<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- --------------------------------------------------------------------------------
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996............................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
- --------------------------------------------------------------------------------
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
MARCH 31, 1996 1-10269
ALLERGAN, INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
95-1622442
2525 DUPONT DRIVE, IRVINE, CALIFORNIA 92715
TELEPHONE NUMBER 714/246-4500
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) X yes no
--- ---
(2) X yes no
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of April 30, 1996 there were 64,874,633 shares of common stock outstanding.
<PAGE> 2
ALLERGAN, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
(A) Consolidated Statements of Earnings - 3
Three Months Ended March 31, 1996 and 1995
(B) Consolidated Balance Sheets - 4
March 31, 1996 and December 31, 1995
(C) Consolidated Statements of Cash Flows - 5
Three Months Ended March 31, 1996 and 1995
(D) Notes to Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7-9
PART II - OTHER INFORMATION
ITEM 4 10-11
ITEM 6 11
Signature 12
Exhibits
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Allergan, Inc.
Consolidated Statements of Earnings
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------
1996 1995
------ ------
<S> <C> <C>
Net Sales $258.1 $228.3
Operating costs and expenses:
Cost of sales 85.7 71.1
Selling, general and
administrative 114.3 103.5
Research and development 26.8 25.6
------ ------
226.8 200.2
------ ------
Operating income 31.3 28.1
Nonoperating income (expense):
Interest income 2.3 3.1
Interest expense (3.3) (2.3)
Other, net 2.2 2.4
------ ------
1.2 3.2
------ ------
Earnings from continuing operations
before income taxes and minority interest 32.5 31.3
Provision for income taxes 9.4 9.2
Minority interest -- 0.4
------ ------
Net Earnings $ 23.1 $ 21.7
====== ======
Net Earnings Per Common Share $ 0.35 $ 0.34
====== ======
Weighted Average Common Shares Outstanding 65.6 64.5
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
Allergan, Inc.
Consolidated Balance Sheets
(In millions, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 108.2 $ 102.3
Trade receivables, net 214.0 205.7
Inventories 129.8 120.8
Other current assets 101.6 93.5
-------- --------
Total current assets 553.6 522.3
Investments and other assets 165.0 160.8
Property, plant and equipment, net 353.8 357.5
Goodwill and intangibles, net 264.6 275.7
-------- --------
Total assets $1,337.0 $1,316.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 62.5 $ 58.5
Accounts payable 55.2 58.7
Accrued expenses 158.7 173.1
Income taxes 48.0 41.3
-------- --------
Total current liabilities 324.4 331.6
Long-term debt 271.8 266.7
Other liabilities 48.4 49.1
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued -- --
Common stock, $.01 par value; authorized
150,000,000 shares; issued 67,309,000
and 67,319,000 shares 0.7 0.7
Additional paid-in capital 201.8 199.7
Foreign currency translation adjustment 3.8 4.7
Other 0.1 (1.4)
Retained earnings 542.8 527.4
-------- --------
749.2 731.1
Less - treasury stock, at cost
(2,550,000 and 2,786,000 shares) (56.8) (62.2)
-------- --------
Total stockholders' equity 692.4 668.9
-------- --------
Total liabilities and stockholders' equity $1,337.0 $1,316.3
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
Allergan, Inc.
Consolidated Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Three months
ended March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 23.1 $ 21.7
Non-cash items included in net earnings:
Depreciation and amortization 18.1 13.3
Amortization of prepaid royalties 1.6 2.1
Deferred income taxes (1.2) (0.4)
Loss on sale of assets -- 0.7
Expense of compensation plans 0.4 0.5
Minority interest -- 0.4
Changes in assets and liabilities:
Trade receivables (9.6) 4.9
Inventories (9.4) (3.2)
Accounts payable (2.8) (15.3)
Accrued liabilities (13.1) (18.0)
Income taxes 8.2 (26.0)
Other (6.1) (9.7)
------ ------
Net cash provided by/(used in)
operating activities 9.2 (29.0)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (12.1) (10.0)
Disposals of property, plant and equipment 4.8 0.6
Prepayment of royalties -- (14.6)
Acquisitions of businesses, net of cash acquired -- (18.3)
Other, net (4.3) (5.5)
------ ------
Net cash used in investing activities (11.6) (47.8)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders (7.6) (7.0)
Net borrowings under
commercial paper obligations 1.9 39.7
Increase in notes payable 1.9 0.6
Sale of stock to employees 4.6 6.0
Increase in long term debt 11.4 3.8
Decrease in long term debt (4.0) (0.5)
Acquisition of capital leases (0.3) --
------ ------
Net cash provided by financing activities 7.9 42.6
------ ------
Effect of exchange rates on cash and
equivalents 0.4 1.3
------ ------
Net increase/(decrease) in cash and equivalents 5.9 (32.9)
Cash and equivalents at beginning of period 102.3 130.7
------ ------
Cash and equivalents at end of period $108.2 $ 97.8
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
Allergan, Inc.
Notes to Consolidated Financial Statements
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary (consisting only of normal
recurring accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by generally
accepted accounting principles and should be read in conjunction with the
audited financial statements of the Company for the year ended December 31,
1995. The results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1996. Earnings per common and common equivalent share were
computed by dividing net earnings by the weighted average number of common and
common equivalent shares outstanding during the respective periods.
2. Components of inventory were:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(in millions)
<S> <C> <C>
Finished goods $ 86.2 $ 83.0
Work in process 16.5 11.3
Raw materials 27.1 26.5
------ ------
Total $129.8 $120.8
====== ======
</TABLE>
3. Income taxes are determined using an estimated annual effective tax
rate, which is less than the U.S. Federal statutory rate, primarily because of
lower tax rates in Puerto Rico and in certain non U.S. jurisdictions.
Withholding and U.S. taxes have not been provided for unremitted earnings of
certain non U.S. subsidiaries because the Company expects that such earnings
have been or will be reinvested in operations, or will be offset by appropriate
credits for foreign income taxes paid.
4. The Company is involved in various litigation and claims arising in the
normal course of business. The Company's management believes that recovery or
liability with respect to these matters would not have a material adverse
effect on the consolidated financial position and results of operations of the
Company.
5. On April 23, 1996 the Board of Directors declared a quarterly cash
dividend of $0.12 per share, payable June 14, 1996 to stockholders of record on
May 24, 1996.
6
<PAGE> 7
ALLERGAN, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
RESULTS OF OPERATIONS
- ---------------------
The following table compares 1996 and 1995 net sales by Product Line for the
first quarter periods:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
Net Sales by Product Line ($ millions): 1996 1995
------ ------
<S> <C>
Eye Care
Pharmaceuticals $ 98.0 $ 85.6
Surgical 40.5 40.1
Optical Lens Care 91.5 85.0
------ ------
230.0 210.7
Skin Care 13.8 7.5
Botox(R) 14.3 10.1
------ ------
Total Net Sales $258.1 $228.3
====== ======
</TABLE>
For the quarter ended March 31, 1996 total net sales increased by $29.8 million
or 13% to $258.1 million as compared to the first quarter of 1995. The impact
of foreign currency fluctuations for the three month period ended March 31,
1996 increased net sales by $2.2 million over the prior comparable period.
Sales growth excluding the impact of foreign exchange between the comparable
quarters was 12%. During 1995, Allergan acquired five businesses. Results in
the first quarter of 1996 include sales of Laboratorios Frumtost S.A.
(Frumtost), Herald Pharmacal, and the Pilkington Barnes Hind contact lens care
product line with no comparable 1995 amounts. Sales from such acquired
businesses account for 80% of the increase in sales in 1996.
For the three months ended March 31, 1996, Eye Care Pharmaceuticals sales
increased 14% from the comparable 1995 period. Sales in the United States
decreased $1.6 million in 1996 primarily as a result of decreases in net
realized prices of eye care products. Price decreases are primarily the result
of increased price discounting to managed care organizations which represent an
increasing portion of sales. Sales in international markets increased by $14.0
million in 1996 primarily as a result of $9.6 million in sales of Frumtost
products.
Surgical sales increased 1% in the first quarter of 1996 compared to the first
quarter of 1995. For the quarter, domestic sales decreased 17% while
international sales increased 19%. Declines in cataract surgeries due to
inclement weather in the United States, together with the initiation of a
limited, voluntary recall of certain AMO(R) PhacoFlex II(R) Model SI-30
intraocular lenses ("IOLs") impacted the first quarter 1996 operating results.
Physicians were advised that the recalled IOLs pose no safety or efficacy
issues. No adverse effects have been reported. The Company now anticipates,
after evaluating the continuing impact of the recall of SI-30 IOLs and the
adverse weather conditions, as well as other factors influencing the surgical
business, that the overall surgical sales volume for the year 1996 may be
essentially flat compared to 1995 surgical sales results. Actual results for
the surgical business for the year 1996 will
7
<PAGE> 8
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996 (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
depend upon the continuing impact of the recall of the SI-30 IOLs on the
Company's operations, as well as other factors affecting the surgical business
such as competitive conditions, including reactions to the recall, downward
pricing pressures on IOLs, the approval and performance of new products,
contributions from acquired businesses, and the results of geographic expansion
efforts. Sales in international markets increased primarily as a result of
increased market penetration in the sales of silicone IOLs, and
phacoemulsification equipment manufactured by Optical Micro Systems (OMS). OMS
was acquired in January 1995.
Optical Lens Care net sales of $91.5 million for the three months ended March
31, 1996 increased by 8% compared to the first quarter of 1995. Domestic sales
increased by 11% while international sales increased by 7%. Sales of Barnes
Hind products contributed $10.1 million to worldwide sales and accounted for
the increases in both domestic and international sales. The decrease in base
international sales, excluding Barnes Hind products, was primarily the result
of decreases in Europe due to new private label competition and the continuing
market shift from traditional peroxide systems to more convenient and lower
priced one-bottle disinfection systems.
Skin Care Pharmaceutical sales increased $6.3 million or 84% in the first
quarter of 1996. Sales of Herald Pharmacal products contributed $4.1 million
to this increase.
Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex sales increased
by 42% compared to 1995 to $14.3 million. The increase was the result of
strong growth in both the United States and international markets.
Allergan's gross margin percentage for the first quarter of 1996 was 66.8% of
net sales, which represents a 2.1 percentage point decrease from the 68.9% rate
for the first quarter of 1995. The gross margin percentage declined in the
first quarter of 1996 compared to 1995 primarily as a result of declines in
margins in the contact lens care product line. Such declines were due, in
part, to lower margins in the recently acquired Barnes Hind product line.
Declines in realized sales prices of eye care pharmaceutical products also
contributed to the decline in the gross margin percentage. Gross margin
increased over the first quarter of 1995 by $15.2 million or 10% as a result of
the 13% increase in net sales offset by the 2.1 percentage point decrease in
gross margin percentage.
Operating income was $31.3 million for the first quarter, an increase of $3.2
million or 11% from the prior comparable period. The increase was the result
of the $15.2 million increase in gross margin offset by a $10.8 million
increase in selling, general and administrative expense. The increase in
selling, general and administrative expense related primarily to acquisitions
in 1995. In addition, research and development expense increased by $1.2
million in 1996 compared to the first quarter of 1995.
8
<PAGE> 9
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996 (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
Net earnings increased by $1.4 million in the first quarter of 1996 to $23.1
million compared to $21.7 million for the first quarter of 1995. The increase
in operating income of $3.2 million was offset by a decrease in non-operating
income of $2.0 million compared to 1995. The decrease in non-operating income
was primarily the result of an increase in interest expense resulting from
increased debt incurred in connection with the acquisition of businesses in
1995. In addition, interest income decreased as a result of decreases in
average interest rates earned on invested funds.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of March 31, 1996, the Company had four long-term credit facilities and a
medium term note program. The credit facilities allow for borrowings of up to
$19.0 million through November 1996, and $253.5 million through 1999, and $47.5
million through 2003. The note program allows the Company to issue up to $200
million in notes. Subsequent to March 31, the Company increased one of the
four long-term credit facilities from $225 million to $250 million, and
extended the expiration date from 1999 to 2001. Borrowings under the credit
facilities are subject to certain financial and operating covenants, including
a requirement that the Company maintain certain financial ratios and other
customary covenants for credit facilities of similar kind. As of March 31,
1996, the Company had $82.9 million in borrowings under three of the credit
facilities and $85.0 million under the note program. As of March 31, 1996, the
Company has classified $78.4 million of its commercial paper borrowings and
$81.2 million borrowed under the credit facilities as a long-term debt based
upon the Company's ability to maintain such debt under terms of the credit
facilities described above. As of March 31, 1996, the Company had commercial
paper borrowings of $108.4 million.
The net cash provided by operating activities for the three months ended March
31, 1996 was $9.2 million compared with cash used by operating activities of
$29.0 million for the respective 1995 period. Operating cash flow in 1995 was
decreased as a result of significant reductions in accounts payable and income
taxes payable. Most of the Company's existing cash and equivalents are held by
its non-U.S. subsidiaries and will be reinvested in operations outside the
United States.
The Company invested $12.1 million in new facilities and equipment during the
three months ended March 31, 1996 compared to $10.0 million during the same
period in 1995. Investing activities in 1995 also included $14.6 million used
to prepay royalties and $18.3 million used for acquisitions of businesses.
Cash provided by financing activities was $7.9 million in the three months
ended March 31, 1996 compared to $42.6 million cash provided by financing
activities in 1995. The amounts are net of dividend outflows of $7.6 million
in 1996 and $7.0 million in 1995.
9
<PAGE> 10
Allergan, Inc.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of stockholders of the registrant was held on April
23, 1996 at which four directors, constituting all of the Class I directors,
were re-elected to serve on the Board of Directors for a three year term until
the annual meeting of stockholders to be held in 1999. The names of the
persons elected as directors are as follows:
Howard E. Greene, Jr.
Richard M. Haugen
Lester J. Kaplan
Leonard D. Schaeffer
The terms of the following directors continued after the meeting:
Class II (term expires in 1997)
-------------------------------
Herbert W. Boyer
Tamara J. Erickson
William R. Grant
Louis T. Rosso
William C. Shepherd
Class III (term expires in 1998)
--------------------------------
Handel E. Evans
Gavin S. Herbert
Leslie G. McCraw
Henry Wendt
Two other matters were voted on and approved, namely, amendment and
restatement of the Allergan, Inc. 1989 Incentive Compensation Plan and
amendment of the Allergan, Inc. 1989 Nonemployee Director Stock Plan.
A summary of the voting follows:
<TABLE>
<CAPTION>
Broker
Directors For Withheld Non-votes
- --------- ---------- -------- ---------
<S> <C> <C>
Howard E. Greene, Jr. 54,215,322 675,931
Richard M. Haugen 54,192,445 698,808
Lester J. Kaplan 54,178,706 712,547
Leonard D. Schaeffer 53,977,799 913,454
</TABLE>
10
<PAGE> 11
Allergan, Inc.
PART II - OTHER INFORMATION (Continued)
Item 4. Submission of Matters to a Vote of Security Holders. (Continued)
<TABLE>
<CAPTION>
Broker
Other Matters For Against Abstain Non-votes
- ------------- ---------- ---------- -------- ---------
<S> <C> <C> <C>
Amendment and Restatement 53,401,975 1,268,461 220,817 0
of the 1989 Incentive
Compensation Plan
Amendment to the 1989 44,066,752 10,079,743 744,758 0
Nonemployee Director
Stock Plan
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
- Exhibits
(numbered in accordance with Item 601 of Regulation S-K)
(10.1) Restated Allergan, Inc. Employee Stock Ownership Plan
(10.2) Restated Allergan, Inc. Savings and Investment Plan
(10.3) Restated Allergan, Inc. Pension Plan
(10.4) Allergan, Inc. 1989 Nonemployee Director Stock Plan
(10.5) Restated Allergan, Inc. Supplemental Retirement
Income Plan
(10.6) Restated Allergan, Inc. Supplemental Executive Benefit
Plan
(10.7) $250,000,000 Credit Agreement dated as of December 22,
1993 and amended and restated as of May 10, 1996 among
Allergan, Inc., as Borrower and Guarantor, the Eligible
Subsidiaries Referred to Therein, the Banks Listed
Therein, Morgan Guaranty Trust Company of New York, as
Agent and Bank of America National Trust and Savings
Association, as Co-Agent
(11) Statement re Computation of Per Share Earnings
(27) Financial Data Schedule
- Reports on Form 8-K. None.
11
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 13, 1996 ALLERGAN, INC.
----------------
/s/ A. J. Moyer
--------------------------------------
A. J. Moyer
Corporate Vice President and
Chief Financial Officer
12
<PAGE> 1
EXHIBIT 10.1
ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
RESTATED
1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Name, Effective Date and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Name and Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Participation after Reemployment . . . . . . . . . . . . . . . . . . . . 14
3.3 Duration of Participation . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Participation After Normal Retirement Age . . . . . . . . . . . . . . . . 14
ARTICLE IV
Contributions and Allocation to Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Contributions to the Trust Fund . . . . . . . . . . . . . . . . . . . . . 15
4.2 Allocation of Contributions to Trust Fund . . . . . . . . . . . . . . . . 15
4.3 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 17
4.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Employee Contributions and Rollovers . . . . . . . . . . . . . . . . . . 17
ARTICLE V
Vesting and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 No Vested Rights Except as Herein Specified . . . . . . . . . . . . . . . 18
5.2 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Severance When Less Than Fully Vested . . . . . . . . . . . . . . . . . . 18
5.4 Distribution To a Fully Vested Participant . . . . . . . . . . . . . . . 19
5.5 Distribution upon Death . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Distribution upon Disability . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Put Option for Company Stock Allocated to ESOP Accounts . . . . . . . . . 23
5.11 Diversification Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13 Lapsed Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
Trust Fund and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Single Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Investment of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 Certain Offers for Company Stock . . . . . . . . . . . . . . . . . . . . 30
6.5 Securities Law Limitation . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Accounting and Valuations . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Reserved for Future Modification . . . . . . . . . . . . . . . . . . . . 36
6.9 Non-Diversion of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.10 Company, Committee and Trustee Not Responsible
for Adequacy of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 37
6.11 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.13 Trustee Records to be Maintained . . . . . . . . . . . . . . . . . . . . 38
6.14 Annual Report of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 38
6.15 Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
Operation and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Appointment of Committee . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Transaction of Business . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.3 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Responsibility of Committee . . . . . . . . . . . . . . . . . . . . . . . 40
7.5 Committee Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 Additional Powers of Committee . . . . . . . . . . . . . . . . . . . . . 42
7.7 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 42
7.8 Application for Determination of Benefits . . . . . . . . . . . . . . . . 42
7.9 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . 44
7.11 Compensation of Committee and Plan Expenses . . . . . . . . . . . . . . . 44
7.12 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.13 Voting of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.14 Reliance Upon Documents and Opinions . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
Amendment and Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Right to Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 Adoption of Plan by Affiliated Companies . . . . . . . . . . . . . . . . 47
ARTICLE IX
Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X
Termination and Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.1 Right to Terminate Plan . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.2 Effect on Trustee and Committee . . . . . . . . . . . . . . . . . . . . . 49
10.3 Merger Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.4 Effect of Reorganization, Transfer of Assets or
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XI
Limitation on Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.3 Other Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . 53
11.4 Defined Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.5 Adjustments for Excess Combined Plan Fraction and Excess Annual Additions 53
11.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.7 Treatment of 415 Suspense Account Upon Termination . . . . . . . . . . . 55
</TABLE>
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE XII
Top-Heavy Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.1 Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.3 Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
12.4 Minimum Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.5 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 59
12.6 Maximum Annual Addition . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.7 Minimum Vesting Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.8 Non-Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XIII
Restriction on Assignment or Other Alienation of Plan Benefits . . . . . . . . . . . . . . . . 61
13.1 General Restrictions Against Alienation . . . . . . . . . . . . . . . . . 61
13.2 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . 61
ARTICLE XIV
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.1 No Right of Employment Hereunder . . . . . . . . . . . . . . . . . . . . 65
14.2 Limitation on Company Liability . . . . . . . . . . . . . . . . . . . . . 65
14.3 Effect of Article Headings . . . . . . . . . . . . . . . . . . . . . . . 65
14.4 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.6 Withholding For Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.7 California Law Controlling . . . . . . . . . . . . . . . . . . . . . . . 65
14.8 Plan and Trust as One Instrument . . . . . . . . . . . . . . . . . . . . 65
14.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
iii
<PAGE> 5
THE ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ARTICLE I
Name, Effective Date and Purpose
1.1 Name and Effective Date. The Plan established and
adopted hereunder shall be known as the Allergan, Inc. Employee Stock Ownership
Plan (the "Plan"). On or about July 26, 1989, SmithKline Beckman distributed
the stock of Allergan, Inc. to its shareholders. (The date upon which such
distribution occurred shall hereinafter be referred to as the "Spin-off Date".)
The provisions of the trust maintained under this Plan for the purpose of
holding the Plan's assets (the "Trust") are set forth in a separate instrument
known as the Allergan, Inc. Employee Stock Ownership Plan Trust Agreement,
established as of the Effective Date of the Plan. The Plan is intended to be a
stock bonus plan qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), which also qualifies as an employee stock
ownership plan, as defined in Section 4975(e)(7) of the Code. The Trust is
intended to be a qualified trust under Section 501(a) of the Code. The
provisions of the Plan are intended to comply with the Tax Reform Act of 1986
and the Technical and Miscellaneous Revenue Act of 1988. This Plan document
incorporates certain amendments which were submitted to the Internal Revenue
Service (the "IRS") pursuant to the processing of an application for issuance
by the IRS of the favorable determination letter covering the Plan, dated
January 16, 1990.
1.2 Purpose. The purpose of this Plan is to offer
Participants a systematic program for accumulation of beneficial ownership
interests in Company Stock and to encourage and develop employee interest and
involvement in the Company. Through the beneficial ownership of Company Stock,
enhanced by means of possible debt financed acquisition of Company Stock,
Allergan, Inc. intends to provide Participants with a meaningful voice in
matters affecting both it and Participants as shareholders. In order to
accomplish these objectives, the Plan is expressly authorized and directed to
acquire and hold Company Stock as its primary investment. All assets acquired
under this Plan shall be administered, distributed, forfeited and otherwise
governed by the provisions of this Plan which is to be administered by the
Committee.
1.3 Capitalized Terms. All capitalized terms used in this
Plan shall have the meanings set forth in Article II hereof unless the context
clearly indicates otherwise.
<PAGE> 6
ARTICLE II
Definitions
2.1 "Affiliated Company" shall mean (a) any corporation,
other than the Sponsor, which is included in a controlled group of corporations
(within the meaning of Section 414(b) of the Code) of which the Sponsor is a
member, (b) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Section 414(c) of the Code) with the
Sponsor, (c) any entity or organization, other than the Sponsor, which is a
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) of which the Sponsor is a member, and (d) any entity or organization,
other than the Sponsor, which is affiliated with the Sponsor under Section
414(o) of the Code. Any entity shall be an Affiliated Company pursuant to this
Paragraph only during the period of time in which such entity has the required
relationship with the Sponsor under Subparagraphs (a), (b), (c) or (d) of this
Paragraph.
2.2 "Beneficiary" shall mean the person, or estate of a
deceased Participant, entitled to benefits hereunder upon the death of a
Participant.
2.3 "Board of Directors" shall mean the Board of Directors
of the Sponsor as it may from time to time be constituted.
2.4 "Break in Service" shall mean, with respect to an
Employee, each period of 12 consecutive months during a Period of Severance
that commences on the Employee's Severance Date or on any anniversary of such
Severance Date.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended. Where the context so requires, a reference to a particular Code
Section shall also refer to any successor provision of the Code to such Code
Section.
2.6 "Committee" or "Plan Committee" shall mean the
committee to be appointed under the provisions of Section 7.1.
2.7 "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts this Plan in accordance with Section 8.2.
2.8 "Company Stock" shall mean any class of stock of the
Sponsor which both constitutes "qualifying employer securities" as defined in
Section 407(d)(5) of ERISA and "employer securities" as defined in Section
409(1) of the Code.
2.9 "Compensation" shall mean the amounts paid during a
Plan Year to an Employee by the Company for services rendered, including base
earnings, commissions and similar incentive compensation, cost of living
allowances earned within the United States of America, holiday pay, overtime
earnings, pay received for election board duty, pay received for jury and
witness duty, pay received for military service (annual training), pay received
for being available for work, if required (call-in premium), amounts of salary
reduction elected by the Participant under a Code Section 401(k) cash or
deferred arrangement, shift differential and premium, sickness/accident related
pay, vacation pay, vacation shift premium, and bonus amounts paid under the
following programs:
(1) Sales bonus,
(2) "Management Bonus Payments" (MBP), either in cash or in
restricted stock,
2
<PAGE> 7
(3) Group performance sharing payments, such as the
"Partners for Success", and "Profit Sharing" for the Humphrey
operations;
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of
living adjustments and differentials paid for service outside of the United
States, expatriate reimbursement payments, and tax equalization payments; forms
of imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance
pay; Share Value Plan or other long-term incentive awards, bonuses or payments;
special individual recognition payments which are nonrecurring in nature,
including the "Impact Award" payments, and "Employee of the Year" payments;
tuition reimbursement; and contributions by the Company under this Plan or
distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Section 401(a) of the
Code (other than contributions constituting salary reduction amounts elected by
the Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees.. The
Compensation taken into account for determining all benefits provided under the
Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in
such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the
foregoing, for Plan Years beginning prior to January 1, 1994, the Compensation
taken into account for determining all benefits provided under the Plan for any
Plan Year shall not exceed $200,000 as adjusted by the Secretary of the
Treasury and consistent with the terms of the Plan at such time. If the period
for determining Compensation used in calculating an Employee's allocation for a
Plan Year is a short Plan Year (i.e. shorter than 12 months), the Compensation
limit is an amount equal to the otherwise applicable Compensation limit
multiplied by a fraction, the numerator of which is the number of months in the
short Plan Year, and the denominator of which is 12. Solely for the purpose of
determining the limitations of Code Section 401(a)(17) on the Compensation of
an Employee, the rules of Code Section 414(q)(6) shall apply, except that in
applying such rules, the term "family" shall include only the spouse of the
Employee and any lineal descendants of the Employee who have not attained age
19 before the end of the Plan Year. If, as the result of the application of
such rules the adjusted $200,000 limitation is exceeded, then the limitation
shall be prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this Section prior to the
application of this limitation. Notwithstanding the foregoing, for purposes of
applying the provisions of Articles XI and XII, an Employee's Compensation
shall be determined pursuant to the definition of "Compensation" as set forth
in Sections 11.6 or 12.2(i), as the case may be.
2.9A Computation Period
(a) "Computation Period" shall mean the consecutive twelve
(12) month period used for determining whether an Employee is eligible
to participate in the Plan pursuant to Section 3.1.
(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his Employment Commencement Date or
Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all
subsequent Computation Periods) shall be the Plan Year that includes or
begins on the first anniversary of such Employee's Employment
Commencement Date or Reemployment Commencement Date (whichever is
applicable) and each subsequent Plan Year.
3
<PAGE> 8
2.10 "Credited Service" shall mean, with respect to each
Employee, his years and months of Credited Service determined in accordance
with the following rules:
(a) In the case of any Employee who was employed by the
Company on the Effective Date, for the period prior to such Effective
Date such Employee shall be credited with Credited Service under this
Plan equal to the period (if any) of uninterrupted employment of such
Employee with the Company up to and including the day before the
Effective Date. For purposes of this Paragraph (a), such a period of
pre-Effective Date employment shall not be deemed to have been
interrupted by reason of (i) any break in or interruption of employment
which continued for less than one year, or (ii) any Leave of Absence
granted to such Employee under applicable Company policies regarding
Leaves of Absence.
(b) On and after the Effective Date, an Employee shall
receive Credited Service credit for the elapsed period of time between
each Employment Commencement Date (or Reemployment Commencement Date) of
the Employee and the Severance Date which immediately follows that
Employment Commencement Date (or Reemployment Commencement Date).
Solely for the purpose of determining an Employee's Credited Service
under this Paragraph (b), in the case of an Employee who is employed on
the Effective Date, that date shall be deemed to be an Employment
Commencement Date of the Employee (with service credit for periods prior
to the Effective Date to be determined under Paragraph (a) above). An
Employee who is absent from work on an authorized Leave of Absence shall
be deemed to have incurred a Severance (if any) in accordance with the
rules of Section 2.34.
(c) An Employee shall receive Credited Service credit for
periods between a Severance and his subsequent Reemployment Commencement
Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a
quit, discharge or retirement (other than such a Severance
occurring during an approved Leave of Absence, which situation
is covered under the provisions of Subparagraph (ii) below), and
the Employee is later reemployed by the Company prior to his
incurring a Break in Service, he shall receive Credited Service
for the period commencing with his Severance Date and ending
with his subsequent Reemployment Commencement Date.
(ii) If an Employee is on an approved Leave of Absence
and then incurs a Severance by reason of a quit, discharge or
retirement during the Leave of Absence, or a failure to return
to work as scheduled following such Leave, and such Employee is
later reemployed by the Company within 12 months of the date on
which he discontinued active employment and commenced such
Leave, he shall receive Credited Service for the period
commencing with his Severance Date and ending with his
subsequent Reemployment Commencement Date. For such purposes an
Employee shall be deemed to have incurred a Severance (if any)
in accordance with the rules of Section 2.34.
(iii) Other than as expressly set forth above in this
Paragraph (c), an Employee shall receive no Credited Service
with respect to periods between a Severance and a subsequent
Reemployment Commencement Date.
(d) For all purposes of this Plan, an Employee's total
Credited Service shall be determined by aggregating any separate periods
of Credited Service separated by any Breaks in Service.
4
<PAGE> 9
(e) An Employee shall be credited with Credited Service
with respect to a period of employment with an Affiliated Company, but
only to the extent that such period of employment would be so credited
under the foregoing rules set forth in this Section had such Employee
been employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall
so provide by resolution of its Board of Directors, or unless otherwise
expressly stated in this Plan, an Employee shall not receive such
Credited Service credit for any period of employment with an Affiliated
Company prior to such entity becoming an Affiliated Company, except that
Employees of Allergan Optical, Inc., Allergan Humphrey, and Allergan
Medical Optics shall receive Credited Service credit for any period of
employment with such companies prior to the time such companies became
Affiliated Companies.
2.11 "Disability" shall mean any mental or physical condition
which, in the judgment of the Committee, based on such competent medical
evidence as the Committee may require, renders an individual unable to engage
in any substantial gainful activity for the Company for which he is reasonably
fitted by education, training, or experience and which condition can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of at least 12 months. The determination by the Committee,
upon opinion of a physician selected by the Committee, as to whether a
Participant has incurred a Disability shall be final and binding on all
persons.
2.12 "Effective Date" shall mean the date which is the day
after the Spin-off Date, as that term is defined in Section 1.1.
2.13 "Employee" shall mean any person who is employed by the
Sponsor or any Affiliated Company in any capacity, any portion of whose income
is subject to withholding of income tax and/or for whom Social Security
contributions are made by the Sponsor or any such Affiliated Company, as well
as any other person qualifying as a common-law employee of the Sponsor or any
such Affiliated Company.
"2.14 "Eligible Employee" shall mean any United States-based
payroll Employee of the company and any expatriate Employee of the company who
is a United States citizen or permanent resident, but excluding any Employee of
the company who is employed at the Sponsor's facility in Puerto Rico, any
non-resident alien, any non-regular manufacturing site transition Employee, any
independent contractor, any individual who must be treated as a leased employee
under Code Section 414(n), and any Employee covered by a collective bargaining
agreement. Notwithstanding the preceding sentence, for Plan Years beginning
prior to January 1, 1996, an Eligible Employee shall not include a temporary
employee classified as such by the Company."
2.15 "Eligible Retirement Plan" shall mean an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a) that
accepts an Eligible Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
2.16 "Eligible Rollover Distribution" shall mean any
distribution, on or after January 1, 1993, of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover Distribution
does not include:
5
<PAGE> 10
(a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or
the joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten
years or more;
(b) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and
(c) the portion of any distribution that is not includable
in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
For purposes of this Section, "Distributee" shall mean
any Employee or former Employee receiving a distribution from the Plan. A
Distributee also includes the Employee or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations Order (as defined in
Article XV) are Distributees with regard to the interest of the spouse or
former spouse.
2.17 "Employment Commencement Date" shall mean the date on
which an Employee first performs an Hour of Service in any capacity for the
Sponsor or any Affiliated Company. Unless the Sponsor shall expressly
determine otherwise, and except as is expressly provided otherwise in this Plan
or in resolutions of the Board of Directors, an Employee shall not, for the
purpose of determining his Employment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective date on
which such entity became an Affiliated Company.
2.18 "Entry Date" shall mean the first day of each calendar
quarter commencing each January 1, April 1, July 1, and October 1 of each Plan
Year.
2.19 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time. Where the context so
requires, a reference to a particular ERISA section shall also refer to any
successor provision of ERISA to such ERISA section.
2.20 "ESOP Account" shall mean, with respect to each
Participant, the account established and maintained for purposes of holding and
accounting for the Participant's allocated share of assets of the Plan,
including any subaccounts established thereunder from time to time (including
his Stock Subaccount and Non-Stock Subaccount established pursuant to Section
6.6 of this Plan).
2.21 "Exempt Loan" shall mean any loan to the Plan or Trust not
prohibited by Section 4975(c) of the Code, including a loan which meets the
requirements set forth in Section 4975(d)(3) of the Code and the Regulations
promulgated thereunder, the proceeds of which are used to finance the
acquisition of Company Stock or to refinance such a loan.
2.22 "Exempt Loan Suspense Subfund" shall mean the subfund
established under Section 4.1 hereof as part of the Trust Fund to hold Company
Stock purchased with the proceeds of an Exempt Loan pending the allocation of
such Company Stock to individual ESOP Accounts.
2.23 "Hour of Service".
(a) "Hour of Service" of an Employee shall mean the
following:
6
<PAGE> 11
(i) Each hour for which the Employee is paid by the
Company or an Affiliated Company or entitled to payment for the
performance of services as an Employee.
(ii) Each hour in or attributable to a period of
time during which the Employee performs no duties (irrespective
of whether he/she has terminated his/her Employment) due to a
vacation, holiday, illness, incapacity (including pregnancy or
disability), layoff, jury duty, military duty or a Leave of
Absence (if the Leave of Absence is an unpaid medical Leave of
Absence, the Employee will accrue hours for the duration of such
leave for the first six months of such leave), for which he/she
is so paid or so entitled to payment, whether direct or
indirect. However, no such hours shall be credited to an
Employee if (A) such Employee is directly or indirectly paid or
entitled to payment for such hours and (B) such payment or
entitlement is made or due under a plan maintained solely for
the purpose of complying with applicable worker's compensation,
unemployment compensation, or disability insurance laws, or is a
payment which solely reimburses the Employee for medical or
medically-related expenses incurred by him/her.
(iii) Each hour for which he/she is entitled to back
pay, irrespective of mitigation of damages, whether awarded or
agreed to by the Company or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of
Service with respect to such hour under Subparagraphs (i) or
(ii) above.
Hours of Service under Paragraphs (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R.
Section 2530.200b-2(b). All Hours of Service determined under the
rules of Paragraph (a) shall be credited to the Computation Period to
which the payment relates, rather than the period in which it is made.
(b) In the event that an Employee is compensated for duties
performed on a basis other than actual hours worked and no records of
the Employee's actual working hours are maintained, the Employee shall
be deemed to have completed ten (10) Hours of Service for each day, or
portion thereof during which he/she is credited with an Hour of Service
for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise,
and except as may be expressly provided otherwise in this Plan, an
Employee shall not receive credit for his/her Hours of Service completed
with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company.
2.24 "Investment Manager" shall mean the one or more
investment managers, if any, appointed pursuant to Section 6.15 and who
constitute investment managers under Section 3(38) of ERISA.
2.25 "Leased Employee" shall mean any person (other than an
Employee of the recipient) who pursuant to an agreement between the recipient
and any other person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in accordance
with Code Section 414(n)(6)) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed by
employees in the business field of the recipient employer. Contributions or
benefits provided a Leased Employee by the leasing organization which are
attributable to services performed for the recipient employer shall be treated
as provided by the recipient employer. A Leased Employee shall not be
considered an Employee of the recipient if:
7
<PAGE> 12
(a) Such employee is covered by a money purchase pension
plan providing: (i) a nonintegrated employer contribution rate of at
least ten (10) percent of compensation, as defined in Code Section
415(c)(3), but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the employee's gross income
under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or
Code Section 403(b); (ii) immediate participation; and (iii) full and
immediate vesting; and
(b) Leased Employees do not constitute more than 20 percent
(20%) of the recipient's non-highly compensated workforce.
2.26 "Leave of Absence".
(a) "Leave of Absence" shall mean any personal leave from
active employment (whether with or without pay) duly authorized by the
Company under the Company's standard personnel practices. All persons
under similar circumstances shall be treated alike in the granting of
such Leaves of Absence. Leaves of Absence may be granted by the Company
for reasons of health (including temporary sickness or short term
disability) or public service or for any other reason determined by the
Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in
Paragraph (a) above, the term Leave of Absence shall also mean a
Maternity or Paternity Leave, as defined herein, but only to the extent
and for the purposes required under Paragraph (c) below. As used
herein, "Maternity or Paternity Leave" shall mean an absence from work
for any period (i) by reason of the pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption
of the child by the Employee, or (iv) for purposes of caring for the
child for a period beginning immediately following the birth or
placement referred to in clauses (ii) or (iii) above.
(c) Subject to the provisions of Paragraph (d) below, a
Maternity or Paternity Leave described in Paragraph (b) above shall be
deemed to constitute an authorized Leave of Absence for purposes of this
Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in
Service has occurred, the Severance Date of a Participant who is
absent by reason of a Maternity or Paternity Leave shall not be
deemed to occur any earlier than the second anniversary of the
date upon which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated
as a Leave of Absence solely for purposes of determining whether
or not an Employee has incurred a Break in Service.
Accordingly, such a Maternity or Paternity Leave shall not
result in an accrual of Credited Service for purposes of the
vesting provisions of this Plan or for purposes of determining
eligibility to participate in the Plan pursuant to the
provisions of Article III (except only in determining whether a
Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be treated
as a Leave of Absence unless the Employee provides such timely
information as the Committee may reasonably require to establish
that the absence is for the reasons listed in Paragraph (b)
above and to determine the number of days for which there was
such an absence.
(d) Notwithstanding the limitations provided in Paragraph
(c) above, a Maternity or Paternity Leave described in Paragraph (b)
above shall be treated as an authorized Leave of
8
<PAGE> 13
Absence, as described in Paragraph (a), for all purposes of this Plan to
the extent the period of absence is one authorized as a Leave of Absence
under the Company's standard personnel practices and thus is covered by
the provisions of Paragraph (a) above without reference to the
provisions of Paragraph (b) above, provided, however, that the special
rule provided under this Paragraph (d) shall not apply if it would
result in a Participant who is absent on a Maternity or Paternity Leave
being deemed to have incurred a Break in Service sooner than under the
rules set forth in Paragraph (c).
2.27 "Normal Retirement Age" shall mean an Employee's
sixty-fifth (65th) birthday.
2.28 "Participant" shall mean any Employee who has satisfied
the requirements of Article III for participation in this Plan, who has
commenced participation in the Plan as provided in said Article III, and who
retains rights under the Plan.
2.29 "Period of Severance" shall mean the period of time
commencing on an Employee's Severance Date and ending on the Employee's
subsequent Reemployment Commencement Date, if any.
2.30 Reserved for future modifications.
2.31 Reserved for future modifications.
2.32 "Plan" shall mean the Allergan, Inc. Employee Stock
Ownership Plan described herein and as amended from time to time.
2.33 "Plan Administrator" shall mean the administrator of the
Plan, within the meaning of Section 3(16)(A) of ERISA. The Plan Administrator
shall be Allergan, Inc.
2.34 "Plan Year" shall mean the period commencing on the
Effective Date and ending on December 31, 1989 and each subsequent calendar
year.
2.35 "Reemployment Commencement Date" shall mean, in the case
of an Employee who incurs a Severance and who is subsequently reemployed by the
Sponsor or an Affiliated Company, the first day following the Severance on
which the Employee is credited with an Hour of Service for the Sponsor or
Affiliated Company with respect to which he is compensated or entitled to
compensation by the Sponsor or Affiliated Company. Unless the Sponsor shall
expressly determine otherwise and except as is expressly provided otherwise in
this Plan, an Employee shall not, for the purpose of determining his
Reemployment Commencement Date, be deemed to have commenced employment with an
Affiliated Company prior to the effective date on which such entity becomes an
Affiliated Company.
2.36 "Severance" shall mean the termination of an Employee's
employment with the Sponsor or Affiliated Company by reason of such Employee's
quit, discharge, Disability, death, retirement, or otherwise. For purposes of
determining whether an Employee has incurred a Severance, the following rules
shall apply:
(a) An Employee shall not be deemed to have incurred a
Severance (i) because of his absence from employment with the Sponsor or
Affiliated Company by reason of any paid vacation or holiday period, or
(ii) by reason of any Leave of Absence, subject to the provisions of
Paragraph (b) below.
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<PAGE> 14
(b) For purposes of this Plan, an Employee shall be deemed
to have incurred a Severance on the earlier of (i) the date on which he
dies, resigns, is discharged, or otherwise terminates his employment
with the Sponsor or Affiliated Company; or (ii) the date on which he is
scheduled to return to work after the expiration of an approved Leave of
Absence, if he does not in fact return to work on the scheduled
expiration date of such Leave; or (iii) in the case of a Leave of
Absence for longer than one year, the first anniversary of the
commencement of such Leave, provided such Employee does not actually
return to work on or before said first anniversary date. In no event
shall an Employee's Severance be deemed to have occurred before the last
day on which such Employee performs any services for the Sponsor or
Affiliated Company in the capacity of an Employee with respect to which
he is compensated or entitled to compensation by the Sponsor or
Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a
Participant who is absent by reason of a Maternity or Paternity Leave,
the provisions of Section 2.26(c)-(d) shall apply for purposes of
determining whether such a Participant has incurred a Break in Service
by reason of such Leave.
2.37 "Severance Date" shall mean, in the case of any Employee
who incurs a Severance, the day on which such Employee is deemed to have
incurred said Severance as determined in accordance with the provisions of
Section 2.36, provided, however, that the special rule set forth under Section
2.26(c)-(d) shall apply with respect to determining whether a Participant on a
Maternity or Paternity Leave has incurred a Break in Service. In the case of
any Employee who incurs a Severance as provided under Section 2.36 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of
the effective date of the Severance event (e.g., the date of his death,
effective date of a resignation or discharge, etc.), and the subsequent payment
of the aforementioned type of post-Severance compensation shall not operate to
postpone the timing of the Severance Date for purposes of this Plan.
2.38 "Sponsor" shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.
2.39 "Trust" or "Trust Fund" shall mean the trust maintained
pursuant to the Trust Agreement and as described in Section 6.1 hereof, which
shall hold all cash and securities and all other assets of whatsoever nature
deposited with or acquired by the Trustee in its capacity as Trustee hereunder,
together with accumulated net earnings.
2.40 "Trust Agreement" shall mean the agreement between the
Trustee and the Sponsor pursuant to which the Trust is maintained.
2.41 "Trustee" shall mean the one or more trustees of the Trust
established pursuant to Section 6.1 hereof.
2.42 "Valuation Date" shall mean the last day of each Plan Year
and any other date which the Committee may designate from time to time.
2.43 "415 Suspense Account" shall mean the account (if any)
established and maintained in accordance with the provisions of Article XI for
the purpose of holding and accounting for allocations of excess Annual
Additions (as defined in Article XI).
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<PAGE> 15
ARTICLE III
Eligibility and Participation
3.1 Commencement of Participation. Every Eligible Employee
shall become a Participant on the Entry Date that is concurrent with or
immediately follows the later to occur of:
(a) The date such Eligible Employee performs an Hour of
Service as an Eligible Employee; or
(b) The date such Eligible Employee completes six (6) months
of Credited Service with a Sponsor or Affiliated Company as an Employee,
provided such Eligible Employee is an Eligible Employee as of such Entry
Date.
Notwithstanding the foregoing, any Employee who is an Eligible Employee
on the Effective Date and who has satisfied the requirements of
paragraphs (a) and (b), above, as of the Effective Date shall become a
Participant on the Effective Date.
3.2 Participation after Reemploymentt. Any Employee who is
not a Participant but who has completed the service requirement specified in
Section 3.1(b) shall, if he incurs a Severance and is subsequently reemployed
as an Eligible Employee, become a Participant as of his Reemployment
Commencement Date as an Eligible Employee. Any Employee who has not completed
the service requirement specified in Section 3.1(b) shall, if he incurs a
Severance and is subsequently reemployed, become a Participant on the date
determined under Section 3.1 above.
3.3 Duration of Participation. An Eligible Employee who
becomes a Participant shall remain an active Participant until he incurs a
Severance, at which time he shall become an inactive Participant until he
receives a distribution of his entire vested interest in his ESOP Account.
Once such a distribution is made, any Participant who incurs such a Severance
shall no longer be considered a Participant in this Plan. Any Participant who
(a) transfers out of employment with the Company but who remains an Employee of
an Affiliated Company that has not adopted this Plan pursuant to Section 8.2,
or (b) remains an Employee of the Company but is no longer an Eligible
Employee, shall become an inactive Participant. Any Compensation of an
Employee while an inactive Participant shall not be included as Compensation
for the purpose of allocations based on Compensation made pursuant to Article
IV.
3.4 Participation After Normal Retirement Age. An Eligible
Employee may become, or continue as, a Participant after reaching his Normal
Retirement Age in the same manner as an Eligible Employee who has not reached
his Normal Retirement Age.
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<PAGE> 16
ARTICLE IV
Contributions and Allocation to Accounts
4.1 Contributions to the Trust Fund. The Company may
contribute to the Trust Fund for each Plan Year an amount to be determined by
the Board of Directors solely in its discretion. Such amount shall be
contributed in cash or Company Stock and paid over to the Trustee for
allocation to the Trust Fund not later than the date prescribed for filing the
Sponsor's federal income tax return (including all extensions thereto) for its
fiscal year corresponding to such Plan Year. Contributions shall first be
applied, if necessary, to reinstate the ESOP Accounts of applicable reemployed
Participants who had previously forfeited their ESOP Accounts pursuant to
Section 5.3 of this Plan, but only after all forfeitures for the Plan Year have
been so applied pursuant to Section 4.4. Some or all of the remaining
contributions under this Section 4.1 may be applied to repay any principal
and/or interest outstanding on any Exempt Loan or to pay Plan expenses as
provided in Section 7.11. The determination of the extent to which such
contributions shall be used to repay such Exempt Loans or pay Plan expenses
shall be made at the sole discretion of the Committee. Company Stock acquired
by the Trust Fund through an Exempt Loan shall be added to and maintained in
the Exempt Loan Suspense Subfund and shall thereafter be released from the
Exempt Loan Suspense Subfund and allocated to Participants' ESOP Accounts as
provided in Section 4.2. Contributions in excess of amounts used for other
purposes described in this Section 4.1 shall be allocated to the ESOP Accounts
of Participants as provided in Section 4.2.
4.2 Allocation of Contributions to Trust Fund.
(a) As of a date not later than the last day of each Plan
Year, an allocation shall be made to the ESOP Account of each "Eligible
Participant" of such Participant's allocable share for such Plan Year of
(1) Company contributions of Company Stock contributed in kind to the
Trust Fund and (2) Company contributions in other than Company Stock,
which are not used for other purposes described in Section 4.1. For the
purposes of this Section 4.2, the term "Eligible Participant" shall
include all Participants who are Eligible Employees on the last day of
such Plan Year or who ceased to be Eligible Employees during such Plan
Year due to death, Disability, or retirement at or after age 55 (as such
retirement is determined under the Retirement Plan for Employees of
SmithKline Beckman Corporation or any successor qualified defined
benefit plan established by Allergan, Inc. when such plan is
established). Such allocations shall be made in the same proportion
that the Compensation for the Plan Year for such Eligible Participant
bears to the total Compensation of all Eligible Participants for such
Plan Year.
(b) Company Stock acquired for the Trust Fund through an
Exempt Loan shall be released from the Exempt Loan Suspense Subfund as
the Exempt Loan is repaid, in accordance with the provisions of this
Section 4.2(b).
(1) For each Plan Year until the Exempt Loan is fully repaid,
the number of shares of Company Stock released from the Exempt
Loan Suspense Subfund shall equal the number of unreleased
shares immediately before such release for the current Plan Year
multiplied by the "Release Fraction." As used herein, the
Release Fraction shall be a fraction, the numerator of which is
the amount of principal and interest paid on the Exempt Loan for
such current Plan Year, and the denominator of which is the sum
of the numerator plus the principal and interest to be paid on
such Exempt Loan for all future years during the duration of the
term of such Loan (determined without reference to any possible
extensions or renewals thereof). Notwithstanding the foregoing,
in the event such Loan shall be repaid with the proceeds of a
subsequent
12
<PAGE> 17
Exempt Loan (the "Substitute Loan"), such repayment shall not
operate to release all such Company Stock in the Exempt Loan
Suspense Subfund, but, rather, such release shall be effected
pursuant to the foregoing provisions of this Section 4.2(b) on
the basis of payments of principal and interest on such
Substitute Loan.
(2) If the Committee so determines in its discretion, then in
lieu of applying the provisions of Section 4.2(b)(1) hereof with
respect to such Exempt Loan or Substitute Loan, shares shall be
released from the Exempt Loan Suspense Subfund as the principal
amount of an Exempt Loan is repaid (and without regard to
interest payments), provided the following three conditions are
satisfied:
(i) The Exempt Loan must provide for annual payments of
principal and interest at a cumulative rate that is not
less rapid at any time than level annual payments of
such amounts for ten years.
(ii) The interest portion of any payment is disregarded
only to the extent it would be treated as interest
under standard loan amortization tables.
(iii) If the Exempt Loan is renewed, extended or refinanced,
the sum of the expired duration of the Exempt Loan and
the renewal, extension or new Exempt Loan period must
not exceed ten years.
(3) It is intended that the provisions of this Section 4.2(b)
shall be applied and construed in a manner consistent with the
requirements and provisions of Treasury Regulation Section
54.4975-7(b)(8), and any successor Regulation thereto. All
Company Stock released from the Exempt Loan Suspense Subfund
during any Plan Year shall be allocated among Participants as
prescribed by Section 4.2(c) hereof, except to the extent
provided in Section 6.7.
(c) Shares of Company Stock released from the Exempt Loan
Suspense Subfund for a Plan Year in accordance with Section 4.2(b)
hereof and Section 6.7(b)(1) shall be held in the Trust Fund on an
unallocated basis until allocated by the Committee as of not later than
the last day of that Plan Year. The allocation of such shares shall be
made among the ESOP Accounts of Eligible Participants (as that term is
defined in Section 4.2(a)). The number of shares allocable to each such
Eligible Participant's ESOP Account shall be the number of shares which
bears the same ratio to the total shares released for such Plan Year as
the Compensation for the Plan Year for such Eligible Participant bears
to the total Compensation of all Eligible Participants for such Plan
Year.
(d) Notwithstanding the foregoing allocation rules, if the
aggregate amount of contributions for a Plan Year allocated to ESOP
Accounts pursuant to Paragraphs (a) through (c) above of Participants
who are highly compensated employees (within the meaning of Code Section
414(q)) exceed one-third of the aggregate contributions made for such
Plan Year, amounts allocated to highly compensated employees in excess
of one-third of such aggregate contributions shall be reallocated to
other Eligible Participants (as that term is defined in Section 4.2(a))
who are not highly compensated employees in the same proportion that the
Compensation for such Plan Year of each such Eligible Participant bears
to the total Compensation of all such non-highly compensated Eligible
Participants for such Plan Year.
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<PAGE> 18
4.3 Reserved for Future Modifications.
4.4 Forfeitures. Any amount which is forfeited pursuant to
Section 5.3 or 5.13 during a Plan Year shall be segregated from other amounts
held under the Plan and shall first be used to reinstate the ESOP Accounts of
reemployed Participants (or Beneficiaries, if applicable) who had previously
forfeited such ESOP Accounts and who have a right to reinstatement of their
forfeited ESOP Accounts pursuant to Section 5.3 or 5.13. Should any
forfeitures then remain, they may next be used to pay Plan expenses as provided
under Section 7.11. Should any forfeitures then remain, they shall be
allocated as of the last day of the Plan Year to the ESOP Accounts of Eligible
Participants (as that term is defined in Section 4.2(a)) based on Compensation
in the same manner as allocations under Section 4.2(a) and (c).
4.5 Employee Contributions and Rollovers. No Employee
contributions are permitted under the Plan. No rollover contributions to the
Plan are permitted whether or not any such contributions would satisfy the
applicable requirements of Code Sections 402, 403, 408 or 409.
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<PAGE> 19
ARTICLE V
Vesting and Distributions
5.1 No Vested Rights Except as Herein Specified. No
Employee shall have any vested right or interest in any assets of the Trust,
except as provided in this Article V. Neither the making of any allocations
nor the credit to any ESOP Account of a Participant in the Trust shall vest in
any Participant any right, title, or interest in or to any assets of the Trust,
except as provided in this Article V.
5.2 Vesting.
(a) The interest of a Participant in amounts allocated to his
ESOP Account shall vest in accordance with the following schedule:
<TABLE>
<CAPTION>
Year of Credited Service Vested Percentage
------------------------ -----------------
<S> <C>
Less than 1 0%
1 but less than 2 20%
2 but less then 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
</TABLE>
(b) Notwithstanding the above, a Participant shall become
fully vested in his or her ESOP Account upon the occurrence of the
death, Disability, or attainment of age 62 of such Participant while an
Employee, or upon the occurrence of a Change in Control pursuant to
Section 10.4(b).
5.3 Severance When Less Than Fully Vested. A Participant
who incurs a Severance and who is not or does not become 100% vested pursuant
to Section 5.2, (i) shall receive a distribution of the vested portion of his
or her ESOP Account in a single lump sum payment or (ii) may elect to have an
Eligible Rollover Distribution paid directly by the Trustee to the trustee of
an Eligible Retirement Plan in the form prescribed by Section 5.7 hereof, as
soon as practicable following the Participant's Severance Date, but in no event
later than the last day of the Plan Year following the Plan Year in which the
Participant incurred the Severance. The non-vested portion of such
Participant's ESOP Account shall be forfeited in accordance with the following
rules:
(a) In the event that a distribution of the entire vested
portion of such a Participant's ESOP Account is made pursuant to this
Section 5.3, the non-vested portion shall be forfeited as of such
Participant's Severance Date. In the event such Participant is rehired
by the Company prior to the date such Participant incurs five
consecutive Breaks in Service, the amount so forfeited shall be
reinstated to the Participant's ESOP Account as of the Participant's
Reemployment Commencement Date (without regard to any interest or
investment earnings on such amount). For the purpose of this Paragraph
(a), a Participant with no vested portion of his ESOP Account shall be
deemed to have received a distribution pursuant to this Paragraph (a).
(b) In the event such a Participant who incurs a Severance
does not receive a distribution of the entire vested portion of his ESOP
Account, such Participant's ESOP Account shall continue to be held by
the Trustee. Thereafter, when the Participant incurs five consecutive
Breaks in Service, the non-vested portion of such Participant's ESOP
Account shall be forfeited.
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<PAGE> 20
(c) At any relevant time after Severance pursuant to
paragraphs (a) and (b) above, the Participant's vested portion of his
ESOP Account shall be equal to an amount ("X") determined by the
following formula:
X = P*(AB + D) - D
For the purposes of applying the formula:
P = the vested percentage at any relevant time determined
pursuant to Section 5.2
AB = the ESOP Account balance at the relevant time
D = the total amount of any distributions from the ESOP Account
since such Severance
5.4 Distribution To a Fully Vested Participant. A
Participant who incurs a Severance on or after becoming 100% vested pursuant to
Section 5.2, shall receive a distribution of his ESOP Account, in a single
lump-sum payment in the form prescribed by Section 5.8 hereof, as soon as
practicable following the Participant's Severance Date, but in no event later
than the last day of the Plan Year following the Plan Year in which the
Participant incurred the Severance.
5.5 Distribution upon Death.
(a) Upon the death of a Participant while still an
Employee, the Committee shall give such directions as may be necessary
to cause a distribution of his ESOP Account to be made in a single
lump-sum payment to the Beneficiary designated by the deceased
Participant in the form prescribed in Section 5.8 hereof, as soon as
practicable following the Participant's death, but in no event later
than the last day of the Plan Year following the Plan Year in which the
Participant died.
(b) Upon the death of a Participant after he ceases to be
an Employee but before he receives his entire vested interest in the
Trust, the Committee shall give such directions as may be necessary to
cause a distribution, in the manner and time provided in Section 5.5(a)
hereof, of any vested balance remaining in the Participant's ESOP
Account to the Beneficiary designated by the Participant.
(c) The Committee may require the execution and delivery of
such documents, papers and receipts as the Committee may determine
necessary or appropriate in order to establish the fact of death of the
deceased Participant and of the right and identity of any Beneficiary or
other person or persons claiming any benefits under this Section 5.5.
5.6 Distribution upon Disability. In the event the
Committee shall determine that a Participant has suffered a Disability while an
Employee, the Committee shall proceed to cause a distribution to be made of
such Participant's ESOP Account in a single lump-sum payment in the form
prescribed in Section 5.8 hereof as soon as practicable following the
Committee's determination that the Participant has incurred a Disability, but
in no event later than the last day of the Plan Year following the Plan Year in
which the Committee makes such determination.
5.7 Designation of Beneficiary.
(a) At any time, and from time to time, each Participant
shall have the unrestricted right to designate the Beneficiary to
receive the portion of his death benefit and to revoke any such
designation. Each such designation shall be evidenced by a written
instrument signed by the Participant and filed with the Committee.
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<PAGE> 21
(b) If the Participant is married and designates a
Beneficiary other than his spouse, said designation shall not be honored
by the Committee unless accompanied by the written consent of said
spouse to said designation. Such consent (i) must designate a
Beneficiary which may not be changed without the consent of the spouse
(or the consent of the spouse expressly permits designation by the
Participant without any further consent by the spouse), (ii) must
acknowledge the effect of the designation, and (iii) must be witnessed
by a Plan representative or a notary public. No consent of such spouse
shall be necessary if it is established to the satisfaction of a Plan
representative that the consent required under this Paragraph (b) cannot
or need not be obtained because (i) there is no spouse, (ii) the spouse
cannot be located, or (iii) there exist such other circumstances which,
pursuant to Regulations under Code Section 417, permit a distribution to
another Beneficiary. Any consent of a spouse obtained pursuant to this
Paragraph (b) or any determination that the consent of the spouse cannot
(or need not) be obtained, shall be effective only with respect to that
spouse. If a Participant becomes married following his designation of a
Beneficiary other than his spouse, such designation shall be ineffective
unless the spousal consent requirements of this paragraph are satisfied
with respect to such spouse (subject, however, to the provisions of
Article XIII regarding Qualified Domestic Relations Orders).
(c) If the Participant is married and does not designate a
Beneficiary, the Participant's spouse shall be his Beneficiary for
purposes of this Section. If the deceased Participant is not married
and shall have failed to designate a Beneficiary, or if the Committee
shall be unable to locate the designated Beneficiary after reasonable
efforts have been made, or if such Beneficiary shall be deceased,
distribution of the Participant's death benefit shall be made by payment
of the deceased Participant's entire interest in the Trust to his
personal representative in a single lump-sum payment. In the event the
deceased Participant is not a resident of California at the date of his
death, the Committee, in its discretion, may require the establishment
of ancillary administration in California. If the Committee cannot
locate a qualified personal representative of the deceased Participant,
or if administration of the deceased Participant's estate is not
otherwise required, the Committee, in its discretion, may pay the
deceased Participant's interest in the Trust to his heirs at law
(determined in accordance with the laws of the State of California as
they existed at the date of the Participant's death).
5.8 Form of Distribution.
(a) All shares of Company Stock allocated to a
Participant's ESOP Account shall be distributed in the form of cash or
other property, unless the Participant elects under Paragraph (b) below
to receive the distribution in the form of Company Stock with cash in
lieu of fractional shares. To the extent that Company Stock must be
valued to effect such a distribution, such valuation shall be equal to
the fair market value of such stock determined as of the last Valuation
Date prior to the date of distribution.
(b) A Participant may elect that all shares of Company
Stock allocated to his ESOP Account be distributed in the form of
Company Stock with cash in lieu of fractional shares. Any cash or other
property in a Participant's ESOP Account ("non-stock assets") shall be
used to acquire Company Stock for distribution only if such Participant
further elects and only if such stock is available on the open market.
If such Participant elects to receive the non-stock assets in his ESOP
Account in Company Stock and such stock is available on the open market,
the value of such non-stock assets shall be used to acquire such whole
shares of Company Stock as may be acquired with such value and any
remaining amount shall be distributed in cash. Notwithstanding the
foregoing, if applicable corporate charter or bylaw provisions restrict
ownership of substantially all outstanding Company Stock to Employees or
to a plan or trust described in Section 401(a) of the Code, then any
distribution of a Participant's ESOP Account shall only be in cash.
17
<PAGE> 22
(c) Notwithstanding the foregoing, a Participant who
elected to diversify the investment of a portion of his ESOP Account
pursuant to Section 5.11(d)(2) or (3) shall not have the right to
receive such diversified portion in Company Stock, but, rather, shall
receive any distribution of such diversified portion in cash.
5.9 Distribution Rules. Notwithstanding the provisions of
Sections 5.3, 5.4, 5.5, 5.6, and 5.8 of the Plan regarding distributions of
Participants' ESOP Accounts, the following additional rules shall apply to all
such distributions.
(a) In no event shall any benefits under this Plan,
including benefits upon retirement, termination of employment, or
Disability, be paid to a Participant prior to the "Consent Date" (as
defined herein) unless the Participant consents in writing to the
payment of such benefits prior to said Consent Date. As used herein,
the term "Consent Date" shall mean the later of (1) the Participant's
62nd birthday, or (2) the Participant's Normal Retirement Age.
Notwithstanding the foregoing, the provisions of this Paragraph shall
not apply (1) following the Participant's death, or (2) with respect to
a lump-sum distribution of the vested portion of a Participant's ESOP
Account if the total amount of such vested portion does not exceed or
has never exceeded $3,500.
(b) Unless the Participant elects otherwise pursuant to
Paragraph (a) above, distributions of the vested portion of a
Participant's ESOP Accounts shall commence no later than the 60th day
after the close of the Plan Year in which the latest of the following
events occurs: (1) the Participant's Normal Retirement Age; (2) the
tenth anniversary of the year in which the Participant commenced
participation in the Plan; or (3) the Participant's Severance.
(c) All distributions under this Plan shall be made in
accordance with the minimum distribution incidental benefit requirements
of Code Section 401(a)(9)(G) and in accordance with all regulations
issued under Code Section 401(a)(9). Accordingly, distributions of the
entire vested portion of a Participant's ESOP Accounts shall be made no
later than April 1 of the calendar year following the calendar year in
which the Participant attains age 70-1/2; provided, however, if the
Participant attains age 70-1/2 before January 1, 1988 and the
Participant was not a Five Percent Owner (as defined in Section 416(i)
of the Code) at any time during the Plan Year ending with or within the
calendar year in which such Participant attains age 66-1/2 or any
subsequent Plan Year, then the date required under this Paragraph (c)
shall be April 1 of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70-1/2 or (ii) the
calendar year in which the Participant retires.
(d) If it is not administratively practical to calculate
and commence payments by the latest date specified in the rules of
Paragraphs (a), (b) and (c) above because the amount of the
Participant's benefit cannot be calculated, or because the Committee is
unable to locate the Participant after making reasonable efforts to do
so, the payment shall be made as soon as is administratively possible
(but not more than 60 days) after the Participant can be located and the
amount of the distributable benefit can be ascertained.
(e) If any payee under the Plan is a minor or if the
Committee reasonably believes that any payee is legally incapable of
giving a valid receipt and discharge for any payment due him, the
Committee may have such payment, or any part thereof, made to the person
(or persons or institution) whom it reasonably believes is caring for or
supporting such payee, or, if applicable, to any duly appointed guardian
or committee or other authorized representative of such payee. Any such
payment shall be a payment for the account of such payee and shall, to
the extent thereof, be a complete discharge of any liability under the
Plan to such payee.
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<PAGE> 23
5.10 Put Option for Company Stock Allocated to ESOP
Accounts.
(a) Solely in the event that a Participant receives a
distribution consisting in whole or in part of Company Stock that at the
time of distribution thereof is not readily tradable stock within the
meaning of Code Section 409(h) then such distributed Company Stock shall
be made subject to a put option in the hands of a Qualified Holder (as
defined hereinbelow), with such put option to be subject to the
following provisions:
(i) As used herein, the term "Qualified Holder" shall mean
the Participant or Beneficiary receiving the distribution of
such Company Stock, any other party to whom such stock is
transferred by gift or by reason of death, and also any trustee
of an Individual Retirement Account (as defined under Code
Section 408) to which all or any portion of such distributed
Company Stock is transferred pursuant to a tax-free "rollover"
transaction satisfying the requirements of Code Section 402.
(ii) During the sixty (60) day period following any
distribution of such Company Stock, a Qualified Holder shall
have the right to require the Company to purchase all or any
portion of said distributed Company Stock held by said Qualified
Holder. A Qualified Holder shall exercise such right by giving
written notice to the Company within the aforesaid sixty (60)
day period of the number of shares of distributed Company Stock
that such Qualified Holder intends to sell to the Company. The
purchase price to be paid for any such Company Stock shall be
its fair market value determined as of the Valuation Date
coincident with or immediately preceding the date of the
distribution.
(iii) If a Qualified Holder shall fail to exercise his put
option right under Subparagraph (ii) above, such option right
shall temporarily lapse upon the expiration of the sixty (60)
day period thereof. As soon as is reasonably practicable
following the last day of the Plan Year in which said sixty (60)
day option period expires, the Company shall notify each such
non-electing Qualified Holder who is then a shareholder of
record of the valuation of such Company Stock as of the most
recent Valuation Date. During the sixty (60) day period
following receipt of such valuation notice, any such Qualified
Holder shall have the right to require the Company to purchase
all or any portion of such distributed Company Stock. The
purchase price to be paid therefor shall be based on the
valuation of such Company Stock as of the Valuation Date
coinciding with or next preceding the exercise of the option
under this Section 5.10(c). If a Qualified Holder fails to
exercise his option right under this Subparagraph (iii) with
respect to any portion of such distributed Company Stock, no
further options shall be applicable under this Plan and the
Company shall have no further purchase obligations hereunder.
(iv) In the event that a Qualified Holder shall exercise a
put option under this Section, then the Company shall have the
option of paying the purchase price of the Company Stock which
is subject to such put option (hereafter the "Option Stock")
under either of the following methods:
(I) A lump sum payment of the purchase price within
ninety (90) days after the date upon which such put
option is exercised (the "Exercise Date") or
(II) A series of six equal installment payments, with
the first such payment to be made within thirty (30)
days after the Exercise Date and the five remaining
payments to be made on the five anniversary dates of
the Exercise Date, so that the
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full amount shall be paid as of the fifth anniversary
of such Exercise Date. If the Company elects to pay
the purchase price of the Option Stock under the
installment method provided in this Subparagraph (II),
then the Company shall, within thirty (30) days after
the Exercise Date, give the Qualified Holder who is
exercising the put option the Company's promissory note
for the full unpaid balance of the option price. Such
note shall, at a minimum, provide adequate security (if
required under applicable regulations), state a rate of
interest reasonable under the circumstances (but at
least equal to the imputed compound rate in effect as
of the Exercise Date pursuant to the Treasury
Regulations promulgated under Code Section 483 or 1274,
whichever shall be applicable) and provide that the
full amount of such note shall accelerate and become
due immediately in the event that the Company defaults
in the payment of a scheduled installment payment.
(v) The put options under Subparagraphs (ii)and (iii) above
shall be effective solely against the Company and shall not
obligate the Plan in any manner; provided, however, with the
Company's consent, the Plan may elect to purchase any Company
Stock that otherwise must be purchased by the Company pursuant
to a Qualified Holder's exercise of any such option.
(vi) If at the time of any distribution of said Company
Stock it is known that any applicable Federal or State law would
be violated by the Company's honoring of such a put option as
provided under this Section, the Company shall designate another
entity that will honor such put option. Such other entity shall
be one having a substantial net worth at the time such loan is
made and whose net worth is reasonably expected to remain
substantial.
(vii) In the event that a Qualified Holder is unable to
exercise the put option provided hereunder because the Company
(or other entity bound by such put option) is prohibited from
honoring it by reason of any applicable Federal or State law,
then the sixty (60) day option periods during which such put
option is exercisable under Subparagraphs (ii) and (iii) shall
not include any such time during which said put option may not
be exercised due to such reason.
(viii) Except as is expressly provided hereinabove with
respect to any distributed Company Stock that is readily
tradeable stock within the meaning of Code Section 409(h), no
Participant shall have any put option rights with respect to
Company Stock distributed under this Plan, and neither the
Company nor this Plan shall have any obligation whatsoever to
purchase any such distributed Company Stock from any Participant
or other Qualified Holder.
(ix) At the time of distribution of Company Stock that is
not readily tradable stock within the meaning of Code Section
409(h), to a Participant or Beneficiary, the Company shall
furnish to such Participant or Beneficiary the most recent
annual certificate of value prepared by the Company with respect
to such Stock. In addition, the Company shall furnish to such
Participant or Beneficiary a copy of each subsequent annual
certificate of value until the put options provided for in this
Section with respect to such distributed Company Stock shall
expire.
(b) Notwithstanding any other provisions of the Plan
regarding a Participant's right to exercise a put option, the put option
described in Paragraph (a) above shall be subject to the following
additional provisions:
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(i) If the distribution constitutes a Total
Distribution (as defined below), in the event that a Qualified
Holder exercises a put option under this Section, then the
Company shall have the right to pay the purchase price of the
Option Stock under either of the following methods:
(I) A lump sum payment of the purchase price within
thirty (30) days after the Exercise Date; or
(II) A series of five substantially equal annual
payments with the first such payment to be made within
thirty (30) days after the Exercise Date. If the
Company elects to pay the purchase price of the Option
Stock under the installment method provided in this
Subparagraph (II), then the Company shall, within 30
days after the Exercise Date, give the Qualified Holder
who is exercising the put option the Company's
promissory note for the full unpaid balance of the
option price. Such note shall, at a minimum, provide
adequate security, state a rate of interest reasonable
under the circumstances (but at least equal to the
imputed compound rate in effect as of the Exercise Date
pursuant to the Treasury Regulations promulgated under
Code Section 483 or 1274, whichever shall be
applicable) and provide that the full amount of such
note shall accelerate and become due immediately in the
event that the Company defaults in the payment of a
scheduled installment payment.
(ii) If the distribution does not constitute a Total
Distribution (as defined below), in the event that a Qualified
Holder exercises a put option under this Section, then the
Company shall pay the purchase price of the Option Stock in a
lump sum within thirty (30) days after the Exercise Date.
For purposes of this Section, "Total Distribution" shall mean a
distribution to a Participant (or his Beneficiary, if
applicable) within one taxable year of such recipient of the
entire balance to the credit of the Participant.
(c) The foregoing provisions of this Section shall be
interpreted and applied in accordance with all applicable requirements
of Code Section 409(h) and the regulations issued thereunder.
5.11 Diversification Rule.
(a) For the purpose of this Section 5.11 only, the following
definitions shall apply:
(1) "Qualified Participant" shall mean a Participant who has
attained age 55 and who has completed at least 10 years of
participation in the Plan.
(2) "Qualified Election Period" shall mean the six Plan Year
period beginning with the Plan Year in which the Participant
first becomes a Qualified Participant.
(3) "Insider" shall mean any Participant who is directly or
indirectly the beneficial owner of more than 10% of any class of
any equity security (other than an exempted security) of the
Sponsor (or the Company) which is registered pursuant to Section
12 of the Securities Exchange Act of 1934, or who is a
"director" or an "officer" of the sponsor or the Company as
those terms are interpreted under the Securities Exchange Act of
1934 for the purpose of determining persons subject to Section
16 of such Act.
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(b) Each Qualified Participant shall be permitted to direct
the Plan as to the diversification of 25 percent of the value of the
vested portion of the Participant's ESOP Account, in the manner provided
under Paragraph (d) below, within 90 days after the last day of each
Plan Year during the Participant's Qualified Election Period. Within 90
days after the close of the last Plan Year in the Participant's
Qualified Election Period, a Qualified Participant may direct the Plan
as to the diversification of 50 percent of the value of the vested
portion of such ESOP Account.
(c) The Participant's direction shall be provided to the
Committee in writing and shall specify which, if any, of the options set
forth in Section 5.11(d) the Participant selects.
(d) (1) At the election of the Qualified Participant, the Plan
shall distribute (notwithstanding section 409(d) of the Code)
the portion of the Participant's ESOP Account that is covered by
the election within 90 days after the last day of the period
during which the election can be made. Such distribution shall
be in such form as provided in Section 5.8. Such distribution
shall be subject to such requirements of the Plan concerning put
options as would otherwise apply to a distribution of Company
Stock from the plan. This Section 5.11(d) shall apply
notwithstanding any other provision of the Plan other than such
provisions as require the consent of the Participant and/or the
Participant's spouse to a distribution with a present value in
excess of $3,500. If the Participant and/or the Participant's
spouse do not consent, such amount shall be retained in this
Plan.
(2) In lieu of distribution under Section 5.11(d)(1), the
Qualified Participant who has the right to receive a
distribution under Section 5.11(d)(1) may so elect that the Plan
transfer the portion of the Participant's ESOP Account that is
distributable and that is covered by such election to another
qualified plan of the Company which accepts such transfers,
provided that such plan permits employee-directed investment and
does not invest in Company Stock to a substantial degree. Such
transfer shall be made no later than 90 days after the last day
of the period during which the election can be made.
(3) The Committee may establish at least three investment
options under this Plan for the purpose of diversification under
this Section 5.11. If the Committee establishes such investment
options, in lieu of distribution or transfer under Section
5.11(d)(1) or (2) above, the Qualified Participant who has a
right to receive a distribution under Section 5.11(d)(1) may so
elect that the Plan invest the portion of the Participant's ESOP
Account that is distributable in cash and that is covered by
such election in any of the investment options established by
the Committee. Such investment shall be made no later than 90
days after the last day of the period during which the election
can be made.
Notwithstanding the foregoing, a Qualified Participant who is an Insider
may only elect to diversify his ESOP Account by electing the options
provided by Subparagraph (2) or (3) above, if available, and may not
elect the method of distribution described in Subparagraph (1) above.
5.12 Withdrawals. After attaining age 59-1/2, a Participant
who is still an Employee may, following such reasonable advance notice as may
be required by the Committee, withdraw the entire vested amount credited to his
ESOP Account. Such a withdrawal shall be in the same form and using the same
valuation methods as provided for distributions pursuant to Section 5.8.
5.13 Lapsed Benefits.
(a) In the event that a benefit is payable under this Plan
to a Participant and after reasonable efforts the Participant cannot be
located for the purpose of paying the benefit during a
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period of three consecutive years, the Participant shall be presumed
dead and the benefit shall, upon the termination of that three year
period, be paid to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the
purpose of paying the benefit for the following two years, then the
benefit shall be forfeited and allocated to the ESOP Accounts of the
other Participants for such Plan Year in accordance with Section 4.4.
(c) If a Participant shall die prior to receiving a
distribution of his entire benefit under this Plan (other than a
Participant presumed to have died as provided above), if after
reasonable efforts an eligible Beneficiary of the Participant cannot be
located for the purpose of paying the benefit during a period of five
consecutive years, the benefit shall, upon expiration of such five-year
period, be forfeited and reallocated to the ESOP Accounts of the other
Participants in accordance with Section 4.4.
(d) For purposes of this Section, the term "Beneficiary"
shall include any person entitled under Section 5.7 to receive the
interest of a deceased Participant or deceased designated Beneficiary.
It is the intention of this provision that during the relevant waiting
period (two years or five years) the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 5.7 if
no eligible Beneficiary in a higher priority category can be located by
the Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a
forfeiture the Participant or an eligible Beneficiary shall claim the
forfeited benefit, the amount forfeited shall be reinstated (without
regard to any interest or investment earnings on such amount) and paid
to the claimant as soon as practical following the claimant's production
of reasonable proof of his or her identity and entitlement to the
benefit (determined pursuant to the Plan's normal claim review
procedures under Section 7.8).
(f) The Committee shall direct the Trustee with respect to
the procedures to be followed concerning a missing Participant (or
Beneficiary), and the Company shall be obligated to contribute to the
Trust Fund any amounts necessary after the application of Section 4.3 to
pay any reinstated benefit after it has been forfeited pursuant to the
provisions of this Section.
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ARTICLE VI
Trust Fund and Investments
6.1 General. All contributions made under the Plan and
investments made and property of any kind or character acquired with any such
funds or otherwise contributed, and all income, profits, and proceeds derived
therefrom, shall be held in Trust and shall be held and administered by the
Trustee in accordance with the provisions of the Plan and Trust Agreement.
6.2 Single Trust. Assets of the Trust shall be held in a
separate fund which shall consist of the Trust Fund. Individual Participant
interests in the Trust Fund shall be reflected in the ESOP Accounts maintained
for the Participants. Notwithstanding the foregoing, the Trust Fund shall be
treated as a single trust for purposes of investment and administration, and
nothing contained herein shall require a physical segregation of assets for any
fund or for any Account maintained under the Plan.
6.3 Investment of the Trust.
(a) Subject to Sections 6.4 and 5.11 hereof, the Trust Fund
shall be invested primarily in Company Stock and neither the Company nor
the Committee nor the Trustee shall have any responsibility or duty to
time any transaction involving Company Stock, in order to anticipate
market conditions or changes in stock value, nor shall any such person
have any responsibility or duty to sell Company Stock held in the Trust
Fund (or otherwise to provide investment management for Company Stock
held in the Trust Fund) in order to maximize return or minimize loss.
The Committee may direct the Trustee to have the Plan enter into one or
more Exempt Loans to finance the acquisition of Company Stock for the
Trust Fund. Company contributions in cash, and other cash received or
held by the Trustee, may be used to acquire shares of Company Stock from
the Company, Company shareholders, from the ESOP Accounts of
Participants about to receive distributions under the Plan, or on the
open market.
(b) Notwithstanding anything contained herein to the
contrary, proceeds of an Exempt Loan shall be used, within a reasonable
time after receipt by the Trust, only for the following purposes:
(1) to acquire Company Stock;
(2) to repay the same Exempt Loan; or
(3) to repay any previous Exempt Loan.
An Exempt Loan shall be repaid only from amounts loaned to the Trust and the
proceeds of such loans, from Company contributions in cash and earnings
attributable thereto, from any collateral given for the loan (including, in the
case where the Exempt Loan is a refinancing of a prior Exempt Loan, unallocated
Company Stock acquired with the proceeds of the prior Exempt Loan), and from
dividends paid on Company Stock acquired with proceeds of the Exempt Loan.
Except as provided in Section 5.10 or as otherwise required by applicable law,
no Company Stock acquired with the proceeds of an Exempt Loan may be subject to
a put, call, or other option or buy-sell or similar arrangement while held by
and when distributed from the Plan.
6.4 Certain Offers for Company Stock. Notwithstanding any
other provision of this Plan to the contrary, in the event an offer shall be
received by the Trustee (including but not limited to a tender offer or
exchange offer within the meaning of the Securities Exchange Act of 1934, as
from
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time to time amended and in effect) to acquire any or all shares of Company
Stock held by the Trust (an "Offer"), whether or not such stock is allocated to
Participants' ESOP Accounts, the discretion or authority to sell, exchange or
transfer any of such shares shall be determined in accordance with the
following rules:
(a) The Trustee shall have no discretion or authority to
sell, exchange or transfer any of such stock pursuant to such Offer
except to the extent, and only to the extent that the Trustee is timely
directed to do so in writing (i) with respect to any Company Stock held
by the Trustee subject to such Offer and allocated to the ESOP Account
of any Participant, by each Participant to whose ESOP Account any of
such shares are allocated and (ii) with respect to any Company Stock
held by the Trustee subject to such Offer and not allocated to the ESOP
Account of any Participant, by each Participant who is an Eligible
Employee with respect to a number of shares (including fractional
shares) of such unallocated Company Stock equal to the total number of
shares of such unallocated Company Stock multiplied by a fraction the
numerator of which is the annualized Compensation of such Participant
for the calendar year in which such Offer is made and the denominator of
which is the total annualized Compensation for the calendar year in
which such Offer is made of all such Participants who are Eligible
Employees.
Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of Paragraphs (c) and (m) of this Section,
sell, exchange or transfer pursuant to such Offer, only such shares as
to which such instructions were given. The Trustee shall use its best
efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee.
In the event, under the terms of an Offer or otherwise, any
shares of Company Stock tendered for sale, exchange or transfer pursuant
to such Offer may be withdrawn from such Offer, the Trustee shall follow
such instructions respecting the withdrawal of such securities from such
Offer in the same manner and the same proportion as shall be timely
received by the Trustee from the Participants entitled under this
Paragraph to give instructions as to the sale, exchange or transfer of
securities pursuant to such Offer.
(b) In the event that an Offer for fewer than all of the
shares of Company Stock held by the Trustee in the Trust shall be
received by the Trustee, each Participant shall be entitled to direct
the Trustee as to the acceptance or rejection of such Offer (as provided
by Paragraph (a) of this Section) with respect to the largest portion of
such Company Stock as may be possible given the total number or amount
of shares of Company Stock the Plan may sell, exchange or transfer
pursuant to the Offer based upon the instructions received by the
Trustee from all other Participants who shall timely instruct the
Trustee pursuant to this Paragraph to sell, exchange or transfer such
shares pursuant to such Offer, each on a pro rata basis in accordance
with the maximum number of shares each such Participant would have been
permitted to direct under Paragraph (a) had the Offer been for all
shares of Company Stock held in the trust.
(c) In the event an Offer shall be received by the Trustee
and instructions shall be solicited from Participants in the Plan
pursuant to Paragraph (a) of this Section regarding such Offer, and
prior to termination of such Offer, another Offer is received by the
Trustee for the securities subject to the first Offer, the Trustee shall
use its best efforts under the circumstances to solicit instructions
from the Participants to the Trustee (i) with respect to securities
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to withdraw such tender, if possible, and, if withdrawn, whether
to tender any securities so withdrawn for sale, exchange or transfer
pursuant to the second Offer and (ii) with respect to securities not
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to tender or not to tender such securities for sale, exchange or
transfer pursuant to the second Offer. The Trustee shall follow
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all such instructions received in a timely manner from Participants in
the same manner and in the same proportion as provided in Paragraph (a)
of this Section. With respect to any further Offer for any Company
Stock received by the Trustee and subject to any earlier Offer
(including successive Offers from one or more existing offers), the
Trustee shall act in the same manner as described above.
(d) With respect to any Offer received by the Trustee, the
Trustee shall distribute, at the Company's expense, copies of all
relevant material including but not limited to material filed with the
Securities and Exchange Commission with such Offer or regarding such
Offer, and shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to
Paragraph (a), (b), or (c). The identities of Participants, the amount
of Company Stock allocated to their ESOP Accounts, and the Compensation
of each Participant shall be determined from the list of Participants
delivered to the Trustee by the Committee which shall take all
reasonable steps necessary to provide the Trustee with the latest
possible information.
(e) The Trustee shall distribute and/or make available to
each Participant who is entitled to respond to an Offer pursuant to
Paragraph (a), (b), or (c) an instruction form to be used by each such
Participant who wishes to instruct the Trustee. The instruction form
shall state that (i) if the Participant fails to return an instruction
form to the Trustee by the indicated deadline, the Company Stock with
respect to which he is entitled to give instructions will not be sold,
exchanged or transferred pursuant to such Offer, (ii) the Participant
will be a named fiduciary (as described in Paragraph (j) below) with
respect to all shares for which he is entitled to give instructions, and
(iii) the Company acknowledges and agrees to honor the confidentiality
of the Participant's instructions to the Trustee.
(f) Each Participant may choose to instruct the Trustee in
one of the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he is entitled to give instructions,
or (ii) to sell, exchange or transfer all Company Stock for which he is
entitled to give instructions. The Trustee shall follow up with
additional mailings and postings of bulletins, as reasonable under the
time constraints then prevailing, to obtain instructions from
Participants not otherwise responding to such requests for instructions.
Subject to Paragraph (c), the Trustee shall then sell, exchange or
transfer shares according to instructions from Participants, except that
shares for which no instructions are received shall not be sold,
exchanged or transferred.
(g) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants
pursuant to Paragraphs (d), (e), and (f) of this Plan. The Trustee is
hereby authorized to sell, exchange or transfer pursuant to an Offer any
such Company Stock in accordance with appropriate instructions from such
former Participants.
(h) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant
concerning the Offer, nor shall they have any authority or
responsibility to do so. The Trustee has no duty to monitor or police
the party making the Offer; provided, however, that if the Trustee
becomes aware of activity which on its face reasonably appears to the
Trustee to be materially false, misleading, or coercive, the Trustee
shall demand promptly that the offending party take appropriate
corrective action. If the offending party fails or refuses to take
appropriate corrective action, the Trustee shall communicate with
affected Participants in such manner as it deems advisable.
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(i) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some but not all Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent
is retained, such agent must agree, as a condition of its retention by
the Company, not to disclose the composition of any Participant ESOP
Accounts to the Company, its officers, directors, employees, or
representatives. The Company acknowledges and agrees to honor the
confidentiality of Participants' instructions to the Trustee.
(j) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock allocated to his ESOP Account under the Plan and with respect to
his pro-rata portion of the unallocated Company Stock for which he is
entitled to issue instructions in accordance with Paragraph (a) of this
Section solely for purposes of exercising the rights of a shareholder
with respect to an Offer pursuant to this Section 6.4 and voting rights
pursuant to Section 7.13.
(k) Reserved for future plan modifications.
(l) To the extent that an Offer results in the sale of
Company Stock in the Trust and allocated to the ESOP Accounts of
Participants, the Committee shall instruct the Trustee as to the
investment of the proceeds of such sale. To the extent that an Offer
results in the sale of Company Stock in the Trust and not allocated to
the ESOP Accounts of any Participant, the proceeds from such sale shall
first be applied to repay the fullest extent possible, all Exempt Loans
then outstanding. To effect such repayment, the Trustee shall seek such
consents and approvals from lenders under any Exempt Loans as may be
necessary or convenient to permit the tender of shares of Company Stock
held in the Exempt Loan Suspense Subfund. To the extent that proceeds
from the sale of shares held in the Exempt Loan Suspense Subfund exceed
the outstanding principal and interest of all Exempt Loans, such excess
proceeds shall be allocated to each Participant's Non-Stock Subaccount
in the same manner as allocations under Section 4.2(a); provided,
however, that any Participant who is employed on the date of the closing
of the sale pursuant to the Offer shall be deemed an Eligible
Participant entitled to an allocation of excess sale proceeds for
purposes of this Section 6.4(l) only. To the extent that less than all
of the shares of Company Stock held in the Exempt Loan Suspense Subfund
are tendered in an Offer and repayment of an Exempt Loan results in a
release of shares of Company Stock from the Exempt Loan Suspense Subfund
in excess of those tendered in such Offer, the excess released shares of
Company Stock shall be allocated to each Participant's ESOP Account in
the same manner as allocations under Section 4.2(c); provided, however,
that any Participant who is employed on the date of the closing of the
sale pursuant to the Offer shall be deemed an Eligible Participant
entitled to an allocation of Company Stock for purposes of this Section
6.4(l) only. To the extent that allocations to Participants under this
Section 6.4(l) constitute Annual Additions, all such allocations shall
be subject to the limitations set forth in Article XI hereof. Any
allocations to which Participants would be entitled under this Section
6.4(l) but for the limitations of Article XI, shall be held in the 415
Suspense Account and allocated to Participants in accordance with
Article XI.
(m) In the event a court of competent jurisdiction shall
issue to the Plan, the Company or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to
be made as to whether or
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not Company Stock held by the Trustee shall be sold, exchanged or
transferred pursuant to an Offer or cause any such provision or
provisions to conflict with securities laws, then, upon notice thereof
to the Company or the Trustee, as the case may be, such invalid or
conflicting provisions of this Section shall be given no further force
or effect. In such circumstances the Trustee shall have no discretion
as to whether or not to Company Stock held in the Trust shall be sold,
exchanged, or transferred unless required under such order or opinion,
but shall follow instructions received from Participants, to the extent
such instructions have not been invalidated by such order or opinion.
To the extent required to exercise any residual fiduciary responsibility
with respect to such sale, exchange or transfer, the Trustee shall take
into account in exercising its fiduciary judgment, unless it is clearly
imprudent to do so, directions timely received from Participants, as
such directions are most indicative of what action is in the best
interests of Participants. Further, the Trustee, in addition to taking
into consideration any relevant financial factors bearing on any such
decision, shall take into consideration any relevant non-financial
factors, including, but not limited to, the continuing job security of
Participants as employees of the Sponsor or any Affiliated Company,
conditions of employment, employment opportunities and other similar
matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan (including any
subsequent release and allocation of Company Stock held in the Exempt
Loan Suspense Subfund).
6.5 Securities Law Limitation. Neither the Committee nor
the Trustee shall be required to engage in any transaction, including without
limitation, directing the purchase or sale of Company Stock, which either
determines in its sole discretion might tend to subject itself, its members,
the Plan, the Company, or any Participant or Beneficiary to a liability under
federal or state securities laws.
6.6 Accounting and Valuations.
(a) The following special accounting rules shall apply to
the Trust Fund.
(1) Each Participant's ESOP Account shall consist of a
portion comprised of cash and all other assets except for
Company Stock (the "Non-Stock Subaccount") and a portion
comprised solely of Company Stock (the "Stock Subaccount").
(2) Gains or losses on Non-Stock Subaccounts shall be
credited in accordance with this Section as if the Non-Stock
Subaccounts collectively constituted a separate pooled
investment fund.
(3) Stock Subaccounts shall be credited with a specific
number of shares of Company Stock rather than an individual
interest in a pool of Company Stock.
(b) Non-Stock Subaccounts may be invested in Company Stock
from time to time, and Company Stock so acquired shall be allocated
among Stock Subaccounts in proportion to the amount debited to the
corresponding Non-Stock Subaccounts.
(c) As of each Valuation Date each Participant's Non-Stock
Subaccount shall be credited (debited) with the "allocable share" of the
net income (loss) of the non-Company Stock portion of the Trust Fund
valued as of such Valuation Date in proportion to Non-Stock Subaccount
balances. For this purpose, except as provided in Section 6.7, the net
income (loss) of the Trust Fund shall not include any income with
respect to securities in the Exempt Loan Suspense Subfund acquired with
the proceeds of an Exempt Loan.
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(d) In making valuations required by this Plan, the Trustee
shall value all assets of the Trust at fair market value. Such fair
market value shall be determined from facts reasonably available to the
Trustee. In making said determination, the Trustee may, but need not,
select and rely upon the advice and opinions of appraisers, brokers,
investment counsel, or any other persons believed by the Trustee to be
competent. Any determination of value so made shall, for all purposes
of the Plan, conclusively establish such value.
(e) If Company Stock is readily tradeable stock (as that
term is used under Code Section 409(h)), valuation of each Participant's
Stock Subaccount shall, at any relevant times, be worth the fair market
value on that date of the shares of Company Stock credited to it.
Valuations of any Company Stock held by the Trust which is not readily
tradable stock shall be performed by an independent appraiser or
valuation consultant.
(f) The Committee shall establish accounting procedures for
the purpose of making the allocations, valuations and adjustments to
Participants' ESOP Accounts provided for in Article VI hereof. Such
accounting procedures shall include adequate records of the cost basis
of Company Stock allocated to ESOP Accounts and the identity of shares
acquired with the proceeds of an Exempt Loan. From time to time, the
Committee may modify its accounting procedures for the purpose of
achieving equitable and nondiscriminatory allocations among the ESOP
Accounts of Participants in accordance with the provisions of the Plan.
(g) In the event any rights, warrants, or options are
issued with respect to Company Stock held in Stock Subaccounts, the
Committee shall direct the Trustee as to whether such rights, warrants,
or options shall be exercised for such Subaccounts using cash as may be
available in corresponding Non-Stock Subaccounts. Company Stock so
acquired shall be credited to corresponding Stock Subaccounts in
proportion to the amount of cash withdrawn from the corresponding
Non-Stock Subaccounts. A Participant shall have no right to request,
direct, or demand that the Trust exercise on his or her behalf rights to
purchase Company Stock.
(h) The Participants and their Beneficiaries shall assume all
risks in connection with any decrease in the value of any assets
invested in the Trust Fund which are allocated to their ESOP Accounts.
6.7 Dividends.
(a) As determined by the Committee, dividends on shares of
Company Stock allocated to ESOP Accounts shall be either (i) applied to
repay an Exempt Loan then outstanding; (ii) paid directly to
Participants or Beneficiaries; or (iii) retained in the Trust and
treated as net income of the Trust. Any resulting allocation shall be
made according to the following rules:
(1) If cash dividends are used to repay an Exempt Loan, the
appropriate number of shares of Company Stock shall be released
from the Exempt Loan Suspense Subfund pursuant to Section
4.2(b). Notwithstanding the foregoing, if the fair market value
of the shares released pursuant to Section 4.2(b) from the
application of cash dividends to repay an Exempt Loan under this
Section 6.7(a)(1) is less than such cash dividends, additional
shares shall be released from the Exempt Loan Suspense Subfund
until the fair market value of such released shares equals the
amount of such cash dividends. Such Company Stock shall be
allocated to Participants' Stock Subaccounts in proportion to
the number of shares of Company Stock allocated to Participants'
Stock Subaccounts for which such cash dividend was paid.
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(2) If cash dividends are retained in the Trust and are not
used to pay expenses of the Plan, such dividends shall be
allocated as of the date specified by the Committee to Non-Stock
Subaccounts in proportion to the shares of Company Stock held in
corresponding Stock Subaccounts for which such dividends were
distributed to the Trust.
(3) If stock dividends are retained in the Trust and are
not used to pay expenses of the Plan, such dividends shall be
credited on the date specified by the Committee to Stock
Subaccounts in proportion to the shares of Company Stock held in
such Subaccounts for which such dividends were distributed to
the Trust.
(4) If cash or stock dividends are distributed directly to
Participants or Beneficiaries, such dividends shall be
distributed on the date specified by the Committee in proportion
to the shares of Company Stock held in such Participant's or
Beneficiary's Stock Subaccount for which such dividends were
distributed.
(b) As determined by the Committee, dividends on shares of
Company Stock held in the Exempt Loan Suspense Subfund or on shares of
Company Stock contributed to the Trust Fund but not yet allocated to
Participant's ESOP Accounts shall be either (i) applied to repay an
Exempt Loan then outstanding or (ii) retained in the Trust and treated
as net income of the Trust. Any resulting allocation shall be made
according to the following rules:
(1) If cash or stock dividends are used to repay an Exempt
Loan, the appropriate number of shares of Company Stock shall be
released from the Exempt Loan Suspense Subfund pursuant to
Section 4.2(b). Such Company Stock shall be allocated to
Participants Stock Subaccounts pursuant to Section 4.2(c).
(2) If cash or stock dividends are not used to repay an
Exempt Loan, they shall be considered income of the Trust and,
if not used to pay expenses of the Plan, shall be allocated to
Participants' ESOP Accounts in proportion to their respective
ESOP Account balances.
6.8 Reserved for Future Modification.
6.9 Non-Diversion of Trust Fund. Except as hereinafter
provided, all assets of the Trust shall be held by the Trustee for the
exclusive benefit of Plan Participants and Beneficiaries. At no time shall any
part of the Trust be used for or diverted to purposes other than for the
exclusive benefit of the Participants and Beneficiaries under the Plan except
as follows:
(a) In the case of a contribution which is made by a
mistake of fact, that contribution, at the Company's election, may be
returned to the Company within one year after it is made.
(b) All contributions to the Trust are hereby conditioned
upon the Plan satisfying all of the requirements of Code Section 401(a),
as evidenced by the issuance by the Internal Revenue Service of a
favorable determination letter with respect to the Plan. If the Plan
does not qualify, at the Company's written election, the Plan may be
revoked and any or all such contributions with respect to the portion
revoked may be returned to the Company within one year after the date of
the Internal Revenue Service's denial of the qualification of the Plan
or a portion thereof. Upon such a revocation, the affairs of the Plan
or the portion revoked shall be terminated and wound up as the Committee
shall direct.
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(c) Contributions to the Trust Fund are conditioned on
deductibility under Section 404 of the Code. In the event a deduction
is disallowed for any such contribution, then such contribution may be
returned to the Company within one year of the disallowance.
(d) The residue of the 415 Suspense Account that cannot be
allocated to Participants upon a Plan termination may revert to the
Company in accordance with the provisions of Section 11.7.
6.10 Company, Committee and Trustee Not Responsible for
Adequacy of Trust Fund. Neither any member of the Committee, any Trustee nor
the Company shall be liable or responsible for the adequacy of the Trust to
meet and discharge any or all payments and liabilities hereunder. All Plan
benefits will be paid only from the Trust assets, and neither any member of the
Committee, any Trustee, nor the Company shall have any duty or liability to
furnish the Trust with any funds, securities or other assets except as
expressly provided in the Plan. Except as required under the Plan or Trust or
under Part 4 of Subtitle B, Title I of ERISA, the Company shall not be
responsible for any decision, act, or omission of a Trustee or a member of the
Committee or any Investment Manager (if applicable), or responsible for the
application of any moneys, securities, investments, or other property paid or
delivered to the Trustee.
6.11 Distributions. Money and property of the Trust shall
be paid out, disbursed, or applied by the Trustee for the benefit of
Participants and Beneficiaries under the Plan in accordance with directions
received by the Trustee from the Committee. Upon direction of the Committee,
the Trustee may pay money or deliver property from the Trust for any purpose
authorized under the Plan. The Trustee shall be fully protected in paying out
money or delivering property from the Trust from time to time upon written
order of the Committee and shall not be liable for the application of such
money or property by the Committee.
The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.
6.12 Taxes. If the whole or any part of the Trust, or the
proceeds thereof, shall become liable for the payment of any estate,
inheritance, income or other tax, charge, or assessment which the Trustee shall
be required to pay, the Trustee shall have full power and authority to pay such
tax, charge, or assessment out of any moneys or other property in its hands for
the account of the person whose interests hereunder are so liable, but at least
ten (10) days prior to making any such payment, the Trustee shall mail notice
to the Committee of its intention to make such payment. Prior to making any
transfers or distributions of any of the Trust, the Trustee may require such
releases or other documents from any lawful taxing authority as it shall deem
necessary.
6.13 Trustee Records to be Maintained. The Trustee shall
keep accurate and detailed accounts of all investments, receipts,
disbursements, and other transactions hereunder, and all accounts, books, and
records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Company (subject to the
provisions of Section 6.4(i)).
6.14 Annual Report of Trustee. Promptly following the close
of each Plan Year (or such other period as may be agreed upon between the
Trustee and Committee), or promptly after receipt of a written request from the
Company, the Trustee shall prepare for the Company a written account which will
enable the Company to satisfy the annual financial reporting requirements of
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ERISA, and which will set forth among other things all investments, receipts,
disbursements, and other transactions effected by the Trustee during such Plan
Year or during the period from the close of the last Plan Year to the date of
such request. Such account shall also describe all securities and other
investments purchased and sold during the period to which it refers, the cost
of acquisition or net proceeds of sale, the securities and investments held as
of the date of such account, and the cost of each item thereof as carried on
the books of the Trustee. All accounts so filed shall be open to inspection
during business hours by the Company, the Committee, and by Participants and
Beneficiaries of the Plan (subject to the provisions of Section 6.4(i)).
6.15 Appointment of Investment Manager. From time to time
the Committee, in accordance with Section 7.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over
assets of the Trust not invested or to be invested in Company Stock. The
Committee shall notify the Trustee of such assets of the appointment of the
Investment Manager. In the event more than one Investment Manager is
appointed, the Committee shall determine which assets shall be subject to
management and control by each Investment Manager and shall also determine the
proportion in which funds withdrawn or disbursed shall be charged against the
assets subject to each Investment Manager's management and control. As shall
be provided in any contract between an Investment Manager and the Committee,
such Investment Manager shall hold a revocable proxy with respect to all
securities which are held under the management of such Investment Manager
pursuant to such contract (except for Company Stock), and such Investment
manager shall report the voting of all securities subject to such proxy on an
annual basis to the Committee.
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ARTICLE VII
Operation and Administration
7.1 Appointment of Committee. There is hereby created a
committee (the "Committee") which shall exercise such powers and have such
duties in administering the Plan as are hereinafter set forth. The Board of
Directors shall determine the number of members of such Committee. The members
of the Committee shall be appointed by the Board of Directors and such Board
shall from time to time fill all vacancies occurring in said Committee. The
members of the Committee shall constitute the Named Fiduciaries of the Plan
within the meaning of Section 402(a)(2) of ERISA; provided that solely for
purposes of Section 6.4 hereof, Participants shall be Named Fiduciaries with
respect to shares of Company Stock for which they have the right to sell,
transfer, or exchange pursuant to Section 6.4 and solely for purposes of
Section 7.13, Participants shall be Named Fiduciaries with respect to shares of
Company Stock on matters as to which they are entitled to provide voting
directions pursuant to Section 7.13.
7.2 Transaction of Business. A majority of the Committee
shall constitute a quorum for the transaction of business. Actions of the
Committee may be taken either by vote at a meeting or in writing without a
meeting. All action taken by the Committee at any meeting shall be by a vote
of the majority of those present at such meeting. All action taken in writing
without a meeting shall be by a vote of the majority of those responding in
writing. All notices, advices, directions and instructions to be transmitted
by the Committee shall be in writing and signed by or in the name of the
Committee. In all its communications with the Trustee, the Committee may, by
either of the majority actions specified above, authorize any one or more of
its members to execute any document or documents on behalf of the Committee, in
which event it shall notify the Trustee in writing of such action and the name
or names of its members so designated and the Trustee shall thereafter accept
and rely upon any documents executed by such member or members as representing
action by the Committee until the Committee shall file with the Trustee a
written revocation of such designation.
7.3 Voting. Any member of the Committee who is also a
Participant hereunder shall not be qualified to act or vote on any matter
relating solely to himself, and upon such matter his presence at a meeting
shall not be counted for the purpose of determining a quorum. If, at any time
a member of the Committee is not so qualified to act or vote, the qualified
members of the Committee shall be reduced below two (2), the Board of Directors
shall promptly appoint one or more special members to the Committee so that
there shall be at least one qualified member to act upon the matter in
question. Such special Committee members shall have power to act only upon the
matter for which they were especially appointed and their tenure shall cease as
soon as they have acted upon the matter for which they were especially
appointed.
7.4 Responsibility of Committee. The authority to control
and manage the operation and administration of the Plan, the general
administration of this Plan, the responsibility for carrying out this Plan and
the authority and responsibility to control and manage the assets of the Trust
are hereby delegated by the Board of Directors to and vested in the Committee,
except to the extent reserved to the Board of Directors, the Sponsor, or the
Company. Subject to the limitations of this Plan, the Committee shall, from
time to time, establish rules for the performance of its functions and the
administration of this Plan. In the performance of its functions, the
Committee shall not discriminate in favor of highly compensated employees (as
defined under Code Section 414(q)).
7.5 Committee Powers. The Committee shall have all
discretionary powers necessary to supervise the administration of the Plan and
control its operations. In addition to any discretionary powers and authority
conferred on the Committee elsewhere in the Plan or by law, the Committee shall
have, but not by way of limitation, the following discretionary powers and
authority:
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(a) To designate agents to carry out responsibilities
relating to the Plan, other than fiduciary responsibilities as provided
in Section 7.6.
(b) To employ such legal, actuarial, medical, accounting,
clerical, and other assistance as it may deem appropriate in carrying
out the provisions of this Plan, including one or more persons to render
advice with regard to any responsibility any Named Fiduciary or any
other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time
for the conduct of the Committee's business and the administration and
effectuation of this Plan.
(d) To administer, interpret, construe, and apply this Plan
and to decide all questions which may arise or which may be raised under
this Plan by any Employee, Participant, former Participant, Beneficiary
or other person whatsoever, including but not limited to all questions
relating to eligibility to participate in the Plan, the amount of
Credited Service of any Participant, and the amount of benefits to which
any Participant or his Beneficiary may be entitled.
(e) To determine the manner in which the assets of this
Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time,
to invest and reinvest the Trust Fund, or any part thereof, or to
purchase, exchange, or lease any property, real or personal, which the
Committee may designate. This shall include the right to direct the
investment of all or any part of the Trust in any one security or any
one type of securities permitted hereunder. Among the securities which
the Committee may direct the Trustee to purchase are "qualifying
employer securities" as defined in Internal Revenue Code Section 4975(e)
or any successor statutes thereto.
(g) Subject to provisions (a) through (d) of Section 8.1,
to make administrative amendments to the Plan that do not cause a
substantial increase or decrease in benefit accruals to Participants and
that do not cause a substantial increase in the cost of administering
the Plan.
(h) To perform or cause to be performed such further acts
as it may deem to be necessary, appropriate or convenient in the
efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary power conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary
powers conferred upon the Committee shall be absolute; provided, however, that
all such discretionary power shall be exercised in a uniform and
nondiscriminatory manner.
7.6 Additional Powers of Committee. In addition to any
discretionary powers or authority conferred on the Committee elsewhere in this
Plan or by law, such Committee shall have the following discretionary powers
and authority:
(a) To appoint one or more Investment Managers to manage
and control any or all of the assets of the Trust not invested or to be
invested in Company Stock.
(b) To designate persons (other than the members of the
Committee) to carry out fiduciary responsibilities, other than any
responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the
members of the Committee, other than any responsibility to manage or
control the assets of the Trust;
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(d) To cancel any such designation or allocation at any
time for any reason;
(e) To direct the voting of any Company Stock or any other
security held by the Trust subject to Section 7.13 hereof; and
(f) To exercise management and control over Plan assets and
to direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 7.6 shall be taken in writing, and
no designation or allocation under Subsection (a), (b) or (c) shall be
effective until accepted in writing by the indicated responsible person.
7.7 Reserved for Future Modifications.
7.8 Application for Determination of Benefits.
(a) The Committee may require any person claiming benefits
under the Plan to submit an application therefor on such forms and in
such manner as the Committee may prescribe, together with such documents
and information as the Committee may require. In the case of any person
suffering from a disability which prevents him from making personal
application for benefits, the Committee may, in its discretion, permit
another person acting on his behalf to submit the application.
(b) Within ninety (90) days following receipt of an
application and all necessary documents and information, the Committee
shall furnish the claimant with written notice of the decision rendered
with respect to the application. In the case of a denial of the
claimant's application, the written notice shall set forth:
(1) The specific reasons for the denial, with reference to
the Plan provisions upon which the denial is based;
(2) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(3) An explanation of the Plan's claim review procedure.
(c) A claimant who does not agree with the decision
rendered under Section 7.8(b) hereof with respect to his application may
appeal the decision to the Committee. The appeal shall be made in
writing within sixty-five (65) days after the date of notice of the
decision with respect to the application. If the application has
neither been approved nor denied within the ninety (90) day period
provided in Section 7.8(b) hereof, then the appeal shall be made within
sixty-five (65) days after the expiration of the ninety (90) day period.
In making his appeal, the claimant may request that his application be
given full and fair review by the Committee. The claimant may review
all pertinent documents and submit issues and comments in writing. The
decision of the Committee shall be made promptly, and not later than
sixty (60) days after the Committee's receipt of a request for review,
unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt
of a request for review. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by
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the claimant with specific references to the pertinent Plan provisions
upon which the decision is based.
7.9 Limitation on Liability. Each of the fiduciaries under
the Plan shall be solely responsible for its own acts and omissions and no
fiduciary shall be liable for any breach of fiduciary responsibility resulting
from the act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 7.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 6.15 hereof or as to which management and control has been retained by
the Trustee.
7.10 Indemnification and Insurance. To the extent permitted
by law, the Company shall indemnify and hold harmless the Committee and each
member thereof, each Trustee, the Board of Directors and each member thereof,
and such other persons as the Board of Directors may specify, from the effects
and consequences of his acts, omissions, and conduct in his official capacity
in connection with the Plan and Trust. To the extent permitted by law, the
Company may also purchase liability insurance for such persons.
7.11 Compensation of Committee and Plan Expenses. Members
of the Committee shall serve as such without compensation unless the Board of
Directors shall otherwise determine, but in no event shall any member of the
Committee who is an Employee receive compensation from the Plan for his
services as a member of the Committee. All members shall be reimbursed for any
necessary expenditures incurred in the discharge of duties as members of the
Committee. The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee or other persons retained or employed by the
Committee shall be fixed by the Committee, subject to approval by the Board of
Directors. The expenses incurred in the administration and operation of the
Plan, including but not limited to the expenses incurred by the members of the
Committee in exercising their duties, shall be paid by the Plan from the Trust
Fund, unless paid by the Company, provided, however, that the Plan and not the
Company shall bear the cost of interest and normal brokerage charges which are
included in the cost of securities purchased by the Trust Fund (or charged to
proceeds in the case of sales). If such expenses are to be paid by the Plan
from the Trust Fund, the Committee may direct the Trustee to use forfeitures
and dividends (and to sell the shares of Company Stock that represent such
forfeitures or dividends) to pay such expenses.
7.12 Resignation. Any member of the Committee may resign by
giving fifteen (15) days notice to the Board of Directors, and any member shall
resign forthwith upon receipt of the written request of the Board of Directors,
whether or not said member is at that time the only member of the Committee.
7.13 Voting of Company Stock. Notwithstanding any other
provision of the Plan to the contrary, the Trustee shall have no discretion or
authority to vote Company Stock held in the Trust on any matter presented for a
vote by the stockholders of the Company except in accordance with timely
directions received by the Trustee either from the Committee or from
Participants, depending on who has the right to direct the voting of such stock
as provided in the following provisions of this Section 7.13.
(a) (1) All Company Stock held in the Trust Fund shall be
voted by the Trustee as the Committee directs in its absolute
discretion, except as provided in this Section 7.13(a).
(2) If the Sponsor has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code), then
with respect to all corporate matters, (i) each Participant
shall be entitled to direct the Trustee as to the voting of all
Company Stock allocated and credited to his ESOP Account and
(ii) each Participant who is an Eligible Employee shall be
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entitled to direct the Trustee as to the voting of a portion of
all Company Stock not allocated to the ESOP Accounts of
Participants, with such portion equal to the total number of
shares of such unallocated stock multiplied by a fraction the
numerator of which is the number of shares of Company Stock
allocated and credited to his ESOP account and the denominator
of which is the total number of shares of Company Stock
allocated and credited to all ESOP Accounts of Participants.
(3) If the Sponsor does not have a registration-type
class of securities (as defined in Section 409(e)(4) of the
Code), then only with respect to such matters as the approval or
disapproval of any corporate merger or consolidation,
recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of trade or business, or such
similar transactions as may be prescribed in Treasury
Regulations, (i) each Participant shall be entitled to direct
the Trustee as to the voting of all Company Stock allocated and
credited to his ESOP Account and (ii) each Participant who is an
Eligible Employee shall be entitled to direct the Trustee as to
the voting of a portion of all Company Stock not allocated to
the ESOP Accounts of Participants, with such portion determined
in the same manner as under Paragraph (a)(2)(ii) above.
(b) All Participants entitled to direct such voting shall
be notified by the Sponsor, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Sponsor or any other party regarding the exercise of such
rights. Such Participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect
the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional interests in shares). The
Trustee shall maintain confidentiality with respect to the voting
directions of all Participants.
(c) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock for which he has the right to direct the voting under the Plan but
solely for the purpose of exercising voting rights pursuant to this
Section 7.13 or certain Offers pursuant to Section 6.4.
(d) In the event a court of competent jurisdiction shall
issue an opinion or order to the Plan, the Company or the Trustee, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate under ERISA, in all circumstances or in any particular
circumstances, any provision or provisions of this Section regarding the
manner in which Company stock held in the Trust shall be voted or cause
any such provision or provisions to conflict with ERISA, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall
nevertheless have no discretion to vote Company Stock held in the Trust
unless required under such order or opinion but shall follow
instructions received from Participants, to the extent such instructions
have not been invalidated. To the extent required to exercise any
residual fiduciary responsibility with respect to voting, the Trustee
shall take into account in exercising its fiduciary judgment, unless it
is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what is in the
best interests of Participants. Further, the Trustee, in addition to
taking into consideration any relevant financial factors bearing on any
such decision, shall take into consideration any relevant nonfinancial
factors, including, but not limited to, the continuing job security of
Participants as employees of the Company or any of its subsidiaries,
conditions of employment, employment opportunities and
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other similar matters, and the prospect of the Participants and
prospective Participants for future benefits under the Plan.
7.14 Reliance Upon Documents and Opinions. The members of
the Committee, the Board of Directors, the Company and any person delegated to
carry out any fiduciary responsibilities under the Plan (hereinafter a
"delegated fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or
any Investment Manager. The members of the Committee, the Board of Directors,
the Company and any delegated fiduciary shall be fully protected and shall not
be liable in any manner whatsoever for anything done or action taken or
suffered in reliance upon any such consultant, or firm or corporation which
employs one or more consultants, Trustee, Investment Manager, or counsel. Any
and all such things done or such action taken or suffered by the Committee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law. The Committee and any
delegated fiduciary may, but are not required to, rely upon all records of the
Company with respect to any matter or thing whatsoever, and may likewise treat
such records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided
by law.
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ARTICLE VIII
Amendment and Adoption of Plan
8.1 Right to Amend Plan. The Sponsor, by resolution of the
Board of Directors, shall have the right to amend this Plan and Trust Agreement
at any time and from time to time and in such manner and to such extent as it
may deem advisable, including retroactively, subject to the following
provisions:
(a) No amendment shall have the effect of reducing any
Participant's vested interest in the Plan or eliminating an optional
form of distribution.
(b) No amendment shall have the effect of diverting any
part of the assets of the Plan to persons or purposes other than the
exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the
duties or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of
officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the above
provisions (a) through (d), in accordance with the provisions of Section
7.5(g).
8.2 Adoption of Plan by Affiliated Companies. Subject to
approval by the Board of Directors, and consistent with the provisions of
ERISA, an Affiliated Company may adopt the Plan for all or any specified group
of its Eligible Employees by entering into an adoption agreement in the form
and substance prescribed by the Committee. The adoption agreement may include
such modification of the Plan provisions with respect to such Eligible
Employees as the Committee approves after having determined that no prohibited
discrimination or other threat to the qualification of the Plan is likely to
result. The Board of Directors may prospectively revoke or modify an
Affiliated Company's participation in the Plan at any time and for any or no
reason, without regard to the terms of the adoption agreement, or terminate the
Plan with respect to such Affiliated Company's Eligible Employees and
Participants. By execution of an adoption agreement (each of which by this
reference shall become part of the Plan), the Affiliated Company agrees to be
bound by all the terms and conditions of the Plan.
39
<PAGE> 44
ARTICLE IX
Discontinuance of Contributions
In the event the Company decides it is impossible or inadvisable
for business reasons to continue to make contributions under the Plan, it may,
by resolution of the Board of Directors, discontinue contributions to the Plan.
Upon the permanent discontinuance of contributions to the Plan and
notwithstanding any other provisions of the Plan, the rights of Participants
shall become fully vested and nonforfeitable unless replaced by a comparable
plan. The permanent discontinuance of contributions on the part of the Company
shall not terminate the Plan as to the funds and assets then held in the Trust,
or operate to accelerate any payments of distributions to or for the benefit of
Participants or Beneficiaries, and the Trust shall continue to be administered
in accordance with the provisions hereof until the obligations hereunder shall
have been discharged and satisfied. If, at the time of discontinuance, there
is any amount outstanding on an Exempt Loan, any amount remaining in the Exempt
Loan Suspense Subfund shall be disposed of as provided in any applicable loan
agreement.
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<PAGE> 45
ARTICLE X
Termination and Merger
10.1 Right to Terminate Plan. In the event the Board of
Directors decides it is impossible or inadvisable for business reasons to
continue the Plan, then it may, by resolution, terminate the Plan. Upon and
after the effective date of such termination, the Company shall not make any
further contributions under the Plan. Upon the termination or partial
termination of the Plan for any reason, the interest in the Trust of each
affected Participant shall automatically become fully vested unless the Plan is
continued after its termination by conversion of this Plan into a comparable
Plan through Plan amendment or through merger. If, at the time of termination,
there is any amount outstanding in an Exempt Loan, any amount remaining in the
Exempt Loan Suspense Subfund shall be disposed of in a manner that provides for
the repayment of amounts outstanding in any such Exempt Loan. After the
satisfaction of all outstanding liabilities of the Plan to persons other than
Participants and Beneficiaries, all unallocated assets shall be allocated to
the ESOP Accounts of Participants to the maximum extent permitted by law. The
Trust Fund may not be fully or finally liquidated until all assets are
allocated to ESOP Accounts; alternatively any unallocated assets may be
transferred to another defined contribution plan maintained by the Sponsor or
an Affiliated Company qualified under Section 401 of the Code where such assets
shall be allocated among the accounts of Participants herein who are
participants in such transferee plan. In no event, however, shall any part of
the Plan revert to or be recoverable by the Company, or be used for or diverted
to purposes other than for the exclusive benefit of the Participants or their
Beneficiaries. Notwithstanding the foregoing, amounts held in the 415 Suspense
Account may revert to the Company in accordance with Section 11.7.
10.2 Effect on Trustee and Committee. The Trustee and the
Committee shall continue to function as such for such period of time as may be
necessary for the winding up of this Plan and for the making of distributions
in the manner prescribed by the Board of Directors at the time of termination
of the Plan.
10.3 Merger Restriction. Notwithstanding any other
provision in this Plan, this Plan shall not in whole or in part merge or
consolidate with, or transfer its assets or liabilities to, any other plan
unless each affected Participant in this Plan would (if such other plan then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).
10.4 Effect of Reorganization, Transfer of Assets or Change
in Control.
(a) In the event of a consolidation or merger of the
Company, or in the event of a sale and/or any other transfer of the
operating assets of the Company, any ultimate successor or successors to
the business of the Company may continue this Plan in full force and
effect by adopting the same by resolution of its board of directors and
by executing a proper supplemental or transfer agreement with the
Trustee.
(b) In the event of a Change in Control (as herein
defined), all Participants who were Participants on the date of such
Change in Control shall become 100% vested in any amounts allocated to
their ESOP Accounts on the date of such Change in Control and in any
amounts allocated to their ESOP Accounts subsequent to the date of the
Change in Control. Notwithstanding the foregoing, the Board of
Directors may, at its discretion, amend or delete this Paragraph (b) in
its entirety prior to the occurrence of any such Change in Control. For
the purpose of this Paragraph (b), "Change in Control" shall mean the
following and shall be deemed to occur if any of the following events
occur:
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<PAGE> 46
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Sponsor representing 50% or more of the
combined voting power of the Sponsor's then outstanding voting
securities;
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election
contest relating to the election of the directors of the
Sponsor, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of
this Plan, be considered as though such person were a member of
the Incumbent Board;
(iii) The stockholders of the Sponsor approve a merger or
consolidation with any other corporation, other than
(A) a merger or consolidation which would result in
the voting securities of the Sponsor outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of another entity) more than 50%
of the combined voting power of the voting securities
of the Sponsor or such other entity outstanding
immediately after such merger or consolidation, and
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no person acquires 50% or more of
the combined voting power of the Sponsor's then
outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all
of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (b), a Change
in Control shall not be deemed to have occurred (1) if the "person"
described in the preceding provisions of this Paragraph is an
underwriter or underwriting syndicate that has acquired the ownership of
50% or more of the combined voting power of the Sponsor's then
outstanding voting securities solely in connection with a public
offering of the Sponsor's securities or (2) if the "person" described in
the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company
that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
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<PAGE> 47
ARTICLE XI
Limitation on Allocations
11.1 General Rule.
(a) Subject to Sections 11.1(b) and 11.3 through 11.6
hereof, the total Annual Additions under this Plan to a Participant's
ESOP Accounts for any Limitation Year shall not exceed the lesser of:
(1) Thirty Thousand Dollars ($30,000), or if greater,
one-fourth of the defined benefit dollar limitation set forth in
Section 415(b)(1) of the Code as in effect for the Limitation
Year; or
(2) Twenty-five percent (25%) of the Participant's
Compensation, from the Company for the Limitation Year. For
purposes of this Article XI, the "Limitation Year" shall mean
the Plan Year.
(b) For the purpose of this Article XI and XII only, the
term "Company" shall mean the Sponsor and any Affiliated Company whether
or not such Company has adopted the Plan pursuant to Section 8.2.
Solely for purposes of this Article XI, an entity shall be considered an
Affiliated Company by reference to Code Section 415(h).
11.2 Annual Additions. For purposes of Section 11.1, the
term "Annual Additions" shall mean with respect to a Participant, for any
Limitation Year with respect to this Plan and each other defined contribution
plan, within the meaning of Code Section 415(k), maintained by the Company
("Defined Contribution Plan"), the sum of the amounts determined under Sections
11.2(a), (b), (c), and (d) hereof:
(a) All amounts contributed or deemed contributed by the
Company, except that the Annual Addition shall exclude the portion of
the Company contribution representing interest on an Exempt Loan,
provided that no more than one-third of the Company's contributions to
the Trust Fund deductible under Section 404(a)(9) of the Code for a
Limitation Year are allocated to highly compensated employees (as that
term is defined in Section 414(q) of the Code).
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant. For
purposes of this Section 11.2, forfeitures shall not include forfeitures
of Company Stock acquired through the Trust Fund with the proceeds of an
Exempt Loan, provided that no more than one-third of the Company's
contributions to the Trust Fund deductible under Section 404(a)(9) of
the Code for a Limitation Year are allocated to highly compensated
employees (as that term is defined in Section 414(q) of the Code).
(d) All amounts described in Sections 415(l)(1) and
419A(d)(2) of the Code.
11.3 Other Defined Contribution Plans. If the Company
maintains any other Defined Contribution Plan, then each Participant's Annual
Additions under such Defined Contribution Plan shall be aggregated with the
Participant's Annual Additions under this Plan for the purposes of applying the
limitations of Section 11.1.
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<PAGE> 48
11.4 Defined Benefit Plans. If a Participant in this Plan
has also been a participant in a defined benefit plan (as defined in Section
415(k) of the Code) maintained by the Company ("Defined Benefit Plan"), then in
addition to the limitation contained in Section 11.1 hereof, the sum of the
"Defined Benefit Fraction," as defined in Section 11.4(a) hereof, and the
"Defined Contribution Fraction," as defined in Section 11.4(b) hereof, for any
Limitation Year shall not exceed 1.0.
(a) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the total projected benefit of a Participant under
all Defined Benefit Plans expressed as either an annual straight life
annuity or a qualified joint and survivor annuity providing the maximum
permissible survivor benefit (determined as of the close of the
Limitation Year), and the denominator of which is the lesser of (1) the
maximum dollar amount otherwise allowable for such Limitation Year under
Section 415(b)(1)(A) of the Code times 1.25 or (2) the percentage of
compensation limit under Section 415(b)(1)(B) of the Code for such
Limitation Year times 1.4.
(b) "Defined Contribution Fraction" shall mean a fraction,
the numerator of which is the sum of the Participant's Annual Additions
to this Plan and all other Defined Contribution Plans as of the end of a
Limitation Year, and the denominator of which is the sum, determined for
such Limitation Year and each prior Limitation Year of the Participant's
service with the Company of the lesser of (1) the maximum dollar Annual
Addition under Section 415(c)(1)(A) of the Code (determined without
regard to Section 415(c)(6) of the Code) which could have been made for
the Limitation Year times 1.25 or (2) the amount determined under the
percentage of compensation limit for such Limitation Year under Section
415(c)(1)(B) of the Code times 1.4. In computing the Defined
Contribution Fraction under this Section 11.4(b) with respect to any
Limitation Year ending after December 31, 1982, the special transition
rule provided in Section 415(e)(6) of the Code shall be applicable.
11.5 Adjustments for Excess Combined Plan Fraction and
Excess Annual Additions. To the extent that the Annual Additions on behalf of
any Participant in a Limitation Year to this Plan and all other Defined
Contribution Plans exceed the limitations set forth in Sections 11.1 through
11.3 hereof, then excess Annual Additions shall be eliminated in accordance
with the following rules and in the following order:
(a) If the Annual Additions on behalf of a Participant in a
Limitation Year to the Plan and all other Defined Contribution Plans
would cause the sum of the Defined Contribution Fraction and Defined
Benefit Fraction to exceed 1.0 as determined under Section 11.4 hereof,
the excess shall be eliminated by first applying the provisions such
other Defined Benefit Plans or Defined Contribution Plans that are
applicable to reduce the Annual Addition or annual benefit under such
other plans (except to the extent that this may be prohibited by law or
by the terms of such plans).
(b) If, after the application of Paragraph (a) above,
excess Annual Additions on behalf of any Participant remain, such excess
shall be eliminated by reducing the allocation to the Participant's ESOP
Account by the amount of the excess and treating such amount as a
forfeiture under Section 5.3 hereof and reallocating such amount
proportionately to the ESOP Accounts of other Participants receiving
allocations for the Limitation Year up to the limits set forth in
Sections 11.1 through 11.3 hereof.
(c) After each Participant's ESOP Account has been credited
under Paragraph (b) with an amount bringing his ESOP Account up to his
maximum Annual Addition (determined under the provisions of this Article
XI), any remaining excess Annual Addition shall be transferred and
credited to a 415 Suspense Account established for the purpose of this
Section 11.5.
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<PAGE> 49
(d) Any amounts held in the 415 Suspense Account shall be
treated as Company contributions and allocated to the ESOP Accounts of
Participants as of the last day of the next succeeding Plan Year in
accordance with the allocation formula applicable to Company
contributions provided in Section 4.2. The 415 Suspense Account shall
be exhausted before any Company contributions shall be allocated to the
ESOP Accounts of Participants subsequent to the date upon which any
residue excess Annual Addition as described in Paragraph (c) is credited
to the 415 Suspense Account.
11.6 Compensation. For purposes of this Article XI,
Compensation shall mean a Participant's earned income, wages, salaries, fees
for professional services and other amounts received (without regard to whether
or not an amount is paid in cash) for personal services actually rendered in
the course of employment with the Company maintaining the Plan to the extent
that the amounts are includable in gross income (including, but not limited to,
commissions paid to salespeople, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a nonaccountable
plan as described in Regulation Section 1.62-2(c)), and shall exclude the
following:
(a) Company contributions to a plan of deferred
compensation which are not included in a Participant's gross income for
the taxable year in which contributed, Company contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Participant, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the
Participant becomes freely transferable, or is no longer subject to a
substantial risk of forfeiture;
(c) Amounts realized in the sale, exchange or other
disposition of stock acquired under a qualified stock option;
(d) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee).
(e) Any contribution for medical benefits (within the
meaning of Section 419(f)(2) of the Code) after termination of
employment which is otherwise treated as an Annual Addition; and
(f) Any amount otherwise treated as an Annual Addition
under Section 415(l)(1) of the Code.
Compensation for any Limitation Year is the compensation
actually paid or made available during such year, provided, however, that the
compensation taken into account for purposes of Article XI and Article XII
shall be limited in accordance with Code Section 401(a)(17) and related
regulations to $150,000 (or such amount as is adjusted by the Secretary of
Treasury). Notwithstanding the foregoing, for Plan Years beginning prior to
January 1, 1994, the compensation shall not exceed $200,000 as adjusted by the
Secretary of the Treasury and consistent with the terms of the Plan at such
time.
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<PAGE> 50
11.7 Treatment of 415 Suspense Account Upon Termination. In
the event the Plan shall terminate at a time when all amounts in the 415
Suspense Account have not been allocated to the ESOP Accounts of the
Participants, the 415 Suspense Account amounts shall be applied as follows:
(a) The amount in the 415 Suspense Account shall first be
allocated, as of the Plan termination date, to Participants in
accordance with the allocation formula applicable to Company
contributions provided under Section 4.2(a).
(b) If, after those allocations have been made, any further
residue funds remain in the 415 Suspense Account, the residue may revert
to the Company in accordance with applicable provisions of the Code,
ERISA, and the regulations thereunder.
(c) Notwithstanding paragraphs (a) and (b) above, in the
event that termination of the plan occurs after a Change of Control, all
amounts in the 415 Suspense Account shall be allocated to Participants
only in accordance with Section 10.1 hereof, and no part of the 415
Suspense Account shall revert to or be recoverable by the Company, or be
used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries.
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<PAGE> 51
ARTICLE XII
Top-Heavy Rules
12.1 Applicability. Notwithstanding any provision in this
Plan to the contrary, and subject to the limitations set forth in Section 12.8,
the requirements of Sections 12.4, 12.5, 12.6 and 12.7 shall apply under this
Plan in the case of any Plan Year in which the Plan is determined to be a
Top-Heavy Plan under the rules of Section 12.3. For the purpose of this
Article XII and XI only, the term "Company" shall mean the Sponsor and any
Affiliated Company whether or not such company has adopted the Plan pursuant to
Section 8.2.
12.2 Definitions. For purposes of this Article XII, the
following special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former
Employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is or was:
(i) An officer of the Company having an annual Compensation
greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for the Plan Year; provided, however, for such
purposes no more than 50 Employees (or, if lesser, the greater
of three Employees or 10% of the Employees) shall be treated as
officers;
(ii) One of the ten Employees having annual Compensation
from the Company of more than the limitation in effect under
Code Section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code Section 318) the largest interests in
the Company. For this purpose, if two Employees have the same
interest in the Company, the Employee having greater annual
Compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual
Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns
(or is considered as owning within the meaning of Code Section 318) more
than 5% of the outstanding stock of the Company or stock possessing more
than 5% of the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would
be described in Paragraph (b) if "1%" were substituted for "5%" each
place where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is
not a Key Employee.
(e) The term "Determination Date" means, with respect to
any plan year, the last day of the preceding plan year. In the case of
the first plan year of any plan, the term "Determination Date" shall
mean the last day of that plan year.
(f) The term "Aggregation Group" means (i) each plan of the
Company in which a Key Employee is a Participant, and (ii) each other
plan of the Company which enables any plan described in clause (i) to
meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
47
<PAGE> 52
required to be included in an Aggregation Group under the preceding
rules may be treated as being part of such group if the group would
continue to meet the requirements of Code Sections 401(a)(4) and 410
with the plan being taken into account.
(g) For purposes of determining ownership under Paragraphs
(a), (b) and (c) above, the following special rules shall apply: (i)
Code Section 318(a)(2)(C) shall be applied by substituting "5%" for
"50%", and (ii) the aggregation rules of Subsections (b), (c) and (m) of
Code Section 414 shall not apply, with the result that the ownership
tests of this Section 12.2 shall apply separately with respect to each
Affiliated Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall
include their Beneficiaries, and the definitions provided under this
Section 12.2 shall be interpreted and applied in a manner consistent
with the provisions of Code Section 416(i) and the regulations
thereunder.
(i) For purposes of this Article XII, an Employee's
Compensation shall be determined in accordance with the rules of Section
11.6.
12.3 Top-Heavy Status
(a) The term "Top-Heavy Plan" means, with respect to any
Plan Year:
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under
the plan for Key Employees exceeds 60% of the present value of
the cumulative accrued benefits under the plan for all
Employees; and
(ii) Any defined contribution plan if, as of the
Determination Date, the aggregate of the account balances of Key
Employees under the plan exceeds 60% of the aggregate of the
account balances of all Employees under the plan.
In applying the foregoing provisions of this Paragraph (a), the
valuation date to be used in valuing Plan assets shall be (A) in the
case of a defined benefit plan, the same date which is used for
computing costs for minimum funding purposes, and (B) in the case of a
defined contribution plan, the most recent valuation date within a
12-month period ending on the applicable Determination Date.
(b) Each plan maintained by the Company required to be
included in an Aggregation Group shall be treated as a Top-Heavy Plan if
the Aggregation Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of (i) the present value of
the cumulative accrued benefits for Key Employees under all defined
benefit plans included in the group, and (ii) the aggregate of the
account balances of Key Employees under all defined contribution plans
included in the group exceeds 60% of a similar sum determined for all
Employees. For purposes of determining the present value of the
cumulative accrued benefit of any Employee, or the amount of the account
balance of any Employee, such present value or amount shall be increased
by the aggregate distributions made with respect to the Employee under
the plan during the five year period ending on the Determination Date.
The preceding prior distribution rule shall also apply to distributions
under a terminated plan that, if it had not been terminated, would have
been required to be included in an Aggregation Group; provided, however,
any rollover contribution
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<PAGE> 53
or similar transfer initiated by the Employee and made after December
31, 1983, to a plan shall not be taken into account with respect to the
transferee plan for purposes of determining whether such plan is a
Top-Heavy Plan (or whether any Aggregation Group which includes such
plan is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with respect to
any plan for any plan year, but the individual was a Key Employee with
respect to the plan for any prior plan year, any accrued benefit for the
individual (and the account balance of the individual) shall not be
taken into account for purposes of this Section 12.3.
(e) If any individual has not performed services for the
Company at any time during the five year period ending on the
Determination Date, any accrued benefit for such individual (and the
account balance of the individual) shall not be taken into account for
purposes of this Section 12.3
(f) In applying the foregoing provisions of this Section,
the accrued benefit of a Non-Key Employee shall be determined (i) under
the method, if any, which is used for accrual purposes under all plans
of the Company and any Affiliated Companies, or (ii) if there is no such
uniform method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XII, the definitions
provided under this Section 12.3 shall be applied and interpreted in a
manner consistent with the provisions of Code Section 416(g) and the
Regulations thereunder.
12.4 Minimum Contributions. For any Plan Year in which the
Plan is determined to be a Top-Heavy Plan, the minimum Company Contributions
for that year shall be determined in accordance with the rules of this Section
12.4.
(a) Except as provided below, the minimum contribution
(including for Plan Years beginning after December 31, 1984, amounts
deferred under a cash or deferred arrangement under Code Section 401(k))
for each Non-Key Employee shall be not less than 3% of his compensation.
(b) Subject to the following rules of this Paragraph (b),
the percentage set forth in Paragraph (a) above shall not be required to
exceed the percentage at which contributions (including for Plan Years
beginning after December 31, 1984, amounts deferred under a cash or
deferred arrangement under Code Section 401(k)) are made (or are
required to be made) under the Plan for the year for the Key Employee
for whom the percentage is the highest for the year. This determination
shall be made by dividing the contributions for each Key Employee by so
much of his total compensation for the Plan Year as does not exceed the
applicable Compensation limit. For purposes of this Paragraph (b), all
defined contribution plans required to be included in an Aggregation
Group shall be treated as one plan. Notwithstanding the foregoing, the
exceptions to Paragraph (a) as provided under this Paragraph (b) shall
not apply to any plan required to be included in an Aggregation Group if
the plan enables a defined benefit plan to meet the requirements of Code
Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under
this Section 12.4 shall be calculated without regard to any Social
Security benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-
49
<PAGE> 54
Heavy Plans, the Company shall satisfy the minimum benefit requirements
of Code Section 416 by providing (in lieu of the minimum contribution
described in Paragraph (a) above) a minimum benefit under the defined
benefit plan so as to prevent the duplication of required minimum
benefits hereunder.
12.5 Reserved for Future Modifications.
12.6 Maximum Annual Addition.
(a) Except as set forth below, for any Plan Year in which
the Plan is determined to be a Top-Heavy Plan, the rules of Section
11.4(b) and (c) shall be applied by substituting "1.0" for "1.25".
(b) The rule set forth in Paragraph (a) above shall not
apply if (i) the minimum contribution requirement of Section 12.4(a)
above would be satisfied after substituting "4%" for "3%" where it
appears therein, and (ii) the Plan would not be a Top-Heavy Plan if
"90%" were substituted for "60%" each place it appears in Section
12.3(a)(ii).
(c) The rules of Paragraph (a) shall not apply with respect
to any Employee as long as there are no (i) Company Contributions
(including amounts deferred under a cash or deferred arrangement under
Code Section 401(k)), forfeitures, or voluntary nondeductible
contributions allocated to the Employee under a defined contribution
plan maintained by the Company, or (ii) accruals by the Employee under a
defined benefit plan maintained by the Company.
12.7 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the
Plan is a Top-Heavy Plan, the vesting schedule of the Plan shall be
changed to that set forth below (unless the Plan's vesting schedule
otherwise provides for vesting at a rate at least as rapid as that set
forth below):
<TABLE>
<CAPTION>
Number of Full Years of Nonforfeitable
Credited Service Percentage
----------------------- --------------
<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 or more 100%
</TABLE>
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting
schedule of the Plan shall (for such Plan Years as the Plan is not a
Top-Heavy Plan) revert to that provided in Section 5.2 (the "Regular
Vesting Schedule"). If such reversion to the Regular Vesting Schedule
is deemed to constitute a vesting schedule change that is attributable
to a Plan amendment (within the meaning of Code Section 411(a)(10)),
then such reversion to said Regular Vesting Schedule shall be subject to
the requirements of Code Section 411(a)(10) of this Plan. For such
purposes, the date of the adoption of such deemed amendment shall be the
Determination Date as of which it is determined that the Plan has ceased
to be a Top-Heavy Plan.
50
<PAGE> 55
12.8 Non-Eligible Employees. The rules of this Article XII
shall not apply to any Employee included in a unit of employees covered by a
collective bargaining agreement between employee representatives and one or
more employers if retirement benefits were the subject of good faith bargaining
between such employee representatives and the employer or employers.
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<PAGE> 56
ARTICLE XIII
Restriction on Assignment or Other
Alienation of Plan Benefits
13.1 General Restrictions Against Alienation.
(a) The interest of any Participant or his Beneficiary in
the income, benefits, payments, claims or rights hereunder, or in the
Trust Fund, shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and Beneficiary is
prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without
power to do so, except as may be permitted in connection with providing
security for a loan from the Plan to the Participant pursuant to the
provisions of this Plan as it may be amended from time to time. The
interest of any Participant or Beneficiary shall not be liable or
subject to his debts, liabilities, or obligations, now contracted, or
which may hereafter be contracted, and such interest shall be free from
all claims, liabilities, or other legal process now or hereafter
incurred or arising. Neither the interest of a Participant or
Beneficiary, nor any part thereof, shall be subject to any judgment
rendered against any such Participant or Beneficiary. Notwithstanding
the foregoing, a Participant's or Beneficiary's interest in the Plan may
be subject to the enforcement of a Federal tax levy made pursuant to
Code Section 6331 or the collection by the United States on a judgment
resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action
contrary to this Article XIII, such action shall be null and void and of
no effect, and the Company, the Committee, the Trustee and all
Participants and their Beneficiaries, may disregard such action and are
not in any manner bound thereby, and they, and each of them, shall
suffer no liability for any such disregard thereof, and shall be
reimbursed on demand out of the Trust Fund for the amount of any loss,
cost or expense incurred as a result of disregarding or of acting in
disregard of such action.
(c) The foregoing provisions of this Section shall be
interpreted and applied by the Committee in accordance with the
requirements of Code Section 401(a)(13) and ERISA Section 206(d) as
construed and interpreted by authoritative judicial and administrative
rulings and regulations.
13.2 Qualified Domestic Relations Orders. The rules set
forth in Section 13.1 above shall not apply with respect to a "Qualified
Domestic Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment,
decree, or order (including approval of a property settlement agreement)
that:
(i) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable under this Plan
with respect to a Participant,
(ii) Relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child or other dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law
(including a community property law), and
52
<PAGE> 57
(iv) Clearly specifies: (A) the name and last known mailing
address (if any) of the Participant and the name and mailing
address of each Alternate Payee covered by the order (if the
Plan Administrator does not have reason to know that address
independently of the order); (B) the amount or percentage of the
Participant's benefits to be paid to each Alternate Payee, or
the manner in which the amount or percentage is to be
determined; (C) the number of payments or period to which the
order applies; and (D) each plan to which the order applies.
For purposes of this Section 13.2, "Alternate Payee" means any spouse,
former spouse, child or other dependent of a Participant who is
recognized by a domestic relations order as having a right to receive
all, or a portion of, the benefits payable with respect to the
Participant.
(b) A domestic relations order is not a Qualified Domestic
Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or any
option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under a previous
Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to
fail to satisfy the requirements of Paragraph (b)(i) above with respect
to any payment made before a Participant has separated from service
solely because the order requires that payment of benefits be made to an
Alternate Payee:
(i) On or after the date on which the Participant attains
(or would have first attained) his earliest retirement age (as
defined in Code Section 414(p)(4)(B));
(ii) As if the Participant had retired on the date on which
such payment is to begin under such order (but taking into
account only the present value of accrued benefits and not
taking into account the present value of any subsidy for early
retirement benefits); and
(iii) In any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a joint
and survivor annuity with respect to the Alternate Payee and his
or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before his
earliest retirement age (as defined in Section 414(p)(4)(B)), the
Alternate Payee is entitled to benefits only if the Qualified Domestic
Relations Order requires survivor benefits to be paid to the Alternate
Payee.
(d) To the extent provided in any Qualified Domestic
Relations Order, the former spouse of a Participant shall be treated as
a surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order received by
the Plan, the Plan Administrator shall promptly notify the Participant
and any Alternate Payee of the receipt of the
53
<PAGE> 58
order and the Plan's procedures for determining the qualified status of
domestic relations orders. Within a reasonable period after the receipt
of the order, the Plan Administrator shall determine whether the order
is a Qualified Domestic Relations Order and shall notify the Participant
and each Alternate Payee of such determination.
(f) The Plan Administrator shall establish reasonable
procedures to determine the qualified status of domestic relations
orders and to administer distributions under Qualified Domestic
Relations Orders. During any period in which the issue of whether a
domestic relations order is a Qualified Domestic Relations Order is
being determined (by the Plan Administrator, by a court of competent
jurisdiction, or otherwise), the Plan Administrator shall segregate in a
separate account in the Plan (or in an escrow account) the amounts which
would have been payable to the Alternate Payee during the period if the
order had been determined to be a Qualified Domestic Relations Order.
If within the 18 Month Period (as defined below), the order (or
modification thereof) is determined to be a Qualified Domestic Relations
Order, the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. However,
if within the 18 Month Period (i) it is determined that the order is not
a Qualified Domestic Relations Order, or (ii) the issue as to whether
the order is a Qualified Domestic Relations Order is not resolved, then
the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons who would have been entitled
to the amounts if there had been no order (assuming such benefits were
otherwise payable). Any determination that an order is a Qualified
Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this
Section 13.2, the "18 Month Period" shall mean the 18 month period
beginning with the date on which the first payment would be required to
be made under the domestic relations order.
54
<PAGE> 59
ARTICLE XIV
Miscellaneous Provisions
14.1 No Right of Employment Hereunder. The adoption and
maintenance of this Plan and Trust shall not be deemed to constitute a contract
of employment or otherwise between the Company and any Employee or Participant,
or to be a consideration for, or an inducement or condition of, any employment.
Nothing contained herein shall be deemed to give any Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge, with or without cause, any Employee or Participant at any
time, which right is hereby expressly reserved.
14.2 Limitation on Company Liability. Any benefits payable
under this Plan shall be paid or provided for solely from the Plan and the
Company assumes no liability or responsibility therefor.
14.3 Effect of Article Headings. Article headings are for
convenient reference only and shall not be deemed to be a part of the substance
of this instrument or in any way to enlarge or limit the contents of any
Article.
14.4 Gender. Masculine gender shall include the feminine
and the singular shall include the plural unless the context clearly indicates
otherwise.
14.5 Interpretation. The provisions of this Plan shall in
all cases be interpreted in a manner that is consistent with this Plan
satisfying (a) the requirements of Code Section 401(a) and related statutes for
qualification as a stock bonus plan and (b) the requirements of Code Section
4975(e)(7) and related statutes for qualification as an employee stock
ownership plan and eligibility for the prohibited transaction exemption
provided under Code Section 4975(d)(3) and its related statutes under ERISA.
14.6 Withholding For Taxes. Any payments from the Trust
Fund may be subject to withholding for taxes as may be required by any
applicable federal or state law.
14.7 California Law Controlling. All legal questions
pertaining to the Plan which are not controlled by ERISA shall be determined in
accordance with the laws of the State of California and all contributions made
hereunder shall be deemed to have been made in that State.
14.8 Plan and Trust as One Instrument. This Plan and the
Trust Agreement shall be construed together as one instrument. In the event
that any conflict arises between the terms and/or conditions of the Trust
Agreement and this Plan, the provisions of this Plan shall control, except that
with respect to the duties and responsibilities of the Trustee, the Trust
Agreement shall control.
14.9 Invalid Provisions. If any paragraph, section,
sentence, clause or phrase contained in this Plan shall become illegal, null or
void or against public policy, for any reason, or shall be held by any court of
competent jurisdiction to be incapable of being construed or limited in a
manner to make it enforceable, or is otherwise held by such court to be
illegal, null or void or against public policy, the remaining paragraphs,
sections, sentences, clauses or phrases contained in this Plan shall not be
affected thereby.
14.10 Counterparts. This instrument may be executed in one
or more counterparts each of which shall be legally binding and enforceable.
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<PAGE> 60
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this
instrument, evidencing the terms of the Allergan, Inc. Employee Stock Ownership
Plan as restated this 3rd day of April, 1996.
ALLERGAN, INC.
By Francis R. Tunney, Jr.
Secretary
56
<PAGE> 1
EXHIBIT 10.2
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
RESTATED
1996
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ARTICLE I
NAME AND EFFECTIVE DATE 1
1.1 Plan Name 1
1.2 Plan Purpose 1
1.3 Plan Intended to Qualify 1
ARTICLE II
DEFINITIONS
2.1 Accounts 1
2.2 Affiliated Company 1
2.3 After Tax Deposits 2
2.4 After Tax Deposits Account 2
2.5 Anniversary Date 2
2.6 Reserved for Future Modifications 2
2.7 Reserved for Future Modifications 2
2.8 Before Tax Deposits 2
2.9 Before Tax Deposits Account 2
2.10 Beneficiary 2
2.11 Board of Directors 2
2.12 Break in Service 2
2.13 Reserved for Future Modifications 2
2.14 Code 2
2.15 Committee 2
2.16 Company 2
2.17 Company Contributions 3
2.18 Company Contributions Account 3
2.19 Company Stock 3
2.20 Compensation 3
2.21 Computation Period 4
2.22 Credited Service 4
2.23 Disability 5
2.24 Reserved for Future Modifications 5
2.25 Effective Date 5
2.26 Eligible Employee 5
2.27 Eligible Retirement Plan 6
2.28 Eligible Rollover Distribution 6
2.29 Employee 6
2.30 Employment Commencement Date 6
2.31 ERISA 7
2.32 Reserved for Future Modifications 7
2.33 Forfeitures 7
2.34 Highly Compensated Employee 7
2.35 Hour of Service 9
2.36 Investment Manager 10
2.37 Leased Employee 10
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2.38 Leave of Absence 11
2.39 Normal Retirement Age 12
2.40 Participant 12
2.41 Participant Deposits 12
2.42 Period of Severance 12
2.43 Plan 12
2.44 Plan Administrator 12
2.45 Plan Year 12
2.46 Reemployment Commencement Date 12
2.47 Rollover Account 12
2.48 Severance 12
2.49 Severance Date 13
2.50 Sharing Deposits 13
2.51 Sponsor 13
2.52 Stock Credit Account 13
2.53 Trust and Trust Fund 13
2.54 Trustee 13
2.55 Reserved for Future Modifications 13
2.56 Reserved for Future Modifications 13
2.57 Valuation Date 13
2.58 415 Suspense Account 14
ARTICLE III
ELIGIBILITY AND PARTICIPATION 15
3.1 Participation 15
3.2 Participants in Prior Plans 15
3.3 Participation in Plan prior to March 1, 1995 15
ARTICLE IV
PARTICIPANT DEPOSITS 16
4.1 Election 16
4.2 Amount Subject to Election 16
4.3 Limitation on Compensation Deferrals 17
4.4 Provisions for Return of Excess Before Tax
Deposits Over $7,000 19
4.5 Provision for Recharacterization or Return
of Excess Deferrals by Highly Compensated 21
4.6 Termination of, Change in Rate of, or
Resumption of Deferrals 23
4.7 Character of Deposits 23
4.8 Rollover Contributions 23
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ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS 25
5.1 General 25
5.2 Single Trust 25
5.3 Company Contributions 25
5.4 Form of Company Contributions 26
5.5 Investment of Trust Assets 26
5.6 Reserved for Future Modifications 27
5.7 Irrevocability 27
5.8 Company, Committee and Trustee Not
Responsible for Adequacy of Trust Fund 28
5.9 Certain Offers for Company Stock 28
5.10 Voting of Company Stock 31
5.11 Securities Law Limitation 32
5.12 Distributions 32
5.13 Taxes 32
5.14 Trustee Records to be Maintained 32
5.15 Annual Report of Trustee 32
5.16 Appointment of Investment Manager 33
ARTICLE VI
ACCOUNTS AND ALLOCATIONS 34
6.1 Participants' Accounts 34
6.2 Reserved for Plan Modifications 34
6.3 Allocation of Amounts Contributed by Participants 34
6.4 Allocation of Company Contributions and Forfeitures 34
6.5 Valuation of Participants' Accounts 34
6.6 Valuation of Company Stock 35
6.7 Dividends, Splits, Recapitalizations, Etc. 35
6.8 Stock Rights, Warrants or Options 35
6.9 Reserved for Plan Modifications 35
6.10 Treatment of Accounts Upon Severance 35
6.11 Cash Dividends 36
6.12 Miscellaneous Allocation Rules 36
6.13 Limitations on After Tax Deposits and
Company Contributions 36
6.14 Provision for Disposition of Excess After
Tax Deposits or Matching Contributions on
Behalf of Highly Compensated Participants 40
ARTICLE VII
VESTING IN PLAN ACCOUNTS 43
7.1 No Vested Rights Except as Herein Provided 43
7.2 Vesting Schedule 43
7.3 Vesting of Participant Deposits 43
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ARTICLE VIII
PAYMENT OF PLAN BENEFITS 44
8.1 Withdrawals During Employment 44
8.2 Distributions Upon Termination of
Employment or Disability 47
8.3 Distribution Upon Death of Participant 47
8.4 Designation of Beneficiary 48
8.5 Distribution Rules 48
8.6 Forfeitures 50
8.7 Valuation of Plan Benefits Upon Distribution 50
8.8 Lapsed Benefits 51
8.9 Persons Under Legal Disability 51
8.10 Additional Documents 52
8.11 Trustee-to-Trustee Transfers 52
8.12 Loans to Participants 52
ARTICLE IX
OPERATION AND ADMINISTRATION 54
9.1 Appointment of Committee 54
9.2 Transaction of Business 54
9.3 Voting 54
9.4 Responsibility of Committee 54
9.5 Committee Powers 54
9.6 Additional Powers of Committee 55
9.7 Periodic Review of Funding Policy 56
9.8 Application for Determination of Benefits 56
9.9 Limitation on Liability 57
9.10 Indemnification and Insurance 57
9.11 Compensation of Committee and Plan Expenses 57
9.12 Resignation 57
9.13 Reliance Upon Documents and Opinions 58
ARTICLE X
AMENDMENT AND ADOPTION OF PLAN 59
10.1 Right to Amend Plan 59
10.2 Adoption of Plan by Affiliated Companies 59
ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS 60
ARTICLE XII
TERMINATION AND MERGER 61
12.1 Right to Terminate Plan 61
12.2 Effect on Trustee and Committee 61
12.3 Merger Restriction 61
12.4 Effect of Reorganization, Transfer of
Assets or Change in Control 61
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ARTICLE XIII
LIMITATION ON ALLOCATIONS 63
13.1 General Rule 63
13.2 Annual Additions 63
13.3 Other Defined Contribution Plans 64
13.4 Defined Benefit Plans 64
13.5 Adjustments for Excess Combined Plan
Fraction and Excess Annual Additions 64
13.6 Compensation 65
13.7 Treatment of 415 Suspense Account Upon
Termination 66
ARTICLE XIV
TOP-HEAVY RULES 67
14.1 Applicability 67
14.2 Definitions 67
14.3 Top-Heavy Status 68
14.4 Minimum Contributions 69
14.5 Reserved for Future Modifications 70
14.6 Maximum Annual Addition 70
14.7 Minimum Vesting Rules 70
14.8 Noneligible Employees 70
ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER
ALIENATION OF PLAN BENEFITS 71
15.1 General Restrictions Against Alienation 71
15.2 Qualified Domestic Relations Orders 71
ARTICLE XVI
MISCELLANEOUS PROVISIONS 74
16.1 No Right of Employment Hereunder 74
16.2 Limitation on Company Liability 74
16.3 Effect of Article Headings 74
16.4 Gender 74
16.5 Interpretation 74
16.6 Withholding For Taxes 74
16.7 California Law Controlling 74
16.8 Plan and Trust as One Instrument 74
16.9 Invalid Provisions 74
16.10 Counterparts 75
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ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
ARTICLE I
NAME AND EFFECTIVE DATE
1.1 Plan Name. This document, made and entered into by Allergan,
Inc., a Delaware corporation ("Allergan"), evidences the terms of a defined
contribution plan with a cash or deferred arrangement for Eligible Employees of
Allergan and any Affiliated Companies that are authorized by the Board of
Directors to participate in the Plan, to be known hereafter as the "Allergan,
Inc. Savings and Investment Plan" (the "Plan"). The Plan shall be effective on
the day after the Spin-off Date, as that term is defined in Section 1.2, (the
"Effective Date").
1.2 Plan Purpose. Prior to the Effective Date of this Plan,
Eligible Employees of Allergan were eligible to participate in the SmithKline
Beckman Corporation Savings and Investment Plan (the "SKB Plan"). On or about
July 26, 1989, SmithKline Beckman Corporation distributed the stock of Allergan
to its shareholders, rendering Eligible Employees of the Company ineligible to
participate in the SKB Plan. (The date upon which such distribution occurred
shall hereinafter be referred to as the "Spin-off Date".) The purpose of this
Plan is to enable Eligible Employees of Allergan, and any Affiliated Companies
that are authorized by the Board of Directors to participate in the Plan, to
participate in a plan similar to the SKB Plan, to share in the growth and
prosperity of the Company and to provide Participants with an opportunity to
accumulate capital for their future economic security. The account balances of
Eligible Employees of the Company maintained under the SKB Plan will be
transferred to this Plan. All assets acquired under this Plan as a result of
Company Contributions, income, and other additions to the Fund under the Plan
will be administered, distributed, forfeited and otherwise governed by the
provisions of this Plan, which is to be administered by the Committee for the
exclusive benefit of Participants in the Plan and their Beneficiaries.
1.3 Plan Intended to Qualify. This Plan is an employee benefit plan
that is intended to qualify under Code Section 401(a) as a qualified profit
sharing plan and under Code Section 401(k) as a qualified cash or deferred
arrangement. The provisions of this Plan are intended to comply with the
requirements of the Tax Reform Act of 1986 and subsequent legislation up to and
including the Omnibus Budget Reconciliation Act of 1993. This Plan document
incorporates certain amendments which were submitted to the Internal Revenue
Service (the "IRS") pursuant to the processing of an application for issuance
by the IRS of the favorable determination letter covering the Plan, dated
January 8, 1990.
ARTICLE II
DEFINITIONS
2.1 Accounts. "Accounts" or "Participant's Accounts" shall mean the
After Tax Deposits Accounts, Before Tax Deposits Accounts, Company Contribution
Accounts, Stock Credit Accounts, and Rollover Accounts maintained for the
various Participants.
2.2 Affiliated Company. "Affiliated Company" shall mean (a) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Section 414(b) of the Code) of which the
Sponsor is a member, (b) any trade or business, other than the Sponsor, which
is under common control (within the meaning of Section 414(c) of the Code) with
the
<PAGE> 8
Sponsor, (c) any entity or organization, other than the Sponsor, which is a
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) of which the Sponsor is a member, and (d) any entity or organization,
other than the Sponsor, which is affiliated with the Sponsor under Section
414(o) of the Code. Any entity shall be an Affiliated Company pursuant to this
paragraph only during the period of time in which such entity has the required
relationship with the Sponsor under subparagraphs (a), (b), (c) or (d) of this
paragraph after the Effective Date of this Plan.
2.3 After Tax Deposits. "After Tax Deposits" shall mean those
contributions made by a Participant which represent after-tax contributions.
2.4 After Tax Deposits Account. "After Tax Deposits Account" of a
Participant shall mean his/her individual account in the Trust Fund in which
are held his/her After Tax Deposits and the earnings thereon.
2.5 Anniversary Date. "Anniversary Date" shall mean the last day of
each Plan Year.
2.6 Reserved for Future Modifications.
2.7 Reserved for Future Modifications.
2.8 Before Tax Deposits. "Before Tax Deposits" shall mean those
contributions made by a Participant which represent pre-tax contributions.
2.9 Before Tax Deposits Account. "Before Tax Deposits Account" of a
Participant shall mean his/her individual account in the Trust Fund in which
are held his/her Before Tax Deposits and the earnings thereon.
2.10 Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the
person or persons last designated by a Participant as set forth in Section 8.4
or, if there is no designated Beneficiary or surviving Beneficiary, the person
or persons designated pursuant to Section 8.4 to receive the interest of a
deceased Participant in such event.
2.11 Board of Directors. "Board of Directors" shall mean the Board
of Directors (or its delegate) of the Sponsor as it may from time to time be
constituted.
2.12 Break in Service. "Break in Service" shall mean, with respect
to an Employee, each period of 12 consecutive months during a Period of
Severance that commences on the Employee's Severance Date or on any anniversary
of such Severance Date.
2.13 Reserved for Future Modifications.
2.14 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended. Where the context so requires a reference to a particular Code
section shall also refer to any successor provision of the Code to such Code
section.
2.15 Committee. "Committee" or "Plan Committee" shall mean the
committee to be appointed under the provisions of Section 9.1.
2.16 Company. "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts this Plan in accordance with Section 10.2.
2
<PAGE> 9
2.17 Company Contributions. "Company Contributions" shall mean all
amounts (whether in cash or other property, including Company Stock) paid by
the Company pursuant to Section 5.3 into the Trust Fund established and
maintained under the provisions of this Plan for the purpose of providing
benefits for Participants and their Beneficiaries. Unless expressly stated
otherwise in this Plan, Company Contributions shall not include Participant
Before Tax or After Tax Deposits.
2.18 Company Contributions Account. "Company Contributions Account"
shall mean a Participant's individual account in the Trust Fund in which are
held Company Contributions and the earnings thereon.
2.19 Company Stock. "Company Stock" shall mean any class of stock of
the Sponsor which both constitutes "qualifying employer securities" as defined
in Section 407(d)(5) of ERISA and "employer securities" as defined in Section
409(l) of the Code.
2.20 Compensation. "Compensation" shall mean the amounts paid during
a Plan Year to an Employee by the Company for services rendered, including base
earnings, commissions and similar incentive compensation, cost of living
allowances earned within the United States of America, holiday pay, overtime
earnings, pay received for election board duty, pay received for jury and
witness duty, pay received for military service (annual training), pay received
for being available for work, if required (call-in premium), amounts of salary
reduction elected by the Participant under a Code Section 401(k) cash or
deferred arrangement, shift differential and premium, sickness/accident related
pay, vacation pay, vacation shift premium, and bonus amounts paid under the
following programs:
(1) Sales bonus,
(2) "Management Bonus Payments" (MBP), either in cash or in
restricted stock,
(3) Group performance sharing payments, such as the
"Partners for Success";
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of
living adjustments and differentials paid for service outside of the United
States, expatriate reimbursement payments, and tax equalization payments; forms
of imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance
pay; Share Value Plan or other long-term incentive awards, bonuses or payments;
special individual recognition payments which are nonrecurring in nature,
including the "Impact Award" payments, and "Employee of the Year" payments;
tuition reimbursement; and contributions by the Company under this Plan or
distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Section 401(a) of the
Code (other than contributions constituting salary reduction amounts elected by
the Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees. The
Compensation taken into account for determining all benefits provided under the
Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in
such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the
foregoing, for Plan Years beginning prior to January 1, 1994, the Compensation
taken into account for determining all benefits provided under the Plan shall
not exceed $200,000 as adjusted by the Secretary of the Treasury and consistent
with the terms of the Plan at such time. If the period for determining
Compensation used in calculating an Employee's allocation for a Plan Year is a
short Plan Year (i.e.
3
<PAGE> 10
shorter than 12 months), the Compensation limit is an amount equal to the
otherwise applicable Compensation limit multiplied by a fraction, the numerator
of which is the number of months in the short Plan Year, and the denominator of
which is 12. In determining the Compensation of an Employee, the rules of Code
Section 414(q)(6) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the close of
the Plan Year. If, as the result of the application of such rules the
applicable Compensation limit is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation. Notwithstanding the foregoing, for purposes of applying the
provisions of Articles XI and XII, an Employee's Compensation shall be
determined pursuant to the definition of "Compensation" as set forth in
Sections 13.6 or 14.2(i), as the case may be.
2.21 Computation Period.
(a) "Computation Period" shall mean the consecutive twelve
(12) month period used for determining whether an Employee is eligible
to participate in the Plan pursuant to Section 3.1.
(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his Employment Commencement Date or
Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all
subsequent Computation Periods) shall be the Plan Year that includes or
begins on the first anniversary of such Employee's Employment
Commencement Date or Reemployment Commencement Date (whichever is
applicable) and each subsequent Plan Year.
2.22 Credited Service. "Credited Service" shall mean, with respect
to each Employee, his years and months of Credited Service determined in
accordance with the following rules:
(a) In the case of any Employee who was employed by the
Company at any time prior to the Effective Date, for the period prior to
January 1, 1989 such Employee shall be credited with Credited Service
under this Plan equal to the period (if any) of service credited to such
Employee under the SmithKline Beckman Savings and Investment Plan.
(b) In the case of any Employee who is employed by the
Company on or after the Effective Date, an Employee shall receive
Credited Service credit for the elapsed period of time between each
Employment Commencement Date (or Reemployment Commencement Date) of the
Employee and the Severance Date which immediately follows that
Employment Commencement Date (or Reemployment Commencement Date).
Solely for the purpose of determining an Employee's Credited Service
under this Paragraph (b), in the case of an Employee who is employed on
January 1, 1989, that date shall be deemed to be an Employment
Commencement Date of the Employee (with service credit for periods prior
to January 1, 1989 to be determined under Paragraph (a) above). An
Employee who is absent from work on an authorized Leave of Absence shall
be deemed to have incurred a Severance (if any) in accordance with the
rules of Section 2.40.
(c) An Employee shall receive Credited Service credit for
periods between a Severance and his subsequent Reemployment Commencement
Date in accordance with the following rules:
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(i) If an Employee incurs a Severance by reason of
a quit, discharge, Disability, or retirement whether or not such
a Severance occurs during an approved Leave of Absence and the
Employee is later reemployed by the Company prior to his
incurring a Break in Service, he shall receive Credited Service
for the period commencing with his Severance Date and ending
with his subsequent Reemployment Commencement Date.
(ii) Other than as expressly set forth above in this
Paragraph (c), an Employee shall receive no Credited Service
with respect to periods between a Severance and a subsequent
Reemployment Commencement Date.
(d) For all purposes of this Plan, an Employee's total
Credited Service shall be determined by aggregating any separate periods
of Credited Service separated by any Breaks in Service.
(e) An Employee shall be credited with Credited Service
with respect to a period of employment with an Affiliated Company, but
only to the extent that such period of employment would be so credited
under the foregoing rules set forth in this Section had such Employee
been employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall
so provide by resolution of its Board of Directors, or unless otherwise
expressly stated in this Plan, an Employee shall not receive such
Credited Service credit for any period of employment with an Affiliated
Company prior to such entity becoming an Affiliated Company.
(g) In accordance with Paragraph (f) above, an Eligible
Employee shall receive Credited Service for any period of employment
with Allergan Medical Optics - Lenoir facility prior to its becoming an
Affiliated Company but only to the extent provided in Paragraph (e)
above. Notwithstanding anything therein to the contrary, the Employment
Commencement Date for such Eligible Employee under Paragraph (b) shall
mean the date the Employee was first credited with an Hour of Service
with Allergan Medical Optics - Lenoir facility, including any date prior
to Allergan Medical Optics - Lenoir facility becoming an Affiliated
Company.
2.23 Disability. "Disability" shall mean any mental or physical
condition which, in the judgment of the Committee, based on such competent
medical evidence as the Committee may require, renders an individual unable to
engage in any substantial gainful activity for the Company for which he is
reasonably fitted by education, training, or experience and which condition can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of at least 12 months. The determination by the
Committee, upon opinion of a physician selected by the Committee, as to whether
a Participant has incurred a Disability shall be final and binding on all
persons.
2.24 Reserved for Future Modifications.
2.25 Effective Date. "Effective Date" shall mean the date that is
the day after the Spin-off Date (as that term is defined in Section 1.2).
2.26 Eligible Employee. "Eligible Employee" shall mean any United
States-based payroll Employee of the company and any expatriate Employee of the
company who is a United States citizen or permanent resident, but excluding any
Employee of the company who is employed at the Sponsor's facility in Puerto
Rico, any non-resident alien, any non-regular manufacturing site transition
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<PAGE> 12
Employee, any independent contractor, any individual who must be treated as a
leased employee under Code Section 414(n), and any Employee covered by a
collective bargaining agreement. Notwithstanding the preceding sentence, for
Plan Years beginning prior to January 1, 1996, an Eligible Employee shall not
include a temporary employee classified as such by the Company.
2.27 Eligible Retirement Plan. "Eligible Retirement Plan" shall mean
an individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in Code
Section 401(a) that accepts an Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
2.28 Eligible Rollover Distribution. "Eligible Rollover
Distribution" shall mean any distribution, on or after January 1, 1993, of all
or any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee of the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten
years or more;
(b) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and
(c) the portion of any distribution that is not includable
in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
For purposes of this Section, "Distributee" shall mean any
Employee or former Employee receiving a distribution from the Plan. A
Distributee also includes the Employee or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations Order (as defined in
Article XV) are Distributees with regard to the interest of the spouse or
former spouse.
2.29 Employee. "Employee" shall mean any person who is employed by
the Sponsor or any Affiliated Company in any capacity, any portion of whose
income is subject to withholding of income tax and/or for whom Social Security
contributions are made by the Sponsor or any such Affiliated Company, as well
as any other person qualifying as a common-law employee of the Sponsor or any
such Affiliated Company. The term Employee shall also include any leased
employee deemed to be an Employee of the Sponsor or any Affiliated Company as
provided in Sections 414(n) or (o) of the Code.
2.30 Employment Commencement Date.
(a) "Employment Commencement Date" shall mean the date on
which an Employee is first credited with an Hour of Service for the
Sponsor or an Affiliated Company.
(b) Unless the Sponsor shall expressly determine otherwise,
and except as is expressly provided otherwise in this Plan or in
resolutions of the Board of Directors, an Employee shall not, for the
purposes of determining his/her Employment Commencement
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<PAGE> 13
Date, be deemed to have commenced employment with an Affiliated Company
prior to the effective date on which the entity became an Affiliated
Company.
2.31 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, where the context so
requires, a reference to a particular ERISA section shall also refer to any
successor provision of ERISA to such ERISA section.
2.32 Reserved for Future Modifications.
2.33 Forfeitures. "Forfeitures" shall mean the nonvested portion of
a Participant's benefit that is forfeited in accordance with the provisions of
Article VIII.
2.34 Highly Compensated Employee.
(a) "Highly Compensated Employee" shall mean any Employee
who
(i) was a Five Percent Owner during the Determination Year
or the Look Back Year;
(ii) received Compensation from an Employer in excess of
$75,000 (as adjusted by the Secretary of Treasury) during the
Look Back Year;
(iii) received Compensation from an Employer in excess of
$50,000 (as adjusted by the Secretary of Treasury) during the
Look Back Year and was in the "top-paid group" of Employees for
such Look Back Year;
(iv) was at any time an officer during the Look Back Year
and received Compensation greater than fifty percent (50%) of
the amount in effect under Section 415(b)(1)(A) of the Code in
such Look Back Year; or
(v) was an Employee described in subparagraph (ii), (iii),
or (iv) above for the Determination Year and was a member of the
group consisting of the 100 Employees paid the greatest
Compensation during the Determination Year.
(b) Determination of a Highly Compensated Employee shall be
in accordance with the following definitions and special rules:
(i) "Determination Year" shall mean the Plan Year for which
the determination of Highly Compensated Employee is being made.
(ii) "Look Back Year" shall mean the twelve (12) month
period preceding the Determination Year.
(iii) An Employee shall be treated as a Five Percent Owner
for any Determination Year or Look Back Year if at any time
during such Year such Employee was a Five Percent Owner (as
defined in Section 14.2).
(iv) An Employee is in the "top-paid group" of Employees for
any Determination Year or Look Back Year if such Employee is in
the group consisting of the top twenty percent (20%) of the
Employees when ranked on the basis of Compensation paid during
such Year.
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<PAGE> 14
(v) For purposes of this Section, no more than fifty (50)
Employees (or, if lesser, the greater of three (3) Employees or
ten percent (10%) of the Employees) shall be treated as
officers. To the extent required by Code Section 414(q), if for
any Determination Year or Look Back Year no officer of the
Employer is described in this Section, the highest paid officer
of the Employer for such year shall be treated as described in
this section. Employees who are excluded in determining the
"top-paid group" shall also be excluded in determining the 10%
limit referenced in the first sentence of this subparagraph (v).
(vi) If any individual is a "family member" with respect to
a Five Percent Owner or of a Highly Compensated Employee in the
group consisting of the ten (10) Highly Compensated Employees
paid the greatest Compensation during the Determination Year or
Look Back Year, then
(A) such individual shall not be considered a
separate Employee, and
(B) any Compensation paid to such individual
(and any applicable contribution or benefit on behalf
of such individual) shall be treated as if it were paid
to (or on behalf of) the Five Percent Owner or Highly
Compensated Employee.
For purposes of this subparagraph (vi), the term
"family member" means, with respect to any Employee, such
Employee's Spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
(vii) For purposes of this Section the term "Compensation"
means Compensation as defined in Code Section 415(c)(3), as set
forth in Section 14.2(i), without regard to the limitations of
Code Section 401(a)(17); provided, however, the determination
under this subparagraph (vii) shall be made without regard to
Code Sections 125, 402(a)(8), and 401(h)(1)(B), and in the case
of employer contributions made pursuant to a salary reduction
agreement, without regard to Code Section 403(b).
(viii) For purposes of determining the number of Employees in
the "top-paid" group under this Section, the following Employees
shall be excluded:
(A) Employees who have not completed six (6)
months of Credited Service,
(B) Employees who normally work less than
17-1/2 hours per week,
(C) Employees who normally work not more than
six (6) months during any Plan Year, and
(D) Employees who have not attained age 21,
(E) Except to the extent provided in Treasury
Regulations, Employees who are included in a unit of
employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement
between Employee representatives and Employer, and
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<PAGE> 15
(F) Employees who are nonresident aliens and
who receive no earned income (within the meaning of
Code Section 911(d)(2) from the Employer which
constitutes income from sources within the United
States (within the meaning of Code Section 861(a)(3)).
An Employer may elect to apply Subparagraphs (A) through (D) above by
substituting a shorter period of Credited Service, smaller number of hours or
months, or lower age for the period of service, number of hours or months, or
(as the case may be) than as specified in such Subparagraphs.
(ix) A former Employee shall be treated as a Highly
Compensated Employee if
(A) such Employee was a Highly Compensated
Employee when such Employee incurred a Severance, or
(B) such Employee was a Highly Compensated
Employee at any time after attaining age fifty-five
(55).
(x) Code Sections 414(b), (c), (m), and (o) shall be
applied before the application of this Section. Also, the term
"Employee" shall include "leased employees," within the meaning
of Code Section 414(n), unless such leased Employee is covered
under a "safe harbor" plan of the leasing organization and not
covered under a qualified plan of the Employer.
(xi) For the purpose of this section, the term "Employer"
shall mean the Sponsor and any Affiliated Company.
(xii) Notwithstanding the foregoing, non-resident aliens
without U.S. source income from the Employer shall be
disregarded for all purposes in determining the Highly
Compensated Employees of the Employer.
(c) Notwithstanding the foregoing, for administrative
convenience, the Committee may establish rules and procedures for
purposes of identifying Highly Compensated Employees, which rules and
procedures may result in an Eligible Employee being deemed to be a
Highly Compensated Employee for purposes of the limitations of Article
IV and Article VI, whether or not such Eligible Employee is an
individual described in Code Section 414(q).
2.35 Hour of Service.
(a) "Hour of Service" of an Employee shall mean the
following:
(i) Each hour for which the Employee is paid by the
Company or an Affiliated Company or entitled to payment for the
performance of services as an Employee.
(ii) Each hour in or attributable to a period of time
during which the Employee performs no duties (irrespective of
whether he/she has terminated his/her Employment) due to a
vacation, holiday, illness, incapacity (including pregnancy or
disability), layoff, jury duty, military duty or a Leave of
Absence (if the Leave of Absence is an unpaid medical Leave of
Absence, the Employee will accrue hours for the duration of such
leave for the first six months of such leave), for which he/she
is so paid or so entitled to payment, whether direct or
indirect. However, no such hours
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<PAGE> 16
shall be credited to an Employee if (A) such Employee is
directly or indirectly paid or entitled to payment for such
hours and (B) such payment or entitlement is made or due under a
plan maintained solely for the purpose of complying with
applicable worker's compensation, unemployment compensation, or
disability insurance laws, or is a payment which solely
reimburses the Employee for medical or medically-related
expenses incurred by him/her.
(iii) Each hour for which he/she is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed
to by the Company or an Affiliated Company, provided that such
Employee has not previously been credited with an Hour of
Service with respect to such hour under Subparagraphs (i) or
(ii) above.
Hours of Service under Paragraphs (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R.
Section 2530.200b-2(b). All Hours of Service determined under the
rules of Paragraph (a) shall be credited to the Computation Period to
which the payment relates, rather than the period in which it is made.
(b) In the event that an Employee is compensated for duties
performed on a basis other than actual hours worked and no records of
the Employee's actual working hours are maintained, the Employee shall
be deemed to have completed ten (10) Hours of Service for each day, or
portion thereof during which he/she is credited with an Hour of Service
for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise,
and except as may be expressly provided otherwise in this Plan, an
Employee shall not receive credit for his/her Hours of Service completed
with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company.
2.36 Investment Manager. "Investment Manager" shall mean the one or
more Investment Managers, if any, that are appointed pursuant to Section 5.16
and who constitute investment managers under Section 3(38) of ERISA.
2.37 Leased Employee. "Leased Employee" shall mean any person (other
than an Employee of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for
a period of at least one year, and such services are of a type historically
performed by employees in the business field of the recipient employer.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer. A Leased
Employee shall not be considered an Employee of the recipient if:
(a) Such employee is covered by a money purchase pension
plan providing: (i) a nonintegrated employer contribution rate of at
least ten (10) percent of compensation, as defined in Code Section
415(c)(3), but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the employee's gross income
under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or
Code Section 403(b); (ii) immediate participation; and (iii) full and
immediate vesting; and
(b) Leased Employees do not constitute more than 20 percent
(20%) of the recipient's non-highly compensated workforce.
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2.38 Leave of Absence.
(a) "Leave of Absence" shall mean any personal leave from
active employment (whether with or without pay) duly authorized by the
Company under the Company's standard personnel practices. All persons
under similar circumstances shall be treated alike in the granting of
such Leaves of Absence. Leaves of Absence may be granted by the Company
for reasons of health (including temporary sickness or short term
disability) or public service or for any other reason determined by the
Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in
Paragraph (a) above, the term Leave of Absence shall also mean a
Maternity or Paternity Leave, as defined herein, but only to the extent
and for the purposes required under Paragraph (c) below. As used
herein, "Maternity or Paternity Leave" shall mean an absence from work
for any period (i) by reason of the pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption
of the child by the Employee, or (iv) for purposes of caring for the
child for a period beginning immediately following the birth or
placement referred to in clauses (ii) or (iii) above.
(c) Subject to the provisions of Paragraph (d) below, a
Maternity or Paternity Leave described in Paragraph (b) above shall be
deemed to constitute an authorized Leave of Absence for purposes of this
Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in
Service has occurred, the Severance Date of a Participant who is
absent by reason of a Maternity or Paternity Leave shall not be
deemed to occur any earlier than the second anniversary of the
date upon which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated
as a Leave of Absence solely for purposes of determining whether
or not an Employee has incurred a Break in Service.
Accordingly, such a Maternity or Paternity Leave shall not
result in an accrual of Credited Service for purposes of the
vesting provisions of this Plan or for purposes of determining
eligibility to participate in the Plan pursuant to the
provisions of Article III (except only in determining whether a
Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be
treated as a Leave of Absence unless the Employee provides such
timely information as the Committee may reasonably require to
establish that the absence is for the reasons listed in
Paragraph (b) above and to determine the number of days for
which there was such an absence.
(d) Notwithstanding the limitations provided in Paragraph
(c) above, a Maternity or Paternity Leave described in Paragraph (b)
above shall be treated as an authorized Leave of Absence, as described
in Paragraph (a), for all purposes of this Plan to the extent the period
of absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
Paragraph (a) above without reference to the provisions of Paragraph (b)
above, provided, however, that the special rule provided under this
Paragraph (d) shall not apply if it would result in a Participant who is
absent on a Maternity or Paternity Leave being deemed to have incurred a
Break in Service sooner than under the rules set forth in Paragraph (c).
2.39 Normal Retirement Age. "Normal Retirement Age" shall mean the
Participant's sixty-fifth (65th) birthday.
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<PAGE> 18
2.40 Participant. "Participant" shall mean any Eligible Employee who
has commenced participation in the Plan pursuant to Article III and who retains
rights under the Plan.
2.41 Participant Deposits. "Participant Deposits" shall mean all of
a Participant's deposits to the Plan, including After Tax Deposits and Before
Tax Deposits.
2.42 Period of Severance. "Period of Severance" shall mean the
period of time commencing on an Employee's Severance Date and ending on the
Employee's subsequent Reemployment Commencement Date, if any.
2.43 Plan. "Plan" shall mean the Allergan, Inc. Savings and
Investment Plan described herein and as amended from time to time.
2.44 Plan Administrator. "Plan Administrator" shall mean the
administrator of the Plan, within the meaning of Section 3(16)(A) of ERISA.
The Plan Administrator shall be Allergan, Inc.
2.45 Plan Year. "Plan Year" shall mean the period commencing on the
Effective Date and ending on December 31, 1989 and each subsequent calendar
year.
2.46 Reemployment Commencement Date. "Reemployment Commencement
Date" shall mean, in the case of an Employee who incurs a Severance and who is
subsequently reemployed by the Sponsor or an Affiliated Company, the first day
following the Severance on which the Employee is credited with an Hour of
Service for the Sponsor or Affiliated Company with respect to which he is
compensated or entitled to compensation by the Sponsor or Affiliated Company.
Unless the Sponsor shall expressly determine otherwise and except as is
expressly provided otherwise in this Plan, an Employee shall not, for the
purpose of determining his Reemployment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective date on
which such entity becomes an Affiliated Company.
2.47 Rollover Account. "Rollover Account" of a Participant shall be
his individual account in the Trust Fund in which are held rollover
contributions made pursuant to Section 4.8.
2.48 Severance. "Severance" shall mean the termination of an
Employee's employment with the Sponsor or Affiliated Company by reason of such
Employee's quit, discharge, Disability, death, retirement, or otherwise. For
purposes of determining whether an Employee has incurred a Severance, the
following rules shall apply:
(a) An Employee shall not be deemed to have incurred a
Severance (i) because of his absence from employment with the Sponsor or
Affiliated Company by reason of any paid vacation or holiday period, or
(ii) by reason of any Leave of Absence, subject to the provisions of
Paragraph (b) below.
(b) For purposes of this Plan, an Employee shall be deemed
to have incurred a Severance on the earlier of (i) the date on which he
dies, resigns, is discharged, or otherwise terminates his employment with
the Sponsor or Affiliated Company; or (ii) the date on which he is
scheduled to return to work after the expiration of an approved Leave of
Absence, if he does not in fact return to work on the scheduled
expiration date of such Leave. In no event shall an Employee's Severance
be deemed to have occurred before the last day on which such Employee
performs any services for the Sponsor or Affiliated Company in the
capacity of an
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<PAGE> 19
Employee with respect to which he is compensated or entitled to
compensation by the Sponsor or Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a
Participant who is absent by reason of a Maternity or Paternity Leave,
the provisions of Section 2.38(c)-(d) shall apply for purposes of
determining whether such a Participant has incurred a Break in Service
by reason of such Leave.
2.49 Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.48, provided, however, that the special rules set forth under Section
2.38(c)-(d) shall apply with respect to determining whether a Participant on a
Maternity or Paternity Leave has incurred a Break in Service. In the case of
any Employee who incurs a Severance as provided under Section 2.48 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of
the effective date of the Severance event (e.g., the date of his death,
effective date of a resignation or discharge, etc.), and the subsequent payment
of the aforementioned type of post-Severance compensation shall not operate to
postpone the timing of the Severance Date for purposes of this Plan.
2.50 Sharing Deposits. "Sharing Deposits" of a Participant shall
mean his/her Deposits (whether Before Tax or After Tax) not in excess of five
percent (5%) of Compensation. Sharing Deposits shall participate in
allocations of Company Contributions and Forfeitures. For the Plan Year
beginning on the Effective Date and ending December 31, 1989, deposits made to
the SmithKline Beckman Savings and Incentive Plan and compensation earned while
participating in such plan by any Participant for the period beginning January
1, 1989 and ending on the Effective Date shall be included in Deposits and
Compensation under this Plan solely for the purpose of determining Sharing
Deposits in such Plan Year.
2.51 Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware
Corporation, and any successor corporation or entity.
2.52 Stock Credit Account. "Stock Credit Account" shall mean a
Participant's individual account in the Trust Fund attributable to amounts
transferred from such Participant's PAYSOP account in the SmithKline Beckman
Savings and Investment Plan to this Plan, if any.
2.53 Trust and Trust Fund. "Trust" or "Trust Fund" shall mean the
one or more trusts created for funding purposes under the Plan.
2.54 Trustee. "Trustee" shall mean the individual or entity acting
as a trustee of the Trust Fund.
2.55 Reserved for Future Modifications.
2.56 Reserved for Future Modifications.
2.57 Valuation Date. "Valuation Date" shall mean the date as of
which the Trustee shall determine the value of the assets in the Trust Fund for
purposes of determining the value of each Account, which shall be each business
day in accordance with rules applied in a consistent and uniform basis. For
periods prior to March 1, 1995, the date shall be the latest day of each
calendar month.
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2.58 415 Suspense Account. "415 Suspense Account" shall mean the
account (if any) established and maintained in accordance with the provisions
of Article XIII for the purpose of holding and accounting for allocations of
excess Annual Additions (as defined in Article XIII).
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Participation.
(a) Each Eligible Employee shall be eligible to participate
in the Plan upon the first day of the calendar month ("Eligibility
Date") coincident with or immediately following the Employee's
Employment Commencement Date.
(b) Each Eligible Employee's employment with the Company
terminates (i) after satisfaction of the requirements of Paragraph (a),
above, but prior to his/her Eligibility Date, or (ii) after the Employee
has become a Participant in the Plan, the Employee shall become eligible
to participate in the Plan immediately upon his/her Reemployment
Commencement Date.
3.2 Participants in Prior Plans. Any Employee who was eligible to
participate in the SmithKline Beckman Savings and Investment Plan on the day
preceding the Spin-Off Date (as that term is defined in Section 1.2), shall
automatically be eligible to participate in the Plan on the Effective Date,
provided he/she is an Eligible Employee on that date.
3.3 Participation in Plan Prior to March 1, 1995. Notwithstanding
Section 3.1(a) above, prior to March 1, 1995, each Eligible Employee shall be
eligible to participate in the Plan upon the first day of the calendar month
("Eligibility Date") coincident with or immediately following the completion of
six (6) months of Credited Service.
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ARTICLE IV
PARTICIPANT DEPOSITS
4.1 Election.
(a) Each Eligible Employee may elect to defer the receipt
of a portion of his/her Compensation and to have the deferred amount
contributed directly by the Company to the Plan as Before Tax Deposits.
Before Tax Deposits may be made only by means of payroll deduction.
(b) Each Eligible Employee may elect to contribute to the
Plan a portion of his/her Compensation as After Tax Deposits. After Tax
Deposits may be made only by means of payroll deduction.
(c) The Committee shall prescribe such procedures, either
in writing or in practice, and provide such forms as are necessary or
appropriate for each Participant and each Eligible Employee who will
become a Participant to make deposits pursuant to this Article IV.
However, an election by a Participant shall not be adopted
retroactively.
4.2 Amount Subject to Election.
(a) Participants may elect to contribute a whole percentage
of his/her Compensation to the Plan as Before Tax Deposits not to exceed
ten percent (10%) and, when aggregated with the After Tax Deposits
contributed by such Participant pursuant to Paragraph (b) below, not to
exceed fifteen percent (15%). Notwithstanding the foregoing, no
Participant shall be permitted to make Before Tax Deposits to the Plan
during any calendar year in excess of $7,000, or such larger amount as
may be determined by the Secretary of the Treasury pursuant to Code
Section 402(g)(2), or which exceed the limitations set forth in Section
4.3. For purposes of the dollar limitation, the Before Tax Deposits of
a Participant for any taxable year is the sum of all Before Tax Deposits
under the Plan and all salary reduction amounts under any other
qualified cash or deferred arrangement (as defined in Code Section
401(k)), a simplified employee pension (as defined in Code Section
408(k) and Code Section 402(h)(1)(B)), a deferred compensation plan
under Code Section 457, a trust described in Code Section 501(c)(18) and
any salary reduction amount used to purchase an annuity contract under
Code Section 403(b) whether or not sponsored by the Company but shall
not include any amounts properly distributed as excess annual additions.
(b) Each Participant may elect to contribute a whole
percentage of his/her Compensation to the Plan as After Tax Deposits not
to exceed fifteen percent (15%) when aggregated with the amount of
his/her Before Tax Deposits. Notwithstanding the foregoing, no
Participant shall be permitted to make After Tax Deposits to the Plan
during any Plan Year which exceed the limitations set forth in Section
6.13.
(c) The Committee shall prescribe such procedures, either
in writing or in practice, as it deems necessary or appropriate
regarding the maximum amount that a Participant may elect to defer and
the timing of such an election. These procedures shall apply to all
individuals eligible to make an election described in Section 4.1. The
Committee may, at any time during a Plan Year, require the suspension,
reduction, or recharacterization of Before Tax Deposits or the
suspension or reduction of After Tax Deposits of any Highly Compensated
Employee such that the limitations of Section 4.2(a) and (b) are
satisfied.
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4.3 Limitation on Compensation Deferrals. With respect to each Plan
Year, Compensation Deferral Contributions by a Participant for the Plan Year
shall not exceed the limitation on contributions by or on behalf of Highly
Compensated Participants under Section 401(k) of the Code, as provided in this
Section. In the event that Compensation Deferral Contributions under this Plan
by or on behalf of Highly Compensated Participants exceed the limitations of
this Section for any reason, either such excess contributions shall be
recharacterized as After Tax Deposits or such excess contributions, adjusted
for any income or loss allocable thereto, shall be returned to the Participant,
as provided in Section 4.5.
(a) The Compensation Deferral Contributions by Participants
for a Plan Year shall satisfy the Actual Deferral Percentage Test set
forth in (i) below, or, to the extent not precluded by applicable
regulations, the alternative Actual Deferral Percentage test set forth
in (ii) below:
(i) The average Actual Deferral Percentage for the Highly
Compensated Participants shall not be more than the average
Actual Deferral Percentage of all other Participants multiplied
by 1.25, or
(ii) The excess of the average Actual Deferral Percentage
for the Highly Compensated Participants over the average Actual
Deferral Percentage for all other Participants shall not be more
than two (2) percentage points (or such lesser percentage as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of the alternative limitation set forth in this
Section 4.3(a)(ii) with respect to any Highly Compensated
Participants), and the average Actual Deferral Percentage for
the Highly Compensated Participants shall not be more than the
average Actual Deferral Percentage of all other Participants
multiplied by 2.0.
(iii) In the event the test under (i) above cannot be
satisfied, the Committee shall determine if the use of the
alternative test under (ii) above is available under regulations
relating to the multiple use of the alternative limitation, as
prescribed by the Secretary of the Treasury under Code Section
401(m)(2)(A). If the Committee determines that the alternative
test is not available, either the Actual Deferral Percentage or
the Average Contribution Percentage (as defined in Section 6.13)
for Highly Compensated Participants eligible to participate in
this Plan and a plan of the Company or an Affiliated Company
that is subject to the limitations of Section 401 (k) and (m) of
the Code including, if applicable, this Plan, shall be reduced
in accordance with, and to the extent necessary to satisfy, the
requirements of regulations issued under Code Section 401(m).
(b) Notwithstanding any other provisions of this Plan,
for the purposes of the limitations of this Section 4.3 and Section 4.6
only, the following definitions shall apply:
(i) "Actual Deferral Percentage" shall mean, with respect
to the group of Highly Compensated Participants and the group of
all other Participants for a Plan Year, the ratio, calculated
separately for each Participant in such group, of the amount of
the Participant's Compensation Deferral Contribution for such
Plan Year, to such Participant's Compensation for such Plan
Year, in accordance with regulations prescribed by the Secretary
of the Treasury under Code Section 401(k). To the extent
determined by the Committee and in accordance with regulations
issued by the Secretary of the Treasury, qualified nonelective
contributions on behalf of a Participant that satisfy the
requirements of Code Section 401(k)(3)(c)(ii) may also be taken
into account for the purpose of determining the Actual Deferral
Percentage of such
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<PAGE> 24
Participant. For purposes of computing the Actual Deferral
Percentage, an Eligible Employee who would be a Participant but
for the failure to make Before Tax Deposits shall be treated as
a Participant on whose behalf no Before Tax Deposits are made.
(ii) "Highly Compensated Participant" shall mean for any
Plan Year any Participant who is a Highly Compensated Employee.
(iii) "Participant" shall mean any Eligible Employee who
satisfied the requirements under Section 3.1 during the Plan
Year, whether or not such Eligible Employee has elected to
contribute to the Plan for such Plan Year.
(iv) "Compensation Deferral Contributions" shall mean
amounts contributed to the Plan by a Participant as Before Tax
Deposits pursuant to Section 4.2(a), including excess Before Tax
Deposits (as defined in Section 4.4(a)) of Highly Compensated
Participants but excluding (1) excess Before Tax Deposits of all
other Participants that arise solely from Before Tax Deposits
made under this Plan or plans of the Company, (2) Before Tax
Deposits that are taken into account in the Average Contribution
Percentage test (as defined in Section 6.13) provided that the
Actual Deferral Percentage test is satisfied both with and
without exclusions of these Before Tax Deposits, and (3) any
deferrals properly distributed as excess Annual Additions.
Compensation Deferral Contributions may include, at the election
of the Company, any Company Contributions which meet the
requirements for such inclusion under Code Section 401(k)(3)(C).
(v) "Compensation" shall mean compensation as described
below:
(1) Compensation means compensation determined by
the Company in accordance with the requirements of Code
Section 414(s) and the Regulations thereunder.
(2) For purposes of this Section 4.3, Compensation
may, at the Company's election, include amounts which are
excludable from a Participant's gross income under Code
Section 125 (pertaining to cafeteria plans) and Code Section
402(e)(3) (pertaining to 401(k) salary reductions). The
Company may change its election provided such change does not
discriminate in favor of Highly Compensated Employees.
(3) Compensation taken into account for any Plan
Year shall not exceed $150,000 as adjusted at the time and in
such manner as permitted under Code Section 401(a)(17)(B).
Notwithstanding the foregoing, for Plan Years beginning before
January 1, 1994, 414(s) Compensation as defined under Code
Section 414(s) taken into account for any Plan Year shall not
exceed $200,000 as adjusted in such manner as permitted under
Code Section 415(d) and shall be determined as of the first
day of such Plan Year.
(c) In the event that as of the last day of a Plan Year
this Plan satisfies the requirements of Sections 401(k), 401(a)(4) or
410(b) of the Code only if aggregated with one or more other plans which
include arrangements under Code Section 401(k), then this Section 4.3
shall be applied by determining the Actual Deferral Percentages of
Participants as if all such plans were a single plan, in accordance with
regulations prescribed by the Secretary of the
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<PAGE> 25
Treasury under Section 401(k) of the Code. Plans may be considered one
plan for purposes of satisfying Section 401(k) only if they have the same
Plan Year.
(d) For the purposes of this Section 4.3, the "Actual
Deferral Percentage" for any Highly Compensated Participant who is a
Participant under two or more Code Section 401(k) arrangements of the
Company shall be determined by taking into account the Highly Compensated
Participant's compensation under each such arrangement and contributions
under each such arrangement which qualify for treatment under Code
Section 401(k), in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code. If the
arrangements have different Plan Years, this subsection shall be applied
by treating all such arrangements ending with or within the same calendar
year as a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate plans if mandatorily disaggregated
pursuant to Regulations under Code Section 401(k).
(e) If a Participant is a Five Percent Owner as defined in
Section 14.2(b) or a Highly Compensated Employee in the group consisting
of the ten (10) Highly Compensated Employees paid the greatest
Compensation during the Determination Year or Look Back Year, the Actual
Deferral Percentage for such Participant shall be determined by combining
the Compensation Deferral Contributions and Compensation of the
Participant and all eligible family members as defined in Section
2.34(b)(vi). The family members of such Participant shall be disregarded
as separate employees in determining the Actual Deferral Percentage for
the Highly Compensated Participants and all other Participants.
(f) For purposes of the Actual Deferral Percentage test,
Compensation Deferral Contributions must be made before the last day of
the twelve-month period immediately following the Plan Year to which such
contributions relate.
(g) The determination and treatment of Compensation
Deferral Contributions and the Actual Deferral Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(h) The Committee shall keep or cause to have kept such
records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(k) and (m) and the regulations
thereunder, in accordance with regulations prescribed by the Secretary of
the Treasury.
4.4 Provisions for Return of Excess Before Tax Deposits Over $7,000.
(a) In the event that due to error or otherwise, an amount
of a Participant's Compensation in excess of the $7,000 limitation (after
application of any necessary adjustment) described in Section 4.2(a) is
deferred under this Plan in any calendar year pursuant to such
Participant's Compensation deferral agreement (but without regard to
amounts deferred under any other plan) the excess Before Tax Deposits, if
any, together with income allocable to such amount shall be returned to
the Participant (after withholding applicable federal, state and local
taxes due on such amounts) on or before the first April 15 following the
close of the calendar year in which such excess contribution is made;
provided, however, if there is a loss allocable to the excess Before Tax
Deposits, the amount distributed shall be the amount of the excess as
adjusted to reflect such loss. Any Company Contributions allocated to
the Participant's Sharing Deposits pursuant to Section 6.4(b) which are
attributable to any excess Before Tax Deposits by a Participant, and any
income or loss allocable to such Company Contributions, shall either be
returned to the Company or applied to reduce future Company Contributions
by the Company.
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<PAGE> 26
(b) The amount of income or loss attributable to any
excess Before Tax Deposits described in Paragraph (a) above shall be
equal to the sum of the following:
(i) The income or loss allocable to the Participant's
Before Tax Deposits Account for the Plan Year multiplied by a
fraction, the numerator of which is the excess Before Tax
Deposits as determined under Paragraph (a) above, and the
denominator of which is the balance of the Participant's Before
Tax Deposits Account as of the last day of the Plan Year,
without regard to any income or loss allocable to such Account
during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap
Period using the "safe harbor" method set forth in regulations
prescribed by the Secretary of the Treasury under Code Section
402(g). Under the "safe harbor" method, such allocable income
or loss is equal to 10% of the amount calculated under Section
4.4(b)(i) above, multiplied by the number of calendar months
from the last day of the Plan Year until the date of
distribution of the Participant's excess Before Tax Deposits. A
distribution on or before the 15th of the month is treated as
made on the last day of the preceding month, a distribution
after the 15th of the month is treated as made on the first day
of the next month.
(c) For the purpose of this Section 4.4, "Gap Period" shall
mean the period between the last day of the Plan Year and the date of
distribution of any excess Before Tax Deposits.
(d) In accordance with procedures as may be established,
either in writing or in practice, by the Committee, not later than March
1 of a calendar year a Participant may submit a claim to the Committee
in which he certifies in writing the specific amount of his Before Tax
Deposits for the preceding calendar year which, when added to amounts
deferred for such calendar year under other plans or arrangements
described in Section 401(k), 408(k) or 403(b) of the Code, will cause
the Participant to exceed the $7,000 limitation as described in Section
4.2(a) for such preceding calendar year. Notwithstanding the amount of
the Participant's Before Tax Deposits under the Plan for such preceding
calendar year, the Committee shall treat the amount specified by the
Participant in his claim as a Before Tax Deposit in excess of the $7,000
limitation (after application of any necessary adjustment) for such
calendar year and return it to the Participant in accordance with
Section 4.4(a) above. A Participant is deemed to notify the Committee
of any excess Before Tax Deposits that arise by taking into account only
those Before Tax Deposits made to this Plan and other plans of the
Company.
(e) Any Before Tax Deposits in excess of the $7,000
limitation (after application of any necessary adjustment) described in
Section 4.2(a) which are distributed to a Participant in accordance with
this Section, shall to the extent required by regulations issued by the
Secretary of the Treasury be treated as Annual Additions under Article
XIII for the Plan Year for which the excess Before Tax Deposits were
made, unless such amounts are distributed no later than the first April
15th following the close of the Participant's taxable year.
(f) The Committee shall not be liable to any Participant
(or his/her Beneficiary, if applicable) for any losses caused by a
mistake in calculating the amount of any Participant's excess Before Tax
Deposits or the income or losses attributable thereto.
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<PAGE> 27
4.5 Provision for Recharacterization or Return of Excess Deferrals
by Highly Compensated Participants. The provisions of this Section 4.5 shall
be applied after implementation of the provisions of Section 4.4.
(a) The Committee shall determine in accordance with the
procedures set forth in Section 4.3, as soon as is reasonably possible
following the close of each Plan Year, the extent (if any) to which
deferral treatment under Code Section 401(k) may not be available for
Compensation Deferral Contributions on behalf of any Highly Compensated
Participants. If, pursuant to these determinations by the Committee, a
Highly Compensated Participant's Compensation Deferral Contributions are
not eligible for tax- deferral treatment then, as determined by the
Committee, either (1) any excess Compensation Deferral Contributions
shall be recharacterized as After Tax Deposits in accordance with
regulations issued under Code Section 401(k), or (2) any excess
Compensation Deferral Contributions together with any income or loss
allocable thereto shall be returned to the Highly Compensated
Participant (after withholding applicable federal, state, and local
taxes due on such amounts). Such return or recharacterization shall be
made within the first two and one-half (2-1/2) months following the
close of the Plan Year for which such excess deferrals were made,
provided however, that if any excess deferrals and income or loss
allocable thereto are, due to error or otherwise, not returned by such
date, such amounts as are required to be returned shall be returned not
later than the end of the first Plan Year following the Plan Year for
which such excess deferrals were made.
(b) For purposes of satisfying the Actual Deferral
Percentage test of Section 4.3(a), the amount of any excess Compensation
Deferral Contributions by a Highly Compensated Participant shall be
determined by the Committee by application of the leveling method set
forth in Treasury Regulation Section 1.401(k)-1(f)(2) under which the
Deferral Percentage of the Highly Compensated Participant who has the
highest such percentage for such Plan Year is reduced to the extent
required (i) to enable the Plan to satisfy the Actual Deferral
Percentage test, or (ii) to cause such Highly Compensated Participant's
Deferral Percentage to equal the Deferral Percentage of the Highly
Compensated Participant with the next highest Deferral Percentage. The
process shall be repeated until the Plan satisfies the Actual Deferral
Percentage test. For each Highly Compensated Participant, the amount of
excess Compensation Deferral Contributions shall be equal to the total
Compensation Deferral Contributions made or deemed to be made by such
Highly Compensated Participant (determined prior to the application of
the foregoing provisions of this Paragraph (b)) minus the amount
determined by multiplying the Highly Compensated Participant's Deferral
Percentage (determined after application of the foregoing provisions of
this Paragraph (b)) by his Compensation.
(c) The Determination and correction of excess Compensation
Deferral Contributions of a Highly Compensated Participant whose
Actual Deferral Percentage must be determined under the family
aggregation rules referenced in Section 4.3(e) shall be allocated
among the family members in proportion to the Compensation Deferral
Contributions of each family member that is combined to determine the
combined Actual Deferral Percentage.
(d) The amount of income or loss attributable to any excess
Compensation Deferral Contributions by a Highly Compensated Participant
for a Plan Year shall be equal to the sum of the following:
(i) The income or loss allocable to the Highly Compensated
Participant's Compensation Deferral Contribution Accounts for
the Plan Year multiplied by a fraction, the numerator of which
is the excess Compensation Deferral Contribution as
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<PAGE> 28
determined under Section 4.3, and the denominator of which is
the balance of the Highly Compensated Participant's Compensation
Deferral Contribution Accounts as of the last day of the Plan
Year without regard to any income or loss allocable to such
Accounts during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap
Period using the "safe harbor" method set forth in the
regulations prescribed by the Secretary of the Treasury under
Code Section 401(k). Under the "safe harbor" method, such
allocable income or loss is equal to 10% of the amount
calculated under Section 4.5(d)(i) above, multiplied by the
number of calendar months from the last day of the Plan Year
until the date of distribution of the Participant's excess
Compensation Deferral Contribution. A distribution on or before
the 15th of the month is treated as made on the last day of the
preceding month, a distribution after the 15th of the month is
treated as made on the first day of the next month.
(e) For the purpose of this Section 4.5 the following shall
apply:
(i) "Compensation Deferral Contribution Accounts" shall
mean the Participant's Before Tax Deposits Account and shall
mean any other accounts of the Participant to which Company
Contributions have been allocated where such Company
Contributions have been included as Compensation Deferral
Contributions pursuant to Section 4.3(b)(iv).
(ii) "Gap Period" shall mean the period beginning with the
last day of the Plan Year and the date of distribution of any
excess Compensation Deferral Contributions.
(f) For purposes of this Section, the amount of
Compensation Deferral Contributions by a Participant who is not a Highly
Compensated Participant for a Plan Year shall be reduced by any Before
Tax Deposits which have been distributed to the Participant under
Section 4.4, in accordance with regulations prescribed by the Secretary
of the Treasury under Section 401(k) of the Code.
(g) In the event that the Committee determines that an
amount to be deferred pursuant to the Compensation deferral agreement
provided in Section 4.1 would cause the Company contributions under this
and any other tax-qualified retirement plan maintained by the Company to
exceed the applicable deduction limitations contained in Code Section
404, or to exceed the maximum Annual Addition determined in accordance
with Article XIII, the Committee may treat such amount in accordance
with the rules set forth above in Section 4.5(a).
(h) The Committee shall not be liable to any Participant
(or his/her Beneficiary, if applicable) for any losses caused by a
mistake in calculating the amount of any Participant's excess
Compensation Deferral Contribution or the income or losses attributable
thereto.
(i) To the extent required by regulations under Section
401(k) or 415 of the Code, any excess Compensation Deferral
Contributions with respect to a Highly Compensated Participant shall be
treated as Annual Additions under Article XIII for the Plan Year for
which the excess Compensation Deferral Contributions were made,
notwithstanding the distribution of such excess in accordance with the
provisions of this Section.
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<PAGE> 29
4.6 Termination of, Change in Rate of, or Resumption of Deferrals.
(a) A Participant shall be limited to changing the rate or
form of investment of Before Tax Deposits or After Tax Deposits to once
a month, in 1% increments, (once in any three (3) month period prior to
March 1, 1995). Notwithstanding the foregoing, a Participant shall
change the rate of such Deposits as may be required pursuant to Section
4.2.
(b) The right of a Participant to make Deposits shall cease
during any Period of Severance.
(c) Any change in rate or form of investment of Before Tax
Deposits or After Tax Deposits made by a Participant pursuant to
subparagraph (a) above shall be effective in accordance with the
following rules: (1) If the Participant properly notifies the Plan
Administrator of such change on or before the fifteenth day of any month
(or such later date authorized by the Committee), such change shall be
effective on the first day of the following month. (2) If the
Participant properly notifies the Plan Administrator after the fifteenth
day of any month (or such later date authorized by the Committee) but on
or before the last day of such month, such change shall be effective on
the first day of the second month following such month.
4.7 Character of Deposits. Before Tax Deposits shall be treated as
Company Contributions for purposes of Code Sections 401(k) and 414(h). After
Tax Deposits shall not constitute "qualified voluntary employee contributions"
under Code Section 219 (relating to the deductibility of those amounts).
4.8 Rollover Contributions.
(a) Pursuant to procedures as the Committee may prescribe
(either in writing or practice), a Participant may make a Rollover
Contribution to the Plan. "Rollover Contribution" shall mean a
contribution by a Participant as the result of a distribution from
another "qualified trust" (as defined in Code Section 401) which is
exempt from tax under Code Section 501, but only if such contribution:
(i) Is received by the Committee not later than 60 days
after the distribution was received by the Participant; or
(ii) Is the result of a trustee-to-trustee transfer of
assets between two (2) or more qualified plans, and the
transaction satisfies the requirements of Section 12.3; or
(iii) Is the result of a transfer of assets from an
individual retirement arrangement or annuity (as defined in Code
Section 408) and such individual retirement arrangement or
annuity was created solely from a distribution or distributions
from a qualified plan; or
(iv) Is an "Eligible Rollover Distribution".
(b) A Rollover Contribution shall not be considered a
Participant Deposit.
(c) A Participant's Rollover Contribution made pursuant the
rules of this Section 4.8 shall be held in a separate Rollover Account
for the Employee. This Rollover
23
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Account will not share in allocations of Company Contributions or
Forfeitures under Section 6.4.
24
<PAGE> 31
ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS
5.1 General. All contributions made under the Plan and investments
made and property of any kind or character acquired with any such funds or
otherwise contributed, and all income, profits, and proceeds derived therefrom,
shall be held in Trust and shall be held and administered by the Trustee in
accordance with the provisions of the Plan and Trust Agreement.
5.2 Single Trust. Assets of the Trust shall be held in a separate
fund which shall consist of the Trust Fund. Individual Participant interests
in the Trust Fund shall be reflected in the Accounts maintained for the
Participants. Notwithstanding the foregoing, the Trust Fund shall be treated
as a single trust for purposes of investment and administration, and nothing
contained herein shall require a physical segregation of assets for any fund or
for any Account maintained under the Plan.
5.3 Company Contributions. The Company shall contribute to the Plan
in accordance with the following rules:
(a) Effective March 1, 1995 and subject to the limitations
of Article XIII and to the extent that the Company has current or
accumulated profits, the Company shall contribute monthly out of
current or accumulated profits an amount which, when added to
available forfeitures provided under Section 8.2 resulting from the
terminations during the month, is equal to:
(i) 75% of each Participant's Sharing Deposits for the
previous month which are not in excess of two percent (2%) of such
Participant's Compensation.
(ii) 50% of each Participant's Sharing Deposits for the
previous month which are in excess of two percent (2%) of such
Participant's Compensation but not in excess of three percent (3%) of
such Participant's Compensation.
(iii) 25% of each Participant's Sharing Deposits for the
previous month which are in excess of three percent (3$) of such
Participant's Compensation.
In addition to the foregoing, the Company shall contribute an amount
sufficient to satisfy the reinstatement and plan expense requirements of
Section 6.4(a)(i) and (ii). When a Participant's contributions are suspended
pursuant to Section 8.1, no Company Contributions shall be made for such
Participant.
(b) Prior to March 1, 1995 and subject to the limitations
of Article XIII and to the extent that the Company has current or
accumulated profits, the Company shall contribute monthly out of current
or accumulated profits an amount which, when added to available
forfeitures provided under Section 8.2 resulting from terminations
during the month, is equal to 50% of each Participant's Sharing Deposits
for the previous month plus an amount sufficient to satisfy the
reinstatement and plan expense requirements of Section 6.4(a)(i) and
(ii). When a Participant's contributions are suspended pursuant to
Section 8.1, no Company Contributions shall be made for such
Participant.
(c) The Board of Directors, acting upon the advice and
direction of the Committee, may authorize and direct that the Company
Contribution (expressed as a percentage of
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<PAGE> 32
participants' Sharing Deposits in subparagraph (a) above) be changed
from time to time from a minimum of 0% to a maximum of 100%.
5.4 Form of Company Contributions. The Company's contributions to
the Trust Fund shall be paid in cash, property, or Company Stock as the Company
may from time to time determine.
5.5 Investment of Trust Assets.
(a) The manner in which assets of the Trust will be
invested shall be chosen by the Committee at its discretion, although
the Committee may delegate the management to one or more Investment
Managers appointed pursuant to Section 5.16. Notwithstanding the
foregoing, all Company Contributions contributed on or after the
Effective Date shall be invested in Company Stock except to the extent
invested pursuant to Section 5.5(e). Company Contributions made under
the SKB Plan and transferred to this Plan shall be invested at the
discretion of the Committee.
(b) The Committee may establish separate investment funds
under the Plan, with each fund representing an investment alternative
available to Participants for the investment of their Accounts as
provided in Section 5.4(c) and (d) below. Each Participant shall have a
subaccount under the Plan corresponding to the Participant's interest
which is allocated to each investment fund. Each such subaccount may be
valued separately. The Committee may, at its discretion, establish
alternative investment funds or eliminate any previously established
funds, including but not limited to the following types of investment
funds:
(i) The Interest Income Fund investing in group
annuity contracts with major insurance companies.
(ii) The Balanced Fund investing in common stocks,
bonds, government securities and similar types of investments.
(iii) The Equity Fund investing in a mutual fund which
may invest in equity securities, bonds, preferred stocks, and
interest-bearing cash investments.
(iv) The Company Stock Fund consisting exclusively of
Company Stock.
Notwithstanding the establishment of separate investment funds, up to one
hundred percent (100%) of the assets of the Plan may be invested in Company
Stock.
(c) A Participant may elect the investment fund to which
his or her Before Tax Deposits or After Tax Deposits are invested under
the Plan or may change such elections pursuant to Section 4.6(a). Such
elections shall be limited to the investment funds currently offered by
the Committee and currently available to Participants pursuant to
Paragraph (b) above. A Participant shall effect such an election by
properly completing and submitting the form authorized by the Committee
for this purpose.
(d) Once a month (once in any 3 month period prior to March
1, 1995), a Participant may elect to transfer amounts accrued in such
Participant's Before Tax Deposits Account, After Tax Deposits Account,
or Rollover Account among any of the investment funds currently offered
by the Committee and currently available to the Participant, provided,
however, the total amount transferred shall be in increments of 1% of
the amount accrued in such accounts. A Participant shall effect such a
transfer by properly completing and submitting the application
26
<PAGE> 33
authorized by the Committee for this purpose, or in such manner
authorized by the Committee. Such a transfer shall occur no later than
the first day of the month following the month in which such application
or other authorized request for transfer is deemed perfected. An
application for transfer shall be deemed perfected in a month if such
application is properly completed and submitted to the Plan
Administrator on or before the fifteenth day of such month (or such
later date authorized by the Committee), otherwise such application
shall be deemed perfected in the following month.
(e) Notwithstanding the requirement of Paragraph (a) above
that all Company Contributions be invested in the Company Stock Fund,
any Participant who is an Employee of the Company on or after the date
he or she attains age 55 may elect that (i) all amounts allocated to his
or her Company Contribution Account which are held in the Company Stock
Fund and (ii) all future Company Contributions that may be allocated to
his or her Company Contribution Account, be invested in any of the
investment funds currently offered by the Committee and currently
available to the Participant. A Participant shall make any election,
and may change any election, at such times and in accordance with the
requirements imposed by Section 5.5(c) and (d) above.
(f) A Participant's Stock Credit Account shall remain
invested in the Company Stock Fund until such time as the Participant's
Stock Credit Account is distributed pursuant to Sections 8.2 or 8.3.
(g) Amounts invested in any one of the investment funds
shall not share in gains and losses experienced by any other fund.
(h) Notwithstanding the establishment of separate
investment funds within the Trust, the Trust shall at all times
constitute a single trust.
5.6 Reserved for Future Modifications.
5.7 Irrevocability. The Company shall have no right or title to,
nor interest in, the contributions made to the Trust Fund, and no part of the
Trust Fund shall revert to the Company except that on or after the Effective
Date funds may be returned to the Company as follows:
(a) In the case of a Company Contribution which is made by
a mistake of fact, at the Company's written request that contribution
may be returned to the Company within one (1) year after it is made.
(b) All Company Contributions to the Trust are hereby
conditioned upon the Plan satisfying all of the requirements of Code
Section 401(a). If the Plan does not qualify, at the Company's written
election the Plan may be revoked and all such contributions may be
returned to the Company within one year after the date of Internal
Revenue Service denial of the qualification of the Plan. Upon such a
revocation the affairs of the Plan and Trust shall be terminated and
wound up as the Company shall direct.
(c) All Company Contributions to the Plan are conditioned
upon the deductibility of those contributions under Code Section 404.
To the extent a deduction is disallowed, at the Company's written
request the contribution may be returned to the Company within one year
after the disallowance.
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(d) In the event that the Plan is terminated when there are
amounts remaining in the Suspense Account, the excess funds may revert
to the Company to the extent provided in Section 13.7.
5.8 Company, Committee and Trustee Not Responsible for Adequacy of
Trust Fund.
(a) The Company, Committee, and the Trustee shall not be
liable or responsible for the adequacy of the Trust Fund to meet and
discharge any or all payments and liabilities hereunder. All Plan
benefits will be paid only from the Trust assets, and neither the
Company, the Committee nor the Trustee shall have any duty or liability
to furnish the Trust with any funds, securities or other assets except
as expressly provided in the Plan.
(b) Except as required under the Plan or Trust or under
Part 4 of Subtitle B of Title I of ERISA, the Company shall not be
responsible for any decision, act or omission of the Trustee, the
Committee, or the Investment Manager (if applicable), and shall not be
responsible for the application of any moneys, securities, investments
or other property paid or delivered to the Trustee.
5.9 Certain Offers for Company Stock. Notwithstanding any other
provision of this Plan to the contrary, in the event an offer shall be received
by the Trustee (including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect) to acquire any or all shares of Company Stock held by
the Trust (an "Offer"), the discretion or authority to sell, exchange or
transfer any of such shares shall be determined in accordance with the
following rules:
(a) The Trustee shall have no discretion or authority to
sell, exchange or transfer any of such stock pursuant to such Offer
except to the extent, and only to the extent, that the Trustee is timely
directed to do so in writing by each Participant with respect to any of
such shares that are allocated to such Participant's Accounts.
Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of Paragraphs (c) and (m) of this Section,
sell, exchange or transfer pursuant to such Offer, only such shares as
to which such instructions were given. The Trustee shall use its best
efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee.
In the event, under the terms of an Offer or otherwise, any
shares of Company Stock tendered for sale, exchange or transfer pursuant
to such Offer may be withdrawn from such Offer, the Trustee shall follow
such instructions respecting the withdrawal of such securities from such
Offer in the same manner and the same proportion as shall be timely
received by the Trustee from the Participants entitled under this
Paragraph to give instructions as to the sale, exchange or transfer of
securities pursuant to such Offer.
(b) In the event that an Offer for fewer than all of the
shares of Company Stock held by the Trustee in the Trust shall be
received by the Trustee, each Participant shall be entitled to direct
the Trustee as to the acceptance or rejection of such Offer (as provided
by Paragraph (a) of this Section) with respect to the largest portion of
such Company Stock as may be possible given the total number or amount
of shares of Company Stock the Plan may sell, exchange or transfer
pursuant to the Offer based upon the instructions received by the
Trustee from all other Participants who shall timely instruct the
Trustee pursuant to this Paragraph to sell, exchange or transfer such
shares pursuant to such Offer, each on a pro rata basis in
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accordance with the maximum number of shares each such Participant would
have been permitted to direct under Paragraph (a) had the Offer been for
all shares of Company Stock held in the trust.
(c) In the event an Offer shall be received by the Trustee
and instructions shall be solicited from Participants in the Plan
pursuant to Paragraph (a) of this Section regarding such Offer, and
prior to termination of such Offer, another Offer is received by the
Trustee for the securities subject to the first Offer, the Trustee shall
use its best efforts under the circumstances to solicit instructions
from the Participants to the Trustee (i) with respect to securities
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to withdraw such tender, if possible, and, if withdrawn, whether
to tender any securities so withdrawn for sale, exchange or transfer
pursuant to the second Offer and (ii) with respect to securities not
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to tender or not to tender such securities for sale, exchange or
transfer pursuant to the second Offer. The Trustee shall follow all
such instructions received in a timely manner from Participants in the
same manner and in the same proportion as provided in Paragraph (a) of
this Section. With respect to any further Offer for any Company Stock
received by the Trustee and subject to any earlier Offer (including
successive Offers from one or more existing offerors), the Trustee shall
act in the same manner as described above.
(d) With respect to any Offer received by the Trustee, the
Trustee shall distribute, at the Company's expense, copies of all
relevant material including but not limited to material filed with the
Securities and Exchange Commission with such Offer or regarding such
Offer, and shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to
Paragraphs (a) or (b). The identities of Participants, the amount of
Company Stock allocated to their Accounts, and the Compensation of each
Participant shall be determined from the list of Participants delivered
to the Trustee by the Committee which shall take all reasonable steps
necessary to provide the Trustee with the latest possible information.
(e) The Trustee shall distribute and/or make available to
each Participant who is entitled to respond to an Offer pursuant to
Paragraph (a), (b), or (c) an instruction form to be used by each such
Participant who wishes to instruct the Trustee. The instruction form
shall state that (i) if the Participant fails to return an instruction
form to the Trustee by the indicated deadline, the Company Stock with
respect to which heor she is entitled to give instructions will not be
sold, exchanged or transferred pursuant to such Offer, (ii) the
Participant will be a named fiduciary (as described in Paragraph (j)
below) with respect to all shares for which he or she is entitled to
give instructions, and (iii) the Company acknowledges and agrees to
honor the confidentiality of the Participant's instructions to the
Trustee.
(f) Each Participant may choose to instruct the Trustee in
one of the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he is entitled to give instructions,
or (ii) to sell, exchange or transfer all Company Stock for which heor
she is entitled to give instructions. The Trustee shall follow up with
additional mailings and postings of bulletins, as reasonable under the
time constraints then prevailing, to obtain instructions from
Participants not otherwise responding to such requests for instructions.
Subject to Paragraph (c), the Trustee shall then sell, exchange or
transfer shares according to instructions from Participants, except that
shares for which no instructions are received shall not be sold,
exchanged or transferred.
(g) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to
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Participants pursuant to Paragraphs (d), (e), and (f) of this Section.
The Trustee is hereby authorized to sell, exchange or transfer pursuant
to an Offer any such Company Stock in accordance with appropriate
instructions from such former Participants.
(h) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant
concerning the Offer, nor shall they have any authority or
responsibility to do so. The Trustee has no duty to monitor or police
the party making the Offer; provided, however, that if the Trustee
becomes aware of activity which on its face reasonably appears to the
Trustee to be materially false, misleading, or coercive, the Trustee
shall demand promptly that the offending party take appropriate
corrective action. If the offending party fails or refuses to take
appropriate corrective action, the Trustee shall communicate with
affected Participants in such manner as it deems advisable.
(i) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some but not all Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent
is retained, such agent must agree, as a condition of its retention by
the Company, not to disclose the composition of any Participant Accounts
to the Company, its officers, directors, employees, or representatives.
The Company acknowledges and agrees to honor the confidentiality of
Participants' instructions to the Trustee.
(j) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock allocated to his or her Accounts under the Plan solely for
purposes of exercising the rights of a shareholder with respect to an
Offer pursuant to this Section 5.9 and voting rights pursuant to Section
5.10.
(k) Reserved for future plan modifications.
(l) To the extent that an Offer results in the sale of
Company Stock in the Trust, the Committee shall instruct the Trustee as
to the investment of the proceeds of such sale.
(m) In the event a court of competent jurisdiction shall
issue to the Plan, the Company or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to
be made as to whether or not Company Stock held by the Trustee shall be
sold, exchanged or transferred pursuant to an Offer or cause any such
provision or provisions to conflict with securities laws, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall have
no discretion as to whether or not Company Stock held in the Trust shall
be sold, exchanged, or transferred unless required under such order or
opinion, but shall follow instructions received from Participants, to
the extent such instructions have not been invalidated by such order or
opinion. To the extent required to exercise any residual fiduciary
responsibility with respect to such sale, exchange or transfer, the
Trustee shall take into account in exercising its fiduciary judgment,
unless it is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what action is
in the best interests of Participants. Further, the Trustee, in
addition to taking into consideration any
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relevant financial factors bearing on any such decision, shall take into
consideration any relevant nonfinancial factors, including, but not
limited to, the continuing job security of Participants as employees of
the Sponsor or any Affiliated Company, conditions of employment,
employment opportunities and other similar matters, and the prospect of
the Participants and prospective Participants for future benefits under
the Plan.
5.10 Voting of Company Stock. Notwithstanding any other provision of
the Plan to the contrary, the Trustee shall have no discretion or authority to
vote Company Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions
received by the Trustee from either the Committee or Participants, depending on
who has the right to direct the voting of such stock as provided in the
following provisions of this Section 5.10.
(a) (1) All Company Stock held in the Trust Fund shall be
voted by the Trustee as the Committee directs in its absolute
discretion, except as provided in this Section 5.10(a).
(2) If the Sponsor has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code), then
with respect to all corporate matters, each Participant shall be
entitled to direct the Trustee as to the voting of all Company
Stock allocated and credited to his Accounts.
(3) If the Sponsor does not have a registration-type
class of securities (as defined in Section 409(e)(4) of the
Code), then only with respect to such matters as the approval or
disapproval of any corporate merger or consolidation,
recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of trade or business, or such
similar transactions as may be prescribed in Treasury
Regulations, each Participant shall be entitled to direct the
Trustee as to the voting of all Company Stock allocated and
credited to the his Accounts.
(b) All Participants entitled to direct such voting shall
be notified by the Sponsor, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Sponsor or any other party regarding the exercise of such
rights. Such Participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect
the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional interests in shares). To
the extent that a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under any Company Stock credited to
his Accounts, such Company Stock shall not be voted. The Trustee shall
maintain confidentiality with respect to the voting directions of all
Participants.
(c) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock for which he has the right to direct the voting under the Plan but
solely for the purpose of exercising voting rights pursuant to this
Section 5.10 or certain Offers pursuant to Section 5.9.
(d) In the event a court of competent jurisdiction shall
issue an opinion or order to the Plan, the Company or the Trustee, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate under ERISA, in all circumstances or in any particular
circumstances, any provision or provisions of this Section regarding the
manner in which Company stock held
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in the Trust shall be voted or cause any such provision or provisions to
conflict with ERISA, then, upon notice thereof to the Company or the
Trustee, as the case may be, such invalid or conflicting provisions of
this Section shall be given no further force or effect. In such
circumstances the Trustee shall nevertheless have no discretion to vote
Company Stock held in the Trust unless required under such order or
opinion but shall follow instructions received from Participants, to the
extent such instructions have not been invalidated. To the extent
required to exercise any residual fiduciary responsibility with respect
to voting, the Trustee shall take into account in exercising its
fiduciary judgment, unless it is clearly imprudent to do so, directions
timely received from Participants, as such directions are most
indicative of what is in the best interests of Participants. Further,
the Trustee, in addition to taking into consideration any relevant
financial factors bearing on any such decision, shall take into
consideration any relevant nonfinancial factors, including, but not
limited to, the continuing job security of Participants as employees of
the Company or any of its subsidiaries, conditions of employment,
employment opportunities and other similar matters, and the prospect of
the Participants and prospective Participants for future benefits under
the Plan.
5.11 Securities Law Limitation. Neither the Committee nor the
Trustee shall be required to engage in any transaction, including without
limitation, directing the purchase or sale of Company Stock, which either
determines in its sole discretion might tend to subject itself, its members,
the Plan, the Company, or any Participant or Beneficiary to a liability under
federal or state securities laws.
5.12 Distributions. Money and property of the Trust shall be paid
out, disbursed, or applied by the Trustee for the benefit of Participants and
Beneficiaries under the Plan in accordance with directions received by the
Trustee from the Committee. Upon direction of the Committee, the Trustee may
pay money or deliver property from the Trust for any purpose authorized under
the Plan. The Trustee shall be fully protected in paying out money or
delivering property from the Trust from time to time upon written order of the
Committee and shall not be liable for the application of such money or property
by the Committee.
The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.
5.13 Taxes. If the whole or any part of the Trust, or the proceeds
thereof, shall become liable for the payment of any estate, inheritance, income
or other tax, charge, or assessment which the Trustee shall be required to pay,
the Trustee shall have full power and authority to pay such tax, charge, or
assessment out of any moneys or other property in its hands for the account of
the person whose interests hereunder are so liable, but at least ten (10) days
prior to making any such payment, the Trustee shall mail notice to the
Committee of its intention to make such payment. Prior to making any transfers
or distributions of any of the Trust, the Trustee may require such releases or
other documents from any lawful taxing authority as it shall deem necessary.
5.14 Trustee Records to be Maintained. The Trustee shall keep
accurate and detailed accounts of all investments, receipts, disbursements, and
other transactions hereunder, and all accounts, books, and records relating
thereto shall be open to inspection and audit at all reasonable times by any
person designated by the Company (subject to the provisions of Section 5.9(i)).
5.15 Annual Report of Trustee. Promptly following the close of each
Plan Year (or such other period as may be agreed upon between the Trustee and
Committee), or promptly after receipt of a written request from the Company,
the Trustee shall prepare for the Company a written account
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which will enable the Company to satisfy the annual financial reporting
requirements of ERISA, and which will set forth among other things all
investments, receipts, disbursements, and other transactions effected by the
Trustee during such Plan Year or during the period from the close of the last
Plan Year to the date of such request. Such account shall also describe all
securities and other investments purchased and sold during the period to which
it refers, the cost of acquisition or net proceeds of sale, the securities and
investments held as of the date of such account, and the cost of each item
thereof as carried on the books of the Trustee. All accounts so filed shall be
open to inspection during business hours by the Company, the Committee, and by
Participants and Beneficiaries of the Plan (subject to the provisions of
Section 5.9(i)).
5.16 Appointment of Investment Manager. From time to time the
Committee, in accordance with Section 9.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over
assets of the Trust not invested or to be invested in Company Stock. The
Committee shall notify the Trustee of such assets of the appointment of the
Investment Manager. In the event more than one Investment Manager is
appointed, the Committee shall determine which assets shall be subject to
management and control by each Investment Manager and shall also determine the
proportion in which funds withdrawn or disbursed shall be charged against the
assets subject to each Investment Manager's management and control. As shall
be provided in any contract between an Investment Manager and the Committee,
such Investment Manager shall hold a revocable proxy with respect to all
securities which are held under the management of such Investment Manager
pursuant to such contract (except for Company Stock), and such Investment
Manager shall report the voting of all securities subject to such proxy on an
annual basis to the Committee.
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ARTICLE VI
ACCOUNTS AND ALLOCATIONS
6.1 Participants' Accounts. In order to account for the allocated
interest of each Participant in the Trust Fund, there shall be established and
maintained for each Participant (making such form of contribution) a Before Tax
Deposits Account, a After Tax Deposits Account, a Company Contribution Account,
a Stock Credit Account, and a Rollover Account.
6.2 Reserved for Plan Modifications.
6.3 Allocation of Amounts Contributed by Participants. All After
Tax Deposits and Before Tax Deposits contributed by a Participant shall be
allocated to the separate Account established and maintained for that
Participant for such form of contributions. Such contributions shall be paid
by the Company to the Trustee as soon as practicable, but in no event later
than thirty (30) days after such amounts are withheld from the Participants'
paychecks.
6.4 Allocation of Company Contributions and Forfeitures. Within 30
days of the last day of each month, Company Contributions made pursuant to
Section 5.3 for such month and Forfeitures which occurred during such month
shall be allocated as follows:
(a) (i) All Company Contributions for such month shall
first be used to restore the Accounts of Participants rehired
during such month pursuant to the rules of Section 8.6 but only
after all Forfeitures occurring during such month are so
applied.
(ii) If any Forfeitures remain after application of
subparagraph (i), such funds shall be allocated to the Company
Contribution Accounts of Participants to the extent necessary to
correct insufficient allocations made to such Accounts in prior
months discovered during the Plan Year to which such Forfeitures
are attributable. Any Company Contributions which remain after
the application of subparagraph (i) may be used to pay Plan
expenses. The determination of the extent to which such
contributions shall be used to pay Plan expenses shall be made
at the sole discretion of the Committee.
(iii) Any Company Contributions and Forfeitures which
remain after the application of subparagraphs (i) and (ii) above
shall be allocated to the Company Contribution Accounts of all
Participants who made Sharing Deposits during such month, in an
amount equal to the percentages provided in Section 5.3(a) (or
such percentage established by the Board of Directors pursuant
to Section 5.3(c)) of the Sharing Deposits for such month of
each such Participant.
(b) The allocations of Company Contributions under this
Section 6.4 shall be made after any allocations required by Sections 6.5
and 13.5 have been made.
6.5 Valuation of Participants' Accounts. Within sixty (60) days
after each Valuation Date the Trustee shall value the assets of the Trust on
the basis of fair market values. Company Stock held by the Trust shall be
valued in accordance with Section 6.6. If separate investment funds are
maintained under the Trust pursuant to Section 5.4(b) then each such fund shall
be valued separately so that gains or losses of the various funds shall not be
commingled. Upon receipt of these valuations from the Trustee, the Committee
shall revalue the Accounts and subaccounts (as established pursuant to Section
5.4(b)), if any, of each Participant as of the applicable Valuation Date so as
to reflect, among
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other things, a proportionate share in any increase or decrease in the fair
market value of the assets in the Trust Fund, determined by the Trustee as of
that date as compared with the value of the assets in the Trust Fund as of the
immediately preceding Valuation Date.
6.6 Valuation of Company Stock. Company Stock held by the Trust
shall be valued according to the following rules:
(a) In the case of Company Stock that is publicly traded on
a national securities exchange, such stock shall be valued by reference
to the closing price of such stock on such exchange on the last trading
day of the month for which such stock is being valued.
(b) In the case of Company Stock that is not publicly
traded on a national securities exchange, such stock shall be valued as
of the first day of each Plan Year, or such other time as established by
the Committee, by determining the fair market value of such stock
through the use of an independent appraiser. Such fair market valuation
shall be used to determine the valuation of each Participant's Company
Stock Account on each Valuation Date in such Plan Year pursuant to
Section 6.5.
6.7 Dividends, Splits, Recapitalizations, Etc. Any Company Stock
received by the Trustee as a stock split, dividend, or as a result of a
reorganization or other recapitalization of the Company shall be allocated in
the same manner as the Company Stock to which it is attributable is then
allocated.
6.8 Stock Rights, Warrants or Options.
(a) In the event any rights, warrants, or options are
issued on Company Stock held in the Trust Fund, the Trustee shall
exercise them for the acquisition of additional Company Stock as
directed by the Committee to the extent that cash is then available in
the Trust Fund.
(b) Any Company Stock acquired in this fashion shall be
treated as Company Stock purchased by the Trustee for the net price paid
and shall be allocated in the same manner as the funds used to purchase
the Company Stock were or would be allocated under the provisions of
this Plan. Thus, if the funds used to purchase the stock consisted of
unallocated Company Contributions, the stock would be allocated under
the terms of Section 6.4; if the funds used consisted of the unallocated
net income of the Trust, the stock would be allocated as provided in
Section 6.5; and if the funds used consisted of funds previously
allocated to the Accounts, the stock would be allocated in the manner in
which the Accounts or subaccounts are debited and credited.
(c) Any rights, warrants, or options on Company Stock which
cannot be exercised for lack of cash may, as directed by the Committee,
be sold by the Trustee and the proceeds allocated in accordance with the
source of the Company Stock with respect to which the rights, warrants,
or options were issued in accordance with rules of Paragraph (b) above.
6.9 Reserved for Plan Modifications.
6.10 Treatment of Accounts Upon Severance. Upon a Participant's
Severance, pending distribution of the Participant's benefit pursuant to the
provisions of Article VIII below, the Participant's Accounts shall continue to
be maintained and accounted for in accordance with all applicable provisions of
this Plan, including but not limited to the allocation of Company Contributions
and net income or loss to which the Accounts are entitled under the applicable
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provisions of Sections 6.4 and 6.5 as of any Valuation Date or other date
preceding the distribution of the Participant's entire benefit under the Plan.
6.11 Cash Dividends.
(a) All cash dividends paid to the Trustee with respect to
Company Stock that has been allocated to a Participant's Account as of
the quarterly date on which the dividend is received by the Trustee
shall be allocated to the Participant's Account.
(b) If a Participant (or Beneficiary) has a current right
to a distribution in Company Stock pursuant to Article VIII and such
stock has not yet been re-registered in the name of the Participants (or
Beneficiary) as of the record date of any dividend on such stock, such
dividend shall be distributed to the Participant (or Beneficiary).
(c) Notwithstanding the provisions of Paragraph (a) and (b)
above, the Committee may determine, in its discretion, that cash
dividends on such shares may be used to purchase additional shares of
Company Stock, or in whatever other manner it deems appropriate.
6.12 Miscellaneous Allocation Rules.
(a) In the event that there is more than one class of
Company Stock to be allocated to Participants' Accounts, there shall be
allocated to the Account of each Participant (entitled to share in
allocations of Company Stock as of any applicable date) the portion of
each class of Company Stock (to be allocated as of that date) which the
amount to be allocated to the Account of the Participant bears to the
total amount to be allocated to the Accounts of all Participants
entitled to share in such allocation.
(b) Allocations of all assets other than Company Stock
shall be made on the basis of, and expressed in terms of dollar value.
Allocations of Company Stock shall be on the basis of the number of
shares of Company Stock (including fractional shares) and valuations, as
of each Valuation Date, shall be expressed in terms of number of shares
and dollar value.
(c) The Committee and the Trustee shall establish such
additional accounting procedures as may be necessary for the purpose of
making the allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VI. From time to time the
Committee and Trustee may modify such additional accounting procedures
for the purpose of achieving equitable, nondiscriminatory, and
administratively feasible allocations among the Accounts of Participants
in accordance with the general concepts of the Plan and the provisions
of this Article VI.
(d) The Company, the Committee and Trustee do not in any
manner or to any extent whatsoever warrant, guarantee or represent that
the value of a Participant's Account shall at any time equal or exceed
the amount previously contributed thereto.
6.13 Limitations on After Tax Deposits and Company Contributions.
With respect to each Plan Year, After Tax Deposits and Matching Contributions
under the Plan for the Plan Year shall not exceed the limitations by or on
behalf of Highly Compensated Participants under Section 401(m) of the Code, as
provided in this Section. In the event that After Tax Deposits and Matching
Contributions under this Plan by or on behalf of Highly Compensated
Participants for any Plan Year exceed the limitations of this Section for any
reason, such excess After Tax Deposits and Matching Contributions and any
income or loss allocable thereto shall be disposed of in accordance with
Section 6.14.
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(a) The After Tax Deposits by Participants and Matching
Contributions on behalf of Participants for a Plan Year shall satisfy
the Average Contribution Percentage test set forth in (i) below, or, to
the extent not precluded by applicable regulations, the alternative
Average Contribution Percentage test set forth in (ii) below:
(i) The "Average Contribution Percentage" for the
Highly Compensated Participants shall not be more than the
Average Contribution Percentage of all other Participants
multiplied by 1.25, or
(ii) The excess of the Average Contribution
Percentage for the Highly Compensated Participant over the
Average Contribution Percentage for all other Participants shall
not be more than two (2) percentage points (or such lesser
percentage as the Secretary of the Treasury shall prescribe to
prevent the multiple use of the alternative limitation set forth
in this Section 6.13(a)(ii) with respect to any Highly
Compensated Participant), and the Average Contribution
Percentage for the Highly Compensated Participant shall not be
more than the Average Contribution Percentage of all other
Participants multiplied by 2.0.
(iii) If one or more Highly Compensated Employees
participate in both a cash or deferred arrangement and a plan
subject to the Average Contribution Percentage test maintained
by the Sponsor or an Affiliated Company and the sum of the
Actual Deferral Percentage and Average Contribution Percentage
of those Highly Compensated Employees subject to either or both
test exceeds the Aggregate Limit, then the Average Contribution
Percentage of those Highly Compensated Employees who also
participate in the cash or deferred arrangement will be reduced
(beginning with such Highly Compensated Employee whose Average
Contribution Percentage is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Average Contribution Percentage is reduced shall be
treated as an Excess Aggregate Contribution. The Actual
Deferral Percentage and Average Contribution Percentage of the
Highly Compensated Employee are determined after any corrections
required to meet the Actual Deferral Percentage and Average
Contribution Percentage tests. Multiple use does not occur if
both the Actual Deferral Percentage and Average Contribution
Percentage of those Highly Compensated Employees does not exceed
125 percent of the Actual Deferral Percentage and Average
Contribution Percentage of all other Participants.
(b) For purposes of Sections 6.13 and 6.14 the following
definitions shall apply:
(i) "Average Contribution Percentage" shall mean,
with respect to a group of Participants for a Plan Year, the
average of the "Contribution Percentage" in such group. The
"Contribution Percentage" for any Participant is determined by
dividing the sum of the Participant's After Tax Deposits and
Matching Contributions under the Plan on behalf of such
Participant for such Plan year by such Participant's
Compensation for the Plan Year in accordance with regulations
prescribed by the Secretary of the Treasury under Code Section
401(m). Such Contribution Percentage, however, shall not
include Matching Contributions that are forfeited either to
correct Excess Aggregate Contributions or because the
contribution to which they relate are excess Before Tax
Deposits, excess After Tax Deposits, or Excess Aggregate
Contributions. To the extent determined by the Committee and in
accordance with regulations issued by the Secretary of the
Treasury under Code Section 401(m)(3), Before Tax Deposits and
any
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<PAGE> 44
qualified nonelective contributions, within the meaning of Code
Section 401(m)(4)(C) on behalf of a Participant may also be
taken into account for purposes of calculating the Contribution
Percentage of a Participant. However, if any Before Tax
Deposits are taken into account for purposes of determining
Actual Deferral Percentages under Section 4.3 then such Before
Tax Deposits shall not be taken into account under this Section
6.13.
(ii) "Highly Compensated Participant" shall mean for
any Plan Year any Participant who is a Highly Compensated
Employee.
(iii) "Participant" shall mean any Eligible Employee
who satisfied the requirements under Section 3.1 during the Plan
Year whether or not such Eligible Employee has elected to
contribute to the Plan for such Plan Year.
(iv) "Matching Contributions" shall mean the Company
Contributions allocated to a Participant's Company Contribution
Account pursuant to Section 6.4(a) of the Plan.
(v) "Compensation" shall mean compensation as
described below:
(1) Compensation means compensation
determined by the Company in accordance with the requirements of
Code Section 414(s) and the Regulations thereunder.
(2) For purposes of this Section 6.13,
Compensation may, at the Company's election, include amounts
which are excludable from a Participant's gross income under
Code Section 125 (pertaining to cafeteria plans) and Code
Section 402(e)(3) (pertaining to 401(k) salary reductions). The
Company may change its election provided such change does not
discriminate in favor of Highly Compensated Employees.
(3) Compensation taken into account for
any Plan Year shall not exceed $150,000 as adjusted at the time
and in such manner as permitted under Code Section
401(a)(17)(B). Notwithstanding the foregoing, for Plan Years
beginning before January 1, 1994, 414(s) Compensation as defined
under Code Section 414(s) taken into account for any Plan Year
shall not exceed $200,000 as adjusted in such manner as
permitted under Code Section 415(d) and shall be determined as
of the first day of such Plan Year.
(vi) "Aggregate Limit" shall mean the sum of (1) 125
percent of the greater of the Actual Deferral Percentage of all
Non-Highly Compensated Participants for the Plan Year or the
Average Contribution Percentage of Non-Highly Compensated
Participants under the Plan subject to Code Section 401(m) for
the Plan Year beginning with or within the Plan Year of the cash
or deferred arrangement and (2) the lesser of 200% or two plus
the lesser of such Actual Deferral Percentage or Average
Contribution Percentage. "Lesser" is substituted for "greater"
in (1) above, and "greater" is substituted for "lesser" after
"two plus the" in (2) above if it would result in a larger
Aggregate Limit.
(vii) "Excess Aggregate Contributions" shall mean,
with respect to any Plan Year, the excess of:
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<PAGE> 45
(1) The aggregate After Tax Deposits and
Matching Contributions taken into account in computing the
numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan year, over
(2) The maximum After Tax Deposits and
Matching Contributions permitted under the Average Contribution
Percentage test as determined by reducing such Matching
Contributions made on behalf of Highly Compensated Employees in
order of their Contribution Percentages, beginning with the
highest of such percentages.
Such determination shall be made after first determining
excess Before Tax Deposits pursuant to Sections 4.2(a) and 4.3.
(viii) "Non-Highly Compensated Participant" shall mean any
Participant who is not a Highly Compensated Employee.
(c) For the purposes of this Section 6.13, if two or more
plans described in Code Section 401(a) are considered one plan for the
purposes of Code Sections 401(m), 401(a)(4) or 410(b), the Contribution
Percentages of Participants shall be treated as made under one plan.
Plans may be considered one plan for purposes of satisfying Code Section
401(m) only if they have the same Plan Year.
(d) For purposes of this Section 6.13, the Contribution
Percentage for any Highly Compensated Participants who is eligible to
have After Tax Deposits or Matching Contributions allocated to his or
her account under two or more plans maintained by the Sponsor or an
Affiliated Company shall be determined as if the total of such After Tax
Deposits or Matching Contributions was made under each plan. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate plans if mandatorily disaggregated
pursuant to Regulations under Code Section 401(m).
(e) If a Participant is a Five Percent Owner as defined in
Section 14.2(b) or a Highly Compensated Employee in the group consisting
of the ten (10) Highly Compensated Employees paid the greatest
Compensation during the Determination Year or Look Back Year, the Average
Contribution Percentage for such Participant shall be determined by
combining the After Tax Deposits, Matching Contribution and Compensation
of the Participant and all eligible family members as defined in Section
2.34(b)(vi). The family members of such Participant shall be disregarded
as separate employees in determining the Average Contribution Percentage
for the Highly Compensated Participants and all other Participants.
(f) For purposes of the Average Contribution Percentage
test, After Tax Deposits shall be considered to have been made in the
Plan Year in which contributed to the Trust. Matching Contributions
shall be considered made for a Plan Year if made no later than the end
of the twelve-month period beginning on the day after the close of the
Plan Year.
(g) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
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<PAGE> 46
(h) The Committee shall keep or cause to have kept such
records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
6.14 Provision for Disposition of Excess After Tax Deposits or
Matching Contributions on Behalf of Highly Compensated Participants. After
application of the provisions of Section 4.4 and 4.5, the following provisions
shall be implemented:
(a) The Committee shall determine, as soon as is reasonably
possible following the close of each Plan Year, the extent (if any) to
which contributions by or on behalf of Highly Compensated Participants
may cause the Plan to exceed the limitations of Section 6.13 for such
Plan Year. If, pursuant to the determination by the Committee and as
required by the leveling method described in paragraph (b) below,
contributions by or on behalf of a Highly Compensated Participant may
cause the Plan to exceed such limitations, then the Committee shall take
the following steps:
(i) First, any excess After Tax Deposits that were not
matched by Matching Contributions, together with income or loss
allocable to such amount (determined in accordance with (d)
below) shall be returned to the Highly Compensated Participant.
(ii) Second, if any excess remains after the provisions of
(i) above are applied, to the extent necessary to eliminate the
excess, Matching Contributions with respect to the Highly
Compensated Participant, any corresponding matched After Tax
Deposits, and any income or loss allocable thereto, shall either
be distributed (if non-forfeitable) to the Highly Compensated
Participant or forfeited (to the extent forfeitable under the
Plan) on a pro-rata basis. Amounts of excess Matching
Contributions forfeited by Highly Compensated Participants under
this Section 6.14, including any income or loss allocable
thereto, shall be applied to reduce Matching Contributions by
the Company or the Affiliated Company that made the Matching
Contribution on behalf of the Highly Compensated Participant for
the Plan Year for which the excess contribution was made.
(iii) If administratively feasible, any amounts distributed
pursuant to subparagraphs (i) or (ii) above shall be returned
within two and one-half (2-1/2) months following the close of
the Plan Year for which such excess After Tax Deposits or
Matching Contributions were made, but in any event no later than
the end of the first Plan Year following the Plan Year for which
the excess After Tax Deposits or Matching Contributions were
made. After Tax Deposits and Matching Contributions for any
Plan Year shall be made on the basis of the respective portions
of such excess After Tax Deposits and Matching Contributions
attributable to each Highly Compensated Participant.
(b) For purposes of satisfying the Average Contribution
Percentage test, the amount of any excess After Tax Deposits or Matching
Contributions by or on behalf of Highly Compensated Participants for a
Plan Year under Section 6.13 shall be determined by application of the
leveling method set forth in Treasury Regulation Section
1.401(m)-1(e)(2) under which the Contribution Percentage of the Highly
Compensated Participant who has the highest such percentage for such
Plan Year is reduced to the extent required (i) to enable the Plan to
satisfy the Average Contribution Percentage test, or (ii) to cause such
Highly Compensated Participant's Contribution Percentage to equal the
Contribution Percentage of the Highly Compensated Participant with the
next highest Contribution Percentage. This process shall be
40
<PAGE> 47
repeated until the Plan satisfies the Average Contribution Percentage
test. For each Highly Compensated Participant, the amount of excess
After Tax Deposits or Matching Contributions shall be equal to the total
After Tax Deposits or Matching Contributions made on behalf of such
Highly Compensated Participant (determined prior to the application of
the foregoing provisions of this Paragraph (b)) minus the amount
determined by multiplying the Highly Compensated Participant's
Contribution Percentage (determined after the application of the
foregoing provisions of this Paragraph (b)) by his Compensation.
(c) The determination and correction of excess After Tax
Deposits and Matching Contributions made on behalf of a Highly
Compensated Participant whose Average Contribution Percentage must be
determined under the family aggregation rules referenced in Section
6.13(e) shall be allocated among the family members in proportion to the
After Tax Deposits and Matching Contributions of each family member that
is combined to determine the combined Average Contribution Percentage.
(d) The amount of income or loss attributable to any excess
After Tax Deposits or Matching Contributions, as determined under this
Section 6.14 (the "Excess Aggregate Contribution") by a Highly
Compensated Participant for a Plan Year shall be equal to the sum of the
following:
(i) The income or loss allocable to the Highly
Compensated Participant's Excess Aggregate Contribution Accounts
for the Plan Year multiplied by a fraction, the numerator of
which is the Excess Aggregate Contribution and the denominator
of which is the sum of the balance of the Highly Compensated
Participant's Excess Aggregate Contribution Accounts without
regard to any income or loss allocable to such Accounts during
the Plan Year; and
(ii) The amount of allocable income or loss for the
Gap Period using the "safe harbor" method set forth in
regulations prescribed by the Secretary of the Treasury under
Code Section 401(m). Under the "safe harbor" method, such
allocable income or loss is equal to 10% of the amount
calculated under Section 6.14(d)(i) above, multiplied by the
number of calendar months from the last day of the Plan Year
until the date of distribution of the Participant's excess After
Tax Deposits or Matching Contributions. A distribution on or
before the 15th of the month is treated as made on the last day
of the preceding month, a distribution after the 15th of the
month is treated as made on the first day of the next month.
(e) For the purpose of this Section 6.14, the following
shall apply:
(i) "Excess Aggregate Contribution Accounts" shall
mean the Participant's After Tax Deposits Account and Company
Contribution Account.
(ii) "Gap Period" shall mean the period between last
day of the Plan Year and the date of distribution of any Excess
Aggregate Contributions.
(f) Any excess After Tax Deposits and/or Matching
Contributions distributed to a Highly Compensated Participant or
forfeited by a Highly Compensated Participant in accordance with this
Section 6.14, shall be treated as Annual Additions under Article XIII
for the Plan Year for which the excess contribution was made.
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<PAGE> 48
(g) Neither the Committee nor the Plan Administrator shall
be liable to any Participant (or his/her Beneficiary, if applicable) for
any losses caused by a mistake in calculating the amount of any Excess
Aggregate Contributions by or on behalf of a Highly Compensated
Participant and the income or loss allocable thereto.
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<PAGE> 49
ARTICLE VII
VESTING IN PLAN ACCOUNTS
7.1 No Vested Rights Except as Herein Provided. No Participant
shall have any vested right or interest to, or any right of payment of, any
assets of the Trust Fund, except as expressly provided in this Plan. Neither
the making of any allocations nor the credit to any Account of a Participant
shall vest in any Participant any right, title, or interest in or to any assets
of the Trust Fund.
7.2 Vesting Schedule.
(a) A Participant's interest in his/her Company Contribution
Account shall vest in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Credited Service Vested Percentage
------------------------- -----------------
<S> <C>
Less than 3 0%
3 or more 100%
</TABLE>
(b) Notwithstanding the above, a Participant shall become
fully vested in his or her Company Contribution Account upon the
occurrence of any of the following events, if such Participant is then
still an Employee:
(i) Attainment of age sixty-two (62);
(ii) Death;
(iii) Severance due to a Disability; or
(iv) Occurrence of a Change of Control pursuant to Section
12.4.
(c) Notwithstanding the above, a Participant shall at all
times be 100% vested in all amounts transferred from the SmithKline
Beckman Corporation Savings and Investment Plan to this Plan.
7.3 Vesting of Participant Deposits. A Participant shall be fully
vested at all times in the amounts allocated to his or her Before Tax Deposits
Account, After Tax Deposits Account, Stock Credit Account and Rollover Account.
43
<PAGE> 50
ARTICLE VIII
PAYMENT OF PLAN BENEFITS
8.1 Withdrawals During Employment. A Participant may withdraw, once
in any month period, amounts of at least $500 from his or her Accounts while an
Employee in accordance with the following rules:
(a) A Participant may, for any reason, withdraw any portion
of the amount allocated to his After Tax Deposits Account excluding any
After Tax Deposits recharacterized (and any earnings attributable to
such After Tax Deposits after December 31, 1988) as such under Section
4.5. A Participant who makes such a withdrawal shall not receive an
allocation of Company Contributions pursuant to Section 6.4(a)(iii) with
respect to any Sharing Deposits made by such Participant during the 6
month period beginning on the date of any such withdrawal.
(b) After withdrawing all After Tax Deposits pursuant to
paragraph (a) above, a Participant with 3 or more years of Credited
Service may, for any reason, withdraw any portion of the amount
allocated to his or her Company Contribution Account that was so
allocated 2 or more years prior to the date of such a withdrawal.
(c) On or after the attainment of age 59-1/2, a Participant
may withdraw any portion of the amounts allocated to any of hisor her
Accounts except his or her Stock Credit Account.
(d) After withdrawing all amounts permitted pursuant to
Paragraphs (a), (b) and (c) above, a Participant may withdraw amounts
from his or her Before Tax Deposits Account (excluding any earnings
attributable to such Account after December 31, 1988) and Rollover
Account, and the vested portion of his or her Company Contribution
Account, and any remaining amount in his or her After Tax Deposits after
December 31, 1988) earnings attributable to such After Tax Deposits
after December 31, 1988) which were recharacterized as such under
Section 4.5 upon incurring a hardship as determined by the Plan
Administrator in accordance with the following procedures:
(i) A hardship distribution shall be made to a
Participant only if the Plan Administrator (or its
representative) determines that the Participant has an immediate
and heavy financial need and that a withdrawal from the Plan is
necessary in order to satisfy such need.
(ii) The following situations shall be "deemed" to be
immediate and heavy financial needs:
(1) Medical expenses described in Code
Section 213(d) incurred by the Participant, the
Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152);
(2) The purchase (excluding mortgage
payments) of a principal residence for the Participant
only;
(3) The payment of tuition and related
educational fees for the next twelve (12) months of
post-secondary education for the Participant, his or her
spouse, children, or dependents;
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<PAGE> 51
(4) The need to prevent the eviction of the
Participant from his or her principal residence or
foreclosure on the mortgage of the Participant's
principal residence; and
(5) Any other situation deemed as immediate
and heavy financial needs by the Internal Revenue Service
through the publication of revenue rulings, notices, and
other documents of general applicability.
(iii) In the case of the hardship withdrawal of the vested
portion of a Participant's Company Contribution Account, the
following situations shall also be "deemed" to be immediate and
heavy financial needs:
(1) The purchase of a primary residence for
the Participant or a dependent, including related
expenses incurred up to 3 months following the purchase;
(2) Any education expense for the Participant
or a dependent for the current or immediately prior
school semester;
(3) The funeral expense of a dependent; and
(4) Any medical or dental expenses for the
Participant or his or her dependents incurred during the
current or immediately prior calendar year.
(iv) The determination as to whether a withdrawal from the
Plan is necessary to satisfy an immediate and heavy financial
need is to be made on the basis of all relevant facts and
circumstances. However, a withdrawal from the Plan shall be
necessary in order to satisfy an immediate and heavy financial
need only if:
(1) The amount of the withdrawal is not in
excess of the amount required to relieve the financial
need (including amounts necessary to pay any federal,
state, or local income taxes or penalties reasonably
anticipated to result from the withdrawal) or in excess
of the amount that such need could not be satisfied from
other sources that are reasonably available to the
Participant.
(2) The Participant submits a signed
statement to the Committee, on which the Committee can
reasonably rely, to the extent that the need cannot 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 Before Tax Deposits or After
Tax Deposits under the Plan; or
(D) By other withdrawals or distributions or
nontaxable (at the time of the loan) loans from
any plan maintained by the Company (including
this Plan) or any other employer, or by
borrowing from commercial sources on reasonable
commercial terms.
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<PAGE> 52
(v) A Participant's resources shall be deemed to include
those assets of his or her spouse and minor children that are
reasonably available to the Participant.
(vi) A Participant who makes a hardship withdrawal
pursuant to this Section 8.1(d) shall not be permitted to make
Before Tax Deposits or After Tax Deposits for a period of 12
months from the date of such withdrawal unless such withdrawal
only included amounts from such Participant's Company
Contribution Account.
(vii) A Participant who makes a hardship withdrawal
pursuant to this Section 8.1 may not make Before Tax
Contributions for such Participant's taxable year immediately
following the taxable year of such hardship withdrawal that is
in excess of the applicable limit under Code Section 402(g) for
such immediately following taxable year less the amount of such
Participant's Before Tax Contributions for the taxable year in
which such Participant made the hardship withdrawal.
(viii) Notwithstanding the provisions of Paragraph (e)
below, all hardship withdrawals shall be made in cash regardless
of the fund from which such withdrawal is made. The Committee
may, at its discretion, establish written procedures whereby
Participants may receive an estimated prepayment of a hardship
withdrawal based on the last available valuation of such
Participant's Accounts with a reconciling adjustment made to
such Participant's Accounts after current valuation data is
available.
(e) Except as provided in subparagraph (d)(viii) above, all
withdrawals shall be made in cash, except to the extent any of the
vested portion of a Participant's Account to be withdrawn is invested in
the Company Stock Fund, then such withdrawal may be made in Company
Stock at the election of the Participant to the extent so invested.
(f) Except as provided in Paragraphs (a) through (d) above,
Participants may not receive a distribution of their benefits under the
plan prior to termination of employment.
(g) Except as provided in Paragraph (d)(viii) above, all
withdrawals shall be made to Participants as soon as reasonably
practicable following the Valuation Date in the month for which a
properly completed withdrawal request is deemed perfected. All
withdrawals shall be based on the Account balances of a Participant as
of such Valuation Date. If a properly completed withdrawal request is
received by the Plan Administrator during any month and on or before the
fifteenth day of such month, the withdrawal request shall be deemed
perfected in such month, otherwise such withdrawal request shall be
deemed perfected in the immediately following month.
(h) Notwithstanding anything to the contrary in this
Section 8.1 or Section 4.1, the following additional withdrawal
restrictions shall apply to all Participants who are Insiders. For the
purpose of this Section 8.1, the term "Insider" shall mean any
Participant who is directly or indirectly the beneficial owner of more
than 10% of any class of any equity security (other than an exempted
security) of the Sponsor (or the Company) which is registered pursuant
to Section 12 of the Securities Exchange Act of 1934 or who is a
"director" or an "officer" of the Sponsor or the Company as those terms
are interpreted for the purpose of determining persons subject to
Section 16 of such Act.
(i) Any Insider who withdraws, pursuant to Paragraphs (a)
or (b) above, any amounts allocated to his After Tax Deposits
Account or Company Contributions
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<PAGE> 53
Account and attributable to After Tax Deposits or Company
Contributions made on or after the Effective Date shall not be
permitted to contribute any After Tax Deposits or Before Tax
Deposits for the 12 month period beginning on the date of any
such withdrawal.
(ii) Any Insider who withdraws, pursuant to Paragraph (d)
above, any amounts allocated to his Company Contributions
Account and attributable to Company Contributions made on or
after the Effective Date shall not be permitted to contribute
any After Tax Deposits or Before Tax Deposits for the 12 month
period beginning on the date of any such withdrawal.
(iii) Any Insider who withdraws, pursuant to Paragraph (a)
above, any amounts allocated to his After Tax Deposits Account
and attributable to employee after-tax contributions from 6% to
15% of compensation made to the SmithKline Beckman Savings and
Investment Plan and transferred to this Plan shall not be
permitted to contribute any After Tax Deposits or Before Tax
Deposits for the six month period beginning on the date of the
third such withdrawal in any such 12 month period.
(iv) Any Insider who withdraws, pursuant to Paragraph (a)
above, any amounts allocated to his After Tax Deposits Account
and attributable to employee after-tax contributions from 1% to
5% of compensation made to the SmithKline Beckman Savings and
Investment Plan and transferred to this Plan shall not be
permitted to contribute any After Tax Deposits or Before Tax
Deposits for the six month period beginning on the date of any
such withdrawal.
(v) Any Insider who withdraws, pursuant to Paragraph (b)
above, any amounts allocated to his Company Contributions
Account and attributable to company matching contributions made
to the SmithKline Beckman Savings and Investment Plan and
transferred to this Plan shall not be permitted to contribute
any After Tax Deposits or Before Tax Deposits for the 12 month
period beginning on the date of any such withdrawal.
8.2 Distributions Upon Termination of Employment or Disability.
(a) Subject to the provisions of Sections 8.5, if a
Participant incurs a Severance for any reason (including Disability)
other than death, such Participant shall (i) receive a distribution of
his or her entire vested portion of his or her Accounts under the Plan
or (ii) may elect to have an Eligible Rollover Distribution paid
directly by the Trustee to the trustee of an Eligible Retirement Plan.
(b) Any distribution made pursuant to Paragraph (a) above
shall be made in one lump sum distribution in cash except to the extent
any of the vested portion of such Participant's Accounts is invested in
the Company Stock Fund, then, to the extent so invested, such
distribution may be made in Company Stock at the election of the
Participant.
(c) Notwithstanding the provisions contained in the
foregoing Subsections of this Section 8.2 or Section 8.1, any provision
which restricts or would deny a Participant through the withholding of
consent or the exercise of discretion by some person or persons other
than the Participant (and where relevant, other than the Participant's
spouse) of an alternative form of benefit, in violation of Code Section
411(d)(6) and the regulation promulgated thereunder, is hereby amended
by the deletion of the consent and/or discretion requirement.
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<PAGE> 54
8.3 Distribution Upon Death of Participant. In the event of the
death of a Participant, the Participant's benefit under the Plan shall be
distributed to the surviving spouse as Beneficiary (if still alive) unless the
Participant designated another Beneficiary pursuant to Section 8.4. If the
Beneficiary is the surviving spouse of the Participant, he or she may elect to
have an Eligible Rollover Distribution paid directly by the Trustee to the
trustee of an Eligible Retirement Plan. Distributions to the Beneficiary
pursuant to this Section 8.3 shall be in the same form as specified in Section
8.2(b) above, as elected by the Beneficiary. All such distributions shall be
made as soon as practicable after the death of the Participant. A Beneficiary
may not elect to defer such a distribution.
8.4 Designation of Beneficiary.
(a) At any time, and from time to time, each Participant
shall have the unrestricted right to designate the Beneficiary to
receive the portion of his death benefit and to revoke any such
designation. Each such designation shall be evidenced by a written
instrument signed by the Participant and filed with the Committee.
(b) If the Participant is married and designates a
Beneficiary other than his spouse, said designation shall not be honored
by the Committee unless accompanied by the written consent of said
spouse to said designation. Such consent (i) must designate a
Beneficiary which may not be changed without the consent of the spouse
(or the consent of the spouse expressly permits designation by the
Participant without any further consent by the spouse), (ii) must
acknowledge the effect of the designation, and (iii) must be witnessed
by a Plan representative or a notary public. No consent of such spouse
shall be necessary if it is established to the satisfaction of a Plan
representative that the consent required under this paragraph (b) cannot
or need not be obtained because (i) there is no spouse, (ii) the spouse
cannot be located, or (iii) there exist such other circumstances which,
pursuant to Regulations under Code Section 417, permit a distribution to
another Beneficiary. Any consent of a spouse obtained pursuant to this
paragraph (b) or any determination that the consent of the spouse cannot
(or need not) be obtained, shall be effective only with respect to that
spouse. If a Participant becomes married following his designation of a
Beneficiary other than his spouse, such designation shall be ineffective
unless the spousal consent requirements of this paragraph are satisfied
with respect to such spouse (subject, however, to the provisions of
Article XV regarding Qualified Domestic Relations Orders).
(c) If the Participant is married and does not designate a
Beneficiary, the Participant's spouse shall be his Beneficiary for
purposes of this Section. If the deceased Participant is not married
and shall have failed to designate a Beneficiary, or if the Committee
shall be unable to locate the designated Beneficiary after reasonable
efforts have been made, or if such Beneficiary shall be deceased,
distribution of the Participant's death benefit shall be made by payment
of the deceased Participant's entire interest in the Trust to his
personal representative in a single lump-sum payment. In the event the
deceased Participant is not a resident of California at the date of his
death, the Committee, in its discretion, may require the establishment
of ancillary administration in California. If the Committee cannot
locate a qualified personal representative of the deceased Participant,
or if administration of the deceased Participant's estate is not
otherwise required, the Committee, in its discretion, may pay the
deceased Participant's interest in the Trust to his heirs at law
(determined in accordance with the laws of the State of California as
they existed at the date of the Participant's death).
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8.5 Distribution Rules. Notwithstanding any other provisions of
this Article VIII of the Plan regarding distributions of Participant's
Accounts, the following additional rules shall apply to all such distributions.
(a) In no event shall any benefits under this Plan,
including benefits upon retirement, Severance, or Disability, be paid
(or commence to be paid) to a Participant prior to the "Consent Date"
(as defined herein) unless the Participant consents in writing to the
payment (or commencement of payment) of such benefits prior to said
Consent Date. As used herein, the term "Consent Date" shall mean the
later of (1) the Participant's 62nd birthday, or (2) the Participant's
Normal Retirement Age. Notwithstanding the foregoing, the provisions of
this Paragraph shall not apply (1) following the Participant's death, or
(2) with respect to a lump sum distribution of the vested portion of a
Participant's Account if the total amount of such vested portion does
not exceedor has never exceeded $3,500.
(b) Unless a Participant elects otherwise pursuant to
Paragraph (a) above, distributions of the vested portion of a
Participant's Accounts shall commence no later than the 60th day after
the close of the Plan Year in which the latest of the following events
occurs: (1) the Participant's Normal Retirement Age; (2) the tenth
anniversary of the year in which the Participant commenced participation
in the Plan; or (3) the termination of the Participant's employment with
the Company.
(c) Notwithstanding Paragraph (a) or (b) above,
distributions of the entire vested portion of a Participant's Accounts
shall be made no later than the Participant's Required Beginning Date,
or, if such distribution is to be made over the life of such Participant
or over the lives of such Participant and a Beneficiary (or over a
period not extending beyond the life expectancy of such Participant and
Beneficiary) then such distribution shall commence no later than the
Participant's Required Beginning Date. Required Beginning Date shall
mean:
(1) For the period prior to January 1, 1989, April
1 of the calendar year following the later of the calendar year
in which the Participant (i) attains age 70-1/2, or (ii)
retires; provided, however, the foregoing clause (ii) shall not
apply with respect to a Participant who is a Five Percent Owner
(as defined in Section 416(i) of the Code) at any time during
the five Plan Year period ending in the calendar year in which
the Participant attains age 70-1/2. If the Participant becomes
a Five Percent Owner during any Plan Year subsequent to the five
Plan Year period referenced above, the Required Beginning Date
under this Subparagraph (1) shall be April 1 of the calendar
year following the calendar year in which such subsequent Plan
Year ends.
(2) For the period after December 31, 1988, April 1
of the calendar year following the calendar year in which the
Participant attains age 70-1/2; provided, however, if the
Participant attains age 70-1/2 before January 1, 1988 and the
Participant was not a Five Percent Owner (as defined in Section
416(i) of the Code) at any time during the Plan Year ending with
or within the calendar year in which such Participant attains
age 66-1/2 or any subsequent Plan Year, then this Subparagraph
(2) shall not apply and the Required Beginning Date shall be
determined under Subparagraph (1) above.
(d) Notwithstanding anything to the contrary in this Plan,
if a Participant dies before distribution of his or her vested benefit
has begun in accordance with paragraph (c) above, the Participant's
vested benefit shall be distributed to his Beneficiary within five years
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from the date of the Participant's death except that any portion of the
Account balance meeting the following requirements shall not be subject
to this rule:
(1) A Beneficiary has been designated to receive
the Participant's Account balance and such designation is
effective at the Participant's death;
(2) The Account balance is paid to the Beneficiary
over the Beneficiary's life or over a period not to exceed the
Beneficiary's life; and
(3) The payments to the Beneficiary commence within
one year of the Participant's death, or, if the Beneficiary is
the spouse, before the time the deceased Participant would have
attained age 70-1/2.
(e) All distributions under this Plan shall be made in
accordance with the minimum distribution incidental benefit requirements
of Code Section 401(a)(9)(G) and in accordance with all regulations
issued under Code Section 401(a)(9).
(f) If it is not administratively practical to calculate
and commence payments by the latest date specified in the rules of
Paragraphs (b), (c) and (d) above because the amount of the
Participant's benefit cannot be calculated, or because the Committee is
unable to locate the Participant (or eligible Beneficiary) after making
reasonable efforts to do so, the payment shall be made as soon as is
administratively possible (but not more than 60 days) after the
Participant (or Beneficiary) can be located and the amount of the
distributable benefit can be ascertained.
8.6 Forfeitures.
(a) In the event that a distribution of the entire vested
portion of a Participant's Accounts is made to a Participant due to a
Severance when he is not fully vested in such Accounts, the nonvested
portion of the Participant's Account(s) shall be forfeited as of the
Participant's Severance Date. A Participant who incurs such a Severance
when no portion of his or her Accounts are vested shall be deemed to
have received a distribution pursuant to this Paragraph (a).
(b) In the event a Participant who receives a distribution
pursuant to Paragraph (a) above is rehired by the Company prior to the
date such Participant incurs five consecutive Breaks in Service, the
amount so forfeited shall be reinstated to the Participant's Accounts as
of the Participant's Reemployment Commencement Date (without regard to
any interest or investment earnings on such amount).
(c) If a Participant incurs a Severance when partially
vested in his Accounts and does not receive a distribution described in
Paragraph (a), the Participant's Account shall continue to be held by
the Trustee as provided in Section 6.10. Thereafter, when the
Participant incurs five consecutive Breaks in Service, the non-vested
portion of the Participant's Accounts shall be forfeited.
(d) Forfeitures shall be used as provided in Section 6.4.
8.7 Valuation of Plan Benefits Upon Distribution. For the purpose
of any distribution of benefits under this Article VIII, the amount of such
distribution shall be based on the value of a Participant's Accounts as of the
Valuation Date in the month in which the application for such distribution is
deemed perfected. If a properly completed distribution application is received
by the
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Plan Administrator during any month and on or before the fifteenth day of such
month, the distribution application shall be deemed perfected in such month,
otherwise such distribution application shall be deemed perfected in the
immediately following month.
8.8 Lapsed Benefits.
(a) In the event that a benefit is payable under this Plan
to a Participant and after reasonable efforts the Participant cannot be
located for the purpose of paying the benefit during a period of three
consecutive years, the Participant shall be presumed dead and the
benefit shall, upon the termination of that three year period, be paid
to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the
purpose of paying the benefit for the following two years, then the
benefit shall be forfeited and allocated to the Accounts of the other
Participants for such Plan Year in accordance with Section 6.4.
(c) If a Participant shall die prior to receiving a
distribution of his entire benefit under this Plan (other than a
Participant presumed to have died as provided above), if after
reasonable efforts an eligible Beneficiary of the Participant cannot be
located for the purpose of paying the benefit during a period of five
consecutive years, the benefit shall, upon expiration of such five-year
period, be forfeited and reallocated to the Accounts of the other
Participants in accordance with Section 6.4.
(d) For purposes of this Section, the term "Beneficiary"
shall include any person entitled under Section 8.4 to receive the
interest of a deceased Participant or deceased designated Beneficiary.
It is the intention of this provision that during the relevant waiting
period (two years or five years) the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 8.4 if
no eligible Beneficiary in a higher priority category can be located by
the Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a
forfeiture the Participant or an eligible Beneficiary shall claim the
forfeited benefit, the amount forfeited shall be reinstated (without
regard to any interest or investment earnings on such amount) and paid
to the claimant as soon as practical following the claimant's production
of reasonable proof of his or her identity and entitlement to the
benefit (determined pursuant to the Plan's normal claim review
procedures under Section 9.8).
(f) The Committee shall direct the Trustee with respect to
the procedures to be followed concerning a missing Participant (or
Beneficiary), and the Company shall be obligated to contribute to the
Trust Fund any amounts necessary after the application of Section 6.4 to
pay any reinstated benefit after it has been forfeited pursuant to the
provisions of this Section.
8.9 Persons Under Legal Disability.
(a) If any payee under the Plan is a minor or if the
Committee reasonably believes that any payee is legally incapable of
giving a valid receipt and discharge for any payment due him/her, the
Committee may have the payment, or any part thereof, made to the person
(or persons or institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or committee of the payee.
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(b) Any such payment shall be a payment from the Accounts
of the payee and shall, to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.
8.10 Additional Documents.
(a) The Committee or the Company may require satisfactory
proof of any matter under this Plan from or with respect to any
Employee, Participant, or Beneficiary, and no person shall be entitled
to receive any benefits under this Plan until the required proof shall
be furnished.
(b) The Committee or Trustee, or both, may require the
execution and delivery of such documents, papers and receipts as the
Committee or Trustee may determine necessary or appropriate in order to
establish the fact of death of the deceased Participant and of the right
and identity of any Beneficiary or other person or persons claiming any
benefits under this Article VIII.
(c) The Committee or the Trustee, or both, may, as a
condition precedent to the payment of death benefits hereunder, require
an inheritance tax release and/or such security as the Committee or
Trustee, or both, may deem appropriate as protection against possible
liability for State or Federal death taxes attributable to any death
benefits.
8.11 Trustee-to-Trustee Transfers. In the case of any Participant or
Participants who have terminated employment with the Company and all Affiliated
Companies and subsequently become employed by an unrelated successor employer,
the Committee, shall at the request of such Participant or Participants, direct
the Trustee to transfer the assets in the Accounts of such Participant or
Participants directly to the trustee of any retirement plan maintained by such
successor employer or employers in lieu of any distribution described in the
preceding provisions of this Article VIII but only if (i) the retirement plan
maintained by such successor employer is determined to the satisfaction of the
Committee to be qualified under Section 401 of the Code, (ii) the sponsor and
trustee of such plan consent to the transfer, and (iii) such transfer satisfies
the conditions of Section 12.3 hereof.
8.12 Loans to Participants. A Participant may borrow from his or her
Accounts while an Employee in accordance with the following rules:
(a) Subject to minimum and maximum loan requirements, a
Participant may borrow up to 50% of his or her After Tax Deposits
Account, Rollover Account, the vested portion of his or her Company
Contribution Account and Before Tax Deposits Account. Only one loan may
be outstanding to a Participant any time. The minimum loan amount shall
be $1,000 and the maximum loan amount shall be $50,000. The $50,000
maximum loan amount shall be reduced by the excess, if any, of the
highest outstanding balance of loans from the Plan to the Participant
during the one-year period ending on the day before the loan is made over
the outstanding balance of loans on the date the loan is made.
(b) A loan to a Participant shall be made solely from his or
her Account(s) and shall be considered an investment directed by the
Participant. Loan amounts shall be funded from the Participant's
Accounts in the following order: (1) After Tax Deposits Account; (2)
Rollover Account; (3) Company Contribution Account; and (4) Before Tax
Deposits Account. Principal repayments shall be credited to the
Participant's Accounts in the inverse of the order used to fund the loan
and interest payments shall be credited to the Participant's Accounts in
direct proportion to the principal repayments.
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(c) A loan to a Participant shall bear an interest rate
equal to the prime rate reported in the Wall Street Journal on the last
business day of the previous month plus one percent (1%) and shall remain
fixed throughout the term of the loan. Notwithstanding the preceding
sentence, if the Committee determines that such rate is not reasonable or
otherwise not in accordance with applicable requirements under the Code
or ERISA, the Committee shall set an alternate interest rate at the time
that the loan is taken.
(d) A loan to a Participant shall have a definite maturity
date and repayment schedule and shall be amortized on a substantially
level basis with repayments occurring not less frequently than quarterly.
Loans, other than loans made for the purpose of acquiring the principal
residence of the Participant, shall be made for a period not to exceed
five (5) years. Loans made for the purpose of acquiring the principal
residence of the Participant shall be made for a period not to exceed
fifteen (15) years.
(e) A loan to a Participant shall be secured by the vested
portion of the Participant's Account(s). No more than 50% of the
Participant's vested Account(s) as determined on the date the loan is
issued shall be considered by the Plan as security for a loan. A
Participant who borrows from the Plan hereby agrees that, unless
expressly provided otherwise in loan documents, any such loan is
automatically secured by 50% of his or her vested Account(s).
(f) A loan to a Participant shall be evidenced by a
promissory note and/or such other documentation as required by the
Committee.
(g) A loan to a Participant shall be treated as a
distribution unless the entire principal amount and any interest accrued
thereon is repaid within ninety (90) days after the occurrence of a
Participant's Severance. Absent repayment by the Participant, the
Committee shall instruct the Trustee to distribute the note to the
Participant as part of his or her distribution and the Participant's
vested Account(s) shall be reduced to the extent of such distribution.
(h) The Committee shall establish the participant loan
program and have the duty to manage and administer the participant loan
program in accordance with the terms and provisions of this Section. The
Committee shall have, but not by way of limitation, the following
discretionary powers and authority:
(1) To determine the manner in which loan
repayments shall occur whether it be through automatic payroll
deductions or otherwise.
(2) To establish any fees, including but not
limited to application fees and maintenance fees, and the
manner in which such fees are collected from the Participant.
(3) To consider only those factors which would be
considered in a normal commercial setting by persons in the
business of making similar types of loans in establishing the
participant loan program. Such factors may include the
applicant's credit worthiness and financial need, but may not
include any factor which would discriminate against
Participants who are not Highly Compensated Employees. Loans
shall be made available to all Participants without regard to
a Participant's race, color, religion, sex, age or national
origin and shall not be made available to Participants who are
Highly Compensated Employees in an amount greater than the
amount made available to Participants who are not Highly
Compensated Employees.
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ARTICLE IX
OPERATION AND ADMINISTRATION
9.1 Appointment of Committee. There is hereby created a committee
(the "Committee") which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall
from time to time fill all vacancies occurring in said Committee. The members
of the Committee shall constitute the Named Fiduciaries of the Plan within the
meaning of Section 402(a)(2) of ERISA; provided that solely for purposes of
Section 5.9 hereof, Participants shall be Named Fiduciaries with respect to
shares of Company Stock allocated to their respective Accounts and solely for
purposes of Section 5.10, Participants shall be Named Fiduciaries with respect
to shares of Company Stock allocated to their respective Accounts on matters as
to which they are entitled to provide voting directions.
9.2 Transaction of Business. A majority of the Committee shall
constitute a quorum for the transaction of business. Actions of the Committee
may be taken either by vote at a meeting or in writing without a meeting. All
action taken by the Committee at any meeting shall be by a vote of the majority
of those present at such meeting. All action taken in writing without a
meeting shall be by a vote of the majority of those responding in writing. All
notices, advices, directions and instructions to be transmitted by the
Committee shall be in writing and signed by or in the name of the Committee.
In all its communications with the Trustee, the Committee may, by either of the
majority actions specified above, authorize any one or more of its members to
execute any document or documents on behalf of the Committee, in which event it
shall notify the Trustee in writing of such action and the name or names of its
members so designated and the Trustee shall thereafter accept and rely upon any
documents executed by such member or members as representing action by the
Committee until the Committee shall file with the Trustee a written revocation
of such designation.
9.3 Voting. Any member of the Committee who is also a Participant
hereunder shall not be qualified to act or vote on any matter relating solely
to himself, and upon such matter his presence at a meeting shall not be counted
for the purpose of determining a quorum. If, at any time a member of the
Committee is not so qualified to act or vote, the qualified members of the
Committee shall be reduced below two (2), the Board of Directors shall promptly
appoint one or more special members to the Committee so that there shall be at
least one qualified member to act upon the matter in question. Such special
Committee members shall have power to act only upon the matter for which they
were especially appointed and their tenure shall cease as soon as they have
acted upon the matter for which they were especially appointed.
9.4 Responsibility of Committee. The authority to control and
manage the operation and administration of the Plan, the general administration
of this Plan, the responsibility for carrying out this Plan and the authority
and responsibility to control and manage the assets of the Trust are hereby
delegated by the Board of Directors to and vested in the Committee, except to
the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the limitations of this Plan, the Committee shall, from time to
time, establish rules for the performance of its functions and the
administration of this Plan. In the performance of its functions, the
Committee shall not discriminate in favor of Highly Compensated Employees.
9.5 Committee Powers. The Committee shall have all discretionary
powers necessary to supervise the administration of the Plan and control its
operations. In addition to any discretionary powers and authority conferred on
the Committee elsewhere in the Plan or by law, the Committee shall have, but
not by way of limitation, the following discretionary powers and authority:
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(a) To designate agents to carry out responsibilities
relating to the Plan, other than fiduciary responsibilities as provided
in Section 9.6.
(b) To employ such legal, actuarial, medical, accounting,
clerical, and other assistance as it may deem appropriate in carrying
out the provisions of this Plan, including one or more persons to render
advice with regard to any responsibility any Named Fiduciary or any
other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time
for the conduct of the Committee's business and the administration and
effectuation of this Plan.
(d) To administer, interpret, construe, and apply this Plan
and to decide all questions which may arise or which may be raised under
this Plan by any Employee, Participant, former Participant, Beneficiary
or other person whatsoever, including but not limited to all questions
relating to eligibility to participate in the Plan, the amount of
Credited Service of any Participant, and the amount of benefits to which
any Participant or his Beneficiary may be entitled.
(e) To determine the manner in which the assets of this
Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time,
to invest and reinvest the Trust Fund, or any part thereof, or to
purchase, exchange, or lease any property, real or personal, which the
Committee may designate. This shall include the right to direct the
investment of all or any part of the Trust in any one security or any
one type of securities permitted hereunder. Among the securities which
the Committee may direct the Trustee to purchase are "qualifying
employer securities" as defined in Internal Revenue Code Section
4975(e).
(g) Subject to provisions (a) through (d) of Section 10.1,
to make administrative amendments to the Plan that do not cause a
substantial increase or decrease in benefit accruals to Participants and
that do not cause a substantial increase in the cost of administering
the Plan.
(h) To perform or cause to be performed such further acts
as it may deem to be necessary, appropriate or convenient in the
efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary powers conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary
powers conferred upon the Committee shall be absolute; provided, however, that
all such discretionary power shall be exercised in a uniform and
nondiscriminatory manner.
9.6 Additional Powers of Committee. In addition to any
discretionary powers or authority conferred on the Committee elsewhere in this
Plan or by law, such Committee shall have the following discretionary powers
and authority:
(a) To appoint one or more Investment Managers pursuant to
Section 5.16 to manage and control any or all of the assets of the Trust
not invested or to be invested in Company Stock.
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(b) To designate persons (other than the members of the
Committee) to carry out fiduciary responsibilities, other than any
responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the
members of the Committee, other than any responsibility to manage or
control the assets of the Trust;
(d) To cancel any such designation or allocation at any
time for any reason;
(e) To direct the voting of any Company Stock or any other
security held by the Trust subject to Section 9.13 hereof; and
(f) To exercise management and control over Plan assets and
to direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 9.6 shall be taken in writing, and
no designation or allocation under Subsection (a), (b) or (c) shall be
effective until accepted in writing by the indicated responsible person.
9.7 Periodic Review of Funding Policy. At periodic intervals the
Committee shall review the long-run and short-run financial needs of the Plan
and shall determine a funding policy for the Plan consistent with the
objectives of the Plan and the minimum funding standards of ERISA, if
applicable. In determining such funding policy the Committee shall take into
account, at a minimum, not only the long-term investment objectives of the
Trust Fund consistent with the prudent management of the assets thereof, but
also the short-run needs of the Plan to pay benefits. All actions taken by the
Committee with respect to the funding policy of the Plan, including the reasons
therefor, shall be fully reflected in the minutes of the Committee.
9.8 Application for Determination of Benefits.
(a) The Committee may require any person claiming benefits
under the Plan to submit an application therefor on such forms and in
such manner as the Committee may prescribe, together with such documents
and information as the Committee may require. In the case of any person
suffering from a disability which prevents him from making personal
application for benefits, the Committee may, in its discretion, permit
another person acting on his behalf to submit the application.
(b) Within ninety (90) days following receipt of an
application and all necessary documents and information, the Committee
shall furnish the claimant with written notice of the decision rendered
with respect to the application. In the case of a denial of the
claimant's application, the written notice shall set forth:
(1) The specific reasons for the denial, with
reference to the Plan provisions upon which the denial is based;
(2) A description of any additional information or
material necessary for perfection of the application (together
with an explanation why the material or information is
necessary); and
(3) An explanation of the Plan's claim review
procedure.
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(c) A claimant who does not agree with the decision
rendered under Section 9.8(b) hereof with respect to his application may
appeal the decision to the Committee. The appeal shall be made in
writing within sixty-five (65) days after the date of notice of the
decision with respect to the application. If the application has
neither been approved nor denied within the ninety (90) day period
provided in Section 9.8(b) hereof, then the appeal shall be made within
sixty-five (65) days after the expiration of the ninety (90) day period.
In making his or her appeal, the claimant may request that his
application be given full and fair review by the Committee. The
claimant may review all pertinent documents and submit issues and
comments in writing. The decision of the Committee shall be made
promptly, and not later than sixty (60) days after the Committee's
receipt of a request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than one hundred twenty
(120) days after receipt of a request for review. The decision on
review shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the
claimant with specific references to the pertinent Plan provisions upon
which the decision is based.
9.9 Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 9.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 5.15 hereof or as to which management and control has been retained by
the Trustee.
9.10 Indemnification and Insurance. To the extent permitted by law,
the Company shall indemnify and hold harmless the Committee and each member
thereof, each Trustee, the Board of Directors and each member thereof, and such
other persons as the Board of Directors may specify, from the effects and
consequences of his or her acts, omissions, and conduct in his or her official
capacity in connection with the Plan and Trust. To the extent permitted by
law, the Company may also purchase liability insurance for such persons.
9.11 Compensation of Committee and Plan Expenses. Members of the
Committee shall serve as such without compensation unless the Board of
Directors shall otherwise determine, but in no event shall any member of the
Committee who is an Employee receive compensation from the Plan for his or her
services as a member of the Committee. All members shall be reimbursed for any
necessary expenditures incurred in the discharge of duties as members of the
Committee. The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee or other persons retained or employed by the
Committee shall be fixed by the Committee, subject to approval by the Board of
Directors. The expenses incurred in the administration and operation of the
Plan, including but not limited to the expenses incurred by the members of the
Committee in exercising their duties, shall be paid by the Plan from the Trust
Fund, unless paid by the Company, provided, however, that the Plan and not the
Company shall bear the cost of interest and normal brokerage charges which are
included in the cost of securities purchased by the Trust Fund (or charged to
proceeds in the case of sales). If such expenses are to be paid by the Plan
from the Trust Fund, the Committee may direct the Trustee to use forfeitures
and dividends (and to sell the shares of Company Stock that represent such
forfeitures or dividends) to pay such expenses.
9.12 Resignation. Any member of the Committee may resign by giving
fifteen (15) days notice to the Board of Directors, and any member shall resign
forthwith upon receipt of the written
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request of the Board of Directors, whether or not said member is at that time
the only member of the Committee.
9.13 Reliance Upon Documents and Opinions. The members of the
Committee, the Board of Directors, the Company and any person delegated to
carry out any fiduciary responsibilities under the Plan (hereinafter a
"delegated fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or
any Investment Manager. The members of the Committee, the Board of Directors,
the Company and any delegated fiduciary shall be fully protected and shall not
be liable in any manner whatsoever for anything done or action taken or
suffered in reliance upon any such consultant, or firm or corporation which
employs one or more consultants, Trustee, Investment Manager, or counsel. Any
and all such things done or such action taken or suffered by the Committee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law. The Committee and any
delegated fiduciary may, but are not required to, rely upon all records of the
Company with respect to any matter or thing whatsoever, and may likewise treat
such records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided
by law.
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ARTICLE X
AMENDMENT AND ADOPTION OF PLAN
10.1 Right to Amend Plan. The Sponsor, by resolution of the Board of
Directors, shall have the right to amend this Plan and Trust Agreement at any
time and from time to time and in such manner and to such extent as it may deem
advisable, including retroactively, subject to the following provisions:
(a) No amendment shall have the effect of reducing any
Participant's vested interest in the Plan or eliminating an optional
form of distribution.
(b) No amendment shall have the effect of diverting any
part of the assets of the Plan to persons or purposes other than the
exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the
duties or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of
officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the above
provisions (a) through (d), in accordance with the provisions of Section
9.5(g).
10.2 Adoption of Plan by Affiliated Companies. Subject to approval
by the Board of Directors, and consistent with the provisions of ERISA, an
Affiliated Company may adopt the Plan for all or any specified group of its
Eligible Employees by entering into an adoption agreement in the form and
substance prescribed by the Committee. The adoption agreement may include such
modification of the Plan provisions with respect to such Eligible Employees as
the Committee approves after having determined that no prohibited
discrimination or other threat to the qualification of the Plan is likely to
result. The Board of Directors may prospectively revoke or modify an
Affiliated Company's participation in the Plan at any time and for any or no
reason, without regard to the terms of the adoption agreement, or terminate the
Plan with respect to such Affiliated Company's Eligible Employees and
Participants. By execution of an adoption agreement (each of which by this
reference shall become part of the Plan), the Affiliated Company agrees to be
bound by all the terms and conditions of the Plan.
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<PAGE> 66
ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS
In the event the Company decides it is impossible or inadvisable
for business reasons to continue to make contributions under the Plan, it may,
by resolution of the Board of Directors, discontinue contributions to the Plan.
Upon the permanent discontinuance of contributions to the Plan and
notwithstanding any other provisions of the Plan, the rights of Participants
shall become fully vested and nonforfeitable unless replaced by a comparable
plan. The permanent discontinuance of contributions on the part of the Company
shall not terminate the Plan as to the funds and assets then held in the Trust,
or operate to accelerate any payments of distributions to or for the benefit of
Participants or Beneficiaries, and the Trust shall continue to be administered
in accordance with the provisions hereof until the obligations hereunder shall
have been discharged and satisfied.
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ARTICLE XII
TERMINATION AND MERGER
12.1 Right to Terminate Plan. In the event the Board of Directors
decides it is impossible or inadvisable for business reasons to continue the
Plan, then it may, by resolution, terminate the Plan. Upon and after the
effective date of such termination, the Company shall not make any further
contributions under the Plan. Upon the termination or partial termination of
the Plan for any reason, the interest in the Trust of each affected Participant
shall automatically become fully vested unless the Plan is continued after its
termination by conversion of this Plan into a comparable Plan through Plan
amendment or through merger. After the satisfaction of all outstanding
liabilities of the Plan to persons other than Participants and Beneficiaries,
all unallocated assets shall be allocated to the Accounts of Participants to
the maximum extent permitted by law. The Trust Fund may not be fully or
finally liquidated until all assets are allocated to Accounts; alternatively
any unallocated assets may be transferred to another defined contribution plan
maintained by the Sponsor or an Affiliated Company qualified under Section 401
of the Code where such assets shall be allocated among the accounts of
Participants herein who are participants in such transferee plan. In no event,
however, shall any part of the Plan revert to or be recoverable by the Company,
or be used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries. Notwithstanding the foregoing,
amounts held in the 415 Suspense Account may revert to the Company in
accordance with Section 13.7.
12.2 Effect on Trustee and Committee. The Trustee and the Committee
shall continue to function as such for such period of time as may be necessary
for the winding up of this Plan and for the making of distributions in the
manner prescribed by the Board of Directors at the time of termination of the
Plan.
12.3 Merger Restriction. Notwithstanding any other provision in this
Plan, this Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to, any other plan unless each affected
Participant in this Plan would (if such other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
12.4 Effect of Reorganization, Transfer of Assets or Change in
Control.
(a) In the event of a consolidation or merger of the
Company, or in the event of a sale and/or any other transfer of the
operating assets of the Company, any ultimate successor or successors to
the business of the Company may continue this Plan in full force and
effect by adopting the same by resolution of its board of directors and
by executing a proper supplemental or transfer agreement with the
Trustee.
(b) In the event of a Change in Control (as herein
defined), all Participants who were Participants on the date of such
Change in Control shall become 100% vested in any amounts allocated to
their Company Contribution Accounts on the date of such Change in
Control and in any amounts allocated to their Company Contribution
Accounts subsequent to the date of the Change in Control.
Notwithstanding the foregoing, the Board of Directors may, at its
discretion, amend or delete this Paragraph (b) in its entirety prior to
the occurrence of any such Change in Control. For the purpose of this
Paragraph (b), "Change in Control" shall mean the following and shall be
deemed to occur if any of the following events occur:
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(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Sponsor representing 50% or more of the
combined voting power of the Sponsor's then outstanding voting
securities;
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election
contest relating to the election of the directors of the
Sponsor, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of
this Plan, be considered as though such person were a member of
the Incumbent Board;
(iii) The stockholders of the Sponsor approve a merger or
consolidation with any other corporation, other than
(A) a merger or consolidation which would result in
the voting securities of the Sponsor outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of another entity) more than 50%
of the combined voting power of the voting securities
of the Sponsor or such other entity outstanding
immediately after such merger or consolidation, and
(B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar
transaction) in which no person acquires 50% or more of
the combined voting power of the Sponsor's then
outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all
of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (b), a Change
in Control shall not be deemed to have occurred (1) if the "person"
described in the preceding provisions of this Paragraph is an
underwriter or underwriting syndicate that has acquired the ownership of
50% or more of the combined voting power of the Sponsor's then
outstanding voting securities solely in connection with a public
offering of the Sponsor's securities or (2) if the "person" described in
the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company
that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
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ARTICLE XIII
LIMITATION ON ALLOCATIONS
13.1 General Rule.
(a) Subject to Sections 13.3 through 13.6 hereof, the total
Annual Additions under this Plan to a Participant's Accounts for any
Limitation Year shall not exceed the lesser of:
(1) Thirty Thousand Dollars ($30,000), or if
greater, one-fourth of the defined benefit dollar limitation set
forth in Section 415(b)(1) of the Code as in effect for the
Limitation Year; or
(2) Twenty-five percent (25%) of the Participant's
Compensation, from the Company for the Limitation Year. For
purposes of this Article XIII, the "Limitation Year" shall mean
the Plan Year.
(b) For the purpose of this Article XIII and XIV only, the
term "Company" shall mean the Sponsor and any Affiliated Company whether
or not such Affiliated Company has adopted the Plan pursuant to Section
8.2. Solely for purposes of this Article XI, an entity shall be
considered an Affiliated Company by reference to Code Section 415(h).
13.2 Annual Additions. For purposes of Section 13.1, the term
"Annual Additions" shall mean with respect to a Participant, for any Limitation
Year with respect to this Plan and each other defined contribution plan, within
the meaning of Code Section 415(k), maintained by the Company ("Defined
Contribution Plan"), the sum of the amounts determined under Sections 13.2(a),
(b), (c), (d), (e) and (f) hereof:
(a) All amounts contributed or deemed contributed by the
Company.
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant.
(d) Any amounts allocated to an account established under a
pension or annuity plan to provide medical benefits with respect to a
Participant after retirement under Section 401(h) of the Code.
(e) Any amounts allocated for such Plan Year which amounts
are derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to post
retirement medical or life insurance benefits allocated to the separate
account of a key employee (as defined in Code Section 416(i) under Code
Section 419A(d)(1).
(f) Excess deferral amounts determined pursuant to Sections
4.5 and 6.14.
(g) Excess deferral amounts determined pursuant to Section
4.4 to the extent such amounts are distributed after the first April
15th following the close of the Participant's taxable year.
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Notwithstanding the foregoing, Sections 13.2(d) and 13.2(e) above shall not be
included in any amount treated as an Annual Addition for purposes of applying
the limitations contained in Section 13.1(a)(2) above.
A Participant's Rollover Contributions shall not be considered Annual
Additions.
13.3 Other Defined Contribution Plans. If the Company maintains any
other Defined Contribution Plan, then each Participant's Annual Additions under
such Defined Contribution Plan shall be aggregated with the Participant's
Annual Additions under this Plan for the purposes of applying the limitations
of Section 13.1.
13.4 Defined Benefit Plans. If a Participant in this Plan has also
been a participant in a defined benefit plan (as defined in Section 415(k) of
the Code) maintained by the Company ("Defined Benefit Plan"), then in addition
to the limitation contained in Section 13.1 hereof, the sum of the "Defined
Benefit Fraction," as defined in Section 13.4(a) hereof, and the "Defined
Contribution Fraction," as defined in Section 13.4(b) hereof, for any
Limitation Year shall not exceed 1.0.
(a) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the total projected benefit of a Participant under
all Defined Benefit Plans expressed as either an annual straight life
annuity or a qualified joint and survivor annuity providing the maximum
permissible survivor benefit (determined as of the close of the
Limitation Year), and the denominator of which is the lesser of (1) the
maximum dollar amount otherwise allowable for such Limitation Year under
Section 415(b)(1)(A) of the Code times 1.25 or (2) the percentage of
compensation limit under Section 415(b)(1)(B) of the Code for such
Limitation Year times 1.4.
(b) "Defined Contribution Fraction" shall mean a fraction,
the numerator of which is the sum of the Participant's Annual Additions
to this Plan and all other Defined Contribution Plans as of the end of a
Limitation Year, and the denominator of which is the sum, determined for
such Limitation Year and each prior Limitation Year of the Participant's
service with the Company of the lesser of (1) the maximum dollar Annual
Addition under Section 415(c)(1)(A) of the Code (determined without
regard to Section 415(c)(6) of the Code) which could have been made for
the Limitation Year times 1.25 or (2) the amount determined under the
percentage of compensation limit for such Limitation Year under Section
415(c)(1)(B) of the Code times 1.4. In computing the Defined
Contribution Fraction under this Section 11.4(b) with respect to any
Limitation Year ending after December 31, 1982, the special transition
rule provided in Section 415(e)(6) of the Code shall be applicable.
13.5 Adjustments for Excess Combined Plan Fraction and Excess Annual
Additions. To the extent that the Annual Additions on behalf of any
Participant in a Limitation Year to this Plan and all other Defined
Contribution Plans exceed the limitations set forth in Sections 13.1 through
13.3 hereof, then excess Annual Additions shall be eliminated in accordance
with the following rules and in the following order:
(a) If the Annual Additions on behalf of a Participant in a
Limitation Year to the Plan and all other Defined Contribution Plans
would cause the sum of the Defined Contribution Fraction and Defined
Benefit Fraction to exceed 1.0 as determined under Section 13.4 hereof,
the excess shall be eliminated by first applying the provisions such
other Defined Benefit Plans that are applicable to reduce the Annual
Addition or annual benefit under such other plans (except to the extent
that this may be prohibited by law or by the terms of such plans).
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<PAGE> 71
(b) If, after the application of Paragraph (a) above,
excess Annual Additions on behalf of any Participant remain, such excess
shall be eliminated by reducing the allocation to the Participant's
Account by the amount of the excess and treating such amount as a
forfeiture under Section 5.3 hereof and reallocating such amount
proportionately to the Accounts of other Participants receiving
allocations for the Limitation Year up to the limits set forth in
Sections 13.1 through 13.3 hereof. The allocation to the Participant's
Account shall be reduced in the following order until such excess is Tax
Deposits that are not Sharing Deposits, After Tax Deposits and Before
Tax Deposits that are Sharing Deposits and Company Contributions on a
pro-rata basis.
(c) After each Participant's Account has been credited
under Paragraph (b) with an amount bringing his Account up to his
maximum Annual Addition (determined under the provisions of this Article
XIII), any remaining excess Annual Addition shall be transferred and
credited to a 415 Suspense Account established for the purpose of this
Section 13.5.
(d) Any amounts held in the 415 Suspense Account shall be
treated as Company contributions and allocated to the Accounts of
Participants as of the last day of the next succeeding Plan Year in
accordance with the allocation formula applicable to Company
contributions provided in Section 6.4. The 415 Suspense Account shall
be exhausted before any Company contributions shall be allocated to the
Accounts of Participants subsequent to the date upon which any residue
excess Annual Addition as described in Paragraph (c) is credited to the
415 Suspense Account.
13.6 Compensation. For purposes of this Article XIII, Compensation
shall mean a Participant's earned income, wages, salaries, fees for
professional services, and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Company maintaining the Plan to the extent that
the amounts are includable in gross income (including, but not limited to,
commissions paid to salespeople, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a nonaccountable
plan as described in Regulation Section 1.62-2(c)), and shall exclude the
following:
(a) Company contributions to a plan of deferred
compensation which are not included in a Participant's gross income for
the taxable year in which contributed, Company contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Participant, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the
Participant becomes freely transferable, or is no longer subject to a
substantial risk of forfeiture;
(c) Amounts realized in the sale, exchange or other
disposition of stock acquired under a qualified stock option;
(d) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee).
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(e) Any contribution for medical benefits (within the
meaning of Section 419(f)(2) of the Code) after termination of
employment which is otherwise treated as an Annual Addition; and
(f) Any amount otherwise treated as an Annual Addition
under Section 415(l)(1) of the Code.
Compensation for any Limitation Year is the compensation
actually paid or made available during such year, provided, however, that the
compensation taken into account for purposes of this Article XIII and Article
XIV shall be limited in accordance with Code Section 401(a)(17) and related
regulations to $150,000 (or such amount as is adjusted by the Secretary of
Treasury). Notwithstanding the foregoing, for Plan Years beginning prior to
January 1, 1994, the compensation shall not exceed $200,000 as adjusted by the
Secretary of the Treasury and consistent with the terms of the Plan at such
time.
13.7 Treatment of 415 Suspense Account Upon Termination. In the
event the Plan shall terminate at a time when all amounts in the 415 Suspense
Account have not been allocated to the Accounts of the Participants, the 415
Suspense Account amounts shall be applied as follows:
(a) The amount in the 415 Suspense Account shall first be
allocated, as of the Plan termination date, to Participants in
accordance with the allocation formula applicable to Company
contributions provided under Section 6.4.
(b) If, after those allocations have been made, any further
residue funds remain in the 415 Suspense Account, the residue may revert
to the Company in accordance with applicable provisions of the Code,
ERISA, and the regulations thereunder.
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ARTICLE XIV
TOP-HEAVY RULES
14.1 Applicability. Notwithstanding any provision in this Plan to
the contrary, and subject to the limitations set forth in Section 14.8, the
requirements of Sections 14.4, 14.5, 14.6 and 14.7 shall apply under this Plan
in the case of any Plan Year in which the Plan is determined to be a Top-Heavy
Plan under the rules of Section 14.3. For the purpose of this Article XIV and
XIII only, the term "Company" shall mean the Sponsor and any Affiliated Company
whether or not such company has adopted the Plan pursuant to Section 10.2.
14.2 Definitions. For purposes of this Article XIV, the following
special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former
Employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is or was:
(i) An officer of the Company having an annual
Compensation greater than 50% of the amount in effect under Code
Section 415(b)(1)(A) for the Plan Year; provided, however, for
such purposes no more than 50 Employees (or, if lesser, the
greater of three Employees or 10% of the Employees) shall be
treated as officers;
(ii) One of the ten Employees having annual Compensation
from the Company of more than the limitation in effect under
Code Section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code Section 318) the largest interests in
the Company. For this purpose, if two Employees have the same
interest in the Company, the Employee having greater annual
Compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual
Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns
(or is considered as owning within the meaning of Code Section 318) more
than 5% of the outstanding stock of the Company or stock possessing more
than 5% of the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would
be described in Paragraph (b) if "1%" were substituted for "5%" each
place where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is
not a Key Employee.
(e) The term "Determination Date" means, with respect to
any plan year, the last day of the preceding plan year. In the case of
the first plan year of any plan, the term "Determination Date" shall
mean the last day of that plan year.
(f) The term "Aggregation Group" means (i) each plan of the
Company in which a Key Employee is a Participant, and (ii) each other
plan of the Company which enables any plan described in clause (i) to
meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
required to be included in an Aggregation Group under the preceding
rules may be treated as being
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part of such group if the group would continue to meet the requirements
of Code Sections 401(a)(4) and 410 with the plan being taken into
account.
(g) For purposes of determining ownership under Paragraphs
(a), (b) and (c) above, the following special rules shall apply: (i)
Code Section 318(a)(2)(C) shall be applied by substituting "5%" for
"50%", and (ii) the aggregation rules of Subsections (b), (c) and (m) of
Code Section 414 shall not apply, with the result that the ownership
tests of this Section 14.2 shall apply separately with respect to each
Affiliated Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall
include their Beneficiaries, and the definitions provided under this
Section 14.2 shall be interpreted and applied in a manner consistent
with the provisions of Code Section 416(i) and the regulations
thereunder.
(i) For purposes of this Article XIV, an Employee's
Compensation shall be determined in accordance with the rules of Section
13.6.
14.3 Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect to any
Plan Year:
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under
the plan for Key Employees exceeds 60% of the present value of
the cumulative accrued benefits under the plan for all
Employees; and
(ii) Any defined contribution plan if, as of the
Determination Date, the aggregate of the account balances of Key
Employees under the plan exceeds 60% of the aggregate of the
account balances of all Employees under the plan.
In applying the foregoing provisions of this Paragraph (a), the
valuation date to be used in valuing Plan assets shall be (A) in the
case of a defined benefit plan, the same date which is used for
computing costs for minimum funding purposes, and (B) in the case of a
defined contribution plan, the most recent valuation date within a
12-month period ending on the applicable Determination Date.
(b) Each plan maintained by the Company required to be
included in an Aggregation Group shall be treated as a Top-Heavy Plan if
the Aggregation Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of (i) the present value of
the cumulative accrued benefits for Key Employees under all defined
benefit plans included in the group, and (ii) the aggregate of the
account balances of Key Employees under all defined contribution plans
included in the group exceeds 60% of a similar sum determined for all
Employees. For purposes of determining the present value of the
cumulative accrued benefit of any Employee, or the amount of the account
balance of any Employee, such present value or amount shall be increased
by the aggregate distributions made with respect to the Employee under
the plan during the five year period ending on the Determination Date.
The preceding prior distribution rule shall also apply to distributions
under a terminated plan that, if it had not been terminated, would have
been required to be included in an Aggregation Group; provided, however,
any rollover contribution or similar transfer initiated by the Employee
and made after December 31, 1983, to a plan shall not be taken into
account with respect to the transferee plan for purposes of determining
whether such plan is a Top-Heavy Plan (or whether any Aggregation Group
which includes such plan is a Top-Heavy Group).
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(d) If any individual is a Non-Key Employee with respect to
any plan for any plan year, but the individual was a Key Employee with
respect to the plan for any prior plan year, any accrued benefit for the
individual (and the account balance of the individual) shall not be
taken into account for purposes of this Section 14.3.
(e) If any individual has not performed services for the
Company at any time during the five year period ending on the
Determination Date, any accrued benefit for such individual (and the
account balance of the individual) shall not be taken into account for
purposes of this Section 14.3
(f) In applying the foregoing provisions of this Section,
the accrued benefit of a Non-Key Employee shall be determined (i) under
the method, if any, which is used for accrual purposes under all plans
of the Company and any Affiliated Companies, or (ii) if there is no such
uniform method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XIV, the definitions
provided under this Section 14.3 shall be applied and interpreted in a
manner consistent with the provisions of Code Section 416(g) and the
Regulations thereunder.
14.4 Minimum Contributions. For any Plan Year in which the Plan is
determined to be a Top-Heavy Plan, the minimum Company Contributions for that
year shall be determined in accordance with the rules of this Section 14.4.
(a) Except as provided below, the minimum contribution
(including for Plan Years beginning after December 31, 1984, amounts
deferred under a cash or deferred arrangement under Code Section 401(k))
for each Non-Key Employee shall be not less than 3% of his compensation.
For purposes of satisfying the minimum contribution requirement, Before
Tax Deposits and Matching Contributions as defined in Section
6.13(b)(iv) shall not be taken into account.
(b) Subject to the following rules of this Paragraph (b),
the percentage set forth in Paragraph (a) above shall not be required to
exceed the percentage at which contributions (including for Plan Years
beginning after December 31, 1984, amounts deferred under a cash or
deferred arrangement under Code Section 401(k)) are made (or are
required to be made) under the Plan for the year for the Key Employee
for whom the percentage is the highest for the year. This determination
shall be made by dividing the contributions for each Key Employee by so
much of his total compensation for the Plan Year as does not exceed the
applicable Compensation limit. For purposes of this Paragraph (b), all
defined contribution plans required to be included in an Aggregation
Group shall be treated as one plan. Notwithstanding the foregoing, the
exceptions to Paragraph (a) as provided under this Paragraph (b) shall
not apply to any plan required to be included in an Aggregation Group if
the plan enables a defined benefit plan to meet the requirements of Code
Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under
this Section 14.4 shall be calculated without regard to any Social
Security benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-Heavy Plans, the Company shall satisfy
the minimum benefit requirements of Code Section 416 by providing (in
lieu
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of the minimum contribution described in Paragraph (a) above) a minimum
benefit under the defined benefit plan so as to prevent the duplication
of required minimum benefits hereunder.
14.5 Reserved for Future Modifications.
14.6 Maximum Annual Addition.
(a) Except as set forth below, for any Plan Year in which
the Plan is determined to be a Top-Heavy Plan, the rules of Section
13.4(b) and (c) shall be applied by substituting "1.0" for "1.25".
(b) The rule set forth in Paragraph (a) above shall not
apply if (i) the minimum contribution requirement of Section 14.4(a)
above would be satisfied after substituting "4%" for "3%" where it
appears therein, and (ii) the Plan would not be a Top-Heavy Plan if
"90%" were substituted for "60%" each place it appears in Section
14.3(a)(ii).
(c) The rules of Paragraph (a) shall not apply with respect
to any Employee as long as there are no (i) Company Contributions
(including amounts deferred under a cash or deferred arrangement under
Code Section 401(k)), forfeitures, or voluntary nondeductible
contributions allocated to the Employee under a defined contribution
plan maintained by the Company, or (ii) accruals by the Employee under a
defined benefit plan maintained by the Company.
14.7 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the
Plan is a Top-Heavy Plan, the vesting schedule of the Plan shall be
changed to that set forth below (unless the Plan's vesting schedule
otherwise provides for vesting at a rate at least as rapid as that set
forth below):
<TABLE>
<CAPTION>
Number of Full Years of Nonforfeitable
Credited Service Percentage
----------------------- --------------
<S> <C>
Less than 3 years 0%
3 or more 100%
</TABLE>
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting
schedule of the Plan shall (for such Plan Years as the Plan is not a
Top-Heavy Plan) revert to that provided in Section 7.2 (the "Regular
Vesting Schedule"). If such reversion to the Regular Vesting Schedule
is deemed to constitute a vesting schedule change that is attributable
to a Plan amendment (within the meaning of Code Section 411(a)(10)),
then such reversion to said Regular Vesting Schedule shall be subject to
the requirements of Code Section 411(a)(10) of this Plan. For such
purposes, the date of the adoption of such deemed amendment shall be the
Determination Date as of which it is determined that the Plan has ceased
to be a Top-Heavy Plan.
14.8 Noneligible Employees. The rules of this Article XIV shall not
apply to any Employee included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more employers
if retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.
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<PAGE> 77
ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER
ALIENATION OF PLAN BENEFITS
15.1 General Restrictions Against Alienation.
(a) The interest of any Participant or his Beneficiary in
the income, benefits, payments, claims or rights hereunder, or in the
Trust Fund, shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and Beneficiary is
prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without
power to do so, except as may be permitted in connection with providing
security for a loan from the Plan to the Participant pursuant to the
provisions of this Plan as it may be amended from time to time. The
interest of any Participant or Beneficiary shall not be liable or
subject to his debts, liabilities, or obligations, now contracted, or
which may hereafter be contracted, and such interest shall be free from
all claims, liabilities, or other legal process now or hereafter
incurred or arising. Neither the interest of a Participant or
Beneficiary, nor any part thereof, shall be subject to any judgment
rendered against any such Participant or Beneficiary. Notwithstanding
the foregoing, a Participant's or Beneficiary's interest in the Plan may
be subject to the enforcement of a Federal tax levy made pursuant to
Code Section 6331 or the collection by the United States on a judgment
resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action
contrary to this Article XV, such action shall be null and void and of
no effect, and the Company, the Committee, the Trustee and all
Participants and their Beneficiaries, may disregard such action and are
not in any manner bound thereby, and they, and each of them, shall
suffer no liability for any such disregard thereof, and shall be
reimbursed on demand out of the Trust Fund for the amount of any loss,
cost or expense incurred as a result of disregarding or of acting in
disregard of such action.
(c) The foregoing provisions of this Section shall be
interpreted and applied by the Committee in accordance with the
requirements of Code Section 401(a)(13) and ERISA Section 206(d) as
construed and interpreted by authoritative judicial and administrative
rulings and regulations.
15.2 Qualified Domestic Relations Orders. The rules set forth in
Section 15.1 above shall not apply with respect to a "Qualified Domestic
Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment,
decree, or order (including approval of a property settlement agreement)
that:
(i) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable under this Plan
with respect to a Participant,
(ii) Relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child or other dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law
(including a community property law), and
71
<PAGE> 78
(iv) Clearly specifies: (A) the name and last known
mailing address (if any) of the Participant and the name and
mailing address of each Alternate Payee covered by the order (if
the Plan Administrator does not have reason to know that address
independently of the order); (B) the amount or percentage of the
Participant's benefits to be paid to each Alternate Payee, or
the manner in which the amount or percentage is to be
determined; (C) the number of payments or period to which the
order applies; and (D) each plan to which the order applies.
For purposes of this Section 15.2, "Alternate Payee" means any spouse,
former spouse, child or other dependent of a Participant who is
recognized by a domestic relations order as having a right to receive
all, or a portion of, the benefits payable with respect to the
Participant.
(b) A domestic relations order is not a Qualified Domestic
Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or
any option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that
are required to be paid to another Alternate Payee under a
previous Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to
fail to satisfy the requirements of Paragraph (b)(i) above with respect
to any payment made before a Participant has separated from service
solely because the order requires that payment of benefits be made to an
Alternate Payee:
(i) On or after the date on which the Participant attains
(or would have first attained) his earliest retirement age (as
defined in Code Section 414(p)(4)(B));
(ii) As if the Participant had retired on the date on
which such payment is to begin under such order (but taking into
account only the present value of accrued benefits and not
taking into account the present value of any subsidy for early
retirement benefits); and
(iii) In any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a joint
and survivor annuity with respect to the Alternate Payee and his
or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before his
earliest retirement age (as defined in Section 414(p)(4)(B)), the
Alternate Payee is entitled to benefits only if the Qualified Domestic
Relations Order requires survivor benefits to be paid to the Alternate
Payee.
(d) To the extent provided in any Qualified Domestic
Relations Order, the former spouse of a Participant shall be treated as
a surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
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<PAGE> 79
(e) In the case of any domestic relations order received by
the Plan, the Plan Administrator shall promptly notify the Participant
and any Alternate Payee of the receipt of the order and the Plan's
procedures for determining the qualified status of domestic relations
orders. Within a reasonable period after the receipt of the order, the
Plan Administrator shall determine whether the order is a Qualified
Domestic Relations Order and shall notify the Participant and each
Alternate Payee of such determination.
(f) The Plan Administrator shall establish reasonable
procedures to determine the qualified status of domestic relations
orders and to administer distributions under Qualified Domestic
Relations Orders. During any period in which the issue of whether a
domestic relations order is a Qualified Domestic Relations Order is
being determined (by the Plan Administrator, by a court of competent
jurisdiction, or otherwise), the Plan Administrator shall segregate in a
separate account in the Plan (or in an escrow account) the amounts which
would have been payable to the Alternate Payee during the period if the
order had been determined to be a Qualified Domestic Relations Order.
If within the 18 Month Period (as defined below), the order (or
modification thereof) is determined to be a Qualified Domestic Relations
Order, the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. However,
if within the 18 Month Period (i) it is determined that the order is not
a Qualified Domestic Relations Order, or (ii) the issue as to whether
the order is a Qualified Domestic Relations Order is not resolved, then
the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons who would have been entitled
to the amounts if there had been no order (assuming such benefits were
otherwise payable). Any determination that an order is a Qualified
Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this
Section 15.2, the "18 Month Period" shall mean the 18 month period
beginning with the date on which the first payment would be required to
be made under the domestic relations order.
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<PAGE> 80
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 No Right of Employment Hereunder. The adoption and maintenance
of this Plan and Trust shall not be deemed to constitute a contract of
employment or otherwise between the Company and any Employee or Participant, or
to be a consideration for, or an inducement or condition of, any employment.
Nothing contained herein shall be deemed to give any Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge, with or without cause, any Employee or Participant at any
time, which right is hereby expressly reserved.
16.2 Limitation on Company Liability. Any benefits payable under
this Plan shall be paid or provided for solely from the Plan and the Company
assumes no liability or responsibility therefor.
16.3 Effect of Article Headings. Article headings are for convenient
reference only and shall not be deemed to be a part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article.
16.4 Gender. Masculine gender shall include the feminine and the
singular shall include the plural unless the context clearly indicates
otherwise.
16.5 Interpretation. The provisions of this Plan shall in all cases
be interpreted in a manner that is consistent with this Plan satisfying (a) the
requirements of Code Section 401(a) and related statutes for qualification as a
defined contribution plan and (b) the requirements of Code Section 401(k) and
related statutes for qualification as a cash or deferred arrangement.
16.6 Withholding For Taxes. Any payments from the Trust Fund may be
subject to withholding for taxes as may be required by any applicable federal
or state law.
16.7 California Law Controlling. All legal questions pertaining to
the Plan which are not controlled by ERISA shall be determined in accordance
with the laws of the State of California and all contributions made hereunder
shall be deemed to have been made in that State.
16.8 Plan and Trust as One Instrument. This Plan and the Trust
Agreement shall be construed together as one instrument. In the event that any
conflict arises between the terms and/or conditions of the Trust Agreement and
this Plan, the provisions of this Plan shall control, except that with respect
to the duties and responsibilities of the Trustee, the Trust Agreement shall
control.
16.9 Invalid Provisions. If any paragraph, section, sentence, clause
or phrase contained in this Plan shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of competent
jurisdiction to be incapable of being construed or limited in a manner to make
it enforceable, or is otherwise held by such court to be illegal, null or void
or against public policy, the remaining paragraphs, sections, sentences,
clauses or phrases contained in this Plan shall not be affected thereby.
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<PAGE> 81
16.10 Counterparts. This instrument may be executed in one or more
counterparts each of which shall be legally binding and enforceable.
Allergan, Inc. hereby executes this instrument, evidencing the
terms of the Allergan, Inc. Savings and Investment Plan as restated this 3rd
day of April 1996.
ALLERGAN, INC.
By: /s/ Francis R. Tunney, Jr.
---------------------------------
Secretary
75
<PAGE> 1
EXHIBIT 10.3
ALLERGAN, INC.
PENSION PLAN
RESTATED
1996
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION 1
ARTICLE I
Definitions and Construction 2
1.1 Definitions 2
1.2 Gender 8
ARTICLE II
Participation 9
2.1 Participation As Of the Effective Date 9
2.2 Other Eligible Employees 9
ARTICLE III
Accrual of Benefits 10
3.1 Accrued Benefit Formula 10
3.2 Minimum Accrued Benefits 10
ARTICLE IV
Benefits 11
4.1 Normal Retirement 11
4.2 Postponed Retirement 11
4.3 Early Retirement 11
4.4 Termination of Employment 12
4.5 Maximum Pension 13
4.6 Defined Benefit Fraction and Defined
Contribution Fraction 13
4.7 Mandatory Commencement of Benefits 14
4.8 Reemployment 15
4.9 Early Disability Retirement 16
4.10 Other Disabled Participants 16
4.11 Nonforfeitable Interest 16
4.12 Compensation for Maximum Pension 17
ARTICLE V
Form of Pensions 18
5.1 Unmarried Participants 18
5.2 Married Participants 18
5.3 Optional Benefits 18
5.4 Cash-Outs 19
</TABLE>
<PAGE> 3
Table of Contents
Continued
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE VI
Pre-retirement Death Benefits 20
6.1 Eligibility 20
6.2 Benefit 20
6.3 Alternate Death Benefit 21
6.4 Children's Survivor Benefit 21
ARTICLE VII
Contributions 23
7.1 Company Contributions 23
7.2 Source of Benefits 23
7.3 Irrevocability 23
ARTICLE VIII
Administration 24
8.1 Appointment of Committee 24
8.2 Transaction of Business 24
8.3 Voting 24
8.4 Responsibility of Committee 24
8.5 Committee Powers 24
8.6 Additional Powers of Committee 25
8.7 Periodic Review of Funding Policy 26
8.8 Application for Determination of Benefits 26
8.9 Limitation on Liability 27
8.10 Indemnification and Insurance 27
8.11 Compensation of Committee and Plan
Expenses 27
8.12 Resignation 27
8.13 Reliance Upon Documents and Opinions 27
ARTICLE IX
Termination and Merger 28
9.1 Right to Terminate Plan 28
9.2 Mergers, etc. 28
9.3 Effect of Reorganization, Transfer of
Assets or Change in Control 28
9.4 Termination Restrictions Effective
prior to January 1, 1994 29
9.5 Termination Restrictions Effective
on or after January 1, 1994 31
</TABLE>
ii
<PAGE> 4
Table of Contents
Continued
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE X
Miscellaneous 32
10.1 Forfeitures 32
10.2 Amendment 32
10.3 Nonalienation of Benefits 32
10.4 Facility of Payment 32
10.5 California Law Controlling 32
10.6 Lapsed Benefits 32
10.7 Effect of Article Headings 33
10.8 Interpretation 33
10.9 Withholding For Taxes 33
10.10 Plan and Trust as One Instrument 33
10.11 Invalid Provisions 33
10.12 Counterparts 33
10.13 No Right of Employment Hereunder 33
10.14 Appointment of Investment Manager 33
10.15 Qualified Domestic Relations Orders 34
ARTICLE XI
Top-Heavy Provisions 36
11.1 Applicability 36
11.2 Definitions 36
11.3 Top-Heavy Status 37
11.4 Minimum Benefit 38
11.5 Maximum Benefit 39
11.6 Minimum Vesting Rules 39
11.7 Noneligible Employees 40
APPENDIX A 41
APPENDIX B 44
</TABLE>
iii
<PAGE> 5
SERVICE EFFECTIVE DATES
Vesting and benefit years of service include service with the following
companies (or their predecessors) effective on the dates shown:
<TABLE>
<CAPTION>
Vesting Benefit
Service Service
Effective Effective
Date Date
----------- -----------
<S> <C> <C>
Allergan America At hire 04/11/80
Allergan Puerto Rico, Inc. (formerly At hire 04/11/80
Allergan Caribbean)
Allergan Surgical (formerly 04/30/86 04/30/86
Innovative Surgical Products)
Allergan Medical Optics At hire 04/30/86
Allergan Medical Optics-Ioptex At hire 09/08/94
Allergan Medical Optics-Puerto Rico At hire 04/30/86
Allergan Medical Optics-Lenoir Deparments At hire 03/01/92
120-130
Allergan Humphrey 02/07/80 01/01/87
Allergan Optical Inc. (formerly At hire 11/13/87
International Hydron Corporation)
Allergan Optical Puerto Rico, Inc. At hire 11/13/87
Optical Micro Systems, Inc. At hire 01/27/95
</TABLE>
iv
<PAGE> 6
ALLERGAN, INC. PENSION PLAN
INTRODUCTION
This document, made and entered into by Allergan, Inc., a
Delaware corporation ("Allergan"), evidences the terms of a defined benefit
plan for Eligible Employees of Allergan and any Affiliates that are authorized
by the Board of Directors of Allergan to participate in the Plan, to be known
hereafter as the "Allergan, Inc. Pension Plan" (the "Plan"). The Plan shall be
effective on the day after the Spin-Off Date, as that term is defined below
(the "Effective Date").
Prior to the Effective Date of this Plan, Eligible Employees
were eligible to participate in the Retirement Plan for Employees of SmithKline
Beckman Corporation (the "SKB Plan"). On or about July 26, 1989, SmithKline
Beckman Corporation distributed the stock of Allergan to its shareholders,
rendering Eligible Employees of the Company ineligible to participate in the
SKB Plan. (The date upon which such distribution occurred shall hereinafter be
referred to as the "Spin-Off Date".) The liability for the accrued benefits of
Eligible Employees under the SKB Plan and assets sufficient to satisfy
applicable legal requirements were transferred to the Plan in November of 1989.
The benefits which were previously provided by the SKB Plan for former
employees of Allergan who terminated prior to the Spin-Off Date shall continue
to be paid under this Plan.
This Plan is an employee benefit plan that is intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code") as a qualified pension plan. The provisions of this Plan are
intended to comply with the requirements of applicable federal pension law, as
enacted through the Omnibus Budget Reconciliation Act of 1993, so as to assure
that the trust created under the Plan is tax exempt pursuant to the provisions
of Code Sections 401(a) and 501(a).
<PAGE> 7
ARTICLE I
Definitions and Construction
1.1 Definitions. Whenever used in this Plan:
"Accrued Benefit" means, for each Participant, the amount of
pension accrued by him under Article III as of the date of reference. Accrued
Benefits shall only be payable in accordance with Articles IV and VI.
"Active Participant" means a Participant who has become an
Active Participant as provided in Article II and has at all times thereafter
been an Eligible Employee.
"Actuarial Equivalent" means a benefit of equal actuarial value
under the assumptions set forth in Appendix A.
"Affiliate" means (a) any corporation (other than the Company)
that is a member of a controlled group of corporations (within the meaning of
Code Section 414(b), applied for purposes of Section 4.5 with regard to Code
Section 415(h)) of which the Company is a member, (b) any trade or business
that is under common control with the Company, within the meaning of Section
Code 414(c), (c) any service organization that is included in an affiliated
service group, within the meaning of Code Section 414(m), of which affiliated
service group the Company is also a member, (d) any other entity required to be
aggregated with the Company pursuant to Code Section 414(o), and (e) any other
entity designated as an Affiliate by the Company.
"Age" means age at most recent birthday.
"Average Earnings" means, for each Participant, 12 times the
monthly average of his Earnings for the 60 consecutive months that yield the
highest average. For purposes of this Section, nonconsecutive months
interrupted only by months in which a Participant has no Earnings shall be
treated as consecutive. If a Participant does not have Earnings in 60
consecutive whole months, his Average Earnings shall be 12 times the monthly
average of his Earnings in all of the whole months in which he is an Employee.
"Beneficiary" means the person or persons last designated by the
Participant to receive the interest of a deceased Participant.
"Benefit Year" means a credit used to measure a Participant's
service in calculating his Accrued Benefit. Each Active Participant shall be
credited with a number of Benefit Years equal to 1/365th of the aggregate
number of days between each of his Employment Dates and the Separation from
Service immediately following such Employment Date, disregarding any day such
Participant is not an Eligible Employee.
"Board of Directors" means the Board of Directors of Allergan as
it may from time to time be constituted.
"Company" means Allergan, Inc. ("Allergan"), and such Affiliates
as may from time to time participate in the Plan by authorization of the Boards
of Directors of Allergan and of such Affiliates.
"Earnings" means the amounts paid during a Plan Year to an
Employee by the Company for services rendered, including base earnings,
commissions and similar incentive compensation, cost of living allowances
earned within the United States of America, holiday pay, overtime earnings, pay
received for election board duty, pay received for jury and witness duty, pay
received for military
2
<PAGE> 8
service (annual training), pay received for being available for work, if
required (call-in premium), amounts of salary reduction elected by the
Participant under a Code Section 401(k) cash or deferred arrangement or a Code
Section 125 cafeteria plan, shift differential and premium, sickness/accident
related pay, vacation pay, vacation shift premium, and bonus amounts paid under
the following programs:
(1) Sales bonus,
(2) "Management Bonus Payments" (MBP), either in cash or in
restricted stock,
(3) Group performance sharing payments, such as the
"Partners for Success", and "Profit Sharing" for the Humphrey operations;
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of
living adjustments and differentials paid for service outside of the United
States, expatriate reimbursement payments, and tax equalization payments; forms
of imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance
pay; Share Value Plan or other long-term incentive awards, bonuses or payments;
special individual recognition payments which are nonrecurring in nature,
including the "Impact Award" payments, and "Employee of the Year" payments;
tuition reimbursement; and contributions by the Company under this Plan or
distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Code Section 401(a)
(other than contributions constituting salary reduction amounts elected by the
Participant under a Code Section 401(k) cash or deferred arrangement or a Code
Section 125 cafeteria plan), any payments under a health or welfare plan
sponsored by the Company, or premiums paid by the Company under any insurance
plan for the benefit of Employees. The Earnings taken into account for
determining all benefits provided under the Plan for any Plan Year shall not
exceed $150,000 as adjusted at the time and in such manner as permitted under
Code Section 401(a)(17)(B). Notwithstanding the foregoing, for Plan Years
beginning prior to January 1, 1994, the Earnings taken into account for
determining all benefits provided under the Plan for any Plan Year shall not
exceed $200,000. This limitation shall be adjusted by the Secretary of the
Treasury at the same time and in the same manner as under Code Section 415(d),
except that the dollar limitation in effect on January 1 of any calendar year
shall be effective for years beginning in such calendar year and the first
adjustment to the $200,000 limitation shall be effected on January 1, 1990. If
the period for determining Earnings used in calculating an Employee's
allocation for a Plan Year is a short Plan Year (i.e. shorter than 12 months),
the Earnings limit is an amount equal to the otherwise applicable Earnings
limit multiplied by a fraction, the numerator of which is the number of months
in the short Plan Year, and the denominator of which is 12. In determining the
Earnings of an Employee, the rules of Code Section 414(q)(6) shall apply,
except that in applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee who have not
attained age 19 before the close of the Plan Year. If, as the result of the
application of such rules the applicable Earnings limitation is exceeded, then
the limitation shall be prorated among the affected individuals in proportion
to each such individual's Earnings as determined under this Section prior to
the applicatio of this limitation. A Participant shall be deemed to have no
Earnings in any month in which he is not an Eligible Employee for the entire
month.
"Eligibility Computation Period" means, for each Employee, the
12-consecutive-month period that begins on his Employment Date and each
calendar year that begins after his Employment Date.
3
<PAGE> 9
"Eligible Employee" means an Employee who is employed by the
Company or by an Affiliate designated by the Board of Directors of Allergan,
but not by a joint venture in which the Company or such Affiliate is a joint
venturer; provided, that an Employee with respect whom retirement benefits have
been the subject of good faith collective bargaining shall be an Eligible
Employee only to the extent a collective bargaining agreement relating to him
so provides. An Employee of an Affiliate or of the Company who is neither a
United States citizen nor a United States resident shall not be an Eligible
Employee. Notwithstanding the preceding sentence, for Plan Years beginning
prior to January 1, 1996, an Eligible Employee shall not include a temporary
employee classified as such by the Affiliate or the Company.
"Eligible Retirement Plan" means an individual retirement
account described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code Section
403(a), or a qualified trust described in Code Section 401(a) that accepts an
Eligible Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
"Eligible Rollover Distribution" means any distribution, on or
after January 1, 1993, of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does not
include:
(a) any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten years or
more;
(b) any distribution to the extent such
distribution is required under Code Section 401(a)(9); and
(c) the portion of any distribution that
is not includable in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).
For purposes of this Section, 'Distributee' shall mean any
Employee or former Employee receiving a distribution from the Plan. A
Distributee also includes the Employee or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations Order (as defined in
Article X) are Distributees with regard to the interest of the spouse or former
spouse.
"Employee" means a person who is employed by or is an officer of
the Company or an Affiliate.
"Employment Date" means the day on which an Employee completes
his first Hour of Service for the performance of duties.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Fund" means the assets accumulated for purposes of the Plan.
"Highly Compensated Employee" means an employee as defined in
Code Section 414(q) and regulations thereunder. For purposes of determining
the group of Highly Compensated
4
<PAGE> 10
Employees for a determination year, the lookback year calculation for a
determination year shall be made on the basis of the calendar year ending with
or within the applicable determination year.
"Hour of Service" means a credit used to measure service for
purposes of determining a Participant's eligibility to participate in the Plan.
Hours of Service are credited as follows:
(a) Each week shall count as 45 Hours of Service in
which an Employee is (i) employed by the Company or any Affiliate in a
position designated by the Company as full time, (ii) absent from a full
time position as a result of temporary disability on account of illness
or accident, (iii) on leave of absence from a full time position not
exceeding 30 days granted by the Company under a uniform policy, or (iv)
absent from a full time position while covered by a long term disability
plan maintained by the Company.
(b) Each week of absence for military service from
which the Employee returns to the Company or an Affiliate with legally
protected reemployment rights shall count as a number of Hours of
Service equal to the number of hours of work in the Employee's customary
week of work at the time the absence began.
(c) Each hour which is not included in a period
described in Paragraph (a) or (b) but for which an Employee is directly
or indirectly paid or entitled to payment by the Company or an Affiliate
for the performance of duties, including back pay, without regard to
mitigation of damages, shall count as one Hour of Service. For purposes
of this Paragraph (c), Hours of Service shall be determined by dividing
the payments received or due for reasons other than the performance of
duties by the lesser of (A) the Employee's most recent hourly rate of
compensation for the performance of duties or (B) the Employee's average
hourly rate of compensation for the performance of duties for the most
recent computation period in which the Employee completed more than 375
Hours of Service.
(d) Each hour in or attributable to a period of
time during which an Employee performs no duties (irrespective of whether
he has had a Separation from Service) due to a vacation, holiday,
illness, incapacity (including disability), layoff, jury duty or a leave
of absence for which he is so paid or so entitled to payment by the
Company or an Affiliate, whether direct or indirect, shall count as an
Hour of Service; provided, however, that
(i) no more than 501 Hours of Service
shall be credited under this paragraph to an Employee on account of any
such period; and
(ii) no such hours shall be credited to
an Employee if attributable to payments made or due under a plan
maintained solely for the purpose of complying with applicable workers'
compensation, unemployment compensation or disability insurance laws or
to a payment which solely reimburses the Employee for medical or
medically related expenses incurred by him.
(e) Hours of Service for the performance of duties
shall be credited to the Employee for the computation period or periods
in which the services are performed. Hours of Service for back pay
shall be credited to the Employee for the computation period or
computation periods to which the award or agreement pertains rather than
the computation period or periods in which it was made. Hours of
Service for the nonperformance of duties as described in paragraph (d),
above, shall be credited to the Employee for computation periods in
accordance with 29 C.F.R. Section 2530.200b-2(c)(2). The same Hours of
Service shall not be credited under two or more Paragraphs.
5
<PAGE> 11
"Investment Manager" means the one or more Investment Managers,
if any, that are appointed pursuant to the provisions of Section 10.15 and who
constitute investment managers under Section 3(38) of ERISA.
"Leased Employee" shall mean any person (other than an Employee
of the recipient) who pursuant to an agreement between the recipient and any
other person ("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are of a type historically performed by employees
in the business field of the recipient employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to services performed for the recipient employer shall be treated as provided
by the recipient employer. A Leased Employee shall not be considered an
Employee of the recipient if:
(a) Such employee is covered by a money purchase
pension plan providing: (i) a nonintegrated employer contribution rate of
at least ten (10) percent of compensation, as defined in Code Section
415(c)(3), but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the employee's gross income
under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or
Code Section 403(b); (ii) immediate participation; and (iii) full and
immediate vesting; and
(b) Leased Employees do not constitute more than 20
percent (20%) of the recipient's non-highly compensated workforce.
"Normal Retirement Date" means the last day of the calendar
month in which the Participant attains Age 65.
"Participant" means: (a) an Active Participant, or (b) a former
Active Participant who is eligible for an immediate or deferred benefit under
Article IV.
"Plan" means the Allergan, Inc. Pension Plan described herein
and as amended from time to time.
"Plan Administrator" means the administrator of the Plan, within
the meaning of Section 3(16) of ERISA. The Plan Administrator shall be
Allergan.
"Plan Year" means the period commencing on the Effective Date
and ending on December 31, 1989 and each subsequent calendar year, unless
another period is required. The Plan Year shall be the limitation year for
purposes of computing limitations on contributions, benefits and allocations.
"Primary Social Security Benefit" means for purposes of
determining a Participant's Accrued Benefit:
(a) for an Employee whose Separation from Service
occurs on or after the date he attains Age 62, the immediate benefit
that is or would have been payable to him at Age 65 or his actual
retirement, if earlier, under the Social Security Act (or foreign
equivalent) as then in effect; or
(b) for an Employee whose Separation from Service
occurs prior to Age 62, the benefit that would be payable to him at Age
62 under the Social Security Act (or foreign equivalent) as in effect
when he incurs a Separation from Service, without adjustments for cost
of living, projected on the assumption that for each month before Age
60, he continues to receive wages for Social Security purposes equal to
one-twelfth of his Earnings for the calendar year
6
<PAGE> 12
preceding the year in which his Separation from Service occurs, and that
he shall receive no further wages for Social Security purposes after the
later of Age 60 or his actual Separation from Service.
"Qualified Joint and Survivor Annuity" means the form of pension
benefit described in this Section. Under a Qualified Joint and Survivor
Annuity, monthly payments to the Participant shall begin on the date provided
in Article IV and continue until the last day of the month in which the
Participant's death occurs. On the first day of the following month, monthly
payments in an amount equal to 50% of the monthly payment to the Participant
which is attributable to his Accrued Benefit shall begin to his surviving
spouse but only if the spouse was married to the Participant on the date as of
which payments to the Participant began. Payments to a surviving spouse under
a Qualified Joint and Survivor Annuity shall end on the last day of the month
in which the spouse's death occurs. The anticipated payments under a Qualified
Joint and Survivor Annuity shall be the actuarial equivalent of a pension in
the form of a Single Life Annuity in the amount set forth in Article IV.
"Separation from Service" means the earliest of (a) an
Employee's death, retirement, resignation or discharge, or (b) the first
anniversary of the first day of any continuous absence during which the
Employee is not credited with an Hour of Service, except as provided
hereinafter. For purposes of determining a Participant's Vesting Years and
Benefit Years, such Participant shall not incur a Separation from Service by
reason of the following:
(a) absence due to service in the Armed Forces of
the United States, if the Employee makes application to the Company for
resumption of work with the Company or an Affiliate, following
discharge, within the time specified by then applicable law;
(b) absence resulting from temporary disability on
account of illness or accident;
(c) leave of absence not exceeding 30 days granted
by the Company under a uniform policy;
(d) absence while covered by a long term disability
plan maintained by the Company and prior to the earlier of a
Participant's Normal Retirement Date or the date his pension under the
Plan commences, provided that the Participant has at least five Vesting
Years as of the first date of such absence;
(e) such other types of absence as the Company may
determine by uniform policy.
For the purposes of determining Benefit Years and Vesting Years, a Participant
who does not have a nonforfeitable interest in his Accrued Benefit at the time
he retires, resigns or is discharged shall not incur a Separation from Service
until the first date following the end of any period for which he receives
severance pay if his interest in his Accrued Benefit would thereby become
nonforfeitable.
"Single Life Annuity" means a form of pension benefit under
which payments begin on the date provided in Article IV and end on the last day
of the month in which the Participant's death occurs.
"Special Retirement Eligibility Date" means the date the
Participant attains Age 62.
"Trust" or "Trust Fund" means the one or more trusts created for
funding purposes under the Plan.
7
<PAGE> 13
"Trustee" means the individual or entity acting as a trustee of
the Trust Fund.
"Vesting Year" means a credit awarded as follows:
(a) In the case of any Employee who was employed by
the Company at any time prior to the Effective Date, for the period
prior to the Effective Date, such Employee shall be credited with that
number of Vesting Years under this Plan equal to the number of Vesting
Years (as that term is defined in the SKB Plan) credited to such
Employee under the SKB Plan as of the Effective Date.
(b) In the case of any Employee who is employed by
the Company on or after the Effective Date, an Employee shall be
credited with a number of Vesting Years equal to 1/365th of the
aggregate number of days between each of his Employment Dates and the
Separation from Service immediately following such Employment Date,
together with the aggregate number of days during any period of less
than twelve consecutive months between such Employee's Separation from
Service and his next Employment Date. Solely for the purpose of
determining an Employee's Vested Years under this Paragraph (b), in the
case of an Employee who is employed by the Company on the Effective
Date, that date shall be deemed to be an Employment Date of the Employee
(with Vested Years for the period prior to the Effective Date determined
under Paragraph (a) above).
(c) In the case of any Employee who is employed
under Departments 120 through 130 at the Allergan Medical Optics -
Lenoir facility, such Employee shall be credited with a number of
Vesting Years equal to 1/365th of the aggregate number of days between
each of his Employment Dates and the Separation from Service immediately
following such Employment date, together with the aggregate number of
days during any period of less than twelve consecutive months between
such Employee's Separation from Service and his next Employment Date.
Solely for the purpose of determining an Employee's Vested Years under
this Paragraph (c), an Employee's Employment Date shall mean the date
the Employee first performed an Hour of Service with Allergan Medical
Optics - Lenoir facility, including any date prior to Allergan Medical
Optics - Lenoir facility becoming an Affiliate.
1.2 Gender. The masculine gender shall include the
feminine.
8
<PAGE> 14
ARTICLE II
Participation
2.1 Participation As Of the Effective Date. Each Eligible
Employee as of the Effective Date who is an employee participating in the SKB
Plan as of the day preceding the Spin-Off Date shall automatically become an
Active Participant in this Plan on the Effective Date, provided he or she is an
Eligible Employee on such Date.
2.2 Other Eligible Employees. Each Eligible Employee who
does not automatically become an Active Participant in the Plan pursuant to
the provision of Section 2.1 above shall become an Active Participant in the
Plan on the first date on which he or she is an Eligible Employee upon
completion of his or her Eligibility Computation Period.
9
<PAGE> 15
ARTICLE III
Accrual of Benefits
3.1 Accrued Benefit Formula. Each Participant shall have
an Accrued Benefit equal to one-twelfth (1/12) of the sum of:
(a) 1.23% of his Average Earnings not in
excess of Covered Compensation multiplied by the number of his Benefit
Years to a maximum of 35 Benefit Years; plus
(b) 1.73% of his Average Earnings in
excess of Covered Compensation multiplied by the number of his Benefit
Years to a maximum of 35 Benefit Years; plus
(c) .50% of his Average Earnings
multiplied by the number of his Benefit Years in excess of 35 Benefit
Years.
For purposes of this Section, "Covered Compensation" is the
average (without indexing) of the social security wage bases in effect for each
calendar year during the 35-year period ending with the calendar year in which
the Participant attains (or will attain) the social security retirement age as
defined in Code Section 415(b)(8). In determining a Participant's Covered
Compensation for a Plan Year, it is assumed that the social security wage base
in effect at the beginning of the Plan Year will remain the same for all future
calendar years."
3.2 Minimum Accrued Benefits. Notwithstanding any other
provision of the Plan, under no circumstances will any Participant's Accrued
Benefit under this Plan be less than the amount of his accrued benefit under
the SKB Plan as of the Spin-Off Date under the terms of the SKB Plan in effect
as of that date, including any amendments made to the SKB Plan which are
effective on the Spin-Off Date, notwithstanding the fact that they may have
been adopted after such date.
3.3 Accrued Benefit for Participants with Earnings in
excess of $150,000 prior to January 1, 1994. The Accrued Benefit of a "Section
401(a)(17) Employee" shall be the greater of:
(a) The Section 401(a)(17) Employee's
Accrued Benefit determined under the benefit formula in effect on or
after January 1, 1994 taking into account all Benefit Years of the
Section 401(a)(17) Employee; or
(b) the sum of:
(i) the Section 401(a)(17)
Employee's Accrued Benefit determined as of December 31, 1993
frozen in accordance with Section 1.401(a)(4)-13 of the Treasury
Regulations; and
(ii) the Section 401(a)(17)
Employee's Accrued Benefit determined under the benefit formula
applicable for Plan Years beginning on or after January 1, 1994
taking into account only those Benefit Years of the Section
401(a)(17) Employee credited on or after January 1, 1994.
For purposes of this Section, a "Section 401(a)(17) Employee" means a
Participant whose current Accrued Benefit as of January 1, 1994 is based on
Earnings in excess of $150,000.
10
<PAGE> 16
ARTICLE IV
Benefits
4.1 Normal Retirement. A Participant may retire any day on
or between his Special Retirement Eligibility Date and his Normal Retirement
Date. Upon so retiring, a Participant shall be entitled to a monthly pension
that begins as of the first day next following his retirement and which is
equal to his Accrued Benefit.
4.2 Postponed Retirement. A Participant may continue in
service beyond his Normal Retirement Date and may retire on any day thereafter.
If a Participant continues in service beyond his Normal Retirement Date, he
shall upon retiring be entitled to a monthly pension that begins as of the
first day next following his retirement and is equal to his Accrued Benefit as
of his Normal Retirement Date increased for each Plan Year after his Normal
Retirement Date by the greater of (a) the additional benefit accrual provided
under Article III, or (b) an actuarial adjustment to take into account a delay
in the payment of the benefit using the actuarial assumptions set forth in
Appendix A for determining actuarial equivalence. The foregoing provisions of
this Section 4.2 shall be interpreted and applied in accordance with the
provisions of Proposed Treasury Regulation Section 1.411(b)-2(b)(4)(iii) or the
corresponding provision of any subsequently adopted final regulations.
4.3 Early Retirement. A Participant shall be eligible for
Early Retirement as set forth below:
(a) A Participant who has at least five
(5) Vesting Years and whose age is at least 55 may retire on the following
terms:
(i) The pension of a Participant
who retires under this Paragraph (a) shall begin as of the
first day following his actual retirement or, at his election,
as of the first day of any subsequent month not later than his
Special Retirement Eligibility Date.
(ii) A Participant who retires under
this Paragraph (a) shall receive a monthly pension equal to his
Accrued Benefit but reduced in accordance with the following
Table, with the percentage for a fractional part of a year of
age being prorated on the basis of a number of full months.
<TABLE>
<CAPTION>
Age When % of Normal Pension Age When % of Normal Pension
Payments Computed Under Payments Computed Under
Begin Article III Begin Article III
----- ----------- ----- -----------
<S> <C> <C> <C>
61 94 57 70
60 88 56 64
59 82 55 58
58 76
</TABLE>
(b) A Participant who was a Participant on
June 26, 1990, and who has at least five (5) Vesting Years, and whose age plus
Benefit Years sum to at least 55 may retire on the following terms:
(i) The pension of a Participant
who retires under this Paragraph (b) shall begin as of the first
day following his actual retirement or, at his election, as of
the first day of any subsequent month not later than his Special
Retirement Eligibility
11
<PAGE> 17
Date (or if earlier, the first date on which he is entitled to
100% of his Accrued Benefit under subparagraph (ii), below).
(ii) A Participant who retires under
this Paragraph (b) shall receive a monthly pension equal to his
Accrued Benefit determined as of June 26, 1990, as set forth
under the formula contained in Appendix B, but reduced in
accordance with the following Table, with the percentage for a
fractional part of a year of age being prorated on the basis of
a number of full months.
<TABLE>
<CAPTION>
Age When % of Normal Pension Age When % of Normal Pension
Payments Computed Under Payments Computed Under
Begin Article III Begin Article III
----- ----------- ----- -----------
<S> <C> <C> <C>
61 94 48 36
60 88 47 34
59 82 46 32
58 76 45 30
57 70 44 28
56 64 43 27
55 58 42 26
54 52 41 25
53 46 40 24
52 44 39 23
51 42 38 22
50 40 37 21
49 38
</TABLE>
Provided, that the above percentages shall be
increased by 1% to a maximum of 10% for each of the
Participant's Benefit Years in excess of 20, with the percentage
for a fractional part of a Benefit Year being prorated on the
basis of the number of full months. In no event, however, shall
a percentage be increased above 100%.
(iii) A Participant who retires under
this Paragraph (b) and who was a Participant on or before June
26, 1990 shall receive a total monthly pension as follows: (1)
if the Participant is 55 or older when payments begin, the
Participant shall receive a total monthly pension which is the
greater of the amount determined under Paragraph (a)(ii) or
Paragraph (b)(ii), and (2) if the Participant is less than age
55 when benefit payments begin, the Participant shall receive a
monthly pension which is determined under Paragraph (b)(ii) plus
an additional monthly pension commencing at age 55 which is
actuarially equivalent to the excess, if any, of the actuarial
equivalent value of the monthly pension under Paragraph (a)(ii)
determined at age 55 over the actuarial equivalent value of the
monthly pension under Paragraph (b)(ii) determined at age 55.
4.4 Termination of Employment. A Participant who has at
least five Vesting Years but whose age and Benefit Years sum to less than 55
years upon termination of his employment may elect to begin receiving payment
of his pension commencing as of the first day of any month after his age plus
Benefit Years total 55, but in this event, the amount of his pension shall be
reduced as provided in Section 4.3(b). If the Participant does not make such
an election, the commencement of his pension under this Section shall begin on
the first day of the month coincident with or next following his Special
Retirement Eligibility Date.
12
<PAGE> 18
4.5 Maximum Pension. The largest aggregate annual pension
that may be paid to any Participant in any Plan Year under this Plan shall not,
when added to the pension under any other qualified defined benefit plan of the
Company or any Affiliate (to the extent such pension is provided by the
employer), exceed the lesser of:
(a) The lesser of (i) $90,000 (or such other amount
as may be permitted for qualified defined benefit pension plans for the
calendar year that includes the last day of the Plan Year in which such
pension is paid), multiplied by a fraction the numerator of which is the
number of the Participant's years of participation in the Plan or, up to
the Spin-Off Date in the SKB Plan or in the Beckman Instruments, Inc.
Pension Plan, not in excess of ten, and the denominator of which is ten,
or (ii) 100% of his average annual total cash remuneration from the
Company in the thirty-six consecutive months which yield the highest
average, multiplied by a fraction the numerator of which is the number
of the Participant's Vesting Years not in excess of ten and the
denominator of which is ten; or
(b) The amount that would cause the sum of his
Defined Benefit Fraction and his Defined Contribution Fraction (see
Section 4.6) for the Plan Year in which the Participant's Separation
from Service occurs to equal 1.0. To the extent the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction exceeds 1.0,
adjustments shall be made first by reducing the Employee's benefit under
any defined benefit plan maintained by the Company or any Affiliate.
For purposes of this Section, a Participant's pension shall be measured
as a Single Life Annuity beginning at his Social Security Retirement Age.
Nevertheless, if the Participant actually receives his pension in the form of a
Single Life Annuity or Qualified Joint and Survivor Annuity beginning after he
attains Social Security Retirement Age, his pension shall be measured by the
periodic payments to him. For purposes of this Section, a pension benefit
shall be treated as a Qualified Joint and Survivor Annuity if it meets all of
the requirements as defined in Section 1.1, except that the periodic payments
to the spouse may be equal to or greater than 50%, but not more than 100%, of
those to the Participant. If a Participant's pension begins before or after he
attains his Social Security Retirement Age, the $90,000 figure shall be
adjusted to its Actuarial Equivalent beginning at his Social Security
Retirement Age; except that if a Participant's pension begins before he attains
his Social Security Retirement Age, but after he attains Age 62, the $90,000
figure shall be reduced by 5/9 of 1% for each of the first 36 months and 5/12
of 1% for each additional month by which the Participant's benefit commencement
date precedes the Social Security Retirement Age. The interest rate used to
determine the Actuarial Equivalent shall be the rate stated in the Plan, but
shall be 5% if the pension begins after the Social Security Retirement Age.
For purposes of this Section and Section 4.6, "Social Security Retirement Age"
means (i) for any Participant born before January 1, 1938, Age 65, (ii) for any
Participant born after December 31, 1937 but before January 1, 1955, Age 66, or
(iii) for any other Participant, Age 67.
In addition to other limitations set forth in the Plan and
notwithstanding any other provisions of the Plan, the accrued benefit,
including the right to any optional benefits provided in the Plan (and all
other defined benefit plans required to be aggregated with this Plan under the
provisions of Code Section 415) shall not increase to an amount in excess of
the amount permitted under Code Section 415 at any time. For purposes of
Sections 4.5 and 4.6 and determining compliance with Code Section 415, "cash
remuneration" shall mean "compensation" as defined in Section 4.12.
4.6 Defined Benefit Fraction and Defined Contribution
Fraction.
(a) A Participant's Defined Benefit Fraction for a
given Plan Year is a fraction, the numerator of which is his projected
annual benefit for the Plan Year and the denominator of which is the
lesser of (i) 1.25 multiplied by $90,000, adjusted to reflect
commencement before or after Social Security Retirement Age, or (ii) 1.4
multiplied by 100% of
13
<PAGE> 19
his average annual total cash remuneration from the Company or any
Affiliate in the thirty-six consecutive months which yield the highest
average.
(b) A Participant's Defined Contribution Fraction
for a given Plan Year is a fraction, the numerator of which is the sum
of his annual additions for all calendar years and the denominator of
which is the sum of his maximum aggregate amounts for all calendar years
in which he is an Employee. A Participant's maximum aggregate amounts
for any Plan Year shall equal the lesser of 1.25 multiplied by the
dollar limitation for such Plan Year or 1.4 multiplied by the percentage
limitation for such Plan Year.
(c) The annual addition to a Participant's account
for any year is the sum, determined with respect to all qualified
defined contribution plans of the Company and Affiliates (including the
voluntary contributions feature of any defined benefit plan thereof),
of:
(i) Company contributions and forfeitures
allocated to the Participant's account; plus
(ii) for Plan Years beginning after
December 31, 1986, the amount of the Participant's
contributions; for Plan Years beginning before January 1, 1987,
the lesser of:
(A) 50% of his contributions; or
(B) (I) for each calendar year
after 1975 the amount by which the
Participant's contributions exceed 6% of his
cash remuneration;
(II) for each calendar year before
1976 during which he was a Participant, the
excess of the aggregate amount of his
contributions for all such years over 10% of
his aggregate cash remuneration from the
Company or an Affiliate for all such years,
multiplied by a fraction the numerator of which
is one and the denominator of which is the
number of such years.
(d) The maximum annual addition to a Participant's
account for any Plan Year is the lesser of $30,000 (or such other amount
as may be permitted for qualified defined contribution plans), or 25% of
the Participant's cash remuneration for that year from the Company or an
Affiliate. For all calendar years ending before January 1, 1976, the
maximum annual addition shall be deemed to be the lesser of $25,000 or
25% of the Participant's cash remuneration for that year from the
Company or an Affiliate.
4.7 Mandatory Commencement of Benefits.
(a) Unless the Participant elects otherwise, his
pension shall begin no later than sixty days after the close of the Plan
Year in which falls the later of his Normal Retirement Date or the date
he retires.
(b) In addition, payment shall begin no later than
a Participant's required beginning date determined under the rules of
Subparagraph (i) below.
(i) A Participant's required beginning
date shall be April 1 of the calendar year immediately following
the year in which the Participant attains age 70-1/2; provided,
however, if the Participant attained age 70-1/2 before January
1, 1988
14
<PAGE> 20
and the Participant was not a Five Percent Owner (as defined in
Code Section 416(i)) at any time during the plan year of the SKB
Plan ending with or within the calendar year in which such
Participant attained age 66-1/2 or any subsequent plan year of
the SKB Plan, then this Subparagraph (i) shall not apply and the
required beginning date shall be determined under Subparagraph
(ii); further, provided, however, if the Participant attains age
70-1/2 in 1988, is not a Five Percent Owner, and has not retired
as of January 1, 1989, then his required beginning date shall be
April 1, 1990.
(ii) A Participant's required beginning
date under this Subparagraph (ii) shall be April 1 of the
calendar year following the later of the calendar year in which
the Participant (A) attains age 70-1/2, or (B) retires;
provided, however, this Subparagraph (ii) shall not apply with
respect to a Participant who was a Five Percent Owner (as
defined in Code Section 416(i)) at any time during the five plan
year period (under the SKB Plan) ending in the calendar year in
which the Participant attained age 70-1/2. If the Participant
becomes a Five Percent Owner during any plan year under the SKB
Plan or Plan Year under this Plan subsequent to the five plan
year period referenced above, the required beginning date under
this Subparagraph (ii) shall be April 1 of the calendar year
following the calendar year in which such subsequent plan year
under the SKB Plan or Plan Year under this Plan ends.
4.8 Reemployment. If a Participant who is receiving
benefits again becomes an Employee, his pension shall be subject to the
following rules:
(a) If the Participant has not reached his Normal
Retirement Date, his pension shall be suspended and recomputed upon his
Separation from Service.
(b) If the Participant has reached his Normal
Retirement Date, for each calendar month or for each four or five week
payroll period ending in a calendar month during which the Participant
either completes 40 or more Hours of Service (counting each day of
employment in a position designated by the Company as full time as five
Hours of Service), or receives payment for any such Hours of Service
performed on each of eight or more days or separate work shifts in such
month or payroll period, no pension payment shall be made, and no
adjustment to the Participant's pension shall be made on account of such
non-payment. No payment shall be withheld pursuant to this Paragraph
(b) until the Employee is notified by personal delivery or first class
mail during the first calendar month or payroll period in which payments
are suspended that his benefits are suspended. Such notification shall
contain a description of the specific reasons why benefit payments are
being suspended, a general description of the Plan provisions relating
to the suspension of payments, a copy of such provisions, and a
statement to the effect that applicable Department of Labor regulations
may be found in Section 2530.203-3 of the Code of Federal Regulations.
In addition, the suspension notification shall inform the Employee of
the Plan's procedures for affording a review of the suspension of
benefits.
(c) An Employee described in (a) or (b), above,
shall be eligible to receive credit for additional Benefit Years for any
period of reemployment (as an Eligible Employee). The pension of such
Employee shall be reduced by the Actuarial Equivalent of any payment
received by the Employee under the Plan prior to his Special Retirement
Eligibility Date, or, if earlier, the first day on which he would have
been entitled to 100% of his Accrued Benefit under Section 4.3(b) (if on
his prior Separation from Service he had deferred his benefit until that
date).
(d) The rules set forth in Paragraphs (a) through
(c), above, shall not apply to such categories of Employee reemployed on
a part-time basis as the Company may designate. The pension of each
such Employee shall not be suspended and such Employee shall be eligible
15
<PAGE> 21
to receive additional benefit accruals in accordance with the provisions
of Article III, but only to the extent an additional accrual (calculated
in accordance with the benefit formula set forth in Article III) for any
Plan Year (taking into account all of the Participant's Benefit Years),
exceeds the Actuarial Equivalent of total benefit distributions made to
the Participant by the close of such Plan Year. The foregoing
provisions of this Paragraph (d) shall be interpreted and applied in
accordance with Proposed Treasury Regulation Section
1.411(b)-2(b)(4)(ii) or corresponding final regulations.
4.9 Early Disability Retirement. An Active Participant who
is not covered under a long term disability plan maintained by the Company, who
has at least five Vesting Years, and who becomes totally and permanently
disabled shall be retired with an immediate pension beginning as of the date of
determination of such disability by the Company equal to 18% of the Employee's
Average Earnings plus .8% of such compensation for each Benefit Year in excess
of 10, unless he would receive a greater benefit under any other provision of
the Plan. Total and permanent disability means a medically determinable
physical or mental impairment of a potentially permanent character which
prevents an Employee from engaging in any substantial, gainful activity and
may, in the discretion of the Company, include any disability for which he
receives a benefit under the Federal Social Security Act. The Company shall
have the right to defer such determination until the appropriate state or
federal agency shall have made a finding that the Employee is suffering from a
disability as defined in the Federal Social Security Act. The Employee may be
required, as a condition of continued receipt of the disability pension, to
furnish the Company once during each calendar year proof satisfactory to the
Company of continuance of his total and permanent disability.
4.10 Other Disabled Participants. An Active Participant who
is covered under a long term disability plan maintained by the Company, who has
at least five Vesting Years, and who becomes eligible for benefits under such
plan, shall be eligible to accrue Benefit Years pursuant to this Section for
the duration of his disability until the earlier of his Normal Retirement Date
or the date he commences to receive a pension under the Plan. The following
rules shall apply to benefit accruals under this Section:
(a) The Employee's Average Earnings during his
disability shall be deemed to be his Average Earnings calculated at the
time his disability commenced.
(b) The Employee's Primary Social Security Benefit
shall be as defined in Article I.
(c) In addition, an Active Participant described in
this Section who met the requirements for early retirement at the time
his disability commenced shall be entitled to the survivor income
benefit described in Section 6.1 until the date he commences to receive
a pension under the Plan.
4.11 Nonforfeitable Interest. Notwithstanding any other
provision in the Plan to the contrary, a Participant shall have a
nonforfeitable interest in his Accrued Benefit upon being credited with five or
more Vesting Years. In addition, a Participant shall have a nonforfeitable
interest in his Accrued Benefit upon attaining his Special Retirement
Eligibility Date and completion of one Vesting Year.
4.12 Compensation for Maximum Pension. For purposes of
Sections 4.5 and 4.6, compensation shall mean a Participant's earned income,
wages, salaries, fees for professional services, and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Company
maintaining the Plan to the extent that the amounts are includable in gross
income (including, but not limited to, commissions paid to salespeople,
compensation for services on the basis of a percentage of profits, commissions
on
16
<PAGE> 22
insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other
expense allowances under a nonaccountable plan as described in Regulation
Section 1.62-2(c)), and shall exclude the following:
(a) Company contributions to a plan of deferred
compensation which are not included in a Participant's gross income for
the taxable year in which contributed, Company contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Participant, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held
by the Participant becomes freely transferable, or is no longer subject
to a substantial risk of forfeiture;
(c) Amounts realized in the sale, exchange, or
other disposition of stock acquired under a qualified stock option;
(d) Other amounts which received special tax
benefits, or contributions made by the Company (whether or not under a
salary reduction agreement) toward the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee);
(e) Any contribution for medical benefits (within
the meaning of Code Section 419(f)(2) of the Code) after termination of
employment which is otherwise treated as an Annual Addition; and
(f) Any amount otherwise treated as an Annual
Addition under Section 415(1)(1) of the Code.
Compensation for any Plan Year is the compensation actually paid or made
available during such year, provided, however, that the compensation taken into
account for purposes of Sections 4.5 and 4.6 shall be limited in accordance
with Code Section 401(a)(17) and related regulations to $200,000 (or such
amount as is adjusted by the Secretary of Treasury).
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<PAGE> 23
ARTICLE V
Form of Pensions
5.1 Unmarried Participants. The pension of a Participant
who is unmarried when payments begin shall be paid as a Single Life Annuity
unless he elects an optional form of benefit under Section 5.3 or receives a
lump sum distribution under Section 5.4.
5.2 Married Participants. The pension of a Participant who
is married when payments begin shall be paid as a Qualified Joint and Survivor
Annuity, unless he elects an optional form of benefit under this Section or
Section 5.3 or receives a lump sum distribution under Section 5.4. A
Participant described in this Section may elect to receive his pension in the
form of a Single Life Annuity, in accordance with the following rules:
(a) Such election shall be made in writing in a
manner prescribed by the Committee on a form that clearly states that
the Participant is electing to receive his benefit other than as a
Qualified Joint and Survivor Annuity. No such election shall be
effective with respect to a married Participant (unless he elects a
joint and survivor option providing for payment of at least 50% of his
annuity to his surviving spouse) unless such election designates the
form of benefit and a specific beneficiary, acknowledges the effect of
the election and is witnessed by a notary public or by a representative
of the Company on behalf of the Plan, or the Plan finds that the spouse
cannot be located.
(b) The election may be made or revoked at any time
during an election period established by the Committee. Such election
period shall begin when the information described in Paragraph (d) is
furnished to the Participant and, subject to Paragraphs (c) and (d),
shall end, with no opportunity for a further election, on the date
retirement benefits to the Participant begin or are required to begin
under Section 4.7.
(c) Subject to Paragraph (d), in the case of a
Participant who retires after attaining Age 55, the election period
described in Paragraph (b) shall end on the date of the Participant's
Separation from Service, or on such later date as the Committee shall
fix, but an election made during the election period may be revoked at
any time before the later of the end of the election period or the date
the first payment to the Participant falls due.
(d) Each married Participant shall receive in
written nontechnical language a general description or explanation of the
Qualified Joint and Survivor Annuity, the circumstances in which it will
be provided unless he has elected not to have benefits provided in that
form, and the availability of such election. Such information shall be
furnished to the Participant no less than 30 days and no more than 90
days before the first day of the first period for which retirement
benefits begin.
5.3 Optional Benefits. Subject to the provisions of
Section 5.2, any Participant may elect to receive the Actuarial Equivalent of
his pension in another form. The specific options shall be (a) a Single Life
Annuity which pays a benefit for the Participant's lifetime; (b) a contingent
beneficiary option which pays a reduced benefit for the Participant's lifetime,
then continues 100%, 66 2/3%, or 50% of the reduced benefit for the lifetime of
a designated beneficiary; (c) a guaranteed payment option which pays a reduced
benefit for the longer of the Participant's lifetime or a specified number of
months (60, 120, 180, or 240). The payments are made to the Participant, with
any remaining guaranteed payments on the Participant's death to a designated
beneficiary; or (d) a level income option which pays an increased benefit to a
Participant (if payments begin between the ages of 55 and 62) until age 62, and
a reduced benefit beginning at age 62. Under each such option the Actuarial
Equivalent of the anticipated payments to the Participant shall be greater than
that of those to his beneficiary, except that if the beneficiary is the
Participant's spouse, the option may provide for a joint
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<PAGE> 24
and survivor annuity under which the periodic payments to the spouse are no
greater than those to the Participant.
5.4 Cash-Outs.
(a) If the lump sum Actuarial Equivalent of a Participant's
nonforfeitable Accrued Benefit does not exceed or has never exceeded
$3,500, the Participant or the Participant's beneficiary (i) shall be
paid the lump sum Actuarial Equivalent, or (ii) may elect to have an
Eligible Rollover Distribution paid directly by the Trustee to the
trustee of an Eligible Retirement Plan.
(b) If the lump sum Actuarial Equivalent of a Participant's
nonforfeitable Accrued Benefit exceeds $3,500, but does not exceed
$7,000, the Participant, or the Participant's beneficiary in the event
of the Participant's death, may elect (i) to be paid the lump sum
Actuarial Equivalent, or (ii) to have an Eligible Rollover Distribution
paid directly by the Trustee to the trustee of an Eligible Retirement
Plan. No distribution may be elected under this Paragraph (b) unless
the Participant has attained at least Age 55 with 5 or more Vesting
Years. In addition, the election may not be made after pension payments
start, except that a Participant or a Participant's beneficiary whose
payments started prior to September 1, 1993, and whose lump sum
Actuarial Equivalent did not exceed $7,000 at the date payments started,
may elect to be paid the remaining lump sum Actuarial Equivalent. A
married Participant who elects under this Paragraph (b) must comply with
the applicable requirements for spousal consent.
(c) A Participant who has no nonforfeitable Accrued Benefit
in the Plan at the time of his Separation from Service shall be deemed
to have been cashed out with a zero cash benefit upon such Separation
from Service.
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<PAGE> 25
ARTICLE VI
Pre-retirement Death Benefits
6.1 Eligibility. A death benefit shall be payable under
Section 6.2 with respect to a Participant if, on the date of his death:
(a) he is an Employee who has met the requirements
for early or normal retirement under the Plan;
(b) he is an Employee not described in paragraph
(a), above, who has a nonforfeitable interest in his Accrued Benefit; or
(c) he is a former Employee who has had a
Separation from Service with a vested benefit.
6.2 Benefit. Except as provided in Paragraph (f) of this
Section, upon the death of a Participant described in Section 6.1, the
Participant's surviving spouse, if living on the date set forth in Paragraphs
(a)-(e) of this Section, shall receive a pension in accordance with the
following rules:
(a) If the Participant is an Employee who has met
the requirements for early or normal retirement under Section 4.1 or
4.3, the pension to the surviving spouse shall begin as of the day
following the Participant's date of death and shall end with the payment
on the first day of the month in which the spouse's death occurs, and
shall be in a monthly amount equal to the amount the spouse would have
received if the Participant had retired on the date of his death and had
elected an immediate pension in the form of a Qualified Joint and
Survivor Annuity beginning as of the day following the day of his death
with the spouse as joint annuitant.
(b) If the Participant is an Employee who has not
met the requirements for early or normal retirement under Section 4.1 or
4.3, the pension to the surviving spouse shall begin on the first day of
the month following the month in which the Participant would have first
met such requirements if he had not died but had lived and had separated
from service on the date of his death, shall end with the payment on the
first day of the month in which the spouse's death occurs, and shall be
in a monthly amount equal to the amount the spouse would have received
if the Participant's Separation from Service had occurred on the day of
his death and he had survived and elected to begin receiving his pension
in the form of a Qualified Joint and Survivor Annuity on the date as of
which the spouse's benefit begins.
(c) If the Participant is a former Employee who
retired under Section 4.1 and whose benefit has not yet commenced to be
paid, the pension to the surviving spouse shall begin as of the day
following the Participant's date of death and shall end with the payment
on the first day of the month in which the spouse's death occurs, and
shall be in a monthly amount equal to the amount the spouse would have
received if the Participant had elected to begin receiving his pension
in the form of a Qualified Joint and Survivor Annuity beginning as of
the day following the day of his death with the spouse as joint
annuitant.
(d) If the Participant is a former Employee who
retired under Section 4.3 and whose benefit has not yet commenced to be
paid, the pension to the surviving spouse shall begin as of the day
following the Participant's date of death and shall end with the payment
on the first day of the month in which the spouse's death occurs, and
shall be in a monthly amount equal to the amount the spouse would have
received if the Participant had elected to begin receiving his pension
in the form of a Qualified Joint and Survivor Annuity on the date as of
which the spouse's benefit begins.
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<PAGE> 26
(e) If the Participant is a former Employee who did
not meet the requirements for early or normal retirement under Section
4.1 or 4.3 and whose benefit has not yet commenced to be paid, the
pension to the surviving spouse shall begin on the first day of the
month following the month in which the Participant would have met such
requirements if he had not died but had lived, shall end with the
payment on the first day of the month in which the spouse's death
occurs, and shall be in a monthly amount equal to the amount the spouse
would have received if the Participant had elected to begin receiving
his actual pension in the form of a Qualified Joint and Survivor Annuity
on the date as of which the spouse's benefit begins.
<TABLE>
<CAPTION>
Percent Reduction of
Participant's Age Accrued Benefit Per Year
----------------- ------------------------
<S> <C>
To Age 44 0.1%
45-54 0.3%
55-61 0.7%
</TABLE>
Notwithstanding the foregoing, no reduction to reflect the value of the
coverage shall be made prior to the later of the time the Plan permits a
Participant to waive the death benefit provided by this Section 6.2 or
provides a notice of the ability to waive such benefit. Each married
Participant shall receive a written explanation of the terms and
conditions of the benefit provided by this Article and of the effect of
an election not to take it.
(f) Notwithstanding anything in Article 6 to the
contrary, each married Participant shall receive in written nontechnical
language a general description or explanation of the death benefits
provided by this Article 6, the circumstances in which it will be
provided unless he has elected not to have benefits provided in such
form, and the availability of such election. Such information shall be
furnished within the applicable period with respect to such Participant.
The term "applicable period" means, with respect to a Participant,
whichever of the following periods ends last: (i) the period beginning
with the first day of the Plan Year in which the Participant attains age
32 and ending with the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35, (ii) a reasonable period ending
after an Employee becomes a Participant, (iii) a reasonable period ending
after the survivor income benefit is no longer subsidized, (iv) a
reasonable period ending after Code Section 401(a)(11) first applies to
the Participant, or (v) a reasonable period ending after separation from
service in the case of a Participant who terminates his employment with
the Company before attaining age 35. For purposes of applying the
preceding, a reasonable period ending after the enumerated events
described in (ii), (iii), and (iv) is the end of the two-year period
beginning one year prior to the date the applicable event occurs, and
ending one year after that date. In the case of a Participant who
terminates his employment with the Company before the Plan Year in which
age 35 is attained, notice shall be provided within the two-year period
beginning one year prior to the date of termination and ending one year
after the date of termination. If such Participant thereafter returns to
employment with the Company, the applicable period for such Participant
shall be redetermined.
6.3 Alternate Death Benefit. In lieu of the benefit
provided in Section 6.2, a Participant described in Section 6.1(a) may, at any
time before his pension payments are to begin, select a beneficiary or
beneficiaries other than his spouse for a survivor income benefit. No such
election shall be effective with respect to a married Participant (unless he
elects a joint and survivor option providing for payment of at least 50% of his
annuity to his surviving spouse) unless the Participant's spouse consents
thereto in writing, and such consent acknowledges the effect of the election
and is witnessed by a representative of the Company on behalf of the Plan or by
a notary
21
<PAGE> 27
public, or the Plan finds that the spouse cannot be located. The monthly
payment to the beneficiary shall equal the payment the beneficiary would have
received and which would have been attributable to the Participant's Accrued
Benefit, if the Participant had retired on the day of his death with a pension
in the form of a 50% joint and survivor annuity beginning as of the day
following the day of his death with the beneficiary as joint annuitant.
6.4 Children's Survivor Benefit. In lieu of the benefit
provided in Section 6.2, a Participant described in Section 6.1(a) may, at any
time before his pension payments are to begin his child or children as
beneficiary or beneficiaries for the survivor income benefit. No such election
shall be effective with respect to a married Participant (unless he elects a
joint and survivor option providing for payment of at least 50% of his annuity
to his surviving spouse) unless the Participant's spouse consents thereto in
writing, and such consent acknowledges the effect of the election and is
witnessed by a representative of the Company on behalf of the Plan or by a
notary public, or the Plan finds that the spouse cannot be located. The
aggregate monthly payment to the child or children shall equal the monthly
payment a surviving spouse of an Age equal to that of the Participant would
have received and which would have been attributable to the Participant's
Accrued Benefit, if the Participant had been covered by Section 6.2 and had
left such a surviving spouse. Payments to each child shall continue during
such child's life or until the end of the month in which the child attains Age
19, whichever is earlier except that if the child is enrolled as a full-time
student in an academic institution, payments shall continue until the earlier
of the end of the month in which the child attains Age 23 or the termination of
the child's education.
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<PAGE> 28
ARTICLE VII
Contributions
7.1 Company Contributions. The Company shall contribute
each year an amount actuarially determined to be sufficient to provide the
benefits under the Plan. Notwithstanding the foregoing, Company contributions
for any Plan Year shall be conditioned upon the deductibility of such
contributions by the Company under Code Section 404 or any amendments thereto.
The Company reserves the right, however, to reduce, suspend or discontinue its
contributions under the Plan for any reason at any time. Except as provided in
Section 7.3, it shall be impossible for any part of the Company's contributions
to revert to the Company, or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and their Beneficiaries.
7.2 Source of Benefits. All benefits under the Plan shall
be paid exclusively from the Fund, and the Company shall have no duty to
contribute thereto except as provided in this Article.
7.3 Irrevocability. The Company shall have no right or
title to, nor interest in, the Company contributions made to the Fund, and no
part of the Fund shall revert to the Company, except that on and after the
Effective Date funds may be returned to the Company as follows:
(a) In the case of a contribution which is made by
a mistake of fact, such contribution may be returned to the Company
within one year after it is made.
(b) In the case of a contribution conditioned on
the initial qualification of the Plan under Code Section 401 (or any
successor statute thereto), and the Plan does not initially qualify
upon the filing of a timely determination letter request, such
contribution may be returned to the Company within one year after the
date of denial of the initial qualification of the Plan.
(c) In the case of a contribution conditioned on
the deductibility thereof under Code Section 404 (or any successor
statute thereto), such contribution may, to the extent such deduction
is disallowed, be returned to the Company within one year after such
disallowance.
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<PAGE> 29
ARTICLE VIII
Administration
8.1 Appointment of Committee. There is hereby created a
committee (the "Committee") which shall exercise such powers and have such
duties in administering the Plan as are hereinafter set forth. The Board of
Directors shall determine the number of members of such Committee. The members
of the Committee shall be appointed by the Board of Directors and such Board
shall from time to time fill all vacancies occurring in said Committee. The
members of the Committee shall constitute the Named Fiduciaries of the Plan
within the meaning of Section 402(a)(2) of ERISA.
8.2 Transaction of Business. A majority of the Committee
shall constitute a quorum for the transaction of business. Actions of the
Committee may be taken either by vote at a meeting or in writing without a
meeting. All action taken by the Committee at any meeting shall be by a vote
of the majority of those present at such meeting. All action taken in writing
without a meeting shall be by a vote of the majority of those responding in
writing. All notices, advices, directions and instructions to be transmitted
by the Committee shall be in writing and signed by or in the name of the
Committee. In all its communications with the Trustee, the Committee may, by
either of the majority actions specified above, authorize any one or more of
its members to execute any document or documents on behalf of the Committee, in
which event it shall notify the Trustee in writing of such action and the name
or names of its members so designated and the Trustee shall thereafter accept
and rely upon any documents executed by such member or members as representing
action by the Committee until the Committee shall file with the Trustee a
written revocation of such designation.
8.3 Voting. Any member of the Committee who is also a
Participant hereunder shall not be qualified to act or vote on any matter
relating solely to himself, and upon such matter his presence at a meeting
shall not be counted for the purpose of determining a quorum. If, at any time
a member of the Committee is not so qualified to act or vote, the qualified
members of the Committee shall be reduced below two (2), the Board of Directors
shall promptly appoint one or more special members to the Committee so that
there shall be at least one qualified member to act upon the matter in
question. Such special Committee members shall have power to act only upon the
matter for which they were especially appointed and their tenure shall cease as
soon as they have acted upon the matter for which they were especially
appointed.
8.4 Responsibility of Committee. The authority to control
and manage the operation and administration of the Plan, the general
administration of this Plan, the responsibility for carrying out this Plan and
the authority and responsibility to control and manage the assets of the Trust
are hereby delegated by the Board of Directors to and vested in the Committee,
except to the extent reserved to the Board of Directors or the Company.
Subject to the limitations of this Plan, the Committee shall, from time to
time, establish rules for the performance of its functions and the
administration of this Plan. In the performance of its functions, the
Committee shall not discriminate in favor of highly compensated employees, as
such term is defined in Code Section 414(q).
8.5 Committee Powers. The Committee shall have all
discretionary powers necessary to supervise the administration of the Plan and
control its operations. In addition to any discretionary powers and authority
conferred on the Committee elsewhere in the Plan or by law, the Committee shall
have, but not by way of limitation, the following discretionary powers and
authority:
(a) To designate agents to carry out
responsibilities relating to the Plan, other than fiduciary
responsibilities as provided in Section 8.6.
(b) To employ such legal, actuarial, medical,
accounting, clerical, and other assistance as it may deem appropriate in
carrying out the provisions of this Plan, including one
24
<PAGE> 30
or more persons to render advice with regard to any responsibility any
Named Fiduciary or any other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to
time for the conduct of the Committee's business and the administration
and effectuation of this Plan.
(d) To administer, interpret, construe, and apply
this Plan and to decide all questions which may arise or which may be
raised under this Plan by any Employee, Participant, former Participant,
Beneficiary or other person whatsoever, including but not limited to all
questions relating to eligibility to participate in the Plan, the amount
of Benefit Years or Vesting Years of any Participant, and the amount of
benefits to which any Participant or his Beneficiary may be entitled.
(e) To determine the manner in which the assets of
this Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to
time, to invest and reinvest the Trust Fund, or any part thereof, or to
purchase, exchange, or lease any property, real or personal, which the
Committee may designate. This shall include the right to direct the
investment of all or any part of the Trust in any one security or any
one type of securities permitted hereunder. Among the securities which
the Committee may direct the Trustee to purchase are "qualifying
employer securities" as defined in ERISA Section 407(d)(5).
(g) Subject to provisions (a) through (d) of
Section 10.2, to make administrative amendments to the Plan that do not
cause a substantial increase or decrease in benefit accruals to
Participants and that do not cause a substantial increase in the cost of
administering the Plan.
(h) To perform or cause to be performed such
further acts as it may deem to be necessary, appropriate or convenient
in the efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary powers conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary
powers conferred upon the Committee shall be absolute; provided, however, that
all such discretionary power shall be exercised in a uniform and
nondiscriminatory manner.
8.6 Additional Powers of Committee. In addition to any
discretionary powers or authority conferred on the Committee elsewhere in this
Plan or by law, such Committee shall have the following discretionary powers
and authority:
(a) To appoint one or more Investment Managers
pursuant to Section 10.15 to manage and control any or all of the assets
of the Trust.
(b) To designate persons (other than the members of
the Committee) to carry out fiduciary responsibilities, other than any
responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among
the members of the Committee, other than any responsibility to manage or
control the assets of the Trust;
(d) To cancel any such designation or allocation at
any time for any reason;
(e) To exercise management and control over Plan
assets.
25
<PAGE> 31
Any action under this Section 8.6 shall be taken in writing, and
no designation or allocation under Paragraph (a), (b) or (c) shall be effective
until accepted in writing by the indicated responsible person.
8.7 Periodic Review of Funding Policy. At periodic
intervals the Committee shall review the long-run and short-run financial needs
of the Plan and shall determine a funding policy for the Plan consistent with
the objectives of the Plan and the minimum funding standards of ERISA, if
applicable. In determining such funding policy the Committee shall take into
account, at a minimum, not only the long-term investment objectives of the
Trust Fund consistent with the prudent management of the assets thereof, but
also the short-run needs of the Plan to pay benefits. All actions taken by the
Committee with respect to the funding policy of the Plan, including the reasons
therefor, shall be fully reflected in the minutes of the Committee.
8.8 Application for Determination of Benefits.
(a) The Committee may require any person claiming
benefits under the Plan to submit an application therefor on such forms
and in such manner as the Committee may prescribe, together with such
documents and information as the Committee may require. In the case of
any person suffering from a disability which prevents him from making
personal application for benefits, the Committee may, in its discretion,
permit another person acting on his behalf to submit the application.
(b) Within ninety (90) days following receipt of an
application and all necessary documents and information, the Committee
shall furnish the claimant with written notice of the decision rendered
with respect to the application. In the case of a denial of the
claimant's application, the written notice shall set forth:
(i) The specific reasons for the denial,
with reference to the Plan provisions upon which the denial is
based;
(ii) A description of any additional
information or material necessary for perfection of the
application (together with an explanation why the material or
information is necessary); and
(iii) An explanation of the Plan's claim
review procedure.
(c) A claimant who does not agree with the decision
rendered under Section 8.8(b) hereof with respect to his application may
appeal the decision to the Committee. The appeal shall be made in
writing within sixty-five (65) days after the date of notice of the
decision with respect to the application. If the application has
neither been approved nor denied within the ninety (90) day period
provided in Section 8.8(b) hereof, then the appeal shall be made within
sixty-five (65) days after the expiration of the ninety (90) day period.
In making his appeal, the claimant may request that his application be
given full and fair review by the Committee. The claimant may review
all pertinent documents and submit issues and comments in writing. The
decision of the Committee shall be made promptly, and not later than
sixty (60) days after the Committee's receipt of a request for review,
unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt
of a request for review. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant with specific references to
the pertinent Plan provisions upon which the decision is based.
26
<PAGE> 32
8.9 Limitation on Liability. Each of the fiduciaries under
the Plan shall be solely responsible for its own acts and omissions and no
fiduciary shall be liable for any breach of fiduciary responsibility resulting
from the act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 8.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 10.15 hereof or as to which management and control has been retained by
the Trustee.
8.10 Indemnification and Insurance. To the extent permitted
by law, the Company shall indemnify and hold harmless the Committee and each
member thereof, each Trustee, the Board of Directors and each member thereof,
and such other persons as the Board of Directors may specify, from the effects
and consequences of his acts, omissions, and conduct in his official capacity
in connection with the Plan and Trust. To the extent permitted by law, the
Company may also purchase liability insurance for such persons.
8.11 Compensation of Committee and Plan Expenses. Members
of the Committee shall serve as such without compensation unless the Board of
Directors shall otherwise determine, but in no event shall any member of the
Committee who is an Employee receive compensation from the Plan for his
services as a member of the Committee. All members shall be reimbursed for any
necessary expenditures incurred in the discharge of duties as members of the
Committee. The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee or other persons retained or employed by the
Committee shall be fixed by the Committee, subject to approval by the Board of
Directors. The expenses incurred in the administration and operation of the
Plan, including but not limited to the expenses incurred by the members of the
Committee in exercising their duties, shall be paid by the Plan from the Trust
Fund, unless paid by the Company, provided, however, that the Plan and not the
Company shall bear the cost of interest and normal brokerage charges which are
included in the cost of securities purchased by the Trust Fund (or charged to
proceeds in the case of sales).
8.12 Resignation. Any member of the Committee may resign by
giving fifteen (15) days notice to the Board of Directors, and any member shall
resign forthwith upon receipt of the written request of the Board of Directors,
whether or not said member is at that time the only member of the Committee.
8.13 Reliance Upon Documents and Opinions. The members of
the Committee, the Board of Directors, the Company and any person delegated to
carry out any fiduciary responsibilities under the Plan (hereinafter a
"delegated fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or
any Investment Manager. The members of the Committee, the Board of Directors,
the Company and any delegated fiduciary shall be fully protected and shall not
be liable in any manner whatsoever for anything done or action taken or
suffered in reliance upon any such consultant, or firm or corporation which
employs one or more consultants, Trustee, Investment Manager, or counsel. Any
and all such things done or such action taken or suffered by the Committee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law. The Committee and any
delegated fiduciary may, but are not required to, rely upon all records of the
Company with respect to any matter or thing whatsoever, and may likewise treat
such records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided
by law.
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ARTICLE IX
Termination and Merger
9.1 Right to Terminate Plan. The Company may terminate or
partially terminate the Plan. If the Plan is terminated or partially
terminated, the assets of the Plan shall be allocated, subject to Section 9.3,
as provided in Section 4044 of the Employee Retirement Income Security Act of
1974 (as it may be from time to time amended or construed by any appropriate
governmental agency or corporation), without subclasses. Any amount remaining
after all fixed and contingent liabilities of the Plan have been satisfied
shall be allocated to each Participant in proportion to the present value of a
benefit commencing at Normal Retirement Date equal to such Participant's
Average Earnings times Benefit Years. Allocations under this Section to
Participants with respect to whom the Plan is terminating shall be
nonforfeitable. Except as otherwise required by law, the time and manner of
distribution of the assets shall be determined by Allergan by amendment to the
Plan.
9.2 Mergers, etc. No merger or consolidation with, or
transfer of any of the Plan's assets or liabilities to, any other plan shall
occur at any time unless each Participant would (if the Plan had then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).
9.3 Effect of Reorganization, Transfer of Assets or Change
in Control.
(a) In the event of a consolidation or merger of
the Company, or in the event of a sale and/or any other transfer of the
operating assets of the Company, any ultimate successor or successors to
the business of the Company may continue this Plan in full force and
effect by adopting the same by resolution of its board of directors and
by executing a proper supplemental or transfer agreement with the
Trustee.
(b) In the event of a Change in Control (as herein
defined), all Participants who were Participants on the date of such
Change in Control shall become 100% vested in their Accrued Benefits on
the date of such Change in Control and in any benefit accruals
subsequent to the date of the Change in Control. Notwithstanding the
foregoing, the Board of Directors may, at its discretion, amend or
delete this Paragraph (b) in its entirety prior to the occurrence of any
such Change in Control. For the purpose of this Paragraph (b), "Change
in Control" shall mean the following and shall be deemed to occur if any
of the following events occur:
(i) Any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Allergan representing 50% or more
of the combined voting power of Allergan's then outstanding
voting securities;
(ii) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent Board"), cease for
any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by
Allergan's stockholders, is approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of Allergan, as such terms are used Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall, for
the purposes of this Plan, be considered as though such person
were a member of the Incumbent Board;
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(iii) The stockholders of Allergan approve a
merger or consolidation with any other corporation, other than
(A) a merger or consolidation which
would result in the voting securities of Allergan
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of another entity)
more than 50% of the combined voting power of the
voting securities of Allergan or such other entity
outstanding immediately after such merger or
consolidation, and
(B) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no person acquires
50% or more of the combined voting power of Allergan's
then outstanding voting securities; or
(iv) The stockholders of Allergan approve a
plan of complete liquidation of the Company or an agreement for
the sale or other disposition by the Company of all or
substantially all of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (b), a Change
in Control shall not be deemed to have occurred (1) if the "person"
described in the preceding provisions of this Paragraph is an
underwriter or underwriting syndicate that has acquired the ownership of
50% or more of the combined voting power of Allergan's then outstanding
voting securities solely in connection with a public offering of
Allergan's securities or (2) if the "person" described in the preceding
provisions of this Paragraph is an employee stock ownership plan or
other employee benefit plan maintained by the Company that is qualified
under the provisions of ERISA.
9.4 Termination Restrictions, Effective Prior to January 1,
1994. For Plan Years beginning prior to January 1, 1994, the following
termination restrictions shall apply:
(a) Company contributions made on behalf of any of
the 25 highest paid Employees at the time the Plan is established and whose
anticipated Accrued Benefit exceeds $1,500 shall be restricted as provided in
Paragraph (b) upon the occurrence of the following conditions:
(i) The Plan is terminated within 10 years
after its establishment,
(ii) The benefits of such highest paid
Employee become payable within 10 years after the establishment
of the Plan, or
(iii) If Code Section 412 (without regard to
Code Section 412(h)(2)) does not apply to this Plan, the benefits
of such Employee become payable after the Plan has been in effect
for 10 years, and the full current costs of the Plan for the
first 10 years have not been funded.
(b) Company contributions which may be used for the
benefit of an Employee described in paragraph (a) shall not exceed the
greater of $20,000, or 20% of the first $50,000 of the Employee's
Compensation multiplied by the number of years between the date of the
establishment of the Plan and:
(i) If (a)(i) applies, the date of the
termination of the Plan,
(ii) If (a)(ii) applies, the date the
benefits become payable, or
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<PAGE> 35
(iii) If (a)(iii) applies, the date of the
failure to meet the full current costs.
(c) If the Plan is amended so as to increase the
benefit actually payable in the event of the subsequent termination of
the Plan, or the subsequent discontinuance of contributions thereunder,
then the provisions of the above paragraphs shall be applied to the Plan
as so changed as if it were a new plan established on the date of the
change. The original group of 25 Employees (as described in (a) above)
shall continue to have the limitations in paragraph (b) apply as if the
Plan had not been changed. The restrictions relating to the change of
Plan should apply to benefits or funds for each of the 25 highest paid
Employees on the effective date of the change except that such
restrictions need not apply with respect to any Employee in this group
for whom the Accrued Benefit provided by Company contributions to that
date and during the ensuing ten years, based on his rate of Compensation
on that date, could not exceed $1,500.
The Company contributions which may be used for the benefit of
new group of 25 Employees will be limited to the greater of:
(i) The Company contributions (or funds
attributable thereto) which would have been applied to provide
the benefits for the Employee if the previous plan had been
continued without change;
(ii) $20,000; or
(iii) The sum of (A) the Company
contributions (or funds attributable thereto) which would have
been applied to provide benefits for the Employee under the
previous plan if it had been terminated the date before the
effective date of change, and (B) an amount computed by
multiplying the number of years for which the current costs of
the Plan after that date are met by (I) 20 percent of his
Compensation, or (II) $10,000, whichever is smaller.
(d) Notwithstanding the above limitations, the
following limitations will apply if they would result in a greater amount
of Company contributions to be used for the benefit of the restricted
Employee:
(i) In the case of a substantial owner (as
defined in Section 4022(b)(5) of ERISA), a dollar amount which
equals the present value of the benefit guaranteed for such
employee under Section 4022 of ERISA, or if the Plan has not
terminated, the present value of the benefit that would be
guaranteed if the Plan terminated on the date the benefit
commences, determined in accordance with regulations of the
Pension Benefit Guaranty Corporation (PBGC); and
(ii) In the case of other restricted
Employees, a dollar amount which equals the present value of the
maximum benefit described in Section 4022(b)(3)(B) of ERISA
(determined on the earlier of the date the Plan terminates or
the date benefits commence, and determined in accordance with
regulations of PBGC) without regard to any other limitations in
Section 4022 of ERISA.
(e) If, as of the date this Plan terminates, the
value of the Plan assets is not less than the present value of all
Accrued Benefits (whether or not nonforfeitable) distributions of assets
to each Participant equal to the present value of that Participant's
Accrued Benefit will
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not be discriminatory if the formula for computing benefits as of the
date of termination is not discriminatory.
All present value and the value of plan assets will be
computed using assumptions satisfying Section 4044 of ERISA.
Upon the occurrence of the above situation, the amount
by which the value of Plan assets exceeds the present value of Accrued Benefits
(whether or not nonforfeitable) will revert to the Company.
9.5 Termination Restrictions Effective on or after January
1, 1994. For Plan Years beginning on or after January 1, 1994, the following
termination restrictions shall apply:
(a) In the event the Plan is terminated, the
Accrued Benefit of any Highly Compensated Employee (active or former)
shall be limited to an Accrued Benefit that is nondiscriminatory under
Code Section 401(a)(4).
(b) Accrued Benefits distributed to any of the 25
most Highest Compensated Employees (active or former) with the greatest
Earnings in the current or any prior year shall be restricted so that the
annual payments to such Highest Compensated Employee are no greater than
an amount equal to the payment that would be made on behalf of the Highly
Compensated Employee under a straight life annuity that is the actuarial
equivalent of the sum of the Highly Compensated Employee's Accrued
Benefit, other benefits under the Plan (other than social security
supplement, within the meaning of Section 1.411(a)-7(c)(4)(ii) of the
Income Tax Regulations), and the amount that he is entitled to receive
under a social security supplement.
(c) Paragraph (a) shall not apply if:
(i) After payment of the Accrued Benefit
to an Employee described in Paragraph (a), the value of Plan
assets equals or exceeds 110% of the value of current
liabilities, as defined in Code Section 412(1)(7),
(ii) The value of the Accrued Benefit for
an Employee described in Paragraph (a) is less than 1% of the
value of current liabilities before distribution, or
(iii) The value of the Accrued Benefit
payable under the Plan to an Employee described in Paragraph (a)
does not exceed $3,500.
For purposes of this Paragraph (c), the Accrued Benefit includes loans in
excess of the amount set forth in Code Section 72(p)(2)(A), any periodic
income, any withdrawal values payable to a living Employee, and any death
benefits not provided for by insurance on the Employee's life.
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ARTICLE X
Miscellaneous
10.1 Forfeitures. All forfeitures arising under the Plan
shall be used as soon as possible to reduce the Company's contributions and
shall not be applied to increase the benefits any person would otherwise
receive under the Plan.
10.2 Amendment. The Company, by resolution of the Board of
Directors, shall have the right to amend this Plan and any trust agreement with
the Trustee at any time and from time to time and in such manner and to such
extent as it may deem advisable, including retroactively, subject to the
following provisions:
(a) No amendment shall have the effect of reducing
any Participant's vested interest in the Plan or eliminating an optional
form of distribution.
(b) No amendment shall have the effect of diverting
any part of the assets of the Plan to persons or purposes other than the
exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of
increasing the duties or responsibilities of a Trustee without its
written consent.
The Committee shall have the right to amend the Plan, subject to the above
provisions (a) through (c), in accordance with the provisions of Section
8.5(g).
10.3 Nonalienation of Benefits. Except pursuant to a
Qualified Domestic Relations Order as described in Section 10.15, no benefit
under this Plan may be voluntarily or involuntarily assigned or alienated.
10.4 Facility of Payment. If the Committee deems any person
incapable of receiving benefits to which he is entitled by reason of minority,
illness, infirmity, or other incapacity, it may direct that payment be made
directly for the benefit of such person or to any person selected by the
Committee to disburse it, whose receipt shall be a complete acquittance
therefor. Such payments shall, to the extent thereof, discharge all liability
of the Company and the party making the payment.
10.5 California Law Controlling. All legal questions
pertaining to the Plan which are not controlled by ERISA shall be determined in
accordance with the laws of the State of California and all contributions made
hereunder shall be deemed to have been made in that State.
10.6 Lapsed Benefits.
(a) In the event that a benefit is payable under
this Plan to a Participant and after reasonable efforts the Participant
cannot be located for the purpose of paying the benefit during a period
of three consecutive years, the Participant shall be presumed dead and
the benefit (if any) shall, upon the termination of that three year
period, be paid to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located
for the purpose of paying the benefit for the following two years, then
the benefit shall be forfeited and applied in accordance with the
provisions of Section 10.1.
(c) Notwithstanding the foregoing rules, if after
such a forfeiture the Participant or an eligible Beneficiary shall claim
the forfeited benefit, the amount forfeited shall
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be reinstated and paid to the claimant as soon as practical following
the claimant's production of reasonable proof of his or her identity and
entitlement to the benefit (determined pursuant to the Plan's normal
claim review procedures under Section 8.8).
(d) The Committee shall direct the Trustee with
respect to the procedures to be followed concerning a missing
Participant (or Beneficiary), and the Company shall be obligated to
contribute to the Trust Fund any amounts necessary after the application
of Section 10.1 to pay any reinstated benefit after it has been
forfeited pursuant to the provisions of this Section.
10.7 Effect of Article Headings. Article headings are for
convenient reference only and shall not be deemed to be a part of the substance
of this instrument or in any way to enlarge or limit the contents of any
Article.
10.8 Interpretation. The provisions of this Plan shall in
all cases be interpreted in a manner that is consistent with this Plan
satisfying the requirements of Code Section 401(a) and related statutes for
qualification as a defined benefit plan.
10.9 Withholding For Taxes. Any payments from the Trust
Fund may be subject to withholding for taxes as may be required by any
applicable federal or state law.
10.10 Plan and Trust as One Instrument. This Plan and any
trust agreement adopted hereunder shall be construed together as one
instrument. In the event that any conflict arises between the terms and/or
conditions of any trust agreement with the Trustee and this Plan, the
provisions of this Plan shall control, except that with respect to the duties
and responsibilities of the Trustee, the trust agreement shall control.
10.11 Invalid Provisions. If any paragraph, section,
sentence, clause or phrase contained in this Plan shall become illegal, null or
void or against public policy, for any reason, or shall be held by any court of
competent jurisdiction to be incapable of being construed or limited in a
manner to make it enforceable, or is otherwise held by such court to be
illegal, null or void or against public policy, the remaining paragraphs,
sections, sentences, clauses or phrases contained in this Plan shall not be
affected thereby.
10.12 Counterparts. This instrument may be executed in one
or more counterparts each of which shall be legally binding and enforceable.
10.13 No Right of Employment Hereunder. The adoption and
maintenance of this Plan and Trust shall not be deemed to constitute a contract
of employment or otherwise between the Company and any Employee or Participant,
or to be a consideration for, or an inducement or condition of, any employment.
Nothing contained herein shall be deemed to give any Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge, with or without cause, any Employee or Participant at any
time, which right is hereby expressly reserved.
10.14 Appointment of Investment Manager. From time to time
the Committee, in accordance with Section 8.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over
assets of the Trust. The Committee shall notify the Trustee of such assets of
the appointment of the Investment Manager. In the event more than one
Investment Manager is appointed, the Committee shall determine which assets
shall be subject to management and control by each Investment Manager and shall
also determine the proportion in which funds withdrawn or disbursed shall be
charged against the assets subject to each Investment Manager's management and
control. As shall be provided in any contract between an Investment Manager
and
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<PAGE> 39
the Committee, such Investment Manager shall hold a revocable proxy with
respect to all securities which are held under the management of such
Investment Manager pursuant to such contract, and such Investment Manager shall
report the voting of all securities subject to such proxy on an annual basis to
the Committee.
10.15 Qualified Domestic Relations Orders. The rule set
forth in Section 10.3 above shall not apply with respect to a "Qualified
Domestic Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a
judgment, decree, or order (including approval of a property settlement
agreement) that:
(i) Creates or recognizes the existence of
an Alternate Payee's right to, or assigns to an Alternate Payee
the right to, receive all or a portion of the benefits payable
under this Plan with respect to a Participant,
(ii) Relates to the provision of child
support, alimony payments, or marital property rights to a
spouse, former spouse, child or other dependent of a
Participant,
(iii) Is made pursuant to a State domestic
relations law (including a community property law), and
(iv) Clearly specifies: (A) the name and
last known mailing address (if any) of the Participant and the
name and mailing address of each Alternate Payee covered by the
order (if the Plan Administrator does not have reason to know
that address independently of the order); (B) the amount or
percentage of the Participant's benefits to be paid to each
Alternate Payee, or the manner in which the amount or percentage
is to be determined; (C) the number of payments or period to
which the order applies; and (D) each plan to which the order
applies.
For purposes of this Section 10.15,s "Alternate Payee" means any
spouse, former spouse, child or other dependent of a Participant who is
recognized by a domestic relations order as having a right to receive all, or a
portion of, the benefits payable with respect to the Participant.
(b) A domestic relations order is not a Qualified
Domestic Relations Order if it requires:
(i) The Plan to provide any type or form of
benefit, or any option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits;
or
(iii) The payment of benefits to an Alternate
Payee that are required to be paid to another Alternate Payee
under a previous Qualified Domestic Relations Order.
(c) A domestic relations order shall not be
considered to fail to satisfy the requirements of Paragraph (b)(i) above with
respect to any payment made before a Participant has separated from service
solely because the order requires that payment of benefits be made to an
Alternate Payee:
(i) On or after the date on which the
Participant attains (or would have first attained) his earliest
retirement age (as defined in Code Section 414(p)(4)(B));
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(ii) As if the Participant had retired on
the date on which such payment is to begin under such order (but
taking into account only the present value of accrued benefits
and not taking into account the present value of any subsidy for
early retirement benefits); and
(iii) In any form in which such benefits may
be paid under the Plan to the Participant (other than in the
form of a joint and survivor annuity with respect to the
Alternate Payee and his or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before
his earliest retirement age (as defined in Code Section 414(p)(4)(B)), the
Alternate Payee is entitled to benefits only if the Qualified Domestic
Relations Order requires survivor benefits to be paid to the Alternate Payee.
(d) To the extent provided in any Qualified
Domestic Relations Order, the former spouse of a Participant shall be
treated as a surviving Spouse of the Participant for purposes of applying
the rules (relating to minimum survivor annuity requirements) of Code
Sections 401(a)(11) and 417, and any current spouse of the Participant
shall not be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order
received by the Plan, the Plan Administrator shall promptly notify the
Participant and any Alternate Payee of the receipt of the order and the
Plan's procedures for determining the qualified status of domestic
relations orders. Within a reasonable period after the receipt of the
order, the Plan Administrator shall determine whether the order is a
Qualified Domestic Relations Order and shall notify the Participant and
each Alternate Payee of such determination.
(f) The Plan Administrator shall establish
reasonable procedures to determine the qualified status of domestic
relations orders and to administer distributions under Qualified Domestic
Relations Orders. During any period in which the issue of whether a
domestic relations order is a Qualified Domestic Relations Order is being
determined (by the Plan Administrator, by a court of competent
jurisdiction, or otherwise), the Plan Administrator shall segregate in a
separate account in the Plan (or in an escrow account) the amounts which
would have been payable to the Alternate Payee during the period if the
order had been determined to be a Qualified Domestic Relations Order. If
within the 18 Month Period (as defined below), the order (or modification
thereof) is determined to be a Qualified Domestic Relations Order, the
Plan Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons entitled thereto. However, if within
the 18 Month Period (i) it is determined that the order to not a
Qualified Domestic Relations Order, or (ii) the issue as to whether the
order is a Qualified Domestic Relations Order is not resolved, then the
Plan Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to the
amounts if there had been no order (assuming such benefits were otherwise
payable). Any determination that an order is a Qualified Domestic
Relations Order that is made after the close of the 18 Month Period shall
be applied prospectively only. For purposes of this Section 10.15, the
"18 Month Period" shall mean the 18 month period beginning with the date
on which the first payment would be required to be made under the
domestic relations order.
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ARTICLE XI
Top-Heavy Provisions
11.1 Applicability. Notwithstanding any provision in this
Plan to the contrary, and subject to the limitations set forth in Section 11.8,
the requirements of Sections 11.4, 11.5, 11.6 and 11.7 shall apply under this
Plan in the case of any Plan Year in which the Plan is determined to be a
Top-Heavy Plan under the rules of Section 11.3. For the purpose of this
Article XI only, the term "Company" shall mean Allergan and any Affiliate
whether or not such company has adopted the Plan.
11.2 Definitions. For purposes of this Article XI, the
following special definitions and definitional rules shall
apply:
(a) The term "Key Employee" means any Employee or
former Employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is or was:
(i) An officer of the Company having an
annual compensation greater than 50% of the amount in effect
under Code Section 415(b)(1)(A) for the Plan Year; provided,
however, for such purposes no more than 50 Employees (or, if
lesser, the greater of three Employees or 10% of the Employees)
shall be treated as officers;
(ii) One of the ten Employees having annual
compensation from the Company of more than the limitation in
effect under Code Section 415(c)(1)(A) and owning (or considered
as owning within the meaning of Code Section 318) both more than
a one-half percent interest and the largest interests in the
Company. For this purpose, if two Employees have the same
interest in the Company, the Employee having greater annual
compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company;
or
(iv) A One Percent Owner of the Company
having an annual compensation from the Company of more than
$150,000.
(b) The term "Five Percent Owner" means any person
who owns (or is considered as owning within the meaning of Code Section
318) more than 5% of the outstanding stock of the Company or stock
possessing more than 5% of the total combined voting power of all stock
of the Company.
(c) The term "One Percent Owner" means any person
who would be described in Paragraph (b) if "1%" were substituted for
"5%" each place where it appears therein.
(d) The term "Non-Key Employee" means any Employee
who is not a Key Employee.
(e) The term "Determination Date" means, with
respect to any plan year, the last day of the preceding plan year. In
the case of the first plan year of any plan, the term "Determination
Date" shall mean the last day of that plan year.
(f) The term "Aggregation Group" means (i) each
plan of the Company in which a Key Employee is a Participant, and (ii)
each other plan of the Company which enables any plan described in
clause (i) to meet the requirements of Code Sections 401(a)(4) or 410.
Any plan not required to be included in an Aggregation Group under the
preceding rules may be
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treated as being part of such group if the group would continue to meet
the requirements of Code Sections 401(a)(4) and 410 with the plan being
taken into account.
(g) For purposes of determining ownership under
Paragraphs (a), (b) and (c) above, the following special rules shall
apply: (i) Code Section 318(a)(2)(C) shall be applied by substituting
"5%" for "50%", and (ii) the aggregation rules of Subsections (b), (c)
and (m) of Code Section 414 shall not apply, with the result that the
ownership tests of this Section 11.2 shall apply separately with respect
to each Affiliate.
(h) The terms "Key Employee" and "Non-Key Employee"
shall include their Beneficiaries, and the definitions provided under
this Section 11.2 shall be interpreted and applied in a manner
consistent with the provisions of Code Section 416(i) and the
regulations thereunder.
(i) For purposes of this Article XI, an Employee's
Compensation shall be determined in accordance with the rules of Code
Section 415 and the regulations thereunder; provided, however, for
purposes of Paragraph (a) above only, an Employee's annual compensation
shall be determined in accordance with the rules of Code Section
414(q)(7).
11.3 Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect
to any Plan Year:
(i) Any defined benefit plan if, as of the
Determination Date, the present value of the cumulative accrued
benefits under the plan for Key Employees exceeds 60% of the
present value of the cumulative accrued benefits under the plan
for all Employees; and
(ii) Any defined contribution plan if, as
of the Determination Date, the aggregate of the account balances
of Key Employees under the plan exceeds 60% of the aggregate of
the account balances of all Employees under the plan.
In applying the foregoing provisions of this Paragraph (a), the
valuation date to be used in valuing Plan assets shall be (A) in the
case of a defined benefit plan, the same date which is used for
computing costs for minimum funding purposes, and (B) in the case of a
defined contribution plan, the most recent valuation date within a
12-month period ending on the applicable Determination Date.
(b) Each plan maintained by the Company required to
be included in an Aggregation Group shall be treated as a Top- Heavy
Plan if the Aggregation Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any
Aggregation Group if the sum (as of the Determination Date) of (i) the
present value of the cumulative accrued benefits for Key Employees under
all defined benefit plans included in the group, and (ii) the aggregate
of the account balances of Key Employees under all defined contribution
plans included in the group exceeds 60% of a similar sum determined for
all Employees. For purposes of determining the present value of the
cumulative accrued benefit of any Employee, or the amount of the account
balance of any Employee, such present value or amount shall be increased
by the aggregate distributions made with respect to the Employee under
the plan during the five year period ending on the Determination Date.
The preceding prior distribution rule shall also apply to distributions
under a terminated plan that, if it had not been terminated, would have
been required to be included in an Aggregation Group; provided, however,
any rollover contribution
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or similar transfer initiated by the Employee and made after December
31, 1983, to a plan shall not be taken into account with respect to the
transferee plan for purposes of determining whether such plan is a
Top-Heavy Plan (or whether any Aggregation Group which includes such
plan is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with
respect to any plan for any plan year, but the individual was a Key
Employee with respect to the plan for any prior plan year, any accrued
benefit for the individual (and the account balance of the individual)
shall not be taken into account for purposes of this Section 11.3.
(e) If any individual has not performed services
for the Company at any time during the five year period ending on the
Determination Date, any accrued benefit for such individual (and the
account balance of the individual) shall not be taken into account for
purposes of this Section 11.3
(f) In applying the foregoing provisions of this
Section, the accrued benefit of a Non-Key Employee shall be determined
(i) under the method, if any, which is used for accrual purposes under
all plans of the Company and any Affiliate, or (ii) if there is no such
uniform method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XI, the
definitions provided under this Section 11.3 shall be applied and
interpreted in a manner consistent with the provisions of Code Section
416(g) and the Regulations thereunder.
11.4 Minimum Benefit.
(a) The Plan shall provide a minimum benefit for
each Participant who is not classified as a "Key Employee." This
minimum benefit, when expressed as an annual retirement benefit payable
in the form of a single life annuity beginning when the Participant
attains Age 65, shall not be less than the Participant's average annual
compensation during the period of consecutive years (not exceeding five
(5)) during which the Participant had the greatest aggregate
compensation from the Company multiplied by the lesser of:
(i) Two percent (2%) multiplied by the
number of his Vesting Years; or
(ii) Twenty percent (20%).
(b) For purposes of this Section 11.4, Vesting
Years shall be determined under Subsections (4), (5), and (6) of Code
Section 411(a), but excluding:
(i) Any Vesting Year if the Plan was not a
Top-Heavy Plan for the Plan Year ending during such Vesting
Year; and
(ii) Any Vesting Year which was completed
in a Plan Year beginning before January 1, 1984.
(c) The Participant's minimum benefit determined
under this Section 11.4 shall be calculated without regard to any Social
Security benefits payable to the Participant.
(d) In the event a Participant is covered by both a
defined contribution and a defined benefit plan maintained by the
Company, both of which are determined to be Top-
38
<PAGE> 44
Heavy Plans, the Company shall satisfy the minimum benefit requirements
of Code Section 416 by providing (in lieu of the minimum contribution
described under the defined contribution plan) a minimum benefit under
this Plan so as to prevent the duplication of required minimum benefits
hereunder.
11.5 Maximum Benefit.
(a) Except as set forth below, in the case of any
Top-Heavy Plan the rules of Sections 4.6(a)(i) and 4.6(b) shall be
applied by substituting "1.0" for "1.25."
(b) The rule set forth in Paragraph (a) above shall
not apply if the requirements of both Subparagraphs (i) and (ii) are
satisfied.
(i) The requirements of this Subparagraph
(i) are satisfied if the rules of Section 11.4(a) above would be
satisfied after substituting "three percent (3%)" for "two
percent (2%)" where it appears therein and by increasing (but
not by more than ten (10) percentage points) twenty percent
(20%) by one (1) percentage point for each year for which the
Plan is a Top Heavy Plan.
(ii) The requirements of this Subparagraph
(ii) are satisfied if the Plan would not be a Top-Heavy Plan if
"ninety percent (90%)" were substituted for "sixty percent
(60%)" each place it appears in Sections 11.3(a) and 11.3(c).
(c) The rules of Paragraph (a) shall not apply with
respect to any Employee as long as there are no --
(i) Company contributions, forfeitures, or
voluntary nondeductible contributions allocated to the Employee
under a defined contribution plan maintained by the Company, or
(ii) Accruals by the Employee under a
defined benefit plan maintained by the Company.
(d) In the case where the Plan is subject to the
rules of Paragraph (a) above, the transition fraction rules of Code
Section 415(e)(6) shall be applied by substituting "$41,500" for
"$51,875."
11.6 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined
that the Plan is a Top-Heavy Plan, the vesting schedule of the Plan
shall be changed to that set forth below (unless the Plan's vesting
schedule otherwise provides for vesting at a rate at least as rapid as
that set forth below):
<TABLE>
<CAPTION>
Nonforfeitable
Number of Vesting Years Percentage
----------------------- ----------
<S> <C>
Less than 3 years 0%
3 or more 100%
</TABLE>
(b) If the Plan ceases to be a Top-Heavy Plan, the
vesting schedule of the Plan shall (for such Plan Years as the Plan is
not a Top-Heavy Plan) revert to that provided in Section 4.11 (the
"Regular Vesting Schedule"). If such reversion to the Regular Vesting
Schedule is deemed to constitute a vesting schedule change that is
attributable to a Plan amendment
39
<PAGE> 45
(within the meaning of Code Section 411(a)(10)), then such reversion to
said Regular Vesting Schedule shall be subject to the requirements of
Code Section 411(a)(10). For such purposes, the date of the adoption of
such deemed amendment shall be the Determination Date as of which it is
determined that the Plan has ceased to be a Top-Heavy Plan.
11.7 Noneligible Employees. The rules of this Article XI
shall not apply to any Employee included in a unit of employees covered by a
collective bargaining agreement between employee representatives and one or
more employers if retirement benefits were the subject of good faith bargaining
between such employee representatives and the employer or employers.
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Pension Plan as restated this 3rd
day of April, 1996.
ALLERGAN, INC.
By: Francis R. Tunney, Jr.
Secretary
40
<PAGE> 46
APPENDIX A
Actuarial Equivalent shall mean a benefit of equal
actuarial value based on the attached factors.
A.1 No benefit determined in accordance with the
factors set forth in this Appendix shall be less than the actuarial
equivalent determined in accordance with the actuarial assumptions in
effect as of the adoption date of the Second Amendment to the Plan (7%
interest rate and the 1971 GAM Mortality Table -- Males (age setback 2
years)) of the Participant's Accrued Benefit determined as of the
adoption date of the Second Amendment to the Plan.
A.2 For Plan Years commencing prior to January 1,
1995: For purposes of Section 5.4, Actuarial Equivalent shall mean an
amount of equal actuarial value based on the interest rate(s) which
would be used (as of the first day of the Plan Year in which falls the
annuity starting date) by the Pension Benefit Guaranty Corporation
(PBGC) for a trusteed single-employer plan to value a benefit upon
termination of an insufficient trusteed single-employer plan to value
a benefit upon termination of an insufficient trusteed single-employer
plan and the 1971 GAM Mortality Table -- Males (age set-back 2 years).
A.3 For Plan Years commencing after December 31,
1994: For purposes of Section 5.4, Actuarial Equivalent shall mean an
amount of equal actuarial value based on the Applicable Mortality
Table and the Applicable Interest Rate where:
"Applicable Mortality Table" means the 1983
Group Annuity Mortality Table; and
"Applicable Interest Rate" means the annual
interest rate on 30-year Treasury securities as specified by
the Commissioner of Internal Revenue for the first full
calendar month preceding the Plan Year that contains the
annuity starting date.
41
<PAGE> 47
ATTACHMENT TO APPENDIX A
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
<TABLE>
<CAPTION>
Retiree Joint & 50% Joint & 66 2/3% Joint & 100%
Age Survivor Survivor Survivor
--- -------- -------- --------
<S> <C> <C> <C>
40 .975 .960 .945
41 .973 .958 .942
42 .971 .956 .939
43 .969 .954 .936
44 .967 .952 .933
45 .965 .950 .930
46 .963 .948 .926
47 .961 .946 .922
48 .959 .944 .918
49 .957 .942 .914
50 .955 .940 .910
51 .953 .937 .906
52 .951 .934 .902
53 .949 .931 .898
54 .947 .928 .894
55 .945 .925 .890
56 .942 .921 .885
57 .939 .917 .880
58 .936 .913 .875
59 .933 .909 .870
60 .930 .905 .865
61 .927 .901 .860
62 .924 .897 .855
63 .921 .893 .850
64 .918 .889 .845
65 .915 .885 .840
66 .911 .881 .834
67 .907 .877 .828
68 .903 .873 .822
69 .899 .869 .816
70 .895 .865 .810
71 .892 .862 .805
72 .889 .859 .800
73 .886 .856 .795
74 .883 .853 .790
75 .880 .850 .785
</TABLE>
42
<PAGE> 48
ATTACHMENT TO APPENDIX A
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
<TABLE>
<CAPTION>
5-year 10-year 15-year 20-year
Retiree Certain Certain Certain Certain
Age & Life & Life & Life & Life
--- ------ ------ ------ ------
<S> <C> <C> <C> <C>
40 .999 .996 .990 .983
41 .999 .995 .989 .981
42 .999 .995 .988 .979
43 .999 .994 .986 .976
44 .998 .993 .984 .973
45 .998 .992 .982 .970
46 .998 .991 .980 .967
47 .997 .990 .978 .963
48 .997 .988 .975 .959
49 .997 .987 .972 .954
50 .996 .985 .969 .950
51 .996 .984 .966 .945
52 .995 .982 .962 .939
53 .995 .980 .959 .933
54 .994 .978 .954 .926
55 .993 .975 .950 .919
56 .993 .973 .945 .911
57 .992 .970 .939 .902
58 .991 .967 .933 .893
59 .990 .963 .926 .883
60 .989 .959 .918 .872
61 .987 .954 .909 .860
62 .986 .949 .899 .847
63 .984 .943 .889 .833
64 .982 .937 .877 .818
65 .980 .929 .865 .802
66 .977 .921 .851 .785
67 .974 .911 .836 .768
68 .971 .901 .821 .749
69 .967 .890 .804 .730
70 .962 .878 .787 .711
71 .957 .865 .769 .691
72 .952 .851 .750 .671
73 .946 .837 .731 .651
74 .940 .822 .711 .631
75 .934 .806 .691 .610
</TABLE>
43
<PAGE> 49
APPENDIX B
For purposes of Section 4.3(b) of the Plan, the Accrued Benefit of a
Participant shall be equal to one-twelfth (1/12) of the difference between:
(a) the sum of:
(i) 1.7% of his Average Earnings multiplied
by the number of his Benefit Years to a maximum of 35 Benefit
Years; plus
(ii) 0.5% of his Average Earnings for each
Benefit Year in excess of 35 Benefit Years; and
(b) 1.43% of the Participant's Primary Social Security
Benefit multiplied by the number of his Benefit Years to a maximum of 35
Benefit Years.
44
<PAGE> 1
EXHIBIT 10.4
ALLERGAN, INC.
1989 NONEMPLOYEE DIRECTOR STOCK PLAN
(AS AMENDED AND RESTATED)
I. GENERAL PROVISIONS
1.1 Purposes of Plan. Allergan, Inc. (the "Company") has adopted this
1989 Nonemployee Director Stock Plan (the "Plan") to enable the Company to
attract and retain the services of experienced and knowledgeable Nonemployee
Directors and to align further their interests with those of the stockholders
of the Company by providing for or increasing the proprietary interests of the
Nonemployee Directors in the Company.
1.2 Definitions. The following terms, when used in this Plan, shall
have the meanings set forth in this Section 1.2:
(a) "Award" means an award of Restricted Stock under the Plan.
(b) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(c) "Change in Control" means the following and shall be deemed
to occur if any of the following events occur:
(i) Any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company's then outstanding voting securities;
(ii) Individuals who, as of the date hereof, constitute
the Board of Directors (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's stockholders, is approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall, for
the purposes of this Plan, be considered as though such person
were a member of the Incumbent Board;
(iii) The stockholders of the Company approve a merger
or consolidation with any other corporation, other than
(A) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of another entity) more than 50%
of the combined voting power of the voting securities of
the Company or such other entity outstanding immediately
after such merger or consolidation, and
1
<PAGE> 2
(B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person acquires 50% or more of
the combined voting power of the Company's then
outstanding voting securities; or
(iv) The stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all
of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (c), a Change in
Control shall not be deemed to have occurred (1) if the "person" described in
the preceding provisions of this Paragraph, is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities or (2) if the "person"
described in the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company (or any
of its affiliated companies) that is qualified under the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
(d) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(e) "Company" means Allergan, Inc., a Delaware corporation, or any
successor thereto.
(f) "Nonemployee Director" means any member of the Board of Directors
who is not an employee of the Company or of a parent or subsidiary corporation
(as defined in Section 425 of the Internal Revenue Code) with respect to the
Company.
(g) "Participant" means any Nonemployee Director who receives an Award
pursuant to the terms of the Plan.
(h) "Plan" means the Allergan, Inc. 1989 Nonemployee Director Stock Plan
as set forth herein, as amended from time to time.
(i) "Restricted Stock" means Common Stock which is the subject of an
Award under this Plan and which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met as set forth in this Plan.
1.3 Common Shares Subject to Plan.
(a) Subject to the provisions of Article IV and of this Section 1.3,
the maximum number of shares of Common Stock which may be issued or transferred
pursuant to Awards under this Plan shall not exceed 50,000 shares.
(b) The shares of Common Stock to be delivered under the Plan shall be
made available, at the discretion of the Board of Directors, either from
authorized but unissued shares of Common Stock or from shares of Common Stock
held by the Company as treasury shares, including shares purchased in the open
market.
(c) If, on or before termination of the Plan, any shares of Common Stock
subject to an Award shall not be issued or transferred and shall cease to be
issuable or transferable for any reason, or if such shares shall have been
reacquired by the Company pursuant to restrictions imposed on such shares under
the Plan, the shares not so issued or transferred and the shares so reacquired
shall not longer be charged against the limitation provided for in Paragraph (a)
of this Section 1.3 and may be again made the subject of Awards under this plan.
2
<PAGE> 3
1.4 Administration of Plan.
(a) Subject to the provisions of Paragraph (b) below, this Plan
shall be administered by the Board of Directors. Awards under the Plan
shall be automatic as described elsewhere in this Plan. Subject to the
provisions of this Plan, the Board shall be authorized and empowered to
do all things necessary or desirable in connection with the
administration.
(b) The Board, in its absolute discretion, may at any time and
from time to time delegate to a committee of three or more persons
appointed by the Board (the "Committee") all or any part of the
authority, powers and discretion of the Board under this Plan. Any
determinations, decisions, interpretations, rules, regulations or other
actions of the Committee shall have the same effect as if made or taken
by the Board. Members of the Committee shall be subject to removal at
any time as determined by the Board, and the Board may at any time
abolish the entire Committee, in which case all authority, powers and
discretion delegated to the Committee shall immediately become revested
in the Board. The Board also may limit the Committee's authority and
power at any time, in which case any specified authority or power
removed from the Committee shall immediately become revested in the
Board. No Nonemployee Director shall be eligible to be a member of the
Committee.
1.5 Participation. All Nonemployee Directors shall receive Awards
under this Plan, which Awards shall be granted automatically as provided in
Section 2.1 below.
II. GRANTS OF RESTRICTED STOCK
2.1 Restricted Stock Awards -- Pre-1994.
(a) Immediately following the effective date of this Plan (as
determined pursuant to Section 5.2 hereof), each Nonemployee Director
who is then serving as a member of the Board of Directors shall
automatically be granted an Award consisting of a number of shares of
Restricted Stock (rounded to the nearest whole number of shares) equal
to 1,000 multiplied by the Applicable Service Fraction (as defined in
Paragraph (c) below) with respect to such Nonemployee Director
determined as of the effective date of this Plan.
(b) Thereafter, each Nonemployee Director who is newly
appointed or elected to the Board for a full term of three years shall
automatically be granted an award consisting of 1,000 shares of
Restricted Stock at the time such Nonemployee Director first joins the
Board. Such Award shall be made on the first business day following the
date of the regular annual meeting of stockholders of the Company, or
any adjournment thereof, at which directors are elected.
(c) Each Nonemployee Director who is appointed or elected to
fulfill a term of less than three years (whether by replacing a director
who retires, resigns or otherwise terminates his service as a director
prior to the expiration of this term or otherwise) shall automatically
be granted an Award consisting of a number of shares of Restricted Stock
(rounded to the nearest whole number of shares) equal to 1,000
multiplied by the Applicable Service Fraction with respect to such
Nonemployee Director determined as of the date of such Nonemployee
Director's appointment or election to the Board. Such Award shall be
made as of the first business day following the date of such Nonemployee
Director's appointment or election to the Board.
(d) Each Nonemployee Director who is re-elected (or, in the
case of a Nonemployee Director who was appointed to the Board and
received an Award pursuant to any of the preceding provisions of this
Section 2.1 (an "Appointed Director"), elected) to the Board for a full
term of three years shall
3
<PAGE> 4
automatically be granted an Award consisting of 700 shares of Restricted
Stock at the time of such Nonemployee Director's re-election (or, in the
case of an Appointed Director, election) to the Board. Such Award shall
be made on the first business day following the date of the annual
meeting of stockholders of the Company, or any adjournment thereof, at
which directors of the Company are elected.
(e) As used herein, "Applicable Service Fraction" means, with
respect to any Nonemployee Director, a fraction the numerator of which
is the number of months remaining in such Nonemployee Director's term at
the time the Applicable Service Fraction is to be determined pursuant
hereto and the denominator of which is 36.
2.2 Purchase Price. Participants under the Plan shall not be
required to pay any purchase price for the shares of Common Stock to be acquired
pursuant to an Award, unless otherwise required under applicable law or
regulations for the issuance of shares of Common Stock which are nontransferable
and subject to a substantial risk of forfeiture until specific conditions are
met. If so required, the price at which shares of Common Stock shall be sold to
Participants under this Plan pursuant to an Award shall be the minimum purchase
price required in such law or regulations, as determined by the Board in the
exercise of its sole discretion.
2.3 Terms of Payment. The purchase price, if any, of shares of
Common Stock sold by the Company hereunder shall be payable by the Participant
in cash at the time such award is granted.
2.4 Restricted Stock Awards -- 1994 and After. Effective as of
immediately prior to the 1994 Annual Meeting of Stockholders of the Company:
(a) No new Awards shall be made pursuant to the provisions of
Section 2.1.
(b) Upon election, re-election or appointment of a Nonemployee
Director to the Board occurring at or after the 1994 Annual Meeting of
Stockholders, such Nonemployee Director shall automatically be granted
an Award consisting of the following number of shares of Restricted
Stock: 600 multiplied by the number of years which remain in the term of
the person so elected, re-elected or appointed. For purposes of such
calculation, a year shall be the period between annual meetings of
stockholders of the Company or any part of such period (exclusive of the
60 days immediately preceding the first annual meeting to be held
following such election, re-election or appointment giving rise to such
Award). For example, if a Nonemployee Director is appointed to the
Board in January of 1995 to serve a term which will expire at the 1997
Annual Meeting of Stockholders (and the 1995 Annual Meeting of
Stockholders is held more than 60 days after such appointment), the term
of such person would be considered to be three years for purposes of
calculating the Award.
(c) Awards automatically granted pursuant to this Section 2.4
shall be made on the first business day following the date of such
election, re-election or appointment, as applicable.
III. RESTRICTIONS ON GRANTED STOCK
3.1 Restrictions on Shares Issued. All shares of Common Stock
granted pursuant to an Award under this Plan shall be subject to the following
restrictions:
(a) The shares may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, alienated or encumbered until the
restrictions set forth in Paragraph (b) below lapse and are removed as
provided in Paragraph (d) below, and any additional requirements or
restrictions set forth in or
4
<PAGE> 5
imposed pursuant to this Plan have been satisfied, terminated or expressly
waived by the Company in writing.
(b) In the event a Participant's service as a director of the Company
terminates for any reason other than death or total disability, all shares of
Common Stock acquired under this Plan by such Participant with respect to
which, at the date of such termination of service, the vesting restrictions
imposed under this Plan have not lapsed and been removed as provided in
Paragraph (d) below shall be returned to the Company forthwith, and all rights
of the Participant to such shares shall immediately terminate upon payment by
the Company to such Participant of the amount, if any, that the Participant
paid to the Company for such shares.
(c) In the event a Participant's service as a director of the Company
terminates because of death or total disability, the Participant shall not be
obligated to return any shares as described in Paragraph (b) above and, except
for any continuing and additional restrictions which may exist as set forth in
or imposed pursuant to this Plan, the vesting restrictions imposed upon the
shares of Common Stock acquired by such Participant under this Plan shall lapse
and be removed (and the shares of Common Stock acquired by such Participant
under Awards pursuant to the Plan shall vest) upon such termination of service.
(d) The restrictions imposed under Paragraph (b) above shall lapse and
be removed (and the shares of Common Stock acquired by a Participant pursuant
to an Award shall vest) in accordance with the following rules:
(i) Subject to the provisions of Subparagraphs (iii) and (iv)
below, in the case of an Award granted pursuant to Paragraph (a) or (c)
of Section 2.1, as of the date of each regular annual meeting of
stockholders of the Company at which directors are to be elected
following the date of such Award, the vesting restrictions imposed under
this Plan shall lapse and be removed from such number of shares of
Restricted Stock acquired pursuant to the Award as is required to cause
the aggregate number of shares of Common Stock acquired pursuant to such
Award with respect to which the vesting restrictions imposed pursuant to
this Plan have lapsed and been removed (and in which the Participant
shall be fully vested) to equal the number (rounded to the nearest whole
number of shares) computed by multiplying the total number of shares of
Restricted Stock that were initially the subject of such Award by the
lesser of (A) one or (b) a fraction the numerator of which is the number
of months the Participant has served as a member of the Board of
Directors subsequent to the date upon which the Award was granted and
the denominator of which is the total number of months in the term of
such Nonemployee Director determined as of the date upon which the Award
was granted.
(ii) Subject to the provisions of Subparagraph (iii) and (iv)
below, in the case of an Award pursuant to Paragraph (b) or (d) of
Section 2.1, as of the date of each regular annual meeting of
stockholders of the Company at which directors are to be elected
following the date of such Award, the vesting restrictions imposed
pursuant to this Plan shall lapse and be removed (and the Participant
shall be fully vested) with respect to one-third (rounded to the nearest
whole number) of the number of shares acquired by the Participant
pursuant to the Award, such that the restrictions shall lapse and be
removed (and the Participant shall be fully vested) with respect to all
of the shares acquired by the Participant pursuant to such Award as of
the date of the third such annual meeting of stockholders following the
date upon which the Award is granted.
(iii) Notwithstanding the provisions of Subparagraphs (i), (ii)
and (v) of this Section 3.1, in the event that a Participant's service
as a director of the Company terminates because of death or
5
<PAGE> 6
total disability, as of the date of such termination of service the
vesting restrictions imposed pursuant to this Plan shall lapse and be
removed (and the Participant shall be fully vested) with respect to all
shares of Common Stock acquired by such Participant under Awards
pursuant to this Plan.
(iv) Notwithstanding the provisions of Subparagraphs (i), (ii)
and (v) of this Section 3.1, in the event of a Change in Control, as of
the date of such Change in Control the vesting restrictions imposed
pursuant to this Plan shall lapse and be removed (and Participants shall
be fully vested) with respect to all shares of Common Stock acquired
under Awards pursuant to this Plan.
(v) Subject to the provisions of Subparagraphs (iii) and (iv) of
this Section 3.1, Awards made pursuant to Section 2.4, as of the date of
each annual meeting of stockholders following the date of such Award,
the vesting restrictions imposed pursuant to this Plan shall lapse and
be removed (and the Participant shall be fully vested) with respect to
600 of the shares covered by such Award.
3.2 Rights With Respect to Shares of Restricted Stock. A Nonemployee
Director to whom an Award has been made shall be notified of the Award, and upon
payment in full of the purchase price (if any) required for the shares of the
Restricted Stock, the Company shall promptly cause to be issued or transferred
to the name of the Nonemployee Director a certificate or certificates for the
number of shares of Restricted Stock granted, subject to the provisions of
Sections 3.3, 3.4 and 3.5 below. From and after the date of the Award, the
Nonemployee Director shall be a Participant and shall have all rights of
ownership with respect to such shares of Restricted Stock, including the right
to vote and to receive dividends and other distributions with respect thereto,
subject to the terms, conditions and restrictions described in this Plan.
3.3 Custody of Stock Certificates. In order to enforce the
restrictions imposed upon shares of Restricted Stock pursuant to this Plan, the
Board may require that the certificates representing such shares of Restricted
Stock remain in the physical custody of the Company until any or all of the
restrictions imposed pursuant to the Plan expire or shall have been removed.
3.4 Legends on Stock Certificates. The Board shall cause such legend
or legends making reference to the restrictions imposed hereunder to be placed
on certificates representing shares of Common Stock which are subject to
restrictions hereunder as the Board deems necessary or appropriate in order to
enforce the restrictions imposed upon shares of Restricted Stock issued
pursuant to Awards granted hereunder.
3.5 Securities Law Requirements. Shares of Common Stock shall not be
offered or issued under this Plan unless the offer, issuance and delivery of
such shares shall comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the California Corporate Securities Law of 1968, as amended, and the
requirements of any stock exchange upon which the Common Stock may then be
listed. As a condition precedent to the issuance of shares of Common Stock
pursuant to an Award, the Company may require the Participant to take any
reasonable action to comply with such requirements.
IV. ADJUSTMENT PROVISIONS
4.1 Adjustments. If the outstanding shares of the Common Stock of the
Company are increased, decreased or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed in respect of such shares of Common Stock
(or any stock or securities received with respect to such Common Stock),
through merger, consolidation, sale or exchange of all or substantially all of
the properties of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, spin-off or
other distribution in respect of such
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<PAGE> 7
shares of Common Stock (or any stock or securities received with respect to
such Common Stock), and appropriate and proportionate adjustment shall be made
in (i) the maximum number of securities provided in Section 1.3 of the Plan,
(ii) the number of shares to be included in each grant of Restricted Stock of
the Plan; (iii) the number and kind of shares then subject to restrictions
pursuant to Section 3.1 of the Plan, and (iv) the repurchase price, if any, for
each share of Common Stock subject to such restrictions. The Board's
determination of the adjustments required under this Section 4.1 shall be
final, binding and conclusive. No fractional interests shall be issued under
the Plan on account of any such adjustment.
V. MISCELLANEOUS PROVISIONS
5.1 Amendment, Suspension and Termination of Plan. The Board of
Directors may at any time amend, suspend, or terminate the Plan; provided,
however, that no such action shall deprive the holder of an Award of such Award
without the consent of such holder, and further provided that the
nondiscretionary manner in which Awards are made to Nonemployee Directors under
Section 2.1 and Section 2.4 shall not be modified or amended (provided that the
number of shares to be included in each automatic grant thereunder may be
changed with the approval of the stockholders). Furthermore, no such amendment
shall, without approval of the stockholders of the Company, except as provided
in Article IV hereof:
(a) increase the maximum number of shares specified in paragraph
(a) of Section 1.3;
(b) change the price of Common Stock specified in Section 2.2;
(c) change the terms of payment specified in Section 2.3;
(d) accelerate the restriction-removal schedule specified in
Paragraph (d) of Section 3.1;
(e) extend the duration of the Plan;
(f) materially modify the requirements as to eligibility for
participation in the Plan; or
(g) materially increase in any other way the benefits accruing
to the holder of an Award already granted or that subsequently may be
granted under this Plan.
Except as provided in Article IV, no termination, suspension or
amendment of this Plan may, without the consent of the holder thereof, affect
Common Stock previously acquired by a Participant pursuant to this Plan.
5.2 Effective Date and Duration of Plan. This Plan shall become
effective on the later of (a) the date of its approval by the Board of
Directors of the Company, (b) the date of its approval by the holders of the
outstanding shares of Common Stock (either by a vote of a majority of such
outstanding shares present in person or by proxy and entitled to vote at a
meting of the stockholders of the Company or by written consent), or (c) the
date of the distribution by SmithKline Beckman Corporation ("SKB") of the stock
of the Company pursuant to the terms of that certain Distribution Agreement,
dated as of April 11, 1989, among SKB, the Company and Beckman Instruments,
Inc. Unless previously terminated by the Board of Directors, this Plan shall
terminate at the close of business on December 31, 1999, and no Award may be
granted under the Plan thereafter, but such termination shall not affect any
Award theretofore granted and any shares of Common Stock granted pursuant
thereto.
5.3 Additional Limitations on Common Stock. With respect to any
shares of Common Stock issued or transferred under any provisions of the Plan,
such shares may be issued or transferred subject to such conditions, in
addition to those specifically provided in the Plan as the Board may direct.
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<PAGE> 8
5.4 Director Status. Nothing in this Plan or in any instrument
executed pursuant hereto shall confer upon any Nonemployee Director any right
to continue as a member of the Board of Directors of the Company or any
subsidiary thereof or shall interfere with or restrict the right of the Company
or its stockholders (or of a subsidiary or its stockholders, as the case may
be) to terminate the service of any Nonemployee Director at any time and for
any reason whatsoever, with or without good cause.
5.5 Securities Law Legends. In addition to any legend or legends
pursuant to Section 3.4 above, each certificate representing shares of Common
Stock issued under the Plan shall be endorsed with such legends as the Company
may, in its discretion, deem reasonably necessary or appropriate to comply
with or give notice of applicable federal and state securities laws.
5.6 No Entitlement to Shares. No Nonemployee Director (individually or
as a member of a group), and no beneficiary or other person claiming under or
through such Nonemployee Director, shall have any right, title, or interest in
or to any shares of Common Stock allocated or reserved for the purpose of the
Plan or subject to any Award except as to such shares of Common Stock, if any,
as shall have been issued or transferred to such Nonemployee Director. A
Nonemployee Director's rights to any shares of Common Stock issued or
transferred to the name of such Nonemployee Director pursuant to an Award under
this Plan shall be subject to such limitations and restrictions as are set forth
in or imposed pursuant to this Plan.
5.7 Withholding of Taxes. The Company may make such provisions as it
deems appropriate for the withholding by the Company of such amounts as the
Company determines it is required to withhold in connection with any Award.
The Company may require a Participant to satisfy any relevant tax requirements
before authorizing any issuance of Common Stock to such Participant. Any such
settlement shall be made in the form of cash, a certified or bank cashier's
check or such other form of consideration as is satisfactory to the Board.
5.8 Transferability. No award or right under this Plan, contingent or
otherwise, shall be assignable or otherwise transferable other than by will or
the laws of descent and distribution, or shall be subject to any encumbrance,
pledge or change or any nature. Any Award shall be accepted during a
Participant's lifetime only by the Participant or the Participant's guardian or
other legal representative.
5.9 Other Plans. Nothing in this Plan is intended to be a substitute
for, or shall preclude or limit the establishment or continuation of, any other
plan, practice or arrangement for the payment of compensation or benefits to
directors generally, which the Company now has or may hereafter lawfully put
into effect, including, without limitation, any retirement, pension, insurance,
stock purchase, incentive compensation or bonus plan.
5.10 Invalid Provisions. In the event that any provision of this Plan
document is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering
any other provisions contained herein invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid or unenforceable provision were not contained herein.
5.11 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender, as the context may require.
5.12 Applicable Law. This Plan shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws relating to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
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5.13 Successors and Assigns of the Company. The Plan shall be binding
upon the successors and assignees of the Company.
5.14 Successors and Assigns of Participants. The provisions of this
Plan and any agreement executed upon the acquisition of shares hereunder shall
be binding upon each Participant in the Plan, and such Participant's heirs,
executors, administrators, personal representatives, transferees, assignees and
successors in interest.
5.15 Headings, Etc. Not Part of Plan. Heading of Articles and
Sections hereof are inserted for convenience and reference only, and they shall
not constitute a part of the Plan.
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<PAGE> 1
EXHIBIT 10.5
ALLERGAN, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
Restated
1996
<PAGE> 2
RESTATED
ALLERGAN, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
ARTICLE I
INTRODUCTION
1.1 Purpose. This Allergan, Inc. Supplemental Retirement
Income Plan (the "Plan") is hereby established by the board of directors
(hereinafter referred to as the "Board of Directors" or the "Board") of
Allergan, Inc., a Delaware corporation (the "Sponsor"), to provide certain
supplemental retirement benefits to selected management employees of the
Sponsor and its Affiliated Companies as more fully provided herein. The
benefits provided under this Plan are intended to replace and be generally
comparable to the benefits related to the limitation contained in Code Section
415 that are provided under that certain Supplemental Benefit Plan maintained
by SmithKline Beckman Corporation, a Pennsylvania corporation ("SKB"), as such
Supplemental Benefit Plan (the "SKB Plan") is in effect immediately prior to
the Effective Date hereof.
1.2 Effective Date and Term. This plan is adopted effective as
of July 27, 1989 (the "Effective Date"), and shall continue in effect until
terminated by the Board of Directors.
1.3 Participation. Participation in this Plan shall be open to
all Eligible Employees of the Sponsor and any Affiliated Company. For purposes
of the preceding sentence, "Eligible Employees" means any management employee
of the Sponsor or any Affiliated Company whose benefits under the Pension Plan
are limited by reason of Code Section 415.
1.4 Applicability of ERISA. This Plan is intended to be an
unfunded "excess benefit plan" within the meaning of Section 4(b)(5) of ERISA.
<PAGE> 3
ARTICLE II
DEFINITIONS
2.1 Affiliated Company. "Affiliated Company" means any
affiliate of the Sponsor which has adopted the Pension Plan as provided
therein.
2.2 Board; Board of Directors. "Board" and "Board of
Directors" each mean the board of directors of the Sponsor.
2.3 Code. "Code" means the Internal Revenue Code of 1986, as
amended.
2.4 Committee. "Committee" means the committee authorized to
administer this Plan as set forth in Section 3.1 hereof.
2.5 Effective Date. "Effective Date" means July 27, 1989.
2.6 ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
2.7 Participant. "Participant" means any Eligible Employee of
the Sponsor or any Affiliated Company as defined under Section 1.3 hereof.
2.8 Pension Plan. "Pension Plan" means the Allergan, Inc.
Pension Plan as it may be amended from time to time.
2.9 Plan. "Plan" means this Allergan, Inc. Supplemental
Retirement Income Plan adopted as of the Effective Date hereof and as it may be
amended from time to time.
2.10 Sponsor. "Sponsor" means Allergan, Inc., a Delaware
corporation.
2.11 Termination. "Termination" means the termination of a
Participant's employment with the Sponsor for any reason whatsoever, whether
voluntary or involuntary.
2.12 Termination Date. "Termination Date" means, with respect
to any Participant, the effective date of such Participant's Termination.
2
<PAGE> 4
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration By Committee. This Plan shall be
administered by the same committee (the "Committee") which is appointed to
administer the Pension Plan. A member of the Committee may be a Participant in
this Plan, provided, however, that any action to be taken by the Committee
solely with respect to the particular interest in this Plan of a Committee
member who is also a Participant in this Plan shall be taken by the remaining
members of the Committee.
3.2 Committee Authority; Rules and Regulations. The Committee
shall have discretionary authority to (a) make, amend, interpret and enforce
all appropriate rules and regulations for the administration of the Plan, (b)
decide or resolve any and all questions, including interpretations of the Plan,
as may arise in connection with the Plan, and (c) take or approve all such
other actions relating to the Plan (other than amending or terminating the Plan
or making a final determination concerning an application for Plan benefits as
set forth in Section 3.6 hereof) as may be taken or approved by the Board;
provided, however, that the Board may, by written notice to the Committee,
withdraw all or any part of the Committee's authority at any time, in which
case such withdrawn authority shall immediately revest in the Board. Subject
to Section 3.6 hereof, the decision or action of the Committee in respect of
any question arising out of or in connection with the administration,
interpretation and application of this Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.
3.3 Appointment of Agents. In the administration of this Plan,
the Board and/or the Committee may from time to time employ agents (which may
include officers and/or employees of the Sponsor or any Affiliated Company) and
delegate to them such administrative duties as it sees fit and may from time to
time consult with counsel who may be counsel to the Sponsor or any Affiliated
Company.
3.4 Application For Benefits. The Committee may require any
person claiming benefits under the Plan to submit an application therefor,
together with such documents and information as the Committee may require. In
the case of any person suffering from a disability which prevents such person
from making personal application for benefits, the Committee may, in its
discretion, permit application to be made by another person acting on his
behalf. Notwithstanding the foregoing, if the Committee shall have all
information necessary to determine the amount and form of Plan benefits payable
to a Participant or Beneficiary who is entitled to benefit payments under this
Plan (including, to the extent applicable and without limiting the generality
of the foregoing, the name, age, sex and proper mailing address of all parties
entitled to benefit payments), then the failure of a Participant or Beneficiary
to file an application for benefits shall not cause the
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<PAGE> 5
Committee to defer the commencement of benefit payments beyond the benefit
commencement date required under this Plan.
3.5 Action on Application. Within 60 days following receipt of
an application and all necessary documents and information, the Committee shall
furnish the claimant with written notice of the decision rendered with respect
to such application. Should special circumstances require an extension of time
for processing the claim, written notice of the extension shall be furnished to
the claimant prior to the expiration of the initial 60 day period. The notice
shall indicate the special circumstances requiring an extension of time and the
date by which a final decision is expected to be rendered. In no event shall
the period of the extension exceed 90 days from the end of the initial 60 day
period. In the case of a denial of the claimant's application, the written
notice thereof shall set forth specific reasons for the denial, with references
to the Plan provisions upon which the denial is based, a description of any
additional information or material necessary to perfect the application
(together with an explanation why such material or information is necessary),
and an explanation of the Plan's claim review procedure.
3.6 Appeal of Committee Decision.
(a) A claimant who does not agree with the decision rendered by the
Committee with respect to his application may appeal such decision to
the Board. The appeal must be in writing and must be filed with the
Board within 65 days after the date of notice of the Committee's
decision with respect to the application, or, if the application has
neither been approved nor denied within the applicable period provided
in Section 3.5 hereof, then the appeal must be filed within 65 days
after the expiration of such applicable period.
(b) The claimant may request that his application be given full and
fair review by the Board. The claimant may review all pertinent
documents and submit issues and comments to the Board in writing in
connection with the appeal. The decision of the Board shall be made
promptly, and not later than 60 days after the Board's receipt of a
request for review and all supporting documentation and information to
be submitted by the claimant, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt
of a request for review and such supporting documentation and
information. The Board's decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific reference to
the pertinent Plan provisions upon which the decision is based.
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<PAGE> 6
ARTICLE IV
BENEFITS
4.1 Determination of Benefits. Except as provided in Article V
hereof, the supplemental retirement benefit payable to any Participant under
this Plan shall be determined as of such Participant's Termination Date and
shall be an amount equal to the excess (if any) of (a) the retirement benefit
to which such Participant would be entitled under the Pension Plan if his
retirement benefit under the Pension Plan were determined without regard to the
limits imposed by Code Section 415, over (b) the retirement benefit to which
such Participant is actually entitled under the Pension Plan. Notwithstanding
the foregoing, in no event shall the supplemental retirement benefit payable to
a Participant under this Plan be less than the benefit which, when added to
such Participant's benefit (if any) under the Allergan, Inc. Supplemental
Executive Benefit Plan, results in an aggregate benefit equal to such
Participant's accrued benefit (if any) under the SKB Plan as of July 26, 1989.
4.2 Form and Payment of Benefits. Except as provided in
Article V hereof, a Participant's benefit under this Plan as determined
pursuant to Section 4.1 hereof shall be paid to such Participant in the same
form and at the same time, and shall be calculated under the same actuarial
assumptions, as the Participant's benefits under the Pension Plan. For
example, if a Participant were entitled to monthly benefit payments under the
Pension Plan, the Participant's benefit under this Plan would also be paid on a
monthly basis at the same time as the monthly benefit payments under the
Pension Plan, and the amount of each monthly benefit payment under this Plan
would be the amount (if any) by which the monthly benefit payment determined
under clause (a) of Section 4.1 hereof exceeds the monthly benefit payment
determined under clause (b) of Section 4.1 hereof, subject to the provisions of
the last sentence of Section 4.1 hereof.
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<PAGE> 7
ARTICLE V
CHANGE IN CONTROL
5.1 Effect of a Change in Control. Notwithstanding the
provisions of Article IV hereof, in the event that a Change In Control (as
defined in Section 5.4 hereof) occurs on or after the Effective Date hereof,
each Participant shall receive a "Lump Sum Benefit" in lieu of any benefits
under the Plan to which such Participant is or would otherwise become entitled
and which have not already been paid as of the date such Change In Control
occurs (the "Change In Control Date"), with such Lump Sum Benefit to be paid as
provided in Section 5.2 hereof in the amount calculated as provided in Section
5.3 hereof.
5.2 Payment of Lump Sum Benefit. The Lump Sum Benefit
payable to any Participant under Section 5.1 hereof shall be paid to such
Participant within 30 days following such Participant's Determination Date. As
used herein, a Participant's "Determination Date" shall be the later of the
Change In Control Date or such Participant's Termination Date.
5.3 Amount of Lump Sum Benefit. The amount of the Lump Sum
Benefit payable to any Participant pursuant to Section 5.1 hereof shall be the
amount equal to the lump sum actuarial equivalent, determined as of such
Participant's Determination Date, of the unpaid Plan benefits to which such
Participant is entitled under Article IV hereof, provided, however, that in
determining the lump sum actuarial equivalent of such Participant's unpaid Plan
benefits, the following special rules shall apply:
(a) The interest/discount rate assumed shall be 3.6 percent (3.6%);
(b) The mortality table used shall be the same as the mortality
table used for purposes of determining the Sponsor's minimum funding
obligation under ERISA with respect to the Pension Plan for the plan
year preceding the plan year in which the Participant's Determination
Date falls; and
(c) For purposes of determining what benefits the Participant is
entitled to receive under Article IV hereof, it shall be assumed that
the Participant would commence receiving benefit payments under the
Pension Plan and under Article IV of this Plan as of the earlier of (i)
the date such Participant actually commenced receiving Pension Plan
benefits, or (ii) the date which is the later of (A) such Participant's
Termination Date or (B) the earliest date such Participant would be
eligible to commence receiving Pension Plan benefits.
6
<PAGE> 8
5.4. Change in Control. As used in this Plan, "Change in
Control" shall mean the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Sponsor
representing 50% or more of the combined voting power of the Sponsor's
then outstanding voting securities;
(b) Individuals who, as of the Effective Date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors, provided that
any person becoming a director subsequent to the Effective Date hereof
whose election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Sponsor, as such terms are used Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall, for
the purposes of this Plan, be considered as though such person were a
member of the Incumbent Board of the Sponsor;
(c) The stockholders of the Sponsor approve a merger or consolidation
with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of another entity) more
than 50% of the combined voting power of the voting securities
of the Sponsor or such other entity outstanding immediately
after such merger or consolidation, and
(ii) a merger or consolidation effected to implement a
recapitalization of the Sponsor (or similar transaction) in
which no person acquires 50% or more of the combined voting
power of the Sponsor's then outstanding voting securities; or
(d) The stockholders of the Sponsor approve a plan of complete
liquidation of the Sponsor or an agreement for the sale or other
disposition by the Sponsor of all or substantially all of the Sponsor's
assets.
Notwithstanding the preceding provisions of this Section 5.4, a Change in
Control shall not be deemed to have occurred (1) if the "person" described in
the preceding provisions of this Section 5.4 is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of
7
<PAGE> 9
the Sponsor's then outstanding voting securities solely in connection with a
public offering of the Sponsor's securities, or (2) if the "person" described
in the preceding provisions of this Section 5.4 is an employee stock ownership
plan or other employee benefit plan maintained by the Sponsor (or any of its
affiliated companies) that is qualified under the provisions of ERISA.
8
<PAGE> 10
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Designation of Beneficiary. A Participant shall be
entitled to designate one or more individuals or entities, in any combination,
as his "Beneficiary" or "Beneficiaries" to receive any Plan payments to which
such Participant is entitled as of, or by reason of, his death. Any such
designation may be made or changed at any time prior to the Participant's death
by written notice filed with the Committee, with such written notice to be in
such form and contain such information as the Committee may from time to time
determine. In the event that either (a) a Beneficiary designation is not on
file at the date of a Participant's death, (b) no Beneficiary survives the
Participant, or (c) no Beneficiary is living at the time any payment becomes
payable under this Plan, then, for purposes of making any further payment of
any unpaid benefits under this Plan, such Participant's Beneficiary or
Beneficiaries shall be deemed to be the person or persons entitled to receive
the Participant's survivor and death benefits under the Pension Plan.
6.2 Payments During Incapacity. In the event a Participant (or
Beneficiary) is under mental or physical incapacity at the time of any payment
to be made to such Participant (or Beneficiary) pursuant to this Plan, any such
payment may be made to the conservator or other legally appointed personal
representative having authority over and responsibility for the person or
estate of such Participant (or Beneficiary), as the case may be, and for
purposes of such payment references in this Plan to the Participant (or
Beneficiary) shall mean and refer to such conservator or other personal
representative, whichever is applicable. In the absence of any lawfully
appointed conservator or other personal representative of the person or estate
of the Participant (or Beneficiary), any such payment may be made to any person
or institution that has apparent responsibility for the person and/or estate of
the Participant (or Beneficiary) as determined by the Committee. Any payment
made in accordance with the provisions of this Section 6.2 to a person or
institution other than the Participant (or Beneficiary) shall be deemed for all
purposes of this Plan as the equivalent of a payment to such Participant (or
Beneficiary), and neither the Sponsor nor any Affiliated Company shall have any
further obligation or responsibility with respect to such payment.
6.3 Prohibition Against Assignment. Except as otherwise
expressly provided in Section 6.1 and Section 6.2 hereof, the rights, interests
and benefits of a Participant under this Plan (a) may not be sold, assigned,
transferred, pledged, hypothecated, gifted, bequeathed or otherwise disposed of
to any other party by such Participant or any Beneficiary, executor,
administrator, heir, distributee or other person claiming under such
Participant, and (b) shall not be subject to execution, attachment or similar
process. Any attempted sale, assignment, transfer, pledge, hypothecation,
gift, bequest or other disposition of such rights,
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<PAGE> 11
interests or benefits contrary to the foregoing provisions of this Section 6.3
shall be null and void and without effect.
6.4 Binding Effect. The Provisions of this Plan shall be
binding upon the Sponsor, each Affiliated Companies, the Participants and any
successor-in-interest to the Sponsor, any Affiliated Company or any
Participant.
6.5 No Transfer of Interest. Benefits under this Plan shall be
payable solely from the general assets of the Sponsor and no person shall be
entitled to look to any source for payment of such benefits other than the
general assets of the Sponsor. The Sponsor shall have and possess all title
to, and beneficial interest in, any and all funds or reserves maintained or
held by the Sponsor on account of any obligation to pay benefits as required
under this Plan, whether or not earmarked by the Sponsor as a fund or reserve
for such purpose; any such funds, other property or reserves shall be subject
to the claims of the creditors of the Sponsor, and the provisions of this Plan
are not intended to create, and shall not be interpreted as vesting, in any
Participant, Beneficiary or other person, any right to or beneficial interest
in any such funds, other property or reserves. Nothing in this Section 6.5
shall be construed or interpreted as prohibiting or restricting the
establishment of a grantor trust within the meaning of Code Section 671 which
is unfunded for purposes of Section 4(b)(5) of ERISA, from which benefits under
this Plan may be payable.
6.6 Amendment or Termination of the Plan. The Board of
Directors may amend this Plan from time to time in any respect that it deems
appropriate or desirable, and the Board may terminate this Plan at any time;
provided, however, that any such Plan amendment or Plan termination shall not,
without a Participant's written consent, be given effect with respect to such
Participant to the extent such Plan amendment or Plan termination operates to
reduce or eliminate, in any material respect, such Participant's accrued Plan
benefit. For purposes of the preceding sentence, the determination as to
whether any Plan amendment or Plan termination operates to reduce or eliminate,
in any material respect, a Participant's accrued Plan benefit shall be made at
the time of, and not until, such Participant's Termination. Accordingly, an
amendment or termination of the Plan shall be treated as reducing or
eliminating a Participant's accrued Plan benefit only if, and to the extent
that, (a) the benefit (expressed as a single life annuity payable monthly) to
which such Participant is actually entitled under the Pension Plan upon his
Termination, is less than (b) such Participant's "accrued benefit" under the
Pension Plan as of the effective date of such Plan amendment or Plan
termination (expressed as a single life annuity payable monthly), with such
"accrued benefit" to be determined (i) as if such Participant incurred a
Termination on the effective date of such Plan amendment or Plan termination,
and (ii) without regard to the limits imposed by Code Section 415.
6.7 No Right to Employment. This Plan is voluntary on the part
of the Sponsor and each Affiliated Company, and the Plan shall not be deemed to
constitute an employment contract between the Sponsor or any Affiliated Company
and any Participant, nor shall the adoption or existence of the Plan or any
10
<PAGE> 12
provision contained in the Plan be deemed to be a required condition of the
employment of any Participant. Nothing contained in this Plan shall be deemed
to give any Participant the right to continued employment with the Sponsor or
any Affiliated Company, and the Sponsor and each Affiliated Company may
terminate any Participant who is in its employ at any time, in which case the
Participant's rights arising under this Plan shall be only those expressly
provided under the terms of this Plan.
6.8 Notices. All notices, requests, or other communications
(hereinafter collectively referred to as "Notices") required or permitted to be
given hereunder or which are given with respect to this Plan shall be in
writing and may be personally delivered, or may be deposited in the United
States mail, postage prepaid and addressed as follows:
To the Sponsor Allergan, Inc.
or the Committee at: Attention: Supplemental Retirement Income
Plan Committee
2525 Dupont Drive
Irvine, CA 92715-1599
To Participant at: The Participant's residential mailing address as
reflected in the Company's employment
records
A Notice which is delivered personally shall be deemed given as of the date of
personal delivery, and a Notice mailed as provided herein shall be deemed given
on the second business day following the date so mailed. Any Participant may
change his address for purposes of Notices hereunder pursuant to a Notice to
the Committee, given as provided herein, advising the Committee of such change.
The Sponsor, the Committee and/or any Affiliated Company may at any time change
its address for purposes of Notices hereunder pursuant to a Notice to all
affected Participants, given as provided herein, advising the affected
Participants of such change.
6.9 Governing Law. This Plan shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
6.10 Titles and Headings; Gender of Terms. Article and Section
headings herein are for reference purposes only and shall not be deemed to be
part of the substance of this Plan or in any way to enlarge or limit the
meaning or interpretation of any provision in this Plan. Use in this Plan of
the masculine, feminine or neuter gender shall be deemed to include each of the
omitted genders if the context so requires.
11
<PAGE> 13
6.11 Severability. In the event that any provision of this
Plan is found to be invalid or otherwise unenforceable by a court or other
tribunal of competent jurisdiction, such invalidity or unenforceability shall
not be construed as rendering any other provision contained herein invalid or
unenforceable, and all such other provisions shall be given full force and
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.
6.12 Tax Effect of Plan. Neither the Sponsor nor any
Affiliated Company warrants any tax benefit nor any financial benefit under the
Plan. Without limiting the foregoing, the Sponsor, all Affiliated Companies
and their directors, officers, employees and agents shall be held harmless by
the Participant from, and shall not be subject to any liability on account of,
any Federal or State tax consequences or any consequences under ERISA of any
determination as to the amount of Plan benefits to be paid, the method by which
Plan benefits are paid, the persons to whom Plan benefits are paid, or the
commencement or termination of the payment of Plan benefits.
IN WITNESS WHEREOF, the Sponsor hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Supplemental Retirement Income Plan
as restated this 23rd day of April, 1996.
ALLERGAN, INC.,
a Delaware corporation
By: /s/ Francis R. Tunney, Jr.
-----------------------------
Its: Secretary
-----------------------------
12
<PAGE> 1
EXHIBIT 10.6
ALLERGAN, INC.
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
Restated
1996
<PAGE> 2
RESTATED
ALLERGAN, INC.
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
ARTICLE I
INTRODUCTION
1.1 Purpose. This Allergan, Inc. Supplemental Executive
Benefit Plan (the "Plan") is hereby established by the board of directors
(hereinafter referred to as the "Board of Directors" or the "Board") of
Allergan, Inc., a Delaware corporation (the "Sponsor"), to provide certain
supplemental retirement benefits to selected officers of the Sponsor as more
fully provided herein. The benefits provided under this Plan are intended to
replace and be generally comparable to certain benefits (related to the
Management Bonus Plan and the limitation contained in Code Section 401(a)(17))
that are provided under that certain Supplemental Benefit Plan maintained by
SmithKline Beckman Corporation, a Pennsylvania corporation ("SKB"), as such
Supplemental Benefit Plan (the "SKB Plan") is in effect immediately prior to
the Effective Date hereof.
1.2 Effective Date and Term. This plan is adopted effective as
of July 27, 1989 (the "Effective Date"), and shall continue in effect until
terminated by the Board of Directors.
1.3 Participation. Participation in this Plan is open only to
those officers of the Sponsor who are appointed directly by the Board of
Directors (any such officer shall be referred to herein as a "Designated
Officer"). Each employee of the Sponsor who is, as of the Effective Date
hereof, a Designated Officer shall automatically commence participation in this
Plan as of such Effective Date. Any employee of the Sponsor who becomes,
subsequent to the Effective Date hereof, a Designated Officer shall
automatically commence participation in this Plan as of the date such employee
becomes a Designated Officer.
1.4 Applicability of ERISA. This Plan is intended to be a
"top-hat" plan -- that is, an unfunded plan maintained primarily for the
purpose of providing deferred compensation to a select group of management or
highly compensated employees within the meaning of ERISA.
<PAGE> 3
ARTICLE II
DEFINITIONS
2.1 Board; Board of Directors. "Board" and "Board of
Directors" each mean the board of directors of the Sponsor.
2.2 Code. "Code" means the Internal Revenue Code of 1986, as
amended.
2.3 Committee. "Committee" means the committee authorized to
administer this Plan as set forth in Section 3.1 hereof.
2.4 Effective Date. "Effective Date" means July 27, 1989.
2.5 ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
2.6 Former Designated Officer. "Former Designated Officer"
means any employee of the Sponsor who (a) commenced participation in this Plan
by reason of his holding or attaining the status of Designated Officer as
provided in Section 1.3 hereof, and (b) does not hold the status of Designated
Officer at the time of his Termination.
2.7 Participant. "Participant" means any Designated Officer
who commences participation in this Plan as provided under Section 1.3 hereof.
2.8 Pension Plan. "Pension Plan" means the Allergan, Inc.
Pension Plan as it may be amended from time to time.
2.9 Plan. "Plan" means this Allergan, Inc. Supplemental
Executive Benefit Plan adopted as of the Effective Date hereof and as it may be
amended from time to time.
2.10 Sponsor. "Sponsor" means Allergan, Inc., a Delaware
corporation.
2.11 Termination. "Termination" means the termination of a
Participant's employment with the Sponsor for any reason whatsoever, whether
voluntary or involuntary.
2.12 Termination Date. "Termination Date" means, with respect
to any Participant, the effective date of such Participant's Termination.
2
<PAGE> 4
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration By Committee. This Plan shall be
administered by the same committee (the "Committee") which is appointed to
administer the Pension Plan. A member of the Committee may be a Participant in
this Plan, provided, however, that any action to be taken by the Committee
solely with respect to the particular interest in this Plan of a Committee
member who is also a Participant in this Plan shall be taken by the remaining
members of the Committee.
3.2 Committee Authority; Rules and Regulations. The Committee
shall have discretionary authority to (a) make, amend, interpret and enforce
all appropriate rules and regulations for the administration of the Plan, (b)
decide or resolve any and all questions, including interpretations of the Plan,
as may arise in connection with the Plan, and (c) take or approve all such
other actions relating to the Plan (other than amending or terminating the Plan
or making a final determination concerning an application for Plan benefits as
set forth in Section 3.6 hereof) as may be taken or approved by the Board;
provided, however, that the Board may, by written notice to the Committee,
withdraw all or any part of the Committee's authority at any time, in which
case such withdrawn authority shall immediately revest in the Board. Subject
to Section 3.6 hereof, the decision or action of the Committee in respect of
any question arising out of or in connection with the administration,
interpretation and application of this Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.
3.3 Appointment of Agents. In the administration of this Plan,
the Board and/or the Committee may from time to time employ agents (which may
include officers and/or employees of the Sponsor) and delegate to them such
administrative duties as it sees fit and may from time to time consult with
counsel who may be counsel to the Sponsor.
3.4 Application For Benefits. The Committee may require any
person claiming benefits under the Plan to submit an application therefor,
together with such documents and information as the Committee may require. In
the case of any person suffering from a disability which prevents such person
from making personal application for benefits, the Committee may, in its
discretion, permit application to be made by another person acting on his
behalf. Notwithstanding the foregoing, if the Committee shall have all
information necessary to determine the amount and form of Plan benefits payable
to a Participant or Beneficiary who is entitled to benefit payments under this
Plan (including, to the extent applicable and without limiting the generality
of the foregoing, the name, age, sex and proper mailing address of all parties
entitled to benefit payments), then the failure of a Participant or Beneficiary
to file an application for benefits shall not cause the Committee to defer the
commencement of benefit payments beyond the benefit commencement date required
under this Plan.
3
<PAGE> 5
3.5 Action on Application. Within 60 days following receipt of
an application and all necessary documents and information, the Committee shall
furnish the claimant with written notice of the decision rendered with respect
to such application. Should special circumstances require an extension of time
for processing the claim, written notice of the extension shall be furnished to
the claimant prior to the expiration of the initial 60 day period. The notice
shall indicate the special circumstances requiring an extension of time and the
date by which a final decision is expected to be rendered. In no event shall
the period of the extension exceed 90 days from the end of the initial 60 day
period. In the case of a denial of the claimant's application, the written
notice thereof shall set forth specific reasons for the denial, with references
to the Plan provisions upon which the denial is based, a description of any
additional information or material necessary to perfect the application
(together with an explanation why such material or information is necessary),
and an explanation of the Plan's claim review procedure.
3.6 Appeal of Committee Decision.
(a) A claimant who does not agree with the decision rendered by the
Committee with respect to his application may appeal such decision to
the Board. The appeal must be in writing and must be filed with the
Board within 65 days after the date of notice of the Committee's
decision with respect to the application, or, if the application has
neither been approved nor denied within the applicable period provided
in Section 3.5 hereof, then the appeal must be filed within 65 days
after the expiration of such applicable period.
(b) The claimant may request that his application be given full and
fair review by the Board. The claimant may review all pertinent
documents and submit issues and comments to the Board in writing in
connection with the appeal. The decision of the Board shall be made
promptly, and not later than 60 days after the Board's receipt of a
request for review and all supporting documentation and information to
be submitted by the claimant, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt
of a request for review and such supporting documentation and
information. The Board's decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific reference to
the pertinent Plan provisions upon which the decision is based.
4
<PAGE> 6
ARTICLE IV
BENEFITS
4.1 Determination of Benefits.
(a) Except as provided in Section 4.2 or Article V hereof, the
supplemental retirement benefit payable to any Participant under this
Plan shall be determined as of such Participant's Termination Date and
shall be an amount equal to the excess (if any) of (i) the retirement
benefit to which such Participant would be entitled under the Pension
Plan if his retirement benefit under the Pension Plan were determined
(A) without regard to the limits imposed by Code Sections 401(a)(17)
and/or 415, and (B) by taking into account the amount of any
compensation deferred by such Participant prior to the Effective Date
hereof under SKB's Management Bonus Plan as if such compensation had
been paid in the year awarded; over (ii) the retirement benefit to which
such Participant would be entitled under the Pension Plan if his benefit
under the Pension Plan were determined without regard to the limits
imposed by Code Section 415.
(b) Notwithstanding the provisions of subsection (a) above or Section
4.2 hereof, in the case of any Participant in this Plan (including any
Former Designated Officer) who is not also a participant in the
Allergan, Inc. Supplemental Retirement Income Plan (a "Specified
Participant"), in no event shall the supplemental retirement benefit
payable under this Plan to such Specified Participant be less than such
Specified Participant's accrued benefit (if any) under the SKB Plan as
of July 26, 1989.
4.2 Loss of Designated Officer Status. In the case of any
Former Designated Officer, such Former Designated Officer's supplemental
retirement benefit under this Plan shall be determined under Section 4.1
hereof, provided, however, that for purposes of applying subsection (a)
thereof, the limits imposed by Code Section 401(a)(17) shall be disregarded
only with respect to those periods during which such Former Designated Officer
held the status of Designated Officer and only if, and to the extent that, such
periods are required to be used under the Pension Plan benefit formula in order
to calculate such Former Designated Officer's actual benefit under the Pension
Plan.
5
<PAGE> 7
4.3 Form and Payment of Benefits. Except as provided in
Article V hereof, a Participant's benefit under this Plan as determined
pursuant to this Article IV shall be paid to such Participant in the same form
and at the same time, and calculated under the same actuarial assumptions, as
the Participant's benefits under the Pension Plan. For example, if a
Participant were entitled to monthly benefit payments under the Pension Plan,
the Participant's benefit under this Plan would also be paid on a monthly basis
at the same time as the monthly benefit payments under the Pension Plan, and
the amount of each monthly benefit payment under this Plan would be the amount
(if any) by which the monthly benefit payment determined under clause (i) of
Section 4.1(a) hereof (as modified by Section 4.2 hereof if applicable) exceeds
the monthly benefit payment determined under clause (ii) of Section 4.1(a)
hereof (as modified by Section 4.2 hereof if applicable), subject to the
provisions of Section 4.1(b) hereof.
6
<PAGE> 8
ARTICLE V
CHANGE IN CONTROL
5.1 Effect of a Change in Control. Notwithstanding the
provisions of Article IV hereof, in the event that a Change In Control (as
defined in Section 5.4 hereof) occurs on or after the Effective Date hereof,
each Participant shall receive a "Lump Sum Benefit" in lieu of any benefits
under the Plan to which such Participant is or would otherwise become entitled
and which have not already been paid as of the date such Change In Control
occurs (the "Change In Control Date"), with such Lump Sum Benefit to be paid as
provided in Section 5.2 hereof in the amount calculated as provided in Section
5.3 hereof.
5.2 Payment of Lump Sum Benefit. The Lump Sum Benefit
payable to any Participant under Section 5.1 hereof shall be paid to such
Participant within 30 days following such Participant's Determination Date. As
used herein, a Participant's "Determination Date" shall be the later of the
Change In Control Date or such Participant's Termination Date.
5.3 Amount of Lump Sum Benefit. The amount of the Lump Sum
Benefit payable to any Participant pursuant to Section 5.1 hereof shall be the
amount equal to the lump sum actuarial equivalent, determined as of such
Participant's Determination Date, of the unpaid Plan benefits to which such
Participant is entitled under Article IV hereof, provided, however, that in
determining the lump sum actuarial equivalent of such Participant's unpaid Plan
benefits, the following special rules shall apply:
(a) The interest/discount rate assumed shall be 3.6 percent (3.6%);
(b) The mortality table used shall be the same as the mortality
table used for purposes of determining the Sponsor's minimum funding
obligation under ERISA with respect to the Pension Plan for the plan
year preceding the plan year in which the Participant's Determination
Date falls; and
(c) For purposes of determining what benefits the Participant is
entitled to receive under Article IV hereof, it shall be assumed that
the Participant would commence receiving benefit payments under the
Pension Plan and under Article IV of this Plan as of the earlier of (i)
the date such Participant actually commenced receiving Pension Plan
benefits, or (ii) the date which is the later of (A) such Participant's
Termination Date or (B) the earliest date such Participant would be
eligible to commence receiving Pension Plan benefits.
7
<PAGE> 9
5.4. Change in Control. As used in this Plan, "Change in
Control" shall mean the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Sponsor
representing 50% or more of the combined voting power of the Sponsor's
then outstanding voting securities;
(b) Individuals who, as of the Effective Date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors, provided that
any person becoming a director subsequent to the Effective Date hereof
whose election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Sponsor, as such terms are used Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall, for
the purposes of this Plan, be considered as though such person were a
member of the Incumbent Board of the Sponsor;
(c) The stockholders of the Sponsor approve a merger or consolidation
with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of another entity) more
than 50% of the combined voting power of the voting securities
of the Sponsor or such other entity outstanding immediately
after such merger or consolidation, and
(ii) a merger or consolidation effected to implement a
recapitalization of the Sponsor (or similar transaction) in
which no person acquires 50% or more of the combined voting
power of the Sponsor's then outstanding voting securities; or
(d) The stockholders of the Sponsor approve a plan of complete
liquidation of the Sponsor or an agreement for the sale or other
disposition by the Sponsor of all or substantially all of the Sponsor's
assets.
Notwithstanding the preceding provisions of this Section 5.4, a Change in
Control shall not be deemed to have occurred (1) if the "person" described in
the preceding provisions of this Section 5.4 is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of
8
<PAGE> 10
the Sponsor's then outstanding voting securities solely in connection with a
public offering of the Sponsor's securities, or (2) if the "person" described
in the preceding provisions of this Section 5.4 is an employee stock ownership
plan or other employee benefit plan maintained by the Sponsor (or any of its
affiliated companies) that is qualified under the provisions of ERISA.
9
<PAGE> 11
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Designation of Beneficiary. A Participant shall be
entitled to designate one or more individuals or entities, in any combination,
as his "Beneficiary" or "Beneficiaries" to receive any Plan payments to which
such Participant is entitled as of, or by reason of, his death. Any such
designation may be made or changed at any time prior to the Participant's death
by written notice filed with the Committee, with such written notice to be in
such form and contain such information as the Committee may from time to time
determine. In the event that either (a) a Beneficiary designation is not on
file at the date of a Participant's death, (b) no Beneficiary survives the
Participant, or (c) no Beneficiary is living at the time any payment becomes
payable under this Plan, then, for purposes of making any further payment of
any unpaid benefits under this Plan, such Participant's Beneficiary or
Beneficiaries shall be deemed to be the person or persons entitled to receive
the Participant's survivor and death benefits under the Pension Plan.
6.2 Payments During Incapacity. In the event a Participant (or
Beneficiary) is under mental or physical incapacity at the time of any payment
to be made to such Participant (or Beneficiary) pursuant to this Plan, any such
payment may be made to the conservator or other legally appointed personal
representative having authority over and responsibility for the person or
estate of such Participant (or Beneficiary), as the case may be, and for
purposes of such payment references in this Plan to the Participant (or
Beneficiary) shall mean and refer to such conservator or other personal
representative, whichever is applicable. In the absence of any lawfully
appointed conservator or other personal representative of the person or estate
of the Participant (or Beneficiary), any such payment may be made to any person
or institution that has apparent responsibility for the person and/or estate of
the Participant (or Beneficiary) as determined by the Committee. Any payment
made in accordance with the provisions of this Section 6.2 to a person or
institution other than the Participant (or Beneficiary) shall be deemed for all
purposes of this Plan as the equivalent of a payment to such Participant (or
Beneficiary), and the Sponsor shall have no further obligation or
responsibility with respect to such payment.
6.3 Prohibition Against Assignment. Except as otherwise
expressly provided in Section 6.1 and Section 6.2 hereof, the rights, interests
and benefits of a Participant under this Plan (a) may not be sold, assigned,
transferred, pledged, hypothecated, gifted, bequeathed or otherwise disposed of
to any other party by such Participant or any Beneficiary, executor,
administrator, heir, distributee or other person claiming under such
Participant, and (b) shall not be subject to execution, attachment or similar
process. Any attempted sale, assignment, transfer, pledge, hypothecation,
gift, bequest or other disposition of such rights,
10
<PAGE> 12
interests or benefits contrary to the foregoing provisions of this Section 6.3
shall be null and void and without effect.
6.4 Binding Effect. The Provisions of this Plan shall be
binding upon the Sponsor, the Participants and any successor-in- interest to
the Sponsor or to any Participant.
6.5 No Transfer of Interest. Benefits under this Plan shall be
payable solely from the general assets of the Sponsor and no person shall be
entitled to look to any source for payment of such benefits other than the
general assets of the Sponsor. The Sponsor shall have and possess all title
to, and beneficial interest in, any and all funds or reserves maintained or
held by the Sponsor on account of any obligation to pay benefits as required
under this Plan, whether or not earmarked by the Sponsor as a fund or reserve
for such purpose; any such funds, other property or reserves shall be subject
to the claims of the creditors of the Sponsor, and the provisions of this Plan
are not intended to create, and shall not be interpreted as vesting, in any
Participant, Beneficiary or other person, any right to or beneficial interest
in any such funds, other property or reserves. Nothing in this Section 6.5
shall be construed or interpreted as prohibiting or restricting the
establishment of a grantor trust within the meaning of Code Section 671 which
is unfunded for purposes of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
from which benefits under this Plan may be payable.
6.6 Amendment or Termination of the Plan. The Board of
Directors may amend this Plan from time to time in any respect that it deems
appropriate or desirable, and the Board may terminate this Plan at any time;
provided, however, that any such Plan amendment or Plan termination shall not,
without a Participant's written consent, be given effect with respect to such
Participant to the extent such Plan amendment or Plan termination operates to
reduce or eliminate, in any material respect, such Participant's accrued Plan
benefit determined as set forth hereinbelow. For purposes of the preceding
sentence, the determination as to whether any Plan amendment or Plan
termination operates to reduce or eliminate, in any material respect, a
Participant's accrued Plan benefit shall be made at the time of, and not until,
such Participant's Termination. Accordingly, an amendment or termination of
the Plan shall be treated as reducing or eliminating a Participant's accrued
Plan benefit only if, and to the extent that, (a) the retirement benefit
(expressed as a single life annuity payable monthly) to which such Participant
would be entitled under the Pension Plan at the time of his actual Termination
if such retirement benefit were determined without regard to the limits imposed
by Code Section 415, is less than (b) the retirement benefit (expressed as a
single life annuity payable monthly) to which such Participant would be
entitled under the Pension Plan at the time of his actual Termination if such
retirement benefit were determined (i) by disregarding, for periods prior to
such Plan amendment or Plan termination, the limits imposed by Code Section
401(a)(17) (but only to the extent such periods are otherwise required to be
used under the Pension Plan benefit formula in order to calculate such
Participant's actual benefits under the Pension Plan), (ii) by taking into
account, as if paid in the year awarded, the amount of any compensation
deferred by such Participant prior to the Effective Date hereof under
11
<PAGE> 13
SKB's Management Bonus Plan, and (iii) by disregarding for all periods the
limits imposed by Code Section 415.
6.7 No Right to Employment. This Plan is voluntary on the part
of the Sponsor, and the Plan shall not be deemed to constitute an employment
contract between the Sponsor and any Participant, nor shall the adoption or
existence of the Plan or any provision contained in the Plan be deemed to be a
required condition of the employment of any Participant. Nothing contained in
this Plan shall be deemed to give any Participant the right to continued
employment with the Sponsor, and the Sponsor may terminate any Participant at
any time, in which case the Participant's rights arising under this Plan shall
be only those expressly provided under the terms of this Plan.
6.8 Notices. All notices, requests, or other communications
(hereinafter collectively referred to as "Notices") required or permitted to be
given hereunder or which are given with respect to this Plan shall be in
writing and may be personally delivered, or may be deposited in the United
States mail, postage prepaid and addressed as follows:
To the Sponsor Allergan, Inc.
or the Committee at: Attention: Supplemental Executive Benefit
Plan Committee
2525 Dupont Drive
Irvine, CA 92715-1599
To Participant at: The Participant's residential mailing address
as reflected in the Sponsor's employment
records
A Notice which is delivered personally shall be deemed given as of the date of
personal delivery, and a Notice mailed as provided herein shall be deemed given
on the second business day following the date so mailed. Any Participant may
change his address for purposes of Notices hereunder pursuant to a Notice to
the Committee, given as provided herein, advising the Committee of such change.
The Sponsor and/or the Committee may at any time change its address for
purposes of Notices hereunder pursuant to a Notice to all Participants, given
as provided herein, advising the Participants of such change.
6.9 Governing Law. This Plan shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
6.10 Titles and Headings; Gender of Terms. Article and Section
headings herein are for reference purposes only and shall not be deemed to be
part of the substance of this Plan or in any way to enlarge or limit the
meaning or interpretation of any provision in this Plan. Use in this Plan of
the
12
<PAGE> 14
masculine, feminine or neuter gender shall be deemed to include each of the
omitted genders if the context so requires.
6.11 Severability. In the event that any provision of this
Plan is found to be invalid or otherwise unenforceable by a court or other
tribunal of competent jurisdiction, such invalidity or unenforceability shall
not be construed as rendering any other provision contained herein invalid or
unenforceable, and all such other provisions shall be given full force and
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.
6.12 Tax Effect of Plan. The Sponsor does not warrant any tax
benefit nor any financial benefit under the Plan. Without limiting the
foregoing, the Sponsor and its directors, officers, employees and agents shall
be held harmless by the Participant from, and shall not be subject to any
liability on account of, any Federal or State tax consequences or any
consequences under ERISA of any determination as to the amount of Plan benefits
to be paid, the method by which Plan benefits are paid, the persons to whom
Plan benefits are paid, or the commencement or termination of the payment of
Plan benefits.
IN WITNESS WHEREOF, the Sponsor hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Supplemental Retirement Income Plan
as restated this 23rd day of April, 1996.
ALLERGAN, INC.,
a Delaware corporation
By: /s/ Francis R. Tunney, Jr.
------------------------------
Its: Secretary
------------------------------
13
<PAGE> 1
EXHIBIT 10.7
CONFORMED COPY
$250,000,000
CREDIT AGREEMENT
dated as of
December 22, 1993
and amended and
restated as of
May 10, 1996
among
Allergan, Inc.,
as Borrower and Guarantor
The Eligible Subsidiaries
Referred to Herein,
as Borrowers
The Banks Party Hereto
Morgan Guaranty Trust Company of New York,
as Agent
and
Bank of America
National Trust and Savings Association,
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................ 1
SECTION 1.02. Accounting Terms and
Determinations............................................. 16
SECTION 1.03. Types of Borrowings........................................ 16
SECTION 1.04. Basis for Ratings.......................................... 17
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend........................................ 17
SECTION 2.02. Notice of Committed Borrowings............................. 17
SECTION 2.03. Money Market Borrowings.................................... 18
SECTION 2.04. Notice to Banks; Funding of Loans.......................... 22
SECTION 2.05. Notes...................................................... 23
SECTION 2.06. Maturity of Loans.......................................... 24
SECTION 2.07. Interest Rates............................................. 24
SECTION 2.08. Facility Fees.............................................. 28
SECTION 2.09. Method of Electing Types of
Interest Rates and Interest Periods
for Dollar-Denominated Loans............................... 29
SECTION 2.10. Method of Electing Interest Periods
for Alternative Currency Loans;
Required Prepayments....................................... 31
SECTION 2.11. Termination or Reduction of
Commitments................................................ 32
SECTION 2.12. Optional Prepayments....................................... 32
SECTION 2.13. General Provisions as to Payments.......................... 33
SECTION 2.14. Funding Losses............................................. 34
SECTION 2.15. Computation of Interest and Fees........................... 35
SECTION 2.16. Judgment Currency.......................................... 35
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness.............................................. 36
SECTION 3.02. Borrowings................................................. 36
</TABLE>
- --------
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3.03. First Borrowing by Each Eligible
Subsidiary................................................. 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.............................. 38
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention............................ 38
SECTION 4.03. Binding Effect............................................. 38
SECTION 4.04. Financial Information...................................... 38
SECTION 4.05. Litigation................................................. 39
SECTION 4.06. Compliance with ERISA...................................... 39
SECTION 4.07. Environmental Matters...................................... 39
SECTION 4.08. Taxes...................................................... 40
SECTION 4.09. Not an Investment Company.................................. 40
SECTION 4.10. Full Disclosure............................................ 40
SECTION 4.11. Subsidiaries............................................... 41
SECTION 4.12. Good Title to Properties................................... 41
SECTION 4.13. Trademarks, Patents, etc................................... 41
ARTICLE V
COVENANTS
SECTION 5.01. Information................................................ 41
SECTION 5.02. Payment of Obligations..................................... 44
SECTION 5.03. Maintenance of Property; Insurance......................... 44
SECTION 5.04. Conduct of Business and Maintenance
of Existence............................................... 45
SECTION 5.05. Compliance with Laws....................................... 45
SECTION 5.06. Inspection of Property, Books and
Records.................................................... 45
SECTION 5.07. Subsidiary Debt............................................ 46
SECTION 5.08. Debt to Capitalization..................................... 46
SECTION 5.09. Minimum Consolidated Net Worth............................. 46
SECTION 5.10. Negative Pledge............................................ 46
SECTION 5.11. Consolidations, Mergers and Sales
of Assets.................................................. 48
SECTION 5.12. Use of Proceeds............................................ 48
SECTION 5.13. Transactions with Affiliates............................... 48
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default.......................................... 48
SECTION 6.02. Notice of Default.......................................... 51
</TABLE>
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ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization.............................. 51
SECTION 7.02. Agent and Affiliates....................................... 51
SECTION 7.03. Action by Agent............................................ 52
SECTION 7.04. Consultation with Experts.................................. 52
SECTION 7.05. Liability of Agent......................................... 52
SECTION 7.06. Indemnification............................................ 52
SECTION 7.07. Credit Decision............................................ 53
SECTION 7.08. Successor Agent............................................ 53
SECTION 7.09. Agent's Fee................................................ 53
SECTION 7.10. Co-Agent................................................... 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair....................................... 54
SECTION 8.02. Illegality................................................. 54
SECTION 8.03. Increased Cost and Reduced Return.......................... 55
SECTION 8.04. Taxes...................................................... 57
SECTION 8.05. Base Rate Loans Substituted for
Affected Fixed Rate Loans.................................. 61
SECTION 8.06. Substitution of Bank....................................... 62
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
SECTION 9.01. Corporate Existence and Power.............................. 62
SECTION 9.02. Corporate and Governmental
Authorization; No Contravention............................ 63
SECTION 9.03. Binding Effect............................................. 63
SECTION 9.04. Taxes...................................................... 63
ARTICLE X
GUARANTY
SECTION 10.01. The Guaranty.............................................. 63
SECTION 10.02. Guaranty Unconditional.................................... 64
SECTION 10.03. Discharge Only Upon Payment In
Full; Reinstatement In Certain
Circumstances............................................. 65
SECTION 10.04. Waiver by the Company..................................... 65
SECTION 10.05. Subrogation............................................... 65
SECTION 10.06. Stay of Acceleration...................................... 65
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices................................................... 66
SECTION 11.02. No Waivers................................................ 66
SECTION 11.03. Expenses; Indemnification................................. 67
SECTION 11.04. Sharing of Set-Offs....................................... 67
SECTION 11.05. Amendments and Waivers.................................... 68
SECTION 11.06. Successors and Assigns.................................... 68
SECTION 11.07. Collateral................................................ 70
SECTION 11.08. Governing Law; Submission to
Jurisdiction.............................................. 70
SECTION 11.09. Counterparts; Integration................................. 71
SECTION 11.10. WAIVER OF JURY TRIAL...................................... 71
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Commitment Schedule
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel for the Company
Exhibit F - Opinion of Special Counsel to the Agent
Exhibit G - Form of Election to Participate
Exhibit H - Form of Election to Terminate
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Intellectual Property
</TABLE>
v
<PAGE> 7
CREDIT AGREEMENT
AGREEMENT dated as of May 10, 1996 among ALLERGAN, INC., the
ELIGIBLE SUBSIDIARIES referred to herein, the BANKS party hereto, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent.
WHEREAS the parties hereto are parties to a Credit Agreement
dated as of December 22, 1993, as heretofore amended, and wish, upon
satisfaction of the conditions set forth in Section 3.01 hereof, to amend and
restate such Credit Agreement as set forth herein (such amendment and
restatement being called this "Amendment"; and such Credit Agreement, as in
effect from time to time prior to the Effective Date, as amended and restated by
this Amendment as of the Effective Date and as it may be further amended from
time to time thereafter being called the "Agreement");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section
2.07(b).
"Adjusted Consolidated Net Worth" means at any date
Consolidated Net Worth less (to the extent reflected in the determination
thereof) all investments in unconsolidated Subsidiaries and all equity
investments in Persons which are not Subsidiaries.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.07(c).
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Agent, duly
completed by such Bank and submitted to the Agent (with a copy to the Company).
<PAGE> 8
"Affiliate" means (i) any Person (other than the Company and
its Subsidiaries) directly or indirectly controlling, controlled by, or under
common control with the Company or (ii) any Person (other than the Company and
its Subsidiaries) that owns or controls 20% or more of any class of equity
securities of the Company or any of its Subsidiaries or Affiliates. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Agreement" has the meaning set forth in the WHEREAS clause
hereof.
"Alternative Currencies" means Canadian dollars, French
francs, Japanese yen, British pounds sterling, Italian lira, German deutsche
marks and Irish pounds, provided that any other currency (except Dollars) shall
also be an Alternative Currency if (i) the Company requests, by notice to the
Agent, that such currency be included as an additional Alternative Currency for
purposes of this Agreement, (ii) such currency is freely transferable and freely
convertible into Dollars, (iii) deposits in such currency are customarily
offered to banks in the London interbank market and (iv) each Bank either (x)
approves the inclusion of such currency as an additional Alternative Currency
for purposes hereof or (y) fails to notify the Agent that it objects to such
inclusion within five Domestic Business Days after the Agent notifies it of the
Company's request for such inclusion.
"Alternative Currency Loan" means a Committed Loan that is
made in an Alternative Currency in accordance with the applicable Notice of
Committed Borrowing.
"Amendment" has the meaning set forth in the WHEREAS clause
hereof.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the
case of its Euro- Currency Loans, its Euro-Currency Lending Office and (iii)
2
<PAGE> 9
in the case of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section
2.07(b).
"Assignee" has the meaning set forth in Section 11.06(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 11.06(c), and their
respective successors, provided that for purposes of any determination made with
respect to Citicorp USA, Inc. under Section 8.01(b), 8.02 or 8.03, the term
"Bank" shall be deemed to include Citibank, N.A.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan that is
outstanding as a Base Rate Loan in accordance with the applicable Notice of
Committed Borrowing or an applicable Notice of Interest Rate Election or
pursuant to Article VIII or the last sentence of Section 2.09(a) or (ii) an
overdue amount which was a Base Rate Loan immediately before it became overdue.
"Borrower" means the Company or any Eligible Subsidiary, as
the context may require, and their respective successors, and "Borrowers" means
all of the foregoing.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means (i) a Committed Loan that is outstanding as a
CD Loan in accordance with the applicable Notice of Committed Borrowing or an
applicable Notice of Interest Rate Election or (ii) an overdue amount which was
a CD Loan immediately before it became overdue.
"CD Margin" has the meaning set forth in Section 2.07(b).
"CD Reference Banks" means Bank of America National Trust and
Savings Association, Citibank, N.A. and Morgan Guaranty Trust Company of New
York.
3
<PAGE> 10
"Co-Agent" means Bank of America National Trust and Savings
Association, in its capacity as the Co-Agent hereunder.
"Commitment" means (i) with respect to any Bank listed on the
Commitment Schedule attached hereto, the amount set forth opposite its name on
such Commitment Schedule as its Commitment or (ii) with respect to any Assignee,
the amount of the transferor Bank's Commitment assigned to such Assignee
pursuant to Section 11.06(c), in each case as such amount may be reduced from
time to time pursuant to Section 2.11 or changed as a result of an assignment
pursuant to Section 11.06(c).
"Committed Loan" means a loan made by a Bank pursuant to
Section 2.01; provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
"Company" means Allergan, Inc., a Delaware corporation, and
its successors.
"Consolidated Debt" means at any date the Debt of the Company
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Net Income" means consolidated net income of the
Company and its Consolidated Subsidiaries.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries determined
as of such date less (to the extent reflected in determining such consolidated
stockholders' equity) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business) subsequent to
December 31, 1995 in the book value of any asset owned by the Company or a
Consolidated Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in its consolidated financial statements if such statements were
prepared as of such date.
4
<PAGE> 11
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v) all
Debt secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person and (vi) all Debt of others Guaranteed by
such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Dollar Amount" means:
(i) with respect to any Dollar-Denominated Loan at any time,
the principal amount thereof then outstanding; and
(ii) with respect to any Alternative Currency Loan at any time
during any Interest Period applicable thereto, the principal amount
thereof then outstanding in the relevant Alternative Currency,
converted to Dollars at the Agent's spot buying rate for Dollars
against such Alternative Currency as of approximately 11:00 A.M.
(London time) three Euro-Currency Business Days before the first day of
such Interest Period.
If an Alternative Currency Loan is not paid when due, the Dollar Amount thereof
shall be recalculated as contemplated by clause (ii) above on the due date
thereof and at three-month intervals thereafter until such Loan is paid in full.
"Dollar-Denominated Loan" means a Loan that is made in Dollars
in accordance with the applicable Notice of Borrowing.
"Dollars" and the sign "$" mean lawful money of the United
States.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized by
law to close.
5
<PAGE> 12
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Company and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.07(b).
"Effective Date" means the date on which the Agent shall have
received all the payments and documents specified in or pursuant to Section
3.01.
"Election to Participate" means an Election to Participate
substantially in the form of Exhibit G hereto.
"Election to Terminate" means an Election to Terminate
substantially in the form of Exhibit H hereto.
"Eligible Subsidiary" means any wholly owned Consolidated
Subsidiary as to which an Election to Participate shall have been delivered to
the Agent and as to which an Election to Terminate shall not have been delivered
to the Agent. Each such Election to Participate and Election to Terminate shall
be duly executed on behalf of such Subsidiary and the Company in such number of
copies as the Agent may request. The delivery of an Election to Terminate shall
not affect any obligation of an Eligible Subsidiary theretofore incurred. The
Agent shall promptly give notice to the Banks of the receipt of any Election to
Participate or Election to Terminate.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without
6
<PAGE> 13
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company or any Subsidiary, are treated as a single employer under Section 414 of
the Internal Revenue Code.
"Euro-Currency Business Day" means a Euro-Dollar Business Day,
unless such term is used in connection with an Alternative Currency Borrowing or
Alternative Currency Loan for which funds are to be paid or made available in
such Alternative Currency on such day, in which case such day shall not be a
Euro-Currency Business Day unless commercial banks are open for domestic and
international business (including dealings in deposits in such Alternative
Currency) in both London and the place where such funds are to be paid or made
available.
"Euro-Currency Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Currency Lending Office) or such other office, branch or affiliate
of such Bank as it may hereafter designate as its Euro-Currency Lending Office
by notice to the Company and the Agent.
"Euro-Currency Loan" means a Euro-Dollar Loan or an
Alternative Currency Loan.
"Euro-Currency Margin" has the meaning set forth in Section
2.07(c).
"Euro-Currency Reference Banks" means the principal London
offices of Bank of America National Trust and Savings Association, Citibank,
N.A. and Morgan Guaranty Trust Company of New York.
"Euro-Currency Reserve Percentage" has the meaning set forth
in Section 2.07(c).
7
<PAGE> 14
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in Dollar deposits) in London.
"Euro-Dollar Loan" means (i) a Committed Loan that is
outstanding as a Euro-Dollar Loan in accordance with the applicable Notice of
Committed Borrowing or an applicable Notice of Interest Rate Election or (ii) an
overdue amount which was a Euro-Dollar Loan immediately before it became
overdue.
"Event of Default" has the meaning set forth in Section 6.01.
"Facility Fee Rate" has the meaning set forth in Section
2.08(a).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust Company
of New York on such day on such transactions as determined by the Agent.
"Fixed Rate Loans" means CD Loans or Euro-Currency Loans or
Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the
Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting
of (i) all Committed Loans to the same Borrower which are Base Rate Loans at
such time, (ii) all Euro-Currency Loans to the same Borrower which are in the
same currency and have the same Interest Period at such time or (iii) all CD
Loans to the same Borrower which have the same Interest Period at such time;
provided that, if a Committed Loan of any particular Bank is converted to or
made as a Base Rate Loan pursuant to Section 8.02 or 8.04, such Loan shall be
included in the same Group or Groups of
8
<PAGE> 15
Loans from time to time as it would have been in if it had not been so converted
or made.
"Governmental Authority" means any federal, state, local,
foreign or other governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission or other similar dispute resolving panel or body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the holder of such Debt of the
payment thereof or to protect such holder against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means the Company in its capacity as guarantor of
the obligations of the Eligible Subsidiaries pursuant to the provisions of
Article X.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 11.03(b).
"Interest Period" means: (1) with respect to each
Euro-Currency Loan, a period commencing on the date of borrowing specified in
the applicable Notice of Borrowing or on the date specified in an applicable
Notice of Interest Rate Election and ending one, two, three or six months
thereafter, as the Company may elect in the applicable notice; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) which
9
<PAGE> 16
would otherwise end on a day which is not a Euro-Currency Business Day
for the relevant currency shall be extended to the next succeeding
Euro-Currency Business Day for such currency unless such Euro-Currency
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Currency Business
Day for such currency;
(b) any Interest Period which begins on the last Euro-Currency
Business Day for the relevant currency in a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to clause (c)
below, end on the last Euro-Currency Business Day for the relevant
currency in a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date (or, if the
Termination Date is not a Euro-Currency Business Day for the relevant
currency, the next preceding Euro-Currency Business Day for such
currency).
(2) with respect to each CD Loan, a period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter, as the Company may elect in the applicable notice;
provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending a minimum of one month thereafter, as the Company may elect
in accordance with Section 2.03; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) which would otherwise end on a
day which is not a Euro-Dollar
10
<PAGE> 17
Business Day shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 15 days)
as the Company may elect in accordance with Section 2.03; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Irish Affiliate Cash" means an amount equal to 70% of the
cash and cash equivalents denominated in Dollars or in any currency which is
readily exchangeable into Dollars and which is not, at such time, subject to any
form of exchange control regulation, and which are payable by their terms at an
address within the United States and by a United States resident or other person
having an address within the United States, such amount of cash and cash
equivalents not to exceed $150,000,000 and such cash and cash equivalents to be
owned by Allergan Pharmaceuticals (Ireland) Ltd., a subsidiary of Allergan
Holdings, Inc., a Delaware corporation.
11
<PAGE> 18
"Level I Pricing" applies at any date if, at such date, the
Company's outstanding senior unsecured long-term debt securities are rated AA-
or higher by S&P and Aa3 or higher by Moody's.
"Level II Pricing" applies at any date if, at such date, (i)
the Company's outstanding senior unsecured long-term debt securities are rated A
or higher by S&P and A2 or higher by Moody's and (ii) Level I Pricing does not
apply.
"Level III Pricing" applies at any date if, at such date, (i)
the Company's outstanding senior unsecured long-term debt securities are rated
BBB+ or higher by S&P and Baa1 or higher by Moody's and (ii) neither Level I
Pricing nor Level II Pricing applies.
"Level IV Pricing" applies at any date if, at such date, (i)
the Company's outstanding senior unsecured long-term debt securities are rated
BBB or higher by S&P and Baa2 or higher by Moody's and (ii) none of Level I
Pricing, Level II Pricing or Level III Pricing applies.
"Level V Pricing" applies at any date if, at such date, no
other Pricing Level applies.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Currency Loan or a
Money Market Loan and "Loans" means Domestic Loans or Euro-Currency Loans or
Money Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Margin Stock" has the meaning set forth in Regulations U and
G of the Board of Governors of the Federal Reserve System.
12
<PAGE> 19
"Material Debt" means Debt (other than the Notes) of the
Company and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal amount exceeding
$10,000,000.
"Materially Adverse Effect" means any materially adverse
change in the business, operations, condition (financial or otherwise) or assets
of the Company and its Subsidiaries taken as a whole.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in
Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Company and the Agent; provided that any Bank may from time to time by
notice to the Company and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan made by a Bank pursuant
to a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section
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4001(a)(3) of ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the preceding five
plan years made contributions, including for these purposes any Person which
ceased to be a member of the ERISA Group during such five year period.
"Notes" means promissory notes of a Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of such Borrower to
repay the Loans made to it, and "Note" means any one of such promissory notes
issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing
(as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined
in Section 2.03(f)).
"Notice of Interest Rate Election" means a notice by the
Company electing a type of interest rate and/or the duration of an Interest
Period as provided in Section 2.09(a) or 2.10.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
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<PAGE> 21
"Pricing Level" refers to Level I Pricing, Level II Pricing,
Level III Pricing, Level IV Pricing and/or Level V Pricing.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Quarterly Payment Date" means each March 15, June 15,
September 15 and December 15.
"Reference Banks" means the CD Reference Banks or the
Euro-Currency Reference Banks, as the context may require, and "Reference Bank"
means any one of such Reference Banks.
"Required Banks" means at any time Banks having at least 66%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 66% of the aggregate unpaid
Dollar Amount of the Loans.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Ratings Services.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company.
"Termination Date" means May 10, 2001 or, if such day is not a
Domestic Business Day, the next succeeding Domestic Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
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<PAGE> 22
"United States" means the United States of America, including
the States thereof and the District of Columbia, but excluding its territories
and possessions.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Company.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Company notifies the
Agent that the Company wishes to amend any covenant in Article V to eliminate
the effect of any change in generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies the Company that the
Required Banks wish to amend Article V for such purpose), then the Company's
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Company and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans by one or more Banks to be made to a single
Borrower pursuant to Article II on a single date, all of which Loans (i) are
made in the same currency, (ii) in the case of Loans denominated in Dollars, are
of the same type (subject to Article VIII) and (iii) except in the case of Base
Rate Loans, have the same Interest Period or initial Interest Period. Borrowings
are classified for purposes of this Agreement either by reference to the
currency and/or pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar
Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the
provisions of Article II under which participation therein is determined (i.e.,
a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the
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<PAGE> 23
Bank participants are determined on the basis of their bids in accordance
therewith).
SECTION 1.04. Basis for Ratings. The credit ratings to be
utilized in the determination of a Pricing Level are the ratings assigned to
unsecured obligations of the Company without third party credit support. Such
ratings may be pending or implied ratings assigned by the relevant rating
agencies if ratings for outstanding obligations of the foregoing type are not
available. Ratings assigned to any obligation which is secured or which has the
benefit of third party credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make loans to the
Company or any Eligible Subsidiary pursuant to this Section from time to time
prior to the Termination Date in amounts such that the aggregate Dollar Amount
of Committed Loans by such Bank at any one time outstanding to all Borrowers
shall not exceed the amount of its Commitment, provided that any Money Market
Loan made by a Bank shall not reduce such Bank's Commitment with respect to its
pro rata portion of any Loan which is not a Money Market Loan. Each Borrowing of
Dollar- Denominated Loans under this Section shall be in an aggregate principal
amount of at least $5,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(c)). Each Borrowing
in an Alternative Currency shall be in an aggregate Dollar Amount of at least
$10,000,000. Each Borrowing under this Section, in any currency, shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrowers may borrow under this Section, repay,
or to the extent permitted by Section 2.12, prepay Loans and reborrow at any
time prior to the Termination Date under this Section.
SECTION 2.02. Notice of Committed Borrowings. The Company
shall give the Agent notice (a "Notice of Committed Borrowing") not later than
11:00 A.M. (New York City time) on (i) the date of each Base Rate Borrowing,
(ii) the second Domestic Business Day before each CD Borrowing, (iii) the third
Euro-Dollar Business Day before each Euro- Dollar Borrowing and (iv) the fourth
Euro-Currency Business Day before each Alternative Currency Borrowing,
specifying:
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<PAGE> 24
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Currency
Business Day for the relevant currency in the case of a Euro-Currency
Borrowing;
(b) the currency and aggregate amount (in such currency) of
such Borrowing;
(c) if such Borrowing is comprised of Dollar-Denominated
Loans, whether such Loans are to be CD Loans, Base Rate Loans or
Euro-Dollar Loans; and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Company may, as set forth in this
Section, request the Banks to make offers to make Money Market Loans to any of
the Borrowers. The Banks may, but shall have no obligation to, make such offers
and the Company may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
(b) Money Market Quote Request. When the Company wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Company and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction;
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<PAGE> 25
(ii) the aggregate amount of such Borrowing, which shall
be $5,000,000 or a larger multiple of $1,000,000;
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest
Period; and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Company may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Company and the Agent may agree) of any other Money Market
Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt
of a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Company to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (d) and must
be submitted to the Agent by telex or facsimile transmission at its office in
New York City referred to in Section 11.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) 9:45 A.M. (New York
City time) on the proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the Company and the
Agent shall have mutually agreed and shall have notified to the Banks not later
than the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective); provided that
Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in
the capacity of a Bank may be submitted, and may only be submitted, if the Agent
or such affiliate notifies the Company of the terms of the offer or offers
contained therein not later than (x) one
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<PAGE> 26
hour prior to the deadline for the other Banks, in the case of a LIBOR Auction,
or (y) 15 minutes prior to the deadline for the other Banks, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote so
made shall be irrevocable except with the written consent of the Agent given on
the instructions of the Company.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed
the principal amount of Money Market Loans for which offers being made
by such quoting Bank may be accepted, and (z) may be subject to an
aggregate limitation as to the principal amount of Money Market Loans
for which offers being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "Money Market
Margin") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto
or does not specify all of the information required by subsection
(d)(ii);
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(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Company of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Company shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30
A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Company and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Company shall notify the Agent of the
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Company may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
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(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Company may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in respect
of which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof (including the name of the
Borrower) and of such Bank's share (if any) of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by such Borrower.
(b) On the date of each Borrowing, each Bank participating
therein shall:
(i) if such Borrowing is to be made in Dollars, make available
its share of such Borrowing in Dollars, not later than 12:00 Noon (New
York City time), in Federal or other funds immediately available in New
York City, to the Agent at its address in New York City referred to in
Section 11.01; or
(ii) if such Borrowing is to be made in an Alternative
Currency, make available its share of such Borrowing in such
Alternative Currency (in such funds as may then be customary for the
settlement of international transactions in such Alternative
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Currency) to the account of the Agent at such time and place as shall
have been notified by the Agent to the Banks by not less than four
Domestic Business Days' notice.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the relevant Borrower at the aforesaid address or place.
(c) Unless the Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such Bank
has made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section and the Agent may, in reliance
upon such assumption, make available to the relevant Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and such Borrower severally agree
to repay to the Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to such Borrower until the date such amount is repaid to the Agent, at (i) in
the case of such Borrower, a rate per annum equal to the higher of the Federal
Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and
(ii) in the case of such Bank, the Federal Funds Rate (if such Borrowing is in
Dollars) or the applicable Adjusted London Interbank Offered Rate (if such
Borrowing is in an Alternative Currency). If such Bank shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank to each
Borrower shall be evidenced by a single Note of such Borrower payable to the
order of such Bank for the account of its Applicable Lending Office in an amount
equal to the aggregate unpaid principal amount of such Bank's Loans to such
Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent,
request that its Loans of a particular type to such Borrower be evidenced by a
separate Note of such Borrower in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant type. Each reference in this Agreement
to the "Note" of such Bank shall be deemed to
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refer to and include any or all of such Notes, as the context may require.
(c) Upon receipt of Notes from any Borrower pursuant to
Section 3.01(b) or 3.03(b), the Agent shall forward such Notes to the Banks.
Each Bank shall record the date, currency, amount (in such currency), type and
maturity of each Loan made by it to each Borrower and the date and amount of
each payment of principal made with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of any of its Notes,
endorse on the schedule forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Loan to the relevant
Borrower then outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations of any Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by each
Borrower so to endorse its Note of such Borrower and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall
mature, and the principal amount thereof shall be due and payable, on the
Termination Date (or, if the Termination Date is not a Euro-Currency Business
Day for the relevant currency, the next preceding Euro-Currency Business Day
for such currency).
(b) Each Money Market Loan included in any Money Market
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due or is converted to a different type
of Loan, at a rate per annum equal to the Base Rate for such day. Such interest
shall be payable quarterly in arrears on each Quarterly Payment Date and, with
respect to the principal amount of any Base Rate Loan converted to a different
type of Loan, on the date such principal amount is so converted. Any overdue
principal of or interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus
the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at a rate
per annum equal to the
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sum of the CD Margin plus the applicable Adjusted CD Rate; provided that if any
CD Loan or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, 90 days after the first day thereof. Any overdue principal
of or interest on any CD Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 2% plus the higher of (i)
the sum of the CD Margin plus the Adjusted CD Rate applicable to such Loan
immediately before it became overdue and (ii) the Base Rate for such day.
"CD Margin" means (i) 0.265% for any day on which Level I
Pricing applies, (ii) 0.275% for any day on which Level II Pricing applies,
(iii) 0.325% for any day on which Level III Pricing applies, (iv) 0.350% for any
day on which Level IV Pricing applies and (v) 0.4375% for any day on which Level
V Pricing applies.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [----------] + AR
[1.00 - DRP]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ---------------
* The amount in brackets being rounded upward, if necessary,
to the next higher 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of
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such CD Reference Bank to which such Interest Period applies and having a
maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Currency Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Currency Margin plus
the applicable Adjusted London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, three months after the first day thereof.
"Euro-Currency Margin" means (i) 0.140% for any day on which
Level I Pricing applies, (ii) 0.150% for any day on which Level II Pricing
applies, (iii) 0.200% for any day on which Level III Pricing applies, (iv)
0.225% for any day on which Level IV Pricing applies and (v) 0.3125% for any day
on which Level V Pricing applies
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward if necessary, to the next higher 1/100 of 1%) by dividing (i) the
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<PAGE> 33
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Currency
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in the relevant currency are
offered to each of the Euro-Currency Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Currency Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of the Euro-Currency Loan of such Euro-Currency Reference
Bank to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Currency Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Currency Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Currency Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Currency Loan
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the Euro-Currency Margin plus the higher
of (i) the Adjusted London Interbank Offered Rate applicable to such Loan
immediately before it became overdue and (ii) the quotient obtained (rounded
upward if necessary, to the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which one day (or, if such amount due remains unpaid more
than three Euro-Currency Business Days, then for such other period of time not
longer than six months as the Agent may select) deposits in the relevant
currency in an amount approximately equal to such overdue payment due to each of
the Euro-Currency Reference Banks are offered to such Euro-Currency Reference
Bank in the London interbank
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market for the applicable period determined as provided above by (y) 1.00 minus
the Euro-Currency Reserve Percentage (or, if the circumstances described in
clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the
sum of 2% plus the Base Rate for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Company and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Facility Fees. The Company shall pay to the
Agent, for the account of the Banks ratably in proportion to their Commitments,
a facility fee calculated for each day at the Facility Fee Rate for such day.
Such facility fee shall accrue (i) for each day from and including the Effective
Date to but excluding the Termination Date (or earlier date on which the
Commitments
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terminate in their entirety), on the aggregate amount of the Commitments
(whether used or unused) in effect on such day and (ii) for each day from and
including the date on which the Commitments terminate in their entirety to but
excluding the date on which the Loans shall be repaid in their entirety, on the
aggregate Dollar Amount of the Loans outstanding on such day. Such fees shall be
payable quarterly in arrears on each Quarterly Payment Date, and on the date on
which the Commitments terminate in their entirety (and, if later, the date on
which the Loans shall be repaid in their entirety).
"Facility Fee Rate" means (i) 0.060% per annum for any day on
which Level I Pricing applies, (ii) 0.075% per annum for any day on which Level
II Pricing applies, (iii) 0.100% per annum for any day on which Level III
Pricing applies, (iv) 0.125% per annum for any day on which Level IV Pricing
applies and (v) 0.1875% per annum for any day on which Level V Pricing applies.
SECTION 2.09. Method of Electing Types of Interest Rates and
Interest Periods for Dollar-Denominated Loans. (a) The Loans included in each
Committed Dollar-Denominated Borrowing shall bear interest initially at the
type of interest rate specified by the Company in the applicable Notice of
Borrowing. Thereafter, the Company may from time to time elect to change or
continue the type of interest rate borne by each Group of Dollar-Denominated
Loans (subject to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Company may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Company may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.14 in the case of any such conversion on any day
other than the last day of the then current Interest Period applicable
to such CD Loans;
(iii) if such Loans are Euro-Dollar Loans, the Company may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest
Period, subject to Section 2.14 in the case of any such conversion on
any day other than the last day of the
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then current Interest Period applicable to such Euro-Dollar Loans.
Each such election shall be made by delivering a notice to the Agent not later
than 10:00 A.M. (New York City time) on the third Euro-Dollar Business Day
before the conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be converted from Domestic Loans to Domestic
Loans of the other type or continued as CD Loans of the same type for an
additional Interest Period, in which case such notice shall be delivered to the
Agent at least three Domestic Business Days before such conversion or
continuation is to be effective). Such notice may, if it so specifies, apply to
only a portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the Dollar Amount of the portion to which such notice
applies, and the remaining portion to which it does not apply, are each at least
$5,000,000. If no such notice is timely received prior to the end of an Interest
Period, the Company shall be deemed to have elected that such Group of Loans be
converted to Base Rate Loans.
(b) Each Notice of Interest Rate Election delivered pursuant
to subsection (a) above shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans being converted are to be Fixed
Rate Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from
the Company pursuant to subsection (a) above,
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the Agent shall promptly notify each Bank of the contents thereof and such
notice shall not thereafter be revocable by the Company.
SECTION 2.10. Method of Electing Interest Periods for
Alternative Currency Loans; Required Prepayments. (a) The initial Interest
Period for each Group of Alternative Currency Loans shall be specified by the
Company in the applicable Notice of Borrowing. The Company may specify the
duration of each subsequent Interest Period applicable to such Group of Loans by
delivering to the Agent, not later that 10:00 A.M. (New York City time) on the
third Euro-Currency Business Day before the end of the immediately preceding
Interest Period, a notice specifying the Group of Loans (or portion thereof) to
which such notice applies and the duration of such subsequent Interest Period
(which shall comply with the provisions of the definition of Interest Period).
If no such Notice of Interest Rate Election is timely received by the Agent
before the end of any applicable Interest Period, the Company shall be deemed to
have elected that the subsequent Interest Period for such Group of Loans shall
have a duration of one month (subject to the provisions of the definition of
Interest Period).
(b) Three Euro-Currency Business Days before the end of each
Interest Period applicable to any Group of Alternative Currency Loans, the Agent
shall notify the Company as to the Agent's spot buying rate for Dollars against
the relevant Alternative Currency as of approximately 9:00 A.M. (New York City
time) on such day and the aggregate Dollar Amount of such Group of Loans as
recalculated on the basis of such spot buying rate. On the last day of such
Interest Period the relevant Borrower shall prepay such Group of Loans ratably
to the extent (if any) required so that, at the beginning of the next Interest
Period applicable thereto (and giving effect to such recalculation of the Dollar
Amount thereof), (i) the aggregate Dollar Amount of Committed Loans by each Bank
then outstanding to all Borrowers does not exceed the amount of such Bank's
Commitment, (ii) the aggregate Dollar Amount of all Loans then outstanding to
all Eligible Subsidiaries does not exceed $100,000,000 and (iii) the aggregate
Dollar Amount of all Loans then outstanding to all Borrowers does not exceed the
aggregate amount of the Commitments.
(c) If on or before the first day of any Interest Period
applicable to any Group of Alternative Currency Loans, there shall occur any
change in national or international financial, political or economic conditions
or currency exchange rates or exchange controls which would in the opinion of
the Agent make it impracticable for such
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Group of Loans to continue to be denominated in the relevant Alternative
Currency, the Agent shall forthwith give notice thereof to the Company and the
Banks, in which event the relevant Borrower shall repay such Group of Loans in
full on the later of (i) the last day of the immediately preceding Interest
Period or (ii) the third Euro-Currency Business Day after the Company receives
such notice from the Agent. Such Group of Loans shall bear interest on and after
the last day of such immediately preceding Interest Period at a rate per annum
determined for each day as provided in Section 2.07(d) (except that if the
repayment due date is determined pursuant to the foregoing clause (ii), the 2%
per annum additional interest applicable to overdue amounts shall not apply
prior to such due date).
SECTION 2.11. Termination or Reduction of Commitments. (a) The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
(b) The Commitments shall terminate on the Termination Date,
and any Loans then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
SECTION 2.12. Optional Prepayments. (a) Any Borrower may:
(i) upon at least one Domestic Business Day's notice to the
Agent, prepay its Group of Base Rate Loans (or any Money Market Loans
bearing interest at the Base Rate pursuant to Section 8.01(a)), in
whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000;
(ii) upon at least three Euro-Dollar Business Days' notice to
the Agent, subject to Section 2.14, prepay any Group of CD Loans or
Group of Euro-Dollar Loans, in whole at any time, or from time to time
in part in amounts aggregating $5,000,000 or any larger multiple of
$1,000,000; or
(iii) upon at least three Euro-Currency Business Days' notice
to the Agent, subject to Section 2.14, prepay any Group of Alternative
Currency Loans, in whole at any time, or from time to time in part;
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provided that the aggregate Dollar Amount of any partial prepayment is
at least $5,000,000;
in each case, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group of Loans.
(b) Except as provided in Section 8.02, no Borrower may prepay
all or any portion of the principal amount of any Money Market Loan (except a
Money Market Loan bearing interest at the Base Rate pursuant to Section 8.01(a))
prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.13. General Provisions as to Payments. (a) Each
payment of principal of, and interest on, the Dollar-Denominated Loans and each
payment of fees hereunder, shall be made in Dollars not later than 12:00 Noon
(New York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Agent at its address in New York City
referred to in Section 11.01.
(b) Each payment of principal of, and interest on, the
Alternative Currency Loans shall be made in the relevant Alternative Currency in
such funds as may then be customary for the settlement of international
transactions in such Alternative Currency, for the account of the Agent at such
time and at such place as shall have been notified by the Agent to the Company
and the Banks by not less than four Euro-Currency Business Days' notice.
(c) Promptly upon receiving any payment for the account of the
Banks, the Agent will distribute to each Bank, in the currency and type of funds
received by the Agent, such Bank's ratable share of such payment.
(d) Whenever any payment of principal of, or interest on, the
Domestic Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on, the
Euro-Currency Loans shall be due on a day which is not a Euro-Currency Business
Day for the relevant currency, the date for payment thereof shall be
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extended to the next succeeding Euro-Currency Business Day for such currency,
unless such Euro-Currency Business Day falls in another calendar month, in which
case the date for payment thereof shall be the next preceding Euro-Currency
Business Day for such currency. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(e) Unless the Agent shall have received notice from the
Company prior to the date on which any payment is due from any Borrower to the
Banks hereunder that such Borrower will not make such payment in full, the Agent
may assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at (i) the Federal Funds Rate (if such amount was
distributed in Dollars) or (ii) the rate per annum at which one day deposits in
the relevant currency are offered to the Agent in the London interbank market
for such day (if such amount was distributed in an Alternative Currency).
SECTION 2.14. Funding Losses. If a Borrower makes any payment
of principal with respect to any Fixed Rate Loan (pursuant to Section 2.12,
Article VI or VIII or otherwise) on any day other than the last day of an
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.07(d), or if a Borrower fails to borrow any Fixed
Rate Loans (including a failure to borrow in an Alternative Currency due to the
occurrence of any event described in Section 3.02(f)) after notice has been
given to any Bank in accordance with Section 2.04(a), such Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after
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any such payment or failure to borrow, provided that such Bank shall have
delivered to such Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error.
SECTION 2.15. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.16. Judgment Currency. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due from any
Borrower hereunder or under any Note in the currency expressed to be payable
herein (the "specified currency") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other
currency at the Agent's New York office on the Euro-Currency Business Day
preceding that on which final judgment is given. The obligations of each
Borrower in respect of any sum due to any Bank or the Agent hereunder or under
any Note shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that, on the Euro-Currency
Business Day following receipt by such Bank or the Agent (as the case may be) of
any sum adjudged to be so due in such other currency, such Bank or the Agent (as
the case may be) may in accordance with normal banking procedures purchase the
specified currency with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to such Bank or the
Agent, as the case may be, in the specified currency, the relevant Borrower
agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Bank or the
Agent, as the case may be, against such loss, and if the amount of the specified
currency so purchased exceeds (a) the sum originally due to any Bank or the
Agent, as the case may be, in the specified currency and (b) any amounts shared
with other Banks as a result of allocations of such excess as a disproportionate
payment to such Bank under Section 11.04, such Bank or the Agent, as the case
may be, agrees to remit such excess to the relevant Borrower.
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ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Amendment shall become
effective, and the Agreement shall be amended and restated to read in full as
set forth herein, when the Agent shall have received:
(a) counterparts of this Amendment signed by each of the
parties listed on the signature pages hereof (or, in the case of any
party as to which an executed counterpart shall not have been received,
by the Agent shall have received, in form satisfactory to it,
facsimile, telex or other written confirmation from such party that it
has executed a counterpart hereof);
(b) a duly executed Note of the Company for the account of
each Bank, dated on or before the Effective Date and complying with the
provisions of Section 2.05;
(c) for the account of each Bank, all unpaid fees accrued
under Section 2.08 of the Agreement to but excluding the Effective
Date;
(d) an opinion of Francis R. Tunney, Jr., Esq., Corporate Vice
President and General Counsel of the Company, substantially in the form
of Exhibit E hereto, each such opinion to cover such additional matters
relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(e) an opinion of Davis Polk & Wardwell, special counsel for
the Agent, substantially in the form of Exhibit F hereto and covering
such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request; and
(f) all documents the Agent may reasonably request relating to
the existence of the Company, the corporate authority for and the
validity of this Agreement and the Notes of the Company, and any other
matters relevant hereto, all in form and substance satisfactory to the
Agent.
The Agent shall promptly notify the Company and the Banks of the Effective Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
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(a) the fact that the Effective Date shall have occurred on or
prior to May 25, 1996;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately after such Borrowing, (i) the
aggregate Dollar Amount of all Loans then outstanding to all Borrowers
will not exceed the aggregate amount of the Commitments and (ii) the
aggregate Dollar Amount of all Loans then outstanding to all Eligible
Subsidiaries shall not exceed $100,000,000;
(d) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(e) the fact that the representations and warranties of the
Borrowers contained in this Agreement shall be true on and as of the
date of such Borrowing; and
(f) in the case of an Alternative Currency Borrowing, there
shall not have occurred any change in national or international
financial, political or economic conditions or currency exchange rates
or exchange controls which would in the opinion of the Agent make it
impracticable for such Borrowing to be denominated in the relevant
Alternative Currency.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such Borrowing as to the facts specified in clauses
(c), (d) and (e) of this Section.
SECTION 3.03. First Borrowing by Each Eligible Subsidiary. The
obligation of each Bank to make a Loan on the occasion of the first Borrowing by
each Eligible Subsidiary is subject to the satisfaction of the following further
conditions:
(a) receipt by the Agent of an Election to Participate duly
executed by such Eligible Subsidiary and the Company;
(b) receipt by the Agent for the account of each Bank of a
duly executed Note of such Eligible Subsidiary, dated on or before the
date of such
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Borrowing and complying with the provisions of Section 2.05; and
(c) receipt by the Agent of all documents which it may
reasonably request relating to the existence of such Eligible
Subsidiary, the corporate authority for and the validity of its
Election to Participate (if any), this Agreement and its Notes, and any
other matters relevant thereto, all in form and substance satisfactory
to the Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Company of this
Agreement and its Notes are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official under any
provision of law or regulation applicable to the Company, and do not contravene,
or constitute a default under, any provision of law or regulation applicable to
the Company or of the restated certificate of incorporation or by-laws of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or any of its Subsidiaries or result in the
creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Company and its Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Company.
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of the Company and its Consolidated Subsidiaries as of December
31, 1995 and the related consolidated statements of earnings and cash flows
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for the fiscal year then ended, reported on by KPMG Peat Marwick LLP, a copy of
which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Company and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal year.
(b) Since December 31, 1995 there has been no material adverse
change in the business, financial position, assets, liabilities or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company or any of its Subsidiaries before any
Governmental Authority in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the business or consolidated
financial position of the Company and its Subsidiaries, taken as a whole, or
which in any manner draws into question the validity of this Agreement or its
Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of
its business, the Company conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Company and
its Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with
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environmental protection standards imposed by law or as a condition of any
license, permit or contract, any related constraints on operating activities,
including any periodic or permanent shutdown of any facility or reduction in the
level of or change in the nature of operations conducted thereat, any costs or
liabilities in connection with off-site disposal of wastes or Hazardous
Substances, and any actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the basis of this review, the
Company has reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are unlikely to have
a Materially Adverse Effect.
SECTION 4.08. Taxes. The Company and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Company
or any Subsidiary, except assessments which are being contested in good faith
and as to which adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes or
other governmental charges are, in the reasonable opinion of the Company,
adequate.
SECTION 4.09. Not an Investment Company. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. Full Disclosure. All Information (as defined
below) heretofore furnished by the Company is, and all Information hereafter
furnished by the Company will be, true and accurate in all material respects on
the date as of which such Information is dated or certified (except for any
projections included therein, which projections shall have provided reasonable
estimations of future performance for the periods covered thereby subject to the
uncertainty and approximation inherent in any projections) and not incomplete by
omitting to state anything necessary to make such Information not misleading at
such time except to the extent later Information could reasonably have been
expected to supersede earlier Information. As used in this Section, the term
"Information" means (i) the information set forth in the Company's report on
Form 10-K for its fiscal year ended December 31, 1995 and in all subsequent
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and registration
statements (excluding exhibits thereto and any registration statements on Form
S-8 or its equivalent) which the Company shall have filed with the SEC and (ii)
all
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other information furnished by the Company to the Agent or any Bank for purposes
of or in connection with this Agreement, but only if such other information is
(x) financial information, (y) furnished in writing to all the Banks or to the
Agent for distribution to all the Banks or (z) furnished at a meeting to which
all the Banks were invited.
SECTION 4.11. Subsidiaries. Each of the Company's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where failures to obtain such licenses, authorizations, consents and
approvals would not, in the aggregate, have a Materially Adverse Effect.
SECTION 4.12. Good Title to Properties. The Company and its
Subsidiaries have good and marketable title to their respective properties and
assets (except properties and assets that, in the aggregate, are not material to
the Company and its Subsidiaries taken as a whole), subject to no Liens of any
kind, except such as would be permitted under Section 5.10.
SECTION 4.13. Trademarks, Patents, etc. Except as disclosed to
the Banks in Exhibit J hereto, the Company and its Subsidiaries possess
trademarks, trade names, copyrights, patents and licenses, or rights in any
thereof, adequate in all material respects for the conduct of their business
(taken as a whole) as now conducted, without material conflict with the rights
or, to the best knowledge of the Company, any claimed rights of others.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each of
the Banks:
(a) as soon as available and in any event within 105 days
after the end of each fiscal year of the Company, a consolidated
balance sheet of the Company and its Consolidated Subsidiaries as of
the end of such
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fiscal year and the related consolidated statements of earnings and
cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the SEC by KPMG Peat Marwick LLP or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Company, an unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such quarter and the related
unaudited consolidated statements of earnings and cash flows for such
quarter and for the portion of the Company's fiscal year ended at the
end of such quarter, setting forth in the case of such earnings and
cash flows in comparative form the figures for the corresponding
quarter and the corresponding portion of the Company's previous fiscal
year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Company (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with the
requirements of Sections 5.07 to 5.10, inclusive, on the date of such
financial statements (including, without limitation, the amount of
Irish Affiliate Cash) and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Company is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
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(e) within five days after any officer of the Company obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer of the Company setting forth the details thereof and the action
which the Company is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall
have filed with the SEC;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or makes any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Company setting forth details
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as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take;
(i) promptly upon any officer of the Company obtaining
knowledge thereof, notice of any actual or proposed change in the
rating of the Company's outstanding senior unsecured long term debt
securities by S&P or Moody's; and
(j) from time to time such additional information regarding
the financial position or business of the Company and its Subsidiaries
as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Company will pay and
discharge, and will cause its Subsidiaries to pay and discharge, at or before
maturity (or the expiration of any applicable grace period, as the case may be),
all Material Debt and all other material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves (on a consolidated basis) for the accrual of
any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The
Company will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted; provided that the Company and its Subsidiaries shall not be
required to maintain any property or properties which are, in the reasonable
opinion of the Company, not material to the business of the Company and its
Consolidated Subsidiaries taken as a whole.
(b) The Company and its Subsidiaries will maintain (i)
physical damage insurance on all their real and personal properties (except
properties that, in aggregate, are not material to the Company and its
Subsidiaries taken as a whole) on an all risks basis (including the perils of
flood and quake), covering the repair and replacement cost of all such property
and consequential loss coverage for business interruption and extra expense, and
(ii) public liability insurance (including products/completed operations
liability coverage) in an amount not less than that which is usually insured
against by companies engaged in the same or a similar business in the same
general area. All such insurance shall be provided by insurers having an A.M.
Best
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policyholders rating of not less than B+ or such other insurers as the Required
Banks may approve in writing. The Company will deliver to the Banks, upon
request of any Bank through the Agent, from time to time full information as to
the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. The Company will continue, and will cause its Subsidiaries to
continue, to engage in business of the same general type as now conducted by the
Company and its Subsidiaries, and will preserve, renew and keep in full force
and effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect, their respective corporate existences and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that the foregoing shall not prevent any Subsidiary
(except an Eligible Subsidiary that has not paid in full all principal, interest
and other amounts payable by it hereunder) from terminating its corporate
existence or prevent the Company or any Subsidiary from discontinuing any
business or any right, privilege or franchise, if all such terminations and
discontinuances, in the aggregate, would not in the reasonable opinion of the
Company have a Materially Adverse Effect.
SECTION 5.05. Compliance with Laws. The Company will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA, environmental,
and food and drug, and the rules and regulations under each of the foregoing)
except where (i) the necessity of compliance therewith is contested in good
faith by appropriate proceedings or (ii) noncompliance therewith would not, in
the aggregate, have a Materially Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The
Company will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Bank at
such Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all
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at such reasonable times and as often as may reasonably be desired.
SECTION 5.07. Subsidiary Debt. The Company will not permit its
Subsidiaries to incur or suffer to exist any Debt (excluding Debt owed to the
Company or a Wholly-Owned Subsidiary) in excess of 35% of Consolidated Net Worth
at any time in the aggregate for all Subsidiaries.
SECTION 5.08. Debt to Capitalization. The ratio of (i)
Consolidated Debt less Irish Affiliate Cash to (ii) Consolidated Debt less Irish
Affiliate Cash plus Adjusted Consolidated Net Worth will at no time be greater
than 0.45:1.
SECTION 5.09. Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $523,833,000; provided that the foregoing
amount shall be increased (i) at the end of each of the Company's fiscal years
ending after December 31, 1995, by 50% of Consolidated Net Income (if positive)
for such fiscal year and (ii) by 100% of the amount by which Consolidated Net
Worth is increased from time to time after December 31, 1995 as a result of the
issuance or sale of the Company's capital stock.
SECTION 5.10. Negative Pledge. Neither the Company nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on December 22, 1993 securing Debt
outstanding in an aggregate principal amount not exceeding $20,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset concurrently
with or within 90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the
Company or a Subsidiary and not created in contemplation of such event;
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(e) any Lien existing on any asset prior to the acquisition
thereof by the Company or a Subsidiary and not created in contemplation
of such acquisition;
(f) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section, provided that such Debt is
not increased and is not secured by any additional assets;
(g) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith by appropriate proceedings and as to which adequate reserves
have been provided for;
(h) Liens imposed by law, such as landlords', carriers',
warehousemen's and mechanics' liens and other similar liens arising in
the ordinary course of business which secure payment of obligations not
more than 60 days past due;
(i) Liens arising out of statutory pledges or deposits under
applicable law relating to worker's compensation, unemployment
insurance, social security or similar obligations;
(j) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of similar nature and
which do not in any material way adversely affect or interfere with the
use thereof in the business of the Company and its Subsidiaries;
(k) banker's liens in the nature of rights of set-off arising
in the ordinary course of business;
(l) Liens not otherwise permitted by the foregoing clauses of
this Section, arising in the ordinary course of its business, which (i)
do not secure Debt, (ii) do not secure any obligation in an amount
individually or in the aggregate exceeding $50,000,000 and (iii) do not
in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business; and
(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an
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aggregate principal amount at any time outstanding not to exceed 15% of
Consolidated Net Worth.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Company will not consolidate or merge with or into any other Person; provided
that the Company may merge with a Person if (A) the Company is the corporation
surviving such merger and (B) immediately after giving effect to any such
merger, no Default shall have occurred and be continuing and all the
representations and warranties of the Company contained in this Agreement shall
be true. The Company will not, and will not permit its Subsidiaries to, sell,
lease or otherwise transfer, directly or indirectly, all or any substantial part
of the assets of the Company and its Subsidiaries, taken as a whole, to any
other Person.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrowers for general corporate
purposes, including the backstop of commercial paper. None of such proceeds will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of buying or carrying any Margin Stock.
SECTION 5.13. Transactions with Affiliates. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, enter into
any material transaction, whether or not in the ordinary course of business,
with any Affiliate other than on terms and conditions at least as favorable to
the Company, or the affected Subsidiary, as those that would be obtained through
an arm's length negotiation with an unaffiliated third party.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) any Borrower shall fail to pay when due any principal of
or interest on any Loan, any fees or any other amount payable
hereunder, which failure, in the case of interest or fees or amounts
other than principal of any Loan, continues for three Domestic Business
Days;
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(b) the Company shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.13, inclusive;
(c) any Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after written notice thereof has
been given to the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement
made by any Borrower in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or
deemed made);
(e) the Company or any Subsidiary shall fail to make any
payment in respect of any Material Debt when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Company or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
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receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Company or
any Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay to the PBGC or a Plan under Title IV of
ERISA; or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could
cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Company or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a
period of 30 days;
(k) the Guarantee by the Company in Article X shall for any
reason be revoked or invalidated, or otherwise cease to be in full
force and effect, or the Company, or any Person on behalf of the
Company, shall deny or disaffirm its obligations under such Guarantee;
or
(l) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the SEC under said Act) of 25% or more of the
outstanding shares of common stock of the Company; or individuals who,
as of the Effective Date, constitute the board of directors of the
Company (the "Incumbent Directors") cease for any reason to constitute
at least
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a majority of the Company's board of directors, provided that any
person becoming a director after the Effective Date whose election, or
nomination for election by the Company's stockholders, is approved by a
vote of at least a majority of the directors then comprising the
Incumbent Directors (other than an election or nomination of an
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election or
removal of directors of the Company) shall, for the purposes of this
Agreement, be considered as though such person were an Incumbent
Director;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate Dollar
Amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that in
the case of any of the Events of Default specified in clause (g) or (h) above
with respect to the any Borrower, without any notice to the Company or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrowers.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Company under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same
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rights and powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and Morgan
Guaranty Trust Company of New York and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Company or
any Subsidiary or affiliate of the Company as if it were not the Agent
hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of any Borrower; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed
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by the Company) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent, the Co-Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 days after the retiring
Agent gives notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $50,000,000. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Company shall pay to the Agent
for its own account fees in the amounts and at the times previously agreed upon
between the Company and the Agent.
SECTION 7.10. Co-Agent. The Co-Agent shall have no duties or
responsibilities hereunder.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for any Fixed
Rate Loans:
(a) the Agent is advised by the Reference Banks that deposits
in the applicable currency and amounts are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Currency Loans, Banks
having 50% or more of the aggregate amount of the Commitments advise
the Agent that the Adjusted CD Rate or the Adjusted London Interbank
Offered Rate, as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding such
Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Currency Loans (in the affected currency), as the case may
be, or to convert outstanding Loans into CD Loans or Euro-Dollar Loans, as the
case may be, shall be suspended and (ii) each outstanding CD Loan or
Euro-Currency Loan, as the case may be, shall be converted into a Base Rate Loan
on the last day of the then current Interest Period applicable thereto. In the
case of an Alternative Currency Loan, such conversion shall be made at the
Agent's spot buying rate for Dollars against the relevant Alternative Currency
as of approximately 11:00 A.M. (London time) on the date of such conversion.
Unless the Company notifies the Agent at least two Domestic Business Days before
the date of any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that the relevant Borrower elects not to borrow on such
date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing
shall instead be made as a Base Rate Borrowing in the same Dollar Amount as the
requested Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after May 10, 1996, the
adoption of any applicable law, rule or
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regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Currency Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Currency Lending Office) to make,
maintain or fund its Euro-Currency Loans to any Borrower and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Company, whereupon until such Bank notifies the Company and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Currency Loans to such Borrower, or to
convert outstanding Loans to such Borrower into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Euro-Currency Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given with respect to Euro-Dollar Loans, each Euro-Dollar Loan of such Bank
then outstanding shall be converted to a Base Rate Loan either (a) on the last
day of the then current Interest Period applicable to such Euro-Dollar Loan if
such Bank may lawfully continue to maintain and fund such Euro-Dollar Loan to
such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Euro-Dollar Loan to such day. If
such notice is given with respect to Alternative Currency Loans, the relevant
Borrower shall prepay such Alternative Currency Loans either (a) on the last day
of the then current Interest Period applicable to such Alternative Currency Loan
if such Bank may lawfully continue to maintain and fund such Alternative
Currency Loan to such day or (b) immediately if such Bank shall determine that
it may not lawfully continue to maintain and fund such Alternative Currency Loan
to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or
after (x) May 10, 1996, in the case of any Committed Loan or any obligation to
make Committed Loans or (y) the date of the related Money Market Quote, in the
case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by
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any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding (i) with respect to any
CD Loan any such requirement included in an applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Currency Loan any such requirement
included in an applicable Euro-Currency Reserve Percentage), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, any of its Notes or its obligation to make Fixed Rate Loans and the
result of any of the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under any of its Notes with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Agent), the Company shall
pay, or cause the relevant Borrower to pay, to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after May 10,
1996, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the Company shall pay to such
Bank such additional amount or
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amounts as will compensate such Bank (or its Parent) for such reduction,
provided that no such demand by any Bank shall include any period commencing
earlier than 90 days prior to the date of demand.
(c) Each Bank will promptly notify the Company and the Agent
of any event of which it has knowledge, occurring after May 10, 1996, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) If at any time any Subsidiary that is incorporated in, or
conducts business in, a jurisdiction outside the United States becomes an
Eligible Subsidiary, all applicable laws, rules and regulations then in effect
in such jurisdiction shall be deemed for purposes of Section 8.03(a) to have
been adopted at such time and all applicable requests and directives theretofore
made by any governmental authority, central bank or comparable agency in such
jurisdiction shall be deemed for purposes of Section 8.03(a) to have been made
at such time; provided that no Bank shall be obligated under Section 8.03(c) to
give notice of any such law, rule, regulation, request or directive, or to
designate a different Applicable Lending Office by reason thereof, until an
officer of such Bank responsible for administering this Agreement shall have
become aware of such law, rule, regulation, request or directive and the
relevant consequences thereof.
SECTION 8.04. Taxes. (a) Any and all payments by any Borrower
or the Guarantor to or for the account of any Bank or the Agent hereunder or
under any Note shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, taxes imposed on its net income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on its income, and franchise or
similar taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any
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political subdivision thereof. In the case of each Bank or the Agent, all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities are hereinafter referred to as its "Taxes", and all such
excluded taxes are hereinafter referred to as its "Domestic Taxes". If any
Borrower or the Guarantor shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) such Bank or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower or the Guarantor, as the case may be, shall make such
deductions, (iii) the Borrower or the Guarantor, as the case may be, shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law and (iv) the Borrower or the Guarantor shall
furnish to the Agent, at its address in New York City referred to in Section
11.01, the original or a certified copy of a receipt evidencing payment thereof,
and, if such receipt relates to Taxes in respect of a sum payable to any Bank,
the Agent shall promptly deliver such original or certified copy to such Bank.
(b) In addition, each Borrower and the Guarantor agrees to pay
any present or future stamp or documentary taxes and any other excise or
property taxes, or charges or similar levies which arise from any payment made
hereunder or under any Note or from the execution or delivery of, or otherwise
with respect to, this Agreement or any Note (hereinafter referred to as "Other
Taxes").
(c) Each Borrower and the Guarantor agrees to indemnify each
Bank and the Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by such Bank or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses to the extent not attributable to the gross negligence or willful
misconduct of such Bank or the Agent, as the case may be) arising therefrom or
with respect thereto. In addition, each Borrower and the Guarantor agrees to
indemnify each Bank and the Agent for all Domestic Taxes of such Bank or the
Agent (calculated based on a hypothetical basis at the maximum marginal rate for
a corporation) and any liability (including penalties, interest and expenses to
the extent not attributable to the gross negligence or willful misconduct of
such Bank or the Agent, as the case may be)
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arising therefrom or with respect thereto, in each case to the extent that such
Domestic Taxes result from any payment or indemnification pursuant to this
Section for (i) Taxes or Other Taxes imposed by any jurisdiction other than the
United States or (ii) Domestic Taxes of such Bank or the Agent, as the case may
be. This indemnification shall be made within 15 days from the date such Bank or
the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Amendment in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by the Company
(but only so long as such Bank remains lawfully able to do so), shall provide
the Company with Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, any United States interest withholding tax at such rate
imposed on payments by the Company under this Agreement or under any Note (other
than pursuant to Article X) shall be excluded from "Taxes" as defined in Section
8.04(a).
(e) For any period with respect to which a Bank has failed to
provide the Company with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under Section 8.04(a) or
Section 8.04(c) with respect to Taxes imposed by the United States; provided
that should a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrowers shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If any Borrower or the Guarantor is required to pay
additional amounts to or for the account of any Bank
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pursuant to this Section, then such Bank will change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Bank, is not otherwise disadvantageous to such Bank.
(g) Each Bank and the Agent shall, at the request of the
Company or the Guarantor, use reasonable efforts (consistent with applicable
legal and regulatory restrictions) to file any certificate or document requested
by the Company if the making of such a filing would eliminate or reduce the
amount of any additional amounts payable to or for the account of such Bank or
the Agent (as the case may be) pursuant to this Section in respect of any Taxes
or Other Taxes imposed by any jurisdiction other than the United States which
may thereafter accrue and would not, in the sole judgement of such Bank or the
Agent, require such Bank or the Agent to disclose any confidential or
proprietary information or be otherwise disadvantageous to such Bank or the
Agent.
(h) If any Borrower or the Guarantor makes any payment
pursuant to Section 8.04(a) or (c) with respect to a Bank, such Bank shall, upon
the reasonable request and at the reasonable expense of such Borrower or the
Guarantor, use reasonable efforts to apply for a refund of tax (if such tax is
not lawfully imposed) or a credit against its tax liabilities on account of such
payment; provided that (A) such Bank shall have no obligation under this Section
8.04(h) if it determines, in its sole discretion, that claiming a refund or a
credit would have adverse tax consequences to it and (B) such Bank shall not be
under any obligation to claim a credit or refund in respect of such payment in
priority to any other claims, reliefs, credits or deductions available to it. If
such Bank receives such a refund or actually reduces its tax liabilities by
utilizing such a credit, such Bank shall, to the extent that it can do so
without prejudice to the retention of the amount of such refund or credit, pay
to the relevant Borrower or the Guarantor an amount equal to the amount so
received or utilized (less any out-of-pocket expenses or taxes imposed on the
receipt of such refund or credit); provided that such Bank shall be required to
pay to such Borrower or the Guarantor (i) only such amounts as such Bank
determines, in its sole discretion and by using any reasonable method which the
Bank deems appropriate, are attributable to such payment by such Borrower or the
Guarantor, and (ii) only if no Event of Default exists at the time such Bank
receives the relevant refund or credit. If a Bank is in an excess foreign tax
credit position, such Bank shall be deemed not to have utilized a foreign tax
credit with respect to any
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such payment by the Borrower or the Guarantor. Each Borrower and the Guarantor
agrees to return, upon the request of a Bank, any payment made by such Bank
under this Section 8.04(h) (plus penalties, interest and other charges imposed
by a taxing authority) to such Bank if a taxing authority or such Bank
determines that (x) such Bank is required to repay such refund or (y) such Bank
is unable to utilize such credit. Any calculation or determination made under
this Section 8.04(h) by any Bank shall be conclusive and final.
(i) Nothing contained in Section 8.04 shall (i) entitle any
Borrower or the Guarantor to any information determined by any Bank, in its sole
discretion, to be confidential or proprietary information of such Bank, to any
tax or financial information of any Bank or to inspect or review any books and
records of any Bank, (ii) require any Bank to disclose or detail the basis of
any calculation of the amount of any tax benefit or any other amount or the
basis of any determination made under Section 8.04(h) to any Borrower or any
other party, (iii) be construed to require any Bank to institute any
administrative proceeding (other than the filing of a claim for any refund or
credit) or judicial proceeding to obtain any such refund or credit, or (iv)
interfere with the rights of any Bank to conduct its fiscal or tax affairs
(including, without limitation, its determination as to whether to claim a
deduction or credit in respect of foreign taxes) in such manner as it deems fit.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make, or convert outstanding
Loans to, Euro-Dollar Loans to any Borrower has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Currency Loans and the Company shall,
by at least five Euro-Currency Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Company that the
circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as
(or continued as or converted into) CD Loans or Euro-Dollar Loans, as
the case may be, shall instead be made as (or continued as converted
into) Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
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(b) after each of its CD Loans or Euro-Currency Loans, as the
case may be, has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Company that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If (i) the obligation of
any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02
or (ii) any Bank has demanded compensation under Section 8.03 or 8.04, the
Company shall have the right, with the assistance of the Agent, to seek a
mutually satisfactory substitute bank or banks ("Substitute Banks") (which may
be one or more of the Banks) to purchase the Committed Loans and assume the
Commitment of such Bank (the "Exiting Bank"). The Exiting Bank shall, upon
reasonable notice and payment to it of the purchase price agreed between it and
the Substitute Bank or Banks (or, failing such agreement, a purchase price equal
to the outstanding principal amount of its Committed Loans and interest accrued
thereon to but excluding the date of payment), assign all of its rights and
obligations under this Agreement and the Notes (including its Commitment but
excluding its Money Market Loans, if any, unless it otherwise agrees) to the
Substitute Bank or Banks, and the Substitute Bank or Banks shall assume such
rights and obligations, in accordance with Section 11.06(c). In connection with
any such sale, the Company shall compensate the Exiting Bank for any funding
losses as provided in Section 2.14 and pay to the Exiting Bank its facility fees
accrued to but excluding the date of such sale.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary shall be deemed, by executing and
delivering its Election to Participate, to have represented and warranted as of
the date thereof that:
SECTION 9.01. Corporate Existence and Power. It is a
corporation duly incorporated, validly existing and in
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good standing under the laws of its jurisdiction of incorporation and is a
Wholly-Owned Subsidiary of the Company.
SECTION 9.02. Corporate and Governmental Authorization; No
Contravention. The execution and delivery by it of its Election to Participate
and its Notes, and the performance by it of this Agreement and its Notes, are
within its corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of its charter
or by-laws or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or such Eligible Subsidiary or result in the
creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
SECTION 9.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of such Eligible Subsidiary and its Notes, when
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of such Eligible Subsidiary.
SECTION 9.04. Taxes. Except as disclosed in such Election to
Participate, there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, imposed by or in the nature of withholding
or otherwise, which is imposed on any payment to be made by such Eligible
Subsidiary pursuant to this Agreement or on its Notes, or is imposed on or by
virtue of the execution, delivery or enforcement of its Election to Participate
or its Notes.
ARTICLE X
GUARANTY
SECTION 10.01. The Guaranty. The Company hereby
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by any Eligible Subsidiary pursuant to this Agreement, and the
full and punctual payment of all other amounts payable by any Eligible
Subsidiary under this Agreement. Upon failure by any Eligible Subsidiary to pay
punctually any such amount, the Company shall forthwith on demand pay the amount
not so paid at the place and in the manner and currency specified in this
Agreement.
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SECTION 10.02. Guaranty Unconditional. The obligations of the
Company under this Article X shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Eligible Subsidiary under
this Agreement or any of its Notes, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note of such Eligible Subsidiary (except that the
Company's guarantee under this Article X shall apply to the obligations
of such Eligible Subsidiary as modified, amended or supplemented
thereby);
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of any Eligible
Subsidiary under this Agreement or any of its Notes;
(iv) any change in the corporate existence, structure or
ownership of any Eligible Subsidiary, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Eligible
Subsidiary or its assets or any resulting release or discharge of any
obligation of any Eligible Subsidiary contained in this Agreement or
any of its Notes;
(v) the existence of any claim, set-off or other rights which
the Company may have at any time against any Eligible Subsidiary, the
Agent, any Bank or any other Person, whether in connection herewith or
with any unrelated transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or against
any Eligible Subsidiary for any reason of this Agreement or any of its
Notes, or any provision of applicable law or regulation purporting to
prohibit the payment by any Eligible Subsidiary of the principal of or
interest on any of its Notes or any other amount payable by it under
this Agreement; or
(vii) any other act or omission to act or delay of any kind by
any Eligible Subsidiary, the Agent, any Bank or any other Person or any
other circumstance
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whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Company's obligations
hereunder.
SECTION 10.03. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances. The Company's obligations hereunder
shall remain in full force and effect until the Commitments shall have
terminated and the principal of and interest on the Notes of the Eligible
Subsidiaries and all other amounts payable by the Company and each Eligible
Subsidiary under this Agreement shall have been paid in full. If at any time any
payment of the principal of or interest on any Note of any Eligible Subsidiary
or any other amount payable by any Eligible Subsidiary under this Agreement is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the
Company's obligations hereunder with respect to such payment shall be reinstated
at such time as though such payment had been due but not made at such time.
SECTION 10.04. Waiver by the Company. The Company irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against any Eligible Subsidiary or any other Person.
SECTION 10.05. Subrogation. Upon making any payment with
respect to the obligations of any Eligible Subsidiary hereunder, the Company
shall be subrogated to the rights of the payee against such Eligible Subsidiary
with respect to such payment; provided that the Company shall not enforce any
payment by way of subrogation against such Eligible Subsidiary so long as (i)
any Bank has any Commitment hereunder (unless such Eligible Subsidiary is no
longer an Eligible Subsidiary for purposes hereof) or (ii) any amount payable by
such Eligible Subsidiary hereunder remains unpaid.
SECTION 10.06. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by any Eligible Subsidiary under this
Agreement or its Notes is stayed upon insolvency, bankruptcy or reorganization
of such Eligible Subsidiary, all such amounts otherwise subject to acceleration
under the terms of this Agreement shall nonetheless be payable by the Company
hereunder forthwith on demand by the Agent made at the request of the Required
Banks.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party:
(w) in the case of the Company, at its address or
facsimile number set forth on the signature pages hereof;
(x) in the case of the Agent, at its address or telex
or facsimile number in New York City set forth on the signature pages
hereof, unless such communication is expressly required to be given to
the Agent in London, in which case at its address or telex or facsimile
number in London set forth on the signature pages hereof;
(y) in the case of an Eligible Subsidiary, at its
address set forth in its Election to Participate; or
(z) in the case of any Bank, at its address or telex
number set forth in its Administrative Questionnaire or in the case of
any party, such other address or telex or facsimile number as such
party may hereafter specify for the purpose by notice to the Agent and
the Company. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback
is received, (ii) if given by facsimile transmission, when transmitted
to the facsimile number referred to in this Section and confirmation of
receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address specified in this Section; provided that
notices to the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 11.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The
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rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 11.03. Expenses; Indemnification. (a) The Company
shall pay (i) all reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation and administration of this Agreement, any waiver
or consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Agent or any Bank, including fees and disbursements of counsel
(including, without limitation, the allocated costs of in-house counsel), in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel (including, without limitation, the reasonable
allocated costs of in-house counsel), which may be incurred by such Indemnitee
in connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
SECTION 11.04. Sharing of Set-Offs. Each Bank agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note of the same Borrower held by
such other Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes of the same Borrower held by the other
Banks, and such other adjustments shall be made, as may be required so that all
such payments of principal and interest with respect to the Notes of the same
Borrower held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section
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shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the relevant Borrower other than its indebtedness
under the Notes. Each Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any holder of a participation in any of its
Notes, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of such Borrower in the amount of such participation.
SECTION 11.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Company and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all the Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for the
termination of any Commitment, (iv) release the Guarantor from any of its
obligations under Article X, (v) waive any of the conditions to effectiveness
set forth in Section 3.01 or (vi) change the percentage of the Commitments or of
the aggregate Dollar Amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement; and provided further that no such
amendment, waiver or modification shall, unless signed by an Eligible
Subsidiary, (w) subject such Eligible Subsidiary to any additional obligation,
(x) increase the principal of or rate of interest on any outstanding Loan of
such Eligible Subsidiary, (y) accelerate the stated maturity of any outstanding
Loan of such Eligible Subsidiary or (z) change this proviso.
SECTION 11.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that no Borrower may
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant")
68
<PAGE> 75
participating interests in its Commitment or any or all of its Loans. In the
event of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the Borrowers and the Agent, such Bank shall
remain responsible for the performance of its obligations hereunder, and the
Borrowers and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of this Agreement described in clause (i), (ii) or (iii) of Section 11.05
without the consent of the Participant. The Borrowers agree that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit I hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent; provided that if an Assignee is an
affiliate of such transferor Bank, no such consent shall be required; and
provided further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution and
delivery of such an instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a Commitment as set
forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor
69
<PAGE> 76
Bank, the Agent and the Borrowers shall make appropriate arrangements so that,
if required, new Notes are issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $2,500. If the Assignee is not
incorporated under the laws of the United States or a state thereof, it shall
deliver to the Company and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank or to any
affiliate of such transferor Bank. No such assignment shall release the
transferor Bank from its obligations hereunder and the Borrowers and the Agent
shall continue to deal solely and directly with such transferor Bank in
connection with such transferor Bank's rights and obligations under this
Agreement.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Company's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 11.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon any
Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 11.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
70
<PAGE> 77
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11.09. Counterparts; Integration. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 11.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
71
<PAGE> 78
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
ALLERGAN, INC.
By /s/ Albert J. Moyer
----------------------------------------
Title: Corporate Vice President
Chief Financial Officer
By /s/ Jeffrey L. Edwards
----------------------------------------
Title: Vice President, Treasurer
2525 Dupont Drive
Irvine, California 92713
Attn: Jeffrey L. Edwards
Telex No.:
Facsimile No.: 714-246-4162
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
----------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Yvonne C. Dennis
----------------------------------------
Title: Vice President
CITICORP USA, INC.
By /s/ Marjorie Futornick
----------------------------------------
Title: Vice President
72
<PAGE> 79
ABN AMRO BANK N.V.
LOS ANGELES INTERNATIONAL
BRANCH
By /s/ Matthew S. Thomson
----------------------------------------
Title: Group Vice President/
Director
By /s/ Paul K. Stimpfl
----------------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND, NEW
YORK BRANCH
By /s/ Bruce T. Richards
----------------------------------------
Title: Managing Director
By /s/ Donna Derwin
----------------------------------------
Title: Assistant Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ David K. Alexander
----------------------------------------
Title: Senior Vice President
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By /s/ Yvonne C. Dennis
----------------------------------------
Title: Vice President
555 S. Flower Street
11th Floor, #5618
Los Angeles, CA 90071
Attention: Yvonne C. Dennis
Telex No.:
Facsimile No.: 213-623-1959
73
<PAGE> 80
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
----------------------------------------
Title: Vice President
In New York:
60 Wall Street
New York, New York 10260-0060
Attention: Diana H. Imhof
Telex No.: 177615
Facsimile No.: 212-648-5014
In London:
60 Victoria Embankment
London EC4Y OJP
Attention: Raymond Mayers
Telephone No.: 011-44-171-325-1486
Facsimile No.: 011-44-171-325-8114
74
<PAGE> 81
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
Bank Commitments
- ---- -----------
<S> <C>
Morgan Guaranty Trust Company of New York $ 53,000,000
Bank of America National Trust and Savings $ 52,000,000
Association
Citicorp USA, Inc. $ 52,000,000
ABN AMRO Bank N.V., Los Angeles $ 31,000,000
International Branch
Union Bank of Switzerland $ 31,000,000
Wachovia Bank of Georgia, N.A. $ 31,000,000
============
Total $250,000,000
</TABLE>
<PAGE> 82
EXHIBIT A
NOTE
New York, New York
, 19
For value received, [name of relevant Borrower], a [Borrower's
jurisdiction of incorporation] corporation (the "Borrower"), promises to pay to
the order of _______________ (the "Bank"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on the maturity date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates and in the currency provided for in the Credit Agreement. All such
payments of principal and interest shall be made (i) if in Dollars, in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York or (ii) if in an Alternative Currency, in such funds as may then
be customary for the settlement of international transactions in such
Alternative Currency at the place specified for payment thereof pursuant to the
Credit Agreement.
All Loans made by the Bank, the respective types and
maturities thereof, all repayments of the principal thereof and, in the case of
Euro-Currency Loans in an Alternative Currency, the currency thereof shall be
recorded by the Bank and, if the Bank so elects in connection with any transfer
or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding shall be endorsed by
the Bank on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the failure of the Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of December 22, 1993 and amended and restated as of May 10,
1996 among Allergan, Inc., the Eligible Subsidiaries referred to therein, the
banks party thereto, Morgan Guaranty Trust Company of New York, as Agent and
Bank of America National Trust and Savings Association,
1
<PAGE> 83
as Co-Agent (as the same may be further amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
[The payment in full of the principal and interest on this
Note has, pursuant to the provisions of the Credit Agreement, been
unconditionally guaranteed by Allergan, Inc.]**
[Name of Borrower]
By
--------------------------------------
Title:
- --------
** Include in Notes of Eligible Subsidiaries only.
2
<PAGE> 84
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Type or Amount of
Currency Principal Amount Maturity Notation
Date of Loan Repaid of Loan Date Made by
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 85
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: [Name of Borrower]
Re: Credit Agreement (the "Credit Agreement") dated as
of December 22, 1993 and amended and restated as
of May 10, 1996 among the Allergan, Inc., the
Eligible Subsidiaries referred to therein, the
Banks party thereto, the Agent and the Co-Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing:
------------------------------
Principal Amount* Interest Period**
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate].
Terms used herein have the meanings assigned to them in the
Credit Agreement.
[Name of Borrower]
By
--------------------------------------
Title:
- --------
* Amount must be $5,000,000 or a larger multiple of $1,000,000.
** Not less than one month (LIBOR Auction) or not less than 15 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE> 86
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to [Name of Borrower] (the
"Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of
December 22, 1993 and amended and restated as of May 10, 1996 among Allergan,
Inc., the Eligible Subsidiaries referred to therein, the Banks parties thereto
and the undersigned, as Agent, we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing:
------------------------------
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate for Money Market LIBOR Loan is the
London Interbank Offered Rate].
Please respond to this invitation by no later than [2:00 P.M.]
[9:15 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
--------------------------------------
Authorized Officer
<PAGE> 87
EXHIBIT D
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
23 Wall Street
New York, New York 10015
Attention:
Re: Money Market Quote to
[Name of Borrower] (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_________________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank:_________________________________________________________
2. Person to contact at Quoting Bank:
______________________________________________________________________
3. Date of Borrowing:__________________________________________________ *
- --------
* As specified in the related Invitation.
<PAGE> 88
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- --------- --------- ------------ --------------------
<S> <C> <C> <C>
$
$
</TABLE>
[Provided that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $ .]**
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in
the Credit Agreement dated as of December 22, 1993 and amended and
restated as of May 10, 1996 among Allergan, Inc., the Eligible
Subsidiaries referred to therein, the Banks and Co-
- --------
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids
must be made for $5,000,000 or a larger multiple of $1,000,000.
*** Not less than one month or not less than 15 days, as specified in the
related Invitation. No more than five bids are permitted for each
Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000 of 1%).
2
<PAGE> 89
Agent party thereto and yourselves, as Agent, irrevocably obligates us
to make the Money Market Loan(s) for which any offer(s) are accepted,
in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By:
------------------------------ -------------------------------------
Authorized Officer
3
<PAGE> 90
EXHIBIT E
Opinion of General Counsel for the Company
May 10, 1996
To the Banks and the
Agent referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Re: Allergan, Inc.
Gentlemen:
This opinion is being furnished to you pursuant to Section
3.01(d) of the Credit Agreement dated as of December 22, 1993 and amended and
restated as of May 10, 1996 among Allergan, Inc., a Delaware corporation (the
"Company"), the Eligible Subsidiaries and Co-Agent referred to therein and you
(the "Credit Agreement"). Capitalized terms used but not defined herein have the
corresponding meanings set forth in the Credit Agreement.
I am the General Counsel of the Company and, in such capacity,
I am generally familiar with the corporate and legal matters concerning the
Company and its Subsidiaries.
I have made such inquiries and examined, among other things,
originals, or copies certified or otherwise identified to my satisfaction as
being true copies, of such records, agreements, certificates, instruments and
other documents as I have considered necessary or appropriate for purposes of
this opinion.
Based on the foregoing and in reliance thereon, I am of the
opinion that:
1. The Company has been duly incorporated and is a validly
existing corporation and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to execute, deliver
and perform its obligations under the Credit Agreement and the Notes and to
conduct its business as presently conducted.
<PAGE> 91
To the Banks and the
Agent referred to below 2 May 10, 1996
2. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the character of its business or
the location of its properties makes such qualification necessary, except where
the failure to be so qualified would not have a Materially Adverse Effect.
3. To the best of my knowledge, the Company and each
Subsidiary have all governmental licenses, authorizations, consents and
approvals required to carry on their respective businesses as presently
conducted, except where the failure to have any of the foregoing would not in
the aggregate have a Materially Adverse Effect.
4. Neither the Company nor any Subsidiary is in violation of
(a) its charter or bylaws or (b) to the best of my knowledge, any law, statute,
rule, regulation, order, writ, injunction or decree of any Governmental
Authority applicable to them or their respective properties or assets, except
(in the case of clause (b)) where any such violation would, singly or in the
aggregate with other such violations, not have a Materially Adverse Effect.
5. There are no pending or, to the best of my knowledge,
threatened actions or proceedings against the Company or any of its Subsidiaries
before any Governmental Authority which purport to affect the legality,
validity, binding effect or enforceability of the Credit Agreement or the Notes,
or which are likely to have a Materially Adverse Effect.
6. The execution and delivery by the Company of the Credit
Agreement and its Notes and the performance of its obligations thereunder have
been duly authorized by all necessary action of the Company.
7. The Credit Agreement and the Notes of the
Company have each been duly executed and delivered by the
Company.
8. The Credit Agreement constitutes a valid and binding
agreement of the Company and each of its Notes constitute a legal, valid and
binding obligation of the Company, in each case enforceable in accordance with
its terms.
2
<PAGE> 92
To the Banks and the
Agent referred to below 3 May 10, 1996
9. The execution, delivery and performance by the Company of
the Credit Agreement and its Notes do not and will not (A) violate the restated
certificate of incorporation or bylaws of the Company as in effect on the date
hereof, (B) to the best of my knowledge, violate any material law or regulation
applicable to the Company or any order, judgment or decree of any Governmental
Authority known to me to be binding on the Company, (C) to the best of my
knowledge, conflict with, result in a material breach of or constitute a
material default under any material indenture, mortgage, deed of trust,
agreement or other instrument to which the Company or any Subsidiary is a party
or by which any of their respective properties are bound or result in or require
the creation or imposition of any Lien upon any of their respective assets, or
(D) require any authorization, consent, waiver or approval of any Governmental
Authority.
10. Neither the Company nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
The foregoing opinions are subject to the following
exceptions, qualifications and limitations:
A. I render no opinion herein as to matters involving the laws
of any jurisdiction other than (i) the Federal laws of the United States of
America, (ii) the laws of the State of California and (iii) the Delaware General
Corporation Law. I am not admitted to practice law in the State of Delaware;
however, I am generally familiar with the Delaware General Corporation Law as
presently in effect and have made such inquiries as I consider necessary to
render the opinions contained in paragraphs 1, 4, 6, 7 and 9. This opinion is
limited to the effect of the present state of the foregoing laws and to the
facts as they presently exist. I assume no obligation to revise or supplement
this opinion in the event of future changes in such laws or the interpretations
thereof or such facts. I call your attention to the fact that the Credit
Agreement provides that it and the Notes shall be construed in accordance with
and governed by the laws of the State of New York as to which I express no
opinion herein. However, in my opinion (i) a Federal or state court sitting in
California would enforce or otherwise give legal effect to the choice of New
York law set forth in Section 11.08 of the Credit Agreement and (ii) even if
such a court applied California law to
3
<PAGE> 93
To the Banks and the
Agent referred to below 4 May 10, 1996
determine the rights of the parties under the Credit Agreement, I would give the
opinion set forth in paragraph 8 above.
B. My opinions set forth in paragraph 8 and (with respect to
performance by the Company) clauses (B) and (D) of paragraph 9 are subject to
(i) the effect of any bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting the enforcement of creditors' rights
generally (including, without limitation, the effect of statutory or other laws
regarding fraudulent transfers or preferential transfers) and (ii) general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law.
C. Without limitation, I express no opinion (i) as to the
ability to obtain specific performance, injunctive relief or other equitable
relief (whether sought in a proceeding at law or in equity) as a remedy for
noncompliance with Credit Agreement or the Notes, and (ii) regarding the rights
or remedies available to any party insofar as such party may take discretionary
action that is arbitrary, unreasonable or capricious, or is not taken in good
faith or in a commercially reasonable manner, whether or not such action is
permitted under the Credit Agreement or the Notes.
D. I express no opinion with respect to the legality,
validity, binding nature or enforceability of any provision of the Credit
Agreement or the Notes to the effect that rights or remedies are not exclusive,
that every right or remedy is cumulative and may be exercised in addition to any
other right or remedy, that the election of some particular remedy does not
preclude recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy.
E. I express no opinion with respect to the legality,
validity, binding nature or enforceability of (i) any waiver under the Credit
Agreement or the Notes or any consents thereunder relating to the rights of the
Company or duties owing to it existing as a matter of law, except to the extent
the Company may so waive or consent under applicable law, (ii) provisions in the
Credit Agreement or the Notes imposing an increase in interest rate upon
delinquency in payment or (iii) any rights of setoff.
4
<PAGE> 94
To the Banks and the
Agent referred to below 5 May 10, 1996
F. I express no opinion as to any provision of the Credit
Agreement or the Notes requiring written amendments or waivers of such documents
insofar as it suggests that oral or other modifications, amendments or waivers
could not be effectively agreed upon by the parties or that the doctrine of
promissory estoppel might not apply.
G. I express no opinion as to the applicability
or effect of any Bank's compliance with any state or Federal
laws applicable to the transactions contemplated by the
Credit Agreement.
This opinion is rendered to you in connection with the Credit
Agreement and may not be relied upon by any person other than you (or permitted
assignees under the Credit Agreement) or by you (or any such permitted assignee)
in any other context, provided that you may provide this opinion (i) to bank
examiners and other regulatory authorities should they so request or in
connection with their normal examinations, (ii) to your independent auditors and
attorneys, (iii) pursuant to order or legal process of any court or governmental
agency, or (iv) in connection with any legal action to which you are a party
arising out of the transactions contemplated by the Credit Agreement. This
opinion may not be quoted without my prior written consent. I consent to the
delivery of this opinion to the Agent's special counsel, Davis Polk & Wardwell,
and to their reliance on this opinion in connection with closing under the
Credit Agreement.
Very truly yours,
Francis R. Tunney, Jr., Esq.
General Counsel
Allergan, Inc.
5
<PAGE> 95
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
TO THE AGENT
May 10, 1996
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of December 22, 1993 as amended and
restated as of May 10, 1996 among Allergan, Inc., a Delaware corporation (the
"Company"), the Eligible Subsidiaries referred to therein, the banks party
thereto (the "Banks"), Morgan Guaranty Trust Company of New York, as Agent (the
"Agent") and Bank of America National Trust and Savings Association, as Co-Agent
(the "Co-Agent"), and have acted as special counsel to the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(e) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of
the Credit Agreement and its Notes are within the Company's corporate powers and
have been duly authorized by all necessary corporate action.
<PAGE> 96
2. The Credit Agreement constitutes a valid and binding
agreement of the Company and each Note of the Company constitutes a valid and
binding obligation of the Company.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 97
EXHIBIT G
ELECTION TO PARTICIPATE
___________, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent for
the Banks party to the Credit
Agreement dated as of December
22, 1993 and amended and restated
as of May 10, 1996 among
Allergan, Inc., the Eligible
Subsidiaries referred to therein,
such Banks and such Agent (the
"Credit Agreement")
Dear Sirs:
Reference is made to the Credit Agreement described above.
Terms not defined herein which are defined in the Credit Agreement have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a
[jurisdiction of incorporation] corporation, hereby elects to be an Eligible
Subsidiary for purposes of the Credit Agreement, effective from the date hereof
until an Election to Terminate shall have been delivered on behalf of the
undersigned in accordance with the Credit Agreement. The undersigned confirms
that the representations and warranties set forth in Article IX of the Credit
Agreement are true and correct as to the undersigned as of the date hereof, and
the undersigned agrees to perform all the obligations of an Eligible Subsidiary
under, and to be bound in all respects by the terms of, the Credit Agreement,
including without limitation Section 11.08 thereof, as if the undersigned were a
signatory party thereto.
[Tax disclosure pursuant to Section 8.04.]
The address to which all notices to the undersigned under the
Credit Agreement should be directed is:
<PAGE> 98
This instrument shall be construed in accordance with and governed by the laws
of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By____________________________
Title:
The undersigned confirms that [name of Eligible Subsidiary] is
an Eligible Subsidiary for purposes of the Credit Agreement described above.
ALLERGAN, INC.
By____________________________
Name:
Title:
Receipt of the above Election to Participate is acknowledged
on and as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________________
Name:
Title:
2
<PAGE> 99
EXHIBIT H
ELECTION TO TERMINATE
___________, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent for
the Banks party to the Credit
Agreement dated as of
December 22, 1993 and amended
and restated as of May 10,
1996 among Allergan, Inc.,
the Eligible Subsidiaries
referred to therein, such Banks
an such Agent (the "Credit
Agreement")
Dear Sirs:
Reference is made to the Credit Agreement described above.
Terms not defined herein which are defined in the Credit Agreement have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a
[jurisdiction of incorporation] corporation, elects to terminate its status as
an Eligible Subsidiary for purposes of the Credit Agreement, effective as of the
date hereof. The undersigned represents and warrants that all principal and
interest on all Notes of the undersigned and all other amounts payable by the
undersigned pursuant to the Credit Agreement have been paid in full on or prior
to the date hereof. Notwithstanding the foregoing, this Election to Terminate
shall not affect any obligation of the undersigned under the Credit Agreement or
under any of its Notes heretofore incurred.
<PAGE> 100
This instrument shall be construed in accordance with and
governed by the laws of the State of New York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By_______________________
Title:
The undersigned confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is terminated as of the date hereof.
ALLERGAN, INC.
By_________________________
Name:
Title:
Receipt of the above Election to Terminate is acknowledged on
and as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Name:
Title:
2
<PAGE> 101
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), ALLERGAN, INC., a Delaware corporation
(the "Company"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of December 22, 1993 and
amended and restated as of May 10, 1996 among the Company, the Eligible
Subsidiaries party thereto, the Assignor and the other Banks party thereto, as
Banks, the Co-Agent party thereto and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrowers in an aggregate Dollar Amount at
any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrowers by the Assignor
under the Credit Agreement in the aggregate Dollar Amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
1
<PAGE> 102
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Committed Loans made by the Assignor outstanding at the date hereof. Upon
the execution and delivery hereof by the Assignor, the Assignee, the Company and
the Agent and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Bank under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by a like amount and the Assignor shall be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof, in Dollars (in Federal funds) and the relevant Alternative
Currencies, the amounts heretofore agreed between them.(1) It is understood that
facility fees accrued to the date hereof are for the account of the Assignor and
such fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same to
such other party.
SECTION 4. Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the
- --------
(1) Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee. It may be preferable in an
appropriate case to specify these amounts generically or by formula rather than
as a fixed sum.
2
<PAGE> 103
Company and the Agent pursuant to Section 11.06(c) of the Credit Agreement. The
execution of this Agreement by the Company and the Agent is evidence of this
consent. Pursuant to Section 11.06(c) the Company agrees to execute and deliver
a Note, and cause the Eligible Subsidiaries to execute and deliver Notes,
payable to the order of the Assignee to evidence the assignment and assumption
provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of any
Borrower, or the validity and enforceability of the obligations of any Borrower
in respect of the Credit Agreement or its Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrowers.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
3
<PAGE> 104
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
[ALLERGAN,INC.
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:]
4
<PAGE> 105
EXHIBIT J
INTELLECTUAL PROPERTY
As used in this Exhibit J, references to the Company shall mean Allergan, Inc.
LEGAL PROCEEDINGS
1. In November 1992 the Company's subsidiary Allergan Medical Optics
("AMO") filed suit against Staar Surgical for infringement of a patent covering
certain devices for the insertion of intraocular lenses into the eye. In
December 1992, AMO filed a similar suit against Chiron Ophthalmics, Inc. The two
cases were subsequently consolidated and trial has been divided into two phases.
The court has denied AMO's request for a preliminary injunction against Chiron
and Staar pending the outcome of the Phase I trial. Phase I trial was held and
judgment was entered for AMO. Chiron subsequently entered into a complete
settlement with AMO. Staar appealed and the trial of phase II against Staar is
set for June, 1996.
2. Chiron (phaco cassettes) (Alleged Patent Infringement)
On February 1, 1996, the Company received a cease and desist
letter from Chiron alleging infringement of U.S. Patent Nos. Re 33,250 and
4,493,695. After preliminary review, the Company has concluded there is no merit
to this claim and has so notified Chiron. Chiron is evaluating our reply.
3. Intaglia (M.D. Formulations VIT-A-PLUS) (Alleged Patent
Infringement).
On March 27, 1996 the Company received a claim letter from
counsel for Intaglia alleging that Herald's VIT-A-PLUS infringes a soon to be
issued patent held by claimant. Claimant alleges that they have received a
notice of allowance for a patent which allegedly covers the product. The Company
has requested further information regarding the patent claim and prosecution
history of the patent in issue in order to evaluate the claim.
<PAGE> 1
ALLERGAN, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Earnings per share of common stock, including common stock equivalents, have
been computed based on the following weighted average number of shares and net
earnings:
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1996
--------------
<S> <C>
(in millions, except per share amounts)
Weighted average number of common shares
outstanding during the period 64.6
Weighted average number of additional
shares issuable in connection with
dilutive stock options based upon
use of the treasury stock method
and average market prices 1.0
-----
Weighted average number of common shares
including common stock equivalents 65.6
=====
Net Earnings for the period $23.1
=====
Primary Earnings Per Common Share $0.35
=====
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF EARNINGS AND BALANCE SHEETS OF ALLERGAN, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 108,200
<SECURITIES> 0
<RECEIVABLES> 219,700
<ALLOWANCES> 5,700
<INVENTORY> 129,800
<CURRENT-ASSETS> 553,600
<PP&E> 583,700
<DEPRECIATION> 229,900
<TOTAL-ASSETS> 1,337,000
<CURRENT-LIABILITIES> 324,400
<BONDS> 271,800
0
0
<COMMON> 700
<OTHER-SE> 691,700
<TOTAL-LIABILITY-AND-EQUITY> 1,337,000
<SALES> 258,100
<TOTAL-REVENUES> 258,100
<CGS> 85,700
<TOTAL-COSTS> 85,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 375
<INTEREST-EXPENSE> 3,300
<INCOME-PRETAX> 32,500
<INCOME-TAX> 9,400
<INCOME-CONTINUING> 23,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,100
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
