TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
MONEY PURCHASE PENSION PLAN
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
MONEY PURCHASE PENSION PLAN
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................... 2
1.01 Accounts.................................................. 2
1.02 Affiliate................................................. 2
1.03 Beneficiary............................................... 2
1.04 Board..................................................... 2
1.05 Code...................................................... 3
1.06 Committee................................................. 3
1.07 Company................................................... 3
1.08 Compensation.............................................. 3
1.09 Distribution Date......................................... 4
1.10 Effective Date............................................ 4
1.11 Eligible Employee......................................... 4
1.12 Employer.................................................. 4
1.13 ERISA..................................................... 4
1.14 Highly Compensated Employee............................... 4
1.15 Hour of Service........................................... 5
1.16 Inactive Participant...................................... 6
1.17 Limitation Year........................................... 6
1.18 Non-Highly Compensated Employee........................... 6
1.19 Normal Retirement Age..................................... 6
1.20 Participant............................................... 6
1.21 Period of Severance....................................... 6
1.22 Permanent and Total Disability............................ 7
1.23 Plan...................................................... 7
1.24 Plan Year................................................. 7
1.25 Service................................................... 8
1.26 Trust Fund................................................ 9
1.27 Trustee................................................... 9
1.28 Valuation Date............................................ 9
ARTICLE II ELIGIBILITY AND PARTICIPATION............................. 10
2.01 Participation in the Plan................................. 10
2.02 Reemployment.............................................. 10
2.03 Employment After Normal Retirement Age.................... 10
2.04 Termination of Participation.............................. 10
2.05 Inactive Participation and Transfers...................... 10
ARTICLE III CONTRIBUTIONS............................................. 12
3.01 Employer Contributions.................................... 12
3.02 Limitation on Reversion of Contributions.................. 12
3.03 Make-Up Contributions..................................... 12
ARTICLE IV PARTICIPANT'S ACCOUNT: ALLOCATIONS........................ 13
4.01 Participant Accounts...................................... 13
ARTICLE V ALLOCATION LIMITATIONS.................................... 14
5.01 Basic Limitation on Annual Additions...................... 14
5.02 Participation in this Plan and a Defined Benefit Plan..... 15
5.03 Reduction in Annual Additions and Elimination of Excess
Amounts................................................... 15
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TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
MONEY PURCHASE PENSION PLAN
TABLE OF CONTENTS
ARTICLE PAGE
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ARTICLE VI INVESTMENTS: ALLOCATION OF GAINS AND LOSSES............... 17
6.01 Investment of Accounts.................................... 17
6.02 Allocation of Investment Fund Gains and Losses............ 17
ARTICLE VII WITHDRAWALS AND LOANS..................................... 19
7.01 Withdrawals from Employee After-Tax Contribution Transfer
Account................................................... 19
7.02 Amount and Payment of Withdrawals......................... 19
7.03 Loans to Participants..................................... 19
ARTICLE VIII RETIREMENT, DISABILITY AND DEATH BENEFITS................. 23
8.01 Retirement Benefits....................................... 23
8.02 Disability Benefits....................................... 23
8.03 Death Benefits............................................ 23
8.04 Annuity Requirements...................................... 23
ARTICLE IX TERMINATION BENEFITS AND VESTING REQUIREMENTS............. 24
9.01 Benefits Upon Termination of Employment................... 24
9.02 Vesting Requirements...................................... 24
9.03 Annuity Requirement....................................... 24
ARTICLE X DISTRIBUTION OF BENEFITS.................................. 25
10.01 Form of Benefits for Retirement and Other Termination..... 25
10.02 Joint and Survivor Annuity Requirements................... 25
10.03 Qualified Pre-Retirement Survivor Annuity Requirements.... 27
10.04 Timing of Distributions................................... 28
ARTICLE XI COMMITTEE................................................. 30
11.01 Appointment of Committee.................................. 30
11.02 Manner of Action.......................................... 30
11.03 Chairman, Secretary and Employment of Specialists......... 30
11.04 Subcommittees............................................. 30
11.05 Other Agents.............................................. 30
11.06 Records................................................... 31
11.07 Powers and Duties......................................... 31
11.08 Interested Members........................................ 32
11.09 Indemnification........................................... 32
11.10 Conclusiveness of Action.................................. 32
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TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
MONEY PURCHASE PENSION PLAN
TABLE OF CONTENTS
ARTICLE PAGE
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11.11 Payment of Expenses....................................... 33
11.12 Claims Procedure.......................................... 33
ARTICLE XII AMENDMENT TO THE PLAN..................................... 35
12.01 Right to Amend............................................ 35
ARTICLE XIII TERMINATION OF THE PLAN................................... 36
13.01 Right to Terminate........................................ 36
13.02 Corporate Reorganization.................................. 36
13.03 Plan Merger and Consolidation............................. 36
ARTICLE XIV TRUST AND THE TRUSTEE..................................... 37
14.01 Board to Select Trustee................................... 37
ARTICLE XV ADOPTION BY AFFILIATE..................................... 38
15.01 Affiliate................................................. 38
15.02 Action Binding on Participating Affiliates................ 38
15.03 Termination of Participation of Affiliate................. 38
ARTICLE XVI TOP-HEAVY PROVISIONS...................................... 40
16.01 Definitions............................................... 40
16.02 Determination of Top Heavy Status - Single Plan........... 42
16.03 Determination of Top Heavy Status - Multiple Plans........ 42
16.04 Effect of Top Heavy Status................................ 43
ARTICLE XVII MISCELLANEOUS............................................. 46
17.01 Voluntary Plan............................................ 46
17.02 Nonalienation of Benefits................................. 46
17.03 Inability to Receive Benefits............................. 46
17.04 Lost Participants......................................... 47
17.05 Limitation of Rights...................................... 47
17.06 Absence of Guaranty....................................... 47
17.07 Invalid Provisions........................................ 47
17.08 One Plan.................................................. 47
17.09 Governing Law............................................. 47
ARTICLE XVIII DIRECT ROLLOVERS.......................................... 49
18.01 Direct Rollovers.......................................... 49
18.02 Definitions............................................... 49
ARTICLE XIX EXECUTION................................................. 51
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INTRODUCTION
FHP International Corporation ("FHP") previously established the FHP Money
Purchase Pension Plan ("FHP Plan") for the benefit of certain employees of FHP
and certain of its Subsidiaries which adopted the FHP Plan. Two of these
subsidiaries were Talbert Medical Management Corporation and Talbert Health Care
Services Corporation (collectively and together with Talbert Medical Management
Holdings Corporation referred herein to as "Talbert"). Effective on February
14, 1997, the FHP controlled group was acquired by PacifiCare Health Systems,
Inc. ("PacifiCare") and sponsorship of the FHP Plan was assumed by PacifiCare in
connection with that transaction.
Effective on or about April __, 1997, Talbert became a separate publicly traded
corporation. Talbert established this Plan for the benefit of certain of its
employees and the employees of corporations which are part of he same
"affiliated service group" (within the meaning of Code Section 414(m)) as
Talbert. Pursuant to the Employee Benefits and Compensation Allocation
Agreement between FHP and Talbert dated February 14, 1997, the assets and
liabilities of the FHP Plan attributable to employees of Talbert and various
affiliated entities were transferred to this Plan. This Plan should be known as
the "Talbert Medical Management Holdings Corporation Money Purchase Pension
Plan." This Plan is frozen both as to participation and additional
contributions.
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ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan with their first letters
capitalized, they have the meaning specified below. Additional words and
phrases used in the Plan are not defined in this Article I, but, for
convenience, are defined as they are introduced in the text. Unless the context
indicates otherwise, the masculine pronoun refers to a man or a woman. Words in
the singular include the plural, and vice versa, unless the context indicates
otherwise.
1.01 ACCOUNTS
"Accounts" means a Participant's Employer Contribution Transfer Account
and his Employee After-Tax Contribution Transfer Account. These Accounts
are described in Section 4.01 of the Plan.
1.02 AFFILIATE
"Affiliate" means the Company and each other entity which is controlled by
or under common control with the Company or is a member of the same
affiliated service group, within the meaning of Code Sections 414 and
1563.
1.03 BENEFICIARY
"Beneficiary" means the person or persons (who may be named contingently
or successively) designated by a Participant to receive his Accounts in
the event of his death. Each Participant may designate a Beneficiary on a
form prescribed by the Committee. The designation will be effective when
filed with the Committee, and will revoke all prior designations by the
same Participant. A married Participant who designates a Beneficiary
other than his spouse must obtain and submit to the Committee the spouse's
written, notarized consent to the designation of each such Beneficiary on
a form that discloses to the spouse the potential effect of such consent.
The designation will not be valid until the Committee receives such
notarized consent. If no Beneficiary is designated at the time of the
Participant's death, or if no person so designated survives the
Participant, the Beneficiary will be the Participant's spouse, or if the
deceased Participant has no surviving spouse, his estate.
1.04 BOARD
"Board" means the board of directors of Talbert Medical Management
Holdings Corporation.
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1.05 CODE
"Code" means the Internal Revenue Code of 1986 as it currently exists and
includes any subsequent amendments.
1.06 COMMITTEE
"Committee" means the Committee described in Article XI.
1.07 COMPANY
"Company" means Talbert Medical Management Holdings Corporation.
1.08 COMPENSATION
"Compensation" means the total salary and wages paid for a Plan Year or
other specified period to a Participant by the Employer for services
rendered. It includes salary, wages, commission, tips, bonuses and
overtime compensation reportable on federal form W-2 or its equivalent and
amounts of salary reduction elected by the Participant in connection with
pre-tax deferrals under the Talbert Medical Management Holdings
Corporation Employee Stock Ownership Plan and/or a benefit plan sponsored
by an Affiliate and qualified under Code Section 125. It excludes (1) any
amount (other than the pre-tax deferrals described above) contributed by
the Employer to any pension plan or plan of deferred compensation, (2) any
amount, regardless if it is or becomes reportable on federal form W-2
which is (i) paid by the Employer (other than the salary reduction
described above) for other fringe benefits, such as health and welfare,
hospitalization, group life insurance benefits, stock options or
perquisites or (ii) paid by the Employer in lieu of the benefits described
in (i) above, such as a cash out of credits generated under a plan
qualified under Code Section 125, (3) any reimbursement for expenses or
allowances, including automobile allowances and moving allowances and (4)
any amount realized when a stock option is exercised at a price below fair
market value on the date of the exercise.
A Participant's annual Compensation in excess of $150,000 is disregarded
for all purposes under the Plan. Such dollar limit will be adjusted
pursuant to Code Section 401(a)(17).
Compensation will be recognized as of an employee's effective date of
participation pursuant to Sections 2.01 and 2.02. Compensation for any
Plan Year shall be determined by counting Compensation for the payroll
periods ending with or within such Plan Year.
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1.09 DISTRIBUTION DATE
"Distribution Date" means the date as of which the vested portion of a
Participant's Accounts is distributed, as described in Section 8.01 (in
the case of Normal Retirement Age), Section 8.02 (in the case of Permanent
and Total Disability), Section 8.03 (in the case of death) and Section
9.01 (in the case of any other termination of employment).
1.10 EFFECTIVE DATE
"Effective Date" means the original effective date of the Plan, which is
April __, 1997.
1.11 ELIGIBLE EMPLOYEE
"Eligible Employee" means any person who is employed by an Employer
provided he is not one of the following:
(a) a per diem, on-call, or temporary employee,
(b) an employee whose terms of employment are covered by a collective
bargaining agreement between the Employer and employee
representatives where there is evidence retirement benefits were the
subject of good faith bargaining unless the bargaining agreement
expressly provides for participation in the Plan, or
(c) any leased employee described in Section 414(n) of the Code.
1.12 EMPLOYER
"Employer" means the Company and any Affiliate which adopts the Plan in
accordance with Article XV.
1.13 ERISA
"ERISA" mean the Employee Retirement Income Security Act of 1974, as it
currently exists and includes any subsequent amendments.
1.14 HIGHLY COMPENSATED EMPLOYEE
"Highly Compensated Employee" means an individual described in Code
Section 414(q), as amended.
4
1.15 HOUR OF SERVICE
"Hour of Service" means:
(a) Each hour for which a person is directly or indirectly paid by, or
entitled to payment from an Affiliate for the performance of duties.
These hours are credited to the person in the computation period in
which the duties are performed.
(b) Each hour for which a person is directly or indirectly paid by, or
entitled to payment from an Affiliate on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence. However, a person is not
entitled to credit for such hours if payment is made or due under a
plan maintained solely for the purpose of complying with applicable
worker's compensation, unemployment compensation or disability
insurance laws, or if such payment solely reimburses a person for
his medical or medically related expenses. No more than 501 hours
are credited for any single continuous period of time during which
no duties are performed.
In the case of a payment which is made or due on account of a period
during which a person performs no duties, and which results in
crediting of hours under this subsection (b), or in the case of an
award or agreement for back pay, to the extent that such award or
agreement is made with respect to a period described in this
subsection (b), the number of hours and the computation period in
which they are to be credited is determined according to Section
2530.200(b)-2(b) and (c) of Title 29 of the Code of Federal
Regulations.
(c) Each hour for which a person is entitled to back pay, regardless of
mitigation of damages, which has been either awarded or agreed to by
an Affiliate. These hours are credited to the person in the
computation period to which the award, agreement or payment
pertains. However, a person will not be credited with hours under
this subsection (c) if he received credit for the same hours under
subsections (a) or (b).
(d) Notwithstanding the above, an exempt employee will be credited with
90 Hours of Service for each bi-weekly pay period (or 95 Hours of
Service in the case of a semi-monthly pay period) during which he
would receive credit for at least one Hour of Service under
subsections (a) through (c) above. For purposes of
5
this subsection an exempt employee is defined under the Fair Labor
Standards Act.
1.16 INACTIVE PARTICIPANT
"Inactive Participant" means a person who was a Participant but who is
transferred to and is in a position of employment in which he is no longer
an Eligible Employee.
1.17 LIMITATION YEAR
"Limitation Year" means the twelve month period beginning January 1 and
ending the following December 31, as that term is used in Section 5.01;
provided, however, that the initial limitation year shall be from _______
__, 1997 through December 31, 1997.
1.18 NON-HIGHLY COMPENSATED EMPLOYEE
"Non-Highly Compensated Employee" means a person employed by an Affiliate
who is not a Highly Compensated Employee.
1.19 NORMAL RETIREMENT AGE
"Normal Retirement Age" means a Participant's sixty-fifth birthday.
1.20 PARTICIPANT
"Participant" means any Eligible Employee who is a Participant as provided
in Article II. Where appropriate to the context, it also includes an
Inactive Participant.
1.21 PERIOD OF SEVERANCE
"Period of Severance" means, for any person, an interruption in his
Service under the Plan. A Period of Severance begins on the date the
person no longer is credited with Service under the Plan and ends on the
date the person returns to active employment with an Affiliate. A person
whose employment with all Affiliates is terminated, or deemed terminated,
for any reason will incur:
(a) a one year Period of Severance if he fails to return to active
employment as an employee and render one or more Hours of Service
before the first annual anniversary of the date of such termination.
(b) a five year Period of Severance if he fails to return to active
employment as an employee and render one or more Hours of Service
before the fifth annual anniversary of the date of such termination.
6
For purposes of this Section, a person who is absent from employment for
maternity or paternity reasons will not be treated as having incurred a
one year Period of Severance until the second anniversary of such absence,
or a five year Period of Severance until the sixth anniversary of such
absence, or such earlier time permitted under applicable regulations.
Absence for maternity or paternity reasons means a person is absent
because:
(1) the person is pregnant,
(2) the person gave birth to a child;
(3) an adopted child is placed with the person, or
(4) the person is caring for his natural or adopted child
immediately after the child is born or placed with the person.
The provisions of this paragraph will not apply unless the person provides
information to the Committee, within the time limits established by the
Committee, sufficient to establish that the absence is for maternity or
paternity reasons and the duration of the absence.
1.22 PERMANENT AND TOTAL DISABILITY
"Permanent and Total Disability" means any medically determinable physical
or mental impairment resulting from sickness, accident or other injury
which may be expected to be permanent and continuous and which renders the
Participant incapable of performing the duties of his employment or any
similar employment with his Employer. The determination of the Committee
as to whether a Participant is "Permanently and Totally Disabled," based
upon the certification of one or more physicians or surgeons selected by
it, shall be final and binding on all persons.
1.23 PLAN
"Plan" means the Talbert Medical Management Holdings Corporation Money
Purchase Pension Plan described in this document and includes any
subsequent amendments.
1.24 PLAN YEAR
"Plan Year" means the twelve month period beginning January 1 and ending
the following December 31; provided, however, that the initial Plan Year
is a short Plan Year from _______ __, 1997 through December 31, 1997.
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1.25 SERVICE
"Service" means, with respect to any person, his period or periods of
employment with all Affiliates which are counted as Service according to
the following rules.
(a) Each person is credited with Service under the Plan for the period
or periods during which the person maintains an employment
relationship with any Affiliate. A person's employment relationship
is deemed to commence on the date the person first renders one Hour
of Service, and is deemed to continue during the following periods:
(i) Periods of leave of absence with or without pay granted to the
person by an Affiliate in a like and nondiscriminatory manner
for any purpose including, but not limited to, sickness,
accident or military leave. A person is not considered to
have terminated employment during such leave of absence unless
he fails to return to the employ of an Affiliate at or prior
to the expiration date of the leave. If he fails to so
return, he is deemed to have terminated as of the date the
leave began but he is given credit for Service through the
earlier of the first anniversary of the date his leave of
absence began or the date his employment terminates.
(ii) In the case of a person who terminates employment and who is
later reemployed by an Affiliate before he incurs a one year
Period of Severance, the period between his date of
termination and date of reemployment.
(b) Except as provided in Subsection (c) all periods of a person's
Service, whether or not consecutive, are aggregated. Service is
measured in elapsed years and fractions of years whereby each twelve
complete calendar months constitutes one year, each complete
calendar month constitutes one-twelfth of a year and partial
calendar months which when aggregated equal thirty days constitute
one-twelfth of a year.
(c) In the case of a person who terminates employment before he becomes
a Participant and who is not reemployed before the date he incurs
the greater of.
(i) a five year Period of Severance, or
(ii) a Period of Severance greater than his service before the date
he terminated employment,
8
his Service before he terminated employment will be disregarded.
(d) Notwithstanding anything in this Plan to the contrary, Service that
was credited to a Participant under the terms of the FHP Money
Purchase Pension Plan shall be counted as Service under this Plan
for purposes of vesting and eligibility.
1.26 TRUST FUND
"Trust Fund" means the assets of the Plan as invested pursuant to Section
6.01 and held by the Trustee and subject to the trust agreement described
in Article XIV.
1.27 TRUSTEE
"Trustee" means the person, persons, bank and/or other entity selected by
the Board to hold the Trust Fund according to Article XIV.
1.28 VALUATION DATE
"Valuation Date" means March 31, June 30, September 30, and December 31 of
each Plan Year. Notwithstanding the preceding sentence, upon a
determination by the Committee, in its sole discretion, that more frequent
Valuation Dates are administratively feasible, Valuation Date means the
last day of any other months selected by the Committee. Valuation Date
may also mean any date selected by the Committee in the event the
Committee in its sole discretion determines that events affecting the
market value of the Trust Fund require an interim Valuation Date.
9
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 PARTICIPATION IN THE PLAN
The Participants in the Plan are those Eligible Employees whose account
balances under the FHP Money Purchase Pension Plan were transferred to
this Plan in connection with the rights offering which resulted in the
Company becoming a separate publicly-traded corporation. Participation in
the Plan is otherwise frozen. Accordingly, no additional Eligible
Employees will be permitted to participate in the Plan.
2.02 REEMPLOYMENT
A Participant whose employment with all Affiliates terminated and who is
subsequently reemployed and becomes an Eligible Employee again, becomes a
Participant on the date he becomes an Eligible Employee again.
An employee who was not a Participant when his employment with all
Affiliates terminated and who is later reemployed by an Affiliate becomes
a Participant in the Plan pursuant to the provisions of Section 2.01.
Hours of Service before he terminated employment will be considered in
determining his eligibility to become a Participant.
2.03 EMPLOYMENT AFTER NORMAL RETIREMENT AGE
A Participant who continues employment as an Eligible Employee after his
Normal Retirement Age continues to be a Participant for all purposes of
the Plan.
2.04 TERMINATION OF PARTICIPATION
A Participant will cease to be a Participant on the date on which he or
his Beneficiary receives distribution of the entire vested portion of his
Accounts under the Plan due to his termination of employment, retirement,
death or Permanent and Total Disability.
2.05 INACTIVE PARTICIPATION AND TRANSFERS
A Participant who transfers to an employment status with an Affiliate in
which he is no longer an Eligible Employee becomes an Inactive
Participant. Employer Contributions will not be allocated to his Employer
Contribution Account after the date of his transfer.
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If a Participant becomes an Inactive Participant, his Accounts will
continue to be held under the Plan until he becomes entitled to a
distribution under the provisions of Articles VIII and IX.
An employee who transfers to an employment status with an Affiliate in
which he is an Eligible Employee may become a Participant pursuant to
Section 2.01. Employer Contributions to his Employer Contribution Account
will not be based on his Compensation earned before the date he
transferred and became a Participant.
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ARTICLE III
CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
The Plan is frozen with respect to Employer Contributions. Accordingly,
until such time as this Plan is further amended, no additional Employer
Contributions will be made to the Plan.
3.02 LIMITATION ON REVERSION OF CONTRIBUTIONS
Except as provided in subsections (a), (b) and (c) below, contributions
made under the Plan are held for the exclusive benefit of Participants and
their Beneficiaries and may not revert to the Employer.
(a) A contribution which is made by a mistake of fact may be returned to
the Employer within one year after it is contributed to the Plan.
(b) All contributions to the Plan are conditioned on their deductibility
under Code Section 404. To the extent the deduction is disallowed,
the amount disallowed will be returned to the Employer within one
year after the disallowance.
(c) All contributions to the Plan are conditioned on the Plan's
qualification under Code Section 401(a). If the Plan does not so
qualify, any contributions will be returned to the Employer within
one year after the qualification is denied.
3.03 MAKE-UP CONTRIBUTIONS
In addition to other Employer Contributions described in Section 3.01, an
Employer may make special make-up contributions to the Plan, if necessary.
A make-up contribution will be necessary if there are insufficient
forfeitures under the Plan to restore a Participant's Employer
Contribution Account pursuant to Section 9.04, if a Participant or
Beneficiary's Accounts must be reinstated pursuant to Section 17.04, or if
a mistake or omission in the allocation of contributions is discovered and
cannot be corrected by revising prior allocations.
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ARTICLE IV
PARTICIPANT'S ACCOUNT: ALLOCATIONS
4.01 PARTICIPANT ACCOUNTS
The Committee will maintain the following Accounts for each Participant:
(a) An EMPLOYER CONTRIBUTION TRANSFER ACCOUNT which is:
(i) credited with the Participant's Employer Contribution Account
transferred from the FHP Money Purchase Pension Plan;
(ii) adjusted for investment results and expenses; and
(iii) charged with distributions.
(b) An EMPLOYEE AFTER-TAX CONTRIBUTION TRANSFER ACCOUNT which is:
(i) credited with the Participant's Employee After-Tax
Contribution Account transferred from the FHP Money Purchase
Pension Plan;
(ii) adjusted for investment results and expenses; and
(iii) charged with withdrawals and distributions.
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ARTICLE V
ALLOCATION LIMITATIONS
5.01 BASIC LIMITATION ON ANNUAL ADDITIONS
(a) Notwithstanding any other provisions of the Plan and subject to the
provisions of Subsections (b), (c) and (d) below, the amount of
Annual Additions, as defined below, allocated to a Participant for
any Limitation Year will not exceed the lesser of:
(i) $30,000; or
(ii) twenty-five percent of the Participant's Earnings (as defined
below) for the Limitation Year.
The dollar limitation referred to in Subsection (a)(i) above is
adjusted as of January 1 of each Plan Year pursuant to Code Section
415. The adjusted amount applies for the Limitation Year which ends
within that Plan Year.
(b) For purposes of this Article V, a Participant's Annual Additions
means the amount of:
(i) Employer and Affiliate contributions,
(ii) Participant contributions,
(iii) forfeitures, and
(iv) contributions for post retirement medical benefits, to the
extent required by Code Section 415(c) or 419A(d)(2),
allocated to his Accounts under this Plan and his accounts under all
other defined contribution plans (as defined in Code Section 414(i))
adopted by an Affiliate.
(c) For purposes of this Article V, a Participant's Earnings means his
earned income, wages, salaries, commissions and bonuses received
from all Affiliates. It excludes the following:
(i) Contributions by an Affiliate to a plan of deferred
compensation which are not included in the Participant's gross
income for the taxable year in which contributed, or any
distribution from a plan of deferred compensation;
14
(ii) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Participant either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax benefit including
pre-tax deferrals under the Talbert Medical Management
Holdings International Corporation Employee Stock Ownership
Plan and salary reduction under any other tax qualified
program.
Earnings for any Limitation Year are the amount actually paid or
includable in gross income during such year. A Participant's annual
Earnings in excess of $150,000 are disregarded for all purposes
under this Plan. Such dollar limit will be adjusted each year
pursuant to Code Section 401(a)(17).
5.02 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN
If a Participant is or has been a participant in a qualified defined
benefit plan (as defined Code Section 414(j)) maintained by an Affiliate,
the sum of the Participant's defined benefit plan fraction and defined
contribution plan fraction (as defined in Code Section 415(e)) for any
year will not exceed one. In calculating the defined contribution plan
fraction, the Committee may, at its discretion, make the election
described in Code Section 415(e)(6).
5.03 REDUCTION IN ANNUAL ADDITIONS AND ELIMINATION OF EXCESS AMOUNTS
If the limitations described in Section 5.01 and 5.02 would otherwise be
exceeded for a Participant for a Limitation Year, the excess will be
eliminated as follows:
(a) Amounts attributable to the Participant's pre-tax deferrals under
the Talbert Medical Management Holdings Corporation Employee Stock
Ownership Plan will be reduced, pursuant to the applicable
provisions of such plan.
(b) Second, the excess allocations of Employer Contributions will be
removed from the Participant's Employer Contribution Account and
will be held unallocated in a suspense account. If a suspense
account exists at any time during a Limitation Year,
15
other than the Limitation Year described in the preceding sentence,
all amounts in the suspense account must be allocated to
Participants' Accounts (subject to the limitations of Code Section
415) before any Employer Contributions which are Annual Additions
may be made to the Plan for that Limitation Year.
(c) Third, the provisions of any other plans established by an Affiliate
which have caused the limits to be exceeded for the Participant will
be applied. The provisions of a defined benefit plan will be
applied before the provisions of a defined contribution plan.
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ARTICLE VI
INVESTMENTS: ALLOCATION OF GAINS AND LOSSES
6.01 INVESTMENT OF ACCOUNTS
Each Participant's Accounts are invested in the Trust Fund. Within the
Trust Fund, two different Investment Funds have been designated. They are
identified as Trust I and Trust II. A Participant's Employer Contribution
Transfer Account will be invested in Trust I. His Employee After-Tax
Contribution Transfer Account will be invested in Trust II. The
Participant will not have the right to direct the investment of these
funds.
The investment objectives of Trust I and Trust II may be different. The
investment policies associated with each of these funds will be determined
by the Company.
6.02 ALLOCATION OF INVESTMENT FUND GAINS AND LOSSES
As of each Valuation Date, the Committee will determine the net investment
gain or loss, after adjustment for applicable expenses, if any, of Trust I
and Trust II since the immediately preceding Valuation Date.
Notwithstanding the preceding sentence, the net gain or loss in the value
of any portion of the Plan's assets invested in real estate will be
determined no less frequently than once every Plan Year. The resulting
value, without adjustment for gain or loss, will be the value for all
subsequent Valuation Dates until the Valuation Date on which the net gain
or loss of such assets is redetermined.
The net investment gain or loss of Trust I and Trust II will be
apportioned to each Participant's Accounts. The apportionment will be in
the same proportions as the following for the Participant bears to the
total of the following for all Participants:
(a) The balance of the Participant's Account which was held in Trust I
or Trust II, whichever is applicable, as of the immediately
preceding Valuation Date;
(b) One-half of the Participant's loan repayments, if any, made to the
Account since the immediately preceding Valuation Date; and
(c) A reduction for any withdrawals, distributions or loan proceeds paid
from the portion of the Account invested in Trust I or Trust II,
whichever is applicable, and paid after the allocation of gains or
losses as of the immediately preceding Valuation Date.
17
All withdrawals, distributions and loan proceeds which are paid as of a
Valuation Date shall be paid after the allocation of net investment gain
or loss applicable to such Valuation Date has been apportioned pursuant to
this Section. The amounts paid out will not share in the allocation of
net investment gain or loss in the subsequent Valuation Date.
18
ARTICLE VII
WITHDRAWALS AND LOANS
7.01 WITHDRAWALS FROM EMPLOYEE AFTER-TAX CONTRIBUTION TRANSFER ACCOUNT
(a) A Participant may withdraw up to one hundred percent of the value of
his Employee After-Tax Contribution Transfer Account determined as
of the most recent Valuation Date (a) which precedes the date the
withdrawal request is received by the Committee on a written form
prescribed by the Committee, and (b) for which the allocation
process described in Section 6.02 has been completed. A Participant
may not withdraw from his Employer Contribution Transfer Account
except as provided in Articles VIII, IX, and X.
(b) A Participant may not withdraw less than the entire value of his
Employee After-Tax Contribution Transfer Account. Any request for a
withdrawal of a portion of a Participant's Employee After-Tax
Contribution Transfer Account shall be deemed to be a request for a
withdrawal of the entire value of a Participant's Employee After-Tax
Contribution Transfer Account.
7.02 AMOUNT AND PAYMENT OF WITHDRAWALS
Application for a withdrawal shall be made on such forms as the Committee
prescribes. Payment will be made to the Participant as soon as
administratively possible following the date the Committee receives and
approves the withdrawal request from the Participant. The amount of such
withdrawal shall be taken from the Participant's Account at such time and
paid to the Participant in a single sum. No withdrawal under this Article
VII shall cause forfeiture of any interests of the Participant in the
Plan.
If a Participant is married, his spouse must consent in writing to any
withdrawal of his Employee After-Tax Contribution Transfer Account no more
than 90 days before the withdrawal is approved by the Committee. The
spouse's consent must be witnessed by a notary public.
7.03 LOANS TO PARTICIPANTS
(a) Some Participants may have outstanding loans in their Accounts which
were transferred to this Plan from the FHP Money Purchase Pension
Plan. Such loans shall be repaid according to the repayment
schedule established when the loan was made and pursuant to this
Section 7.03. Notwithstanding anything else contained herein
19
to the contrary, no new Participant loans shall be permitted under
this Plan.
(b) A Participant may have no more than one loan from this Plan
outstanding at any time.
(c) The Participant must apply for the loan, sign a note payable to the
Trustee in the proper amount on a form prescribed by the Committee,
and authorize payroll deductions for payment of interest and
principal, all in accordance with procedures adopted by the
Committee.
If the Participant is married, his spouse must consent in writing to
the loan no more than ninety days before the date of the loan. The
spouse's consent must be witnessed by a notary public.
Any loan processing fees (charged by a person other than the
Employer) shall be deducted from the principal amount available to
the Participant.
(d) The period of repayment for any loan shall be arrived at by mutual
agreement between the Committee and the Participant. However, the
period of repayment, including any extensions resulting from the
consolidation of a loan into a subsequent loan, shall not extend
beyond the earlier of five years or the date such Participant
terminates employment with the Employer. The five year limit shall
not apply to any portion of the loan used to acquire the
Participant's principal place of residence.
(e) The amount of the loan must be at least $1,000, but may not exceed
the lesser of:
(i) $50,000 reduced by (A) the Participant's current outstanding
loan balance under all plans qualified under Code Section
401(a) and maintained by an Affiliate, and (B) the excess of
the Participant's highest outstanding loan balance under such
plans during the twelve months preceding the date of the loan
over the Participant's current outstanding loan balance under
such plans; or
(ii) 50% of the vested portion of all of the Participant's Accounts
under this Plan (including the Employer Contribution Account)
valued on the Applicable Valuation Date immediately before the
date the request for a loan is received. "Applicable
Valuation Date" means the most recent Valuation Date (A) which
precedes the date the loan request is received by the
Committee on a written form prescribed by the Committee, and
(B)
20
for which the allocation process described in Section 6.02 has
been completed.
(f) All loans shall bear an interest rate equal to two percentage points
above the published prime lending rate of Bank of America N.T. &
S.A. on the last business day of the month preceding the month in
which the request for a loan is received, provided, however, that no
loan shall bear a rate of interest which exceeds the maximum rate
permitted by law. The interest rate so determined shall be fixed
for the term of the loan.
(g) The Committee shall establish a loan account for the Participant,
and shall credit the loan account with an amount equal to the
principal amount of the loan granted. The principal amount will be
withdrawn from Trust I or Trust II as directed by the Participant.
Each repayment of principal on the loan received by the Trustee from
the Participant shall reduce the balance credited to the loan
account and each payment of principal and interest shall increase
the balance in the Participant's Employee After-Tax Contribution
Transfer Account or Employer Contribution Transfer Account,
depending on which account served as the source of the loan.
(h) Repayment shall be accomplished through regular payroll deductions.
The Committee may restrict loan amounts if withholdings of principal
and interest would exceed twenty percent of Compensation in each
payroll period. A Participant shall be entitled to prepay, without
penalty, the total accrued interest and outstanding principal amount
of the loan. Such prepayment may be made by increasing the amount
of his payroll deduction or by any other means.
(i) If a Participant terminates employment with all Affiliates, incurs a
Permanent and Total Disability or undergoes bankruptcy prior to his
repayment of the total principal and interest on a note held by his
loan account, the note in the Participant's Account shall be
cancelled and the unpaid principal balance deemed distributed to him
by the Trust Fund.
(j) This paragraph applies only to Participants who (i) were employed by
FHP Fountain Valley Hospital ("FHP Hospital") on or before January
13, 1996, (ii) had an outstanding loan under the FHP Money Purchase
Pension Plan as of January 13, 1996, and (iii) became employed by
Orange Coast Memorial Hospital on January 14, 1996. A Participant
who satisfies the requirements of the preceding sentence is referred
to herein as a
21
"Qualified Participant." Notwithstanding anything else contained
herein to the contrary, Qualified Participants may repay loans under
this Plan by payroll deduction in accordance with paragraph (h) of
this Section except that Orange Coast Memorial Hospital shall remit
such payroll deductions to the Trustee. The repayment period with
respect to a loan subject to this subparagraph shall be the same as
the original repayment period of such loan, provided that such
period of repayment, including any extensions resulting from the
consolidation of a loan into a subsequent loan, shall not extend
beyond five years from the original date of the loan. This five
year limit shall not apply to any portion of the loan used to
acquire the Participant's principal residence.
22
ARTICLE VIII
RETIREMENT, DISABILITY AND DEATH BENEFITS
8.01 RETIREMENT BENEFITS
The retirement benefit payable under the Plan in the case of a Participant
whose employment with all Affiliates terminates on or after he attains
Normal Retirement Age is one hundred percent of the value of his Accounts
on his Distribution Date. The Participant's Distribution Date is the
Valuation Date coincident with or immediately following the date the
terminated Participant's request for a distribution on a written form
prescribed by the Committee is received by the Committee.
8.02 DISABILITY BENEFITS
The disability benefit payable under the Plan in the case of a Participant
whose employment with all Affiliates terminates because he is Permanently
and Totally Disabled is one hundred percent of the value of his Accounts
on his Distribution Date. The Participant's Distribution Date is the
Valuation Date coinciding with or immediately following the later of the
date the Permanently and Totally Disabled Participant's request for a
distribution on a written form prescribed by the Committee is received by
the Committee or the date the Committee determines the Participant is
Permanently and Totally Disabled.
8.03 DEATH BENEFITS
The death benefit payable to a Beneficiary under the Plan in the case of a
Participant whose employment with an Affiliate terminates due to his death
(or who dies after termination of employment under Sections 8.01 and 8.02,
but before his Distribution Date under such Sections) is one hundred
percent of the value of his Accounts on the Distribution Date. The
Distribution Date with respect to such Participant is the Valuation Date
coincident with or immediately following the date the request for a
distribution by the deceased Participant's Beneficiary (or if no
Beneficiary has been designated, the representative of his estate) is
received by the Committee on a written form prescribed by the Committee.
8.04 ANNUITY REQUIREMENTS
Benefits distributed under Section 8.01, 8.02, and 8.03 are subject to the
joint and survivor annuity and qualified pre-retirement survivor annuity
requirements described in Article X.
23
ARTICLE IX
TERMINATION BENEFITS AND VESTING REQUIREMENTS
9.01 BENEFITS UPON TERMINATION OF EMPLOYMENT
The benefit payable under the Plan in the case of a Participant whose
employment with all Affiliates terminates for any reason other than
because he became Permanently and Totally Disabled, died, or retired on or
after his Normal Retirement Age is the vested portion (determined pursuant
to Section 9.02) of the value of his Accounts on his Distribution Date.
The Participant's Distribution Date is the Valuation Date coincident with
or immediately following the date the terminated Participant's request for
a distribution on a written form prescribed by the Committee is received
by the Committee.
9.02 VESTING REQUIREMENTS
The vested portion of a Participant's Employer Contribution Transfer
Account and Employee After-Tax Contribution Transfer Account shall always
be one hundred percent.
9.03 ANNUITY REQUIREMENT
Benefits distributed under this Article IX are subject to the joint and
survivor annuity and qualified pre-retirement survivor annuity
requirements described in Article X.
24
ARTICLE X
DISTRIBUTION OF BENEFITS
10.01 FORM OF BENEFITS FOR RETIREMENT AND OTHER TERMINATION
(a) Amounts distributable pursuant to Articles VIII and IX are
distributed, at the Participant's or, if applicable, Beneficiary's
election, in one of the following forms:
(i) A single sum payment in cash of the value of his benefit as of
his Distribution Date; or
(ii) Payments beginning as of his Distribution Date, of his entire
benefit in substantially equal monthly cash installments over
a period not to exceed the life expectancy of the Participant
on the date his payments begin (or the joint life expectancies
of the Participant and his Beneficiary on the date his
payments begin). Until the Participant, and his Beneficiary,
if applicable, receive all installments under this Subsection,
the Participant's benefit will remain invested in the Trust
Fund and will continue to share in the allocations of gains
and losses of the Trust Fund pursuant to Article VI. If the
Participant dies before he receives his entire benefit under
this Subsection, his Beneficiary will be entitled to a single
sum cash payment of the remaining benefit. Payment will be
made as soon as practicable after the Valuation Date
coincident with or immediately following the Participant's
death and will be equal to the value of the Participant's
remaining benefit as of such Valuation Date.
(b) If the value of the vested portion of a Participant's Accounts on
the Valuation Date coinciding with or immediately following the date
he terminates employment does not exceed $3,500, he will not be
permitted to elect the form in which his benefit will be
distributed, and his benefit will be distributed in accordance with
Section 10.01(a)(i).
10.02 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
(a) Notwithstanding anything in the Plan to the contrary, unless a
Participant who is entitled to a benefit pursuant to Section 8.01,
8.02 or 9.01:
(i) Makes an election under Section 8.01, 8.02 or 9.01, his
Distribution Date will be the Valuation Date coincident with
or immediately following the
25
later of the date he attains age sixty-five or the date he
terminates employment.
(ii) Makes an election under Section 10.01 that complies with
Subsection (b) below, his benefit will be distributed in one
of the following forms:
(1) If the Participant is not married on his Distribution
Date, he will receive a paid up life annuity providing a
lifetime benefit to him with no continuation of benefits
after his death. The benefit payable pursuant to
Section 8.01, 8.02 or 9.01 will be used to purchase a
single premium immediate annuity in such a form with a
premium equal to the value of his benefit as of his
Distribution Date.
(2) If the Participant is married on his Distribution Date,
he will receive a paid up joint and fifty percent
survivor annuity providing a lifetime benefit to him
with fifty percent of his monthly payments continuing to
his spouse, if the spouse survives him, for the spouse's
lifetime. The benefit payable pursuant to Section 8.01,
8.02 or 9.01 will be used to purchase a single premium
immediate annuity in such form with a premium equal to
the value of his benefit as of the Distribution Date.
(b) An election will comply with this Subsection (b) if it is made
within ninety days before the date the Participant's benefit
payments begin. The election will not be valid unless the spouse to
which the Participant is married on the date of the election
consents in writing to the election. The spouse's consent must be
witnessed by a notary public. The spouse's consent requirement will
not apply if the Participant's spouse cannot be located or the
Participant has no spouse. A Participant may revoke an election at
anytime.
(c) The Committee will provide each Participant, no less than thirty
days and no more than ninety days before his Distribution Date, a
written explanation of:
(i) the automatic form of payment in Subsection (a),
(ii) when and how the Participant may elect not to be paid in the
automatic form, including the requirement that the
Participant's spouse consent to such election,
26
(iii) when and how the Participant may revoke an election not to be
paid in the automatic form, and
(iv) the effect of an election or revocation of an election to be
paid in the automatic form.
10.03 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY REQUIREMENTS
(a) Notwithstanding anything in the Plan to the contrary, in the case of
a Participant who is married on his date of death:
(i) unless his spouse elects otherwise under Subsection (b) below,
or
(ii) unless the Participant has named a Beneficiary in accordance
with Section 1.03 which is other than his spouse as his sole
beneficiary.
the benefit payable under Section 8.03 will be paid by distribution
of a paid up life annuity providing a lifetime benefit to the
Participant's spouse, with payments beginning at the direction of
the spouse, within a reasonable time after the Participant died.
The benefit payable pursuant to Section 8.03 will be used to
purchase a single premium annuity in such a form, with a premium
equal to the value of the benefit as of the Distribution Date.
(b) In lieu of the life annuity described above, the spouse may elect to
be paid as of the Distribution Date described in Section 8.03 and in
one of the payment forms described in Section 10.01.
(c) The Committee will provide each Participant, within the period
described below, a written explanation of the death benefit
described in Subsection (a) above. The written explanation will be
comparable to the information required under Section 10.02(c).
The written explanation will be provided during whichever of the
following periods ends last:
(i) The period beginning on the first day of the Plan Year in
which the Participant attains age thirty-two and ending on the
last day of the Plan Year in which the Participant attains age
thirty-four;
(ii) By the end of the three year period beginning with the first
day of the Plan Year in which the Participant became a
Participant pursuant to Section 2.01; or
27
(iii) Within one year after the Participant terminates employment,
provided the Participant terminates employment before
attaining age thirty-five.
(d) Notwithstanding the above, if the benefit payable to the spouse
(calculated on the Valuation Date coinciding with or immediately
following the Participant's date of death) exceeds $3,500, then the
spouse has to consent in writing in the manner established by the
Committee for the distribution to commence before the date the
Participant would have attained age 65.
10.04 TIMING OF DISTRIBUTIONS
(a) Notwithstanding the provisions of Articles IX and X, if a
Participant's employment terminates for any reason and the value of
the vested portion of his Accounts on the Valuation Date coinciding
with or immediately following the date he terminates employment does
not exceed $3,500, his Distribution Date is the Valuation Date
coinciding with or immediately following the date he terminates
employment. If a Participant who is otherwise entitled to elect a
Distribution Date does not consent in writing in the manner
established by the Committee, his Distribution Date is the Valuation
Date coinciding with or immediately following the date he reaches
age sixty-five.
(b) Distributions under the Plan pursuant to Articles VIII, IX and X are
made as soon as practicable following the applicable Distribution
Date but in no event later than sixty days after the end of the Plan
Year in which the Participant reaches age sixty-five, reaches the
tenth anniversary of the date he began participation in the Plan, or
terminates employment, whichever is latest.
Notwithstanding anything to the contrary contained herein, the
distribution options under the Plan shall comply with Section
401(a)(9) of the Code and regulations promulgated thereunder, which
are hereby incorporated by this reference as part of the Plan.
Accordingly, with respect to a Participant who is a five percent
(5%) owner of the Company or an Affiliated Employer at any time
during the Plan Year ending in the calendar year in which he or she
attains age 70-1/2, the entire interest of each such Participant
shall be distributed by April 1 of the calendar year in which the
Participant reaches age 70-1/2. With respect to a Participant who
is not a five percent (5%) owner of the Company or an Affiliated
Employer at any time during Plan Year ending in the calendar year in
which he or she attains age 70-1/2, and except as otherwise provided
by law, such a Participant is not required to
28
receive a distribution of his or her interest until the April 1 of
the calendar year following the calendar year in which he or she
retires. Except as provided by law, a Participant who reached age
70-1/2 before January 1, 1988 and who was not a five percent owner
of the Company at any time during the Plan Year ending with or
within the calendar year in which the Participant attains age 66-1/2
or thereafter, is not required to receive distribution of his
interest until he separates from service. Benefits distributed
under this Section 10.04(b) are subject to the qualified joint and
survivor annuity and qualified pre-retirement survivor annuity
requirements described in Sections 10.02 and 10.03.
(c) Distributions to an alternate payee pursuant to a qualified domestic
relations order ("QDRO"), as defined in Code Section 414(p), will be
paid in accordance with such order. Notwithstanding anything to the
contrary in the Plan, a payment to an alternate payee may be made
before the date the applicable Participant is otherwise entitled to
a distribution from the Plan, as permitted under Code Section
414(p)(10). Accordingly, subject to the procedures established by
the Committee, benefits may be paid from the balance of a
Participant's Account in accordance with a QDRO without regard to
whether the Participant has attained the "earliest retirement age,"
as defined in Section 414(p) of the Code. The amount paid to an
alternate payee, and any amounts remaining in the affected
Participant's Accounts after such payment, will be determined as of
the Valuation Date coincident with or immediately following the date
the request for a distribution by the alternate payee is received by
the Committee on a written form prescribed by the Committee.
29
ARTICLE XI
COMMITTEE
11.01 APPOINTMENT OF COMMITTEE
A Committee consisting of at least three members will be appointed by the
Board to administer the Plan on behalf of the Company. A vacancy on the
Committee which results from death, resignation or otherwise, will be
filled from time to time by appointment of a new Committee member by the
Board, and a member of the Committee may be removed at any time at the
discretion of the Board.
11.02 MANNER OF ACTION
A majority of the members of the Committee at the time in office will
constitute a quorum for the transaction of business. All resolutions
adopted, and other actions taken by the Committee at any meeting will be
by the vote of a majority of those present at the meeting. Upon the
unanimous written consent of the members at the time in office, action of
the Committee may be taken without a meeting.
11.03 CHAIRMAN, SECRETARY AND EMPLOYMENT OF SPECIALISTS
The Company may appoint a Chairman of the Committee. The Committee will
elect a Secretary who may, but need not, be a member of the Committee.
They may authorize one or more of their number or any agent to execute or
deliver any instrument or instruments on their behalf, and may employ such
counsel, auditors, and other specialists and such clerical, medical,
actuarial and other services as they may require in carrying out the
provisions of the Plan.
11.04 SUBCOMMITTEES
The Committee may appoint one or more subcommittees and delegate such of
its power and duties as it deems desirable to any such subcommittee, in
which case every reference in the Plan made to the Committee is deemed to
mean or include the subcommittees as to matters within their jurisdiction.
The members of any subcommittee will consist of such officers or other
employees of the Company and such other persons as the Committee may
appoint.
30
11.05 OTHER AGENTS
On behalf of the Company, the Committee may also appoint one or more
persons or agents to aid it in carrying out its duties and delegate such
of its power and duties as it deems desirable to such person or agents.
11.06 RECORDS
All resolutions, proceedings, acts and determinations of the Committee
shall be recorded by the Secretary thereof or under his supervision, and
all such records, together with such documents and instruments as may be
necessary for the administration of the Plan, shall be preserved in the
custody of the Secretary.
11.07 POWERS AND DUTIES
(a) The Committee has full power and discretion to administer the Plan
and to construe and interpret the terms and provisions of this Plan
and apply all of its provisions on behalf of the Company. The
Company is the Plan Administrator. The Company is the Named
Fiduciary within the meaning of ERISA Section 402(a). The Company
and Committee may delegate to any other person or organizations any
of its powers and duties with respect to the operation of this Plan.
The Committee's powers and duties, unless properly delegated,
include, but are not limited to:
(i) Deciding questions relating to eligibility, continuity of
Service and amount of benefits;
(ii) Deciding disputes which may arise with regard to the rights of
employees, Participants and their legal representatives or
Beneficiaries under the terms of the Plan. Such decisions by
the Committee shall be deemed final in each case;
(iii) Obtaining such information from the Employer with respect to
employees as shall be necessary to determine the rights and
benefits of such employees under the Plan. The Committee may
rely conclusively upon such information furnished by the
Employer.
(iv) Compiling and maintaining all records necessary for the Plan;
(v) Furnishing the Employer, upon request, such reports with
respect to the administration of the Plan as are reasonable
and appropriate;
31
(vi) Authorizing the Trustee to make payment of all benefits as
they become payable under the Plan;
(vii) Engaging such legal, administrative, actuarial, investment,
accounting, consulting and other professional services as the
Committee deems proper;
(viii) Adopting rules and regulations for the administration of the
Plan not inconsistent with the Plan; and
(ix) Doing and performing such other actions as may be provided
for in other parts of this Plan.
11.08 INTERESTED MEMBERS
No Committee member shall participate in any action of the Committee on a
matter in which such member has a specialized individual interest as a
Participant in the Plan. Such matters shall be determined by a majority
of the remainder of the members of the Committee.
11.09 INDEMNIFICATION
The Company shall and does by the following terms indemnity and hold the
members of the Committee and each of them, harmless from the effects and
consequences of their acts, omissions and conduct in their official
capacities, except to the extent that the effects and consequences thereof
shall result from their own willful misconduct, breach of good faith or
gross negligence in the performance of their duties. The Company shall
have the right, but not the obligation, to conduct the defense of such
members in any proceeding to which this Section applies. The foregoing
right of indemnification shall not be exclusive of other rights to which
each such member may be entitled as a matter of law or by other indemnity
coverage provided by the Company.
The Company's obligations under this Section may be satisfied through
purchase of a policy or policies of insurance providing equivalent
protection.
11.10 CONCLUSIVENESS OF ACTION
Any action on matters within the discretion of the Committee shall be
conclusive, final and binding upon all Participants of the Plan and upon
all persons claiming any rights hereunder including Beneficiaries.
32
11.11 PAYMENT OF EXPENSES
The members of the Committee shall serve without compensation for services
as such. However, the Company may reimburse such members for all
necessary and proper expenses incurred in carrying out their duties under
the Plan. The compensation or fees of accountants, counsel, employee
benefit consultants, and other specialists and any other costs of
administering the Plan or Trust, unless paid directly by the Company are
paid from the Trust Fund and will be charged against Participants'
Accounts.
Investment costs and taxes that are paid from the Trust Fund are paid as
follows. Brokerage commissions, transfer taxes, and other charges and
expenses in connection with the purchase and sale of securities are added
to the cost of such securities, as the case may be. There will be no
commissions on transactions with the Company or any other party in
interest. Taxes, if any, applicable to the Trust Fund which are payable
by the Trustee will be charged against Participants' Accounts, other than
any excise tax payable directly by the Trustee pursuant to Section 4975 of
the Code.
11.12 CLAIMS PROCEDURE
Benefits are provided from this Plan through procedures initiated by the
Committee, and the Participant need not file a claim. However, if a
Participant or Beneficiary believes he is entitled to a benefit, or a
benefit different from the one he receives, then the Participant or
Beneficiary may file a claim for the benefit by writing a letter to the
Committee.
If any claim for benefits under the Plan is wholly or partially denied,
the claimant will be given a written notice of the denial within ninety
days after the claim is received. However, if special circumstances
require an extension of time, and written notice of the extension is
furnished to the claimant, he will be given a written notice of the denial
within one hundred and eighty days after the claim is received. Notice of
the denial will state the following information:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which denial is
based;
(c) A description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why the
material or information is necessary.
33
(d) An explanation that a full and fair review by the Committee of the
decision denying the claim may be requested by the Claimant or his
authorized representative by filing with the Company, within sixty
days after the claimant receives the denial, a written request for
review; and
(e) If a request for review is filed, the claimant or his authorized
representative may review pertinent documents and submit issues and
comments in writing within the same sixty day period specified in
paragraph (d) above.
The decision of the Committee upon review will be made by the
Committee's delegate, will be made promptly, and not later than
sixty days after the Committee's receipt of the request for review.
However, if special circumstances require an extension of time for
processing, the claimant will be so notified and a decision will be
rendered as soon as possible, but not later than one hundred and
twenty days after receipt of the request for review. If the claim
is denied, wholly or in part, the claimant will be given a copy of
the decision promptly. The decision will be in writing and will
include specific reasons for the denial, specific references to the
pertinent Plan provisions on which the denial is based and will be
written in a manner calculated to be understood by the claimant.
34
ARTICLE XII
AMENDMENT TO THE PLAN
12.01 RIGHT TO AMEND
The Board, or the Committee if authorized by the Board, has the right to
amend the Plan at any time and, from time to time, to any extent that it
deems advisable. No amendment will increase the duties or
responsibilities of the Trustee without the Trustee's written consent. No
amendment may be made to this Plan which attempts to transfer any part of
the corpus or income of the Trust Fund for purposes other than the
exclusive benefit of Participants and their Beneficiaries. No amendment
may deprive any Participant or Beneficiary of any benefits to which he is
entitled under the Plan with respect to contributions previously made to
the Plan. No amendment may eliminate or reduce an early retirement
benefit or eliminate an optional form of distribution.
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ARTICLE XIII
TERMINATION OF THE PLAN
13.01 RIGHT TO TERMINATE
The Board has the right to terminate the Plan in whole or in part at any
time. In the event of a termination, or partial termination, each
affected Participant will become one hundred percent vested in the value
of all his Accounts.
13.02 CORPORATE REORGANIZATION
In the event the Company is dissolved or liquidated or shall by
appropriate legal proceedings be adjudged bankrupt, or in the event
judicial proceedings of any kind result in the involuntary dissolution of
the Company, the Plan shall be terminated. The merger, consolidation or
reorganization of the Company, or the sale of the Company or of all or
substantially all of its assets or stock, shall not terminate the Plan if
there is delivered to the Company, by its successor or by the purchaser of
all or substantially all of its stock or assets, a written instrument
requesting that it be substituted for the Company and agreeing to perform
all the provisions hereof which the Company is required to perform
hereunder. Upon the receipt of said instrument, with the approval of the
Company, the successor or the purchaser shall be substituted for the
Company herein, and the Company shall be relieved and released from all
obligations of any kind, character or description herein or in any trust
agreement.
13.03 PLAN MERGER AND CONSOLIDATION
In the event that the Plan and Trust Fund merges or consolidates with, or
transfers its assets or liabilities to, any other qualified plan of
deferred compensation, no Participant herein shall, solely on account of
such merger, consolidation or transfer, have an account balance on the day
following such event which is less than his account balance on the day
preceding such event. For the purpose of this Section, a Participant's
account balance shall be calculated based upon the assumption that a plan
termination and distribution of assets occurred on each of the
above-mentioned days. In no event will this provision be construed to
require full vesting upon a merger, consolidation, or transfer of assets
unless the Plan is subsequently partially or wholly terminated or
contributions are completely discontinued.
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ARTICLE XIV
TRUST AND THE TRUSTEE
14.01 BOARD TO SELECT TRUSTEE
The Board will select one or more Trustees to hold and invest the Trust
Fund in accordance with the terms of a trust agreement and/or other
contract. The Trustee must be an individual or individuals, a bank or
trust company incorporated under the laws of the United States or of any
state and qualified to operate as a trustee, a legal reserve life
insurance company, or a combination of such entities. The Board may, from
time to time, change any Trustee then serving under a trust agreement
and/or other contract to another Trustee or elect to terminate a trust
and/or other contract and hold the Plan assets in any other method
acceptable under ERISA.
Any trust agreement and/or other contract are designated as and constitute
a part of the Plan. Any rights which a person has under this Plan are
subject to all of the terms and provisions of the trust agreement and/or
other contract.
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ARTICLE XV
ADOPTION BY AFFILIATE
15.01 AFFILIATE
An Affiliate may become a party to the Plan and Trust Agreement by
adopting the Plan for the benefit of any specified group of its employees,
effective as of the date specified in such adoption:
(a) By filing with the Company a certified copy of a resolution of its
board of directors to that effect, and/or such other instruments as
the Company may require; and
(b) By the Company's filing with the then Trustee a copy of such
resolution, together with a certified copy of resolutions of the
Board approving such adoption.
The Company may require an adopting Affiliate to execute an instrument of
adoption in such form as is acceptable to the Company. Except as provided
below, an employee of an Affiliate shall earn Service only with respect to
periods for which his employer is an Affiliate. Notwithstanding the
above, to the extent explicitly provided by the Company in a stock or
asset acquisition, merger or other similar transaction, an employee of a
Affiliate shall earn Service with respect to periods of employment with
such Affiliate prior to the time it became an Affiliate.
15.02 ACTION BINDING ON PARTICIPATING AFFILIATES
As long as the Company is party to the Plan and the Trust Agreement it
shall be empowered to act thereunder for any Employer in all matters
respecting the Committee and the Trustee and the designation of
Affiliates, and any action taken by the Company with respect thereto shall
automatically include and be binding upon any Employer which is a party to
the Plan.
15.03 TERMINATION OF PARTICIPATION OF AFFILIATE
The Company reserves the right, in its sole discretion and at any time, to
terminate the participation in this Plan of any or all Affiliates. Such
termination shall be effective immediately upon notice of such termination
from the Company to the Trustee and the Affiliate being terminated. In
event of such termination, this Plan shall not terminate, but the portion
of the Plan attributable to the Affiliate shall become a separate Plan,
and the Company shall inform the Trustee of the portion of the Trust Fund
that is then
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attributable to the participation of such terminated Affiliate. Such
portion shall as soon thereafter as is administratively feasible be set
apart by the Trustee as a separate Trust which shall be part of the
separate Plan of such terminated Affiliate.
Thereafter the administration, control and operation of the Plan with
respect to such terminated Affiliate shall be on a separate basis (with
the Affiliate assuming the functions assigned to the Company hereunder) in
accordance with the terms hereof, or as such terms may be amended by
appropriate action of such terminated Affiliate in accordance with the
provisions of Article XII.
39
ARTICLE XVI
TOP-HEAVY PROVISIONS
16.01 DEFINITIONS
Wherever used in this Article XVI, the following words and phrases have
the meaning specified below:
(a) "Accumulated Account" means the total value of an employee's
Accounts as of the Valuation Date which coincides with or
immediately precedes the Determination Date. Accumulated Accounts
includes:
(i) amounts attributable to employee contributions (other than
deductible employee contributions),
(ii) amounts rolled over or transferred directly from a plan
sponsored by an unrelated employer (within the meaning of Code
Section 414(b), (c) or (m)), but only if received by the Plan
before January 1, 1984,
(iii) amounts rolled over or transferred directly from a plan
sponsored by a related employer (within the meaning of Code
Section 414(b), (c) or (m), without regard to when received by
the Plan, and
(iv) as determined in accordance with Code Section 416(g)(3),
distributions to the employee during the Plan Year which
includes the Determination Date and the four immediately
preceding Plan Years, unless already reflected in the
employee's Accounts. The preceding sentence shall also apply
to distributions under a terminated plan which, if it had not
been terminated would have been required to be included in the
Aggregation Group.
Accumulated Accounts will not include any distribution rolled over
or transferred directly to a related employer (within the meaning of
Code Section 414(b), (c) or (m)). With respect to a Nonkey Employee
who was a Key Employee with respect to a plan in a prior year,
Accumulated Accounts will not include any of the employee's
Accounts.
Accumulated Accounts will not include the Account of an employee who
has not performed any service for the Employer during the five-year
period ending on the Determination Date. However, if the employee
again performs services his Account will be included.
40
(b) "Determination Date" means in any Plan Year the last day of the
immediately preceding Plan Year.
(c) "Key Employee" means at any given time an employee, a deceased
employee, or the beneficiary of an employee or a deceased employee
who during the current Plan Year or any of the four immediately
preceding Plan Years is:
(i) an officer of an Employer with annual earnings from the
Employer greater than 50% of the maximum dollar limit under
Code Section 415(b)(1)(a) in effect for the calendar year in
which the Plan Year ends. In any Plan Year, officer will not
include more than the lesser of:
(A) fifty employees, or
(B) the greater of three employees or ten percent of the
greatest number of employees the Employer had during the
current Plan Year or any of the four immediately
preceding Plan Years.
Such limited number of officers will be selected from
the group of all persons otherwise considered officers
under this paragraph (i) in the current Plan Year or
four immediately preceding Plan Years, selecting only
those who had the highest annual earnings in such five
year period;
(ii) an employee who is one of the ten employees of the Employer
having annual compensation from such Employer of more than the
limitation in effect under Section 415(c)(1)(a) of the Code
and owning (or considered as owning within the meaning of
Section 318 of the Code) both more than a 1/2% interest and
the largest interests in such Employer. An employee's
ownership interest during a Plan Year is his greatest
ownership interest at anytime during the Plan Year. If two
employees have the same ownership interest, the employee with
the greater earnings in the Plan Year of such ownership will
be deemed to have the greater ownership interest.
(iii) an employee who owns at least five percent of an Employer; or
(iv) an employee who owns at least one percent of an Employer and
has annual earnings from the Employer of more than $150,000.
41
For purposes of determining the number of officers of the Employer,
all employees of organizations required to be aggregated under Code
Section 414(b), (c) and (m) will be considered employees of the
Employer. For purposes of determining earnings from the Employer,
all earnings, as stated on Form W-2 for the calendar year ending
within the Plan Year, from all organizations required to be
aggregated under Code Section 414(b), (c) and (m) will be treated as
earned from the Employer. For purposes of determining ownership
interest, each entity that would otherwise be aggregated under Code
Section 414(b), (c) and (m) will be treated as a separate Employer.
Ownership includes any interest constructively owned under the
applicable provisions of the Code.
Employee will not include any employee or beneficiary of an employee
who did not have earnings from an Employer during the five year
period ending on the Determination Date.
(d) "Nonkey Employee" means at any given time an employee who is not a
Key Employee.
16.02 DETERMINATION OF TOP HEAVY STATUS - SINGLE PLAN
If this Plan is the only retirement plan qualified under Code Section
401(a) maintained by an Affiliate, the rules of this Section 16.02 will
apply to determine if this Plan is Top Heavy. The Plan will be Top Heavy
during a Plan Year if as of the Determination Date in such Plan Year the
value of the Accumulated Accounts under the Plan of all Key Employees
exceeds sixty percent of the value of Accumulated Accounts under the Plan
of all employees.
16.03 DETERMINATION OF TOP HEAVY STATUS - MULTIPLE PLANS
(a) If an Affiliate maintains more than one retirement plan qualified
under Code Section 401(a), the rules of this Section 16.03 will
apply to determine if this Plan is Top Heavy. This Plan will be Top
Heavy during a Plan Year if the Plan is required to be in the
Aggregation Group on the Plan's Determination Date for such Plan
Year and the Aggregation Group is Top Heavy.
The Aggregation Group is Top Heavy if the value of the Accumulated
Accounts for all Key Employees of all the plans in the group exceeds
sixty percent of the value of the Accumulated Accounts for all
employees of all the plans in the group. The Accumulated Accounts
of each plan will be determined separately as of each plan's
Determination Date and then aggregated by calendar year. If a plan
in the Aggregation Group is a
42
defined benefit plan (as defined in Code Section 4140)), for
purposes of this subsection (a) value of the Accumulated Accounts
means the present value of benefits as defined under the top heavy
provisions of such plan.
(b) The Aggregation Group consists of all the Affiliate's retirement
plans qualified under Code Section 401(a) which are either required
or permitted to be in the Aggregation Group.
A plan is required to be in the Aggregation Group if during the Plan
Year containing the Determination Date or any of the four preceding
Plan Years;
(i) the Plan has at least one Key Employee, or
(ii) the Plan is required to be aggregated with a plan with at
least one Key Employee so that the later plan meets the
requirements of Code Sections 401(a)(4) or 410.
A plan, which has been formally terminated, has ceased crediting
service for benefit accruals and vesting, and has been or is
distributing all plan assets to participants or their beneficiaries
as soon as administratively feasible, is required to be in the
Aggregation Group if it was maintained during the Plan Year
containing the Determination Date or any of the four preceding Play
Years and it would, but for the fact that it terminated, be required
to be in the Aggregation Group pursuant to the preceding sentence.
A plan is permitted to be in the Aggregation Group if it is not
required to be in the Aggregation Group, provided including it does
not prevent the Aggregation Group as a whole from meeting the
requirements of Code Sections 401(a)(4) or 410.
16.04 EFFECT OF TOP HEAVY STATUS
If the Plan is Top Heavy for any Plan Year, the requirements of this
Section 16.04 apply during such Plan Year, superseding all other Plan
provision inconsistent with its terms.
(a) MINIMUM VESTING
The vested portion of a Participant who has completed one Hour of
Service in any Plan Year in which the Plan is Top Heavy is
determined under the schedule designated below in this Section
16.04(a) or the
43
applicable schedules in Section 9.02, whichever is more favorable to
the Participant:
Service Vested Portion
---------- ---------------
Less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 but less than 6 years 80%
6 or more years 100%
In each Plan Year in which the Plan is not Top Heavy, which occurs
immediately after a Plan Year in which the Plan is Top Heavy, an
employee who is participating in the Plan during the Election Period
has the right to elect to continue to be subject to the vesting
schedule in this sub-paragraph (a). The Election Period begins on
the date the Plan is determined not to be Top Heavy and ends on the
later of sixty days after the Plan is determined not to be Top Heavy
or sixty days after the employee is given written notice that the
Plan is no longer Top Heavy.
(b) MINIMUM CONTRIBUTION
On the last day of any Plan Year in which the Plan is Top Heavy an
Employer Contribution will be allocated to the appropriate Account
of each employee who is eligible to participate in the Plan pursuant
to Section 2.01 on such date. The amount of such contribution, when
aggregated with all other contributions allocated to the
Participant's Employer Contribution Account and his pre-tax deferral
account and employer contribution account under the Talbert Medical
Management Holdings Corporation Employee Stock Ownership Plan during
the Plan Year must equal the lesser of:
(i) Three percent of the Participant's earnings, as stated on Form
W-2 for the calendar year ending within such Plan Year, or
(ii) A percent of the Participant's earnings, as defined in
subsection (i) above, equal to the percentage at which
contributions are allocated pursuant to Section 4.02 (or
required to be allocated) for the Plan Year for the Key
Employee for whom such percentage is the highest for the year.
The Employer will make an additional contribution to the Plan
sufficient to make the allocation described above.
44
This Subsection (b) applies without regard to contributions or
benefits under Social Security or any other Federal or State law.
(c) ADJUSTMENT TO LIMITATION ON ANNUAL ADDITIONS
(i) If an Affiliate also maintains a qualified defined benefit
plan (as defined in Code Section 414(j) the denominator of
both the defined benefit plan fraction and defined
contribution plan fraction, as described in Code Section
415(e), for the Limitation Year ending in such Plan Year will
be adjusted by substituting one for one and twenty-five one
hundredths in each place the figure occurs.
(ii) The adjustments referred to in paragraph (i) are not required
if:
(1) the Plan would not be Top Heavy if ninety percent were
substituted for sixty percent in Sections 16.02 and
16.03, and
(2) Subsection (b)(i) above is adjusted by substituting four
percent for three percent where the figure occurs.
(iii) The adjustments referred to in paragraph (i) above do not
apply to any Participant as long as no Employer Contributions,
forfeitures or Employee After-Tax Contributions are allocated
to such Participant's Accounts and the Participant does not
accrue any benefits under the defined benefit plan.
45
ARTICLE XVII
MISCELLANEOUS
17.01 VOLUNTARY PLAN
The Plan is purely voluntary on the part of the Company and Employer and
neither the establishment of the Plan nor any amendment thereof, nor the
creation of any fund or account, nor the payment of any benefits shall be
construed as giving any person a legal or equitable right as against the
Company, an Employer, the Trustee or the Committee unless the same shall
be specifically provided for in this Plan or conferred by affirmative
action of the Committee or the Company in accordance with the terms and
provisions of this Plan. Nor shall such actions be construed as giving
any Employee or Participant the right to be retained in the service of the
Employer. All Employees and/or Participants shall remain subject to
discharge to the same extent as though this Plan had not been established.
17.02 NONALIENATION OF BENEFITS
Participants and their Beneficiaries shall be entitled to all the benefits
specifically set out under the terms of the Plan, but neither said
benefits nor any of the property rights therein shall be assignable or
distributable to any creditor or other claimant of such Participant. A
Participant shall not have the right to anticipate, assign, pledge,
accelerate or in any way dispose of or encumber any of the monies or
benefits or other property which may be payable or become payable to such
Participant or his Beneficiary. The preceding sentence shall also apply
to the creation, assignment, or recognition of a right to any benefit
payable with respect to Participant pursuant to a domestic relations
order, unless such order is determined to be a qualified domestic
relations order, as defined in Code Section 414(p).
17.03 INABILITY TO RECEIVE BENEFITS
If the Committee receives evidence that (a) a person entitled to receive
any payment under the Plan is physically or mentally incompetent to
receive payment and to give a valid release therefore, and (b) another
person or an institution is then maintaining or has custody of such
person, and no guardian, committee or other representative of the estate
of such person has been duly appointed by a court of competent
jurisdiction, such payment may be made to such other person or institution
referred to in (b) above. The release to such other person or institution
shall be a valid and complete discharge for the payment.
46
17.04 LOST PARTICIPANTS
If the Committee is unable within two years after a distribution becomes
due, and after reasonable and diligent effort, to locate a Participant or
Beneficiary who is entitled to payment under the Plan, the payment due
such person shall become a forfeiture; provided, however, that if the
Participant or Beneficiary later files a claim for his benefit it shall be
reinstated. Notification by certified or registered mail to the last
known address of the Participant or Beneficiary shall be deemed a
reasonable and diligent effort to locate such person.
17.05 LIMITATION OF RIGHTS
Nothing in the Plan expressed or implied is intended or shall be construed
to confer upon or give to any person, firm or association other than the
Company, an Employer, the Participant and their successors in interest any
right, remedy or claim under or by reason of this Plan.
17.06 ABSENCE OF GUARANTY
Each Participant (and his Beneficiary) assumes all risk connected with any
decreased in the market value of any assets held under the Plan. Neither
the Company nor the Employer in any way guarantees the Trust Fund from
loss or depreciation, or the payment of any amount that may be or become
due to any person from the Trust Fund. The Trust Fund shall be the sole
source of distributions to be made under this Plan.
17.07 INVALID PROVISIONS
In case any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining
parts of this Plan, but this Plan shall be construed and enforced as if
said illegal and invalid provisions had never been inserted herein.
17.08 ONE PLAN
This Plan may be executed in any number of counterparts, each of which
shall be deemed an original and said counterparts shall constitute but one
and the same instrument and may be sufficiently evidenced by any one
counterpart.
17.09 GOVERNING LAW
The Plan shall be governed by and construed in accordance with the Federal
laws governing employee benefit plans qualified under the Code and in
accordance with the laws of
47
the State of California where such laws are not preempted by the
aforementioned federal laws.
48
ARTICLE XVIII
DIRECT ROLLOVERS
18.01 DIRECT ROLLOVERS
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Article, if a
Distributee will receive an Eligible Rollover Distribution of at
least $200, the Distributee may elect, at the time and in the manner
prescribed by the Committee, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover; provided,
however, that a Distributee may not elect to have an Eligible
Rollover Distribution of less than $500 paid directly to an Eligible
Retirement Plan unless the Distributee elects to have his or her
entire Eligible Rollover Distribution paid directly to the Eligible
Retirement Plan.
18.02 DEFINITIONS
(a) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the
extent such distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified plan described in Section 401(a) of the Code,
that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
49
(c) Distributee: A distributee includes an employee or former employee.
In addition, the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
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ARTICLE XIX
EXECUTION
IN WITNESS WHEREOF, the Company has caused its duly authorized
officer to execute this Plan on this ____ day of __________, 1997.
TALBERT MEDICAL MANAGEMENT HOLDINGS
CORPORATION
By: ______________________________
Its: ______________________________
51