<PAGE> 1
As filed with the Securities and Exchange Commission on February 4, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------------------------
CARDINAL HEALTH, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 31-0958666
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5555 Glendon Court, Dublin, Ohio 43016
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
---------------
ALLEGIANCE RETIREMENT PLAN
(Full title of the plan)
---------------
Steven Alan Bennett
Executive Vice President, General Counsel and Secretary
Cardinal Health, Inc.
5555 Glendon Court
Dublin, Ohio 43016
(Name and address of agent for service)
(614) 717-5000
(Telephone number, including area code, of agent for service)
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================== ========================== ========================== ========================== =======================
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price per aggregate offering price Amount of registration
registered registered(1) share(2) (2) fee (2)
- --------------------------- -------------------------- -------------------------- -------------------------- -----------------------
<S> <C> <C> <C> <C>
Common Shares, without par 3,000,000 73.53125 $220,593,750 61,330
value
=========================== ========================== ========================== ========================== =======================
</TABLE>
(1) Also includes an indeterminable number of additional shares that may
become issuable pursuant to the anti-dilution provisions of the Plan.
(2) The registration fee has been calculated pursuant to Rule 457(c) and
(h) based on the average of the high and low sale prices on January 28,
1999, of the Registrant's Common Shares as reported on the New York
Stock Exchange.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee plan described herein.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (h) below are incorporated by
reference in the registration statement. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), subsequent to the date of the filing
of this registration statement and prior to the filing of a post-effective
amendment that indicates that all securities registered hereunder have been
sold, or that de-registers all securities then remaining unsold, shall be deemed
to be incorporated by reference in the registration statement and to be a part
hereof from the date of the filing of such documents.
(a) The Annual Report on Form 10-K of the Company for the
fiscal year ended June 30, 1998 filed with the
Securities and Exchange Commission (the "Commission")
on September 1, 1998 (excluding Items 7 and 8) ("Form
10-K");
(b) The information contained in the Company's Proxy
Statement dated September 28, 1998 for its Annual
Meeting of Shareholders held on November 23, 1998
that has been incorporated by reference in its Form
10-K;
(c) The Company's Current Report on Form 8-K/A filed with
the Commission on September 28, 1998, amending the
Company's Current Report on Form 8-K filed with the
Commission on August 10, 1998;
(d) The Company's Current Report on Form 8-K filed with
the Commission on October 13, 1998;
(e) The Company's Current Report on Form 8-K filed with
the Commission on November 24, 1998;
(f) The Company's Current Report on Form 8-K filed with
the Commission on January 21, 1999.
(g) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, filed with the
Commission on November 13, 1998; and
(h) The description of the Company's Common Shares
contained in the Company's Registration Statement on
Form 8-A dated August 19, 1994, pursuant to Section
12 of the Exchange Act.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Shares offered hereby has been passed upon
for the Company by Paul S. Williams, Assistant General Counsel of the Company.
Mr. Williams holds vested and unvested options to purchase Common Shares of the
Company, and unvested restricted Common Shares of the Company.
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<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
Article 6 of the Company's Restated Code of Regulations ("Code of
Regulations"), as amended and restated, contains certain indemnification
provisions adopted pursuant to authority contained in Section 1701.13(E) of the
Ohio Revised Code. The Company's Code of Regulations provides for the
indemnification of its officers, directors, employees, and agents against all
expenses with respect to any judgments, fines, and amounts paid in settlement,
or with respect to any threatened, pending, or completed action, suit, or
proceeding to which they were or are parties or are threatened to be made
parties by reason of acting in such capacities, provided that it is determined,
either by a majority vote of a quorum of disinterested directors of the Company
or the shareholders of the Company or otherwise as provided in Section
1701.13(E) of the Ohio Revised Code, that (a) they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interest of
the Company; (b) in any action, suit, or proceeding by or in the right of the
Company, they were not, and have not been adjudicated to have been, negligent or
guilty of misconduct in the performance of their duties to the Company; and (c)
with respect to any criminal action or proceeding, that they had no reasonable
cause to believe that their conduct was unlawful. Section 1701.13(E) provides
that to the extent a director, officer, employee, or agent has been successful
on the merits or otherwise in defense of any such action, suit, or proceeding,
such individual shall be indemnified against expenses reasonably incurred in
connection therewith. At present there are no material claims, actions, suits,
or proceedings pending where indemnification would be required under these
provisions, and the Company does not know of any such threatened claims,
actions, suits, or proceedings which may result in a request for such
indemnification.
The Company has entered into indemnification contracts with each of its
directors and executive officers. These contracts generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations and
assure that this indemnity will continue to be provided; (ii) provide that if
the Company does not maintain directors' and officers' liability insurance, the
Company will, in effect, become a self-insurer of the coverage; and (iii)
provide that, in addition, the directors and officers shall be indemnified to
the fullest extent permitted by law against all expenses (including legal fees),
judgments, fines, and settlement amounts incurred by them in any action or
proceeding on account of their service as a director, officer, employee, or
agent of the Company, or at the request of the Company as a director, officer,
employee, trustee, fiduciary, manager, member or agent of another corporation,
partnership, trust, limited liability company, employee benefit plan or other
enterprise and; (iv) provide for the mandatory advancement of expenses to the
executive officer or director in connection with the defense of any proceedings,
provided that the executive officer or director agrees to reimburse the Company
for that advancement if it is ultimately determined that the executive officer
or director is not entitled to the indemnification for that proceeding under the
agreement. Coverage under the contracts is excluded: (A) on account of conduct
which is finally adjudged to be knowingly fraudulent, deliberately dishonest, or
willful misconduct; or (B) if a final court of adjudication shall determine that
such indemnification is not lawful; or (C) in respect of any suit in which
judgment is rendered for violations of Section 16(b) of the Securities and
Exchange Act of 1934, as amended, or provisions of any federal, state, or local
statutory law; or (D) on account of any remuneration paid which is finally
adjudged to have been in violation of law; or (E) on account of conduct
occurring prior to the time the executive officer or director became an officer,
director, employee or agent of the Company or its subsidiaries (but in no event
earlier than the time such entity became a subsidiary of Cardinal); or (F) with
respect to proceedings initiated or brought voluntarily by the executive officer
or director and not by way of defense, except for proceedings brought to enforce
rights under the indemnification contract.
The Company maintains a directors' and officers' insurance policy which
insures the officers and directors of the Company from any claim arising out of
an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Company.
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<PAGE> 4
<TABLE>
<CAPTION>
ITEM 8. EXHIBITS.
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
4(a) Specimen Certificate for the Registrant's Class A Common Shares (1)
4(b) Amended and Restated Articles of Incorporation of Registrant, as amended (2)
4(c) Restated Code of Regulations of Registrant, as amended (2)
4(d) Allegiance Retirement Plan (including all amendments thereto)
5 Opinion of Paul S. Williams as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Ernst & Young LLP
23(c) Consent of PricewaterhouseCoopers LLP
23(d) Consent of Arthur Andersen LLP
23(e) Consent of Paul S. Williams (included in Opinion filed as Exhibit 5 hereto)
24 Power of Attorney (included in signature page to Registration Statement)
</TABLE>
(1) Included as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997 and incorporated herein by
reference.
(2) Included as an exhibit to the Registrant's 8-K filed November 24, 1998
and incorporated herein by reference.
The Registrant hereby undertakes that the Allegiance Retirement Plan
and any amendment thereto has been or will be submitted to the Internal Revenue
Service ("IRS") in a timely manner and all changes required by the IRS in order
to qualify the Allegiance Retirement Plan will be made.
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act"); (ii) to reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
clauses is
-3-
<PAGE> 5
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 6 above or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
[Signatures on Following Page]
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dublin, State of Ohio, on the 4th day of February,
1999.
CARDINAL HEALTH, INC.
By: /s/ Robert D. Walter
---------------------------------
Robert D. Walter, Chairman and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert D. Walter, Steven Alan Bennett, and Paul
S. Williams, and each of them, severally, as his/her attorney-in-fact and agent,
with full power of substitution and resubstitution, for him/her and in his/her
name, place, and stead, in any and all capacities, to sign any and all
post-effective amendments to this Registration Statement, and to file the same
with all exhibits hereto, and other documents with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 4th day of February, 1999.
Signature Title
- --------- -----
/s/ Robert D. Walter Chairman, Chief Executive
- ----------------------- Officer (principal executive officer)
Robert D. Walter and Director
/s/ Richard J. Miller Vice President, Acting Chief
- ----------------------- Financial Officer and Controller
Richard J. Miller (principal financial officer
and principal accounting officer)
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<PAGE> 7
/s/ Aleksander Erdeljan Director
- -----------------------
Aleksander Erdeljan
/s/ John F. Finn Director
- -----------------------
John F. Finn
/s/ Robert L. Gerbig Director
- -----------------------
Robert L. Gerbig
/s/ John F. Havens Director
- -----------------------
John F. Havens
/s/ Regina E. Herzlinger Director
- -----------------------
Regina E. Herzlinger
/s/ John C. Kane Director
- -----------------------
John C. Kane
/s/ J. Michael Losh Director
- -----------------------
J. Michael Losh
/s/ George R. Manser Director
- -----------------------
George R. Manser
/s/ John B. McCoy Director
- -----------------------
John B. McCoy
/s/ Jerry E. Robertson Director
- -----------------------
Jerry E. Robertson
/s/ L. Jack Van Fossen Director
- -----------------------
L. Jack Van Fossen
/s/ Melburn G. Whitmire Director
- -----------------------
Melburn G. Whitmire
-6-
<PAGE> 8
Director
- -----------------------
Silas S. Cathcart
Director
- -----------------------
Michael D. O'Halleron
Director
- -----------------------
Lester B. Knight
THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the Plan
Committee has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of McGraw Park, State
of Illinois, on the 4th day of February, 1999.
ALLEGIANCE RETIREMENT PLAN
By:/s/ Robert B. DeBaun
------------------------
Name: Robert B. DeBaun
-7-
<PAGE> 9
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
4(a) Specimen Certificate for the Registrant's Class A Common Shares (1)
4(b) Amended and Restated Articles of Incorporation of Registrant, as amended (2)
4(c) Restated Code of Regulations of Registrant, as amended (2)
4(d) Allegiance Retirement Plan (including all amendments thereto)
5 Opinion of Paul S. Williams as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Ernst & Young LLP
23(c) Consent of PricewaterhouseCoopers LLP
23(d) Consent of Arthur Andersen LLP
23(e) Consent of Paul S. Williams (included in Opinion filed as Exhibit 5 hereto)
24 Power of Attorney (included in signature page to Registration Statement)
</TABLE>
(1) Included as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997 and incorporated herein by
reference.
(2) Included as an exhibit to the Registrant's 8-K filed November 24, 1998
and incorporated herein by reference.
<PAGE> 1
Exhibit 4(d)
ALLEGIANCE CORPORATION RETIREMENT PLAN
--------------------------------------
McDermott, Will & Emery
Chicago
<PAGE> 2
TABLE OF CONTENTS
-----------------
[INTENTIONALLY OMITTED]
-i-
<PAGE> 3
ALLEGIANCE CORPORATION RETIREMENT PLAN
--------------------------------------
SECTION 1
---------
Introduction
------------
1.1. PURPOSE. The Allegiance Corporation Retirement Plan (the "Plan")
is maintained by Allegiance Corporation (the "Company") to encourage eligible
employees to save for their retirement, to stimulate interest, initiative and
increased efficiency among employees and to share with the employees, through
Company contributions, the economic benefits produced by their efforts. The Plan
is intended to constitute a cash or deferred/profit sharing plan which meets the
requirements of Section 401(a) of the Internal Revenue Code.
1.2. EFFECTIVE DATE, PLAN HISTORY, PLAN YEAR. The Plan is established
effective October 1, 1996 (the "Effective Date"). The Plan is a spin-off from
the Baxter International Inc. and Subsidiaries Incentive Investment Plan (As
Amended and Restated Effective May 1, 1995) (the "Prior Plan"). The Prior Plan
was originally established effective July 1, 1960 and was amended and restated
from time to time; various plans were merged into the Prior Plan. The Plan shall
be administered on the basis of a Plan Year, which means the twelve-consecutive
month period beginning January 1 and ending December 31, provided that the first
Plan Year shall be the period beginning on October 1, 1996 and ending on
December 31, 1996.
1.3. THE EMPLOYERS AND THE CONTROLLED GROUP MEMBERS. Any Controlled
Group Member may adopt the Plan for the benefit of its Eligible Employees (as
defined in Section 2.1) with the Company's consent and pursuant to Section 13.
For purposes of the Plan, a "Controlled Group Member" means the Company and any
other corporation that is a member of the controlled group of corporations
(within the meaning of Section 1563 of the Internal Revenue Code of 1986, as
amended (the "Code"), determined without regard to Sections 1563(a)(4) and
1563(e)(3)(C) thereof) in which the Company is a member. The Company and the
other Controlled Group Members which adopt the Plan pursuant to Section 13 are
referred to herein collectively as the "Employers" and individually as an
"Employer."
1.4. ADMINISTRATION OF THE PLAN. The Plan is administered by a plan
committee (the "Administrative Committee") consisting of three or more persons
appointed by the Company, as described in Section 10. Participants will be
notified of the identity of the
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<PAGE> 4
members of the Administrative Committee, and of any change in Administrative
Committee membership. Any notice or document required to be given to or filed
with the Administrative Committee will be properly given or filed if delivered
or mailed, by registered mail, postage prepaid, to the Administrative Committee,
in care of the Company, at 1430 Waukegan Road, McGraw Park, IL 60085.
1.5. FUNDING OF BENEFITS. Funds contributed under the Plan are held and
invested until distribution by a trustee (the "Trustee") appointed by the
Company, in accordance with the terms of a trust agreement, known as the
Allegiance Corporation Retirement Trust Agreement (the "Trust"), between the
Company and the Trustee which implements and forms a part of the Plan.
Investment of the Trust is administered by an investment committee (the
"Investment Committee") consisting of three or more persons appointed by the
Company, as described in Section 9. Participants will be notified of the
identity of the Trustee and the Investment Committee, and of any change in the
Trustee or in Investment Committee membership. Copies of the Plan and the Trust,
and any amendments thereto, will be on file at the office of the Secretary of
the Company where they may be examined by any Participant or other person
entitled to benefits under the Plan. The provisions of and benefits under the
Plan are subject to the terms and provisions of the Trust.
1.6. PLAN SUPPLEMENTS. The provisions of the Plan may be modified by
supplements ("Supplements") to the Plan. The terms and provisions of each
Supplement are a part of the Plan and supersede the provisions of the Plan to
the extent necessary to eliminate inconsistencies between the Plan and the
Supplement.
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<PAGE> 5
SECTION 2
---------
Eligibility
-----------
2.1. PARTICIPATION. Subject to the conditions and limitations of the
Plan, each Eligible Employee of the Company who was a Participant in the Prior
Plan immediately preceding the Effective Date will become a Participant in this
Plan on and after the Effective Date. On and after the Effective Date, each
other Eligible Employee of an Employer will become a participant in the Plan on
the first day of the calendar month which begins with or immediately follows the
one-month anniversary of his employment with an Employer.
An "Eligible Employee" means an Employee on the payroll of an Employer
incorporated in the United States whose Compensation (as defined in Section 3.5)
constitutes wages from employment within the meaning of Sections 3121(a) and (b)
of the Federal Insurance Contribution Act on and after the Effective Date by the
Employer, and excluding:
(a) An Employee who is a member of a group of Employees
represented by a collective bargaining representative, with
respect to which the Plan has not been extended by a currently
effective collective bargaining agreement between his Employer
and the collective bargaining representative of the group of
Employees of which he is a member after good faith bargaining
on the subject of employee benefits;
(b) An Employee who is otherwise excluded from all of the groups
of Employees to whom the Plan is extended by the Employers;
and
(c) A leased employee who is considered an Employee under
subsection (i) below.
An "Employee" means any person who is a common law employee of an Employer or a
Controlled Group Member of an Employer and who is in active employment or on an
approved leave of absence. Notwithstanding the foregoing, the following rules
shall apply in determining a person's status as an Employee:
(i) LEASED EMPLOYEES. An individual who is considered a
"leased employee" of an Employer under the provisions
of Code Section 414(n)(2) shall be considered an
Employee, but not an Eligible Employee, for all
purposes of the Plan; provided, however, that such
individual shall not be considered an Employee if the
leasing organization that employs him covers such
individual with a plan
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<PAGE> 6
providing benefits at least as generous as those
described in Code Section 414(n)(5).
(ii) UNITED STATES CITIZENSHIP. Individuals employed by an
Employer and who generally satisfy the requirements
of this Section need not be United States citizens to
be Employees; provided, however, that individuals who
are not United States citizens and who are employed
at an Employer's facility in the United States or one
of its possessions solely on the understanding that
such United States employment is temporary for
purposes of training or familiarization with such
facility or with such Employer's operations or
practices shall not be considered to be Employees;
(iii) CERTAIN CITIZENS EMPLOYED ABROAD. Ordinarily an
individual must be employed by an Employer and must
be employed at one or more of its facilities in the
United States or possessions of the United States to
be considered an Employee. A United States citizen
employed by an Employer at one of its Facilities
outside of the United States and its possessions may
become an Employee if he satisfies the other
requirements of this Section and if the applicable
requirements of Sections 401(a) and 404A of the Code
and Section 406 or 407 of the Code are satisfied with
respect to such Employee;
2.2. NOTICE OF PARTICIPATION. The Administrative Committee will notify
each Employee when he becomes a Participant in the Plan, and will furnish each
Participant under the Plan with a copy of a summary plan description.
2.3. CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant on the later of the date on which such Participant ceases to be an
Eligible Employee or the date on which the Participant's Accounts (as defined
in Section 5.1) are distributed for his benefit in accordance with the Plan.
2.4. REEMPLOYMENT. An Eligible Employee who was a Participant or was
eligible to participate prior to his Termination of Employment and is
reemployed as an Eligible Employee shall recommence participation in the Plan
on the first day of the first calendar month beginning after the date of his
reemployment. A "Termination of Employment" occurs when a person ceases to be
an Employee and ceases to be on the payroll of an Employer or a Controlled
Group Member of an Employer. Transfer of employment from an Employer to another
Employer or Controlled Group Member or from one Controlled Group Member to
another Controlled Group Member or to an
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<PAGE> 7
Employer, shall not constitute a Termination of Employment for purposes of the
Plan. Notwithstanding the foregoing, an individual who has ceased to be an
Employee but who remains for a limited period of time on the payroll of an
Employer or a Controlled Group Member of an Employer solely for administrative
purposes shall incur a Termination of Employment on the date he ceases to be an
Employee.
-5-
<PAGE> 8
SECTION 3
---------
Participant Contributions
-------------------------
3.1. PARTICIPANT PAY DEFERRAL CONTRIBUTIONS. Under the terms stated
below, and subject to any limitations contained in the Plan, a Participant may
elect to make "Pay Deferral Contributions" under the Plan for any Plan Year,
beginning with the Plan Year in which he becomes a Participant, in an amount not
less than one percent nor more than twelve percent (in multiples of one percent)
of his Base Pay (as defined in Section 3.8) for that year. Each election by a
Participant under this subsection must be made electronically via telephone in
such way as the Administrative Committee determines. Pay Deferral Contributions
will become effective as of the first pay period beginning after such elections
are properly made, or as soon as administratively feasible. No Pay Deferral
Contributions will be effective unless the Participant properly selects the Plan
investment fund(s) to which his Pay Deferral Contributions are to be allocated,
as described in Section 5.4.
3.2. PAYMENT OF PAY DEFERRAL CONTRIBUTIONS. A Participant's Pay
Deferral Contributions shall be made by his Employer on behalf of the
Participant, and shall reduce the Participant's Base Pay at the time of payment.
Amounts by which a Participant's Base Pay has been reduced for any pay period
shall be paid to the Trustee as soon as practicable thereafter, but no later
than the date specified by law.
3.3. VARIATION, DISCONTINUANCE AND RESUMPTION OF PAY DEFERRAL
CONTRIBUTIONS. Once per calendar month, a Participant may elect to change his
Pay Deferral Contribution rate (but not retroactively) within the limits
specified above, to discontinue contributions or to resume contributions. Any
such election shall be made electronically via telephone in such manner as the
Administrative Committee shall determine, and shall be effective only in
accordance with such rules as shall be established from time to time by the
Administrative Committee. Election changes shall be effective as of the pay
period beginning after the election is properly made. A former Participant who
is reemployed may recommence Pay Deferral Contributions on the first day of the
first calendar month beginning immediately following his reemployment.
3.4. MAXIMUM AMOUNT OF PAY DEFERRAL CONTRIBUTIONS. In no event shall
the amount of Pay Deferral Contributions by a Participant for any calendar year
exceed $9,500.00 (or such greater amount as may be determined by the
Commissioner of Internal Revenue for that calendar year under Code Section
402(g)). Upon reaching this limit in any year, a Participant's Pay Deferral
Contributions shall cease for the remainder of the year. Alternatively, if this
limitation is exceeded in any year, such
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<PAGE> 9
excess Pay Deferral Contributions (and the earnings thereon) shall be
distributed to the Participant by April 15 of the following calendar year.
3.5. LIMITATION ON PAY DEFERRAL CONTRIBUTIONS. Notwithstanding the
foregoing provisions of this Section 3, in no event shall the Actual Deferral
Percentage for any Plan Year of the Highly Compensated Employees (as defined in
Section 3.9) exceed the greater of:
(a) the Actual Deferral Percentage of all other Participants for
such Plan Year multiplied by 1.25; or
(b) the Actual Deferral Percentage of all other Participants for
such Plan Year multiplied by 2.0; provided that the Actual
Deferral Percentage of such Highly Compensated Employees does
not exceed that of all other Participants by more than 2
percentage points.
The "Actual Deferral Percentage" means a percentage calculated for purposes of
this Section 3.5 for (i) the group of Participants who are Highly Compensated
Employees and (ii) the group of all other Participants. For each group being
tested, the Actual Deferral Percentage shall be the average of the following
percentages (calculated separately for each member of the group): Pay Deferral
Contributions on behalf of each group member for the Plan Year, divided by his
Compensation for the Plan Year. For purposes of this calculation, a Participant
means any Eligible Employee. The deferral percentages for individuals and the
Actual Deferral Percentage for each specified group shall be calculated to the
nearest one-hundredth of one percent. To the extent necessary to satisfy the
nondiscrimination test in this Section 3.5 in a particular Plan Year, the
Administrative Committee may elect to add to the numerator of the Actual
Deferral Percentage fraction (i) any portion of additional Nonelective
Contributions (as defined in Section 4.5) made by any Employer that may be
treated as a "qualified nonelective contribution" under Code Section 401(k);
and/or (ii) any portion of that Plan Year's Matching Contributions that may be
treated as a "qualified matching contribution" under Code Section 401(k). Salary
reduction contributions made by a Participant under any other tax-qualified
defined contribution plan maintained by the Participant's Employer or any
Controlled Group Member of such Employer shall be included in computing his
deferral percentage to the extent the Company elects to aggregate such other
defined contribution plan with the Plan for purposes of the nondiscrimination
test of this Section 3.5 or the coverage test of Code Section 410(b).
"Compensation" means the amount paid by the Employers during the Plan Year to
such Participant for personal services as an Employee which are required to be
reported as taxable income on Form W-2, including the amount of any salary
reduction or cash or deferred contributions made by such Participant for the
calendar year which coincides with the Plan Year under this Plan and under any
other plan maintained by the
-7-
<PAGE> 10
Employers which satisfies the requirements of Code Section 125 or Code Section
401(k). The amount of a Participant's Compensation that may be taken into
account for any purpose of the Plan shall not exceed $150,000, as adjusted
pursuant to Section 401(a)(17) of the Code, and for this purpose:
(a) The family aggregation rules of Section 414(q)(6) of the Code
shall apply, except that for this purpose the term "family"
shall mean only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19
before the end of that year; and
(b) If, as a result of the application of these family aggregation
rules, the aggregated Compensation of the Participant and
those family members would exceed the $150,000 (as adjusted)
maximum, then the Compensation of the Participant and each of
those family members shall be reduced in proportion to the
Compensation of each before the application of this limitation
until their aggregate Compensation equals the $150,000 (as
adjusted) maximum.
In computing the Compensation of a Participant for all Plan purposes,
Compensation paid in currency other than United States dollars shall be
converted to United States dollars at the rate of exchange used at that time by
his Employer for such purpose. Compensation paid to a Participant before he
commences participation in the Plan, and Compensation paid to a Participant
after he ceases to receive credit for Hours of Service under the Plan, will not
be recognized under the Plan, except where required by applicable law or where
the Plan specifically indicates to the contrary.
The Pay Deferral Contributions made by the Highly Compensated Employees will be
reduced (in the order of their deferral percentages beginning with the highest
percentage) to the extent necessary to meet the requirements of this Section
3.5. If, because of the foregoing limitations, a portion of the Pay Deferral
Contributions made by a Highly Compensated Employee may not be credited to his
account for a Plan Year, such portion (and the earnings thereon) shall be
distributed to such Employee within two and one-half months after the end of
that Plan Year. Alternatively, an Employer may make Nonelective Contributions to
the Plan to the extent necessary to satisfy this Section 3.5. The Administrative
Committee shall designate the Participant for whom the contributions are made.
The additional contributions must be made no later than 30 days after the end of
the Plan Year, shall satisfy the requirements under Code Section 401(k) for
treatment of "qualified nonelective contributions," and shall be credited to the
"Before-Tax Account" (as defined in Section 5.1) of each Participant for whom
any contribution is made.
3.6. ROLLOVER CONTRIBUTIONS. On such forms and in such manner as
prescribed by the Administrative Committee, a Participant who is an Employee may
elect to roll
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<PAGE> 11
over to the Plan amounts credited to his account in a tax-qualified plan of his
former employer or amounts held on his behalf in an individual retirement
account; provided that the Trustee may accept rollover amounts on behalf of a
Participant only to the extent such amounts constitute "eligible rollover
distributions" (as defined in Code Section 402(a)(4)). "Rollover Contributions"
will be credited to a Rollover Account maintained for the Participant pursuant
to Section 5.1. No rollover election will become effective unless the
Participant properly selects the Plan investment fund or funds to which the
Rollover Contribution is to be allocated (in the manner described in Section
5.4). If a Participant has previously made an investment election applicable to
his Pay Deferral Contributions, such election shall apply to his Rollover
Contributions.
3.7. AFTER-TAX CONTRIBUTIONS. The Plan does not permit Participants to
make after-tax contributions of any type, but will maintain an "After-Tax
Account" (as defined in Section 5.1) on behalf of each Participant who made such
contributions to the Prior Plan.
3.8. BASE PAYBASE PAY. "Base Pay" means the following:
(a) With respect to Employees who are compensated based upon sales
commissions, Base Pay includes 75% of the Employee's regular
pay, draw and commissions for the Plan Year, but excludes
shift differentials, exception pay, Management Incentive
Compensation Plan ("MICP"), lump sum merit pay, performance
pay and any other payments.
(b) With respect to Employees who are not compensated based upon
sales commissions, Base Pay includes regular pay, back pay,
vacation pay, holiday pay, sick pay, funeral pay, jury pay,
military pay and other paid absences, but excludes overtime,
short-term disability, shift differential, exception pay,
MICP, lump sum merit pay, performance pay and any other
payments.
The amount of a Participant's Base Pay that may be taken into account for any
purpose of the Plan shall not exceed $150,000, as adjusted pursuant to Section
401(a)(17) of the Code, and for this purpose:
(i) The family aggregation rules of Section 414(q)(6) of
the Code shall apply, except that for this purpose
the term "family" shall mean only the spouse of the
Participant and any lineal descendants of the
Participant who have not attained age 19 before the
end of that year; and
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<PAGE> 12
(ii) If, as a result of the application of these family
aggregation rules, the aggregated Base Pay of the
Participant and those family members would exceed the
$150,000 (as adjusted) maximum, then the Base Pay of
the Participant and each of those family members
shall be reduced in proportion to the Base Pay of
each before the application of this limitation until
their aggregate Base Pay equals the $150,000 (as
adjusted) maximum.
In computing the Base Pay of a Participant for all Plan purposes, Base Pay paid
in currency other than United States dollars shall be converted to United States
dollars at the rate of exchange used at that time by his Employer for such
purpose. Base Pay paid to a Participant before he commences participation in the
Plan, and Base Pay paid to a Participant after he ceases to receive credit for
Hours of Service under the Plan, will not be recognized under the Plan, except
where required by applicable law or where the Plan specifically indicates to the
contrary.
3.9 HIGHLY COMPENSATED EMPLOYEES. A "Highly Compensated Employee" means
an Employee described below:
(a) The Employee was a 5% owner (as defined in Section 416(i)(1)
of the Code) of an Employer during that Plan Year or the
preceding Plan Year;
(b) The Employee received more than $100,000 (or such other amount
as determined under Section 414(q)(1)(B) of the Code) in
annual Compensation from an Employer during the preceding Plan
Year;
(c) The Employee received more than $66,000 (or such other amount
as determined under Section 414(q)(1)(C) of the Code) in
annual Compensation from an Employer and was a member of a
group of Employees of an Employer consisting of the top 20% of
Employees when ranked on the basis of Compensation paid during
the preceding Plan Year; or
(d) The Employee was an officer of an Employer and received annual
Compensation in excess of 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for that Plan
Year or the preceding Plan Year.
A Participant who is not described in subsection (b), (c) or (d) for the year
preceding the current Plan Year shall be a Highly Compensated Employee for the
current Plan Year if he is described in subsection (b), (c) or (d) for the
current Plan Year and he is one of the 100 Employees paid the greatest
Compensation during the current Plan Year.
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<PAGE> 13
For purposes of subsection (d), no more than 50 Employees (or, if less, the
greater of three Employees or 10% of Employees) shall be treated as officers.
However, if all officers of an Employer have less Compensation than the
threshold amount stated in subsection (d) for a particular Plan Year, the
officer with the highest Compensation for the year shall be treated as described
in subsection (d).
If any Employee is a member of the family of a 5% owner or of one of the ten
Highly Compensated Employees paid the greatest Compensation during the Plan
Year, then such Employee shall not be considered a separate Employee, and any
Compensation paid to him and any contribution made by him or on his behalf shall
be treated as if it were Compensation of or contributions by or on behalf of
such 5% owner or Highly Compensated Employee. For purposes of the preceding
sentence, an Employee's family includes his spouse and his lineal ascendants and
descendants and their spouses. The Plan is intended to satisfy the qualification
requirements of the Code, including the coverage and nondiscrimination
provisions of Code Sections 410(b) and 401(a)(4). If the Administrative
Committee determines this Plan would violate such restrictions, then the
Administrative Committee is authorized to construe the Plan in a manner
necessary to avoid discrimination in favor of Highly Compensated Employees, if
the express provisions of the Plan permit such interpretation.
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<PAGE> 14
SECTION 4
---------
Employer Contributions
----------------------
4.1. MATCHING CONTRIBUTIONS. For each Plan Year, the Employers will
make a "Matching Contribution" to the Trustee for allocation to each Participant
in an amount equal to one hundred percent of each Participants' Pay Deferral
Contributions made for such Plan Year, but not to exceed 3% of each such
Participants' annual Base Pay. The Matching Contribution will be credited to
Participants ratably as of the end of each payroll period, whether or not Pay
Deferral Contributions are made ratably over the Plan Year. The amount of the
Employers' Matching Contribution may be reduced by the amount of Forfeitures (as
defined in Section 7.4), if any, attributable to prior Matching Contributions
and Profit Sharing Account (as defined in Section 5.1) balances which are to be
allocated as of the last day of such Plan Year.
4.2. FIXED CONTRIBUTIONS. Effective January 1, 1997, for each Plan
Year, the Employers will make a "Fixed Contribution" to the Trustee for
allocation to each Eligible Participant in an amount equal to 3% of each
Eligible Participants' Base Pay for such Plan Year, provided that the Employers'
contribution shall be reduced by the amount of Forfeitures, if any, attributable
to prior Fixed Contributions which are to be allocated as of the last day of
such Plan Year. An "Eligible Participant" means a Participant who is employed by
an Employer and is an Eligible Employee on the last day of the Plan Year or
retired, died during the Plan Year. Each Eligible Participant shall receive an
allocation of 3% of his Base Pay allocated to his Fixed Account.
4.3. TRANSITION CONTRIBUTIONS. Effective January 1, 1997 and for the
eight Plan Years beginning on and after January 1, 1997, the Employers will make
a "Transition Contribution" to the Trustee for allocation to each Eligible
Participant eligible for a Transition I Benefit or Transition II Benefit, in an
amount equal to the sum of the amounts owed to all Eligible Participants so
entitled. The Transition Contributions will be allocated to such Eligible
Participants according to the following schedule:
(a) TRANSITION I BENEFIT: Each Eligible Participant who, as of
October 1, 1996, had at least 55 points and at least 10 Years
of Benefit Service, each determined under the Baxter
International, Inc. and Subsidiaries Pension Plan shall be
entitled to a Transition I Benefit according to the following
schedule:
-12-
<PAGE> 15
<TABLE>
<CAPTION>
Points as of Contribution as a
October 1, 1996 Percent of Base Pay
--------------- -------------------
<S> <C>
55 through 59 3%
60 to 64 4%
65 to 69 5%
70 to 74 6%
75 to 79 7%
80 or more 8%
</TABLE>
(b) TRANSITION II BENEFIT: Each Participant who, as of October 1,
1996, had less than 55 points but at least 15 Years of Benefit
Service, each determined under the Baxter International, Inc.
and Subsidiaries Pension Plan, shall be entitled to receive a
Transition II Benefit of 2% of his annual Base Pay.
4.4. PERFORMANCE CONTRIBUTION. Effective January 1, 1997, for each Plan
Year that the Employers meet certain performance goals established and announced
to Participants prior to the beginning of the Plan Year, the Employers will make
a "Performance Contribution" to the Trustee in an amount to be determined by the
Employers. The amount of such Performance Contribution shall be reduced by the
amount of Forfeitures, if any, attributable to prior Performance Contributions
which are to be allocated as of the last day of such Plan Year. The Performance
Contribution shall be allocated to Participants who are Eligible Participants as
of the last day of the applicable Plan Year, PRO RATA according to each Eligible
Participants' Base Pay.
4.5. NONELECTIVE CONTRIBUTIONS. During any Plan Year, the Employers may
make a "Nonelective Contribution" to the Trustee in such amount, if any, as
shall be determined by the Employers to be necessary under Section 3.5 of the
Plan. The Company shall designate the Plan Year on account of which a
Nonelective Contribution is made and shall specify the amount of the Nonelective
Contribution or a definite basis or formula by which the Nonelective
Contribution can be determined within a reasonable time after the end of that
Plan Year.
4.6. LIMITATION ON ALLOCATION OF MATCHING CONTRIBUTIONS.
Notwithstanding the foregoing provisions of this Section 4, in no event shall
the Actual Contribution Percentage of the Highly Compensated Employees who are
Participants for any Plan Year exceed the greater of:
(a) the Actual Contribution Percentage of all other Participants
for such Plan Year multiplied by 1.25; or
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<PAGE> 16
(b) the Actual Contribution Percentage of all other Participants
for such Plan Year multiplied by 2.0; provided that the Actual
Contribution Percentage of the Highly Compensated Employees
does not exceed that of all other Participants by more than 2
percentage points.
The "Actual Contribution Percentage" means a percentage calculated for purposes
of this Section 4.6 for (i) the group of Participants who are Highly Compensated
Employees and (ii) the group of all other Participants. For each group being
tested, the Actual Contribution Percentage shall be the average of the following
percentages (calculated separately for each member of the group): Matching
Contributions on behalf of each group member for the Plan Year, divided by his
Compensation for the Plan Year. The percentages for individuals and the Actual
Contribution Percentage for each specified group shall be calculated to the
nearest one-hundredth of one percent. Matching Contributions made on behalf of a
Participant under any other tax-qualified defined contribution plan maintained
by the Participant's Employer or any Controlled Group Member of such Employer
shall be included in computing his Actual Contribution Percentage to the extent
the Company elects to aggregate such other defined contribution plan with the
Plan for purposes of the nondiscrimination test of this Section 4.6 or the
coverage test of Code Section 410(b).
For purposes of this Section 4.6, a Participant means any Employee who is
eligible to receive Matching Contributions under the Plan. The Matching
Contributions allocated to Highly Compensated Employees will be reduced (in the
order of their Actual Contribution Percentages beginning with the highest
percentage) to the extent necessary to meet the requirements of this Section
4.6. If, because of the foregoing limitations, a portion of the Matching
Contributions allocated to a Highly Compensated Employee may not be credited to
his Matching Account for a Plan Year, such portion (and the earnings thereon)
shall be distributed to such Employee within two and one-half months after the
end of that Plan Year.
4.7. MULTIPLE USE OF ALTERNATIVE LIMITATION. In accordance with
Treasury Regulation 1.401(m)-2(c), multiple use of the alternative limitation
which occurs as a result of testing under the limitations described in Sections
3.5 and 4.6 will be corrected in the manner described in Treasury Regulation
1.401(m)-1(e). The term "alternative limitation" as used above means the
alternative methods of compliance with Sections 401(k) and 401(m) of the
Internal Revenue Code contained in Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) thereof, respectively.
4.8. CONTRIBUTION LIMITATIONS. For each Plan Year, the Annual Additions
(as defined below) to a Participant's Accounts under the Plan shall not exceed
the lesser of $30,000 (or, if greater, 1/4 of the dollar limitation in effect
under Section 415(b)(1)(A) of
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<PAGE> 17
the Internal Revenue Code for the calendar year which begins with or within that
Plan Year) or 25 percent of the Participant's Compensation during that Plan
Year. The term "Annual Addition" for any Plan Year means the sum of the
contributions made the Employers, Pay Deferral Contributions and Forfeitures
credited to a Participant's Accounts for that year. Any Pay Deferral
Contributions which cannot be allocated to a Participant because of the
foregoing limitations (and any gains attributable thereto) shall be returned to
him. Any Employer contributions which cannot be allocated to a Participant
because of the foregoing limitations shall be applied to reduce the Employers'
contributions in succeeding Plan Years, in order of time.
4.9. COMBINED BENEFIT LIMITATIONS. If a Participant in this Plan also
is a Participant in a defined benefit plan maintained by an Employer, the
aggregate benefits payable to, or on account of, him under both plans will be
determined in a manner consistent with Section 415 of the Internal Revenue Code
and Section 1106 of the Tax Reform Act of 1986. Accordingly, there will be
determined with respect to the Participant a defined contribution plan fraction
and a defined benefit plan fraction in accordance with said Sections 415 and
1106. The benefits provided for the Participant under the defined benefit plan
will be adjusted to the extent necessary so that the sum of such fractions
determined with respect to the Participant does not exceed 1.0.
4.10. LIMITATIONS ON EMPLOYER CONTRIBUTIONS. The Employers'
contributions for a Plan Year are conditioned on their deductibility under
Section 404 of the Internal Revenue Code in that year, shall comply with the
contribution limitations set forth in Sections 4.8 and 4.9 and shall not exceed
an amount equal to the maximum amount deductible on account thereof by the
Employer for that year for purposes of Federal taxes on income.
4.11. PAYMENT OF EMPLOYER CONTRIBUTIONS. The Employers' contributions
under the Plan for any Plan Year shall be due on the last day of that Plan Year
and, if not paid by the end of that year, shall be payable to the Trustee as
soon as practicable thereafter, without interest, but no later than the time
prescribed by law for filing the Employers' Federal income tax return for such
year, including extensions thereof.
4.12. VERIFICATION OF EMPLOYER CONTRIBUTIONS. If for any reason the
Employers decide to verify the correctness of any amount of calculation relating
to their contribution for any Plan Year, the certificate of an independent
accountant selected by the Company as to the correctness of any such amount or
calculation shall be conclusive on all persons.
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<PAGE> 18
4.13. NO INTEREST IN EMPLOYERS. The Employers shall have no right,
title or interest in the Trust fund, nor shall any part of the Trust fund revert
or be repaid to the Employers, directly or indirectly, unless:
(a) the Internal Revenue Service initially determines that the
Plan does not meet the requirements of Section 401(a) of the
Internal Revenue Code, in which event the contributions made
to the Plan by the Employers shall be returned to them within
one year after such adverse determination;
(b) a contribution is made by an Employer by mistake of fact and
such contribution is returned to the Employer within one year
after payment to the Trustee; or
(c) a contribution conditioned on the deductibility thereof is
disallowed as an expense for Federal income tax purposes and
such contribution (to the extent disallowed) is returned to
the Employer within one year after the disallowance of the
deduction.
Contributions may be returned to the Employers pursuant to subsection (a) above
only if they are conditioned upon initial qualification of the Plan, and an
application for determination was made by the time prescribed by law for filing
the Company's Federal income tax return for the taxable year in which the Plan
was adopted (or such later date as the Secretary of the Treasury may prescribe).
The amount of any contribution that may be returned to the Employers pursuant to
subsections (b) or (c) above must be reduced by any portion thereof previously
distributed from the Trust fund and by any losses of the Trust Fund (as defined
in Section 5.2) allocable thereto, and in no event may the return of such
contribution cause any Participant's account balances to be less than the amount
of such balances had the contribution not been made under the Plan.
-16-
<PAGE> 19
SECTION 5
---------
Investments and Plan Accounting
-------------------------------
5.1. PARTICIPANT ACCOUNT BALANCE. The Administrative Committee shall
establish and maintain the following separate Accounts with respect to
Participants:
(a) BEFORE-TAX ACCOUNT. A "Before-Tax Account" shall be maintained
for each Participant. This account shall represent the amount
of such Participant's Pay Deferral Contributions to this Plan
and the Prior Plan and the expenses, distributions, earnings
and losses attributable to such account.
(b) MATCHING ACCOUNT. A "Matching Account" shall be maintained for
each Participant. This account shall represent the portion of
the Matching Contributions allocated to such Participant under
the Plan and the Prior Plan and the expenses, distributions,
earnings and losses attributable to such account.
(c) FIXED ACCOUNT. A "Fixed Account" shall be maintained for each
Participant. This account shall represent the portion of the
Fixed Contributions allocated to such Participant under the
Plan and the expenses, distributions, earnings and losses
attributable to such account.
(d) TRANSITION ACCOUNT. A "Transition Account" shall be maintained
for each Participant for whom Transition Contributions have
been made. This account shall represent the portion of the
Transition Contributions allocated to such Participant under
the Plan and the expenses, distributions, earnings and losses
attributable to such account.
(e) PERFORMANCE ACCOUNT. A "Performance Account" shall be
maintained for each Participant. This account shall represent
the portion of the Performance Contributions allocated to such
Participant under the Plan and the expenses, distributions,
earnings and losses attributable to such account.
(f) PROFIT SHARING ACCOUNT. A "Profit Sharing Account" shall be
maintained for each Participant on whose behalf a Profit
Sharing Account was maintained under the Prior Plan
immediately prior to the Effective Date of the Plan. This
account shall reflect the expenses, distributions, earnings
and losses attributable to such account.
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<PAGE> 20
(g) AFTER-TAX ACCOUNT. An "After-Tax Account" shall be maintained
for each Participant on whose behalf an After-Tax Account was
maintained for his supplemental after-tax contributions under
the Prior Plan immediately prior to the Effective Date of the
Plan. This account shall include any amounts previously rolled
over into this account from the Participant's "Pre-1983
Mandatory Contribution Account" and/or "Pre-1983 Voluntary
Contribution Account" in the Prior Plan. This account shall
reflect the expenses, distributions, earnings and losses
attributable to such account.
(h) ROLLOVER ACCOUNT. A "Rollover Account" shall be maintained for
each Participant whose benefits under another plan described
in Section 401(a) of the Code, other than the Prior Plan, are
transferred to the Trust Fund in accordance with Section 3.6
for the subsequent payment of such amounts in accordance with
this Plan. This account shall reflect the expenses,
distributions, earnings and losses attributable to such
account.
The Accounts represent the Participants' interests in the Plan and Trust Fund
and are intended as bookkeeping account records to assist the Investment
Committee in the administration of the Plan.
5.2. INVESTMENT OF ACCOUNTS. All of the assets held by the Trustee,
Investment Managers and insurance institutions in accordance with the Plan and
Trust shall be known as the "Trust Fund". The Trustee, the Investment Managers
and any insurance institutions responsible for investment of the Trust Fund are
permitted to commingle the assets of the Trust Fund for purposes of investment
with the assets of other plans or trusts which are intended to qualify for a
federal tax exemption under Sections 401(a) and 501(a) of the Code. Any
documents which are required to be incorporated in the Plan and the Trust
Agreement to permit such commingled investments are hereby incorporated. Except
to the extent required by Sections 5.3 and 5.4, segregated investment of Plan
and Trust Fund assets shall not be required with respect to any one or more
Participants. Each of the Accounts invested in a particular investment fund
shall represent an undivided interest in such investment fund which corresponds
to the balance of such Account.
-18-
<PAGE> 21
5.3. INVESTMENT FUNDS. From time to time the Investment Committee may
cause the Trustee, an Investment Manager or an insurance institution to
establish one or more investment funds for the investment and reinvestment of
the Trust Fund. Although the Investment Committee may arrange with the Trustee,
Investment Managers and insurance institutions for the establishment of
investment funds, the continued availability of these funds cannot be assured
nor is it possible to assure that the arrangements or the investment funds
managed by a particular Investment Manager, by the Trustee or by an insurance
institution will continue to be available on the same or similar terms.
Participants may invest the total amount of their Accounts among the investment
funds made available by the Investment Committee from time to time for such
purpose. Such funds shall allow Participants to select from a range of
alternatives that offer different types of investments and different risk and
return characteristics.
The Investment Committee may determine that Participants shall exercise
direction and control over the investment of their Accounts in a manner intended
to insulate Plan fiduciaries from liability for investments under Section 404(c)
of ERISA, and, if so, the investment funds established by the Investment
Committee pursuant to this Section 5.3 shall comply with the requirements of
Section 404(c) of ERISA.
5.4. INVESTMENT ELECTIONS. Each Participant, in accordance with rules
promulgated under the Plan shall direct the investment of his Accounts in one or
more of the investment funds available under the Plan. With respect to the
investment funds referred to in Section 5.3 above, such investment elections
shall be subject to the following limitations:
(a) INITIAL INVESTMENT ELECTION. At the same time and in the
same manner that a Participant makes his initial Pay Deferral
Contribution election or makes a Rollover Contribution, the
Participant must direct the Trustee (electronically via
telephone) as to the investment funds to which the amounts
credited to his Accounts shall be invested. Participants shall
invest the total amount of the Accounts in any combination (in
1% increments) of the available investment funds. All
investment elections shall continue in force until properly
changed in accordance with subsection (b) below. If the
Participant fails to make an investment election, the
Participant's Accounts will be invested in the investment fund
designated by the Investment Committee as the principal
preservation fund.
(b) CHANGES IN INVESTMENT ELECTIONS. A Participant may change his
investment directions no more than one time in each calendar
month. A Participant may change his investment direction as to
future contributions, as to the amounts already in his
Accounts or as to both. Changes in investment elections shall
be effected electronically via telephone in the
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<PAGE> 22
manner prescribed by the Investment Committee and shall become
effective on the day the election is properly made (or on the
following business day, if made after 3:00 p.m. central time).
(c) SEPARATE ELECTIONS. Both with respect to initial investment
elections and changes in investment elections, separate
elections shall be made as follows:
(i) One election shall apply to the balance, as of the
effective date of the election, in the Participant's
Matching Account, Fixed Account, Transition Account,
Performance Account, Profit Sharing Account, and
additions thereto; and
(ii) One election shall apply to the balance, as of the
effective date of the election, in the Participant's
Before-Tax Account, After-Tax Account, Rollover
Account and additions thereto.
(d) SPECIAL LIMITATIONS AND PROCEDURES APPLICABLE TO THE
ALLEGIANCE COMMON STOCK FUND. The following limitations and
procedures shall be applicable to investment elections which
specify investment of a portion of the Participant's Accounts
in the investment fund known as the Allegiance Common Stock
Fund which holds shares of common stock of the Company
("Company Common Stock"):
(i) The aggregate amount of the assets of the Plan which
may be invested in the Allegiance Common Stock Fund
shall be limited by the Investment Committee to the
extent the Investment Committee deems necessary to
prevent the Plan from holding 5% or more of then
outstanding Common Stock of the Company or such other
amount as shall be necessary to assure that the Plan
does not become subject to the provisions of Section
13(d) of the Securities Exchange Act of 1934.
(ii) VOTING OF COMMON STOCK OF THE COMPANY. Pursuant to
the terms set forth in the Trust Agreement, each
Participant having an interest in the Allegiance
Common Stock Fund shall have the right to direct the
manner in which the Trustee shall vote the Company
Common Stock credited to the Participant's Accounts.
Before each annual or special meeting of shareholders
of the Company, there will be sent to each applicable
Participant a copy of the proxy solicitation material
for such meeting, together with a form requesting
instructions to the Trustee on how to vote the
Company Common Stock allocated to such Participant's
Accounts. Instructions will be mailed directly to the
Trustee to preserve confidentiality. Upon
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<PAGE> 23
receipt of such instructions, the Trustee will vote
such shares as instructed. The Trustee will vote
Company Common Stock allocated to Participants'
Accounts for which the Trustee receives no valid
voting instructions and Company Common Stock not
credited to Participant's Accounts, if any, held in
the Trust Fund in a manner consistent with the
provisions of the Trust Agreement and applicable law.
The Investment Committee may, but is not required to,
direct the Trustee with respect to the voting of
Company Common Stock described in the previous
sentence, and the Trustee will follow such directions
except where to do so would be a breach of the
Trustee's duties under the Trust Agreement or
applicable law. The Trustee may not divulge
information with respect to any Participant's
directions regarding voting of Company Common Stock
allocated to his Accounts.
(iii) OFFERS FOR COMPANY COMMON STOCK. Pursuant to the
terms set forth in the Trust Agreement, in the event
that the stockholders of the Company have received an
offer, including a tender offer, for the purchase or
exchange of their shares of Company Common Stock, the
following provisions shall apply:
(A) Each Participant having an interest in the
Alliance Common Stock Fund shall have the
right to direct the Trustee concerning the
sale or tendering of the number of shares of
Company Common Stock credited to the
Participant's Accounts.
(B) The Trustee will use its best efforts to
communicate or cause to be communicated to
all Participants the provisions of the Plan
and Trust Agreement relating to such offer,
all communications directed generally to the
owners of the securities to whom the offer
is made or available, and any communications
that the Trustee may receive from persons
making the offer or any other interested
party (including the Company) relating to
the offer. The Company and the Investment
Committee will provide the Trustee with such
information and assistance as the Trustee
may reasonably request in connection with
these communications to Participants.
Neither the Company nor the Trustee may
interfere in any manner with any
Participant's investment decision with
respect to such an offer.
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<PAGE> 24
(C) If the offer is for all Company Common Stock
held by the Trustee in the Trust Fund, then
the Trustee will:
(1) Accept or reject the offer with
respect to Company Common Stock
allocated to each Participant's
Accounts according to that
Participant's direction, except
where to do so would be a breach of
the Trustee's duties under the Trust
Agreement or applicable law; and
(2) Accept or reject the offer with
respect to Company Common Stock
allocated to Participants' Accounts
for which no valid direction was
received by the Trustee and with
respect to unallocated Company
Common Stock held in the Trust Fund
in the Trustee's sole discretion.
The Trustee may not divulge information with
respect to any Participant's investment
decision regarding the offer.
(D) If the offer is for less than all the
Company Common Stock held by the Trustee in
the Trust Fund, all provisions of paragraphs
(A) through (C) will be applied to that
offer, except that each Participant will
have the opportunity to make an investment
decision for a pro rata portion of the
Company Common Stock allocated to his
Accounts and the Trustee, after effecting
those investment decisions, will make its
acceptance or rejection of the offer with
respect to a pro rata portion of the Company
Common Stock allocated to Accounts for which
it received no valid investment instructions
or which is held unallocated in the Trust
Fund, so that the offer has been accepted or
rejected with respect to the full amount of
Company Common Stock held by the Trustee in
the Trust Fund which was subject to the
offer.
(E) Notwithstanding the provisions of paragraphs
(C) and (D) above, the Investment Committee
may, but is not required to, direct the
Trustee with respect to the acceptance or
rejection of any offer described in
paragraph (C) or (D) with respect to Company
Common Stock allocated to Participants'
Accounts for which no valid investment
instructions are received by the Trustee and
with respect to unallocated Company Common
Stock held in the Trust Fund, and the
Trustee shall accept or reject any such
offer
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<PAGE> 25
in accordance with any such directions from
the Investment Committee to the Trustee with
respect to the offer, except where to do so
would be a breach of the Trustee's duties
under the Trust Agreement or applicable law.
(F) Following the Trustee's sale or tender of
shares pursuant to the terms of this
subsection, the proceeds from the sale or
tender of the shares credited to the
affected Participant's Accounts shall be
subject to the Participant's investment
direction.
5.5. INVESTMENT FUND ACCOUNT. The undivided interest of each
Participant's Accounts in an investment fund shall be determined in accordance
with the accounting procedures specified in the Trust Agreement, investment
management agreement, insurance contract, custodian agreement or other document
under which such investment fund is maintained (the "Investment Fund Document").
To the extent not inconsistent with such procedures, the following rules shall
apply:
(a) DEPOSITS. Amounts deposited in an investment fund shall be
deposited by means of a transfer of such amounts to such
investment fund to conform with the investment elections
properly received in accordance with Section 5.4.
(b) TRANSFERS. Amounts required to be transferred from an
investment fund to satisfy benefit payments and required
transfers to effectuate investment elections in accordance
with Section 5.4 shall be transferred from such investment
funds as soon as practicable following receipt by the Trustee
or Investment Manager of proper instructions to complete such
transfers.
(c) ALLOCATION OF FUND EARNINGS. Except as provided in the
applicable Investment Fund Document, all amounts deposited in
an investment fund shall be invested as soon as practicable
following receipt of such deposit. Notwithstanding the primary
purpose or investment policy of an investment fund, assets of
any investment fund which are not invested in the primary
investment vehicle authorized by the Investment Fund Document
shall be invested in such short term instruments or funds as
the Trustee or applicable Investment Manager or insurance
institution shall determine pending investment in accordance
with such Investment Fund Document.
(d) ACCOUNTING FOR PURCHASES AND SALES OF COMPANY COMMON STOCK.
Purchases and sales of Company Common Stock shall be made for
the
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<PAGE> 26
Allegiance Common Stock Fund in accordance with the provisions
of the Trust Agreement and in accordance with the following:
(i) No commissions shall be paid in connection with
purchases or sales of Company Common Stock from or
to any disqualified person or party in interest (as
defined for purposes of Section 4975(e)(2) of the
Code or Section 3(14) of ERISA).
(ii) Purchases of Company Common Stock other than
purchases on the New York Stock Exchange (the
"Exchange") shall be at a price not greater than the
last recorded sales price quoted for such shares on
the Exchange on the last trading day on which there
was a recorded sale of such shares immediately
preceding the date of such purchases (the "Exchange
Trading Price").
(iii) Sales of Company Common Stock other than sales on
the Exchange shall be at a price not less than the
Exchange Trading Price (as defined in subparagraph
(ii) above).
(iv) In-kind contributions of the Employers, including
contributions of Company Common Stock, are valued at
fair market value. For this purpose Company Common
Stock shall be valued as of the date of such
contribution at the then Exchange Trading Price (as
defined in subparagraph (ii) above but determined as
of the end of the date on which such contribution is
made if such date is a trading day on the Exchange).
If there are no sales of Company Common Stock on the
date as of which the Exchange Trading Price is
determined, then the fair market value of such
common stock shall be the mean of the bid and asked
prices for such date.
(v) If the Investment Committee is unable to determine
the Exchange Trading Price (as defined in
subparagraph (ii) above) because sales prices on the
Exchange are not so quoted, such quotes are not
available to the Investment Committee or for any
other reason, then the Investment Committee may
utilize a composite index price or other price which
is generally accepted for the establishment of fair
market value in lieu of the Exchange Trading Price
for purposes of the restrictions of subparagraphs
(ii) and (iii) above.
5.6. EXPENSES. Unless paid by the Employers, all costs and expenses
incurred in connection with the general administration of the Plan and Trust
shall be allocated among each investment funds in the proportion in which the
amount invested in each
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<PAGE> 27
such fund bears to the amount invested in all funds as of the Accounting Date
preceding the date of allocation. An "Accounting Date" is each day of the Plan
Year that the New York Stock Exchange is open for trading. All costs and
expenses directly identifiable to one fund shall be allocated to that fund. No
commission expenses shall be paid from the Plan with respect to transactions
described in Section 5.5(d)(i).
5.7. CREDITING EMPLOYER CONTRIBUTIONS. Employer Matching Contributions
shall be credited to the appropriate Accounts of Participants as of the first
Accounting Date coincident with or next following the end of the payroll period
for which such contributions are made, regardless of the date such contributions
are actually made. Fixed Contributions, Transition Contributions and Performance
Contributions shall be credited to the appropriate Accounts of Participants as
of the last day of the Plan Year, regardless of when paid to the Trustee.
Expenses, distributions, earnings or losses attributable to such amounts shall
be separately credited pursuant to Sections 5.6 and 5.9.
5.8. CREDITING PAY DEFERRAL CONTRIBUTIONS. Pay Deferral Contributions
shall be credited to the appropriate Accounts as of the first Accounting Date
coincident with or next following the end of the payroll period for which such
contributions are made, regardless of the date such contributions are actually
made. Expenses, distributions, earnings or losses attributable to such amounts
shall be separately credited pursuant to Sections 5.6 and 5.9.
5.9. ADJUSTMENT OF ACCOUNT BALANCES. As of each Accounting Date the
Investment Committee shall cause the Accounts of Participants to be adjusted to
reflect adjustments in the value of the Trust Fund, to reflect contributions
(net of Forfeitures) credited in accordance with Sections 5.7 and 5.8 and to
reflect distributions of benefits (including transfers and withdrawals) as
follows:
(a) First, adjust the Accounts as of the last Accounting Date of
all Participants to reflect the Adjusted Net Worth (as
described below) of the Trust Fund by applying the earnings
adjustment rules applicable to each investment fund and
crediting earnings for segregated investments to the
appropriate Accounts of the Participants to whom such
investments pertain; and
(b) Next, credit Employer Matching Contributions, Fixed
Contributions, Transition Contributions and Performance
Contributions, including Forfeitures applied towards such
contributions in accordance with Section 5.4, and Participant
Pay Deferral Contributions to the proper Accounts; and
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<PAGE> 28
(c) Finally, charge to the proper Accounts all distributions made
since the previous Accounting Date.
The "Adjusted Net Worth" of the Trust Fund as of any date means the fair market
value of the Trust Fund as determined by the Trustee. If an error in the
adjustment of Accounts under this Section is discovered, the Investment
Committee shall correct such error either (i) by crediting or changing the
adjustment necessary to make such correction to or against income or unclaimed
amounts or as an expense of the Trust Fund for the Plan Year in which the
correction is made or (ii) by requiring the Participant's Employer to make a
special contribution to the Plan.
5.10. STATEMENT OF ACCOUNT. As soon as practicable after the last day
of each Plan Year, each participant will be furnished with a statement
reflecting the condition of his Accounts in the trust fund as of that date. No
Participant, except one authorized by the Administrative Committee, shall have
the right to inspect the records reflecting the Accounts of any other
Participant.
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<PAGE> 29
SECTION 6
---------
Period of Participation
-----------------------
6.1. RESTRICTED PARTICIPATION. When payment of all of a Participant's
Account Balances is not made at his Settlement Date (as defined in Section 6.2),
the Participant or his Beneficiary will be treated as a Participant for all
purposes of the Plan, except as follows:
(a) The Participant will not share in Employer contributions and
Forfeitures after his Settlement Date except for certain
contributions and Forfeitures due for the Plan Year in which
the Participant terminated employment, as provided in Section
5.
(b) The Beneficiary of a deceased Participant cannot designate a
Beneficiary under Section 7.9.
6.2. SETTLEMENT DATE. A Participant's "Settlement Date" will be the
date on which he incurs a Termination of Employment with the Employers because
of the first to occur of the following:
(a) NORMAL OR LATE RETIREMENT. The date of the Participant's
retirement on or after reaching age 65 his "Normal Retirement
Date." A participant's right to his Account Balances shall be
nonforfeitable on and after his Normal Retirement Date.
(b) DEATH. The date of the Participant's death.
(c) TERMINATION. The date the Participant resigns or is dismissed
from the employ of the Employers for a reason other than
Normal or Late Retirement.
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<PAGE> 30
SECTION 7
---------
Payment of Account Balances
---------------------------
7.1. RETIREMENT OR DEATH. If a Participant's employment with the
Employers is terminated because of retirement under Section 6.2(a) or if a
Participant dies while in the employ of an Employer, the balances in all of his
Accounts as at the Accounting Date coincident with or next preceding his
Settlement Date (after all adjustments required under the Plan as of that date
have been made) shall be nonforfeitable and shall be distributable to him, or in
the event of his death to his Beneficiary, under this Section 7.
7.2. OTHER TERMINATIONS. If a Participant terminated from the employ of
an Employer before retirement under Section 6.2(a), the balances in his
Before-Tax Account, After-Tax Account and Rollover Account as at the Accounting
Date coincident with or next preceding his Settlement Date (after all
adjustments required under the Plan as of that date have been made) shall be
nonforfeitable and shall be distributable to him under this Section 7 depending
upon the Participant's Years of Service (as defined in Section 7.3). The
balances in his Matching Account, Fixed Account, Transition Account, Performance
Account and Profit Sharing Account as at the Accounting Date coincident with or
next preceding his Settlement Date (after all adjustments required under the
Plan as of that date have been made) shall be determined in accordance with the
following schedule:
<TABLE>
<CAPTION>
If the Participant's The Vested Percentage
Number of Years of of His Accounts
Service Is: Will Be:
------------------ ---------------------
<S> <C>
Less than 5 years 0%
5 years or more 100%
</TABLE>
Notwithstanding the preceding sentence, if a Participant in the Plan was a
participant in the Prior Plan immediately preceding the Effective Date and
became a Participant in the Plan on the Effective Date, the balances in his
Matching Account, Fixed Account, Transition Account, Performance Account, and
Profit Sharing Account shall be determined in accordance with the following
schedule:
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<PAGE> 31
<TABLE>
<CAPTION>
If the Participant's The Vested Percentage
Number of Years of of His Accounts
Service Is: Will Be:
------------------ ---------------------
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
</TABLE>
The resulting balances in his Matching Account, Fixed Account, Transition
Account, Performance Account and Profit Sharing Account will be distributable to
the Participant under Section 7.5.
7.3. YEARS OF SERVICE. "Year of Service" means each Plan Year during
which an Employee earns at least 1,000 Hours of Service, and shall include:
(a) All Years of Service earned by an Employee while employed by
an Employer or a Controlled Group Member of an Employer (but
only recognizing employment while the corporation was an
Employer or a Controlled Group Member).
(b) All Years of Service earned by an Employee while employed by a
corporation that becomes a Controlled Group Member of an
Employer, but only if the Employee is employed on the date the
corporation becomes a Controlled Group Member of an Employer.
Credit shall be given at the rate of 45 Hours of Service for
each week during such period (but not to exceed 1,000 Hours of
Service per Plan Year).
(c) For Employees of an Employer on the Effective Date who were
Participants in the Prior Plan immediately prior to the
Effective Date, all Years of Service earned under the Prior
Plan.
If an Employee has at least one Year of Service, he shall never lose such Years
of Service regardless of when he returns to employment as an Employee.
An "Hour of Service" means:
(i) DUTY HOURS. Each hour for which an Employee is
directly or indirectly paid or entitled to payment by
an Employer or by a Controlled Group Member of an
Employer for the performance of duties.
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<PAGE> 32
(ii) NON-DUTY HOURS. Each hour for which an Employee is
directly or indirectly paid or entitled to payment by
an Employer or by a Controlled Group Member of an
Employer for reasons (such as vacation, holidays,
sickness, disability, layoff, severance pay, jury
duty, military duty or paid leave of absence) other
than the performance of duties, irrespective of
whether the Employee has incurred a Termination of
Employment. Notwithstanding the preceding sentence,
(A) No more than 501 Hours of Service are
required to be credited under this
subsection (ii) to an Employee on account of
any single continuous period during which
the Employee performs no duties;
(B) No Hours of Service will be credited if
payment is made solely to comply with
applicable workers' compensation or
disability insurance laws; and
(C) No Hour of Service will be credited for
payments made to reimburse an Employee for
medical expenses incurred by the Employee;
(iii) BACK-PAY HOURS. Each hour for which no credit has
been given under subsections (i) or (ii) above, but
for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by an
Employer or by a Controlled Group Member of an
Employer.
(iv) MILITARY SERVICE HOURS. Each hour of the normally
scheduled work week during a period the Employee is
absent from employment with an Employer or a
Controlled Group Member of an Employer for voluntary
or involuntary military service with the armed forces
of the United States, but not to exceed the period
required under the law and pertaining to veteran's
reemployment rights; provided, however, if the
Employee fails to report to work with an Employer or
a Controlled Group Member of an Employer at the end
of such absence during which he has reemployment
rights under the law, the Employee shall not receive
credit for hours on such leave (other than for
purposes of subsection (ii) above).
The number and method of Hours of Service to be credited shall be in accordance
with the provisions of Rules and Regulations for Minimum Standards for Employee
Pension Benefit Plans, U.S. Department of Labor, 29 CFR Section 2530.200b-2(b)
which are
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<PAGE> 33
hereby incorporated by reference. With respect to Employees for whom records are
not ordinarily maintained, as of the first day of any week during which such
Employees are required to be credited with at lease one Hour of Service, they
shall be credited with 45 Hours of Service for such week. Hours shall be
credited for the periods to which such hours pertain rather than the periods
during which payment for such hours is made or received. Hours required to be
credited for more than one reason under this Section which pertain to the same
period of time shall be credited only once.
7.4. FORFEITURES. The amounts by which a Participant's Matching
Account, Fixed Account, Transition Account, Performance Account and Profit
Sharing Account are reduced under subsection 7.2 shall each be a "Forfeiture."
A Forfeiture shall be treated as a separate account until the earlier of the
date the Participant receives a distribution of his entire Account Balances or
incurs his fifth consecutive one-year Break in Service, and then each
Forfeiture attributable to prior Matching Contributions, Fixed Contributions,
Transition Contributions and Performance Contributions shall be applied in the
manner provided in Section 4 to reduce such contributions as of that date, and
when so applied will be treated as though it were the respective contributions
made under Section 4; and each remainder attributable to prior Profit Sharing
Contributions shall be used to reduce Matching Contributions required under
Section 4.1 If the Participant is reemployed by an Employer before he incurs
five consecutive one-year Breaks in Service, Section 7.5 shall apply.
7.5. BENEFIT COMMENCEMENT DATE. Except as otherwise provided in this
Section or Section 7.6, the Accounts of a Participant who incurs a Termination
of Employment shall be distributed in accordance with Section 7.6 as soon as
practicable following the Participant's Normal Retirement Date. Notwithstanding
the preceding sentence, the following rules shall apply for purposes of
determining the benefit commencement date for any Participant or Beneficiary:
(a) CASH-OUT OF SMALL AMOUNTS. If the vested portion of a
Participant's Accounts does not exceed $3,500, the
Administrative Committee shall direct the Trustee to
distribute such amount to the Participant (or to the
Beneficiary, if appropriate) in a single sum without the
consent of the Participant. The remaining portion shall be
treated as a Forfeiture. A distribution pursuant to this
subsection shall be made as soon as administratively
practicable following the Participant's Termination of
Employment.
(b) RESTRICTIONS ON IMMEDIATE DISTRIBUTION. If the vested portion
of a Participant's Accounts exceeds $3,500, the Participant
must consent to any distribution commencing prior to his
Normal Retirement Date; provided, however, that consent under
this subsection is not required to
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<PAGE> 34
make distributions necessary to satisfy Code Section 401(a)(9)
or 415. In order for a distribution to commence prior to a
Participant's Normal Retirement Date, the Participant must
elect such a distribution electronically via telephone in the
manner prescribed by the Administrative Committee.
Distributions made pursuant to such Participant election shall
be valued as of the Accounting Date on which the Participant
makes his final request for distribution.
(c) COMMENCEMENT DATE IN ABSENCE OF PARTICIPANT DIRECTION. Subject
to Section 7.6, distribution of a Participant's Accounts which
are distributable in accordance with Sections 7.1 or 7.2 shall
commence as soon as practicable after the Participant attains
Normal Retirement if the Participant has not made a proper
election to commence his distributions prior to his Normal
Retirement Date, pursuant to subsection (b) above, provided
that distribution of such Accounts shall commence no later
than the 60th day after the end of the Plan Year in which the
latest of (i), (ii) or (iii) below occurs.
(i) The date the Participant attains 65 years of age;
(ii) The date of the Participant's Termination of
Employment; or
(iii) The tenth anniversary of his initial Plan
participation.
(d) BENEFIT COMMENCEMENT DATE OF BENEFICIARY. If a Participant
dies prior to the commencement of his benefits, and the vested
portion of the Participant's Accounts exceeds $3,500, benefits
payable to his spouse or other Beneficiary shall commence in
accordance with the election of such spouse or Beneficiary,
pursuant to Section 7.6. Notwithstanding the foregoing, the
commencement and duration of benefit payments to spouses and
other Beneficiaries shall be subject to the requirements of
Code Section 401(a)(9). In addition, no benefits shall be paid
to any spouse or other Beneficiary prior to the completion by
the Administrative Committee of its determination of the
status of such spouse or other Beneficiary as a proper payee
with respect to such Participant. If the Participant's
surviving spouse dies prior to commencement of such benefits,
the benefits payable to any contingent Beneficiary shall
commence no later than the last day of the calendar year
following the calendar year in which such surviving spouse's
date of death occurs. For purposes of this subsection, a
Participant's benefits shall be deemed to have commenced on
the date the Participant requests payment of his distribution,
in accordance with subsection (b).
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<PAGE> 35
(e) ALTERNATE PAYEE COMMENCEMENT DATE. Benefits payable to a
former spouse or other member or former member of the
Participant's family pursuant to a Qualified Domestic
Relations Order (as defined in Code Section 414(p)) will
commence no sooner than the date the Administrative Committee
or its delegate completes its determination that the order
satisfies the requirements set forth in Code Section 414(p).
If the value of the alternate payee's distribution does not
exceed $3,500, it shall be distributed in a single sum without
the consent of the alternate payee as soon as practicable
following the date referred to in the preceding sentence. If
the value of the alternate payee's distribution exceeds
$3,500, then the commencement of benefits payable to the
alternate payee shall be subject to the rules set forth herein
as applied to the applicable Participant, in accordance with
such alternate payee's elections, made pursuant to Section
7.6. For such purpose, the alternate payee shall have the same
payment options as are available to Participants; provided,
however, that no distribution to an alternate payee shall
violate the provisions of Code Section 401(a)(9) or 414(p) or
the terms of the applicable Qualified Domestic Relations
Order.
(f) MINIMUM REQUIRED DISTRIBUTION RULES. The requirements of this
subsection are intended to reflect the applicable rules of
Code Section 401(a)(9) for pre-death distributions and shall
take precedence over any inconsistent provisions of the Plan.
The entire interest of a Participant must be distributed or
begin to be distributed no later than the Participant's
"required beginning date." The required beginning date of a
Participant who attains age 70 1/2 on or after January 1, 1988
is April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2. The required
beginning date of any Participant who attained age 70 1/2
before January 1, 1988 shall be determined in accordance with
the provisions of Section 401(a)(9) of the Code. If the
Participant's benefit is to be distributed in installments,
the following minimum distribution rules shall apply on or
after the required beginning date:
(i) If a Participant's benefit is to be distributed over
(A) a period not extending beyond the life expectancy
of the Participant or the joint life expectancy of
the Participant and Beneficiary or (B) a period not
extending beyond the life expectancy of the
Beneficiary, the amount required to be distributed
for each calendar year must be at least equal the
quotient obtained by dividing the Participant's
benefit by the applicable life expectancy.
(ii) Life expectancy (or joint life expectancy) shall be
calculated by use of the expected return multiples in
Tables V and VI of Treasury
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<PAGE> 36
Regulation Section 1.72-9. Life expectancy shall not
be recalculated unless required by Code Section
401(a)(9).
The hierarchy for distributions required to be made pursuant
to this subsection (f) shall be the hierarchy applicable to
installment distributions provided in Section 7.6(c).
7.6. METHODS OF BENEFIT PAYMENT. Participants and, if applicable,
Beneficiaries shall make elections regarding the methods of benefit payments in
such manner and at such times as the Administrative Committee shall require. A
Participant's Accounts shall be distributed to him, or in the event of his death
to his Beneficiary, in one of the following methods:
(a) SINGLE SUM FORM OF PAYMENT. This is the normal form of benefit
payment. Unless an optional method of payment is elected by
the Participant in accordance with subsection (b), (c), or (d)
below, or by the Participant's Beneficiaries in accordance
with subsection (c) or (d) below, the Participant's Accounts
will be distributed in a single sum, provided that if the
Participant's Accounts exceed $3,500, distribution thereof in
a single sum may not be made prior to certain designated times
without the Participant's or Beneficiaries' consent, if
required pursuant to Section 7.6.
(b) OPTIONAL ANNUITY FORMS OF PAYMENT. If the Participant's
Accounts exceed $3,500, he may elect to have his Accounts
distributed in the form of an annuity contract subject to the
following restrictions:
(i) JOINT AND SURVIVOR FORM. If a Participant elects to
have his Accounts distributed in an annuity form, he
has a spouse to whom he has been legally married for
the entire one-year period ending on his Benefit
Commencement Date and he does not elect (with the
consent of his spouse, as provided in Section 7.8)
the optional form of payment under subparagraph (iii)
below, then the Participant's Accounts shall be
distributed by purchase of an annuity contract in the
form of a Qualified Joint and Survivor Annuity. A
"Qualified Joint and Survivor Annuity" is an annuity
for the life of the Participant with a survivor
annuity for the life of his spouse in an amount which
is 50% of the annuity payable during the joint lives
of the Participant and such spouse.
(ii) PRE-RETIREMENT SURVIVOR FORM. If distribution of the
Participant's Accounts does not commence prior to his
death, he elects an annuity form of payment, he has a
spouse to whom he has been legally married for the
entire one-year period ending on the date of
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<PAGE> 37
his death and he has not elected (with the consent of
his spouse, as provided in Section 7.8) the optional
form of payment under subparagraph (iii) below to his
Beneficiary, then the Participant's Accounts shall be
distributed by purchase of an annuity contract in the
form of a Qualified Pre-Retirement Survivor Annuity.
A "Qualified Pre-Retirement Survivor Annuity" is an
annuity for the life of the Participant's surviving
spouse.
(iii) STRAIGHT LIFE ANNUITY FORM. If a Participant elects
an annuity form of payment and either (A) he does not
have a spouse to whom he has been legally married for
the entire one-year period ending on the earlier of
his Benefit Commencement Date or his date of death or
(B) he elects this form of payment with the consent
of his spouse (in accordance with Section 7.8), then
the Participant's Accounts shall be distributed by
purchase of an annuity contract in the form of a
single life annuity payable over the life of the
Participant or, if the Participant is deceased at the
time the annuity is purchased, over the fife of his
Beneficiary, provided that no annuity will be
purchased under this subparagraph (iii) for the
benefit of more than one individual Beneficiary.
(c) OPTIONAL INSTALLMENT FORM OF PAYMENT. If the Participant's
Accounts exceed $3,500, the Participant or his Beneficiaries,
as applicable, may elect to have the Participant's Accounts
distributed in the form of substantially equal annual,
quarterly or monthly installment payments. Such installment
payments shall not be payable over a period of time in excess
of the maximum installment period permitted by Code Section
401(a)(9). Installment distributions shall be deducted from
the Participant's Accounts in the following order (and shall
be deducted on a pro rata basis from the investment funds to
which amounts in such Accounts are allocated):
(i) After-Tax Account (exclusive of earnings).
(ii) After-Tax Account earnings.
(iii) Rollover Account.
(iv) Profit Sharing Account.
(v) Fixed Account.
(vi) Transition Account.
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<PAGE> 38
(vii) Performance Account.
(viii) Matching Account.
(ix) Before-Tax Account.
(d) PARTIAL SINGLE SUM FORM OF PAYMENT. A Participant or his
Beneficiaries, as applicable, may elect to have less than 100%
of the Participant's Accounts paid in a single sum. Such
election shall be made in accordance with the procedures
described in Section 7.6(c). The hierarchy for distributions
made pursuant to this subsection shall be the hierarchy
applicable to installment distributions provided in subsection
(c) above.
Benefits may be distributed in cash or, if applicable, in whole shares of
Company Common Stock from the Allegiance Common Stock Fund, provided that
property distributed in Company Common Stock may only be distributed if the
requirements of Section 8.11 are satisfied. As part of the distribution
election, a Participant or his Beneficiaries, as applicable, must indicate the
amount, if any, of the balance in the Participant's Accounts invested in the
Allegiance Common Stock Fund that he wishes to receive in Company Common Stock.
Neither the Employers nor the Administrative Committee shall be
obligated to consider the tax effects upon a Participant, spouse, or other
Beneficiary of receipt by that Participant or such spouse or other Beneficiary
of Plan benefits. It shall be the responsibility of Participants to consider the
tax effects of the time and manner of benefit distribution and the disposition
of distributions upon receipt by a Participant, spouse, or other Beneficiary.
7.7. DIRECT ROLLOVERS. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election hereunder, a
distributee may elect, at the time and in the manner prescribed by the
Administrative Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(a) NOTICE OF RIGHTS. Each distributee shall be provided with a
notice of his or her rights under this subsection no less than
30 days and no more than 90 days before the commencement of an
eligible rollover distribution to the distributee from the
Plan. Written consent of the distributee to the distribution
must not be made before the distributee receives the notice
and must not be made more than 90 days before such
commencement. If a distribution is one to which Code Sections
401(a)(11) and 417 do not apply, such distribution may
commence less than 30 days after the notice
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required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(i) The Administrative Committee clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option); and
(ii) The Participant, after receiving the notice,
affirmatively elects a distribution.
(b) DEFINITIONS.
(i) ELIGIBLE ROLLOVER DISTRIBUTION: An eligible rollover
distribution is any distribution of all or any
portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include: 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 fives (or joint life expectancies) of the
distributee and the distributee's designated
Beneficiary, or for a specified period of ten years
or more; any distribution to the extent such
distribution is required under Code Section
401(a)(9); and the portion of any distribution that
is not includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan
is an individual retirement account described in Code
Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified
trust described in Code Section 401(a), that accepts
the distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account
or individual retirement annuity.
(iii) DISTRIBUTEE: A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's divorced spouse who is the
alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are
distributees with regard to the interest of the
spouse or former spouse.
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(iv) DIRECT ROLLOVER: A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
7.8. MARRIED PARTICIPANTS - WAIVER OF ANNUITY FORMS OF PAYMENT. In the
case of a married Participant who elects the annuity form of payment, the
Administrative Committee shall, at the time and in the manner specified in U.S.
Treasury regulations, provide to the Participant in writing the applicable terms
and conditions of the Qualified Joint and Survivor Annuity or the Qualified
Pre-Retirement Survivor Annuity and the availability and financial effect of the
election not to take such annuities. In the case of a married Participant who
elects an annuity form of payment but wishes to choose a payment method other
than the Qualified Joint and Survivor Annuity or the Qualified Pre-Retirement
Survivor Annuity, an election to waive the Qualified Joint and Survivor Annuity
shall be made in writing on an appropriate form filed with the Administrative
Committee within the 90-day period ending on the date distribution is to begin.
The Participant will receive a written explanation of the Qualified Joint and
Survivor Annuity form of payment not more than 90 nor less than 30 days prior to
the date his distribution is to begin. A Participant's election to waive the
Qualified Pre-Retirement Survivor Annuity shall be made in writing on an
appropriate form filed with the Administrative Committee within an election
period beginning on the first day of the Plan Year in which the Participant
attains age 35 and ending on the date of the Participant's death, except that if
the Participant's Termination of Employment occurs before the first day of the
Plan Year in which he attains 35 years of age, the election period shall begin
on the date of such termination. Any such election to waive the Qualified Joint
and Survivor Annuity or the Qualified Pre-Retirement Survivor Annuity shall be
effective only if either the Participant's spouse consents to such waiver or it
is established to the satisfaction of the Administrative Committee that the
Participant has no spouse or that such consent cannot be obtained because the
spouse cannot be located. Any such election may be revoked in writing at any
time before distribution begins. Any such consent of a Participant's spouse must
be in writing, must acknowledge the effect of the election, must be limited to a
benefit for a specific alternate Beneficiary or Beneficiaries (or class of
Beneficiaries) and must be witnessed by a notary public or Plan representative.
Any such consent by a Participant's spouse shall not be valid with respect to
any other spouse. Any new election or change of Beneficiary shall require a new
spousal consent. Elections made in accordance with this Section 7.8 may be
revoked or superseded by a new election made by the Participant.
7.9. SURVIVING SPOUSE OR DESIGNATED BENEFICIARIES. Except as provided
in this Section, a Participant's spouse shall be his designated Beneficiary and
any benefits remaining to be paid hereunder following a Participant's death
shall be distributed to the Participant's surviving spouse, if any. Except as
provided below, any such benefits which remain to be paid following the death of
the Participant's surviving spouse shall
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be paid to the estate of the Participant's surviving spouse. If there is no
surviving spouse or if the surviving spouse of such Participant consents in the
manner described below, the benefits remaining to be paid shall be distributed
to the Participant's designated Beneficiary or Beneficiaries. A Beneficiary
designation must be completed and filed with the Administrative Committee during
the Participant's lifetime. A Beneficiary designation properly completed and
filed with the Administrative Committee will cancel all such designations dated
earlier. A Participant may designate contingent or successive Beneficiaries and
may name natural persons, legal persons or entities, trusts, estates, trustees
or legal representatives as the Beneficiaries. If a married Participant
designates a Beneficiary or contingent Beneficiary other than his spouse and the
estate of such spouse, the Participant's spouse must consent in writing to such
designation and such consent must be witnessed by a notary public or Plan
representative. If the spouse does not so consent, then such Beneficiary
designation shall not be effective unless the spouse dies before the Participant
unless following the death of the Participant his surviving spouse disclaims all
rights to the Participant's benefits.
If the Participant dies leaving no surviving spouse and either (a) the
Participant failed to file a valid beneficiary designation form, or (b) all
persons designated on the beneficiary designation form have predeceased the
Participant, the Participant's benefit shall be paid in the following order: (i)
to the Participant's surviving children (including legally adopted children) in
equal shares, (ii) to the Participant's surviving parents (including legally
adoptive parents) in equal shares, (iii) to the Participant's surviving brothers
and sisters in equal shares, then (iv) to the Participant's estate.
7.10. MISSING BENEFICIARIES OF DECEASED OR MISSING PARTICIPANTS.
Subject to all applicable laws relating to unclaimed property, if the Trustee
mails by registered or certified mail, postage prepaid, to the last known
address of a Participant or Beneficiary, a notification that he is entitled to a
Plan distribution, and if the notification is returned by the United States
Postal Service as being undeliverable because the addressee cannot be located at
the address indicated, and if the Trustee has no knowledge of such Participant's
or Beneficiary's whereabouts for three years after the date the notification was
mailed (or if for three years after the date the notification was mailed to the
Participant or Beneficiary he does not respond by informing the Trustee of his
or her whereabouts), then, subject to the applicable state laws concerning
escheat, the aggregate amount of such Participant's Accounts shall be treated as
a Forfeiture, subject to the following:
(a) RESTORATION OF FORFEITURES. If following a Forfeiture under
this Section 7.10, the Participant or Beneficiary is located,
the Forfeiture (unadjusted for subsequent earnings or losses),
shall be restored by crediting such amount to the appropriate
Accounts of the Participant as of the next Accounting Date.
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(b) SOURCE OF RESTORATION. The amounts necessary to restore the
Forfeiture in accordance with (a) above shall be allocated for
such purpose from Forfeiture not yet applied towards Employer
contributions and if Forfeitures are not sufficient then from
an initial allocation of Employer contributions to the extent
necessary to satisfy such restoration. In lieu of such method
of restoring the Forfeitures, the Participant's Employer may
make a special contribution which shall be allocated solely
for purposes of such restoration.
Participants and Beneficiaries are required to maintain current post office
addresses on file with the Administrative Committee.
7.11. INCAPACITATED PARTICIPANTS OR BENEFICIARIES. If a Participant or
Beneficiary is incompetent or a minor, and a conservator, guardian, or other
person legally charged with his care has been appointed, any benefits to which
such Participant or Beneficiary is entitled shall be payable to such
conservator, guardian, or other person legally charged with his care. The
decision of the Administrative Committee in such matters shall be final,
binding, and conclusive upon a affected or interested parties. Neither the Plan
nor any representative of the Plan has any duty to see to the proper application
of such payments.
7.12. REEMPLOYMENT AFTER DISTRIBUTIONS COMMENCE. If a Participant has
elected an installment form of distribution, all such payments shall cease if
the Participant is rehired as an Eligible Employee. The portion of the Accounts
not distributed shall remain in such Participant's Accounts. Payments under an
annuity contract shall continue during any period of reemployment.
7.13. ERRONEOUS PAYMENTS. All benefits under the Plan shall be paid to
the Participant, spouse or Beneficiary entitled thereto ("Payee") in cash and/or
in Company Common Stock, provided that if any such payment shall be made in
error or in excess of the amount due, the Payee shall be required to return any
such payment or excessive portion of any payment upon request of the Investment
Committee.
7.14. FINALITY OF DISTRIBUTIONS. Payments made in accordance with this
Article shall discharge all liabilities for such payments under the Plan.
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SECTION 8
---------
Withdrawals and Loans
---------------------
8.1. WITHDRAWALS. Accounts of Participants who have not ceased to be
Employees may be withdrawn in accordance with the following rules:
(a) AFTER-TAX/ROLLOVER CONTRIBUTIONS. A Participant may elect to
withdraw all or a portion of the total value (determined as of
the date described below) of his After-Tax Account and/or
Rollover Account including earnings thereon.
(b) MATCHING ACCOUNT AND PROFIT SHARING ACCOUNT WITHDRAWALS. A
Participant who would be fully vested in his Matching
Contributions under Section 7.1 or 7.2 if his Accounts were
then distributable, and who has attained the fifth anniversary
of his first date of participation may elect to withdraw all
or a portion of the total value (determined as of the date
described below) of his Matching Account and Profit Sharing
Account. The amount to be withdrawn is satisfied by reducing
the value determined for each such Account by the amount
requested to be withdrawn by the Participant, without regard
to any distinction between contributions and earnings. A
Participant who receives a withdrawal under this subsection
(b) is ineligible to make Pay Deferral Contributions under
Section 3.1 for a period of six months commencing on the first
day of the first calendar month following the date on which
the Accounts are valued under this subsection for purposes of
such withdrawal. Such Participant's Pay Deferral Contributions
shall recommence at the same rate (unless the Participant
elects otherwise) on the first day of the sixth full calendar
month following the date on which such Contributions were
suspended.
(c) WITHDRAWALS AFTER AGE 59 1/2. A Participant who has attained
age 59 1/2 and who is fully vested may elect to withdraw 100%
of the value (determined as of the date described below) of
his Accounts; provided, however, that if such Participant is a
participant in any other tax-qualified plan sponsored by the
Company or a Controlled Group Member from which a lump sum
payment would be aggregated with a lump sum payment from the
Plan pursuant to Section 402(d)(4)(C) of the Code, such
Participant must make an election under such other plan
similar to the election described in this subsection before a
withdrawal under this subsection will be permitted. Only one
withdrawal per calendar year may be made pursuant to this
subsection.
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(d) HARDSHIP WITHDRAWAL. A Participant who has withdrawn all
amounts permitted to be withdrawn under subsections (a), (b)
and (c) above and who has established hardship (as described
below) may elect to withdraw a specified dollar amount up to
the total value (determined as of the date described below) of
his Before-Tax Account. Such withdrawals shall be subject to
the following:
(i) IMMEDIATE AND HEAVY FINANCIAL NEED. A withdrawal
shall be deemed to be made on account of a hardship
only if it is made on account of an immediate and
heavy financial need of the Participant and is
necessary to satisfy such financial need. The
determination of whether a Participant has an
immediate and heavy financial need is to be made on
the basis of all relevant facts and circumstances.
(ii) EXHAUSTION OF OTHER RESOURCES. A withdrawal will not
be deemed to be necessary to satisfy the immediate
and heavy financial need requirement of subparagraph
(i) above unless the Participant has first obtained
all distributions and withdrawals, other than
hardship withdrawals, and all nontaxable loans
currently available under all plans maintained by the
Employers and Controlled Group Members of the
Employers. A withdrawal generally may be treated as
necessary to satisfy the immediate and heavy
financial need if the need cannot reasonably be
relieved:
(A) Through reimbursement or compensation by
insurance or otherwise;
(B) By reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself cause an
immediate and heavy financial need;
(C) By cessation of Pay Deferral Contributions
under the Plan, and the cessation of any
similar contributions under all qualified
and nonqualified plans of deferred
compensation maintained by the Participant's
Employer or any Controlled Group Member; or
(D) By other distributions or nontaxable loans
(at the time of the loan) from the Plan or
any other plan maintained by the
Participant's Employer or any Controlled
Group Member, or by borrowing from
commercial sources on reasonable commercial
terms.
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For purposes of this Section, the Participant's
resources shall be deemed to include those assets of
his spouse and minor children that are reasonably
available to the Participant. A financial need shall
not fail to qualify as immediate and heavy merely
because such need was reasonably foreseeable or
voluntarily incurred by the Participant.
(iii) SPECIFIC HARDSHIP. A withdrawal shall be deemed to be
made on account of an immediate and heavy financial
need of a Participant if the withdrawal is made on
account of:
(A) Expenses for medical care described in Code
Section 213(d) incurred by the Participant,
the Participant's spouse, or any dependents
of the Participant (as defined in Code
Section 152);
(B) The purchase of a principal residence of the
Participant (excluding mortgage payments);
(C) Payment of tuition and related educational
fees for the next 12 months of
post-secondary education for the
Participant, or his spouse, children, or
dependents (as defined in Code Section 152);
(D) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence; or
(E) Such other reasons as the Commissioner of
Internal Revenue may prescribe.
The amount of an immediate and heavy financial need
may include any amounts necessary to pay any federal
state or local income taxes or penalties reasonably
anticipated to result from the withdrawal.
(iv) WITHDRAWAL LIMITED TO NEED. A withdrawal shall not be
treated as necessary to satisfy an immediate and
heavy financial need of a Participant to the extent
the amount of the withdrawal is in excess of the
amount required to relieve the financial need or to
the extent such need may be satisfied from other
resources that are reasonably available to the
Participant. This determination generally is to be
made on the basis of all relevant facts and
circumstances.
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(v) IMPACT OF WITHDRAWAL ON FUTURE PARTICIPATION. Upon
receiving a hardship withdrawal, a Participant shall
be precluded from making any further Pay Deferral
Contributions and from having further Matching
Contributions made on his behalf under the Plan or
any other plan of deferred compensation maintained by
his Employer or any Controlled Group Member until the
beginning of the first pay period coincident with or
next following the end of a period of 12 months
commencing with the date of such withdrawal. The
Participant's Pay Deferral Contributions shall
recommence at the same rate (unless the Participant
elects otherwise); provided, however, that such
Participant's Pay Deferral Contributions for the
12-month period beginning on the date the Suspension
is lifted shall be limited to the limit described in
Section 3.4 reduced by the amount of Pay Deferral
Contributions made by the Participant during the Plan
Year in which the withdrawal occurs. The denial of a
Participant's request for a hardship withdrawal shall
be treated as a denial of a claim for a benefit under
the Plan, and shall thus be subject to the claim and
review procedures set forth under Section 9.10.
(e) REQUESTING WITHDRAWALS. A Participant may request a withdrawal
electronically via telephone in the manner prescribed by the
Administrative Committee.
(f) SPOUSAL CONSENT. No withdrawal shall be made to a married
Participant who has elected to have his Accounts distributed
in an annuity form unless the Participant's spouse consents to
the withdrawal in the manner prescribed by the Administrative
Committee. Such consent must be in writing and witnessed by a
notary public.
(g) HIERARCHY. Hardship withdrawals shall be deducted from the
Participant's Accounts in the following order (and shall be
deducted on a pro rata basis from the investment funds to
which amounts in such Accounts are allocated):
(i) After-Tax Account (exclusive of earnings).
(ii) After-Tax Account earnings.
(iii) Rollover Account.
(iv) Profit Sharing Account.
(v) Matching Account.
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(vi) Before-Tax Account.
After a withdrawal in accordance with this Section, amounts remaining in the
Participant's Accounts, if any, shall continue to be held, invested and adjusted
in accordance with the Plan and Trust Agreement until such amounts are
subsequently withdrawn or otherwise distributable in accordance with Section 7.
Withdrawals under this Section shall ordinarily be based on a valuation of the
applicable Accounts as of the Accounting Date immediately preceding the date on
which such request is processed and/or approved by the Trustee or Administrative
Committee. Actual distribution of amounts withdrawn shall ordinarily occur as
soon as practicable after the request is processed.
8.2. LOANS TO PARTICIPANTS. Loans shall be extended to
Participants who have not ceased to be Employees, subject to the following
rules:
(a) AUTHORITY. The Administrative Committee, upon request by a
Participant in the manner described in subsection (n) below,
shall direct the Trustee to make a loan from the Trust Fund to
a Participant.
(b) LOAN DOCUMENTS. Each loan shall be evidenced by a written
promissory note providing for repayment and interest. As
described in subsection (n) below, the promissory note shall
consist of a loan agreement, to which the Participant shall
indicate his agreement by endorsing the loan check. The
Administrative Committee shall make appropriate arrangements
with the Trustee regarding the custody of such notes.
(c) NONDISCRIMINATION. The Administrative Committee shall exercise
its authority under this Section in a manner which makes loans
available to all Plan Participants on an equivalent basis.
Loans shall not be made available in greater amounts
(expressed as a percentage of Compensation) to Highly
Compensated Employees than to all Participants.
(d) FREQUENCY AND NUMBER. The Administrative Committee may
establish conditions on the frequency and number of loans to
Participants. As of the Effective Date, no Participant may
have more than two loans outstanding at any given time
provided that a Participant who, as of the Effective Date, has
more than two loans outstanding shall be permitted to continue
to pay down such loans, but may not extend, renew or seek a
new loan until he has fewer than two outstanding.
(e) TERM OF LOAN. The term of the loan will be for a period of
time not exceeding five years. Notwithstanding the foregoing,
the term of the loan may be for a period of up to ten years if
the loan is used to acquire any
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<PAGE> 48
dwelling unit which within a reasonable time is to be used as
a principal residence of the Participant in accordance with
Section 72(p)(2) of the Code. The Administrative Committee
shall be entitled to rely on any representation made by a
Participant with regard to the purpose for which a loan is
requested.
(f) MINIMUM LOAN. From time to time the Administrative Committee
may establish a minimum loan amount, provided that such
limitation shall not exceed $1,000. As of the Effective Date
the minimum loan amount is $500.
(g) MAXIMUM LOAN. The principal amount of the loan may not exceed
the lesser of
(i) $50,000, provided that such dollar limit shall be
reduced by the highest outstanding balance of loans
to the Participant from the Plan and any other
"qualified employer plan" (as defined in Code Section
72(p)(4)) maintained by the Employer or any
Controlled Group Member of the Employer at any time
in the prior 12 consecutive month period; or
(ii) 50% of the sum of the Participant's vested Accounts
under this Plan, provided that such percentage Emit
shall be reduced by the percentage of such
Participant's Accounts which is then invested in any
other loans.
The limitations of subparagraphs (i) and (ii) above shall be
applied as of the Accounting Date immediately preceding or
coincident with the day the loan is requested pursuant to the
procedures specified in subsection (n) below; provided,
however, that the Participant's vested Accounts as of such
request date shall be reduced by the amount of any withdrawals
made to such Participant between the date of the loan request
and the date such loan is processed by the Trustee.
(h) INTEREST RATE. The interest rate charged to Participants for
loans under this Section shall be determined by the
Administrative Committee from time to time. The rate selected
by the Administrative Committee for this purpose shall be a
rate which the Administrative Committee determines is within
the range of prevailing rates which would be charged by
commercial lenders for loans of a similar type. For this
purpose the Administrative Committee may rely on such evidence
as it may deem reliable concerning such prevailing rates and
all decisions of the Administrative Committee regarding such
rates shall be conclusive. The interest rate applicable as of
the Effective Date is the prime rate plus 1%
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<PAGE> 49
as published in the Wall Street Journal on the last Accounting
Date of the month preceding the month in which the loan is
made.
(i) SECURITY. Loans shall be secured by all of the balances in the
Participant's Accounts, together with such additional
collateral as the Administrative Committee may require either
at the time of the loan or from time to time thereafter. In
determining the adequacy of such security, the Administrative
Committee shall not consider any non-vested portion of the
Participant's Accounts and a Participant's vested Accounts
shall not be considered adequate security unless immediately
prior to disbursement of the loan the vested portions of the
Participant's Accounts (as of the most recent Accounting Date)
have an aggregate value equal to at least twice the sum of the
face amount of such loan and the then outstanding balances of
all prior loans to such Participant.
(j) LOAN FEES. A $50 application fee shall be charged against the
Participant's Account for each loan that he requests
(regardless of whether the loan is approved).
(k) REPAYMENT TERMS. All Plan loans shall be repaid under a
written repayment schedule by payroll deduction and shall be
evidenced by a written promissory note payable to the Trustee.
If a Participant with an outstanding loan incurs a Termination
of Employment thereby making payroll deductions impossible,
such Participant must repay the entire outstanding balance of
the loan within six months of such Termination of Employment.
In no event shall principal and interest payments be less
frequent than quarterly on a level amortization basis in
substantially nonincreasing installments. Loans may be prepaid
in full at any time.
(l) DISTRIBUTION PRIOR TO LOAN REPAYMENT. Notwithstanding any
other provision of the Plan, any distribution under this Plan
to or on behalf of a Participant to whom one or more loans are
then outstanding shall first be applied by the Trustee to
reduce the outstanding balances of such loans. For this
purpose loan reductions shall first be applied to satisfy any
loan installments in default. Payments shall be applied to
loans which are not in default pro rata.
(m) EVENTS OF DEFAULT. In the event of a default in payment of
either principal or interest that is due under the terms of
any loan, the Plan Administrator may declare the full amount
of the loan due and payable and may take whatever action may
be lawful to remedy the default. Default will be deemed to
have occurred if any payment is not made within 90 days
following the day on which it was due or if a Participant
fails to repay the entire outstanding amount of his loan
within six months of his Termination
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of Employment, as described in subsection (k) above. The
Trustee may offset amounts owed by the Participant against
Plan benefits owed to him or her without being in violation of
Section 10.2.
(n) REQUESTING LOANS. A Participant may request a loan
electronically via telephone in the manner prescribed by the
Administrative Committee.
(i) NON-RESIDENTIAL LOANS. Upon receipt and approval of a
request for a nonresidential loan, the Trustee shall
mail a loan agreement (including a promissory note)
along with a loan check to the Participant. By
endorsing the check, the Participant shall indicate
his agreement to the terms and conditions of the
loan, as described in the loan agreement.
(ii) RESIDENTIAL LOANS. Upon receipt of a request for a
loan to be used for the purchase of the Participant's
primary residence, the Trustee shall send the
Participant a loan agreement along with information
as to what supporting documentation the Participant
must submit in connection with such loan request. The
Participant must then submit this supporting
documentation within 30 days. If the loan request is
approved, the Trustee shall mail a loan agreement
(including a promissory note) along with a loan check
to the Participant. By endorsing the check, the
Participant shall indicate his agreement to the terms
and conditions of the loan, as described in the loan
agreement. If the loan request is denied, the Trustee
shall notify the Participant and inform the
Participant of the reason for such denial within a
reasonable period of time after the loan request.
(o) HIERARCHY. Loan amounts shall be deducted from the
Participant's Accounts in the following order (and shall be
deducted on a pro rata basis from the investment funds to
which amounts in such Accounts are allocated):
(i) Profit Sharing Account.
(ii) Vested portion of Employer Matching Account.
(iii) Rollover Account.
(iv) Before-Tax Account.
(v) After-Tax Account.
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Repayments of loan principal will be credited to the
Participant's Accounts in the same order as above. Repayments
of interest will be credited on a pro rata basis to the
Accounts from which the loan was deducted. All loan repayments
will be allocated to investment funds in accordance with the
Participant's existing investment elections for the applicable
Accounts.
8.3. NO REPRESENTATION REGARDING TAX EFFECT OF WITHDRAWALS OR LOANS.
Neither the Employers, the Administrative Committee, the Investment Committee,
the Trustee nor any other Plan representative shall be construed as representing
the tax effects of any withdrawals or loans made in accordance with this
Article. It shall be the responsibility of Participants requesting withdrawals
or loans to consider the tax effects of such withdrawals or loans.
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SECTION 9
---------
Plan Committees
---------------
9.1. MEMBERSHIP OF ADMINISTRATIVE AND INVESTMENT COMMITTEES. The
Administrative Committee, consisting of at least three persons, shall be
appointed by the Compensation Committee of the Board of Directors. The
Investment Committee, consisting of at least three persons, shall be appointed
by the Finance Committee of the Board of Directors. The Secretary of the Company
shall certify to the Trustee from time to time the appointment to (and
termination from) office of each member of the Administrative Committee and the
Investment Committee and the persons, if any, who are selected as secretaries of
the Administrative Committee and the Investment Committee. The appointment of a
member of either Committee and acceptance of such appointment by any person
constitutes an agreement by and between the Company and such Committee member
that the member, acting in concert with the other Committee members, shall have
and will exercise the powers and duties described herein, including, with
respect to the Administrative Committee, the power and duty to interpret this
Plan and determine the benefits to which Participants are entitled hereunder.
9.2. ADMINISTRATIVE COMMITTEE POWERS AND DUTIES. The Administrative
Committee shall have such powers and duties necessary to discharge its duties
hereunder, including, but not limited to, the following:
(a) Within its complete and unfettered discretion to construe and
interpret the Plan and Trust Agreement provisions and to
resolve all questions arising under the Plan including
questions of Plan participation, eligibility for benefits and
the rights of Employees, Participants, Beneficiaries and other
persons to benefits under the Plan and to determine the
amount, manner and time of payment of any benefits hereunder;
(b) To prescribe procedures, rules and regulations to be followed
by Employees, Participants, Beneficiaries and other persons or
to be otherwise utilized in the efficient administration of
the Plan consistent with the Trust;
(c) To make determinations as to the rights of Employees,
Participants, Beneficiaries and other persons to benefits
under the Plan and to afford any Participant or Beneficiary
dissatisfied with such determination with rights pursuant to a
claims procedure adopted by the Administrative Committee;
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(d) To enforce the Plan in accordance with the terms of the Plan
and the Trust and to enforce its procedures, rules and
regulations;
(e) To be responsible for the preparation and maintenance of
records necessary to determine the rights and benefits of
Employees, Participants and Beneficiaries or other persons
under the Plan and the Trust and to request and receive from
the Employers such information necessary to prepare such
records;
(f) To prepare and distribute in such manner as it deems
appropriate and to prepare and file with appropriate
government agencies information, disclosures, descriptions and
reporting documents regarding the Plan, and in the preparation
and review of such reports the Administrative Committee is
entitled to rely upon information supplied to it by the
Employees, accountants, counsel, actuaries, the Investment
Managers and any insurance institutions described in the Trust
Agreement;
(g) To appoint or employ individuals to assist in the
administration of the Plan and other agents (corporate or
individual) that the Administrative Committee deems advisable,
including legal counsel and such clerical, medical,
accounting, auditing, actuarial and other services as the
Administrative Committee may require in carrying out the
provisions of the Plan. However, no agent except an Investment
Manager or fiduciary named in the Plan shall be appointed or
employed in a position that would require or permit him or
her: (i) to exercise discretionary authority or control over
the acquisition, disposition or management of Trust assets;
(ii) to render investment advice for a fee; or (iii) to
exercise discretionary authority or responsibility for Plan
administration;
(h) To cause to be prepared and to cause to be distributed, in
such manner as the Trustee determines to be appropriate,
information explaining the Plan and Trust;
(i) To furnish to the Employers upon request such annual or other
reports with respect to the administration of the Plan as are
reasonable and appropriate;
(j) To receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, receipts and
disbursements, and assets of the Trust; and
(k) To discharge all other duties set forth in the Plan.
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The Administrative Committee has no power to add to, subtract from or modify any
of the terms of the Plan, nor to change or add to any benefits provided by the
Plan, nor to waive or fail to apply any requirements of eligibility for benefits
under the Plan.
9.3. INVESTMENT COMMITTEE POWERS AND DUTIES. The Investment Committee
has such powers necessary to discharge its duties hereunder, including, but not
limited to, the following:
(a) To appoint any bank, trust company, firm or institution to
invest all or part of the Trust Fund;
(b) To establish and from time to time revise the investment
policy of the Plan, to communicate and consult with the
Company, the Administrative Committee and the Trustee and any
Investment Manager or insurance institution regarding the
investment policy applicable to the Plan as a whole or to any
individual investment fund;
(c) To supervise the performance by the Trustee and any Investment
Manager or insurance institution regarding their
responsibilities under the Plan and Trust. The Investment
Committee shall review and analyze performance information
supplied by the Trustee and the Investment Managers or
insurance institutions to the Investment Committee and/or any
such performance information obtained independently by the
Investment Committee and shall report the results of such
analysis to the Finance Committee of the Board of Directors
from time to time in such form and with such degree of
frequency as the Investment Committee shall determine proper.
Such responsibilities of the Investment Committee with respect
to supervision, review and analysis shall be performed no less
frequently than once each Plan Year and shall ordinarily not
be required more frequently than once each calendar quarter.
The Trustee, Investment Managers and insurance institutions
have been allocated the responsibility for day-to-day
investment management of the Plan and Trust and the
responsibilities of the Investment Committee hereunder are not
intended to relieve the Trustee, Investment Managers or
insurance institutions of such on-going investment management
responsibilities;
(d) To instruct the Trustee, the Investment Managers and insurance
institutions with respect to the proper application of
contributions made under the Plan;
(e) To determine the proper allocation of investment
responsibilities with respect to the assets of the Plan
between the Trustee and any Investment
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Manager or insurance institution acting hereunder or under the
terms of the Trust and to allocate fiduciary responsibilities
among these parties;
(f) To the extent not provided to the contrary in the Trust
Agreement, to appoint the Trustee and any Investment Managers
or insurance institutions, to direct the establishment of any
investment fund and to remove the Trustee and any Investment
Managers or insurance institutions or appoint additional
Trustees, Investment Managers or insurance institutions;
(g) To review any accounts submitted by the Trustee and any
Investment Managers or insurance institutions and to report to
the Finance Committee of the Board of Directors with respect
to any such accounts;
(h) Following the Administrative Committee's determination of the
benefit rights of any Participant or Beneficiary, to aggregate
information concerning such benefits and authorize and direct
the Trustee with respect to the commencement, modification or
cessation of such benefit payments;
(i) To supervise the performance of fiduciary responsibilities by
others including the Trustee and any Investment Managers;
(j) To appoint and utilize the services of administrative staff
employees of the Company and the other Employers for the
performance of duties delegated to the Investment Committee
hereunder and to rely upon information received from such
staff employees; provided that in both cases the Investment
Committee reasonably believes the performance of such services
and the preparation of such information is within the
competence of such staff employees;
(k) To furnish to the Employers, upon reasonable request, such
annual or other reports as the Employers deem necessary
regarding the administration of the Plan; and
(l) To employ reputable agents (who may also be Employees) and to
delegate to them any of the administrative powers or duties
imposed upon the Investment Committee or the Employers.
9.4. CONFLICTS OF INTEREST. No member of the Administrative Committee
or the Investment Committee shall participate in any action on matters involving
solely such member's rights or benefits as a Participant under the Plan.
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9.5. COMPENSATION; REIMBURSEMENT. No member of the Administrative
Committee or the Investment Committee shall receive compensation for his
services, but the Employers shall reimburse him for any necessary expenses
incurred in the discharge of his duties.
9.6. STANDARD OF CARE. The Administrative Committee and the Investment
Committee shall perform their duties under this Plan in accordance with the
terms of this document and the Trust Agreement solely in the interest of the
Participants and for the exclusive purposes of providing retirement benefits to
Participants and defraying the reasonable expenses of Plan administration and
operation. The Administrative Committee and the Investment Committee shall also
perform their duties under this Plan with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man, acting in
a like capacity and familiar with such matters, would use in the conduct of an
enterprise of a like character and with like aims.
9.7. ACTION BY COMMITTEES. Action by each Committee is subject to the
following special rules:
(a) Each Committee may act by meeting or by document signed
without meeting and documents may be signed through the use of
a single document or concurrent documents.
(b) Each Committee shall act by a majority, and such action shall
be as effective as if such action had been taken by all
Committee members, provided that by majority action one or
more Committee members or other persons may be authorized to
act with respect to particular matters on behalf of all
Committee members.
(c) Each Committee may, but is not required to, select a
secretary, who may but need not be a Committee member, and the
certificate of such secretary that the Committee has taken or
authorized any action shall be conclusive in favor of any
person relying upon such certificate.
(d) Each Committee may act through agents or other delegates and
may retain legal counsel, auditors or other specialists (who
may also be Employees) to aid in the Committee's performance
of its responsibilities.
9.8. RESIGNATION OR REMOVAL OF COMMITTEE MEMBER. Any person serving as
an Administrative Committee member may resign from such Committee at any time by
written notice to the Compensation Committee of the Board of Directors or may be
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removed by the Compensation Committee at any time by written notice to such
member. Any person serving as an Investment Committee member may resign from
such Committee at any time by written notice to the Finance Committee of the
Board of Directors or may be removed by the Finance Committee at any time by
written notice to such member. The Compensation Committee shall fill any vacancy
in the membership of the Administrative Committee as soon as practicable. The
Finance Committee Company shall fill any vacancy in the membership of the
Investment Committee as soon as practicable. Until any such vacancy is filled,
the remaining members of the applicable Committee may exercise all of the
powers, rights and duties conferred on the such Committee.
9.9. UNIFORM APPLICATION OF RULES BY ADMINISTRATIVE COMMITTEE. The
Administrative Committee shall apply all rules, regulations, procedures and
decisions uniformly and consistently to all Employees and Participants similarly
situated. Any ruling, regulation, procedure or decision of the Administrative
Committee which is not inconsistent with the provisions of the Plan or the Trust
shall be conclusive and binding upon all persons affected by it. There shall be
no appeal of any ruling by the Administrative Committee which is within its
authority, except as provided in Section 9.10 below. When making a determination
or a calculation, the Administrative Committee is entitled to rely on
information supplied by the Employer, Trustee, Investment Managers, insurance
institutions, accountants and other professionals including legal counsel for
the Company.
9.10. CLAIMS PROCEDURE. Each person entitled to benefits under the Plan
(the "Applicant") must submit a written claim for benefits to the Administrative
Committee. If a claim for benefits by the Applicant is denied, in whole or in
part, the Administrative Committee shall furnish the Applicant within 90 days
after receipt of such claim (or within 180 days after receipt if special
circumstances require an extension of time), a written notice which specifies
the reason for or the denial, refers to the pertinent provisions of the Plan on
which the denial is based, describes any additional material or information
necessary for properly completing the claim and explains why such material or
information is necessary, and explains the claim review procedures of this
Section 9.10. Any Applicant whose claim is denied under the provisions described
above, or who has not received from the Administrative Committee a response to
his claim within the time periods specified in the provisions described above
may request a review of the denied claim by written request to the
Administrative Committee within 60 days after receiving notice of the denial. In
connection with such request, the Applicant or his authorized representative may
review pertinent documents and may submit issues and comments in writing. If
such a request is made, the Administrative Committee shall make a full and fair
review of the denial of the claim and shall make a decision not later than 60
days after receipt of the request, unless special circumstances (such as the
need to hold a hearing) require an extension of time, in which case a decision
shall be
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made as soon as possible but not later than 120 days after receipt of the
request for review, and written notice of the extension shall be given to the
Applicant before the commencement of the extension. The decision on review shall
be in writing and shall include specific reasons for the decision and specific
references to the pertinent provisions of the Plan on which the decision is
based. No person entitled to benefits under the Plan shall have any right to
seek review of a denial of benefits, or to bring any action to enforce a claim
for benefits, in any court prior to, his filing a claim for benefits and
exhausting all of his rights under this Section 9.10. Although not required to
do so, an Applicant may choose to state the reason or reasons he believes he is
entitled to benefits, and may choose to submit written evidence, during the
initial claim process or review of claim denial process. However, failure to
state any such reason or submit such evidence during the initial claim process
or review of claim denial process, or by written notice to the Administrative
Committee within 60 days of the date of the decision on the review of the claim
denial, shall permanently bar the Applicant, and his successors in interest,
from raising such reason or submitting such evidence in any forum at any later
date.
9.11. INVESTMENTS IN COMPANY COMMON STOCK. The Investment Committee is
responsible for directing the Trustee with respect to investments of Plan assets
in Company Common Stock. In connection with such investments, the Investment
Committee has the authority to cause the Trustee to exercise or sell in the open
market any options, rights or warrants which entitle the Plan to subscribe to or
purchase shares of Company Common Stock. As provided in Section 5.6, the
Investment Committee is responsible for determining the appropriate value for
Company Common Stock contributed to the Plan or purchased by the Plan.
Notwithstanding the foregoing, all certificates for shares of Company Common
Stock held on behalf of the Plan shall be in the custody of the Trustee and
shall be held in the name of the Trustee or a nominee of the Trustee. Prior to
any distribution of Plan assets in the form of Company Common Stock, the
Investment Committee shall cause such Common Stock held by the Trust, to the
extent not registered under the Securities Act of 1933, to be registered to the
extent required under said Act.
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SECTION 10
----------
Amendment, Termination or Plan Merger
-------------------------------------
10.1. AMENDMENT. The Administrative Committee shall have the right at
any time to amend in whole or in part any or all of the provisions of this Plan
except as expressly set forth below:
(a) Except as expressly provided in Section 11.14, no amendment
may result in, authorize or permit any part of the Trust Fund,
the income from the Trust Fund or any Plan assets to be
distributed to or for the benefit of anyone other than the
Participants and any other persons entitled to benefits under
the Plan.
(b) No amendment may be adopted which will reduce any
Participant's benefits to an amount less than the benefit that
the Participant would be entitled to receive if he had
resigned from the employ of the Employers and all Controlled
Group Members of the Employers immediately prior to the
effective date of such amendment.
(c) No amendment may increase the duties of either the
Administrative Committee or the Investment Committee without
its consent.
10.2. PLAN TERMINATION. The Plan will terminate as to all Employers on
the earlier of the date the Plan is terminated by the Company with respect to
all Employers or the earliest date on which one of the events described in
subsections (a) through (d) below has occurred with respect to all Employers.
The Plan will terminate with respect to an individual Employer on the first to
occur of the following dates:
(a) Any date that the Plan is terminated with respect to an
individual Employer by action of that Employer, provided that
the Company and the Trustee have been given prior written
notice of such termination and provided that the Company does
not elect to continue the Plan as it applies to such Employer.
(b) Any date that the Employer is judicially declared bankrupt or
insolvent unless the Company elects to continue the Plan as it
applies to such Employer.
(c) Any date an Employer completely discontinues its contributions
under the Plan unless the Company elects to continue such
contributions.
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(d) Any date the Employer is dissolved, merged, consolidated or
reorganized or the date on which the assets of the Employer
are completely or substantially sold, unless arrangements have
been made whereby the Plan will be continued by the Company or
the other Employers or by a successor to the Employer or
purchaser of its assets under Section 10.3.
10.3. CONTINUATION BY A SUCCESSOR OR PURCHASER. The Plan and the Trust
shall not terminate with respect to an Employer in the event of dissolution,
merger, consolidation or reorganization of such Employer or sale by such
Employer of its entire assets or substantially all of its assets if arrangements
are made in writing among the Employer, the Company and any successor to the
Employer or purchaser of all or substantially all of its assets whereby such
successor or purchaser will continue the Plan and the Trust. If such
arrangements are made, such successor or purchaser shall be substituted for the
Employer under the Plan and the Trust.
10.4. PLAN MERGER OR CONSOLIDATION. The Company may cause the Plan or
the Trust or both to be merged or consolidated with, or may transfer the assets
or liabilities under the Plan to, any other qualified plan or from any other
qualified plan, provided that the documents and other arrangements regarding
such merger, consolidation or transfer provide safeguards which would cause each
Participant in the Plan, if the Plan terminated, to receive a benefit in the
event of a termination immediately after such merger, consolidation or transfer
which is equal to or greater than the benefit the Participant would have been
entitled to receive if the Plan had terminated immediately prior to such merger,
consolidation or transfer.
10.5. NOTICE TO PARTICIPANTS OF AMENDMENTS, TERMINATIONS OR PLAN
MERGERS. Participants shall be notified by the Company within a reasonable time
following any significant amendment, termination, Plan merger or consolidation.
10.6. VESTING AND DISTRIBUTION ON TERMINATION. There shall be no
Employer contributions or Pay Deferral Contributions after the date the Plan
terminates. However, the Trust shall remain in existence, and all of the
provisions of the Plan (other than the provisions relating to contributions)
which in the sole opinion of the Trustee are necessary, shall remain in full
force and effect until all the assets of the Plan are distributed in accordance
with the terms of the Plan and the Trust. The benefits of each Participant
affected by a termination or partial termination will be fully vested and will
be payable to such Participant in a lump sum as soon as practicable, unless
other arrangements are previously made in accordance with Section 7.
Notwithstanding the foregoing, if the Plan assets to be distributed to
Participants in accordance with this Section 10.6 include Company Common Stock,
prior to such distribution the Company
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shall cooperate with the Investment Committee to cause all such Company Common
Stock, to the extent not registered under the Securities Act of 1933, to be
registered to the extent required under said Act.
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SECTION 11
----------
General Provisions
------------------
11.1. NO EMPLOYMENT GUARANTEE. The establishment of the Plan, any
modification thereof, the creation of any fund or Account, or the payment of any
benefits shall not be construed as giving to any Participant or other person any
legal or equitable right against the Employers, the Administrative Committee,
the Investment Committee, the Trustee or any Plan representative except as
herein provided. Under no circumstances shall the terms of employment with the
Employer of any Participant be modified or in any way affected hereby. The
maintenance of this Plan shall not constitute a contract of employment with the
Employer. Participation in the Plan will not give any Participant a right to be
retained as an Employee of any Employer.
11.2. NONALIENATION OF PLAN BENEFITS. The rights or interests of any
Participant or any Beneficiary to any benefits or future payments hereunder
shall not be subject to attachment or garnishment or other legal proceeding or
process by any creditor of any such Participant or Beneficiary nor shall any
such Participant or Beneficiary have any right to alienate, anticipate, commute,
pledge, attach, encumber or assign any of the benefits or rights which he may
expect to receive, contingently or otherwise under the Plan except as may be
required by the tax withholding provisions of the Code or of a state's income
tax act or as may be required to comply with a "Qualified Domestic Relations
Order" (as defined in Code Section 414(p)). The Administrative Committee shall
establish written procedures consistent with Code Sections 401(a)(13) and 414(p)
to determine the qualified status of any domestic relations order.
11.3. ACTION BY AN EMPLOYER. Action required or permitted to be taken
by an Employer may be taken by action of the board of directors of that Employer
or by a person or committee of persons authorized to act by said board. The
Company's powers may be exercised by the Board of Directors or a person or
committee of persons authorized to act by the Board of Directors or by the
Company's chief executive officer or his delegate.
11.4. APPLICABLE LAW. The Plan and Trust shall be construed in
accordance with the provisions of ERISA and other applicable federal laws. To
the extent not inconsistent with such laws, this Plan shall be construed in
accordance with the laws of Illinois.
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11.5. PARTICIPANT LITIGATION. In any action or proceeding regarding the
Plan assets or any property constituting a portion or all thereof or regarding
the administration of the Plan, Employees or former employees of the Employers
or their Beneficiaries or any other persons having or claiming to have an
interest in this Plan shall not be necessary parties and shall not be entitled
to any notice or process. Any final judgment which is not appealed or appealable
and may be entered in any such action or proceeding shall be binding and
conclusive on the parties hereto and all persons having or claiming to have any
interest in this Plan. To the extent permitted by law, if a legal action is
begun against the Employers, the Administrative Committee, the Investment
Committee or the Trustee by or on behalf of any person and such action results
adversely to such person or if a legal action arises because of conflicting
claims to a Participant's or other person's benefits, the costs to the
Employers, the Administrative Committee, the Investment Committee or the Trustee
of defending the action will be charged to the sums, if any, which were involved
in the action or were payable to the Participant or other person concerned. To
the extent permitted by applicable law, acceptance of participation in this Plan
shall constitute a release of the Employers, the Administrative Committee, the
Investment Committee, the Trustee and their agents from any and all liability
and obligation not involving willful misconduct or gross neglect.
11.6. PARTICIPANT AND BENEFICIARY DUTIES. Each person entitled to
benefits under the Plan shall furnish the Administrative Committee with all
appropriate documents, evidence, data or information which the Administrative
Committee considers necessary or desirable in administering the Plan.
11.7. INDIVIDUAL ACCOUNT STATEMENTS. At least once each year the
Administrative Committee will issue to each Participant an Account Balance
statement. As of the Effective Date, such statements are provided quarterly.
11.8. GENDER AND NUMBER. Words denoting the masculine gender shall
include the feminine and neuter genders and the singular shall include the
plural and the plural shall include the singular wherever required by the
context.
11.9. ADEQUACY OF EVIDENCE. Evidence which is required of anyone under
this Plan shall be executed or presented by proper individuals or parties and
may be in the form of certificates, affidavits, documents or other information
which the Administrative Committee, the Trustee, the Employer or other persons
acting on such evidence consider pertinent and reliable.
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11.10. NOTICE TO PARTICIPANTS AND BENEFICIARIES. A notice mailed to a
Participant or Beneficiary at his last address filed with the Administrative
Committee will be binding on the Participant or Beneficiary for all purposes of
the Plan.
11.11. WAIVER OF NOTICE. Any notice under this Plan may be wholly or
partially waived by the person entitled to notice.
11.12. SUCCESSORS. This Plan and the Trust will be binding on all
persons entitled to benefits hereunder and their respective heirs and legal
representatives, and on the Administrative Committee, the Investment Committee,
the Trustee and their successors.
11.13. SEVERABILITY. If any provision of the Plan is held illegal or
invalid for any reason, such illegal or invalid provision shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced
as if such illegal or invalid provisions had never been contained in the Plan.
11.14. NONREVERSION. Except as provided below, the Employers have no
right, title or interest in the assets of the Plan or in the Trust Fund and no
portion of the Trust Fund or the assets of the Plan or interest therein shall at
any time revert or be repaid to the Employers. Notwithstanding the preceding
sentence, the following Employer contributions or Participant contributions may
be returned to the Employer or the Participant, as the case may be:
(a) The contributions which cannot be credited to a Participant's
Account because of the limitations of Sections 3.5, 4.6 or 4.7
may be returned to the Employer.
(b) Employer contributions which are conditioned upon their
deductibility under Code Section 404 shall be returned to the
applicable Employer or Employers to the extent any such
contributions are determined to be nondeductible. Employer
contributions and Participant contributions which are made as
a result of a mistake of fact may be returned to the Employer
or the Participant making those contributions. Employer
contributions may only be repaid under this subsection within
12 months after the date the error or nondeductibility is
discovered by the Employer.
(c) Employer contributions which are conditioned upon
qualification of the Plan and the Trust may be returned to the
Employer if the Plan is not initially determined to be
qualified.
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11.15. QUALIFICATION OF PLAN AND TRUST. The Trust and the Plan taken
together are intended to qualify under Sections 401 and 501(a) of the Code, as
amended, or under any comparable provisions of any future legislation which may
amend or supersede said provisions of the Code. Each of the Trust and the Plan
shall also be deemed to be mutually incorporated by reference and to implement
and form a part of each other such document. Unless and until advised to the
contrary, the Administrative Committee, the Investment Committee, the Trustee,
any Investment Managers, any insurance institutions and persons dealing with
them shall be entitled to assume that the Trust and this Plan are so qualified
and tax exempt.
11.16. CERTAIN INDEMNIFICATION. To the extent permitted by applicable
law and to the extent that he is not indemnified or saved harmless under any
liability insurance contracts, any present or former Administrative Committee or
Investment Committee member and any officer, Employee or director of any
Employer or its subsidiaries or affiliates shall be indemnified and saved
harmless by the Employers from and against any and all liabilities or
allegations of liability, joint or several to which he may be subjected by
reason of any act done or omitted to be done in good faith in the administration
and operation of the Plan and Trust (and for the acts and omissions of his
agents or co-fiduciaries), including all expenses reasonably incurred in the
defense of any action, suit or proceeding (including reasonable attorneys' fees
and reasonable costs of settlement) in the event that the Employers fail to
provide such defense after having been requested to do so.
11.17. VOICE RESPONSE UNIT DEEMED WRITTEN CONSENT. Where the written
consent of a Participant, spouse, Beneficiary, or alternate payee is required
pursuant to the terms of the Plan and/or applicable law, electronic telephone
entries made by any such individual via the Company's automated "voice response
unit" system shall constitute such written consent.
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SECTION 12
----------
Special Top-Heavy Rules
-----------------------
12.1. APPLICATION. Notwithstanding any provisions of the
Plan to the contrary, the provisions of this Section 13 shall apply and be
effective for any Plan Year for which the Plan shall be determined to be a
"Top-Heavy Plan" as provided and defined herein.
12.2. SPECIAL TERMSSPECIAL TERMS. For purposes of this Article XII, the
following terms shall have the following meanings:
(a) "Aggregate Benefit" means the sum of:
(i) The present value of the accrued benefit under each
and all defined benefit plans in the Aggregation
Group determined on each plan's individual
Determination Date as if there were a Termination of
Employment on the most recent date the plan is valued
by an actuary for purposes of computing plan costs
under Section 412 of the Code within the 12-month
period ending on the Determination Date of each such
plan, but with respect to the first plan year of any
such plan determined by taking into account the
estimated accrued benefit as of the Determination
Date; provided that the actuarial assumptions to be
applied for purposes of this subparagraph (i) shall
be the same assumptions as those applied for purposes
of determining the actuarial equivalents of optional
benefits under the particular plan, except that the
interest rate assumption shall be 5%;
(ii) The present value of the accrued benefit (i.e.,
account balances) under each and all defined
contribution plans in the Aggregation Group, valued
as of the valuation date coinciding with or
immediately preceding the Determination Date of each
such plan, including (A) contributions made after the
valuation date but on or prior to the Determination
Date, (B) with respect to the first plan year of any
plan, any contribution made subsequent to the
Determination Date but allocable as of any date in
the first plan year or (C) with respect to any
defined contribution plan subject to Section 412 of
the Code, any contribution made after the
Determination Date that is allocable as of a date on
or prior to the Determination Date; and
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(iii) The sum of each and all amounts distributed (other
than a rollover or plan-to-plan transfer) from any
Aggregation Group Plan, plus a rollover or
plan-to-plan transfer initiated by the Employee and
made to a plan which is not an Aggregation Group Plan
within the Current Plan Year or within the preceding
four plan years of any such plan, provided such
amounts are not already included in the present value
of the accrued benefits as of the valuation date
coincident with or immediately preceding the
Determination Date.
The Aggregate Benefit shall not include the value of any
rollover or plan-to-plan transfer to an Aggregation Group
Plan, the contribution or transfer of which was initiated by a
Participant, was from a plan which was not an Aggregation
Group Plan and was made after December 31, 1983, nor shall the
Aggregate Benefit include the value of employee contributions
which are deductible pursuant to Section 219 of the Code.
(b) "Aggregation Group" means the Plan and any plan (including a
plan that has terminated) which is described in Section 401
(a) of the Code, is an annuity contract described in Section
403(a) of the Code or is a simplified employee pension
described in Section 408(k) of the Code maintained or adopted
by an Employer or a Controlled Group Member of the Employer in
the Current Plan Year or one of the four preceding Plan Years
which is either a "Required Aggregation Group" or a
"Permissive Aggregation Group."
(i) A "Required Aggregation Group" means all Aggregation
Group Plans (A) in which a Key Employee participates
or (B) which enable any Aggregation Group Plan in
which a Key Employee participates to satisfy the
requirements of Section 401(a)(4) or Section 410 of
the Code;
(ii) A "Permissive Aggregation Group" means all
Aggregation Group Plans included in the Required
Aggregation Group, plus one or more other Aggregation
Group Plans as designated by the Administrative
Committee in its sole discretion, which satisfy the
requirements of Section 401(a)(4) and Section 410 of
the Code when considered with the other component
plans of the Required Aggregation Group.
(c) "Aggregation Group Plan" means the Plan and each other plan in
the Aggregation Group.
(d) "Current Plan Year" means (i) with respect to the Plan, the
Plan Year in which the Determination Date occurs, and (ii)
with respect to each other
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<PAGE> 68
Aggregation Group Plan, the plan year of such other plan in
which occurs the Determination Date of such other plan.
(e) "Determination Date" means (i) with respect to the Plan and
its Plan Year, the last day of the preceding Plan Year, or
(ii) with respect to any other Aggregation Group Plan in any
calendar year during which the Plan is not the only component
plan of an Aggregation Group, the determination date of each
plan in such Aggregation Group to occur during the calendar
year as determined under the provisions of each such plan.
(f) "Former Key Employee" means an Employee (including a
terminated Employee) who is not a Key Employee in the Current
Plan Year nor during the four preceding Plan Years but who was
a Key Employee at any time prior to the four preceding Plan
Years.
(g) "Key Employee" means an Employee (including a terminated
Employee) who at any time during the Current Plan Year or at
any time during the four preceding Plan Years is:
(i) An officer of an Employer or a Controlled Group
Member of an Employer whose total Compensation from
the Employer and the Controlled Group Member during
the Plan Year is greater than 50% of the amount in
effect under Section 415(b)(1)(A) of the Code (as
adjusted for cost-of-living increases by the
Secretary of the Treasury) for the calendar year in
which the Plan Year ends; provided, however, that no
more than the lesser of (A) 50 Employees, or (B) the
greater of (1) three Employees or (2) 10% (rounded to
the next whole integer) of the greatest number of
Employees during the Current Plan Year or any of the
preceding four Plan Years shall be considered as
officers for this purpose. Such officers considered
will be those with the greatest annual Compensation
as an officer during the five-year period ending on
the Determination Date;
(ii) One of the ten Employees who owns (or is considered
to own within the meaning of Section 318 of the Code)
more than a 1/2% interest in value and the largest
percentage ownership interest in value in an Employer
or a Controlled Group Member of an Employer
(considered separately), and whose total annual
Compensation from the Employer and the Controlled
Group Member is not less than the amount specified in
Section 415(c)(1)(A) of the Code (as adjusted for
cost-of-living increases by the Secretary of the
Treasury) for the calendar year in which the Plan
Year ends;
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<PAGE> 69
(iii) A person who owns more than 5% of the value of the
outstanding stock of an Employer or of any Controlled
Group Member of the Employer or more than 5% of the
total combined voting power of all stock of the
Employer or any Controlled Group Member of the
Employer (considered separately); or
(iv) A person who owns more than 1% of the value of the
outstanding stock of an Employer or a Controlled
Group Member of the Employer or more than 1% of the
total combined voting power of all stock of the
Employer or of the Controlled Group Member
(considered separately) and whose total annual
Compensation from the Employer and the Controlled
Group Member is in excess of $150,000.
The rules of Section 416(i)(1)(B) and (C) of the Code shall be
applied for purposes of determining an Employee's ownership
interest in an Employer or a Controlled Group Member of an
Employer for purposes of subparagraphs (iii) and (iv) above.
For purposes of this subsection (g), "value" means fair market
value. A Beneficiary (who would not otherwise be considered a
Key Employee) of a deceased Key Employee shall be deemed to be
a Key Employee in substitution for such deceased Key Employee.
(h) "Top-Heavy Plan" means the Plan with respect to any Plan Year
if the Aggregate Benefit of all Key Employees or the
Beneficiaries of Key Employees determined on the Determination
Date is an amount in excess of 60% of the Aggregate Benefit of
all persons who are Employees within the Current Plan Year,
excluding Former Key Employees, plus the Aggregate Benefit of
persons who have been Employees (but are not Former Key
Employees) within the four preceding Plan Years but who are
not Employees in the Current Plan Year. With respect to any
calendar year during which the Plan is not the only
Aggregation Group Plan, the ratio determined under the
preceding sentence shall be computed based on the sum of the
Aggregate Benefits of each Aggregation Group Plan totaled as
of the last Determination Date of any Aggregation Group Plan
to occur during the calendar year.
12.3. MAXIMUM BENEFIT ACCRUAL. For any Plan Year that the Plan is a
Top-Heavy Plan, the denominator of the "defined benefit fraction" and the
denominator of the "defined contribution fraction" (as defined in Section 4.9)
shall be determined by substituting "1.0" for "1.25". The preceding sentence
shall not apply with respect to any Plan Year that the Plan is a Top-Heavy Plan
if the Plan would not be a Top-Heavy Plan
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<PAGE> 70
if "90%" were substituted for "60%" in subsection 12.2(h). This Section shall
not apply with respect to an Employee for any Plan Year during which he accrues
no benefit under any plan of the Aggregation Group.
12.4. TERMINATION OF TOP-HEAVY STATUS. If the Plan has been determined
to be a Top-Heavy Plan for one or more Plan Years and thereafter ceases to be a
Top-Heavy Plan, the provisions of this Section 12 shall cease to apply to such
Plan effective as of the Determination Date on which the Plan is not a Top-Heavy
Plan.
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<PAGE> 71
SECTION 13
----------
Adoption and Withdrawal From Plan
---------------------------------
13.1. PROCEDURE FOR ADOPTION. Any Employer and certain unrelated
companies (as provided in Section 13.3) may adopt the Plan for the benefit of
their Employees as of a date specified. No such adoption shall be effective
until such adoption has been approved by the Administrative Committee.
Notwithstanding any term or provision of the Plan to the contrary, the terms and
provisions as may be imposed with respect to such Employer Employers and their
Employees in an applicable supplement or appendix to the Plan shall govern. Any
Employer who adopts the Plan in accordance with this Section or Section 13.3
agrees to be bound by all the terms, provisions, conditions and limitations of
the Plan and the accompanying Trust Agreement which are pertinent to any entity
defined as an "Employer" in the Plan with respect to its Eligible Employees
under the Plan. Such Employer further agrees that the Administrative Committee
and the Investment Committee shall act for the Employer and its Eligible
Employees under the provisions of the Plan. Such Employer further agrees to
furnish from time to time such information with reference to its Eligible
Employees as may be required by the Administrative Committee or the Investment
Committee.
13.2. PROCEDURE FOR WITHDRAWAL. Any Employer (other than the Company)
may, with the consent of the Company, and subject to such conditions as may be
imposed by the Company, terminate its adoption of the Plan. Upon discontinuance
of an Employer's participation in the Plan, the Trustee shall cause a
determination to be made of the equitable part of the Plan assets held on
account of Participants of the withdrawing Employer and their Beneficiaries. The
Administrative Committee shall direct the Trustee to transfer assets
representing such equitable part to a separate fund for the plan of the
withdrawing Employer. Such withdrawing Employer may thereafter exercise, in
respect of such separate fund, all the rights and powers reserved to the Company
with respect to Plan assets. The plan of the withdrawing Employer shall, until
amended by the withdrawing Employer, continue with the same terms as the Plan
herein, except that with respect to the separate plan of the withdrawing
Employer the words "Employer", "Employers", and "Company" shall thereafter be
considered to refer only to the withdrawing Employer. Any discontinuance of
participation by an Employer shall be effected in such manner that each
Participant or Beneficiary would (if the Plan and the plan of the withdrawing
Employer then terminated) receive a benefit immediately after such
discontinuance of participation which is equal to or greater than the benefit he
or she would have been entitled to receive immediately before such
discontinuance of participation if the Plan had then terminated. No transfer of
assets pursuant to this section shall be effected until such statements with
respect thereto, if any, required by ERISA to be filed in advance thereof have
been filed.
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<PAGE> 72
13.3. ADOPTION OF PLAN BY UNRELATED EMPLOYERS. The Company may
authorize companies that are not Controlled Group Member with respect to the
Company to adopt the Plan. Such authorization may extend to an individual
company or to a group of related companies. Any such company that is authorized
to adopt the Plan for the benefit of its employees shall do so in accordance
with Section 13.1. For purposes of such adoption and for purposes of its
participation in the Plan, any such company shall be deemed to be an "Employer"
hereunder and shall be subject to all terms of the Plan applicable to an
Employer.
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<PAGE> 73
FIRST AMENDMENT
---------------
OF
--
ALLEGIANCE CORPORATION RETIREMENT PLAN
--------------------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains
Allegiance Corporation Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan now is considered desirable;
NOW, THEREFORE, by virtue of the power reserved to the Company
by Section 10.1 of the Plan, and in exercise of the authority delegated to the
undersigned officer of the Company, the Plan hereby is amended effective as of
October 1, 1996 in the following particulars:
1. By changing the name of the Plan to "Allegiance Retirement
Plan" wherever the name of the Plan appears in the Plan document.
2. By substituting the following for Section 4.2 of the Plan:
"4.2. FIXED CONTRIBUTIONS. Effective January 1, 1997, for each
Plan Year, the Employers will make a 'Fixed Contribution' to the Trustee
for allocation to each Eligible Participant (as defined below) in an
amount equal to 3% of each Eligible Participants' Base Pay for such Plan
Year, provided that the Employers' contribution shall be reduced by the
amount of Forfeitures, if any, attributable to prior Fixed Contributions
which are to be allocated as of the last day of such Plan Year. For
purposes of this Section 4.2, an 'Eligible Participant' means a
Participant who is employed by an Employer and is an Eligible Employee
on the last day of the Plan Year or a Participant who retired or died
during the Plan Year. Each Eligible Participant shall receive an
allocation of 3% of the Eligible Participant's Base Pay allocated to the
Participant's Fixed Account."
3. By substituting the following for Section 4.3 of the Plan:
"4.3. TRANSITION CONTRIBUTIONS. Effective January 1, 1997 and
for the eight Plan Years beginning on and after January 1, 1997, the
Employers will make a 'Transition Contribution' to the Trustee for
allocation to each Transition Participant (as defined below) eligible
for a Transition I Benefit or Transition II
<PAGE> 74
Benefit, (as specified below) in an amount equal to the sum of the
amounts owed to all Transition Participants so entitled. The Transition
Contributions will be allocated to such Transition Participants
according to the following schedule:
(a) TRANSITION I BENEFIT: Each Transition
Participant who, as of October 1, 1996, had at
least 55 points and at least 10 Years of
Benefit Service, each determined under the
Baxter International, Inc. and Subsidiaries
Pension Plan shall be entitled to a Transition
I Benefit according to the following
schedule:
Points as of Contribution as a
October 1, 1996 Percent of Base Pay
--------------- -------------------
55 through 59 3%
60 to 64 4%
65 to 69 5%
70 to 74 6%
75 to 79 7%
80 or more 8%
(b) TRANSITION II BENEFIT: Each Transition
Participant who, as of October 1, 1996, had
less than 55 points but at least 15 Years of
Benefit Service, each determined under the
Baxter International, Inc. and Subsidiaries
Pension Plan, shall be entitled to receive a
Transition II Benefit of 2% of his annual
Base Pay.
For purposes of this Section 4.3 a 'Transition Participant' means a
Participant who (i) was an active participant under the Baxter
International, Inc. and Subsidiaries Pension Plan on September 30, 1996,
(ii) transferred directly from employment with Baxter International,
Inc. or one of its subsidiaries to employment with an Employer hereunder
prior to January 1, 1997, (iii) has not incurred a Termination of
Employment and (iv) is employed on the last day of the Plan Year or
retired or died during the Plan Year."
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<PAGE> 75
IN WITNESS WHEREOF, the undersigned officers of the Company have
caused these presents to be executed this 15th day of November, 1996.
ALLEGIANCE CORPORATION
By /s/ Robert B. Debaun
-----------------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
-3-
<PAGE> 76
SECOND AMENDMENT
----------------
OF
--
ALLEGIANCE RETIREMENT PLAN
--------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains
Allegiance Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan now is considered desirable;
NOW, THEREFORE, by virtue of the power reserved to the
Administrative Committee by Section 10.1 of the Plan, and in exercise of the
authority delegated to the undersigned officer of the Company, the Plan hereby
is amended effective as of October 1, 1996, except as otherwise provided below,
in the following particulars:
1. By restating the last sentence of the second paragraph of
Section 3.5 of The Plan to read as follows:
"Salary reduction contributions made by a Participant under any other
tax-qualified defined contribution plan maintained by the Participant's
Employer or any Controlled Group Member of such Employer shall be
included in computing his deferral percentage to the extent the
Administrative Committee elects to aggregate such other defined
contribution plan with the Plan for purposes of the nondiscrimination
test of this Section 3.5 or the coverage test of Code Section 410(b).
The Administrative Committee may elect to complete and comply with the
Actual Deferral Percentage test identified in this Section 3.5 by
separating the Plan into two portions, one benefiting only Participants
who have not yet reached age 21 and completed a year of service (as that
term is defined in Code Section 410(a)(3)) and the other benefiting
Participants who have reached age 21 and completed a year of service (as
that term is defined in Code Section 410(a)(3)). For any Plan Year that
the Company chooses to test the Plan in two portions, the Plan must also
satisfy Code Section 410(b) with respect to each portion."
2. By restating Section 3.9 in its entirety, effective January
1, 1997, to read as follows:
"Effective January 1, 1997, a 'Highly Compensated Employee' means an
Employee who:
<PAGE> 77
(a) was a 5 percent owner (as defined in Section 416(i)(1)
of the Code) of an Employer during the Plan Year or the
preceding Plan Year; or
(b) received more than $80,000 (or such other amount as
determined under Section 414(q)(1)(C) of the Code) in
annual Compensation from the Employers during the
preceding Plan Year and was in the top 20% of Employees
when ranked on the basis of Compensation paid during
the preceding Plan Year.
The determination of whether a Participant is a Highly Compensated
Employee for a Plan Year shall be based upon the Participant's Employer
as of that first day of that Plan Year and the Compensation the
Participant received from that Employer."
3. By adding the following at the end of Section 4.3 of the
Plan, effective January 1, 1997:
"If, due to the limitations of Section 4.8 of the Plan, a Participant
who is not a Highly Compensated Employee is unable to receive an
allocation of the entire Transition Contribution owed to the Participant
for a Plan Year, such Participant will receive in the next Plan Year an
allocation of the amount of the Transition Contribution not previously
allocated, in addition to the Transition Contribution owed for that Plan
Year."
4. By restating the second sentence of Section 5.7 of the Plan,
effective January 1, 1997, to read as follows:
"Fixed Contributions, Transition Contributions and Performance
Contributions shall be credited to the appropriate Accounts of
Participants as of the last day of the Plan Year, regardless of when
paid to the Trustee, except that the Administrative Committee may, in
its discretion, credit Transition Contributions on any Accounting Date
prior to the last day of the Plan Year."
5. By deleting the reference to severance pay in Section 7.3(ii)
of the Plan.
6. By restating the last sentence of Section 7.4 of the Plan to
read as follows:
<PAGE> 78
"If a Participant is reemployed by an Employer before he incurs five
consecutive one-year Breaks in Service and at the time of his previous
Termination of Employment a portion of his Matching Account, Fixed
Account, Transition Account, Performance Account or Profit Sharing
Account became a Forfeiture, he may repay to the Trustee (within five
years of his date of reemployment) the total amount distributed to him
from such Accounts as of result of his previous Termination of
Employment. If a Participant makes such a repayment to the Trustee, both
the amount of the repayment and the Forfeitures which resulted from his
previous Termination of Employment shall be credited to the appropriate
Accounts of the Participant as of the next Accounting Date. The amounts
necessary to restore the Forfeitures in accordance with this Section 7.4
shall be taken from other Forfeitures not yet applied towards Employer
contributions pursuant to Section 4, and if such Forfeitures are not
sufficient, then from an initial allocation of Employer contributions to
the extent necessary to satisfy such restoration. In lieu of such method
of restoring the Forfeitures, the Participant's Employer may make a
special contribution which shall be allocated solely for purposes of
such restoration."
7. By restating the first sentence of Section 7.5(e) to read as
follows:
"Benefits payable to a former spouse or other member or former member of
the Participant's family pursuant to a Qualified Domestic Relations
Order (as defined in Code Section 414(p)) will commence on the earliest
date provided in the order, but no sooner than the date the
Administrative Committee or its delegate completes its determination
that the order satisfies the requirements set forth in Code Section
414(p)."
8. By inserting the following after the second sentence of
Section 8.2(k) of the Plan:
"If a Participant with an outstanding loan goes on an unpaid leave of
absence, making payroll deductions impossible, the loan repayments will
accumulate until the end of the unpaid leave, and will be deducted from
the Participant's pay on the first payroll after the Participant returns
and from subsequent payrolls to the extent necessary. If the Participant
incurs a Termination of Employment prior to the end of the unpaid leave
of absence, the Participant must repay the entire outstanding balance of
the loan within six months of such Termination of Employment."
<PAGE> 79
IN WITNESS WHEREOF, the undersigned officer of the Company have
caused these presents to be executed this 19th day of August, 1997.
ALLEGIANCE CORPORATION
By /s/ Robert B. Debaun
------------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
<PAGE> 80
THIRD AMENDMENT
---------------
OF
--
ALLEGIANCE CORPORATION RETIREMENT PLAN
--------------------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains
Allegiance Corporation Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan now is considered desirable;
NOW, THEREFORE, by virtue of the power reserved to the Company
by Section 10.1 of the Plan, and in exercise of the authority delegated to the
undersigned officer of the Company, the Plan hereby is amended effective as of
January 1, 1998 in the following particulars:
1. By substituting the following for Section 4.3 of the Plan:
"4.3. TRANSITION CONTRIBUTIONS. Effective January 1, 1997 and for
each of the eight Plan Years beginning on and after January 1, 1997,
the Employers will make a `Transition Contribution' to the Trustee for
allocation to each Transition Participant (as defined below) eligible
for a Transition I Benefit or Transition II Benefit, (as specified
below) in an amount equal to the sum of the amounts owed to all
Transition Participants so entitled. The Transition Contributions will
be allocated to such Transition Participants according to the following
schedule:
(a) TRANSITION I BENEFIT: Each Transition Participant
who, as of October 1, 1996, had at least 55 points
and at least 10 Years of Benefit Service, each
determined under the Baxter International, Inc. and
Subsidiaries Pension Plan shall be entitled to a
Transition I Benefit according to the following
schedule:
Points as of Contribution as a
October 1, 1996 Percent of Base Pay
--------------- -------------------
55 through 59 3%
60 to 64 4%
65 to 69 5%
70 to 74 6%
75 to 79 7%
80 or more 8%
<PAGE> 81
(b) TRANSITION II BENEFIT: Each Transition Participant
who, as of October 1, 1996, had less than 55 points
but at least 15 Years of Benefit Service, each
determined under the Baxter International, Inc. and
Subsidiaries Pension Plan, shall be entitled to
receive a Transition II Benefit of 2% of his annual
Base Pay.
For purposes of this Section 4.3 a `Transition Participant' for a Plan
Year means a Participant who (i) was an active participant under the
Baxter International, Inc. and Subsidiaries Pension Plan on September
30, 1996, (ii) transferred directly from employment with Baxter
International, Inc. or one of its subsidiaries to employment with an
Employer hereunder prior to January 1, 1997, (iii) has not incurred a
Termination of Employment (or was rehired within one (1) year of an
involuntary Termination of Employment) AND (iv) is employed on the last
day of the applicable Plan Year or retired or died during the Plan
Year. A Participant's Termination of Employment shall be considered
`Involuntary' if the Participant's job is eliminated or the Participant
leaves employment as the result of a divestiture or the closing of a
facility or operation of the Company."
IN WITNESS WHEREOF, the undersigned officers of the Company have caused
these presents to be executed this 28th day of May, 1998.
ALLEGIANCE CORPORATION
By /s/ Robert B. Debaun
------------------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
-2-
<PAGE> 82
FOURTH AMENDMENT
----------------
OF
--
ALLEGIANCE RETIREMENT PLAN
--------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains the
Allegiance Retirement Plan (the "Plan"); and
WHEREAS, the Plan has previously been amended and further
amendment of the Plan is now considered desirable to maintain the Plan's
tax-qualified status;
NOW, THEREFORE, by virtue of the power reserved to the
Administrative Committee by Section 10.1 of the Plan, and in exercise of the
authority delegated to the undersigned officer of the Company, the Plan is
hereby amended in the following particulars:
1. Effective as of October 1, 1996, by deleting paragraph (b)
of Section 2.1 and renaming paragraph (c) as paragraph (b) accordingly.
2. Effective as of January 1, 1998, by substituting the number
"$10,000" for "$9,500" where the latter appears in Section 3.4 of the Plan.
3. Effective as of January 1, 1997, by substituting the
following for paragraphs (a) and (b) of the first paragraph of Section 3.5 of
the Plan:
"(a) the Actual Deferral Percentage of all other Participants for
the preceding Plan Year multiplied by 1.25; or
<PAGE> 83
(b) the Actual Deferral Percentage of all other Participants for
the preceding Plan Year multiplied by 2.0; provided that the
Actual Deferral Percentage of such Highly Compensated
Employees does not exceed that of all other Participants by
more than 2 percentage points."
4. Effective as of January 1, 1997, by deleting the last
sentence of the third paragraph of Section 3.5 of the Plan (including paragraphs
(a) and (b)) and substituting the following:
"The amount of a Participant's Compensation that may be taken into
account for any purpose of the Plan shall not exceed $150,000, as
adjusted pursuant to Section 401(a)(17) of the Code."
5. Effective as of January 1, 1997, by substituting the
following sentence for the first two sentences of the last paragraph of Section
3.5 of the Plan:
"If, for a Plan Year, Pay Deferral Contributions made on behalf of the
Highly Compensated Employees exceed the limitations of this Section
3.5, the excess Pay Deferral Contributions made by the Highly
Compensated Employees (and any earnings thereon) will be refunded (in
the order of their Pay Deferral Contribution amounts beginning with the
largest amount) to the extent necessary to meet such limitations,
generally within two and one-half months after the end of that Plan
Year, but in no event later than the last day of the first Plan Year
beginning after that Plan Year."
6. Effective as of January 1, 1997, by deleting the entire
third sentence of Section 3.8 of the Plan (including paragraphs (i) and (ii))
and substituting the following:
"The amount of a Participant's Base Pay that may be taken into account
for any purpose of the Plan shall not exceed $150,000, as adjusted
pursuant to Section 401(a)(17) of the Code."
7. Effective as of October 1, 1996, by substituting the
following for the first sentence of Section 4.5 of the Plan:
-2-
<PAGE> 84
"During any Plan Year, the Employers may make a "Nonelective
Contribution" to the Trustee for allocation to Participants who are not
Highly Compensated Employees in such amount, if any, as shall be
determined by the Employers to be necessary under Section 3.5 of the
Plan."
8. Effective as of January 1, 1997, by substituting the
following for paragraphs (a) and (b) of the first paragraph of Section 4.6 of
the Plan:
"(a) the Actual Contribution Percentage of all other Participants
for the preceding Plan Year multiplied by 1.25; or
(b) the Actual Contribution Percentage of all other Participants
for the preceding Plan Year multiplied by 2.0; provided that
the Actual Contribution Percentage of such Highly Compensated
Employees does not exceed that of all other Participants by
more than 2 percentage points."
9. Effective as of January 1, 1997, by substituting the
following sentence for the second and third sentences of the last paragraph of
Section 4.6 of the Plan:
"If, for a Plan Year, Matching Contributions made on behalf of the
Highly Compensated Employees exceed the limitations of this Section
4.6, the excess Matching Contributions made on behalf of the Highly
Compensated Employees (and any earnings thereon) will be refunded (in
the order of their Matching Contribution amounts beginning with the
largest amount) to the extent necessary to meet such limitations,
generally within two and one-half months after the end of that Plan
Year, but in no event later than the last day of the first Plan Year
beginning after that Plan Year."
10. Effective as of October 1, 1996, by restating the first
sentence of Section 4.7 to read as follows:
"In accordance with Treasury Regulation ss.1.401(m)-2(c), multiple use
of the alternative limitation which occurs as a result of testing under
the limitations described in Section 3.5 and 4.6 will be corrected by
reducing the Actual
-3-
<PAGE> 85
Deferral Percentage of highly compensated employees, reducing the Actual
Contribution Percentage of highly compensated employees, or a
combination of the two methods."
11. Effective as of January 1, 1997, by deleting the phrase
"(or, if greater, 1/4 of the dollar limitation in effect under Section
415(b)(1)(A) of the Internal Revenue Code for the calendar year which begins
with or within that Plan Year)" from the first sentence of Section 4.8 of the
Plan.
12. Effective as of October 1, 1996, by restating the last
sentence of Section 4.8 to read as follows:
"Any Employer contributions which cannot be allocated to a Participant
because of the foregoing limitations shall be held in an unallocated
suspense account and be applied in succeeding Plan Years, in order of
time, to reduce the Employers' contributions."
13. Effective January 1, 2000, by deleting Section 4.9 from
the Plan, by redesignating Sections 4.10, 4.11, 4.12, and 4.13 thereof as
Sections 4.9, 4.10, 4.11, and 4.12, respectively, and by making all other
corresponding changes throughout the Plan.
14. Effective as of October 1, 1996, by substituting the
following for paragraph (a) of Section 5.1 of the Plan:
"(a) BEFORE-TAX ACCOUNT: A "Before-Tax Account" shall be maintained for
each Participant. This account shall represent the amount of such
Participant's Pay Deferral Contribution to this Plan and the Prior
Plan, Nonelective Contributions allocated to
-4-
<PAGE> 86
such Participant under the Plan, and the expenses, distributions,
earnings and losses attributable to such account."
15. Effective as of January 1, 1998, by substituting the
number "$5,000" for "$3,500" wherever the latter appears in Section 7 of the
Plan.
16. Effective as of October 1, 1996, by substituting the
following for the first sentence of the second paragraph of Section 7.2 of the
Plan:
"Notwithstanding the preceding sentence, if a Participant in the Plan
was employed by Baxter International Inc. and/or any of its
subsidiaries or related companies immediately preceding the Effective
Date and became a Participant in the Plan on the Effective Date, the
balances in his Matching Account, Fixed Account, Transition Account,
Performance Account, and Profit Sharing Account shall be determined in
accordance with the following schedule:"
17. Effective as of October 1, 1996, by adding the following
at the end of Section 7.4 of the Plan:
"A `Break in Service' is any Plan Year in which a Participant or an
employee does not complete more than 500 Hours of Service. An employee
or a Participant will be credited with up to 501 Hours of Service on
account of an absence described in paragraphs (a) through (d) below,
but only with respect to the Plan Year in which such absence from work
begins, if such employee or Participant would be prevented from
incurring a Break in Service in such year solely because Hours of
Service are credited to him for the period of absence described in
paragraphs (a) through (d) below or, in any other case, in the
immediately following Plan Year. The periods of absence described in
the preceding sentence are those on account of :
(a) the pregnancy of the employee or Participant;
(b) the birth of a child of the employee or Participant;
(c) the placement of a child with the employee or Participant in
connection with the adoption of such child by such employee or
Participant; and
(d) caring for such child for a period beginning immediately
following such birth or placement."
-5-
<PAGE> 87
18. Effective as of January 1, 1997, by substituting the
following for the third sentence of paragraph (f) of Section 7.5 of the Plan:
"A Participant's 'required beginning date' is April 1 of the calendar
year next following the later of the calendar year in which the
Participant attains age 70-1/2 or the calendar year in which the
Participant retires; provided, that the required beginning date of a
Participant who is a 5 percent owner of an employer (as defined in Code
Section 416) is April 1 of the calendar year next following the
calendar year in which such Participant attains age 70-1/2."
19. Effective as of October 1, 1996, by adding the following
at the end of Section 7.6 of the Plan:
"If a Participant receives a distribution under paragraph (c) or (d)
above, is later reemployed by an Employer prior to incurring five
consecutive Breaks in Service, but leaves before becoming fully vested,
then: (i) the Participant's vested percentage as of the subsequent
resignation or dismissal shall apply to amounts not distributed after
the first resignation or dismissal, and (ii) as of the Accounting Date
coincident with or next following the date on which the Participant
first incurs a Break in Service after such subsequent resignation or
dismissal (after all adjustments then required under the Plan have been
made), then his Forfeitures under Section 7.4 of the Plan shall be
reduced by an amount determined by multiplying the Forfeitures by the
produce of the following: (X - Y) divided by (100% - Y), where X equals
the Participant's vested percentage on the date of his subsequent
Settlement Date and Y equals the Participant's vested percentage on the
date of his prior Settlement Date. The Forfeitures after the foregoing
reduction will be nonforfeitable and will be distributable to the to
Participant in accordance with the provisions of Sections 7.5 and 7.6."
20. Effective as of January 1, 1997, by substituting the
following sentence for the third sentence of paragraph (d) of Section 7.9 of the
Plan:
"The Participant will receive a written explanation of the Qualified
Joint and Survivor Annuity form of payment not more than 90 nor less
than 30 days prior
-6-
<PAGE> 88
to the date his distribution is to begin (or, if the Participant
elects, at least 7 days before the date his distribution is to begin)."
21. Effective as of October 1, 1996, by adding the following
new Section 11.18 to the Plan immediately after Section 11.17 thereof:
"11.18 MILITARY SERVICE. Notwithstanding any provision of this Plan to
the contrary, contributions, benefits, and service credit with respect
to qualified military service will be provided in accordance with Code
Section 414(u)."
22. Effective as of October 1, 1996, by restating paragraph
(e) of Section 12.2 to read as follows:
"(e) "Determination Date" means (i) with respect to the Plan and its
Plan Year, the last day of the preceding Plan Year, provided that for
the first Plan Year, the last day of such year, or (ii) with respect to
any other Aggregation Group Plan in any calendar year during which the
Plan is not the only component plan of an Aggregation Group, the
determination date of each plan in such Aggregation Group to occur
during the calendar year as determined under the provisions of each
such plan."
23. Effective as of October 1, 1996, by adding the following
as paragraph (i) of Section 12.2 of the Plan:
"Non-Key Employee" means any Employee who is not a Key Employee, and
includes all Former Key Employees."
24. Effective January 1, 2000, by deleting Section 12.3 from
the Plan, by redesignating Sections 12.4, 12.5 and 12.6 thereof as Sections
12.3, 12.4 and 12.5, and by making all other corresponding changes throughout
the Plan.
25. Effective as of October 1, 1996, by adding the following
as Sections 12.4 and 12.5 of the Plan and redesignating Section 12.4 as 12.6 of
the Plan:
-7-
<PAGE> 89
"12.4 MINIMUM CONTRIBUTION. For any Plan Year that the Plan is a
Top-Heavy Plan, that the aggregate amount of Fixed Contributions,
Transition Contributions and Performance Contributions allocated in
such Plan Year to the Accounts of each Participant who is not a Key
Employee and who is employed by an Employer as of the last day of the
Plan Year, regardless of the number of Hours of Service which he
completes during such Plan Year, may not be less than the lesser of:
(a) three percent of his Compensation for the Plan Year; or
(b) a percentage of his Compensation equal to the largest percentage
obtained by dividing the sum of the amount credited to the Accounts
(including Pay Deferral Contributions) of any Key Employee by that Key
Employee's Compensation.
12.5 MINIMUM VESTING. For any Plan Year that the Plan is a Top-Heavy
Plan, the vesting schedule in the first paragraph of Section 7.2 shall
be revised as follows:
<TABLE>
<CAPTION>
If the Participant's Number of Years The Vested Percentage of His
------------------------------------ ----------------------------
of Service Is: Accounts Will Be:
-------------- -----------------
<S> <C>
Less than 3 years 0%
3 years or more 100%"
</TABLE>
IN WITNESS WHEREOF, the undersigned officer of the Company has
caused these presents to be executed this 28th of May, 1998.
ALLEGIANCE CORPORATION
By:/s/ Robert B. Debaun
----------------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
-8-
<PAGE> 90
FIFTH AMENDMENT
---------------
OF
--
ALLEGIANCE RETIREMENT PLAN
--------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains Allegiance
Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan now is considered desirable;
NOW, THEREFORE, by virtue of the power reserved to the Company by
Section 10.1 of the Plan, and in exercise of the authority delegated to the
undersigned officer of the Company, the Plan hereby is amended effective as of
January 1, by adding the following new Supplement A to the Plan immediately
following Section 13 thereof:
"SUPPLEMENT A
-------------
Sale of
-------
Eaton, Ohio Facility
--------------------
A-1. INTRODUCTION. On or about August 31, 1998 (the "Transfer
Date") Allegiance Corporation sold its manufacturing facility located
in Eaton, Ohio (the `Eaton Facility') and transferred the employees
employed at the Eaton Facility (`Eaton Employees') to the purchaser of
the Eaton Facility. The purpose of this Supplement A is to modify the
provisions of the Plan as applied to Eaton Employees.
A-2. CONTRIBUTIONS. Notwithstanding the provisions of the Plan
to the contrary, for the Plan Year ending December 31, 1998 for
purposes of Sections 4.2 and 4.3 of the Plan, an `Eligible Participant'
shall include a Participant who was an Eaton Employee on the Transfer
Date.
A-3. FULL VESTING. Notwithstanding the provisions of Section
7.2 of the Plan to the contrary, the Vested Percentage of each Eaton
Employee who is a Participant in the Plan on the Transfer Date shall be
100 percent."
IN WITNESS WHEREOF, the undersigned officers of the Company have caused
these presents to be executed this 16th day of December, 1998.
ALLEGIANCE CORPORATION
By /s/ Robert B. Debaun
---------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
<PAGE> 91
SIXTH AMENDMENT
---------------
OF
--
ALLEGIANCE RETIREMENT PLAN
--------------------------
WHEREAS, Allegiance Corporation (the "Company") maintains the
Allegiance Retirement Plan (the "Plan"); and
WHEREAS, the Plan has previously been amended and further
amendment of the Plan is now considered desirable;
NOW, THEREFORE, by virtue of the power reserved to the
Administrative Committee by Section 10.1 of the Plan, and in exercise of the
authority delegated to the undersigned officer of the Company, the Plan is
hereby amended, effective as of the dates listed below, as follows:
1. By restating the last paragraph of Section 4.3 to read as follows,
effective October 1, 1996:
"For purposes of Section 4.3 a `Transition Participant' for a Plan Year means a
Participant who ( i) was an active participant under the Baxter International,
Inc. and Subsidiaries Pension Plan on September 30, 1996, (ii) transferred
directly from employment with Baxter International, Inc. or one of its
subsidiaries to employment with an Employer hereunder prior to January 1, 1997,
(iii) has not incurred a Termination of Employment (or was rehired within one
(1) year of an involuntary Termination of Employment) or Termination of
Employment due to disability (for this purpose a Participant will be deemed to
have incurred a "disability" if the Participant qualified for benfits under the
long-term disability plan maintained for that Participant by Allegiance
Corporation) AND (iv) is employed on the last day of the applicable Plan Year or
retired or died during the Plan Year. A Participant's Termination of Employment
shall be considered `involuntary' if the Participant's job is eliminated or the
Participant leaves employment as the result of a divestiture, or the closing of
a facility or
<PAGE> 92
operation of the Company."
2. By restating the last three sentences of Section 7.3 to read as
follows, effective January 1, 1998.
"with respect to Employees for whom records (including time schedules
and other corporate records) are not ordinarily maintained and
Employees paid on the basis of hours worked who are scheduled to work
full-time, as of the first day of any week during which such Employees
are required to be credited with at least One Hour of Service, they
shall be credited with 45 Hours of Service for such week."
3. By adding the following Supplement A to the Plan immediately after Section 13
thereof, effective January 1, 1999.
"SUPPLEMENT A
-------------
Provisions Relating to the Merger of the West Hudson 401(k) Plan
----------------------------------------------------------------
A-1. MERGER OF PLANS. Effective January 1, 1999 (the "Merger Date"), the
West Hudson & Company, Inc. 401(k) Profit Sharing Plan (the "West
Hudson Plan") shall be merged into the Plan and shall be continued in
the form of the Plan on and after that date. The merger of the West
Hudson Plan into the Plan and the resulting transfer of assets
described in paragraph A-3 shall be made in accordance with Code
Sections 401(a)(12) and 414(l) and the regulations thereunder.
A-2. ELIGIBILITY AND PARTICIPATION. Each participant in or beneficiary of
the West Hudson Plan on December 31, 1998 shall become a Participant in
the Plan on January 1, 1999 (a "West Hudson Participant" and
collectively, the "West Hudson Participants"). For purposes of
eligibility and vesting under the Plan, each other employee of West
Hudson on or after the Merger Date shall be credited with any service
while in the employ of West Hudson and shall become a Participant in
the Plan on the first entry date following the date such employee meets
the eligibility requirements set forth in Section 2.1 of the Plan.
<PAGE> 93
A-3. TRANSFER OF ASSETS. The assets of the West Hudson Plan shall be
transferred to the Allegiance Corporation Retirement Trust Agreement
(the "Trust"), which Trust serves as the funding vehicle of the Plan,
as soon as practicable after the Merger Date (the "Transfer Date").
A-4. TRANSFER OF ACCOUNT BALANCES. All accounts maintained under the West
Hudson Plan on behalf of West Hudson Participants immediately prior to
the Transfer Date shall be adjusted as of that date in accordance with
the provisions of the West Hudson Plan. The net credit balances in such
accounts, as adjusted, shall be transferred to the Plan (the
"Transferred Accounts") and credited on the Transfer Date to the
corresponding new accounts maintained for the West Hudson Participants
under the Plan as follows:
West Hudson Account Allegiance Account
------------------- ------------------
Employee Deferral Before-Tax
Employer Matching Matching
Employer Contribution Fixed
Employee After-Tax After-Tax
Employee Rollover Rollover
Each West Hudson Participant's Transferred Account shall be invested in
the Stable Income Fund until such time as the West Hudson Participant
makes an election in accordance with Section 5.4 of the Plan, and such
amounts shall be adjusted as of each Accounting Date in accordance with
the provisions of the Plan. Each West Hudson Participant's Transferred
Account shall be subject to the provisions of the Plan and shall be
treated in a manner that conforms with Section 411(d)(6) of the Code
and the regulations thereunder.
A-5. PLAN BENEFITS. All benefits accrued by West Hudson Participants on or
after the Merger Date shall be pursuant to the terms of the Plan. Upon
the retirement date or other termination of employment of each West
Hudson Participant in the Plan, the benefits, if any, payable and the
method of payment, to such Participant shall be determined in
accordance with the Plan.
A-6. NORMAL RETIREMENT AGE. Notwithstanding any provision of the Plan to the
contrary, the normal retirement age of a West Hudson Participant shall
be 60 years of age. Upon attainment of age 60, a West Hudson
Participant shall be 100% vested in all accounts maintained in his name
under the Plan.
A-7. DISABILITY. Notwithstanding any provision in the Plan to the contrary,
a West Hudson participant shall be 100% vested in all accounts
maintained in his name under the Plan if he incurs a disability. A West
Hudson participant shall be deemed to have incurred a disability if he
is determined to be disabled by a physician approved by the Company.
<PAGE> 94
A-8. SERVICE. A West Hudson Participant will be credited with all Years of
Service earned under the West Hudson Plan as of the Merger Date. Such
Years of Service shall receive full credit for all purposes of the
Plan.
A-9. VESTING. The accounts of each West Hudson Participant in the Plan,
other than Before Tax Account shall be subject to the following
schedule.
If the Participant's The Vested Percentage
Number of Years of of His Accounts
Service Is: Will Be:
----------- ------------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
No West Hudson Participant shall have a vested percentage after the
Merger Date which is less than his vested percentage in his accounts in
the West Hudson Plan prior to the Merger Date . In all other respects
of the vested percentage of a West Hudson Participant shall be
determined with respect to Section 7.2 of the Plan.
A-10. LOANS. Any outstanding Participant loans on the Merger Date that had
been made to West Hudson Participants under the West Hudson Plan shall
be maintained on or after that date under the Plan until all amounts of
principal and interest thereon have been repaid. In addition,
Participants subject to this Supplement A may apply for a loan pursuant
to Section 8.2 of the Plan on or after the Merger Date.
A-11. TRANSFER OF RECORDS. On or as soon as practicable after the Transfer
Date, the plan administrator of the West Hudson Plan shall transfer to
the Company all administrative records maintained with respect to the
West Hudson Participants.
A-12. USE OF TERMS. Terms used in this Supplement A with respect to the West
Hudson Plan and terms used in this Supplement A with respect to the
Plan shall, unless defined in this Supplement A, have the meanings of
those terms as defined in the West Hudson Plan or the Plan as the case
may be.
* * *
<PAGE> 95
IN WITNESS WHEREOF, the undersigned officer of the Company has
caused these presents to be executed this 31st of December, 1998.
ALLEGIANCE CORPORATION
By:/s/ Robert B. Debaun
-----------------------------------
Robert B. DeBaun
Corporate Vice President
Human Resources
<PAGE> 1
EXHIBIT 5
February 4, 1999
Cardinal Health, Inc.
5555 Glendon Court
Dublin, OH 43016
Gentlemen:
I have acted as counsel to Cardinal Health, Inc., an Ohio
corporation (the "Company"), in connection with Company's Registration
Statement on Form S-8 (the "Registration Statement") filed under the Securities
Act of 1933, as amended (the "Act") relating to the issuance of up to
3,000,000 common shares, without par value (the "Common Shares"), of the
Company pursuant to the Allegiance Retirement Plan (the "Plan").
In connection with the foregoing, I have examined: (a) the
Amended and Restated Articles of Incorporation, as amended, and Restated Code of
Regulations, as amended, of the Company, (b) the Plan, and (c) such records of
the corporate proceedings of the Company and such other documents as I deemed
necessary to render this opinion.
Based on such examination, I am of the opinion that the Common
Shares available for issuance under the Plan, when issued, delivered and paid
for in accordance with the terms and conditions of the Plan, will be legally
issued, fully paid and nonassessable.
I hereby consent to the filing of this Opinion as Exhibit 5 to
the Registration Statement and the reference to me in Item 5 of Part II of the
Registration Statement. In giving such consent, I do not thereby admit that I am
in the category of person whose consent is required under Section 7 of the Act
or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Paul S. Williams
Paul S. Williams, Esq.
Assistant General Counsel
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. on Form S-8 of our report dated August 12, 1998 (which
report expresses an unqualified opinion that such financial statements are in
conformity with generally accepted accounting principles applicable after
consolidated financial statements are issued for a period which includes the
date of consummation of the business combination of Cardinal Health, Inc. and
R.P. Scherer Corporation), appearing in Cardinal Health, Inc.'s Current Report
on Form 8-K/A filed September 28, 1998.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
February 1, 1999
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF ERNST AND YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. (the "Company") on Form S-8 of our report, with respect to
the consolidated financial statements of Pyxis Corporation (not presented) dated
August 2, 1996, appearing in the Company's Current Report on Form 8-K/A dated
September 28, 1998.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
February 1, 1999
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of Cardinal Health, Inc. of our report dated January 30,
1997 related to the financial statements of Owen Healthcare, Inc. which appears
on page 5 of Cardinal Health, Inc.'s Current Report on Form 8-K/A dated
September 28, 1998.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
February 1, 1999
<PAGE> 1
EXHIBIT 23(d)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Cardinal Health, Inc. on Form S-8,
of our report with respect to R.P. Scherer Corporation dated April 27, 1998
(except with respect to the matter discussed in Note 16, as to which the date
is May 17,1998) included in the Current Report on Form 8-K/A (Amendment No. 1,
dated September 28, 1998) of Cardinal Health, Inc. and to all references to our
Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Arthur Anderson LLP
Detroit, Michigan
February 1, 1999
