1
EXHIBIT 4.3
UNITED INSURANCE COMPANIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(As Amended and Restated
Effective as of January 1, 1989 and as further
amended through the second amendment thereof)
Xxxxx, Xxxxx & Xxxxx
Washington, D.C.
2
TABLE OF CONTENTS
Section Page
------- ----
1 General 1
History and Purpose 1
Employers and Related Companies 1
Plan Administration, Trust Agreement 1
Plan Year 2
Accounting Date 2
Applicable Laws 2
Gender and Number 2
Notices 2
Evidence 2
Action by Employers 2
No Reversion to Employers 3
2 Participation 3
Eligibility for Participation 3
Hour of Service 3
Plan Not Contract of Employment 4
Restricted Participation 4
Leased Employees 4
3 Employer Contributions 5
Tax Deferral Election 5
Compensation 5
Employer Contributions 6
Election to Vary or Suspend
Pre-Tax Contributions 7
4 After-Tax and Rollover Contributions 8
After-Tax Contributions 8
Election to Vary or Suspend
After-Tax Contributions 8
Rollover Contributions 8
5 Plan Investments 9
Investment in UICI Stock 9
ESOP Loans 9
Release of UICI Common Stock
From Collateral 10
Suspense Account and Withdrawal
of UICI Common Stock 11
Restricted UICI Stock 11
6 Plan Accounting 11
Participant Accounts 11
Crediting of After-Tax and
Rollover Contributions 12
-i-
3
Allocation and Crediting of
Employer Contributions and
Forfeitures 12
Income on Suspense Account Assets 12
Allocation of All Other Plan Income 13
Statement of Plan Interest 13
7 Limitations on Amounts Credited to
Participants' Accounts 13
General Limitation 13
Reduction of Contributions 15
Limitations Applicable to Highly
Compensated Employees 16
Treatment of Excess Contributions 16
8 Shareholder Rights 18
Voting Rights 18
Tender and Exchange Rights 18
9 Termination Dates 18
10 Distribution From Participant Accounts 20
Fully Vested Benefits 20
Partially Vested Benefits 20
Forfeiture Accounts and Forfeitures 21
Cash Dividend Distributions 22
Commencement of Benefits 23
Distributions to Persons Under
Disability 24
Interests Not Transferable 24
Absence of Guaranty 24
Designation of Beneficiary 24
Missing Recipients 25
Withdrawals by Qualified
Participants 25
Optional Direct Transfer of
Eligible Rollover Distributions 26
Withdrawals on Account of Hardship 26
11 The Committee 28
Membership 28
Rights, Powers, and Duties 28
Application of Rules 29
Remuneration and Expenses 29
Indemnification of the Committee 29
Exercise of Committee's Duties 30
Information to be Furnished to
Committee 30
Resignation or Removal of
Committee Member 30
-ii-
4
Appointment of Successor
Committee Members 30
Interested Committee Member 31
Committee's Decision Final 31
Review of Benefit Determinations 31
12 Amendment and Termination 31
Amendment 31
Termination 31
Merger and Consolidation of Plan,
Transfer of Plan Assets 32
Vesting and Distribution on
Termination and Partial
Termination 32
Notice of Amendment, Termination,
or Partial Termination 32
SUPPLEMENT A
-iii-
5
UNITED INSURANCE COMPANIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(As Amended and Restated
Effective as of January 1, 1989)
SECTION 1
General
1.1. History and Purpose. United Insurance Companies, Inc., a
Delaware corporation (the "Company"), established United Insurance Companies,
Inc. Employee Stock Ownership Plan (the "Plan") effective January 1, 1987 to
promote the mutual interests of the Company, its shareholders, its employees,
and the employees of each Related Company (as defined in subsection 1.2) which
adopts the Plan, by investing primarily in, and retaining, shares of common
stock of the Company ("UICI Common Stock"), thereby providing such employees
with an equity interest in the Company and providing the Company and its
shareholders with the benefits of an employee workforce whose performance is
motivated through a closer identity of interests with the Company's
shareholders, and to assist eligible employees to provide for their future
security. It is also intended that the Plan may serve as a technique of
corporate financing and provide a vehicle for the transfer of ownership of UICI
Common Stock. The Plan's acquisition of shares of UICI Common Stock may be
financed through one or more loans. Shares of UICI Common Stock so acquired,
together with the appreciation on such shares, shall be for the benefit of
eligible employees over the periods that such loans are outstanding. The
following provisions constitute an amendment, restatement and continuation of
the Plan as in effect immediately prior to January 1, 1989, the "Effective
Date" of the Plan as set forth herein. The provisions of the Plan as applied
to any group of employees may be modified from time to time by the adoption of
one or more Supplements. Each supplement shall form a part of the Plan as of
the Supplement's effective date.
1.2. Employers and Related Companies. The Company and each
Related Company which, with the consent of the Company, adopts the Plan are
referred to below collectively as the "Employers" and individual as an
"Employer". The term "Related Company" means any corporation or trade or
business during any period during which it is, together with the Company, a
member of a controlled group of corporations or a controlled group of trades or
businesses (within the meaning of section 414(b) or 414(c), respectively, of
the Internal Revenue Code of 1986 (the "Code")).
6
1.3. Plan Administration, Trust Agreement. The authority to
control and manage the operation and administration of the Plan is vested in a
Committee as described in Section 11; provided, however, that the Company is
the Administrator of the Plan and, except as otherwise specifically provided in
Section 11, has the rights, duties, and obligations of an "administrator" as
that term is defined in section 3(16)(A) of the Employee Retirement Income
Security Act of 1974 ("ERISA") and of a "plan administrator" as that term is
defined in section 414(g) of the Code. All contributions made under the Plan
are held, managed and controlled, until distribution, by one or more trustees
(the "Trustee") acting under a Trust which implements and forms a part of the
Plan. The terms of the trust (the "Trust") are set forth in a trust agreement
known as United Insurance Companies, Inc. Employee Stock Ownership Trust.
Copies of the Trust and the Plan, and any amendments thereto, are on file at
the office of the Company and of each other Employer where they may be examined
by any Participant or other person entitled to benefits under the Plan. The
provisions of and benefits under the Plan are subject to the terms and
provisions of the Trust Agreement.
1.4. Plan Year. The "Plan Year" means the calendar year.
1.5. Accounting Date. An "Accounting Date" means the last day
of each calendar month.
1.6. Applicable Laws. The Plan shall be construed and
administered according to the laws of the State of Texas to the extent that
such laws are not preempted by the laws of the United States of America.
1.7. Gender and Number. Where the context admits, words in any
gender shall include each other gender, words in the singular shall include the
plural, and the plural shall include the singular.
1.8. Notices. Any notice or document required to be filed with
the Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company at
its principal executive offices. Any notice required under the Plan may be
waived by the person entitled to notice.
1.9. Evidence. Evidence required of anyone under the Plan may
be by certificate, affidavit, document, or other information which the person
acting on it considers to be pertinent and reliable, and signed, made, or
presented by the proper party or parties.
1.10. Action by Employers. Any action required or permitted to
be taken by an Employer under the Plan shall be by
-2-
7
resolution of its Board of Directors, by resolution of a duly authorized
committee of its Board of Directors or by a person or persons authorized by its
Board of Directors or such committee.
1.11. No Reversion to Employers. No part of the corpus or income
of the Trust Fund shall revert to any Employer or be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and other persons
entitled to benefits under the Plan, except as specifically provided in Article
V of the Trust Agreement.
SECTION 2
Participation
2.1. Eligibility for Participation. Subject to the conditions
and limitations of the Plan, each individual who was a Participant in the Plan
immediately prior to the Effective Date will continue as such on and after that
date, and each employee of an Employer who was not a Participant in the Plan
immediately prior to the Effective Date will become a Participant in the Plan
on the Effective Date or on the first day of a Plan Year quarter thereafter on
which he meets both of the following requirements:
(a) he has attained age 18 years; and
(b) he has completed a Plan Year quarter since the
date on which he first completed one Hour of
Service (as defined in subsection 2.2 below) for
an Employer or a Related Company.
Notwithstanding the foregoing provisions of this subsection 2.1., if an
employee who has once met the eligibility requirements of paragraphs (a) and
(b) above is employed or reemployed by an Employer, he shall immediately become
a Participant in the Plan.
2.2. Hour of Service. An "Hour of Service" means, with respect
to any employee or Participant, each hour for which the employee or Participant
is paid or entitled to payment for the performance of duties for an Employer or
a Related Company or for which back pay, irrespective of mitigation of damages,
has been awarded to the employee or Participant or agreed to by an Employer or
a Related Company. In addition, an employee or Participant shall be credited
with Hours of Service equal to the number of hours regularly scheduled for
performance of duties for any period during which he performs no duties for an
Employer or a Related Company (irrespective of whether the employment
relationship has terminated) by reason of a vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence, but for which he is directly
-3-
8
or indirectly paid or entitled to payment by an Employer or a Related Company;
provided, however, that an employee or Participant shall not be credited with
more than 501 Hours of Service under this sentence for any single continuous
period of service during which he performs no duties for an Employer or a
Related Company. Payments considered for purposes of the foregoing sentence
shall include payments unrelated to the length of the period during which no
duties are performed but shall not include payments made solely as
reimbursement for medically related expenses or solely for the purpose of
complying with applicable workers' compensation, unemployment compensation or
disability insurance laws.
2.3. Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the Plan will not
give an employee the right to be retained in the employ of an Employer nor any
right or claim to any benefit under the terms of the Plan unless such right or
claim has specifically accrued under the terms of the Plan.
2.4. Restricted Participation. When distribution of part or all
of the benefits to which a Participant is entitled under the Plan is deferred
beyond or cannot be made until after his Termination Date (as described in
Section 9), or during any period the Participant is employed by a Related
Company, the Participant or, in the event of his death, his Beneficiary will be
considered and treated as a Participant for all purposes of the Plan, except as
follows:
(a) no share of Employer Contributions will be credited to his
Account; and
(b) the Beneficiary of a deceased Participant cannot designate
a Beneficiary under subsection 10.9.
2.5. Leased Employees. If a person satisfies the requirements
of section 414(n) of the Code and applicable Treasury regulations for treatment
as a "Leased Employee", such Leased Employee shall not be eligible to
participate in this Plan or in any other plan maintained by an Employer or a
Related Company which is qualified under section 401(a) of the Code, but, to
the extent required by section 414(n) of the Code and applicable Treasury
regulations, such person shall be treated as if the services performed by him
in such capacity were performed by him as an employee of a Related Company
which has not adopted the Plan; provided, however, that no such service shall
be credited:
(a) for any period during which fewer than 20 percent of the
workforce of the Employers and the Related Companies that
is not highly compensated (as defined in
-4-
9
section 414(q) of the Code) consists of Leased Employees
and the Leased Employee is a participant in a money
purchase pension plan maintained by the leasing
organization which (i) provides for a nonintegrated
employer contribution of at least 10 percent of
compensation, (ii) provides for full and immediate vesting,
and (iii) covers all employees of the leasing organization
(beginning with the date they become employees), other than
those employees excluded under section 414(n)(5) of the
Code; or
(b) for any other period unless the Leased Employee provides
satisfactory evidence to the Employer or Related Company
that he meets all of the conditions of this subsection and
applicable law required for treatment as a Leased Employee.
SECTION 3
Employer Contributions
3.1. Tax Deferral Election. Each Participant shall be eligible
to make a Tax Deferral Election (as defined below) with respect to Compensation
(as defined in subsection 3.2) paid for payroll periods commencing on or after
the date he becomes a Participant. For purposes of the Plan, the term "Tax
Deferral Election" means a written election by a Participant, filed with the
Committee in such form and at such time as it may require, to have the amount
of the Compensation that would otherwise be payable to him by the Employers for
any Plan Year or lesser period of participation reduced by an amount that is
not less than 1 percent nor more than 15 percent (10 percent for years
beginning before January 1, 1990) thereof (in all cases in multiples of 1
percent). A Participant's Compensation for any payroll period shall be reduced
by the amount, if any, of his Tax Deferral Election for that period and his
Employer shall contribute a like amount to the Plan in accordance with the
provisions of subsection 3.3. To the extent that the Committee determines it
is necessary or appropriate in order to conform the operation of the Plan to
the requirements of sections 401(k) or 402(g) of the Code or the limitations on
contributions set forth in Section 7, the Committee, after reviewing the Tax
Deferral Elections filed for any Plan Year, may establish limitations on Tax
Deferral Elections and, in accordance with such limitations, may unilaterally
modify or revoke any Tax Deferral Election authorized by a Participant. A
Participant's Tax Deferral Election shall be without effect as to any amounts
in excess of the limits described in the preceding sentence.
-5-
10
3.2. Compensation. A Participant's "Compensation" for any
period means his total cash compensation received from the Employers during
that period after the date on which he becomes a Participant, but not in excess
of $150,000 for any Plan Year ($200,000 for any Plan Year beginning prior to
January 1, 1994) or such larger amount as may be permitted for any year under
section 401(a)(17) of the Code, taking into account for purposes of such
limitation any proration required in situations where "family members" (as
defined in sections 401(a)(17) and 414(q)(6) of the Code) where their
compensation must be aggregated, or where compensation is computed with respect
to a period less than a full year (other than on account of mid-year
commencement or cessation of active participation in the Plan. The
Compensation of a Participant shall be determined prior to any reduction
thereof by operation of a Tax Deferral Election under subsection 3.1 or by
reason of any salary reduction agreement under a plan described in section 125
of the Code.
3.3. Employer Contributions. Subject to the following
provisions of this subsection and Section 7 and subject to the provisions of
sections 401(k) and 401(m) of the Code, for each Plan Year, each Employer shall
make a contribution to the Trustee in an amount equal to the sum of the
following:
(a) a "Pre-Tax Contribution" on behalf of each of its employees
who is a Participant and for whom a Tax Deferral Election
is in effect in an amount equal to the amount by which the
Compensation otherwise payable to the Participant has been
reduced pursuant to the terms of the Participant's Tax
Deferral Election;
(b) an "Employer Matched Contribution" on behalf of each of its
employees who is a Participant and for whom a Tax Deferral
Election of 1 percent or more is in effect and for whom it
has made a Pre-Tax Contribution in such amount, if any, as
the Board of Directors of the Company shall determine,
expressed as a percentage of the Pre-Tax Contribution, but
in no event more than 3 percent of the Participant's
Compensation; and
(c) a "Basic Employer Contribution" in such amount as may be
necessary to enable the Trustee to pay any maturing
obligations under any outstanding ESOP Loan (as described
in subsection 5.2) plus, to the extent determined by the
Company, such amounts as may be necessary to prepay all or
any portion of any outstanding ESOP Loan; provided that in
no event shall any contribution be made for the purpose of
prepaying an ESOP Loan if such prepayment would cause the
amount to be allocated for any Plan Year to the Account
maintained for any Participant in accordance with the
-6-
11
provisions of Section 6 to exceed the limitations set
forth in Section 7; and
(d) a "Supplemental Employer Contribution" on behalf of each of
its employees who is a Participant in an amount equal to 1
percent of the Participant's Compensation and such
additional amount, expressed as a percentage of
Compensation considered for purposes of allocating that
Employer's contribution in accordance with the provisions
of subsection 6.3, if any, as the Company's Board of
Directors shall determine.
Notwithstanding the foregoing, in no event shall the amount of the Employer
Contribution in (b) above made on behalf of any Participant exceed the maximum
amount which, together with the amount of the Participant's After-Tax
Contributions, may be made under the Plan on behalf of the Participant pursuant
to section 401(m) of the Code. Pre-Tax Contributions shall be paid to the
Trustee as soon as practicable after the completion of the last pay period in
each month to which they relate. Basic Employer Contributions which are
required for any period shall be made by the Employers, pro rata, according to
the Compensation paid by them to Participants during that period, and shall be
used exclusively to make payments of principal and interest on ESOP Loans. For
all purposes of the Plan, a Basic Employer Contribution which is contributed
for any Plan year prior to the time prescribed by law, including extensions
thereof, for filing the Employer's Federal income tax return for that year
shall be deemed to be contributed during that Plan Year. Each Employer's
Matched Contribution and Supplemental Employer Contribution for any Plan Year
shall be due on the last day of that Plan Year and,if not paid by the end of
that year, shall be paid to the Trustee as soon as practicable thereafter,
without interest, but no later than the time prescribed by law, including
extensions thereof, for filing the Employer's Federal income tax return for
that year. In no event will the Employers' aggregate contributions for any
Plan Year exceed an amount equal to the lesser of (i) the maximum amount
deductible on account thereof by the Employers for that Plan Year as an expense
for Federal income tax purposes, or (ii) the amount which can be credited to
Participant Accounts in accordance with the provisions of subsection 6.3.
3.4. Election to Vary or Suspend Pre-Tax Contributions. A
Participant may elect to have his Employer suspend Pre-Tax Contributions being
made on his behalf as of the first day of any payroll period by advance written
notice filed with the Committee at such time and in such manner as the
Committee may require. A Participant may resume or change (within the limits
set forth in subsection 3.1) the rate of Pre-Tax Contributions being made by
his Employer on his behalf as of any January 1, April 1, July 1 or October 1,
by writing filed with the Committee at least 30
-7-
12
days in advance of the date on which the change is to be effective.
SECTION 4
After-Tax and Rollover Contributions
4.1. After-Tax Contributions. Subject to the following
provisions of this Section 4, a Participant may elect to make After-Tax
Contributions that are not less than 1 percent nor more than 6 percent of the
Compensation payable to him by the Employers; provided, however, that in no
event shall After-Tax Contributions in any Plan year exceed 6 percent of a
Participant's Section 415 Compensation (as defined in subsection 7.1) or the
maximum amount which may be credited to the Participant's After-Tax Account
pursuant to the provisions of section 401(m) of the Code. Any portion of an
After-Tax Contribution made by a Participant for any Plan Year which is in
excess of the maximum amount permitted by the foregoing provisions of this
subsection 4.1, along with the earnings, if any, allocated to a Participant's
After-Tax Account which are attributable to such portion, shall be returned to
him as soon as practicable in accordance with the provisions of subsection
7.4(b) of the Plan and shall not be considered an After-Tax Contribution for
any purpose of the Plan. A Participant's After-Tax Contributions may be made
by regular payroll deductions (in multiples of 1 percent) or in any other way
approved by the Committee.
4.2. Election to Vary or Suspend After-Tax Contributions. A
Participant may elect to discontinue his After-Tax Contributions as of the
first day of any payroll period by advance written notice filed with the
Committee at such time and in such manner as the Committee may require. A
Participant may resume or change (within the limits set forth in subsection
4.1) the rate of his After-Tax Contributions as of any January 1, April 1, July
1 or October 1, by writing filed with the Committee at least 30 days in advance
of the date on which the change is to be effective.
4.3. Rollover Contributions. An employee of an Employer that
the Company has so designated may, in accordance with procedures approved by
the Committee, contribute part or all of an eligible rollover distribution (as
defined in section 402 of the Code), or make a rollover contribution (as
described in section 408(d)(3) of the Code) which, under the applicable
provisions of the Code, is permitted to be rolled over to an eligible
retirement plan, provided that such contribution must be paid over to the
Trustee on or before the sixtieth day after receipt by the employee of the
distribution. In addition,
-8-
13
amounts held for the benefit of an employee of such an Employer under a plan
qualified under section 401(a) of the Code may, with such individual's consent,
and the consent of the Committee, be transferred to the Plan, but only if such
amounts are not subject to the provisions of section 401(a)(11) or 411(d)(6) of
the Code. If an employee who is not otherwise a Participant makes a rollover
contribution to the Plan, he shall be treated as a Participant only with
respect to the amounts so contributed or transferred until he has met all of
the requirements for Plan participation set forth in subsection 2.1 of the
Plan.
SECTION 5
Plan Investments
5.1. Investment in UICI Stock. Subject to retention in cash or
cash equivalents of such reasonable amounts as may be necessary from time to
time for administration of the Plan, all Plan assets, including earnings
thereon, shall be invested primarily in UICI Stock.
5.2. ESOP Loans. The Committee may from time to time direct the
Trustee to incur debt (an "ESOP Loan") for the purpose of acquiring UICI Common
Stock or for the purpose of repaying all or any portion of any outstanding ESOP
Loan, subject to the following:
(a) Each ESOP Loan shall be for a specific term.
(b) The interest rate with respect to an ESOP Loan may be fixed
or variable; provided, however, that in either case such
rate shall not be in excess of a reasonable rate of
interest taking into account all relevant factors,
including the amount and duration of the loan, the
security, and the guarantee, if any, and the credit
standing of the Plan and the guarantor, if any.
(c) The proceeds of an ESOP Loan shall be used, within a
reasonable time after receipt, to acquire UICI Common
Stock, or to repay all or any portion of such ESOP Loan or
of a prior ESOP Loan.
(d) The only Plan assets which may be given as collateral for
an ESOP Loan are UICI Common Stock acquired with the loan
proceeds, or with the proceeds of any prior ESOP Loan to
the extent that such prior ESOP Loan is repaid with the
proceeds of the current ESOP Loan. Any such collateral
shall be released as provided in subsection 5.3.
-9-
14
(e) Under the terms of the ESOP Loan, no person entitled to
payment thereunder shall have any right to any Plan assets
other than (i) collateral given for the ESOP Loan in
accordance with subsection (d) next above, (ii) Basic
Employer Contributions, and (iii) earnings attributable to
such collateral and to the investment of such
contributions.
(f) Subject to paragraph (e) next above, the ESOP Loan shall be
without recourse against the Plan.
(g) Payments which relate to any Plan Year on all outstanding
ESOP Loans shall not exceed an amount equal to the sum for
all Plan Years of all Basic Employer Contributions, and all
earnings on the collateral, if any, provided in accordance
with paragraph (d) next above, reduced by all prior ESOP
Loan payments which relate to all prior Plan Years.
(h) In the event of a default under the ESOP Loan, the value of
Plan assets transferred in satisfaction of the loan shall
not exceed the amount of the default. If the lender is a
disqualified person (as defined in section 4975(e) of the
Code) or a party in interest to the Plan (as defined in
section 3(14) of ERISA), the ESOP Loan shall provide for a
transfer of Plan assets upon default only upon and to the
extent of the failure of the Plan to meet the payment
schedule of the ESOP Loan.
(i) UICI Common Stock acquired with the proceeds of an ESOP
Loan shall not be subject to a put, call or other option or
a buy-sell or similar arrangement either while held by the
Plan or when distributed to or on account of a Participant.
5.3. Release of UICI Common Stock From Collateral. Subject to
the following provisions of this subsection 5.3, for each Plan Year during the
duration of an ESOP Loan, the number of shares of UICI Common Stock which serve
as collateral for such ESOP Loan multiplied by a fraction, the numerator of
which is the amount of principal and interest paid on the loan for that year
and the denominator of which is the amount of principal and interest paid or
payable on the loan for that year and for all future years. For purposes of
determining the preceding fraction for any Plan Year, if the interest rate
under the ESOP Loan is variable, the interest rate to be paid in future years
shall be assumed to be equal to the interest rate applicable as of the last day
of that Plan Year. Notwithstanding the preceding sentence, any ESOP Loan may
provide that UICI Common Stock shall be released from
-10-
15
encumbrance in amounts proportionate to principal payments only, provided that:
(a) such release is consistent with the provisions of the ESOP
Loan;
(b) the ESOP Loan provides 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;
(c) interest is disregarded for purposes of determining such
release only to the extent that it would be determined to
be interest under standard loan amortization tables; and
(d) the term of the ESOP Loan, together with any renewal,
extension, or refinancing thereof, does not exceed ten
years.
5.4. Suspense Account and Withdrawal of UICI Common Stock. All
shares of UICI Common Stock acquired with the proceeds of an ESOP Loan, shall
be allocated to a Suspense Account. Shares of UICI Common Stock which are
released from encumbrance for any Plan Year (or would be released in accordance
with the provisions of subsection 5.3 if such shares were collateral for the
ESOP Loan) due to the making of an ESOP Loan payment which relates to that Plan
Year shall be withdrawn from such Suspense Account and allocated to Participant
Accounts in accordance with the provisions of subsection 6.3.
5.5. Restricted UICI Stock. If any UICI Stock acquired by or on
behalf of the Plan constitutes "restricted securities" as that term is defined
by Securities and Exchange Commission Rule 144(a)(3), the Company shall cause
such registration statements or other documents to be filed as may be necessary
to permit the Plan to sell or otherwise dispose of such UICI Stock free of
restrictions on resale.
SECTION 6
Plan Accounting
6.1. Participant Accounts. The Committee will maintain or cause
to be maintained an "After-Tax Contribution Account" in the name of each
Participant which will reflect his After-Tax Contributions, if any, and the
income, losses, appreciation and depreciation attributable hereto. The
Committee will also maintain or cause to be maintained a "Pre-Tax Contribution
Account" in the name of each Participant which will reflect Pre-
-11-
16
Tax Contributions, if any, made on his behalf, and the income, losses,
appreciation and depreciation attributable thereto. The Committee will also
maintain an "Employer Contribution Account" in the name of each Participant
which will reflect his share of Employer Matched Contributions, Supplemental
Employer Contributions and Forfeitures arising under the Plan including his
proportionate share (determined on the basis of his proportionate share of UICI
Common Stock released from the Suspense Account) of the Basic Employer
Contributions, and the income, losses, appreciation and depreciation
attributable thereto. The Committee will also maintain or cause to be
maintained a "Rollover Contribution Account" in the name of each Participant
which will reflect Rollover Contributions, if any, made by him and the income,
losses, appreciation and depreciation attributable thereto. The Committee's
records will reflect which shares in a Participant's Account are attributable
to the Basic Employer Contributions. The Committee also may maintain such
other accounts in the names of the Participant or otherwise as it considers
desirable. Unless the context indicates otherwise, references in the Plan to a
Participant's "Account" means all accounts maintained in his name under the
Plan.
6.2. Crediting of After-Tax and Rollover Contributions. As of
the last day of the month for which the contributions were made, a
Participant's After-Tax Contributions shall be credited to his After-Tax
Contribution Account and his Rollover Contributions shall be credited to his
Rollover Contribution Account.
6.3. Allocation and Crediting of Employer Contributions and
Forfeitures. Subject to the provisions of subsection 3.1 and Section 7, the
amount of Pre-Tax Contributions made on behalf of a Participant for any
calendar month shall be credited to his Pre-Tax Contribution Account as of the
last day of that month. Subject to the provisions of Section 7, as of the last
day of each Plan Year, the amount, if any, of Employer Matched Contributions
for that year shall be allocated and credited to the Employer Contribution
Accounts of all Participants who were employed by an Employer on the last day
of that Plan Year or retired in accordance with paragraph 9(a), (b) or (c) or
died during that year, pro rata, according to the Pre-Tax Contributions made on
their behalf for that Plan Year. Subject to the provisions of Section 7, as of
the last day of each Plan Year, all shares of UICI Common Stock which were
released from the Suspense Account due to the making of an ESOP Loan payment
which relates to that Plan Year, in accordance with the provisions of
subsection 5.4, all Supplemental Employer Contributions for that year and all
Forfeitures arising under the Plan during that year shall be allocated among
and credited to the Employer Contribution Accounts of all Participants who were
employed by an Employer on the last day of that Plan Year or
-12-
17
retired in accordance with paragraph 9(a), (b) or (c) or died during that year,
pro rata, according to the lesser of $40,000 or the Compensation paid to them
during that year.
6.4. Income on Suspense Account Assets. All income on assets
held in the Suspense Account shall be used by the Trustee to make payments of
interest or principal, or both, on the ESOP Loan to which such amounts are
attributable.
6.5. Allocation of All Other Plan Income. Subject to the
provisions of subsection 10.4, all dividends paid to the Trustee with respect
to shares of UICI Common Stock, other than shares held in the Suspense Account,
shall be allocated and credited to the Account of the Participant to whose
Account such shares are credited. As of each Accounting Date, all income on
the amount, if any, of the Plan's investments in cash equivalents shall be
allocated among and credited to the Accounts of Participants, pro rata,
according to the portion of their Account balance which is invested in such
cash equivalents or funds on the first day of the Plan Year quarter ending on
such Accounting Date.
6.6. Statement of Plan Interest. As soon as practicable after
the last day of each Plan Year (or more frequently, as the Committee shall
determine), the Committee shall provide each Participant with a statement
reflecting the value of his Account as of that date.
SECTION 7
Limitations on Amounts Credited to Participants' Accounts
7.1. General Limitation. Notwithstanding any provisions of the
Plan other than the provisions of this Section 7, for any Plan Year the Annual
Addition (as defined below) to a Participant's Account shall not exceed an
amount equal to the lesser of:
(a) 25 percent of the Section 415 Compensation (as defined
below) paid to the Participant in that Plan Year; or
(b) the sum of:
(i) $30,000, or, if greater, one-fourth of the
dollar limitation in effect under section
415(b)(1)(A) of the Code, plus
(ii) for years beginning before January 1, 1990, the
lesser of the amount determined under
subparagraph (i) next above or the sum of (A)
the Pre-Tax Contributions, Employer Matched
-13-
18
Contributions and Supplemental Employer
Contributions which are allocated to the
Participant's Account for that year and used to
purchase UICI Common Stock within 60 days after
the due date for such contributions, plus (B)
his proportionate share (determined on the basis
of his proportionate share of UICI Common Stock
released from the Suspense Account in accordance
with the provisions of subsection 5.4) of the
Basic Employer Contributions made for that year
which were used to repay any principal amount on
an ESOP Loan;
REDUCED BY
(c) the amount of any employer contributions credited to the
Participant's account during any Plan Year under any
Related Defined Contribution Plan (as defined below).
A Participant's "Annual Addition" for any Plan Year means the sum of (i) his
After-Tax Contributions and the Pre-Tax Contributions (excluding Pre-Tax
Contributions that are distributed as excess deferrals), Employer Matched
Contributions, Supplemental Employer Contributions and Forfeitures (other than
Forfeitures of UICI Common Stock acquired with the proceeds of an ESOP Loan)
credited to his accounts for the year under this Plan and under any Related
Defined Contribution Plan (regardless of whether any such amounts (or portions
thereof) are subsequently distributed in accordance with subsection 7.4) and
his proportionate share (determined on the basis of his proportionate share of
UICI Common Stock released from the Suspense Account in accordance with the
provisions of subsection 5.4) of the Basic Employer Contributions made for that
year which were used to repay any principal amount on an ESOP Loan, and (ii)
solely with respect to the dollar limit in (b)(1) above, amounts described in
section 415(l) of the Code, and if the Participant is a key employee (as
defined in section 419A(d) of the Code) any amounts described in section
419A(d) of the Code that are contributed or maintained for the benefit of the
Participant for that year. Plan earnings, including dividends on UICI Common
Stock which are used to make payments of interest or principal or both on an
ESOP Loan, shall not constitute an Annual Addition. The term "Related Defined
Contribution Plan" means any other defined contribution plan (as defined in
section 415(k) of the Code) maintained by an Employer or any other trade or
business which, together with an Employer, is a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
sections 414(b) and (c) of the Code, as modified by section 415(h) of the Code.
A Participant's "Section 415 Compensation" for any Plan Year means his total
compensation (as defined in Treas. Reg. Section 1.415-
-14-
19
2(d)(1)) paid during that year for services rendered to the Employers or to any
other trade or business which, together with an Employer, is a member of a
controlled group of corporations or a controlled group of trades or businesses,
as described in sections 414(b) and (c) of the Code, as modified by section
415(h) of the Code, excluding deferred compensation (such as Pre-Tax
Contributions) and other amounts which receive special tax treatment (as
described in Treas. Reg. Section 1.415-2(d)(2)).
7.2. Reduction of Contributions. In the event that a
Participant's Annual Addition for any Plan year would otherwise exceed the
limitations imposed by the provisions of subsection 7.1, the amount of the
contributions which would otherwise be credited to his Account for that year
shall be reduced to the extent necessary to comply with such limitations. Such
reduction shall be made in the following order: After-Tax Contributions,
Employer Matched Contributions, Pre-Tax Contributions, Supplemental Employer
Contributions. Amounts attributable to After-Tax Contributions which are not
to be credited to a Participant's After-Tax Contribution Account because of the
provisions of this subsection shall be returned to the Participant as soon as
practicable. Amounts attributable to Employer Contributions which are not to
be credited to a Participant's Account because of the provisions of this
subsection shall be credited to an Excess Account maintained in the
Participant's name. Amounts credited to a Participant's Excess Account shall
be credited to the Participant's Account in the following Plan Year or Plan
Years, to the extent permitted by the foregoing provisions of this Section 7
and shall be used to reduce Employer Contributions otherwise required for such
Plan Years with respect to such Participant. If any amount remains in a
Participant's Excess Account after the Plan Year in which such Participant
ceases to participate in the Plan, such amount shall be used to reduce Employer
Contributions in the following Plan Year or Plan Years. In no event will the
sum of the value of all amounts credited to all Excess Accounts for any Plan
Year (determined as of the date such amounts are credited) exceed the sum of
the Forfeitures which arose under the Plan during the year and the amount
contributed for that year as a result of estimating the Section 415
Compensation of Participants or as a result of such other circumstances as the
Commissioner of Internal Revenue may permit. In addition, if a Participant
also participates in any defined benefit plans (as defined in section 415(k) of
the Code) maintained by an Employer or any entity that would be a Related
Company if the ownership test of section 414 of the Code were "more than 50%"
rather than "at least 80%", the aggregate benefits payable to, or on account
of, the Participant under such plans together with this Plan shall be
determined in a manner consistent with section 415(e) of the Code. The benefit
provided for the Participant under the defined benefit plans shall be adjusted
to the extent necessary so that the sum of the
-15-
20
"defined benefit fraction" and the "defined contribution fraction" (as such
terms are defined in section 415(e) of the Code and applicable regulations
thereunder) calculated with regard to such Participant does not exceed 1.0.
7.3. Limitations Applicable to Highly Compensated Employees. In
no event shall more than one-third of the Employer Contributions for any Plan
Year be allocated to highly compensated employees, as that term is defined in
section 414(q) of the Code. Consistent with and subject to the provisions of
section 414(q) of the Code, the term "highly compensated employee" for any Plan
Year shall include any employee of an Employer who during that year:
(a) was a 5 percent owner of an Employer or Related Company;
(b) received Section 415 Compensation (including salary
reduction contributions made on the Participant's behalf
for the year under subsection 3.1 or under a plan described
in section 125 of the Code) from the Employers and Related
Companies that was in excess of $50,000 (indexed for cost-
of-living adjustments under section 415(d) of the Code); or
(c) was an officer of an Employer or Related Company and
received Section 415 Compensation (as modified by paragraph
(b) above) greater than 50 percent of the amount in effect
under section 415(b)(1)(A) of the Code for such year,
provided that the officers taken into account under this
paragraph (c) shall be limited to 50 or, if less, the
greater of 3 or 10 percent of the employees of all the
Employers and Related Companies.
For purposes of this subsection, a family member (as defined below) of a 5
percent owner or of one of the 10 most highly compensated employees of the
Employers and Related Companies shall not be treated as a separate employee,
and any Section 415 Compensation (as modified by paragraph (b) above) paid to
such family member shall be deemed to be paid instead to the related 5 percent
owner or highly compensated employee. The term "family member" means, with
respect to any employee, such employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
7.4. Treatment of Excess Contributions.
(a) Treatment of Excess Pre-Tax Contributions. If the amount
of Pre-Tax Contributions for any Plan Year exceeds the
limitations of section 401(k) of the Code, the amount of
the excess contributions for such year,
-16-
21
and any income allocable to such contributions, shall be
returned to affected Participants under the leveling method
described in applicable regulations no later than the last
day of the following Plan Year; provided, however, that to
the extent provided in Treasury Regulations, an affected
Participant may elect to treat the amount of excess
contributions that would otherwise be returned to him as an
After-Tax Contribution made on his behalf. If the amount
of Pre-Tax Contributions made on behalf of a Participant
for any Plan Year exceeds the limitations of section 402(g)
of the Code, the Committee may return the amount of such
excess deferrals, as defined in section 402(g) of the Code,
and any income allocable to such amount, to the Participant
no later than the first April 15 following the close of the
taxable year to which the excess deferrals relate. The
amounts to be distributed to any Participant to comply with
the limitations of section 401(k) shall be reduced by the
amount of any Pre-Tax Contributions previously distributed
to him for such Plan Year to comply with the limitations of
section 402(g) of the Code.
(b) Treatment of Excess Aggregate Contributions. If the amount
of Employer contributions made under subsection 3.3(b) of
the Plan and Participant After-Tax Contributions for any
Plan Year exceed the limitations of section 401(m) of the
Code, the amount of such excess aggregate contributions,
and any income allocable to such contributions, shall be
returned to affected Participants under the leveling method
described in applicable regulations no later than the last
day of the following Plan Year.
(c) Treatment of Contributions Which Exceed the Alternative
Limitation. If the amount of Pre-Tax Contributions exceeds
the alternative limitation of section 401(k) of the Code
and the amount of Employer Contributions made under
subsection 3.3(b) of the Plan and Participant After-Tax
Contributions for any Plan Year exceeds the alternative
limitation of section 401(m) of the Code, the amount of
such excess aggregate contributions and any income
allocable to such contributions shall be returned to
affected Participants under the leveling method described
in applicable regulations no later than the last day of the
following Plan Year.
If, after application of the other provisions of Section 7, the foregoing
limitations would be exceeded, Employer contributions allocated to each such
highly compensated employee shall be proportionately reduced to the extent
necessary to eliminate such
-17-
22
excess and, subject to the provisions of this Section 7, the amount of such
reduction shall be allocated and reallocated to all remaining Participants in
accordance with the provisions of subsection 6.3.
SECTION 8
Shareholder Rights
8.1. Voting Rights. At least 30 days before each annual or
special meeting of shareholders of the Company, the Trustee shall send to each
Participant a copy of the proxy soliciting material for the meeting, together
with a form for the Participant's use in instructing the Trustee on how to vote
the number of whole shares and any fractional share of UICI Stock allocated to
the Participant's Account. The voting instructions received by the Trustee
will be held by it in confidence. Upon receipt of such instruction, the
Trustee shall vote such shares as instructed,provided that, in the case of
fractional shares, the Trustee shall vote the combined fractional shares to the
extent possible to reflect the direction of the Participants to whose Accounts
fractional shares are credited. The Trustee shall vote shares of UICI Stock
for which it does not receive voting directions, including those shares which
are not allocated to Participant Accounts, in the same proportion as shares
with respect to which it does receive directions.
8.2. Tender and Exchange Rights. The Trustee shall tender or
exchange shares of UICI Stock pursuant to a tender or exchange offer only to
the extent directed by the Company; provided, however, that if the Company
advises the Trustee that it will not or cannot direct the Trustee with respect
to any tender or exchange offer, the Trustee shall provide each Participant
with such notices and information statements as are provided to Company
shareholders generally with respect to such offer, and each Participant shall
be entitled to direct the Trustee with respect to the tender or exchange of
shares of UICI Stock allocated to his Account. To the extent possible, the
Trustee shall hold any such directions in confidence. The Trustee shall tender
or exchange shares of UICI Stock for which it does not receive directions,
including those shares which are not allocated to Participant Accounts, in the
same proportion as shares with respect to which it does receive directions.
-18-
23
SECTION 9
Termination Dates
A Participant's "Termination Date" will be the date on which his
employment with the Employers and the Related Companies is terminated because
of the first to occur of the following events:
(a) Normal or Late Retirement. The Participant retires or is
retired from the employ of the Employers and the Related
Companies on or after the date on which he attains age 65
years.
(b) Early Retirement. The Participant retires or is retired
from the employ of the Employers and the Related companies
on or after the date on which he attains age 55 years and
has completed at least seven Years of Service (as defined
in subsection 10.1).
(c) Disability Retirement. The Participant is retired from the
employ of the Employers and the Related Companies at any
age because of permanent disability. A Participant will be
considered permanently disabled for purposes of the Plan
if, on account of physical or mental disability, he no
longer is capable of performing the duties assigned to him
by his Employer and, in the opinion of a physician selected
by his Employer, such disability is likely to be permanent
and continuous during the remainder of the Participant's
lifetime.
(d) Death. The Participant's death.
(e) Resignation or Dismissal. The Participant resigns or is
dismissed from the employ of the Employers and the Related
companies before retirement in accordance with paragraph
(a), (b) or (c) next above.
Notwithstanding the foregoing, a Participant may not commence distribution of
his Pre-Tax Contribution Account even though his employment with the Employers
and Related Companies has terminated unless or until he also has a "separation
from service" within the meaning of section 401(k)(2)(B) of the Code. The
foregoing restriction shall not apply, however, if the Participant's
termination of employment occurs in connection with the sale by an Employer to
an unrelated entity, provided (i) the Participant remains employed in such
trade or business or by such subsidiary after the sale, (ii) the Employer
continues to maintain the Plan after the sale, (iii) no transfer of the
Participant's Account occurs or is scheduled to occur after the
-19-
24
sale to a plan of such subsidiary or of the purchaser of such assets (or any
entity affiliated therewith) and (iv) the Participant receives distribution of
his Account under the Plan in a lump sum by the end of the second calendar year
after the year in which the sale occurs.
SECTION 10
Distribution From Participant Accounts
10.1. Fully Vested Benefits. If a Participant retires or is
retired under paragraph 9(a), 9(b) or 9(c), if a Participant dies while in the
employ of an Employer or a Related Company, or if a Participant resigns or is
dismissed from the employ of the Employers and all Related Companies after
completing at least seven Years of Service (as defined below), the entire
balance in his Account maintained as at the Accounting Date coincident with or
next following his Termination Date (after all adjustments then required under
the Plan have been made) will become distributable to or for his benefit of his
Beneficiary, in accordance with the provisions of subsection 10.5. A
Participant's "Years of Service" means each Plan Year beginning on or after the
Effective Date during which he has completed at least 1,000 Hours of Service.
10.2. Partially Vested Benefits. If a Participant resigns or is
dismissed from the employ of the Employers and all Related Companies under
paragraph 9(e) and before completing at least seven Years of Service, the
entire balance in his Pre-Tax Contribution Account, his After-Tax Contribution
Account and his Rollover Contribution Account, if any, maintained as at the
Accounting Date coincident with or next following his Termination Date (after
all adjustments then required under the Plan have been made) will become
distributable to or for the benefit of his Beneficiary, in accordance with the
provisions of subsection 10.5, and the balance in his Employer Contribution
Account as at the Accounting Date coincident with or next following the
Participant's Termination Date (after all adjustments then required under the
Plan have been made) shall be multiplied by the applicable vesting percentage
determined in accordance with the following schedule:
Number of Completed Vesting
Years of Service Percentage
------------------- ----------
Less than 1 year 0%
1 year but fewer than 2 years 10%
2 years but fewer than 3 years 20%
3 years but fewer than 4 years 30%
4 years but fewer than 5 years 40%
-20-
25
5 years but fewer than 6 years 60%
6 years but fewer than 7 years 80%
7 years or more 100%
The resulting balance in the Participant's Employer Contribution Account
determined as of the Accounting Date coincident with or next following his
Termination Date will become distributable to or for his benefit or, in the
event of his death, to or for the benefit of his Beneficiary, in accordance
with the provisions of subsection 10.5. To the extent possible, the
distributable amount shall consist of the shares of UICI Common Stock acquired
with the proceeds of an ESOP Loan that are credited to the Participant's
Employer Contribution Account.
10.3. Forfeiture Accounts and Forfeitures. The portion of a
Participant's Account that is not vested as of his Termination Date will be a
Forfeiture on the date on which distribution of his vested Account is made and
will be allocated and credited to Participants' Accounts in accordance with the
provisions of subsection 6.3 for the Plan Year in which the Forfeiture arises.
If the Participant (or an employee who was not a Participant) returns to
employment with an Employer or a Related Company, the Years of Service to which
he was entitled at his prior termination shall be added to his Years of Service
after his reemployment and if he is reemployed on or before the last day of the
fifth Plan Year following the Plan Year which includes the date on which he
incurred a Forfeiture, the amount of that Forfeiture, if any (without
adjustment for appreciation or depreciation or for earnings and losses after
the Forfeiture occurred), shall be restored by being credited to a Forfeiture
Account established and maintained by the Committee in the Participant's name;
provided, however, that if a Participant's Termination Date occurred by reason
of the Participant's pregnancy, the birth of the Participant's child, the
adoption of a child or placement of a child for adoption and, in each case, the
care of such child immediately after its birth or placement, the Participant's
Forfeiture shall be restored if the Participant is reemployed on or before the
last day of the sixth Plan Year following the Plan Year which includes the date
on which the Participant incurred a Forfeiture. The Committee may require the
Participant to furnish such information as it considers necessary to establish
that the Participant's absence was for one of the reasons specified in the
preceding sentence. Such restoration shall be made by the Employer reemploying
him out of Forfeitures arising during the Plan Year in which he is reemployed
or, if he is reemployed by a Related Company, by the Employer which last
employed him, and shall not be treated as an Annual Addition for purposes of
Section 7. Upon such Participant's subsequent Termination Date, the balance in
his Forfeiture Account shall be treated as follows:
-21-
26
(a) If the Participant subsequently becomes eligible for Plan
benefits in accordance with the provisions of subsection
10.1, the balance in his Forfeiture Account as at the
Accounting Date coincident with or next following his
Termination Date will be distributable to or for his
benefit or, in the event of his death, to or for the
benefit of his Beneficiary, in accordance with the
provisions of subsection 10.5.
(b) If the Participant again resigns or is dismissed prior to
completing seven Years of Service, then, as of the
Accounting Date coincident with or next following his
subsequent Termination Date, the amount distributable from
his Forfeiture Account will be determined as follows:
(i) First, the balance in his Forfeiture Account
shall be increased by the amount of the
distribution he received because of his prior
termination.
(ii) Next, the amount determined under subparagraph
(i) next above shall be multiplied by the
vesting percentage applicable under subsection
10.2 at his subsequent Termination Date.
(iii) Finally, the amount determined under
subparagraph (ii) next above shall be reduced by
the amount of the distribution the Participant
received because of his prior termination.
The remaining portion of the Participant's Forfeiture Account will be a
Forfeiture and will be allocated and credited in accordance with the provisions
of subsection 6.3. Notwithstanding the foregoing, if distribution of the
Account of a Participant who terminates on a Termination Date described in
paragraph 9(e) is not made prior to the last day of the fifth Plan Year
following the Plan Year in which his Termination Date occurred, and if he is
not reemployed by an Employer or a Related Company on or before such date, the
portion of his Account that is not vested will be a Forfeiture on such date and
will be allocated and credited to Participants' Accounts in accordance with the
provisions of subsection 6.3 for the Plan year in which the Forfeiture arises,
and if he is reemployed after such date, his reemployment shall have no effect
on his prior Forfeiture.
10.4. Cash Dividend Distributions. The Committee may from time
to time permit Participants to elect to have the amount of any cash dividends
which are paid to the Trustee with respect to share of UICI Common Stock held
in their Accounts distributed to
-22-
27
them no later than the 90th day next following the close of the Plan Year in
which such dividends are paid. Any election by a Participant under this
subsection shall be by writing filed with the Committee at such time and in
such manner as the Committee may require.
10.5. Commencement of Benefits. Subject to the following
provisions of this subsection 10.5, benefits payable to or on account of any
Participant pursuant to subsection 10.1 or 10.2 shall be made as of the last
day of the Plan Year during which the Participant attains age 65 or, if later,
during which his Termination Date occurs. In no event shall the actual payment
under the preceding sentence occur later than 60 days after the end of the
applicable Plan Year. A Participant or, in the event of his death, his
Beneficiary may elect to have payment of his benefits made pursuant to the
provisions of the following sentence if such election shall result in the
making of his benefit payment at a date earlier than the date determined under
the foregoing provisions of this subsection 10.5. Payment of benefits under
the election provided by the preceding sentence shall be made as of the last
day of the Plan Year in which the Participant's Termination Date occurs;
provided, however, that a Participant's Account balance shall not include any
shares of UICI Common Stock acquired with the proceeds of an ESOP Loan until
the close of the Plan Year in which such loan is repaid in full, and provided
further that in no event shall the actual commencement of payments under this
sentence occur later than one year after the end of the applicable Plan year.
Distribution may be made before 30 days after the date on which the notice
required under Treas. Reg. Section 1.411(a)-11(c) is given if the Committee
clearly informs the Participant of his right to consider whether to elect the
distribution for a period of at least 30 days after receiving the notice and
the Participant, after receiving the notice, affirmatively elects the
distribution. Notwithstanding the foregoing provisions of this subsection
10.5,
(a) a Participant's entire vested Account balances shall be
distributed no later than the earlier of (i) the April 1 of
the calendar year immediately following the calendar year
in which he attains age 70- 1/2 or (ii) December 31 of the
calendar year which contains the fifth anniversary of the
date of the Participant's death; and
(b) if, following the termination of a Participant's employment
for any reason, the balance of his Account after reduction
in accordance with the provisions of subsection 10.2, if
applicable, is not more than $3,500, such balance shall be
paid as soon as practicable in a lump sum.
-23-
28
The provisions of this subsection 10.5 reflect requirements set forth in
section 401(a)(9) of the Code, including the incidental death benefit rule, and
the regulations thereunder, and supersede any other provisions of the Plan
which would otherwise be inconsistent with section 401(a)(9) of the Code.
Distribution of a Participant's Account shall be made in the form of the shares
of UICI Common Stock, provided, however, that cash may be distributed in lieu
of any fractional share allocated to a Participant's Account; and provided,
further, that, with the consent of the payee, the Committee may direct payment
in cash based on the value of UICI common Stock as of the date of distribution.
10.6. Distributions to Persons Under Disability. Notwithstanding
the foregoing provisions of this Section, in the event that a Participant or
Beneficiary is declared incompetent and the Committee receives evidence
satisfactory to it that a conservator or other person legally charged with the
care of his person or estate has been appointed, the amount of any benefit to
which such Participant or Beneficiary is then entitled from the Trust Fund
shall be paid to such conservator or other person legally charged with the care
of his person or estate.
10.7. Interests Not Transferable. The interests of Participants
and their Beneficiaries under the Plan and Trust Agreement are not subject to
the claims of their creditors and may not be voluntarily or involuntarily
assigned, alienated, or encumbered, except in the case of certain qualified
domestic relations orders which relate to the provision of child support,
alimony or marital rights of a spouse, child, or other dependent and which meet
such other requirements as may be imposed by section 414(p) of the Code or
regulations issued thereunder.
10.8. Absence of Guaranty. Neither the Trustee, the Committee
nor the Employers in any way guarantee the Trust Fund from loss or
depreciation. The Employers do not guarantee any payment to any person. The
liability of the Trustee to make any payment is limited to the available assets
of the Trust Fund.
10.9. Designation of Beneficiary. Subject to the provisions of
subsection 10.7, each Participant, from time to time, by signing a form
furnished by the Committee, may designate any legal or natural person or
persons (who may be designated contingently or successively) to whom his
benefits are to be paid if he dies before he receives all of his benefits;
provided, however, that if a Participant is married on the date of his death,
any designation as Beneficiary of a person other than his spouse shall be
effective only if consented to in writing by his surviving spouse. Such
consent must be in writing filed with the Committee, must acknowledge the
effect of such consent and must be witnessed by a Plan representative or a
notary public. A
-24-
29
Beneficiary designation form will be effective only when the signed form is
filed with the Committee while the Participant is alive and will cancel all
Beneficiary designation forms signed earlier. Except as otherwise specifically
provided in this Section, if a deceased Participant failed to designate a
Beneficiary as provided above, or if the designated Beneficiary of a deceased
Participant dies before him or before complete payment of the Participant's
benefits, benefits shall be paid to the Participant's surviving spouse, or, if
there is no surviving spouse, to the legal representative or representative of
the estate of the last to die of the Participant and the Participant's
Beneficiary. If there is any question as to the right of any Beneficiary to
receive a distribution under the Plan, the Committee, in its sole discretion,
may direct the Trustee to make payment to the legal representative of the
Participant's estate. The term "Beneficiary" as used in the Plan means the
person or persons to whom a deceased Participant's benefits are payable under
this subsection.
10.10. Missing Recipients. Each Participant and each Beneficiary
must file with the Committee from time to time in writing his post office
address and each change of post office address. Any communication, statement,
or notice addressed to a Participant or Beneficiary at his last post office
address filed with the Committee, or if no address is filed with the Committee
then, in the case of a Participant, at his last post office address as shown on
the Employers' records, will be binding on the Participant and his Beneficiary
for all purposes of the Plan. None of the Employers, the Committee or the
Trustee will be required to search for or locate a Participant or Beneficiary.
If a Participant or Beneficiary entitled to benefits under the Plan fails to
claim such benefits and the Committee determines that it is unable to
reasonably find his whereabouts, such benefits shall be forfeited and shall be
used until exhausted to reduce the Employer Contributions otherwise required
under Section 3 of the Employer which last employed the Participant. If the
whereabouts of the Participant or Beneficiary is subsequently determined, such
forfeiture shall be restored by the Employer whose contributions were so
reduced and such restoration shall not be treated as an Annual Addition for
purposes of subsection 7.1.
10.11. Withdrawals by Qualified Participants. Notwithstanding any
other provision of the Plan, during the 90-day period following the last day of
each Plan Year in a Participant's Qualified Election Period (as defined below),
the Participant may, by writing filed with the Committee in such form as it may
require, elect to withdraw:
(a) a portion of his Account balance not exceeding 25 percent
(50 percent with respect to the Participant's
-25-
30
election following the last Plan Year in his Qualified
Election Period) of the sum of:
(i) his Account balance at the end of the
immediately preceding Plan Year; and
(ii) prior withdrawals during his Qualified Election
Period;
REDUCED BY
(b) the amount of prior withdrawals made in accordance with this
subsection.
Any amount required to be distributed pursuant to a withdrawal election made
during any Plan Year in accordance with this subsection shall be distributed no
later than the 180th day of that Plan Year. A Participant's "Qualified
Election Period" means the six-Plan-Year period beginning with the first Plan
Year in which he has both completed ten years of participation in the Plan and
has attained at least age 55 years.
10.12. Optional Direct Transfer of Eligible Rollover
Distributions. Effective January 1, 1993, if the distributee of any "eligible
rollover distribution under the Plan elects to have such distribution paid
directly to an "eligible retirement plan" (as such terms are defined in section
402 of the Code or related regulations or notices) and specifies in such form
and at such time as the Committee may prescribe the eligible retirement plan to
which the distribution is to be paid, then the distribution shall be made in
the form of a direct trustee-to-trustee transfer to the eligible retirement
plan so specified.
10.13. Withdrawals on Account of Hardship. A Participant whose
Termination Date has not yet occurred may elect to withdraw all or part of his
Pre-Tax Contributions on account of financial Hardship. For purposes of this
subsection, Pre-Tax Contributions shall be valued as of the Accounting Date
immediately preceding the withdrawal request.
A withdrawal will not be considered to be made on account of
"Hardship" unless the following requirements are met:
(a) The withdrawal is requested because of an immediate and
heavy financial need of the Participant, and will be so
deemed if the Participant represents that the withdrawal is
made on account of:
(i) expenses for medical care described in section
213(d) of the Code incurred by the Participant,
the Participant's spouse or any
-26-
31
dependent of the Participant (as defined in
section 152 of the Code) or necessary for persons
to obtain such medical care;
(ii) the purchase (excluding mortgage payments) of a
principal residence of the Participant;
(iii) payment of tuition and related educational fees
for the next 12 months of post-secondary education
for the Participant, or his spouse, children or
dependents; or
(iv) the need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(b) The withdrawal must also be necessary to satisfy the immediate
and heavy financial need of the Participant, and will be so
deemed if all of the following requirements are satisfied:
(i) the Participant represents that the withdrawal is
not in excess of the amount of an immediate and
heavy financial need (taking into account any
applicable income or penalty taxes resulting from
the withdrawal);
(ii) the Participant has obtained all distributions
(other than hardship withdrawals under this
subsection 10.13) and all nontaxable loans
currently available under all plans maintained by
the Employers;
(iii) Notwithstanding any other provision of the Plan,
Pre-Tax, After-Tax and Employer Matched
Contributions by or on behalf of the Participant
shall be suspended for a period of 12 months after
the Participant receives a Hardship withdrawal
under this subsection 10.13, and the Participant
shall be prohibited from making any contributions
for the same period to any other deferred
compensation plan of the Employers (whether or not
qualified); and
(iv) in the Participant's taxable year immediately
following the taxable year of the Hardship
withdrawal the Pre-Tax Contributions contributed
on behalf of the Participant shall not exceed the
applicable limit under section 402(g) of the Code
for such next taxable year less the amount
-27-
32
of Pre-Tax Contributions contributed on behalf of
the Participant for the taxable year of the
Hardship withdrawal.
A Participant shall not fail to be treated as an eligible
employee for purposes of applying the provisions of sections
401(k)(3) and 401(m)(2) of the Code merely because of the
application of subparagraph 10.13(b)(iv) above.
(c) The withdrawal must be made pursuant to a written request to
the Committee, which request shall include any representation
required by this subsection 10.13 and adequate proof thereof,
as determined by the Committee in its sole discretion.
The Committee may set such limits and restrictions on the dollar
amount of a Hardship withdrawal and the availability of a Hardship withdrawal
based on a Participant's length of employment with the Employers as it may
determine on a uniform and non-discriminatory basis. All hardship withdrawals
made pursuant to this subsection 10.13 shall be made in cash, unless the
Participant elects distribution in shares of UICI Common Stock.
SECTION 11
The Committee
11.1. Membership. The membership of the Committee referred to in
subsection 1.3 shall consist of one or more members appointed by the Board of
Directors of the Company. The members of the Committee shall be "named
fiduciaries" (as described in section 402 of ERISA) under the Plan. In
controlling and managing the operation and administration of the Plan, the
Committee shall act by the concurrence of a majority of its then members by
meeting or by writing without a meeting. The Committee may authorize any one
of its members to execute any document, instrument, or direction on its behalf.
A written statement by a majority of the Committee members or by an authorized
Committee member shall be conclusive in favor of any person (including the
Trustee) acting in reliance thereon.
11.2. Rights, Powers, and Duties. The Committee shall have such
authority as may be necessary to discharge its responsibilities under the Plan,
including the following powers, rights, and duties:
(a) to adopt such rules of procedure and regulations as, in its
opinion, may be necessary for the proper and
-28-
33
efficient administration of the Plan and as are consistent
with the provisions of the Plan;
(b) to enforce the Plan in accordance with its terms and with such
rules and regulations as may be adopted by the Committee;
(c) to determine all questions arising under the Plan, including
questions relating to the eligibility, benefits, and other
Plan rights of Participants and other persons entitled to
benefits under the Plan and to remedy ambiguities,
inconsistencies, or omissions;
(d) to maintain and keep adequate records concerning the Plan and
concerning its proceedings and acts in such form and detail as
the Committee may decide;
(e) to direct all benefit payments under the Plan;
(f) to furnish the Employers with such information with respect to
the Plan as may be required by them for tax or other purposes;
(g) to act as the "plan administrator" (as defined in section
414(g) of the Code) for purposes of establishing and
implementing procedures to determine the qualified status of
domestic relations orders (in accordance with the requirements
of section 414(p) of the Code) and to administer distributions
under such qualified orders; and
(h) to employ agents, attorneys, accountants and other persons
(who also may be employed by the Employers or the Trustee) and
to delegate to them such powers as the Committee considers
desirable to properly carry our administration of the Plan,
provided that such delegation and the acceptance thereof by
such agents, attorneys, accountants or other persons shall be
in writing.
11.3. Application of Rules. In operating and administering the
Plan, the Committee shall apply all rules of procedure and regulations adopted
by it in a uniform and nondiscriminatory manner.
11.4. Remuneration and Expenses. No remuneration shall be paid to
any Committee member as such. However, the reasonable expenses of a Committee
member incurred in the performance of a Committee function shall be reimbursed
by the Company.
-29-
34
11.5. Indemnification of the Committee. The Committee and the
individual members thereof and any employees to whom the Committee has
delegated responsibility in accordance with subsection 11.2(h) shall be
indemnified by the Employers against and any all liabilities, losses, costs and
expenses (including legal fees and expenses) of whatsoever kind and nature
which may be imposed on, incurred by, or asserted against the Committee, its
members, or such employees by reasons of the performance of a Committee
function if the Committee, such members or employees did not act dishonestly or
in willful violation of the law or regulation under which such liability, loss,
cost or expense arises.
11.6. Exercise of Committee's Duties. Notwithstanding any other
provisions of the Plan, the Committee shall discharge its duties hereunder
solely in the interests of the Participants in the Plan and other persons
entitled to benefits thereunder, and
(a) for the exclusive purpose of providing benefits to
Participants and other persons entitled to benefits
thereunder; and
(b) with the care, skill, prudence, and diligence under the
circumstance then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims.
11.7. Information to be Furnished to Committee. The Employers shall
furnish the Committee such data and information as may be required. The
records of the Employers as to a Participant's period of employment,
termination of employment and the reasons therefor, leave of absence,
reemployment and Compensation will be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to
benefits under the Plan must furnish to the Committee such evidence, data or
information as it considers desirable to carry out the Plan.
11.8. Resignation or Removal of Committee Member. A Committee
member may resign at any time by giving 30 days' advance written notice to the
Company, the Trustee and the other Committee members. The Board of Directors
of the Company may remove a Committee member by giving advance written notice
to him, the Trustee and the other Committee members.
11.9. Appointment of Successor Committee Members. The Chairman of
the Company's Board of Directors may fill any vacancy in the membership of the
Committee and shall give prompt written notice thereof to the other Committee
members, the other Employers and the Trustee. While there is a vacancy in the
-30-
35
membership of the Committee, the remaining Committee members shall have the
same powers as the full Committee until the vacancy is filled.
11.10. Interested Committee Member. If a member of the Committee is
also a Participant in the Plan, he may not decide or determine any matter or
question concerning distributions of any kind to be made to him or the nature
or mode of settlement of his benefits unless such decisions or determination
could be made by him under the Plan if he were not serving on the Committee.
11.11. Committee's Decision Final. To the extent permitted by law,
any interpretation of the provisions of the Plan and any decisions on any
matter within the discretion of the Committee made by the Committee in good
faith shall be binding on all persons. A misstatement or other mistake of fact
shall be corrected when it becomes known and the Committee shall make such
adjustment on account thereof as it considers equitable and practicable.
11.12. Review of Benefit Determinations. The Committee will provide
notice in writing to any Participant or Beneficiary whose claim for benefits
under the Plan is denied and the Committee shall afford such Participant or
Beneficiary a full and fair review of its decision if so requested in writing.
SECTION 12
Amendment and Termination
12.1. Amendment. While the Employers expect and intend to continue
the Plan, the Company reserves the right to amend the Plan at any time,
provided that no amendment shall reduce a Participant's benefits to less than
the amount he would be entitled to receive if he had resigned from the employ
of all of the Employers and the Related Companies on the day of the amendment.
12.2. Termination. The Plan will terminate as to all Employees on
any day specified by the Company. The Plan will terminate as to any Employer
on the first to occur of the following:
(a) the date it is terminated by that Employer;
(b) the date that Employer completely discontinues its
contributions under the Plan;
(c) the date that Employer is judicially declared bankrupt or
insolvent; or
-31-
36
(d) the dissolution, merger, consolidation or reorganization of
that Employer, or the sale by that Employer of all or
substantially all of its assets, except that, subject to the
provisions of subsection 12.3, with the consent of the
Company, in any such event arrangements may be made whereby
the Plan will be continued by any successor to that Employer
or any purchaser of all or substantially all of that
Employer's assets, in which case the successor or purchaser
will be substituted for that Employer under the Plan.
12.3. Merger and Consolidation of Plan, Transfer of Plan Assets. In
the case of any merger or consolidation with, or transfer of assets and
liabilities to, any other plan, provisions shall be made so that each affected
Participant of the Plan on the date thereof (if the Plan then terminated) would
receive a benefit immediately after the merger, consolidation, or transfer
which is equal to or greater than the benefit such Participant would have been
entitled to receive immediately prior to the merger, consolidation, or transfer
if the Plan had then terminated.
12.4. Vesting and Distribution on Termination and Partial
Termination. On termination of the Plan in accordance with the provisions of
subsection 12.2, or on partial termination of the Plan by operation of law,
each affected Participant's benefits will be nonforfeitable. If, on
termination or partial termination of the Plan, a Participant remains in the
employ of an Employer or a Related Company, the amount of his benefits shall be
retained in the Trust until after the Participant's termination of employment
with all of the Employers and Related Companies and shall be paid to him in
accordance with the provisions of Section 10. The benefits payable to an
affected Participant whose employment with all of the Employers and Related
Companies is terminated coincident with the termination or partial termination
of the Plan (and the benefits payable to an affected Participant on partial
termination of the Plan) shall be paid to him in accordance with the provisions
of Section 10. All appropriate accounting provisions of the Plan will continue
to apply until the benefits of all affected Participants have been distributed
to them.
12.5. Notice of Amendment, Termination, or Partial Termination.
Affected Participants and Beneficiaries will be notified of an amendment,
termination or partial termination of the Plan as required by law.
-32-
37
SUPPLEMENT A
TO
UNITED INSURANCE COMPANIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(Top-Heavy Status)
Application A-1. This Supplement A to United Insurance
Companies, Inc. Employee Stock Ownership Plan (the
"Plan") shall be applicable on and after the Date
on which the Plan become Top-Heavy (as described
in subsection A-4).
Definitions A-2. All terms and provisions of the Plan shall
apply to this Supplement A, except that where the
terms and provisions of the Plan and this
Supplement A conflict, the terms and provisions of
this Supplement A shall govern.
Affected A-3. For purposes of this Supplement A,
Participant the term "Affected Participant" means each
Participant who is employed by an Employer or a
Related Company during any Plan Year for which the
Plan is Top-Heavy, provided, however, that the
term "Affected Participant" shall not include any
Participant who is covered by a collective
bargaining agreement if retirement benefits were
the subject of good faith bargaining between his
Employer and his collectible bargaining
representative.
Top-Heavy A-4. The Plan shall be "Top-Heavy" for any Plan
Year if, as of the Determination Date for that
year (as described in paragraph (a) next below),
the present value of the benefits attributable to
Key Employees (as defined in subsection A-5) under
all Aggregation Plans (as defined in subsection
A-6) exceeds 60% of the present value of all
benefits under such plans. The foregoing
determination shall be made in accordance with the
provisions of section 416 of the Code. Subject to
the preceding sentence:
(a) The Determination Date with respect
to any plan for purposes of
determining Top-Heavy status for any
plan year of that plan shall be the
last day of the preceding plan year
or, in the case of the first plan
year of that plan shall
38
be the last day of the preceding plan
year or, in the case of the first
plan year of that plan, the last day
of that year. The present value of
benefits as of any Determination
Date shall be determined as of the
accounting Date or valuation date
coincident with or next preceding
the Determination Date. If the plan
years of all Aggregation Plans do
not coincide, the Top-Heavy status
of the Plan on any Determination
Date shall be determined by
aggregating the present value of
Plan benefits on that date with the
present value of the benefits under
each other Aggregation Plan
determined as of the Determination
Date of such other Aggregation Plan
which occurs in the same calendar
year as the Plan's Determination
Date.
(b) Benefits under any plan as of any
Determination Date shall include the
amount of any distributions from
that plan made during the plan year
which includes the Determination
Date (including distributions under
a terminated plan which, if it had
not been terminated, would have been
required to be included in an
aggregation group) or during any of
the preceding four plan years, but
shall not include any amounts
attributable to employee
contributions which are deductible
under section 219 of the Code, any
amounts attributable to
employee-initiated rollovers or
transfers made after December 31,
1983 from a plan maintained by an
unrelated employer, or, in the case
of a defined contribution plan, any
amounts attributable to
contributions made after the
Determination Date unless such
contributions are required by
section 412 of the Code or are made
for the plan's first plan year.
(c) Benefits attributable to a
participant shall include benefits
paid or payable to a beneficiary of
the participant, but shall not
include benefits paid or payable to
any participant who has not
-2-
39
performed services for an Employer or
Related Company during any of the
five plan years ending on the
applicable Determination Date;
provided, however, that if a
participant performs no services for
five years and then performs
services, the benefits attributable
to such participant shall be
included.
(d) The accrued benefit of any
participant who is a Non-Key
Employee (as defined in subsection
A-5) with respect to a plan but who
was a Key Employee with respect to
such plan for any prior plan year
shall not be taken into account.
(e) The accrued benefit of a Non-Key
Employee shall be determined under
the method which is used for accrual
purposes for all plans of the
Employer and Related Companies; or,
if there is not such a method, as if
the benefit accrued not more rapidly
than the slowest accrual rate
permitted under section 411(b)(1)(c)
of the Code.
(f) The present value of benefits under
all defined benefit plans shall be
determined on the basis of an 8% per
annum interest factor and the 1984
Unisex Pension Mortality Table.
Key Employee A-5. The term "Key Employee" means any employee
or deceased employee (including any beneficiary of
such employee) who is a Key Employee within the
meaning ascribed to that term by section 416(i) of
the Code. Subject to the preceding sentence, the
term Key Employee includes any participant
employee or deceased employee (or beneficiary of
such deceased employee) who at any time during the
plan year which includes the Determination Date or
during the preceding plan years was:
(a) an officer of any Employer or Related
Company with Section 415 Compensation for
that year in excess of 50% of the amount
in effect under section 415(b)(1)(A) of
the Code for the calendar year in which
that year ends;
-3-
40
provided, however, that the maximum
number of employees who shall be
considered Key Employees under this
paragraph (a) shall be the lesser of
50 or 10% of the total number of
employees of the Employers and the
Related Companies disregarding
excludable employees under section
414(q)(8) of the Code;
(b) one of the 10 employees owning the
largest interests in any Employer or
any Related Company (disregarding
any ownership interest which is less
than 1/2%), excluding any employee
for any plan year whose Section 415
Compensation for that year did not
exceed the applicable amount in
effect under section 415(c)(1)(A) of
the Code for the calendar year in
which that years ends;
(c) a 5% owner of any Employer or of any
Related Company; or
(d) a 1% owner of any Employer or any
Related Company having Section 415
Compensation in excess of $150,000.
The term "Non-Key Employee" means any employee (or
beneficiary of a deceased employee) who is not a
Key Employee.
Aggregation A-6. The term "Aggregation Plan" means
Plan the Plan and each other retirement plan (including
a terminated plan) maintained by an Employer or
Related Company which is qualified under section
401(a) of the Code and which:
(a) during the plan year which includes the
applicable Determination Date, or during any
of the preceding four plan years, includes a
Key Employee as a participant;
(b) during the plan year which includes the
applicable Determination Date or, during any
of the preceding four plan years, enables the
Plan or any plan in which a Key Employee
participates to meet the
-4-
41
requirement of section 401(a)(4) or 410 of the
Code; or
(c) at the election of the Employer, would meet
the requirements of sections of 401(a)(4) and
410 if it were considered together with the
Plan and all other plans described in
paragraphs (a) and (b) next above.
A "Required Aggregation Plan" means a plan
described in paragraph (a) or (b) above, and a
"Permissive Aggregation Plan" means a plan
described in (c) above.
Compensation A-7. For purposes of this Supplement A, Section
415 Compensation for any year in excess of
$150,000 ($200,000 for plan years beginning before
January 1, 1994) or such larger amount as may be
permitted for any year under section 401(a)(17) of
the Code shall not be considered; provided, that,
for plan years beginning on or after January 1,
1989, solely for purposes of determining who is a
Key Employee, the term "Section 415 Compensation"
means compensation as defined in section 414(q)(7)
of the Code.
Vesting A-8. For any Plan Year during which the Plan is
Top-Heavy, the Account balance of any Affected
Participant who has completed at least three Years
of Service shall be 100% vested. If the Plan
ceases to be Top-Heavy for any Plan Year, the
provisions of this subsection A-8 shall continue
to apply to (i) the portion of an Affected
Participant's Account and Forfeiture Account
balances which were accrued and vested prior to
such Plan Year (adjusted for subsequent earnings
and losses) and (ii) in the case of an Affected
Participant who had completed at least 3 Years of
Service, the portion of his Account and Forfeiture
Account balances which accrue thereafter.
Minimum A-9. For any Plan Year during which the Plan is
Contribution Top-Heavy, the minimum amount of Employer
Contributions and Forfeitures allocated to the
Account of each Affected Participant who is
employed by an Employer or Related Company on the
last day of that year
-5-
42
(without regard to whether he has completed 1,000
Hours of Service during that year) who is a
Non-Key Employee and who is not entitled to a
minimum benefit for that year under any defined
benefit Aggregation Plan which is top-heavy, nor
is entitled to a minimum benefit for that year
under any other defined contribution Aggregation
Plan maintained by the Employer, shall, when
expressed as a percentage of the Affected
Participant's Section 415 Compensation, be equal
to the lesser of:
(a) 3%; or
(b) the percentage at which Employer
Contributions and Forfeitures are allocated
to the Accounts of the Key Employee for whom
such percentage is greatest.
For purposes of the preceding sentence,
compensation earned while a member of a group of
employees to whom the Plan has not been extended
shall be disregarded. Paragraph (b) next above
shall not be applicable for any Plan Year if the
Plan enables a defined benefit plan described in
paragraph A-6(a) or (b) to meet the requirements
of section 401(a)(4) or 410 for that year.
Employer Contributions for any Plan Year during
which the Plan is Top-Heavy shall be allocated
first to non-Key Employees until the requirements
of this subsection A-9 have been met and, to the
extent necessary to comply with the provisions of
this subsection A-9, additional contributions
shall be required of the Employers.
Aggregate A-10. For any Plan Year during which the Plan is
Benefit Limit Top Heavy, paragraphs (2)(B) and (3)(B) of
section 415(e) of the Code shall be applied by
substituting "1.0" for "1.25".
-6-
