FOR THE QUARTER ENDED COMMISSION FILE NUMBER
JUNE 30, 2000 1-10269
ALLERGAN, INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
95-1622442
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Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
(1) X yes no
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(2) X yes no
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INDEX
Page
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PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
(A) Condensed Consolidated Statements of Earnings --
Three Months and Six Months Ended
June 30, 2000 and June 25, 1999 3
(B) Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999 4
(C) Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2000 and June 25, 1999 5
(D) Notes to Condensed Consolidated Financial Statements 6-11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12-15
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 16-17
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 21
Signature 22
Exhibits
Allergan, Inc.
Condensed Consolidated Statements of Earnings
(In millions, except per share amounts)
Three months Six months
Ended Ended
---------------------- ----------------------
June 30, June 25, June 30, June 25,
2000 1999 2000 1999
------- ------- ------- -------
Product Sales
Net sales $ 404.1 $ 367.8 $ 780.3 $ 679.1
Cost of sales 112.2 113.5 215.6 203.2
------- ------- ------- -------
Product gross margin 291.9 254.3 564.7 475.9
Research Services
Research service revenues,
primarily from a related party 13.8 11.1 29.4 20.9
Cost of research services 13.0 10.5 27.8 19.6
------- ------- ------- -------
Research services margin 0.8 0.6 1.6 1.3
Operating costs and expenses
Selling, general and
administrative 168.1 152.5 333.6 296.4
Research and development 51.7 38.2 97.4 69.9
Technology fees from
related party (0.8) (1.7) (1.6) (3.4)
------- ------- ------- -------
Operating income 73.7 65.9 136.9 114.3
Nonoperating income (expense)
Interest income 4.9 3.8 8.8 7.1
Interest expense (5.5) (3.2) (10.4) (6.5)
Gain on investments, net 0.6 0.6 0.6 2.1
Other, net 0.6 (0.8) 0.5 --
------- ------- ------- -------
0.6 0.4 (0.5) 2.7
------- ------- ------- -------
Earnings before income taxes
and minority interest 74.3 66.3 136.4 117.0
Provision for income taxes 22.3 19.4 40.9 35.1
Minority interest expense 0.1 -- 0.1 --
------- ------- ------- -------
Net earnings $ 51.9 $ 46.9 $ 95.4 $ 81.9
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Basic earnings per share $ 0.40 $ 0.35 $ 0.73 $ 0.62
======= ======= ======= =======
Diluted earnings per share $ 0.39 $ 0.34 $ 0.72 $ 0.60
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See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Balance Sheets
(In millions, except share data)
June 30, December 31,
2000 1999
--------- -----------
ASSETS
Current assets:
Cash and equivalents $ 302.4 $ 162.9
Trade receivables, net 283.0 253.2
Inventories 120.7 130.7
Other current assets 127.9 150.7
-------- --------
Total current assets 834.0 697.5
Investments and other assets 157.5 160.8
Property, plant and equipment, net 335.3 330.3
Goodwill and intangibles, net 143.4 150.5
-------- --------
Total assets $1,470.2 $1,339.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 84.1 $ 85.3
Accounts payable 76.3 80.5
Accrued expenses 159.7 170.7
Income taxes 63.5 83.4
-------- --------
Total current liabilities 383.6 419.9
Long-term debt 259.1 208.8
Other liabilities 79.6 75.8
Commitments and contingencies -- --
Minority interest 0.2 0.1
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued -- --
Common stock, $.01 par value; authorized
300,000,000 shares; issued 134,255,000 1.3 1.3
Additional paid-in capital 266.4 245.5
Accumulated other comprehensive loss (54.7) (49.3)
Retained earnings 701.8 651.1
-------- --------
914.8 848.6
Less - treasury stock, at cost
(3,273,000 and 4,436,000 shares) (167.1) (214.1)
-------- --------
Total stockholders' equity 747.7 634.5
-------- --------
Total liabilities and
stockholders' equity $1,470.2 $1,339.1
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See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(In millions)
Six months
Ended
-----------------------------
June 30, June 25,
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 95.4 $ 81.9
Non-cash items included in net earnings:
Depreciation and amortization 40.8 36.3
Amortization of prepaid royalties 1.8 1.6
Gain on investments, net (0.6) (2.1)
Deferred income taxes 3.8 (3.9)
Loss (Gain) on disposal of assets 0.9 (0.3)
Expense of stock compensation plans 3.8 6.5
Adjustment in reporting foreign subsidiaries (3.2) (2.4)
Changes in assets and liabilities:
Trade receivables (35.5) (11.5)
Inventories 8.8 (9.5)
Accounts payable (5.1) 11.4
Accrued expenses (5.1) 6.0
Income taxes (1.9) 20.6
Other 9.4 2.6
------ ------
Net cash provided by operating activities 113.3 137.2
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (27.9) (23.0)
Disposals of property, plant and equipment 0.4 4.0
Proceeds from sale of investments 2.6 7.5
Other, net (6.2) (22.0)
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Net cash used in investing activities (31.1) (33.5)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders (20.9) (18.6)
Net borrowings (repayments) under commercial
paper obligations 65.2 (13.2)
Net (repayments) borrowings of notes payable (9.4) 8.6
Sale of stock to employees 94.8 20.7
Increase in long term debt -- 3.0
Decrease in long-term debt (1.8) (1.2)
Payments to acquire treasury stock (69.6) (63.0)
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Net cash provided by (used in) financing activities 58.3 (63.7)
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Effect of exchange rates on cash and equivalents (1.0) (6.0)
------ ------
Net increase in cash and equivalents 139.5 34.0
Cash and equivalents at beginning of period 162.9 181.6
------ ------
Cash and equivalents at end of period $302.4 $215.6
====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the six months ended for
Interest (net of capitalization) $ 10.5 $ 5.4
====== ======
Income taxes $ 27.8 $ 19.2
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See accompanying notes to condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by generally accepted accounting principles and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 1999. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000.
2. In December 1999, the United States Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101 - "Revenue Recognition in Financial Statements," as amended, effective October 1, 2000. SAB No. 101 summarizes certain of the staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. During the quarter ended June 30, 2000, the Company implemented SAB No. 101 and there was no material impact on its financial statements.
3. On October 21, 1999, the Company's Board of Directors approved a two for one stock split in the form of a 100% stock dividend, effective on December 9, 1999. All share and per share data is stated to reflect the split. Additionally, at the Annual Meeting on April 26, 2000, the stockholders approved an amendment to the Company's Certificate of Incorporation to increase the aggregate number of common stock shares authorized from 150,000,000 to 300,000,000.
4. Components of inventories were:
June 30, December 31,
2000 1999
-------- ------------
(in millions)
Finished goods $ 81.4 $ 87.5
Work in process 22.3 13.3
Raw materials 17.0 29.9
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Total $120.7 $130.7
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5. Income taxes are determined using an estimated annual effective tax rate, which is less than the U.S. Federal statutory rate, primarily because of lower tax rates in Puerto Rico and in certain non U.S. jurisdictions. Withholding and U.S. taxes have not been provided for unremitted earnings of certain non U.S. subsidiaries because such earnings are or will be reinvested in operations outside the United States, or will be offset by appropriate credits for foreign income taxes paid.
6. The Company is involved in various litigation and claims arising in the normal course of business. The Company's management believes that the ultimate disposition of any of the currently pending lawsuits would not have a material adverse effect on the consolidated financial position and results of operations of the Company.
Notes to Condensed Consolidated Financial Statements (Continued)
7. On July 25, 2000, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable September 15, 2000 to stockholders of record on August 25, 2000.
8. The following table presents the computation of basic and diluted earnings per share:
Second Quarter
--------------------------------------------------------------------------------------
2000 1999
(In millions, ----------------------------------------- -----------------------------------------
except per share Income Shares Per-Share Income Shares Per-Share
data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Computation of basic EPS:
Income available to common
stockholders $51.9 130.3 $0.40 $46.9 133.0 $0.35
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Effect of dilutive options 3.5 3.1
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Computation of diluted EPS:
Income available to common
stockholders assuming exercises $51.9 133.8 $0.39 $46.9 136.1 $0.34
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Six Months
--------------------------------------------------------------------------------------
2000 1999
(In millions, ----------------------------------------- -----------------------------------------
except per share Income Shares Per-Share Income Shares Per-Share
data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Computation of basic EPS:
Income available to common
stockholders $95.4 130.1 $0.73 $81.9 132.9 $0.62
===== =====
Effect of dilutive options 3.1 3.2
----- -----
Computation of diluted EPS:
Income available to common
stockholders assuming exercises $95.4 133.2 $0.72 $81.9 136.1 $0.60
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Notes to Condensed Consolidated Financial Statements (Continued)
Options to purchase 6,800 shares of common stock at an exercise price of $72.13 per share were outstanding at June 30, 2000. Additionally, options to purchase 2,200,000 shares of common stock at an exercise price of $55.00 were outstanding as of June 25, 1999. The 6,800 options at June 30, 2000 and the 2,200,000 options at June 25, 1999 were not included in the computation of diluted earnings per share at June 30, 2000 and June 25, 1999, respectively, because the effect would be antidilutive.
9. The following table summarizes components of comprehensive income for the quarters and six months ended:
Second Quarter
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(in millions) 2000 1999
---------------------------------------- ---------------------------------------
Tax Tax
Before-tax (expense) Net-of-tax Before-tax (expense) Net-of-tax
amount or benefit amount amount or benefit amount
---------- ---------- ---------- ---------- ---------- ----------
Foreign currency translation
adjustments $(3.1) $ -- $(3.1) $ 3.0 $ -- $ 3.0
Unrealized holding gains
arising during period 0.6 (0.2) 0.4 8.3 (2.9) 5.4
Reclassification adjustment for
net gains realized in net income (0.6) 0.2 (0.4) (0.6) 0.2 (0.4)
----- ----- ----- ----- ------ -----
Other comprehensive income (loss) $(3.1) $ -- (3.1) $10.7 $(2.7) 8.0
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Net earnings 51.9 46.9
----- -----
Total other comprehensive income $48.8 $54.9
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Notes to Condensed Consolidated Financial Statements (Continued)
(in millions) June 30, 2000 June 25, 1999
----------------------------------------- --------------------------------------
Tax Tax
Before-tax (expense) Net-of-tax Before-tax (expense) Net-of-tax
amount or benefit amount amount or benefit amount
---------- ---------- ---------- ---------- ---------- ----------
Foreign currency translation
adjustments $(5.5) $ -- $(5.5) $(27.4) -- $(27.4)
Unrealized holding gains
arising during period 0.7 (0.2) 0.5 5.2 $(1.8) 3.4
Reclassification adjustment
for net gains realized in
net income (0.6) 0.2 (0.4) (2.1) 0.7 (1.4)
----- ----- ----- ------ ----- -----
Other comprehensive loss $(5.4) $ -- (5.4) $(24.3) $(1.1) (25.4)
===== ===== ====== =====
Net earnings 95.4 81.9
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Total other comprehensive income $90.0 $56.5
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10. Business Segment Information
The Company operates in Regions or geographic operating segments. In accordance with SFAS No. 131, the United States information is presented separately as it is the Company's headquarters country, and U.S. sales represented 50.0% and 48.8% of total product net sales for the quarters ended June 30, 2000 and June 25, 1999, respectively, and 52.5% and 49.1% of total product net sales for the six month periods ended June 30, 2000 and June 25, 1999, respectively. No other country, or single customer, generates over 10% of total product net sales. Operations for the Europe Region also include sales to customers in Africa and the Middle East, and operations in the Asia Pacific Region include sales to customers in Australia and New Zealand.
Operating income attributable to each operating segment is based upon the management assignment of costs to such regions. Operating income was determined for each operating segment using a cost of sales amount which included the manufacturing standard cost of goods produced by the Company's manufacturing operations (or the cost to acquire goods from third parties), freight, duty and local distribution costs, royalties and charges for corporate services and asset utilization.
Notes to Condensed Consolidated Financial Statements (Continued)
Income from manufacturing operations is not assigned to geographic regions because most manufacturing operations produce products for more than one region. Research and Development costs are general corporate costs.
Identifiable assets are assigned by region based upon management responsibility for such items. Corporate assets are primarily cash and equivalents, goodwill and intangibles, and long-term investments. Assets assigned to segments have not changed materially since December 31, 1999.
GEOGRAPHIC OPERATING SEGMENTS
Net Sales Operating Income
------------------------- ------------------------
2nd Qtr. 2nd Qtr. 2nd Qtr. 2nd Qtr.
(in millions) 2000 1999 2000 1999
------------------------------------------------------------------- ------------------------
United States $201.0 $178.0 $ 84.6 $ 69.6
Europe 96.5 98.0 28.7 24.4
Asia Pacific 63.0 53.3 11.3 5.8
Other 42.7 36.7 7.7 9.2
----------------------- ----------------------
Segments total 403.2 366.0 132.3 109.0
Manufacturing operations 0.9 1.8 32.8 34.4
Research and development (51.7) (38.1)
Research services margin 0.8 0.7
Elimination of inter-company profit (48.4) (51.5)
General corporate 7.9 11.4
------------------------ ----------------------
Total $404.1 $367.8 $ 73.7 $ 65.9
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Net Sales Operating Income
------------------------ -----------------------
Six Months Ended Six Months Ended
------------------------ -----------------------
June 30, June 25, June 30, June 25,
(in millions) 2000 1999 2000 1999
------------------------------------------------------------------- -----------------------
United States $407.9 $330.6 $176.0 $ 123.9
Europe 180.2 184.4 45.8 47.4
Asia Pacific 109.6 93.4 10.6 6.6
Other 80.5 67.3 11.3 12.6
----------------------- ----------------------
Segments total 778.2 675.7 243.7 190.5
Manufacturing operations 2.1 3.4 67.5 61.8
Research and development (97.4) (69.9)
Research services margin 1.6 1.3
Elimination of inter-company profit (96.5) (94.0)
General corporate 18.0 24.6
----------------------- ----------------------
Total $780.3 $679.1 $136.9 $114.3
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11. Special Charges
The Company maintains specific current and non-current liabilities at June 30, 2000 for restructuring charges recognized in 1998 and 1996. For the three and six month periods ended June 30, 2000, the Company utilized approximately $0.7 million and $3.3 million, respectively, of accrued
Notes to Condensed Consolidated Financial Statements (Continued)
liabilities specific to both the 1998 and 1996 restructuring. This spending is primarily associated with payments made to involuntarily terminated employees related to continued workforce reductions in identified manufacturing facilities. At June 30, 2000, the Company maintained approximately $9.1 million of accrued liabilities related to the 1998 and 1996 restructurings.
12. New and Proposed Accounting Standard
In June 1998, Statement of Financial Accounting Standards No. 133 - "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133) was issued, as amended, and is effective for all periods of fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company has not determined the impact that SFAS No. 133 will have on its financial statements and believes that such determination will not be meaningful until closer to the date of initial adoption.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2000
RESULTS OF OPERATIONS
The following table compares 2000 and 1999 net sales by Product Line for the second quarter and year-to-date periods:
Three Months Six Months
Ended Ended
---------------------- ----------------------
Net Sales by Product Line June 30, June 25, June 30, June 25,
($ millions): 2000 1999 2000 1999
-------- -------- ------- --------
Specialty pharmaceuticals
Eye Care Pharmaceuticals $173.9 $154.1 $353.0 $283.5
Skin Care 16.5 22.8 32.2 41.7
BOTOX(R)/Neuromuscular 60.1 42.7 112.1 78.8
------ ------ ------ ------
250.5 219.6 497.3 404.0
Medical devices and OTC products
Ophthalmic Surgical 65.1 56.7 121.6 104.1
Contact Lens Care 88.5 91.5 161.4 171.0
------ ------ ------ ------
Total Net Sales $404.1 $367.8 $780.3 $679.1
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For the quarter ended June 30, 2000 total net sales increased by $36.3 million or 10% to $404.1 million as compared to the second quarter of 1999. Net sales for the six months ended June 30, 2000 were $780.3 million, a 15% increase from the comparable 1999 amount.
The impact of foreign currency changes compared to the comparable prior year period decreased net sales by $7.4 million or 2% for the quarter ended June 30, 2000 and by $12.7 million or 2% for the six months ended June 30, 2000. At constant currency rates, sales increased $43.7 million or 12% during the quarter, and $113.9 million or 17% for the six months ended June 30, 2000 compared with the same periods last year.
Sales in the U.S. were 50% of total product net sales for the quarter ended June 30, 2000, which represents a 1.2 percentage point increase over the 48.8% rate for the second quarter of 1999. For the six months ended June 30, 2000, sales in the U.S. were 52.5% of total product net sales which represents a 3.4 percentage point increase over the 49.1% rate for the first six months of 1999. The increase in the mix of U.S. sales as a percentage of total product net sales was primarily attributable to the increase in U.S. Eye Care Pharmaceutical sales.
Eye Care Pharmaceutical and Botox(R) Purified Neurotoxin Complex sales were reduced from the amounts that would have been reported at constant currency rates by $5.2 million and $1.0 million, respectively, in the second quarter and by $7.8 million and $1.6 million, respectively, in the first six months of 2000. This was primarily a result of the weakness in the Euro denominated currencies in 2000. Ophthalmic Surgical and Contact Lens Care sales were reduced from the amounts that would have been reported at constant currency rates by $0.8 million and $0.4 million, respectively, in
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2000 (Continued)
RESULTS OF OPERATIONS (Continued)
the second quarter and by $1.9 million and $1.4 million, respectively, in the first six months of 2000. This was primarily a result of the weakness in Euro denominated currencies partially offset by the strengthening of the Japanese yen in 2000.
The $36.3 million increase in net sales in the second quarter and the $101.2 million increase in the first six months of 2000 were primarily the result of increases in sales in three product lines. Eye Care Pharmaceutical sales increased by $19.8 million in the second quarter and $69.5 million in the first six months of 2000. Sales of Botox(R) Purified Neurotoxin Complex increased by $17.4 million in the second quarter and $33.3 million in the first six months of 2000. Surgical sales increased by $8.4 million in the second quarter and $17.5 million in the first six months of 2000. Eye Care Pharmaceutical sales increased primarily because of growth in sales of Alphagan(R) ophthalmic solution. Botox(R) sales increased as a result of strong growth in both the United States and international markets. Allergan believes it currently possesses over 80 percent of the worldwide market for neurotoxins including Botox(R). Later this year, a competitor is expected to introduce a competing neurotoxin. While Allergan expects this new competition to cause the market for neurotoxins to expand, the rate of growth of Botox(R) sales may decrease in the future as a result of this new competition. Surgical sales increased primarily as a result of increased sales of silicone intraocular lenses (IOLs) and strong sales of Allergan's acrylic IOL.
Allergan's gross margin percentage for the second quarter of 2000 was 72.2% of net sales, which represents a 3.1 percentage point increase from the 69.1% rate for the second quarter of 1999. The gross margin percentage for the six months ended June 30, 2000 was 72.4% of net sales, which represents a 2.3 percentage point increase from the 70.1% rate for the first six months of 1999. The gross margin percentage increased in 2000 compared to the comparable periods in 1999 primarily as a result of shifts in the mix of products sold to higher margin products. Higher margin Eye Care Pharmaceutical and Botox(R) Purified Neurotoxin Complex sales represented a greater percentage of 2000 sales compared to 1999. Gross margin in dollars increased over the second quarter of 1999 by $37.6 million or 15% as a result of the 10% increase in net sales and the 3.1 percentage point increase in gross margin percentage. For the first six months of 2000 gross margin in dollars increased over the comparable period of 1999 by $88.8 million or 19% as a result of the 15% increase in net sales and the 2.3 percentage point increase in gross margin percentage.
Operating income in the second quarter of 2000 of $73.7 million was $7.8 million, or 12%, higher than operating income in the second quarter of 1999 of $65.9 million. The increase was the result of the $37.6 million increase in gross margin in the second quarter of 2000 offset by a $16.5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2000 (Continued)
RESULTS OF OPERATIONS (Continued)
million increase in selling, general and administrative expense, and a $13.5 million increase in research and development. Operating income for the six months ended June 30, 2000 of $136.9 million was $22.6 million, or 20% higher than operating income in the first six months of 1999 of $114.3 million. The increase was the result of the $88.8 million increase in gross margin in 2000 offset by a $39.0 million increase in selling, general and administrative expense, and a $27.5 million increase in research and development. Selling, general, and administrative expenses increased for the second quarter and for the six months ended June 30, 2000 primarily as a result of increases in spending on promotion, selling and marketing activities in 2000. Research and development increased for the second quarter and for the six months ended June 30, 2000 as a result of increased research activity.
Net earnings of $51.9 million in the second quarter of 2000 increased by $5.0 million or 11% over net earnings of $46.9 million for the second quarter of 1999. The increase was the result of the $7.8 million increase in operating income and a $2.4 million favorable change in the effects of foreign exchange gains and losses. This was somewhat offset by a $1.2 million increase in net interest expense, and an increase in income taxes of $2.9 million resulting from the increase in earnings before income tax.
Net earnings of $95.4 million in the first six months of 2000 represent a $13.5 million, or 17% increase over net earnings of $81.9 million in the first six months of 1999. The 2000 increase is primarily the result of the $22.6 million increase in operating income and a $2.5 million favorable change in the effects of foreign currency exchange gains and losses. This was partially offset by a $2.2 million increase in net interest expense, an increase in the loss on fixed asset disposals of $1.2 million, a decrease in the gains on sales of investments of $1.5 million, and a $5.8 million increase in income taxes resulting from the increase in earnings before income tax.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had long-term credit facilities and a medium term note program. The credit facilities allow for borrowings of up to $63.3 million through 2001, $14.1 million through 2002, and $276.5 million through 2003. The note program allows the Company to issue up to an additional $35 million in notes on a non-revolving basis. Borrowings under the credit facilities are subject to certain financial and operating covenants, including a requirement that the Company maintain certain financial ratios, and other customary covenants for credit facilities of similar kind. As of June 30, 2000, the Company had $102.4 million in borrowings under six of the credit facilities, $89.0 million in borrowings under the note program, and commercial paper borrowings of $112.3 million. As of June 30, 2000, the Company has classified $112.3 million of commercial paper borrowings as long-term debt based upon the Company's
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2000
LIQUIDITY AND CAPITAL RESOURCES (Continued)
ability to maintain such debt under terms of the credit facilities described above.
The net cash provided by operating activities for the six months ended June 30, 2000 was $113.3 million. The net cash provided by operating activities for the six months ended June 25, 1999 was $137.2 million. The decrease in net cash provided by operating activities of $23.9 million is primarily the result of an increase in trade accounts receivable of $35.5 million offset by the increase in net earnings of $13.5 million.
Cash used in investing activities for the six months ended June 30, 2000 was $31.1 million. Cash used in investing activities for the six months ended June 25, 1999 was $33.5 million. The Company invested $27.9 million in new facilities and equipment during the six months ended June 30, 2000 compared to $23.0 million during the same period in 1999.
Cash provided by financing activities was $58.3 million for the six months ended June 30, 2000 compared to cash used in financing activities of $63.7 million during the same period in 1999. The increase in net cash provided by financing activities of $122 million is primarily the result of the sale of stock to employees of $94.8 million. The Company is uncertain as to the level of future stock purchases by employees. Commercial paper borrowings, net of repayments of debt totaled $65.2 million for the six months ended June 30, 2000. Commercial paper repayments of debt, net of borrowings, totaled $13.2 million for the six months ended June 25, 1999. The amounts in both years include dividend outflows of $20.9 million in 2000 and $18.6 million in 1999. The 2000 amount of cash used in financing activities includes $69.6 million used to repurchase treasury stock.
The Company believes that the net cash provided by operating activities, supplemented as necessary with the $286.5 million of available borrowings under the Company's existing credit facilities, will provide it with sufficient resources to meet working capital requirements, debt service and other cash needs over the next year. The Company believes it will spend approximately $9.1 million on accrued restructuring costs during the remainder of 2000 and 2001.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, operations of the Company are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates. The Company addresses these risks through controlled risk management that includes the use of derivative financial instruments to hedge or reduce these exposures. The Company does not enter into financial instruments for trading or speculative purposes.
To ensure the adequacy and effectiveness of the Company's interest rate and foreign exchange hedge positions, the Company continually monitors its interest rate swap positions and foreign exchange forward and option positions both on a stand-alone basis and in conjunction with its underlying interest rate and foreign currency exposures, respectively, from an accounting and economic perspective. However, given the inherent limitations of forecasting and the anticipatory nature of the exposures intended to be hedged, there can be no assurance that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in either interest or foreign exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect the Company's consolidated operating results and financial position.
Interest Rate Risk
The Company's interest income and expense is most sensitive to fluctuations in the general level of U.S. and Japan interest rates. Changes in U.S. and Japan interest rates affect the interest earned on the Company's cash and equivalents, interest expense on the Company's debt as well as costs associated with foreign currency hedges.
The Company's exposure to market risk for changes in interest rates results from the Company's long-term debt obligations and related derivative financial instruments. The Company enters into interest rate swap agreements to reduce the impact of interest rate changes on its floating rate long-term debt. These derivative financial instruments allow the Company to make long-term borrowings at floating rates and then swap them into fixed rates that are anticipated to be lower than those available to the Company if fixed-rate borrowings were made directly.
The Company's interest rate swaps qualify as accounting hedges and generally require the Company to pay a fixed interest rate and receive a floating rate of interest without exchanges of the underlying notional amounts. As a result, these swaps effectively convert the Company's floating-rate debt to fixed rates and generally qualify for hedge accounting treatment.
The impact of interest rate risk management activities on income during the quarter ended June 30, 2000, and the amount of deferred gains and losses from interest rate risk management transactions at June 30, 2000 were not material.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
Foreign Currency Risk
Overall, the Company is a net recipient of currencies other than the U.S. dollar and, as such, benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect the Company's consolidated sales and gross margins as expressed in U.S. dollars.
From time to time, the Company enters into foreign currency forward and option contracts to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on its core business issues and challenges. Accordingly, the Company enters into various contracts, which change in value as foreign exchange rates change, to offset the effect of changes in the value of foreign currency assets and liabilities, commitments and anticipated foreign currency denominated sales and operating expenses. The Company enters into foreign currency forward and option contracts in amounts between minimum and maximum anticipated foreign exchange exposures, generally for periods not to exceed one year. The gains and losses on these contracts offset changes in the value of the related exposures.
All of the Company's outstanding foreign exchange forward contracts were entered into to protect the value of intercompany borrowings denominated in currencies other than the lender's functional currency. These forward contracts qualify for hedge accounting treatment. As such, gains and losses recognized upon settlement of the forward contracts offset losses and gains, respectively, on the underlying intercompany receivables being hedged.
Probable but not firmly committed transactions are comprised of sales of the Company's products and purchases of raw material in currencies other than the U.S. Dollar. A majority of these sales are made through the Company's subsidiaries in Europe, Asia (particularly Japan), Canada and Australia. The Company purchases foreign exchange forward and option contracts to hedge the currency exchange risks associated with these probable but not firmly committed transactions. The duration of foreign exchange hedging instruments, whether for firmly committed transactions or for probable but not firmly committed transactions, currently does not exceed one year.
All of the Company's purchased options were entered into to protect the value of anticipated, but not firmly committed transactions in Japan, Europe, Australia and Canada. The premium cost of purchased foreign exchange option contracts are recorded in Other Current Assets and amortized over the life of the option.
In January 2001, the Company is required to adopt Statement of Financial Accounting Standards No. 133 - "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), as amended. The Company has not determined the impact that SFAS No. 133 will have on its financial statements and believes that such determination will not be meaningful until closer to the date of initial adoption.
CERTAIN FACTORS AND TRENDS AFFECTING ALLERGAN AND ITS BUSINESSES
The Company believes that certain statements made by the Company in this report and in other reports and statements released by the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as comments which express the Company's opinions about trends and factors which may impact future operating results. Disclosures that use words such as the Company "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by the Company about its businesses including, without limitation, the factors discussed below.
o The pharmaceutical industry and other health care-related industries continue to experience consolidation, resulting in larger, more diversified companies with greater resources than the Company. Among other things, these larger companies can spread their research and development costs over much broader revenue bases than Allergan and can influence customer and distributor buying decisions.
o The Company is currently the only manufacturer of an FDA-approved neurotoxin. The Company is aware, however, of another company seeking FDA approval of a neurotoxin. If such approval is granted, the Company's sales of Botox(R) Purified Neurotoxin Complex could be materially and negatively impacted.
o The manufacturing process to create bulk toxin raw material necessary to produce Botox(R) Purified Neurotoxin Complex is technically complicated. Any failure of the Company to maintain an adequate supply of bulk toxin and finished product could result in an interruption in the supply of Botox(R) Purified Neurotoxin Complex and a resulting decrease in sales of the product.
o The Company's Contact Lens Care business continues to be impacted by trends in the contact lens and lens care marketplace, including technological and medical advances in surgical techniques for the correction of vision impairment. Cheaper one-bottle chemical disinfection systems continue to gain popularity among soft contact lens wearers instead of peroxide-based lens care products which historically have been Allergan's strongest family of lens care products. Also, the growing use and acceptance of daily contact lenses and laser-correction procedures, along with the other factors above, could have the effect of reducing demand for lens care products generally. While the Company believes it has established appropriate marketing and sales plans to mitigate the impact of these trends upon its Contact Lens Care business, no assurance can be given in this regard.
CERTAIN FACTORS AND TRENDS AFFECTING ALLERGAN AND ITS BUSINESSES (Continued)
o The Company has in the past been, and continues to be, subject to product liability claims. In addition, the Company has in the past and may in the future recall or issue field corrections related to its products due to manufacturing deficiencies, labeling errors or other safety or regulatory reasons. There can be no assurance that the Company will not experience material losses due to product liability claims or product recalls or corrections.
o Sales of the Company's surgical and pharmaceutical products have been and are expected to continue to be impacted by continuing pricing pressures resulting from various government initiatives as well as from the purchasing and operational decisions made by managed care organizations.
o A current political issue of debate in the United States is the propriety of expanding Medicare coverage to include pharmaceutical products. If measures to accomplish that coverage become law, and if these measures impose price controls on the Company's products, the Company's revenues and financial condition are likely to be materially and adversely affected.
o The Company collects and pays a substantial portion of its sales and expenditures in currencies other than the U.S. dollar. Therefore, fluctuations in foreign currency exchange rates affect the Company's operating results. The Company can provide no assurance that future exchange rate movements will not have a material adverse effect on the Company's sales, gross profit or operating expenses.
o Patent protection is generally important in the pharmaceutical industry. Therefore, Allergan's future financial success may depend in part on obtaining patent protection for technologies incorporated into products. No assurance can be given that patents will be issued covering any products, or that any existing patents or patents issued in the future will be of commercial benefit. In addition, it is impossible to anticipate the breadth or degree of protection that any such patents will afford, and there can be no assurance that any such patents will not be successfully challenged in the future. If the Company is unsuccessful in obtaining or preserving patent protection, or if any products rely on unpatented proprietary technology, there can be no assurance that others will not commercialize products substantially identical to such products. Furthermore, although Allergan has a corporate policy not to infringe the valid and enforceable patents of others, Allergan cannot provide assurances that its products will not infringe patents held by third parties. In such event, licenses from such third parties may not be available or may not be available on commercially attractive terms.
CERTAIN FACTORS AND TRENDS AFFECTING ALLERGAN AND ITS BUSINESSES (Continued)
o The Company's business is also subject to other risks generally associated with doing business abroad, such as political unrest and changing economic conditions with countries where the Company's products are sold or manufactured. Management cannot provide assurances that it can successfully manage these risks or avoid their effects.
o The Company sells its pharmaceutical products primarily through wholesalers. Wholesaler purchases may exceed customer demand, resulting in reduced wholesaler purchases in later quarters. The Company can give no assurances that wholesaler purchases will not decline as a result of this potential excess buying.
o Future performance of the Company will be affected by the introduction of new products and FDA approval of new indications for current products such as Botox(R) Purified Neurotoxin Complex. The Company has allocated significant resources to the development and introduction of new products and indications. The successful development, regulatory approval and market acceptance of the products and indications cannot be assured.
o There are intrinsic uncertainties associated with research & development efforts and the regulatory process both of which are discussed in greater details in the "Research and Development" and the "Government Regulation" sections of Allergan's Annual Report on Form 10-K for the year ending December 31, 1999, which are incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
-- Exhibits
(numbered in accordance with Item 601 of Regulation S-K)
3 Certificate of Amendment of Certificate of Incorporation of Allergan,
Inc., as filed with the State of Delaware on May 4, 2000.
10.1 Allergan, Inc. Employee Stock Ownership Plan (Restated 2000).
10.2 Allergan, Inc. Employee Stock Ownership Plan Trust Agreement, dated
July 1, 2000, between Allergan, Inc. and UMB Bank, N.A.
10.3 Allergan, Inc. Savings and Investment Plan (Restated 2000).
10.4 Allergan, Inc. Savings and Investment Plan Trust Agreement, dated July
1, 2000, between Allergan, Inc. and UMB Bank, N.A.
10.5 First Amendment to Allergan, Inc. Executive Deferred Compensation Plan
(restated 2000)
27 Financial Data Schedule
-- Reports on Form 8-K
None.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 11, 2000 ALLERGAN, INC.
/s/ Eric K. Brandt
--------------------------------
Eric K. Brandt
Principal Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3 Certificate of Amendment of Certificate of Incorporation of
Allergan, Inc., as filed with the State of Delaware on May 4,
2000.
10.1 Allergan, Inc. Employee Stock Ownership Plan (Restated 2000).
10.2 Allergan, Inc. Employee Stock Ownership Plan Trust Agreement,
dated July 1, 2000, between Allergan, Inc. and UMB Bank, N.A.
10.3 Allergan, Inc. Savings and Investment Plan (Restated 2000).
10.4 Allergan, Inc. Savings and Investment Plan Trust Agreement,
dated July 1, 2000, between Allergan, Inc. and UMB Bank, N.A.
10.5 First Amendment to Allergan, Inc. Executive Deferred
Compensation Plan (restated 2000)
27 Financial Data Schedule
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Allergan, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), through its duly authorized officer and by authority of its Board of Directors, does hereby certify:
1. In accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware, at a meeting of the Board of Directors of the Corporation held on January 24, 2000, a resolution was duly adopted setting forth a proposed amendment to the Certificate of Incorporation of the Corporation, declaring said amendment to be advisable and directing that said amendment be submitted to the stockholders of the Corporation for consideration thereof at the next annual meeting of the stockholders. The resolution setting forth the proposed amendment is as follows:
"RESOLVED FURTHER, that the officers of the Corporation be, and are hereby authorized and directed to include in the Proxy Statement to be sent to Stockholders in connection with the Annual Meeting of Stockholders a proposal to amend Article 4 of Corporation's Certificate of Incorporation to read in its entirety as follows, which amendment this Board of Directors hereby deems to be advisable and hereby approves:
"ARTICLE 4: Authorized Capital Stock
The aggregate number of shares which the Corporation shall have authority to issue is 305,000,000 to be divided into (a) 300,000,000 shares of Common Stock, par value $.01 per share, and (b) 5,000,000 shares of Preferred Stock, par value $.01 per share.
The Board of Directors is hereby empowered to cause the Preferred Stock to be issued from time to time for such consideration as it may from time to time fix, and to cause such Preferred Stock to be issued in series with such voting powers and such designations, preferences, and relative,
2. That thereafter, pursuant to resolution of its Board of Directors, in
accordance with Section 242 of the General Corporation Law of the State of
Delaware, the Corporation's stockholders approved the foregoing amendment by the
necessary number of shares of capital stock of the Corporation, as required by
statute and by the Certificate of Incorporation, at the annual meeting of
stockholders held April 26, 2000, which was held upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware.
3. That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of Certificate of Incorporation to be signed by Francis R. Tunney, Jr., its duly authorized officer, this 1st day of May, 2000.
By: /s/ Francis R. Tunney
---------------------------------
Francis R. Tunney, Jr.
Corporate Vice President -
Administration, General
Counsel and Secretary
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RESTATED
2000
Page
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ARTICLE I
NAME AND EFFECTIVE DATE..............................................................................1
1.1 Plan Name..........................................................................1
1.2 Effective Date of 2000 Restated Plan...............................................1
1.3 Plan Purpose.......................................................................1
1.4 Plan Intended to Qualify...........................................................1
ARTICLE II
DEFINITIONS..........................................................................................2
2.1 Affiliated Company.................................................................2
2.2 Beneficiary........................................................................2
2.3 Board of Directors.................................................................2
2.4 Break in Service...................................................................2
2.5 Code...............................................................................2
2.6 Committee..........................................................................2
2.7 Company............................................................................2
2.8 Company Stock......................................................................2
2.9 Compensation.......................................................................2
2.10 Computation Period.................................................................3
2.11 Credited Service...................................................................4
2.12 Disability.........................................................................5
2.13 Effective Date.....................................................................6
2.14 Eligible Employee..................................................................6
2.15 Eligible Retirement Plan...........................................................6
2.16 Eligible Rollover Distribution.....................................................6
2.17 Employee...........................................................................7
2.18 Employment Commencement Date.......................................................7
2.19 Entry Date.........................................................................7
2.20 ERISA..............................................................................7
2.21 ESOP Account.......................................................................7
2.22 Exempt Loan........................................................................7
2.23 Exempt Loan Suspense Subfund.......................................................8
2.24 415 Suspense Account...............................................................8
2.25 Highly Compensated Employee........................................................8
2.26 Hour of Service....................................................................9
2.27 Investment Manager.................................................................10
2.28 Leased Employee....................................................................10
2.29 Leave of Absence...................................................................10
2.30 Normal Retirement Age..............................................................11
2.31 Participant........................................................................11
2.32 Period of Severance................................................................11
2.33 Plan...............................................................................11
2.34 Plan Administrator.................................................................11
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2.35 Plan Year..........................................................................12
2.36 Reemployment Commencement Date.....................................................12
2.37 Severance..........................................................................12
2.38 Severance Date.....................................................................12
2.39 Sponsor............................................................................13
2.40 Trust..............................................................................13
2.41 Trust Agreement....................................................................13
2.42 Trustee............................................................................13
2.43 Valuation Date.....................................................................13
ARTICLE III
ELIGIBILITY AND PARTICIPATION........................................................................14
3.1 Commencement of Participation......................................................14
3.2 Participation after Reemployment...................................................14
3.3 Duration of Participation..........................................................14
3.4 Participation After Normal Retirement Age..........................................14
ARTICLE IV
CONTRIBUTIONS AND ALLOCATION TO ACCOUNTS.............................................................15
4.1 Contributions to the Trust Fund....................................................15
4.2 Allocation of Contributions to Trust Fund..........................................15
4.3 Forfeitures........................................................................17
4.4 Employee Contributions and Rollovers...............................................17
ARTICLE V
VESTING AND DISTRIBUTIONS............................................................................18
5.1 No Vested Rights Except as Herein Specified........................................18
5.2 Vesting............................................................................18
5.3 Severance When Less Than Fully Vested..............................................18
5.4 Distribution upon Severance........................................................19
5.5 Distribution upon Death............................................................19
5.6 Distribution upon Disability.......................................................20
5.7 Withdrawal upon Age 59-1/2.........................................................20
5.8 Designation of Beneficiary.........................................................20
5.9 Form of Distribution...............................................................21
5.10 Distribution Rules.................................................................22
5.11 Put Option for Company Stock Allocated to ESOP Accounts............................23
5.12 Diversification Rule...............................................................27
5.13 Lapsed Benefits....................................................................28
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ARTICLE VI
TRUST FUND AND INVESTMENTS...........................................................................30
6.1 General............................................................................30
6.2 Single Trust.......................................................................30
6.3 Investment of the Trust............................................................30
6.4 Certain Offers for Company Stock...................................................31
6.5 Securities Law Limitation..........................................................35
6.6 Accounting and Valuations..........................................................35
6.7 Dividends..........................................................................37
6.8 Non-Diversion of Trust Fund........................................................38
6.9 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund..........39
6.10 Distributions......................................................................39
6.11 Taxes..............................................................................39
6.12 Trustee Records to be Maintained...................................................39
6.13 Annual Report of Trustee...........................................................39
6.14 Appointment of Investment Manager..................................................40
ARTICLE VII
OPERATION AND ADMINISTRATION.........................................................................41
7.1 Appointment of Committee...........................................................41
7.2 Transaction of Business............................................................41
7.3 Voting.............................................................................41
7.4 Responsibility of Committee........................................................41
7.5 Committee Powers...................................................................42
7.6 Additional Powers of Committee.....................................................43
7.7 Claims Procedures..................................................................43
7.8 Appeals Procedures.................................................................44
7.9 Limitation on Liability............................................................45
7.10 Indemnification and Insurance......................................................45
7.11 Compensation of Committee and Plan Expenses........................................45
7.12 Resignation........................................................................45
7.13 Voting of Company Stock............................................................45
7.14 Reliance Upon Documents and Opinions...............................................47
ARTICLE VIII
AMENDMENT AND ADOPTION OF PLAN.......................................................................49
8.1 Right to Amend Plan................................................................49
8.2 Adoption of Plan by Affiliated Companies...........................................49
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ARTICLE IX
DISCONTINUANCE OF CONTRIBUTIONS......................................................................50
ARTICLE X
TERMINATION AND MERGER...............................................................................51
10.1 Right to Terminate Plan............................................................51
10.2 Effect on Trustee and Committee....................................................51
10.3 Merger Restriction.................................................................51
10.4 Effect of Reorganization, Transfer of Assets or Change in Control..................51
ARTICLE XI
LIMITATION ON ALLOCATIONS............................................................................55
11.1 General Rule.......................................................................55
11.2 Annual Additions...................................................................55
11.3 Other Defined Contribution Plans...................................................55
11.4 Defined Benefit Plans..............................................................56
11.5 Adjustments for Excess Annual Additions............................................56
11.6 Compensation.......................................................................57
11.7 Treatment of 415 Suspense Account Upon Termination.................................58
ARTICLE XII
TOP-HEAVY RULES......................................................................................59
12.1 Applicability......................................................................59
12.2 Definitions........................................................................59
12.3 Top-Heavy Status...................................................................60
12.4 Minimum Contributions..............................................................62
12.5 Maximum Annual Addition............................................................62
12.6 Minimum Vesting Rules..............................................................63
12.7 Non-Eligible Employees.............................................................63
ARTICLE XIII
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS.......................................64
13.1 General Restrictions Against Alienation............................................64
13.2 Qualified Domestic Relations Orders................................................64
ARTICLE XIV
MISCELLANEOUS PROVISIONS.............................................................................68
14.1 No Right of Employment Hereunder...................................................68
14.2 Limitation on Company Liability....................................................68
14.3 Effect of Article Headings.........................................................68
14.4 Gender.............................................................................68
14.5 Interpretation.....................................................................68
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14.6 Withholding For Taxes..............................................................68
14.7 California Law Controlling.........................................................68
14.8 Plan and Trust as One Instrument...................................................68
14.9 Invalid Provisions.................................................................68
14.10 Counterparts.......................................................................69
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1.1. Plan Name. This document, made and entered into by Allergan, Inc., a Delaware corporation ("Allergan"), evidences the terms of a defined contribution plan for Eligible Employees of Allergan and any Affiliated Companies that are authorized by the Board of Directors to participate in the plan, to be known hereafter as the "Allergan, Inc. Employee Stock Ownership Plan (Restated 2000)" (the "Plan").
1.2. Effective Date of 2000 Restated Plan. The "Allergan, Inc. Employee Stock Ownership Plan (Restated 1996)" and the First, Second, Third, Fourth and Fifth Amendments made thereto are hereby incorporated into the Plan. The Effective Date of the 2000 Restated Plan shall be January 1, 1997 unless otherwise stated in the Plan.
1.3. Plan Purpose. The purpose of the Plan is to offer Participants a systematic program for accumulation of beneficial ownership interests in Company Stock and to encourage and develop employee interest and involvement in the Company. Through the beneficial ownership of Company Stock, enhanced by means of possible debt financed acquisition of Company Stock, Allergan, Inc. intends to provide Participants with a meaningful voice in matters affecting both it and Participants as shareholders. In order to accomplish these objectives, the Plan is expressly authorized and directed to acquire and hold Company Stock as its primary investment. All assets acquired under the Plan shall be administered, distributed, forfeited and otherwise governed by the provisions of the Plan, which is to be administered by the Committee for the exclusive benefit of Participants in the Plan and their Beneficiaries.
1.4. Plan Intended to Qualify. The Plan is an employee benefit plan that is intended to qualify under Code Section 401(a) as a qualified stock bonus plan and under Code Section 4975(e)(7) as an employee stock ownership plan. The provisions of the Plan are also intended to comply with all changes to the qualification requirements made by the Uruguay Round Agreements Act (GATT), the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform Act of 1998 including qualification requirements that are effective on or after January 1, 1999.
2.1. Affiliated Company. "Affiliated Company" shall mean (i) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Code Section 414(b)) of which the Sponsor is
a member, (ii) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Code Section 414(c)) with the Sponsor,
(iii) any entity or organization, other than the Sponsor, which is a member of
an affiliated service group (within the meaning of Code Section 414(m)) of which
the Sponsor is a member, and (iv) any entity or organization, other than the
Sponsor, which is affiliated with the Sponsor under Code Section 414(o). An
entity shall be an Affiliated Company pursuant to this paragraph only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
original Effective Date of the Plan.
2.2. Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the person or persons last designated by a Participant as set forth in Section 5.8 or, if there is no designated Beneficiary or surviving Beneficiary, the person or persons designated pursuant to Section 5.8 to receive the interest of a deceased Participant in such event.
2.3. Board of Directors. "Board of Directors" shall mean the Board of Directors of the Sponsor (or its delegate) as it may from time to time be constituted.
2.4. Break in Service. "Break in Service" shall mean, with respect to an Employee, each period of 12 consecutive months during a Period of Severance that commences on the Employee's Severance Date or on any anniversary of such Severance Date.
2.5. Code. "Code" shall mean the Internal Revenue Code of 1986 and the regulations thereunder. Reference to a specific Code Section shall be deemed also to refer to any applicable regulations under that Section, and shall also include any comparable provisions of future legislation that amend, supplement or supersede that specific Section.
2.6. Committee. "Committee" shall mean the committee appointed under the provisions of Section 7.1.
2.7. Company. "Company" shall mean collectively the Sponsor and each Affiliated Company that adopts the Plan in accordance with Section 8.2.
2.8. Company Stock. "Company Stock" shall mean any class of stock of
the Sponsor which both constitutes "qualifying employer securities" as defined
in Section 407(d)(5) of ERISA and "employer securities" as defined in Code
Section 409(1).
2.9. Compensation. "Compensation" shall mean the amounts paid during a Plan Year to an Employee by the Company for services rendered, including base earnings, commissions and similar incentive compensation, cost of living allowances earned within the United States of
(1) Sales bonus,
(2) Management Bonus Plan or Executive Bonus Plan, either in cash or in restricted stock,
(3) Group performance sharing payments, such as the "Partners for Success;"
but excluding business expense reimbursements; Company gifts or the value of Company gifts; Company stock related options and payments; employee referral awards; flexible compensation credits paid in cash; special overseas payments, allowances and adjustments including, but not limited to, pay for cost of living adjustments and differentials paid for service outside of the United States, expatriate reimbursement payments, and tax equalization payments; forms of imputed income; long-term disability pay; payment for loss of Company car; Company car allowance; payments for patents or for writing articles; relocation and moving expenses; retention and employment incentive payments; severance pay; long-term incentive awards, bonuses or payments; "Impact Award" payments; "Employee of the Year" payments; "Awards for Excellence" payments; special group incentive payments and individual recognition payments which are nonrecurring in nature; tuition reimbursement; and contributions by the Company under the Plan or distributions hereunder, any contributions or distributions pursuant to any other plan sponsored by the Company and qualified under Code Section 401(a) (other than contributions constituting salary reduction amounts elected by the Participant under a Code Section 401(k) cash or deferred arrangement), any payments under a health or welfare plan sponsored by the Company, or premiums paid by the Company under any insurance plan for the benefit of Employees. Compensation taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the foregoing, for purposes of applying the provisions of Articles XI and XII, an Employee's Compensation shall be determined pursuant to the definition of "Compensation" as set forth in Sections 11.6 or 12.2(i), as the case may be.
2.10. Computation Period
(a) "Computation Period" shall mean the consecutive twelve
(12) month period used for determining whether an Employee is eligible
to participate in the Plan pursuant to Section 3.1.
(c) An Employee's second Computation Period (and all subsequent Computation Periods) shall be the Plan Year that includes or begins on the first anniversary of such Employee's Employment Commencement Date or Reemployment Commencement Date (whichever is applicable) and each subsequent Plan Year.
2.11. Credited Service. "Credited Service" shall mean, with respect to each Employee, his or her years and months of Credited Service determined in accordance with the following rules:
(a) In the case of any Employee who was employed by the Company on the original Effective Date, for the period prior to such Effective Date such Employee shall be credited with Credited Service under the Plan equal to the period (if any) of uninterrupted employment of such Employee with the Company up to and including the day before the original Effective Date. For purposes of this paragraph (a), such a period of pre-Effective Date employment shall not be deemed to have been interrupted by reason of (i) any break in or interruption of employment which continued for less than one year, or (ii) any Leave of Absence granted to such Employee under applicable Company policies regarding Leaves of Absence.
(b) On and after the Effective Date, an Employee shall receive Credited Service credit for the elapsed period of time between each Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date). Solely for the purpose of determining an Employee's Credited Service under this paragraph (b), in the case of an Employee who is employed on the Effective Date, that date shall be deemed to be an Employment Commencement Date of the Employee (with service credit for periods prior to the Effective Date to be determined under paragraph (a) above). An Employee who is absent from work on an authorized Leave of Absence shall be deemed to have incurred a Severance (if any) in accordance with the rules of Section 2.37.
(c) An Employee shall receive Credited Service credit for periods between a Severance and his or her subsequent Reemployment Commencement Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a quit, discharge or retirement (other than such a Severance occurring during an approved Leave of Absence, which situation is covered under the provisions of subparagraph (ii) below), and the Employee is later reemployed by the Company prior to his or her incurring a Break in Service, he or she shall receive Credited Service for the
(ii) If an Employee is on an approved Leave of Absence and then incurs a Severance by reason of a quit, discharge or retirement during the Leave of Absence, or a failure to return to work as scheduled following such Leave, and such Employee is later reemployed by the Company within 12 months of the date on which he or she discontinued active employment and commenced such Leave, he or she shall receive Credited Service for the period commencing with his or her Severance Date and ending with his or her subsequent Reemployment Commencement Date. For such purposes an Employee shall be deemed to have incurred a Severance (if any) in accordance with the rules of Section 2.37.
(iii) Other than as expressly set forth above in this paragraph (c), an Employee shall receive no Credited Service with respect to periods between a Severance and a subsequent Reemployment Commencement Date.
(d) For all purposes of the Plan, an Employee's total Credited Service shall be determined by aggregating any separate periods of Credited Service separated by any Breaks in Service.
(e) An Employee shall be credited with Credited Service with respect to a period of employment with an Affiliated Company, but only to the extent that such period of employment would be so credited under the foregoing rules set forth in this Section had such Employee been employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall so provide by resolution of its Board of Directors, or unless otherwise expressly stated in the Plan, an Employee shall not receive such Credited Service credit for any period of employment with an Affiliated Company prior to such entity becoming an Affiliated Company, except that Employees of Allergan Optical, Inc., Allergan Humphrey, and Allergan Medical Optics shall receive Credited Service credit for any period of employment with such companies prior to the time such companies became Affiliated Companies.
(g) Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).
2.12. Disability. "Disability" shall mean any mental or physical condition which, in the judgment of the Committee, based on such competent medical evidence as the Committee may require, renders an individual unable to engage in any substantial gainful activity for the Company for which he or she is reasonably fitted by education, training, or experience and which condition can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months. The determination by the Committee, upon opinion of a
2.13. Effective Date. "Effective Date" of this restated Plan shall mean January 1, 1997 unless otherwise specified in the Plan. The original Effective Date of the Plan was July 26, 1989.
2.14. Eligible Employee. "Eligible Employee" shall mean any United States-based payroll Employee of the Company and any expatriate Employee of the Company who is a United States citizen or permanent resident, but excluding any Employee of the Company who is employed at the Sponsor's facility in Puerto Rico, any non-resident alien, any non-regular manufacturing site transition Employee, any Leased Employee, and any Employee covered by a collective bargaining agreement.
2.15. Eligible Retirement Plan. "Eligible Retirement Plan" shall mean an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a) that accepts an Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.
2.16. Eligible Rollover Distribution. "Eligible Rollover Distribution" shall mean 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:
(a) 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;
(b) any distribution to the extent such distribution is required under Code Section 401(a)(9); and
(c) any hardship distribution described in Code Section
401(k)(2)(B)(I)(IV);
(d) 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).
(e) any other distribution that is reasonably expected to total less than $200 during the year.
For purposes of this Section, "Distributee" shall mean any Employee or former Employee receiving a distribution from the Plan. A Distributee also includes the Employee or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse
2.17. Employee. "Employee" shall mean, for purposes of the Plan, any
person who is employed by the Sponsor or an Affiliated Company in any capacity,
any portion of whose income is subject to withholding of income tax and/or for
whom Social Security contribution are made by the Sponsor or an Affiliated
Company except that such term shall not include (i) any individual who performs
services for the Sponsor or an Affiliated Company and who is classified or paid
as an independent contractor as determined by the payroll records of the Sponsor
or Affiliated Company even if a court or administrative agency determines that
such individual is a common-law employee and not an independent contractor and
(ii) any individual who performs services for the Sponsor or an Affiliated
Company pursuant to an agreement between the Sponsor or an Affiliated Company
and any other person including a leasing organization except to the extent such
individual is a Leased Employee.(1)
2.18. Employment Commencement Date. "Employment Commencement Date" shall mean the date on which an Employee first performs an Hour of Service in any capacity for the Sponsor or any Affiliated Company. Unless the Sponsor shall expressly determine otherwise, and except as is expressly provided otherwise in the Plan or in resolutions of the Board of Directors, an Employee shall not, for the purpose of determining his or her Employment Commencement Date, be deemed to have commenced employment with an Affiliated Company prior to the effective date on which such entity became an Affiliated Company.
2.19. Entry Date. "Entry Date" shall mean the first day of each calendar quarter commencing each January 1, April 1, July 1, and October 1 of each Plan Year.
2.20. ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.
2.21. ESOP Account. "ESOP Account" shall mean, with respect to each
Participant, the account established and maintained for purposes of holding and
accounting for the Participant's allocated share of assets of the Plan,
including any subaccounts established thereunder from time to time (including
his or her Stock Subaccount and Non-Stock Subaccount established pursuant to
Section 6.6).
2.22. Exempt Loan. "Exempt Loan" shall mean any loan to the Plan or Trust not prohibited by Code Section 4975(c), including a loan which meets the requirements set forth in Code Section 4975(d)(3) and the regulations promulgated thereunder, the proceeds of which are used to finance the acquisition of Company Stock or to refinance such a loan.
2.24. 415 Suspense Account. "415 Suspense Account" shall mean the account (if any) established and maintained in accordance with the provisions of Article XI for the purpose of holding and accounting for allocations of excess Annual Additions (as defined in Article XI).
2.25. Highly Compensated Employee. "Highly Compensated Employee" shall mean:
(a) An Employee who performed services for the Employer during the Plan Year or preceding Plan Year and is a member of one or more of the following groups:
(i) Employees who at any time during the Plan Year or
preceding Plan Year were Five Percent Owners (as defined in
Section 12.2).
(ii) Employees who received Compensation during the preceding Plan Year from the Employer in excess of $80,000 (as adjusted in such manner as permitted under Code Section 414(q)(1)).
(b) For the purpose of this Section, the term "Compensation" means compensation as defined in Code Section 415(c)(3), as set forth in Section 11.6.
(c) The term "Highly Compensated Employee" includes a Former Highly Compensated Employee. A Former Highly Compensated Former Employee is any Employee who was (i) a Highly Compensated Employee when he or she terminated employment with the Employer or (ii) a Highly Compensated Employee at any time after attaining age 55. Notwithstanding the foregoing, an Employee who separated from service prior to 1987 shall be treated as a Former Highly Compensated Former Employee only if during the separation year (or year preceding the separation year) or any year after the Employee attains age 55 (or the last year ending before the Employee's 55th birthday), the Employee either received Compensation in excess of $50,000 or was a Five Percent Owner.
(d) For the purpose of this Section, the term "Employer" shall mean the Sponsor and any Affiliated Company.
(e) The determination of who is a Highly Compensated Employee, including the determination of the Compensation that is considered, shall be made in accordance with Code Section 414(q) and the regulations thereunder.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the Company or an Affiliated Company or entitled to payment for the performance of services as an Employee.
(ii) Each hour in or attributable to a period of time during which the Employee performs no duties (irrespective of whether he or she has terminated his or her Employment) due to a vacation, holiday, illness, incapacity (including pregnancy or disability), layoff, jury duty, military duty or a Leave of Absence (if the Leave of Absence is an unpaid medical Leave of Absence, the Employee will accrue hours for the duration of such leave for the first six months of such leave), for which he or she is so paid or so entitled to payment, whether direct or indirect. However, no such hours shall be credited to an Employee if (1) such Employee is directly or indirectly paid or entitled to payment for such hours and (2) such payment or entitlement 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 is a payment which solely reimburses the Employee for medical or medically-related expenses incurred by him/her.
(iii) Each hour for which he or she is entitled to back pay, irrespective of mitigation of damages, whether awarded or agreed to by the Company or an Affiliated Company, provided that such Employee has not previously been credited with an Hour of Service with respect to such hour under subparagraphs (i) or (ii) above.
Hours of Service under paragraphs (a)(ii) and (a)(iii) shall be calculated in accordance with Department of Labor Regulation 29 C.F.R. Section 2530.200b-2(b). All Hours of Service determined under the rules of paragraph (a) shall be credited to the Computation Period to which the payment relates, rather than the period in which it is made.
(b) In the event that an Employee is compensated for duties performed on a basis other than actual hours worked and no records of the Employee's actual working hours are maintained, the Employee shall be deemed to have completed ten (10) Hours of Service for each day, or portion thereof during which he or she is credited with an Hour of Service for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise, and except as may be expressly provided otherwise in the Plan, an Employee shall not receive credit for his or her Hours of Service completed with an Affiliated Company prior to the effective date on which the entity became an Affiliated Company.
2.28. Leased Employee. "Leased Employee" shall mean any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one (1) year, and such services are performed under the primary direction or control by recipient employer. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. A Leased Employee shall not be considered an Employee of the recipient if Leased Employees do not constitute more than 20 percent of the recipient's nonhighly compensated workforce and such Leased Employee is covered by a money purchase pension plan providing (i) a nonintegrated employer contribution rate of at least ten (10) percent of compensation as defined under Code Section 415(c)(3); (ii) immediate participation; and (iii) full and immediate vesting.
2.29. Leave of Absence.
(a) "Leave of Absence" shall mean any personal leave from active employment (whether with or without pay) duly authorized by the Company under the Company's standard personnel practices. All persons under similar circumstances shall be treated alike in the granting of such Leaves of Absence. Leaves of Absence may be granted by the Company for reasons of health (including temporary sickness or short term disability) or public service or for any other reason determined by the Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in paragraph
(a) above, the term Leave of Absence shall also mean a Maternity or
Paternity Leave, as defined herein, but only to the extent and for the
purposes required under paragraph (c) below. As used herein, "Maternity
or Paternity Leave" shall mean an absence from work for any period (i)
by reason of the pregnancy of the Employee, (ii) by reason of the birth
of a child of the Employee, (iii) by reason of the placement of a child
with the Employee in connection with the adoption of the child by the
Employee, or (iv) for purposes of caring for the child for a period
beginning immediately following the birth or placement referred to in
clauses (ii) or (iii) above.
(c) Subject to the provisions of paragraph (d) below, a Maternity or Paternity Leave described in paragraph (b) above shall be deemed to constitute an authorized Leave of Absence for purposes of the Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in Service has occurred, the Severance Date of a Participant who is absent by reason of a Maternity or Paternity Leave shall not be deemed to occur any earlier than the
(ii) The Maternity or Paternity Leave shall be treated as a Leave of Absence solely for purposes of determining whether or not an Employee has incurred a Break in Service. Accordingly, such a Maternity or Paternity Leave shall not result in an accrual of Credited Service for purposes of the vesting provisions of the Plan or for purposes of determining eligibility to participate in the Plan pursuant to the provisions of Article III (except only in determining whether a Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be treated as a Leave of Absence unless the Employee provides such timely information as the Committee may reasonably require to establish that the absence is for the reasons listed in paragraph (b) above and to determine the number of days for which there was such an absence.
(d) Notwithstanding the limitations provided in paragraph (c)
above, a Maternity or Paternity Leave described in paragraph (b) above
shall be treated as an authorized Leave of Absence, as described in
paragraph (a), for all purposes of the Plan to the extent the period of
absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
paragraph (a) above without reference to the provisions of paragraph
(b) above, provided, however, that the special rule provided under this
paragraph (d) shall not apply if it would result in a Participant who
is absent on a Maternity or Paternity Leave being deemed to have
incurred a Break in Service sooner than under the rules set forth in
paragraph (c).
2.30. Normal Retirement Age. "Normal Retirement Age" shall mean a Participant's sixty-fifth (65th) birthday.
2.31. Participant. "Participant" shall mean any Eligible Employee who has commenced participation in the Plan pursuant to Article III and who retains rights under the Plan.
2.32. Period of Severance. "Period of Severance" shall mean the period of time commencing on an Employee's Severance Date and ending on the Employee's subsequent Reemployment Commencement Date, if any.
2.33. Plan. "Plan" shall mean the Allergan, Inc. Employee Stock Ownership Plan (Restated 2000) described herein and as amended from time to time.
2.34. Plan Administrator. "Plan Administrator" shall mean the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be the Allergan Corporate Benefits Committee whose
members are appointed by the Board of Directors pursuant to the provisions of
Section 7.1 to administer the Plan.
2.36. Reemployment Commencement Date. "Reemployment Commencement Date" shall mean, in the case of an Employee who incurs a Severance and who is subsequently reemployed by the Sponsor or an Affiliated Company, the first day following the Severance on which the Employee is credited with an Hour of Service for the Sponsor or Affiliated Company with respect to which he or she is compensated or entitled to compensation by the Sponsor or Affiliated Company. Unless the Sponsor shall expressly determine otherwise and except as is expressly provided otherwise in the Plan, an Employee shall not, for the purpose of determining his or her Reemployment Commencement Date, be deemed to have commenced employment with an Affiliated Company prior to the effective date on which such entity becomes an Affiliated Company.
2.37. Severance. "Severance" shall mean the termination of an Employee's employment with the Sponsor or Affiliated Company by reason of such Employee's quit, discharge, Disability, death, retirement, or otherwise. For purposes of determining whether an Employee has incurred a Severance, the following rules shall apply:
(a) An Employee shall not be deemed to have incurred a Severance (i) because of his or her absence from employment with the Sponsor or Affiliated Company by reason of any paid vacation or holiday period, or (ii) by reason of any Leave of Absence, subject to the provisions of paragraph (b) below.
(b) For purposes of the Plan, an Employee shall be deemed to have incurred a Severance on the earlier of (i) the date on which he or she dies, resigns, is discharged, or otherwise terminates his or her employment with the Sponsor or Affiliated Company; or (ii) the date on which he or she is scheduled to return to work after the expiration of an approved Leave of Absence, if he or she does not in fact return to work on the scheduled expiration date of such Leave; or (iii) in the case of a Leave of Absence for longer than one year, the first anniversary of the commencement of such Leave, provided such Employee does not actually return to work on or before said first anniversary date. In no event shall an Employee's Severance be deemed to have occurred before the last day on which such Employee performs any services for the Sponsor or Affiliated Company in the capacity of an Employee with respect to which he or she is compensated or entitled to compensation by the Sponsor or Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a Participant who is absent by reason of a Maternity or Paternity Leave, the provisions of Section 2.26(c)-(d) shall apply for purposes of determining whether such a Participant has incurred a Break in Service by reason of such Leave.
2.38. Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.37, provided, however, that the special rule set forth under Section
2.26(c)-(d) shall apply with respect to determining whether a
2.39. Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware corporation, and any successor corporation or entity.
2.40. Trust. "Trust" or "Trust Fund" shall mean the trust maintained pursuant to the Trust Agreement and as described in Section 6.1 hereof, which shall hold all cash and securities and all other assets of whatsoever nature deposited with or acquired by the Trustee in its capacity as Trustee hereunder, together with accumulated net earnings.
2.41. Trust Agreement. "Trust Agreement" shall mean the agreement between the Trustee and the Sponsor pursuant to which the Trust is maintained.
2.42. Trustee. "Trustee" shall mean the one or more trustees of the Trust established pursuant to Section 6.1 hereof.
2.43. Valuation Date. "Valuation Date" shall mean the last day of each Plan Year and any other date which the Committee may designate from time to time.
3.1. Commencement of Participation. Each Eligible Employee shall become a Participant on the Entry Date that is concurrent with or immediately follows the later of:
(a) The date such Eligible Employee performs an Hour of Service as an Eligible Employee; or
(b) The date such Eligible Employee completes six (6) months of Credited Service with a Sponsor or Affiliated Company as an Employee, provided such Eligible Employee is an Eligible Employee as of such Entry Date.
Notwithstanding the foregoing, any Employee who is an Eligible Employee on the Effective Date and who has satisfied the requirements of paragraphs (a) and (b), above, as of the Effective Date shall become a Participant on the Effective Date.
3.2. Participation after Reemploymentt. Any Employee who is not a
Participant but who has completed the service requirement specified in Section
3.1(b) shall, if he or she incurs a Severance and is subsequently reemployed as
an Eligible Employee, become a Participant as of his or her Reemployment
Commencement Date as an Eligible Employee. Any Employee who has not completed
the service requirement specified in Section 3.1(b) shall, if he or she incurs a
Severance and is subsequently reemployed, become a Participant on the date
determined under Section 3.1 above.
3.3. Duration of Participation. An Eligible Employee who becomes a
Participant shall remain an active Participant until he or she incurs a
Severance, at which time he or she shall become an inactive Participant until he
or she receives a distribution of his or her entire vested interest in his or
her ESOP Account. Once such a distribution is made, any Participant who incurs
such a Severance shall no longer be considered a Participant in the Plan. Any
Participant who (i) transfers out of employment with the Company but who remains
an Employee of an Affiliated Company that has not adopted the Plan pursuant to
Section 8.2, or (ii) remains an Employee of the Company but is no longer an
Eligible Employee, shall become an inactive Participant. Any Compensation of an
Employee while an inactive Participant shall not be included as Compensation for
the purpose of allocations based on Compensation made pursuant to Article IV.
3.4. Participation After Normal Retirement Age. An Eligible Employee may become, or continue as, a Participant after reaching his or her Normal Retirement Age in the same manner as an Eligible Employee who has not reached his or her Normal Retirement Age.
4.1. Contributions to the Trust Fund. The Company may contribute to the
Trust Fund for each Plan Year an amount to be determined by the Board of
Directors solely in its discretion. Such amount shall be contributed in cash or
Company Stock and paid over to the Trustee for allocation to the Trust Fund not
later than the date prescribed for filing the Sponsor's federal income tax
return (including all extensions thereto) for its fiscal year corresponding to
such Plan Year. Contributions shall first be applied, if necessary, to reinstate
the ESOP Accounts of applicable reemployed Participants who had previously
forfeited their ESOP Accounts pursuant to Section 5.3 of the Plan, but only
after all forfeitures for the Plan Year have been so applied pursuant to Section
4.3. Some or all of the remaining contributions under this Section 4.1 may be
applied to repay any principal and/or interest outstanding on any Exempt Loan or
to pay Plan expenses as provided in Section 7.11. The determination of the
extent to which such contributions shall be used to repay such Exempt Loans or
pay Plan expenses shall be made at the sole discretion of the Committee. Company
Stock acquired by the Trust Fund through an Exempt Loan shall be added to and
maintained in the Exempt Loan Suspense Subfund and shall thereafter be released
from the Exempt Loan Suspense Subfund and allocated to Participants' ESOP
Accounts as provided in Section 4.2. Contributions in excess of amounts used for
other purposes described in this Section 4.1 shall be allocated to the ESOP
Accounts of Participants as provided in Section 4.2.
4.2. Allocation of Contributions to Trust Fund.
(a) As of a date not later than the last day of each Plan Year, an allocation shall be made to the ESOP Account of each "Eligible Participant" of such Participant's allocable share for such Plan Year of (i) Company contributions of Company Stock contributed in kind to the Trust Fund and (ii) Company contributions in other than Company Stock, which are not used for other purposes described in Section 4.1. For the purposes of this Section 4.2, the term "Eligible Participant" shall include all Participants who are Eligible Employees on the last day of such Plan Year or who ceased to be Eligible Employees during such Plan Year due to death, Disability, or retirement at or after age 55 (as such retirement is determined under the Allergan, Inc. Pension Plan). Such allocations shall be made in the same proportion that the Compensation for the Plan Year for such Eligible Participant bears to the total Compensation of all Eligible Participants for such Plan Year.
(b) Company Stock acquired for the Trust Fund through an
Exempt Loan shall be released from the Exempt Loan Suspense Subfund as
the Exempt Loan is repaid, in accordance with the provisions of this
Section 4.2(b).
(i) For each Plan Year until the Exempt Loan is fully repaid, the number of shares of Company Stock released from the Exempt Loan Suspense Subfund shall equal the number of unreleased shares immediately before such
(ii) If the Committee so determines in its
discretion, then in lieu of applying the provisions of Section
4.2(b)(1) hereof with respect to such Exempt Loan or
Substitute Loan, shares shall be released from the Exempt Loan
Suspense Subfund as the principal amount of an Exempt Loan is
repaid (and without regard to interest payments), provided the
following three conditions are satisfied:
(1) The Exempt Loan must provide for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for ten years.
(2) The interest portion of any payment is disregarded only to the extent it would be treated as interest under standard loan amortization tables.
(3) If the Exempt Loan is renewed, extended or refinanced, the sum of the expired duration of the Exempt Loan and the renewal, extension or new Exempt Loan period must not exceed ten years.
(iii) It is intended that the provisions of this
Section 4.2(b) shall be applied and construed in a manner
consistent with the requirements and provisions of Treasury
Regulation Section 54.4975-7(b)(8), and any successor
regulation thereto. All Company Stock released from the Exempt
Loan Suspense Subfund during any Plan Year shall be allocated
among Participants as prescribed by Section 4.2(c) hereof,
except to the extent provided in Section 6.7.
(c) Shares of Company Stock released from the Exempt Loan Suspense Subfund for a Plan Year in accordance with Section 4.2(b) hereof and Section 6.7(b)(1) shall be held in the Trust Fund on an unallocated basis until allocated by the Committee as of not later than the last day of that Plan Year. The allocation of such shares shall be made among the ESOP Accounts of Eligible Participants (as that term is defined in Section 4.2(a)). The number of shares allocable to each such Eligible Participant's ESOP Account shall be the number of shares which bears the same ratio to the total shares
(d) Notwithstanding the foregoing allocation rules, if the aggregate amount of contributions for a Plan Year allocated to ESOP Accounts pursuant to paragraphs (a) through (c) above of Participants who are Highly Compensated Employees exceed one-third of the aggregate contributions made for such Plan Year, amounts allocated to highly compensated employees in excess of one-third of such aggregate contributions shall be reallocated to other Eligible Participants (as that term is defined in Section 4.2(a)) who are not Highly Compensated Employees in the same proportion that the Compensation for such Plan Year of each such Eligible Participant bears to the total Compensation of all such Eligible Participants who are not Highly Compensated Employees for such Plan Year.
(e) For the 1998 Plan Year only, the term "Eligible Participant" as defined in Section 4.2(a) shall include any Participant who ceased to be an Eligible Employee during the 1998 Plan Year due to his or her election to participate in the Sponsor's Voluntary Early Retirement Incentive by August 31, 1998 (or such later date as approved by the Sponsor but in no event later than September 30, 1998).(1)
4.3. Forfeitures. Any amount which is forfeited pursuant to Section 5.3 or 5.13 during a Plan Year shall be segregated from other amounts held under the Plan and shall first be used to reinstate the ESOP Accounts of reemployed Participants (or Beneficiaries, if applicable) who had previously forfeited such ESOP Accounts and who have a right to reinstatement of their forfeited ESOP Accounts pursuant to Section 5.3 or 5.13. Should any forfeitures then remain, they may next be used to pay Plan expenses as provided under Section 7.11. Should any forfeitures then remain, they shall be allocated as of the last day of the Plan Year to the ESOP Accounts of Eligible Participants (as that term is defined in Section 4.2(a)) based on Compensation in the same manner as allocations under Section 4.2(a) and (c).
4.4. Employee Contributions and Rollovers. No Employee contributions are permitted under the Plan. No rollover contributions to the Plan are permitted whether or not any such contributions would satisfy the applicable requirements of Code Sections 402, 403, 408 or 409.
5.1. No Vested Rights Except as Herein Specified. No Employee shall have any vested right or interest in any assets of the Trust, except as provided in this Article V. Neither the making of any allocations nor the credit to any ESOP Account of a Participant in the Trust shall vest in any Participant any right, title, or interest in or to any assets of the Trust except as provided in this Article V.
5.2. Vesting.
(a) The interest of a Participant in amounts allocated to his or her ESOP Account shall vest in accordance with the following schedule:
Year of Credited Service Vested Percentage
------------------------ -----------------
Less than 1 0%
1 but less than 2 20%
2 but less then 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
|
(b) Notwithstanding the above, a Participant shall become
fully vested in his or her ESOP Account upon the occurrence of the
death, Disability, or attainment of age 62 of such Participant while an
Employee, or upon the occurrence of a Change in Control pursuant to
Section 10.4(b).
5.3. Severance When Less Than Fully Vested. A Participant who incurs a Severance and who is not or does not become 100% vested pursuant to Section 5.2, shall receive a distribution of the vested portion of his or her ESOP Account in a single lump sum payment in the form prescribed by Section 5.9 hereof, as soon as practicable following the Participant's Severance Date, but in no event later than the last day of the Plan Year following the Plan Year in which the Participant incurred the Severance. The non-vested portion of such Participant's ESOP Account shall be forfeited in accordance with the following rules:
(a) In the event that a distribution of the entire vested
portion of such a Participant's ESOP Account is made pursuant to this
Section 5.3, the non-vested portion shall be forfeited as of such
Participant's Severance Date. In the event such Participant is rehired
by the Company prior to the date such Participant incurs five
consecutive Breaks in Service, the amount so forfeited shall be
reinstated to the Participant's ESOP Account as of the Participant's
Reemployment Commencement Date (without regard to any interest or
investment earnings on such amount). For the purpose of this paragraph
(a), a Participant with no vested portion of his or her ESOP Account
shall be deemed to have received a distribution pursuant to this
paragraph (a).
(c) At any relevant time after Severance pursuant to paragraphs (a) and (b) above, the Participant's vested portion of his or her ESOP Account shall be equal to an amount ("X") determined by the following formula:
X = P*(AB + D) - D
For the purposes of applying the formula:
P = the vested percentage at any relevant time determined pursuant to Section 5.2
AB = the ESOP Account balance at the relevant time
D = the total amount of any distributions from the ESOP Account since such Severance
5.4. Distribution upon Severance. A Participant who incurs a Severance
on or after becoming 100% vested pursuant to Section 5.2, shall receive a
distribution of his or her ESOP Account, in a single lump-sum payment in the
form prescribed by Section 5.9 hereof, as soon as practicable following the
Participant's Severance Date, but in no event later than the last day of the
Plan Year following the Plan Year in which the Participant incurred the
Severance. Notwithstanding anything to the contrary, upon receipt of a Qualified
Domestic Relations Order on or after a Participant is 100% vested pursuant to
Section 5.2, the amount payable to an Alternate Payee (as such terms are
described in Section 13.2) shall be distributed to the Alternate Payee as soon
as administratively feasible regardless of whether the Participant incurs a
Severance.
5.5. Distribution upon Death.
(a) Upon the death of a Participant while still an Employee, the Committee shall give such directions as may be necessary to cause a distribution of his or her ESOP Account to be made in a single lump-sum payment to the Beneficiary designated by the deceased Participant in the form prescribed in Section 5.9 hereof, as soon as practicable following the Participant's death, but in no event later than the last day of the Plan Year following the Plan Year in which the Participant died.
(b) Upon the death of a Participant after he or she ceases to be an Employee but before he or she receives his or her entire vested interest in the Trust, the Committee shall give such directions as may be necessary to cause a distribution, in the manner and
(c) The Committee may require the execution and delivery of such documents, papers and receipts as the Committee may determine necessary or appropriate in order to establish the fact of death of the deceased Participant and of the right and identity of any Beneficiary or other person or persons claiming any benefits under this Section 5.5.
5.6. Distribution upon Disability. In the event the Committee shall determine that a Participant has suffered a Disability while an Employee, the Committee shall proceed to cause a distribution to be made of such Participant's ESOP Account in a single lump-sum payment in the form prescribed in Section 5.9 hereof as soon as practicable following the Committee's determination that the Participant has incurred a Disability, but in no event later than the last day of the Plan Year following the Plan Year in which the Committee makes such determination.
5.7. Withdrawal upon Age 59-1/2. After attaining age 59-1/2, a
Participant who is still an Employee may, following such reasonable advance
notice as may be required by the Committee, withdraw the entire vested amount
credited to his or her ESOP Account. Such a withdrawal shall be in the same form
and using the same valuation methods as provided for distributions pursuant to
Section 5.9. For the 2000 Plan Year only, a Participant who is still an Employee
may withdraw the entire vested amount credited to his or her ESOP Account if
such Participant shall incur a Severance between June 19, 2000 and July 31,
2000, inclusive, on or after attaining age 55 and such Participant provides such
reasonable advance notice of his or her expected Severance as required by the
Committee.
5.8. Designation of Beneficiary.
(a) At any time, and from time to time, each Participant shall have the unrestricted right to designate the Beneficiary to receive the portion of his or her death benefit and to revoke any such designation. Each such designation shall be evidenced by a written instrument signed by the Participant and filed with the Committee.
(b) If the Participant is married and designates a Beneficiary other than his or her spouse, said designation shall not be honored by the Committee unless accompanied by the written consent of said spouse to said designation. Such consent (i) must designate a Beneficiary which may not be changed without the consent of the spouse (or the consent of the spouse expressly permits designation by the Participant without any further consent by the spouse), (ii) must acknowledge the effect of the designation, and (iii) must be witnessed by a Plan representative or a notary public. No consent of such spouse shall be necessary if it is established to the satisfaction of a Plan representative that the consent required under this paragraph (b) cannot or need not be obtained because (i) there is no spouse, (ii) the spouse cannot be located, or (iii) there exist such other circumstances which, pursuant to regulations under Code Section 417, permit a distribution to another Beneficiary. Any consent of a spouse obtained pursuant to this paragraph (b) or any
(c) If the Participant is married and does not designate a Beneficiary, the Participant's spouse shall be his or her Beneficiary for purposes of this Section. If the deceased Participant is not married and shall have failed to designate a Beneficiary, or if the Committee shall be unable to locate the designated Beneficiary after reasonable efforts have been made, or if such Beneficiary shall be deceased, distribution of the Participant's death benefit shall be made by payment of the deceased Participant's entire interest in the Trust to his or her personal representative in a single lump-sum payment. In the event the deceased Participant is not a resident of California at the date of his or her death, the Committee, in its discretion, may require the establishment of ancillary administration in California. If the Committee cannot locate a qualified personal representative of the deceased Participant, or if administration of the deceased Participant's estate is not otherwise required, the Committee, in its discretion, may pay the deceased Participant's interest in the Trust to his or her heirs at law (determined in accordance with the laws of the State of California as they existed at the date of the Participant's death).
5.9. Form of Distribution.
(a) All shares of Company Stock allocated to a Participant's ESOP Account shall be distributed in the form of cash or other property, unless the Participant elects under paragraph (b) below to receive the distribution in the form of Company Stock with cash in lieu of fractional shares. To the extent that Company Stock must be valued to effect such a distribution, such valuation shall be equal to the fair market value of such stock determined as of the last Valuation Date prior to the date of distribution.
(b) A Participant may elect that all shares of Company Stock
allocated to his or her ESOP Account be distributed in the form of
Company Stock with cash in lieu of fractional shares. Any cash or other
property in a Participant's ESOP Account ("non-stock assets") shall be
used to acquire Company Stock for distribution only if such Participant
further elects and only if such stock is available on the open market.
If such Participant elects to receive the non-stock assets in his or
her ESOP Account in Company Stock and such stock is available on the
open market, the value of such non-stock assets shall be used to
acquire such whole shares of Company Stock as may be acquired with such
value and any remaining amount shall be distributed in cash.
Notwithstanding the foregoing, if applicable corporate charter or bylaw
provisions restrict ownership of substantially all outstanding Company
Stock to Employees or to a plan or trust described in Code Section
401(a), then any distribution of a Participant's ESOP Account shall
only be in cash.
(d) Notwithstanding the foregoing, in the case of an Eligible Rollover Distribution, a Participant may elect that an Eligible Rollover Distribution be paid directly by the Trustee to the trustee of an Eligible Retirement Plan.
5.10. Distribution Rules. Notwithstanding the provisions of Sections
5.3, 5.4, 5.5, 5.6, 5.7, and 5.9 of the Plan regarding distributions of
Participants' ESOP Accounts, the following additional rules shall apply to all
such distributions.
(a) In no event shall any benefits under the Plan, including
benefits upon retirement, termination of employment, or Disability, be
paid to a Participant prior to the "Consent Date" (as defined herein)
unless the Participant consents in writing to the payment of such
benefits prior to said Consent Date. As used herein, the term "Consent
Date" shall mean the later of (i) the Participant's 62nd birthday, or
(ii) the Participant's Normal Retirement Age. Notwithstanding the
foregoing, the provisions of this paragraph shall not apply (i)
following the Participant's death, or (ii) with respect to a lump-sum
distribution of the vested portion of a Participant's ESOP Account if
the total amount of such vested portion does not exceed (1) $5,000 or
did not exceed $5,000 at the time of any prior distribution ($3,500 for
the 1997 Plan Year) or (2) for distributions after March 21, 1999, the
total amount of such vested portion at the time of distribution does
not exceed $5,000.(1)
(b) Unless the Participant elects otherwise pursuant to paragraph (a) above, distributions of the vested portion of a Participant's ESOP Accounts shall commence no later than the 60th day after the close of the Plan Year in which the latest of the following events occurs: (i) the Participant's Normal Retirement Age; (ii) the tenth anniversary of the year in which the Participant commenced participation in the Plan; or (iii) the Participant's Severance.
(c) Notwithstanding paragraphs (a) or (b) above, distributions of the entire vested portion of a Participant's ESOP Accounts shall be made no later than the Participant's Required Beginning Date, or, if such distribution is to be made over the life of such Participant or over the lives of such Participant and a Beneficiary (or over a period not extending beyond the life expectancy of such Participant and Beneficiary) then such distribution shall commence no later than the Participant's Required Beginning Date. Required Beginning Date shall mean:
(ii) Participants attaining age 70-1/2 after 1998:
The Required Beginning Date of a Participant who attains age
70-1/2 after 1998 shall be April 1 of the calendar year
immediately following the later of the calendar year in which
the Participant attains age 70-1/2 or retires; provided,
however, if such Participant is a Five Percent Owner (as
defined in Code Section 416(i) and applicable regulations)
with respect to the Plan Year ending in the calendar year in
which such Participant attains age 70-1/2, the Required
Beginning Date shall be April 1 of the calendar year
immediately following the year in which such Participant
attains age 70-1/2.(1)
(d) If it is not administratively practical to calculate and commence payments by the latest date specified in the rules of paragraphs (a), (b) and (c) above because the amount of the Participant's benefit cannot be calculated, or because the Committee is unable to locate the Participant after making reasonable efforts to do so, the payment shall be made as soon as is administratively possible (but not more than 60 days) after the Participant can be located and the amount of the distributable benefit can be ascertained.
(e) If any payee under the Plan is a minor or if the Committee reasonably believes that any payee is legally incapable of giving a valid receipt and discharge for any payment due him, the Committee may have such payment, or any part thereof, made to the person (or persons or institution) whom it reasonably believes is caring for or supporting such payee, or, if applicable, to any duly appointed guardian or committee or other authorized representative of such payee. Any such payment shall be a payment for the account of such payee and shall, to the extent thereof, be a complete discharge of any liability under the Plan to such payee.
5.11. Put Option for Company Stock Allocated to ESOP Accounts.
(a) Solely in the event that a Participant receives a distribution consisting in whole or in part of Company Stock that at the time of distribution thereof is not readily tradable stock within the meaning of Code Section 409(h) then such distributed Company Stock shall be made subject to a put option in the hands of a Qualified Holder (as defined hereinbelow), with such put option to be subject to the following provisions:
(ii) During the sixty (60) day period following any distribution of such Company Stock, a Qualified Holder shall have the right to require the Company to purchase all or any portion of said distributed Company Stock held by said Qualified Holder. A Qualified Holder shall exercise such right by giving written notice to the Company within the aforesaid sixty (60) day period of the number of shares of distributed Company Stock that such Qualified Holder intends to sell to the Company. The purchase price to be paid for any such Company Stock shall be its fair market value determined as of the Valuation Date coincident with or immediately preceding the date of the distribution.
(iii) If a Qualified Holder shall fail to exercise his or her put option right under subparagraph (ii) above, such option right shall temporarily lapse upon the expiration of the sixty (60) day period thereof. As soon as is reasonably practicable following the last day of the Plan Year in which said sixty (60) day option period expires, the Company shall notify each such non-electing Qualified Holder who is then a shareholder of record of the valuation of such Company Stock as of the most recent Valuation Date. During the sixty (60) day period following receipt of such valuation notice, any such Qualified Holder shall have the right to require the Company to purchase all or any portion of such distributed Company Stock. The purchase price to be paid therefor shall be based on the valuation of such Company Stock as of the Valuation Date coinciding with or next preceding the exercise of the option under this Section 5.11(c). If a Qualified Holder fails to exercise his or her option right under this subparagraph (iii) with respect to any portion of such distributed Company Stock, no further options shall be applicable under the Plan and the Company shall have no further purchase obligations hereunder.
(iv) In the event that a Qualified Holder shall exercise a put option under this Section, then the Company shall have the option of paying the purchase price of the Company Stock which is subject to such put option (hereafter the "Option Stock") under either of the following methods:
(I) A lump sum payment of the purchase price within ninety (90) days after the date upon which such put option is exercised (the "Exercise Date") or
(v) The put options under subparagraphs (ii)and (iii) above shall be effective solely against the Company and shall not obligate the Plan in any manner; provided, however, with the Company's consent, the Plan may elect to purchase any Company Stock that otherwise must be purchased by the Company pursuant to a Qualified Holder's exercise of any such option.
(vi) If at the time of any distribution of said Company Stock it is known that any applicable Federal or State law would be violated by the Company's honoring of such a put option as provided under this Section, the Company shall designate another entity that will honor such put option. Such other entity shall be one having a substantial net worth at the time such loan is made and whose net worth is reasonably expected to remain substantial.
(vii) In the event that a Qualified Holder is unable to exercise the put option provided hereunder because the Company (or other entity bound by such put option) is prohibited from honoring it by reason of any applicable Federal or State law, then the sixty (60) day option periods during which such put option is exercisable under subparagraphs (ii) and (iii) shall not include any such time during which said put option may not be exercised due to such reason.
(viii) Except as is expressly provided hereinabove with respect to any distributed Company Stock that is readily tradeable stock within the meaning of Code Section 409(h), no Participant shall have any put option rights with respect to Company Stock distributed under the Plan, and neither the Company nor the Plan shall have any obligation whatsoever to purchase any such distributed Company Stock from any Participant or other Qualified Holder.
(b) Notwithstanding any other provisions of the Plan regarding a Participant's right to exercise a put option, the put option described in paragraph (a) above shall be subject to the following additional provisions:
(i) If the distribution constitutes a Total Distribution (as defined below), in the event that a Qualified Holder exercises a put option under this Section, then the Company shall have the right to pay the purchase price of the Option Stock under either of the following methods:
(1) A lump sum payment of the purchase price within thirty (30) days after the Exercise Date; or
(2) A series of five substantially equal annual payments with the first such payment to be made within thirty (30) days after the Exercise Date. If the Company elects to pay the purchase price of the Option Stock under the installment method provided in this clause (2), then the Company shall, within 30 days after the Exercise Date, give the Qualified Holder who is exercising the put option the Company's promissory note for the full unpaid balance of the option price. Such note shall, at a minimum, provide adequate security, state a rate of interest reasonable under the circumstances (but at least equal to the imputed compound rate in effect as of the Exercise Date pursuant to the regulations promulgated under Code Sections 483 or 1274, whichever shall be applicable) and provide that the full amount of such note shall accelerate and become due immediately in the event that the Company defaults in the payment of a scheduled installment payment.
(ii) If the distribution does not constitute a Total Distribution (as defined below), in the event that a Qualified Holder exercises a put option under this Section, then the Company shall pay the purchase price of the Option Stock in a lump sum within thirty (30) days after the Exercise Date.
For purposes of this Section, "Total Distribution" shall mean a distribution to a Participant (or his or her Beneficiary, if applicable) within one taxable year of such recipient of the entire balance to the credit of the Participant.
5.12. Diversification Rule.
(a) For the purpose of this Section 5.12 only, the following definitions shall apply:
(i) "Qualified Participant" shall mean a Participant who has attained age 55 and who has completed at least 10 years of participation in the Plan.
(ii) "Qualified Election Period" shall mean the six Plan Year period beginning with the Plan Year in which the Participant first becomes a Qualified Participant.
(iii) "Insider" shall mean any Participant who is directly or indirectly the beneficial owner of more than 10% of any class of any equity security (other than an exempted security) of the Sponsor (or the Company) which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, or who is a "director" or an "officer" of the sponsor or the Company as those terms are interpreted under the Securities Exchange Act of 1934 for the purpose of determining persons subject to Section 16 of such Act.
(b) Each Qualified Participant shall be permitted to direct the Plan as to the diversification of 25 percent of the value of the vested portion of the Participant's ESOP Account, in the manner provided under paragraphs (c) or (d) below, within 90 days after the last day of each Plan Year during the Participant's Qualified Election Period. Within 90 days after the close of the last Plan Year in the Participant's Qualified Election Period, a Qualified Participant may direct the Plan as to the diversification of 50 percent of the value of the vested portion of such ESOP Account.
(c) For Plan Years beginning on or after January 1, 2000, at
the written election of a Qualified Participant, the Plan shall
transfer to the Allergan, Inc. Savings and Investment Plan (the "SIP")
that portion of the Participant's ESOP Account that is covered by the
election within 90 days after the last day of the period during which
the election can be made which shall be allocated to a rollover account
maintained on behalf of the Qualified Participant. Under the SIP, the
Qualified Participant may invest the amount so transferred under any of
the investment options available under the SIP or may direct that the
amount so transferred be distributed to him or her. Notwithstanding the
foregoing and consistent with the requirements of Code Section
401(a)(28), a Qualified Participant who is an Insider may only elect to
diversify his or her ESOP Account if within six (6) months before the
Participant's election, he or she has not made an election under the
Allergan, Inc. Savings and Investment Plan or the provision of any
company plan covered by Rule 16b-3 (promulgated pursuant to the
Securities Exchange Act of
(d) For Plan Years beginning prior to January 1, 2000, at the written election of a Qualified Participant, the Plan shall distribute (notwithstanding Code Section 409(d)) the portion of the Participant's ESOP Account that is covered by the election within 90 days after the last day of the period during which the election can be made. Such distribution shall be in such form as provided in Section 5.9. Such distribution shall be subject to such requirements of the Plan concerning put options as would otherwise apply to a distribution of Company Stock from the Plan. In lieu of such distribution, a Qualified Participant may elect that the Plan transfer the portion of the Participant's ESOP Account that is distributable and that is covered by such election to another qualified plan of the Company which accepts such transfers, provided that such plan permits employee-directed investment and does not invest in Company Stock to a substantial degree. Such transfer shall be made no later than 90 days after the last day of the period during which the election can be made. The Committee may also establish at least three investment options under this Plan for the purpose of diversification under this Section 5.12. If the Committee establishes such investment options, in lieu of distribution or transfer under this paragraph (d), a Qualified Participant may elect that the Plan invest the portion of the Participant's ESOP Account that is distributable in cash and that is covered by such election in any of the investment options established by the Committee. Such investment shall be made no later than 90 days after the last day of the period during which the election can be made. Notwithstanding the foregoing and consistent with the requirements of Code Section 401(a)(28), a Qualified Participant who is an Insider may only elect to diversify his or her ESOP Account if within six (6) months before the Participant's election, he or she has not made an election under the Allergan, Inc. Savings and Investment Plan or the provision of any company plan covered by Rule 16b-3 (promulgated pursuant to the Securities Exchange Act of 1934) then in existence that would result in the transfer into a Company equity securities fund.
5.13. Lapsed Benefits.
(a) In the event that a benefit is payable under the Plan to a Participant and after reasonable efforts the Participant cannot be located for the purpose of paying the benefit during a period of three consecutive years, the Participant shall be presumed dead and the benefit shall, upon the termination of that three year period, be paid to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the purpose of paying the benefit for the following two years, then the benefit shall be forfeited and allocated to the ESOP Accounts of the other Participants for such Plan Year in accordance with Section 4.3.
(d) For purposes of this Section, the term "Beneficiary" shall include any person entitled under Section 5.8 to receive the interest of a deceased Participant or deceased designated Beneficiary. It is the intention of this provision that during the relevant waiting period (two years or five years) the benefit will be distributed to an eligible Beneficiary in a lower priority category under Section 5.8 if no eligible Beneficiary in a higher priority category can be located by the Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a forfeiture the Participant or an eligible Beneficiary shall claim the forfeited benefit, the amount forfeited shall be reinstated (without regard to any interest or investment earnings on such amount) and paid to the claimant as soon as practical following the claimant's production of reasonable proof of his or her identity and entitlement to the benefit (determined pursuant to the Plan's normal claim review procedures under Section 7.8).
(f) The Committee shall direct the Trustee with respect to the procedures to be followed concerning a missing Participant (or Beneficiary), and the Company shall be obligated to contribute to the Trust Fund any amounts necessary after the application of Section 4.3 to pay any reinstated benefit after it has been forfeited pursuant to the provisions of this Section.
6.1. General. All contributions made under the Plan and investments made and property of any kind or character acquired with any such funds or otherwise contributed, and all income, profits, and proceeds derived therefrom, shall be held in Trust and shall be held and administered by the Trustee in accordance with the provisions of the Plan and Trust Agreement.
6.2. Single Trust. Assets of the Trust shall be held in a separate fund which shall consist of the Trust Fund. Individual Participant interests in the Trust Fund shall be reflected in the ESOP Accounts maintained for the Participants. Notwithstanding the foregoing, the Trust Fund shall be treated as a single trust for purposes of investment and administration, and nothing contained herein shall require a physical segregation of assets for any fund or for any Account maintained under the Plan.
6.3. Investment of the Trust.
(a) Subject to Sections 6.4 and 5.11 hereof, the Trust Fund shall be invested primarily in Company Stock and neither the Company nor the Committee nor the Trustee shall have any responsibility or duty to time any transaction involving Company Stock, in order to anticipate market conditions or changes in stock value, nor shall any such person have any responsibility or duty to sell Company Stock held in the Trust Fund (or otherwise to provide investment management for Company Stock held in the Trust Fund) in order to maximize return or minimize loss. The Committee may direct the Trustee to have the Plan enter into one or more Exempt Loans to finance the acquisition of Company Stock for the Trust Fund. Company contributions in cash, and other cash received or held by the Trustee, may be used to acquire shares of Company Stock from the Company, Company shareholders, from the ESOP Accounts of Participants about to receive distributions under the Plan, or on the open market.
(b) Notwithstanding anything contained herein to the contrary, proceeds of an Exempt Loan shall be used, within a reasonable time after receipt by the Trust, only for the following purposes:
(i) to acquire Company Stock;
(ii) to repay the same Exempt Loan; or
(iii) to repay any previous Exempt Loan.
An Exempt Loan shall be repaid only from amounts loaned to the Trust and the proceeds of such loans, from Company contributions in cash and earnings attributable thereto, from any collateral given for the loan (including, in the case where the Exempt Loan is a refinancing of a prior Exempt Loan, unallocated Company Stock acquired with
6.4. Certain Offers for Company Stock. Notwithstanding any other provision of the Plan to the contrary, in the event an offer shall be received by the Trustee (including but not limited to a tender offer or exchange offer within the meaning of the Securities Exchange Act of 1934, as from time to time amended and in effect) to acquire any or all shares of Company Stock held by the Trust (an "Offer"), whether or not such Company Stock is allocated to Participants' ESOP Accounts, the discretion or authority to sell, exchange or transfer any of such shares of Company Stock shall be determined in accordance with the following rules:
(a) The Trustee shall have no discretion or authority to sell, exchange or transfer any Company Stock pursuant to an Offer except to the extent, and only to the extent that the Trustee is timely directed to do so in writing (i) with respect to any Company Stock held by the Trustee subject to such Offer and allocated to any Participant's ESOP Account, by each Participant to whose ESOP Account any of such Company Stock is allocated and (ii) with respect to any Company Stock held by the Trustee subject to such Offer and not allocated to any Participant's ESOP Account, by each Participant who is an Eligible Employee with respect to a number of shares (including fractional shares) of such unallocated Company Stock equal to the total number of shares of such unallocated Company Stock multiplied by a fraction the numerator of which is the annualized Compensation of such Participant for the calendar year in which such Offer is made and the denominator of which is the total annualized Compensation for the calendar year in which such Offer is made of all such Participants who are Eligible Employees.
(b) To the extent there remains any residual fiduciary responsibility with respect to Company Stock pursuant to an Offer after application of paragraph (a) above, the Trustee shall sell, exchange or transfer such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor. To the extent the Committee or an independent fiduciary is required to exercise any residual fiduciary responsibility with respect to an Offer, the Committee or independent fiduciary shall take into account in exercising its fiduciary judgment, unless it is clearly imprudent to do so, directions timely received from Participants, as such directions are most indicative of what action is in the best interests of Participants. Further, the Committee or independent fiduciary, in addition to taking into consideration any relevant financial factors bearing on any such decision, shall take into consideration any relevant non-financial factors, including, but not limited to, the continuing job security of Participants as employees of the Sponsor or any Affiliated Company, conditions of employment, employment opportunities and other similar matters, and the prospect of the Participants and prospective Participants for future benefits under the Plan (including any
(c) Upon timely receipt of such instructions, the Trustee shall, subject to the provisions of paragraphs (e) and (o) of this Section, sell, exchange or transfer pursuant to such Offer, only such shares as to which such instructions were given. The Committee shall use its best efforts to communicate or cause to be communicated to each Participant the consequences of any failure to provide timely instructions to the Trustee.
(d) In the event, under the terms of an Offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such Offer may be withdrawn from such Offer, the Trustee shall follow such instructions respecting the withdrawal of such shares from such Offer in the same manner and the same proportion as shall be timely received by the Trustee from the Participants entitled under this Section to give instructions as to the sale, exchange or transfer of shares pursuant to such Offer.
(e) In the event that an Offer for fewer than all of the shares of Company Stock held by the Trustee in the Trust shall be received by the Trustee, each Participant shall be entitled to direct the Trustee as to the acceptance or rejection of such Offer (as set forth herein) with respect to the largest portion of such Company Stock as may be possible given the total number or amount of shares of Company Stock the Plan may sell, exchange or transfer pursuant to the Offer based upon the instructions received by the Trustee from all other Participants who shall timely instruct the Trustee pursuant to this paragraph to sell, exchange or transfer such shares pursuant to such Offer, each on a pro rata basis in accordance with the maximum number of shares each such Participant would have been permitted to direct under paragraph (a) had the Offer been for all shares of Company Stock held in the Trust.
(f) In the event an Offer is received by the Trustee and instructions have been solicited from Participants regarding such Offer, and prior to termination of such Offer, another Offer is received by the Trustee for the Company Stock subject to the first Offer, the Trustee shall inform the Committee of such other Offer and the Committee shall use its best efforts under the circumstances to solicit instructions from the Participants (i) with respect to securities tendered for sale, exchange or transfer pursuant to the first Offer, whether to withdraw such tender, if possible, and, if withdrawn, whether to tender any Company Stock so withdrawn for sale, exchange or transfer pursuant to the second Offer and (ii) with respect to Company Stock not tendered for sale, exchange or transfer pursuant to the first Offer, whether to tender or not to tender such Company Stock for sale, exchange or transfer pursuant to the second Offer. The Trustee shall follow all such instructions received in a timely manner from Participants in the same manner and in the same proportion as provided in paragraph (a) of this Section. With respect to any further Offer for any Company Stock received by the Trustee and subject to any earlier Offer (including successive Offers from one or more existing offers), the Trustee shall act in the same manner as described above.
(h) The Sponsor shall distribute and/or make available to each Participant who is entitled to respond to an Offer pursuant to paragraphs (a), an instruction form to be used by each such Participant who wishes to instruct the Trustee. The instruction form shall state that (i) if the Participant fails to return an instruction form to the Trustee by the indicated deadline, the Company Stock with respect to which he or she is entitled to give instructions shall not be sold, exchanged or transferred pursuant to such Offer unless the Trustee is directed otherwise as provided in paragraph (b) above, (ii) the Participant shall be a named fiduciary (as described in paragraph (m) below) with respect to all shares of Company Stock for which he or she is entitled to give instructions, and (iii) the Company acknowledges and agrees to honor the confidentiality of the Participant's instructions to the Trustee.
(i) Each Participant may choose to instruct the Trustee in one of the following two ways: (i) not to sell, exchange or transfer any shares of Company Stock for which he or she is entitled to give instructions, or (ii) to sell, exchange or transfer all Company Stock for which he or she is entitled to give instructions. The Sponsor shall follow up with additional mailings and postings of bulletins, as reasonable under the time constraints then prevailing, to obtain instructions from Participants not otherwise responding to such requests for instructions. Subject to paragraph (e), the Trustee shall then sell, exchange or transfer shares according to instructions from Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred unless directed otherwise as provided in paragraph (b) above.
(j) The Sponsor shall furnish former Participants who have received distributions of Company Stock so recently as to not be shareholders of record with the information given to Participants pursuant to paragraphs (g), (h) and (i) of this Section. The Trustee shall then sell, exchange or transfer shares according to instructions from such former Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred.
(k) Neither the Company, the Committee nor the Trustee shall express any opinion or give any advice or recommendation to any Participant concerning the Offer, nor shall they have any authority or responsibility to do so.
(m) Each Participant shall be a named fiduciary (as that term
is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
allocated to his or her ESOP Account under the Plan and with respect to
his or her pro-rata portion of the unallocated Company Stock for which
he or she is entitled to issue instructions in accordance with
paragraph (a) of this Section solely for purposes of exercising the
rights of a shareholder with respect to an Offer pursuant to this
Section 6.4 and voting rights pursuant to Section 7.13.
(n) To the extent that an Offer results in the sale of Company Stock in the Trust and allocated to the ESOP Accounts of Participants, the Committee shall instruct the Trustee as to the investment of the proceeds of such sale. To the extent that an Offer results in the sale of Company Stock in the Trust and not allocated to the ESOP Accounts of any Participant, the proceeds from such sale shall first be applied to repay the fullest extent possible, all Exempt Loans then outstanding. To effect such repayment, the Trustee shall seek such consents and approvals from lenders under any Exempt Loans as may be necessary or convenient to permit the tender of shares of Company Stock held in the Exempt Loan Suspense Subfund. To the extent that proceeds from the sale of shares held in the Exempt Loan Suspense Subfund exceed the outstanding principal and interest of all Exempt Loans, such excess proceeds shall be allocated to each Participant's Non-Stock Subaccount in the same manner as allocations under Section 4.2(a); provided, however, that any Participant who is employed on the date of the closing of the sale pursuant to the Offer shall be deemed an Eligible Participant entitled to an allocation of excess sale proceeds for purposes of this Section 6.4(l) only. To the extent that less than all of the shares of Company Stock held in the Exempt Loan Suspense Subfund are tendered in an Offer and repayment of an Exempt Loan results in a release of shares of Company Stock from the Exempt Loan Suspense Subfund in excess of those tendered in such Offer, the excess released shares of Company Stock shall be allocated to each Participant's ESOP Account in the same manner as allocations under Section 4.2(c); provided, however, that any Participant who is employed on the date of the closing of the sale pursuant to the Offer shall be deemed an Eligible Participant entitled to an allocation of Company Stock for purposes of this Section 6.4(l) only. To the extent that allocations to Participants under this Section 6.4(l) constitute Annual Additions, all such allocations
(o) In the event a court of competent jurisdiction shall issue to the Plan, the Committee, the Sponsor or the Trustee an opinion or order, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate, in all circumstances or in any particular circumstances, any provision or provisions of this Section regarding the determination to be made as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to an Offer or cause any such provision or provisions to conflict with securities laws, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this Section shall be given no further force or effect. In such circumstances, the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with respect to such Offer, the Sponsor shall appoint an independent fiduciary who shall exercise such residual fiduciary responsibility as provided in paragraph (b) above and shall direct the Trustee as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to such Offer.
6.5. Securities Law Limitation. Neither the Committee nor the Trustee shall be required to engage in any transaction, including without limitation, directing the purchase or sale of Company Stock, which either determines in its sole discretion might tend to subject itself, its members, the Plan, the Company, or any Participant or Beneficiary to a liability under federal or state securities laws.
6.6. Accounting and Valuations.
(a) The following special accounting rules shall apply to the Trust Fund.
(i) Each Participant's ESOP Account shall consist of a portion comprised of cash and all other assets except for Company Stock (the "Non-Stock Subaccount") and a portion comprised solely of Company Stock (the "Stock Subaccount").
(ii) Gains or losses on Non-Stock Subaccounts shall be credited in accordance with this Section as if the Non-Stock Subaccounts collectively constituted a separate pooled investment fund.
(iii) Stock Subaccounts shall be credited with a specific number of shares of Company Stock rather than an individual interest in a pool of Company Stock.
(c) As of each Valuation Date each Participant's Non-Stock
Subaccount shall be credited (debited) with the "allocable share" of
the net income (loss) of the non-Company Stock portion of the Trust
Fund valued as of such Valuation Date in proportion to Non-Stock
Subaccount balances. For this purpose, except as provided in Section
6.7, the net income (loss) of the Trust Fund shall not include any
income with respect to securities in the Exempt Loan Suspense Subfund
acquired with the proceeds of an Exempt Loan.
(d) In making valuations required by the Plan, the Trustee shall value all assets of the Trust at fair market value. Such fair market value shall be determined from facts reasonably available to the Trustee. In making said determination, the Trustee may, but need not, select and rely upon the advice and opinions of appraisers, brokers, investment counsel, or any other persons believed by the Trustee to be competent. Any determination of value so made shall, for all purposes of the Plan, conclusively establish such value.
(e) If Company Stock is readily tradeable stock (as that term is used under Code Section 409(h)), valuation of each Participant's Stock Subaccount shall, at any relevant times, be worth the fair market value on that date of the shares of Company Stock credited to it. Valuations of any Company Stock held by the Trust which is not readily tradable stock shall be performed by an independent appraiser or valuation consultant.
(f) The Committee shall establish accounting procedures for the purpose of making the allocations, valuations and adjustments to Participants' ESOP Accounts provided for in Article VI hereof. Such accounting procedures shall include adequate records of the cost basis of Company Stock allocated to ESOP Accounts and the identity of shares acquired with the proceeds of an Exempt Loan. From time to time, the Committee may modify its accounting procedures for the purpose of achieving equitable and nondiscriminatory allocations among the ESOP Accounts of Participants in accordance with the provisions of the Plan.
(g) In the event any rights, warrants, or options are issued with respect to Company Stock held in Stock Subaccounts, the Committee shall direct the Trustee as to whether such rights, warrants, or options shall be exercised for such Subaccounts using cash as may be available in corresponding Non-Stock Subaccounts. Company Stock so acquired shall be credited to corresponding Stock Subaccounts in proportion to the amount of cash withdrawn from the corresponding Non-Stock Subaccounts. A Participant shall have no right to request, direct, or demand that the Trust exercise on his or her behalf rights to purchase Company Stock.
6.7. Dividends.
(a) As determined by the Committee, dividends on shares of Company Stock allocated to ESOP Accounts shall be either (i) applied to repay an Exempt Loan then outstanding; (ii) paid directly to Participants or Beneficiaries; or (iii) retained in the Trust and treated as net income of the Trust. Any resulting allocation shall be made according to the following rules:
(i) If cash dividends are used to repay an Exempt
Loan, the appropriate number of shares of Company Stock shall
be released from the Exempt Loan Suspense Subfund pursuant to
Section 4.2(b). Notwithstanding the foregoing, if the fair
market value of the shares released pursuant to Section 4.2(b)
from the application of cash dividends to repay an Exempt Loan
under this Section 6.7(a)(i) is less than such cash dividends,
additional shares shall be released from the Exempt Loan
Suspense Subfund until the fair market value of such released
shares equals the amount of such cash dividends. Such Company
Stock shall be allocated to Participants' Stock Subaccounts in
proportion to the number of shares of Company Stock allocated
to Participants' Stock Subaccounts for which such cash
dividend was paid.
(ii) If cash dividends are retained in the Trust and are not used to pay expenses of the Plan, such dividends shall be allocated as of the date specified by the Committee to Non-Stock Subaccounts in proportion to the shares of Company Stock held in corresponding Stock Subaccounts for which such dividends were distributed to the Trust.
(iii) If stock dividends are retained in the Trust and are not used to pay expenses of the Plan, such dividends shall be credited on the date specified by the Committee to Stock Subaccounts in proportion to the shares of Company Stock held in such Subaccounts for which such dividends were distributed to the Trust.
(iv) If cash or stock dividends are distributed directly to Participants or Beneficiaries, such dividends shall be distributed on the date specified by the Committee in proportion to the shares of Company Stock held in such Participant's or Beneficiary's Stock Subaccount for which such dividends were distributed.
(b) As determined by the Committee, dividends on shares of Company Stock held in the Exempt Loan Suspense Subfund or on shares of Company Stock contributed to the Trust Fund but not yet allocated to Participant's ESOP Accounts shall be either
(i) If cash or stock dividends are used to repay an
Exempt Loan, the appropriate number of shares of Company Stock
shall be released from the Exempt Loan Suspense Subfund
pursuant to Section 4.2(b). Such Company Stock shall be
allocated to Participants Stock Subaccounts pursuant to
Section 4.2(c).
(ii) If cash dividends are not used to repay an Exempt Loan, they shall be considered income of the Trust and, if not used to pay expenses of the Plan, shall be allocated to Participants' ESOP Accounts in proportion to their respective ESOP Account balances.
(iii) If stock dividends are not used to repay an Exempt Loan or used to pay expenses of the Plan, they shall be retained in the Exempt Loan Suspense Subfund until released from such Subfund pursuant to Section 4.2(b) and allocated to Participants Stock Subaccounts pursuant to Section 4.2(c).
6.8. Non-Diversion of Trust Fund. Except as hereinafter provided, all assets of the Trust shall be held by the Trustee for the exclusive benefit of Plan Participants and Beneficiaries. At no time shall any part of the Trust be used for or diverted to purposes other than for the exclusive benefit of the Participants and Beneficiaries under the Plan except as follows:
(a) In the case of a contribution which is made by a mistake of fact, that contribution, at the Company's election, may be returned to the Company within one year after it is made.
(b) All contributions to the Trust are hereby conditioned upon the Plan satisfying all of the requirements of Code Section 401(a), as evidenced by the issuance by the Internal Revenue Service of a favorable determination letter with respect to the Plan. If the Plan does not qualify, at the Company's written election, the Plan may be revoked and any or all such contributions with respect to the portion revoked may be returned to the Company within one year after the date of the Internal Revenue Service's denial of the qualification of the Plan or a portion thereof. Upon such a revocation, the affairs of the Plan or the portion revoked shall be terminated and wound up as the Committee shall direct.
(c) Contributions to the Trust Fund are conditioned on deductibility under Code Section 404. In the event a deduction is disallowed for any such contribution, then such contribution may be returned to the Company within one year of the disallowance.
(d) The residue of the 415 Suspense Account that cannot be allocated to Participants upon a Plan termination may revert to the Company in accordance with the provisions of Section 11.7.
6.10. Distributions. Money and property of the Trust shall be paid out, disbursed, or applied by the Trustee for the benefit of Participants and Beneficiaries under the Plan in accordance with directions received by the Trustee from the Committee. Upon direction of the Committee, the Trustee may pay money or deliver property from the Trust for any purpose authorized under the Plan. The Trustee shall be fully protected in paying out money or delivering property from the Trust from time to time upon written order of the Committee and shall not be liable for the application of such money or property by the Committee.
The Trustee shall not be required to determine or to make any investigation to determine the identity or mailing address of any person entitled to benefits hereunder and shall have discharged its obligation in that respect when it shall have sent checks or other property by first-class mail to such persons at their respective addresses as may be certified to it by the Committee.
6.11. Taxes. If the whole or any part of the Trust, or the proceeds thereof, shall become liable for the payment of any estate, inheritance, income or other tax, charge, or assessment which the Trustee shall be required to pay, the Trustee shall have full power and authority to pay such tax, charge, or assessment out of any moneys or other property in its hands for the account of the person whose interests hereunder are so liable, but at least ten (10) days prior to making any such payment, the Trustee shall mail notice to the Committee of its intention to make such payment. Prior to making any transfers or distributions of any of the Trust, the Trustee may require such releases or other documents from any lawful taxing authority as it shall deem necessary.
6.12. Trustee Records to be Maintained. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions hereunder, and all accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company (subject to the provisions of Section 6.4(k)).
6.13. Annual Report of Trustee. Promptly following the close of each Plan Year (or such other period as may be agreed upon between the Trustee and Committee), or promptly after receipt of a written request from the Company, the Trustee shall prepare for the Company a
6.14. Appointment of Investment Manager. From time to time the Committee, in accordance with Section 7.6 hereof, may appoint one or more Investment Managers who shall have investment management and control over assets of the Trust not invested or to be invested in Company Stock. The Committee shall notify the Trustee of such assets of the appointment of the Investment Manager. In the event more than one Investment Manager is appointed, the Committee shall determine which assets shall be subject to management and control by each Investment Manager and shall also determine the proportion in which funds withdrawn or disbursed shall be charged against the assets subject to each Investment Manager's management and control. As shall be provided in any contract between an Investment Manager and the Committee, such Investment Manager shall hold a revocable proxy with respect to all securities which are held under the management of such Investment Manager pursuant to such contract (except for Company Stock), and such Investment Manager shall report the voting of all securities subject to such proxy on an annual basis to the Committee.
7.1. Appointment of Committee. There is hereby created a committee (the "Committee") which shall exercise such powers and have such duties in administering the Plan as are hereinafter set forth. The Board of Directors shall determine the number of members of such Committee. The members of the Committee shall be appointed by the Board of Directors and such Board shall from time to time fill all vacancies occurring in said Committee. The members of the Committee shall constitute the Named Fiduciaries of the Plan within the meaning of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 6.4 hereof, Participants shall be Named Fiduciaries with respect to shares of Company Stock for which they have the right to sell, transfer, or exchange pursuant to Section 6.4 and solely for purposes of Section 7.13, Participants shall be Named Fiduciaries with respect to shares of Company Stock on matters as to which they are entitled to provide voting directions pursuant to Section 7.13.
7.2. Transaction of Business. A majority of the Committee shall constitute a quorum for the transaction of business. Actions of the Committee may be taken either by vote at a meeting or in writing without a meeting. All action taken by the Committee at any meeting shall be by a vote of the majority of those present at such meeting. All action taken in writing without a meeting shall be by a vote of the majority of those responding in writing. All notices, advices, directions and instructions to be transmitted by the Committee shall be in writing and signed by or in the name of the Committee. In all its communications with the Trustee, the Committee may, by either of the majority actions specified above, authorize any one or more of its members to execute any document or documents on behalf of the Committee, in which event it shall notify the Trustee in writing of such action and the name or names of its members so designated and the Trustee shall thereafter accept and rely upon any documents executed by such member or members as representing action by the Committee until the Committee shall file with the Trustee a written revocation of such designation.
7.3. Voting. Any member of the Committee who is also a Participant hereunder shall not be qualified to act or vote on any matter relating solely to himself, and upon such matter his or her presence at a meeting shall not be counted for the purpose of determining a quorum. If, at any time a member of the Committee is not so qualified to act or vote, the qualified members of the Committee shall be reduced below two (2), the Board of Directors shall promptly appoint one or more special members to the Committee so that there shall be at least one qualified member to act upon the matter in question. Such special Committee members shall have power to act only upon the matter for which they were especially appointed and their tenure shall cease as soon as they have acted upon the matter for which they were especially appointed.
7.4. Responsibility of Committee. The authority to control and manage the operation and administration of the Plan, the general administration of the Plan, the responsibility for carrying out the Plan and the authority and responsibility to control and manage the assets of the Trust are hereby delegated by the Board of Directors to and vested in the Committee, except to the extent reserved to the Board of Directors, the Sponsor, or the Company. Subject to the
7.5. Committee Powers. The Committee shall have all discretionary powers necessary to supervise the administration of the Plan and control its operations. In addition to any discretionary powers and authority conferred on the Committee elsewhere in the Plan or by law, the Committee shall have, but not by way of limitation, the following discretionary powers and authority:
(a) To designate agents to carry out responsibilities relating
to the Plan, other than fiduciary responsibilities as provided in
Section 7.6.
(b) To employ such legal, actuarial, medical, accounting, clerical, and other assistance as it may deem appropriate in carrying out the provisions of the Plan, including one or more persons to render advice with regard to any responsibility any Named Fiduciary or any other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time for the conduct of the Committee's business and the administration and effectuation of the Plan.
(d) To administer, interpret, construe, and apply the Plan and to decide all questions which may arise or which may be raised under the Plan by any Employee, Participant, former Participant, Beneficiary or other person whatsoever, including but not limited to all questions relating to eligibility to participate in the Plan, the amount of Credited Service of any Participant, and the amount of benefits to which any Participant or his or her Beneficiary may be entitled.
(e) To determine the manner in which the assets of the Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time, to invest and reinvest the Trust Fund, or any part thereof, or to purchase, exchange, or lease any property, real or personal, which the Committee may designate. This shall include the right to direct the investment of all or any part of the Trust in any one security or any one type of securities permitted hereunder. Among the securities which the Committee may direct the Trustee to purchase are "qualifying employer securities" as defined in Code Section 4975(e) or any successor statutes thereto.
(g) Subject to provisions (a) through (d) of Section 8.1, to make administrative amendments to the Plan that do not cause a substantial increase or decrease in benefit accruals to Participants and that do not cause a substantial increase in the cost of administering the Plan.
Any action taken in good faith by the Committee in the exercise of discretionary power conferred upon it by the Plan shall be conclusive and binding upon the Participants and their Beneficiaries. All discretionary powers conferred upon the Committee shall be absolute; provided, however, that all such discretionary power shall be exercised in a uniform and nondiscriminatory manner.
7.6. Additional Powers of Committee. In addition to any discretionary powers or authority conferred on the Committee elsewhere in the Plan or by law, such Committee shall have the following discretionary powers and authority:
(a) To appoint one or more Investment Managers to manage and control any or all of the assets of the Trust not invested or to be invested in Company Stock.
(b) To designate persons (other than the members of the Committee) to carry out fiduciary responsibilities, other than any responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the members of the Committee, other than any responsibility to manage or control the assets of the Trust;
(d) To cancel any such designation or allocation at any time for any reason;
(e) To direct the voting of any Company Stock or any other security held by the Trust subject to Section 7.13 hereof; and
(f) To exercise management and control over Plan assets and to direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 7.6 shall be taken in writing, and no designation or allocation under Subsection (a), (b) or (c) shall be effective until accepted in writing by the indicated responsible person.
7.7. Claims Procedures. If a Participant believes that he or she is being denied any rights or benefits under the Plan, such Participant (or his or her beneficiary or duly appointed representative) may file a claim for benefits in writing with the Committee. The Committee shall follow the procedures set forth in this Section in processing a claim for benefits.
(a) Within 90 days following receipt by the Committee of a claim for benefits and all necessary documents and information, the Committee shall furnish the person claiming benefits under the Plan ("Claimant") with written notice of the decision rendered with respect to such claim. Should special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the
(b) In the case of a denial of the Claimant's claim, the written notice of such denial shall set forth (i) the specific reasons for the denial, (ii) references to the Plan provisions upon which the denial is based, (iii) a description of any additional information or material necessary for perfection of the application (together with an explanation why such material or information is necessary), and (iv) an explanation of the Plan's appeals procedures.
(c) If the Committee does not respond within 180 days, the Claimant may consider his or her claim denied.
7.8. Appeals Procedures. A Claimant who wishes to appeal the denial of his or her claim for benefits or to contest the amount of benefits payable shall follow the administrative procedures for an appeal as set forth in this Section and shall exhaust such administrative procedures prior to seeking any other form of relief.
(a) In order to appeal a decision rendered with respect to his
or her claim for benefits or with respect to the amount of his or her
benefits, a Claimant must file an appeal with the Committee in writing
within 60 days after the date of notice of the decision with respect to
the claim, or if the claim has neither been approved nor denied within
the period provided in Section 7.7(a) above, then the appeal must be
made within 60 days after the expiration of the period provided in
Section 7.7(c).
(b) The Claimant may request that his or her appeal be given full and fair review by the Committee. The Claimant also may review all pertinent documents and submit issues and comments in writing in connection with the appeal. The decision of the Committee shall be made not later than 60 days after the Claimant has completed his or her submission to the Committee of his or her appeal and any documentation or other information to be submitted in support of such request. Should special circumstances require an extension of time for processing, written notice of the extension shall be furnished to the Claimant prior to the expiration of the initial 60 day period. The notice shall indicate the special circumstances requiring an extension of time and the date by which a final decision is expected to be rendered. In no event shall the period of the extension exceed 60 days from the end of the initial 60 day period.
(c) The decision on the Claimant's appeal shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant with specific reference to the pertinent Plan provisions upon which the decision is based.
7.9. Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 7.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 6.15 hereof or as to which management and control has been retained by
the Trustee.
7.10. Indemnification and Insurance. To the extent permitted by law, the Company shall indemnify and hold harmless the Committee and each member thereof, each Trustee, the Board of Directors and each member thereof, and such other persons as the Board of Directors may specify, from the effects and consequences of his or her acts, omissions, and conduct in his or her official capacity in connection with the Plan and Trust. To the extent permitted by law, the Company may also purchase liability insurance for such persons.
7.11. Compensation of Committee and Plan Expenses. Members of the Committee shall serve as such without compensation unless the Board of Directors shall otherwise determine, but in no event shall any member of the Committee who is an Employee receive compensation from the Plan for his or her services as a member of the Committee. All members shall be reimbursed for any necessary expenditures incurred in the discharge of duties as members of the Committee. The compensation or fees, as the case may be, of all officers, agents, counsel, the Trustee or other persons retained or employed by the Committee shall be fixed by the Committee, subject to approval by the Board of Directors. The expenses incurred in the administration and operation of the Plan, including but not limited to the expenses incurred by the members of the Committee in exercising their duties, shall be paid by the Plan from the Trust Fund, unless paid by the Company, provided, however, that the Plan and not the Company shall bear the cost of interest and normal brokerage charges which are included in the cost of securities purchased by the Trust Fund (or charged to proceeds in the case of sales). If such expenses are to be paid by the Plan from the Trust Fund, the Committee may direct the Trustee to use forfeitures and dividends (and to sell the shares of Company Stock that represent such forfeitures or dividends) to pay such expenses.
7.12. Resignation. Any member of the Committee may resign by giving fifteen (15) days notice to the Board of Directors, and any member shall resign forthwith upon receipt of the written request of the Board of Directors, whether or not said member is at that time the only member of the Committee.
7.13. Voting of Company Stock. Notwithstanding any other provision of the Plan to the contrary, the Trustee shall have no discretion or authority to vote Company Stock held in the Trust on any matter presented for a vote by the stockholders of the Company except in accordance with timely directions received by the Trustee either from the Committee or from
(a) All Company Stock held in the Trust Fund shall be voted by the Trustee as the Committee directs in its absolute discretion, except as provided in this Section 7.13(a).
(i) If the Sponsor has a registration-type class of securities (as defined in Code Section 409(e)(4)), then with respect to all corporate matters, (1) each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to his or her ESOP Account and (2) each Participant who is an Eligible Employee shall be entitled to direct the Trustee as to the voting of a portion of all Company Stock not allocated to the ESOP Accounts of Participants, with such portion equal to the total number of shares of such unallocated stock multiplied by a fraction the numerator of which is the number of shares of Company Stock allocated and credited to his or her ESOP account and the denominator of which is the total number of shares of Company Stock allocated and credited to all ESOP Accounts of Participants.
(ii) If the Sponsor does not have a registration-type class of securities, then only with respect to such matters as the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of trade or business, or such similar transactions as may be prescribed in Code Section 409(e)(4) and the regulations thereunder, (1) each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to his or her ESOP Account and (2) each Participant who is an Eligible Employee shall be entitled to direct the Trustee as to the voting of a portion of all Company Stock not allocated to the ESOP Accounts of Participants, with such portion determined in the same manner as under paragraph (a)(i) above.
(b) To the extent there remains any residual fiduciary responsibility with respect to the voting of Company Stock after application of paragraph (a) above, the Trustee shall vote such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor. To the extent the Committee or an independent fiduciary is required to exercise any residual fiduciary responsibility with respect to the voting of Company Stock, the Committee or independent fiduciary shall take into account in exercising its fiduciary judgment, unless it is clearly imprudent to do so, directions timely received from Participants, as such directions are most indicative of what action is in the best interests of Participants. Further, the Committee or independent fiduciary, in addition to taking into consideration any relevant financial factors bearing on any such decision, shall take into consideration any relevant non-financial factors, including, but not limited to, the continuing job security of Participants as employees of the Sponsor or any Affiliated Company, conditions of employment, employment
(c) All Participants entitled to direct such voting shall be notified by the Sponsor, pursuant to its normal communications with shareholders, of each occasion for the exercise of such voting rights within a reasonable time before such rights are to be exercised. Such notification shall include all information distributed to shareholders either by the Sponsor or any other party regarding the exercise of such rights. Such Participants shall be so entitled to direct the voting of fractional shares (or fractional interests in shares); provided, however, that the Trustee may, to the extent possible, vote the combined fractional shares (or fractional interests in shares) so as to reflect the aggregate direction of all Participants giving directions with respect to fractional shares (or fractional interests in shares). To the extent that a Participant shall fail to direct the Trustee as to the exercise of voting rights arising under Company Stock credited to his or her ESOP Account, such Company Stock shall not be voted unless the Trustee is directed otherwise as provided in paragraph (b) above. The Trustee shall maintain confidentiality with respect to the voting directions of all Participants.
(d) Each Participant shall be a named fiduciary (as that term
is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
for which he or she has the right to direct the voting under the Plan
but solely for the purpose of exercising voting rights pursuant to this
Section 7.13 or certain Offers pursuant to Section 6.4.
(e) In the event a court of competent jurisdiction shall issue an opinion or order to the Plan, the Committee, the Sponsor or the Trustee, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate under ERISA, in all circumstances or in any particular circumstances, any provision or provisions of this paragraph regarding the manner in which Company Stock held in the Trust shall be voted or cause any such provision or provisions to conflict with ERISA, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this Section shall be given no further force or effect. In such circumstances the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with respect to voting, the Sponsor shall appoint an independent fiduciary who shall exercise such residual fiduciary responsibility as provided in paragraph (b) above and shall direct the Trustee as to the manner in which Company Stock held by the Trustee shall be voted.
7.14. Reliance Upon Documents and Opinions. The members of the Committee, the Board of Directors, the Company and any person delegated to carry out any fiduciary responsibilities under the Plan (hereinafter a "delegated fiduciary"), shall be entitled to rely upon any tables, valuations, computations, estimates, certificates and reports furnished by any consultant, or firm or corporation which employs one or more consultants, upon any opinions furnished by legal counsel, and upon any reports furnished by the Trustee or any Investment
8.1. Right to Amend Plan. The Sponsor, by resolution of the Board of Directors, shall have the right to amend the Plan and Trust Agreement at any time and from time to time and in such manner and to such extent as it may deem advisable, including retroactively, subject to the following provisions:
(a) No amendment shall have the effect of reducing any Participant's vested interest in the Plan or eliminating an optional form of distribution.
(b) No amendment shall have the effect of diverting any part of the assets of the Plan to persons or purposes other than the exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the duties or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the
above provisions (a) through (d), in accordance with the provisions of Section
7.5(g).
8.2. Adoption of Plan by Affiliated Companies. Subject to approval by the Board of Directors, and consistent with the provisions of ERISA, an Affiliated Company may adopt the Plan for all or any specified group of its Eligible Employees by entering into an adoption agreement in the form and substance prescribed by the Committee. The adoption agreement may include such modification of the Plan provisions with respect to such Eligible Employees as the Committee approves after having determined that no prohibited discrimination or other threat to the qualification of the Plan is likely to result. The Board of Directors may prospectively revoke or modify an Affiliated Company's participation in the Plan at any time and for any or no reason, without regard to the terms of the adoption agreement, or terminate the Plan with respect to such Affiliated Company's Eligible Employees and Participants. By execution of an adoption agreement (each of which by this reference shall become part of the Plan), the Affiliated Company agrees to be bound by all the terms and conditions of the Plan.
In the event the Company decides it is impossible or inadvisable for business reasons to continue to make contributions under the Plan, it may, by resolution of the Board of Directors, discontinue contributions to the Plan. Upon the permanent discontinuance of contributions to the Plan and notwithstanding any other provisions of the Plan, the rights of Participants shall become fully vested and nonforfeitable unless replaced by a comparable plan. The permanent discontinuance of contributions on the part of the Company shall not terminate the Plan as to the funds and assets then held in the Trust, or operate to accelerate any payments of distributions to or for the benefit of Participants or Beneficiaries, and the Trust shall continue to be administered in accordance with the provisions hereof until the obligations hereunder shall have been discharged and satisfied. If, at the time of discontinuance, there is any amount outstanding on an Exempt Loan, any amount remaining in the Exempt Loan Suspense Subfund shall be disposed of as provided in any applicable loan agreement.
10.1. Right to Terminate Plan. In the event the Board of Directors decides it is impossible or inadvisable for business reasons to continue the Plan, then it may, by resolution, terminate the Plan. Upon and after the effective date of such termination, the Company shall not make any further contributions under the Plan. Upon the termination or partial termination of the Plan for any reason, the interest in the Trust of each affected Participant shall automatically become fully vested unless the Plan is continued after its termination by conversion of the Plan into a comparable Plan through Plan amendment or through merger. If, at the time of termination, there is any amount outstanding in an Exempt Loan, any amount remaining in the Exempt Loan Suspense Subfund shall be disposed of in a manner that provides for the repayment of amounts outstanding in any such Exempt Loan. After the satisfaction of all outstanding liabilities of the Plan to persons other than Participants and Beneficiaries, all unallocated assets shall be allocated to the ESOP Accounts of Participants to the maximum extent permitted by law. The Trust Fund may not be fully or finally liquidated until all assets are allocated to ESOP Accounts; alternatively any unallocated assets may be transferred to another defined contribution plan maintained by the Sponsor or an Affiliated Company qualified under Code Section 401 where such assets shall be allocated among the accounts of Participants herein who are participants in such transferee plan. In no event, however, shall any part of the Plan revert to or be recoverable by the Company, or be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries. Notwithstanding the foregoing, amounts held in the 415 Suspense Account may revert to the Company in accordance with Section 11.7.
10.2. Effect on Trustee and Committee. The Trustee and the Committee shall continue to function as such for such period of time as may be necessary for the winding up of the Plan and for the making of distributions in the manner prescribed by the Board of Directors at the time of termination of the Plan.
10.3. Merger Restriction. Notwithstanding any other provision in the Plan, the Plan shall not in whole or in part merge or consolidate with, or transfer its assets or liabilities to, any other plan unless each affected Participant in the Plan would (if such other plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated).
10.4. Effect of Reorganization, Transfer of Assets or Change in Control.
(a) In the event of a consolidation or merger of the Company, or in the event of a sale and/or any other transfer of the operating assets of the Company, any ultimate successor or successors to the business of the Company may continue the Plan in full force and effect by adopting the same by resolution of its board of directors and by executing a proper supplemental or transfer agreement with the Trustee.
(i) Any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person"), is or becomes the
"beneficial owner," as defined in Rule 13d-3 under the
Exchange Act (a "Beneficial Owner"), directly or indirectly,
of securities of the Sponsor representing (1) 20% or more of
the combined voting power of the Sponsor's then outstanding
voting securities, which acquisition is not approved in
advance of the acquisition or within 30 days after the
acquisition by a majority of the Incumbent Board (as
hereinafter defined) or (2) 33% or more of the combined voting
power of the Sponsor's then outstanding voting securities,
without regard to whether such acquisition is approved by the
Incumbent Board;
(ii) Individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Sponsor's stockholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Sponsor, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall, for the purposes of this Plan, be considered as though such person were a member of the Incumbent Board of the Sponsor;
(iii) The consummation of a merger, consolidation or reorganization involving the Sponsor, other than one which satisfies both of the following conditions:
(1) a merger, consolidation or reorganization which would result in the voting securities of the Sponsor outstanding immediately prior thereto continuing to represent (either by
(2) a merger, consolidation or reorganization in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Sponsor representing 20% or more of the combined voting power of the Sponsor's then outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of complete liquidation of the Sponsor or an agreement for the sale or other disposition by the Sponsor of all or substantially all of the Sponsor's assets.
Notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b) is
(i) an underwriter or underwriting syndicate that has acquired any of
the Sponsor's then outstanding voting securities solely in connection
with a public offering of the Sponsor's securities, (ii) the Sponsor or
any subsidiary of the Sponsor or (iii) an employee stock ownership plan
or other employee benefit plan maintained by the Company or an
Affiliated Company that is qualified under the provisions of the Code.
In addition, notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b)
becomes a Beneficial Owner of more than the permitted amount of
outstanding securities as a result of the acquisition of voting
securities by the Company or an Affiliated Company which, by reducing
the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a
Change in Control would occur but for the operation of this sentence
and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under
any stock option plan of the Sponsor or through a stock dividend or
stock split), then a Change in Control shall occur.
(c) In the event of a Change in Control (as defined in Section 10.4(b) above), the Company shall be required to repay in full, solely from its own funds and within thirty (30) days following the date of such Change in Control, all Exempt Loans and Substitute Loans outstanding on the date of the Change in Control. Notwithstanding any other provision of the Plan to the contrary, all assets (including Company Stock) and
11.1. General Rule.
(a) Subject to Sections 11.1(b) and 11.3 through 11.6 hereof, the total Annual Additions under the Plan to a Participant's ESOP Accounts for any Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000); or
(ii) Twenty-five percent (25%) of the Participant's Compensation, from the Company for the Limitation Year. For purposes of this Article XI, the "Limitation Year" shall mean the Plan Year.
(b) For the purpose of this Article XI and XII only, the term "Company" shall mean the Sponsor and any Affiliated Company whether or not such Company has adopted the Plan pursuant to Section 8.2. Solely for purposes of this Article XI, an entity shall be considered an Affiliated Company by reference to Code Section 415(h).
11.2. Annual Additions. For purposes of Section 11.1, the term "Annual
Additions" shall mean with respect to a Participant, for any Limitation Year
with respect to the Plan and each other defined contribution plan, within the
meaning of Code Section 415(k), maintained by the Company ("Defined Contribution
Plan"), the sum of the amounts determined under Sections 11.2(a), (b), (c), and
(d) hereof:
(a) All amounts contributed or deemed contributed by the Company, except that the Annual Addition shall exclude the portion of the Company contribution representing interest on an Exempt Loan, provided that no more than one-third of the Company's contributions to the Trust Fund deductible under Code Section 404(a)(9) for a Limitation Year are allocated to Highly Compensated Employees.
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant. For purposes of this Section 11.2, forfeitures shall not include forfeitures of Company Stock acquired through the Trust Fund with the proceeds of an Exempt Loan, provided that no more than one-third of the Company's contributions to the Trust Fund deductible under Code Section 404(a)(9) for a Limitation Year are allocated to Highly Compensated Employees.
(d) All amounts described in Code Sections 415(l)(1) and 419A(d)(2).
11.3. Other Defined Contribution Plans. If the Company maintains any other Defined Contribution Plan, then each Participant's Annual Additions under such Defined Contribution
11.4. Defined Benefit Plans. If a Participant in the Plan has also been a participant in a defined benefit plan (as defined in Code Section 415(k)) maintained by the Company ("Defined Benefit Plan"), then in addition to the limitation contained in Section 11.1 hereof, the sum of the "Defined Benefit Fraction," as defined in Section 11.4(a) hereof, and the "Defined Contribution Fraction," as defined in Section 11.4(b) hereof, for any Limitation Year shall not exceed 1.0.
(a) "Defined Benefit Fraction" shall mean a fraction, the numerator of which is the total projected benefit of a Participant under all Defined Benefit Plans expressed as either an annual straight life annuity or a qualified joint and survivor annuity providing the maximum permissible survivor benefit (determined as of the close of the Limitation Year), and the denominator of which is the lesser of (i) the maximum dollar amount otherwise allowable for such Limitation Year under Code Section 415(b)(1)(A) times 1.25 or (ii) the percentage of compensation limit under Code Section 415(b)(1)(B) for such Limitation Year times 1.4.
(b) "Defined Contribution Fraction" shall mean a fraction, the numerator of which is the sum of the Participant's Annual Additions to the Plan and all other Defined Contribution Plans as of the end of a Limitation Year, and the denominator of which is the sum, determined for such Limitation Year and each prior Limitation Year of the Participant's service with the Company of the lesser of (i) the maximum dollar Annual Addition under Code Section 415(c)(1)(A) (determined without regard to Code Section 415(c)(6)) which could have been made for the Limitation Year times 1.25 or (ii) the amount determined under the percentage of compensation limit for such Limitation Year under Code Section 415(c)(1)(B) times 1.4. In computing the Defined Contribution Fraction under this Section 11.4(b) with respect to any Limitation Year ending after December 31, 1982, the special transition rule provided in Code Section 415(e)(6) shall be applicable.
This Section shall not apply to Plan Years beginning on or after January 1, 2000.
11.5. Adjustment for Excess Annual Additions. To the extent that the Annual Additions on behalf of any Participant in a Limitation Year to the Plan and all other Defined Contribution Plans exceed the limitations set forth in Sections 11.1 through 11.3 hereof, then excess Annual Additions shall be eliminated in accordance with the following rules and in the following order:
(a) If the Annual Additions on behalf of a Participant in a Limitation Year to the Plan and all other Defined Contribution Plans would cause the sum of the Defined Contribution Fraction and Defined Benefit Fraction to exceed 1.0 as determined under Section 11.4 hereof, the excess shall be eliminated by first applying the provisions of such other Defined Benefit Plans or Defined Contribution Plans that are applicable to
(b) If, after the application of paragraph (a) above, excess Annual Additions on behalf of any Participant remain, such excess shall be eliminated by reducing the allocation to the Participant's ESOP Account by the amount of the excess and treating such amount as a forfeiture under Section 5.3 hereof and reallocating such amount proportionately to the ESOP Accounts of other Participants receiving allocations for the Limitation Year up to the limits set forth in Sections 11.1 through 11.3 hereof.
(c) After each Participant's ESOP Account has been credited under paragraph (b) with an amount bringing his or her ESOP Account up to his or her maximum Annual Addition (determined under the provisions of this Article XI), any remaining excess Annual Addition shall be transferred and credited to a 415 Suspense Account established for the purpose of this Section 11.5.
(d) Any amounts held in the 415 Suspense Account shall be treated as Company contributions and allocated to the ESOP Accounts of Participants as of the last day of the next succeeding Plan Year in accordance with the allocation formula applicable to Company contributions provided in Section 4.2. The 415 Suspense Account shall be exhausted before any Company contributions shall be allocated to the ESOP Accounts of Participants subsequent to the date upon which any residue excess Annual Addition as described in paragraph (c) is credited to the 415 Suspense Account.
11.6. Compensation. For the purpose of this Article XIII, Compensation shall mean a Participant's earned income, wages, salaries, fees for professional services, and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company maintaining the Plan and shall be determined as described below:
(a) Compensation shall include to the extent that the amounts
are includible in gross income (including, but not limited to,
commissions paid salespeople, compensation for services on the basis of
a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or other expense
allowances under a nonaccountable plan as described in Regulation
1.62-2(c)).
(b) Compensation shall include any elective deferral as defined in Code Section 402(g)(3) and any amount which is contributed or deferred by the Company at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Sections 125 or 457.
(c) Compensation shall not include (i) any employer contributions to a plan of deferred compensation which are not included in the Employee's gross income for the taxable year in which contributed, (ii) any distributions from a plan of deferred compensation, (iii) any amounts realized from the exercise of a non-qualified stock
(d) Notwithstanding anything in the Plan to the contrary,
Compensation shall be determined in accordance with Code Section
415(c)(3) as in effect for Plan Years beginning prior to January 1,
1998 where required by applicable law.
11.7. Treatment of 415 Suspense Account Upon Termination. In the event the Plan shall terminate at a time when all amounts in the 415 Suspense Account have not been allocated to the ESOP Accounts of the Participants, the 415 Suspense Account amounts shall be applied as follows:
(a) The amount in the 415 Suspense Account shall first be allocated, as of the Plan termination date, to Participants in accordance with the allocation formula applicable to Company contributions provided under Section 4.2(a).
(b) If, after those allocations have been made, any further residue funds remain in the 415 Suspense Account, the residue may revert to the Company in accordance with applicable provisions of the Code, ERISA, and the regulations thereunder.
(c) Notwithstanding paragraphs (a) and (b) above, in the event that termination of the plan occurs after a Change in Control, all amounts in the 415 Suspense Account shall be allocated to Participants only in accordance with Section 10.4 hereof, and no part of the 415 Suspense Account shall revert to or be recoverable by the Company, or be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries.
12.1. Applicability. Notwithstanding any provision in the Plan to the contrary, and subject to the limitations set forth in Section 12.7, the requirements of Sections 12.4, 12.5, and 12.6 shall apply under the Plan in the case of any Plan Year in which the Plan is determined to be a Top-Heavy Plan under the rules of Section 12.3. For the purpose of this Article XII and XI only, the term "Company" shall mean the Sponsor and any Affiliated Company whether or not such company has adopted the Plan pursuant to Section 8.2.
12.2. Definitions. For purposes of this Article XII, the following special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former Employee who, at any time during the Plan Year or any of the four preceding Plan Years, is or was:
(i) An officer of the Company having an annual Compensation greater than 50% of the amount in effect under Code Section 415(b)(1)(A) for the Plan Year; provided, however, for such purposes no more than 50 Employees (or, if lesser, the greater of three Employees or 10% of the Employees) shall be treated as officers;
(ii) One of the ten Employees having annual Compensation from the Company of more than the limitation in effect under Code Section 415(c)(1)(A) and owning (or considered as owning within the meaning of Code Section 318) the largest interests in the Company. For this purpose, if two Employees have the same interest in the Company, the Employee having greater annual Compensation from the Company shall be treated as having a larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns
(or is considered as owning within the meaning of Code Section 318)
more than 5% of the outstanding stock of the Company or stock
possessing more than 5% of the total combined voting power of all stock
of the Company.
(c) The term "One Percent Owner" means any person who would be described in paragraph (b) if "1%" were substituted for "5%" each place where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is not a Key Employee.
(f) The term "Aggregation Group" means (i) each plan of the Company in which a Key Employee is a Participant, and (ii) each other plan of the Company which enables any plan described in clause (i) to meet the requirements of Code Sections 401(a)(4) or 410. Any plan not required to be included in an Aggregation Group under the preceding rules may be treated as being part of such group if the group would continue to meet the requirements of Code Sections 401(a)(4) and 410 with the plan being taken into account.
(g) For purposes of determining ownership under paragraphs
(a), (b) and (c) above, the following special rules shall apply: (i)
Code Section 318(a)(2)(C) shall be applied by substituting "5%" for
"50%", and (ii) the aggregation rules of Subsections (b), (c) and (m)
of Code Section 414 shall not apply, with the result that the ownership
tests of this Section 12.2 shall apply separately with respect to each
Affiliated Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall
include their Beneficiaries, and the definitions provided under this
Section 12.2 shall be interpreted and applied in a manner consistent
with the provisions of Code Section 416(i) and the regulations
thereunder.
(i) For purposes of this Article XII, an Employee's
Compensation shall be determined in accordance with the rules of
Section 11.6.
12.3. Top-Heavy Status
(a) The term "Top-Heavy Plan" means, with respect to any Plan Year:
(i) Any defined benefit plan if, as of the Determination Date, the present value of the cumulative accrued benefits under the plan for Key Employees exceeds 60% of the present value of the
(ii) cumulative accrued benefits under the plan for all Employees; and
(iii) Any defined contribution plan if, as of the Determination Date, the aggregate of the account balances of Key Employees under the plan exceeds 60% of the aggregate of the account balances of all Employees under the plan.
In applying the foregoing provisions of this paragraph (a), the valuation date to be used in valuing Plan assets shall be (i) in the case of a defined benefit plan, the same date which is used for computing costs for minimum funding purposes, and (ii) in the case of a
(b) Each plan maintained by the Company required to be included in an Aggregation Group shall be treated as a Top-Heavy Plan if the Aggregation Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any Aggregation Group if the sum (as of the Determination Date) of (i) the present value of the cumulative accrued benefits for Key Employees under all defined benefit plans included in the group, and (ii) the aggregate of the account balances of Key Employees under all defined contribution plans included in the group exceeds 60% of a similar sum determined for all Employees. For purposes of determining the present value of the cumulative accrued benefit of any Employee, or the amount of the account balance of any Employee, such present value or amount shall be increased by the aggregate distributions made with respect to the Employee under the plan during the five year period ending on the Determination Date. The preceding prior distribution rule shall also apply to distributions under a terminated plan that, if it had not been terminated, would have been required to be included in an Aggregation Group; provided, however, any rollover contribution or similar transfer initiated by the Employee and made after December 31, 1983, to a plan shall not be taken into account with respect to the transferee plan for purposes of determining whether such plan is a Top-Heavy Plan (or whether any Aggregation Group which includes such plan is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with respect to any plan for any plan year, but the individual was a Key Employee with respect to the plan for any prior plan year, any accrued benefit for the individual (and the account balance of the individual) shall not be taken into account for purposes of this Section 12.3.
(e) If any individual has not performed services for the Company at any time during the five year period ending on the Determination Date, any accrued benefit for such individual (and the account balance of the individual) shall not be taken into account for purposes of this Section 12.3
(f) In applying the foregoing provisions of this Section, the accrued benefit of a Non-Key Employee shall be determined (i) under the method, if any, which is used for accrual purposes under all plans of the Company and any Affiliated Companies, or (ii) if there is no such uniform method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XII, the definitions provided under this Section 12.3 shall be applied and interpreted in a manner consistent with the provisions of Code Section 416(g) and the regulations thereunder.
(a) Except as provided below, the minimum contribution
(including for Plan Years beginning after December 31, 1984, amounts
deferred under a cash or deferred arrangement under Code Section
401(k)) for each Non-Key Employee shall be not less than 3% of his or
her compensation.
(b) Subject to the following rules of this paragraph (b), the percentage set forth in paragraph (a) above shall not be required to exceed the percentage at which contributions (including for Plan Years beginning after December 31, 1984, amounts deferred under a cash or deferred arrangement under Code Section 401(k)) are made (or are required to be made) under the Plan for the year for the Key Employee for whom the percentage is the highest for the year. This determination shall be made by dividing the contributions for each Key Employee by so much of his or her total compensation for the Plan Year as does not exceed the applicable Compensation limit. For purposes of this paragraph (b), all defined contribution plans required to be included in an Aggregation Group shall be treated as one plan. Notwithstanding the foregoing, the exceptions to paragraph (a) as provided under this paragraph (b) shall not apply to any plan required to be included in an Aggregation Group if the plan enables a defined benefit plan to meet the requirements of Code Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under this Section 12.4 shall be calculated without regard to any Social Security benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-Heavy Plans, the Company shall
satisfy the minimum benefit requirements of Code Section 416 by
providing (in lieu of the minimum contribution described in paragraph
(a) above) a minimum benefit under the defined benefit plan so as to
prevent the duplication of required minimum benefits hereunder.
12.5. Maximum Annual Addition.
(a) Except as set forth below, for any Plan Year in which the Plan is determined to be a Top-Heavy Plan, the rules of Section 11.4(b) and (c) shall be applied by substituting "1.0" for "1.25".
(b) The rule set forth in paragraph (a) above shall not apply if (i) the minimum contribution requirement of Section 12.4(a) above would be satisfied after substituting "4%" for "3%" where it appears therein, and (ii) the Plan would not be a Top-Heavy Plan if "90%" were substituted for "60%" each place it appears in Section 12.3(a).
12.6. Minimum Vesting Rules. For any Plan Year in which it is determined that the Plan is a Top-Heavy Plan, the vesting schedule shall be the vesting schedule set forth in Section 5.2.
12.7. Non-Eligible Employees. The rules of this Article XII shall not apply to any Employee included in a unit of employees covered by a collective bargaining agreement between employee representatives and one or more employers if retirement benefits were the subject of good faith bargaining between such employee representatives and the employer or employers.
13.1. General Restrictions Against Alienation.
(a) The interest of any Participant or his or her Beneficiary in the income, benefits, payments, claims or rights hereunder, or in the Trust Fund, shall not in any event be subject to sale, assignment, hypothecation, or transfer. Each Participant and Beneficiary is prohibited from anticipating, encumbering, assigning, or in any manner alienating his or her interest under the Trust Fund, and is without power to do so, except as may be permitted in connection with providing security for a loan from the Plan to the Participant pursuant to the provisions of the Plan as it may be amended from time to time. The interest of any Participant or Beneficiary shall not be liable or subject to his or her debts, liabilities, or obligations, now contracted, or which may hereafter be contracted, and such interest shall be free from all claims, liabilities, or other legal process now or hereafter incurred or arising. Neither the interest of a Participant or Beneficiary, nor any part thereof, shall be subject to any judgment rendered against any such Participant or Beneficiary. Notwithstanding the foregoing, a Participant's or Beneficiary's interest in the Plan may be subject to the enforcement of a Federal tax levy made pursuant to Code Section 6331 or the collection by the United States on a judgment resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action contrary to this Article XIII, such action shall be null and void and of no effect, and the Company, the Committee, the Trustee and all Participants and their Beneficiaries, may disregard such action and are not in any manner bound thereby, and they, and each of them, shall suffer no liability for any such disregard thereof, and shall be reimbursed on demand out of the Trust Fund for the amount of any loss, cost or expense incurred as a result of disregarding or of acting in disregard of such action.
(c) The foregoing provisions of this Section shall be interpreted and applied by the Committee in accordance with the requirements of Code Section 401(a)(13) and Section 206(d) of ERISA as construed and interpreted by authoritative judicial and administrative rulings and regulations.
13.2. Qualified Domestic Relations Orders. The rules set forth in
Section 13.1 above shall not apply with respect to a "Qualified Domestic
Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment, decree, or order (including approval of a property settlement agreement) that:
(ii) Relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law (including a community property law), and
(iv) Clearly specifies: (1) the name and last known mailing address (if any) of the Participant and the name and mailing address of each Alternate Payee covered by the order (if the Committee does not have reason to know that address independently of the order); (2) the amount or percentage of the Participant's benefits to be paid to each Alternate Payee, or the manner in which the amount or percentage is to be determined; (3) the number of payments or period to which the order applies; and (4) each plan to which the order applies.
For purposes of this Section 13.2, "Alternate Payee" means any spouse, former spouse, child or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable with respect to the Participant.
(b) A domestic relations order is not a Qualified Domestic Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under a previous Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to fail to satisfy the requirements of paragraph (b)(i) above with respect to any payment made before a Participant has separated from service solely because the order requires that payment of benefits be made to an Alternate Payee:
(i) On or after the date on which the Participant attains (or would have first attained) his or her earliest retirement age (as defined in Code Section 414(p)(4)(B));
(iii) In any form in which such benefits may be paid under the Plan to the Participant (other than in the form of a joint and survivor annuity with respect to the Alternate Payee and his or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before
his or her earliest retirement age (as defined in Section
414(p)(4)(B)), the Alternate Payee is entitled to benefits only if the
Qualified Domestic Relations Order requires survivor benefits to be
paid to the Alternate Payee.
(d) To the extent provided in any Qualified Domestic Relations
Order, the former spouse of a Participant shall be treated as a
surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order received by the Plan, the Committee shall promptly notify the Participant and any Alternate Payee named in the order that an order has been received and shall provide a copy of the Plan's procedures for determining the qualified status of domestic relations orders. An Alternate Payee may designate a representative for receipt of copies of notices and plan information that are sent to the Alternate Payee with respect to domestic relations order. Within a reasonable period after the receipt of the order, the Committee shall determine whether the order is a Qualified Domestic Relations Order and shall notify the Participant and each Alternate Payee of such determination.
(f) The Committee shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under Qualified Domestic Relations Orders. During any period in which the issue of whether a domestic relations order is a Qualified Domestic Relations Order is being determined (by the Committee, by a court of competent jurisdiction, or otherwise), the Committee shall direct the Trustee to segregate in a separate account in the Plan (or in an escrow account) the amounts which would have been payable to the Alternate Payee during the period if the order had been determined to be a Qualified Domestic Relations Order. If within the 18 Month Period (as defined below), the order (or modification thereof) is determined to be a Qualified Domestic Relations Order, the Committee shall direct the Trustee to pay the segregated amounts (plus any interest thereon) to the person or persons entitled thereto. However, if within the 18 Month Period (i) it is determined that the order is not a Qualified Domestic Relations Order, or (ii) the issue as to whether the order is a Qualified Domestic Relations Order is not resolved, then the Committee shall direct the Trustee to pay the segregated amounts (plus any interest thereon) to the person or persons who
14.1. No Right of Employment Hereunder. The adoption and maintenance of the Plan and Trust shall not be deemed to constitute a contract of employment or otherwise between the Company and any Employee or Participant, or to be a consideration for, or an inducement or condition of, any employment. Nothing contained herein shall be deemed to give any Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge, with or without cause, any Employee or Participant at any time, which right is hereby expressly reserved.
14.2. Limitation on Company Liability. Any benefits payable under the Plan shall be paid or provided for solely from the Plan and the Company assumes no liability or responsibility therefor.
14.3. Effect of Article Headings. Article headings are for convenient reference only and shall not be deemed to be a part of the substance of this instrument or in any way to enlarge or limit the contents of any Article.
14.4. Gender. Masculine gender shall include the feminine and the singular shall include the plural unless the context clearly indicates otherwise.
14.5. Interpretation. The provisions of the Plan shall in all cases be interpreted in a manner that is consistent with the Plan satisfying (a) the requirements of Code Section 401(a) and related statutes for qualification as a stock bonus plan and (b) the requirements of Code Section 4975(e)(7) and related statutes for qualification as an employee stock ownership plan and eligibility for the prohibited transaction exemption provided under Code Section 4975(d)(3) and its related statutes under ERISA.
14.6. Withholding For Taxes. Any payments from the Trust Fund may be subject to withholding for taxes as may be required by any applicable federal or state law.
14.7. California Law Controlling. All legal questions pertaining to the Plan which are not controlled by ERISA shall be determined in accordance with the laws of the State of California and all contributions made hereunder shall be deemed to have been made in that State.
14.8. Plan and Trust as One Instrument. The Plan and the Trust Agreement shall be construed together as one instrument. In the event that any conflict arises between the terms and/or conditions of the Trust Agreement and the Plan, the provisions of the Plan shall control, except that with respect to the duties and responsibilities of the Trustee, the Trust Agreement shall control.
14.9. Invalid Provisions. If any paragraph, section, sentence, clause or phrase contained in the Plan shall become illegal, null or void or against public policy, for any reason, or shall be
14.10. Counterparts. This instrument may be executed in one or more counterparts each of which shall be legally binding and enforceable.
ALLERGAN, INC.
By /s/ Francis R. Tunney, Jr.
--------------------------
Francis R. Tunney, Jr.
Corporate Vice President, Administration
General Counsel and Secretary of Allergan, Inc.
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ARTICLE
FIRST: Acceptance of Property..................................................2 SECOND: Investment Powers......................................................2 THIRD: Payments................................................................8 FOURTH: Administrative Powers..................................................8 FIFTH: Insurance Company Contracts............................................13 SIXTH: Fiduciary Standards....................................................13 SEVENTH: Prohibition of Diversion.............................................14 EIGHTH: Hold Harmless.........................................................14 NINTH: Accounts...............................................................15 TENTH: Committee..............................................................16 ELEVENTH: Compensation and Expenses...........................................16 TWELFTH: Resignation of Trustee...............................................16 THIRTEENTH: Amendment.........................................................16 FOURTEENTH: Termination.......................................................17 FIFTEENTH: Plan-to-Plan Transfers; Rollovers..................................17 SIXTEENTH: Adopting Employers.................................................18 SEVENTEENTH: Alienation.......................................................18 EIGHTEENTH: Bond..............................................................18 NINETEENTH: Successors........................................................18 TWENTIETH: Severability.......................................................19 TWENTY-FIRST: Communications..................................................19 TWENTY-SECOND: Governing Law..................................................19 |
WHEREAS, the Allergan, Inc. Employee Stock Ownership Plan, hereinafter referred to as the "Plan," and the Trust Agreement for Allergan, Inc. Employee Stock Ownership Plan was initially established with an effective date of July 27, 1989, by Allergan, Inc., hereinafter referred to as the "Sponsor," for the purpose of providing retirement and related benefits to eligible employees of the Sponsor and any Affiliated Company who adopts the Plan, hereinafter referred to collectively as the "Company," and their beneficiaries, hereinafter referred to as "Participants"; and
WHEREAS, the Plan Committee, the members of which are "named fiduciaries" as defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (which named fiduciaries are hereinafter referred to as the "Committee") has general responsibility for administration of the Plan; and
WHEREAS, the Plan provides for a trust to which contributions are to be made by the Company to be held by a trustee and to be managed, invested and reinvested for the exclusive benefit of Participants of the Plan and their beneficiaries; and
WHEREAS, the Plan and trust are intended to qualify as a plan and trust that meet the applicable requirements of sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, hereinafter referred to as the "Code"; and
WHEREAS, the current trustee(s) of the trust have been removed as trustee(s) effective June 30, 2000; and
WHEREAS, effective July 1, 2000, the Sponsor wishes to amend and restate the existing agreement of trust, hereinafter referred to as the "Trust," in its entirety and appoint UMB Bank, N.A., a national banking association, having its principal place of business at Kansas City, Missouri, hereinafter referred to as the "Trustee"; and
NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, the Sponsor and the Trustee do hereby covenant and agree as follows:
The Trustee shall accept such cash and other property as is tendered to it as contributions hereunder, and as is acceptable to it, hereinafter referred to as the "Trust Fund," but shall not be under any duty to require the Company to contribute to the Trust Fund or to determine whether the amount of any contribution has been correctly computed under the terms of the Plan. In no event shall the Trustee be considered a party to the Plan. The Trustee shall have only such duties with respect to the Plan as are set forth in this Agreement.
The Trustee shall invest the assets of the Trust Fund as directed by the Sponsor, Committee, or Participants in accordance with the provisions of the Plan. In doing so, the Trustee will be a directed trustee. The general investment policy of the Plan is to invest primarily in employer securities as that term is defined in section 407(d) of ERISA, hereinafter referred to as "Company Stock." Accordingly, subject to the direction of the Committee, Trust Fund assets other than Company Stock may be used to acquire additional Company Stock. To the extent not so invested to acquire Company Stock, Trust Fund assets other than Company Stock may be invested by the Trustee, subject to the direction of the Committee, in regulated mutual funds or such funds may be held in cash or cash equivalents pending distribution to Participants or other use by the Trust. Subject to the general investment policy of the Plan, which is to invest primarily in Company Stock, trust investments may also include, any fund created for the collective investment of the assets of employee benefit trusts, as long as such collective investment fund is a qualified trust under the applicable provisions of the Code (and while any portion of the Trust Fund is so invested, such collective investment fund shall constitute a part of the Plan, and the instruments creating such fund shall constitute a part of this Agreement). The Trustee shall have no independent investment duties or responsibilities. The Trustee assumes no financial responsibility with respect to the investment of the assets of the Trust Fund. If the Trustee properly carries out such investment directions, the Trustee will have no liability for any loss or diminution in value occasioned thereby.
To the maximum extent permitted by law, the Trustee shall not be liable for the acquisition, retention or disposition of any assets of the Trust Fund or for any loss to or diminution of such assets unless due to the Trustee's own negligence or willful misconduct.
The Committee may appoint an "investment manager," as defined in
section 3(38) of ERISA. Any investment manager so appointed shall be (i) an
investment adviser registered as such under the Investment Advisers Act of 1940,
(ii) a bank, or (iii) an insurance company qualified to perform investment
management services under the laws of more than one state of the United States.
The Committee shall notify the Trustee of any such appointment by delivering to
the Trustee an executed copy of the instrument under which the investment
manager is appointed and evidencing the investment manager's acceptance of such
appointment, an acknowledgment by the investment manager that it is a fiduciary
of the Plan, and a certificate evidencing the investment manager's current
registration under the Investment Advisers Act of 1940 or other appropriate
qualification. The Committee shall specify to the Trustee the portion
In the event that the investment manager appointed hereunder is a bank or a trust company, or an affiliate of a bank or a trust company, the Trustee shall, upon the direction of the Committee, transfer funds to such bank, trust company, or affiliate for investment through the medium of any fund created and administered by such bank, trust company, or affiliate, acting as trustee therefore, for the collective investment of the assets of employee benefit trusts, provided that such fund is qualified under the applicable provisions of the Code and that while any portion of the assets are so invested, such fund shall constitute part of the applicable Plan or Plans, and the instrument creating such fund shall constitute part of this Agreement. In order to implement the provisions of this paragraph, the Trustee is authorized to enter into any required ancillary trust, agency or other type of agreement with an investment manager, or its affiliate, as described in the preceding sentence.
The Trustee shall have no power or duty to sell, tender, exchange, or otherwise dispose of any Company Stock held in the Fund, hereinafter referred to as the "Company Stock Fund," except in the following circumstances: (i) in the event of a tender or exchange offer as hereinafter provided, (ii) in the case of fractional shares received in any stock dividend, stock split or other recapitalization, (iii) as necessary to make any distribution or payment from the Trust Fund, (iv) pursuant to the direction of the Sponsor, Committee, or a Participant, or (v) where ERISA prohibits the limitation of the Trustee's power. In the event that an offer (including but not limited to a tender offer or exchange offer within the meaning of the Securities Exchange Act of 1934, as from time to time amended and in effect) (the "Offer") whether or not such Company Stock is allocated to Participants' ESOP accounts, is made for all or any portion of the Company Stock held in the Company Stock Fund, and notwithstanding any other provision of the Trust to the contrary, the Trustee's discretion or authority to sell, exchange or transfer any of such Company Stock held in the Company Stock Fund shall be determined in accordance with the following rules:
(1) The Trustee shall have no discretion or authority to sell, exchange or transfer any Company Stock pursuant to an Offer except to the extent, and only to the extent that the Trustee is timely directed to do so in writing (i) with respect to any Company Stock held by the Trustee subject to such Offer and allocated to any Participant's ESOP account, by each Participant to whose ESOP account any of
(2) To the extent there remains any residual fiduciary responsibility with respect to Company Stock pursuant to an Offer after application of subparagraph (1) above, the Trustee shall sell, exchange or transfer such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor.
(3) Upon timely receipt of such instructions, the Trustee shall, subject to the provisions of subparagraphs (5) and (15) of this paragraph, sell, exchange or transfer pursuant to such Offer, only such shares of Company Stock as to which such instructions were given.
(4) In the event, under the terms of an Offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such Offer may be withdrawn from such Offer, the Trustee shall follow such instructions respecting the withdrawal of such shares from such Offer in the same manner and the same proportion as shall be timely received by the Trustee from the Participants entitled under this paragraph to give instructions as to the sale, exchange or transfer of shares pursuant to such Offer.
(5) In the event that an Offer for fewer than all of the shares of Company Stock held by the Trustee in the Trust shall be received by the Trustee, each Participant shall be entitled to direct the Trustee as to the acceptance or rejection of such Offer (as set forth herein) with respect to the largest portion of such Company Stock as may be possible given the total number or amount of shares of Company Stock the Plan may sell, exchange or transfer pursuant to the Offer based upon the instructions received by the Trustee from all other Participants who shall timely instruct the Trustee pursuant to this paragraph to sell, exchange or transfer such shares pursuant to such Offer, each on a pro rata basis in accordance with the maximum number of shares each such Participant would have been permitted to direct under subparagraph (1) had the Offer been for all shares of Company Stock held in the Trust.
(7) With respect to any Offer received by the Trustee, the Trustee shall inform the Sponsor of such Offer and the Sponsor shall distribute, at its expense, copies of all relevant material including but not limited to material filed with the Securities and Exchange Commission with such Offer or regarding such Offer, which shall seek confidential written instructions from each Participant who is entitled to respond to such Offer pursuant to subparagraph (1).
(8) The Sponsor shall distribute and/or make available to each Participant who is entitled to respond to an Offer pursuant to subparagraph (1), an instruction form to be used by each such Participant who wishes to instruct the Trustee. The instruction form shall state that (i) if the Participant fails to return an instruction form to the Trustee by the indicated deadline, the Company Stock with respect to which he or she is entitled to give instructions shall not be sold, exchanged or transferred pursuant to such Offer unless the Trustee is directed otherwise as provided in subparagraph (2) above, (ii) the Participant shall be a named fiduciary (as described in subparagraph (13) below) with respect to all shares of Company Stock for which he or she is entitled to give instructions, and (iii) the Company acknowledges and agrees to honor the confidentiality of the Participant's instructions to the Trustee.
(9) Each Participant may choose to instruct the Trustee in one of the following two ways: (i) not to sell, exchange or transfer any shares of Company Stock for which he or she is entitled to give instructions, or (ii) to sell, exchange or transfer all Company Stock for which he or she is entitled to give instructions. The Sponsor shall follow up with additional mailings and postings of bulletins, as reasonable under the time constraints then prevailing, to obtain instructions from Participants not otherwise responding to such requests for instructions. Subject to
(10) The Sponsor shall furnish former Participants who have received distributions of Company Stock so recently as to not be shareholders of record with the information given to Participants pursuant to subparagraphs (7), (8), and (9). The Trustee shall then sell, exchange or transfer shares according to instructions from such former Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred.
(11) Neither the Company, the Committee nor the Trustee shall express any opinion or give any advice or recommendation to any Participant concerning the Offer, nor shall they have any authority or responsibility to do so.
(12) The Trustee shall not reveal or release a Participant's instructions to the Company, its officers, directors, employees, or representatives. If some but not all Company Stock held by the Trust is sold, exchanged, or transferred pursuant to an Offer, the Company, with the Trustee's cooperation, shall take such action as is necessary to maintain the confidentiality of Participant's records including, without limitation, establishment of a security system and procedures which restrict access to Participant records and retention of an independent agent to maintain such records. If an independent recordkeeping agent is retained, such agent must agree, as a condition of its retention by the Sponsor, not to disclose the composition of any Participant ESOP accounts to the Company, its officers, directors, employees, or representatives. The Company acknowledges and agrees to honor the confidentiality of Participants' instructions to the Trustee.
(13) Each Participant shall be a named fiduciary (as that term is defined in section 402(a)(2) of ERISA) with respect to Company Stock allocated to his or her ESOP account under the Plan and with respect to his or her pro-rata portion of the unallocated Company Stock for which he or she is entitled to issue instructions in accordance with subparagraph (1) of this paragraph solely for purposes of exercising the rights of a shareholder with respect to an Offer pursuant to this paragraph.
(14) To the extent that an Offer results in the sale of Company Stock in the Trust and allocated to the ESOP accounts of Participants, the Committee shall instruct the Trustee as to the investment of the proceeds of such sale.
(15) In the event a court of competent jurisdiction shall issue to the Plan, the Committee, the Sponsor or the Trustee an opinion or order, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate, in all circumstances or in any particular circumstances, any provision or provisions of
All property received in exchange for such Company Stock so tendered shall upon receipt be held by the Trustee in the Fund within the accounts of those Participants who so tendered, the provisions of this Agreement shall hereby be deemed amended to permit the holding of such property within said Fund and the property shall thereafter be administered, invested, reinvested and distributed in accordance with the applicable terms of the Plan and Trust.
All dividends paid to the Trustee with respect to the Company Stock Fund shall be held in the Trust by the Trustee as directed by the Committee.
The Trustee, when directed by the Committee, shall borrow money from any source, including the Company or any shareholder in the Company, in such amounts and upon such terms as the Committee may determine, for the purpose of purchasing or otherwise acquiring Company Stock. In connection with any such borrowing, at the direction of the Committee, the Trustee may issue its promissory note and may secure the repayment of such borrowed funds only with the Company Stock acquired with the proceeds of the loan. Any such borrowing from the Company, or from any other "disqualified person" within the meaning of section 4975(e)(2) of the Code, or any other "party in interest" within the meaning of section 3(14) of ERISA (or guaranteed by the Company or any other disqualified person or party in interest), shall be subject to the following provisions:
(1) The proceeds of any such loan shall be used only to acquire Company Stock, to pay any charges or fees incurred in connection with such acquisition, and/or to repay any such loan.
(2) The only Trust Funds assets which may be used as collateral for the loan shall be the Company Stock acquired with the proceeds of such loan (or used as collateral on a prior such loan repaid with the proceeds of such current loan), and the terms of such loan must provide that shares of such Company Stock pledged as collateral shall be released from their status as collateral in accordance with Sections 4.2(b) and 6.7(a)(1) (or superseding sections) of the Plan (pertaining to the release of Company Stock from the Exempt Loan Suspense Subfund) as
(3) In the event of a default in the repayment of any such loan, the value of pledged shares of Company Stock transferred to the lender in satisfaction of such loan shall not exceed the amount of such default. Other than such a transfer of the pledged Company Stock in such amount, the lender shall have no recourse against the Trust for nonpayment of the loan.
(4) In the event that there shall be more than one class of capital stock of the Company, the class or classes of Company Stock acquired by the Trustee with the proceeds of such a loan, and the relative proportions of such classes of stock held by the Trustee, shall comply with any applicable requirements established pursuant to regulations issued by the Secretary of the Treasury under section 4975 of the Code so as to assure that such loan and/or acquisition of Company Stock does not constitute a prohibited transaction within the meaning of the applicable provisions of the Code and ERISA, as such provisions may be amended from time to time.
Subject to the provisions of Article FOURTEENTH hereof, the Trustee shall from time to time transfer cash or other property from the Trust Fund to such persons, including an insurance company or companies or a paying agent designated by the Committee, at such addresses, in such amounts, for such purposes and in such manner as the Committee may direct, provided that such transfer is administratively feasible, and the Trustee shall incur no liability for any such payment made at the direction of the Committee. The Committee shall be solely responsible to insure that any payment made at its direction conforms with the provisions of the Plan, the provisions of this Agreement, and ERISA, and the Trustee shall have no duty to determine the rights or benefits of any person in the Trust Fund or under the Plan or to inquire into the right or power of the Committee to direct any such payment.
The Trustee is authorized to exercise from time to time the following powers in respect of any property, real or personal, of the Trust Fund:
(1) power to sell at public or private sale for cash or upon credit or partly for cash and partly upon credit and upon such terms and conditions as it shall deem proper as and when directed to do so by the Committee (or by Participants pursuant to Article Second). No purchaser shall be bound to see to or be liable for the application of the proceeds of any such sale;
(3) power to vote in person or by proxy at corporate or other meetings and to participate in or consent to any voting trust, reorganization, dissolution, merger or other action affecting securities in its possession or the issuers thereof; except, notwithstanding any other provision of the Trust to the contrary, the Trustee's discretion and authority to vote the Company Stock Fund, shall be determined as provided herein.
(4) power to acquire, hold or dispose of property in unregistered form, or in its name without designation of fiduciary capacity, or in the name of its nominee or any custodian, and to the extent permitted by ERISA, to combine certificates representing investments with investments of the same issue held by the Trustee in other fiduciary capacities, and to deposit property in a depository or clearing corporation or with the federal reserve bank in its district as and when directed to do so by the Committee (or by Participants pursuant to Article Second);
(5) power to compromise and adjust all debts or claims due to or made against it, to participate in any plan of reorganization, consolidation, merger, combination, liquidation or other similar plan or any action thereunder, or any contract, lease, mortgage, purchase, sale or other action by any corporation or other entity upon the written direction of the Committee;
(6) power to deposit any such property with any protective, reorganization or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee; and any assessments levied with respect to any property so deposited upon the written direction of the Committee unless the Trustee is so ordered to do so by a court or governmental agency of competent jurisdiction;
(7) power to exercise any conversion privilege or subscription right available in connection with any such property; to oppose or to consent to the reorganization, consolidation, merger or readjustment of the finances of any corporation, company or association, or to the sale, mortgage, pledge or lease of the property of any corporation, company or association any of the securities of which may at any time be held in the Trust Fund and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payments of expenses, assessments or subscriptions, which may be deemed necessary or advisable in connection therewith and to hold and retain any securities or other property which it may so acquire upon the written direction of the Committee;
(9) power to engage legal counsel, including counsel to the Company or the Trustee in its individual capacity, and any other suitable agents, and to consult with such counsel or agents with respect to the construction of this Agreement, the administration of the Trust Fund, and the duties of the Trustee hereunder following written consent of the Committee;
(10) power to commence or defend suits or legal proceedings and to represent the Trust Fund in all suits or legal proceedings; to settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust Fund, provided that the Trustee shall notify the Committee of all such suits, legal proceedings and claims and, except in the case of a suit, legal proceeding or claim involving solely the Trustee's action or omissions to act, shall obtain the written consent of the Sponsor before settling, compromising or submitting to binding arbitration any claim, suit or legal proceeding of any nature whatsoever;
(11) power to enter into any contract or policy with an insurance company or companies, for the purpose of insurance coverage or otherwise, provided that, except as provided in Article FIFTH, the Trustee shall be the sole owner of all such contracts or policies and all such contracts or policies shall be held as assets of the Trust Fund upon the written direction of the Committee;
(12) power to make, execute and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers;
(13) power to transfer assets of the Trust Fund to a successor trustee as provided in Article TWELFTH; and
(14) power to appoint custodians or subcustodians to hold any or all of the Trust Fund upon the written direction or consent of the Committee;
(15) power to appoint ministerial agents to perform various functions of the Trustee upon the written direction or consent of the Committee; and
(16) power to exercise, subject to the terms and restrictions set forth in Article Fourth and the provisions of the Plan, generally, any of the powers that an individual owner might exercise in connection with property either real, personal or mixed held by the Trust Fund, and to do all other acts that the Trustee may deem
Notwithstanding any other provision of the Trust to the contrary, the Trustee shall have no discretion or authority to vote Company Stock held in the Trust on any matter presented for a vote by the stockholders of the Company except in accordance with timely directions received by the Trustee either from the Committee or from Participants, depending on who has the right to direct the voting of such Company Stock as provided in the following subparagraphs:
(1) All Company Stock held in the Trust Fund shall be voted by the Trustee as the Committee directs in its absolute discretion, except as provided in this subparagraph (1).
(i) If the Sponsor has a registration-type class of securities (as defined in section 409(e)(4) of the Code), then with respect to all corporate matters, (1) each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to his or her ESOP account and (2) each Participant who is an Eligible Employee shall be entitled to direct the Trustee as to the voting of a portion of all Company Stock not allocated to the ESOP accounts of Participants, with such portion equal to the total number of shares of such unallocated stock multiplied by a fraction the numerator of which is the number of shares of Company Stock allocated and credited to his or her ESOP account and the denominator of which is the total number of shares of Company Stock allocated and credited to all ESOP accounts of Participants.
(ii) If the Sponsor does not have a registration-type class of
securities, then only with respect to such matters as the
approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets
of trade or business, or such similar transactions as may be
prescribed in regulations under section 409(e)(4) of the
Code, (1) each Participant shall be entitled to direct the
Trustee as to the voting of all Company Stock allocated and
credited to his or her ESOP account and (2) each Participant
who is an Eligible Employee shall be entitled to direct the
Trustee as to the voting of a portion of all Company Stock
not allocated to the ESOP accounts of Participants, with
such portion determined in the same manner as under clause
(i) above.
A list of the Participants eligible to vote unallocated Company Stock and the number of shares subject to their direction shall be delivered to the Trustee by the Committee.
(2) To the extent there remains any residual fiduciary responsibility with respect to the voting of Company Stock after application of subparagraph (1) above, the
(3) All Participants entitled to direct such voting shall be notified by the Sponsor, pursuant to its normal communications with shareholders, of each occasion for the exercise of such voting rights within a reasonable time before such rights are to be exercised. Such notification shall include all information distributed to shareholders either by the Sponsor or any other party regarding the exercise of such rights. Such Participants shall be so entitled to direct the voting of fractional shares (or fractional interests in shares); provided, however, that the Trustee may, to the extent possible, vote the combined fractional shares (or fractional interests in shares) so as to reflect the aggregate direction of all Participants giving directions with respect to fractional shares (or fractional interests in shares). To the extent that a Participant shall fail to direct the Trustee as to the exercise of voting rights arising under Company Stock credited to his or her ESOP account, such Company Stock shall not be voted unless the Trustee is directed otherwise as provided in subparagraph (2) above. The Trustee shall maintain confidentiality with respect to the voting directions of all Participants.
(4) Each Participant shall be a named fiduciary (as that term is defined in section 402(a)(2) of ERISA) with respect to Company Stock for which he or she has the right to direct the voting under the Plan but solely for the purpose of exercising voting rights pursuant to this paragraph.
(5) In the event a court of competent jurisdiction shall issue an opinion or order to the Plan, the Committee, the Sponsor or the Trustee, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate under ERISA, in all circumstances or in any particular circumstances, any provision or provisions of this paragraph regarding the manner in which Company Stock held in the Trust shall be voted or cause any such provision or provisions to conflict with ERISA, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this paragraph shall be given no further force or effect. In such circumstances the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with respect to voting, the Sponsor shall appoint an independent fiduciary who shall direct the Trustee as to the manner in which Company Stock held by the Trustee shall be voted.
Notwithstanding the foregoing paragraphs, in the event that an investment manager is appointed pursuant to Article SECOND hereof, such investment manager shall exercise such of the powers enumerated in this Article FOURTH and otherwise contained in this Agreement with respect to the portion of the Trust Fund subject to its control as may be specified in the instrument under which the investment manager was appointed.
The Trustee may, at the direction of the Committee, (i) enter into one or more contracts with legal reserve life insurance companies, the rate of return from which is fixed by the terms of such contracts, (ii) transfer to any such insurance companies a portion of the Trust Fund in accordance with any such contracts, and (iii) hold any such contracts as a part of the Trust Fund until directed otherwise by the Committee. The Committee shall give such direction to the Trustee by delivering to the Trustee a copy of the action of the Committee which shall specifically refer to this Article FIFTH and direct the Trustee to so act. The Committee may direct the Trustee to (i) request any information from any such insurance companies necessary or appropriate to make an investment decision, (ii) demand or accept withdrawals or other distributions under any such contracts, (iii) exercise or not to exercise any rights, powers, privileges and options under any such contracts and (iv) assign, amend, modify or terminate any such contracts. The Trustee shall take no action with respect to any such contracts except at the direction of the Committee. The Trustee shall incur no liability for complying with any direction of the Committee, and in the absence of any direction from the Committee, the Trustee shall incur no liability for failing to take any action. Any insurance companies issuing any contracts as hereinabove described may deal with the Trustee as the absolute owner of any such contracts and need not inquire as to the authority of the Trustee to act with regard to such contracts. Any such insurance company may accept and rely upon any communication from the Trustee that is signed by an officer of the Trustee. For purposes of this Agreement, any such insurance company shall be considered to be an investment manager with regard to the assets of the Plan subject to its control. In no event shall the underlying assets of such insurance company in which such contracts are invested be considered assets of the Plan or part of the Trust Fund.
The Trustee (or any investment manager appointed pursuant to Article SECOND hereof) shall (i) discharge its duties hereunder with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (ii) subject to the investment funds specified in the Plan, if any, and to the extent required by ERISA, diversify the investments of the Trust Fund so as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so; and (iii) discharge its duties in accordance with the provisions of the Plan and this Agreement insofar as such provisions are consistent with ERISA.
The Trustee (or any investment manager appointed pursuant to Article SECOND hereof) shall not engage in any transaction that it knows or should know violates section 406 of ERISA. Notwithstanding the foregoing, the Trustee (or any investment manager appointed pursuant to Article SECOND hereof) may, in accordance with any appropriate exemption provided under ERISA or upon the approval of the Secretary of the Department of Labor, enter into any transaction otherwise prohibited under section 406 of ERISA.
The Trustee shall not be responsible for any failure of the Committee or the Company to discharge any of their respective responsibilities with respect to the Plan nor be required to enforce payment of any contributions to the Trust Fund.
(1) At no time prior to the satisfaction of all liabilities with respect to Participants in the Plan and their beneficiaries shall any part of the corpus or income of the Trust Fund be used for, or diverted to, purposes other than for the exclusive benefit of such Participants and their beneficiaries. Except as provided in subparagraphs (2), (3) and (4) below, and Article THIRTEENTH, or as otherwise permitted under the provisions of the Plan, the assets of the Trust Fund shall never inure to the benefit of the Company and shall be held for the exclusive purpose of providing benefits to Participants in the Plan and their beneficiaries and defraying the reasonable expenses of administering the Plan.
(2) In the case of a contribution that is made by the Company by a mistake of fact, subparagraph (1) above shall not prohibit the return to the Company of such contribution at the direction of the Committee within one year after the payment of the contribution.
(3) If a contribution by the Company is expressly conditioned on qualification of the Plan under section 401 of the Code, and if the Plan does not so qualify, then subparagraph (1) above shall not prohibit the return to the Company of such contribution at the direction of the Committee within one year after the date of denial of qualification of the Plan, to the extent permitted by ERISA and the Code.
(4) If a contribution by the Company is expressly conditioned upon the deductibility of the contribution under section 404 of the Code, then to the extent such deduction is disallowed, subparagraph (1) above shall not prohibit the return to the Company of such contribution at the direction of the Committee, to the extent disallowed, within one year after the date of such disallowance.
To the maximum extent permitted by ERISA and other applicable law, the Trustee shall not be liable for and the Company shall indemnify the Trustee against, and agrees to hold the Trustee harmless from, all liabilities and claims (including reasonable attorney's fees and expenses in defending against such liabilities and claims) against the Trustee, arising from the Trustee's performance of its duties in conformance with the terms of the Plan and this
The Trustee or its agent shall keep records of all transactions relating to the Trust Fund, which shall be made available at all reasonable times to the Committee, persons designated by the Board of Directors of the Sponsor or as may be required by law. The Trustee or its agent shall render an accounting to the Company and the Committee at least annually which shall be in a form sufficient to produce financial statements and to conduct an audit as required by ERISA and the Code. The Committee may approve such accounting on behalf of itself and the Company by an instrument in writing delivered to the Trustee. If the Committee does not file with the Trustee objections to any such accounting within sixty (60) days after its receipt, the Committee shall be deemed to have approved such accounting on behalf of itself and the Company. In such case, or upon the written approval of the Committee of any such accounting, the Trustee shall, to the extent permitted by law, be discharged from all liability to the Committee and the Company for its acts or failures to act described in such accounting. Except to the extent otherwise provided in ERISA, no person, other than the Company or the Committee, may require an accounting or bring any action against the Trustee with respect to the Trust Fund. The Trustee shall render to the Committee, at least quarterly, a statement of the Trust Fund assets and their values and, whenever a contribution is made to the Trust Fund other than in cash, a statement of the value of such property on the date it is received by the Trustee.
Nothing contained in this Agreement or in the Plan shall deprive the Trustee of the right to have judicial settlement of its accounts. In any proceeding for a judicial settlement of the Trustee's accounts, or for instructions with regard to the Trust, the only necessary parties thereto in addition to the Trustee shall be the Committee. If the Trustee so elects, it may join as a party or parties any other person or persons.
The Sponsor shall certify to the Trustee the name of the entity, person, or persons from time to time constituting the Committee. All directions to the Trustee by the Committee shall be in writing, and the Trustee shall be entitled to rely without further inquiry upon all such written directions received from the Committee. The Committee shall in its sole discretion have the right to appoint such agents as it may deem necessary to carry out its duties pursuant to the provisions of the Plan and this Trust. If necessary or appropriate the Committee shall notify the Trustee in writing as to the identity and authority of any such agent, which notice shall be effective upon receipt by the Trustee and shall remain effective until notice of the termination of any such agent's authority is given to the Trustee.
The Trustee shall be entitled to receive such reasonable compensation for its services as may be agreed upon from time to time by the Sponsor and the Trustee. Unless paid by the Company, such compensation, attorneys' fees that were incurred with the Committee's approval in the administration of the Trust Fund, all taxes levied or assessed against the Trust Fund, and such other expenses as are incurred in the administration of the Trust Fund shall be paid from the Trust Fund.
The Trustee may resign at any time by giving thirty (30) days written notice to the Sponsor. An authorized officer of the Sponsor may remove the Trustee at any time by giving thirty (30) days written notice to the Trustee unless the Trustee shall accept as adequate a shorter notice. In the case of the resignation or removal of the Trustee, an authorized officer of the Sponsor shall appoint a successor trustee who shall have the same powers and duties as those conferred upon the Trustee. Upon the resignation or removal of the Trustee and the appointment of the successor trustee, the Trustee shall account for the administration of the Trust Fund up to the date of its resignation or removal in the manner provided in Article NINTH hereof and, upon the approval or deemed approval of such accounting, the Trustee shall transfer to the successor trustee all of the assets then constituting the Trust Fund and the Trustee shall to the maximum extent permitted by ERISA be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions; provided, however, that the Trustee may, in its sole discretion, transfer such assets prior to the completion of such accounting if the Sponsor agrees thereto in writing, such writing to include such limitations on the Trustee's liability therefor as the Trustee may deem appropriate. The term "Trustee" as used in this Agreement shall be deemed to apply to any successor trustee acting hereunder.
An authorized officer of the Sponsor may amend all or any part of this Agreement at any time provided, however, that any amendment shall not be effective until the instrument of amendment has been agreed to and executed by the Trustee. Any such amendment or
Notwithstanding anything contained in this Article THIRTEENTH to the contrary, no amendment shall divert any part of the Trust Fund to, and no part of the Trust Fund shall be used for, any purpose other than for the exclusive purpose of providing benefits to Participants and their beneficiaries; provided, however, that nothing in this Article THIRTEENTH shall be deemed to limit or otherwise prevent the payment from the Trust Fund of expenses, other charges as provided in Article ELEVENTH, or as otherwise permitted by the Plan.
This Agreement and the Trust Fund hereby created may be terminated at any time by the Board of Directors of the Sponsor by written notice delivered to the Trustee. Upon receipt of such notice of termination, the Trustee shall, after payment of all expenses incurred in the administration of the Trust Fund and such compensation as the Trustee may be entitled to, and upon approval of the appropriate governmental or quasi-governmental authorities (if such approval shall be required under applicable law or desired by the Committee), then distribute the Trust Fund in cash or in kind to such persons or entities, including the Company, at such time and in such amounts as the Committee shall direct, which direction shall be in conformity with the provisions of the Plan and ERISA.
The Trustee or its agent may transfer all of the property representing a Participant's vested interest in the Plan to the trustees of any trust qualified under section 401(a) of the Code or to an individual retirement account. The Trustee or its agent may make such a transfer only at the direction of the Committee.
The Trustee may accept as part of the Trust Fund such property as is acceptable to the Trustee that represents a Participant's retirement benefits transferred from a trust qualified under section 401(a) of the Code or transferred from the Participant or an individual retirement account as a permissible rollover under section 402(c) or 408(d)(3) of the Code. The Trustee may accept such a transfer only at the direction of the Committee. A Participant shall at all times be fully vested in any property so transferred as a rollover to the Trust Fund. Such property shall be distributed to the Participant or his beneficiary at the direction of the Committee within the time required for distribution of his or her retirement benefits under the applicable provisions of the Plan.
An affiliated entity of the Sponsor that has adopted the Plan in accordance with its terms shall become a party to this Agreement by delivering to the Sponsor and the Trustee a certified copy of a resolution of its board of directors or governing body to the effect that it agrees to adopt the Plan, to become a party to this Agreement, and to be bound by all the terms and conditions of the Plan and this Agreement. The Sponsor shall have the sole authority to enforce this Agreement on behalf of any such affiliated entity and the Trustee shall in no event be required to deal with any such affiliated entity except by dealing with the Sponsor as its agent. Irrespective of the number of affiliated entities which may become parties to this Agreement, the Trustee shall in all respects invest and administer the Trust Fund as a single fund for investment and accounting purposes without allocation of any part of the Trust Fund as between the Sponsor and any such affiliated entity.
An affiliated entity that has adopted the Plan shall cease to be a party to this Agreement upon the Sponsor delivering to the Trustee a certified copy of a resolution of such affiliated entity's board of directors or governing body terminating its participation in the Plan. In such event, or in the event of the merger, consolidation, sale of property or stock, separation, reorganization or liquidation of the Sponsor or of any such affiliated entity, or in the event of the establishment, modification or continuance of any other retirement plan that separately or in conjunction with this Plan qualifies under section 401(a) of the Code, the Trustee shall continue to hold the portion of the Trust Fund that is attributable to the participation in the Plan of the employees and their beneficiaries affected by such termination or by such transaction, and this Agreement shall continue in force with respect to such portion, until otherwise directed by the Committee, in accordance with the provisions of the Plan and ERISA.
No interest in the Trust Fund shall be assignable or subject to anticipation, sale, transfer, mortgage, pledge, charge, garnishment, attachment, bankruptcy or encumbrance or levy of any kind, and the Trustee shall not recognize any attempt to assign, sell, transfer, mortgage, pledge, charge, garnish, attach or otherwise encumber the same except to the extent that such attempt is made pursuant to a court order determined by the Committee to be a qualified domestic relations order, as defined in section 414 of the Code and section 206 of ERISA, or as otherwise required by law.
The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Agreement except as required by law.
This Agreement shall be binding upon the respective successors and assigns of the Company and the Trustee. Any corporation that shall, by merger, consolidation, purchase or
If any provision of this Agreement is held to be invalid, such invalidity shall not affect the remaining provisions of the Agreement and they shall be construed and enforced as if such invalid provisions had never been inserted therein.
Communications to the Company or the Committee shall be addressed to the Sponsor, or to the Committee in care of the Sponsor, as the case may be, Mr. Kevin Wilcox, Director, Corporate Employee Benefits, Allergan, Inc., 2525 Dupont Drive, Irvine, CA 92612-1599 (or his/her successor); provided, however, that upon the Sponsor's written request such communications shall be sent to such other address as the Sponsor may specify.
Communications to the Trustee shall be addressed to: UMB Bank, N.A., Employee Benefit Division, 1010 Grand Avenue, P.O. Box 419692, Kansas City, MO 64141-6692; provided, however, that upon the Trustee's written request, such communications shall be sent to such other address as the Trustee may specify. No communication shall be binding on the Trustee until it is received by the Trustee.
This Agreement shall be construed in accordance with ERISA and, to the extent not preempted by ERISA, the laws of the State of Missouri.
By: /s/ Francis R. Tunney, Jr.
-------------------------------
Title: Corporate Vice President--
Administration, General Counsel and
Secretary
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ATTEST:
Title:
(Corporate Seal)
By: /s/ William A. Hann
-------------------------------
Title: Senior Vice President
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RESTATED
2000
TABLE OF CONTENTS
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ARTICLE I
NAME AND EFFECTIVE DATE........................................................1
1.1 Plan Name..............................................................1
1.2 Effective Date of 2000 Restated Plan...................................1
1.3 Plan Purpose...........................................................1
1.4 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan.......1
1.5 Plan Intended to Qualify...............................................1
ARTICLE II
DEFINITIONS....................................................................2
2.1 Accounts...............................................................2
2.2 Affiliated Company.....................................................2
2.3 After Tax Deposits.....................................................2
2.4 After Tax Deposits Account.............................................2
2.5 Anniversary Date.......................................................2
2.6 Before Tax Deposits....................................................2
2.7 Before Tax Deposits Account............................................2
2.8 Beneficiary............................................................2
2.9 Board of Directors.....................................................2
2.10 Break in Service.......................................................3
2.11 Code...................................................................3
2.12 Committee..............................................................3
2.13 Company................................................................3
2.14 Company Contributions..................................................3
2.15 Company Contributions Account..........................................3
2.16 Company Stock..........................................................3
2.17 Compensation...........................................................3
2.18 Computation Period.....................................................4
2.19 Credited Service.......................................................4
2.20 Disability.............................................................6
2.21 Effective Date.........................................................6
2.22 Eligible Employee......................................................6
2.23 Eligible Retirement Plan...............................................6
2.24 Eligible Rollover Distribution.........................................7
2.25 Employee...............................................................7
2.26 Employment Commencement Date...........................................7
2.27 ERISA..................................................................8
2.28 Forfeitures............................................................8
2.29 415 Suspense Account...................................................8
2.30 Highly Compensated Employee............................................8
2.31 Hour of Service........................................................9
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2.32 Investment Manager....................................................10
2.33 Leased Employee.......................................................10
2.34 Leave of Absence......................................................10
2.35 Matched Deposits......................................................11
2.36 Matching Contributions................................................11
2.37 Normal Retirement Age.................................................12
2.38 Participant...........................................................12
2.39 Participant Deposits..................................................12
2.40 Period of Severance...................................................12
2.41 Plan..................................................................12
2.42 Plan Administrator....................................................12
2.43 Plan Year.............................................................12
2.44 Reemployment Commencement Date........................................12
2.45 Rollover Account......................................................12
2.46 Severance.............................................................12
2.47 SeveranceDate.........................................................13
2.48 Sponsor...............................................................13
2.49 Trust.................................................................13
2.50 Trustee...............................................................13
2.51 Valuation Date........................................................13
ARTICLE III
ELIGIBILITY AND PARTICIPATION.................................................14
ARTICLE IV
PARTICIPANT DEPOSITS..........................................................15
4.1 Election..............................................................15
4.2 Amount Subject to Election............................................16
4.3 Limitation on Compensation Deferrals..................................17
4.4 Provisions for Return of Excess Before Tax Deposits Over $7,000.......20
4.5 Provision for Recharacterization or Return of Excess Deferrals by
Highly Compensated Participants.......................................21
4.6 Termination, Change in Rate, or Resumption of Deferrals...............23
4.7 Character of Deposits.................................................24
4.8 Rollover Contributions................................................24
ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS..........................................25
5.1 General...............................................................25
5.2 Single Trust..........................................................25
5.3 Company Contributions.................................................25
5.4 Form of Company Contributions.........................................26
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5.5 Investment of Trust Assets............................................26
5.6 Irrevocability........................................................28
5.7 Company, Committee and Trustee Not Responsible for Adequacy
of Trust Fund.........................................................29
5.8 Certain Offers for Company Stock......................................29
5.9 Voting of Company Stock...............................................32
5.10 Securities Law Limitation.............................................34
5.11 Distributions.........................................................34
5.12 Taxes.................................................................34
5.13 Trustee Records to be Maintained......................................35
5.14 Annual Report of Trustee..............................................35
5.15 Appointment of Investment Manager.....................................35
ARTICLE VI
ACCOUNTS AND ALLOCATIONS......................................................36
6.1 Participants' Accounts................................................36
6.2 Allocation of Amounts Contributed by Participants.....................36
6.3 Allocation of Company Contributions and Forfeitures...................36
6.4 Valuation of Participants' Accounts...................................36
6.5 Valuation of Company Stock............................................37
6.6 Dividends, Splits, Recapitalizations, Etc.............................37
6.7 Stock Rights, Warrants or Options.....................................37
6.8 Treatment of Accounts Upon Severance..................................38
6.9 Cash Dividends........................................................38
6.10 Miscellaneous Allocation Rules........................................38
6.11 Limitations on After Tax Deposits and Company Contributions...........39
6.12 Provision for Disposition of Excess After Tax Deposits or Matching
Contributions on Behalf of Highly Compensated Participants............43
ARTICLE VII
VESTING IN PLAN ACCOUNTS......................................................46
7.1 No Vested Rights Except as Herein Provided............................46
7.2 Vesting Schedule......................................................46
7.3 Vesting of Participant Deposits.......................................46
ARTICLE VIII
PAYMENT OF PLAN BENEFITS......................................................47
8.1 Withdrawals During Employment.........................................47
8.2 Distributions Upon Termination of Employment or Disability............48
8.3 Distribution Upon Death of Participant................................49
8.4 Designation of Beneficiary............................................49
8.5 Hardship Withdrawal Rules.............................................50
8.6 Distribution Rules....................................................51
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8.7 Forfeitures...........................................................53
8.8 Valuation of Plan Benefits Upon Distribution..........................53
8.9 Lapsed Benefits.......................................................53
8.10 Persons Under Legal Disability........................................54
8.11 Additional Documents..................................................55
8.12 Trustee-to-Trustee Transfers..........................................55
8.13 Loans to Participants.................................................55
ARTICLE IX OPERATION AND ADMINISTRATION.......................................58
9.1 Appointment of Committee..............................................58
9.2 Transaction of Business...............................................58
9.3 Voting................................................................58
9.4 Responsibility of Committee...........................................58
9.5 Committee Powers......................................................59
9.6 Additional Powers of Committee........................................60
9.7 Periodic Review of Funding Policy.....................................60
9.8 Claims Procedures.....................................................60
9.9 Appeals Procedures....................................................61
9.10 Limitation on Liability...............................................62
9.11 Indemnification and Insurance.........................................62
9.12 Compensation of Committee and Plan Expenses...........................62
9.13 Resignation...........................................................62
9.14 Reliance Upon Documents and Opinions..................................63
ARTICLE X
AMENDMENT AND ADOPTION OF PLAN................................................64
10.1 Right to Amend Plan...................................................64
10.2 Adoption of Plan by Affiliated Companies..............................64
ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS...............................................65
ARTICLE XII
TERMINATION AND MERGER........................................................66
12.1 Right to Terminate Plan...............................................66
12.2 Merger Restriction....................................................66
12.3 Effect on Trustee and Committee.......................................66
12.4 Effect of Reorganization, Transfer of Assets or Change in Control.....66
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ARTICLE XIII
LIMITATION ON ALLOCATIONS.....................................................69
13.1 General Rule..........................................................69
13.2 Annual Additions......................................................69
13.3 Other Defined Contribution Plans......................................70
13.4 Adjustments for Excess Annual Additions...............................70
13.5 Compensation..........................................................70
13.6 Treatment of 415 Suspense Account Upon Termination....................71
ARTICLE XIV
TOP-HEAVY RULES...............................................................72
14.1 Applicability.........................................................72
14.2 Definitions...........................................................72
14.3 Top-Heavy Status......................................................73
14.4 Minimum Contributions.................................................75
14.5 Minimum Vesting Rules.................................................75
14.6 Noneligible Employees.................................................76
ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS...............77
15.1 General Restrictions Against Alienation...............................77
15.2 Qualified Domestic Relations Orders...................................77
ARTICLE XVI
MISCELLANEOUS PROVISIONS......................................................81
16.1 No Right of Employment Hereunder......................................81
16.2 Effect of Article Headings............................................81
16.3 Limitation on Company Liability.......................................81
16.4 Gender................................................................81
16.5 Interpretation........................................................81
16.6 Withholding For Taxes.................................................81
16.7 California Law Controlling............................................81
16.8 Plan and Trust as One Instrument......................................81
16.9 Invalid Provisions....................................................81
16.10 Counterparts..........................................................82
APPENDIX A
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1.1 Plan Name. This document, made and entered into by Allergan, Inc., a Delaware corporation ("Allergan"), evidences the terms of a defined contribution plan with a cash or deferred arrangement for Eligible Employees of Allergan and any Affiliated Companies that are authorized by the Board of Directors to participate in the plan, to be known hereafter as the "Allergan, Inc. Savings and Investment Plan (Restated 2000)" (the "Plan").
1.2 Effective Date of 2000 Restated Plan. The "Allergan, Inc. Savings and Investment Plan (Restated 1998)" which was issued a favorable determination letter by the Internal Revenue Service on September 24, 1999 and the First and Second Amendments made thereto are hereby incorporated into the Plan. The Effective Date of the 2000 Restated Plan shall be January 1, 2000 unless otherwise stated in the Plan.
1.3 Plan Purpose. The purpose of the Plan is to enable Eligible Employees of Allergan, and any Affiliated Companies that are authorized by the Board of Directors to participate in the Plan, to share in the growth and prosperity of the Company and to provide Participants with an opportunity to accumulate capital for their future economic security. All assets acquired under the Plan as a result of Company Contributions, income, and other additions to the Fund under the Plan shall be administered, distributed, forfeited and otherwise governed by the provisions of the Plan, which is to be administered by the Committee for the exclusive benefit of Participants in the Plan and their Beneficiaries.
1.4 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan. The Allergan, Inc. Puerto Rico Savings and Investment Plan was merged with and into the Plan effective as of January 1, 1999. All account balances of the Allergan, Inc. Puerto Rico Savings and Investment Plan were transferred to the Plan and all account balances transferred to the Plan as a result of the merger shall be administered, distributed, forfeited and otherwise governed by the provisions of the Plan and Appendix A, which is attached hereto and made a part hereof.
1.5 Plan Intended to Qualify. The Plan is an employee benefit plan that is intended to qualify under Code Section 401(a) as a qualified profit sharing plan and under Code Section 401(k) as a qualified cash or deferred arrangement. The provisions of the Plan are also intended to comply with all changes to the qualification requirements made by the Uruguay Round Agreements Act (GATT), the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform Act of 1998 including qualification requirements that are effective on or after January 1, 1999.
2.1 Accounts. "Accounts" or "Participant's Accounts" shall mean the After Tax Deposits Accounts, Before Tax Deposits Accounts, Company Contribution Accounts, and Rollover Accounts maintained for the various Participants.
2.2 Affiliated Company. "Affiliated Company" shall mean (i) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Code Section 414(b)) of which the Sponsor is
a member, (ii) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Code Section 414(c)) with the Sponsor,
(iii) any entity or organization, other than the Sponsor, which is a member of
an affiliated service group (within the meaning of Code Section 414(m)) of which
the Sponsor is a member, and (iv) any entity or organization, other than the
Sponsor, which is affiliated with the Sponsor under Code Section 414(o). An
entity shall be an Affiliated Company pursuant to this paragraph only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
original Effective Date of the Plan.
2.3 After Tax Deposits. "After Tax Deposits" shall mean those contributions made by a Participant which represent after-tax contributions.
2.4 After Tax Deposits Account. "After Tax Deposits Account" of a Participant shall mean his or her individual account in the Trust Fund in which are held his or her After Tax Deposits and the earnings thereon.
2.5 Anniversary Date. "Anniversary Date" shall mean the last day of each Plan Year.
2.6 Before Tax Deposits. "Before Tax Deposits" shall mean those contributions made by a Participant which represent pre-tax contributions.
2.7 Before Tax Deposits Account. "Before Tax Deposits Account" of a Participant shall mean his or her individual account in the Trust Fund in which are held his or her Before Tax Deposits and the earnings thereon.
2.8 Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the person or persons last designated by a Participant as set forth in Section 8.4 or, if there is no designated Beneficiary or surviving Beneficiary, the person or persons designated pursuant to Section 8.4 to receive the interest of a deceased Participant in such event.
2.9 Board of Directors. "Board of Directors" shall mean the Board of Directors of the Sponsor (or its delegate) as it may from time to time be constituted.
2.11 Code. "Code" shall mean the Internal Revenue Code of 1986 and the regulations thereunder. Reference to a specific Code Section shall be deemed also to refer to any applicable regulations under that Section, and shall also include any comparable provisions of future legislation that amend, supplement or supersede that specific Section.
2.12 Committee. "Committee" shall mean the committee to be appointed under the provisions of Section 9.1 to administer the Plan.
2.13 Company. "Company" shall mean collectively the Sponsor and each Affiliated Company that adopts the Plan in accordance with Section 10.2.
2.14 Company Contributions. "Company Contributions" shall mean all amounts (whether in cash or other property, including Company Stock), including Matching Contributions, paid by the Company pursuant to Section 5.3 into the Trust Fund established and maintained under the provisions of the Plan for the purpose of providing benefits for Participants and their Beneficiaries. Unless expressly stated otherwise in the Plan, Company Contributions shall not include Participant Before Tax or After Tax Deposits.
2.15 Company Contributions Account. "Company Contributions Account" shall mean a Participant's individual account in the Trust Fund in which are held Matching Contributions and the earnings thereon and amounts transferred from a Participant's account in the SmithKline Beckman Savings and Investment Plan to the Plan, if any. Any amounts so transferred shall be fully vested.
2.16 Company Stock. "Company Stock" shall mean any class of stock of
the Sponsor which both constitutes "qualifying employer securities" as defined
in Section 407(d)(5) of ERISA and "employer securities" as defined in Code
Section 409(l).
2.17 Compensation. "Compensation" shall mean the amounts paid during a Plan Year to an Employee by the Company for services rendered, including base earnings, commissions and similar incentive compensation, cost of living allowances earned within the United States of America, holiday pay, overtime earnings, pay received for election board duty, pay received for jury and witness duty, pay received for military service (annual training), pay received for being available for work, if required (call-in premium), amounts of salary reduction elected by the Participant under a Code Section 401(k) cash or deferred arrangement, shift differential and premium, sickness/accident related pay, vacation pay, vacation shift premium, and bonus amounts paid under the following programs:
(1) Sales bonus,
(2) Management Bonus Plan or Executive Bonus Plan, either in cash or in restricted stock,
but excluding business expense reimbursements; Company gifts or the value of Company gifts; Company stock related options and payments; employee referral awards; flexible compensation credits paid in cash; special overseas payments, allowances and adjustments including, but not limited to, pay for cost of living adjustments and differentials paid for service outside of the United States, expatriate reimbursement payments, and tax equalization payments; forms of imputed income; long-term disability pay; payment for loss of Company car; Company car allowance; payments for patents or for writing articles; relocation and moving expenses; retention and employment incentive payments; severance pay; long-term incentive awards, bonuses or payments; "Impact Award" payments; "Employee of the Year" payments; "Awards for Excellence" payments; special group incentive payments and individual recognition payments which are nonrecurring in nature; tuition reimbursement; and contributions by the Company under the Plan or distributions hereunder, any contributions or distributions pursuant to any other plan sponsored by the Company and qualified under Code Section 401(a) (other than contributions constituting salary reduction amounts elected by the Participant under a Code Section 401(k) cash or deferred arrangement), any payments under a health or welfare plan sponsored by the Company, or premiums paid by the Company under any insurance plan for the benefit of Employees. Compensation taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the foregoing, for purposes of applying the provisions of Articles XIII and XIV, an Employee's Compensation shall be determined pursuant to the definition of "Compensation" as set forth in Sections 13.5 or 14.2(i), as the case may be.
2.18 Computation Period.
(a) "Computation Period" shall mean the consecutive twelve (12) month period used for determining whether an Employee is eligible to participate in the Plan pursuant to Article III.
(b) An Employee's initial Computation Period shall be the twelve-month period commencing on his or her Employment Commencement Date or Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all subsequent Computation Periods) shall be the Plan Year that includes or begins on the first anniversary of such Employee's Employment Commencement Date or Reemployment Commencement Date (whichever is applicable) and each subsequent Plan Year.
2.19 Credited Service. "Credited Service" shall mean, with respect to each Employee, his or her years and months of Credited Service determined in accordance with the following rules:
(b) In the case of any Employee who is employed by the Company on or after the original Effective Date, an Employee shall receive Credited Service credit for the elapsed period of time between each Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date). Solely for the purpose of determining an Employee's Credited Service under this paragraph (b), in the case of an Employee who is employed on January 1, 1989, that date shall be deemed to be an Employment Commencement Date of the Employee (with service credit for periods prior to January 1, 1989 to be determined under paragraph (a) above). An Employee who is absent from work on an authorized Leave of Absence shall be deemed to have incurred a Severance (if any) in accordance with the rules of Section 2.46.
(c) An Employee shall receive Credited Service credit for periods between a Severance and his or her subsequent Reemployment Commencement Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a quit, discharge, Disability, or retirement whether or not such a Severance occurs during an approved Leave of Absence and the Employee is later reemployed by the Company prior to his or her incurring a Break in Service, he or she shall receive Credited Service for the period commencing with his or her Severance Date and ending with his or her subsequent Reemployment Commencement Date.
(ii) Other than as expressly set forth above in this paragraph (c), an Employee shall receive no Credited Service with respect to periods between a Severance and a subsequent Reemployment Commencement Date.
(d) For all purposes of the Plan, an Employee's total Credited Service shall be determined by aggregating any separate periods of Credited Service separated by any Breaks in Service.
(e) An Employee shall be credited with Credited Service with respect to a period of employment with an Affiliated Company, but only to the extent that such period of employment would be so credited under the foregoing rules set forth in this Section had such Employee been employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall so provide by resolution of its Board of Directors, or unless otherwise expressly stated in the Plan, an
(g) In accordance with paragraph (f) above, an Eligible Employee shall receive Credited Service for any period of employment with Allergan Medical Optics - Lenoir facility prior to its becoming an Affiliated Company but only to the extent provided in paragraph (e) above. Notwithstanding anything therein to the contrary, the Employment Commencement Date for such Eligible Employee under paragraph (b) shall mean the date the Employee was first credited with an Hour of Service with Allergan Medical Optics - Lenoir facility, including any date prior to Allergan Medical Optics - Lenoir facility becoming an Affiliated Company.
(h) Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).
2.20 Disability. "Disability" shall mean any mental or physical condition which, in the judgment of the Committee, based on such competent medical evidence as the Committee may require, renders an individual unable to engage in any substantial gainful activity for the Company for which he or she is reasonably fitted by education, training, or experience and which condition can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months. The determination by the Committee, upon opinion of a physician selected by the Committee, as to whether a Participant has incurred a Disability shall be final and binding on all persons.
2.21 Effective Date. "Effective Date" of this restated Plan shall mean January 1, 2000 unless otherwise specified in the Plan. The original Effective Date of the Plan was July 26, 1989.
2.22 Eligible Employee. "Eligible Employee" shall mean any United States-based payroll Employee and any Puerto Rico-based payroll Employee of the Company and any expatriate Employee of the Company who is a United States citizen or permanent resident, but excluding any non-resident alien of the United States and Puerto Rico, any non-regular manufacturing site transition Employee, any Leased Employee, and any Employee covered by a collective bargaining agreement.
2.23 Eligible Retirement Plan. "Eligible Retirement Plan" shall mean an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a) that accepts an Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.
(a) 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 of 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;
(b) any distribution to the extent such distribution is required under Code Section 401(a)(9);
(c) any hardship distribution described in Code Section
401(k)(2)(B)(I)(IV);
(d) 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); and
(e) any other distribution that is reasonably expected to total less than $200 during the year.
For purposes of this Section, "Distributee" shall mean any Employee or former Employee receiving a distribution from the Plan. A Distributee also includes the Employee 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 Article XV) are Distributees with regard to the interest of the spouse or former spouse.
2.25 Employee. "Employee" shall mean, for purposes of the Plan, any person who is employed by the Sponsor or an Affiliated Company in any capacity, any portion of whose income is subject to withholding of income tax and/or for whom Social Security contribution are made by the Sponsor or an Affiliated Company, as well as a Puerto Rico-based payroll Employee of the Sponsor or an Affiliated Company except that such term shall not include (i) any individual who performs services for the Sponsor or an Affiliated Company and who is classified or paid as an independent contractor as determined by the payroll records of the Sponsor or Affiliated Company even if a court or administrative agency determines that such individual is a common-law employee and not an independent contractor and (ii) any individual who performs services for the Sponsor or an Affiliated Company pursuant to an agreement between the Sponsor or an Affiliated Company and any other person including a leasing organization except to the extent such individual is a Leased Employee.
2.26 Employment Commencement Date.
(a) "Employment Commencement Date" shall mean the date on which an Employee is first credited with an Hour of Service for the Sponsor or an Affiliated Company.
2.27 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.
2.28 Forfeitures. "Forfeitures" shall mean the nonvested portion of a Participant's benefit that is forfeited in accordance with the provisions of Article VIII.
2.29 415 Suspense Account. "415 Suspense Account" shall mean the account (if any) established and maintained in accordance with the provisions of Article XIII for the purpose of holding and accounting for allocations of excess Annual Additions (as defined in Article XIII).
2.30 Highly Compensated Employee. "Highly Compensated Employee" shall mean:
(a) An Employee who performed services for the Employer during the Plan Year or preceding Plan Year and is a member of one or more of the following groups:
(i) Employees who at any time during the Plan Year or
preceding Plan Year were Five Percent Owners (as defined in
Section 14.2).
(ii) Employees who received Compensation during the preceding Plan Year from the Employer in excess of $80,000 (as adjusted in such manner as permitted under Code Section 414(q)(1)).
(b) For the purpose of this Section, the term "Compensation" means
compensation as defined in Code Section 415(c)(3), as set forth in
Section 13.5.
(c) The term "Highly Compensated Employee" includes a Former Highly Compensated Employee. A Former Highly Compensated Former Employee is any Employee who was (i) a Highly Compensated Employee when he or she terminated employment with the Employer or (ii) a Highly Compensated Employee at any time after attaining age 55. Notwithstanding the foregoing, an Employee who separated from service prior to 1987 shall be treated as a Former Highly Compensated Former Employee only if during the separation year (or year preceding the separation year) or any year after the Employee attains age 55 (or the last year ending before the Employee's 55th birthday), the Employee either received Compensation in excess of $50,000 or was a Five Percent Owner.
(e) The determination of who is a Highly Compensated Employee, including the determination of the Compensation that is considered, shall be made in accordance with Code Section 414(q) and applicable regulations to the extent permitted thereunder, the Committee, for administrative convenience, may establish rules and procedures for purposes of identifying Highly Compensated Employees, which rules and procedures may result in an Eligible Employee being deemed to be a Highly Compensated Employee for purposes of the limitations of Article IV and Article VI, whether or not such Eligible Employee is a Highly Compensated Employee described in Code Section 414(q).
2.31 Hour of Service.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the Company or an Affiliated Company or entitled to payment for the performance of services as an Employee.
(ii) Each hour in or attributable to a period of time during which the Employee performs no duties (irrespective of whether he or she has terminated his or her Employment) due to a vacation, holiday, illness, incapacity (including pregnancy or disability), layoff, jury duty, military duty or a Leave of Absence (if the Leave of Absence is an unpaid medical Leave of Absence, the Employee will accrue hours for the duration of such leave for the first six months of such leave), for which he or she is so paid or so entitled to payment, whether direct or indirect. However, no such hours shall be credited to an Employee if (A) such Employee is directly or indirectly paid or entitled to payment for such hours and (B) such payment or entitlement 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 is a payment which solely reimburses the Employee for medical or medically-related expenses incurred by him/her.
(iii) Each hour for which he or she is entitled to back pay, irrespective of mitigation of damages, whether awarded or agreed to by the Company or an Affiliated Company, provided that such Employee has not previously been credited with an Hour of Service with respect to such hour under subparagraphs (i) or (ii) above.
Hours of Service under paragraphs (a)(ii) and (a)(iii) shall be calculated in accordance with Department of Labor Regulation 29 C.F.R. Section 2530.200b-2(b). All Hours of Service determined under the rules of paragraph (a) shall be credited to the Computation Period to which the payment relates, rather than the period in which it is made.
(c) Unless the Company shall expressly determine otherwise, and except as may be expressly provided otherwise in the Plan, an Employee shall not receive credit for his or her Hours of Service completed with an Affiliated Company prior to the effective date on which the entity became an Affiliated Company.
2.32 Investment Manager. "Investment Manager" shall mean the one or more Investment Managers, if any, that are appointed pursuant to Section 5.15 and who constitute investment managers under Section 3(38) of ERISA.
2.33 Leased Employee. "Leased Employee" shall mean any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one (1) year, and such services are performed under the primary direction or control by recipient employer. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. A Leased Employee shall not be considered an Employee of the recipient if Leased Employees do not constitute more than 20 percent of the recipient's nonhighly compensated workforce and such Leased Employee is covered by a money purchase pension plan providing (i) a nonintegrated employer contribution rate of at least ten (10) percent of compensation as defined under Code Section 415(c)(3); (ii) immediate participation; and (iii) full and immediate vesting.
2.34 Leave of Absence.
(a) "Leave of Absence" shall mean any personal leave from active employment (whether with or without pay) duly authorized by the Company under the Company's standard personnel practices. All persons under similar circumstances shall be treated alike in the granting of such Leaves of Absence. Leaves of Absence may be granted by the Company for reasons of health (including temporary sickness or short term disability) or public service or for any other reason determined by the Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in paragraph (a) above, the term Leave of Absence shall also mean a Maternity or Paternity Leave, as defined herein, but only to the extent and for the purposes required under paragraph (c) below. As used herein, "Maternity or Paternity Leave" shall mean an absence from work for any period (i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with the adoption of the child by the Employee, or (iv) for purposes of caring
(c) Subject to the provisions of paragraph (d) below, a Maternity or Paternity Leave described in paragraph (b) above shall be deemed to constitute an authorized Leave of Absence for purposes of the Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in Service has occurred, the Severance Date of a Participant who is absent by reason of a Maternity or Paternity Leave shall not be deemed to occur any earlier than the second anniversary of the date upon which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated as a Leave of Absence solely for purposes of determining whether or not an Employee has incurred a Break in Service. Accordingly, such a Maternity or Paternity Leave shall not result in an accrual of Credited Service for purposes of the vesting provisions of the Plan or for purposes of determining eligibility to participate in the Plan pursuant to the provisions of Article III (except only in determining whether a Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be treated as a Leave of Absence unless the Employee provides such timely information as the Committee may reasonably require to establish that the absence is for the reasons listed in paragraph (b) above and to determine the number of days for which there was such an absence.
(d) Notwithstanding the limitations provided in paragraph (c)
above, a Maternity or Paternity Leave described in paragraph (b) above
shall be treated as an authorized Leave of Absence, as described in
paragraph (a), for all purposes of the Plan to the extent the period of
absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
paragraph (a) above without reference to the provisions of paragraph
(b) above, provided, however, that the special rule provided under this
paragraph (d) shall not apply if it would result in a Participant who
is absent on a Maternity or Paternity Leave being deemed to have
incurred a Break in Service sooner than under the rules set forth in
paragraph (c).
2.35 Matched Deposits. "Matched Deposits" of a Participant shall mean his or her Deposits (whether Before Tax or After Tax) not in excess of five percent (5%) of Compensation. Matched Deposits shall participate in allocations of Company Contributions and Forfeitures.
2.36 Matching Contributions. "Matching Contributions" shall mean all amounts (whether in cash or other property, including Company Stock) paid by the Company pursuant to Sections 5.3(a) and 5.3(b) into the Trust Fund established and maintained under the provisions of the Plan for the purpose of providing benefits for Participants and their Beneficiaries.
2.38 Participant. "Participant" shall mean any Eligible Employee who has commenced participation in the Plan pursuant to Article III and who retains rights under the Plan.
2.39 Participant Deposits. "Participant Deposits" shall mean all of a Participant's deposits to the Plan, including After Tax Deposits and Before Tax Deposits.
2.40 Period of Severance. "Period of Severance" shall mean the period of time commencing on an Employee's Severance Date and ending on the Employee's subsequent Reemployment Commencement Date, if any.
2.41 Plan. "Plan" shall mean the Allergan, Inc. Savings and Investment Plan (Restated 2000) described herein and as amended from time to time.
2.42 Plan Administrator. Plan Administrator" shall mean the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be the Allergan Corporate Benefits Committee whose
members are appointed by the Board of Directors pursuant to the provisions of
Section 9.1 to administer the Plan.
2.43 Plan Year. "Plan Year" shall mean the calendar year.
2.44 Reemployment Commencement Date. "Reemployment Commencement Date" shall mean, in the case of an Employee who incurs a Severance and who is subsequently reemployed by the Sponsor or an Affiliated Company, the first day following the Severance on which the Employee is credited with an Hour of Service for the Sponsor or Affiliated Company with respect to which he or she is compensated or entitled to compensation by the Sponsor or Affiliated Company. Unless the Sponsor shall expressly determine otherwise and except as is expressly provided otherwise in the Plan, an Employee shall not, for the purpose of determining his or her Reemployment Commencement Date, be deemed to have commenced employment with an Affiliated Company prior to the effective date on which such entity becomes an Affiliated Company.
2.45 Rollover Account. "Rollover Account" of a Participant shall be his or her individual account in the Trust Fund in which are held rollover contributions made pursuant to Section 4.8.
2.46 Severance. "Severance" shall mean the termination of an Employee's employment with the Sponsor or Affiliated Company by reason of such Employee's quit, discharge, Disability, death, retirement, or otherwise. For purposes of determining whether an Employee has incurred a Severance, the following rules shall apply:
(a) An Employee shall not be deemed to have incurred a Severance
(i) because of his or her absence from employment with the Sponsor or
Affiliated Company
(b) For purposes of the Plan, an Employee shall be deemed to have incurred a Severance on the earlier of (i) the date on which he or she dies, resigns, is discharged, or otherwise terminates his or her employment with the Sponsor or Affiliated Company; or (ii) the date on which he or she is scheduled to return to work after the expiration of an approved Leave of Absence, if he or she does not in fact return to work on the scheduled expiration date of such Leave. In no event shall an Employee's Severance be deemed to have occurred before the last day on which such Employee performs any services for the Sponsor or Affiliated Company in the capacity of an Employee with respect to which he or she is compensated or entitled to compensation by the Sponsor or Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a Participant who is absent by reason of a Maternity or Paternity Leave, the provisions of Section 2.34(c)-(d) shall apply for purposes of determining whether such a Participant has incurred a Break in Service by reason of such Leave.
2.47 Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.46, provided, however, that the special rules set forth under Section
2.34(c)-(d) shall apply with respect to determining whether a Participant on a
Maternity or Paternity Leave has incurred a Break in Service. In the case of any
Employee who incurs a Severance as provided under Section 2.46 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of the
effective date of the Severance event (e.g., the date of his or her death,
effective date of a resignation or discharge, etc.), and the subsequent payment
of the aforementioned type of post-Severance compensation shall not operate to
postpone the timing of the Severance Date for purposes of the Plan.
2.48 Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware corporation, and any successor corporation or entity.
2.49 Trust. "Trust" or "Trust Fund" shall mean the one or more trusts created for funding purposes under the Plan.
2.50 Trustee. "Trustee" shall mean the individual or entity acting as a trustee of the Trust Fund.
2.51 Valuation Date. "Valuation Date" shall mean the date as of which the Trustee shall determine the value of the assets in the Trust Fund for purposes of determining the value of each Account, which shall be each business day in accordance with rules applied in a consistent and uniform basis.
Each Eligible Employee shall be eligible to participate in the Plan on his or her Employment Commencement Date. If an Eligible Employee's employment with the Company terminates after the Employee has become a Participant in the Plan, the Employee shall become eligible to participate in the Plan immediately upon his or her Reemployment Commencement Date.
4.1 Election.
(a) Each Eligible Employee may elect to defer the receipt of a portion of his or her Compensation and to have the deferred amount contributed directly by the Company to the Plan as Before Tax Deposits. Before Tax Deposits may be made only by means of payroll deduction.
(b) Each Eligible Employee may elect to contribute to the Plan a portion of his or her Compensation as After Tax Deposits. After Tax Deposits may be made only by means of payroll deduction.
(c) The Committee shall prescribe procedures to implement automatic enrollment elections, pursuant to which an Eligible Employee or, if limited to newly hired Eligible Employees as determined by the Committee, shall be deemed to have elected to defer the receipt of three percent (3%) of his or her Compensation and to have such deferred amount contributed directly by the Company to the Plan as Before Tax Deposits if such Eligible Employee fails to change or terminate the automatic election for any Plan Year within the time period prescribed by the Committee (or, in the case of newly hired Eligible Employee, he or she fails to change or terminate the automatic election within 30 days of his or her hire date). Such procedures shall require that an Eligible Employee receive a written notice of explanation of the automatic election informing the Eligible Employee of the effective date of the automatic election, the automatic deferral percentage and his or her right to terminate the automatic election or to change the amount of his or her Before Tax Deposits made to the Plan as well as the procedures for exercising such rights and the timing for implementing a different election. An automatic election under this paragraph (c) shall be effective as of the first pay period of the Plan Year (or, in the case of newly hired Eligible Employee, the first pay period following the 30-day period beginning on his or her date of hire) and shall remain in effect until superseded by a subsequent election by the Eligible Employee. Amounts contributed directly by the Company to the Plan under this paragraph (c) shall be invested in the Balanced Fund described in Section 5.5(b) until superseded by a subsequent election by the Eligible Employee.
(d) Notwithstanding anything in this Section to the contrary, a Participant who makes a hardship withdrawal pursuant to Section 8.1(e) shall not be permitted to make Before Tax Deposits or After Tax Deposits to the Plan for the 12-month period beginning as soon as administratively feasible following the date of the hardship withdrawal. In addition, a Participant who makes a withdrawal of After Tax Deposits (whether Matched Deposits or non-Matched Deposits) pursuant to Section 8.1(a) on or after July 1, 2000 shall not be permitted to make any After Tax or and Before Tax Deposits during the 6-month period beginning as soon as administratively feasible following the date of the withdrawal unless the After Tax Deposits can also be withdrawn under Section 8.1(d) or
(e) The Committee shall prescribe such procedures, either in writing or in practice, and provide such forms as are necessary or appropriate for each Participant and each Eligible Employee who will become a Participant to make Deposits pursuant to this Article IV. However, an election by a Participant shall not be adopted retroactively.
4.2 Amount Subject to Election.
(a) Participants may elect to contribute a whole percentage of his
or her Compensation to the Plan as Before Tax Deposits not to exceed
twenty percent (20%) when aggregated with the After Tax Deposits
contributed by such Participant pursuant to paragraph (b) below.
Notwithstanding the foregoing, no Participant shall be permitted to
make Before Tax Deposits to the Plan during any taxable year in excess
of $10,500, or such larger amount as may be determined by the Secretary
of the Treasury pursuant to Code Section 402(g)(2), or which exceed the
limitations set forth in Section 4.3. For purposes of the dollar
limitation, the Before Tax Deposits of a Participant for any taxable
year is the sum of all Before Tax Deposits under the Plan and all
salary reduction amounts under any other qualified cash or deferred
arrangement (as defined in Code Section 401(k)), a simplified employee
pension (as defined in Code Section 408(k) and Code Section
402(h)(1)(B)), a deferred compensation plan under Code Section 457, a
trust described in Code Section 501(c)(18) and any salary reduction
amount used to purchase an annuity contract under Code Section 403(b)
whether or not sponsored by the Company but shall not include any
amounts properly distributed as excess annual additions.
(b) Each Participant may elect to contribute a whole percentage of his or her Compensation to the Plan as After Tax Deposits not to exceed twenty percent (20%) when aggregated with the amount of his or her Before Tax Deposits. Notwithstanding the foregoing, no Participant shall be permitted to make After Tax Deposits to the Plan during any Plan Year which exceed the limitations set forth in Section 6.13.
(c) The Committee shall prescribe such procedures, either in writing or in practice, as it deems necessary or appropriate regarding the maximum amount that a Participant may elect to defer and the timing of such an election. These procedures shall apply to all individuals eligible to make an election described in Section 4.1. The Committee may, at any time during a Plan Year, require the suspension, reduction, or recharacterization of Before Tax Deposits or the suspension or reduction of After Tax Deposits of any Highly Compensated Employee such that the limitations of Section 4.2(a) and (b) are satisfied.
(d) Notwithstanding paragraph (a), a Participant who makes a hardship withdrawal of Before Tax Deposits pursuant to Section 8.1(f) may not make Before Tax Deposits for the taxable year immediately following the taxable year of such hardship withdrawal that is in excess of the applicable limit under Code Section 402(g) for such
4.3 Limitation on Compensation Deferrals. With respect to each Plan Year, Compensation Deferral Contributions by a Participant for the Plan Year shall not exceed the limitation on contributions by or on behalf of Highly Compensated Participants under Code Section 401(k), as provided in this Section. In the event that Compensation Deferral Contributions under the Plan by or on behalf of Highly Compensated Participants exceed the limitations of this Section for any reason, either such excess contributions shall be recharacterized as After Tax Deposits or such excess contributions, adjusted for any income or loss allocable thereto, shall be returned to the Participant, as provided in Section 4.5.
(a) The Compensation Deferral Contributions by Participants for a Plan Year shall satisfy the Actual Deferral Percentage Test set forth in (i) below, or, to the extent not precluded by applicable regulations, the alternative Actual Deferral Percentage test set forth in (ii) below:
(i) The average Actual Deferral Percentage of Highly Compensated Participants for the Plan Year shall not be more than the prior Plan Year's average Actual Deferral Percentage of Participants who were not Highly Compensated Employees for the prior Plan Year multiplied by 1.25, or
(ii) The average Actual Deferral Percentage of Highly
Compensated Participants for the Plan Year shall not be more than
the prior Plan Year's Actual Deferral Percentage of Participants
who were not Highly Compensated Employees for the prior Plan Year
multiplied by 2.0, provided that the average Actual Deferral
Percentage of Highly Compensated Participants does not exceed the
average Actual Deferral Percentage of Participants who were not
Highly Compensated Employees for the prior Plan Year by more than
two (2) percentage points (or such lesser percentage as the
Secretary of the Treasury shall prescribe to prevent the multiple
use of the alternative limitation set forth in this Section
4.3(a)(ii) with respect to any Highly Compensated Participants).
(iii) In the event the test under (i) above cannot be
satisfied, the Committee shall determine if the use of the
alternative test under (ii) above is available under regulations
relating to the multiple use of the alternative limitation, as
prescribed by the Secretary of the Treasury under Code Section
401(m)(2)(A). If the Committee determines that the alternative
test is not available, either the Actual Deferral Percentage or
the Average Contribution Percentage (as defined in Section 6.11)
for Highly Compensated Participants eligible to participate in the
Plan and a plan of the Company or an Affiliated Company that is
subject to the limitations of Code Sections 401 (k) and (m)
including, if applicable, the Plan, shall be reduced in accordance
with, and to the extent necessary to satisfy, the requirements of
regulations issued under Code Section 401(m).
(i) "Actual Deferral Percentage" shall mean, with respect to the group of Highly Compensated Participants and the group of all other Participants for a Plan Year, the ratios calculated separately and to the nearest one-hundredth of one percent for each Participant in such group, as follows:
(1) For a Highly Compensated Participant, the ratio of such Participant's Compensation Deferral Contributions for the current Plan Year to such Participant's Compensation for the current Plan Year; provided, however, that the Actual Deferral Percentage of a Highly Compensated Participant with no Compensation Deferral Contributions made on his or her behalf shall be zero.
(2) For any other Participant, the ratio of such Participant's Compensation Deferral Contributions for the preceding Plan Year to such Participant's Compensation for the preceding Plan Year; provided, however, that the Actual Deferral Percentage of a Participant with no Compensation Deferral Contributions made on his or her behalf shall be zero.
To the extent determined by the Committee and in accordance with regulations issued by the Secretary of the Treasury, qualified nonelective contributions on behalf of a Participant that satisfy the requirements of Code Section 401(k)(3)(c)(ii) may also be taken into account for the purpose of determining the Actual Deferral Percentage of a Participant.
(ii) "Highly Compensated Participant" shall mean for any Plan Year any Participant who is a Highly Compensated Employee. A Participant is a Highly Compensated Employee for a particular Plan Year if he or she meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is not a Highly Compensated Employee for a particular Plan Year if he or she does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.
(iii) "Participant" shall mean any Eligible Employee who satisfied the requirements under Article III during the Plan Year, whether or not such Eligible Employee has elected to contribute to the Plan for such Plan Year.
(iv) "Compensation Deferral Contributions" shall mean amounts contributed to the Plan by a Participant as Before Tax Deposits pursuant to Section 4.2(a), including excess Before Tax Deposits (as defined in Section 4.4(a)) of Highly Compensated Participants but excluding (1) excess Before Tax Deposits of all other Participants that arise solely from Before Tax Deposits made under the Plan or plans of the Company, (2) Before Tax Deposits that are taken into account in the Average Contribution Percentage test (as defined
(v) "Compensation" shall mean compensation as described below:
(1) Compensation means compensation determined by the
Company in accordance with the requirements of Code Section
414(s) and the regulations thereunder.
(2) For purposes of this Section 4.3, Compensation may, at the Company's election, exclude amounts which are excludable from a Participant's gross income under Code Section 125 (pertaining to cafeteria plans) and Code Section 402(e)(3) (pertaining to 401(k) salary reductions). The Company may change its election provided such change does not discriminate in favor of Highly Compensated Employees.
(3) Compensation taken into account for any Plan Year shall not exceed $150,000 as adjusted at the time and in such manner as permitted under Code Section 401(a)(17)(B).
(c) In the event the Plan satisfies the requirements of Code Sections 401(k), 401(a)(4) or 410(b) only if aggregated with one or more other plans which include arrangements under Code Section 401(k), then this Section 4.3 shall be applied by determining the Actual Deferral Percentages of Participants as if all such plans were a single plan, in accordance with regulations prescribed by the Secretary of the Treasury under Code Section 401(k). Any adjustments to the Actual Deferral Percentage of Participants who are not Highly Compensated Employees for the prior year shall be made in accordance with Notice 98-1 and any superseding guidance. Plans may be aggregated in order to satisfy Code Sections 401(k) only if they have the same Plan Year and use the same Actual Deferral Percentage testing method.
(d) For the purposes of this Section 4.3, the "Actual Deferral Percentage" for any Highly Compensated Participant who is a Participant under two or more Code Section 401(k) arrangements of the Company shall be determined by taking into account the Highly Compensated Participant's compensation under each such arrangement and contributions under each such arrangement which qualify for treatment under Code Section 401(k), in accordance with regulations prescribed by the Secretary of the Treasury under Code Section 401(k). If the arrangements have different Plan Years, this paragraph shall be applied by treating all such arrangements ending with or within the same calendar year as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate plans if mandatorily disaggregated pursuant to regulations under Code Section 401(k).
(f) The determination and treatment of Compensation Deferral Contributions and the Actual Deferral Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records as are necessary to demonstrate that the Plan satisfies the requirements of Code Section 401(k) and (m) and the regulations thereunder, in accordance with regulations prescribed by the Secretary of the Treasury.
4.4 Provisions for Return of Excess Before Tax Deposits Over $7,000.
(a) In the event that due to error or otherwise, an amount of a Participant's Compensation in excess of the $7,000 limitation (after application of any necessary adjustment) described in Section 4.2(a) is deferred under the Plan in any calendar year pursuant to such Participant's Compensation deferral agreement (but without regard to amounts deferred under any other plan) the excess Before Tax Deposits, if any, together with income allocable to such amount shall be returned to the Participant (after withholding applicable federal, state and local taxes due on such amounts) on or before the first April 15 following the close of the calendar year in which such excess contribution is made; provided, however, if there is a loss allocable to the excess Before Tax Deposits, the amount distributed shall be the amount of the excess as adjusted to reflect such loss. Any Company Contributions allocated to the Participant's Matched Deposits pursuant to Section 6.3(b) which are attributable to any excess Before Tax Deposits by a Participant, and any income or loss allocable to such Company Contributions, shall either be returned to the Company or applied to reduce any future Company Contributions by the Company.
(b) The amount of income or loss attributable to any excess Before Tax Deposits described in paragraph (a) above shall be equal to the sum of the following:
(i) The income or loss allocable to the Participant's Before Tax Deposits Account for the Plan Year multiplied by a fraction, the numerator of which is the excess Before Tax Deposits as determined under paragraph (a) above, and the denominator of which is the balance of the Participant's Before Tax Deposits Account as of the last day of the Plan Year, without regard to any income or loss allocable to such Account during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap Period using the "safe harbor" method set forth in regulations prescribed by the Secretary of the Treasury under Code Section 402(g). Under the "safe harbor" method, such allocable income or loss is equal to 10% of the amount calculated under
(c) For the purpose of this Section 4.4, "Gap Period" shall mean the period between the last day of the Plan Year and the date of distribution of any excess Before Tax Deposits.
(d) In accordance with procedures as may be established, either in
writing or in practice, by the Committee, not later than March 1 of a
calendar year a Participant may submit a claim to the Committee in
which he or she certifies in writing the specific amount of his or her
Before Tax Deposits for the preceding calendar year which, when added
to amounts deferred for such calendar year under other plans or
arrangements described in Code Sections 401(k), 408(k) or 403(b), will
cause the Participant to exceed the $7,000 limitation as described in
Section 4.2(a) for such preceding calendar year. Notwithstanding the
amount of the Participant's Before Tax Deposits under the Plan for such
preceding calendar year, the Committee shall treat the amount specified
by the Participant in his or her claim as a Before Tax Deposit in
excess of the $7,000 limitation (after application of any necessary
adjustment) for such calendar year and return it to the Participant in
accordance with Section 4.4(a) above. A Participant is deemed to notify
the Committee of any excess Before Tax Deposits that arise by taking
into account only those Before Tax Deposits made to the Plan and other
plans of the Company.
(e) Any Before Tax Deposits in excess of the $7,000 limitation
(after application of any necessary adjustment) described in Section
4.2(a) which are distributed to a Participant in accordance with this
Section, shall to the extent required by regulations issued by the
Secretary of the Treasury be treated as Annual Additions under Article
XIII for the Plan Year for which the excess Before Tax Deposits were
made, unless such amounts are distributed no later than the first April
15th following the close of the Participant's taxable year.
(f) The Committee shall not be liable to any Participant (or his or her Beneficiary, if applicable) for any losses caused by a mistake in calculating the amount of any Participant's excess Before Tax Deposits or the income or losses attributable thereto.
4.5 Provision for Recharacterization or Return of Excess Deferrals by Highly Compensated Participants. The provisions of this Section 4.5 shall be applied after implementation of the provisions of Section 4.4.
(a) The Committee shall determine in accordance with the procedures set forth in Section 4.3, as soon as is reasonably possible following the close of each Plan Year, the extent (if any) to which deferral treatment under Code Section 401(k) may not be available for Compensation Deferral Contributions on behalf of any Highly Compensated Participants. If, pursuant to these determinations by the Committee, a
(b) For purposes of satisfying the Actual Deferral Percentage test
of Section 4.3(a), the amount of any excess Compensation Deferral
Contributions by a Highly Compensated Participant shall be determined
by the Committee by application of a leveling method under which the
Compensation Deferral Contributions of the Highly Compensated
Participant who has the highest dollar amount of Compensation Deferral
Contributions for such Plan Year is reduced to the extent required to
cause such Highly Compensated Participant's Compensation Deferral
Contributions to equal the Compensation Deferral Contributions of the
Highly Compensated Participant with the next highest Compensation
Deferral Contributions; provided, however, if a lesser amount, when
added to the total dollar amount already returned under this paragraph
(b), equals the total excess Compensation Deferral Contributions that
are required to be returned to enable the Plan to satisfy the Actual
Deferral Percentage test, the lesser amount shall be returned. This
process shall be repeated until the Plan satisfies the Actual Deferral
Percentage test.
(c) The amount of income or loss attributable to any excess Compensation Deferral Contributions by a Highly Compensated Participant for a Plan Year shall be equal to the sum of the following:
(i) The income or loss allocable to the Highly Compensated
Participant's Compensation Deferral Contribution Accounts for the
Plan Year multiplied by a fraction, the numerator of which is the
excess Compensation Deferral Contribution as determined under
Section 4.3, and the denominator of which is the balance of the
Highly Compensated Participant's Compensation Deferral
Contribution Accounts as of the last day of the Plan Year without
regard to any income or loss allocable to such Accounts during the
Plan Year; and
(ii) The amount of allocable income or loss for the Gap Period
using the "safe harbor" method set forth in the regulations
prescribed by the Secretary of the Treasury under Code Section
401(k). Under the "safe harbor" method, such allocable income or
loss is equal to 10% of the amount calculated under Section
4.5(c)(i) above, multiplied by the number of calendar months from
the last day of the Plan Year until the date of distribution of
the Participant's excess
(d) For the purpose of this Section 4.5 the following shall apply:
(i) "Compensation Deferral Contribution Accounts" shall mean
the Participant's Before Tax Deposits Account and shall mean any
other accounts of the Participant to which Company Contributions
has been allocated where such Company Contributions has been
included as Compensation Deferral Contributions pursuant to
Section 4.3(b)(iv).
(ii) "Gap Period" shall mean the period beginning with the last day of the Plan Year and the date of distribution of any excess Compensation Deferral Contributions.
(e) For purposes of this Section, the amount of Compensation Deferral Contributions by a Participant who is not a Highly Compensated Participant for a Plan Year shall be reduced by any Before Tax Deposits which have been distributed to the Participant under Section 4.4, in accordance with regulations prescribed by the Secretary of the Treasury under Code Section 401(k).
(f) In the event that the Committee determines that an amount to
be deferred pursuant to the Compensation deferral agreement provided in
Section 4.1 would cause Company Contributions under this and any other
tax-qualified retirement plan maintained by the Company to exceed the
applicable deduction limitations contained in Code Section 404, or to
exceed the maximum Annual Addition determined in accordance with
Article XIII, the Committee may treat such amount in accordance with
the rules set forth above in Section 4.5(a).
(g) The Committee shall not be liable to any Participant (or his or her Beneficiary, if applicable) for any losses caused by a mistake in calculating the amount of any Participant's excess Compensation Deferral Contribution or the income or losses attributable thereto.
(h) To the extent required by regulations under Code Sections
401(k) or 415, any excess Compensation Deferral Contributions with
respect to a Highly Compensated Participant shall be treated as Annual
Additions under Article XIII for the Plan Year for which the excess
Compensation Deferral Contributions were made, notwithstanding the
distribution of such excess in accordance with the provisions of this
Section.
4.6 Termination, Change in Rate, or Resumption of Deferrals.
(a) A Participant may, at any time, terminate, change the rate, or resume Before Tax Deposits or After Tax Deposits in 1% increments.
(c) Any termination, change in rate or resumption of Before Tax Deposits or After Tax Deposits made by a Participant pursuant to paragraph (a) above shall be effective as of the following pay period or, if later, as soon as administratively feasible.
4.7 Character of Deposits. Before Tax Deposits shall be treated as Company Contributions for purposes of Code Sections 401(k) and 414(h). After Tax Deposits shall not constitute "qualified voluntary employee contributions" under Code Section 219 (relating to the deductibility of those amounts).
4.8 Rollover Contributions.
(a) Pursuant to procedures as the Committee may prescribe (either in writing or practice), an Eligible Employee may make a Rollover Contribution to the Plan. "Rollover Contribution" shall mean a contribution by an Eligible Employee as the result of a distribution from another "qualified trust" (as defined in Code Section 401) which is exempt from tax under Code Section 501, but only if such contribution:
(i) Is received by the Committee not later than 60 days after the distribution was received by an Eligible Employee; or
(ii) Is the result of a trustee-to-trustee transfer of assets between two or more qualified plans; or
(iii) Is the result of a transfer of assets from an individual retirement arrangement or annuity (as defined in Code Section 408) and such individual retirement arrangement or annuity was created solely from a distribution or distributions from a qualified plan; or
(iv) Is an "Eligible Rollover Distribution".
(b) A Rollover Contribution shall not be considered a Participant Deposit.
(c) An Eligible Employee's Rollover Contribution made pursuant the rules of this Section 4.8 shall be held in a separate Rollover Account for the Eligible Employee. A Rollover Account will not share in any allocations of Company Contributions or Forfeitures under Section 6.3.
5.1 General. All contributions made under the Plan and investments made and property of any kind or character acquired with any such funds or otherwise contributed, and all income, profits, and proceeds derived therefrom, shall be held in Trust and shall be held and administered by the Trustee in accordance with the provisions of the Plan and Trust Agreement.
5.2 Single Trust. Assets of the Trust shall be held in a separate fund which shall consist of the Trust Fund. Individual Participant interests in the Trust Fund shall be reflected in the Accounts maintained for the Participants. Notwithstanding the foregoing, the Trust Fund shall be treated as a single trust for purposes of investment and administration, and nothing contained herein shall require a physical segregation of assets for any fund or for any Account maintained under the Plan.
5.3 Company Contributions. Subject to the limitations of Article XIII, the suspension provisions of Section 8.1 and to the extent that the Company has current or accumulated profits, the Company shall contribute to the Plan in accordance with the following rules:
(a) The Company shall contribute and allocate Matching Contributions on a pay period basis which, when added to Forfeitures available after application of Section 6.3, is equal to:
(i) 75% of each Participant's Matched Deposits for the pay period which are not in excess of two percent (2%) of such Participant's Compensation.
(ii) 50% of each Participant's Matched Deposits for the pay period which are in excess of two percent (2%) of such Participant's Compensation but not in excess of three percent (3%) of such Participant's Compensation.
(iii) 25% of each Participant's Matched Deposits for the pay period which are in excess of three percent (3%) of such Participant's Compensation.
The Board of Directors, acting upon the advice and direction of the Committee, may authorize and direct that Matching Contributions (expressed as a percentage of Participants' Matched Deposits as set forth above) be changed from time to time from a minimum of 0% to a maximum of 100%.
(b) The Company shall contribute and allocate additional Matching Contributions on the last day of each Plan Year which when added to Forfeitures available after application of Section 6.3, is equal to the difference, if any, between the amount of each Participant's Matching Contributions determined under paragraph (a) and the amount of such Participant's Matching Contributions if paragraph (a) was applied on a Plan Year basis instead of a pay period basis.
5.4 Form of Company Contributions. The Company's contributions to the Trust Fund shall be paid in cash, property, or Company Stock as the Company may from time to time determine.
5.5 Investment of Trust Assets.
(a) The manner in which assets of the Trust will be invested shall be chosen by the Committee at its discretion, although the Committee may delegate the management to one or more Investment Managers appointed pursuant to Section 5.15. Notwithstanding the foregoing, Matching Contributions shall be invested in Company Stock except to the extent invested pursuant to Section 5.5(e). Employer contributions made under the SmithKline Beckman Corporation Savings and Investment Plan and transferred to the Plan shall be invested at the discretion of the Committee through June 30, 2000.
(b) The Committee may establish separate investment funds under the Plan, with each fund representing an investment alternative available to Participants for the investment of their Accounts as provided in Section 5.5(c) and (d) below. Each Participant shall have a subaccount under the Plan corresponding to the Participant's interest which is allocated to each investment fund. Each such subaccount may be valued separately. The Committee may, at its discretion, establish alternative investment funds or eliminate any previously established funds, including but not limited to the following types of investment funds:
(i) The Interest Income Fund investing in group annuity contracts with major insurance companies.
(ii) The Balanced Fund investing in common stocks, bonds, government securities and similar types of investments.
(iii) The Equity Fund investing in a mutual fund which may invest in equity securities, bonds, preferred stocks, and interest-bearing cash investments.
(iv) The Company Stock Fund consisting exclusively of Company Stock.
Notwithstanding the establishment of separate investment funds, up to one hundred percent (100%) of the assets of the Plan may be invested in Company Stock.
(c) A Participant may elect the investment fund to which his or her Before Tax Deposits or After Tax Deposits are invested under the Plan or may change such
(d) A Participant may elect at any time to transfer amounts accumulated in his or her Before Tax Deposits Account, After Tax Deposits Account, or Rollover Account among any of the investment funds currently offered by the Committee and currently available to the Participant, provided, however, the total amount transferred shall be in increments of 1% of the amount accrued in such accounts. As of July 1, 2000, the foregoing investment discretion shall be permitted for amounts attributable to employer contributions made under the SmithKline Beckman Corporation Savings and Investment Plan and transferred to the Plan. A Participant shall effect such transfer in the manner authorized by the Committee.
(e) Notwithstanding the requirement of paragraph (a) above that Matching Contributions be invested in the Company Stock Fund, any Participant on or after the date he or she attains age 55 may elect that (i) all amounts allocated to his or her Company Contribution Account which are held in the Company Stock Fund and (ii) any future Matching Contributions that may be allocated to his or her Company Contribution Account, be invested in any of the investment funds currently offered by the Committee and currently available to the Participant. A Participant shall make any election, and may change any election, at such times and in accordance with the requirements imposed by Sections 5.5(c) and (d) above.
(f) Amounts invested in any one of the investment funds shall not share in gains and losses experienced by any other fund.
(g) Notwithstanding the establishment of separate investment funds within the Trust, the Trust shall at all times constitute a single trust.
(h) Notwithstanding anything to the contrary in this Section 5.5 or Section 4.1 or Section 8.1, the following additional transfer and withdrawal restrictions shall apply to all Participants who are Insiders. For the purpose of this Section 5.5, the term "Insider" shall mean any Participant who is directly or indirectly the beneficial owner of more than 10% of any class of any equity security (other than an exempted security) of the Sponsor (or the Company) which is registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act") or who is a "director" or an "officer" of the Sponsor or the Company as those terms are interpreted for the purpose of determining persons subject to Section 16 of the Exchange Act.
(i) Any Insider who transfers amounts invested in the Company Stock Fund out of such fund and into another fund or withdraws cash in a transaction
(ii) Any Insider who transfers amounts invested in a fund other than the Company Stock Fund into the Company Stock Fund, may not for a period of six months following the Participant's election to so transfer funds make an election to (1) transfer amounts from the Company Stock Fund into another fund, (2) withdraw cash or take a loan in a transaction that results in the liquidation of amounts in the Company Stock Fund or (3) utilize the diversification rule of Section 5.12 of the Allergan Inc. Employee Stock Ownership Plan or the provision of any Company plan covered by Rule 16b-3 (promulgated pursuant to the Exchange Act) then in existence that would result in the transfer out of a Company equity securities fund.
(i) It is intended that to the extent a Participant may direct the investment of his or her Accounts under the Plan that the Plan constitute a plan described in Section 404(c) of ERISA and the regulations thereunder, and neither the Company, Committee, nor any fiduciary with respect to the Plan who is employed by the Company shall be liable for investment losses sustained by any Participant or Beneficiary as a direct and necessary result of the investment instructions given by such Participant or Beneficiary. Such fiduciaries set forth in the preceding sentence shall be under no duty to question the investment direction of the Participant or to advise a Participant as to the manner in which his or her Accounts is to be invested. The fact that an investment option is offered shall not be construed to be a recommendation of investment.
5.6 Irrevocability. The Company shall have no right or title to, nor interest in, the contributions made to the Trust Fund, and no part of the Trust Fund shall revert to the Company except that on or after the original Effective Date funds may be returned to the Company as follows:
(a) In the case of a Company Contribution which is made by a mistake of fact, at the Company's written request that contribution may be returned to the Company within one (1) year after it is made.
(b) All Company Contributions contributed to the Trust are hereby
conditioned upon the Plan satisfying all of the requirements of Code
Section 401(a). If the Plan does not qualify, at the Company's written
election the Plan may be revoked and all such contributions may be
returned to the Company within one year after the date of Internal
Revenue Service denial of the qualification of the Plan. Upon such a
revocation the affairs of the Plan and Trust shall be terminated and
wound up as the Company shall direct.
(d) In the event that the Plan is terminated when there are amounts remaining in the Suspense Account, the excess funds may revert to the Company to the extent provided in Section 13.6.
5.7 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund.
(a) The Company, Committee, and the Trustee shall not be liable or responsible for the adequacy of the Trust Fund to meet and discharge any or all payments and liabilities hereunder. All Plan benefits will be paid only from the Trust assets, and neither the Company, the Committee nor the Trustee shall have any duty or liability to furnish the Trust with any funds, securities or other assets except as expressly provided in the Plan.
(b) Except as required under the Plan or Trust or under Part 4 of Subtitle B of Title I of ERISA, the Company shall not be responsible for any decision, act or omission of the Trustee, the Committee, or the Investment Manager (if applicable), and shall not be responsible for the application of any moneys, securities, investments or other property paid or delivered to the Trustee.
5.8 Certain Offers for Company Stock. Notwithstanding any other provision of the Plan to the contrary, in the event an offer shall be received by the Trustee (including but not limited to a tender offer or exchange offer within the meaning of the Securities Exchange Act of 1934, as from time to time amended and in effect) to acquire any or all shares of Company Stock held by the Trust (an "Offer"), the discretion or authority to sell, exchange or transfer any of such shares of Company Stock shall be determined in accordance with the following rules:
(a) The Trustee shall have no discretion or authority to sell, exchange or transfer any Company Stock pursuant to an Offer except to the extent, and only to the extent, that the Trustee is timely directed to do so in writing by each Participant with respect to shares of Company Stock that are allocated to such Participant's Accounts.
(b) To the extent there remains any residual fiduciary responsibility with respect to Company Stock pursuant to an Offer after application of paragraph (a) above, the Trustee shall sell, exchange or transfer such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor. To the extent the Committee or an independent fiduciary is required to exercise any residual fiduciary responsibility with respect to an Offer, the Committee or independent fiduciary shall take into account in exercising its fiduciary judgment, unless it is clearly imprudent to do so, directions timely received from Participants, as such directions are most indicative of what action is in the best interests of Participants. Further, the Committee or independent fiduciary, in addition to taking into consideration any relevant
(c) Upon timely receipt of such instructions, the Trustee shall, subject to the provisions of paragraphs (e) and (o) of this Section, sell, exchange or transfer pursuant to such Offer, only such shares as to which such instructions were given. The Committee shall use its best efforts to communicate or cause to be communicated to each Participant the consequences of any failure to provide timely instructions to the Trustee.
(d) In the event, under the terms of an Offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such Offer may be withdrawn from such Offer, the Trustee shall follow such instructions respecting the withdrawal of such shares from such Offer in the same manner and the same proportion as shall be timely received by the Trustee from the Participants entitled under this paragraph (a) to give instructions as to the sale, exchange or transfer of shares pursuant to such Offer.
(e) In the event that an Offer for fewer than all of the shares of Company Stock held by the Trustee in the Trust shall be received by the Trustee, each Participant shall be entitled to direct the Trustee as to the acceptance or rejection of such Offer (as set forth herein) with respect to the largest portion of such Company Stock as may be possible given the total number or amount of shares of Company Stock the Plan may sell, exchange or transfer pursuant to the Offer based upon the instructions received by the Trustee from all other Participants who shall timely instruct the Trustee pursuant to this paragraph to sell, exchange or transfer such shares pursuant to such Offer, each on a pro rata basis in accordance with the maximum number of shares each such Participant would have been permitted to direct under paragraph (a) had the Offer been for all shares of Company Stock held in the Trust.
(f) In the event an Offer is received by the Trustee and instructions have been solicited from Participants regarding such Offer, and prior to termination of such Offer, another Offer is received by the Trustee for the Company Stock subject to the first Offer, the Trustee shall inform the Committee of such other Offer and the Committee shall use its best efforts under the circumstances to solicit instructions from the Participants (i) with respect to securities tendered for sale, exchange or transfer pursuant to the first Offer, whether to withdraw such tender, if possible, and, if withdrawn, whether to tender any Company Stock so withdrawn for sale, exchange or transfer pursuant to the second Offer and (ii) with respect to Company Stock not tendered for sale, exchange or transfer pursuant to the first Offer, whether to tender or not to tender such Company Stock for sale, exchange or transfer pursuant to the second Offer. The Trustee shall follow all such instructions received in a timely manner from Participants in the same manner and in the same proportion as provided in paragraph (a) of this Section. With respect to any further Offer for any Company Stock received by the Trustee and subject to any earlier Offer
(g) With respect to any Offer received by the Trustee, the Trustee shall inform the Sponsor of such Offer and the Sponsor shall distribute, at its expense, copies of all relevant material including but not limited to material filed with the Securities and Exchange Commission with such Offer or regarding such Offer, which shall seek confidential written instructions from each Participant who is entitled to respond to such Offer pursuant to paragraph (a). The identities of Participants, the amount of Company Stock allocated to their ESOP Accounts, and the Compensation of each Participant shall be determined from the list of Participants delivered to the Sponsor by the Committee which shall take all reasonable steps necessary to provide the Sponsor with the latest possible information.
(h) The Sponsor shall distribute and/or make available to each Participant who is entitled to respond to an Offer pursuant to paragraph (a), an instruction form to be used by each such Participant who wishes to instruct the Trustee. The instruction form shall state that (i) if the Participant fails to return an instruction form to the Trustee by the indicated deadline, the Company Stock with respect to which he or she is entitled to give instructions shall not be sold, exchanged or transferred pursuant to such Offer, (ii) the Participant shall be a named fiduciary (as described in paragraph (m) below) with respect to all shares of Company Stock for which he or she is entitled to give instructions, and (iii) the Company acknowledges and agrees to honor the confidentiality of the Participant's instructions to the Trustee.
(i) Each Participant may choose to instruct the Trustee in one of the following two ways: (i) not to sell, exchange or transfer any shares of Company Stock for which he or she is entitled to give instructions, or (ii) to sell, exchange or transfer all Company Stock for which he or she is entitled to give instructions. The Sponsor shall follow up with additional mailings and postings of bulletins, as reasonable under the time constraints then prevailing, to obtain instructions from Participants not otherwise responding to such requests for instructions. Subject to paragraph (e), the Trustee shall then sell, exchange or transfer shares according to instructions from Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred unless directed otherwise as provided in paragraph (b) above.
(j) The Sponsor shall furnish former Participants who have received distributions of Company Stock so recently as to not be shareholders of record with the information given to Participants pursuant to paragraphs (g), (h) and (i) of this Section. The Trustee shall then sell, exchange or transfer shares according to instructions from such former Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred.
(k) Neither the Company, the Committee nor the Trustee shall express any opinion or give any advice or recommendation to any Participant concerning the Offer, nor shall they have any authority or responsibility to do so.
(m) Each Participant shall be a named fiduciary (as that term is defined in Section 402(a)(2) of ERISA) with respect to Company Stock allocated to his or her Accounts under the Plan solely for purposes of exercising the rights of a shareholder with respect to an Offer pursuant to this Section 5.8 and voting rights pursuant to Section 5.9.
(n) To the extent that an Offer results in the sale of Company Stock in the Trust, the Committee or the Participants, if so permitted under the terms of the Plan, shall instruct the Trustee as to the investment of the proceeds of such sale.
(o) In the event a court of competent jurisdiction shall issue to the Plan, the Committee, the Sponsor or the Trustee an opinion or order, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate, in all circumstances or in any particular circumstances, any provision or provisions of this Section regarding the determination to be made as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to an Offer or cause any such provision or provisions to conflict with securities laws, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this Section shall be given no further force or effect. In such circumstances, the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with respect to such Offer, the Sponsor shall appoint an independent fiduciary who shall exercise such residual fiduciary responsibility as provided in paragraph (b) above and shall direct the Trustee as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to such Offer.
5.9 Voting of Company Stock. Notwithstanding any other provision of the Plan to the contrary, the Trustee shall have no discretion or authority to vote Company Stock held in the Trust on any matter presented for a vote by the stockholders of the Company except in accordance with timely directions received by the Trustee from either the Committee or Participants, depending on who has the right to direct the voting of such Company Stock as provided in the following provisions of this Section 5.9.
(i) If the Sponsor has a registration-type class of securities (as defined in Code Section 409(e)(4)), then with respect to all corporate matters, each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to his or her Accounts.
(ii) If the Sponsor does not have a registration-type class of securities, then only with respect to such matters as the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of trade or business, or such similar transactions as may be prescribed in Code Section 409(e)(4) and the regulations thereunder, each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to the his or her Accounts.
(b) To the extent there remains any residual fiduciary responsibility with respect to the voting of Company Stock after application of paragraph (a) above, the Trustee shall vote such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor. To the extent the Committee or an independent fiduciary is required to exercise any residual fiduciary responsibility with respect to the voting of Company Stock, the Committee or independent fiduciary shall take into account in exercising its fiduciary judgment, unless it is clearly imprudent to do so, directions timely received from Participants, as such directions are most indicative of what action is in the best interests of Participants. Further, the Committee or independent fiduciary, in addition to taking into consideration any relevant financial factors bearing on any such decision, shall take into consideration any relevant non-financial factors, including, but not limited to, the continuing job security of Participants as employees of the Sponsor or any Affiliated Company, conditions of employment, employment opportunities and other similar matters, and the prospect of the Participants and prospective Participants for future benefits under the Plan.
(c) All Participants entitled to direct such voting shall be notified by the Sponsor, pursuant to its normal communications with shareholders, of each occasion for the exercise of such voting rights within a reasonable time before such rights are to be exercised. Such notification shall include all information distributed to shareholders either by the Sponsor or any other party regarding the exercise of such rights. Such Participants shall be so entitled to direct the voting of fractional shares (or fractional interests in shares), provided, however, that the Trustee may, to the extent possible, vote the combined fractional shares (or fractional interests in shares) so as to reflect the aggregate direction of all Participants giving directions with respect to fractional shares (or fractional interests in shares). To the extent that a Participant shall fail to direct the Trustee as to the exercise of voting rights arising under any Company Stock credited to his or her Accounts, such Company Stock shall not be voted unless the Trustee is directed
(d) Each Participant shall be a named fiduciary (as that term is
defined in Section 402(a)(2) of ERISA) with respect to Company Stock
for which he or she has the right to direct the voting under the Plan
but solely for the purpose of exercising voting rights pursuant to this
Section 5.9 or certain Offers pursuant to Section 5.8.
(e) In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Committee, the Sponsor or the
Trustee, which shall, in the opinion of counsel to the Committee, the
Sponsor or the Trustee, invalidate under ERISA, in all circumstances or
in any particular circumstances, any provision or provisions of this
Section regarding the manner in which Company Stock held in the Trust
shall be voted or cause any such provision or provisions to conflict
with ERISA, then, upon notice thereof to the Committee, the Sponsor or
the Trustee, as the case may be, such invalid or conflicting provisions
of this Section shall be given no further force or effect. In such
circumstances the Trustee shall continue to follow instructions
received from Participants, to the extent such instructions have not
been invalidated by such order or opinion. To the extent the Trustee is
required by such opinion or order to exercise any residual fiduciary
responsibility with respect to voting, the Sponsor shall appoint an
independent fiduciary who shall exercise such residual fiduciary
responsibility as provided in paragraph (b) above and shall direct the
Trustee as to the manner in which Company Stock held by the Trustee
shall be voted.
5.10 Securities Law Limitation. Neither the Committee nor the Trustee shall be required to engage in any transaction, including without limitation, directing the purchase or sale of Company Stock, which either determines in its sole discretion might tend to subject itself, its members, the Plan, the Company, or any Participant or Beneficiary to a liability under federal or state securities laws.
5.11 Distributions. Money and property of the Trust shall be paid out, disbursed, or applied by the Trustee for the benefit of Participants and Beneficiaries under the Plan in accordance with directions received by the Trustee from the Committee. Upon direction of the Committee, the Trustee may pay money or deliver property from the Trust for any purpose authorized under the Plan. The Trustee shall be fully protected in paying out money or delivering property from the Trust from time to time upon written order of the Committee and shall not be liable for the application of such money or property by the Committee.
The Trustee shall not be required to determine or to make any investigation to determine the identity or mailing address of any person entitled to benefits hereunder and shall have discharged its obligation in that respect when it shall have sent checks or other property by first-class mail to such persons at their respective addresses as may be certified to it by the Committee.
5.12 Taxes. If the whole or any part of the Trust, or the proceeds thereof, shall become liable for the payment of any estate, inheritance, income or other tax, charge, or assessment
5.13 Trustee Records to be Maintained. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions hereunder, and all accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company (subject to the provisions of Section 5.8(k)).
5.14 Annual Report of Trustee. Promptly following the close of each Plan Year (or such other period as may be agreed upon between the Trustee and Committee), or promptly after receipt of a written request from the Company, the Trustee shall prepare for the Company a written account which will enable the Company to satisfy the annual financial reporting requirements of ERISA, and which will set forth among other things all investments, receipts, disbursements, and other transactions effected by the Trustee during such Plan Year or during the period from the close of the last Plan Year to the date of such request. Such account shall also describe all securities and other investments purchased and sold during the period to which it refers, the cost of acquisition or net proceeds of sale, the securities and investments held as of the date of such account, and the cost of each item thereof as carried on the books of the Trustee. All accounts so filed shall be open to inspection during business hours by the Company, the Committee, and by Participants and Beneficiaries of the Plan (subject to the provisions of Section 5.8(k)).
5.15 Appointment of Investment Manager. From time to time the Committee, in accordance with Section 9.6 hereof, may appoint one or more Investment Managers who shall have investment management and control over assets of the Trust not invested or to be invested in Company Stock. The Committee shall notify the Trustee of such assets of the appointment of the Investment Manager. In the event more than one Investment Manager is appointed, the Committee shall determine which assets shall be subject to management and control by each Investment Manager and shall also determine the proportion in which funds withdrawn or disbursed shall be charged against the assets subject to each Investment Manager's management and control. As shall be provided in any contract between an Investment Manager and the Committee, such Investment Manager shall hold a revocable proxy with respect to all securities which are held under the management of such Investment Manager pursuant to such contract (except for Company Stock), and such Investment Manager shall report the voting of all securities subject to such proxy on an annual basis to the Committee.
6.1 Participants' Accounts. In order to account for the allocated interest of each Participant in the Trust Fund, there shall be established and maintained for each Participant (making such form of contribution) a Before Tax Deposits Account, an After Tax Deposits Account, a Company Contribution Account, and a Rollover Account.
6.2 Allocation of Amounts Contributed by Participants. All After Tax Deposits and Before Tax Deposits contributed by a Participant shall be allocated to the separate Account established and maintained for that Participant for such form of contributions. Such contributions shall be paid by the Company to the Trustee as soon as the amount can reasonably be identified and separated from the Company's other assets, but in any event no later than the 15th business day of the month following the month in which such amounts would otherwise be payable to the Participant, or such other time provided in applicable regulations under the Code or ERISA.
6.3 Allocation of Company Contributions and Forfeitures. Company Contributions and Forfeitures shall be allocated as follows:
(a) Forfeitures shall first be used to restore the Accounts of
rehired Participants if so required under Section 8.7(c) and shall then
be allocated to the Company Contribution Accounts of Participants to
the extent necessary to correct insufficient allocations made to such
Accounts in prior months discovered during the Plan Year to which such
Forfeitures are attributable. Any remaining Forfeitures may be applied
towards plan expenses if so directed by the Committee as provided in
Section 9.12 or shall be used to reduce contributions made by the
Company pursuant to Section 5.3.
(b) Matching Contributions shall be allocated to the Company
Contribution Accounts of all Participants who made Matched Deposits at
such times and in such amounts as provided in Sections 5.3(a) and
5.3(b).
(c) Any other Company Contributions shall be used to restore the Accounts of rehired Participants if so required under Section 8.7(c) and to the extent Forfeitures are unavailable. Any amounts remaining may be used to pay Plan expenses if so directed by the Committee as provided in Section 9.12.
The allocations of Company Contributions under this Section 6.3 shall be made only after any allocations required by Sections 6.8 and 13.4 have been made.
6.4 Valuation of Participants' Accounts. Within sixty (60) days after each Valuation Date the Trustee shall value the assets of the Trust on the basis of fair market values. Company Stock held by the Trust shall be valued in accordance with Section 6.5. If separate investment funds are maintained under the Trust pursuant to Section 5.5(b) then each such fund shall be valued separately so that gains or losses of the various funds shall not be commingled. Upon
6.5 Valuation of Company Stock. Company Stock held by the Trust shall be valued according to the following rules:
(a) In the case of Company Stock that is publicly traded on a national securities exchange, such stock shall be valued by reference to the closing price of such stock on such exchange on the last trading day of the month for which such stock is being valued.
(b) In the case of Company Stock that is not publicly traded on a national securities exchange, such stock shall be valued as of the first day of each Plan Year, or such other time as established by the Committee, by determining the fair market value of such stock through the use of an independent appraiser. Such fair market valuation shall be used to determine the valuation of each Participant's Company Stock Account on each Valuation Date in such Plan Year pursuant to Section 6.4.
6.6 Dividends, Splits, Recapitalizations, Etc. Any Company Stock received by the Trustee as a stock split, dividend, or as a result of a reorganization or other recapitalization of the Company shall be allocated in the same manner as the Company Stock to which it is attributable is then allocated.
6.7 Stock Rights, Warrants or Options.
(a) In the event any rights, warrants, or options are issued on Company Stock held in the Trust Fund, the Trustee shall exercise them for the acquisition of additional Company Stock as directed by the Committee to the extent that cash is then available in the Trust Fund.
(b) Any Company Stock acquired in this fashion shall be treated as Company Stock purchased by the Trustee for the net price paid and shall be allocated in the same manner as the funds used to purchase the Company Stock were or would be allocated under the provisions of the Plan. Thus, if the funds used to purchase the stock consisted of unallocated Company Contributions, the stock would be allocated under the terms of Section 6.3; if the funds used consisted of the unallocated net income of the Trust, the stock would be allocated as provided in Section 6.4; and if the funds used consisted of funds previously allocated to the Accounts, the stock would be allocated in the manner in which the Accounts or subaccounts are debited and credited.
(c) Any rights, warrants, or options on Company Stock which cannot be exercised for lack of cash may, as directed by the Committee, be sold by the Trustee and
6.8 Treatment of Accounts Upon Severance. Upon a Participant's Severance, pending distribution of the Participant's benefit pursuant to the provisions of Article VIII, the Participant's Accounts shall continue to be maintained and accounted for in accordance with all applicable provisions of the Plan, including but not limited to the allocation of Company Contributions and net income or loss to which the Accounts are entitled under the applicable provisions of Sections 6.3 and 6.4 as of any Valuation Date or other date preceding the distribution of the Participant's entire benefit under the Plan.
6.9 Cash Dividends.
(a) All cash dividends paid to the Trustee with respect to Company Stock that has been allocated to a Participant's Account as of the quarterly date on which the dividend is received by the Trustee shall be allocated to the Participant's Account.
(b) If a Participant (or Beneficiary) has a current right to a distribution in Company Stock pursuant to Article VIII and such stock has not yet been re-registered in the name of the Participants (or Beneficiary) as of the record date of any dividend on such stock, such dividend shall be distributed to the Participant (or Beneficiary).
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, the Committee may determine, in its discretion, that cash dividends on such shares may be used to purchase additional shares of Company Stock, or in whatever other manner it deems appropriate.
6.10 Miscellaneous Allocation Rules.
(a) In the event that there is more than one class of Company Stock to be allocated to Participants' Accounts, there shall be allocated to the Account of each Participant (entitled to share in allocations of Company Stock as of any applicable date) the portion of each class of Company Stock (to be allocated as of that date) which the amount to be allocated to the Account of the Participant bears to the total amount to be allocated to the Accounts of all Participants entitled to share in such allocation.
(b) Allocations of all assets other than Company Stock shall be made on the basis of, and expressed in terms of dollar value. Allocations of Company Stock shall be on the basis of the number of shares of Company Stock (including fractional shares) and valuations, as of each Valuation Date, shall be expressed in terms of number of shares and dollar value.
(c) The Committee and the Trustee shall establish such additional accounting procedures as may be necessary for the purpose of making the allocations, valuations, withdrawals, and adjustments to Participants' Accounts provided for in this Article VI.
(d) The Company, the Committee and Trustee do not in any manner or to any extent whatsoever warrant, guarantee or represent that the value of a Participant's Account shall at any time equal or exceed the amount previously contributed thereto.
6.11 Limitations on After Tax Deposits and Company Contributions. With respect to each Plan Year, After Tax Deposits and Matching Contributions under the Plan for the Plan Year shall not exceed the limitations by or on behalf of Highly Compensated Participants under Code Section 401(m), as provided in this Section. In the event that After Tax Deposits and Matching Contributions under the Plan by or on behalf of Highly Compensated Participants for any Plan Year exceed the limitations of this Section for any reason, such excess After Tax Deposits and Matching Contributions and any income or loss allocable thereto shall be disposed of in accordance with Section 6.12.
(a) The After Tax Deposits by Participants and Matching Contributions on behalf of Participants for a Plan Year shall satisfy the Average Contribution Percentage test set forth in (i) below, or, to the extent not precluded by applicable regulations, the alternative Average Contribution Percentage test set forth in (ii) below:
(i) The Average Contribution Percentage of Highly Compensated Participants for the Plan Year shall not be more than the prior Plan Year's Average Contribution Percentage of Participants who were not Highly Compensated Employees for the prior Plan Year multiplied by 1.25, or
(ii) The Average Contribution Percentage of Highly Compensated
Participants for the Plan Year shall not be more than the prior
Plan Year's Average Contribution Percentage of Participants who
were not Highly Compensated Employees for the prior Plan Year
multiplied by 2.0, provided that the Average Contribution
Percentage of Highly Compensated Participants does not exceed the
Average Contribution Percentage of Participants who were not
Highly Compensated Employees for the prior Plan Year by more than
two (2) percentage points (or such lesser percentage as the
Secretary of the Treasury shall prescribe to prevent the multiple
use of the alternative limitation set forth in this Section
4.3(a)(ii) with respect to any Highly Compensated Participants).
(iii) If one or more Highly Compensated Employees participate in both a cash or deferred arrangement and a plan subject to the Average Contribution Percentage test maintained by the Sponsor or an Affiliated Company and the sum of the Actual Deferral Percentage and Contribution Percentage of those Highly Compensated Employees subject to either or both test exceeds the Aggregate Limit, then the Contribution Percentages of those Highly Compensated Employees who also participate in the cash or deferred arrangement will be
(b) For purposes of this Section 6.11 and Section 6.12 the following definitions shall apply:
(i) "Average Contribution Percentage" shall mean the average of the Contribution Percentages, with respect to the group of Highly Compensated Participants and the group of all other Participants for a Plan Year. The "Contribution Percentage" for any Participant shall mean the ratio, calculated separately and to the nearest one-hundredth of one percent for each Participant in such group, determined as follows:
(1) For a Highly Compensated Participant, the ratio of such Participant's After Tax Deposits and Matching Contributions for the current Plan Year to such Participant's Compensation for the current Plan Year; provided, however, that the Contribution Percentage of a Highly Compensated Participant with no After Tax Deposits and Matching Contributions made on his or her behalf shall be zero.
(2) For any other Participant, the ratio of such Participant's After Tax Deposits and Matching Contributions for the preceding Plan Year to such Participant's Compensation for the preceding Plan Year; provided, however, that the Contribution Percentage of a Participant with no After Tax Deposits and Matching Contributions made on his or her behalf shall be zero.
The Contribution Percentage, in each case, however, shall not
include Matching Contributions that are forfeited either to
correct Excess Aggregate Contributions or because the contribution
to which they relate are excess Before Tax Deposits, excess After
Tax Deposits, or Excess Aggregate Contributions. To the extent
determined by the Committee and in accordance with regulations
issued by the Secretary of the Treasury under Code Section
401(m)(3), Before Tax Deposits and any qualified nonelective
contributions, within the meaning of Code Section 401(m)(4)(C) on
behalf of a Participant may also be taken into account for
purposes of calculating the Contribution Percentage of a
Participant.
(ii) "Highly Compensated Participant" shall mean for any Plan Year any Participant who is a Highly Compensated Employee. A Participant is a Highly Compensated Employee for a particular Plan Year if he or she meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is not a Highly Compensated Employee for a particular Plan Year if he or she does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.
(iii) "Participant" shall mean any Eligible Employee who satisfied the requirements under Article III during the Plan Year whether or not such Eligible Employee has elected to contribute to the Plan for such Plan Year.
(iv) "Compensation" shall mean compensation as described below:
(1) Compensation means compensation determined by the
Company in accordance with the requirements of Code Section
414(s) and the regulations thereunder.
(2) For purposes of this Section 6.11, Compensation may,
at the Company's election, exclude amounts which are
excludable from a Participant's gross income under Code
Section 125 (pertaining to cafeteria plans) and Code Section
402(e)(3) (pertaining to 401(k) salary reductions). The
Company may change its election provided such change does not
discriminate in favor of Highly Compensated Employees.
(3) Compensation taken into account for any Plan Year shall not exceed $150,000 as adjusted at the time and in such manner as permitted under Code Section 401(a)(17)(B).
(v) "Aggregate Limit" shall mean the sum of (1) 125 percent of
the greater of the average Actual Deferral Percentage of all
Non-Highly Compensated Participants for the Plan Year or the
Average Contribution Percentage of Non-Highly Compensated
Participants under the Plan subject to Code Section 401(m) for the
Plan Year beginning with or within the Plan Year of the cash or
deferred arrangement and (2) the lesser of 200% or two plus the
lesser of such average Actual Deferral Percentage or Average
Contribution Percentage. "Lesser" is substituted for "greater" in
(1) above, and "greater" is substituted for "lesser" after "two
plus the" in (2) above if it would result in a larger Aggregate
Limit.
(vi) "Excess Aggregate Contributions" shall mean, with respect to any Plan Year, the excess of:
(2) The maximum After Tax Deposits and Matching Contributions permitted under the Average Contribution Percentage test as determined by reducing such Matching Contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages.
Such determination shall be made after first determining excess Before Tax Deposits pursuant to Sections 4.2(a) and 4.3.
(c) In the event the Plan satisfies the requirements of Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans which include arrangements under Code Section 401(k), then this Section 6.11 shall be applied by determining the Contribution Percentages of Participants as if all such plans were a single plan. Any adjustments to the Contribution Percentages of Participants who are not Highly Compensated Employees for the prior year shall be made in accordance with Notice 98-1 and any superseding guidance. Plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same Plan Year and use the same Average Contribution Percentage testing method.
(d) For purposes of this Section 6.11, the Contribution Percentage for any Highly Compensated Participants who is eligible to have After Tax Deposits or Matching Contributions allocated to his or her account under two or more plans maintained by the Sponsor or an Affiliated Company shall be determined as if the total of such After Tax Deposits or Matching Contributions was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate plans if mandatorily disaggregated pursuant to regulations under Code Section 401(m).
(e) For purposes of the Average Contribution Percentage test, After Tax Deposits shall be considered to have been made in the Plan Year in which contributed to the Trust. Matching Contributions shall be considered made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year.
(f) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.
6.12 Provision for Disposition of Excess After Tax Deposits or Matching Contributions on Behalf of Highly Compensated Participants. After application of the provisions of Section 4.4 and 4.5, the following provisions shall be implemented:
(a) The Committee shall determine, as soon as is reasonably possible following the close of each Plan Year, the extent (if any) to which contributions by or on behalf of Highly Compensated Participants may cause the Plan to exceed the limitations of Section 6.11 for such Plan Year. If, pursuant to the determination by the Committee and as required by the leveling method described in paragraph (b) below, contributions by or on behalf of a Highly Compensated Participant may cause the Plan to exceed such limitations, then the Committee shall take the following steps:
(i) First, any excess After Tax Deposits that were not matched by Matching Contributions, together with income or loss allocable to such amount (determined in accordance with (d) below) shall be returned to the Highly Compensated Participant.
(ii) Second, if any excess remains after the provisions of (i) above are applied, to the extent necessary to eliminate the excess, Matching Contributions with respect to the Highly Compensated Participant, any corresponding matched After Tax Deposits, and any income or loss allocable thereto, shall either be distributed (if non-forfeitable) to the Highly Compensated Participant or forfeited (to the extent forfeitable under the Plan) on a pro-rata basis. Amounts of excess Matching Contributions forfeited by Highly Compensated Participants under this Section 6.12, including any income or loss allocable thereto, shall be applied to reduce Matching Contributions by the Company or the Affiliated Company that made the Matching Contribution on behalf of the Highly Compensated Participant for the Plan Year for which the excess contribution was made.
(iii) If administratively feasible, any amounts distributed pursuant to subparagraphs (i) or (ii) above shall be returned within two and one-half (2-1/2) months following the close of the Plan Year for which such excess After Tax Deposits or Matching Contributions were made, but in any event no later than the end of the first Plan Year following the Plan Year for which the excess After Tax Deposits or Matching Contributions were made. After Tax Deposits and Matching Contributions for any Plan Year shall be made on the basis of the respective portions of such excess After Tax Deposits and Matching Contributions attributable to each Highly Compensated Participant.
(b) For purposes of satisfying the Average Contribution Percentage test, the amount of any excess After Tax Deposits or Matching Contributions by or on behalf of
(c) The amount of income or loss attributable to any excess After
Tax Deposits or Matching Contributions, as determined under this
Section 6.12 (the "Excess Aggregate Contribution") by a Highly
Compensated Participant for a Plan Year shall be equal to the sum of
the following:
(i) The income or loss allocable to the Highly Compensated Participant's Excess Aggregate Contribution Accounts for the Plan Year multiplied by a fraction, the numerator of which is the Excess Aggregate Contribution and the denominator of which is the sum of the balance of the Highly Compensated Participant's Excess Aggregate Contribution Accounts without regard to any income or loss allocable to such Accounts during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap Period using the "safe harbor" method set forth in regulations prescribed by the Secretary of the Treasury under Code Section 401(m). Under the "safe harbor" method, such allocable income or loss is equal to 10% of the amount calculated under Section 6.12(c)(i) above, multiplied by the number of calendar months from the last day of the Plan Year until the date of distribution of the Participant's excess After Tax Deposits or Matching Contributions. A distribution on or before the 15th of the month is treated as made on the last day of the preceding month, a distribution after the 15th of the month is treated as made on the first day of the next month.
(d) For the purpose of this Section 6.12, the following shall apply:
(i) "Excess Aggregate Contribution Accounts" shall mean the Participant's After Tax Deposits Account and Company Contribution Account.
(ii) "Gap Period" shall mean the period between last day of the Plan Year and the date of distribution of any Excess Aggregate Contributions.
(f) Neither the Committee nor the Company shall be liable to any Participant (or his or her Beneficiary, if applicable) for any losses caused by a mistake in calculating the amount of any Excess Aggregate Contributions by or on behalf of a Highly Compensated Participant and the income or loss allocable thereto.
7.1 No Vested Rights Except as Herein Provided. No Participant shall have any vested right or interest to, or any right of payment of, any assets of the Trust Fund, except as expressly provided in the Plan. Neither the making of any allocations nor the credit to any Account of a Participant shall vest in any Participant any right, title, or interest in or to any assets of the Trust Fund.
7.2 Vesting Schedule.
(a) A Participant's interest in his or her Company Contribution Account shall vest in accordance with the following schedule:
Years of Credited Service Vested Percentage ------------------------- ----------------- Less than 3 0% 3 or more 100% |
(b) Notwithstanding the above, a Participant shall become fully vested in his or her Company Contribution Account upon the occurrence of any of the following events, if such Participant is then still an Employee:
(i) Attainment of age sixty-two (62);
(ii) Death;
(iii) Severance due to a Disability; or
(iv) Occurrence of a Change in Control pursuant to Section 12.4.
(c) Notwithstanding the above, a Participant shall at all times be 100% vested in all amounts transferred from the SmithKline Beckman Corporation Savings and Investment Plan to the Plan.
7.3 Vesting of Participant Deposits. A Participant shall be fully vested at all times in the amounts allocated to his or her Before Tax Deposits Account, After Tax Deposits Account, and Rollover Account.
8.1 Withdrawals During Employment. A Participant may withdraw, once in any calendar quarter, amounts of at least $500 from his or her Accounts while an Employee in accordance with the following rules:
(a) A Participant may, for any reason, withdraw any portion of the amount allocated to his or her After Tax Deposit Account (excluding any After Tax Deposits recharacterized as such under Section 4.5). A Participant who makes a withdrawal of After Tax Deposits which are also Matched Deposits prior to July 1, 2000 shall not receive any Matching Contributions pursuant to Section 5.3(a) with respect to any Matched Deposits made by such Participant during the six (6) month period beginning on the date of any such withdrawal unless the After Tax Deposits can also be withdrawn under paragraph (d) below. A Participant who makes a withdrawal of After Tax Deposits (whether Matched Deposits or non-Matched Deposits) on or after July 1, 2000 shall not be permitted to make any After Tax or and Before Tax Deposits during the six (6) month period beginning as soon as administratively feasible following the date of the withdrawal unless the After Tax Deposits can also be withdrawn under paragraph (d) below or the withdrawal is comprised solely of After Tax Deposits which are not Matched Deposits and which were contributed prior to July 1, 2000.
(b) A Participant may, for any reason, withdraw any portion of the amount allocated to his or her Rollover Account.
(c) After withdrawing all After Tax Deposits pursuant to paragraph
(a) and all amounts allocated to his or her Rollover Account under
paragraph (b) above, a Participant with 3 or more years of Credited
Service may, for any reason, withdraw any portion of the amount
allocated to his or her Company Contribution Account that was so
allocated 2 or more years prior to the date of such a withdrawal.
(d) On or after the attainment of age 59-1/2, a Participant may withdraw any vested portion of the amounts allocated to any of his or her Accounts.
(e) After withdrawing all amounts permitted pursuant to paragraphs
(a), (b) (c), and (d) above, a Participant may withdraw amounts from
his or her Before Tax Deposits Account (excluding any earnings
attributable to such Account after December 31, 1988) and the vested
portion of his or her Company Contribution Account, and any remaining
amount in his or her After Tax Deposits (amounts which were
recharacterized as After Tax Deposits under Section 4.5 but excluding
any earnings attributable to recharacterized After Tax Deposits after
December 31, 1988) upon incurring a hardship as defined in Section 8.5.
(f) Except as provided in Section 8.5(c), all withdrawals shall be made in cash, except to the extent any of the vested portion of a Participant's Account to be
(g) Except as provided in paragraphs (a) through (e) above, Participants may not receive a distribution of their benefits under the Plan prior to termination of employment.
(h) Except as provided in Section 8.5(c), all withdrawals shall be made to Participants as soon as reasonably practicable following the Valuation Date in the month for which a properly completed withdrawal request is deemed perfected. All withdrawals shall be based on the Account balances of a Participant as of such Valuation Date. If a properly completed withdrawal request is received by the Plan Administrator during any month and on or before the fifteenth day of such month, the withdrawal request shall be deemed perfected in such month, otherwise such withdrawal request shall be deemed perfected in the immediately following month.
(i) Notwithstanding anything to the contrary in this Section 8.1
or Section 4.1, the additional withdrawal restrictions stated in
Section 5.5(h) shall apply to all Participants who are Insiders, as
that term is defined Section 5.5(h).
8.2 Distributions Upon Termination of Employment or Disability.
(a) Subject to the provisions of Section 8.6, if a Participant incurs a Severance for any reason (including Disability) other than death, all or a portion of such Participant's entire vested portion of his or her Accounts under the Plan shall be (i) distributed directly to such Participant or (ii) at the election of the Participant, distributed as an Eligible Rollover Distribution and paid directly by the Trustee to the trustee of an Eligible Retirement Plan.
(b) Any distribution made pursuant to paragraph (a) shall be paid no more than once in any calendar quarter in amounts of at least $500 (or the Participant's entire vested portion of his or her Accounts under the Plan if lesser) and shall be made in cash except to the extent any of the vested portion of such Participant's Accounts is invested in the Company Stock Fund, then, to the extent so invested, such distribution may be made in Company Stock at the election of the Participant.
(c) Notwithstanding the provisions contained in the foregoing
paragraphs of this Section 8.2 or Section 8.1, any provision which
restricts or would deny a Participant through the withholding of
consent or the exercise of discretion by some person or persons other
than the Participant (and where relevant, other than the Participant's
spouse) of an alternative form of benefit, in violation of Code Section
411(d)(6) and the regulation promulgated thereunder, is hereby amended
by the deletion of the consent and/or discretion requirement.
(d) Notwithstanding the provisions contained in the foregoing paragraphs of this Section 8.2 or Section 8.1, upon receipt of a Qualified Domestic Relations Order, the
8.3 Distribution Upon Death of Participant. In the event of the death of a Participant, the Participant's benefit under the Plan shall be distributed to the surviving spouse as Beneficiary (if still alive) unless the Participant designated another Beneficiary pursuant to Section 8.4. If the Beneficiary is the surviving spouse of the Participant, he or she may elect to have an Eligible Rollover Distribution paid directly by the Trustee to the trustee of an Eligible Retirement Plan. Distributions to the Beneficiary pursuant to this Section 8.3 shall be in the same form as specified in Section 8.2(b) above, as elected by the Beneficiary. All such distributions shall be made as soon as practicable after the death of the Participant. A Beneficiary may not elect to defer such a distribution.
8.4 Designation of Beneficiary. At any time, and from time to time, each Participant shall have the unrestricted right to designate the Beneficiary to receive the portion of his or her death benefit and to revoke any such designation subject to paragraphs (a) and (b) below. Each such designation shall be evidenced by a written instrument signed by the Participant and filed with the Committee.
(a) If the Participant is married and designates a Beneficiary other than his or her spouse, said designation shall not be honored by the Committee unless accompanied by the written consent of said spouse to said designation. Such consent (i) must designate a Beneficiary which may not be changed without the consent of the spouse (or the consent of the spouse expressly permits designation by the Participant without any further consent by the spouse), (ii) must acknowledge the effect of the designation, and (iii) must be witnessed by a Plan representative or a notary public. No consent of such spouse shall be necessary if it is established to the satisfaction of a Plan representative that the consent required under this paragraph (b) cannot or need not be obtained because (i) there is no spouse, (ii) the spouse cannot be located, or (iii) there exist such other circumstances which, pursuant to regulations under Code Section 417, permit a distribution to another Beneficiary. Any consent of a spouse obtained pursuant to this paragraph (b) or any determination that the consent of the spouse cannot (or need not) be obtained, shall be effective only with respect to that spouse. If a Participant becomes married following his or her designation of a Beneficiary other than his or her spouse, such designation shall be ineffective unless the spousal consent requirements of this paragraph are satisfied with respect to such spouse (subject, however, to the provisions of Article XV regarding Qualified Domestic Relations Orders).
(b) If the Participant is married and does not designate a Beneficiary, the Participant's spouse shall be his or her Beneficiary for purposes of this Section. If the deceased Participant is not married and shall have failed to designate a Beneficiary, or if the Committee shall be unable to locate the designated Beneficiary after reasonable efforts have been made, or if such Beneficiary shall be deceased, distribution of the Participant's death benefit shall be made by payment of the deceased Participant's entire interest in the Trust to his or her personal representative in a single lump-sum payment. In the event the deceased Participant is not a resident of California at the date of his or
8.5 Hardship Withdrawal Rules. A hardship withdrawal shall be made to a
Participant only if the Committee (or its representative) determines that the
Participant has an immediate and heavy financial need and that a withdrawal from
the Plan is necessary to satisfy such need as set forth in paragraphs (a) and
(b) below.
(a) A hardship withdrawal shall be authorized by the Committee only if the Committee, based upon the Participant's representation and such other facts as are known to the Committee, determines that the requested withdrawal is on the account of:
(i) Medical expenses described in Code Section 213(d) incurred by the Participant, the Participant's spouse, or any dependents of the Participant (as defined in Code Section 152);
(ii) The purchase (excluding mortgage payments) of a principal residence for the Participant only;
(iii) The payment of tuition and related educational fees for the next twelve (12) months of post-secondary education for the Participant, his or her spouse, children, or dependents;
(iv) The need to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage of the Participant's principal residence; and
(v) Any other situation deemed as immediate and heavy financial needs by the Internal Revenue Service through the publication of revenue rulings, notices, and other documents of general applicability.
(b) A hardship withdrawal shall be authorized by the Committee only if the Committee, based upon the Participant's representation and such other facts as are known to the Committee, determines that all of the following conditions are or will be satisfied:
(i) The amount of the withdrawal is not in excess of the amount required to relieve the financial need (including amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the withdrawal).
(iii) The Participant shall not be permitted to make Before Tax Deposits or After Tax Deposits for the 12-month period beginning as soon as administratively feasible following the date of the hardship withdrawal from the Plan or any other plan maintained by the Company.
(iv) The Participant shall not be permitted to make Before Tax Deposits during the Participant's taxable year immediately following the taxable year of the hardship withdrawal that is in excess of the applicable limit under Code Section 402(g) for such immediately following taxable year less the amount of such Participant's Before Tax Deposits for the taxable year in which such Participant made the hardship withdrawal.
(c) Notwithstanding the provisions of Section 8.1(f), all hardship withdrawals shall be made in cash regardless of the fund from which such withdrawal is made. The Committee may, at its discretion, establish written procedures whereby Participants may receive an estimated prepayment of a hardship withdrawal based on the last available valuation of such Participant's Accounts with a reconciling adjustment made to such Participant's Accounts after current valuation data is available.
8.6 Distribution Rules. Notwithstanding any other provisions of this Article VIII of the Plan regarding distributions of Participant's Accounts, the following additional rules shall apply to all such distributions.
(a) In no event shall any benefits under the Plan, including benefits upon retirement, Severance, or Disability, be paid (or commence to be paid) to a Participant prior to the "Consent Date" (as defined herein) unless the Participant consents in writing to the payment (or commencement of payment) of such benefits prior to said Consent Date. As used herein, the term "Consent Date" shall mean the later of (i) the Participant's 62nd birthday, or (ii) the Participant's Normal Retirement Age. Notwithstanding the foregoing, the provisions of this paragraph shall not apply (i) following the Participant's death, or (ii) with respect to a lump sum distribution of the vested portion of a Participant's Account if the total amount of such vested portion does not exceed $5,000.
(b) Unless a Participant elects otherwise pursuant to paragraph (a)
above, distributions of the vested portion of a Participant's Accounts
shall commence no later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs: (i) the
Participant's Normal Retirement Age; (ii) the tenth anniversary of the
year in which the Participant commenced participation in the Plan; or
(iii) the termination of the Participant's employment with the Company.
(i) Participants attaining age 70-1/2 prior to 1999: The Required Beginning Date of a Participant who attains age 70-1/2 prior to 1999 shall be April 1 of the calendar year immediately following the year in which the Participant attains age 70-1/2; provided, however, that a Participant, other than a Five Percent Owner (as defined in Code Section 416(i) and applicable regulations), who attains age 70-1/2 in 1996, 1997, or 1998 may elect to defer the Required Beginning Date until April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70-1/2 or retires.
(ii) Participants attaining age 70-1/2 after 1998: The
Required Beginning Date of a Participant who attains age 70-1/2
after 1998 shall be April 1 of the calendar year immediately
following the later of the calendar year in which the Participant
attains age 70-1/2 or retires; provided, however, if such
Participant is a Five Percent Owner (as defined in Code Section
416(i) and applicable regulations) with respect to the Plan Year
ending in the calendar year in which such Participant attains age
70-1/2, the Required Beginning Date shall be April 1 of the
calendar year immediately following the year in which such
Participant attains age 70-1/2.
(d) Notwithstanding anything to the contrary in the Plan, if a Participant dies before distribution of his or her vested benefit has begun in accordance with paragraph (c) above, the Participant's vested benefit shall be distributed to his or her Beneficiary within five years from the date of the Participant's death except that any portion of the Account balance meeting the following requirements shall not be subject to this rule:
(i) A Beneficiary has been designated to receive the Participant's Account balance and such designation is effective at the Participant's death;
(ii) The Account balance is paid to the Beneficiary over the Beneficiary's life or over a period not to exceed the Beneficiary's life; and
(iii) The payments to the Beneficiary commence within one year of the Participant's death, or, if the Beneficiary is the spouse, before the time the deceased Participant would have attained age 70-1/2.
(e) All distributions under the Plan shall be made in accordance
with the minimum distribution incidental benefit requirements of Code
Section 401(a)(9)(G) and in accordance with all regulations issued
under Code Section 401(a)(9).
8.7 Forfeitures.
(a) In the event that a distribution of the entire vested portion of a Participant's Accounts is made to a Participant due to a Severance when he or she is not fully vested in such Accounts, the nonvested portion of the Participant's Account(s) shall be forfeited as of the Participant's Severance Date. A Participant who incurs such a Severance when no portion of his or her Accounts are vested shall be deemed to have received a distribution pursuant to this paragraph (a).
(b) If a Participant incurs a Severance when partially vested in his or her Accounts and does not receive a distribution described in paragraph (a), the Participant's Account shall be held by the Trustee as provided in Section 6.8 for 90 days at which time, the nonvested portion of the Participant's Account(s) shall be forfeited as of the last day of the month in which the 90-day period ends.
(c) In the event a Participant is rehired by the Company prior to the date such Participant incurs five consecutive Breaks in Service, the amount so forfeited pursuant to paragraphs (a) and (b) above shall be reinstated to the Participant as of his or her Reemployment Commencement Date (without regard to any interest or investment earnings on such amount).
(d) Forfeitures shall be allocated in the manner provided in
Section 6.3 at such times as determined by the Committee and to the
extent available shall be used to reduce contributions made by the
Company pursuant to Section 5.3.
8.8 Valuation of Plan Benefits Upon Distribution. For the purpose of any distribution of benefits under this Article VIII, the amount of such distribution shall be based on the value of a Participant's Accounts as of the Valuation Date in the month in which the application for such distribution is deemed perfected. If a properly completed distribution application is received by the Committee during any month and on or before the fifteenth day of such month, the distribution application shall be deemed perfected in such month, otherwise such distribution application shall be deemed perfected in the immediately following month.
8.9 Lapsed Benefits.
(a) In the event that a benefit is payable under the Plan to a Participant and after reasonable efforts the Participant cannot be located for the purpose of paying the
(b) If any eligible Beneficiary cannot be located for the purpose of paying the benefit for the following two years, then the benefit shall be forfeited and allocated to the Accounts of the other Participants for such Plan Year in accordance with Section 6.3.
(c) If a Participant shall die prior to receiving a distribution of his or her entire benefit under the Plan (other than a Participant presumed to have died as provided above), if after reasonable efforts an eligible Beneficiary of the Participant cannot be located for the purpose of paying the benefit during a period of five consecutive years, the benefit shall, upon expiration of such five-year period, be forfeited and reallocated to the Accounts of the other Participants in accordance with Section 6.3.
(d) For purposes of this Section, the term "Beneficiary" shall include any person entitled under Section 8.4 to receive the interest of a deceased Participant or deceased designated Beneficiary. It is the intention of this provision that during the relevant waiting period (two years or five years) the benefit will be distributed to an eligible Beneficiary in a lower priority category under Section 8.4 if no eligible Beneficiary in a higher priority category can be located by the Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a forfeiture
the Participant or an eligible Beneficiary shall claim the forfeited
benefit, the amount forfeited shall be reinstated (without regard to
any interest or investment earnings on such amount) and paid to the
claimant as soon as practical following the claimant's production of
reasonable proof of his or her identity and entitlement to the benefit
(determined pursuant to the Plan's normal claim review procedures under
Section 9.8).
(f) The Committee shall direct the Trustee with respect to the procedures to be followed concerning a missing Participant (or Beneficiary), and the Company shall be obligated to contribute to the Trust Fund any amounts necessary after the application of Section 6.3 to pay any reinstated benefit after it has been forfeited pursuant to the provisions of this Section.
8.10 Persons Under Legal Disability.
(a) If any payee under the Plan is a minor or if the Committee reasonably believes that any payee is legally incapable of giving a valid receipt and discharge for any payment due him/her, the Committee may have the payment, or any part thereof, made to the person (or persons or institution) whom it reasonably believes is caring for or supporting the payee, unless it has received due notice of claim therefor from a duly appointed guardian or committee of the payee.
8.11 Additional Documents.
(a) The Committee or the Company may require satisfactory proof of any matter under the Plan from or with respect to any Employee, Participant, or Beneficiary, and no person shall be entitled to receive any benefits under the Plan until the required proof shall be furnished.
(b) The Committee or Trustee, or both, may require the execution and delivery of such documents, papers and receipts as the Committee or Trustee may determine necessary or appropriate in order to establish the fact of death of the deceased Participant and of the right and identity of any Beneficiary or other person or persons claiming any benefits under this Article VIII.
(c) The Committee or the Trustee, or both, may, as a condition precedent to the payment of death benefits hereunder, require an inheritance tax release and/or such security as the Committee or Trustee, or both, may deem appropriate as protection against possible liability for State or Federal death taxes attributable to any death benefits.
8.12 Trustee-to-Trustee Transfers. In the case of any Participant or Participants who have terminated employment with the Company and all Affiliated Companies and subsequently become employed by an unrelated successor employer, the Committee, shall at the request of such Participant or Participants, direct the Trustee to transfer the assets in the Accounts of such Participant or Participants directly to the trustee of any retirement plan maintained by such successor employer or employers in lieu of any distribution described in the preceding provisions of this Article VIII but only if (i) the retirement plan maintained by such successor employer is determined to the satisfaction of the Committee to be qualified under Code Section 401, (ii) the sponsor and trustee of such plan consent to the transfer, and (iii) such transfer satisfies the conditions of Section 12.3 hereof.
8.13 Loans to Participants. A Participant may borrow from his or her Accounts while an Employee in accordance with the following rules:
(a) Subject to minimum and maximum loan requirements, a Participant may borrow up to 50% of his or her After Tax Deposits Account, Rollover Account, the vested portion of his or her Company Contribution Account and Before Tax Deposits Account. Only one loan may be outstanding to a Participant any time. The minimum loan amount shall be $1,000 and the maximum loan amount shall be $50,000. The $50,000 maximum loan amount shall be reduced by the excess, if any, of the highest outstanding balance of loans from the Plan to the Participant during the one-year period ending on the day before the loan is made over the outstanding balance of loans on the date the loan is made.
(c) A loan to a Participant shall bear an interest rate equal to the prime rate reported in the Wall Street Journal on first business day of the month in which the loan is granted (the last business day of the previous month for loans made prior to July 1, 2000) plus one percent (1%) and shall remain fixed throughout the term of the loan. Notwithstanding the preceding sentence, if the Committee determines that such rate is not reasonable or otherwise not in accordance with applicable requirements under the Code or ERISA, the Committee shall set an alternate interest rate at the time that the loan is taken.
(d) A loan to a Participant shall have a definite maturity date. Loans, other than loans made for the purpose of acquiring the principal residence of the Participant, shall be made for a period not to exceed five (5) years. Loans made for the purpose of acquiring the principal residence of the Participant shall be made for a period not to exceed fifteen (15) years.
(e) A loan to a Participant shall have a definite repayment schedule and shall be amortized on a substantially level basis with repayments occurring not less frequently than quarterly. Notwithstanding the foregoing, the loan repayments shall be suspended during an unpaid Leave of Absence not to exceed one year at which time loan repayments shall resume. In the case of a Leave of Absence due to qualified military service, loan repayments shall be suspended as permitted under Code Section 414(u)(4).
(f) A loan to a Participant shall be secured by the vested portion of the Participant's Account(s). No more than 50% of the Participant's vested Account(s) as determined on the date the loan is issued shall be considered by the Plan as security for a loan. A Participant who borrows from the Plan hereby agrees that, unless expressly provided otherwise in loan documents, any such loan is automatically secured by 50% of his or her vested Account(s).
(g) A loan to a Participant shall be evidenced by a promissory note and/or such other documentation as required by the Committee.
(h) A loan to a Participant shall be treated as a distribution unless the entire principal amount and any interest accrued thereon is repaid within ninety (90) days after the occurrence of a Participant's Severance. Absent repayment by the Participant, the Committee shall instruct the Trustee to distribute the note to the Participant as part of his
(i) The Committee shall establish the participant loan program and have the duty to manage and administer the participant loan program in accordance with the terms and provisions of this Section. The Committee shall have, but not by way of limitation, the following discretionary powers and authority:
(i) To determine the manner in which loan repayments shall occur whether it be through automatic payroll deductions or otherwise.
(ii) To determine the amount of loan repayments following suspension due to an unpaid Leave of Absence subject to the requirement that the loan must be repaid by the latest date permitted under paragraph (d).
(iii) To establish any fees, including but not limited to application fees and maintenance fees, and the manner in which such fees are collected from the Participant.
(iv) To consider only those factors which would be considered in a normal commercial setting by persons in the business of making similar types of loans in establishing the participant loan program. Such factors may include the applicant's credit worthiness and financial need, but may not include any factor which would discriminate against Participants who are not Highly Compensated Employees. Loans shall be made available to all Participants without regard to a Participant's race, color, religion, sex, age or national origin and shall not be made available to Participants who are Highly Compensated Employees in an amount greater than the amount made available to Participants who are not Highly Compensated Employees.
9.1 Appointment of Committee. There is hereby created a committee (the
"Committee") which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall from
time to time fill all vacancies occurring in said Committee. The members of the
Committee shall constitute the Named Fiduciaries of the Plan within the meaning
of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 5.8
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts and solely for purposes of
Section 5.9, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts on matters as to which they
are entitled to provide voting directions.
9.2 Transaction of Business. A majority of the Committee shall constitute a quorum for the transaction of business. Actions of the Committee may be taken either by vote at a meeting or in writing without a meeting. All action taken by the Committee at any meeting shall be by a vote of the majority of those present at such meeting. All action taken in writing without a meeting shall be by a vote of the majority of those responding in writing. All notices, advices, directions and instructions to be transmitted by the Committee shall be in writing and signed by or in the name of the Committee. In all its communications with the Trustee, the Committee may, by either of the majority actions specified above, authorize any one or more of its members to execute any document or documents on behalf of the Committee, in which event it shall notify the Trustee in writing of such action and the name or names of its members so designated and the Trustee shall thereafter accept and rely upon any documents executed by such member or members as representing action by the Committee until the Committee shall file with the Trustee a written revocation of such designation.
9.3 Voting. Any member of the Committee who is also a Participant hereunder shall not be qualified to act or vote on any matter relating solely to himself, and upon such matter his or her presence at a meeting shall not be counted for the purpose of determining a quorum. If, at any time a member of the Committee is not so qualified to act or vote, the qualified members of the Committee shall be reduced below two (2), the Board of Directors shall promptly appoint one or more special members to the Committee so that there shall be at least one qualified member to act upon the matter in question. Such special Committee members shall have power to act only upon the matter for which they were especially appointed and their tenure shall cease as soon as they have acted upon the matter for which they were especially appointed.
9.4 Responsibility of Committee. The authority to control and manage the operation and administration of the Plan, the general administration of the Plan, the responsibility for carrying out the Plan and the authority and responsibility to control and manage the assets of the Trust are hereby delegated by the Board of Directors to and vested in the Committee, except to the extent reserved to the Board of Directors, the Sponsor, or the Company. Subject to the limitations of the Plan, the Committee shall, from time to time, establish rules for the
9.5 Committee Powers. The Committee shall have all discretionary powers necessary to supervise the administration of the Plan and control its operations. In addition to any discretionary powers and authority conferred on the Committee elsewhere in the Plan or by law, the Committee shall have, but not by way of limitation, the following discretionary powers and authority:
(a) To designate agents to carry out responsibilities relating to the Plan, other than fiduciary responsibilities as provided in Section 9.6.
(b) To employ such legal, actuarial, medical, accounting, clerical, and other assistance as it may deem appropriate in carrying out the provisions of the Plan, including one or more persons to render advice with regard to any responsibility any Named Fiduciary or any other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time for the conduct of the Committee's business and the administration and effectuation of the Plan.
(d) To administer, interpret, construe, and apply the Plan and to decide all questions which may arise or which may be raised under the Plan by any Employee, Participant, former Participant, Beneficiary or other person whatsoever, including but not limited to all questions relating to eligibility to participate in the Plan, the amount of Credited Service of any Participant, and the amount of benefits to which any Participant or his or her Beneficiary may be entitled.
(e) To determine the manner in which the assets of the Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time, to invest and reinvest the Trust Fund, or any part thereof, or to purchase, exchange, or lease any property, real or personal, which the Committee may designate. This shall include the right to direct the investment of all or any part of the Trust in any one security or any one type of securities permitted hereunder. Among the securities which the Committee may direct the Trustee to purchase are "qualifying employer securities" as defined in Code Section 4975(e).
(g) Subject to provisions (a) through (d) of Section 10.1, to make administrative amendments to the Plan that do not cause a substantial increase or decrease in benefit accruals to Participants and that do not cause a substantial increase in the cost of administering the Plan.
(h) To perform or cause to be performed such further acts as it may deem to be necessary, appropriate or convenient in the efficient administration of the Plan.
9.6 Additional Powers of Committee. In addition to any discretionary powers or authority conferred on the Committee elsewhere in the Plan or by law, such Committee shall have the following discretionary powers and authority:
(a) To appoint one or more Investment Managers pursuant to Section
5.15 to manage and control any or all of the assets of the Trust not
invested or to be invested in Company Stock.
(b) To designate persons (other than the members of the Committee) to carry out fiduciary responsibilities, other than any responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the members of the Committee, other than any responsibility to manage or control the assets of the Trust;
(d) To cancel any such designation or allocation at any time for any reason;
(e) To direct the voting of any Company Stock or any other security held by the Trust subject to Section 9.13 hereof; and
(f) To exercise management and control over Plan assets and to direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 9.6 shall be taken in writing, and no designation or allocation under paragraphs (a), (b) or (c) shall be effective until accepted in writing by the indicated responsible person.
9.7 Periodic Review of Funding Policy. At periodic intervals the Committee shall review the long-run and short-run financial needs of the Plan and shall determine a funding policy for the Plan consistent with the objectives of the Plan and the minimum funding standards of ERISA, if applicable. In determining such funding policy the Committee shall take into account, at a minimum, not only the long-term investment objectives of the Trust Fund consistent with the prudent management of the assets thereof, but also the short-run needs of the Plan to pay benefits. All actions taken by the Committee with respect to the funding policy of the Plan, including the reasons therefor, shall be fully reflected in the minutes of the Committee.
9.8 Claims Procedures. If a Participant believes that he or she is being denied any rights or benefits under the Plan, such Participant (or his or her beneficiary or duly appointed representative) may file a claim for benefits in writing with the Committee. The Committee shall follow the procedures set forth in this Section in processing a claim for benefits.
(b) In the case of a denial of the Claimant's claim, the written notice of such denial shall set forth (i) the specific reasons for the denial, (ii) references to the Plan provisions upon which the denial is based, (iii) a description of any additional information or material necessary for perfection of the application (together with an explanation why such material or information is necessary), and (iv) an explanation of the Plan's appeals procedures.
(c) If the Committee does not respond within 180 days, the Claimant may consider his or her claim denied.
9.9 Appeals Procedures. A Claimant who wishes to appeal the denial of his or her claim for benefits or to contest the amount of benefits payable shall follow the administrative procedures for an appeal as set forth in this Section and shall exhaust such administrative procedures prior to seeking any other form of relief.
(a) In order to appeal a decision rendered with respect to his or
her claim for benefits or with respect to the amount of his or her
benefits, a Claimant must file an appeal with the Committee in writing
within 60 days after the date of notice of the decision with respect to
the claim, or if the claim has neither been approved nor denied within
the period provided in Section 9.8(a) above, then the appeal must be
made within 60 days after the expiration of the period provided in
Section 9.8(c).
(b) The Claimant may request that his or her appeal be given full and fair review by the Committee. The Claimant also may review all pertinent documents and submit issues and comments in writing in connection with the appeal. The decision of the Committee shall be made not later than 60 days after the Claimant has completed his or her submission to the Committee of his or her appeal and any documentation or other information to be submitted in support of such request. Should special circumstances require an extension of time for processing, written notice of the extension shall be furnished to the Claimant prior to the expiration of the initial 60 day period. The notice shall indicate the special circumstances requiring an extension of time and the date by which a final decision is expected to be rendered. In no event shall the period of the extension exceed 60 days from the end of the initial 60 day period.
(d) If the Committee does not respond within 120 days, the Claimant may consider his or her appeal denied.
9.10 Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 9.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 5.15 hereof or as to which management and control has been retained by
the Trustee.
9.11 Indemnification and Insurance. To the extent permitted by law, the Company shall indemnify and hold harmless the Committee and each member thereof, each Trustee, the Board of Directors and each member thereof, and such other persons as the Board of Directors may specify, from the effects and consequences of his or her acts, omissions, and conduct in his or her official capacity in connection with the Plan and Trust. To the extent permitted by law, the Company may also purchase liability insurance for such persons.
9.12 Compensation of Committee and Plan Expenses. Members of the Committee shall serve as such without compensation unless the Board of Directors shall otherwise determine, but in no event shall any member of the Committee who is an Employee receive compensation from the Plan for his or her services as a member of the Committee. All members shall be reimbursed for any necessary expenditures incurred in the discharge of duties as members of the Committee. The compensation or fees, as the case may be, of all officers, agents, counsel, the Trustee or other persons retained or employed by the Committee shall be fixed by the Committee, subject to approval by the Board of Directors. The expenses incurred in the administration and operation of the Plan, including but not limited to the expenses incurred by the members of the Committee in exercising their duties, shall be paid by the Plan from the Trust Fund, unless paid by the Company, provided, however, that the Plan and not the Company shall bear the cost of interest and normal brokerage charges which are included in the cost of securities purchased by the Trust Fund (or charged to proceeds in the case of sales). If such expenses are to be paid by the Plan from the Trust Fund, the Committee may direct the Trustee to use forfeitures and dividends (and to sell the shares of Company Stock that represent such forfeitures or dividends) to pay such expenses.
9.13 Resignation. Any member of the Committee may resign by giving fifteen (15) days notice to the Board of Directors, and any member shall resign forthwith upon receipt of the written request of the Board of Directors, whether or not said member is at that time the only member of the Committee.
10.1 Right to Amend Plan. The Sponsor, by resolution of the Board of Directors, shall have the right to amend the Plan and Trust Agreement at any time and from time to time and in such manner and to such extent as it may deem advisable, including retroactively, subject to the following provisions:
(a) No amendment shall have the effect of reducing any Participant's vested interest in the Plan or eliminating an optional form of distribution.
(b) No amendment shall have the effect of diverting any part of the assets of the Plan to persons or purposes other than the exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the duties or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the
above provisions (a) through (d), in accordance with the provisions of Section
9.5(g).
10.2 Adoption of Plan by Affiliated Companies. Subject to approval by the Board of Directors, and consistent with the provisions of ERISA, an Affiliated Company may adopt the Plan for all or any specified group of its Eligible Employees by entering into an adoption agreement in the form and substance prescribed by the Committee. The adoption agreement may include such modification of the Plan provisions with respect to such Eligible Employees as the Committee approves after having determined that no prohibited discrimination or other threat to the qualification of the Plan is likely to result. The Board of Directors may prospectively revoke or modify an Affiliated Company's participation in the Plan at any time and for any or no reason, without regard to the terms of the adoption agreement, or terminate the Plan with respect to such Affiliated Company's Eligible Employees and Participants. By execution of an adoption agreement (each of which by this reference shall become part of the Plan), the Affiliated Company agrees to be bound by all the terms and conditions of the Plan.
In the event the Company decides it is impossible or inadvisable for business reasons to continue to make contributions under the Plan, it may, by resolution of the Board of Directors, discontinue contributions to the Plan. Upon the permanent discontinuance of contributions to the Plan and notwithstanding any other provisions of the Plan, the rights of Participants shall become fully vested and nonforfeitable unless replaced by a comparable plan. The permanent discontinuance of contributions on the part of the Company shall not terminate the Plan as to the funds and assets then held in the Trust, or operate to accelerate any payments of distributions to or for the benefit of Participants or Beneficiaries, and the Trust shall continue to be administered in accordance with the provisions hereof until the obligations hereunder shall have been discharged and satisfied.
12.1 Right to Terminate Plan. In the event the Board of Directors decides it is impossible or inadvisable for business reasons to continue the Plan, then it may, by resolution, terminate the Plan. Upon and after the effective date of such termination, the Company shall not make any further contributions under the Plan. Upon the termination or partial termination of the Plan for any reason, the interest in the Trust of each affected Participant shall automatically become fully vested unless the Plan is continued after its termination by conversion of the Plan into a comparable Plan through Plan amendment or through merger. After the satisfaction of all outstanding liabilities of the Plan to persons other than Participants and Beneficiaries, all unallocated assets shall be allocated to the Accounts of Participants to the maximum extent permitted by law. The Trust Fund may not be fully or finally liquidated until all assets are allocated to Accounts; alternatively any unallocated assets may be transferred to another defined contribution plan maintained by the Sponsor or an Affiliated Company qualified under Code Section 401 where such assets shall be allocated among the accounts of Participants herein who are participants in such transferee plan. In no event, however, shall any part of the Plan revert to or be recoverable by the Company, or be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries. Notwithstanding the foregoing, amounts held in the 415 Suspense Account may revert to the Company in accordance with Section 13.7.
12.2 Merger Restriction. Notwithstanding any other provision in the Plan, the Plan shall not in whole or in part merge or consolidate with, or transfer its assets or liabilities to, any other plan unless each affected Participant in the Plan would (if such other plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated).
12.3 Effect on Trustee and Committee. The Trustee and the Committee shall continue to function as such for such period of time as may be necessary for the winding up of the Plan and for the making of distributions in the manner prescribed by the Board of Directors at the time of termination of the Plan.
12.4 Effect of Reorganization, Transfer of Assets or Change in Control.
(a) In the event of a consolidation or merger of the Company, or in the event of a sale and/or any other transfer of the operating assets of the Company, any ultimate successor or successors to the business of the Company may continue the Plan in full force and effect by adopting the same by resolution of its board of directors and by executing a proper supplemental or transfer agreement with the Trustee.
(b) In the event of a Change in Control (as herein defined), all Participants who were Participants on the date of such Change in Control shall become 100% vested in any amounts allocated to their Company Contribution
(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (a "Person"), is or becomes the "beneficial
owner," as defined in Rule 13d-3 under the Exchange Act (a
"Beneficial Owner"), directly or indirectly, of securities of the
Sponsor representing (1) 20% or more of the combined voting power
of the Sponsor's then outstanding voting securities, which
acquisition is not approved in advance of the acquisition or
within 30 days after the acquisition by a majority of the
Incumbent Board (as hereinafter defined) or (2) 33% or more of the
combined voting power of the Sponsor's then outstanding voting
securities, without regard to whether such acquisition is approved
by the Incumbent Board;
(ii) Individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board of Directors, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Sponsor's stockholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Sponsor, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall, for the purposes of this Plan, be considered as though such person were a member of the Incumbent Board of the Sponsor;
(iii) The consummation of a merger, consolidation or reorganization involving the Sponsor, other than one which satisfies both of the following conditions:
(1) a merger, consolidation or reorganization which would result in the voting securities of the Sponsor outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of another entity) at least 55% of the combined voting power of the voting securities of the Sponsor or such other entity resulting from the merger, consolidation or reorganization (the "Surviving Corporation") outstanding immediately after such merger, consolidation or reorganization and being held in substantially the same proportion as the ownership in the Sponsor's voting
(2) a merger, consolidation or reorganization in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Sponsor representing 20% or more of the combined voting power of the Sponsor's then outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of complete liquidation of the Sponsor or an agreement for the sale or other disposition by the Sponsor of all or substantially all of the Sponsor's assets.
Notwithstanding the preceding provisions of this paragraph (b), a
Change in Control shall not be deemed to have occurred if the Person
described in the preceding provisions of this paragraph (b) is (i) an
underwriter or underwriting syndicate that has acquired any of the
Sponsor's then outstanding voting securities solely in connection with
a public offering of the Sponsor's securities, (ii) the Sponsor or any
subsidiary of the Sponsor or (iii) an employee stock ownership plan or
other employee benefit plan maintained by the Sponsor or an Affiliated
Company that is qualified under the provisions of the Code. In
addition, notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b)
becomes a Beneficial Owner of more than the permitted amount of
outstanding securities as a result of the acquisition of voting
securities by the Sponsor or an Affiliated Company which, by reducing
the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a
Change in Control would occur but for the operation of this sentence
and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under
any stock option plan of the Sponsor or through a stock dividend or
stock split), then a Change in Control shall occur.
13.1 General Rule.
(a) Subject to Sections 13.3 through 13.5 hereof, the total Annual Additions under the Plan to a Participant's Accounts for any Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000); or
(ii) Twenty-five percent (25%) of the Participant's Compensation, from the Company for the Limitation Year. For purposes of this Article XIII, the "Limitation Year" shall mean the Plan Year.
(b) For the purpose of this Article XIII and XIV only, the term
"Company" shall mean the Sponsor and any Affiliated Company whether or
not such Affiliated Company has adopted the Plan pursuant to Section
10.2. Solely for purposes of this Article XIII, an entity shall be
considered an Affiliated Company by reference to Code Section 415(h).
13.2 Annual Additions. For purposes of Section 13.1, the term "Annual
Additions" shall mean with respect to a Participant, for any Limitation Year
with respect to the Plan and each other defined contribution plan, within the
meaning of Code Section 415(k), maintained by the Company ("Defined Contribution
Plan"), the sum of the amounts determined under Sections 13.2(a), (b), (c), (d),
(e), (f) and (g) hereof:
(a) All amounts contributed or deemed contributed by the Company.
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant.
(d) Any amounts allocated to an account established under a pension or annuity plan to provide medical benefits with respect to a Participant after retirement under Code Section 401(h).
(e) Any amounts allocated for such Plan Year which amounts are
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post
retirement medical or life insurance benefits allocated to the separate
account of a key employee (as defined in Code Section 416(i) under Code
Section 419A(d)(1).
(f) Excess deferral amounts determined pursuant to Sections 4.5 and 6.12.
Notwithstanding the foregoing, Sections 13.2(d) and 13.2(e) above shall not be included in any amount treated as an Annual Addition for purposes of applying the limitations contained in Section 13.1(a)(ii) above. A Participant's Rollover Contributions shall not be considered Annual Additions.
13.3 Other Defined Contribution Plans. If the Company maintains any other Defined Contribution Plan, then each Participant's Annual Additions under such Defined Contribution Plan shall be aggregated with the Participant's Annual Additions under the Plan for the purposes of applying the limitations of Section 13.1.
13.4 Adjustments for Excess Annual Additions. To the extent that the Annual Additions on behalf of any Participant in a Limitation Year to the Plan and all other Defined Contribution Plans exceed the limitations set forth in Sections 13.1 through 13.3 hereof, such Participant's Annual Additions for the Plan shall be reduced in the following order: (i) After Tax Deposits that are not Matched Deposits, (ii) After Tax Deposits that are Matched Deposits, (iii) Before Tax Deposits that are not Matched Deposits, (iv) Before Tax Deposits that are Matched Deposits, and (v) Matching Contributions. The portion of the reduction attributable to Participant Deposits shall be refunded to the Participants and the balance attributable to Matching Contributions, if any, shall be held unallocated in a 415 Suspense Account established for the purpose of this Section 13.4 and shall be used to reduce Company Contributions for the next limitation year (and succeeding limitation year, as necessary) for all Participants in the Plan. The 415 Suspense Account shall be exhausted before any Company contributions shall be allocated to the Accounts of Participants.
13.5 Compensation. For the purpose of this Article XIII, Compensation shall mean a Participant's earned income, wages, salaries, fees for professional services, and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company maintaining the Plan and shall be determined as described below:
(a) Compensation shall include to the extent that the amounts are
includible in gross income (including, but not limited to, commissions
paid salespeople, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or other expense
allowances under a nonaccountable plan as described in Regulation
1.62-2(c)).
(b) Compensation shall include any elective deferral as defined in Code Section 402(g)(3) and any amount which is contributed or deferred by the Company at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Sections 125 or 457.
13.6 Treatment of 415 Suspense Account Upon Termination. In the event the Plan shall terminate at a time when all amounts in the 415 Suspense Account have not been allocated to the Accounts of the Participants, the 415 Suspense Account amounts shall be applied as follows:
(a) The amount in the 415 Suspense Account shall first be allocated, as of the Plan termination date, to Participants in accordance with the allocation formula applicable to Company Contributions provided under Section 6.3.
(b) If, after those allocations have been made, any further residue funds remain in the 415 Suspense Account, the residue may revert to the Company in accordance with applicable provisions of the Code, ERISA, and the regulations thereunder.
14.1 Applicability. Notwithstanding any provision in the Plan to the contrary, and subject to the limitations set forth in Section 14.8, the requirements of Sections 14.4, 14.5, 14.6 and 14.7 shall apply under the Plan in the case of any Plan Year in which the Plan is determined to be a Top-Heavy Plan under the rules of Section 14.3. For the purpose of this Article XIV and XIII only, the term "Company" shall mean the Sponsor and any Affiliated Company whether or not such company has adopted the Plan pursuant to Section 10.2.
14.2 Definitions. For purposes of this Article XIV, the following special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former Employee who, at any time during the Plan Year or any of the four preceding Plan Years, is or was:
(i) An officer of the Company having an annual Compensation
greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for the Plan Year; provided, however, for such
purposes no more than 50 Employees (or, if lesser, the greater of
three Employees or 10% of the Employees) shall be treated as
officers;
(ii) One of the ten Employees having annual Compensation from
the Company of more than the limitation in effect under Code
Section 415(c)(1)(A) and owning (or considered as owning within
the meaning of Code Section 318) the largest interests in the
Company. For this purpose, if two Employees have the same interest
in the Company, the Employee having greater annual Compensation
from the Company shall be treated as having a larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns (or is considered as owning within the meaning of Code Section 318) more than 5% of the outstanding stock of the Company or stock possessing more than 5% of the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would be described in paragraph (b) if "1%" were substituted for "5%" each place where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is not a Key Employee.
(f) The term "Aggregation Group" means (i) each plan of the Company in which a Key Employee is a Participant, and (ii) each other plan of the Company which enables any plan described in clause (i) to meet the requirements of Code Sections 401(a)(4) or 410. Any plan not required to be included in an Aggregation Group under the preceding rules may be treated as being part of such group if the group would continue to meet the requirements of Code Sections 401(a)(4) and 410 with the plan being taken into account.
(g) For purposes of determining ownership under paragraphs (a),
(b) and (c) above, the following special rules shall apply: (i) Code
Section 318(a)(2)(C) shall be applied by substituting "5%" for "50%",
and (ii) the aggregation rules of Code Sections 414(b), (c) and (m)
shall not apply, with the result that the ownership tests of this
Section 14.2 shall apply separately with respect to each Affiliated
Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall include their Beneficiaries, and the definitions provided under this Section 14.2 shall be interpreted and applied in a manner consistent with the provisions of Code Section 416(i) and the regulations thereunder.
(i) For purposes of this Article XIV, an Employee's Compensation shall be determined in accordance with the rules of Section 13.5.
14.3 Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect to any Plan Year:
(i) Any defined benefit plan if, as of the Determination Date, the present value of the cumulative accrued benefits under the plan for Key Employees exceeds 60% of the present value of the cumulative accrued benefits under the plan for all Employees; and
(ii) Any defined contribution plan if, as of the Determination Date, the aggregate of the account balances of Key Employees under the plan exceeds 60% of the aggregate of the account balances of all Employees under the plan.
In applying the foregoing provisions of this paragraph (a), the valuation date to be used in valuing Plan assets shall be (i) in the case of a defined benefit plan, the same date which is used for computing costs for minimum funding purposes, and (ii) in the case of a defined contribution plan, the most recent valuation date within a 12-month period ending on the applicable Determination Date.
(c) The term "Top-Heavy Group" means any Aggregation Group if the sum (as of the Determination Date) of (i) the present value of the cumulative accrued benefits for Key Employees under all defined benefit plans included in the group, and (ii) the aggregate of the account balances of Key Employees under all defined contribution plans included in the group exceeds 60% of a similar sum determined for all Employees. For purposes of determining the present value of the cumulative accrued benefit of any Employee, or the amount of the account balance of any Employee, such present value or amount shall be increased by the aggregate distributions made with respect to the Employee under the plan during the five year period ending on the Determination Date. The preceding prior distribution rule shall also apply to distributions under a terminated plan that, if it had not been terminated, would have been required to be included in an Aggregation Group; provided, however, any rollover contribution or similar transfer initiated by the Employee and made after December 31, 1983, to a plan shall not be taken into account with respect to the transferee plan for purposes of determining whether such plan is a Top-Heavy Plan (or whether any Aggregation Group which includes such plan is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with respect to any plan for any plan year, but the individual was a Key Employee with respect to the plan for any prior plan year, any accrued benefit for the individual (and the account balance of the individual) shall not be taken into account for purposes of this Section 14.3.
(e) If any individual has not performed services for the Company
at any time during the five year period ending on the Determination
Date, any accrued benefit for such individual (and the account balance
of the individual) shall not be taken into account for purposes of this
Section 14.3
(f) In applying the foregoing provisions of this Section, the accrued benefit of a Non-Key Employee shall be determined (i) under the method, if any, which is used for accrual purposes under all plans of the Company and any Affiliated Companies, or (ii) if there is no such uniform method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XIV, the definitions provided under this Section 14.3 shall be applied and interpreted in a manner consistent with the provisions of Code Section 416(g) and the regulations thereunder.
(a) Except as provided below, the minimum contribution for each
Non-Key Employee shall be not less than 3% of his or her compensation.
For purposes of satisfying the minimum contribution requirement, Before
Tax Deposits and Matching Contributions as defined in Section
6.13(b)(iv) shall not be taken into account.
(b) Subject to the following rules of this paragraph (b), the
percentage set forth in paragraph (a) above shall not be required to
exceed the percentage at which contributions (including amounts
deferred under a cash or deferred arrangement under Code Section
401(k)) are made (or are required to be made) under the Plan for the
year for the Key Employee for whom the percentage is the highest for
the year. This determination shall be made by dividing the
contributions for each Key Employee by so much of his or her total
compensation for the Plan Year as does not exceed the applicable
Compensation limit. For purposes of this paragraph (b), all defined
contribution plans required to be included in an Aggregation Group
shall be treated as one plan. Notwithstanding the foregoing, the
exceptions to paragraph (a) as provided under this paragraph (b) shall
not apply to any plan required to be included in an Aggregation Group
if the plan enables a defined benefit plan to meet the requirements of
Code Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under this
Section 14.4 shall be calculated without regard to any Social Security
benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-Heavy Plans, the Company shall
satisfy the minimum benefit requirements of Code Section 416 by
providing (in lieu of the minimum contribution described in paragraph
(a) above) a minimum benefit under the defined benefit plan so as to
prevent the duplication of required minimum benefits hereunder.
14.5 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the Plan is a Top-Heavy Plan, the vesting schedule of the Plan shall be changed to that set forth below (unless the Plan's vesting schedule otherwise provides for vesting at a rate at least as rapid as that set forth below):
Number of Full Years of Nonforfeitable Credited Service Percentage ----------------------- -------------- Less than 3 years 0% 3 or more 100% |
14.6 Noneligible Employees. The rules of this Article XIV shall not apply to any Employee included in a unit of employees covered by a collective bargaining agreement between employee representatives and one or more employers if retirement benefits were the subject of good faith bargaining between such employee representatives and the employer or employers.
15.1 General Restrictions Against Alienation.
(a) The interest of any Participant or his or her Beneficiary in the income, benefits, payments, claims or rights hereunder, or in the Trust Fund, shall not in any event be subject to sale, assignment, hypothecation, or transfer. Each Participant and Beneficiary is prohibited from anticipating, encumbering, assigning, or in any manner alienating his or her interest under the Trust Fund, and is without power to do so, except as may be permitted in connection with providing security for a loan from the Plan to the Participant pursuant to the provisions of the Plan as it may be amended from time to time. The interest of any Participant or Beneficiary shall not be liable or subject to his or her debts, liabilities, or obligations, now contracted, or which may hereafter be contracted, and such interest shall be free from all claims, liabilities, or other legal process now or hereafter incurred or arising. Neither the interest of a Participant or Beneficiary, nor any part thereof, shall be subject to any judgment rendered against any such Participant or Beneficiary. Notwithstanding the foregoing, a Participant's or Beneficiary's interest in the Plan may be subject to the enforcement of a Federal tax levy made pursuant to Code Section 6331 or the collection by the United States on a judgment resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action contrary to this Article XV, such action shall be null and void and of no effect, and the Company, the Committee, the Trustee and all Participants and their Beneficiaries, may disregard such action and are not in any manner bound thereby, and they, and each of them, shall suffer no liability for any such disregard thereof, and shall be reimbursed on demand out of the Trust Fund for the amount of any loss, cost or expense incurred as a result of disregarding or of acting in disregard of such action.
(c) The foregoing provisions of this Section shall be interpreted and applied by the Committee in accordance with the requirements of Code Section 401(a)(13) and Section 206(d) of ERISA as construed and interpreted by authoritative judicial and administrative rulings and regulations.
15.2 Qualified Domestic Relations Orders. The rules set forth in
Section 15.1 above shall not apply with respect to a "Qualified Domestic
Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment, decree, or order (including approval of a property settlement agreement) that:
(i) Creates or recognizes the existence of an Alternate Payee's right to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable under the Plan with respect to a Participant,
(iii) Is made pursuant to a State domestic relations law (including a community property law), and
(iv) Clearly specifies: (A) the name and last known mailing address (if any) of the Participant and the name and mailing address of each Alternate Payee covered by the order (if the Committee does not have reason to know that address independently of the order); (B) the amount or percentage of the Participant's benefits to be paid to each Alternate Payee, or the manner in which the amount or percentage is to be determined; (C) the number of payments or period to which the order applies; and (D) each plan to which the order applies.
For purposes of this Section 15.2, "Alternate Payee" means any spouse, former spouse, child or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable with respect to the Participant.
(b) A domestic relations order is not a Qualified Domestic Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under a previous Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to fail to satisfy the requirements of paragraph (b)(i) above with respect to any payment made before a Participant has separated from service solely because the order requires that payment of benefits be made to an Alternate Payee:
(i) On or after the date on which the Participant attains (or would have first attained) his or her earliest retirement age (as defined in Code Section 414(p)(4)(B));
(iii) In any form in which such benefits may be paid under the Plan to the Participant (other than in the form of a joint and survivor annuity with respect to the Alternate Payee and his or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before his
or her earliest retirement age (as defined in Code Section
414(p)(4)(B)), the Alternate Payee is entitled to benefits only if the
Qualified Domestic Relations Order requires survivor benefits to be
paid to the Alternate Payee.
(d) To the extent provided in any Qualified Domestic Relations
Order, the former spouse of a Participant shall be treated as a
surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order received by the Plan, the Committee shall promptly notify the Participant and any Alternate Payee named in the order that an order has been received and shall provide a copy of the Plan's procedures for determining the qualified status of domestic relations orders. An Alternate Payee may designate a representative for receipt of copies of notices and plan information that are sent to the Alternate Payee with respect to domestic relations order. Within a reasonable period after the receipt of the order, the Committee shall determine whether the order is a Qualified Domestic Relations Order and shall notify the Participant and each Alternate Payee of such determination.
(f) The Committee shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under Qualified Domestic Relations Orders. During any period in which the issue of whether a domestic relations order is a Qualified Domestic Relations Order is being determined (by the Committee, by a court of competent jurisdiction, or otherwise), the Committee shall direct the Trustee to segregate in a separate account in the Plan (or in an escrow account) the amounts which would have been payable to the Alternate Payee during the period if the order had been determined to be a Qualified Domestic Relations Order. If within the 18 Month Period (as defined below), the order (or modification thereof) is determined to be a Qualified Domestic Relations Order, the Committee shall direct the Trustee to pay the segregated amounts (plus any interest thereon) to the person or persons entitled thereto. However, if within the 18 Month Period (i) it is determined that the order is not a Qualified Domestic Relations Order, or (ii) the issue as to whether the order is a Qualified Domestic Relations Order is not resolved, then the Committee shall direct the Trustee to pay the segregated amounts (plus any interest thereon) to the person or persons who would have been entitled to the amounts if there had been no order (assuming such
16.1 No Right of Employment Hereunder. The adoption and maintenance of the Plan and Trust shall not be deemed to constitute a contract of employment or otherwise between the Company and any Employee or Participant, or to be a consideration for, or an inducement or condition of, any employment. Nothing contained herein shall be deemed to give any Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge, with or without cause, any Employee or Participant at any time, which right is hereby expressly reserved.
16.2 Effect of Article Headings. Article headings are for convenient reference only and shall not be deemed to be a part of the substance of this instrument or in any way to enlarge or limit the contents of any Article.
16.3 Limitation on Company Liability. Any benefits payable under the Plan shall be paid or provided for solely from the Plan and the Company assumes no liability or responsibility therefor.
16.4 Gender. Masculine gender shall include the feminine and the singular shall include the plural unless the context clearly indicates otherwise.
16.5 Interpretation. The provisions of the Plan shall in all cases be interpreted in a manner that is consistent with the Plan satisfying (i) the requirements of Code Section 401(a) and related statutes for qualification as a defined contribution plan and (ii) the requirements of Code Section 401(k) and related statutes for qualification as a cash or deferred arrangement.
16.6 Withholding For Taxes. Any payments from the Trust Fund may be subject to withholding for taxes as may be required by any applicable federal or state law.
16.7 California Law Controlling. All legal questions pertaining to the Plan which are not controlled by ERISA shall be determined in accordance with the laws of the State of California and all contributions made hereunder shall be deemed to have been made in that State.
16.8 Plan and Trust as One Instrument. The Plan and the Trust Agreement shall be construed together as one instrument. In the event that any conflict arises between the terms and/or conditions of the Trust Agreement and the Plan, the provisions of the Plan shall control, except that with respect to the duties and responsibilities of the Trustee, the Trust Agreement shall control.
16.9 Invalid Provisions. If any paragraph, section, sentence, clause or phrase contained in the Plan shall become illegal, null or void or against public policy, for any reason, or shall be held by any court of competent jurisdiction to be incapable of being construed or limited in a manner to make it enforceable, or is otherwise held by such court to be illegal, null
16.10 Counterparts. This instrument may be executed in one or more counterparts each of which shall be legally binding and enforceable.
ALLERGAN, INC.
By: /s/ FRANCIS R. TUNNEY, JR.
-----------------------------------
Francis R. Tunney, Jr.
Corporate Vice President, Administration
General Counsel and Secretary of Allergan, Inc.
|
1.1 Effective Date. The effective date of this Appendix A is January 1, 1999. Prior to the effective date of Appendix A, Puerto Rico-based Employees were eligible to participate in the Allergan, Inc. Puerto Rico Savings and Investment Plan. As of the effective date of Appendix A, Eligible Puerto Rico-based Employees shall cease participating in the Allergan, Inc. Puerto Rico Savings and Investment Plan and shall participate in the Plan.
1.2 Purpose of Appendix A. The provisions of the Plan shall apply to all Puerto Rico-based payroll Employees except as specifically provided in this Appendix A.
The Definitions of Article II of the Plan shall apply to all Puerto Rico-based Employees and shall have the same meaning for the purpose of this Appendix A except as set forth below:
2.1 Plan Section 2.17. "Compensation" shall have the same meaning as set forth in Plan Section 2.17 except that in the case of a Puerto Rico-based Employee, Compensation shall also include cost of living allowances earned within Puerto Rico and amounts paid under the Christmas bonus program.
2.2 Plan Section 2.19. "Credited Service" shall have the same meaning as set forth in Plan Section 2.19 except that in the case of a Puerto Rico-based Employee who was employed by the Company at any time prior to the original Effective Date, for the period prior to January 1, 1989, Credited Service shall include service, if any, credited to such Employee under the Savings and Investment Plan for Employees of Subsidiaries of SmithKline Beckman Corporation Whose Principal Office is Located in Puerto Rico.
2.3 Plan Section 2.22. For the purpose of this Appendix A only, the definition of "Eligible Employee" as defined in Plan Section 2.22 shall not apply and "Eligible Employee" or "Eligible Puerto Rico-based Employee" shall mean any Puerto Rico-based Employee but shall exclude any non-resident alien of Puerto Rico and the United States, any Leased Employee, and any Employee covered by a collective bargaining agreement.
2.4 Plan Section 2.25. For the purpose of this Appendix A only, the definition of "Employee" as defined in Plan Section 2.25 shall not apply and "Employee" or "Puerto Rico-based Employee" shall mean any person who is employed in any capacity by the Sponsor or any Affiliated Company at its Puerto Rico locations, any portion of whose income is subject to withholding of income tax and/or for whom Social Security contribution are made by the
2.5 Plan Section 2.35. Notwithstanding the provisions of Plan Section
2.35, "Matched Deposits" of a Puerto Rico-based Participant shall mean his or
her Deposits (whether Before Tax or After Tax) not in excess of six percent (6%)
of Compensation. Matched Deposits shall participate in allocations of Company
Contributions and Forfeitures.
2.6 Plan Section 2.38. For the purpose of this Appendix A only, "Participant" as defined in Plan Section 2.38 shall not apply and "Participant" or "Puerto Rico-based Participant" shall mean a Puerto Rico-based Employee who is eligible to participate in the Plan and elects to participate in the Plan in accordance with Plan Section 3.1.
2.7 Additional Terms. Additional terms shall have the following meaning:
(a) "PR-Code" shall mean the Puerto Rico Internal Revenue Code of 1994, as amended. Where the context so requires a reference to a particular PR-Code Section shall also refer to any successor provision of the PR-Code to such PR-Code Section.
(b) "Top One-Third Highly Compensated Employee" shall mean any Participant who has Compensation for a Plan Year that is greater than the Compensation for such Plan Year of two-thirds (2/3) of all other Participants of the same Company.
The provisions of Article III of the Plan shall apply to all Puerto Rico-based Employees.
The provisions of Article IV of the Plan shall apply to all Puerto Rico-based Employees except as set forth below:
4.1 Reserved for Future Modification.
4.3 Additional Contribution Deferral Limitation. In addition to the
limitations on Compensation Deferral Contributions set forth in Plan Section
4.3, Compensation Deferral Contributions by a Puerto Rico-based Participant
shall not exceed the limitation on contributions by or on behalf of the Top
One-Third Highly Compensation Employees under PR-Code Section 1165(e), as
provided in this Section 4.3 with respect to each Plan Year. In the event that
Compensation Deferrals Contributions under the Plan by or on behalf of the Top
One-Third Highly Compensated Employees exceed the limitations of this Section
for any reason, such excess contributions shall be recharacterized as After Tax
Deposits or such excess contributions, adjusted for any income or loss allocable
thereto, shall be returned to such Participant, as provided in Plan Section 4.5.
(a) The Compensation Deferral Contributions by Participants for a Plan Year shall satisfy the Actual Deferral Percentage test under the PR-Code as set forth in (i) below, or to the extent not precluded by applicable regulations, the alternate Actual Deferral Percentage test as set forth in (ii) below:
(i) The average "Actual Deferral Percentage" for the Top One-Third Highly Compensated Employees shall not be more than the average Actual Deferral Percentage of all non-Top One-Third Highly Compensated Employees multiplied by 1.25, or
(ii) The excess of the average Actual Deferral Percentage for the Top One-Third Highly Compensated Employees over the average Actual Deferral Percentage for all non-Top One-Third Highly Compensated Employees shall not be more than two (2) percentage points and the average Actual Deferral Percentage for the Top One-Third Highly Compensated Employee shall not be more than the average Actual Deferral Percentage of all non-Top One-Third Highly Compensated Employees multiplied by 2.0.
(i) "Actual Deferral Percentage" shall mean, with respect to the group of all Top One-Third Highly Compensated Employees and the group of all non-Top One-Third Highly Compensated Employees for a Plan Year, the ratio, calculated separately for each Participant in such group, of the amount of the Participant's Compensation Deferral Contribution for such Plan Year, to such Participant's Compensation for such Plan Year, in accordance with regulations prescribed by the Puerto Rico Secretary of the Treasury under PR-Code Section 1165(e). For purposes of computing the Actual Deferral Percentage, an Eligible Employee who would be a Participant but for the failure to make Before Tax Deposits shall be treated as a Participant on whose behalf no Before Tax Deposits are made.
(ii) "Participant" shall mean any Eligible Puerto Rico-based Employee who satisfied the requirements under Plan Article III during the Plan Year, whether or not such Eligible Employee elected to contribute to the Plan for such Plan Year.
(iii) "Compensation Deferral Contributions" shall mean amounts contributed to the Plan by a Participant as Before Tax Deposits pursuant to Section 4.1 of this Appendix, including excess Before Tax Deposits (as defined in Plan Section 4.4(a)) of the Top One-Third Highly Compensated Employees but excluding (1) excess Before Tax Deposits of all non-Top One-Third Highly Compensated Employees that arise solely from Before Tax Deposits made under the Plan or plans of the Company, (2) Before Tax Deposits that are taken into account in the Average Contribution Percentage test (as defined in Plan Section 6.11) provided that the Actual Deferral Percentage test is satisfied both with and without exclusions of these Before Tax Deposits, and (3) any deferrals properly distributed as excess Annual Additions. To the extent determined by the Committee and in accordance with regulations issued by the Puerto Rico Secretary of the Treasury, matching contributions and qualified nonelective contributions on behalf of a Participant that satisfy the requirements of PR-Code Section 1165(e)(3)(D)(ii) may also be taken into account for the purpose of determining the Actual Deferral Percentage of such Participant.
(iv) "Compensation" shall mean compensation as described below:
(1) Compensation means compensation determined by the
Company in accordance with the requirements of Code Section
414(s) and the regulations thereunder.
(2) For the purpose of this Section 4.3, Compensation
may, at the Company's election, include amounts which are
excludable from a Participant's gross income under Code
Section 125 (pertaining to cafeteria plans) and Code Section
402(e)(3) (pertaining to 401(k) salary reductions).
(3) Compensation taken into account for any Plan Year shall not exceed $150,000 as adjusted at the time and in such manner as permitted under Code Section 401(a)(17)(B).
(c) In the event that as of the first day of Plan Year, the Plan satisfies the requirements of PR-Code Section 1165(a) only if aggregated with one or more other plans which include arrangements under PR-Code Section 1165(e), then this Section 4.3 shall be applied by determining the Actual Deferral Percentages of Participants as if all such plans were a single plan, in accordance with regulations prescribed by the Secretary of the Treasury under PR-Code Section 1165(e). Plans may be considered one plan for purposes of satisfying PR-Code Section 1165(e) only if they have the same Plan Year.
(d) For the purpose of this Section 4.3, the "Actual Deferral Percentage" for any Top One-Third Highly Compensated Employee who is a Participant under two or more PR-Code Section 1165(e) arrangements of the Company shall be determined by taking into account the Top One-Third Highly Compensated Employee's Compensation under each such arrangement and contributions under each such arrangement which qualify for treatment under PR-Code Section 1165(e) in accordance with regulations prescribed by the Puerto Rico Secretary of the Treasury under PR-Code Section 1165(e). If the arrangements have different Plan Years, this subSection shall be applied by treating all such arrangements ending with or within the same calendar year as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate plans if mandatorily disaggregated pursuant to regulations under Code Section 401(k).
(e) For purposes of the Actual Deferral Percentage test, Compensation Deferral Contributions must be made before the last day of the twelve-month period immediately following the Plan Year to which such contributions relate.
(f) The determination and treatment of Compensation Deferral Contributions and the Actual Deferral Percentage of any Participant under this Section 4.3 shall satisfy such other requirements as may be prescribed by the Puerto Rico Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records as are necessary to demonstrate that the Plan satisfies the requirements of PR-Code Section 1165(e) and the regulations thereunder, in accordance with regulations prescribed by the Puerto Rico Secretary of the Treasury.
4.4 Plan Section 4.4. The provisions of Plan Section 4.4 entitled "Provisions for Return of Excess Before Tax Deposits over $7,000" shall be applied by substituting the dollar limitation contained in Section 4.1 of this Appendix for the "$7,000 limitation" in each place it appears.
(a) "Highly Compensated Employee and Top One-Third Highly Compensated Employee" shall be substituted for "Highly Compensated Employee" in each place it appears.
(b) Any reference to Code Sections shall include reference to the
corresponding PR-Code Section unless the context clearly indicates
otherwise. For example, references to "Code Section 401(k)" and "Code
Section 404" shall include references to PR-Code Section 1165(e) and
PR-Code Section 1023(n), respectively.
4.6 Reserved for Future Modification.
4.7 Plan Section 4.7. In addition to the provisions of Plan Section 4.7 entitled "Character of Deposits," Before Tax Deposits shall be treated as employer contributions for purposes of PR-Code Section 1165(e).
4.8 Plan Section 4.8. The provisions of Plan Section 4.8 entitled
"Rollover Contributions" shall be applied by including a corresponding reference
to "PR-Code Section 1165(a)" in each place "Code Section 401(a)" and "Code
Section 501(a)" appears.
The provisions of Article V shall apply to all Puerto Rico-based Employees except as set forth below:
5.1 Plan Section 5.3(a). Notwithstanding the provisions of Plan Section
5.3(a) entitled "Company Contributions," the Company shall contribute and
allocate on a pay period basis which, when added to Forfeitures available after
application of Section 6.3 is equal to:
(a) 75% of each Participant's Matched Deposits for the pay period which are not in excess of two percent (2%) of such Participant's Compensation.
(b) 50% of each Participant's Matched Deposits for the pay period which are in excess of two percent (2%) of such Participant's Compensation but not in excess of four percent (4%) of such Participant's Compensation.
(c) 25% of each Participant's Matched Deposits for the pay period which are in excess of four percent (4%) of such Participant's Compensation.
The Board of Directors, acting upon the advice and direction of the Committee, may authorize and direct that Matching Contributions (expressed as a percentage of Participants'
5.2 Plan Section 5.6. The provisions of Plan Section 5.6 entitled
"Irrevocability" shall be applied by including a corresponding reference to
"PR-Code Section 1165(a)" and "PR-Code Section 1023(n)" in each place "Code
Section 401(a)" and "Code Section 404" appears, respectively
The provisions of Article VI of the Plan shall apply to all Puerto Rico-based Employees.
The provisions of Article VII of the Plan shall apply to all Puerto Rico-based Employees.
The provisions of Article VIII of the Plan shall apply to all Puerto Rico-based Employees except as set forth below:
8.2 Plan Section 8.4. In addition to the provisions of Plan Section 8.4 entitled "Designation of Beneficiary," the following rules shall apply to a Participant, as defined in Section 2.6 of this Appendix:
(a) In the event a deceased Participant is not a resident of Puerto Rico at the date of his or her death, the Committee, in its discretion, may require the establishment of ancillary administration in Puerto Rico.
(b) If the Committee cannot locate a qualified personal representative of the deceased Participant, or if administration of the deceased Participant's estate is not otherwise required, the Committee, in its discretion, may pay the deceased Participant's interest in the Trust Fund to his or her heirs at law (determined in accordance with the laws of the Commonwealth of Puerto Rico) as they existed at the date of the Participant's death.
8.3 Plan Section 8.6(a). Notwithstanding the provisions of Plan Section
8.6(a) entitled "Distribution Rules," in the case of a Puerto Rico-based
Participant in no event shall any
8.4 Plan Section 8.6(c). Notwithstanding the provisions of Plan Section
8.6(c) entitled "Distribution Rules," Section 8.3 of this Appendix or Plan
Section 8.6(b), in the case of a Puerto Rico-based Participant distributions of
the entire vested portion of a Participant's Accounts shall be made no later
than the Participant's Required Beginning Date, or, if such distribution is to
be made over the life of such Participant or over the lives of such Participant
and a Beneficiary (or over a period not extending beyond the life expectancy of
such participant and Beneficiary) then such distribution shall commence no later
than the Participant's Required Beginning Date. Required Beginning Date shall
mean:
(a) For the period prior to January 1, 1989, April 1 of the calendar year following the later of the calendar year in which the Participant (i) attains age 70-1/2, or (ii) retires; provided, however, the foregoing clause (ii) shall not apply with respect to a Participant who is a Five Percent Owner (as defined in Code Section 416(i)) at any time during the five Plan Year period ending in the calendar year in which the Participant attains age 70-1/2. If the Participant becomes a Five Percent Owner during any Plan Year subsequent to the five Plan Year period referenced above, the Required Beginning Date under this Paragraph (a) shall be April 1 of the calendar year following the calendar year in which such subsequent Plan year ends.
(b) For the period after December 31, 1988, April 1 of the calendar year following the calendar year in which the Participant attains age 70-1/2; provided, however, if the Participant attains age 70-1/2 before January 1, 1988 and the Participant was not a Five Percent Owner at any time during the Plan Year ending with or within the calendar year in which such Participant attains age 66-1/2 or any subsequent Plan Year, then this Paragraph (b) shall not apply and the Required Beginning Date shall be determined under Paragraph (a) above.
8.5 Plan Section 8.11(c). The provisions of Plan Section 8.11(c) entitled "Additional Documents" shall be applied by including reference to "Puerto Rico" in each place "State or Federal" appears.
8.6 Plan Section 8.12. The provisions of Plan Section 8.12 entitled "Trustee-Trustee Transfers" shall be applied by including a corresponding reference to "PR-Code Section 1165" in each place "Code Section 401" appears.
The provisions of Articles IX through XV of the Plan shall apply to all Puerto Rico-based Employees.
The provisions of Article XVI of the Plan shall apply to all Puerto Rico-based Employees except as follows:
10.1 Plan Section 16.5. In addition to the provisions of Plan Section
16.5 entitled "Interpretation," the provisions of the Plan shall be interpreted
in a manner consistent with the Plan satisfying (i) the requirements of PR-Code
Section 1165(a) and related statutes for qualification as a defined contribution
plan and (ii) the requirements of PR-Code Section 1165(e) and related statutes
for qualification as a cash or deferred arrangement to the extent such
interpretation would not violate (i) the requirements of Code Section 401(a) and
related statutes for qualification as a defined contribution plan and (ii) the
requirements of Code Section 401(k) and related statutes for qualification as a
cash or deferred arrangement.
10.2 Plan Section 16.6. In addition to the provisions of Plan Section 16.6 entitled "Withholding for Taxes," any payments from the Trust Fund may be subject to withholding for taxes as may be required by any applicable Puerto Rico law.
10.3 Plan Section 16.7. In addition to the provisions of Plan Section 16.7 entitled "California Law Controlling," the Committee shall determine whether all legal questions pertaining to the Plan which are not controlled by ERISA shall be determined in accordance with the laws of the Commonwealth of Puerto Rico or the laws of the State of California in the case of a Puerto Rico-based Employee or Participant.
ARTICLE
FIRST: Acceptance of Property...............................................2 SECOND: Investment Powers...................................................2 THIRD: Payments.............................................................7 FOURTH: Administrative Powers...............................................7 FIFTH: Insurance Company Contracts.........................................11 SIXTH: Fiduciary Standards.................................................11 SEVENTH: Prohibition of Diversion..........................................12 EIGHTH: Hold Harmless......................................................13 NINTH: Accounts............................................................13 TENTH: Committee...........................................................14 ELEVENTH: Compensation and Expenses........................................14 TWELFTH: Resignation of Trustee............................................14 THIRTEENTH: Amendment......................................................15 FOURTEENTH: Termination....................................................15 FIFTEENTH: Plan-to-Plan Transfers; Rollovers...............................15 SIXTEENTH: Adopting Employers..............................................16 SEVENTEENTH: Alienation....................................................16 EIGHTEENTH: Bond...........................................................17 NINETEENTH: Successors.....................................................17 TWENTIETH: Severability....................................................17 TWENTY-FIRST: Communications...............................................17 TWENTY-SECOND: Governing Law...............................................17 |
WHEREAS, the Allergan, Inc. Savings and Investment Plan, hereinafter referred to as the "Plan," and the Trust Agreement for Allergan, Inc. Savings and Investment Plan was initially established with an effective date of July 27, 1989, by Allergan, Inc., hereinafter referred to as the "Sponsor," for the purpose of providing retirement and related benefits to eligible employees of the Sponsor and any Affiliated Company who adopts the Plan, hereinafter referred to collectively as the "Company," and their beneficiaries, hereinafter referred to as "Participants"; and
WHEREAS, the Plan Committee, the members of which are "named fiduciaries" as defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (which named fiduciaries are hereinafter referred to as the "Committee") has general responsibility for administration of the Plan; and
WHEREAS, the Plan provides for a trust to which contributions are to be made by the Company to be held by a trustee and to be managed, invested and reinvested for the exclusive benefit of Participants of the Plan and their beneficiaries; and
WHEREAS, the Plan and trust are intended to qualify as a plan and trust that meet the applicable requirements of sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, hereinafter referred to as the "Code"; and
WHEREAS, the current trustee(s) of the trust have been removed as trustee(s) effective June 30, 2000; and
WHEREAS, effective July 1, 2000, the Sponsor wishes to amend and restate the existing agreement of trust, hereinafter referred to as the "Trust," in its entirety and appoint UMB Bank, N.A., a national banking association, having its principal place of business at Kansas City, Missouri, hereinafter referred to as the "Trustee"; and
NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, the Sponsor and the Trustee do hereby covenant and agree as follows:
The Trustee shall accept such cash and other property as is tendered to it as contributions hereunder, and as is acceptable to it, hereinafter referred to as the "Trust Fund," but shall not be under any duty to require the Company to contribute to the Trust Fund or to determine whether the amount of any contribution has been correctly computed under the terms of the Plan. In no event shall the Trustee be considered a party to the Plan. The Trustee shall have only such duties with respect to the Plan as are set forth in this Agreement.
The Trustee shall invest the assets of the Trust Fund as directed by the Sponsor, Committee, or Participants in accordance with the provisions of the Plan. In doing so, the Trustee will be a directed trustee. Trust investments may include, without limitation, employer securities, as that term is defined in section 407(d) of ERISA, hereinafter referred to as "Company Stock, " without regard to limitations imposed by section 407(a) of ERISA, and any fund created for the collective investment of the assets of employee benefit trusts, as long as such collective investment fund is a qualified trust under the applicable provisions of the Code (and while any portion of the Trust Fund is so invested, such collective investment fund shall constitute a part of the Plan, and the instruments creating such fund shall constitute a part of this Agreement). The Trustee shall have no independent investment duties or responsibilities. The Trustee assumes no financial responsibility with respect to the investment of the assets of the Trust Fund. If the Trustee properly carries out such investment directions, the Trustee will have no liability for any loss or diminution in value occasioned thereby.
To the maximum extent permitted by law, the Trustee shall not be liable for the acquisition, retention or disposition of any assets of the Trust Fund or for any loss to or diminution of such assets unless due to the Trustee's own negligence or willful misconduct.
The Committee may appoint an "investment manager," as defined in
section 3(38) of ERISA. Any investment manager so appointed shall be (i) an
investment adviser registered as such under the Investment Advisers Act of 1940,
(ii) a bank, or (iii) an insurance company qualified to perform investment
management services under the laws of more than one state of the United States.
The Committee shall notify the Trustee of any such appointment by delivering to
the Trustee an executed copy of the instrument under which the investment
manager is appointed and evidencing the investment manager's acceptance of such
appointment, an acknowledgment by the investment manager that it is a fiduciary
of the Plan, and a certificate evidencing the investment manager's current
registration under the Investment Advisers Act of 1940 or other appropriate
qualification. The Committee shall specify to the Trustee the portion of the
Trust Fund that shall be subject to such investment management. The Trustee
shall invest and reinvest the portion of the Trust Fund subject to such
investment management only to the extent and in the manner directed by the
investment manager in writing. During the term of such appointment, the Trustee
shall have no liability for the acts or omissions of such investment manager,
and except as provided in the preceding sentence, shall be under no obligation
to invest
In the event that the investment manager appointed hereunder is a bank or a trust company, or an affiliate of a bank or a trust company, the Trustee shall, upon the direction of the Committee, transfer funds to such bank, trust company, or affiliate for investment through the medium of any fund created and administered by such bank, trust company, or affiliate, acting as trustee therefore, for the collective investment of the assets of employee benefit trusts, provided that such fund is qualified under the applicable provisions of the Code and that while any portion of the assets are so invested, such fund shall constitute part of the applicable Plan or Plans, and the instrument creating such fund shall constitute part of this Agreement. In order to implement the provisions of this paragraph, the Trustee is authorized to enter into any required ancillary trust, agency or other type of agreement with an investment manager, or its affiliate, as described in the preceding sentence.
The Trustee shall have no power or duty to sell, tender, exchange, or otherwise dispose of any Company Stock held in the Fund, hereinafter referred to as the "Company Stock Fund," except in the following circumstances: (i) in the event of a tender or exchange offer as hereinafter provided, (ii) in the case of fractional shares received in any stock dividend, stock split or other recapitalization, (iii) as necessary to make any distribution or payment from the Trust Fund, (iv) pursuant to the direction of the Sponsor, Committee, or a Participant, or (v) where ERISA prohibits the limitation of the Trustee's power. In the event that an offer (including but not limited to a tender offer or exchange offer within the meaning of the Securities Exchange Act of 1934, as from time to time amended and in effect) (the "Offer") is made for all or any portion of the Company Stock held in the Company Stock Fund, and notwithstanding any other provision of the Trust to the contrary, the Trustee's discretion or authority to sell, exchange or transfer any of such Company Stock held in the Company Stock Fund shall be determined in accordance with the following rules:
(1) The Trustee shall have no discretion or authority to sell, exchange or transfer any Company Stock pursuant to an Offer except to the extent, and only to the extent, that the Trustee is timely directed to do so in writing by each Participant with respect to shares of Company Stock that are allocated to such Participant's accounts.
(2) To the extent there remains any residual fiduciary responsibility with respect to Company Stock pursuant to an Offer after application of subparagraph (1) above, the Trustee shall sell, exchange or transfer such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor.
(4) In the event, under the terms of an Offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such Offer may be withdrawn from such Offer, the Trustee shall follow such instructions respecting the withdrawal of such shares from such Offer in the same manner and the same proportion as shall be timely received by the Trustee from the Participants entitled under this paragraph to give instructions as to the sale, exchange or transfer of shares pursuant to such Offer.
(5) In the event that an Offer for fewer than all of the shares of Company Stock held by the Trustee in the Trust shall be received by the Trustee, each Participant shall be entitled to direct the Trustee as to the acceptance or rejection of such Offer (as set forth herein) with respect to the largest portion of such Company Stock as may be possible given the total number or amount of shares of Company Stock the Plan may sell, exchange or transfer pursuant to the Offer based upon the instructions received by the Trustee from all other Participants who shall timely instruct the Trustee pursuant to this paragraph to sell, exchange or transfer such shares pursuant to such Offer, each on a pro rata basis in accordance with the maximum number of shares each such Participant would have been permitted to direct under subparagraph (1) had the Offer been for all shares of Company Stock held in the Trust.
(6) In the event an Offer is received by the Trustee and instructions
have been solicited from Participants regarding such Offer, and
prior to termination of such Offer, another Offer is received by
the Trustee for the Company Stock subject to the first Offer, the
Trustee shall inform the Committee of such other Offer and the
Committee shall use its best efforts under the circumstances to
solicit instructions from the Participants (i) with respect to
securities tendered for sale, exchange or transfer pursuant to the
first Offer, whether to withdraw such tender, if possible, and, if
withdrawn, whether to tender any Company Stock so withdrawn for
sale, exchange or transfer pursuant to the second Offer and (ii)
with respect to Company Stock not tendered for sale, exchange or
transfer pursuant to the first Offer, whether to tender or not to
tender such Company Stock for sale, exchange or transfer pursuant
to the second Offer. The Trustee shall follow all such
instructions received in a timely manner from Participants in the
same manner and in the same proportion as provided in subparagraph
(1). With respect to any further Offer for any Company Stock
received by the Trustee and subject to any earlier Offer
(including successive Offers from one or more existing offers),
the Trustee shall act in the same manner as described above.
(8) The Sponsor shall distribute and/or make available to each Participant who is entitled to respond to an Offer pursuant to subparagraph (1), an instruction form to be used by each such Participant who wishes to instruct the Trustee. The instruction form shall state that (i) if the Participant fails to return an instruction form to the Trustee by the indicated deadline, the Company Stock with respect to which he or she is entitled to give instructions shall not be sold, exchanged or transferred pursuant to such Offer, (ii) the Participant shall be a named fiduciary (as described in subparagraph (13) below) with respect to all shares of Company Stock for which he or she is entitled to give instructions, and (iii) the Company acknowledges and agrees to honor the confidentiality of the Participant's instructions to the Trustee.
(9) Each Participant may choose to instruct the Trustee in one of the following two ways: (i) not to sell, exchange or transfer any shares of Company Stock for which he or she is entitled to give instructions, or (ii) to sell, exchange or transfer all Company Stock for which he or she is entitled to give instructions. The Sponsor shall follow up with additional mailings and postings of bulletins, as reasonable under the time constraints then prevailing, to obtain instructions from Participants not otherwise responding to such requests for instructions. Subject to subparagraph (4), the Trustee shall then sell, exchange or transfer shares of Company Stock according to instructions from Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred unless directed otherwise as provided in subparagraph (2) above.
(10) The Sponsor shall furnish former Participants who have received distributions of Company Stock so recently as to not be shareholders of record with the information given to Participants pursuant to subparagraphs (7), (8), and (9). The Trustee shall then sell, exchange or transfer shares according to instructions from such former Participants, except that shares for which no instructions are received shall not be sold, exchanged or transferred.
(11) Neither the Company, the Committee nor the Trustee shall express any opinion or give any advice or recommendation to any Participant concerning the Offer, nor shall they have any authority or responsibility to do so.
(12) The Trustee shall not reveal or release a Participant's instructions to the Company, its officers, directors, employees, or representatives. If some but not all Company Stock held by the Trust is sold, exchanged, or transferred pursuant to an Offer, the
(13) Each Participant shall be a named fiduciary (as that term is defined in section 402(a)(2) of ERISA) with respect to Company Stock allocated to his or her accounts under the Plan solely for purposes of exercising the rights of a shareholder with respect to an Offer pursuant to this paragraph.
(14) To the extent that an Offer results in the sale of Company Stock in the Trust, the Committee or the Participants, if so permitted under the terms of the Plan, shall instruct the Trustee as to the investment of the proceeds of such sale.
(15) In the event a court of competent jurisdiction shall issue to the Plan, the Committee, the Sponsor or the Trustee an opinion or order, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate, in all circumstances or in any particular circumstances, any provision or provisions of this paragraph regarding the determination to be made as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to an Offer or cause any such provision or provisions to conflict with securities laws, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this paragraph shall be given no further force or effect. In such circumstances, the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with respect to such Offer, the Sponsor shall appoint an independent fiduciary who shall direct the Trustee as to whether or not Company Stock held by the Trustee shall be sold, exchanged or transferred pursuant to such Offer.
All property received in exchange for such Company Stock so tendered shall upon receipt be held by the Trustee in the Fund within the accounts of those Participants who so tendered, the provisions of this Agreement shall hereby be deemed amended to permit the holding of such property within said Fund and the property shall thereafter be administered, invested, reinvested and distributed in accordance with the applicable terms of the Plan and Trust.
All dividends paid to the Trustee with respect to the Company Stock Fund shall be held in the Trust by the Trustee as directed by the Committee.
Subject to the provisions of Article FOURTEENTH hereof, the Trustee shall from time to time transfer cash or other property from the Trust Fund to such persons, including an insurance company or companies or a paying agent designated by the Committee, at such addresses, in such amounts, for such purposes and in such manner as the Committee may direct, provided that such transfer is administratively feasible, and the Trustee shall incur no liability for any such payment made at the direction of the Committee. The Committee shall be solely responsible to insure that any payment made at its direction conforms with the provisions of the Plan, the provisions of this Agreement, and ERISA, and the Trustee shall have no duty to determine the rights or benefits of any person in the Trust Fund or under the Plan or to inquire into the right or power of the Committee to direct any such payment.
The Trustee is authorized to exercise from time to time the following powers in respect of any property, real or personal, of the Trust Fund:
(1) power to sell at public or private sale for cash or upon credit or partly for cash and partly upon credit and upon such terms and conditions as it shall deem proper as and when directed to do so by the Committee (or by Participants pursuant to Article Second). No purchaser shall be bound to see to or be liable for the application of the proceeds of any such sale;
(2) power to exchange securities or property held by it for other securities or property, or partly for such securities or property and partly for cash, and to exercise conversion, subscription, option and similar rights with respect to securities held by it, and to make payments in connection therewith as and when directed to do so by the Committee (or by Participants pursuant to Article Second);
(3) power to vote in person or by proxy at corporate or other meetings and to participate in or consent to any voting trust, reorganization, dissolution, merger or other action affecting securities in its possession or the issuers thereof; except, notwithstanding any other provision of the Trust to the contrary, the Trustee's discretion and authority to vote the Company Stock Fund, shall be determined as provided herein.
(4) power to acquire, hold or dispose of property in unregistered form, or in its name without designation of fiduciary capacity, or in the name of its nominee or any custodian, and to the extent permitted by ERISA, to combine certificates representing investments with investments of the same issue held by the Trustee in other fiduciary capacities, and to deposit property in a depository or clearing corporation or with the federal reserve bank in its district as and when directed to do so by the Committee (or by Participants pursuant to Article Second);
(6) power to deposit any such property with any protective, reorganization or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee; and any assessments levied with respect to any property so deposited upon the written direction of the Committee unless the Trustee is so ordered to do so by a court or governmental agency of competent jurisdiction;
(7) power to exercise any conversion privilege or subscription right available in connection with any such property; to oppose or to consent to the reorganization, consolidation, merger or readjustment of the finances of any corporation, company or association, or to the sale, mortgage, pledge or lease of the property of any corporation, company or association any of the securities of which may at any time be held in the Trust Fund and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payments of expenses, assessments or subscriptions, which may be deemed necessary or advisable in connection therewith and to hold and retain any securities or other property which it may so acquire upon the written direction of the Committee;
(8) power to make distributions in cash or in specific property, real or personal, or an undivided interest therein, or partly in cash and partly in such property upon the written direction of the Committee (or by Participants but subject to the provisions of the Plan);
(9) power to engage legal counsel, including counsel to the Company or the Trustee in its individual capacity, and any other suitable agents, and to consult with such counsel or agents with respect to the construction of this Agreement, the administration of the Trust Fund, and the duties of the Trustee hereunder following written consent of the Committee;
(10) power to commence or defend suits or legal proceedings and to represent the Trust Fund in all suits or legal proceedings; to settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust Fund, provided that the Trustee shall notify the Committee of all such suits, legal proceedings and claims and, except in the case of a suit, legal proceeding or claim involving solely the Trustee's action or omissions to act, shall obtain the written consent of the Sponsor before settling, compromising or submitting to binding arbitration any claim, suit or legal proceeding of any nature whatsoever;
(12) power to make, execute and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers;
(13) power to transfer assets of the Trust Fund to a successor trustee as provided in Article TWELFTH; and
(14) power to appoint custodians or subcustodians to hold any or all of the Trust Fund upon the written direction or consent of the Committee;
(15) power to appoint ministerial agents to perform various functions of the Trustee upon the written direction or consent of the Committee; and
(16) power to exercise, subject to the terms and restrictions set forth in Article Fourth and the provisions of the Plan, generally, any of the powers that an individual owner might exercise in connection with property either real, personal or mixed held by the Trust Fund, and to do all other acts that the Trustee may deem necessary or proper to carry out any of the powers set forth in this Article FOURTH or otherwise in the best interests of the Trust Fund.
Notwithstanding any other provision of the Trust to the contrary, the Trustee shall have no discretion or authority to vote Company Stock held in the Trust on any matter presented for a vote by the stockholders of the Company except in accordance with timely directions received by the Trustee from either the Committee or Participants, depending on who has the right to direct the voting of such Company Stock as provided in the following subparagraphs:
(1) All Company Stock held in the Trust Fund shall be voted by the Trustee as the Committee directs in its absolute discretion, except as provided in this subparagraph (1).
(i) If the Sponsor has a registration-type class of securities (as defined in section 409(e)(4) of the Code), then with respect to all corporate matters, each Participant shall be entitled to direct the Trustee as to the voting of all Company Stock allocated and credited to his or her accounts.
(ii) If the Sponsor does not have a registration-type class of securities, then only with respect to such matters as the approval or disapproval of any
(2) To the extent there remains any residual fiduciary responsibility with respect to the voting of Company Stock after application of subparagraph (1) above, the Trustee shall vote such Company Stock as directed by the Committee or as directed by an independent fiduciary if duly appointed by the Sponsor.
(3) All Participants entitled to direct such voting shall be notified by the Sponsor, pursuant to its normal communications with shareholders, of each occasion for the exercise of such voting rights within a reasonable time before such rights are to be exercised. Such notification shall include all information distributed to shareholders either by the Company or any other party regarding the exercise of such rights. Such Participants shall be so entitled to direct the voting of fractional shares (or fractional interests in shares), provided, however, that the Trustee may, to the extent possible, vote the combined fractional shares (or fractional interests in shares) so as to reflect the aggregate direction of all Participants giving directions with respect to fractional shares (or fractional interests in shares). To the extent that a Participant shall fail to direct the Trustee as to the exercise of voting rights arising under Company Stock credited to his or her account, such Company Stock shall not be voted unless the Trustee is directed otherwise as provided in subparagraph (2) above. The Trustee shall maintain confidentiality with respect to the voting directions of all Participants.
(4) Each Participant shall be a named fiduciary (as that term is defined in section 402(a)(2) of ERISA) with respect to Company Stock for which he or she has the right to direct the voting under the Plan but solely for the purpose of exercising voting rights pursuant to this paragraph.
(5) In the event a court of competent jurisdiction shall issue an opinion or order to the Plan, the Committee, the Sponsor or the Trustee, which shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate under ERISA, in all circumstances or in any particular circumstances, any provision or provisions of this paragraph regarding the manner in which Company Stock held in the Trust shall be voted or cause any such provision or provisions to conflict with ERISA, then, upon notice thereof to the Committee, the Sponsor or the Trustee, as the case may be, such invalid or conflicting provisions of this paragraph shall be given no further force or effect. In such circumstances the Trustee shall continue to follow instructions received from Participants, to the extent such instructions have not been invalidated by such order or opinion. To the extent the Trustee is required by such opinion or order to exercise any residual fiduciary responsibility with
Notwithstanding the foregoing paragraphs, in the event that an investment manager is appointed pursuant to Article SECOND hereof, such investment manager shall exercise such of the powers enumerated in this Article FOURTH and otherwise contained in this Agreement with respect to the portion of the Trust Fund subject to its control as may be specified in the instrument under which the investment manager was appointed.
The Trustee may, at the direction of the Committee, (i) enter into one or more contracts with legal reserve life insurance companies, the rate of return from which is fixed by the terms of such contracts, (ii) transfer to any such insurance companies a portion of the Trust Fund in accordance with any such contracts, and (iii) hold any such contracts as a part of the Trust Fund until directed otherwise by the Committee. The Committee shall give such direction to the Trustee by delivering to the Trustee a copy of the action of the Committee which shall specifically refer to this Article FIFTH and direct the Trustee to so act. The Committee may direct the Trustee to (i) request any information from any such insurance companies necessary or appropriate to make an investment decision, (ii) demand or accept withdrawals or other distributions under any such contracts, (iii) exercise or not to exercise any rights, powers, privileges and options under any such contracts and (iv) assign, amend, modify or terminate any such contracts. The Trustee shall take no action with respect to any such contracts except at the direction of the Committee. The Trustee shall incur no liability for complying with any direction of the Committee, and in the absence of any direction from the Committee, the Trustee shall incur no liability for failing to take any action. Any insurance companies issuing any contracts as hereinabove described may deal with the Trustee as the absolute owner of any such contracts and need not inquire as to the authority of the Trustee to act with regard to such contracts. Any such insurance company may accept and rely upon any communication from the Trustee that is signed by an officer of the Trustee. For purposes of this Agreement, any such insurance company shall be considered to be an investment manager with regard to the assets of the Plan subject to its control. In no event shall the underlying assets of such insurance company in which such contracts are invested be considered assets of the Plan or part of the Trust Fund.
The Trustee (or any investment manager appointed pursuant to Article SECOND hereof) shall (i) discharge its duties hereunder with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (ii) subject to the investment funds specified in the Plan, if any, and to the extent required by ERISA, diversify the investments of the Trust Fund so as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so; and (iii) discharge its duties in accordance
The Trustee (or any investment manager appointed pursuant to Article SECOND hereof) shall not engage in any transaction that it knows or should know violates section 406 of ERISA. Notwithstanding the foregoing, the Trustee (or any investment manager appointed pursuant to Article SECOND hereof) may, in accordance with any appropriate exemption provided under ERISA or upon the approval of the Secretary of the Department of Labor, enter into any transaction otherwise prohibited under section 406 of ERISA.
The Trustee shall not be responsible for the administration of the Plan, for determining the funding policy of the Plan, or the adequacy of the Trust Fund to meet and discharge liabilities under the Plan.
The Trustee shall not be responsible for any failure of the Committee or the Company to discharge any of their respective responsibilities with respect to the Plan nor be required to enforce payment of any contributions to the Trust Fund.
(1) At no time prior to the satisfaction of all liabilities with respect to Participants in the Plan and their beneficiaries shall any part of the corpus or income of the Trust Fund be used for, or diverted to, purposes other than for the exclusive benefit of such Participants and their beneficiaries. Except as provided in subparagraphs (2), (3) and (4) below, and Article THIRTEENTH, or as otherwise permitted under the provisions of the Plan, the assets of the Trust Fund shall never inure to the benefit of the Company and shall be held for the exclusive purpose of providing benefits to Participants in the Plan and their beneficiaries and defraying the reasonable expenses of administering the Plan.
(2) In the case of a contribution that is made by the Company by a mistake of fact, subparagraph (1) above shall not prohibit the return to the Company of such contribution at the direction of the Committee within one year after the payment of the contribution.
(3) If a contribution by the Company is expressly conditioned on qualification of the Plan under section 401 of the Code, and if the Plan does not so qualify, then subparagraph (1) above shall not prohibit the return to the Company of such contribution at the direction of the Committee within one year after the date of denial of qualification of the Plan, to the extent permitted by ERISA and the Code.
(4) If a contribution by the Company is expressly conditioned upon the deductibility of the contribution under section 404 of the Code, then to the extent such deduction is disallowed, subparagraph (1) above shall not prohibit the return to
To the maximum extent permitted by ERISA and other applicable law, the Trustee shall not be liable for and the Company shall indemnify the Trustee against, and agrees to hold the Trustee harmless from, all liabilities and claims (including reasonable attorney's fees and expenses in defending against such liabilities and claims) against the Trustee, arising from the Trustee's performance of its duties in conformance with the terms of the Plan and this Agreement, including any liability and claim arising with regard to the provisions of Article SECOND, unless such liability or claim results from negligent, reckless, or willful acts of commission or omission by the Trustee or results from the Trustee's violation of ERISA or other applicable laws. To the maximum extent permitted by ERISA and other applicable law, the Trustee shall not be liable for acting (or for taking no action) in accordance with any written direction of the Committee or an investment manager designated under Article SECOND, or, where an investment manager has been designated, failing to act in the absence of any such direction, including, without limitation, any claim or liability that may be asserted against the Trustee on account of failure to receive securities purchased, or failure to deliver securities sold pursuant to orders issued by an investment manager, and the Company shall indemnify the Trustee against and agrees to hold the Trustee harmless from, all such liabilities and claims (including attorney's fees and expenses in defending against such liabilities and claims). The foregoing indemnifications shall also apply to liabilities and claims against the Trustee arising from any breach of fiduciary responsibility by a fiduciary other than the Trustee, unless the Trustee (i) participates knowingly in or knowingly undertakes to conceal such breach, (ii) has enabled such fiduciary to commit such breach by its failure to exercise its fiduciary duties under ERISA or (iii) has actual knowledge of such breach and fails to take reasonable remedial action to remedy such breach.
The Trustee or its agent shall keep records of all transactions relating to the Trust Fund, which shall be made available at all reasonable times to the Committee, persons designated by the Board of Directors of the Sponsor or as may be required by law. The Trustee or its agent shall render an accounting to the Company and the Committee at least annually which shall be in a form sufficient to produce financial statements and to conduct an audit as required by ERISA and the Code. The Committee may approve such accounting on behalf of itself and the Company by an instrument in writing delivered to the Trustee. If the Committee does not file with the Trustee objections to any such accounting within sixty (60) days after its receipt, the Committee shall be deemed to have approved such accounting on behalf of itself and the Company. In such case, or upon the written approval of the Committee of any such accounting, the Trustee shall, to the extent permitted by law, be discharged from all liability to the Committee and the Company for its acts or failures to act described in such accounting. Except to the extent otherwise provided in ERISA, no person, other than the Company or the Committee, may require an accounting or bring any action against the Trustee with respect to the Trust Fund. The Trustee
Nothing contained in this Agreement or in the Plan shall deprive the Trustee of the right to have judicial settlement of its accounts. In any proceeding for a judicial settlement of the Trustee's accounts, or for instructions with regard to the Trust, the only necessary parties thereto in addition to the Trustee shall be the Committee. If the Trustee so elects, it may join as a party or parties any other person or persons.
The Sponsor shall certify to the Trustee the name of the entity, person, or persons from time to time constituting the Committee. All directions to the Trustee by the Committee shall be in writing, and the Trustee shall be entitled to rely without further inquiry upon all such written directions received from the Committee. The Committee shall in its sole discretion have the right to appoint such agents as it may deem necessary to carry out its duties pursuant to the provisions of the Plan and this Trust. If necessary or appropriate the Committee shall notify the Trustee in writing as to the identity and authority of any such agent, which notice shall be effective upon receipt by the Trustee and shall remain effective until notice of the termination of any such agent's authority is given to the Trustee.
The Trustee shall be entitled to receive such reasonable compensation for its services as may be agreed upon from time to time by the Sponsor and the Trustee. Unless paid by the Company, such compensation, attorneys' fees that were incurred with the Committee's approval in the administration of the Trust Fund, all taxes levied or assessed against the Trust Fund, and such other expenses as are incurred in the administration of the Trust Fund shall be paid from the Trust Fund.
The Trustee may resign at any time by giving thirty (30) days written notice to the Sponsor. An authorized officer of the Sponsor may remove the Trustee at any time by giving thirty (30) days written notice to the Trustee unless the Trustee shall accept as adequate a shorter notice. In the case of the resignation or removal of the Trustee, an authorized officer of the Sponsor shall appoint a successor trustee who shall have the same powers and duties as those conferred upon the Trustee. Upon the resignation or removal of the Trustee and the appointment of the successor trustee, the Trustee shall account for the administration of the Trust Fund up to the date of its resignation or removal in the manner provided in Article NINTH hereof and, upon the approval or deemed approval of such accounting, the Trustee shall transfer to the successor trustee all of the assets then constituting the Trust Fund and the Trustee shall to the maximum extent permitted by ERISA be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions; provided, however, that
An authorized officer of the Sponsor may amend all or any part of this
Agreement at any time provided, however, that any amendment shall not be
effective until the instrument of amendment has been agreed to and executed by
the Trustee. Any such amendment or modification of this Agreement may be
retroactive if necessary or appropriate to qualify or maintain the Trust Fund as
a part of a plan and trust exempt from federal income taxation under sections
401(a) and 501(a) of the Code, the provisions of ERISA, or any other applicable
provisions of federal or state law, as now in effect or hereafter amended or
adopted, and any regulations issued thereunder, including, without limitation,
any regulations issued by the United States Treasury Department, or the United
States Department of Labor.
Notwithstanding anything contained in this Article THIRTEENTH to the contrary, no amendment shall divert any part of the Trust Fund to, and no part of the Trust Fund shall be used for, any purpose other than for the exclusive purpose of providing benefits to Participants and their beneficiaries; provided, however, that nothing in this Article THIRTEENTH shall be deemed to limit or otherwise prevent the payment from the Trust Fund of expenses, other charges as provided in Article ELEVENTH, or as otherwise permitted by the Plan.
This Agreement and the Trust Fund hereby created may be terminated at any time by the Board of Directors of the Sponsor by written notice delivered to the Trustee. Upon receipt of such notice of termination, the Trustee shall, after payment of all expenses incurred in the administration of the Trust Fund and such compensation as the Trustee may be entitled to, and upon approval of the appropriate governmental or quasi-governmental authorities (if such approval shall be required under applicable law or desired by the Committee), then distribute the Trust Fund in cash or in kind to such persons or entities, including the Company, at such time and in such amounts as the Committee shall direct, which direction shall be in conformity with the provisions of the Plan and ERISA.
The Trustee or its agent may transfer all of the property representing a Participant's vested interest in the Plan to the trustees of any trust qualified under section 401(a) of the Code or to an individual retirement account. The Trustee or its agent may make such a transfer only at the direction of the Committee.
The Trustee may accept as part of the Trust Fund such property as is acceptable to the Trustee that represents a Participant's retirement benefits transferred from a trust qualified under
An affiliated entity of the Sponsor that has adopted the Plan in accordance with its terms shall become a party to this Agreement by delivering to the Sponsor and the Trustee a certified copy of a resolution of its board of directors or governing body to the effect that it agrees to adopt the Plan, to become a party to this Agreement, and to be bound by all the terms and conditions of the Plan and this Agreement. The Sponsor shall have the sole authority to enforce this Agreement on behalf of any such affiliated entity and the Trustee shall in no event be required to deal with any such affiliated entity except by dealing with the Company as its agent. Irrespective of the number of affiliated entities which may become parties to this Agreement, the Trustee shall in all respects invest and administer the Trust Fund as a single fund for investment and accounting purposes without allocation of any part of the Trust Fund as between the Sponsor and any such affiliated entity.
An affiliated entity that has adopted the Plan shall cease to be a party to this Agreement upon the Sponsor delivering to the Trustee a certified copy of a resolution of such affiliated entity's board of directors or governing body terminating its participation in the Plan. In such event, or in the event of the merger, consolidation, sale of property or stock, separation, reorganization or liquidation of the Sponsor or of any such affiliated entity, or in the event of the establishment, modification or continuance of any other retirement plan that separately or in conjunction with this Plan qualifies under section 401(a) of the Code, the Trustee shall continue to hold the portion of the Trust Fund that is attributable to the participation in the Plan of the employees and their beneficiaries affected by such termination or by such transaction, and this Agreement shall continue in force with respect to such portion, until otherwise directed by the Committee, in accordance with the provisions of the Plan and ERISA.
No interest in the Trust Fund shall be assignable or subject to anticipation, sale, transfer, mortgage, pledge, charge, garnishment, attachment, bankruptcy or encumbrance or levy of any kind, and the Trustee shall not recognize any attempt to assign, sell, transfer, mortgage, pledge, charge, garnish, attach or otherwise encumber the same except to the extent that such attempt is made pursuant to a court order determined by the Committee to be a qualified domestic relations order, as defined in section 414 of the Code and section 206 of ERISA, or as otherwise required by law.
The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Agreement except as required by law.
This Agreement shall be binding upon the respective successors and assigns of the Company and the Trustee. Any corporation that shall, by merger, consolidation, purchase or otherwise, succeed to substantially all the trust business of the Trustee shall, upon such succession, and without any appointment or other action by any person, be and become successor Trustee hereunder.
If any provision of this Agreement is held to be invalid, such invalidity shall not affect the remaining provisions of the Agreement and they shall be construed and enforced as if such invalid provisions had never been inserted therein.
Communications to the Sponsor or the Committee shall be addressed to the Sponsor, or to the Committee in care of the Sponsor, as the case may be, Mr. Kevin Wilcox, Director, Corporate Employee Benefits, Allergan, Inc., 2525 Dupont Drive, Irvine, CA 92612-1599 (or his/her successor); provided, however, that upon the Sponsor's written request such communications shall be sent to such other address as the Sponsor may specify.
Communications to the Trustee shall be addressed to: UMB Bank, N.A., Employee Benefit Division, 1010 Grand Avenue, P.O. Box 419692, Kansas City, MO 64141-6692; provided, however, that upon the Trustee's written request, such communications shall be sent to such other address as the Trustee may specify. No communication shall be binding on the Trustee until it is received by the Trustee.
This Agreement shall be construed in accordance with ERISA and, to the extent not preempted by ERISA, the laws of the State of Missouri.
By: /s/ Francis R. Tunney, Jr.
--------------------------------
Title: Corporate Vice President--
Administration, General Counsel and
Secretary
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ATTEST:
Title:
(Corporate Seal)
By: /s/ William A. Hann
--------------------------------
Title: Senior Vice President
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A new Section 8.5 is hereby added to read as follows:
"8.5. Special Death Benefits for Corporate Officers. A Special Death Benefit shall be payable to the Beneficiary of a Participant who dies prior to termination of employment and who is a Corporate Officer of Allergan, Inc. on the date of his or her death. The term "Corporate Officer" means, as of January 1, 2000, the Corporation's President, Chief Executive Officer and each of the Corporation's Corporate Vice Presidents. The Corporation's Board of Directors may change the definition of Corporate Officer hereafter by Board resolution. The Special Death Benefit shall be One Million Five Hundred Thousand Dollars ($1,500,000), unless such amount is adjusted by the Board, and such amount shall be in addition to the death benefit that is described in Section 8.1 and Section 8.2. Entitlement to the Special Death Benefit shall be conditioned on (a) the Committee's determination that the Participant has complied with all requests required by the insurer which issues the life insurance described in Section 15.3, including naming the Beneficiary, (b) such life insurance being in effect on the date of death and providing death benefits in an amount sufficient to cover the Special Death Benefit hereunder, and (c ) the Committee's determination that the Participant is a Corporate Officer of Allergan, Inc., on the date of his or her death."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument evidencing the above terms of the Allergan, Inc. Executive Deferred Compensation Plan effective as of January 1, 2000.
By: /s/ Francis R. Tunney, Jr.
---------------------------------
Title: Secretary
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ARTICLE 5
MULTIPLIER: 1,000
PERIOD TYPE
3 MOS
FISCAL YEAR END
DEC 31 2000
PERIOD START
APR 01 2000
PERIOD END
JUN 30 2000
CASH
302,400
SECURITIES
0
RECEIVABLES
289,900
ALLOWANCES
6,900
INVENTORY
120,700
CURRENT ASSETS
834,000
PP&E
632,500
DEPRECIATION
297,200
TOTAL ASSETS
1,470,200
CURRENT LIABILITIES
383,600
BONDS
0
PREFERRED MANDATORY
0
PREFERRED
0
COMMON
1,300
OTHER SE
746,400
TOTAL LIABILITY AND EQUITY
1,470,200
SALES
404,100
TOTAL REVENUES
417,900
CGS
112,200
TOTAL COSTS
125,200
OTHER EXPENSES
50,900
LOSS PROVISION
167
INTEREST EXPENSE
5,500
INCOME PRETAX
74,300
INCOME TAX
22,300
INCOME CONTINUING
51,900
DISCONTINUED
0
EXTRAORDINARY
0
CHANGES
0
NET INCOME
51,900
EPS BASIC
0.40
EPS DILUTED
0.39