Exhibit 10.19
-------------
X.X. XXXXX HEALTHCARE, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AMENDMENT DATED ____________, 1998
This Amendment is adopted the ____ day of ____________, 1998, by and
between X.X. Xxxxx Healthcare, Inc. (hereinafter the "Company") and Xxxxxx X.
Xxxx Trust Company (hereinafter the "Trustee");
WHEREAS, the Company and the Trustee heretofore entered into the X.X. Xxxxx
Drug Company Employee Stock Ownership Plan (the "Plan"); and
WHEREAS, pursuant to the terms of the Plan, the Company reserved the right
to amend the Plan from time to time in its discretion; and
WHEREAS, the Company now desires to amend the Plan to reflect the initial
public offering and listing of its stock on the New York Stock Exchange, the
change of its name and the name of the Plan, and to make certain other changes
to the Plan.
NOW, THEREFORE, in consideration of these premises, the Plan is hereby
amended as follows, effective upon adoption of the Amendment unless otherwise
noted:
1. Section 1.01 is deleted in its entirety and a new Section 1.01 is
added to read as follows:
1.01 "Plan" means the retirement plan established and continued by
the Employer in the form of this Agreement, designated as the X.X.
XXXXX HEALTHCARE, INC. EMPLOYEE STOCK OWNERSHIP PLAN. The Employer
has designed this Plan to invest primarily in Employer Securities.
2. Section 1.02 is deleted in its entirety and a new Section 1.02 is
added to read as follows:
1.02 "Employer" means X.X. Xxxxx Healthcare, Inc., and any employer
that, with the consent of X.X. Xxxxx Healthcare, Inc. adopts this Plan
for the benefit of its eligible Employees.
3. Section 1.06 is deleted in its entirety and a new Section 1.06 is
added to read as follows:
1.06 "Employee" means any employee of an Employer. Notwithstanding
anything in this Plan or any other communication, documentation, or
anything else, the only employees who may be eligible if they
otherwise meet the eligibility requirements of the Plan shall be
persons classified by the Employer as common-law employees and who
are on the W-2 payroll of the Employer. However, such term excludes
any person classified by the Employer as an independent contractor or
contract employee. Such exclusion shall apply regardless of whether
or not
such persons are on the W-2 payroll of the Employer. This limitation
on the definition of Employee shall be controlling for purposes of
this Plan, regardless of whether or not the person is later determined
by the Internal Revenue Service, other agency, arbitrator or a court
to be a common-law employee of the Employer. Notwithstanding anything
in this Plan or any other communication, documentation, or anything
else, the only employees who may be eligible if they otherwise meet
the eligibility requirements of the Plan shall be persons classified
by the Employer as common-law employees and who are on the W-2 payroll
of the Employer. However, such term excludes any person classified by
the Employer as an independent contractor or contract employee. Such
exclusion shall apply regardless of whether or not such persons are on
the W-2 payroll of the Employer. This limitation on the definition of
Employee shall be controlling for purposes of this Plan, regardless of
whether or not the person is later determined by the Internal Revenue
Service, other agency, arbitrator or a court to be a common-law
employee of the Employer.
4. Section 1.19 is deleted in its entirety and a new Section 1.19 is
added to read as follows:
1.19 "Trust Fund" means all property of every kind held or acquired
by the Employer's Plan, other than incidental benefit insurance
contracts. This Plan creates a single Trust for all Employers
participating under the X.X. XXXXX HEALTHCARE, INC. EMPLOYEE STOCK
OWNERSHIP PLAN. However, the Trustee will maintain separate records
of account in order to reflect properly each Participant's Accrued
Benefit derived from each participating Employer.
5. Section 1.28 is deleted in its entirety and a new Section 1.28 is
added to read as follows:
1.28 Leased Employees. The Plan does not treat a Leased Employee as
an Employee of the Employer. A Leased Employee is an individual (who
otherwise is not an Employee of the Employer) who, pursuant to a
leasing agreement between the Employer and any other person, has
performed services for the Employer (or for the Employer and any
persons related to the Employer within the meaning of Code Section
144(a)(3)) on a substantially full time basis for at least one year
and who is subject to the primary direction and control of the
Employer.
6. A new paragraph is added at the end of Section 2.01 to read as
follows:
If a Leased Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment
classification, he will participate in the Plan immediately if he has
satisfied the eligibility conditions of Section 2.01 and would have
been a Participant had he not been an Excluded Employee during his
period of Service. Furthermore, the Plan takes into account all of the
2
Participant's included Years of Service with the Employer as a Leased
Employee for purposes of vesting credit under Article V.
7. Section 9.11[E] is deleted in its entirety. Section 9.11[F] is
renumbered as Section 9.11[E].
8. The third full paragraph of Section 10.03(A)(1) is deleted in its
entirety and a new third paragraph is added to Section 10.03(A)(1) to read as
follows:
In the event an offer shall be received by the Trustee for the sale or
other disposition of other Employer Securities owned by the Trust,
whether such offer shall be in the form of cash in exchange for
Employer Securities pursuant to a proposed purchase and sale, or for
cash and/or other property pursuant to a proposed transfer, exchange,
merger, consolidation or otherwise, the Advisory Committee shall
direct the Trustee with respect to whether or not to accept such offer
and to engage in such sale or other disposition of Employer
Securities, provided that the consideration to be received by the
Trust as a result of such sale or other disposition must be at least
equal to the fair market value of such Employer Securities as
determined by an independent appraiser so long as such securities are
not readily tradable on an established securities market, as of the
date of such sale or other disposition (as determined in good faith by
the Advisory Committee and the direction). In the event the Trustee
is unable to make payments of principal and/or interest on a Exempt
Loan when due, the Advisory Committee may direct the Trustee to sell
any Leveraged Securities that have not yet been allocated to
Participants' Employer Securities Accounts or to obtain another Exempt
Loan in an amount sufficient to make such payments.
9. Section 10.08 is deleted in its entirety and a new Section 10.08 is
added to read as follows:
10.08 Distribution of Trust Funds; Valuation of Employer Securities.
The Trustee will make all distributions of benefits under the Plan in
Employer Securities valued at fair market value at the time of the
distribution unless a special valuation is required. The Trustee will
pay in cash any fractional security share to which a Participant or
his Beneficiary is entitled. In the event the Trustee is to make a
distribution in shares of Employer Securities, the Trustee may apply
any balance in a Participant's General Investments Account to provide
whole shares of Employer Securities at the then fair market value.
If the Employer's charter or bylaws restrict ownership of
substantially all shares of Employer Securities to Employees and the
trust, as described in Code Section 409(h)(2), the Trustee will make
the distribution of a Participant's Accrued Benefit entirely in cash.
Notwithstanding the proceeding provisions of this Section 10.08, the
Trustee, if directed in writing by the Advisory Committee, will pay,
in cash, any cash
3
dividends on Employer Securities allocated, or allocable to
Participants' Employer Securities Accounts, irrespective of whether a
Participant is fully vested in his Employer Securities Account. The
Advisory Committee's direction must state whether the Trustee is to
pay the cash dividend distributions currently, or within the 90 day
period following the close of the Plan Year in which the Employer pays
the dividends to the Trust. The Advisory Committee may request the
Employer to pay dividends on Employer Securities directly to
Participants.
10. Section 10.15 is deleted in its entirety and a new Section 10.15 is
added to read as follows:
10.15 Participant Voting Direction Rights-Employer Securities. With
respect to the voting of Employer Securities which are not part of a
registration-type class of securities (as defined in Code Section
409(d)(4)), a Participant has the right to direct the Trustee
regarding the voting of such Employer Securities allocated to his
Employer Securities Account with respect to any corporate matter which
involves the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all assets of a trade or business,
or such similar transaction as the Treasury may prescribe in
regulations. As to any Employer Securities allocated to the
Participant's Employer Securities Account which are part of a
registration-type class of securities or any Employer Securities which
were acquired with the proceeds of a securities acquisition loan (as
defined in Section 133(b) of the Code) made after July 10, 1989, the
voting direction rights provided in this Section 10.15 extend to all
corporate matters requiring a vote to stockholders. The Advisory
Committee shall direct the Trustee with respect to the voting of
Employer Securities which are not part of a registration-type class of
securities and which either are held by the suspense account (and not
allocated to individual Participant Employer Securities Accounts) and
Employer Securities or are so allocated but which are not directed as
to voting by the respective Participants. As to any shares which are
part of a registration-type class of securities, shares allocated to
the accounts of Participants who have not timely instructed the
Trustee how to vote them and any unallocated shares will be voted in
the same proportions as the shares for which the Trustee has received
timely instructions.
11. Section 6.02 is deleted in its entirety and a new Section 6.02 is
added to read as follows:
6.02. Method of Payment of Accrued Benefit. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary
may elect distribution as follows, subject to Section 10.08, and the
other applicable rules herein:
(i) If the Participant's benefit is $3,500 or less, the Trustee will
pay the entire benefit in cash in one lump sum payment as soon as
administratively
4
practicable after the first day of the third month of the Plan Year
following the Plan Year in which the Participant separates from service.
(ii) If the Participant's benefit is greater than $3,500, unless the
Participant elects to receive a lump sum distribution pursuant to (iii)
below, upon the Participant's written consent, the Trustee will pay the
benefit in five substantially equal annual installments beginning as soon
as administratively practicable after the first day of the sixth Plan
Year following the Plan Year in which the Participant separates from
service, pursuant to Section 6.05.
(iii) If the Participant's benefit is greater than $3,500, the Participant may
elect to have the Trustee distribute his entire benefit in a lump sum at
any time as soon as administratively feasible following his Separation
from Service. Any Participant who receives a lump sum distribution in the
year in which he separates from service and whose account receives an
allocation of the Employer's contribution for the Plan Year in which he
separates from service, shall receive an additional distribution of such
additional allocation in the first plan year following his separation
from service.
The distribution options permitted under this Section 6.02 are available
only if the present value of the Participant Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds
$3,500. A Participant or Beneficiary may elect to receive an installment
distribution in the form of a Nontransferable Annuity Contract. Under an
installment distribution, the Participant or Beneficiary, at any time,
may elect to accelerate the payment of all, or any portion, of the
Participant's unpaid Nonforfeitable Accrued Benefit, subject to the
requirements of Section 6.04.
(A) Minimum Distribution Requirements for Participants. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to
have the Trustee distribute his Nonforfeitable Accrued Benefit,
under a method of payment which, as of the Required Beginning Date,
does not satisfy the minimum distribution requirements under Code
(S)401(a)(9) and the applicable Treasury regulations. The minimum
distribution for a calendar year equals the Participant's
Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the
Participant's life expectancy or, if applicable, the joint and last
survivor expectancy of the Participant and his designated
Beneficiary (as determined under Article VIII, subject to the
requirements of the Code (S)401(a)(9) regulations). The Advisory
Committee will increase the Participant's Nonforfeitable Accrued
Benefit, as determined on the relevant
5
valuation date, for contributions or forfeitures allocated
after the valuation date and by December 31 of the valuation
calendar year, and will decrease the valuation by
distributions made after the valuation date and by December
31 of the valuation calendar year. For purposes of this
valuation, the Advisory Committee will treat any portion of
the minimum distribution for the first distribution calendar
year made after the close of that year as a distribution
occurring in that first distribution calendar year. In
computing a minimum distribution, the Advisory Committee
must use the unisex life expectancy multiples under Treas.
Reg. (S)1.72-9. The Advisory Committee, only upon the
Participant's written request, will compute the minimum
distribution for a calendar year subsequent to the first
calendar year for which the Plan requires a minimum
distribution by redetermining the applicable life
expectancy. However, the Advisory Committee may not
redetermine the joint life and last survivor expectancy of
the Participant and a nonspouse designated Beneficiary in a
manner which takes into account any adjustment to a life
expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated
Beneficiary, a method of payment to the Participant (whether
by Participant election or by Advisory Committee direction)
may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31,
1988, the Plan must satisfy the Minimum Distribution
Incidental Benefit ("MDIB") requirement in the Treasury
regulations issued under Code (S)401(a)(9) for distributions
made on or after the Participant's Required Beginning Date
and before the Participant's death. To satisfy the MDIB
requirement, the Advisory Committee will compute the minimum
distribution required by this Section 6.02(A) by
substituting the applicable MDIB divisor for the applicable
life expectancy factor, if the MDIB divisor is a lesser
number. Following the Participant's death, the Advisory
Committee will compute the minimum distribution required by
this Section 6.02(A) solely on the basis of the applicable
life expectancy factor and will disregard the MDIB factor.
For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefits requirement if the
distributions to the Participant satisfied the MDIB
requirement or if the present value of the retirement
benefits payable solely to the Participant is greater than
50% of the present value of the total benefits payable to
the Participant and his Beneficiaries. The Advisory
Committee must determine whether benefits to the Beneficiary
are incidental as of the date the Trustee is to commence
payment of the retirement benefits to the Participant, or
6
as of any date the Trustee redetermined the payment period
to the Participant.
The minimum distribution for the first distribution calendar
year is due by the Participant's Required Beginning Date.
The minimum distribution for each subsequent distribution
calendar year, including the calendar year in which the
Participant's Required Beginning Date occurs, is due by
December 31 of that year. If the Participant receives
distribution in the form of a Nontransferable Annuity
Contract, the distribution satisfies this Section 6.02(A) if
the contract complies with the requirements of Code
(S)401(a)(9) and the applicable Treasury regulations.
(B) Minimum Distribution Requirements for Beneficiaries. The
method of distribution to the Participant's Beneficiary must
satisfy Code (S)401(a)(9) and the applicable Treasury
regulations. If the Participant's death occurs after his
Required Beginning Date or, if earlier, the date the
Participant commences an irrevocable annuity pursuant to
Section 6.04, the method of payment to the Beneficiary must
provide for completion of payment over a period which does
not exceed the payment period which had commenced for the
Participant. If the Participant's death occurs prior to his
Required Beginning Date, and the Participant had not
commenced an irrevocable annuity pursuant to Section 6.04,
the method of payment to the Beneficiary, subject to Section
6.04, must provide for completion of payment to the
Beneficiary over a period not exceeding: (i) 5 years after
the date of the Participant's death; or (ii) if the
Beneficiary is a designated Beneficiary, the designated
Beneficiary's life expectancy. The Advisory Committee may
not direct payment of the Participant's Nonforfeitable
Accrued Benefit over a period described in clause (ii)
unless the Trustee will commence payment to the designated
Beneficiary no later than the December 31 following the
close of the calendar year in which the Participant's death
occurred or, if later, and the designated Beneficiary is the
Participant's surviving spouse, December 31 of the calendar
year in which the Participant would have attained age
70 1/2. If the Trustee will make distribution in accordance
with clause (ii), the minimum distribution for a calendar
year equals the Participant's Nonforfeitable Accrued Benefit
as of the latest valuation date preceding the beginning of
the calendar year divided by the designated Beneficiary's
life expectancy. The Advisory Committee must use the unisex
life expectancy multiples under Treas. Reg. (S)1.72-9 for
purposes of applying this paragraph. The Advisory Committee,
only upon the written request of the Participant or of the
Participant's surviving spouse, will recalculate the life
expectancy of the Participant's surviving spouse not more
7
frequently than annually, but may not recalculate the life
expectancy of a nonspouse designated Beneficiary after the
Trustee commences payment to the designated Beneficiary. The
Advisory Committee will apply this paragraph by treating any
amount paid to the Participant's child, which becomes
payable to the Participant's surviving spouse upon the
child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the Beneficiary's
written request, the Advisory Committee must direct the
Trustee to accelerate payment of all, or any portion, of the
Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of
that request.
12. Section 6.03(A) is deleted in its entirety and a new Section 6.03(A)
is added to read as follows:
(A) Participant Elections After Separation from Service.
Distributions of Employer Securities shall be made pursuant
to Sections 6.02 and 6.05 and the other applicable rules
herein. In addition, the Participant may elect to have the
Trustee commence distribution as of any date following his
attainment of the normal retirement age of 65. The
Participant may reconsider an election at any time prior to
the annuity starting date and elect to commence distribution
as of any other date, but not earlier than the date
described in the first sentence of this Paragraph (A).
Following his attainment of Normal Retirement Age, a
Participant who has separated from Service may elect
distribution as of any date, irrespective of the
restrictions otherwise applicable under this Section
6.03(A). If the Participant is partially-vested in his
Accrued Benefit, the Participant's earliest distribution
date under this Paragraph (A) is the first distribution date
after the Participant incurs a Forfeiture Break in Service
(as defined in Section 5.08).
13. Effective March 31, 1999, Section 6.03(B) is deleted in its entirety
and a new Section 6.03(B) is added to read as follows:
(B) Participant Elections Prior to Separation from Service. For
purposes of this paragraph, the terms "direct rollover" and
"eligible rollover distribution" shall have the meanings
ascribed to them in Section 6.08. Any Participant who is
100% vested in his Account, until he retires, has a
continuing election to direct the Trustee to pay directly to
an individual retirement account specified by the
Participant in a direct rollover up to 20% of his
Nonforfeitable Accrued Benefit (to the extent a direction
amount exceeds the amount to which a prior direction under
this Section 6.03(B) applies), provided that the payment is
an eligible rollover distribution and further provided, that
in no
8
event shall the Advisory Committee grant such request from a
Participant who has previously made a withdrawal pursuant to
this Section 6.03(B) unless, subsequent to the Plan Year in
which the Participant's most recent such request was made
and granted, the Participant has been a Participant in the
Plan for at least an additional twenty four (24) months. A
Participant may make an election under this paragraph on a
form prescribed by the Advisory Committee at any time during
the Plan Year for which his election is to be effective. In
his written election, the Participant must specify the
percentage or dollar amount he wishes the Trustee to
distribute. The Participant's election relates solely to the
percentage or dollar amount specified in his election form
and his right to elect to have directly rolled over an
amount, if any, for a particular Plan Year greater than the
dollar amount or percentage specified in his election form
terminates on the Accounting Date. The Trustee must pay the
amount specified by the Participant in a direct rollover in
accordance with the Participant's election under this
paragraph as soon as administratively practicable after the
Participant files his written election with the Advisory
Committee. The Trustee will distribute the balance of the
Participant's Accrued Benefit not distributed pursuant to
his election(s) under this Section 6.03(B) in accordance
with the other distribution provisions of this Plan.
The Company and the Trustee hereby agree to the provisions of this
Amendment, and in witness of their Agreement, the Company and the Trustee has
signified their acceptance, as of the day and year first above appearing.
X.X. XXXXX HEALTHCARE, INC.
By: ____________________________
Title: _________________________
XXXXXX X. XXXX TRUST COMPANY
By: ____________________________
Title: _________________________
9
