As filed with the Securities and Exchange Commission on September 18, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
PATHOGENESIS CORPORATION
AND
PATHOGENESIS CORPORATION 401(K) PROFIT SHARING PLAN
(as Co-Registrants)
(Exact name of Company as specified in its charter)
DELAWARE 91-1542150
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
201 ELLIOTT AVENUE WEST
SEATTLE, WASHINGTON 98119
(Address of Company's Principal Executive Offices)
---------------
PATHOGENESIS CORPORATION 401(K) PROFIT SHARING PLAN
(Full Title of the Plan)
CAMERON S. AVERY COPIES TO:
GENERAL COUNSEL WOON-WAH SIU
PATHOGENESIS CORPORATION BELL, BOYD & LLOYD
5215 OLD ORCHARD ROAD, SUITE 900 THREE FIRST NATIONAL PLAZA, SUITE 3300
SKOKIE, ILLINOIS 60077 CHICAGO, ILLINOIS 60602
(847) 583-8050 (312) 372-1121
(Name, Address, and Telephone Number,
Including Area Code, of Agent For Service)
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CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share 30,000 Shares(1) $28.1875(2) $845,625(2) $250.00(2)
- ---------------------------------------------------------------------------------------------------------------
Interests in the Plan (3)
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<FN>
(1) Estimated maximum aggregate number of shares of Common Stock of
PathoGenesis Corporation purchasable with participant contributions under
the PathoGenesis Corporation 401(k) Profit Sharing Plan (the "Plan") in the
next 36 months. Also includes the associated Preferred Stock Purchase
Rights evidenced by certificates of shares of Common Stock that
automatically trade with such Common Stock.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of 1933
(the "Securities Act") solely for purposes of calculating the registration
fee and based upon the average of the high and low sale prices of the
Common Stock on the Nasdaq National Market on September 11, 1998, as
reported in The Wall Street Journal (Midwest Edition).
(3) Pursuant to Rule 416(c) under the Securities Act, this registration
statement covers an indeterminate amount of interests to be offered or sold
pursuant to the PathoGenesis Corporation 401(k) Profit Sharing Plan
described herein.
</FN>
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be included herewith.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be included herewith.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
This registration statement on Form S-8 relates to the registration of
an indeterminate number of interests in the PathoGenesis Corporation 401(k)
Profit Sharing Plan (the "Plan") pursuant to which participants in the Plan may
have the Plan purchase, in the open market, shares of common stock, par value
$.001 per share (the "Common Stock"), of PathoGenesis Corporation (the
"Company").
The following documents previously filed by the Company with the
Securities and Exchange Commission are incorporated herein by reference:
(a) The Company's annual report on Form 10-K for the fiscal
year ended December 31, 1997 (File No. 0-27150).
(b) The Company's quarterly reports on Form 10-Q for the
quarters ended March 31, 1998, as amended by Amendment No. 1 on Form
10-Q/A, and June 30, 1998 (File No. 0-27150).
(c) The description of the Company's Common Stock set forth
under the caption "Description of Capital Stock -Common Stock" in the
Company's prospectus constituting a part of the registration statement
on Form S-1 (Reg. No. 333-22297), filed on February 25, 1997; and
(d) The description of the Company's Preferred Stock Purchase
Rights (the "Rights") in the Company's registration statement on Form
8-A filed on July 10, 1997, for the registration of the Rights under
Section 12(g) of the Securities Exchange Act of 1934 (File No.
0-27150).
All reports and other documents subsequently filed by the Company and
the Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, prior to the filing of a post-effective amendment which
indicates that all of the securities offered hereby have been sold or which
deregisters all of such securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference in this
registration statement shall be deemed to be modified or superseded for purposes
of this registration statement to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
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ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a
Delaware corporation to indemnify any director or officer against expenses,
judgments, fines and settlements actually and reasonably incurred by such person
in connection with any action, suit or proceeding, if such director or officer
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful, except that no indemnification shall be made in connection
with any action by or in the right of the corporation if such person is adjudged
to be liable to the corporation, unless the court determines that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expense that the court shall deem proper. Said section
further provides that to the extent that any such person is successful on the
merits or otherwise in defense of any action such director or officer shall be
indemnified against expenses actually and reasonably incurred by him or her. In
addition, a Delaware corporation is authorized to purchase insurance on behalf
of its directors and officers against liabilities whether or not in the
circumstances the corporation would have the power to indemnify against such
liabilities under said section.
The Company's Amended and Restated Certificate of Incorporation
provides for indemnification of the Company's directors, officers, employees and
agents, to the fullest extent permitted by the Delaware General Corporation Law,
against all expense, liability and loss reasonably incurred or suffered by each
such person in connection with any action, suit, or proceeding to which such
person was or is made a party or is threatened to be made a party by reason of
the fact that such person is a director, officer, employee or agent of the
Company; provided, however, except as provided in the Amended and Restated
Certificate of Incorporation with respect to proceedings to enforce rights to
indemnification, the Company shall indemnify any such person in connection with
a proceeding initiated by such person only if the proceeding was authorized by
the board of directors of the Company. The Company has obtained directors and
officers insurance covering its directors and executive officers.
The Company's Amended and Restated Certificate of Incorporation
eliminates, to the fullest extent permitted by Delaware law, liability of a
director to the Company or its stockholders for monetary damages for breach of
the director's fiduciary duty of care except for liability where the director
(a) breaches his or her duty of loyalty to the Company or its shareholders, (b)
fails to act in good faith or engages in intentional misconduct or knowing
violation of law, (c) authorizes a payment of an illegal dividend or stock
repurchase, or (d) obtains an improper personal benefit. While liability for
monetary damages has been eliminated, equitable remedies such as injunctive
relief or rescission remain available. In addition, a director is not relieved
of his or her responsibilities under any other law, including the federal
securities laws.
Insofar as indemnification by the Company for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The exhibits to this registration statement are listed in the Exhibit
Index which appears elsewhere in this registration statement and is hereby
incorporated by reference.
2
<PAGE>
The Company hereby undertakes that it will submit or has submitted the
Plan and any amendment thereto to the Internal Revenue Service in a timely
manner and has made or will make all changes required by the Internal Revenue
Service in order to qualify the Plan under Section 401 of the Internal Revenue
Code of 1986, as amended.
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c)-(g) Not applicable.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter
3
<PAGE>
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(i)-(j) Not applicable.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Skokie, State of Illinois, on September 17, 1998.
PATHOGENESIS CORPORATION
By /S/ ALAN R. MEYER
--------------------------------
Alan R. Meyer
Executive Vice President
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<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<S> <C> <C>
/S/ ALAN R. MEYER Executive Vice President, Chief September 17, 1998
- --------------------------------------
Alan R. Meyer Financial Officer and Director
(Principal Financial and
Accounting Officer)
WILBUR H. GANTZ Chairman, Chief Executive Officer, )
- --------------------------------------
President and Director )
(Principal Executive Officer) )
)
JOHN GORDON Director )
- --------------------------------------
)
)
ELIZABETH M. GREETHAM Director ) By:/S/ ALAN R. MEYER
- -------------------------------------- -----------------
) Alan R. Meyer
) Attorney-in-Fact
) September 17, 1998
)
)
ARTHUR W. NIENHUIS Director )
- --------------------------------------
)
)
TALAT M. OTHMAN Director )
- --------------------------------------
)
)
EUGENE L. STEP Director )
- --------------------------------------
)
)
FRED WILPON Director )
- --------------------------------------
</TABLE>
(Being the principal executive officer, the principal financial and accounting
officer and a majority of the directors of PathoGenesis Corporation.)
ORIGINAL POWERS OF ATTORNEY AUTHORIZING WILBUR H. GANTZ OR ALAN R.
MEYER TO EXECUTE THIS REGISTRATION STATEMENT, AND ANY AMENDMENT THERETO, FOR
EACH OF MS.
5
<PAGE>
GREETHAM AND MESSRS. GANTZ, GORDON, MEYER, NIENHUIS, OTHMAN, STEP AND WILPON
HAVE BEEN EXECUTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
Pursuant to the requirements of the Securities Act of 1933,
PathoGenesis Corporation, which administers the Plan, has duly caused this
registration statement to be signed on the Plan's behalf by the undersigned,
thereunto duly authorized, in the Village of Skokie, State of Illinois, on
September 17, 1998.
PATHOGENESIS CORPORATION
401(K) PROFIT SHARING PLAN
By: PATHOGENESIS CORPORATION
Plan Administrator
By: /S/ ALAN R. MEYER
----------------------
Alan R. Meyer
Executive Vice President and
Chief Financial Officer
6
INDEX TO EXHIBITS
The following are filed as part of this registration statement.
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
4.1 Composite Certificate of Incorporation of the
Company, as amended through July 7, 1997
(incorporated reference to Exhibit 3.1(d) of the
Company's quarterly report on Form 10-Q
for the three months ended March 31, 1998,
File No. 0-27150).
4.1(a) Amended and Restated Certificate of Incorporation
of the Company (incorporated by reference to
Exhibit 3.1 to the Company's registration statement
on Form S-1, Registration No. 333-22297).
4.1(b) Certificate of Amendment of Amended and Restated
Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1(b) to the
Company's registration statement on Form S-8,
Registration No. 333-45571).
4.2 By-laws of the Company, as amended through January
30, 1998 (incorporated by reference to Exhibit 3.2
to the Company's annual report on Form 10-K for
1997, file No. 0-27150).
4.3 Certificate of Designations (incorporated by
reference to Exhibit 4.1(b) to the Company's
registration statement on Form S-8, Registration No.
333-45571).
4.4 Rights Agreement, dated as of June 26, 1997,
between the Company and Harris Trust and
Savings Bank as Rights Agent (incorporated by
reference to Exhibit No. 1 to the
Company's registration statement on Form 8-A,
File No. 0-27150).
4.4(a) First Amendment, dated as of March 8, 1998, to
Rights Agreement between the Company and
Harris Trust and Savings Bank, as Rights Agent
(incorporated by reference to Exhibit
4.1(bb) to the Company's annual report on
Form 10-K for 1997, file No. 0-27150).
4.6 PathoGenesis Corporation 401(k) Profit Sharing Plan.
4.7 Trust Agreement, dated as of April 1, 1998,
between the Company and Wilmington Trust Company,
as Trustee.
23.1 Consent of KPMG Peat Marwick LLP.
24 Original Powers of Attorney authorizing
Wilbur H. Gantz or Alan R. Meyer to execute this
registration statement.
7
EXHIBIT 4.6
PATHOGENESIS CORPORATION
401(K) PROFIT SHARING PLAN
(Amended and Restated Effective as of July 1, 1998)
<PAGE>
PATHOGENESIS CORPORATION
401(K) PROFIT SHARING PLAN
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Table of Contents
Article Page
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I Introduction.............................................................................................1
1.1 The Plan........................................................................................1
1.2 Type of Plan....................................................................................1
1.3 Plan Objectives.................................................................................1
1.4 Exclusive Benefit...............................................................................1
1.5 Funding.........................................................................................1
1.6 Sponsor and Employers...........................................................................1
1.7 Effective Date..................................................................................1
II Definitions and Rules of Interpretation..................................................................3
2.1 Definitions.....................................................................................3
Account .......................................................................................3
Account Balance.................................................................................3
Accounting Date.................................................................................3
Active Participant..............................................................................3
Administrator...................................................................................3
Affiliate.......................................................................................3
Alternate Payee.................................................................................3
Anniversary Date................................................................................3
Beneficiary.....................................................................................3
Board .......................................................................................3
Code .......................................................................................4
Collective Bargaining Agreement.................................................................4
Compensation....................................................................................4
Computation Period..............................................................................4
Contribution....................................................................................4
Contribution Percentage.........................................................................5
Deferral Percentage.............................................................................5
DOL Regulations or DOL Reg......................................................................5
Effective Date..................................................................................5
Eligible Employee...............................................................................5
Employee .......................................................................................5
Employer .......................................................................................5
Employment Commencement Date....................................................................5
Entry Date......................................................................................5
ERISA .......................................................................................6
Forfeiture......................................................................................6
401(k) Compensation.............................................................................6
i
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415 Affiliate...................................................................................6
415 Compensation................................................................................6
Highly Compensated ADP..........................................................................6
Highly Compensated ACP..........................................................................6
Highly Compensated Employee.....................................................................6
Hour of Service.................................................................................7
Inactive Participant............................................................................8
Key Employee....................................................................................8
Leased Employee.................................................................................9
Leave of Absence...............................................................................10
Limitation Year................................................................................10
Maximum ACP....................................................................................10
Maximum ADP....................................................................................10
Non-Highly Compensated ADP.....................................................................11
Non-Highly Compensated ACP.....................................................................11
Non-Highly Compensated Employee................................................................11
Non-Key Employee...............................................................................11
Normal Retirement Age..........................................................................11
Participant....................................................................................11
Period of Service..............................................................................11
Period of Severance............................................................................11
Permanent Disability...........................................................................11
Plan ......................................................................................12
Plan Year......................................................................................12
Qualified Domestic Relations Order.............................................................12
Re-Employment Commencement Date................................................................12
Sponsor ......................................................................................12
Termination of Employment......................................................................12
Top-Heavy Determination Date...................................................................13
Top-Heavy Year.................................................................................13
Treasury Regulations or Treas. Reg.............................................................14
Trust ......................................................................................14
Trust Agreement................................................................................14
Trustee ......................................................................................14
Vested ......................................................................................14
2.2 Conformance with Code and ERISA................................................................15
2.3 Gender and Number; Effect of Titles............................................................15
III Computation of Service..................................................................................16
3.1 Method of Computation..........................................................................16
3.2 Computation of Service under the Elapsed Time Method...........................................16
3.3 Service with Predecessor Employers.............................................................17
ii
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IV Participation...........................................................................................18
4.1 Requirements for Participation.................................................................18
4.2 Determination of Entry Date....................................................................18
4.3 Cessation and Resumption of Active Participation...............................................18
V Amount and Allocation of Contributions..................................................................19
5.1 Salary Deferral Contributions..................................................................19
5.2 Matching Contributions.........................................................................19
5.3 Profit-Sharing Contributions...................................................................20
5.4 Rollover Contributions.........................................................................20
5.5 Qualified Nonelective Contributions............................................................21
5.6 Minimum Contribution in Top-Heavy Years........................................................21
5.7 Other Required Contributions...................................................................21
VI Limits on Contributions.................................................................................22
6.1 Limit on Annual Additions......................................................................22
6.2 Limit on Salary Deferral Contributions.........................................................23
6.3 Actual Deferral Percentage Limitation..........................................................24
6.4 Actual Contribution Percentage Limitation......................................................25
6.5 Limit on Deductible Contributions..............................................................27
6.6 Purpose of Limitations; Authority of Administrator.............................................27
VII Investments and Plan Accounting.........................................................................28
7.1 Participant Accounts...........................................................................28
7.2 Adjustments to Accounts........................................................................28
7.3 Separate Fund Accounting.......................................................................29
7.4 Participant-Directed Accounts..................................................................30
VIII Vesting and Forfeiture..................................................................................31
8.1 Accounts That Are Always Fully Vested..........................................................31
8.2 Vesting on Retirement..........................................................................31
8.3 Vesting at Death...............................................................................31
8.4 Other Termination of Employment................................................................31
8.5 Forfeitures....................................................................................32
IX Payment of Benefits.....................................................................................34
9.1 Methods of Benefit Payment.....................................................................34
9.2 Distributions upon Termination of Employment...................................................34
9.3 Payments after a Participant's Death...........................................................35
9.4 Purpose of Limitations; Authority of Administrator.............................................36
9.5 Direct Transfers...............................................................................36
9.6 Missing Participants and Beneficiaries.........................................................37
9.7 Payment With Respect to Incapacitated Participants or Beneficiaries............................37
9.8 Limitation on Liability for Distributions......................................................37
9.9 Withdrawals....................................................................................37
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9.10 Loans..........................................................................................39
X Plan Administration.....................................................................................41
10.1 General Fiduciary Standard of Conduct..........................................................41
10.2 Allocation of Responsibility Among Fiduciaries.................................................41
10.3 Administrator..................................................................................41
10.4 Powers and Duties of Administrator.............................................................41
10.5 Committee......................................................................................42
10.6 Compensation and Expenses......................................................................43
10.7 Indemnification by Employers...................................................................43
10.8 Service in Multiple Capacities.................................................................43
10.9 Claims Procedure...............................................................................43
10.10 Qualified Domestic Relations Orders............................................................44
XI Amendment, Termination or Merger of Plan................................................................45
11.1 Amendment......................................................................................45
11.2 Termination....................................................................................45
11.3 Continuation by a Successor or Purchaser.......................................................46
11.4 Plan Merger or Consolidation...................................................................46
XII General Provisions......................................................................................47
12.1 No Employment Guarantee........................................................................47
12.2 Nonalienation of Plan Benefits.................................................................47
12.3 Action By Sponsor Or Employer..................................................................47
12.4 Applicable Law.................................................................................47
12.5 Participant Litigation.........................................................................47
12.6 Participant and Beneficiary Duties.............................................................47
12.7 Adequacy of Evidence...........................................................................48
12.8 Notice to Participants and Beneficiaries.......................................................48
12.9 Waiver of Notice...............................................................................48
12.10 Successors.....................................................................................48
12.11 Severability...................................................................................48
12.12 Nonreversion...................................................................................48
iv
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PATHOGENESIS CORPORATION
401(K) PROFIT SHARING PLAN
(Amended and Restated Effective July 1, 1998)
ARTICLE I
INTRODUCTION
1.1 The Plan. The following provisions constitute the PathoGenesis
Corporation 401(k) Profit-Sharing (the "Plan") as amended and restated effective
July 1, 1998. The Plan was originally adopted effective January 1, 1994.
1.2 Type of Plan. For purposes of ss.401(a)(27) of the Code, the Plan
is designated as a profit-sharing plan that includes a cash or deferred
arrangement qualified under ss.401(k) of the Code.
1.3 Plan Objectives. The Plan is maintained by the Employers in order
to stimulate interest and initiative and increase efficiency among Participants
and to assist in providing Participants with retirement benefits.
1.4 Exclusive Benefit. The Plan is for the exclusive benefit of the
Participants and their Beneficiaries. No portion of the funds contributed to the
Plan shall ever revert to or be applied for the benefit of the Employers, except
as specifically permitted herein.
1.5 Funding. In order to fund the benefits provided under the Plan, the
Sponsor has established the Trust pursuant to the Trust Agreement. All benefits
under the Plan shall be provided exclusively by distributions from the Trust.
The Sponsor (as defined in Section 1.6) shall have the authority to replace the
Trustee of the Trust at any time, or to establish additional Trusts to fund
benefits under the Plan. Benefits under the Plan may also, in the Sponsor's
discretion, be provided by the purchase of insurance contracts, and in such
event the term Trust shall also include the Plan's interest in such insurance
contracts.
1.6 Sponsor and Employers. The sponsor of the Plan (the "Sponsor") is
PathoGenesis Corporation. With the approval of the Sponsor, the Plan may be
adopted for the benefit of its Employees by any Affiliate or any other business
entity in which the Sponsor or an Affiliate has a substantial interest. The
business entities which adopt the Plan, including the Sponsor, are referred to
in the Plan as the "Employers." As of the Effective Date, the only Employer
other than the Sponsor is PathoGenesis Limited.
1.7 Effective Date. The Effective Date of the Plan as hereby amended
and restated shall be July 1, 1998, except as otherwise provided herein. The
rights of a Participant who incurred a Termination of Employment prior to the
Effective Date, or of a Beneficiary of such a Participant, shall, except as
otherwise provided herein, be determined by the terms of the Plan as in effect
as of the date on which the Termination of Employment occurred. Notwithstanding
the foregoing,
(a) the computation of Service for vesting purposes under the elapsed time
method shall be effective on the date on which this amendment and
restatement is approved by the Board, but any Employee who, as of such
date, had completed at least three Years of Service, as defined under
the Plan immediately prior to such date, shall have the Vested portion
of his Account determined under either the elapsed time method or the
<PAGE>
hours of service method in effect immediately prior to such date,
whichever method produces the larger Vested portion;
(b) a Participant who terminates employment after attaining his Early
Retirement Age as defined under the Plan as in effect immediately
prior to the Effective Date shall be entitled to retire and receive
the full amount of his Account Balance determined as of the Effective
Date distributed in accordance with the terms of the Plan as in effect
immediately prior to the Effective Date; and
(c) any provision of the Plan that is required to have an earlier
effective date in order to preserve the qualified status of the Plan
under ss.401(a) of the Code or any Treasury Regulation shall be
effective as of such earlier date.
<PAGE>
ARTICLE II
DEFINITIONS AND RULES OF INTERPRETATION
2.1 Definitions. As used in this Plan, capitalized terms shall have the
meaning set forth below:
Account. All of the separate accounts maintained under the Plan for the
benefit of a Participant as provided in Section 7.1 The term "Account" shall
not, unless otherwise specifically provided herein, include the Section 415
Suspense Account, if any, established pursuant to Section 6.1.
Account Balance. The total amount held for the benefit of a Participant
in his Account (or in the specific separate Account referred to), as determined
on the coincident or immediately preceding Accounting Date in accordance with
the provisions of Article VII.
Accounting Date. Each Anniversary Date and each other date upon which
Account Balances are adjusted in accordance with Article VII.
Active Participant. Any Eligible Employee who participates in the Plan
as provided in Article IV, while he remains an Eligible Employee.
Administrator. The Sponsor or such other corporation or person (or
persons) appointed to administer the Plan pursuant to the provisions of Section
10.3.
Affiliate. Any business entity that is either:
(a) a corporation that is a member of the same controlled group of
corporations, as defined in ss.414(b) of the Code, as an Employer;
(b) a trade or business, whether or not incorporated, that is under
common control with an Employer within the meaning of ss.414(c) of the Code;
(c) a member of the same affiliated service group, as defined in
ss.414(m) of the Code, as an Employer; or
(d) otherwise required to be aggregated with an Employer pursuant to
Treasury Regulations issued under ss.414(o) of the Code, but that is not itself
an Employer.
Alternate Payee. A spouse, former spouse, child or other dependent of a
Participant entitled to receive a portion of such Participant's Account under a
Qualified Domestic Relations Order.
Anniversary Date. The last day of each Plan Year.
Beneficiary. Any person, including a trust or other entity, entitled to
receive any benefits which may become payable upon or after a Participant's
death.
Board. The board of directors of the Sponsor.
<PAGE>
Code. The Internal Revenue Code of 1986, as now in effect or as
hereafter amended, and any regulation, ruling or other administrative guidance
issued pursuant thereto by the Internal Revenue Service.
Collective Bargaining Agreement. A bona fide agreement that the
Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and an Employer or Affiliate, provided that not more
than 50 percent of the Employees covered by such agreement are officers, owners
or executives of the Employer or Affiliate as determined under ss.7701(a)(46) of
the Code.
Compensation.
(a) General Rule. Except as otherwise provided below, an Employee's
Compensation for a Plan Year shall mean all amounts paid or made available to
the Employee by all Employers during the Plan Year for services as an Active
Participant that either (i) constitute wages as defined by ss.3401(a) of the
Code for purposes of income tax withholding, but determined without regard to
any rules that limit the remuneration included in wages based upon the nature or
location of employment or the services performed, or (ii) are otherwise required
to be reported on Form W-2 (or such other form as may be prescribed pursuant to
ss.6041(d) and ss.6051(a)(3) of the Code).
(b) Treatment of Salary Deferral Contributions. Notwithstanding the
foregoing, an Employee's Compensation shall include any: elective contributions
excluded from income under ss.125 of the Code (relating to cafeteria plans),
ss.402(e)(3) of the Code (relating to 401(k) plans), or ss.402(h) of the Code
(relating to simplified employee pension plans).
(c) Certain Exclusions. The following items shall be excluded from a
Participant's Compensation even if otherwise included under paragraph (a):
(i) Reimbursements or other expense allowances, fringe benefits (cash or
noncash), moving expenses, deferred compensation (except as otherwise
provided in paragraph (b)), or welfare benefits,
(ii) Amounts realized upon the grant or exercise of stock or stock options,
or from the sale or other disposition of stock received in
compensation or upon the exercise of a stock option, or
(iii) Discretionary bonuses or incentive compensation, including hiring
bonuses, PathWays merit awards, Employee Referral Awards, and similar
amounts.
(d) Annual Limit on Compensation. An Employee's Compensation for any
Plan Year shall not exceed $160,000, as adjusted pursuant to ss.401(a)(17) of
the Code. For purposes of computing the Salary Deferral Contributions withheld
from a Participant whose Compensation exceeds such limit, all Compensation paid
to the Participant during the period during which he has elected to have Salary
Deferral Contributions withheld shall be taken into account until the total
Compensation taken into account equals such limit.
Computation Period. A twelve-month period used in computing an
Employee's Service, as determined under Section 3.1.
Contribution. An amount contributed to the Plan by an Employer or a
Participant in accordance with Article V.
<PAGE>
Contribution Percentage. The total amount of Matching Contributions and
Qualified Nonelective Contributions (to the extent provided in Section 6.4)
allocated to an Active Participant with respect to a Plan Year expressed as a
percentage of such Active Participant's 401(k) Compensation for such Plan Year
and calculated to the nearest one-hundredth of a percentage point. The
Contribution Percentage of an Active Participant who receives no such
Contributions shall be zero. If an Active Participant is eligible to receive any
such contributions under any other plan maintained by an Employer or Affiliate
(other than a plan which cannot be aggregated with the Plan under ss.410(b) of
the Code), his Contribution Percentage shall include the contributions and
compensation as determined under such other plan.
Deferral Percentage. The total amount of Salary Deferral Contributions
and Qualified Nonelective Contributions (to the extent provided in Section 6.3)
allocated to an Active Participant with respect to a Plan Year expressed as a
percentage of such Active Participant's 401(k) Compensation for such Plan Year
and calculated to the nearest one-hundredth of a percentage point. The Deferral
Percentage of an Active Participant who receives no such Contributions shall be
zero. If an Active Participant is eligible to receive any such contributions
under any other plan maintained by an Employer or Affiliate (other than a plan
which cannot be aggregated with the Plan under ss.410(b) of the Code), his
Deferral Percentage shall include the contributions and compensation as
determined under such other plan.
DOL Regulations or DOL Reg. Regulations, including proposed and
temporary regulations, issued by the Department of Labor interpreting ERISA and
codified at Title 29 of the Code of Federal Regulations. Where a reference is
made to temporary or proposed regulations, such reference shall include any
permanent regulations, modified proposed or temporary regulations, issued in
lieu thereof.
Effective Date. The date on which this amendment and restatement of the
Plan is generally effective, as provided in Section 1.7.
Eligible Employee. All Employees who are employed by an Employer except
that the term Eligible Employee shall not include Leased Employees, Employees
covered by a Collective Bargaining Agreement in which retirement benefits were
the subject of good faith bargaining, unless such Collective Bargaining
Agreement provides for such Employees to participate in the Plan, nonresident
aliens who receive no earned income (as defined in ss.911(d)(2) of the Code)
from an Employer which constitutes income from sources within the United States
(as defined in ss.861(a)(3) of the Code), or persons who are retained as
independent contractors but who are subsequently determined to be employees in
the common law sense for purposes of any federal or state tax or employment law.
Employee. Any person who is an employee in the common law sense of an
Employer or an Affiliate, or who is a Leased Employee with respect to an
Employer or Affiliate.
Employer. The Sponsor and any other business entity that adopts the
Plan with the consent of the Sponsor for the benefit of its Employees pursuant
to Section 1.6. A singular reference to an "Employer" shall be understood to be
a reference to any Employer individually, except where the context is
inconsistent with such interpretation.
Employment Commencement Date. The day on which an Employee first
performs an Hour of Service for an Employer or Affiliate.
Entry Date. The date upon which an Eligible Employee becomes a
Participant as provided in Section 4.2.
<PAGE>
ERISA. The Employee Retirement Income Security Act of 1974, as now in
effect or as hereafter amended, and any regulation, ruling or other
administrative guidance issued pursuant thereto by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corporation.
Forfeiture. The portion of a Participant's Account that exceeds the
Vested portion when he incurs a Termination of Employment, or at such other time
as provided in the Plan.
401(k) Compensation. A Participant's Compensation for a Plan Year
determined without regard to the exclusions in paragraph (c) of the definition
of Compensation.
415 Affiliate. A business entity that either is an Affiliate, or would
be an Affiliate if ss.414 of the Code were modified in the manner provided
by ss.415(h) of the Code.
415 Compensation. All amounts paid or made available by an Employer or
415 Affiliate to an Employee that would constitute Compensation under paragraph
(a) or (b) of the definition of Compensation if paid to an Active Participant by
an Employer, without regard to the other paragraphs of such definition, whether
or not included in the Participant's Compensation.
Highly Compensated ADP. The average of the Deferral Percentages of all
Highly Compensated Employees who are Active Participants for a Plan Year,
including those whose Deferral Percentage is zero.
Highly Compensated ACP. The average of the Contribution Percentages of
all Highly Compensated Employees who are Active Participants for a Plan Year,
including those whose Contribution Percentage is zero.
Highly Compensated Employee.
(a) General Rule. Except as otherwise provided in this Section, an
Employee shall be considered a Highly Compensated Employee for any Plan Year
beginning with the Plan Year commencing January 1, 1997, if he either:
(i) at any time during the Plan Year or the immediately preceding Plan
Year owned more than five percent, by voting power or value, of the
outstanding stock of an Employer or Affiliate that is a corporation,
or owned more than five percent of the capital or profits interest in
an Employer or Affiliate that is not a corporation; or
(ii) in the immediately preceding Plan Year received 415 Compensation in
excess of $80,000 (as adjusted pursuant to ss.414(q)(1) of the Code
for the preceding Plan Year) and, if the Administrator so elects, was
a member for such preceding Plan Year of the highest-paid group
described in paragraph (b).
(b) Highest-Paid Group. For any Plan Year, the highest-paid group
described in this paragraph (b) shall consist of the group consisting of the top
20 percent of Employees when ranked on the basis of 415 Compensation paid during
such Plan Year. For purposes of this paragraph (b), there shall be excluded
Employees who have not completed six months of service, Employees who normally
work less than 17 1/2 Hours of Service per week, Employees who normally work
during not more than six months during any Plan Year; Employees who have not
attained the age of 18. The Administrator may elect to exclude Employees who are
described in
<PAGE>
paragraph (a)(ii) but who are not in the highest-paid group in any Plan Year
by adopting a resolution making such resolution, which shall be considered an
amendment to the Plan, and such election shall apply to all succeeding Plan
Years until the Administrator adopts a resolution revoking such election.
(c) Former Employees. A former Employee shall be treated as Highly
Compensated Employee if he was a Highly Compensated Employee (based on the
definition in effect at such time) either when his employment was terminated or
at any time after attaining age 55.
(d) Nonresident Aliens. A nonresident alien who receives no earned
income (within the meaning of ss.911(d)(2) of the Code) which constitutes income
from sources within the United States (within the meaning of ss.861(a)(3) of the
Code) from an Employer or Affiliate during any Plan Year shall not be considered
an Employee for such Plan Year for any purpose of this Section.
(e) Purpose. The purpose of this Section is to conform to the
definition of "highly compensated employee" set forth in ss.414(q) of the Code,
as now in effect or as hereafter amended, which is incorporated herein by
reference, and to the extent that this Section shall be inconsistent with
ss.414(q) of the Code, either by excluding Employees who would be classified as
"highly compensated employees" thereunder or by including Employees who would
not be so classified, the provisions of ss. 414(q) of the Code shall govern and
control. The Administrator may make or revoke any elective adjustment to the
definition of Highly Compensated Employee permitted by ss.414(q) of the Code or
any regulations, revenue procedures, or other guidance issued thereunder.
Hour of Service. Each Employee shall be credited with an Hour of
Service for:
(a) General Rule. Each hour for which he is directly or indirectly paid
or entitled to payment by an Employer or Affiliate for the performance of
duties. These hours shall be credited to the Employee for the computation period
(or periods) during which the duties are performed. An Employee whose employer
does not have records which would permit it to accurately determine the actual
number of Hours of Service performed by such Employee shall be credited with the
following number of Hours of Service for each payroll period during which he
completes at least one Hour of Service, based upon the payroll period for which
the Employee is compensated:
(i) 45 Hours of Service for each weekly payroll period;
(ii) 90 Hours of Service for each bi-weekly payroll period;
(iii) 95 Hours of Service for each semi-monthly payroll period; or
(iv) 190 Hours of Service for each monthly payroll period.
Hours of Service credited to a payroll period which includes an Anniversary
Date shall be credited entirely to the Plan Year that includes the last day
of such payroll period. An Employee who is not compensated on the basis of a
regular payroll period shall be credited with 10 Hours of Service for each
day on which he completes at least one Hour of Service.
(b) Periods During Which No Services are Performed. Except as provided
in paragraph (c) below, each hour (up to a maximum of 501 hours in any one
continuous period) for which he is directly or indirectly paid or entitled to
payment by an Employer or Affiliate on account of a period during which no
duties are performed, such as vacation or sickness, including
<PAGE>
payments made from a trust fund or insurance policy to which the Employer
or Affiliated contributes or pays premiums. In the case of payments which
are computed on the basis of specific periods of time during which no
duties are performed, the Employee shall receive credit for Hours of
Service as if he had actually worked during such periods of time, computed
and credited as provided in paragraph (a). In the case of all other
payments, the Employee's Hours of Service shall be computed and credited in
the manner prescribed in subparagraphs (b) and (c) of DOL Regs.
ss. 2530.200b-2, which are hereby incorporated herein by reference.
Notwithstanding the foregoing, no Hours of Service shall be credited for a
period during which no services are performed merely because an Employee is
receiving payments under a plan maintained solely to comply with an
applicable worker's compensation, unemployment compensation, or disability
insurance law, or payments which solely reimburse the Employee for medical
or medically related expenses.
(c) Back Pay. Each hour for which back pay, irrespective of mitigation
of damages, has been either awarded or agreed to by any Employer or Affiliate.
These hours shall be credited to the Employee for the computation period (or
periods) to which the award, agreement or payment pertains rather than the
computation period (or periods) during which the award, agreement or payment was
made.
Inactive Participant. A person who was an Active Participant and who is
no longer an Eligible Employee, but whose Account has not yet been distributed
in full.
Key Employee.
(a) General Rule. Except as otherwise provided in this Section, an
Employee shall be considered a Key Employee for any Plan Year if, at any time
during the Key Employee Test Period, he:
(i) is an officer of any Employer or Affiliate whose 415 Compensation
exceeds 50 percent of the annual dollar limitation set forth in
ss. 415(b)(1)(A) of the Code; or
(ii) owns at least one-half percent of the outstanding stock of an Employer
or Affiliate and receives 415 Compensation in excess of the annual
defined contribution dollar limitation set forth in ss.415(c)(1)(A) of
the Code, unless at least ten other Employees whose 415 Compensation
exceeds the annual defined contribution dollar limitation set forth in
ss.415(c)(1)(A) of the Code own during any Plan Year in the Key
Employee Test Period a percentage share of the stock of the Employer
or Affiliate which is greater than such Employee's percentage share;
or
(iii) owns more than five percent of the stock of an Employer or Affiliate;
or
(iv) owns more than one percent of the stock of an Employer or Affiliate
and receives 415 Compensation for any Plan Year in which he owns such
percentage in excess of $150,000.
(b) Limitation on Inclusion of Officers. For purposes of subparagraph
(a)(i), the number of Employees classified as Key Employees solely because they
are officers shall not exceed the greater of (i) three or (ii) ten percent of
the largest number of Employees during any of the Years in the Key Employee Test
Period; provided, however, that in no event shall such number exceed fifty (50).
If more than such number of Employees would otherwise be classified as Key
Employees
<PAGE>
by reason of being officers, the Employees classified as Key Employees by
reason of being officers shall be those officers who had the highest 415
Compensation during any of the Years in the Key Employee Test Period during
which they were officers.
(c) Determination of Largest Shareholders. For purposes of subparagraph
(a)(ii), in the event that two or more Employees own the same percentage share
of an Employer or Affiliate, the Employee who had the highest 415 Compensation
of such Employees for the Plan Year during the Key Employee Test Period in which
his 415 Compensation was the highest and in which he owned such interest in the
Employer or Affiliate for part of the Plan Year shall be treated as owning the
largest percentage share of the stock of the Employer or Affiliate. If an
Employee's percentage interest in the stock of an Employer or Affiliate changes
during a Plan Year, his interest for such Plan Year shall be the highest
percentage he held at any time during such Plan Year.
(d) Determination of Percentage Interests. For purposes of this
Section, an Employee shall be considered to own any stock of any Employer or
Affiliate which would be attributed to him under ss.318 of the Code (as modified
by substituting "five percent" for "50 percent" in ss.318(a)(2) of the Code). In
the case of an Employer or Affiliate that has issued more than one class of
stock, the applicable test shall be satisfied if the Employee's stock ownership
meets the test on the basis of either the value or the voting power of the
stock. In the case of an Employer or Affiliate that is not a corporation, such
tests shall be applied in accordance with regulations promulgated under
ss.416(i)(1)(B)(iii)(II) of the Code.
(e) Duration of Classification as Key Employee. Any Employee who meets
any of the four tests set forth in paragraph (a) as of any Top-Heavy
Determination Date shall continue to be a Key Employee for the remainder of the
Key Employee Test Period, commencing with the Plan Year which includes such
Top-Heavy Determination Date, whether or not he remains an Employee, and, if
such Employee dies during such Key Employee Test Period his Beneficiaries shall
be classified as Key Employees for the balance of such Key Employee Test Period,
unless such Employee is a Key Employee solely by reason of paragraph (a)(i) and
is subsequently excluded from the group of officers having the highest 415
Compensation by reason of the limitation set forth in paragraph (b) in
subsequent Years or solely by reason of paragraph (a)(ii) and is subsequently
excluded from the group of the ten (10) Employees owning the largest percentage
shares of the stock of an Employer or Affiliate in subsequent Years.
(f) Key Employee Test Period. The Key Employee Test Period for any Plan
Year shall mean the period consisting of five Years (or, if fewer, the total
number of Years during which the Plan and all other employee plans qualified
under ss.401(a) of the Code maintained by an Employer or Affiliate have been in
effect) ending with the Plan Year which includes the Top-Heavy Determination
Date for such Plan Year.
(g) Purpose. The purpose of this Section is to conform to the
definition of "key employee" set forth in ss.416(i)(1) of the Code, which is
incorporated herein by reference, and to the extent that this Section shall be
inconsistent with ss.416(i)(1) of the Code, either by excluding Employees who
would be classified as "key employees" thereunder or by including Employees who
would not be so classified, the provisions of ss.416(i)(1) of the Code shall
govern and control.
Leased Employee.
(a) General Rule. Any person (other than a person described in
paragraph (b)) who performs services for an Employer or Affiliate under the
primary direction or control of such Employer or Affiliate on a substantially
full-time basis pursuant to an agreement between the Employer or Affiliate and
any third person (for purposes of this Section the "leasing organization"). A
Leased Employee shall not be considered to be an Employee until he has
<PAGE>
provided such services to the Employer or Affiliate for at least one year,
but thereafter the Leased Employee's Period of Service shall be determined
on the basis of the entire period that the Leased Employee has performed
services for any such persons.
(b) Exception for Leased Employees Covered by Other Plans. A person
shall not be considered a Leased Employee if (i) he is covered by a money
purchase pension plan maintained by the Leasing Organization and providing for
contributions equal to at least 10 percent of the Leased Employee's compensation
(without regard to integration with Social Security) providing for full and
immediate vesting of all such contributions and, providing that each employee of
the Leasing Organization (other than employees who perform substantially all of
their services for the Leasing Organization) immediately participate in such
plan (other than employees whose compensation from the Leasing Organization for
each of the plan years in the four plan year period ending with the year under
determination is less than $1,000); and (ii) persons who would be Leased
Employees but for this paragraph (b) do not comprise more than 20 percent of the
sum of number of Employees (excluding Leased Employees) who have performed
services for the an Employer or Affiliate on a substantially full-time basis for
at least one Plan Year and persons who would be Leased Employees but for this
paragraph (b), excluding in each case any Highly Compensated Employee.
(c) Definition of Affiliate. Solely for purposes of this Section, the
term Affiliate shall also include any person related to an Employer or Affiliate
within the meaning of ss.144(a)(3) of the Code.
Leave of Absence. A period of absence that (i) is authorized by the
Employer or Affiliate, (ii) is covered by the Uniformed Services Employment and
Reemployment Rights Act of 1994 (or applicable prior law), or (iii) to which the
Employee is entitled under the Family and Medical Leave Act of 1993 or any
comparable state law; provided, however, that the Employee retires or returns to
work for an Employer or Affiliate within the time specified in his Leave of
Absence (or, if applicable, within the period during which re-employment rights
are protected by law).
Limitation Year. The twelve-month period used by the Plan for purposes
of applying the limitations of ss.415 of the Code, which shall be the same as
the Plan Year.
Maximum ACP. The maximum permissible Highly Compensated ACP for a Plan
Year, based upon the Non-Highly Compensated ACP for such Plan Year in accordance
with the following schedule:
If the Non-Highly Compensated ACP is The Maximum ACP is
- ------------------------------------ ------------------------------
2% or less the Non-Highly Compensated ACP
multiplied by two
greater than 2% but less than 8% the Non-Highly Compensated ACP
plus two percentage points
8% or more the Non-Highly Compensated ACP
multiplied by 1.25
Maximum ADP. The maximum permissible Highly Compensated ADP for a Plan
Year, based upon the Non-Highly Compensated ADP for such Plan Year in accordance
with the following schedule:
<PAGE>
If the Non-Highly Compensated ADP is The Maximum ADP is
- ------------------------------------ ------------------------------
2% or less the Non-Highly Compensated ADP
multiplied by two
greater than 2% but less than 8% the Non-Highly Compensated ADP
plus two percentage points
8% or more the Non-Highly Compensated ADP
multiplied by 1.25
Non-Highly Compensated ADP. For any Plan Year beginning with the Plan
Year commencing January 1, 1997, the average of the Deferral Percentages of all
Non-Highly Compensated Employees who are Active Participants for the immediately
preceding Plan Year, including those whose Deferral Percentage is zero and those
who are not Non-Highly Compensated Employees or Active Participants in the
current Plan Year. The Administrator may adopt a resolution for any Plan Year
electing to use the average of the Deferral Percentages of all Non-Highly
Compensated Employees for the current, rather than immediately preceding, Plan
Year, and such resolution shall be considered an amendment to the Plan;
provided, however, that if such election is made for any Plan Year, it may not
be changed for any subsequent Plan Year without the consent of the Internal
Revenue Service.
Non-Highly Compensated ACP. For any Plan Year beginning with the Plan
Year commencing January 1, 1997, the average of the Contribution Percentages of
all Non-Highly Compensated Employees who are Active Participants for the
immediately preceding Plan Year, including those whose Contribution Percentage
is zero and those who are not Non-Highly Compensated Employees or Active
Participants in the current Plan Year. The Administrator may adopt a resolution
for any Plan Year electing to use the average of the Contribution Percentages of
all Non-Highly Compensated Employees for the current, rather than immediately
preceding, Plan Year, and such resolution shall be considered an amendment to
the Plan; provided, however, that if such election is made for any Plan Year, it
may not be changed for any subsequent Plan Year without the consent of the
Internal Revenue Service.
Non-Highly Compensated Employee. Any Employee who for any Plan Year is
not a Highly Compensated Employee.
Non-Key Employee. Any Employee who for any Plan Year is not a Key
Employee.
Normal Retirement Age The first day of the month in which a Participant
attains the age of 65.
Participant. A person who is either an Active Participant or an
Inactive Participant.
Period of Service. A period of employment and certain periods of
absence from employment included in a Participant's period of Service under the
elapsed method, as defined in Article III.
Period of Severance. A period of absence from employment that causes an
interruption in the computation of an Employee's Service under the elapsed time
method, as defined in Article III.
Permanent Disability. The inability of a Participant to perform a
substantial portion of his duties by reason of any medically determinable
physical or mental impairment which can be expected to be of long-continued and
indefinite duration. Permanent Disability shall be determined solely by the
Administrator upon medical evidence from a physician selected
<PAGE>
by the Administrator. A determination of Permanent Disability pursuant to the
provisions of the Plan shall not be construed to be an admission of disability
in regard to any other claim of disability brought by the Participant against an
Employer.
Plan. The PathoGenesis Corporation 401(k) Profit Sharing Plan, the
profit-sharing plan created by this instrument, and any amendments or
supplements thereto.
Plan Year. The twelve-month accounting period used by the Plan, which
shall end on December 31 of each year.
Qualified Domestic Relations Order.
(a) General Rule. Except as provided in paragraph (b), any order
(including a judgment, a decree or an approval of a property settlement
agreement entered by any court) which the Administrator determines (i) is made
pursuant to any state domestic relations law (including a community property
law), (ii) 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 a
Participant's Accounts , and (iii) clearly specifies (A) the name and last known
mailing address of the Participant and the name and last known mailing address
of each Alternate Payee covered by the order, (B) the amount or percentage of
the Participant's benefits to be paid by the Plan to each Alternate Payee, or
the manner in which such amount or percentage is to be determined, (C) the
number of payments or period to which such order applies, and (D) the employee
benefit plan to which such order applies.
(b) Requirements for Qualified Status. An order shall in no event be
considered a Qualified Domestic Relations Order if the Administrator determines
that such order (i) requires the Plan to provide benefits to Alternate Payees,
the actuarial present value of which in the aggregate is greater than the
benefits which would otherwise have been provided to the Participant, (ii)
requires the Plan to pay benefits to an Alternate Payee, which benefits are
required to be paid to a different Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order, or (iii)
except as provided in paragraph (c), requires the Plan to provide any type or
form of benefit, or any option, not otherwise provided under the Plan.
(c) Exception for Certain Required Distributions. Notwithstanding
paragraph (b)(iii), an order shall not fail to be a Qualified Domestic Relations
Order merely because it requires a distribution to an Alternate Payee prior to
the time the Participant incurs a Termination of Employment provided that the
Participant would then be entitled to a distribution if he incurred a
Termination of Employment.
Re-Employment Commencement Date. The day on which an Employee first
performs an Hour of Service for an Employer or Affiliate after a Termination of
Employment, or, solely for purposes of computing an Employee's Service under the
elapsed time method, after commencing a period of absence from service, whether
or not paid, other than by reason of a Termination of Employment.
Sponsor. PathoGenesis Corporation, a Delaware corporation.
Termination of Employment.
(a) General Rule. An Employee shall be deemed to have incurred a
Termination of Employment as a result of:
(i) a retirement, a resignation or a dismissal for any reason;
<PAGE>
(ii) a failure to return to work promptly upon the request of the
Employer at the end of a layoff; or
(iii) a failure to retire or return to work at the end of an unpaid
Leave of Absence.
(b) Failure to Return after Leave. In the event that a Termination of
Employment occurs within the meaning of either subparagraph (a)(ii) or (a)(iii),
such termination shall be deemed to have occurred on the first day of a layoff
or a Leave of Absence for which the Employee was not credited with an Hour of
Service.
(c) Transfers. A transfer between Employers or Affiliates shall not be
considered to be a Termination of Employment for purposes of determining a
Participant's Period of Service.
Top-Heavy Determination Date. The Top-Heavy Determination Date for any
Plan Year is the last day of the immediately preceding Plan Year.
Top-Heavy Year.
(a) General Rule. Except as otherwise provided below, a Top-Heavy Year
shall be any Plan Year if, as of the Top-Heavy Determination Date for such Plan
Year, the aggregate Account Balances of all Key Employees under the Plan exceed
60 percent of the aggregate Account Balances of all Participants under the Plan.
(b) Mandatory Aggregation Groups. Notwithstanding paragraph (a), if
during any Plan Year (i) at least one Participant is a Key Employee, (ii) as of
the Top-Heavy Determination Date for such Plan Year any Employer or Affiliate
has adopted any other employee plan qualified under ss.401(a) of the Code and
(iii) either (A) a Key Employee participates in such other plan or (B) the Plan
or such other plan has satisfied the requirements of ss.401(a)(4) or ss.410 of
the Code only by treating the Plan and such other plan as a single plan, then
the Plan Year shall be considered a Top-Heavy Year if and only if the Account
Balances of all Key Employees under the Plan and the aggregate balances in the
accounts of all Key Employees under all such other plans exceed 60 percent of
the aggregate balances in the accounts of all Participants under the Plan and
all such other plans.
(c) Permissive Aggregation Groups. Notwithstanding paragraphs (a) and
(b), if as of any Top-Heavy Determination Date any Employer or Affiliate has
adopted any other employee plan qualified under ss.401(a) of the Code which is
not a plan described in paragraph (b), but which plan may be considered as a
single plan with the Plan and all plans described in paragraph (b) without
causing any of such plans to violate the requirements of either ss.401(a)(4) or
ss.410 of the Code, the Plan Year shall not be considered a Top-Heavy Year if
the Account Balances of all Key Employees under the Plan and the aggregate
balances in the accounts of all Key Employees under all plans described in
paragraph (b) and all plans described in this paragraph (c) do not exceed 60
percent of the aggregate balances in the accounts of all Participants under all
such plans.
(d) Inclusion of Defined Benefit Plans. If any of the plans described
in either paragraph (b) or (c) are defined benefit plans (as defined in
ss.414(j) of the Code), then the tests set forth in said paragraphs shall be
applied by substituting the present value of all benefits accrued under such
plans (as determined by the Administrator, using actuarial assumptions which are
uniform for all such plans and are reasonable in the aggregate) for the account
balances in such plans. The accrued benefits of the Non-Key Employees under such
plans shall be determined in accordance with ss.416(g)(4)(F) of the Code. If any
of such plans have a
<PAGE>
determination date (as defined in ss.416(g)(4)(C) of the Code) for purposes
of determining top-heavy status which is different from the Top-Heavy
Determination Date, the account balances (or the present value of the
accrued benefits, in the case of a defined benefit plan) in such plan shall
be determined as of the determination date for such plan which occurs in
the same Plan Year as the Top-Heavy Determination Date.
(e) Account Balances. For purposes of this Section, account balances
shall include (i) all Contributions which any Employer or Affiliate has paid or
is legally obligated to pay to any employee plan as of the Top-Heavy
Determination Date (including Contributions made thereafter if they are
allocated as of the Top-Heavy Determination Date) and all Forfeitures allocated
as of the Top-Heavy Determination Date, and (ii) all distributions made to a
Participant or his Beneficiary during the Key Employee Test Period (or, in the
case of a defined benefit plan, the actuarial present value as of the Top-Heavy
Determination Date of such distributions). If any plan that was terminated
within the Key Employee Test Period would, if it had not been terminated, be a
plan described in paragraph (b), distributions made under such plan shall also
be taken into account. For purposes of this Section, account balances shall also
include amounts which are attributable to Contributions made by the Participants
(other than deductible voluntary contributions under ss.219 of the Code) but
shall not include any rollover (as defined in ss.402 of the Code) or a direct
transfer from the trust of any employee plan qualified under ss.401(a) of the
Code if such plan is not maintained by an Employer or Affiliate and such
rollover or transfer is made at the request of the Participant after December
31, 1983.
(f) Certain Former Employees. Anything to the contrary notwithstanding,
if an Employee has not performed any services for any Employer or Affiliate at
any time during the Key Employee Test Period, his account balance (in the case
of a defined contribution plan) or his accrued benefit (in the case of a defined
benefit plan) shall not be taken into consideration in the determination of
whether the Plan Year is a Top-Heavy Year.
(g) Purpose. The purpose of this Section is to conform to the
definition of "top-heavy plan" set forth in ss.416(g) of the Code, which is
incorporated herein by reference, and to the extent that this Section shall be
inconsistent with ss.416(g) of the Code, either by causing any Plan Year during
which the Plan would be classified as a "top-heavy plan" not to be a Top-Heavy
Year or by causing any Plan Year during which it would not be classified as a
"top-heavy plan" to be a Top-Heavy Year, the provisions of ss.416(g) of the Code
shall govern and control.
Treasury Regulations or Treas. Reg. Regulations, including proposed and
temporary regulations, issued by the Department of the Treasury or Internal
Revenue Service codified at Title 26 of the Code of Federal Regulations. Where a
reference is made to temporary or proposed regulations, such reference shall
include any permanent regulations, modified proposed or temporary regulations,
issued in lieu thereof.
Trust. The trust or trusts establish to fund benefits provided under
the Plan, as provided in Section 1.5. The term "Trust" shall also include, as
applicable, any insurance policy purchased to fund benefits under the Plan.
Trust Agreement. The agreement pursuant to which the Trust is
established.
Trustee. The person or persons acting as trustee of the Trust.
Vested. The portion of a Participant's Account at any time that would
not be forfeited if he then incurred a Termination of Employment.
<PAGE>
2.2 Conformance with Code and ERISA. The Plan is intended to comply in
all respects with the requirements of ss.401(a) of the Code and Title 1 of
ERISA, and shall be so construed. References to specific provisions of the Code
or ERISA in certain provisions of the Plan shall not be construed to limit
reference to other provisions of the Code or ERISA in construing other
provisions of the Plan where such reference is consistent with the purpose of
the Plan. If any provision of the Code or ERISA is amended, any reference in the
Plan to such provision shall, if appropriate in the context and consistent with
the purpose of the Plan, be deemed to refer to any successor to such provision.
2.3 Gender and Number; Effect of Titles. Wherever used in this Plan,
nouns or pronouns of one gender shall be interpreted to apply to all genders,
and the singular shall include the plural and vice-versa, as the context may
require. Titles, captions and headings of Articles, Sections and Exhibits are
for ease of reference only, and shall have no substantive meaning.
<PAGE>
ARTICLE III
COMPUTATION OF SERVICE
3.1 Method of Computation. For purposes of determining a Participant's
Vested Account Balance pursuant to Article VIII, a Participant's service shall
be determined using the elapsed time method.
3.2 Computation of Service under the Elapsed Time Method.
(a) General Rule. Under the elapsed time method, an Employee's Service
shall, except as otherwise provided below, equal the sum of all of the
Employee's Periods of Service. An Employee shall receive credit for a Period of
Service for:
(i) The period between the Employee's Employment Commencement Date or
Re-Employment Commencement Date and the date on which the Employee
incurs a Termination of Employment;
(ii) The period between the date the Employee incurs a Termination of
Employment (other than a period described in subparagraph (iii)) and
the Employee's Re-Employment Commencement Date, if such period is less
than 12 months; and
(iii) The period between the date the Employee incurs a Termination of
Employment while absent from the service of all Employers and
Affiliates without incurring a Termination of Employment, whether or
not paid, and the Employee's Re-Employment Commencement Date, if the
period between the date on which such period of absence began and the
Employee's Re-Employment Commencement Date is less than 12 months.
For purposes of adding Periods of Service, 365 days shall equal one year.
(b) Re-Employment. The Service of an Employee who incurs a Termination
of Employment and is subsequently re-employed shall include the Service
completed prior to such Termination of Employment, except as follows:
(i) If the Employee incurred a Period of Severance, such prior Service
shall not be included until the Employee completes a one-year Period
of Service after being re-employed.
(ii) If the Employee was not Vested in any portion of his Account
attributable to Contributions by the Employers such prior Service
shall only be included under subparagraph (i) if the number of years
in such Period of Severance did not exceed the greater of five or the
number of years in the Employee's Period of Service completed prior to
such Termination of Employment, disregarding Periods of Service
completed prior to earlier Terminations of Employment which were not
included by reason of this paragraph (b) when the Employee was
previously re-employed.
(c) Periods of Severance. Except as otherwise provided below, a Period
of Severance shall mean any period of time following a Termination of Employment
that is not included in a Period of Service, and the period between the date on
which an Employee is first absent from the service of all Employers and
Affiliates and the first anniversary of such date if
<PAGE>
the Employee has not returned to service before such date. Notwithstanding the
foregoing, the following special rules shall apply:
(i) If the reason that the Employee has not yet returned to service by the
first anniversary of the beginning of such period of absence is either
(A) the pregnancy of the Employee, (B) the birth of a child of the
Employee, (C) the placement of a child with the Employee in connection
with the adoption of such child by the Employee, or (D) for the
purpose of caring for such child for a period beginning immediately
following such birth or placement, then the period between the first
day of such period of absence and the first anniversary of such date
shall be included in the Employee's Period of Service, and the period
between the first and second anniversaries (or, if earlier, the
Employee's Re-Employment Date) shall be neither a Period of Service
nor a Period of Severance. The Administrator shall adopt regulations
under which an Employee may be required to furnish reasonable
information on a timely basis establishing the reason for such a
period of absence.
(ii) A period of unpaid absence during which the Employee is serving in the
Armed Forces of the United States shall not be considered either a
Period of Service or a Period of Severance, provided that the Employee
returns to the employ of an Employer after so serving within the
period of time required for his seniority rights to be restored under
applicable law.
(iii) A period of unpaid absence not otherwise described above to which the
Employee is entitled under the Family and Medical Leave Act of 1993,
if applicable, shall not be considered either a Period of Service or a
Period of Severance, provided that the Employee returns to the employ
of an Employer within the period of time required for his employment
rights to be restored under the terms of said Act.
(iv) A period during which the Employee is absent because of an approved
Leave of Absence, provided that the Employee returns to the employ of
an Employer within the agreed upon time after the conclusion of such
Leave of Absence, shall not be considered either a Period of Service
or a Period of Severance.
3.3 Service with Predecessor Employers. In the event that the Sponsor
or an Employer acquires the business of another employer in the future, the
employees of such business who become Employees shall receive credit for their
service with such predecessor employer only to the extent determined by the
Sponsor, exercised in accordance with Treasury Regulations promulgated under
ss.401(a)(4) of the Code. In such event, the extent, if any, to which such
employees are to receive credit for prior service shall be set forth in a
supplement attached to the Plan. Notwithstanding the foregoing, in any case in
which an Employer maintains a plan of a predecessor employer, service for such
predecessor employer shall be counted as service for the Employer.
<PAGE>
ARTICLE IV
PARTICIPATION
4.1 Requirements for Participation. Each Eligible Employee who was a
Participant in the Plan immediately prior to the Effective Date of this
restatement of the Plan shall become a Participant on the Effective Date. Each
other Eligible Employee shall become a Participant on the Entry Date, as
determined under Section 4.2, that he satisfies all of the following
requirements:
(a) He or she is then an Eligible Employee; and
(b) He or she is at least 18 years of age.
4.2 Determination of Entry Date. Each Eligible Employee's Entry Date
shall be the first day of a month following the date he meets the requirements
of Section 4.1.
4.3 Cessation and Resumption of Active Participation.
(a) General Rule. A Participant who ceases to be an Eligible Employee
shall cease to be an Active Participant, but shall continue to be an Inactive
Participant until the full amount of his Account Balance is distributed or
forfeited in accordance herewith.
(b) Reinstatement. A former or Inactive Participant who again becomes
an Eligible Employee shall be eligible to become an Active Participant again on
the first Entry Date following the day on which he becomes an Eligible Employee.
(c) Other Plans. The Sponsor may provide that Employees who are
participants in other plans maintained by the Employers, or by businesses
acquired by the Employers, will become Active Participants immediately upon
becoming Eligible Employees, in accordance with Regulations issued pursuant to
ss.401(a)(4) of the Code. Any plans to which such treatment is extended shall be
listed on a supplement to this Plan.
<PAGE>
ARTICLE V
AMOUNT AND ALLOCATION OF CONTRIBUTIONS
5.1 Salary Deferral Contributions.
(a) Amount of Contributions. Subject to the limitations in Article VI,
each Active Participant may elect to have a portion of his Compensation
contributed to the Plan as Salary Deferral Contributions. Salary Deferral
Contributions shall be stated as a whole percentage of the Participant's
Compensation, which shall be not less than one percent and not more than twenty
percent, and the percentage elected shall be withheld from each payment of
Compensation to the Participant.
(b) Withholding, Deposit and Allocation of Contributions. All Salary
Deferral Contributions shall be withheld from Compensation payable to the
Participant, and shall be deposited in the Trust as soon as practical after
being withheld, but in no event later than the fifteenth day of the month
following the month in which they are withheld. No amount shall be withheld from
Compensation that is available to be paid to the Participant before the date on
which the election is made. All Salary Deferral Contributions shall be allocated
to the Participant's Salary Deferral Contribution Account as of the Accounting
Date coinciding with or next succeeding the date they are withheld.
(c) Timing and Revision of Elections. An Active Participant is
permitted to make or revise an Salary Deferral Election as of any Election Date
coinciding with or succeeding his Entry Date. The Election Dates shall be any
date that is an Entry Date. Each election or revision of an election shall take
effect for the first payment of Compensation payable to the Participant on or
after the Election Date as of which it is effective. The Administrator shall
adopt and distribute election forms, and establish uniform procedures for making
elections, which shall include time periods preceding each Election Date by
which elections must be received to be effective as of such Election Date. No
election shall be effective or binding upon any Employer until actually
received, in writing, in accordance with such procedures. The Administrator may
also change the frequency of Election Dates, suspend deferrals, or establish
additional Election Dates in special circumstances, such as the payment of
annual bonuses or other circumstances that may make it desirable for
Participants to change their elections, provided that in all cases the
availability of Election Dates shall not discriminate in favor of Highly
Compensated Employees.
(d) Termination and Resumption of Contributions. If an Active
Participant ceases to be an Active Participant, his election to have Salary
Deferral Contributions made on his behalf shall be automatically terminated,
whether or not he continues to be an Employee or Inactive Participant. If such
Participant continues to be an Employee, his Salary Deferral Contributions shall
be terminated as of the next payment of Compensation to him (subject to any
necessary delay for administrative processing). If he again becomes an Active
Participant, he may make a new election as of the Election Date coinciding with
or next succeeding his new Entry Date as provided in paragraph (c).
5.2 Matching Contributions.
(a) Discretionary Contributions. Each Employer shall make Matching
Contributions for each Match Period, as defined below in an amount determined by
the Sponsor in its sole discretion. Matching Contributions made pursuant to this
shall be allocated among all Employees eligible to participate therein, as
described below, in proportion to the relative amounts of Salary Deferral
Contributions made on behalf of such Employees for such Match Period; provided
that, in determining the amount of Matching Contributions, the Sponsor may
<PAGE>
provide that the Matching Contributions allocated to any Active Participant
shall not exceed a specified percentage of Salary Deferral Contributions or a
dollar amount.
(b) Eligibility to Participate. The Employees eligible to participate
in Matching Contributions made pursuant to this Section for any Match Period
shall be those Employees on whose behalf Salary Deferral Contributions made
during such Match Period. For purposes of this Section 5.2, the "Match Period"
shall mean each payroll period of the Employer.
(c) Allocation and Deposit of Contributions. All Matching Contributions
shall be deposited in the Trust at such time or times as the Sponsor shall
determine, provided that the Matching Contributions made by each Employer shall
be deposited not later than the last date for the filing of the Employer's
federal income tax return for the year which includes the last day of the Plan
Year to which such Contributions relate. Each Participant's share of Matching
Contributions shall be allocated to the Participant's Matching Contribution
Account as of the last day of the period to which the Matching Contributions
relate, regardless of when deposited.
5.3 Profit-Sharing Contributions.
(a) Amount of Contributions. Each Employer shall make a Profit-Sharing
Contribution for each Plan Year in such amount as the Sponsor, in its sole
discretion, shall determine.
(b) Allocation of Contributions. Profit-Sharing Contributions and
Forfeitures to be allocated in the same manner as Profit-Sharing Contributions
shall be allocated among all eligible Participants as of the last day of each
Plan Year in the proportion that the Compensation paid to each such Participant
bears to the Compensation paid to all such Participants during the Plan Year.
(c) Eligibility to Participate. The Employees eligible to participate
in Profit-Sharing Contributions made pursuant to this Section for any Plan Year
shall be those Employees who have been Active Participants at some time during
such Plan Year, who are Employees on the last day of the Plan Year (or incurred
a Termination of Employment during the Plan Year due to death, Retirement, or
Permanent Disability) and, in the case of an Employee hired during the Plan
Year, performed at least one Hour of Service prior to July 1 of the Plan Year.
(d) Allocation and Deposit of Contributions. All Profit-Sharing
Contributions shall be deposited in the Trust at such time or times as the
Sponsor shall determine, provided that the Profit-Sharing Contributions made by
each Employer shall be deposited not later than the last date for the filing of
the Employer's federal income tax return for the year which includes the last
day of the Plan Year to which such Contributions relate. Each Participant's
share of Profit-Sharing Contributions shall be allocated to the Participant's
Profit-Sharing Contribution Account as of the last day of the period to which
the Profit-Sharing Contributions relate, regardless of when deposited.
5.4 Rollover Contributions. An Active Participant may make a
Contribution to the Plan which constitutes a rollover of benefits from another
plan qualified under ss.401(a) of the Code (either directly or through a conduit
IRA described in ss.408(d)(3)(A)(ii) of the Code), or cause the trustee of
another plan to make a direct transfer of such benefits on his behalf (in either
case, a "Rollover Contribution"). Such Contribution shall be allocated to a
separate Rollover Account maintained for the Participant. The Administrator may
establish uniform rules limiting or restricting Rollover Contributions. An
Eligible Employee who has not yet become a Participant may also make a Rollover
Contribution to the Plan, and shall be treated as an Inactive Participant with
respect to his Rollover Account until he becomes a Participant.
<PAGE>
5.5 Qualified Nonelective Contributions. The Sponsor may, but shall not
be obliged to, direct all Employers to make Qualified Nonelective Contributions
in an amount that does not exceed the amount necessary to enable the Plan to
satisfy the limitations of Section 6.3 or 6.4. Such Qualified Nonelective
Contributions shall be allocated among all Active Participants that are
Non-Highly Compensated Employees for the Plan Year in proportion to their 401(k)
Compensation. Such Qualified Nonelective Contributions shall be allocated to the
Participants' QNEC Accounts, but shall be treated as Salary Deferral
Contributions for all purposes of the Plan.
5.6 Minimum Contribution in Top-Heavy Years.
(a) Required Contribution. For any Plan Year that is a Top-Heavy Year,
the minimum amount of Profit-Sharing Contributions allocated to the
Profit-Sharing Account of each eligible Non-Key Employee shall be the lesser of
(i) 3 percent of the Non-Key Employee's 415 Compensation for the Plan Year or
(ii) the highest Key Employee percentage (as hereafter described) for such Plan
Year, reduced in either case by any Qualified Nonelective Contributions
allocated to such Non-Key Employee for such Plan Year. For purposes of this
Section, the "Key Employee percentage" for each Key Employee shall mean the
total amount of Contributions other than Rollover Contributions made by or on
behalf of such Key Employee for a Plan Year expressed as a percentage of such
Key Employee's 415 Compensation for the Plan Year. An eligible Non-Key Employee
is one who was an Active Participant at any time during the Plan Year and who
has not incurred a Termination of Employment prior to the end of the Plan Year
regardless of whether the Non-Key Employee has completed 1000 Hours of Service
during the Plan Year. The amount of Profit-Sharing Contributions that would
otherwise be allocated to the Key Employees shall be reallocated (in proportion
to their 415 Compensation) to the eligible Non-Key Employees (in proportion to
their 415 Compensation) to the extent necessary to satisfy the requirement of
this Section. Any additional amount required to satisfy the requirements of this
Section shall be contributed by the Employers in proportion to the 415
Compensation paid by them to eligible Non-Key Employees during the Plan Year,
regardless of any other limits on Profit-Sharing Contributions contained in this
Article V.
(b) Participation in Other Plans. The minimum Contribution required by
paragraph (a) shall be reduced by any employer contributions (other than
elective and matching contributions subject to ss.401(k) or ss.401(m) of the
Code) allocated to the account of the Non-Key Employee in any other defined
contribution plan maintained by an Employer or Affiliate. If an eligible Non-Key
Employee also participates in any Top-Heavy Year in a top-heavy defined benefit
plan maintained by any Employer or Affiliate, then this Section shall not apply
to such eligible Non-Key Employee provided that the minimum top-heavy benefit
required by ss.416(c)(1) is accrued under such defined benefit plan.
5.7 Other Required Contributions. The Employers shall make any
additional contributions required to restore a forfeited Account pursuant to
Section 8.5(c) or 9.6 to the extent that Forfeitures occurring in the same Plan
Year are insufficient for such purpose. Effective October 13, 1996, a
Participant who is re-employed following service in the United States Armed
Forces shall have the right to have Salary Deferral Contributions made on his
behalf, and shall otherwise be allocated the Contributions he would have
received, had be been an Active Participant during such period of service, to
the extent required by, and in accordance with regulations issued pursuant to,
the Uniformed Services Employment and Reemployment Rights Act of 1994.
<PAGE>
ARTICLE VI
LIMITS ON CONTRIBUTIONS
6.1 Limit on Annual Additions.
(a) Limitation. Notwithstanding any other provisions of the Plan, the
amount of annual additions (as hereinafter defined) allocated to a Participant's
Account for any Limitation Year shall not exceed an amount equal to the lesser
of:
(i) $30,000 (or, if greater, one-fourth of the dollar limitation in
effect under ss.415(b)(1)(A) of the Code as of the first day of such Limitation
Year); or
(ii) 25 percent of the Participant's 415 Compensation for the
Limitation Year, increased by any amounts treated as annual additions solely by
reason of subparagraph (b)(iv);
reduced in either case by the amount of annual additions credited to the
Participant's account for the Limitation Year under any other defined
contribution plan maintained by an Employer or 415 Affiliate.
(b) Annual Additions. For purposes of this Section, annual additions
shall include (i) all Contributions made by an Employer or 415 Affiliate
(including Pre-Tax Deferrals and elective deferrals under other plans), (ii)
Contributions made by the Participant (other than Rollover Contributions), (iii)
Forfeitures, and (iv) contributions to a separate account described in ss.401(h)
of the Code or ss.419A(d) of the Code to provide medical or life insurance
benefits for Key Employees. An amount credited to a Participant's Account in
order to correct an error made in a previous Limitation Year shall be treated
for purposes of paragraph (a) as having been credited to such Account in the
Limitation Year to which the error relates.
(c) Correction of Excess Annual Additions. If, as the result of an
allocation of Forfeitures, a reasonable error in determining a Participant's 415
Compensation, or similar factors, the amount otherwise allocable to a
Participant's Account would exceed the limitation set forth in paragraph (a),
the amount of such excess shall first be corrected by a return to the
Participant of all or a portion of his Salary Deferral Contributions for the
Limitation Year. If the allocations to the Participant's Account would still
exceed the limitation set forth in paragraph (a), then the amount of such excess
shall be allocated and reallocated among all other Active Participants in
proportion to their Compensation for the Limitation Year, subject to the
limitation of paragraph (a). Any amount that cannot be allocated to any Active
Participant without exceeding the limitation of paragraph (a) shall be credited
to a Section 415 Suspense Account. For each Limitation Year in which there
remains a balance in the Section 415 Suspense Account, the amount of such
balance shall be allocated and reallocated among the Accounts of the Active
Participants, in proportion to their Compensation for such Limitation Year. Such
allocation shall be subject to the limitation of paragraph (a), and shall be
made prior to any other allocation of Contributions for such Limitation Year.
(d) Participation in Defined Benefit Plan. Anything to the contrary
notwithstanding, if during any Limitation Year beginning prior to January 1,
2000, a Participant also participates in a defined benefit plan (as defined in
ss.414(j) of the Code) maintained by an Employer or 415 Affiliate, the
combination of the annual additions under this Plan and the projected annual
benefit under the defined benefit plan shall not exceed the combined plan
limitation set forth in paragraph (e) with respect to any Participant.
Compliance with the combined plan limitation shall be achieved by reducing the
allocation of annual additions under this Plan in the manner described in
paragraph (c).
<PAGE>
(e) Combined Plan Limitation. The combined plan limitation shall be
exceeded for a Limitation Year with respect to a Participant if the sum of the
Participant's "defined benefit plan fraction" and "defined contribution plan
fraction" (as hereafter defined) for such Limitation Year exceeds one. A
Participant's defined benefit plan fraction for any Limitation Year is a
fraction, the numerator of which is the Participant's projected annual benefit
under the defined benefit plan, determined as of the close of its plan year on
the assumptions that the Participant remains covered by the plan until normal
retirement age and that the Participant's compensation and all other factors
will remain the same (or, in the case of a Participant who has attained his
normal retirement age, his accrued benefit) and the denominator of which is the
lesser of:
(i) 1.25 multiplied by the maximum dollar limitation in effect under
ss.415(b)(1)(A) of the Code for such Limitation Year, or
(ii) 1.4 multiplied by the amount which may be taken into account under
ss.415(b(1)(B) of the Code for such Limitation Year.
A Participant's defined contribution plan fraction for any Limitation Year is
a fraction, the numerator of which is the sum of the annual additions to
the Participant's Account as of the close of the Limitation Year and the
denominator of which is the sum of the lesser of the following amounts
determined for such Limitation Year and each prior Limitation Year during any
part of which the Participant was an Employee of an Employer or 415 Affiliate:
(i) 1.25 multiplied by the maximum dollar limitation in effect under
ss.415(c)(1)(A) of the Code for such Limitation Year (determined
without regard to ss.415(c)(6) of the Code), or
(ii) 1.4 multiplied by the maximum amount which could have been taken
into account under ss.415(c)(1)(B) of the Code for such Limitation
Year.
Solely for purposes of computing the defined contribution plan fraction, the
term "Limitation Year" shall include all prior twelve-month periods which
would have been Limitation Years had the Plan been in existence and subject
to ss.415 of the Code. The aggregate amount included in the numerator of the
defined contribution plan fraction for all Limitation Years (as so defined)
beginning prior to January 1, 1976, shall not exceed the aggregate amount
included in the denominator for all such Limitation Years
(f) Top-Heavy Years. For any Top-Heavy Year, 1.0 shall be substituted
for 1.25 wherever it appears in paragraph (e).
(g) Aggregation of Plans. For purposes of this Section 6.1, all defined
benefit plans of any Employer or 415 Affiliate, whether or not terminated, are
to be treated as one defined benefit plan, and all defined contribution plans of
any Employer or 415 Affiliate, whether or not terminated, are to be treated as
one defined contribution plan.
6.2 Limit on Salary Deferral Contributions.
(a) Limitation. The total amount of Salary Deferral Contributions made
on behalf of any Participant under this Plan, plus the total amount of
before-tax elective deferrals made on behalf of the Participant under any other
plan described in ss.401(k) or ss.402(h)(1)(B) of the Code plus amounts used to
purchase an annuity under ss.403(b) of the Code pursuant to a salary reduction
agreement under ss.402(g)(3) of the Code, in any calendar year shall not exceed
$10,000.00 (or such larger dollar limitation as may then be applicable for such
calendar year under ss.402(g)(5) of the Code).
<PAGE>
(b) Notification and Distribution of Excess. If the Participant
notifies the Administrator not later than March 1 of the following calendar year
that the limitation of this Section has been exceeded for any calendar year, and
specifies the amount of Salary Deferral Contributions that must be distributed
from the Plan to satisfy such limitation, such amount shall be distributed to
the Participant notwithstanding any other limitation on distributions contained
in this Plan. For purposes of this paragraph, if the limitation of this Section
would be exceeded by reason of Contributions made under this Plan, or under this
Plan and one or more other Plans maintained by the Employers, the Participant
shall be deemed to have notified the Administrator and the necessary
distribution shall be made first from this Plan. The amount required to be
distributed pursuant to this Section 6.2 shall be reduced by any amount
previously distributed to satisfy Section 6.3.
(c) Distributions During Year. If the notice is received or deemed
received within the calendar year for which the limitation is exceeded, the
required distribution shall, if possible, be made out of Salary Deferral
Contributions already received and before the end of such year, and shall be
designated as a distribution of excess Salary Deferral Contributions.
(d) Distributions after End of Year. If the notice is received or
deemed received after the end of the calendar year, or the required distribution
cannot be accomplished before the end of the calendar year, the required
distribution shall be made not later than April 15 of the following calendar
year and shall include the income attributable to such distribution (as
determined under paragraph (e)), and the total amount distributed shall be
included in the Participant's taxable income for the calendar year in which the
excess occurred.
(e) Allocation of Income. For purposes of paragraph (d), the amount of
income allocated to the required distribution shall be equal to the total income
earned by the Participant's Pre-Tax Deferral Account for the calendar year
multiplied by a fraction, the numerator of which is the amount of the required
distribution and the denominator of which is the sum of the Participant's
Pre-Tax Deferral Account Balance as of the beginning of the calendar year and
the amount of Salary Deferral Contributions made during the calendar year. The
income allocable to the required distribution for the "gap period" between the
end of the calendar year and the date of the distribution shall not also be
distributed.
(f) Use of Other Methods. Notwithstanding paragraph (e), the
Administrator may use any other reasonable method of allocating income for any
year provided that such method does not violate ss.401(a)(4) of the Code, is
applied consistently to all excess distributions and Participants for the year,
and is the method used to allocate income to Accounts generally.
6.3 Actual Deferral Percentage Limitation
(a) Limitation. The Salary Deferral Contributions of Participants who
are Highly-Compensated Employees shall be further limited for each Plan Year so
that the Highly Compensated ADP does not exceed the Maximum ADP. The
Administrator may reduce the Pre-Tax Deferral Elections of such Participants
during the Plan Year to prevent this limitation from being exceeded, but in no
event shall the Administrator have any liability to any Highly Compensated
Employee if it does not do so.
(b) Correction of Excess Contributions. If the limitation of paragraph
(a) is exceeded for any Plan Year after taking into account any Qualified
Non-Elective Contributions the excess Salary Deferral Contribution (as
determined under paragraph (c)) of each Participant who is a Highly-Compensated
Employee shall be distributed to such Participant. All distributions shall be
made, notwithstanding any other restriction on distributions in the Plan, not
later than 2 1/2 months following the end of the Plan Year if possible, and in
any event not later than the last day of the following Plan Year. The amount
required to be distributed under this
<PAGE>
Section 6.3 shall be reduced by any amount previously distributed to
satisfy Section 6.2. Any amount distributed shall include the share of
income allocable to such distribution, determined in accordance with the
method used under Section 6.2(e) or 6.2(f), and all references to excess
Salary Deferral Contributions shall be deemed to include such allocated
income.
(c) Determination of Excess Contributions. If it is necessary to
determine their excess Salary Reduction Contributions of Highly Compensated
Employees pursuant to paragraph (b) for any Plan Year beginning with the Plan
Year commencing January 1, 1997, the following method shall be used:
(i) First, the Administrator shall determine the amount by which the
Salary Reduction Contributions of the Highly Compensated Employee or
Employees whose Deferral Percentage is the highest must be reduced
until their Deferral Percentage is equal to the greater of the
Deferral Percentage which will cause the Highly Compensated ADP not to
exceed the Maximum ADP or the Deferral Percentage of the Highly
Compensated Employee or Employees who have the second highest Deferral
Percentage. The same procedure shall then be applied, if necessary, to
the Salary Reduction Contributions of the Highly Compensated Employees
who have the second highest Deferral Percentage (including those whose
Deferral Percentage was reduced in the prior step), and so on until
the Highly Compensated ADP no longer exceeds the Maximum ADP. The
aggregate amount by which all Salary Reduction Contributions would
have to be reduced, using this method, so that the Highly Compensated
ADP would no longer exceed the Maximum ADP is hereinafter referred to
as the "Aggregate Excess Contribution."
(ii) Second, the Administrator shall determine the amount by which the
Salary Reduction Contributions (determined without regard to
subparagraph (c)(i) above) of the Highly Compensated Employee or
Employees whose Salary Reduction Contributions are the largest in
dollar amounts must be reduced until either the total amount of
reductions equals the Aggregate Excess Contribution or their Salary
Reduction Contributions are equal in amount to the Salary Reduction
Contributions of the Highly Compensated Employee or Employees who have
the second largest amount of Salary Reduction Contributions. The same
procedure shall then be applied, if necessary, to the Salary Reduction
Contributions of the Highly Compensated Employees who received the
second largest dollar amount of Salary Reduction Contributions
(including those whose Salary Reduction Contributions were reduced in
the prior step), and so on until the total amount of reductions equals
the Aggregate Excess Contribution.
6.4 Actual Contribution Percentage Limitation
(a) Limitation. The Matching Contributions of Participants who are
Highly Compensated Employees shall be further limited for each Plan Year so that
the Highly Compensated ACP does not exceed the Maximum ACP (or such lower amount
as is determined under paragraph (e)). The Administrator may reduce the amount
of Matching Contributions allocated to Highly Compensated Employees during the
Plan Year to prevent this limitation from being exceeded, but in no event shall
the Administrator have any liability to any Highly Compensated Employee if it
does not do so.
(b) Correction of Excess Contributions. If the limitation of paragraph
(a) is exceeded for any Plan Year after taking into account any Qualified
Non-Elective Contributions
<PAGE>
and the recharacterization of Salary Deferral Contributions pursuant to
paragraph (c), the excess Matching Contribution (as determined under
paragraph (d) of each Participant who is a Highly-Compensated Employee
shall be distributed to such Participant. All distributions shall be made,
notwithstanding any other restriction on distributions in the Plan, not
later than 2 1/2 months following the end of the Plan Year if possible, and
in any event not later than the last day of the following Plan Year. Each
such distribution shall include the share of income allocable to such
distribution, determined in accordance with the method used under Section
6.2(e) or 6.2(f), and all references to excess Contributions shall be
deemed to include such allocated income.
(c) Use of Salary Deferral Contributions. For purposes of this Section,
a portion of the Salary Deferral Contributions made on behalf of Participants
who are Non-Highly Compensated Employees shall be treated as Matching
Contributions. Such amount shall be determined by applying the method set forth
in paragraph (d) to recharacterize the Salary Deferral Contributions of
Non-Highly Compensated Employees as Matching Contributions until either the
limitation of paragraph (a) is satisfied or any further recharacterization would
cause the limitation of Section 6.3 to be exceeded. If before-tax contributions
under any other plan maintained by an Employer or Affiliate are included in a
Non-Highly Compensated Employee's Contribution Percentage, such before-tax
contributions may be recharacterized only if such other plan and the Plan would
satisfy ss.410(b) of the Code (without reliance on the average benefits test) if
treated as a single plan. Salary Deferral Contributions that are so
recharacterized shall continue to be treated as Salary Deferral Contributions
for all other purposes under the Plan, including specifically limitations on
Forfeitures and distributions.
(d) Determination of Excess Contributions. If it is necessary to
determine their excess Matching Contributions of Highly Compensated Employees
pursuant to paragraph (b) for any Plan Year beginning with the Plan Year
commencing January 1, 1997, the same two-step method described in Section 6.3(c)
shall be used.
(e) Multiple Use of Alternative Limitation. If the sum of the Highly
Compensated ADP and the Highly Compensated ACP would otherwise exceed the
greater of (i) or (ii) below:
(i) The sum of (A) 1.25 times the greater of the Non-Highly Compensated
ADP or the Non-Highly Compensated ACP plus (B) two percentage points
plus the lesser of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP; provided that the amount in (B) shall not exceed two
times the lesser of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP.
(ii) The sum of (A) 1.25 times the lesser of the Non-Highly Compensated ADP
or the Non-Highly Compensated ACP plus (B) two percentage points plus
the greater of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP; provided that the amount in (B) shall not exceed two
times the greater of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP.
then this Section 6.4 shall be applied by substituting the highest Highly
Compensated ACP that will keep the sum of the Highly Compensated ADP and
the Highly Compensated ACP from exceeding such amount for the Maximum ACP in
paragraph (a).
(f) Forfeiture of Nonvested Contributions. If a distribution of an
excess Matching Contribution must be made to a Participant under this Section
6.4 at a time when the Participant is not fully Vested in his Matching
Contribution Account, then the amount distributed shall be the lesser of the
excess Matching Contribution or the Vested balance of the Matching
<PAGE>
Contribution Account and, if the amount of the excess Matching Contribution
exceeds the Vested portion of the Matching Contribution Account Balance, and
the remaining portion of the excess Matching Contribution shall be forfeited.
Thereafter, the Vested portion of the Matching Contribution Account Balance
shall be determined in the manner provided in Section 8.4(b).
6.5 Limit on Deductible Contributions Anything else contained herein to
the contrary notwithstanding, the total Contributions made by any Employer to
the Plan for any Plan Year shall not exceed 15 percent of the aggregate
Compensation paid by the Employer to all Participants during the Plan Year, or
such other amount as may be deductible under ss.404 of the Code for such Plan
Year (determined without regard to ss.263A of the Code).
6.6 Purpose of Limitations; Authority of Administrator. The limitations
of this Article VI are intended to comply with the requirements of ss.415,
ss.402(g), ss.401(k), ss.401(m) and ss.404(a)(3) of the Code and the Treasury
Regulations issued thereunder, and shall be construed accordingly. To the extent
that said Treasury Regulations provide for any elections or alternative methods
of compliance not specifically addressed in this Article VI, the Administrator
shall have the authority to make or revoke such election or utilize such
alternative method of compliance unless such election or alternative method of
compliance by its terms requires an amendment to the Plan.
<PAGE>
ARTICLE VII
INVESTMENTS AND PLAN ACCOUNTING
7.1 Participant Accounts. The Administrator shall establish and
maintain the following separate Accounts with respect to Participants:
(a) Salary Deferral Contributions Account. A Salary Deferral
Contributions Account shall be maintained on behalf of each Participant who
elects to have Salary Deferral Contributions made on his behalf.
(b) Matching Contributions Account. A Matching Contributions Account
shall be maintained on behalf of each Participant who is allocated any Matching
Contributions under the Plan.
(c) Profit-Sharing Contributions Account. A Profit-Sharing
Contributions Account shall be maintained on behalf of each Participant who is
allocated any Profit-Sharing Contributions under the Plan.
(d) Rollover Account. A Rollover Account shall be maintained on behalf
of each Participant who elects to make a Rollover Contribution to the Plan.
(e) QNEC Account. A QNEC Account shall be maintained on behalf of each
Participant who is allocated any Qualified Nonelective Contributions under the
Plan.
Each Account shall represent the aggregate amount of the type of Contribution
referred to above, less any withdrawals, distributions or Forfeitures charged
thereto, and adjusted by the earnings, gains, losses, expenses, and unrealized
appreciation or depreciation attributable to such Contributions. The maintenance
of separate Account balances shall not require physical segregation of plan
assets with respects to any Account. The Accounts maintained hereunder represent
the Participants' interests in the Plan and Trust and are intended as
bookkeeping records to assist the Administrator in the administration of the
Plan. Any reference to a Participant's "Accounts" or "Account Balances" shall
refer to all of the Accounts maintained in the Participant's name under the
Plan unless the context otherwise requires.
7.2 Adjustments to Accounts.
(a) Accounting Dates. The end of each Plan Year shall be an Accounting
Date. The day on which the Plan terminates as to any Employer or group of
Participants or is merged with any other plan shall also be an Accounting Date.
The Administrator may change the frequency of Accounting Dates from time to time
and may establish special Accounting Dates on a uniform and non-discriminatory
basis, provided that each Anniversary Date shall always be an Accounting Date.
(b) Accounting Date Adjustments. As of each Accounting Date, the
Trustee shall:
(i) First, charge to the proper Accounts all payments or distributions
made from the Accounts since the immediately preceding Accounting
Date.
(ii) Second, adjust the Account Balances upward or downward, on a
proportional basis, according to the net gain or loss of the Trust
assets from investments (as reflected by interest payments, dividends,
realized and unrealized gains and losses on securities and other
investment
<PAGE>
transactions), so that the aggregate Account Balances equal
the fair market value (as appraised by the Trustee, but excluding all
unpaid items of income or expense) of the Trust assets on such
Accounting Date. For purposes of this subparagraph (ii), Account
Balances shall not include the balance in the Forfeiture Suspense
Account established pursuant to Section 8.5 or in the Section 415
Suspense Account established pursuant to Section 6.1.
(iii) Third, allocate and credit the balances, if any, in the 415 Suspense
Account in accordance with Section 6.1.
(iv) Fourth, allocate and credit all Contributions and Forfeitures in
accordance with Articles V and VI and Section 8.5.
(c) Timing of Adjustments. Every adjustment made pursuant to this
Section 7.2 shall be considered as having been made as of the Accounting Date
regardless of the dates of actual receipt of Contributions or payment of
distributions by the Trustee during the period ending on the Accounting Date.
Notwithstanding the foregoing, the Trustee may adopt, or the Administrator may
direct the Trustee to adopt, any reasonable, consistent, and non-discriminatory
method of accounting for the receipt of Contributions and payment of
distributions. The Trustee's determination as to the value of the assets of the
Trust and the charges or credits to the Accounts of the Participants shall be
conclusive and binding on all persons.
7.3 Separate Fund Accounting.
(a) Manner of Accounting. To the extent the Trust is divided into
separate funds, including funds established pursuant to Section 7.4, the
undivided interest of each Participant's Account in each such fund shall be
determined under the principles set forth in Section 7.2 but in accordance with
the accounting procedures specified in the trust agreement, investment
management agreement, insurance contract, custodian agreement or other document
under which such fund is maintained. To the extent not inconsistent with such
procedures, the following rules shall apply:
(i) Amounts deposited in a fund shall be deposited by means of a transfer
of such amounts to such fund from another fund as required.
(ii) Amounts required to be transferred from a fund to satisfy benefit
payments shall be transferred from such investment funds as soon as
practicable following receipt by the trustee or investment manager of
proper instructions to complete such transfers.
(iii) Except as provided in the applicable fund document, all amounts
deposited in a fund shall be invested as soon as practical following
receipt of such deposit. Notwithstanding the primary purpose or
investment policy of a fund, assets of any fund which are not invested
in the manner required by the fund document shall be invested in such
short term instruments or funds as the applicable trustee or
investment manager shall determine pending investment in accordance
with such investment policy.
(b) Separate Participant Accounts. Notwithstanding the foregoing, if
any portion of the Trust is invested in a fund that permits each Participant's
interest in the fund to be accounted for as a separate account, all
Contributions, distributions, and earnings shall be accounted for as they are
actually received, disbursed, or earned.
<PAGE>
7.4 Participant-Directed Accounts. The Administrator may permit or
require all Participants or Beneficiaries to direct the investment of some or
all of their own Accounts. If Participants are required or permitted to direct
the investment of their Accounts, the Administrator shall establish a written
procedure to govern such investments, which procedure shall satisfy the
requirements of ss.404(c) of ERISA and DOL Reg. ss.2550.404c-1, including
without limitation the establishment of at least three investment funds that
provide sufficient diversification, the identification of the fiduciaries who
are obligated to carry out participant investment directions, and any
limitations on permissible investments. Such procedure shall be appended to and
considered a part of this Plan. Such procedure shall provide for the
establishment of a fund to consist of common stock of the Sponsor, and the
Trustee shall be authorized to invest in such stock to the extent so directed by
Participants or Beneficiaries, even if the amount invested exceeds 10% of the
assets of the Trust.
<PAGE>
ARTICLE VIII
VESTING AND FORFEITURE
8.1 Accounts That Are Always Fully Vested. The following Accounts in
the Plan shall be fully Vested at all times to the extent funded, and shall not
be forfeited for any reason:
(a) Salary Deferral Contributions Account
(b) Rollover Account
(c) QNEC Account
Any provision of the Plan that refers to vesting or forfeiture shall in
no event be construed to refer to any of the Accounts listed above. Any Account
not listed above shall be hereinafter sometimes referred to as a "Forfeitable
Account."
8.2 Vesting on Retirement. If a Participant incurs a Termination of
Employment on or after attaining his Normal Retirement Age, or after becoming
Permanently Disabled, all of such Participant's Forfeitable Accounts shall be
fully Vested.
8.3 Vesting at Death. If a Participant dies before becoming eligible to
retire pursuant to Section 8.2, his Forfeitable Accounts shall be fully Vested.
8.4 Other Termination of Employment.
(a) Determination of Vested Portion. If a Participant incurs a
Termination of Employment when he is not eligible to retire pursuant to Section
8.2 then, except as otherwise provided herein, the percentage of his Forfeitable
Accounts that is Vested shall be determined in accordance with the number of
full years in his Period of Service in accordance with the following table:
Number of Years Vested Percentage
--------------- -----------------
Fewer than 1 0%
1 but not 2 25%
2 but not 3 50%
3 but not 4 75%
4 or more 100%
(b) Vesting Following a Distribution. If at any time a Participant
receives a distribution from any of his Forfeitable Accounts at a time when it
is possible to increase the Vested percentage of such Account, thereafter the
Vested portion of such Account shall be determined as follows:
(i) First, the amount previously distributed to the Participant shall be
added back to the Account;
(ii) Second, the amount determined under subparagraph (i) will be reduced
by applying the applicable vesting percentage determined in accordance
with the vesting schedule under paragraph (a);
(iii) Third, the amount previously distributed to the Participant shall be
deducted from the amount determined under subparagraph (ii).
<PAGE>
(c) Vesting Following Re-Employment. If a Participant incurs a
Termination of Employment when he is partially Vested in his Forfeitable
Accounts, and is subsequently re-employed but is not eligible to have his
forfeited Account Balances restored to him under Section 8.5, then any portion
of his Forfeitable Accounts that was Vested at the time of the Termination of
Employment but was not distributed to him (including a pro rata share of income,
gains, losses, expenses, and unrealized appreciation or depreciation) shall
thereafter be treated as a separate subaccount of such Account that is 100
percent Vested, and the vesting schedule in paragraph (a) shall apply only to
the remainder of such Account.
(d) Vesting Following Plan Termination. If there is a complete or
partial termination of the Plan, or if there is a complete discontinuance of
Contributions to the Plan by any Employer, then the Forfeitable Accounts of all
Participants affected by such termination or discontinuance shall thereafter be
fully Vested.
(e) Vesting Following Plan Amendments. If any amendment to the Plan
alters directly or indirectly the manner in which the Vested portion of
Forfeitable Accounts is determined, then, in the case of any Participant who on
the later of the date on which the amendment is adopted or the effective date of
the amendment had completed a Period of Service consisting of at least three
full years the Vested portion of such Participant's Forfeitable Accounts shall
thereafter be determined without regard to such amendment unless the effect of
the amendment is to increase the Vested portion.
8.5 Forfeitures.
(a) Effective Date of Forfeiture. The portion of any Participant's
Forfeitable Accounts which is not Vested when he incurs a Termination of
Employment under Section 8.4 will become a Forfeiture as of the last day of the
Plan Year in which the Participant receives a distribution or deemed
distribution of the Vested portion of his Forfeitable Account following the
Termination of Employment, or the Participant incurs a Period of Severance of at
least five years following the Termination of Employment. Matching Contributions
forfeited pursuant to Section 6.4(f) in order to satisfy the actual contribution
percentage test shall be forfeited as of the last day of the Plan Year to which
such Matching Contributions relate.
(b) Application of Forfeitures. Forfeitures occurring in any Plan Year
shall be applied in the following order:
(i) To restore the forfeited Accounts of Participants described in
paragraph (c) and Section 9.6 during such Plan Year.
(ii) To reduce the amount of Matching Contributions required for such Plan
Year.
(iii) To reduce the amount of Qualified Nonelective Contributions required
for such Plan Year.
(iv) In a Top-Heavy Year, to reduce the amount of minimum top-heavy
Contributions required in such Top-Heavy Year.
(v) To the extent determined by the Administrator, to pay administrative
expenses of the Plan.
(vi) Among all Participants eligible to receive Profit-Sharing
Contributions for such Plan Year in the same manner that
Profit-Sharing Contributions are or would be allocated for such Plan
Year.
<PAGE>
(c) Restoration of Forfeitures. If a Participant who incurs a
Termination of Employment when his Forfeitable Accounts are not fully Vested and
incurs a forfeiture upon receiving the distribution or deemed distribution of
the Vested portion of his Forfeitable Account is re-employed before incurring a
Period of Severance of at least five years, the portion of his Account that was
not Vested shall be restored to his Account, without adjustment for any gains or
losses, when the Participant is entitled to have his Service restored pursuant
to Article III. Such restoration shall be made out of Forfeitures occurring
during the Plan Year, or out of additional Contributions by the Employers. A
Participant who is not Vested in any portion of his Forfeitable Account when he
incurs a Termination of Employment shall be deemed to have been distributed the
entire Vested balance of such Account. Nothing contained herein shall be
construed to cause any period with respect to which a Participant received a
distribution of the Vested portion of his Account to be disregarded for purposes
of determining the Participant's Service.
(d) Treatment of Account Pending Forfeiture. The Forfeitable Account of
a Participant who incurs a Termination of Employment when he is not fully Vested
shall continue to share in all allocations of earnings, gains, losses and
expenses until it is fully distributed or forfeited. If the Vested portion of
such Participant's Forfeitable Accounts is distributed before the balance is
forfeited and the Participant is re-employed, the vested portion shall be
determined in accordance with Section 8.4(b). If no portion of the Forfeitable
Account of a Participant who incurs a Termination of Employment is Vested, he
shall be deemed to have received a distribution of the full amount of the Vested
portion of his Forfeitable Account upon his Termination of Employment.
<PAGE>
ARTICLE IX
PAYMENT OF BENEFITS
9.1 Methods of Benefit Payment.
(a) Normal Form of Payment. The normal form of payment of a
Participant's benefit, whether to the Participant or a Beneficiary, shall be a
cash lump sum distribution equal to the Participant's total Vested Account
Balance valued as of the Accounting Date coincident with or immediately prior to
such distribution, and, except as otherwise provided herein, all benefits shall
be paid in such form.
(b) Election Procedures. Wherever the Plan provides for a Participant
or Beneficiary to elect a form of distribution (including the right to defer
receiving a distribution), the Administrator shall provide a written explanation
of the different forms of distribution. Such explanation shall be provided not
less than 30 nor more than 90 days prior to the scheduled commencement of such
benefit, or within such other period as may be provided by any applicable
provision of ERISA or the Code.
9.2 Distributions upon Termination of Employment.
(a) Small Account Balances. Effective January 1, 1998, if, at the time
of a Participant's Termination of Employment, his Vested Account Balance does
not exceed $5,000.00, and did not exceed $5,000.00 immediately prior to any
other distribution, the entire amount of the Vested Account Balance shall be
distributed to such Participant as soon as administratively feasible.
(b) Retirement. A Participant who incurs a Termination of Employment on
or after attaining his Normal Retirement Age, or after becoming Permanently
Disabled, shall begin receiving the distribution of his Account Balance as soon
as administratively feasible, provided that if paragraph (a) does not apply, in
no event shall distribution begin before the Participant attains his Normal
Retirement Age unless the Participant so elects.
(c) Termination of Employment Prior to Retirement. If a Participant
incurs a Termination of Employment prior to being eligible to retire, and
paragraph (a) does not apply to such Participant, then if the Participant so
elects, distribution of his Vested Account Balance shall begin as soon as
administratively feasible and, if the Participant does not so elect,
distribution of his Vested Account Balance shall begin as soon as
administratively feasible after the Participant attains Normal Retirement Age. A
Participant who does not elect to begin receiving his distribution at the time
of his Termination of Employment may subsequently elect to begin receiving his
distribution at any time prior to attaining Normal Retirement Age.
(d) Latest Commencement Date. Anything else contained herein to the
contrary notwithstanding, in no event shall distribution of a Participant's
Account begin later than the earliest of the dates determined under clause (i)
or clause (ii) below:
(i) Unless the Participant consents to a later date, the sixtieth (60th)
day after the close of the Plan Year in which the latest of the
following events occurs: (A) the Participant's attainment of his
Normal Retirement Age; (B) the tenth anniversary of the date on which
the Participant commenced participation in the Plan; or (C) the
Participant's Termination of Employment.
<PAGE>
(ii) Effective January 1, 1997, April 1 of the calendar year following the
later of the calendar year in which the Participant attains the age of
70 1/2 incurs a Termination of Employment, or, in the case of a
Participant who is described in paragraph (a)(i) of the definition of
Highly Compensated Employee in the year in which he attains the age of
70 1/2, April 1 of the following calendar year regardless of whether
he has incurred a Termination of Employment.
9.3 Payments after a Participant's Death.
(a) Designation of Beneficiaries. The Account of a Participant who dies
before his Account has been distributed in full shall be distributed to this
Beneficiary or Beneficiaries as provided herein:
(i) Each Participant may file with the Administrator, in such form as the
Administrator shall from time to time require, a written designation
of a Beneficiary or Beneficiaries (including contingent or successive
Beneficiaries). If more than one Beneficiary is designated, such
designation shall also specify the manner in which payments are to be
divided. In the absence of such designation, all payments shall be
divided per capita, or, if the Beneficiaries are the Participant's
descendants, per stirpes. The Beneficiaries may be changed at any time
or times by the filing of a new designation with the Administrator,
without the necessity of obtaining the written consent of any
Beneficiary, subject to the rights of the Participant's spouse under
clause (ii) below. No designation of a Beneficiary or change thereof
shall be effective until it has been received by the Administrator.
The Administrator shall be entitled to rely upon the last designation
filed by the Participant prior to his death.
(ii) Any Beneficiary designation which has the effect of causing any
portion of a Participant's Vested Account Balance to be paid to any
Beneficiary other than the surviving spouse of the Participant shall
be effective only if (i) such election is consented to, in writing, by
the person who was the Participant's spouse for the one-year period
ending on the date of the Participant's death, and the spouse's
signature is witnessed either by a representative designated by the
Administrator or by a notary public, or (ii) it is established, to the
satisfaction of the Administrator, that the Participant had not been
married for one year on the date of his death or that, if the
Participant had been married for one year on the date of his death,
that the consent of the spouse could not be obtained when the
designation was filed because the Participant was unable to locate his
spouse, the Participant and his spouse were legally separated, the
Participant had been abandoned by his spouse and had a court order to
such effect, or that such other circumstances existed as would justify
a failure to obtain the spouse's consent under ss.417 of the Code.
(iii) To the extent provided in any Qualified Domestic Relations Order, a
former spouse of the Participant shall be treated as the Participant's
spouse at the time of his death (and as having been married to the
Participant for a one-year period at the time of his death).
(iv) If a Participant dies without having a Beneficiary designation in
force, or if at the time of the Participant's death all designated
Beneficiaries have died, payment shall be made to the Participant's
spouse at the time of his
<PAGE>
death if they had been married for at least one year at the time of
his death; or if the Participant's spouse predeceases him or they
had been married for less than one year, then to the Participant's
estate.
(b) Death of Participant after Distribution Has Commenced. If a
Participant dies after distribution of his benefit has commenced and after the
date specified in Section 9.2(d)(ii), then distribution shall continue under the
same method of distribution elected by the Participant. If distribution has
commenced but the Participant dies prior to the date specified in Section
9.2(d)(ii), then distribution shall be made in accordance with paragraph (c).
(c) Death of Participant before Distribution Has Commenced. If the
Participant dies before distribution of his Account has commenced, or before the
date specified in Section 9.2(d)(ii), then the remaining balance of the
Participant's Account shall be distributed among his Beneficiaries in a lump sum
as soon as administratively feasible after the Participant's death, but in no
event later than December 31 of the calendar year than includes the fifth
anniversary of the Participant's death. In the case of a surviving spouse,
commencement may be deferred until December 31 of the calendar year in which the
Participant would have attained the age of 70 1/2, if later. If the surviving
spouse dies before such distribution are to begin, then the provisions of this
paragraph (c) shall apply to the successor Beneficiary as if the surviving
spouse had been the Participant, except that, if the surviving spouse had
remarried, his surviving spouse shall not be treated as the surviving spouse of
a Participant. Such an election must be made no later than the earlier of the
date on which such payments would be required to begin or December 31 of the
calendar year that includes the fifth anniversary of the Participant's death (or
such earlier date as the Administrator may establish for purposes of
administrative processing), and shall be irrevocable and binding on all
successor Beneficiaries.
(d) Special Rules for Payments to Surviving Spouse. Any distribution to
a surviving spouse shall be available to such spouse within a reasonable time
following the Participant's death. For this purpose, a reasonable time shall
mean either 90 days or, if longer, the period of time within which other types
of distributions made on Termination of Employment are customarily made. The
portion of the Account payable to the surviving spouse shall be adjusted for
gains and losses before it is distributed in the same manner and at the same
times as Accounts are adjusted for purposes of other distributions.
9.4 Purpose of Limitations; Authority of Administrator. The provisions
of Sections 9.1, 9.2 and 9.3 are intended comply with the requirements of
ss.401(a)(9) of the Code, including specifically the minimum distribution
incidental death benefit rule of ss.401(a)(9)(G), the proposed Treasury
Regulations issued thereunder, and any final Treasury Regulations, and shall be
construed accordingly. Said Code and Treasury Regulation provisions are hereby
incorporated herein by this reference, and shall control over any form of
distribution provided in this Plan that is inconsistent therewith. To the extent
that said Treasury Regulations provide for any elections or alternative methods
of compliance not specifically addressed in Sections 9.1, 9.2 and 9.3, the
Administrator shall have the authority to make or revoke such election or
utilize such alternative method of compliance.
9.5 Direct Transfers. Any Participant or Alternate Payee who is
entitled to receive a distribution to which this Section 9.5 applies shall have
the right to direct the transfer of all or a portion of such distribution
directly to an individual retirement account or annuity qualified under ss.408
of the Code (other than an endowment contract) (an "IRA"), or to a defined
contribution pension or profit-sharing trust qualified under ss.401(a), annuity
plan qualified under ss.403(a) of the Code, or other "eligible retirement plan"
as defined in ss.401(a)(31) of the Code, which will accept such a transfer,
provided that the amount so transferred must either be the entire amount of such
distribution or must be at least $500. The surviving spouse of a Participant
shall similarly be entitled to direct the transfer of all or a portion of any
distribution to which this
<PAGE>
Section 9.5 applies, but only to an IRA. The Administrator shall furnish
each Participant, Alternate Payee or surviving spouse to whom this Section
9.5 applies with a notice describing his right to a direct transfer and the
tax consequences of a distribution. Such notice shall be furnished not more
than 90 days nor less than 30 days before the Participant, Alternate Payee
or surviving spouse is entitled to receive such distribution, and no
distribution shall be made until 30 days after he has received such notice
unless he waives such 30 day period in writing. The provisions of this
Section 9.5 shall apply to all distributions from the Trust which exceed
$200.00, except for the portion of any distribution that is necessary to
meet the minimum distribution requirements of ss.401(a)(9) of the Code. The
Administrator may adopt administrative procedures to implement direct
transfers, which may vary the time periods and minimum amounts set forth
above, to the extent consistent with final Treasury Regulations issued
under ss.401(a)(31) of the Code.
9.6 Missing Participants and Beneficiaries. If a portion of an Account
remains to be distributed to a Participant or Beneficiary at a time when the
Administrator is unable to locate the Participant or Beneficiary, and the
Participant or Beneficiary fails to contact the Administrator within three years
after being notified of his right to receive such distribution by a letter sent
to his address on file with the Administrator, then such Account shall be
applied to reduce the amount of Contributions that the Employers would otherwise
be required to contribute to the Plan, but if the Participant or Beneficiary
later asserts a proper claim for such distribution, or if the person who would
be entitled to receive such distribution upon the death of such Participant or
Beneficiary establishes that such Participant or Beneficiary has died, then such
account shall first be restored out of Forfeitures for the Plan Year, and the
Employers shall contribute any additional amount necessary to restore such
Account.
9.7 Payment With Respect to Incapacitated Participants or
Beneficiaries. If any person entitled to a distribution benefits under the Plan
is under a legal disability, or in the Administrator's opinion, is incapacitated
in any way so as to be unable to manage his financial affairs, the Administrator
may direct the payment of such distribution to such person's legal
representative or to a relative or friend of such person for such person's
benefit or the trustee may direct the application of such benefits to the
benefit of such person. Payments made in accordance with this Section 9.7 shall
discharge all liabilities for such distribution under the Plan.
9.8 Limitation on Liability for Distributions. Anything else contained
herein to the contrary notwithstanding, any distribution made under any
provision of this Article IX to a person whom the Administrator determines in
good faith to be entitled to receive such distribution shall fully discharge the
Plan's obligation to make such distribution, and neither the Plan, the Trustee,
the Administrator, the Sponsor nor any Employer shall have any further liability
with respect to such distribution to the Participant or any other person
claiming through him.
9.9 Withdrawals.
(a) Non-Hardship Withdrawals. Participants shall be permitted to make
withdrawals from their Account without demonstrating a financial hardship to the
extent provided below:
(i) Withdrawals after Age 59 1/2. A Participant who has attained the age
of 59 1/2 may withdraw part or all of the Vested portion of the
balance in his Accounts.
(b) Hardship Withdrawals. A Participant may receive a hardship
withdrawal as provided below:
<PAGE>
(i) Subject to the limitations set forth below, hardship withdrawal may be
made from the Participant's Salary Deferral Contribution Account,
Matching Contributions Account and Profit-Sharing Account.
(ii) A hardship withdrawal can only be made because of
(A) the Participant's need to pay medical expenses (as defined in
ss.213(d) of the Code) for the Participant, his spouse, or one of his
dependents (as defined in ss.152 of the Code);
(B) the Participant's need to purchase the Participant's principal
residence (excluding mortgage payments);
(C) the Participant's need to pay tuition, related fees, and room and
board for up to twelve months of post-secondary education for the
Participant, his spouse, one of his children, or one of his dependents
(as defined in ss.152 of the Code);
(D) the Participant's need to pay rent to avoid eviction from his
principal residence, or mortgage payments to avoid foreclosure on his
principal residence; or.
(E) other circumstances designated as safe harbor examples of hardship
pursuant to Treasury Regulations promulgated under ss.401(k) of the
Code.
(iii) A hardship withdrawal must be limited to the amount reasonably
necessary to satisfy the financial need described above (after
payment of all income taxes and penalties on the withdrawal). A
withdrawal will be considered reasonably necessary to satisfy a
financial need only if it satisfies the following criteria:
(A) the Participant has obtained all other distributions permitted under
paragraph (a) and loans permitted under Section 9.10,
(B) the Participant's elective deferrals (as hereinafter defined) are
suspended for a period of at least twelve months after the withdrawal
under all plans maintained by any Employer or Affiliate, and
(C) the maximum amount of such elective deferrals for the calendar year
following the year of the withdrawal are limited to the amount set
forth in Section 6.2 reduced by all elective deferrals made prior to
the withdrawal in the year of the withdrawal. For this purpose, the
term elective deferrals includes Salary Deferral Contributions and all
compensation the payment of which is deferred on a pre-tax basis,
including that deferred under non-qualified plans.
(iv) A hardship withdrawal that is charged to the Salary Deferral
Contribution Account may not exceed the lesser of the (A) current
balance of the Account or (B) the excess of the total amount of
Salary Deferral Contributions made to the Account over the total
prior hardship withdrawals made from such Account.
<PAGE>
(c) Limitations on Withdrawals. The Administrator may adopt uniform and
non-discriminatory procedures imposing limitations on the number, frequency, or
amount of hardships pursuant to this Section 9.9.
(d) Treatment of Withdrawals. Except as otherwise specifically provided
herein, a withdrawal shall be treated as a distribution for all purposes of the
Plan.
9.10 Loans.
(a) Eligibility for Loans. An Active Participant, or an Inactive
Participant who is still an Employee, may borrow against his Account Balance
subject to the provisions set forth herein. Such loans shall be available to all
Participants on a reasonably equivalent basis and shall not be made available to
Highly Compensated Employees, officers or shareholders in an amount greater than
the amount (stated as a percentage of the Participant's Accounts) made available
to other Participants. Inactive Participants who are no longer Employees and
Beneficiaries of deceased Participants shall be entitled to borrow from the Plan
only if they are "parties in interest" as defined in ss.3(14) of ERISA at the
time the loan is requested. Loans to such Inactive Participants and
Beneficiaries shall be governed by the same rules as provided in this Section,
with such modifications as the Administrator may determine to be appropriate to
reflect the lack of an employment relationship.
(b) Maximum Amount of Loans. A loan to any Participant, when added to
the outstanding balance of all other loans to him from the Plan, shall not
exceed the lesser of (i) 50 percent of the Participant's Vested Account Balance
or (ii) $50,000.00 reduced by the excess (if any) of (A) the highest outstanding
balance of loans from the Plan during the one year period ending on the day
before the date of the loan over (B) the outstanding balance of loans from the
Plan on the date of the loan.
(c) Maximum Term. Each loan to a Participant shall provide for
repayment over a period not to exceed five years, except that any such loan may
provide for repayment over a period up to 15 years if it is to be used to
acquire a dwelling unit which within a reasonable time is to be used (determined
at the time the loan is made) as the principal residence of the Participant.
Each such loan shall provide for substantially level amortization (with payments
not less frequently than quarterly) over the term of the loan.
(d) Interest Rate. Each such loan shall bear interest at a reasonable
rate to be determined by the Administrator in a nondiscriminatory manner, taking
into consideration interest rates currently being charged by commercial lending
institutions for similar loans.
(e) Collateral and Enforcement. Each loan made to a Participant shall
be secured by not more than 50 percent of the Vested portion of the
Participant's Accounts. Each Participant who is an Employee shall be required to
execute a wage withholding agreement providing for payments of principal and
interest to be withheld from his compensation. Each loan shall also provide that
Termination of Employment by the Participant is an event of default, whether or
not a distribution is made from the Participant's Accounts, permitting the
balance of the loan to be offset against the Participant's Accounts. Anything
else contained herein to the contrary notwithstanding, no amount shall be offset
against a Participant's Salary Deferral Contribution Account except at a time
that a distribution would be permitted to the Participant, whether or not a loan
is treated as a distribution for tax purposes under ss.72(p) of the Code.
(f) Accounting Treatment. The loan shall for purposes of Article VII be
treated as an investment of the funds credited to the Participant's Accounts.
For purposes of the accounting adjustments provided for by Article VII as of
each Accounting Date until the loan is repaid in full, the Administrator shall
reduce the Participant's Account Balances by the unpaid
<PAGE>
balance on such loan and shall increase his Accounts by the amount of
interest and other payments made by the Participant. Each such reduction or
increase shall be applied to the Participant's Accounts and the Investment
Funds in which his Accounts are invested in such proportions as he may
specify in accordance rules adopted by the Administrator, or, if he fails
to specify the proportions, shall be applied proportionately to such
Accounts and Investment Funds.
(g) Other Restrictions. No loan shall be made to any Participant in an
amount of less than $1,000. The Administrator may establish additional
restrictions on the number, frequency, or terms of loans, and may impose
reasonable fees for loans, provided that such restrictions and fees are applied
in a uniform and non-discriminatory manner and do not cause loans to fail to be
available to Participants on a reasonably equivalent basis.
<PAGE>
ARTICLE X
PLAN ADMINISTRATION
10.1 General Fiduciary Standard of Conduct Each fiduciary under this
Plan shall discharge his duties hereunder solely in the interest of the
Participants and their Beneficiaries and for the exclusive purpose of providing
benefits to the Participants and their Beneficiaries and defraying the
reasonable expenses of administering the Plan and the Trust. Each fiduciary
shall act with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like character and
with like aims, in accordance with the documents and instruments governing the
Plan and the Trust, insofar as such documents and instruments are consistent
with this standard.
10.2 Allocation of Responsibility Among Fiduciaries. The fiduciaries
shall have only those specific powers, duties, responsibilities and obligations
specifically delegated to them under this Agreement. The Sponsor, the
Administrator (if other than the Sponsor), members of the Committee, the
Trustee, if any, and any investment manager shall each be a "named fiduciary" as
defined in ss.402(a)(2) of ERISA. The Administrator may delegate fiduciary
duties (other than trustee duties) to persons other than named fiduciaries, and
may approve any allocation of fiduciary duties among named fiduciaries, as
provided in ss.405(c) of ERISA. If there is more than one Trustee, they may
enter into agreements among themselves with respect to the allocation of trustee
responsibilities with the consent of the Administrator as provided in ss.405(b)
of ERISA.
10.3 Administrator. The Administrator of the Plan shall be the Sponsor.
The Administrator shall be the "plan administrator" as defined in ss.414(g) of
the Code, and the "administrator" as defined in ss.3(16)(A) of ERISA. The
Administrator shall have the duty to file such plan descriptions and annual
reports as may be required by ERISA or similar legislation and shall be
designated to accept service of legal process and any other notices for the
Plan. The Administrator shall also furnish each Participant with a summary plan
description, a summary annual report, and all other notices and other documents
required by ERISA, the Code or this Plan. The Sponsor shall have the authority
to appoint one or more persons to serve as the Administrator hereunder, and
shall also have the authority to remove the Administrator at any time that it is
not serving as Administrator.
10.4 Powers and Duties of Administrator. In addition to all other
powers and duties set forth herein, the Administrator shall have all necessary
power to accomplish its duties under the Plan, including, but not limited to,
the power to:
(a) construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment of any benefits
hereunder;
(b) prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
(c) assist any Participant regarding any rights, benefits or elections
available under the Plan;
(d) adopt reasonable procedures for determining whether any order,
judgment or decree constitutes a Qualified Domestic Relations Order, and notify
the Participant and all alternative payees affected as to the results of its
determinations;
<PAGE>
(e) direct the Trustee with respect to the amount and type of benefits
to which any Participant or Beneficiary shall be entitled hereunder and with
respect to other disbursements from the Trust;
(f) to the extent permitted under the Trust Agreement, direct the
Trustee with respect to the investments of the Trust;
(g) receive from the Employers and from Participants such information
as shall be necessary for the proper administration of the Plan;
(h) furnish the Employers, upon request, such annual reports with
respect to the administration of the Plan as are reasonable and appropriate;
(i) maintain all the necessary records for the administration of the
Plan;
(j) receive, review and keep on file (as it deems convenient and
proper) reports of benefit payments made by the Trustee and reports of
disbursements for expenses directed by it; and
(k) do all other acts which the Administrator deems necessary or proper
to accomplish and implement its responsibilities under the Plan.
Any rule or procedure adopted by the Administrator, or any decision, ruling or
determination made by the Administrator, in good faith and in accordance with
the applicable fiduciary standards of ERISA shall be final, binding and
conclusive on all Employers, Employees, Participants, Beneficiaries and all
persons claiming through them. Rules and procedures adopted by the
Administrator in accordance with this Section 10.4 may alter any provision of
the Plan that is ministerial or administrative in nature, including varying the
time required for performing any act if such time is not specified by law or
regulation, without a formal amendment to the Plan. Wherever the Plan provides
for any election, consent, or other action to be taken by a Participant,
Employee, Beneficiary, or other person in writing, the Administrator may
authorize the use of alternative technology, including specifically use of a
voice response or other telephonic system, to the extent permitted by applicable
law.
10.5 Committee.
(a) Appointment and Membership. A Committee may be appointed to
administer the Plan as agent for the Sponsor. The Committee shall consist of one
or more members appointed by the Board from time to time. Each members shall
serve at the pleasure of the Board or for such term as the Board may determine,
and may be removed by the Board at any time. A member of the Committee who is an
Employee shall automatically cease to be a member upon his Termination of
Employment. The Board may change the size of the Committee at any time, and if
any vacancy occurs on the Committee, the remaining members shall have full
authority to act unless and until the Board appoints a replacement member.
(b) Action by Committee. The Committee shall act by the concurrence of
a majority of its members at the time in office and such action may be taken
either by vote at a meeting or in writing without a meeting. The Committee may
adopt such by-laws, rules and regulations as it deems necessary, desirable or
appropriate for the conduct of its affairs. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant, Beneficiary, Employer, or Affiliate, the Administrator or the
Trustee, and shall have no duty or responsibility to verify such information. By
vote or by unanimous written consent the Committee may authorize any one or more
of its members to execute any instrument or document on its behalf.
<PAGE>
(c) Failure to Appoint Committee. If the Sponsor is acting as
Administrator and fails to appoint a Committee, the Sponsor's powers and duties
as Administrator shall be discharged by such officers and employees as may be
specifically delegated such powers and duties by the Board or Chief Executive
Officer of the Sponsor or, in the absence of such delegation, by such officers
and employees as are customarily responsible for matters involving human
resources and/or employee benefits. In no event shall any such person be deemed
to be the Administrator unless he is specifically so designated and accepts such
designation in writing.
10.6 Compensation and Expenses. All fiduciaries and Committee members
who are Employees shall serve without compensation for their services hereunder.
Professional Trustees and investment managers shall be paid such compensation as
may be agreed upon by the Administrator. All expenses of the administration of
the Plan, including expenses incurred in the hiring of consultants, advisors,
investment managers, attorneys and accountants, shall be paid by the Employers
to the extent that such expenses are not paid out of the Trust.
10.7 Indemnification by Employers. The Employers shall indemnify the
members of the Committee, the Administrator and each Trustee for, and hold them
harmless from and against, any and all liabilities, losses, costs or expenses
(including reasonable attorneys fees) of whatsoever kind and nature which may be
imposed on, incurred by or asserted against them at any time by reason of their
service under the Plan or the Trust as long as they did not act dishonestly or
engage in willful misconduct or gross negligence in their official capacities
hereunder, including all expenses reasonably incurred in their defense if the
Employers fail to provide such defense.
10.8 Service in Multiple Capacities. Any person may serve in more than
one fiduciary capacity hereunder, including but not limited to service both as a
member of the Committee and as a Trustee.
10.9 Claims Procedure.
(a) Filing of Claim. A Participant or Beneficiary, or an authorized
representative acting on his behalf (hereinafter called the "claimant"), may
notify the Administrator of a claim for benefits under the Plan. Such notice may
be in any form acceptable to the Administrator and shall set forth the basis of
such claim and shall authorize the Administrator to conduct such examinations as
may be necessary to determine the validity of the claim and to take such steps
as may be necessary to facilitate the payment of any benefits to which the
claimant may be entitled under the terms of the Plan.
(b) Notice of Denial. Whenever a claim for benefits by the claimant has
been denied by the Administrator, a written notice of denial shall be given to
the claimant, prepared in a manner calculated to be understood by him without
legal assistance and setting forth the specific reasons for the denial and
explaining the procedure for an appeal and review of the decision by the
Administrator. Such notice shall be furnished not later than 90 days after the
claim has been filed (which 90 day period may be extended for up to an
additional 90 days if special circumstances require and notice of the extension
is furnished to the claimant prior to the end of the first 90 day period).
(c) Review of Denial. A claimant whose claim is denied, or his
authorized representative, may request a review upon written application to the
Administrator within 60 days after receiving notice of the denial. In connection
with such application, the claimant or his authorized representative may review
pertinent documents and may submit issues and comments in writing. If such an
application is made, the Administrator shall make a full and fair review of the
denial of the claim and shall make a decision not later than 60 days after
receipt of the application, unless special circumstances (such as the need to
hold a hearing) require an
<PAGE>
extension of time, in which case a decision shall be made as soon as
possible but not later than 120 days after receipt of the request for review,
and written notice of the extension shall be given to the claimant before the
commencement of the extension. The decision on review shall be in writing and
shall include specific reasons for the decision and specific references to the
pertinent provisions of the Plan on which the decision is based.
10.10 Qualified Domestic Relations Orders.
(a) Distribution in Accordance with QDRO. Notwithstanding Section 12.2
or anything else in the Plan to the contrary, a Participant's Accounts may be
distributed to an Alternate Payee in accordance with a Qualified Domestic
Relations Order.
(b) Procedure on Receipt of Order. After receipt of an order that is a
potential Qualified Domestic Relations Order, the Administrator shall (i)
promptly notify the affected Participant and any Alternate Payee of the receipt
of such order and the Administrator's procedure for determining qualified status
of such orders, and (ii) within a reasonable period after receipt shall
determine whether the order is a Qualified Domestic Relations Order and notify
the Participant and each Alternate Payee of such determination.
(c) Determination of Status of Orders. The Administrator shall
establish a procedure to determine the qualified status of such orders and to
administer Plan distributions in accordance with Qualified Domestic Relations
Orders. Such procedure shall be in writing, shall include a provision specifying
the notification requirements enumerated in the preceding paragraph, shall
permit an Alternate Payee to designate a representative for receipt of
communications from the Administrator and shall include such other provisions as
the Administrator determines, consistent with ss.401(a)(13) and ss.206(d)(3) of
ERISA.
(d) Segregation of Accounts. During any period in which the issue of
the qualified status of such an order is being determined (by the Administrator,
a court of competent jurisdiction or otherwise), the Plan shall separately
account for the amounts, if any, which would have been payable to the Alternate
Payee during such period if the order had been determined to be a Qualified
Domestic Relations Order.
(e) Payment after Determination of Status. If an order is determined to
be a Qualified Domestic Relations Order within the 18-month period after
distribution of the Participant's Accounts would otherwise be required, then
payment from the segregated account shall be made to the appropriate Alternate
Payee. If such a determination is not made within the 18-month period, the
segregated account shall be returned to the Participant's Accounts under the
Plan and shall be paid at the time and the manner provided under the Plan as if
no order had been received. Any subsequent determination that the order is a
Qualified Domestic Relations Order shall be applied prospectively only.
(f) Pre-1985 Orders. An order that was entered prior to January 1, 1985
and that does not meet the requirements of a Qualified Domestic Relations Order,
shall nevertheless be treated as a Qualified Domestic Relations Order if
benefits were being paid pursuant to such order on such date, and, otherwise may
be treated as a Qualified Domestic Relations Order in the Administrator's
discretion.
<PAGE>
ARTICLE XI
AMENDMENT, TERMINATION OR MERGER OF PLAN
11.1 Amendment.
(a) Sponsor's Authority to Amend. The Sponsor shall have the right at
any time to amend in whole or in part any or all of the provisions of this Plan
by action of its Board or any other person to whom the Board may delegate such
authority except as expressly set forth below.
(b) No Reversionary Amendments. Except as expressly provided in Section
12.12 below, no amendment may result in, authorize or permit any part of the
Trust, the income from the Trust or any Plan assets to be distributed to or for
the benefit of anyone other than the Participants and their Beneficiaries.
(c) No Benefit Reductions. No amendment may be adopted which will
reduce any Participant's Account Balance or the Vested portion thereof to an
amount less than the Account Balance or the Vested portion thereof that the
Participant would be entitled to receive if he had resigned from the employ of
all Employers and Affiliates immediately prior to the latter of the adoption
date or election date of such amendment. Except as otherwise provided in
Treasury Regulations issued pursuant to ss.411(d)(6) of the Code, an amendment
that eliminates or reduces an early retirement benefit or retirement-type
subsidy, or that eliminates an optional form of benefit, with respect to a
Participant's Account Balance shall be treated as reducing the Participant's
Account Balance for this purpose.
(d) Duties of Trustee. No amendment shall increase the duties or
liabilities of the Trustee without the Trustee's consent.
11.2 Termination.
(a) Complete Termination. The Sponsor may terminate the Plan as to all
Employers at any time by written notice to all of the Employers.
(b) Termination by an Employer. The Plan will terminate as to any
Employer on the earliest date on which one of the events described in (i)
through (iv) below has occurred with respect to any that employer:
(i) Any date that the Plan is terminated with respect to an Employer by
action of that Employer provided that the Sponsor has been given prior
written notice of such termination;
(ii) Any date that an Employer is judicially declared bankrupt or
insolvent;
(iii) Any date an Employer completely discontinues its Contributions under
the Plan; or
(iv) Any date on which an Employer is dissolved, merged, consolidated or
reorganized or the date on which the assets of an Employer are
completely or substantially sold unless arrangements have been made
whereby the Plan will be continued by a successor to that employer or
purchaser of its assets under Section 11.3.
<PAGE>
11.3 Continuation by a Successor or Purchaser. Notwithstanding Section
11.2(b)(iv), the Plan and the Trust shall not terminate with respect to an
Employer in the event of dissolution, merger, consolidation or reorganization of
the Employer or sale by an Employer of its entire assets or substantially all of
its assets if arrangements are made in writing, with the consent of the Sponsor,
between the Employer and any successor to the Employer or purchaser of all or
substantially all of its assets whereby such successor or purchaser will
continue the Plan. If such arrangements are made then such successor or
purchaser shall be substituted for the Employer under the Plan.
11.4 Plan Merger or Consolidation. The Sponsor may cause the Plan or
the Trust to be merged or consolidated with, or may transfer the assets or
liabilities under the Plan to, any other qualified plan or from any other
qualified plan provided that the documents and other arrangements regarding such
merger, consolidation or transfer provide safeguards which would cause each
Participant in the Plan, if the Plan terminated, to receive a benefit in the
event of a termination immediately after such merger, consolidation or transfer
which is equal to or greater than the benefit the Participant would have been
entitled to receive if the Plan had terminated immediately prior to such merger,
consolidation or transfer.
<PAGE>
ARTICLE XII
GENERAL PROVISIONS
12.1 No Employment Guarantee. Neither the establishment of the Plan nor
any modification thereof, nor the creation of any fund or account, nor the
payment of any benefits shall be construed as giving to any Participant or other
person any legal or equitable right against the Sponsor, any Employer, the
Administrator or the Trustee except as herein provided. Under no circumstances
shall the terms of employment with an Employer of any Participant be modified or
in any way affected hereby. The maintenance of this Plan shall not constitute a
contract of employment with any Employer. Participation in the Plan will not
give any Participant a right to be retained as an employee of any Employer.
12.2 Nonalienation of Plan Benefits. The rights or interests of any
Participant or any Participant's Beneficiaries to any benefits or future
payments hereunder shall not be subject to attachment or garnishment or other
legal process by any creditor of any such Participant or beneficiary nor shall
any such Participant or beneficiary have any right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or rights which he may
expect to receive, contingently or otherwise under this Plan except as may be
required by Section 10.10 or otherwise by applicable law that is not pre-empted
by ERISA.
12.3 Action by Sponsor or Employer. Action required to be taken or
permitted by the Sponsor or an Employer may be taken by action of the Board of
the Sponsor or such Employer or by a person or committee of persons authorized
to act by said Board.
12.4 Applicable Law. The Plan and the Trust shall be construed in
accordance with the provisions of ERISA and other applicable federal laws. To
the extent not inconsistent with such laws, this Plan shall be construed in
accordance with the laws of the State of Illinois.
12.5 Participant Litigation. In any action or proceeding regarding the
Plan assets or any property constituting a portion or all thereof or regarding
the administration of the Plan, employees or former employees of an Employer or
their Beneficiaries or any other persons having or claiming to have an interest
in this Plan shall not be necessary parties and shall not be entitled to any
notice or process. Any final judgment which is not appealed or appealable and
may be entered in any such action or proceeding shall be binding and conclusive
on the parties hereto and all persons having or claiming to have any interest in
this Plan. To the extent permitted by law, if a legal action is begun against
the Sponsor, an Employer, the Administrator, the Committee, or the Trustee by or
on behalf of any person and such action results adversely to such person or if a
legal action arises because of conflicting claims to a Participant's or other
person's benefits, the costs to the Sponsor, an Employer, the Administrator, the
Committee, or the Trustee of defending the action will be charged to the
amounts, if any, which were involved in the action or were payable to the
Participant or other person concerned. To the extent permitted by applicable
law, acceptance of participation in this Plan shall constitute a release of the
Sponsor, each Employer, the Administrator, the Committee, and the Trustee and
their respective agents from any and all liability and obligation not involving
willful misconduct or gross neglect.
12.6 Participant and Beneficiary Duties. Persons entitled to benefits
under the Plan shall file with the Administrator from time to time such person's
post office address and each change of post office address. Each such person
entitled to benefits under the Plan also shall furnish the committee with all
appropriate documents, evidence, data or information which the committee
considers necessary or desirable in administering the Plan. Any document will be
properly filed with the Administrator if it is delivered or mailed by registered
mail postage prepaid to the Administrator in care of the Sponsor.
<PAGE>
12.7 Adequacy of Evidence. Evidence that is required of anyone under
this Plan shall be executed or presented by proper individuals or parties and
may be in the form of certificates, affidavits, documents or other information
which the person acting on such evidence considers pertinent and reliable.
12.8 Notice to Participants and Beneficiaries. A notice mailed to a
Participant or Beneficiary at his last address filed with the Administrator will
be binding on the Participant or Beneficiary for all purposes of the Plan.
12.9 Waiver of Notice. Any notice under this Plan may be waived by the
person entitled to notice.
12.10 Successors. This Plan will be binding on the Sponsor and
Employers, and on all persons entitled to benefits hereunder, and their
respective successor, heirs and legal representatives.
12.11 Severability. If any provision of this Plan shall be held illegal
or invalid for any reason, such illegal or invalid provision shall not affect
the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if such illegal or invalid provisions had never been contained in
the Plan.
12.12 Nonreversion.
(a) Prohibition on Reversions. The Employers have no right, title or
interest in the assets of the Plan or in Trust and no portion of the Trust or
the assets of the Plan or interest therein shall at any time revert or be repaid
to the Employers, except as otherwise provided in paragraph (b).
(b) Notwithstanding paragraph (a), the following Employer Contributions
may be returned to an Employer:
(i) Employer Contributions which are made as a result of a good faith
mistake of fact may be returned to the Employer making the
Contributions within 12 months after the Contribution is made by the
Employer.
(ii) All Employer Contributions are conditioned upon the assumption that
such Contributions are deductible under ss.404 of the Code, and shall
be returned to the Employer that made such Contribution to the extent
the Employer's deduction is disallowed. Such amount shall be returned
within 12 months after the final conclusion of all administrative and
judicial proceedings with respect to the disallowance of such
deduction.
(c) General Limitations on Returns. The amount returned to an Employer
pursuant to subparagraph (b)(i) or (b)(ii) shall be the excess, if any, of the
amount actually contributed over the amount that either would have been
contributed had the mistake not occurred, or that is determined to be
deductible, as applicable. Such amount shall be reduced by a pro rata share of
any losses incurred by the Trust, but shall not include any earnings. A
Contribution may be returned even though it has been allocated to a
Participant's Account, and such Account may be reduced accordingly, but in no
event shall any account be reduced below the amount that would have been
allocated to it if the mistaken or non-deductible Contribution had not been
made. If the amount
<PAGE>
returned under any provision of paragraph (b) represents a Salary Deferral
Contribution or Rollover Contribution, it shall be promptly paid by the
Employer to the Participant.
IN WITNESS WHEREOF, the Sponsor has caused this Amended and Restated
Plan to be executed by its duly authorized officers this 1
st day of
July, 1998.
PATHOGENESIS CORPORATION
By: /s/ Wilbur H. Gantz
---------------------------------------
Its: Chairman & Chief Executive Officer
EXHIBIT 4.7
TRUST AGREEMENT
BETWEEN
PATHOGENESIS CORPORATION
AND
WILMINGTON TRUST COMPANY,
AS TRUSTEE
(PathoGenesis Corporation 401(k) Profit Sharing Plan)
WTC Direction Trust/
Tax Qualified Plan/
Rev. 1/96 Permits Employer Securities
<PAGE>
INDEX
Page
ARTICLE I DEFINITIONS ....................................................1
Section 1.1. Definitions.......................................1
ARTICLE II CREATION; PURPOSE; ETC..........................................2
Section 2.1. Creation .........................................2
Section 2.2. Purpose ..........................................2
Section 2.3. Exclusive Benefit ................................2
Section 2.4. Domestic Trust ...................................2
ARTICLE III ADMINISTRATION OF PLAN .........................................3
Section 3.1. Payment of Benefits ..............................3
Section 3.2. Participant Records and Accounts .................3
Section 3.3. Reliance on Administrator ........................3
Section 3.4. Trustee Not Responsible for
Plan Administration .........................3
Section 3.5. Trustee Not Responsible for Enforcing
Contributions or for Sufficiency of Trust Fund..3
ARTICLE IV INVESTMENT OF TRUST FUND .......................................3
Section 4.1. Named Fiduciary ..................................3
Section 4.2. Investment Managers ..............................3
Section 4.3. Individually Directed Accounts ...................4
Section 4.4. Reliance on Named Fiduciary, Investment
Managers, Participants .......................4
Section 4.5. Shareholder Communications Act ...................4
ARTICLE V POWERS OF TRUSTEE ..............................................5
Section 5.1. General Powers ...................................5
Section 5.2. Additional Powers ................................6
Section 5.3. Valuations .......................................7
ARTICLE VI RECORDS AND ACCOUNTS OF TRUSTEE ................................7
Section 6.1. Records ..........................................7
Section 6.2. Annual and Other Periodic Accounts ...............7
Section 6.3. Tax Returns ......................................8
ARTICLE VII TRUSTEE'S RIGHTS/LIMITATION OF TRUSTEE'S RESPONSIBILITY.........8
Section 7.1. No Implied Duties ................................8
Section 7.2. Evidence of Authority ............................8
Section 7.3. Reliance by Trustee ..............................8
-i-
<PAGE>
Continuation of Index Page
Section 7.4. Trustee May Employ Agents ........................8
Section 7.5. No Responsibility for Insurance Contracts ........9
Section 7.6. No Liability for Acts or Omissions of
Other Fiduciaries ...........................9
Section 7.7. No Obligation to Act on Unsatisfactory Notice ....9
ARTICLE VIII COMPENSATION, TAXES, EXPENSES, INDEMNITY .......................9
Section 8.1. Payment of Compensation and Expenses .............9
Section 8.2. Taxes ............................................9
Section 8.3. Indemnification by Employer .....................10
ARTICLE IX RESIGNATION OR REMOVAL OF TRUSTEE .............................10
Section 9.1. Removal or Resignation of Trustee ...............10
Section 9.2. Reserve for Expenses.............................10
ARTICLE X AMENDMENT OR TERMINATION OF AGREEMENT .........................10
Section 10.1. Amendment of Agreement .........................10
Section 10.2. Termination of Agreement .......................11
ARTICLE XI TERMINATION OR DISQUALIFICATION OF PLAN........................11
Section 11.1. Amendment or Termination of Plan ...............11
Section 11.2. Disqualification ...............................11
Section 11.3. Application of Funds on Termination ............11
ARTICLE XII GENERAL PROVISIONS ............................................11
Section 12.1. Governing Law ..................................11
Section 12.2. Entire Agreement ...............................11
Section 12.3. Notices ........................................11
Section 12.4. Plan Documents .................................12
Section 12.5. Spendthrift Provision ..........................12
Section 12.6 FDIC Insurance .................................12
Section 12.7. Effect .........................................12
Section 12.8. Severability ...................................12
Section 12.9. Headings and Titles ............................12
Section 12.10. Binding Agreement ..............................12
Section 12.11. Merger or Consolidation ........................12
Section 12.12. Force Majeure ..................................13
-ii-
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT (the "Agreement") is made as of this 1st day of
April, 1998, by and between PATHOGENESIS CORPORATION, a Delaware corporation
(the "Employer"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation
(the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer has adopted the PathoGenesis Corporation 401(k)
Profit Sharing Plan (the "Plan"), a tax-qualified retirement plan; and
WHEREAS, this Agreement is intended to implement the provisions of the
Plan by providing for the creation of a trust (the "Trust") satisfying the
requirements of the Employee Retirement Income Security Act of 1974, as amended;
and
WHEREAS, the authority to control and manage the operation and
administration of the Plan is vested in the Named Fiduciary or Fiduciaries
provided for in the Plan, which shall have the authorities and shall be subject
to the duties with respect to the Trust specified in this Agreement; and
WHEREAS, the Employer desires to appoint Wilmington Trust Company as
Trustee of the Trust, and Wilmington Trust Company is willing to serve as
Trustee in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Employer and the Trustee hereby mutually agree
as follows:
ARTICLE I - DEFINITIONS
Section 1.1. DEFINITIONS. Unless the context otherwise requires or
unless otherwise expressly provided, as used in this Agreement:
(a) "Administrator" means, with respect to the Plan, the organization,
entity, committee or other person responsible for benefit administration under
the Plan, including any representative or delegate thereof designated in
writing, authorized to act on behalf of such organization, entity, committee or
other person, and may include the Employer.
(b) "Investment Manager" means a bank, insurance company or registered
investment adviser satisfying the requirements of Section 3(38) of ERISA
appointed by the Named Fiduciary to manage all or any portion of the Trust Fund
as designated by the Named Fiduciary.
<PAGE>
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and Regulations issued thereunder.
(d) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
(e) "Insurance Contract" means any contract or policy of any kind,
including any annuity contract, issued by an insurance company, whether or not
providing for the allocation of amounts received by the insurance company to its
general account or to one or more separate accounts, or a combination thereof,
and whether or not any such allocation may be made in the discretion of the
insurance company.
(f) "Named Fiduciary" means the organization, entity, committee or
other person or its representative or delegate with respect to the Plan, who,
within the meaning of ERISA, has the authority to perform the separate functions
allocated to that "Named Fiduciary" under this Agreement. Unless otherwise
specifically provided to the contrary, the Named Fiduciary shall mean the
Administrator.
(g) "Trust Fund" means all property, real, personal or mixed, of any
kind or nature, contributed, paid or delivered to the Trustee hereunder, and all
investments, reinvestments and proceeds thereof, and all gains, earnings and
profits thereon.
ARTICLE II - CREATION; PURPOSE; ETC.
Section 2.1. CREATION. The Employer hereby creates the PathoGenesis
Corporation 401(k) Profit Sharing Plan Trust. Under the terms of the Plan, the
Employer has the power to appoint and hereby appoints Wilmington Trust Company
to act as Trustee; and Wilmington Trust Company hereby accepts the appointment
to serve as Trustee.
Section 2.2. PURPOSE. The Trust is established to fund the benefits
payable to participants and their beneficiaries under the Plan.
Section 2.3. EXCLUSIVE BENEFIT. Except as otherwise permitted by law or
as set forth in Article XI of this Agreement, at no time prior to the
satisfaction of all liabilities with respect to participants and their
beneficiaries under the Plan shall any part of the Trust Fund be used for, or
diverted to, any purposes other than for the exclusive benefit of the
participants and their beneficiaries and for defraying the reasonable expenses
of administering such Plan.
Section 2.4. DOMESTIC TRUST. The Trust shall at all times be
maintained as a domestic trust in the United States.
<PAGE>
ARTICLE III - ADMINISTRATION OF PLAN
Section 3.1. PAYMENT OF BENEFITS. At the direction of the
Administrator, the Trustee shall pay moneys or other property directly to or for
the benefit of participants and their beneficiaries, or to an insurance company
to provide for the payment of such benefits by the purchase of an Insurance
Contract, or to a paying or disbursing agent, which may be the Administrator.
Any moneys or other property disbursed or paid over by the Trustee pursuant to
this Section 3.1 shall no longer be part of the Trust Fund.
Section 3.2. PARTICIPANT RECORDS AND ACCOUNTS. Except as the parties
may otherwise agree in writing, the Trustee shall not be required to maintain
any participant records or accounts and shall not be responsible for the
allocation of contributions among participants.
Section 3.3. RELIANCE ON ADMINISTRATOR. Any directions pursuant to
Section 3.1 may, but need not, specify the application to be made of payments so
directed. Each direction to the Trustee under Section 3.1 shall constitute a
representation and warranty by the Administrator that such direction is in
accordance with this Agreement, the Plan and applicable law, and the Trustee
shall have no duty to make any independent inquiry or investigation before
acting upon such direction, or to see to the application of any moneys or other
property so paid.
Section 3.4. TRUSTEE NOT RESPONSIBLE FOR PLAN ADMINISTRATION. The
Trustee shall not be responsible in any way for the determination, computation,
payment or application of any benefit, for the form, terms, payment provisions
or issuer of any Insurance Contract, or for any other matter affecting the
administration of the Plan by the Employer or the Administrator or any
organization, entity, committee or other person to whom such responsibility is
delegated under the Plan.
Section 3.5. TRUSTEE NOT RESPONSIBLE FOR ENFORCING CONTRIBUTIONS OR FOR
SUFFICIENCY OF TRUST FUND. The Trustee shall not be responsible for enforcing
payment of any contribution to the Trust, for the timing or amount thereof, or
for the adequacy of the Trust Fund or any part thereof or the funding standards
adopted for the Plan to meet or discharge any liabilities of the Plan or the
Trust.
ARTICLE IV - INVESTMENT OF TRUST FUND
Section 4.1. NAMED FIDUCIARY. Except as otherwise provided in Section
4.2 or 4.3, the Named Fiduciary shall possess all discretionary authority for
the management and control of the Trust Fund. The Named Fiduciary shall be
responsible for determining the diversification policy (if and to the extent
required), and for monitoring adherence by the Investment Manager or Investment
Managers to such policy.
Section 4.2. INVESTMENT MANAGERS. Discretionary authority for the
management and control of all or any portion of the Trust Fund may be delegated
by the Named Fiduciary, in its absolute discretion, to one or more Investment
Managers. The terms and conditions of
<PAGE>
appointment, authority and retention of any Investment Manager shall be the
sole responsibility of the Named Fiduciary. The Named Fiduciary shall promptly
notify the Trustee in writing of the appointment or removal of any Investment
Manager and the portion of the Trust Fund over which such Investment Manager
shall have authority. Any notice of appointment pursuant to this Section 4.2
shall constitute a representation and warranty that the Investment Manager has
been appointed in accordance with the Plan and that any Investment Manager is an
Investment Manager as defined in this Agreement. The Named Fiduciary may limit,
restrict or impose guidelines affecting the exercise of the discretion conferred
on any Investment Manager, and shall be responsible for communicating, and
monitoring adherence to, any such limitations, restrictions or guidelines.
Section 4.3. INDIVIDUALLY DIRECTED ACCOUNTS. As to each individually
directed account, if any, permitted by the Plan, the applicable participant
shall possess all of the investment and investment-related authority held by the
Named Fiduciary hereunder, and the Trustee shall invest and reinvest such assets
pursuant to the directions of the participant, as communicated in writing to the
Trustee by the Administrator or its delegate. The Trustee shall be fully
protected in relying upon the written instructions of the Administrator or its
delegate as to the participant's directions. Neither the Trustee, nor the
Employer, nor any fiduciary of the Plan shall be liable to the participant or
any of his or her beneficiaries for any loss resulting from any action taken at
the direction of the participant.
Section 4.4. RELIANCE ON NAMED FIDUCIARY, INVESTMENT MANAGERS,
PARTICIPANTS. The Trustee shall invest and reinvest the Trust Fund pursuant to
the written directions of the Named Fiduciary or the Investment Manager or
Investment Managers, as the case may be. The Trustee shall have no investment
responsibility with respect to the Trust Fund, and shall have no duty to inquire
into the directions of the Named Fiduciary, any Investment Manager, as the case
may be, to solicit such directions, or to review and follow the investments made
pursuant to any such directions, other than to the extent required by law. Any
investment direction by the Named Fiduciary or any Investment Manager shall
constitute a representation and warranty that the transaction will not
constitute a prohibited transaction under ERISA or the Code and that the
investment is authorized under this Agreement, the Plan and any other agreement
affecting the Named Fiduciary's or Investment Manager's authority.
Section 4.5. SHAREHOLDER COMMUNICATIONS ACT. Unless otherwise directed
in writing, the Trustee is:
[Check One]
_______ authorized _______ not authorized
to disclose the name, address and share positions of the Named Fiduciary and/or
any person or organization designated to give instructions under this Agreement
to companies over whose securities the Named Fiduciary or such person or
organization exercises voting authority or to others upon request by such
companies.
<PAGE>
ARTICLE V - POWERS OF TRUSTEE
Section 5.1. GENERAL POWERS. Upon the directions of the Named
Fiduciary, the Investment Manager(s), or the Administrator or its delegate on
behalf of the participants with respect to individually directed accounts, as
the case may be, the Trustee shall be authorized and empowered to exercise any
and all of the following rights, powers and privileges with respect to the Trust
Fund:
(a) To invest and reinvest the principal and income of the Trust Fund,
without distinction between principal and income, in such securities (including,
without limitation, securities of the Employer or its affiliates constituting
"qualifying employer securities" as defined in Section 407 of ERISA and
hereafter referred to as Employer Securities) as, but not limited to, common
stocks, preferred stocks, bonds, bills, notes, commercial paper, debentures,
mortgages, equipment trust certificates, investment trust certificates,
partnership interests and also in other investments, whether real, personal or
mixed property.
(b) To sell, exchange, convey, transfer or otherwise dispose of any
such property at public or private sale, for cash or credit, or partly for cash
and partly for credit, and with or without notice or advertisement of any kind.
(c) To purchase whole or part interests in real property or in
mortgages on real property, wherever situated, directly or through financial
intermediaries or entities, such as, but not limited to, partnerships, and to
mortgage or lease for any term any real property or part interest in real
property; and to delegate to a manager the management and operation of any
interest in such property or properties.
(d) To purchase or sell, write or issue, puts, calls or other options,
covered or uncovered, to enter into financial futures contracts, forward
placement contracts and standby contracts, and in connection therewith, to
deposit, hold or pledge assets of the Trust Fund.
(e) To exercise all voting rights pertaining to any securities; and to
consent to or request any action on the part of the issuer of any such
securities, and to give general or special proxies and or powers of attorneys
with or without powers of substitution; to consent to or participate in
amalgamation, reorganizations, recapitalizations, consolidations, mergers,
liquidations, or similar transactions with respect to any securities, and to
accept and to hold any other securities issued in connection therewith; and to
exercise any subscription rights or conversion privileges with respect to any
securities held in the Trust Fund. Notwithstanding the foregoing, the Trustee
shall exercise all voting rights relating to any Employer Securities at the
direction of the participants, as communicated to the Trustee by the
Administrator, provided that in the event any Employer Securities are
unallocated among the participants or unvoted by the participants, or in the
event that the voting rights with respect to such securities do not pass through
to the participants under the Plan, then the Trustee shall exercise all voting
rights relating to such Employer Securities as the Trustee, in its sole
discretion, deems appropriate.
<PAGE>
(f) To collect and receive any and all money and other property of
whatsoever kind or nature due or owing or belonging to the Trust Fund and to
give full discharge and acquittance therefor; and to extend the time of payment
of any obligation at any time owing to the Trust Fund.
(g) To transfer money or other property to an insurance company issuing
an Insurance Contract.
(h) To settle, compromise, or submit to arbitration any claims, debts
or damages due or owing to or from the Trust Fund; to commence or defend suits
or legal proceedings; and to represent the Trust Fund in all suits or legal
proceedings in any court of law or equity or before any other body or tribunal,
insofar as such suits or proceedings relate to any part of the Trust Fund or the
administration thereof.
(i) To borrow money from any source as may be necessary or advisable to
effectuate the purposes of the Trust.
(j) To deposit funds in interest bearing account deposits or savings
certificates issued by the Trustee or any other banking institution affiliated
with the Trustee.
(k) To transfer, from time to time, all or any part of the Trust Fund
to any common, collective or commingled trust fund exempt from taxation under
the Code, including any such fund maintained by Wilmington Trust Company, to be
held and administered subject to the terms and provisions of the relevant trust
agreement, and such trust agreement shall be deemed adopted as part of this
Agreement and the Plan to the extent that any portion of the Trust Fund is
invested therein.
(l) Generally to take all actions, execute all instruments, and
exercise all rights and privileges with relation to the Trust Fund, whether or
not expressly authorized, as the Trustee is directed or in its sole discretion
deems necessary or desirable.
Section 5.2. ADDITIONAL POWERS. With respect to the Trust Fund, the
Trustee is hereby authorized and empowered, in its sole judgment:
(a) To hold uninvested from time to time, without liability for
interest thereon, such sum of money as is necessary for the cash requirements of
the Plan or as the Trustee may from time to time deem to be in the best
interests of the Trust Fund, notwithstanding the Trustee's receipt of "float"
from such uninvested cash; and whenever the Trustee receives cash or cash
equivalents, but no investment directions hereunder, to invest the same in
authorized deposit accounts, savings certificates, short-term investment funds,
including any such fund managed by the Trustee, or other short-term investment
vehicle pending receipt of investment directions.
(b) To cause any securities or other property to be registered in, or
transferred to, the name of the Trustee or the name of its nominee or nominees,
or to deposit or arrange for the
<PAGE>
deposit of such securities in a securities depository or with a Federal Reserve
Bank, or to retain such securities unregistered and in form permitting
transferability by delivery, but the books and records of the Trustee shall at
all times show that all such securities and other property are part of the
Trust Fund.
Section 5.3. VALUATIONS. The Trustee shall periodically determine the
market value of the assets of the Trust Fund or, in the absence of readily
ascertainable market values, at such values as the Trustee shall determine in
accordance with methods consistently followed and uniformly applied. With
respect to assets without readily ascertainable market values, the Trustee may
rely for all purposes of this Agreement on the latest valuation and transaction
information submitted to it by the person responsible for the investment. The
Named Fiduciary shall cause such person to provide the Trustee with all
information needed by the Trustee to discharge its obligations to value such
assets and to account under this Agreement.
ARTICLE VI - RECORDS AND ACCOUNTS OF TRUSTEE
Section 6.1. RECORDS. The Trustee shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other transactions in
the Trust Fund and all accounts, books and records relating thereto shall be
open to inspection and audit at reasonable times during normal business hours by
any person designated by the Named Fiduciary.
Section 6.2. ANNUAL AND OTHER PERIODIC ACCOUNTS. Within ninety (90)
days following the close of each Plan year, and within sixty (60) days following
the close of each Plan quarter, the Trustee shall file with the Employer or the
Administrator a written account setting forth the receipts and disbursements and
the investments and other transactions effected by it with respect to the Trust
Fund during such Plan year or quarter, as the case may be. Upon the expiration
of ninety (90) days from the date of filing of its annual or quarterly account,
the Trustee shall be forever released and discharged from all liability and
further accountability to the Employer, the Administrator or any other person
with respect to the accuracy of such accounting and all acts and failures to act
of the Trustee reflected in such account, except to the extent that the Employer
or the Administrator shall, within such 90-day period, file with the Trustee
specific written objections to the account. Neither the Employer, the
Administrator, any participant nor any other person shall be entitled to any
additional or different accounting by the Trustee and the Trustee shall not be
compelled to file in any court any additional or different accounting. For
purposes of regulations promulgated by the Federal Deposit Insurance Corporation
("FDIC"), The Trustee's account statements shall be sufficient information
concerning securities transactions effected for the Trust Fund; provided that
the Employer or the Named Fiduciary, upon written request, shall have the right
to receive at no additional cost written confirmations of such securities
transactions, which shall be mailed or otherwise furnished by the Trustee within
five business days after the date of the transaction, or if a broker/dealer is
utilized, within five business days after the date of the Trustee's receipt of
the broker/dealer confirmations thereof.
<PAGE>
Section 6.3. TAX RETURNS. The Trustee shall prepare tax returns or
other filings with respect to the Trust Fund only if such returns or filings
must be filed by the Trustee rather than by the Administrator, the Named
Fiduciary, or the Employer. Unless otherwise agreed in writing by the Trustee,
the Trustee shall not be responsible for filing any information or other returns
with respect to payments to any participants or their beneficiaries.
ARTICLE VII - TRUSTEE'S RIGHTS/LIMITATION OF TRUSTEE'S
RESPONSIBILITY
Section 7.1. NO IMPLIED DUTIES. The duties and responsibilities of the
Trustee shall be as set forth in this Agreement and no other or further duties
or responsibilities shall be implied against or imposed on the Trustee.
Section 7.2. EVIDENCE OF AUTHORITY. The Employer shall furnish the
Trustee from time to time with certified copies of the resolutions of the Board
of Directors evidencing the name, title and specimen signature of any person
authorized to give instructions to the Trustee on behalf of the Employer
hereunder. The Employer shall also furnish the Trustee from time to time or
cause the Trustee to be furnished from time to time with certified lists of the
names and signatures of all other organizations, entities, committees or other
persons authorized to act as the Administrator, a Named Fiduciary, or in any
manner authorized to issue notices, requests, directions, instructions or other
communications to the Trustee pursuant to this Agreement. The Named Fiduciary
shall cause each Investment Manager to furnish the Trustee from time to time
with the names and signatures of the persons authorized to direct the Trustee on
its behalf hereunder. The Trustee shall be entitled to rely upon each such
evidence of authority until it is revoked in writing.
Section 7.3. RELIANCE BY TRUSTEE. The Trustee shall be entitled to rely
upon each representation, information, notice, direction, certificate and other
communication furnished by or on behalf of the Employer, the Administrator, each
Named Fiduciary and each Investment Manager; and the Trustee shall be protected
to the extent the law permits in acting in accordance with and relying upon such
representations, information, notices, directions, certificates and other
communications; and the Trustee shall be under no duty to make any inquiry or
investigation in connection therewith.
Section 7.4. TRUSTEE MAY EMPLOY AGENTS. The Trustee may from time to
time employ and consult with counsel (who may also serve as counsel for the
Employer or the Trustee) and shall be protected to the extent the law permits in
acting upon such advice of counsel. The Trustee may also from time to time
employ accountants and other agents as may be reasonably necessary in
administering and protecting the Trust Fund, and the Trustee may pay such
counsel, accountants and other agents reasonable compensation, which shall be
reimbursed to the Trustee in accordance with Section 8.1. The Trustee shall at
no time be obligated to institute any legal action or to become a party to any
legal action unless the Trustee shall have been indemnified to its satisfaction
for any fees, costs and expenses to be incurred in connection with such legal
action.
<PAGE>
Section 7.5. NO RESPONSIBILITY FOR INSURANCE CONTRACTS. The Trustee
shall have no obligation to pay any premium on any Insurance Contract or to take
any action with respect to any Insurance Contract, except upon instructions from
the person authorized to direct the Trustee with respect to such Insurance
Contracts. The Trustee shall be entitled to rely on information furnished by the
Employer as to the amount of any contribution to be applied to the purchase or
carrying of Insurance Contracts, the amount and type of Insurance Contracts to
be purchased, the selection of the insurance company or companies, the
designation of beneficiaries, and the election of any right or option under any
Insurance Contract or with respect to any participant. The Trustee may rely on
information furnished by the Employer as to the accuracy and completeness of any
information contained in any application for any Insurance Contract, or any
other information given to the insurer in connection with any Insurance
Contract, and shall have no responsibility to the insurer with respect to any
such application or other information. The Trustee shall have no responsibility
to any participant or the Employer for the invalidity or unenforceability of any
Insurance Contract, or for the failure of any Insurance Contract to meet any
requirements of the Plan.
Section 7.6. NO LIABILITY FOR ACTS OR OMISSIONS OF OTHER FIDUCIARIES.
The Trustee shall not be liable for the acts or omissions of other fiduciaries
unless (a) the Trustee knowingly participates in, or knowingly attempts to
conceal the act or omission of another fiduciary, and the Trustee knows the act
or omission is a breach of a fiduciary responsibility by the other fiduciary; or
(b) the Trustee has knowledge of a breach by the other fiduciary and does not
make reasonable efforts to remedy the breach; or (c) the Trustee's breach of its
own fiduciary responsibility permits the other fiduciary to commit a breach.
Section 7.7. NO OBLIGATION TO ACT ON UNSATISFACTORY NOTICE. The Trustee
shall not be liable for any failure to act pursuant to any notice, direction or
any other communication from the Employer, the Administrator, the Named
Fiduciary, any Investment Manager or any other person or delegate of any of them
unless and until it shall have received directions in the form specified in this
Article VII.
ARTICLE VIII - COMPENSATION, TAXES, EXPENSES, INDEMNITY
Section 8.1. PAYMENT OF COMPENSATION AND EXPENSES. The Trustee shall be
entitled to receive from the Employer compensation for its services and all
reasonable costs and expenses incurred in connection with the administration of
the Trust Fund. The compensation of the Trustee shall be as agreed upon from
time to time by the Trustee and the Employer; and in the event that Trustee
shall be called upon to render any extraordinary services, it shall be entitled
to additional compensation. If such compensation, costs and expenses are not
paid by the Employer, they shall be paid from the Trust Fund.
Section 8.2. TAXES. All income or other taxes of any kind whatsoever
which may be properly levied or assessed under existing or future laws upon, or
in respect of, the Trust Fund
<PAGE>
shall be paid by the Trustee out of the Trust Fund, and, until paid, shall
constitute a charge upon the Trust Fund.
Section 8.3. INDEMNIFICATION BY EMPLOYER. The Employer shall, to the
maximum extent permitted by ERISA, indemnify the Trustee and the Trustee's
officers, employees and agents from and against any and all damages, losses,
costs, judgments, fines and expenses (including attorney's fees and
disbursements) of any kind or nature (collectively, "Losses") imposed on or
incurred by the Trustee, its officers, employees or agents by reason of its or
their service pursuant to this Agreement, including any Losses arising out of
any threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any such action by
or in the right of the Employer), except to the extent such Losses were caused
by the negligence or willful misconduct of the Trustee. Reasonable expenses
incurred in defending any such claim, action, suit or proceeding shall be paid
by the Employer in advance of a final disposition of such claim, action, suit,
or proceeding, upon presentation of statements therefor by the Trustee. The
provisions of this Article VIII shall survive termination of this Agreement.
ARTICLE IX - RESIGNATION OR REMOVAL OF TRUSTEE
Section 9.1. REMOVAL OR RESIGNATION OF TRUSTEE. The Trustee may resign
at any time by written notice to the Employer. The Trustee may be removed by the
Employer at any time by written notice to the Trustee. Any such notice shall be
effective sixty (60) days after receipt by the party to whom notice is given or
such later date as shall be specified therein. Upon the effective date of the
removal or resignation of the Trustee, the Trustee shall deliver the Trust Fund
to a successor trustee or custodian designated by the Employer. If, for any
reason, the Employer cannot or does not act promptly to appoint a successor
trustee, the Trustee may apply to a court of competent jurisdiction for the
appointment of a successor trustee. Any expenses incurred by the Trustee in
connection therewith shall be charged to and paid from the Trust Fund as an
expense of administration.
Section 9.2. RESERVE FOR EXPENSES. The Trustee is authorized to reserve
such sum of money (and for that purpose to liquidate property to produce such
sum) as it may deem advisable for payment of all proper charges against the
Trust Fund, including expenses in connection with such resignation or removal,
and any balance of such reserve remaining after the payment of such charges
shall be paid over to the successor trustee or custodian.
ARTICLE X - AMENDMENT OR TERMINATION OF AGREEMENT
Section 10.1. AMENDMENT OF AGREEMENT. Subject to Section 2.3, the
Employer may at any time alter, modify or amend this Agreement in whole or in
part by notice thereof in writing delivered to the Trustee; provided that no
such alteration, modification or amendment shall alter the rights, duties, or
responsibilities of the Trustee without its prior written consent.
<PAGE>
Section 10.2. TERMINATION OF AGREEMENT. Subject to Section 2.3, the
Employer may at any time terminate this Agreement by written notice given to the
Trustee. Such notice of termination shall be accompanied by a certified copy of
a resolution of the Board of Directors of the Employer approving such
termination. In the event of the termination of this Agreement, the Trust Fund
shall be distributed pursuant to Article IX or XI hereof.
ARTICLE XI - TERMINATION OR DISQUALIFICATION OF PLAN
Section 11.1. AMENDMENT OR TERMINATION OF PLAN. Subject to Section 2.3,
the Employer may at any time alter, modify, amend or terminate the Plan in whole
or in part by written notice given to the Trustee; provided that no such
alteration, modification or amendment shall alter the rights, duties, or
responsibilities of the Trustee without its prior written consent; and further
provided that notice of termination shall be accompanied by a certified copy of
a resolution of the Board of Directors of the Employer approving such
termination.
Section 11.2. DISQUALIFICATION. The Employer shall promptly notify
the Trustee if the Plan has been or is likely to be disqualified under Section
401 of the Code. In that event, the Plan shall be treated as terminated.
Section 11.3. APPLICATION OF FUNDS ON TERMINATION. In the event of
termination of the Plan, the interests of the Plan participants shall vest and
be processed in accordance with the written directions of the Employer,
accompanied by a certificate that such disposition is in accordance with the
terms of the Plan.
ARTICLE XII - GENERAL PROVISIONS
Section 12.1. GOVERNING LAW. To the extent not preempted by the
provisions of ERISA, this Agreement shall be administered, construed and
enforced according to the laws of the State of Delaware.
Section 12.2. ENTIRE AGREEMENT. The Trustee's duties and
responsibilities to the Plan or any person interested therein shall be limited
to those specifically set forth in this Agreement. No amendment to the Plan or
any other document affecting the Plan shall affect the Trustee's duties or
responsibilities hereunder without its prior written consent.
Section 12.3. NOTICES. Except as otherwise provided in writing and
agreed to by the Trustee, all notices, reports, accounts and other
communications from the Trustee to the Employer, the Named Fiduciary, the
Administrator, the Investment Manager(s) or any other person shall be in writing
and deemed to have been duly given if mailed, postage prepaid or delivered by
hand to such person at its address appearing on the records of the Trustee.
Except as otherwise provided in writing and agreed by the Trustee, all
directions, notices, objections and other communications to the Trustee shall be
in writing or in such other form,
<PAGE>
including transmission by electronic means through the facilities of third
parties or otherwise, specifically agreed to in writing by the Trustee and
shall be deemed to have been given when received by the Trustee at its offices.
Section 12.4. PLAN DOCUMENTS. The Named Fiduciary shall provide the
Trustee with complete, current copies of the Plan and the most recent tax
qualification letters relating thereto. The Trustee shall be entitled to rely
upon the Named Fiduciary's attention to this obligation and shall be under no
duty to inquire of any person as to the existence of any documents not provided
hereunder.
Section 12.5. SPENDTHRIFT PROVISION. Except as may be required by law,
no interest or claim of interest of any kind of any participant under the
provisions of this Trust is assignable, nor may any such interest or claim be
subject to garnishment, attachment, execution or levy of any kind, and no
attempt to transfer, assign, pledge or otherwise encumber or dispose of such
interest by act of the person involved or by operation of law will be
recognized.
Section 12.6 FDIC INSURANCE. The Trustee represents that it
qualifies for Federal Deposit Insurance Corporation ("FDIC") pro rata worth
pass-through insurance coverage in accordance with the standards set forth in
applicable federal law and FDIC insurance regulations. If the Trustee fails at
any time in the future to so qualify for pro rata worth pass-through insurance
coverage, it will promptly notify the Employer.
Section 12.7. EFFECT. All persons at any time interested in the Plan
shall be bound by the provisions of this Agreement and, in the event of any
conflict between this Agreement and the provisions of the Plan or any instrument
or agreement forming part of the Plan, the provisions of this Agreement shall
control.
Section 12.8. SEVERABILITY. The illegality or unenforceability of any
provisions of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
Section 12.9. HEADINGS AND TITLES. The titles of the Articles and
headings of Sections in this Trust Agreement are for convenience of reference
only and in case of conflict the text of this Trust Agreement rather than such
titles or headings shall control.
Section 12.10. BINDING AGREEMENT. This Agreement shall be binding upon
the Trustee and the Employer their successors and assigns, and upon the
participants and their beneficiaries, heirs, executors, administrators and
assigns.
Section 12.11. MERGER OR CONSOLIDATION. Any corporation into which the
Trustee may be merged, or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Trustee may be a party,
or any corporation succeeding to the business of the Trustee or to which
substantially all of the assets of the Trustee may be transferred, shall be the
successor of the Trustee hereunder without the execution or filing of
<PAGE>
any paper and without any further action on the part of the parties hereto,
with like effect as if such successor trustee had originally been named
trustee herein.
Section 12.12. FORCE MAJEURE. The Trustee shall have no liability for
any losses arising out of delays in performing the services which it renders
under this Agreement which result from events beyond its control, including
without limitation, interruption of the business of the Trustee due to acts of
God, acts of governmental authority, acts of war, riots, civil commotions,
insurrections, labor difficulties (including, but not limited to, strikes and
other work slippages due to slow-downs), or any action of any courier or
utility, mechanical or other malfunction, or electronic interruption.
IN WITNESS WHEREOF, the Employer and the Trustee have caused this
Agreement to be executed and their corporate seals to be attested by their
respective duly authorized officers, all as of the day and year first above
written.
[Corporate Seal] PATHOGENESIS CORPORATION
Attest: /S/ CAMERON S. AVERY By: /S/ KENT L. DELUCENAY
---------------------------- ---------------------------------
(Assistant) Secretary Title: Vice President
Human Resources
[Corporate Seal] WILMINGTON TRUST COMPANY,
AS TRUSTEE
Attest: /S/ JENNIFER MATZ By: NINO DIRIENZO
---------------------------- ---------------------------------
Financial Services Officer Vice President
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
The Board of Directors
PathoGenesis Corporation
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated January 23, 1998, relating to the consolidated
balance sheets of PathoGenesis Corporation (a development stage enterprise) and
subsidiary as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997, and for the period from
December 10, 1991 (inception) through December 31, 1997, which report appears in
the December 31, 1997, annual report on Form 10-K of PathoGenesis Corporation.
KPMG Peat Marwick LLP
Seattle, Washington
September 17, 1998
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Wilbur H. Gantz and Alan R. Meyer, or any
one of them, his/her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him/her and in his/her name, place, and
stead, in any and all capacities, to sign any and all pre- or post-effective
amendments to Registration Statement on Form S-8 relating to the PathoGenesis
Corporation 401(k) Profit Sharing Plan, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he/she might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or their, his/her substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Wilbur H. Gantz Chairman, Chief Executive August 27, 1998
Wilbur H. Gantz Officer, President and Director
(Principal Executive Officer)
/s/ Alan R. Meyer Executive Vice President, Chief August 27, 1998
Alan R. Meyer Financial Officer and Director
(Principal Financial and
Accounting Officer)
/s/ John Gordon Director) August 27, 1998
John Gordon
/s/ Elizabeth M. Greetham Director) August 27, 1998
Elizabeth M. Greetham
/s/ Arthur W. Nienhuis Director) August 27, 1998
Arthur W. Nienhuis
/s/ Talat M. Othman Director) August 27, 1998
Talat M. Othman
/s/ Eugene L. Step Director) August 27, 1998
Eugene L. Step
/s/ Fred Wilpon Director) August 27, 1998
Fred Wilpon
</TABLE>
