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Exhibit 10.3
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
RESTATED
2000
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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 2000 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 Before Tax Deposits....................................................2
2.7 Before Tax Deposits Account............................................2
2.8 Beneficiary............................................................2
2.9 Board of Directors.....................................................2
2.10 Break in Service.......................................................3
2.11 Code...................................................................3
2.12 Committee..............................................................3
2.13 Company................................................................3
2.14 Company Contributions..................................................3
2.15 Company Contributions Account..........................................3
2.16 Company Stock..........................................................3
2.17 Compensation...........................................................3
2.18 Computation Period.....................................................4
2.19 Credited Service.......................................................4
2.20 Disability.............................................................6
2.21 Effective Date.........................................................6
2.22 Eligible Employee......................................................6
2.23 Eligible Retirement Plan...............................................6
2.24 Eligible Rollover Distribution.........................................7
2.25 Employee...............................................................7
2.26 Employment Commencement Date...........................................7
2.27 ERISA..................................................................8
2.28 Forfeitures............................................................8
2.29 415 Suspense Account...................................................8
2.30 Highly Compensated Employee............................................8
2.31 Hour of Service........................................................9
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2.32 Investment Manager....................................................10
2.33 Leased Employee.......................................................10
2.34 Leave of Absence......................................................10
2.35 Matched Deposits......................................................11
2.36 Matching Contributions................................................11
2.37 Normal Retirement Age.................................................12
2.38 Participant...........................................................12
2.39 Participant Deposits..................................................12
2.40 Period of Severance...................................................12
2.41 Plan..................................................................12
2.42 Plan Administrator....................................................12
2.43 Plan Year.............................................................12
2.44 Reemployment Commencement Date........................................12
2.45 Rollover Account......................................................12
2.46 Severance.............................................................12
2.47 SeveranceDate.........................................................13
2.48 Sponsor...............................................................13
2.49 Trust.................................................................13
2.50 Trustee...............................................................13
2.51 Valuation Date........................................................13
ARTICLE III
ELIGIBILITY AND PARTICIPATION.................................................14
ARTICLE IV
PARTICIPANT DEPOSITS..........................................................15
4.1 Election..............................................................15
4.2 Amount Subject to Election............................................16
4.3 Limitation on Compensation Deferrals..................................17
4.4 Provisions for Return of Excess Before Tax Deposits Over $7,000.......20
4.5 Provision for Recharacterization or Return of Excess Deferrals by
Highly Compensated Participants.......................................21
4.6 Termination, Change in Rate, or Resumption of Deferrals...............23
4.7 Character of Deposits.................................................24
4.8 Rollover Contributions................................................24
ARTICLE V
TRUST FUND AND COMPANY CONTRIBUTIONS..........................................25
5.1 General...............................................................25
5.2 Single Trust..........................................................25
5.3 Company Contributions.................................................25
5.4 Form of Company Contributions.........................................26
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5.5 Investment of Trust Assets............................................26
5.6 Irrevocability........................................................28
5.7 Company, Committee and Trustee Not Responsible for Adequacy
of Trust Fund.........................................................29
5.8 Certain Offers for Company Stock......................................29
5.9 Voting of Company Stock...............................................32
5.10 Securities Law Limitation.............................................34
5.11 Distributions.........................................................34
5.12 Taxes.................................................................34
5.13 Trustee Records to be Maintained......................................35
5.14 Annual Report of Trustee..............................................35
5.15 Appointment of Investment Manager.....................................35
ARTICLE VI
ACCOUNTS AND ALLOCATIONS......................................................36
6.1 Participants' Accounts................................................36
6.2 Allocation of Amounts Contributed by Participants.....................36
6.3 Allocation of Company Contributions and Forfeitures...................36
6.4 Valuation of Participants' Accounts...................................36
6.5 Valuation of Company Stock............................................37
6.6 Dividends, Splits, Recapitalizations, Etc.............................37
6.7 Stock Rights, Warrants or Options.....................................37
6.8 Treatment of Accounts Upon Severance..................................38
6.9 Cash Dividends........................................................38
6.10 Miscellaneous Allocation Rules........................................38
6.11 Limitations on After Tax Deposits and Company Contributions...........39
6.12 Provision for Disposition of Excess After Tax Deposits or Matching
Contributions on Behalf of Highly Compensated Participants............43
ARTICLE VII
VESTING IN PLAN ACCOUNTS......................................................46
7.1 No Vested Rights Except as Herein Provided............................46
7.2 Vesting Schedule......................................................46
7.3 Vesting of Participant Deposits.......................................46
ARTICLE VIII
PAYMENT OF PLAN BENEFITS......................................................47
8.1 Withdrawals During Employment.........................................47
8.2 Distributions Upon Termination of Employment or Disability............48
8.3 Distribution Upon Death of Participant................................49
8.4 Designation of Beneficiary............................................49
8.5 Hardship Withdrawal Rules.............................................50
8.6 Distribution Rules....................................................51
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8.7 Forfeitures...........................................................53
8.8 Valuation of Plan Benefits Upon Distribution..........................53
8.9 Lapsed Benefits.......................................................53
8.10 Persons Under Legal Disability........................................54
8.11 Additional Documents..................................................55
8.12 Trustee-to-Trustee Transfers..........................................55
8.13 Loans to Participants.................................................55
ARTICLE IX OPERATION AND ADMINISTRATION.......................................58
9.1 Appointment of Committee..............................................58
9.2 Transaction of Business...............................................58
9.3 Voting................................................................58
9.4 Responsibility of Committee...........................................58
9.5 Committee Powers......................................................59
9.6 Additional Powers of Committee........................................60
9.7 Periodic Review of Funding Policy.....................................60
9.8 Claims Procedures.....................................................60
9.9 Appeals Procedures....................................................61
9.10 Limitation on Liability...............................................62
9.11 Indemnification and Insurance.........................................62
9.12 Compensation of Committee and Plan Expenses...........................62
9.13 Resignation...........................................................62
9.14 Reliance Upon Documents and Opinions..................................63
ARTICLE X
AMENDMENT AND ADOPTION OF PLAN................................................64
10.1 Right to Amend Plan...................................................64
10.2 Adoption of Plan by Affiliated Companies..............................64
ARTICLE XI
DISCONTINUANCE OF CONTRIBUTIONS...............................................65
ARTICLE XII
TERMINATION AND MERGER........................................................66
12.1 Right to Terminate Plan...............................................66
12.2 Merger Restriction....................................................66
12.3 Effect on Trustee and Committee.......................................66
12.4 Effect of Reorganization, Transfer of Assets or Change in Control.....66
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ARTICLE XIII
LIMITATION ON ALLOCATIONS.....................................................69
13.1 General Rule..........................................................69
13.2 Annual Additions......................................................69
13.3 Other Defined Contribution Plans......................................70
13.4 Adjustments for Excess Annual Additions...............................70
13.5 Compensation..........................................................70
13.6 Treatment of 415 Suspense Account Upon Termination....................71
ARTICLE XIV
TOP-HEAVY RULES...............................................................72
14.1 Applicability.........................................................72
14.2 Definitions...........................................................72
14.3 Top-Heavy Status......................................................73
14.4 Minimum Contributions.................................................75
14.5 Minimum Vesting Rules.................................................75
14.6 Noneligible Employees.................................................76
ARTICLE XV
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS...............77
15.1 General Restrictions Against Alienation...............................77
15.2 Qualified Domestic Relations Orders...................................77
ARTICLE XVI
MISCELLANEOUS PROVISIONS......................................................81
16.1 No Right of Employment Hereunder......................................81
16.2 Effect of Article Headings............................................81
16.3 Limitation on Company Liability.......................................81
16.4 Gender................................................................81
16.5 Interpretation........................................................81
16.6 Withholding For Taxes.................................................81
16.7 California Law Controlling............................................81
16.8 Plan and Trust as One Instrument......................................81
16.9 Invalid Provisions....................................................81
16.10 Counterparts..........................................................82
APPENDIX A
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ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
ARTICLE I
NAME AND EFFECTIVE DATE
1.1 Plan Name. This document, made and entered into by Allergan, Inc.,
a Delaware corporation ("Allergan"), evidences the terms of a defined
contribution plan with a cash or deferred arrangement for Eligible Employees of
Allergan and any Affiliated Companies that are authorized by the Board of
Directors to participate in the plan, to be known hereafter as the "Allergan,
Inc. Savings and Investment Plan (Restated 2000)" (the "Plan").
1.2 Effective Date of 2000 Restated Plan. The "Allergan, Inc. Savings
and Investment Plan (Restated 1998)" which was issued a favorable determination
letter by the Internal Revenue Service on September 24, 1999 and the First and
Second Amendments made thereto are hereby incorporated into the Plan. The
Effective Date of the 2000 Restated Plan shall be January 1, 2000 unless
otherwise stated in the Plan.
1.3 Plan Purpose. The purpose of the 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
the Plan as a result of Company Contributions, income, and other additions to
the Fund under the Plan shall be administered, distributed, forfeited and
otherwise governed by the provisions of the Plan, which is to be administered by
the Committee for the exclusive benefit of Participants in the Plan and their
Beneficiaries.
1.4 Merger of Allergan, Inc. Puerto Rico Savings and Investment Plan.
The Allergan, Inc. Puerto Rico Savings and Investment Plan was merged with and
into the Plan effective as of January 1, 1999. All account balances of the
Allergan, Inc. Puerto Rico Savings and Investment Plan were transferred to the
Plan and all account balances transferred to 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. The 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 the Plan are also intended to comply with all changes to the
qualification requirements made by the Uruguay Round Agreements Act (GATT), the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the
Internal Revenue Service Restructuring and Reform Act of 1998 including
qualification requirements that are effective on or after January 1, 1999.
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ARTICLE II
DEFINITIONS
2.1 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). An
entity shall be an Affiliated Company pursuant to this paragraph only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
original Effective Date of the Plan.
2.3 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 or her individual account in the Trust Fund in which
are held his or 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 Before Tax Deposits. "Before Tax Deposits" shall mean those
contributions made by a Participant which represent pre-tax contributions.
2.7 Before Tax Deposits Account. "Before Tax Deposits Account" of a
Participant shall mean his or her individual account in the Trust Fund in which
are held his or her Before Tax Deposits and the earnings thereon.
2.8 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.
2.9 Board of Directors. "Board of Directors" shall mean the Board of
Directors of the Sponsor (or its delegate) as it may from time to time be
constituted.
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2.10 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.
2.11 Code. "Code" shall mean the Internal Revenue Code of 1986 and the
regulations thereunder. Reference to a specific Code Section shall be deemed
also to refer to any applicable regulations under that Section, and shall also
include any comparable provisions of future legislation that amend, supplement
or supersede that specific Section.
2.12 Committee. "Committee" shall mean the committee to be appointed
under the provisions of Section 9.1 to administer the Plan.
2.13 Company. "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts the Plan in accordance with Section 10.2.
2.14 Company Contributions. "Company Contributions" shall mean all
amounts (whether in cash or other property, including Company Stock), including
Matching Contributions, paid by the Company pursuant to Section 5.3 into the
Trust Fund established and maintained under the provisions of the Plan for the
purpose of providing benefits for Participants and their Beneficiaries. Unless
expressly stated otherwise in the Plan, Company Contributions shall not include
Participant Before Tax or After Tax Deposits.
2.15 Company Contributions Account. "Company Contributions Account"
shall mean a Participant's individual account in the Trust Fund in which are
held Matching Contributions and the earnings thereon and amounts transferred
from a Participant's account in the SmithKline Beckman Savings and Investment
Plan to the Plan, if any. Any amounts so transferred shall be fully vested.
2.16 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).
2.17 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 Plan or Executive Bonus Plan, either in cash
or in restricted stock,
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(3) Group performance sharing payments, such as the "Partners for
Success;"
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of living
adjustments and differentials paid for service outside of the United States,
expatriate reimbursement payments, and tax equalization payments; forms of
imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance pay;
long-term incentive awards, bonuses or payments; "Impact Award" payments;
"Employee of the Year" payments; "Awards for Excellence" payments; special group
incentive payments and individual recognition payments which are nonrecurring in
nature; tuition reimbursement; and contributions by the Company under the Plan
or distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Code Section 401(a)
(other than contributions constituting salary reduction amounts elected by the
Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees.
Compensation taken into account for determining all benefits provided under the
Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in
such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the
foregoing, for purposes of applying the provisions of Articles XIII and XIV, an
Employee's Compensation shall be determined pursuant to the definition of
"Compensation" as set forth in Sections 13.5 or 14.2(i), as the case may be.
2.18 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 Article III.
(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his or her Employment Commencement
Date or Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all subsequent
Computation Periods) shall be the Plan Year that includes or begins on
the first anniversary of such Employee's Employment Commencement Date
or Reemployment Commencement Date (whichever is applicable) and each
subsequent Plan Year.
2.19 Credited Service. "Credited Service" shall mean, with respect to
each Employee, his or her years and months of Credited Service determined in
accordance with the following rules:
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(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 the 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 2.46.
(c) An Employee shall receive Credited Service credit for periods
between a Severance and his or her subsequent Reemployment Commencement
Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a quit,
discharge, 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 or her
incurring a Break in Service, he or she shall receive Credited
Service for the period commencing with his or her Severance Date
and ending with his or her subsequent Reemployment Commencement
Date.
(ii) Other than as expressly set forth above in this
paragraph (c), an Employee shall receive no Credited Service with
respect to periods between a Severance and a subsequent
Reemployment Commencement Date.
(d) For all purposes of the Plan, an Employee's total Credited
Service shall be determined by aggregating any separate periods of
Credited Service separated by any Breaks in Service.
(e) An Employee shall be credited with Credited Service with
respect to a period of employment with an Affiliated Company, but only
to the extent that such period of employment would be so credited under
the foregoing rules set forth in this Section had such Employee been
employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall so
provide by resolution of its Board of Directors, or unless otherwise
expressly stated in the Plan, an
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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).
2.20 Disability. "Disability" shall mean any mental or physical
condition which, in the judgment of the Committee, based on such competent
medical evidence as the Committee may require, renders an individual unable to
engage in any substantial gainful activity for the Company for which he or she
is reasonably fitted by education, training, or experience and which condition
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of at least 12 months. The determination by the
Committee, upon opinion of a physician selected by the Committee, as to whether
a Participant has incurred a Disability shall be final and binding on all
persons.
2.21 Effective Date. "Effective Date" of this restated Plan shall mean
January 1, 2000 unless otherwise specified in the Plan. The original Effective
Date of the Plan was July 26, 1989.
2.22 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.
2.23 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.
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2.24 Eligible Rollover Distribution. "Eligible Rollover Distribution"
shall mean any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution 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);
(c) any hardship distribution described in Code Section
401(k)(2)(B)(I)(IV);
(d) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities); and
(e) any other distribution that is reasonably expected to total
less than $200 during the year.
For purposes of this Section, "Distributee" shall mean any Employee or former
Employee receiving a distribution from the Plan. A Distributee also includes the
Employee or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse 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.
2.25 Employee. "Employee" shall mean, for purposes of the Plan, any
person who is employed by the Sponsor or an Affiliated Company in any capacity,
any portion of whose income is subject to withholding of income tax and/or for
whom Social Security contribution are made by the Sponsor or an Affiliated
Company, as well as a Puerto Rico-based payroll 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 as determined by the payroll
records of the Sponsor or Affiliated Company even if a court or administrative
agency determines that such individual is a common-law employee and not an
independent contractor and (ii) any individual who performs services for the
Sponsor or an Affiliated Company pursuant to an agreement between the Sponsor or
an Affiliated Company and any other person including a leasing organization
except to the extent such individual is a Leased Employee.
2.26 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.
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(b) Unless the Sponsor shall expressly determine otherwise, and
except as is expressly provided otherwise in the Plan or in resolutions
of the Board of Directors, an Employee shall not, for the purposes of
determining his or her Employment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective
date on which the entity became an Affiliated Company.
2.27 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.
2.28 Forfeitures. "Forfeitures" shall mean the nonvested portion of a
Participant's benefit that is forfeited in accordance with the provisions of
Article VIII.
2.29 415 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).
2.30 Highly Compensated Employee. "Highly Compensated Employee" shall
mean:
(a) An Employee who performed services for the Employer during the
Plan Year or preceding Plan Year and is a member of one or more of the
following groups:
(i) Employees who at any time during the Plan Year or
preceding Plan Year were Five Percent Owners (as defined in
Section 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 13.5.
(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.
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(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 applicable
regulations 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).
2.31 Hour of Service.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the Company
or an Affiliated Company or entitled to payment for the
performance of services as an Employee.
(ii) Each hour in or attributable to a period of time during
which the Employee performs no duties (irrespective of whether he
or she has terminated his or her Employment) due to a vacation,
holiday, illness, incapacity (including pregnancy or disability),
layoff, jury duty, military duty or a Leave of Absence (if the
Leave of Absence is an unpaid medical Leave of Absence, the
Employee will accrue hours for the duration of such leave for the
first six months of such leave), for which he or she is so paid or
so entitled to payment, whether direct or indirect. However, no
such hours shall be credited to an Employee if (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 or she is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed
to by the Company or an Affiliated Company, provided that such
Employee has not previously been credited with an Hour of Service
with respect to such hour under subparagraphs (i) or (ii) above.
Hours of Service under paragraphs (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R. Section
2530.200b-2(b). All Hours of Service determined under the rules of paragraph (a)
shall be credited to the Computation Period to which the payment relates, rather
than the period in which it is made.
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(b) In the event that an Employee is compensated for duties
performed on a basis other than actual hours worked and no records of
the Employee's actual working hours are maintained, the Employee shall
be deemed to have completed ten (10) Hours of Service for each day, or
portion thereof during which he or she is credited with an Hour of
Service for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise, and
except as may be expressly provided otherwise in the Plan, an Employee
shall not receive credit for his or her Hours of Service completed with
an Affiliated Company prior to the effective date on which the entity
became an Affiliated Company.
2.32 Investment Manager. "Investment Manager" shall mean the one or
more Investment Managers, if any, that are appointed pursuant to Section 5.15
and who constitute investment managers under Section 3(38) of ERISA.
2.33 Leased Employee. "Leased Employee" shall mean any person (other
than an Employee of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one (1) year, and such services are performed under the
primary direction or control by recipient employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable to
services performed for the recipient employer shall be treated as provided by
the recipient employer. A Leased Employee shall not be considered an Employee of
the recipient if Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce and such Leased Employee is covered
by a money purchase pension plan providing (i) a nonintegrated employer
contribution rate of at least ten (10) percent of compensation as defined under
Code Section 415(c)(3); (ii) immediate participation; and (iii) full and
immediate vesting.
2.34 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
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<PAGE> 17
for the child for a period beginning immediately following the birth or
placement referred to in clauses (ii) or (iii) above.
(c) Subject to the provisions of paragraph (d) below, a Maternity
or Paternity Leave described in paragraph (b) above shall be deemed to
constitute an authorized Leave of Absence for purposes of the Plan only
to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in Service has
occurred, the Severance Date of a Participant who is absent by
reason of a Maternity or Paternity Leave shall not be deemed to
occur any earlier than the second anniversary of the date upon
which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated as a
Leave of Absence solely for purposes of determining whether or not
an Employee has incurred a Break in Service. Accordingly, such a
Maternity or Paternity Leave shall not result in an accrual of
Credited Service for purposes of the vesting provisions of the
Plan or for purposes of determining eligibility to participate in
the Plan pursuant to the provisions of Article III (except only in
determining whether a Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be treated as a
Leave of Absence unless the Employee provides such timely
information as the Committee may reasonably require to establish
that the absence is for the reasons listed in paragraph (b) above
and to determine the number of days for which there was such an
absence.
(d) Notwithstanding the limitations provided in paragraph (c)
above, a Maternity or Paternity Leave described in paragraph (b) above
shall be treated as an authorized Leave of Absence, as described in
paragraph (a), for all purposes of the Plan to the extent the period of
absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
paragraph (a) above without reference to the provisions of paragraph
(b) above, provided, however, that the special rule provided under this
paragraph (d) shall not apply if it would result in a Participant who
is absent on a Maternity or Paternity Leave being deemed to have
incurred a Break in Service sooner than under the rules set forth in
paragraph (c).
2.35 Matched Deposits. "Matched Deposits" of a Participant shall mean
his or her Deposits (whether Before Tax or After Tax) not in excess of five
percent (5%) of Compensation. Matched Deposits shall participate in allocations
of Company Contributions and Forfeitures.
2.36 Matching Contributions. "Matching Contributions" shall mean all
amounts (whether in cash or other property, including Company Stock) paid by the
Company pursuant to Sections 5.3(a) and 5.3(b) into the Trust Fund established
and maintained under the provisions of the Plan for the purpose of providing
benefits for Participants and their Beneficiaries.
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2.37 Normal Retirement Age. "Normal Retirement Age" shall mean a
Participant's sixty-fifth (65th) birthday.
2.38 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.
2.39 Participant Deposits. "Participant Deposits" shall mean all of a
Participant's deposits to the Plan, including After Tax Deposits and Before Tax
Deposits.
2.40 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.
2.41 Plan. "Plan" shall mean the Allergan, Inc. Savings and Investment
Plan (Restated 2000) described herein and as amended from time to time.
2.42 Plan Administrator. Plan Administrator" shall mean the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be the Allergan Corporate Benefits Committee whose
members are appointed by the Board of Directors pursuant to the provisions of
Section 9.1 to administer the Plan.
2.43 Plan Year. "Plan Year" shall mean the calendar year.
2.44 Reemployment Commencement Date. "Reemployment Commencement Date"
shall mean, in the case of an Employee who incurs a Severance and who is
subsequently reemployed by the Sponsor or an Affiliated Company, the first day
following the Severance on which the Employee is credited with an Hour of
Service for the Sponsor or Affiliated Company with respect to which he or she is
compensated or entitled to compensation by the Sponsor or Affiliated Company.
Unless the Sponsor shall expressly determine otherwise and except as is
expressly provided otherwise in the Plan, an Employee shall not, for the purpose
of determining his or her Reemployment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective date on
which such entity becomes an Affiliated Company.
2.45 Rollover Account. "Rollover Account" of a Participant shall be his
or her individual account in the Trust Fund in which are held rollover
contributions made pursuant to Section 4.8.
2.46 Severance. "Severance" shall mean the termination of an Employee's
employment with the Sponsor or Affiliated Company by reason of such Employee's
quit, discharge, Disability, death, retirement, or otherwise. For purposes of
determining whether an Employee has incurred a Severance, the following rules
shall apply:
(a) An Employee shall not be deemed to have incurred a Severance
(i) because of his or her absence from employment with the Sponsor or
Affiliated Company
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<PAGE> 19
by reason of any paid vacation or holiday period, or (ii) by reason of
any Leave of Absence, subject to the provisions of paragraph (b) below.
(b) For purposes of the Plan, an Employee shall be deemed to have
incurred a Severance on the earlier of (i) the date on which he or she
dies, resigns, is discharged, or otherwise terminates his or her
employment with the Sponsor or Affiliated Company; or (ii) the date on
which he or she is scheduled to return to work after the expiration of
an approved Leave of Absence, if he or she does not in fact return to
work on the scheduled expiration date of such Leave. In no event shall
an Employee's Severance be deemed to have occurred before the last day
on which such Employee performs any services for the Sponsor or
Affiliated Company in the capacity of an Employee with respect to which
he or she is compensated or entitled to compensation by the Sponsor or
Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a Participant
who is absent by reason of a Maternity or Paternity Leave, the
provisions of Section 2.34(c)-(d) shall apply for purposes of
determining whether such a Participant has incurred a Break in Service
by reason of such Leave.
2.47 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 2.46, provided, however, that the special rules set forth under Section
2.34(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 2.46 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of the
effective date of the Severance event (e.g., the date of his or her death,
effective date of a resignation or discharge, etc.), and the subsequent payment
of the aforementioned type of post-Severance compensation shall not operate to
postpone the timing of the Severance Date for purposes of the Plan.
2.48 Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.
2.49 Trust. "Trust" or "Trust Fund" shall mean the one or more trusts
created for funding purposes under the Plan.
2.50 Trustee. "Trustee" shall mean the individual or entity acting as a
trustee of the Trust Fund.
2.51 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.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
Each Eligible Employee shall be eligible to participate in the Plan on his or
her Employment Commencement Date. 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.
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ARTICLE IV
PARTICIPANT DEPOSITS
4.1 Election.
(a) Each Eligible Employee may elect to defer the receipt of a
portion of his or 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 or her Compensation as After Tax Deposits. After Tax
Deposits may be made only by means of payroll deduction.
(c) The Committee shall prescribe procedures to implement automatic
enrollment elections, pursuant to which an Eligible Employee or, if
limited to newly hired Eligible Employees as determined by the
Committee, shall be deemed to have elected to defer the receipt of
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 change or terminate the
automatic election for any Plan Year within the time period prescribed
by the Committee (or, in the case of newly hired Eligible Employee, he
or she fails to change or terminate the automatic election within 30
days of his or her hire date). Such procedures shall require that an
Eligible Employee receive a written notice of explanation of the
automatic election informing the Eligible Employee of the effective
date of the automatic election, the automatic deferral percentage and
his or her right to terminate the automatic election or to change the
amount of his or her Before Tax Deposits made to the Plan as well as
the procedures for exercising such rights and the timing for
implementing a different election. An automatic election under this
paragraph (c) 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 the 30-day period beginning on his or her date of
hire) and shall remain in effect until superseded by a subsequent
election by the Eligible Employee. Amounts contributed directly by the
Company to the Plan under this paragraph (c) shall be invested in the
Balanced Fund described in Section 5.5(b) until superseded by a
subsequent election by the Eligible Employee.
(d) Notwithstanding anything in this Section to the contrary, a
Participant who makes a hardship withdrawal pursuant to Section 8.1(e)
shall not be permitted to make Before Tax Deposits or After Tax
Deposits to the Plan for the 12-month period beginning as soon as
administratively feasible following the date of the hardship
withdrawal. In addition, a Participant who makes a withdrawal of After
Tax Deposits (whether Matched Deposits or non-Matched Deposits)
pursuant to Section 8.1(a) on or after July 1, 2000 shall not be
permitted to make any After Tax or and Before Tax Deposits during the
6-month period beginning as soon as administratively feasible following
the date of the withdrawal unless the After Tax Deposits can also be
withdrawn under Section 8.1(d) or
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the withdrawal is comprised solely of After Tax Deposits which are not
Matched Deposits and which were contributed prior to July 1, 2000.
(e) The Committee shall prescribe such procedures, either in
writing or in practice, and provide such forms as are necessary or
appropriate for each Participant and each Eligible Employee who will
become a Participant to make Deposits pursuant to this Article IV.
However, an election by a Participant shall not be adopted
retroactively.
4.2 Amount Subject to Election.
(a) Participants may elect to contribute a whole percentage of his
or 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 taxable year in excess
of $10,500, or such larger amount as may be determined by the Secretary
of the Treasury pursuant to Code Section 402(g)(2), or which exceed the
limitations set forth in Section 4.3. For purposes of the dollar
limitation, the Before Tax Deposits of a Participant for any taxable
year is the sum of all Before Tax Deposits under the Plan and all
salary reduction amounts under any other qualified cash or deferred
arrangement (as defined in Code Section 401(k)), a simplified employee
pension (as defined in Code Section 408(k) and Code Section
402(h)(1)(B)), a deferred compensation plan under Code Section 457, a
trust described in Code Section 501(c)(18) and any salary reduction
amount used to purchase an annuity contract under Code Section 403(b)
whether or not sponsored by the Company but shall not include any
amounts properly distributed as excess annual additions.
(b) Each Participant may elect to contribute a whole percentage of
his or her Compensation to the Plan as After Tax Deposits not to exceed
twenty percent (20%) when aggregated with the amount of his or her
Before Tax Deposits. Notwithstanding the foregoing, no Participant
shall be permitted to make After Tax Deposits to the Plan during any
Plan Year which exceed the limitations set forth in Section 6.13.
(c) The Committee shall prescribe such procedures, either in
writing or in practice, as it deems necessary or appropriate regarding
the maximum amount that a Participant may elect to defer and the timing
of such an election. These procedures shall apply to all individuals
eligible to make an election described in Section 4.1. The Committee
may, at any time during a Plan Year, require the suspension, reduction,
or recharacterization of Before Tax Deposits or the suspension or
reduction of After Tax Deposits of any Highly Compensated Employee such
that the limitations of Section 4.2(a) and (b) are satisfied.
(d) Notwithstanding paragraph (a), a Participant who makes a
hardship withdrawal of Before Tax Deposits pursuant to Section 8.1(f)
may not make Before Tax Deposits for the 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
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immediately following taxable year less the amount of such
Participant's Before Tax Deposits for the taxable year in which such
Participant made the hardship withdrawal.
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 the Plan by or on
behalf of Highly Compensated Participants exceed the limitations of this Section
for any reason, either such excess contributions shall be recharacterized as
After Tax Deposits or such excess contributions, adjusted for any income or loss
allocable thereto, shall be returned to the Participant, as provided in Section
4.5.
(a) The Compensation Deferral Contributions by Participants for a
Plan Year shall satisfy the Actual Deferral Percentage Test set forth
in (i) below, or, to the extent not precluded by applicable
regulations, the alternative Actual Deferral Percentage test set forth
in (ii) below:
(i) The average Actual Deferral Percentage of Highly
Compensated Participants for the Plan Year shall not be more than
the prior Plan Year's average Actual Deferral Percentage of
Participants who were not Highly Compensated Employees for the
prior Plan Year multiplied by 1.25, or
(ii) The average Actual Deferral Percentage of Highly
Compensated Participants for the Plan Year shall not be more than
the prior Plan Year's Actual Deferral Percentage of Participants
who were not Highly Compensated Employees for the prior Plan Year
multiplied by 2.0, provided that the average Actual Deferral
Percentage of Highly Compensated Participants does not exceed the
average Actual Deferral Percentage of Participants who were not
Highly Compensated Employees for the prior Plan Year by 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).
(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 6.11)
for Highly Compensated Participants eligible to participate in the
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, the Plan, shall be reduced in accordance
with, and to the extent necessary to satisfy, the requirements of
regulations issued under Code Section 401(m).
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(b) Notwithstanding any other provisions of the Plan, for the
purposes of the limitations of this Section 4.3 and Section 4.5 only,
the following definitions shall apply:
(i) "Actual Deferral Percentage" shall mean, with respect to
the group of Highly Compensated Participants and the group of all
other Participants for a Plan Year, the ratios 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.
(ii) "Highly Compensated Participant" shall mean for any Plan
Year any Participant who is a Highly Compensated Employee. A
Participant is a Highly Compensated Employee for a particular Plan
Year if he or she meets the definition of a Highly Compensated
Employee in effect for that Plan Year. Similarly, a Participant is
not a Highly Compensated Employee for a particular Plan Year if he
or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.
(iii) "Participant" shall mean any Eligible Employee who
satisfied the requirements under Article III 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
the Plan or plans of the Company, (2) Before Tax Deposits that are
taken into account in the Average Contribution Percentage test (as
defined
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<PAGE> 25
in 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. Compensation Deferral Contributions may include,
at the election of the Company, any Company Contributions which
meet the requirements for such inclusion under Code Section
401(k)(3)(C).
(v) "Compensation" shall mean compensation as described below:
(1) Compensation means compensation determined by the
Company in accordance with the requirements of Code Section
414(s) and the regulations thereunder.
(2) For purposes of this Section 4.3, Compensation may, at
the Company's election, 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).
(c) In the event the 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). Any adjustments to the Actual
Deferral Percentage of Participants who are not Highly Compensated
Employees for the prior year shall be made in accordance with Notice
98-1 and any superseding guidance. Plans may be aggregated in order to
satisfy Code Sections 401(k) only if they have the same Plan Year and
use the same Actual Deferral Percentage testing method.
(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).
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(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 the 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 Matched Deposits pursuant
to Section 6.3(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 any future Company Contributions by the Company.
(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
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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 or she certifies in writing the specific amount of his or her
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 or her 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 the 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
or 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.
(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
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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.
(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(c)(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
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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 Company Contributions
has been allocated where such Company Contributions has 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 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
or 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, Change in Rate, or Resumption of Deferrals.
(a) A Participant may, at any time, terminate, change the rate, or
resume Before Tax Deposits or After Tax Deposits in 1% increments.
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(b) The right of a Participant to make Deposits shall cease during
any Period of Severance.
(c) Any termination, change in rate or resumption of Before Tax
Deposits or After Tax Deposits made by a Participant pursuant to
paragraph (a) above shall be effective as of the following pay period
or, if later, as soon as administratively feasible.
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), an Eligible Employee may make a Rollover
Contribution to the Plan. "Rollover Contribution" shall mean a
contribution by an Eligible Employee 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 an Eligible Employee; or
(ii) Is the result of a trustee-to-trustee transfer of assets
between two or more qualified plans; 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) An Eligible Employee's Rollover Contribution made pursuant the
rules of this Section 4.8 shall be held in a separate Rollover Account
for the Eligible Employee. A Rollover Account will not share in any
allocations of Company Contributions or Forfeitures under Section 6.3.
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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. Subject to the limitations of Article XIII,
the suspension provisions of Section 8.1 and to the extent that the Company has
current or accumulated profits, the Company shall contribute to the Plan in
accordance with the following rules:
(a) The Company shall contribute and allocate Matching
Contributions on a pay period basis which, when added to Forfeitures
available after application of Section 6.3, is equal to:
(i) 75% of each Participant's Matched Deposits for the pay
period which are not in excess of two percent (2%) of such
Participant's Compensation.
(ii) 50% of each Participant's Matched Deposits for the pay
period 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 Matched Deposits for the pay
period which are in excess of three percent (3%) of such
Participant's Compensation.
The Board of Directors, acting upon the advice and direction of
the Committee, may authorize and direct that Matching Contributions
(expressed as a percentage of Participants' Matched Deposits as set
forth above) be changed from time to time from a minimum of 0% to a
maximum of 100%.
(b) The Company shall contribute and allocate additional Matching
Contributions on the last day of each Plan Year which when added to
Forfeitures available after application of Section 6.3, is equal to the
difference, if any, between the amount of each Participant's Matching
Contributions determined under paragraph (a) and the amount of such
Participant's Matching Contributions if paragraph (a) was applied on a
Plan Year basis instead of a pay period basis.
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(c) The Company shall contribute amounts sufficient to satisfy the
reinstatement requirements of Section 8.7 to the extent Forfeitures are
insufficient to satisfy the reinstatement requirement of Section 8.7
and any plan expense requirements of Section 9.11 if so directed and at
such times as may be determined by the Committee.
5.4 Form of Company Contributions. The Company's contributions to the
Trust Fund shall be paid in cash, property, or Company Stock as the Company may
from time to time determine.
5.5 Investment of Trust Assets.
(a) The manner in which assets of the Trust will be invested shall
be chosen by the Committee at its discretion, although the Committee
may delegate the management to one or more Investment Managers
appointed pursuant to Section 5.15. Notwithstanding the foregoing,
Matching Contributions shall be invested in Company Stock except to the
extent invested pursuant to Section 5.5(e). Employer contributions made
under the SmithKline Beckman Corporation Savings and Investment Plan
and transferred to the Plan shall be invested at the discretion of the
Committee through June 30, 2000.
(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
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elections at any time; provided, however, that any allocations among
the investment funds shall be made in 1% increments. Any change in
investment funds shall be effective as soon as administratively
feasible. Any investment 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
accumulated in his or her 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. As of July
1, 2000, the foregoing investment discretion shall be permitted for
amounts attributable to employer contributions made under the
SmithKline Beckman Corporation Savings and Investment Plan and
transferred to the Plan. A Participant shall effect such transfer in
the manner authorized by the Committee.
(e) Notwithstanding the requirement of paragraph (a) above that
Matching Contributions be invested in the Company Stock Fund, any
Participant 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) any future
Matching Contributions that may be allocated to his or her Company
Contribution Account, be invested in any of the investment funds
currently offered by the Committee and currently available to the
Participant. A Participant shall make any election, and may change any
election, at such times and in accordance with the requirements imposed
by Sections 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
"Exchange 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 Exchange 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
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that results in the liquidation of amounts in the Company Stock
Fund (pursuant to Sections 8.1 or 8.13), 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 5.12 of the Allergan Inc.
Employee Stock Ownership Plan or the provision of any Company plan
covered by Rule 16b-3 (promulgated pursuant to the Exchange Act)
then in existence that would result in the transfer out of a
Company equity securities fund.
(i) It is intended that to the extent a Participant may direct the
investment of his or her Accounts under the Plan that the Plan
constitute a plan described in Section 404(c) of ERISA and the
regulations thereunder, and neither the Company, Committee, nor any
fiduciary with respect to the Plan who is employed by the Company shall
be liable for investment losses sustained by any Participant or
Beneficiary as a direct and necessary result of the investment
instructions given by such Participant or Beneficiary. Such fiduciaries
set forth in the preceding sentence shall be under no duty to question
the investment direction of the Participant or to advise a Participant
as to the manner in which his or her Accounts is to be invested. The
fact that an investment option is offered shall not be construed to be
a recommendation of investment.
5.6 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 contributed 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.
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(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 13.6.
5.7 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.
5.8 Certain Offers for Company Stock. Notwithstanding any other
provision of the Plan to the contrary, in the event an offer shall be received
by the Trustee (including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect) to acquire any or all shares of Company Stock held by the
Trust (an "Offer"), the discretion or authority to sell, exchange or transfer
any of such shares of Company Stock shall be determined in accordance with the
following rules:
(a) The Trustee shall have no discretion or authority to sell,
exchange or transfer any Company Stock pursuant to an Offer except to
the extent, and only to the extent, that the Trustee is timely directed
to do so in writing by each Participant with respect to shares of
Company Stock that are allocated to such Participant's Accounts.
(b) To the extent there remains any residual fiduciary
responsibility with respect to Company Stock pursuant to an Offer after
application of paragraph (a) above, the Trustee shall sell, exchange or
transfer such Company Stock as directed by the Committee or as directed
by an independent fiduciary if duly appointed by the Sponsor. To the
extent the Committee or an independent fiduciary is required to
exercise any residual fiduciary responsibility with respect to an
Offer, the Committee or independent fiduciary shall take into account
in exercising its fiduciary judgment, unless it is clearly imprudent to
do so, directions timely received from Participants, as such directions
are most indicative of what action is in the best interests of
Participants. Further, the Committee or independent fiduciary, in
addition to taking into consideration any relevant
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financial factors bearing on any such decision, shall take into
consideration any relevant non-financial factors, including, but not
limited to, the continuing job security of Participants as employees of
the Sponsor or any Affiliated Company, conditions of employment,
employment opportunities and other similar matters, and the prospect of
the Participants and prospective Participants for future benefits under
the Plan.
(c) Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of paragraphs (e) and (o) of this Section,
sell, exchange or transfer pursuant to such Offer, only such shares as
to which such instructions were given. The Committee shall use its best
efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee.
(d) In the event, under the terms of an Offer or otherwise, any
shares of Company Stock tendered for sale, exchange or transfer
pursuant to such Offer may be withdrawn from such Offer, the Trustee
shall follow such instructions respecting the withdrawal of such shares
from such Offer in the same manner and the same proportion as shall be
timely received by the Trustee from the Participants entitled under
this paragraph (a) to give instructions as to the sale, exchange or
transfer of shares pursuant to such Offer.
(e) In the event that an Offer for fewer than all of the shares of
Company Stock held by the Trustee in the Trust shall be received by the
Trustee, each Participant shall be entitled to direct the Trustee as to
the acceptance or rejection of such Offer (as set forth herein) with
respect to the largest portion of such Company Stock as may be possible
given the total number or amount of shares of Company Stock the Plan
may sell, exchange or transfer pursuant to the Offer based upon the
instructions received by the Trustee from all other Participants who
shall timely instruct the Trustee pursuant to this paragraph to sell,
exchange or transfer such shares pursuant to such Offer, each on a pro
rata basis in accordance with the maximum number of shares each such
Participant would have been permitted to direct under paragraph (a) had
the Offer been for all shares of Company Stock held in the Trust.
(f) In the event an Offer is received by the Trustee and
instructions have been solicited from Participants regarding such
Offer, and prior to termination of such Offer, another Offer is
received by the Trustee for the Company Stock subject to the first
Offer, the Trustee shall inform the Committee of such other Offer and
the Committee shall use its best efforts under the circumstances to
solicit instructions from the Participants (i) with respect to
securities tendered for sale, exchange or transfer pursuant to the
first Offer, whether to withdraw such tender, if possible, and, if
withdrawn, whether to tender any Company Stock so withdrawn for sale,
exchange or transfer pursuant to the second Offer and (ii) with respect
to Company Stock not tendered for sale, exchange or transfer pursuant
to the first Offer, whether to tender or not to tender such Company
Stock for sale, exchange or transfer pursuant to the second Offer. The
Trustee shall follow all such instructions received in a timely manner
from Participants in the same manner and in the same proportion as
provided in paragraph (a) of this Section. With respect to any further
Offer for any Company Stock received by the Trustee and subject to any
earlier Offer
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(including successive Offers from one or more existing offers), the
Trustee shall act in the same manner as described above.
(g) With respect to any Offer received by the Trustee, the Trustee
shall inform the Sponsor of such Offer and the Sponsor shall
distribute, at its expense, copies of all relevant material including
but not limited to material filed with the Securities and Exchange
Commission with such Offer or regarding such Offer, which shall seek
confidential written instructions from each Participant who is entitled
to respond to such Offer pursuant to paragraph (a). The identities of
Participants, the amount of Company Stock allocated to their ESOP
Accounts, and the Compensation of each Participant shall be determined
from the list of Participants delivered to the Sponsor by the Committee
which shall take all reasonable steps necessary to provide the Sponsor
with the latest possible information.
(h) The Sponsor shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to
paragraph (a), an instruction form to be used by each such Participant
who wishes to instruct the Trustee. The instruction form shall state
that (i) if the Participant fails to return an instruction form to the
Trustee by the indicated deadline, the Company Stock with respect to
which he or she is entitled to give instructions shall not be sold,
exchanged or transferred pursuant to such Offer, (ii) the Participant
shall be a named fiduciary (as described in paragraph (m) below) with
respect to all shares of Company Stock for which he or she is entitled
to give instructions, and (iii) the Company acknowledges and agrees to
honor the confidentiality of the Participant's instructions to the
Trustee.
(i) Each Participant may choose to instruct the Trustee in one of
the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he or she is entitled to give
instructions, or (ii) to sell, exchange or transfer all Company Stock
for which he or she is entitled to give instructions. The Sponsor shall
follow up with additional mailings and postings of bulletins, as
reasonable under the time constraints then prevailing, to obtain
instructions from Participants not otherwise responding to such
requests for instructions. Subject to paragraph (e), the Trustee shall
then sell, exchange or transfer shares according to instructions from
Participants, except that shares for which no instructions are received
shall not be sold, exchanged or transferred unless directed otherwise
as provided in paragraph (b) above.
(j) The Sponsor shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants
pursuant to paragraphs (g), (h) and (i) of this Section. The Trustee
shall then sell, exchange or transfer shares according to instructions
from such former Participants, except that shares for which no
instructions are received shall not be sold, exchanged or transferred.
(k) Neither the Company, the Committee nor the Trustee shall
express any opinion or give any advice or recommendation to any
Participant concerning the Offer, nor shall they have any authority or
responsibility to do so.
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(l) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some but not all Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records including,
without limitation, establishment of a security system and procedures
which restrict access to Participant records and retention of an
independent agent to maintain such records. If an independent record
keeping agent is retained, such agent must agree, as a condition of its
retention by the Sponsor, not to disclose the composition of any
Participant Accounts to the Company, its officers, directors,
employees, or representatives. The Company acknowledges and agrees to
honor the confidentiality of Participants' instructions to the Trustee.
(m) Each Participant shall be a named fiduciary (as that term is
defined in Section 402(a)(2) of ERISA) with respect to Company Stock
allocated to his or her Accounts under the Plan solely for purposes of
exercising the rights of a shareholder with respect to an Offer
pursuant to this Section 5.8 and voting rights pursuant to Section 5.9.
(n) To the extent that an Offer results in the sale of Company
Stock in the Trust, the Committee or the Participants, if so permitted
under the terms of the Plan, 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 Committee, the Sponsor or the Trustee an opinion or
order, which shall, in the opinion of counsel to the Committee, the
Sponsor or the Trustee, invalidate, in all circumstances or in any
particular circumstances, any provision or provisions of this Section
regarding the determination to be made as to whether or not Company
Stock held by the Trustee shall be sold, exchanged or transferred
pursuant to an Offer or cause any such provision or provisions to
conflict with securities laws, then, upon notice thereof to the
Committee, the Sponsor or the Trustee, as the case may be, such invalid
or conflicting provisions of this Section shall be given no further
force or effect. In such circumstances, the Trustee shall continue to
follow instructions received from Participants, to the extent such
instructions have not been invalidated by such order or opinion. To the
extent the Trustee is required by such opinion or order to exercise any
residual fiduciary responsibility with respect to such Offer, the
Sponsor shall appoint an independent fiduciary who shall exercise such
residual fiduciary responsibility as provided in paragraph (b) above
and shall direct the Trustee as to whether or not Company Stock held by
the Trustee shall be sold, exchanged or transferred pursuant to such
Offer.
5.9 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 Company Stock as provided in the
following provisions of this Section 5.9.
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(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 5.9(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 or her Accounts.
(ii) If the Sponsor does not have a registration-type class of
securities, then only with respect to such matters as the approval
or disapproval of any corporate merger or consolidation,
recapitalization, reclassification, liquidation, dissolution, sale
of substantially all assets of trade or business, or such similar
transactions as may be prescribed in Code Section 409(e)(4) and
the regulations thereunder, each Participant shall be entitled to
direct the Trustee as to the voting of all Company Stock allocated
and credited to the his or her Accounts.
(b) To the extent there remains any residual fiduciary
responsibility with respect to the voting of Company Stock after
application of paragraph (a) above, the Trustee shall vote such Company
Stock as directed by the Committee or as directed by an independent
fiduciary if duly appointed by the Sponsor. To the extent the Committee
or an independent fiduciary is required to exercise any residual
fiduciary responsibility with respect to the voting of Company Stock,
the Committee or independent fiduciary shall take into account in
exercising its fiduciary judgment, unless it is clearly imprudent to do
so, directions timely received from Participants, as such directions
are most indicative of what action is in the best interests of
Participants. Further, the Committee or independent fiduciary, in
addition to taking into consideration any relevant financial factors
bearing on any such decision, shall take into consideration any
relevant non-financial factors, including, but not limited to, the
continuing job security of Participants as employees of the Sponsor or
any Affiliated Company, conditions of employment, employment
opportunities and other similar matters, and the prospect of the
Participants and prospective Participants for future benefits under the
Plan.
(c) All Participants entitled to direct such voting shall be
notified by the Sponsor, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Sponsor or any other party regarding the exercise of such
rights. Such Participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the
combined fractional shares (or fractional interests in shares) so as to
reflect the aggregate direction of all Participants giving directions
with respect to fractional shares (or fractional interests in shares).
To the extent that a Participant shall fail to direct the Trustee as to
the exercise of voting rights arising under any Company Stock credited
to his or her Accounts, such Company Stock shall not be voted unless
the Trustee is directed
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otherwise as provided in paragraph (b) above. The Trustee shall
maintain confidentiality with respect to the voting directions of all
Participants.
(d) Each Participant shall be a named fiduciary (as that term is
defined in Section 402(a)(2) of ERISA) with respect to Company Stock
for which he or she has the right to direct the voting under the Plan
but solely for the purpose of exercising voting rights pursuant to this
Section 5.9 or certain Offers pursuant to Section 5.8.
(e) In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Committee, the Sponsor or the
Trustee, which shall, in the opinion of counsel to the Committee, the
Sponsor or the Trustee, invalidate under ERISA, in all circumstances or
in any particular circumstances, any provision or provisions of this
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 Committee, the Sponsor or
the Trustee, as the case may be, such invalid or conflicting provisions
of this Section shall be given no further force or effect. In such
circumstances the Trustee shall continue to follow instructions
received from Participants, to the extent such instructions have not
been invalidated by such order or opinion. To the extent the Trustee is
required by such opinion or order to exercise any residual fiduciary
responsibility with respect to voting, the Sponsor shall appoint an
independent fiduciary who shall exercise such residual fiduciary
responsibility as provided in paragraph (b) above and shall direct the
Trustee as to the manner in which Company Stock held by the Trustee
shall be voted.
5.10 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.
5.11 Distributions. Money and property of the Trust shall be paid out,
disbursed, or applied by the Trustee for the benefit of Participants and
Beneficiaries under the Plan in accordance with directions received by the
Trustee from the Committee. Upon direction of the Committee, the Trustee may pay
money or deliver property from the Trust for any purpose authorized under the
Plan. The Trustee shall be fully protected in paying out money or delivering
property from the Trust from time to time upon written order of the Committee
and shall not be liable for the application of such money or property by the
Committee.
The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.
5.12 Taxes. If the whole or any part of the Trust, or the proceeds
thereof, shall become liable for the payment of any estate, inheritance, income
or other tax, charge, or assessment
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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.
5.13 Trustee Records to be Maintained. The Trustee shall keep accurate
and detailed accounts of all investments, receipts, disbursements, and other
transactions hereunder, and all accounts, books, and records relating thereto
shall be open to inspection and audit at all reasonable times by any person
designated by the Company (subject to the provisions of Section 5.8(k)).
5.14 Annual Report of Trustee. Promptly following the close of each
Plan Year (or such other period as may be agreed upon between the Trustee and
Committee), or promptly after receipt of a written request from the Company, the
Trustee shall prepare for the Company a written account which will enable the
Company to satisfy the annual financial reporting requirements of 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 5.8(k)).
5.15 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 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 the amount can reasonably be identified and separated from
the Company's other assets, but in any event no later than the 15th business day
of the month following the month in which such amounts would otherwise be
payable to the Participant, or such other time provided in applicable
regulations under the Code or ERISA.
6.3 Allocation of Company Contributions and Forfeitures. Company
Contributions and Forfeitures shall be allocated as follows:
(a) Forfeitures shall first be used to restore the Accounts of
rehired Participants if so required under Section 8.7(c) and shall then
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 remaining Forfeitures may be applied
towards plan expenses if so directed by the Committee as provided in
Section 9.12 or shall be used to reduce contributions made by the
Company pursuant to Section 5.3.
(b) Matching Contributions shall be allocated to the Company
Contribution Accounts of all Participants who made Matched Deposits at
such times and in such amounts as provided in Sections 5.3(a) and
5.3(b).
(c) Any other Company Contributions shall be used to restore the
Accounts of rehired Participants if so required under Section 8.7(c)
and to the extent Forfeitures are unavailable. Any amounts remaining
may be used to pay Plan expenses if so directed by the Committee as
provided in Section 9.12.
The allocations of Company Contributions under this Section 6.3 shall
be made only after any allocations required by Sections 6.8 and 13.4 have been
made.
6.4 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 6.5. If separate investment funds are maintained under
the Trust pursuant to Section 5.5(b) then each such fund shall be valued
separately so that gains or losses of the various funds shall not be commingled.
Upon
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receipt of these valuations from the Trustee, the Committee shall revalue the
Accounts and subaccounts (as established pursuant to Section 5.5(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.
6.5 Valuation of Company Stock. Company Stock held by the Trust shall
be valued according to the following rules:
(a) In the case of Company Stock that is publicly traded on a
national securities exchange, such stock shall be valued by reference
to the closing price of such stock on such exchange on the last trading
day of the month for which such stock is being valued.
(b) In the case of Company Stock that is not publicly traded on a
national securities exchange, such stock shall be valued as of the
first day of each Plan Year, or such other time as established by the
Committee, by determining the fair market value of such stock through
the use of an independent appraiser. Such fair market valuation shall
be used to determine the valuation of each Participant's Company Stock
Account on each Valuation Date in such Plan Year pursuant to Section
6.4.
6.6 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.
6.7 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 the
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 6.3; if the funds used consisted of the
unallocated net income of the Trust, the stock would be allocated as
provided in Section 6.4; 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
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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.
6.8 Treatment of Accounts Upon Severance. Upon a Participant's
Severance, pending distribution of the Participant's benefit pursuant to the
provisions of Article VIII, the Participant's Accounts shall continue to be
maintained and accounted for in accordance with all applicable provisions of the
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 6.3 and 6.4 as of any Valuation Date or other date
preceding the distribution of the Participant's entire benefit under the Plan.
6.9 Cash Dividends.
(a) All cash dividends paid to the Trustee with respect to Company
Stock that has been allocated to a Participant's Account as of the
quarterly date on which the dividend is received by the Trustee shall
be allocated to the Participant's Account.
(b) If a Participant (or Beneficiary) has a current right to a
distribution in Company Stock pursuant to Article VIII and such stock
has not yet been re-registered in the name of the Participants (or
Beneficiary) as of the record date of any dividend on such stock, such
dividend shall be distributed to the Participant (or Beneficiary).
(c) Notwithstanding the provisions of paragraphs (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.
6.10 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, withdrawals, and adjustments to Participants'
Accounts provided for in this Article VI.
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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.
6.11 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
the 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 6.12.
(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 of Highly Compensated
Participants for the Plan Year shall not be more than the prior
Plan Year's Average Contribution Percentage of Participants who
were not Highly Compensated Employees for the prior Plan Year
multiplied by 1.25, or
(ii) The Average Contribution Percentage of Highly Compensated
Participants for the Plan Year shall not be more than the prior
Plan Year's Average Contribution Percentage of Participants who
were not Highly Compensated Employees for the prior Plan Year
multiplied by 2.0, provided that the Average Contribution
Percentage of Highly Compensated Participants does not exceed the
Average Contribution Percentage of Participants who were not
Highly Compensated Employees for the prior Plan Year by 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).
(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 Contribution Percentage of those Highly Compensated
Employees subject to either or both test exceeds the Aggregate
Limit, then the Contribution Percentages of those Highly
Compensated Employees who also participate in the cash or deferred
arrangement will be
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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 Contribution Percentage is reduced shall be treated as
an Excess Aggregate Contribution. The Actual Deferral Percentage
and Contribution Percentage of the Highly Compensated Employee are
determined after any corrections required to meet the Actual
Deferral Percentage and Average Contribution Percentage tests and
are deemed to be the maximum permitted under such tests for the
Plan Year. Multiple use does not occur if both the average 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 this Section 6.11 and Section 6.12 the
following definitions shall apply:
(i) "Average Contribution Percentage" shall mean the average
of the Contribution Percentages, with respect to the group of
Highly Compensated Participants and the group of all other
Participants for a Plan Year. The "Contribution Percentage" for
any Participant shall mean the ratio, calculated separately and to
the nearest one-hundredth of one percent for each Participant in
such group, 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.
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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 6.11.
(ii) "Highly Compensated Participant" shall mean for any Plan
Year any Participant who is a Highly Compensated Employee. A
Participant is a Highly Compensated Employee for a particular Plan
Year if he or she meets the definition of a Highly Compensated
Employee in effect for that Plan Year. Similarly, a Participant is
not a Highly Compensated Employee for a particular Plan Year if he
or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.
(iii) "Participant" shall mean any Eligible Employee who
satisfied the requirements under Article III during the Plan Year
whether or not such Eligible Employee has elected to contribute to
the Plan for such Plan Year.
(iv) "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 6.11, 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).
(v) "Aggregate Limit" shall mean the sum of (1) 125 percent of
the greater of the average 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 average 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.
(vi) "Excess Aggregate Contributions" shall mean, with respect
to any Plan Year, the excess of:
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(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.
(c) In the event the Plan satisfies the requirements of Code
Sections 401(m), 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 6.11 shall be applied by determining the Contribution
Percentages of Participants as if all such plans were a single plan.
Any adjustments to the Contribution Percentages of Participants who are
not Highly Compensated Employees for the prior year shall be made in
accordance with Notice 98-1 and any superseding guidance. Plans may be
aggregated in order to satisfy Code Section 401(m) only if they have
the same Plan Year and use the same Average Contribution Percentage
testing method.
(d) For purposes of this Section 6.11, 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.
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(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.
6.12 Provision for Disposition of Excess After Tax Deposits or Matching
Contributions on Behalf of Highly Compensated Participants. After application of
the provisions of Section 4.4 and 4.5, the following provisions shall be
implemented:
(a) The Committee shall determine, as soon as is reasonably
possible following the close of each Plan Year, the extent (if any) to
which contributions by or on behalf of Highly Compensated Participants
may cause the Plan to exceed the limitations of Section 6.11 for such
Plan Year. If, pursuant to the determination by the Committee and as
required by the leveling method described in paragraph (b) below,
contributions by or on behalf of a Highly Compensated Participant may
cause the Plan to exceed such limitations, then the Committee shall
take the following steps:
(i) First, any excess After Tax Deposits that were not matched
by Matching Contributions, together with income or loss allocable
to such amount (determined in accordance with (d) below) shall be
returned to the Highly Compensated Participant.
(ii) Second, if any excess remains after the provisions of (i)
above are applied, to the extent necessary to eliminate the
excess, Matching Contributions with respect to the Highly
Compensated Participant, any corresponding matched After Tax
Deposits, and any income or loss allocable thereto, shall either
be distributed (if non-forfeitable) to the Highly Compensated
Participant or forfeited (to the extent forfeitable under the
Plan) on a pro-rata basis. Amounts of excess Matching
Contributions forfeited by Highly Compensated Participants under
this Section 6.12, 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
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Highly Compensated Participants for a Plan Year under Section 6.11
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.
(c) The amount of income or loss attributable to any excess After
Tax Deposits or Matching Contributions, as determined under this
Section 6.12 (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 6.12(c)(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 6.12, the following shall
apply:
(i) "Excess Aggregate Contribution Accounts" shall mean the
Participant's After Tax Deposits Account and Company Contribution
Account.
(ii) "Gap Period" shall mean the period between last day of
the Plan Year and the date of distribution of any Excess Aggregate
Contributions.
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(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 6.12,
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 Company shall be liable to any
Participant (or his or her Beneficiary, if applicable) for any losses
caused by a mistake in calculating the amount of any Excess Aggregate
Contributions by or on behalf of a Highly Compensated Participant and
the income or loss allocable thereto.
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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 the 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 or her Company Contribution
Account shall vest in accordance with the following schedule:
Years of Credited Service Vested Percentage
------------------------- -----------------
Less than 3 0%
3 or more 100%
(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 in 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 the 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.
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ARTICLE VIII
PAYMENT OF PLAN BENEFITS
8.1 Withdrawals During Employment. A Participant may withdraw, once in
any calendar quarter, 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 or her After Tax Deposit Account (excluding any
After Tax Deposits recharacterized as such under Section 4.5). A
Participant who makes a withdrawal of After Tax Deposits which are also
Matched Deposits prior to July 1, 2000 shall not receive any Matching
Contributions pursuant to Section 5.3(a) with respect to any Matched
Deposits made by such Participant during the six (6) month period
beginning on the date of any such withdrawal unless the After Tax
Deposits can also be withdrawn under paragraph (d) below. A Participant
who makes a withdrawal of After Tax Deposits (whether Matched Deposits
or non-Matched Deposits) on or after July 1, 2000 shall not be
permitted to make any After Tax or and Before Tax Deposits during the
six (6) month period beginning as soon as administratively feasible
following the date of the withdrawal unless the After Tax Deposits can
also be withdrawn under paragraph (d) below or the withdrawal is
comprised solely of After Tax Deposits which are not Matched Deposits
and which were contributed prior to July 1, 2000.
(b) A Participant may, for any reason, withdraw any portion of the
amount allocated to his or her Rollover Account.
(c) After withdrawing all After Tax Deposits pursuant to paragraph
(a) and all amounts allocated to his or her Rollover Account under
paragraph (b) 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.
(d) On or after the attainment of age 59-1/2, a Participant may
withdraw any vested portion of the amounts allocated to any of his or
her Accounts.
(e) After withdrawing all amounts permitted pursuant to paragraphs
(a), (b) (c), and (d) 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 the vested
portion of his or her Company Contribution Account, and any remaining
amount in his or her After Tax Deposits (amounts which were
recharacterized as After Tax Deposits under Section 4.5 but excluding
any earnings attributable to recharacterized After Tax Deposits after
December 31, 1988) upon incurring a hardship as defined in Section 8.5.
(f) Except as provided in Section 8.5(c), all withdrawals shall be
made in cash, except to the extent any of the vested portion of a
Participant's Account to be
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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.
(g) Except as provided in paragraphs (a) through (e) above,
Participants may not receive a distribution of their benefits under the
Plan prior to termination of employment.
(h) Except as provided in Section 8.5(c), 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.
(i) 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).
8.2 Distributions Upon Termination of Employment or Disability.
(a) Subject to the provisions of Section 8.6, 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.
(b) Any distribution made pursuant to paragraph (a) shall be paid
no more than once in any calendar quarter 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 of such Participant's Accounts is
invested in the Company Stock Fund, then, to the extent so invested,
such distribution may be made in Company Stock at the election of the
Participant.
(c) Notwithstanding the provisions contained in the foregoing
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.
(d) Notwithstanding the provisions contained in the foregoing
paragraphs of this Section 8.2 or Section 8.1, upon receipt of a
Qualified Domestic Relations Order, the
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<PAGE> 55
amount payable to an Alternate Payee (as such terms are described in
Section 15.2) may be distributed to the Alternate Payee as soon as
administratively feasible.
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. At any time, and from time to time,
each Participant shall have the unrestricted right to designate the Beneficiary
to receive the portion of his or her death benefit and to revoke any such
designation subject to paragraphs (a) and (b) below. Each such designation shall
be evidenced by a written instrument signed by the Participant and filed with
the Committee.
(a) If the Participant is married and designates a Beneficiary
other than his or her spouse, said designation shall not be honored by
the Committee unless accompanied by the written consent of said spouse
to said designation. Such consent (i) must designate a Beneficiary
which may not be changed without the consent of the spouse (or the
consent of the spouse expressly permits designation by the Participant
without any further consent by the spouse), (ii) must acknowledge the
effect of the designation, and (iii) must be witnessed by a Plan
representative or a notary public. No consent of such spouse shall be
necessary if it is established to the satisfaction of a Plan
representative that the consent required under this paragraph (b)
cannot or need not be obtained because (i) there is no spouse, (ii) the
spouse cannot be located, or (iii) there exist such other circumstances
which, pursuant to regulations under Code Section 417, permit a
distribution to another Beneficiary. Any consent of a spouse obtained
pursuant to this paragraph (b) or any determination that the consent of
the spouse cannot (or need not) be obtained, shall be effective only
with respect to that spouse. If a Participant becomes married following
his or her designation of a Beneficiary other than his or her spouse,
such designation shall be ineffective unless the spousal consent
requirements of this paragraph are satisfied with respect to such
spouse (subject, however, to the provisions of Article XV regarding
Qualified Domestic Relations Orders).
(b) If the Participant is married and does not designate a
Beneficiary, the Participant's spouse shall be his or her Beneficiary
for purposes of this Section. If the deceased Participant is not
married and shall have failed to designate a Beneficiary, or if the
Committee shall be unable to locate the designated Beneficiary after
reasonable efforts have been made, or if such Beneficiary shall be
deceased, distribution of the Participant's death benefit shall be made
by payment of the deceased Participant's entire interest in the Trust
to his or her personal representative in a single lump-sum payment. In
the event the deceased Participant is not a resident of California at
the date of his or
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<PAGE> 56
her death, the Committee, in its discretion, may require the
establishment of ancillary administration in California. If the
Committee cannot locate a qualified personal representative of the
deceased Participant, or if administration of the deceased
Participant's estate is not otherwise required, the Committee, in its
discretion, may pay the deceased Participant's interest in the Trust to
his or her heirs at law (determined in accordance with the laws of the
State of California as they existed at the date of the Participant's
death).
8.5 Hardship Withdrawal Rules. A hardship withdrawal shall be made to a
Participant only if the Committee (or its representative) determines that the
Participant has an immediate and heavy financial need and that a withdrawal from
the Plan is necessary to satisfy such need as set forth in paragraphs (a) and
(b) below.
(a) A hardship withdrawal shall be authorized by the Committee
only if the Committee, based upon the Participant's representation and
such other facts as are known to the Committee, determines that the
requested withdrawal is on the account of:
(i) 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);
(ii) The purchase (excluding mortgage payments) of a principal
residence for the Participant only;
(iii) 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;
(iv) 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
(v) 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.
(b) A hardship withdrawal shall be authorized by the Committee
only if the Committee, based upon the Participant's representation and
such other facts as are known to the Committee, determines that all of
the following conditions are or will be satisfied:
(i) 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).
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<PAGE> 57
(ii) The Participant has obtained all distributions, other
than hardship withdrawals, and all nontaxable (at the time of the
loan) loans from the Plan or any other plan maintained by the
Company.
(iii) The Participant shall not be permitted to make Before
Tax Deposits or After Tax Deposits for the 12-month period
beginning as soon as administratively feasible following the date
of the hardship withdrawal from the Plan or any other plan
maintained by the Company.
(iv) The Participant shall not be permitted to make Before Tax
Deposits during the Participant's taxable year immediately
following the taxable year of the 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 Deposits for the taxable year in which
such Participant made the hardship withdrawal.
(c) Notwithstanding the provisions of Section 8.1(f), 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.
8.6 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 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 $5,000.
(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.
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(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.
(d) Notwithstanding anything to the contrary in the 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 or her 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:
(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 the 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).
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(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.
8.7 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 or she 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) If a Participant incurs a Severance when partially vested in
his or her Accounts and does not receive a distribution described in
paragraph (a), the Participant's Account shall be held by the Trustee
as provided in Section 6.8 for 90 days at which time, the nonvested
portion of the Participant's Account(s) shall be forfeited as of the
last day of the month in which the 90-day period ends.
(c) In the event a Participant is rehired by the Company prior to
the date such Participant incurs five consecutive Breaks in Service,
the amount so forfeited pursuant to paragraphs (a) and (b) above shall
be reinstated to the Participant as of his or her Reemployment
Commencement Date (without regard to any interest or investment
earnings on such amount).
(d) Forfeitures shall be allocated in the manner provided in
Section 6.3 at such times as determined by the Committee and to the
extent available shall be used to reduce contributions made by the
Company pursuant to Section 5.3.
8.8 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 Committee 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.
8.9 Lapsed Benefits.
(a) In the event that a benefit is payable under the Plan to a
Participant and after reasonable efforts the Participant cannot be
located for the purpose of paying the
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benefit during a period of three consecutive years, the Participant
shall be presumed dead and the benefit shall, upon the termination of
that three year period, be paid to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the purpose
of paying the benefit for the following two years, then the benefit
shall be forfeited and allocated to the Accounts of the other
Participants for such Plan Year in accordance with Section 6.3.
(c) If a Participant shall die prior to receiving a distribution of
his or her entire benefit under the Plan (other than a Participant
presumed to have died as provided above), if after reasonable efforts
an eligible Beneficiary of the Participant cannot be located for the
purpose of paying the benefit during a period of five consecutive
years, the benefit shall, upon expiration of such five-year period, be
forfeited and reallocated to the Accounts of the other Participants in
accordance with Section 6.3.
(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 6.3
to pay any reinstated benefit after it has been forfeited pursuant to
the provisions of this Section.
8.10 Persons Under Legal Disability.
(a) If any payee under the Plan is a minor or if the Committee
reasonably believes that any payee is legally incapable of giving a
valid receipt and discharge for any payment due him/her, the Committee
may have the payment, or any part thereof, made to the person (or
persons or institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or committee of the payee.
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(b) Any such payment shall be a payment from the Accounts of the
payee and shall, to the extent thereof, be a complete discharge of any
liability under the Plan to the payee.
8.11 Additional Documents.
(a) The Committee or the Company may require satisfactory proof of
any matter under the Plan from or with respect to any Employee,
Participant, or Beneficiary, and no person shall be entitled to receive
any benefits under the Plan until the required proof shall be
furnished.
(b) The Committee or Trustee, or both, may require the execution
and delivery of such documents, papers and receipts as the Committee or
Trustee may determine necessary or appropriate in order to establish
the fact of death of the deceased Participant and of the right and
identity of any Beneficiary or other person or persons claiming any
benefits under this Article VIII.
(c) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Committee or
Trustee, or both, may deem appropriate as protection against possible
liability for State or Federal death taxes attributable to any death
benefits.
8.12 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.
8.13 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.
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(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 as determined under procedures established by the Committee;
provided, however, that 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 first business
day of the month in which the loan is granted (the last business day of
the previous month for loans made prior to July 1, 2000) 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.
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 have a definite repayment
schedule and shall be amortized on a substantially level basis with
repayments occurring not less frequently than quarterly.
Notwithstanding the foregoing, the loan repayments shall be suspended
during an unpaid Leave of Absence not to exceed one year at which time
loan repayments shall resume. In the case of a Leave of Absence due to
qualified military service, loan repayments shall be suspended as
permitted under Code Section 414(u)(4).
(f) 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).
(g) A loan to a Participant shall be evidenced by a promissory
note and/or such other documentation as required by the Committee.
(h) 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
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or her distribution and the Participant's vested Account(s) shall be
reduced to the extent of such distribution.
(i) 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 determine the amount of loan repayments following
suspension due to an unpaid Leave of Absence subject to the
requirement that the loan must be repaid by the latest date
permitted under paragraph (d).
(iii) 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.
(iv) 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 5.8
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts and solely for purposes of
Section 5.9, 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 or her presence at a meeting shall not be
counted for the purpose of determining a quorum. If, at any time a member of the
Committee is not so qualified to act or vote, the qualified members of the
Committee shall be reduced below two (2), the Board of Directors shall promptly
appoint one or more special members to the Committee so that there shall be at
least one qualified member to act upon the matter in question. Such special
Committee members shall have power to act only upon the matter for which they
were especially appointed and their tenure shall cease as soon as they have
acted upon the matter for which they were especially appointed.
9.4 Responsibility of Committee. The authority to control and manage
the operation and administration of the Plan, the general administration of the
Plan, the responsibility for carrying out the Plan and the authority and
responsibility to control and manage the assets of the Trust are hereby
delegated by the Board of Directors to and vested in the Committee, except to
the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the limitations of the Plan, the Committee shall, from time to time,
establish rules for the
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performance of its functions and the administration of the Plan. In the
performance of its functions, the Committee shall not discriminate in favor of
Highly Compensated Employees.
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 the Plan, including one or more persons to render advice
with regard to any responsibility any Named Fiduciary or any other
fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration and
effectuation of the Plan.
(d) To administer, interpret, construe, and apply the Plan and to
decide all questions which may arise or which may be raised under the
Plan by any Employee, Participant, former Participant, Beneficiary or
other person whatsoever, including but not limited to all questions
relating to eligibility to participate in the Plan, the amount of
Credited Service of any Participant, and the amount of benefits to
which any Participant or his or her Beneficiary may be entitled.
(e) To determine the manner in which the assets of the Plan, or any
part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time, to invest
and reinvest the Trust Fund, or any part thereof, or to purchase,
exchange, or lease any property, real or personal, which the Committee
may designate. This shall include the right to direct the investment of
all or any part of the Trust in any one security or any one type of
securities permitted hereunder. Among the securities which the
Committee may direct the Trustee to purchase are "qualifying employer
securities" as defined in Code Section 4975(e).
(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.
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Any action taken in good faith by the Committee in the exercise of
discretionary powers conferred upon it by the Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary powers
conferred upon the Committee shall be absolute; provided, however, that all such
discretionary power shall be exercised in a uniform and nondiscriminatory
manner.
9.6 Additional Powers of Committee. In addition to any discretionary
powers or authority conferred on the Committee elsewhere in the Plan or by law,
such Committee shall have the following discretionary powers and authority:
(a) To appoint one or more Investment Managers pursuant to Section
5.15 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.
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 Claims Procedures. If a Participant believes that he or she is
being denied any rights or benefits under the Plan, such Participant (or his or
her beneficiary or duly appointed representative) may file a claim for benefits
in writing with the Committee. The Committee shall follow the procedures set
forth in this Section in processing a claim for benefits.
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(a) Within 90 days following receipt by the Committee of a claim
for benefits and all necessary documents and information, the Committee
shall furnish the person claiming benefits under the Plan ("Claimant")
with written notice of the decision rendered with respect to such
claim. Should special circumstances require an extension of time for
processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the expiration of the initial 90 day
period. The notice shall indicate the special circumstances requiring
an extension of time and the date by which a final decision is expected
to be rendered. In no event shall the period of the extension exceed 90
days from the end of the initial 90 day period.
(b) In the case of a denial of the Claimant's claim, the written
notice of such denial shall set forth (i) the specific reasons for the
denial, (ii) references to the Plan provisions upon which the denial is
based, (iii) a description of any additional information or material
necessary for perfection of the application (together with an
explanation why such material or information is necessary), and (iv) an
explanation of the Plan's appeals procedures.
(c) If the Committee does not respond within 180 days, the Claimant
may consider his or her claim denied.
9.9 Appeals Procedures. A Claimant who wishes to appeal the denial of
his or her claim for benefits or to contest the amount of benefits payable shall
follow the administrative procedures for an appeal as set forth in this Section
and shall exhaust such administrative procedures prior to seeking any other form
of relief.
(a) In order to appeal a decision rendered with respect to his or
her claim for benefits or with respect to the amount of his or her
benefits, a Claimant must file an appeal with the Committee in writing
within 60 days after the date of notice of the decision with respect to
the claim, or if the claim has neither been approved nor denied within
the period provided in Section 9.8(a) above, then the appeal must be
made within 60 days after the expiration of the period provided in
Section 9.8(c).
(b) The Claimant may request that his or her appeal be given full
and fair review by the Committee. The Claimant also may review all
pertinent documents and submit issues and comments in writing in
connection with the appeal. The decision of the Committee shall be made
not later than 60 days after the Claimant has completed his or her
submission to the Committee of his or her appeal and any documentation
or other information to be submitted in support of such request. Should
special circumstances require an extension of time for processing,
written notice of the extension shall be furnished to the Claimant
prior to the expiration of the initial 60 day period. The notice shall
indicate the special circumstances requiring an extension of time and
the date by which a final decision is expected to be rendered. In no
event shall the period of the extension exceed 60 days from the end of
the initial 60 day period.
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(c) The decision on the Claimant's appeal shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the Claimant with specific reference to
the pertinent Plan provisions upon which the decision is based.
(d) If the Committee does not respond within 120 days, the Claimant
may consider his or her appeal denied.
9.10 Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 9.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 5.15 hereof or as to which management and control has been retained by
the Trustee.
9.11 Indemnification and Insurance. To the extent permitted by law, the
Company shall indemnify and hold harmless the Committee and each member thereof,
each Trustee, the Board of Directors and each member thereof, and such other
persons as the Board of Directors may specify, from the effects and consequences
of his or her acts, omissions, and conduct in his or her official capacity in
connection with the Plan and Trust. To the extent permitted by law, the Company
may also purchase liability insurance for such persons.
9.12 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.
9.13 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.
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9.14 Reliance Upon Documents and Opinions. The members of the
Committee, the Board of Directors, the Company and any person delegated to carry
out any fiduciary responsibilities under the Plan (hereinafter a "delegated
fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or any
Investment Manager. The members of the Committee, the Board of Directors, the
Company and any delegated fiduciary shall be fully protected and shall not be
liable in any manner whatsoever for anything done or action taken or suffered in
reliance upon any such consultant, or firm or corporation which employs one or
more consultants, Trustee, Investment Manager, or counsel. Any and all such
things done or such action taken or suffered by the Committee, the Board of
Directors, the Company and any delegated fiduciary shall be conclusive and
binding on all Employees, Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law. The Committee and any delegated
fiduciary may, but are not required to, rely upon all records of the Company
with respect to any matter or thing whatsoever, and may likewise treat such
records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided by
law.
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ARTICLE 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 the Plan and Trust Agreement at any
time and from time to time and in such manner and to such extent as it may deem
advisable, including retroactively, subject to the following provisions:
(a) No amendment shall have the effect of reducing any
Participant's vested interest in the Plan or eliminating an optional form of
distribution.
(b) No amendment shall have the effect of diverting any part of
the assets of the Plan to persons or purposes other than the exclusive benefit
of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the duties or
responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of
officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the
above provisions (a) through (d), in accordance with the provisions of Section
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 the 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 Merger Restriction. Notwithstanding any other provision in the
Plan, the Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to, any other plan unless each affected
Participant in the Plan would (if such other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
12.3 Effect on Trustee and Committee. The Trustee and the Committee
shall continue to function as such for such period of time as may be necessary
for the winding up of the Plan and for the making of distributions in the manner
prescribed by the Board of Directors at the time of termination of the Plan.
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 the Plan in full force and effect
by adopting the same by resolution of its board of directors and by
executing a proper supplemental or transfer agreement with the Trustee.
(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
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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 the
Sponsor representing (1) 20% or more of the combined voting power
of the Sponsor's then outstanding voting securities, which
acquisition is not approved in advance of the acquisition or
within 30 days after the acquisition by a majority of the
Incumbent Board (as hereinafter defined) or (2) 33% or more of the
combined voting power of the Sponsor's then outstanding voting
securities, without regard to whether such acquisition is approved
by the Incumbent Board;
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board"), cease for any reason
to constitute at least a majority of the Board of Directors,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Sponsor's stockholders, is approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Sponsor, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall, for the
purposes of this Plan, be considered as though such person were a
member of the Incumbent Board of the Sponsor;
(iii) The consummation of a merger, consolidation or
reorganization involving the Sponsor, other than one which
satisfies both of the following conditions:
(1) a merger, consolidation or reorganization which
would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to represent
(either by 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
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securities immediately before such merger, consolidation or
reorganization, and
(2) a merger, consolidation or reorganization in which
no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Sponsor representing 20% or
more of the combined voting power of the Sponsor's then
outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of
complete liquidation of the Sponsor or an agreement for the sale
or other disposition by the Sponsor of all or substantially all of
the Sponsor's assets.
Notwithstanding the preceding provisions of this paragraph (b), a
Change in Control shall not be deemed to have occurred if the Person
described in the preceding provisions of this paragraph (b) is (i) an
underwriter or underwriting syndicate that has acquired any of the
Sponsor's then outstanding voting securities solely in connection with
a public offering of the Sponsor's securities, (ii) the Sponsor or any
subsidiary of the Sponsor or (iii) an employee stock ownership plan or
other employee benefit plan maintained by the Sponsor or an Affiliated
Company that is qualified under the provisions of the Code. In
addition, notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b)
becomes a Beneficial Owner of more than the permitted amount of
outstanding securities as a result of the acquisition of voting
securities by the Sponsor or an Affiliated Company which, by reducing
the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a
Change in Control would occur but for the operation of this sentence
and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under
any stock option plan of the Sponsor or through a stock dividend or
stock split), then a Change in Control shall occur.
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ARTICLE XIII
LIMITATION ON ALLOCATIONS
13.1 General Rule.
(a) Subject to Sections 13.3 through 13.5 hereof, the total Annual
Additions under the Plan to a Participant's Accounts for any Limitation
Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000); or
(ii) Twenty-five percent (25%) of the Participant's
Compensation, from the Company for the Limitation Year. For
purposes of this Article 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
10.2. Solely for purposes of this Article XIII, 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 the Plan and each other defined contribution plan, within the
meaning of Code Section 415(k), maintained by the Company ("Defined Contribution
Plan"), the sum of the amounts determined under Sections 13.2(a), (b), (c), (d),
(e), (f) and (g) 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 6.12.
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(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 the Plan for the purposes of applying the limitations of Section
13.1.
13.4 Adjustments for Excess Annual Additions. To the extent that the
Annual Additions on behalf of any Participant in a Limitation Year to the Plan
and all other Defined Contribution Plans exceed the limitations set forth in
Sections 13.1 through 13.3 hereof, such Participant's Annual Additions for the
Plan shall be reduced in the following order: (i) After Tax Deposits that are
not Matched Deposits, (ii) After Tax Deposits that are Matched Deposits, (iii)
Before Tax Deposits that are not Matched Deposits, (iv) Before Tax Deposits that
are Matched Deposits, and (v) Matching Contributions. The portion of the
reduction attributable to Participant Deposits shall be refunded to the
Participants and the balance attributable to Matching Contributions, if any,
shall be held unallocated in a 415 Suspense Account established for the purpose
of this Section 13.4 and shall be used to reduce Company Contributions for the
next limitation year (and succeeding limitation year, as necessary) for all
Participants in the Plan. The 415 Suspense Account shall be exhausted before any
Company contributions shall be allocated to the Accounts of Participants.
13.5 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.
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(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).
13.6 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 6.3.
(b) If, after those allocations have been made, any further
residue funds remain in the 415 Suspense Account, the residue may
revert to the Company in accordance with applicable provisions of the
Code, ERISA, and the regulations thereunder.
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ARTICLE XIV
TOP-HEAVY RULES
14.1 Applicability. Notwithstanding any provision in the 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 the Plan in
the case of any Plan Year in which the Plan is determined to be a Top-Heavy Plan
under the rules of Section 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.
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(e) The term "Determination Date" means, with respect to any plan
year, the last day of the preceding plan year. In the case of the first
plan year of any plan, the term "Determination Date" shall mean the
last day of that plan year.
(f) The term "Aggregation Group" means (i) each plan of the
Company in which a Key Employee is a Participant, and (ii) each other
plan of the Company which enables any plan described in clause (i) to
meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
required to be included in an Aggregation Group under the preceding
rules may be treated as being part of such group if the group would
continue to meet the requirements of Code Sections 401(a)(4) and 410
with the plan being taken into account.
(g) For purposes of determining ownership under paragraphs (a),
(b) and (c) above, the following special rules shall apply: (i) Code
Section 318(a)(2)(C) shall be applied by substituting "5%" for "50%",
and (ii) the aggregation rules of 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 13.5.
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.
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(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
(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.
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14.4 Minimum Contributions. For any Plan Year in which the Plan is
determined to be a Top-Heavy Plan, the minimum employer 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 for each
Non-Key Employee shall be not less than 3% of his or her 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 amounts
deferred under a cash or deferred arrangement under Code Section
401(k)) are made (or are required to be made) under the Plan for the
year for the Key Employee for whom the percentage is the highest for
the year. This determination shall be made by dividing the
contributions for each Key Employee by so much of his or her total
compensation for the Plan Year as does not exceed the applicable
Compensation limit. For purposes of this paragraph (b), all defined
contribution plans required to be included in an Aggregation Group
shall be treated as one plan. Notwithstanding the foregoing, the
exceptions to paragraph (a) as provided under this paragraph (b) shall
not apply to any plan required to be included in an Aggregation Group
if the plan enables a defined benefit plan to meet the requirements of
Code Sections 401(a)(4) or 410.
(c) The Participant's minimum contribution determined under this
Section 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 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):
Number of Full Years of Nonforfeitable
Credited Service Percentage
----------------------- --------------
Less than 3 years 0%
3 or more 100%
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(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 the 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.
14.6 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 or her Beneficiary in
the income, benefits, payments, claims or rights hereunder, or in the
Trust Fund, shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and Beneficiary is
prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without
power to do so, except as may be permitted in connection with providing
security for a loan from the Plan to the Participant pursuant to the
provisions of the Plan as it may be amended from time to time. The
interest of any Participant or Beneficiary shall not be liable or
subject to his or her debts, liabilities, or obligations, now
contracted, or which may hereafter be contracted, and such interest
shall be free from all claims, liabilities, or other legal process now
or hereafter incurred or arising. Neither the interest of a Participant
or Beneficiary, nor any part thereof, shall be subject to any judgment
rendered against any such Participant or Beneficiary. Notwithstanding
the foregoing, a Participant's or Beneficiary's interest in the Plan
may be subject to the enforcement of a Federal tax levy made pursuant
to Code Section 6331 or the collection by the United States on a
judgment resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action contrary
to this Article 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 Section 206(d) of ERISA 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 the Plan
with respect to a Participant,
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(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
Committee does not have reason to know that address independently
of the order); (B) the amount or percentage of the Participant's
benefits to be paid to each Alternate Payee, or the manner in
which the amount or percentage is to be determined; (C) the number
of payments or period to which the order applies; and (D) each
plan to which the order applies.
For purposes of this Section 15.2, "Alternate Payee" means any
spouse, former spouse, child or other dependent of a Participant who is
recognized by a domestic relations order as having a right to receive
all, or a portion of, the benefits payable with respect to the
Participant.
(b) A domestic relations order is not a Qualified Domestic
Relations Order if it requires:
(i) The Plan to provide any type or form of benefit, or any
option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under a previous
Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to fail to
satisfy the requirements of paragraph (b)(i) above with respect to any
payment made before a Participant has separated from service solely
because the order requires that payment of benefits be made to an
Alternate Payee:
(i) On or after the date on which the Participant attains (or
would have first attained) his or her earliest retirement age (as
defined in Code Section 414(p)(4)(B));
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(ii) As if the Participant had retired on the date on which
such payment is to begin under such order (but taking into account
only the present value of accrued benefits and not taking into
account the present value of any subsidy for early retirement
benefits); and
(iii) In any form in which such benefits may be paid under the
Plan to the Participant (other than in the form of a joint and
survivor annuity with respect to the Alternate Payee and his or
her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before his
or her earliest retirement age (as defined in 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 Committee shall promptly notify the Participant and any
Alternate Payee named in the order that an order has been received and
shall provide a copy of the Plan's procedures for determining the
qualified status of domestic relations orders. An Alternate Payee may
designate a representative for receipt of copies of notices and plan
information that are sent to the Alternate Payee with respect to
domestic relations order. Within a reasonable period after the receipt
of the order, the Committee shall determine whether the order is a
Qualified Domestic Relations Order and shall notify the Participant and
each Alternate Payee of such determination.
(f) The Committee shall establish reasonable procedures to
determine the qualified status of domestic relations orders and to
administer distributions under Qualified Domestic Relations Orders.
During any period in which the issue of whether a domestic relations
order is a Qualified Domestic Relations Order is being determined (by
the Committee, by a court of competent jurisdiction, or otherwise), the
Committee shall direct the Trustee to segregate in a separate account
in the Plan (or in an escrow account) the amounts which would have been
payable to the Alternate Payee during the period if the order had been
determined to be a Qualified Domestic Relations Order. If within the 18
Month Period (as defined below), the order (or modification thereof) is
determined to be a Qualified Domestic Relations Order, the Committee
shall direct the Trustee to pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. However,
if within the 18 Month Period (i) it is determined that the order is
not a Qualified Domestic Relations Order, or (ii) the issue as to
whether the order is a Qualified Domestic Relations Order is not
resolved, then the Committee shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons
who would have been entitled to the amounts if there had been no order
(assuming such
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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
the Plan and Trust shall not be deemed to constitute a contract of employment or
otherwise between the Company and any Employee or Participant, or to be a
consideration for, or an inducement or condition of, any employment. Nothing
contained herein shall be deemed to give any Employee the right to be retained
in the service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any Employee or Participant at any time, which
right is hereby expressly reserved.
16.2 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.
16.3 Limitation on Company Liability. Any benefits payable under the
Plan shall be paid or provided for solely from the Plan and the Company assumes
no liability or responsibility therefor.
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 the Plan shall in all cases be
interpreted in a manner that is consistent with the Plan satisfying (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.
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. The Plan and the Trust Agreement
shall be construed together as one instrument. In the event that any conflict
arises between the terms and/or conditions of the Trust Agreement and the Plan,
the provisions of the Plan shall control, except that with respect to the duties
and responsibilities of the Trustee, the Trust Agreement shall control.
16.9 Invalid Provisions. If any paragraph, section, sentence, clause or
phrase contained in the Plan shall become illegal, null or void or against
public policy, for any reason, or shall be 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
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or void or against public policy, the remaining paragraphs, sections, sentences,
clauses or phrases contained in the 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.
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IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Savings and Investment Plan as
restated this 20th day of June, 2000.
ALLERGAN, INC.
By: /s/ FRANCIS R. TUNNEY, JR.
-----------------------------------
Francis R. Tunney, Jr.
Corporate Vice President, Administration
General Counsel and Secretary of Allergan, Inc.
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APPENDIX A
SPECIAL PROVISIONS FOR PUERTO RICO-BASED PAYROLL EMPLOYEES
PART I
INTRODUCTION
1.1 Effective Date. The effective date of this Appendix A is January 1,
1999. 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 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 2.17. "Compensation" shall have the same meaning as
set forth in Plan Section 2.17 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 2.19. "Credited Service" shall have the same meaning
as set forth in Plan Section 2.19 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 2.22. For the purpose of this Appendix A only, the
definition of "Eligible Employee" as defined in Plan Section 2.22 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 any Employee covered
by a collective bargaining agreement.
2.4 Plan Section 2.25. For the purpose of this Appendix A only, the
definition of "Employee" as defined in Plan Section 2.25 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 of income tax
and/or for whom Social Security contribution are made by the
<PAGE> 91
Sponsor or an Affiliated Company except that such term shall not include (i) any
individual who performs services for the Sponsor or an Affiliated Company and
who is classified or paid as an independent contractor as determined by the
payroll records of the Sponsor or Affiliated Company even if a court or
administrative agency determines that such individual is a common-law employee
and not an independent contractor and (ii) any individual who performs services
for the Sponsor or an Affiliated Company pursuant to an agreement between the
Sponsor or an Affiliated Company and any other person including a leasing
organization except to the extent such individual is a Leased Employee.
2.5 Plan Section 2.35. Notwithstanding the provisions of Plan Section
2.35, "Matched Deposits" of a Puerto Rico-based Participant shall mean his or
her Deposits (whether Before Tax or After Tax) not in excess of six percent (6%)
of Compensation. Matched Deposits shall participate in allocations of Company
Contributions and Forfeitures.
2.6 Plan Section 2.38. For the purpose of this Appendix A only,
"Participant" as defined in Plan Section 2.38 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.
2.7 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.
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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 or her Compensation to the Plan as Before Tax Deposits not to
exceed ten percent (10%) and, when aggregated with the After Tax Deposits
contributed by such Participant pursuant to paragraph (b) below, not to exceed
fifteen percent (15%). Notwithstanding the foregoing, no Participant shall be
permitted to make Before Tax Deposits to the Plan during any calendar year in
excess of $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.
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.
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(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 Article III
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:
(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).
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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.
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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.
(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
employer 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 MATCHING CONTRIBUTIONS
The provisions of Article V shall apply to all Puerto Rico-based
Employees except as set forth below:
5.1 Plan Section 5.3(a). Notwithstanding the provisions of Plan Section
5.3(a) entitled "Company Contributions," the Company shall contribute and
allocate on a pay period basis which, when added to Forfeitures available after
application of Section 6.3 is equal to:
(a) 75% of each Participant's Matched Deposits for the pay period
which are not in excess of two percent (2%) of such Participant's
Compensation.
(b) 50% of each Participant's Matched Deposits for the pay period
which are in excess of two percent (2%) of such Participant's
Compensation but not in excess of four percent (4%) of such
Participant's Compensation.
(c) 25% of each Participant's Matched Deposits for the pay period
which are in excess of four percent (4%) of such Participant's
Compensation.
The Board of Directors, acting upon the advice and direction of the
Committee, may authorize and direct that Matching Contributions (expressed as a
percentage of Participants'
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Matched Deposits as set forth above) be changed from time to time from a minimum
of 0% to a maximum of 100%.
5.2 Plan Section 5.6. The provisions of Plan Section 5.6 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.
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:
8.2 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 2.6 of this Appendix:
(a) In the event a deceased Participant is not a resident of
Puerto Rico at the date of his or her death, the Committee, 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 Committee,
in its discretion, may pay the deceased Participant's interest in the
Trust Fund to his or her 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 8.6(a). Notwithstanding the provisions of Plan Section
8.6(a) entitled "Distribution Rules," in the case of a Puerto Rico-based
Participant in no event shall any
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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 8.6(c). Notwithstanding the provisions of Plan Section
8.6(c) entitled "Distribution Rules," Section 8.3 of this Appendix or Plan
Section 8.6(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 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 8.11(c). The provisions of Plan Section 8.11(c)
entitled "Additional Documents" shall be applied by including reference to
"Puerto Rico" in each place "State or Federal" appears.
8.6 Plan Section 8.12. The provisions of Plan Section 8.12 entitled
"Trustee-Trustee Transfers" shall be applied by including a corresponding
reference to "PR-Code Section 1165" in each place "Code Section 401" appears.
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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 Committee 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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