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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 25, 2000
Allergan, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-10269 95-1622442
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
2525 Dupont Drive, Irvine, California 92612
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(Address of principal executive offices) (Zip Code)
(714) 246-4500
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On January 25, 2000 the Board of Directors of Allergan, Inc. (the
"Company") adopted a Stockholder Rights Plan.
In connection with the Rights Plan, the Board of Directors of the
Company declared a dividend of one preferred share purchase right (the "Rights")
for each outstanding share of common stock, par value $.01 per share (the
"Common Shares"), of the Company outstanding at the close of business on
February 18, 2000 (the "Record Date"). Each Right will entitle the registered
holder thereof, after the Rights become exercisable and until February 18, 2010
(or the earlier redemption, exchange or termination of the Rights), to purchase
from the Company one one-hundredth (1/100th) of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), at a price of $300.00 per one one-hundredth (1/100th) of a Preferred
Share, subject to certain anti-dilution adjustments (the "Purchase Price").
Until the earlier to occur of (i) ten (10) days following a public announcement
that a person or group of affiliated or associated persons has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the Common
Shares (an "Acquiring Person") or (ii) ten (10) business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement or announcement of an intention to make a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the Common Shares (the earlier
of (i) and (ii) being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate. The Rights will be
transferred with and only with the Common Shares until the Distribution Date or
earlier redemption or expiration of the Rights. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. The Rights will at no time have any
voting rights.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of $1.00 per share but will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per Common Share. In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment of $100
per share plus any accrued but unpaid dividends but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes and will vote together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. Preferred Shares will not be
redeemable. These Rights are protected by customary anti-dilution provisions.
Because of the nature of the Preferred Share's dividend, liquidation and voting
rights, the value of one one-hundredth of a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share.
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In the event that a Person becomes an Acquiring Person or if the Company
were the surviving corporation in a merger with an Acquiring Person or any
affiliate or associate of an Acquiring Person and the Common Shares were not
changed or exchanged, each holder of a Right, other than Rights that are or were
acquired or beneficially owned by the Acquiring Person (which Rights will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Common Shares having a market value of two times the then current
Purchase Price of one Right. In the event that, after a person has become an
Acquiring Person, the Company were acquired in a merger or other business
combination transaction or more than 50% of its assets or earning power were
sold, proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of one Right.
At any time after a Person becomes an Acquiring Person and prior to the
earlier of one of the events described in the last sentence in the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of the then
outstanding Common Shares, the Board of Directors may cause the Company to
exchange the Rights (other than Rights owned by an Acquiring Person which have
become void), in whole or in part, for Common Shares at an exchange rate of one
Common Share per Right (subject to adjustment).
The Rights may be redeemed in whole, but not in part, at a price of $.01
per Right (the "Redemption Price") by the Board of Directors at any time prior
to the time that an Acquiring Person has become such. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will receive the
Redemption Price.
The Rights will expire on February 18, 2010 (unless earlier redeemed,
exchanged or terminated). First Chicago Trust Company of New York is the Rights
Agent.
The Purchase Price payable, and the number of one one-hundredths of a
Preferred Share or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares or convertible securities at less than the current market price
of the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness, cash, securities or assets
(excluding regular periodic cash dividends at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or, in case
regular periodic cash dividends have not theretofore been paid, at a rate not in
excess of 50% of the average net income per share of the Company for the four
quarters ended immediately prior to the payment of such dividend, or dividends
payable in Preferred Shares (which dividends will be subject to the adjustment
described in clause (i) above)) or of subscription rights or warrants (other
than those referred to above).
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company beyond those as an existing stockholder,
including, without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement dated as of January 25,
2000 between the Company and the Rights Agent (the "Rights Agreement") may be
amended by the Board of Directors of the Company for so long as the Rights are
then redeemable, and after the Rights are no longer redeemable, the Company may
amend or supplement the Rights Agreement in any manner that does not adversely
affect the interests of the holder of the Rights.
One Right will be distributed to stockholders of the Company for each
Common Share owned of record by them on February 18, 2000. As long as the Rights
are attached to the Common Shares, the Company will issue one Right with each
new Common Share so that all such shares will have attached Rights. The Company
has agreed that, from and after the Distribution Date, the Company will reserve
1,500,000 Preferred Shares initially for issuance upon exercise of the Rights.
The rights are designed to assure that all of the Company's stockholders
receive fair and equal treatment in the event of any proposed takeover of the
Company and to guard against partial tender offers, open market accumulations
and other abusive tactics to gain control of the Company without paying all
stockholders a control premium. The Rights will cause substantial dilution to a
person or group that acquires 15% or more of the Company's stock on terms not
approved by the Company's Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
at any time prior to the first date that a Person or group has become an
Acquiring Person.
The Rights Agreement specifying the terms of the Rights and the text of
the press release announcing the declaration of the Rights, are incorporated
herein by reference as exhibits to this Current Report. The foregoing
description of the Rights is qualified in its entirety by reference to such
exhibits.
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Item 7. Exhibits.
4. Rights Agreement, dated as of January 25, 2000 between Allergan, Inc.
and First Chicago Trust Company of New York which includes the form of
Certificate of Designations of the Series A Junior Participating
Preferred Stock of Allergan, Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase Preferred
Shares as Exhibit C.
10.1 Form of change in control severance agreement.
10.2 First Amendment to Executive Bonus Plan.
10.3 Fifth Amendment to Restated Employee Stock Ownership Plan.
10.4 Allergan, Inc. 1989 Incentive Compensation Plan (amended and restated
January 2000).
10.5 Second Amendment to Savings and Investment Plan (restated 1998).
10.6 Savings and Investment Plan (restated 1998).
10.7 Second Amendment to 1999 Management Bonus Plan.
10.8 2000 Management Bonus Plan.
10.9 First Amendment to 1989 Nonemployee Director Stock Plan (restated 1998).
10.10 Fourth Amendment to Pension Plan (restated 1996).
10.11 Second Amendment to Supplemental Executive Benefit Plan (restated 1996).
10.12 Second Amendment to Supplemental Retirement Income Plan (restated 1996).
99. Text of Press Release, dated January 26, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 28, 2000
ALLERGAN, INC.
By: /s/ Francis R. Tunney, Jr.
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Name: Francis R. Tunney, Jr.
Title: Corporate Vice President--
Administration, General
Counsel and Secretary
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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4. Rights Agreement, dated as of January 25, 2000 between Allergan, Inc.
and First Chicago Trust Company of New York which includes the form of
Certificate of Designations of the Series A Junior Participating
Preferred Stock of Allergan, Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase Preferred
Shares as Exhibit C.
10.1 Form of change in control severance agreement.
10.2 First Amendment to Executive Bonus Plan.
10.3 Fifth Amendment to Restated Employee Stock Ownership Plan.
10.4 Allergan, Inc. 1989 Incentive Compensation Plan (amended and restated
January 2000).
10.5 Second Amendment to Savings and Investment Plan (restated 1998).
10.6 Savings and Investment Plan (restated 1998).
10.7 Second Amendment to 1999 Management Bonus Plan.
10.8 2000 Management Bonus Plan.
10.9 First Amendment to 1989 Nonemployee Director Stock Plan (restated 1998).
10.10 Fourth Amendment to Pension Plan (restated 1996).
10.11 Second Amendment to Supplemental Executive Benefit Plan (restated 1996).
10.12 Second Amendment to Supplemental Retirement Income Plan (restated 1996).
99. Text of Press Release, dated January 26, 2000.
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EXHIBIT 4
================================================================================
Allergan, Inc.
and
First Chicago Trust Company of New York
as Rights Agent
Rights Agreement
Dated as of January 25, 2000
================================================================================
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RIGHTS AGREEMENT
Rights Agreement, dated as of January 25, 2000, between Allergan, Inc.,
a Delaware corporation (the "Company"), and First Chicago Trust Company of New
York, a New York trust company, as Rights Agent (the "Rights Agent").
RECITALS
WHEREAS, on January 25, 2000, the Board of Directors of the Company
adopted this Agreement, and has authorized and declared a dividend of one
preferred share purchase right (a "Right") for each Common Share (as defined in
Section 1.6) of the Company outstanding at the close of business on February 18,
2000 (the "Record Date") and has authorized and directed the issuance of one
Right (subject to adjustment as provided herein) with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date and the Expiration Date (as such terms are defined in
Sections 3.1 and 7.1), each Right initially representing the right to purchase
one one-hundredth (subject to adjustment) of a share of Series A Junior
Participating Preferred Stock (the "Preferred Shares") of the Company having the
rights, powers and preferences set forth in the form of Certificate of
Designation attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth PROVIDED, HOWEVER, that Rights may be issued
with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding but shall not include (i) an Exempt Person (as
such term is hereinafter defined) or (ii) if, as of the date hereof, any Person
is the Beneficial Owner of 15% or more of the Common Shares outstanding (an
"Existing Holder"), such Existing Holder shall not be or become an "Acquiring
Person" unless and until such time as such Existing Holder shall become the
Beneficial Owner of one or more additional Common Shares of the Company (other
than pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), unless, upon becoming the Beneficial Owner of
such additional Common Shares, such Existing Holder is not then the Beneficial
Owner of 15% or more of the Common Shares then outstanding. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
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Owner of 15% or more of the Common Shares of the Company then outstanding solely
by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of one or more additional
Common Shares of the Company (other than pursuant to a dividend or distribution
paid or made by the Company on the outstanding Common Shares in Common Shares or
pursuant to a split or subdivision of the outstanding Common Shares), then such
Person shall be deemed to be an "Acquiring Person" unless upon becoming the
Beneficial Owner of such additional shares of Common Stock such Person does not
beneficially own 15% or more of the shares of Common Stock then outstanding.
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1.1,
has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (B) such Person
was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement), and without any intention of changing or influencing control of the
Company, and such Person divests as promptly as practicable a sufficient number
of Common Shares so that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this Section 1.1, then such
Person shall not be deemed to be or have become an "Acquiring Person" at any
time for any purposes of this Agreement. For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
1.2 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations, under
the Exchange Act, as in effect on the date of this Agreement.
1.3 A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether such
right is exercisable immediately, or only after the passage of time, compliance
with regulatory requirements, fulfillment of a condition or otherwise) pursuant
to any agreement, arrangement or understanding, whether or not in writing (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (w) securities
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tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (x) securities which such
Person has a right to acquire upon the exercise of Rights at any time prior to
the time that any Person becomes an Acquiring Person, (y) securities issuable
upon the exercise of Rights from and after the time that any Person becomes an
Acquiring Person if such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3.1 or Section 22 ("Original Rights") or pursuant to Section 11.9 or
Section 11.15 with respect to an adjustment to Original Rights or (z) securities
which such Person or any of such Person's Affiliates or Associates may acquire,
does or do acquire or may be deemed to acquire or may be deemed to have the
right to acquire, pursuant to any merger or other acquisition agreement between
the Company and such Person (or one or more of such Person's Affiliates or
Associates) if prior to such Person becoming an Acquiring Person the Board of
Directors of the Company has approved such agreement and determined that such
Person shall not be or be deemed to be the beneficial owner of such securities
within the meaning of this Section 1.3.; or (B) the right to vote pursuant to
any agreement, arrangement or understanding (whether or not in writing);
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) and with respect to which
such Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), whether or not in writing, for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or consent as
described in the proviso to Section 1.3(ii)(B)) or disposing of any securities
of the Company;
PROVIDED, HOWEVER, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section 1.3), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director
or employee of an Exempt Person.
1.4 "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
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1.5 "close of business" on any given date shall mean 5:00 p.m., New York
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
1.6 "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of such
other Person or, if such Person is a Subsidiary (as such term is hereinafter
defined) of another Person, the Person or Persons which ultimately control such
first-mentioned Person, and which has issued and outstanding such capital stock,
equity securities or equity interest.
1.7 "Exempt Person" shall mean the Company, any Subsidiary of the
Company, in each case including, without limitation, its fiduciary capacity, or
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity or trustee holding shares of capital stock of the Company for or
pursuant to the terms of any such plan, or for the purpose of funding other
employee benefits for employees of the Company or any Subsidiary of the Company.
1.8 "Person" shall mean any individual, partnership, joint venture,
limited liability company, firm, corporation, unincorporated association, trust
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
1.9 "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, the filing of a report pursuant to Section 13(d) of the Exchange Act
or pursuant to a comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses information
which reveals the existence of an Acquiring Person or such earlier date as a
majority of the Board of Directors shall become aware of the existence of an
Acquiring Person.
1.10 "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, of record or beneficially, directly or indirectly,
by such Person.
1.11 A "Trigger Event" shall be deemed to have occurred upon any Person
becoming an Acquiring Person.
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1.12 The following terms shall have the meanings defined for such terms
in the Sections set forth below:
Term Section
---- -------
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Existing Holder 1.1
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agent shall be as the
Company shall determine. Contemporaneously with such appointment, if any, the
Company shall notify the Rights Agent thereof.
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Section 3. Issuance of Right Certificates.
3.1 Rights Evidenced by Share Certificates. Until the earlier of (i) the
tenth day after the Shares Acquisition Date or (ii) the tenth Business Day after
the date of the commencement of, or first public announcement of the intent of
any Person (other than an Exempt Person) to commence, a tender or exchange offer
the consummation of which would result in any Person (other than an Exempt
Person) becoming the Beneficial Owner of Common Shares aggregating 15% or more
of the then outstanding Common Shares of the Company (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights
(unless earlier expired, redeemed or terminated) will be evidenced (subject to
the provisions of Section 3.2) by the certificates for Common Shares registered
in the names of the holders thereof (which certificates for Common Shares shall
also be deemed to be Right Certificates) and not by separate certificates, and
(y) the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying Common
Shares. The preceding sentence notwithstanding, prior to the occurrence of a
Distribution Date specified as a result of an event described in clause (ii) (or
such later Distribution Date as the Board of Directors of the Company may select
pursuant to this sentence), the Board of Directors may postpone, one or more
times, the Distribution Date which would occur as a result of an event described
in clause (ii) beyond the date set forth in such clause (ii). Nothing herein
shall permit such a postponement of a Distribution Date after a Person becomes
an Acquiring Person. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign and the
Company (or, if requested, the Rights Agent) will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, one or more certificates for Rights, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right (subject to adjustment as provided herein) for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2 Summary of Rights. On the Record Date or as soon as practicable
thereafter, the Company will send or cause to be sent a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the form attached hereto
as Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the close of business on the Record
Date at the address of such holder shown on the records of the Company. With
respect to certificates for Common Shares outstanding as of the close of
business on the Record Date, until the Distribution Date (or the earlier
Expiration Date), the Rights will be evidenced by such certificates for Common
Shares registered in the names of the holders thereof together with a copy of
the Summary of Rights and the registered holders of the Common Shares shall also
be registered holders of the associated Rights. Until the Distribution Date (or
the earlier Expiration Date), the surrender for transfer of any certificate for
Common Shares outstanding at the close of business on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of
the Rights associated with the Common Shares represented thereby.
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3.3 New Certificates After Record Date. Certificates for Common Shares
which become outstanding (whether upon issuance out of authorized but unissued
Common Shares, disposition out of treasury or transfer or exchange of
outstanding Common Shares) after the Record Date but prior to the earliest of
the Distribution Date or the Expiration Date, shall have impressed, printed,
stamped, written or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Agreement between Allergan, Inc. (the
"Company") and First Chicago Trust Company of New York, as Rights
Agent, dated as of January 25, 2000, as the same may be amended from
time to time (the "Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, as set forth in the Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Agreement without charge after receipt of a
written request therefor. AS DESCRIBED IN THE AGREEMENT, RIGHTS WHICH
ARE OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BY ACQUIRING PERSONS OR
ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN THE AGREEMENT) SHALL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier Expiration Date), the Rights associated with
the Common Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificates,
except as otherwise provided herein, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby. In the event that
the Company purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Shares
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding.
Notwithstanding this Section 3.3, the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares, certification and assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or trading system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the terms and conditions hereof, the Right Certificates,
whenever issued, shall be dated as of the Record Date, and shall show the date
of countersignature by the Rights Agent, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the
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"Purchase Price"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, the Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be countersigned, either manually or by facsimile
signature, by an authorized signatory of the Rights Agent, but it shall not be
necessary for the same signatory to countersign all of the Right Certificates
hereunder. No Right Certificate shall be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 11.1.2 and Section 14, at any time after the close
of business on the Distribution Date, and at or prior to the close of business
on the Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to Section
11.1.2 or that have been exchanged pursuant to Section 27) may be transferred,
split up or combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up or combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender, together with any required form of assignment and
certificate duly completed, the Right Certificate or Right Certificates to be
transferred, split up or combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate or Right Certificates
and shall have provided such additional evidence of the identity of the
Beneficial
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Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment from the holders of Right Certificates of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up or combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2 , at any time after the
Distribution Date and prior to the Expiration Date, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company will
make and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
7.1 Exercise of Rights. Subject to Section 11.1.2 and except as
otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price for the
total number of one one-hundredths of a Preferred Share (or other securities,
cash or other assets) as to which the Rights are exercised, at or prior to the
time (the "Expiration Date") that is the earliest of (i) the close of business
on February 18, 2010 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date"), (iii) the
closing of any merger or other acquisition transaction involving the Company
pursuant to an agreement of the type described in Section 13.3 at which time the
Rights are deemed terminated, or (iv) the time at which the Rights are exchanged
as provided in Section 27.
7.2 Purchase. The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall be initially $300.00,
shall be subject to adjustment from time to time as provided in Sections 11, 13
and 26 and shall be payable in lawful money of the United States of America in
accordance with Section 7.3.
7.3 Payment Procedures. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certification duly
executed, accompanied by payment of the aggregate Purchase Price for the total
number of one one-hundredths of a Preferred Share to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9, in cash or by certified or
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i)(A) requisition from any transfer agent
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of the Preferred Shares (or make available, if the Rights Agent is the transfer
agent) certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depositary agent depositary receipts
representing interests in such number of one one-hundredths of a Preferred Share
as are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with all such requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 14 or otherwise in accordance with Section 11.1.3, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities of the Company,
pay cash and/or distribute other property pursuant to Section 11.1.3, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
7.4 Partial Exercise. In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
7.5 Full Information Concerning Ownership. Notwithstanding anything in
this Agreement to the contrary, neither the Rights Agent nor the Company shall
be obligated to undertake any action with respect to a registered holder of
Rights upon the occurrence of any purported exercise as set forth in this
Section 7 unless the certificate contained in the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written
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request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. The Company
covenants and agrees that from and after the Distribution Date it will cause to
be reserved and kept available out of its authorized and unissued Preferred
Shares (and, following the occurrence of a Trigger Event, out of its authorized
and unissued Common Shares or other securities or out of its shares held in its
treasury) the number of Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) issuable upon the exercise
of Rights may be listed on any national securities exchange or traded in the
over-the-counter market and quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") (including the National
Market or Small Cap Market), the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed or admitted to trading on such exchange or quoted
on Nasdaq upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
From and after such time as the Rights become exercisable, the Company
shall use its best efforts, if then necessary to permit the issuance of
Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities or
"Blue Sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the date as of which the Rights are no longer
exercisable for such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall have been declared effective.
The Company further covenants and agrees that it will pay when due and
payable any and all Federal and state transfer taxes and charges which may be
payable in respect of the
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issuance or delivery of the Right Certificates or of any Preferred Shares (or
Common Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
for the Preferred Shares (or Common Shares and/or other securities, as the case
may be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates for Preferred Shares (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or other securities
or property purchasable upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
11.1 Post-Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In the event the
Company shall at any time after the date of this Agreement (A) declare and pay a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into
a smaller number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11.1, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of
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such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both Section 11.1.1 and Section 11.1.2, the adjustment provided
for in this Section 11.1.1 shall be in addition to, and shall be made prior to,
the adjustment required pursuant to, Section 11.1.2.
11.1.2 Acquiring Person Events; Triggering Events. Subject to Sections
23.1 and 27, in the event that a Trigger Event occurs, then, from and after the
first occurrence of such event, each holder of a Right, except as provided
below, shall thereafter have a right to receive, upon exercise thereof at a
price per Right equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2), in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without giving effect to this
Section 11.1.2) and (y) dividing that product by 50% of the current per share
market price of the Common Shares (determined pursuant to Section 11.4) on the
first of the date of the occurrence of, or the date of the first public
announcement of, a Trigger Event (the "Adjustment Shares"); PROVIDED that the
Purchase Price and the number of Adjustment Shares shall thereafter be subject
to further adjustment as appropriate in accordance with Section 11.6.
Notwithstanding the foregoing, upon the occurrence of a Trigger Event, any
Rights that are or were acquired or beneficially owned by (1) any Acquiring
Person or any Associate or Affiliate thereof, (2) a transferee of any Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (3) a transferee of any Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of this Section 11.1.2, and subsequent transferees, shall become void without
any further action, and any holder (whether or not such holder is an Acquiring
Person or an Associate or Affiliate of an Acquiring Person) of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement or otherwise. From and after the Trigger Event, no Right Certificate
shall be issued pursuant to Section 3 or Section 6 that represents Rights that
are or have become void pursuant to the provisions of this paragraph, and any
Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this paragraph shall be
canceled.
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The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 are complied with, but shall have no liability
to any holder of Right Certificates or other Person as a result of its failure
to make any determinations with respect to any Acquiring Person or its
Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in Section 13.1, any
Rights that theretofore have not been exercised pursuant to this Section 11.1.2
shall thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11.1.2.
11.1.3 Insufficient Shares. The Company may at its option substitute for
a Common Share issuable upon the exercise of Rights in accordance with the
foregoing Section 11.1.2 a number of Preferred Shares or fraction thereof such
that the current per share market price of one Preferred Share multiplied by
such number or fraction is equal to the current per share market price of one
Common Share. In the event that upon the occurrence of a Trigger Event there
shall not be sufficient Common Shares authorized but unissued, or held by the
Company as treasury shares, to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exercise of the Rights, PROVIDED, HOWEVER, that if the Company determines
that it is unable to cause the authorization of a sufficient number of
additional Common Shares, then, in the event the Rights become exercisable, the
Company, with respect to each Right and to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date hereof to
which it is a party, shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price (such excess, the "Spread") and (B) with respect to
each Right (other than Rights which have become void pursuant to Section
11.1.2), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities of the Company
(including, without limitation, shares, or fractions of shares, of preferred
stock which, by virtue of having dividend and liquidation rights substantially
comparable to those of the Common Shares, the Board of Directors of the Company
has deemed in good faith to have substantially the same value as Common Shares)
(each such share of preferred stock or fractions of shares of preferred stock
constituting a "common stock equivalent")), (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing having an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors of the Company; PROVIDED, HOWEVER, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the occurrence of a Trigger Event, then the Company
shall be obligated to deliver, to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date hereof to
which it is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
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<PAGE> 16
available) and then, if necessary, such number or fractions of Preferred Shares
(to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is unlikely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety (90) days
following the occurrence of a Trigger Event, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period as may be extended, the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the second and/or
third sentences of this Section 11.1.3, the Company (x) shall provide that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11.1.3, the
value of a Common Share shall be the current per share market price (as
determined pursuant to Section 11.4) on the date of the occurrence of a Trigger
Event and the value of any "common stock equivalent" shall be deemed to have the
same value as the Common Shares on such date. The Board of Directors of the
Company may, but shall not be required to, establish procedures to allocate the
right to receive Common Shares upon the exercise of the Rights among holders of
Rights pursuant to this Section 11.1.3.
11.2 Dilutive Rights Offering. In case the Company shall fix a record
date for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or securities having
the same rights, privileges and preferences as the Preferred Shares ("equivalent
preferred stock")) or securities convertible into Preferred Shares or equivalent
preferred stock at a price per Preferred Share or per share of equivalent
preferred stock (or having a conversion or exercise price per share, if a
security convertible into or exercisable for Preferred Shares or equivalent
preferred stock) less than the current per share market price of the Preferred
Shares (as determined pursuant to Section 11.4) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
and shares of equivalent preferred stock outstanding on such record date plus
the number of Preferred Shares and shares of equivalent preferred stock which
the aggregate offering price of the total number of Preferred Shares and/or
shares of equivalent preferred stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current per share market price and the denominator of which shall be the
number of Preferred Shares and shares of equivalent preferred stock outstanding
on such record date plus the number of additional Preferred Shares and/or shares
of equivalent preferred stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate
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par value of the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Preferred Shares and shares of equivalent preferred stock owned by or
held for the account of the Company or any Subsidiary of the Company shall not
be deemed outstanding for the purpose of any such computation. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
11.3 Distributions. In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash, securities or assets (other than a regular periodic cash
dividend at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Preferred Shares (which dividend, for purposes of this Agreement, shall be
subject to the provisions of Section 11.1.1(A))) or convertible securities, or
subscription rights or warrants (excluding those referred to in Section 11.2),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price of the Preferred Shares (as determined pursuant to Section 11.4) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets,
securities or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares (as determined pursuant to Section 11.4); PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
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11.4 Current Per Share Market Value.
11.4.1 General. For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11.4.1) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; PROVIDED, HOWEVER, that in the event that the current per share market
price of the Security is determined during any period following the announcement
by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"current per share market price" shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so listed
or traded, or if on any such date the Security is not so quoted and no such
market maker is making a market in the Security, "current per share market
price" shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company or, if at the time of such determination there
is an Acquiring Person, by a nationally recognized investment banking firm
selected by the Board of Directors, which shall have the duty to make such
determination in a reasonable and objective manner, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
11.4.2 Preferred Shares. Notwithstanding Section 11.4.1, for the purpose
of any computation hereunder, the "current per share market price" of the
Preferred Shares shall be determined in the same manner as set forth above in
Section 11.4.1 (other than the last sentence thereof). If the current per share
market price of the Preferred Shares cannot be determined in the manner
described in Section 11.4.1, the "current per share market price" of the
Preferred Shares
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shall be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring after the date of
this Agreement) multiplied by the current per share market price of the Common
Shares (as determined pursuant to Section 11.4.1). If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, or if on any
such date neither the Common Shares nor the Preferred Shares are so quoted and
no such market maker is making a market in either the Common Shares or the
Preferred Shares, "current per share market price" of the Preferred Shares shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm selected by
the Board of Directors of the Company, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. For purposes of this Agreement, the "current per share market
price" of one one-hundredth of a Preferred Share shall be equal to the "current
per share market price" of one Preferred Share divided by 100.
11.5 Insignificant Changes. No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price. Any adjustments which by reason of this Section
11.5 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one-hundred thousandth of a Preferred
Share or the nearest one-hundredth of a Common Share or other share or security,
as the case may be.
11.6 Shares Other Than Preferred Shares. If as a result of an adjustment
made pursuant to Section 11.1, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11.1,
11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
11.7 Rights Issued Prior to Adjustment. All Rights originally issued by
the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the number
of one one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8 Effect of Adjustments. Unless the Company shall have exercised its
election as provided in Section 11.9, upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one-hundred
thousandth of a Preferred Share) obtained by (i) multiplying (x) the number of
one
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one-hundredths of a Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
11.9 Adjustment in Number of Rights. The Company may elect on or after
the date of any adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of one one-hundredths of a
Preferred Share issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11.9, the Company may, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
11.10 Right Certificates Unchanged. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
share and the number of one one-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
11.11 Par Value Limitations. Before taking any action that would cause
an adjustment reducing the Purchase Price below one one-hundredth of the then
par value, if any, of the Preferred Shares or other shares of capital stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Preferred
Shares or other such shares at such adjusted Purchase Price.
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11.12 Deferred Issuance. In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised after
such record date of that number of Preferred Shares and shares of other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the Preferred Shares and shares of other capital stock or other
securities, assets or cash of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
11.13 Reduction in Purchase Price. Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any of the Preferred Shares at
less than the current market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Shares shall not
be taxable to such stockholders.
11.14 Company Not to Diminish Benefits of Rights. The Company covenants
and agrees that after the earlier of the Shares Acquisition Date or Distribution
Date it will not, except as permitted by Section 23, Section 26 or Section 27,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
11.15 Adjustment of Rights Associated with Common Shares.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that the Company shall at any time after the date hereof and prior to the
Distribution Date (i) declare or pay any dividend on the outstanding Common
Shares payable in Common Shares, (ii) effect a subdivision or consolidation of
the outstanding Common Shares (by reclassification or otherwise than by the
payment of dividends payable in Common Shares), or (iii) combine the outstanding
Common Shares into a greater or lesser number of Common Shares, then in any such
case, the number of Rights associated with each Common Share then outstanding,
or issued or delivered thereafter but prior to the Distribution Date or in
accordance with Section 22 shall be proportionately adjusted so that the number
of Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustments provided for in this
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Section 11.15 shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
13.1 Certain Transactions. In the event that, from and after the first
occurrence of a Trigger Event, directly or indirectly, (A) the Company shall
consolidate with, or merge with and into, any other Person and the Company shall
not be the continuing or surviving corporation, (B) any Person shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of the Company or any other Person or cash or any
other property, or (C) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or one or more wholly-owned Subsidiaries of the Company in one or more
transactions each of which complies with Section 11.14), then, and in each such
case, proper provision shall be made so that (i) each holder of a Right (other
than Rights which have become void pursuant to Section 11.1.2) shall thereafter
have the right to receive, upon the exercise thereof at a price per Right equal
to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in
accordance with the terms of this Agreement and in lieu of Preferred Shares or
Common Shares, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as such
term is hereinafter defined) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y)
dividing that product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11.4) on
the date of consummation of such consolidation, merger, sale or transfer;
PROVIDED, that the price per Right so payable and the number of Common Shares of
such Principal Party so receivable upon
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exercise of a Right shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11.6 to reflect any events covered
thereby occurring in respect of the Common Shares of such Principal Party after
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; PROVIDED that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase Price as provided
in this Section 13.1, such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Shares of the Principal Party
receivable upon the exercise of a Right pursuant to this Section 13.1, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that the requirements of this Section
13.1 and Section 13.2 shall promptly be performed in accordance with their terms
and that such consolidation, merger, sale or transfer of assets shall not result
in a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to this Section 13.1 and Section
13.2 and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party, at its own expense, shall
(1) prepare and file a registration statement under the Securities Act,
if necessary, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and similarly comply with applicable
state securities laws;
(2) use its best efforts, if the Common Shares of the Principal Party
shall be listed or admitted to trading on the New York Stock Exchange or on
another national securities exchange, to list or admit to trading (or continue
the listing of) the Rights and the securities purchasable upon exercise of the
Rights on the New York Stock Exchange or such securities exchange, or, if the
Common Shares of the Principal Party shall not be listed or admitted to trading
on the New York Stock Exchange or a national securities exchange, to cause the
Rights
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<PAGE> 24
and the securities receivable upon exercise of the Rights to be authorized for
quotation on Nasdaq or on such other system then in use;
(3) deliver to holders of the Rights historical financial statements for
the Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act; and
(4) obtain waivers of any rights of first refusal or preemptive rights
in respect of the Common Shares of the Principal Party subject to purchase upon
exercise of outstanding Rights.
In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, Common Shares or
common stock equivalents of such Principal Party at less than the then current
market price per share thereof (determined pursuant to Section 11.4) or
securities exercisable for, or convertible into, Common Shares or common stock
equivalents of such Principal Party at less than such then current market price
(other than to holders of Rights pursuant to this Section 13), or (ii) providing
for any special payment, taxes or similar provision in connection with the
issuance of the Common Shares of such Principal Party pursuant to the provision
of Section 13, then, in such event, the Company hereby agrees with each holder
of Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
The Company covenants and agrees that it shall not, at any time after
the Trigger Event, enter into any transaction of the type described in clauses
(A) through (C) of this Section 13.1 if (i) at the time of or immediately after
such consolidation, merger, sale, transfer or other transaction there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (ii) prior to, simultaneously with or
immediately after such consolidation, merger, sale, transfer or other
transaction, the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13.2 shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
provisions of this Section 13 shall similarly apply to successive transactions
of the type described in clauses (A) through (C) of this Section 13.1.
13.2 Principal Party. "Principal Party" shall mean:
(i) in the case of any transaction described in (A) or (B) of the
first sentence of Section 13.1: (i) the Person that is the issuer of the
securities into which the
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Common Shares are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Shares of which have the
greatest aggregate market value of shares outstanding, or (ii) if no securities
are so issued, (x) the Person that is the other party to the merger, if such
Person survives said merger, or, if there is more than one such Person, the
Person the Common Shares of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the consolidation;
and
(ii) in the case of any transaction described in (C) of the first
sentence in Section 13.1, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;
PROVIDED, HOWEVER, that in any such case described in the foregoing clause (i)
or (ii) of this Section 13.2, if the Common Shares of such Person are not at
such time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person is a
direct or indirect Subsidiary of another Person the Common Shares of which are
and have been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
13.3 Approved Acquisitions. Notwithstanding anything contained herein to
the contrary, upon the consummation of any merger or other acquisition
transaction of the type described in clause (A), (B) or (C) of Section 13.1
involving the Company pursuant to a merger or other acquisition agreement
between the Company and any Person (or one or more of such Person's Affiliates
or Associates) which agreement has been approved by the Board of Directors of
the Company prior to any Person becoming an Acquiring Person, this Agreement and
the rights of holders of Rights hereunder shall be terminated in accordance with
Section 7.1.
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Section 14. Fractional Rights and Fractional Shares.
14.1 Cash in Lieu of Fractional Rights. The Company shall not be
required to issue fractions of Rights or to distribute Right Certificates which
evidence fractional Rights (except prior to the Distribution Date in accordance
with Section 11.15). In lieu of such fractional Rights, there shall be paid to
the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14.1, the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the current market
value of the Rights on such date shall be the fair value of the Rights as
determined in good faith by the Board of Directors of the Company, or, if at the
time of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, which shall have the duty to make such determination in a reasonable
and objective manner, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
14.2 Cash in Lieu of Fractional Preferred Shares. The Company shall not
be required to issue fractions of Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share) upon exercise
or exchange of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share). Interests in fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
PROVIDED, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same
fraction of the current per share market price of one Preferred Share (as
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determined in accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
14.3 Cash in Lieu of Fractional Common Shares. The Company shall not be
required to issue fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares upon the exercise or exchange of Rights. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share (as determined in accordance
with Section 14.1) for the Trading Day immediately prior to the date of such
exercise or exchange.
14.4 Waiver of Right to Receive Fractional Rights or Shares. The holder
of a Right by the acceptance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise or exchange of a
Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18, are vested in the respective registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce this Agreement, and may institute and maintain any suit, action
or proceeding against the Company to enforce this Agreement, or otherwise
enforce or act in respect of his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person (including, without limitation, the Company) subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer with all required certifications completed; and
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(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation or limited liability company into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or limited liability company resulting from any merger or
consolidation to which the Rights Agent or any successor
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Rights Agent shall be a party, or any corporation or limited liability company
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, PROVIDED that such corporation or
limited liability company would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
20.1 Legal Counsel. The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
20.2 Certificates as to Facts or Matters. Whenever in the performance of
its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or
any Assistant Treasurer or Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or willful misconduct.
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20.4 Reliance on Agreement and Right Certificates. The Rights Agent
shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except as to
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
20.5 No Responsibility as to Certain Matters. The Rights Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11.1.2) or any adjustment required under the provisions of Sections 3,
11, 13, 23 or 27 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such change or adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
20.6 Further Assurance by Company. The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
20.7 Authorized Company Officers. The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties under this Agreement, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting
while waiting for these instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Agreement and the
date on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable to the Company for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified therein (which
date shall not be less than three business days after the date any such officer
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking of any such action (or
the effective date in the case of omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
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20.8 Freedom to Trade in Company Securities. The Rights Agent and any
stockholder, director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
20.9 Reliance on Attorneys and Agents. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, omission, default, neglect or misconduct,
PROVIDED that reasonable care was exercised in the selection and continued
employment thereof.
20.10 Incomplete Certificate. If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an Affiliate or Associate
thereof), the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
20.11 Rights Holders List. At any time and from time to time after the
Distribution Date, upon the request of the Company, the Rights Agent shall
promptly deliver to the Company a list, as of the most recent practicable date
(or as of such earlier date as may be specified by the Company), of the holders
of record of Rights.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and/or Preferred Shares, as applicable, by
registered or certified mail. Following the Distribution Date, the Company shall
promptly notify the holders of the Right Certificates by first-class mail of any
such resignation. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares and/or Preferred Shares, as applicable, by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the resigning, removed, or incapacitated Rights Agent shall
remit to the Company, or to any successor Rights Agent designated by the
Company, all books, records, funds, certificates or other documents or
instruments of any kind then in its possession which were acquired by such
resigning, removed or incapacitated Rights Agent in connection with its
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services as Rights Agent hereunder, and shall thereafter be discharged from all
duties and obligations hereunder. Following notice of such removal, resignation
or incapacity, the Company shall appoint a successor to such Rights Agent. If
the Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York or the State of California (or any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or California) in good standing,
having an office in the State of New York or the State of California, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by Federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $10 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and/or Preferred Shares, as applicable, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the Expiration Date, the Company shall, with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded, or upon exercise, conversion
or exchange of securities hereinafter issued by the Company, in each case
existing prior to the Distribution Date, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued and (ii) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
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Section 23. Redemption.
23.1 Right to Redeem. The Board of Directors of the Company may, at its
option, at any time prior to a Trigger Event, redeem all but not less than all
of the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"), and
the Company may, at its option, pay the Redemption Price in Common Shares (based
on the "current per share market price," determined pursuant to Section 11.4, of
the Common Shares at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of Directors. The redemption of
the Rights by the Board of Directors may be made effective at such time, on such
basis and subject to such conditions as the Board of Directors in its sole
discretion may establish.
23.2 Redemption Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights (or at such later
time as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held. The
Company shall promptly give public notice of such redemption; PROVIDED, HOWEVER,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. The Company shall promptly give, or cause the
Rights Agent to give, notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 27, and other
than in connection with the purchase, acquisition or redemption of Common Shares
prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company shall propose
at any time after the earlier of the Shares Acquisition Date and the
Distribution Date (a) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last regular periodic cash dividend
theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
per share of the Company for the four quarters ended immediately prior to the
payment of such dividends, or a stock dividend on, or a subdivision, combination
or reclassification of the Common Shares), or (b) to offer to the holders of
Preferred
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Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than pursuant to a merger or other
acquisition agreement of the type described in Section 1.3(ii)(A)(z)), or (e) to
effect the liquidation, dissolution or winding up of the Company, or (f) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to the Rights Agent and to each
holder of a Right Certificate, in accordance with Section 25, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares and/or Common Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least ten (10) days prior to the record
date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least ten (10) days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares and/or Common Shares, whichever
shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13 shall occur,
then, in any such case, (i) the Company shall as soon as practicable thereafter
give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 25, a notice of the occurrence of such event, which
notice shall describe the event and the consequences of the event to holders of
Rights under Section 11.1.2 and Section 13, and (ii) all references in this
Section 24 to Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary, prior to the
Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
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Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Allergan, Inc.
2525 Dupont Drive
Irvine, California 92612
Attention: Secretary
Subject to the provisions of Section 21 and Section 24, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
Mail Stop 4660, P.O. Box 2507
Jersey City, NJ 07303-2507
Attention: Michael S. Duncan
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments. For so long as the Rights are
then redeemable, the Company may in its sole and absolute discretion, and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time that the Rights are no longer
redeemable, the Company may, and the Rights Agent shall, if the Company so
directs, from time to time supplement or amend this Agreement without the
approval of any holders of Rights (i) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (ii) to make any other changes or provisions
in regard to matters or questions arising hereunder which the Company may deem
necessary or desirable, including but not limited to extending the Final
Expiration Date; PROVIDED, HOWEVER, that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such supplement or amendment may cause the Rights again to become redeemable or
cause this Agreement again to become amendable other than in accordance with
this sentence; PROVIDED FURTHER, that the right of the Board of Directors to
extend the Distribution Date shall not require any amendment or supplement
hereunder. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Without limiting the foregoing, at any time prior to
such time as any Person becomes an Acquiring Person, the Company and the Rights
Agent may amend this Agreement to lower the thresholds set forth in Sections 1.1
and 3.1 to not less than the greater of (i) any percentage
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greater than the largest percentage of the outstanding Common Shares then known
by the Company to be beneficially owned by any Person (other than an Exempt
Person) and (ii) 10%.
Section 27. Exchange.
27.1 Exchange of Common Shares for Rights. The Board of Directors of the
Company may, at its option, at any time after the occurrence of a Trigger Event,
exchange Common Shares for all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11.1.2) by exchanging at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such amount per
Right being hereinafter referred to as the "Exchange Consideration").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Acquiring Person shall have become
the Beneficial Owner of 50% or more of the Common Shares then outstanding. From
and after the occurrence of an event specified in Section 13.1, any Rights that
theretofore have not been exchanged pursuant to this Section 27.1 shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 27.1. The exchange of the Rights by the Board
of Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
27.2 Exchange Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the exchange for any Rights pursuant to
Section 27.1 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive the Exchange Consideration. The Company shall
promptly give public notice of any such exchange; PROVIDED, HOWEVER, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
the Rights that have become void pursuant to the provisions of Section 11.1.2)
held by each holder of Rights.
27.3 Insufficient Shares. The Company may at its option substitute, and,
in the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit an exchange of Rights for
Common Shares as contemplated in accordance with this Section 27, the Company
shall substitute to the extent of such insufficiency, for each Common Share that
would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof (or equivalent preferred stock, as such term is
defined in Section 11.2) such that the current per share market price
(determined pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is
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equal to the current per share market price of one Common Share (determined
pursuant to Section 11.4) as of the date of such exchange.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Determination and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are done or
made by the Board of Directors of the Company in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Heading. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
ALLERGAN, INC.
By /s/ DAVID E.I. PYOTT
-----------------------------------
Name: David E.I. Pyott
Title: President & CEO
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
By /s/ MICHAEL S. DUNCAN
-----------------------------------
Name: Michael S. Duncan
Title: Director, Corporate Actions
37
<PAGE> 39
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ALLERGAN, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------
Allergan, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on January 25, 2000.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation of this Corporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, powers and preferences, and qualifications,
limitations and restrictions thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of this Corporation ranking prior
and superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred
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Stock, in preference to the holders of Common Stock, par value $.01 per
share (the "Common Stock"), of the Corporation, and of any other stock
ranking junior to the Series A Preferred Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash
on the first day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1.00 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly
A-2
<PAGE> 41
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
A-3
<PAGE> 42
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Corporation
ranking junior (both as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the
Corporation, voluntary or otherwise no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to
A-4
<PAGE> 43
the Series A Preferred Stock unless, prior thereto, the holders of
shares of Series A Preferred Stock shall have received an amount per
share (the "Series A Liquidation Preference") equal to $100 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided
that the holders of shares of Series A Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of shares of Common Stock,
or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that are outstanding immediately prior to such
event.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and
series of stock of the Corporation, if any, that rank on a parity with
the Series A Preferred Stock in respect thereof, then the assets
available for such distribution shall be distributed ratably to the
holders of the Series A Preferred Stock and the holders of such parity
shares in proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
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<PAGE> 44
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable by the Company.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, junior to all series of any other class of the
Corporation's Preferred Stock, except to the extent that any such other series
specifically provides that it shall rank on a parity with or junior to the
Series A Preferred Stock.
Section 10. Amendment. At any time any shares of Series A Preferred
Stock are outstanding, the Certificate of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
separately as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board this ___ day of
__________, 2000.
-----------------------------------
Chairman of the Board
A-6
<PAGE> 45
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER FEBRUARY 18, 2010 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED
PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z)
OF THE AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS
DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
ALLERGAN, INC.
This certifies that _______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January 25, 2000, as the same
may be amended from time to time (the "Agreement"), between Allergan, Inc., a
Delaware corporation (the "Company"), and First Chicago Trust Company of New
York, a New York trust company, as Rights Agent (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date and prior to
5:00 P.M. (New York time) on February 18, 2010, at the offices of the Rights
Agent, or its successors as Rights Agent, designated for such purpose, one
one-hundredth of a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred Shares")
of the Company, at a purchase price of $300.00 per one one-hundredth of a
Preferred Share, subject to adjustment (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
and certification duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of February 18, 2000, based on
the Preferred Shares as constituted at such date. Capitalized terms used in this
Right Certificate without definition shall have the meanings ascribed to them in
the Agreement. As provided in the Agreement, the Purchase Price and the number
of Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by
B-1
<PAGE> 46
reference and made a part hereof and to which Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations, duties
and immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Agreement are on file at the principal offices
of the Company and the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the offices of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of one one-hundredths of a Preferred Share as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Agreement, the Board of Directors may,
at its option, (i) redeem the Rights evidenced by this Right Certificate at a
redemption price of $.01 per Right or (ii) exchange Common Shares for the Rights
evidenced by this Certificate, in whole or in part.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions of Preferred Shares which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Right Certificate shall not be valid or binding for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
<PAGE> 47
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________.
Attest: ALLERGAN, INC.
By By
----------------------------------- -----------------------------------
Title: Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Rights Agent
By
-----------------------------------
Authorized Signature
B-3
<PAGE> 48
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address
of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint ___________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
-----------------------
-----------------------------------
Signature
Signature Guaranteed:
- -------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
B-4
<PAGE> 49
- --------------------------------------------------------------------------------
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not beneficially
owned by and are not being assigned to an Acquiring Person or an Affiliate or an
Associate thereof; and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated:
------------------------------
-------------------------------------
Signature
B-5
<PAGE> 50
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: Allergan, Inc.
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities or property
of the Company or of any other Person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the name
of:
- ------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- ------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------
Dated:
--------------
---------------------------------------
Signature
Signature Guaranteed:
- -----------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
B-6
<PAGE> 51
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not beneficially
owned by and are not being assigned to an Acquiring Person or an Affiliate or an
Associate thereof; and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated:
-----------------
----------------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment and Form of Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment
or Form of Election to Purchase is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate hereof and such Assignment or
Election to Purchase will not be honored.
B-7
<PAGE> 52
EXHIBIT C
As described in the Rights Agreement, Rights which are
held by or have been held by an Acquiring Person or Associates
or Affiliates thereof (as defined in the Rights Agreement) and certain
transferees thereof shall become null and void and will
no longer be transferable.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On January 25, 2000 the Board of Directors of Allergan, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each share of common stock, $.01 par value (the "Common Shares"), of the
Company outstanding at the close of business on February 18, 2000 (the "Record
Date"). As long as the Rights are attached to the Common Shares, the Company
will issue one Right (subject to adjustment) with each new Common Share so that
all such shares will have attached Rights. When exercisable, each Right will
entitle the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock (the "Preferred
Shares") at a price of $300.00 per one one-hundredth of a Preferred Share,
subject to adjustment (the "Purchase Price"). The description and terms of the
Rights are set forth in a Rights Agreement, dated as of January 25, 2000, as the
same may be amended from time to time (the "Agreement"), between the Company and
First Chicago Trust Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Shares (an "Acquiring Person") or (ii) ten (10) business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement or announcement of an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the Common Shares
(the earlier of (i) and (ii) being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate together
with a copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or earlier
redemption exchange, termination, or expiration of the Rights), the Rights will
be transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the close of business on the Record Date upon transfer
or new issuance of the Common Shares will contain a notation incorporating the
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange, termination or expiration of the Rights), the surrender for transfer
of any certificates for Common Shares, with or without such notation or a copy
of this Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights
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<PAGE> 53
("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 18, 2010, subject to the Company's right to extend such
date (the "Final Expiration Date"), unless earlier redeemed or exchanged by the
Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of $1.00 per share but will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per Common Share. In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $100 per share (plus any accrued but unpaid dividends) but will be entitled
to an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes and will vote together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. Preferred Shares will
not be redeemable. These rights are protected by customary antidilution
provisions. Because of the nature of the Preferred Share's dividend, liquidation
and voting rights, the value of one one-hundredth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets (excluding regular periodic cash
dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends payable in
Preferred Shares (which dividends will be subject to the adjustment described in
clause (i) above)) or of subscription rights or warrants (other than those
referred to above).
In the event that a Person becomes an Acquiring Person or if the Company
were the surviving corporation in a merger with an Acquiring Person or any
affiliate or associate of an Acquiring Person and the Common Shares were not
changed or exchanged, each holder of a Right, other than Rights that are or were
acquired or beneficially owned by the Acquiring Person (which Rights will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Common Shares having a market value of two times the then current
Purchase Price of the Right. In the event that, after a person has become an
Acquiring Person, the Company were acquired in a merger or other business
combination transaction or more than 50% of its
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assets or earning power were sold, proper provision shall be made so that each
holder of a Right shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
would have a market value of two times the then current Purchase Price of the
Right.
At any time after a Person becomes an Acquiring Person and prior to the
earlier of one of the events described in the last sentence of the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors may cause the Company to
exchange the Rights (other than Rights owned by an Acquiring Person which will
have become void), in whole or in part, for Common Shares at an exchange rate of
one Common Share per Right (subject to adjustment).
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No
fractional Preferred Shares or Common Shares will be issued (other than
fractions of Preferred Shares which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Company, be evidenced by
depository receipts), and in lieu thereof, a payment in cash will be made based
on the market price of the Preferred Shares or Common Shares on the last trading
date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $.01
per Right (the "Redemption Price") by the Board of Directors at any time prior
to the time that an Acquiring Person has become such. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company beyond those as an existing stockholder,
including, without limitation, the right to vote or to receive dividends.
Any of the provisions of the Agreement may be amended by the Board of
Directors of the Company for so long as the Rights are then redeemable, and
after the Rights are no longer redeemable, the Company may amend or supplement
the Agreement in any manner that does not adversely affect the interests of the
holders of the Rights (other than an Acquiring Person or an affiliate or
associate of an Acquiring Person). The Company may at any time prior to such
time as any person becomes an Acquiring Person amend the Agreement to lower the
thresholds described above to no less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common Shares then known
by the Company to be beneficially owned by any person or group of affiliated or
associated persons (other than an Exempt Person) and (ii) 10%.
A copy of the Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K. A copy of the
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Agreement, which is incorporated herein by reference.
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EXHIBIT 10.1
AGREEMENT
This Agreement ("Agreement") dated as of ____________________, is entered
into by and between _________________________ ("Employee"), and Allergan, Inc.,
a Delaware corporation (the "Company"), and amends, restates and supersedes the
Agreement, dated , as amended, between Employee and the Company.
RECITALS
The Company believes that because of its position in the industry,
financial resources and historical operating results there is a possibility that
the Company may become the subject of a Change in Control (as defined below),
either now or at some time in the future.
The Company believes that it is in the best interest of the Company and
its stockholders to foster Employee's objectivity in making decisions with
respect to any pending or threatened Change in Control of the Company and to
assure that the Company will have the continued dedication and availability of
Employee as an employee of the Company or one of its affiliates, notwithstanding
the possibility, threat or occurrence of a Change in Control. The Company
believes that these goals can be accomplished by alleviating certain of the
risks and uncertainties with regard to Employee's financial and professional
security that would be created by a pending or threatened Change in Control and
that inevitably would distract Employee and could impair his or her ability to
objectively perform his or her duties for and on behalf of the Company.
Accordingly, the Company believes that it is appropriate and in the best
interest of the Company and its stockholders to provide to Employee compensation
arrangements upon a Change in Control that lessen Employee's financial risks and
uncertainties and that are competitive with those of other corporations.
With these and other considerations in mind, the Board of Directors of the
Company, acting through its Organization and Compensation Committee, has
authorized the Company to enter into this Agreement with Employee to provide the
protections set forth herein for Employee's financial security following a
Change in Control.
NOW, THEREFORE, in consideration of the foregoing, it is hereby agreed as
follows:
1. Term of Agreement. This Agreement shall be effective for the period
commencing on the date first written above and ending on the second anniversary
of such date. The Company may, in its sole discretion and for any reason,
provide written notice of termination (effective as of the then applicable
expiration date) to Employee no later than 60 days before the expiration date of
this Agreement. If written notice is not so provided, this Agreement shall be
automatically extended for an additional period of 12 months past the expiration
date. This Agreement shall continue to be automatically extended for an
additional 12 months at the end of such 12-month period and each succeeding
12-month period unless notice is given in the manner described in this Section.
No termination of this Agreement shall affect Employee's rights hereunder with
respect to a Change in Control which has occurred prior to such termination.
<PAGE> 2
2. Purpose of Agreement. The purpose of this Agreement is to provide that,
in the event of a "Change in Control," Employee may become entitled to receive
certain additional benefits, as described herein, in the event of his or her
termination.
3. Change in Control. As used in this Agreement, the phrase "Change in
Control" shall mean the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (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 Company representing (i) 20% or more of the combined
voting power of the Company'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 (ii) 33% or more of the combined voting power of
the Company's then outstanding voting securities, without regard to
whether such acquisition is approved by the Incumbent Board;
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (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 Company's stockholders, is
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Company, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of this
Agreement, be considered as though such person were a member of the
Incumbent Board of the Company;
(c) The consummation of a merger, consolidation or reorganization
involving the Company, 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 Company outstanding
immediately prior thereto continuing to represent (either by
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 Company 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 Company'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
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<PAGE> 3
Company representing 20% or more of the combined voting power of the
Company's then outstanding voting securities; or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's
assets.
Notwithstanding the preceding provisions of this Section, a Change
in Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Section is (1) an underwriter or underwriting
syndicate that has acquired the ownership of any of the Company's then
outstanding voting securities solely in connection with a public offering of the
Company's securities, (2) the Company or any subsidiary of the Company or (3) an
employee stock ownership plan or other employee benefit plan maintained by the
Company (or any of its affiliated companies) that is qualified under the
provisions of the Internal Revenue Code of 1986, as amended. In addition,
notwithstanding the preceding provisions of this Section, a Change in Control
shall not be deemed to have occurred if the Person described in the preceding
provisions of this Section 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 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 Company or through a stock dividend or stock
split), then a Change in Control shall occur.
4. Effect of a Change in Control. In the event of a Change in Control,
Sections 6 through 10 of this Agreement shall become applicable to Employee.
These Sections shall continue to remain applicable until the second anniversary
of the date upon which the Change in Control occurs. At that point, so long as
the employment of Employee has not been terminated on account of a Qualifying
Termination, as defined in Section 5, this Agreement shall terminate and be of
no further force. If Employee's employment with the Company and its affiliated
companies is terminated on account of a Qualifying Termination on or before such
date, this Agreement shall remain in effect until Employee receives the various
benefits to which he or she has become entitled under the terms of this
Agreement.
5. Qualifying Termination. If, subsequent to a Change in Control
Employee's employment with the Company and its affiliated companies is
terminated, such termination shall be considered a Qualifying Termination
unless:
(a) Employee voluntarily terminates his or her employment with the
Company and its affiliated companies. Employee, however, shall not be
considered to have voluntarily terminated his or her employment with the
Company and its affiliated companies if, following the Change in Control,
Employee's overall compensation is reduced or adversely modified in any
material respect or Employee's duties are materially changed, and
subsequent to such reduction, modification or change, Employee elects to
terminate his or her employment with the Company and its affiliated
companies. For such purposes, Employee's duties shall be considered to
have been "materially changed" if,
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<PAGE> 4
without Employee's express written consent, there is any substantial
diminution or adverse modification in Employee's overall position,
responsibilities or reporting relationship, or if, without Employee's
express written consent, Employee's job location is transferred to a site
more than 50 miles away from his or her place of employment prior to the
Change in Control.
(b) The termination is on account of Employee's death or Disability.
For such purposes, "Disability" shall mean a physical or mental incapacity
as a result of which Employee becomes unable to continue the performance
of his or her responsibilities for the Company and its affiliated
companies and which, at least 26 weeks after its commencement, is
determined to be total and permanent by a physician agreed to by the
Company and Employee, or in the event of Employee's inability to designate
a physician, Employee's legal representative. In the absence of agreement
between the Company and Employee, each party shall nominate a qualified
physician and the two physicians so nominated shall select a third
physician who shall make the determination as to Disability.
(c) Employee is involuntarily terminated for "cause." For this
purpose, "cause" shall be limited to only three types of events:
(1) the willful refusal of Employee to comply with a lawful,
written instruction of the Board so long as the instruction is
consistent with the scope and responsibilities of Employee's
position prior to the Change in Control;
(2) dishonesty by Employee which results in a material
financial loss to the Company (or to any of its affiliated
companies) or material injury to its public reputation (or to the
public reputation of any of its affiliated companies); or
(3) Employee's conviction of any felony involving an act of
moral turpitude.
In addition, notwithstanding anything contained in this Agreement to
the contrary, if Employee's employment is terminated prior to a Change in
Control and it is determined that such termination (i) was at the request of a
third party who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control and who subsequently effectuates a Change in
Control (a "Third Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then, for all
purposes of this Agreement, the date of a Change in Control with respect to
Employee shall mean the date immediately prior to the date of such termination
of Employee's employment.
6. Severance Payment. If Employee's employment is terminated as a result
of a Qualifying Termination, the Company shall pay Employee within 30 days after
the Qualifying Termination a cash lump sum equal to [3/2/1] times Employee's
"Compensation" (the "Severance Payment").
(a) For purposes of this Agreement, and subject to Sections 6 (c),
(d) and (e), below, Employee's "Compensation" shall equal the sum of (i)
Employee's highest annual salary rate within the five-year period ending
on the date of
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Employee's Qualifying Termination plus (ii) a "Management Bonus
Increment." The Management Bonus Increment shall equal the average of the
two highest of the last five bonuses paid to Employee under the Management
Bonus Plan or any successor thereto.
(b) In lieu of a cash lump sum, Employee may elect to receive the
Severance Payment provided by this Section in equal annual installments
over two (2) or three (3) years at Employee's election. Such installments
shall be paid to Employee on each anniversary of the date of Employee's
Qualifying Termination, beginning with the first such anniversary and
continuing on each such anniversary thereafter until fully paid. Such
election to receive the Severance Payment in installments, and the number
of installments to receive, may be made and/or revoked by Employee at any
time prior to the occurrence of a Change in Control by written notice to
the Secretary of the Company. Upon the occurrence of a Change in Control,
any such election to receive the Severance Payment in installments that
has been made and not revoked prior to the Change in Control shall be
irrevocable and binding on both the Company and Employee. In the event
that at the time of a Change in Control there is not in effect an election
by Employee to receive the Severance Payment in installments, such
Severance Payment shall be paid to Employee in a single cash lump sum as
provided above.
(c) If Employee has not participated in the Management Bonus Plan
(including any successor thereto) for at least two full plan years, then
the missing bonus component(s) will be computed, for purposes of
calculating the Management Bonus Increment under this Agreement, by
reference to the guideline percentage for officers at Employee's grade
level for the most recently completed bonus period, assuming a 100% target
bonus for both corporate and individual objectives.
(d) If Employee's normal severance payment under the Company's
applicable severance pay policies for a reduction in force would be
greater than the Compensation described in Section 6(a), above, then
Employee's "Compensation" for purposes of Section 6(a) shall be such
greater amount.
(e) The Severance Payment hereunder is in lieu of any severance
payment that Employee might otherwise be entitled to from the Company
under the Company's applicable severance pay policies.
7. Incentive Compensation Grants. Employee may have received stock option
grants, grants of restricted stock or other incentive compensation awards under
the Allergan, Inc. 1989 Incentive Compensation Plan or other incentive
compensation plans of the Company (collectively the "Incentive Plans"). In the
event of a Qualifying Termination, the Company agrees that any and all such
stock options, restricted stock and other incentive compensation awards that are
outstanding at the time of such termination and that have not previously become
exercisable, payable or free from restrictions, as the case may be, shall
immediately become exercisable, payable or free from restrictions (other than
restrictions required by applicable law or any national securities exchange upon
which any securities of the Company are then listed), as the case may be, in
their entirety, and that the exercise period of any stock option or other
incentive award granted pursuant to any of the Incentive Plans shall continue
for the
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<PAGE> 6
length of the exercise period specified in the grant of the award determined
without regard to Employee's termination of employment.
8. Retirement Plan. In addition to any retirement benefits that might
otherwise be due Employee under the Allergan, Inc. Pension Plan or any successor
qualified defined benefit plan maintained by the Company (the "Retirement Plan")
or under the Allergan, Inc. Retirement Income Plan and the Allergan, Inc.
Supplemental Executive Benefit Plan or any successor supplemental employee
retirement plan(s) maintained by the Company (collectively the "SERP"), Employee
shall receive additional payments from the Company calculated as set forth in
this Section if Employee is terminated on account of a Qualifying Termination.
(a) At the time that Employee (or Employee's beneficiary) first
begins to receive benefits under the Retirement Plan, there shall be
calculated the difference between the benefit that Employee or Employee's
beneficiary has begun to receive under the Retirement Plan and/or the SERP
and the benefit that would have been received if Employee had worked for
another [3/2/1] years subsequent to the date of the Qualifying
Termination. For the purpose of the preceding sentence, Employee shall be
deemed to have received "Earnings" under the Retirement Plan and the SERP
for the period subsequent to the Qualifying Termination at an annual rate
equal to his or her Compensation, as calculated under Section 6(a) of this
Agreement. This difference shall be paid by the Company as a supplemental
payment to Employee or Employee's beneficiary for the period of time that
he or she is entitled to the payment that is being supplemented.
(b) Notwithstanding the preceding subsection, Employee shall not be
treated under this Section as if he or she had continued employment with
the Company once Employee elects to commence to receive benefits under the
Retirement Plan. For example, if Employee elects to commence to receive
benefits one year after his or her Qualifying Termination, then Employee
shall be credited with only one year's additional employment under this
Section, even if Employee is entitled to receive a Severance Payment equal
to three times his or her Compensation.
(c) If Employee is not a participant in the Retirement Plan,
Employee will be provided with the benefits contemplated by the provisions
of this Section 8 as part of the retirement plan provided by the affiliate
of the Company in which Employee is employed.
9. Additional Benefits. In the event of a Qualifying Termination, Employee
shall be entitled to continue to participate in all of the employee benefit
programs available to Employee before the Qualifying Termination, including but
not limited to, group medical insurance, group dental insurance, group-term life
insurance, disability insurance, automobile allowance, gasoline allowance, and a
full allowance for club dues and tax and financial planning. In addition,
Employee shall receive Executive Outplacement benefits of a type and duration
generally provided to executives at Employee's level. These programs shall be
continued at no cost to Employee, except to the extent that tax rules require
the inclusion of the value of such benefits in Employee's income. The programs
shall be continued in the same way and at the same level as immediately prior to
the Qualifying Termination. If Employee is employed by an affiliate of the
Company
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<PAGE> 7
that does not provide the additional benefits enumerated, Employee shall be
entitled to continue to participate in the employee benefit programs in which
Employee had been participating prior to the Qualifying Termination. The
programs shall continue for [3/2/1] years.
10. Indemnification for Excise Tax. In the event that Employee becomes
entitled to receive a Severance Payment in accordance with the provisions of
Section 6 above, and such Severance Payment or any other benefits or payments
(including transfers of Property) that Employee receives, or is to receive,
pursuant to this Agreement or any other agreement, plan or arrangement with the
Company in connection with a Change in Control of the Company ("Other Benefits")
shall be subject to the tax imposed pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (or any successor thereto) or any
comparable provision of state law (an "Excise Tax"), the following rules shall
apply:
(a) The Company shall pay to Employee, within 30 days after
Employee's Qualifying Termination, an additional amount (the "Gross-Up
Payment") such that the net amount retained by Employee, after deduction
of any Excise Tax with respect to the Severance Payments or the Other
Benefits and any federal, state and local income tax, employment tax and
Excise Tax upon such Gross-Up Payment, is equal to the amount that would
have been retained by Employee if such Excise Tax were not applicable, as
determined by the accounting firm (the "Auditors") serving as the
Company's independent auditors immediately prior to the Change in Control.
It is intended that Employee shall not suffer any loss or expense
resulting from the assessment of any Excise Tax or the Company's
reimbursement of Employee for payment of any such Excise Tax.
(b) For purposes of determining whether any of the Severance
Payments or Other Benefits will be subject to an Excise Tax and the amount
of such Excise Tax, (i) any other payment or benefits received or to be
received by Employee in connection with a Change in Control of the Company
or Employee's termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control or any
person affiliated with the Company or such person) shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code
(or any successor thereto), and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code (or any successor thereto) shall
be treated as subject to the Excise Tax, unless in the opinion of tax
counsel selected by the Auditors and acceptable to Employee such other
payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code (or any successor thereto),
(ii) the amount of the Severance Payments and Other Benefits which shall
be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Severance Payments or Other Benefits or (B)
the amount of excess parachute payments within the meaning of Sections
280G(b)(1) and (4) of the Code (or any successor or successors thereto),
after applying clause (i), above, and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code (or any successor or successors
thereto).
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(c) For purposes of determining the amount of the Gross-Up Payment,
Employee shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of Employee's
residence on the date of Employee's Qualifying Termination, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
(d) In the event that the Excise Tax is subsequently determined to
be less than the amount taken into account hereunder at the time of
Employee's Qualifying Termination, Employee shall repay to the Company, at
the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such
reduction plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code (or any successor thereto)
(the "Applicable Rate"). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of such
Qualifying Termination (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect
of such excess (plus interest, determined at the Applicable Rate, payable
with respect to such excess) at the time that the amount of such excess is
finally determined.
11. Rights and Obligations Prior to a Change in Control. Except as
otherwise provided in the last paragraph of Section 5, prior to a Change in
Control, the rights and obligations of Employee with respect to his or her
employment by the Company shall be determined in accordance with the policies
and procedures adopted from time to time by the Company and the provisions of
any written employment contract in effect between the Company and Employee from
time to time. Except as otherwise provided in the last paragraph of Section 5,
this Agreement deals only with certain rights and obligations of Employee
subsequent to a Change in Control, and the existence of this Agreement shall not
be treated as raising any inference with respect to what rights and obligations
exist prior to a Change in Control. Unless otherwise expressly set forth in a
separate employment agreement between Employee and the Company, the employment
of Employee is at-will, and Employee or the Company may terminate Employee's
employment with the Company at any time and for any reason, with or without
cause, provided that if such termination occurs within two years after a Change
in Control and constitutes a Qualifying Termination (as defined in Section 5
above) the provisions of this Agreement shall govern the payment of the
Severance Payment and certain other benefits as provided herein.
12. Non-Exclusivity of Rights. Subject to Section 6(d) above, nothing in
this Agreement shall prevent or limit Employee's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company or any of its affiliated companies and for which Employee may
qualify, nor shall anything herein limit or otherwise affect (except as provided
in Section 7 above) such rights as Employee may have under any stock option or
other agreements with the Company or any of its affiliated companies. Except as
otherwise provided in Section 6(d) above, amounts which are vested benefits or
which Employee is otherwise entitled to receive under any plan or program of the
Company or any of its affiliated companies at or subsequent to
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the date of any Qualified Termination shall be payable in accordance with such
plan or program.
13. Confidentiality Covenant. Employee hereby agrees that Employee shall
not, directly or indirectly, disclose or make available to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
any Confidential Information (as hereinafter defined). Employee agrees that,
upon termination of Employee's employment with the Company, all Confidential
Information in Employee's possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Company and shall not be retained by Employee or furnished to
any third party, in any form except as provided herein; provided, however, that
Employee shall not be obligated to treat as confidential, or return to the
Company copies of any Confidential Information that (i) was publicly known at
the time of disclosure to Employee, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Company by any person or entity, or (iii) is lawfully disclosed
to Employee by a third party. As used in this Agreement, the term "Confidential
Information" means: information disclosed to Employee or known by Employee as a
consequence of or through Employee's relationship with the Company, about the
products, research and development efforts, regulatory efforts, manufacturing
processes, customers, employees, business methods, public relations methods,
organization, procedures or finances, including, without limitation, information
of or relating to customer lists, of the Company and its affiliates.
14. Non-Solicitation Covenant. Employee hereby agrees that during
Employee's employment by the Company and for the period commencing on the date
of termination of Employee's employment with the Company and ending on the first
anniversary thereof, Employee shall not, either on Employee's own account or
jointly with or as a manager, agent, officer, employee, consultant, partner,
joint venturer, owner or shareholder or otherwise on behalf of any other person,
firm or corporation, directly or indirectly solicit or attempt to solicit away
from the Company any of its officers or employees or offer employment to any
person who, on or during the six (6) months immediately preceding the date of
such solicitation or offer, is or was an officer or employee of the Company;
provided, however, that a general advertisement to which an employee of the
Company responds shall in no event be deemed to result in a breach of this
Section 14.
15. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counter-claim, recoupment,
defense or other claim, right or action which the Company may have against
Employee or others. In no event shall Employee be obligated to seek other
employment or to take any other action by way of mitigation of the amounts
payable to Employee under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which Employee may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Employee about the
amount of any payment pursuant to Section 10 of this Agreement), plus in each
case interest at the Applicable Rate (as defined in Section 10 above), unless
the referee or the court, as
9
<PAGE> 10
the case may be, determines that the Employee's material claims in such contest
were frivolous or were asserted in bad faith.
16. Successors.
(a) This Agreement is personal to Employee, and without the prior
written consent of the Company shall not be assignable by Employee other
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Employee's legal
representatives.
(b) The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company.
17. Governing Law. This Agreement is made and entered into in the State of
California, and the laws of California shall govern its validity and
interpretation in the performance by the parties hereto of their respective
duties and obligations hereunder.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the benefits due Employee in the event of a
Change in Control followed by a Qualifying Termination, and there are no
representations, warranties or commitments, other than those set forth herein,
which relate to such benefits. This Agreement may be amended or modified only by
an instrument in writing executed by all of the parties hereto.
19. Dispute Resolution.
(a) Any controversy or dispute between the parties involving the
construction, interpretation, application or performance of the terms,
covenants, or conditions of this Agreement or in any way arising under
this Agreement (a "Covered Dispute") shall, on demand by either of the
parties by written notice served on the other party in the manner
prescribed in Section 20 hereof, be referenced pursuant to the procedures
described in California Code of Civil Procedure ("CCP") Sections 638, et
seq., as they may be amended from time to time (the "Reference
Procedures"), to a retired Judge from the Superior Court for the County of
Los Angeles or the County of Orange for a decision.
(b) The Reference Procedures shall be commenced by either party by
the filing in the Superior Court of the State of California for the County
of Orange of a petition pursuant to CCP Section 638(1) (a "Petition").
Said Petition shall designate as a referee a Judge from the list of
retired Los Angeles County and Orange County Superior Court Judges who
have made themselves available for trial or settlement of civil litigation
under said Reference Procedures. If the parties hereto are unable to agree
on the designation of a particular retired Los Angeles County or Orange
County Superior Court Judge or the designated Judge is unavailable or
unable to serve in such capacity, request shall be made in said Petition
that the Presiding or Assistant Presiding Judge of the Orange County
Superior Court appoint as referee a retired Los Angeles County or Orange
County Superior Court Judge from the aforementioned list.
10
<PAGE> 11
(c) Except as hereafter agreed by the parties, the referee shall
apply the law of California in deciding the issues submitted hereunder.
Unless formal pleadings are waived by agreement among the parties and the
referee, the moving party shall file and serve its complaint within 15
days from the date a referee is designated as provided herein, and the
other party shall have 15 days thereafter in which to plead to said
complaint. Each of the parties reserves its respective rights to allege
and assert in such pleadings all claims, causes of action, contentions and
defenses which it may have arising out of or relating to the general
subject matter of the Covered Dispute that is being determined pursuant to
the Reference Procedures. Reasonable notice of any motions before the
referee shall be given, and all matters shall be set at the convenience of
the referee. Discovery shall be conducted as the parties agree or as
allowed by the referee. Unless waived by each of the parties, a reporter
shall be present at all proceedings before the referee.
(d) It is the parties' intention by this Section 19 that all issues
of fact and law and all matters of a legal and equitable nature related to
any Covered Dispute will be submitted for determination by a referee
designated as provided herein. Accordingly, the parties hereby stipulate
that a referee designated as provided herein shall have all powers of a
Judge of the Superior Court including, without limitation, the power to
grant equitable and interlocutory and permanent injunctive relief.
(e) Each of the parties specifically (i) consents to the exercise of
jurisdiction over his or her person by a referee designated as provided
herein with respect to any and all Covered Disputes; and (ii) consents to
the personal jurisdiction of the California courts with respect to any
appeal or review of the decision of any such referee.
(f) Each of the parties acknowledges that the decision by a referee
designated as provided herein shall be a basis for a judgment as provided
in CCP Section 644 and shall be subject to exception and review as
provided in CCP Section 645.
20. Notices. Any notice or communications required or permitted to be
given to the parties hereto shall be delivered personally, sent via facsimile or
via an overnight courier service or be sent by United States registered or
certified mail, postage prepaid and return receipt requested, and addressed or
delivered as follows, or as such other addresses the party addressed may have
substituted by notice pursuant to this Section:
(a) If to the Company: Allergan, Inc.
2525 Dupont Drive
Irvine, California 92612
Attn: General Counsel
(b) If to Employee:
11
<PAGE> 12
21. Captions. The captions of this Agreement are inserted for convenience
and do not constitute a part hereof.
22. Severability. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein and there shall be deemed substituted for such invalid,
illegal or unenforceable provision such other provision as will most nearly
accomplish the intent of the parties to the extent permitted by the applicable
law. In case this Agreement, or any one or more of the provisions hereof, shall
be held to be invalid, illegal or unenforceable within any governmental
jurisdiction or subdivision thereof, this Agreement or any such provision
thereof shall not as a consequence thereof be deemed to be invalid, illegal or
unenforceable in any other governmental jurisdiction or subdivision thereof.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one in the same Agreement.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
ALLERGAN, INC.
By:
------------------------------------
David E.I. Pyott
President and
Chief Executive Officer
12
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO
ALLERGAN, INC.
EXECUTIVE BONUS PLAN
The ALLERGAN, INC. EXECUTIVE BONUS PLAN (the "Plan") is hereby amended,
effective January 1, 2000, to clarify that "Change in Control" as used in the
Plan means the following and shall be deemed to occur if any of the following
events occur:
(a) Any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (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 Company representing (i) 20% or more of the combined
voting power of the Company'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 (ii) 33% or more of the combined voting power of
the Company's then outstanding voting securities, without regard to
whether such acquisition is approved by the Incumbent Board;
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's stockholders,
is approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used 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 Company;
(c) The consummation of a merger, consolidation or reorganization
involving the Company, 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 Company outstanding
immediately prior thereto continuing to represent (either by
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 Company or such other entity resulting from
the merger, consolidation or reorganization (the "Surviving
<PAGE> 2
Corporation") outstanding immediately after such merger,
consolidation or reorganization and being held in substantially the
same proportion as the ownership in the Company'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 Company representing 20% or more of the
combined voting power of the Company's then outstanding voting
securities; or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's
assets.
Notwithstanding the preceding provisions, a Change in Control shall not be
deemed to have occurred if the Person described in the preceding
provisions is (1) an underwriter or underwriting syndicate that has
acquired any of the Company's then outstanding voting securities solely in
connection with a public offering of the Company's securities, (2) the
Company or any subsidiary of the Company or (3) an employee stock
ownership plan or other employee benefit plan maintained by the Company
(or any of its subsidiaries) that is qualified under the provisions of the
Internal Revenue Code of 1986, as amended. In addition, notwithstanding
the preceding provisions, a Change in Control shall not be deemed to have
occurred if the Person described in the preceding provisions 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 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 Company or through a
stock dividend or stock split), then a Change in Control shall occur.
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this First Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
-----------------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.3
FIFTH AMENDMENT TO
ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(RESTATED 1996)
The ALLERGAN, INC. EMPLOYEE STOCK OWNERSHIP PLAN (the "Plan") is hereby
amended, effective January 1, 2000, to read as follows:
1. Section 10.4(b) of the Plan is hereby amended and restated in its entirety
to read as follows:
"(b) In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control
shall become 100% vested in any amounts allocated to their ESOP Accounts
on the date of such Change in Control and in any amounts allocated to
their ESOP Accounts subsequent to the date of the Change in Control.
Notwithstanding the foregoing, the Board of Directors may, at its
discretion, amend or delete this Paragraph (b) in its entirety prior to
the occurrence of any such Change in Control. For the purpose of this
Paragraph (b), "Change in Control" shall mean the following and shall be
deemed to occur if any of the following events occur:
(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 (i) 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 (ii) 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
<PAGE> 2
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:
(A) a merger, consolidation or reorganization which
would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of another entity) 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
(B) 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 Company or an agreement for the sale or
other disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the preceding provisions of this Paragraph (b), a Change
in Control shall not be deemed to have occurred if the Person described in
the preceding provisions of this Paragraph (b) is (1) 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, (2) the Sponsor or any subsidiary of the
Sponsor or (3) an employee stock ownership plan or other employee benefit
plan maintained by the 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
<PAGE> 3
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 Sponsor 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."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Fifth Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
-----------------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.4
ALLERGAN, INC.
1989 INCENTIVE COMPENSATION PLAN
(AS AMENDED AND RESTATED, JANUARY 2000 AND AS ADJUSTED FOR 1999 STOCK SPLIT)
I. GENERAL PROVISIONS
1.1 PURPOSES OF THE PLAN
Allergan, Inc. ("Allergan") has adopted this 1989 Incentive Compensation
Plan (the "Plan") to advance the interests of Allergan and its stockholders by
affording to key management and other Employees of Allergan and its subsidiaries
an opportunity to acquire or increase a proprietary interest in the Company or
to otherwise benefit from the success of the Company through the grant to such
Employees of Incentive Awards under the terms and conditions set forth herein.
By thus encouraging such Employees to become owners of Allergan's shares and by
granting such Employees other incentive compensation that is measured by the
increased market value of Allergan's shares or another appropriate measure of
the success and profitability of the Company, the Company seeks to attract,
retain and motivate those highly competent individuals upon whose judgment,
initiative, leadership and continued efforts the success of the Company in large
measure depends.
1.2 DEFINITIONS
As used herein the following terms shall have the meanings set forth below:
(a) "Allergan" means Allergan, Inc., a Delaware corporation, or any
successor thereto.
(b) "Board" means the Board of Directors of Allergan.
(c) "Cause" means, with respect to the discharge by the Company of any
Participant, any conduct that under Company policies as set forth from time to
time in the Allergan Supervisors Manual (or any successor thereto) would be
considered to constitute "serious misconduct" that would justify immediate
termination without benefit of a counseling review or severance pay.
(d) "Change in Control" means the following and shall be deemed to occur if
any of the following events occur:
(i) Any "person," as such term is used in Sections 13(d) and 14(d) of
the 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 Allergan representing (i) 20% or
more of the combined voting power of Allergan'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 (ii) 33% or more of the
combined voting power of Allergan'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 (the
"Incumbent Board"), cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election by Allergan's
stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of Allergan, as such terms are used 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 Allergan;
(iii) The consummation of a merger, consolidation or reorganization
involving Allergan, other than one which satisfies both of the following
conditions:
<PAGE> 2
(A) a merger, consolidation or reorganization which would result
in the voting securities of Allergan outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of another entity) at least 55%
of the combined voting power of the voting securities of Allergan 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 Allergan's voting
securities immediately before such merger, consolidation or
reorganization, and
(B) a merger, consolidation or reorganization in which no Person
is or becomes the Beneficial Owner, directly or indirectly, of
securities of Allergan representing 20% or more of the combined voting
power of Allergan's then outstanding voting securities; or
(iv) The stockholders of Allergan approve a plan of complete
liquidation of the Allergan or an agreement for the sale or other
disposition by the Allergan of all or substantially all of the Allergan's
assets.
Notwithstanding the preceding provisions of this Paragraph (d), a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Paragraph (d) is (1) an underwriter or underwriting
syndicate that has acquired any of Allergan's then outstanding voting securities
solely in connection with a public offering of Allergan's securities, (2)
Allergan or any subsidiary of Allergan or (3) an employee stock ownership plan
or other employee benefit plan maintained by the Allergan or any of its
subsidiaries that is qualified under the provisions of the Code. In addition,
notwithstanding the preceding provisions of this Paragraph (d), a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Paragraph (d) becomes a Beneficial Owner of more
than the permitted amount of outstanding securities as a result of the
acquisition of voting securities by Allergan 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 Allergan or through a
stock dividend or stock split), then a Change in Control shall occur.
(e) "Code" means the Internal Revenue Code of 1986, as amended. Where the
context so requires, a reference to a particular Code section shall also refer
to any successor provision of the Code to such section.
(f) "Committee" means the committee appointed by the Board to administer
the Plan. The Committee shall be composed entirely of members who meet the
requirements of Section 1.4(a) hereof.
(g) "Common Stock" means the common stock of Allergan, $0.01 par value.
(h) "Company" means Allergan and any present or future parent or subsidiary
corporations (as defined in Section 425 of the Code) with respect to Allergan,
or any successors to such corporations.
(i) "Dividend Equivalent" means an amount payable in cash, Common Stock or
a combination thereof to a holder of a Stock Option, Stock Appreciation Right or
other Incentive Award denominated in shares of Common Stock that is equivalent
to the amount of dividends paid to stockholders with respect to a number of
shares of Common Stock equal to the number of shares upon which such Incentive
Award is based.
(j) "Employee" means any individual classified by the Company as a regular,
full-time employee of the Company whose income is subject to withholding of
income tax and/or for whom Social Security contributions are made by the Company
except that such term shall not include any individual who (a) performs services
for the Company and who is classified or paid as an independent contractor
(regardless of his or her classification for federal tax or other legal
purposes) by the Company or (b) performs services for the Company pursuant to an
agreement between the Company and any other person including a leasing
organization.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
Where the context so requires, a reference to a particular section of the
Exchange Act shall also refer to any successor provision to such section.
2
<PAGE> 3
(l) "Fair Market Value" means the fair market value of a share of Common
Stock as determined by the Committee on the basis of such factors as it may deem
appropriate.
(m) "Incentive Award" means any Stock Option, Restricted Stock, Stock
Appreciation Right, Stock Payment, Performance Award or other award granted or
sold under the Plan.
(n) "Incentive Stock Option" means an incentive stock option, as defined
under Section 422 of the Code and the regulations thereunder.
(o) "Nonqualified Stock Option" means a stock option other than an
Incentive Stock Option.
(p) "Option" or "Stock Option" means a right to purchase Common Stock and
refers to both Incentive Stock Options and Nonqualified Stock Options.
(q) "Participant" means any Employee selected by the Committee to receive
an Incentive Award pursuant to this Plan.
(r) "Payment Event" means the event or events giving rise to the right to
payment of a Performance Award.
(s) "Performance Award" means an award, payable in cash, Common Stock or a
combination thereof, the terms and conditions of which may be determined by the
Committee at the time the Performance Award is granted.
(t) "Plan" means the Allergan, Inc. 1989 Incentive Compensation Plan as set
forth herein, as amended from time to time.
(u) "Purchase Price" means the purchase price (if any) to be paid by a
Participant for Restricted Stock as determined by the Committee (which price
shall be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).
(v) "Restricted Stock" means Common Stock which is the subject of an
Incentive Award under this Plan and which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met as set forth in
this Plan and in any statement evidencing the grant of such Incentive Award.
(w) "Securities Act" means the Securities Act of 1933, as amended.
(x) "Stock Appreciation Right" or "Right" means a right granted pursuant to
Section VI of the Plan to receive a number of shares of Common Stock or, in the
discretion of the Committee, an amount of cash or a combination of shares and
cash, based on the increase in the Fair Market Value of the shares subject to
the right during such period as is specified by the Committee.
(y) "Stock Payment" means a payment in shares of the Company's Common Stock
to replace all or any portion of the compensation (other than base salary) that
would otherwise become payable to any Employee of the Company.
1.3 SHARES OF COMMON STOCK SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 1.3(c) and Section 8.1 of the
Plan, the maximum number of shares of Common Stock that may be issued pursuant
to Incentive Awards under the Plan shall be:
(i) During the period commencing with the inception of the Plan through
February 29, 1992 (the "Transition Date"), the aggregate number of shares
that may be issued pursuant to or issuable upon exercise of Incentive
Awards granted prior to the Transition Date shall be 10,000,000 shares.
(ii) After the Transition Date, the aggregate number of shares that
may be issued pursuant to or issuable upon exercise of Incentive Awards
granted during any calendar year shall be up to 1.5% of the
3
<PAGE> 4
Outstanding Shares (as defined below) plus (A) with respect to calendar
years 1993 and thereafter, any unused shares available under this Section
1.3(a)(ii) from prior years and (B) any shares issued or issuable under
Incentive Awards granted after the Transition Date which by virtue of
Section 1.3(c) below again become available for the grant of further
Incentive Awards.
(For purposes of Section 1.3(a)(ii) above, the term "Outstanding Shares" means
the number of shares of Common Stock outstanding on December 31 of the year
preceding the year for which the calculation is to be made; provided that, for
purposes of determining the maximum aggregate number of shares which may be
issued pursuant to or issuable upon exercise of Incentive Awards granted during
calendar 1992 after the Transition Date, "Outstanding Shares" shall mean the
number of shares of Common Stock outstanding on the Transition Date.)
(b) The Common Stock to be issued under this Plan will be made available,
at the discretion of the Board or the Committee, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including shares purchased on the open market.
(c) Shares of Common Stock subject to unexercised portions of any Incentive
Award granted under this Plan that expire, terminate or are cancelled, and
shares of Common Stock issued pursuant to an Incentive Award under this Plan
that are reacquired by the Company pursuant to the terms of the Incentive Award
under which such shares were issued, will again become available for the grant
of further Incentive Awards under this Plan.
(d) Notwithstanding Section 1.3(a) (ii) above, the maximum number of shares
issuable upon the exercise of Incentive Awards granted in the form of Incentive
Stock Options after the Transition Date shall be the lesser of the amount
determined pursuant to Section 1.3 (a) (ii) above and 10,000,000 shares,
(e) The maximum number of shares of Common Stock with respect to which
Stock Options may be granted to an executive officer in any given calendar year
is 800,000 Options per executive officer.
1.4 ADMINISTRATION OF THE PLAN
(a) The Plan will be administered by the Committee, which will consist of
two or more persons appointed by the Board (i) who are not eligible to receive
Incentive Awards under the Plan and (ii) who have not been eligible at any time
within one year before appointment to the Committee for selection as persons to
whom Incentive Awards may be granted pursuant to the Plan, or to whom shares may
be allocated, or stock options, stock appreciation rights or similar rights may
be granted, pursuant to any other discretionary plan of Allergan (or any
affiliate thereof, within the meaning of the Exchange Act and the regulations
thereunder) entitling the participants therein to acquire stock, stock options,
stock appreciation rights or similar rights of Allergan (or any affiliate
thereof, within the meaning of the Exchange Act and the regulations thereunder).
Notwithstanding anything contained herein, no person shall be disqualified from
being a member of the Committee merely because such person is entitled to
receive grants of restricted stock pursuant to the Allergan, Inc. 1989
Nonemployee Director Stock Plan or any successor thereto providing for the
automatic grant, without the intervention of any administrative discretion, of
stock options, restricted stock or other stock-based incentive compensation
awards.
(b) The Committee has and may exercise such powers and authority of the
Board as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. The Committee has authority in its
discretion to select the eligible Employees to whom, and the time or times at
which, Incentive Awards shall be granted or sold, the nature of each Incentive
Award, the number of shares of Common Stock or the number of rights that make up
each Incentive Award, the period for the exercise of each Incentive Award, the
performance criteria (which need not be identical) utilized to measure the value
of Performance Awards and such other terms and conditions applicable to each
individual Incentive Award as the Committee shall determine. The Committee may
grant at any time new Incentive Awards to a Participant who has previously
received Incentive Awards or other grants (including other stock options)
whether such prior Incentive Awards or such other grants are still outstanding,
have previously been exercised in whole or in part, or are cancelled in
connection with the issuance of new Incentive Awards. The Committee may grant
Incentive Awards singly or in combination or in tandem with other Incentive
Awards as it determines in its discretion. The purchase price or initial value
and any and all other terms and conditions of the Incentive Awards may be
established by the Committee without regard to existing Incentive
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Awards or other grants. Further, the Committee may, with the consent of a
Participant, amend in a manner consistent with the Plan the terms of any
existing Incentive Award previously granted to such Participant.
(c) Subject to the express provisions of the Plan, the Committee has the
authority to interpret the Plan, to determine the terms and conditions of
Incentive Awards and to make all other determinations necessary or advisable for
the administration of the Plan. The Committee has authority to prescribe, amend
and rescind rules and regulations relating to the Plan. All interpretations,
determinations and actions by the Committee shall be final, conclusive and
binding upon all parties. Any action of the Committee with respect to the
administration of the Plan shall be taken pursuant to a majority vote or by the
unanimous written consent of its members.
(d) No member of the Board or the Committee nor any designee thereof will
be liable for any action or determination made in good faith by the Board or the
Committee with respect to the Plan or any transaction arising under the Plan.
1.5 PARTICIPATION
(a) All Employees who are key Employees of the Company, as determined by
the Committee, are eligible to receive Incentive Awards under the Plan. In no
event may any member of the Board who is not an Employee be granted an Incentive
Award under the Plan.
(b) At the time of the grant of each Incentive Award pursuant to this Plan,
the Committee shall deliver, or cause to be delivered, to the Participant to
whom the Incentive Award is granted a written statement evidencing the Incentive
Award and setting forth such terms and conditions applicable to the Incentive
Award as the Committee may in its discretion determine consistent with the Plan.
II. DIVIDEND EQUIVALENTS
A Participant may in the discretion of the Committee be granted, at no
additional cost, Dividend Equivalents based on the dividends declared on the
Common Stock on record dates during the period between the date an Incentive
Award is granted and the date such Incentive Award is exercised or such other
period as is determined by the Committee and specified in the instrument that
evidences the grant of the Incentive Award. Such Dividend Equivalents shall be
converted to additional shares or cash by such formula as may be determined by
the Committee.
Dividend Equivalents shall be computed as of each dividend record date in
such manner as may be determined by the Committee and shall be payable to
Participants at such time or time as the Committee in its discretion may
determine.
III. OPTIONS
3.1 OPTION PRICE
The purchase price of Common Stock under each Option (the "Option Exercise
Price") will be determined by the Committee at the date such Option is granted.
The Option Exercise Price may be less than the Fair Market Value on the date of
grant of the Common Stock subject to the Option; provided, however, that in no
event shall the Option Exercise Price be less than the par value of the shares
of Common Stock subject to the Option; and further provided that in the case of
an Incentive Stock Option the Option Exercise Price shall be not less than the
Fair Market Value on the date of grant of the Common Stock subject to such
Option or such other amount as is necessary to enable such Option to be treated
as an "incentive stock option" within the meaning of Code Section 422A.
3.2 OPTION PERIOD
Options may be exercised as determined by the Committee, but, in the case
of an Incentive Stock Option, in no event after ten years from the date of grant
of such Option or such other period as is necessary to enable such Option to be
treated as an "incentive stock option" within the meaning of Code Section 422A.
3.3 EXERCISE OF OPTIONS
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At the time of the exercise of an Option, the purchase price shall be paid
in full in cash or other equivalent consideration acceptable to the Committee
and consistent with the Plan's purpose and applicable law, including without
limitation Common Stock or Restricted Stock or other contingent awards
denominated in either stock or cash. Any shares of Company Stock assigned and
delivered to the Company in payment or partial payment of the purchase price
will be valued at their Fair Market Value on the exercise date. No fractional
shares will be issued pursuant to the exercise of an Option nor will any cash
payment be made in lieu of fractional shares.
3.4 LIMITATION ON EXERCISE OF INCENTIVE STOCK OPTIONS
The aggregate Fair Market Value (determined at the time the Option is
granted) with respect to which Incentive Stock Options are exercisable for the
first time by any Employee during any calendar year (under all stock option
plans of the Company) shall not exceed $100,000 or such other limit as is
prescribed by the Code. Any Options granted as Incentive Stock Options pursuant
to the Plan in excess of such limitation shall be treated as Nonqualified Stock
Options.
3.5 TERMINATION OF EMPLOYMENT
(a) Except as otherwise provided in a written agreement between the Company
and the Participant, in the event of the termination of a Participant's
employment with the Company for Cause, all of the Participant's unexercised
Options and/or Rights shall expire as of the date of such termination.
(b) Except as otherwise provided in a written agreement between the Company
and the Participant, in the event of a Participant's termination of employment
for:
(i) Any reason other than for Cause, death, disability, or normal
retirement (as defined in the instrument evidencing the grant of the
Option), the Participant's Options and/or Rights shall expire and become
unexercisable as of the earlier of (A) the date such Options and/or Rights
expire in accordance with their terms or (B) three calendar months after
the date of termination.
(ii) Death or disability, subject to the provisions of Paragraph (c)
below, the Participant shall have twelve (12) months after the date of
termination within which to exercise Options and/or Rights that have become
exercisable on or before such date and that have not expired on or before
such date, regardless of the date upon which such Options or Rights would
otherwise expire in accordance with their terms.
(iii) Normal retirement, the Participant's Options and/or Rights shall
expire and become unexercisable as of the earlier of (A) the date such
Options and/or Rights expire in accordance with their terms or (B) three
(3) years after the date of termination.
(c) Notwithstanding anything to the contrary in Paragraphs (a) or (b)
above, the Committee may in its discretion designate such shorter or longer
periods to exercise Options and/or Rights following a Participant's termination
of employment; provided, however, that any shorter periods determined by the
Committee shall be effective only if provided for in the instrument that
evidences the grant to the Participant of such Options and/or Rights or if such
shorter period is agreed to in writing by the Participant. In the case of an
Incentive Stock Option, notwithstanding anything to the contrary herein, in no
event shall such Option be exercisable after the expiration of ten years from
the date such Option is granted (or such other period as is provided in Code
Section 422A). Notwithstanding anything to the contrary herein, Options and/or
Rights shall be exercisable by a Participant (or his successor in interest)
following such Participant's termination of employment only to the extent that
installments thereof had become exercisable on or prior to the date of such
termination; provided, however, that the Committee, in its discretion, may elect
to accelerate the vesting of all or any portion of any Options and/or Rights
that had not become exercisable on or prior to the date of such termination.
3.6 GRANT OF OPTIONS IN SUBSTITUTION FOR SMITHKLINE BECKMAN CORPORATION OPTIONS
In accordance with the provisions of Section 7.05 of that certain
Distribution Agreement dated as of April 11, 1989, among SmithKline Beckman
Corporation ("SKB"), Allergan and Beckman Instruments, Inc. (the
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"Distribution Agreement") and notwithstanding anything to the contrary in this
Plan, in the event that as of the Distribution Date (as defined in the
Distribution Agreement) an Employee (or other person described in Section
7.05(b) of the Distribution Agreement) shall hold an outstanding option granted
under any employee stock option plan of SKB (an "SKB Option") there shall be
granted to such Employee (or other person) pursuant to this Plan, in
substitution for such SKB Option, an Option to purchase Common Stock (a
"Substitute Option"). The number of shares subject to such Substitute Option,
the Option Exercise Price of such Substitute Option and the other terms and
conditions of such Substitute Option shall be determined by the Committee in
accordance with Section 425(a) of the Code or any other reasonably comparable
method designed to preserve the gain in the SKB Option at the time of the
substitution.
IV. PERFORMANCE AWARDS
4.1 GRANT OF PERFORMANCE AWARDS
The Committee shall determine the performance criteria (which need not be
identical) to be utilized to calculate the value of the Performance Awards, the
term of such Performance Awards, the Payment Event, and the form and time of
payment of Performance Awards. The specific terms and conditions of each
Performance Award shall be set forth in a written statement evidencing the grant
of such Performance Award.
4.2 PAYMENT OF AWARD; LIMITATION
Upon the occurrence of a Payment Event, payment of a Performance Award will
be made to the Participant in cash or in shares of Common Stock valued at Fair
Market Value on the date of the Payment Event or a combination of Common Stock
and cash, as the Committee in its discretion may determine. The Committee may
impose a limitation on the amount payable upon the occurrence of a Payment
Event, which limitation shall be set forth in the written statement evidencing
the grant of the Performance Award.
4.3 EXPIRATION OF PERFORMANCE AWARD
If any Participant's employment with the Company is terminated for any
reason other than normal retirement (as defined in the instrument evidencing the
grant of the Performance Award), death, or disability prior to the occurrence of
the Payment Event, all of the Participant's rights under the Performance Award
shall expire and terminate unless otherwise determined by the Committee. In the
event of termination of employment by reason of death, disability or normal
retirement, the Committee, in its discretion, may determine what portions, if
any, of the Performance Award should be paid to the Participant.
V. RESTRICTED STOCK
5.1 AWARD OF RESTRICTED STOCK
The Committee may grant awards of Restricted Stock to Employees. The
Committee shall determine the Purchase Price (if any), the terms of payment of
the Purchase Price, the restrictions upon the Restricted Stock, and when such
restrictions shall lapse. The terms and conditions of the Restricted Stock shall
be set forth in the statement evidencing the grant of such award of Restricted
Stock.
5.2 REQUIREMENTS OF RESTRICTED STOCK
All shares of Restricted Stock granted or sold, pursuant to the Plan will
be subject to the following conditions:
(a) The shares may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, alienated or encumbered until the
restrictions are removed or expire;
(b) The Committee may require that the certificates representing Restricted
Stock granted or sold to a Participant pursuant to the Plan remain in the
physical custody of an escrow holder or the Company until all restrictions are
removed or expire;
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(c) Each certificate representing Restricted Stock granted or sold to a
Participant pursuant to the Plan will bear such legend or legends making
reference to the restrictions imposed upon such Restricted Stock as the
Committee in its discretion deems necessary or appropriate to enforce such
restrictions; and
(d) The Committee may impose such other conditions on Restricted Stock as
the Committee may deem advisable including, without limitation, restrictions
under the Securities Act, under the Exchange Act, under the requirements of any
stock exchange upon which such Restricted Stock or shares of the same class are
then listed and under any blue sky or other securities laws applicable to such
shares.
5.3 LAPSE OF RESTRICTIONS
The restrictions imposed upon Restricted Stock pursuant to Section 5.2
above will lapse in accordance with such schedule or other conditions as are
determined by the Committee and set forth in the statement evidencing the grant
or sale of the Restricted Stock.
5.4 RIGHTS OF PARTICIPANT
Subject to the provisions of Section 5.2 or restrictions imposed pursuant
to Section 5.2, the Participant will have all rights of a stockholder with
respect to the Restricted Stock granted or sold to such Participant under the
Plan, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
5.5 TERMINATION OF EMPLOYMENT
Unless the Committee in its discretion determines otherwise, upon a
Participant's termination of employment for any reason, all of the Participant's
Restricted Stock remaining subject to restrictions imposed pursuant to this Plan
on the date of such termination of employment shall be repurchased by the
Company at the Purchase Price (if any).
VI. STOCK APPRECIATION RIGHTS
6.1 GRANTING OF STOCK APPRECIATION RIGHTS
The Committee may approve the grant to eligible Employees of Stock
Appreciation Rights related or unrelated to Options, at any time.
(a) A Stock Appreciation Right granted in connection with an Option granted
under this Plan will entitle the holder of the related Option, upon exercise of
the Stock Appreciation Right, to surrender such Option, or any portion thereof
to the extent unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 6.1(c). Such Option will, to the extent
surrendered, then cease to be exercisable.
(b) Subject to Section 6.1(g), a Stock Appreciation Right granted in
connection with an Option hereunder will be exercisable at such time or times,
and only to the extent that, the related Option is exercisable, and will not be
transferable except to the extent that such related Option may be transferable.
(c) Upon the exercise of a Stock Appreciation Right related to an Option,
the Holder will be entitled to receive payment of an amount determined by
multiplying: (i) the difference obtained by subtracting the Option Exercise
Price of a share of Common Stock specified in the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right (or as of such other date or as of the occurrence of such
event as may have been specified in the instrument evidencing the grant of the
Stock Appreciation Right), by (ii) the number of shares as to which such Stock
Appreciation Right is exercised.
(d) The Committee may grant Stock Appreciation Rights unrelated to Options
to eligible Employees. Section 6.1(c) shall be used to determine the amount
payable at exercise under such Stock Appreciation Right, except that in
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lieu of the Option Exercise Price specified in the related Option the initial
base amount specified in the Incentive Award shall be used.
(e) Notwithstanding the foregoing, the Committee, in its discretion, may
place a dollar limitation on the maximum amount that will be payable upon the
exercise of a Stock Appreciation Right under the Plan.
(f) Payment of the amount determined under the foregoing provisions of this
Section 6.2 may be made solely in whole shares of Common Stock valued at their
Fair Market Value on the date of exercise of the Stock Appreciation Right or,
alternatively, at the sole discretion of the Committee, in cash or in a
combination of cash and shares of Common Stock as the Committee deems advisable.
The Committee is hereby vested with full discretion to determine the form in
which payment of a Stock Appreciation Right will be made and to consent to or
disapprove the election of a Participant to receive cash in full or partial
settlement of a Stock Appreciation Right. If the Committee decides to make full
payment in shares of Common Stock, and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.
(g) The Committee may, at the time a Stock Appreciation Right is granted,
impose such conditions on the exercise of the Stock Appreciation Right as may be
required to satisfy the requirements of Rule 16b-3 under the Exchange Act (or
any other comparable provisions in effect at the time or times in question).
6.2 TERMINATION OF EMPLOYMENT
Section 3.5 will govern the treatment of Stock Appreciation Rights upon the
termination of a Participant's employment with the Company.
VII. STOCK PAYMENTS
The Committee may approve Stock Payments of the Company's Common Stock to
any Employee of the Company for all or any portion of the compensation (other
than base salary) that would otherwise become payable to an Employee in cash.
VIII. OTHER PROVISIONS
8.1 ADJUSTMENT PROVISIONS
(a) Subject to Section 8.1(b) below, (i) if the outstanding shares of
Common Stock of the Company are increased, decreased or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed in respect of
such shares of Common Stock (or any stock or securities received with respect to
such Common Stock), through merger, consolidation, sale or exchange of all or
substantially all of the properties of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, spin-off or other distribution with respect to such shares of Common
Stock (or any stock or securities received with respect to such Common Stock),
or (ii) if the value of the outstanding shares of Common Stock of the Company is
reduced by reason of an extraordinary cash dividend, an appropriate and
proportionate adjustment may be made in (x) the maximum number and kind of
shares provided in Section 1.3 (including the maximum amounts referred to in
Section 1.3(d) and (e)), (y) the number and kind of shares or other securities
subject to then outstanding Incentive Awards, and (z) the price for each share
or other unit of any other securities subject to then outstanding Incentive
Awards. Adjustments under this Section 8.1(a) will be made by the Committee,
whose determination as to what adjustments will be made and the extent thereof
will be final, binding and conclusive. No fractional interests will be issued
under the Plan resulting from any such adjustments.
(b) In addition to the adjustments permitted by Section 8.1(a) above,
except as otherwise expressly provided in the statement evidencing the grant of
an Incentive Award, upon the occurrence of a Change in Control of the Company
any outstanding Incentive Awards not theretofore exercisable, payable or free
from restrictions, as the case may be, shall immediately become exercisable,
payable or free from restrictions (other than restrictions required by
applicable law or any national securities exchange upon which any securities of
the Company are then listed), as the case may be, in their entirety and any
shares of Common Stock acquired pursuant to an Incentive
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Award which are not fully vested shall immediately become fully vested,
notwithstanding any of the other provisions of the Plan.
8.2 SECTION 16 PERSONS
Notwithstanding any other provisions in this Plan, any Incentive Award
granted hereunder to an Employee who is then subject to Section 16 of the
Exchange Act shall be subject to the following limitations:
(a) The Incentive Award may provide for the issuance of shares of Common
Stock as a stock bonus for no consideration other than services rendered or to
be rendered. In the event of an Incentive Award under which shares of Common
Stock are or may in the future be issued for any other type of consideration,
the amount of such consideration shall either (1) be equal to the amount (such
as the par value of such shares) required to be received by the Company in order
to assure compliance with applicable state law, (2) be equal to or greater than
50% of the fair market value of such shares on the date of grant of such
Incentive Award, or (3) in the case of Stock Options granted pursuant to Section
3.6 above, be the amount determined pursuant to the applicable substitution
formula. For such purposes, the fair market value of shares of Common Stock
shall be calculated on the basis of the closing price of stock of that class on
the day in question (or, if such day is not a trading day in the U.S. securities
markets, on the nearest preceding trading day), as reported with respect to the
principal market (or the composite of the markets, if more than one) in which
such shares are then traded, or, if no such closing prices are reported, on the
basis of the mean between the high bid and low asked prices that day on the
principal market or national quotation system on which such shares are then
quoted or, if not so quoted, as furnished by a professional securities dealer
making a market in such shares selected by the Board or the Committee.
(b) Any Stock Option or similar right (including a Stock Appreciation
Right) granted to such Employee pursuant to the Plan shall not be transferable
other than by will or the laws of descent and distribution and shall be
exercisable during such Employee's lifetime only by him or by his guardian or
legal representative. No Incentive Award granted to such Employee and no right
of such Employee under the Plan, contingent or otherwise, will be assignable or
made subject to any encumbrance, pledge or charge of any nature except that,
under such rules and regulations as the Committee may establish pursuant to the
terms of the Plan, a beneficiary may be designated with respect to an Incentive
Award in the event of death of such Employee. If such beneficiary is the
executor or administrator of the estate of the Employee, any rights with respect
to such Incentive Award may be transferred to the person or persons or entity
(including a trust) entitled thereto under the will of such Employee.
8.3 CONTINUATION OF EMPLOYMENT
(a) Nothing in the Plan or in any statement evidencing the grant of an
Incentive Award pursuant to the Plan shall be construed to create or imply any
contract of employment between any Participant and the Company, to confer upon
any Participant any right to continue in the employ of the Company, or to confer
upon the Company any right to require any Participant's continued employment.
Except as expressly provided in the Plan or in any statement evidencing the
grant of an Incentive Award pursuant to the Plan, the Company shall have the
right to deal with each Participant in the same manner as if the Plan and any
such statement evidencing the grant of an Incentive Award pursuant to the Plan
did not exist, including, without limitation, with respect to all matters
related to the hiring, discharge, compensation and conditions of the employment
of the Participant. Unless otherwise expressly set forth in a separate
employment agreement between the Company and such Participant, the Company may
terminate the employment of any Participant with the Company at any time for any
reason, with or without cause.
(b) Any question(s) as to whether and when there has been a termination of
a Participant's employment, the reason (if any) for such termination, and/or the
consequences thereof under the terms of the Plan or any statement evidencing the
grant of an Incentive Award pursuant to the Plan shall be determined by the
Committee's and the Committee's determination thereof shall be final and
binding.
8.4 COMPLIANCE WITH GOVERNMENT REGULATIONS
No shares of Common Stock will be issued pursuant to an Incentive Award
unless and until all applicable requirements imposed by federal and state
securities and other laws, rules and regulations and by any regulatory agencies
having jurisdiction and by any stock exchanges upon which the Common Stock may
be listed have been
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fully met. As a condition precedent to the issuance of shares of Common Stock
pursuant to an Incentive Award, the Company may require the Participant to take
any reasonable action to comply with such requirements.
8.5 ADDITIONAL CONDITIONS
The award of any benefit under this Plan may also be subject to such other
provisions (whether or not applicable to the benefit award to any other
Participant) as the Committee determines appropriate including, without
limitation, provisions to assist the Participant in financing the purchase of
Common Stock through the exercise of Stock Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of Common
Stock acquired under any form of benefit, provisions giving the Company the
right to repurchase shares of Common Stock acquired under any form of benefit in
the event the Participant elects to dispose of such shares, and provisions to
comply with federal and state securities laws and federal and state income tax
withholding requirements.
8.6 PRIVILEGES OF STOCK OWNERSHIP
No Participant and no beneficiary or other person claiming under or through
such Participant will have any right, title or interest in or to any shares of
Common Stock allocated or reserved under the Plan or subject to any Incentive
Award, except as to such shares of Common Stock, if any, that have been issued
to such Participant in accordance with the terms and conditions of the
applicable Incentive Award; provided, however, that Participants who have
received Restricted Stock shall have only those rights with respect to such
stock as are set forth in this Plan and the statement evidencing the grant or
sale of such Restricted Stock.
8.7 AMENDMENT AND TERMINATION OF PLAN: AMENDMENT OF INCENTIVE AWARDS
(a) The Board may alter, amend, suspend or terminate the Plan at any time.
No such action of the Board, unless taken with the approval of the stockholders
of the Company, may increase the maximum number of shares that may be sold or
issued under the Plan or alter the class of Employees eligible to participate in
the Plan. With respect to any other amendments of the Plan, the Board may in its
discretion determine that such amendments shall only become effective upon
approval by the stockholders of the Company, if the Board determines that such
stockholder approval may be advisable, such as for the purpose of obtaining or
retaining any statutory or regulatory benefits under federal or state securities
law, federal or state tax law or any other laws or for the purposes of
satisfying applicable stock exchange listing requirements.
(b) The Committee may, with the consent of a Participant, make such
modifications in the terms and conditions of an Incentive Award as it deems
advisable. Without limiting the generality of the foregoing, the Committee may,
with the consent of the Participant, from time to time to adjust or reduce the
purchase price of Options held by such Participant by cancellation of such
Options and granting of Options to purchase the same or a lesser number of
shares at lower purchase prices or by modification, extension or renewal of such
Options.
(c) Except as otherwise provided in this Plan or in the statement
evidencing the grant of the Incentive Award, no amendment, suspension or
termination of the Plan will, without the consent of the Participant, alter,
terminate, impair or adversely affect any right or obligation under any
Incentive Award previously granted under the Plan.
8.8 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option, incentive
or other compensation plans in effect for the Company, nor shall the Plan
preclude the Company from establishing any other forms of incentive or other
compensation for Employees of the Company.
8.9 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the Company.
8.10 SINGULAR, PLURAL; GENDER
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Whenever used herein, nouns in the singular shall include the plural, and
the masculine pronoun shall include the feminine gender.
8.11 HEADINGS, ETC., NO PART OF PLAN
Heading of Articles and Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
8.12 PARTICIPATION BY FOREIGN EMPLOYEES
Notwithstanding anything to the contrary herein, the Committee may, in
order to fulfill the purposes of the Plan, modify grants of Incentive Awards to
Participants who are foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or local custom.
IX. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on the later of (a) the date of its
adoption by the Board, (b) the date of its approval by the holders of the
outstanding shares of Common Stock (either by a vote of a majority of such
outstanding shares present in person or by proxy and entitled to vote at a
meeting of stockholders of the Company or by written consent) or (c) the date of
the distribution by SKB (as defined in Section 3.6 above) of the stock of
Allergan pursuant to the terms of the Distribution Agreement (as defined in
Section 3.6 above). The Plan shall terminate at such time as the Board, in its
discretion, shall determine. No Incentive Award may be granted under the Plan
after the date of such termination, but such termination shall not affect any
Incentive Award theretofore granted.
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EXHIBIT 10.5
SECOND AMENDMENT TO
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
(RESTATED 1998)
The ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN (the "Plan") is hereby
amended, effective January 1, 2000, to read as follows:
1. Section 12.4(b) of the Plan is hereby amended and restated in its entirety
to read as follows:
"(b) In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control
shall become 100% vested in any amounts allocated to their Company
Contribution Accounts on the date of such Change in Control and in any
amounts allocated to their Company Contribution Accounts subsequent to the
date of the Change in Control. Notwithstanding the foregoing, the Board of
Directors may, at its discretion, amend or delete this Paragraph (b) in
its entirety prior to the occurrence of any such Change in Control. For
the purpose of this Paragraph (b), "Change in Control" shall mean the
following and shall be deemed to occur if any of the following events
occur:
(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 Sponsor
representing (i) 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 (ii) 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
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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:
(A) a merger, consolidation or reorganization which
would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of another entity) 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
(B) 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 (1) 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, (2) the Sponsor or any subsidiary of the
Sponsor or (3) an employee stock ownership plan or other employee benefit
plan maintained by the Company that is qualified under the provisions of
the
<PAGE> 3
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 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."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Second Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
-----------------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.6
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
RESTATED
1998
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TABLE OF CONTENTS
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ARTICLE I
NAME AND EFFECTIVE DATE 1
1.1 Plan Name 1
1.2 Effective Date of 1998 Restated Plan 1
1.3 Plan Purpose 1
1.4 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan 1
1.5 Plan Intended to Qualify 1
ARTICLE II
DEFINITIONS 2
2.1 Accounts 2
2.2 Affiliated Company 2
2.3 After Tax Deposits 2
2.4 After Tax Deposits Account 2
2.5 Anniversary Date 2
2.6 Reserved for Future Modifications 2
2.7 Reserved for Future Modifications 2
2.8 Before Tax Deposits 2
2.9 Before Tax Deposits Account 2
2.10 Beneficiary 2
2.11 Board of Directors 2
2.12 Break in Service 2
2.13 Reserved for Future Modifications 2
2.14 Code 2
2.15 Committee 3
2.16 Company 3
2.17 Company Contributions 3
2.18 Company Contributions Account 3
2.19 Company Stock 3
2.20 Compensation 3
2.21 Computation Period 4
2.22 Credited Service 4
2.23 Disability 5
2.24 Reserved for Future Modifications 5
2.25 Effective Date 5
2.26 Eligible Employee 5
2.27 Eligible Retirement Plan 6
2.28 Eligible Rollover Distribution 6
2.29 Employee 6
2.30 Employment Commencement Date 6
2.31 ERISA 7
2.32 Reserved for Future Modifications 7
2.33 Forfeitures 7
2.34 Highly Compensated Employee 7
2.35 Hour of Service 8
2.36 Investment Manager 8
2.37 Leased Employee 8
2.38 Leave of Absence 9
2.39 Normal Retirement Age 10
2.40 Participant 10
2.41 Participant Deposits 10
2.42 Period of Severance 10
2.43 Plan 10
2.44 Plan Administrator 10
</TABLE>
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<TABLE>
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2.45 Plan Year 10
2.46 Reemployment Commencement Date 10
2.47 Rollover Account 10
2.48 Severance 10
2.49 Severance Date 11
2.50 Sharing Deposits 11
2.51 Sponsor 11
2.52 Trust and Trust Fund 11
2.53 Trustee 11
2.54 Reserved for Future Modifications 11
2.55 Reserved for Future Modifications 11
2.56 Valuation Date 11
2.57 415 Suspense Account 11
ARTICLE III
ELIGIBILITY AND PARTICIPATION 12
3.1 Participation 12
3.2 Participants in Prior Plans 12
3.3 Participation in Plan Prior to March 1, 1995 12
ARTICLE IV
PARTICIPANT DEPOSITS 13
4.1 Election 13
4.2 Amount Subject to Election 13
4.3 Limitation on Compensation Deferrals 14
4.4 Provisions for Return of Excess Before Tax
Deposits Over $7,000 16
4.5 Provision for Recharacterization or Return
of Excess Deferrals by Highly Compensated
Participants 17
4.6 Termination of, Change in Rate of, or
Resumption of Deferrals 19
4.7 Character of Deposits 19
4.8 Rollover Contributions 19
ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS 21
5.1 General 21
5.2 Single Trust 21
5.3 Company Contributions 21
5.4 Form of Company Contributions 21
5.5 Investment of Trust Assets 22
5.6 Reserved for Future Modifications 23
5.7 Irrevocability 23
5.8 Company, Committee and Trustee Not
Responsible for Adequacy of Trust Fund 24
5.9 Certain Offers for Company Stock 24
5.10 Voting of Company Stock 26
5.11 Securities Law Limitation 27
5.12 Distributions 27
5.13 Taxes 28
5.14 Trustee Records to be Maintained 28
5.15 Annual Report of Trustee 28
5.16 Appointment of Investment Manager 28
</TABLE>
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ARTICLE VI
ACCOUNTS AND ALLOCATIONS 29
6.1 Participants' Accounts 29
6.2 Reserved for Plan Modifications 29
6.3 Allocation of Amounts Contributed by Participants 29
6.4 Allocation of Company Contributions and Forfeitures 29
6.5 Valuation of Participants' Accounts 29
6.6 Valuation of Company Stock 29
6.7 Dividends, Splits, Recapitalizations, Etc. 30
6.8 Stock Rights, Warrants or Options 30
6.9 Reserved for Plan Modifications 30
6.10 Treatment of Accounts Upon Severance 30
6.11 Cash Dividends 30
6.12 Miscellaneous Allocation Rules 31
6.13 Limitations on After Tax Deposits and
Company Contributions 31
6.14 Provision for Disposition of Excess After
Tax Deposits or Matching Contributions on
Behalf of Highly Compensated Participants 34
ARTICLE VII
VESTING IN PLAN ACCOUNTS 37
7.1 No Vested Rights Except as Herein Provided 37
7.2 Vesting Schedule 37
7.3 Vesting of Participant Deposits 37
ARTICLE VIII
PAYMENT OF PLAN BENEFITS 38
8.1 Withdrawals During Employment 38
8.2 Distributions Upon Termination of
Employment or Disability 40
8.3 Distribution Upon Death of Participant 41
8.4 Designation of Beneficiary 41
8.5 Distribution Rules 42
8.6 Forfeitures 43
8.7 Valuation of Plan Benefits Upon Distribution 43
8.8 Lapsed Benefits 43
8.9 Persons Under Legal Disability 44
8.10 Additional Documents 44
8.11 Trustee-to-Trustee Transfers 45
8.12 Loans to Participants 45
ARTICLE IX
OPERATION AND ADMINISTRATION 47
9.1 Appointment of Committee 47
9.2 Transaction of Business 47
9.3 Voting 47
9.4 Responsibility of Committee 47
9.5 Committee Powers 47
9.6 Additional Powers of Committee 48
9.7 Periodic Review of Funding Policy 49
9.8 Application for Determination of Benefits 49
9.9 Limitation on Liability 49
</TABLE>
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9.10 Indemnification and Insurance 49
9.11 Compensation of Committee and Plan Expenses 50
9.12 Resignation 50
9.13 Reliance Upon Documents and Opinions 50
ARTICLE X
AMENDMENT AND ADOPTION OF PLAN 51
10.1 Right to Amend Plan 51
10.2 Adoption of Plan by Affiliated Companies 51
ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS 52
ARTICLE XII
TERMINATION AND MERGER 53
12.1 Right to Terminate Plan 53
12.2 Effect on Trustee and Committee 53
12.3 Merger Restriction 53
12.4 Effect of Reorganization, Transfer of
Assets or Change in Control 53
ARTICLE XIII
LIMITATION ON ALLOCATIONS 55
13.1 General Rule 55
13.2 Annual Additions 55
13.3 Other Defined Contribution Plans 55
13.4 Defined Benefit Plans 56
13.5 Adjustments for Excess Combined Plan
Fraction and Excess Annual Additions 56
13.6 Compensation 57
13.7 Treatment of 415 Suspense Account Upon
Termination 57
ARTICLE XIV
TOP-HEAVY RULES 59
14.1 Applicability 59
14.2 Definitions 59
14.3 Top-Heavy Status 60
14.4 Minimum Contributions 61
14.5 Reserved for Future Modifications 61
14.6 Maximum Annual Addition 61
14.7 Minimum Vesting Rules 62
14.8 Noneligible Employees 62
ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER
ALIENATION OF PLAN BENEFITS 63
15.1 General Restrictions Against Alienation 63
15.2 Qualified Domestic Relations Orders 63
ARTICLE XVI
MISCELLANEOUS PROVISIONS 66
16.1 No Right of Employment Hereunder 66
16.2 Limitation on Company Liability 66
</TABLE>
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16.3 Effect of Article Headings 66
16.4 Gender 66
16.5 Interpretation 66
16.6 Withholding For Taxes 66
16.7 California Law Controlling 66
16.8 Plan and Trust as One Instrument 66
16.9 Invalid Provisions 66
16.10 Counterparts 66
</TABLE>
APPENDIX A
5
<PAGE> 7
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
ARTICLE I
NAME AND EFFECTIVE DATE
1.1 Plan Name. This document, made and entered into by Allergan, Inc., a
Delaware corporation ("Allergan"), evidences the terms of a defined contribution
plan with a cash or deferred arrangement for Eligible Employees of Allergan and
any Affiliated Companies that are authorized by the Board of Directors to
participate in the Plan, to be known hereafter as the "Allergan, Inc. Savings
and Investment Plan (Restated 1998)" (the "Plan").
1.2 Effective Date of 1998 Restated Plan. The "Allergan, Inc. Savings
and Investment Plan (Restated 1996)" and the First, Second and Third Amendments
made thereto are hereby incorporated into the Plan. The Effective Date of the
1998 Restated Plan shall be January 1, 1999 unless otherwise stated in the Plan.
1.3 Plan Purpose. The purpose of this Plan is to enable Eligible
Employees of Allergan, and any Affiliated Companies that are authorized by the
Board of Directors to participate in the Plan, to share in the growth and
prosperity of the Company and to provide Participants with an opportunity to
accumulate capital for their future economic security. All assets acquired under
this Plan as a result of Company Contributions, income, and other additions to
the Fund under the Plan will be administered, distributed, forfeited and
otherwise governed by the provisions of this Plan, which is to be administered
by the Committee for the exclusive benefit of Participants in the Plan and their
Beneficiaries.
1.4 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan.
The Allergan, Inc. Puerto Rico Savings and Investment Plan shall merge with and
into the Plan effective as of the later of January 1, 1999 or, the date the
merger of the Allergan, Inc. Puerto Rico Savings and Investment Plan into the
Plan is approved by the United States and Puerto Rico tax authorities. This Plan
shall be the plan surviving the merger. All account balances shall be
transferred to the Plan and all assets acquired under the Plan as a result of
the merger shall be administered, distributed, forfeited and otherwise governed
by the provisions of the Plan and Appendix A, which is attached hereto and made
a part hereof.
1.5 Plan Intended to Qualify. This Plan is an employee benefit plan that
is intended to qualify under Code Section 401(a) as a qualified profit sharing
plan and under Code Section 401(k) as a qualified cash or deferred arrangement.
The provisions of this Plan are intended to comply with the requirements of the
General Agreement on Tariffs and Trade, the Uniformed Services Employment and
Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996,
and the Taxpayer Relief Act of 1997.
<PAGE> 8
ARTICLE II
DEFINITIONS
2.1. Accounts. "Accounts" or "Participant's Accounts" shall mean the
After Tax Deposits Accounts, Before Tax Deposits Accounts, Company Contribution
Accounts, and Rollover Accounts maintained for the various Participants.
2.2. 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). Any
entity shall be an Affiliated Company pursuant to this paragraph only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
original Effective Date of this Plan.
2.3. After Tax Deposits. "After Tax Deposits" shall mean those
contributions made by a Participant which represent after-tax contributions.
2.4. After Tax Deposits Account. "After Tax Deposits Account" of a
Participant shall mean his/her individual account in the Trust Fund in which are
held his/her After Tax Deposits and the earnings thereon.
2.5. Anniversary Date. "Anniversary Date" shall mean the last day of
each Plan Year.
2.6. Reserved for Future Modifications.
2.7. Reserved for Future Modifications.
2.8. Before Tax Deposits. "Before Tax Deposits" shall mean those
contributions made by a Participant which represent pre-tax contributions.
2.9. Before Tax Deposits Account. "Before Tax Deposits Account" of a
Participant shall mean his/her individual account in the Trust Fund in which are
held his/her Before Tax Deposits and the earnings thereon.
2.10. Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the
person or persons last designated by a Participant as set forth in Section 8.4
or, if there is no designated Beneficiary or surviving Beneficiary, the person
or persons designated pursuant to Section 8.4 to receive the interest of a
deceased Participant in such event.
2.11. Board of Directors. "Board of Directors" shall mean the Board of
Directors (or its delegate) of the Sponsor as it may from time to time be
constituted.
2.12. Break in Service. "Break in Service" shall mean, with respect to
an Employee, each period of 12 consecutive months during a Period of Severance
that commences on the Employee's Severance Date or on any anniversary of such
Severance Date.
2.13. Reserved for Future Modifications.
2.14. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended. Where the context so requires a reference to a particular Code Section
shall also refer to any successor provision of the Code to such Code Section.
2
<PAGE> 9
2.15. Committee. "Committee" or "Plan Committee" shall mean the
committee to be appointed under the provisions of Section 9.1.
2.16. Company. "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts this Plan in accordance with Section 10.2.
2.17. Company Contributions. "Company Contributions" shall mean all
amounts (whether in cash or other property, including Company Stock) paid by the
Company pursuant to Section 5.3 into the Trust Fund established and maintained
under the provisions of this Plan for the purpose of providing benefits for
Participants and their Beneficiaries. Unless expressly stated otherwise in this
Plan, Company Contributions shall not include Participant Before Tax or After
Tax Deposits.
2.18. Company Contributions Account. "Company Contributions Account"
shall mean a Participant's individual account in the Trust Fund in which are
held Company Contributions and the earnings thereon and amounts transferred from
a Participant's PAYSOP account in the SmithKline Beckman Savings and Investment
Plan to the Plan, if any. Any amounts so transferred shall be fully vested.
2.19. Company Stock. "Company Stock" shall mean any class of stock of
the Sponsor which both constitutes "qualifying employer securities" as defined
in Section 407(d)(5) of ERISA and "employer securities" as defined in Code
Section 409(l).
2.20. Compensation. "Compensation" shall mean the amounts paid during a
Plan Year to an Employee by the Company for services rendered, including base
earnings, commissions and similar incentive compensation, cost of living
allowances earned within the United States of America, holiday pay, overtime
earnings, pay received for election board duty, pay received for jury and
witness duty, pay received for military service (annual training), pay received
for being available for work, if required (call-in premium), amounts of salary
reduction elected by the Participant under a Code Section 401(k) cash or
deferred arrangement, shift differential and premium, sickness/accident related
pay, vacation pay, vacation shift premium, and bonus amounts paid under the
following programs:
(1) Sales bonus,
(2) "Management Bonus Payments" (MBP), either in cash or in
restricted stock,
(3) Group performance sharing payments, such as the
"Partners for Success";
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of living
adjustments and differentials paid for service outside of the United States,
expatriate reimbursement payments, and tax equalization payments; forms of
imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance pay;
Share Value Plan or other long-term incentive awards, bonuses or payments;
"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 this Plan or distributions hereunder, any
contributions or distributions pursuant to any other plan sponsored by the
Company and qualified under Code Section 401(a) (other than contributions
constituting salary reduction amounts elected by the Participant under a Code
Section 401(k) cash or deferred arrangement), 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). If the period for determining Compensation used in
calculating an Employee's allocation for a Plan Year is a short Plan Year (i.e.
shorter than 12 months), the Compensation limit is an amount equal to the
otherwise applicable Compensation limit multiplied by a fraction, the
3
<PAGE> 10
numerator of which is the number of months in the short Plan Year, and the
denominator of which is 12. Notwithstanding the foregoing, for purposes of
applying the provisions of Articles XI and XII, an Employee's Compensation shall
be determined pursuant to the definition of "Compensation" as set forth in
Sections 13.6 or 14.2(i), as the case may be.(1)
2.21. Computation Period.
(a) "Computation Period" shall mean the consecutive twelve (12)
month period used for determining whether an Employee is eligible to
participate in the Plan pursuant to Section 3.1.
(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his Employment Commencement Date or
Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all subsequent
Computation Periods) shall be the Plan Year that includes or begins on
the first anniversary of such Employee's Employment Commencement Date or
Reemployment Commencement Date (whichever is applicable) and each
subsequent Plan Year.
2.22. Credited Service. "Credited Service" shall mean, with respect to
each Employee, his years and months of Credited Service determined in accordance
with the following rules:
(a) In the case of any Employee who was employed by the Company
at any time prior to the original Effective Date, for the period prior
to January 1, 1989 such Employee shall be credited with Credited Service
under this Plan equal to the period (if any) of service credited to such
Employee under the SmithKline Beckman Savings and Investment Plan.
(b) In the case of any Employee who is employed by the Company
on or after the original Effective Date, an Employee shall receive
Credited Service credit for the elapsed period of time between each
Employment Commencement Date (or Reemployment Commencement Date) of the
Employee and the Severance Date which immediately follows that
Employment Commencement Date (or Reemployment Commencement Date). Solely
for the purpose of determining an Employee's Credited Service under this
paragraph (b), in the case of an Employee who is employed on January 1,
1989, that date shall be deemed to be an Employment Commencement Date of
the Employee (with service credit for periods prior to January 1, 1989
to be determined under paragraph (a) above). An Employee who is absent
from work on an authorized Leave of Absence shall be deemed to have
incurred a Severance (if any) in accordance with the rules of Section
2.48.
(c) An Employee shall receive Credited Service credit for
periods between a Severance and his subsequent Reemployment Commencement
Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a
quit, discharge, Disability, or retirement whether or not such a
Severance occurs during an approved Leave of Absence and the
Employee is later reemployed by the Company prior to his
incurring a Break in Service, he shall receive Credited Service
for the period commencing with his Severance Date and ending
with his subsequent Reemployment Commencement Date.
(ii) Other than as expressly set forth above in this
paragraph (c), an Employee shall receive no Credited Service
with respect to periods between a Severance and a subsequent
Reemployment Commencement Date.
- ----------
(1) The amendment of Section 2.20 as set forth above was approved by the
Board on November 17, 1998 and is effective January 1, 1998 (effective January
1, 1997, with respect to the deletion of the family aggregation rules).
4
<PAGE> 11
(d) For all purposes of this Plan, an Employee's total Credited
Service shall be determined by aggregating any separate periods of
Credited Service separated by any Breaks in Service.
(e) An Employee shall be credited with Credited Service with
respect to a period of employment with an Affiliated Company, but only
to the extent that such period of employment would be so credited under
the foregoing rules set forth in this Section had such Employee been
employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall so
provide by resolution of its Board of Directors, or unless otherwise
expressly stated in this Plan, an Employee shall not receive such
Credited Service credit for any period of employment with an Affiliated
Company prior to such entity becoming an Affiliated Company.
(g) In accordance with paragraph (f) above, an Eligible Employee
shall receive Credited Service for any period of employment with
Allergan Medical Optics - Lenoir facility prior to its becoming an
Affiliated Company but only to the extent provided in paragraph (e)
above. Notwithstanding anything therein to the contrary, the Employment
Commencement Date for such Eligible Employee under paragraph (b) shall
mean the date the Employee was first credited with an Hour of Service
with Allergan Medical Optics - Lenoir facility, including any date prior
to Allergan Medical Optics - Lenoir facility becoming an Affiliated
Company.
(h) 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)
2.23. Disability. "Disability" shall mean any mental or physical
condition which, in the judgment of the Committee, based on such competent
medical evidence as the Committee may require, renders an individual unable to
engage in any substantial gainful activity for the Company for which he is
reasonably fitted by education, training, or experience and which condition can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of at least 12 months. The determination by the
Committee, upon opinion of a physician selected by the Committee, as to whether
a Participant has incurred a Disability shall be final and binding on all
persons.
2.24. Reserved for Future Modifications.
2.25. Effective Date. "Effective Date" of this restated Plan shall mean
January 1, 1999 unless otherwise specified in the Plan. The original Effective
Date of the Plan is the date that is the day after the Spin-off Date as
hereinafter defined. Prior to the original Effective Date of this Plan, Eligible
Employees of Allergan were eligible to participate in the SmithKline Beckman
Corporation Savings and Investment Plan (the "SKB Plan"). On or about July 26,
1989, SmithKline Beckman Corporation distributed the stock of Allergan to its
shareholders, rendering Eligible Employees of the Company ineligible to
participate in the SKB Plan. The date upon which such distribution occurred
shall hereinafter be referred to as the "Spin-off Date."
2.26. Eligible Employee. "Eligible Employee" shall mean any United
States-based payroll Employee and any Puerto Rico-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 non-resident alien of the
United States and Puerto Rico, any non-regular manufacturing site transition
Employee, any Leased Employee, and any Employee covered by a collective
bargaining agreement.(3)
- ----------
(2) Paragraph (h) of Section 2.22 as set forth above was approved by the
Board on November 17, 1998 and is effective December 12, 1994.
(3) The amendment of Section 2.26 as set forth above was approved by the
Board on November 17, 1998 and is effective the later of January 1, 1999 or, the
date the merger of the
5
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2.27. Eligible Retirement Plan. "Eligible Retirement Plan" shall mean an
individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a)
that accepts an Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to a surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
2.28. Eligible Rollover Distribution. "Eligible Rollover Distribution"
shall mean any distribution, on or after January 1, 1993, of all or any portion
of the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution shall not include:
(a) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee of the joint lives (or
joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required
under Code Section 401(a)(9); and
(c) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
For purposes of this Section, "Distributee" shall mean any Employee or
former Employee receiving a distribution from the Plan. A Distributee also
includes the Employee or former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is the Alternate Payee under a
Qualified Domestic Relations Order (as defined in Article XV) are Distributees
with regard to the interest of the spouse or former spouse.
2.29. Employee. "Employee" shall mean any person who is employed by the
Sponsor or an Affiliated Company in any capacity, any portion of whose income is
subject to withholding or income tax and/or for whom Social Security
contribution are made by the Sponsor or an Affiliated Company, as well as any
other person qualifying as a common-law employee or Puerto Rico-based employee
of 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 (regardless
of his or her classification for federal tax or other legal purposes) by the
Sponsor or an Affiliated Company 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.(4)
2.30. Employment Commencement Date.
(a) "Employment Commencement Date" shall mean the date on which
an Employee is first credited with an Hour of Service for the Sponsor or
an Affiliated Company.
(b) Unless the Sponsor shall expressly determine otherwise, and
except as is expressly provided otherwise in this Plan or in resolutions
of the Board of Directors, an Employee shall not, for the
- ----------
Allergan, Inc. Puerto Rico Savings and Investment Plan into the Plan is approved
by the United States and Puerto Rico tax authorities.
(4) The amendment of Section 2.29 as set forth above was approved by the
Board on November 17, 1998 and is effective the later of January 1, 1999 or, the
date the merger of the Allergan, Inc. Puerto Rico Savings and Investment Plan
into the Plan is approved by the United States and Puerto Rico tax authorities.
6
<PAGE> 13
purposes of determining his/her Employment Commencement Date, be deemed
to have commenced employment with an Affiliated Company prior to the
effective date on which the entity became an Affiliated Company.
2.31. ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, where the context so requires, a
reference to a particular ERISA section shall also refer to any successor
provision of ERISA to such ERISA section.
2.32. Reserved for Future Modifications.
2.33. Forfeitures. "Forfeitures" shall mean the nonvested portion of a
Participant's benefit that is forfeited in accordance with the provisions of
Article VIII.
2.34. Highly Compensated Employee.(5) "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 14.2).
(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 13.6.
(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
and to the extent permitted thereunder, the Committee, for
administrative convenience, may establish rules and procedures for
purposes of identifying Highly Compensated Employees, which rules and
procedures may result in an Eligible Employee being deemed to be a
Highly Compensated Employee for purposes of the limitations of Article
IV and Article VI, whether or not such Eligible Employee is a Highly
Compensated Employee described in Code Section 414(q).
- ----------
(5) The amendment of Section 2.34 as set forth above was approved by the
Board on November 17, 1998 and is effective January 1, 1997.
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<PAGE> 14
2.35. Hour of Service.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the
Company or an Affiliated Company or entitled to payment for the
performance of services as an Employee.
(ii) Each hour in or attributable to a period of time
during which the Employee performs no duties (irrespective of
whether he/she has terminated his/her Employment) due to a
vacation, holiday, illness, incapacity (including pregnancy or
disability), layoff, jury duty, military duty or a Leave of
Absence (if the Leave of Absence is an unpaid medical Leave of
Absence, the Employee will accrue hours for the duration of such
leave for the first six months of such leave), for which he/she
is so paid or so entitled to payment, whether direct or
indirect. However, no such hours shall be credited to an
Employee if (A) such Employee is directly or indirectly paid or
entitled to payment for such hours and (B) such payment or
entitlement is made or due under a plan maintained solely for
the purpose of complying with applicable worker's compensation,
unemployment compensation, or disability insurance laws, or is a
payment which solely reimburses the Employee for medical or
medically-related expenses incurred by him/her.
(iii) Each hour for which he/she is entitled to back
pay, irrespective of mitigation of damages, whether awarded or
agreed to by the Company or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of
Service with respect to such hour under subparagraphs (i) or
(ii) above.
Hours of Service under paragraphs (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R.
Section 2530.200b-2(b). All Hours of Service determined under the rules
of paragraph (a) shall be credited to the Computation Period to which
the payment relates, rather than the period in which it is made.
(b) In the event that an Employee is compensated for duties
performed on a basis other than actual hours worked and no records of
the Employee's actual working hours are maintained, the Employee shall
be deemed to have completed ten (10) Hours of Service for each day, or
portion thereof during which he/she is credited with an Hour of Service
for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise, and
except as may be expressly provided otherwise in this Plan, an Employee
shall not receive credit for his/her Hours of Service completed with an
Affiliated Company prior to the effective date on which the entity
became an Affiliated Company.
2.36. Investment Manager. "Investment Manager" shall mean the one or
more Investment Managers, if any, that are appointed pursuant to Section 5.16
and who constitute investment managers under Section 3(38) of ERISA.
2.37. Leased Employee. "Leased Employee" shall mean any person (other
than an Employee of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one (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
8
<PAGE> 15
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.(6)
2.38. Leave of Absence.
(a) "Leave of Absence" shall mean any personal leave from active
employment (whether with or without pay) duly authorized by the Company
under the Company's standard personnel practices. All persons under
similar circumstances shall be treated alike in the granting of such
Leaves of Absence. Leaves of Absence may be granted by the Company for
reasons of health (including temporary sickness or short term
disability) or public service or for any other reason determined by the
Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in paragraph (a)
above, the term Leave of Absence shall also mean a Maternity or
Paternity Leave, as defined herein, but only to the extent and for the
purposes required under paragraph (c) below. As used herein, "Maternity
or Paternity Leave" shall mean an absence from work for any period (i)
by reason of the pregnancy of the Employee, (ii) by reason of the birth
of a child of the Employee, (iii) by reason of the placement of a child
with the Employee in connection with the adoption of the child by the
Employee, or (iv) for purposes of caring for the child for a period
beginning immediately following the birth or placement referred to in
clauses (ii) or (iii) above.
(c) Subject to the provisions of paragraph (d) below, a
Maternity or Paternity Leave described in paragraph (b) above shall be
deemed to constitute an authorized Leave of Absence for purposes of this
Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in
Service has occurred, the Severance Date of a Participant who is
absent by reason of a Maternity or Paternity Leave shall not be
deemed to occur any earlier than the second anniversary of the
date upon which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated
as a Leave of Absence solely for purposes of determining whether
or not an Employee has incurred a Break in Service. Accordingly,
such a Maternity or Paternity Leave shall not result in an
accrual of Credited Service for purposes of the vesting
provisions of this Plan or for purposes of determining
eligibility to participate in the Plan pursuant to the
provisions of Article III (except only in determining whether a
Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be
treated as a Leave of Absence unless the Employee provides such
timely information as the Committee may reasonably require to
establish that the absence is for the reasons listed in
paragraph (b) above and to determine the number of days for
which there was such an absence.
(d) Notwithstanding the limitations provided in paragraph (c)
above, a Maternity or Paternity Leave described in paragraph (b) above
shall be treated as an authorized Leave of Absence, as described in
paragraph (a), for all purposes of this Plan to the extent the period of
absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
paragraph (a) above without reference to the provisions of paragraph (b)
above, provided, however, that the special rule provided under this
paragraph (d) shall not apply if it would result in a Participant who is
absent on a Maternity or Paternity Leave being deemed to have incurred a
Break in Service sooner than under the rules set forth in paragraph (c).
- ----------
(6) The amendment of Section 2.37 as set forth above was approved by the
Board on November 17, 1998 and is effective January 1, 1997.
9
<PAGE> 16
2.39. Normal Retirement Age. "Normal Retirement Age" shall mean the
Participant's sixty-fifth (65th) birthday.
2.40. Participant. "Participant" shall mean any Eligible Employee who
has commenced participation in the Plan pursuant to Article III and who retains
rights under the Plan.
2.41. Participant Deposits. "Participant Deposits" shall mean all of a
Participant's deposits to the Plan, including After Tax Deposits and Before Tax
Deposits.
2.42. Period of Severance. "Period of Severance" shall mean the period
of time commencing on an Employee's Severance Date and ending on the Employee's
subsequent Reemployment Commencement Date, if any.
2.43. Plan. "Plan" shall mean the Allergan, Inc. Savings and Investment
Plan described herein and as amended from time to time.
2.44. Plan Administrator. "Plan Administrator" shall mean the
administrator of the Plan, within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be Allergan, Inc.
2.45. Plan Year. "Plan Year" shall mean the period commencing on the
original Effective Date and ending on December 31, 1989 and each subsequent
calendar year.
2.46. Reemployment Commencement Date. "Reemployment Commencement Date"
shall mean, in the case of an Employee who incurs a Severance and who is
subsequently reemployed by the Sponsor or an Affiliated Company, the first day
following the Severance on which the Employee is credited with an Hour of
Service for the Sponsor or Affiliated Company with respect to which he is
compensated or entitled to compensation by the Sponsor or Affiliated Company.
Unless the Sponsor shall expressly determine otherwise and except as is
expressly provided otherwise in this Plan, an Employee shall not, for the
purpose of determining his Reemployment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective date on
which such entity becomes an Affiliated Company.
2.47. Rollover Account. "Rollover Account" of a Participant shall be his
individual account in the Trust Fund in which are held rollover contributions
made pursuant to Section 4.8.
2.48. Severance. "Severance" shall mean the termination of an Employee's
employment with the Sponsor or Affiliated Company by reason of such Employee's
quit, discharge, Disability, death, retirement, or otherwise. For purposes of
determining whether an Employee has incurred a Severance, the following rules
shall apply:
(a) An Employee shall not be deemed to have incurred a Severance
(i) because of his absence from employment with the Sponsor or
Affiliated Company by reason of any paid vacation or holiday period, or
(ii) by reason of any Leave of Absence, subject to the provisions of
paragraph (b) below.
(b) For purposes of this Plan, an Employee shall be deemed to
have incurred a Severance on the earlier of (i) the date on which he
dies, resigns, is discharged, or otherwise terminates his employment
with the Sponsor or Affiliated Company; or (ii) the date on which he is
scheduled to return to work after the expiration of an approved Leave of
Absence, if he does not in fact return to work on the scheduled
expiration date of such Leave. In no event shall an Employee's Severance
be deemed to have occurred before the last day on which such Employee
performs any services for the Sponsor or Affiliated Company in the
capacity of an Employee with respect to which he is compensated or
entitled to compensation by the Sponsor or Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a Participant
who is absent by reason of a Maternity or Paternity Leave, the
provisions of Section 2.38(c)-(d) shall apply for purposes of
determining whether such a Participant has incurred a Break in Service
by reason of such Leave.
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<PAGE> 17
2.49. Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.48, provided, however, that the special rules set forth under Section
2.38(c)-(d) shall apply with respect to determining whether a Participant on a
Maternity or Paternity Leave has incurred a Break in Service. In the case of any
Employee who incurs a Severance as provided under Section 2.48 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of the
effective date of the Severance event (e.g., the date of his death, effective
date of a resignation or discharge, etc.), and the subsequent payment of the
aforementioned type of post-Severance compensation shall not operate to postpone
the timing of the Severance Date for purposes of this Plan.
2.50. Sharing Deposits. "Sharing Deposits" of a Participant shall mean
his/her Deposits (whether Before Tax or After Tax) not in excess of five percent
(5%) of Compensation. Sharing Deposits shall participate in allocations of
Company Contributions and Forfeitures. For the Plan Year beginning on the
Effective Date and ending December 31, 1989, deposits made to the SmithKline
Beckman Savings and Incentive Plan and compensation earned while participating
in such plan by any Participant for the period beginning January 1, 1989 and
ending on the Effective Date shall be included in Deposits and Compensation
under this Plan solely for the purpose of determining Sharing Deposits in such
Plan Year.
2.51. Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware
Corporation, and any successor corporation or entity.
2.52. Trust and Trust Fund. "Trust" or "Trust Fund" shall mean the one
or more trusts created for funding purposes under the Plan.
2.53. Trustee. "Trustee" shall mean the individual or entity acting as a
trustee of the Trust Fund.
2.54. Reserved for Future Modifications.
2.55. Reserved for Future Modifications.
2.56. Valuation Date. "Valuation Date" shall mean the date as of which
the Trustee shall determine the value of the assets in the Trust Fund for
purposes of determining the value of each Account, which shall be each business
day in accordance with rules applied in a consistent and uniform basis. For
periods prior to March 1, 1995, the date shall be the latest day of each
calendar month.
2.57. 415 Suspense Account. "415 Suspense Account" shall mean the
account (if any) established and maintained in accordance with the provisions of
Article XIII for the purpose of holding and accounting for allocations of excess
Annual Additions (as defined in Article XIII).
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<PAGE> 18
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1. Participation.(7)
(a) Each Eligible Employee shall be eligible to participate in
the Plan on his or her Employment Commencement Date.
(b) If an Eligible Employee's employment with the Company
terminates after the Employee has become a Participant in the Plan, the
Employee shall become eligible to participate in the Plan immediately
upon his or her Reemployment Commencement Date.
3.2. Participants in Prior Plans. Any Employee who was eligible to
participate in the SmithKline Beckman Savings and Investment Plan on the day
preceding the Spin-Off Date (as that term is defined in Section 2.25), shall
automatically be eligible to participate in the Plan on the Effective Date,
provided he/she is an Eligible Employee on that date.
3.3. Participation in Plan Prior to March 1, 1995. Notwithstanding
Section 3.1(a) above, prior to March 1, 1995, each Eligible Employee shall be
eligible to participate in the Plan upon the first day of the calendar month
("Eligibility Date") coincident with or immediately following the completion of
six (6) months of Credited Service.
- ----------
(7) The amendment of Section 3.1 as set forth above was approved by the
Board on November 17, 1998 and is effective January 1, 1997.
12
<PAGE> 19
ARTICLE IV
PARTICIPANT DEPOSITS
4.1. Election.
(a) Each Eligible Employee may elect to defer the receipt of a
portion of his/her Compensation and to have the deferred amount
contributed directly by the Company to the Plan as Before Tax Deposits.
Before Tax Deposits may be made only by means of payroll deduction.
(b) Each Eligible Employee may elect to contribute to the Plan a
portion of his/her Compensation as After Tax Deposits. After Tax
Deposits may be made only by means of payroll deduction.
(c) The Committee shall prescribe such procedures, either in
writing or in practice, and provide such forms as are necessary or
appropriate for each Participant and each Eligible Employee who will
become a Participant to make deposits pursuant to this Article IV.
However, an election by a Participant shall not be adopted
retroactively.
(d) Notwithstanding the above paragraphs, an Eligible Employee
shall be deemed to have elected to defer the receipt of a three percent
(3%) of his or her Compensation and to have such deferred amount
contributed directly by the Company to the Plan as Before Tax Deposits
if such Eligible Employee fails to file an election for any Plan Year
within the time period prescribed by the Committee (or, in the case of
newly hired Eligible Employee, the Eligible Employee fails to file an
election when hired or prior to the date compensation for the first pay
period is currently available). A deemed election under this paragraph
(d) shall be effective as of the first pay period of the Plan Year (or,
in the case of newly hired Eligible Employee, the first pay period
following his or her date of hire) and shall remain in effect until
superseded by a subsequent affirmative election by the Eligible
Employee. Deferred amounts contributed directly by the Company to the
Plan under this paragraph (d) shall be invested in the Balanced Fund
described in Section 5.5(b) until superseded by a subsequent election by
the Eligible Employee. (8)
4.2. Amount Subject to Election.
(a) Participants may elect to contribute a whole percentage of
his/her Compensation to the Plan as Before Tax Deposits not to exceed
twenty percent (20%) when aggregated with the After Tax Deposits
contributed by such Participant pursuant to paragraph (b) below.
Notwithstanding the foregoing, no Participant shall be permitted to make
Before Tax Deposits to the Plan during any calendar year in excess of
$7,000, or such larger amount as may be determined by the Secretary of
the Treasury pursuant to Code Section 402(g)(2), or which exceed the
limitations set forth in Section 4.3. For purposes of the dollar
limitation, the Before Tax Deposits of a Participant for any taxable
year is the sum of all Before Tax Deposits under the Plan and all salary
reduction amounts under any other qualified cash or deferred arrangement
(as defined in Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k) and Code Section 402(h)(1)(B)), a
deferred compensation plan under Code Section 457, a trust described in
Code Section 501(c)(18) and any salary reduction amount used to purchase
an annuity contract under Code Section 403(b) whether or not sponsored
by the Company but shall not include any amounts properly distributed as
excess annual additions.(9)
(b) Each Participant may elect to contribute a whole percentage
of his/her Compensation to the Plan as After Tax Deposits not to exceed
twenty percent (20%) when aggregated with the amount of his/her
- ----------
(8) Paragraph (d) of Section 4.1 as set forth above was approved by the
Board on November 17, 1998 and is effective January 1, 1999.
(9) The amendment of Section 4.2(a) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1999.
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<PAGE> 20
Before Tax Deposits. Notwithstanding the foregoing, no Participant shall
be permitted to make After Tax Deposits to the Plan during any Plan Year
which exceed the limitations set forth in Section 6.13.(10)
(c) The Committee shall prescribe such procedures, either in
writing or in practice, as it deems necessary or appropriate regarding
the maximum amount that a Participant may elect to defer and the timing
of such an election. These procedures shall apply to all individuals
eligible to make an election described in Section 4.1. The Committee
may, at any time during a Plan Year, require the suspension, reduction,
or recharacterization of Before Tax Deposits or the suspension or
reduction of After Tax Deposits of any Highly Compensated Employee such
that the limitations of Section 4.2(a) and (b) are satisfied.
4.3. Limitation on Compensation Deferrals. With respect to each Plan
Year, Compensation Deferral Contributions by a Participant for the Plan Year
shall not exceed the limitation on contributions by or on behalf of Highly
Compensated Participants under Code Section 401(k), as provided in this Section.
In the event that Compensation Deferral Contributions under this Plan by or on
behalf of Highly Compensated Participants exceed the limitations of this Section
for any reason, either such excess contributions shall be recharacterized as
After Tax Deposits or such excess contributions, adjusted for any income or loss
allocable thereto, shall be returned to the Participant, as provided in Section
4.5.(11)
(a) The Compensation Deferral Contributions by Participants for
a Plan Year shall satisfy the Actual Deferral Percentage Test set forth
in (i) below, or, to the extent not precluded by applicable regulations,
the alternative Actual Deferral Percentage test set forth in (ii) below:
(i) The average Actual Deferral Percentage for the
Highly Compensated Participants shall not be more than the
average Actual Deferral Percentage of all other Participants
multiplied by 1.25, or
(ii) The excess of the average Actual Deferral
Percentage for the Highly Compensated Participants over the
average Actual Deferral Percentage for all other Participants
shall not be more than two (2) percentage points (or such lesser
percentage as the Secretary of the Treasury shall prescribe to
prevent the multiple use of the alternative limitation set forth
in this Section 4.3(a)(ii) with respect to any Highly
Compensated Participants), and the average Actual Deferral
Percentage for the Highly Compensated Participants shall not be
more than the average Actual Deferral Percentage of all other
Participants multiplied by 2.0.
(iii) In the event the test under (i) above cannot be
satisfied, the Committee shall determine if the use of the
alternative test under (ii) above is available under regulations
relating to the multiple use of the alternative limitation, as
prescribed by the Secretary of the Treasury under Code Section
401(m)(2)(A). If the Committee determines that the alternative
test is not available, either the Actual Deferral Percentage or
the Average Contribution Percentage (as defined in Section 6.13)
for Highly Compensated Participants eligible to participate in
this Plan and a plan of the Company or an Affiliated Company
that is subject to the limitations of Code Sections 401 (k) and
(m) including, if applicable, this Plan, shall be reduced in
accordance with, and to the extent necessary to satisfy, the
requirements of regulations issued under Code Section 401(m).
(b) Notwithstanding any other provisions of this Plan, for the
purposes of the limitations of this Section 4.3 and Section 4.6 only,
the following definitions shall apply:
- ----------
(10) The amendment of Section 4.2(b) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1999.
(11) The amendment of Section 4.3 to delete prior paragraph (e)
regarding family aggregation and to redesignate paragraphs (f), (g), and (h) as
paragraphs (e), (f), and (g), respectively, as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
14
<PAGE> 21
(i) "Actual Deferral Percentage" shall mean, with
respect to the group of Highly Compensated Participants and the
group of all other Participants for a Plan Year, the ratio,
calculated separately and to the nearest one-hundredth of one
percent for each Participant in such group, as follows:
(1) For a Highly Compensated Participant, the
ratio of such Participant's Compensation Deferral
Contributions for the current Plan Year to such
Participant's Compensation for the current Plan Year;
provided, however, that the Actual Deferral Percentage
of a Highly Compensated Participant with no Compensation
Deferral Contributions made on his or her behalf shall
be zero.
(2) For any other Participant, the ratio of such
Participant's Compensation Deferral Contributions for
the preceding Plan Year to such Participant's
Compensation for the preceding Plan Year; provided,
however, that the Actual Deferral Percentage of a
Participant with no Compensation Deferral Contributions
made on his or her behalf shall be zero.
To the extent determined by the Committee and in accordance with
regulations issued by the Secretary of the Treasury, qualified
nonelective contributions on behalf of a Participant that satisfy the
requirements of Code Section 401(k)(3)(c)(ii) may also be taken into
account for the purpose of determining the Actual Deferral Percentage of
a Participant.(12)
(ii) "Highly Compensated Participant" shall mean for any
Plan Year any Participant who is a Highly Compensated Employee.
(iii) "Participant" shall mean any Eligible Employee who
satisfied the requirements under Section 3.1 during the Plan
Year, whether or not such Eligible Employee has elected to
contribute to the Plan for such Plan Year.
(iv) "Compensation Deferral Contributions" shall mean
amounts contributed to the Plan by a Participant as Before Tax
Deposits pursuant to Section 4.2(a), including excess Before Tax
Deposits (as defined in Section 4.4(a)) of Highly Compensated
Participants but excluding (1) excess Before Tax Deposits of all
other Participants that arise solely from Before Tax Deposits
made under this Plan or plans of the Company, (2) Before Tax
Deposits that are taken into account in the Average Contribution
Percentage test (as defined in Section 6.13) provided that the
Actual Deferral Percentage test is satisfied both with and
without exclusions of these Before Tax Deposits, and (3) any
deferrals properly distributed as excess Annual Additions.
Compensation Deferral Contributions may include, at the election
of the Company, any Company Contributions which meet the
requirements for such inclusion under Code Section 401(k)(3)(C).
(v) "Compensation" shall mean compensation as described
below:
(1) Compensation means compensation determined
by the Company in accordance with the requirements of
Code Section 414(s) and the Regulations thereunder.
(2) For purposes of this Section 4.3, for Plan
Years beginning on or after January 1, 1998,
Compensation may, at the Company's election, exclude
amounts which are excludable from a Participant's gross
income under Code Section 125 (pertaining to cafeteria
plans) and Code Section 402(e)(3) (pertaining to 401(k)
salary reductions). The
- ----------
(12) The amendment of Section 4.3(b)(i) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
15
<PAGE> 22
Company may change its election provided such change
does not discriminate in favor of Highly Compensated
Employees.
(3) Compensation taken into account for any Plan
Year shall not exceed $150,000 as adjusted at the time
and in such manner as permitted under Code Section
401(a)(17)(B).(13)
(c) In the event that as of the last day of a Plan Year this
Plan satisfies the requirements of Code Sections 401(k), 401(a)(4) or
410(b) only if aggregated with one or more other plans which include
arrangements under Code Section 401(k), then this Section 4.3 shall be
applied by determining the Actual Deferral Percentages of Participants
as if all such plans were a single plan, in accordance with regulations
prescribed by the Secretary of the Treasury under Code Section 401(k).
Plans may be considered one plan for purposes of satisfying Code Section
401(k) only if they have the same Plan Year.
(d) For the purposes of this Section 4.3, the "Actual Deferral
Percentage" for any Highly Compensated Participant who is a Participant
under two or more Code Section 401(k) arrangements of the Company shall
be determined by taking into account the Highly Compensated
Participant's compensation under each such arrangement and contributions
under each such arrangement which qualify for treatment under Code
Section 401(k), in accordance with regulations prescribed by the
Secretary of the Treasury under Code Section 401(k). If the arrangements
have different Plan Years, this paragraph shall be applied by treating
all such arrangements ending with or within the same calendar year as a
single arrangement. Notwithstanding the foregoing, certain plans shall
be treated as separate plans if mandatorily disaggregated pursuant to
Regulations under Code Section 401(k).
(e) For purposes of the Actual Deferral Percentage test,
Compensation Deferral Contributions must be made before the last day of
the twelve-month period immediately following the Plan Year to which
such contributions relate.
(f) The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records
as are necessary to demonstrate that the Plan satisfies the requirements
of Code Section 401(k) and (m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
4.4. Provisions for Return of Excess Before Tax Deposits Over $7,000.
(a) In the event that due to error or otherwise, an amount of a
Participant's Compensation in excess of the $7,000 limitation (after
application of any necessary adjustment) described in Section 4.2(a) is
deferred under this Plan in any calendar year pursuant to such
Participant's Compensation deferral agreement (but without regard to
amounts deferred under any other plan) the excess Before Tax Deposits,
if any, together with income allocable to such amount shall be returned
to the Participant (after withholding applicable federal, state and
local taxes due on such amounts) on or before the first April 15
following the close of the calendar year in which such excess
contribution is made; provided, however, if there is a loss allocable to
the excess Before Tax Deposits, the amount distributed shall be the
amount of the excess as adjusted to reflect such loss. Any Company
Contributions allocated to the Participant's Sharing Deposits pursuant
to Section 6.4(b) which are attributable to any excess Before Tax
Deposits by a Participant, and any income or loss allocable to such
Company Contributions, shall either be returned to the Company or
applied to reduce future Company Contributions by the Company.
- ----------
(13) The amendment of Section 4.3(b)(v) as set forth above was approved
by the Board on November 17, 1998 and is effective January 1, 1998.
16
<PAGE> 23
(b) The amount of income or loss attributable to any excess
Before Tax Deposits described in paragraph (a) above shall be equal to
the sum of the following:
(i) The income or loss allocable to the Participant's
Before Tax Deposits Account for the Plan Year multiplied by a
fraction, the numerator of which is the excess Before Tax
Deposits as determined under paragraph (a) above, and the
denominator of which is the balance of the Participant's Before
Tax Deposits Account as of the last day of the Plan Year,
without regard to any income or loss allocable to such Account
during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap
Period using the "safe harbor" method set forth in regulations
prescribed by the Secretary of the Treasury under Code Section
402(g). Under the "safe harbor" method, such allocable income or
loss is equal to 10% of the amount calculated under Section
4.4(b)(i) above, multiplied by the number of calendar months
from the last day of the Plan Year until the date of
distribution of the Participant's excess Before Tax Deposits. A
distribution on or before the 15th of the month is treated as
made on the last day of the preceding month, a distribution
after the 15th of the month is treated as made on the first day
of the next month.
(c) For the purpose of this Section 4.4, "Gap Period" shall mean
the period between the last day of the Plan Year and the date of
distribution of any excess Before Tax Deposits.
(d) In accordance with procedures as may be established, either
in writing or in practice, by the Committee, not later than March 1 of a
calendar year a Participant may submit a claim to the Committee in which
he certifies in writing the specific amount of his Before Tax Deposits
for the preceding calendar year which, when added to amounts deferred
for such calendar year under other plans or arrangements described in
Code Sections 401(k), 408(k) or 403(b), will cause the Participant to
exceed the $7,000 limitation as described in Section 4.2(a) for such
preceding calendar year. Notwithstanding the amount of the Participant's
Before Tax Deposits under the Plan for such preceding calendar year, the
Committee shall treat the amount specified by the Participant in his
claim as a Before Tax Deposit in excess of the $7,000 limitation (after
application of any necessary adjustment) for such calendar year and
return it to the Participant in accordance with Section 4.4(a) above. A
Participant is deemed to notify the Committee of any excess Before Tax
Deposits that arise by taking into account only those Before Tax
Deposits made to this Plan and other plans of the Company.
(e) Any Before Tax Deposits in excess of the $7,000 limitation
(after application of any necessary adjustment) described in Section
4.2(a) which are distributed to a Participant in accordance with this
Section, shall to the extent required by regulations issued by the
Secretary of the Treasury be treated as Annual Additions under Article
XIII for the Plan Year for which the excess Before Tax Deposits were
made, unless such amounts are distributed no later than the first April
15th following the close of the Participant's taxable year.
(f) The Committee shall not be liable to any Participant (or
his/her Beneficiary, if applicable) for any losses caused by a mistake
in calculating the amount of any Participant's excess Before Tax
Deposits or the income or losses attributable thereto.
4.5. Provision for Recharacterization or Return of Excess Deferrals by
Highly Compensated Participants. The provisions of this Section 4.5 shall be
applied after implementation of the provisions of Section 4.4. (14)
- ----------
(14) The amendment of Section 4.5 to delete prior paragraph (c)
regarding family aggregation and to redesignate paragraphs (d), (e), (f), (g),
(h), and (i) as paragraphs (c), (d), (e), (f), (g), and (h), respectively, as
set forth above was approved by the Board on November 17, 1998 and is effective
January 1, 1997.
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<PAGE> 24
(a) The Committee shall determine in accordance with the
procedures set forth in Section 4.3, as soon as is reasonably possible
following the close of each Plan Year, the extent (if any) to which
deferral treatment under Code Section 401(k) may not be available for
Compensation Deferral Contributions on behalf of any Highly Compensated
Participants. If, pursuant to these determinations by the Committee, a
Highly Compensated Participant's Compensation Deferral Contributions are
not eligible for tax-deferral treatment then, as determined by the
Committee, either (i) any excess Compensation Deferral Contributions
shall be recharacterized as After Tax Deposits in accordance with
regulations issued under Code Section 401(k), or (ii) any excess
Compensation Deferral Contributions together with any income or loss
allocable thereto shall be returned to the Highly Compensated
Participant (after withholding applicable federal, state, and local
taxes due on such amounts). Such return or recharacterization shall be
made within the first two and one-half (2-1/2) months following the
close of the Plan Year for which such excess deferrals were made,
provided however, that if any excess deferrals and income or loss
allocable thereto are, due to error or otherwise, not returned by such
date, such amounts as are required to be returned shall be returned not
later than the end of the first Plan Year following the Plan Year for
which such excess deferrals were made.
(b) For purposes of satisfying the Actual Deferral Percentage
test of Section 4.3(a), the amount of any excess Compensation Deferral
Contributions by a Highly Compensated Participant shall be determined by
the Committee by application of a leveling method under which the
Compensation Deferral Contributions of the Highly Compensated
Participant who has the highest dollar amount of Compensation Deferral
Contributions for such Plan Year is reduced to the extent required to
cause such Highly Compensated Participant's Compensation Deferral
Contributions to equal the Compensation Deferral Contributions of the
Highly Compensated Participant with the next highest Compensation
Deferral Contributions; provided, however, if a lesser amount, when
added to the total dollar amount already returned under this paragraph
(b), equals the total excess Compensation Deferral Contributions that
are required to be returned to enable the Plan to satisfy the Actual
Deferral Percentage test, the lesser amount shall be returned. This
process shall be repeated until the Plan satisfies the Actual Deferral
Percentage test. (15)
(c) The amount of income or loss attributable to any excess
Compensation Deferral Contributions by a Highly Compensated Participant
for a Plan Year shall be equal to the sum of the following:
(i) The income or loss allocable to the Highly
Compensated Participant's Compensation Deferral Contribution
Accounts for the Plan Year multiplied by a fraction, the
numerator of which is the excess Compensation Deferral
Contribution as determined under Section 4.3, and the
denominator of which is the balance of the Highly Compensated
Participant's Compensation Deferral Contribution Accounts as of
the last day of the Plan Year without regard to any income or
loss allocable to such Accounts during the Plan Year; and
(ii) The amount of allocable income or loss for the Gap
Period using the "safe harbor" method set forth in the
regulations prescribed by the Secretary of the Treasury under
Code Section 401(k). Under the "safe harbor" method, such
allocable income or loss is equal to 10% of the amount
calculated under Section 4.5(d)(i) above, multiplied by the
number of calendar months from the last day of the Plan Year
until the date of distribution of the Participant's excess
Compensation Deferral Contribution. A distribution on or before
the 15th of the month is treated as made on the last day of the
preceding month, a distribution after the 15th of the month is
treated as made on the first day of the next month.
(d) For the purpose of this Section 4.5 the following shall
apply:
(i) "Compensation Deferral Contribution Accounts" shall
mean the Participant's Before Tax Deposits Account and shall
mean any other accounts of the Participant to which
- ----------
(15) The amendment of Section 4.5(b) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
18
<PAGE> 25
Company Contributions have been allocated where such Company
Contributions have been included as Compensation Deferral
Contributions pursuant to Section 4.3(b)(iv).
(ii) "Gap Period" shall mean the period beginning with
the last day of the Plan Year and the date of distribution of
any excess Compensation Deferral Contributions.
(e) For purposes of this Section, the amount of Compensation
Deferral Contributions by a Participant who is not a Highly Compensated
Participant for a Plan Year shall be reduced by any Before Tax Deposits
which have been distributed to the Participant under Section 4.4, in
accordance with regulations prescribed by the Secretary of the Treasury
under Code Section 401(k).
(f) In the event that the Committee determines that an amount to
be deferred pursuant to the Compensation deferral agreement provided in
Section 4.1 would cause the Company contributions under this and any
other tax-qualified retirement plan maintained by the Company to exceed
the applicable deduction limitations contained in Code Section 404, or
to exceed the maximum Annual Addition determined in accordance with
Article XIII, the Committee may treat such amount in accordance with the
rules set forth above in Section 4.5(a).
(g) The Committee shall not be liable to any Participant (or
his/her Beneficiary, if applicable) for any losses caused by a mistake
in calculating the amount of any Participant's excess Compensation
Deferral Contribution or the income or losses attributable thereto.
(h) To the extent required by regulations under Code Sections
401(k) or 415, any excess Compensation Deferral Contributions with
respect to a Highly Compensated Participant shall be treated as Annual
Additions under Article XIII for the Plan Year for which the excess
Compensation Deferral Contributions were made, notwithstanding the
distribution of such excess in accordance with the provisions of this
Section.
4.6. Termination of, Change in Rate of, or Resumption of Deferrals.
(a) A Participant shall be limited to changing the rate or form
of investment of Before Tax Deposits or After Tax Deposits to once a
month, in 1% increments, (once in any three (3) month period prior to
March 1, 1995). Notwithstanding the foregoing, a Participant shall
change the rate of such Deposits as may be required pursuant to Section
4.2.
(b) The right of a Participant to make Deposits shall cease
during any Period of Severance.
(c) Any change in rate or form of investment of Before Tax
Deposits or After Tax Deposits made by a Participant pursuant to
paragraph (a) above shall be effective in accordance with the following
rules: (i) If the Participant properly notifies the Plan Administrator
of such change on or before the fifteenth day of any month (or such
later date authorized by the Committee), such change shall be effective
on the first day of the following month or (ii) if the Participant
properly notifies the Plan Administrator after the fifteenth day of any
month (or such later date authorized by the Committee) but on or before
the last day of such month, such change shall be effective on the first
day of the second month following such month.
4.7. Character of Deposits. Before Tax Deposits shall be treated as
Company Contributions for purposes of Code Sections 401(k) and 414(h). After Tax
Deposits shall not constitute "qualified voluntary employee contributions" under
Code Section 219 (relating to the deductibility of those amounts).
4.8. Rollover Contributions.
(a) Pursuant to procedures as the Committee may prescribe
(either in writing or practice), a Participant may make a Rollover
Contribution to the Plan. "Rollover Contribution" shall mean a
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<PAGE> 26
contribution by a Participant as the result of a distribution from
another "qualified trust" (as defined in Code Section 401) which is
exempt from tax under Code Section 501, but only if such contribution:
(i) Is received by the Committee not later than 60 days
after the distribution was received by the Participant; or
(ii) Is the result of a trustee-to-trustee transfer of
assets between two (2) or more qualified plans, and the
transaction satisfies the requirements of Section 12.3; or
(iii) Is the result of a transfer of assets from an
individual retirement arrangement or annuity (as defined in Code
Section 408) and such individual retirement arrangement or
annuity was created solely from a distribution or distributions
from a qualified plan; or
(iv) Is an "Eligible Rollover Distribution".
(b) A Rollover Contribution shall not be considered a
Participant Deposit.
(c) A Participant's Rollover Contribution made pursuant the
rules of this Section 4.8 shall be held in a separate Rollover Account
for the Employee. This Rollover Account will not share in allocations of
Company Contributions or Forfeitures under Section 6.4.
20
<PAGE> 27
ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS
5.1. General. All contributions made under the Plan and investments made
and property of any kind or character acquired with any such funds or otherwise
contributed, and all income, profits, and proceeds derived therefrom, shall be
held in Trust and shall be held and administered by the Trustee in accordance
with the provisions of the Plan and Trust Agreement.
5.2. Single Trust. Assets of the Trust shall be held in a separate fund
which shall consist of the Trust Fund. Individual Participant interests in the
Trust Fund shall be reflected in the Accounts maintained for the Participants.
Notwithstanding the foregoing, the Trust Fund shall be treated as a single trust
for purposes of investment and administration, and nothing contained herein
shall require a physical segregation of assets for any fund or for any Account
maintained under the Plan.
5.3. Company Contributions. The Company shall contribute to the Plan in
accordance with the following rules:
(a) Effective March 1, 1995 and subject to the limitations of
Article XIII and to the extent that the Company has current or
accumulated profits, the Company shall contribute monthly out of current
or accumulated profits an amount which, when added to available
forfeitures provided under Section 8.2 resulting from the terminations
during the month, is equal to:
(i) 75% of each Participant's Sharing Deposits for the
previous month which are not in excess of two percent (2%) of
such Participant's Compensation.
(ii) 50% of each Participant's Sharing Deposits for the
previous month which are in excess of two percent (2%) of such
Participant's Compensation but not in excess of three percent
(3%) of such Participant's Compensation.
(iii) 25% of each Participant's Sharing Deposits for the
previous month which are in excess of three percent (3%) of such
Participant's Compensation.
In addition to the foregoing, the Company shall contribute an
amount sufficient to satisfy the reinstatement and plan expense
requirements of Section 6.4(a)(i) and (ii). When a Participant's
contributions are suspended pursuant to Section 8.1, no Company
Contributions shall be made for such Participant.
(b) Prior to March 1, 1995 and subject to the limitations of
Article XIII and to the extent that the Company has current or
accumulated profits, the Company shall contribute monthly out of current
or accumulated profits an amount which, when added to available
forfeitures provided under Section 8.2 resulting from terminations
during the month, is equal to 50% of each Participant's Sharing Deposits
for the previous month plus an amount sufficient to satisfy the
reinstatement and plan expense requirements of Section 6.4(a)(i) and
(ii). When a Participant's contributions are suspended pursuant to
Section 8.1, no Company Contributions shall be made for such
Participant.
(c) The Board of Directors, acting upon the advice and direction
of the Committee, may authorize and direct that the Company Contribution
(expressed as a percentage of Participants' Sharing Deposits in
paragraph (a) above) be changed from time to time from a minimum of 0%
to a maximum of 100%.
5.4. Form of Company Contributions. The Company's contributions to the
Trust Fund shall be paid in cash, property, or Company Stock as the Company may
from time to time determine.
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<PAGE> 28
5.5. Investment of Trust Assets.
(a) The manner in which assets of the Trust will be invested
shall be chosen by the Committee at its discretion, although the
Committee may delegate the management to one or more Investment Managers
appointed pursuant to Section 5.16. Notwithstanding the foregoing, all
Company Contributions contributed on or after the original Effective
Date shall be invested in Company Stock except to the extent invested
pursuant to Section 5.5(e). Company Contributions made under the
SmithKline Beckman Corporation Savings and Investment Plan and
transferred to this Plan shall be invested at the discretion of the
Committee.
(b) The Committee may establish separate investment funds under
the Plan, with each fund representing an investment alternative
available to Participants for the investment of their Accounts as
provided in Section 5.5(c) and (d) below. Each Participant shall have a
subaccount under the Plan corresponding to the Participant's interest
which is allocated to each investment fund. Each such subaccount may be
valued separately. The Committee may, at its discretion, establish
alternative investment funds or eliminate any previously established
funds, including but not limited to the following types of investment
funds:
(i) The Interest Income Fund investing in group annuity
contracts with major insurance companies.
(ii) The Balanced Fund investing in common stocks,
bonds, government securities and similar types of investments.
(iii) The Equity Fund investing in a mutual fund which
may invest in equity securities, bonds, preferred stocks, and
interest-bearing cash investments.
(iv) The Company Stock Fund consisting exclusively of
Company Stock.
Notwithstanding the establishment of separate investment funds,
up to one hundred percent (100%) of the assets of the Plan may be
invested in Company Stock.
(c) A Participant may elect the investment fund to which his or
her Before Tax Deposits or After Tax Deposits are invested under the
Plan or may change such elections pursuant to Section 4.6(a). Such
elections shall be limited to the investment funds currently offered by
the Committee and currently available to Participants pursuant to
paragraph (b) above. A Participant shall effect such an election by
properly completing and submitting the form authorized by the Committee
for this purpose.
(d) A Participant may elect at any time to transfer amounts
accrued in such Participant's Before Tax Deposits Account, After Tax
Deposits Account, or Rollover Account among any of the investment funds
currently offered by the Committee and currently available to the
Participant, provided, however, the total amount transferred shall be in
increments of 1% of the amount accrued in such accounts. A Participant
shall effect such transfer in the manner authorized by the
Committee.(16)
(e) Notwithstanding the requirement of paragraph (a) above that
all Company Contributions be invested in the Company Stock Fund, any
Participant who is an Employee of the Company on or after the date he or
she attains age 55 may elect that (i) all amounts allocated to his or
her Company Contribution Account which are held in the Company Stock
Fund and (ii) all future Company Contributions that may be allocated to
his or her Company Contribution Account, be invested in any of the
investment funds currently offered by the Committee and currently
available to the Participant. A Participant shall make any election,
- ----------
(16) The amendment of Section 5.5(d) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1999.
22
<PAGE> 29
and may change any election, at such times and in accordance with the
requirements imposed by Section 5.5(c) and (d) above.
(f) Amounts invested in any one of the investment funds shall
not share in gains and losses experienced by any other fund.
(g) Notwithstanding the establishment of separate investment
funds within the Trust, the Trust shall at all times constitute a single
trust.
(h) Notwithstanding anything to the contrary in this Section 5.5
or Section 4.1 or Section 8.1, the following additional transfer and
withdrawal restrictions shall apply to all Participants who are
Insiders. For the purpose of this Section 5.5, the term "Insider" shall
mean any Participant who is directly or indirectly the beneficial owner
of more than 10% of any class of any equity security (other than an
exempted security) of the Sponsor (or the Company) which is registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "`34
Act") or who is a "director" or an "officer" of the Sponsor or the
Company as those terms are interpreted for the purpose of determining
persons subject to Section 16 of the `34 Act.
(i) Any Insider who transfers amounts invested in the
Company Stock Fund out of such fund and into another fund or
withdraws cash in a transaction that results in the liquidation
of amounts in the Company Stock Fund (pursuant to Sections 8.1
or 8.12 below), may not for a period of six months following the
Participant's election to so transfer funds, withdraw cash or
take a loan, as the case may be, make an election to transfer
amounts from another fund into the Company Stock Fund.
(ii) Any Insider who transfers amounts invested in a
fund other than the Company Stock Fund into the Company Stock
Fund, may not for a period of six months following the
Participant's election to so transfer funds make an election to
(1) transfer amounts from the Company Stock Fund into another
fund, (2) withdraw cash or take a loan in a transaction that
results in the liquidation of amounts in the Company Stock Fund
or (3) utilize the diversification rule of Section 5.11 of the
Allergan Inc. Employee Stock Ownership Plan or the provision of
any Company plan covered by Rule 16b-3 (promulgated pursuant to
the `34 Act) then in existence that would result in the transfer
out of a Company equity securities fund.(17)
5.6. Reserved for Future Modifications.
5.7. Irrevocability. The Company shall have no right or title to, nor
interest in, the contributions made to the Trust Fund, and no part of the Trust
Fund shall revert to the Company except that on or after the original Effective
Date funds may be returned to the Company as follows:
(a) In the case of a Company Contribution which is made by a
mistake of fact, at the Company's written request that contribution may
be returned to the Company within one (1) year after it is made.
(b) All Company Contributions to the Trust are hereby
conditioned upon the Plan satisfying all of the requirements of Code
Section 401(a). If the Plan does not qualify, at the Company's written
election the Plan may be revoked and all such contributions may be
returned to the Company within one year after the date of Internal
Revenue Service denial of the qualification of the Plan. Upon such a
revocation the affairs of the Plan and Trust shall be terminated and
wound up as the Company shall direct.
- ----------
(17) Paragraph (h) of Section 5.5 as set forth above was adopted by the
Sponsor effective July 23, 1996.
23
<PAGE> 30
(c) All Company Contributions to the Plan are conditioned upon
the deductibility of those contributions under Code Section 404. To the
extent a deduction is disallowed, at the Company's written request the
contribution may be returned to the Company within one year after the
disallowance.
(d) In the event that the Plan is terminated when there are
amounts remaining in the Suspense Account, the excess funds may revert
to the Company to the extent provided in Section 13.7.
5.8. Company, Committee and Trustee Not Responsible for Adequacy of
Trust Fund.
(a) The Company, Committee, and the Trustee shall not be liable
or responsible for the adequacy of the Trust Fund to meet and discharge
any or all payments and liabilities hereunder. All Plan benefits will be
paid only from the Trust assets, and neither the Company, the Committee
nor the Trustee shall have any duty or liability to furnish the Trust
with any funds, securities or other assets except as expressly provided
in the Plan.
(b) Except as required under the Plan or Trust or under Part 4
of Subtitle B of Title I of ERISA, the Company shall not be responsible
for any decision, act or omission of the Trustee, the Committee, or the
Investment Manager (if applicable), and shall not be responsible for the
application of any moneys, securities, investments or other property
paid or delivered to the Trustee.
5.9. Certain Offers for Company Stock. Notwithstanding any other
provision of this Plan to the contrary, in the event an offer shall be received
by the Trustee (including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect) to acquire any or all shares of Company Stock held by the
Trust (an "Offer"), the discretion or authority to sell, exchange or transfer
any of such shares shall be determined in accordance with the following rules:
(a) The Trustee shall have no discretion or authority to sell,
exchange or transfer any of such stock pursuant to such Offer except to
the extent, and only to the extent, that the Trustee is timely directed
to do so in writing by each Participant with respect to any of such
shares that are allocated to such Participant's Accounts.
(b) Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of paragraphs (c) and (m) of this Section,
sell, exchange or transfer pursuant to such Offer, only such shares as
to which such instructions were given. The Trustee shall use its best
efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee.
(c) In the event, under the terms of an Offer or otherwise, any
shares of Company Stock tendered for sale, exchange or transfer pursuant
to such Offer may be withdrawn from such Offer, the Trustee shall follow
such instructions respecting the withdrawal of such securities from such
Offer in the same manner and the same proportion as shall be timely
received by the Trustee from the Participants entitled under this
paragraph to give instructions as to the sale, exchange or transfer of
securities pursuant to such Offer.
(d) In the event that an Offer for fewer than all of the shares
of Company Stock held by the Trustee in the Trust shall be received by
the Trustee, each Participant shall be entitled to direct the Trustee as
to the acceptance or rejection of such Offer (as provided by paragraph
(a) of this Section) with respect to the largest portion of such Company
Stock as may be possible given the total number or amount of shares of
Company Stock the Plan may sell, exchange or transfer pursuant to the
Offer based upon the instructions received by the Trustee from all other
Participants who shall timely instruct the Trustee pursuant to this
paragraph to sell, exchange or transfer such shares pursuant to such
Offer, each on a pro rata basis in accordance with the maximum number of
shares each such Participant would have been permitted to direct under
paragraph (a) had the Offer been for all shares of Company Stock held in
the trust.
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<PAGE> 31
(e) In the event an Offer shall be received by the Trustee and
instructions shall be solicited from Participants in the Plan pursuant
to paragraph (a) of this Section regarding such Offer, and prior to
termination of such Offer, another Offer is received by the Trustee for
the securities subject to the first Offer, the Trustee shall use its
best efforts under the circumstances to solicit instructions from the
Participants to the Trustee (i) with respect to securities tendered for
sale, exchange or transfer pursuant to the first Offer, whether to
withdraw such tender, if possible, and, if withdrawn, whether to tender
any securities so withdrawn for sale, exchange or transfer pursuant to
the second Offer and (ii) with respect to securities not tendered for
sale, exchange or transfer pursuant to the first Offer, whether to
tender or not to tender such securities for sale, exchange or transfer
pursuant to the second Offer. The Trustee shall follow all such
instructions received in a timely manner from Participants in the same
manner and in the same proportion as provided in paragraph (a) of this
Section. With respect to any further Offer for any Company Stock
received by the Trustee and subject to any earlier Offer (including
successive Offers from one or more existing offerors), the Trustee shall
act in the same manner as described above.
(f) With respect to any Offer received by the Trustee, the
Trustee shall distribute, at the Company's expense, copies of all
relevant material including but not limited to material filed with the
Securities and Exchange Commission with such Offer or regarding such
Offer, and shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to
paragraphs (a) or (b). The identities of Participants, the amount of
Company Stock allocated to their Accounts, and the Compensation of each
Participant shall be determined from the list of Participants delivered
to the Trustee by the Committee which shall take all reasonable steps
necessary to provide the Trustee with the latest possible information.
(g) The Trustee shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to
paragraphs (a), (b), or (c) an instruction form to be used by each such
Participant who wishes to instruct the Trustee. The instruction form
shall state that (i) if the Participant fails to return an instruction
form to the Trustee by the indicated deadline, the Company Stock with
respect to which he or she is entitled to give instructions will not be
sold, exchanged or transferred pursuant to such Offer, (ii) the
Participant will be a named fiduciary (as described in paragraph (j)
below) with respect to all shares for which he or she is entitled to
give instructions, and (iii) the Company acknowledges and agrees to
honor the confidentiality of the Participant's instructions to the
Trustee.
(h) Each Participant may choose to instruct the Trustee in one
of the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he is entitled to give instructions,
or (ii) to sell, exchange or transfer all Company Stock for which he or
she is entitled to give instructions. The Trustee shall follow up with
additional mailings and postings of bulletins, as reasonable under the
time constraints then prevailing, to obtain instructions from
Participants not otherwise responding to such requests for instructions.
Subject to paragraph (c), the Trustee shall then sell, exchange or
transfer shares according to instructions from Participants, except that
shares for which no instructions are received shall not be sold,
exchanged or transferred.
(i) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants
pursuant to paragraphs (d), (e), and (f) of this Section. The Trustee is
hereby authorized to sell, exchange or transfer pursuant to an Offer any
such Company Stock in accordance with appropriate instructions from such
former Participants.
(j) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant
concerning the Offer, nor shall they have any authority or
responsibility to do so. The Trustee has no duty to monitor or police
the party making the Offer; provided, however, that if the Trustee
becomes aware of activity which on its face reasonably appears to the
Trustee to be materially false, misleading, or coercive, the Trustee
shall demand promptly that the offending party take appropriate
corrective action. If the offending party fails or refuses to take
appropriate corrective action, the Trustee shall communicate with
affected Participants in such manner as it deems advisable.
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(k) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some but not all Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent
is retained, such agent must agree, as a condition of its retention by
the Company, not to disclose the composition of any Participant Accounts
to the Company, its officers, directors, employees, or representatives.
The Company acknowledges and agrees to honor the confidentiality of
Participants' instructions to the Trustee.
(l) Each Participant shall be a named fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock
allocated to his or her Accounts under the Plan solely for purposes of
exercising the rights of a shareholder with respect to an Offer pursuant
to this Section 5.9 and voting rights pursuant to Section 5.10.
(m) Reserved for future plan modifications.
(n) To the extent that an Offer results in the sale of Company
Stock in the Trust, the Committee shall instruct the Trustee as to the
investment of the proceeds of such sale.
(o) In the event a court of competent jurisdiction shall issue
to the Plan, the Company or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to
be made as to whether or not Company Stock held by the Trustee shall be
sold, exchanged or transferred pursuant to an Offer or cause any such
provision or provisions to conflict with securities laws, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall have no
discretion as to whether or not Company Stock held in the Trust shall be
sold, exchanged, or transferred unless required under such order or
opinion, but shall follow instructions received from Participants, to
the extent such instructions have not been invalidated by such order or
opinion. To the extent required to exercise any residual fiduciary
responsibility with respect to such sale, exchange or transfer, the
Trustee shall take into account in exercising its fiduciary judgment,
unless it is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what action is
in the best interests of Participants. Further, the Trustee, in addition
to taking into consideration any relevant financial factors bearing on
any such decision, shall take into consideration any relevant
nonfinancial factors, including, but not limited to, the continuing job
security of Participants as employees of the Sponsor or any Affiliated
Company, conditions of employment, employment opportunities and other
similar matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan.
5.10. Voting of Company Stock. Notwithstanding any other provision of
the Plan to the contrary, the Trustee shall have no discretion or authority to
vote Company Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions received
by the Trustee from either the Committee or Participants, depending on who has
the right to direct the voting of such stock as provided in the following
provisions of this Section 5.10.
(a) All Company Stock held in the Trust Fund shall be voted by
the Trustee as the Committee directs in its absolute discretion, except
as provided in this Section 5.10(a).
(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, each Participant shall be
entitled to direct the Trustee as to the voting of all Company
Stock allocated and credited to his Accounts.
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(ii) If the Sponsor does not have a registration-type
class of securities (as defined in Code Section 409(e)(4)), then
only with respect to such matters as the approval or disapproval
of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of
substantially all assets of trade or business, or such similar
transactions as may be prescribed in Treasury Regulations, each
Participant shall be entitled to direct the Trustee as to the
voting of all Company Stock allocated and credited to the his
Accounts.
(a) All Participants entitled to direct such voting shall be
notified by the Sponsor, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Sponsor or any other party regarding the exercise of such
rights. Such Participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect
the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional interests in shares). To the
extent that a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under any Company Stock credited to
his Accounts, such Company Stock shall not be voted. The Trustee shall
maintain confidentiality with respect to the voting directions of all
Participants.
(b) Each Participant shall be a named fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for
which he has the right to direct the voting under the Plan but solely
for the purpose of exercising voting rights pursuant to this Section
5.10 or certain Offers pursuant to Section 5.9.
(c) In the event a court of competent jurisdiction shall issue
an opinion or order to the Plan, the Company or the Trustee, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate under ERISA, in all circumstances or in any particular
circumstances, any provision or provisions of this Section regarding the
manner in which Company stock held in the Trust shall be voted or cause
any such provision or provisions to conflict with ERISA, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall
nevertheless have no discretion to vote Company Stock held in the Trust
unless required under such order or opinion but shall follow
instructions received from Participants, to the extent such instructions
have not been invalidated. To the extent required to exercise any
residual fiduciary responsibility with respect to voting, the Trustee
shall take into account in exercising its fiduciary judgment, unless it
is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what is in the
best interests of Participants. Further, the Trustee, in addition to
taking into consideration any relevant financial factors bearing on any
such decision, shall take into consideration any relevant nonfinancial
factors, including, but not limited to, the continuing job security of
Participants as employees of the Company or any of its subsidiaries,
conditions of employment, employment opportunities and other similar
matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan.
5.11. Securities Law Limitation. Neither the Committee nor the Trustee
shall be required to engage in any transaction, including without limitation,
directing the purchase or sale of Company Stock, which either determines in its
sole discretion might tend to subject itself, its members, the Plan, the
Company, or any Participant or Beneficiary to a liability under federal or state
securities laws.
5.12. Distributions. Money and property of the Trust shall be paid out,
disbursed, or applied by the Trustee for the benefit of Participants and
Beneficiaries under the Plan in accordance with directions received by the
Trustee from the Committee. Upon direction of the Committee, the Trustee may pay
money or deliver property from the Trust for any purpose authorized under the
Plan. The Trustee shall be fully protected in paying out money or delivering
property from the Trust from time to time upon written order of the Committee
and shall not be liable for the application of such money or property by the
Committee.
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The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.
5.13. Taxes. If the whole or any part of the Trust, or the proceeds
thereof, shall become liable for the payment of any estate, inheritance, income
or other tax, charge, or assessment which the Trustee shall be required to pay,
the Trustee shall have full power and authority to pay such tax, charge, or
assessment out of any moneys or other property in its hands for the account of
the person whose interests hereunder are so liable, but at least ten (10) days
prior to making any such payment, the Trustee shall mail notice to the Committee
of its intention to make such payment. Prior to making any transfers or
distributions of any of the Trust, the Trustee may require such releases or
other documents from any lawful taxing authority as it shall deem necessary.
5.14. Trustee Records to be Maintained. The Trustee shall keep accurate
and detailed accounts of all investments, receipts, disbursements, and other
transactions hereunder, and all accounts, books, and records relating thereto
shall be open to inspection and audit at all reasonable times by any person
designated by the Company (subject to the provisions of Section 5.9(i)).
5.15. Annual Report of Trustee. Promptly following the close of each
Plan Year (or such other period as may be agreed upon between the Trustee and
Committee), or promptly after receipt of a written request from the Company, the
Trustee shall prepare for the Company a written account which will enable the
Company to satisfy the annual financial reporting requirements of ERISA, and
which will set forth among other things all investments, receipts,
disbursements, and other transactions effected by the Trustee during such Plan
Year or during the period from the close of the last Plan Year to the date of
such request. Such account shall also describe all securities and other
investments purchased and sold during the period to which it refers, the cost of
acquisition or net proceeds of sale, the securities and investments held as of
the date of such account, and the cost of each item thereof as carried on the
books of the Trustee. All accounts so filed shall be open to inspection during
business hours by the Company, the Committee, and by Participants and
Beneficiaries of the Plan (subject to the provisions of Section 5.9(i)).
5.16. Appointment of Investment Manager. From time to time the
Committee, in accordance with Section 9.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over assets
of the Trust not invested or to be invested in Company Stock. The Committee
shall notify the Trustee of such assets of the appointment of the Investment
Manager. In the event more than one Investment Manager is appointed, the
Committee shall determine which assets shall be subject to management and
control by each Investment Manager and shall also determine the proportion in
which funds withdrawn or disbursed shall be charged against the assets subject
to each Investment Manager's management and control. As shall be provided in any
contract between an Investment Manager and the Committee, such Investment
Manager shall hold a revocable proxy with respect to all securities which are
held under the management of such Investment Manager pursuant to such contract
(except for Company Stock), and such Investment Manager shall report the voting
of all securities subject to such proxy on an annual basis to the Committee.
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ARTICLE VI
ACCOUNTS AND ALLOCATIONS
6.1. Participants' Accounts. In order to account for the allocated
interest of each Participant in the Trust Fund, there shall be established and
maintained for each Participant (making such form of contribution) a Before Tax
Deposits Account, an After Tax Deposits Account, a Company Contribution Account,
and a Rollover Account.
6.2. Reserved for Plan Modifications.
6.3. Allocation of Amounts Contributed by Participants. All After Tax
Deposits and Before Tax Deposits contributed by a Participant shall be allocated
to the separate Account established and maintained for that Participant for such
form of contributions. Such contributions shall be paid by the Company to the
Trustee as soon as practicable, but in no event later than thirty (30) days
after such amounts are withheld from the Participants' paychecks.
6.4. Allocation of Company Contributions and Forfeitures. Within 30 days
of the last day of each month, Company Contributions made pursuant to Section
5.3 for such month and Forfeitures which occurred during such month shall be
allocated as follows:
(a) All Company Contributions for such month shall first be used
to restore the Accounts of Participants rehired during such month
pursuant to the rules of Section 8.6 but only after all Forfeitures
occurring during such month are so applied.
(b) If any Forfeitures remain after application of paragraph
(a), such funds shall be allocated to the Company Contribution Accounts
of Participants to the extent necessary to correct insufficient
allocations made to such Accounts in prior months discovered during the
Plan Year to which such Forfeitures are attributable. Any Company
Contributions which remain after the application of paragraph (a) may be
used to pay Plan expenses. The determination of the extent to which such
contributions shall be used to pay Plan expenses shall be made at the
sole discretion of the Committee.
(c) Any Company Contributions and Forfeitures which remain after
the application of paragraphs (a) and (c) above shall be allocated to
the Company Contribution Accounts of all Participants who made Sharing
Deposits during such month, in an amount equal to the percentages
provided in Section 5.3(a) (or such percentage established by the Board
of Directors pursuant to Section 5.3(c)) of the Sharing Deposits for
such month of each such Participant.
The allocations of Company Contributions under this Section 6.4 shall be
made only after any allocations required by Sections 6.5 and 13.5 have been
made.
6.5. Valuation of Participants' Accounts. Within sixty (60) days after
each Valuation Date the Trustee shall value the assets of the Trust on the basis
of fair market values. Company Stock held by the Trust shall be valued in
accordance with Section 6.6. If separate investment funds are maintained under
the Trust pursuant to Section 5.4(b) then each such fund shall be valued
separately so that gains or losses of the various funds shall not be commingled.
Upon receipt of these valuations from the Trustee, the Committee shall revalue
the Accounts and subaccounts (as established pursuant to Section 5.4(b)), if
any, of each Participant as of the applicable Valuation Date so as to reflect,
among other things, a proportionate share in any increase or decrease in the
fair market value of the assets in the Trust Fund, determined by the Trustee as
of that date as compared with the value of the assets in the Trust Fund as of
the immediately preceding Valuation Date.
6.6. Valuation of Company Stock. Company Stock held by the Trust shall
be valued according to the following rules:
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(a) In the case of Company Stock that is publicly traded on a
national securities exchange, such stock shall be valued by reference to
the closing price of such stock on such exchange on the last trading day
of the month for which such stock is being valued.
(b) In the case of Company Stock that is not publicly traded on
a national securities exchange, such stock shall be valued as of the
first day of each Plan Year, or such other time as established by the
Committee, by determining the fair market value of such stock through
the use of an independent appraiser. Such fair market valuation shall be
used to determine the valuation of each Participant's Company Stock
Account on each Valuation Date in such Plan Year pursuant to Section
6.5.
6.7. Dividends, Splits, Recapitalizations, Etc. Any Company Stock
received by the Trustee as a stock split, dividend, or as a result of a
reorganization or other recapitalization of the Company shall be allocated in
the same manner as the Company Stock to which it is attributable is then
allocated.
6.8. Stock Rights, Warrants or Options.
(a) In the event any rights, warrants, or options are issued on
Company Stock held in the Trust Fund, the Trustee shall exercise them
for the acquisition of additional Company Stock as directed by the
Committee to the extent that cash is then available in the Trust Fund.
(b) Any Company Stock acquired in this fashion shall be treated
as Company Stock purchased by the Trustee for the net price paid and
shall be allocated in the same manner as the funds used to purchase the
Company Stock were or would be allocated under the provisions of this
Plan. Thus, if the funds used to purchase the stock consisted of
unallocated Company Contributions, the stock would be allocated under
the terms of Section 6.4; if the funds used consisted of the unallocated
net income of the Trust, the stock would be allocated as provided in
Section 6.5; and if the funds used consisted of funds previously
allocated to the Accounts, the stock would be allocated in the manner in
which the Accounts or subaccounts are debited and credited.
(c) Any rights, warrants, or options on Company Stock which
cannot be exercised for lack of cash may, as directed by the Committee,
be sold by the Trustee and the proceeds allocated in accordance with the
source of the Company Stock with respect to which the rights, warrants,
or options were issued in accordance with rules of paragraph (b) above.
6.9. Reserved for Plan Modifications.
6.10. Treatment of Accounts Upon Severance. Upon a Participant's
Severance, pending distribution of the Participant's benefit pursuant to the
provisions of Article VIII below, the Participant's Accounts shall continue to
be maintained and accounted for in accordance with all applicable provisions of
this Plan, including but not limited to the allocation of Company Contributions
and net income or loss to which the Accounts are entitled under the applicable
provisions of Sections 6.4 and 6.5 as of any Valuation Date or other date
preceding the distribution of the Participant's entire benefit under the Plan.
6.11. Cash Dividends.
(a) All cash dividends paid to the Trustee with respect to
Company Stock that has been allocated to a Participant's Account as of
the quarterly date on which the dividend is received by the Trustee
shall be allocated to the Participant's Account.
(b) If a Participant (or Beneficiary) has a current right to a
distribution in Company Stock pursuant to Article VIII and such stock
has not yet been re-registered in the name of the Participants (or
Beneficiary) as of the record date of any dividend on such stock, such
dividend shall be distributed to the Participant (or Beneficiary).
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(c) Notwithstanding the provisions of paragraph (a) and (b)
above, the Committee may determine, in its discretion, that cash
dividends on such shares may be used to purchase additional shares of
Company Stock, or in whatever other manner it deems appropriate.
6.12. Miscellaneous Allocation Rules.
(a) In the event that there is more than one class of Company
Stock to be allocated to Participants' Accounts, there shall be
allocated to the Account of each Participant (entitled to share in
allocations of Company Stock as of any applicable date) the portion of
each class of Company Stock (to be allocated as of that date) which the
amount to be allocated to the Account of the Participant bears to the
total amount to be allocated to the Accounts of all Participants
entitled to share in such allocation.
(b) Allocations of all assets other than Company Stock shall be
made on the basis of, and expressed in terms of dollar value.
Allocations of Company Stock shall be on the basis of the number of
shares of Company Stock (including fractional shares) and valuations, as
of each Valuation Date, shall be expressed in terms of number of shares
and dollar value.
(c) The Committee and the Trustee shall establish such
additional accounting procedures as may be necessary for the purpose of
making the allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VI. From time to time the
Committee and Trustee may modify such additional accounting procedures
for the purpose of achieving equitable, nondiscriminatory, and
administratively feasible allocations among the Accounts of Participants
in accordance with the general concepts of the Plan and the provisions
of this Article VI.
(d) The Company, the Committee and Trustee do not in any manner
or to any extent whatsoever warrant, guarantee or represent that the
value of a Participant's Account shall at any time equal or exceed the
amount previously contributed thereto.
6.13. Limitations on After Tax Deposits and Company Contributions. With
respect to each Plan Year, After Tax Deposits and Matching Contributions under
the Plan for the Plan Year shall not exceed the limitations by or on behalf of
Highly Compensated Participants under Code Section 401(m), as provided in this
Section. In the event that After Tax Deposits and Matching Contributions under
this Plan by or on behalf of Highly Compensated Participants for any Plan Year
exceed the limitations of this Section for any reason, such excess After Tax
Deposits and Matching Contributions and any income or loss allocable thereto
shall be disposed of in accordance with Section 6.13.(18)
(a) The After Tax Deposits by Participants and Matching
Contributions on behalf of Participants for a Plan Year shall satisfy
the Average Contribution Percentage test set forth in (i) below, or, to
the extent not precluded by applicable regulations, the alternative
Average Contribution Percentage test set forth in (ii) below:
(i) The "Average Contribution Percentage" for the Highly
Compensated Participants shall not be more than the Average
Contribution Percentage of all other Participants multiplied by
1.25, or
(ii) The excess of the Average Contribution Percentage
for the Highly Compensated Participant over the Average
Contribution Percentage for all other Participants shall not be
more than two (2) percentage points (or such lesser percentage
as the Secretary of the Treasury shall prescribe to prevent the
multiple use of the alternative limitation set forth in this
- ----------
(18) The amendment of Section 6.13 to delete prior paragraph (e)
regarding family aggregation and to redesignate paragraphs (f), (g), and (h) as
paragraphs (e), (f), and (g), respectively, as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
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Section 6.13(a)(ii) with respect to any Highly Compensated
Participant), and the Average Contribution Percentage for the
Highly Compensated Participant shall not be more than the
Average Contribution Percentage of all other Participants
multiplied by 2.0.
(iii) If one or more Highly Compensated Employees
participate in both a cash or deferred arrangement and a plan
subject to the Average Contribution Percentage test maintained
by the Sponsor or an Affiliated Company and the sum of the
Actual Deferral Percentage and Average Contribution Percentage
of those Highly Compensated Employees subject to either or both
test exceeds the Aggregate Limit, then the Average Contribution
Percentage of those Highly Compensated Employees who also
participate in the cash or deferred arrangement will be reduced
(beginning with such Highly Compensated Employee whose Average
Contribution Percentage is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Average Contribution Percentage is reduced shall be treated as
an Excess Aggregate Contribution. The Actual Deferral Percentage
and Average Contribution Percentage of the Highly Compensated
Employee are determined after any corrections required to meet
the Actual Deferral Percentage and Average Contribution
Percentage tests. Multiple use does not occur if both the Actual
Deferral Percentage and Average Contribution Percentage of those
Highly Compensated Employees does not exceed 125 percent of the
Actual Deferral Percentage and Average Contribution Percentage
of all other Participants.
(b) For purposes of Sections 6.13 and 6.14 the following
definitions shall apply:
(i) "Average Contribution Percentage" shall mean, with
respect to the group of Highly Compensated Participants and the
group of all other Participants for a Plan Year, the ratio,
calculated separately and to the nearest one-hundredth of one
percent for each Participant in such group: The "Contribution
Percentage" for any Participant shall be determined as follows:
(1) For a Highly Compensated Participant, the
ratio of such Participant's After Tax Deposits and
Matching Contributions for the current Plan Year to such
Participant's Compensation for the current Plan Year;
provided, however, that the Contribution Percentage of a
Highly Compensated Participant with no After Tax
Deposits and Matching Contributions made on his or her
behalf shall be zero.
(2) For any other Participant, the ratio of such
Participant's After Tax Deposits and Matching
Contributions for the preceding Plan Year to such
Participant's Compensation for the preceding Plan Year;
provided, however, that the Contribution Percentage of a
Participant with no After Tax Deposits and Matching
Contributions made on his or her behalf shall be zero.
The Contribution Percentage, in each case, however,
shall not include Matching Contributions that are forfeited
either to correct Excess Aggregate Contributions or because the
contribution to which they relate are excess Before Tax
Deposits, excess After Tax Deposits, or Excess Aggregate
Contributions. To the extent determined by the Committee and in
accordance with regulations issued by the Secretary of the
Treasury under Code Section 401(m)(3), Before Tax Deposits and
any qualified nonelective contributions, within the meaning of
Code Section 401(m)(4)(C) on behalf of a Participant may also be
taken into account for purposes of calculating the Contribution
Percentage of a Participant. However, if any Before Tax Deposits
are taken into account for purposes of determining Actual
Deferral Percentages under Section 4.3 then such Before Tax
Deposits shall not be taken into account under this Section
6.13.(19)
- ----------
(19) The amendment of Section 6.13(b)(i) as set forth above was approved
by the Board on November 17, 1998 and is effective January 1, 1997.
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(ii) "Highly Compensated Participant" shall mean for any
Plan Year any Participant who is a Highly Compensated Employee.
(iii) "Participant" shall mean any Eligible Employee who
satisfied the requirements under Section 3.1 during the Plan
Year whether or not such Eligible Employee has elected to
contribute to the Plan for such Plan Year.
(iv) "Matching Contributions" shall mean the Company
Contributions allocated to a Participant's Company Contribution
Account pursuant to Section 6.4(a) of the Plan.
(v) "Compensation" shall mean compensation as described
below:
(1) Compensation means compensation determined
by the Company in accordance with the requirements of
Code Section 414(s) and the Regulations thereunder.
(2) For purposes of this Section 6.13,
Compensation may, at the Company's election, exclude
amounts which are excludable from a Participant's gross
income under Code Section 125 (pertaining to cafeteria
plans) and Code Section 402(e)(3) (pertaining to 401(k)
salary reductions). The Company may change its election
provided such change does not discriminate in favor of
Highly Compensated Employees.
(3) Compensation taken into account for any Plan
Year shall not exceed $150,000 as adjusted at the time
and in such manner as permitted under Code Section
401(a)(17)(B).(20)
(vi) "Aggregate Limit" shall mean the sum of (1) 125
percent of the greater of the Actual Deferral Percentage of all
Non-Highly Compensated Participants for the Plan Year or the
Average Contribution Percentage of Non-Highly Compensated
Participants under the Plan subject to Code Section 401(m) for
the Plan Year beginning with or within the Plan Year of the cash
or deferred arrangement and (2) the lesser of 200% or two plus
the lesser of such Actual Deferral Percentage or Average
Contribution Percentage. "Lesser" is substituted for "greater"
in (1) above, and "greater" is substituted for "lesser" after
"two plus the" in (2) above if it would result in a larger
Aggregate Limit.
(vii) "Excess Aggregate Contributions" shall mean, with
respect to any Plan Year, the excess of:
(1) The aggregate After Tax Deposits and
Matching Contributions taken into account in computing
the numerator of the Contribution Percentage actually
made on behalf of Highly Compensated Employees for such
Plan year, over
(2) The maximum After Tax Deposits and Matching
Contributions permitted under the Average Contribution
Percentage test as determined by reducing such Matching
Contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages,
beginning with the highest of such percentages.
Such determination shall be made after first determining
excess Before Tax Deposits pursuant to Sections 4.2(a) and 4.3.
(viii) "Non-Highly Compensated Participant" shall mean
any Participant who is not a Highly Compensated Employee.
- ----------
(20) The amendment of Section 6.13(b)(v) as set forth above was approved
by the Board on November 17, 1998 and is effective January 1, 1998.
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(c) For the purposes of this Section 6.13, if two or more plans
described in Code Section 401(a) are considered one plan for the
purposes of Code Sections 401(m), 401(a)(4) or 410(b), the Contribution
Percentages of Participants shall be treated as made under one plan.
Plans may be considered one plan for purposes of satisfying Code Section
401(m) only if they have the same Plan Year.
(d) For purposes of this Section 6.13, the Contribution
Percentage for any Highly Compensated Participants who is eligible to
have After Tax Deposits or Matching Contributions allocated to his or
her account under two or more plans maintained by the Sponsor or an
Affiliated Company shall be determined as if the total of such After Tax
Deposits or Matching Contributions was made under each plan. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate plans if mandatorily disaggregated
pursuant to Regulations under Code Section 401(m).
(e) For purposes of the Average Contribution Percentage test,
After Tax Deposits shall be considered to have been made in the Plan
Year in which contributed to the Trust. Matching Contributions shall be
considered made for a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the close of the Plan
Year.
(f) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records
as are necessary to demonstrate that the Plan satisfies the requirements
of Code Section 401(m) and the regulations thereunder, in accordance
with regulations prescribed by the Secretary of the Treasury.
6.14. Provision for Disposition of Excess After Tax Deposits or Matching
Contributions on Behalf of Highly Compensated Participants. After application of
the provisions of Section 4.4 and 4.5, the following provisions shall be
implemented:(21)
(a) The Committee shall determine, as soon as is reasonably
possible following the close of each Plan Year, the extent (if any) to
which contributions by or on behalf of Highly Compensated Participants
may cause the Plan to exceed the limitations of Section 6.13 for such
Plan Year. If, pursuant to the determination by the Committee and as
required by the leveling method described in paragraph (b) below,
contributions by or on behalf of a Highly Compensated Participant may
cause the Plan to exceed such limitations, then the Committee shall take
the following steps:
(i) First, any excess After Tax Deposits that were not
matched by Matching Contributions, together with income or loss
allocable to such amount (determined in accordance with (d)
below) shall be returned to the Highly Compensated Participant.
(ii) Second, if any excess remains after the provisions
of (i) above are applied, to the extent necessary to eliminate
the excess, Matching Contributions with respect to the Highly
Compensated Participant, any corresponding matched After Tax
Deposits, and any income or loss allocable thereto, shall either
be distributed (if non-forfeitable) to the Highly Compensated
Participant or forfeited (to the extent forfeitable under the
Plan) on a pro-rata basis. Amounts of excess Matching
Contributions forfeited by Highly Compensated Participants under
this Section
- ----------
(21) The amendment of Section 6.14 to delete prior paragraph (c)
regarding family aggregation and to redesignate paragraphs (d), (e), (f), and
(g), as paragraphs (c), (d), (e), and (f), respectively, as set forth above was
approved by the Board on November 17, 1998 and is effective January 1, 1997.
34
<PAGE> 41
6.14, including any income or loss allocable thereto, shall be
applied to reduce Matching Contributions by the Company or the
Affiliated Company that made the Matching Contribution on behalf
of the Highly Compensated Participant for the Plan Year for
which the excess contribution was made.
(iii) If administratively feasible, any amounts
distributed pursuant to subparagraphs (i) or (ii) above shall be
returned within two and one-half (2-1/2) months following the
close of the Plan Year for which such excess After Tax Deposits
or Matching Contributions were made, but in any event no later
than the end of the first Plan Year following the Plan Year for
which the excess After Tax Deposits or Matching Contributions
were made. After Tax Deposits and Matching Contributions for any
Plan Year shall be made on the basis of the respective portions
of such excess After Tax Deposits and Matching Contributions
attributable to each Highly Compensated Participant.
(b) For purposes of satisfying the Average Contribution
Percentage test, the amount of any excess After Tax Deposits or Matching
Contributions by or on behalf of Highly Compensated Participants for a
Plan Year under Section 6.13 shall be determined by application of a
leveling method under which the After Tax Deposits or Matching
Contributions of the Highly Compensated Participant who has the highest
dollar amount of After Tax Deposits or Matching Contributions for such
Plan Year is reduced to the extent required to cause such Highly
Compensated Participant's After Tax Deposits and Matching Contributions
to equal the After Tax Deposits and Matching Contributions of the Highly
Compensated Participant with the next highest After Tax Deposits and
Matching Contributions; provided, however, if a lesser amount, when
added to the total dollar amount already distributed under this
paragraph (b), equals the total excess After Tax Deposits and Matching
Contributions that are required to be distributed to enable the Plan to
satisfy the Average Contribution Percentage test, the lesser amount
shall be distributed. This process shall be repeated until the Plan
satisfies the Average Contribution Percentage test.(22)
(c) The amount of income or loss attributable to any excess
After Tax Deposits or Matching Contributions, as determined under this
Section 6.14 (the "Excess Aggregate Contribution") by a Highly
Compensated Participant for a Plan Year shall be equal to the sum of the
following:
(i) The income or loss allocable to the Highly
Compensated Participant's Excess Aggregate Contribution Accounts
for the Plan Year multiplied by a fraction, the numerator of
which is the Excess Aggregate Contribution and the denominator
of which is the sum of the balance of the Highly Compensated
Participant's Excess Aggregate Contribution Accounts without
regard to any income or loss allocable to such Accounts during
the Plan Year; and
(ii) The amount of allocable income or loss for the Gap
Period using the "safe harbor" method set forth in regulations
prescribed by the Secretary of the Treasury under Code Section
401(m). Under the "safe harbor" method, such allocable income or
loss is equal to 10% of the amount calculated under Section
6.14(d)(i) above, multiplied by the number of calendar months
from the last day of the Plan Year until the date of
distribution of the Participant's excess After Tax Deposits or
Matching Contributions. A distribution on or before the 15th of
the month is treated as made on the last day of the preceding
month, a distribution after the 15th of the month is treated as
made on the first day of the next month.
(d) For the purpose of this Section 6.14, the following shall
apply:
(i) "Excess Aggregate Contribution Accounts" shall mean
the Participant's After Tax Deposits Account and Company
Contribution Account.
- ----------
(22) The amendment of Section 6.14(b) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
35
<PAGE> 42
(ii) "Gap Period" shall mean the period between last day
of the Plan Year and the date of distribution of any Excess
Aggregate Contributions.
(e) Any excess After Tax Deposits and/or Matching Contributions
distributed to a Highly Compensated Participant or forfeited by a Highly
Compensated Participant in accordance with this Section 6.14, shall be
treated as Annual Additions under Article XIII for the Plan Year for
which the excess contribution was made.
(f) Neither the Committee nor the Plan Administrator shall be
liable to any Participant (or his/her Beneficiary, if applicable) for
any losses caused by a mistake in calculating the amount of any Excess
Aggregate Contributions by or on behalf of a Highly Compensated
Participant and the income or loss allocable thereto.
36
<PAGE> 43
ARTICLE VII
VESTING IN PLAN ACCOUNTS
7.1. No Vested Rights Except as Herein Provided. No Participant shall
have any vested right or interest to, or any right of payment of, any assets of
the Trust Fund, except as expressly provided in this Plan. Neither the making of
any allocations nor the credit to any Account of a Participant shall vest in any
Participant any right, title, or interest in or to any assets of the Trust Fund.
7.2. Vesting Schedule.
(a) A Participant's interest in his/her Company Contribution
Account shall vest in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Credited Service Vested Percentage
------------------------- -----------------
<S> <C>
Less than 3 0%
3 or more 100%
</TABLE>
(b) Notwithstanding the above, a Participant shall become fully
vested in his or her Company Contribution Account upon the occurrence of
any of the following events, if such Participant is then still an
Employee:
(i) Attainment of age sixty-two (62);
(ii) Death;
(iii) Severance due to a Disability; or
(iv) Occurrence of a Change of Control pursuant to
Section 12.4.
(c) Notwithstanding the above, a Participant shall at all times
be 100% vested in all amounts transferred from the SmithKline Beckman
Corporation Savings and Investment Plan to this Plan.
7.3. Vesting of Participant Deposits. A Participant shall be fully
vested at all times in the amounts allocated to his or her Before Tax Deposits
Account, After Tax Deposits Account, and Rollover Account.
37
<PAGE> 44
ARTICLE VIII
PAYMENT OF PLAN BENEFITS
8.1. Withdrawals During Employment. A Participant may withdraw, once in
any month period, amounts of at least $500 from his or her Accounts while an
Employee in accordance with the following rules:
(a) A Participant may, for any reason, withdraw any portion of
the amount allocated to his After Tax Deposits Account (excluding any
After Tax Deposits recharacterized as such under Section 4.5 and any
earnings attributable to After Tax Deposits after December 31, 1988). A
Participant who makes a withdrawal of After Tax Deposits which are also
Sharing Deposits shall not receive an allocation of Company
Contributions pursuant to Section 6.4(a)(iii) with respect to any
Sharing Deposits made by such Participant during the 6 month period
beginning on the date of any such withdrawal.(23)
(b) After withdrawing all After Tax Deposits pursuant to
paragraph (a) above, a Participant with 3 or more years of Credited
Service may, for any reason, withdraw any portion of the amount
allocated to his or her Company Contribution Account that was so
allocated 2 or more years prior to the date of such a withdrawal.
(c) On or after the attainment of age 59-1/2, a Participant may
withdraw any portion of the amounts allocated to any of his or her
Accounts.
(d) After withdrawing all amounts permitted pursuant to
paragraphs (a), (b) and (c) above, a Participant may withdraw amounts
from his or her Before Tax Deposits Account (excluding any earnings
attributable to such Account after December 31, 1988) and Rollover
Account, and the vested portion of his or her Company Contribution
Account, and any remaining amount in his or her After Tax Deposits after
December 31, 1988) earnings attributable to such After Tax Deposits
after December 31, 1988) which were recharacterized as such under
Section 4.5 upon incurring a hardship as determined by the Plan
Administrator in accordance with the following procedures:
(i) A hardship distribution shall be made to a
Participant only if the Plan Administrator (or its
representative) determines that the Participant has an immediate
and heavy financial need and that a withdrawal from the Plan is
necessary in order to satisfy such need.
(ii) The following situations shall be "deemed" to be
immediate and heavy financial needs:
(1) Medical expenses described in Code Section
213(d) incurred by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined
in Code Section 152);
(2) The purchase (excluding mortgage payments)
of a principal residence for the Participant only;
(3) The payment of tuition and related
educational fees for the next twelve (12) months of
post-secondary education for the Participant, his or her
spouse, children, or dependents;
(4) The need to prevent the eviction of the
Participant from his or her principal residence or
foreclosure on the mortgage of the Participant's
principal residence; and
- ----------
(23) The amendment of Section 8.1(a) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1997.
38
<PAGE> 45
(5) Any other situation deemed as immediate and
heavy financial needs by the Internal Revenue Service
through the publication of revenue rulings, notices, and
other documents of general applicability.
(iii) In the case of the hardship withdrawal of the
vested portion of a Participant's Company Contribution Account,
the following situations shall also be "deemed" to be immediate
and heavy financial needs:
(1) The purchase of a primary residence for the
Participant or a dependent, including related expenses
incurred up to 3 months following the purchase;
(2) Any education expense for the Participant or
a dependent for the current or immediately prior school
semester;
(3) The funeral expense of a dependent; and
(4) Any medical or dental expenses for the
Participant or his or her dependents incurred during the
current or immediately prior calendar year.
(iv) The determination as to whether a withdrawal from
the Plan is necessary to satisfy an immediate and heavy
financial need is to be made on the basis of all relevant facts
and circumstances. However, a withdrawal from the Plan shall be
necessary in order to satisfy an immediate and heavy financial
need only if:
(1) The amount of the withdrawal is not in
excess of the amount required to relieve the financial
need (including amounts necessary to pay any federal,
state, or local income taxes or penalties reasonably
anticipated to result from the withdrawal) or in excess
of the amount that such need could not be satisfied from
other sources that are reasonably available to the
Participant.
(2) The Participant submits a signed statement
to the Committee, on which the Committee can reasonably
rely, to the extent that the need cannot be relieved:
(A) Through reimbursement or
compensation by insurance or otherwise;
(B) By reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself cause an immediate
and heavy financial need;
(C) By cessation of Before Tax Deposits
or After Tax Deposits under the Plan; or
(D) By other withdrawals or
distributions or nontaxable (at the time of the
loan) loans from any plan maintained by the
Company (including this Plan) or any other
employer, or by borrowing from commercial
sources on reasonable commercial terms.
(v) A Participant's resources shall be deemed to include
those assets of his or her spouse and minor children that are
reasonably available to the Participant.
(vi) A Participant who makes a hardship withdrawal
pursuant to this Section 8.1(d) shall not be permitted to make
Before Tax Deposits or After Tax Deposits for a period of 12
months from the date of such withdrawal unless such withdrawal
only included amounts from such Participant's Company
Contribution Account.
39
<PAGE> 46
(vii) A Participant who makes a hardship withdrawal
pursuant to this Section 8.1 may not make Before Tax
Contributions for such Participant's taxable year immediately
following the taxable year of such hardship withdrawal that is
in excess of the applicable limit under Code Section 402(g) for
such immediately following taxable year less the amount of such
Participant's Before Tax Contributions for the taxable year in
which such Participant made the hardship withdrawal.
(viii) Notwithstanding the provisions of paragraph (e)
below, all hardship withdrawals shall be made in cash regardless
of the fund from which such withdrawal is made. The Committee
may, at its discretion, establish written procedures whereby
Participants may receive an estimated prepayment of a hardship
withdrawal based on the last available valuation of such
Participant's Accounts with a reconciling adjustment made to
such Participant's Accounts after current valuation data is
available.
(e) Except as provided in subparagraph (d)(viii) above, all
withdrawals shall be made in cash, except to the extent any of the
vested portion of a Participant's Account to be withdrawn is invested in
the Company Stock Fund, then such withdrawal may be made in Company
Stock at the election of the Participant to the extent so invested.
(f) Except as provided in paragraphs (a) through (d) above,
Participants may not receive a distribution of their benefits under the
plan prior to termination of employment.
(g) Except as provided in paragraph (d)(viii) above, all
withdrawals shall be made to Participants as soon as reasonably
practicable following the Valuation Date in the month for which a
properly completed withdrawal request is deemed perfected. All
withdrawals shall be based on the Account balances of a Participant as
of such Valuation Date. If a properly completed withdrawal request is
received by the Plan Administrator during any month and on or before the
fifteenth day of such month, the withdrawal request shall be deemed
perfected in such month, otherwise such withdrawal request shall be
deemed perfected in the immediately following month.
(h) Notwithstanding anything to the contrary in this Section 8.1
or Section 4.1, the additional withdrawal restrictions stated in Section
5.5(h) shall apply to all Participants who are Insiders, as that term is
defined Section 5.5(h).(24)
8.2. Distributions Upon Termination of Employment or Disability.
(a) Subject to the provisions of Section 8.5, if a Participant
incurs a Severance for any reason (including Disability) other than
death, all or a portion of such Participant's entire vested portion of
his or her Accounts under the Plan shall be (i) distributed directly to
such Participant or (ii) at the election of the Participant, distributed
as an Eligible Rollover Distribution and paid directly by the Trustee to
the trustee of an Eligible Retirement Plan.(25)
(b) Any distribution made pursuant to paragraph (a) shall be
paid no more than once in any three (3) month period in amounts of at
least $500 (or the Participant's entire vested portion of his or her
Accounts under the Plan if lesser) and shall be made in cash except to
the extent any of the vested portion
- ----------
(24) The amendment of Section 8.1(h) as set forth above was adopted by
the Sponsor and is effective July 23, 1996.
(25) The amendment of Section 8.2(a) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1999.
40
<PAGE> 47
of such Participant's Accounts is invested in the Company Stock Fund,
then, to the extent so invested, such distribution may be made in
Company Stock at the election of the Participant.(26)
(c) Notwithstanding the provisions contained in the foregoing
paragraphs of this Section 8.2 or Section 8.1, any provision which
restricts or would deny a Participant through the withholding of consent
or the exercise of discretion by some person or persons other than the
Participant (and where relevant, other than the Participant's spouse) of
an alternative form of benefit, in violation of Code Section 411(d)(6)
and the regulation promulgated thereunder, is hereby amended by the
deletion of the consent and/or discretion requirement.
8.3. Distribution Upon Death of Participant. In the event of the death
of a Participant, the Participant's benefit under the Plan shall be distributed
to the surviving spouse as Beneficiary (if still alive) unless the Participant
designated another Beneficiary pursuant to Section 8.4. If the Beneficiary is
the surviving spouse of the Participant, he or she may elect to have an Eligible
Rollover Distribution paid directly by the Trustee to the trustee of an Eligible
Retirement Plan. Distributions to the Beneficiary pursuant to this Section 8.3
shall be in the same form as specified in Section 8.2(b) above, as elected by
the Beneficiary. All such distributions shall be made as soon as practicable
after the death of the Participant. A Beneficiary may not elect to defer such a
distribution.
8.4. Designation of Beneficiary.
(a) At any time, and from time to time, each Participant shall
have the unrestricted right to designate the Beneficiary to receive the
portion of his death benefit and to revoke any such designation. Each
such designation shall be evidenced by a written instrument signed by
the Participant and filed with the Committee.
(b) If the Participant is married and designates a Beneficiary
other than his spouse, said designation shall not be honored by the
Committee unless accompanied by the written consent of said spouse to
said designation. Such consent (i) must designate a Beneficiary which
may not be changed without the consent of the spouse (or the consent of
the spouse expressly permits designation by the Participant without any
further consent by the spouse), (ii) must acknowledge the effect of the
designation, and (iii) must be witnessed by a Plan representative or a
notary public. No consent of such spouse shall be necessary if it is
established to the satisfaction of a Plan representative that the
consent required under this paragraph (b) cannot or need not be obtained
because (i) there is no spouse, (ii) the spouse cannot be located, or
(iii) there exist such other circumstances which, pursuant to
Regulations under Code Section 417, permit a distribution to another
Beneficiary. Any consent of a spouse obtained pursuant to this paragraph
(b) or any determination that the consent of the spouse cannot (or need
not) be obtained, shall be effective only with respect to that spouse.
If a Participant becomes married following his designation of a
Beneficiary other than his spouse, such designation shall be ineffective
unless the spousal consent requirements of this paragraph are satisfied
with respect to such spouse (subject, however, to the provisions of
Article XV regarding Qualified Domestic Relations Orders).
(c) If the Participant is married and does not designate a
Beneficiary, the Participant's spouse shall be his Beneficiary for
purposes of this Section. If the deceased Participant is not married and
shall have failed to designate a Beneficiary, or if the Committee shall
be unable to locate the designated Beneficiary after reasonable efforts
have been made, or if such Beneficiary shall be deceased, distribution
of the Participant's death benefit shall be made by payment of the
deceased Participant's entire interest in the Trust to his personal
representative in a single lump-sum payment. In the event the deceased
Participant is not a resident of California at the date of his death,
the Committee, in its discretion, may require the establishment of
ancillary administration in California. If the Committee cannot locate a
qualified personal representative of the deceased Participant, or if
administration of the deceased Participant's estate is not otherwise
required, the Committee, in its discretion, may pay the deceased
- ----------
(26) The amendment of Section 8.2(b) as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1999.
41
<PAGE> 48
Participant's interest in the Trust to his heirs at law (determined in
accordance with the laws of the State of California as they existed at
the date of the Participant's death).
8.5. Distribution Rules. Notwithstanding any other provisions of this
Article VIII of the Plan regarding distributions of Participant's Accounts, the
following additional rules shall apply to all such distributions.
(a) In no event shall any benefits under this Plan, including
benefits upon retirement, Severance, or Disability, be paid (or commence
to be paid) to a Participant prior to the "Consent Date" (as defined
herein) unless the Participant consents in writing to the payment (or
commencement of payment) of such benefits prior to said Consent Date. As
used herein, the term "Consent Date" shall mean the later of (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 Account if the total amount of such vested portion does
not exceed or has never exceeded $5,000.(27)
(b) Unless a Participant elects otherwise pursuant to paragraph
(a) above, distributions of the vested portion of a Participant's
Accounts shall commence no later than the 60th day after the close of
the Plan Year in which the latest of the following events occurs: (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 termination of the Participant's employment with the
Company.
(c) Notwithstanding paragraphs (a) or (b) above, distributions
of the entire vested portion of a Participant's Accounts shall be made
no later than the Participant's Required Beginning Date, or, if such
distribution is to be made over the life of such Participant or over the
lives of such Participant and a Beneficiary (or over a period not
extending beyond the life expectancy of such Participant and
Beneficiary) then such distribution shall commence no later than the
Participant's Required Beginning Date. Required Beginning Date shall
mean:
(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.(28)
(d) Notwithstanding anything to the contrary in this Plan, if a
Participant dies before distribution of his or her vested benefit has
begun in accordance with paragraph (c) above, the Participant's vested
benefit shall be distributed to his Beneficiary within five years from
the date of the Participant's death except that any portion of the
Account balance meeting the following requirements shall not be subject
to this rule:
- ----------
(27) The amendment of Section 8.5(a) as set forth above was adopted by
the Sponsor and is effective January 1, 1998.
(28) The amendment of Section 8.5(c) as set forth above was adopted by
the Sponsor and is effective January 1, 1997.
42
<PAGE> 49
(i) A Beneficiary has been designated to receive the
Participant's Account balance and such designation is effective
at the Participant's death;
(ii) The Account balance is paid to the Beneficiary over
the Beneficiary's life or over a period not to exceed the
Beneficiary's life; and
(iii) The payments to the Beneficiary commence within
one year of the Participant's death, or, if the Beneficiary is
the spouse, before the time the deceased Participant would have
attained age 70-1/2.
(e) All distributions under this Plan shall be made in
accordance with the minimum distribution incidental benefit requirements
of Code Section 401(a)(9)(G) and in accordance with all regulations
issued under Code Section 401(a)(9).
(f) If it is not administratively practical to calculate and
commence payments by the latest date specified in the rules of
paragraphs (b), (c) and (d) above because the amount of the
Participant's benefit cannot be calculated, or because the Committee is
unable to locate the Participant (or eligible Beneficiary) after making
reasonable efforts to do so, the payment shall be made as soon as is
administratively possible (but not more than 60 days) after the
Participant (or Beneficiary) can be located and the amount of the
distributable benefit can be ascertained.
8.6. Forfeitures.
(a) In the event that a distribution of the entire vested
portion of a Participant's Accounts is made to a Participant due to a
Severance when he is not fully vested in such Accounts, the nonvested
portion of the Participant's Account(s) shall be forfeited as of the
Participant's Severance Date. A Participant who incurs such a Severance
when no portion of his or her Accounts are vested shall be deemed to
have received a distribution pursuant to this paragraph (a).
(b) In the event a Participant who receives a distribution
pursuant to paragraph (a) above is rehired by the Company prior to the
date such Participant incurs five consecutive Breaks in Service, the
amount so forfeited shall be reinstated to the Participant's Accounts as
of the Participant's Reemployment Commencement Date (without regard to
any interest or investment earnings on such amount).
(c) If a Participant incurs a Severance when partially vested in
his Accounts and does not receive a distribution described in paragraph
(a), the Participant's Account shall continue to be held by the Trustee
as provided in Section 6.10. Thereafter, when the Participant incurs
five consecutive Breaks in Service, the non-vested portion of the
Participant's Accounts shall be forfeited.
(d) Forfeitures shall be used as provided in Section 6.4.
8.7. Valuation of Plan Benefits Upon Distribution. For the purpose of
any distribution of benefits under this Article VIII, the amount of such
distribution shall be based on the value of a Participant's Accounts as of the
Valuation Date in the month in which the application for such distribution is
deemed perfected. If a properly completed distribution application is received
by the Plan Administrator during any month and on or before the fifteenth day of
such month, the distribution application shall be deemed perfected in such
month, otherwise such distribution application shall be deemed perfected in the
immediately following month.
8.8. Lapsed Benefits.
(a) In the event that a benefit is payable under this Plan to a
Participant and after reasonable efforts the Participant cannot be
located for the purpose of paying the benefit during a period of three
43
<PAGE> 50
consecutive years, the Participant shall be presumed dead and the
benefit shall, upon the termination of that three year period, be paid
to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the
purpose of paying the benefit for the following two years, then the
benefit shall be forfeited and allocated to the Accounts of the other
Participants for such Plan Year in accordance with Section 6.4.
(c) If a Participant shall die prior to receiving a distribution
of his entire benefit under this Plan (other than a Participant presumed
to have died as provided above), if after reasonable efforts an eligible
Beneficiary of the Participant cannot be located for the purpose of
paying the benefit during a period of five consecutive years, the
benefit shall, upon expiration of such five-year period, be forfeited
and reallocated to the Accounts of the other Participants in accordance
with Section 6.4.
(d) For purposes of this Section, the term "Beneficiary" shall
include any person entitled under Section 8.4 to receive the interest of
a deceased Participant or deceased designated Beneficiary. It is the
intention of this provision that during the relevant waiting period (two
years or five years) the benefit will be distributed to an eligible
Beneficiary in a lower priority category under Section 8.4 if no
eligible Beneficiary in a higher priority category can be located by the
Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a
forfeiture the Participant or an eligible Beneficiary shall claim the
forfeited benefit, the amount forfeited shall be reinstated (without
regard to any interest or investment earnings on such amount) and paid
to the claimant as soon as practical following the claimant's production
of reasonable proof of his or her identity and entitlement to the
benefit (determined pursuant to the Plan's normal claim review
procedures under Section 9.8).
(f) The Committee shall direct the Trustee with respect to the
procedures to be followed concerning a missing Participant (or
Beneficiary), and the Company shall be obligated to contribute to the
Trust Fund any amounts necessary after the application of Section 6.4 to
pay any reinstated benefit after it has been forfeited pursuant to the
provisions of this Section.
8.9. Persons Under Legal Disability.
(a) If any payee under the Plan is a minor or if the Committee
reasonably believes that any payee is legally incapable of giving a
valid receipt and discharge for any payment due him/her, the Committee
may have the payment, or any part thereof, made to the person (or
persons or institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or committee of the payee.
(b) Any such payment shall be a payment from the Accounts of the
payee and shall, to the extent thereof, be a complete discharge of any
liability under the Plan to the payee.
8.10. Additional Documents.
(a) The Committee or the Company may require satisfactory proof
of any matter under this Plan from or with respect to any Employee,
Participant, or Beneficiary, and no person shall be entitled to receive
any benefits under this Plan until the required proof shall be
furnished.
(b) The Committee or Trustee, or both, may require the execution
and delivery of such documents, papers and receipts as the Committee or
Trustee may determine necessary or appropriate in order to establish the
fact of death of the deceased Participant and of the right and identity
of any Beneficiary or other person or persons claiming any benefits
under this Article VIII.
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(c) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Committee or
Trustee, or both, may deem appropriate as protection against possible
liability for State or Federal death taxes attributable to any death
benefits.
8.11. Trustee-to-Trustee Transfers. In the case of any Participant or
Participants who have terminated employment with the Company and all Affiliated
Companies and subsequently become employed by an unrelated successor employer,
the Committee, shall at the request of such Participant or Participants, direct
the Trustee to transfer the assets in the Accounts of such Participant or
Participants directly to the trustee of any retirement plan maintained by such
successor employer or employers in lieu of any distribution described in the
preceding provisions of this Article VIII but only if (i) the retirement plan
maintained by such successor employer is determined to the satisfaction of the
Committee to be qualified under Code Section 401, (ii) the sponsor and trustee
of such plan consent to the transfer, and (iii) such transfer satisfies the
conditions of Section 12.3 hereof.
8.12. Loans to Participants. A Participant may borrow from his or her
Accounts while an Employee in accordance with the following rules:
(a) Subject to minimum and maximum loan requirements, a
Participant may borrow up to 50% of his or her After Tax Deposits
Account, Rollover Account, the vested portion of his or her Company
Contribution Account and Before Tax Deposits Account. Only one loan may
be outstanding to a Participant any time. The minimum loan amount shall
be $1,000 and the maximum loan amount shall be $50,000. The $50,000
maximum loan amount shall be reduced by the excess, if any, of the
highest outstanding balance of loans from the Plan to the Participant
during the one-year period ending on the day before the loan is made
over the outstanding balance of loans on the date the loan is made.
(b) A loan to a Participant shall be made solely from his or her
Account(s) and shall be considered an investment directed by the
Participant. Loan amounts shall be funded from the Participant's
Accounts in the following order: (i) After Tax Deposits Account; (ii)
Rollover Account; (iii) Company Contribution Account; and (iv) Before
Tax Deposits Account. Principal repayments shall be credited to the
Participant's Accounts in the inverse of the order used to fund the loan
and interest payments shall be credited to the Participant's Accounts in
direct proportion to the principal repayments.
(c) A loan to a Participant shall bear an interest rate equal to
the prime rate reported in the Wall Street Journal on the last business
day of the previous month plus one percent (1%) and shall remain fixed
throughout the term of the loan. Notwithstanding the preceding sentence,
if the Committee determines that such rate is not reasonable or
otherwise not in accordance with applicable requirements under the Code
or ERISA, the Committee shall set an alternate interest rate at the time
that the loan is taken.
(d) A loan to a Participant shall have a definite maturity date
and repayment schedule and shall be amortized on a substantially level
basis with repayments occurring not less frequently than quarterly.
Loans, other than loans made for the purpose of acquiring the principal
residence of the Participant, shall be made for a period not to exceed
five (5) years. Loans made for the purpose of acquiring the principal
residence of the Participant shall be made for a period not to exceed
fifteen (15) years.
(e) A loan to a Participant shall be secured by the vested
portion of the Participant's Account(s). No more than 50% of the
Participant's vested Account(s) as determined on the date the loan is
issued shall be considered by the Plan as security for a loan. A
Participant who borrows from the Plan hereby agrees that, unless
expressly provided otherwise in loan documents, any such loan is
automatically secured by 50% of his or her vested Account(s).
(f) A loan to a Participant shall be evidenced by a promissory
note and/or such other documentation as required by the Committee.
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(g) A loan to a Participant shall be treated as a distribution
unless the entire principal amount and any interest accrued thereon is
repaid within ninety (90) days after the occurrence of a Participant's
Severance. Absent repayment by the Participant, the Committee shall
instruct the Trustee to distribute the note to the Participant as part
of his or her distribution and the Participant's vested Account(s) shall
be reduced to the extent of such distribution.
(h) The Committee shall establish the participant loan program
and have the duty to manage and administer the participant loan program
in accordance with the terms and provisions of this Section. The
Committee shall have, but not by way of limitation, the following
discretionary powers and authority:
(i) To determine the manner in which loan repayments
shall occur whether it be through automatic payroll deductions
or otherwise.
(ii) To establish any fees, including but not limited to
application fees and maintenance fees, and the manner in which
such fees are collected from the Participant.
(iii) To consider only those factors which would be
considered in a normal commercial setting by persons in the
business of making similar types of loans in establishing the
participant loan program. Such factors may include the
applicant's credit worthiness and financial need, but may not
include any factor which would discriminate against Participants
who are not Highly Compensated Employees. Loans shall be made
available to all Participants without regard to a Participant's
race, color, religion, sex, age or national origin and shall not
be made available to Participants who are Highly Compensated
Employees in an amount greater than the amount made available to
Participants who are not Highly Compensated Employees.
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ARTICLE IX
OPERATION AND ADMINISTRATION
9.1. Appointment of Committee. There is hereby created a committee (the
"Committee") which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall from
time to time fill all vacancies occurring in said Committee. The members of the
Committee shall constitute the Named Fiduciaries of the Plan within the meaning
of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 5.9
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts and solely for purposes of
Section 5.10, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts on matters as to which they
are entitled to provide voting directions.
9.2. Transaction of Business. A majority of the Committee shall
constitute a quorum for the transaction of business. Actions of the Committee
may be taken either by vote at a meeting or in writing without a meeting. All
action taken by the Committee at any meeting shall be by a vote of the majority
of those present at such meeting. All action taken in writing without a meeting
shall be by a vote of the majority of those responding in writing. All notices,
advices, directions and instructions to be transmitted by the Committee shall be
in writing and signed by or in the name of the Committee. In all its
communications with the Trustee, the Committee may, by either of the majority
actions specified above, authorize any one or more of its members to execute any
document or documents on behalf of the Committee, in which event it shall notify
the Trustee in writing of such action and the name or names of its members so
designated and the Trustee shall thereafter accept and rely upon any documents
executed by such member or members as representing action by the Committee until
the Committee shall file with the Trustee a written revocation of such
designation.
9.3. Voting. Any member of the Committee who is also a Participant
hereunder shall not be qualified to act or vote on any matter relating solely to
himself, and upon such matter his presence at a meeting shall not be counted for
the purpose of determining a quorum. If, at any time a member of the Committee
is not so qualified to act or vote, the qualified members of the Committee shall
be reduced below two (2), the Board of Directors shall promptly appoint one or
more special members to the Committee so that there shall be at least one
qualified member to act upon the matter in question. Such special Committee
members shall have power to act only upon the matter for which they were
especially appointed and their tenure shall cease as soon as they have acted
upon the matter for which they were especially appointed.
9.4. Responsibility of Committee. The authority to control and manage
the operation and administration of the Plan, the general administration of this
Plan, the responsibility for carrying out this Plan and the authority and
responsibility to control and manage the assets of the Trust are hereby
delegated by the Board of Directors to and vested in the Committee, except to
the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the limitations of this Plan, the Committee shall, from time to time,
establish rules for the performance of its functions and the administration of
this Plan. In the performance of its functions, the Committee shall not
discriminate in favor of Highly Compensated Employees.
9.5. Committee Powers. The Committee shall have all discretionary powers
necessary to supervise the administration of the Plan and control its
operations. In addition to any discretionary powers and authority conferred on
the Committee elsewhere in the Plan or by law, the Committee shall have, but not
by way of limitation, the following discretionary powers and authority:
(a) To designate agents to carry out responsibilities relating
to the Plan, other than fiduciary responsibilities as provided in
Section 9.6.
(b) To employ such legal, actuarial, medical, accounting,
clerical, and other assistance as it may deem appropriate in carrying
out the provisions of this Plan, including one or more persons to render
advice with regard to any responsibility any Named Fiduciary or any
other fiduciary may have under the Plan.
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(c) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration and
effectuation of this Plan.
(d) To administer, interpret, construe, and apply this Plan and
to decide all questions which may arise or which may be raised under
this Plan by any Employee, Participant, former Participant, Beneficiary
or other person whatsoever, including but not limited to all questions
relating to eligibility to participate in the Plan, the amount of
Credited Service of any Participant, and the amount of benefits to which
any Participant or his Beneficiary may be entitled.
(e) To determine the manner in which the assets of this Plan, or
any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time, to
invest and reinvest the Trust Fund, or any part thereof, or to purchase,
exchange, or lease any property, real or personal, which the Committee
may designate. This shall include the right to direct the investment of
all or any part of the Trust in any one security or any one type of
securities permitted hereunder. Among the securities which the Committee
may direct the Trustee to purchase are "qualifying employer securities"
as defined in Code Section 4975(e).
(g) Subject to provisions (a) through (d) of Section 10.1, to
make administrative amendments to the Plan that do not cause a
substantial increase or decrease in benefit accruals to Participants and
that do not cause a substantial increase in the cost of administering
the Plan.
(h) To perform or cause to be performed such further acts as it
may deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary powers conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary powers
conferred upon the Committee shall be absolute; provided, however, that all such
discretionary power shall be exercised in a uniform and nondiscriminatory
manner.
9.6. Additional Powers of Committee. In addition to any discretionary
powers or authority conferred on the Committee elsewhere in this Plan or by law,
such Committee shall have the following discretionary powers and authority:
(a) To appoint one or more Investment Managers pursuant to
Section 5.16 to manage and control any or all of the assets of the Trust
not invested or to be invested in Company Stock;
(b) To designate persons (other than the members of the
Committee) to carry out fiduciary responsibilities, other than any
responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the members of
the Committee, other than any responsibility to manage or control the
assets of the Trust;
(d) To cancel any such designation or allocation at any time for
any reason;
(e) To direct the voting of any Company Stock or any other
security held by the Trust subject to Section 9.13 hereof; and
(f) To exercise management and control over Plan assets and to
direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 9.6 shall be taken in writing, and no
designation or allocation under paragraphs (a), (b) or (c) shall be effective
until accepted in writing by the indicated responsible person.
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9.7. Periodic Review of Funding Policy. At periodic intervals the
Committee shall review the long-run and short-run financial needs of the Plan
and shall determine a funding policy for the Plan consistent with the objectives
of the Plan and the minimum funding standards of ERISA, if applicable. In
determining such funding policy the Committee shall take into account, at a
minimum, not only the long-term investment objectives of the Trust Fund
consistent with the prudent management of the assets thereof, but also the
short-run needs of the Plan to pay benefits. All actions taken by the Committee
with respect to the funding policy of the Plan, including the reasons therefor,
shall be fully reflected in the minutes of the Committee.
9.8. Application for Determination of Benefits.
(a) The Committee may require any person claiming benefits under
the Plan to submit an application therefor on such forms and in such
manner as the Committee may prescribe, together with such documents and
information as the Committee may require. In the case of any person
suffering from a disability which prevents him from making personal
application for benefits, the Committee may, in its discretion, permit
another person acting on his behalf to submit the application.
(b) Within ninety (90) days following receipt of an application
and all necessary documents and information, the Committee shall furnish
the claimant with written notice of the decision rendered with respect
to the application. In the case of a denial of the claimant's
application, the written notice shall set forth:
(i) The specific reasons for the denial, with reference
to the Plan provisions upon which the denial is based;
(ii) A description of any additional information or
material necessary for perfection of the application (together
with an explanation why the material or information is
necessary); and
(iii) An explanation of the Plan's claim review
procedure.
(c) A claimant who does not agree with the decision rendered
under Section 9.8(b) hereof with respect to his application may appeal
the decision to the Committee. The appeal shall be made in writing
within sixty-five (65) days after the date of notice of the decision
with respect to the application. If the application has neither been
approved nor denied within the ninety (90) day period provided in
Section 9.8(b) hereof, then the appeal shall be made within sixty-five
(65) days after the expiration of the ninety (90) day period. In making
his or her appeal, the claimant may request that his application be
given full and fair review by the Committee. The claimant may review all
pertinent documents and submit issues and comments in writing. The
decision of the Committee shall be made promptly, and not later than
sixty (60) days after the Committee's receipt of a request for review,
unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt
of a request for review. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant with specific references to
the pertinent Plan provisions upon which the decision is based.
9.9. Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 9.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 5.16 hereof or as to which management and control has been retained by
the Trustee.
9.10. Indemnification and Insurance. To the extent permitted by law, the
Company shall indemnify and hold harmless the Committee and each member thereof,
each Trustee, the Board of Directors and each member
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thereof, and such other persons as the Board of Directors may specify, from the
effects and consequences of his or her acts, omissions, and conduct in his or
her official capacity in connection with the Plan and Trust. To the extent
permitted by law, the Company may also purchase liability insurance for such
persons.
9.11. Compensation of Committee and Plan Expenses. Members of the
Committee shall serve as such without compensation unless the Board of Directors
shall otherwise determine, but in no event shall any member of the Committee who
is an Employee receive compensation from the Plan for his or her services as a
member of the Committee. All members shall be reimbursed for any necessary
expenditures incurred in the discharge of duties as members of the Committee.
The compensation or fees, as the case may be, of all officers, agents, counsel,
the Trustee or other persons retained or employed by the Committee shall be
fixed by the Committee, subject to approval by the Board of Directors. The
expenses incurred in the administration and operation of the Plan, including but
not limited to the expenses incurred by the members of the Committee in
exercising their duties, shall be paid by the Plan from the Trust Fund, unless
paid by the Company, provided, however, that the Plan and not the Company shall
bear the cost of interest and normal brokerage charges which are included in the
cost of securities purchased by the Trust Fund (or charged to proceeds in the
case of sales). If such expenses are to be paid by the Plan from the Trust Fund,
the Committee may direct the Trustee to use forfeitures and dividends (and to
sell the shares of Company Stock that represent such forfeitures or dividends)
to pay such expenses.
9.12. Resignation. Any member of the Committee may resign by giving
fifteen (15) days notice to the Board of Directors, and any member shall resign
forthwith upon receipt of the written request of the Board of Directors, whether
or not said member is at that time the only member of the Committee.
9.13. Reliance Upon Documents and Opinions. The members of the
Committee, the Board of Directors, the Company and any person delegated to carry
out any fiduciary responsibilities under the Plan (hereinafter a "delegated
fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or any
Investment Manager. The members of the Committee, the Board of Directors, the
Company and any delegated fiduciary shall be fully protected and shall not be
liable in any manner whatsoever for anything done or action taken or suffered in
reliance upon any such consultant, or firm or corporation which employs one or
more consultants, Trustee, Investment Manager, or counsel. Any and all such
things done or such action taken or suffered by the Committee, the Board of
Directors, the Company and any delegated fiduciary shall be conclusive and
binding on all Employees, Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law. The Committee and any delegated
fiduciary may, but are not required to, rely upon all records of the Company
with respect to any matter or thing whatsoever, and may likewise treat such
records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided by
law.
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ARTICLE X
AMENDMENT AND ADOPTION OF PLAN
10.1. Right to Amend Plan. The Sponsor, by resolution of the Board of
Directors, shall have the right to amend this Plan and Trust Agreement at any
time and from time to time and in such manner and to such extent as it may deem
advisable, including retroactively, subject to the following provisions:
(a) No amendment shall have the effect of reducing any
Participant's vested interest in the Plan or eliminating an optional
form of distribution.
(b) No amendment shall have the effect of diverting any part of
the assets of the Plan to persons or purposes other than the exclusive
benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the duties
or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of
officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the
above provisions (a) through (d), in accordance with the provisions of Section
9.5(g).
10.2. Adoption of Plan by Affiliated Companies. Subject to approval by
the Board of Directors, and consistent with the provisions of ERISA, an
Affiliated Company may adopt the Plan for all or any specified group of its
Eligible Employees by entering into an adoption agreement in the form and
substance prescribed by the Committee. The adoption agreement may include such
modification of the Plan provisions with respect to such Eligible Employees as
the Committee approves after having determined that no prohibited discrimination
or other threat to the qualification of the Plan is likely to result. The Board
of Directors may prospectively revoke or modify an Affiliated Company's
participation in the Plan at any time and for any or no reason, without regard
to the terms of the adoption agreement, or terminate the Plan with respect to
such Affiliated Company's Eligible Employees and Participants. By execution of
an adoption agreement (each of which by this reference shall become part of the
Plan), the Affiliated Company agrees to be bound by all the terms and conditions
of the Plan.
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ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS
In the event the Company decides it is impossible or inadvisable for
business reasons to continue to make contributions under the Plan, it may, by
resolution of the Board of Directors, discontinue contributions to the Plan.
Upon the permanent discontinuance of contributions to the Plan and
notwithstanding any other provisions of the Plan, the rights of Participants
shall become fully vested and nonforfeitable unless replaced by a comparable
plan. The permanent discontinuance of contributions on the part of the Company
shall not terminate the Plan as to the funds and assets then held in the Trust,
or operate to accelerate any payments of distributions to or for the benefit of
Participants or Beneficiaries, and the Trust shall continue to be administered
in accordance with the provisions hereof until the obligations hereunder shall
have been discharged and satisfied.
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ARTICLE XII
TERMINATION AND MERGER
12.1. Right to Terminate Plan. In the event the Board of Directors
decides it is impossible or inadvisable for business reasons to continue the
Plan, then it may, by resolution, terminate the Plan. Upon and after the
effective date of such termination, the Company shall not make any further
contributions under the Plan. Upon the termination or partial termination of the
Plan for any reason, the interest in the Trust of each affected Participant
shall automatically become fully vested unless the Plan is continued after its
termination by conversion of this Plan into a comparable Plan through Plan
amendment or through merger. After the satisfaction of all outstanding
liabilities of the Plan to persons other than Participants and Beneficiaries,
all unallocated assets shall be allocated to the Accounts of Participants to the
maximum extent permitted by law. The Trust Fund may not be fully or finally
liquidated until all assets are allocated to Accounts; alternatively any
unallocated assets may be transferred to another defined contribution plan
maintained by the Sponsor or an Affiliated Company qualified under 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 13.7.
12.2. Effect on Trustee and Committee. The Trustee and the Committee
shall continue to function as such for such period of time as may be necessary
for the winding up of this Plan and for the making of distributions in the
manner prescribed by the Board of Directors at the time of termination of the
Plan.
12.3. Merger Restriction. Notwithstanding any other provision in this
Plan, this Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to, any other plan unless each affected
Participant in this Plan would (if such other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
12.4. Effect of Reorganization, Transfer of Assets or Change in Control.
(a) In the event of a consolidation or merger of the Company, or
in the event of a sale and/or any other transfer of the operating assets
of the Company, any ultimate successor or successors to the business of
the Company may continue this Plan in full force and effect by adopting
the same by resolution of its board of directors and by executing a
proper supplemental or transfer agreement with the Trustee.
(b) In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control
shall become 100% vested in any amounts allocated to their Company
Contribution Accounts on the date of such Change in Control and in any
amounts allocated to their Company Contribution Accounts subsequent to
the date of the Change in Control. Notwithstanding the foregoing, the
Board of Directors may, at its discretion, amend or delete this
paragraph (b) in its entirety prior to the occurrence of any such Change
in Control. For the purpose of this paragraph (b), "Change in Control"
shall mean the following and shall be deemed to occur if any of the
following events occur:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Sponsor representing 50% or more of the
combined voting power of the Sponsor's then outstanding voting
securities;
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of
the directors
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then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of the directors of the Sponsor, as
such terms are used Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall, for the purposes of this Plan, be
considered as though such person were a member of the Incumbent
Board;
(iii) The stockholders of the Sponsor approve a merger
or consolidation with any other corporation, other than
(1) a merger or consolidation which would result
in the voting securities of the Sponsor outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of another entity) more than 50%
of the combined voting power of the voting securities of
the Sponsor or such other entity outstanding immediately
after such merger or consolidation, and
(2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person acquires 50% or more of
the combined voting power of the Sponsor's then
outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all
of the Company's assets.
Notwithstanding the preceding provisions of this
paragraph (b), a Change in Control shall not be deemed to have occurred
(i) if the "person" described in the preceding provisions of this
paragraph is an underwriter or underwriting syndicate that has acquired
the ownership of 50% or more of the combined voting power of the
Sponsor's then outstanding voting securities solely in connection with a
public offering of the Sponsor's securities or (ii) if the "person"
described in the preceding provisions of this paragraph is an employee
stock ownership plan or other employee benefit plan maintained by the
Company that is qualified under the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
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ARTICLE XIII
LIMITATION ON ALLOCATIONS
13.1. General Rule.
(a) Subject to Sections 13.3 through 13.6 hereof, the total
Annual Additions under this Plan to a Participant's Accounts for any
Limitation Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000);(29) or
(ii) Twenty-five percent (25%) of the Participant's
Compensation, from the Company for the Limitation Year. For
purposes of this Article XIII, the "Limitation Year" shall mean
the Plan Year.
(b) For the purpose of this Article XIII and XIV only, the term
"Company" shall mean the Sponsor and any Affiliated Company whether or
not such Affiliated Company has adopted the Plan pursuant to Section
8.2. Solely for purposes of this Article XI, an entity shall be
considered an Affiliated Company by reference to Code Section 415(h).
13.2. Annual Additions. For purposes of Section 13.1, the term "Annual
Additions" shall mean with respect to a Participant, for any Limitation Year
with respect to this Plan and each other defined contribution plan, within the
meaning of Code Section 415(k), maintained by the Company ("Defined Contribution
Plan"), the sum of the amounts determined under Sections 13.2(a), (b), (c), (d),
(e) and (f) hereof:
(a) All amounts contributed or deemed contributed by the
Company.
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant.
(d) Any amounts allocated to an account established under a
pension or annuity plan to provide medical benefits with respect to a
Participant after retirement under Code Section 401(h).
(e) Any amounts allocated for such Plan Year which amounts are
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post
retirement medical or life insurance benefits allocated to the separate
account of a key employee (as defined in Code Section 416(i) under Code
Section 419A(d)(1).
(f) Excess deferral amounts determined pursuant to Sections 4.5
and 6.14.
(g) Excess deferral amounts determined pursuant to Section 4.4
to the extent such amounts are distributed after the first April 15th
following the close of the Participant's taxable year.
Notwithstanding the foregoing, Sections 13.2(d) and 13.2(e) above shall not be
included in any amount treated as an Annual Addition for purposes of applying
the limitations contained in Section 13.1(a)(ii) above. A Participant's Rollover
Contributions shall not be considered Annual Additions.
13.3. Other Defined Contribution Plans. If the Company maintains any
other Defined Contribution Plan, then each Participant's Annual Additions under
such Defined Contribution Plan shall be aggregated with the Participant's Annual
Additions under this Plan for the purposes of applying the limitations of
Section 13.1.
- ----------
(29) The amendment of Section 13.1(a)(1) as set forth above was approved
by the Board on November 17, 1998 and is effective January 1, 1995.
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<PAGE> 62
13.4. Defined Benefit Plans. If a Participant in this 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 13.1 hereof, the sum of the "Defined Benefit
Fraction," as defined in Section 13.4(a) hereof, and the "Defined Contribution
Fraction," as defined in Section 13.4(b) hereof, for any Limitation Year shall
not exceed 1.0.
(a) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the total projected benefit of a Participant under
all Defined Benefit Plans expressed as either an annual straight life
annuity or a qualified joint and survivor annuity providing the maximum
permissible survivor benefit (determined as of the close of the
Limitation Year), and the denominator of which is the lesser of (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
this Plan and all other Defined Contribution Plans as of the end of a
Limitation Year, and the denominator of which is the sum, determined for
such Limitation Year and each prior Limitation Year of the Participant's
service with the Company of the lesser of (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.(30)
13.5. Adjustments for Excess Combined Plan Fraction and Excess Annual
Additions. To the extent that the Annual Additions on behalf of any Participant
in a Limitation Year to this Plan and all other Defined Contribution Plans
exceed the limitations set forth in Sections 13.1 through 13.3 hereof, then
excess Annual Additions shall be eliminated in accordance with the following
rules and in the following order:
(a) If the Annual Additions on behalf of a Participant in a
Limitation Year to the Plan and all other Defined Contribution Plans
would cause the sum of the Defined Contribution Fraction and Defined
Benefit Fraction to exceed 1.0 as determined under Section 13.4 hereof,
the excess shall be eliminated by first applying the provisions such
other Defined Benefit Plans that are applicable to reduce the Annual
Addition or annual benefit under such other plans (except to the extent
that this may be prohibited by law or by the terms of such plans). This
subsection shall not apply to Plan Years beginning on or after January
1, 2000.(31)
(b) If, after the application of paragraph (a) above, excess
Annual Additions on behalf of any Participant remain, such excess shall
be eliminated by reducing the allocation to the Participant's Account by
the amount of the excess and treating such amount as a forfeiture under
Section 5.3 hereof and reallocating such amount proportionately to the
Accounts of other Participants receiving allocations for the Limitation
Year up to the limits set forth in Sections 13.1 through 13.3 hereof.
The allocation to the Participant's Account shall be reduced in the
following order until such excess is Tax Deposits that are not Sharing
Deposits, After Tax Deposits and Before Tax Deposits that are Sharing
Deposits and Company Contributions on a pro-rata basis.
- ----------
(30) The amendment of Section 13.4 to add the last sentence as set forth
above was approved by the Board on November 17, 1998.
(31) The amendment of Section 13.5(a) to add the last sentence as set
forth above was approved by the Board on November 17, 1998.
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<PAGE> 63
(c) After each Participant's Account has been credited under
paragraph (b) with an amount bringing his Account up to his maximum
Annual Addition (determined under the provisions of this Article XIII),
any remaining excess Annual Addition shall be transferred and credited
to a 415 Suspense Account established for the purpose of this Section
13.5.
(d) Any amounts held in the 415 Suspense Account shall be
treated as Company contributions and allocated to the Accounts of
Participants as of the last day of the next succeeding Plan Year in
accordance with the allocation formula applicable to Company
contributions provided in Section 6.4. The 415 Suspense Account shall be
exhausted before any Company contributions shall be allocated to the
Accounts of Participants subsequent to the date upon which any residue
excess Annual Addition as described in paragraph (c) is credited to the
415 Suspense Account.
13.6. Compensation. For 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 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.(32)
13.7. Treatment of 415 Suspense Account Upon Termination. In the event
the Plan shall terminate at a time when all amounts in the 415 Suspense Account
have not been allocated to the Accounts of the Participants, the 415 Suspense
Account amounts shall be applied as follows:
(a) The amount in the 415 Suspense Account shall first be
allocated, as of the Plan termination date, to Participants in
accordance with the allocation formula applicable to Company
contributions provided under Section 6.4.
- ----------
(32) The amendment of Section 13.6 as set forth above was approved by
the Board on November 17, 1998 and is effective January 1, 1998.
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<PAGE> 64
(b) If, after those allocations have been made, any further
residue funds remain in the 415 Suspense Account, the residue may revert
to the Company in accordance with applicable provisions of the Code,
ERISA, and the regulations thereunder.
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<PAGE> 65
ARTICLE XIV
TOP-HEAVY RULES
14.1. Applicability. Notwithstanding any provision in this Plan to the
contrary, and subject to the limitations set forth in Section 14.8, the
requirements of Sections 14.4, 14.5, 14.6 and 14.7 shall apply under this Plan
in the case of any Plan Year in which the Plan is determined to be a Top-Heavy
Plan under the rules of Section 14.3. For the purpose of this Article XIV and
XIII only, the term "Company" shall mean the Sponsor and any Affiliated Company
whether or not such company has adopted the Plan pursuant to Section 10.2.
14.2. Definitions. For purposes of this Article XIV, the following
special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former
Employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is or was:
(i) An officer of the Company having an annual
Compensation greater than 50% of the amount in effect under Code
Section 415(b)(1)(A) for the Plan Year; provided, however, for
such purposes no more than 50 Employees (or, if lesser, the
greater of three Employees or 10% of the Employees) shall be
treated as officers;
(ii) One of the ten Employees having annual Compensation
from the Company of more than the limitation in effect under
Code Section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code Section 318) the largest interests in
the Company. For this purpose, if two Employees have the same
interest in the Company, the Employee having greater annual
Compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual
Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns (or
is considered as owning within the meaning of Code Section 318) more
than 5% of the outstanding stock of the Company or stock possessing more
than 5% of the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would be
described in paragraph (b) if "1%" were substituted for "5%" each place
where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is not a
Key Employee.
(e) The term "Determination Date" means, with respect to any
plan year, the last day of the preceding plan year. In the case of the
first plan year of any plan, the term "Determination Date" shall mean
the last day of that plan year.
(f) The term "Aggregation Group" means (i) each plan of the
Company in which a Key Employee is a Participant, and (ii) each other
plan of the Company which enables any plan described in clause (i) to
meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
required to be included in an Aggregation Group under the preceding
rules may be treated as being 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%",
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<PAGE> 66
and (ii) the aggregation rules of Code Sections 414(b), (c) and (m)
shall not apply, with the result that the ownership tests of this
Section 14.2 shall apply separately with respect to each Affiliated
Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall
include their Beneficiaries, and the definitions provided under this
Section 14.2 shall be interpreted and applied in a manner consistent
with the provisions of Code Section 416(i) and the regulations
thereunder.
(i) For purposes of this Article XIV, an Employee's Compensation
shall be determined in accordance with the rules of Section 13.6.
14.3. Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect to any Plan
Year:
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under
the plan for Key Employees exceeds 60% of the present value of
the cumulative accrued benefits under the plan for all
Employees; and
(ii) Any defined contribution plan if, as of the
Determination Date, the aggregate of the account balances of Key
Employees under the plan exceeds 60% of the aggregate of the
account balances of all Employees under the plan.
In applying the foregoing provisions of this paragraph
(a), the valuation date to be used in valuing Plan assets shall be (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
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 14.3.
(e) If any individual has not performed services for the Company
at any time during the five year period ending on the Determination
Date, any accrued benefit for such individual (and the account balance
of the individual) shall not be taken into account for purposes of this
Section 14.3
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<PAGE> 67
(f) In applying the foregoing provisions of this Section, the
accrued benefit of a Non-Key Employee shall be determined (i) under the
method, if any, which is used for accrual purposes under all plans of
the Company and any Affiliated Companies, or (ii) if there is no such
uniform method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XIV, the definitions
provided under this Section 14.3 shall be applied and interpreted in a
manner consistent with the provisions of Code Section 416(g) and the
Regulations thereunder.
14.4. Minimum Contributions. For any Plan Year in which the Plan is
determined to be a Top-Heavy Plan, the minimum Company Contributions for that
year shall be determined in accordance with the rules of this Section 14.4.
(a) Except as provided below, the minimum contribution
(including for Plan Years beginning after December 31, 1984, amounts
deferred under a cash or deferred arrangement under Code Section 401(k))
for each Non-Key Employee shall be not less than 3% of his compensation.
For purposes of satisfying the minimum contribution requirement, Before
Tax Deposits and Matching Contributions as defined in Section
6.13(b)(iv) shall not be taken into account.
(b) Subject to the following rules of this paragraph (b), the
percentage set forth in paragraph (a) above shall not be required to
exceed the percentage at which contributions (including for Plan Years
beginning after December 31, 1984, amounts deferred under a cash or
deferred arrangement under Code Section 401(k)) are made (or are
required to be made) under the Plan for the year for the Key Employee
for whom the percentage is the highest for the year. This determination
shall be made by dividing the contributions for each Key Employee by so
much of his total compensation for the Plan Year as does not exceed the
applicable Compensation limit. For purposes of this paragraph (b), all
defined contribution plans required to be included in an Aggregation
Group shall be treated as one plan. Notwithstanding the foregoing, the
exceptions to paragraph (a) as provided under this paragraph (b) shall
not apply to any plan required to be included in an Aggregation Group if
the plan enables a defined benefit plan to meet the requirements of Code
Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under this
Section 14.4 shall be calculated without regard to any Social Security
benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-Heavy Plans, the Company shall satisfy
the minimum benefit requirements of Code Section 416 by providing (in
lieu of the minimum contribution described in paragraph (a) above) a
minimum benefit under the defined benefit plan so as to prevent the
duplication of required minimum benefits hereunder.
14.5. Reserved for Future Modifications.
14.6. Maximum Annual Addition.
(a) Except as set forth below, for any Plan Year in which the
Plan is determined to be a Top-Heavy Plan, the rules of Section 13.4(b)
and (c) shall be applied by substituting "1.0" for "1.25".
(b) The rule set forth in paragraph (a) above shall not apply if
(i) the minimum contribution requirement of Section 14.4(a) above would
be satisfied after substituting "4%" for "3%" where it appears therein,
and (ii) the Plan would not be a Top-Heavy Plan if "90%" were
substituted for "60%" each place it appears in Section 14.3(a)(ii).
(c) The rules of paragraph (a) shall not apply with respect to
any Employee as long as there are no (i) Company Contributions
(including amounts deferred under a cash or deferred arrangement under
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<PAGE> 68
Code Section 401(k)), forfeitures, or voluntary nondeductible
contributions allocated to the Employee under a defined contribution
plan maintained by the Company, or (ii) accruals by the Employee under a
defined benefit plan maintained by the Company.
14.7. Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the Plan is
a Top-Heavy Plan, the vesting schedule of the Plan shall be changed to
that set forth below (unless the Plan's vesting schedule otherwise
provides for vesting at a rate at least as rapid as that set forth
below):
<TABLE>
<CAPTION>
Number of Full Years of Nonforfeitable
Credited Service Percentage
---------------- ----------
<S> <C>
Less than 3 years 0%
3 or more 100%
</TABLE>
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting
schedule of the Plan shall (for such Plan Years as the Plan is not a
Top-Heavy Plan) revert to that provided in Section 7.2 (the "Regular
Vesting Schedule"). If such reversion to the Regular Vesting Schedule is
deemed to constitute a vesting schedule change that is attributable to a
Plan amendment (within the meaning of Code Section 411(a)(10)), then
such reversion to said Regular Vesting Schedule shall be subject to the
requirements of Code Section 411(a)(10) of this Plan. For such purposes,
the date of the adoption of such deemed amendment shall be the
Determination Date as of which it is determined that the Plan has ceased
to be a Top-Heavy Plan.
14.8. Noneligible Employees. The rules of this Article XIV shall not
apply to any Employee included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more employers
if retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.
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ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER
ALIENATION OF PLAN BENEFITS
15.1. General Restrictions Against Alienation.
(a)The interest of any Participant or his Beneficiary in the
income, benefits, payments, claims or rights hereunder, or in the Trust
Fund, shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and Beneficiary is
prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without
power to do so, except as may be permitted in connection with providing
security for a loan from the Plan to the Participant pursuant to the
provisions of this Plan as it may be amended from time to time. The
interest of any Participant or Beneficiary shall not be liable or
subject to his debts, liabilities, or obligations, now contracted, or
which may hereafter be contracted, and such interest shall be free from
all claims, liabilities, or other legal process now or hereafter
incurred or arising. Neither the interest of a Participant or
Beneficiary, nor any part thereof, shall be subject to any judgment
rendered against any such Participant or Beneficiary. Notwithstanding
the foregoing, a Participant's or Beneficiary's interest in the Plan may
be subject to the enforcement of a Federal tax levy made pursuant to
Code Section 6331 or the collection by the United States on a judgment
resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action contrary
to this Article XV, such action shall be null and void and of no effect,
and the Company, the Committee, the Trustee and all Participants and
their Beneficiaries, may disregard such action and are not in any manner
bound thereby, and they, and each of them, shall suffer no liability for
any such disregard thereof, and shall be reimbursed on demand out of the
Trust Fund for the amount of any loss, cost or expense incurred as a
result of disregarding or of acting in disregard of such action.
(c) The foregoing provisions of this Section shall be
interpreted and applied by the Committee in accordance with the
requirements of Code Section 401(a)(13) and ERISA Section 206(d) as
construed and interpreted by authoritative judicial and administrative
rulings and regulations.
15.2. Qualified Domestic Relations Orders. The rules set forth in
Section 15.1 above shall not apply with respect to a "Qualified Domestic
Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment,
decree, or order (including approval of a property settlement agreement)
that:
(i) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable under this Plan
with respect to a Participant,
(ii) Relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child or other dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law
(including a community property law), and
(iv) Clearly specifies: (A) the name and last known
mailing address (if any) of the Participant and the name and
mailing address of each Alternate Payee covered by the order (if
the Plan Administrator does not have reason to know that address
independently of the order); (B) the amount or percentage of the
Participant's benefits to be paid to each Alternate Payee, or
the manner in which the amount or percentage is to be
determined; (C) the number of payments or period to which the
order applies; and (D) each plan to which the order applies.
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<PAGE> 70
For purposes of this Section 15.2, "Alternate Payee" means any
spouse, former spouse, child or other dependent of a Participant who is
recognized by a domestic relations order as having a right to receive
all, or a portion of, the benefits payable with respect to the
Participant.
(b) A domestic relations order is not a Qualified Domestic
Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or
any option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that
are required to be paid to another Alternate Payee under a
previous Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to fail
to satisfy the requirements of paragraph (b)(i) above with respect to
any payment made before a Participant has separated from service solely
because the order requires that payment of benefits be made to an
Alternate Payee:
(i) On or after the date on which the Participant
attains (or would have first attained) his earliest retirement
age (as defined in Code Section 414(p)(4)(B));
(ii) As if the Participant had retired on the date on
which such payment is to begin under such order (but taking into
account only the present value of accrued benefits and not
taking into account the present value of any subsidy for early
retirement benefits); and
(iii) In any form in which such benefits may be paid
under the Plan to the Participant (other than in the form of a
joint and survivor annuity with respect to the Alternate Payee
and his or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before
his earliest retirement age (as defined in Code Section 414(p)(4)(B)),
the Alternate Payee is entitled to benefits only if the Qualified
Domestic Relations Order requires survivor benefits to be paid to the
Alternate Payee.
(d) To the extent provided in any Qualified Domestic Relations
Order, the former spouse of a Participant shall be treated as a
surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order received by the
Plan, the Plan Administrator shall promptly notify the Participant and
any Alternate Payee of the receipt of the order and the Plan's
procedures for determining the qualified status of domestic relations
orders. Within a reasonable period after the receipt of the order, the
Plan Administrator shall determine whether the order is a Qualified
Domestic Relations Order and shall notify the Participant and each
Alternate Payee of such determination.
(f) The Plan Administrator shall establish reasonable procedures
to determine the qualified status of domestic relations orders and to
administer distributions under Qualified Domestic Relations Orders.
During any period in which the issue of whether a domestic relations
order is a Qualified Domestic Relations Order is being determined (by
the Plan Administrator, by a court of competent jurisdiction, or
otherwise), the Plan Administrator shall segregate in a separate account
in the Plan (or in an escrow account) the amounts which would have been
payable to the Alternate Payee during the period if the order had been
determined to be a Qualified Domestic Relations Order. If within the 18
Month Period (as defined below), the order (or modification thereof) is
determined to be a Qualified Domestic Relations Order, the Plan
Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons entitled thereto. However, if within
the 18 Month Period (i) it is determined that the order is not a
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<PAGE> 71
Qualified Domestic Relations Order, or (ii) the issue as to whether the
order is a Qualified Domestic Relations Order is not resolved, then the
Plan Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to the
amounts if there had been no order (assuming such benefits were
otherwise payable). Any determination that an order is a Qualified
Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this Section
15.2, the "18 Month Period" shall mean the 18 month period beginning
with the date on which the first payment would be required to be made
under the domestic relations order.
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ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1. No Right of Employment Hereunder. The adoption and maintenance of
this Plan and Trust shall not be deemed to constitute a contract of employment
or otherwise between the Company and any Employee or Participant, or to be a
consideration for, or an inducement or condition of, any employment. Nothing
contained herein shall be deemed to give any Employee the right to be retained
in the service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any Employee or Participant at any time, which
right is hereby expressly reserved.
16.2. Limitation on Company Liability. Any benefits payable under this
Plan shall be paid or provided for solely from the Plan and the Company assumes
no liability or responsibility therefor.
16.3. Effect of Article Headings. Article headings are for convenient
reference only and shall not be deemed to be a part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article.
16.4. Gender. Masculine gender shall include the feminine and the
singular shall include the plural unless the context clearly indicates
otherwise.
16.5. Interpretation. The provisions of this Plan shall in all cases be
interpreted in a manner that is consistent with this Plan satisfying (a) the
requirements of Code Section 401(a) and related statutes for qualification as a
defined contribution plan and (b) the requirements of Code Section 401(k) and
related statutes for qualification as a cash or deferred arrangement.
16.6. Withholding For Taxes. Any payments from the Trust Fund may be
subject to withholding for taxes as may be required by any applicable federal or
state law.
16.7. California Law Controlling. All legal questions pertaining to the
Plan which are not controlled by ERISA shall be determined in accordance with
the laws of the State of California and all contributions made hereunder shall
be deemed to have been made in that State.
16.8. Plan and Trust as One Instrument. This Plan and the Trust
Agreement shall be construed together as one instrument. In the event that any
conflict arises between the terms and/or conditions of the Trust Agreement and
this Plan, the provisions of this Plan shall control, except that with respect
to the duties and responsibilities of the Trustee, the Trust Agreement shall
control.
16.9. Invalid Provisions. If any paragraph, section, sentence, clause or
phrase contained in this Plan shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of competent
jurisdiction to be incapable of being construed or limited in a manner to make
it enforceable, or is otherwise held by such court to be illegal, null or void
or against public policy, the remaining paragraphs, sections, sentences, clauses
or phrases contained in this Plan shall not be affected thereby.
16.10. Counterparts. This instrument may be executed in one or more
counterparts each of which shall be legally binding and enforceable.
Allergan, Inc. hereby executes this instrument, evidencing the terms of
the Allergan, Inc. Savings and Investment Plan as restated this 7th day of April
1999.
ALLERGAN, INC.
By: /s/ AIMEE S. WEISNER
------------------------
Assistant Secretary
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<PAGE> 73
APPENDIX A
SPECIAL PROVISIONS FOR PUERTO RICO-BASED PAYROLL EMPLOYEES
PART I
INTRODUCTION
1.1 Effective Date. Subject to the approval of the United States and
Puerto Rico tax authorities, the Effective Date of this Appendix A is the later
of January 1, 1999 or, the date the merger of the Allergan, Inc. Puerto Rico
Savings and Investment Plan into the Plan is approved by the United States and
Puerto Rico tax authorities. Prior to the Effective Date of Appendix A, Puerto
Rico-based Employees were eligible to participate in the Allergan, Inc. Puerto
Rico Savings and Investment Plan. As of the Effective Date of Appendix A,
Eligible Puerto Rico-based Employees shall cease participating in the Allergan,
Inc. Puerto Rico Savings and Investment Plan and shall participate in the Plan.
1.2 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan.
Subject to the approval of the United States and Puerto Rico tax authorities,
the Allergan, Inc. Puerto Rico Savings and Investment Plan shall merge with and
into the Plan. The Plan shall be the plan surviving the merger. All account
balances shall be transferred to the Plan and all assets acquired under the Plan
as a result of the merger shall be administered, distributed, forfeited and
otherwise governed by the provisions of the Plan and this Appendix A.
1.3 Purpose of Appendix A. The provisions of the Plan shall apply to all
Puerto Rico-based payroll Employees, except as specifically provided in this
Appendix A.
PART II
DEFINITIONS
The Definitions of Article II of the Plan shall apply to all Puerto
Rico-based Employees and shall have the same meaning for the purpose of this
Appendix A except as set forth below:
2.1 Plan Section 2.20. "Compensation" shall have the same meaning as set
forth in Plan Section 2.20 except that in the case of a Puerto Rico-based
Employee, Compensation shall also include cost of living allowances earned
within Puerto Rico and amounts paid under the Christmas bonus program.
2.2 Plan Section 2.24. "Credited Service" shall have the same meaning as
set forth in Plan Section 2.24 except that in the case of a Puerto Rico-based
Employee who was employed by the Company at any time prior to the original
Effective Date, for the period prior to January 1, 1989, Credited Service shall
include service, if any, credited to such Employee under the Savings and
Investment Plan for Employees of Subsidiaries of SmithKline Beckman Corporation
Whose Principal Office is Located in Puerto Rico.
2.3 Plan Section 2.26. For the purpose of this Appendix A only, the
definition of "Eligible Employee" as defined in Plan Section 2.26 shall not
apply and "Eligible Employee" or "Eligible Puerto Rico-based Employee" shall
mean any Puerto Rico-based Employee but shall exclude any non-resident alien of
Puerto Rico and the United States, any Leased Employee, and, and any Employee
covered by a collective bargaining agreement.
2.4 Plan Section 2.29. For the purpose of this Appendix A only, the
definition of "Employee" as defined in Plan Section 2.29 shall not apply and
"Employee" or "Puerto Rico-based Employee" shall mean any person who is employed
in any capacity by the Sponsor or any Affiliated Company at its Puerto Rico
locations, any portion of whose income is subject to withholding or income tax
and/or for whom Social Security contribution are made by the Sponsor or any
Affiliated Company except that such term shall not include (i) any individual
who performs services for the Sponsor or any Affiliated Company and who is
classified or paid as an independent contractor (regardless of his or her
classification for federal tax or other legal purposes) by the Sponsor or any
<PAGE> 74
Affiliated Company and (ii) any individual who performs services for the Sponsor
or any Affiliated Company pursuant to an agreement between the Sponsor or any
Affiliated Company and any other person including a leasing organization except
to the extent such individual is a Leased Employee.
2.5 Plan Section 2.40. For the purpose of this Appendix A only,
"Participant" as defined in Plan Section 2.40 shall not apply and "Participant"
or "Puerto Rico-based Participant" shall mean a Puerto Rico-based Employee who
is eligible to participate in the Plan and elects to participate in the Plan in
accordance with Plan Section 3.1.
2.6 Plan Section 2.50. Notwithstanding the provisions of Plan Section
2.50, "Sharing Deposits" of a Puerto Rico-based Participant shall mean his
Deposits (whether Before Tax or After Tax) not in excess of six percent (6%) of
Compensation. Sharing Deposits shall participate in allocations of Company
Contributions and Forfeitures.
2.7 Additional Terms. Additional terms shall have the following meaning:
(a) "PR-Code" shall mean the Puerto Rico Internal Revenue Code
of 1994, as amended. Where the context so requires a reference to a
particular PR-Code Section shall also refer to any successor provision
of the PR-Code to such PR-Code Section.
(b) "Top One-Third Highly Compensated Employee" shall mean any
Participant who has Compensation for a Plan Year that is greater than
the Compensation for such Plan Year of two-thirds (2/3) of all other
Participants of the same Company.
PART III
ELIGIBILITY AND PARTICIPATION
The provisions of Article III of the Plan shall apply to all Puerto
Rico-based Employees.
PART IV
PARTICIPANT DEPOSITS
The provisions of Article IV of the Plan shall apply to all Puerto
Rico-based Employees except as set forth below:
4.1 Reserved for Future Modification.
4.2 Plan Section 4.2(a). Notwithstanding the provisions of Plan Section
4.2(a), a Puerto Rico-based Participant may elect to contribute a whole
percentage of his Compensation to the Plan as Before Tax Deposits not to exceed
ten percent (10%) and, when aggregated with the After Tax Deposits contributed
by such Participant pursuant to paragraph (b) below, not to exceed fifteen
percent (15%). Notwithstanding the foregoing, no Participant shall be permitted
to make Before Tax Deposits to the Plan during any calendar year in excess of
$8,000, or such larger amount as may be determined by the Puerto Rico Secretary
of the Treasury pursuant to the PR-Code, or which exceed the limitations set
forth in Section 4.3 of this Appendix. For purposes of the dollar limitation,
the Before Tax Deposits of a Participant for any taxable year is the sum of all
Before Tax Deposits under the Plan and all salary reduction amounts under any
other qualified cash or deferred arrangement (as defined in Code Section 401(k),
a simplified employee pension (as defined in Code Sections 408(k) and
402(h)(1)(B), a deferral compensation plan under Code Section 457, a trust
described in Code Section 501(c)(18) and any salary reduction amount used to
purchase an annuity contract under Section 403(b) whether or not sponsored by
the Company but shall not include any amounts properly distributed as excess
annual additions.
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4.3 Additional Contribution Deferral Limitation. In addition to the
limitations on Compensation Deferral Contributions set forth in Plan Section
4.3, Compensation Deferral Contributions by a Puerto Rico-based Participant
shall not exceed the limitation on contributions by or on behalf of the Top
One-Third Highly Compensation Employees under PR-Code Section 1165(e), as
provided in this Section 4.3 with respect to each Plan Year. In the event that
Compensation Deferrals Contributions under the Plan by or on behalf of the Top
One-Third Highly Compensated Employees exceed the limitations of this section
for any reason, such excess contributions shall be recharacterized as After Tax
Deposits or such excess contributions, adjusted for any income or loss allocable
thereto, shall be returned to such Participant, as provided in Plan Section 4.5.
(a) The Compensation Deferral Contributions by Participants for
a Plan Year shall satisfy the Actual Deferral Percentage test under the
PR-Code as set forth in (i) below, or to the extent not precluded by
applicable regulations, the alternate Actual Deferral Percentage test as
set forth in (ii) below:
(i) The average "Actual Deferral Percentage" for the Top
One-Third Highly Compensated Employees shall not be more than
the average Actual Deferral Percentage of all non-Top One-Third
Highly Compensated Employees multiplied by 1.25, or
(ii) The excess of the average Actual Deferral
Percentage for the Top One-Third Highly Compensated Employees
over the average Actual Deferral Percentage for all non-Top
One-Third Highly Compensated Employees shall not be more than
two (2) percentage points and the average Actual Deferral
Percentage for the Top One-Third Highly Compensated Employee
shall not be more than the average Actual Deferral Percentage of
all non-Top One-Third Highly Compensated Employees multiplied by
2.0.
(b) For the purpose of this Section 4.3 only, the following
definitions shall apply:
(i) "Actual Deferral Percentage" shall mean, with
respect to the group of all Top One-Third Highly Compensated
Employees and the group of all non-Top One-Third Highly
Compensated Employees for a Plan Year, the ratio, calculated
separately for each Participant in such group, of the amount of
the Participant's Compensation Deferral Contribution for such
Plan Year, to such Participant's Compensation for such Plan
Year, in accordance with regulations prescribed by the Puerto
Rico Secretary of the Treasury under PR-Code Section 1165(e).
For purposes of computing the Actual Deferral Percentage, an
Eligible Employee who would be a Participant but for the failure
to make Before Tax Deposits shall be treated as a Participant on
whose behalf no Before Tax Deposits are made.
(ii) "Participant" shall mean any Eligible Puerto
Rico-based Employee who satisfied the requirements under Plan
Section 3.1 during the Plan Year, whether or not such Eligible
Employee elected to contribute to the Plan for such Plan Year.
(iii) "Compensation Deferral Contributions" shall mean
amounts contributed to the Plan by a Participant as Before Tax
Deposits pursuant to Section 4.1 of this Appendix, including
excess Before Tax Deposits (as defined in Plan Section 4.4(a))
of the Top One-Third Highly Compensated Employees but excluding
(1) excess Before Tax Deposits of all non-Top One-Third Highly
Compensated Employees that arise solely from Before Tax Deposits
made under the Plan or plans of the Company, (2) Before Tax
Deposits that are taken into account in the Average Contribution
Percentage test (as defined in Plan Section 6.11) provided that
the Actual Deferral Percentage test is satisfied both with and
without exclusions of these Before Tax Deposits, and (3) any
deferrals properly distributed as excess Annual Additions. To
the extent determined by the Committee and in accordance with
regulations issued by the Puerto Rico Secretary of the Treasury,
matching contributions and qualified nonelective contributions
on behalf of a Participant that satisfy the requirements of
PR-Code Section 1165(e)(3)(D)(ii) may also be taken into account
for the purpose of determining the Actual Deferral Percentage of
such Participant.
(iv) "Compensation" shall mean compensation as described
below:
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<PAGE> 76
(1) Compensation means compensation determined
by the Company in accordance with the requirements of
Code Section 414(s) and the regulations thereunder.
(2) For the purpose of this Section 4.3,
Compensation may, at the Company's election, include
amounts which are excludable from a Participant's gross
income under Code Section 125 (pertaining to cafeteria
plans) and Code Section 402(e)(3) (pertaining to 401(k)
salary reductions). The Company may change its election
provided such change does not discriminate in favor of
the Top One-Third Highly Compensated Employees.
(3) Compensation taken into account for any Plan
Year shall not exceed $150,000 as adjusted at the time
and in such manner as permitted under Code Section
401(a)(17)(B).
(c) In the event that as of the first day of Plan Year, the Plan
satisfies the requirements of PR-Code Section 1165(a) only if aggregated
with one or more other plans which include arrangements under PR-Code
Section 1165(e), then this Section 4.3 shall be applied by determining
the Actual Deferral Percentages of Participants as if all such plans
were a single plan, in accordance with regulations prescribed by the
Secretary of the Treasury under PR-Code Section 1165(e). Plans may be
considered one plan for purposes of satisfying PR-Code Section 1165(e)
only if they have the same Plan Year.
(d) For the purpose of this Section 4.3, the "Actual Deferral
Percentage" for any Top One-Third Highly Compensated Employee who is a
Participant under two or more PR-Code Section 1165(e) arrangements of
the Company shall be determined by taking into account the Top One-Third
Highly Compensated Employee's Compensation under each such arrangement
and contributions under each such arrangement which qualify for
treatment under PR-Code Section 1165(e) in accordance with regulations
prescribed by the Puerto Rico Secretary of the Treasury under PR-Code
Section 1165(e). If the arrangements have different Plan Years, this
subsection shall be applied by treating all such arrangements ending
with or within the same calendar year as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as
separate plans if mandatorily disaggregated pursuant to regulations
under Code Section 401(k).
(e) For purposes of the Actual Deferral Percentage test,
Compensation Deferral Contributions must be made before the last day of
the twelve-month period immediately following the Plan Year to which
such contributions relate.
(f) The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant
under this Section 4.3 shall satisfy such other requirements as may be
prescribed by the Puerto Rico Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records
as are necessary to demonstrate that the Plan satisfies the requirements
of PR-Code Section 1165(e) and the regulations thereunder, in accordance
with regulations prescribed by the Puerto Rico Secretary of the
Treasury.
4.4 Plan Section 4.4. The provisions of Plan Section 4.4 entitled
"Provisions for Return of Excess Before Tax Deposits over $7,000" shall be
applied by substituting the dollar limitation contained in Section 4.1 of this
Appendix for the "$7,000 limitation" in each place it appears.
4.5 Plan Section 4.5. The provisions of Plan Section 4.5 entitled
"Provision for Recharacterization or Return of Excess Deferrals by Highly
Compensated Participants" shall be applied as follows:
(a) "Highly Compensated Employee and Top One-Third Highly
Compensated Employee" shall be substituted for "Highly Compensated
Employee" in each place it appears.
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<PAGE> 77
(b) Any reference to Code Sections shall include reference to
the corresponding PR-Code Section unless the context clearly indicates
otherwise. For example, references to "Code Section 401(k)" and "Code
Section 404" shall include references to PR-Code Section 1165(e) and
PR-Code Section 1023(n), respectively.
4.6 Reserved for Future Modification.
4.7 Plan Section 4.7. In addition to the provisions of Plan Section 4.7
entitled "Character of Deposits," Before Tax Deposits shall be treated as
Company Contributions for purposes of PR-Code Section 1165(e).
4.8 Plan Section 4.8. The provisions of Plan Section 4.8 entitled
"Rollover Contributions" shall be applied by including a corresponding reference
to "PR-Code Section 1165(a)" in each place "Code Section 401(a)" and "Code
Section 501(a)" appears.
PART V
TRUST FUND AND COMPANY CONTRIBUTIONS
The provisions of Article V shall apply to all Puerto Rico-based
Employees except as set forth below:
5.1 Plan Section 5.2. Notwithstanding the provisions of Plan Section 5.2
entitled "Company Contributions" and subject to the limitations of Plan Article
XIII and to the extent that the Company has current or accumulated profits, in
the case of a Puerto Rico-based Participant the Company shall contribute monthly
out of current or accumulated profits and an amount which, when added to
available forfeitures provided under Plan Section 8.2 resulting from the
terminations during the month, is equal to 75% of each Participant's Sharing
Deposits for the previous month which are not in excess of two percent (2%) of
such Participant's Compensation.
5.2 Plan Section 5.7. The provisions of Plan Section 5.7 entitled
"Irrevocability" shall be applied by including a corresponding reference to
"PR-Code Section 1165(a)" and "PR-Code Section 1023(n)" in each place "Code
Section 401(a)" and "Code Section 404" appears, respectively
PART VI
ACCOUNTS AND ALLOCATIONS
The provisions of Article VI of the Plan shall apply to all Puerto
Rico-based Employees.
PART VII
VESTING IN PLAN ACCOUNTS
The provisions of Article VII of the Plan shall apply to all Puerto
Rico-based Employees.
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PART VIII
PAYMENT OF PLAN BENEFITS
The provisions of Article VIII of the Plan shall apply to all Puerto
Rico-based Employees except as set forth below:
8.1 Plan Section 8.1. The provisions of Plan Section 8.1 entitled
"Withdrawals During Employment" shall be applied by including a corresponding
reference to "PR-Code Section 1165(e)(7)(A)" in each place "Code Section 402(g)"
appears.
8.2 Plan Section 8.4. In addition to the provisions of Plan Section 8.4
entitled "Designation of Beneficiary," the following rules shall apply to a
Participant, as defined in Section 2.4 of this Appendix:
(a) In the event a deceased Participant is not a resident of
Puerto Rico at the date of his death, the Plan Administrator, in its
discretion, may require the establishment of ancillary administration in
Puerto Rico.
(b) 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 Plan
Administrator, in its discretion, may pay the deceased Participant's
interest in the Trust Fund to his heirs at law (determined in accordance
with the laws of the Commonwealth of Puerto Rico) as they existed at the
date of the Participant's death.
8.3 Plan Section 8.5(a). Notwithstanding the provisions of Plan Section
8.5(a) entitled "Distribution Rules," in the case of a Puerto Rico-based
Participant in no event shall any benefits under the Plan, including benefits
upon retirement, Severance, or Disability, be paid (or commence to be paid) to a
participant prior to the "Consent Date" (as defined herein) unless the
Participant consents in writing to the payment (or commencement of payment) of
such benefits prior to said Consent Date. As used herein, the term "Consent
Date" shall mean the later of (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 Account if the total amount of such vested portion does not
exceed or has never exceeded $3,500.
8.4 Plan Section 8.5(c). Notwithstanding the provisions of Plan Section
8.5(c) entitled "Distribution Rules," Section 8.3 of this Appendix or Plan
Section 8.5(b), in the case of a Puerto Rico-based Participant distributions of
the entire vested portion of a Participant's Accounts shall be made no later
than the Participant's Required Beginning Date, or, if such distribution is to
be made over the life of such Participant or over the lives of such Participant
and a Beneficiary (or over a period not extending beyond the life expectancy of
such participant and Beneficiary) then such distribution shall commence no later
than the Participant's Required Beginning Date. Required Beginning Date shall
mean:
(a) For the period prior to January 1, 1989, April 1 of the
calendar year following the later of the calendar year in which the
Participant (i) attains age 70-1/2, or (ii) retires; provided, however,
the foregoing clause (ii) shall not apply with respect to a Participant
who is a Five Percent Owner (as defined in Code Section 416(i)) at any
time during the five Plan Year period ending in the calendar year in
which the Participant attains age 70-1/2. If the Participant becomes a
Five Percent Owner during any Plan Year subsequent to the five Plan Year
period referenced above, the Required Beginning Date under this
Paragraph (a) shall be April 1 of the calendar year following the
calendar year in which such subsequent Plan year ends.
(b) For the period after December 31, 1988, April 1 of the
calendar year following the calendar year in which the Participant
attains age 70-1/2; provided, however, if the Participant attains age
70-1/2 before January 1, 1988 and the Participant was not a Five Percent
Owner at any time during the Plan Year ending with or within the
calendar year in which such Participant attains age 66-1/2 or any
subsequent
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<PAGE> 79
Plan Year, then this Paragraph (b) shall not apply and the Required
Beginning Date shall be determined under Paragraph (a) above.
8.5 Plan Section 8.10(c). The provisions of Plan Section 8.10(c)
entitled "Additional Documents" shall be applied by including reference to
"Puerto Rico" in each place "State or Federal" appears.
8.6 Plan Section 8.11. The provisions of Plan Section 8.11 entitled
"Trustee-Trustee Transfers" shall be applied by including a corresponding
reference to "PR-Code Section 1165" in each place "Section 401 of the Code"
appears.
8.7 Plan Section 8.12. The provisions of Plan Section 8.10(c) entitled
"Additional Documents" shall be applied by including reference to the "P-R Code"
in each place "Code or ERISA" appears.
PART IX
PLAN ARTICLES IX THROUGH XV
The provisions of Articles IX through XV of the Plan shall apply to all
Puerto Rico-based Employees.
PART X
MISCELLANEOUS PROVISIONS
The provisions of Article XVI of the Plan shall apply to all Puerto
Rico-based Employees except as follows:
10.1 Plan Section 16.5. In addition to the provisions of Plan Section
16.5 entitled "Interpretation," the provisions of the Plan shall be interpreted
in a manner consistent with the Plan satisfying (i) the requirements of PR-Code
Section 1165(a) and related statutes for qualification as a defined contribution
plan and (ii) the requirements of PR-Code Section 1165(e) and related statutes
for qualification as a cash or deferred arrangement to the extent such
interpretation would not violate (i) the requirements of Code Section 401(a) and
related statutes for qualification as a defined contribution plan and (ii) the
requirements of Code Section 401(k) and related statutes for qualification as a
cash or deferred arrangement.
10.2 Plan Section 16.6. In addition to the provisions of Plan Section
16.6 entitled "Withholding for Taxes," any payments from the Trust Fund may be
subject to withholding for taxes as may be required by any applicable Puerto
Rico law.
10.3 Plan Section 16.7. In addition to the provisions of Plan Section
16.7 entitled "California Law Controlling," the Plan Administrator shall
determine whether all legal questions pertaining to the Plan which are not
controlled by ERISA shall be determined in accordance with the laws of the
Commonwealth of Puerto Rico or the laws of the State of California in the case
of a Puerto Rico-based Employee or Participant.
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<PAGE> 1
EXHIBIT 10.7
SECOND AMENDMENT TO
ALLERGAN, INC.
1999 MANAGEMENT BONUS PLAN
The ALLERGAN, INC. 1999 MANAGEMENT BONUS PLAN (the "Plan") is hereby
amended, effective January 1, 2000, to clarify that "Change in Control" as used
in the Plan means the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (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 Allergan, Inc. (the "Company") representing
(i) 20% or more of the combined voting power of the Company'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 (ii) 33% or
more of the combined voting power of the Company's then outstanding
voting securities, without regard to whether such acquisition is approved
by the Incumbent Board;
(b) Individuals who, as of the date hereof, constitute the Board
of Directors of the Company (the "Incumbent Board"), cease for any reason
to constitute at least a majority of the Board of Directors of the
Company, provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used 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 Company;
(c) The consummation of a merger, consolidation or reorganization
involving the Company, 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 Company outstanding
immediately prior thereto continuing to represent (either by
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 Company or such other entity
resulting
<PAGE> 2
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 Company'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 Company representing 20% or more of the
combined voting power of the Company's then outstanding voting
securities; or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's
assets.
Notwithstanding the preceding provisions, a Change in Control shall not
be deemed to have occurred if the Person described in the preceding
provisions is (1) an underwriter or underwriting syndicate that has
acquired any of the Company's then outstanding voting securities solely
in connection with a public offering of the Company's securities, (2) the
Company or any subsidiary of the Company or (3) an employee stock
ownership plan or other employee benefit plan maintained by the Company
(or any of its affiliated companies) that is qualified under the
provisions of the Internal Revenue Code of 1986, as amended. In addition,
notwithstanding the preceding provisions, a Change in Control shall not
be deemed to have occurred if the Person described in the preceding
provisions 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 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 Company or through a stock dividend or stock split), then a Change
in Control shall occur.
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Second Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
----------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.8
ALLERGAN
2000
MANAGEMENT BONUS PLAN
JANUARY 2000
- --------------------------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
PURPOSE OF THE PLAN
The Allergan, Inc. 2000 Management Bonus Plan (the "Plan") is designed to reward
eligible management-level employees for their contributions to providing
Allergan's stockholders increased value for their investment through the
successful accomplishment of specific financial objectives and individual
performance objectives.
- --------------------------------------------------------------------------------
PLAN YEAR
The Plan year runs from January 1, 2000 through December 31, 2000 for all
locations that have a fiscal year beginning January 1 and ending December 31.
For the international locations with fiscal years beginning December 1 and
ending November 1, the Plan year is December 1, 1999 to November 30, 2000.
- --------------------------------------------------------------------------------
ELIGIBILITY
All regular full-time and part-time employees of Allergan, Inc. and its
subsidiaries (the "Company") scheduled to work 20 or more hours per week in
salary grades 7E and above who are not covered by any other bonus or sales
incentive plan are eligible to participate in the Plan. Notwithstanding anything
in this Plan to the contrary, any individual shall not be eligible to
participate in the Plan if such individual (a) performs services for the Company
and is classified or paid as an independent contractor (regardless of his or her
classification for federal tax or other legal purposes) by the Company or (b)
performs services for the Company pursuant to an agreement between the Company
and any other person including a leasing organization. For the locations where
the Plan year is January 1, 2000 through December 31, 2000, the participants
must be employed on or before June 30, 2000; for the locations where the Plan
year is December 1, 1999 through November 30, 2000, the participants must be
employed on or before May 31, 2000. Participants must be actively employed by
the Company on the date bonuses are paid in order to be eligible to receive a
bonus. Participants who resign or are terminated for reasons other than those
noted below will receive no bonus. Bonuses, if any, for participants who become
eligible after the beginning of the plan year, retire (defined as age 55 or over
with at least 5 years of service), become disabled, die or transfer into a
position covered by another incentive plan will be prorated. Bonuses, if any,
for participants who are laid-off will be prorated provided the participant was
eligible for at least six months of the Plan year. All proration will be based
on the number of months of participation in the Plan during the Plan year.
- --------------------------------------------------------------------------------
PERFORMANCE OBJECTIVES
Bonuses for Plan participants are based on both corporate performance and
individual performance in relation to pre-established objectives, as follows:
CORPORATE OBJECTIVES
- - EARNINGS PER SHARE--Corporate performance is measured in terms of
Allergan, Inc.'s Earnings Per Share (EPS) performance. EPS is defined as
net earnings from continuing operations as measured by Wall Street
divided by the weighted average number of common and common equivalent
shares on a diluted basis.
Page - 1 -
<PAGE> 3
- - OPERATING INCOME--Operating Income compared to budget will be considered
for allocation of bonus pools by Business Unit/Function. Operating Income
is defined as Net Sales minus Cost of Goods minus Selling and General
Administrative expenses minus Research & Development minus allocated
corporate interest where applicable.
INDIVIDUAL OBJECTIVES
Management Bonus Objectives (MBOs) are prepared by each participant and
his or her supervisor at the beginning of the Plan year and may be
modified throughout the year as necessary. Objectives should reflect
major results and accomplishments to be achieved in order to meet short-
and long-term business goals that contribute to increased stockholder
value. MBOs are expressed as specific, quantifiable measures of
performance in relation to key operating decisions for the participant's
business unit, such as managing inventory levels, receivables, expenses,
or payables; increasing sales; eliminating unnecessary capital
expenditures, etc.
At the end of the Plan year, the supervisor evaluates the participant's
performance in relation to his or her objectives in order to determine
the size of the bonus award, if any. A more detailed description of how
the award is calculated is provided under "Individual Bonus Award
Calculation."
- --------------------------------------------------------------------------------
BONUS POOL CALCULATION
The two components of this calculation are: Earnings Per Share; and Operating
Income.
BONUS POOL FUNDING - Bonuses are funded when the Company achieves the threshold
level of EPS performance. The level of bonus funding is
first determined by EPS performance as outlined in the
table below.
- - EARNINGS PER SHARE
<TABLE>
<CAPTION>
2000 EPS RANGE BONUS % OF TARGET
-------------- -----------------
<S> <C>
-$0.16 40%
-$0.13 49%
-$0.09 58%
-$0.06 70%
-$0.03 83%
TARGET 100%
+$0.03 117%
+$0.06 130%
+$0.09 142%
+$0.13 151%
+$0.16 160%
</TABLE>
If actual EPS results fall between the performance levels shown above,
bonuses will be prorated accordingly.
Page - 2 -
<PAGE> 4
BONUS POOL DIFFERENTIATION BY BUSINESS UNIT/FUNCTION
- - OPERATING INCOME--The target bonus pool determined by EPS performance is
modified for each business unit/function based on Operating Income
results vs. budget. That is, a business unit that exceeds budget will
receive a greater share of the total Company pool than a business unit
that is below budget.
At the end of the year, the Chief Executive Officer of Allergan, Inc. may
recommend adjustments to the bonus funding levels to the Organization and
Compensation Committee (the "Committee") after consideration of key operating
results. When calculating EPS performance for purposes of this Plan, the
Committee has the discretion to include or exclude any or all of the following
items:
- - extraordinary, unusual or non-recurring items
- - effects of accounting changes
- - effects of financing activities
- - expenses for restructuring or productivity initiatives
- - other non-operating items
- - spending for acquisitions
- - effects of divestitures
- --------------------------------------------------------------------------------
INDIVIDUAL BONUS AWARD CALCULATION
Target bonus awards are expressed as a percentage of the participant's year-end
annualized base salary. The target percentages vary by salary grade (see
Attachment No. 1).
A participant's actual bonus award may vary above or below the targeted level
based on the supervisor's evaluation of his or her performance in relation to
the predetermined MBOs. Each participant may receive from 0% up to 150% of his
or her target bonus amount. However, the total of all bonus awards given within
each business unit must total no more than 100% of the total bonus pool dollars
allocated to that business unit.
- --------------------------------------------------------------------------------
METHOD OF PAYMENT
Cash awards are paid following the close of the Plan year after the review and
authorization of bonuses by the Committee. Bonuses will be paid within 30 days
following management communication of the award, through the participant's
normal payroll channel. In the event of a Change in Control (as defined in
Attachment No. 2), bonuses will be paid within 30 days of the effective date of
the Change in Control.
Page - 3 -
<PAGE> 5
- --------------------------------------------------------------------------------
CHANGE IN CONTROL
If a Change in Control occurs after the close of the Plan year and Company
performance supports bonus pool funding, participants will be paid a bonus based
on performance in relation to the EPS target.
If the Change in Control occurs during the Plan year, participants will be paid
a bonus prorated to the effective date of the Change in Control and EPS
performance will be deemed to be the greater of:
- - 100% of the EPS target or
- - the prorated actual year-to-date EPS performance
In either case, a participant's actual bonus may vary above or below the
targeted level according to the provisions outlined in "Individual Bonus Award
Calculation" above. Participants must be employed by the Company or its
successor on the effective date of the Change in Control in order to receive the
prorated payment, unless their employment is terminated for retirement, death,
disability or otherwise without cause. For purposes of this plan, "cause" shall
be limited to only three types of events: the willful refusal to comply with a
lawful, written instruction of the Board so long as the instruction is
consistent with the scope and responsibilities of the participant's position
prior to the Change in Control; dishonesty which results in a material financial
loss to the Company (or to any of its affiliated companies) or material injury
to its public reputation (or to the public reputation of any of its affiliated
companies); or conviction of any felony involving an act of moral turpitude.
- --------------------------------------------------------------------------------
GENERAL
Management reserves the right to define corporate performance and individual
performance and to review, alter, amend, or terminate the Plan at any time. This
Plan does not constitute a contract of employment and cannot be relied upon as
such. Any questions regarding this Plan should be directed to the Human
Resources department or the Director, Compensation. This Management Bonus Plan
document supersedes any previous document you may have received.
Page - 4 -
<PAGE> 6
ATTACHMENT NO. 1
ALLERGAN
2000 MANAGEMENT BONUS PLAN
TARGET AWARDS
<TABLE>
<CAPTION>
SALARY GRADE TARGET BONUS*
<S> <C>
7E 10%
8E 15%
9E 20%
10E 25%
11E 30%
12E 35%
13E 40%
14E 50%
15E 55%
</TABLE>
- ----------------
* Expressed as a percentage of year-end base salary.
Page - 5 -
<PAGE> 7
ATTACHMENT NO. 2
CHANGE IN CONTROL DEFINITION
"Change in Control" shall mean the following and shall be deemed to occur if any
of the following events occur:
(a) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (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 Allergan, Inc., a Delaware corporation ("Allergan") representing (i) 20% or
more of the combined voting power of Allergan'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 (ii) 33% or more of the combined voting power of
Allergan's then outstanding voting securities, without regard to whether such
acquisition is approved by the Incumbent Board;
(b) Individuals who, as of the date hereof, constitute the Board
of Directors of Allergan (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 Allergan's stockholders, is approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of Allergan, as such terms are used Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall, for the purposes of
this Agreement, be considered as though such person were a member of the
Incumbent Board of Allergan;
(c) The consummation of a merger, consolidation or reorganization
involving Allergan, other than one which satisfies both of the following
conditions:
(1) a merger, consolidation or reorganization which would
result in the voting securities of Allergan outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of another entity) at least 55% of the combined
voting power of the voting securities of Allergan 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 Allergan'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 Allergan representing 20% or more of the combined voting power of Allergan's
then outstanding voting securities; or
(d) The stockholders of Allergan approve a plan of complete
liquidation of Allergan or an agreement for the sale or other disposition by
Allergan of all or substantially all of Allergan's assets.
Notwithstanding the preceding provisions of this Section, a Change in Control
shall not be deemed to have occurred if the Person described in the preceding
provisions of this Section is (1) an underwriter or underwriting syndicate that
has acquired the ownership of any of Allergan's then outstanding voting
securities solely in connection with a public offering of Allergan's securities,
(2) Allergan or any subsidiary of Allergan or (3) an employee stock ownership
plan or other employee benefit plan maintained by Allergan (or any of its
affiliated companies) that is qualified under the provisions of the Internal
Revenue Code of 1986, as amended. In addition, notwithstanding the preceding
provisions of this Section, a Change in Control shall not be deemed to have
occurred if the Person described in the preceding provisions of this Section
becomes a Beneficial Owner of more than the permitted amount of outstanding
securities as a result of the acquisition of voting securities by Allergan
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 Allergan or through a stock dividend or stock split), then a Change in
Control shall occur.
Page - 6 -
<PAGE> 1
EXHIBIT 10.9
FIRST AMENDMENT TO
ALLERGAN, INC.
1989 NONEMPLOYEE DIRECTOR STOCK PLAN
(RESTATED 1998)
The ALLERGAN, INC. 1989 NONEMPLOYEE DIRECTOR STOCK PLAN (the "Plan") is
hereby amended, effective January 1, 2000, to read as follows:
1. Section 1.2(c) of the Plan is hereby amended and restated in its entirety
to read as follows:
"(c) "Change in Control" means the following and shall be deemed
to occur if any of the following events occur:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (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
Company representing (i) 20% or more of the combined voting power
of the Company'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 (ii) 33% or more of
the combined voting power of the Company'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
Company's stockholders, is approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used 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 Company;
<PAGE> 2
(iii) The consummation of a merger, consolidation or
reorganization involving the Company, other than one which
satisfies both of the following conditions:
(A) a merger, consolidation or reorganization which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of another entity) at
least 55% of the combined voting power of the voting
securities of the Company 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
Company's voting securities immediately before such merger,
consolidation or reorganization, and
(B) a merger, consolidation or reorganization in
which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of
the Company's then outstanding voting securities; or
(iv) The stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all of
the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (c), a Change
in Control shall not be deemed to have occurred if the Person described
in the preceding provisions of this Paragraph (c) is (1) an underwriter
or underwriting syndicate that has acquired any of the Company's then
outstanding voting securities solely in connection with a public offering
of the Company's securities, (2) the Company or any subsidiary of the
Company or (3) an employee stock ownership plan or other employee benefit
plan maintained by the Company (or any of its subsidiaries) that is
qualified under the provisions of the Internal Revenue Code of 1986, as
amended. In addition, notwithstanding the preceding provisions of this
Paragraph (c), a Change in Control shall not be deemed to have occurred
if the Person described in the preceding provisions of this Paragraph (c)
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 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
<PAGE> 3
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
Company or through a stock dividend or stock split), then a Change in
Control shall occur."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this First Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
-----------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.10
FOURTH AMENDMENT TO
ALLERGAN, INC.
PENSION PLAN
(RESTATED 1996)
The ALLERGAN, INC. PENSION PLAN (the "Plan") is hereby amended, effective
January 1, 2000, to read as follows:
1. Section 9.3(b) of the Plan is hereby amended and restated in its entirety
to read as follows:
"(b) In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control
shall become 100% vested in their Accrued Benefits on the date of such
Change in Control and in any benefit accruals subsequent to the date of
the Change in Control. Notwithstanding the foregoing, the Board of
Directors may, at its discretion, amend or delete this Paragraph (b) in
its entirety prior to the occurrence of any such Change in Control. For
the purpose of this Paragraph (b), "Change in Control" shall mean the
following and shall be deemed to occur if any of the following events
occur:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, 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
Allergan representing (i) 20% or more of the combined voting power
of Allergan'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 (ii) 33% or more of
the combined voting power of Allergan'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
Allergan's stockholders, is approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an
<PAGE> 2
election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election
contest relating to the election of the directors of Allergan, as
such terms are used 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 Allergan;
(iii) The consummation of a merger, consolidation or
reorganization involving Allergan, other than one which satisfies
both of the following conditions:
(A) a merger, consolidation or reorganization which
would result in the voting securities of Allergan
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of another entity) at
least 55% of the combined voting power of the voting
securities of Allergan 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
Allergan's voting securities immediately before such
merger, consolidation or reorganization, and
(B) a merger, consolidation or reorganization in
which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Allergan
representing 20% or more of the combined voting power of
Allergan's then outstanding voting securities; or
(iv) The stockholders of Allergan approve a plan of
complete liquidation of Allergan or an agreement for the sale or
other disposition by Allergan of all or substantially all of
Allergan'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 (1) an underwriter or underwriting
syndicate that has acquired any of Allergan's then outstanding voting securities
solely in connection with a public offering of Allergan's securities, (2)
Allergan or any subsidiary of Allergan or (3) an employee stock ownership plan
or other employee benefit plan maintained by the Company that is qualified under
the provisions of the Internal Revenue Code of 1986, as amended. 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
<PAGE> 3
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 Allergan 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 Allergan or through a stock dividend or stock
split), then a Change in Control shall occur."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Fourth Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
--------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.11
SECOND AMENDMENT TO
ALLERGAN, INC.
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
(RESTATED 1996)
The ALLERGAN, INC. SUPPLEMENTAL EXECUTIVE BENEFIT PLAN (the "Plan") is
hereby amended, effective January 1, 2000, to read as follows:
1. Section 5.4 of the Plan is hereby amended and restated in its entirety to
read as follows:
"5.4. Change in Control. As used in this Plan, "Change in Control"
shall mean the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (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 (i) 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 (ii) 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;
(b) 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;
<PAGE> 2
(c) The consummation of a merger, consolidation or
reorganization involving the Sponsor, other than one which
satisfies both of the following conditions:
(i) a merger, consolidation or reorganization which
would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of another entity) 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
(ii) 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
(d) The stockholders of the Sponsor approve a plan of
complete liquidation of the Sponsor or an agreement for the sale
or other disposition by the Sponsor of all or substantially all of
the Sponsor's assets.
Notwithstanding the preceding provisions of this Section 5.4, a Change in
Control shall not be deemed to have occurred if the Person described in
the preceding provisions of this Section 5.4 is (1) an underwriter or
underwriting syndicate that has acquired the ownership of any of the
Sponsor's then outstanding voting securities solely in connection with a
public offering of the Sponsor's securities, (2) the Sponsor or any
subsidiary of the Sponsor or (3) an employee stock ownership plan or
other employee benefit plan maintained by the Sponsor (or any of its
subsidiaries) that is qualified under the provisions of the Code. In
addition, notwithstanding the preceding provisions of this Section 5.4, a
Change in Control shall not be deemed to have occurred if the Person
described in the preceding provisions of this Section 5.4 becomes a
Beneficial Owner of more than the permitted amount of outstanding
securities as a result of the acquisition of voting securities by the
Sponsor which, by reducing the number of voting securities outstanding,
increases the proportional number of shares beneficially owned by such
Person,
<PAGE> 3
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."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Second Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
---------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.12
SECOND AMENDMENT TO
ALLERGAN, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
(RESTATED 1996)
The ALLERGAN, INC. SUPPLEMENTAL RETIREMENT INCOME PLAN (the "Plan") is
hereby amended, effective January 1, 2000, to read as follows:
1. Section 5.4 of the Plan is hereby amended and restated in its entirety to
read as follows:
"5.4. Change in Control. As used in this Plan, "Change in Control"
shall mean the following and shall be deemed to occur if any of the
following events occur:
(a) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (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 (i) 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 (ii) 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;
(b) 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;
<PAGE> 2
(c) The consummation of a merger, consolidation or
reorganization involving the Sponsor, other than one which
satisfies both of the following conditions:
(i) a merger, consolidation or reorganization which
would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of another entity) 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
(ii) 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
(d) The stockholders of the Sponsor approve a plan of
complete liquidation of the Sponsor or an agreement for the sale
or other disposition by the Sponsor of all or substantially all of
the Sponsor's assets.
Notwithstanding the preceding provisions of this Section 5.4, a Change in
Control shall not be deemed to have occurred if the Person described in
the preceding provisions of this Section 5.4 is (1) 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, (2) the Sponsor or any subsidiary of the
Sponsor or (3) an employee stock ownership plan or other employee benefit
plan maintained by the Sponsor (or any of its subsidiaries) that is
qualified under the provisions of the Code. In addition, notwithstanding
the preceding provisions of this Section 5.4, a Change in Control shall
not be deemed to have occurred if the Person described in the preceding
provisions of this Section 5.4 becomes a Beneficial Owner of more than
the permitted amount of outstanding securities as a result of the
acquisition of voting securities by the Sponsor which, by reducing the
number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a
<PAGE> 3
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."
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this Second Amendment
on the 30th day of December, 1999.
ALLERGAN, INC.
BY: /s/ Francis R. Tunney, Jr.
------------------------------
Francis R. Tunney, Jr.,
Corporate Vice President--Administration,
General Counsel and Secretary
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EXHIBIT 99
For Immediate Release Investor Contact: Jeff Edwards
(714) 246-4636
Media Contact: Ira Haskell
(714) 246-4515
ALLERGAN RAISES QUARTERLY DIVIDEND
BOARD OF DIRECTORS DECLARES DIVIDEND DISTRIBUTION
OF PREFERRED SHARE PURCHASE RIGHTS
(IRVINE, California, January 26, 2000) - Allergan, Inc. (NYSE:AGN) announced
today that its Board of Directors increased the fourth quarter dividend to $0.08
per share, payable March 10, 2000, to stockholders of record on February 18,
2000. Allergan has raised its annual dividend payout for nine consecutive years.
Additionally, the Board of Directors has declared a dividend distribution of one
Preferred Share Purchase Right on each outstanding share of Allergan common
stock. Subject to limited exceptions, the Rights will be exercisable if a person
or group acquires 15% or more of the Company's common stock or announces a
tender offer for 15% or more of the common stock. Under certain circumstances,
each Right will entitle stockholders to buy one one-hundredth of a share of
newly created Series A Junior Participating Preferred Stock of the Company at an
exercise price of $300.00. The Allergan Board will be entitled to redeem the
Rights at $.01 per Right at any time before a person has acquired 15% or more of
the outstanding common stock.
The Rights are intended to enable all Allergan stockholders to realize the
long-term value of their investment in the Company. They do not prevent a
takeover, but should encourage anyone seeking to acquire the Company to
negotiate with the Board of Directors prior to attempting a takeover. The Rights
Plan will expire in 2010.
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The Rights are not being distributed in response to any specific effort to
acquire control of the Company. The Rights are designed to assure that all
Allergan stockholders receive fair and equal treatment in the event of any
proposed takeover of the Company and to guard against partial tender offers,
open market accumulations and other abusive tactics to gain control of Allergan
without paying all stockholders a control premium.
If a person becomes an Acquiring Person, each Right will entitle its holder to
purchase, at the Right's then-current exercise price, a number of common shares
of Allergan having a market value at that time of twice the Right's exercise
price. Rights held by the Acquiring Person will become void and will not be
exercisable to purchase shares at the bargain purchase price. An Acquiring
Person is defined as a person who acquires 15% or more of the outstanding common
stock of Allergan. If Allergan is acquired in a merger or other business
combination transaction which has not been approved by the Board of Directors,
each Right will entitle its holder to purchase, at the Right's then-current
exercise price, a number of the acquiring company's common shares having a
market value at that time of twice the Right's exercise price.
The dividend distribution to establish the new Rights Plan will be payable to
stockholders of record on February 18, 2000. The Rights will expire in ten
years. The Rights distribution is not taxable to stockholders.
Allergan, Inc., headquartered in Irvine, California, is a technology-driven,
global health care company providing eye care and specialty pharmaceutical
products worldwide. Allergan develops and commercializes products in the eye
care pharmaceutical, ophthalmic surgical device, over-the-counter contact lens
care, movement disorder, and dermatological markets that deliver value to our
customers, satisfy unmet medical needs and improve patients' lives.
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