As approved by the Committee on Management
Of the Board of Directors
As of April 1, 1998
As amended as of December 8, 1998
LTI DEFERRED COMPENSATION PLAN
1. Introduction
This LTI Deferred Compensation Plan (the "Plan") provides the
opportunity for participants in the Bausch & Lomb Incorporated
(the "Company") Long Term Incentive Plan (the "LTI Plan") to
defer their awards under the LTI Plan.
2. Effective Date
The effective date of this Plan is April 1, 1998 (the
"Effective Date"). It covers eligible compensation earned
after the Effective Date and deferred hereunder.
3. Eligibility
Commencing on the Effective Date, the Plan is available to all
participants in the LTI Plan who (1) are in the active employ
of the Company on the date they make a deferral election and
(2) are with a select group of management or highly
compensated employees as provided for in Title I of ERISA.
Individuals who are not current participants in the LTI Plan
will become eligible to participate in this Plan upon receipt
of their first grant under the LTI Plan.
4. Amount of Deferral
An eligible employee may become a participant in the Plan by
electing to defer any grant or award under the LTI Plan.
Deferrals must be as to an entire grant, and partial deferrals
of individual grants are not permitted.
5. Time of Deferral Election
a) A participant's election to defer compensation must be made
by written notice to the Plan Administrator on behalf of the
Company before the compensation is earned. Without limiting the
generality of the foregoing, subparagraphs 5(b) and 5(c) and 5(d)
identify particular instances as to when effective elections may
be made.
b) For any grants in the first calendar quarter of 1998 which
have a performance cycle ending before January 1, 1999, deferral
elections may be made at any time after the Effective Date of
this Plan but not later than April 30, 1998.
c) For any person newly eligible to participate in this Plan,
as set forth in paragraph 3 hereof, an initial deferral election
may be made at any time within 30 days of being newly eligible.
d) For any LTI Plan grants with a performance cycle of greater
than one year, deferral elections may be made at any time prior
to the end of the Bausch & Lomb fiscal year next preceding the
final Bausch & Lomb fiscal year of the performance cycle.
6. Deferral Election
a) To defer compensation under the Plan, a participant must
give written notice to the Plan Administrator. This notice must
include (1) identification, by Cycle End Date (as defined in the
LTI Plan), of the grant to be deferred; (2) the payment
commencement date (i.e. retirement or date certain); (3) the
method of payment desired (i.e. annual installments, lump sum)
and, if annual, the number of years of installment payments; and
(4) the designation of payment to the participant's estate or
beneficiary in the event of the participant's death. The Company
will provide notice forms for deferral elections (see Exhibit),
which shall include identification of payment methods and
installments as may be approved in advance by the Plan
Administrator.
b) If a participant names someone other than his or her spouse
as a beneficiary in the event of participant's death, a spousal
consent form must be signed by that participant's spouse and
returned to the Company.
c) For all compensation deferred after the Effective Date of
this Plan, a participant may elect only two payment options, each
consisting of a payment commencement date and a method of
payment.
d) If a participant elects to receive his or her deferred
compensation in installments, the installment payments will be
calculated in the following manner: the participant's account
balance at the payment commencement date will be multiplied by a
fraction, the numerator of which is 1, and the denominator of
which is the number of remaining installment periods.
e) Retirement, for purposes of the Plan, shall mean the date on
which the participant is both (i) at least age 55 and (ii) no
longer employed by the Company.
7. Deferred Compensation Investment Account
a) An investment account will be established for each
participant ("Investment Account") to record all deferrals a
participant makes under this Plan plus all earnings on these
deferrals.
b) All deferrals will be deferred and, subject to subparagraphs
(g) and (h) below, held in shares of Company Stock.
c) Prior to the vesting of any grants, deferred shares will be
held by the Plan as Class B shares of the Company.
d) Upon vesting of any grants, shares previously held as Class
B shares will be converted, on a one-to-one basis, to regular
shares of Company Common stock and invested in a rabbi trust (the
"Trust") established for this purpose.
e) If any grant does not vest, all shares theretofore held by
the Company as Class B stock shall be forfeited and the
participant's Investment Account shall be adjusted to reflect
such forfeiture.
f) Dividends on deferred shares, whether vested or not, will be
paid into the Trust and invested in regular shares of Company
common stock.
g) All investments in Investment Accounts under the Plan are
hypothetical to the participant, regardless of whether or not the
Plan holds Class B or Common shares, or other assets. At the
time of each deferral of an LTI Plan award into the Plan, a
participant will be credited with an imputed number of shares for
the Investment Account. Participants will have no right to vote
these imputed shares. Thereafter, the value of a participant's
Investment Account will fluctuate in accordance with the actual
performance of the Investment Account. Dividends on the imputed
shares also will be credited to the participant's Investment
Account. Distributions and forfeitures will be deducted from the
Investment Account.
h) All vested deferred amounts shall remain invested in Company
Common stock.
8. Payment of Deferred Compensation
a) A participant's right to payment of deferred compensation
under the Plan is a contractual obligation of the Company to the
participant, and his or her right to such monies or assets shall
be an unsecured claim against the general assets of the Company.
However, the Company has established the Trust as an irrevocable
rabbi trust for participants for the purpose of holding, after
vesting of awards, assets used to pay deferred compensation
required to be paid by this Plan. The Company shall make
periodic contributions to the Trust as may be required to fund
amounts payable under the Plan. The Trust provides a participant
with assurance that deferred monies or assets will be paid to the
participant in accordance with the Plan, except in the event of
the Company's bankruptcy or insolvency. Notwithstanding the
establishment of the Trust, the Company remains ultimately
responsible to pay deferred compensation to each participant.
This obligation shall be met from the general assets of the
Company if the Trust has insufficient funds to pay benefits.
b) Payments of deferred compensation to a participant shall be
pursuant to the participant's deferral election notice given
pursuant to Section 6 hereof. Except as provided in Subsections
(c) and (d) below, a participant may not change the payment
commencement date or method of payment for monies or assets
already in his or her Investment Account. However, a participant
may choose a different payment commencement date and/or method of
payout for future deferrals subject to Section 6 above.
c) If, in the discretion of the Plan Administrator, a
participant has a need for funds due to a financial emergency
beyond the control of the participant, a payment may be made to
the participant from the vested funds in his or her account under
the Trust at a date earlier than the payment commencement date
chosen by the participant at the time of deferral. A
distribution based upon financial hardship may not exceed the
amount required to meet the immediate financial need created by
the hardship less the amount reasonably available to the
participant from other sources. Notwithstanding the foregoing, a
participant may not obtain a distribution based on financial
hardship which would create liability of the participant to the
Company under Section 16. As used herein, the term "Section 16"
shall mean Section 16 of the Securities Exchange Act of 1934.
A participant requesting a hardship distribution must supply
the Plan Administrator with a statement indicating the
nature of the need creating the financial hardship, the fact
that all other available resources are insufficient to meet
the need, and any other information that the Plan
Administrator deems necessary to evaluate whether a
financial hardship exists.
d) A participant may make an early withdrawal of vested funds
or assets held in the participant's Account under the Trust at
anytime, subject to the following penalties:
Forfeiture of 10% of the amount of the early withdrawal; and
Suspension of eligibility to make further deferral elections
for a period of five years.
Notwithstanding the foregoing, a participant may not obtain
a distribution under this Subsection which would create
liability of the participant to the Company under Section 16.
e) In the event of a participant's death before he or she has
received all of the deferred compensation payments to which
he or she is entitled, payments will be made, according to
the participant's deferral election pursuant to Section 6
hereof, to the participant's estate or beneficiary either
(a) continuing in the same manner as designated with respect
to payments to the participant while living or (b) in a
single lump sum payment the value of which is determined as
of the date immediately following the participant's death
and paid on the first January 15 or July 15 following such
valuation date (or as soon as reasonably possible
thereafter).
f) All payments made to participants under the Plan shall be
subject to all taxes required to be withheld under applicable
laws and regulations of any governmental authorities.
g) Upon termination of a participant as an employee of the
Company, the first day of February next following the date of
termination will be deemed to be the payment commencement date
for account balances of less than $3,500 (or such higher amount
as may be determined by the Plan Administrator) and such payment
will be made to the participant in a lump sum.
h) Upon a Change of Control (as defined below) notwithstanding
a participant's payment commencement date with respect to any
compensation deferred hereunder or method of payout with respect
to any compensation deferred hereunder, all amounts in a
participant's deferred compensation account (including earnings
credited thereto) shall be due and payable to the participant in
a cash lump sum payment within 15 days following the Change of
Control; provided, however that amounts which shall be due and
payable in accordance with this subparagraph 8(h) shall be paid,
at the election of the participant, in a manner so as not to
create liability of the participant to the Company under Section 16.
i) Notwithstanding any other provisions to the contrary herein,
all amounts invested in Company Common Stock shall be paid
to the participant upon distribution in Company Common Stock
or, at the sole option of the Company, in cash, based upon
the market value of Company Common Stock at the time of
distribution.
j) For purposes of this Plan, Change of Control shall mean:
A) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-
3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired
directly from the Company), (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (i) (C) of this Section 8 are satisfied; or
B) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
C) Approval by the shareholders of the Company of a
reorganization, merger, binding share exchange or consolidation,
in each case, unless, following such reorganization, merger,
binding share exchange or consolidation, (i) more than 60% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, binding share
exchange or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization,
merger, binding share exchange or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no person (excluding the
Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization,
merger, binding share exchange or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger, binding share exchange or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger, binding
share exchange or consolidation or the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (iii)
at least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger,
binding share exchange or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, binding
share exchange or consolidation; or
D) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (1) more than
60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (3) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
9. Administration
The Treasurer of the Company, as the designee of the Committee
on Management of the Board of Directors, shall be the Plan
Administrator and has the authority to control and manage the
operation and administration of the Plan. The Investment
Committee shall be the Investment Committee of Bausch & Lomb
Incorporated.
10. Assignability
No right to receive payments under the Plan is transferable or
assignable by a participant except by will or by the laws of
descent and distribution.
11. Business Days
In the event any date specified falls on a Saturday, Sunday,
or holiday, such date will be deemed to refer to the next
business day thereafter.
12. Amendment
The Plan may at any time or from time to time be amended,
modified, or terminated by the Board of Directors or the
Committee on Management of the Board of Directors of the
Company. No such amendments, modification, or termination
will, without the consent of the participant, adversely affect
the participant's accruals in his or her deferred compensation
account.
BAUSCH & LOMB INCORPORATED
By:______________________________
Date:____________________________