<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-23832
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PHYSICIAN SALES & SERVICE, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-2280364
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(State or other jurisdiction (IRS employer
of incorporation) identification number)
4345 Southpoint Boulevard
Jacksonville, Florida 32216
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(Address of principal (Zip code)
executive offices)
Registrant's telephone number (904) 332-3000
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ] Yes [ ] No
As of August 13, 1997 a total of 38,252,524 shares of common stock, par
value $.01 per share, of the registrant were outstanding.
<PAGE>
PHYSICIAN SALES & SERVICE, INC. & SUBSIDIARIES
JUNE 30, 1997
INDEX
PART I FINANCIAL INFORMATION PAGE NUMBER
-----------
Condensed Consolidated Balance Sheets -
June 30, 1997 and March 28, 1997 3
Condensed Consolidated Statements of Operations -
Three Months Ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 15
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 MARCH 28, 1997
------------- --------------
(Unaudited) *
ASSETS
Current Assets:
Cash and cash equivalents $ 48,172,411 $ 28,740,123
Marketable securities 520,313 15,045,482
Accounts receivable, net 121,592,786 119,292,896
Inventories 68,477,128 67,895,154
Prepaid expenses and other 20,502,143 21,971,847
------------- ------------
Total current assets 259,264,781 252,945,502
Property and equipment, net 21,317,785 18,811,691
Other Assets:
Intangibles, net 22,248,053 21,616,893
Other 5,370,737 4,911,501
------------ ------------
Total assets $308,201,356 $298,285,587
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 69,699,998 $ 64,063,501
Accrued expenses 13,763,967 18,263,097
Other 7,684,222 5,164,751
------------ ------------
Total current liabilities 91,148,187 87,491,349
Long-Term debt and capital lease, net 1,609,166 559,764
Other 5,063,687 4,634,291
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Total liabilities 97,821,040 92,685,404
============ ============
Shareholders' Equity:
Preferred stock, $.01 par value;
1,000,000 shares authorized,
no shares issued and
outstanding - -
Common stock, $.01 par value;
60,000,000 shares authorized,
37,345,515 and 37,061,615 shares
issued and outstanding at June
30, 1997 and March 28, 1997,
respectively 373,455 370,616
Additional paid-in capital 207,651,115 207,509,342
Retained earnings (deficit) 2,015,769 (2,372,463)
Cumulative foreign currency
translation adjustment 339,977 92,688
------------ ------------
Total shareholders' equity 210,380,316 205,600,183
============ ============
Total liabilities and
shareholders' equity $308,201,536 $298,285,587
============ ============
* Condensed from audited financial statements.
The accompanying notes are an integral part of these
condensed consolidated statements.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
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Net Sales $203,542,635 $151,567,551
Cost of Goods Sold 148,099,587 109,732,401
------------ ------------
Gross Profit 55,443,048 41,835,150
General and Administrative Expenses 32,090,286 22,857,157
Selling Expenses 16,821,599 15,055,949
Merger Costs and Expenses - 6,934,000
------------ ------------
Income (Loss) From Operations 6,531,163 (3,011,956)
Other Income:
Interest income 248,145 528,153
Other income 581,839 404,275
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829,984 932,428
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Income (Loss) before provision for
income taxes 7,361,147 (2,079,528)
Income Tax (provision) benefit (2,991,054) 540,000
------------ ------------
Net Income (Loss) $ 4,370,093 $ (1,539,528)
============ ============
Net Income (Loss) per common and
common equivalent share $ 0.12 $ (0.04)
============ ============
Proforma tax adjustment on pooled
S-corporation income (142,000)
Proforma net loss $ (1,681,528)
============
Proforma tax adjustment per
common and common equivalent
share on pooled S-corporation
income $ (0.01)
============
Proforma net loss per common and
common equivalent share $ (0.05)
============
Weighted Average number of
Shares outstanding 37,502,000 35,189,000
------------ ------------
The accompanying notes are an integral part of these
condensed consolidated statements.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
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Cash Flows From Operating Activities:
Net income (loss) $ 4,370,093 $ (1,539,528)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 2,034,408 987,148
Provision for doubtful accounts 492,778 347,697
Merger costs and expenses - 6,469,506
Foreign currency translation 247,289 (2,189)
Changes in operating assets and
liabilities, net of effects
from business acquisitions:
Increase in accounts receivable (1,300,197) (858,178)
Decrease (increase) in inventories 406,802 (3,236,991)
Decrease in prepaid expenses
and other current assets 1,478,273 1,924,557
Increase in other assets (1,298,501) (3,548,013)
Increase (decrease) in
accounts payable, accrued
expenses and other liabilities 3,879,666 (3,141,719)
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Net cash provided by (used
in) operating activities 10,310,611 (2,597,710)
------------ ------------
Cash Flows From Investing Activities:
Net proceeds from sales of marketable
securities 14,525,169 -
Capital expenditures (3,473,293) (1,437,689)
Payment for purchases of net assets
from business acquisitions (350,000) (4,572,740)
Payments on noncompete agreements (1,083,379) (376,486)
------------ ------------
Net cash provided by (used in)
investing activities 9,618,497 (6,386,915)
------------ ------------
Cash Flows From Financing Activities:
Net repayments of long-term debt (645,661) (8,662,437)
Net proceeds from issuance of
common stock 148,841 880,370
------------ ------------
Net cash used in financing activities (496,820) (7,782,067)
------------ ------------
Net increase (decrease) in cash
and cash equivalents 19,432,288 (16,766,692)
Cash and cash equivalents, beginning
of period 28,740,123 86,333,789
------------ ------------
Cash and cash equivalents, end
of period $ 48,172,411 $ 69,567,097
============ ============
The accompanying notes are an integral part of these
condensed consolidated statements.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements of Physician Sales &
Service, Inc. ("PSS" or "the Company") reflect, in the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods
indicated. The adjustments include the retroactive adjustment to reflect the
merger with X-Ray Corporation of Georgia ("X-ray GA") effective December 20,
1996, accounted for under the pooling-of-interests method.
The accompanying condensed consolidated financial statements should be read
in conjunction with the financial statements and related notes in the Company's
1997 Annual Report to Shareholders. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to the Securities and
Exchange Commission rules and regulations.
Financial statements for the Company's subsidiary outside the United States
are translated into U.S. dollars at quarter-end exchange rates for assets and
liabilities and weighted average exchange rates for income and expenses. The
resulting translation adjustments are recorded as a separate component of
shareholders' equity.
The results of operations for the interim periods covered by this report
may not necessarily be indicative of operating results for the full fiscal year.
Certain items have been reclassified to conform to the current year
presentation.
NOTE 2 - BUSINESS ACQUISITIONS
During the three months ended June 30, 1997, the Company acquired a
radiology and imaging distributor in a stock-for-stock merger accounted for
under the pooling-of-interests method by issuing 167,311 shares of common stock.
The acquired company reported $17 million in revenue for the twelve months prior
to acquisition by the Company. The accompanying consolidated financial
statements have not been restated for periods prior to the pooling due to
immateriality. Accordingly, the results of operations of have been reflected in
the consolidated financial statements prospectively from the acquisition date in
June of 1997.
Additionally, during the three months ended June 30, 1997, the Company
acquired the stock of a medical supply and equipment distributor for cash and
the assets of another medical supply and equipment distributor for cash.
Proforma financial information related to these acquisitions is not presented
due to immateriality.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Following is separate company data of PSS and X-Ray GA for the period
prior to the Merger. X-ray GA was a Subchapter S Corporation for income tax
purposes and, therefore, did not pay U.S. federal income taxes. The table
includes unaudited proforma net (loss) and net (loss) per share
amounts which reflect proforma adjustments to present income taxes of X-ray GA
on the basis on which they will be reported in future periods.
Three Months Ended
June 30, 1996
(in thousands)
------------------
Net Sales
PSS $139,703
X-ray GA 11,865
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Total $151,568
Net Income (Loss)
PSS $ (1,914)
X-ray GA 374
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Net Loss as Reported (1,540)
Proforma Tax Provision for X-ray GA (142)
--------
Proforma Net Loss (1,682)
========
Net Loss Per Share
As Reported $ (0.4)
Proforma $ (0.5)
--------
NOTE 3 SUBSEQUENT EVENTS
On July 20, 1997, the Company acquired an imaging distributor for an
aggregate purchase price of approximately $18.2 million comprised of 868,364
shares of common stock and cash of approximately $2.5 million to be accounted
for as a purchase. The acquired company distributes radiology and imaging
equipment, chemicals and supplies, and provides technical service to the acute
and alternate site markets through seven locations in seven states in the
Midwest. The acquired company reported $76 million in revenues for the latest
twelve month period.
On August 12, 1997, the Company signed a definitive agreement to merge with
S&W X-Ray, Inc. ("S&W"). The Company intends to acquire S&W in a stock-for-
stock merger, to be accounted for as a pooling-of-interests. S&W reported $73
million in revenues for the latest twelve month period.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is a leading distributor of medical supplies, equipment and
pharmaceuticals to primary care and other office-based physicians. The Company
currently operates 61 physician office medical supply distribution ("Physician
Supply Division") service centers distributing to approximately 103,000
physician office sites in all 50 states. The Company's primary market is the
approximately 399,000 physicians who practice medicine in approximately 198,000
office sites throughout the United States. For fiscal 1997, the Company
generated net revenues of $691.0 million.
The Company, through its wholly-owned subsidiary, Diagnostic Imaging
("DI" or "Imaging Division"), distributes medical diagnostic imaging supplies,
chemicals, equipment and service to the acute care and alternate care market.
DI currently operates 20 imaging service centers in ten states in the Southeast
and Midwest.
The Company also distributes medical supplies and equipment in Belgium,
France, Germany, and the Netherlands through its WorldMed International, Inc.
subsidiary ("International Division"). The Company currently has three
International Division service centers distributing to the acute and alternate
care markets.
The Company's primary objectives are to be capable of servicing the medical
equipment and supply needs of every office-based physician in the United States,
to create a national diagnostic imaging distribution company, and to expand its
presence in the European medical equipment and supply market. To achieve these
objectives and increase profitability, the Company intends to (i) continue to
acquire core business medical supply and equipment distributors, especially in
existing markets where it can leverage its distribution infrastructure and gain
market share, (ii) acquire diagnostic imaging distributors to expand its
geographic coverage and leverage its existing infrastructure, (iii) increase
sales of existing service centers by adding additional sales representatives and
providing superior service, competitive pricing and a broad product line,
including sophisticated diagnostic equipment, (iv) expand operating margins, (v)
open new service centers in selected markets where acquisition opportunities are
not available, and (vi) invest in sophisticated information systems that bring
efficiency to the Company and its subsidiaries.
INDUSTRY
According to industry estimates, the medical supply and equipment segment
of the health care industry represents a $30.2 billion market, of which $6.6
billion represents the primary care and other office-based physicians. The
medical supply and equipment industry is estimated to be growing at an annual
rate of 6% to 8%. The Company has historically grown faster than the overall
market. The Company estimates that approximately 300 companies supply medical
products to the office-based physician sector.
The diagnostic imaging industry represents a $4.1 billion market,
representing the sale and service of diagnostic imaging equipment and supplies
to the acute care market, imaging centers and physician offices. Approximately
$2.3 billion of the diagnostic imaging market is sold through independent
distributors and the remainder is sold directly by manufacturers. The diagnostic
imaging industry is highly fragmented with unconsolidated distributors
representing approximately 70% of the market.
COMPANY GROWTH
Since its inception in 1983, the Company has achieved significant growth in
the number of service center locations, geographic area of operation, net sales,
and profitability. During the fiscal years 1992 through 1997, the Company and
its subsidiaries' net sales, excluding the retroactive effect of mergers, grew
at a compound annual rate of approximately 49%, and giving retroactive effect of
mergers, the Company's net sales grew at a compound annual rate of approximately
27%. The number of company service centers has grown from two at the end of
fiscal 1984 to 84 currently, including 61 Physician Supply Division service
centers, 20 Imaging Division services centers and three International Division
service centers. In order of priority, the Company's growth has been
accomplished through (i) acquiring regional and local physician supply companies
-8-
<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
(ii) acquiring local and regional imaging companies, (iii) increasing sales from
existing Physician Supply Division service centers, and (iv) opening start-up
Physician Supply Division service centers.
RESULTS OF OPERATIONS
The following is management's discussion and analysis of the results of
operations for the three months ended June 30, 1997 and 1996:
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
NET SALES. Net sales for the three months ended June 30, 1997 totaled
$203.5 million, an increase of $52.0 million or 34.3% over net sales of $151.6
million for the three months ended June 30, 1996. The sales from the Imaging
Division increased to $44.9 million for the three months ended June 30, 1997
from $11.9 million for the three months ended June 30, 1996. In order of
contribution to the increase, net sales increased as the result of (i) net sales
of the Imaging Division centers acquired during the last nine months of fiscal
1997, (ii) internal sales growth of Physician Supply Division centers operating
at least two years, and (iii) net sales of Physician Supply Division centers
recently acquired.
The Company's Physician Supply Division service centers operating for at
least 24 consecutive months as of fiscal year ended 1998 generated same center
sales growth of 13% for the three months ended June 30, 1997. The sales growth
resulted from the continued development of PSS's sales force, further market
penetration, increased emphasis on diagnostic equipment and supplies, and
expansion of existing territories served by individual service centers.
GROSS PROFIT. Gross profit for the three months ended June 30, 1997 totaled
$55.4 million, an increase of $13.6 million or 32.5% over the three months ended
June 30, 1996 total of $41.8 million. Gross profit as a percentage of net sales
decreased to 27.2% for the three months ended June 30, 1997 from 27.6% for the
three months ended June 30, 1996. The decrease in gross profit percentage is
attributable to lower margins of the recently acquired Imaging Division
operations, which had an average gross profit of 20.5% for the three months
ended June 30, 1997. The Company is currently in the third year of a five year
exclusive distributorship agreement with Abbott Laboratories. For the three
months ended June 30, 1997 and 1996, gross profit on sales of Abbott products
were 22.0% and 20.8%, respectively.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the three months ended June 30, 1997 totaled $32.1 million, an increase of
$9.2 million or 40.4% over the three months ended June 30, 1996 total of $22.9
million. As a percentage of sales, general and administrative expenses increased
to 15.8% for the three months ended June 30, 1997 from 15.1% for the three
months ended June 30, 1996. Contributing to the increase in general and
administrative expenses as a percentage of net sales was the Company's strategy
to focus its Physician Supply Division sales efforts on penetration of more
profitable areas of the market, which resulted in lower but more profitable
growth in sales. The increase in general and administrative expenses is also
attributable to continuing investment in resources to respond to a changing
health care market. The Company has increased its focus on sales of diagnostic
equipment to office based physicians and on penetration of the managed care
market segment. Since inception, the Company has maintained a comprehensive and
consultative sales approach with an emphasis on diagnostic products, which
includes sophisticated diagnostic equipment and supplies related to the use of
such equipment. At the beginning of fiscal 1996, the Company created a
diagnostic team to train and educate newly hired or acquired sales
representatives about the diagnostic equipment sales process. As a result, the
Company has been able to maintain its diagnostic products sales at approximately
20% of total net sales. Sales of diagnostic equipment, while generally lower in
gross margin than supplies, require the reordering of diagnostic reagents which
generally yield higher margins.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
The Company continued to increase its emphasis on national customer
accounts, including large physician group practices, physician practice
management companies, physician-hospital organizations, physician management
service organizations and group purchasing organizations through the expansion
of its national accounts team.
SELLING EXPENSES. Selling expenses for the three months ended June 30, 1997
totaled $16.8 million, an increase of $1.8 million or 11.7% over the three
months ended June 30, 1996 total of $15.1 million. As a percentage of sales,
selling expenses decreased to 8.2% for the three months ended June 30, 1997 from
9.9% for the three months ended June 30, 1996. The decrease in selling expense
as a percentage of sales was primarily a result of the operations of the new
Imaging Division which incurs significantly lower selling expense as a
percentage of net sales than the Physician Supply Division.
MERGER COSTS AND EXPENSES. During the three months ended June 30, 1997, the
Company did not incur any non-recurring merger costs and expenses related to the
acquisitions. During the three months ended June 30, 1996, the Company recorded
non-recurring merger costs and expenses of approximately $6.9 million associated
with the mergers of PSS and four medical supply and equipment distributors. Such
costs included direct merger costs primarily consisting of investment banking,
legal, accounting and filing fees as well as consolidation costs from the
closing of duplicate service center locations and reducing personnel.
OPERATING INCOME (LOSS). The Company recorded operating income of $6.5
million for the three months ended June 30, 1997 as compared to an operating
loss of $3.0 million for the three months ended June 30, 1996. The operating
results for the three months ended June 30, 1996 include non-recurring merger
costs and expenses of approximately $6.9 million. Excluding the effect of these
non-recurring costs, operating income increased $2.6 million or 67% to $6.5
million for the three months ended June 30, 1997 from $3.9 million for the three
months ended June 30, 1996.
INTEREST INCOME. The Company recorded interest income from short-term
investments of approximately $ 320,000 during the three months ended June 30,
1997. Interest expense for the three months ended June 30, 1997 was
approximately $70,000. Interest expense was related to debt of companies
acquired which was repaid upon acquisition.
OTHER INCOME. The Company's other income totaled $0.6 million and $0.4
million, an increase of $0.2 million or 43.9%, for the three months ended June
30, 1997 and 1996, respectively. Other income primarily represents finance
charges on customer accounts.
(PROVISION) BENEFIT FOR INCOME TAXES. The income tax provision totaled $3.0
million for the three months ended June 30, 1997 as compared to the income tax
benefit of $0.5 million for the three months ended June 30, 1996. The income tax
computation is affected by the non-deductible nature of certain non-recurring
merger costs and expenses in the period in which they were incurred.
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<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
NET INCOME (LOSS). Net income totaled $4.4 million for the three months
ended June 30, 1997 as compared to a net loss of $1.5 million for the three
months ended June 30, 1996. The net loss for the three months ended June 30,
1996 includes approximately $6.9 million of non-recurring merger costs and
expenses. The following table shows net income (loss) and net income (loss) per
share for the three months ended June 30, 1997 as compared to the three months
ended June 30, 1996 as reported and the pro-forma effect on net income per share
excluding these non-recurring merger costs and expenses and the related tax
effects.
<TABLE>
<CAPTION>
Pro-forma excluding non-
recurring merger costs and expenses As reported
Three Months Ended Three Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) (in thousands) $ 4,370 $ 3,135 $ 4,370 $ (1,540)
Net income (loss)
per share $ 0.12 $ 0.09 $ 0.12 $ (0.04)
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $168.1 million and $165.4 million as of
June 30, 1997 and March 28, 1997, respectively. Accounts receivable (net of
allowances) were $121.6 million and $119.3 million as of June 30, 1997 and March
28, 1997, respectively. The average number of days sales in accounts receivable
was approximately 53 days for the three months ended June 30, 1997 and 56 days
for the year ended March 28, 1997, respectively. Inventories were $68.5 million
and $67.9 million as of June 30, 1997 and March 28, 1997, respectively. The
Company had annual inventory turnover of 8.7 times for the three months ended
June 30, 1997 and 8.1 times for the year ended March 28, 1997.
Net cash provided by operating activities was $10.3 million for the three
months ended June 30, 1997 compared to net cash used in operating activities of
$2.6 million for the three months ended June 30, 1996. The improvement resulted
from improved operating results for the three months ended June 30, 1997. For
the three months ended June 30, 1996, a significant portion of these funds were
utilized to consolidate the closing of duplicate service center locations,
realigning regional and corporate functions, consolidating information systems
and reducing personnel in conjunction with mergers.
Net cash provided by investing activities for the three months ended June
30, 1997 consisted primarily of the proceeds from sales of marketable securities
offset by capital expenditures and the payments on noncompete agreements. Net
cash used in investing activities for the three months ended June 30, 1996
consisted primarily of payments for purchases of net assets of businesses
acquired. Net cash used in financing activities was $0.5 million for the three
months ended June 30, 1996. Net cash used in financing activities of $7.8
million for the three months ended June 30, 1996 consisted primarily of
repayments of outstanding debt of companies acquired.
The Company has historically financed its liquidity needs for expansion
through lines of credit provided by banks and the private and public offering of
stock. The Company has no debt outstanding on its $60 million credit facility.
-11-
<PAGE>
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
The Company believes that its current cash and cash equivalent balances
combined with the expected cash flows from operations, available credit
facility, capital markets, and vendor credit will be sufficient to fund its
liquidity needs for its existing operations and for service center expansion for
at least the next two years.
All statements contained herein that are not historical facts, including,
but not limited to, statements regarding anticipated growth in revenue, gross
margins and earnings, statements regarding the Company's current business
strategy, the Company's projected sources and uses of cash, and the Company's
plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company; competitive factors; the ability of the
Company to adequately defend or reach a settlement of outstanding litigations
and investigations involving the Company or its management; changes in labor,
equipment and capital costs; changes in regulations affecting the Company's
business; future acquisitions or strategic partnerships; general business and
economic conditions; and other factors described from time to time in the
Company's reports filed with the Securities and Exchange Commission. The Company
wishes to caution readers not to place undue reliance on any such forward-
looking statements, which statements are made pursuant to the Private Litigation
Reform Act of 1995 and, as such, speak only as of the date made.
-12-
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
(c) On March 20, 1997, the Company issued 407,317 shares of common stock,
including 31,339 shares which are being held in escrow pending the
resolution of potential indemnifiable claims, to the former
shareholder of Rad-Tech X-Ray, Inc. in exchange for all of the shares
of Rad-Tech X-Ray, Inc. common stock. The issuance of the securities
was made in reliance on the exemption from registration provided under
Section 4(2) of the Securities Act of 1933, as a transaction by an
issuer not involving a public offering. All of the securities were
acquired by the recipient for investment and with no view toward the
public resale or distribution thereof without registration. The
recipient qualified as an accredited investor, the offers and sales
were made without any public solicitation, and the stock certificates
bear restrictive legends.
On June 2, 1997, the Company issued 167,311 shares of common stock,
including 22,214 shares which are being held in escrow pending the
resolution of potential indemnifiable claims, to the former
shareholders of Thompco Medical, Inc. common stock. The issuance of
the securities was made in reliance on the exemption from registration
provided under Section 4(2) of the Securities Act of 1933, as a
transaction by an issuer not involving a public offering. All of the
securities were acquired by the recipients for investment and with no
view toward the public resale or distribution thereof without
registration. The recipients were accredited investors or
sophisticated investors the offers and sales were made without any
public solicitation and the stock certificates bear restrictive
legends.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 Amended and Restated Articles of Incorporation dated March 15,
1994. (1)
3.2 Amended and Restated Bylaws dated March 15, 1994. (1)
10.1 Financing and Security Agreement between the Company and
NationsBank of Georgia, N.A. (as successor to NCNB National Bank of
Florida), dated as of September 26, 1991, as amended. (2)
10.2 Registration Rights Agreement between the Company and Tullis-
Dickerson Capital Focus, LP, dated as of March 16, 1994. (2)
10.3 Employment Contract, as amended, for Patrick C. Kelly. (2)
10.4 Incentive Stock Option Plan dated May 14, 1986. (2)
10.5 Shareholders Agreement dated March 26, 1986, between the Company,
the Charthouse Co., Underwood, Santioni and Dunaway. (2)
10.6 Shareholders Agreement dated April 10, 1986, between the Company
and Clyde Young. (2)
10.7 Shareholders Agreement between the Company and John D. Barrow. (2)
10.8 Amended and Restated Directors Stock Plan. (7)
10.9 Amended and Restated 1994 Long Term Incentive Plan. (7)
10.10 Amended and Restated 1994 Long Term Stock Plan. (7)
10.11 1994 Employee Stock Purchase Plan (3)
10.12 1994 Amended Incentive Stock Option Plan (2)
10.13 Amended and Restated Loan and Security Agreement between the
Company and NationsBank of Georgia, N.A. dated December 21, 1994
(4)
10.14 Distributorship Agreement between Abbott Laboratories and Physician
Sales & Service, Inc. (Portions omitted as confidential -Separately
filed with Commission). (5)
10.15 Stock Purchase Agreement between Abbott Laboratories and Physician
Sales & Service, Inc. (5)
-13-
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.16 Amendment to Employee Stock Ownership Plan. (7)
10.16a Amendment and Restatement of the Physician Sales and Service, Inc.
Employee Stock Ownership and Savings Plan.
10.16b First Amendment to the Physician Sales and Service Inc. Employee
Stock Ownership and Savings Plan.
10.17 Third Amended and Restated Agreement and Plan of Merger By and
Among Taylor Medical, Inc. and Physician Sales & Service, Inc.
(including exhibits thereto) (6)
10.18 Agreement and Plan of Merger by and Among Physician Sales &
Service, Inc., PSS Merger Corp. and and Treadway Enterprises, Inc.
(8)
27 Financial Data Schedule (for SEC use only)
- -----------
(1) Incorporated by Reference to the Company's Registration Statement on Form
S-3, Registration No. 33-97524.
(2) Incorporated by Reference to the Company's Registration Statement on Form
S-1, Registration No. 33-76580.
(3) Incorporated by Reference to the Company's Registration Statement on Form
S-8, filed October 7, 1994
(4) Incorporated by Reference to the Company's Report on Form 10-Q for the
quarterly period ended December 31, 1994.
(5) Incorporated by Reference to the Company's Report on Form 10-K for the
fiscal year ended March 30, 1995.
(6) Incorporated by Reference to the Company's Report on Form 10-K for the
fiscal year ended March 30, 1996.
(7) Incorporated by Reference to the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1996
(8) Incorporated by Reference to the Company's Current Report on Form 8-K,
filed January 3, 1997.
(B) REPORTS ON FORM 8-K
None
-14-
<PAGE>
OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on August 14, 1997.
PHYSICIAN SALES & SERVICE, INC.
/s/ David A. Smith
-------------------------------
David A. Smith
Executive Vice President and
Chief Financial Officer
-15-
<PAGE>
EXHIBIT 10.16A
AMENDMENT AND RESTATEMENT
OF THE
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
------
<S> <C> <C>
ARTICLE I DEFINITIONS................................................ I-1
ARTICLE II AMENDMENT AND RESTATEMENT OF THE PLAN...................... II-1
ARTICLE III PURPOSE OF THE PLAN AND THE TRUST.......................... III-1
ARTICLE IV PLAN ADMINISTRATOR......................................... IV-1
ARTICLE V ELIGIBILITY AND PARTICIPATION.............................. V-1
ARTICLE VI CONTRIBUTIONS TO THE TRUST................................. VI-1
ARTICLE VII PARTICIPANTS' ACCOUNTS AND ALLOCATION OF CONTRIBUTIONS..... VII-1
ARTICLE VIII BENEFITS UNDER THE PLAN.................................... VIII-1
ARTICLE IX PAYMENTS OF BENEFITS, PUT OPTION AND RIGHT OF FIRST REFUSAL IX-1
ARTICLE X WITHDRAWALS AND DIVERSIFICATION DISTRIBUTIONS.............. X-1
ARTICLE XI PARTICIPANT DIRECTED INVESTMENTS........................... XI-1
ARTICLE XII TRUST FUND................................................. XII-1
ARTICLE XIII EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND.. XIII-1
ARTICLE XIV AMENDMENT AND TERMINATION.................................. XIV-1
ARTICLE XV MISCELLANEOUS.............................................. XV-1
</TABLE>
<PAGE>
AMENDMENT AND RESTATEMENT
OF THE
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
This Amendment and Restatement of the Physician Sales & Service, Inc.
Employee Stock Ownership and Savings Plan is made and entered into effective for
all purposes as of January 1, 1997, except as may be otherwise noted herein, by
Physician Sales & Service, Inc. (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has previously adopted the Amendment and Restatement
of the Physician Sales & Service, Inc. Employee Stock Ownership and Savings
Plan, which has been amended from time to time (as amended, the "Plan"); and
WHEREAS, the Company is authorized and empowered to amend the Plan; and
WHEREAS, the Company deems it advisable and in the best interests of the
Participants to amend the Plan to provide for the merger of the Brown's Medical
Supply Co. Retirement Savings Plan into this Plan effective as of January 1,
1997 (or as soon as practicable thereafter), and to include other changes
required in order to comply with applicable federal laws.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety to
read as follows:
ARTICLE I
Definitions
-----------
(a) "ACCOUNT" or "ACCOUNTS" shall mean, as required by the context, the
------- --------
entire amount held from time to time for the benefit of any one Participant, or
a portion thereof attributable to a Participant's 401(k) Elective Contributions
Account, ESOP Matching Contributions Account, ESOP Employer Contributions
Account, Rollover Contributions Account, and/or Merger Accounts, as well as a
Participant's ESOP Elective Contributions Account credited with any ESOP
Elective Contributions made by the Participant for payroll periods ending before
January 1, 1996. A Participant's ESOP Matching Contributions Account and ESOP
Employer Contributions Account may each include an Employer Securities Account
and an Other Investments Account, as set forth hereinafter. A Participant's
ESOP Elective Contributions Account may include an Employer Securities Account,
an Other Investments Account, and a Participant Investments - ESOP Elective
Contributions Account, as set forth hereinafter.
<PAGE>
(b) "ACTUAL CONTRIBUTION PERCENTAGE" shall mean, with respect to a group of
------------------------------
Participants for the Plan Year, the average of the Actual Contribution Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group.
(c) "ACTUAL CONTRIBUTION RATIO" shall mean the ratio of the amount of ESOP
-------------------------
Matching Contributions (including any other contributions which are subject to
the employee stock ownership plan provisions of this Plan and which may be
treated as matching contributions in accordance with Treasury Regulation Section
1.401(m)-1(b)(5)) made on behalf of a Participant for a Plan Year to the
Participant's Compensation for the Plan Year.
(d) "ACTUAL DEFERRAL PERCENTAGE" shall mean, with respect to a group of
--------------------------
Participants for the Plan Year, the average of the Actual Deferral Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group.
(e) "ACTUAL DEFERRAL RATIO" shall mean the ratio of the amount of 401(k)
---------------------
Elective Contributions (including 401(k) Elective Contributions by Highly
Compensated Employees in excess of the limitation set forth in paragraph
(a)(2)(A) of Article VI to the extent required by Treasury Regulation Section
1.402(g)-1(e)(1)(ii), and any Non-Elective Contributions treated as elective
contributions) made on behalf of a Participant for a Plan Year to the
Participant's Compensation for the Plan Year.
(f) "ADMINISTRATOR" shall mean the Plan Administrator.
-------------
(g) "AFFILIATE" shall mean, with respect to an Employer, any corporation
---------
other than such Employer that is a member of a controlled group of corporations,
within the meaning of Section 414(b) of the Code, of which such Employer is a
member; all other trades or businesses (whether or not incorporated) under
common control, within the meaning of Section 414(c) of the Code, with such
Employer; any service organization other than such Employer that is a member of
an affiliated service group, within the meaning of Section 414(m) of the Code,
of which such Employer is a member; and any other organization that is required
to be aggregated with such Employer under Section 414(o) of the Code. For
purposes of determining the limitations on Annual Additions, the special rules
of Section 415(h) of the Code shall apply.
(h) "AGREEMENT AND DECLARATION OF TRUST" shall mean the agreement providing
----------------------------------
for the Trust Fund, as it may be amended from time to time.
(i) "ANNUAL ADDITIONS"
----------------
(1) The term "Annual Additions" shall mean, with respect to a
Limitation Year, the sum of:
(A) the amount of the contributions made by the Employers
(including 401(k) Elective Contributions other than amounts
-2-
<PAGE>
distributed as "excess deferrals" in accordance with Treasury
Regulation Section 1.402(g)-1(e)(2) or (3)) and allocated to the
Participant under any defined contribution plan maintained by an
Employer or an Affiliate;
(B) the amount of the Employee's contributions (other than
Rollover Contributions, if any) to any contributory defined
contribution plan maintained by an Employer or an Affiliate;
(C) except as provided in subparagraph (2), any forfeitures
separately allocated to the Participant under any defined contribution
plan maintained by an Employer or an Affiliate; and
(D) if the Participant is a Key Employee, to the extent required
by law, any contributions allocated to any individual account on
behalf of such Participant under Section 401(h) or Section 419A(d) of
the Code.
(2) The amount of any ESOP Employer Contribution allocated to a
Participant for purposes of subparagraph (1)(A), if such contribution is
used to repay a loan for the purchase of Employer Securities, shall be
equal to the Participant's share of the repayment, and not to the value of
Employer Securities released from a suspense account and allocated to such
Participant's Employer Securities Accounts as a result of such repayment.
If no more than one-third of the ESOP Employer Contributions for a Plan
Year that are used to repay a loan for the purchase of Employer Securities
are allocated to Highly Compensated Employees, the Annual Additions for
such Plan Year shall not include
(A) forfeitures of Employer Securities that were acquired with
the proceeds of a loan, and
(B) amounts used to pay interest on a loan used for the purchase
of Employer Securities.
(j) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors of
------------------ -----
the Company or, when required by the context, the board of directors of an
Employer other than the Company.
(k) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
----
successor statute. Reference to a specific section of the Code shall include a
reference to any successor provision.
(l) "COMPANY" shall mean Physician Sales & Service, Inc. and its
-------
successors.
(m) "COMPENSATION"
------------
(1) The term "Compensation" shall mean the regular salaries and wages,
overtime pay, bonuses, commissions and other amounts paid by an Employer
and taxable to the Employee, as well as elective contributions made on
-3-
<PAGE>
behalf of a Participant to this Plan and any cafeteria plan maintained by
an Employer pursuant to Sections 401(k) and 125 of the Code, respectively,
but shall not include third party disability payments, tax deferred stock
options, deductible relocation expense payments, credits or benefits under
this Plan, any amount contributed to any pension, employee welfare, life
insurance or health insurance plan or arrangement (other than elective
contributions to this Plan and any cafeteria plan), or any other tax-
favored fringe benefits.
(2) For purposes of determining a Participant's Actual Deferral Ratio
with respect to any Plan Year, an Employer may limit the period for which
Compensation is taken into account to that portion of the Plan Year in
which the Employee was a Participant so long as this limit is applied
uniformly to all eligible Employees under the Plan for the Plan Year. For
all other purposes of the Plan, no Compensation paid or accrued by an
Employer with respect to an Employee prior to the Employee's first day of
participation shall be taken into account.
(3) No Compensation in excess of $150,000 (adjusted by the
Commissioner of the Internal Revenue Service in accordance with Section
401(a)(17)(B) of the Code) shall be taken into account for any Employee.
(n) "DIRECT ROLLOVER" shall mean a payment of an Eligible Rollover
---------------
Distribution by the Plan to an Eligible Retirement Plan specified by the
Distributee.
(o) "DISTRIBUTEE" shall mean
-----------
(1) a Participant, or former Participant, who is entitled to benefits
payable as a result of his retirement, disability or other severance of
employment as provided in Article VIII,
(2) a Participant's, or former Participant's, surviving Eligible
Spouse who is entitled to death benefits payable pursuant to paragraph (d)
of Article VIII, and
(3) a Participant's, or former Participant's, spouse or former spouse
who is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, entitled to benefits payable as
provided by paragraph (b)(2) of Article XV.
(p) "DIVERSIFICATION ELECTION PERIOD" shall mean the six Plan Year period
-------------------------------
beginning with the later of
(1) the Plan Year after the Plan Year in which the Participant attains
age 55; or
(2) the Plan Year after the Plan Year in which the Participant first
completes ten (10) years of participation in the Plan.
-4-
<PAGE>
(q) "EARLY RETIREMENT DATE" shall mean the first date on which a
---------------------
Participant has reached the age of 55 years and completed ten Years of Service.
(r) "EFFECTIVE DATE" of this Amendment and Restatement shall mean January
--------------
1, 1997, except as may otherwise be noted herein.
(s) "ELIGIBILITY DATE" shall mean the first day of each Plan Year or
----------------
October 1 of each Plan Year.
(t) "ELIGIBLE RETIREMENT PLAN" shall mean an individual retirement account
------------------------
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts a Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to a Participant's, or former
Participant's, surviving Eligible Spouse who is entitled to death benefits
payable pursuant to paragraph (d) of Article VIII, an Eligible Retirement Plan
shall mean an individual retirement account or individual retirement annuity.
(u) "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean any distribution of all or
------------------------------
any portion of the balance to the credit of a Distributee, other than:
(1) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
(A) for the life (or life expectancy) of the Distributee, or the
joint lives (or life expectancies) of the Distributee and the
Distributee's designated beneficiary, or
(B) for a specified period of ten years or more;
(2) any distribution to the extent such distribution is required under
Section 410(a)(9) of the Code; and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Notwithstanding the preceding provisions of this paragraph, an Eligible Rollover
Distribution shall not include one or more distributions during a Plan Year with
respect to a Participant if the aggregate amount distributed during the Year is
less than $200 (adjusted under such regulations as may be issued from time to
time by the Secretary of the Treasury).
(v) "ELIGIBLE SPOUSE" shall mean a Participant's husband or wife.
---------------
(w) "EMPLOYEE"
--------
-5-
<PAGE>
(1) The term "Employee" shall mean any person employed by an Employer
or an Affiliate other than:
(A) a member of a collective bargaining unit if retirement
benefits were a subject of good faith bargaining between such unit and
an Employer, and
(B) a nonresident alien who does not receive earned income from
sources within the United States.
(2) The term "Employee" shall also include any leased employee of the
Employer; provided, however, that contributions or benefits provided by the
leasing organization that are attributable to services performed for such
Employer shall be treated as provided by such Employer. The preceding
sentence shall not apply to any leased employee if:
(A) leased employees do not constitute more than twenty percent
(20%) of the Employer's Non-Highly Compensated Employees (as
determined without regard to this subparagraph), and
(B) such leased employee is covered by a money purchase pension
plan providing:
(i) a nonintegrated Employer Contribution rate of at least
10% of compensation (as defined in Section 414(n) of the Code),
(ii) immediate participation, and
(iii) full and immediate vesting.
(3) For purposes of this paragraph, the term "leased employee" means
any person (other than an employee of the Employer) who, pursuant to an
agreement between the Employer and any other person ("leasing
organization"), has performed services for the Employer (or for the
Employer and one or more Affiliates) on a substantially full time basis for
a period of at least one year and the individual's services are performed
under the primary direction or control of such Employer.
(x) "EMPLOYER" shall mean the Company and any subsidiary, related
--------
corporation, or other entity that adopts this Plan with the consent of the
Company.
(y) "EMPLOYER CONTRIBUTION" shall mean a discretionary contribution by an
---------------------
Employer allocated to a Participant for Plan Years beginning before March 31,
1995, which was previously credited to the Participant's Employer Contributions
Account and which is credited to the Participant's 401(k) Elective Contributions
Account pursuant to paragraph (b) of Article VII.
-6-
<PAGE>
(z) "EMPLOYER CONTRIBUTIONS ACCOUNT" shall mean an account separately
------------------------------
maintained prior to January 1, 1996, for purposes of allocating Employer
Contributions on behalf of a Participant, which has been merged with the
Participant's 401(k) Elective Contributions Account pursuant to paragraph (b) of
Article VII.
(aa) "EMPLOYER SECURITIES" shall mean common stock, any other type of stock
-------------------
or any marketable obligation (as defined in Section 407(e) of ERISA) issued by
the Company or any Affiliate of the Company; provided, however, that if Employer
Securities are purchased with borrowed funds, Employer Securities, to the extent
required by Section 4975 of the Code, shall only include
(1) such securities that are readily tradable on an established
securities market, or
(2) if none of the stock of an Employer (or any Affiliate of such
Employer other than a member of an affiliated service group that includes
such Employer) is publicly tradable on an established securities market,
common stock issued by the Employer having a combination of voting power
and dividend rights equal to or in excess of (A) that class of common stock
of the Employer or any Affiliate having the greatest voting power, and (B)
that class of common stock of the Employer or any Affiliate having the
greatest dividend rights, or
(3) noncallable preferred stock that is convertible at any time into
stock meeting the requirements of subparagraph (1) or (2) (whichever is
applicable), if such conversion is at a reasonable price (determined
pursuant to Treasury Regulation (S)54.4975-11(d)(5) as of the date of
acquisition by the Trustee).
(bb) "EMPLOYER SECURITIES ACCOUNT" shall mean an account established
---------------------------
pursuant to paragraph (b) of Article VII with respect to ESOP Employer
Contributions and/or ESOP Matching Contributions (and any ESOP Elective
Contributions made to the Plan for payroll periods ending before January 1, 1996
and not credited to Participant Investments - ESOP Elective Contributions
Accounts) invested by the Trustee in Employer Securities as required by
paragraph (a) of Article III, and adjustments thereto.
(cc) "ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, or any successor statute. References to a specific section of
ERISA shall include references to any successor provisions.
(dd) "ESOP ELECTIVE CONTRIBUTION" shall mean a contribution made by an
--------------------------
Employer at the election of a Participant for payroll periods ending before
January 1, 1996, which was credited to the Participant's ESOP Elective
Contributions Account.
(ee) "ESOP ELECTIVE CONTRIBUTIONS ACCOUNT" shall mean an account
-----------------------------------
established pursuant to paragraph (b) of Article VII with respect to ESOP
Elective Contributions made under salary reduction arrangements for payroll
-7-
<PAGE>
periods ending before January 1, 1996 and invested primarily in Employer
Securities as provided in paragraph (a) of Article III.
(ff) "ESOP EMPLOYER CONTRIBUTION" shall mean a contribution pursuant to
--------------------------
paragraph (c) of Article VI by an Employer on behalf of a Participant.
(gg) "ESOP EMPLOYER CONTRIBUTIONS ACCOUNT" shall mean an account
-----------------------------------
established pursuant to paragraph (b) of Article VII with respect to ESOP
Employer Contributions made pursuant to paragraph (c) of Article VI and invested
primarily in Employer Securities as provided in paragraph (a) of Article III.
(hh) "ESOP MATCHING CONTRIBUTION" shall mean a contribution pursuant to
--------------------------
paragraph (b) of Article VI by an Employer on behalf of a Participant.
(ii) "ESOP MATCHING CONTRIBUTIONS ACCOUNT" shall mean an account
-----------------------------------
established pursuant to paragraph (b) of Article VII with respect to ESOP
Matching Contributions made pursuant to paragraph (b) of Article VI and invested
primarily in Employer Securities as provided in paragraph (a) of Article III.
(jj) "FAIR MARKET VALUE" shall mean, for purposes of the valuation of
-----------------
Employer Securities, the closing price (or, if there is no closing price, then
the closing bid price) of such Employer Securities as reported on the Composite
Tape, or if not reported thereon, then such price as reported in the trading
reports of the principal securities exchange in the United States on which such
Employer Securities are listed, or if the Employer Securities are not listed on
a securities exchange in the United States, the mean between the dealer closing
"bid" and "ask" prices on the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System (NASDAQ),
or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of
the securities as determined in good faith and based on all relevant factors;
provided, however, that the Fair Market Value of Employer Securities not readily
tradable on an established securities market shall be determined by an
independent appraiser pursuant to Section 401(a)(28)(C) of the Code.
(kk) "401(K) ELECTIVE CONTRIBUTION" shall mean a contribution pursuant to
----------------------------
paragraph (a) of Article VI by an Employer on behalf of a Participant.
(ll) "401(K) ELECTIVE CONTRIBUTIONS ACCOUNT" shall mean an account
-------------------------------------
established pursuant to paragraph (b) of Article VII with respect to
contributions made to this Plan under salary reduction arrangements pursuant to
paragraph (a) of Article VI and as Non-Elective Employer Contributions pursuant
to paragraph (d) of Article VI. A Participant's 401(k) Elective Contributions
Account shall include amounts previously credited (1) as salary reduction
contributions to the 401(k) Plan on behalf of a Participant prior to the merger
of the 401(k) Plan with this Plan effective October 1, 1993, and (2) to the
Participant's Employer Contributions Account as of December 31, 1995, under the
terms of this Plan in effect as of such date.
-8-
<PAGE>
(mm) "401(K) PLAN" shall mean the Physician Sales & Service, Inc. 401(k)
-----------
Plan, as established and maintained by the Employers prior to its merger into
this Plan effective as of October 1, 1993.
(nn) "FUND" shall mean an investment fund established pursuant to Article
----
XI.
(oo) "HARDSHIP" shall mean an immediate and heavy financial need of the
--------
Participant for which a distribution of 401(k) Elective Contributions (as well
as any other contributions made to the 401(k) Plan and allocated to the
Participant prior to the merger of the 401(k) Plan with this Plan effective
October 1, 1993) is necessary to satisfy such need, as described in Article X.
(pp) "HIGHLY COMPENSATED EMPLOYEE"
---------------------------
(1) The term "Highly Compensated Employee" shall mean any Employee:
(A) who was a 5% owner of an Employer or an Affiliate during the
Plan Year or the immediately preceding Plan Year; or;
(B) whose Section 415 Compensation was more than $80,000
(adjusted under such regulations as may be issued by the Secretary of
the Treasury) for the immediately preceding Plan Year, and who was a
member of the "top paid group" for such preceding Year. As used
herein, "top paid group" shall mean all Employees who are in the top
20% of the Employer's or an Affiliate's work force (without regard to
employees excludable pursuant to Section 414(q) of the Code) on the
basis of Section 415 Compensation paid during the year.
(2) The term "Highly Compensated Employee" shall also mean any former
Employee who separated from service (or was deemed to have separated from
service) prior to the Plan Year, performs no service for an Employer during
the Plan Year, and was an actively employed Highly Compensated Employee in
the separation year or any Plan Year ending on or after the date the
Employee attained age 55.
(3) For purposes of this paragraph, each Employee's Section 415
Compensation shall be adjusted as required by Section 414(q)(7)(B) of the
Code for the Plan Year beginning before January 1, 1998.
(qq) "HOUR OF SERVICE"
---------------
(1) The term "Hour of Service" shall mean
(A) an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for an Employer or an
Affiliate;
-9-
<PAGE>
(B) an hour for which an Employee is paid, or entitled to
payment, by an Employer or an Affiliate 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 duty,
military duty or leave of absence. Notwithstanding the preceding,
(i) no more than 501 Hours of Service shall be credited
under this section (B) to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year);
(ii) an hour for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period during which
no duties are performed shall not be credited to the Employee if
such payment is made or due under a plan maintained solely for
the purpose of complying with applicable workmen's compensation,
or unemployment compensation or disability insurance laws; and
(iii) an hour shall not be credited for a payment which
solely reimburses an Employee for medical or medically related
expenses incurred by the Employee; and
(C) an hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or an
Affiliate; provided, that the same Hour of Service shall not be
credited both under section (A) or section (B), as the case may be,
and under this section (C). Crediting of an Hour of Service for back
pay awarded or agreed to with respect to periods described in section
(B) shall be subject to the limitations set forth in that section.
The definition set forth in this subparagraph (1) is subject to the special
rules contained in Department of Labor Regulations Sections 2530.200b-2(b)
and (c), and any regulations amending or superseding such sections, which
special rules are hereby incorporated in the definition of "Hour of
Service" by this reference.
(2) Each Employee who is not required to maintain records of his
actual Hours of Service during any month shall be credited with 190 Hours
of Service for such month if he would be credited with at least one Hour of
Service during such month under subparagraph (1).
(3) (A) Notwithstanding the other provisions of this "Hour of
Service" definition, in the case of an Employee who is absent from
work for any period by reason of her pregnancy, by reason of the birth
of a child of the Employee, by reason of the placement of a child with
-10-
<PAGE>
the Employee in connection with the adoption of such child by the
Employee or for purposes of caring for such child for a reasonable
period beginning immediately following such birth or placement, the
Employee shall be treated as having those Hours of Service described
in section (B).
(B) The Hours of Service to be credited to an Employee under the
provisions of section (A) are the Hours of Service that otherwise
would normally have been credited to such Employee but for the absence
in question or, in any case in which the Plan is unable to determine
such hours, eight Hours of Service per day of such absence; provided,
however, that the total number of hours treated as Hours of Service
under this subparagraph (3) by reason of any such pregnancy or
placement shall not exceed 501 hours.
(C) The hours treated as Hours of Service under this subparagraph
(3) shall be credited only in the Plan Year in which the absence from
work begins, if the crediting is necessary to prevent a One Year Break
in Service in such Plan Year or, in any other case, in the immediately
following Plan Year.
(D) Credit shall be given for Hours of Service under this
subparagraph (3) solely for purposes of determining whether a One Year
Break in Service has occurred for participation or vesting purposes;
credit shall not be given hereunder for any other purposes (including,
without limitation, benefit accrual).
(E) Notwithstanding any other provision of this subparagraph (3),
no credit shall be given under this subparagraph (3) unless the
Employee in question furnishes to the Administrator such timely
information as the Administrator may reasonably require to establish
that the absence from work is for reasons referred to in section (A)
and the number of days for which there was such an absence.
(rr) "KEY EMPLOYEE" shall mean any Employee or former Employee (and the
------------
beneficiaries of such Employee) who is at any time during the Plan Year (or was
at any time during the four preceding Plan Years)
(1) an officer of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates in excess of 50%
of the amount in effect under Section 415(b)(1)(A) of the Code for any such
Plan Year; provided, however, that no more than the lesser of--
(A) 50 Employees, or
(B) the greater of (i) three Employees or (ii) 10 percent of all
Employees,
-11-
<PAGE>
shall be treated as officers, and such officers shall be those with the
highest annual compensation in the five-year period;
(2) one of the ten Employees owning (or considered as owning) the
largest interests in an Employer or an Affiliate, owning more than a 1/2%
interest in the Employer or an Affiliate, and having an aggregate annual
compensation from the Employer and its Affiliates of more than the
limitation in effect under Section 415(c)(1)(A) of the Code for the
calendar year that includes the last day of the Plan Year;
(3) a 5% owner of an Employer or an Affiliate; or
(4) a 1% owner of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates of more than
$150,000.
Ownership shall be determined in accordance with Code section 416(i)(1)(B) and
(C). For purposes of section (2), if two Employees have the same ownership
interest in an Employer or an Affiliate, the Employee having the greatest annual
compensation from the Employer and all Affiliates shall be treated as having a
larger interest. For purposes of this paragraph, "compensation" shall mean
compensation as defined in Section 415(c)(3) of the Code, but including amounts
contributed by an Employer on behalf of an Employee pursuant to a salary
reduction agreement which are excludable from the Employee's gross income under
Section 125, Section 402(a)(8), Section 402(h), or Section 403(b) of the Code.
(ss) "LEAVE OF ABSENCE" shall mean the time granted to an Employee for
----------------
vacation, sick leave, temporary layoff or other purposes, all as authorized in
accordance with uniform rules adopted by his Employer from time to time. Leave
of Absence shall also include the time that an Employee serves in the armed
forces of the United States of America during a period of national emergency or
as a result of the operation of a compulsory military service law of the United
States of America, and during any period after his discharge from such armed
forces in which his employment rights are guaranteed by law.
(tt) "LIMITATION YEAR" shall mean the Plan Year.
---------------
(uu) "MERGER ACCOUNTS" shall mean the account or accounts established
---------------
pursuant to paragraph (b) of Article VII with respect to contributions to the
Brown's Medical Supply Co. Retirement Savings Plan (and any other tax-qualified
retirement plan that may be merged with this Plan from time to time) on behalf
of a Participant prior to the merger of the Brown's Medical Supply Co.
Retirement Savings Plan (and any other merged plan) with this Plan effective as
of January 1, 1997 (or as soon thereafter as administratively feasible (and,
with respect to any other merged plan, the effective date of such subsequent
merger)).
-12-
<PAGE>
(vv) "NON-ELECTIVE CONTRIBUTION" shall mean a contribution pursuant to
-------------------------
paragraph (d) of Article VI by an Employer on behalf of a Participant.
(ww) "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean, with respect to any Plan
-------------------------------
Year, an Employee who is not a Highly Compensated Employee.
(xx) "NON-KEY EMPLOYEE" shall mean, with respect to any Plan Year, an
----------------
Employee or former Employee who is not a Key Employee (including any such
Employee who formerly was a Key Employee).
(yy) "NORMAL RETIREMENT DATE" shall mean the date on which a Participant
----------------------
attains the age of 65 years.
(zz) "ONE YEAR BREAK IN SERVICE" shall mean a 12-month Plan Year in which
-------------------------
an Employee has 500 or fewer Hours of Service, and it shall be deemed to occur
on the last day of any such Plan Year. For the short Plan Year beginning
January 1, 1989 and ending March 30, 1989, a "One Year Break in Service" shall
be credited to an Employee who has 500 or fewer Hours of Service during the 12-
month period beginning January 1, 1989 and ending December 31, 1989.
(aaa) "OTHER INVESTMENTS ACCOUNT" shall mean an account established
-------------------------
pursuant to paragraph (b) of Article VII with respect to ESOP Employer
Contributions and/or ESOP Matching Contributions invested in assets other than
Employer Securities, and adjustments thereto. The term "Other Investments
Account" shall also mean an account established pursuant to paragraph (b) of
Article VII with respect to any ESOP Elective Contributions made for payroll
periods ending before January 1, 1996 invested in assets other than Employer
Securities or Funds described in Article XI, and adjustments thereto.
(bbb) "PARTICIPANT" shall mean any eligible Employee of an Employer who
-----------
has become a Participant under the Plan and shall include any former employee of
an Employer who became a Participant under the Plan and (1) who still has a
balance in an Account under the Plan or (2) is entitled to an allocation of a
contribution pursuant to paragraph (e)(2) of Article VII.
(ccc) "PARTICIPANT INVESTMENTS - ESOP ELECTIVE CONTRIBUTIONS ACCOUNT"
-------------------------------------------------------------
shall mean an account established pursuant to paragraph (b) of Article VII with
respect to the segregated portion of each Participant's ESOP Elective
Contributions Account invested in accordance with the Designated Investments
provisions of Article XI, and adjustments thereto.
(ddd) "PLAN" shall mean the Physician Sales & Service, Inc. Employee Stock
----
Ownership and Savings Plan as herein set forth, as it may be amended from time
to time.
(eee) "PLAN ADMINISTRATOR" shall mean the Company.
------------------
(fff) "PLAN YEAR" shall mean
---------
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<PAGE>
(1) for Plan Years beginning before January 1, 1989, the 12-month
period ending on December 31 of each year,
(2) for the Plan Year beginning on January 1, 1989, the period
beginning on January 1, 1989, and ending on March 30, 1989, and
(3) for Plan Years beginning after March 30, 1989, the 12-month period
ending on the Thursday nearest March 31 of each year.
(ggg) "ROLLOVER CONTRIBUTION" shall mean a contribution pursuant to
---------------------
paragraph (i) of Article VI by an Employer on behalf of an Employee.
(hhh) "ROLLOVER CONTRIBUTIONS ACCOUNT" shall mean an account established
------------------------------
pursuant to paragraph (b) of Article VII with respect to qualified Rollover
Contributions made pursuant to paragraph (i) of Article VI.
(iii) "SECTION 415 COMPENSATION" shall mean:
------------------------
(1) Wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer to the extent that the amounts are includible in gross
income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described in Section 1.62-2(c) of the Income Tax Regulations), and
(2) Effective for Plan Years beginning after December 31, 1997,
(A) any elective deferral (as defined in Section 402(g)(3) of the
Code), and
(B) any amount which is contributed or deferred by the Employer
at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Section 125 or 457 of the
Code.
(3) Section 415 Compensation shall exclude the following:
(A) Employer contributions (except as set forth in subparagraph
(2) above) to a plan of deferred compensation which are not includible
in the Employee's gross income for the taxable year in which
contributed, or Employer contributions (except as set forth in
subparagraph (2) above) under a simplified employee pension or any
distributions from a plan of deferred compensation; provided, however,
that any amounts received by an Employee pursuant to an unfunded non-
qualified plan are permitted to be considered as Section 415
-14-
<PAGE>
Compensation in the year the amounts are includible in the gross
income of the Employee;
(B) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(D) Effective for the Plan Year beginning prior to January 1,
1998, other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Section 403(b) of the Code (whether or not the
contributions are actually excludable from the gross income of the
Employee).
(jjj) "TOP HEAVY PLAN" shall mean this Plan if the aggregate account
--------------
balances (not including voluntary rollover contributions made by any Participant
from an unrelated plan) of the Key Employees and their beneficiaries for such
Plan Year exceed 60% of the aggregate account balances (not including voluntary
rollover contributions made by any Participant from an unrelated plan) for all
Participants and their beneficiaries. Such values shall be determined for any
Plan Year as of the last day of the immediately preceding Plan Year. The
account balances on any determination date shall include the aggregate
distributions made with respect to Participants during the five-year period
ending on the determination date. For the purposes of this definition, the
aggregate account balances for any Plan Year shall include the account balances
and accrued benefits of all retirement plans qualified under Section 401(a) of
the Code with which this Plan is required to be aggregated to meet the
requirements of Section 401(a)(4) or 410 of the Code (including terminated plans
that would have been required to be aggregated with this Plan) and all plans of
an Employer or an Affiliate in which a Key Employee participates; and such term
may include (at the discretion of the Plan Administrator) any other retirement
plan qualified under Section 401(a) of the Code that is maintained by an
Employer or an Affiliate, provided the resulting aggregation group satisfies the
requirements of Sections 401(a) and 410 of the Code. All calculations shall be
on the basis of actuarial assumptions that are specified by the Plan
Administrator and applied on a uniform basis to all plans in the applicable
aggregation group. The account balance of any Participant shall not be taken
into account if:
(1) he is a Non-Key Employee for any Plan Year, but was a Key Employee
for any prior Plan Year, or
(2) for Plan Years beginning after December 31, 1984, he has not
performed any service for an Employer during the five-year period ending on
the determination date.
-15-
<PAGE>
(kkk) "TRUST" shall mean the trust established by the Agreement and
-----
Declaration of Trust.
(lll) "TRUSTEE" shall mean the individual, individuals or corporation
-------
designated as trustee under the Agreement and Declaration of Trust.
(mmm) "TRUST FUND" shall mean the trust fund established under the
----------
Agreement and Declaration of Trust from which the amounts of supplementary
compensation provided for by the Plan are to be paid or are to be funded.
(nnn) "VALUATION DATE" shall mean the last day of the Plan Year, June 30,
--------------
September 30, and December 31 of each Plan Year, and such other dates as may be
selected by the Plan Administrator.
(ooo) "VALUATION PERIOD" shall mean the period beginning with the first
----------------
day after a Valuation Date and ending with the next Valuation Date.
(ppp) "YEAR OF SERVICE"
---------------
(1)The term "Year of Service" shall mean
(A) for all purposes of this Plan except for purposes of Article
V, a Plan Year during which an Employee completes 1,000 or more Hours
of Service; provided, however, that, for the Plan Year commencing
before January 1, 1989 or after March 30, 1989, a "Year of Service"
shall be credited to any Employee who completes 1,000 or more Hours of
Service during the 12-month period beginning March 31, 1988 and ending
March 30, 1989.
(B) for purposes of Article V, the consecutive 12-month period
beginning with the date of the Employee's first Hour of Service for
his Employer or any Affiliate thereof (or his first Hour of Service
after a One Year Break in Service) if, during such consecutive 12-
month period, the Employee completes 1,000 Hours of Service for an
Employer or an Affiliate thereof; provided, however, that if, during
such consecutive 12-month period, the Employee does not complete 1,000
Hours of Service, then "Year of Service" shall mean any Plan Year
beginning after the date of the Employee's first Hour of Service
during which the Employee completes 1,000 or more Hours of Service.
In either event, for purposes of Article V, the Year of Service is not
completed until the end of the consecutive 12-month period or the Plan
Year, as the case may be, without regard to when during the period
that the 1,000 Hours of Service are completed. In determining his
Years of Service the Employee shall receive credit for his Hours of
Service for his Employer or any Affiliate thereof, whether or not he
was an Employee at the time such Hours of Service were completed.
-16-
<PAGE>
(2) For purposes of Article VIII and subparagraph (a)(5) of Article
XIV, an Employee's "Years of Service" shall not include the following:
(A) any Year of Service prior to a One Year Break in Service, but
only prior to such time as the Participant has completed a Year of
Service after such One Year Break in Service; and
(B) any Year of Service prior to a One Year Break in Service if
the Participant had no vested interest in the balance of his Employer
Contributions Account at the time of such One Year Break in Service
and if the number of consecutive years in which a One Year Break in
Service occurred equaled or exceeded the greater of five or the number
of Years of Service completed by the Employee prior thereto (not
including any Years of Service not required to be taken into
consideration under the Plan as then in effect as a result of any
prior One Year Break in Service); provided, however, that for these
purposes, any One Year Break in Service resulting from a Leave of
Absence shall not be counted but shall be disregarded.
Notwithstanding the foregoing, Years of Service shall not be determined
under this subparagraph (2) until the first Plan Year beginning after the
Effective Date of this Amendment and Restatement, but shall be determined
for prior periods under the Plan as in effect prior to this Amendment and
Restatement.
(3) For each Employee previously employed by a business acquired by an
Employer on or after October 1, 1993 (directly or through the Employer's
purchase of all or substantially all of the assets of the business), such
Employee's "Years of Service" shall include, for purposes of Article V,
service with the Employee's predecessor employer if:
(A) the Employee was employed by the business on the date it was
acquired by the Employer; and
(B) the Employee's predecessor employer employed not less than 30
employees on the date it was acquired by the Employer.
-17-
<PAGE>
ARTICLE II
Amendment and Restatement of the Plan
-------------------------------------
The Employers' combined employee stock ownership plan and 401(k) plan is
hereby amended and restated in accordance with the terms hereof. The amended
and restated Plan shall continue to be known as the "PHYSICIAN SALES & SERVICE,
INC. EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN."
-18-
<PAGE>
ARTICLE III
Purpose of the Plan and the Trust
---------------------------------
(a) EXCLUSIVE BENEFIT. This Plan is created for the sole purpose of
-----------------
providing benefits to the Participants and enabling them to share in the growth
of their Employer and is designed to invest ESOP Matching Contributions and ESOP
Employer Contributions (as well as ESOP Elective Contributions made for payroll
periods before January 1, 1996) primarily in Employer Securities. Except as
otherwise provided herein and as otherwise permitted by law, in no event shall
any part of the principal or income of the Trust be paid to or reinvested in any
Employer or be used for or diverted to any purpose whatsoever other than for the
exclusive benefit of the Participants and their beneficiaries.
(b) RETURN OF CONTRIBUTIONS. Notwithstanding the foregoing provisions of
-----------------------
paragraph (a), any contribution made by an Employer to this Plan by a mistake of
fact may be returned to the Employer within one year after the payment of the
contribution; and any contribution made by an Employer that is conditioned upon
the deductibility of the contribution under Section 404 of the Code (each
contribution shall be presumed to be so conditioned unless the Employer
specifies otherwise) may be returned to the Employer if the deduction is
disallowed and the contribution is returned (to the extent disallowed) within
one year after the disallowance of the deduction.
(c) PARTICIPANTS' RIGHTS. The establishment of this Plan shall not be
--------------------
considered as giving any Employee, or any other person, any legal or equitable
right against any Employer, any Affiliate, the Plan Administrator, the Trustee
or the principal or the income of the Trust, except to the extent otherwise
provided by law. The establishment of this Plan shall not be considered as
giving any Employee, or any other person, the right to be retained in the employ
of any Employer or any Affiliate.
(d) QUALIFIED PLAN. This Plan and the Trust are intended to qualify under
--------------
the Code as a tax-free employees' plan and trust, as a cash or deferred
arrangement subject to Section 401(k) of the Code, and as an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the Code. The
provisions of this Plan and the Trust should be interpreted accordingly.
-19-
<PAGE>
ARTICLE IV
Plan Administrator
------------------
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall control and
--------------------------
manage the operation and administration of the Plan, except with respect to
investments. The Administrator shall have no duty with respect to the
investments to be made of the funds in the Trust except as may be expressly
assigned to it by the terms of the Agreement and Declaration of Trust.
(b) POWERS AND DUTIES. The Administrator shall have complete control over
-----------------
the administration of the Plan herein embodied, with all powers necessary to
enable it to carry out its duties in that respect. Not in limitation, but in
amplification of the foregoing, the Administrator shall have the power and
discretion to interpret or construe this Plan and to determine all questions
that may arise as to the status and rights of the Participants and others
hereunder.
(c) DIRECTION OF TRUSTEE. It shall be the duty of the Administrator to
--------------------
direct the Trustee with regard to the allocation and the distribution of the
benefits to the Participants and others hereunder.
(d) SUMMARY PLAN DESCRIPTION. The Administrator shall prepare or cause to
------------------------
be prepared a Summary Plan Description (if required by law) and such periodic
and annual reports as are required by law.
(e) DISCLOSURE. At least once each year, the Administrator shall furnish
----------
to each Participant a statement containing the value of his interest in the
Trust Fund and such other information as may be required by law.
(f) CONFLICT IN TERMS. The Administrator shall notify each Employee, in
-----------------
writing, as to the existence of the Plan and Trust and the basic provisions
thereof. In the event of any conflict between the terms of this Plan and Trust
as set forth in this Plan and in the Agreement and Declaration of Trust and as
set forth in any explanatory booklet or other description, this Plan and the
Agreement and Declaration of Trust shall control.
(g) NONDISCRIMINATION. The Administrator shall not take any action or
-----------------
direct the Trustee to take any action whatsoever that would result in unfairly
benefiting one Participant or group of Participants at the expense of another or
in improperly discriminating between Participants similarly situated or in the
application of different rules to substantially similar sets of facts.
(h) RECORDS. The Administrator shall keep a complete record of all its
-------
proceedings as such Administrator and all data necessary for the administration
of the Plan. All of the foregoing records and data shall be located at the
principal office of the Administrator.
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<PAGE>
(i) FINAL AUTHORITY. Except to the extent otherwise required by law, the
---------------
decision of the Administrator in matters within its jurisdiction shall be final,
binding and conclusive upon each Employer and each Employee, member and
beneficiary and every other interested or concerned person or party.
(j) CLAIMS.
------
(1) Claims for benefits under the Plan may be made by a Participant or
a beneficiary of a Participant on forms supplied by the Plan Administrator.
Written notice of the disposition of a claim shall be furnished to the
claimant by the Administrator within ninety (90) days after the application
is filed with the Administrator, unless special circumstances require an
extension of time for processing, in which event action shall be taken as
soon as possible, but not later than one hundred eighty (180) days after
the application is filed with the Administrator; and, in the event that no
action has been taken within such ninety (90) or one hundred eighty (180)
day period, the claim shall be deemed to be denied for the purposes of
subparagraph (2). In the event that the claim is denied, the denial shall
be written in a manner calculated to be understood by the claimant and
shall include the specific reasons for the denial, specific references to
pertinent Plan provisions on which the denial is based, a description of
the material information, if any, necessary for the claimant to perfect the
claim, an explanation of why such material information is necessary and an
explanation of the claim review procedure.
(2) If a claim is denied (either in the form of a written denial or by
the failure of the Plan Administrator, within the required time period, to
notify the claimant of the action taken), a claimant or his duly authorized
representative shall have sixty (60) days after the receipt of such denial
to petition the Plan Administrator in writing for a full and fair review of
the denial, during which time the claimant or his duly authorized
representative shall have the right to review pertinent documents and to
submit issues and comments in writing. The Plan Administrator shall
promptly review the claim and shall make a decision not later than sixty
(60) days after receipt of the request for review, unless special
circumstances require an extension of time for processing, in which event a
decision shall be rendered as soon as possible, but not later than one
hundred twenty (120) days after the receipt of the request for review. If
such an extension is required because of special circumstances, written
notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. The decision of the review shall be in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, with specific
references to the Plan provisions on which the decision is based.
(k) APPOINTMENT OF ADVISORS. The Administrator may appoint such
-----------------------
accountants, counsel (who may be counsel for an Employer), specialists and other
persons that it deems necessary and desirable in connection with the
administration of this Plan. The Administrator, by action of its Board of
Directors, may designate one or more of its employees to perform the duties
required of the Administrator hereunder.
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<PAGE>
ARTICLE V
Eligibility and Participation
-----------------------------
(a) CURRENT PARTICIPANTS. Any Employee who was a Participant in this Plan
--------------------
on the Effective Date of this Amendment and Restatement shall remain as a
Participant in the Plan.
(b) ELIGIBILITY AND PARTICIPATION. Thereafter, any Employee of an Employer
-----------------------------
shall be eligible to become a Participant in the Plan upon completing one Year
of Service. Any such eligible Employee shall enter the Plan as a Participant,
if he is still an Employee of an Employer, on the first Eligibility Date
concurring therewith or occurring thereafter. An Employee who has completed one
Year of Service prior to becoming an Employee of an Employer shall enter the
Plan as a Participant on the date he becomes an Employee of an Employer (or, if
later, on the first Eligibility Date following the completion of his eligibility
requirements).
(c) FORMER EMPLOYEES. An Employee who ceases to be a Participant and who
----------------
subsequently reenters the employ of an Employer shall be eligible again to
become a Participant on the date of his reemployment.
-22-
<PAGE>
ARTICLE VI
Contributions to the Trust
--------------------------
(a) PARTICIPANTS' 401(K) ELECTIVE CONTRIBUTIONS.
-------------------------------------------
(1) Each Employer shall contribute to the Trust, on behalf of each
Participant, a 401(k) Elective Contribution as specified in a written
salary reduction agreement (if any) between the Participant and such
Employer under which the Participant elects, pursuant to the terms of this
Plan, to reduce the compensation otherwise payable to him by an amount
allocable to his 401(k) Elective Contributions Account.
(2) The 401(k) Elective Contribution for a Participant shall not
exceed the lesser of
(A) (i) $7,000 (adjusted under such regulations as may be
issued from time to time by the Secretary of the Treasury) with
respect to any calendar year,
(ii) reduced, during the calendar year immediately following
the year of a Participant's Hardship withdrawal, pursuant to
paragraph (a) of Article X, by the amount of such Participant's
aggregate 401(k) Elective Contributions for the year of the
Hardship withdrawal, or
(B) 20% of the Participant's Compensation for such Plan Year (or
such lower percentage as may be selected by the Board of Directors for
the Plan Year).
The minimum contribution made on behalf of a Participant electing to make a
contribution pursuant to this paragraph (a) for any Plan Year shall be 1%
of his Compensation.
(3) (A) If a Participant's 401(k) Elective Contributions made
pursuant to paragraph (a)(1) of this Article VI, together with any
elective contributions by the Participant to any other plans of his
Employer or an Affiliate intended to qualify under Sections 401(k) or
403(b) of the Code, exceed the limitation set forth in paragraph
(a)(2)(A) of this Article VI for any calendar year, the Administrator,
upon notification from the Participant or his Employer, shall refund
to such Participant the portion of such excess that is attributable to
contributions made pursuant to paragraph (a)(1), increased by the
earnings thereon for such calendar year (such earnings shall be
determined by the Plan Administrator, as of the last day of the
calendar year preceding the date the refund is made, in a manner
consistent with the provisions of paragraph (e)(1) of Article VII and
-23-
<PAGE>
Treasury Regulation Section 1.402(g)-1(e)(5)) and reduced by any
excess 401(k) Elective Contributions, and earnings, for the Plan Year
beginning with or within the calendar year that have been previously
distributed to the Participant in accordance with the provisions of
paragraph (a)(8). Any such refund shall be made on or before April 15
of the calendar year following the calendar year in which the excess
401(k) Elective Contributions are made.
(B) If a Participant's 401(k) Elective Contributions made
pursuant to paragraph (a)(1) of this Article VI, together with any
elective contributions by the Participant to any other plans intended
to qualify under Sections 401(k), 403(b), 408(k) or 457 of the Code,
exceed the limitation set forth in paragraph (a)(2)(A) of this Article
VI for any calendar year (after the application of paragraph
(a)(3)(A)), the Administrator may refund to such Participant, at the
Participant's request, the portion of such excess that is attributable
to contributions made pursuant to paragraph (a)(1), increased by the
earnings thereon for such calendar year (determined as provided in
paragraph (a)(3)(A)) and reduced by any excess 401(k) Elective
Contributions, and earnings, for the Plan Year beginning with or
within the calendar year that have been previously distributed to the
Participant in accordance with the provisions of paragraph (a)(8).
Any such refund shall be made on or before April 15 of the calendar
year following the calendar year in which the excess 401(k) Elective
Contributions are made.
(C) Excess 401(k) Elective Contributions, and earnings, shall be
determined for purposes of paragraphs (a)(2)(A), (a)(3)(A) and
(a)(3)(B) after taking into account any previous refunds to the
Participant of excess 401(k) Elective Contributions, and earnings, for
the Plan Year ending with or within the calendar year made in
accordance with the provisions of paragraph (a)(8).
(4) Any salary reduction agreement with respect to 401(k) Elective
Contributions shall be executed and in effect prior to the first day of the
first pay period to which it applies. Any such agreement may be revised by
the Participant, with the approval of the Administrator, as of the first
day of any Plan Year, and as of any July 1, October 1, January 1, or any
other date selected by the Administrator, for pay periods beginning after
the date such revision is executed and made effective. Any separate salary
reduction agreement with respect to 401(k) Elective Contributions relating
to a cash bonus shall be executed and in effect prior to the date on which
the bonus is payable.
(5) The Administrator shall have the right to require any Participant
to reduce his 401(k) Elective Contributions under any such agreements, or
to refuse deferral of all or part of the amount set forth in such
agreements, if necessary to comply with the requirements of this Plan and
the Code.
-24-
<PAGE>
(6) A Participant may suspend further 401(k) Elective Contributions to
the Plan at any time, provided the request for such suspension is received
by the Plan Administrator prior to the first day of the first pay period to
which such suspension applies. Any Participant who suspends further
contributions relating to periodic pay may reinstate such contributions by
providing written notice to the Plan Administrator prior to the first day
of any quarter of the Plan Year thereafter.
(7) In the event that a Participant receives a withdrawal of his
401(k) Elective Contributions pursuant to paragraph (a) of Article X, such
Participant shall not be permitted to make any further 401(k) Elective
Contributions pursuant to paragraph (a)(1) of this Article VI until the
first day of the quarter of the Plan Year following the expiration of 12
months from the date of such withdrawal.
(8) (A) In the event that the 401(k) Elective Contributions of
Highly Compensated Employees exceed the limitations set forth in
paragraph (g), such excess (plus the earnings thereon for the Plan
Year to which the excess contributions relate), determined as set
forth below, shall be distributed to the Highly Compensated Employees
on or before the 15th day of the third month after the close of the
Plan Year to which the excess contributions relate. Notwithstanding
the preceding sentence, the Plan Administrator may delay the
distribution of any excess 401(k) Elective Contributions (plus the
earnings thereon for the Plan Year to which the excess contributions
relate) attributable to an Employer beyond the 15th day of the third
month of such Plan Year, if the Employer consents to such delay and
the Administrator refunds all such excess amounts not later than 12
months after the close of the Plan Year to which the excess
contributions relate.
(B) (i) The amount of such excess for the Plan Year shall be
equal to the amount by which the Actual Deferral Ratio of the
Highly Compensated Employee with the highest Actual Deferral
Ratio for the Plan Year would be reduced to the extent required
to:
a. enable the arrangement to satisfy the limitations
set forth in paragraph (g), or
b. cause such Highly Compensated Employee's Actual
Deferral Ratio to equal the Actual Deferral Ratio of the
Highly Compensated Employee with the next highest Actual
Deferral Ratio.
This process shall be repeated until the arrangement satisfies
the limitations set forth in paragraph (g).
(ii) For each Highly Compensated Employee, the amount of
such excess shall be deemed to equal
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<PAGE>
a. the total 401(k) Elective Contributions on behalf
of the Participant (determined prior to the application of
this paragraph (a)(8), minus
b. the amount determined by multiplying the
Participant's Actual Deferral Ratio (determined after
application of this paragraph (a)(8)) by his Compensation
used in determining such ratio.
(C) The 401(k) Elective Contributions of the Highly Compensated
Employee with the highest dollar amount of 401(k) Elective
Contributions for the Plan Year shall be reduced by an amount equal to
the excess 401(k) Elective Contributions determined under paragraph
(a)(8)(B). The reduced amount shall be distributed to such Highly
Compensated Employee in accordance with paragraph (a)(8)(A); provided,
further, that such Highly Compensated Employee's 401(k) Elective
Contributions shall be reduced to a level that is equal to the 401(k)
Elective Contributions of the Highly Compensated Employee with the
next highest dollar amount of 401(k) Elective Contributions.
Thereafter, the 401(k) Elective Contributions of the Highly
Compensated Employees with the same dollar amounts of 401(k) Elective
Contributions shall be reduced on an equal basis by an amount equal to
any additional excess 401(k) Elective Contributions determined under
paragraph (a)(8)(B) above, which reduced amounts shall be distributed
to such Highly Compensated Employees in accordance with paragraph
(a)(8)(A). For purposes of this paragraph (a)(8)(C), 401(k) Elective
Contributions shall include amounts treated as elective contributions.
(D) The amount of excess 401(k) Elective Contributions that may
be distributed under this paragraph (a)(8) with respect to a
Participant for a Plan Year shall be reduced by any excess deferrals
previously distributed to such Participant under paragraph (a)(3) for
the Participant's taxable year ending with or within such Plan Year.
(E) The Plan Administrator may use any reasonable method for
computing the income allocable to excess contributions, provided that
the method does not violate Section 401(a)(4) of the Code, is used
consistently for all Participants and for all corrective distributions
under the Plan for the Plan Year, and is used by the Plan for
allocating income to Participants' Accounts.
(b) ESOP MATCHING CONTRIBUTIONS.
---------------------------
(1) (A) Each Employer, at the discretion of the Board of Directors
of the Company, may contribute to the Trust an ESOP Matching
Contribution on behalf of each eligible Participant (as determined
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<PAGE>
pursuant to subparagraph (b)(2)) for whom a 401(k) Elective
Contribution is made during the Plan Year. The amount allocable to a
Participant eligible to share in the ESOP Matching Contribution for
the Plan Year shall be
(i) the amount that shall bear the same ratio to the total
of such contribution for the Plan Year
(ii) as the Participant's Recognized 401(k) Elective
Contribution for such Plan Year bears to the aggregate Recognized
401(k) Elective Contributions of all Participants employed by
such Employer who are eligible to share in the contribution for
such Plan Year.
(B) A Participant's Recognized 401(k) Elective Contribution shall
be equal to
(i) the amount of his 401(k) Elective Contribution made to
the Plan pursuant to paragraph (a)(1) of this Article VI,
(ii) reduced by any portion of his 401(k) Elective
Contribution in excess of a specified percentage of each
Participant's Compensation or a specified maximum dollar amount,
as determined by the Board of such Employer for the Plan Year and
applied consistently to each Participant.
No ESOP Matching Contribution shall be required to be taken into
consideration under section (B)(i) for the portion of a Participant's
401(k) Elective Contribution subject to the refund requirements of
paragraphs (a)(3) and (a)(8).
(2) (A) Except as otherwise provided in this subparagraph (2), a
Participant shall be eligible to share in the ESOP Matching
Contribution described in subparagraph (1) for a Plan Year if he has
completed 1,000 Hours of Service during the Plan Year and if he is
employed by his Employer on the last day of such Plan Year (or if his
employment is terminated by his retirement, disability [as defined in
paragraph (b)(2) of Article IX] or death).
(B) In the event that the eligibility requirements set forth in
section (A) would cause this Plan to fail to meet the coverage
requirements of this section (B) for any Plan Year, a Participant
shall also be entitled to share in the ESOP Matching Contribution if
he meets the requirements of section (C). In order to meet the
coverage requirements of this section (B) for the Plan Year, the
Plan's "ratio percentage" for the Plan Year shall be at least seventy
percent (70%). For purposes of this section (B), the Plan's "ratio
percentage" shall mean the percentage (rounded to the nearest
hundredth of a percentage point) determined by dividing the percentage
of the Non-Highly Compensated Employees who benefit under the Plan by
the percentage of the Highly Compensated Employees who benefit under
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<PAGE>
the Plan. The percentage of the Non-Highly Compensated Employees who
benefit under the Plan shall be determined by dividing the number of
Non-Highly Compensated Employees who are Participants in the Plan and
are entitled to share in ESOP Matching Contributions under the Plan by
the total number of Non-Highly Compensated Employees who have met the
eligibility and participation requirements of Article V. The
percentage of the Highly Compensated Employees who benefit under the
Plan shall be determined by dividing the number of Highly Compensated
Employees who are Participants in the Plan and are entitled to share
in ESOP Matching Contributions under the Plan by the total number of
Highly Compensated Employees who have met the eligibility and
participation requirements of Article V. The Plan's "ratio
percentage" shall be determined as of the last day of the Plan Year,
taking into account all Employees who were Employees on any day during
the Plan Year.
(C) If this Plan would otherwise fail to meet the coverage
requirements of section (B) for a Plan Year, a Participant shall be
entitled to share in the ESOP Matching Contribution pursuant to this
section (C) if:
(i) he is a Non-Highly Compensated Employee;
(ii) he completes 500 Hours of Service during such Plan
Year, regardless of whether such Plan Year constitutes a Year of
Service for such Participant or whether he is employed by his
Employer on the last day of the Plan Year; and
(iii) the allocation of an ESOP Matching Contribution to
the Participant is required by this section (C)(iii). The number
of Participants entitled to an allocation required by this
section (C)(iii) (the "Required Number of Participants"), when
added to the Non-Highly Compensated Employees who are eligible to
receive an allocation pursuant to the provisions of section (A)
above, shall be equal to the minimum number of Non-Highly
Compensated Employees who are required to be eligible for an ESOP
Matching Contribution from the Plan during the Plan Year in order
to meet the minimum coverage requirements of section (B). An
allocation is required by this section (C)(iii) if a Participant
is among the Required Number of Participants paid the lowest
Compensation by their Employers for the Plan Year (determined
without regard to those Participants who are entitled to an
allocation pursuant to section (A) above). If two or more
Participants would otherwise be determined to have been paid the
same amount of Compensation by their Employers for the Plan Year,
then the Participant who was first credited with an Hour of
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<PAGE>
Service for his Employer or any Affiliate thereof shall be deemed
to paid the lowest Compensation of such two or more Participants
and the Participant who was next credited with an Hour of Service
for his Employer or any Affiliate thereof shall be deemed to paid
the next lowest Compensation and the process shall be repeated
until the Plan Administrator has determined the Participants who
are among the Required Number of Participants paid the lowest
Compensation by their Employers for the Plan Year.
(3) Except as noted in subparagraph (4), any ESOP Matching
Contribution made by an Employer on account of a 401(k) Elective
Contribution that has been refunded pursuant to paragraph (a)(3) or
paragraph (a)(8), above, shall be forfeited. Unless otherwise required by
paragraph (c)(4)(C) of Article VIII such forfeiture shall be used to reduce
ESOP Matching Contributions for the Plan Year in which the forfeiture
occurs. In the event that forfeitures arising pursuant to this
subparagraph (3) exceed the amount that may be used to reduce ESOP Matching
Contributions for the Plan Year, any additional forfeitures shall be
allocated as additional ESOP Employer Contributions in accordance with
paragraph (c) of this Article VI.
In the case of a Highly Compensated Employee whose Actual
Contribution Ratio is determined under the family aggregation rules
set forth in paragraph (e)(3), the determination of the amount of the
excess shall be made by reducing the Actual Contribution Ratio in
accordance with this subparagraph (b)(4) and allocating the excess
among the Family Members in proportion to the contribution made on
behalf of each of the Family Members that have been combined.
(4) In the event that the ESOP Matching Contributions of Highly
Compensated Employees exceed the limitations of paragraph (g):
(A) The nonvested portion of such excess (including earnings
thereon for the Plan Year to which the excess contributions relate),
if any, shall be forfeited. Unless otherwise required by paragraph
(c)(4)(C) of Article VIII such forfeiture shall be used first to
reduce Employer ESOP Matching Contributions for the Plan Year under
this paragraph (b). In the event that forfeitures arising pursuant to
this paragraph (b)(4)(A) exceed the amount that may be used to reduce
ESOP Matching Contributions for the Plan Year, any additional
forfeitures shall be allocated as additional ESOP Employer
Contributions in accordance with paragraph (c) of this Article VI.
(B) The vested portion of such excess (including earnings thereon
for the Plan Year to which the excess contributions relate), if any,
shall be distributed to the Highly Compensated Employees on or before
the 15th day of the third month after the close of the Plan Year to
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<PAGE>
which the ESOP Matching Contributions relate. Notwithstanding the
preceding sentence, the Plan Administrator may delay the distribution
of any excess ESOP Matching Contributions (plus the earnings thereon
for the Plan Year to which the excess contributions relate)
attributable to an Employer beyond the 15th day of the third month of
such Plan Year, if the Employer consents to such delay and the
Administrator refunds all such excess amounts not later than 12 months
after the close of the Plan Year to which the excess contributions
relate.
(C) The amount of such excess for the Plan Year shall be
determined by the following leveling method, under which the Actual
Contribution Ratio of the Highly Compensated Employee with the highest
Actual Contribution Ratio would be reduced to the extent required to
(i) enable the Plan to satisfy the limitations set forth in
paragraph (g), or
(ii) cause such Highly Compensated Employee's Actual
Contribution Ratio to equal the Actual Contribution Ratio of the
Highly Compensated Employee with the next highest Actual
Contribution Ratio.
This process shall be repeated until the Plan satisfies the
limitations set forth in paragraph (g). For each Highly Compensated
Employee, the amount of such excess is equal to the total ESOP
Matching Contributions (plus any other contributions treated as ESOP
Matching Contributions) on behalf of the Employee (determined prior to
the application of this paragraph (b)(4)(C)) minus the amount
determined by multiplying the Employee's Actual Contribution Ratio
(determined after application of this paragraph (b)(4)(C)) by his
Compensation used in determining such ratio.
(D) In determining the amount of such excess, Actual Contribution
Ratios shall be rounded to the nearest one-hundredth of one percent of
the Employee's Compensation.
(E) In no case shall the amount of such excess with respect to
any Highly Compensated Employee exceed the amount of ESOP Matching
Contributions on behalf of such Highly Compensated Employee for such
Plan Year.
(F) The ESOP Matching Contributions of the Highly Compensated
Employee with the highest dollar amount of ESOP Matching Contributions
for the Plan Year shall be reduced by an amount equal to the excess
ESOP Matching Contributions determined in accordance with subparagraph
(4)(C) above. The reduced amount shall be either forfeited or
distributed to such Highly Compensated Employee in accordance with
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<PAGE>
subparagraphs (4)(A) and (B) above, provided, further, that such
Highly Compensated Employee's ESOP Matching Contributions shall be
reduced to a level that is equal to the ESOP Matching Contributions of
the Highly Compensated Employee with the next highest dollar amount of
ESOP Matching Contributions. Thereafter, the ESOP Matching
Contributions of the Highly Compensated Employees with the same dollar
amounts of ESOP Matching Contributions shall be reduced on an equal
basis by an amount equal to any additional excess ESOP Matching
Contributions determined in accordance with subparagraph (4)(C) above,
which reduced amounts shall be either forfeited or distributed to such
Highly Compensated Employees in accordance with subparagraphs (4)(A)
and (B) above. For purposes of this subparagraph, ESOP Matching
Contributions shall include amounts treated as ESOP Matching
Contributions.
(G) The Plan Administrator may use any reasonable method for
computing the income allocable to excess contributions, provided that
the method does not violate Section 401(a)(4) of the Code, is used
consistently for all Participants and for all corrective distributions
under the Plan for the Plan Year, and is used by the Plan for
allocating income to Participants' Accounts.
(c) ESOP EMPLOYER CONTRIBUTIONS. An Employer may make ESOP Employer
---------------------------
Contributions to the ESOP Employer Contributions Accounts of Participants. The
amount, if any, to be contributed to the Trust by an Employer as an ESOP
Employer Contribution for each Plan Year shall be determined by the Board of
Directors of the Company; provided, however, that the Employer shall make an
aggregate ESOP Employer Contribution sufficient to permit the scheduled
repayment of any loan used to purchase Employer Securities. Any amount
forfeited pursuant to the provisions of this Plan and not otherwise allocated
pursuant to paragraphs (b)(3) and (b)(4)(A) of Article VI and paragraph
(c)(4)(C) of Article VIII shall be allocated as additional ESOP Employer
Contributions.
(d) NON-ELECTIVE CONTRIBUTIONS. An Employer, at the discretion of the
--------------------------
Board of Directors of the Company, may make Non-Elective Contributions to the
401(k) Elective Contributions Accounts of Participants at any time.
(e) CESSATION OF EMPLOYER CONTRIBUTIONS AND ESOP ELECTIVE CONTRIBUTIONS.
-------------------------------------------------------------------
This Plan will not accept Employer Contributions for Plan Years beginning after
March 30, 1995. In addition, this Plan will not accept ESOP Elective
Contributions for payroll periods ending after January 1, 1996.
(f) LIMITATIONS ON CONTRIBUTIONS AND FORFEITURES. It is the present
--------------------------------------------
intention of each Employer to make recurring and substantial contributions to
the Trust for each Plan Year, but in no event shall such contribution for any
corresponding taxable year of an Employer exceed the maximum amount deductible
from the Employer's income for such taxable year under Section 404(a) of the
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<PAGE>
Code. If the Employers are not treated as separate lines of business under
Section 414(r) of the Code, the discretionary ESOP Employer Contributions, and
Non-Elective Contributions made by each Employer, including any amounts
forfeited and allocated as such contributions, shall be allocated among all
Participants without regard to each Participant's employment relationship with a
particular Employer, as required by paragraph (e) of Article VII (but subject to
any applicable requirements with respect to the completion of a Year of Service
or employment with an Employer on the last day of a Plan Year, as set forth
herein).
(g) LIMITATIONS ON 401(K) ELECTIVE AND ESOP MATCHING CONTRIBUTIONS. The
--------------------------------------------------------------
amounts contributed as 401(k) Elective Contributions and ESOP Matching
Contributions shall be limited as follows:
(1) The Actual Deferral Percentage for the group of eligible Highly
Compensated Employees for the Plan Year shall bear a relationship to the
Actual Deferral Percentage for all other eligible Employees for the
preceding Plan Year (or the current Plan Year if elected by the Company;
provided, however, that if such an election is made, it may not be changed
except as provided by the Secretary) which meets either of the following
tests:
(A) The Actual Deferral Percentage for the group of eligible
Highly Compensated Employees for a Plan Year shall not exceed the
Actual Deferral Percentage for the group of all other eligible
Employees multiplied by 1.25, or
(B) The excess of the Actual Deferral Percentage for the group of
eligible Highly Compensated Employees for a Plan Year over the Actual
Deferral Percentage for the group of all other eligible Employees
shall not exceed two (2) percentage points (or such lesser amount as
may be required by the Secretary of the Treasury, through regulations
or otherwise); and the Actual Deferral Percentage for the group of
eligible Highly Compensated Employees shall not exceed the Actual
Deferral Percentage for the group of all other eligible Employees,
multiplied by 2.0 (or such lesser amount as may be required by the
Secretary of the Treasury, through regulations or otherwise).
(2) The Actual Contribution Percentage for the group of eligible
Highly Compensated Employees for the Plan Year shall bear a relationship to
the Actual Contribution Percentage for all other eligible Employees for the
preceding Plan Year (or the current Plan Year if elected by the Company;
provided, however, that if such an election is made, it may not be changed
except as provided by the Secretary) which meets either of the following
tests:
(A) The Actual Contribution Percentage for the group of eligible
Highly Compensated Employees for a Plan Year shall not exceed the
Actual Contribution Percentage for the group of all other eligible
Employees multiplied by 1.25, or
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<PAGE>
(B) The excess of the Actual Contribution Percentage for the
group of eligible Highly Compensated Employees for a Plan Year over
the Actual Contribution Percentage for the group of all other eligible
Employees shall not exceed two (2) percentage points (or such lesser
amount as may be required by the Secretary of the Treasury, through
regulations or otherwise); and the Actual Contribution Percentage for
the group of eligible Highly Compensated Employees shall not exceed
the Actual Deferral Percentage for the group of all other eligible
Employees, multiplied by 2.0 (or such lesser amount as may be required
by the Secretary of the Treasury, through regulations or otherwise).
(3) If the Plan Administrator determines, in accordance with the
provisions of Section 1.401(m)-2 of the Treasury Regulations (and after
consideration of Sections 1.401(k)-1(g)(11) and 1.410(b)-7(c)(2) of the
Treasury Regulations), that a multiple use of the alternative limitation
has occurred, such multiple use shall be corrected by reducing the Actual
Contribution Percentage of Highly Compensated Employees in the manner
described in Section 1.401(m)-2(c) of the Treasury Regulations and
paragraph (b) of this Article V. The provisions of Section 1.401(m)-2 of
the Treasury Regulations are incorporated herein by reference.
(4) The Actual Deferral Percentages and the Actual Contribution
Percentages for the group of all other eligible Employees, computed in
accordance with subparagraphs (1) and (2) for purposes of limiting
contributions in paragraphs (a) and (b), may be separately determined, and
applied, for the Employees within each group of Employees that may be
separately tested in accordance with applicable Treasury Regulations.
(5) For purposes of this paragraph (g), if two or more plans of an
Employer to which elective salary reduction contributions, voluntary
contributions or matching contributions are made are elected by the
Employer to be treated as one Plan for purposes of Section 410(b)(6) of the
Code, such plans shall be treated as a single plan for purposes of
determining the Actual Deferral Percentage and the Actual Contribution
Percentage. For purposes of determining the Actual Deferral Percentages
and the Actual Contribution Percentages for the group of Highly Compensated
Employees and the group of all other eligible Employees, all Employees of
the respective group who are directly or indirectly eligible to receive
allocations of elective contributions and/or matching contributions under
the Plan for any portion of the Plan Year, and all Employees of the
respective group who elect not to enter into salary reduction agreements
pursuant to paragraph (a) of Article VI or whose eligibility to enter into
salary reduction agreements has been suspended or otherwise limited because
of an election not to participate, a withdrawal, a loan, or a restriction
on Annual Additions as set forth in paragraph (f) of Article VII, shall be
included. For purposes of determining the Actual Deferral Ratio and the
Actual Contribution Ratio for a Highly Compensated Employee, all cash or
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<PAGE>
deferred arrangements in which the Employee is eligible to receive
allocations of elective contributions and/or matching contributions shall
be taken into account, unless otherwise required by Treasury Regulation
Sections 1.401(k)-1(g)(1)(ii)(B) and 1.401(m)-1(f)(1)(ii)(B).
(h) FORM AND TIMING OF CONTRIBUTIONS. Payments on account of ESOP Matching
--------------------------------
Contributions and ESOP Employer Contributions due from an Employer for any Plan
Year shall be made in cash and/or Employer Securities to the Trustee. Payments
on account of any other contributions due from an Employer for any Plan Year
shall be made in cash to the Trustee. Such payments may be made by a
contributing Employer at any time, but payment of ESOP Matching Contributions,
ESOP Employer Contributions, and Non-Elective Contributions for any Plan Year
shall be completed on or before the time prescribed by law, including extensions
thereof, for filing such Employer's federal income tax return for its taxable
year with which or within which such Plan Year ends. Payment of any 401(k)
Elective Contribution shall be made not later than the 15th day of the month
following the month in which it is withheld from a Participant's pay.
(i) ROLLOVER CONTRIBUTIONS. Each Employee at any time during a Plan Year,
----------------------
with the consent of the Plan Administrator and in such manner as prescribed by
the Plan Administrator, may pay or cause to be paid to the Trustee a rollover
contribution (as defined in the applicable sections of the Code, except that for
this purpose "rollover contribution" shall be deemed to include both a direct
payment from an Employee and a direct transfer from a trustee of another
qualified plan in which the Employee is or was a participant).
(j) NO DUTY TO INQUIRE. The Trustee shall have no right or duty to inquire
------------------
into the amount of any contribution made by an Employer or any Participant or
the method used in determining the amount of any such contribution, or to
collect the same, but the Trustee shall be accountable only for funds actually
received by it.
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<PAGE>
ARTICLE VII
Participants' Accounts and Allocation of Contributions
------------------------------------------------------
(a) COMMON FUND. Except as otherwise provided in this Plan or in the
-----------
Agreement and Declaration of Trust, the assets of the Trust (or, to the extent
provided in Article XI, the assets of each Fund) shall constitute a common fund
in which each Participant (or each Participant who has directed that a portion
of his Account be invested in such Fund) shall have an undivided interest.
(b) ESTABLISHMENT AND MERGER OF ACCOUNTS.
------------------------------------
(1) The Plan Administrator shall establish and maintain with respect
to each Participant three Accounts, designated as the Participant's 401(k)
Elective Contributions Account, ESOP Employer Contributions Account, and
ESOP Matching Contributions Account.
(2) For each Participant who made an ESOP Elective Contribution
(pursuant to the terms of this Plan prior to the Effective Date of this
Amendment and Restatement) for a payroll period ending before January 1,
1996, the Plan Administrator shall maintain an ESOP Elective Contributions
Account, and for each Employee who has made a Rollover Contribution
pursuant to paragraph (i) of Article VI, the Plan Administrator shall
establish and maintain a Rollover Contributions Account. Each
Participant's Accounts shall, collectively, reflect the Participant's
interest in the Trust Fund.
(3) The Employer Contributions Account credited to each Participant
under the terms of the Plan prior to January 1, 1996 shall be maintained as
a part of, such Participant's 401(k) Elective Contributions Account.
(4) Effective January 1, 1997, or as soon thereafter as is
administratively feasible, the Plan Administrator shall establish and
maintain, with respect to each Participant who was also a participant in
the Brown's Medical Supply Co. Retirement Savings Plan, one or more Merger
Accounts to provide for amounts credited to the Participant and transferred
from the Brown's Medical Supply Co. Retirement Savings Plan upon its merger
with this Plan. The Plan Administrator may establish and maintain
additional Merger Accounts from time to time to provide for amounts
credited to Participants and transferred from other tax-qualified
retirement plans merged with this Plan upon the authorization and direction
of the Board of Directors.
(5) The Plan Administrator may establish and maintain with respect to
each Participant's ESOP Employer Contributions Account and ESOP Matching
Contributions Account an Employer Securities Account and an Other
Investments Account, that may further reflect the Participant's interest in
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<PAGE>
the Trust Fund with respect to employee stock ownership plan contributions
made to such Accounts by his Employer.
(6) The Plan Administrator may establish and maintain with respect to
each Participant's ESOP Elective Contributions Account an Employer
Securities Account, an Other Investments Account, and, effective as of
January 1, 1996 (or as soon thereafter as practicable), a Participant
Investments - ESOP Elective Contributions Account that may further reflect
the Participant's interest in the Trust Fund with respect to employee stock
ownership plan contributions made to such Account for payroll periods
ending before January 1, 1996 by his Employer. Each Participant's
Participant Investments - ESOP Elective Contributions Account shall
initially be comprised of forty percent (40%) of each Participant's ESOP
Elective Contributions Account determined as of January 1, 1996, which
shall be invested in accordance with the Designated Investments provisions
of Article XI.
(7) The Plan Administrator may establish such additional Accounts as
are necessary to reflect a Participant's interest in the Trust Fund.
(c) SUSPENSE ACCOUNTS. The Plan Administrator shall establish and maintain
-----------------
a suspense account to which shall be credited any units of Employer Securities
purchased by the Trustee with borrowed funds (such term including, for all
purposes of this Plan, purchase-money transactions). A separate suspense
account shall be maintained for each such purchase. The shares released from a
suspense account each year, if any, shall be allocated as of each Valuation Date
that is the last day of a Plan Year to the Participants' ESOP Employer
Contributions Accounts under the provisions of paragraph (e) of this Article VII
as Employer Securities attributable to ESOP Employer Contributions. The number
of units of Employer Securities to be released from a suspense account each Plan
Year shall be determined under one of the following methods, as selected by the
Plan Administrator with respect to a particular suspense account:
(1) The number of units to be released shall equal the number of units
held in the suspense account immediately before the release for the current
Plan Year multiplied by a fraction, the numerator of which is the amount of
principal and interest paid by the Trustee for the Plan Year with respect
to the loan in question and the denominator of which is the sum of the
numerator plus the amount of principal and interest to be paid with respect
to such loan for all future Plan Years; or
(2) The number of units to be released shall equal the number of units
held in the suspense account immediately before the release for the current
Plan Year multiplied by a fraction, the numerator of which is the amount of
principal paid by the Trustee for the Plan Year with respect to the loan in
question and the denominator of which is the sum of the numerator plus the
amount of principal to be paid with respect to such loan for all future
Plan Years; provided, however, that the terms of each of the following
conditions are met:
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<PAGE>
(A) The loan must provide for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than
level annual payments of such amounts for ten years (this term is not
satisfied from the time that, by reason of a renewal, extension or
refinancing, the sum of the expired duration of the loan, the renewal
period, the extension period and the duration of a new exempt loan
(used to refinance) exceeds ten years); and
(B) Interest included in any repayment can be disregarded for
release purposes only to the extent that it would be determined to be
interest under standard loan amortization tables.
(d) INTERESTS OF PARTICIPANTS. The interest of a Participant in the Trust
-------------------------
Fund shall be the vested balance remaining from time to time in his Accounts
after making the adjustments required in paragraph (e).
(e) ADJUSTMENTS TO ACCOUNTS. Subject to the provisions of paragraph (h),
-----------------------
the Accounts of a Participant shall be adjusted from time to time as follows:
(1) Each Participant's Accounts shall be credited with appreciation or
depreciation, and earnings or losses, as follows:
(A) As of each Valuation Date, the portions of each Participant's
ESOP Employer Contributions Account, ESOP Matching Contributions
Account and ESOP Elective Contributions Account credited to Employer
Securities Accounts shall be credited with any stock dividends for the
Valuation Period ending with such current Valuation Date that are
received on Employer Securities allocated to the Participant's
Employer Securities Accounts (and that are not used, pursuant to
paragraph (f) to repay a loan).
(B) As of each Valuation Date, the Administrator shall credit any
stock dividends for the Valuation Period ending with such date, that
are received on Employer Securities allocated to suspense accounts
maintained as of such date (and that are not used, pursuant to
paragraph (f) to repay a loan), to such suspense accounts.
(C) As of each Valuation Date, the portions of each Participant's
ESOP Employer Contributions Account, ESOP Matching Contributions
Account and ESOP Elective Contributions Account credited to Other
Investments Accounts shall be credited or charged, as the case may be,
with a share of the Other Investments Accounts "earnings factor" for
the Valuation Period ending with such current Valuation Date. The
Other Investments Accounts earnings factor and a Participant's share
thereof are to be determined as follows:
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(i) The Other Investments Accounts earnings factor for any
Valuation Period shall consist of
a. the aggregate of the unrealized appreciation or
depreciation occurring in the value of the portion of the
Trust Fund during such period that is a. attributable to
contributions theretofore made to the Participants' ESOP
Employer Contributions Accounts and ESOP Matching
Contributions Accounts, and earnings thereon, and b.
invested in assets other than Employer Securities (and, for
ESOP Elective Contributions Accounts, in assets other than
Funds described in Article XI),
b that portion of the income earned or the loss
sustained by the portion of the Trust Fund during such
period (whether from investments or from the sale or
exchange of assets) that is 1. attributable to contributions
theretofore made to the Participants' ESOP Employer
Contributions Accounts and ESOP Matching Contributions
Accounts, and earnings thereon, and 2. invested in assets
other than Employer Securities (and, for ESOP Elective
Contributions Accounts, in assets other than Funds described
in Article XI),
c. cash dividends received on Employer Securities not
allocated to any Participant's Employer Securities Account
or any Fund described in Article XI (to the extent such cash
dividends are not used, pursuant to paragraph (f), to repay
a loan), and
d. cash dividends received on Employer Securities
allocated to Participants' Employer Securities Accounts (to
the extent such cash dividends are not used to repay a loan
or are not distributed, pursuant to paragraph (f)).
(ii) A Participant's share of the Other Investments Accounts
earnings factor for any Valuation Period shall be:
a. that amount that shall bear the same ratio to such
earnings factor as the balance in such Participant's Other
Investments Accounts as of the end of the immediately
preceding Valuation Period (less any amounts distributed
from such Other Investments Accounts to the Participant, or
debited to such Accounts for any payments made with the
assets of such Accounts for the purchase of Employer
Securities, during the Valuation Period ending with the
current Valuation Date) bears to
b. the aggregate balances in the Other Investments
Accounts as of the end of the immediately preceding
Valuation Period of all Participants (less the aggregate
amounts distributed from Participants' ESOP Elective
Contributions Accounts, ESOP Employer Contributions
Accounts, and ESOP Matching Contributions Accounts (and
attributable to their Other Investments Accounts) to such
Participants, or debited to such Accounts for any payments
made with the assets of such Accounts for the purchase of
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Employer Securities, during the Valuation Period ending with
the current Valuation Date).
(iii) Except as otherwise provided, the Other Investments
Accounts earnings factor, or a Participant's share thereof, shall
not include any appreciation, depreciation, income or loss
attributable to the Plan's investment in Employer Securities.
(D) As of each Valuation Date, the portion of each Participant's
401(k) Elective Contributions Account, Participant Investments - ESOP
Elective Contributions Account, Rollover Contributions Account, and
Merger Accounts that is invested in each Fund established under
Article XI shall be credited or charged, as the case may be, with a
share of the "earnings factor" for the portion of the Trust Fund
invested in such Fund for the Valuation Period ending with such
current Valuation Date. The earnings factor for the portion of the
Trust Fund invested in each Fund established under Article XI and the
share attributable to each such Account are to be determined as
follows:
(i) The determination of the earnings factor attributable to
such a Fund for any Valuation Period shall be based upon the
difference between the value of each share for the current
Valuation Date and the value of each share as of the most recent
preceding Valuation Date, as adjusted to reflect earnings
attributable to shares purchased or sold during the Valuation
Period. To the extent the value of the Fund is not expressed in
terms of individual shares, the earnings factor shall consist of
the aggregate of the unrealized appreciation or depreciation
occurring in the value of the portion of the Trust Fund invested
in such Fund during such period that is attributable to
contributions theretofore made to the Participants' 401(k)
Elective Contributions Accounts, Participant Investments - ESOP
Elective Contributions Accounts, Rollover Contributions Accounts,
and Merger Accounts and earnings thereon, and that portion of the
income earned or the loss sustained by the portion of the Trust
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Fund invested in such Fund during such period (whether from
investments or from the sale or exchange of assets) that is
attributable to contributions theretofore made to such Accounts
and earnings thereon.
(ii) The share of the earnings factor attributable to the
portion of any 401(k) Elective Contributions Account, Participant
Investments - ESOP Elective Contributions Account, Rollover
Contributions Account, or Merger Accounts of the Participant
invested in each Fund for any Valuation Period shall be:
a. that amount that shall bear the same ratio to such
earnings factor as the sum of:
1. the balance in the portion of such Account
invested in such Fund as of the end of the immediately
preceding Valuation Period (adjusted to reflect the
Participant's election to transfer investments from one
Fund to another (or to make initial investments in a
Fund) as of the first day of the current Valuation
Period, to the extent permitted by Article XI), and,
2. one-half of any 401(k) Elective Contributions
or Rollover Contributions made to such Account and
credited to such Fund during the Valuation Period
ending with the current Valuation Date,
less any amounts distributed from such Account
(and attributable to such Fund) to the Participant during
the Valuation Period ending with the current Valuation Date,
bears to
b. the aggregate of the sum of:
1 the balances in the portion of the Accounts
invested in such Fund as of the end of the immediately
preceding Valuation Period of all Participants who are
entitled to share in such earnings factor (adjusted to
reflect the Participants' elections to transfer
investments from one Fund to another (or to make
initial investments in a Fund) as of the first day of
the current Valuation Period, to the extent permitted
by Article XI), and
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2. one-half of all contributions made to
Participants' 401(k) Elective Contributions Accounts
and Rollover Contributions Accounts and attributable to
such Fund during the Valuation Period ending with the
current Valuation Date,
less the aggregate amounts distributed from the
Accounts (and credited to such Fund) to such Participants during
the Valuation Period ending with the current Valuation Date.
(2) Each Participant's Accounts shall be credited with his share of
the contributions to the Plan, and shall be further adjusted, as follows:
(A) As of each Valuation Date, the 401(k) Elective Contributions
Account of a Participant shall be credited with any 401(k) Elective
Contributions made by his Employer on his behalf with respect to one
or more dates occurring during the Valuation Period ending with such
Valuation Date.
(B) As of each Valuation Date that is the last day of a Plan
Year, the 401(k) Elective Contributions Account of a Participant shall
be credited with his share of the Non-Elective Contributions, if any,
made by his Employer with respect to the Plan Year ending with such
Valuation Date, such share being the amount that shall bear the same
ratio to the total of such Non-Elective Contribution as the
Participant's Compensation for such Plan Year ending with such
Valuation Date bears to the aggregate of the Compensation from such
Employer for that period of all Participants who are entitled to share
in the Non-Elective Contribution for such Plan Year. A Participant
who is a Highly Compensated Employee shall not be entitled to share in
the Non-Elective Contribution; provided, further, that a Participant
shall not be entitled to share in the Non-Elective Contribution unless
such Plan Year constitutes a Year of Service for such Participant and
he is employed by his Employer on the last day of the Plan Year.
(C) As of each Valuation Date that is the last day of a Plan
Year, the ESOP Matching Contributions Account of a Participant shall
be credited with any ESOP Matching Contributions made by his Employer
on his behalf with respect to such Plan Year (which shall include any
forfeitures reducing such contributions as provided in paragraph
(b)(3) of Article VI). A Participant will not be entitled to share in
the ESOP Matching Contributions unless he meets the requirements of
paragraph (b)(2) of Article VI for the Plan Year. Any such ESOP
Matching Contributions shall be credited to an Employer Securities
Account or an Other Investments Account, as appropriate, on behalf of
the Participant. The Participant's Employer Securities Account and
Other Investments Account attributable to his ESOP Matching
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<PAGE>
Contributions Account shall be further credited and debited to reflect
direct or indirect purchases of Employer Securities with assets other
than Employer Securities, and purchases of assets other than Employer
Securities in connection with the sale of Employer Securities.
(D) As of each Valuation Date that is the last day of a Plan
Year, the ESOP Employer Contributions Account of a Participant shall
be credited with his share of the ESOP Employer Contribution, if any,
made by his Employer, and any forfeitures (except to the extent
otherwise provided in paragraphs (c)(4)(C) of Article VIII and (b)(3)
of Article VI), with respect to the Plan Year ending with such
Valuation Date. The amount allocable to a Participant entitled to a
share of the contribution and forfeitures for the Plan Year shall be
the amount that shall bear the same ratio to the total of such
contribution and forfeitures as the Participant's Compensation for
such Plan Year ending with such Valuation Date bears to the aggregate
of the Compensation of all Participants employed by such Employer for
that period who are entitled to share in the contribution and
forfeitures for such Plan Year.
(i) A Participant shall be entitled to share in the ESOP
Employer Contribution and forfeitures if a. the Plan Year
constitutes a Year of Service for such Participant and he is
employed by his Employer on the last day of the Plan Year, or b.
his employment is terminated by his retirement, disability [as
defined in paragraph (b)(2) of Article VIII] or death.
(ii) In the event that the requirements set forth in
subsection (i) immediately above would cause this Plan to fail to
meet the coverage requirements of this subsection (ii), a
Participant shall also be entitled to share in the ESOP Employer
Contribution and forfeitures if he meets the requirements of
subsection (iii). In order to meet the coverage requirements of
this subsection (ii) for the Plan Year, the Plan's "ratio
percentage" for the Plan Year shall be at least seventy percent
(70%). For purposes of this subsection (ii), the Plan's "ratio
percentage" shall mean the percentage (rounded to the nearest
hundredth of a percentage point) determined by dividing the
percentage of the Non-Highly Compensated Employees who benefit
under the Plan by the percentage of the Highly Compensated
Employees who benefit under the Plan. The percentage of the Non-
Highly Compensated Employees who benefit under the Plan shall be
determined by dividing the number of Non-Highly Compensated
Employees who are Participants in the Plan and are entitled to
share in Employer Contribution under the Plan by the total number
of Non-Highly Compensated Employees who have met the eligibility
and participation requirements of Article V. The percentage of
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the Highly Compensated Employees who benefit under the Plan shall
be determined by dividing the number of Highly Compensated
Employees who are Participants in the Plan and are entitled to
share in Employer Contribution under the Plan by the total number
of Highly Compensated Employees who have met the eligibility and
participation requirements of Article V. The Plan's "ratio
percentage" shall be determined as of the last day of the Plan
Year, taking into account all Employees who were Employees on any
day during the Plan Year.
(iii) If this Plan would otherwise fail to meet the
requirements of subsection (ii) for the Plan Year, a Participant
shall be entitled to share in the ESOP Employer Contribution and
forfeitures pursuant to this section (D) if:
a. he is a Non-Highly Compensated Employee;
b. he completes 500 Hours of Service during such Plan
Year, regardless of whether such Plan Year constitutes a
Year of Service for such Participant or whether he is
employed by his Employer on the last day of the Plan Year;
and
c. the allocation of a share of the contribution to
the Participant is required by this part c. The number of
Participants entitled to an allocation required by this part
c. (the "Required Number of Participants"), when added to
the Non-Highly Compensated Employees who are eligible to
receive an allocation pursuant to the provisions of
subsection (i), shall be equal to the minimum number of Non-
Highly Compensated Employees who are required to be eligible
for an ESOP Employer Contribution and forfeitures from the
Plan during the Plan Year in order to meet the minimum
coverage requirements of subsection (ii). An allocation is
required by this part c. if a Participant is among the
Required Number of Participants paid the lowest Compensation
by their Employers for the Plan Year (determined without
regard to those Participants who are entitled to an
allocation pursuant to subsection (i) above). If two or
more Participants would otherwise be determined to have been
paid the same amount of Compensation by their Employers for
the Plan Year, then the Participant who was first credited
with an Hour of Service for his Employer or any Affiliate
thereof shall be deemed to paid the lowest Compensation of
such two or more Participants and the Participant who was
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<PAGE>
next credited with an Hour of Service for his Employer or
any Affiliate thereof shall be deemed to paid the next
lowest Compensation and the process shall be repeated until
the Plan Administrator has determined the Participants who
are among the Required Number of Participants paid the
lowest Compensation by their Employers for the Plan Year.
(iv) For each Plan Year in which this Plan is a Top Heavy
Plan, a Participant who is employed by an Employer on the last
day of such Plan Year and who is a Non-Key Employee for such Plan
Year shall be entitled to share in the contribution and
forfeitures (as described in this section (C)) to the extent such
allocation does not exceed at least three percent (3%) of his
Section 415 Compensation (or, if less, the highest percentage of
such Section 415 Compensation allocated to a Key Employee's
Accounts hereunder (other than any amount allocated to a Rollover
Contributions Account and Merger Accounts), as well as his
employer contribution accounts under any other defined
contribution plan maintained by such Employer or an Affiliate,
including any elective contribution to any plan subject to Code
Section 401(k)), regardless of whether the preceding requirements
of this section (C) have been met for such Participant.
The Participant's Employer Securities Account and Other
Investments Account attributable to his ESOP Employer Contributions
Account shall be further credited and debited to reflect direct or
indirect purchases of Employer Securities with assets other than
Employer Securities, and purchases of assets other than Employer
Securities in connection with the sale of Employer Securities.
(E) As of each Valuation Date, the Rollover Contributions Account
of an Employee shall be credited with the Rollover Contributions, if
any, made by the Employee pursuant to Article VI with respect to the
Valuation Period ending with such Valuation Date.
(3) As of each Valuation Date, each Account of a Participant shall be
charged with the amount of any distribution, or withdrawal, made to, or by,
the Participant or his beneficiary from such Account during the Valuation
Period ending with such Valuation Date.
(4) Except as otherwise provided in this Plan or any Agreement of
Trust, for purposes of all computations required by this Article VII, the
accrual method of accounting shall be used, and the Trust Fund, each Fund,
and the assets thereof shall be valued at their fair market value as of
each Valuation Date. Employer Securities shall be accounted for as
provided in Treasury Regulation Section 1.402(a)-1(b)(2)(ii), or any
successor regulation or statute.
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(5) The Plan Administrator may adopt such additional accounting
procedures as are necessary to accurately reflect each Participant's
interest in the Trust Fund or in any Fund, which procedures shall be
effective upon approval by the Company. All such procedures shall be
applied in a consistent, nondiscriminatory manner.
(6) If the Plan Administrator determines in making any valuation,
allocation or adjustments to any Participant's Account under the provisions
of the Plan that the strict application of the provisions of the Plan will
not produce equitable and nondiscriminatory allocation among the
Participants' Accounts, it may modify any procedures specified in the Plan
for purposes of achieving an equal and nondiscriminatory allocation in
accordance with the general concepts and purposes of the Plan; provided,
however, that any such modification shall not be inconsistent with the
provisions of Section 401(a)(4) of the Code.
(f) ALLOCATION OF DIVIDENDS. Notwithstanding anything contained in this
-----------------------
Plan to the contrary, dividends attributable to Employer Securities that are
credited to Participants' ESOP Employer Contributions Accounts, as well as to
suspense accounts established pursuant to paragraph (c), shall be used, to the
extent required by the terms of the Agreement of Trust, to repay any loan used
to purchase the Employer Securities on account of which the dividends were paid.
In addition, cash dividends paid with respect to units of Employer Securities
that are credited to Participants' Employer Securities Accounts may be
distributed to Participants or allocated to Participants' Other Investments
Accounts in accordance with the provisions of Article VI(b) of the Agreement and
Declaration of Trust.
(g) LIMITATION ON ALLOCATION OF CONTRIBUTIONS.
-----------------------------------------
(1) Notwithstanding anything contained in this Plan to the contrary,
the aggregate Annual Additions to a Participant's Accounts under this Plan
and under any other defined contribution plans maintained by an Employer or
an Affiliate for any Limitation Year shall not exceed the lesser of $30,000
(or, if greater, one quarter of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code) or 25% of the Participant's Section 415
Compensation for such Plan Year.
(2) In the event that the Annual Additions, under the normal
administration of the Plan, would otherwise exceed the limits set forth
above for any Participant, or in the event that any Participant
participates in both a defined benefit plan and a defined contribution plan
maintained by any Employer or any Affiliate and the aggregate annual
additions to and projected benefits under all of such plans, under the
normal administration of such plans, would otherwise exceed the limits
provided by law, then the Plan Administrator shall take such actions,
applied in a uniform and nondiscriminatory manner, as will keep the annual
additions and projected benefits for such Participant from exceeding the
applicable limits provided by law. Excess Annual Additions shall be
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disposed of as provided in subparagraph (3). Adjustments shall be made to
all other plans, if necessary to comply with such limits, before any
adjustments may be made to this Plan.
(3) If as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Section 415 Compensation or other
circumstances permitted under Section 415 of the Code, the Annual Additions
attributable to Employer contributions for a particular Participant
(including elective, matching and voluntary contributions) would cause the
limitations set forth in this paragraph (g) to be exceeded, the excess
amount shall be deemed first to consist of the Participant's elective
contributions in excess of any amount subject to a matching contribution
for the Plan Year, which excess shall be returned to the Participant. The
remaining excess shall be deemed to consist of elective contributions and
corresponding matching contributions, in which case the excess elective
contributions shall be returned to such Participant and the corresponding
matching contributions shall be held and allocated in the manner described
below. Any remaining excess shall be deemed to consist of Employer
contributions and shall be held and allocated as described below. Any
excess amount attributable to matching contributions and Employer
contributions shall be held unallocated in a suspense account for the
Limitation Year, used to reduce matching or Employer contributions on
behalf of such Participant for the next Limitation Year, and allocated to
such Participant in lieu of such reduced contribution as of the end of the
next Limitation Year under the terms of paragraph (e)(2) of this Article
VII. Any such allocations shall be treated as Annual Additions to the
Account of the Participant in the Limitation Year that they are allocated
in lieu of such reduced contributions. In the event that the Participant
terminates his participation in this Plan before all of the amounts in a
suspense account are allocated to his Account, then such excess amounts
shall be retained in such suspense account, to be reallocated to other
Participants as of the end of the next Limitation Year and any succeeding
Limitation Years until all amounts in the suspense account are exhausted.
(4) Effective for Plan Years beginning before January 1, 2000, in the
event that any Participant participates in both a defined benefit plan and
a defined contribution plan maintained by his Employer or an Affiliate
thereof, then the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year shall not exceed 1.0.
For these purposes,
(A) The Defined Benefit Plan Fraction is a fraction, the
numerator of which is the projected annual benefit of the Participant
under the defined benefit plan determined as of the close of the
Limitation Year and the denominator of which is the lesser of (1) the
product of 1.25 times the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Limitation Year or (2) the product
of 1.4 times the amount that may be taken into account under Section
415(b)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
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(B) The Defined Contribution Plan Fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Accounts as of the close of the Limitation Year (less
any amount that may be subtracted from the numerator in accordance
with any applicable statutes, notices or rulings) and the denominator
of which is the sum of the lesser of the following amounts determined
for such year and for each prior Year of Service with the Employer:
(1) the product of 1.25 times the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for such Limitation Year (determined
without regard to Section 415(c)(6) of the Code) or (2) the product of
1.4 times the amount that may be taken into account under Section
415(c)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
(C) The figure "1.0" shall be substituted for the figure "1.25"
set forth in sections (A) and (B) for each year in which this Plan is
a Top Heavy Plan unless (1) the defined benefit plan provides a
minimum benefit equal to 3% of each Participant's Compensation times
the number of years (not exceeding 10) the Plan is a Top Heavy Plan or
the defined contribution plan provides a minimum contribution equal to
4% (7 1/2% if the Participant participates in both the defined benefit
plan and the defined contribution plan) of each Participant's Section
415 Compensation, and (2) the present value of the cumulative accrued
benefits (not including rollover contributions made after December 31,
1983), of the Key Employees for such year does not exceed 90% of the
present value of the accrued benefits (not including rollover
contributions made after December 31, 1983) under all plans. Such
values shall be determined in the same manner as described in the "Top
Heavy" definition in Article I.
(D) If any Employer maintained both a defined contribution plan
and a defined benefit plan on May 6, 1986 and if the plans satisfied
the requirements of Section 415 of the Code for the Limitation Year
beginning in 1986, the numerator under section (B) for any Employee
who participated in such defined contribution plan on the last day of
the Limitation Year beginning before January 1, 1987 (the
"determination date") shall be permanently reduced by an amount equal
to the product of (1) the sum of the Defined Contribution Plan
Fraction and the Defined Benefit Plan Fraction as of the determination
date reduced by 1.0, multiplied by (2) the denominator of the Defined
Contribution Plan Fraction as of the determination date. For purposes
of the preceding sentence, the Defined Contribution Plan Fraction and
the Defined Benefit Plan Fraction shall be computed in accordance with
Section 415 of the Code as amended in 1986, and changes in the terms
and conditions of the defined contribution plan after May 5, 1986
shall not be taken into account. The Annual Addition for any
Limitation Year beginning before January 1, 1987 shall not be
recomputed to treat Employee contributions as Annual Additions.
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(5) For purposes of applying the limitations of this paragraph (g) for
a particular Limitation Year;
(A) all qualified defined benefit plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined benefit plan, and
(B) all qualified defined contribution plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined contribution plan.
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ARTICLE VIII
Benefits Under the Plan
-----------------------
(a) RETIREMENT BENEFIT.
-------------------
(1) A Participant shall be entitled to retire from the employ of his
Employer upon such Participant's Normal Retirement Date. Until a
Participant actually retires from the employ of his Employer, no retirement
benefits shall be payable to him, and he shall continue to be treated in
all respects as a Participant; provided, however, that a Participant who is
a 5% owner of the Company (or any Affiliate) and who attains age 70 1/2
shall begin receiving payment of his retirement benefit no later than the
April 1 after the end of the calendar year in which he attains age 70 1/2.
In addition, upon giving thirty (30) days written notice, a Participant may
take an early retirement commencing on or after the occurrence of such
Participant's Early Retirement Date.
(2) Upon the retirement of a Participant as provided in subparagraph
(1) and subject to adjustment as provided in paragraph (d) of Article IX,
such Participant shall be entitled to a retirement benefit in an amount
equal to 100% of the balance in his Accounts as of the Valuation Date
immediately preceding or concurring with his benefit commencement date,
plus the amount of any contributions allocated subsequent to such Valuation
Date.
(b) DISABILITY BENEFIT.
-------------------
(1) In the event a Participant's employment with his Employer is
terminated by reason of his total and permanent disability and subject to
adjustment as provided in paragraph (d) of Article IX, such Participant
shall be entitled to a disability benefit in an amount equal to 100% of the
balance in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of the termination of his employment, plus the
amount of any contributions allocated subsequent to such Valuation Date.
(2) Total and permanent disability shall mean the total incapacity of
a Participant to perform the usual duties of his employment with his
Employer and will be deemed to have occurred only when certified by a
physician who is acceptable to the Plan Administrator and only if such
proof is received by the Administrator within sixty (60) days after the
date of the termination of such Participant's employment.
(c) SEVERANCE OF EMPLOYMENT BENEFIT.
-------------------------------
(1) In the event a Participant's employment with his Employer is
terminated for reasons other than retirement, total and permanent
disability or death, and subject to adjustment as provided in paragraph (d)
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of Article IX, such Participant shall be entitled to a severance of
employment benefit in an amount equal to his vested interest in the balance
in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of the termination of his employment, plus his
vested interest in the amount of any contributions allocated subsequent to
such Valuation Date.
(2) (A) The vested interest in the ESOP Matching Contributions
Account and ESOP Employer Contributions Account of each Participant
performing at least one Hour of Service on or after January 1, 1989,
shall be a percentage of the balance of such Account as of the
applicable Valuation Date, based upon such Participant's Years of
Service as of the date of the termination of his employment, as
follows:
TOTAL NUMBER OF VESTED
Years of Service Interest
---------------- --------
Less than 3 Years of Service 0%
3 years, but less than 3 years 20%
4 years, but less than 4 years 40%
5 years, but less than 5 years 60%
6 years, but less than 6 years 80%
7 years or more 100%
(B) Notwithstanding the provisions of subparagraph (2)(A), for
any Plan Year in which this Plan is a Top Heavy Plan, a Participant's
vested interest in his ESOP Matching Contributions Account and ESOP
Employer Contributions Account shall be a percentage of the balance of
such account as of the applicable Valuation Date, based upon such
Participant's Years of Service as of the date of the termination of
his employment, as follows:
TOTAL NUMBER OF VESTED
Years of Service Interest
---------------- --------
Less than 2 Years of Service 0%
2 years, but less than 3 years 20%
3 years, but less than 4 years 40%
4 years, but less than 5 years 60%
5 years, but less than 6 years 80%
6 years or more 100%
(C) If at any time this Plan ceases to be a Top Heavy Plan after
being a Top Heavy Plan for one or more Plan Years, the change from
being a Top Heavy Plan shall be treated as if it were an amendment to
the Plan's vesting schedule for purposes of paragraphs (a)(3) and
(a)(5) of Article XIV of this Plan.
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(D) Notwithstanding the foregoing, a Participant shall be 100%
vested in his ESOP Matching Contributions Account and ESOP Employer
Contributions Account upon attaining his Normal or Early Retirement
Date. A Participant's vested interest in his ESOP Elective
Contributions Account, 401(k) Elective Contributions Account, Rollover
Contributions Account, and Merger Accounts shall be 100% regardless of
the number of his Years of Service.
(3) (A) If the termination of employment results in five consecutive
One Year Breaks in Service, then upon the occurrence of such five
consecutive One Year Breaks in Service, the nonvested interest of the
Participant in his ESOP Matching Contributions Account and ESOP
Employer Contributions Account as of the Valuation Date immediately
preceding or concurring with the date of his termination of employment
shall be deemed to be forfeited and such forfeited amount shall be
reallocated, pursuant to the provisions of paragraphs (c)(4)(C) of
this Article VIII, (b)(3) of Article VI, and (e)(2)(D) of Article VII,
at the end of the Plan Year concurring with the date the fifth such
consecutive One Year Break in Service occurs. If the Participant is
later reemployed by an Employer or an Affiliate, the unforfeited
balance, if any, in his ESOP Matching Contributions Account and ESOP
Employer Contributions Account that has not been distributed to such
Participant shall be set aside in a separate account, and such
Participant's Years of Service after any five consecutive One Year
Breaks in Service resulting from such termination of employment shall
not be taken into account for the purpose of determining the vested
interest of such Participant in the balance of his ESOP Matching
Contributions Account and ESOP Employer Contributions Account that
accrued before such five consecutive One Year Breaks in Service. If
any portion of a Participant's ESOP Matching Contributions Account and
ESOP Employer Contributions Account is forfeited, his Employer
Securities Accounts and Other Investments Accounts shall be treated as
a single account for purposes of this subparagraph and Employer
Securities that were purchased with borrowed funds and allocated to
such Participant's Employer Securities Account after release from a
suspense account shall be forfeited only after all other assets in
such Participant's Accounts. If interests in more than one class of
Employer Securities have been so allocated to such Participant's
Accounts, the Participant shall forfeit the same proportion of each
such class.
(B) Notwithstanding any other provision of this paragraph (c), if
a Participant is reemployed by an Employer or an Affiliate and, as a
result, no five consecutive One Year Breaks in Service occur, the
Participant shall not be entitled to any severance of employment
benefit as a result of such termination of employment; provided,
however, that nothing contained herein shall require or permit the
Participant to return or otherwise have restored to his ESOP Matching
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Contributions Account and ESOP Employer Contributions Account any
funds distributed to him prior to his reemployment and the
determination that no five consecutive One Year Breaks in Service
would occur.
(C) If a Participant is less than 100% vested in his ESOP
Matching Contributions Account and ESOP Employer Contributions Account
and he receives all or a part of his severance of employment benefit,
then, if the Participant resumes employment with an Employer or an
Affiliate before the occurrence of five consecutive One Year Breaks in
Service, until such time as there is a fifth consecutive One Year
Break in Service, the Participant's vested portion of the balance in
his ESOP Matching Contributions Account and ESOP Employer
Contributions Account at any time shall be equal to an amount ("X")
determined by the formula X = P(AB + D) - D, where "P" is the vested
percentage of the Participant at such time, "AB" is the balance in the
Participant's ESOP Matching Contributions Account and ESOP Employer
Contributions Account at such time and "D" is the amount distributed
as a severance of employment benefit.
(D) This subparagraph (3) shall only apply to forfeitures that
would otherwise occur in Plan Years beginning after December 31, 1996;
and the provisions of this Plan, as in effect immediately prior to
this Amendment, shall apply to all other forfeitures.
(4) (A) Notwithstanding any other provision of this paragraph (c), if
at any time a Participant is less than 100% vested in his ESOP
Matching Contributions Account and ESOP Employer Contributions
Account, and, as a result of his severance of employment, he receives
his entire vested severance of employment benefit pursuant to the
provisions of Article IX, and the distribution of such benefit is made
not later than the close of the fifth Plan Year following the Plan
Year in which such termination occurs (or such longer period as may be
permitted by the Secretary of the Treasury, through regulations or
otherwise), then upon the occurrence of such distribution, the
nonvested interest of the Participant in his ESOP Matching
Contributions Account and ESOP Employer Contributions Account shall be
deemed to be forfeited and such forfeited amount shall be reallocated,
pursuant to the provisions of paragraph (c)(4)(C) of this Article
VIII, paragraph (b)(3) of Article VI, and paragraph (e)(2)(D) of
Article VII, at the end of the Plan Year immediately following or
concurring with the date such distribution occurs.
(B) If a Participant is not vested as to any portion of his ESOP
Matching Contributions Account and ESOP Employer Contributions
Account, he will be deemed to have received a distribution immediately
following his severance of employment. Upon the occurrence of such
deemed distribution, the nonvested interest of the Participant in his
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ESOP Matching Contributions Account and ESOP Employer Contributions
Account shall be deemed to be forfeited and such forfeited amount
shall be reallocated, pursuant to the provisions of paragraph
(c)(4)(C) of this Article VIII, paragraph (b)(3) of Article VI, and
paragraph (e)(2)(D) of Article VII, at the end of the Plan Year
immediately following or concurring with the date such distribution
occurs.
(C) If a Participant whose interest is forfeited under this
subparagraph (4) is reemployed by an Employer or an Affiliate prior to
the occurrence of five consecutive One Year Breaks in Service
commencing after his distribution, then such Participant shall have
the right to repay to the Trust, before the date that is the earlier
of (1) five years after the Participant's resumption of employment, or
(2) the close of a period of five consecutive One Year Breaks in
Service, the full amount of the severance of employment benefit
previously distributed to him. If the Participant elects to repay
such amount to the Trust within the time periods prescribed herein, or
if a nonvested Participant whose interest was forfeited under this
subparagraph (4) is reemployed by an Employer or an Affiliate prior to
the occurrence of five consecutive One Year Breaks in Service, the
nonvested interest of the Participant previously forfeited pursuant to
the provisions of this subparagraph (4) shall be restored to the ESOP
Matching Contributions Account and ESOP Employer Contributions Account
of the Participant, such restoration to be made from forfeitures of
nonvested interests and, if necessary, by contributions of his
Employer, so that the aggregate of the amounts repaid by the
Participant and restored by the Employer shall not be less than the
ESOP Matching Contributions Account and ESOP Employer Contributions
Account balance of the Participant at the time of forfeiture
unadjusted by any subsequent gains or losses. Amounts attributed to
an ESOP Matching Contributions Account and an ESOP Employer
Contributions Account repaid by the Participant and restored by the
Employer shall initially be credited to the Participant's Other
Investment Account consistent with the provisions of paragraph (e) of
Article VII.
(d) DEATH BENEFIT.
-------------
(1) In the event of the death of a Participant and subject to
adjustment as provided in paragraph (d) of Article IX, his beneficiary
shall be entitled to a death benefit in an amount equal to 100% of the
balance in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of his death plus the amount of any contributions
allocated subsequent to such Valuation Date.
(2) Subject to the provisions of subparagraph (3), at any time and
from time to time, each Participant shall have the unrestricted right to
designate a beneficiary to receive his death benefit and to revoke any such
designation. Each designation or revocation shall be evidenced by written
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instrument filed with the Plan Administrator, signed by the Participant and
bearing the signatures of at least two persons as witnesses to his
signature. In the event that a Participant has not designated a
beneficiary or beneficiaries, or if for any reason such designation shall
be legally ineffective, or if such beneficiary or beneficiaries shall
predecease the Participant, then the Participant's surviving Eligible
Spouse, and if none, his issue, per stirpes, and if none, the personal
representative of the estate of such Participant shall be deemed to be the
beneficiary designated to receive such death benefit, or if no personal
representative is appointed for the estate of such Participant, then his
next of kin under the statute of descent and distribution of the State of
such Participant's domicile at the date of his death shall be deemed to be
the beneficiary or beneficiaries to receive such death benefit.
(3) Notwithstanding the foregoing, if the Participant is married as of
the date of his death, the Participant's surviving Eligible Spouse shall be
deemed to be his designated beneficiary and shall receive the full amount
of the death benefit attributable to the Participant unless the spouse
consents or has consented to the Participant's designation of another
beneficiary. Any such consent to the designation of another beneficiary
must acknowledge the effect of the consent, must be witnessed by a Plan
representative or by a notary public and shall be effective only with
respect to that spouse. A spouse's consent may be either a restricted
consent (which may not be changed as to the beneficiary or (except as
otherwise permitted by law) form of payment unless the spouse consents to
such change in the manner described herein) or a blanket consent (which
acknowledges that the spouse has the right to limit consent only to a
specific beneficiary or a specific form of payment, and that the spouse
voluntarily elects to relinquish one or both of such rights).
Notwithstanding the preceding provisions of this subparagraph (3), a
Participant shall not be required to obtain spousal consent to his
designation of another beneficiary if (A) the Participant is legally
separated or the Participant has been abandoned, and the Participant
provides the Administrator with a court order to such effect, or (B) the
spouse cannot be located.
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ARTICLE IX
Payments of Benefits, Put Option and Right of First Refusal
-----------------------------------------------------------
(A) TIME FOR DISTRIBUTION OF BENEFITS.
---------------------------------
(1) Except as otherwise provided under this Article IX, the amount of
the benefit to which a Participant is entitled under paragraph (a), (b),
(c) or (d) of Article VIII shall be paid to him or applied for his benefit
or, in the case of a death benefit, shall be paid to or applied for the
benefit of said Participant's beneficiary or beneficiaries, as described
within paragraph (b) beginning as soon as practicable following the
Valuation Date coincident with or next following the Participant's
retirement, disability, death, or other severance his employment, as the
case may be.
(2) (A) Any distribution paid to a Participant (or, in the case of a
death benefit, to his beneficiary or beneficiaries) pursuant to
subparagraph (1) shall commence not later than the earlier of:
(i) the 60th day after the last day of the Plan Year in
which the Participant's employment is terminated or, if later, in
which occurs the Participant's Normal Retirement Date; or
(ii) solely for each Participant who is a 5% owner of the
Company or an Affiliate, April 1 of the year immediately
following the calendar year in which he reaches age 70 1/2.
(B) Notwithstanding the foregoing, no distribution shall be made
of any Participant's benefit payable pursuant to paragraph (a), (b),
or (c) of Article VIII prior to his Normal Retirement Date unless the
value of his benefit does not exceed $3,500, or unless the Participant
consents to the distribution. The Plan Administrator shall provide
each Participant entitled to a distribution of more than $3,500 with a
written notice of his rights, which shall include an explanation of
the alternative dates for distribution of benefits. The Participant
may elect to exercise such rights, no less than 30 days and no more
than 90 days before the first date upon which distribution of the
Participant's vested Account balances may be made; provided, however,
that such distribution may be made less than 30 days after the
exercise of such rights if (i) the Plan Administrator informs the
Participant of his right to such thirty to ninety day period, and (ii)
the Participant, after receiving such notice from the Plan
Administrator, affirmatively elects a distribution in less than 30
days. In the event that a Participant does not consent to a
distribution of a benefit in excess of $3,500 to which he is entitled
under paragraph (a), (b) or (c) of Article VIII, the amount of his
benefit shall be paid to the Participant in such subsequent Plan Year
as the Participant shall, at any time, select, but not later than
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sixty (60) days after the last day of the Plan Year in which the
Participant reaches his Normal Retirement Date.
(b) FORM OF PAYMENT.
---------------
(1) ESOP Payments.
--------------
(A) The benefits payable under paragraphs (a), (b), (c) and (d)
of Article VIII that are attributable to a Participant's ESOP Matching
Contributions Account and ESOP Employer Contributions Account, as well
as the portions of his ESOP Elective Contributions Account allocated
to an Employer Securities Account and an Other Investments Account,
shall be paid to the Participant (or, if applicable, his beneficiary
or beneficiaries), to the extent possible, in units of Employer
Securities, except that no fractional shares shall be issued and the
value of any fractional shares to which a Participant (or his
beneficiary or beneficiaries) would otherwise be entitled shall be
paid in cash. During the sixty (60) day period immediately preceding
the proposed distribution date of the benefit which the Participant is
entitled to receive under the Plan, the Trustee, to the extent
possible, shall apply the balance in the Participant's Other
Investments Account to the purchase of the maximum number of whole
units of Employer Securities at their then Fair Market Value, which
units shall be allocated to the Participant's Employer Securities
Account. Any portion of the balance of a Participant's Other
Investments Account that the Trustee is unable to apply to the
purchase of whole units of Employer Securities within the said sixty
(60) day period shall be paid in cash.
(B) The benefits payable under paragraphs (a), (b), (c) and (d)
of Article VIII that are attributable to the portion of a
Participant's ESOP Elective Contributions Account allocated to a
Participant Investments - ESOP Elective Contributions Account shall be
paid to the Participant (or, if applicable, his beneficiary or
beneficiaries), to the extent possible, in cash or in units of
Employer Securities (except that no fractional shares shall be issued
and the value of any fractional shares to which a Participant would
otherwise be entitled shall be paid in cash), as elected by the
Participant (or his beneficiary or beneficiaries). If the Participant
elects to receive all or any portion of the vested balance in his
Participant Investments - ESOP Elective Contributions Account in units
of Employer Securities, then, during the sixty (60) day period
immediately preceding the proposed distribution date of the benefit
which the Participant is entitled to receive under the Plan, the
Trustee, to the extent possible, shall apply (net of any brokerage
commissions) such portion of the Participant's Participant Investments
- ESOP Elective Contributions Account to the purchase of the maximum
number of whole units of Employer Securities at their then Fair Market
Value, which units shall be allocated to the Participant's Employer
Securities Account. If the Trustee is unable to apply any elected
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<PAGE>
portion of the balance of such Participant Investments - ESOP Elective
Contributions Account to the purchase of whole units of Employer
Securities within the said sixty (60) day period, such elected portion
shall be paid in cash.
(C) Notwithstanding the provisions of subparagraphs (1)(A) and
(1)(B), if the amount to which any Participant is entitled under
Article VIII is less than $3,500, the Plan Administrator, in
accordance with a uniform and nondiscriminatory policy, may pay such
amount to the Participant or his beneficiary in the form of cash
rather than Employer Securities unless the Participant or his
beneficiary demands that such amount be distributed in the form of
Employer Securities; provided, however, that prior to distributing any
such amount in cash, the Participant's right to demand a distribution
in the form of Employer Securities instead of cash shall have been
communicated to the Participant or his beneficiary in writing by the
Plan Administrator.
(2) Other Payments. The benefits payable under paragraphs (a), (b),
--------------
(c) and (d) of Article VIII that are attributable to a Participant's 401(k)
Elective Contributions Account, Rollover Contributions Account, and Merger
Accounts shall be paid to the Participant (or, if applicable, his
beneficiary or beneficiaries) in cash.
(c) MANNER OF PAYMENT.
-----------------
(1) The benefits payable under paragraphs (a), (b), (c) and (d) of
Article VIII that are attributable to a Participant's ESOP Elective
Contributions Account, ESOP Matching Contributions Account, and ESOP
Employer Contributions Account shall be paid to the Participant (or, if
applicable, his beneficiary or beneficiaries) in a single lump sum
distribution.
(2) The manner of payment for benefits payable under paragraphs (a),
(b), (c) and (d) of Article VIII that are attributable to a Participant's
401(k) Elective Contributions Account, Rollover Contributions Account, and
Merger Accounts shall be determined by the Participant or, in case such
Participant has died, his beneficiary or beneficiaries. The options are:
(A) Option A - Such amount shall be paid or applied in monthly,
--------
quarterly, semi-annual or annual installments as nearly equal as
practicable; provided, however, that no periodic payment shall be less
than $100. In the event this option is selected, the portion of the
account of a Participant, or, in case such Participant is dead, of his
beneficiary or beneficiaries, that is not needed to make annual
payments during the then current Plan Year shall remain a part of the
Trust Fund under Article VII and shall participate in the net increase
or net decrease in the value of said Trust Fund as provided therein.
Installments shall be made as follows:
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(i) In the case of a retirement, disability or termination
benefit, in no event shall payments under this Option A extend
beyond the life expectancy of the Participant or the joint life
expectancy of the Participant and his designated beneficiary. If
the Participant dies before receiving the entire amount payable
to him, the balance shall be paid to his designated beneficiary
or, if there is none, to the beneficiary specified in Article
VIII; in each case the balance shall be distributed at least as
rapidly as under the method being used prior to the Participant's
death.
(ii) In the case of a death benefit, payment under this
Option A:
a. to the designated beneficiary shall begin within
one year following the Participant's death and shall not, in
any event, extend beyond the life expectancy of the
designated beneficiary (unless the designated beneficiary is
the Participant's surviving spouse, in which case such
benefit shall begin no later than the date the Participant
would have reached age 70 1/2); or
b. to any other beneficiary shall be totally
distributed within five years from the date of the
Participant's death.
(B) Option B - Such amount shall be paid in a single lump sum
--------
payment.
The Participant (or his spouse) shall be permitted to elect whether life
expectancies will be recalculated for purposes of distributions hereunder.
Such election must be made by the Participant (or his spouse) no later than
the date that distributions are required to commence pursuant to Section
401(a)(9) of the Code. If the Participant (or his spouse) fails to make
such election, life expectancies shall not be recalculated.
Notwithstanding the preceding provisions of this subparagraph (2), any
benefit provided under this subparagraph (2) that is not more than $3,500
shall be paid in a lump sum.
(3) Notwithstanding the foregoing, payments under any of the options
described in this paragraph shall satisfy the incidental death benefit
requirements and all other applicable provisions of Section 401(a)(9) of
the Code, the regulations issued thereunder (including Prop. Reg. Section
1.401(a)(9)-2), and such other rules thereunder as may be prescribed by the
Commissioner.
(d) PERIODIC ADJUSTMENTS. To the extent the balance of a Participant's
--------------------
Accounts has not been distributed and remains in the Plan, and notwithstanding
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anything contained in the Plan to the contrary, the value of such remaining
balance shall be subject to adjustment from time to time pursuant to the
provisions of Article VII.
(e) DIRECT ROLLOVER DISTRIBUTIONS. Notwithstanding any provision of the
-----------------------------
plan to the contrary, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have all or any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover. In the event that a Distributee elect to
have only a portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan, the portion must not be less than $500 (adjusted under
such regulations as may be issued from time to time by the Secretary of the
Treasury).
(f) PUT OPTIONS.
-----------
(1) The provisions of this paragraph (f) relate to all Employer
Securities held as assets of the Trust. Except to the extent hereinafter
provided in this paragraph (f), except as provided in paragraph (g) or
except as otherwise required by applicable law, no such Employer Securities
may be subject to a put, call or other option, or buy-sell or similar
arrangement while held by and when distributed from the Plan.
(2) If any such Employer Securities, when distributed to or for the
benefit of a Participant, are not then listed on a national securities
exchange registered under section 6 of the Securities Exchange Act of 1934
(the "1934 Act") or are not then quoted on a system sponsored by a national
securities association registered under section 15A(b) of the 1934 Act, or,
if so listed or quoted, are then subject to a trading limitation (a
restriction under any federal or state securities law, any regulation
thereunder or any permissible agreement affecting such Employer Securities,
that makes such Employer Securities not as freely tradable as Employer
Securities not subject to such restriction), then the Participant, the
Participant's beneficiary or beneficiaries, the persons to whom such shares
are transferred by gift from the Participant, or any person to whom such
Employer Securities pass by reason of the death of the Participant or a
beneficiary of the Participant, as the case may be, shall be granted an
option to put any of the units of such Employer Securities to the Company.
The put option shall provide that, for a period of fifteen (15) months
after such shares are distributed, the Participant, the Participant's
beneficiary or beneficiaries, the persons to whom such shares are
transferred by gift from the Participant, or any person to whom such
Employer Securities pass by reason of the death of the Participant or a
beneficiary of the Participant, as the case may be, shall have the right to
have the Company purchase such units at their Fair Market Value on the date
the put option is exercised. Any such put option shall be exercised by the
holder notifying the Company in writing that the put option is being
exercised; the date of exercise shall be the date the Company receives such
written notice. Payment of the purchase price shall be made by the
Company, at the election of the Company, either in cash within 30 days
after the date of exercise or by an installment purchase. Any installment
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purchase must provide for adequate security, a reasonable interest rate and
a payment schedule providing for cumulative payments at any time not less
than the payments that would be made if made in substantially equal annual
installments beginning within 30 days and ending not more than five years
(which may be extended to a date no later than the earlier of ten years
after the date of exercise or the date the proceeds of the loan used by the
Plan to acquire the securities in question are entirely repaid) after the
date the put option is exercised.
(3) The following special rules shall apply to any put option granted
with respect to any such Employer Securities:
(A) At the time that any such put option is exercised, the Plan
shall have an option to assume the rights and obligations of the
Company under the put option.
(B) If it is known at the time that a loan is made to the Plan to
enable it to purchase Employer Securities that federal or state law
will be violated by the Company honoring the put option provided in
this paragraph (f), the holder of any such put option shall have the
right to put such Employer Securities to a third party that has
substantial net worth at the time the loan is made and whose net worth
is reasonably expected to remain substantial, the identity of such
third party to be selected by the Plan Administrator.
(C) If any such Employer Securities are publicly traded without
restriction when distributed, but cease to be so traded within 15
months after distribution, the Company shall notify each holder of
such Employer Securities, in writing, on or before the tenth day after
the date such Employer Securities cease to be so traded, that for the
remainder of the 15-month period, such Employer Securities are subject
to a put option. Such notice shall also inform the holder of the
terms of such put option (which terms shall be consistent with the
provisions of this paragraph (f)). If such notice is given after the
tenth day after the date such Employer Securities cease to be so
traded, the duration of the put option shall be extended by the number
of days between such tenth day and the date on which notice is
actually given.
(D) The period during which a put option is exercisable shall not
include any time when a distributee is unable to exercise it because
the party bound by the put option is prohibited from honoring it by
applicable federal or state law.
(4) Except as otherwise permitted by law, the provisions of this
paragraph (f) are not terminable for any reason, including as a result of
the repayment of any loan used to acquire Employer Securities or by the
cessation of the Plan as an employer stock ownership plan.
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(g) RIGHT OF FIRST REFUSAL. The Employer or, if the Employer does not
----------------------
exercise such right, the Plan, shall have a right of first refusal with respect
to any Employer Securities constituting stock or another equity security or a
debt security convertible into stock or another equity security that are
distributed for the benefit of a Participant or his beneficiary under this Plan.
Such right of first refusal shall be subject to the following terms and
conditions:
(1) At the time the right of first refusal may be exercised, the
Employer Securities subject thereto must not then be listed on a national
securities exchange registered under section 6 of the Securities Exchange
Act of 1934 (the "1934 Act") or must not then be quoted on a system
sponsored by a national securities association registered under section
15A(b) of the 1934 Act.
(2) If at any time the person owning or otherwise having the right to
sell such Employer Securities subject to the right of first refusal
(whether or not such person received such securities from the Trust or as a
result of a gift, a pledge or otherwise) desires to sell such securities,
or any portion thereof, such person shall provide notice in writing to the
Employer and to the Trustee (on behalf of the Plan), with such notice to
include the name and address of the person to whom it is proposed that the
securities be sold and of the person proposing to make the sale, the
proposed purchase price therefor and the proposed terms of payment. The
Employer and/or the Trustee shall have fourteen (14) days from the giving
of such notice within which to give notice in writing to the person
proposing to make the sale of the desire to exercise the right of first
refusal. If both the Employer and the Trustee (on behalf of the Plan)
exercise such right of first refusal, the Employer shall have the priority
to make the purchase.
(3) If the Employer or the Trustee exercise the right of first
refusal, the purchase of the shares shall take place as soon thereafter as
is practicable at the offices of the purchaser. The purchase price and
other terms of the purchase shall not be less favorable to the seller than
the greater of the Fair Market Value of the securities in question or the
purchase price and other terms offered by the proposed purchaser (other
than the Employer or the Plan), making a good faith offer to purchase the
security.
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ARTICLE X
Withdrawals and Diversification Distributions
---------------------------------------------
(a) HARDSHIP WITHDRAWALS.
--------------------
(1) A Participant who has participated in this Plan for at least
eighteen (18) months will be eligible to receive a distribution of 401(k)
Elective Contributions (plus earnings credited to such contributions prior
to January 1, 1989, as well as any other contributions made to the 401(k)
Plan and allocated to the Participant prior to the merger of the 401(k)
Plan with this Plan effective October 1, 1993) on account of Hardship. If
a Participant incurs a Hardship, such Participant may apply to the
Administrator for the withdrawal of a portion of his 401(k) Elective
Contributions Account (and other Accounts to the extent described above)
not in excess of the amount of such Hardship. The Administrator shall
determine whether an immediate and heavy financial need exists and the
amount necessary to meet the need (which amount may include the amount
necessary to pay income taxes and penalties reasonably anticipated to
result from the withdrawal), or the lesser amount, if any, to be
distributed to such Participant, in a uniform and nondiscriminatory manner.
If the Administrator approves a Hardship withdrawal, it shall direct the
Trustee to distribute such amount to such Participant from his 401(k)
Elective Contributions Account, not in excess of the actual contributions
thereto plus earnings credited to the Participant's 401(k) Elective
Contributions Account as of the last day of the last Plan Year ending
before July 1, 1989, less previous distributions (and from any other
contributions made to the 401(k) Plan and allocated to the Participant
prior to the merger of the 401(k) Plan with this Plan effective October 1,
1993). No Hardship withdrawal shall be permitted in an amount less than
$1,000.
(2) An immediate and heavy financial need shall be deemed to include
(A) expenses of medical care (as defined in Section 213(d) of the
Code) incurred by the Participant or his spouse or other dependents
(as defined in Section 152 of the Code) or necessary for such persons
to obtain such medical care,
(B) payments (other than mortgage payments) directly related to
the purchase of the Participant's principal residence,
(C) payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant or his
spouse, children or other dependents,
(D) payments necessary to prevent the eviction of the Participant
from his principal residence or the foreclosure on the mortgage of
such residence, and
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(E) such other events as may be prescribed by the Commissioner of
the Internal Revenue Service in revenue rulings, notices and other
documents of general applicability.
A financial need shall not fail to qualify as immediate and heavy merely
because such need was reasonably foreseeable or voluntarily incurred by the
Participant.
(3) A distribution of 401(k) Elective Contributions will be deemed
necessary to satisfy the financial need of a Participant if
(A) the distribution is not in excess of the amount of the
immediate and heavy financial need of the employee (including any
amount necessary to pay income taxes and penalties reasonably
anticipated to result from the distribution);
(B) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available
under all plans maintained by an Employer;
(C) the Participant's elective contributions to the Plan or any
other qualified or nonqualified plans of deferred compensation
maintained by an Employer are suspended and he is not permitted to
make further elective contributions until the first day of the quarter
of the Plan Year following the expiration of 12 months from the date
of such withdrawal; and
(D) the Participant is not permitted to make elective
contributions to the Plan or any other plan maintained by an Employer
for the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable limit
under Section 402(g) of the Code for such next taxable year less the
amount of such Participant's elective contributions for the taxable
year of the hardship distribution.
(4) Any Participant who withdraws an amount pursuant to subparagraph
(1) shall be subject to the limitations of paragraphs (a)(2)(A)(ii) and
(a)(7) of Article VI.
(b) WITHDRAWALS AFTER AGE 59 1/2. Upon reaching age 59 1/2, a Participant
----------------------------
may apply to the Administrator for the withdrawal of all or a portion of his
Accounts. The Administrator shall establish uniform and nondiscriminatory rules
and procedures regarding the distribution of benefits pursuant to this
paragraph. The Administrator shall direct the Trustee to distribute to a
Participant who has applied for such a withdrawal the amount requested from his
Accounts. Amounts withdrawn from the Participant's ESOP Elective Contributions
Account, ESOP Matching Contributions Account, ESOP Employer Contributions
Account, 401(k) Elective Contributions Account, Rollover Contributions Account,
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and/or Merger Accounts shall be paid to the Participant in the form and manner
provided in paragraphs (b) and (c) of Article IX.
(c) DIVERSIFICATION DISTRIBUTIONS.
-----------------------------
(1) Any Participant who has attained age 55 and completed ten (10)
years of participation in the Plan, shall have the right to direct the
Trustee to distribute a portion of his Employer Securities Accounts before
his retirement, death, total and permanent disability, or severance of
employment as a diversification distribution.
(A) Such a Participant may elect, within ninety (90) days after
the close of the first Plan Year in the Diversification Election
Period, to receive a distribution of cash in an amount not exceeding
25% of the portion of the balance of his Employer Securities Accounts
attributable to Employer Securities acquired by, or contributed to,
the Plan after December 31, 1986, determined as of the last day of
such Plan Year.
(B) Within ninety (90) days after the close of the second, third,
fourth and fifth Plan Years in the Diversification Election Period,
such a Participant may elect to receive a distribution of cash in an
amount equal to the difference between
(i) 25% of the portion of the balance of his Employer
Securities Account attributable to Employer Securities acquired
by, or contributed to, the Plan after December 31, 1986,
determined as of the last day of such Plan Year, and
(ii) the amount with respect to which a diversification
distribution was previously elected.
(C) In the final Plan Year of the Diversification Election
Period, the Participant may elect to receive a distribution in cash in
an amount equal to the difference between
(i) 50% of the portion of the balance of his Employer
Securities Accounts attributable to Employer Securities acquired
by, or contributed to, the Plan after December 31, 1986,
determined as of the last day of such Plan Year,
(ii) and the amount with respect to which a diversification
distribution was previously elected.
(2) An eligible Participant's diversification election shall be made
in writing on such forms as may be approved by the Plan Administrator, with
the Participant designating the amount to be distributed as a percentage of
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the portion of his Employer Securities Accounts that is available for
distribution as described in subparagraph (1).
(3) If any Participant elects to receive a diversification
distribution in any year in the Diversification Election Period, the
Trustee shall sell Employer Securities that are allocated to the Account of
the Participant with a value equal to the amount to be distributed. The
proceeds of such sale shall be distributed to the Participant no later than
ninety (90) days after the Participant's election is made.
(4) Notwithstanding any other provision of this paragraph (c), no
diversification distribution shall be made to any Participant unless the
value of the Employer Securities acquired by or contributed to this Plan
after December 31, 1986, and allocated to the Participant's Employer
Securities Accounts, exceeds $500 as of the Valuation Date immediately
preceding the first day on which the Participant may elect a
diversification distribution.
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ARTICLE XI
Participant Directed Investments
--------------------------------
(a) PARTICIPANT DIRECTED INVESTMENTS. On the commencement of his
--------------------------------
participation in the Plan, each Participant shall direct the Trustee to invest
his 401(k) Elective Contributions Account, Participant Investments - ESOP
Elective Contributions Account, Rollover Contributions Account, and Merger
Accounts in one or more of the following:
(1) A "Money Market Fund," which shall consist of a portfolio invested
in commercial paper, U.S. Government or federal agency obligations, short-
term corporate obligations, bank certificates of deposit, savings accounts,
guaranteed investment-type contracts, fixed rate annuity contracts
(provided, however, that no such annuity contract shall be deemed to permit
any Participant to receive any benefit under this Plan in the form of a
life annuity), and/or comparable investments, as may be deemed appropriate
by the Plan Administrator, designed to provide maximum protection of
capital with a conservative rate of return;
(2) A "Bond Fund," which shall consist of a portfolio invested
primarily in governmental and corporate bonds, notes and bills, fixed rate
annuity contracts (provided, however, that no such annuity contract shall
be deemed to permit any Participant to receive any benefit under this Plan
in the form of a life annuity), mortgages, savings accounts and/or
comparable investments, as may be deemed appropriate by the Plan
Administrator, designed to provide for a moderate rate of return based
primarily upon interest income;
(3) A "Balanced Fund," which shall consist of a portfolio invested
primarily in common and preferred stocks, governmental and corporate bonds
and such other securities or investment opportunities, as may be deemed
appropriate by the Plan Administrator, designed to provide for a balanced
return based upon appreciation of stocks and income derived from interest
and dividends;
(4) A "Growth Fund," which shall consist of a portfolio invested
primarily in common stocks and such other securities or investment
opportunities, as may be deemed appropriate by the Plan Administrator,
providing primarily for long-term capital appreciation;
(5) An "Aggressive Growth Fund," which shall consist of a portfolio
invested primarily in common stocks of small and medium-sized companies and
such other securities or investment opportunities, as may be deemed
appropriate by the Plan Administrator, providing for long-term capital
appreciation;
(6) A "Company Stock Fund," which shall consist of a portfolio
invested primarily in Employer Securities; and
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(7) Such additional, or alternative, investment funds as may be made
available by the Plan Administrator from time to time.
The Plan Administrator may provide such Funds through mutual funds, investment
contracts, or other appropriate investment vehicles.
(b) ELECTION PROCEDURES. Except as may be otherwise provided by the
-------------------
Agreement and Declaration of Trust or by any contract entered into by the
Trustee or the Plan Administrator with an investment manager appointed to manage
all or any portion of the assets of the Plan, each Participant's elections
described in paragraph (a) shall be made in writing upon his commencement of
participation in the Plan.
(1) A Participant shall designate the percentage of his 401(k)
Elective Contributions, Participant Investments - ESOP Elective
Contributions Account, and Rollover Contributions to be allocated to any
Fund. The Administrator shall establish the minimum percentage that each
Participant may select to be allocated to any Fund selected by the
Participant, which minimum percentage shall not be less than 5%.
(2) A Participant may revise his election effective as of the first
day of each Valuation Period. The Participant's revised election shall be
effective for contributions made to the Plan after the effective date of
such revision, and may be effective for the investment of balances
previously allocated and remaining credited to a Participant's 401(k)
Elective Contributions Account, Participant Investments - ESOP Elective
Contributions Account, and Rollover Contributions Account and Merger
Accounts.
(3) The Trustee shall make requested investments on behalf of each
Participant within a reasonable period after the receipt of written
directions from the Administrator or the Participant.
(c) FAILURE TO DESIGNATE. If a Participant does not specifically designate
--------------------
the initial investments for all of his 401(k) Elective Contributions Account,
and Rollover Contributions Account, the Administrator shall not accept his
initial salary reduction agreement. In the event that a Participant is credited
with a 401(k) Elective Contributions Account, Participant Investments - ESOP
Elective Contributions Account, Rollover Contributions Account, and/or Merger
Accounts prior to providing the Trustee with directions for the investment of
his Accounts, such Accounts shall be invested in the Balanced Fund.
(d) UNIFORM PROCEDURES. The Administrator shall establish uniform
------------------
procedures regarding Participant investment directions, which procedures shall
be communicated to all Participants. The Plan Administrator, at its sole
discretion, may prohibit, or otherwise restrict, investment of 401(k) Elective
Contributions Account, Participant Investments - ESOP Elective Contributions
Account, Rollover Contributions Account, and Merger Account balances in the
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Company Stock Fund by any officer, director or 10% shareholder of the Company,
or any other Participant who is required to file reports under Section 16(b) of
the Securities Exchange Act of 1934, in order to prevent a violation of federal
law or an undue administrative burden upon the Plan Administrator.
(e) DESIGNATED SECTION 404(C) PLAN.
------------------------------
(1) This Plan is designated as an "ERISA Section 404(c) Plan"
providing Participants (and beneficiaries) with the opportunity to exercise
control over the investment of assets held in their Accounts and to select,
from a broad range of investment funds, the manner in which some or all of
the assets in their Accounts are invested. The investment funds shall be
selected and offered by the Company, as the designated plan fiduciary, in
accordance with Section 404(c) of ERISA and the regulations thereunder.
(2) Information relating to the purchase, holding or sale of interests
in the Company Stock Fund by Participants, as well as the voting and/or
tender of Employer Securities, shall be maintained on a confidential basis
by the director of personnel for the Company at all times. The director of
personnel for the Company shall be the fiduciary responsible for
maintaining all participant information with respect to investments in, and
the voting and tender of, the Company Stock Fund. The director of
personnel shall maintain confidential information with respect to
participants' investments in the Company Stock Fund in a manner that will
prevent officers, directors and employees of the Company from obtaining
access to the information unless they have been specifically authorized to
receive the information in connection with their responsibilities with
respect to the administration of the plan. The director of personnel also
shall be responsible for the periodic review and revision of
confidentiality procedures for the Plan.
(3) In the event the fiduciary designated in subparagraph (2) above
determines that the direct or indirect exercise of shareholder rights by
any Participant who has invested in the Company Stock Fund may be subject
to undue employer influence, the fiduciary shall appoint one or more
independent fiduciaries (who are not affiliated with any Employer) to carry
out such activities with respect to the Company Stock Fund as may be
required to eliminate such undue employer influence.
(f) OTHER ACCOUNTS. The Participant shall have no right to direct the
--------------
investment of his ESOP Matching Contributions Account, his ESOP Employer
Contributions Account, or the portions of his ESOP Elective Contributions
Account allocated to an Employer Securities Account and/or an Other Investments
Account.
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ARTICLE XII
Trust Fund
----------
Effective as of January 2, 1997, the Trust Fund shall be held by
Northwestern Trust and Investors Advisory Company, as Trustee, or by a successor
trustee or trustees, for use in accordance with the Plan under the Agreement and
Declaration of Trust. The Agreement and Declaration of Trust may from time to
time be amended in the manner therein provided. Similarly, the Trustee may be
changed from time to time in the manner provided in the Agreement and
Declaration of Trust.
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ARTICLE XIII
Expenses of Administration of the Plan and the Trust Fund
---------------------------------------------------------
The Company shall bear all expenses of implementing this Plan and the
Trust. For its services, any corporate trustee shall be entitled to receive
reasonable compensation in accordance with its agreement with the Company, as in
effect from time to time. Any individual Trustee shall be entitled to such
compensation as shall be arranged between the Company and the Trustee by
separate instrument; provided, however, that no person who is already receiving
full-time pay from any Employer or any Affiliate shall receive compensation from
the Trust Fund (except for the reimbursement of expenses properly and actually
incurred). The Company may pay all expenses of the administration of the Trust
Fund, including the Trustee's compensation, the compensation of any investment
manager, the expense incurred by the Plan Administrator in discharging its
duties, all income or other taxes of any kind whatsoever that may be levied or
assessed under existing or future laws upon or in respect of the Trust Fund, and
any interest that may be payable on money borrowed by the Trustee for the
purpose of the Trust and any Employer may pay such expenses as relate to
Participants employed by such Employer. Any such payment by the Company or
another Employer shall not be deemed a contribution to this Plan. Such expenses
shall be paid out of the assets of the Trust Fund unless paid or provided for by
the Company or another Employer. Notwithstanding anything contained herein to
the contrary, no excise tax or other liability imposed upon the Trustee, the
Plan Administrator or any other person for failure to comply with the provisions
of any federal law shall be subject to payment or reimbursement from the assets
of the Trust.
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ARTICLE XIV
Amendment and Termination
-------------------------
(a) RESTRICTIONS ON AMENDMENT AND TERMINATION OF PLAN. It is the present
-------------------------------------------------
intention of the Company to maintain the Plan set forth herein indefinitely.
Nevertheless, the Company specifically reserves to itself the right at any time,
and from time to time, to amend or terminate this Plan in whole or in part;
provided, however, that no such amendment:
(1) shall have the effect of vesting in any Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent funds held subject to the terms of the Trust;
(2) shall cause or permit any property held subject to the terms of
the Trust to be diverted to purposes other than the exclusive benefit of
the Participants and their beneficiaries or for the administrative expenses
of the Plan Administrator and the Trust;
(3) shall either directly or indirectly reduce any vested and
nonforfeitable interest of, or the vested percentage in effect with respect
to, a Participant determined as of the later of the date the amendment is
adopted or the date the amendment is effective, except as permitted by law;
(4) shall reduce the Accounts of any Participant;
(5) shall amend any vesting schedule with respect to any Participant
who has at least five Years of Service (three Years of Service for Plan
Years beginning after December 31, 1988) at the end of the election period
described below, except as permitted by law, unless each such Participant
shall have the right to elect to have the vesting schedule in effect prior
to such amendment apply with respect to him, such election, if any, to be
made during the period beginning not later than the date the amendment is
adopted and ending no earlier than sixty (60) days after the latest of the
date the amendment is adopted, the amendment becomes effective or the
Participant is issued written notice of the amendment by his Employer or
the Plan Administrator;
(6) shall increase the duties or liabilities of the Trustee without
its written consent; or
(7) shall modify, more than once in any six-month period, any
provision of the Plan set forth in Article V, paragraphs (a), (b) and (c)
of Article VI, and subparagraph (e)(2) and paragraph (f) of Article VII
that is applicable to any officer, director, 10% owner of any Employer, or
any other Participant who is required to file reports under Section 16(a)
of the Securities Exchange Act of 1934.
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<PAGE>
(b) AMENDMENT OF PLAN. Subject to the limitations stated in paragraph (a),
-----------------
the Company shall have the power to amend this Plan in any manner that it deems
desirable, and, not in limitation but in amplification of the foregoing, it
shall have the right to change or modify the method of allocation of
contributions hereunder (except as provided in paragraph (a)(7)), to change any
provision relating to the administration of this Plan and to change any
provision relating to the distribution or payment, or both, of any of the assets
of the Trust.
(c) TERMINATION OF PLAN. Any Employer, in its sole and absolute
-------------------
discretion, may permanently discontinue making contributions under this Plan or
may terminate this Plan and the Trust (with respect to all Employers if it is
the Company, or with respect to itself alone if it is an Employer other than the
Company), completely or partially, at any time without any liability whatsoever
for such permanent discontinuance or complete or partial termination. In any of
such events, the affected Participants, notwithstanding any other provisions of
this Plan, shall have fully vested interests in the amounts credited to their
respective Accounts at the time of such complete or partial termination of this
Plan and the Trust or permanent discontinuance of contributions. All such
vested interests shall be nonforfeitable.
(d) DISCONTINUANCE PROCEDURE. In the event an Employer decides to
------------------------
permanently discontinue making contributions, such decision shall be evidenced
by an appropriate resolution of its Board and a certified copy of such
resolution shall be delivered to the Plan Administrator and the Trustee. All of
the assets in the Trust Fund belonging to the affected Participants on the date
of discontinuance specified in such resolutions shall, aside from becoming fully
vested as provided in paragraph (c), be held, administered and distributed by
the Trustee in the manner provided under this Plan. In the event of a permanent
discontinuance of contributions without such formal documentation, full vesting
of the interests of the affected Participants in the amounts credited to their
respective Accounts will occur on the last day of the year in which a
substantial contribution is made to the Trust.
(e) TERMINATION PROCEDURE.
---------------------
(1) In the event an Employer decides to terminate this Plan and the
Trust, such decision shall be evidenced by an appropriate resolution of its
Board and a certified copy of such resolution shall be delivered to the
Plan Administrator and the Trustee. After payment of all expenses and
proportional adjustments of individual accounts to reflect such expenses
and other changes in the value of the Trust Fund as of the date of
termination, each affected Participant (or the beneficiary of any such
Participant) shall be entitled to receive, provided that the requirements
set forth in subparagraph (2) are met, any amount then credited to his
Accounts in a lump sum.
(2) In the event this Plan and the Trust are terminated, completely or
partially, and with respect to any one Employer or with respect to all
Employers, distributions may not be made pursuant to this paragraph (e)
unless:
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(A) the Plan has been completely terminated and no successor plan
(within the meaning of Section 401(k)(10) of the Code) has been
established;
(B) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer to an unrelated corporation
of substantially all of the assets used in a trade or business, in
which case distribution may be made to employees who continue
employment with the acquiring corporation; or
(C) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer of its interest in a
subsidiary, in which case distribution may be made to employees who
continue employment with the subsidiary.
(3) At the election of the Participant, the Plan Administrator may
transfer the amount of any Participant's distribution under this paragraph
(e) to the trustee of another qualified plan or the trustee of an
individual retirement account or individual retirement annuity instead of
distributing such amount to the Participant. Any such election by a
Participant shall be in writing and filed with the Plan Administrator.
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ARTICLE XV
Miscellaneous
-------------
(a) MERGER OR CONSOLIDATION. This Plan and the Trust may not be merged or
-----------------------
consolidated with, and the assets or liabilities of this Plan and the Trust may
not be transferred to, any other plan or trust unless each Participant would
receive a benefit immediately after the merger, consolidation or transfer, if
the plan and trust then terminated, that is equal to or greater than the benefit
the Participant would have received immediately before the merger, consolidation
or transfer if this Plan and the Trust had then terminated.
(b) ALIENATION.
----------
(1) Except as provided in subparagraph (2), no Participant or
beneficiary of a Participant shall have any right to assign, transfer,
appropriate, encumber, commute, anticipate or otherwise alienate his
interest in this Plan or the Trust or any payments to be made thereunder;
no benefits, payments, rights or interests of a Participant or beneficiary
of a Participant of any kind or nature shall be in any way subject to legal
process to levy upon, garnish or attach the same for payment of any claim
against the Participant or beneficiary of a Participant; and no Participant
or beneficiary of a Participant shall have any right of any kind whatsoever
with respect to the Trust, or any estate or interest therein, or with
respect to any other property or right, other than the right to receive
such distributions as are lawfully made out of the Trust, as and when the
same respectively are due and payable under the terms of this Plan and the
Trust.
(2) Notwithstanding the provisions of subparagraph (b)(1), the Plan
Administrator shall direct the Trustee to make payments pursuant to a
Qualified Domestic Relations Order as defined in Section 414(p) of the
Code. The Plan Administrator shall establish procedures consistent with
Section 414(p) of the Code to determine if any order received by the Plan
Administrator, or any other fiduciary of the Plan, is a Qualified Domestic
Relations Order.
(c) USERRA REQUIREMENTS. Notwithstanding any provision of this Plan to the
-------------------
contrary, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Section 414(u) of the
Internal Revenue Code and the Uniformed Service Employment and Reemployment
Rights Act.
(d) GOVERNING LAW. This Plan shall be administered, construed and enforced
-------------
according to the laws of the State of Florida, except to the extent such laws
have been expressly preempted by federal law.
(e) ACTION BY EMPLOYER. Whenever the Company or another Employer under the
------------------
terms of this Plan is permitted or required to do or perform any act, it shall
be done and performed by the Board of Directors of the Company or such other
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Employer and shall be evidenced by proper resolution of such Board of Directors
certified by the Secretary or Assistant Secretary of the Company or such other
Employer.
(f) ALTERNATIVE ACTIONS. In the event it becomes impossible for the
-------------------
Company, another Employer, the Plan Administrator or the Trustee to perform any
act required by this Plan, then the Company, such other Employer, the Plan
Administrator or the Trustee, as the case may be, may perform such alternative
act that most nearly carries out the intent and purpose of this Plan.
(g) GENDER. Throughout this Plan, and whenever appropriate, the masculine
------
gender shall be deemed to include the feminine and neuter; the singular, the
plural; and vice versa.
IN WITNESS WHEREOF, this Amendment and Restatement has been executed this
31st day of December, 1996, and shall be effective as of the dates set forth
hereinabove.
ATTEST: PHYSICIAN SALES & SERVICE, INC.
(Corporate Seal)
By: /s/ David A. Smith
- ------------------------------------ -----------------------------
Secretary Executive Vice President and
Chief Financial Officer
"COMPANY"
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EXHIBIT 10.16B
FIRST AMENDMENT
TO THE
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
This First Amendment to the Physician Sales & Service, Inc. Employee Stock
Ownership and Savings Plan is adopted this 8th day of July, 1997, by Physician
Sales & Service, Inc. (the "Company"), and is effective as of January 1, 1997,
except as otherwise set forth below.
W I T N E S S E T H:
-------------------
WHEREAS, the Company has previously adopted the Amendment and Restatement
of the Physician Sales & Service, Inc. Employee Stock Ownership and Savings Plan
(the "Plan"), effective as of January 1, 1997; and
WHEREAS, the Company is authorized and empowered to further amend the Plan;
and
WHEREAS, the Company deems it advisable and in the best interests of the
Participants to amend the Plan to provide for the merger of the Y-Laboratories &
Supplies, Inc. 401(k) Retirement Plan into this Plan effective as of October 1,
1997 (or as soon as practicable thereafter), to modify the timing of changes to
certain contributions and investment elections under the Plan, to clarify the
earnings allocation and antidiscrimination provisions of the Plan, and to
include other changes required in order to comply with applicable federal laws.
NOW, THEREFORE, the Plan is hereby amended as follows:
I.
Paragraph (b) of Article I is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(b) "ACTUAL CONTRIBUTION PERCENTAGE" shall mean, with respect to any Plan
------------------------------
Year beginning on or after January 1, 1997 and with respect to a group of
Participants for the Plan Year, the average of the Actual Contribution Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group.
<PAGE>
II.
Paragraph (d) of Article I is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(d) "ACTUAL DEFERRAL PERCENTAGE" shall mean, with respect to any Plan Year
--------------------------
beginning on or after January 1, 1997 and with respect to a group of
Participants for the Plan Year, the average of the Actual Deferral Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group.
III.
Subparagraphs (m)(2) and (m)(3) of Article I are hereby deleted, in their
entireties, and the following is substituted in lieu thereof:
(2) For purposes of determining a Participant's Actual Deferral Ratio
with respect to any Plan Year beginning on or after January 1, 1997, an
Employer may limit the period for which Compensation is taken into account
to that portion of the Plan Year in which the Employee was a Participant so
long as this limit is applied uniformly to all eligible Employees under the
Plan for the Plan Year. For all other purposes of the Plan, no
Compensation paid or accrued by an Employer with respect to an Employee
prior to the Employee's first day of participation shall be taken into
account.
(3) Effective for Plan Years beginning on or after January 1, 1997, no
Compensation in excess of $160,000 (adjusted by the Commissioner of the
Internal Revenue Service in accordance with Section 401(a)(17)(B) of the
Code) shall be taken into account for any Employee. For Plan Years
beginning before January 1, 1997, the provisions of subparagraph (m)(3) of
Article I of this Plan prior to its most recent amendment and restatement
shall be in effect.
IV.
Paragraph (s) of Article I is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(s) "ELIGIBILITY DATE" shall mean the first day of each Plan Year and the
----------------
first day of each calendar month within the Plan Year.
V.
Subparagraph (w)(3) of Article I is hereby deleted, in its entirety, and
the following is substituted in lieu thereof:
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(3) For Plan Years beginning on or after January 1, 1997, the term
"leased employee," as used in this paragraph (w), means any person (other
than an employee of the Employer) who, pursuant to an agreement between the
Employer and any other person ("leasing organization"), has performed
services for the Employer (or for the Employer and one or more Affiliates)
on a substantially full time basis for a period of at least one year and
the individual's services are performed under the primary direction or
control of such Employer.
VI.
Paragraph (pp) of Article I is hereby modified by renumbering subparagraph
(3) as subparagraph (4) and adding a new subparagraph (3), immediately before
renumbered subparagraph (4), as follows:
(3) The provisions of subparagraphs (1) and (2) shall be effective for
Plan Years beginning on or after January 1, 1997. For Plan Years beginning
before January 1, 1997, the provisions of paragraph (pp) of Article I of
this Plan prior to its most recent amendment and restatement shall be in
effect.
VII.
Effective October 1, 1997, paragraph (uu) of Article I is hereby deleted,
in its entirety, and the following is substituted in lieu thereof:
(uu) "MERGER ACCOUNTS" shall mean the account or accounts established
---------------
pursuant to paragraph (b) of Article VII with respect to contributions to the
Brown's Medical Supply Co. Retirement Savings Plan and the Y-Laboratories &
Supplies, Inc. 401(k) Retirement Plan on behalf of a Participant prior to the
merger of the Brown's Medical Supply Co. Retirement Savings Plan and the Y-
Laboratories & Supplies, Inc. 401(k) Retirement Plan with this Plan effective as
of January 1, 1997 and October 1, 1997, respectively, or as soon thereafter as
administratively feasible, together with accounts established with respect to
contributions to other tax-qualified retirement plans merged with this Plan from
time to time.
VIII.
Paragraph (nnn) of Article I is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(nnn) "VALUATION DATE" shall mean the last day of each Plan Year and each
--------------
business day, or such other dates as may be selected by the Plan Administrator.
For purposes of this paragraph, the term "business day" shall mean a day on
which the New York Stock Exchange and the home office of any third-party
administrator that contracts with the Plan Administrator to provide services to
the Plan are open for business.
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<PAGE>
IX.
Article I is hereby modified by adding new paragraphs (qqq), (rrr) and
(sss), immediately following existing paragraph (ppp), as follows:
(qqq) "EARNINGS" attributable to any Pooled Investment Fund (other than
--------
any pooled Employer Securities Accounts, Other Investments Accounts, or the
Company Stock Fund) shall mean, with respect to a Valuation Period, the
aggregate of the unrealized appreciation or depreciation accruing to the Pooled
Investment Fund during such a period; and the income earned or the loss
sustained by the Pooled Investment Fund during such period, whether from
investments or from the sale or exchange of assets. The Earnings attributable
to a separate portion of a Segregated Investment Fund (other than any segregated
Employer Securities Accounts, Other Investments Accounts, or Company Stock Fund)
credited to a Participant's Account for any Valuation Period shall be determined
by multiplying the number of shares of the Segregated Investment Fund credited
to the Participant's Account by the difference between the value of each share
for the current Valuation Date and the value of each share as of the most recent
preceding Valuation Date. The Earnings attributable to any portion of the
Company Stock Fund invested in assets other than Employer Securities shall mean,
with respect to a Valuation Period, (i) cash dividends received on shares of
Employer Securities allocated to Participants' investments in the Company Stock
Fund and (ii) the aggregate of the unrealized appreciation or depreciation
occurring in the value of, and that portion of the income earned or the loss
sustained by, such portion of the Company Stock Fund during such period. The
Earnings attributable to any Other Investments Account shall mean, with respect
to a Valuation Period, (i) cash dividends received on shares of Employer
Securities allocated to Participants' Employer Securities Accounts (to the
extent such cash dividends are not used, pursuant to paragraph (f), to repay a
loan), (ii) cash dividends received on Employer Securities not allocated to any
Participant's Employer Securities Account or any Fund described in Article XI
(to the extent such cash dividends are not used, pursuant to paragraph (f), to
repay a loan), and (iii) the aggregate of the unrealized appreciation or
depreciation occurring in the value of, and that portion of the income earned or
the loss sustained by, the Other Investments Account during such period.
(rrr) "POOLED INVESTMENT FUND" shall mean a Fund established under Article
----------------------
XI, the combined assets of which shall consist of the common investments of all
Participants selecting the Fund.
(sss) "SEGREGATED INVESTMENT FUND" shall mean a Fund established under
--------------------------
Article XI, in which the assets of each Participant selecting the Fund shall be
separately invested, and for which the earnings attributable to such assets
shall be separately accounted.
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<PAGE>
X.
Effective April 1, 1997, subparagraph (a)(4) of Article VI is hereby
deleted, in its entirety, and the following is substituted in lieu thereof:
(4) Any salary reduction agreement with respect to 401(k) Elective
Contributions shall be executed and in effect prior to the date selected by
the Administrator for the first pay period to which it applies. Any such
agreement may be revised by the Participant monthly with the approval of,
and as of such date as determined by, the Administrator (or as of any
additional dates selected by the Administrator), for pay periods beginning
after the date such revision is executed and made effective.
XI.
Effective April 1, 1997, subparagraphs (a)(6) and (a)(7) of Article VI are
hereby deleted, in their entireties, and the following is substituted in lieu
thereof:
(6) A Participant may suspend further 401(k) Elective Contributions to
the Plan at any time, provided the request for such suspension is received
by the Plan Administrator prior to the date selected by the Administrator
for the first pay period to which such suspension applies. Any Participant
who suspends further contributions relating to periodic pay may reinstate
such contributions by providing written notice to the Plan Administrator
for any month thereafter (and as of the date within such month as
determined by the Administrator). Any such notice shall be delivered
within the time period designated by the Plan Administrator.
(7) In the event that a Participant receives a withdrawal of his
401(k) Elective Contributions pursuant to paragraph (a) of Article X, such
Participant shall not be permitted to make any further 401(k) Elective
Contributions pursuant to paragraph (a)(1) of this Article VI for a period
of 12 months following the date of such withdrawal. After the completion
of the 12-month period, the Participant may reinstate 401(k) Elective
Contributions in accordance with the provisions of paragraph (a)(6).
XII.
Sections (a)(8)(A), (a)(8)(B) and (a)(8)(C) of Article VI are hereby
deleted, in their entireties, and the following is substituted in lieu thereof:
(8) (A) In the event that the 401(k) Elective Contributions of
Highly Compensated Employees exceed the limitations set forth in
paragraph (g), the aggregate excess 401(k) Elective Contributions
(plus the earnings thereon for the Plan Year to which the excess
-5-
<PAGE>
contributions relate), determined as set forth in paragraph (a)(8)(B)
below, shall be distributed to the Highly Compensated Employees as
provided in paragraph (a)(8)(C) below on or before the 15th day of the
third month after the close of the Plan Year to which the excess
contributions relate. Notwithstanding the preceding sentence, the
Plan Administrator may delay the distribution of any excess 401(k)
Elective Contributions (plus the earnings thereon for the Plan Year to
which the excess contributions relate) attributable to an Employer
beyond the 15th day of the third month of such Plan Year, if the
Employer consents to such delay and the Administrator refunds all such
excess amounts not later than 12 months after the close of the Plan
Year to which the excess contributions relate.
(B) For purposes of paragraph (a)(8)(A), the amount of the
aggregate excess 401(k) Elective Contributions for the Plan Year shall
be equal to the sum of the amounts of such excess contributions
attributable to each Highly Compensated Employee for the Plan Year.
(i) In order to determine the amount of the excess 401(k)
Elective Contributions attributable to each Highly Compensated
Employee, the Plan Administrator shall first reduce the Actual
Deferral Ratio of the Highly Compensated Employee with the
highest Actual Deferral Ratio for the Plan Year to the extent
required to:
a. enable the arrangement to satisfy the limitations
set forth in paragraph (g), or
b. cause such Highly Compensated Employee's Actual
Deferral Ratio to equal the Actual Deferral Ratio of the
Highly Compensated Employee with the next highest Actual
Deferral Ratio.
Then, if necessary, the Plan Administrator shall reduce the
Actual Deferral Ratios of the Highly Compensated Employees with
the next highest Actual Deferral Ratio for the Plan Year
(including the Actual Deferral Ratio(s) of the Highly Compensated
Employee(s) whose Actual Deferral Ratio the Plan Administrator
already has reduced) to the extent required to comply with
paragraph (a)(8)(B)(i)a. or (a)(8)(B)(i)b. This process shall
then be repeated until the Actual Deferral Percentage for the
Highly Compensated Employees satisfies the limitations set forth
in paragraph (g).
(ii) The amount of the excess 401(k) Elective Contributions
attributable to each Highly Compensated Employee shall equal the
remainder of
-6-
<PAGE>
a. the total 401(k) Elective Contributions (and any
Non-Elective Contributions treated as 401(k) Elective
Contributions) on behalf of the Participant (determined
prior to the application of this paragraph (a)(8)(B)), minus
b. the amount determined by multiplying the
Participant's Actual Deferral Ratio (determined after
application of paragraph (a)(8)(B)(i)) by his Compensation
used in determining such ratio.
(C) In order to determine the dollar amount of the excess 401(k)
Elective Contributions distributable to each Highly Compensated
Employee pursuant to paragraph (a)(8)(A), the Plan Administrator shall
first reduce the 401(k) Elective Contributions of the Highly
Compensated Employee(s) with the highest dollar amount of 401(k)
Elective Contributions for the Plan Year by a dollar amount equal to
the lesser of
(i) the aggregate excess 401(k) Elective Contributions
determined under paragraph (a)(8)(B), or
(ii) the dollar amount necessary to reduce such Highly
Compensated Employee's 401(k) Elective Contributions to a dollar
amount that is equal to the dollar amount of 401(k) Elective
Contributions of the Highly Compensated Employee with the next
highest dollar amount of 401(k) Elective Contributions.
Then, if necessary, the Plan Administrator shall reduce the 401(k)
Elective Contributions of the Highly Compensated Employees with the
next highest dollar amount of 401(k) Elective Contributions for the
Plan Year (including the Highly Compensated Employee(s) whose 401(k)
Elective Contributions the Plan Administrator already has reduced) to
the extent required to comply with paragraph (a)(8)(C)(i) or
(a)(8)(C)(ii). This process shall then be repeated until the
aggregate excess 401(k) Elective Contributions determined under
paragraph (a)(8)(B) have been eliminated. The reduced amounts shall
be distributed in accordance with paragraph (a)(8)(A) to the Highly
Compensated Employees to whom the reductions are attributable under
this paragraph (a)(8)(C). For purposes of this paragraph (a)(8)(C),
401(k) Elective Contributions shall include amounts treated as
elective contributions.
XIII.
Subparagraph (a)(8) of Article VI is hereby modified by adding a new
section (F), immediately following existing section (E), as follows:
-7-
<PAGE>
(F) The provisions of this paragraph (a)(8) shall be effective
for Plan Years beginning on or after January 1, 1997. For Plan Years
beginning before January 1, 1997, the provisions of subparagraph
(a)(8) of Article VI of this Plan, prior to its most recent amendment
and restatement, shall be in effect.
XIV.
Sections (b)(4)(A) through (b)(4)(F) of Article VI are hereby deleted, in
their entireties, and the following sections (b)(4)(A) through (b)(4)(D) are
substituted in lieu thereof:
(A) The nonvested portion of such aggregate excess ESOP Matching
Contributions (including earnings thereon for the Plan Year to which
the excess contributions relate), if any, determined as set forth in
paragraph (b)(4)(C) below, shall be forfeited. Unless otherwise
required by paragraph (c)(4)(C) of Article VIII, such forfeiture shall
be allocated as additional ESOP Employer Contributions in accordance
with paragraph (c) of this Article VI; provided, however, that such
forfeiture shall be allocated solely to the accounts of Non-Highly
Compensated Employees.
(B) The vested portion of such aggregate excess ESOP Matching
Contributions (including earnings thereon for the Plan Year to which
the excess contributions relate), if any, determined as set forth in
paragraph (b)(4)(C) below, shall be distributed to the Highly
Compensated Employees as provided in paragraph (b)(4)(D) below on or
before the 15th day of the third month after the close of the Plan
Year to which the ESOP Matching Contributions relate. Notwithstanding
the preceding sentence, the Plan Administrator may delay the
distribution of any excess ESOP Matching Contributions (plus the
earnings thereon for the Plan Year to which the excess contributions
relate) attributable to an Employer beyond the 15th day of the third
month of such Plan Year, if the Employer consents to such delay and
the Administrator refunds all such excess amounts not later than 12
months after the close of the Plan Year to which the excess
contributions relate.
(C) For purposes of paragraphs (b)(4)(A) and (b)(4)(B), the
amount of the aggregate excess ESOP Matching Contributions for the
Plan Year shall be equal to the sum of the amounts of such excess
contributions attributable to each Highly Compensated Employee for the
Plan Year.
(i) In order to determine the amount of the excess ESOP
Matching Contributions attributable to each Highly Compensated
Employee, the Plan Administrator shall first reduce the Actual
-8-
<PAGE>
Contribution Ratio of the Highly Compensated Employee with the
highest Actual Contribution Ratio for the Plan Year to the extent
required to:
a. enable the arrangement to satisfy the limitations
set forth in paragraph (g), or
b. cause such Highly Compensated Employee's Actual
Contribution Ratio to equal the Actual Contribution Ratio of
the Highly Compensated Employee with the next highest Actual
Contribution Ratio.
Then, if necessary, the Plan Administrator shall reduce the
Actual Contribution Ratios of the Highly Compensated Employees
with the next highest Actual Contribution Ratio for the Plan Year
(including the Actual Contribution Ratio(s) of the Highly
Compensated Employee(s) whose Actual Contribution Ratio the Plan
Administrator already has reduced) to the extent required to
comply with paragraph (b)(4)(C)(i)a. or (b)(4)(C)(i)b. This
process shall then be repeated until the Actual Contribution
Percentage for the Highly Compensated Employees satisfies the
limitations set forth in paragraph (g).
(ii) The amount of the excess ESOP Matching Contributions
attributable to each Highly Compensated Employee shall equal the
remainder of
a. the total ESOP Matching Contributions (and Non-
Elective Contributions treated as ESOP Matching
Contributions) on behalf of the Participant (determined
prior to the application of this paragraph (b)(4)(C)), minus
b. the amount determined by multiplying the
Participant's Actual Contribution Ratio (determined after
application of paragraph (b)(4)(C)(i)) by his Compensation
used in determining such ratio.
(iii) In determining the amount of the excess ESOP Matching
Contributions, Actual Contribution Ratios shall be rounded to the
nearest one-hundredth of one percent of the Employee's
Compensation. In no case shall the amount of such excess with
respect to any Highly Compensated Employee exceed the amount of
ESOP Matching Contributions on behalf of such Highly Compensated
Employee for such Plan Year.
(D) In order to determine the dollar amount of the excess ESOP
Matching Contributions forfeitable with respect to, and distributable
-9-
<PAGE>
to, each Highly Compensated Employee pursuant to paragraphs (b)(4)(A)
and (b)(4)(B), the Plan Administrator shall first reduce the ESOP
Matching Contributions of the Highly Compensated Employee(s) with the
highest dollar amount of ESOP Matching Contributions for the Plan Year
by a dollar amount equal to the lesser of
(i) the aggregate excess ESOP Matching Contributions
determined under paragraph (b)(4)(C), or
(ii) the dollar amount necessary to reduce such Highly
Compensated Employee's ESOP Matching Contributions to a dollar
amount that is equal to the dollar amount of ESOP Matching
Contributions of the Highly Compensated Employee with the next
highest dollar amount of ESOP Matching Contributions.
Then, if necessary, the Plan Administrator shall reduce the ESOP
Matching Contributions of the Highly Compensated Employees with the
next highest dollar amount of ESOP Matching Contributions for the Plan
Year (including the Highly Compensated Employee(s) whose ESOP Matching
Contributions the Plan Administrator already has reduced) to the
extent required to comply with paragraph (b)(4)(D)(i) or
(b)(4)(D)(ii). This process shall then be repeated until the
aggregate excess ESOP Matching Contributions determined under
paragraph (b)(4)(C) have been eliminated. The reduced amounts shall
be forfeited and/or distributed in accordance with paragraphs
(b)(4)(A) and (b)(4)(B) to the Highly Compensated Employees to whom
the reductions are attributable under this paragraph (b)(4)(D). For
purposes of this subparagraph, ESOP Matching Contributions shall
include amounts treated as ESOP Matching Contributions.
XV.
Subparagraph (b)(4) Article VI is hereby modified by redesignating section
(G) as section (E) and by adding a new section (F), immediately following
existing (redesignated) section (E), as follows:
(E) The provisions of this subparagraph (b)(4) shall be effective
for Plan Years beginning on or after January 1, 1997. For Plan Years
beginning before January 1, 1997, the prior provisions of subparagraph
(b)(4) of Article VI of this Plan, prior to its most recent amendment
and restatement, shall be in effect.
-10-
<PAGE>
XVI.
Section (g)(1)(B) of Article VI is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(B) The excess of the Actual Deferral Percentage for the group of
eligible Highly Compensated Employees for a Plan Year over the Actual
Deferral Percentage for the group of all other eligible Employees
shall not exceed two (2) percentage points (or such lesser amount as
may be required by the Secretary of the Treasury, through regulations
or otherwise); and the Actual Deferral Percentage for the group of
eligible Highly Compensated Employees shall not exceed the Actual
Deferral Percentage for the group of all other eligible Employees,
multiplied by 2.0 (or such lesser amount as may be required by the
Secretary of the Treasury, through regulations or otherwise).
XVII.
Paragraph (g) of Article VI is hereby amended by adding a new subparagraph
(6), immediately following existing subparagraph (5), as follows:
(6) The provisions of this paragraph (g) shall be effective for Plan
Years beginning on or after January 1, 1997. For Plan Years beginning
before January 1, 1997, the prior provisions of paragraph (g) of Article VI
of this Plan, prior to its most recent amendment and restatement, shall be
in effect.
XVIII.
Effective October 1, 1997, subparagraph (b)(4) of Article VII is hereby
deleted, in its entirety, and the following is substituted in lieu thereof:
(4) Effective January 1, 1997, or as soon thereafter as is
administratively feasible, the Plan Administrator shall establish and
maintain, with respect to each Participant who was also a participant in
the Brown's Medical Supply Co. Retirement Savings Plan, one or more Merger
Accounts to provide for amounts credited to the Participant and transferred
from the Brown's Medical Supply Co. Retirement Savings Plan upon its merger
with this Plan. Effective October 1, 1997, or as soon thereafter as is
administratively feasible, the Plan Administrator shall establish and
maintain, with respect to each Participant who was also a participant in
the Y-Laboratories & Supplies, Inc. 401(k) Retirement Plan, one or more
Merger Accounts to provide for amounts credited to the Participant and
transferred from the Y-Laboratories & Supplies, Inc. 401(k) Retirement Plan
-11-
<PAGE>
upon its merger with this Plan. The Plan Administrator may establish and
maintain additional Merger Accounts from time to time to provide for
amounts credited to Participants and transferred from other tax-qualified
retirement plans merged with this Plan upon the authorization and direction
of the Board of Directors.
XIX.
Paragraph (e)(1) of Article VII is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(1) Each Participant's Accounts shall be credited with appreciation or
depreciation, and earnings or losses, as follows:
(A) As of each Valuation Date, the portions of each Participant's
ESOP Employer Contributions Account, ESOP Matching Contributions
Account and ESOP Elective Contributions Account credited to Employer
Securities Accounts shall be credited with any stock dividends (as
well as the aggregate unrealized appreciation or depreciation, if
Employer Securities Accounts are not accounted for in shares) for the
Valuation Period ending with such current Valuation Date that are
received on (or attributable to) shares of Employer Securities
allocated to the Participant's Employer Securities Accounts (and that
are not used, pursuant to paragraph (f) to repay a loan).
(B) As of each Valuation Date, the Administrator shall credit any
stock dividends (as well as the aggregate unrealized appreciation or
depreciation, if Employer Securities Accounts are not accounted for in
shares) for the Valuation Period ending with such date, that are
received on (or attributable to) shares of Employer Securities
allocated to suspense accounts maintained as of such date (and that
are not used, pursuant to paragraph (f) to repay a loan), to such
suspense accounts.
(C) As of each Valuation Date, the portions of the Participant's
ESOP Employer Contributions Account, ESOP Matching Contributions
Account, and ESOP Elective Contributions Account credited to Other
Investments Accounts shall be credited or charged, as the case may be,
with the share of the Earnings for the Valuation Period ending with
such current Valuation Date. Each Participant's share of the Earnings
of his Other Investments Accounts for any Valuation Period shall be
determined by the Plan Administrator on a weighted average basis, so
that each Participant with a balance in such Other Investments
Accounts shall receive a pro rata share of the Earnings of such Other
Investments Accounts, taking into account the period of time that each
-12-
<PAGE>
dollar invested in such Other Investments Accounts has been so
invested.
(D) To the extent not otherwise provided for in the preceding
provisions of this paragraph (d), the portions of the Participant's
ESOP Employer Contributions Account, ESOP Matching Contributions
Account, and ESOP Elective Contributions Account credited to Employer
Securities Accounts and Other Investments Accounts shall be further
credited and charged with (i) the proceeds of any short-term interim
investments that may be made by the Trustee during periods prior to
purchase dates for the acquisition of Employer Securities by the
Trustee, and (ii) direct or indirect purchases of the Employer
Securities with assets other than Employer Securities, and purchases
of assets other than the Employer Securities in connection with the
sale of Employer Securities.
(E) (i) As of each Valuation Date, any portion of the
Participant's 401(k) Elective Contributions Account, Participant
Investments - ESOP Elective Contributions Account, Rollover
Contributions Account, and Merger Accounts that is invested in a
Pooled Investment Fund established under paragraph (a) of Article
XI (other than a Company Stock Fund) shall be credited or
charged, as the case may be, with a share of the Earnings of such
Pooled Investment Fund for the Valuation Period ending with such
current Valuation Date. Each Participant's share of the Earnings
of a Pooled Investment Fund for any Valuation Period shall be
determined by the Plan Administrator on a weighted average basis,
so that each Participant with a balance in such Pooled Investment
Fund shall receive a pro rata share of the Earnings of such
Pooled Investment Fund, taking into account the period of time
that each dollar invested in such Pooled Investment Fund has been
so invested.
(ii) As of each Valuation Date, the portion of the
Participant's 401(k) Elective Contributions Account, Participant
Investments - ESOP Elective Contributions Account, Rollover
Contributions Account, and Merger Accounts that is invested in
each Segregated Investment Fund established under paragraph (a)
of Article XI (other than a Company Stock Fund) shall be credited
or charged, as the case may be, with the Earnings attributable to
the Participant's investment in such Segregated Investment Fund
for the Valuation Period ending with such current Valuation Date.
(iii) As of each Valuation Date, any portion of the
Participant's 401(k) Elective Contributions Account, Participant
Investments - ESOP Elective Contributions Account, Rollover
Contributions Account, and Merger Accounts that is invested in
-13-
<PAGE>
the Company Stock Fund pursuant to paragraph (a) of Article XI
shall be credited or charged, as the case may be, with the share
of the appreciation or depreciation, and earnings or losses,
attributable to the Participant's investment in the Company Stock
Fund for the Valuation Period ending with such current Valuation
Date as follows:
a. The portions of the Participant's Accounts invested
in Employer Securities shall be credited with the value of
any stock dividends (as well as the aggregate unrealized
appreciation or depreciation, if such investments are not
accounted for in shares) for the Valuation Period ending
with such current Valuation Date that are received on (or
attributable to) shares of Employer Securities allocated to
the Participant's investment.
b. The portions of the Participant's Accounts invested
in other investments shall be credited or charged, as the
case may be, with a share of the Earnings of such other
investments for the Valuation Period ending with such
current Valuation Date. Each Participant's share of the
Earnings of such other investments for any Valuation Period
shall be determined by the Plan Administrator on a weighted
average basis, so that each Participant with a balance in
such other investments shall receive a pro rata share of the
Earnings of such other investments, taking into account the
period of time that each dollar invested has been so
invested.
c. To the extent not otherwise provided for in the
preceding provisions of this paragraph (d)(1)(E)(iii), the
Participant's investments in a Company Stock Fund shall be
further credited and charged with the proceeds of any short-
term interim investments that may be made by the Trustee
during periods prior to purchase dates for the acquisition
of Employer Securities by the Trustee, and with direct or
indirect purchases of the Employer Securities with assets
other than Employer Securities and purchases of assets other
than the Employer Securities in connection with the sale of
Employer Securities.
XX.
Subparagraph (e)(5) of Article VII is hereby deleted, in its entirety, and
the following is substituted in lieu thereof:
-14-
<PAGE>
(5) The Plan Administrator may adopt such additional accounting
procedures as are necessary to accurately reflect each Participant's
interests in the Trust Fund or in any Fund. Such accounting procedures
shall include any procedures necessary to appropriately reflect any
earnings and losses that may result from delays that may occur in
completing scheduled transactions. All such procedures shall be applied in
a consistent, nondiscriminatory manner.
XXI.
Effective October 1, 1997, subparagraph (b)(2) of Article IX is hereby
modified by adding a new final sentence thereto, immediately following the
existing final sentence, as follows:
Notwithstanding the foregoing provision of this paragraph (b)(2), any
Participant who is entitled to a distribution of benefits attributable to
one or more Merger Accounts on or after October 1, 1997 and who elects a
manner of payment described in paragraph (c)(2)(A) of this Article IX shall
be paid his Merger Account balances in cash or in the form of a
nontransferable annuity contract (purchased by the Plan Administrator from
a commercial provider), as elected by the Participant (or his beneficiary
or beneficiaries).
XXII.
Paragraph (d) of Article IX is hereby deleted, in its entirety, and the
following is substituted in lieu thereof:
(d) LIQUIDATION OF INVESTMENTS AND PERIODIC ADJUSTMENTS.
---------------------------------------------------
(1) Notwithstanding any other provision of this Plan, whenever a
Participant is entitled to a distribution or withdrawal from the Plan
pursuant to Article IX or X, the Plan Administrator and the Trustee shall
be entitled to liquidate all, or any portion, of the investments
attributable to the Participant's Accounts at any time during the five
business days preceding the date upon which the distribution or withdrawal
is scheduled to occur in order to facilitate the payment of benefits. In
the event that the Plan Administrator and the Trustee elect to liquidate
investments in order to facilitate a distribution or withdrawal, the
liquidated funds may be placed in a money market fund or similar investment
fund (or, when reasonable, may be held in cash, without liability for
interest thereon). The Plan Administrator may adopt such accounting
procedures as are necessary to accurately reflect the Participant's
interest in such liquidated funds.
-15-
<PAGE>
(2) Except as otherwise provided in paragraph (d)(1), to the extent
the balance of a Participant's Accounts has not been distributed and
remains in the Plan, the value of such remaining balance shall be subject
to adjustment from time to time pursuant to the provisions of Article VII.
XXIII.
Effective April 1, 1997, subparagraphs (b)(1) and (b)(2) of Article XI are
hereby deleted, in their entireties, and the following is substituted in lieu
thereof:
(1) A Participant shall designate the percentage of his 401(k)
Elective Contributions, Participant Investments - ESOP Elective
Contributions Account, and Rollover Contributions to be allocated to any
Fund. The Administrator shall establish the minimum percentage that each
Participant may select to be allocated to any Fund selected by the
Participant.
(2) A Participant may revise his election monthly, effective as of
such dates as may be selected by the Plan Administrator from time to time.
The Participant's revised election shall be effective for contributions
made to the Plan after the effective date of such revision, and may be
effective for the investment of balances previously allocated and remaining
credited to a Participant's 401(k) Elective Contributions Account,
Participant Investments - ESOP Elective Contributions Account, and Rollover
Contributions Account and Merger Accounts.
IN WITNESS WHEREOF, this First Amendment has been executed this 8th day of
July, 1997, and is effective as of the dates set forth herein.
ATTEST: PHYSICIAN SALES & SERVICE, INC.
(Corporate Seal)
/s/ Fred Elefant By: /s/ David A. Smith
- ------------------------------------- ------------------------------
Secretary Executive Vice President and
Chief Financial Officer
"COMPANY"
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-27-1998
<PERIOD-START> MAR-29-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 48,172,411
<SECURITIES> 520,313
<RECEIVABLES> 121,592,786
<ALLOWANCES> 0
<INVENTORY> 68,477,128
<CURRENT-ASSETS> 259,264,781
<PP&E> 21,317,785
<DEPRECIATION> 2,034,408
<TOTAL-ASSETS> 308,201,536
<CURRENT-LIABILITIES> 91,821,040
<BONDS> 0
0
0
<COMMON> 373,455
<OTHER-SE> 207,651,115
<TOTAL-LIABILITY-AND-EQUITY> 308,201,536
<SALES> 203,542,635
<TOTAL-REVENUES> 203,542,635
<CGS> 148,099,587
<TOTAL-COSTS> 48,911,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 248,145
<INCOME-PRETAX> 7,361,147
<INCOME-TAX> 2,991,054
<INCOME-CONTINUING> 4,370,093
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,370,093
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
