EXHIBIT 10.8
ALLERGAN, INC.
PENSION PLAN
RESTATED
2005
.
.
.
TABLE OF CONTENTS
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ARTICLE I
INTRODUCTION............................................................. 1
1.1 Plan Name.......................................................... 1
1.2 Plan Purpose....................................................... 1
1.3 Effective Date of 2005 Restated Plan............................... 1
1.4 Amendments to Plan................................................. 1
1.5 Plan Qualification................................................. 2
ARTICLE II
DEFINITIONS.............................................................. 3
2.1 Accrued Benefit.................................................... 3
2.2 Active Participant................................................. 3
2.3 Actuarial Equivalent............................................... 3
2.4 Affiliated Company................................................. 3
2.5 Age................................................................ 3
2.6 Annuity Starting Date.............................................. 3
2.7 Average Earnings................................................... 3
2.8 Beneficiary........................................................ 4
2.9 Benefit Year....................................................... 4
2.10 Board of Directors................................................. 4
2.11 Code............................................................... 4
2.12 Committee.......................................................... 4
2.13 Company............................................................ 4
2.14 Earnings........................................................... 4
2.15 Effective Date..................................................... 5
2.16 Eligibility Computation Period..................................... 5
2.17 Eligible Employee.................................................. 6
2.18 Eligible Retirement Plan........................................... 6
2.19 Eligible Rollover Distribution..................................... 7
2.20 Employee........................................................... 7
2.21 Employment Commencement Date....................................... 8
2.22 ERISA.............................................................. 8
2.23 Fund............................................................... 8
2.24 Highly Compensated Employee........................................ 8
2.25 Hour of Service.................................................... 9
2.26 Investment Manager................................................. 9
2.27 Leased Employee.................................................... 9
2.28 Normal Retirement Date............................................. 9
2.29 Participant........................................................ 9
2.30 Period of Severance................................................ 10
2.31 Plan............................................................... 10
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2.32 Plan Administrator................................................. 10
2.33 Plan Year.......................................................... 10
2.34 Primary Social Security Benefit.................................... 10
2.35 Qualified Joint and Survivor Annuity............................... 10
2.36 Reemployment Commencement Date..................................... 11
2.37 Severance.......................................................... 11
2.38 Severance Date..................................................... 11
2.39 Single Life Annuity................................................ 12
2.40 SKB Plan........................................................... 12
2.41 Special Retirement Eligibility Date................................ 12
2.42 Spin-Off Date...................................................... 12
2.43 Sponsor............................................................ 12
2.44 Trust.............................................................. 12
2.45 Trustee............................................................ 12
2.46 Vesting Year....................................................... 12
ARTICLE III
PARTICIPATION............................................................ 14
3.1 Participation for the 2003 Plan Year and thereafter................ 14
3.2 Participation for the 2002 Plan Year............................... 14
3.3 Participation prior to the 2002 Plan Year.......................... 14
ARTICLE IV
ACCRUAL OF BENEFITS...................................................... 15
4.1 Accrued Benefit Formula............................................ 15
4.2 Minimum Accrued Benefit............................................ 15
4.3 Accrued Benefit for Participants with Earningsin excess of
$150,000 prior to January 1, 1994............................... 15
4.4 Accrued Benefit for Participants Participating in the Voluntary
Early Retirement Incentive Program.............................. 16
4.5 Temporary Supplemental Monthly Benefit for Participants
Participating in the Voluntary Early Retirement Incentive
Program......................................................... 17
ARTICLE V
BENEFITS................................................................. 18
5.1 Normal Retirement.................................................. 18
5.2 Postponed Retirement............................................... 18
5.3 Early Retirement................................................... 18
5.4 Termination of Employment.......................................... 20
5.5 Consent to Pension Payments........................................ 21
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5.6 Maximum Pension.................................................... 21
5.7 Defined Benefit Fraction and Defined Contribution Fraction......... 24
5.8 Mandatory Commencement of Benefits................................. 25
5.9 Reemployment....................................................... 26
5.10 Other Disabled Participants........................................ 27
5.11 Nonforfeitable Interest............................................ 27
5.12 Compensation for Maximum Pension................................... 27
ARTICLE VI
FORM OF PENSIONS......................................................... 29
6.1 Unmarried Participants............................................. 29
6.2 Married Participants............................................... 29
6.3 Election of Optional Form of Benefit............................... 29
6.4 Optional Forms of Benefit.......................................... 30
6.5 Cash-Outs.......................................................... 31
ARTICLE VII
PRE-RETIREMENT DEATH BENEFITS............................................ 32
7.1 Eligibility........................................................ 32
7.2 Spousal Benefit.................................................... 32
7.3 Alternative Death Benefit.......................................... 33
7.4 Children's Survivor Benefit........................................ 33
7.5 Waiver of Spousal Benefit.......................................... 34
ARTICLE VIII
CONTRIBUTIONS............................................................ 35
8.1 Company Contributions.............................................. 35
8.2 Source of Benefits................................................. 35
8.3 Irrevocability..................................................... 35
ARTICLE IX
ADMINISTRATION........................................................... 36
9.1 Appointment of Committee........................................... 36
9.2 Appointment of Investment Subcommittee............................. 36
9.3 Transaction of Business............................................ 36
9.4 Voting............................................................. 37
9.5 Responsibility of Committees....................................... 37
9.6 Committee Powers................................................... 37
9.7 Additional Powers of Committee..................................... 38
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9.8 Investment Subcommittee Powers..................................... 39
9.9 Periodic Review of Funding Policy.................................. 40
9.10 Claims Procedures.................................................. 40
9.11 Appeals Procedures................................................. 41
9.12 Limitation on Liability............................................ 42
9.13 Indemnification and Insurance...................................... 42
9.14 Compensation of Committee and Plan Expenses........................ 42
9.15 Resignation........................................................ 42
9.16 Reliance Upon Documents and Opinions............................... 42
9.17 Appointment of Investment Manager.................................. 43
ARTICLE X
AMENDMENT AND ADOPTION OF PLAN........................................... 44
10.1 Right to Amend Plan................................................ 44
10.2 Adoption of Plan by Affiliated Companies........................... 44
ARTICLE XI
TERMINATION AND MERGER................................................... 45
11.1 Right to Terminate Plan............................................ 45
11.2 Merger Restriction................................................. 45
11.3 Effect on Trustee and Committee.................................... 45
11.4 Effect of Reorganization, Transfer of Assets or Change in Control.. 45
11.5 Termination Restrictions........................................... 47
ARTICLE XII
TOP-HEAVY RULES.......................................................... 49
12.1 Applicability...................................................... 49
12.2 Definitions........................................................ 49
12.3 Top-Heavy Status................................................... 50
12.4 Minimum Benefit.................................................... 51
12.5 Maximum Benefit.................................................... 52
12.6 Minimum Vesting Rules.............................................. 53
12.7 Noneligible Employees.............................................. 53
ARTICLE XIII
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS........... 54
13.1 General Restrictions Against Alienation............................ 54
13.2 Qualified Domestic Relations Orders................................ 54
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ARTICLE XIV
MISCELLANEOUS............................................................ 57
14.1 No Right of Employment Hereunder................................... 57
14.2 Effect of Article Headings......................................... 57
14.3 Limitation on Company Liability.................................... 57
14.4 Interpretation..................................................... 57
14.5 Withholding For Taxes.............................................. 57
14.6 California Law Controlling......................................... 57
14.7 Plan and Trust as One Instrument................................... 57
14.8 Invalid Provisions................................................. 57
14.9 Counterparts....................................................... 57
14.10 Forfeitures........................................................ 58
14.11 Facility of Payment................................................ 58
14.12 Lapsed Benefits.................................................... 58
APPENDIX A
APPENDIX B
APPENDIX C
v
ALLERGAN, INC.
PENSION PLAN
ARTICLE I
INTRODUCTION
1.1 Plan Name. This document, made and entered into by Allergan, Inc., a
Delaware corporation ("Allergan") amends and restates in its entirety the
"Allergan, Inc. Pension Plan (Restated 2003)" and shall be known hereafter as
the "Allergan, Inc. Pension Plan (Restated 2005)."
1.2 Plan Purpose. The purpose of the Allergan, Inc. Pension Plan (Restated
2005), hereinafter referred to as the "Plan," is to provide additional
retirement income to Eligible Employees of Allergan, and any Affiliated
Companies that are authorized by the Board of Directors of Allergan to
participate in the Plan for their future economic security. The Plan is fully
funded through Company contributions and the assets of 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.
1.3 Effective Date of 2005 Restated Plan. The Effective Date of this
amended and restated Plan shall be January 1, 2005 unless otherwise specified in
the Plan. The provisions of this Plan document apply generally to Employees who
have completed at least one (1) Hour of Service for Allergan or any Affiliated
Companies on or after January 1, 2005 and the rights and benefits, if any, of
Employees or Participants whose employment with Allergan or any Affiliated
Companies terminated prior to January 1, 2005 shall be determined in accordance
with the provisions of the Plan then in effect unless otherwise provided herein
and subject to any modification provided herein that may affect the payment of
benefits under the Plan.
1.4 Amendments to Plan. The Plan has been amended from time to time since
its Original Effective Date of July 26, 1989 to reflect changes in the Plan's
operations and applicable law including, but not limited to, the following:
(a) This Plan document amends the Plan to eliminate the mandatory
cash-out of Accrued Benefits that do not exceed $5,000 effective March 28,
2005. The Plan document also incorporates the amendments made under the
First and Second Amendments to the Plan (Restated 2003).
(b) During the 2002 Plan Year, under election procedures established
by Allergan, all Employees who are Eligible Employees (as defined in
Section 2.17(b)) on September 30, 2002 shall be provided with the
opportunity to make a one-time irrevocable election to either (i) continue
active participation in the Plan for Plan Years beginning on and after
January 1, 2003 until their participation is terminated under the terms of
the Plan or (ii) cease active participation in the Plan for Plan Years
beginning on and after January 1, 2003 and be eligible to receive an
allocation equal to 5% of compensation under the Allergan, Inc. Savings and
Investment Plan as provided under
and subject to the terms of that plan. Eligible Employees who elect to
cease active participation in the Plan: (i) shall not be credited with
Benefit Years after December 31, 2002 but shall continue to be credited
with Vesting Years as provided under the terms of the Plan and (ii) shall
be entitled to a monthly pension upon completing five (5) Vesting Years or
upon reaching the Special Retirement Eligibility Date and completing one
(1) Vesting Year, the amount of which shall be equal to his or her Accrued
Benefit determined as of December 31, 2002, at such times and in such forms
as permitted under the Plan.
(c) In connection with the distribution of the stock of Advanced
Medical Optics, Inc. ("AMO") by Allergan to its stockholders on June 29,
2002, (i) AMO Employees (as defined in Section 2.20) shall cease to be
eligible to participate in the Plan and shall cease to be credited with
Benefit Years and Vesting Years under the Plan, (ii) AMO Employees shall
have a nonforfeitable interest in their Accrued Benefits notwithstanding
Section 5.11, and (iii) the assets attributable to, and the liabilities
relating to, arising out of, or resulting from the Accrued Benefits of AMO
Employees shall remain with the Pension Plan and shall be payable from the
Plan to AMO Employees at such times and in such forms as permitted under
the Plan.
(d) In connection with the closure of the Allergan, Inc. Medical
Plastics facility in Santa Ana, California ("Medical Plastics"), (i)
Participants whose employment is terminated as a result of the closure of
Medical Plastics, as determined by the payroll records of the Sponsor or
any Affiliated Company shall have a nonforfeitable interest in their
Accrued Benefits notwithstanding Section 5.11 effective as of their
termination dates, and (ii) the Accrued Benefits of such Participants shall
be payable from the Plan to such Participants at such times and in such
forms as permitted under the Plan.
1.5 Plan Qualification. The Plan is an employee benefit plan that is
intended to qualify under Code Section 401(a) as a qualified pension plan so as
to assure that the trust created under the Plan is tax exempt pursuant to Code
Section 501(a). The Plan's last determination letter was issued by the Internal
Revenue Service on March 7, 2003 with respect to the Allergan, Inc. Pension Plan
(Restated 2003) and its compliance with the 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, the Internal Revenue
Service Restructuring and Reform Act of 1998, and the Community Renewal Tax
Relief Act of 2000. It is intended that the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA") provisions of the Plan are to be regarded
as good faith compliance with the requirements of EGTRRA and are to be construed
in accordance with EGTRRA and guidance issued thereunder.
2
ARTICLE II
DEFINITIONS
2.1 Accrued Benefit. "Accrued Benefit" shall mean, for each Participant,
the amount of pension accrued by him or her under Article IV as of the date of
reference. An Accrued Benefit shall only be payable in accordance with Articles
V and VII.
2.2 Active Participant. "Active Participant" shall mean a Participant who
is an Eligible Employee.
2.3 Actuarial Equivalent. "Actuarial Equivalent" shall mean a benefit of
equal actuarial value under the assumptions set forth in Appendix A.
2.4 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 Section 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.
2.5 Age. "Age" shall mean a Participant's age at his or her most recent
birthday.
2.6 Annuity Starting Date. "Annuity Starting Date" shall mean the first day
of the first period for which a Participant's pension is paid as an annuity or
as any other optional form of benefit.
2.7 Average Earnings. "Average Earnings" shall mean, for each Participant,
12 times the monthly average of his or her Earnings for the 60 consecutive
months that yield the highest average. For purposes of this Section, (i)
nonconsecutive months interrupted only by months in which a Participant has no
Earnings shall be treated as consecutive and (ii) unless the Sponsor expressly
determines otherwise, and except as is expressly provided otherwise in the Plan
or in resolutions of the Board of Directors, amounts paid to a Participant by a
domestic Affiliated Company prior to the effective date on which it became an
Affiliated Company (that would have been Earnings if paid by the Company) before
he or she became a Participant shall be treated as Earnings but only to the
extent such Earnings when added to the Earnings actually paid by the Company do
not result in more than 60 consecutive months of Earnings. If a Participant does
not have Earnings for 60 consecutive months, his or her Average Earnings shall
be 12 times the monthly average of his or her Earnings. For periods beginning on
or after April 1, 2000, a partial month of employment shall be taken into
account only if doing so yields a higher monthly average.
3
2.8 Beneficiary. "Beneficiary" or "Beneficiaries" shall mean the person or
persons last designated by the Participant to receive the interest of a deceased
Participant.
2.9 Benefit Year. "Benefit Year" shall mean a credit used to measure a
Participant's service in calculating his or her Accrued Benefit. Each
Participant shall be credited with a number of Benefit Years equal to 1/365th of
(i) the aggregate number of days between his or her 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) and (ii) the aggregate number of days during a Period of
Severance of less than 30 days, but in each case, disregarding any day such
Participant is not an Active Participant and, for periods beginning on or after
January 1, 2003, any day such Participant is on an "Extended Leave of Absence"
as such term is defined in the Allergan, Inc. Welfare Benefits Plan.
2.10 Board of Directors. "Board of Directors" shall mean the Board of
Directors of the Sponsor (or its delegate) as it may from time to time be
constituted.
2.11 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 Earnings. "Earnings" shall mean the following:
(a) Earnings shall include 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), shift differential
and premium, sickness/accident related pay, vacation pay, vacation shift
premium, and bonus amounts paid under the (i) Sales Bonus Program, (ii)
Management Bonus Plan or Executive Bonus Plan, either in cash or in
restricted stock, and (iii) group performance sharing payments, such as the
"Partners for Success."
(b) Earnings shall include amounts of salary reduction elected by the
Employee under a Code Section 401(k) cash or deferred arrangement or a Code
Section 125 cafeteria plan, amounts deferred under the Executive Deferred
Compensation Plan, and amounts paid to an Employee pursuant to a "split pay
arrangement" between the Company and an Affiliated Company.
4
(c) Earnings shall not include 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 Employee 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.
(d) For purposes of this Section and notwithstanding paragraph (a)
above, (i) for periods on or after January 1, 2005, Earnings shall not
include lump sum amounts paid to Employees under the Company's vacation
buy-back policy, (ii) for periods beginning on or after January 1, 2003, if
a Participant is not an Active Participant at any time during the month, he
or she shall be deemed to have no Earnings for that month, (iii) for the
period beginning on April 1, 2001 and ending on December 31, 2002, if a
Participant is an Employee at any time during a month, Earnings for that
month shall be the Earnings actually paid to the Participant during such
month, and (iv) for periods prior to April 1, 2001, if a Participant is not
an Employee for the entire month, he or she shall be deemed to have no
Earnings for that month.
(e) Earnings shall not exceed $200,000, as adjusted for cost-of-living
increases in accordance with Code Section 401(a)(17)(B), for purposes of
determining all benefits provided under the Plan. Any cost-of-living
adjustments in effect for a calendar year shall apply to the Plan Year
beginning with or within such calendar year. For purposes of determining
benefits provided under the Plan in a Plan Year beginning on or after
January 1, 2002, Earnings for any prior Plan Year shall not exceed
$200,000.
2.15 Effective Date. "Effective Date" of this restated Plan shall mean
January 1, 2005 except as provided herein or as otherwise required for the Plan
to continue to maintain its qualified status under Code Section 401(a). The
"Original Effective Date" of the Plan shall mean July 26, 1989.
2.16 Eligibility Computation Period. "Eligibility Computation Period" shall
mean a 365 day period used for determining whether an Employee is eligible to
participate in the Plan.
5
Each Employee shall be credited with (i) the aggregate number of days 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) and (ii) the aggregate
number of days during a Period of Severance of less than twelve months.
2.17 Eligible Employee. "Eligible Employee" shall mean:
(a) For Plan Years beginning on or after January 1, 2003 and subject
to paragraph (d) below, an Eligible Employee is any "Election Eligible
Employee" who makes a one-time irrevocable election under procedures
established by the Sponsor to continue as an Active Participant for Plan
Years beginning on or after January 1, 2003 and who did not incur a
Severance on or after October 1, 2002. An "Election Eligible Employee" is
any Employee who is an Eligible Employee (as defined in paragraph (b)
below) on September 30, 2002. The classification of an Employee as an
Eligible Employee for Plan Years beginning on or after January 1, 2003
shall be determined solely from the records obtained during the election
period established by the Sponsor.
(b) For the 2002 Plan Year only and subject to paragraph (d) below, an
Eligible Employee is any Employee who is employed by the Company but not by
a joint venture in which the Company is a joint venturer and whose
Employment Commencement Date or most recent Reemployment Commencement Date
is prior to October 1, 2002; provided, however, if a former Employee is
rehired on or after October 1, 2002 but prior to January 1, 2003 and would
be an Eligible Employee but for his or her Reemployment Commencement Date,
he or she shall be an Eligible Employee commencing on his or her
Reemployment Commencement Date but shall cease to be an Eligible Employee
as of January 1, 2003. Notwithstanding the foregoing, a Leased Employee or
an Employee of the Company who, as of October 1, 2002, is neither a United
States citizen nor a United States resident shall not be an Eligible
Employee.
(c) For Plan Years beginning prior to January 1, 2002 and subject to
paragraph (d) below, an Eligible Employee is any Employee who is employed
by the Company but not by a joint venture in which the Company is a joint
venturer; provided, however, a Leased Employee or an Employee of the
Company who is neither a United States citizen nor a United States resident
shall not be an Eligible Employee.
(d) Notwithstanding paragraphs (a), (b), and (c) above, (i) an
Employee with respect to whom retirement benefits have been the subject of
good faith collective bargaining shall be an Eligible Employee to the
extent a collective bargaining agreement relating to him or her so provides
and (ii) a temporary employee classified as such by the Sponsor or an
Affiliated Company shall not be an Eligible Employee for Plan Years
beginning prior to January 1, 1996.
2.18 Eligible Retirement Plan. "Eligible Retirement Plan" shall mean (i) an
individual retirement account or annuity described in Code Section 408(a) or
408(b), (ii) a qualified retirement plan described in Code Section 401(a) or
403(a) that accepts Eligible Rollover
6
Distributions, (iii) an annuity contract described in Code Section 403(b) that
accepts Eligible Rollover Distributions, and (iv) an eligible plan described in
Code Section 457(b) which is maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or political subdivision of a
state and which agrees to separately account for amounts transferred into such
plan from this Plan. The definition of Eligible Retirement Plan shall also apply
in the case of an Eligible Rollover Distribution to a surviving spouse, or to a
spouse or former spouse who is an Alternate Payee under a Qualified Domestic
Relations Order (as defined in Article XIII).
2.19 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 or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under
Code Section 401(a)(9);
(c) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and
(d) 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 or
former Employee's spouse or former spouse who is an Alternate Payee under a
Qualified Domestic Relations Order (as defined in Article XIII) with regard to
the interest of the spouse or former spouse.
2.20 Employee. "Employee" shall mean, for purposes of the Plan, any
individual who is employed by the Sponsor or an Affiliated Company, any portion
of whose income is subject to withholding of income tax and/or for whom Social
Security contributions are made by the Sponsor or an Affiliated Company;
provided, however, that such term shall not include:
(a) 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 an
Affiliated Company even if a court or administrative agency determines that
such individual is a common-law employee and not an independent contractor;
7
(b) 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; and
(c) Any individual whose employment is transferred from the Sponsor or
an Affiliated Company to Advanced Medical Optics, Inc. ("AMO") in
connection with the distribution of the stock of AMO by the Sponsor to its
stockholders, effective as of the day following such transfer, hereinafter
referred to as an "AMO Employee." An individual is an AMO Employee if
classified or identified as such in the payroll records of the Sponsor or
an Affiliated Company or in the Employee Matters Agreement entered into
between the Sponsor and AMO.
2.21 Employment Commencement Date. "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. An Employee shall not, for the purpose of
determining his or her Employment Commencement Date, be deemed to have commenced
employment with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company unless the Sponsor expressly determines
otherwise, and except as is expressly provided otherwise in the Plan, in
Appendix C to the Plan, or in resolutions of the Board of Directors.
2.22 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.
2.23 Fund. "Fund" shall mean the assets accumulated for purposes of the
Plan.
2.24 Highly Compensated Employee. "Highly Compensated Employee" shall mean:
(a) An Employee who performed services for the Company 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 are or were Five Percent Owners (as defined in Section
12.2).
(ii) Employees who received Compensation during the preceding
Plan Year from the Company in excess of $80,000 (as adjusted in such
manner as permitted under Code Section 414(q)(1)).
(b) The term "Highly Compensated Employee" includes a Former Highly
Compensated Employee. A Former Highly Compensated Employee is any Employee
who was (i) a Highly Compensated Employee when he or she terminated
employment with the Company or (ii) a Highly Compensated Employee at any
time after attaining age
8
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 (as
defined in Section 12.2).
(c) For the purpose of this Section, the term "Compensation" means
compensation as defined in Code Section 415(c)(3), as set forth in Section
5.12.
(d) For the purpose of this Section, the term "Company" shall mean the
Sponsor and any Affiliated Company.
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.
2.25 Hour of Service. "Hour of Service" shall mean an hour for which an
Employee is paid or entitled to payment for the performance of duties for the
Sponsor and any Affiliated Company.
2.26 Investment Manager. "Investment Manager" shall mean the one or more
Investment Managers, if any, that are appointed pursuant to the provisions of
Section 9.15 and who constitute investment managers under Section 3(38) of
ERISA.
2.27 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.
2.28 Normal Retirement Date. "Normal Retirement Date" shall mean the date a
Participant attains age 65.
2.29 Participant. "Participant" shall mean: (i) an Active Participant, or
(ii) a former Active Participant who is eligible for an immediate or deferred
benefit under Article V.
9
2.30 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.
2.31 Plan. "Plan" shall mean the Allergan, Inc. Pension Plan described
herein and as amended from time to time.
2.32 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.
2.33 Plan Year. "Plan Year" shall mean the calendar year. The Plan Year
shall be the limitation year for purposes of computing limitations on
contributions, benefits and allocations.
2.34 Primary Social Security Benefit. "Primary Social Security Benefit"
shall mean for purposes of determining a Participant's Accrued Benefit:
(a) for an Employee whose Severance occurs on or after the date he or
she attains Age 62, the immediate benefit that is or would have been
payable to him or her at Age 65 or his or her actual retirement, if
earlier, under the Social Security Act (or foreign equivalent) as then in
effect; or
(b) for an Employee whose Severance occurs prior to Age 62, the
benefit that would be payable to him or her at Age 62 under the Social
Security Act (or foreign equivalent) as in effect when he or she incurs a
Severance, without adjustments for cost of living, projected on the
assumption that for each month before Age 60, he or she continues to
receive wages for Social Security purposes equal to one-twelfth of his or
her Earnings for the calendar year preceding the year in which his or her
Severance occurs, and that he or she shall receive no further wages for
Social Security purposes after the later of Age 60 or his or her actual
Severance.
2.35 Qualified Joint and Survivor Annuity. "Qualified Joint and Survivor
Annuity" shall mean the form of pension benefit described in this Section. Under
a Qualified Joint and Survivor Annuity, monthly payments to the Participant
shall begin on the date provided in Article V and continue until the last day of
the month in which the Participant's death occurs. On the first day of the
following month, monthly payments in an amount equal to 50% of the monthly
payment to the Participant which is attributable to his or her Accrued Benefit
shall begin to his or her surviving spouse but only if the spouse was married to
the Participant on the date as of which payments to the Participant began.
Payments to a surviving spouse under a Qualified Joint and Survivor Annuity
shall end on the last day of the month in which the spouse's death occurs. The
anticipated payments under a Qualified Joint and Survivor Annuity shall be the
actuarial equivalent of a pension in the form of a Single Life Annuity in the
amount set forth in Article V.
10
2.36 Reemployment Commencement Date. "Reemployment Commencement Date" shall
mean, in the case of an Employee who incurs a Severance and who is subsequently
reemployed by the Sponsor or an Affiliated Company, the first day following the
Severance on which the Employee is credited with an Hour of Service for the
Sponsor or an Affiliated Company with respect to which he or she is compensated
or entitled to compensation by the Sponsor or an Affiliated Company. 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 the entity became an Affiliated Company unless the
Sponsor shall expressly determine otherwise, and except as is expressly provided
otherwise in the Plan or in resolutions of the Board of Directors.
2.37 Severance. "Severance" shall mean the termination of an Employee's
employment with the Sponsor or an Affiliated Company by reason of such
Employee's death, retirement, resignation or discharge, or otherwise. For
purposes of determining a Participant's Vesting Years and Benefit Years, such
Participant shall not incur a Severance by reason of the following:
(a) absence due to service in the Armed Forces of the United States,
if the Employee makes application to the Company for resumption of work
with the Company, following discharge, within the time specified by then
applicable law or absence due to qualified military service if so required
by Code Section 414(u);
(b) absence resulting from temporary disability on account of illness
or accident;
(c) absence while covered by a long term disability plan maintained by
the Company that is prior to the earlier of (i) a Participant's Normal
Retirement Date (or, if later, such date the Participant is no longer
classified as an Eligible Employee as determined by the payroll records of
the Sponsor or Affiliated Company or (ii) the date his or her pension under
the Plan commences, provided that the Participant has at least five (5)
Vesting Years as of the first date of such absence; or
(d) such other types of absence as the Company may determine by
uniform policy.
2.38 Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred such Severance as determined in accordance with the provisions of
Section 2.37. In the case of any Employee who incurs a Severance as provided
under Section 2.37 and who is entitled to a subsequent payment of compensation
for reasons other than future services (e.g., as back pay for past services
rendered or as payments in the nature of severance pay), the Severance Date of
such Employee shall be as of the effective date of the Severance event (e.g.,
the date of his or her death, effective date of a resignation or discharge,
etc.), and the subsequent payment of the aforementioned type of post-Severance
compensation shall not operate to postpone the timing of the Severance Date for
purposes of the Plan except as provided in Section 2.37.
11
2.39 Single Life Annuity. "Single Life Annuity" shall mean the form of
pension benefit described in this Section. Under a Single Life Annuity, monthly
payments to the Participant shall begin on the date provided in Article V and
continue until the last day of the month in which the Participant's death
occurs.
2.40 SKB Plan. "SKB Plan" shall mean the Retirement Plan for Employees of
SmithKline Beckman Corporation.
2.41 Special Retirement Eligibility Date. "Special Retirement Eligibility
Date" shall mean the date a Participant attains age 62.
2.42 Spin-Off Date. "Spin-Off Date" shall mean on or about July 26, 1989,
SmithKline Beckman Corporation distributed the stock of the Sponsor to its
shareholders, rendering Eligible Employees of the Company ineligible to
participate in the SKB Plan. The liability for the accrued benefits of Eligible
Employees under the SKB Plan and assets sufficient to satisfy applicable legal
requirements were transferred to the Plan in November of 1989. The benefits
which were previously provided by the SKB Plan for former employees of Company
who terminated prior to the Spin-Off Date shall be paid under the Plan.
2.43 Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware corporation,
and any successor corporation or entity.
2.44 Trust. "Trust" or" Trust Fund" shall mean the one or more trusts
created for funding purposes under the Plan.
2.45 Trustee. "Trustee" shall mean the individual or entity acting as a
trustee of the Trust Fund.
2.46 Vesting Year. "Vesting Year" shall mean a credit awarded as follows:
(a) In the case of any Employee who was employed by the Sponsor or an
Affiliated Company at any time prior to the Original Effective Date, for
the period prior to the Original Effective Date, such Employee shall be
credited with that number of Vesting Years under this Plan equal to the
number of Vesting Years (as that term is defined in the SKB Plan) credited
to such Employee under the SKB Plan as of the Original Effective Date.
(b) In the case of any Employee who is employed by the Sponsor or an
Affiliated Company on or after the Original Effective Date, an Employee
shall be credited with a number of Vesting Years equal to 1/365th of (i)
the aggregate number of days 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) and (ii) the aggregate number of days for
any Period of Severance of less than twelve months. Solely for the purpose
of determining an Employee's Vesting Years under this paragraph (b), in the
case of an Employee who is employed by the Sponsor or
12
an Affiliated Company on the Original Effective Date, that date shall be
deemed to be an Employment Commencement Date of the Employee (with Vesting
Years for the period prior to the Original Effective Date determined under
paragraph (a) above).
(c) In the case of any Employee who is employed under Departments 120
through 130 at the Allergan Medical Optics - Lenoir facility, such Employee
shall be credited with a number of Vesting Years equal to 1/365th of (i)
the aggregate number of days 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) and (ii) the aggregate number of days for
any Period of Severance of less than twelve months. Solely for the purpose
of determining an Employee's Vesting Years under this paragraph (c), an
Employee's Employment Commencement Date or Reemployment Commencement Date
shall include dates prior to Allergan Medical Optics - Lenoir facility
becoming an Affiliated Company.
13
ARTICLE III
PARTICIPATION
3.1 Participation for the 2003 Plan Year and thereafter. For Plan Years
beginning on or after January 1, 2003, participation in the Plan shall be
determined as follows:
(a) Each Employee or former Employee who is a Participant in the Plan
as of December 31, 2002 shall continue as a Participant and each
Participant who is an Active Participant in the Plan as of December 31,
2002 shall continue as an Active Participant so long as he or she is an
Eligible Employee (as defined in Section 2.17(a)). Any other Employee shall
not be eligible to become a Participant in the Plan and any Participant who
is not an Active Participant on January 1, 2003 shall not be eligible to
become an Active Participant in the Plan.
(b) If an Active Participant incurs a Severance after January 1, 2003
and is subsequently reemployed, he or she shall not be reinstated as an
Active Participant but shall continue to be credited with Vesting Service
in accordance with Section 2.46 and shall be entitled to a monthly pension
upon completing five (5) Vesting Years or reaching the Special Retirement
Eligibility Date and completing one (1) Vesting Year, the amount of which
shall be equal to his or her Accrued Benefit determined as of his or her
first Severance Date following January 1, 2003, at such times and in such
forms as permitted under Article V.
3.2 Participation for the 2002 Plan Year. For the 2002 Plan Year, each
Employee or former Employee who is a Participant in the Plan as of December 31,
2001 shall continue as a Participant and each Participant who is an Active
Participant in the Plan as of December 31, 2001 shall continue as an Active
Participant so long as he or she is an Eligible Employee (as defined in Section
2.17(b)). Any other Eligible Employee (as defined in Section 2.17(b)) shall
become a Participant in the Plan on the later of: (i) the date the Eligible
Employee completes his or her Eligibility Computation Period, or December 31,
2002, if earlier, or (ii) the date the Employee becomes an Eligible Employee,
and shall continue as an Active Participant so long as he or she is an Eligible
Employee.
3.3 Participation prior to the 2002 Plan Year. For Plan Years prior to
January 1, 2002, each Eligible Employee (as defined in Section 2.17(c)) became a
Participant in the Plan on the later of: (i) the date the Employee completed his
or her Eligibility Computation Period or (ii) the date the Employee became an
Eligible Employee, and continued as an Active Participant so long as he or she
was an Eligible Employee.
14
ARTICLE IV
ACCRUAL OF BENEFITS
4.1 Accrued Benefit Formula. Each Participant shall have an Accrued Benefit
equal to one-twelfth (1/12) of the sum of:
(a) 1.23% of his or her Average Earnings not in excess of Covered
Compensation multiplied by the number of his or her Benefit Years to a
maximum of 35 Benefit Years; plus
(b) 1.73% of his or her Average Earnings in excess of Covered
Compensation multiplied by the number of his or her Benefit Years to a
maximum of 35 Benefit Years; plus
(c) .50% of his or her Average Earnings multiplied by the number of
his or her Benefit Years in excess of 35 Benefit Years.
For purposes of this Section, "Covered Compensation" is the average
(without indexing) of the social security wage bases in effect for each calendar
year during the 35-year period ending with the calendar year in which the
Participant attains (or will attain) the social security retirement age as
defined in Code Section 415(b)(8). In determining a Participant's Covered
Compensation for a Plan Year, it is assumed that the social security wage base
in effect at the beginning of the Plan Year will remain the same for all future
calendar years."
4.2 Minimum Accrued Benefit. Notwithstanding any other provision of the
Plan, under no circumstances shall any Participant's Accrued Benefit under the
Plan be less than the amount of his or her accrued benefit under the SKB Plan as
of the Spin-Off Date under the terms of the SKB Plan in effect as of that date,
including any amendments made to the SKB Plan which are effective on the
Spin-Off Date, notwithstanding the fact that they may have been adopted after
such date.
4.3 Accrued Benefit for Participants with Earnings in excess of $150,000
prior to January 1, 1994. The Accrued Benefit of a "Section 401(a)(17) Employee"
shall be the greater of:
(a) The Section 401(a)(17) Employee's Accrued Benefit determined under
the benefit formula in effect on or after January 1, 1994 taking into
account all Benefit Years of the Section 401(a)(17) Employee; or
(b) the sum of:
(i) the Section 401(a)(17) Employee's Accrued Benefit determined
as of December 31, 1993 frozen in accordance with Section
1.401(a)(4)-13 of the Treasury Regulations; and
15
(ii) the Section 401(a)(17) Employee's Accrued Benefit determined
under the benefit formula applicable for Plan Years beginning on or
after January 1, 1994 taking into account only those Benefit Years of
the Section 401(a)(17) Employee credited on or after January 1, 1994;
or
(c) the sum of:
(i) the Employee's Accrued Benefit determined as of December 31,
1988 under the SKB Plan and frozen in accordance with Section
1.401(a)(4)-13 of the Treasury Regulations; and
(ii) the Section 401(a)(17) Employee's Accrued Benefit determined
under the benefit formula applicable for Plan Years beginning on or
after January 1, 1989 taking into account only those Benefit Years of
the Section 401(a)(17) Employee credited on or after January 1, 1989
and before January 1, 1994; and
(iii) the Section 401(a)(17) Employee's Accrued Benefit
determined under the benefit formula applicable for Plan Years
beginning on or after January 1, 1994 taking into account only those
Benefit Years of the Section 401(a)(17) Employee credited on or after
January 1, 1994.
For purposes of this Section, a "Section 401(a)(17) Employee" means a
Participant whose current Accrued Benefit as of January 1, 1994 is based on
Earnings in excess of $150,000.
4.4 Accrued Benefit for Participants Participating in the Voluntary Early
Retirement Incentive Program ("VERI"). The Accrued Benefit of a "VERI Employee"
shall be determined as follows:
(a) For the purpose of calculating the Accrued Benefit of a VERI
Employee under Section 4.1, a VERI Employee shall be credited with five (5)
Benefit Years in addition to the number of Benefit Years credited under
Section 2.9.
(b) The early retirement reduction factors of Sections 5.3(a) and
5.3(b) shall not apply to reduce the monthly pension derived from the
Accrued Benefit of a VERI Employee.
For purposes of this Section 4.4 and Section 4.5 below, a "VERI Employee"
means a Participant who has elected by August 31, 1998 (or such later date as
approved by the Sponsor but in no event later than September 30, 1998) to
participate in the Voluntary Early Retirement Incentive program offered by the
Sponsor.
16
4.5 Temporary Supplemental Monthly Benefit for Participants Participating
in the Voluntary Early Retirement Incentive Program. In addition to his or her
Accrued Benefit, a VERI Employee shall receive a temporary supplemental monthly
pension determined as follows:
(a) A VERI Employee who is unmarried when his or her monthly pension
payments begin shall receive a temporary supplemental monthly pension
following the month in which his or her retirement occurs and continuing
until the earlier of (i) the month in which the VERI Employee attains age
62 or (ii) the month in which the VERI Employee dies. The amount of the
temporary supplemental monthly pension shall be determined in accordance
with the following Table:
Age at Amount of
December 31, 1998 Supplemental Monthly Pension
- ----------------- ----------------------------
60-61 $500.00
55-59 $400.00
50-54 $300.00
(b) A VERI Employee who is married when his or her monthly pension
payments begin shall receive a temporary supplemental monthly pension
following the month in which his or her retirement occurs and continuing
until the earlier of (i) the month in which the VERI Employee attain age 62
or (ii) the month in which the VERI Employee dies unless the VERI Employee
elects to receive his or her monthly pension in the form of (i) a
contingent beneficiary option, (ii) a guaranteed payment option, or (iii) a
level income option as described in Section 6.4. In such case, if the
married VERI Employee dies before reaching age 62, his or her temporary
supplemental monthly pension shall be paid to his or her spouse, if living,
and shall continue until the month in which the VERI Employee would have
attained age 62. The amount of the temporary supplemental monthly pension
shall be determined in accordance with the Table set forth in subsection
(a) above.
17
ARTICLE V
BENEFITS
5.1 Normal Retirement. If a Participant incurs a Severance on account of
retirement on or between the Special Retirement Eligibility Date and the Normal
Retirement Date, he or she shall be entitled to a monthly pension that begins as
of the first day of the month coincident with or next following his or her
Severance Date which is equal to his or her Accrued Benefit.
5.2 Postponed Retirement. If a Participant incurs a Severance on account of
retirement after attaining the Normal Retirement Date, he or she shall be
entitled to a monthly pension that begins as of the first day of the month
coincident with or next following his or her Severance Date which is equal to
his or her Accrued Benefit determined as of the Normal Retirement Date increased
by the greater of (i) any additional benefit accruals provided under Article IV
after the Normal Retirement Date, or (ii) an actuarial adjustment to take into
account a delay in the payment of the Participant's Accrued Benefit using the
actuarial assumptions set forth in Appendix A for determining actuarial
equivalence. The foregoing provisions of this Section 5.2 shall be interpreted
and applied in accordance with the provisions of Proposed Treasury Regulation
Section 1.411(b)-2(b)(4)(iii) or the corresponding provision of any subsequently
adopted final regulations.
5.3 Early Retirement. A Participant shall be eligible for Early Retirement
as set forth below:
(a) If a Participant who has at least five (5) Vesting Years and whose
age is at least 55 incurs a Severance on account of retirement, he or she
shall be eligible for Early Retirement as set forth in this paragraph (a):
(i) Such Participant shall be entitled to a monthly pension that
begins as of the first day of the month coincident with or next
following his or her Severance Date or, at his or her election, a
monthly pension that begins as of the first day of any subsequent
month not later than the Normal Retirement Date.
(ii) Such Participant's monthly pension shall be equal to his or
her Accrued Benefit but reduced in accordance with the following
Table, with the percentage for a fractional part of a year of age
being prorated on the basis of a number of full months.
% of Normal % of Normal
Pension Pension
Age When Computed Age When Computed
Payments Under Payments Under
Begin Article IV Begin Article IV
- -------- ----------- -------- -----------
61 94 57 70
60 88 56 64
59 82 55 58
58 76
18
(iii) A Participant who is an AMO Employee (as defined in Section
2.20) shall be treated as having not less than five (5) Vesting Years
as of the day following his or her transfer to Advanced Medical
Optics, Inc. for purposes of this paragraph (a).
(b) If a Participant who was a Participant on June 26, 1990, and who
has at least five (5) Vesting Years, and whose age plus Benefit Years sum
to at least 55 incurs a Severance on account of retirement, he or she shall
be eligible for Early Retirement as set forth in this paragraph (b):
(i) Such Participant shall be entitled to a monthly pension that
begins as of the first day of the month coincident with or next
following his or her Severance Date or, at his or her election, a
monthly pension that begins as of the first day of any subsequent
month not later than the Normal Retirement Date.
(ii) Such Participant's monthly pension shall be equal to his or
her Accrued Benefit determined as of June 26, 1990, as set forth under
the formula contained in Appendix B, but reduced in accordance with
the following Table, with the percentage for a fractional part of a
year of age being prorated on the basis of a number of full months.
% of Normal % of Normal
Pension Pension
Age When Computed Age When Computed
Payments Under Payments Under
Begin Article IV Begin Article IV
- -------- ----------- -------- -----------
61 94 48 36
60 88 47 34
59 82 46 32
58 76 45 30
57 70 44 28
56 64 43 27
55 58 42 26
54 52 41 25
53 46 40 24
52 44 39 23
51 42 38 22
50 40 37 21
49 38
Provided, that the above percentages shall be increased by 1% to
a maximum of 10% for each of the Participant's Benefit Years in excess
of 20, with the percentage for a fractional part of a Benefit Year
being prorated on the basis of the number of full months. In no event,
however, shall a percentage be increased above 100%.
19
(iii) Notwithstanding subparagraph (ii) above, (1) if the
Participant is age 55 or older when payments begin, the Participant
shall receive a total monthly pension which is the greater of the
amount determined under paragraph (a)(ii) or paragraph (b)(ii) above,
and (2) if the Participant is less than age 55 when benefit payments
begin, the Participant shall receive a monthly pension which is
determined under paragraph (b)(ii) plus an additional monthly pension
commencing at age 55 which is actuarially equivalent to the excess, if
any, of the actuarial equivalent value of the monthly pension under
paragraph (a)(ii) determined at age 55 over the actuarial equivalent
value of the monthly pension under paragraph (b)(ii) determined at age
55.
(c) A Participant who has elected by August 31, 1998 (or such later
date as approved by the Sponsor but in no event later than September 30,
1998) to participate in the Voluntary Early Retirement Incentive program
offered by the Sponsor shall be entitled to a monthly pension that begins
as of the first day of the month coincident with or next following his or
her Severance Date or, at his or her election, a monthly pension that
begins as of the first day of any subsequent month not later than the
Normal Retirement Date.
(d) If a Participant incurs a Severance and retires under this
Section, and his or her monthly pension begins after the first day of the
month coincident with or next following the Special Retirement Eligibility
Date, such Participant shall be entitled to the monthly pension payments he
or she would have received had his or her pension began as of the first day
of the month following the Special Retirement Eligibility Date.
5.4 Termination of Employment.
(a) If a Participant who has at least five (5) Vesting Years incurs a
Severance for any reason other than death and is not eligible to retire
under Section 5.3, he or she shall be entitled to a monthly pension that
begins on the first day of the month coincident with or next following the
date he or she attains age 55, or at his or her election, a monthly pension
that begins as of the first day of any subsequent month not later than the
Normal Retirement Date. In the event a Participant elects that his or her
monthly pension begin prior to the Special Retirement Eligibility Date, the
amount of his or her monthly pension shall be determined as provided in
Section 5.3(a).
(b) If a Participant who has at least five (5) Vesting Years incurs a
Severance for any reason other than death and is not eligible to retire
under Section 5.3 but was a Participant on June 26, 1990, he or she shall
be entitled to a monthly pension that begins on the first day of the month
coincident with or next following the date his or her Age and Benefit Years
total 55 years, or at his or her election, a monthly pension that begins as
of the first day of any subsequent month not later than the Normal
Retirement Date. In the event a Participant elects that his or her monthly
pension begin prior to the Special Retirement Eligibility Date, the amount
of his or her monthly pension shall be determined as provided in Section
5.3(b).
20
(c) If a Participant incurs a Severance and is entitled to a monthly
pension under this Section, and his or her monthly pension begins after the
first day of the month coincident with or next following the Special
Retirement Eligibility Date, such Participant shall be entitled to the
monthly pension payments he or she would have received had his or her
pension began as of the first day of the month following the Special
Retirement Eligibility Date.
5.5 Consent to Pension Payments. If the lump sum Actuarial Equivalent of a
Participant's pension exceeds $5,000, the Participant and, if applicable, the
Participant's spouse must consent to the payment or commencement of the
Participant's pension prior to the Normal Retirement Date in accordance with the
following rules:
(a) The consent of the Participant shall be obtained in writing within
the 90-day period ending on the Annuity Starting Date. No such consent
shall be effective with respect to a married Participant unless the
Participant's spouse consents thereto in writing. Spousal consent shall not
be required if a married Participant elects a joint and survivor option
providing for payment of at least 50% of his or her annuity to his or her
surviving spouse or the Sponsor determines there is no spouse or the spouse
cannot be located. Neither the consent of the Participant nor the
Participant's spouse shall be required to the extent the payment or
commencement of the Participant's pension is required to begin under
Section 5.8.
(b) Each Participant shall receive in written nontechnical language a
notice which shall include a general description of the material features,
and an explanation of the relative values of, the available optional forms
of benefit. Such notice shall be furnished to the Participant no less than
30 days and no more than 90 days prior to the Participant's Annuity
Starting Date; provided, however, the Participant's pension may be paid or
commence less than 30 days after such notice is furnished if the notice
clearly informs the Participant that he or she has at least 30 days after
receiving the notice to consider the decision of whether or not to elect
the commencement of his or her pension (and, if applicable, an optional
form of benefit), and the Participant, after receiving the notice,
affirmatively elects to commence his or her pension.
5.6 Maximum Pension. The largest aggregate annual pension that may be paid
to any Participant in any Plan Year under the Plan shall be determined as
follows:
(a) Subject to paragraphs (b) through (d), the largest aggregate
annual pension that may be paid to any Participant in any Plan Year, when
added to the pension under any other qualified defined benefit plan
maintained by the Sponsor or any Affiliated Company, shall not exceed the
lesser of:
(i) The Defined Benefit Dollar Limitation of $160,000 ($90,000
for Plan Years prior to the 2002 Limitation Year), multiplied by a
fraction the numerator of which is the number of the Participant's
years of participation (or a part thereof) in the Plan or, up to the
Spin-Off Date in the SKB Plan or in the Beckman Instruments, Inc.
Pension Plan, not in excess of ten, and the denominator of which is
ten; or
21
(ii) The Defined Benefit Compensation Limitation of 100% of the
Participant's average annual total cash remuneration from the Company
in the thirty-six consecutive months which yield the highest average,
multiplied by a fraction the numerator of which is the number of the
Participant's Vesting Years (or a part thereof) not in excess of ten
and the denominator of which is ten.
Benefit increases resulting from the increase in the Defined Benefit
Dollar Limitation and the Defined Benefit Compensation Limitation under the
Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to
all Employees participating in the Plan who have one (1) Hour of Service on
or after January 1, 2002.
(b) The limitations set forth in this Section 5.6 shall be determined
as provided below:
(i) The Defined Benefit Dollar Limitation shall automatically be
adjusted annually for increases in the cost of living as provided in
Code Section 415(d). The adjusted limitation shall be effective as of
January 1st of each calendar year and shall be applicable to
Limitation Years ending with or within that calendar year. Such new
limitation is incorporated herein by this reference and shall be
substituted for the Defined Benefit Dollar Limitation set forth in
paragraph (a) above.
(ii) "Cash remuneration" shall mean "compensation" as defined in
Section 5.12.
(iii) For purposes of this Section, a Participant's pension shall
be measured as a Single Life Annuity or Qualified Joint and Survivor
Annuity. A pension benefit shall be treated as a Qualified Joint and
Survivor Annuity if it meets all of the requirements as defined in
Section 2.35 except that the periodic payments to the spouse may be
equal to or greater than 50%, but not more than 100%, of those to the
Participant.
(iv) A benefit payable in a form other than a Single Life Annuity
or Qualified Joint and Survivor Annuity described in subparagraph
(iii) above shall be adjusted to the Actuarial Equivalent of a
Straight Life Annuity before applying the limitations of this Section.
Effective for Limitation Years commencing on or after January 1, 1995,
Actuarial Equivalent for the form of benefit shall be determined using
(1) the interest rate and mortality table specified in Appendix A or
(2) 5% interest (or for lump sums or other benefits subject to Code
Section 417(e)(3), the applicable interest rate under Code Section
415(b)(2)(E)(ii) as determined as provided in Appendix A) and the
applicable mortality table under Code Section 415(b)(2)(E)(v),
whichever produces the greater Actuarial Equivalent value.
(v) In addition to other limitations set forth in the Plan and
notwithstanding any other provisions of the Plan, the accrued benefit,
including the right to any optional benefits provided in the Plan (and
all other defined benefit plans required to be aggregated with this
Plan under the provisions of
22
Code Section 415) shall not increase to an amount in excess of the
amount permitted under Code Section 415 at any time.
(c) For Limitation Years beginning on or after January 1, 2002, the
Defined Benefit Dollar Limitation for any Participant shall be adjusted as
follows:
(i) If a Participant's pension begins prior to age 62, the
Defined Benefit Dollar Limitation applicable to the Participant at
such earlier age is an annual benefit payable in the form of a
straight life annuity beginning at the earlier age that is the
actuarial equivalent of the Defined Benefit Dollar Limitation
applicable to the Participant at age 62 (as adjusted under paragraph
(a) above, if required). The Defined Benefit Dollar Limitation
applicable at an age prior to age 62 is determined as the lesser of
(1) the Actuarial Equivalent (at such age) of the Defined Benefit
Dollar Limitation computed using the factors specified in Section 5.3
or (2) the actuarial equivalent (at such age) of the Defined Benefit
Dollar Limitation computed using a 5 percent interest rate and the
applicable mortality table specified in Appendix A to the Plan. Any
decrease in the Defined Benefit Dollar Limitation determined in
accordance with this paragraph (c) shall not reflect a mortality
decrement if benefits are not forfeited upon the death of the
Participant. If any benefits are forfeited upon death, the full
mortality decrement is taken into account.
(ii) If a Participant's pension begins after age 65, the Defined
Benefit Dollar Limitation applicable to the Participant at such later
age is the annual benefit payable in the form of a straight life
annuity beginning at the later age that is actuarially equivalent to
the defined benefit dollar limitation applicable to the Participant at
age 65 (as adjusted under paragraph (a) above, if required). The
actuarial equivalent of the Defined Benefit Dollar Limitation
applicable at an age after age 65 is determined as (1) the lesser of
the Actuarial Equivalent (at such age) of the Defined Benefit Dollar
Limitation computed using the interest rate and mortality table
specified in Appendix A to the Plan or (2) the actuarial equivalent
(at such age) of the Defined Benefit Dollar Limitation computed using
a 5 percent interest rate assumption and the applicable mortality
table specified in Appendix A to the Plan. For these purposes,
mortality between age 65 and the age at which benefits commence shall
be ignored.
(d) For Limitation Years beginning prior to January 1, 2002, the
Defined Benefit Dollar Limitation for any Participant shall be adjusted if
a Participant's pension begins before or after he or she attains his or her
Social Security Retirement Age. In such case, the Defined Benefit Dollar
Limitation shall be adjusted to its Actuarial Equivalent beginning at the
Participant's Social Security Retirement Age; except that if his or her
pension begins before he or she attains his or her Social Security
Retirement Age, but after he or she attains age 62, the Defined Benefit
Dollar Limitation shall be reduced by 5/9 of 1% for each of the first 36
months and 5/12 of 1% for each additional month by which the Participant's
benefit commencement date precedes his or her Social Security Retirement
Age. The Defined Benefit Dollar Limitation applicable at an age prior to
age 62 is determined as the lesser of (1) the Actuarial Equivalent (at such
age) of the Defined Benefit Dollar Limitation computed using the factors
specified in Section 5.3 or (2) the actuarial equivalent (at such age) of
the Defined Benefit Dollar Limitation
23
computed using a 5 percent interest rate and the applicable mortality table
specified in Appendix A to the Plan. The interest rate used to determine
the Actuarial Equivalent shall be the rate stated in the Plan, but shall be
5% if the pension begins after the Social Security Retirement Age. For
purposes of this Section and Section 5.7, "Social Security Retirement Age"
means (i) for any Participant born before January 1, 1938, Age 65, (ii) for
any Participant born after December 31, 1937 but before January 1, 1955,
Age 66, or (iii) for any other Participant, Age 67. A Participant's pension
shall be measured as a Single Life Annuity beginning at his or her Social
Security Retirement Age.
5.7 Defined Benefit Fraction and Defined Contribution Fraction. For Plan
Years beginning prior to the 2000 Plan Year, the largest aggregate annual
pension that may be paid to any Participant in any Plan Year under the Plan
shall not, when added to the pension under any other qualified defined benefit
plan maintained by the Sponsor or any Affiliated Company, exceed the lesser of
the dollar limitation described in Section 5.6 or the amount that would cause
the sum of a Participant's Defined Benefit Fraction and Defined Contribution
Fraction for the Plan Year in which the Participant's Severance occurs to equal
1.0. To the extent the sum of a Participant's Defined Benefit Fraction and
Defined Contribution Fraction exceeds 1.0, adjustments shall be made first by
reducing the Participant's benefit under any defined benefit plan maintained by
the Sponsor or an Affiliated Company.
(a) A Participant's Defined Benefit Fraction for a given Plan Year is
a fraction, the numerator of which is his or her projected annual benefit
for the Plan Year and the denominator of which is the lesser of (i) 1.25
multiplied by $90,000, adjusted to reflect commencement before or after
Social Security Retirement Age, or (ii) 1.4 multiplied by 100% of his or
her average annual total cash remuneration from the Sponsor or any
Affiliated Company in the thirty-six consecutive months which yield the
highest average.
(b) A Participant's Defined Contribution Fraction for a given Plan
Year is a fraction, the numerator of which is the sum of his or her annual
additions for all calendar years and the denominator of which is the sum of
his or her maximum aggregate amounts for all calendar years in which he or
she is an Employee. A Participant's maximum aggregate amounts for any Plan
Year shall equal the lesser of 1.25 multiplied by the dollar limitation for
such Plan Year or 1.4 multiplied by the percentage limitation for such Plan
Year.
(c) The annual addition to a Participant's account for any year is the
sum, determined with respect to all defined contribution plans maintained
by the Sponsor or an Affiliated Company (including any voluntary
contributions feature of any defined benefit plan thereof), of:
(i) Company contributions and forfeitures allocated to the
Participant's account;
24
(ii) For Plan Years beginning after December 31, 1986, the amount
of the Participant's contributions; for Plan Years beginning before
January 1, 1987, the lesser of:
(A) 50% of his or her contributions; or
(B) For each calendar year after 1975 the amount by which
the Participant's contributions exceed 6% of his or her cash
remuneration; for each calendar year before 1976 during which he
or she was a Participant, the excess of the aggregate amount of
his or her contributions for all such years over 10% of his or
her aggregate cash remuneration from the Sponsor or an Affiliated
Company for all such years, multiplied by a fraction the
numerator of which is one and the denominator of which is the
number of such years.
(iii) Amounts allocated after March 31, 1984 to an individual
medical account (as defined in Code Section 415(l)(2)) that is part of
a pension or annuity plan maintained by the Sponsor or an Affiliated
Company;
(iv) Amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, that are
attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit fund (as defined in Code Section
419(e)) maintained by the Sponsor or an Affiliated Company; and
(v) allocations under a simplified employee pension.
5.8 Mandatory Commencement of Benefits.
(a) A Participant's pension shall begin no later than sixty days after
the close of the Plan Year in which falls the later of his or her
attainment of the Normal Retirement Date or the date he or she incurs a
Severance.
(b) In the case of an Active Participant, payment shall begin no later
than an Active Participant's required beginning date determined under the
rules of subparagraphs (i) or (ii) below:
(i) Active Participants attaining age 70-1/2 prior to 1999: The
required beginning date of an Active 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 Active Participant attains age 70-1/2;
provided, however, that an Active Participant, other than an Active
Participant who is a Five Percent Owner (as defined in Section 12.2),
who attains age 70-1/2 in 1996, 1997, or 1998 may elect to defer the
required beginning date until the first day of the month coincident
with or next following his or her Severance Date.
(ii) Active Participants attaining age 70-1/2 after 1998: The
required beginning date of an Active Participant who attains age
70-1/2 after 1998 shall be the first day of the month coincident with
or next following his or her Severance
25
Date; provided, however, if such Active Participant is a Five Percent
Owner (as defined in Section 12.2) 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 Active Participant
attains age 70-1/2.
5.9 Reemployment. If a Participant who is receiving benefits again becomes
an Employee, his or her pension shall be subject to the following rules:
(a) A Participant's pension shall not be suspended if he or she is
subsequently reemployed on or after October 1, 2002.
(b) A Participant's pension shall be suspended if he or she was
subsequently reemployed as an Eligible Employee prior to October 1, 2002 as
follows:
(i) The Participant's pension shall be suspended and recomputed
upon his or her Severance Date if he or she has not reached the Normal
Retirement Date.
(ii) The Participant's pension shall be suspended for each
calendar month or for each four or five week payroll period ending in
a calendar month during which the Participant either completes 40 or
more Hours of Service (counting each day of employment in a position
designated by the Company as full time as five (5) Hours of Service),
or receives payment for any such Hours of Service performed on each of
eight or more days or separate work shifts in such month or payroll
period if the Participant has reached the Normal Retirement Date. No
adjustment to the Participant's pension shall be made on account of
such non-payment. No payment shall be withheld pursuant to this
subparagraph (ii) until the Participant is notified by personal
delivery or first class mail during the first calendar month or
payroll period in which payments are suspended that his benefits are
suspended. Such notification shall contain a description of the
specific reasons why benefit payments are being suspended, a general
description of the Plan provisions relating to the suspension of
payments, a copy of such provisions, and a statement to the effect
that applicable Department of Labor regulations may be found in
Section 2530.203-3 of the Code of Federal Regulations. In addition,
the suspension notification shall inform the Participant of the Plan's
procedures for affording a review of the suspension of benefits.
(iii) A Participant described in subparagraphs (i) or (ii) above,
shall be eligible to receive credit for additional Benefit Years for
any period of reemployment (as an Eligible Employee). The pension of
such Participant shall be reduced by the Actuarial Equivalent of any
payment received by the Participant under the Plan prior to his or her
attainment of the Special Retirement Eligibility Date, or, if earlier,
the first day on which he or she would have been
26
entitled to 100% of his or her Accrued Benefit under Section 5.3(b)
(if on his or her prior Severance Date he or she had deferred his or
her benefit until that date).
5.10 Other Disabled Participants. A former Active Participant who is
covered under a long term disability plan maintained by the Company, who has at
least five (5) Vesting Years, and who becomes eligible for benefits under such
plan, shall be eligible to accrue Benefit Years pursuant to this Section for the
duration of his or her disability until the earlier of (i) the later of his or
her Normal Retirement Date or Severance Date or (ii) the date he or she
commences to receive a pension under the Plan. The following rules shall apply
to benefit accruals under this Section:
(a) The Employee's Average Earnings during his or her disability shall
be deemed to be his or her Average Earnings calculated at the time his or
her disability commenced.
(b) The Employee's Primary Social Security Benefit shall be as defined
in Article II and the Employee's Covered Compensation as defined in Section
4.1 shall be determined as of the year for which he or she is credited with
his or her final Benefit Year.
(c) In addition, a former Active Participant described in this Section
shall be treated as an Employee for purposes of the survivor income
benefits described in Section 7.1 while he or she is eligible to accrue
Benefit Years pursuant to this Section.
5.11 Nonforfeitable Interest. Notwithstanding any other provision in the
Plan to the contrary, a Participant shall have a nonforfeitable interest in his
or her Accrued Benefit upon reaching the Normal Retirement Date, or if earlier,
upon being credited with five (5) or more Vesting Years. In addition, a
Participant shall have a nonforfeitable interest in his or her Accrued Benefit
upon reaching the Special Retirement Eligibility Date or if later, upon being
credited with one (1) Vesting Year.
5.12 Compensation for Maximum Pension. For purposes of Sections 5.6 and
5.7, 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), any amount which is contributed or deferred by the
Company at the election of the Employee that is excludable from an
Employee's gross income under
27
Code Sections 125 or 457 and, for Plan Years beginning on or after January
1, 1998, any elective amount that is excludable from an Employee's gross
income under Code Section 132(f)(4).
(c) Compensation shall not include (i) any employer contributions to a
plan of deferred compensation which are not included in the Employee's
gross income for the taxable year in which contributed, (ii) any
distributions from a plan of deferred compensation, (iii) any amounts
realized from the exercise of a non-qualified stock option or when
restricted stock or property held by the Employee becomes either freely
transferable or is no longer subject to a substantial risk of forfeiture
under Code Section 83 if such option, stock, or property was granted to the
Employee by the Company, (iv) any amounts realized from the sale, exchange,
or other disposition of stock acquired under a qualified stock option, (v)
any contribution for medical benefits (within the meaning of Code Section
419(f)(2) after termination of employment which is otherwise treated as an
annual addition, and (vi) any amount otherwise treated as an annual
addition under Code Section 415(l)(1).
(d) Notwithstanding anything in the Plan to the contrary, Compensation
shall be determined in accordance with Code Section 415(c)(3) as in effect
for Plan Years beginning prior to January 1, 1998 where required by
applicable law.
28
ARTICLE VI
FORM OF PENSIONS
6.1 Unmarried Participants. The pension of a Participant who is unmarried
when payments begin shall be paid as a Single Life Annuity unless he or she
elects an optional form of benefit under Section 6.3 or receives a lump sum
distribution under Section 6.5.
6.2 Married Participants. The pension of a Participant who is married when
payments begin shall be paid as a Qualified Joint and Survivor Annuity, unless
he or she elects an optional form of benefit under Section 6.3 or receives a
lump sum distribution under Section 6.5.
6.3 Election of Optional Form of Benefit. A Participant may waive the
Single Life Annuity or, in the case of a married Participant, the Qualified
Joint and Survivor Annuity and elect any optional form of benefit described in
Section 6.4 in accordance with the following rules:
(a) The election shall be made in writing in a manner prescribed by
the Committee on a form that clearly states that the Participant is
electing to receive his or her pension other than as a Single Life Annuity
or, in the case of a married Participant, his or her pension other than as
a Qualified Joint and Survivor Annuity. No such election shall be effective
with respect to a married Participant unless: (i) the Participant's spouse
consents in writing to the election; (ii) such election designates the form
of benefit and a specific beneficiary; (iii) the consent acknowledges the
effect of the election; and (iv) the consent is witnessed by a notary
public or by a Plan representative. Notwithstanding the foregoing, an
election without spousal consent shall be effective if a married
Participant elects a joint and survivor option providing for payment of at
least 50% of his or her annuity to his or her surviving spouse, the Sponsor
determines there is no spouse, or the spouse cannot be located.
(b) The election may be made or revoked at any time during an election
period established by the Committee. Such election period shall begin when
the information described in paragraph (d) is furnished to the Participant
and, subject to paragraphs (c) through (e), shall end, with no opportunity
for a further election, on the Participant's Annuity Starting Date. For
purposes of Article VII (pertaining to pre-retirement death benefits), if
an optional form of benefit is elected in accordance with this Section 6.3
within the 90 day period ending on the Participant's date of death, the
Participant's pension shall be deemed to have commenced even if the
Participant dies prior to the Annuity Starting Date.
(c) Subject to paragraphs (d) and (e), in the case of a Participant
who retires after attaining age 55, the election period described in
paragraph (b) shall end on the date of the Participant's Severance, or on
such later date as the Committee shall fix, but an election made during the
election period may be revoked at any time before the later of the end of
the election period or the Participant's Annuity Starting Date.
29
(d) Each Participant shall receive a written explanation of a Single
Life Annuity or, in the case of a married Participant, a Qualified Joint
and Survivor Annuity which shall include: (i) the terms and conditions of
such annuity form of benefit; (ii) the Participant's right to make and the
effect of waiving such annuity form of benefit; (iii) the rights of a
spouse; (iv) the right to make, and the effect of, a revocation of a
previous election to waive such annuity form of benefit; and (v) the
relative values of the optional forms of benefit available under the Plan.
Such explanation shall be furnished to the Participant no less than 30 days
and no more than 90 days prior to the Participant's Annuity Starting Date
except as provided in paragraph (e).
(e) The written explanation described in paragraph (d) may be
furnished to the Participant less than 30 days prior to the Participant's
Annuity Starting Date; provided, that, the written explanation: (i) clearly
indicates that the Participant has at least 30 days to consider whether to
waive the Single Life Annuity or, in the case of a married Participant, the
Qualified Joint and Survivor Annuity and to elect with spousal consent, if
applicable, an optional form of benefit; (ii) the Participant is permitted
to revoke any affirmative distribution election at least until the Annuity
Starting Date or, if later, at any time prior to the expiration of the
7-day period that begins the day after the written explanation is provided
to the Participant; and (iii) the Annuity Starting Date is a date after the
date that the written explanation was provided to the Participant.
Notwithstanding the foregoing, the Annuity Starting Date may be a date
prior to the date the written explanation is provided to the Participant;
provided, that, the Participant's pension is not paid or does not commence
until at least 30 days after such written explanation is furnished, subject
to the waiver of the 30-day period as provided in the foregoing sentence.
6.4 Optional Forms of Benefit. Subject to the provisions of Sections 6.3
and 6.5, a Participant may elect to receive the Actuarial Equivalent of his or
her pension in another form. The specific options shall be (i) a Single Life
Annuity which pays a benefit for the Participant's lifetime; (ii) a contingent
beneficiary option which pays a reduced benefit for the Participant's lifetime,
then continues 100%, 66 2/3%, or 50% of the reduced benefit for the lifetime of
one designated beneficiary; (iii) a guaranteed payment option which pays a
reduced benefit for the longer of the Participant's lifetime or a specified
number of months (60, 120, 180, or 240) with payments made to the Participant
and any remaining guaranteed payments on the Participant's death to a designated
beneficiary or beneficiaries (as more fully described in Appendix B); or (iv) a
level income option (as more fully described in Appendix B) which pays an
increased benefit to a Participant (if payments begin between the ages of 55 and
62) until age 62, and a reduced benefit beginning at age 62. Under each such
option the Actuarial Equivalent of the anticipated payments to the Participant
shall be greater than that of those to his or her beneficiary, except that if
the beneficiary is the Participant's spouse, the option may provide for a joint
and survivor annuity under which the periodic payments to the spouse are no
greater than those to the Participant.
30
6.5 Cash-Outs.
(a) Notwithstanding anything in this Article to the contrary, if the
lump sum Actuarial Equivalent of a Participant's nonforfeitable Accrued
Benefit does not exceed or has never exceeded $5,000, the Participant, or
the Participant's beneficiary in the event of the Participant's death, may
only elect (i) to be paid the lump sum Actuarial Equivalent, or (ii) to
have the lump sum Actuarial Equivalent paid directly by the Trustee to the
trustee of an Eligible Retirement Plan.
(b) If the lump sum Actuarial Equivalent of a Participant's
nonforfeitable Accrued Benefit exceeds $5,000 but does not exceed $10,000,
the Participant, or the Participant's beneficiary in the event of the
Participant's death, may elect (i) to be paid the lump sum Actuarial
Equivalent, or (ii) to have the lump sum Actuarial Equivalent paid directly
by the Trustee to the trustee of an Eligible Retirement Plan. No
distribution may be elected under this paragraph (b) unless the Participant
has attained at least age 55 with five (5) or more Vesting Years. For
purposes of this paragraph (b), a Participant who is an AMO Employee (as
defined in Section 2.20) shall be treated as having not less than five (5)
Vesting Years as of the day following his or her transfer to Advanced
Medical Optics, Inc. In addition, the election may not be made after
pension payments start, except that a Participant or a Participant's
beneficiary whose payments started prior to September 1, 1993, and whose
lump sum Actuarial Equivalent did not exceed $10,000 at the date payments
started, may elect to be paid the remaining lump sum Actuarial Equivalent.
A married Participant who elects a lump sum under this paragraph (b) must
comply with the applicable requirements for spousal consent.
(c) A Participant who has no nonforfeitable Accrued Benefit in the
Plan at the time of his or her Severance shall be deemed to have been
cashed out with a zero cash benefit upon such Severance Date.
31
ARTICLE VII
PRE-RETIREMENT DEATH BENEFITS
7.1 Eligibility. A death benefit shall be payable under Section 7.2 with
respect to a Participant if, on the date of his or her death:
(a) he or she is an Employee who has met the requirements for normal
or early retirement under Sections 5.1 or 5.3;
(b) he or she is an Employee not described in paragraph (a), above,
who has a nonforfeitable interest in his or her Accrued Benefit; or
(c) he or she is a former Employee who has a nonforfeitable interest
in his or her Accrued Benefit and whose pension has not yet commenced to be
paid.
7.2 Spousal Benefit. Upon the death of a Participant described in Section
7.1, the Participant's surviving spouse, if living on the date set forth in this
Section, shall receive a pension or a lump sum distribution, if applicable under
Section 6.5, in accordance with the following rules:
(a) If the Participant is an Employee who has met the requirements for
normal or early retirement under Sections 5.1 or 5.3, the pension to the
surviving spouse shall begin as of the first day of the month following the
Participant's date of death, shall end on the last day of the month in
which the spouse's death occurs, and shall be in a monthly amount equal to
the amount the spouse would have received if the Participant had retired on
the date of his or her death and had elected an immediate pension in the
form of a Qualified Joint and Survivor Annuity beginning on the first day
of the month following the day of his or her death with the spouse as joint
annuitant.
(b) If the Participant is an Employee who has not met the requirements
for normal or early retirement under Sections 5.1 or 5.3 but at the time of
death has a nonforfeitable interest in his or her Accrued Benefit, the
pension to the surviving spouse shall begin on the first day of the month
following the month in which the Participant would have first met the
requirements for early retirement, shall end on the last day of the month
in which the spouse's death occurs, and shall be in a monthly amount equal
to the amount the spouse would have received if (i) the Participant's
Severance had occurred on the date of his or her death, (ii) the
Participant had survived to meet the requirements for early retirement,
(iii) the Participant had elected an immediate pension in the form of a
Qualified Joint and Survivor Annuity beginning on the first day of the
month coincident with or next following his or her attainment of the
earliest retirement age with the spouse as joint annuitant, and (iv) the
Participant had died the day after the date his or her pension commenced.
(c) If the Participant is a former Employee who retired under Section
5.1, the pension to the surviving spouse shall begin as of the first day of
the month coincident with or next following the Participant's date of
death, shall end on the last day of the
32
month in which the spouse's death occurs, and shall be in a monthly amount
equal to the amount the spouse would have received if the Participant had
elected an immediate pension in the form of a Qualified Joint and Survivor
Annuity beginning on the first day of the month coincident with or next
following the date of his or her death with the spouse as joint annuitant.
(d) If the Participant is a former Employee who retired under Section
5.3, the pension to the surviving spouse shall begin as of the first day of
the month coincident with or next following the Participant's date of
death, shall end on the last day of the month in which the spouse's death
occurs, and shall be in a monthly amount equal to the amount the spouse
would have received if the Participant had elected an immediate pension in
the form of a Qualified Joint and Survivor Annuity beginning on the first
day of the month coincident with or next following the date of his or her
death with the spouse as joint annuitant.
(e) If the Participant is a former Employee who did not meet the
requirements for normal or early retirement under Sections 5.1 or 5.3 but
has a nonforfeitable interest in his or her Accrued Benefit, the pension to
the surviving spouse shall begin on the first day of the month coincident
with or next following the date the Participant would have first met the
requirements for early retirement if he or she had not died but had lived,
shall end on the last day of the month in which the spouse's death occurs,
and shall be in a monthly amount equal to the amount the spouse would have
received if (i) the Participant had survived to meet the requirements for
early retirement, (ii) the Participant had elected an immediate pension in
the form of a Qualified Joint and Survivor Annuity beginning on the first
day of the month coincident with or next following his or her attainment of
the earliest retirement age with the spouse as joint annuitant, and (iii)
the Participant had died the day after the date his or her pension
commenced.
7.3 Alternate Death Benefit. In lieu of the benefit provided in Section
7.2, a Participant described in Section 7.1(a) may, at any time before his or
her pension commences, select a beneficiary or beneficiaries other than his or
her spouse for a survivor income benefit subject to Section 7.5. The monthly
payment to the beneficiary shall equal the payment the beneficiary would have
received and which would have been attributable to the Participant's Accrued
Benefit, if the Participant had retired on the day of his or her death with a
pension in the form of a 50% joint and survivor annuity beginning as of the
first day of the month following the day of his or her death with the
beneficiary as joint annuitant.
7.4 Children's Survivor Benefit. In lieu of the benefit provided in Section
7.2, a Participant described in Section 7.1(a) may, at any time before his or
her pension commences, select his or her child or children as beneficiary or
beneficiaries for the survivor income benefit subject to Section 7.5. The
aggregate monthly payment to the child or children shall equal the monthly
payment a surviving spouse of an age equal to that of the Participant would have
received and which would have been attributable to the Participant's Accrued
Benefit, if the Participant had been covered by Section 7.2 and had left such a
surviving spouse. Payments to each child shall continue during such child's life
or until the end of the month in which the child attains age 19, whichever is
earlier except that if the child is enrolled as a full-time student in an
33
academic institution, payments shall continue until the earlier of the end of
the month in which the child attains age 23 or the termination of the child's
education.
7.5 Waiver of Spousal Benefit. An election under Section 7.3 or 7.4 shall
be effective with respect to a married Participant only if he or she waives the
benefit provided in Section 7.2 in accordance with the following rules:
(a) A waiver shall be made in writing in a manner prescribed by the
Committee on a form that clearly states that the Participant is waiving the
benefit provided in Section 7.2. No such waiver shall be effective unless:
(i) the Participant's spouse consents in writing to the waiver; (ii) the
waiver election designates the form of benefit and a specific beneficiary;
(iii) the spouse's consent to the waiver acknowledges the effect of the
waiver; and (iv) the spouse's consent is witnessed by a notary public or by
a Plan representative. A waiver without spousal consent shall be effective
if the Sponsor determines there is no spouse or the spouse cannot be
located.
(b) Each Participant and his or her spouse shall receive a written
explanation of the benefit provided in Section 7.2 which shall include: (i)
the terms and conditions of the benefit; (ii) the Participant's right to
make and the effect of waiving the benefit; (iii) the rights of a spouse;
and (iv) the right to make, and the effect of, a revocation of a previous
election to waive the benefit. Such explanation shall be furnished to the
Participant within the applicable period. The term "applicable period"
means, with respect to a Participant, whichever of the following periods
ends earliest: (i) the period beginning with the first day of the Plan Year
in which the Participant becomes a Participant described in Section 7.1(a)
and ending on the date of the Participant's death or (ii) the period
beginning with the first day of the Plan Year in which the Participant
becomes a Participant described in Section 7.1(a) and ending on the date
his or her pension commences.
34
ARTICLE VIII
CONTRIBUTIONS
8.1 Company Contributions. The Company shall contribute each year an amount
actuarially determined to be sufficient to provide the benefits under the Plan.
Notwithstanding the foregoing, Company contributions for any Plan Year shall be
conditioned upon the deductibility of such contributions by the Company under
Code Section 404. The Company reserves the right, however, to reduce, suspend or
discontinue its contributions under the Plan for any reason at any time. Except
as provided in Section 8.3, it shall be impossible for any part of the Company's
contributions to revert to the Company, or to be used for, or diverted to, any
purpose other than for the exclusive benefit of Participants and their
Beneficiaries.
8.2 Source of Benefits. All benefits under the Plan shall be paid
exclusively from the Fund, and the Company shall have no duty to contribute
thereto except as provided in this Article.
8.3 Irrevocability. The Company shall have no right or title to, nor
interest in, the Company contributions made to the Fund, and no part of the Fund
shall revert to the Company, except that on and after the Effective Date funds
may be returned to the Company as follows:
(a) In the case of a contribution which is made by a mistake of fact,
such contribution may be returned to the Company within one year after it
is made.
(b) In the case of a contribution conditioned on the initial
qualification of the Plan under Code Section 401 (or any successor statute
thereto), and the Plan does not initially qualify upon the filing of a
timely determination letter request, such contribution may be returned to
the Company within one year after the date of denial of the initial
qualification of the Plan.
(c) In the case of a contribution conditioned on the deductibility
thereof under Code Section 404 (or any successor statute thereto), such
contribution shall, to the extent such deduction is disallowed, be returned
to the Company within one year after such disallowance.
35
ARTICLE IX
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.
9.2 Appointment of Investment Subcommittee. There is hereby created an
investment subcommittee of the Committee (hereinafter referred to as the
"Investment Subcommittee" for purposes of this Article IX) which shall exercise
management and control over the assets of the Trust. The Board of Directors,
acting through its Organization and Compensation Committee, shall determine the
number of members of the Investment Subcommittee. The members of the Investment
Subcommittee shall be appointed by the Board of Directors, acting through its
Organization and Compensation Committee, and shall from time to time appoint
such members to or fill any vacancies in the Investment Subcommittee. The
members of the Investment Subcommittee shall constitute the Named Fiduciaries of
the Plan within the meaning of Section 402(a)(2) of ERISA with respect to the
management and control of the assets of the Trust.
9.3 Transaction of Business. The Committee and Investment Subcommittee
shall transact business as provided in paragraphs (a) and (b), respectively:
(a) 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.
(b) A majority of the Investment Subcommittee shall constitute a
quorum for the transaction of business. Actions of the Investment
Subcommittee may be taken either by vote at a meeting or in writing without
a meeting. All action taken by the Investment Subcommittee at any meeting
shall be by a vote of the majority
36
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
Investment Subcommittee shall be in writing and signed by or in the name of
the Investment Subcommittee. In all its communications with the Trustee,
the Investment Subcommittee may, by action specified above, authorize any
one or more of its members to execute any document or documents on behalf
of the Investment Subcommittee, 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
Investment Subcommittee until the Investment Subcommittee shall file with
the Trustee a written revocation of such designation.
9.4 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
or herself, 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) and 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.
9.5 Responsibility of Committees. The responsibilities of the Committee and
Investment Subcommittee shall be as provided in paragraphs (a) and (b),
respectively:
(a) The authority to manage and control the operation and
administration of the Plan, the general administration of the Plan, the
responsibility for carrying out the Plan, and to the extent provided in
Section 9.7(e), the authority and responsibility to manage and control 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
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.
(b) The authority and responsibility to manage and control the assets
of the Trust are hereby delegated by the Board of Directors, acting through
its Organization and Compensation Committee, to and vested in the
Investment Subcommittee except to the extent reserved to the Board of
Directors or the Board of Directors, acting through its Organization and
Compensation Committee, or the Sponsor. Subject to the limitations of the
Plan, the Investment Subcommittee shall, from time to time, establish rules
for the performance of its functions.
9.6 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,
37
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 9.7.
(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 Benefit Years or
Vesting Years 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) 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.
(g) To perform or cause to be performed such further acts as it may
deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary powers conferred upon it by 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.
9.7 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
9.17 to manage and control any or all of the assets of the Trust.
38
(b) To designate persons (other than the members of the Committee) to
carry out fiduciary responsibilities, other than any responsibility to
manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the members of the
Committee, other than any responsibility to manage or control the assets of
the Trust;
(d) To cancel any such designation or allocation at any time for any
reason;
(e) To exercise management and control over the assets of the Trust to
the extent provided in paragraph (a) above and in Section 9.9 (relating to
review by the Committee of the long-run and short-run financial needs of
the Plan and the determination of the funding policy for the Plan).
Any action under this Section 9.7 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.
9.8 Investment Subcommittee Powers. The Investment Subcommittee shall have
all discretionary powers necessary to manage and control the assets of the
Trust, including but not limited to, the following:
(a) To exercise management and control over the assets of the Trust
except to the extent the Committee appoints an Investment Manager pursuant
to Section 9.7(a) and subject to the requirement that all action taken by
the Investment Subcommittee shall be in accordance and consistent with the
funding policy established by the Committee and shall be communicated to
the Committee at periodic intervals.
(b) To employ consulting, actuarial, and other assistance as it may
deem appropriate in carrying out its responsibilities under the Plan,
including one or more persons to render advice with regard to any fiduciary
responsibility the Investment Subcommittee may have under the Plan.
(c) To establish rules and regulations from time to time for the
conduct of the Investment Subcommittee's business.
(d) 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 Investment Subcommittee
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 Investment Subcommittee
may direct the Trustee to purchase are "qualifying employer securities" as
defined in ERISA Section 407(d)(5).
39
Any action taken in good faith by the Investment Subcommittee in the
exercise of discretionary powers conferred upon it by the Plan shall be
conclusive and binding upon the Participants and their Beneficiaries.
9.9 Periodic Review of Funding Policy. Notwithstanding the delegation of
authority and responsibility to manage and control the assets of the Trust to
the Investment Subcommittee, the Committee, at periodic intervals, 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.
9.10 Claims Procedures. If a Participant or his or her Beneficiary believes
that he or she is being denied any rights or benefits under the Plan, the
Participant, Beneficiary, or in either case, his or her authorized
representative (the "Claimant") shall follow the administrative procedures for
filing a claim for benefits as set forth in this Section. A claim for benefits
shall be in writing and shall be reviewed by the Committee or a claims official
designated by the Committee. The Committee or claims official shall review a
claim for benefits in accordance with the procedures established by the
Committee subject to the following administrative procedures set forth in this
Section.
(a) The Committee shall furnish the Claimant with written or
electronic notice of the decision rendered with respect to a claim for
benefits within 90 days following receipt by the Committee (or its
delegate) of the claim unless the Committee determines that special
circumstances require an extension of time for processing the claim. In the
event an extension is necessary, written or electronic 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 or
electronic 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 claim (together with an
explanation why such material or information is necessary), (iv) an
explanation of the Plan's appeals procedures, and (v) a statement of the
Claimant's right to bring a civil action under Section 502(a) of ERISA if
his or her claim is denied upon appeal.
(c) In the case of a denial of a claim, a Claimant who wishes to
appeal the decision shall follow the administrative procedures for an
appeal as set forth in Section 9.11 below.
40
9.11 Appeals Procedures. A Claimant who wishes to appeal the denial of his
or her claim for benefits 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. Appeals shall be reviewed
in accordance with the procedures established by the Committee subject to the
following administrative procedures set forth in this Section.
(a) In order to appeal a decision rendered with respect to his or her
claim for benefits, a Claimant must file an appeal with the Committee in
writing within 60 days following his or her receipt of the notice of denial
with respect to the claim.
(b) The Claimant's appeal may include written comments, documents,
records and other information relating to his or her claim. The Claimant
may review all pertinent documents and, upon request, shall have reasonable
access to or be provided free of charge, copies of all documents, records,
and other information relevant to his or her claim.
(c) The Committee shall provide a full and fair review of the appeal
and shall take into account all claim related comments, documents, records,
and other information submitted by the Claimant without regard to whether
such information was submitted or considered under the initial
determination or review of the initial determination. Where appropriate,
the Committee will overturn a notice of denial if it determines that an
error was made in the interpretation of the controlling plan documents or
if the Committee determines that an existing interpretation of the
controlling plan documents should be changed on a prospective basis. In the
event the Claimant is a subordinate, as determined by the Committee, to an
individual conducting the review, such individual shall recuse himself or
herself from the review of the appeal.
(d) The Committee shall furnish the Claimant with written or
electronic notice of the decision rendered with respect to an appeal within
60 days following receipt by the Committee of the appeal unless the
Committee determines that special circumstances require an extension of
time for processing the appeal. In the event an extension is necessary,
written or electronic 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.
(e) In the case of a denial of an appeal, the written or electronic
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 statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relating to his or her claim for
benefits, and (iv) a statement of the Claimant's right to bring a civil
action under Section 502(a) of ERISA.
41
9.12 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 9.2 or 9.7, except as
provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. Neither the
Committee nor the Investment Subcommittee shall have responsibility over assets
as to which management and control has been delegated to an Investment Manager
appointed pursuant to Section 9.17 hereof or as to which management and control
has been retained by the Trustee.
9.13 Indemnification and Insurance. To the extent permitted by law, the
Company shall indemnify and hold harmless the Committee, the Investment
Subcommittee and each member thereof, 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.
9.14 Compensation of Committee and Plan Expenses. Members of the Committee
and the Investment Subcommittee shall serve as such without compensation unless
the Board of Directors shall otherwise determine, but in no event shall any
member of the Committee or Investment Subcommittee who is an Employee receive
compensation from the Plan for his or her services as a member of the Committee
or the Investment Subcommittee. All members shall be reimbursed for any
necessary expenditures incurred in the discharge of duties as members of the
Committee or the Investment Subcommittee. 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 or the Investment Subcommittee 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 or the
Investment Subcommittee 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).
9.15 Resignation. Any member of the Committee or Investment Subcommittee
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 or the Investment Subcommittee.
9.16 Reliance Upon Documents and Opinions. The members of the Committee,
the Investment Subcommittee, 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
Investment Subcommittee, 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
42
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 Investment
Subcommittee, 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, the Investment Subcommittee, 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.
9.17 Appointment of Investment Manager. From time to time the Committee, in
accordance with Section 9.7 hereof, may appoint one or more Investment Managers
who shall have investment management and control over assets of the Trust. The
Committee shall notify the Trustee of such assets of the appointment of the
Investment Manager. In the event more than one Investment Manager is appointed,
the Committee shall determine which assets shall be subject to management and
control by each Investment Manager and shall also determine the proportion in
which funds withdrawn or disbursed shall be charged against the assets subject
to each Investment Manager's management and control. As shall be provided in any
contract between an Investment Manager and the Committee, such Investment
Manager shall hold a revocable proxy with respect to all securities which are
held under the management of such Investment Manager pursuant to such contract,
and such Investment Manager shall report the voting of all securities subject to
such proxy on an annual basis to the Committee.
43
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 any trust agreement with
the Trustee at any time and from time to time and in such manner and to such
extent as it may deem advisable, including retroactively, subject to the
following provisions:
(a) No amendment shall have the effect of reducing any Participant's
vested interest in the Plan or eliminating an optional form of
distribution.
(b) No amendment shall have the effect of diverting any part of the
assets of the Plan to persons or purposes other than the exclusive benefit
of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the duties or
responsibilities of a Trustee without its written consent.
(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 paragraphs
(a) through (d) above, 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.
44
ARTICLE XI
TERMINATION AND MERGER
11.1 Right to Terminate Plan. The Sponsor, by resolution of the Board of
Directors, may terminate or partially terminate the Plan. If the Plan is
terminated or partially terminated, the assets of the Plan shall be allocated,
subject to Section 11.3, as provided in Section 4044 of the Employee Retirement
Income Security Act of 1974 (as it may be from time to time amended or construed
by any appropriate governmental agency or corporation), without subclasses.
Effective as of the first day of the sixth calendar year following the adoption
date of this amended and restated Plan, in the event of a termination of the
Plan (other than a partial termination), any amount remaining after all fixed
and contingent liabilities of the Plan have been satisfied shall revert to the
Company notwithstanding any provision in the Plan to the contrary. In the event
of a termination of the Plan (other than a partial termination) prior to the
first day of the sixth calendar year following the adoption date of this amended
and restated Plan, any amount remaining after all fixed and contingent
liabilities of the Plan have been satisfied shall be allocated to each
Participant in proportion to the present value of a benefit commencing at Normal
Retirement Date equal to such Participant's Average Earnings times Benefit
Years. Any allocations under this Section to Participants with respect to whom
the Plan is terminating shall be nonforfeitable. Except as otherwise required by
law, the time and manner of distribution of the assets or the time and manner of
any reversion of assets to the Company shall be determined by the Sponsor by
amendment to the Plan.
11.2 Merger Restriction. No merger or consolidation with, or transfer of
any of the Plan's assets or liabilities to, any other plan shall occur at any
time unless each Participant would (if the Plan had then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
11.3 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.
11.4 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 their Accrued Benefit on the date of such
Change in Control and in any benefit accruals subsequent to the date of the
Change in Control. Notwithstanding the foregoing, the Board of Directors
may, at its discretion, amend or delete this paragraph (b) in its
45
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 the Plan, be considered as though such
person were a member of the Incumbent Board of the Sponsor;
(iii) The consummation of a merger, consolidation or
reorganization involving the Sponsor, other than one which satisfies
both of the following conditions:
(A) a merger, consolidation or reorganization which would
result in the voting securities of the Sponsor outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of another entity) at least 55% of the combined voting
power of the voting securities of the Sponsor or such other
entity resulting from the merger, consolidation or reorganization
(the "Surviving Corporation") outstanding immediately after such
merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in the
Sponsor's voting securities immediately before such merger,
consolidation or reorganization, and
(B) a merger, consolidation or reorganization in which no
Person is or becomes the Beneficial Owner, directly or
indirectly, of
46
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.
(c) For purposes of this Section 11.4, a Change of Control shall not
be deemed to have occurred upon the distribution of the stock of Advanced
Medical Optics, Inc. on June 29, 2002 by the Sponsor to its stockholders.
11.5 Termination Restrictions. The following termination restrictions shall
apply:
(a) In the event the Plan is terminated, the Accrued Benefit of any
Highly Compensated Employee (active or former) shall be limited to an
Accrued Benefit that is nondiscriminatory under Code Section 401(a)(4).
(b) The Accrued Benefit distributed to any of the 25 most Highest
Compensated Employees (active or former) with the greatest Earnings in the
current or any prior year shall be restricted so that the annual payments
to such Highest Compensated Employee are no greater than an amount equal to
the payment that would be made on behalf of the Highly Compensated Employee
under a straight life annuity that is the actuarial equivalent of the sum
of the Highly Compensated Employee's Accrued Benefit, other benefits under
the Plan (other than social security supplement, within the meaning of
Section 1.411(a)-7(c)(4)(ii) of the Income Tax Regulations), and the amount
that he is entitled to receive under a social security supplement.
47
(c) Paragraph (b) shall not apply if:
(i) After payment of the Accrued Benefit to an Employee described
in paragraph (a), the value of Plan assets equals or exceeds 110% of
the value of current liabilities, as defined in Code Section
412(1)(7),
(ii) The value of the Accrued Benefit for an Employee described
in paragraph (a) is less than 1% of the value of current liabilities
before distribution, or
(iii) The value of the Accrued Benefit payable under the Plan to
an Employee described in paragraph (b) does not exceed $3,500.
For purposes of this paragraph (c), the Accrued Benefit includes loans
in excess of the amount set forth in Code Section 72(p)(2)(A), any periodic
income, any withdrawal values payable to a living Employee, and any death
benefits not provided for by insurance on the Employee's life.
48
ARTICLE XII
TOP-HEAVY RULES
12.1 Applicability. Notwithstanding any provision in the Plan to the
contrary, and subject to the limitations set forth in Section 12.7, the
requirements of Sections 12.4, 12.5, and 12.6 shall apply under the Plan in the
case of any Plan Year in which the Plan is determined to be a Top-Heavy Plan
under the rules of Section 12.3. For the purpose of this Article XII, the term
"Company" shall mean the Sponsor and any Affiliated Company whether or not such
Affiliated Company has adopted the Plan.
12.2 Definitions. For purposes of this Article XII, the following special
definitions and rules shall apply:
(a) The term "Key Employee" means any Employee or former Employee
(including any deceased Employee) who, at any time during the Plan Year
that includes the Determination Date, was an officer of the Company having
annual Compensation greater than $130,000 (as adjusted under Code Section
416(i)(1) for Plan Years beginning after December 31, 2002), a Five Percent
Owner of the Company, or an One Percent Owner of the Company having annual
Compensation of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns (or is
considered as owning within the meaning of Code Section 318) more than 5%
of the outstanding stock of the Company or stock possessing more than 5% of
the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would be
described in paragraph (b) if "1%" were substituted for "5%" each place
where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is not a Key
Employee.
(e) The term "Determination Date" means, with respect to any plan
year, the last day of the preceding plan year. In the case of the first
plan year of any plan, the term "Determination Date" shall mean the last
day of that plan year.
(f) The term "Aggregation Group" means (i) each qualified plan of the
Company in which at least one Key Employee participates or participated at
any time during the determination period (regardless of whether the plan
has terminated), and (ii) any other qualified plan of the Company which
enables a 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.
49
(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 12.2 shall apply
separately with respect to each Affiliated Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall include
their Beneficiaries, and the definitions provided under this Section 12.2
shall be interpreted and applied in a manner consistent with the provisions
of Code Section 416(i) and the regulations thereunder.
(i) For purposes of this Article XII, an Employee's Compensation shall
be determined in accordance with the rules of Code Section 415 and the
regulations thereunder.
12.3 Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect to any Plan Year:
(i) Any defined benefit plan if, as of the Determination Date,
the present value of the cumulative accrued benefits under the plan
for Key Employees exceeds 60% of the present value of the cumulative
accrued benefits under the plan for all Employees; and
(ii) Any defined contribution plan if, as of the Determination
Date, the aggregate of the account balances of Key Employees under the
plan exceeds 60% of the aggregate of the account balances of all
Employees under the plan.
In applying the foregoing provisions of this paragraph (a), the
valuation date to be used in valuing Plan assets shall be (i) in the case
of a defined benefit plan, the same date which is used for computing costs
for minimum funding purposes, and (ii) in the case of a defined
contribution plan, the most recent valuation date within a 12-month period
ending on the applicable Determination Date.
(b) Each plan maintained by the Company required to be included in an
Aggregation Group shall be treated as a Top-Heavy Plan if the Aggregation
Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any Aggregation Group if the sum
(as of the Determination Date) of (i) the present value of the cumulative
accrued benefits for Key Employees under all defined benefit plans included
in the group, and (ii) the aggregate of the account balances of Key
Employees under all defined contribution plans included in the group
exceeds 60% of a similar sum determined for all Employees. For purposes of
determining the present value of the cumulative accrued benefit of any
Employee, or the amount of the account balance of any Employee, such
present value or amount shall be increased by the aggregate distributions
made with respect to the
50
Employee under the plan (including a terminated plan which, had it not been
terminated, would have been aggregated with the plan under Code Section
416(g)(2)(A)(i))during the one year period ending on the Determination
Date. In the case of distributions made for a reason other than separation
from service, death, or disability, the preceding sentence shall be applied
by substituting "5-year period" for "l -year period." Any rollover
contribution or similar transfer initiated by the Employee and made after
December 31, 1983, to a plan shall not be taken into account with respect
to the transferee plan for purposes of determining whether such plan is a
Top-Heavy Plan (or whether any Aggregation Group which includes such plan
is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with respect to any plan
for any plan year, but the individual was a Key Employee with respect to
the plan for any prior plan year, any accrued benefit for the individual
(and the account balance of the individual) shall not be taken into account
for purposes of this Section 12.3.
(e) If any individual has not performed services for the Company at
any time during the one year period ending on the Determination Date, any
accrued benefit for such individual (and the account balance of the
individual) shall not be taken into account for purposes of this Section
12.3.
(f) In applying the foregoing provisions of this Section, the accrued
benefit of a Non-Key Employee shall be determined (i) under the method, if
any, which is used for accrual purposes under all plans of the Company and
any Affiliate, or (ii) if there is no such uniform method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted
under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XII, the definitions provided
under this Section 12.3 shall be applied and interpreted in a manner
consistent with the provisions of Code Section 416(g) and the Regulations
thereunder.
12.4 Minimum Benefit.
(a) The Plan shall provide a minimum benefit for each Participant who
is not classified as a "Key Employee." This minimum benefit, when expressed
as an annual retirement benefit payable in the form of a single life
annuity beginning when the Participant attains Age 65, shall not be less
than the Participant's average annual compensation during the period of
consecutive years (not exceeding five (5)) during which the Participant had
the greatest aggregate compensation from the Company multiplied by the
lesser of:
(i) Two percent (2%) multiplied by the number of his or her
Vesting Years; or
(ii) Twenty percent (20%).
51
(b) For purposes of this Section 12.4, Vesting Years shall be
determined under Code Sections 411(a)(4), (5), and (6), but excluding:
(i) Any Vesting Year if the Plan was not a Top-Heavy Plan for the
Plan Year ending during such Vesting Year;
(ii) Any Vesting Year which was completed in a Plan Year
beginning before January 1, 1984; and
(iii) Any Vesting Year which was completed in a Plan Year
beginning on or after January 1, 2002 during which the Plan benefits
(within the meaning of Code Section 410(b)) no Key Employee or former
Key Employee.
(c) The Participant's minimum benefit determined under this Section
12.4 shall be calculated without regard to any Social Security benefits
payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both of
which are determined to be Top-Heavy Plans, the Company shall satisfy the
minimum benefit requirements of Code Section 416 by providing (in lieu of
the minimum contribution described under the defined contribution plan) a
minimum benefit under the Plan so as to prevent the duplication of required
minimum benefits hereunder.
12.5 Maximum Benefit.
(a) Except as set forth below, in the case of any Top-Heavy Plan the
rules of Sections 5.7(a)(i) and 5.7(b) shall be applied by substituting
"1.0" for "1.25."
(b) The rule set forth in paragraph (a) above shall not apply if the
requirements of both subparagraphs (i) and (ii) are satisfied.
(i) The requirements of this subparagraph (i) are satisfied if
the rules of Section 12.4(a) above would be satisfied after
substituting "three percent (3%)" for "two percent (2%)" where it
appears therein and by increasing (but not by more than ten (10)
percentage points) twenty percent (20%) by one (1) percentage point
for each year for which the Plan is a Top Heavy Plan.
(ii) The requirements of this subparagraph (ii) are satisfied if
the Plan would not be a Top-Heavy Plan if "ninety percent (90%)" were
substituted for "sixty percent (60%)" each place it appears in
Sections 12.3(a) and 12.3(c).
52
(c) The rules of paragraph (a) shall not apply with respect to any
Employee as long as there are no --
(i) Company contributions, forfeitures, or voluntary
nondeductible contributions allocated to the Employee under a defined
contribution plan maintained by the Company, or
(ii) Accruals by the Employee under a defined benefit plan
maintained by the Company.
(d) In the case where the Plan is subject to the rules of paragraph
(a) above, the transition fraction rules of Code Section 415(e)(6) shall be
applied by substituting "$41,500" for "$51,875."
12.6 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the Plan is a
Top-Heavy Plan, the vesting schedule of the Plan shall be changed to that
set forth below (unless the Plan's vesting schedule otherwise provides for
vesting at a rate at least as rapid as that set forth below):
Number of Vesting Years Nonforfeitable Percentage
- ----------------------- -------------------------
Less than 3 years 0%
3 or more 100%
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting schedule of
the Plan shall (for such Plan Years as the Plan is not a Top-Heavy Plan)
revert to that provided in Section 5.11 (the "Regular Vesting Schedule").
If such reversion to the Regular Vesting Schedule is deemed to constitute a
vesting schedule change that is attributable to a Plan amendment (within
the meaning of Code Section 411(a)(10)), then such reversion to said
Regular Vesting Schedule shall be subject to the requirements of Code
Section 411(a)(10). For such purposes, the date of the adoption of such
deemed amendment shall be the Determination Date as of which it is
determined that the Plan has ceased to be a Top-Heavy Plan.
12.7 Noneligible Employees. The rules of this Article XII shall not apply
to any Employee included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more employers
if retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.
53
ARTICLE XIII
RESTRICTION ON ASSIGNMENT OR
OTHER ALIENATION OF PLAN BENEFITS
13.1 General Restrictions Against Alienation.
(a) The interest of any Participant or his or her Beneficiary in the
income, benefits, payments, claims or rights hereunder, or in the Trust
Fund, shall not in any event be subject to sale, assignment, hypothecation,
or transfer. Each Participant and Beneficiary is prohibited from
anticipating, encumbering, assigning, or in any manner alienating his or
her interest under the Trust Fund, and is without power to do so. The
interest of any Participant or Beneficiary shall not be liable or subject
to his or her debts, liabilities, or obligations, now contracted, or which
may hereafter be contracted, and such interest shall be free from all
claims, liabilities, or other legal process now or hereafter incurred or
arising. Neither the interest of a Participant or Beneficiary, nor any part
thereof, shall be subject to any judgment rendered against any such
Participant or Beneficiary. Notwithstanding the foregoing, a Participant's
or Beneficiary's interest in the Plan may be subject to the enforcement of
a Federal tax levy made pursuant to Code Section 6331 or the collection by
the United States on a judgment resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action contrary to
this Article XIII, such action shall be null and void and of no effect, and
the Company, the Committee, the Trustee and all Participants and their
Beneficiaries, may disregard such action and are not in any manner bound
thereby, and they, and each of them, shall suffer no liability for any such
disregard thereof, and shall be reimbursed on demand out of the Trust Fund
for the amount of any loss, cost or expense incurred as a result of
disregarding or of acting in disregard of such action.
(c) The foregoing provisions of this Section shall be interpreted and
applied by the Committee in accordance with the requirements of Code
Section 401(a)(13) and Section 206(d) of ERISA as construed and interpreted
by authoritative judicial and administrative rulings and regulations.
13.2 Qualified Domestic Relations Orders. The rule set forth in Section
13.1 above shall not apply with respect to a "Qualified Domestic Relations
Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment, decree, or
order (including approval of a property settlement agreement) that:
(i) Creates or recognizes the existence of an Alternate Payee's
right to, or assigns to an Alternate Payee the right to, receive all
or a portion of the benefits payable under this Plan with respect to a
Participant,
54
(ii) Relates to the provision of child support, alimony payments,
or marital property rights to a spouse, former spouse, child or other
dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law
(including a community property law), and
(iv) Clearly specifies: (1) the name and last known mailing
address (if any) of the Participant and the name and mailing address
of each Alternate Payee covered by the order (if the Committee does
not have reason to know that address independently of the order); (2)
the amount or percentage of the Participant's benefits to be paid to
each Alternate Payee, or the manner in which the amount or percentage
is to be determined; (3) the number of payments or period to which the
order applies; and (4) each plan to which the order applies.
For purposes of this Section 13.2, "Alternate Payee" means any spouse,
former spouse, child or other dependent of a Participant who is recognized
by a domestic relations order as having a right to receive all, or a
portion of, the benefits payable with respect to the Participant.
(b) A domestic relations order is not a Qualified Domestic Relations
Order if it requires:
(i) The Plan to provide any type or form of benefit, or any
option, not otherwise provided under the Plan;
(ii) The Plan to provide increased benefits; or
(iii) The payment of benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under a previous
Qualified Domestic Relations Order.
(c) A domestic relations order shall not be considered to fail to
satisfy the requirements of paragraph (b)(i) above with respect to any
payment made before a Participant has separated from service solely because
the order requires that payment of benefits be made to an Alternate Payee:
(i) On or after the date on which the Participant attains (or
would have first attained) his earliest retirement age (as defined in
Code Section 414(p)(4)(B));
(ii) As if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the
present value of accrued benefits and not taking into account the
present value of any subsidy for early retirement benefits); and
55
(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
of the receipt of the order and the Plan's procedures for determining the
qualified status of domestic relations orders. Within a reasonable period
after the receipt of the order, the 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 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 pay the segregated amounts (plus any interest thereon) to
the person or persons entitled thereto. However, if within the 18 Month
Period (i) it is determined that the order to not a Qualified Domestic
Relations Order, or (ii) the issue as to whether the order is a Qualified
Domestic Relations Order is not resolved, then the Committee shall pay the
segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to the amounts if there had been no order
(assuming such benefits were otherwise payable). Any determination that an
order is a Qualified Domestic Relations Order that is made after the close
of the 18 Month Period shall be applied prospectively only. For purposes of
this Section 13.2, the "18 Month Period" shall mean the 18 month period
beginning with the date on which the first payment would be required to be
made under the domestic relations order.
56
ARTICLE XIV
MISCELLANEOUS
14.1 No Right of Employment Hereunder. The adoption and maintenance of the
Plan and Trust shall not be deemed to constitute a contract of employment or
otherwise between the Company and any Employee or Participant, or to be a
consideration for, or an inducement or condition of, any employment. Nothing
contained herein shall be deemed to give any Employee the right to be retained
in the service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any Employee or Participant at any time, which
right is hereby expressly reserved.
14.2 Effect of Article Headings. Article headings are for convenient
reference only and shall not be deemed to be a part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article.
14.3 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.
14.4 Interpretation. The provisions of the Plan shall in all cases be
interpreted in a manner that is consistent with the Plan satisfying the
requirements of Code Section 401(a) and related statutes for qualification as a
defined benefit plan.
14.5 Withholding For Taxes. Any payments from the Trust Fund may be subject
to withholding for taxes as may be required by any applicable federal or state
law.
14.6 California Law Controlling. All legal questions pertaining to the Plan
which are not controlled by ERISA shall be determined in accordance with the
laws of the State of California and all contributions made hereunder shall be
deemed to have been made in that State.
14.7 Plan and Trust as One Instrument. The Plan and any trust agreement
adopted hereunder shall be construed together as one instrument. In the event
that any conflict arises between the terms and/or conditions of any trust
agreement with the Trustee and the Plan, the provisions of the Plan shall
control, except that with respect to the duties and responsibilities of the
Trustee, the trust agreement shall control.
14.8 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 or void
or against public policy, the remaining paragraphs, sections, sentences, clauses
or phrases contained in the Plan shall not be affected thereby.
14.9 Counterparts. This instrument may be executed in one or more
counterparts each of which shall be legally binding and enforceable.
57
14.10 Forfeitures. All forfeitures arising under the Plan shall be used as
soon as possible to reduce the Company's contributions and shall not be applied
to increase the benefits any person would otherwise receive under the Plan.
14.11 Facility of Payment. If the Committee deems any person incapable of
receiving benefits to which he is entitled by reason of minority, illness,
infirmity, or other incapacity, it may direct that payment be made directly for
the benefit of such person or to any person selected by the Committee to
disburse it, whose receipt shall be a complete acquittance therefor. Such
payments shall, to the extent thereof, discharge all liability of the Company
and the party making the payment.
14.12 Lapsed Benefits.
(a) In the event that a benefit is payable under the Plan to a
Participant and after reasonable efforts the Participant cannot be located
for the purpose of paying the benefit during a period of three consecutive
years, the Participant shall be presumed dead and the benefit (if any)
shall, upon the termination of that three year period, be paid to the
Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the purpose of
paying the benefit for the following two years, then the benefit shall be
forfeited and applied in accordance with the provisions of Section 14.10.
(c) Notwithstanding the foregoing rules, if after such a forfeiture
the Participant or an eligible Beneficiary shall claim the forfeited
benefit, the amount forfeited shall be reinstated and paid to the claimant
as soon as practical following the claimant's production of reasonable
proof of his or her identity and entitlement to the benefit (determined
pursuant to the Plan's normal claim review procedures under Sections 9.8
and 9.9).
(d) The Committee shall direct the Trustee with respect to the
procedures to be followed concerning a missing Participant (or
Beneficiary), and the Company shall be obligated to contribute to the Trust
Fund any amounts necessary after the application of Section 14.10 to pay
any reinstated benefit after it has been forfeited pursuant to the
provisions of this Section.
58
IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Pension Plan as restated this 14th
day of June, 2005.
ALLERGAN, INC.
By: /s/ Roy J. Wilson
---------------------------------
Roy J. Wilson
Executive Vice President, Human
Resources
59
APPENDIX A
A.1 The Actuarial Equivalent of a benefit other than a lump sum shall be
determined as follows:
(a) For Annuity Starting Dates on or after July 1, 2002, the Actuarial
Equivalent of a benefit other than a lump sum shall be determined by
applying a 7% interest rate and the 1994 Group Annuity Reserving Table;
provided, however, the Actuarial Equivalent of a contingent benefit option
which provides a benefit following a Participant's death to the
Participant's surviving spouse shall be determined by the factors set forth
in Table I under this Appendix A if greater.
(b) For Annuity Starting Dates commencing as of the Plan's Original
Effective Date and ending June 30, 2002, the Actuarial Equivalent of a
benefit other than a lump sum shall be determined by applying a 7% interest
rate and the 1971 GAM Mortality Table -- Males (age set-back 2 years);
provided, however, the Actuarial Equivalent of a contingent benefit option
which provides a benefit following a Participant's death to the
Participant's surviving spouse shall be determined by the factors set forth
in Table II under this Appendix A.
A.2 The Actuarial Equivalent of a lump sum benefit shall, for purposes of
Section 6.5, be determined as follows:
(a) The Actuarial Equivalent of a lump sum benefit with an Annuity
Starting Date on or after July 1, 2002, shall mean an amount of equal
actuarial value based on the Applicable Mortality Table and the Applicable
Interest Rate where:
(i) "Applicable Mortality Table" means the 1994 Group Annuity
Reserving Table; and
(ii) "Applicable Interest Rate" means the annual interest rate on
30-year Treasury securities as specified by the Commissioner of
Internal Revenue for the first full calendar month preceding the Plan
Year that contains the annuity starting date.
(b) The Actuarial Equivalent of a lump sum benefit with an Annuity
Starting Date on or after January 1, 1995 and prior to July 1, 2002, shall
mean an amount of equal actuarial value based on the Applicable Mortality
Table and the Applicable Interest Rate where:
(i) "Applicable Mortality Table" means the 1983 Group Annuity
Mortality Table; and
A-1
(ii) "Applicable Interest Rate" means the annual interest rate on
30-year Treasury securities as specified by the Commissioner of
Internal Revenue for the first full calendar month preceding the Plan
Year that contains the annuity starting date.
(c) The Actuarial Equivalent of a lump sum benefit with an Annuity
Starting Date prior to January 1, 1995, shall mean an amount of equal
actuarial value based on the interest rate(s) which would be used (as of
the first day of the Plan Year in which falls the annuity starting date) by
the Pension Benefit Guaranty Corporation (PBGC) for a trusteed
single-employer plan to value a benefit upon termination of an insufficient
trusteed single-employer plan and the 1971 GAM Mortality Table -- Males
(age set-back 2 years).
A-2
ATTACHMENT TO APPENDIX A
TABLE I
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
7%/1994 Group Annuity Reserving Table
Retiree
Age 50% J&S 66 2/3% J&S 100% J&S 5 Yr C&C 10 Yr C&C 15 Yr C&C 20 Yr C&C
- ------- ------- ----------- -------- -------- --------- --------- ---------
35 0.984 0.979 0.969 1.000 0.998 0.997 0.994
36 0.984 0.978 0.968 1.000 0.998 0.996 0.994
37 0.983 0.977 0.966 1.000 0.998 0.996 0.994
38 0.982 0.976 0.964 1.000 0.998 0.996 0.993
39 0.981 0.974 0.962 0.999 0.998 0.995 0.992
40 0.980 0.973 0.960 0.999 0.998 0.995 0.992
41 0.979 0.972 0.958 0.999 0.998 0.995 0.991
42 0.977 0.970 0.956 0.999 0.997 0.994 0.990
43 0.976 0.968 0.953 0.999 0.997 0.994 0.989
44 0.975 0.967 0.951 0.999 0.997 0.993 0.987
45 0.973 0.965 0.948 0.999 0.996 0.992 0.986
46 0.972 0.963 0.946 0.999 0.996 0.991 0.984
47 0.970 0.961 0.943 0.999 0.996 0.990 0.982
48 0.969 0.959 0.939 0.999 0.995 0.989 0.980
49 0.967 0.957 0.936 0.999 0.995 0.988 0.977
50 0.965 0.954 0.933 0.998 0.994 0.986 0.974
51 0.963 0.952 0.929 0.998 0.993 0.984 0.971
52 0.961 0.949 0.925 0.998 0.992 0.982 0.967
53 0.959 0.946 0.921 0.998 0.991 0.979 0.963
54 0.957 0.943 0.917 0.997 0.990 0.976 0.958
55 0.954 0.940 0.913 0.997 0.988 0.973 0.953
56 0.952 0.937 0.908 0.997 0.986 0.969 0.947
57 0.949 0.934 0.904 0.996 0.984 0.965 0.941
58 0.947 0.930 0.899 0.995 0.982 0.960 0.934
59 0.944 0.927 0.894 0.995 0.979 0.955 0.926
60 0.941 0.923 0.889 0.994 0.976 0.949 0.918
61 0.939 0.920 0.884 0.993 0.973 0.943 0.909
62 0.936 0.916 0.879 0.992 0.969 0.937 0.899
63 0.933 0.912 0.874 0.991 0.965 0.929 0.888
64 0.930 0.909 0.869 0.989 0.961 0.921 0.877
A-3
ATTACHMENT TO APPENDIX A
TABLE I
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
7%/1994 Group Annuity Reserving Table
Retiree
Age 50% J&S 66 2/3% J&S 100% J&S 5 Yr C&C 10 Yr C&C 15 Yr C&C 20 Yr C&C
- ------- ------- ----------- -------- -------- --------- --------- ---------
65 0.927 0.905 0.864 0.988 0.956 0.913 0.865
66 0.924 0.901 0.859 0.986 0.951 0.904 0.852
67 0.921 0.898 0.854 0.985 0.946 0.894 0.838
68 0.919 0.894 0.850 0.983 0.940 0.883 0.824
69 0.916 0.891 0.845 0.981 0.933 0.871 0.808
70 0.913 0.887 0.840 0.979 0.926 0.858 0.791
71 0.910 0.883 0.835 0.976 0.917 0.844 0.773
72 0.907 0.879 0.829 0.973 0.907 0.828 0.754
73 0.904 0.875 0.824 0.970 0.896 0.811 0.734
74 0.900 0.871 0.819 0.966 0.884 0.792 0.712
75 0.897 0.867 0.813 0.961 0.870 0.772 0.690
76 0.893 0.863 0.807 0.955 0.854 0.750 0.667
77 0.890 0.858 0.801 0.948 0.837 0.727 0.643
78 0.886 0.854 0.795 0.941 0.819 0.703 0.619
79 0.883 0.849 0.790 0.932 0.798 0.678 0.595
80 0.879 0.845 0.784 0.923 0.777 0.653 0.570
A-4
ATTACHMENT TO APPENDIX A
TABLE II
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
7%/ 1971 GAM Mortality Table -- Males (age set-back 2 years)
Retiree
Age 50% J&S 66 2/3% J&S 100% J&S 5 Yr C&C 10 Yr C&C 15 Yr C&C 20 Yr C&C
- ------- ------- ----------- -------- -------- --------- --------- ---------
40 .975 .960 .945 .999 .996 .990 .983
41 .973 .958 .942 .999 .995 .989 .981
42 .971 .956 .939 .999 .995 .988 .979
43 .969 .954 .936 .999 .994 .986 .976
44 .967 .952 .933 .998 .993 .984 .973
45 .965 .950 .930 .998 .992 .982 .970
46 .963 .948 .926 .998 .991 .980 .967
47 .961 .946 .922 .997 .990 .978 .963
48 .959 .944 .918 .997 .988 .975 .959
49 .957 .942 .914 .997 .987 .972 .954
50 .955 .940 .910 .996 .985 .969 .950
51 .953 .937 .906 .996 .984 .966 .945
52 .951 .934 .902 .995 .982 .962 .939
53 .949 .931 .898 .995 .980 .959 .933
54 .947 .928 .894 .994 .978 .954 .926
55 .945 .925 .890 .993 .975 .950 .919
56 .942 .921 .885 .993 .973 .945 .911
57 .939 .917 .880 .992 .970 .939 .902
58 .936 .913 .875 .991 .967 .933 .893
59 .933 .909 .870 .990 .963 .926 .883
60 .930 .905 .865 .989 .959 .918 .872
61 .927 .901 .860 .987 .954 .909 .860
62 .924 .897 .855 .986 .949 .899 .847
63 .921 .893 .850 .984 .943 .889 .833
64 .918 .889 .845 .982 .937 .877 .818
65 .915 .885 .840 .980 .929 .865 .802
66 .911 .881 .834 .977 .921 .851 .785
67 .907 .877 .828 .974 .911 .836 .768
68 .903 .873 .822 .971 .901 .821 .749
69 .899 .869 .816 .967 .890 .804 .730
A-5
ATTACHMENT TO APPENDIX A
TABLE II
OPTIONAL BENEFIT FORM FACTORS
(TO BE APPLIED TO STRAIGHT LIFE ANNUITY)
7%/ 1971 GAM Mortality Table -- Males (age set-back 2 years)
Retiree
Age 50% J&S 66 2/3% J&S 100% J&S 5 Yr C&C 10 Yr C&C 15 Yr C&C 20 Yr C&C
- ------- ------- ----------- -------- -------- --------- --------- ---------
70 .895 .865 .810 .962 .878 .787 .711
71 .892 .862 .805 .957 .865 .769 .691
72 .889 .859 .800 .952 .851 .750 .671
73 .886 .856 .795 .946 .837 .731 .651
74 .883 .853 .790 .940 .822 .711 .631
75 .880 .850 .785 .934 .806 .691 .610
76 .877 .846 .781 .927 .789 .671 .590
77 .874 .842 .777 Left intentionally blank
78 .871 .838 .773 Left intentionally blank
79 .868 .834 .769 Left intentionally blank
80 .865 .830 .765 Left intentionally blank
A-6
APPENDIX B
B.1 For purposes of Section 4.3(b) of the Plan, the Accrued Benefit of a
Participant shall be equal to one-twelfth (1/12) of the difference between:
(a) the sum of:
(i) 1.7% of his or her Average Earnings multiplied by the number
of his or her Benefit Years to a maximum of 35 Benefit Years; plus
(ii) 0.5% of his or her Average Earnings for each Benefit Year in
excess of 35 Benefit Years; and
(b) 1.43% of the Participant's Primary Social Security Benefit
multiplied by the number of his or her Benefit Years to a maximum of 35
Benefit Years.
Notwithstanding the foregoing, the Accrued Benefit of a Participant who is
considered a highly compensated employee in 1989 within the meaning of Code
Section 414(q)(1)(A) or (B) is limited to the Participant's Accrued Benefit
under the SKB Plan as of the Spin-Off Date. The Accrued Benefit of a Participant
who is considered a highly compensated employee in 1990 within the meaning of
Code Section 414(q)(1)(A) or (B), and is not considered a highly compensated
employee in 1989 within the meaning of Code Section 414(q)(1)(A) or (B) is
limited to the Participant's Accrued Benefit as of December 31, 1989.
B.2 The level income option offered as an optional form of benefit under
Section 6.4(b) of the Plan, provides a monthly pension payable as a Single Life
Annuity or under a contingent beneficiary option. For purposes of this
paragraph, the Single Life Annuity or, if a contingent beneficiary option is
elected, the monthly amount payable to a Participant as reduced for the
contingent beneficiary option shall be referred to as the Participant's Life
Pension. In order to recognize the increased benefits payable until age 62 (the
"Temporary Pension"), the Participant's Life Pension is reduced. The Temporary
Pension shall end on the earlier of the Participant's death or his or her
attainment of age 62. If a contingent beneficiary option is elected and the
Participant dies, then 100%, 66 2/3% or 50% (as previously elected by the
Participant) of the Participant's Life Pension as determined prior to the
adjustment for the Temporary Pension shall be payable for the lifetime of his or
her designated beneficiary.
B.3 The guaranteed payment option offered as an optional form of benefit
under Section 6.4(b) of the Plan, provides a reduced benefit for the longer of
the Participant's lifetime or a specified number of months (60, 120, 180, or
240) with payments made to the Participant and any remaining guaranteed payments
on the Participant's death to a designated beneficiary or beneficiaries
(hereinafter referred to as the "designated beneficiary"). For purposes of the
guaranteed payment option, the following rules shall apply to beneficiary
designations:
(a) A Participant may change his or her designated beneficiary at any
time and may designate a secondary beneficiary or beneficiaries to receive
any remaining
B-1
guaranteed payments on the Participant's death in the event his or her
designated beneficiary predeceases the Participant or dies during the
guaranteed payment period.
(b) If the Participant fails to designate a secondary beneficiary and
the Participant's designated beneficiary predeceases the Participant, any
guaranteed payments on the Participant's death shall be paid in a lump sum
to either the Participant's personal representative or heirs at law as
determined under paragraph (d) below.
(c) If the Participant fails to designate a secondary beneficiary and
the Participant's designated beneficiary dies while receiving payments
during the guaranteed payment period, the designated beneficiary's interest
in the remaining guaranteed payments shall be paid in a lump sum to either
the designated beneficiary's personal representative or heirs at law as
determined under paragraph (d) below.
(d) In the event the deceased Participant or deceased designated
beneficiary under paragraphs (b) and (c) above, respectively, is not a
resident of California at the date of his or her death, the Committee, in
its discretion, may require the establishment of ancillary administration
in California. If the Committee cannot locate a qualified personal
representative of the deceased Participant or deceased designated
beneficiary, or if administration of the deceased Participant's or deceased
designated beneficiary's estate is not otherwise required, the Committee,
in its discretion, may pay the remaining guaranteed payments (or interest
therein) to the deceased Participant's or deceased designated beneficiary's
heirs at law (determined in accordance with the laws of the State of
California as they existed at the date of the Participant's or designated
beneficiary's death).
B.4 Notwithstanding anything in the Plan to the contrary, the reductions
applied to the Accrued Benefits of Participants whose last Severance Date was
prior to July 27, 1989 to reflect the value of coverage for pre-retirement death
benefits shall no longer apply to benefits with Annuity Starting Dates on or
after July 1, 2002.
B-2
APPENDIX C
Benefit Years and Vesting Years include service with the following Affiliated
Companies (or their predecessors) effective on the dates shown:
Vesting Benefit
Service Service
Effective Effective
Date Date
--------- ---------
Allergan America At hire 04/11/80
Allergan Corporate At hire At hire*
Allergan Humphrey 02/07/80 01/01/87
Allergan International At hire At hire*
Allergan Medical Optics At hire 04/30/86
Allergan Medical Optics-Ioptex At hire 09/08/94
Allergan Medical Optics-Lenoir At hire 03/01/92
(Departments 120-130)
Allergan Medical Optics-Puerto Rico At hire 04/30/86
Allergan Optical Inc. At hire 11/13/87
(formerly International Hydron Corporation)
Allergan Optical Puerto Rico, Inc. At hire 11/13/87
Allergan Optical At hire At hire*
Allergan Pharmaceuticals At hire At hire*
Allergan Phoenix At hire 12/01/95
Allergan Puerto Rico, Inc. At hire 04/11/80
(formerly Allergan Caribbean)
Allergan Surgical At hire At hire*
(formerly Innovative Surgical Products)
Herbert Labs At hire At hire*
Herald Pharmacal At hire 08/03/95
Oculinum, Inc. At hire 06/28/91
Optical Micro Systems, Inc. At hire 01/27/95
* If employment terminated between April 11, 1980 and January 1, 1986,
Benefit Years shall be credited from April 11, 1980 or date of hire,
whichever is later.
C-1