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EXHIBIT 10.1
ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
RESTATED
2000
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ARTICLE I
NAME AND EFFECTIVE DATE..............................................................................1
1.1 Plan Name..........................................................................1
1.2 Effective Date of 2000 Restated Plan...............................................1
1.3 Plan Purpose.......................................................................1
1.4 Plan Intended to Qualify...........................................................1
ARTICLE II
DEFINITIONS..........................................................................................2
2.1 Affiliated Company.................................................................2
2.2 Beneficiary........................................................................2
2.3 Board of Directors.................................................................2
2.4 Break in Service...................................................................2
2.5 Code...............................................................................2
2.6 Committee..........................................................................2
2.7 Company............................................................................2
2.8 Company Stock......................................................................2
2.9 Compensation.......................................................................2
2.10 Computation Period.................................................................3
2.11 Credited Service...................................................................4
2.12 Disability.........................................................................5
2.13 Effective Date.....................................................................6
2.14 Eligible Employee..................................................................6
2.15 Eligible Retirement Plan...........................................................6
2.16 Eligible Rollover Distribution.....................................................6
2.17 Employee...........................................................................7
2.18 Employment Commencement Date.......................................................7
2.19 Entry Date.........................................................................7
2.20 ERISA..............................................................................7
2.21 ESOP Account.......................................................................7
2.22 Exempt Loan........................................................................7
2.23 Exempt Loan Suspense Subfund.......................................................8
2.24 415 Suspense Account...............................................................8
2.25 Highly Compensated Employee........................................................8
2.26 Hour of Service....................................................................9
2.27 Investment Manager.................................................................10
2.28 Leased Employee....................................................................10
2.29 Leave of Absence...................................................................10
2.30 Normal Retirement Age..............................................................11
2.31 Participant........................................................................11
2.32 Period of Severance................................................................11
2.33 Plan...............................................................................11
2.34 Plan Administrator.................................................................11
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2.35 Plan Year..........................................................................12
2.36 Reemployment Commencement Date.....................................................12
2.37 Severance..........................................................................12
2.38 Severance Date.....................................................................12
2.39 Sponsor............................................................................13
2.40 Trust..............................................................................13
2.41 Trust Agreement....................................................................13
2.42 Trustee............................................................................13
2.43 Valuation Date.....................................................................13
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 Forfeitures........................................................................17
4.4 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 upon Severance........................................................19
5.5 Distribution upon Death............................................................19
5.6 Distribution upon Disability.......................................................20
5.7 Withdrawal upon Age 59-1/2.........................................................20
5.8 Designation of Beneficiary.........................................................20
5.9 Form of Distribution...............................................................21
5.10 Distribution Rules.................................................................22
5.11 Put Option for Company Stock Allocated to ESOP Accounts............................23
5.12 Diversification Rule...............................................................27
5.13 Lapsed Benefits....................................................................28
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ARTICLE VI
TRUST FUND AND INVESTMENTS...........................................................................30
6.1 General............................................................................30
6.2 Single Trust.......................................................................30
6.3 Investment of the Trust............................................................30
6.4 Certain Offers for Company Stock...................................................31
6.5 Securities Law Limitation..........................................................35
6.6 Accounting and Valuations..........................................................35
6.7 Dividends..........................................................................37
6.8 Non-Diversion of Trust Fund........................................................38
6.9 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund..........39
6.10 Distributions......................................................................39
6.11 Taxes..............................................................................39
6.12 Trustee Records to be Maintained...................................................39
6.13 Annual Report of Trustee...........................................................39
6.14 Appointment of Investment Manager..................................................40
ARTICLE VII
OPERATION AND ADMINISTRATION.........................................................................41
7.1 Appointment of Committee...........................................................41
7.2 Transaction of Business............................................................41
7.3 Voting.............................................................................41
7.4 Responsibility of Committee........................................................41
7.5 Committee Powers...................................................................42
7.6 Additional Powers of Committee.....................................................43
7.7 Claims Procedures..................................................................43
7.8 Appeals Procedures.................................................................44
7.9 Limitation on Liability............................................................45
7.10 Indemnification and Insurance......................................................45
7.11 Compensation of Committee and Plan Expenses........................................45
7.12 Resignation........................................................................45
7.13 Voting of Company Stock............................................................45
7.14 Reliance Upon Documents and Opinions...............................................47
ARTICLE VIII
AMENDMENT AND ADOPTION OF PLAN.......................................................................49
8.1 Right to Amend Plan................................................................49
8.2 Adoption of Plan by Affiliated Companies...........................................49
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ARTICLE IX
DISCONTINUANCE OF CONTRIBUTIONS......................................................................50
ARTICLE X
TERMINATION AND MERGER...............................................................................51
10.1 Right to Terminate Plan............................................................51
10.2 Effect on Trustee and Committee....................................................51
10.3 Merger Restriction.................................................................51
10.4 Effect of Reorganization, Transfer of Assets or Change in Control..................51
ARTICLE XI
LIMITATION ON ALLOCATIONS............................................................................55
11.1 General Rule.......................................................................55
11.2 Annual Additions...................................................................55
11.3 Other Defined Contribution Plans...................................................55
11.4 Defined Benefit Plans..............................................................56
11.5 Adjustments for Excess Annual Additions............................................56
11.6 Compensation.......................................................................57
11.7 Treatment of 415 Suspense Account Upon Termination.................................58
ARTICLE XII
TOP-HEAVY RULES......................................................................................59
12.1 Applicability......................................................................59
12.2 Definitions........................................................................59
12.3 Top-Heavy Status...................................................................60
12.4 Minimum Contributions..............................................................62
12.5 Maximum Annual Addition............................................................62
12.6 Minimum Vesting Rules..............................................................63
12.7 Non-Eligible Employees.............................................................63
ARTICLE XIII
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS.......................................64
13.1 General Restrictions Against Alienation............................................64
13.2 Qualified Domestic Relations Orders................................................64
ARTICLE XIV
MISCELLANEOUS PROVISIONS.............................................................................68
14.1 No Right of Employment Hereunder...................................................68
14.2 Limitation on Company Liability....................................................68
14.3 Effect of Article Headings.........................................................68
14.4 Gender.............................................................................68
14.5 Interpretation.....................................................................68
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14.6 Withholding For Taxes..............................................................68
14.7 California Law Controlling.........................................................68
14.8 Plan and Trust as One Instrument...................................................68
14.9 Invalid Provisions.................................................................68
14.10 Counterparts.......................................................................69
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ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP 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 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. Employee Stock Ownership Plan
(Restated 2000)" (the "Plan").
1.2. Effective Date of 2000 Restated Plan. The "Allergan, Inc. Employee
Stock Ownership Plan (Restated 1996)" and the First, Second, Third, Fourth and
Fifth Amendments made thereto are hereby incorporated into the Plan. The
Effective Date of the 2000 Restated Plan shall be January 1, 1997 unless
otherwise stated in the Plan.
1.3. Plan Purpose. The purpose of the 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 the Plan shall be administered,
distributed, forfeited and otherwise governed by the provisions of the Plan,
which is to be administered by the Committee for the exclusive benefit of
Participants in the Plan and their Beneficiaries.
1.4. Plan Intended to Qualify. The Plan is an employee benefit plan
that is intended to qualify under Code Section 401(a) as a qualified stock bonus
plan and under Code Section 4975(e)(7) as an employee stock ownership plan. The
provisions of the Plan are also intended to comply with all changes to the
qualification requirements made by the Uruguay Round Agreements Act (GATT), the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the
Internal Revenue Service Restructuring and Reform Act of 1998 including
qualification requirements that are effective on or after January 1, 1999.
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ARTICLE II
DEFINITIONS
2.1. Affiliated Company. "Affiliated Company" shall mean (i) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Code Section 414(b)) of which the Sponsor is
a member, (ii) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Code Section 414(c)) with the Sponsor,
(iii) any entity or organization, other than the Sponsor, which is a member of
an affiliated service group (within the meaning of Code Section 414(m)) of which
the Sponsor is a member, and (iv) any entity or organization, other than the
Sponsor, which is affiliated with the Sponsor under Code Section 414(o). An
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 clauses (i), (ii), (iii) or (iv) of this Section after the
original Effective Date of the Plan.
2.2. Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the
person or persons last designated by a Participant as set forth in Section 5.8
or, if there is no designated Beneficiary or surviving Beneficiary, the person
or persons designated pursuant to Section 5.8 to receive the interest of a
deceased Participant in such event.
2.3. Board of Directors. "Board of Directors" shall mean the Board of
Directors of the Sponsor (or its delegate) as it may from time to time be
constituted.
2.4. 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.
2.5. Code. "Code" shall mean the Internal Revenue Code of 1986 and the
regulations thereunder. Reference to a specific Code Section shall be deemed
also to refer to any applicable regulations under that Section, and shall also
include any comparable provisions of future legislation that amend, supplement
or supersede that specific Section.
2.6. Committee. "Committee" shall mean the committee appointed under
the provisions of Section 7.1.
2.7. Company. "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts the Plan in accordance with Section 8.2.
2.8. 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 Code
Section 409(1).
2.9. 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
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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 Plan or Executive Bonus Plan, 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;
long-term incentive awards, bonuses or payments; "Impact Award" payments;
"Employee of the Year" payments; "Awards for Excellence" payments; special group
incentive payments and individual recognition payments which are nonrecurring in
nature; tuition reimbursement; and contributions by the Company under the 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), 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.
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 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.
2.10. 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.
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(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his or her 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.
2.11. Credited Service. "Credited Service" shall mean, with respect to
each Employee, his or her 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 original Effective Date, for the period prior to such
Effective Date such Employee shall be credited with Credited Service
under the Plan equal to the period (if any) of uninterrupted employment
of such Employee with the Company up to and including the day before
the original 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 2.37.
(c) An Employee shall receive Credited Service credit for
periods between a Severance and his or her 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 or her incurring a Break in Service, he or she shall
receive Credited Service for the
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period commencing with his or her Severance Date and ending
with his or her 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 or she discontinued active
employment and commenced such Leave, he or she shall receive
Credited Service for the period commencing with his or her
Severance Date and ending with his or her 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 2.37.
(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 the 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 the 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.
(g) Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Code Section
414(u).
2.12. 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 or she
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
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physician selected by the Committee, as to whether a Participant has incurred a
Disability shall be final and binding on all persons.
2.13. Effective Date. "Effective Date" of this restated Plan shall mean
January 1, 1997 unless otherwise specified in the Plan. The original Effective
Date of the Plan was July 26, 1989.
2.14. 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
Employee, any Leased Employee, and any Employee covered by a collective
bargaining agreement.
2.15. 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 to a surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.
2.16. Eligible Rollover Distribution. "Eligible Rollover Distribution"
shall mean any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution does not
include:
(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) any hardship distribution described in Code Section
401(k)(2)(B)(I)(IV);
(d) 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).
(e) any other distribution that is reasonably expected to
total less than $200 during the year.
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
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who is the Alternate Payee under a Qualified Domestic Relations Order (as
defined in Article XIII) are Distributees with regard to the interest of the
spouse or former spouse.
2.17. Employee. "Employee" shall mean, for purposes of the Plan, any
person who is employed by the Sponsor or an Affiliated Company in any capacity,
any portion of whose income is subject to withholding of income tax and/or for
whom Social Security contribution are made by the Sponsor or an Affiliated
Company except that such term shall not include (i) any individual who performs
services for the Sponsor or an Affiliated Company and who is classified or paid
as an independent contractor as determined by the payroll records of the Sponsor
or Affiliated Company even if a court or administrative agency determines that
such individual is a common-law employee and not an independent contractor and
(ii) any individual who performs services for the Sponsor or an Affiliated
Company pursuant to an agreement between the Sponsor or an Affiliated Company
and any other person including a leasing organization except to the extent such
individual is a Leased Employee.(1)
2.18. Employment Commencement Date. "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
the Plan or in resolutions of the Board of Directors, an Employee shall not, for
the purpose of determining his or her 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.
2.19. Entry Date. "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.
2.20. ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.
2.21. ESOP Account. "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 or her Stock Subaccount and Non-Stock Subaccount established pursuant to
Section 6.6).
2.22. Exempt Loan. "Exempt Loan" shall mean any loan to the Plan or
Trust not prohibited by Code Section 4975(c), including a loan which meets the
requirements set forth in Code Section 4975(d)(3) and the regulations
promulgated thereunder, the proceeds of which are used to finance the
acquisition of Company Stock or to refinance such a loan.
--------
(1) Section 2.17 was amended effective October 1, 1997 as set forth in the
Second Amendment to the Plan, amended effective January 1, 1999 as set forth
in the Fourth Amendment to the Plan and is amended effective January 1, 2000
as set forth above.
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2.23. Exempt Loan Suspense Subfund. "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.
2.24. 415 Suspense Account. "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).
2.25. Highly Compensated Employee. "Highly Compensated Employee" shall
mean:
(a) An Employee who performed services for the Employer during
the Plan Year or preceding Plan Year and is a member of one or more of
the following groups:
(i) Employees who at any time during the Plan Year or
preceding Plan Year were Five Percent Owners (as defined in
Section 12.2).
(ii) Employees who received Compensation during the
preceding Plan Year from the Employer in excess of $80,000 (as
adjusted in such manner as permitted under Code Section
414(q)(1)).
(b) For the purpose of this Section, the term "Compensation"
means compensation as defined in Code Section 415(c)(3), as set forth
in Section 11.6.
(c) The term "Highly Compensated Employee" includes a Former
Highly Compensated Employee. A Former Highly Compensated Former
Employee is any Employee who was (i) a Highly Compensated Employee when
he or she terminated employment with the Employer or (ii) a Highly
Compensated Employee at any time after attaining age 55.
Notwithstanding the foregoing, an Employee who separated from service
prior to 1987 shall be treated as a Former Highly Compensated Former
Employee only if during the separation year (or year preceding the
separation year) or any year after the Employee attains age 55 (or the
last year ending before the Employee's 55th birthday), the Employee
either received Compensation in excess of $50,000 or was a Five Percent
Owner.
(d) For the purpose of this Section, the term "Employer" shall
mean the Sponsor and any Affiliated Company.
(e) The determination of who is a Highly Compensated Employee,
including the determination of the Compensation that is considered,
shall be made in accordance with Code Section 414(q) and the
regulations thereunder.
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2.26. 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 or she has terminated his or 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 or she is so paid or so entitled to payment, whether direct
or indirect. However, no such hours shall be credited to an
Employee if (1) such Employee is directly or indirectly paid
or entitled to payment for such hours and (2) 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 or 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 or 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 the Plan, an
Employee shall not receive credit for his or her Hours of Service
completed with an Affiliated Company prior to the effective date on
which the entity became an Affiliated Company.
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<PAGE> 16
2.27. Investment Manager. "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.
2.28. 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 (1) year, and such services are performed under the
primary direction or control by 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 Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce and such Leased 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 under
Code Section 415(c)(3); (ii) immediate participation; and (iii) full and
immediate vesting.
2.29. 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 the
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
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<PAGE> 17
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 the 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 the 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).
2.30. Normal Retirement Age. "Normal Retirement Age" shall mean a
Participant's sixty-fifth (65th) birthday.
2.31. 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.
2.32. 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.
2.33. Plan. "Plan" shall mean the Allergan, Inc. Employee Stock
Ownership Plan (Restated 2000) described herein and as amended from time to
time.
2.34. 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 the Allergan Corporate Benefits Committee whose
members are appointed by the Board of Directors pursuant to the provisions of
Section 7.1 to administer the Plan.
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<PAGE> 18
2.35. Plan Year. "Plan Year" shall mean the calendar year.
2.36. 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 or she 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 the Plan, an Employee shall not, for the purpose
of determining his or her 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.
2.37. 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 or her 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 the Plan, an Employee shall be deemed to
have incurred a Severance on the earlier of (i) the date on which he or
she dies, resigns, is discharged, or otherwise terminates his or her
employment with the Sponsor or Affiliated Company; or (ii) the date on
which he or she is scheduled to return to work after the expiration of
an approved Leave of Absence, if he or she 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 or she 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.
2.38. 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 2.37, provided, however, that the special rule set forth under Section
2.26(c)-(d) shall apply with respect to determining whether a
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<PAGE> 19
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
2.37 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
or her 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
the Plan.
2.39. Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.
2.40. Trust. "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.
2.41. Trust Agreement. "Trust Agreement" shall mean the agreement
between the Trustee and the Sponsor pursuant to which the Trust is maintained.
2.42. Trustee. "Trustee" shall mean the one or more trustees of the
Trust established pursuant to Section 6.1 hereof.
2.43. Valuation Date. "Valuation Date" shall mean the last day of each
Plan Year and any other date which the Committee may designate from time to
time.
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<PAGE> 20
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1. Commencement of Participation. Each Eligible Employee shall become
a Participant on the Entry Date that is concurrent with or immediately follows
the later 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 or she incurs a Severance and is subsequently reemployed as
an Eligible Employee, become a Participant as of his or her 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 or she 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 or she incurs a
Severance, at which time he or she shall become an inactive Participant until he
or she receives a distribution of his or her entire vested interest in his or
her ESOP Account. Once such a distribution is made, any Participant who incurs
such a Severance shall no longer be considered a Participant in the Plan. Any
Participant who (i) transfers out of employment with the Company but who remains
an Employee of an Affiliated Company that has not adopted the Plan pursuant to
Section 8.2, or (ii) 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 or her Normal
Retirement Age in the same manner as an Eligible Employee who has not reached
his or her Normal Retirement Age.
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<PAGE> 21
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 the Plan, but only
after all forfeitures for the Plan Year have been so applied pursuant to Section
4.3. 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 (i) Company contributions of Company Stock contributed in kind to
the Trust Fund and (ii) 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 Allergan, Inc. Pension
Plan). 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).
(i) 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
15
<PAGE> 22
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 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.
(ii) 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:
(1) 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.
(2) The interest portion of any payment is
disregarded only to the extent it would be treated as
interest under standard loan amortization tables.
(3) 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.
(iii) 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
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<PAGE> 23
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 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 Eligible Participants who are not Highly Compensated
Employees for such Plan Year.
(e) For the 1998 Plan Year only, the term "Eligible
Participant" as defined in Section 4.2(a) shall include any Participant
who ceased to be an Eligible Employee during the 1998 Plan Year due to
his or her election to participate in the Sponsor's Voluntary Early
Retirement Incentive by August 31, 1998 (or such later date as approved
by the Sponsor but in no event later than September 30, 1998).(1)
4.3. 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).
4.4. 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.
-------------
(1) Section 4.2(e) was added effective January 1, 1998 pursuant to the Third
Amendment to the Plan as set forth above.
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<PAGE> 24
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
or her ESOP Account shall vest in accordance with the following
schedule:
Year of Credited Service Vested Percentage
------------------------ -----------------
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%
(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,
shall receive a distribution of the vested portion of his or her ESOP Account in
a single lump sum payment in the form prescribed by Section 5.9 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 or her ESOP Account
shall be deemed to have received a distribution pursuant to this
paragraph (a).
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<PAGE> 25
(b) In the event such a Participant who incurs a Severance
does not receive a distribution of the entire vested portion of his or
her 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.
(c) At any relevant time after Severance pursuant to
paragraphs (a) and (b) above, the Participant's vested portion of his
or her 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 upon Severance. A Participant who incurs a Severance
on or after becoming 100% vested pursuant to Section 5.2, shall receive a
distribution of his or her ESOP Account, in a single lump-sum payment in the
form prescribed by Section 5.9 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. Notwithstanding anything to the contrary, upon receipt of a Qualified
Domestic Relations Order on or after a Participant is 100% vested pursuant to
Section 5.2, the amount payable to an Alternate Payee (as such terms are
described in Section 13.2) shall be distributed to the Alternate Payee as soon
as administratively feasible regardless of whether the Participant incurs a
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 or her 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 5.9 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 or she ceases to
be an Employee but before he or she receives his or her entire vested
interest in the Trust, the Committee shall give such directions as may
be necessary to cause a distribution, in the manner and
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<PAGE> 26
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 5.9
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. Withdrawal upon Age 59-1/2. 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 or her ESOP Account. Such a withdrawal shall be in the same form
and using the same valuation methods as provided for distributions pursuant to
Section 5.9. For the 2000 Plan Year only, a Participant who is still an Employee
may withdraw the entire vested amount credited to his or her ESOP Account if
such Participant shall incur a Severance between June 19, 2000 and July 31,
2000, inclusive, on or after attaining age 55 and such Participant provides such
reasonable advance notice of his or her expected Severance as required by the
Committee.
5.8. 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 or her 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 or her 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
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<PAGE> 27
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 or her designation of a
Beneficiary other than his or her 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 or her 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 or her 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 or her 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 or her 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).
5.9. 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 or her 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 or
her 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 Code Section
401(a), then any distribution of a Participant's ESOP Account shall
only be in cash.
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(c) Notwithstanding the foregoing, a Participant who elected
to diversify the investment of a portion of his or her ESOP Account
pursuant to Section 5.12(c) or (d) 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.
(d) Notwithstanding the foregoing, in the case of an Eligible
Rollover Distribution, a Participant may elect that an Eligible
Rollover Distribution be paid directly by the Trustee to the trustee of
an Eligible Retirement Plan.
5.10. Distribution Rules. Notwithstanding the provisions of Sections
5.3, 5.4, 5.5, 5.6, 5.7, and 5.9 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 the 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 (i) the Participant's 62nd birthday, or
(ii) the Participant's Normal Retirement Age. Notwithstanding the
foregoing, the provisions of this paragraph shall not apply (i)
following the Participant's death, or (ii) 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 (1) $5,000 or
did not exceed $5,000 at the time of any prior distribution ($3,500 for
the 1997 Plan Year) or (2) for distributions after March 21, 1999, the
total amount of such vested portion at the time of distribution does
not exceed $5,000.(1)
(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: (i) the Participant's Normal Retirement Age; (ii) the
tenth anniversary of the year in which the Participant commenced
participation in the Plan; or (iii) the Participant's Severance.
(c) Notwithstanding paragraphs (a) or (b) above, distributions
of the entire vested portion of a Participant's ESOP 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) Section 5.10(a) was amended effective January 1, 1998 as set forth in the
Second Amendment to the Plan and is amended effective March 21, 1999 as set
forth above.
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<PAGE> 29
(i) Participants attaining age 70-1/2 prior to 1999:
The Required Beginning Date of a Participant who attains age
70-1/2 prior to 1999 shall be April 1 of the calendar year
immediately following the year in which the Participant
attains age 70-1/2; provided, however, that a Participant,
other than a Five Percent Owner (as defined in Code Section
416(i) and applicable regulations), who attains age 70-1/2 in
1996, 1997, or 1998 may elect to defer the Required Beginning
Date until April 1 of the calendar year following the later of
the calendar year in which the Participant attains age 70-1/2
or retires.
(ii) Participants attaining age 70-1/2 after 1998:
The Required Beginning Date of a Participant who attains age
70-1/2 after 1998 shall be April 1 of the calendar year
immediately following the later of the calendar year in which
the Participant attains age 70-1/2 or retires; provided,
however, if such Participant is a Five Percent Owner (as
defined in Code Section 416(i) and applicable regulations)
with respect to the Plan Year ending in the calendar year in
which such Participant attains age 70-1/2, the Required
Beginning Date shall be April 1 of the calendar year
immediately following the year in which such Participant
attains age 70-1/2.(1)
(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.
5.11. 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:
-------------
(1) Section 5.10(c) was amended effective January 1, 1997 pursuant to the Second
Amendment to the Plan adopted November 18, 1997 as set forth above.
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<PAGE> 30
(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 or her 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 5.11(c). If a Qualified
Holder fails to exercise his or her option right under this
subparagraph (iii) with respect to any portion of such
distributed Company Stock, no further options shall be
applicable under the 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
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<PAGE> 31
(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
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 clause (2), 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 regulations promulgated under Code
Sections 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 the Plan, and neither the
Company nor the Plan shall have any obligation whatsoever to
purchase any such distributed Company Stock from any
Participant or other Qualified Holder.
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<PAGE> 32
(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:
(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:
(1) A lump sum payment of the purchase price
within thirty (30) days after the Exercise Date; or
(2) 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 clause (2), 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 regulations
promulgated under Code Sections 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 or her Beneficiary, if applicable) within
one taxable year of such recipient of the entire balance to the credit of the
Participant.
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<PAGE> 33
(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.
5.12. Diversification Rule.
(a) For the purpose of this Section 5.12 only, the following
definitions shall apply:
(i) "Qualified Participant" shall mean a Participant
who has attained age 55 and who has completed at least 10
years of participation in the Plan.
(ii) "Qualified Election Period" shall mean the six
Plan Year period beginning with the Plan Year in which the
Participant first becomes a Qualified Participant.
(iii) "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.
(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 paragraphs (c) or (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) For Plan Years beginning on or after January 1, 2000, at
the written election of a Qualified Participant, the Plan shall
transfer to the Allergan, Inc. Savings and Investment Plan (the "SIP")
that 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 which shall be allocated to a rollover account
maintained on behalf of the Qualified Participant. Under the SIP, the
Qualified Participant may invest the amount so transferred under any of
the investment options available under the SIP or may direct that the
amount so transferred be distributed to him or her. Notwithstanding the
foregoing and consistent with the requirements of Code Section
401(a)(28), a Qualified Participant who is an Insider may only elect to
diversify his or her ESOP Account if within six (6) months before the
Participant's election, he or she has not made an election under the
Allergan, Inc. Savings and Investment Plan or the provision of any
company plan covered by Rule 16b-3 (promulgated pursuant to the
Securities Exchange Act of
27
<PAGE> 34
1934) then in existence that would result in the transfer into a
Company equity securities fund.(1)
(d) For Plan Years beginning prior to January 1, 2000, at the
written election of a Qualified Participant, the Plan shall distribute
(notwithstanding Code Section 409(d)) 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 5.9. 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. In lieu of such distribution, a Qualified
Participant may 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. The
Committee may also establish at least three investment options under
this Plan for the purpose of diversification under this Section 5.12.
If the Committee establishes such investment options, in lieu of
distribution or transfer under this paragraph (d), a Qualified
Participant may 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 and consistent with the requirements of
Code Section 401(a)(28), a Qualified Participant who is an Insider may
only elect to diversify his or her ESOP Account if within six (6)
months before the Participant's election, he or she has not made an
election under the Allergan, Inc. Savings and Investment Plan or the
provision of any company plan covered by Rule 16b-3 (promulgated
pursuant to the Securities Exchange Act of 1934) then in existence that
would result in the transfer into a Company equity securities fund.
5.13. Lapsed Benefits.
(a) In the event that a benefit is payable under the 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 ESOP Accounts of the
other Participants for such Plan Year in accordance with Section 4.3.
-------------
(1) The last sentence of Section 5.12(c) was amended effective July 23, 1996
pursuant to the First Amendment to the Plan as set forth above.
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<PAGE> 35
(c) If a Participant shall die prior to receiving a
distribution of his or her entire benefit under the 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 4.3.
(d) For purposes of this Section, the term "Beneficiary" shall
include any person entitled under Section 5.8 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 5.8 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:
(i) to acquire Company Stock;
(ii) to repay the same Exempt Loan; or
(iii) 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
30
<PAGE> 37
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 5.11 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 the 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"), whether or not such Company Stock is allocated to
Participants' ESOP Accounts, the discretion or authority to sell, exchange or
transfer any of such shares of Company Stock shall be determined in accordance
with the following rules:
(a) The Trustee shall have no discretion or authority to sell,
exchange or transfer any Company Stock pursuant to an 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 any Participant's ESOP
Account, by each Participant to whose ESOP Account any of such Company
Stock is allocated and (ii) with respect to any Company Stock held by
the Trustee subject to such Offer and not allocated to any
Participant's ESOP Account, 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.
(b) To the extent there remains any residual fiduciary
responsibility with respect to Company Stock pursuant to an Offer after
application of paragraph (a) above, the Trustee shall sell, exchange or
transfer such Company Stock as directed by the Committee or as directed
by an independent fiduciary if duly appointed by the Sponsor. To the
extent the Committee or an independent fiduciary is required to
exercise any residual fiduciary responsibility with respect to an
Offer, the Committee or independent fiduciary 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 Committee or independent fiduciary, 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
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<PAGE> 38
subsequent release and allocation of Company Stock held in the Exempt
Loan Suspense Subfund).
(c) Upon timely receipt of such instructions, the Trustee
shall, subject to the provisions of paragraphs (e) and (o) of this
Section, sell, exchange or transfer pursuant to such Offer, only such
shares as to which such instructions were given. The Committee 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.
(d) 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 shares
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 Section to give instructions as to the sale, exchange or transfer
of shares pursuant to such Offer.
(e) 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 set
forth herein) 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.
(f) In the event an Offer is received by the Trustee and
instructions have been solicited from Participants regarding such
Offer, and prior to termination of such Offer, another Offer is
received by the Trustee for the Company Stock subject to the first
Offer, the Trustee shall inform the Committee of such other Offer and
the Committee shall use its best efforts under the circumstances to
solicit instructions from the Participants (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 Company Stock so withdrawn for sale,
exchange or transfer pursuant to the second Offer and (ii) with respect
to Company Stock not tendered for sale, exchange or transfer pursuant
to the first Offer, whether to tender or not to tender such Company
Stock 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
offers), the Trustee shall act in the same manner as described above.
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(g) With respect to any Offer received by the Trustee, the
Trustee shall inform the Sponsor of such Offer and the Sponsor shall
distribute, at its 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, which shall seek
confidential written instructions from each Participant who is entitled
to respond to such Offer pursuant to paragraph (a). 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 Sponsor by the Committee
which shall take all reasonable steps necessary to provide the Sponsor
with the latest possible information.
(h) The Sponsor shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to
paragraphs (a), 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 or she is entitled to give instructions shall not be sold,
exchanged or transferred pursuant to such Offer unless the Trustee is
directed otherwise as provided in paragraph (b) above, (ii) the
Participant shall be a named fiduciary (as described in paragraph (m)
below) with respect to all shares of Company Stock 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.
(i) 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 or she is entitled to give
instructions, or (ii) to sell, exchange or transfer all Company Stock
for which he or she is entitled to give instructions. The Sponsor 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 (e), 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 unless directed otherwise
as provided in paragraph (b) above.
(j) The Sponsor 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 (g), (h) and (i) of this Section. The Trustee
shall then sell, exchange or transfer shares according to instructions
from such former Participants, except that shares for which no
instructions are received shall not be sold, exchanged or transferred.
(k) Neither the Company, 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.
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(l) 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 Sponsor, 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.
(m) Each Participant shall be a named fiduciary (as that term
is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
allocated to his or her ESOP Account under the Plan and with respect to
his or her pro-rata portion of the unallocated Company Stock for which
he or she 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.
(n) 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
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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.
(o) In the event a court of competent jurisdiction shall issue
to the Plan, the Committee, the Sponsor or the Trustee an opinion or
order, which shall, in the opinion of counsel to the Committee, the
Sponsor 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
Committee, the Sponsor 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 continue to
follow instructions received from Participants, to the extent such
instructions have not been invalidated by such order or opinion. To the
extent the Trustee is required by such opinion or order to exercise any
residual fiduciary responsibility with respect to such Offer, the
Sponsor shall appoint an independent fiduciary who shall exercise such
residual fiduciary responsibility as provided in paragraph (b) above
and shall direct the Trustee as to whether or not Company Stock held by
the Trustee shall be sold, exchanged or transferred pursuant to such
Offer.
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.
(i) 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").
(ii) 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.
(iii) 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.
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(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.
(d) In making valuations required by the 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.
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(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:
(i) 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)(i) 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.
(ii) 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.
(iii) 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.
(iv) 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
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(i) applied to repay an Exempt Loan then outstanding or (ii) retained
in the Trust. Any resulting allocation shall be made according to the
following rules:
(i) 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).
(ii) If cash 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.
(iii) If stock dividends are not used to repay an
Exempt Loan or used to pay expenses of the Plan, they shall be
retained in the Exempt Loan Suspense Subfund until released
from such Subfund pursuant to Section 4.2(b) and allocated to
Participants Stock Subaccounts pursuant to Section 4.2(c).
6.8. 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.
(c) Contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. 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.
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6.9. 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.
6.10. 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.
6.11. 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.
6.12. 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(k)).
6.13. 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
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written account 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
6.4(k)).
6.14. 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 or her 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 the
Plan, the responsibility for carrying out the 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
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limitations of the Plan, the Committee shall, from time to time, establish rules
for the performance of its functions and the administration of the Plan. In the
performance of its functions, the Committee shall not discriminate in favor of
Highly Compensated Employees.
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:
(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 the 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 the Plan.
(d) To administer, interpret, construe, and apply the Plan and
to decide all questions which may arise or which may be raised under
the 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 or her Beneficiary may be entitled.
(e) To determine the manner in which the assets of the 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 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.
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(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 the 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 the 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;
(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. Claims Procedures. If a Participant believes that he or she is
being denied any rights or benefits under the Plan, such Participant (or his or
her beneficiary or duly appointed representative) may file a claim for benefits
in writing with the Committee. The Committee shall follow the procedures set
forth in this Section in processing a claim for benefits.
(a) Within 90 days following receipt by the Committee of a
claim for benefits and all necessary documents and information, the
Committee shall furnish the person claiming benefits under the Plan
("Claimant") with written notice of the decision rendered with respect
to such claim. Should special circumstances require an extension of
time for processing the claim, written notice of the extension shall be
furnished to the
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Claimant prior to the expiration of the initial 90 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 90 day period.
(b) In the case of a denial of the Claimant's claim, the
written notice of such denial shall set forth (i) the specific reasons
for the denial, (ii) references to the Plan provisions upon which the
denial is based, (iii) a description of any additional information or
material necessary for perfection of the application (together with an
explanation why such material or information is necessary), and (iv) an
explanation of the Plan's appeals procedures.
(c) If the Committee does not respond within 180 days, the
Claimant may consider his or her claim denied.
7.8. Appeals Procedures. A Claimant who wishes to appeal the denial of
his or her claim for benefits or to contest the amount of benefits payable shall
follow the administrative procedures for an appeal as set forth in this Section
and shall exhaust such administrative procedures prior to seeking any other form
of relief.
(a) In order to appeal a decision rendered with respect to his
or her claim for benefits or with respect to the amount of his or her
benefits, a Claimant must file an appeal with the Committee in writing
within 60 days after the date of notice of the decision with respect to
the claim, or if the claim has neither been approved nor denied within
the period provided in Section 7.7(a) above, then the appeal must be
made within 60 days after the expiration of the period provided in
Section 7.7(c).
(b) The Claimant may request that his or her appeal be given
full and fair review by the Committee. The Claimant also may review all
pertinent documents and submit issues and comments in writing in
connection with the appeal. The decision of the Committee shall be made
not later than 60 days after the Claimant has completed his or her
submission to the Committee of his or her appeal and any documentation
or other information to be submitted in support of such request. Should
special circumstances require an extension of time for processing,
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 60 days from the end of
the initial 60 day period.
(c) The decision on the Claimant's appeal 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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(d) If the Committee does not respond within 120 days, the
Claimant may consider his or her appeal denied.
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 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.
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 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.
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
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Participants, depending on who has the right to direct the voting of such
Company Stock as provided in the following provisions of this Section 7.13.
(a) 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).
(i) If the Sponsor has a registration-type class of
securities (as defined in Code Section 409(e)(4)), then with
respect to all corporate matters, (1) each Participant shall
be entitled to direct the Trustee as to the voting of all
Company Stock allocated and credited to his or her ESOP
Account and (2) 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 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 or her 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.
(ii) If the Sponsor does not have a registration-type
class of securities, 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 Code Section 409(e)(4) and the regulations
thereunder, (1) each Participant shall be entitled to direct
the Trustee as to the voting of all Company Stock allocated
and credited to his or her ESOP Account and (2) 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)(i) above.
(b) To the extent there remains any residual fiduciary
responsibility with respect to the voting of Company Stock after
application of paragraph (a) above, the Trustee shall vote such Company
Stock as directed by the Committee or as directed by an independent
fiduciary if duly appointed by the Sponsor. To the extent the Committee
or an independent fiduciary is required to exercise any residual
fiduciary responsibility with respect to the voting of Company Stock,
the Committee or independent fiduciary 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 Committee or independent fiduciary, 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
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opportunities and other similar matters, and the prospect of the
Participants and prospective Participants for future benefits under the
Plan.
(c) 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 Company Stock credited to
his or her ESOP Account, such Company Stock shall not be voted unless
the Trustee is directed otherwise as provided in paragraph (b) above.
The Trustee shall maintain confidentiality with respect to the voting
directions of all Participants.
(d) Each Participant shall be a named fiduciary (as that term
is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
for which he or she 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.
(e) In the event a court of competent jurisdiction shall issue
an opinion or order to the Plan, the Committee, the Sponsor or the
Trustee, which shall, in the opinion of counsel to the Committee, the
Sponsor or the Trustee, invalidate under ERISA, in all circumstances or
in any particular circumstances, any provision or provisions of this
paragraph 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 Committee, the Sponsor 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 continue to follow instructions
received from Participants, to the extent such instructions have not
been invalidated by such order or opinion. To the extent the Trustee is
required by such opinion or order to exercise any residual fiduciary
responsibility with respect to voting, the Sponsor shall appoint an
independent fiduciary who shall exercise such residual fiduciary
responsibility as provided in paragraph (b) above and shall direct the
Trustee as to the manner in which Company Stock held by the Trustee
shall be voted.
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
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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 the 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.
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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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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 the 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 Code Section 401 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 the 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 the
Plan, the 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 the 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 or she 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 the 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.
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(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) and prior to January 1, 2000, a "Change in
Control" shall be as defined in the Plan prior to this restatement. On
or after January 1, 2000, a "Change in Control" shall mean the
following and shall be deemed to occur if any of the following events
occur:(1)
(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") (a "Person"), is or becomes the
"beneficial owner," as defined in Rule 13d-3 under the
Exchange Act (a "Beneficial Owner"), directly or indirectly,
of securities of the Sponsor representing (1) 20% or more of
the combined voting power of the Sponsor's then outstanding
voting securities, which acquisition is not approved in
advance of the acquisition or within 30 days after the
acquisition by a majority of the Incumbent Board (as
hereinafter defined) or (2) 33% or more of the combined voting
power of the Sponsor's then outstanding voting securities,
without regard to whether such acquisition is approved by the
Incumbent Board;
(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 of Directors, 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 in 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;
(iii) The consummation of a merger, consolidation or
reorganization involving the Sponsor, other than one which
satisfies both of the following conditions:
(1) a merger, consolidation or
reorganization which would result in the voting
securities of the Sponsor outstanding immediately
prior thereto continuing to represent (either by
-------------
(1) Section 10.4(b) was amended effective January 1, 2000 pursuant to the Fifth
Amendment to the Plan adopted on December 31, 1999 as set forth above.
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remaining outstanding or by being converted into
voting securities of another entity) at least 55% of
the combined voting power of the voting securities of
the Sponsor or such other entity resulting from the
merger, consolidation or reorganization (the
"Surviving Corporation") outstanding immediately
after such merger, consolidation or reorganization
and being held in substantially the same proportion
as the ownership in the Sponsor's voting securities
immediately before such merger, consolidation or
reorganization, and
(2) a merger, consolidation or
reorganization in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Sponsor representing 20% 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 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 paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b) is
(i) an underwriter or underwriting syndicate that has acquired any of
the Sponsor's then outstanding voting securities solely in connection
with a public offering of the Sponsor's securities, (ii) the Sponsor or
any subsidiary of the Sponsor or (iii) an employee stock ownership plan
or other employee benefit plan maintained by the Company or an
Affiliated Company that is qualified under the provisions of the Code.
In addition, notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b)
becomes a Beneficial Owner of more than the permitted amount of
outstanding securities as a result of the acquisition of voting
securities by the Company or an Affiliated Company which, by reducing
the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a
Change in Control would occur but for the operation of this sentence
and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under
any stock option plan of the Sponsor or through a stock dividend or
stock split), then a Change in Control shall occur.
(c) In the event of a Change in Control (as defined in Section
10.4(b) above), the Company shall be required to repay in full, solely
from its own funds and within thirty (30) days following the date of
such Change in Control, all Exempt Loans and Substitute Loans
outstanding on the date of the Change in Control. Notwithstanding any
other provision of the Plan to the contrary, all assets (including
Company Stock) and
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funds that released from the Exempt Loan Suspense Subfund on account of
repayment by the Company under this Section 10.4(c) shall be allocated,
for the Plan Year in which the Change in Control occurs, in accordance
with the formula set forth herein (consistent with the requirements
imposed under Article XI, Section 4.2(d) and other requirements of the
Code). Under the formula for allocation set forth herein, assets and
funds that are released shall be allocated to Employees who are
Participants as of the date of the Change in Control (or who would have
been Participants but for their death, Disability or retirement at or
after age 55 during the Plan Year) in the same ratio that each such
Participant's Compensation for the Plan Year through the last pay
period ending on or before the date of such Change in Control bears to
the total Compensation of all such Participants for the Plan Year
through their last pay periods ending on or before the date of such
Change in Control.(1)
-------------
(1) Section 10.4(c) was amended effective July 23, 1996 as set forth in the
First Amendment to the Plan and is amended effective January 1, 200 pursuant
to the Fifth Amendment to the Plan as set forth above.
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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 the Plan to a Participant's ESOP
Accounts for any Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000); or
(ii) 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 the 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 Code Section 404(a)(9) for a Limitation
Year are allocated to Highly Compensated Employees.
(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 Code Section 404(a)(9)
for a Limitation Year are allocated to Highly Compensated Employees.
(d) All amounts described in Code Sections 415(l)(1) and
419A(d)(2).
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
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Plan shall be aggregated with the Participant's Annual Additions under the Plan
for the purposes of applying the limitations of Section 11.1.
11.4. Defined Benefit Plans. If a Participant in the Plan has also been
a participant in a defined benefit plan (as defined in Code Section 415(k))
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 (i) the
maximum dollar amount otherwise allowable for such Limitation Year
under Code Section 415(b)(1)(A) times 1.25 or (ii) the percentage of
compensation limit under Code Section 415(b)(1)(B) 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
the 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 (i) the maximum
dollar Annual Addition under Code Section 415(c)(1)(A) (determined
without regard to Code Section 415(c)(6)) which could have been made
for the Limitation Year times 1.25 or (ii) the amount determined under
the percentage of compensation limit for such Limitation Year under
Code Section 415(c)(1)(B) 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 Code Section 415(e)(6) shall be applicable.
This Section shall not apply to Plan Years beginning on or after
January 1, 2000.
11.5. Adjustment for Excess Annual Additions. To the extent that the
Annual Additions on behalf of any Participant in a Limitation Year to the 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 of such
other Defined Benefit Plans or Defined Contribution Plans that are
applicable to
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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 or her ESOP Account up
to his or her 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.
(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 the purpose 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 and shall be determined as
described below:
(a) Compensation shall include to the extent that the amounts
are includible in gross income (including, but not limited to,
commissions paid 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
1.62-2(c)).
(b) Compensation shall include any elective deferral as
defined in Code Section 402(g)(3) and any amount which is contributed
or deferred by the Company at the election of the Employee and which is
not includible in the gross income of the Employee by reason of Code
Sections 125 or 457.
(c) Compensation shall not include (i) any employer
contributions to a plan of deferred compensation which are not included
in the Employee's gross income for the taxable year in which
contributed, (ii) any distributions from a plan of deferred
compensation, (iii) any amounts realized from the exercise of a
non-qualified stock
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option or when restricted stock or property held by the Employee
becomes either freely transferable or is no longer subject to a
substantial risk of forfeiture under Code Section 83 if such option,
stock, or property was granted to the Employee by the Company, (iv) any
amounts realized from the sale, exchange, or other disposition of stock
acquired under a qualified stock option, (v) any contribution for
medical benefits (within the meaning of Code Section 419(f)(2) after
termination of employment which is otherwise treated as an Annual
Addition, and (vi) any amount otherwise treated as an Annual Addition
under Code Section 415(l)(1).
(d) Notwithstanding anything in the Plan to the contrary,
Compensation shall be determined in accordance with Code Section
415(c)(3) as in effect for Plan Years beginning prior to January 1,
1998 where required by applicable law.
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 in Control, all
amounts in the 415 Suspense Account shall be allocated to Participants
only in accordance with Section 10.4 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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ARTICLE XII
TOP-HEAVY RULES
12.1. Applicability. Notwithstanding any provision in the Plan to the
contrary, and subject to the limitations set forth in Section 12.7, the
requirements of Sections 12.4, 12.5, and 12.6 shall apply under the 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.
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(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 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
(ii) cumulative accrued benefits under the plan for
all Employees; and
(iii) 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 (i) in
the case of a defined benefit plan, the same date which is used for
computing costs for minimum funding purposes, and (ii) in the case of a
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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).
(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.
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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 or
her 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 or her 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-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. 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).
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(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.
12.6. Minimum Vesting Rules. For any Plan Year in which it is
determined that the Plan is a Top-Heavy Plan, the vesting schedule shall be the
vesting schedule set forth in Section 5.2.
12.7. 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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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 or her 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 the 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 or her 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 Section 206(d) of ERISA 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:
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(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 the 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: (1) 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 Committee does not have reason to know that address
independently of the order); (2) 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; (3) the number of payments or period to which the
order applies; and (4) 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 or her 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 or her 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 Committee shall promptly notify the Participant and any
Alternate Payee named in the order that an order has been received and
shall provide a copy of the Plan's procedures for determining the
qualified status of domestic relations orders. An Alternate Payee may
designate a representative for receipt of copies of notices and plan
information that are sent to the Alternate Payee with respect to
domestic relations order. Within a reasonable period after the receipt
of the order, the Committee 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 Committee 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 Committee, by a court of competent jurisdiction, or otherwise), the
Committee shall direct the Trustee to 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 Committee
shall direct the Trustee to 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 Committee shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons
who
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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.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. No Right of Employment Hereunder. The adoption and maintenance of
the 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 the
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 the Plan shall in all cases be
interpreted in a manner that is consistent with the 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. The 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
the Plan, the provisions of the 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 the Plan shall become illegal, null or void or against
public policy, for any reason, or shall be
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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 the 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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IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Employee Stock Ownership Plan as
restated this 21st day of June, 2000.
ALLERGAN, INC.
By /s/ Francis R. Tunney, Jr.
--------------------------
Francis R. Tunney, Jr.
Corporate Vice President, Administration
General Counsel and Secretary of Allergan, Inc.
70
