SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3540776
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 DeHavilland Drive, Thousand Oaks, California 91320-1789
- ----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 447-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of June 30, 1996, the registrant had 264,668,720 shares of Common
Stock, $.0001 par value, outstanding.
<PAGE>
AMGEN INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1.Financial Statements .......................3
Condensed Consolidated Statements of
Operations - three and six months
ended June 30, 1996 and 1995 ....................4
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 .............5
Condensed Consolidated Statements of
Cash Flows - six months ended
June 30, 1996 and 1995 ......................6 - 7
Notes to Condensed Consolidated Financial
Statements ......................................8
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................13
PART II OTHER INFORMATION
Item 1.Legal Proceedings .........................18
Item 4.Submission of Matters to a Vote
of Security Holders .......................18
Item 6.Exhibits and Reports on Form 8-K ..........19
Signatures........................................20
Index to Exhibits.................................21
PAGE 2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three and six months
ended June 30, 1996 and 1995 is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which
Amgen Inc. ("Amgen" or the "Company") considers necessary for a fair
presentation of the results of operations for those periods.
The condensed consolidated financial statements should be read
in conjunction with the Company's financial statements and the notes
thereto contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
Interim results are not necessarily indicative of results for
the full fiscal year.
PAGE 3
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------ ------ -------- ------
Revenues:
Product sales $518.9 $462.6 $ 995.8 $873.8
Corporate partner revenues 42.0 21.5 63.8 41.3
Royalty income 10.5 9.6 19.7 18.0
------ ------ -------- ------
Total revenues 571.4 493.7 1,079.3 933.1
------ ------ -------- ------
Operating expenses:
Cost of sales 68.3 76.4 135.2 143.0
Research and development 123.6 108.3 254.2 222.2
Marketing and selling 78.5 69.9 146.1 128.7
General and administrative 37.8 34.6 77.0 69.2
Loss of affiliates, net 14.9 13.3 28.2 26.0
------ ------ -------- ------
Total operating expenses 323.1 302.5 640.7 589.1
------ ------ -------- ------
Operating income 248.3 191.2 438.6 344.0
------ ------ -------- ------
Other income (expense):
Interest and other income 12.2 18.4 31.2 31.3
Interest expense, net (1.7) (3.8) (4.0) (7.6)
------ ------ -------- ------
Total other income
(expense) 10.5 14.6 27.2 23.7
------ ------ -------- ------
Income before income taxes 258.8 205.8 465.8 367.7
Provision for income taxes 80.1 68.1 143.5 121.4
------ ------ -------- ------
Net income $178.7 $137.7 $ 322.3 $246.3
====== ====== ======== ======
Earnings per share:
Primary $ .64 $ .49 $ 1.14 $ .88
Fully diluted $ .64 $ .49 $ 1.14 $ .87
Shares used in calculation
of:
Primary earnings per share 280.9 278.8 282.2 279.2
Fully diluted earnings per
share 280.9 280.3 282.2 281.5
See accompanying notes.
PAGE 4
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AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
June 30, December
31,
1996 1995
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 214.2 $ 66.7
Marketable securities 797.8 983.6
Trade receivables, net 198.8 199.3
Inventories 91.8 88.8
Other current assets 107.5 115.7
-------- --------
Total current assets 1,410.1 1,454.1
Property, plant and equipment at cost, net 781.6 743.8
Investments in affiliated companies 99.7 95.7
Other assets 204.9 139.2
-------- --------
$2,496.3 $2,432.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53.0 $ 54.4
Commercial paper - 69.7
Accrued liabilities 445.3 459.7
Current portion of long-term debt 78.2 -
-------- --------
Total current liabilities 576.5 583.8
Long-term debt 99.0 177.2
Commitments and contingencies
Stockholders' equity:
Common stock, and additional paid-in
capital; $.0001 par value; 750.0 shares
authorized; outstanding - 264.7 shares
in 1996 and 265.7 shares in 1995 926.3 864.8
Retained earnings 894.5 807.0
-------- --------
Total stockholders' equity 1,820.8 1,671.8
-------- --------
$2,496.3 $2,432.8
======== ========
See accompanying notes.
PAGE 5
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ende
June 30,
1996 1995
------- -------
Cash flows from operating activities:
Net income $322.3 $246.3
Depreciation and amortization 54.9 42.4
Loss of affiliates, net 28.2 26.0
Cash provided by (used in):
Trade receivables, net 0.5 (23.6)
Inventories (3.0) 17.7
Other current assets 8.2 3.5
Accounts payable (1.4) 7.6
Accrued liabilities (14.4) 38.7
------ ------
Net cash provided by operating
activities 395.3 358.6
------ ------
Cash flows from investing activities:
Purchases of property, plant and
equipment (92.7) (55.1)
Proceeds from maturities of marketable
securities 129.9 48.4
Proceeds from sales of marketable
securities 449.6 604.1
Purchases of marketable securities (393.7) (822.9)
(Increase) decrease in investments in
affiliated companies (5.5) 5.4
Increase in other assets (65.7) (5.0)
------ ------
Net cash provided by (used in)
investing activities 21.9 (225.1)
------ ------
See accompanying notes.
(Continued on next page)
PAGE 6
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
Six Months Ended
June 30,
1996 1995
------- -------
Cash flows from financing activities:
Decrease in commercial paper $(69.7) $ (0.5)
Repayment of long-term debt - (2.2)
Net proceeds from issuance of common
stock upon the exercise of stock
options 45.7 40.9
Tax benefit related to stock options 15.8 8.9
Repurchases of common stock (234.8) (173.5)
Other (26.7) (23.5)
------ ------
Net cash used in financing activities (269.7) (149.9)
------ ------
Increase (decrease) in cash and cash
equivalents 147.5 (16.4)
Cash and cash equivalents at beginning of
period 66.7 211.3
------ ------
Cash and cash equivalents at end of period $214.2 $194.9
====== ======
See accompanying notes.
PAGE 7
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AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology
company that develops, manufactures and markets human therapeutics
based on advanced cellular and molecular biology.
Principles of consolidation
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries as well as
affiliated companies for which the Company has a controlling
financial interest and exercises control over their operations
("majority controlled affiliates"). All material intercompany
transactions and balances have been eliminated in consolidation.
Investments in affiliated companies which are 50% or less owned and
where the Company exercises significant influence over operations are
accounted for using the equity method. All other equity investments
are accounted for under the cost method. The caption "Loss of
affiliates, net" includes Amgen's equity in the operating results of
affiliated companies and the minority interest others hold in the
operating results of Amgen's majority controlled affiliates.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined in a manner which approximates the first-in, first-out
(FIFO) method. Inventories are shown net of applicable reserves and
allowances. Inventories consist of the following (in millions):
June 30, December
31,
1996 1995
------- -------
Raw materials $13.3 $11.8
Work in process 48.4 45.9
Finished goods 30.1 31.1
----- -----
$91.8 $88.8
===== =====
Product sales
Product sales consist of two products, EPOGEN(R) (Epoetin alfa)
and NEUPOGEN(R) (Filgrastim).
PAGE 8
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Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonal changes in cancer chemotherapy administration, and
wholesaler inventory management practices. Wholesaler inventory
reductions have tended to reduce domestic NEUPOGEN(R) sales in the
first quarter of each year. In prior years, NEUPOGEN(R) sales in the
European Union have experienced a seasonal decline to varying degrees
in the third quarter.
The Company has the exclusive right to sell Epoetin alfa for
dialysis, diagnostics and all non-human uses in the United States.
The Company sells Epoetin alfa under the brand name EPOGEN(R). Amgen
has granted to Ortho Pharmaceutical Corporation, a subsidiary of
Johnson & Johnson ("Johnson & Johnson"), a license relating to
Epoetin alfa for sales in the United States for all human uses except
dialysis and diagnostics. Pursuant to this license, Amgen does not
recognize product sales it makes into the exclusive market of Johnson
& Johnson and does recognize the product sales made by Johnson &
Johnson into Amgen's exclusive market. These sales amounts, and
adjustments thereto, are derived from third-party data on shipments
to end users and their usage (see Note 4, "Contingencies - Johnson &
Johnson arbitrations").
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 (Note 3).
Stock option and purchase plans
The Company's stock options and purchase plans are accounted for
under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees".
Earnings per share
Earnings per share are computed in accordance with the treasury
stock method. Primary and fully diluted earnings per share are based
upon the weighted average number of common shares and dilutive common
stock equivalents during the period in which they were outstanding.
Common stock equivalents are outstanding options under the Company's
stock option plans.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results may
differ from those estimates.
Basis of presentation
The financial information for the three and six months ended
June 30, 1996 and 1995 is unaudited but includes all adjustments
(consisting only of normal recurring accruals) which the Company
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considers necessary for a fair presentation of the results of
operations for these periods. Interim results are not necessarily
indicative of results for the full fiscal year.
Reclassification
Certain prior period amounts have been reclassified to conform
to the current period presentation.
2. Debt
During the first quarter of 1996, the Company paid off all
outstanding commercial paper.
As of June 30, 1996, $150 million was available under the
Company's line of credit for borrowing and to support the Company's
commercial paper program. No borrowings on this line of credit were
outstanding at June 30, 1996.
Long-term debt consists of the following (in millions):
June 30, December 31,
1996 1995
-------- --------
Medium Term Notes $109.0 $109.0
Promissory notes 68.2 68.2
------ ------
177.2 177.2
Less current portion (78.2) -
------ ------
$ 99.0 $177.2
====== ======
The Company has registered $200 million of unsecured medium term
debt securities ("Medium Term Notes") of which $109.0 million were
outstanding at June 30, 1996. These Medium Term Notes bear interest
at fixed rates averaging 5.8% and mature in one to seven years.
3. Income taxes
The provision for income taxes consists of the following (in
millions):
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------ ------ ------ ------
Federal (including
U.S. possessions) $72.8 $61.6 $130.1 $110.2
State 7.3 6.5 13.4 11.2
----- ----- ------ ------
$80.1 $68.1 $143.5 $121.4
===== ===== ====== ======
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4. Contingencies
Johnson & Johnson arbitrations
In September 1985, the Company granted Johnson & Johnson a
license relating to certain patented technology and know-how of the
Company to sell a genetically engineered form of recombinant human
erythropoietin, called Epoetin alfa, throughout the United States for
all human uses except dialysis and diagnostics. Johnson & Johnson
sells Epoetin alfa under the brand name PROCRIT(R).
A number of disputes have arisen between Amgen and Johnson &
Johnson as to their respective rights and obligations under the
various agreements between them, including the agreement granting the
license (the "License Agreement"). These disputes have been the
subject of arbitration proceedings before Judicial Arbitration and
Mediation Services, Inc. in Chicago, Illinois commencing in January
1989. A dispute that has not yet been resolved and is the subject of
the current arbitration proceeding relates to the audit methodology
currently employed by the Company for Epoetin alfa sales. The
Company and Johnson & Johnson are required to compensate each other
for Epoetin alfa sales which either party makes into the other
party's exclusive market. The Company has established and is
employing an audit methodology to assign the proceeds of sales of
EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson & Johnson's
respective exclusive markets. Based upon this audit methodology, the
Company is seeking payment of approximately $15 million (excluding
interest) from Johnson & Johnson for the period 1991 through 1994.
Johnson & Johnson has disputed this methodology and is proposing an
alternative methodology for adoption by the arbitrator pursuant to
which it is seeking payment of approximately $450 million (including
interest through June 1996) for the period 1989 through 1994. If, as
a result of the arbitration proceeding, a methodology different from
that currently employed by the Company is instituted to assign the
proceeds of sales between the parties, it may yield results that are
different from the results of the audit methodology currently
employed by the Company. As a result of the arbitration, it is
possible that the Company would recognize a different level of
EPOGEN(R) sales than are currently being recognized. As a result of
the arbitration, the Company may be required to pay additional
compensation to Johnson & Johnson for sales during prior periods, or
Johnson & Johnson may be required to pay compensation to the Company
for such prior period sales. While it is impossible to predict
accurately or determine the outcome of these proceedings, based
primarily upon the merits of its claims and based upon certain
liabilities established due to the inherent uncertainty of any
arbitrated result, the Company believes that the outcome of these
proceedings will not have a material adverse effect on its financial
statements.
The trial commenced in March 1996 regarding the audit
methodologies and compensation for sales by Johnson & Johnson into
Amgen's exclusive market and sales by Amgen into Johnson & Johnson's
exclusive market.
PAGE 11
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The Company has filed a demand in the arbitration to terminate
Johnson & Johnson's rights under the License Agreement and to recover
damages for breach of the License Agreement. A hearing on this
demand will be scheduled following the adjudication of the audit
methodologies for Epoetin alfa sales. On October 27, 1995, the
Company filed a complaint in the Circuit Court of Cook County,
Illinois, which is now pending in the United States District Court
for the Northern District of Illinois, seeking an order compelling
Johnson & Johnson to arbitrate the Company's claim for termination
before the arbitrator. The Company is unable to predict at this time
the outcome of the demand for termination or when it will be
resolved.
On October 2, 1995, Johnson & Johnson filed a demand for a
separate arbitration proceeding against the Company before the
American Arbitration Association ("AAA") in Chicago, Illinois.
Johnson & Johnson alleges in this demand that the Company has
breached the License Agreement. The demand also includes allegations
of various antitrust violations. In this demand, Johnson & Johnson
seeks an injunction, declaratory relief, unspecified compensatory
damages, punitive damages and costs. The Company has filed a motion
to stay the arbitration pending the outcome of the existing
arbitration proceedings before Judicial Arbitration and Mediation
Services, Inc. discussed above. The Company has also filed an answer
and counterclaim denying that AAA has jurisdiction to hear or decide
the claims stated in the demand, denying the allegations in the
demand and counterclaiming for certain unpaid invoices.
Synergen ANTRIL(TM) litigation
Several lawsuits have been filed against the Company's wholly
owned subsidiary, Amgen Boulder Inc. (formerly Synergen, Inc.),
alleging misrepresentations in connection with Synergen's research
and development of ANTRIL(TM) for the treatment of sepsis. One suit,
filed by a limited partner of a partnership with which Amgen Boulder
Inc. is affiliated, has been certified as a class action. That suit
seeks rescission of certain payments made by the limited partners to
the partnership (or unspecified damages not less than $52 million)
and treble damages based on a variety of allegations relating to
state and federal law claims. The plaintiffs in that suit also have
filed a second amended complaint alleging violations of federal
securities laws. Two broker-dealers who acted as market makers in
Synergen options have also filed a suit claiming in excess of $3.2
million in trading losses.
While it is not possible to predict accurately or determine the
eventual outcome of the Johnson & Johnson arbitration proceedings,
the Synergen litigation or various other legal proceedings (including
patent disputes) involving Amgen, the Company believes that the
outcome of these proceedings will not have a material adverse effect
on its financial statements.
5. Stockholders' equity
During the six months ended June 30, 1996, the Company
repurchased 4.0 million shares of its common stock at a total cost of
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$234.8 million under its common stock repurchase program. The Board
of Directors has authorized the Company to repurchase up to $450
million of shares during the 1996 calendar year. Stock repurchased
under the program is retired.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash provided by operating activities has been and is expected
to continue to be the Company's primary source of funds. During the
six months ended June 30, 1996, operations provided $395.3 million of
cash compared with $358.6 million during the same period last year.
The Company had cash, cash equivalents and marketable securities of
$1,012 million at June 30, 1996, compared with $1,050.3 million at
December 31, 1995.
Capital expenditures totaled $92.7 million for the six months
ended June 30, 1996, compared with $55.1 million for the same period
a year ago. Over the next few years, the Company expects to spend
approximately $200 million to $300 million per year on capital
projects and equipment to expand the Company's global operations.
In April 1996, the Company invested $48 million in Regeneron
Pharmaceuticals, Inc. and acquired 3.0 million shares of common stock
along with warrants to purchase an additional 0.7 million shares.
The Company receives cash from the exercise of employee stock
options. During the six months ended June 30, 1996, stock options
and their related tax benefits provided $61.5 million of cash
compared with $49.8 million for the period last year. Proceeds from
the exercise of stock options and their related tax benefits will
vary from period to period based upon, among other factors,
fluctuations in the market value of the Company's stock relative to
the exercise price of such options.
The Company has a stock repurchase program to offset the
dilutive effect of its employee benefit stock option and stock
purchase plans. During the six months ended June 30, 1996, the
Company purchased 4.0 million shares of its common stock at a cost of
$234.8 million compared with 5.0 million shares purchased at a cost
of $173.5 million during the same period last year. The Company
expects to repurchase $400 million to $450 million of its stock under
the program in 1996.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company has a shelf registration under which it could issue up to
$200 million of Medium Term Notes. At June 30, 1996, $109.0 million
of Medium Term Notes were outstanding which mature in one to seven
years. The Company has a commercial paper program which provides for
short-term borrowings up to an aggregate face amount of $200 million.
As of June 30, 1996, the Company had no outstanding commercial paper.
PAGE 13
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The Company also has a $150 million revolving line of credit. No
borrowings on this line of credit were outstanding at June 30, 1996.
The Company invests its cash in accordance with a policy that
seeks to maximize returns while ensuring both liquidity and minimal
risk of principal loss. The policy limits investments to certain
types of instruments issued by institutions with investment grade
credit ratings, and places restrictions on maturities and
concentration by type and issuer. The majority of the Company's
portfolio is composed of fixed income investments which are subject
to the risk of market interest rate fluctuations, and all the
Company's investments are subject to risks associated with the
ability of the issuers to perform their obligations under the
instruments.
The Company has a program to manage certain portions of its
exposure to fluctuations in foreign currency exchange rates. These
exposures primarily result from European sales. The Company
generally hedges the related receivables with foreign currency
forward contracts, which typically mature within six months. The
Company uses foreign currency option and forward contracts which
generally expire within 12 months to hedge certain anticipated future
sales. At June 30, 1996, outstanding option and forward contracts
totaled $8.1 million and $41.4 million, respectively.
The Company believes that existing funds, cash generated from
operations, and existing sources of debt financing are adequate to
support its stock repurchase program, as well as to satisfy its
working capital and capital expenditure requirements for the
foreseeable future. However, the Company may raise additional
capital from time to time to take advantage of favorable conditions
in the markets or in connection with the Company's corporate
development activities.
Results of Operations
Product sales
Product sales increased 12% and 14% for the three and six months
ended June 30, 1996, respectively, compared with the same periods
last year.
NEUPOGEN(R) (Filgrastim)
Worldwide NEUPOGEN(R) sales were $254.7 million and
$487.5 million for the three and six months ended June 30, 1996,
respectively. These amounts represent increases of 3.1% and 6.1%,
respectively, over the same periods last year.
Domestic sales of NEUPOGEN(R) were $184.2 million and $346.9
million for the three and six months ended June 30, 1996,
respectively. These amounts represent increases of $8.4 million and
$23.8 million, or 4.8% and 7.4%, respectively, over the same periods
last year. These increases were primarily due to demand growth and a
price increase. In 1995, wholesalers accelerated their purchasing
PAGE 14
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because of the timing of the July 4 holiday. As a result,
approximately $7 million of sales were shifted from the third quarter
of 1995 into the second quarter. Such accelerated wholesaler
purchasing did not occur in the second quarter of 1996.
The ongoing and intensifying cost containment pressures in the
health care marketplace, including use of guidelines in patient care,
have contributed to the slowing of growth in domestic NEUPOGEN(R)
usage over the past several years. These pressures are expected to
continue to influence such growth for the foreseeable future.
International sales of NEUPOGEN(R), primarily in Europe, were
$70.5 million and $140.6 million for the three and six months ended
June 30, 1996, respectively. These amounts represent a decrease of
$0.7 million or 1% for the three month period and an increase of $4.4
million, or 3.2% for the six month period. The current year periods
reflect slower demand growth due to competitive and cost containment
pressures as well as unfavorable foreign currency effects. The
decrease in the second quarter of 1996, compared to the same period a
year ago, was due to unfavorable foreign currency effects exceeding
underlying demand growth.
The Company's overall share of the colony stimulating factor
market in the European Union ("EU") has continued to decrease since
the introduction in 1994 of a competing granulocyte colony
stimulating factor product. The Company does not expect the
competitive intensity to subside in the near future. In addition,
increasing government cost control measures have slowed the growth of
the colony stimulating factor market in the EU.
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonal change in cancer chemotherapy administration, and wholesaler
inventory management practices. Wholesaler inventory reductions have
tended to reduce domestic NEUPOGEN(R) sales in the first quarter of
each year. In prior years, NEUPOGEN sales in the EU have experienced
a seasonal decline to varying degrees in the third quarter.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $264.2 million and $508.3 million for the
three and six months ended June 30, 1996, respectively. The amounts
represent increases of $48.6 million and $93.8 million or 22.5% and
22.6%, respectively, over the same periods last year. These
increases were primarily due to a continued increase in the U.S.
dialysis patient population and the administration of higher doses.
Corporate partner revenues
Corporate partner revenues increased $20.5 million and
$22.5 million, or 95.3% and 54.5%, during the three and six months
ended June 30, 1996, respectively, compared to the same periods last
year. These increases were primarily due to a $15 million payment
received from Yamanouchi Pharmaceutical Co., Ltd. under a licensing
agreement. In connection with this agreement, the Company has
licensed the rights to develop, manufacture and commercialize the
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Company's proprietary Consensus Interferon in specified geographic
areas of the world. The Company will receive milestone payments as
well as royalties on future product sales.
Cost of sales
Cost of sales as a percentage of product sales was 13.2% and
13.6% for the three and six months ended June 30, 1996, respectively,
compared with 16.5% and 16.4% for the same periods last year. These
improvements reflect efficiencies from the fill-and-finish facility
in Puerto Rico. As a result of continued efficiencies in Puerto Rico
in 1996, cost of sales as a percentage of product sales is expected
to range from 13%-14%.
Research and development
During the three and six months ended June 30, 1996, research
and development expenses increased $15.3 million and $32.0 million,
or 14.1% and 14.4%, respectively, compared with the same periods last
year. These increases were primarily due to clinical and preclinical
activities necessary to initiate new programs and to further advance
existing product development activities. Annual research and
development expenses are expected to increase at a rate exceeding the
Company's product sales growth rate due to planned increases in
internal efforts on development of product candidates and discovery
efforts.
Marketing and selling
Marketing and selling expenses increased $8.6 million and $17.4
million, or 12.3% and 13.5%, respectively, during the three and six
months ended June 30, 1996 compared with the same periods last year.
These increases primarily reflect market research activities and
efforts to increase the number of patients receiving NEUPOGEN(R) and
to bring more patients receiving EPOGEN(R) within the target
hematocrit range. In 1996, marketing and selling expenses combined
with general and administrative expenses are expected to have an
aggregate annual growth rate lower than the anticipated annual
product sales growth rate.
General and administrative
General and administrative expenses increased $3.2 million and
$7.8 million, or 9.2% and 11.3%, respectively, during the three and
six months ended June 30, 1996 compared with the same periods last
year. These increases were primarily due to higher staff-related
expenses. In 1996, general and administrative expenses combined with
marketing and selling expenses are expected to have an aggregate
annual growth rate lower than the anticipated annual product sales
growth rate.
Interest and other income
Interest and other income decreased $6.2 million and
$0.1 million, or 33.7% or 0.3%, respectively, during the three and
six months ended June 30, 1996 compared with the same periods last
year. These decreases resulted from fluctuations in interest rates
and the absence of any capital gains in the second quarter of 1996
compared to the same period a year ago. These decreases offset
interest income from higher cash balances in the current year period.
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Interest and other income is expected to continue to vary from period
to period primarily due to changes in cash balances, timing of
capital gains/losses, and fluctuations in interest rates.
Income taxes
The Company's effective tax rate for the three and six months
ended June 30, 1996 was 31.0% and 30.8% compared with 33.1% and
33.0%, respectively, for the same periods last year. These decreases
in the tax rate were due to increased realization of net operating
losses of an acquired company and continued tax benefits from the
sale of products manufactured in the Puerto Rico fill-and-finish
facility.
Financial Outlook
Worldwide NEUPOGEN(R) sales for 1996 are expected to grow at a
rate lower than the 1995 growth rate. Future NEUPOGEN(R) sales
increases are dependent primarily upon further penetration of
existing markets, the timing and nature of additional indications for
which the product may be approved and the effects of competitive
products. NEUPOGEN(R) usage is expected to continue to be affected
by cost containment pressures on health care providers worldwide. In
addition, international NEUPOGEN(R) sales will continue to be subject
to changes in foreign currency exchange rates, competition, and
government cost containment measures.
EPOGEN(R) sales for 1996 are also expected to grow at a rate
lower than the 1995 growth rate. The Company anticipates that
increases in both the U.S. dialysis patient population and dosing
will continue to drive EPOGEN(R) sales. The Company believes that as
more dialysis patients' hematocrits reach target levels, the
contribution of dosing to sales increases will diminish. Patients
receiving treatment for end stage renal disease are covered primarily
under medical programs provided by the federal government.
Therefore, EPOGEN(R) sales may also be affected by future changes in
reimbursement rates or the basis for reimbursement by the federal
government.
The Company anticipates that total product sales and earnings
will grow at double digit rates in 1996, but these growth rates are
expected to be lower than 1995 growth rates. Estimates of future
product sales and earnings, however, are necessarily speculative in
nature and are difficult to predict with accuracy.
Except for the historical information contained herein, the
matters discussed herein are by their nature forward-looking. For
reasons stated, or for various unanticipated reasons, actual results
may differ materially. Amgen operates in a rapidly changing
environment that involves a number of risks, some of which are beyond
the Company's control. Future operating results and matters which
may affect the Company's stock price may be affected by a number of
factors, certain of which are discussed elsewhere herein and are
discussed in the sections appearing under the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Factors That May Affect Future Results" in the Company's
PAGE 17
<PAGE>
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996,
which sections are incorporated herein by reference.
Legal Matters
The Company is engaged in arbitration proceedings with one of
its licensees and various legal proceedings relating to Synergen.
For a discussion of these matters see Note 4 to the Condensed
Consolidated Financial Statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is engaged in arbitration proceedings with one of
its licensees. For a complete discussion of these matters see Note 4
to the Condensed Consolidated Financial Statements - "Contingencies -
Johnson & Johnson arbitrations." Other legal proceedings are also
reported in Note 4 to the Condensed Consolidated Financial Statements
and in the Company's Form 10-K for the year ended December 31, 1995,
with material developments or new proceedings since that report
described in the Company's Form 10-Q for the quarter ended March 31,
1996 and below. While it is not possible to predict accurately or to
determine the eventual outcome of these matters, the Company believes
that the outcome of these legal proceedings will not have a material
adverse effect on the financial statements of the Company.
Synergen ANTRIL(TM) litigation
Johnson v. Amgen Boulder Inc., et al., a suit filed by a limited
partner of a partnership with which Amgen Boulder Inc. is affiliated,
was certified as a class action on June 12, 1996. That suit seeks
rescission of certain payments made by the limited partners to the
partnership (or unspecified damages not less than $52 million) and
treble damages based on a variety of allegations relating to state
and federal law claims. On June 25, 1996, the plaintiffs in that
suit also filed a second amended complaint alleging violations of
federal securities laws.
F. Hoffman-La Roche
On December 20, 1995, Roche Holding A.G., parent corporation of
F. Hoffman-La Roche and Company, filed suit in the Tokyo District
Court in Japan, against Amgen K.K., a subsidiary of the Company,
seeking injunctive relief for the alleged infringement of a patent
relating to alpha-interferon by the Company's Consensus Interferon.
The Company subsequently answered the complaint, denying allegations
of infringement.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Stockholders on
May 2, 1996.
(b) Omitted pursuant to Instruction 3 to Item 4 of Form 10-Q.
PAGE 18
<PAGE>
(c) The two matters voted upon at the meeting were to elect
three directors to hold office until the 1999 Annual
Meeting of Stockholders and to ratify the selection of
Ernst & Young LLP as the independent auditors of the
Company for the year ending December 31, 1996.
(i) The following votes were cast for or were withheld
with respect to each of the nominees for director:
Mr. William K. Bowes, Jr.: 203,050,432 votes for and
706,907 votes withheld; Ms. Judith C. Pelham:
201,541,898 votes for and 2,215,441 votes withheld;
and Mr. Kevin W. Sharer: 202,998,903 votes for and
758,436 votes withheld. All nominees were declared to
have been elected as directors to hold office until
the 1999 Annual Meeting of Stockholders. No
abstentions or broker non-votes were cast for the
election of directors.
(ii) With respect to the proposal to ratify the selection
of Ernst & Young LLP as the Company's independent
auditors, 203,059,851 votes were cast for the
proposal, 255,197 votes were cast against the proposal
and 442,291 votes abstained. No broker non-votes were
cast in connection with the proposal. The selection
of Ernst & Young LLP as the Company's independent
auditors for the year ending December 31, 1996 was
declared to have been ratified.
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Reference is made to the Index to Exhibits included herein.
(b) No reports on Form 8-K were filed during the three months
ended June 30, 1996.
PAGE 19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 8/9/96 By:/s/ Robert S. Attiyeh
- ------------------ ------------------------------------
Robert S. Attiyeh
Senior Vice President, Finance
and Corporate Development, and
Chief Financial Officer
Date: 8/9/96 By:/s/ Larry A. May
- ------------------ ------------------------------------
Larry A. May
Vice President, Corporate
Controller and Chief
Accounting Officer
PAGE 20
<PAGE>
AMGEN INC.
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Certificate of Incorporation. (6)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, effective as of July 24, 1991. (11)
3.3* Amended and Restated Bylaws.
4.1 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (12)
4.2 Forms of Commercial Paper Master Note Certificates. (15)
10.1* Company's Amended and Restated 1991 Equity Incentive
Plan.
10.2 Company's Amended and Restated 1984 Stock Option Plan.
(21)
10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984, between the Company and Kirin Brewery Company,
Limited (with certain confidential information deleted
therefrom). (1)
10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July
29, 1985 and December 19, 1985, respectively, to the
Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984 (with certain confidential information deleted
therefrom). (3)
10.5 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated, September 30, 1985
between the Company and Ortho Pharmaceutical Corporation
(with certain confidential information deleted
therefrom). (2)
10.6 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated September 30, 1985
between Kirin-Amgen, Inc. and Ortho Pharmaceutical
Corporation (with certain confidential information
deleted therefrom). (3)
10.7 Company's Amended and Restated Employee Stock Purchase
Plan. (22)
10.8 Research, Development Technology Disclosure and License
Agreement PPO, dated January 20, 1986, by and between
the Company and Kirin Brewery Co., Ltd. (4)
10.9 Amendment Nos. 4 and 5, dated October 16, 1986
(effective July 1, 1986) and December 6, 1986 (effective
July 1, 1986), respectively, to the Shareholders
Agreement of Kirin-Amgen, Inc. dated May 11, 1984 (with
certain confidential information deleted therefrom). (5)
10.10 Assignment and License Agreement, dated October 16,
1986, between the Company and Kirin-Amgen, Inc. (with
certain confidential information deleted therefrom). (5)
10.11 G-CSF European License Agreement, dated December 30,
1986, between Kirin-Amgen, Inc. and the Company (with
certain confidential information deleted therefrom). (5)
10.12 Research and Development Technology Disclosure and
License Agreement: GM-CSF, dated March 31, 1987, between
PAGE 21
<PAGE>
Kirin Brewery Company, Limited and the Company (with
certain confidential information deleted therefrom). (5)
10.13 Company's Amended and Restated 1987 Directors' Stock
Option Plan. (21)
10.14* Company's Amended and Restated 1988 Stock Option Plan.
10.15* Company's Amended and Restated Retirement and Savings
Plan.
10.16 Amendment, dated June 30, 1988, to Research,
Development, Technology Disclosure and License
Agreement: GM-CSF dated March 31, 1987, between Kirin
Brewery Company, Limited and the Company. (6)
10.17 Agreement on G-CSF in the EU, dated September 26, 1988,
between Amgen Inc. and F. Hoffmann-La Roche & Co.
Limited Company (with certain confidential information
deleted therefrom). (8)
10.18 Supplementary Agreement to Agreement dated January 4,
1989 to Agreement on G-CSF in the EU, dated September
26, 1988, between the Company and F. Hoffmann-La Roche &
Co. Limited Company, (with certain confidential
information deleted therefrom). (8)
10.19 Agreement on G-CSF in Certain European Countries, dated
January 1, 1989, between Amgen Inc. and F. Hoffmann-La
Roche & Co. Limited Company (with certain confidential
information deleted therefrom). (8)
10.20 Rights Agreement, dated January 24, 1989, between Amgen
Inc. and American Stock Transfer and Trust Company,
Rights Agent. (7)
10.21 First Amendment to Rights Agreement, dated January 22,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (9)
10.22 Second Amendment to Rights Agreement, dated April 2,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (10)
10.23 Agency Agreement, dated November 21, 1991, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.24 Agency Agreement, dated May 21, 1992, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.25 Guaranty, dated July 29, 1992, by the Company in favor
of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (14)
10.26 936 Promissory Note No. 01, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.27 936 Promissory Note No. 02, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.28 936 Promissory Note No. 001, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.29 936 Promissory Note No. 002, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.30 Guaranty, dated November 21, 1991, by the Company in
favor of Citicorp Financial Services Corporation. (13)
10.31 Partnership Purchase Agreement, dated March 12, 1993,
between the Company, Amgen Clinical Partners, L.P.,
Amgen Development Corporation, the Class A limited
partners and the Class B limited partner. (14)
PAGE 22
<PAGE>
10.32 Amgen Supplemental Retirement Plan dated June 1, 1993.
(16)
10.33 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (16)
10.34 Promissory Note of Mr. Larry A. May, dated February 24,
1993. (17)
10.35 Amgen Performance Based Management Incentive Plan. (17)
10.36 Agreement and Plan of Merger, dated as of November 17,
1994, among Amgen Inc., Amgen Acquisition Subsidiary,
Inc. and Synergen, Inc. (18)
10.37 Third Amendment to Rights Agreement, dated as of
February 21, 1995, between Amgen Inc. and American Stock
Transfer Trust and Trust Company (19)
10.38 Credit Agreement, dated as of June 23, 1995, among Amgen
Inc., the Borrowing Subsidiaries named therein, the
Banks named therein, Swiss Bank Corporation and ABN AMRO
Bank N.V., as Issuing Banks, and Swiss Bank Corporation,
as Administrative Agent. (20)
10.39 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (22)
10.40 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (22)
10.41 Promissory Note of Mr. Stan Benson, dated March 19,
1996. (22)
11* Computation of per share earnings.
27* Financial Data Schedule.
99* Sections appearing under the heading "Management's
Discussion and Analysis of Financial Condition and
Results of Operations--Factors That May Affect Future
Results" in the Company's quarterly report on Form 10-Q
for the quarter ended March 31, 1996.
- ----------------
* Filed herewith.
(1) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1984 on June 26, 1984 and incorporated
herein by reference.
(2) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1985 on November 14, 1985 and
incorporated herein by reference.
(3) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1985 on February 3, 1986 and
incorporated herein by reference.
(4) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration
Statement (Registration No. 33-3069) on March 11, 1986 and
incorporated herein by reference.
(5) Filed as an exhibit to the Form 10-K Annual Report for the year
ended March 31, 1987 on May 18, 1987 and incorporated herein by
reference.
(6) Filed as an exhibit to Form 8 amending the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988 on August 25, 1988
and incorporated herein by reference.
(7) Filed as an exhibit to the Form 8-K Current Report dated January
24, 1989 and incorporated herein by reference.
PAGE 23
<PAGE>
(8) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1989 on June 28, 1989 and incorporated
herein by reference.
(9) Filed as an exhibit to the Form 8-K Current Report dated January
22, 1991 and incorporated herein by reference.
(10) Filed as an exhibit to the Form 8-K Current Report dated April
12, 1991 and incorporated herein by reference.
(11) Filed as an exhibit to the Form 8-K Current Report dated July
24, 1991 and incorporated herein by reference.
(12) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(13) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1992 on March 30, 1993 and incorporated
herein by reference.
(14) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(15) Filed as an exhibit to the Form 10-Q for the quarter ended March
31, 1993 on May 17, 1993 and incorporated herein by reference.
(16) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1993 on November 12, 1993 and incorporated herein
by reference.
(17) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1993 on March 25, 1994 and incorporated
herein by reference.
(18) Filed as an exhibit to the Form 8-K Current Report dated
November 18, 1994 on December 2, 1994 and incorporated herein by
reference.
(19) Filed as an exhibit to the Form 8-K Current Report dated
February 21, 1995 on March 7, 1995 and incorporated herein by
reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended
June 30, 1995 on August 11, 1995 and incorporated herein by
reference.
(21) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1995 on November 13, 1995 and incorporated herein
by reference.
(22) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1995 on March 29, 1996 and incorporated
herein by reference.
PAGE 24
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
PRIMARY COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------- ------- ------- -------
Net income $178.7 $137.7 $322.3 $246.3
====== ====== ====== ======
Applicable common and common
stock equivalent shares:
Weighted average shares of
common stock outstanding
during the period 264.9 264.0 265.4 264.6
Incremental number of shares
outstanding during the
period resulting from the
assumed exercises of stock
options and warrants 16.0 14.8 16.8 14.6
------ ------ ------ ------
Weighted average shares of
common stock and common
stock equivalents
outstanding during the
period 280.9 278.8 282.2 279.2
====== ====== ====== ======
Earnings per common share
primary $ .64 $ .49 $ 1.14 $ .88
====== ====== ====== ======
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
FULLY DILUTED COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------- ------- ------- -------
Net income $178.7 $137.7 $322.3 $246.3
====== ====== ====== ======
Applicable common and common
stock equivalent shares:
Weighted average shares of
common stock outstanding
during the period 264.9 264.0 265.4 264.6
Incremental number of shares
outstanding during the
period resulting from the
assumed exercises of stock
options and warrants 16.0 16.3 16.8 16.9
------ ------ ------ ------
Weighted average shares of
common stock and common
stock equivalents
outstanding during the
period 280.9 280.3 282.2 281.5
====== ====== ====== ======
Earnings per common share
fully diluted $ .64 $ .49 $ 1.14 $ .87
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 214
<SECURITIES> 798
<RECEIVABLES> 199
<ALLOWANCES> 0
<INVENTORY> 92
<CURRENT-ASSETS> 1,410
<PP&E> 782
<DEPRECIATION> 55
<TOTAL-ASSETS> 2,496
<CURRENT-LIABILITIES> 577
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,821
<TOTAL-LIABILITY-AND-EQUITY> 2,496
<SALES> 996
<TOTAL-REVENUES> 1,079
<CGS> 135
<TOTAL-COSTS> 641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 466
<INCOME-TAX> 144
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 322
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.14
</TABLE>
EXHIBIT 3.3
AMENDED AND RESTATED BYLAWS
OF
AMGEN INC.
(AS AMENDED THROUGH APRIL 11, 1996)
INDEX
Page
ARTICLE I Offices 1
Section 1. Registered Office 1
Section 2. Other Offices 1
ARTICLE II Corporate Seal 1
Section 3. Corporate Seal 1
ARTICLE III Stockholders' Meetings 1
Section 4. Place of Meetings 1
Section 5. Annual Meeting 1
Section 6. Special Meetings 2
Section 7. Notice of Meetings 2
Section 8. Quorum 2
Section 9. Adjournment and Notice of
Adjourned Meetings 3
Section 10. Voting Rights 3
Section 11. Joint Owners of Stock 3
Section 12. List of Stockholders 4
Section 13. No Action Without Meeting 4
Section 14. Organization 4
<PAGE>
Section 15. Notifications of Nominations and
Proposed Business 4
ARTICLE IV Directors 6
Section 16. Number 6
Section 17. Classes of Directors 6
Section 18. Newly Created Directorships and
Vacancies 6
Section 19. Powers 6
Section 20. Resignation 6
Section 21. Removal 7
Section 22. Meetings 7
(a) Annual Meetings 7
(b) Regular Meetings 7
(c) Special Meetings 7
(d) Telephone Meetings 8
(e) Notice of Meetings 8
(f) Waiver of Notice 8
Section 23. Quorum and Voting 8
(a) Quorum 8
(b) Majority Vote 8
Section 24. Action without Meeting 8
Section 25. Fees and Compensation 9
Section 26. Committees 9
(a) Executive Committee 9
(b) Other Committees 9
(c) Term 10
(d) Meetings 10
Section 27. Organization 11
<PAGE>
ARTICLE V Officers 11
Section 28. Officers Designated 11
Section 29. Tenure and Duties of Officers 11
(a) General 11
(b) Duties of Chairman of the Board 11
(c) Duties of Chief Executive Officer 12
(d) Duties of President and Chief
Operating Officer 12
(e) Duties of Vice Presidents 12
(f) Duties of Chief Financial Officer 12
(g) Duties of Secretary 13
Section 30. Resignations 13
Section 31. Removal 13
Section 32. Compensation 13
ARTICLE VI Execution of Corporate Instruments and
Voting of Securities Owned by the
Corporation 14
Section 33. Execution of CorporateInstruments 14
Section 34. Voting of Securities Owned by the
Corporation 14
ARTICLE VII Shares of Stock 14
Section 35. Form and Execution of
Certificates 15
Section 36. Lost Certificates 15
Section 37. Transfers 15
Section 38. Fixing Record Dates 15
Section 39. Registered Stockholders 16
Section 40. Issuance, Transfer and Resignation of
Shares 16
ARTICLE VIII Other Securities of the Corporation 16
Section 41. Execution of Other Securities 16
ARTICLE IX Dividends 17
<PAGE>
Section 42. Declaration of Dividends 17
Section 43. Dividend Reserve 17
ARTICLE X Fiscal Year 17
Section 44. Fiscal Year 17
ARTICLE XI Indemnification of Directors, Officers,
Employees and Other Agents 18
Section 45. Indemnification of Directors,Officers,
Employees and Other Agents 18
(a) Directors and Officers 18
(b) Other Employees and Other Agents 18
(c) Expenses 18
(d) Enforcement 19
(e) Non-Exclusivity of Rights 20
(f) Survival of Rights 20
(g) Insurance 20
(h) Amendments 20
(i) Savings Clause 20
(j) Certain Definitions 21
ARTICLE XII Notices 22
Section 46. Notices 22
(a) Notice to Stockholders 22
(b) Notice to Directors 22
(c) Address Unknown 22
(d) Affidavit of Mailing 22
(e) Time Notices Deemed Given 22
(f) Methods of Notice 22
<PAGE>
(g) Failure to Receive Notice 23
(h) Notice to Person with Whom
Communication Is Unlawful 23
ARTICLE XIII Amendments 23
Section 47. Amendments 23
ARTICLE XIV Loans of Officers and Others 24
Section 48. Certain Corporate Loans and
Guaranties 24
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the
corporation in the State of Delaware shall be in the City of Dover,
County of Kent. (Del. Code Ann., tit. 8, Section 131)
Section 2. Other Offices. The corporation also shall have
and maintain an office or principal place of business at such place
as may be fixed by the Board of Directors, and also may have offices
at such other places, both within and without the State of Delaware
as the Board of Directors may from time to time determine or the
business of the corporation may require. (Del. Code Ann., tit. 8,
Section 122(8))
ARTICLE II
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist
of a die bearing the name of the corporation and the inscription,
"Corporate Seal-Delaware." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or
otherwise. (Del. Code Ann., tit. 8, Section 122(3))
<PAGE>
ARTICLE III
Stockholders' Meetings
Section 4. Place of Meetings. Meetings of the stockholders
of the corporation shall be held at such place, either within or
without the State of Delaware, as may be designated from time to time
by the Board of Directors, or, if not so designated, then at the
office of the corporation required to be maintained pursuant to
Section 2 hereof. (Del. Code Ann., tit. 8, Section 211(a))
Section 5. Annual Meeting. The annual meeting of the
stockholders of the corporation shall be held on any date and time
which may from time to time be designated by the Board of Directors.
At such annual meeting, directors shall be elected and any other
business may be transacted that may properly come before the meeting.
(Del. Code Ann., tit. 8, Section 211(b))
Section 6. Special Meetings. Special meetings of the
stockholders of the corporation may be called, for any purpose or
purposes, by the Chairman of the Board of Directors ("Chairman of the
Board"), the Chief Executive Officer, the President, or the Board of
Directors at any time. Upon written request of any stockholder or
stockholders holding in the aggregate 20% or more of the voting power
of all stockholders delivered in person or sent by registered mail to
the Chief Executive Officer, the President or Secretary, the
Secretary shall call a special meeting of stockholders to be held at
the office of the corporation required to be maintained pursuant to
Section 2 hereof, or at such other place as may be designated by the
Secretary, at such time as the Secretary may fix, such meeting to be
held not less than ten (10) nor more than sixty (60) days after the
receipt of such request, and if the Secretary shall neglect or refuse
to call such meeting, within seven (7) days after the receipt of such
request, the stockholder making such request may do so. (Del. Code
Ann., tit. 8, Section 211(d))
Section 7. Notice of Meetings. Except as otherwise provided
by law or the Certificate of Incorporation, written notice of each
meeting of stockholders shall be given not less than ten (10) nor
more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting, such notice to specify
the place, date and hour and purpose or purposes of the meeting.
Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice
thereof, either before or after such meeting, and will be waived by
any stockholder by his attendance thereat in person or by proxy,
except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened.
Any stockholder so waiving notice of such meeting shall be bound by
the proceedings of any such meeting in all respects as if due notice
thereof had been given. (Del. Code Ann., tit. 8, Section 222, 229)
Section 8. Quorum. At all meetings of stockholders, except
where otherwise provided by statute or by the Certificate of
Incorporation, or by these Bylaws, the presence, in person or by
proxy duly authorized, of the holders of a majority of the
outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason
cannot be lawfully voted at such meeting, shall not be counted to
determine a quorum at such meeting. In the absence of a quorum any
meeting of stockholders may be adjourned, from time to time, by vote
of the holders of a majority of the shares represented thereat, but
no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a
quorum is present, may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting
<PAGE>
at which a quorum is present shall be valid and binding upon the
corporation. (Del. Code Ann., tit. 8, Section 216)
Section 9. Adjournment and Notice of Adjourned Meetings.
Any meeting of stockholders, whether annual or special, may be
adjourned from time to time by the vote of a majority of the shares,
the holders of which are present either in person or by proxy. When
a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. (Del. Code Ann., tit. 8,
Section 222(c))
Section 10. Voting Rights. For the purpose of determining
those stockholders entitled to vote at any meeting of the
stockholders, except as otherwise provided by law, only persons in
whose names shares stand on the stock records of the corporation on
the record date, as provided in Section 12 of these Bylaws, shall be
entitled to vote at any meeting of stockholders. Every person
entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written
proxy executed by such person or his duly authorized agent, which
proxy shall be filed with the Secretary at or before the meeting at
which it is to be used. An agent so appointed need not be a
stockholder. No proxy shall be voted on after three (3) years from
its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless
otherwise provided in the Certificate of Incorporation. (Del. Code
Ann., tit. 8, Section 211(e), 212(b))
Section 11. Joint Owners of Stock. If shares or other
securities having voting power stand of record in the names of two
(2) or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two (2) or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary is
given written notice to the contrary and is furnishedwith a copy of
the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall
have the following effect: (a) if only one (1) votes, his act binds
all; (b) if more than one (1) votes, the act of the majority so
voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the
securities in question proportionally, or may apply to the Delaware
Court of Chancery for relief as provided in the General Corporation
Law of Delaware, Section 217(b). If the instrument filed with the
Secretary shows that any such tenancy is held in unequal interests, a
majority or even-split for the purpose of this subSection (c) shall
be a majority or even-split in interest. (Del. Code Ann., tit. 8,
Section 217(b))
<PAGE>
Section 12. List of Stockholders. The Secretary shall
prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting,
or, if not specified, at the place where the meeting is to be held.
The list shall be produced and kept at the time and place of meeting
during the whole time thereof, and may be inspected by any
stockholder who is present. (Del. Code Ann., tit. 8, Section 219(a))
Section 13. No Action Without Meeting. Any action required
or permitted to be taken by the stockholders of the corporation must
be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such
holders.
Section 14. Organization. At every meeting of stockholders,
the Chairman of the Board, or, if the Chairman of the Board is
absent, the Chief Executive Officer, or, if the Chief Executive
Officer is absent, the President, or, if the President is absent, the
most senior Vice President present, or in the absence of any such
officer, a chairman of the meeting chosen by a majority in interest
of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the Chief Executive Officer,
shall act as secretary of the meeting.
Section 15. Notifications of Nominations and Proposed
Business. Subject to the rights of holders of any class or series
of stock having a preference over the Common Stock as to dividends or
upon liquidation,
(x) nominations for the election of directors, and
(y) business proposed to be brought before any stockholder
meeting, may be made by the Board of Directors or a proxy committee
appointed by the Board of Directors or by any stockholder entitled to
vote in the election of directors generally. However, any such
stockholder may nominate one or more persons for election as
directors at a meeting or propose business to be brought before a
meeting, or both, only if such stockholder has given timely notice in
proper written form of his intent to make such nomination or
nominations or to propose such business. To be timely, a
stockholder's notice must be delivered to or mailed and received by
the Secretary of the corporation not later than 90 days prior to such
meeting; provided, however, that in the event that less than 100
days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the 10th day
following the date on which such notice of the date of such meeting
was mailed or such public disclosure was made. To be in proper
<PAGE>
written form, a stockholder's notice to the Secretary shall set
forth:
(a) the name and address of the stockholder who intends to make
the nominations or propose the business and, as the case may be, of
the person or persons to be nominated or of the business to be
proposed;
(b) a representation that the stockholder is a holder of record
of stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(c) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed by the Board of Directors; and
(e) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance
with the foregoing procedure.
ARTICLE IV
Directors
Section 16. Number. The authorized number of directors of
the corporation shall be fixed from time to time by the Board of
Directors. The number of directors presently authorized is nine.
Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause the directors shall
not have been elected at an annual meeting, they may be elected as
soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these
Bylaws. (Del. Code Ann., tit. 8, Section 141(b), 211(b), (c))
Section 17. Classes of Directors. The Board of Directors
shall be divided into three classes: Class I, Class II and Class
III, which shall be as nearly equal in number as possible. Each
director shall serve for a term ending on the date of the third
annual meeting of stockholders following the annual meeting at which
the director was elected. Notwithstanding the foregoing provisions
of this Section, each director shall serve until his successor is
duly elected and qualified or until his death, resignation or
removal. (Del. Code Ann., tit. 8, Section 141(d))
<PAGE>
Section 18. Newly Created Directorships and Vacancies. In
the event of any increase or decrease in the authorized number of
directors, the newly created or eliminated directorships resulting
from such increase or decrease shall be apportioned by the Board of
Directors among the three classes of directors so as to maintain such
classes as nearly equal in number as possible. No decrease in the
number of directors constituting the Board of Directors shall shorten
the term of any incumbent director. Newly created directorships
resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled
by the affirmative vote of a majority of the remaining directors then
in office (and not by stockholders), even though less than a quorum
of the authorized Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such
director's successors shall have been elected and qualified.
Section 19. Powers. The powers of the corporation shall be
exercised, its business conducted and its property controlledby the
Board of Directors, except as may be otherwise provided by statute or
by the Certificate of Incorporation (Del. Code Ann., tit. 8, Section
141(a))
Section 20. Resignation. Any director may resign at any time
by delivering his written resignation to the Secretary, such
resignation to specify whether it will be effective at a particular
time, upon receipt by the Secretary or at the pleasure of the Board
of Directors. If no such specification is made, it shall be deemed
effective at the pleasure of the Board of Directors. When one or
more directors shall resign from the Board of Directors, effective at
a future date, a majority of the directors then in office, including
those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each Director so chosen
shall hold office for the unexpired portion of the term of the
director whose place shall be vacated and until his successor shall
have been duly elected and qualified. (Del. Code Ann., tit. 8,
Section 141(b), 223(d))
Section 21. Removal. At a special meeting of stockholders
called for the purpose in the manner hereinabove provided, the Board
of Directors, or any individual director, may be removed from office,
(a) with cause, and one or more new directors may be elected, by a
vote of stockholders holding a majority of the outstanding shares
entitled to vote at an election of Directors or (b), without cause,
by a vote of stockholders holding at least 66.67% of the outstanding
shares entitled to vote at an election of directors. (Del. Code Ann.,
tit. 8, Section 141(k))
Section 22. Meetings.
(a) Annual Meetings. The annual meeting of the Board of
Directors shall be held on the date of the annual meeting of
stockholders and at the place where such meeting is held. No notice
of an annual meeting of the Board of Directors shall be necessary and
<PAGE>
such meeting shall be held for the purpose of electing officers and
transacting such other business as may lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise
provided, regular meetings of the Board of
Directors shall be held in the office of the corporation required to
be maintained pursuant to Section 2 hereof. Unless otherwise
restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors also may be held at any place within or
without the State of Delaware which has been designated by resolution
of the Board of Directors or the written consent of all Directors.
(Del. Code Ann., tit. 8, Section 141(g))
(c) Special Meetings. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of
Directors may be held at any time and place within or without the
State of Delaware whenever called by the Chairman of the Board, the
Chief Executive Officer, the President or a majority of the
Directors. (Del. Code Ann., tit. 8, Section 141(g))
(d) Telephone Meetings. Any member of the Board of
Directors, or of any committee thereof, may participate in a meeting
by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by such means shall
constitute presence in person at such meeting. (Del. Code Ann., tit.
8, Section 141(i))
(e) Notice of Meetings. Written notice of the time and
place of all regular and special meetings of the Board of Directors
shall be given at least one (1) day before the date of the meeting.
Notice of any meeting may be waived in writing at any time before or
after the meeting and will be waived by any director by attendance
thereat, except when the director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully
called or convened. (Del. Code Ann., tit. 8, Section 229)
(f) Waiver of Notice. The transaction of all business at
any meeting of the Board of Directors, or any committee thereof,
however called or noticed, or wherever held, shall be as valid as
though taken at a meeting duly held after regular call and notice, if
a quorum is present and if, either before or after the meeting, each
of the Directors not present sign a written waiver of notice, or a
consent to holding such meeting, or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
(Del. Code Ann., tit. 8, Section 229)
<PAGE>
Section 23. Quorum and Voting.
(a) Quorum. Unless the Certificate of Incorporation
requires a greater number, a quorum of the Board of Directors shall
consist of a majority of the exact number of Directors fixed from
time to time in accordance with Section 16 of these Bylaws, but not
less than one (1); provided, however, at any meeting whether a quorum
is present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by
announcement at the meeting. (Del. Code Ann., tit. 8, Section
141(b))
(b) Majority Vote. At each meeting of the Board of
Directors at which a quorum is present all questions and business
shall be determined by a vote of a majority of the Directors present,
unless a different vote is required by law, the Certificate of
Incorporation or these Bylaws. (Del. Code Ann., tit. 8, Section
141(b))
Section 24. Action without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board of Directors or committee, as
the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of
Directors or committee. (Del. Code Ann., tit. 8, Section 141(f))
Section 25. Fees and Compensation. Directors shall not
receive any stated salary for their services as Directors, but by
resolution of the Board of Directors a fixed fee, with or without
expense of attendance, may be allowed for serving on the Board of
Directors and/or attendance at each meeting and at each meeting of
any committee of the Board of Directors. Nothing herein contained
shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent, consultant,
employee, or otherwise and receiving compensation therefor. (Del.
Code Ann., tit. 8, Section 141(h))
Section 26. Committees.
(a) Executive Committee. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors,
appoint an Executive Committee to consist of one (1) or more members
of the Board of
Directors. The Executive Committee, to the extent permitted by law
and specifically granted by the Board of Directors, shall have and
may exercise when the Board of Directors is not in session all powers
of the Board of Directors in the management of the business and
affairs of the corporation, including, without limitation, the power
and authority to declare a dividend or to authorize the issuance of
stock, except such committee shall not have the power or authority to
amend the Certificate of Incorporation (except that the committee
may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors as provided by law, fix any of the preferences or rights of
<PAGE>
such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or
the exchange of such shares for shares of any other class or classes
or any other series of the same or any other class or classes of
stock of the corporation), to adopt an agreement of merger or
consolidation, to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property
and assets, to recommend to the stockholders a dissolution of the
corporation or a revocation of a dissolution or to amend these
Bylaws. (Del. Code Ann., tit. 8, Section 141(c))
(b) Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, from
time to time appoint such other committees as may be permitted by
law. Such other committees appointed by the Board of Directors shall
consist of one (1) or more members of the Board of Directors, and
shall have such powers and perform such duties as may be prescribed
by the resolution or resolutions creating such committees, but in no
event shall such committee have the powers denied to the Executive
Committee in these Bylaws. (Del. Code Ann., tit. 8, Section 141(c))
(c) Term. Each member of a committee of the Board of
Directors shall serve a term on the committee coexistent with such
member's term on the Board of Directors. The Board of Directors,
subject to the provisions of subsections (a) or (b) of this Section
26, may at any time increase or decrease the number of members of a
committee or terminate the existence of a committee. The membership
of a committee member shall terminate on the date of his death or
voluntary resignation. The Board of Directors may at any time for
any reason remove any individual committee member and
the Board of Directors may fill any committee vacancy created by
death, resignation, removal or increase in the number of members of
the committee. The Board of Directors may designate one or more
Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee, and,
in addition, in the absence or disqualification of any member of a
committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member. (Del. Code Ann., tit. 8, Section 141(c))
(d) Meetings. Unless the Board of Directors shall
otherwise provide, regular meetings of the Executive Committee or any
other committee appointed pursuant to this Section 26 shall be held
at such times and places as are determined by the Board of Directors,
or by any such committee, and when notice thereof has been given to
each member of such committee, no further notice of such regular
meetings need be given thereafter. Special meetings of any such
committee may be held at the principal office of the corporation
required to be maintained pursuant to Section 2 hereof, or at any
place which has been designated from time to time by resolution of
such committee or by written consent of all members thereof, and may
be called by any director who is a member of such committee, upon
written notice to the members of such committee of the time and place
<PAGE>
of such special meeting given in the manner provided for the giving
of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of
any special meeting of any committee may be waived in writing at any
time before or after the meeting and will be waived by any director
by attendance thereat, except when the director attends such special
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is
not lawfully called or convened. A majority of the authorized number
of members of any such committee shall constitute a quorum for the
transaction of business, and the act of a majority of those present
at any meeting at which a quorum is present shall be the act of such
committee. (Del. Code Ann., tit. 8, Section 141(c), 229)
Section 27. Organization. At every meeting of the directors,
the Chairman of the Board, or, if the Chairman of the Board is
absent, the Chief Executive
Officer, or if the Chief Executive Officer is absent, the President,
or if the President is absent, the most senior Vice President, or, in
the absence of any such officer, a chairman of the meeting chosen by
a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to
do so by the Chief Executive Officer, shall act as secretary of the
meeting.
ARTICLE V
Officers
Section 28. Officers Designated. The officers of the
corporation shall be the Chairman of the Board, the Chief Executive
Officer, the President and Chief Operating Officer, one or more Vice
Presidents, the Chief Financial Officer and the Secretary, all of
whom shall be elected at the annual meeting of the Board of
Directors. The Board of Directors also may appoint such other
officers and agents with such powers and duties as it shall deem
necessary. The order of the seniority of the Vice Presidents shall be
in the order of their nomination, unless otherwise determined by the
Board of Directors. The Board of Directors may assign such
additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the
corporation at any one time unless specifically prohibited therefrom
by law. The salaries and other compensation of the officers of the
corporation shall be fixed by or in the manner designated by the
Board of Directors.
Section 29. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the
pleasure of the Board of Directors and until their successors shall
have been duly elected and qualified, unless sooner removed. Any
officer elected or appointed by the Board of Directors may be removed
at any time by the Board of Directors. If the office of any officer
becomes vacant for any reason, the vacancy may be filled by the Board
of Directors.
<PAGE>
(b) Duties of Chairman of the Board. The Chairman of the
Board, subject to the control of the Board of Directors, shall
perform such duties and functions as are necessary to further the
strategic direction of the corporation. Unless the Board of
Directors designates another person, the Chairman of the
Board shall preside at all meetings of the stockholders, the Board of
Directors and of the Executive Committee.
(c) Duties of Chief Executive Officer. The Chief
Executive Officer, at the request of the Chairman of the Board or
upon his absence or disability, or in the event of a vacancy in the
office of Chairman of the Board, shall exercise all the powers of
Chairman of the Board as provided in Subsection 29(b). The Chief
Executive Officer shall, subject to the control of the Board of
Directors, exercise general management and supervision over the
property, affairs and business of the corporation and shall authorize
officers of the corporation, other than the Chairman of the Board, to
exercise such powers as he, in his discretion, may deem to be in the
best interests of the corporation. The Chief Executive Officer shall
in general perform all duties incident to general management and
supervision of the corporation and such other duties as the Board of
Directors shall designate from time to time.
(d) Duties of President and Chief Operating Officer. The
President and Chief Operating Officer, at the request of the Chief
Executive Officer or upon his absence or disability, or in the event
of a vacancy in the office of Chief Executive Officer, shall exercise
all the powers of Chief Executive Officer as provided in Subsection
29(c). The President and Chief Operating Officer shall, subject to
the control of the Chief Executive Officer and the Board of
Directors, exercise general management and supervision over the
operating functions of the corporation, and shall authorize officers
of the corporation, other than the Chairman of the Board and the
Chief Executive Officer, to exercise such powers with respect to the
operating function of the corporation as he, in his discretion, may
deem to be in the best interests of the corporation. The President
and Chief Operating Officer shall perform such other duties and have
such other powers as the Board of Directors shall designate from time
to time.
(e) Duties of Vice Presidents. The Vice Presidents, in
the order of their seniority, may assume and perform the duties of
the President and Chief Operating Officer in the absence or
disability of the Chief Executive Officer and the President and Chief
Operating Officer or whenever the offices of Chief Operating Officer
and President and Chief Operating Officer are vacant. The Vice
Presidents shall perform other duties commonly incident to their
office and also shall perform such other duties and have such other
<PAGE>
powers as the Board of Directors, the Chief Executive Officer, or the
President and Chief Operating Officer shall designate from time to
time.
(f) Duties of Chief Financial Officer. The Chief
Financial Officer shall keep or cause to be kept the books of account
of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form
and as often as required by the Board of Directors or the Chief
Executive Officer. The Chief Financial Officer, subject to the order
of the Board of Directors, shall have the custody of all funds and
securities of the corporation. The Chief Financial Officer shall
perform other duties commonly incident to his office and also shall
perform such other duties and have such other powers as the Board of
Directors or the Chief Executive Officer shall designate from time to
time. The Chief Executive Officer may direct any Assistant Chief
Financial Officer to assume and perform the duties of the Chief
Financial Officer in the absence or disability of the Chief Financial
Officer, and each Assistant Chief Financial Officer shall perform
other duties commonly incident to his office and also shall perform
such other duties and have such other powers as the Board of
Directors or the Chief Executive Officer shall designate from time to
time.
(g) Duties of Secretary. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall
record all acts and proceedings thereof in the minute books of the
corporation. The Secretary shall give notice in conformity with
these Bylaws of all meetings of the stockholders, and of all meetings
of the Board of Directors and any committee thereof requiring notice.
The Secretary shall perform all other duties given him in these
Bylaws and other duties commonly incident to his office and also
shall perform such other duties and have such other powers as the
Board of Directors shall designate from time to time. The Chief
Executive Officer may direct any Assistant Secretary to assume and
perform the duties of the Secretary in the absence or disability of
the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and also shall perform such
other duties and have such other powers as the Board of Directors or
the Chief Executive Officer shall designate from time to time.
Section 30. Resignations. Any officer may resign at any time
by giving written notice to the Board of Directors or to the Chief
Executive Officer or to the
President or to the Secretary. Any such resignation shall be
effective when received by the person or persons to whom such notice
is given, unless a later time is specified therein, in which event
the resignation shall become effective at such later time. Unless
otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. (Del. Code
Ann., tit. 8, Section 142(b))
Section 31. Removal. Any officer may be removed from office
at any time, with or without cause, by the vote or written consent of
a majority of the directors in office at the time, or by any
<PAGE>
committee or superior officers upon whom such power of removal may
have been conferred by the Board of Directors.
Section 32. Compensation. The compensation of the officers
shall be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving such compensation by reason
of the fact that such officer is also a director of the corporation.
ARTICLE VI
Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation
Section 33. Execution of Corporate Instruments. The Board of
Directors may, in its discretion, determine the method and designate
the signatory officer or officers, or other person or persons, to
execute on behalf of the corporation any corporate instrument or
document, or to sign on behalf of the corporation the corporate name
without limitation, or to enter into contracts on behalf of the
corporation, except where otherwise provided by law or these Bylaws,
and such execution or signature shall be binding upon the
corporation. (Del. Code Ann., tit. 8, Section 103(a), 142(a), 158)
Unless otherwise specifically determined by the Board
of Directors or otherwise required by law, promissory notes, deeds of
trust, mortgages and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring
the corporate seal, and certificates of shares of stock owned by the
corporation, shall be executed, signed or endorsed by the Chairman of
the Board, or the Chief Executive Officer, or the President or any
Vice President, and by the Secretary or Treasurer or any Assistant
Secretary or Assistant Treasurer. All other
instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such
other manner as may be directed by the Board of Directors. (Del. Code
Ann., tit. 8, Section 103(a), 142(a), 158)
All checks and drafts drawn on banks or other
depositaries on funds to the credit of the corporation or in special
accounts of the corporation shall be signed by such person or persons
as the Board of Directors shall authorize so to do. (Del. Code Ann.,
tit. 8, Section 103(a), 142(a), 158)
Section 34. Voting of Securities Owned by the Corporation.
All stock and other securities of other corporations owned or held by
the corporation for itself, or for other parties in any capacity,
shall be voted, and all proxies with respect thereto shall be
executed, by the person authorized to do so by resolution of the
Board of Directors, or, in the absence of such authorization, by the
Chairman of the Board, the Chief Executive Officer, the President, or
any Vice President. (Del. Code Ann., tit. 8, Section 123)
<PAGE>
ARTICLE VII
Shares of Stock
Section 35. Form and Execution of Certificates. The shares
of the corporation shall be represented by certificates, provided
that the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate
until such certificate is surrendered to the corporation.
Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and upon
request every holder of uncertificated shares shall be entitled to
have a certificate signed by, or in the name of the corporation by,
the Chairman of the Board or any vice-chairman of the Board of
Directors, or the Chief Executive Officer, or the President or any
Vice-President, and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the corporation
representing the number of shares registered in certificate form.
Any or all the signatures on the certificate may be a facsimile. In
case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue. (Del.
Code Ann., tit. 8, Section 158)
Section 36. Lost Certificates. The corporation may issue a
new certificate of stock or uncertificated shares in place of any
certificate theretofore issued by the corporation alleged to have
been lost, stolen or destroyed, and the corporation may require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the
corporation on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate or
uncertificated shares. (Del. Code Ann., tit. 8, Section 167)
Section 37. Transfers. Transfers of record of shares of
stock of the corporation shall be made only upon its books by the
holders thereof, in person or by attorney duly authorized, and upon
the surrender of a properly endorsed certificate or certificates for
a like number of shares. (Del. Code Ann., tit. 6, Section 8-401(1))
Section 38. Fixing Record Dates. In order that the
corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action. If no record date is
fixed: (a) the record date for determining stockholders entitled to
<PAGE>
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held; and (b) the
record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting. (Del. Code Ann., tit. 8,
Section 213)
Section 39. Registered Stockholders. The corporation shall
be entitled to recognize the exclusive right of a person registered
on its books as the owner of shares to receive dividends, and to vote
as such owner, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any
other person whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware. (Del.
Code Ann., tit. 8, Section 213(a), 219)
Section 40. Issuance, Transfer and Resignation of Shares.
The Board of Directors may make such rules and regulations, not
inconsistent with law or with these Bylaws, as it may deem advisable
concerning the issuance, transfer and registration of certificates
for shares of the capital stock of the corporation. The Board of
Directors may appoint a transfer agent or registrar of transfers, or
both, and may require all certificates for shares of the corporation
to bear the signature of either or both.
ARTICLE VIII
Other Securities of the Corporation
Section 41. Execution of Other Securities. All bonds,
debentures and other corporate securities of the corporation, other
than stock certificates, may be signed by the Chairman of the Board,
the Chief Executive Officer, the President or any Vice President, or
such other person as may be authorized by the Board of Directors, and
the corporate seal impressed thereon or a facsimile of such seal
imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer;
provided, however, that where any such bond, debenture or other
corporate security shall be authenticated by the manual signature of
a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the
persons signing and attesting the corporate seal on such bond,
debenture or other corporate security may be the imprinted facsimile
of the signatures of such persons. Interest coupons appertaining to any such
<PAGE>
bond, debenture or other corporate security, authenticated by a
trustee as aforesaid, shall be signed
by the Treasurer or an Assistant Treasurer of the corporation or such
other person as may be authorized by the Board of Directors, or bear
imprinted thereon the facsimile signature of such person. In case
any officer who shall have signed or attested any bond, debenture or
other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such
officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or
other corporate security nevertheless may be adopted by the
corporation and issued and delivered as though the person who signed
the same or whose facsimile signature shall have been used thereon
had not ceased to be such officer of the corporation.
ARTICLE IX
Dividends
Section 42. Declaration of Dividends. Dividends upon the
capital stock of the corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Certificate of
Incorporation. (Del. Code Ann., tit. 8, Section 170, 173)
Section 43. Dividend Reserve. Before payment of any
dividend, there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the Board of Directors
may from time to time, in its absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors
shall think conducive to the interests of the corporation, and the
Board of Directors may modify or abolish any such reserve in the
manner in which it was created. (Del. Code Ann., tit. 8, Section 171)
<PAGE>
ARTICLE X
Fiscal Year
Section 44. Fiscal Year. Unless otherwise fixed by
resolution of the Board of Directors, effective as of January 1,
1992, the fiscal year of the corporation shall end on the 31st day of
the month of December in each calendar year.
ARTICLE XI
Indemnification of Directors, Officers
Employees and Other Agents
Section 45. Indemnification of Directors, Officers,
Employees and Other Agents.
(a) Directors and Officers. The corporation shall
indemnify its directors and officers to the full extent permitted by
the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the corporation to provide
broader indemnification rights than said Law permitted the
corporation to provide prior to such amendment); provided, further,
that the corporation shall not be required to indemnify any director
or officer in connection with any proceeding (or part thereof)
initiated by such person or any proceeding by such person against the
corporation or its directors, officers, employees or other agents
unless (i) such indemnification is expressly required to be made by
law, (ii) the proceeding was authorized by the Board of Directors of
the corporation or (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in
the corporation under the Delaware General Corporation Law, or (iv)
such indemnification is required to be made under subsection (d) of
this Article XI.
(b) Other Employees and Other Agents. The corporation
shall have the power to indemnify its other employees and other
agents as set forth in the Delaware General Corporation Law.
(c) Expenses. The corporation shall advance to any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the
fact that he is or was a director or officer of the
corporation, or is or was serving at the request of the corporation
as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of
any such proceeding, promptly following request therefor, all
expenses incurred by any director or officer in connection with such
proceeding upon receipt of any undertaking by or on behalf of such
person to repay said amounts if it should be determined ultimately
that such person is not entitled to be indemnified under this Bylaw
or otherwise.
Notwithstanding the foregoing, unless otherwise determined
pursuant to paragraph (d) of this Bylaw, no advance shall be made by
the corporation to an officer of the corporation in any action, suit
or proceeding, whether civil, criminal, administrative or
investigate, if a determination is reasonably and promptly made (1)
by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to the proceeding, or (2) if such
quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a
<PAGE>
written opinion that, the facts known to the decision-making party at
the time such determination is made demonstrate clearly and
convincingly that such person acted in bad faith or in a manner that
such person did not reasonably believe to be in or not opposed to the
best interests of the corporation, or, with respect to any criminal
action or proceeding, such person believed or had reasonable cause to
believe his conduct was unlawful, except by reason of the fact that
such officer is or was a director of the corporation or is or was
serving at the request of the corporation as a director of another
corporation, joint venture, trust or other enterprise in which event
this paragraph shall not apply.
(d) Enforcement. Without the necessity of entering into an
express contract, all rights to indemnification and advances under
this Bylaw shall be deemed to be contractual rights and be effective
to the same extent and as if provided for in a contract between the
corporation and the director or officer who serves in such capacity
at any time while this Bylaw and other relevant provisions of the
Delaware General Corporation Law and other applicable law, if any,
are in effect. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on
behalf of the person holding such right in any court of competent
jurisdiction if (i) the claim for
indemnification or advances is denied, in whole or in part, or (ii)
no disposition of such claim is made within ninety (90) days of
request therefor. The claimant in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the
expense of prosecuting his claim. In connection with any claim for
indemnification, the corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the
standards of conduct which make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an officer
of the corporation (except in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the
fact that such officer is or was a director of the corporation or is
or was serving at the request of the corporation as a director of
another corporation, partnership, joint venture, trust or other
enterprise) for advances, the corporation shall be entitled to raise
a defense as to any such action clear and convincing evidence that
such person acted in bad faith or in a manner that such person did
not reasonably believe to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, such person believed or had reasonable cause to believe
his conduct was unlawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement
of such action that indemnification of the claimant is proper in the
circumstances because he has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that claimant has not met the
applicable standard of conduct. In any suit brought by a director or
<PAGE>
officer to enforce a right to indemnification or to an advancement of
expenses hereunder, the burden of proving that the director or
officer is not entitled to be indemnified, or to such advancement of
expenses, under this Article XI or otherwise shall be on the
corporation.
(e) Non-Exclusivity of Rights. The rights conferred on
any person by this Bylaw shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding office. The corporation is specifically authorized to
enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and
advances, as provided by law.
(f) Survival of Rights. The rights conferred on any
person by this Bylaw shall continue as to a person who has ceased to
be a director, officer, employee or other agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(g) Insurance. To the fullest extent permitted by the
Delaware General Corporation Law, the corporation, upon approval by
the Board of Directors, may purchase insurance on behalf of any
person required or permitted to be indemnified pursuant to this
Bylaw.
(h) Amendments. Any repeal or modification of this Bylaw
shall only be prospective and shall not affect the rights under this
Bylaw in effect at the time of the alleged occurrence of any action
or omission to act that is the cause of any proceeding against any
agent of the corporation.
(i) Savings Clause. If this Bylaw or any portion hereof
shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each
director and officer to the full extent permitted by any applicable
portion of this Bylaw that shall not have been invalidated, or by any
other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw,
the following definitions shall apply:
(i) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation,
preparation, prosecution, defense, settlement, arbitration
and appeal of, and the giving of testimony in, any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative.
<PAGE>
(ii) The term "expenses" shall be broadly construed
and shall include, without limitation, court costs,
attorneys' fees,
witness fees, fines, amounts paid in settlement or judgment
and any other costs and expenses of any nature or kind
incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position
under the provisions of this Bylaw with respect to the
resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate
existence had continued.
(iv) References to a "director," "officer,"
"employee," or "agent" of the corporation shall include,
without limitation, situations where such person is serving
at the request of the corporation as, respectively, a
director, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust or other
enterprise.
(v) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an
employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of
<PAGE>
the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed
to the best interests of the corporation" as referred to in
this Bylaw.
ARTICLE XII
Notices
Section 46. Notices.
(a) Notice to Stockholders. Whenever under any provisions
of these Bylaws notice is required to be given to any stockholder, it
shall be given in writing, timely and duly deposited in the United
States mail, postage prepaid, and addressed to his last known post
office address as shown by the stock record of the corporation or its
transfer agent. (Del. Code Ann., tit. 8, Section 222)
(b) Notice to Directors. Any notice required to be given
to any director may be given by the method stated in subsection (a),
or by telegram, except that such notice other than one which is
delivered personally shall be sent to such address as such director
shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.
(c) Address Unknown. If no address of a stockholder or
director be known, notice may be sent to the office of the
corporation required to be maintained pursuant to Section 2 hereof.
(d) Affidavit of Mailing. An affidavit of mailing,
executed by a duly authorized and competent employee of the
corporation or its transfer agent appointed with respect to the class
of stock affected, specifying the name and address or the names and
addresses of the stockholder or stockholders, or director or
directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence
of the statements therein contained. (Del. Code Ann., tit. 8,
Section 222)
(e) Time Notices Deemed Given. All notices given by mail,
as above provided, shall be deemed to have been given as at the time
of mailing and all
<PAGE>
notices given by telegram shall be deemed to have been given as at
the sending time recorded by the telegraph company transmitting the
notices.
(f) Methods of Notice. It shall not be necessary that the
same method of giving notice be employed in respect of all directors,
but one permissible method may be employed in respect of any one or
more, and any other permissible method or methods may be employed in
respect of any other or others.
(g) Failure to Receive Notice. The period or limitation
of time within which any stockholder may exercise any option or
right, or enjoy any privilege or benefit, or be required to act, or
within which any director may exercise any power or right, or enjoy
any privilege, pursuant to any notice sent him in the manner above
provided, shall not be affected or extended in any manner by the
failure of such stockholder or such director to receive such notice.
(h) Notice to Person with Whom Communication Is Unlawful.
Whenever notice is required to be given, under any provision of law
or of the Certificate of Incorporation or Bylaws of the corporation,
to any person with whom communication is unlawful, the giving of such
notice to such person shall not be required and there shall be no
duty to apply to any governmental authority or agency for a license
or permit to give such notice to such person. Any action or meeting
which shall be taken or held without notice to any such person with
whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action
taken by the corporation is such as to require the filing of a
certificate under any provision of the Delaware General Corporation
Law, the certificate shall state, if such is the fact and if notice
is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
(Del. Code Ann., tit. 8, Section 230)
ARTICLE XIII
Amendments
Section 47. Amendments. These Bylaws may be repealed,
altered or amended or new Bylaws adopted by the stockholders. The
Board of Directors also shall have the authority, if such authority
is conferred upon the Board of Directors by the Certificate of
Incorporation, to repeal, alter or amend these Bylaws or adopt new
Bylaws (including, without limitation, the amendment of any Bylaw
setting forth the number of directors who shall constitute the whole
Board of Directors) subject to the power of the stockholders to
change or repeal such Bylaws and provided that the Board of Directors
shall not make or alter any Bylaws fixing the qualifications,
classifications, term of office or compensation of directors. (Del.
Code Ann., tit. 8, Section 109(a), 122(6))
ARTICLE XIV
Loans of Officers and Others
Section 48. Certain Corporate Loans and Guaranties. The
corporation may make loans of money or property to, or guarantee the
obligations of, or otherwise assist any officer or other employee who
is a director of the corporation or its parent or any subsidiary, or
adopt an employee benefit plan or plans authorizing such loans or
guaranties, upon the approval of the Board of Directors alone if the
Board of Directors determines that such a loan or guaranty or plan
may reasonably be expected to benefit the corporation.
EXHIBIT 10.1
AMGEN INC.
AMENDED AND RESTATED 1991 EQUITY INCENTIVE PLAN
1. PURPOSE.
(a) The purpose of the Amended and Restated 1991 Equity
Incentive Plan (the "Plan") is to provide a means by which employees
of and consultants to Amgen Inc., a Delaware corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts created for the benefit of
their families, may be given an opportunity to benefit from increases
in value of the stock of the Company through the granting of (i)
incentive stock options, (ii) nonqualified stock options, (iii) stock
bonuses, and (iv) rights to purchase restricted stock, all as defined
below.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now employed by or serving as consultants to the
Company, to secure and retain the services of persons capable of
filling such positions, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.
(d) The Company intends that the rights issued under the
Plan ("Stock Awards") shall, in the discretion of the Board of
Directors of the Company (the "Board") or any committee to which
responsibility for administration of the Plan has been delegated
pursuant to subparagraph 2(c), be either (i) stock options granted
pursuant to paragraph 5 hereof, including incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock
Options"), or options which do not qualify as Incentive Stock Options
("Nonqualified Stock Options") (together hereinafter referred to as
"Options"), or (ii) stock bonuses or rights to purchase restricted
stock granted pursuant to paragraph 6 hereof.
(e) The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee or consultant, his or
her spouse, or members of their immediate family. The word optionee
shall mean the person to whom the option is granted or the employee
or consultant for whose benefit the option is granted to a Trust, as
the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when
and how Stock Awards shall be granted; whether a Stock Award will be
an Incentive Stock Option, a Nonqualified Stock Option, a stock
bonus, a right to purchase restricted stock, or a combination of the
foregoing; the provisions of each Stock Award granted (which need not
be identical), including the time or times when a person shall be
<PAGE>
permitted to purchase or receive stock pursuant to a Stock Award; and
the number of shares with respect to which Stock Awards shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan or in any Stock Award, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 13.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members of the Board
(the "Committee"), all of the members of which Committee shall be
disinterested persons and outside directors, if required and as
defined by the provisions of subparagraphs 2(d) and 2(e). If
administration is delegated to a Committee, the Committee shall have,
in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board.
(d) The term "disinterested person", as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has
been delegated pursuant to subparagraph 2(c): (i) who is not at the
time he or she exercises discretion in administering the Plan
eligible and has not at any time within one (1) year prior thereto
been eligible for selection as a person to whom Stock Awards may be
granted pursuant to the Plan or any other plan of the Company or any
of its affiliates entitling the participants therein to acquire
equity securities of the Company or any of its affiliates; or (ii)
who is otherwise considered to be a "disinterested person" in
accordance with the rules, regulations or interpretations of the
Securities and Exchange Commission. Any such person shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
from time to time in effect.
(e) The term "outside director," as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c), who is
considered to be an "outside director" in accordance with the rules,
regulations or interpretations of Section 162(m) of the Code.
(f) Any requirement that an administrator of the Plan be a
"disinterested person" or "outside director" shall not apply if the
Board or the Committee expressly declares that such requirement shall
not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 11 relating to
adjustments upon changes in stock, the stock that may be issued
pursuant to Stock Awards granted under the Plan shall not exceed in
the aggregate Forty Eight Million (48,000,000) shares of the
Company's $.0001 par value common stock (the "Common Stock"). If any
<PAGE>
Stock Award granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the Common
Stock not purchased under such Stock Award shall again become
available for the Plan. Shares repurchased by the Company pursuant
to any repurchase rights reserved by the Company pursuant to the Plan
shall not be available for subsequent issuance under the Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined at the time the Incentive Stock Option is granted)
of the Common Stock with respect to which incentive stock options (as
defined by the Code) are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). If it is determined that an entire Option or any portion
thereof does not qualify fortreatment as an Incentive Stock Option by
reason of exceeding such maximum, such Option or the applicable
portion shall be considered a Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees (including officers) of the Company or its Affiliates. A
director of the Company shall not be eligible to receive Incentive
Stock Options unless such director is also an employee of the Company
or any Affiliate. Stock Awards other than Incentive Stock Options
may be granted only to employees (including officers) of or
consultants to the Company or any Affiliate or to Trusts of any such
employee or consultant. A director of the Company shall not be
eligible to receive such Stock Awards unless such director is also an
employee of or a consultant to the Company or any Affiliate.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as a person
to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to a
director: (i) a majority of the Board and a majority of the
directors acting in such matter are disinterested persons, as defined
in subparagraph 2(d); (ii) the Committee consists solely of
"disinterested persons" as defined in subparagraph 2(d); or (iii) the
Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
The Board shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
Notwithstanding the foregoing, the restrictions set forth in this
subparagraph 4(b) shall not apply if the Board or Committee expressly
declares that such restrictions shall not apply.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
persons owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
<PAGE>
Incentive Stock Option is not exercisable after the expiration of
five (5) years from the date of grant.
(d) Stock Awards shall be limited to a maximum of 250,000
shares of Common Stock per person per calendar year.
5. TERMS OF STOCK OPTIONS.
Each Option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option and
each Nonqualified Stock Option shall be not less than one hundred
percent (100%) of the fair market value of the Common Stock subject
to the Option on the date the Option is granted.
(c) The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either: (i) in cash at the time the Option
is exercised; or (ii) at the discretion of the Board or the
Committee, either at the time of grant or exercise of the Option (A)
by delivery to the Company of shares of Common Stock of the Company
that have been held for the period required to avoid a charge to the
Company's reported earnings and valued at the fair market value on
the date of exercise, (B) according to a deferred payment or other
arrangement with the person to whom the Option is granted or to whom
the Option is transferred pursuant to subparagraph 5(d), or (C) in
any other form of legal consideration that may be acceptable to the
Board or the Committee in their discretion.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred payment
arrangement.
(d) An Option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the Option was granted, have all the
rights that such person has while living, including the right to
exercise the Option. In the absence of such designation, after the
death of the person to whom the Option is granted, the Option shall
be exercisable by the person or persons to whom the optionee's rights
under such Option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an Option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which
<PAGE>
the Option was not fully exercised. During the remainder of the term
of the Option (if its term extends beyond the end of the installment
periods), the Option may be exercised from time to time with respect
to any shares then remaining subject to the Option. The provisions
of this subparagraph 5(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to
whom an Option is transferred under subparagraph 5(d), as a condition
of exercising any such Option: (i) to give written assurances
satisfactory to the Company as to the optionee's knowledge and
experience in financial and business matters and/or to employ a
purchaser representative who has such knowledge and experience in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser's representative,
the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the Option for such
person's own account and not with any present intention of selling or
otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative
if: (x) the issuance of the shares upon the exercise of the Option
has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"); or (y) as to any particular requirement, a
determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then
applicable securities law.
(g) An Option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate, unless: (i)
such termination is due to such person's permanent and total dis-
ability, within the meaning of Section 422(c)(6) of the Code, in
which case the Option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination
of employment or relationship as a consultant or director; (ii) the
optionee dies while in the employ of or while serving as a consultant
or director to the Company or an Affiliate, or within not more than
three (3) months after termination of such employment or relationship
as a consultant or director, in which case the Option may, but need
not, provide that it may be exercised at any time within eighteen
(18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such Option pass by will
or by the laws of descent and distribution; or (iii) the Option by
its term specifies either (A) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or
relationship as a consultant or director with the Company or an
Affiliate; or (B) that it may be exercised more than three (3) months
after termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any
Option or to permit anyone to exercise the Option after expiration of
its term, nor shall it be construed to increase the number of shares
as to which any Option is exercisable from the amount exercisable on
the date of termination of the optionee's employment or relationship
as a consultant or director.
(h) The Option may, but need not, include a provision
<PAGE>
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant or director with the
Company or any Affiliate to exercise the Option as to any part or all
of the shares subject to the Option prior to the stated vesting dates
of the Option. Any shares so purchased from any unvested installment
or Option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee
determines to be appropriate.
(i) To the extent provided by the terms of an Option, each
optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold from the
shares of the Common Stock otherwise issuable to the optionee as a
result of the exercise of the Option a number of shares having a fair
market value less than or equal to the amount of the withholding tax
obligation; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement a provision entitling the
optionee to a further Option (a "Re-Load Option") in the event the
optionee exercises the Option evidenced by the Option agreement, in
whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (ii) shall have an expiration date
which is the same as the expiration date of the Option the exercise
of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the
fair market value of the Common Stock subject to the Re-Load Option
on the date of exercise of the original Option or, in the case of a
Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as defined in subparagraph 4(c)), shall
have an exercise price which is equal to one hundred and ten percent
(110%) of the fair market value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, provided however, that
the designation of any Re-Load Option as an Incentive Stock Option
shall be subject to the one hundred thousand dollars ($100,000)
annual limitation on exercisability of Incentive Stock Options
described in subparagraph 3(c) of the Plan and in Section 422(d) of
the Code. There shall be no Re-Load Options on a Re-Load Option.
Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 3(a) and shall be subject to
such other terms and conditions as the Board or Committee may
determine.
6. TERMS OF STOCK BONUSES AND PURCHASES OF
RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as
<PAGE>
the Board or the Committee shall deem appropriate. The terms and
conditions of stock bonus or restricted stock purchase agreements may
change from time to time, and the terms and conditions of separate
agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement
shall be such amount as the Board or Committee shall determine and
designate in such agreement. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in
the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or
for its benefit.
(b) No rights under a stock bonus or restricted stock
purchase agreement shall be assignable by any participant under the
Plan, either voluntarily or by operation of law, except where such
assignment is required by law or expressly authorized by the terms of
the applicable stock bonus or restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the
Committee, according to a deferred payment or other arrangement with
the person to whom the Common Stock is sold; or (iii) in any other
form of legal consideration that may be acceptable to the Board or
the Committee in their discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has
been delegated may award Common Stock pursuant to a stock bonus
agreement in consideration for past services actually rendered to the
Company or for its benefit.
(d) Shares of Common Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the
Board or the Committee.
(e) In the event a person ceases to be an employee of or
ceases to serve as a consultant to the Company or an Affiliate, the
Company may repurchase or otherwise reacquire any or all of the
shares of Common Stock held by that person which have not vested as
of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such
person.
7. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
affected holders of Options, (i) the repricing of any outstanding
Options under the Plan and/or (ii) the cancellation of any
outstanding Options under the Plan and the grant in substitution
therefor of new Options under the Plan covering the same or different
numbers of shares of Common Stock, but having an exercise price per
share not less than one hundred percent (100%) of the fair market
value per share of Common Stock on the new grant date or, in the case
of a 10% stockholder (as defined in subparagraph 4(c)), not less than
one hundred and ten percent (110%) of the fair market value per share
of Common Stock on the new grant date.
<PAGE>
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards granted under the
Plan, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards up to
the number of shares of Common Stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of Common Stock under the
Stock Awards granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any Stock Award granted under the
Plan or any Common Stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Stock Awards unless and until such
authority is obtained.
9. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to Stock
Awards granted under the Plan shall constitute general funds of the
Company.
10. MISCELLANEOUS.
(a) The Board or Committee shall have the power to
accelerate the time during which a Stock Award may be exercised or
the time during which a Stock Award or any part thereof will vest,
notwithstanding the provisions in the Stock Award stating the time
during which it may be exercised or the time during which it will
vest. Each Option providing for vesting pursuant to subparagraph
5(e) shall also provide that if the employee's employment or
consultant's affiliation with the Company is terminated by reason of
death or disability (within the meaning of Title II or XVI of the
Social Security Act and as determined by the Social Security
Administration), the vesting schedule of Options granted to such
employee or consultant or to the Trusts of such employee or
consultant shall be accelerated by twelve months for each full year
the employee has been employed by or the consultant has been
affiliated with the Company. Options granted under the Plan that are
outstanding on February 25, 1992, shall be amended to include the
accelerated vesting upon death provided for in the preceding sentence
of this paragraph 10(a) and Options granted under the Plan that are
outstanding on June 18, 1996, shall be amended to include the
accelerated vesting upon disability provided for in the preceding
sentence of this paragraph 10(a).
(b) Neither an optionee nor any person to whom an Option
is transferred under the provisions of the Plan shall be deemed to be
the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Option unless and until such person
has satisfied all requirements for exercise of the Option pursuant to
its terms.
(c) Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall confer upon any eligible
employee, consultant, director, optionee or holder of Stock Awards
under the Plan any right to continue in the employ of the Company or
any Affiliate or to continue acting as a consultant or director or
shall affect the right of the Company or any Affiliate to terminate
<PAGE>
the employment or consulting relationship or directorship of any
eligible employee, consultant, director, optionee or holder of Stock
Awards under the Plan with or without cause. In the event that a
holder of Stock Awards under the Plan is permitted or otherwise
entitled to take a leave of absence, the Company shall have the
unilateral right to (i) determine whether such leave of absence will
be treated as a termination of employment or relationship as
consultant or director for purposes hereof, and (ii) suspend or
otherwise delay the time or times at which exercisability or vesting
would otherwise occur with respect to any outstanding Stock Awards
under the Plan.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
If any change is made in the Common Stock subject to the
Plan, or subject to any Stock Award granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or otherwise), the Plan and outstanding
Stock Awards will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan, the maximum number of
shares which may be granted to a participant in a calendar year, and
the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards.
12. CHANGE OF CONTROL.
(a) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
Stock Awards become vested shall automatically be accelerated so that
the unvested portions of all Stock Awards shall be vested prior to
the Change in Control and (ii) the time during which the Options may
be exercised shall automatically be accelerated to prior to the
Change in Control. Following the acceleration of the vesting and
exercise periods, at the election of the holder of the Stock Award,
the Stock Award may be: (x) exercised (with respect to Options) or,
if the surviving or acquiring corporation agrees to assume the Stock
Awards or substitute similar stock awards, (y) assumed; or (z)
replaced with substitute stock awards. Options not exercised,
substituted or assumed prior to or upon the Change in Control shall
be terminated.
(b) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this
purpose, the Company or its affiliates, or any employee benefit plan
of the Company or its affiliates which acquires beneficial ownership
of voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) At the time individuals who, as of April 2,
1991, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
<PAGE>
any person becoming a director subsequent to April 2, 1991, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of theIncumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
13. QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Anything in the Plan to the contrary notwithstanding,
rights under Stock Awards may be assigned to an Alternate Payee to
the extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in subsection (c) below.) The assignment of a
Stock Award to an Alternate Payee pursuant to a QDRO shall not be
treated as having caused a new grant. The transfer of an Incentive
Stock Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If a Stock Award is assigned
to an Alternate Payee, the Alternate Payee generally has the same
rights as the grantee under the terms of the Plan; provided however,
that (1) the Stock Award shall be subject to the same vesting terms
and exercise period as if the Stock Award were still held by the
grantee, (2) an Alternate Payee may not transfer a Stock Award and
(3) an Alternate Payee is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of a Stock Award, transfer of the
proceeds of the exercise of such Stock Award, whether in the form of
cash, stock or other property, may be suspended. Such proceeds shall
thereafter be transferred pursuant to the terms of a QDRO or other
agreement between the grantee and Alternate Payee. A grantee's
ability to exercise a Stock Award may be barred if the Plan
administrator receives a court order directing the Plan administrator
not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted a Stock Award to an interest in such Stock Award relating to
marital property rights or support obligations and (2) that the
administrator of the Plan determines would be a "qualified domestic
relations order," as that term is defined in section 414(p) of the
Code and section 206(d) of the Employee Retirement Income Security
<PAGE>
Act ("ERISA"), but for the fact that the Plan is not a plan described
in section 3(3) of ERISA.
14. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 11 relating
to adjustments upon changes in the Common Stock, no amendment shall
be effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for Stock
Awards under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan to the extent such modification requires
stockholder approval in order for the Plan to satisfy the
requirements of Section 422(b) of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act; or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422(b) of the Code or to comply
with the requirements of Rule 16b-3 promulgated under the Exchange
Act.
(b) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to
provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee Incentive Stock Options
and/or to bring the Plan and/or Options granted under it into
compliance therewith.
(c) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be altered or impaired by any
amendment of the Plan, unless: (i) the Company requests the consent
of the person to whom the Stock Award was granted; and (ii) such
person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on December
31, 2000. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Awards granted
while the Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except with the consent of the
person to whom the Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no Stock Awards granted under the Plan shall be exercisable
unless and until the Plan has been approved by the stockholders of
the Company and, if required, an appropriate permit has been issued
by the Commissioner of Corporations of the State of California.
EXHIBIT 10.14
AMGEN INC.
AMENDED AND RESTATED 1988 STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which
selected employees and directors (if declared eligible under
paragraph 4) of and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts for the benefit of their
families, may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now holding positions, to secure and retain the
services of persons capable of filling such positions, and to provide
incentives for such persons to exert maximum efforts for the success
of the Company.
(d) The Company intends that the options issued under the
Plan shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to
subparagraph 2(c), be either incentive stock options as that term is
used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as Incentive
Stock Options ("Nonqualified Stock Options"). All options shall be
separately designated Incentive Stock Options or Nonqualified Stock
Options at the time of grant, and in such form as issued pursuant to
paragraph 5, and a separate certificate or certificates shall be
issued for shares purchased on exercise of each type of option. An
option designated as a Nonqualified Stock Option shall not be treated
as an Incentive Stock Option.
The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee or consultant, his or
her spouse, or members of their immediate family. The word optionee
shall mean the person to whom the option is granted or the employee
or consultant for whose benefit the option is granted to a Trust, as
the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted options; when and
how the option shall be granted; whether the option will be an
Incentive Stock Option or a Nonqualified Stock Option; the provisions
of each option granted (which need not be identical), including the
time or times during the term of each option within which all or
<PAGE>
portions of such option may be exercised; and the number of shares
for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan or in any option agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 11.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members of the Board
(the "Committee"), all of the members of which Committee shall be
disinterested persons, if required and as defined by the provisions
of subparagraph 2(d). If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, subject,
however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
(d) The term "disinterested person", as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c): (i)
who is not at the time he or she exercises discretion in
administering the Plan eligible and has not at any time within one
(1) year prior thereto been eligible for selection as a person to
whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other
plan of the Company or any of its Affiliates entitling the
participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its Affiliates; or (ii)
who is otherwise considered to be a "disinterested person" in
accordance with the rules, regulations or interpretations of the
Securities and Exchange Commission. Any such person shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
from time to time in effect.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply if the Board or the Committee
expressly declares that such requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate Thirty Six Million (36,000,000) shares of the Company's
$.0001 par value common stock (the "Common Stock"). If any option
granted under the Plan shall for any reason expire or otherwise
terminate without having been exercised in full, the Common Stock not
purchased under such option shall again become available for the
Plan.
(b) The Common Stock subject to the Plan may be unissued
<PAGE>
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined as of the times the respective Incentive Stock
Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). Should it be determined that any portion of an Incentive
Stock Option granted under the Plan does not qualify for treatment as
an Incentive Stock Option by reason of exceeding such maximum, such
option shall be considered a Nonqualified Stock Option to the extent,
but only to the extent, of such excess. Should it be determined that
an entire option does not qualify for treatment as an Incentive Stock
Option, such option shall, in its entirety, be considered a
Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees of the Company or its Affiliates, and a director or officer
of the Company shall not be eligible to receive Incentive Stock
Options unless such director or officer is also an employee of the
Company or any Affiliate. Nonqualified Stock Options may be granted
only to employees of, or consultants to, the Company or its
Affiliates (including directors or officers who so qualify) or to
Trusts of any such employee or consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as
a person to whom options may be granted, or in the determination of
the number of shares which may be covered by options granted to a
director: (i) a majority of the Board and a majority of the
directors acting in such matter are disinterested persons, as defined
in subparagraph 2(d); (ii) the Committee consists solely of
"disinterested persons" as defined in subparagraph 2(d); or (iii) the
Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
The Board shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
term of the Incentive Stock Option does not exceed five (5) years
from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
<PAGE>
appropriate. The provisions of separate options need not be
identical, but each option shall include (through incorporation of
provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) No option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair market
value of the Common Stock subject to the option on the date the
option is granted. The exercise price of each Nonqualified Stock
Option shall be not less than eighty-five percent (85%) of the fair
market value of the Common Stock subject to the option on the date
the option is granted.
(c) The purchase price of Common Stock acquired pursuant
to an option shall be paid, to the extent permitted by applicable
statutes and regulations, either: (i) in cash at the time the option
is exercised; or (ii) at the discretion of the Board or the
Committee, either at the time of grant or exercise of the option (A)
by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of
other Common Stock of the Company) with the person to whom the option
is granted or to whom the option is transferred pursuant to
subparagraph 5(d), or (C) in any other form of legal consideration
that may be acceptable to the Board or the Committee in their
discretion.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred payment
arrangement.
(d) An option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the option was granted, have all the
rights that such person has while living, including the right to
exercise the option. In the absence of such designation, after the
death of the person to whom the option is granted, the option shall
be exercisable by the person or persons to whom the optionee's rights
under such option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the option may be exercised with respect
to some or all of the shares allotted to that period, and/or with
respect to some or all of the shares allotted to any prior period as
to which the option was not fully exercised. During the remainder of
the term of the option (if its term extends beyond the end of the
installment periods), the option may be exercised from time to time
with respect to any shares then remaining subject to the option. The
provisions of this subparagraph 5(e) are subject to any option
<PAGE>
provisions governing the minimum number of shares as to which an
option may be exercised.
(f) The Company may require any optionee, or any person to
whom an option is transferred under
subparagraph 5(d), as a condition of exercising any such option: (1)
to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters
and/or to employ a purchaser representative who has such knowledge
and experience in financial and business matters, and that he or she
is capable of evaluating, alone or together with the purchaser's
representative, the merits and risks of exercising the option; and
(2) to give written assurances satisfactory to the Company stating
that such person is acquiring the Common Stock subject to the option
for such person's own account and not with any present intention of
selling or otherwise distributing the Common Stock. These
requirements, and any assurances given pursuant to such requirements,
shall be inoperative if: (i) the issuance of the shares upon the
exercise of the option has been registered under a then currently
effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"); or (ii) as to any particular
requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then
applicable securities law.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant with the Company or an Affiliate, unless: (i) such
termination is due to such person's permanent and total disability,
within the meaning of Section 422(c)(6) of the Code, in which case
the option may, but need not, provide that it may be exercised at any
time within one (1) year following such termination of employment or
relationship as a consultant; (ii) the optionee dies while in the
employ of or while serving as a consultant to the Company or an
Affiliate, or within not more than three (3) months after termination
of such employment or relationship as a consultant, in which case the
option may, but need not, provide that it may be exercised at any
time within eighteen (18) months following the death of the optionee
by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution; or
(iii) the option by its terms specifies either (A) that it shall
terminate sooner than three (3) months after termination of the
optionee's employment or relationship as a consultant, or (B) that it
may be exercised more than three (3) months after termination of the
optionee's employment or relationship as a consultant with the
Company or an Affiliate. This subparagraph 5(g) shall not be
construed to extend the term of any option or to permit anyone to
exercise the option after expiration of its term, nor shall it be
construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of
the optionee's employment or relationship as a consultant.
(h) The option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant with the Company or
any Affiliate to exercise the option as to any part or all of the
shares subject to the option prior to the stated vesting date of the
option or of any installment or installmentsspecified in the option.
Any shares so purchased from any unvested installment or option may
<PAGE>
be subject to a repurchase right in favor of the Company or to any
other restriction the Board or the Committee determines to be
appropriate.
(i) To the extent provided by the terms of an
option, the optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such option by any
of the following means or by a combination of such means: (1)
tendering a cash payment; (2) authorizing the Company to withhold
from the shares of the Common Stock otherwise issuable to the
participant as a result of the exercise of the stock option a number
of shares having a fair market value less than or equal to the amount
of the withholding tax obligation; or (3) delivering to the Company
owned and unencumbered shares of the Common Stock having a fair
market value less than or equal to the amount of the withholding tax
obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement, and all outstanding
Nonqualified Stock Options, to the extent there are unvested options
on June 30, 1991, shall be amended to include, a provision entitling
the optionee to a further Option (a "Re-Load Option") in the event
the optionee exercises the Option evidenced by the Option agreement,
in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option (or surrendered for shares which
were unvested on June 30, 1991 in the case of an amended Nonqualified
Stock Option); (ii) shall have an expiration date which is the same
as the expiration date of the Option the exercise of which gave rise
to such Re-Load Option; (iii) shall have an exercise price which is
equal to one hundred percent (100%) of the fair market value of the
Common Stock subject to the Re-Load Option on the date of exercise of
the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as
defined in subparagraph 4(c)), shall have an exercise price which is
equal to one hundred and ten percent (110%) of the fair market value
of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option; and (iv) shall be granted under this
Plan, if sufficient shares are available under subparagraph 3(a) of
the Plan, and if sufficient shares of Common Stock are not so
available, shall be granted under the 1991 Equity Incentive Plan to
the extent shares of Common Stock are available under that Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, except that all Re-Load
Options on unvested shares (as of June 30, 1991) of Non-Qualified
Stock Options shall be Nonqualified Stock Options, provided, however,
that the designation of any Re-Load Option as an Incentive Stock
Option shall be subject to the one hundred thousand dollars
($100,000) annual limitation on exercisability of Incentive Stock
Options described in subparagraph 3(c) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load
Option. Any such Re-Load Option shall be subject to the availability
of sufficient shares under subparagraph 3(a) of this Plan or under
the 1991 Equity Incentive Plan and shall be subject to such other
<PAGE>
terms and conditions as the Board or Committee may determine.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of
shares of stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of
the options granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any option granted under the Plan or
any Common Stock issued or issuable pursuant to any such option. If,
after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of stock
under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such options unless
and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or Committee shall have the power to
accelerate the time during which an option may be exercised or the
time during which an option or any part thereof will vest,
notwithstanding the provisions in the option stating the time during
which it may be exercised or the time during which it will vest.
Each
option providing for vesting pursuant to subparagraph 5(e) shall also
provide that if the employee's employment or consultant's affiliation
with the Company is terminated by reason of death or disability
(within the meaning of Title II or XVI of the Social Security Act and
as determined by the Social Security Administration), the vesting
schedule of options granted to such employee or consultant or to the
Trusts of such employee or consultant shall be accelerated by twelve
months for each full year the employee has been employed by or the
consultant has been affiliated with the Company. Options granted
under the Plan that are outstanding on February 25, 1992, shall be
amended to include the accelerated vesting upon death provided for in
the preceding sentence of this paragraph 8(a) and options granted
under the Plan that are outstanding on June 18, 1996, shall be
amended to include the accelerated vesting upon disability provided
for in the preceding sentence of this paragraph 8(a).
(b) Neither an optionee nor any person to whom an option
is transferred under subparagraph 5(d) shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to,
any shares subject to such option unless and until such person has
satisfied all requirements for exercise of the option pursuant to its
terms.
(c) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the close
<PAGE>
of each of the Company's fiscal years during the option term, upon
request, such financial and other information regarding the Company
as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or
option granted pursuant thereto shall confer upon any eligible
participant or optionee any right to continue in the employ of the
Company or any Affiliate or to continue acting as a consultant or
shall affect the right of the Company or any Affiliate to terminate
the employment or consulting relationship of any eligible participant
or optionee with or without cause. In the event that an optionee is
permitted or otherwise entitled to take a leave of absence, the
Company shall have the unilateral right to (i) determine whether such
leave of absence will be treated as a termination of employment or
relationship as consultant for purposes of paragraph 5(g) hereof and
corresponding provisions of any outstanding options, and (ii) suspend
or otherwise delay the time or times at which the shares subject to
the option would otherwise vest.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
affected option holders, (i) the repricing of any or all outstanding
options under the Plan and/or (ii) the cancellation of any or all
outstanding options under the Plan and the grant in substitution
therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per
share not less than eighty-five percent (85%) of the fair market
value in the case of a Nonqualified Stock Option, one hundred percent
(100%) of the fair market value in the case of an Incentive Stock
Option or, in the case of a 10% stockholder (as defined in
subparagraph 4(c)), not less than one hundred and ten percent (110%)
of the fair market value per share of Common Stock on the new grant
date.
10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any change is made in the Common Stock subject to
the Plan, or subject to any option granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan and the class(es) and
the number of shares and price per share of Common Stock subject to
outstanding options.
(b) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
<PAGE>
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replaced with substitute options.
Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Exchange Act (excluding, for
this purpose, the Company or its affiliates, or any employee benefit
plan of the Company or its affiliates which acquires beneficial
ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either the then
outstanding shares of Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14A-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
11. QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Anything in the Plan to the contrary notwithstanding,
rights under options may be assigned to an Alternate Payee to the
extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in Subsection (c) below.) The assignment of an
option to an Alternate Payee pursuant to a QDRO shall not be treated
as having caused a new grant. The transfer of an Incentive Stock
Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If an option is assigned to an
<PAGE>
Alternate Payee, the Alternate Payee generally has the same rights as
the grantee under the terms of the Plan; provided however, that (1)
the option shall be subject to the same vesting terms and exercise
period as if the option were still held by the grantee, (2) an
Alternate Payee may not transfer an option and (3) an Alternate Payee
is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of an option, transfer of the proceeds
of the exercise of such option, whether in the form of cash, stock or
other property, may be suspended. Such proceeds shall thereafter be
transferred pursuant to the terms of a QDRO or other agreement
between the grantee and Alternate Payee. A grantee's ability to
exercise an option may be barred if the Plan administrator receives a
court order directing the Plan administrator not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted an option to an interest in such option relating to marital
property rights or support obligations and (2) that the administrator
of the Plan determines would be a "qualified domestic relations
order," as that term is defined in section 414(p) of the Code and
section 206(d) of the Employee Retirement Income Security Act
("ERISA"), but for the fact that the Plan is not a plan described in
section 3(3) of ERISA.
12. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 10 relating
to adjustments upon changes in the Common Stock, no amendment shall
be effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for
options under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to satisfy the
requirements of Section 422(b) of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422(b) of the Code or to comply
with the requirements of Rule 16b-3 promulgated under the Exchange
Act.
(b) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to
provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee incentive stock options
and/or to bring the Plan and/or options granted under it into
compliance therewith.
(c) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any
amendment of the Plan, unless: (i) the Company requests the consent
of the person to whom the option was granted; and (ii) such person
<PAGE>
consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on March
14, 1998. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while
the Plan is in effect shall not be altered or impaired by suspension
or termination of the Plan, except with the consent of the person to
whom the option was granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
No option granted as the result of the amendment on April 2, 1991
shall be exercisable unless and until said amendment is approved by
the stockholders of the Company, and to the extent required or
necessary under applicable law, amendments made on April 2, 1991
shall not be effective until approved by the stockholders of the
Company.
EXHIBIT 10.15
AMGEN RETIREMENT AND SAVINGS PLAN
(As Amended and Restated Effective April 1, 1996)
TABLE OF CONTENTS
ARTICLE 1. INTRODUCTION AND PLAN HISTORY
ARTICLE 2. DEFINITIONS
2.1 "Accounts"
2.2 "Affiliated Group"
2.3 "Aggregate 401(k) Contributions"
2.4 "Aggregate 401(m) Contributions"
2.5 "Alternate Payee"
2.6 "Annual Additions"
2.7 "Annual Deferral Limit"
2.8 "Beneficiary"
2.9 "Break in Service"
2.10 "Board"
2.11 "Code"
2.12 "Company"
2.13 "Company Contributions"
2.14 "Company Stock"
2.15 "Company Stock Fund"
2.16 "Compensation"
2.17 "Compensation Limitation"
2.18 "Disability"
2.19 "Eligible Employee"
2.20 "Employee"
2.21 "Employee Contributions"
2.22 "ERISA"
2.23 "Excess Aggregate Contributions"
2.24 "Excess Contributions"
2.25 "Excess Deferrals"
2.26 "Family Member"
2.27 "Five-Year Break in Service"
2.28 "Forfeiture"
2.29 "Fund" or "Investment Fund"
2.30 "Hardship Withdrawal"
2.31 "Highly Compensated Employee"
2.32 "Hour of Service"
2.33 "Normal Retirement Age"
2.34 "Participant"
2.35 "Participating Company"
2.36 "Plan"
2.37 "Plan Benefit"
2.38 "Plan Year"
2.39 "QDRO"
2.40 "Qualified Joint and Survivor Annuity"
2.41 "Rollover Contribution"
2.42 "Salary Deferral Agreement"
2.43 "Section 414(s) Compensation"
<PAGE>
2.44 "Section 415 Compensation"
2.45 "Section 415 Employer Group"
2.47 "Top-Paid Group"
2.48 "Total Compensation"
2.49 "Trust Agreement"
2.50 "Trustee"
2.51 "Trust Fund"
2.52 "Valuation Date"
2.53 "Year of Service"
ARTICLE 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate
3.2 Commencement of Participation
3.3 "Eligible Employee"
3.4 Suspension of Membership
3.5 Termination of Membership
ARTICLE 4. EMPLOYEE CONTRIBUTIONS
4.1 Participant Elected Contributions
4.2 Suspension, Change and Resumption of
Participant Elected Contributions
4.3 Contributions to the Trustee
4.4 Limits on Participant
Elected Contributions
4.5 Rollover Contributions
ARTICLE 5. COMPANY CONTRIBUTIONS
5.1 Matching Contributions
5.2 Nonelective Contributions
5.3 Qualified Nonelective Contributions
5.4 Qualified Matching Contributions
5.5 Investment of Company Contributions
5.6 Limits on Company Contributions
ARTICLE 6. INVESTMENTS AND PARTICIPANTS' ACCOUNTS
6.1 Investment Funds
6.2 Investment of Contributions
6.3 Participant Elected Contributions
Account
6.4 Rollover Contributions Account
6.5 Matching Contributions Account
6.6 Nonelective Contributions Account
6.7 Qualified Nonelective
Contributions Account
6.8 Qualified Matching Contributions
Account
6.9 Transfers Among Investment Funds
6.10 Allocation of Investment Income
6.11 Account Statements
ARTICLE 7. VESTING OF PARTICIPANTS' ACCOUNTS
7.1 100 Percent Vesting
7.2 Vesting of Matching Contributions
Accounts
7.3 Vesting of Nonelective
Contributions Accounts
<PAGE>
7.4 Forfeitures
7.5 Vesting on Reemployment
7.6 Determination of Account Balance
7.7 Lost Participant or Beneficiary
ARTICLE 8. DISTRIBUTION OF PLAN BENEFIT
8.1 General Rule
8.2 Events Permitting Distribution
8.3 Time of Distribution
8.4 Amount of Plan Benefit
8.5 Latest Time of Distribution
8.6 Forms of Distribution
8.7 Lifetime Annuities
8.8 Time of Distribution of Death Benefit
8.9 Distribution of Death Benefit
8.10 Small Benefits: Lump Sum
8.11 Direct Rollovers
8.12 Beneficiary
8.13 Spousal Consent Needed to Name
a Nonspouse Beneficiary
8.14 Determination of Marital Status
8.15 Incapacity
ARTICLE 9. DISTRIBUTION TO AN ALTERNATE
PAYEE UNDER A QDRO;
FREEZING PARTICIPANT ACCOUNTS
9.1 Immediate Distribution
9.2 Alternate Payee Accounts
9.3 Freezing Participant Accounts
9.4 Death of Alternate Payee
9.5 Distributions From Alternate
Payee Accounts
ARTICLE 10. LOANS
10.1 Amount of Loan
10.2 Terms of Loans
10.3 Company Consent
10.4 Source of Loans
10.5 Disbursement of Loans
10.6 Loan Fees
10.7 Valuation Date
10.8 Loan Payments and Defaults
ARTICLE 11. WITHDRAWALS WHILE EMPLOYED
11.1 Age 59 1/2 and Disability Withdrawals;
Withdrawals from Rollover Account
11.2 Hardship Withdrawals
11.3 Amount of a Hardship Withdrawal
11.4 Consequences of a Hardship Withdrawal
11.5 Valuation Date
11.6 Source of Withdrawals
11.7 Payment of Withdrawals
11.8 Limitations on Withdrawals
ARTICLE 12. HIGHLY COMPENSATED EMPLOYEE DEFINITION
12.1 Determining the Highly Compensated
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Employee Group
12.2 Special Elections for Determining the
Highly Compensated Employee Group
12.3 Determining the Highly Compensated
Employee Group Using the
Simplified Method
12.4 "Highly Compensated Former Employee"
12.5 "Nonhighly Compensated Employee"
12.6 Special Definitions Used in Article 12
(a) "Family Member"
(b) "Top-Paid Group"
(c) "Total Compensation"
ARTICLE 13. CONTRIBUTION LIMITATIONS: ANNUAL
DEFERRAL LIMITATIONS AND AVERAGE
DEFERRAL PERCENTAGE LIMITATIONS
13.1 Return of Excess Deferrals
13.2 Average Deferral Percentage Limitation
13.3 Allocation of Excess Contributions
to Highly Compensated Employees
13.4 Distribution of Excess Contributions
13.5 Qualified Matching Contributions
13.6 Corrective Qualified
Nonelective Contributions
13.7 Special Rules
13.8 Prospective Limitations on
Participant Elected Contributions
13.9 Special Definitions Used in Article 13
(a) "Aggregate 401(k) Contributions"
(b) "Annual Deferral Limit"
(c) "Excess Contributions"
(d) "Excess Deferrals"
(e) "Section 414(s) Compensation"
ARTICLE 14. CONTRIBUTION LIMITATIONS:
AVERAGE CONTRIBUTION
PERCENTAGE LIMITATIONS
14.1 Average Contribution Percentage
Limitation
14.2 Allocation of Excess Aggregate
Contributions to Highly
Compensated Employees
14.3 Distribution of Excess
Aggregate Contributions
14.4 Use of Participant Elected Contributions
14.5 Corrective Qualified
Nonelective Contributions
14.6 Special Rules
14.7 Special Definitions Used in Article 14
ARTICLE 15. CONTRIBUTION LIMITATIONS:
MULTIPLE-USE LIMITATIONS
15.1 Applicability of the
Multiple-Use Limitation
15.2 Multiple-Use Limitation
15.3 Correction of Multiple-Use Limitation
<PAGE>
ARTICLE 16. CONTRIBUTION LIMITATIONS:
SECTION 415 "ANNUAL ADDITIONS"
LIMITATIONS
16.1 Limitation on Contributions
16.2 Combined Limitation on
Benefits and Contributions
16.3 Return of Employee Contributions
16.4 Excess Company Contributions
16.5 Special Definitions Used
in this Article
ARTICLE 17. THE TRUST FUND AND PLAN INVESTMENTS
17.1 Control and Management of Plan Assets
17.2 Trustee Duties
17.3 Independent Qualified
Public Accountant
17.4 Administrative Expenses
17.5 Benefit Payments
ARTICLE 18. ADMINISTRATION AND OPERATION OF PLAN
18.1 Plan Administration
18.2 Employment of Advisers
18.3 Service in Several
Fiduciary Capacities
ARTICLE 19. CLAIMS AND REVIEW PROCEDURES
19.1 Applications for Benefits
19.2 Denial of Applications
19.3 Review Panel
19.4 Requests for Review
19.5 Decisions on Review
19.6 Rules and Procedures
19.7 Exhaustion of Administrative Remedies
ARTICLE 20. AMENDMENT AND TERMINATION
20.1 Right To Amend or Terminate
20.2 Protection of Participants
20.3 Effect of Termination
20.4 Allocation of Trust Fund
Upon Termination
20.5 Partial Termination
ARTICLE 21. MISCELLANEOUS PROVISIONS
21.1 Plan Mergers
21.2 No Assignment of Property Rights
21.3 No Employment Rights
21.4 Choice of Law
21.5 Voting of Company Stock
21.6 Tender Offers
ARTICLE 22. SPECIAL TOP-HEAVY PROVISIONS
22.1 Determination of Top-Heavy Status
22.2 Minimum Allocations
22.3 Impact on Maximum Benefits
22.4 Special Definitions
<PAGE>
(a) "Aggregation Group"
(b) "Determination Date"
(c) "Key Employee"
(d) "Permissive Aggregation Group"
(e) "Required Aggregation Group"
(f) "Top-Heavy Compensation"
(g) "Top-Heavy Ratio"
22.5 Top-Heavy Vesting Rules
ARTICLE 23. EXECUTION
AMGEN RETIREMENT AND SAVINGS PLAN
(As Amended and Restated Effective April 1, 1996)
ARTICLE 1. INTRODUCTION AND PLAN HISTORY.
The Plan was adopted effective as of April 1, 1985. The Plan was
last amended and restated as of April 1, 1996, to reflect previously
adopted amendments and to make other changes. Certain provisions may
be effective at other times, as specified. The Plan is intended to
qualify under sections 401(a) and 401(k) and related sections of the
Code, and under section 407(d)(3)(A) of ERISA. The Plan is subject
to amendment or termination at any time, including (without
limitation) amendments required to meet regulations and rules issued
by the Secretary of the Treasury or his or her delegate or the
Secretary of Labor. Certain capitalized terms used in the text of
the Plan are defined in Article 2 in alphabetical order.
ARTICLE 2. DEFINITIONS.
2.1 "Accounts" means the separate accounts maintained for each
Participant as a part of the Trust Fund. Each Participant's Accounts
are credited with the Participant's Employee Contributions, his or
her share of Company Contributions and Forfeitures and any income,
gains, expenses and losses accruing on amounts previously credited to
the Accounts.
2.2 "Affiliated Group" means the Company and any entity related to
the Company under sections 414(b), (c), (m) or (o) of the Code. In
addition, the term "Affiliated Group" includes any other entity that
the Company has designated in writing as a member of the Affiliated
Group for purposes of the Plan. An entity shall be considered a
member of the Affiliated Group only with respect to periods for which
this designation is in effect or during which the relationship
described in the first sentence of this Section exists. An
"Affiliate" is a member of the Affiliated Group.
2.3 "Aggregate 401(k) Contributions" which is a term used in
specifying certain limitations on Plan contributions, is defined in
Section 13.9.
2.4 "Aggregate 401(m) Contributions" which is a term used in
specifying certain limitations on Plan contributions, is defined in
Section 14.7.
<PAGE>
2.5 "Alternate Payee" means a spouse, former spouse, child or other
dependent of a Participant who is recognized by a domestic relations
order as having a right to receive all or a portion of the
Participant's Plan Benefit.
2.6 "Annual Additions" which is a term used in specifying certain
limitations on Plan contributions, is defined in Section 16.5.
2.7 "Annual Deferral Limit" which is a term used in specifying
certain limitations on Plan contributions, is defined in Section
13.9.
2.8 "Beneficiary" means the person or persons entitled to receive a
Participant's Plan Benefit after the Participant's death, as provided
in Section 8.12.
2.9 "Break in Service" means any Plan Year during which the
Participant completes less than 501 Hours of Service. Solely for the
purpose of determining whether a Break in Service has occurred, an
Employee who is absent from work by virtue of (a) the Employee's
pregnancy, (b) the birth of the Employee's child, (c) the placement
of a child with the employee by adoption, (d) the caring for any such
child for a period of up to one year immediately following such birth
or placement, (e) Disability, (f) service in the armed forces of the
United States during a period (including a post-discharge period)
that entitles the Employee to reemployment rights guaranteed by law
or (g) a leave of absence taken under the terms of the federal Family
Medical Leave Act or applicable state family and medical leave act,
shall be credited with up to 501 additional Hours of Service. Such
additional Hours of Service in such period of absence shall be based
on his or her regular work schedule immediately prior to such period;
provided, however, that such additional Hours of Service shall be
credited during the Plan Year in which the absence from work begins
only if they would prevent a Break in Service from occurring for that
year. In all other cases, the additional Hours of Service shall be
credited during the immediately following Plan Year.
2.10 "Board" means the Board of Directors of the Company, as
constituted from time to time.
2.11 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.12 "Company" means Amgen Inc., a Delaware corporation.
2.13 "Company Contributions" means Matching Contributions,
Nonelective Contributions, Qualified Nonelective Contributions and
Qualified Matching Contributions.
2.14 "Company Stock" means shares of common stock issued by the
Company.
2.15 "Company Stock Fund" means an Investment Fund primarily invested
in Company Stock.
<PAGE>
2.16 "Compensation" is the term generally used under the Plan to
describe the amount with respect to which Plan contributions are made
and means an Eligible Employee's wages, salaries, fees for
professional services, and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with any member of the
Affiliated Group to the extent that the amounts are includable in
gross income (including, but not limited to, commissions paid to
salespersons, compensation for services on the basis of a percentage
of profits, commissions on reimbursements or other expense allowances
under a nonaccountable plan (as described in Treasury Regulation
section 1.62-2(c)). "Compensation" shall be computed without regard
to any election to reduce or defer salary under this Plan or any
cafeteria plan under section 125 of the Code. "Compensation" shall
not include: (a) any Company Contributions to this Plan or any other
employee benefit plan for or on account of the Employee, except as
otherwise provided in the preceding sentence; (b) the items described
in Treasury Regulation section 1.415-2(d)(3), which, among other
items, would exclude from compensation amounts realized from the
exercise of a nonqualified stock option (or when restricted stock (or
property) held by an Employee either becomes freely transferable or
is no longer subject to a substantial risk of forfeiture under
section 83 of the Code) and amounts realized from the sale, exchange
or other disposition of stock acquired under a qualified stock
option; or (c) amounts in excess of the Compensation Limitation.
2.17 "Compensation Limitation" means the limitation in effect under
section 401(a)(17) of the Code for the Plan Year. For purposes of
applying the Compensation Limitation, the compensation of any of the
10 most highly compensated Highly Compensated Employees or any five-
percent owner shall be determined by combining the compensation of
the top-10 Highly Compensated Employee or five-percent owner with the
compensation of any Employees who are family members of the top-10
Highly Compensated Employee or five-percent owner. (For purposes of
this Section only, "family members" means an individual's spouse and
any lineal descendants who have not attained age 19 prior to the end
of the Plan Year.) If, as a result of the application of such
family-aggregation rules, the Compensation Limitation is exceeded,
then the limitation shall be prorated among the individuals in each
family-aggregation group in proportion to each such individual's
compensation, determined without regard to the application of the
family-aggregation rules or the Compensation Limitation.
2.18 "Disability" means that the Participant is determined, under
Title II or XVI of the Social Security Act, to have been disabled at
the time of his or her termination of employment. In order for a
Participant's Accounts to become fully vested on account of
Disability pursuant to Sections 7.2 and 7.3 of the Plan, the
Participant must submit evidence of the Social Security
Administration's determination of disability to the Company prior to
the distribution (or deemed distribution) of the Participant's
Accounts.
2.19 "Eligible Employee" means an Employee described in Section 3.3.
<PAGE>
2.20 "Employee" means an individual who (a) on the employee payroll
of a member of the Affiliated Group or (b) is a "leased employee"
(within the meaning of section 414(n) of the Code) with respect to a
member of the Affiliated Group. "Employee" shall not include a
nonresident alien who receives no earned income (within the meaning
of section 911(b) of the Code) from a member of the Affiliated Group
that constitutes income from sources within the United States (within
the meaning of section 861(a)(3) of the Code).
2.21 "Employee Contributions" means Participant Elected Contributions
and Rollover Contributions.
2.22 "ERISA" means the Employee Retirement Income Security Act of
1974 (P.L. 93-406), as amended.
2.23 "Excess Aggregate Contributions" which is a term used in
specifying certain limitations on Plan contributions, is defined in
Section 14.7.
2.24 "Excess Contributions" which is a term used in specifying
certain limitations on Plan contributions, is defined in Section
13.9.
2.25 "Excess Deferrals" which is a term used in specifying certain
limitations on Plan contributions, is defined in Section 13.9.
2.26 "Family Member" which is a term used in specifying certain
limitations on Plan contributions, is defined in Section 12.6.
2.27 "Five-Year Break in Service" means five or more consecutive one-
year Breaks in Service.
2.28 "Forfeiture" is defined in Section 7.4.
2.29 "Fund" or "Investment Fund" means a separate fund in which
contributions to the Plan are invested in accordance with Article 6.
2.30 "Hardship Withdrawal" is a partial distribution of a
Participant's Account made while he or she is an Employee and in the
limited circumstances described in Section 11.2.
2.31 "Highly Compensated Employee" is defined in
Article 12.
2.32 "Hour of Service" means:
(a) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by a member of the Affiliated
Group for the performance of services,
(b) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by a member of the Affiliated
Group on account of a period of time during which no services
are performed (without regard to whether the employment
relationship between the Employee and the member of the
Affiliated Group has terminated) due to vacation, holiday,
<PAGE>
illness, incapacity, disability, layoff, jury duty, military
duty or leave of absence with pay, and
(c) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment of an amount as back pay (without
regard to mitigation of damages) either awarded or agreed to by
a member of the Affiliated Group.
The foregoing notwithstanding:
(1) No more than 501 Hours of Service shall be credited to
an Employee under Subsection (b) or (c) above on account of any
single continuous period of time during which no services are
performed.
(2) An hour for which an Employee is directly or
indirectly paid or entitled to payment by a member of the
Affiliated Group on account of a period during which no services
are performed shall not constitute an Hour of Service hereunder
if such payment is made or due under a plan maintained solely
for the purpose of complying with applicable workers'
compensation, unemployment compensation or disability insurance
laws.
(3) Hours of Service shall not be credited for payments
that solely reimburse an Employee for medical or medically
related expenses.
(4) The same Hour of Service shall not be credited to an
Employee both under Subsection (a) or (b) and under Subsection
(c).
(5) The computation period to which Hours of Service
determined under Subsection (b) or (c) are to be credited shall
be determined under applicable federal law and regulations,
including, without limitation, Department of Labor Regulation
section 2530.200b-2(b), (c) and (d).
For purposes of applying the foregoing rules, salaried Employees are
paid or entitled to payment for eight-hour workdays. The Company
shall determine the number of Hours of Service, if any, to be
credited to an Employee under the foregoing rules in a uniform and
nondiscriminatory manner and in accordance with applicable federal
laws and regulations, including, without limitation, Department of
Labor Regulations section 2530.200- 2(b), (c) and (d).
2.33 "Normal Retirement Age" means the date on which a Participant
attains age 65.
2.34 "Participant" means any person who elects to participate in the
Plan as provided in Article 3.
2.35 "Participating Company" means the Company and any other member
of the Affiliated Group that the Company has designated in writing as
a Participating Company.
<PAGE>
2.36 "Plan" means the Amgen Retirement and Savings Plan, as amended
from time to time.
2.37 "Plan Benefit" means the Participant's Accounts under the Plan,
to the extent vested.
2.38 "Plan Year" means the calendar year.
2.39 "QDRO" means a qualified domestic relations order (as defined in
section 414(p) of the Code).
2.40 "Qualified Joint and Survivor Annuity" means an annuity for the
life of the Participant with a survivor annuity for the life of his
or her spouse that is not less than fifty percent (50%) nor more than
one hundred percent (100%) of the amount of the annuity payable
during the joint lives of the Participant and his or her spouse. The
value of the Qualified Joint and Survivor Annuity shall be not less
than the value of the Participant's nonforfeitable interest in his or
her Account.
2.41 "Rollover Contribution" means an amount contributed to the Plan
by an Eligible Employee pursuant to Section 4.5.
2.42 "Salary Deferral Agreement" means the agreement between the
Participating Company and an Employee to reduce the Employee's
Compensation as provided for in Article 4.
2.43 "Section 414(s) Compensation" which is a term used in specifying
certain limitations on Plan contributions, is defined in Section
13.9.
2.44 "Section 415 Compensation" which is a term used in specifying
certain limitations on Plan contributions, is defined in Section
16.5.
2.45 "Section 415 Employer Group" which is a term used in specifying
certain limitations on Plan contributions, is defined in Section
16.5.
2.46 "Single Life Annuity" means an annuity under which payments are
made to a person for his or her life and cease upon his or her death.
2.47 "Top-Paid Group" which is used in the definition of the term
"Highly Compensated Employee", is defined in Section 12.6.
2.48 "Total Compensation" which is used in the definition of the term
"Highly Compensated Employee", is defined in Section 12.6.
2.49 "Trust Agreement" means the trust agreement entered into
pursuant to the Plan by the Company and the Trustee, as amended from
time to time.
2.50 "Trustee" means the trustee or trustees appointed by the Company
pursuant to the Plan to hold the assets of the Plan in trust, and any
successor trustee(s) so appointed.
<PAGE>
2.51 "Trust Fund" means the trust fund consisting of the assets of
the Plan and maintained by the Trustee pursuant to the Plan and the
Trust Agreement.
2.52 "Valuation Date" means the date on which the assets of the Plan
are valued, determined in accordance with the Trust Agreement.
2.53 "Year of Service" means:
(a) For purposes of vesting, (1) prior to April 1, 1985, each
calendar year during which an Employee is credited with 1,000
Hours of Service and (2) on and after April 1, 1985, each Plan
Year or portion thereof during which an Employee is credited
with at least 1,000 Hours of Service; provided, however, that an
Employee shall be credited with a Year of Service for the Plan
Year from April 1, 1988 through December 31,1988 if he or she is
credited with at least 1,000 Hours of Service during the 12-
consecutive-month period from April 1,1988 through March 31,1989
and also shall be credited with a Year of Service for the Plan
Year beginning January 1, 1989 if he or she is credited with at
least 1,000 Hours of Service during such Plan Year.
(b) For purposes of determining eligibility, the first
"computation period" in which the Employee completes at least
1,000 Hours of Service. An Employee's initial computation
period is the 12-consecutive-month period following the
Employee's employment commencement date. If the Employee does
not complete at least 1,000 Hours of Service during the first
computation period, subsequent computation periods are each Plan
Year, beginning with the Plan Year in which the first
anniversary of the Employee's employment commencement date
falls.
ARTICLE 3. ELIGIBILITY AND PARTICIPATION.
3.1 Eligibility to Participate. An individual hired or rehired as
an Employee shall be eligible to become a Participant on the date he
or she becomes an Eligible Employee or on any subsequent date.
3.2 Commencement of Participation. An individual who has satisfied
the requirements for Plan participation and wishes to become a
Participant shall follow the enrollment procedures prescribed by the
Company and shall begin participating in the Plan as soon as
administratively practicable after completion of the enrollment
procedures.
3.3 "Eligible Employee" means an Employee of a Participating Company
who is described in (a) or (b) and is not excluded under (c). An
individual's status as an Eligible Employee shall be determined by
the Company and its determination shall be conclusive and binding on
all persons.
(a) Regular Full-Time Employee. Unless excluded under (c)
below, an individual classified by a Participating Company as a
"regular full-time employee" is an Eligible Employee.
<PAGE>
(b) Regular Part-Time Employee. Unless excluded under (c)
below, an individual classified by a Participating Company as a
"regular part-time employee," including a temporary employee or
intern, shall become an Eligible Employee upon completion of a
Year of Service.
(c) Excluded Employees. An Employee shall not be an Eligible
Employee for any period in which he or she is:
(1) Included in a unit of employees covered by a
collective-bargaining agreement that does not provide that such
Employee shall be eligible to participate in the Plan;
(2) Employed by a non-U.S. subsidiary of the Company;
(3) Not on the payroll of a Participating Company but is
deemed, for any reason, to be an Employee; or
(4) A "leased employee" (within the meaning of section
414(n) of the Code) with respect to a Participating Company.
(d) Eligibility After Break in Service. An Eligible Employee
shall continue as an Eligible Employee so long as he or she
remains employed by a Participating Company as a "regular
employee" and has not had a Break in Service. If an Eligible
Employee has a Break in Service, he or she shall again become an
Eligible Employee upon satisfaction of the eligibility
conditions described in this Section.
3.4 Suspension of Membership. A Participant's participation in the
Plan shall be suspended for any period of time during which the
Participant:
(a) Neither receives nor is entitled to receive any
Compensation, including (without limitation) any leave of
absence without pay; or
(b) Does not qualify as an Eligible Employee but remains a
Participant.
In accordance with Section 10.8 and 11.4, participation is also
suspended for 12 months if a Participant defaults on a Plan loan or
takes a Hardship Withdrawal. A Participant shall not make
Participant Elected Contributions or receive any allocation of
Company Contributions with respect to a period of suspended
participation, but a suspended Participant's Accounts shall remain
invested as a part of the Trust Fund and shall continue to share in
the gains, income, losses and expenses of the Trust Fund.
3.5 Termination of Membership. A Participant's participation in the
Plan shall terminate when his or her entire Plan Benefit has been
distributed or on the date of his or her death, whichever occurs
first. In the case of a Participant who is not entitled to a Plan
Benefit, membership in the Plan shall terminate when the Participant
ceases to be an Employee.
<PAGE>
ARTICLE 4. EMPLOYEE CONTRIBUTIONS.
4.1 Participant Elected Contributions. Each Participant whose
participation in the Plan is not suspended may make Participant
Elected Contributions to the Trust Fund pursuant to a Salary Deferral
Agreement that specifies the amount of the contribution. Subject to
the limitations set forth in Section 4.4 and Articles 13-16, the
amount of the Participant Elected Contributions shall be equal to any
whole percentage of his or her Compensation, as the Participant shall
elect, except that this whole percentage shall not exceed 15 percent
of his or her Compensation. Participant Elected Contributions shall
be made through payroll deductions from the Participant's
Compensation. If a Participant elects to make Participant Elected
Contributions, the contributions shall be deemed to be employer
contributions to the Plan for federal income tax purposes and, to the
extent permitted, for purposes of other federal, state and local
taxes. A Participant's election to make Participant Elected
Contributions shall constitute an election to have the Participant's
taxable salary or wages from the Participating Company reduced by the
amount of the Participant Elected Contributions.
4.2 Suspension, Change and Resumption of Participant Elected
Contributions. A Participant may elect to suspend or change the rate
of Participant Elected Contributions and, having elected to suspend
Participant Elected Contributions, may elect to resume them. Any
such election shall be made by following the procedures prescribed by
the Company, which election shall be put into effect at the time
prescribed by the Company's procedures.
4.3 Contributions to the Trustee. The Participating Companies shall
forward all Employee Contributions to the Trustee, for investment in
the Trust Fund, as soon as administratively possible after they were
withheld. Employee Contributions shall be credited to each
Participant's Accounts as provided in Sections 6.3 and 6.4.
4.4 Limits on Participant Elected Contributions. This Section
briefly describes the rules that limit the amount of Participant
Elected Contributions that may be contributed to a Participant's
Account for the Plan Year or calendar year.
(a) Compensation Limit. A Participant may not make further
Participant Elected Contributions for the Plan Year once his or
her Compensation reaches the Compensation Limitation.
(b) Annual Deferral Limit. As is described in detail in
Article 13, a Participant's Participant Elected Contributions,
together with certain other elective deferrals, made during a
calendar year may not exceed the Annual Deferral Limit, which is
$9,500 for 1996.
(c) Average Deferral Percentage Limit. As is described in
detail in Article 13 and Article 15, Participant Elected
Contributions may be returned to certain Participants who are
Highly Compensated Employees in the event that the average
deferral percentage test or multiple-use test is not met for the
Plan Year.
<PAGE>
(d) Section 415 "Annual Additions" Limit. As is described in
detail in Article 15, if amounts credited to a Participant's
Accounts during the Plan Year, other than earnings and Rollover
Contributions, exceed the lesser of $30,000 or 25% of the
Participant's Section 415 Compensation, then Participant Elected
Contributions may be returned to the Participant.
(e) Prospective Limitations. In order to ensure compliance
with the average deferral percentage test, the multiple-use test
and the annual additions limit, at any time during the Plan Year
and at its sole discretion, the Company may require any
Participant to discontinue or reduce the rate of his or her
Participant Elected Contributions. The Company may require the
discontinuance or reduction in the rate of Participant Elected
Contributions even if its actions may prevent a Participant from
making the maximum Participant Elected Contributions allowed by
law.
(f) Nondeductible and Mistaken Contributions. As is
described in detail in Section 5.6(e), Participant Elected
Contributions that are not deductible by the Company or that are
made by mistake are returned to the Company.
4.5 Rollover Contributions. The Plan may receive Rollover
Contributions on behalf of an Eligible Employee if the following
conditions are satisfied:
(a) The contribution is made entirely in the form of U.S.
dollars; and
(b) The Eligible Employee demonstrates to the Company's
satisfaction that the contribution is a qualifying rollover
contribution under section 402(c)(4), 403(a)(4) or 408(d)(3) of
the Code.
If an Eligible Employee who is not a Participant makes a Rollover
Contribution, then he or she shall be considered a Participant solely
with respect to his or her Rollover Contribution Account until he or
she becomes a Participant for all purposes pursuant to Article 3.
A Rollover Contribution shall be paid to the Company in a lump sum in
cash and shall be credited to the Participant's Rollover Account.
The Participant may direct the investment of his or her Rollover
Account by filing the specified investment election form in
accordance with such rules as may be established by the Company.
ARTICLE 5. COMPANY CONTRIBUTIONS.
5.1 Matching Contributions. Subject to the limitations of Section
5.6 and Articles 13-16, each Participating Company may, in its
discretion, make Matching Contributions in an amount determined by
the Participating Company. A Matching Contributions formula may
limit the amount of Participant Elected Contributions that are taken
into account for purposes of allocating Matching Contributions or may
limit allocations of Matching Contributions to a specified group of
<PAGE>
Participants; provided, however, that the Matching Contribution
formula(s) shall not discriminate in favor of Highly Compensated
Employees. A Matching Contribution shall be paid to the Trustee as
soon as reasonably practicable after the pay period to which it
relates and shall be allocated to the Accounts of Participants as
provided in Section 6.5.
5.2 Nonelective Contributions. Subject to the limitations Section
5.6 and Articles 13-16, each Participating Company may, in its
discretion, make Nonelective Contributions in an amount determined by
the Participating Company. The Company, in its sole discretion, may
determine that the allocation of part or all of the Nonelective
Contribution for a Plan Year shall be limited to the Nonelective
Contribution Accounts of Participants who remain Eligible Employees
on the last day of the relevant Plan Year. The Company may limit the
amount of Compensation that is taken into account for purposes of
allocating Nonelective Contributions, and it may determine that
allocations of Nonelective Contributions shall be limited to a
specified group of Eligible Employees; provided, however, that the
Nonelective Contribution formula(s) shall not discriminate in favor
of Highly Compensated Employees. For purposes of allocating such
Nonelective Contributions for any Plan Year or other allocation
period based on an Employee's Compensation, only Compensation
attributable to periods in such Plan Year or other allocation period
during which such Employee was an Eligible Employee shall be taken
into account. A Nonelective Contributions shall be paid to the
Trustee as soon as reasonably practicable following the close of the
pay period to which it relates and shall be allocated to the Accounts
of Participants as provided in Section 6.6.
Nonelective Contributions may include a Core Contribution equal to a
specified percentage of Compensation to be made by the Company for
each payroll period during the Plan Year.
5.3 Qualified Nonelective Contributions. The Participating
Companies may make Qualified Nonelective Contributions pursuant to
Article 13.6.
5.4 Qualified Matching Contributions. The Participating Companies
may make Qualified Matching Contributions in an amount determined by
the Participating Company. The Participating Company may, in its
sole discretion, limit the amount of Participant Elected
Contributions that are taken into account for purposes of allocating
Qualified Matching Contributions, or it may determine that
allocations of Qualified Matching Contributions shall be limited to a
specified group of Eligible Employees; provided, however, that the
Qualified Matching Contribution formula(s) shall not discriminate in
favor of Highly Compensated Employees. Qualified Matching
Contributions shall be paid to the Trustee as soon as reasonably
practicable following the date as of which they are allocated.
5.5 Investment of Company Contributions. The Trustee shall invest
the Company Contributions it receives in accordance with Section 6.2.
<PAGE>
5.6 Limits on Company Contributions. This Section briefly describes
the rules that limit the amount of Company Contributions that may be
contributed to a Participant's Account for the Plan Year.
(a) Compensation Limit. A Company Contribution that is
expressed as a percentage of a Participant's Compensation may
not be based on Compensation in excess of the Compensation
Limitation in effect for the Plan Year.
(b) Average Contribution Percentage Limit. As is described
in detail in Article 14 and Article 15, Matching Contributions,
Qualified Matching Contributions or Qualified Nonelective
Contributions may be returned to certain Participants who are
Highly Compensated Employees in the event that the average
contribution percentage test or multiple-use test is not met for
the Plan Year.
(c) Section 415 "Annual Additions" Limit. As is described in
detail in Article 16, if amounts credited to a Participant's
Accounts during the Plan Year, other than earnings and Rollover
Contributions, exceed the lesser of $30,000 or 25% of the
Participant's Section 415 Compensation, then Company
Contributions may be returned to the Participant.
(d) Prospective Limitations. In order to ensure compliance
with the average contribution percentage test, the multiple-use
test and the annual additions limit, at any time during the Plan
Year and at its sole discretion the Company may reduce or
discontinue allocations of Company Contributions to any
Participant's Account. The Company may implement this reduction
or discontinuance of allocations of Company Contributions even
if its action may prevent a Participant from receiving the
maximum allocations to his or her Account allowed by law.
(e) Nondeductible or Mistaken Contributions. Any other
provision of the Plan notwithstanding, Company Contributions and
Participant Elected Contributions are conditioned upon their
deductibility under section 404 of the Code and the
qualification of the Plan under section 401(a) of the Code. If
the deductibility of a Company Contribution or Participant
Elected Contribution is denied, the amount for which a deduction
is disallowed (reduced by any losses incurred with respect to
such amount) shall be returned to the Participating Companies
within one year after the disallowance of the deduction. If a
Company Contribution or Participant Elected Contribution is made
to the Plan by reason of a mistake of fact, the amount
contributed by reason of such mistake (reduced by any losses
incurred with respect to such amount) shall be returned to the
Participating Companies within one year after the date such
contribution was made.
ARTICLE 6. INVESTMENTS AND PARTICIPANTS' ACCOUNTS.
6.1 Investment Funds. All contributions to the Plan made pursuant
to Articles 4 and 5 shall be paid to the Trust Fund established under
the Plan. All such contributions shall be invested as provided under
<PAGE>
the terms of the Trust Agreement, which may include provision for the
separation of assets into separate Investment Funds, including a
Company Stock Fund.
6.2 Investment of Contributions. Employee Contributions and Company
Contributions shall be apportioned among one or more of the
Investment Funds as the Participant may specify according to the
procedures prescribed by the Company; provided, however, that a
Participant may direct a maximum of 50 percent of Employee
Contributions, Rollover Contributions and Company Contributions to be
invested in the Company Stock Fund. In the event that a Participant
fails to make an investment election, contributions allocated to his
or her Accounts shall be invested in accordance with procedures
prescribed by the Company. A Participant may elect to change the
investment instructions with respect to future contributions
according to the procedures prescribed by the Company.
6.3 Participant Elected Contributions Account. A Participant's
Participant Elected Contribution Account shall consist of his or her
Participant Elected Contributions, adjusted to reflect transfers and
withdrawals from such Participant Elected Contributions Account and
earnings, gains, expenses and losses attributable to the Investment
Fund(s) in which the contributions are invested.
6.4 Rollover Contributions Account. A Participant's Rollover
Contributions Account shall consist of his or her Rollover
Contributions, adjusted to reflect transfers and withdrawals from
such Rollover Contributions Account and earnings, gains, expenses and
losses attributable to the Investment Fund(s) in which the
contributions are invested.
6.5 Matching Contributions Account. A Participant's Matching
Contributions Account shall consist of his or her Matching
Contributions, adjusted to reflect transfers and withdrawals from
such Matching Contributions Account and earnings, gains, expenses and
losses attributable to the Investment Fund(s) in which the
contributions are invested. Matching Contributions, determined under
Section 5.1, shall be allocated to the Matching Contributions Account
of each Participant who is entitled to a Matching Contribution
pursuant to Section 5.1. Matching Contributions shall be allocated
as of the last day of the period for which the Participant received
Compensation with respect to which the Matching Contribution is made.
6.6 Nonelective Contributions Account. A Participant's Nonelective
Contributions Account shall consist of his or her Nonelective
Contributions, adjusted to reflect transfers and withdrawals from
such Nonelective Contributions Account and earnings, gains, expenses
and losses attributable to the Investment Fund(s) in which the
contributions are invested. The Nonelective Contribution of a
Participating Company, determined under Section 5.2, shall be
allocated to the Nonelective Contribution Accounts of each
Participant who is an Eligible Employee of the Participating Company
on the date as of which the Nonelective Contribution is allocated.
The Nonelective Contribution of a Participating Company shall be
allocated to each Participant entitled to an allocation of such
Nonelective Contribution in the proportion that such Participant's
<PAGE>
Compensation while he or she was an Eligible Employee bears to the
Compensation while they were Eligible Employees of all Participants
entitled to an allocation of the Participating Company's Nonelective
Contribution. Allocations of Nonelective Contributions shall be made
as of each payroll period.
6.7 Qualified Nonelective Contributions Account. A Participant's
Qualified Nonelective Contributions Account shall consist of his or
her Qualified Nonelective Contributions, adjusted to reflect
transfers and withdrawals from such Qualified Nonelective
Contributions Account and earnings, gains, expenses and losses
attributable to the Investment Fund(s) in which the contributions are
invested.
6.8 Qualified Matching Contributions Account. A Participant's
Qualified Matching Contributions Account shall consist of his or her
Qualified Matching Contributions, adjusted to reflect transfers and
withdrawals from such Qualified Matching Contributions Account and
earnings, gains, expenses and losses attributable to the Investment
Fund(s) in which the contributions are invested.
6.9 Transfers Among Investment Funds. A Participant may elect to
reapportion the values of his or her Accounts among Investment Funds
by properly following procedures prescribed by the Company. Prior to
July 1, 1996, Participants may not elect to transfer amounts to the
Company Stock Fund. On and after July 1, 1996, transfers into the
Company Stock Fund shall be limited so that, after any such transfer,
no more than 50% of the value of the Participant's aggregate Account
is invested in the Company Stock Fund. For purposes of carrying out
Investment Fund transfers, the value of the Accounts shall be
determined as of the Valuation Date immediately preceding the
Participant's transfer election.
6.10 Allocation of Investment Income. As soon as reasonably
practicable after each Valuation Date, and within 90 days after the
removal or resignation of the Trustee, the Trustee shall value the
assets of the Trust Fund on the basis of fair market value as of the
Valuation Date (or the day of resignation or removal of the Trustee
if it is not a Valuation Date). Where separate Investment Funds have
been established pursuant to Section 6.1, the Trustee shall value
each such Investment Fund separately.
6.11 Account Statements. As soon as practicable after the last day
of each Plan Year (and after such other dates as the Company may
determine), there shall be prepared and delivered to each Participant
a written statement showing the fair market value of his or her
Accounts as of the applicable date and such other information as the
Company may determine.
ARTICLE 7. VESTING OF PARTICIPANTS' ACCOUNTS.
7.1 100 Percent Vesting. A Participant's interest in all of his or
her Participant Elected Contributions Account, Qualified Matching
Contributions Account, Qualified Nonelective Contributions Account
and Rollover Contributions Account shall be 100% vested and
nonforfeitable at all times.
<PAGE>
7.2 Vesting of Matching Contributions Accounts.
(a) If a Participant's employment with a member of the
Affiliated Group is terminated after December 31, 1989 and
before his or her Normal Retirement Age for any reason other
than Disability or death, in addition to the amounts credited to
the Accounts identified in Section 7.1, the Participant shall be
entitled to an amount equal to the "vested percentage" of his
Matching Contributions Account. Such vested percentage shall be
determined in accordance with the following schedule.
Vested
Years of Service Percentage
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
(b) In all events, a Participant's Matching Contributions
Account shall be fully vested upon termination of his or her
employment with the Company on or after attainment of his or her
Normal Retirement Age or by reason of Disability or death.
7.3 Vesting of Nonelective Contributions Accounts.
(a) In the case of (i) an individual who becomes an Employee
prior to April 1, 1991 or (ii) an individual who is classified
by the Company as a temporary employee during the month of March
1991 and who becomes an Employee on April 1, 1991, his
Nonelective Contributions Account shall vest in accordance with
the provisions of Section 7.2.
(b) In the case of any individual who becomes an Employee on
or after April 1, 1991 (other than a temporary employee
described in clause (ii) of Section 7.3(a), he or she shall
become fully vested in his or her Nonelective Contributions
Account upon the earlier of his or her completion of five (5)
Years of Service or his or her termination of employment on or
after attainment of his or her Normal Retirement Age or by
reason of Disability or death. If the employment of such a
Participant terminates prior to his or her completion of five
(5) Years of Service, attainment of Normal Retirement Age,
Disability or death, he or she shall have no vested interest in
his or her Nonelective Contributions Account.
7.4 Forfeitures. If a Participant ceases to be an Employee at a
time when he or she is not yet fully vested in his or her Nonelective
Contributions Account or Matching Contributions Account, the unvested
amount of his or her Nonelective Contributions Account and Matching
Contributions Account shall constitute a Forfeiture for the Plan Year
in which employment terminated. Forfeitures shall be applied to
reduce Nonelective Contributions and Matching Contributions for the
Plan Year. If the Participant is rehired as an Employee, then the
<PAGE>
portion of his or her Nonelective Contributions Account or Matching
Contributions Account that constituted a Forfeiture shall be
reinstated to the Nonelective Contributions Account or Matching
Contributions Account, as applicable, as of the close of the Plan
Year in which the rehire occurs, but only if the Participant returns
to the service of a Participating Company before incurring a Five
Year Break in Service. To the extent that Forfeitures for the Plan
Year in which the Participant is rehired are insufficient to
reinstate the rehired Participant's Forfeiture, then the appropriate
Participating Company shall make a special contribution in the amount
required to reinstate the Forfeiture. In the case of a Participant
who was not fully vested at the time of his or her termination of
employment, receives a distribution out of his or her vested Account
balance and subsequently returns to a Participating Company's service
before incurring a Five Year Break in Service, a separate account for
the Participant's remaining interest in the Plan as of the time of
the distribution shall be maintained. At any time, the Participant's
vested interest in such account shall be an amount "X" determined in
accordance with the following formula:
X = P(AB + D) - D
For purposes of such formula, "P" is the vested percentage at the
relevant time; "AB" is the account balance at the relevant time and
"D" is the amount of the prior distribution.
In the event a Participant's service with a Participating Company
terminates and no payment of the Participant's nonforfeitable
interest is made, the forfeitable amount of the Participant's
interest shall be forfeited after the Participant has incurred a Five
Year Break in Service, as of a Valuation Date determined in a uniform
and consistent manner by the Company. In the event the Participant
returns to the service of a Participating Company before incurring a
Five Year Break in Service, the Participant's Account shall exist as
though no forfeiture had taken place.
7.5 Vesting on Reemployment.
(a) Years of Service completed prior to any Break in Service
shall not be counted in determining a Participant's
nonforfeitable interest under the Plan if, at the time of the
earlier termination of employment, the Participant did not have
any nonforfeitable interest under the Plan to an accrued benefit
derived from Nonelective Contributions or Matching Contributions
and the number of the Participant's consecutive one-year Breaks
in Service equals or exceeds the greater of five (5) or the
aggregate number of his Years of Service prior to such Break in
Service.
(b) In the case of a Participant who incurs a Five Year Break
in Service, Years of Service completed by such Participant after
the Five Year Break in Service shall not be counted to increase
the Participant's nonforfeitable interest in his or her Account
as determined prior to the Five Year Break in Service.
<PAGE>
7.6 Determination of Account Balance. Whenever a Participant or his
or her Beneficiary is entitled to receive the entire amount or a
percentage of his or her Account balance, the amount of such balance
(including the value of any Company Stock held in his or her Account)
shall be the amount in (or value of) such Account as of the Valuation
Date immediately preceding the date of distribution.
7.7 Lost Participant or Beneficiary. In the event that a
Beneficiary or Participant cannot be located at the time a benefit is
payable from the Plan to him or her then, at the close of the 12-
consecutive-month period following the date on which the amount
became payable, the amount shall be treated as a Forfeiture. Such a
Forfeiture shall nevertheless be reinstated, without interest, if the
Participant or Beneficiary subsequently is located and makes a valid
claim for the benefit.
ARTICLE 8. DISTRIBUTION OF PLAN BENEFIT.
8.1 General Rule. All distributions under the Plan shall be made in
accordance with the Treasury Regulations under section 401(a)(9) of
the Code, including Treasury Regulation section 1.401(a)(9)-2 or its
successor. Such regulations are incorporated in the Plan by
reference and shall override any inconsistent provisions of the Plan.
8.2 Events Permitting Distribution. No distribution may be made of
any amounts credited to a Participant's Account except:
(a) After the Participant's death, Disability or termination
of employment for any other reason;
(b) On or after termination of the Plan, provided that
(i) neither the Participating Company nor any Affiliate of the
Participating Company maintains a successor defined contribution
plan (other than an employee stock ownership plan) and (ii) the
Participant's distribution is made in the form of a lump sum;
(c) On or after the disposition, to an entity that is not an
Affiliate of the Participating Company, of substantially all of
the assets used by the Participating Company in a trade or
business, but only with respect to a Participant who continues
employment with the entity acquiring such assets, and provided
that (i) the Participant's distribution is made in the form of a
lump sum and (ii) the Participating Company continues to
maintain the Plan following such disposition;
(d) On or after the disposition, to an entity that is not an
Affiliate of the Participating Company, of the interest of the
Participating Company or an Affiliate of the Participating
Company in a subsidiary, but only with respect to a Participant
who continues employment with such subsidiary, and provided that
(i) the Participant's distribution is made in the form of a lump
sum and (ii) the Participating Company continues to maintain the
Plan following such disposition; or
<PAGE>
(e) As required by applicable law or in connection with a
QDRO, as provided in Article 9, or an in-service withdrawal, as
provided in Article 11.
8.3 Time of Distribution.
(a) Except as provided in Sections 8.5, 8.8 and 8.10, and
unless a Participant elects otherwise, the distribution of a
Participant's Plan Benefit under Section 8.6 shall occur or
commence not later than sixty (60) days after the close of the
Plan Year in which occurs the later of (i) the Participant's
attainment of Normal Retirement Age or (ii) the Participant's
termination of employment. If distribution of a Participant's
Plan Benefit has not yet occurred, on or about nine (9) months
before the Participant's Normal Retirement Date, the Company
shall furnish the Participant with a written explanation of the
terms, conditions and forms of distributions available from the
Plan including, where applicable, a general description of the
Lifetime Annuity (as defined in Section 8.7), and with a
description of the procedures for electing a form of
distribution.
(b) A Participant may elect to receive or commence receipt of
his or her Plan Benefit at any reasonable time after termination
of employment. If the Participant elects, distribution shall in
any event commence not later than one (1) year after the end of
the Plan Year (i) in which he or she terminates employment after
attaining Normal Retirement Age or due to Disability, or
(ii) which is the fifth Plan Year following the Plan Year in
which he or she otherwise terminates employment (except by
reason of his or her death). An election under this Subsection
must be made in writing, must be made not more than ninety (90)
days before the date the distribution is to occur or commence
and must not be made before the Participant receives a written
notice describing the material features and explaining the
relative values of the optional forms of benefit available under
the Plan, in a manner that would satisfy the notice requirements
of Section 417(a)(3) of the Code. Not less than thirty (30)
days and not more than ninety (90) days before the Participant's
distribution is to occur or commence, the Company shall provide
the Participant with such a written notice, which also shall
inform the Participant of his or her right (if applicable) to
defer receipt of his distribution until Normal Retirement Age.
8.4 Amount of Plan Benefit. A Participant's Plan Benefit shall
consist of the Participant's entire interest in his or her Accounts,
to the extent vested.
8.5 Latest Time of Distribution. In no event shall a Participant's
Plan Benefit be distributed later than the April 1 next following the
calendar year in which the Participant attained age 70 1/2, whether
or not the Participant is then an Employee.
<PAGE>
8.6 Forms of Distribution.
(a) A Participant's Plan Benefit shall be distributed in any
of the following forms that he or she elects; provided, however,
that only a Participant who has an Hour of Service prior to
April 1, 1996 may elect a Lifetime Annuity described in
Paragraph (5):
(1) A single sum cash distribution.
(2) A single sum distribution in full shares of Company
Stock (with the value of any fractional share paid in cash).
(3) A single sum distribution paid in a combination of
cash and full shares of Company Stock.
(4) Cash installments paid at least annually over a period
certain not exceeding the life expectancy of the Participant or
the joint life expectancy of the Participant and his or her
designated Beneficiary. All life expectancies shall be
determined not later than the date when payments commence and
shall not be redetermined thereafter. The amount of each
installment payment shall be determined by dividing the
remaining years in the period certain by the value of the
Participant's Account.
(5) Subject to the provisions of Section 8.7, a
nontransferable annuity contract that provides for annuity
payments at least annually over the lifetime of the Participant
or the joint lifetimes of the Participant and his or her
designated Beneficiary, and that may provide for a "period
certain" feature (a "Lifetime Annuity")."
(b) If, by the time for the distribution of a Participant's
Plan Benefit in accordance with the foregoing provisions of this
Article 8, the Participant has not made any election as to the
form of the distribution, payment of his or her Plan Benefit
shall be made in the form of a single sum cash distribution.
(c) To the extent that a distribution is to be made in a
number of shares of Company Stock that exceeds the number of
shares in the Participant's Account under the Company Stock
fund, amounts in one or more other Investment Funds comprising
the Participant's Account shall be applied to purchase the
required additional shares of Company Stock at their fair market
value at the time of purchase.
8.7 Lifetime Annuities. This Section shall apply to any Participant
with an Hour of Service prior to April 1, 1996, who elects a Lifetime
Annuity. The Plan Benefit of a Participant who elects to receive a
Lifetime Annuity, as provided in Section 8.6(a)(5) above, shall be
distributed to the Participant in the applicable form of annuity
described in Subsection (a) below, unless, prior to the Annuity
Starting Date (as defined in Subsection (d) below) with respect to
such Lifetime Annuity distribution, the Participant elects to waive
such Lifetime Annuity, in which case he or she may elect any other
form of distribution provided under Section 8.6. A married
Participant may waive the Qualified Joint and Survivor Annuity once
<PAGE>
he or she elects a Lifetime Annuity only as provided in
Subsection (b) below. If the Participant dies before his Annuity
Starting Date, the provisions of Section 8.9 shall apply.
(a) Lifetime Annuity Forms.
(1) In the case of a Participant who is legally married on
the Annuity Starting Date, the normal form of Lifetime Annuity
that applies shall be a Qualified Joint and Survivor Annuity.
(2) In the case of a Participant who is not married on the
Annuity Starting Date, the normal form of Lifetime Annuity that
applies shall be a Single Life Annuity.
(b) Waiver of Lifetime Annuity.
(1) Not more than ninety (90) days before the Annuity
Starting Date, a married Participant who elects to receive a
Lifetime Annuity may elect to waive the Qualified Joint and
Survivor Annuity form of benefit and to receive payment instead
in one of the other forms specified in Section 8.6(a)(1)-(4) or
as a Single Life Annuity. If the Participant elects the form of
benefit in Section 8.6(a)(4), he or she also may designate a
Beneficiary other than his or her spouse to receive any benefits
payable following his or her death. A Participant may revoke
any election previously made under this Subsection and may make
a new election hereunder any number of times before the Annuity
Starting Date. A Participant's election or revocation under
this Subsection shall be in writing.
(2) An election by a Participant who elects to receive a
Lifetime Annuity to waive the Qualified Joint and Survivor
Annuity shall not be valid unless the Participant has received
the notice and explanation described in Subsection (c) below and
the spouse of the Participant consents in writing to such
election in a manner that satisfies the spousal consent
requirements set forth in Section 8.13, provided that the
Participant's election also must designate a specific
alternative form of benefit (as well as a Beneficiary) that may
not be changed without further spousal consent (unless expressly
permitted by the spouse's consent or a prior consent). Spousal
consent is not required in order for a Participant to reinstate
an election to receive a Qualified Joint and Survivor Annuity,
but is required for any subsequent revocation of the election.
(c) Notice and Explanation Requirements. Not more than
ninety (90) and not less than thirty (30) days before the
Annuity Starting Date, the Company shall notify the Participant
in writing of his or her right to elect to waive the normal form
of Lifetime Annuity. Such written notification shall include:
(1) An explanation of the terms and conditions of the
normal form of Lifetime Annuity, including the circumstances
under which it will be provided if no election is made to waive
such form of benefit;
<PAGE>
(2) A statement of the Participant's right to make an
election to waive the normal form of Lifetime Annuity and an
explanation of the effect of such an election;
(3) A statement of the Participant's right to revoke an
election to waive the normal form of Lifetime Annuity and an
explanation of the effect of such a revocation;
(4) A statement of the right, if any, of the Participant's
spouse to consent to the Participant's election to waive the
normal form of Lifetime Annuity and to the Participant's
designation of an alternative form of benefit or Beneficiary;
(5) A general explanation of the relative financial impact
of an election to waive the normal form of Lifetime Annuity;
(6) A general description of the material features
(including eligibility conditions) and an explanation of the
relative values of the alternative forms of benefit available
under the Plan; and
(7) A statement regarding the availability of the
additional information described below in this Subsection (c).
Within thirty (30) days after receipt of a timely written request
from the Participant for additional information, the Company shall
provide the Participant with a written explanation, in nontechnical
language, of the terms and conditions of the alternative forms of
benefit available under the Plan and the financial effect (in terms
of dollars per monthly payment) upon the Participant's monthly
benefit in case of an election to waive the normal form of Lifetime
Annuity and receive an alternative form of benefit.
(d) Definition of Annuity Starting Date. For purposes of
this Article, the term "Annuity Starting Date" shall mean the
first day of the first period for which an amount is paid as an
annuity or, in the case of a benefit not payable as an annuity,
the first day on which all events have occurred that entitle the
Participant (or, if applicable, a Beneficiary) to receive or
commence receipt of the benefit.
8.8 Time of Distribution of Death Benefit. If a Participant dies
before receiving his or her Plan Benefit, then the Participant's
Beneficiary shall be entitled to receive the Plan Benefit pursuant to
this Section 8.8. (Section 8.12 provides that the surviving spouse
of a married Participant shall be his or her Beneficiary, unless the
Participant, with the spouse's consent, has otherwise elected prior
to his or her death.) The Participant's Plan Benefit shall be
distributed to the Participant's Beneficiary no later than 12 months
after the Participant's death. If, however, a married Participant
has elected to receive his or her Plan Benefit in the form of a
Lifetime Annuity in accordance with Section 8.6(a)(5) and Section 8.7
(and has not subsequently waived such Lifetime Annuity) and then dies
before the Annuity Starting Date (as defined in Section 8.7(d)) with
his or her spouse surviving him or her, and if the value of the
Participant's entire vested Plan Benefit exceeds $3,500, the
<PAGE>
distribution shall not occur or commence until the Participant would
have attained (if not dead) the later of Normal Retirement Age,
unless an earlier distribution is elected by the surviving spouse.
In this event, the Participant's surviving spouse may elect to
receive or commence receipt of the Participant's death benefit at any
reasonable time after the Participant's death. Such an election must
be made in writing not more than ninety (90) days before the date the
distribution is to occur or commence. For this purpose, if the
Participant's vested Plan Benefit at the time of any distribution or
withdrawal exceeded $3,500, the value of his or her vested Plan
Benefit at all times thereafter will be deemed to exceed $3,500.
8.9 Distribution of Death Benefit.
(a) Notwithstanding any Beneficiary designation that may be
to the contrary, if a Participant who has elected to receive a
Lifetime Annuity (and who has not subsequently waived such
Lifetime Annuity in accordance with Section 8.7(b)) dies before
the Annuity Starting Date with respect to such Lifetime Annuity,
and if he or she is married at the time of his or her death, the
vested balance in his or her Account shall be applied toward the
purchase of a Single Life Annuity for the Participant's
surviving spouse.
(b) Except as provided in Subsection (a) above, if a
Participant dies before the Annuity Starting Date (i.e., with
respect to any form of distribution specified in Section
8.6(a)(1)-(4), the vested balance in his or her Account shall be
distributed to his or her Beneficiary in such form as such
Beneficiary may elect from among the alternatives specified in
Section 8.6(a)(1)-(3). In the absence of an election by the
Beneficiary, payment shall be made in the form designated by the
Participant, or, if none, in a single sum cash distribution.
(c) If a Participant dies after the Annuity Starting Date
with respect to the form of distribution in effect under Section
8.6, the remaining amounts that had not yet been distributed
under such form of distribution, if any, shall be paid to the
Participant's Beneficiary in accordance with the applicable
terms of such distribution method. In the case of a distribution
in the form of an annuity contract (including a Lifetime
Annuity) under Section 8.6(a)(4) or (5), the amount and timing
of death or survivor benefit payments, if any, shall be as
determined under such annuity contract.
8.10 Small Benefits: Lump Sum. Any other provision of this Article
8 notwithstanding, if the value of a Participant's entire Plan
Benefit equals $3,500 or less (including a Plan Benefit of $0) before
the first payment of the Plan Benefit is made, then the Plan Benefit
shall be paid (or deemed paid if the Plan Benefit is $0) as soon as
reasonably practicable after the Participant's termination of
employment to the Participant (or to his or her Beneficiary in the
case of the Participant's death) in a single lump sum in cash.
8.11 Direct Rollovers. A "Distributee" who is a Participant, an
Alternate Payee under a QDRO or a Beneficiary who is a deceased
<PAGE>
Participant's surviving spouse may elect to have a distribution of a
Plan Benefit paid directly to the Eligible Retirement Plan (defined
in Subsection (a) below) specified by the Distributee in a Direct
Rollover, except to the extent that the distribution is not an
Eligible Rollover Distribution (defined below in Subsection (b)).
(a) Definition of Eligible Retirement Plan. An Eligible
Retirement Plan is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to a Beneficiary who
is the Participant's surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual
retirement annuity.
(b) Definition of 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: (1)
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 10 years or more; (2) any distribution to the extent the
distribution is required under section 401(a)(9) of the Code;
and (3) the portion of any distribution that is not includable
in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
8.12 Beneficiary. Subject to Section 8.13, a Participant's
Beneficiary shall be the person(s) so designated by the Participant.
If the Participant has not made an effective designation of a
Beneficiary, or if the named Beneficiary is not living when a
distribution is to be made, then (a) the then-living spouse of the
deceased Participant shall be the Beneficiary or (b) if none, the
then-living children of the deceased Participant shall be the
Beneficiaries in equal shares or (c) if none, the then-living parents
of the deceased Participant shall be the Beneficiaries in equal
shares, or (d) if none, the then-living brothers and/or sisters of
the deceased Participant shall be the Beneficiaries in equal shares,
or (e) if none, the estate of the Participant shall be the
Beneficiary. The Participant may change his or her designation of a
Beneficiary from time to time. Any designation of a Beneficiary (or
an amendment or revocation thereof) shall be effective only if it is
made according to the procedures prescribed by the Company and is
received by the Participating Company prior to the Participant's
death.
8.13 Spousal Consent Needed to Name a Nonspouse Beneficiary. Any
other provision of the Plan notwithstanding, in the case of a married
Participant, any designation of a person other than his or her spouse
<PAGE>
as Beneficiary shall be effective only if the spouse consents in
writing to the designation. The spouse's consent shall be witnessed
by a notary public or, if permitted by the Company, by a
representative of the Plan. A consent to a designation of a
particular Beneficiary, once given by the spouse, shall not be
revocable by that spouse. The designation of a particular
Beneficiary may not be changed without further spousal consent
(unless the consent or a prior consent expressly permits designations
by the Participant without any requirement of further consent by the
spouse). However, a designation of Beneficiary made by a Participant
and consented to by the spouse may be revoked by the Participant in
writing without the consent of the spouse at any time prior to the
Annuity Starting Date. Any new election must comply with the
requirements of this section. The spouse's consent shall not be
required if the Participant establishes to the Company's satisfaction
that the spouse's consent cannot be obtained because the spouse
cannot be located or because of other reasons deemed acceptable under
applicable regulations. The Company may require such evidence of the
right of any person to receive payment under this Section as the
Company may deem advisable. The Company's determination of the right
under this Section of any person to receive payment shall be
conclusive.
8.14 Determination of Marital Status. Whether a Participant is
married shall be determined by the Company as of the date when
distribution is to be made.
8.15 Incapacity. If, in the Company's opinion, a Participant or
Beneficiary for any reason is incompetent or becomes unable to handle
properly any property distributable to him or her under the Plan,
then the Company may make any arrangements that it determines to be
beneficial to the Participant or Beneficiary for the distribution of
such property on his or her behalf, including (without limitation)
the distribution of such property to the guardian, conservator,
spouse or dependent(s) of the Participant or Beneficiary.
ARTICLE 9. DISTRIBUTION TO AN ALTERNATE PAYEE UNDER A
QDRO; FREEZING PARTICIPANT ACCOUNTS
9.1 Immediate Distribution.
(a) Any distribution to an Alternate Payee of all or some
portion of a Participant's Participant Elected Contributions
Account, Qualified Nonelective Contributions Account, Qualified
Matching Contributions Account and Rollover Account pursuant to
a domestic relations order, including any interest in a
Participant's Accounts awarded to an Alternate Payee by a
domestic relations order, may be made as soon as reasonably
practicable after the order is determined to be a QDRO, if:
(1) The QDRO specifies such time of distribution; or
(2) The Alternate Payee has consented in writing to
such time of distribution.
The foregoing notwithstanding, any distribution of all or some
portion of Participant's Participant Elected Contributions
<PAGE>
Account, Qualified Nonelective Contributions Account, Qualified
Matching Contributions Account and Rollover Account (as
applicable) shall be made as soon as practicable after the order
is determined to be a QDRO in the event that a distribution of
Participant's Matching Contributions Account and Nonelective
Contributions Account (as applicable) is otherwise required to
be distributed to the Alternate Payee under Section 9.1(b). If
such a distribution is not required to be made under Section
9.1(b), then a separate Participant Elected Contributions
Account, Qualified Nonelective Contributions Account, Qualified
Matching Contributions Account and Rollover Account (as
applicable) will be established for the Alternate Payee pursuant
to Section 9.2 and distributed to Alternate Payee as required
under Section 9.5.
(b) Any distribution to an Alternate Payee of all or some
portion of a Participant's Matching Contributions Account and
Nonelective Contributions Account pursuant to a domestic
relations order, including any interest in a Participant's
Account awarded to an Alternate Payee by a domestic relations
order shall be made in the cases described below, as soon as
practicable after such order is determined to be a QDRO:
(1) Participant is 100% vested in Participant's Matching
Contributions Account and Nonelective Contributions Account;
(2) Alternate Payee consents in writing to such time of
distribution and the amount or percentage assigned or
distributable to Alternate Payee by the QDRO can be paid in full
notwithstanding the fact that Participant is not then 100%
vested in Participant's Matching Contributions Account and
Nonelective Contributions Account (as applicable); or
(3) The QDRO provides for such distribution and the amount
or percentage assigned or distributable to Alternate Payee can
be paid in full notwithstanding the fact that Participant is not
then 100% vested in Participant's Matching Contributions Account
and Nonelective Contributions Account.
9.2 Alternate Payee Accounts. In all cases where Section 9.1 above
is not applicable, separate "Alternate Payee Accounts" shall be
established for the Alternate Payee at such time as the Company shall
determine. The portion of each of the Participant's Accounts that
was assigned or made payable to the Alternate Payee by the QDRO shall
be transferred to such Alternate Payee Accounts. Unless the QDRO
otherwise provides, the transfers to the Alternate Payee Accounts
shall be made pro rata from the Participant's Accounts. Alternate
Payees may change the investment of their Alternate Payee Accounts
pursuant to Section 6.9. Alternate Payees may not take loans or make
withdrawals from their Alternate Payee Accounts under Articles 10 and
11. Alternate Payees may not make any contributions to their
Alternate Payee Accounts.
9.3 Freezing Participant Accounts. If the Plan Administrator
receives a notice of adverse claim (other than a domestic relations
order) against a Participant's Accounts by a potential Alternate
<PAGE>
Payee, then the Plan Administrator shall "freeze" all or a portion of
the Participant's Accounts for a period of up to 90 days from the
date the Participant requests a loan, withdrawal or distribution, to
permit the potential Alternate Payee or the Participant (or both) to
obtain a domestic relations order. If the Plan Administrator
receives a domestic relations order, the Plan Administrator shall
freeze all or a portion of the Participant's Accounts for a period of
up to 18 months from the date the Participant requests a loan,
withdrawal or distribution, to permit the Alternate Payee or the
Participant (or both) to obtain a QDRO. To the extent that an
Account is frozen, no loans, withdrawals or distributions are
permitted.
9.4 Death of Alternate Payee. In all cases, if Alternate Payee dies
prior to the time that Alternate Payee has received all or any
portion of the benefits assigned Alternate Payee by a QDRO, the
benefits shall be paid to the Beneficiary(ies) designated by
Alternate Payee on forms provided by the Plan Administrator for this
purpose. If Alternate Payee has not made an effective designation of
Beneficiary or if the designated Beneficiary is not living when a
distribution is to be made, the entire balance in his or her
Alternate Payee Accounts shall be distributed to his or her estate
(unless the QDRO otherwise provides).
9.5 Distributions From Alternate Payee Accounts. Distributions to
Alternate Payees from their Alternate Payee Accounts shall be made as
soon as reasonably practicable after the earliest of:
(a) The date on which the Alternate Payee is 100% vested
in his or her Accounts;
(b) The date the Participant terminates employment for
any reason; or
(c) The date when the Participant's remaining Plan
benefit is distributed pursuant to Article 8.
ARTICLE 10.LOANS.
10.1 Amount of Loan. A Participant may obtain a cash loan from his
or her Accounts if he or she is an Employee who is not on a leave of
absence at the time of the loan and his or her Plan participation is
not suspended pursuant to Section 3.4. The minimum amount of any
such loan shall be $1,000 at the time the loan is elected. No loan
shall be granted under the Plan if such loan, when aggregated with
the Participant's outstanding loans under any other qualified plans
maintained by any member of the Affiliated Group, would exceed the
lesser of:
(a) $50,000, less the amount by which such aggregate balance
has been reduced through repayments during the period of
12 months ending on the day before the new loan is made; or
(b) One-half of the Participant's vested interest in his or
her Accounts.
<PAGE>
10.2 Terms of Loans.
A loan to a Participant shall be made on such terms and conditions as
the Company may determine, provided that the loan shall:
(a) Be evidenced by a promissory note signed by the
Participant and secured by one-half of the value of his or her
Accounts, to the extent vested (regardless of the amount of the
loan or the source of the loan funds);
(b) Bear interest at a fixed rate commensurate with the
interest rates charged by major financial institutions for
similar loans;
(c) Provide for level amortization over its term with
payments at monthly or more frequent intervals, as determined by
the Company;
(d) Provide for loan payments (1) to be withheld whenever
possible through periodic payroll deductions from the
Participant's compensation from any member of the Affiliated
Group or (2) to be paid by check or money order whenever payroll
withholding is not possible;
(e) Provide for repayment in full on or before the earlier of
(1) the date when the Participant severs from all employment
with any member of the Affiliated Group or (2) the date (A) five
years after the loan is made or (B) 20 years after the loan is
made if the loan is used to acquire a dwelling unit which within
a reasonable time is to be used as the Participant's principal
residence;
(f) Provide that a Participant may not receive any
distribution from any of his or her Accounts under Article 8 or
11 until the loan obligation is repaid, except to the extent
that all or any part of such distribution is used to repay the
outstanding balance of the loan; and
(g) Provide that a Participant's Accounts may not be applied
to the satisfaction of the Participant's loan obligations before
the Accounts become distributable under Article 8, unless the
Company determines that the loan obligations are in default
because a periodic payment is more than 60 days past due and
takes such actions as the Company deems necessary or appropriate
to cause the Plan to realize on its security for the loan. Such
actions may include (without limitation) an involuntary
withdrawal from the Participant's Accounts, whether or not the
withdrawal would be permitted under Article 11 on a voluntary
basis; provided that an involuntary withdrawal attributable to
Company Contributions made with respect to Plan Years that ended
less than 24 months prior to the date of the withdrawal
(adjusted to reflect any earnings, appreciation or losses
attributable to Company Contributions) or attributable to
Participant Elected Contributions shall be permitted only to the
extent that the hardship requirements of Code section
401(k)(2)(B)(i)(IV) and of sections 1.401(k)-1(d)(2)(ii) and
<PAGE>
1.401(k)-1(d)(2)(iii)(A) of the Treasury Regulations are met.
The Company may take such other action as it deems necessary to
recover the balance of a loan secured by the Participant's
Accounts. If an involuntary withdrawal occurs (or would have
occurred if permitted under this Section, the Participant shall
not be permitted to obtain a loan under the Plan thereafter.
10.3 Company Consent
The Company, in its sole discretion, may withhold its consent to any
loan under this Article or may consent only to the borrowing of a
part of the amount requested by the Participant. The Company shall
act upon requests for loans in a uniform and nondiscriminatory
manner, consistent with the requirements of section 401(a), section
401(k) and related provisions of the Code.
10.4 Source of Loans
If a Participant requests and is granted a loan, a Loan Account shall
be established for the Participant. The Loan Account shall be held
by the Trustee as part of the Loan Fund. The amount of the loan shall
be transferred to the Participant's Loan Account from the
Participant's other Accounts and shall be disbursed from the Loan
Account. The promissory note executed by the Participant shall be
held by the Trustee (or by the Company as agent of the Trustee) and
the promissory note shall be treated as an investment of the
Participant's Loan Account.
10.5 Disbursement of Loans
A Participant may request a loan by completing the loan request
procedures prescribed by the Company. A loan shall be disbursed as
soon as reasonably practicable after the date on which the Company
(or its agent) receives the loan request (subject to the Company's
consent).
10.6 Loan Fees
A Participant who obtains a loan under this Article shall be required
to pay such fees as the Company may impose in order to defray the
cost of administering loans from the Plan.
10.7 Valuation Date
For purposes of this Article, the value of a Participant's Accounts
shall be determined as of a Valuation Date within a reasonable
period, not generally to exceed 30 days, on or after the date on
which the Company (or its agent) receives the prescribed loan
request.
10.8 Loan Payments and Defaults. Principal and interest payments on
a Participant's loan shall be credited initially to the Participant's
Loan Account and shall be transferred as soon as reasonably
practicable thereafter to the Participant's other Accounts in the
ratio specified by the Participant under Section 6.2 for the
investment of future contributions. Any loss caused by nonpayment or
<PAGE>
other default on a Participant's loan obligations shall be borne
solely by that Participant's Accounts. If a Participant defaults on
a Plan loan, both his or her participation and ability to obtain a
Plan loan shall be suspended for 12 months. The consequences of
suspension from participation in the Plan are described in Section
3.4.
ARTICLE 11.WITHDRAWALS WHILE EMPLOYED
11.1 Age 59 1/2 and Disability Withdrawals; Withdrawals from Rollover
Account.
(a) A Participant who is an Employee may withdraw up to the
full amount of his or her Rollover Account.
(b) A Participant who is an Employee and who has attained age
59 1/2 may withdraw up to the full amount of his or her vested
Accounts.
(c) A Participant who is an Employee and who is Disabled may
withdraw up the full amount of his or her vested Accounts.
11.2 Hardship Withdrawals. A Participant who is an Employee may take
a Hardship Withdrawal of all or any portion of his or her previously
unwithdrawn Employee Contributions and earnings thereon accrued prior
to January 1, 1988. A Hardship Withdrawal may be made only if the
Company determines that it is required on account of one or more of
the following Hardships:
(a) The construction or purchase (excluding mortgage
payments) of a principal residence of the Participant;
(b) The payment of tuition and related educational fees for
up to 12 months of post-secondary education for the Participant
or his or her spouse, children or dependents;
(c) The payment of medical expenses described in section
213(d) of the Code incurred by the Participant or the
Participant's spouse or dependents, or to obtain medical care
giving rise to such expenses;
(d) The payment of expenses incurred by the Participant for
the funeral of a family member;
(e) The prevention of the eviction of the Participant from
his or her principal residence or foreclosure on a mortgage on
the Participant's principal residence; or
(f) A financial need that has been identified as a deemed
immediate and heavy financial need in a ruling, notice or other
document of general applicability issued under the authority of
the Commissioner of Internal Revenue.
For purposes of this Section, the term "dependent" shall be
defined as set forth in Section 152 of the Code.
<PAGE>
11.3 Amount of a Hardship Withdrawal. The maximum amount of a
Hardship Withdrawal is the amount necessary to satisfy the immediate
and heavy financial need caused by the Hardship, including amounts
necessary to pay taxes or penalties that the Company determines may
be reasonably anticipated to result from the Hardship Withdrawal.
The determination of the amount of a permitted Hardship Withdrawal is
made by the Company only after the Participant has obtained all
withdrawals and distributions, other than hardship withdrawals, and
all nontaxable loans under all plans maintained by the Affiliated
Group.
11.4 Consequences of a Hardship Withdrawal. The following
consequences shall follow a Participant's Hardship Withdrawal:
(a) Plan participation and all employee before-tax and after-
tax employee contributions to the Plan and other qualified and
nonqualified deferred compensation plans sponsored by members of
the Affiliated Group shall be suspended for a period of 12
months. The consequences of suspension from the Plan are
described in Section 3.4.
(b) For the calendar year following the Hardship Withdrawal,
the maximum amount of Participant Elected Contributions and all
other before-tax employee contributions to qualified retirement
plans sponsored by members of the Affiliated Group shall be
limited to the applicable limit under section 402(g) of the Code
for that calendar year ($9,500 for 1996), minus the amount of
the Participant's Participant Elected Contributions and all
other before-tax employee contributions to qualified retirement
plans sponsored by members of the Affiliated Group for the
calendar year of the Hardship Withdrawal.
11.5 Valuation Date. For purposes of this Article, the value of a
Participant's Accounts shall be determined as of the Valuation Date
preceding the date on which the withdrawal is to be paid.
11.6 Source of Withdrawals. Withdrawals shall be paid from the
affected Accounts. If more than one Account is available to pay the
withdrawal because the Participant elected to invest in more than one
Investment Fund, the withdrawal shall be made from the subaccount(s)
designated by the Participant, subject to such ordering restrictions
as the Company may adopt.
11.7 Payment of Withdrawals. A Participant may request a withdrawal
by following the procedures prescribed by the Company. A withdrawal
shall be paid as soon as reasonably practicable after the date on
which the Company receives the prescribed withdrawal request.
Withdrawals shall be paid only in cash.
11.8 Limitations on Withdrawals. A Participant shall not be
permitted to make more than one withdrawal under this Article in any
period of six consecutive months; provided, however, that withdrawals
made at the same time shall be considered a single withdrawal.
<PAGE>
ARTICLE 12.HIGHLY COMPENSATED EMPLOYEE DEFINITION.
12.1 Determining the Highly Compensated Employee Group. As a general
rule, an individual is deemed to be a Highly Compensated Employee for
any Plan Year if the individual is an active Employee who, during the
look-back year:
(a) Received Total Compensation of more than $75,000 (or such
larger amount as may be adopted by the Commissioner of Internal
Revenue to reflect a cost-of-living adjustment);
(b) Received Total Compensation of more than $50,000 (or such
larger amount as may be adopted by the Commissioner of Internal
Revenue to reflect a cost-of-living adjustment) and was a member
of the Top-Paid Group; or
(c) Was an officer of a member of the Affiliated Group and
received Total Compensation of more than 50 percent of the
dollar limitation in effect under section 415(b)(1)(A) of the
Code.
The term "Highly Compensated Employee" also includes: (1) Employees
who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and
the Employee is one of the 100 Employees who received the most Total
Compensation from members of the Affiliated Group during the
determination year; and (2) Employees who are five-percent owners at
any time during the look-back year or determination year. If no
officer has satisfied the Total Compensation requirement of (c) above
during either a determination year or look-back year, the highest
paid officer for such year shall be treated as a Highly Compensated
Employee.
If an Employee is, during a determination year or look-back year, a
Family Member of either a five-percent owner who is an active or
former Employee or a Highly Compensated Employee who is one of the
10 most Highly Compensated Employees ranked on the basis of Total
Compensation paid during such year, then the Family Member and the
five-percent owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the Family Member and the five-percent
owner or top-ten Highly Compensated Employee shall be treated as a
single Employee receiving compensation and Plan contributions and
benefits of the Family Member and five-percent owner or top-ten
Highly Compensated Employee.
For purposes of this Section, the determination year shall be the
Plan Year. The look-back year shall be the 12-month period
immediately preceding the determination year.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the
Top-Paid Group, the top 100 Employees, the number of Employees
treated as officers and the Total Compensation that is considered,
will be made in accordance with section 414(q) of the Code and
regulations thereunder.
12.2 Special Elections for Determining the Highly Compensated
Employee Group. The Company may elect to modify the method described
<PAGE>
in Section 12.1 for determining the Highly Compensated Employee group
by making any one or more of the following elections; provided,
however, that any election under Subsection (a) or (b) is uniform and
consistent with respect to all situations in which the group of
Highly Compensated Employees must be determined for the Affiliated
Group.
(a) The Company may make the calendar-year calculation
election in accordance with Treasury Regulation section
1.414(q)-1T, A-14(b), in which case the look-back year shall be
the calendar year ending within the Plan Year and the
determination year shall be the portion of the Plan Year
extending beyond the look-back year.
(b) The Company may elect to apply the $50,000 limit
described in Subsection (b) of Section 12.1 without regard to
whether an Employee is in the Top-Paid Group and, in that case,
may disregard the $75,000 limit described in Subsection (a) of
Section 12.1.
(c) The Company may elect to apply the "simplified method"
described in Section 12.3 for identifying Highly Compensated
Employees.
12.3 Determining the Highly Compensated Employee Group Using the
Simplified Method. Under the simplified method, as described in IRS
Notice 93-42 or its successor, an individual is deemed to be a Highly
Compensated Employee for any Plan Year if he or she would be a Highly
Compensated Employee under Section 12.1 applied on the basis of the
determination year only. In addition, the Company may choose to
apply the simplified method on the basis of its workforce as of a
"snapshot" day that is reasonably representative of the workforce
throughout the Plan Year. If the snapshot method is used and the
snapshot day precedes the last day of the determination year, Total
Compensation shall be projected to the end of the determination year
by annualizing the Total Compensation as of the snapshot day.
Individuals who are Employees during the determination year but who
are not employed on the snapshot day, and who must be categorized as
Highly Compensated Employees or Nonhighly Compensated Employees for
purposes of applying nondiscrimination tests (such as those set forth
in Articles 13-15) shall be deemed Nonhighly Compensated Employees;
except that the Company shall deem a Highly Compensated Employee any
such Employee who:
(a) Ceased to be an Employee prior to the snapshot day and
who was deemed a Highly Compensated Employee for the year prior
to the determination year;
(b) Ceased to be an Employee prior to the snapshot day and
who (1) was then a five-percent owner; (2) had Total
Compensation for the determination year greater than or equal to
the Total Compensation (projected, if applicable) of any
Employee treated as a Highly Compensated Employee on the
snapshot day on the basis of the $75,000 or $50,000 limit
described in Subsection (a) or (b) of Section 12.1; or (3) was
an officer of an Affiliate and had Total Compensation greater
<PAGE>
than or equal to the Total Compensation (projected, if
applicable) of any other officer of an Affiliate treated as a
Highly Compensated Employee on the snapshot day solely on
account of his or her officer status; or
(c) Becomes an Employee after the snapshot day and who (1)
was then a five-percent owner; (2) had Total Compensation for
the determination year greater than or equal to the Total
Compensation
(projected, if applicable) of any Employee treated as a Highly
Compensated Employee on the snapshot day on the basis of the
$75,000 or $50,000 limit described in Subsection (a) or (b) of
Section 12.1; or (3) was an officer of an Affiliate and had
Total Compensation greater than or equal to the Total
Compensation (projected, if applicable) of any other officer of
an Affiliate treated as a Highly Compensated Employee on the
snapshot day solely on account of his or her officer status.
12.4 "Highly Compensated Former Employee" means a former Employee who
separated from service (or is deemed to have separated) prior to the
determination year, performs no service for any member of the
Affiliated Group during the determination year, and was a Highly
Compensated Employee as an active Employee for either the separation
year or any determination year ending on or after the Employee's 55th
birthday. The determination of who is a Highly Compensated Former
Employee will be made in accordance with section 414(q) of the Code
and regulations thereunder.
12.5 "Nonhighly Compensated Employee" for any Plan Year means any
active Employee who is not a Highly Compensated Employee.
12.6 Special Definitions Used in Article 12. The following
definitions shall apply for purposes of this Article 12:
(a) "Family Member" means an individual's spouse, lineal
ascendants and descendants, and the spouses of such lineal
ascendants and descendants.
(b) "Top-Paid Group" for any Plan Year means the top
20 percent (in terms of Total Compensation) of all Employees of
the Affiliated Group, excluding Employees covered by a
collective bargaining agreement, where the number that is 20
percent of all Employees of the Affiliated Group is determined
by excluding:
(1) Any Employee covered by a collective bargaining
agreement;
(2) Any Employee who is a nonresident alien with respect
to the United States who receives no income with a source within
the United States from a member of the Affiliated Group;
(3) Any Employee who has not completed six months of
service at the end of the Plan Year;
<PAGE>
(4) Any Employee who normally works less than 17 1/2 hours
per week;
(5) Any Employee who normally works no more than six
months during any year; and
(6) Any Employee who has not attained the age of 21 at the
end of the Plan Year."
The Company may elect, in a consistent and uniform manner, to apply
one or more of the age- and service-based exclusions above by
substituting a younger age or shorter period of service, or by not
excluding individuals on the basis of age or service.
(c) "Total Compensation" means "Compensation," as defined in Section
2.16, but determined by including amounts deferred but not refunded
under section 403(b) of the Code, under a cafeteria plan, as such
term is defined in section 125(c) of the Code, under a simplified
employee pension, as such term is defined in section 408(k) of the
Code and under a plan, including this Plan, qualified under section
401(k) of the Code.
ARTICLE 13.CONTRIBUTION LIMITATIONS: ANNUAL
DEFERRAL LIMITATIONS AND AVERAGE DEFERRAL
PERCENTAGE LIMITATIONS.
13.1 Return of Excess Deferrals. The aggregate Participant Elected
Contributions of any Participant for any calendar year, together with
his or her elective deferrals under any other plan or arrangement to
which section 402(g) of the Code applies and that is maintained by a
member of the Affiliated Group, shall not exceed the Annual Deferral
Limit. In the event that the aggregate Participant Elected
Contributions of any Participant for any calendar year, together with
any other elective deferrals (within the meaning of section 402(g)(3)
of the Code) under all plans, contracts or arrangements of the
Affiliated Group and any other employers, exceed the Annual Deferral
Limit, then the Participant may designate all or a portion of such
Excess Deferrals as attributable to this Plan and may request a
refund of such portion by notifying the Company in writing on or
before the March 1 next following the close of such calendar year.
If timely notice is received by the Company, then such portion of
the Excess Deferrals, and any income or loss allocable
to such portion, shall be refunded to the Participant not later than
the April 15 next following the close of such calendar year.
If the Participant fails properly to request a distribution of all
such Excess Deferrals, and such Excess Deferrals are attributable
solely to plans, contracts or arrangements of the Affiliated Group,
then the Company shall be deemed to have notice of such Excess
Deferrals and shall designate one or more plans maintained by a
member of the Affiliated Group from which the refund of Excess
Deferrals and allocable income or loss shall be made no later than
April 15 next following the close of such calendar year.
<PAGE>
Any Participant Elected Contributions distributed pursuant to this
Section 13.1 shall not be included in the Participant Elected
Contributions that attract a Matching Contribution under Section 5.1
or a Qualified Matching Contribution under Section 5.4 of the Plan.
13.2 Average Deferral Percentage Limitation. The Plan shall satisfy
the average deferral percentage test, as provided in section
401(k)(3) of the Code and section 1.401(k)-1 of the regulations
issued thereunder. Subject to the special rules described in Section
13.7, the Aggregate 401(k) Contributions of Highly Compensated
Employees shall not exceed the limits described below:
(a) An Actual Deferral Percentage shall be determined for
each individual who, at any time during the Plan Year, is a
Participant (including a suspended Participant) or is eligible
to participate in the Plan, which Actual Deferral Percentage
shall be the ratio, computed to the nearest one-hundredth of one
percent, of the individual's Aggregate 401(k) Contributions for
the Plan Year to the individual's Section 414(s) Compensation
for the Plan Year;
(b) The Actual Deferral Percentages (including zero
percentages) of Highly Compensated Employees and Nonhighly
Compensated Employees shall be separately averaged to determine
each group's Average Deferral Percentage; and
(c) The Aggregate 401(k) Contributions of Highly Compensated
Employees shall constitute Excess Contributions and shall be
reduced, pursuant to Sections 13.3 and 13.4, to the extent that
the Average Deferral Percentage of Highly Compensated Employees
exceeds the greater of (1) 125 percent of
the Average Deferral Percentage of Nonhighly Compensated
Employees or (2) the lesser of (A) 200 percent of the Average
Deferral Percentage of Nonhighly Compensated Employees or
(B) the Average Deferral Percentage of Nonhighly Compensated
Employees plus two percentage points.
13.3 Allocation of Excess Contributions to Highly Compensated
Employees. Any Excess Contributions for a Plan Year shall be
allocated to Highly Compensated Employees by use of a leveling
process, whereby the Actual Deferral Percentage of the Highly
Compensated Employee with the highest Actual Deferral Percentage is
reduced to the extent required to (a) eliminate all Excess
Contributions or (b) cause such Highly Compensated Employee's Actual
Deferral Percentage to equal the Actual Deferral Percentage of the
Highly Compensated Employee with the next-highest Actual Deferral
Percentage. The leveling process shall be repeated until all Excess
Contributions for the Plan Year are allocated to Highly Compensated
Employees.
13.4 Distribution of Excess Contributions. Excess Contributions
allocated to Highly Compensated Employees for the Plan Year pursuant
to Section 13.3, together with any income or loss allocable to such
Excess Contributions, shall be distributed to such Highly Compensated
Employees not later than two-and-one-half months following the close
<PAGE>
of such Plan Year, if possible, and in any event no later than 12
months following the close of such Plan Year. Any Participant
Elected Contributions distributed pursuant to this Section 13.4 shall
not be included in the Participant Elected Contributions that attract
a Matching Contribution under Section 5.1 or a Qualified Matching
Contribution under Section 5.4 of the Plan.
13.5 Qualified Matching Contributions. The Company, in its sole
discretion, may include all or a portion of the Qualified Matching
Contributions for a Plan Year in Aggregate 401(k) Contributions taken
into account in applying the Average Deferral Percentage limitation
described in Section 13.2 for the Plan Year; provided that such
Qualified Matching Contributions for the Plan Year are fully and
immediately vested, may not be withdrawn while the Participant is an
Employee or may be withdrawn only in circumstances that would permit
a Hardship Withdrawal, and the additional requirements of Treasury
Regulation section 1.401(k)-1(b)(5) are satisfied.
13.6 Corrective Qualified Nonelective Contributions. In order to
satisfy (or partially satisfy) the Average Deferral Percentage
limitation described in Section 13.2, the Average Contribution
Percentage limitation described in Section 14.1 or the multiple-use
limitation described in Section 15.1 (or more than one of such
limitations), the Company, in its sole discretion, may cause one or
more Participating Companies to make a Qualified Nonelective
Contribution to the Plan. Any such Qualified Nonelective
Contribution shall be allocated to the Accounts of those Participants
who are eligible to receive an allocation of Matching Contributions
under Section 5.1 of the Plan or Nonelective Contributions under
Section 5.2, as the Company designates, and who are Nonhighly
Compensated Employees for the Plan Year with respect to which the
Qualified Nonelective Contribution is made, beginning with the
Participant with the lowest Section 414(s) Compensation for the Plan
Year and allocating the maximum amount permissible under Article 16
before allocating any portion of the Qualified Nonelective
Contribution to the Participant with the next lowest Section 414(s)
Compensation. These allocations shall continue until the Plan
satisfies the Average Deferral Percentage limitation described in
Section 13.2, the Average Contribution Percentage limitation
described in Section 14.1 or the multiple-use limitation described in
Section 15.1 (or more than one of such limitations), or until the
amount of the Qualified Nonelective Contribution is exhausted.
The Company, in its sole discretion, may include all or a portion of
the Qualified Nonelective Contributions for a Plan Year in Aggregate
401(k) Contributions taken into account in applying the Average
Deferral Percentage limitation described in Section 13.2 for such
Plan Year, provided that the requirements of Treasury Regulation
section 1.401(k)-1(b)(5) are satisfied.
Qualified Nonelective Contributions shall be paid to the Trustee as
soon as reasonably practicable following the close of the Plan Year,
shall be allocated to the Accounts of Nonhighly Compensated Employees
as of the last day of the Plan Year and shall be fully and
immediately vested. In all other respects, the contribution,
allocation, investment and distribution of Qualified Nonelective
<PAGE>
Contributions shall be governed by the provisions of the Plan
concerning Matching Contributions.
13.7 Special Rules. The following special rules shall apply for
purposes of this Article 13:
(a) The amount of Excess Deferrals to be distributed to a
Participant for a calendar year pursuant to Section 13.1 shall
be reduced by the amount of any Excess Contributions previously
distributed to such Participant for the Plan Year beginning
within such calendar year;
(b) The amount of Excess Contributions to be distributed to a
Participant for a Plan Year pursuant to Section 13.4 shall be
reduced by the amount of any Excess Deferrals previously
distributed to such Participant for the calendar year ending
within such Plan Year;
(c) For purposes of applying the limitation described in
Section 13.2, the Actual Deferral Percentage of any Highly
Compensated Employee who is eligible to make Participant Elected
Contributions and to make elective deferrals (within the meaning
of section 402(g)(3) of the Code) under any other plans,
contracts or arrangements of the Affiliated Group shall be
determined as if all such Participant Elected Contributions and
elective deferrals were made under a single arrangement;
provided, however, that plans, contracts and arrangements shall
not be treated as a single arrangement to the extent that
Treasury Regulation section 1.401(k)-1(b)(3)(ii)(B) prohibits
aggregation;
(d) In the event that this Plan is aggregated with one or
more other plans in order to satisfy the requirements of Code
section 401(a)(4), 401(k) or 410(b), then all such aggregated
plans, including the Plan, shall be treated as a single plan for
all purposes under all such Code sections (except for purposes
of the average benefit percentage provisions of Code section
410(b)(2)(A)(ii));
(e) In the event that the mandatory disaggregation rules of
Treasury Regulation section 1.401(k)-1(b)(3)(ii)(B) apply to the
Plan, or to the Plan and other plans with which it is aggregated
as described in Subsection (d) above,
then the limitation described in Section 13.2 shall be applied
as if each mandatorily disaggregated portion of the Plan (or
aggregated plans) were a single arrangement;
(f) The Actual Deferral Percentage of any of the 10 most
highly compensated Highly Compensated Employees or any five-
percent owner shall be determined by combining the Aggregate
401(k) Contributions and Section 414(s) Compensation of the top-
10 Highly Compensated Employee or five-percent owner with the
Aggregate 401(k) Contributions and Section 414(s) Compensation
of any Employees who are Family Members of the top-10 Highly
Compensated Employee or five-percent owner;
<PAGE>
(g) Any Excess Contributions of any of the 10 most highly
compensated Highly Compensated Employees or five-percent owner
affected by the family-aggregation rules described in
Subsection (f) of this Section 13.7 shall be allocated among the
individuals in each family aggregation group in proportion to
the Aggregate 401(k) Contributions of each such individual; and
(h) Income (and loss) allocable to Excess Contributions for
the Plan Year shall be determined pursuant to the provisions for
allocating income (and loss) to a Participant's Accounts under
Section 6.10 of the Plan.
13.8 Prospective Limitations on Participant Elected Contributions.
At any time, the Company (at its sole discretion) may reduce the
maximum rate at which any Participant may make Participant Elected
Contributions to the Plan, or the Company may require that any
Participant discontinue all Participant Elected Contributions, in
order to ensure that the limitations described in this Article 13 are
met. Any reduction or discontinuance of Participant Elected
Contributions may be applied selectively to individual Participants
or to particular classes of Participants, as the Company may
determine. Upon such date as the Company may determine, this
Section shall automatically cease to apply until the Company again
determines that a reduction or discontinuance of Participant Elected
Contributions is required for any Participant.
13.9 Special Definitions Used in Article 13. The following
definitions shall apply for purposes of this
Article 13, and some may also apply for one or more of Articles 14,
15 and 16:
(a) "Aggregate 401(k) Contributions" means, for any Plan
Year, the sum of the following: (a) the Participant's
Participant Elected Contributions for the Plan Year; (b) the
Qualified Matching Contributions allocated to the Participant's
Accounts as of a date within the Plan Year, but only to the
extent that such Qualified Matching Contributions are aggregated
with Participant Elected Contributions pursuant to Section 13.5;
(c) the Qualified Nonelective Contributions allocated to the
Participant's Accounts as of a date within the Plan Year, but
only to the extent that such Qualified Nonelective Contributions
are aggregated with Participant Elected Contributions pursuant
to Section 13.6.
(b) "Annual Deferral Limit" means the dollar limit in effect
for any calendar year under section 402(g) of the Code. For
1987, the first year in which this limitation was applicable,
the Annual Deferral Limit was $7,000. The Annual Deferral Limit
is subject to annual or periodic cost-of-living adjustments by
the Commissioner of Internal Revenue and is $9,500 for 1996.
(c) "Excess Contributions" means the amount by which the
Aggregate 401(k) Contributions of Highly Compensated Employees
is reduced pursuant to Section 13.3.
<PAGE>
(d) "Excess Deferrals" means the amount of a Participant's
Participant Elected Contributions and elective deferrals (within
the meaning of section 402(g)(3) of the Code) that exceed the
Annual Deferral Limit set forth in Section 13.1.
(e) "Section 414(s) Compensation" means any one of the
following definitions of compensation received by an Employee
from members of the Affiliated Group:
(1) Compensation as defined in Treasury Regulation section
1.415-2(d) or any successor thereto;
(2) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, but determined
without regard to any rules that limit the remuneration included
in wages
based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor
in section 3401(a)(23) of the Code);
(3) "Wages" as defined in section 3401(a) of the Code for
purposes of income tax withholding at the source, plus all other
payments of compensation reportable under Code sections 6041(d)
and 6051(a)(3) and the regulations thereunder, determined
without regard to any rules that limit such Wages or reportable
compensation based on the nature or location of the employment
or the services performed (such as the exception for
agricultural labor in section 3401(a)(23) of the Code), and
modified, at the election of the Company, to exclude amounts
paid or reimbursed for the Employee's moving expenses, to the
extent it is reasonable to believe that these amounts are
deductible by the Employee under section 217 of the Code;
(4) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (1), (2) and (3) above, reduced by all
of the following items (even if includible in gross income):
reimbursements or other expense allowances, fringe benefits
(cash and noncash), moving expenses, deferred compensation and
welfare benefits;
(5) Any of the definitions of Section 414(s) Compensation
set forth in Subsections (1), (2), (3) and (4) above, modified
to include the following: (a) any elective contributions made
by a member of the Affiliated Group on behalf of the Employee
that are not includible in gross income under section 125,
402(e)(3), 402(h) or 403(b) of the Code; (b) compensation
deferred under an eligible deferred compensation plan within the
meaning of section 457(b) of the Code; and (c) employee
contributions described in section 414(h)(2) of the Code that
are picked up by the employing unit and thus are treated as
employer contributions; or
(6) Any reasonable definition of compensation that does
not by design favor Highly Compensated Employees and that
satisfies the nondiscrimination requirement set forth in
<PAGE>
Treasury Regulation section 1.414(s)-1T(d)(2) or the successor
thereto.
Any definition of Section 414(s) Compensation shall be used
consistently to define the compensation of all Employees taken
into account in satisfying the requirements of an applicable
provision of Articles 13, 14, 15 and 16 for the relevant
determination period. For purposes of applying the limitations
set forth in Articles 13, 14 and 15 for a Plan Year, Section
414(s) Compensation shall not exceed the Compensation
Limitation.
ARTICLE 14.CONTRIBUTION LIMITATIONS: AVERAGE
CONTRIBUTION PERCENTAGE LIMITATIONS.
14.1 Average Contribution Percentage Limitation. The Plan shall
satisfy the average contribution percentage test, as provided in
section 401(m)(2) of the Code and section 1.401(m)-1 of the
regulations issued thereunder. Subject to the special rules
described in Section 14.6, the Aggregate 401(m) Contributions of
Highly Compensated Employees shall not exceed the limits described
below:
(a) An Actual Contribution Percentage shall be determined for
each individual who, at any time during the Plan Year, is a
Participant (including a suspended Participant) or is eligible
to participate in the Plan, which Actual Contribution Percentage
shall be the ratio, computed to the nearest one-hundredth of one
percent, of the individual's Aggregate 401(m) Contributions for
the Plan Year to the individual's Section 414(s) Compensation
for the Plan Year;
(b) The Actual Contribution Percentages (including zero
percentages) of Highly Compensated Employees and Nonhighly
Compensated Employees shall be separately averaged to determine
each group's Average Contribution Percentage; and
(c) The Aggregate 401(m) Contributions of Highly Compensated
Employees shall constitute Excess Aggregate Contributions and
shall be reduced, pursuant to Sections 14.2 and 14.3, to the
extent that the Average Contribution Percentage of Highly
Compensated Employees exceeds the greater of (1) 125 percent of
the Average Contribution Percentage of Nonhighly Compensated
Employees or (2) the lesser of (A) 200 percent of the Average
Contribution Percentage of Nonhighly Compensated Employees or
(B) the Average Contribution Percentage of Nonhighly Compensated
Employees plus two percentage points.
14.2 Allocation of Excess Aggregate Contributions to Highly
Compensated Employees. Any Excess Aggregate Contributions for a Plan
Year shall be allocated to Highly Compensated Employees by use of a
leveling process, whereby the Actual Contribution Percentage of the
Highly Compensated Employee with the highest Actual Contribution
Percentage is reduced to the extent required to (a) eliminate all
Excess Aggregate Contributions or (b) cause such Highly Compensated
Employee's Actual Contribution Percentage to equal the Actual
Contribution Percentage of the Highly Compensated Employee with the
<PAGE>
next-highest Actual Contribution Percentage. The leveling process
shall be repeated until all Excess Aggregate Contributions for the
Plan Year are allocated to Highly Compensated Employees.
14.3 Distribution of Excess Aggregate Contributions. Excess
Aggregate Contributions allocated to Highly Compensated Employees for
the Plan Year pursuant to Section 14.2, together with any income or
loss allocable to such Excess Aggregate Contributions, shall be
distributed to such Highly Compensated Employees not later than two-
and-one-half months following the close of such Plan Year, if
possible, and in any event no later than 12 months following the
close of such Plan Year, but only to the extent the Highly
Compensated Employee has a nonforfeitable interest in the Excess
Aggregate contributions. Excess Aggregate Contributions (for
Participants who are Highly Compensated Employees), to the extent not
vested, may be forfeited and allocated, after all other Forfeitures
under the Plan, to other Participants (but in no event to any Highly
Compensated Employee) in the proportion that such Participant's
Participant Elected Contributions, if any, for that Plan Year bears
to the total Participant Elected Contributions of all such
Participants for the Plan Year. Any such amounts shall be included
in the calculation of the Actual Contribution Percentage and in the
calculation of the limits set forth in Article 16.
14.4 Use of Participant Elected Contributions. The Company, in its
sole discretion, may include all or a portion of the Participant
Elected Contributions for a Plan Year in Aggregate 401(m)
Contributions taken into account in applying the Average Contribution
Percentage limitation described in Section 14.1 for the Plan Year,
provided that all Participant Elected Contributions satisfy the
average deferral percentage test, as described in Section 13.2, and
that the additional requirements of Treasury Regulation section
1.401(m)-1(b)(5) are satisfied.
14.5 Corrective Qualified Nonelective Contributions. The Company, in
its sole discretion, may include all or a portion of the Qualified
Nonelective Contributions made pursuant to Section 13.6 for a Plan
Year in Aggregate 401(m) Contributions taken into account in applying
the Average Contribution Percentage limitation described in Section
14.1 for the Plan Year, provided that the requirements of Treasury
Regulation section 1.401(m)-1(b)(5) are satisfied.
14.6 Special Rules. The following special rules shall apply for
purposes of this Article 14:
(a) For purposes of applying the limitation described in
Section 14.1, the Actual Contribution Percentage of any Highly
Compensated Employee who is eligible to participate in the Plan
and to make employee contributions or receive an allocation of
matching contributions (within the meaning of section
401(m)(4)(A) of the Code) under any other plans, contracts or
arrangements of the Affiliated Group shall be determined as if
Matching Contributions and Qualified Matching Contributions
allocated to the Highly Compensated Employee's Accounts and all
such employee contributions and matching contributions were made
under a single arrangement;
<PAGE>
(b) In the event that this Plan is aggregated with one or
more other plans in order to satisfy the requirements of Code
section 401(a)(4), 401(m) or 410(b), then all such aggregated
plans, including the Plan, shall be treated as a single plan for
all purposes under all such Code sections (except for purposes
of the average benefit percentage provisions of Code section
410(b)(2)(A)(ii));
(c) In the event that the mandatory disaggregation rules of
Treasury Regulation section 1.401(m)-1(b)(3)(ii) apply to the
Plan, or to the Plan and other plans with which it is aggregated
as described in Subsection (b) above, then the limitation
described in Section 14.1 shall be applied as if each
mandatorily disaggregated portion of the Plan (or aggregated
plans) were a single arrangement;
(d) The Actual Contribution Percentage of any of the 10 most
highly compensated Highly Compensated Employees or any five-
percent owner shall be determined by combining the Aggregate
401(m) Contributions and Section 414(s) Compensation of the top-
10 Highly Compensated Employee or five-percent owner with the
Aggregate 401(m) Contributions and Section 414(s) Compensation
of any Employees who are Family Members of the top-10 Highly
Compensated Employee or five-percent owner;
(e) Any Excess Aggregate Contributions of any of the 10 most
highly compensated Highly Compensated Employees or five-percent
owner affected by the family-aggregation rules described in
Subsection (d) of this Section 14.6 shall be allocated among the
individuals in each family aggregation group in proportion to
the Aggregate 401(m) Contributions of each such individual; and
(f) Income (and loss) allocable to Excess Aggregate
Contributions for the Plan Year shall be determined pursuant to
the provisions for allocating income (and loss) to a
Participant's Accounts under Section 6.10.
14.7 Special Definitions Used in Article 14. The following
definitions shall apply for purposes of this Article 14:
(a) "Aggregate 401(m) Contributions" means, for any Plan
Year, the sum of the following: (a) the Matching Contributions
and Qualified Matching Contributions allocated to the
Participant's Accounts as of a date within the Plan Year;
(b) the Participant's Participant Elected Contributions for the
Plan Year, but only to the extent that such Participant Elected
Contributions are aggregated with Matching Contributions and
Qualified Matching Contributions pursuant to Section 14.4;
(c) the Qualified Nonelective Contributions allocated to the
Participant's Accounts as of a date within the Plan Year, but
only to the extent that such Qualified Nonelective Contributions
are aggregated with Matching Contributions and Qualified
Matching Contributions pursuant to Section 14.5.
<PAGE>
(b) "Excess Aggregate Contributions" means the amount by
which the Aggregate 401(m) Contributions of Highly Compensated
Employees are reduced pursuant to Section 14.2.
ARTICLE 15.CONTRIBUTION LIMITATIONS: MULTIPLE-USE
LIMITATIONS.
15.1 Applicability of the Multiple-Use Limitation. The limitation
described in this Article 15 shall apply only if, for a Plan Year,
after the limitations of Articles 13 and 14 are applied:
(a) The Average Deferral Percentage of Highly Compensated
Employees (1) exceeds 125 percent of the Average Deferral
Percentage of Nonhighly Compensated Employees, but (2) does not
exceed the lesser of (A) 200 percent of the Average Deferral
Percentage of Nonhighly Compensated Employees or (B) the Average
Deferral Percentage of Nonhighly Compensated Employees plus two
percentage points; and
(b) The Average Contribution Percentage of Highly Compensated
Employees (1) exceeds 125 percent of the Average Contribution
Percentage of Nonhighly Compensated Employees, but (2) does not
exceed the lesser of (A) 200 percent of the Average Contribution
Percentage of Nonhighly Compensated Employees or (B) the Average
Contribution Percentage of Nonhighly Compensated Employees plus
two percentage points.
15.2 Multiple-Use Limitation. The sum of the Average Deferral
Percentage and Average Compensation Percentage of Highly Compensated
Employees shall not exceed the greater of (a) or (b) below.
(a) This limit equals the sum of:
(1) 1.25 times the greater of the Average Deferral
Percentage or Average Contribution Percentage of Nonhighly
Compensated Employees; and
(2) The lesser of (A) 200 percent of the lesser of the
Average Deferral Percentage or Average Contribution Percentage
of Nonhighly Compensated Employees, or (b) the lesser of the
Average Deferral Percentage or Average Contribution Percentage
of Nonhighly Compensated Employees plus two percentage points.
(b) This limit equals the sum of:
(1) 1.25 times the lesser of the Average Deferral
Percentage or Average Contribution Percentage of Nonhighly
Compensated Employees; and
(2) The lesser of (A) 200 percent of the greater of the
Average Deferral Percentage or Average Contribution Percentage
of Nonhighly Compensated Employees, or (B) the greater of the
Average Deferral Percentage or Average Contribution Percentage
of Nonhighly Compensated Employees plus two percentage points.
<PAGE>
15.3 Correction of Multiple-Use Limitation. To the extent necessary,
the limitation of Section 15.2 shall be satisfied by one or more of
the following methods: (a) the allocation of corrective Qualified
Nonelective Contributions in the manner set forth in Sections 13.6 or
14.5, or (b) the distribution of Aggregate 401(m) Contributions (and
income or loss allocable thereto) to Highly Compensated Employees in
the manner set forth in Sections 14.2 and 14.3, followed by the
distribution of Aggregate 401(k) Contributions (and income or loss
allocable thereto) to Highly Compensated Employees in the manner set
forth in Sections 13.3 and 13.4.
ARTICLE 16.CONTRIBUTION LIMITATIONS: SECTION 415
"ANNUAL ADDITIONS" LIMITATIONS.
16.1 Limitation on Contributions. The Annual Additions allocated or
attributed to a Participant for any Plan Year shall not exceed the
lesser of the following:
(a) $30,000; or
(b) 25% of the Participant's Section 415 Compensation for
such year.
If a Participant's Annual Additions would exceed the foregoing
limitation, then such Annual Additions shall be reduced by reducing
the components thereof as necessary in the order in which they are
listed in Section 16.5(a). Any amounts so reduced shall not be
included in a Participant's Aggregate 401(k) Contributions or
Aggregate 401(m) Contributions. The limitation in Section 16.1(b)
shall not apply to any amount that otherwise is an Annual Addition
under Section 415(l)(1) or 419A(d)(2) of the Code.
16.2 Combined Limitation on Benefits and Contributions. The sum of a
Participant's defined-benefit plan fraction and his or her defined-
contribution plan fraction shall not exceed 1.0 with respect to any
Plan Year. For purposes of this Section, the terms "defined-benefit
plan fraction" and "defined-contribution plan fraction" shall have
the meaning given to such terms by section 415(e) of the Code and the
regulations thereunder. If a Participant would exceed the foregoing
limitation, then the Participant's benefits under any qualified
defined-benefit plan that may be maintained by the Section 415
Employer Group shall be reduced as necessary to allow his or her
Annual Additions to equal the maximum permitted by Section 16.1.
16.3 Return of Employee Contributions. If the amount of any
Participant's Participant Elected Contributions is determined to be
an excess Annual Addition under this Article, then the amount of such
excess (adjusted to reflect any earnings, appreciation or losses
attributable to such excess) shall be refunded by the Trustee in cash
to the Participant.
16.4 Excess Company Contributions. If the amount of the Company
Contributions allocated to a Participant for any Plan Year must be
reduced to meet the limitation described in Section 16.1, then the
amount of the reduction shall be applied to reduce the total amount
that the Participating Companies otherwise would contribute for such
<PAGE>
year pursuant to Article 5 of the Plan. If the amount that the
Participating Companies may contribute is thereby reduced to zero and
if there are Company Contributions that still cannot be allocated to
any Participant because of the limitation described in Section 16.1,
then the excess shall be transferred to a suspense account. Any
gains, income or losses attributable to the suspense account shall be
allocated to such account. All amounts credited to the suspense
account shall be applied to reduce the total amount that the
Participating Companies otherwise would contribute to the Plan for
the next Plan Year, and for succeeding Plan Years if necessary. Such
amounts shall be allocated among Participants pursuant to Article 5
of the Plan until the suspense account is exhausted (subject to this
Article). No Participant Elected Contributions or Company
Contributions shall be made as long as any amount remains in the
suspense account.
16.5 Special Definitions Used in this Article 16. The following
definitions shall apply for purposes of this Article 16:
(a) "Annual Additions" means, for any Plan Year, the sum of
the following:
(1) The amount of after-tax contributions that the
Participant contributes during such year to all qualified
retirement plans, other than this Plan, maintained by the
Section 415 Employer Group;
(2) The amount of elective contributions that the
Participant contributes during such year to all qualified
retirement plans, other than this Plan, maintained by the
Section 415 Employer Group;
(3) The amount of Participant Elected Contributions that
the Participant contributes during such year;
(4) The amount of employer contributions and forfeitures
allocated to the Participant under any qualified defined-
contribution plan that may be maintained by the Section 415
Employer Group, other than this Plan, as of any date within such
year; and
(5) The amount of Company Contributions and Forfeitures
allocated to the Participant as of any date within such year.
(b) "Section 415 Compensation" means any one of the
definitions of Section 414(s) Compensation described in
Paragraphs (1), (2), (3) or (4) of Section 13.9(e) received by
an Employee from members of the Section 415 Employer Group. Any
definition of Section 415 Compensation shall be used
consistently to define the compensation of all Employees taken
into account in satisfying the requirements of an applicable
provision of the Plan for the relevant determination period.
(c) "Section 415 Employer Group" means the Affiliated Group,
except that "more than 50 percent" shall be substituted for "at
least 80 percent" wherever the phrase occurs in section 1563(a)
<PAGE>
of the Code (as incorporated by reference in sections 414(b) and
(c) of the Code).
ARTICLE 17.THE TRUST FUND AND PLAN INVESTMENTS.
17.1 Control and Management of Plan Assets. The Company is a named
fiduciary with respect to control over and management of the assets
of the Plan, but only to the extent of having the authority (a) to
appoint one or more trustees to hold assets of the Plan in trust and
to enter into a trust agreement with each trustee it appoints, (b) to
appoint one or more insurance companies that are qualified to do
business in at least one state to hold assets of the Plan and to
enter into a contract with each insurance company it appoints (or to
direct the Trustee to enter into such contract), (c) to appoint one
or more Investment Managers for any assets of the Plan and to enter
into an investment management agreement with each Investment Manager
it appoints, and (d) to direct the investment of any Plan assets not
assigned to an Investment Manager.
17.2 Trustee Duties. The Trustee shall have the exclusive authority
and discretion to control and manage assets of the Plan it holds in
trust, except to the extent that (a) the Plan prescribes how such
assets shall be invested, (b) the Company directs how such assets
shall be invested or (c) the Company allocates the authority to
manage such assets to one or more Investment Managers. Each
Investment Manager shall have the exclusive authority to manage,
including the authority to acquire and dispose of, the assets of the
Plan assigned to it by the Company, except to the extent that the
Plan prescribes or the Company directs how such assets shall be
invested. Each Trustee and Investment Manager shall be solely
responsible for diversifying, in accordance with section 404(a)(1)(C)
of ERISA, the investment of the assets of the Plan assigned to it by
the Company, except to the extent that the Plan prescribes or the
Company directs how such assets shall be invested.
17.3 Independent Qualified Public Accountant. The Company shall
engage an independent qualified public accountant to conduct such
examinations and to express such opinions as may be required by
section 103(a)(3) of ERISA. The Company in its discretion may remove
and discharge the person so engaged, in which event it shall appoint
a successor independent qualified public accountant to perform such
examinations and express such opinions.
17.4 Administrative Expenses. All expenses of the Plan and the Trust
Fund shall be paid by the Participating Companies and by the Trust
Fund. The Company shall have complete and unfettered discretion to
determine whether an expense of the Plan shall be paid out of the
Trust Fund or by the Participating Companies, and the
Company's discretion and authority to direct the payment of expenses
out of the Trust Fund shall not be limited in any way by any prior
decision or practice regarding the payment of Plan expenses.
17.5 Benefit Payments. All benefits payable pursuant to the Plan
shall be paid by the Trustee out of the Trust Fund pursuant to the
directions of the Company and the terms of the Trust Agreement.
<PAGE>
ARTICLE 18.ADMINISTRATION AND OPERATION OF THE PLAN.
18.1 Plan Administration. The Company is the named fiduciary that
has the discretionary authority to control and manage the operation
and administration of the Plan, and the Company is the
"administrator" and "plan sponsor" of the Plan (as such terms are
used in ERISA). The Company in its sole discretion shall make such
rules, interpretations and computations and shall take such other
actions to administer the Plan as it may deem appropriate. Such
rules, interpretations, computations and actions shall be conclusive
and binding on all persons. In administering the Plan, the Company
(a) shall act in a nondiscriminatory manner to the extent required by
section 401(a) and related sections of the Code and (b) shall at all
times discharge its duties in accordance with the standards set forth
in section 404(a)(1) of ERISA.
18.2 Employment of Advisers. The Company may retain such attorneys,
accountants, consultants or other persons to render advice or to
perform services with regard to its responsibilities under the Plan
as it shall determine to be necessary or desirable. The Company may
designate by written instrument (signed by both parties) one or more
persons to carry out, where appropriate, fiduciary responsibilities
under the Plan. The Company's duties and responsibilities under the
Plan that have not been delegated to other fiduciaries pursuant to
the preceding sentence shall be carried out by its directors,
officers and employees, acting on behalf and in the name of the
Company in their capacities as directors, officers and employees, and
not as individual fiduciaries.
18.3 Service in Several Fiduciary Capacities. Nothing herein shall
prohibit any person or group of persons from serving in more than one
fiduciary capacity with respect to the Plan.
ARTICLE 19.CLAIMS AND REVIEW PROCEDURES.
19.1 Applications for Benefits. Any application for benefits under
the Plan shall be submitted to the Company at its principal office.
Such application shall be in writing on the prescribed form and shall
be signed by the applicant.
19.2 Denial of Applications. In the event that any application for
benefits is denied in whole or in part, the Company shall notify the
applicant in writing of the right to a review of the denial. Such
written notice shall set forth, in a manner calculated to be
understood by the applicant, specific reasons for the denial,
specific references to the Plan provisions on which the denial was
based, a description of any information or material necessary to
perfect the application, an explanation of why such material is
necessary, and an explanation of the Plan's review procedure. Such
written notice shall be given to the applicant within 90 days after
the Company receives the application, unless special circumstances
require an extension of time for processing the application. In no
event shall such an extension exceed a period of 90 days from the end
of the initial 90-day period. If such an extension is required,
written notice thereof shall be furnished to the applicant before the
end of the initial 90-day period. Such notice shall indicate the
<PAGE>
special circumstances requiring an extension of time and the date by
which the Company expects to render a decision. If written notice is
not given to the applicant within the period prescribed by this
Section 19.2, the application shall be deemed to have been denied for
purposes of Section 19.4 upon the expiration of such period.
19.3 Review Panel. The Company from time to time shall appoint a
Review Panel. The "Review Panel" shall consist of three or more
individuals who may (but need not) be employees of the Company and
shall be the named fiduciary with the authority to act on any
employee benefit appeal.
19.4 Requests for Review. Any person whose application for benefits
is denied in whole or in part (or such person's duly authorized
representative) may appeal the denial by submitting to the Review
Panel a request for a review of such application within 90 days after
receiving written notice of the denial. The Review Panel shall give
the applicant or such representative an opportunity to review
pertinent documents (except legally privileged materials) in
preparing such request for review and to submit issues and comments
in writing. The request for review shall be in writing and shall be
addressed to the Company's principal office. The request for review
shall set forth all of the grounds on which it is based, all facts in
support of the request, and any other matters which the applicant
deems pertinent. The Review Panel may require the applicant to
submit such additional facts, documents or other material as it may
deem necessary or appropriate in making its review.
19.5 Decisions on Review. The Review Panel shall act upon each
request for review within 60 days after receipt thereof, unless
special circumstances require an extension of time for processing,
but in no event shall the decision on review be rendered more than
120 days after the Review Panel receives the request for review. If
such an extension is required, written notice thereof shall be
furnished to the applicant before the end of the initial 90-day
period. The Review Panel shall give prompt, written notice of its
decision to the applicant and to the Company. In the event that the
Review Panel confirms the denial of the application for benefits in
whole or in part, such notice shall set forth, in a manner calculated
to be understood by the applicant, the specific reasons for such
denial and specific references to the Plan provisions on which the
decision is based. To the extent that the Review Panel overrules the
denial of the application for benefits, such benefits shall be paid
to the applicant.
19.6 Rules and Procedures. The Review Panel shall adopt such rules
and procedures, consistent with ERISA and the Plan, as it deems
necessary or appropriate in carrying out its responsibilities under
this Article 19.
19.7 Exhaustion of Administrative Remedies. No legal or equitable
action for benefits under the Plan shall be brought unless and until
the claimant (a) has submitted a written application for benefits in
accordance with Section 19.1, (b) has been notified that the
application is denied, (c) has filed a written request for a review
of the application in accordance with Section 19.4 and (d) has been
<PAGE>
notified in writing that the Review Panel has affirmed the denial of
the application; provided, however, that an action may be brought
after the Company or the Review Panel has failed to act on the claim
within the time prescribed in Section 19.2 and Section 19.5,
respectively.
ARTICLE 20.AMENDMENT AND TERMINATION.
20.1 Right To Amend or Terminate. The Company expects to continue
the Plan indefinitely. However, future conditions cannot be
foreseen, and the Company reserves the right at any time and for any
reason, by action of its board of directors or by a person or persons
acting pursuant to a valid delegation of authority, (a) to amend the
Plan, (b) to reduce or discontinue Employee Contributions, Company
Contributions or all Contributions or (c) to terminate the Plan and
the Trust Fund.
20.2 Protection of Participants. No amendment of the Plan shall
reduce the benefit of any Participant that accrued under the Plan
prior to the date when such amendment is adopted, except to the
extent that a reduction in accrued benefits may be permitted by the
Code and ERISA. No Plan amendment or other action by the Company
shall divert any part of the Plan's assets to purposes other than the
exclusive purpose of providing benefits to the Participants and
Beneficiaries who have an interest in the Plan and of defraying the
reasonable expenses of administering the Plan.
20.3 Effect of Termination. Upon termination of the Plan, no assets
of the Plan shall revert to any Participating Company or be used for,
or diverted to, purposes other than the exclusive purpose of
providing benefits to Participants and Beneficiaries and of defraying
the reasonable expenses of termination. If the Plan is terminated or
partially terminated, or if all contributions to the Plan are
completely discontinued, then each Participant who then is an
Employee and who is directly affected by such event shall have a 100
percent vested interest in each of his or her Accounts, without
regard to the number of Years of Service he or she has completed.
20.4 Allocation of Trust Fund Upon Termination. Upon termination of
the Plan, the Trust Fund shall continue in existence until the
Accounts of each Participant have been distributed to such
Participant (or to his or her Beneficiary) pursuant to Article 8;
provided, however, that the assets of the Plan shall be allocated in
accordance with any applicable requirements under section 403(d)(1)
of ERISA.
20.5 Partial Termination. Upon a partial termination of the Plan,
Sections 20.3 and 20.4 shall apply with respect to such Participants
and Beneficiaries as are affected by such partial termination.
ARTICLE 21.MISCELLANEOUS PROVISIONS.
21.1 Plan Mergers. The Plan shall not merge or consolidate with, or
transfer assets or liabilities to, any other plan unless each
Participant would receive a benefit immediately after such merger,
consolidation or transfer (if the Plan then terminated) that is equal
<PAGE>
to or greater than the benefit that such Participant would have been
entitled to receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated).
21.2 No Assignment of Property Rights. Except as otherwise provided
in Article 9 with respect to QDROs, the interest or property rights
of any Participant or Beneficiary in the Plan, in the Trust Fund or
in any distribution to be made under the Plan shall not be subject to
option nor be assignable, either by voluntary or involuntary
assignment or by operation of law, including (without limitation)
bankruptcy, garnishment, attachment or other creditor's process, and
any act in violation of this Section 21.2 shall be void.
21.3 No Employment Rights. Nothing in the Plan shall be deemed to
give any individual a right to remain in the employ of an Affiliate
or affect the right of an Affiliate to terminate an individual's
employment at will with or without cause, at any time with or without
notice, for any reason or no reason, which right is hereby reserved.
21.4 Choice of Law. The Plan and all rights thereunder shall be
interpreted and construed in accordance with ERISA and, to the extent
that state law is not preempted by ERISA, the law of the State of
California.
21.5 Voting of Company Stock. Before each annual or special meeting
of the Company's shareholders, the Company shall cause to be sent to
each Participant who has invested any part of his or her Account in
the Company Stock fund the proxy statement and any related materials
that are sent to the Company's registered shareholders. Each
Participant shall have the right to instruct the Trustee
confidentially (in writing on the prescribed form) with respect to
the voting at such meeting of the number of shares of Company Stock
that were allocated to the Participant's Account as of the Valuation
Date immediately preceding the record date for such meeting or such
later date, up to and including the record date for such meeting, as
the Plan Administrator may deem practicable. Such instructions shall
be submitted to the Trustee by the date specified by the Company and,
once received by the Trustee, shall be irrevocable. Under no
circumstances shall the Trustee permit any Participating Company or
any officer, employee or representative thereof to see any voting
instructions given by a Participant to the Trustee. The Trustee
shall vote any Company Stock for which it has not received timely
written instructions in the same proportion in which the shares for
which timely voting instructions have been received have been voted
by Participants.
21.6 Tender Offers. In the event that any person or group makes an
offer subject to section 14(d) of the Securities Exchange Act of 1934
to acquire all or part of the outstanding Company Stock, including
Company Stock held in the Plan ("Acquisition Offer"), each
Participant shall be entitled to direct the Trustee confidentially
(on a form prescribed by the Company) to tender all or part of those
shares of Company Stock that would then be subject to such
Participant's voting instructions under Subsection (a) above. If the
Trustee receives such an instruction by a date determined by the
Trustee and communicated to Participants, the Trustee shall tender
<PAGE>
such Company Stock in accordance with such instruction. Any Company
Stock as to which the Trustee does not receive instructions within
such period shall not be tendered by the Trustee. The Trustee shall
obtain and distribute to each Participant all appropriate materials
pertaining to the Acquisition Offer, including the statement of the
position of the Company with respect to such offer issued pursuant to
Regulation 14(e)-2 of the Securities Exchange Act of 1934, as soon as
practicable after such materials are issued; provided, however, that
if the Company fails to issue such statement within five (5) business
days after the commencement of such offer, the Trustee shall
distribute such materials to each Participant without such statement
by the Company and shall separately distribute such statement by the
Company as soon as practicable after it is issued. The Trustee shall
follow the procedures regarding confidentiality and verification of
compliance with voting instructions described in Section 21.5 above.
ARTICLE 22.SPECIAL TOP-HEAVY PROVISIONS.
22.1 Determination of Top-Heavy Status. Any other provision of the
Plan notwithstanding, this Article shall apply to any Plan Year in
which the Plan is a Top-Heavy Plan. The Plan shall be considered a
"Top-Heavy Plan" for a Plan Year if, as of the Determination Date for
such Plan Year, the Top-Heavy Ratio for the Aggregation Group exceeds
60 percent.
22.2 Minimum Allocations. For any Plan Year during which the Plan is
a Top-Heavy Plan, the Company Contributions allocated to the Account
of each Participant who is not a Key Employee, but who is an Employee
on the last day of such Plan Year, shall not be less than the lesser
of the following amounts:
(a) Three percent of his or her Top-Heavy Compensation; or
(b) A percentage of his or her Top-Heavy Compensation equal to
the greatest allocation of Company Contributions and Participant
Elected Contributions, expressed as a percentage of Top-Heavy
Compensation, made on behalf of any Participant who is a Key
Employee.
22.3 Impact on Maximum Benefits. For any Plan Year in which the Plan
is a Top-Heavy Plan, the number "1.00" shall be substituted for the
number "1.25" wherever it appears in section 415(e)(2) and (3) of the
Code."
22.4 Special Definitions. For purposes of this Article 22, the
following definitions shall apply:
(a) "Aggregation Group" means either the Required Aggregation
Group or any Permissive Aggregation Group, as the Company may
elect.
(b) "Determination Date" means the December 31 next preceding
the applicable Plan Year.
(c) "Key Employee" means a "key employee" (within the meaning
of section 416(i) of the Code). In applying section 416(i) of
<PAGE>
the Code, "annual compensation" shall mean Top-Heavy
Compensation
(d) "Permissive Aggregation Group" means a group of qualified
plans that includes (1) the Required Aggregation Group and
(2) one or more plans of the Affiliated Group that are not part
of the Required Aggregation Group. A Permissive Aggregation
Group, when viewed as a single plan, must satisfy the
requirements of sections 401(a)(4) and 410 of the Code.
(e) "Required Aggregation Group" means a group of qualified
plans that includes (1) each plan of the
Affiliated Group in which a Key Employee is a participant and
(2) each other plan of the Affiliated Group that enables any
plan in which a Key Employee participates to meet the
requirements of section 401(a)(4) or 410 of the Code.
(f) "Top-Heavy Compensation" means Section 415 Compensation,
as defined in Section 16.5(b); provided, however, that Top-Heavy
Compensation shall not include any amount paid to a Participant
for the Plan Year in excess of the Compensation Limitation.
(g) "Top-Heavy Ratio" means a percentage determined pursuant
to section 416(g) of the Code.
22.5 Top-Heavy Vesting Rules.
(a) The vested interest in the Nonelective Account of each
Participant with one or more Hours of Service in a Plan Year in
which the Plan is a Top-Heavy Plan shall be determined in
accordance with the following schedule except to the extent
Section 7.3(a) provides more rapid vesting (in the case of an
individual who becomes an Employee prior to April 1, 1991):
Years of Service Vested Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
The vested interest in the Matching Contributions Account of
each Participant with one or more Hours of Service in a Plan
Year in which the Plan is a Top-Heavy Plan shall be determined
under Section 7.2.
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting
rules described in Section 7.3 shall again apply to all Years of
Service with respect to the Participant's Nonelective Account;
however, any Participant described in Subsection (a) who has at
least three (3) Years of Service to his or her credit at the
time the Plan ceases to be a Top-Heavy Plan shall continue to
have his or her vested percentage computed under the Plan in
accordance with Subsection (a).
<PAGE>
ARTICLE 23.EXECUTION.
To record the adoption of the Plan as set forth herein, effective as
of April 1, 1996, the Company has caused its authorized officer to
execute the same this 25th day of June, 1996.
AMGEN, INC.
By /s/ Edward F. Garnett
Factors That May Affect Future Results
Amgen operates in a rapidly changing environment that involves a
number of risks, some of which are beyond the Company's control. The
following discussion highlights some of these risks and others are
discussed elsewhere herein and in other documents filed by the Company
with the Securities and Exchange Commission.
Period to period fluctuations
The Company's operating results may fluctuate for a number of
reasons. The forecasting of revenue is inherently uncertain for a
variety of reasons. Because the Company plans its operating expenses,
many of which are relatively fixed in the short term, on the basis
that revenues will continue to grow, even a relatively small revenue
shortfall may cause a period's results to be below expectations. Such
a revenue shortfall could arise from any number of factors, including
lower than expected demand, wholesalers' buying patterns, product
pricing strategies, fluctuations in foreign currency exchange rates,
changes in government or private reimbursement, transit interruptions,
overall economic conditions or natural disasters (including earthquakes).
See "Results of Operations - Product sales - NEUPOGEN(R) (Filgrastim)"
for a discussion regarding quarterly NEUPOGEN(R) sales.
The Company's stock price, like that of other biotechnology
companies, is subject to significant volatility. If revenues or
earnings in any quarter fail to meet the investment community's
expectations, there could be an immediate impact on the Company's
stock price. The stock price may also be affected by, among other
things, clinical trial results and other product development related
announcements by Amgen or its competitors, regulatory matters,
intellectual property and legal matters, or broader industry and
market trends unrelated to the Company's performance.
Rapid growth
In light of management's views of the potential for future growth
of the Company's business, the Company has adopted an aggressive
growth plan that includes substantial and increased investments in
research and development and investments in facilities that will be
required to support significant growth. This plan carries with it a
number of risks, including a higher level of operating expenses, the
difficulty of attracting and assimilating a large number of new
employees, and the complexities associated with managing a larger and
faster growing organization.
Product development
The Company intends to continue to develop product candidates.
Successful product development in the biotechnology industry is highly
uncertain and only a small minority of research and development
programs ultimately result in commercially successful drugs. Product
development is dependent on numerous factors, many of which are beyond
the Company's control. Product candidates that appear promising in
<PAGE>
the early phases of development may fail to reach market for numerous
reasons. They may be found to be ineffective or to have harmful side
effects in clinical or preclinical testing, fail to receive necessary
regulatory approvals, be uneconomic because of manufacturing costs or
other factors, or be precluded from commercialization by the
proprietary rights of others. Success in preclinical and early
clinical trials does not ensure that large scale clinical trials will
be successful. Clinical results are frequently susceptible to varying
interpretations which may delay, limit or prevent further clinical
development or regulatory approvals. The length of time necessary to
complete clinical trials and receive approval for product marketing by
regulatory authorities varies significantly by product and indication
and is often difficult to predict.
Regulatory approvals
The success of current products and future product candidates of
the Company will depend in part upon maintaining and obtaining
regulatory approval to market products. Domestic and foreign statutes
and regulations govern matters relating to the Company's products and
product candidates and the research and development activities
associated with them. The Company's product candidates may prove to
have undesirable side effects that may interrupt or delay clinical
studies and could ultimately prevent or limit their commercial use.
The Company or regulatory authorities may suspend or terminate
clinical trials at any time if the participants in such trials are
believed to be exposed to unacceptable health risks. Even if
regulatory approval is obtained, a marketed product and its
manufacturer are subject to continued review. Later discovery of
previously unknown problems with a product or manufacturer may result
in restrictions on such product or manufacturer, including withdrawal
of the product from the market. Failure to obtain necessary
approvals, or the restriction, suspension, or revocation of any
approvals, or the failure to comply with regulatory requirements could
have a material adverse effect on the Company.
Reimbursement
The success of the Company's products partially depends upon the
extent to which a consumer is willing to pay the price or able to
obtain reimbursement for the cost of these products from government
health administration authorities, private health insurers, and other
organizations. Significant uncertainties exist as to the
reimbursement status of newly approved therapeutic products, and
current reimbursement policies for existing products may change. It
is possible that changes in reimbursement or failure to obtain
reimbursement may reduce the demand for or the price of the Company's
products.
Several factors could influence the pricing or reimbursement for
the Company's products including: (1) third-party payors continuing to
challenge the prices charged for medical services and products, (2)
the trend towards managed care in the United States, (3) the growth of
organizations which could control or significantly influence the
purchase of health care services and products, and (4) legislative
proposals to reform health care or reduce government insurance
<PAGE>
programs. NEUPOGEN(R) usage has been and is expected to continue to
be affected by cost containment pressures on health care providers
worldwide. In addition, patients receiving EPOGEN(R) in connection
with treatment for end stage renal disease are covered primarily under
medical programs provided by the federal government. Therefore,
EPOGEN(R) sales may also be affected by future changes in
reimbursement rates or the basis for reimbursement by the federal
government.
Competition
Substantial competition exists in the biotechnology industry from
pharmaceutical and biotechnology companies which may have technical or
competitive advantages. The Company competes with these companies in
the development of technologies and processes and sometimes competes
with them in acquiring technology from academic institutions,
government agencies, and other private and public research
organizations. There can be no assurance that the Company will be
able to produce or acquire rights to products that have commercial
potential. Even if the Company achieves product commercialization,
there can be no assurance that one or more of the Company's
competitors may not: (1) achieve product commercialization earlier
than the Company, (2) receive patent protection that dominates or
adversely affects the Company's activities, or (3) have significantly
greater marketing capabilities.
The field of biotechnology has undergone rapid and significant
technological change. The Company expects that the technology
associated with the Company's research and development will continue
to develop rapidly, and the Company's future success will depend in
large part on its ability to maintain a competitive position with
respect to this technology. Rapid technological development by the
Company or others may result in some of the Company's product
candidates, products, or processes becoming obsolete before the
Company recovers a significant portion of the research, development,
manufacturing, and commercialization expenses it incurs. This could
have a material adverse effect on the Company.
Intellectual property and legal matters
The patent positions of pharmaceutical and biotechnology
companies can be highly uncertain and involve complex legal and
factual questions. Accordingly the breadth of claims allowed in such
companies' patents cannot be predicted. Patent disputes are frequent
and can preclude commercialization of products. The Company is and
may in the future be involved in material patent litigation. Such
litigation, if decided adversely, could subject the Company to
significant liabilities and cause the Company to obtain third party
licenses or cease using the technology or product in dispute.
The Company is involved in arbitration proceedings with Ortho
Pharmaceutical Corporation, a subsidiary of Johnson & Johnson
("Johnson & Johnson"), relating to a license granted by the Company to
Johnson and Johnson for sales of Epoetin alfa in the United States for
all human uses except dialysis and diagnostics. See Note 4 to the
Condensed Consolidated Financial Statements - "Contingencies - Johnson
<PAGE>
and Johnson arbitrations." While it is impossible to predict
accurately or determine the outcome of these proceedings, based
primarily upon the merits of its claims and based upon certain
liabilities established due to the inherent uncertainty of any
arbitrated result, the Company believes that the outcome of these
proceedings will not have a material adverse effect on its financial
statements. However, it is possible that an adverse decision could,
depending on its magnitude, have a material adverse effect on the
financial statements.
