<PAGE>
As filed with the Securities and Exchange Commission on March 31, 1998
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
FOUNDATION HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4288333
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
21600 OXNARD STREET 91367
WOODLAND HILLS, CALIFORNIA (Zip Code)
(Address of principal executive offices)
FOUNDATION HEALTH SYSTEMS, INC.
401(k) ASSOCIATE SAVINGS PLAN
(Full title of the plan)
MICHAEL E. JANSEN, ESQ.
FOUNDATION HEALTH SYSTEMS, INC.
225 NORTH MAIN STREET, PUEBLO, COLORADO 81003
(719) 542-0500
(Name, address and telephone number, including area code, of agent for service)
(with a copy to)
B. CURTIS WESTEN, ESQ.
FOUNDATION HEALTH SYSTEMS, INC.
225 NORTH MAIN STREET, PUEBLO, COLORADO 81003
(719) 542-0500
__________________
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities to be Offering Aggregate Registration
to be Registered Price Per Offering Fee
Registered(1) Share Price
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Class A 300,000 shares $26.9375(2) $8,081,250(2) $2,384
Common
Stock, $.001
par value
per share
Preferred 300,000 rights (3) (3) (3)
Stock
Purchase
Rights
===============================================================================
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of
interests to be offered pursuant to the employee benefit plans described
herein.
(2) Estimated solely for the purpose of calculating the registration fee
and, pursuant to Rule 457(h) under the Securities Act of 1933, based
upon the average ($26.9375) of the high ($27.0625) and low ($26.8125)
sale prices of the Common Stock reported on the New York Stock Exchange
on March 25, 1998.
(3) Rights to purchase Series A Junior Participating Preferred Stock initially
are attached to and trade with the shares of Common Stock being registered
hereby. Value attributable to such Rights, if any, is reflected in the
market price of the Common Stock.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities and
Exchange Commission (the "Commission") by Foundation Health Systems, Inc. (the
"Company") (Commission File No. 1-12718) are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
(b) The description of the Company's Class A Common Stock, par value
$.001 per share, which is contained in the Company's Registration
Statement on Form 8-A dated January 21, 1994.
(c) The description of the Rights to purchase Series A Junior
Participating Preferred Stock of the Company (the "Rights")
contained in the Company's Registration Statement on Form 8-A
dated July 16, 1996.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, and all documents filed
by the Foundation Health Systems, Inc. 401(k) Associate Savings Plan (the
"Plan") pursuant to Section 15(d) of the Exchange Act, after the date of this
Registration Statement and prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Registration Statement and
to be a part hereof from the respective dates of filing of such documents (such
documents, and the documents enumerated above, are hereinafter referred to as
"Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "Delaware
GCL") permits indemnification of directors, officers and employees of a
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of litigation under certain conditions and subject to
certain limitations. The Fourth Amended and Restated Certificate of
Incorporation of the Company (the "Certificate") provides that a director shall
not be personally liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director, except: (i) for any breach of the
duty of loyalty; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (iii) for liability under
Section 174 of the Delaware GCL (relating to certain unlawful dividends, stock
repurchases or stock redemptions); or (iv) for any transaction from which the
director derived any improper personal benefit. The effect of this provision in
the Certificate is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director (including breaches resulting from negligent or grossly negligent
behavior) except in certain limited situations. These provisions do not limit
or eliminate the rights of the Company or any stockholder to seek non-monetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. These provisions do not alter the liability of
directors under federal securities laws.
Article VI of the Certificate and Article VI of the Company's Fifth Amended
and Restated Bylaws provide that the Company shall indemnify each director and
officer to the fullest extent and in the manner set forth in and permitted by
the Delaware GCL and other applicable laws and that the Company may indemnify
employees or agents of the Company to the extent and in the manner set forth in
and permitted by the Delaware GCL and other applicable laws. The Company has
also entered into various Indemnification Agreements with certain of its
officers and directors to contractually provide indemnification coverage
consistent with such Bylaws.
In addition, the Company maintains an officers' and directors' liability
insurance policy insuring the Company's officers and directors against certain
liabilities and expenses incurred by them in their capacities as such, and
insuring the Company, under certain circumstances, in the event that
indemnification payments are made by the Company to such officers and directors.
Pursuant to Section 7.12 of the Agreement and Plan of Merger, dated October
1, 1996 (the "Merger Agreement"), among the Company, FH Acquisition Corp. and
Foundation Health Corporation ("FHC"), the Company has agreed that, for a period
of six years following the Effective Time (as defined in the Merger Agreement),
(a) the Company will continue and guarantee the performance of the
indemnification rights of present and former directors and officers of the
Company and FHC provided for in the Certificate of Incorporation, Bylaws and
Indemnification Agreements of the Company and FHC, with respect to
indemnification for acts and omissions occurring prior to the Effective Time,
and (b) the Company will cause to be maintained the policies of the officers'
and directors' liability covered by each company's officers' and directors'
liability insurance policies as of the Effective Time with respect to acts and
omissions occurring prior to the Effective Time; provided that policies with
third-party insurers of similar or better A.M. Best rating whose terms,
conditions and coverage are no less advantageous may be substituted therefor,
and provided further that in no event shall the Company be required to expend to
maintain or procure insurance coverage an amount in excess of 150% of the annual
premiums for the twelve-month period ended June 30, 1997.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
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ITEM 8. EXHIBITS.
EXHIBIT
NO. DESCRIPTION
4.1 Fourth Amended Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (Registration No. 333-24621)).
4.2 Fifth Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's quarterly Report on
Form 10-Q for the quarter ended June 30, 1997).
4.3 Rights Agreement dated as of June 1, 1996, by and between the Company
and Harris Trust and Savings Bank, as Rights Agent (incorporated by
reference to Exhibit 99.1 to the Company's Registration Statement on
Form 8-A (Commission File No. 1-12718)).
4.4 First Amendment to the Rights Agreement dated as of October 1, 1996,
by and between the Company and Harris Trust and Savings Bank, as
Rights Agent (incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on October 9, 1996).
4.5* Foundation Health Systems, Inc. 401(k) Associate Savings Plan, a copy
of which is filed herewith.
23* Consent of Deloitte & Touche LLP, a copy of which is filed herewith.
24* Powers of Attorney (contained on the signature page to this
Registration Statement).
____________________
* A copy of the document has been filed as an Exhibit to this Registration
Statement.
The Company will submit or has submitted the Plan and any amendment
thereto to the Internal Revenue Service (the "IRS") in a timely manner and has
made or will make all changes required by the IRS in order to qualify the Plan
under Section 401 of the Internal Revenue Code of 1986, as amended.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in
II-3
<PAGE>
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remained unsold at the
termination of the offering.
(b) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pueblo, State of Colorado on this 27th day of
March, 1998.
FOUNDATION HEALTH SYSTEMS, INC.
By: /s/ Malik M. Hasan M.D.
---------------------------
Malik M. Hasan M.D.
Chairman of the Board of
Directors and Chief Executive
Officer (Principal Executive
Officer)
By: /s/ Steven P. Erwin
---------------------------
Steven P. Erwin
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints Malik M. Hasan M.D., B.
Curtis Westen, and Michael E. Jansen, and each or any of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated, on this 27th day of March, 1998.
SIGNATURE TITLE
/s/ Malik M. Hasan M.D.
--------------------------- Chairman of the Board of Directors,
Malik M. Hasan M.D. Chief Executive Officer, and Director
/s/ J. Thomas Bouchard
--------------------------- Director
J. Thomas Bouchard
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/s/ George Deukmejian
--------------------------- Director
George Deukmejian
/s/ Thomas T. Farley
--------------------------- Director
Thomas T. Farley
/s/ Patrick Foley
--------------------------- Director
Patrick Foley
/s/ Earl B. Fowler
--------------------------- Director
Earl B. Fowler
/s/ Roger F. Greaves
--------------------------- Director
Roger F. Greaves
/s/ Richard W. Hanselman
--------------------------- Director
Richard W. Hanselman
/s/ Richard J. Stegemeier
--------------------------- Director
Richard J. Stegemeier
/s/ Raymond S. Troubh
--------------------------- Director
Raymond S. Troubh
THE PLAN. Pursuant to the requirements of the Securities Act of 1933,
as amended, the trustees (or other persons who administer the employee benefit
plan) have duly caused this registration statement to be signed on their
respective behalf by the undersigned, thereunto duly authorized, in the City of
Pueblo, State of Colorado, this 27th day of March, 1998.
FOUNDATION HEALTH SYSTEMS, INC.
401(k) ASSOCIATE SAVINGS PLAN
By: /s/ Michael E. Jansen
---------------------------------
Name: Michael E. Jansen
Title: Chairman of Plan
Administrative
Committee
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<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
4.1 Fourth Amended Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (Registration No. 333-24621)).
4.2 Fifth Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's quarterly Report on
Form 10-Q for the quarter ended June 30, 1997.)
4.3 Rights Agreement dated as of June 1, 1996, by and between the Company
and Harris Trust and Savings Bank, as Rights Agent (incorporated by
reference to Exhibit 99.1 to the Company's Registration Statement on
Form 8-A (Commission File No. 1-12718)).
4.4 First Amendment to the Rights Agreement dated as of October 1, 1996,
by and between the Company and Harris Trust and Savings Bank, as
Rights Agent (incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on October 9, 1996).
4.5* Foundation Health Systems, Inc. 401(k) Associate Savings Plan, a copy
of which is filed herewith
23* Consent of Deloitte & Touche LLP, a copy of which is filed herewith
24* Powers of Attorney (contained on the signature page to this
Registration Statement).
________________________
*A copy of the document has been filed as an Exhibit to this Registration
Statement
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<PAGE>
EXHIBIT 4.5
FOUNDATION HEALTH SYSTEMS, INC.
401(k) ASSOCIATE SAVINGS PLAN
(as amended and restated as of September 1, 1997)
<PAGE>
FOUNDATION HEALTH SYSTEMS, INC.
401(k) ASSOCIATE SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 TITLE AND PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 3 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 3.1. Eligibility for Participation . . . . . . . . . . . . . . . . . .8
Section 3.2. Application for Salary Deferral Contributions . . . . . . . . . .9
Section 3.3. Transfer to Affiliates. . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 4 EMPLOYER CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1. Profit Sharing Contributions. . . . . . . . . . . . . . . . . . 10
Section 4.2. Salary Deferral Contributions . . . . . . . . . . . . . . . . . 11
Section 4.3. Annual Limit on Salary Deferral Contributions . . . . . . . . . 11
Section 4.4. Matching Contributions. . . . . . . . . . . . . . . . . . . . . 13
Section 4.5. Limitations on Contributions for Highly
Compensated Employees. . . . . . . . . . . . . . . . . . . . . .15
Section 4.6. Limitation on Employer Contributions. . . . . . . . . . . . . . 22
ARTICLE 5 ROLLOVER CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.1. Requirements for Rollover Contributions . . . . . . . . . . . . 23
Section 5.2. Delivery of Rollover Contributions. . . . . . . . . . . . . . . 23
Section 5.3. Special Accounting Rules for Rollover Contributions . . . . . . 24
ARTICLE 6 TRUST AND INVESTMENT FUNDS. . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.1. Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.2. Investment Funds. . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 7 PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.1. Participant Accounts and Investment Elections . . . . . . . . . 26
Section 7.2. Investments in Company Stock Fund . . . . . . . . . . . . . . . 29
Section 7.3. Valuation of Funds and Plan Accounts. . . . . . . . . . . . . . 30
Section 7.4. Allocation of Contributions Among Participants' Accounts. . . . 31
Section 7.5. Statutory Limitations on Allocations to Accounts. . . . . . . . 33
Section 7.6. Correction of Error . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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ARTICLE 8 WITHDRAWALS, LOANS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . 36
Section 8.1. Withdrawals Prior to Termination of Employment. . . . . . . . . 36
Section 8.2. Loans to Participants . . . . . . . . . . . . . . . . . . . . . 40
Section 8.3. Distribution Upon Termination of Employment . . . . . . . . . . 41
Section 8.4. Time and Form of Distribution upon Termination of Employment. . 44
Section 8.5. Special Rules Relating to Election of Annuity
Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.6. Designation of Beneficiary. . . . . . . . . . . . . . . . . . . 52
Section 8.7. Distributions to Minor and Disabled Distributees. . . . . . . . 54
Section 8.8. Missing Person. . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.9. Successive Employer . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9 SPECIAL PARTICIPATION RULES . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.1. Change of Employment Status . . . . . . . . . . . . . . . . . . 57
Section 9.2. Reemployment of an Eligible Employee Whose Employment
Terminated Prior to Becoming a Participant . . . . . . . . . . .57
Section 9.3. Reemployment of a Terminated Participant. . . . . . . . . . . . 58
Section 9.4. Employment by Related Entities. . . . . . . . . . . . . . . . . 59
Section 9.5. Leased Employees. . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.6. Reemployment of Veterans. . . . . . . . . . . . . . . . . . . . 60
ARTICLE 10 SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK . . . . . . . . . . . 63
Section 10.1. Voting Shares of Company Stock . . . . . . . . . . . . . . . . 63
Section 10.2. Tender Offers. . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 11 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.1. The Committee. . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.2. Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.3. Notices to Participants. . . . . . . . . . . . . . . . . . . . 71
Section 11.4. Notices to the Committee . . . . . . . . . . . . . . . . . . . 71
Section 11.5. Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 11.6. Reports of Trustee and Accounting to Participants. . . . . . . 72
ARTICLE 12 PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . 72
Section 12.1. Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.2. Withdrawal from Participation. . . . . . . . . . . . . . . . . 73
Section 12.3. Continuance by a Successor . . . . . . . . . . . . . . . . . . 73
Section 12.4. Company as Agent for Employers . . . . . . . . . . . . . . . . 74
ARTICLE 13 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 13.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 13.2. Non-Assignability. . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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<TABLE>
<S> <C>
Section 13.3. Employment Non-Contractual . . . . . . . . . . . . . . . . . . 76
Section 13.4. Limitation of Rights . . . . . . . . . . . . . . . . . . . . . 76
Section 13.5. Merger or Consolidation with Another Plan. . . . . . . . . . . 77
Section 13.6. Gender and Plurals . . . . . . . . . . . . . . . . . . . . . . 77
Section 13.7. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 13.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 13.9. No Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.10. Plan Voluntary . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 14 TOP-HEAVY PLAN REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . 78
Section 14.1. Top-Heavy Plan Determination . . . . . . . . . . . . . . . . . 78
Section 14.2. Definitions and Special Rules. . . . . . . . . . . . . . . . . 79
Section 14.3. Minimum Contribution for Top-Heavy Years . . . . . . . . . . . 80
Section 14.4. Special Rules for Applying Statutory Limitations
on Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 15 AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION. . . . . . . 82
Section 15.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 15.2. Establishment of Separate Plan . . . . . . . . . . . . . . . . 82
Section 15.3. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 15.4. Trust Fund to Be Applied Exclusively for Participants and
Their Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
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ARTICLE 1
TITLE AND PURPOSE
The title of the Plan shall be the "Foundation Health Systems, Inc.
401(k) Associate Savings Plan." The Plan is an amendment and restatement of
the Health Systems International, Inc. 401(k) Associate Savings Plan, as in
effect on August 31, 1997, and shall be effective as of September 1, 1997 in
respect of Participants whose employment terminates on or after such date,
PROVIDED, HOWEVER, that:
(i) any provision that specifies a different effective date shall
be effective as of such date,
(ii) Sections 4.5 and 8.4(d) of the Plan and subdivision (11) of
Article 2, to the extent such Sections and subdivision reflect
modifications required by the Small Business Job Protection Act of 1996,
shall be effective January 1, 1997,
(iii) Section 9.6 of the Plan, to the extent such Section reflects
modifications required by the Uniformed Services Employment and
Reemployment Rights Act of 1994, shall be effective as of December 12,
1994, and
(iv) Section 7.5 of the Plan, to the extent such Section reflects
modifications required by the Retirement Protection Act of 1994, shall
be effective as of January 1, 1995.
Effective September 1, 1997, Foundation Health Corporation, a wholly owned
subsidiary of Foundation Health Systems, Inc., shall adopt the provisions of
this instrument as an amendment and restatement of the FHC Plan, as
hereinafter defined, but shall continue to maintain such plan as a separate
plan until the date as of which the trust holding the assets of the FHC Plan
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shall be merged with and into the trust holding the assets of the Health
Systems International, Inc. 401(k) Associate Savings Plan.
The Plan is designated as a "profit sharing plan" within the
meaning of U.S. Treasury Regulation Section 1.401-1(a)(2)(ii).
ARTICLE 2
DEFINITIONS
As used herein, the following words and phrases shall have the
following respective meanings when capitalized:
(1) AFFILIATE. (a) A corporation that is a member of the same
controlled group of corporations (within the meaning of section 414(b)
of the Code) as an Employer, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section 414(c)
of the Code) with an Employer, (c) any organization (whether or not
incorporated) that is a member of an affiliated service group (within
the meaning of section 414(m) of the Code) that includes an Employer, a
corporation described in clause (a) of this subdivision or a trade or
business described in clause (b) of this subdivision, or (d) any other
entity that is required to be aggregated with an Employer pursuant to
regulations promulgated under section 414(o) of the Code.
(2) AFTER-TAX ACCOUNT. The account established pursuant to
Section 7.1 to which a Participant's after-tax contributions, if any,
transferred to the Plan from the FHC Plan or the QualMed Plan (or any
other plan qualified under section 401(a) of the Code) and any earnings
(or losses) thereon are credited.
(3) BENEFICIARY. A person entitled under Section 8.6 to receive
benefits in the event of the death of a Participant.
(4) BOARD OF DIRECTORS. The board of directors of the Company.
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(5) BREAK IN SERVICE. Any period during which an Employee does
not perform any Hours of Service for an Employer. For purposes of this
definition, an Employee shall be credited with Hours of Service for any
period of absence from an Employer during which such Employee (a) is in
Qualified Military Service, PROVIDED that the Employee returns to the
employ of an Employer within the period prescribed by USERRA, (b) is on
an uncompensated leave of absence duly granted by an Employer, or (c) is
absent from work for a maximum of 24 consecutive months because of (i)
the pregnancy of the Employee, (ii) the birth of the Employee's child,
(iii) the placement of a child with the Employee in connection with the
Employee's adoption of such child, or (iv) the need to care for any such
child for a period beginning immediately following such birth or
placement. Notwithstanding the foregoing, no Hours of Service shall be
credited to an Employee under clause (c) of this subdivision unless the
Employee timely furnishes to the Committee a certificate of birth, proof
of adoption or other appropriate legal documentation setting forth
parentage or adoption.
(6) CODE. The Internal Revenue Code of 1986, as amended.
(7) COMMITTEE. The committee designated in Section 11.1 to
administer the Plan, or any person, corporation, partnership or
committee to which the Committee has delegated its responsibilities
pursuant to Section 11.1.
(8) COMPANY. Foundation Health Systems, Inc., a Delaware
corporation, and any successor to such corporation that adopts the Plan
pursuant to Article 12. In addition, during the period beginning on
September 1, 1997 and ending on the Merger Date, Foundation Health
Corporation, a Delaware corporation and wholly owned subsidiary of
Foundation Health Systems, Inc., shall be the "Company" with respect to
the FHC Plan as amended and restated as of September 1, 1997.
(9) COMPANY STOCK. Class A Common Stock of Foundation Health
Systems, Inc.
(10) COMPANY STOCK FUND. The investment fund established and
maintained by the Trustee in accordance with Section 6.2, which shall be
available for participant directed investments as of the Effective Date
with respect to the FHC Plan and as of the Merger Date with respect to
the HSI Plan.
(11) COMPENSATION. The total earnings paid by an Employer to an
Eligible Employee and properly reportable on Form W-2 for a Plan Year
(including bonuses and overtime), and all amounts not includible in such
Eligible Employee's gross income for federal income tax purposes solely
on account of his or her election to have compensation reduced pursuant
to the Plan or any other qualified cash or deferred arrangement
described in section 401(k) of the Code or a cafeteria plan as defined in
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section 125 of the Code, but excluding any reimbursements or other
allowances for automobile, relocation, travel or education expenses
(even if includible in the Employee's gross income for federal income
tax purposes). An Employee's Compensation in excess of (I) $160,000 for
the Plan Year beginning January 1, 1997, and (II) for each subsequent
Plan Year, the dollar amount prescribed by section 401(a)(17) of the
Code (as adjusted for increases in the cost-of-living) shall not be
taken into account for any purposes under the Plan.
(12) COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation
and Stock Option Committee of the Board of Directors of the Company.
(13) DISABILITY. A disability of an Employee, within the meaning
of the long-term disability plan maintained by the Employer of such
Employee, on account of which such Employee is eligible for and is
receiving long-term disability benefits.
(14) EFFECTIVE DATE. Except as provided elsewhere, the effective
date of this amendment and restatement of the Plan with respect to the
Company and each other entity that is an Employer on August 31, 1997
shall be September 1, 1997, and in the case of any other Employer shall
be the date designated by such Employer.
(15) ELIGIBLE EMPLOYEE. With respect to the Company and FHC, any
Employee thereof, and with respect to each other Employer, any member of
a class of Employees as designated for this purpose by the board of
directors of such Employer, but with respect to all Employers, excluding:
(i) an Employee who (A) is scheduled to perform fewer than 20
Hours of Service per week and (B) performs fewer than 1,000 Hours
of Service during the Plan Year,
(ii) an Employee whose employment is governed by the terms of
a collective bargaining agreement under which retirement benefits
were the subject of good faith bargaining, but which does not
provide for participation in the Plan, and
(iii) an Employee who is a nonresident alien (within the
meaning of section 7701(b)(1)(B) of the Code).
(16) EMPLOYEE. An individual whose relationship with an Employer
is, under common law, that of an employee. Notwithstanding the
foregoing, no individual who renders services for an Employer shall be
considered an Employee for purposes of the Plan if such individual
renders such services pursuant to (i) an agreement providing that such
services are to be rendered by the individual as an independent
contractor, (ii) an agreement with an entity, including a leasing
organization within the meaning of
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section 414(n)(2) of the Code, that is not an Employer or Affiliate or
(iii) an agreement that contains a waiver of participation in the Plan.
(17) EMPLOYER. The Company, FHC, each Affiliate listed in EXHIBIT
A hereto (as such exhibit is amended from time to time), and each other
entity that, with the consent of the Company, elects to participate in
the Plan in the manner described in Section 12.1 and any successor
entity that adopts the Plan pursuant to Section 12.3. If any such
entity withdraws from participation in the Plan pursuant to Section
12.2, or terminates its participation in the Plan pursuant to Section
15.3, then such entity shall thereupon cease to be an Employer.
(18) ENTRY DATE. The first day of each calendar month.
(19) ERISA. The Employee Retirement Income Security Act of 1974,
as amended from time to time.
(20) FHC. Foundation Health Corporation, a Delaware Corporation
and a wholly owned subsidiary of Foundation Health Systems, Inc.
(21) FHC PLAN. The Foundation Health Corporation Profit Sharing
and 401(k) Plan.
(22) HOUR OF SERVICE. Each hour for which:
(a) an Employee is paid, or entitled to payment, for the
performance of duties as an Employee;
(b) an Employee is paid, or entitled to payment, by an Employer on
account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), lay-off, jury, military duty or leave of
absence, PROVIDED that no more than 501 Hours of Service will be
credited under this paragraph (b) for any single continuous period
(regardless of whether such period occurs in a single Plan Year);
(c) back pay is awarded or agreed to by the Employer or an
Affiliate, PROVIDED that such hours shall be credited to the Plan
Years to which the award, agreement or payment pertains rather than
the Plan Year in which the award, agreement or payment is made.
For purposes of paragraphs (b) and (c) above, an Hour of Service shall
be calculated in accordance with U.S. Department of Labor Regulation
Section 2530.200b-2 which provides that (i) if a payment is based upon
hours, days, weeks or other unit of time the number
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of Hours of Service credited will be the number of regularly scheduled
working hours for such Employee for such unit of time, and (ii) if the
payment due is not based upon units of time, the number of Hours of
Service credited shall be equal to the amount of the payment divided by
the Employee's most recent hourly rate of compensation. For payments
made to an Employee without a regular work schedule, the number of hours
credited shall be calculated on a reasonable basis which reflects the
average hours worked by the Employee, or by other employees in the same
job classification, over a representative period of time and which is
consistently applied with respect to all employees within the same job
classification. In order to avoid double counting, the same Hours of
Service shall not be credited both under paragraph (c) and either
paragraph (a) or paragraph (b), as applicable.
(23) HSI PLAN. The Health Systems International, Inc. 401(k)
Associate Savings Plan.
(24) MATCHING CONTRIBUTIONS. Matching contributions and
supplemental matching contributions made to the Plan by an Employer
pursuant to Section 4.4.
(25) MATCHING CONTRIBUTIONS ACCOUNT. The account established
pursuant to Section 7.1 to which Matching Contributions, if any, made on
behalf of a Participant and earnings (or losses) thereon are credited.
(26) MERGER DATE. The date as of which the trust holding the
assets of the FHC Plan, the provisions of which are set forth herein, is
merged into the trust holding the assets of the HSI Plan, as set forth
herein.
(27) PARTICIPANT. Subject to Section 5.3, an Eligible Employee
who has satisfied the requirements set forth in Article 3. An
individual shall cease to be a Participant upon the complete
distribution of his or her accounts under the Plan.
(28) PLAN. The plan herein set forth, and as from time to time
amended.
(29) PLAN YEAR. The twelve-month period beginning on January 1 of
each calendar year.
(30) PROFIT SHARING ACCOUNT. The account established pursuant to
Section 7.1 to which Profit Sharing Contributions, if any, allocated to
a Participant and earnings (or losses) thereon are credited.
(31) PROFIT SHARING CONTRIBUTION. A profit sharing contribution
made to the Plan by an Employer pursuant to Section 4.1.
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(32) QUALIFIED NONELECTIVE CONTRIBUTION ACCOUNT. The account
established pursuant to Section 7.1 to which qualified nonelective
contributions, if any, allocated to a Participant and earnings (or
losses) thereon are credited.
(33) QUALIFIED MATCHING CONTRIBUTION ACCOUNT. The account
established pursuant to Section 7.1 to which qualified matching
contributions, if any, allocated to a Participant and earnings (or
losses) thereon are credited.
(34) QUALIFIED MILITARY SERVICE. Any service in the uniformed
services (as defined in 38 U.S.C. Section 4303) by an individual if
such individual is entitled to reemployment rights under USERRA with
respect to such service.
(35) QUALMED PLAN. The QualMed, Inc. Employee Savings Plan.
(36) ROLLOVER ACCOUNT. The account established pursuant to
Section 7.1 to which a Participant's Rollover Contributions, if any, and
any earnings (or losses) thereon are credited.
(37) ROLLOVER CONTRIBUTIONS. Rollover contributions made by a
Participant pursuant to Section 5.1.
(38) SALARY DEFERRAL CONTRIBUTIONS. Before-tax payroll reduction
contributions made to the Plan by an Employer on behalf of Participants
pursuant to Section 4.2.
(39) SALARY DEFERRAL CONTRIBUTIONS ACCOUNT. The account
established pursuant to Section 7.1 to which a Participant's Salary
Deferral Contributions, if any, and any earnings (or losses) thereon are
credited.
(40) SERVICE. The aggregate of the periods during which an
Employee is employed by an Employer and any periods of employment
required to be taken into account pursuant to Section 9.4.
Notwithstanding the previous sentence, in the case of an Employee who
was a Participant in the HSI Plan immediately prior to the Effective
Date, such Employee's Service shall be the sum of (i) the Employee's
Years of Service as of December 31, 1996, determined under, and as
defined by, the terms of such plan as in effect immediately prior to the
Effective Date, (ii) the aggregate of the periods commencing on and
after January 1, 1998 during which the Employee is employed by an
Employer and any periods of employment on and after such date that are
required to be taken into account pursuant to Section 9.4 and (iii) the
greater of (A) the Service that would be credited to the Employee during
the Plan Year beginning January 1, 1997 under the provisions of such
plan in effect immediately prior to the Effective Date and (B) the
Service that would be credited to the Employee in such year under clause
(ii) above.
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For purposes of the first sentence of this subdivision (40) and
clause (ii) above, an Employee shall be deemed to be employed by an
Employer during (i) any period of absence from employment by an Employer
which is of less than twelve (12) months duration, (ii) the first twelve
months of any period of absence from employment for any reason other than
the Employee's quitting, retiring or being discharged and (iii) any period
of absence from such employment during which the Employee is in Qualified
Military Service, PROVIDED that the Employee returns to the employ of the
Employer within the period prescribed by USERRA.
An Employee's Service prior to a Break in Service of five
consecutive years shall be disregarded if such Employee had no vested
interest in his or her Profit Sharing Account or Matching Contributions
Account upon the commencement of such Break in Service.
(41) TRUST. A Trust created by agreement between the Company and
the Trustee, as from time to time amended.
(42) TRUSTEE. The trustee provided for in Article 6, or any
successor trustee or, if there is more than one trustee acting at any
time, all of such trustees collectively.
(43) TRUST FUND. All money and property of every kind of the Trust
held by the Trustee pursuant to the terms of the agreement governing the
Trust.
(44) USERRA. The Uniformed Services Employment and Reemployment
Rights Act of 1994.
(45) VALUATION DATE. The last day of the Plan Year or if any such
date is not a business day, the immediately preceding business day, and
such other days as the Committee may determine.
ARTICLE 3
PARTICIPATION
SECTION 3.1. ELIGIBILITY FOR PARTICIPATION. Each Eligible Employee
who immediately before the Effective Date was a Participant shall continue to
be a Participant as of the Effective Date. Each individual who is an Eligible
Employee on the Merger Date and who
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was a participant in the FHC Plan immediately prior thereto shall become a
Participant in the Plan as of the Merger Date. Each other Eligible Employee
shall become a Participant as of the first Entry Date coinciding with or next
following the date the Eligible Employee completes 30 days of Service with an
Employer.
SECTION 3.2. APPLICATION FOR SALARY DEFERRAL CONTRIBUTIONS. A
Participant who desires to make Salary Deferral Contributions shall execute and
deliver to his or her Employer, in accordance with procedures prescribed by the
Committee, an application on the form, or by such electronic means, as may be
prescribed by the Committee, specifying his or her chosen rate of Salary
Deferral Contributions. Such application shall authorize the Participant's
Employer to reduce the Participant's Compensation by the amount of any such
Salary Deferral Contributions. The application shall evidence the acceptance
of and agreement to all provisions of the Plan. Any election made pursuant to
this Section shall be effective only with respect to Compensation not yet earned
as of the effective date of such election.
SECTION 3.3. TRANSFER TO AFFILIATES. If a Participant is
transferred from one Employer to another Employer or from an Employer to an
Affiliate that is not an Employer, then such transfer shall not terminate the
Participant's participation in the Plan and the Participant shall continue to
participate in the Plan until an event occurs that would have entitled the
Participant to a complete distribution of the Participant's vested interest
in his or her accounts under the Plan had the Participant continued to be
employed by an Employer until the occurrence of such event. Nevertheless, a
Participant shall not be entitled to make Salary
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Deferral Contributions to the Plan or to receive allocations of Profit
Sharing Contributions during any period of employment by any Affiliate that
is not an Employer, and periods of employment with an Affiliate that is not
an Employer shall be taken into account only to the extent set forth in
Section 9.4.
ARTICLE 4
EMPLOYER CONTRIBUTIONS
SECTION 4.1. PROFIT SHARING CONTRIBUTIONS. Subject to the
limitations set forth in Sections 4.6 and 7.5, each Employer shall contribute
a Profit Sharing Contribution for each Plan Year in such amount as the
Employer may, in its sole discretion, determine. A Profit Sharing
Contribution for a Plan Year by an Employer shall be made wholly in cash,
wholly in shares of Company Stock, or in a combination thereof, as determined
by the Company. An Employer's Profit Sharing Contribution for any Plan Year
shall be delivered to the Trustee prior to the due date, including extensions
thereof, of the Employer's federal income tax return for the fiscal year of
the Employer which ends with or within such Plan Year. If any such Profit
Sharing Contribution is made by the delivery to the Trustee of shares of
Company Stock, then such stock shall be valued at the closing price of the
stock as reported in THE WALL STREET JOURNAL on the New York Stock Exchange
Composite Transactions List (or the consolidated tape of such other principal
exchange on which such stock is traded) as of the date such shares are
delivered
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to the Trustee or, if such date is not a trading day, such price on the most
recent trading day prior thereto.
SECTION 4.2. SALARY DEFERRAL CONTRIBUTIONS. (a) INITIAL ELECTION.
Subject to the limitations set forth in Sections 4.3, 4.5, 4.6 and 7.5, each
Employer shall contribute on behalf of each Participant who is an Employee of
such Employer an amount equal to a whole percentage not less than one percent
(1%) and not more than 17 percent (17%) of such Participant's Compensation
for each payroll period as designated by the Participant on his or her
application pursuant to Section 3.2. Salary Deferral Contributions shall be
delivered to the Trustee as soon as practicable after the end of each payroll
period in which the amount of such contribution would otherwise have been
paid to the Participant.
(b) CHANGES IN THE RATE OR SUSPENSION OF SALARY DEFERRAL
CONTRIBUTIONS. A Participant's Salary Deferral Contributions shall continue
in effect at the rate designated by such Participant pursuant to subsection
(a) of this Section until the Participant changes such designation or
suspends such contributions. A Participant may change such designation or
suspend such contributions as of such time and in such manner as may be
prescribed by the Committee. Any election made pursuant to this subsection
shall be effective only with respect to Compensation not yet earned as of the
effective date of such election.
SECTION 4.3. ANNUAL LIMIT ON SALARY DEFERRAL CONTRIBUTIONS. (a)
GENERAL RULE. Notwithstanding the provisions of Section 4.2, a Participant's
Salary Deferral Contributions for
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any calendar year shall not exceed (i) $9,500 for the 1997 calendar year and
(ii), for each subsequent year, the dollar amount prescribed by section
402(g) of the Code (as adjusted for increases in the cost-of-living in
accordance with section 402(g)(5) of the Code).
(b) CORRECTION OF EXCESS SALARY DEFERRAL CONTRIBUTIONS. If for any
calendar year, the Committee determines that the aggregate of the (i) Salary
Deferral Contributions to the Plan and (ii) amounts contributed under other
qualified cash or deferred arrangements (described in section 401(k) of the
Code) which are maintained by an Employer or Affiliate will exceed the limit
imposed by Section 4.3(a) for the calendar year in which such contributions
were made ("Excess Salary Deferral Contributions"), the Committee shall
direct the Trustee to distribute an amount equal to such Excess Salary
Deferral Contributions (adjusted for gains and losses as determined pursuant
to applicable regulations) to such Participant no later than the April 15
following such calendar year.
(c) CORRECTION OF OTHER EXCESS CONTRIBUTIONS. If for any calendar
year a Participant determines that the aggregate of the (i) Salary Deferral
Contributions to the Plan and (ii) amounts contributed under all other plans
or arrangements described in section 401(k), 408(k) or 403(b) of the Code,
including those maintained by other employers, will exceed the limit imposed
by Section 4.3(a) for the calendar year in which such contributions were
made, such Participant shall be permitted, pursuant to such rules and at such
time prior to the April 15 following such calendar year as determined by the
Committee, to submit a written request for the distribution of an amount
equal to or less than the amount of such excess contributions. The
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request described in this Section 4.3(c) shall be made on a form
designated by the Committee and shall specify the amount of such excess
contributions and the amount to be distributed from the Plan. The request
shall be accompanied by the Participant's written statement that if such
amount is not distributed, the amounts contributed by the Participant under
all plans and arrangements described under sections 401(k), 408(k), and
403(b) of the Code will exceed the limit for such Participant under section
402(g) of the Code. The Committee shall direct the Trustee to distribute
such amount no later than such April 15.
SECTION 4.4. MATCHING CONTRIBUTIONS. (a) EMPLOYER MATCHING
CONTRIBUTIONS. Subject to the limitations set forth in Sections 4.5, 4.6 and
7.5, each Employer shall contribute for each payroll period on behalf of each
Participant, an amount equal to 50 percent (50%) of the Salary Deferral
Contributions made on behalf of the Participant for such payroll period, but
only to the extent that such Salary Deferral Contributions do not exceed six
percent (6%) of such Participant's Compensation for such payroll period.
Matching Contributions for a Plan Year by an Employer shall be made wholly in
cash, wholly in shares of Company Stock, or in a combination thereof, as
determined by the Company. Matching Contributions shall be delivered to the
Trustee as soon as practicable after the end of each payroll period to which
such contributions relate. If any such Matching Contribution is made by the
delivery to the Trustee of shares of Company Stock, then such stock shall be
valued at the closing price of the stock as reported in THE WALL STREET
JOURNAL on the New York Stock Exchange Composite Transactions List (or the
consolidated tape of such other principal exchange on which such stock is
traded) as
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of the date such shares are delivered to the Trustee or, if such date is not
a trading day, such price on the most recent trading day prior thereto.
(b) SUPPLEMENTAL MATCHING CONTRIBUTIONS. Subject to the
limitations set forth in Sections 4.5, 4.6 and 7.5, each Employer also shall
contribute for each Plan Year beginning on and after January 1, 1997 on
behalf of each Participant who is an Eligible Employee of such Employer on
the last day of such Plan Year or who terminated employment during such Plan
Year on account of death, Disability or retirement on or after attaining age
55, a supplemental Matching Contribution equal to the EXCESS OF 50 percent
(50%) of the Salary Deferral Contributions made on behalf of the Participant
for the Plan Year, but only to the extent that such Salary Deferral
Contributions do not exceed six percent (6%) of such Participant's
Compensation for such Plan Year, OVER the Matching Contributions made on
behalf of such Participant pursuant to Section 4.4(a) for such Plan Year,
PROVIDED, HOWEVER, that the supplemental Matching Contribution on behalf of
participants in the HSI Plan for the Plan Year beginning January 1, 1997
shall be determined by substituting 25 percent (25%) for 50 percent (50%),
where it applies herein, with respect to Salary Deferral Contributions made
prior to September 1, 1997. Supplemental Matching Contributions for a Plan
Year by an Employer shall be made wholly in cash, wholly in shares of Company
Stock, or in a combination thereof, as determined by the Company.
Supplemental Matching Contributions for any Plan Year shall be delivered to
the Trustee prior to the due date, including extensions thereof, of the
Employer's federal income tax return for the fiscal year of the Employer that
coincides with such Plan Year. If any such supplemental Matching
Contribution is made by the delivery to the Trustee of shares
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of Company Stock, then such stock shall be valued at the closing price of the
stock as reported in THE WALL STREET JOURNAL on the New York Stock Exchange
Composite Transactions List (or the consolidated tape of such other principal
exchange on which such stock is traded) as of the date such shares are
delivered to the Trustee or, if such date is not a trading day, such price on
the most recent trading day prior thereto.
SECTION 4.5. LIMITATIONS ON CONTRIBUTIONS FOR HIGHLY COMPENSATED
EMPLOYEES. (a) ACTUAL DEFERRAL PERCENTAGE TEST IMPOSED BY SECTION 401(K)(3)
OF THE CODE. Notwithstanding the provisions of Section 4.2, if the Salary
Deferral Contributions made pursuant to such Section for a Plan Year fail to
satisfy both of the tests set forth in paragraphs (1) and (2) of this
subsection, then the adjustments prescribed in paragraph (1) of subsection
(e) of this Section shall be made.
(1) The Average Deferral Percentage for the group consisting of
highly compensated Eligible Employees does not exceed the product of the
Average Deferral Percentage for the group consisting of all other Eligible
Employees multiplied by 1.25.
(2) The Average Deferral Percentage for the group consisting of
highly compensated Eligible Employees (i) does not exceed the Average
Deferral Percentage for the group consisting of all other Eligible
Employees by more than two percentage points, and (ii) does not exceed two
times the Average Deferral Percentage of such group.
(b) LIMITS IMPOSED BY SECTION 401(M) OF THE CODE. Notwithstanding
the provisions of Section 4.4, if the Matching Contributions made pursuant to
such Section for a Plan Year fail to satisfy both of the tests set forth in
paragraphs (1) and (2) of this subsection, then the adjustments prescribed in
paragraph (2) of subsection (e) of this Section shall be made.
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(1) The Average Contribution Percentage for the group consisting of
highly compensated Eligible Employees does not exceed the product of the
Average Contribution Percentage for the group consisting of all other
Eligible Employees multiplied by 1.25.
(2) The Average Contribution Percentage for the group consisting of
highly compensated Eligible Employees (i) does not exceed the Average
Contribution Percentage for the group consisting of all other Eligible
Employees by more than two percentage points, and (ii) does not exceed two
times the Average Contribution Percentage of such group.
(c) AGGREGATE LIMIT ON CONTRIBUTIONS. Notwithstanding anything
herein to the contrary, if the sum of the Average Deferral Percentage (as
determined under paragraph (1) of subsection (e) of this Section after making
the adjustments required by such paragraph for the Plan Year) and the Average
Contribution Percentage (as determined under paragraph (2) of subsection (e) of
this Section after making the adjustments required by such paragraph for the
Plan Year) for the group consisting of Participants who are highly compensated
Eligible Employees exceeds, or in the judgment of the Committee is likely to
exceed, the Aggregate Limit for such Plan Year, then the adjustments prescribed
in paragraph (3) of subsection (e) of this Section shall be made.
(d) DEFINITIONS AND SPECIAL RULES. For purposes of this Section,
the following terms shall have the meaning set forth below:
(1) The "Average Deferral Percentage" for a Plan Year for a group
of Eligible Employees shall be the average of the ratios,
calculated to the nearest one-hundredth of one percent (.01%), of
the Salary Deferral Contributions for the benefit of each Eligible
Employee in such group, plus any qualified nonelective
contributions or qualified matching contributions designated by an
Employer for this purpose pursuant to Section 4.5(f) for such
Eligible Employee to the total compensation for such Plan Year paid to
such Employee. The Committee may elect, in the manner prescribed by
U.S. Treasury Regulations, to compute the Average Deferral
Percentage for a Plan
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Year for the group consisting of nonhighly compensated Eligible
Employees on the basis of prior Plan Year data.
(2) The "Average Contribution Percentage" for a Plan Year for a
group of Eligible Employees shall be the average of the ratios,
calculated to the nearest one-hundredth of one percent (.01%), of
the Matching Contributions for the benefit of each Eligible
Employee, plus any qualified nonelective contributions designated
by an Employer for this purpose pursuant to Section 4.5(f) for such
Eligible Employee to the total compensation for such Plan Year paid
to such Employee. The Committee may elect, in the manner
prescribed by U.S. Treasury Regulations, to compute the Average
Contribution Percentage for a Plan Year for the group consisting of
nonhighly compensated Eligible Employees on the basis of prior Plan Year
data.
(3) The "Aggregate Limit" shall equal the greater of:
(A) the sum of (i) 1.25 times the greater of the Average
Deferral Percentage or the Average Contribution Percentage for the
group consisting of all Eligible Employees who are nonhighly
compensated Employees plus (ii) the lesser of (a) the sum of two
percentage points and the lesser of the Average Deferral Percentage
and the Average Contribution Percentage for the group consisting of
all Eligible Employees who are nonhighly compensated Employees and
(b) 200 percent (200%) of the lesser of the Average Deferral
Percentage and the Average Contribution Percentage for the group
consisting of all Eligible Employees who are nonhighly compensated
Employees; and
(B) the sum of (i) 1.25 times the lesser of the Average Deferral
Percentage or the Average Contribution Percentage for the group
consisting of all Eligible Employees who are nonhighly compensated
Employees plus (ii) two percentage points plus the greater of (a) the
Average Deferral Percentage for the group consisting of all Eligible
Employees who are nonhighly compensated Employees and (b) the Average
Contribution Percentage for the group consisting of all Eligible
Employees who are nonhighly compensated Employees, but not greater
than 200 percent (200%) of the greater of (a) and (b) above.
(4) A "highly compensated" Employee or Eligible Employee, is an
Employee or Eligible Employee, as the case may be, who is (a) a 5%-owner
(as determined under section 416(i)(1)(A)(iii) of the Code) at any time
during the Plan Year or the preceding Plan Year or (b) is paid compensation
in excess of $80,000 (as adjusted for increases in the cost of living in
accordance with section 414(q)(1)(B)(ii) of the Code) from an Employer for
the prior Plan Year. If the Committee so elects for a Plan Year, then the
Employees taken into account under clause (b) above shall be limited to
those
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Employees who were members of the "top-paid group" (as defined in
section 414(q)(3) of the Code) for the preceding Plan Year.
(5) The term "compensation" shall have the meaning set forth in
section 414(s) of the Code or, in the discretion of the Committee, any
other meaning in accordance with the Code for these purposes.
(6) If the Plan and one or more other plans of the Employer to which
salary deferral contributions or qualified nonelective contributions (as
such term is defined in section 401(m)(4)(C) of the Code) are made are
treated as one plan for purposes of section 410(b) of the Code, then such
plans shall be treated as one plan for purposes of this Section.
(e) ADJUSTMENTS TO COMPLY WITH LIMITS. This subsection sets forth
the adjustments and correction methods that shall be used to comply with the
actual deferral percentage test under section 401(k)(3) of the Code, and the
actual contribution percentage test under section 401(m) of the Code.
(1) ADJUSTMENTS TO COMPLY WITH ACTUAL DEFERRAL PERCENTAGE TEST.
(A) ADJUSTMENT TO SALARY DEFERRAL CONTRIBUTIONS OF HIGHLY COMPENSATED
EMPLOYEES. The Committee shall cause to be made such periodic computations
as it shall deem necessary or appropriate to determine whether either of
the tests set forth in clause (1) or (2) of Section 4.5(a) is satisfied
during a Plan Year, and, if in the Committee's judgment it appears that
neither of such tests will be satisfied, then the Committee shall take
such steps as it deems necessary or appropriate to adjust the Salary
Deferral Contributions for all or a portion of such Plan Year on behalf of
Participants who are highly compensated employees to the extent necessary
in order for one of such tests to be satisfied. If, as of the end of the
Plan Year, the Company determines that, notwithstanding any adjustments
made pursuant to the preceding sentence, neither of the tests set forth in
Section 4.5(a) has been satisfied, the total amount by which Salary
Deferral Contributions must be reduced in order to satisfy either such
test shall be calculated in the manner prescribed by section 401(k)(8)(B)
of the Code (the "excess contributions amount"). The amount to be returned
to Participants who are highly compensated employees shall be determined
by first reducing the Salary Deferral Contributions of each Participant
whose actual dollar amount of Salary Deferral Contributions for such Plan
Year is the highest until such dollar amount equals the next higher actual
dollar amount of Salary Deferral Contributions made for such Plan Year on
behalf of any highly compensated employee, or until the total reduction
equals the
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excess contributions amount. If further reductions are necessary, then the
Salary Deferral Contributions on behalf of each Participant who is a
highly compensated employee and whose actual dollar amount of Salary
Deferral Contributions, after the reduction described in the preceding
sentence, is the highest shall be reduced in accordance with the previous
sentence. Such reductions shall continue to be made to the extent
necessary so that the total reduction equals the excess contributions
amount.
(B) CORRECTIVE DISTRIBUTIONS AND FORFEITURES. No later than
2 1/2 months after the end of the Plan Year (or if correction by such date
is administratively impracticable, no later than the last day of the
subsequent Plan Year), the Company shall cause to be distributed to each
affected Participant (i) the amount of Salary Deferral Contributions to be
returned to such Participant pursuant to subparagraph (A) above, plus any
income and minus any loss allocable thereto, and any corresponding
Matching Contributions plus any income and minus any loss allocable
thereto shall be forfeited. The amount of any income or loss allocable to
any such reductions to be so distributed or forfeited shall be determined
by the Committee in accordance with applicable U.S. Treasury Regulations.
Any amounts forfeited pursuant to this paragraph shall be treated in the
same manner as forfeitures described in Section 8.3(c). The amount of
Salary Deferral Contributions (and income or loss allocable thereto) to be
distributed to a Participant hereunder shall be reduced by any Salary
Deferral Contributions previously distributed to such Participant pursuant
to Section 4.3 in order to comply with the limitations of section 402(g)
of the Code. The unadjusted amount of any such reductions so distributed
or forfeited shall be treated as "annual additions" for purposes of
Section 7.5 relating to the limitations under section 415 of the Code.
(2) ADJUSTMENTS TO COMPLY WITH THE ACTUAL CONTRIBUTION
PERCENTAGE TEST. (A) ADJUSTMENT TO MATCHING CONTRIBUTIONS OF HIGHLY
COMPENSATED EMPLOYEES. If, as of the end of the Plan Year but after taking
into account the forfeiture of Matching Contributions made on behalf of
highly compensated employees pursuant to subparagraph (1)(B) above, the
Committee determines that neither of the tests set forth in clause (1) or
(2) of Section 4.5(b) is satisfied for such Plan Year, then the Committee
shall calculate a total amount by which Matching Contributions must be
reduced in order to satisfy either such test, in the manner prescribed by
section 401(m)(6)(B) of the Code (the "excess aggregate contributions
amount"). The amount to be reduced with respect to Participants who are
highly compensated employees shall be determined by first reducing the
Matching Contributions for each Participant whose actual dollar amount of
Matching Contributions for such Plan Year is highest until such reduced
dollar amount equals the next highest dollar amount of Matching
Contributions made for such Plan Year on behalf of any highly compensated
employee, or until the total reduction equals the excess aggregate
contributions amount. If further reductions are necessary then such
Matching Contributions on behalf of each Participant who is a highly
compensated employee and whose actual dollar amount of Matching
Contributions made for such Plan Year is the highest (determined after the
reduction
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described in the preceding sentence) shall be reduced in accordance with
the preceding sentence. Such reductions shall continue to be made to the
extent necessary to that the total reduction equals the excess aggregate
contributions amount.
(B) CORRECTIVE DISTRIBUTIONS AND FORFEITURES. With respect
to the Matching Contributions to be reduced on behalf of
Participants who are highly compensated employees as described in
subparagraph (2)(A) above, the Committee shall distribute within
2 1/2 months after the end of the Plan Year for which the adjustment
is made, if possible, but no later than the last day of the
subsequent Plan Year, the portion of such Matching Contributions
plus any income and minus any loss allocable thereto in which the
Participant would be vested if he or she terminated employment on the
last day of such Plan Year (or earlier if such Participant actually
terminated employment at any earlier date), and the portion of such
Matching Contributions in which the Participant would not be vested
plus any income and minus any loss allocable thereto shall be
forfeited. The amount of any income or loss allocable to any such
reductions to be so distributed or forfeited shall be determined
pursuant to applicable regulations promulgated by the U.S.
Department of Treasury. Any amounts forfeited pursuant to this
paragraph shall be treated in the same manner as forfeitures
described in Section 8.3(c). The unadjusted amount of any such
reductions so distributed shall be treated as "annual additions" for
purposes of Section 7.5 relating to the limitations under section 415
of the Code.
(3) ADJUSTMENTS TO COMPLY WITH THE AGGREGATE LIMIT. If, after
making the adjustments required by paragraphs (1) and (2) of this
subsection for a Plan Year, the Committee determines that the sum of the
Average Deferral Percentage and the Average Contribution Percentage for the
group consisting of Participants who are highly compensated employees
exceeds the Aggregate Limit for such Plan Year, then the Committee shall
adjust the Salary Deferral Contributions made for such Plan Year on behalf
of each Participant who is a highly compensated employee to the extent
necessary to eliminate such excess. Such adjustment shall be effected in
the same manner described in paragraph (1) of this subsection and in
accordance with section 401(k)(8)(B) of the Code. In the event that
further reductions are necessary, the Committee shall adjust the Matching
Contributions made pursuant to Section 4.4 for such Plan Year on behalf of
each Participant who is a highly compensated employee to the extent
necessary to eliminate such excess. Such adjustment shall be effected in
the same manner described in paragraph (2) of this subsection and in
accordance with section 401(m)(6)(B) of the Code.
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(f) DESIGNATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS AND
QUALIFIED MATCHING CONTRIBUTIONS. Each Plan Year, the Committee may require
some or all of the Employers to make, to the extent permitted by the
Secretary of the U.S. Department of Treasury, a "qualified nonelective
contribution," within the meaning of section 401(m)(4)(C) of the Code, or a
"qualified matching contribution," within the meaning of U.S. Treasury
Regulation Section 1.401(k)-1(b)(5), to the Plan for purposes of applying the
tests set forth in Section 4.5(a) or (b) (or both). Any qualified nonelective
contribution to the Plan shall be allocated to the accounts of those
Participants who are not highly compensated employees (as defined in Section
4.5(d)) for the Plan Year with respect to which such qualified nonelective
contribution is made and who are actively employed by the contributing
Employer on the date such contribution is made, beginning with the
Participant with the lowest Compensation for such Plan Year and allocating
the maximum amount permissible under Section 7.5 of the Plan before
allocating any portion of such qualified nonelective contribution to the
Participant with the next lowest Compensation. Such allocation shall
continue until the Plan satisfies the requirements in Section 4.5(a) and (b)
of the Plan or until the amount of such qualified nonelective contribution
has been completely allocated. Qualified matching contributions shall be
allocated to the accounts of Participants who are not highly compensated
employees (as defined in Section 4.5(d)) for the Plan Year with respect to
which such qualified matching contribution is made and who are actively
employed on the date such contribution is made as a percentage of all or a
portion of each such employee's Salary Deferral Contributions as shall be
designated by the Company.
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SECTION 4.6. LIMITATION ON EMPLOYER CONTRIBUTIONS. The
contributions of an Employer for any Plan Year shall not exceed the maximum
amount for which a deduction is allowable to such Employer for federal income
tax purposes for the fiscal year of such Employer that ends with or within
such Plan Year.
Any contribution made by an Employer by reason of a good faith
mistake of fact, or the portion of any contribution made by an Employer that
exceeds the maximum amount for which a deduction is allowable to such
Employer for federal income tax purposes by reason of a good faith mistake in
determining the maximum allowable deduction, shall upon the request of such
Employer be returned by the Trustee to the Employer. An Employer's request
and the return of any such contribution must be made within one year after
such contribution was mistakenly made or after the deduction of such excess
portion of such contribution was disallowed, as the case may be. The amount
to be returned to an Employer pursuant to this paragraph shall be the excess
of (i) the amount contributed over (ii) the amount that would have been
contributed had there not been a mistake of fact or a mistake in determining
the maximum allowable deduction. Earnings attributable to the mistaken
contribution shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned. If the return to the
Employer of the amount attributable to the mistaken contribution would cause
the balance of any Participant's account as of the date such amount is to be
returned (determined as if such date coincided with the close of a Plan Year)
to be reduced to less than what would have been the balance of such account
as of such date had the mistaken amount not been contributed, the amount to
be returned to the Employer shall be limited so as to avoid such reduction.
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ARTICLE 5
ROLLOVER CONTRIBUTIONS
SECTION 5.1. REQUIREMENTS FOR ROLLOVER CONTRIBUTIONS. If an Employee
receives an eligible rollover distribution (within the meaning of section
402(c)(4) of the Code) from a qualified trust (within the meaning of section
402(c)(8)(A) of the Code), then such Employee may contribute to this Plan an
amount which does not exceed the amount of such eligible rollover distribution.
If an Employee receives a distribution or distributions from an individual
retirement account (within the meaning of section 408 of the Code) and the
amount received represents the entire amount in such account and no amount in
such account is attributable to any source other than an eligible rollover
distribution or a "qualified total distribution" (within the meaning of section
402(a)(5)(E)(i) of the Code as in effect prior to January 1, 1993) and any
earnings on such a rollover contribution, then such Employee may contribute to
this Plan such distribution or distributions. An Employee may make a Rollover
Contribution pursuant to this Article prior to the date on which he or she
satisfies the eligibility requirement described in Section 3.1.
SECTION 5.2. DELIVERY OF ROLLOVER CONTRIBUTIONS. Any Rollover
Contribution made pursuant to this Article shall be delivered by the Participant
to the Committee and by the Committee to the Trustee on or before the 60th day
after the day on which the Participant receives the distribution, or on or
before such later date as may be prescribed by law. Any such contribution must
be accompanied by (i) a statement of the Participant that to the best of his or
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her knowledge the amount so transferred meets the conditions specified in this
Section and (ii) a copy of such documents as may have been received by the
Participant advising him or her of the amount of and the character of such
distribution. Notwithstanding the foregoing, the Committee shall not accept a
Rollover Contribution if in its judgment accepting such contribution would cause
the Plan to violate any provision of the Code or regulations promulgated by the
U.S. Department of Treasury.
SECTION 5.3. SPECIAL ACCOUNTING RULES FOR ROLLOVER CONTRIBUTIONS. An
Employee's Rollover Contribution shall be credited to such Employee's Rollover
Account as of the date on which such contribution is received by the Trustee.
If such contribution is made by an Employee prior to his or her becoming a
Participant, then until such time as the Employee becomes a Participant he or
she shall be deemed to be a Participant for all purposes of the Plan except for
the purposes of electing Salary Deferral Contributions and sharing in
allocations of Profit Sharing Contributions, Matching Contributions or any other
Employer contributions pursuant to Article 4. The "annual additions" to a
Participant's accounts, as defined in Section 7.5, shall not include any
Rollover Contribution made to the Plan pursuant to this Article.
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ARTICLE 6
TRUST AND INVESTMENT FUNDS
SECTION 6.1. TRUST. (a) IN GENERAL. A Trust created by the execution
of a trust agreement between the Company (acting on behalf of the Employers
pursuant to Section 12.4) and the Trustee has been established to receive, hold,
invest and dispose of the assets of the Trust Fund. All contributions under the
Plan shall be paid to the Trustee. The Trustee shall hold all monies and other
property received by it and invest and reinvest the same, together with the net
income therefrom, on behalf of the Participants collectively in accordance with
the provisions of the trust agreement. The Trustee shall make distributions
from the Trust Fund at such time or times to such person or persons and in such
amounts as the Committee directs in accordance with the Plan.
(b) BEFORE THE MERGER DATE. The trust created by the execution of a
trust agreement between Health Systems International, Inc. and the Trustee prior
to the Effective Date shall be the Trust with respect to the HSI Plan as amended
and restated as set forth in this Plan prior to the Merger Date and the trust
created by the execution of a trust agreement between FHC and the Trustee prior
to the Effective Date shall be the Trust with respect to the FHC Plan as amended
and restated as set forth in this Plan prior to the Merger Date.
SECTION 6.2. INVESTMENT FUNDS. (a) IN GENERAL. The Committee
shall cause the Trustee to establish, operate and maintain three or more
separate investment funds exclusively
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for the collective investment and reinvestment of moneys directed by the
Participants to be invested in such funds on their behalf. Additional
investment funds may be established as determined by the Committee from time
to time, in its sole discretion.
(b) COMPANY STOCK FUND. The Committee shall cause the Trustee to
establish, operate and maintain a Company Stock Fund. The assets of the Company
Stock Fund shall be invested primarily in shares of Company Stock and short-term
liquid investments in a commingled money market fund maintained by the Trustee,
to the extent determined by the Trustee to be necessary to satisfy such fund's
cash needs. In making purchases or sales of shares of Company Stock for the
Company Stock Fund, the Trustee shall purchase or sell shares of Company Stock
in the manner and in the proportion as prescribed by the Committee in accordance
with rules adopted for such purpose.
ARTICLE 7
PARTICIPANT ACCOUNTS
SECTION 7.1. PARTICIPANT ACCOUNTS AND INVESTMENT ELECTIONS. (a)
PARTICIPANT ACCOUNTS. The Committee shall maintain or cause to be maintained
separate accounts for each Participant. The accounts maintained for a
Participant, to the extent applicable, shall consist of (i) a Profit Sharing
Account, to which shall be credited all Profit Sharing Contributions made on
behalf of the Participant pursuant to Section 4.1, (ii) a Salary Deferral
Contributions Account,
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to which shall be credited all Salary Deferral Contributions made pursuant to
Section 4.2, (iii) a Matching Contributions Account, to which shall be
credited all Matching Contributions made pursuant to Sections 4.4, (iv) a
Rollover Account, to which shall be credited all Rollover Contributions made
pursuant to Article 5, (v) an After-Tax Account, to which shall be credited
all after-tax contributions transferred to the Plan from the FHC Plan and the
QualMed Plan, (vi) a Qualified Nonelective Contribution Account and (vii) a
Qualified Matching Contribution Account. Unless the context otherwise
requires, a Participant's "account balance" shall mean the aggregate value of
all separate accounts maintained for such Participant pursuant to the Plan
and Trust. A Participant shall be fully vested at all times in his or her
Salary Deferral Contributions Account, Rollover Account, After-Tax Account,
Qualified Nonelective Contribution Account and Qualified Matching
Contribution Account under the Plan. A Participant shall be vested in his or
her Profit Sharing Account and Matching Contributions Account only to the
extent provided in Section 8.3. Each account shall, to the extent
appropriate, be composed of (i) investment subaccounts in respect of each
investment fund to which amounts contributed under the Plan shall be credited
pursuant to subsections (b), (c) and (d) of this Section and (ii)
administrative subaccounts in respect of accounts transferred to the Plan
from other plans qualified under section 401(a) of the Code. Such accounts
and subaccounts shall be solely for accounting purposes, and there shall be
no segregation of assets of the Trust or of any separate investment fund
among separate accounts. The books of account, forms and accounting methods
used in the administration of Participants' accounts shall be the
responsibility of, and shall be subject to the supervision and control of,
the Committee.
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(b) INVESTMENT ELECTION. Except as set forth in Section 7.2, each
Participant, as part of his or her commencement of participation (or if
earlier, upon making a Rollover Contribution to the Plan as described in
Section 5.3), shall make an investment election that shall apply to the
investment of (i) Profit Sharing Contributions credited to such Participant's
account for Plan Years beginning on and after January 1, 1998 and any
earnings thereon, (ii) Salary Deferral Contributions made on such
Participant's behalf under the Plan, and any earnings thereon, (iii) Matching
Contributions made on such Participant's behalf under the Plan, and any
earnings thereon, (iv) Rollover Contributions made by the Participant under
the Plan and any earnings thereon, (v) after-tax contributions or other
contributions transferred to the Plan and any earnings thereon and (vi) any
qualified nonelective contributions or qualified matching contributions and
any earnings thereon. The Committee may require that a single investment
election apply to all such contributions, and earnings thereon, or may
prescribe rules for separate investment elections to be made with respect to
any such contributions and earnings. Such elections shall specify that such
contributions, and earnings thereon, be invested either (i) wholly in one of
the funds maintained or employed by the Trustee pursuant to Section 6.2(a) or
(ii) divided among such funds in multiples established by the Committee from
time to time. During any period in which no direction as to the investment
of a Participant's account is on file with the Committee, contributions made
by such Participant or on his or her behalf to the Plan shall be invested in
such manner as the Committee shall determine.
(c) CHANGE OF INVESTMENT ELECTION. Except as set forth in Section
7.2, a Participant may elect to change his or her investment election at such
intervals as may be
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determined by the Committee (but not less frequently than once during each
calendar quarter), in the time and the manner prescribed by the Committee.
Such change shall be limited to the investment choices then maintained or
employed by the Trustee pursuant to Section 6.2(a). A Participant's change
in an investment election shall apply to contributions and earnings thereon
made on behalf of or by the Participant under Article 4 or Article 5 prior to
such change, to future contributions made pursuant to such Articles, or both.
Any such change shall specify that such contributions be invested either (i)
wholly in one of the funds maintained pursuant to Section 6.2(a) or (ii)
divided among such funds in multiples established by the Committee from time
to time.
(d) ERISA SECTION 404(c) PLAN. The Plan is intended to meet the
requirements of section 404(c) of ERISA and the regulations thereunder, and the
provisions of the Plan shall be construed and interpreted to meet such
requirements.
SECTION 7.2. INVESTMENTS IN COMPANY STOCK FUND. (a) ELECTION OF
INVESTMENTS IN COMPANY STOCK FUND. Notwithstanding the provisions of Section
7.1:
(1) A Participant's election to invest any portion of his or her account
balance in the Company Stock Fund shall apply only to contributions
made to the Plan on and after the date such election becomes
effective.
(2) The percentage of any contribution that is invested in the Company
Stock Fund shall not exceed 20%, or such other percentage as may be
prescribed by the Committee from time to time.
(3) An Employee who is one of the 35 (or such other number selected by the
Compensation and Stock Option Committee) most senior officers of the
Company and its subsidiaries whose compensation is subject to approval
by the
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Compensation and Stock Option Committee pursuant to the by-laws
of the Company shall not be permitted to elect the investment of any
portion of his or her account balance in the Company Stock Fund.
(4) Profit Sharing Contributions credited to a Participant's account for
Plan Years beginning prior to January 1, 1998 shall be invested in the
Company Stock Fund, and shall not be subject to the election of such
Participant.
(b) CREDITING OF COMPANY STOCK FUND SUBACCOUNT. As of the Valuation
Date coinciding with or next following the date an amount is credited to a
Company Stock Fund subaccount, such subaccount shall be credited with the number
of whole and fractional shares of Company Stock which have a fair market value
as of such Valuation Date equal to the amount credited to such subaccount.
SECTION 7.3. VALUATION OF FUNDS AND PLAN ACCOUNTS. The value of an
investment fund as of any Valuation Date shall be the market value of all assets
(including any uninvested cash) held by the fund as determined by the Trustee,
reduced by the amount of any accrued liabilities of the fund on such Valuation
Date. The Trustee's determination of market value shall be binding and
conclusive upon all parties.
The value of a Participant's Plan accounts as of any Valuation Date
shall be the sum of the values of his or her investment subaccounts in each of
the Participant's Profit Sharing Account, Salary Deferral Contributions Account,
Matching Contributions Account, Rollover Account, After-Tax Account, Qualified
Nonelective Contributions Account and Qualified Matching Contributions Account.
The Committee shall furnish to each Participant,
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not less frequently than annually, a statement setting forth the balances in
the Plan accounts of such Participant.
SECTION 7.4. ALLOCATION OF CONTRIBUTIONS AMONG PARTICIPANTS'
ACCOUNTS. (a) ALLOCATION OF PROFIT SHARING CONTRIBUTIONS. A portion of a
Profit Sharing Contribution made by an Employer pursuant to Section 4.1 for a
Plan Year shall be allocated to the Profit Sharing Account of each Participant
who was an Employee of the Employer that made such Profit Sharing Contribution
and who either (A) was an Eligible Employee on the last day of the Plan Year or
(B) terminated employment with the Employer during the Plan Year on account of
death, Disability or retirement on or after attaining age 55. Such portion
shall be allocated to each such Participant's Profit Sharing Account in
proportion to the Participant's Compensation payable by such Employer for the
Plan Year compared to the Compensation of all such Participants employed by such
Employer. Profit Sharing Contributions shall be allocated to the Profit Sharing
Account of each such Participant as of the date on which such contributions are
delivered to the Trustee.
(b) ALLOCATION OF SALARY DEFERRAL CONTRIBUTIONS. Salary Deferral
Contributions made pursuant to Section 4.2 shall be allocated to the Salary
Deferral Contributions Account of each Participant for whom such contributions
are made as of the date on which such contributions are delivered to the
Trustee.
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(c) ALLOCATION OF MATCHING CONTRIBUTIONS. Matching Contributions
made pursuant to Section 4.4 shall be allocated to the Matching Contributions
Account of each Participant for whom such contributions are made as of the date
on which such contributions are delivered to the Trustee.
(d) ALLOCATION OF ROLLOVER CONTRIBUTIONS. Subject to the special
accounting rules contained in Section 5.3, a Rollover Contribution made pursuant
to Article 5 shall be allocated to the Rollover Account of the Participant who
makes such contribution as soon as practicable after the date on which such
contribution is delivered to the Trustee.
(e) ALLOCATION OF FORFEITURES. The excess, if any, of (i) the
amounts forfeited in a Plan Year pursuant to Section 8.3(c) by all Participants
employed by an Employer over (ii) the amount of such forfeitures applied to
restore previous forfeitures as provided in Section 9.3(b) shall be allocated
and credited to Profit Sharing Accounts in the next following Plan Year in the
manner described in subsection (a) above, so as to reduce the amount which such
Employer contributes to the Plan in such Plan Year pursuant to Section 4.1. If
such forfeited amounts exceed the amount of such Employer's Profit Sharing
Contribution for such Plan Year, then any remaining forfeited amounts shall be
allocated to the Matching Contribution Accounts of Participants employed by such
Employer during such Plan Year, in the manner described in subsection (c) above,
so as to reduce the amount which such Employer contributes to the Plan for such
Plan Year pursuant to Section 4.4.
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SECTION 7.5. STATUTORY LIMITATIONS ON ALLOCATIONS TO ACCOUNTS.
Notwithstanding any other provision of the Plan, the amount allocated to a
Participant's accounts under the Plan for each Plan Year shall be limited as
follows:
(1) the aggregate annual additions to such accounts and to the
Participant's accounts in all other defined contribution plans maintained by an
employer shall not exceed the lesser of (A) $30,000 (as adjusted in accordance
with section 415(d) of the Code) and (B) twenty-five percent (25%) of the
Participant's compensation for such Plan Year; and
(2) with respect to Plan Years commencing prior to January 1, 2000,
the sum of (A) and (B) below shall not exceed 1.
(A) The sum of the separate amounts determined as follows for each
Plan Year during which the Participant shall have participated in the Plan
or in any other defined contribution plans maintained by an employer
(computed as of the close of the Plan Year for which such computations are
made):
(I) the aggregate annual additions to the Participant's accounts
in all of such plans for each such Plan Year, divided by
(II) the lesser of (i) 125 percent (125%) of the maximum dollar
amount under section 415(c)(1)(A) of the Code, and (ii) 35 percent
(35%) of the Participant's compensation, for each such Plan Year,
respectively.
(B) The aggregate projected annual benefit of the Participant under
all defined benefit plans maintained by an employer (determined as of the
close of the Plan Year for which such computations are made) divided by the
lesser of
(I) 125 percent (125%) of the maximum dollar limitation
contained in section 415(b)(1)(A) of the Code (as adjusted for
increases in the cost-of-living pursuant to section 415(d) of the
Code), and
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(II) 140 percent (140%) of the average of the Participant's
compensation for the three consecutive calendar years of his or her
participation in such defined benefit plans during which his or her
compensation was the highest.
If as a result of the allocation of amounts to Participant's accounts
pursuant to Section 7.4 for a Plan Year, a reasonable error in estimating a
Participant's compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of section 402(g)(3) of the Code) that
may be made with respect to a Participant under the limits of section 415 of the
Code, or under other limited facts and circumstances as determined by the
Commissioner of Internal Revenue, the annual additions to a Participant's
accounts would exceed the limitations set forth above for any Plan Year:
(i) Salary Deferral Contributions made pursuant to Section 4.2 (plus
any income and minus any loss allocable thereto) shall be distributed to
the Participant to the extent necessary to comply with such limitations,
and if such limitations would still be exceeded after returning such
contributions,
(ii) the amount of annual additions in excess of such limitations
(after making the distributions under clause (i) above) shall be held in a
segregated suspense account which shall be invested but shall not be
credited or debited with its own gains or losses and shall not share in
gains or losses of the Trust, and which shall be treated in each succeeding
Plan Year until exhausted as a Matching Contribution or Profit Sharing
Contribution, thereby reducing amounts actually contributed by the Employer
for such year. The balance, if any, in such suspense account shall be
returned to the Employer upon termination of the Plan only if the
allocation upon Plan termination of such amount to Participants would cause
all Participants to receive annual additions in excess of the limitations
of section 415 of the Code.
For purposes of this Section 7.5, the "annual additions" for a Plan
Year to a Participant's accounts under the Plan and under any other defined
contribution plan maintained by an employer is the sum during such Plan Year of:
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(i) the value of allocations made to such Participant's accounts
pursuant to Section 7.4 including any Excess Salary Deferral Contributions
distributed in accordance with Section 4.3),
(ii) the amount of all other employer contributions (within the
meaning of section 415(c) of the Code) and forfeitures, if any, allocated
to such Participant's accounts under all other defined contribution plans
maintained by an employer,
(iii) the amount of contributions by the Participant to any such plan
(excluding any rollover contributions as defined in sections 402(c),
403(a)(4), 403(b)(8) and 408(d)(3) of the Code), and
(iv) contributions allocated on behalf of the Participant to any
individual medical benefit account that is part of a pension or annuity
plan within the meaning of section 415(l) of the Code.
For purposes of this Section 7.5, the terms "compensation," "defined
contribution plan," "projected annual benefit" and "defined benefit plan"
shall have the meanings set forth in section 415 of the Code (as amended from
time to time), and the term "employer" shall include all corporations and
entities determined under section 414(b) and (c) of the Code as modified by
section 415(h) of the Code.
SECTION 7.6. CORRECTION OF ERROR. If it comes to the attention of
the Committee that an error has been made in any of the allocations
prescribed by this Article 7 or in the crediting of any amount to a
Participant's account, then appropriate adjustment shall be made to the
accounts of all Participants and designated Beneficiaries that are affected
by such error, except that no adjustment need be made with respect to any
Participant or Beneficiary whose account has been distributed in full prior
to the discovery of such error.
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ARTICLE 8
WITHDRAWALS, LOANS AND DISTRIBUTIONS
SECTION 8.1. WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT. (a)
WITHDRAWALS OF AFTER-TAX AND ROLLOVER ACCOUNTS. While an Employee, a
Participant may at any time, by instructions at the time and in the manner
prescribed by the Committee, withdraw all or any part of the value of the
balances credited to his or her After-Tax Account and Rollover Account. A
Participant shall not be permitted to withdraw any portion of his or her
After-Tax Account transferred to the Plan from the FHC Plan, or earnings thereon
more frequently than once during any calendar year.
(b) WITHDRAWALS AFTER AGE 59 1/2. Upon attaining age 59 1/2, a
Participant may at any time, by instructions at the time and in the manner
prescribed by the Committee, withdraw any portion of the Participant's vested
interest in his or her accounts under the Plan.
(c) HARDSHIP WITHDRAWALS. A Participant who has incurred a
financial hardship while he or she is an Employee and who has not attained
age 59 1/2 may withdraw any portion of the balance of his or her Salary
Deferral Contributions Account and any portion of the Participant's vested
interest in his or her Matching Contributions Account in an amount necessary
to satisfy the financial hardship. The determination of whether a financial
hardship exists and the amount required to be distributed to satisfy the need
created by the hardship will
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be made by the Committee in a uniform and non-discriminatory manner according
to the following rules:
(A) A financial hardship shall be deemed to exist if the Participant
certifies to the Committee that the financial need is on account of:
(i) expenses for medical care described in section 213(d) of
the Code previously incurred by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined in section
152 of the Code) or necessary for these persons to obtain medical care
described in section 213(d) of the Code;
(ii) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(iii) payment of tuition, related educational fees, and room and
board expenses, for the next 12 months of post-secondary education for
the Participant, the Participant's spouse, the Participant's children,
or any dependents of the Participant (as so defined);
(iv) payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or foreclosure
on the mortgage on that residence; or
(v) such other immediate and heavy financial needs as determined
by the Commissioner of the Internal Revenue Service and announced by
publication of revenue rulings, notices or other documents of general
applicability.
(B) A distribution shall be deemed necessary to satisfy a financial
need if (i) the distribution is not in excess of the amount of the
immediate and heavy financial need to the Participant, as determined by the
Committee, and (ii) the Participant has obtained all distributions
(including withdrawals from the Participant's After-Tax Account and
Rollover Account), other than hardship distributions, and all nontaxable
loans currently available under all plans maintained by the Participant's
Employer, if any. The
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Participant shall be required to submit any supporting documentation as
may be requested by the Committee.
(C) Notwithstanding any provision of the Plan to the contrary, a
Participant who receives a hardship distribution hereunder shall be
prohibited from making any Salary Deferral Contributions under Section 4.2
until the first payroll period following the first Entry Date which is
at least 12 months after the date of the hardship distribution. Such a
Participant may elect to resume making Salary Deferral Contributions in
accordance with the procedures set forth in Section 4.2(a). For purposes
of Section 4.3, the applicable limit for the Plan Year following the Plan
Year in which the hardship distribution is made shall be the limit as in
effect under section 402(g) of the Code for such year less the amount of
Salary Deferral Contributions made by the Participant under Section 4.2
during the Plan Year in which the hardship distribution is made.
(D) Notwithstanding anything herein to the contrary, earnings after
December 31, 1988 credited to a Participant's Salary Deferral Contributions
Account shall not be available for withdrawal pursuant to this subsection.
The Participant shall give the Committee notice of such Participant's
intent to make any such withdrawal permitted by this subsection in the time
and manner prescribed by the Committee.
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(d) MISCELLANEOUS RULES RELATING TO WITHDRAWALS. For purposes of
determining the value of a Participant's account balance under the Plan for
purposes of this Section, the Participant's account balance shall be valued as
of the date the Participant's request for a withdrawal is received by the
Committee in acceptable form and substance, or such other date prescribed by the
Committee in conjunction with the Plan's recordkeeper (such date to be applied
in a uniform manner), and shall be paid within a reasonable period of time
thereafter. All withdrawals under this Section shall be paid in cash. For
purposes of this paragraph, the value of a Participant's accounts shall be
determined by excluding the portion credited to the Participant's loan fund
subaccount under Section 8.2(d), if any. To the extent permitted by the
Committee, a Participant who elects a withdrawal under this Section shall
designate the extent to which any such withdrawal shall be made from the various
investment funds in which his or her account balance is invested, but absent any
such designation such withdrawal shall be made from such funds as the Committee
shall, in its sole discretion, determine. The amount of any withdrawal pursuant
to this Section shall not be less than $500 or, if lesser, the value of the
Participant's account from which the withdrawal is made. Notwithstanding the
foregoing, a Participant who is one of the 35 (or such other number selected by
the Compensation and Stock Option Committee) most senior officers of the Company
and its subsidiaries whose compensation is subject to approval by the
Compensation and Stock Option Committee pursuant to the by-laws of the Company
shall not be permitted to elect a withdrawal pursuant to this Section 8.1 from
such Participant's Profit Sharing Contributions Account to the extent such
account is invested in the Company Stock Fund.
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SECTION 8.2. LOANS TO PARTICIPANTS. (a) MAKING OF LOANS. Subject
to the restrictions set forth in this Section, the Committee shall establish a
loan program whereby any Participant who is an Employee may request, by prior
written application to the Committee, or by such other procedures established by
the Committee, to borrow funds from the Plan. The principal balance of such
loan shall be not less than $1,000 and shall not exceed the lesser of (1) 50
percent (50%) of the aggregate of the Participant's vested account balances as
of the Valuation Date coinciding with or immediately preceding the day on which
the loan is made, and (2) $50,000, reduced by the excess, if any, of the highest
outstanding loan balance of the Participant under all plans maintained by the
Employer during the period of time beginning one year and one day prior to the
date such loan is to be made and ending on the date such loan is to be made over
the outstanding balance of loans from all such plans on the date on which such
loan was made.
(b) RESTRICTIONS. Amounts equal to any such loan shall be debited
proportionately from each of the Participant's accounts and investment
subaccounts (other than subaccounts invested in the Company Stock Fund), subject
to any other ordering rules adopted by the Committee. Each loan approved by the
Committee shall be subject to the loan program and only upon the following terms
and conditions:
(1) The period for repayment of the loan shall be arrived at by
mutual agreement between the Committee and the Participant, but such period
shall not exceed five years from the date of the loan; PROVIDED, HOWEVER,
that if the purpose of the loan, as determined by the Committee, is to
acquire any dwelling unit that within a reasonable period of time is to be
used as the principal residence of the Participant,
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then such period for repayment may exceed 5 years to the extent permitted
by the Committee.
(2) Each loan shall be evidenced by the Participant's collateral
promissory note for the amount of the loan, with interest, payable to the
order of the Trustee, and shall be secured by an assignment of a portion of
the Participant's vested benefit under the Plan at least equal to the
initial principal amount of such loan and such other collateral as may be
required by the Committee.
(c) APPLICABILITY. The provisions of this Section 8.2 shall apply to
any person who is a Participant but who is not an Employee and any Beneficiary
of a deceased Participant if such Participant or Beneficiary is a "party in
interest" as defined in section 3(14) of ERISA. The grant of a loan pursuant to
this Section 8.2 and the terms and conditions thereof shall apply to any such
Participant or Beneficiary in the same manner as to a Participant who is an
Employee, except that the requirements of Section 8.2(b)(2) shall be met with
respect to each such Participant and Beneficiary if such Participant or
Beneficiary consents to have such loan repaid in substantially equal
installments as determined by the Committee, but not less frequently than
quarterly.
SECTION 8.3. DISTRIBUTION UPON TERMINATION OF EMPLOYMENT.
(a) VESTING. Except as provided in Sections 8.3(b) and 8.9, a Participant or
his or her designated Beneficiary, as the case may be, shall be entitled to
receive the Participant's entire account balance as soon as administratively
practicable following the date on which the Participant's termination of
employment occurs if the Participant terminates employment on account of death,
Disability or after attainment of age 55. If a Participant terminates
employment for any other reason, then the Participant shall be entitled to the
entire balance of the Participant's Salary
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Deferral Contributions Account, Rollover Account, After-Tax Account,
Qualified Nonelective Contributions Account and Qualified Matching
Contributions Account, and a percentage of his or her Profit Sharing Account
and Matching Contributions Account determined by reference to the number of
the Participant's years of Service, in accordance with the following
schedule:
<TABLE>
<CAPTION>
Percentage of Profit Sharing and
Years of Service Matching Contributions Accounts
---------------- --------------------------------
<S> <C>
less than 1 0%
at least 1, but less than 2 25%
at least 2, but less than 3 50%
at least 3, but less than 4 75%
4 or more 100%
</TABLE>
(b) GRANDFATHERED VESTING SCHEDULES. (i) Each Eligible Employee who
was a participant in the HSI Plan immediately prior to the Effective Date and
has completed three or more years of service (within the meaning of U.S.
Treasury Regulations promulgated under section 411(a)(10) of the Code) as of
November 1, 1997 shall be fully vested in his or her Matching Contributions
Account. Each Eligible Employee who was a participant in the HSI Plan
immediately prior to the Effective Date, but who has completed fewer than three
years of service as of November 1, 1997, shall be fully vested in the balance of
his or her Matching Contributions Account determined as of the Effective Date.
Notwithstanding the foregoing, the portion of any such Matching Contribution
Account attributable to matching contributions under the QualMed Plan made prior
to January 1, 1995 shall become vested pursuant to subsection (a).
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(ii) Each Eligible Employee who was a participant in the FHC Plan
immediately prior to the Effective Date and had commenced employment with an
employer in the FHC Plan prior to January 1, 1995 shall be vested in his or her
Profit Sharing Account and Matching Contributions Account in accordance with the
following schedule:
<TABLE>
<CAPTION>
Percentage of Profit Sharing and
Years of Service Matching Contributions Accounts
---------------- --------------------------------
<S> <C>
less than 1 0%
at least 1, but less than 2 33-1/3%
at least 2, but less than 3 66-2/3%
3 or more 100%
</TABLE>
The vesting schedule set forth in this paragraph (ii) shall not apply, however,
to any participant in the FHC Plan who was employed at any time by Intergroup
HealthCare Corporation of Utah, Intergroup HealthCare Corporation of Arizona,
Gem Holding Company (or any of its affiliates) or CareFlorida.
(c) FORFEITURES. If upon a Participant's termination of employment
the Participant is not fully vested in the balance of his or her Profit Sharing
Account or Matching Contributions Account, then the difference between the value
of each such account and the amount distributable with respect thereto under
subsection (a) or (b) of this Section shall be charged to such account and
forfeited. Such forfeiture shall occur as of the Valuation Date coinciding with
or next following the earlier of (i) the date the Participant takes a
distribution of his or her vested interest in such account as provided in
Section 8.4 and (ii) the date as of which the Participant incurs a Break in
Service of five consecutive years. For purposes of the
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preceding sentence, a Participant who does not have a vested interest in his
or her Profit Sharing Account or Matching Contributions Account (or both)
shall be deemed to have received a distribution of such account as of the
date of such Participant's termination of employment. If such Participant is
reemployed prior to incurring a Break in Service of five consecutive years,
such forfeiture shall be reinstated as prescribed in Section 9.3(b).
SECTION 8.4. TIME AND FORM OF DISTRIBUTION UPON TERMINATION OF
EMPLOYMENT. (a) NORMAL FORM OF DISTRIBUTION. Unless a Participant or a
Beneficiary elects an optional form of distribution as described in subsection
(b), any distribution upon termination of a Participant's employment shall be
made by the Trustee at the direction of the Committee by payment in a lump sum
in cash.
(b) OPTIONAL FORMS OF DISTRIBUTION. (1) A Participant who has
completed at least one Hour of Service after August 22, 1984 and whose Plan
accounts contain amounts transferred to the HSI Plan prior to the Merger Date
from a qualified plan (within the meaning of sections 501(a) and 401(a) of
the Code) may elect to receive a distribution of the vested portion of his or
her Plan accounts in the form of a single premium annuity in an amount equal
to such transferred amounts. Such an annuity shall provide for payments over
the life of the Participant, if the Participant is not married, or the joint
lives of the Participant and the Participant's spouse if the Participant is
married. An annuity providing for payments over the joint lives of the
Participant and the Participant's spouse shall provide for equal monthly
payments for the Participant's life, and after the Participant's death, for
monthly payments equal
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to 50 percent (50%) of such payments for the life of the Participant's
spouse. A Participant who elects a distribution in the form of an annuity
shall be subject to the election procedures described in Section 8.5.
(2) A Participant who immediately prior to the Merger Date was a
participant in the FHC Plan and who on the Merger Date is a Participant in the
Plan may elect to receive a distribution of the vested portion of his or her
Plan accounts in an amount equal to the Participant's account balance in the FHC
Plan immediately prior to the Merger Date in a series of quarterly, semiannual
or annual installments of substantially nonincreasing designated amounts over a
period of years certain. The amount of each installment payment shall be
adjusted, in accordance with the payment frequency elected by the Participant,
so that the Participant's account is exhausted as of the end of the payment
period.
(3) A Participant who (i) immediately prior to the Merger Date was a
participant in the FHC Plan, (ii) participated in the FHC Plan before January 1,
1997, and (iii) is a Participant in the Plan on the Merger Date may elect to
receive a distribution hereunder in the form of a single premium annuity in an
amount equal to balance of the Participant's Plan accounts on the Merger Date.
Such an annuity shall provide for payments over the life of the Participant or
the joint lives of the Participant and a Beneficiary designated by the
Participant. An annuity providing for payments over the joint lives of the
Participant and the Participant's Beneficiary shall provide for equal monthly
payments for the Participant's life, and after the Participant's death, for
monthly payments equal to 50 percent (50%) of such payments for the
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life of the Participant's Beneficiary. A Participant who elects a
distribution in the form of an annuity shall be subject to the election
procedures described in Section 8.5.
(4) A Participant who (i) immediately prior to the Merger Date was a
participant in the FHC Plan with an account balance attributable to his or her
employment by Managed Health Network, Inc. prior to January 1, 1997 and (ii) is
a Participant in the Plan on the Merger Date may elect to have the balance of
his or her Plan accounts on the Merger Date be used to purchase one of the
following two types of annuity contracts:
(A) A ten-year certain and life annuity providing equal monthly
payments for the Participant's life, and in the event the Participant dies
before 120 monthly payments have been paid, annuity payments in the same
amount to the Participant's Beneficiary commencing on the first day of the
month following the month in which the Participant's death occurs and
continuing until an aggregate of 120 monthly payments have been made to the
Participant and the Participant's Beneficiary.
(B) A single premium annuity providing for payments over the life
of the Participant, if the Participant is not married, or the joint lives
of the Participant and the Participant's spouse if the Participant is
married. An annuity providing for payments over the joint lives of the
Participant and the Participant's Beneficiary shall provide for equal
monthly payments for the Participant's life, and after the Participant's
death, for
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monthly payments equal to 100 percent (100%) of such payments for the
life of the Participant's Beneficiary.
A Participant who elects an annuity contract described in either paragraph (A)
or (B) shall be subject to the election procedures described in Section 8.5.
(c) SMALL BENEFITS PAYABLE IN LUMP SUM. Notwithstanding any
provision of the Plan to the contrary, if the vested portion of a Participant's
Plan accounts does not exceed $5,000 (or such other amount prescribed by section
411(a)(11) of the Code) (such amount referred to herein as the "small benefit
amount") and has not exceeded the small benefit amount at the time of any prior
Plan distributions, then such balance shall be distributed in a lump sum cash
payment as soon as administratively practicable after the Participant's
termination of employment.
(d) TIME OF DISTRIBUTION. Except as provided in Section 8.9, Upon a
Participant's termination of employment, the payment of a lump sum shall be
made, or installment or annuity payments shall commence, as the case may be, as
soon as administratively feasible on or after the date on which such termination
of employment occurs or at such later time as the Participant or his or her
Beneficiary, as the case may be, shall elect, which election may be changed as
of any Valuation Date by advance written notice to the Committee, PROVIDED,
HOWEVER that:
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(1) subject to Section 8.4(c), no payments shall be made before the
Participant's 65th birthday unless the Participant has consented in
writing;
(2) distributions commencing after the Participant's death shall be
completed within five years after the death of the Participant, except that
(i) if the Participant's Beneficiary is the Participant's spouse,
distribution may be deferred until the date on which the Participant would
have attained age 70-1/2 had he or she survived and (ii) if the
Participant's Beneficiary is a natural person other than the Participant's
spouse and distributions commence not later than one year after the
Participant's death, such distributions may be made over a period not
longer than the life expectancy of such Beneficiary. If at the time of the
Participant's death, distribution of the Participant's benefit has
commenced, the remaining portion of the Participant's benefit shall be paid
in the manner elected by the Participant's Beneficiary, but at least as
rapidly as was the method of distribution being used prior to the
Participant's death;
(3) in the case of a Participant who does not elect any distribution
to which such Participant becomes entitled upon termination of employment,
distribution shall be made to such Participant by payment in a lump sum no
later than 60 days after the end of the Plan Year which contains the later
of (i) the date of the Participant's termination of employment and (ii) the
Participant's 65th birthday; and
(4) with respect to a Participant who continues in employment after
attaining age 70-1/2, distribution of the Participant's account balance
shall commence no later than the Participant's required beginning date.
For purposes of this paragraph, the term "required beginning date" shall
mean (i) with respect to a Participant who is a 5%-owner (within the
meaning of section 416(i) of the Code), April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2 and
(ii) with respect to any other Participant, April 1 of the calendar year
following the calendar year in which the Participant retires. A
Participant who (i) is not a 5%-owner, (ii) attained age 70-1/2 before 1997
and (iii) remains in employment with an Employer shall be permitted to
elect to cease receiving distributions while the Participant remains in
employment with an Employer. If such distributions are paid in the form of
a joint and survivor annuity, however, a Participant may elect to cease
such distribution only if the spousal consent and other applicable
requirements of sections 401(a)(11) and 417 of the Code are satisfied.
Distributions made under this paragraph shall be made in the form of
installment payments in the minimum amount required by section 401(a)(9) of
the Code over a period equal to the life of the Participant, or if
applicable, the joint lives of such Participant and the Participant's
Beneficiary. Unless the Participant elects otherwise prior to the date on
which payment of installments commence pursuant to this paragraph, such
period shall be recalculated annually to the extent permitted by
regulations promulgated by the U.S. Department of Treasury.
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(e) DIRECT ROLLOVER OPTION. In the case of a distribution that is an
"eligible rollover distribution" within the meaning of section 402(c)(4) of the
Code, a distributee may elect that all or any portion of such distribution to
which he or she is entitled shall be directly transferred from the Plan to an
individual retirement account or annuity described in section 408 of the Code,
to another retirement plan qualified under section 401(a) of the Code (the terms
of which permit the acceptance of rollover distributions) or to an annuity plan
described in section 403(a) of the Code; PROVIDED, HOWEVER, that if the
distributee is a surviving spouse of a Participant, such distribution may be
transferred only to an individual retirement account or annuity.
Notwithstanding the foregoing, a distributee shall not be entitled to elect to
have an eligible rollover distribution transferred pursuant to this subsection
(i) if the total of all eligible rollover distributions with respect to such
distributee for the Plan Year is not reasonably expected to equal at least $200,
or (ii) in the case of a partial direct rollover, the portion so rolled over
equals at least $500. For purposes of this subsection, the term "distributee"
shall mean (i) a Participant, (ii) an alternate payee (within the meaning of
section 414(p)(8) of the Code) with respect to a Participant under a qualified
domestic relations order or (iii) a surviving spouse of a Participant.
(f) VALUATION OF ACCOUNTS. For purposes of determining the value of
a Participant's account balance under the Plan for purposes of this Section, the
Participant's account balance shall be valued as of the date the Participant's
request for a distribution is received by the Committee in acceptable form and
substance, or such other date prescribed by
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the Committee in conjunction with the Plan's recordkeeper (such date to be
applied in a uniform manner).
SECTION 8.5. SPECIAL RULES RELATING TO ELECTION OF ANNUITY FORM OF
BENEFIT. The provisions of this Section shall apply only to a Participant who
elects to receive payment of his or her account in an optional annuity form of
benefit described in Section 8.4.
(a) QJSA NOTICE. No less than 30 days (or such shorter period as may
be permitted by regulations promulgated by the U.S. Department of Treasury, and
as determined by the Committee) and no more than 90 days before the date of
distribution, the Committee shall give the Participant by mail or personal
delivery written notice a general description of the single premium annuity, a
general description of the circumstances under which a single premium annuity
contract will be purchased and general information on the amount of each payment
under a typical single premium annuity contract. Such notice also shall advise
the Participant that, upon written request to the Committee prior to the end of
his or her election period, the Participant shall be given a written explanation
in nontechnical language of the terms and conditions of the single premium
annuity contract, of the other methods of distribution available pursuant to
Section 8.4 and of the amount of each payment that he or she would be entitled
to receive under such a contract or under the other methods of distribution.
Such explanation shall be mailed or personally delivered to the Participant
within 30 days from the date the Participant's written request is received by
the Committee and the Participant's election period shall end no earlier than 90
days after such explanation is so mailed or delivered.
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(b) QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. If the Participant is
married and dies after making an election to have his or her account distributed
in an annuity form of benefit but prior to his or her annuity starting date,
then such Participant's account shall be applied to purchase a single premium
annuity contract providing for payment over the lifetime of the Participant's
surviving spouse. Notwithstanding the foregoing, the Participant's surviving
spouse may elect, in the time and manner prescribed by the Committee, to receive
payment of the Participant's account in the form of a single sum, in lieu of a
single premium annuity contract.
(c) ELECTION AND WAIVER PROCEDURES. A Participant may, subject to
the last sentence of this paragraph, revoke the annuity form of distribution
provided under the Plan at any time during the 90-day period ending on the
Participant's benefit commencement date (the "election period"). Such a
revocation shall be made by delivering a written notice describing the election,
change or revocation to the Committee on a form provided by the Committee for
this purpose; PROVIDED, HOWEVER, that if the Participant has been married for
the one-year period ending on his or her benefit commencement date, and as a
result of such revocation, the Participant's spouse would not be entitled to
receive a survivor's benefit at least equal to that provided by the 50 percent
(50%) joint and survivor annuity form of benefit, such election shall not be
effective unless it shall have been consented to, at the time of such election,
revocation or change, in writing by the Participant's spouse and such consent
acknowledges the effect of such revocation and is witnessed by either a Plan
representative or a notary public, or it is established to the satisfaction of
the Committee that such consent cannot be obtained because the
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Participant's spouse cannot be located or such other circumstances as may be
prescribed in regulations promulgated by the U.S. Department of Treasury.
SECTION 8.6. DESIGNATION OF BENEFICIARY. Each Participant shall have
the right to designate a Beneficiary or Beneficiaries (who may be designated
contingently or successively and that may be an entity other than a natural
person) to receive any distribution to be made under Section 8.3 upon the death
of such Participant or, in the case of a Participant who dies subsequent to
termination of his or her employment but prior to the distribution of the entire
amount to which such Participant is entitled under the Plan, any undistributed
balance to which such Participant would have been entitled, PROVIDED, HOWEVER,
that no such designation (or change thereof) shall be effective if the
Participant was married through the one-year period ending on the date of the
Participant's death unless such designation (or change thereof) was consented to
at the time of such designation (or change thereof) by the person who was the
Participant's spouse during such period, in writing, acknowledging the effect of
such consent and witnessed by a notary public or a Plan representative, or it is
established to the satisfaction of the Committee that such consent could not be
obtained because the Participant's spouse cannot be located or such other
circumstances as may be prescribed in Regulations. Subject to the preceding
sentence, a Participant may from time to time, without the consent of any
Beneficiary, change or cancel any such designation. Such designation and each
change therein shall be made in the form prescribed by the Committee and shall
be filed with the Committee. If (i) no Beneficiary has been named by a deceased
Participant, (ii) such designation is not effective pursuant to the proviso
contained in the first sentence of this Section, or (iii) the
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designated Beneficiary has predeceased the Participant, any undistributed
balance of the deceased Participant's account shall be distributed by the
Trustee at the direction of the Committee (a) to the surviving spouse of such
deceased Participant, if any, or (b) if there is no surviving spouse, to the
then living children, if any, of the Participant in equal shares, or (c) if
there are no such children, to the executor or administrator of the estate of
such deceased Participant. The marriage of a Participant shall be deemed to
revoke any prior designation of a Beneficiary made by him or her and a
divorce shall be deemed to revoke any prior designation of the Participant's
divorced spouse if written evidence of such marriage or divorce shall be
received by the Committee before distribution of the Participant's account
balance has been made in accordance with such designation. If within a
period of three years following the death or other termination of employment
of any Participant the Committee in the exercise of reasonable diligence has
been unable to locate the person or persons entitled to benefits under this
Article 8, the rights of such person or persons shall be forfeited, PROVIDED,
HOWEVER, that the Plan shall reinstate and pay to such person or persons the
amount of the benefits so forfeited upon a claim for such benefits made by
such person or persons. The amount to be so reinstated shall be obtained
from the total amount that shall have been forfeited pursuant to this Section
8.6 during the Plan Year that the claim for such forfeited benefit is made.
If the amount to be reinstated exceeds the amount of such forfeitures, the
Employer in respect of whose Employee the claim for forfeited benefit is made
shall make a contribution in an amount equal to the remainder of such excess.
Any such contribution shall be made without regard to whether or not the
limitations set forth in Section 4.6 will be exceeded by such contribution.
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SECTION 8.7. DISTRIBUTIONS TO MINOR AND DISABLED DISTRIBUTEES.
Any distribution under this Article that is payable to a distributee who is a
minor or to a distributee who, in the opinion of the Committee, is unable to
manage his or her financial affairs by reason of illness or mental
incompetency may be made to or for the benefit of any such distributee at
such time consistent with the provisions of Section 8.4 and in such of the
following ways as the legal representative of such distributee shall direct:
(a) directly to any such minor distributee if, in the opinion of such legal
representative, he or she is able to manage his or her financial affairs, (b)
to such legal representative, (c) to a custodian under a Uniform Gifts to
Minors Act for any such minor distributee, or (d) to some near relative of
any such distributee to be used for the latter's benefit. Neither the
Committee nor the Trustee shall be required to see to the application by any
third party other than the legal representative of a distributee of any
distribution made to or for the benefit of such distributee pursuant to this
Section.
SECTION 8.8. MISSING PERSON. If within a period of three years
following the death or other termination of employment of any Participant the
Committee in the exercise of reasonable diligence has been unable to locate
the person or persons entitled to benefits under this Article 8, then the
rights of such person or persons shall be forfeited, and, subject to the
following sentence, the amount so forfeited shall be used to reduce the
Profit Sharing Contributions or Matching Contributions otherwise made
pursuant to Sections 4.1 or 4.4 of the Plan for the Plan Year in which such
forfeiture occurs; PROVIDED, HOWEVER, that the Plan shall reinstate and pay
to such person or persons the amount of the benefits so forfeited upon a
claim for such benefits made by such person or persons. The amount to be so
reinstated shall be
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obtained from the total amount that shall have been forfeited pursuant to
this Section 8.8 during the Plan Year that the claim for current forfeited
benefit is made, or if such amount is insufficient, from the amounts
forfeited pursuant to Sections 4.5(e) and 8.3(c). If the amount to be
reinstated exceeds the amount of such forfeitures, then the Employer in
respect of whose Employee the claim for forfeited benefits is made shall make
a contribution in an amount equal to the remainder of such excess. Any such
contribution shall be made without regard to whether or not the limitations
set forth in Section 4.6 will be exceeded by such contribution.
SECTION 8.9. SUCCESSIVE EMPLOYER. (a) IN GENERAL.
Notwithstanding the foregoing provisions of this Article 8, distributions of
Salary Deferral Contribution Accounts of Participants whose employment with
an Employer terminates and who continue employment with a Successive Employer
(as hereinafter defined) shall be subject to the provisions set forth in this
Section 8.9, unless otherwise permitted under the law and the Plan.
(b) SEPARATION FROM SERVICE OR AGE 59 1/2. Such a Participant who
has incurred a Separation from Service (as hereinafter defined) or has
attained age 59 1/2 as of the date his or her employment with an Employer
terminates shall be eligible to receive a distribution of his
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or her Salary Deferral Contribution Account in accordance with Section
8.4(d).
(c) SALE OF ASSETS OR SUBSIDIARY. Such a Participant who has not
incurred a Separation from Service (as hereinafter defined) and has not
attained age 59-1/2 as of the date his or her employment with an Employer
terminates shall be eligible to receive a distribution of his or her Salary
Deferral Contribution Account in accordance with Section 8.4(d) only if the
following conditions are satisfied:
(1) the Successive Employer does not maintain the Plan after the
Participant's employment terminates, within the meaning of Treasury
Regulation Section 1.401(k)-1(d)(4);
(2) the distribution is made in the form of a lump sum distribution
(within the meaning of section 402(d)(4) of the Code, without regard to
section 402(d)(4)(A)(i) through (iv), (B) and (F) of the Code) by the end
of the second calendar year after the calendar year in which the
Participant's employment terminated;
(3) the Successive Employer is not an Affiliate of an Employer;
(4) the Successive Employer purchases (i) at least 85 percent of the
assets used by the Employer in a trade or business of the Employer or (ii)
the Employer's interest in a subsidiary (in each case within the meaning of
Treasury Regulation Section 1.401(k)-1(d)(1));
(5) both the Employer and the Successive Employer are corporations;
and
(6) the Company determines in its sole discretion that a distribution
under this Section 8.9(c) is permissible.
(d) DEFERRAL OF DISTRIBUTIONS. Such a Participant who is not
eligible for a distribution under Section 8.9(b) or (c) may not receive a
distribution of his or her Salary Deferral Contribution Account until such
Participant has incurred a Separation from Service, attained age 59 1/2 or
otherwise become eligible to receive a distribution of such account under
section 401(k)(2)(B) of the Code.
(e) TRANSFER OF ACCOUNTS TO SUCCESSIVE EMPLOYER'S PLAN. The Company
may determine in its sole and absolute discretion to transfer the accounts of
some or all of the
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Participants who are employed by a Successive Employer to a tax-qualified
retirement plan maintained by such Successive Employer.
(f) DEFINITIONS. For purposes of this Section, the following terms
shall have the meaning set forth below:
(i) "Separation from Service" shall mean the date on which a
Participant has separated from service with the meaning of section
401(k)(2)(b)(i)(I) of the Code. The determination of whether a Participant
has incurred a Separation from Service shall be made by the Committee in
its sole and absolute discretion and shall be conclusive and binding on all
persons.
(ii) "Successive Employer" shall mean an entity that either (i)
purchases from an Employer some or all of its interest in a trade or
business or a business unit or (ii) enters into a contract with an Employer
pursuant to which such entity assumes responsibility for the management or
operation of a trade or business or a business unit of such Employer.
ARTICLE 9
SPECIAL PARTICIPATION RULES
SECTION 9.1. CHANGE OF EMPLOYMENT STATUS. If an Employee who is not
a Participant becomes eligible to participate because of a change in his or her
employment status, then such Employee shall be entitled to become a Participant
the first Entry Date coincident with or following the Employee's satisfaction of
the requirements of Section 3.1.
SECTION 9.2. REEMPLOYMENT OF AN ELIGIBLE EMPLOYEE WHOSE EMPLOYMENT
TERMINATED PRIOR TO BECOMING A PARTICIPANT. (a) If an Eligible Employee
whose employment
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terminated before the Employee had satisfied the requirements of Section 3.1
is reemployed by an Employer, such Employee's prior service shall be
disregarded and such Employee shall be eligible to become a Participant in
accordance with Section 3.1.
(b) If an Eligible Employee whose employment terminated after he
or she had satisfied the requirements of Section 3.1 but prior to becoming a
Participant is reemployed by an Employer, then he or she shall not be
required to satisfy again such requirements and shall be eligible to become a
Participant upon the first Entry Date coinciding with or next following the
date of his or her reemployment.
SECTION 9.3. REEMPLOYMENT OF A TERMINATED PARTICIPANT. (a)
PARTICIPATION. If a terminated Participant is reemployed, then he or she
shall not be required to satisfy the requirements of Section 3.1, and shall
be eligible to participate as of the first Entry Date following the date of
his or her reemployment.
(b) RESTORATION OF FORFEITURES. If a terminated Participant is
reemployed prior to incurring a Break in Service of five consecutive years,
then an amount equal to the portion of the Participant's Profit Sharing
Account or Matching Contributions Account that was forfeited pursuant to
Section 8.3(c) shall be credited to a new Profit Sharing Account or Matching
Contributions Account, as the case may be, for such Participant. Such
Participant's vested interest in his or her Profit Sharing Account or
Matching Contributions Account following such reemployment shall be
determined by applying the applicable vesting percentage to the sum of
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the value of such account and the aggregate amount of the Participant's prior
distribution from such account, and then subtracting the aggregate amount of
the Participant's prior distributions from such account. As of the end of
each Plan Year, forfeitures occurring in such Plan Year pursuant to Sections
4.5(e) and 8.3(c) shall be applied to restore the Profit Sharing Accounts and
Matching Contributions Accounts of any persons employed by such Employer at
the end of such Plan Year who are entitled to have forfeitures restored under
the provisions of this Section. In the event the total amount forfeited in
such Plan Year is insufficient to restore in full the forfeitures of all
persons entitled under this Section to have their forfeitures restored, the
Employer of the Participant shall, notwithstanding any other provision of the
Plan, make an additional contribution sufficient to restore such forfeitures.
Any such additional contribution shall be made without regard to whether or
not the limitations set forth in Section 4.6 will be exceeded by such
contribution.
SECTION 9.4. EMPLOYMENT BY RELATED ENTITIES. If an individual is
employed by an Affiliate that is not a participating Employer, then any
period of such employment shall be taken into account to the same extent it
would have been had such period of employment been as an Employee of his or
her Employer solely for the purposes of (i) determining whether and when such
individual is eligible to participate in the Plan under Article 3, (ii)
measuring such individual's years of Service and (iii) determining when such
individual has retired or otherwise terminated his or her employment for
purposes of Article 8.
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SECTION 9.5. LEASED EMPLOYEES. If an individual who performed
services as a leased employee (within the meaning of section 414(n)(2) of the
Code) of an Employer or an Affiliate becomes an Employee, or if an Employee
becomes such a leased employee, then any period during which such services
were so performed shall be taken into account solely for the purposes of
determining whether and when such individual is eligible to participate in
the Plan under Article 3, measuring such individual's years of Service and
determining when such individual has retired or otherwise terminated his or
her employment for purposes of Article 8 to the same extent it would have
been had such service been as an Employee. This Section shall not apply to
any period of service during which such a leased employee was covered by a
plan described in section 414(n)(5) of the Code.
SECTION 9.6. REEMPLOYMENT OF VETERANS. (a) GENERAL. The
provisions of this Section shall apply in the case of the reemployment by an
Employer of an Eligible Employee, within the period prescribed by USERRA,
after the Employee's completion of a period of Qualified Military Service.
The provisions of this Section are intended to provide such Employees with
the rights required by USERRA and section 414(u) of the Code, and shall be
interpreted in accordance with such intent.
(b) MAKE UP OF SALARY DEFERRAL CONTRIBUTIONS. Such Employee shall
be entitled to make contributions under the Plan ("Make-Up Deferrals"), in
addition to any Salary Deferral Contributions which the Employee elects to
have made under the Plan pursuant to Section 4.2. From time to time while
employed by an Employer, such Employee may elect to
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make such Make-Up Deferrals during the period beginning on the date of such
Employee's reemployment and ending on the earlier of:
(i) the end of the period equal to the product of three and such
Employee's period of Qualified Military Service, and
(ii) the fifth anniversary of the date of such reemployment.
Such Employee shall not be permitted to contribute Make-Up Deferrals to the
Plan in excess of the amount which the Employee could have elected to have
made under the Plan in the form of Salary Deferral Contributions if the
Employee had continued in employment with his or her Employer during such
period of Qualified Military Service. Such Employee shall be deemed to have
earned "Compensation" from his or her Employer during such period of
Qualified Military Service for this purpose in the amount prescribed by
sections 414(u)(2)(B) and 414(u)(7) of the Code. The manner in which an
Eligible Employee may elect to make Make-Up Deferrals pursuant to this
subsection (b) shall be prescribed by the Committee.
(c) MAKE-UP OF MATCHING CONTRIBUTIONS. An Eligible Employee who
contributes Make-Up Deferrals as described in subsection (b) shall be
entitled to an allocation of Matching Contributions ("Make-Up Matching
Contributions") in an amount equal to the amount of Matching Contributions
which would have been allocated to the Matching Contributions Account of such
Eligible Employee under the Plan if such Make-Up Deferrals had been made in
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the form of Salary Deferral Contributions during the period of such
Employee's Qualified Military Service. The amounts necessary to make such
allocation of Make-Up Matching Contributions shall be derived from
forfeitures not yet applied towards Matching Contributions for the Plan Year
in which the Make-Up Deferrals are made, and if such forfeitures are not
sufficient for this purpose, then the Eligible Employee's Employer shall make
a special contribution which shall be utilized solely for purposes of such
allocation.
(d) PROFIT SHARING CONTRIBUTIONS. Such Employee shall be entitled
to share in any allocations of Profit Sharing Contributions with respect to
such period of Qualified Military Service as an Eligible Employee. Such
Employee shall be deemed to have earned "Compensation" from his or her
Employer during such period of Qualified Military Service for this purpose in
the amount prescribed by sections 414(u)(2)(B) and 414(u)(7) of the Code.
(e) APPLICATION OF LIMITATIONS AND NONDISCRIMINATION RULES. Any
contributions made by an Eligible Employee or an Employer pursuant to this
Section on account of a period of Qualified Military Service in a prior Plan
Year shall not be subject to the limitations prescribed by Sections 4.3, 4.6
and 7.5 of the Plan (relating to sections 402(g), 404 and 415 of the Code)
for the Plan Year in which such contributions are made. The Plan shall not
be treated as failing to satisfy the nondiscrimination rules of Section 4.5
of the Plan (relating to sections 401(k)(3) and 401(m) of the Code) for any
Plan Year solely on account of any make up contributions made by an Eligible
Employee or an Employer pursuant to this Section.
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ARTICLE 10
SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK
SECTION 10.1. VOTING SHARES OF COMPANY STOCK. Each Participant
(or Beneficiary) shall be entitled to give voting instructions, in the time
and manner prescribed by the Trustee, with respect to the number of whole
shares of Company Stock allocated to his or her accounts. The Trustee shall
vote, in person or by proxy, such shares according to the voting instructions
of Participants (or Beneficiaries) which have been timely submitted to the
Trustee. To the extent permitted by law, the Trustee shall vote the shares of
Company Stock credited to Participants' (or Beneficiaries') accounts with
respect to which the Trustee does not timely receive voting instructions,
shares of Company Stock that are not allocated to Participants' (or
Beneficiaries') accounts (if any) and fractional shares in the same
proportion by which the Trustee votes shares of Company Stock for which
instructions are timely received.
Written notice of any meeting of shareholders of the Company and a
request for voting instructions shall be given by the Trustee, at such time
and in such manner as the Trustee shall determine, to each Participant (or
Beneficiary) entitled to give instructions for voting shares of Company Stock
at such meeting. The Company shall establish and pay for a means by which
such voting instructions can expeditiously be delivered to the Trustee. All
such instructions shall be confidential and shall not be disclosed to any
person, including any Employer.
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SECTION 10.2. TENDER OFFERS. (a) RIGHTS OF PARTICIPANTS. In the
event a tender offer is made generally to the shareholders of the Company to
transfer all or a portion of their shares of Company Stock in return for
valuable consideration, including, but not limited to, offers regulated by
section 14(d) of the Securities Exchange Act of 1934, as amended, the Trustee
shall respond to such tender offer in respect of shares of Company Stock held
by the Trustee in the Company Stock Fund in accordance with instructions
obtained from Participants (or Beneficiaries). Each Participant (or
Beneficiary) shall be entitled to instruct the Trustee regarding how to
respond to any such tender offer with respect to the number of shares of
Company Stock then allocated to his or her accounts. Each Participant (or
Beneficiary) who does not provide timely instructions to the Trustee shall be
presumed to have directed the Trustee not to tender shares of Company Stock
allocated to his or her accounts. A Participant (or Beneficiary) shall not be
limited in the number of instructions to tender or withdraw from tender which
he or she can give, but a Participant (or Beneficiary) shall not have the
right to give instructions to tender or withdraw from tender after a
reasonable time established by the Trustee pursuant to paragraph (c) below.
(b) DUTIES OF THE COMPANY. Within a reasonable time after the
commencement of a tender offer, the Company shall cause the Trustee to
provide to each Participant or Beneficiary, as the case may be:
(i) the offer to purchase as distributed by the offeror to the
shareholders of the Company,
(ii) a statement of the number of shares of Company Stock allocated
to his or her account, and
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(iii) directions as to the means by which instructions with respect
to the tender offer can be given.
The Company shall establish and pay for a means by which
instructions with respect to a tender offer can expeditiously be delivered to
the Trustee. All such instructions shall be confidential and shall not be
disclosed to any person, including any Employer. The Company at its election
may engage an agent to receive such instructions and transmit them to the
Trustee.
For purposes of allocating the proceeds of any sale or exchange
pursuant to a tender offer, the Trustee shall then treat as having been sold
or exchanged from each of the individual accounts of Participants (and
Beneficiaries) who provided timely directions to the Trustee under this
Section that number of shares of Company Stock subject to such directions and
the proceeds of such sale or exchange shall be allocated accordingly. Any
proceeds from the sale or exchange of shares of Company Stock shall be
invested in a commingled fund maintained by the Trustee designated to hold
such amounts pending investment instructions from Participants (and
Beneficiaries).
(c) DUTIES OF THE TRUSTEE. The Trustee shall follow the
instructions of the Participants (and Beneficiaries) with respect to the
tender offer as transmitted to the Trustee. The Trustee may establish a
reasonable time, taking into account the time restrictions of the tender
offer, after which it shall not accept instructions of Participants (or
Beneficiaries).
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ARTICLE 11
ADMINISTRATION
SECTION 11.1. THE COMMITTEE. (a) Either (i) the Compensation and
Stock Option Committee or (ii) to the extent authorized by the Compensation
and Stock Option Committee, the Chairman of the Board of Directors or the
President of the Company (the "authorized officers") shall appoint a
Committee consisting of three or more members that shall be the
"administrator" of the Plan within the meaning of such term as used in ERISA
and, except for duties specifically vested in the Trustee, shall be
responsible for the administration of the provisions of the Plan. The
Committee shall be a "named fiduciary" within the meaning of such term as
used in ERISA. The Compensation and Stock Option Committee or the authorized
officers shall have the right at any time, with or without cause, to remove
the members of the Committee. In addition, any member of the Committee may
resign and such resignation shall be effective upon delivery of the written
resignation to the Company. Upon the resignation, removal or failure or
inability for any reason of any member of the Committee to act hereunder, the
Compensation and Stock Option Committee or the authorized officers shall
appoint a successor. Any successor members of the Committee shall have all
the rights, privileges and duties of the predecessor, but shall not be held
accountable for the acts of the predecessor.
(b) Any member of the Committee may, but need not, be an employee,
director, officer or shareholder of an Employer and such status shall not
disqualify him or her from taking any action hereunder or render him or her
accountable for any distribution or other
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material advantage received by him or her under the Plan, provided that no
member of the Committee who is a Participant shall take part in any action of
the Committee or any matter involving solely his or her rights under the Plan.
(c) Promptly after the appointment of the members of the Committee
and from time to time thereafter, and promptly after the appointment of any
successor member of the Committee, the Trustee shall be notified as to the
names of the persons appointed as successor members of the Committee by
delivery to the Trustee of a written notice of such appointment.
(d) The Committee shall have the duty and authority to interpret
and construe, in its sole discretion, the terms of the Plan in regard to all
questions of eligibility, the status and rights of Participants, distributees
and other persons under the Plan, and the manner, time, and amount of payment
of any distribution under the Plan. Each Employer shall, from time to time,
upon request of the Committee, furnish to the Committee such data and
information as the Committee shall require in the performance of its duties.
All determinations and actions of the Committee shall be conclusive and
binding upon all affected parties, except that the Committee may revoke or
modify a determination or action that it determines to have been in error.
(e) The Committee shall direct the Trustee to make payments of
amounts to be distributed from the Trust under Article 8.
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(f) The Committee may allocate its responsibilities among its members
and may designate any other person, partnership, corporation or another
committee to carry out any of its responsibilities with respect to
administration of the Plan. Any such allocation or designation shall be reduced
to writing and such writing shall be kept with the records of the Plan. Any
reference in the Plan to the Committee shall include any person, partnership,
corporation or committee to which the Committee has delegated any of its
responsibilities.
(g) The Committee may act at a meeting, or by writing without a
meeting, by the vote or written assent of a majority of its members. The
Compensation and Stock Option Committee shall designate one member of the
Committee as its chairman, and the chairman of the Committee shall appoint one
member of the Committee as its secretary. The Committee shall keep the Trustee
advised of the identity of the members holding such offices. Either the
chairman or the secretary of the Committee shall be the Plan's agent for service
of legal process and shall be authorized to forward all necessary communications
to the Trustee. The secretary of the Committee shall keep records of all
meetings of the Committee. The Committee may adopt such rules and procedures as
it deems desirable for the conduct of its affairs and the administration of the
Plan, provided that any such rules and procedures shall be consistent with the
provisions of the Plan and ERISA.
(h) The members of the Committee shall discharge their duties with
respect to the Plan (i) solely in the interest of the Participants and
Beneficiaries, (ii) for the exclusive purpose of providing benefits to Employees
participating in the Plan and their Beneficiaries and
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of defraying reasonable expenses of administering the Plan and (iii) with the
care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and
with like aims. The Employers hereby jointly and severally indemnify the
members of the Committee from the effects and consequences of their acts,
omissions and conduct in their official capacity, except to the extent that
such effects and consequences result from their own willful misconduct.
(i) The members of the Committee may not receive any compensation or
fee for services as members of the Committee. The Employer shall reimburse the
members of the Committee for any necessary expenditures incurred in the
discharge of their duties as members of the Committee.
(j) The Committee may employ such counsel (who may be counsel for an
Employer) and agents and may arrange for such clerical and other services as it
may require in carrying out the provisions of the Plan.
SECTION 11.2. CLAIMS PROCEDURE. Any Participant or distributee who
believes he or she is entitled to benefits in an amount greater than those which
he or she is receiving or has received may file a claim with the Committee.
Such a claim shall be in writing and state the nature of the claim, the facts
supporting the claim, the amount claimed, and the address of the claimant. The
Committee shall review the claim and, unless special circumstances require an
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extension of time, within 90 days after receipt of the claim, give written
notice by registered or certified mail to the claimant of its decision with
respect to the claim. If special circumstances require an extension of time,
the claimant shall be so advised in writing within the initial 90-day period and
in no event shall such an extension exceed 90 days. The notice of the decision
of the Committee with respect to the claim shall be written in a manner
calculated to be understood by the claimant and, if the claim is wholly or
partially denied, set forth the specific reasons for the denial, specific
references to the pertinent Plan provisions on which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is
necessary, and an explanation of the claim review procedure under the Plan. The
Committee shall also advise the claimant that the claimant or his or her duly
authorized representative may request a review by the Committee of the denial by
filing with the Committee within 60 days after notice of the denial has been
received by claimant, a written request for such review. The claimant shall be
informed that he or she may have reasonable access to pertinent documents and
submit comments in writing to the Committee within the same 60-day period. If a
request is so filed, review of the denial shall be made by the Committee within,
unless special circumstances require an extension of time, 60 days after receipt
of such request, and the claimant shall be given written notice of the
Committee's final decision. If special circumstances require an extension of
time, the claimant shall be so advised in writing within the initial 60-day
period and in no event shall such an extension exceed 60 days. The notice of
the Committee's final decision shall include specific reasons for the decision
and specific references to the pertinent
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Plan provisions on which the decision is based and shall be written in a
manner calculated to be understood by the claimant.
SECTION 11.3. NOTICES TO PARTICIPANTS. All notices, reports and
statements given, made, delivered or transmitted to a Participant or
distributee or any other person entitled to or claiming benefits under the
Plan shall be deemed to have been duly given, made or transmitted when mailed
by first class mail with postage prepaid and addressed to the Participant or
distributee or such other person at the address last appearing on the records
of the Committee. A Participant or distributee or other person may record any
change of his or her address from time to time by written notice filed with
the Committee.
SECTION 11.4. NOTICES TO THE COMMITTEE. Written directions, notices
and other communications from Participants or distributees or any other person
entitled to or claiming benefits under the Plan to the Committee shall be deemed
to have been duly given, made or transmitted either when delivered to such
location as shall be specified upon the forms prescribed by the Committee for
the giving of such directions, notices and other communications or when mailed
by first class mail with postage prepaid and addressed to the addressee at the
address specified upon such forms.
SECTION 11.5. RECORDS. The Committee shall keep a record of all of
its proceedings with respect to the Plan and shall keep or cause to be kept all
books of account,
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records and other data as may be necessary or advisable in their judgment for
the administration of the Plan.
SECTION 11.6. REPORTS OF TRUSTEE AND ACCOUNTING TO PARTICIPANTS. The
Committee shall keep on file, in such form as it shall deem convenient and
proper, all reports concerning the Trust Fund received by it from the Trustee,
and the Committee shall, as soon as possible after the close of each Plan Year,
advise each Participant and Beneficiary of the balance credited to any account
for his or her benefit as of the close of such Plan Year pursuant to Article 7
hereof.
ARTICLE 12
PARTICIPATION BY OTHER EMPLOYERS
SECTION 12.1. ADOPTION OF PLAN. With the consent of the Company, any
entity may become a participating Employer under the Plan by (a) taking such
action as shall be necessary to adopt the Plan and (b) executing and delivering
such instruments and taking such other action as may be necessary or desirable
to put the Plan into effect with respect to such entity. However, the sole,
exclusive right of any other amendment of whatever kind or extent to the Plan or
Trust is reserved by the Company. The administrative powers and control of the
Company, as provided in the Plan and Trust agreement, including the sole right
of amendment,
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and of appointment and removal of the Trustee and its successors, shall not
be diminished by reason of the participation of any such adopting entity in
the Plan.
SECTION 12.2. WITHDRAWAL FROM PARTICIPATION. Any Employer may withdraw
from participation in the Plan at any time by filing with the Company a duly
certified copy of a written instrument duly adopted by the Employer to that
effect and giving notice of its intended withdrawal to the Company, the other
Employers and the Trustee prior to the effective date of withdrawal. Any
Employer, by action of its board of directors or other governing authority,
may withdraw from the Plan and Trust after giving 90 days' notice to the
Board of Directors, provided the Board of Directors consents to such
withdrawal. Distribution may be implemented through continuation of the
Trust, or transfer to another trust fund exempt from tax under section 501(a)
of the Code, or to a group annuity contract qualified under section 401(a) of
the Code, or distribution may be made as an immediate cash payment in
accordance with the directions of the Company; PROVIDED, HOWEVER, that no
such action shall divert any part of such fund to any purpose other than the
exclusive benefit of the Employees of such Employer.
SECTION 12.3. CONTINUANCE BY A SUCCESSOR. In the event that an Employer
is reorganized by way of merger, consolidation, transfer of assets or
otherwise, so that another entity succeeds to all or substantially all of the
Employer's business, such successor entity may be substituted for the
Employer under the Plan by adopting the Plan, with the written consent of the
Board of Directors. Contributions by the Employer shall be automatically
suspended from the effective date of any such reorganization until the date
upon which the substitution of such
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successor entity for the Employer under the Plan becomes effective. If,
within 90 days following the effective date of any such reorganization, such
successor entity shall not have elected to become a party to the Plan, the
Board of Directors does not consent to the adoption of the Plan by such
successor entity or the Employer adopts a plan of complete liquidation other
than in connection with a reorganization, the Plan shall be automatically
terminated with respect to employees of such Employer as of the close of
business on the 90th day following the effective date of such reorganization
or as of the close of business on the date of adoption of such plan of
complete liquidation, as the case may be, and the Company shall direct the
Trustee to distribute the portion of the Trust Fund applicable to such
Employer in the manner provided in Article 15.
If such successor entity is substituted for an Employer, by electing to
become a party to the Plan as described above, then, for all purposes of the
Plan, employment of such Employee with such Employer, including service with
and compensation paid by such Employer, shall be considered to be employment
with such Employer.
SECTION 12.4. COMPANY AS AGENT FOR EMPLOYERS. Each entity that becomes
a participating Employer pursuant to Section 12.1 or 12.3 by so doing shall
be deemed to have appointed the Company its agent to exercise on its behalf
all of the powers and authorities hereby conferred upon the Company by the
terms of the Plan, including, but not by way of limitation, the power to
amend and terminate the Plan. The authority of the Company to act as such
agent shall continue unless and until the portion of the Trust Fund held for
the benefit of
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Employees of the particular Employer and their Beneficiaries is set aside in
a separate Trust Fund as provided in Section 15.2.
ARTICLE 13
MISCELLANEOUS
SECTION 13.1. EXPENSES. All costs and expenses incurred in administering
the Plan and the Trust, including the expenses of the Company and the
Committee, the fees of counsel and any agents for the Company and the
Committee, the fees and expenses of the Trustee, the fees of counsel for the
Trustee and other administrative expenses shall be paid under the direction
of the Committee from the Trust Fund to the extent such expenses are not paid
by the Employers. The Committee, in its sole discretion, having regard to
the nature of a particular expense, shall determine the portion of such
expense that is to be borne by each Employer.
SECTION 13.2. NON-ASSIGNABILITY. (a) IN GENERAL. It is a condition of
the Plan, and all rights of each Participant and Beneficiary shall be subject
thereto, that no right or interest of any Participant or Beneficiary in the
Plan shall be assignable or transferable in whole or in part, either directly
or by operation of law or otherwise, including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge or bankruptcy, but excluding
devolution by death or mental incompetency, and no right or interest of any
Participant or
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Beneficiary in the Plan shall be liable for, or subject to, any obligation or
liability of such Participant or Beneficiary, including claims for alimony or
the support of any spouse, except as provided below.
(b) EXCEPTION FOR QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding
any provision of the Plan to the contrary, if a Participant's account balance
under the Plan, or any portion thereof, is the subject of one or more
qualified domestic relations orders, as defined below, such account balance
or portion thereof shall be paid to the person at the time and in the manner
specified in any such order. For purposes of this subsection (b), the term
"qualified domestic relations order" shall have the meaning prescribed by
section 414(p) of the Code. The Committee, in its sole discretion, shall
determine whether any order constitutes a "qualified domestic relations
order" under this subsection. A domestic relations order shall not fail to
constitute a "qualified domestic relations order" under this subsection (b)
solely because such order provides for immediate payment to an alternate
payee of the portion of the Participant's accounts assigned to the alternate
payee under the terms of such order.
SECTION 13.3. EMPLOYMENT NON-CONTRACTUAL. The Plan confers no right
upon an Employee to continue in employment.
SECTION 13.4. LIMITATION OF RIGHTS. The Employers do not guarantee
or promise to pay or to cause to be paid any of the benefits provided by the
Plan. A Participant or distributee shall have no right, title or claim in or to
any specific asset of the Trust Fund, but
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shall have the right only to idstributions from the Trust Fund on the terms
and conditions herein provided.
SECTION 13.5. MERGER OR CONSOLIDATION WITH ANOTHER PLAN. A merger or
consolidation with, or transfer of assets or liabilities to, any other plan
shall not be effected unless the terms of such merger, consolidation or transfer
are such that each Participant, distributee, Beneficiary or other person
entitled to receive benefits from the Plan would, if the Plan were to terminate
immediately after the merger, consolidation or transfer, receive a benefit equal
to or greater than the benefit such person would be entitled to receive if the
Plan were to terminate immediately before the merger, consolidation, or
transfer.
SECTION 13.6. GENDER AND PLURALS. Wherever used in the Plan, words
in the masculine gender shall include masculine or feminine gender, and, unless
the context otherwise requires, words in the singular shall include the plural,
and words in the plural shall include the singular.
SECTION 13.7. APPLICABLE LAW. The Plan and all rights hereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware to the extent such laws have not been preempted by applicable federal
law.
SECTION 13.8. SEVERABILITY. If a provision of the Plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of the Plan and the Plan
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shall be construed and enforced as if the illegal or invalid provision had
not been included in the Plan.
SECTION 13.9. NO GUARANTEE. None of the Company, the Employers, the
Committee or the Trustee in any way guarantees the Trust from loss or
depreciation nor the payment of any money that may be or become due to any
person from the Trust Fund. Nothing herein contained shall be deemed to give
any Participant, distributee, or Beneficiary an interest in any specific part of
the Trust Fund or any other interest except the right to receive benefits out of
the Trust Fund in accordance with the provisions of the Plan and the Trust Fund.
SECTION 13.10. PLAN VOLUNTARY. Although it is intended that the Plan
shall be continued and that contributions shall be made as herein provided, the
Plan is entirely voluntary on the part of the Employers and the continuance of
the Plan and the payment of contributions hereunder are not to be regarded as
contractual obligations of the Employers.
ARTICLE 14
TOP-HEAVY PLAN REQUIREMENTS
SECTION 14.1. TOP-HEAVY PLAN DETERMINATION. If as of the determination
date (as hereinafter defined) for any Plan Year (a) the sum of the account
balances under the Plan and all other defined contribution plans in the
aggregation group (as defined below) and (b) the
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present value of accrued benefits under all defined benefit plans in such
aggregation group of all Participants in such plans who are key employees (as
hereinafter defined) for such Plan Year exceeds 60 percent (60%) of the
aggregate of the account balances and present value of accrued benefits of
all Participants in such plans as of the determination date (as hereinafter
defined), then the Plan shall be a "top-heavy plan" for such Plan Year, and
the requirements of Sections 14.3 and 14.4 shall be applicable for such Plan
Year as of the first day thereof. If the Plan is a top-heavy plan for any
Plan Year and is not a top-heavy plan for any subsequent Plan Year, the
requirements of this Article 14 shall not be applicable for such subsequent
Plan Year.
SECTION 14.2. DEFINITIONS AND SPECIAL RULES. (a) DEFINITIONS. For
purposes of this Article 14, the following definitions shall apply:
(1) DETERMINATION DATE. The determination date for all plans in
the aggregation group shall be the last day of the preceding Plan Year, and
the valuation date applicable to a determination date shall be (i) in the
case of a defined contribution plan, the date as of which account balances
are determined that is coinciding with or immediately precedes the
determination date, and (ii) in the case of a defined benefit plan, the
date as of which the most recent actuarial valuation for the Plan Year that
includes the determination date is prepared, except that if any such plan
specifies a different determination or valuation date, such different date
shall be used with respect to such plan.
(2) AGGREGATION GROUP. The aggregation group shall consist of (a)
each plan of an Employer in which a key employee is a Participant, (b) each
other plan that enables such a plan to be qualified under section 401(a) of
the Code, and (c) any other plans of an Employer that the Company
designates as part of the aggregation group.
(3) KEY EMPLOYEE. Key employee shall have the meaning set forth in
section 416(i) of the Code.
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(4) COMPENSATION. Compensation shall have the meaning set forth in
U.S. Treasury Regulation section 1.415-2(d).
(b) SPECIAL RULES. For the purpose of determining the accrued
benefit or account balance of a Participant, the accrued benefit or account
balance of any person who has not performed services for an employer at any time
during the 5-year period ending on the determination date shall not be taken
into account pursuant to this Section, and any person who received a
distribution from a plan (including a plan that has terminated) in the
aggregation group during the 5-year period ending on the last day of the
preceding Plan Year shall be treated as a Participant in such plan, and any such
distribution shall be included in such Participant's account balance or accrued
benefit, as the case may be.
SECTION 14.3. MINIMUM CONTRIBUTION FOR TOP-HEAVY YEARS.
Notwithstanding any provision of the Plan to the contrary, the sum of the
Employer contributions made pursuant to Article 4 allocated during any Plan Year
to the accounts of each Participant (other than a key employee) for which the
Plan is a top-heavy plan shall in no event be less than the lesser of (i) 3
percent (3%) of such Participant's compensation during such Plan Year and (ii)
the highest percentage at which contributions are made on behalf of any key
employee for such Plan Year. If during any Plan Year for which this Section
14.3 is applicable a defined benefit plan is included in the aggregation group
and such defined benefit plan is a top-heavy plan for such Plan Year, the
percentage set forth in clause (i) of the first sentence of this Section shall
be 5 percent (5%). The percentage referred to in clause (ii) of the first
sentence of this Section shall be obtained by dividing the aggregate of
contributions made pursuant to Article 4 and pursuant
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to any other defined contribution plan that is required to be included in the
aggregation group (other than a defined contribution plan that enables a
defined benefit plan that is required to be included in such group to be
qualified under section 401(a) of the Code) during the Plan Year on behalf of
such key employee by such key employee's compensation for the Plan Year.
SECTION 14.4. SPECIAL RULES FOR APPLYING STATUTORY LIMITATIONS ON
BENEFITS. The provisions of this Section shall apply only with respect to Plan
Years commencing prior to January 1, 2000.
(a) In any Plan Year for which the Plan is a top-heavy plan, clause
(2)(A)(II) of Section 7.5 shall be applied by substituting "100 percent (100%)"
for "125 percent (125%)" appearing therein unless for any such Plan Year (i) the
percentage of account balances of Participants who are key employees does not
exceed 90 percent (90%) and (ii) employer contributions and forfeitures
allocated to the accounts of Participants who are not key employees equals at
least 4 percent (4%) of the compensation (within the meaning of section 415 of
the Code) of each such Participant.
(b) In any Plan Year for which the Plan is a top-heavy plan, clause
(2)(B)(I) of Section 7.5 shall be applied by substituting "100 percent (100%)"
for "125 percent (125%)" appearing therein unless for any such Plan Year (i) the
percentage of accrued benefits of Participants who are key employees does not
exceed 90 percent (90%) and (ii) the minimum accrued benefit of each Participant
under all defined benefit plans in the aggregate group is at
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least 3 percent (3%) of his or her average compensation (determined under
section 416 of the Code) multiplied by each year of Service after 1983, not
in excess of 10, for which such plans are top-heavy plans.
ARTICLE 15
AMENDMENT, ESTABLISHMENT OF SEPARATE
PLAN AND TERMINATION
SECTION 15.1. AMENDMENT. The Company shall have the right to amend
the Plan at any time, and from time to time, by resolution of the Board of
Directors. Any such amendment shall become effective as of the date the Board
of Directors shall determine and may apply to Participants in the Plan at the
time thereof as well as to future Participants.
SECTION 15.2. ESTABLISHMENT OF SEPARATE PLAN. If an Employer withdraws
from the Plan under Section 12.2, the Committee shall determine, in the
manner hereinafter described, the portion of each of the funds of the Trust
Fund which is allocable to the Participants (and Beneficiaries) of such
Employer and direct the Trustee to segregate such portions in a separate
trust. Such separate trust shall thereafter be held and administered as a
part of the separate plan of such Employer.
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The portion of a fund in the Trust Fund applicable to the Participants
(and Beneficiaries) of a particular Employer shall be an amount which bears the
same ratio to the value of such fund as the total value of the fund accounts of
Participants employed or formerly employed by such Employer bears to the total
value of the fund accounts of all Participants and former Participants.
SECTION 15.3. TERMINATION. Any Employer may at any time terminate
its participation in the Plan by resolution of its board of directors to that
effect. In the event of any such termination, or in the event of a partial
termination of the Plan with respect to a group of Participants, the accounts
which are applicable to the Participants with respect to whom the Plan is
terminated shall become fully vested and shall not thereafter be subject to
forfeiture. In the event that an Employer terminates its participation in the
Plan, the Committee shall determine, in the manner provided in Section 15.2, the
portion of the Trust Fund held by the Trustee which is applicable to the
Participants (and Beneficiaries) of such Employer and direct the Trustee to
distribute such portion to Participants (and Beneficiaries) in proportion to the
balances of their respective accounts. A permanent suspension of contributions
by an Employer shall be deemed a termination of such Employer's participation in
the Plan for purposes of this Section. A complete discontinuance of
contributions by an Employer shall be deemed a termination of such Employer's
participation in the Plan for purposes of this Section.
If the Internal Revenue Service shall refuse with respect to any Employer
to issue an initial favorable determination letter that the Plan and Trust as
adopted by such
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Employer meet the requirements of section 401(a) of the Code and that the
Trust is exempt from tax under section 501(a) of the Code, such Employer may
terminate its participation in the Plan and the Company shall direct the
Trustee to pay and deliver the portion of the Trust Fund applicable to the
Participants and former Participants of such Employer, determined in the
manner provided in Section 15.2, to such Employer and such Employer shall pay
to Participants or their Beneficiaries the part of such Employer's portion of
the Trust Fund which is attributable to contributions made by Participants.
SECTION 15.4. TRUST FUND TO BE APPLIED EXCLUSIVELY FOR PARTICIPANTS
AND THEIR BENEFICIARIES. Subject only to the provisions of Sections 4.6, 7.5
and 15.3, and any other provision of the Plan to the contrary notwithstanding,
it shall be impossible for any part of the Trust Fund to be used for or diverted
to any purpose not for the exclusive benefit of Participants and their
beneficiaries either by operation or termination of the Plan, power of amendment
or other means.
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IN WITNESS WHEREOF, Foundation Health Systems, Inc. has caused this
instrument to be executed by its duly authorized officer.
FOUNDATION HEALTH SYSTEMS, INC.
By /s/ Danny O. Smithson
---------------------------------------
Danny O. Smithson
Senior Vice President of Human Resources
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EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Foundation Health Systems, Inc. on Form S-8 of our report
dated March 27, 1998, appearing in the Annual Report of Form 10-K of
Foundation Health Systems, Inc. for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 27, 1998
