<PAGE>
As filed with the Securities and Exchange Commission on March 21, 2000
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
Registration Statement
Under The
Securities Act of 1933
Edwards Lifesciences Corporation
(Exact name of Registrant as Specified in Its Charter)
Delaware 36-4316614
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
17221 Red Hill Avenue 92614
Irvine, California (Zip Code)
(Address of Principal
Executive Offices)
Edwards Lifesciences Corporation 401(k) Savings and Investment Plan
(Full Title of the Plan)
Michael A. Mussallem
Chairman of the Board and Chief Executive Officer
Edwards Lifesciences Corporation
17221 Red Hill Avenue
Irvine, California
(949) 250-2500
(Name, Address and Telephone Number, Including Area Code, of Agent for Service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -------------------------- ------------------------ ------------------------ ------------------------ ------------------------
Title of Each Class of Proposed Maximum
Securities to be Proposed Maximum Aggregate Offering Amount of Registration
Registered (1) Amount to be Registered Offering Price Per Unit Price Fee
- -------------------------- ------------------------ ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 par 769,942 shares(2) $11.14(3) $8,577,153.88(3) $2,384.45
value
- -------------------------- ------------------------ ------------------------ ------------------------ ------------------------
Preferred Stock Purchase 769,942 rights (4) (4) (4)
Rights
- -------------------------- ------------------------ ------------------------ ------------------------ ------------------------
</TABLE>
<PAGE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act"), this registration statement also covers an
indeterminate amount of interests to be offered pursuant to the Plan described
herein.
(2) This registration statement also covers an additional and indeterminate
number of shares of Common Stock that may be issued pursuant to the
anti-dilution provisions of the Plan described herein.
(3) Estimated solely for the purpose of calculating the registration fee and,
pursuant to Rules 457(c) and 457(h) under the Securities Act, based upon the pro
forma book value per share of the Common Stock calculated from the most recent
financial statements contained in the Company's Registration Statement on Form
10 filed under the Securities Exchange Act of 1934, as amended.
(4) The Preferred Stock Purchase Rights initially are attached to and trade with
the shares of Common Stock being registered hereby. Value attributable to such
Rights, if any, is reflected in the market price of the Common Stock.
-2-
<PAGE>
Part II
Information Required in the Registration Statement
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
The following documents heretofore filed with the Securities and
Exchange Commission (the "Commission") by Edwards Lifesciences Corporation (the
"Company") or the Edwards Lifesciences Corporation 401(k) Savings and Investment
Plan (the "Plan") are incorporated herein by reference:
(a) The Company's effective Registration Statement on Form 10, as
amended (Commission File No. 1-15525); and
(b) The descriptions of the Company's Common Stock, $1 par value per
share (the "Common Stock"), and the related Preferred Stock Purchase Rights (the
"Rights") associated with the Common Stock, which are contained in the Section
entitled "Description of Edwards Lifesciences Capital Stock" in the Company's
Registration Statement on Form 10/A No. 3, including any amendments or reports
filed for the purpose of updating such descriptions.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and all documents filed by the Plan pursuant to
Section 15(d) of the Exchange Act, after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the respective dates of
filing of such documents (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document 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
Incorporated Document 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.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
In accordance with Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), the Company's Amended and Restated Certificate of
Incorporation provides that
-3-
<PAGE>
directors will not be personally liable to the Company or its stockholders for
monetary damages for breaches of their fiduciary duty as directors except for
(i) breaches of their duty of loyalty to the Company or its stockholders, (ii)
acts of omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) certain transactions under Section 174 of the
DGCL (which concerns unlawful payments of dividends, stock purchases or
redemptions) or (iv) transactions from which a director derives an improper
personal benefit.
While the Company's Amended and Restated Certificate of Incorporation
provides directors with protection from awards for monetary damages for breaches
of their duty of care, it does not eliminate their duty of care. Accordingly,
the Amended and Restated Certificate of Incorporation will have no effect on the
availability of equitable remedies such as an injunction or rescission based on
a director's breach of his or her duty of care. The provisions of the Amended
and Restated Certificate of Incorporation described above apply to an officer of
the Company only if he or she is a director of the Company and is acting in his
or her capacity as director, and do not apply to the Company's officers who are
not directors.
The Company's Amended and Restated Certificate of Incorporation
provides that each person who is, or was, or has agreed to become a director or
officer of the Company, and each person who serves, or may have served, at the
Company's request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, will be
indemnified by the Company to the fullest extent permitted by the DGCL, as
amended from time to time. Directors and officers will not be indemnified with
respect to an action commenced by such directors or officers against the Company
or by such directors or officers as a derivative action.
The Company's Amended and Restated Certificate of Incorporation
provides that the right to indemnification and payment of expenses conferred
therein will not be exclusive of any other right that any person may have or may
in the future acquire under any agreement, vote of stockholders, vote of
disinterested directors or otherwise. The Amended and Restated Certificate of
Incorporation permits the Company to maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Company, or is
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such liability under the Amended and
Restated Certificate of Incorporation or the DGCL.
The Company intends to obtain directors and officers liability
insurance providing coverage to its directors and officers.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
-4-
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<C> <S>
4.1 Amended and Restated Certificate of Incorporation of the Company, as amended, filed as Exhibit
3.1 to the Company's Registration Statement on Form 10, as amended (Commission File No.
1-15525) (the "Form 10"), is incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Company, filed as Exhibit 3.2 to the Form 10, are
incorporated herein by reference.
*4.3 Edwards Lifesciences Corporation 401(k) Savings and Investment Plan.
4.4 Form of Rights Agreement between the Company and First Chicago Trust Company of New York, a
division of EquiServe, as Rights Agent, filed as Exhibit 10.9 to the Form 10, is incorporated
herein by reference.
*5 Opinion of Sidley & Austin.
*23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Sidley & Austin (included in its opinion filed as Exhibit 5).
*24.1 Power of Attorney from Michael R. Bowlin, Director.
*24.2 Power of Attorney from Victoria R. Fash, Director.
*24.3 Power of Attorney from Vernon R. Loucks Jr., Director.
*24.4 Power of Attorney from Philip M. Neal, Director.
*24.5 Power of Attorney from David E.I. Pyott, Director.
</TABLE>
- ---------------------
* Filed herewith.
The Company will submit or has submitted the Plan and any amendment
thereto to the Internal Revenue Service (the "IRS") in a timely manner and has
made or will make all changes required by the IRS in order to qualify the Plan
under Section 401 of the Internal Revenue Code of 1986, as amended.
Item 9. Undertakings
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
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<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the 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 the registration statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
- -------- -------
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the 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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
-6-
<PAGE>
person of the registrant 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 registrant will, unless in
the opinion of its counsel the matter 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 and will be governed by the final adjudication of such issue.
-7-
<PAGE>
Signatures
The Registrant. Pursuant to the requirements of the Securities Act of
1933, as amended, the registrant 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 City of Irvine, State of
California, on this 10th day of March, 2000.
EDWARDS LIFESCIENCES CORPORATION
By: Michael A. Mussallem
--------------------
Michael A. Mussallem
Chairman of the Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on this 10th day of March, 2000.
Name Capacity
- ---- --------
Michael A. Mussallem Director, Chairman of the Board and Chief
- -------------------- Executive Officer
Michael A. Mussallem (principal executive officer)
Bruce J. Bentcover Corporate Vice President and Chief
- -------------------- Financial Officer
Bruce J. Bentcover (principal financial officer and principal
accounting officer)
Michael R. Bowlin Director
- --------------------
Michael R. Bowlin
Victoria R. Fash Director
- --------------------
Victoria R. Fash
<PAGE>
Vernon R. Loucks Jr. Director
- ---------------------
Vernon R. Loucks Jr.
Philip M. Neal Director
- ---------------------
Philip M. Neal
David E.I. Pyott Director
- ---------------------
David E.I. Pyott
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933,
--------
as amended, the administrator of the Plan has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, this 10th day of March,
2000.
EDWARDS LIFESCIENCES CORPORATION
401(k) Savings and Investment Plan
By: /s/ Mary L. Barker
---------------------------
Name: Mary L. Barker
Title: Vice President of
Compensation, Benefits & Employee
Services
<PAGE>
Index to Exhibits to Registration Statement on Form S-8
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<C> <S>
4.1 Amended and Restated Certificate of Incorporation of the Company, as amended, filed as Exhibit
3.1 to the Company's Registration Statement on Form 10, as amended (Commission File No.
1-15525) (the "Form 10"), is incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Company, filed as Exhibit 3.2 to the Form 10, are
incorporated herein by reference.
*4.3 Edwards Lifesciences Corporation 401(k) Savings and Investment Plan.
4.4 Form of Rights Agreement between the Company and First Chicago Trust Company of New York, a
division of EquiServe, as Rights Agent, filed as Exhibit 10.9 to the Form 10, is incorporated
herein by reference.
*5 Opinion of Sidley & Austin.
*23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Sidley & Austin (included in its opinion filed as Exhibit 5).
*24.1 Power of Attorney from Michael R. Bowlin, Director.
*24.2 Power of Attorney from Victoria R. Fash, Director.
*24.3 Power of Attorney from Vernon R. Loucks Jr., Director.
*24.4 Power of Attorney from Philip M. Neal, Director.
*24.5 Power of Attorney from David E.I. Pyott, Director.
</TABLE>
- ---------------------
* Filed herewith.
<PAGE>
Exhibit 4.3
EDWARDS LIFESCIENCES CORPORATION
401(k) SAVINGS AND INVESTMENT PLAN
(Effective April 1, 2000)
<PAGE>
EDWARDS LIFESCIENCES CORPORATION
401(k) SAVINGS AND INVESTMENT PLAN
TABLE OF CONTENTS
ARTICLE I
INTRODUCTION
<TABLE>
<CAPTION>
<S> <C>
1.1. The Plan.........................................................................................1
1.2. Effective Date...................................................................................1
1.3. Plan Objectives..................................................................................1
1.4. Supplements and Appendices.......................................................................1
ARTICLE II
DEFINITIONS
2.1. "Accounting Date"................................................................................2
2.2. "Accounts" or "Account Balances".................................................................2
2.3. "Actual Deferral Percentage".....................................................................2
2.4. "Administrative Committee".......................................................................3
2.5. "Base Pay".......................................................................................3
2.6. "Baxter Common Stock"............................................................................3
2.7. "Beneficiary" or "Beneficiaries".................................................................3
2.8. "Board of Directors".............................................................................3
2.9. "Code"...........................................................................................3
2.10. "Commonly Controlled Entity".....................................................................3
2.11. "Company"........................................................................................3
2.12. "Company Common Stock"...........................................................................3
2.13. "Compensation"...................................................................................3
2.14. "Disability".....................................................................................7
2.15. "Effective Date".................................................................................7
2.16. "Eligible Employee"..............................................................................7
2.17. "Employee".......................................................................................8
2.18. "Employer".......................................................................................8
2.19. "Employment Date"................................................................................8
2.20. "Entry Date".....................................................................................8
2.21. "ERISA"..........................................................................................8
2.22. "Forfeiture".....................................................................................8
2.23. "Highly Compensated Employee"....................................................................8
2.24. "Hour of Service"................................................................................9
2.25. "Investment Committee"..........................................................................10
2.26. "Investment Manager"............................................................................11
2.27. "Matching Contribution Percentage"..............................................................11
2.28. "Maternity/Paternity Absence"...................................................................11
2.29. "Normal Retirement Date"........................................................................12
2.30. "One-Year Break In Service".....................................................................12
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2.31. "Participant"...................................................................................12
2.32. "Plan"..........................................................................................12
2.33. "Plan Year".....................................................................................12
2.34. "Prior Plan"....................................................................................12
2.35. "Prior Plan Participant"........................................................................12
2.36. "Spouse"........................................................................................12
2.37. "Termination of Employment".....................................................................12
2.38. "Trust".........................................................................................13
2.39. "Trust Agreement"...............................................................................13
2.40. "Trust Fund"....................................................................................13
2.41. "Trustee".......................................................................................13
2.42. "Year of Vesting Service" or "Vesting Service"..................................................13
ARTICLE III
PARTICIPATION
3.1. Participation...................................................................................13
3.2. Cessation of Participation......................................................................14
3.3. Reemployment....................................................................................14
3.4. Transfer of Employment..........................................................................14
3.5. Reemployment of Veterans........................................................................14
ARTICLE IV
CONTRIBUTIONS
4.1. Contributions...................................................................................16
4.2. Certification of Employer Contributions.........................................................17
4.3. Contribution Limitations........................................................................17
4.4. Annual Addition.................................................................................18
ARTICLE V
PARTICIPANT CONTRIBUTIONS/CONTRIBUTION LIMITATIONS
5.1. Pay Deferral Contributions......................................................................19
5.2. Change in Rate of Pay Deferral Contributions/Reemployment.......................................19
5.3. Annual Limitations on Pay Deferral Contributions................................................19
5.4. General Limitations on Pay Deferral Contributions...............................................19
5.5. Nondiscrimination Rules Applicable to Pay Deferral and Matching Contributions...................20
5.6. Rollover Contributions..........................................................................24
ARTICLE VI
INVESTMENTS AND PLAN ACCOUNTING
6.1. Participant Account Balance.....................................................................25
6.2. Investment of Accounts..........................................................................26
6.3. Investment Funds................................................................................26
6.4. Investment Elections............................................................................27
6.5. Information Provided Under ERISA Section 404(c).................................................30
6.6. Investment Fund Accounting......................................................................32
6.7. Expenses........................................................................................33
6.8. Accounting Dates................................................................................33
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
6.9. Crediting Employer Contributions................................................................33
6.10. Crediting Pay Deferral Contributions............................................................34
6.11. Adjustment of Account Balances..................................................................34
ARTICLE VII
DISTRIBUTION OF ACCOUNT BALANCES
7.1. Retirement, Disability or Death.................................................................35
7.2. Resignation or Dismissal........................................................................35
7.3. Special Vesting Rules Upon Sale of Business.....................................................35
7.4. Forfeitures.....................................................................................36
7.5. Benefit Commencement Date.......................................................................36
7.6. Methods of Benefit Payment......................................................................39
7.7. Direct Rollovers................................................................................41
7.8. Married Participants - Waiver of Annuity Forms of Payment.......................................42
7.9. Maximum Installment Period......................................................................43
7.10. Minimum Rate of Installment Payments............................................................44
7.11. Surviving Spouse or Designated Beneficiaries....................................................45
7.12. Missing Beneficiaries of Deceased or Missing Participants.......................................45
7.13. Incapacitated Participants or Beneficiaries.....................................................46
7.14. Reemployment after Distributions Commence.......................................................46
7.15. Erroneous Payments..............................................................................46
7.16. Finality of Distributions.......................................................................46
ARTICLE VIII
WITHDRAWALS AND LOANS
8.1. Withdrawals.....................................................................................47
8.2. Loans to Participants...........................................................................50
8.3. No Representation Regarding Tax Effect of Withdrawals or Loans..................................54
ARTICLE IX
PLAN COMMITTEES
9.1. Membership of Administrative and Investment Committees..........................................54
9.2. Administrative Committee Powers and Duties......................................................55
9.3. Investment Committee Powers and Duties..........................................................56
9.4. Conflicts of Interest...........................................................................57
9.5. Compensation; Reimbursement.....................................................................57
9.6. Standard of Care................................................................................57
9.7. Action by Committees............................................................................58
9.8. Resignation or Removal of Committee Member......................................................58
9.9. Uniform Application of Rules by Administrative Committee........................................58
9.10. Claims Procedure................................................................................58
9.11. Investments in Company Common Stock.............................................................59
ARTICLE X
AMENDMENT, TERMINATION OR PLAN MERGER
10.1. Amendment.......................................................................................60
10.2. Plan Termination................................................................................60
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.3. Continuation by a Successor or Purchaser........................................................60
10.4. Plan Merger or Consolidation....................................................................61
10.5. Notice to Participants of Amendments, Terminations or Plan Mergers..............................61
10.6. Vesting and Distribution on Termination.........................................................61
ARTICLE XI
GENERAL PROVISIONS
11.1. No Employment Guarantee.........................................................................61
11.2. Nonalienation of Plan Benefits..................................................................62
11.3. Action by an Employer...........................................................................62
11.4. Applicable Law..................................................................................62
11.5. Participant Litigation..........................................................................62
11.6. Participant and Beneficiary Duties..............................................................63
11.7. Individual Account Statements...................................................................63
11.8. Gender and Number...............................................................................63
11.9. Adequacy of Evidence............................................................................63
11.10. Notice to Participants and Beneficiaries........................................................63
11.11. Waiver of Notice................................................................................63
11.12. Successors......................................................................................63
11.13. Severability....................................................................................63
11.14. Nonreversion....................................................................................63
11.15. Qualification of Plan and Trust.................................................................64
11.16. Certain Indemnification.........................................................................64
11.17. Voice Response Unit Deemed Written Consent......................................................64
ARTICLE XII
SPECIAL TOP-HEAVY RULES
12.1. Application.....................................................................................65
12.2. Special Terms...................................................................................65
12.3. Vested Percentage...............................................................................68
12.4. Minimum Contribution............................................................................68
12.5. Termination of Top-Heavy Status.................................................................68
ARTICLE XIII
ADOPTION AND WITHDRAWAL FROM PLAN
13.1. Procedure for Adoption..........................................................................68
13.2. Procedure for Withdrawal........................................................................69
13.3. Adoption of Plan by Unrelated Employers.........................................................69
</TABLE>
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<PAGE>
EDWARDS LIFESCIENCES CORPORATION
401(k) SAVINGS AND INVESTMENT PLAN
ARTICLE I
---------
INTRODUCTION
1.1. The Plan. Effective as of the close of business on March 31, 2000,
--------
Baxter International Inc. ("Baxter") spun-off its cardiovascular group business
to Baxter shareholders through a distribution of all of the shares of Edwards
Lifesciences Corporation ("Edwards") (the "Spin-Off"). In connection with the
Spin-Off, Edwards has adopted this Plan (the "Edwards Savings Plan") for the
benefit of certain employees. As soon as practicable after March 31, 2000,
Baxter will cause the Trustee of the Baxter International Inc. and Subsidiaries
Incentive Investment Plan (the "IIP") to transfer assets from the IIP trust fund
to the Trustee of this Plan with respect to the accounts of Edwards employees.
The Edwards Savings Plan is intended to qualify as a profit sharing plan within
the meaning of section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), with a qualified cash or deferred arrangement described in section
401(k) of the Code, as its related trust is intended to be tax-exempt under
section 501(a) of the Code.
1.2. Effective Date. This Plan is effective as of April 1, 2000.
--------------
1.3. Plan Objectives. The Plan is a profit sharing plan maintained by
---------------
the Company to stimulate interest, initiative and increased efficiency among
Participants, to encourage Participants to set aside funds for retirement, to
share with Participants the economic benefits produced by their efforts and to
assist in providing Participants with retirement benefits.
1.4. Supplements and Appendices. Supplements and appendices to the Plan
--------------------------
may be adopted, attached to and incorporated in the Plan at any time. The
provisions of any such supplements and appendices shall have the same effect
that such provisions would have if they were included within the basic text of
the Plan. Supplements and appendices will specify the persons affected and shall
supersede the other provisions of the Plan to the extent necessary to eliminate
inconsistencies between the Plan provisions and the provisions of such
supplements and appendices.
-1-
<PAGE>
ARTICLE II
----------
DEFINITIONS
The following terms, whenever used in the following capitalized form,
shall have the meaning set forth below unless the context clearly indicates
otherwise, or unless modified by a supplement or appendix attached hereto:
2.1. "Accounting Date" means each day of the Plan Year that the New
York Stock Exchange is open for trading.
2.2. "Accounts" or "Account Balances" refer to all of the accounts
described in Section 6.1 which are maintained on behalf of a Participant.
2.3. "Actual Deferral Percentage" means a percentage calculated for
purposes of Section 5.5(a) for (i) the group of Participants who are Highly
Compensated Employees or (ii) the group of all other Participants, as follows:
(a) For the group of Participants (including any Eligible Employee
who is eligible with respect to a Plan Year to make Pay
Deferral Contributions but chooses not to do so) who are
Highly Compensated Employees for a Plan Year, the Actual
Deferral Percentage (referred to herein as the "HCE Actual
Deferral Percentage") for the Plan Year shall be the average
of the following percentages (calculated separately for each
member of the group): Pay Deferral Contributions on behalf of
the group member for the Plan Year, divided by his
Compensation for the Plan Year.
(b) For the group of all other Participants (including any
Eligible Employee who is not a Highly Compensated Employee for
a Plan Year and who is eligible with respect to the Plan Year
to make Pay Deferral Contributions but chooses not to do so),
the Actual Deferral Percentage (referred to herein as the
"NHCE Actual Deferral Percentage") for the Plan Year shall be
the average of the following percentages (calculated
separately for each member of the group): Pay Deferral
Contributions on behalf of the group member for the Plan Year,
divided by his Compensation for the Plan Year. The NHCE Actual
Deferral Percentage shall be determined without regard to
whether an Employee is a non-Highly Compensated Employee for
the current Plan Year.
The deferral percentages for individuals and the Actual Deferral Percentage for
each specified group shall be calculated to the nearest one-hundredth of one
percent. To the extent necessary to satisfy the nondiscrimination tests in
Section 5.5(a) in a particular Plan Year, and to the extent permitted by law,
the Administrative Committee may elect to add to the numerator of the Actual
Deferral Percentage fraction (i) any portion of additional nonelective
contributions made by any Employer that may be treated as a "qualified
nonelective contribution" under Code Section 401(k) or (ii) any portion of that
Plan Year's Matching Contributions that may be treated as a "qualified matching
contribution" under Code Section 401(k). Salary reduction contributions made by
a Participant under any other tax-qualified defined contribution plan maintained
by the
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Participant's Employer or any Commonly Controlled Entity of such Employer shall
be included in computing his deferral percentage to the extent the Company
elects to aggregate such other defined contribution plan with the Plan for
purposes of the nondiscrimination test of Section 5.5(a) or the coverage test of
Code Section 410(b).
2.4. "Administrative Committee" means the committee which is
responsible for administering the Plan in accordance with ARTICLE IX.
2.5. "Base Pay" means regular straight-time earnings plus commissions
and payments in lieu of regular earnings (such as vacation, sick pay and holiday
pay). In the case of a part-time hourly employee, such employee's base pay shall
be determined by multiplying such employee's hourly rate of pay by the number of
regularly scheduled hours of work for such employee.
2.6. "Baxter Common Stock" means common stock of Baxter International
Inc.
2.7. "Beneficiary" or "Beneficiaries" means the persons, trusts or
estates validly designated by a Participant or the Plan pursuant to Section 7.11
to receive any benefits payable on behalf of such Participant after his death.
2.8. "Board of Directors" means the Board of Directors of the Company.
2.9. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.10. "Commonly Controlled Entity" means any corporation, trade or
business that, together with the Company, is a member of a controlled group of
corporations as defined in Section 414(b) of the Code, is under common control
as defined in Section 414(c) of the Code, is a member of an affiliated service
group as defined in Section 414(m) of the Code or is required to be aggregated
pursuant to Section 414(o) of the Code; provided, however, that solely for
purposes of Section 4.3, the standard of control under Sections 414(b) and
414(c) of the Code shall be deemed to be "more than 50%" rather than "at least
80%."
2.11. "Company" means Edwards Lifesciences Corporation.
2.12. "Company Common Stock" means common stock of Edwards Lifesciences
Corporation.
2.13. "Compensation" means the amount determined with respect to a
Participant in accordance with the following alternative definitions:
(a) Compensation Generally. Except as required by subsection (b),
----------------------
(c) or (d) below, for each Participant, "Compensation" means
the amounts paid by the Employers during the Plan Year to such
Participant for services as an Employee which is included in
such Compensation under the rules set forth in subparagraph
(a)(i) below other than such Compensation which is excluded
under the rules set forth in subparagraph (a)(ii) below.
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(i) Included Pay. For purposes of this Section 2.13(a), a Participant's
Compensation shall include:
(A) All earnings as an employee which are required to be reported
as taxable income on Form W-2, including:
1. bonuses, including incentive bonuses under the
Edwards Incentive Plan, the Edwards Performance Bonus
Plan and any other bonus plans approved by the
Company or its delegate as constituting Compensation
hereunder, payments in lieu of salary increases, and
bonuses paid to sales representatives if included in
the compensation plan;
2. call in pay;
3. commission pay;
4. double time pay;
5. draws toward commissions;
6. funeral pay;
7. holiday pay;
8. jury duty pay;
9. lead pay;
10. mileage pay for long haul truckers;
11. military pay;
12. overtime pay;
13. paid absences;
14. retroactive pay;
15. salary or other regular pay;
16. shift differentials;
17. sick pay or other short-term disability pay;
18. straight time pay; and
19. vacation pay.
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(B) The amount of any salary reduction or cash or deferred
contributions made by such Participant for the calendar year
which coincides with the Plan Year under this Plan and under
any other plan maintained by the Employers which satisfies the
requirements of Code Section 125 or Code Section 401(k).
(ii) Excluded Pay. For purposes of this subsection (a), a Participant's
------------
Compensation shall exclude:
(A) Amounts constituting imputed income arising from an Employer's
moving expense reimbursement policies, an Employer's life
insurance plans or an Employer's other fringe benefit plans;
(B) Amounts paid to replace benefits not provided under this Plan
or any other tax-qualified plan due to the contribution or
benefit limitations or the nondiscrimination restrictions of
the Code; and
(C) The following amounts paid, accrued or imputed:
1. attendance awards;
2. automobile allowances;
3. business expense reimbursements;
4. cash prizes or awards;
5. Christmas gifts;
6. contest pay;
7. deferred compensation, including deferred bonuses;
8. discretionary awards;
9. employee referral awards;
10. executive perquisite allowances;
11. hiring bonuses;
12. income from sale of stock;
13. income from the exercise of stock options;
14. interest earnings on deferred compensation, including
deferred bonuses;
15. invention fees and awards;
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16. long term disability pay;
17. mortgage differential payments;
18. noncash prizes or awards;
19. pay for unused sick time;
20. performance shares;
21. promotional awards;
22. relocation expense reimbursements;
23. restricted stock rights;
24. retention bonuses;
25. severance pay;
26. stock appreciation rights;
27. tax equalization payments to expatriates;
28. technical achievement awards;
29. travel allowances;
30. tuition reimbursements; and
31. workers' compensation benefits.
(b) Compensation of Commissioned Sales Representatives. Except as provided
--------------------------------------------------
in subsections (c) and (d) below, the definition of Compensation set
forth in subsection (a) shall apply with respect to a Participant who
is a commissioned sales representative not reimbursed for expenses,
except that only 85% of the amounts included in Compensation shall be
recognized.
(c) Compensation For Discrimination Tests. For purposes of the definition
-------------------------------------
of "Highly Compensated Employee" contained in Section 2.23 and for
purposes of the nondiscrimination limitations of Section 5.5, the
"Compensation" of a Participant means the amounts paid by the Employers
during the Plan Year to such Participant for personal services as an
Employee which are required to be reported as taxable income on Form
W-2 and the amount described in subparagraph (a)(i)(B) above.
(d) Compensation For Contribution and Benefit Limitations. For purposes of
-----------------------------------------------------
Sections 4.3, 4.4, and 12.2(g), "Compensation" of a Plan Participant
shall have the same meaning as under subsection (c) above, except that
the Compensation of a Participant shall include all amounts paid to
such Participant by a Commonly
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Controlled Entity of his Employer which is not itself an Employer
hereunder which would constitute Compensation for purposes of this
subsection (d) if such Commonly Controlled Entity were an Employer.
(e) Maximum Amount of Compensation. The amount of a Participant's
------------------------------
Compensation that may be taken into account for any purpose of the
Plan, including the alternative definitions of "Compensation" described
in (a), (b), (c) and (d) above and the Top-Heavy provisions of ARTICLE
XII, shall not exceed (i) for the initial Plan Year $170,000 and (ii)
for each subsequent Plan Year, the amount prescribed by Section
401(a)(17) of the Code (as adjusted for increases in the cost-of-living
pursuant to Section 401(a)(17)(B) of the Code).
In computing the Compensation of a Participant for all Plan purposes,
Compensation paid in currency other than United States dollars shall be
converted to United States dollars at the rate of exchange used at that time by
his Employer for such purpose. Compensation paid to a Participant before he
commences participation in the Plan, and Compensation paid to a Participant
after he ceases to receive credit for Hours of Service under the Plan, will not
be recognized under the Plan, except where required by applicable law or where
the Plan specifically indicates to the contrary.
2.14. "Disability" means a mental or physical condition which renders a
Participant eligible for and in actual receipt of a disability benefit under the
federal Social Security Act.
2.15. "Effective Date" means April 1, 2000.
2.16. "Eligible Employee" means an Employee on the payroll of an
Employer incorporated in the United States whose Compensation constitutes wages
from employment within the meaning of Sections 3121(a) and (b) of the Federal
Insurance Contribution Act on and after the effective date of the adoption of
the Plan by the Employer, but excluding:
(a) An Employee who is a member of a group of Employees
represented by a collective bargaining representative, with
respect to which the Plan has not been extended by a currently
effective collective bargaining agreement between his Employer
and the collective bargaining representative of the group of
Employees of which he is a member after good faith bargaining
on the subject of employee benefits;
(b) An Employee who is otherwise excluded from all of the groups
of Employees to whom the Plan is extended by the Employers;
(c) A leased employee who is considered an Employee under Section
2.17; and
(d) Any other individual who performs services for an Employer
pursuant to an agreement (written or oral) that classifies
such individual as an independent contractor or as an employee
of another entity, or that otherwise contains a waiver of
participation in this Plan, regardless of such individual's
employment status under common law
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2.17. "Employee" means any person who is a common law employee of an
Employer or a Commonly Controlled Entity of an Employer and who is in active
employment or on an approved leave of absence. Notwithstanding the foregoing,
the following rules shall apply in determining a person's status as an Employee:
(a) Leased Employees. An individual who is considered a "leased
----------------
employee" of an Employer under the provisions of Code Section
414(n)(2) shall be considered an Employee, but not an Eligible
Employee, for all purposes of the Plan; provided, however,
that such individual shall not be considered an Employee if
the leasing organization that employs him covers such
individual with a plan providing benefits at least as generous
as those described in Code Section 414(n)(5).
(b) United States Citizenship. Individuals employed by an Employer
-------------------------
who generally satisfy the requirements of this Section need
not be United States citizens to be Employees; provided,
however, that individuals who are not United States citizens
and who are employed at an Employer's facility in the United
States or one of its possessions solely on the understanding
that such United States employment is temporary for purposes
of training or familiarization with such facility or with such
Employer's operations or practices shall not be considered to
be Employees; and
(c) Certain Citizens Employed Abroad. Ordinarily an individual
--------------------------------
must be employed by an Employer and must be employed at one or
more of its facilities in the United States or possessions of
the United States to be considered an Employee. A United
States citizen employed by an Employer at one of its
facilities outside of the United States and its possessions
may become an Employee if he satisfies the other requirements
of this Section and if the applicable requirements of Sections
401(a) and 404A of the Code and Section 406 or 407 of the Code
are satisfied with respect to such Employee.
2.18. "Employer" means the Company or any Commonly Controlled Entity of
the Company on and after the Effective Date of its adoption of the Plan in
accordance with Section 13.1. "Employer" shall also mean any organization that
is not a Commonly Controlled Entity of the Company if such organization adopts
the Plan in accordance with Section 13.3.
2.19. "Employment Date" means the day a person first earns an Hour of
Service, or, in the case of an Employee who incurs a Termination of Employment
prior to becoming a Participant and who is not reemployed within one year of
such Termination of Employment, the first day on which the Employee earns an
Hour of Service upon his rehire as an Employee.
2.20. "Entry Date" means the first day of each calendar month.
2.21. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
2.22. "Forfeiture" means the portion of a Participant's Accounts which
is forfeited pursuant to Section 7.4.
2.23. "Highly Compensated Employee" for a Plan Year means an Employee
who:
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<PAGE>
(a) is a 5%-owner (as defined in Section 416(i)(1) of the Code) of
an Employer at any time during the Plan Year or the preceding
Plan Year; or
(b) is paid Compensation in excess of $80,000 (as adjusted for
increases in the cost of living in accordance with Section
414(q)(1)(B)(ii) of the Code) from an Employer for the
preceding Plan Year. If the Administrative Committee so elects
for a Plan Year, the Employees taken into account under this
paragraph (b) shall be limited to those Employees who were
members of the "top-paid group" for the preceding Plan Year.
For purposes of the foregoing, an Employee is in the top-paid
group for any year if such Employee is in the group consisting
of the top 20% of the Employees when ranked on the basis of
compensation paid during such year. Such an election shall be
included in the written minutes of the Administrative
Committee.
The Plan is intended to satisfy the qualification requirements of the Code,
including the coverage and nondiscrimination provisions of Code Sections 410(b)
and 401(a)(4). If the Administrative Committee determines this Plan would
violate such restrictions, then the Administrative Committee is authorized to
construe the Plan in a manner necessary to avoid discrimination in favor of
Highly Compensated Employees, if the express provisions of the Plan permit such
interpretation.
2.24. "Hour of Service" means:
(a) Duty Hours. Each hour for which an Employee is directly or
----------
indirectly paid or entitled to payment by an Employer for the
performance of duties.
(b) Non-Duty Hours (Paid). Each hour for which an Employee is
---------------------
directly or indirectly paid or entitled to payment by an
Employer for reasons (such as vacation, holidays, sickness,
short-term disability, long-term disability, medical leave,
family medical leave, severance pay or jury duty) other than
the performance of duties. For purposes of crediting paid
non-duty Hours of Service, up to 501 Hours of Service shall be
credited under this subsection (b) (with such 501 limit
reduced by one Hour of Service for each Hour of Service
credited under subsection (c)) to an Employee in a computation
period on account of any single continuous period during which
the Employee performs no duties, provided, however, that if
such continuous period extends into the next computation
period, up to 501 additional Hours of Service shall be
credited in such computation period, and further provided that
no Hours of Service shall be credited under this subsection
(b) for any period of time after the Employee's Termination of
Employment.
(c) Non-Duty Hours (Unpaid). Each hour for which an Employee is
-----------------------
not paid due to medical leave, family medical leave or layoff.
Up to a total of 501 Hours of Service shall be credited under
this subsection (c) (with such 501 limit reduced by one Hour
of Service for each Hour of Service credited under subsection
(b)) to an Employee in a computation period on account of any
single continuous period during which the Employee performs no
duties, provided, however, that if such continuous period
extends into the next computation period, up to 501 additional
Hours of Service shall be credited in such computation period,
and further
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<PAGE>
provided that no Hours of Service shall be credited under this
subsection (c) for any period of time after the Employee's
Termination of Employment.
(d) Back-Pay Hours. Each hour for which no credit has been given
--------------
under subsections (a), (b) or (c) above, but for which back
pay, irrespective of mitigation of damages, has been either
awarded or agreed to by an Employer.
(e) Military Service Hours. To the extent not taken into account
----------------------
under another subsection of this Section, each hour of the
normally scheduled work week during a period when the Employee
is absent from employment with an Employer for voluntary or
involuntary military service with the armed forces of the
United States, provided that such Employee returns to work
within 90 days after his discharge date or within such longer
period of time as may be prescribed by the Uniformed Services
Employment and Reemployment Rights Act of 1994 ("USERRA").
(f) Worker's Compensation. No Hours of Service will be credited if
---------------------
payment is made solely to comply with applicable worker's
compensation or disability insurance laws.
(g) Intermittent Family Leave. An Employee shall be credited with
-------------------------
45 Hours of Service for each week in which he is on
Intermittent Family Leave. Subsections (b) and (c) shall not
apply to such Employees. An Employee who is a part-time or
temporary Employee on Intermittent Family Leave will be
credited with his regularly scheduled hours on the days during
which he is on Intermittent Family Leave. "Intermittent Family
Leave" has the meaning given in the Employer's policies and
procedures manual for an Employee who periodically needs time
off for the treatment and care of himself or family members
due to conditions which require ongoing medical treatment but
which do not require the Employee to take an extended leave of
absence to provide or obtain such care.
The number of Hours of Service to be credited to Employees shall be calculated
based on 45 hours for each week for which the Employee would be entitled to at
least one Hour of Service. In the case of a payment which is made or due on
account of a period during which an Employee performs no duties and which
results in the crediting of Hours of Service under subsection (b), (c) or (e)
above, or in the case of an award or agreement for back pay made with respect to
a period described in subsection (d) above, the number of Hours of Service to be
credited shall be in accordance with the provisions of the Rules and Regulations
for Minimum Standards for Employee Pension Benefit Plans, U.S. Department of
Labor, 29 C.F.R. Section 2530.200b-2(b) which are hereby incorporated by
reference. Such rules and regulations shall apply to subsection (c) above as if
absences described in such Section were paid absences. Hours of Service shall be
credited to a Plan year in accordance with the provisions of subsection (c) of
the above-cited Department of Labor Regulations. Hours required to be credited
for more than one reason under this Section which pertain to the same period of
time shall be credited only once.
2.25. "Investment Committee" means the committee which is responsible
for directing the investment of the Trust Fund in accordance with ARTICLE IX.
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2.26. "Investment Manager" means any bank, trust company, firm or
institution appointed by the Investment Committee to invest part or all of the
Trust Fund in accordance with ARTICLE VI.
2.27. "Matching Contribution Percentage" means a percentage calculated
for purposes of Section 5.5(b) for (i) the group of Participants who are Highly
Compensated Employees or (ii) the group of all other Participants, as follows:
(a) For the group of Participants (including an Eligible Employee
who is eligible with respect to a Plan Year to receive an
allocation of Matching Contributions, but who fails to do so
solely on account of the Employee's failure to elect to make
Pay Deferral Contributions during the Plan Year) who are
Highly Compensated Employees for a Plan Year, the Matching
Contribution Percentage (referred to herein as the "HCE
Matching Contribution Percentage") for the Plan Year shall be
the average of the following percentages (calculated
separately for each member of the group): Matching
Contributions on behalf of the group member for the Plan Year,
divided by his Compensation for the Plan Year.
(b) For the group of all other Participants (including any
Eligible Employee who is not a Highly Compensated Employee for
a Plan Year and who fails to receive an allocation of Matching
Contributions solely on account of the Employee's failure to
elect to make Pay Deferral Contributions during the Plan
Year), the Matching Contribution Percentage (referred to
herein as the "NHCE Matching Contribution Percentage") for the
Plan Year shall be the average of the following percentages
(calculated separately for each member of the group): Matching
Contributions on behalf of the group member for the prior Plan
Year, divided by his Compensation for the prior Plan Year. The
NHCE Matching Contribution Percentage shall be determined
without regard to whether an Employee is a non-Highly
Compensated Employee for the current Plan Year.
The Matching Contribution Percentages for individuals and the Matching
Contribution Percentage for each specified group shall be calculated to the
nearest one-hundredth of one percent. Matching Contributions made on behalf of a
Participant under any other tax-qualified defined contribution plan maintained
by the Participant's Employer or any Commonly Controlled Entity of such Employer
shall be included in computing his Matching Contribution Percentage to the
extent the Company elects to aggregate such other defined contribution plan with
the Plan for purposes of the nondiscrimination test of Section 5.5(b) or the
coverage test of Code Section 410(b).
2.28. "Maternity/Paternity Absence" means a paid or unpaid absence from
employment (including an unapproved leave of absence) with an Employer or a
Commonly Controlled Entity of an Employer (a) by reason of the pregnancy of the
Employee; (b) by reason of the birth of a child of the Employee; (c) by reason
of the placement of a child under age 18 in connection with the adoption of the
child by the Employee (including a trial period prior to adoption); and (d) for
purposes of caring for a child immediately following birth or adoption. The
Employee must prove to the satisfaction of the Administrative Committee that the
absence meets the above requirements and must supply information concerning the
length of the absence
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<PAGE>
unless the Administrative Committee has access to relevant information without
the Employee submitting it.
2.29. "Normal Retirement Date" means the date on which a Participant
attains age 65.
2.30. "One-Year Break In Service" means a Plan Year in which an
Employee has fewer than 501 Hours of Service; provided, however, that an
Employee shall not have a One-Year Break In Service for any Plan Year if he is
an Employee on the last day of the Plan Year. In addition, an Employee who is
absent from work due to a Maternity/Paternity Absence or due to an unpaid leave
of absence for which credit is required pursuant to the Family Medical Leave Act
of 1993, as amended, to be given for purposes of avoiding a break in service
shall be treated as having completed certain Hours of Service for a limited
period. The Employee will be treated as completing either (i) the number of
Hours of Service that normally would have been credited but for the absence
(i.e., 45 Hours of Service per week) or (ii) if the normal work hours are
unknown, eight Hours of Service for each normal workday during the leave, to a
maximum per Plan Year of 501 Hours of Service. The Hours of Service required to
be credited under this subsection must be credited only to prevent a One-Year
Break in Service in the Plan Year in which the absence begins for one of the
permitted reasons or, if crediting in such year is not necessary to prevent a
One-Year Break in Service in the Plan Year, in the following Plan Year.
2.31. "Participant" means an Eligible Employee who elects to make Pay
Deferral Contributions under the Plan pursuant to Section 5.1, or if earlier,
receives a Profit Sharing Contribution pursuant to Section 4.1(c) or elects to
make a Rollover Contribution to the Plan pursuant to Section 5.6.
2.32. "Plan" means the Edwards Lifesciences Corporation 401(k)
Investment and Savings Plan.
2.33. "Plan Year" means the twelve consecutive month period beginning
January 1 and ending December 31; provided, however, that the first Plan Year
shall be the period beginning on the Effective Date and ending on December 31.
2.34. "Prior Plan" means the Baxter International Inc. and Subsidiaries
Incentive Investment Plan, as in effect immediately prior to the Effective Date.
2.35. "Prior Plan Participant" means an individual who was a
participant in the Prior Plan immediately prior to the Effective Date and who
became an Eligible Employee on the Effective Date.
2.36. "Spouse" means the person who is or was married to the
Participant within the meaning of the laws of the State in which the Participant
lives, and, for purposes of determining who is entitled to the survivor annuity
under a Joint and Survivor Annuity, the person who as of the date a
Participant's annuity payments begin is alive and married to the Participant
within the meaning of the laws of the State in which the Participant lives.
2.37. "Termination of Employment" occurs when a person ceases to be an
Employee and ceases to be on the payroll of an Employer or a Commonly Controlled
Entity of an Employer. Transfer of employment from an Employer to another
Employer or Commonly
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Controlled Entity or from one Commonly Controlled Entity to another Commonly
Controlled Entity or to an Employer, shall not constitute a Termination of
Employment for purposes of the Plan. Notwithstanding the foregoing, an
individual who has ceased to be an Employee but who remains for a limited period
of time on the payroll of an Employer or a Commonly Controlled Entity of an
Employer solely for administrative purposes shall incur a Termination of
Employment on the date he ceases to be an Employee.
2.38. "Trust" means the legal entity resulting from the Trust Agreement
between the Company and the Trustee, pursuant to which assets of the Plan are
received, held, invested and distributed to or for the benefit of Participants,
Spouses and Beneficiaries.
2.39. "Trust Agreement" means the agreement between the Company and the
Trustee establishing the Trust, as amended.
2.40. "Trust Fund" means all assets held by the Trustee, Investment
Managers and insurance institutions in accordance with the Trust Agreement and
the Plan.
2.41. "Trustee" means any individual(s) or corporation(s) designated in
the Trust Agreement to execute the duties of the Trustee as set forth in the
Trust Agreement.
2.42. "Year of Vesting Service" or "Vesting Service" means the period
credited to an Employee for purposes of determining the extent to which the
Employee is vested in his Employer Matching Account under the vesting schedule
set forth in Section 7.2. Under the Plan, an Employee is credited with a Year of
Vesting Service if the Employee completes at least 1,000 Hours of Service during
any Plan Year. An Employee's period of service with a corporation that becomes a
Commonly Controlled Entity of an Employer shall be taken into account for
purposes of this Section if the Employee is employed on the date the corporation
becomes a Commonly Controlled Entity. Credit shall be given at the rate of 45
Hours of Service for each week during such period (but not to exceed 1,000 Hours
of Service for any twelve month period). If an Employee is credited with at
least one Year of Vesting Service, he shall never lose such service regardless
of when he returns to employment as an Employee. Notwithstanding the foregoing,
an individual (i) who immediately prior to the Effective Date was employed by
Baxter or a Commonly Controlled Entity of Baxter and (ii) who becomes an
Eligible Employee on the Effective Date shall be credited with the number of
Years of Vesting Services such individual earned while employed with Baxter or a
Commonly Controlled Entity of Baxter.
ARTICLE III
-----------
PARTICIPATION
3.1. Participation. Each Prior Plan Participant shall become a
-------------
Participant on the Effective Date. Each other Eligible Employee may become a
Participant in the Plan on the Entry Date coincident with or immediately
following the one-month anniversary of his employment with an Employer.
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3.2. Cessation of Participation. A Participant shall cease to be a
--------------------------
Participant on the later of the date on which such Participant ceases to be an
Eligible Employee or the date on which the Participant's Accounts are
distributed for his benefit in accordance with the Plan.
3.3. Reemployment. An Eligible Employee who was a Participant or was
------------
eligible to participate prior to his Termination of Employment and is reemployed
as an Eligible Employee shall be eligible to recommence participation in the
Plan on the first Entry Date following the date of his reemployment.
3.4. Transfer of Employment. In the event an Employee transfers from
----------------------
employment with an Employer to employment with a division or unit of the Company
or a Commonly Controlled Entity of the Company that has not adopted the Plan in
accordance with Section 13.1, the Employee's period of employment with such
non-participating division, unit or Commonly Controlled Entity shall be treated
as employment with a participating Employer solely for purposes of (i)
determining the Participant's Years of Vesting Service and (ii) determining when
the Participant has incurred a Termination of Employment entitling the
Participant to a distribution pursuant to ARTICLE VII.
3.5. Reemployment of Veterans. The provisions of this Section shall
------------------------
apply in the case of the reemployment by an Employer of an Eligible Employee,
within the period prescribed by USERRA, after the Employee's completion of a
period of qualified military service (as defined in Code Section 414(u)(5)). The
provisions of this Section are intended to provide such Employees with the
rights required by USERRA and Section 414(u) of the Code, and shall be
interpreted in accordance with such intent.
(a) Make Up of Pay Deferral Contributions. Such Employee shall
-------------------------------------
have the right to make contributions under the Plan ("Make Up
Deferrals"), in addition to any Pay Deferral Contributions
which the Employee elects to have made under the Plan pursuant
to Section 5.1. From time to time while employed by an
Employer, such Employee may elect to make such Make Up
Deferrals during the period beginning on the date of such
Employee's reemployment and ending on the earlier of:
(i) the end of the period equal to the product of three
and such Employee's period of qualified military
service, and
(ii) the fifth anniversary of the date of such
reemployment.
Such Employee shall not be permitted to contribute Make Up
Deferrals to the Plan in excess of the amount which the
Employee could have elected to have made under the Plan in the
form of Pay Deferral Contributions if the Employee had
continued in employment with his Employer during such period
of qualified military service. Such Employee shall be deemed
to have earned "Compensation" from his Employer during such
period of qualified military service for this purpose in the
amount prescribed by Code Sections 414(u)(2)(B) and 414(u)(7)
("Qualified Military Service"). The manner in which an
Eligible Employee may elect to make up deferrals pursuant to
this subsection (a) shall be prescribed by the Administrative
Committee.
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(b) Make Up of Employer Matching Contributions. An Eligible
------------------------------------------
Employee who makes Make Up Deferrals as described in
subsection (a) shall be entitled to an allocation of matching
contributions ("Make Up Matching Contributions") in an amount
equal to the amount of Employer Matching Contributions which
would have been allocated to the Account of such Eligible
Employee under the Plan if such Make Up Deferrals had been
made in the form of Pay Deferral Contributions during the
period of such Employee's qualified military service (as
determined pursuant to Code Section 414(u)). The amounts
necessary to make such allocation of Make Up Matching
Contributions shall be derived from Forfeitures not yet
applied towards Employer Matching Contributions for the Plan
Year in which the Make Up Deferrals are made, and if such
Forfeitures are not sufficient for this purpose, then the
Eligible Employee's Employer shall make a special contribution
which shall be utilized solely for purposes of such
allocation.
(c) Profit Sharing Contributions. Such Employee shall be entitled
----------------------------
to share in allocations of Profit Sharing Contributions with
respect to such period of Qualified Military Service as an
Eligible Employee. Such Employee shall be deemed to have
earned "Compensation" from his or her Employer during such
period of Qualified Military Service for this purpose in the
amount prescribed by sections 414(u)(2)(B) and 414(u)(7) of
the Code.
(d) Inapplicability of Limitations. Any contributions made by an
------------------------------
Eligible Employee or an Employer pursuant to this Section on
account of a period of qualified military service in a prior
Plan Year shall not be subject to the limitations prescribed
by Sections 4.3, 5.3 and 5.4 of the Plan (relating to Sections
402(g), 404 and 415 of the Code) for the Plan Year in which
such contributions are made. The Plan shall not be treated as
failing to satisfy the nondiscrimination rules of Section 5.5
of the Plan (relating to Sections 401(k)(3) and 401(m) of the
Code) for any Plan Year solely on account of any make up
contributions made by an Eligible Employee or an Employer
pursuant to this Section.
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<PAGE>
ARTICLE IV
----------
CONTRIBUTIONS
4.1. Contributions. Each Plan Year each Employer shall contribute to
-------------
the Trust the following amounts:
(a) Pay Deferral Contributions made in accordance with Section 5.1
for such Plan Year by its Employees who are Participants.
(b) Matching Contributions in an amount equal to (i) 100% of the
aggregate amount of each such Participant's Pay Deferral
Contributions made in accordance with Section 5.1 for such
Plan Year, up to the first 3% of such Participant's annual
Compensation and (ii) 50% of the aggregate amount of each such
Participant's Pay Deferral Contributions made in accordance
with Section 5.1 for such Plan Year on the next 2% of such
Participant's annual Compensation.
(c) In the case of each Participant who is an hourly manufacturing
employee, Discretionary Profit Sharing Contributions, paid
quarterly, in an amount targeted at 3% (which may be more or
less than 3%) of each such Participant's annual Base Pay based
on the achievement of certain performance measures to be
established by the Administrative Committee in its discretion.
(d) In the case of each Participant who is an hourly manufacturing
employee and whose employment was transferred as of March 31,
2000 (the "Distribution Date") to an Employer from a Commonly
Controlled Entity of Baxter, as of the Effective Date, fifty
shares of Company Common Stock to be held in the Participant's
Stock Grant Account.
(e) In the case of each Participant whose employment was
transferred as of the Effective Date to an Employer from a
Commonly Controlled Entity of Baxter and who is a salaried
non-exempt or hourly manufacturing employee on the last day of
the applicable Plan Year (as listed in Schedule A hereto), the
following Transition Contributions:
(i) Each Participant with 75 or more "points" (as
determined under the terms of the Baxter
International Inc. and Subsidiaries Pension Plan (the
"Baxter Pension Plan")) as of the Effective Date will
receive an annual Transition Contribution equal to
five percent of the Participant's Base Pay.
(ii) Each Participant with 70-74 "points" (as determined
under the terms of the Baxter Pension Plan) as of the
Effective Date will receive an annual Transition
Contribution equal to three percent of the
Participant's Base Pay.
(iii) Each Participant with 65-69 "points" (as determined
under the terms of the Baxter Pension Plan) as of the
Effective Date will receive an annual
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<PAGE>
Transition Contribution equal to two and one half
percent of the Participant's Base Pay.
(iv) Each Participant with 60-64 "points" and at least 10
years of "benefit service" (as determined under the
terms of the Baxter Pension Plan) as of the Effective
Date will receive an annual Transition Contributions
equal to one percent of the Participant's Base Pay.
(v) Each Participant with 55-59 "points" and at least 10
years of "benefit service" (as determined under the
terms of the Baxter Pension Plan) as of the Effective
Date will receive an annual Transition Contribution
equal to one half of one percent of the Participant's
Base Pay.
Such annual Transition Contributions shall continue until the
earlier of (1) the date on which the Participant terminates
employment or (2) the first day of the Plan Year following the
Plan Year during which such Participant attains age 65.
Each Employer may also make contributions in accordance with
Sections 3.5, 6.11, 7.4(c) and 7.12(b). The Employers may make such
contributions annually or more frequently. Such contributions may be credited
ratably as of each Accounting Date as provided in Section 6.9 whether or not
such contributions are actually made ratably during the Plan Year.
Pay Deferral Contributions shall be paid by an Employer to the
Trust no later than the 15th business day of the month following the month in
which such contributions would have been payable to each Participant in cash but
for the Participant's election to participate herein (or such other time
prescribed by law). Matching Contributions shall be determined and paid by an
Employer to the Trust no later than the filing date for the Employer's federal
income tax return for such Plan Year, including extensions. Notwithstanding the
foregoing, Profit Sharing Contributions made pursuant to paragraph (c) above
shall be made as quarterly cash contributions which shall be invested according
to the Participant's investment elections. If the Participant has made no
investment elections, then the contributions shall be used to purchase units of
the Company Common Stock Fund in each such Participant's Account. Transition
Contributions made pursuant to paragraph (e) above shall be made annually as
cash contributions which shall be invested according to the Participant's
investment elections. If the Participant has made no investment elections, then
the contributions shall be used to purchase units of the Company Common Stock
Fund in each such Participant's Account. Shares of Company Common Stock
contributed pursuant to paragraph (d) above are not subject to reinvestment. In
no event shall the Employer contributions for any Plan Year exceed the amount
deductible by the Employer under Section 404 of the Code for the taxable year
during which such Plan Year ends.
4.2. Certification of Employer Contributions. An Employer may in its
---------------------------------------
discretion obtain a certification of the correctness of any calculations
relating to its contributions under the Plan. A certificate of an independent
accountant prepared for this purpose shall conclusively determine such issue.
4.3. Contribution Limitations. The following contribution limitations
------------------------
under the Code shall be applied with respect to a limitation year which
coincides with the Plan Year. The Annual Addition (as defined in Section 4.4)
allocated to any Participant's Accounts under the Plan and under any other
defined contribution plan maintained by his Employer or a Commonly
-17-
<PAGE>
Controlled Entity of his Employer ("Related Defined Contribution Plans"), shall
not exceed the lesser of $30,000 (or such other applicable amount determined
under Section 415 of the Code or regulations thereunder) or 25% of the
Participant's total Compensation paid during the Plan Year by his Employer or a
Commonly Controlled Entity of his Employer. In applying the preceding
limitation, the Annual Addition to a Participant's accounts in any Related
Defined Contribution Plans constituting money purchase pension plans and the
Annual Addition to a Participant's accounts under any other Related Defined
Contribution Plans (other than money purchase pension plans) shall be limited
before the Annual Addition to his Accounts are limited, to the extent such
action is not inconsistent with such other plans. Except as provided in Section
5.1 with respect to Pay Deferral Contributions, any Employer contributions which
cannot be credited to a Participant's Accounts because of the limitations of
this Section or shall be used to reduce Employer Matching Contributions. To the
extent required by regulations under Section 415 of the Code, the Employer
contributions allocated to any Participant shall be limited by this Section to
take into consideration any allocations made for the benefit of such Participant
in prior Plan Years in excess of the Annual Addition limitations then in effect
or any applicable cumulative limitations. In applying the rules in this Section,
the Administrative Committee shall make appropriate adjustments to reflect the
proper application of Section 415 of the Code with respect to Plan Years of less
than 12 months.
4.4. Annual Addition. The Annual Addition for each Participant for
---------------
each Plan Year means the sum of the following:
(a) Employer contributions credited to the Participant's Accounts
under Section 4.1 and employer contributions credited to the
Participant's accounts under any Related Defined Contribution
Plans (as defined in Section 4.3);
(b) Remainders and forfeitures credited to the Participant's
Accounts and to his accounts under any Related Defined
Contribution Plans;
(c) After-tax contributions made by the Participant to any Related
Defined Contribution Plan; and
(d) Amounts credited for the benefit of a Key Employee (as defined
in Section 12.2(g)) to a separate retiree health or life
account maintained by an Employer or a Commonly Controlled
Entity of that Employer or maintained under a Funded Welfare
Plan to which the Employer or Commonly Controlled Entity
contributes. A "Funded Welfare Plan" means a trust fund
established under Section 501(c)(9) of the Code or any other
trust, corporation, arrangement or employer account which is
treated as a welfare benefit fund for purposes of Section
419(e) of the Code.
-18-
<PAGE>
ARTICLE V
---------
PARTICIPANT CONTRIBUTIONS/CONTRIBUTION LIMITATIONS
5.1. Pay Deferral Contributions. An Eligible Employee may elect in the
--------------------------
manner described below to have his Employer reduce his Compensation via payroll
deduction in an amount not less than 1% nor more than 15% of his Compensation,
in whole multiples of 1%. Such salary reductions shall constitute Pay Deferral
Contributions and shall be contributed to the Trust by the Employer in
accordance with Section 4.1. A Participant's salary reduction election shall be
made electronically via telephone or in any such manner prescribed by the
Administrative Committee. Salary reduction elections will become effective as of
the first pay period beginning after such elections are properly made. No salary
reduction election will become effective unless the Participant properly selects
the Plan investment fund or funds to which his Pay Deferral Contributions are to
be allocated (in the manner described in Section 6.4). Salary reduction
elections shall continue in effect (with automatic adjustments for any change in
Compensation) until the Participant alters such election in accordance with
Section 5.2 or until the Participant ceases to be an Eligible Employee.
5.2. Change in Rate of Pay Deferral Contributions/Reemployment. Within
---------------------------------------------------------
the limitations of Section 5.1, a Participant may elect to change the rate of
his Pay Deferral Contributions effective once per payroll period. Any such
election shall be made electronically via telephone or in any such manner
prescribed by the Administrative Committee. Election changes shall become
effective as of the pay period beginning after the election is properly made. A
Participant may also elect to suspend or resume making Pay Deferral
Contributions in the same manner. If a former Participant is reemployed within
one month of his Termination of Employment, his Pay Deferral Contributions will
recommence in accordance with the most recent elections received from such
Participant prior to such Termination of Employment. Otherwise, the Participant
must make new elections in accordance with Section 5.1. Notwithstanding the
foregoing, any Participant who elects to contribute a portion of his salary to a
non-qualified deferred compensation arrangement maintained by his Employer or a
Commonly Controlled Entity of such Employer may not change the rate of his Pay
Deferral Contributions, except that he may do so at the end of each Plan Year,
to be effective as of the beginning of the following Plan Year.
5.3. Annual Limitations on Pay Deferral Contributions. A Participant's
------------------------------------------------
annual Pay Deferral Contributions (along with deferrals under any other salary
reduction arrangement under Code Section 401(k)) shall be limited to the amount
specified in Code Section 402(g) (which in 2000 is $10,500, and shall be
adjusted from time to time by the Internal Revenue Service under Code Section
402(g)(i)). Upon reaching this limit in any Plan Year, a Participant's Pay
Deferral Contributions shall cease for the remainder of such Plan Year.
Alternatively, if a Participant's Pay Deferral Contributions are not ceased and
exceed this limit for any Plan Year, such Pay Deferral Contributions and the
attributable earnings shall be returned to the Participant no later than April
15 following the close of such Plan Year.
5.4. General Limitations on Pay Deferral Contributions. For purposes of
-------------------------------------------------
applying the limitations of Sections 404 and 415 of the Code, Employer
contributions (including Pay Deferral
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<PAGE>
Contributions) will be reduced to the extent necessary (with Pay Deferral
Contributions reduced first) to satisfy the following requirements:
(a) With respect to all Participants, the sum of all Pay Deferral
Contributions and Matching Contributions for any Plan Year
shall not exceed the maximum deductible amount for Employer
contributions for such year under the Code; and
(b) With respect to each Participant, the sum of all Pay Deferral
Contributions and Matching Contributions for any Plan Year
shall not exceed the maximum amount which can be credited for
such year under Section 4.3.
Any reduction of Pay Deferral Contributions required under this Section 5.4
shall be made in accordance with the procedures described in Section 5.5 below.
In applying the limitations of this Section 5.4, the Administrative Committee
may consider any other Employer contributions and cash or deferred or salary
reduction contributions permitted to be reflected for such purposes under
applicable federal regulations.
5.5. Nondiscrimination Rules Applicable to Pay Deferral and Matching
---------------------------------------------------------------
Contributions.
- --------------
(a) Actual Deferral Percentage Test. For each Plan Year, at least
-------------------------------
one of the following nondiscrimination tests under Code
Section 401(k)(3) shall be satisfied:
(i) The HCE Actual Deferral Percentage shall not be more
than 125% of the NHCE Actual Deferral Percentage; or
(ii) The HCE Actual Deferral Percentage shall not be more
than two percentage points higher than, nor more than
200% of, the NHCE Actual Deferral Percentage.
(b) Matching Contribution Percentage Test. For each Plan Year, at
-------------------------------------
least one of the following nondiscrimination tests under Code
Section 401(m) shall be satisfied:
(i) The HCE Matching Contribution Percentage shall not be
more than 125% of the NHCE Matching Contribution
Percentage; or
(ii) The HCE Matching Contribution Percentage shall not be
more than two percentage points higher than, nor more
than 200% of, the NHCE Matching Contribution
Percentage.
(c) Multiple Use Limitation. This subsection describes a
----------------------------------------------------
limitation on the multiple use of the alternative limits set
forth in subparagraphs (a)(ii) and (b)(ii) above. If the sum
of the HCE Actual Deferral Percentage ("ADP") and HCE Matching
Contribution Percentage ("MCP") exceeds the "Aggregate Limit,"
then the HCE ADP and/or the HCE MCP shall be reduced until the
Aggregate Limit is no longer exceeded, as described in
paragraph (d) below. The HCE ADP and HCE MCP shall be
determined for purposes of this paragraph after any
corrections required to meet the tests in subsections (a) and
(b) above, respectively. A "multiple use" shall not be
considered to occur, and this subsection shall not apply, if
either the HCE ADP or the HCE MCP does not exceed 1.25
multiplied
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<PAGE>
by the NHCE ADP or NHCE MCP, respectively. The term "Aggregate
Limit" means the greater of the following two paragraphs:
(i) The sum of (1) 125% of the greater of the NHCE ADP or
the NHCE MCP, and (2) two percentage points plus the
lesser of the NHCE ADP or the NHCE MCP. In no event
may the amount in clause (2) exceed twice the lesser
of the NHCE ADP or the NHCE MCP.
(ii) The sum of (1) 125% of the lesser of the NHCE ADP or
the NHCE MCP, and (2) two percentage points plus the
greater of the NHCE ADP or the NHCE MCP. In no event
may the amount in clause (2) exceed twice the greater
of the NHCE ADP or the NHCE MCP.
(d) Remedial Actions to Satisfy Tests. If the nondiscrimination
---------------------------------
rules of subsection (a) or (b) would otherwise not be
satisfied for a Plan Year, the Administrative Committee shall
take such steps during the Plan Year as it deems necessary or
appropriate to adjust the Pay Deferral Contributions for the
remainder of the Plan Year on behalf of each Participant who
is a Highly Compensated Employee in order for one of the tests
to be satisfied. If after the end of the Plan Year, it is
determined that such nondiscrimination rules would not be
satisfied for such Plan Year, the Administrative Committee
shall take all or any of the actions described below.
(i) Actual Deferral Percentage Tests.
(A) Return of Excess Contributions.
If one of the nondiscrimination tests set
forth in subsection (a) would otherwise not be
satisfied for a Plan Year, the Administrative
Committee shall calculate a total amount by which Pay
Deferral Contributions must be reduced in order to
satisfy such tests, in the manner prescribed by
Section 401(k)(8)(B) of the Code (the "excess
contributions amount"). The amount to be returned to
each Participant who is a Highly Compensated Employee
shall be determined by first reducing the Pay
Deferral Contributions of each Participant whose
actual dollar amount of Pay Deferral Contributions
for such Plan Year is highest until the such reduced
dollar amount equals the next highest actual dollar
amount of Pay Deferral Contributions made for such
Plan Year on behalf of any Highly Compensated
Employee, or until the total reduction equals the
excess contributions amount. If further reductions
are necessary, then such Pay Deferral Contributions
on behalf of each Participant who is a Highly
Compensated Employee and whose actual dollar amount
of Pay Deferral Contributions made for such Plan Year
is the highest (determined after the reduction
described in the preceding sentence) shall be reduced
in accordance with the preceding sentence. Such
reductions shall continue to be made to the extent
necessary so that the total reduction equals the
excess contributions amount.
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<PAGE>
The Company shall distribute to each such Participant (i) the amount of
the reductions prescribed by the preceding paragraph plus any income and minus
any loss allocable thereto and (ii) any corresponding Matching Contributions
related thereto plus any income and minus any loss allocable thereto in which
the Participant would be vested if he incurred a Termination of Employment on
the last day of such Plan Year (or earlier if such Participant actually incurred
a Termination of Employment at any earlier date), and any corresponding Matching
Contributions in which the Participant would not be vested plus any income and
minus any loss allocable thereto shall be forfeited. The amount of a
Participant's corresponding Matching Contributions considered to be vested for
this purpose shall be determined as if all corresponding Matching Contributions
to be distributed or forfeited are the only amounts credited to the
Participant's Employer Matching Account upon the hypothetical or actual
Termination of Employment described in the preceding sentence.
The amounts to be returned pursuant to this subparagraph shall be
distributed no later than the date which is 2 1/2 months after the end of the
Plan Year (or if distribution by such date is administratively impracticable, no
later than the last day of the subsequent Plan Year) for which such adjustment
is made. The amount of Pay Deferral Contributions distributed to a Participant
shall be reduced by any Pay Deferral Contributions previously distributed to
such Participant pursuant to Section 5.3 in order to comply with the limitations
of Section 402(g) of the Code. The amount of any income or loss allocable to any
reductions to be distributed or forfeited shall be determined in accordance with
applicable U.S. Treasury Regulations. The unadjusted amount of any reductions so
distributed shall be treated as an Annual Addition for purposes of Section 4.3.
(B) Qualified Nonelective Contributions.
In addition to or in lieu of the actions described in subparagraph (A)
above, to the extent permitted by law, any Employer may make additional
nonelective contributions to the Plan to the extent necessary to satisfy one of
the tests set forth in subsection (a). The Administrative Committee shall
designate the Participants for whom such contributions are made. The additional
contributions must be made no later than 30 days after the end of the Plan Year,
shall satisfy the requirements under Code Section 401(k) for treatment as
"qualified nonelective contributions," and shall be credited to the Before-Tax
Account of each Participant for whom any such contribution is made.
(C) Qualified Matching Contributions.
In addition to or in lieu of the actions described in subparagraphs (A)
or (B) above, to the extent permitted by law, any portion of that Plan
-22-
<PAGE>
Year's Matching Contributions that may be treated as a "qualified matching
contribution" under Code Section 401(k).
(ii) Matching Contribution Percentage Tests.
(A) Return of Excess Aggregate Contributions.
If one of the nondiscrimination tests set forth in subsection (b) would
otherwise not be satisfied for a Plan Year, the Administrative Committee shall
calculate a total amount by which Matching Contributions must be reduced in
order to satisfy such tests, in the manner prescribed by Section 401(m)(6)(B) of
the Code (the "excess aggregate contributions amount"). The amount of reduction
applicable to each Participant who is a Highly Compensated Employee shall be
determined by first reducing the Matching Contributions of each Participant
whose actual dollar amount of Matching Contributions for such Plan Year is
highest until the such reduced dollar amount equals the next highest actual
dollar amount of Matching Contributions made for such Plan Year on behalf of any
Highly Compensated Employee, or until the total reduction equals the excess
aggregate contributions amount. If further reductions are necessary, then such
Matching Contributions on behalf of each Participant who is a Highly Compensated
Employee and whose actual dollar amount of Matching Contributions made for such
Plan Year is the highest (determined after the reduction described in the
preceding sentence) shall be reduced in accordance with the preceding sentence.
Such reductions shall continue to be made to the extent necessary so that the
total reduction equals the excess aggregate contributions amount.
The Company shall distribute to each such Participant the portion of
the reductions applicable to the Matching Contributions related thereto plus any
income and minus any loss allocable thereto in which the Participant would be
vested if he incurred a Termination of Employment on the last day of such Plan
Year (or earlier if such Participant actually incurred a Termination of
Employment at any earlier date), and any Matching Contributions in which the
Participant would not be vested plus any income and minus any loss allocable
thereto shall be forfeited. The amount of a Participant's Matching Contributions
considered to be vested for this purpose shall be determined as if all
corresponding Matching Contributions to be distributed or forfeited are the only
amounts credited to the Participant's Employer Matching Account upon the
hypothetical or actual Termination of Employment described in the preceding
sentence.
The amounts to be returned pursuant to this subparagraph shall be
distributed no later than the date which is 2 1/2 months after the end of the
Plan Year (or if distribution by such date is administratively impracticable, no
later than the last day of the subsequent Plan Year) for which such adjustment
is made. The amount of any income or loss allocable to any reductions to be
distributed or forfeited shall be determined in accordance
-23-
<PAGE>
with applicable U.S. Treasury Regulations. The unadjusted amount of any
reductions so distributed shall be treated as an Annual Addition for purposes of
Section 4.3.
(B) Additional Matching Contributions.
In addition to or in lieu of the actions described in subparagraph (A)
above, any Employer may make additional Matching Contributions to the Plan to
the extent necessary to satisfy one of the tests set forth in subsection (b).
The Administrative Committee shall designate the Participants for whom such
contributions are made. The additional contributions shall be credited to the
Employer Matching Account of each Participant for whom any such contribution is
made.
(iii) Multiple Use Test.
If after making the adjustments required by paragraphs (1) and (2) of
this subsection for a Plan Year the Administrative Committee determines that the
sum of the HCE ADP and the HCE MCP exceeds the aggregate limit for such Plan
Year, the Administrative Committee shall, no later than the last day of the
subsequent Plan Year, reduce the Pay Deferral Contributions made for such Plan
Year on behalf of each Participant who is a Highly Compensated Employee and any
corresponding Matching Contributions to the extent necessary to eliminate such
excess. Such reduction shall be effected by reducing the Pay Deferral
Contributions made on behalf of each Participant who is a Highly Compensated
Employee in the manner described in paragraph (1) of this subsection.
5.6. Rollover Contributions. On such forms and in such manner as
----------------------
prescribed by the Administrative Committee, an Eligible Employee may elect to
roll over to the Plan amounts credited to his account in a tax-qualified plan of
his former employer or amounts held on his behalf in an individual retirement
account; provided that the Trustee may accept rollover amounts on behalf of a
Participant only to the extent such amounts constitute "eligible rollover
distributions" (as defined in Code Section 402(a)(4)). A Participant who has
ceased to be an Employee may only elect to roll over to the Plan an amount
credited on his behalf to the Baxter International Inc. and Subsidiaries Pension
Plan and only to the extent such amount constitutes an "eligible rollover
distribution" (as provided above). "Rollover Contributions" will be credited to
a Rollover Account maintained for the Participant pursuant to Section 6.1(h) as
soon as administratively practicable after such contributions are remitted to
the Administrative Committee. No rollover election will become effective unless
the Participant properly selects the Plan investment fund or funds to which the
Rollover Contribution is to be allocated (in the manner described in Section
6.4). A Participant who has previously made an investment election applicable to
his Pay Deferral Contributions must apply the same election to his Rollover
Contributions and any election to the contrary shall be disregarded.
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<PAGE>
ARTICLE VI
----------
INVESTMENTS AND PLAN ACCOUNTING
6.1. Participant Account Balance. The Administrative Committee shall
---------------------------
establish and maintain the following separate accounts with respect to
Participants:
(a) Before-Tax Account. A "Before-Tax Account" shall be maintained
------------------
for each Participant. This account shall represent the amount
of such Participant's Pay Deferral Contributions and the
expenses, distributions, earnings and losses attributable to
such account.
(b) Employer Matching Account. An "Employer Matching Account"
-------------------------
shall be maintained for each Participant. This account shall
represent the portion of the Employer Matching Contributions
allocated to such Participant under the Plan and the expenses,
distributions, earnings and losses attributable to such
account.
(c) Prior Employer Matching Account. A "Prior Employer Matching
-------------------------------
Account" shall be maintained for each Participant who received
a direct transfer of matching account assets from the Prior
Plan to the Plan. The Participant shall be 100% vested at all
times in such account.
(d) Profit Sharing Account. A "Profit Sharing Account" shall be
----------------------
maintained for each Participant (i) on whose behalf a profit
sharing account was maintained under the Prior Plan and (ii)
who receives a Profit Sharing Contribution as described in
Section 4.1(c). Such Profit Sharing Account shall reflect the
expenses, distributions, earnings and losses attributable to
such account.
(e) Stock Grant Account. A "Stock Grant Account" shall be
-------------------
maintained for each Participant who receives a contribution of
Company Common Stock as described in Section 4.1(d). Such
Stock Grant Account shall reflect the expenses, distributions,
earnings and losses attributable to such account.
(f) Transition Contribution Account. A "Transition Contribution
-------------------------------
Account" shall be maintained for each Participant who receives
Transition Contributions as described in Section 4.1(e). Such
account shall reflect the expenses, distributions, earnings
and losses attributable to such account.
(g) After-Tax Account. An "After-Tax Account" shall be maintained
-----------------
for each Participant on whose behalf an after-tax account was
maintained under the Prior Plan. Such After-Tax Account shall
reflect the expenses, distributions, earnings and losses
attributable to such account. To the extent applicable,
separate subaccounts shall be established to account for any
after-tax contributions made under a predecessor plan prior to
1987, and after-tax contributions made under a predecessor
plan after 1986.
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<PAGE>
(h) Rollover Account. A "Rollover Account" shall be maintained for
----------------
each Participant whose benefits under another plan described
in Section 401(a) of the Code, are transferred to the Trust
Fund in accordance with Section 5.6 for the subsequent payment
of such amounts in accordance with this Plan. This account
shall reflect the expenses, distributions, earnings and losses
attributable to such account.
The Accounts represent the Participants' interests in the Plan and Trust Fund
and are intended as bookkeeping account records to assist the Investment
Committee in the administration of the Plan.
6.2. Investment of Accounts. The Trustee, the Investment Managers and
----------------------
any insurance institutions responsible for investment of the Trust Fund are
permitted to commingle the assets of the Trust Fund for purposes of investment
with the assets of other plans or trusts which are intended to qualify for plan
qualification and federal tax exemption under Sections 401(a) and 501(a) of the
Code, respectively. Any documents which are required to be incorporated in the
Plan and the Trust Agreement to permit such commingled investments are hereby
incorporated. Except to the extent required by Sections 6.3 and 6.4, segregated
investment of Plan and Trust Fund assets shall not be required with respect to
any one or more Participants. Each of the Accounts invested in a particular
investment fund shall represent an undivided interest in such investment fund
which corresponds to the balance of such Account.
6.3. Investment Funds. From time to time the Investment Committee may
----------------
cause the Trustee, an Investment Manager or an insurance institution to
establish one or more investment funds for the investment and reinvestment of
the Trust Fund. Although the Investment Committee may arrange with the Trustee,
Investment Managers and insurance institutions for the establishment of
investment funds, the continued availability of these funds cannot be assured
nor is it possible to assure that the arrangements or the investment funds
managed by a particular Investment Manager, by the Trustee or by an insurance
institution will continue to be available on the same or similar terms.
Participants may invest the total amount of their Accounts (as provided in
Section 6.4) among the investment funds made available by the Investment
Committee from time to time for such purpose. Such funds shall allow
Participants to select from a range of alternatives that offer different types
of investments and different risk and return characteristics.
If the Investment Committee determines that Participants shall exercise
direction and control over the investment of their accounts in a manner intended
to insulate Plan fiduciaries from liability for investments under Section 404(c)
of ERISA, the investment funds established by the Investment Committee pursuant
to this Section 6.3 shall afford Participants with a broad range of investment
alternatives whereby each Participant has a reasonable opportunity to:
(a) Affect materially the potential return on amounts in his
Accounts and the degree of risk to which such amounts are
subject;
(b) Choose from at least three investment alternatives:
(i) each of which is diversified and each of which has
materially different risk and return characteristics;
-26-
<PAGE>
(ii) which, to the extent normally appropriate for
Participants, allow them to achieve portfolios with
respect to the aggregate of their Accounts which have
risk and return characteristics at any point within
the range of all alternatives; and
(iii) each of which when combined with investments in the
other alternatives tends to minimize the overall risk
of each Participant's portfolio with respect to the
aggregate of his Accounts through diversification.
(c) Diversify the investments of his Accounts so as to minimize
the risk of large losses.
6.4. Investment Elections. Each Participant, in accordance with rules
--------------------
promulgated under the Plan shall direct the investment of his Accounts described
in Section 6.1 in one or more of the investment funds available under the Plan.
Notwithstanding anything herein to the contrary, a Participant may not exercise
any investment discretion with respect to the shares of Company Common Stock
contributed pursuant to Section 4.1(d) or the earnings thereon. With respect to
the investment funds referred to in Section 6.3 above, such investment elections
shall be subject to the following limitations:
(a) Initial Investment Election. At the same time and in the same
---------------------------
manner that a Participant makes his initial salary reduction
election (in accordance with the requirements of Section 5.2),
or if earlier, the same time that an Eligible Employee makes a
rollover contribution to the Plan (in accordance with Section
5.6), the Participant must direct the Trustee (electronically
via telephone or in any such manner prescribed by the
Administrative Committee) as to the investment funds to which
the amounts credited to his Accounts shall be invested.
Participants shall invest the total amount of the Accounts in
any combination (in 1% increments) of the available investment
funds. All investment elections shall continue in force until
properly changed in accordance with subsection (b) below.
(b) Changes in Investment Elections. A Participant may change his
-------------------------------
investment directions daily. A Participant may change his
investment direction as to future contributions, as to the
amounts already in his Accounts or as to both. Changes in
investment elections shall be effected electronically via
telephone or in any such manner prescribed by the
Administrative Committee and shall become effective on the day
the election is properly made (or on the following business
day, if made after 3:00 p.m. central time).
(c) Applicability of Investment Elections. Both with respect to
-------------------------------------
initial investment elections and changes in investment
elections, unless the Administrative Committee prescribes
otherwise, one election shall apply to the balance, as of the
effective date of the election, in the Participant's Employer
Matching Account, Profit Sharing Account, Before-Tax Account,
After-Tax Account, Prior Employer Matching Account, Transition
Contribution Account and Rollover Account, and additions
thereto; provided that, with respect to an initial election by
a Participant who makes a rollover contribution prior to
making Pay Deferral Contributions under the Plan, such
election shall apply to the balance, as of the effective date
of the election, in the Participant's Rollover Account.
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<PAGE>
(d) Special Limitations and Procedures Applicable to the Company
------------------------------------------------------------
Common Stock Fund. The following limitations and procedures
-----------------
shall be applicable to investment elections which specify
investment of a portion of the Participant's Accounts in the
Company Common Stock Fund:
(i) The aggregate amount of the assets of the Plan which
may be invested in the Company Common Stock Fund
shall be limited by the Investment Committee to the
extent the Investment Committee deems necessary to
prevent the Plan from holding 5% or more of then
outstanding Common Stock of the Company or such other
amount as shall be necessary to assure that the Plan
does not become subject to the provisions of Section
13(d) of the Securities Exchange Act of 1934.
(ii) Voting of Common Stock of the Company. Pursuant to
-------------------------------------
the terms set forth in the Trust Agreement, each
Participant having an interest in the Company Common
Stock Fund shall have the right to direct the manner
in which the Trustee shall vote the Company Common
Stock credited to the Participant's Accounts. Before
each annual or special meeting of shareholders of the
Company, there will be sent to each applicable
Participant a copy of the proxy solicitation material
for such meeting, together with a form requesting
instructions to the Trustee on how to vote the
Company Common Stock allocated to such Participant's
Accounts. Instructions will be mailed directly to the
Trustee to preserve confidentiality. Upon receipt of
such instructions, the Trustee will vote such shares
as instructed. The Trustee will vote Company Common
Stock allocated to Participants' Accounts for which
the Trustee receives no valid voting instructions and
Company Common Stock not credited to Participant's
Accounts, if any, held in the Trust Fund in a manner
consistent with the provisions of the Trust Agreement
and applicable law. The Investment Committee may, but
is not required to, direct the Trustee with respect
to the voting of Company Common Stock described in
the previous sentence, and the Trustee will follow
such directions except where to do so would be a
breach of the Trustee's duties under the Trust
Agreement or applicable law. The Trustee may not
divulge information with respect to any Participant's
directions regarding voting of Company Common Stock
allocated to his Accounts. A Participant is deemed to
be a named fiduciary of the Plan with regard to all
instructions the Participant provides to the Trustee
as to the manner to which it shall vote the Company
Common Stock credited to such Participant's account.
(iii) Offers for Company Common Stock. Pursuant to the
-------------------------------
terms set forth in the Trust Agreement, in the event
that the stockholders of the Company have received an
offer, including a tender offer, for the purchase or
exchange of their shares of Company Common Stock, the
following provisions shall apply:
(A) Each Participant having an interest in the
Company Common Stock Fund shall have the
right to direct the Trustee concerning the
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sale or tendering of the number of shares of
Company Common Stock credited to the
Participant's Accounts. A Participant is
deemed to be a named fiduciary of the Plan
with regard to all instructions the
Participant provides to the Trustee as to
the manner to which it shall vote the
Company Common Stock credited to such
Participant's account.
(B) The Trustee will use its best efforts to
communicate or cause to be communicated to
all Participants the provisions of the Plan
and Trust Agreement relating to such offer,
all communications directed generally to the
owners of the securities to whom the offer
is made or available, and any communications
that the Trustee may receive from persons
making the offer or any other interested
party (including the Company) relating to
the offer. The Company and the Investment
Committee will provide the Trustee with such
information and assistance as the Trustee
may reasonably request in connection with
these communications to Participants.
Neither the Company nor the Trustee may
interfere in any manner with any
Participant's investment decision with
respect to such an offer.
(C) If the offer is for all Company Common Stock
held by the Trustee in the Trust Fund, then
the Trustee will:
(1) Accept or reject the offer with
respect to Company Common Stock
allocated to each Participant's
Accounts according to that
Participant's investment decision,
except where to do so would be a
breach of the Trustee's duties
under the Trust Agreement or
applicable law; and
(2) Accept or reject the offer with
respect to Company Common Stock
allocated to Participants' Accounts
for which no valid investment
decision was received by the
Trustee and with respect to
unallocated Company Common Stock
held in the Trust Fund in the
Trustee's sole discretion.
The Trustee may not divulge information with
respect to any Participant's investment
decision regarding the offer.
(D) If the offer is for less than all the
Company Common Stock held by the Trustee in
the Trust Fund, all provisions of paragraphs
(A) through (C) will be applied to that
offer, except that each Participant will
have the opportunity to make an investment
decision for a pro rata portion of the
Company Common Stock allocated to his
Accounts and the Trustee, after effecting
those investment decisions, will make its
acceptance or rejection of the offer with
respect to a pro rata portion of the Company
Common Stock allocated to Accounts for which
it received no valid investment instructions
or which is held unallocated in the Trust
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<PAGE>
Fund, so that the offer has been accepted or
rejected with respect to the full amount of
Company Common Stock held by the Trustee in
the Trust Fund which was subject to the
offer.
(E) Notwithstanding the provisions of paragraphs
(C) and (D) above, the Investment Committee
may, but is not required to, direct the
Trustee with respect to the acceptance or
rejection of any offer described in
paragraph (C) or (D) with respect to Company
Common Stock allocated to Participants'
Accounts for which no valid investment
instructions are received by the Trustee and
with respect to unallocated Company Common
Stock held in the Trust Fund, and the
Trustee shall accept or reject any such
offer in accordance with any such directions
from the Investment Committee to the Trustee
with respect to the offer, except where to
do so would be a breach of the Trustee's
duties under the Trust Agreement or
applicable law.
(F) Following the Trustee's sale or tender of
shares pursuant to the terms of this
subsection, each affected Participant's
interest in the Company Common Stock Fund
shall be eliminated and the proceeds from
the sale or tender of the shares credited to
the Participant's Accounts shall be subject
to the Participant's investment direction.
(iv) Special Limitations and Procedures Applicable to the
----------------------------------------------------
Baxter Common Stock Fund. The shareholder rights in
------------------------
the event of a tender offer described in subparagraph
(d)(iii) shall be applicable to Participants in the
Baxter Common Stock Fund with respect to a pro rata
portion of the unallocated shares of Baxter Common
Stock in the Baxter Common Stock Fund determined as
described above. For purposes of this paragraph,
references to "Company" and "Company Common Stock" in
paragraph (d) shall mean "Baxter" and "Baxter Common
Stock," respectively.
6.5. Information Provided Under ERISA Section 404(c).
------------------------------------------------
(a) Participant's Opportunities to Exercise Control. The Investment
-----------------------------------------------
Committee shall communicate its rules to Participants in a manner
calculated to ensure that each Participant has a reasonable opportunity
to direct the investment of his Accounts. In addition, if the
Investment Committee determines that Participants shall exercise
direction and control over the investment of their Accounts in a manner
intended to insulate Plan fiduciaries from liability for investments
under Section 404(c) of ERISA, it shall provide Participants with:
(i) A statement that the Plan is intended to constitute a plan
described in Section 404(c) of ERISA and that the Plan's
fiduciaries may be relieved of liability for any losses which
are the direct and necessary result of investment instructions
given by the Participant;
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<PAGE>
(ii) A description of the investment funds under the Plan and a
general description of the investment objectives and risk and
return characteristics of each such fund, including
information relating to the type and diversification of assets
comprising the investment fund;
(iii) The identity of each investment fund's Investment Manager;
(iv) An explanation of any specified limitations on transfers to or
from a designated investment fund and any restrictions on the
exercise of voting, tender and similar rights appurtenant to
the Participant's investment in the investment fund;
(v) A description of any transaction fees and expenses which
affect the Participant's Accounts in connection with purchases
or sales of interests in the investment funds;
(vi) A description of the procedures established to provide for the
confidentiality of information relating to the purchase,
holding and sale of Company Common Stock, and the exercise of
voting, tender and similar rights by Participants through
investment in the Company Common Stock Fund;
(vii) In the case of an investment fund which is subject to the
Securities Act of 1933, and in which the Participant has no
assets invested immediately following or immediately prior to
the Participant's initial investment in that fund, a copy of
the most recent prospectus provided to the Plan; and
(viii) Any materials provided to the Plan relating to the exercise of
voting, tender or similar rights which are incidental to the
holding in the Account of a Participant of an ownership
interest in the Company Common Stock Fund.
(b) Additional Information Provided Upon Request. If the Investment
--------------------------------------------
Committee determines that Participants shall exercise direction and
control over the investment of their Accounts in a manner intended to
insulate Plan fiduciaries from liability for investments under Section
404(c) of ERISA, it shall provide Participants, upon their request,
with the following information:
(i) A description of the annual operating expenses of each
investment fund (e.g., investment management fees,
administrative fees, transaction costs) which reduce the rate
of return to Participants, and the aggregate amount of such
expenses expressed as a percentage of average net assets of
the fund;
(ii) Copies of any prospectuses, financial statements and reports,
and of any other materials relating to the investment funds,
to the extent such information is provided to the Plan;
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<PAGE>
(iii) A list of the assets comprising the portfolio of each
investment fund and the value of each such asset; and
(iv) Information concerning the value of shares or units in the
investment funds, as well as the past and current investment
performance of such funds, determined, net of expenses, on a
reasonable and consistent basis.
6.6. Investment Fund Accounting. The undivided interest of each
--------------------------
Participant's Accounts in an investment fund shall be determined in accordance
with the accounting procedures specified in the Trust Agreement, investment
management agreement, insurance contract, custodian agreement or other document
under which such investment fund is maintained (the "Investment Fund Document").
To the extent not inconsistent with such procedures, the following rules shall
apply:
(a) Deposits. Amounts deposited in an investment fund shall be
--------
deposited by means of a transfer of such amounts to such
investment fund to conform with the investment elections
properly received in accordance with Section 6.4.
(b) Transfers. Amounts required to be transferred from an
---------
investment fund to satisfy benefit payments and required
transfers to effectuate investment elections in accordance
with Section 6.4 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.
(c) Allocation of Fund Earnings. Except as provided in the
---------------------------
applicable Investment Fund Document, all amounts deposited in
an investment fund shall be invested as soon as practicable
following receipt of such deposit. Notwithstanding the primary
purpose or investment policy of an investment fund, assets of
any investment fund which are not invested in the primary
investment vehicle authorized by the Investment Fund Document
shall be invested in such short term instruments or funds as
the Trustee or applicable Investment Manager or insurance
institution shall determine pending investment in accordance
with such Investment Fund Document.
(d) Accounting for Purchases and Sales of Company Common Stock.
-----------------------------------------------------------
Purchases and sales of Company Common Stock shall be made for
the Company Common Stock Fund in accordance with the
provisions of the Trust Agreement and in accordance with the
following:
(i) No commissions shall be paid in connection with
purchases or sales of Company Common Stock from or to
any disqualified person or party in interest (as
defined for purposes of Section 4975(e)(2) of the
Code or Section 3(14) of ERISA).
(ii) Purchases of Company Common Stock other than
purchases on the New York Stock Exchange (the
"Exchange") shall be at a price not greater than the
last recorded sales price quoted for such shares
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<PAGE>
on the Exchange on the last trading day on which
there was a recorded sale of such shares immediately
preceding the date of such purchases (the "Exchange
Trading Price").
(iii) Sales of Company Common Stock other than sales on the
Exchange shall be at a price not less than the
Exchange Trading Price (as defined in subparagraph
(ii) above).
(iv) In-kind contributions of the Employers, including
contributions of Company Common Stock, are valued at
fair market value. For this purpose Company Common
Stock shall be valued as of the date of such
contribution at the then Exchange Trading Price (as
defined in subparagraph (ii) above but determined as
of the end of the date on which such contribution is
made if such date is a trading day on the Exchange).
If there are no sales of Company Common Stock on the
date as of which the Exchange Trading Price is
determined, then the fair market value of such common
stock shall be the mean of the bid and asked prices
for such date.
(v) If the Investment Committee is unable to determine
the Exchange Trading Price (as defined in
subparagraph (ii) above) because sales prices on the
Exchange are not so quoted, such quotes are not
available to the Investment Committee or for any
other reason, then the Investment Committee may
utilize a composite index price or other price which
is generally accepted for the establishment of fair
market value in lieu of the Exchange Trading Price
for purposes of the restrictions of subparagraphs
(ii) and (iii) above.
6.7. Expenses. Unless paid by the Employers, all costs and expenses
--------
incurred in connection with the general administration of the Plan and Trust
shall be allocated among each investment funds in the proportion in which the
amount invested in each such fund bears to the amount invested in all funds as
of the Accounting Date preceding the date of allocation. All costs and expenses
directly identifiable to one fund shall be allocated to that fund. No commission
expenses shall be paid from the Plan with respect to transactions described in
Section 6.6(d)(i).
6.8. Accounting Dates. All Accounts shall be adjusted in accordance
----------------
with Section 6.11 as of each Accounting Date.
6.9. Crediting Employer Contributions.
---------------------------------
(a) Employer Matching Contributions shall be credited to the
appropriate Accounts of Participants as of the first
Accounting Date coincident with or next following the end of
the payroll period for which such contributions are made,
regardless of the date such contributions are actually made.
Expenses, distributions, earnings or losses attributable to
such amounts shall be separately credited pursuant to Sections
6.7 and 6.11.
(b) Employer Profit Sharing Contributions shall be credited to the
appropriate Accounts of Participants as of the first
Accounting Date coincident with or next
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<PAGE>
following the end of the calendar quarter for which such
contributions are made, regardless of the date such
contributions are actually made. Expenses, distributions,
earnings or losses attributable to such amounts shall be
separately credited pursuant to Sections 6.7 and 6.11.
(c) Transition Contributions shall be credited to the appropriate
Accounts of Participants as of the first Accounting Date
coincident with or next following the end of the Plan Year for
which such contributions are made, regardless of the date such
contributions are actually made. Expenses, distributions,
earnings or losses attributable to such amounts shall be
separately credited pursuant to Sections 6.7 and 6.11.
6.10. Crediting Pay Deferral Contributions. Pay Deferral Contributions
------------------------------------
shall be credited to the appropriate Accounts as of the first Accounting Date
coincident with or next following the end of the payroll period for which such
contributions are made, regardless of the date such contributions are actually
made. Expenses, distributions, earnings or losses attributable to such amounts
shall be separately credited pursuant to Sections 6.7 and 6.11.
6.11. Adjustment of Account Balances. As of each Accounting Date the
------------------------------
Investment Committee shall cause the Accounts of Participants to be adjusted to
reflect adjustments in the value of the Trust Fund, to reflect contributions
(net of Forfeitures) credited in accordance with Sections 6.9 and 6.10 and to
reflect distributions of benefits (including transfers and withdrawals) as
follows:
(a) First, adjust the Accounts as of the last Accounting Date of
all Participants to reflect the Adjusted Net Worth (as
described below) of the Trust Fund by applying the earnings
adjustment rules applicable to each investment fund and
crediting earnings for segregated investments to the
appropriate Accounts of the Participants to whom such
investments pertain; and
(b) Next, credit Employer Matching Contributions, (including
Forfeitures applied towards such contributions in accordance
with Section 7.4) Profit Sharing Contributions, Transition
Contributions, and Participant Pay Deferral Contributions to
the proper Accounts; and
(c) Finally, charge to the proper Accounts all distributions made
since the previous Accounting Date.
The "Adjusted Net Worth" of the Trust Fund as of any date means the fair market
value of the Trust Fund as determined by the Trustee. If an error in the
adjustment of Accounts under this Section is discovered, the Investment
Committee shall correct such error either (i) by crediting or changing the
adjustment necessary to make such correction to or against income or unclaimed
amounts or as an expense of the Trust Fund for the Plan Year in which the
correction is made or (ii) by requiring the Participant's Employer to make a
special contribution to the Plan.
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<PAGE>
ARTICLE VII
-----------
DISTRIBUTION OF ACCOUNT BALANCES
7.1. Retirement, Disability or Death. If a Participant incurs a
-------------------------------
Termination of Employment, while employed by an Employer or a Commonly
Controlled Entity of an Employer, on or after his attainment of age 55 or
because of his Disability or death, the balance in his Accounts, after all
adjustments required under the Plan have been made, shall be determined as soon
as practicable and shall be fully vested and nonforfeitable. Such amount shall
be distributable to the Participant or, in the event of the Participant's death,
to his Spouse or Beneficiary in accordance with Section 7.6.
7.2. Resignation or Dismissal. If a Participant incurs a Termination of
------------------------
Employment for reasons other than a Termination of Employment on or after his
attainment of age 55, Disability or death, the balance in his Prior Employer
Matching Account, Before-Tax Account, Profit Sharing Account, Stock Grant
Account (if any), Transition Contribution Account (if any), After-Tax Account,
Rollover Account and the vested portion of his Employer Matching Account
determined in accordance with the vesting schedule below, after all adjustments
required under the Plan have been made, shall be determined as soon as
practicable and shall be fully vested and nonforfeitable. The portion of such
Account which is vested, based upon the balances of all such Accounts as of the
Accounting Date coincident with or next preceding the date of distribution
(after adjustments required under the Plan as of that date have been made) shall
be distributable to the Participant in accordance with Section 7.6.
Vesting Schedule
----------------
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 or more years 100%
7.3. Special Vesting Rules Upon Sale of Business. In the event of a
-------------------------------------------
sale by the Company of the stock or substantially all of the assets of an entity
that is an Employer, so that the entity ceases to be a participating Employer in
this Plan, the Administrative Committee, in its sole discretion, may determine
that all or a portion of the affected Participants of said entity shall be fully
vested in their Account Balances, determined on the date as of which the entity
is no longer a participating Employer in this Plan, provided that such
Participant is not rehired before actual payment. In lieu of full vesting upon
such a sale, the Administrative Committee may direct that, in accordance with an
agreement between the Company and the purchaser of such stock or assets, periods
of a Participant's service following the effective date of such sale be counted
towards determination of such Participant's Vesting Service hereunder. In the
absence
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<PAGE>
of Administrative Committee action, no accelerated vesting or other special
vesting rules shall apply to any Participant in connection with any such sale,
except as otherwise required by law. The special vesting rules prescribed by
this Section shall be applied in a uniform and nondiscriminatory manner to all
similarly situated classes of affected Participants.
7.4. Forfeitures. The portion of any Participant's Employer Matching
-----------
Account which is not vested under Section 7.2 or 7.3 will become a Forfeiture
upon such Participant's Termination of Employment and, except as provided in
subsection (c) below, will be applied to reduce Employer Matching Contributions
on a periodic basis. However, if such Participant resumes employment with an
Employer or Commonly Controlled Entity of an Employer before incurring five
consecutive One-Year Breaks In Service, the Forfeiture (unadjusted for
subsequent earnings or losses) shall be restored to the Participant's Employer
Matching Account if the Participant restores to the Plan the amount previously
distributed in accordance with subsection (a) below unless such restoration is
not required under an applicable supplement or appendix to this Plan. The
restorations of a Participant's Employer Matching Account are subject to the
following rules:
(a) Buy-Back Contribution. The Forfeiture shall be restored if
---------------------
within 60 months following such Participant's resumption of
employment, he deposits with the Investment Committee an
amount equal to the portion of his Employer Matching Account
which was previously distributed.
(b) Restoration of Forfeitures. As of the first Accounting Date
--------------------------
following receipt by the Investment Committee of the deposit
described in subsection (a) above (or as soon as practicable
thereafter), the Participant's Employer Matching Account shall
be credited with the Forfeiture.
(c) Source of Restoration. The amounts necessary to restore the
---------------------
Forfeiture in accordance with subsection (b) above shall be
allocated for such purpose from Forfeitures not yet applied
towards Employer Matching Contributions, and if such
Forfeitures are not sufficient for this purpose, then, to the
extent necessary to satisfy such restoration, the balance of
such Forfeitures in accordance with subsection (b) above shall
be restored by a special allocation of Employer Matching
Contributions which shall reduce the amounts available to
credit to all other Participants as of such Accounting Date.
In lieu of such method of restoring the Forfeiture, the
Participant's Employer may make a special contribution which
shall be utilized solely for purposes of such restoration.
7.5. Benefit Commencement Date. Except as otherwise provided in this
-------------------------
Section or Section 10.6, the Accounts of a Participant who incurs a Termination
of Employment shall be distributed in accordance with Section 7.6 as soon as
practicable following the Participant's Normal Retirement Date. Notwithstanding
the preceding sentence, the following rules shall apply for purposes of
determining the benefit commencement date for any Participant or Beneficiary:
(a) Cash-Out of Small Amounts. If the vested portion of a
-------------------------
Participant's Accounts does not exceed $5,000, the
Administrative Committee shall direct the Trustee to
distribute such amount to the Participant (or to the
Beneficiary, if appropriate) in a single sum without the
consent of the Participant. The remaining portion shall be
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<PAGE>
treated as a Forfeiture. A distribution pursuant to this
subsection shall be made as soon as administratively
practicable following the Participant's Termination of
Employment.
(b) Restrictions on Immediate Distribution. If the vested portion
--------------------------------------
of a Participant's Accounts exceeds $5,000, the Participant
must consent to any distribution commencing prior to his
Normal Retirement Date; provided, however, that consent under
this subsection is not required to make distributions
necessary to satisfy Code Section 401(a)(9), 401(k)(3),
401(m), 402(g) or 415. In order for a distribution to commence
prior to a Participant's Normal Retirement Date, the
Participant must elect such a distribution electronically via
telephone or in any such manner prescribed by the
Administrative Committee. The Trustee shall forward a
federally mandated tax notice to the Participant as described
in Code Sections 411(a)(11) and 402(f). The Participant must
then telephone the Trustee to request payment of his
distribution no earlier than seven days and no later than 30
days after the date of his distribution election. If the
Participant fails to do so within this prescribed time period,
the distribution request shall be canceled. Distributions made
pursuant to such Participant election shall be valued as of
the Accounting Date on which the Participant makes his final
request for distribution.
(c) Commencement Date in Absence of Participant Direction. Subject
-----------------------------------------------------
to Section 10.6, unless a Participant elects otherwise (in the
time and manner prescribed by the Administrative Committee),
distribution of a Participant's Accounts which are
distributable in accordance with Sections 7.1 or 7.2 shall
commence no later than the 60th day after the end of the Plan
Year in which the latest of (i), (ii) or (iii) below occurs.
(i) The Participant's Normal Retirement Date;
(ii) The date of the Participant's Termination of
Employment; or
(iii) The 5th anniversary of his initial Plan
participation.
(d) Benefit Commencement Date of Beneficiary. If a Participant
----------------------------------------
dies prior to the commencement of his benefits, and the vested
portion of the Participant's Accounts exceeds $5,000, benefits
payable to his Spouse or other Beneficiary shall commence in
accordance with the election of such Spouse or Beneficiary,
pursuant to Section 7.6. Notwithstanding the foregoing, the
commencement and duration of benefit payments to Spouses and
other Beneficiaries shall be subject to the requirements of
Code Section 401(a)(9), as described in Sections 7.9 and 7.10.
In addition, no benefits shall be paid to any Spouse or other
Beneficiary prior to the completion by the Administrative
Committee of its determination of the status of such Spouse or
other Beneficiary as a proper payee with respect to such
Participant. If the Participant's surviving Spouse dies prior
to commencement of such benefits, the benefits payable to any
contingent Beneficiary shall commence no later than December
31 of the calendar year following the calendar year in which
such surviving Spouse's date of death occurs. For purposes of
this subsection, a Participant's benefits shall be deemed
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<PAGE>
to have commenced on the date the Participant requests payment
of his distribution, in accordance with subsection (b).
(e) Alternate Payee Commencement Date. Benefits payable to a
---------------------------------
former Spouse or other member or former member of the
Participant's family pursuant to a Qualified Domestic
Relations Order (as defined in Code Section 414(p)) will
commence no sooner than the date the Administrative Committee
or its delegate completes its determination that the order
satisfies the requirements set forth in Code Section 414(p).
If the value of the alternate payee's distribution does not
exceed $5,000, it shall be distributed in a single sum without
the consent of the alternate payee as soon as practicable
following the date referred to in the preceding sentence. If
the value of the alternate payee's distribution exceeds
$5,000, then the commencement of benefits payable to the
alternate payee shall be made at the time prescribed by the
terms of the Qualified Domestic Relations Order, subject,
however, to the rules set forth herein as applied to the
applicable Participant. For such purpose, the alternate payee
shall have the same payment options as are available to
Participants other than a joint and survivor annuity with the
alternate payee's subsequent spouse.
(f) Minimum Required Distribution Rules. The requirements of this
-----------------------------------
subsection are intended to reflect the applicable rules of
Code Section 401(a)(9) for pre-death distributions and shall
take precedence over any inconsistent provisions of the Plan.
The entire interest of a Participant must be distributed or
begin to be distributed no later than the Participant's
"required beginning date."
(1) Participants Who Are Not 5%-Owners. The
----------------------------------
provisions of this paragraph shall apply only to a Participant
who was not a 5%-owner (as defined in Code Section 416(i)) at
any time during the Plan Year in which the Participant attains
age 70 1/2. With respect to a Participant who attains age 70
1/2 during the 1996 Plan Year, such Participant's required
beginning date shall be April 1, 1997 unless that Participant
makes an election, in the time and manner prescribed by the
Administrative Committee, to defer commencement until after
his Termination of Employment. With respect to a Participant
who attains age 70 1/2 on or after January 1, 1997, the
required beginning date is April 1 of the calendar year
following the later of (i) the calendar year in which the
Participant attains age 70 1/2 and (ii) subject to subsection
(c) above, the calendar year in which contains the
Participant's Termination of Employment. Notwithstanding the
preceding sentence, to the extent required by U.S. Treasury
Regulations or other guidance of general applicability of the
Internal Revenue Service, a Participant's required beginning
date shall be April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2, if
the Participant so elects.
(2) 5%-Owners. The required beginning date of a
---------
Participant who is a 5%-owner (as described above) is April 1
of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
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<PAGE>
If the Participant's benefit is to be distributed pursuant to
this subsection in the form of installments, the following
minimum distribution rules shall apply on or after the
required beginning date:
(i) If a Participant's benefit is to be distributed over
(A) a period not extending beyond the life expectancy
of the Participant or the joint life expectancy of
the Participant and Beneficiary or (B) a period not
extending beyond the life expectancy of the
Beneficiary, the amount required to be distributed
for each calendar year must be at least equal to the
quotient obtained by dividing the Participant's
benefit by the applicable life expectancy.
(ii) Life expectancy (or joint life expectancy) shall be
calculated by use of the expected return multiples in
Tables V and VI of Treasury Regulation Section
1.72-9. Except as provided in Section 7.10(e), life
expectancy shall not be recalculated.
The hierarchy for distributions required to be made pursuant
to this subsection (f) shall be the hierarchy applicable to
installment distributions provided in Section 7.6(c).
The date on which distribution of a Participant's Accounts to a Participant or
Beneficiary commences under this Section 7.5 is his "Benefit Commencement Date."
7.6. Methods of Benefit Payment. Participants and, if applicable,
--------------------------
Beneficiaries shall make elections regarding the methods of benefit payments in
such manner and at such times as the Administrative Committee shall require. A
Participant's Accounts shall be distributed to him, or in the event of his death
to his Beneficiary, in one of the following methods:
(a) Single Sum Form of Payment. This is the normal form of benefit
--------------------------
payment. Unless an optional method of payment is elected by
the Participant in accordance with subsection (b), (c), or (d)
below, or by the Participant's Beneficiaries in accordance
with subsection (c) or (d) below, the Participant's Accounts
will be distributed in a single sum, provided that if the
Participant's Accounts exceed $5,000, distribution thereof in
a single sum may not be made prior to certain designated times
without the Participant's or Beneficiaries' consent, if
required pursuant to Section 7.5.
(b) Optional Annuity Forms of Payment. If the Participant's
---------------------------------
Accounts exceed the $5,000, he may elect to have his Accounts
distributed in the form of an annuity contract subject to the
following restrictions:
(i) Joint and Survivor Form. If a Participant elects to
-----------------------
have his Accounts distributed in an annuity form, he
has a Spouse to whom he has been legally married for
the entire one-year period ending on his Benefit
Commencement Date and he does not elect (with the
consent of his Spouse, as provided in Section 7.8)
the optional form of payment under subparagraph (iii)
below, then the Participant's Accounts shall be
distributed by purchase of an annuity contract in the
form of a Qualified
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<PAGE>
Joint and Survivor Annuity. A "Qualified Joint and
Survivor Annuity" is an annuity for the life of the
Participant with a survivor annuity for the life of
his Spouse in an amount which is 50% of the annuity
payable during the joint lives of the Participant and
such Spouse.
(ii) Pre-Retirement Survivor Form. If distribution of the
----------------------------
Participant's Accounts does not commence prior to his
death, he elects an annuity form of payment, he has a
Spouse to whom he has been legally married for the
entire one-year period ending on the date of his
death and he has not elected (with the consent of his
Spouse, as provided in Section 7.8) the optional form
of payment under subparagraph (iii) below to his
Beneficiary, then the Participant's Accounts shall be
distributed by purchase of an annuity contract in the
form of a Qualified Pre-Retirement Survivor Annuity.
A "Qualified Pre-Retirement Survivor Annuity" is an
annuity for the life of the Participant's surviving
Spouse.
(iii) Straight Life Annuity Form. If a Participant elects
--------------------------
an annuity form of payment and either (A) he does not
have a Spouse to whom he has been legally married for
the entire one-year period ending on the earlier of
his Benefit Commencement Date or his date of death or
(B) he elects this form of payment with the consent
of his Spouse (in accordance with Section 7.8), then
the Participant's Accounts shall be distributed by
purchase of an annuity contract in the form of a
single life annuity payable over the life of the
Participant or, if the Participant is deceased at the
time the annuity is purchased, over the life of his
Beneficiary, provided that no annuity will be
purchased under this subparagraph (iii) for the
benefit of more than one individual Beneficiary.
(c) Optional Installment Form of Payment. If the Participant's
------------------------------------
Accounts exceed $5,000, the Participant or his Beneficiaries,
as applicable, may elect to have the Participant's Accounts
distributed in the form of substantially equal annual,
semi-annual, quarterly or monthly installment payments. Such
installment payments shall not be payable over a period of
time in excess of the "maximum installment period" (as defined
in Section 7.9). Installment distributions shall be deducted
from the Participant's Accounts in the following order (and
shall be deducted on a pro rata basis from the investment
funds to which amounts in such Accounts are allocated):
(i) The portion of the Participant's After-Tax Account
attributable to after-tax contributions made prior to
1987.
(ii) The portion of the Participant's After-Tax Account
attributable to after-tax contributions made after
1986 (if any), and the portion of such account
attributable to earnings, in the proportion
prescribed by section 72 of the Code.
(iii) Rollover Account.
(iv) Prior Employer Matching Account;
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(v) Vested portion of Employer Matching Account.
(vi) Profit Sharing Account.
(vii) Transition Contribution Account.
(viii) Before-Tax Account.
(ix) Stock Grant Account.
(d) Partial Single Sum Form of Payment. A Participant or his
----------------------------------
Beneficiaries, as applicable, may elect to have less than 100%
of the Participant's Accounts paid in a single sum. Such
election shall be made in accordance with the procedures
described in Section 7.5(c). The hierarchy for distributions
made pursuant to this subsection shall be the hierarchy
applicable to installment distributions provided in subsection
(c) above.
Benefits may be distributed in cash or, if applicable, in whole shares of
Company Common Stock from the Company Common Stock Fund, provided that property
distributed in Company Common Stock may only be distributed if the requirements
of Section 9.11 are satisfied. As part of the distribution election, a
Participant or his Beneficiaries, as applicable, must indicate the amount, if
any, of the balance in the Participant's Accounts invested in the Company Common
Stock Fund that he wishes to receive in Company Common Stock.
Neither the Employers nor the Administrative Committee shall be
obligated to consider the tax effects upon a Participant, Spouse, or other
Beneficiary of receipt by that Participant or such Spouse or other Beneficiary
of Plan benefits. It shall be the responsibility of Participants to consider the
tax effects of the time and manner of benefit distribution and the disposition
of distributions upon receipt by a Participant, Spouse, or other Beneficiary.
7.7. Direct Rollovers. Notwithstanding any provision of the Plan to
----------------
the contrary that would otherwise limit a distributee's election hereunder, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(a) Notice of Rights. Each distributee shall be provided with a
----------------
notice as described in Code Section 402(f) of his or her
rights under this subsection no less than 30 days (or such
shorter period permitted by applicable U.S. Treasury
regulations) and no more than 90 days before the commencement
of an eligible rollover distribution to the distributee from
the Plan. Written consent of the distributee to the
distribution must not be made before the distributee receives
the notice and must not be made more than 90 days before such
commencement.
(b) Definitions.
-----------
(i) Eligible rollover distribution: An eligible rollover
------------------------------
distribution is any distribution of all or any
portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include:
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<PAGE>
any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a
specified period of ten years or more; any
distribution to the extent such distribution is
required under Code Section 401(a)(9); any hardship
distribution described in Code Section
401(k)(2)(B)(i)(IV); and the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
(ii) Eligible retirement plan: An eligible retirement plan
------------------------
is an individual retirement account described in Code
Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified
trust described in Code Section 401(a), that accepts
the distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving Spouse, an eligible
retirement plan is an individual retirement account
or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or
-----------
former Employee. In addition, the Employee's or
former Employee's surviving Spouse and the Employee's
or former Employee's divorced Spouse who is the
alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are
distributees with regard to the interest of the
Spouse or former Spouse.
(iv) Direct rollover: A direct rollover is a payment by
---------------
the Plan to the eligible retirement plan specified by
the distributee.
7.8. Married Participants - Waiver of Annuity Forms of Payment. In the
---------------------------------------------------------
case of a married Participant who elects the annuity form of payment, the
Administrative Committee shall, at the time and in the manner specified in U.S.
Treasury regulations, provide to the Participant in writing the applicable terms
and conditions of the Qualified Joint and Survivor Annuity or the Qualified
Pre-Retirement Survivor Annuity and the availability and financial effect of the
election not to take such annuities. In the case of a married Participant who
elects an annuity form of payment but wishes to choose a payment method other
than the Qualified Joint and Survivor Annuity or the Qualified Pre-Retirement
Survivor Annuity, an election to waive the Qualified Joint and Survivor Annuity
shall be made in writing on an appropriate form filed with the Administrative
Committee within the 90-day period ending on the date distribution is to begin.
The Participant will receive a written explanation of the Qualified Joint and
Survivor Annuity form of payment not more than 90 nor less than 30 days (or such
shorter period permitted by U.S. Treasury regulations) prior to the date his
distribution is to begin. A Participant's election to waive the Qualified
Pre-Retirement Survivor Annuity shall be made in writing on an appropriate form
filed with the Administrative Committee within an election period beginning on
the first day of the Plan Year in which the Participant attains age 35 and
ending on the date of the Participant's death, except that if the Participant's
Termination of Employment occurs before the first day of the Plan Year in which
he attains 35 years of age, the
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<PAGE>
election period shall begin on the date of such termination. Any such election
to waive the Qualified Joint and Survivor Annuity or the Qualified
Pre-Retirement Survivor Annuity shall be effective only if either the
Participant's Spouse consents to such waiver or it is established to the
satisfaction of the Administrative Committee that the Participant has no Spouse
or that such consent cannot be obtained because the Spouse cannot be located.
Any such election may be revoked in writing at any time before distribution
begins. Any such consent of a Participant's Spouse must be in writing, must
acknowledge the effect of the election, must be limited to a benefit for a
specific alternate Beneficiary or Beneficiaries (or class of Beneficiaries) and
must be witnessed by a notary public or Plan representative. Any such consent by
a Participant's Spouse shall not be valid with respect to any other Spouse. Any
new election or change of Beneficiary shall require a new Spousal consent.
Elections made in accordance with this Section 7.8 may be revoked or superseded
by a new election made by the Participant.
7.9. Maximum Installment Period. Except as expressly provided to the
--------------------------
contrary in this ARTICLE VII, the period over which installment payments may be
made with respect to any person shall be determined by the Participant. In no
event will the period over which installment payments are made exceed a
Participant's Maximum Installment Period. A Participant's "Maximum Installment
Period" shall be determined pursuant to the following rules:
(a) Life Expectancy Limitation. In no event shall installment
--------------------------
payments be made over a period in excess of the life
expectancy of the Participant or the life expectancy of the
Participant and the Participant's designated Beneficiary. The
Administrative Committee shall not adjust installment payments
to take into account changes in the life expectancy of a
Participant or of his Spouse or Beneficiary.
(b) Incidental Benefit Limitation. In no event will installment
-----------------------------
payments which commence during the lifetime of the Participant
be scheduled over a period which would result in less than 50%
of the value of the Participant's Accounts being distributed
over the Participant's life expectancy, or which otherwise
violates the incidental benefit rules of Code Section
401(a)(9), unless the Participant's Spouse is his Beneficiary.
(c) Death after Commencement of Benefits. If distribution of a
------------------------------------
Participant's benefits over a period ("Prior Payment Period")
not in excess of the period described in subsection (a) above
has begun and the Participant dies before the entire balance
in his Accounts has been distributed to him, the remaining
portion shall be distributed over a period no longer than the
remainder of the Prior Payment Period.
(d) Death before Commencement of Benefits. If a Participant dies
-------------------------------------
before the distribution of his benefits has begun,
distribution of the entire balance in his Accounts shall be
made no later than December 31 of the calendar year which
contains the fifth anniversary of the Participant's death.
However, such five-year limitation shall not apply in the case
of any portion of the Accounts to be distributed to the
Participant's designated Beneficiary if such portion is
distributed over the life of such designated Beneficiary or
over a period not extending beyond the life expectancy of such
Beneficiary and such distribution
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<PAGE>
begins not later than December 31 of the calendar year
following the calendar year which contains the date of the
Participant's death. Notwithstanding the foregoing, if the
designated Beneficiary is the Participant's surviving Spouse,
the date on which distribution must begin as provided in the
preceding sentence shall not be earlier than December 31 of
the calendar year in which the Participant would have attained
age 70 1/2, had he survived. If the Participant's surviving
Spouse dies before distribution begins, this subsection shall
be applied as if the surviving Spouse were the Participant
except that the provisions applicable to the surviving Spouse
of a Participant shall not be applicable to a spouse of the
Participant's surviving Spouse.
For purposes of this Section, a Participant's "Designated Beneficiary" means the
Participant's Beneficiary determined in accordance with Section 7.11.
7.10. Minimum Rate of Installment Payments. Except as expressly
------------------------------------
provided to the contrary in this ARTICLE VII, a Participant who has selected an
installment method of payment may select the rate at which his benefits are
paid, provided the rate or amount of such installment payments satisfies all of
the following rules, to be applied in a uniform and nondiscriminatory manner:
(a) Dollar Limitation. The Administrative Committee may establish
-----------------
a minimum dollar amount for any installment payment.
(b) Frequency of Payment. Installments may be paid monthly,
--------------------
quarterly, semi-annually or annually.
(c) Equal Payments. Installments must be payable in substantially
--------------
equal amounts, provided that the Administrative Committee may
adjust such amounts annually or more frequently to reflect
earnings, losses or other adjustments to the Participant's
Accounts.
(d) Incidental Benefit Limitation. In no event will installment
-----------------------------
payments which commence during the lifetime of the Participant
be scheduled at a rate which would result in less than 50% of
the value of the Participant's Accounts being distributed over
the Participant's life expectancy, or which otherwise violates
the incidental benefit rules of Code Section 401(a)(9), unless
the Participant's Spouse is his Beneficiary.
(e) Rate of Payment Under Code Section 401(a)(9). Notwithstanding
--------------------------------------------
the provisions of Section 7.9 or any other provisions of this
Section, the frequency, timing and rate at which installment
payments are made to a Participant shall comply with the
minimum rate of payment requirements of Section 401(a)(9) of
the Code. Solely for purposes of such redetermination, the
life expectancy of the Participant and his Spouse or
Beneficiary may be adjusted as of such Plan Year end. The
Administrative Committee shall redetermine the amount of such
installment as of each subsequent Plan Year to assure
continued compliance with such requirements but no further
adjustments shall be made to reflect further changes in such
life expectancies.
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<PAGE>
(f) Death after Commencement of Benefits. If distribution of a
------------------------------------
Participant's benefits has begun and the Participant dies
before the entire balance in his Accounts has been distributed
to him, the remaining portion shall be distributed at least as
rapidly as under the method of distribution being used as of
the date of the Participant's death.
(g) Death before Commencement of Benefits. If a Participant dies
-------------------------------------
before the distribution of his benefits has begun,
distribution of the entire balance in his Accounts shall be
made over the period specified in Section 7.9(d) and shall be
payable in an amount and at a rate of payment which complies
with the requirements of Code Section 401(a)(9). The
Administrative Committee may redetermine the amount of such
payments from time to time to assure continued compliance with
such requirements.
7.11. Surviving Spouse or Designated Beneficiaries. Except as provided
--------------------------------------------
in this Section, a Participant's Spouse shall be his designated Beneficiary and
any benefits remaining to be paid hereunder following a Participant's death
shall be distributed to the Participant's surviving Spouse, if any. Except as
provided below, any such benefits which remain to be paid following the death of
the Participant's surviving Spouse shall be paid to the estate of the
Participant's surviving Spouse. If there is no surviving Spouse or if the
surviving Spouse of such Participant consents in the manner described below, the
benefits remaining to be paid shall be distributed to the Participant's
designated Beneficiary or Beneficiaries. A Beneficiary designation must be
completed and filed with the Administrative Committee during the Participant's
lifetime. A Beneficiary designation properly completed and filed with the
Administrative Committee will cancel all such designations dated earlier. A
Participant may designate contingent or successive Beneficiaries and may name
natural persons, legal persons or entities, trusts, estates, trustees or legal
representatives as the Beneficiaries. If a married Participant designates a
Beneficiary or contingent Beneficiary other than his Spouse and the estate of
such Spouse, the Participant's Spouse must consent in writing to such
designation and such consent must be witnessed by a notary public or Plan
representative. If the Spouse does not so consent, then such Beneficiary
designation shall not be effective unless the Spouse dies before the Participant
unless following the death of the Participant his surviving Spouse disclaims all
rights to the Participant's benefits.
If the Participant dies leaving no surviving Spouse and either (a) the
Participant failed to file a valid beneficiary designation form, or (b) all
persons designated on the beneficiary designation form have predeceased the
Participant, the Participant's benefit shall be paid in the following order: (i)
to the Participant's surviving children (including legally adopted children) in
equal shares, (ii) to the Participant's surviving parents (including legally
adoptive parents) in equal shares, (iii) to the Participant's surviving brothers
and sisters in equal shares, then (iv) to the Participant's estate.
7.12. Missing Beneficiaries of Deceased or Missing Participants.
----------------------------------------------------------
Subject to all applicable laws relating to unclaimed property, if the Trustee
mails by registered or certified mail, postage prepaid, to the last known
address of a Participant or Beneficiary, a notification that he is entitled to a
Plan distribution, and if the notification is returned by the United States
Postal Service as being undeliverable because the addressee cannot be located at
the address indicated, and if the Trustee has no knowledge of such Participant's
or Beneficiary's
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<PAGE>
whereabouts for three years after the date the notification was mailed (or if
for three years after the date the notification was mailed to the Participant or
Beneficiary he does not respond by informing the Trustee of his or her
whereabouts), then, subject to the applicable state laws concerning escheat, the
aggregate amount of such Participant's Accounts shall be treated as a Forfeiture
and used to reduce Employer Matching Contributions, subject to the following:
(a) Restoration of Forfeiture. If following a Forfeiture under
-------------------------
this Section 7.12, the Participant or Beneficiary is located,
the Forfeiture (unadjusted for subsequent earnings or losses),
shall be restored by crediting such amount to the appropriate
Accounts of the Participant as of the next Accounting Date.
(b) Source of Restoration. The amounts necessary to restore the
---------------------
Forfeiture in accordance with (a) above shall be allocated for
such purpose from Forfeitures not yet applied towards Employer
Matching Contributions and if Forfeitures are not sufficient
then from an initial allocation of Employer Matching
Contributions to the extent necessary to satisfy such
restoration, which special allocation shall reduce the amounts
available for allocation to all other Participants in
accordance with Section 6.9 as of the relevant Accounting
Date. In lieu of such method of restoring the Forfeiture, the
Participant's Employer may make a special contribution which
shall be allocated solely for purposes of such restoration.
Participants and Beneficiaries are required to maintain current post office
addresses on file with the Administrative Committee.
7.13. Incapacitated Participants or Beneficiaries. If a Participant or
-------------------------------------------
Beneficiary is incompetent or a minor, and a conservator, guardian, or other
person legally charged with his care has been appointed, any benefits to which
such Participant or Beneficiary is entitled shall be payable to such
conservator, guardian, or other person legally charged with his care. The
decision of the Administrative Committee in such matters shall be final,
binding, and conclusive upon all affected or interested parties. Neither the
Plan nor any representative of the Plan has any duty to see to the proper
application of such payments.
7.14. Reemployment after Distributions Commence. If a Participant has
-----------------------------------------
elected an installment form of distribution, all such payments shall cease if
the Participant is rehired as an Eligible Employee. The portion of the Accounts
not distributed shall remain in such Participant's Accounts. Payments under an
annuity contract shall continue during any period of reemployment.
7.15. Erroneous Payments. All benefits under the Plan shall be paid to
------------------
the Participant, Spouse or Beneficiary entitled thereto ("Payee") in cash and/or
in Company Common Stock, provided that if any such payment shall be made in
error or in excess of the amount due, the Payee shall be required to return any
such payment or excessive portion of any payment upon request of the Investment
Committee.
7.16. Finality of Distributions. Payments made in accordance with this
-------------------------
ARTICLE VII shall discharge all liabilities for such payments under the Plan.
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<PAGE>
ARTICLE VIII
------------
WITHDRAWALS AND LOANS
8.1. Withdrawals. Except as provided in an applicable supplement or
-----------
appendix to this Plan, Accounts of Participants who have not ceased
to be Employees may be withdrawn in accordance with the following rules:
(a) After-Tax/Rollover Contributions. A Participant may elect to
--------------------------------
withdraw all or a portion of the total value (determined as of
the date described below) of his After-Tax Account and/or
Rollover Account including earnings thereon.
(b) Employer Matching, Prior Employer Matching, Transition
------------------------------------------------------
Contribution and Profit Sharing Account Withdrawals. A
---------------------------------------------------
Participant who would be fully vested in his Employer Matching
Contributions under Section 7.1 or 7.2 if his Accounts were
then distributable and who is fully vested and has completed
five or more years of Plan participation may elect to withdraw
all or a portion of the total value (determined as of the date
described below) of his Employer Matching Account, Prior
Employer Matching Account, Transition Contribution Account and
Profit Sharing Account. The amount to be withdrawn is
satisfied by reducing the value determined for each such
Account by the amount requested to be withdrawn by the
Participant, without regard to any distinction between
contributions and earnings. A Participant who receives a
withdrawal under this subsection (b) is ineligible to make Pay
Deferral Contributions under Section 5.1 for a period of six
months commencing on the first day of the first pay period
following the date on which the Accounts are valued under this
subsection for purposes of such withdrawal. Such Participant's
Pay Deferral Contributions shall recommence on the first day
of the first pay period following the date on which such
Contributions were suspended and shall be at the same rate as
in effect at the time of suspension (unless the Participant
elects otherwise).
(c) Stock Grant Account. A Participant is not permitted to
-------------------
withdraw the shares contributed to his Stock Grant Account
until he has incurred a Termination of Employment.
(d) Withdrawals after Age 59 1/2. Except as otherwise provided in
----------------------------
an applicable supplement or appendix to this Plan, a
Participant who has attained age 59 1/2 and who is fully
vested and has completed five years of Plan participation may
elect to withdraw 100% of the value (determined as of the date
described below) of his Accounts other than his Stock Grant
Account. Only one withdrawal per calendar month may be made
pursuant to this subsection.
(e) Hardship Withdrawal. A Participant who has withdrawn all
-------------------
amounts permitted to be withdrawn under subsections (a), (b),
(c) and (d) above and who has established hardship (as
described below) may elect to withdraw a specified dollar
amount up to the total value (determined as of the date
described below) of his
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<PAGE>
vested Accounts, other than his Stock Grant Account, according
to the hierarchy set forth in 1(h) below. Such withdrawals
shall be subject to the following:
(i) Immediate and Heavy Financial Need. A withdrawal
----------------------------------
shall be deemed to be made on account of a hardship
only if it is made on account of an immediate and
heavy financial need of the Participant and is
necessary to satisfy such financial need. The
determination of whether a Participant has an
immediate and heavy financial need is to be made on
the basis of all relevant facts and circumstances.
(ii) Exhaustion of Other Resources. A withdrawal will not
-----------------------------
be deemed to be necessary to satisfy the immediate
and heavy financial need requirement of subparagraph
(i) above unless the Participant has first obtained
all distributions and withdrawals, other than
hardship withdrawals, and all nontaxable loans
currently available under all plans maintained by the
Employers and Commonly Controlled Entities of the
Employers. A withdrawal generally may be treated as
necessary to satisfy the immediate and heavy
financial need if the need cannot reasonably be
relieved:
(A) Through reimbursement or compensation by
insurance or otherwise;
(B) By reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself cause an
immediate and heavy financial need;
(C) By cessation of Pay Deferral Contributions
under the Plan, and the cessation of any
similar contributions under all qualified
and nonqualified plans of deferred
compensation maintained by the Participant's
Employer or any Commonly Controlled Entity;
or
(D) By other distributions or nontaxable loans
(at the time of the loan) from the Plan or
any other plan maintained by the
Participant's Employer or any Commonly
Controlled Entity, or by borrowing from
commercial sources on reasonable commercial
terms.
For purposes of this Section, the Participant's
resources shall be deemed to include those assets of
his Spouse and minor children that are reasonably
available to the Participant. A financial need shall
not fail to qualify as immediate and heavy merely
because such need was reasonably foreseeable or
voluntarily incurred by the Participant.
(iii) Specific Hardship. A withdrawal shall be deemed to be
-----------------
made on account of an immediate and heavy financial
need of a Participant if the withdrawal is made on
account of:
(A) Expenses for medical care described in Code
Section 213(d) incurred by the Participant,
the Participant's Spouse, or any dependents
of the Participant (as defined in Code
Section 152);
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<PAGE>
(B) The purchase of a principal residence of the
Participant (excluding mortgage payments);
(C) Payment of tuition, room and board, and
related educational fees for the next 12
months of post-secondary education for the
Participant, or his Spouse, children, or
dependents (as defined in Code Section 152);
(D) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence; or
(E) Such other reasons as the Commissioner of
Internal Revenue may prescribe.
The amount of an immediate and heavy financial need
may include any amounts necessary to pay any federal,
state or local income taxes or penalties reasonably
anticipated to result from the withdrawal.
(iv) Withdrawal Limited to Need. A withdrawal shall not be
--------------------------
treated as necessary to satisfy an immediate and
heavy financial need of a Participant to the extent
the amount of the withdrawal is in excess of the
amount required to relieve the financial need or to
the extent such need may be satisfied from other
resources that are reasonably available to the
Participant. This determination generally is to be
made on the basis of all relevant facts and
circumstances.
(v) Impact of Withdrawal on Future Participation. Upon
--------------------------------------------
receiving a hardship withdrawal, a Participant shall
be precluded from making any further Pay Deferral
Contributions and from having further Employer
Matching Contributions made on his behalf under the
Plan or any other plan of deferred compensation
maintained by his Employer or any Commonly Controlled
Entity until the beginning of the first pay period
coincident with or next following the end of a period
of 12 months commencing with the date of such
withdrawal. The Participant's Pay Deferral
Contributions shall recommence at the same rate
(unless the Participant elects otherwise); provided,
however, that such Participant's Pay Deferral
Contributions for the 12-month period beginning on
the date the Suspension is lifted shall be limited to
the limit described in Section 5.3 reduced by the
amount of Pay Deferral Contributions made by the
Participant during the Plan Year in which the
withdrawal occurs. The denial of a Participant's
request for a hardship withdrawal shall be treated as
a denial of a claim for a benefit under the Plan, and
shall thus be subject to the claim and review
procedures set forth under Section 9.10.
(f) Requesting Withdrawals. A Participant may request a withdrawal
----------------------
electronically via telephone or in any such manner prescribed
by the Administrative Committee. Upon receipt and approval of
a withdrawal request, the Trustee shall mail a federally
mandated tax information notice to the Participant. To receive
payment
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of a withdrawal, the Participant must telephone the Trustee
(in the manner prescribed by the Administrative Committee) no
earlier than seven days and no later than 30 days after the
day he requested the withdrawal. If the Participant fails to
telephone the Trustee within this period, the withdrawal
request shall be canceled.
(g) Spousal Consent. No withdrawal shall be made to a married
---------------
Participant who has elected to have his Accounts distributed
in an annuity form unless the Participant's Spouse consents to
the withdrawal in the manner prescribed by the Administrative
Committee. Such consent must be in writing and witnessed by a
notary public.
(h) Hierarchy. Hardship withdrawals shall be deducted from the
---------
Participant's Accounts in the following order (and shall be
deducted on a pro rata basis from the investment funds to
which amounts in such Accounts are allocated):
(i) The portion of the Participant's After-Tax Account
attributable to after-tax contributions made prior to
1987.
(ii) The portion of the Participant's After-Tax Account
attributable to after-tax contributions made after
1986 (if any), and the portion of such account
attributable to earnings, in the proportion
prescribed by section 72 of the Code.
(iii) Rollover Account.
(iv) Prior Employer Matching Account
(v) Vested portion of Employer Matching Account.
(vi) Profit Sharing Account.
(vii) Transition Contribution Account.
(viii) Before-Tax Account.
After a withdrawal in accordance with this Section, amounts remaining in the
Participant's Accounts, if any, shall continue to be held, invested and adjusted
in accordance with the Plan and Trust Agreement until such amounts are
subsequently withdrawn or otherwise distributable in accordance with ARTICLE
VII. Withdrawals under this Section shall ordinarily be based on a valuation of
the applicable Accounts as of the Accounting Date immediately preceding the date
on which such request is processed and/or approved by the Trustee or
Administrative Committee. Actual distribution of amounts withdrawn shall
ordinarily occur as soon as practicable after the request is processed.
8.2. Loans to Participants. Loans shall be extended to Participants who
---------------------
are Employees of participating Employers (other than any Participant located
outside of the United States who, at the time the loan is made, is not receiving
regular payments of compensation under a United States payroll system), subject
to the following rules:
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(a) Authority. The Administrative Committee, upon request by a
---------
Participant in the manner described in subsection (n) below,
shall direct the Trustee to make a loan from the Trust Fund to
a Participant.
(b) Loan Documents. Each loan shall be evidenced by a written
--------------
promissory note providing for repayment and interest. As
described in subsection (n) below, the promissory note shall
consist of a loan agreement, to which the Participant shall
indicate his agreement by endorsing the loan check. The
Administrative Committee shall make appropriate arrangements
with the Trustee regarding the custody of such notes.
(c) Applicability. The Administrative Committee shall exercise its
-------------
authority under this Section in a manner which makes loans
available to all eligible Plan Participants on a reasonably
equivalent basis. Loans shall also be made available to any
other person who has an account balance under the Plan if the
person is a "party in interest" with respect to the Plan, as
defined in section 3(14) of ERISA (each such person referred
to in this Section as a "Participant").
(d) Frequency and Number. The Administrative Committee may
--------------------
establish conditions on the frequency and number of loans to
Participants. As of the Effective Date, no Participant may
have more than two loans outstanding at any given time.
(e) Term of Loan. The term of the loan will be for a period of
------------
time not exceeding five years. Notwithstanding the foregoing,
the term of the loan may be for a period of up to ten years if
the loan is used to acquire any dwelling unit which within a
reasonable time is to be used as a principal residence of the
Participant in accordance with Section 72(p)(2) of the Code.
The Administrative Committee shall be entitled to rely on any
representation made by a Participant with regard to the
purpose for which a loan is requested.
(f) Minimum Loan. From time to time the Administrative Committee
------------
may establish a minimum loan amount, provided that such
limitation shall not exceed $1,000. As of the Effective Date
the minimum loan amount is $500.
(g) Maximum Loan. The principal amount of the loan may not exceed
------------
the lesser of:
(i) $50,000, provided that such dollar limit shall be
reduced by the highest outstanding balance of loans
to the Participant from the Plan and any other
"qualified employer plan" (as defined in Code Section
72(p)(4)) maintained by the Employer or any Commonly
Controlled Entity of the Employer at any time in the
prior 12 consecutive month period; or
(ii) 50% of the sum of the Participant's vested Accounts
under this Plan (excluding the Participant's Stock
Grant Account), provided that such percentage limit
shall be reduced by the percentage of such
Participant's Accounts which is then invested in any
other loans.
The limitations of subparagraphs (i) and (ii) above shall be
applied as of the Accounting Date immediately preceding or
coincident with the day the loan is
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requested pursuant to the procedures specified in subsection
(n) below; provided, however, that the Participant's vested
Accounts as of such request date shall be reduced by the
amount of any withdrawals made to such Participant between the
date of the loan request and the date such loan is processed
by the Trustee.
(h) Interest Rate. The interest rate charged to Participants for
-------------
loans under this Section shall be determined by the
Administrative Committee from time to time. The rate selected
by the Administrative Committee for this purpose shall be a
rate which the Administrative Committee determines is within
the range of prevailing rates which would be charged by
commercial lenders for loans of a similar type. For this
purpose the Administrative Committee may rely on such evidence
as it may deem reliable concerning such prevailing rates and
all decisions of the Administrative Committee regarding such
rates shall be conclusive. The interest rate applicable as of
the Effective Date is the prime rate (as published in the Wall
Street Journal on the last Accounting Date of the month
preceding the month in which the loan is made) plus 1%.
(i) Security. Loans shall be secured by all of the balances in the
--------
Participant's Accounts, together with such additional
collateral as the Administrative Committee may require either
at the time of the loan or from time to time thereafter. In
determining the adequacy of such security, the Administrative
Committee shall not consider any non-vested portion of the
Participant's Accounts and a Participant's vested Accounts
shall not be considered adequate security unless immediately
prior to disbursement of the loan the vested portions of the
Participant's Accounts (as of the most recent Accounting Date)
have an aggregate value equal to at least twice the sum of the
face amount of such loan and the then outstanding balances of
all prior loans to such Participant.
(j) Loan Fees. An application fee shall be charged against the
---------
Participant's Account for each loan processed. The amount of
such fee shall be established by the Administrative Committee
from time to time. As of the Effective Date, such fee is $50.
(k) Repayment Terms. All Plan loans shall be repaid under a
---------------
written repayment schedule by payroll deduction and shall be
evidenced by a written promissory note payable to the Trustee.
If a Participant with an outstanding loan incurs a Termination
of Employment thereby making payroll deductions impossible,
such Participant must repay the entire outstanding balance of
the loan upon the earlier of (i) the expiration of the
original term of the loan and (ii) the date which is 90 days
after such Termination of Employment. In no event shall
principal and interest payments be less frequent than
quarterly on a level amortization basis in substantially
nonincreasing installments. Loans may be prepaid in full at
any time. Loan repayments under this Plan may be suspended
with respect to a Participant in military service to the
extent required by USERRA and in accordance with Section
414(u)(4) of the Code.
(l) Distribution Prior to Loan Repayment. Notwithstanding any
------------------------------------
other provision of the Plan, any distribution under this Plan
to or on behalf of a Participant to whom
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<PAGE>
one or more loans are then outstanding shall first be applied
by the Trustee to reduce the outstanding balances of such
loans. For this purpose loan reductions shall first be applied
to satisfy any loan installments in default. Payments shall be
applied to loans which are not in default pro rata.
(m) Events of Default. In the event of a default in payment of
-----------------
either principal or interest that is due under the terms of
any loan, the Plan Administrator may declare the full amount
of the loan due and payable and may take whatever action may
be lawful to remedy the default. With respect to a Participant
who terminates employment, default will be deemed to have
occurred if any loan is not paid in full within 90 days
following his Termination of Employment, as described in
subsection (k) above. With respect to a Participant who is an
Employee on an unpaid leave of absence, default will be deemed
to have occurred if any payment is not made within one year
following the due date for any payment of principal and/or
interest for which no payment is made by the Participant. The
Trustee may offset amounts owed by the Participant against
Plan benefits owed to him or her without being in violation of
Section 11.2.
(n) Requesting Loans. A Participant may request a loan
----------------
electronically via telephone or in any such manner prescribed
by the Administrative Committee.
(i) Non-Residential Loans. Upon receipt and approval of a
---------------------
request for a non-residential loan, the Trustee shall
mail a loan agreement (including a promissory note)
along with a loan check to the Participant. By
endorsing the check, the Participant shall indicate
his agreement to the terms and conditions of the
loan, as described in the loan agreement.
(ii) Residential Loans. Upon receipt of a request for a
-----------------
loan to be used for the purchase of the Participant's
primary residence, the Trustee shall send the
Participant a loan agreement along with information
as to what supporting documentation the Participant
must submit in connection with such loan request. The
Participant must then submit this supporting
documentation within 30 days. If the loan request is
approved, the Trustee shall mail a loan agreement
(including a promissory note) along with a loan check
to the Participant. By endorsing the check, the
Participant shall indicate his agreement to the terms
and conditions of the loan, as described in the loan
agreement. If the loan request is denied, the Trustee
shall notify the Participant and inform the
Participant of the reason for such denial within a
reasonable period of time after the loan request.
(o) Hierarchy. Loan amounts shall be deducted from the
---------
Participant's Accounts in the following order (and shall be
deducted on a pro rata basis from the investment funds to
which amounts in such Accounts are allocated):
(i) Matched portion of Before-Tax Account.
(ii) Non-matched portion of Before-Tax Account.
(iii) Transition Contribution Account.
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<PAGE>
(iv) Prior Employer Matching Account.
(v) Vested portion of Employer Matching Account.
(vi) Profit Sharing Account.
(vii) Rollover Account
(viii) After-Tax Account.
Repayments of loan principal will be credited to the
Participant's Accounts in the same order as above. Repayments
of interest will be credited on a pro rata basis to the
Accounts from which the loan was deducted. All loan repayments
will be allocated to investment funds in accordance with the
Participant's existing investment elections for the applicable
Accounts.
Notwithstanding anything in this Section 8.2 to the contrary,
neither the shares contributed to a Participant's Stock Grant
Account nor the earnings thereon shall be available for loans.
8.3. No Representation Regarding Tax Effect of Withdrawals or Loans.
---------------------------------------------------------------
Neither the Employers, the Administrative Committee, the Investment Committee,
the Trustee nor any other Plan representative shall be construed as representing
the tax effects of any withdrawals or loans made in accordance with this ARTICLE
VIII. It shall be the responsibility of Participants requesting withdrawals or
loans to consider the tax effects of such withdrawals or loans.
ARTICLE IX
----------
PLAN COMMITTEES
9.1. Membership of Administrative and Investment Committees. The
------------------------------------------------------
Administrative Committee, consisting of at least three persons, shall be
appointed by the Compensation Committee of the Board of Directors. The
Investment Committee, consisting of at least three persons, shall be appointed
by the Finance Committee of the Board of Directors. The Secretary of the Company
shall certify to the Trustee from time to time the appointment to (and
termination from) office of each member of the Administrative Committee and the
Investment Committee and the persons, if any, who are selected as secretaries of
the Administrative Committee and the Investment Committee. The appointment of a
member of either Committee and acceptance of such appointment by any person
constitutes an agreement by and between the Company and such Committee member
that the member, acting in concert with the other Committee members, shall have
and will exercise the powers and duties described herein, including, with
respect to the Administrative Committee, the power and duty to interpret this
Plan and determine the benefits to which Participants are entitled hereunder.
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<PAGE>
9.2. Administrative Committee Powers and Duties. The Administrative
------------------------------------------
Committee shall have such powers and duties necessary to discharge its duties
hereunder, including, but not limited to, the following:
(a) Within its complete and unfettered discretion to construe and
interpret the terms of the Plan and Trust Agreement provisions
and to resolve all questions arising under the Plan including
questions of Plan participation, eligibility for benefits and
the rights of Employees, Participants, Beneficiaries and other
persons to benefits under the Plan and to determine the
amount, manner and time of payment of any benefits hereunder;
(b) To prescribe procedures, rules and regulations to be followed
by Employees, Participants, Beneficiaries and other persons or
to be otherwise utilized in the efficient administration of
the Plan consistent with the Trust;
(c) To make determinations as to the rights of Employees,
Participants, Beneficiaries and other persons to benefits
under the Plan and to afford any Participant or Beneficiary
dissatisfied with such determination with rights pursuant to a
claims procedure adopted by the Administrative Committee;
(d) To enforce the Plan in accordance with the terms of the Plan
and the Trust and to enforce its procedures, rules and
regulations;
(e) To be responsible for the preparation and maintenance of
records necessary to determine the rights and benefits of
Employees, Participants and Beneficiaries or other persons
under the Plan and the Trust and to request and receive from
the Employers such information necessary to prepare such
records;
(f) To prepare and distribute in such manner as it deems
appropriate and to prepare and file with appropriate
government agencies information, disclosures, descriptions and
reporting documents regarding the Plan, and in the preparation
and review of such reports the Administrative Committee is
entitled to rely upon information supplied to it by the
Employees, accountants, counsel, actuaries, the Investment
Managers and any insurance institutions described in the Trust
Agreement;
(g) To appoint or employ individuals to assist in the
administration of the Plan and other agents (corporate or
individual) that the Administrative Committee deems advisable,
including legal counsel and such clerical, medical,
accounting, auditing, actuarial and other services as the
Administrative Committee may require in carrying out the
provisions of the Plan. However, no agent except an Investment
Manager or fiduciary named in the Plan shall be appointed or
employed in a position that would require or permit him or
her: (i) to exercise discretionary authority or control over
the acquisition, disposition or management of Trust assets;
(ii) to render investment advice for a fee; or (iii) to
exercise discretionary authority or responsibility for Plan
administration;
(h) To cause to be prepared and to cause to be distributed, in
such manner as the Trustee determines to be appropriate,
information explaining the Plan and Trust;
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<PAGE>
(i) To furnish to the Employers upon request such annual or other
reports with respect to the administration of the Plan as are
reasonable and appropriate;
(j) To receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, receipts and
disbursements, and assets of the Trust; and
(k) To discharge all other duties set forth in the Plan.
The Administrative Committee has no power to add to, subtract from or modify any
of the terms of the Plan, nor to change or add to any benefits provided by the
Plan, nor to waive or fail to apply any requirements of eligibility for benefits
under the Plan.
9.3. Investment Committee Powers and Duties. The Investment Committee
--------------------------------------
has such powers necessary to discharge its duties hereunder, including, but not
limited to, the following:
(a) To establish and from time to time revise the investment
policy of the Plan, to communicate and consult with the
Company, the Administrative Committee and the Trustee and any
Investment Manager or insurance institution regarding the
investment policy applicable to the Plan as a whole or to any
individual investment fund;
(b) To supervise the performance by the Trustee and any Investment
Manager or insurance institution regarding their
responsibilities under the Plan and Trust. The Investment
Committee shall review and analyze performance information
supplied by the Trustee and the Investment Managers or
insurance institutions to the Investment Committee and/or any
such performance information obtained independently by the
Investment Committee and shall report the results of such
analysis to the Finance Committee of the Board of Directors
from time to time in such form and with such degree of
frequency as the Investment Committee shall determine proper.
Such responsibilities of the Investment Committee with respect
to supervision, review and analysis shall be performed no less
frequently than once each Plan Year and shall ordinarily not
be required more frequently than once each calendar quarter.
The Trustee, Investment Managers and insurance institutions
have been allocated the responsibility for day-to-day
investment management of the Plan and Trust and the
responsibilities of the Investment Committee hereunder are not
intended to relieve the Trustee, Investment Managers or
insurance institutions of such on-going investment management
responsibilities;
(c) To instruct the Trustee, the Investment Managers and insurance
institutions with respect to the proper application of
contributions made under the Plan;
(d) To determine the proper allocation of investment
responsibilities with respect to the assets of the Plan
between the Trustee and any Investment Manager or insurance
institution acting hereunder or under the terms of the Trust
and to allocate fiduciary responsibilities among these
parties;
(e) To the extent not provided to the contrary in the Trust
Agreement, to appoint the Trustee and any Investment Managers
or insurance institutions, to direct the
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<PAGE>
establishment of any investment fund and to remove the Trustee
and any Investment Managers or insurance institutions or
appoint additional Trustees, Investment Managers or insurance
institutions;
(f) To review any accounts submitted by the Trustee and any
Investment Managers or insurance institutions and to report to
the Finance Committee of the Board of Directors with respect
to any such accounts;
(g) Following the Administrative Committee's determination of the
benefit rights of any Participant or Beneficiary, to aggregate
information concerning such benefits and authorize and direct
the Trustee with respect to the commencement, modification or
cessation of such benefit payments;
(h) To supervise the performance of fiduciary responsibilities by
others including the Trustee and any Investment Managers;
(i) To appoint and utilize the services of administrative staff
employees of the Company and the other Employers for the
performance of duties delegated to the Investment Committee
hereunder and to rely upon information received from such
staff employees; provided that in both cases the Investment
Committee reasonably believes the performance of such services
and the preparation of such information is within the
competence of such staff employees;
(j) To furnish to the Employers, upon reasonable request, such
annual or other reports as the Employers deem necessary
regarding the administration of the Plan; and
(k) To employ reputable agents (who may also be Employees) and to
delegate to them any of the administrative powers or duties
imposed upon the Investment Committee or the Employers.
9.4. Conflicts of Interest. No member of the Administrative Committee
---------------------
or the Investment Committee shall participate in any action on matters involving
solely such member's rights or benefits as a Participant under the Plan.
9.5. Compensation; Reimbursement. No member of the Administrative
---------------------------
Committee or the Investment Committee shall receive compensation for his
services, but the Employers shall reimburse him for any necessary expenses
incurred in the discharge of his duties.
9.6. Standard of Care. The Administrative Committee and the Investment
----------------
Committee shall perform their duties under this Plan in accordance with the
terms of this document and the Trust Agreement solely in the interest of the
Participants and for the exclusive purposes of providing retirement benefits to
Participants and defraying the reasonable expenses of Plan administration and
operation. The Administrative Committee and the Investment Committee shall also
perform their duties under this Plan 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.
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<PAGE>
9.7. Action by Committees. Action by each Plan Committee (i.e., the
--------------------
Administrative Committee and the Investment Committee) is subject to the
following special rules:
(a) Each Committee may act by meeting or by document signed
without meeting and documents may be signed through the use of
a single document or concurrent documents.
(b) Each Committee shall act by a majority, and such action shall
be as effective as if such action had been taken by all
Committee members, provided that by majority action one or
more Committee members or other persons may be authorized to
act with respect to particular matters on behalf of all
Committee members.
(c) Each Committee may, but is not required to, select a
secretary, who may but need not be a Committee member, and the
certificate of such secretary that the Committee has taken or
authorized any action shall be conclusive in favor of any
person relying upon such certificate.
(d) Each Committee may act through agents or other delegates and
may retain legal counsel, auditors or other specialists (who
may also be Employees) to aid in the Committee's performance
of its responsibilities.
9.8. Resignation or Removal of Committee Member. Any person serving as
------------------------------------------
an Administrative Committee member may resign from such Committee at any time by
written notice to the Compensation Committee of the Board of Directors or may be
removed by the Compensation Committee at any time by written notice to such
member. Any person serving as an Investment Committee member may resign from
such Committee at any time by written notice to the Finance Committee of the
Board of Directors or may be removed by the Finance Committee at any time by
written notice to such member. The Compensation Committee shall fill any vacancy
in the membership of the Administrative Committee as soon as practicable. The
Finance Committee Company shall fill any vacancy in the membership of the
Investment Committee as soon as practicable. Until any such vacancy is filled,
the remaining members of the applicable Committee may exercise all of the
powers, rights and duties conferred on the such Committee.
9.9. Uniform Application of Rules by Administrative Committee. The
--------------------------------------------------------
Administrative Committee shall apply all rules, regulations, procedures and
decisions uniformly and consistently to all Employees and Participants similarly
situated. Any ruling, regulation, procedure or decision of the Administrative
Committee which is not inconsistent with the provisions of the Plan or the Trust
shall be conclusive and binding upon all persons affected by it. There shall be
no appeal of any ruling by the Administrative Committee which is within its
authority, except as provided in Section 9.10 below. When making a determination
or a calculation, the Administrative Committee is entitled to rely on
information supplied by the Employer, Trustee, Investment Managers, insurance
institutions, accountants and other professionals including legal counsel for
the Company.
9.10. Claims Procedure. Each person entitled to benefits under the Plan
----------------
(the "Applicant") must submit a written claim for benefits to the Administrative
Committee. If a claim for benefits by the Applicant is denied, in whole or in
part, the Administrative Committee shall furnish the Applicant within 90 days
after receipt of such claim (or within 180 days after
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<PAGE>
receipt if special circumstances require an extension of time), a written notice
which specifies the reason for the denial, refers to the pertinent provisions of
the Plan on which the denial is based, describes any additional material or
information necessary for properly completing the claim and explains why such
material or information is necessary, and explains the claim review procedures
of this Section 9.10. Any Applicant whose claim is denied under the provisions
described above, or who has not received from the Administrative Committee a
response to his claim within the time periods specified in the provisions
described above may request a review of the denied claim by written request to
the Administrative Committee within 60 days after receiving notice of the
denial. In connection with such request, the Applicant or his authorized
representative may review pertinent documents and may submit issues and comments
in writing. If such a request is made, the Administrative Committee 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 request, unless special circumstances
(such as the need to hold a hearing) require an 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 Applicant 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. No person entitled to benefits under the Plan shall have any
right to seek review of a denial of benefits, or to bring any action to enforce
a claim for benefits, in any court prior to his filing a claim for benefits and
exhausting all of his rights under this Section 9.10. Although not required to
do so, an Applicant may choose to state the reason or reasons he believes he is
entitled to benefits, and may choose to submit written evidence, during the
initial claim process or review of claim denial process. However, failure to
state any such reason or submit such evidence during the initial claim process
or review of claim denial process, or by written notice to the Administrative
Committee within 60 days of the date of the decision on the review of the claim
denial, shall permanently bar the Applicant, and his successors in interest,
from raising such reason or submitting such evidence in any forum at any later
date.
9.11. Investments in Company Common Stock. The Investment Committee is
-----------------------------------
responsible for directing the Trustee with respect to investments of Plan assets
in Company Common Stock. In connection with such investments, the Investment
Committee has the authority to cause the Trustee to exercise or sell in the open
market any options, rights or warrants which entitle the Plan to subscribe to or
purchase shares of Company Common Stock. As provided in Section 6.6, the
Investment Committee is responsible for determining the appropriate value for
Company Common Stock contributed to the Plan or purchased by the Plan.
Notwithstanding the foregoing, all certificates for shares of Company Common
Stock held on behalf of the Plan shall be in the custody of the Trustee and
shall be held in the name of the Trustee or a nominee of the Trustee. Prior to
any distribution of Plan assets in the form of Company Common Stock pursuant to
Section 10.6 or any other provision of the Plan, the Investment Committee shall
cause such Common Stock held by the Trust, to the extent not registered under
the Securities Act of 1933, to be registered to the extent required under said
Act.
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ARTICLE X
---------
AMENDMENT, TERMINATION OR PLAN MERGER
10.1. Amendment. The Administrative Committee shall have the right at
---------
any time to amend in whole or in part any or all of the provisions of this Plan
except as expressly set forth below:
(a) Except as expressly provided in Section 11.14 below, no
amendment may result in, authorize or permit any part of the
Trust Fund, the income from the Trust Fund or any Plan assets
to be distributed to or for the benefit of anyone other than
the Participants and any other persons entitled to benefits
under the Plan.
(b) No amendment may be adopted which will reduce any
Participant's benefits to an amount less than the benefit that
the Participant would be entitled to receive if he had
resigned from the employ of the Employers and all Commonly
Controlled Entities of the Employers immediately prior to the
effective date of such amendment.
(c) No amendment may increase the duties of either the
Administrative Committee or the Investment Committee without
its consent.
10.2. Plan Termination. The Plan will terminate as to all Employers on
----------------
the earlier of the date the Plan is terminated by the Company with respect to
all Employers or the earliest date on which one of the events described in
subsections (a) through (d) below has occurred with respect to all Employers.
The Plan will terminate with respect to an individual Employer on the first to
occur of the following dates:
(a) Any date that the Plan is terminated with respect to an
individual Employer by action of that Employer, provided that
the Company and the Trustee have been given prior written
notice of such termination and provided that the Company does
not elect to continue the Plan as it applies to such Employer.
(b) Any date that the Employer is judicially declared bankrupt or
insolvent unless the Company elects to continue the Plan as it
applies to such Employer.
(c) Any date an Employer completely discontinues its contributions
under the Plan unless the Company elects to continue such
contributions.
(d) Any date the Employer is dissolved, merged, consolidated or
reorganized or the date on which the assets of the Employer
are completely or substantially sold, unless arrangements have
been made whereby the Plan will be continued by the Company or
the other Employers or by a successor to the Employer or
purchaser of its assets under Section 10.3.
10.3. Continuation by a Successor or Purchaser. The Plan and the Trust
----------------------------------------
shall not terminate with respect to an Employer in the event of dissolution,
merger, consolidation or
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reorganization of such Employer or sale by such Employer of its entire assets or
substantially all of its assets if arrangements are made in writing among the
Employer, the Company 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 and the Trust. If such arrangements are made, such successor
or purchaser shall be substituted for the Employer under the Plan and the Trust.
10.4. Plan Merger or Consolidation. The Company may cause the Plan or
----------------------------
the Trust or both 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.
10.5. Notice to Participants of Amendments, Terminations or Plan
----------------------------------------------------------
Mergers. Participants shall be notified by the Company within a reasonable time
- -------
following any significant amendment, termination, Plan merger or consolidation.
The Administrative Committee, in its sole discretion, shall determine whether an
amendment is "significant" for purposes of the preceding sentence.
10.6. Vesting and Distribution on Termination. There shall be no
---------------------------------------
Employer contributions (including Pay Deferral Contributions) after the date the
Plan terminates. However, the Trust shall remain in existence, and all of the
provisions of the Plan (other than the provisions relating to contributions)
which in the sole opinion of the Trustee are necessary, shall remain in full
force and effect until all the assets of the Plan are distributed in accordance
with the terms of the Plan and the Trust. The benefits of each Participant
affected by a termination or partial termination will be fully vested and will
be payable to such Participant in a lump sum as soon as practicable, unless
other arrangements are previously made in accordance with ARTICLE VII.
Notwithstanding the foregoing, if the Plan assets to be distributed to
Participants in accordance with this Section 10.6 include Company Common Stock,
prior to such distribution the Company shall cooperate with the Investment
Committee to cause all such Company Common Stock, to the extent not registered
under the Securities Act of 1933, to be registered to the extent required under
said Act.
ARTICLE XI
----------
GENERAL PROVISIONS
11.1. No Employment Guarantee. The establishment of the Plan, any
-----------------------
modification thereof, the creation of any fund or Account, or the payment of any
benefits shall not be construed as giving to any Participant or other person any
legal or equitable right against the Employers, the Administrative Committee,
the Investment Committee, the Trustee or any Plan representative except as
herein provided. Under no circumstances shall the terms of employment with the
Employer of any Participant be modified or in any way affected hereby. The
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maintenance of this Plan shall not constitute a contract of employment with the
Employer. Participation in the Plan will not give any Participant a right to be
retained as an Employee of any Employer.
11.2. Nonalienation of Plan Benefits. The rights or interests of any
------------------------------
Participant or any Beneficiary to any benefits or future payments hereunder
shall not be subject to attachment or garnishment or other legal proceeding or
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, attach, encumber or assign any of the benefits or rights which he may
expect to receive, contingently or otherwise under the Plan except as may be
required by the tax withholding provisions of the Code or of a state's income
tax act, or as may be required by Section 8.2.
(a) The rule against alienation in this Section 11.2 shall not
apply to a "Qualified Domestic Relations Order" (as defined in
Code Section 414(p)). The Administrative Committee shall
establish written procedures consistent with Code Section
414(p) and ERISA Section 206(d)(3) to determine the qualified
status of any domestic relations order.
(b) The rule against alienation in this Section 11.2 shall not
apply, to the extent permitted by law, to any offset of a
Participant's benefits under the Plan against an amount that
the Participant is ordered or required to pay to the Plan
pursuant to (i) a judgment of conviction for a crime involving
the Plan, (ii) a civil judgment in connection with a violation
(or alleged violation) of Part 4 of Subtitle B of Title I of
ERISA or (iii) a settlement agreement between the Secretary of
Labor and the Participant or the Pension Benefit Guaranty
Corporation and the Participant in connection with a violation
(or alleged violation) of Part 4 of Subtitle B of Title I of
ERISA.
11.3. Action by an Employer. Action required or permitted to be taken
---------------------
by an Employer may be taken by action of the board of directors of that Employer
or by a person or committee of persons authorized to act by said board. The
Company's powers may be exercised by the Board of Directors or a person or
committee of persons authorized to act by the Board of Directors or by the
Company's chief executive officer or his delegate.
11.4. Applicable Law. The Plan and 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 California.
11.5. 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 the Employers
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 Employers, the Administrative Committee, the Investment
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
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a Participant's or other person's benefits, the costs to the Employers, the
Administrative Committee, the Investment Committee or the Trustee of defending
the action will be charged to the sums, 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 Employers, the Administrative Committee, the
Investment Committee, the Trustee and their agents from any and all liability
and obligation not involving willful misconduct or gross neglect.
11.6. Participant and Beneficiary Duties. Each person entitled to
----------------------------------
benefits under the Plan shall furnish the Administrative Committee with all
appropriate documents, evidence, data or information which the Administrative
Committee considers necessary or desirable in administering the Plan.
11.7. Individual Account Statements. At least once each year the
-----------------------------
Administrative Committee will issue to each Participant an Account Balance
statement. As of the Effective Date, such statements are provided quarterly.
11.8. Gender and Number. Words denoting the masculine gender shall
-----------------
include the feminine and neuter genders and the singular shall include the
plural and the plural shall include the singular wherever required by the
context.
11.9. Adequacy of Evidence. Evidence which 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 Administrative Committee, the Trustee, the Employer or other persons
acting on such evidence consider pertinent and reliable.
11.10. Notice to Participants and Beneficiaries. A notice mailed to a
----------------------------------------
Participant or Beneficiary at his last address filed with the Administrative
Committee will be binding on the Participant or Beneficiary for all purposes of
the Plan.
11.11. Waiver of Notice. To the extent permitted by applicable law, any
----------------
notice under this Plan may be wholly or partially waived by the person entitled
to notice.
11.12. Successors. This Plan and the Trust will be binding on all
----------
persons entitled to benefits hereunder and their respective heirs and legal
representatives, and on the Administrative Committee, the Investment Committee,
the Trustee and their successors.
11.13. Severability. If any provision of the Plan is 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.
11.14. Nonreversion. Except as provided below, the Employers have no
------------
right, title or interest in the assets of the Plan or in the Trust Fund and no
portion of the Trust Fund or the assets of the Plan or interest therein shall at
any time revert or be repaid to the Employers. Notwithstanding the preceding
sentence, the following Employer contributions or Participant contributions may
be returned to the Employer or the Participant, as the case may be:
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(a) The Employer contributions which cannot be credited to a
Participant's Account because of the limitations of Sections
4.3 or 4.4 may be returned to the Employer.
(b) Employer contributions which are conditioned upon their
deductibility under Code Section 404 shall be returned to the
applicable Employer or Employers to the extent any such
contributions are determined to be nondeductible. Employer
contributions and Participant contributions which are made as
a result of a mistake of fact may be returned to the Employer
or the Participant making those contributions. Employer
contributions may only be repaid under this subsection within
12 months after the date the error or nondeductibility is
discovered by the Employer.
(c) Employer contributions which are conditioned upon
qualification of the Plan and the Trust may be returned to the
Employer if the Plan is not initially determined to be
qualified.
11.15. Qualification of Plan and Trust. The Trust and the Plan taken
-------------------------------
together are intended to qualify under Section 401(a) so as to be tax-exempt
under Section 501(a) of the Code, as amended. Each of the Trust and the Plan
shall also be deemed to be mutually incorporated by reference and to implement
and form a part of each other such document. Unless and until advised to the
contrary, the Administrative Committee, the Investment Committee, the Trustee,
any Investment Managers, any insurance institutions and persons dealing with
them shall be entitled to assume that the Trust and this Plan are so qualified
and tax-exempt.
11.16. Certain Indemnification. To the extent permitted by applicable
-----------------------
law and to the extent that he is not indemnified or saved harmless under any
liability insurance contracts, any present or former Administrative Committee or
Investment Committee member and any officer, Employee or director of any
Employer or its subsidiaries or affiliates shall be indemnified and saved
harmless by the Employers from and against any and all liabilities or
allegations of liability, joint or several to which he may be subjected by
reason of any act done or omitted to be done in good faith in the administration
and operation of the Plan and Trust (and for the acts and omissions of his
agents or co-fiduciaries), including all expenses reasonably incurred in the
defense of any action, suit or proceeding (including reasonable attorneys' fees
and reasonable costs of settlement) in the event that the Employers fail to
provide such defense after having been requested to do so.
11.17. Voice Response Unit Deemed Written Consent. Where the written
------------------------------------------
consent of a Participant, Spouse, Beneficiary, or alternate payee is required
pursuant to the terms of the Plan and/or applicable law, electronic telephone
entries made by any such individual via the Company's automated "voice response
unit" system shall constitute such written consent for purposes of the Code and
U.S. Treasury regulations.
ARTICLE XII
-----------
SPECIAL TOP-HEAVY RULES
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<PAGE>
12.1. Application. Notwithstanding any provisions of the Plan to the
-----------
contrary, the provisions of this ARTICLE XII shall apply and be effective for
any Plan Year for which the Plan shall be determined to be a "Top-Heavy Plan" as
provided and defined herein.
12.2. Special Terms. For purposes of this ARTICLE XII, the following
-------------
terms shall have the following meanings:
(a) "Aggregate Benefit" means the sum of:
(i) The present value of the accrued benefit under each
and all defined benefit plans in the Aggregation
Group determined on each plan's individual
Determination Date as if there were a Termination of
Employment on the most recent date the plan is valued
by an actuary for purposes of computing plan costs
under Section 412 of the Code within the 12-month
period ending on the Determination Date of each such
plan, but with respect to the first plan year of any
such plan determined by taking into account the
estimated accrued benefit as of the Determination
Date; provided that the actuarial assumptions to be
applied for purposes of this subparagraph (i) shall
be the same assumptions as those applied for purposes
of determining the actuarial equivalents of optional
benefits under the particular plan, except that the
interest rate assumption shall be 5%;
(ii) The present value of the accrued benefit (i.e.,
account balances) under each and all defined
contribution plans in the Aggregation Group, valued
as of the valuation date coinciding with or
immediately preceding the Determination Date of each
such plan, including (A) contributions made after the
valuation date but on or prior to the Determination
Date, (B) with respect to the first plan year of any
plan, any contribution made subsequent to the
Determination Date but allocable as of any date in
the first plan year or (C) with respect to any
defined contribution plan subject to Section 412 of
the Code, any contribution made after the
Determination Date that is allocable as of a date on
or prior to the Determination Date; and
(iii) The sum of each and all amounts distributed (other
than a rollover or plan-to-plan transfer) from any
Aggregation Group Plan, plus a rollover or
plan-to-plan transfer initiated by the Employee and
made to a plan which is not an Aggregation Group Plan
within the Current Plan Year or within the preceding
four plan years of any such plan, provided such
amounts are not already included in the present value
of the accrued benefits as of the valuation date
coincident with or immediately preceding the
Determination Date.
The Aggregate Benefit shall not include the value of any
rollover or plan-to-plan transfer to an Aggregation Group
Plan, the contribution or transfer of which was initiated by a
Participant, was from a plan which was not an Aggregation
Group Plan and was made after December 31, 1983, nor shall the
Aggregate Benefit
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<PAGE>
include the value of employee contributions which are
deductible pursuant to Section 219 of the Code.
(b) "Aggregation Group" means the Plan and any plan (including a
plan that has terminated) which is described in Section 401(a)
of the Code, is an annuity contract described in Section
403(a) of the Code, is a simplified employee pension described
in Section 408(k) of the Code or is a simple retirement
account described in Section 408(p) of the Code maintained or
adopted by an Employer or a Commonly Controlled Entity of the
Employer in the Current Plan Year or one of the four preceding
Plan Years which is either a "Required Aggregation Group" or a
"Permissive Aggregation Group."
(i) A "Required Aggregation Group" means all Aggregation
Group Plans (A) in which a Key Employee participates
or (B) which enable any Aggregation Group Plan in
which a Key Employee participates to satisfy the
requirements of Section 401(a)(4) or Section 410 of
the Code;
(ii) A "Permissive Aggregation Group" means all
Aggregation Group Plans included in the Required
Aggregation Group, plus one or more other Aggregation
Group Plans as designated by the Administrative
Committee in its sole discretion, which satisfy the
requirements of Section 401(a)(4) and Section 410 of
the Code when considered with the other component
plans of the Required Aggregation Group.
(c) "Aggregation Group Plan" means the Plan and each other plan in
the Aggregation Group.
(d) "Current Plan Year" means (i) with respect to the Plan, the
Plan Year in which the Determination Date occurs, and (ii)
with respect to each other Aggregation Group Plan, the plan
year of such other plan in which occurs the Determination Date
of such other plan.
(e) "Determination Date" means (i) with respect to the Plan and
its Plan Year, the last day of the preceding Plan Year, or
(ii) with respect to any other Aggregation Group Plan in any
calendar year during which the Plan is not the only component
plan of an Aggregation Group, the determination date of each
plan in such Aggregation Group to occur during the calendar
year as determined under the provisions of each such plan.
(f) "Former Key Employee" means an Employee (including a
terminated Employee) who is not a Key Employee in the Current
Plan Year nor during the four preceding Plan Years but who was
a Key Employee at any time prior to the four preceding Plan
Years.
(g) "Key Employee" means an Employee (including a terminated
Employee) who at any time during the Current Plan Year or at
any time during the four preceding Plan Years is:
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(i) An officer of an Employer or a Commonly Controlled Entity of
an Employer whose total Compensation from the Employer and the
Commonly Controlled Entities during the Plan Year is greater
than 50% of the amount in effect under Section 415(b)(1)(A) of
the Code (as adjusted for cost-of-living increases by the
Secretary of the Treasury) for the calendar year in which the
Plan Year ends; provided, however, that no more than the
lesser of (A) 50 Employees, or (B) the greater of (1) three
Employees or (2) 10% (rounded to the next whole integer) of
the greatest number of Employees during the Current Plan Year
or any of the preceding four Plan Years shall be considered as
officers for this purpose. Such officers considered will be
those with the greatest annual Compensation as an officer
during the five-year period ending on the Determination Date;
(ii) One of the ten employees who owns (or is considered to own
within the meaning of Section 318 of the Code) more than a
1/2% interest in value and the largest percentage ownership
interest in value in an Employer or a Commonly Controlled
Entity of an Employer (considered separately), and whose total
annual Compensation from the Employer and the Commonly
Controlled Entity is not less than the amount specified in
Section 415(c)(1)(A) of the Code (as adjusted for cost-of-
living increases by the Secretary of the Treasury) for the
calendar year in which the Plan Year ends;
(iii) A person who owns more than 5% of the value of the outstanding
stock of an Employer or of any Commonly Controlled Entity of
the Employer or more than 5% of the total combined voting
power of all stock of the Employer or any Commonly Controlled
Entity of the Employer (considered separately); or
(iv) A person who owns more than 1% of the value of the outstanding
stock of an Employer or a Commonly Controlled Entity of the
Employer or more than 1% of the total combined voting power of
all stock of the Employer or of the Commonly Controlled Entity
(considered separately) and whose total annual Compensation
from the Employer and the Commonly Controlled Entity is in
excess of $150,000.
The rules of Section 416(i)(1)(B) and (C) of the Code shall be applied
for purposes of determining an Employee's ownership interest in an
Employer or a Commonly Controlled Entity of an Employer for purposes of
subparagraphs (iii) and (iv) above. For purposes of this subsection
(g), "value" means fair market value. A Beneficiary (who would not
otherwise be considered a Key Employee) of a deceased Key Employee
shall be deemed to be a Key Employee in substitution for such deceased
Key Employee.
(h) "Top-Heavy Plan" means the Plan with respect to any Plan Year if the
Aggregate Benefit of all Key Employees or the Beneficiaries of Key
Employees determined on the Determination Date is an amount in excess
of 60% of the Aggregate
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<PAGE>
Benefit of all persons who are Employees within the Current Plan Year,
excluding Former Key Employees, plus the Aggregate Benefit of persons
who have been Employees (but are not Former Key Employees) within the
four preceding Plan Years but who are not Employees in the Current Plan
Year. With respect to any calendar year during which the Plan is not
the only Aggregation Group Plan, the ratio determined under the
preceding sentence shall be computed based on the sum of the Aggregate
Benefits of each Aggregation Group Plan totaled as of the last
Determination Date of any Aggregation Group Plan to occur during the
calendar year.
12.3. Vested Percentage. For any Plan Year that the Plan is a Top-Heavy
-----------------
Plan, the non-forfeitable percentage of the Employer Matching Account of any
person who is an Employee for such Plan Year shall be determined under the
vesting schedule in Section 7.2.
12.4. Minimum Contribution. For any Plan Year that the Plan shall be a
--------------------
Top-Heavy Plan, each Participant who is (a) an Eligible Employee but who is
neither a Key Employee nor a Former Key Employee and (b) who is an Employee on
the last day of the Plan Year regardless of how many Hours of Service he earned
during the Plan Year shall have allocated to his Employer Matching Account the
sum of Employer Matching Contributions in an amount equal to not less than the
lesser of 3% of such Participant's Compensation, or an amount which is the same
ratio or percentage of Employer Matching Contributions to such Compensation for
the Plan Year as for the Key Employee who has the highest such ratio or
percentage for the Plan Year. The amount of Employer Matching Contributions
required to be allocated under this Section for any Plan Year shall be reduced
by the amount of Employer contributions and Forfeitures allocated on behalf of
the Participant under any other defined contribution plan in the Aggregation
Group for the Plan Year.
12.5. Termination of Top-Heavy Status. If the Plan has been determined
-------------------------------
to be a Top-Heavy Plan for one or more Plan Years and thereafter ceases to be a
Top-Heavy Plan, the provisions of this ARTICLE XII shall cease to apply to such
Plan effective as of the Determination Date on which the Plan is not a Top-Heavy
Plan.
ARTICLE XIII
------------
ADOPTION AND WITHDRAWAL FROM PLAN
13.1. Procedure for Adoption. Any Employer and certain unrelated
----------------------
companies (as provided in Section 13.3) may adopt the Plan for the benefit of
their Employees as of a date specified. No such adoption shall be effective
until such adoption has been approved by the Administrative Committee.
Notwithstanding any term or provision of the Plan to the contrary (including,
but not limited to, terms and conditions concerning Vesting Service, Eligibility
Service, Compensation and amount of retirement benefits), the terms and
provisions as may be imposed with respect to such Employer Employers and their
Employees in an applicable
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<PAGE>
supplement or appendix to the Plan shall govern. Any Employer who adopts the
Plan in accordance with this Section or Section 13.3 agrees to be bound by all
the terms, provisions, conditions and limitations of the Plan and the
accompanying Trust Agreement which are pertinent to any entity defined as an
"Employer" in the Plan with respect to its Eligible Employees under the Plan.
Such Employer further agrees that the Administrative Committee and the
Investment Committee shall act for the Employer and its Eligible Employees under
the provisions of the Plan. Such Employer further agrees to furnish from time to
time such information with reference to its Eligible Employees as may be
required by the Administrative Committee or the Investment Committee.
13.2. Procedure for Withdrawal. Any Employer (other than the Company)
------------------------
may, with the consent of the Company, and subject to such conditions as may be
imposed by the Company, terminate its adoption of the Plan. Upon discontinuance
of an Employer's participation in the Plan, the Trustee shall cause a
determination to be made of the equitable part of the Plan assets held on
account of Participants of the withdrawing Employer and their Beneficiaries. The
Administrative Committee shall direct the Trustee to transfer assets
representing such equitable part to a separate fund for the plan of the
withdrawing Employer. Such withdrawing Employer may thereafter exercise, in
respect of such separate fund, all the rights and powers reserved to the Company
with respect to Plan assets. The plan of the withdrawing Employer shall, until
amended by the withdrawing Employer, continue with the same terms as the Plan
herein, except that with respect to the separate plan of the withdrawing
Employer the words "Employer," "Employers," and "Company" shall thereafter be
considered to refer only to the withdrawing Employer. Any discontinuance of
participation by an Employer shall be effected in such manner that each
Participant or Beneficiary would (if the Plan and the plan of the withdrawing
Employer then terminated) receive a benefit immediately after such
discontinuance of participation which is equal to or greater than the benefit he
or she would have been entitled to receive immediately before such
discontinuance of participation if the Plan had then terminated. No transfer of
assets pursuant to this Section shall be effected until such statements with
respect thereto, if any, required by ERISA to be filed in advance thereof have
been filed.
13.3. Adoption of Plan by Unrelated Employers. The Company may
---------------------------------------
authorize companies that are not Commonly Controlled Entities with respect to
the Company to adopt the Plan. Such authorization may extend to an individual
company or to a group of related companies. Any such company that is authorized
to adopt the Plan for the benefit of its employees shall do so in accordance
with Section 13.1. For purposes of such adoption and for purposes of its
participation in the Plan, any such company shall be deemed to be an "Employer"
hereunder and shall be subject to all terms of the Plan applicable to an
Employer.
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IN WITNESS WHEREOF, a duly authorized officer of the Company has caused
this Plan to be executed on the __________ day of _______________________, 2000.
EDWARDS LIFESCIENCES
CORPORATION
By: _________________
Its: ________________
ATTEST:
- ------------------------------------
ACKNOWLEDGMENT
The undersigned, as Secretary of the Administrative Committee under the
Edwards Lifesciences 401(k) Savings and Investment Plan and on behalf of the
other members of such Committee, acknowledges receipt of the foregoing amendment
instrument and approves thereof.
Dated this _____ day of ______________________, 2000.
ADMINISTRATIVE COMMITTEE
under
EDWARDS LIFESCIENCES CORPORATION
401(k) SAVINGS AND INVESTMENT PLAN
By: ___________________________________
Its Secretary as Aforesaid
<PAGE>
Exhibit 5
March 21, 2000
Edwards Lifesciences Corporation
17221 Red Hill Avenue
Irvine, California 92614
Re: 769,942 shares of Common Stock, $1 par value
769,942 Preferred Stock Purchase Rights
---------------------------------------
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-8 (the "Registration
Statement") being filed by Edwards Lifesciences Corporation, a Delaware
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of an aggregate of 769,942 shares of Common Stock, $1 par value, of
the Company (the "Registered Common Stock"), together with 769,942 Preferred
Stock Purchase Rights of the Company (the "Registered Rights") associated
therewith, to be issued under the Edwards Lifesciences Corporation 401(k)
Savings and Investment Plan (the "Plan"). The terms of the Rights will be set
forth in a Rights Agreement substantially in the form of Exhibit 10.9 to the
Company's Registration Statement on Form 10, as amended (the "Rights Agreement")
to be entered into between the Company and First Chicago Trust Company of New
York, a division of EquiServe, as Rights Agent.
We are familiar with the proceedings to date with respect to the
proposed issuance of the Registered Common Stock and the Registered Rights under
the Plan and have examined such records, documents and questions of law, and
satisfied ourselves as to such matters of fact, as we have considered relevant
and necessary as a basis for this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the laws
of the State of Delaware.
2. Each share of the Registered Common Stock which is newly issued
pursuant to the Plan will constitute a share of Common Stock of the Company
which has been duly authorized, legally issued, fully paid and non-assessable
when (i) the Registration Statement shall have become effective under the
Securities Act; (ii) the Company's Board of Directors or a duly authorized
committee thereof shall have duly adopted final resolutions authorizing the
issuance and sale of the Registered Common Stock as contemplated by the
Registration Statement; (iii) such Registered Common Stock shall have been duly
issued and sold in the manner contemplated by the Plan; and (iv) a certificate
representing such Registered Common Stock shall have been duly executed,
countersigned and registered and duly delivered to the purchaser
<PAGE>
Edwards Lifesciences Corporation
March 21, 2000
Page 2
thereof upon payment of the agreed consideration therefor (not less than the par
value thereof) determined in accordance with the terms of the Plan.
3. The Registered Right associated with each share of Registered Common
Stock referred to in paragraph 2 above will be validly issued when (i) the
Rights Agreement shall have been duly executed by the parties thereto; (ii) such
Registered Right shall have been duly issued in accordance with the terms of the
Rights Agreement; and (iii) such associated share shall have been duly issued
and paid for as set forth in paragraph 2 above.
This opinion letter is limited to the General Corporation Law of the
State of Delaware and the federal laws of the United States of America.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to all references to our firm included in or made
a part of the Registration Statement.
Very truly yours,
Sidley & Austin
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 16, 2000 relating to the
financial statements and financial statement schedule of Edwards Lifesciences
Corporation, which appears in the Edwards Lifesciences Corporation Form 10 dated
March 21, 2000.
Pricewaterhouse Coopers LLP
Chicago, Illinois
March 20, 2000
<PAGE>
Exhibit 24.1
Power of Attorney
The undersigned, a Director and/or Officer of Edwards Lifesciences
Corporation, a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Michael A. Mussallem or Bruce J. Bentcover (each acting alone and
without the other) his or her true and lawful attorney-in-fact and agent, with
full power and authority to execute in the name and on behalf of the undersigned
as such Director and/or Officer, a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act of the offer and sale of shares of the
Corporation's Common Stock, par value $1, and the associated Preferred Stock
Purchase Rights, issuable in accordance with the Edwards Lifesciences
Corporation 401(k) Savings and Investment Plan, and to execute any and all
amendments to such Registration Statement, whether filed prior or subsequent to
the time such Registration Statement becomes effective, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission. The undersigned hereby grants unto each such
attorney-in-fact and agent, full power of substitution and revocation in the
premises and hereby ratifies and confirms all that each such attorney-in-fact
and agent, or his substitute or substitutes, may do or cause to be done by
virtue of these presents.
Dated this 10th day of March, 2000.
Michael R. Bowlin
------------------
Michael R. Bowlin
<PAGE>
Exhibit 24.2
Power of Attorney
The undersigned, a Director and/or Officer of Edwards Lifesciences
Corporation, a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Michael A. Mussallem or Bruce J. Bentcover (each acting alone and
without the other) his or her true and lawful attorney-in-fact and agent, with
full power and authority to execute in the name and on behalf of the undersigned
as such Director and/or Officer, a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act of the offer and sale of shares of the
Corporation's Common Stock, par value $1, and the associated Preferred Stock
Purchase Rights, issuable in accordance with the Edwards Lifesciences
Corporation 401(k) Savings and Investment Plan, and to execute any and all
amendments to such Registration Statement, whether filed prior or subsequent to
the time such Registration Statement becomes effective, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission. The undersigned hereby grants unto each such
attorney-in-fact and agent, full power of substitution and revocation in the
premises and hereby ratifies and confirms all that each such attorney-in-fact
and agent, or his substitute or substitutes, may do or cause to be done by
virtue of these presents.
Dated this 10th day of March, 2000.
Victoria R. Fash
------------------
Victoria R. Fash
<PAGE>
Exhibit 24.3
Power of Attorney
The undersigned, a Director and/or Officer of Edwards Lifesciences
Corporation, a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Michael A. Mussallem or Bruce J. Bentcover (each acting alone and
without the other) his or her true and lawful attorney-in-fact and agent, with
full power and authority to execute in the name and on behalf of the undersigned
as such Director and/or Officer, a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act of the offer and sale of shares of the
Corporation's Common Stock, par value $1, and the associated Preferred Stock
Purchase Rights, issuable in accordance with the Edwards Lifesciences
Corporation 401(k) Savings and Investment Plan, and to execute any and all
amendments to such Registration Statement, whether filed prior or subsequent to
the time such Registration Statement becomes effective, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission. The undersigned hereby grants unto each such
attorney-in-fact and agent, full power of substitution and revocation in the
premises and hereby ratifies and confirms all that each such attorney-in-fact
and agent, or his substitute or substitutes, may do or cause to be done by
virtue of these presents.
Dated this 10th day of March, 2000.
Vernon R. Loucks Jr.
--------------------
Vernon R. Loucks Jr.
<PAGE>
Exhibit 24.4
Power of Attorney
The undersigned, a Director and/or Officer of Edwards Lifesciences
Corporation, a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Michael A. Mussallem or Bruce J. Bentcover (each acting alone and
without the other) his or her true and lawful attorney-in-fact and agent, with
full power and authority to execute in the name and on behalf of the undersigned
as such Director and/or Officer, a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act of the offer and sale of shares of the
Corporation's Common Stock, par value $1, and the associated Preferred Stock
Purchase Rights, issuable in accordance with the Edwards Lifesciences
Corporation 401(k) Savings and Investment Plan, and to execute any and all
amendments to such Registration Statement, whether filed prior or subsequent to
the time such Registration Statement becomes effective, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission. The undersigned hereby grants unto each such
attorney-in-fact and agent, full power of substitution and revocation in the
premises and hereby ratifies and confirms all that each such attorney-in-fact
and agent, or his substitute or substitutes, may do or cause to be done by
virtue of these presents.
Dated this 10th day of March, 2000.
Philip M. Neal
--------------
Philip M. Neal
<PAGE>
Exhibit 24.5
Power of Attorney
The undersigned, a Director and/or Officer of Edwards Lifesciences
Corporation, a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Michael A. Mussallem or Bruce J. Bentcover (each acting alone and
without the other) his or her true and lawful attorney-in-fact and agent, with
full power and authority to execute in the name and on behalf of the undersigned
as such Director and/or Officer, a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act of the offer and sale of shares of the
Corporation's Common Stock, par value $1, and the associated Preferred Stock
Purchase Rights, issuable in accordance with the Edwards Lifesciences
Corporation 401(k) Savings and Investment Plan, and to execute any and all
amendments to such Registration Statement, whether filed prior or subsequent to
the time such Registration Statement becomes effective, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission. The undersigned hereby grants unto each such
attorney-in-fact and agent, full power of substitution and revocation in the
premises and hereby ratifies and confirms all that each such attorney-in-fact
and agent, or his substitute or substitutes, may do or cause to be done by
virtue of these presents.
Dated this 10th day of March, 2000.
David E.I. Pyott
----------------
David E.I. Pyott
