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EXHIBIT 10.1
ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
RESTATED
1994
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TABLE OF CONTENTS
ARTICLE I
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Name, Effective Date and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Name and Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Participation after Reemployment . . . . . . . . . . . . . . . . . . . . 14
3.3 Duration of Participation . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Participation After Normal Retirement Age . . . . . . . . . . . . . . . . 14
ARTICLE IV
Contributions and Allocation to Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Contributions to the Trust Fund . . . . . . . . . . . . . . . . . . . . . 15
4.2 Allocation of Contributions to Trust Fund . . . . . . . . . . . . . . . . 15
4.3 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 17
4.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Employee Contributions and Rollovers . . . . . . . . . . . . . . . . . . 17
ARTICLE V
Vesting and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 No Vested Rights Except as Herein Specified . . . . . . . . . . . . . . . 18
5.2 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Severance When Less Than Fully Vested . . . . . . . . . . . . . . . . . . 18
5.4 Distribution To a Fully Vested Participant . . . . . . . . . . . . . . . 19
5.5 Distribution upon Death . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Distribution upon Disability . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Put Option for Company Stock Allocated to ESOP Accounts . . . . . . . . . 23
5.11 Diversification Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13 Lapsed Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
Trust Fund and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Single Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Investment of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 Certain Offers for Company Stock . . . . . . . . . . . . . . . . . . . . 30
6.5 Securities Law Limitation . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Accounting and Valuations . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Reserved for Future Modification . . . . . . . . . . . . . . . . . . . . 36
6.9 Non-Diversion of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 36
6.10 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund 37
6.11 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.13 Trustee Records to be Maintained . . . . . . . . . . . . . . . . . . . . 38
6.14 Annual Report of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 38
6.15 Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
Operation and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Appointment of Committee . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Transaction of Business . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.3 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Responsibility of Committee . . . . . . . . . . . . . . . . . . . . . . . 40
7.5 Committee Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 Additional Powers of Committee . . . . . . . . . . . . . . . . . . . . . 42
7.7 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 42
7.8 Application for Determination of Benefits . . . . . . . . . . . . . . . . 42
7.9 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . 44
7.11 Compensation of Committee and Plan Expenses . . . . . . . . . . . . . . . 44
7.12 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.13 Voting of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.14 Reliance Upon Documents and Opinions . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
Amendment and Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Right to Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 Adoption of Plan by Affiliated Companies . . . . . . . . . . . . . . . . 47
ARTICLE IX
Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X
Termination and Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.1 Right to Terminate Plan . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.2 Effect on Trustee and Committee . . . . . . . . . . . . . . . . . . . . . 49
10.3 Merger Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.4 Effect of Reorganization, Transfer of Assets or
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XI
Limitation on Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.3 Other Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . 53
11.4 Defined Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.5 Adjustments for Excess Combined Plan Fraction and Excess Annual Additions 53
11.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.7 Treatment of 415 Suspense Account Upon Termination . . . . . . . . . . . 55
ARTICLE XII
Top-Heavy Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.1 Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.3 Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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12.4 Minimum Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.5 Reserved for Future Modifications . . . . . . . . . . . . . . . . . . . . 59
12.6 Maximum Annual Addition . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.7 Minimum Vesting Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.8 Non-Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XIII
Restriction on Assignment or Other Alienation of Plan Benefits . . . . . . . . . . . . . . . . 61
13.1 General Restrictions Against Alienation . . . . . . . . . . . . . . . . . 61
13.2 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . 61
ARTICLE XIV
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.1 No Right of Employment Hereunder . . . . . . . . . . . . . . . . . . . . 65
14.2 Limitation on Company Liability . . . . . . . . . . . . . . . . . . . . . 65
14.3 Effect of Article Headings . . . . . . . . . . . . . . . . . . . . . . . 65
14.4 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.6 Withholding For Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.7 California Law Controlling . . . . . . . . . . . . . . . . . . . . . . . 65
14.8 Plan and Trust as One Instrument . . . . . . . . . . . . . . . . . . . . 65
14.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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THE ALLERGAN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ARTICLE I
Name, Effective Date and Purpose
1.1 Name and Effective Date. The Plan established and
adopted hereunder shall be known as the Allergan, Inc. Employee Stock Ownership
Plan (the "Plan"). On or about July 26, 1989, SmithKline Beckman distributed
the stock of Allergan, Inc. to its shareholders. (The date upon which such
distribution occurred shall hereinafter be referred to as the "Spin-off Date".)
The provisions of the trust maintained under this Plan for the purpose of
holding the Plan's assets (the "Trust") are set forth in a separate instrument
known as the Allergan, Inc. Employee Stock Ownership Plan Trust Agreement,
established as of the Effective Date of the Plan. The Plan is intended to be a
stock bonus plan qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), which also qualifies as an employee stock
ownership plan, as defined in Section 4975(e)(7) of the Code. The Trust is
intended to be a qualified trust under Section 501(a) of the Code. The
provisions of the Plan are intended to comply with the Tax Reform Act of 1986
and the Technical and Miscellaneous Revenue Act of 1988. This Plan document
incorporates certain amendments which were submitted to the Internal Revenue
Service (the "IRS") pursuant to the processing of an application for issuance
by the IRS of the favorable determination letter covering the Plan, dated
January 16, 1990.
1.2 Purpose. The purpose of this Plan is to offer
Participants a systematic program for accumulation of beneficial ownership
interests in Company Stock and to encourage and develop employee interest and
involvement in the Company. Through the beneficial ownership of Company Stock,
enhanced by means of possible debt financed acquisition of Company Stock,
Allergan, Inc. intends to provide Participants with a meaningful voice in
matters affecting both it and Participants as shareholders. In order to
accomplish these objectives, the Plan is expressly authorized and directed to
acquire and hold Company Stock as its primary investment. All assets acquired
under this Plan shall be administered, distributed, forfeited and otherwise
governed by the provisions of this Plan which is to be administered by the
Committee.
1.3 Capitalized Terms. All capitalized terms used in this
Plan shall have the meanings set forth in Article II hereof unless the context
clearly indicates otherwise.
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ARTICLE II
Definitions
2.1 "Affiliated Company" shall mean (a) any corporation,
other than the Sponsor, which is included in a controlled group of corporations
(within the meaning of Section 414(b) of the Code) of which the Sponsor is a
member, (b) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Section 414(c) of the Code) with the
Sponsor, (c) any entity or organization, other than the Sponsor, which is a
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) of which the Sponsor is a member, and (d) any entity or organization,
other than the Sponsor, which is affiliated with the Sponsor under Section
414(o) of the Code. Any entity shall be an Affiliated Company pursuant to this
Paragraph only during the period of time in which such entity has the required
relationship with the Sponsor under Subparagraphs (a), (b), (c) or (d) of this
Paragraph.
2.2 "Beneficiary" shall mean the person, or estate of a
deceased Participant, entitled to benefits hereunder upon the death of a
Participant.
2.3 "Board of Directors" shall mean the Board of Directors
of the Sponsor as it may from time to time be constituted.
2.4 "Break in Service" shall mean, with respect to an
Employee, each period of 12 consecutive months during a Period of Severance
that commences on the Employee's Severance Date or on any anniversary of such
Severance Date.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended. Where the context so requires, a reference to a particular Code
Section shall also refer to any successor provision of the Code to such Code
Section.
2.6 "Committee" or "Plan Committee" shall mean the
committee to be appointed under the provisions of Section 7.1.
2.7 "Company" shall mean collectively the Sponsor and each
Affiliated Company that adopts this Plan in accordance with Section 8.2.
2.8 "Company Stock" shall mean any class of stock of the
Sponsor which both constitutes "qualifying employer securities" as defined in
Section 407(d)(5) of ERISA and "employer securities" as defined in Section
409(1) of the Code.
2.9 "Compensation" shall mean the amounts paid during a
Plan Year to an Employee by the Company for services rendered, including base
earnings, commissions and similar incentive compensation, cost of living
allowances earned within the United States of America, holiday pay, overtime
earnings, pay received for election board duty, pay received for jury and
witness duty, pay received for military service (annual training), pay received
for being available for work, if required (call-in premium), amounts of salary
reduction elected by the Participant under a Code Section 401(k) cash or
deferred arrangement, shift differential and premium, sickness/accident related
pay, vacation pay, vacation shift premium, and bonus amounts paid under the
following programs:
(1) Sales bonus,
(2) "Management Bonus Payments" (MBP), either in cash or in
restricted stock,
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(3) Group performance sharing payments, such as the
"Partners for Success", and "Profit Sharing" for the Humphrey
operations;
but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of
living adjustments and differentials paid for service outside of the United
States, expatriate reimbursement payments, and tax equalization payments; forms
of imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance
pay; Share Value Plan or other long-term incentive awards, bonuses or payments;
special individual recognition payments which are nonrecurring in nature,
including the "Impact Award" payments, and "Employee of the Year" payments;
tuition reimbursement; and contributions by the Company under this Plan or
distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Section 401(a) of the
Code (other than contributions constituting salary reduction amounts elected by
the Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees. The
Compensation taken into account for determining all benefits provided under the
Plan for any Plan Year shall not exceed $200,000. This limitation shall be
adjusted by the Secretary of the Treasury at the same time and in the same
manner as under Code Section 415(d), except that the dollar limitation in
effect on January 1 of any calendar year shall be effective for years beginning
in such calendar year and the first adjustment to the $200,000 limitation shall
be effected on January 1, 1990. If the period for determining Compensation
used in calculating an Employee's allocation for a Plan Year is a short Plan
Year (i.e. shorter than 12 months), the Compensation limit is an amount equal
to the otherwise applicable Compensation limit multiplied by a fraction, the
numerator of which is the number of months in the short Plan Year, and the
denominator of which is 12. Solely for the purpose of determining the
limitations of Code Section 401(a)(17) on the Compensation of an Employee, the
rules of Code Section 414(q)(6) shall apply, except that in applying such
rules, the term "family" shall include only the spouse of the Employee and any
lineal descendants of the Employee who have not attained age 19 before the end
of the Plan Year. If, as the result of the application of such rules the
adjusted $200,000 limitation is exceeded, then the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation. Notwithstanding the foregoing, for purposes of applying the
provisions of Articles XI and XII, an Employee's Compensation shall be
determined pursuant to the definition of "Compensation" as set forth in
Sections 11.6 or 12.2(i), as the case may be.
2.9A Computation Period
(a) "Computation Period" shall mean the consecutive twelve
(12) month period used for determining whether an Employee is eligible
to participate in the Plan pursuant to Section 3.1.
(b) An Employee's initial Computation Period shall be the
twelve-month period commencing on his Employment Commencement Date or
Reemployment Commencement Date (whichever is applicable).
(c) An Employee's second Computation Period (and all
subsequent Computation Periods) shall be the Plan Year that includes or
begins on the first anniversary of such Employee's Employment
Commencement Date or Reemployment Commencement Date (whichever is
applicable) and each subsequent Plan Year.
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2.10 "Credited Service" shall mean, with respect to each
Employee, his years and months of Credited Service determined in accordance
with the following rules:
(a) In the case of any Employee who was employed by the
Company on the Effective Date, for the period prior to such Effective
Date such Employee shall be credited with Credited Service under this
Plan equal to the period (if any) of uninterrupted employment of such
Employee with the Company up to and including the day before the
Effective Date. For purposes of this Paragraph (a), such a period of
pre-Effective Date employment shall not be deemed to have been
interrupted by reason of (i) any break in or interruption of employment
which continued for less than one year, or (ii) any Leave of Absence
granted to such Employee under applicable Company policies regarding
Leaves of Absence.
(b) On and after the Effective Date, an Employee shall
receive Credited Service credit for the elapsed period of time between
each Employment Commencement Date (or Reemployment Commencement Date) of
the Employee and the Severance Date which immediately follows that
Employment Commencement Date (or Reemployment Commencement Date).
Solely for the purpose of determining an Employee's Credited Service
under this Paragraph (b), in the case of an Employee who is employed on
the Effective Date, that date shall be deemed to be an Employment
Commencement Date of the Employee (with service credit for periods prior
to the Effective Date to be determined under Paragraph (a) above). An
Employee who is absent from work on an authorized Leave of Absence shall
be deemed to have incurred a Severance (if any) in accordance with the
rules of Section 2.34.
(c) An Employee shall receive Credited Service credit for
periods between a Severance and his subsequent Reemployment Commencement
Date in accordance with the following rules:
(i) If an Employee incurs a Severance by reason of a
quit, discharge or retirement (other than such a Severance
occurring during an approved Leave of Absence, which situation
is covered under the provisions of Subparagraph (ii) below), and
the Employee is later reemployed by the Company prior to his
incurring a Break in Service, he shall receive Credited Service
for the period commencing with his Severance Date and ending
with his subsequent Reemployment Commencement Date.
(ii) If an Employee is on an approved Leave of Absence
and then incurs a Severance by reason of a quit, discharge or
retirement during the Leave of Absence, or a failure to return
to work as scheduled following such Leave, and such Employee is
later reemployed by the Company within 12 months of the date on
which he discontinued active employment and commenced such
Leave, he shall receive Credited Service for the period
commencing with his Severance Date and ending with his
subsequent Reemployment Commencement Date. For such purposes an
Employee shall be deemed to have incurred a Severance (if any)
in accordance with the rules of Section 2.34.
(iii) Other than as expressly set forth above in this
Paragraph (c), an Employee shall receive no Credited Service
with respect to periods between a Severance and a subsequent
Reemployment Commencement Date.
(d) For all purposes of this Plan, an Employee's total
Credited Service shall be determined by aggregating any separate periods
of Credited Service separated by any Breaks in Service.
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(e) An Employee shall be credited with Credited Service
with respect to a period of employment with an Affiliated Company, but
only to the extent that such period of employment would be so credited
under the foregoing rules set forth in this Section had such Employee
been employed during such period by the Company.
(f) Notwithstanding the foregoing, unless the Sponsor shall
so provide by resolution of its Board of Directors, or unless otherwise
expressly stated in this Plan, an Employee shall not receive such
Credited Service credit for any period of employment with an Affiliated
Company prior to such entity becoming an Affiliated Company, except that
Employees of Allergan Optical, Inc., Allergan Humphrey, and Allergan
Medical Optics shall receive Credited Service credit for any period of
employment with such companies prior to the time such companies became
Affiliated Companies.
2.11 "Disability" shall mean any mental or physical condition
which, in the judgment of the Committee, based on such competent medical
evidence as the Committee may require, renders an individual unable to engage
in any substantial gainful activity for the Company for which he is reasonably
fitted by education, training, or experience and which condition can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of at least 12 months. The determination by the Committee,
upon opinion of a physician selected by the Committee, as to whether a
Participant has incurred a Disability shall be final and binding on all
persons.
2.12 "Effective Date" shall mean the date which is the day
after the Spin-off Date, as that term is defined in Section 1.1.
2.13 "Employee" shall mean any person who is employed by the
Sponsor or any Affiliated Company in any capacity, 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 any such Affiliated Company, as well
as any other person qualifying as a common-law employee of the Sponsor or any
such Affiliated Company.
2.14 "Eligible Employee" shall mean any United States-based
payroll Employee of the Company and any expatriate Employee of the Company who
is a United States citizen or permanent resident, but excluding any Employee of
the Company who is employed at the Sponsor's facility in Puerto Rico, any
non-resident alien, any non-regular manufacturing site transition Employee, any
independent contractor, any individual who must be treated as a leased employee
under Code Section 414(n), any temporary employee classified as such by the
Company, and any Employee covered by a collective bargaining agreement.
2.15 "Eligible Retirement Plan" shall mean an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a) that
accepts an Eligible Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
2.16 "Eligible Rollover Distribution" shall mean any
distribution, on or after January 1, 1993, of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover Distribution
does not include:
(a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
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Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more;
(b) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and
(c) the portion of any distribution that is not includable
in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
For purposes of this Section, "Distributee" shall mean
any Employee or former Employee receiving a distribution from the Plan. A
Distributee also includes the Employee or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations Order (as defined in
Article XV) are Distributees with regard to the interest of the spouse or
former spouse.
2.17 "Employment Commencement Date" shall mean the date on
which an Employee first performs an Hour of Service in any capacity for the
Sponsor or any Affiliated Company. Unless the Sponsor shall expressly
determine otherwise, and except as is expressly provided otherwise in this Plan
or in resolutions of the Board of Directors, an Employee shall not, for the
purpose of determining his Employment Commencement Date, be deemed to have
commenced employment with an Affiliated Company prior to the effective date on
which such entity became an Affiliated Company.
2.18 "Entry Date" shall mean the first day of each calendar
quarter commencing each January 1, April 1, July 1, and October 1 of each Plan
Year.
2.19 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time. Where the context so
requires, a reference to a particular ERISA section shall also refer to any
successor provision of ERISA to such ERISA section.
2.20 "ESOP Account" shall mean, with respect to each
Participant, the account established and maintained for purposes of holding and
accounting for the Participant's allocated share of assets of the Plan,
including any subaccounts established thereunder from time to time (including
his Stock Subaccount and Non-Stock Subaccount established pursuant to Section
6.6 of this Plan).
2.21 "Exempt Loan" shall mean any loan to the Plan or Trust not
prohibited by Section 4975(c) of the Code, including a loan which meets the
requirements set forth in Section 4975(d)(3) of the Code and the Regulations
promulgated thereunder, the proceeds of which are used to finance the
acquisition of Company Stock or to refinance such a loan.
2.22 "Exempt Loan Suspense Subfund" shall mean the subfund
established under Section 4.1 hereof as part of the Trust Fund to hold Company
Stock purchased with the proceeds of an Exempt Loan pending the allocation of
such Company Stock to individual ESOP Accounts.
2.23 "Hour of Service".
(a) "Hour of Service" of an Employee shall mean the
following:
(i) Each hour for which the Employee is paid by the
Company or an Affiliated Company or entitled to payment for the
performance of services as an Employee.
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(ii) Each hour in or attributable to a period of
time during which the Employee performs no duties (irrespective
of whether he/she has terminated his/her Employment) due to a
vacation, holiday, illness, incapacity (including pregnancy or
disability), layoff, jury duty, military duty or a Leave of
Absence (if the Leave of Absence is an unpaid medical Leave of
Absence, the Employee will accrue hours for the duration of such
leave for the first six months of such leave), for which he/she
is so paid or so entitled to payment, whether direct or
indirect. However, no such hours shall be credited to an
Employee if (A) such Employee is directly or indirectly paid or
entitled to payment for such hours and (B) such payment or
entitlement is made or due under a plan maintained solely for
the purpose of complying with applicable worker's compensation,
unemployment compensation, or disability insurance laws, or is a
payment which solely reimburses the Employee for medical or
medically-related expenses incurred by him/her.
(iii) Each hour for which he/she is entitled to back
pay, irrespective of mitigation of damages, whether awarded or
agreed to by the Company or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of
Service with respect to such hour under Subparagraphs (i) or
(ii) above.
Hours of Service under Paragraphs (a)(ii) and (a)(iii) shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R.
Section 2530.200b-2(b). All Hours of Service determined under the rules
of Paragraph (a) shall be credited to the Computation Period to which the
payment relates, rather than the period in which it is made.
(b) In the event that an Employee is compensated for duties
performed on a basis other than actual hours worked and no records of
the Employee's actual working hours are maintained, the Employee shall
be deemed to have completed ten (10) Hours of Service for each day, or
portion thereof during which he/she is credited with an Hour of Service
for the Company or an Affiliated Company.
(c) Unless the Company shall expressly determine otherwise,
and except as may be expressly provided otherwise in this Plan, an
Employee shall not receive credit for his/her Hours of Service completed
with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company.
2.24 "Investment Manager" shall mean the one or more
investment managers, if any, appointed pursuant to Section 6.15 and who
constitute investment managers under Section 3(38) of ERISA.
2.25 "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 year, and such services are of a type historically performed by
employees in the business field of the 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:
(a) Such 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 in Code Section
415(c)(3), but including amounts contributed pursuant to a salary
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reduction agreement which are excludable from the employee's gross
income under Code Section 125, Code Section 402(a)(8), Code Section
402(h) or Code Section 403(b); (ii) immediate participation; and
(iii) full and immediate vesting; and
(b) Leased Employees do not constitute more than 20 percent
(20%) of the recipient's non-highly compensated workforce.
2.26 "Leave of Absence".
(a) "Leave of Absence" shall mean any personal leave from
active employment (whether with or without pay) duly authorized by the
Company under the Company's standard personnel practices. All persons
under similar circumstances shall be treated alike in the granting of
such Leaves of Absence. Leaves of Absence may be granted by the Company
for reasons of health (including temporary sickness or short term
disability) or public service or for any other reason determined by the
Company to be in its best interests.
(b) In addition to Leaves of Absence as defined in
Paragraph (a) above, the term Leave of Absence shall also mean a
Maternity or Paternity Leave, as defined herein, but only to the extent
and for the purposes required under Paragraph (c) below. As used
herein, "Maternity or Paternity Leave" shall mean an absence from work
for any period (i) by reason of the pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption
of the child by the Employee, or (iv) for purposes of caring for the
child for a period beginning immediately following the birth or
placement referred to in clauses (ii) or (iii) above.
(c) Subject to the provisions of Paragraph (d) below, a
Maternity or Paternity Leave described in Paragraph (b) above shall be
deemed to constitute an authorized Leave of Absence for purposes of this
Plan only to the extent consistent with the following rules:
(i) For purposes of determining whether a Break in
Service has occurred, the Severance Date of a Participant who is
absent by reason of a Maternity or Paternity Leave shall not be
deemed to occur any earlier than the second anniversary of the
date upon which such Maternity or Paternity Leave commences.
(ii) The Maternity or Paternity Leave shall be treated
as a Leave of Absence solely for purposes of determining whether
or not an Employee has incurred a Break in Service.
Accordingly, such a Maternity or Paternity Leave shall not
result in an accrual of Credited Service for purposes of the
vesting provisions of this Plan or for purposes of determining
eligibility to participate in the Plan pursuant to the
provisions of Article III (except only in determining whether a
Break in Service has occurred).
(iii) A Maternity or Paternity Leave shall not be treated
as a Leave of Absence unless the Employee provides such timely
information as the Committee may reasonably require to establish
that the absence is for the reasons listed in Paragraph (b)
above and to determine the number of days for which there was
such an absence.
(d) Notwithstanding the limitations provided in Paragraph
(c) above, a Maternity or Paternity Leave described in Paragraph (b)
above shall be treated as an authorized Leave of Absence, as described
in Paragraph (a), for all purposes of this Plan to the extent the period
of absence is one authorized as a Leave of Absence under the Company's
standard personnel practices and thus is covered by the provisions of
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Paragraph (a) above without reference to the provisions of Paragraph (b)
above, provided, however, that the special rule provided under this
Paragraph (d) shall not apply if it would result in a Participant who is
absent on a Maternity or Paternity Leave being deemed to have incurred a
Break in Service sooner than under the rules set forth in Paragraph (c).
2.27 "Normal Retirement Age" shall mean an Employee's
sixty-fifth (65th) birthday.
2.28 "Participant" shall mean any Employee who has satisfied
the requirements of Article III for participation in this Plan, who has
commenced participation in the Plan as provided in said Article III, and who
retains rights under the Plan.
2.29 "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.
2.30 Reserved for future modifications.
2.31 Reserved for future modifications.
2.32 "Plan" shall mean the Allergan, Inc. Employee Stock
Ownership Plan described herein and as amended from time to time.
2.33 "Plan Administrator" shall mean the administrator of the
Plan, within the meaning of Section 3(16)(A) of ERISA. The Plan Administrator
shall be Allergan, Inc.
2.34 "Plan Year" shall mean the period commencing on the
Effective Date and ending on December 31, 1989 and each subsequent calendar
year.
2.35 "Reemployment Commencement Date" shall mean, in the case
of an Employee who incurs a Severance and who is subsequently reemployed by the
Sponsor or an Affiliated Company, the first day following the Severance on
which the Employee is credited with an Hour of Service for the Sponsor or
Affiliated Company with respect to which he is compensated or entitled to
compensation by the Sponsor or Affiliated Company. Unless the Sponsor shall
expressly determine otherwise and except as is expressly provided otherwise in
this Plan, an Employee shall not, for the purpose of determining his
Reemployment Commencement Date, be deemed to have commenced employment with an
Affiliated Company prior to the effective date on which such entity becomes an
Affiliated Company.
2.36 "Severance" shall mean the termination of an Employee's
employment with the Sponsor or Affiliated Company by reason of such Employee's
quit, discharge, Disability, death, retirement, or otherwise. For purposes of
determining whether an Employee has incurred a Severance, the following rules
shall apply:
(a) An Employee shall not be deemed to have incurred a
Severance (i) because of his absence from employment with the Sponsor or
Affiliated Company by reason of any paid vacation or holiday period, or
(ii) by reason of any Leave of Absence, subject to the provisions of
Paragraph (b) below.
(b) For purposes of this Plan, an Employee shall be deemed
to have incurred a Severance on the earlier of (i) the date on which he
dies, resigns, is discharged, or otherwise terminates his employment
with the Sponsor or Affiliated Company; or (ii) the date on which he is
scheduled to return to work after the expiration of an approved Leave
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of Absence, if he does not in fact return to work on the scheduled
expiration date of such Leave; or (iii) in the case of a Leave of
Absence for longer than one year, the first anniversary of the
commencement of such Leave, provided such Employee does not actually
return to work on or before said first anniversary date. In no event
shall an Employee's Severance be deemed to have occurred before the last
day on which such Employee performs any services for the Sponsor or
Affiliated Company in the capacity of an Employee with respect to which
he is compensated or entitled to compensation by the Sponsor or
Affiliated Company.
(c) Notwithstanding the foregoing, in the case of a
Participant who is absent by reason of a Maternity or Paternity Leave,
the provisions of Section 2.26(c)-(d) shall apply for purposes of
determining whether such a Participant has incurred a Break in Service
by reason of such Leave.
2.37 "Severance Date" shall mean, in the case of any Employee
who incurs a Severance, the day on which such Employee is deemed to have
incurred said Severance as determined in accordance with the provisions of
Section 2.36, provided, however, that the special rule set forth under Section
2.26(c)-(d) shall apply with respect to determining whether a Participant on a
Maternity or Paternity Leave has incurred a Break in Service. In the case of
any Employee who incurs a Severance as provided under Section 2.36 and who is
entitled to a subsequent payment of compensation for reasons other than future
services (e.g., as back pay for past services rendered or as payments in the
nature of severance pay), the Severance Date of such Employee shall be as of
the effective date of the Severance event (e.g., the date of his death,
effective date of a resignation or discharge, etc.), and the subsequent payment
of the aforementioned type of post-Severance compensation shall not operate to
postpone the timing of the Severance Date for purposes of this Plan.
2.38 "Sponsor" shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.
2.39 "Trust" or "Trust Fund" shall mean the trust maintained
pursuant to the Trust Agreement and as described in Section 6.1 hereof, which
shall hold all cash and securities and all other assets of whatsoever nature
deposited with or acquired by the Trustee in its capacity as Trustee hereunder,
together with accumulated net earnings.
2.40 "Trust Agreement" shall mean the agreement between the
Trustee and the Sponsor pursuant to which the Trust is maintained.
2.41 "Trustee" shall mean the one or more trustees of the Trust
established pursuant to Section 6.1 hereof.
2.42 "Valuation Date" shall mean the last day of each Plan Year
and any other date which the Committee may designate from time to time.
2.43 "415 Suspense Account" shall mean the account (if any)
established and maintained in accordance with the provisions of Article XI for
the purpose of holding and accounting for allocations of excess Annual
Additions (as defined in Article XI).
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ARTICLE III
Eligibility and Participation
3.1 Commencement of Participation. Every Eligible Employee
shall become a Participant on the Entry Date that is concurrent with or
immediately follows the later to occur of:
(a) The date such Eligible Employee performs an Hour of
Service as an Eligible Employee; or
(b) The date such Eligible Employee completes six (6)
months of Credited Service with a Sponsor or Affiliated Company as an
Employee, provided such Eligible Employee is an Eligible Employee as
of such Entry Date.
Notwithstanding the foregoing, any Employee who is an Eligible Employee
on the Effective Date and who has satisfied the requirements of
paragraphs (a) and (b), above, as of the Effective Date shall become a
Participant on the Effective Date.
3.2 Participation after Reemploymentt. Any Employee who is
not a Participant but who has completed the service requirement specified in
Section 3.1(b) shall, if he incurs a Severance and is subsequently reemployed
as an Eligible Employee, become a Participant as of his Reemployment
Commencement Date as an Eligible Employee. Any Employee who has not completed
the service requirement specified in Section 3.1(b) shall, if he incurs a
Severance and is subsequently reemployed, become a Participant on the date
determined under Section 3.1 above.
3.3 Duration of Participation. An Eligible Employee who
becomes a Participant shall remain an active Participant until he incurs a
Severance, at which time he shall become an inactive Participant until he
receives a distribution of his entire vested interest in his ESOP Account.
Once such a distribution is made, any Participant who incurs such a Severance
shall no longer be considered a Participant in this Plan. Any Participant who
(a) transfers out of employment with the Company but who remains an Employee of
an Affiliated Company that has not adopted this Plan pursuant to Section 8.2,
or (b) remains an Employee of the Company but is no longer an Eligible
Employee, shall become an inactive Participant. Any Compensation of an
Employee while an inactive Participant shall not be included as Compensation
for the purpose of allocations based on Compensation made pursuant to Article
IV.
3.4 Participation After Normal Retirement Age. An Eligible
Employee may become, or continue as, a Participant after reaching his Normal
Retirement Age in the same manner as an Eligible Employee who has not reached
his Normal Retirement Age.
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ARTICLE IV
Contributions and Allocation to Accounts
4.1 Contributions to the Trust Fund. The Company may
contribute to the Trust Fund for each Plan Year an amount to be determined by
the Board of Directors solely in its discretion. Such amount shall be
contributed in cash or Company Stock and paid over to the Trustee for
allocation to the Trust Fund not later than the date prescribed for filing the
Sponsor's federal income tax return (including all extensions thereto) for its
fiscal year corresponding to such Plan Year. Contributions shall first be
applied, if necessary, to reinstate the ESOP Accounts of applicable reemployed
Participants who had previously forfeited their ESOP Accounts pursuant to
Section 5.3 of this Plan, but only after all forfeitures for the Plan Year have
been so applied pursuant to Section 4.4. Some or all of the remaining
contributions under this Section 4.1 may be applied to repay any principal
and/or interest outstanding on any Exempt Loan or to pay Plan expenses as
provided in Section 7.11. The determination of the extent to which such
contributions shall be used to repay such Exempt Loans or pay Plan expenses
shall be made at the sole discretion of the Committee. Company Stock acquired
by the Trust Fund through an Exempt Loan shall be added to and maintained in
the Exempt Loan Suspense Subfund and shall thereafter be released from the
Exempt Loan Suspense Subfund and allocated to Participants' ESOP Accounts as
provided in Section 4.2. Contributions in excess of amounts used for other
purposes described in this Section 4.1 shall be allocated to the ESOP Accounts
of Participants as provided in Section 4.2.
4.2 Allocation of Contributions to Trust Fund.
(a) As of a date not later than the last day of each Plan
Year, an allocation shall be made to the ESOP Account of each "Eligible
Participant" of such Participant's allocable share for such Plan Year of
(1) Company contributions of Company Stock contributed in kind to the
Trust Fund and (2) Company contributions in other than Company Stock,
which are not used for other purposes described in Section 4.1. For the
purposes of this Section 4.2, the term "Eligible Participant" shall
include all Participants who are Eligible Employees on the last day of
such Plan Year or who ceased to be Eligible Employees during such Plan
Year due to death, Disability, or retirement at or after age 55 (as such
retirement is determined under the Retirement Plan for Employees of
SmithKline Beckman Corporation or any successor qualified defined
benefit plan established by Allergan, Inc. when such plan is
established). Such allocations shall be made in the same proportion
that the Compensation for the Plan Year for such Eligible Participant
bears to the total Compensation of all Eligible Participants for such
Plan Year.
(b) Company Stock acquired for the Trust Fund through an
Exempt Loan shall be released from the Exempt Loan Suspense Subfund as
the Exempt Loan is repaid, in accordance with the provisions of this
Section 4.2(b).
(1) For each Plan Year until the Exempt Loan is fully repaid,
the number of shares of Company Stock released from the Exempt
Loan Suspense Subfund shall equal the number of unreleased
shares immediately before such release for the current Plan Year
multiplied by the "Release Fraction." As used herein, the
Release Fraction shall be a fraction, the numerator of which is
the amount of principal and interest paid on the Exempt Loan for
such current Plan Year, and the denominator of which is the sum
of the numerator plus the principal and interest to be paid on
such Exempt Loan for all future years during the duration of the
term of such Loan (determined without reference to any possible
extensions or renewals thereof). Notwithstanding the foregoing,
in the event such Loan shall be repaid with the proceeds of a
subsequent Exempt Loan (the "Substitute Loan"), such repayment
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shall not operate to release all such Company Stock in the
Exempt Loan Suspense Subfund, but, rather, such release shall be
effected pursuant to the foregoing provisions of this Section
4.2(b) on the basis of payments of principal and interest on
such Substitute Loan.
(2) If the Committee so determines in its discretion, then in
lieu of applying the provisions of Section 4.2(b)(1) hereof with
respect to such Exempt Loan or Substitute Loan, shares shall be
released from the Exempt Loan Suspense Subfund as the principal
amount of an Exempt Loan is repaid (and without regard to
interest payments), provided the following three conditions are
satisfied:
(i) The Exempt Loan must provide for annual payments of
principal and interest at a cumulative rate that is not
less rapid at any time than level annual payments of
such amounts for ten years.
(ii) The interest portion of any payment is disregarded
only to the extent it would be treated as interest
under standard loan amortization tables.
(iii) If the Exempt Loan is renewed, extended or refinanced,
the sum of the expired duration of the Exempt Loan and
the renewal, extension or new Exempt Loan period must
not exceed ten years.
(3) It is intended that the provisions of this Section 4.2(b)
shall be applied and construed in a manner consistent with the
requirements and provisions of Treasury Regulation Section
54.4975-7(b)(8), and any successor Regulation thereto. All
Company Stock released from the Exempt Loan Suspense Subfund
during any Plan Year shall be allocated among Participants as
prescribed by Section 4.2(c) hereof, except to the extent
provided in Section 6.7.
(c) Shares of Company Stock released from the Exempt Loan
Suspense Subfund for a Plan Year in accordance with Section 4.2(b)
hereof and Section 6.7(b)(1) shall be held in the Trust Fund on an
unallocated basis until allocated by the Committee as of not later than
the last day of that Plan Year. The allocation of such shares shall be
made among the ESOP Accounts of Eligible Participants (as that term is
defined in Section 4.2(a)). The number of shares allocable to each such
Eligible Participant's ESOP Account shall be the number of shares which
bears the same ratio to the total shares released for such Plan Year as
the Compensation for the Plan Year for such Eligible Participant bears
to the total Compensation of all Eligible Participants for such Plan
Year.
(d) Notwithstanding the foregoing allocation rules, if the
aggregate amount of contributions for a Plan Year allocated to ESOP
Accounts pursuant to Paragraphs (a) through (c) above of Participants
who are highly compensated employees (within the meaning of Code Section
414(q)) exceed one-third of the aggregate contributions made for such
Plan Year, amounts allocated to highly compensated employees in excess
of one-third of such aggregate contributions shall be reallocated to
other Eligible Participants (as that term is defined in Section 4.2(a))
who are not highly compensated employees in the same proportion that the
Compensation for such Plan Year of each such Eligible Participant bears
to the total Compensation of all such non-highly compensated Eligible
Participants for such Plan Year.
4.3 Reserved for Future Modifications.
4.4 Forfeitures. Any amount which is forfeited pursuant to
Section 5.3 or 5.13 during a Plan Year shall be segregated from other amounts
held under the Plan and shall first be
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used to reinstate the ESOP Accounts of reemployed Participants (or
Beneficiaries, if applicable) who had previously forfeited such ESOP Accounts
and who have a right to reinstatement of their forfeited ESOP Accounts pursuant
to Section 5.3 or 5.13. Should any forfeitures then remain, they may next be
used to pay Plan expenses as provided under Section 7.11. Should any
forfeitures then remain, they shall be allocated as of the last day of the Plan
Year to the ESOP Accounts of Eligible Participants (as that term is defined in
Section 4.2(a)) based on Compensation in the same manner as allocations under
Section 4.2(a) and (c).
4.5 Employee Contributions and Rollovers. No Employee
contributions are permitted under the Plan. No rollover contributions to the
Plan are permitted whether or not any such contributions would satisfy the
applicable requirements of Code Sections 402, 403, 408 or 409.
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ARTICLE V
Vesting and Distributions
5.1 No Vested Rights Except as Herein Specified. No
Employee shall have any vested right or interest in any assets of the Trust,
except as provided in this Article V. Neither the making of any allocations
nor the credit to any ESOP Account of a Participant in the Trust shall vest in
any Participant any right, title, or interest in or to any assets of the Trust,
except as provided in this Article V.
5.2 Vesting.
(a) The interest of a Participant in amounts allocated to his
ESOP Account shall vest in accordance with the following schedule:
Year of Credited Service Vested Percentage
------------------------ -----------------
Less than 1 0%
1 but less than 2 20%
2 but less then 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
(b) Notwithstanding the above, a Participant shall become
fully vested in his or her ESOP Account upon the occurrence of the
death, Disability, or attainment of age 62 of such Participant while an
Employee, or upon the occurrence of a Change in Control pursuant to
Section 10.4(b).
5.3 Severance When Less Than Fully Vested. A Participant
who incurs a Severance and who is not or does not become 100% vested pursuant
to Section 5.2, (i) shall receive a distribution of the vested portion of his
or her ESOP Account in a single lump sum payment or (ii) may elect to have an
Eligible Rollover Distribution paid directly by the Trustee to the trustee of
an Eligible Retirement Plan in the form prescribed by Section 5.7 hereof, as
soon as practicable following the Participant's Severance Date, but in no event
later than the last day of the Plan Year following the Plan Year in which the
Participant incurred the Severance. The non-vested portion of such
Participant's ESOP Account shall be forfeited in accordance with the following
rules:
(a) In the event that a distribution of the entire vested
portion of such a Participant's ESOP Account is made pursuant to this
Section 5.3, the non-vested portion shall be forfeited as of such
Participant's Severance Date. In the event such Participant is rehired
by the Company prior to the date such Participant incurs five
consecutive Breaks in Service, the amount so forfeited shall be
reinstated to the Participant's ESOP Account as of the Participant's
Reemployment Commencement Date (without regard to any interest or
investment earnings on such amount). For the purpose of this Paragraph
(a), a Participant with no vested portion of his ESOP Account shall be
deemed to have received a distribution pursuant to this Paragraph (a).
(b) In the event such a Participant who incurs a Severance
does not receive a distribution of the entire vested portion of his ESOP
Account, such Participant's ESOP Account shall continue to be held by
the Trustee. Thereafter, when the Participant incurs five consecutive
Breaks in Service, the non-vested portion of such Participant's ESOP
Account shall be forfeited.
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(c) At any relevant time after Severance pursuant to
paragraphs (a) and (b) above, the Participant's vested portion of his
ESOP Account shall be equal to an amount ("X") determined by the
following formula:
X = P*(AB + D) - D
For the purposes of applying the formula:
P = the vested percentage at any relevant time determined
pursuant to Section 5.2
AB = the ESOP Account balance at the relevant time
D = the total amount of any distributions from the ESOP Account
since such Severance
5.4 Distribution To a Fully Vested Participant. A
Participant who incurs a Severance on or after becoming 100% vested pursuant to
Section 5.2, shall receive a distribution of his ESOP Account, in a single
lump-sum payment in the form prescribed by Section 5.8 hereof, as soon as
practicable following the Participant's Severance Date, but in no event later
than the last day of the Plan Year following the Plan Year in which the
Participant incurred the Severance.
5.5 Distribution upon Death.
(a) Upon the death of a Participant while still an
Employee, the Committee shall give such directions as may be necessary
to cause a distribution of his ESOP Account to be made in a single
lump-sum payment to the Beneficiary designated by the deceased
Participant in the form prescribed in Section 5.8 hereof, as soon as
practicable following the Participant's death, but in no event later
than the last day of the Plan Year following the Plan Year in which the
Participant died.
(b) Upon the death of a Participant after he ceases to be
an Employee but before he receives his entire vested interest in the
Trust, the Committee shall give such directions as may be necessary to
cause a distribution, in the manner and time provided in Section 5.5(a)
hereof, of any vested balance remaining in the Participant's ESOP
Account to the Beneficiary designated by the Participant.
(c) The Committee may require the execution and delivery of
such documents, papers and receipts as the Committee may determine
necessary or appropriate in order to establish the fact of death of the
deceased Participant and of the right and identity of any Beneficiary or
other person or persons claiming any benefits under this Section 5.5.
5.6 Distribution upon Disability. In the event the
Committee shall determine that a Participant has suffered a Disability while an
Employee, the Committee shall proceed to cause a distribution to be made of
such Participant's ESOP Account in a single lump-sum payment in the form
prescribed in Section 5.8 hereof as soon as practicable following the
Committee's determination that the Participant has incurred a Disability, but
in no event later than the last day of the Plan Year following the Plan Year in
which the Committee makes such determination.
5.7 Designation of Beneficiary.
(a) At any time, and from time to time, each Participant
shall have the unrestricted right to designate the Beneficiary to
receive the portion of his death benefit and to revoke any such
designation. Each such designation shall be evidenced by a written
instrument signed by the Participant and filed with the Committee.
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(b) If the Participant is married and designates a
Beneficiary other than his spouse, said designation shall not be honored
by the Committee unless accompanied by the written consent of said
spouse to said designation. Such consent (i) must designate a
Beneficiary which may not be changed without the consent of the spouse
(or the consent of the spouse expressly permits designation by the
Participant without any further consent by the spouse), (ii) must
acknowledge the effect of the designation, and (iii) must be witnessed
by a Plan representative or a notary public. No consent of such spouse
shall be necessary if it is established to the satisfaction of a Plan
representative that the consent required under this Paragraph (b) cannot
or need not be obtained because (i) there is no spouse, (ii) the spouse
cannot be located, or (iii) there exist such other circumstances which,
pursuant to Regulations under Code Section 417, permit a distribution to
another Beneficiary. Any consent of a spouse obtained pursuant to this
Paragraph (b) or any determination that the consent of the spouse cannot
(or need not) be obtained, shall be effective only with respect to that
spouse. If a Participant becomes married following his designation of a
Beneficiary other than his spouse, such designation shall be ineffective
unless the spousal consent requirements of this paragraph are satisfied
with respect to such spouse (subject, however, to the provisions of
Article XIII regarding Qualified Domestic Relations Orders).
(c) If the Participant is married and does not designate a
Beneficiary, the Participant's spouse shall be his Beneficiary for
purposes of this Section. If the deceased Participant is not married
and shall have failed to designate a Beneficiary, or if the Committee
shall be unable to locate the designated Beneficiary after reasonable
efforts have been made, or if such Beneficiary shall be deceased,
distribution of the Participant's death benefit shall be made by payment
of the deceased Participant's entire interest in the Trust to his
personal representative in a single lump-sum payment. In the event the
deceased Participant is not a resident of California at the date of his
death, the Committee, in its discretion, may require the establishment
of ancillary administration in California. If the Committee cannot
locate a qualified personal representative of the deceased Participant,
or if administration of the deceased Participant's estate is not
otherwise required, the Committee, in its discretion, may pay the
deceased Participant's interest in the Trust to his heirs at law
(determined in accordance with the laws of the State of California as
they existed at the date of the Participant's death).
5.8 Form of Distribution.
(a) All shares of Company Stock allocated to a
Participant's ESOP Account shall be distributed in the form of cash or
other property, unless the Participant elects under Paragraph (b) below
to receive the distribution in the form of Company Stock with cash in
lieu of fractional shares. To the extent that Company Stock must be
valued to effect such a distribution, such valuation shall be equal to
the fair market value of such stock determined as of the last Valuation
Date prior to the date of distribution.
(b) A Participant may elect that all shares of Company
Stock allocated to his ESOP Account be distributed in the form of
Company Stock with cash in lieu of fractional shares. Any cash or other
property in a Participant's ESOP Account ("non-stock assets") shall be
used to acquire Company Stock for distribution only if such Participant
further elects and only if such stock is available on the open market.
If such Participant elects to receive the non-stock assets in his ESOP
Account in Company Stock and such stock is available on the open market,
the value of such non-stock assets shall be used to acquire such whole
shares of Company Stock as may be acquired with such value and any
remaining amount shall be distributed in cash. Notwithstanding the
foregoing, if applicable corporate charter or bylaw provisions restrict
ownership of substantially all outstanding Company Stock to Employees or
to a plan or trust described in Section 401(a) of the Code, then any
distribution of a Participant's ESOP Account shall only be in cash.
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(c) Notwithstanding the foregoing, a Participant who
elected to diversify the investment of a portion of his ESOP Account
pursuant to Section 5.11(d)(2) or (3) shall not have the right to
receive such diversified portion in Company Stock, but, rather, shall
receive any distribution of such diversified portion in cash.
5.9 Distribution Rules. Notwithstanding the provisions of
Sections 5.3, 5.4, 5.5, 5.6, and 5.8 of the Plan regarding distributions of
Participants' ESOP Accounts, the following additional rules shall apply to all
such distributions.
(a) In no event shall any benefits under this Plan,
including benefits upon retirement, termination of employment, or
Disability, be paid to a Participant prior to the "Consent Date" (as
defined herein) unless the Participant consents in writing to the
payment of such benefits prior to said Consent Date. As used herein,
the term "Consent Date" shall mean the later of (1) the Participant's
62nd birthday, or (2) the Participant's Normal Retirement Age.
Notwithstanding the foregoing, the provisions of this Paragraph shall
not apply (1) following the Participant's death, or (2) with respect to
a lump-sum distribution of the vested portion of a Participant's ESOP
Account if the total amount of such vested portion does not exceed
$3,500.
(b) Unless the Participant elects otherwise pursuant to
Paragraph (a) above, distributions of the vested portion of a
Participant's ESOP Accounts shall commence no later than the 60th day
after the close of the Plan Year in which the latest of the following
events occurs: (1) the Participant's Normal Retirement Age; (2) the
tenth anniversary of the year in which the Participant commenced
participation in the Plan; or (3) the Participant's Severance.
(c) All distributions under this Plan shall be made in
accordance with the minimum distribution incidental benefit requirements
of Code Section 401(a)(9)(G) and in accordance with all regulations
issued under Code Section 401(a)(9). Accordingly, distributions of the
entire vested portion of a Participant's ESOP Accounts shall be made no
later than April 1 of the calendar year following the calendar year in
which the Participant attains age 70-1/2; provided, however, if the
Participant attains age 70-1/2 before January 1, 1988 and the
Participant was not a Five Percent Owner (as defined in Section 416(i)
of the Code) at any time during the Plan Year ending with or within the
calendar year in which such Participant attains age 66-1/2 or any
subsequent Plan Year, then the date required under this Paragraph (c)
shall be April 1 of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70-1/2 or (ii) the
calendar year in which the Participant retires.
(d) If it is not administratively practical to calculate
and commence payments by the latest date specified in the rules of
Paragraphs (a), (b) and (c) above because the amount of the
Participant's benefit cannot be calculated, or because the Committee is
unable to locate the Participant after making reasonable efforts to do
so, the payment shall be made as soon as is administratively possible
(but not more than 60 days) after the Participant can be located and the
amount of the distributable benefit can be ascertained.
(e) If any payee under the Plan is a minor or if the
Committee reasonably believes that any payee is legally incapable of
giving a valid receipt and discharge for any payment due him, the
Committee may have such payment, or any part thereof, made to the person
(or persons or institution) whom it reasonably believes is caring for or
supporting such payee, or, if applicable, to any duly appointed guardian
or committee or other authorized representative of such payee. Any such
payment shall be a payment for the account of such payee and shall, to
the extent thereof, be a complete discharge of any liability under the
Plan to such payee.
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5.10 Put Option for Company Stock Allocated to ESOP Accounts.
(a) Solely in the event that a Participant receives a
distribution consisting in whole or in part of Company Stock that at the
time of distribution thereof is not readily tradable stock within the
meaning of Code Section 409(h) then such distributed Company Stock shall
be made subject to a put option in the hands of a Qualified Holder (as
defined hereinbelow), with such put option to be subject to the
following provisions:
(i) As used herein, the term "Qualified Holder" shall mean
the Participant or Beneficiary receiving the distribution of
such Company Stock, any other party to whom such stock is
transferred by gift or by reason of death, and also any trustee
of an Individual Retirement Account (as defined under Code
Section 408) to which all or any portion of such distributed
Company Stock is transferred pursuant to a tax-free "rollover"
transaction satisfying the requirements of Code Section 402.
(ii) During the sixty (60) day period following any
distribution of such Company Stock, a Qualified Holder shall
have the right to require the Company to purchase all or any
portion of said distributed Company Stock held by said Qualified
Holder. A Qualified Holder shall exercise such right by giving
written notice to the Company within the aforesaid sixty (60)
day period of the number of shares of distributed Company Stock
that such Qualified Holder intends to sell to the Company. The
purchase price to be paid for any such Company Stock shall be
its fair market value determined as of the Valuation Date
coincident with or immediately preceding the date of the
distribution.
(iii) If a Qualified Holder shall fail to exercise his put
option right under Subparagraph (ii) above, such option right
shall temporarily lapse upon the expiration of the sixty (60)
day period thereof. As soon as is reasonably practicable
following the last day of the Plan Year in which said sixty (60)
day option period expires, the Company shall notify each such
non-electing Qualified Holder who is then a shareholder of
record of the valuation of such Company Stock as of the most
recent Valuation Date. During the sixty (60) day period
following receipt of such valuation notice, any such Qualified
Holder shall have the right to require the Company to purchase
all or any portion of such distributed Company Stock. The
purchase price to be paid therefor shall be based on the
valuation of such Company Stock as of the Valuation Date
coinciding with or next preceding the exercise of the option
under this Section 5.10(c). If a Qualified Holder fails to
exercise his option right under this Subparagraph (iii) with
respect to any portion of such distributed Company Stock, no
further options shall be applicable under this Plan and the
Company shall have no further purchase obligations hereunder.
(iv) In the event that a Qualified Holder shall exercise a
put option under this Section, then the Company shall have the
option of paying the purchase price of the Company Stock which
is subject to such put option (hereafter the "Option Stock")
under either of the following methods:
(I) A lump sum payment of the purchase price within
ninety (90) days after the date upon which such put
option is exercised (the "Exercise Date") or
(II) A series of six equal installment payments, with
the first such payment to be made within thirty (30)
days after the Exercise Date and the five remaining
payments to be made on the five anniversary dates of
the Exercise Date, so that the full amount shall be
paid as of the fifth anniversary of such Exercise Date.
If the Company elects to pay the purchase price of the
Option Stock under the
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installment method provided in this Subparagraph (II),
then the Company shall, within thirty (30) days after
the Exercise Date, give the Qualified Holder who is
exercising the put option the Company's promissory note
for the full unpaid balance of the option price. Such
note shall, at a minimum, provide adequate security (if
required under applicable regulations), state a rate of
interest reasonable under the circumstances (but at
least equal to the imputed compound rate in effect as
of the Exercise Date pursuant to the Treasury
Regulations promulgated under Code Section 483 or 1274,
whichever shall be applicable) and provide that the
full amount of such note shall accelerate and become
due immediately in the event that the Company defaults
in the payment of a scheduled installment payment.
(v) The put options under Subparagraphs (ii)and (iii) above
shall be effective solely against the Company and shall not
obligate the Plan in any manner; provided, however, with the
Company's consent, the Plan may elect to purchase any Company
Stock that otherwise must be purchased by the Company pursuant
to a Qualified Holder's exercise of any such option.
(vi) If at the time of any distribution of said Company
Stock it is known that any applicable Federal or State law would
be violated by the Company's honoring of such a put option as
provided under this Section, the Company shall designate another
entity that will honor such put option. Such other entity shall
be one having a substantial net worth at the time such loan is
made and whose net worth is reasonably expected to remain
substantial.
(vii) In the event that a Qualified Holder is unable to
exercise the put option provided hereunder because the Company
(or other entity bound by such put option) is prohibited from
honoring it by reason of any applicable Federal or State law,
then the sixty (60) day option periods during which such put
option is exercisable under Subparagraphs (ii) and (iii) shall
not include any such time during which said put option may not
be exercised due to such reason.
(viii) Except as is expressly provided hereinabove with
respect to any distributed Company Stock that is readily
tradeable stock within the meaning of Code Section 409(h), no
Participant shall have any put option rights with respect to
Company Stock distributed under this Plan, and neither the
Company nor this Plan shall have any obligation whatsoever to
purchase any such distributed Company Stock from any Participant
or other Qualified Holder.
(ix) At the time of distribution of Company Stock that is
not readily tradable stock within the meaning of Code Section
409(h), to a Participant or Beneficiary, the Company shall
furnish to such Participant or Beneficiary the most recent
annual certificate of value prepared by the Company with respect
to such Stock. In addition, the Company shall furnish to such
Participant or Beneficiary a copy of each subsequent annual
certificate of value until the put options provided for in this
Section with respect to such distributed Company Stock shall
expire.
(b) Notwithstanding any other provisions of the Plan
regarding a Participant's right to exercise a put option, the put option
described in Paragraph (a) above shall be subject to the following
additional provisions:
(i) If the distribution constitutes a Total
Distribution (as defined below), in the event that a Qualified
Holder exercises a put option under this Section, then the
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Company shall have the right to pay the purchase price of the
Option Stock under either of the following methods:
(I) A lump sum payment of the purchase price within
thirty (30) days after the Exercise Date; or
(II) A series of five substantially equal annual
payments with the first such payment to be made within
thirty (30) days after the Exercise Date. If the
Company elects to pay the purchase price of the Option
Stock under the installment method provided in this
Subparagraph (II), then the Company shall, within 30
days after the Exercise Date, give the Qualified Holder
who is exercising the put option the Company's
promissory note for the full unpaid balance of the
option price. Such note shall, at a minimum, provide
adequate security, state a rate of interest reasonable
under the circumstances (but at least equal to the
imputed compound rate in effect as of the Exercise Date
pursuant to the Treasury Regulations promulgated under
Code Section 483 or 1274, whichever shall be
applicable) and provide that the full amount of such
note shall accelerate and become due immediately in the
event that the Company defaults in the payment of a
scheduled installment payment.
(ii) If the distribution does not constitute a Total
Distribution (as defined below), in the event that a Qualified
Holder exercises a put option under this Section, then the
Company shall pay the purchase price of the Option Stock in a
lump sum within thirty (30) days after the Exercise Date.
For purposes of this Section, "Total Distribution" shall mean a
distribution to a Participant (or his Beneficiary, if
applicable) within one taxable year of such recipient of the
entire balance to the credit of the Participant.
(c) The foregoing provisions of this Section shall be
interpreted and applied in accordance with all applicable requirements
of Code Section 409(h) and the regulations issued thereunder.
5.11 Diversification Rule.
(a) For the purpose of this Section 5.11 only, the
following definitions shall apply:
(1) "Qualified Participant" shall mean a Participant who has
attained age 55 and who has completed at least 10 years of
participation in the Plan.
(2) "Qualified Election Period" shall mean the six Plan Year
period beginning with the Plan Year in which the Participant
first becomes a Qualified Participant.
(3) "Insider" shall mean any Participant who is directly or
indirectly the beneficial owner of more than 10% of any class of
any equity security (other than an exempted security) of the
Sponsor (or the Company) which is registered pursuant to Section
12 of the Securities Exchange Act of 1934, or who is a
"director" or an "officer" of the sponsor or the Company as
those terms are interpreted under the Securities Exchange Act of
1934 for the purpose of determining persons subject to Section
16 of such Act.
(b) Each Qualified Participant shall be permitted to direct
the Plan as to the diversification of 25 percent of the value of the
vested portion of the Participant's ESOP
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Account, in the manner provided under Paragraph (d) below, within 90
days after the last day of each Plan Year during the Participant's
Qualified Election Period. Within 90 days after the close of the last
Plan Year in the Participant's Qualified Election Period, a Qualified
Participant may direct the Plan as to the diversification of 50 percent
of the value of the vested portion of such ESOP Account.
(c) The Participant's direction shall be provided to the
Committee in writing and shall specify which, if any, of the options set
forth in Section 5.11(d) the Participant selects.
(d) (1) At the election of the Qualified Participant, the Plan
shall distribute (notwithstanding section 409(d) of the Code)
the portion of the Participant's ESOP Account that is covered by
the election within 90 days after the last day of the period
during which the election can be made. Such distribution shall
be in such form as provided in Section 5.8. Such distribution
shall be subject to such requirements of the Plan concerning put
options as would otherwise apply to a distribution of Company
Stock from the plan. This Section 5.11(d) shall apply
notwithstanding any other provision of the Plan other than such
provisions as require the consent of the Participant and/or the
Participant's spouse to a distribution with a present value in
excess of $3,500. If the Participant and/or the Participant's
spouse do not consent, such amount shall be retained in this
Plan.
(2) In lieu of distribution under Section 5.11(d)(1), the
Qualified Participant who has the right to receive a
distribution under Section 5.11(d)(1) may so elect that the Plan
transfer the portion of the Participant's ESOP Account that is
distributable and that is covered by such election to another
qualified plan of the Company which accepts such transfers,
provided that such plan permits employee-directed investment and
does not invest in Company Stock to a substantial degree. Such
transfer shall be made no later than 90 days after the last day
of the period during which the election can be made.
(3) The Committee may establish at least three investment
options under this Plan for the purpose of diversification under
this Section 5.11. If the Committee establishes such investment
options, in lieu of distribution or transfer under Section
5.11(d)(1) or (2) above, the Qualified Participant who has a
right to receive a distribution under Section 5.11(d)(1) may so
elect that the Plan invest the portion of the Participant's ESOP
Account that is distributable in cash and that is covered by
such election in any of the investment options established by
the Committee. Such investment shall be made no later than 90
days after the last day of the period during which the election
can be made.
Notwithstanding the foregoing, a Qualified Participant who is an Insider
may only elect to diversify his ESOP Account by electing the options
provided by Subparagraph (2) or (3) above, if available, and may not
elect the method of distribution described in Subparagraph (1) above.
5.12 Withdrawals. After attaining age 59-1/2, a Participant
who is still an Employee may, following such reasonable advance notice as may
be required by the Committee, withdraw the entire vested amount credited to his
ESOP Account. Such a withdrawal shall be in the same form and using the same
valuation methods as provided for distributions pursuant to Section 5.8.
5.13 Lapsed Benefits.
(a) In the event that a benefit is payable under this Plan
to a Participant and after reasonable efforts the Participant cannot be
located for the purpose of paying the benefit during
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a period of three consecutive years, the Participant shall be presumed
dead and the benefit shall, upon the termination of that three year
period, be paid to the Participant's Beneficiary.
(b) If any eligible Beneficiary cannot be located for the
purpose of paying the benefit for the following two years, then the
benefit shall be forfeited and allocated to the ESOP Accounts of the
other Participants for such Plan Year in accordance with Section 4.4.
(c) If a Participant shall die prior to receiving a
distribution of his entire benefit under this Plan (other than a
Participant presumed to have died as provided above), if after
reasonable efforts an eligible Beneficiary of the Participant cannot be
located for the purpose of paying the benefit during a period of five
consecutive years, the benefit shall, upon expiration of such five-year
period, be forfeited and reallocated to the ESOP Accounts of the other
Participants in accordance with Section 4.4.
(d) For purposes of this Section, the term "Beneficiary"
shall include any person entitled under Section 5.7 to receive the
interest of a deceased Participant or deceased designated Beneficiary.
It is the intention of this provision that during the relevant waiting
period (two years or five years) the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 5.7 if
no eligible Beneficiary in a higher priority category can be located by
the Committee after reasonable efforts have been made.
(e) Notwithstanding the foregoing rules, if after such a
forfeiture the Participant or an eligible Beneficiary shall claim the
forfeited benefit, the amount forfeited shall be reinstated (without
regard to any interest or investment earnings on such amount) and paid
to the claimant as soon as practical following the claimant's production
of reasonable proof of his or her identity and entitlement to the
benefit (determined pursuant to the Plan's normal claim review
procedures under Section 7.8).
(f) The Committee shall direct the Trustee with respect to
the procedures to be followed concerning a missing Participant (or
Beneficiary), and the Company shall be obligated to contribute to the
Trust Fund any amounts necessary after the application of Section 4.3 to
pay any reinstated benefit after it has been forfeited pursuant to the
provisions of this Section.
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ARTICLE VI
Trust Fund and Investments
6.1 General. All contributions made under the Plan and
investments made and property of any kind or character acquired with any such
funds or otherwise contributed, and all income, profits, and proceeds derived
therefrom, shall be held in Trust and shall be held and administered by the
Trustee in accordance with the provisions of the Plan and Trust Agreement.
6.2 Single Trust. Assets of the Trust shall be held in a
separate fund which shall consist of the Trust Fund. Individual Participant
interests in the Trust Fund shall be reflected in the ESOP Accounts maintained
for the Participants. Notwithstanding the foregoing, the Trust Fund shall be
treated as a single trust for purposes of investment and administration, and
nothing contained herein shall require a physical segregation of assets for any
fund or for any Account maintained under the Plan.
6.3 Investment of the Trust.
(a) Subject to Sections 6.4 and 5.11 hereof, the Trust Fund
shall be invested primarily in Company Stock and neither the Company nor
the Committee nor the Trustee shall have any responsibility or duty to
time any transaction involving Company Stock, in order to anticipate
market conditions or changes in stock value, nor shall any such person
have any responsibility or duty to sell Company Stock held in the Trust
Fund (or otherwise to provide investment management for Company Stock
held in the Trust Fund) in order to maximize return or minimize loss.
The Committee may direct the Trustee to have the Plan enter into one or
more Exempt Loans to finance the acquisition of Company Stock for the
Trust Fund. Company contributions in cash, and other cash received or
held by the Trustee, may be used to acquire shares of Company Stock from
the Company, Company shareholders, from the ESOP Accounts of
Participants about to receive distributions under the Plan, or on the
open market.
(b) Notwithstanding anything contained herein to the
contrary, proceeds of an Exempt Loan shall be used, within a reasonable
time after receipt by the Trust, only for the following purposes:
(1) to acquire Company Stock;
(2) to repay the same Exempt Loan; or
(3) to repay any previous Exempt Loan.
An Exempt Loan shall be repaid only from amounts loaned to the Trust and the
proceeds of such loans, from Company contributions in cash and earnings
attributable thereto, from any collateral given for the loan (including, in the
case where the Exempt Loan is a refinancing of a prior Exempt Loan, unallocated
Company Stock acquired with the proceeds of the prior Exempt Loan), and from
dividends paid on Company Stock acquired with proceeds of the Exempt Loan.
Except as provided in Section 5.10 or as otherwise required by applicable law,
no Company Stock acquired with the proceeds of an Exempt Loan may be subject to
a put, call, or other option or buy-sell or similar arrangement while held by
and when distributed from the Plan.
6.4 Certain Offers for Company Stock. Notwithstanding any
other provision of this Plan to the contrary, in the event an offer shall be
received by the Trustee (including but not limited to a tender offer or
exchange offer within the meaning of the Securities Exchange Act of 1934, as
from time to time amended and in effect) to acquire any or all shares of
Company Stock
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held by the Trust (an "Offer"), whether or not such stock is allocated to
Participants' ESOP Accounts, the discretion or authority to sell, exchange or
transfer any of such shares shall be determined in accordance with the
following rules:
(a) The Trustee shall have no discretion or authority to
sell, exchange or transfer any of such stock pursuant to such Offer
except to the extent, and only to the extent that the Trustee is timely
directed to do so in writing (i) with respect to any Company Stock held
by the Trustee subject to such Offer and allocated to the ESOP Account
of any Participant, by each Participant to whose ESOP Account any of
such shares are allocated and (ii) with respect to any Company Stock
held by the Trustee subject to such Offer and not allocated to the ESOP
Account of any Participant, by each Participant who is an Eligible
Employee with respect to a number of shares (including fractional
shares) of such unallocated Company Stock equal to the total number of
shares of such unallocated Company Stock multiplied by a fraction the
numerator of which is the annualized Compensation of such Participant
for the calendar year in which such Offer is made and the denominator of
which is the total annualized Compensation for the calendar year in
which such Offer is made of all such Participants who are Eligible
Employees.
Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of Paragraphs (c) and (m) of this Section,
sell, exchange or transfer pursuant to such Offer, only such shares as
to which such instructions were given. The Trustee shall use its best
efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee.
In the event, under the terms of an Offer or otherwise, any
shares of Company Stock tendered for sale, exchange or transfer pursuant
to such Offer may be withdrawn from such Offer, the Trustee shall follow
such instructions respecting the withdrawal of such securities from such
Offer in the same manner and the same proportion as shall be timely
received by the Trustee from the Participants entitled under this
Paragraph to give instructions as to the sale, exchange or transfer of
securities pursuant to such Offer.
(b) In the event that an Offer for fewer than all of the
shares of Company Stock held by the Trustee in the Trust shall be
received by the Trustee, each Participant shall be entitled to direct
the Trustee as to the acceptance or rejection of such Offer (as provided
by Paragraph (a) of this Section) with respect to the largest portion of
such Company Stock as may be possible given the total number or amount
of shares of Company Stock the Plan may sell, exchange or transfer
pursuant to the Offer based upon the instructions received by the
Trustee from all other Participants who shall timely instruct the
Trustee pursuant to this Paragraph to sell, exchange or transfer such
shares pursuant to such Offer, each on a pro rata basis in accordance
with the maximum number of shares each such Participant would have been
permitted to direct under Paragraph (a) had the Offer been for all
shares of Company Stock held in the trust.
(c) In the event an Offer shall be received by the Trustee
and instructions shall be solicited from Participants in the Plan
pursuant to Paragraph (a) of this Section regarding such Offer, and
prior to termination of such Offer, another Offer is received by the
Trustee for the securities subject to the first Offer, the Trustee shall
use its best efforts under the circumstances to solicit instructions
from the Participants to the Trustee (i) with respect to securities
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to withdraw such tender, if possible, and, if withdrawn, whether
to tender any securities so withdrawn for sale, exchange or transfer
pursuant to the second Offer and (ii) with respect to securities not
tendered for sale, exchange or transfer pursuant to the first Offer,
whether to tender or not to tender such securities for sale, exchange or
transfer pursuant to the second Offer. The Trustee shall follow all
such instructions received in a timely manner
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from Participants in the same manner and in the same proportion as
provided in Paragraph (a) of this Section. With respect to any further
Offer for any Company Stock received by the Trustee and subject to any
earlier Offer (including successive Offers from one or more existing
offers), the Trustee shall act in the same manner as described above.
(d) With respect to any Offer received by the Trustee, the
Trustee shall distribute, at the Company's expense, copies of all
relevant material including but not limited to material filed with the
Securities and Exchange Commission with such Offer or regarding such
Offer, and shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to
Paragraph (a), (b), or (c). The identities of Participants, the amount
of Company Stock allocated to their ESOP Accounts, and the Compensation
of each Participant shall be determined from the list of Participants
delivered to the Trustee by the Committee which shall take all
reasonable steps necessary to provide the Trustee with the latest
possible information.
(e) The Trustee shall distribute and/or make available to
each Participant who is entitled to respond to an Offer pursuant to
Paragraph (a), (b), or (c) an instruction form to be used by each such
Participant who wishes to instruct the Trustee. The instruction form
shall state that (i) if the Participant fails to return an instruction
form to the Trustee by the indicated deadline, the Company Stock with
respect to which he is entitled to give instructions will not be sold,
exchanged or transferred pursuant to such Offer, (ii) the Participant
will be a named fiduciary (as described in Paragraph (j) below) with
respect to all shares for which he is entitled to give instructions, and
(iii) the Company acknowledges and agrees to honor the confidentiality
of the Participant's instructions to the Trustee.
(f) Each Participant may choose to instruct the Trustee in
one of the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he is entitled to give instructions,
or (ii) to sell, exchange or transfer all Company Stock for which he is
entitled to give instructions. The Trustee shall follow up with
additional mailings and postings of bulletins, as reasonable under the
time constraints then prevailing, to obtain instructions from
Participants not otherwise responding to such requests for instructions.
Subject to Paragraph (c), the Trustee shall then sell, exchange or
transfer shares according to instructions from Participants, except that
shares for which no instructions are received shall not be sold,
exchanged or transferred.
(g) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants
pursuant to Paragraphs (d), (e), and (f) of this Plan. The Trustee is
hereby authorized to sell, exchange or transfer pursuant to an Offer any
such Company Stock in accordance with appropriate instructions from such
former Participants.
(h) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant
concerning the Offer, nor shall they have any authority or
responsibility to do so. The Trustee has no duty to monitor or police
the party making the Offer; provided, however, that if the Trustee
becomes aware of activity which on its face reasonably appears to the
Trustee to be materially false, misleading, or coercive, the Trustee
shall demand promptly that the offending party take appropriate
corrective action. If the offending party fails or refuses to take
appropriate corrective action, the Trustee shall communicate with
affected Participants in such manner as it deems advisable.
(i) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some but not all Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
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maintain the confidentiality of Participant's records including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent
is retained, such agent must agree, as a condition of its retention by
the Company, not to disclose the composition of any Participant ESOP
Accounts to the Company, its officers, directors, employees, or
representatives. The Company acknowledges and agrees to honor the
confidentiality of Participants' instructions to the Trustee.
(j) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock allocated to his ESOP Account under the Plan and with respect to
his pro-rata portion of the unallocated Company Stock for which he is
entitled to issue instructions in accordance with Paragraph (a) of this
Section solely for purposes of exercising the rights of a shareholder
with respect to an Offer pursuant to this Section 6.4 and voting rights
pursuant to Section 7.13.
(k) Reserved for future plan modifications.
(l) To the extent that an Offer results in the sale of
Company Stock in the Trust, the Committee shall instruct the Trustee as
to the investment of the proceeds of such sale.
(m) In the event a court of competent jurisdiction shall
issue to the Plan, the Company or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to
be made as to whether or not Company Stock held by the Trustee shall be
sold, exchanged or transferred pursuant to an Offer or cause any such
provision or provisions to conflict with securities laws, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall have
no discretion as to whether or not to Company Stock held in the Trust
shall be sold, exchanged, or transferred unless required under such
order or opinion, but shall follow instructions received from
Participants, to the extent such instructions have not been invalidated
by such order or opinion. To the extent required to exercise any
residual fiduciary responsibility with respect to such sale, exchange or
transfer, the Trustee shall take into account in exercising its
fiduciary judgment, unless it is clearly imprudent to do so, directions
timely received from Participants, as such directions are most
indicative of what action is in the best interests of Participants.
Further, the Trustee, in addition to taking into consideration any
relevant financial factors bearing on any such decision, shall take into
consideration any relevant non-financial factors, including, but not
limited to, the continuing job security of Participants as employees of
the Sponsor or any Affiliated Company, conditions of employment,
employment opportunities and other similar matters, and the prospect of
the Participants and prospective Participants for future benefits under
the Plan (including any subsequent release and allocation of Company
Stock held in the Exempt Loan Suspense Subfund).
6.5 Securities Law Limitation. Neither the Committee nor
the Trustee shall be required to engage in any transaction, including without
limitation, directing the purchase or sale of Company Stock, which either
determines in its sole discretion might tend to subject itself, its members,
the Plan, the Company, or any Participant or Beneficiary to a liability under
federal or state securities laws.
6.6 Accounting and Valuations.
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(a) The following special accounting rules shall apply to
the Trust Fund.
(1) Each Participant's ESOP Account shall consist of a
portion comprised of cash and all other assets except for
Company Stock (the "Non-Stock Subaccount") and a portion
comprised solely of Company Stock (the "Stock Subaccount").
(2) Gains or losses on Non-Stock Subaccounts shall be
credited in accordance with this Section as if the Non-Stock
Subaccounts collectively constituted a separate pooled
investment fund.
(3) Stock Subaccounts shall be credited with a specific
number of shares of Company Stock rather than an individual
interest in a pool of Company Stock.
(b) Non-Stock Subaccounts may be invested in Company Stock
from time to time, and Company Stock so acquired shall be allocated
among Stock Subaccounts in proportion to the amount debited to the
corresponding Non-Stock Subaccounts.
(c) As of each Valuation Date each Participant's Non-Stock
Subaccount shall be credited (debited) with the "allocable share" of the
net income (loss) of the non-Company Stock portion of the Trust Fund
valued as of such Valuation Date in proportion to Non-Stock Subaccount
balances. For this purpose, except as provided in Section 6.7, the net
income (loss) of the Trust Fund shall not include any income with
respect to securities in the Exempt Loan Suspense Subfund acquired with
the proceeds of an Exempt Loan.
(d) In making valuations required by this Plan, the Trustee
shall value all assets of the Trust at fair market value. Such fair
market value shall be determined from facts reasonably available to the
Trustee. In making said determination, the Trustee may, but need not,
select and rely upon the advice and opinions of appraisers, brokers,
investment counsel, or any other persons believed by the Trustee to be
competent. Any determination of value so made shall, for all purposes
of the Plan, conclusively establish such value.
(e) If Company Stock is readily tradeable stock (as that
term is used under Code Section 409(h)), valuation of each Participant's
Stock Subaccount shall, at any relevant times, be worth the fair market
value on that date of the shares of Company Stock credited to it.
Valuations of any Company Stock held by the Trust which is not readily
tradable stock shall be performed by an independent appraiser or
valuation consultant.
(f) The Committee shall establish accounting procedures for
the purpose of making the allocations, valuations and adjustments to
Participants' ESOP Accounts provided for in Article VI hereof. Such
accounting procedures shall include adequate records of the cost basis
of Company Stock allocated to ESOP Accounts and the identity of shares
acquired with the proceeds of an Exempt Loan. From time to time, the
Committee may modify its accounting procedures for the purpose of
achieving equitable and nondiscriminatory allocations among the ESOP
Accounts of Participants in accordance with the provisions of the Plan.
(g) In the event any rights, warrants, or options are
issued with respect to Company Stock held in Stock Subaccounts, the
Committee shall direct the Trustee as to whether such rights, warrants,
or options shall be exercised for such Subaccounts using cash as may be
available in corresponding Non-Stock Subaccounts. Company Stock so
acquired shall be credited to corresponding Stock Subaccounts in
proportion to the amount of cash withdrawn from the corresponding
Non-Stock Subaccounts. A Participant shall
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have no right to request, direct, or demand that the Trust exercise on
his or her behalf rights to purchase Company Stock.
(h) The Participants and their Beneficiaries shall assume all
risks in connection with any decrease in the value of any assets
invested in the Trust Fund which are allocated to their ESOP Accounts.
6.7 Dividends.
(a) As determined by the Committee, dividends on shares of
Company Stock allocated to ESOP Accounts shall be either (i) applied to
repay an Exempt Loan then outstanding; (ii) paid directly to
Participants or Beneficiaries; or (iii) retained in the Trust and
treated as net income of the Trust. Any resulting allocation shall be
made according to the following rules:
(1) If cash dividends are used to repay an Exempt Loan, the
appropriate number of shares of Company Stock shall be released
from the Exempt Loan Suspense Subfund pursuant to Section
4.2(b). Notwithstanding the foregoing, if the fair market value
of the shares released pursuant to Section 4.2(b) from the
application of cash dividends to repay an Exempt Loan under this
Section 6.7(a)(1) is less than such cash dividends, additional
shares shall be released from the Exempt Loan Suspense Subfund
until the fair market value of such released shares equals the
amount of such cash dividends. Such Company Stock shall be
allocated to Participants' Stock Subaccounts in proportion to
the number of shares of Company Stock allocated to Participants'
Stock Subaccounts for which such cash dividend was paid.
(2) If cash dividends are retained in the Trust and are not
used to pay expenses of the Plan, such dividends shall be
allocated as of the date specified by the Committee to Non-Stock
Subaccounts in proportion to the shares of Company Stock held in
corresponding Stock Subaccounts for which such dividends were
distributed to the Trust.
(3) If stock dividends are retained in the Trust and are
not used to pay expenses of the Plan, such dividends shall be
credited on the date specified by the Committee to Stock
Subaccounts in proportion to the shares of Company Stock held in
such Subaccounts for which such dividends were distributed to
the Trust.
(4) If cash or stock dividends are distributed directly to
Participants or Beneficiaries, such dividends shall be
distributed on the date specified by the Committee in proportion
to the shares of Company Stock held in such Participant's or
Beneficiary's Stock Subaccount for which such dividends were
distributed.
(b) As determined by the Committee, dividends on shares of
Company Stock held in the Exempt Loan Suspense Subfund or on shares of
Company Stock contributed to the Trust Fund but not yet allocated to
Participant's ESOP Accounts shall be either (i) applied to repay an
Exempt Loan then outstanding or (ii) retained in the Trust and treated
as net income of the Trust. Any resulting allocation shall be made
according to the following rules:
(1) If cash or stock dividends are used to repay an Exempt
Loan, the appropriate number of shares of Company Stock shall be
released from the Exempt Loan Suspense Subfund pursuant to
Section 4.2(b). Such Company Stock shall be allocated to
Participants Stock Subaccounts pursuant to Section 4.2(c).
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(2) If cash or stock dividends are not used to repay an
Exempt Loan, they shall be considered income of the Trust and,
if not used to pay expenses of the Plan, shall be allocated to
Participants' ESOP Accounts in proportion to their respective
ESOP Account balances.
6.8 Reserved for Future Modification.
6.9 Non-Diversion of Trust Fund. Except as hereinafter
provided, all assets of the Trust shall be held by the Trustee for the
exclusive benefit of Plan Participants and Beneficiaries. At no time shall any
part of the Trust be used for or diverted to purposes other than for the
exclusive benefit of the Participants and Beneficiaries under the Plan except
as follows:
(a) In the case of a contribution which is made by a
mistake of fact, that contribution, at the Company's election, may be
returned to the Company within one year after it is made.
(b) All contributions to the Trust are hereby conditioned
upon the Plan satisfying all of the requirements of Code Section 401(a),
as evidenced by the issuance by the Internal Revenue Service of a
favorable determination letter with respect to the Plan. If the Plan
does not qualify, at the Company's written election, the Plan may be
revoked and any or all such contributions with respect to the portion
revoked may be returned to the Company within one year after the date of
the Internal Revenue Service's denial of the qualification of the Plan
or a portion thereof. Upon such a revocation, the affairs of the Plan
or the portion revoked shall be terminated and wound up as the Committee
shall direct.
(c) Contributions to the Trust Fund are conditioned on
deductibility under Section 404 of the Code. In the event a deduction
is disallowed for any such contribution, then such contribution may be
returned to the Company within one year of the disallowance.
(d) The residue of the 415 Suspense Account that cannot be
allocated to Participants upon a Plan termination may revert to the
Company in accordance with the provisions of Section 11.7.
6.10 Company, Committee and Trustee Not Responsible for
Adequacy of Trust Fund. Neither any member of the Committee, any Trustee nor
the Company shall be liable or responsible for the adequacy of the Trust to
meet and discharge any or all payments and liabilities hereunder. All Plan
benefits will be paid only from the Trust assets, and neither any member of the
Committee, any Trustee, nor the Company shall have any duty or liability to
furnish the Trust with any funds, securities or other assets except as
expressly provided in the Plan. Except as required under the Plan or Trust or
under Part 4 of Subtitle B, Title I of ERISA, the Company shall not be
responsible for any decision, act, or omission of a Trustee or a member of the
Committee or any Investment Manager (if applicable), or responsible for the
application of any moneys, securities, investments, or other property paid or
delivered to the Trustee.
6.11 Distributions. Money and property of the Trust shall
be paid out, disbursed, or applied by the Trustee for the benefit of
Participants and Beneficiaries under the Plan in accordance with directions
received by the Trustee from the Committee. Upon direction of the Committee,
the Trustee may pay money or deliver property from the Trust for any purpose
authorized under the Plan. The Trustee shall be fully protected in paying out
money or delivering
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property from the Trust from time to time upon written order of the Committee
and shall not be liable for the application of such money or property by the
Committee.
The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.
6.12 Taxes. If the whole or any part of the Trust, or the
proceeds thereof, shall become liable for the payment of any estate,
inheritance, income or other tax, charge, or assessment which the Trustee shall
be required to pay, the Trustee shall have full power and authority to pay such
tax, charge, or assessment out of any moneys or other property in its hands for
the account of the person whose interests hereunder are so liable, but at least
ten (10) days prior to making any such payment, the Trustee shall mail notice
to the Committee of its intention to make such payment. Prior to making any
transfers or distributions of any of the Trust, the Trustee may require such
releases or other documents from any lawful taxing authority as it shall deem
necessary.
6.13 Trustee Records to be Maintained. The Trustee shall
keep accurate and detailed accounts of all investments, receipts,
disbursements, and other transactions hereunder, and all accounts, books, and
records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Company (subject to the
provisions of Section 6.4(i)).
6.14 Annual Report of Trustee. Promptly following the close
of each Plan Year (or such other period as may be agreed upon between the
Trustee and Committee), or promptly after receipt of a written request from the
Company, the Trustee shall prepare for the Company a written account which will
enable the Company to satisfy the annual financial reporting requirements of
ERISA, and which will set forth among other things all investments, receipts,
disbursements, and other transactions effected by the Trustee during such Plan
Year or during the period from the close of the last Plan Year to the date of
such request. Such account shall also describe all securities and other
investments purchased and sold during the period to which it refers, the cost
of acquisition or net proceeds of sale, the securities and investments held as
of the date of such account, and the cost of each item thereof as carried on
the books of the Trustee. All accounts so filed shall be open to inspection
during business hours by the Company, the Committee, and by Participants and
Beneficiaries of the Plan (subject to the provisions of Section 6.4(i)).
6.15 Appointment of Investment Manager. From time to time
the Committee, in accordance with Section 7.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over
assets of the Trust not invested or to be invested in Company Stock. The
Committee shall notify the Trustee of such assets of the appointment of the
Investment Manager. In the event more than one Investment Manager is
appointed, the Committee shall determine which assets shall be subject to
management and control by each Investment Manager and shall also determine the
proportion in which funds withdrawn or disbursed shall be charged against the
assets subject to each Investment Manager's management and control. As shall
be provided in any contract between an Investment Manager and the Committee,
such Investment Manager shall hold a revocable proxy with respect to all
securities which are held under the management of such Investment Manager
pursuant to such contract (except for Company Stock), and such Investment
manager shall report the voting of all securities subject to such proxy on an
annual basis to the Committee.
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ARTICLE VII
Operation and Administration
7.1 Appointment of Committee. There is hereby created a
committee (the "Committee") which shall exercise such powers and have such
duties in administering the Plan as are hereinafter set forth. The Board of
Directors shall determine the number of members of such Committee. The members
of the Committee shall be appointed by the Board of Directors and such Board
shall from time to time fill all vacancies occurring in said Committee. The
members of the Committee shall constitute the Named Fiduciaries of the Plan
within the meaning of Section 402(a)(2) of ERISA; provided that solely for
purposes of Section 6.4 hereof, Participants shall be Named Fiduciaries with
respect to shares of Company Stock for which they have the right to sell,
transfer, or exchange pursuant to Section 6.4 and solely for purposes of
Section 7.13, Participants shall be Named Fiduciaries with respect to shares of
Company Stock on matters as to which they are entitled to provide voting
directions pursuant to Section 7.13.
7.2 Transaction of Business. A majority of the Committee
shall constitute a quorum for the transaction of business. Actions of the
Committee may be taken either by vote at a meeting or in writing without a
meeting. All action taken by the Committee at any meeting shall be by a vote
of the majority of those present at such meeting. All action taken in writing
without a meeting shall be by a vote of the majority of those responding in
writing. All notices, advices, directions and instructions to be transmitted
by the Committee shall be in writing and signed by or in the name of the
Committee. In all its communications with the Trustee, the Committee may, by
either of the majority actions specified above, authorize any one or more of
its members to execute any document or documents on behalf of the Committee, in
which event it shall notify the Trustee in writing of such action and the name
or names of its members so designated and the Trustee shall thereafter accept
and rely upon any documents executed by such member or members as representing
action by the Committee until the Committee shall file with the Trustee a
written revocation of such designation.
7.3 Voting. Any member of the Committee who is also a
Participant hereunder shall not be qualified to act or vote on any matter
relating solely to himself, and upon such matter his presence at a meeting
shall not be counted for the purpose of determining a quorum. If, at any time
a member of the Committee is not so qualified to act or vote, the qualified
members of the Committee shall be reduced below two (2), the Board of Directors
shall promptly appoint one or more special members to the Committee so that
there shall be at least one qualified member to act upon the matter in
question. Such special Committee members shall have power to act only upon the
matter for which they were especially appointed and their tenure shall cease as
soon as they have acted upon the matter for which they were especially
appointed.
7.4 Responsibility of Committee. The authority to control
and manage the operation and administration of the Plan, the general
administration of this Plan, the responsibility for carrying out this Plan and
the authority and responsibility to control and manage the assets of the Trust
are hereby delegated by the Board of Directors to and vested in the Committee,
except to the extent reserved to the Board of Directors, the Sponsor, or the
Company. Subject to the limitations of this Plan, the Committee shall, from
time to time, establish rules for the performance of its functions and the
administration of this Plan. In the performance of its functions, the
Committee shall not discriminate in favor of highly compensated employees (as
defined under Code Section 414(q)).
7.5 Committee Powers. The Committee shall have all
discretionary powers necessary to supervise the administration of the Plan and
control its operations. In addition to any discretionary powers and authority
conferred on the Committee elsewhere in the Plan or by law, the
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Committee shall have, but not by way of limitation, the following discretionary
powers and authority:
(a) To designate agents to carry out responsibilities
relating to the Plan, other than fiduciary responsibilities as provided
in Section 7.6.
(b) To employ such legal, actuarial, medical, accounting,
clerical, and other assistance as it may deem appropriate in carrying
out the provisions of this Plan, including one or more persons to render
advice with regard to any responsibility any Named Fiduciary or any
other fiduciary may have under the Plan.
(c) To establish rules and regulations from time to time
for the conduct of the Committee's business and the administration and
effectuation of this Plan.
(d) To administer, interpret, construe, and apply this Plan
and to decide all questions which may arise or which may be raised under
this Plan by any Employee, Participant, former Participant, Beneficiary
or other person whatsoever, including but not limited to all questions
relating to eligibility to participate in the Plan, the amount of
Credited Service of any Participant, and the amount of benefits to which
any Participant or his Beneficiary may be entitled.
(e) To determine the manner in which the assets of this
Plan, or any part thereof, shall be disbursed.
(f) To direct the Trustee, in writing, from time to time,
to invest and reinvest the Trust Fund, or any part thereof, or to
purchase, exchange, or lease any property, real or personal, which the
Committee may designate. This shall include the right to direct the
investment of all or any part of the Trust in any one security or any
one type of securities permitted hereunder. Among the securities which
the Committee may direct the Trustee to purchase are "qualifying
employer securities" as defined in Internal Revenue Code Section 4975(e)
or any successor statutes thereto.
(g) Subject to provisions (a) through (d) of Section 8.1,
to make administrative amendments to the Plan that do not cause a
substantial increase or decrease in benefit accruals to Participants and
that do not cause a substantial increase in the cost of administering
the Plan.
(h) To perform or cause to be performed such further acts
as it may deem to be necessary, appropriate or convenient in the
efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
discretionary power conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary
powers conferred upon the Committee shall be absolute; provided, however, that
all such discretionary power shall be exercised in a uniform and
nondiscriminatory manner.
7.6 Additional Powers of Committee. In addition to any
discretionary powers or authority conferred on the Committee elsewhere in this
Plan or by law, such Committee shall have the following discretionary powers
and authority:
(a) To appoint one or more Investment Managers to manage
and control any or all of the assets of the Trust not invested or to be
invested in Company Stock.
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(b) To designate persons (other than the members of the
Committee) to carry out fiduciary responsibilities, other than any
responsibility to manage or control the assets of the Trust;
(c) To allocate fiduciary responsibilities among the
members of the Committee, other than any responsibility to manage or
control the assets of the Trust;
(d) To cancel any such designation or allocation at any
time for any reason;
(e) To direct the voting of any Company Stock or any other
security held by the Trust subject to Section 7.13 hereof; and
(f) To exercise management and control over Plan assets and
to direct the purchase and sale of Company Stock for the Trust.
Any action under this Section 7.6 shall be taken in writing, and
no designation or allocation under Subsection (a), (b) or (c) shall be
effective until accepted in writing by the indicated responsible person.
7.7 Reserved for Future Modifications.
7.8 Application for Determination of Benefits.
(a) The Committee may require any person claiming benefits
under the Plan to submit an application therefor on such forms and in
such manner as the Committee may prescribe, together with such documents
and information as the Committee may require. In the case of any person
suffering from a disability which prevents him from making personal
application for benefits, the Committee may, in its discretion, permit
another person acting on his behalf to submit the application.
(b) Within ninety (90) days following receipt of an
application and all necessary documents and information, the Committee
shall furnish the claimant with written notice of the decision rendered
with respect to the application. In the case of a denial of the
claimant's application, the written notice shall set forth:
(1) The specific reasons for the denial, with reference to
the Plan provisions upon which the denial is based;
(2) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(3) An explanation of the Plan's claim review procedure.
(c) A claimant who does not agree with the decision
rendered under Section 7.8(b) hereof with respect to his application may
appeal the decision to the Committee. The appeal shall be made in
writing within sixty-five (65) days after the date of notice of the
decision with respect to the application. If the application has
neither been approved nor denied within the ninety (90) day period
provided in Section 7.8(b) hereof, then the appeal shall be made within
sixty-five (65) days after the expiration of the ninety (90) day period.
In making his appeal, the claimant may request that his application be
given full and fair review by the Committee. The claimant may review
all pertinent documents and submit issues and comments in writing. The
decision of the Committee shall be made promptly, and not later than
sixty (60) days after the Committee's receipt of a request for review,
unless
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special circumstances require an extension of time for processing, in
which case a decision shall be rendered as soon as possible, but not
later than one hundred twenty (120) days after receipt of a request for
review. The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant with specific references to the pertinent
Plan provisions upon which the decision is based.
7.9 Limitation on Liability. Each of the fiduciaries under
the Plan shall be solely responsible for its own acts and omissions and no
fiduciary shall be liable for any breach of fiduciary responsibility resulting
from the act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 7.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 6.15 hereof or as to which management and control has been retained by
the Trustee.
7.10 Indemnification and Insurance. To the extent permitted
by law, the Company shall indemnify and hold harmless the Committee and each
member thereof, each Trustee, the Board of Directors and each member thereof,
and such other persons as the Board of Directors may specify, from the effects
and consequences of his acts, omissions, and conduct in his official capacity
in connection with the Plan and Trust. To the extent permitted by law, the
Company may also purchase liability insurance for such persons.
7.11 Compensation of Committee and Plan Expenses. Members
of the Committee shall serve as such without compensation unless the Board of
Directors shall otherwise determine, but in no event shall any member of the
Committee who is an Employee receive compensation from the Plan for his
services as a member of the Committee. All members shall be reimbursed for any
necessary expenditures incurred in the discharge of duties as members of the
Committee. The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee or other persons retained or employed by the
Committee shall be fixed by the Committee, subject to approval by the Board of
Directors. The expenses incurred in the administration and operation of the
Plan, including but not limited to the expenses incurred by the members of the
Committee in exercising their duties, shall be paid by the Plan from the Trust
Fund, unless paid by the Company, provided, however, that the Plan and not the
Company shall bear the cost of interest and normal brokerage charges which are
included in the cost of securities purchased by the Trust Fund (or charged to
proceeds in the case of sales). If such expenses are to be paid by the Plan
from the Trust Fund, the Committee may direct the Trustee to use forfeitures
and dividends (and to sell the shares of Company Stock that represent such
forfeitures or dividends) to pay such expenses.
7.12 Resignation. Any member of the Committee may resign by
giving fifteen (15) days notice to the Board of Directors, and any member shall
resign forthwith upon receipt of the written request of the Board of Directors,
whether or not said member is at that time the only member of the Committee.
7.13 Voting of Company Stock. Notwithstanding any other
provision of the Plan to the contrary, the Trustee shall have no discretion or
authority to vote Company Stock held in the Trust on any matter presented for a
vote by the stockholders of the Company except in accordance with timely
directions received by the Trustee either from the Committee or from
Participants, depending on who has the right to direct the voting of such stock
as provided in the following provisions of this Section 7.13.
(a) (1) All Company Stock held in the Trust Fund shall be
voted by the Trustee as the Committee directs in its absolute
discretion, except as provided in this Section 7.13(a).
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(2) If the Sponsor has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code), then
with respect to all corporate matters, (i) each Participant
shall be entitled to direct the Trustee as to the voting of all
Company Stock allocated and credited to his ESOP Account and
(ii) each Participant who is an Eligible Employee shall be
entitled to direct the Trustee as to the voting of a portion of
all Company Stock not allocated to the ESOP Accounts of
Participants, with such portion equal to the total number of
shares of such unallocated stock multiplied by a fraction the
numerator of which is the number of shares of Company Stock
allocated and credited to his ESOP account and the denominator
of which is the total number of shares of Company Stock
allocated and credited to all ESOP Accounts of Participants.
(3) If the Sponsor does not have a registration-type class of
securities (as defined in Section 409(e)(4) of the Code), then
only with respect to such matters as the approval or disapproval
of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of
substantially all assets of trade or business, or such similar
transactions as may be prescribed in Treasury Regulations, (i)
each Participant shall be entitled to direct the Trustee as to
the voting of all Company Stock allocated and credited to his
ESOP Account and (ii) each Participant who is an Eligible
Employee shall be entitled to direct the Trustee as to the
voting of a portion of all Company Stock not allocated to the
ESOP Accounts of Participants, with such portion determined in
the same manner as under Paragraph (a)(2)(ii) above.
(b) All Participants entitled to direct such voting shall
be notified by the Sponsor, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Sponsor or any other party regarding the exercise of such
rights. Such Participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect
the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional interests in shares). The
Trustee shall maintain confidentiality with respect to the voting
directions of all Participants.
(c) Each Participant shall be a named fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company
Stock for which he has the right to direct the voting under the Plan but
solely for the purpose of exercising voting rights pursuant to this
Section 7.13 or certain Offers pursuant to Section 6.4.
(d) In the event a court of competent jurisdiction shall
issue an opinion or order to the Plan, the Company or the Trustee, which
shall, in the opinion of counsel to the Company or the Trustee,
invalidate under ERISA, in all circumstances or in any particular
circumstances, any provision or provisions of this Section regarding the
manner in which Company stock held in the Trust shall be voted or cause
any such provision or provisions to conflict with ERISA, then, upon
notice thereof to the Company or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no
further force or effect. In such circumstances the Trustee shall
nevertheless have no discretion to vote Company Stock held in the Trust
unless required under such order or opinion but shall follow
instructions received from Participants, to the extent such instructions
have not been invalidated. To the extent required to exercise any
residual fiduciary responsibility with respect to voting, the Trustee
shall take into account in exercising its fiduciary judgment, unless it
is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what is in the
best interests of Participants. Further, the Trustee, in addition to
taking into consideration any relevant financial factors bearing on any
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such decision, shall take into consideration any relevant nonfinancial
factors, including, but not limited to, the continuing job security of
Participants as employees of the Company or any of its subsidiaries,
conditions of employment, employment opportunities and other similar
matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan.
7.14 Reliance Upon Documents and Opinions. The members of
the Committee, the Board of Directors, the Company and any person delegated to
carry out any fiduciary responsibilities under the Plan (hereinafter a
"delegated fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or
any Investment Manager. The members of the Committee, the Board of Directors,
the Company and any delegated fiduciary shall be fully protected and shall not
be liable in any manner whatsoever for anything done or action taken or
suffered in reliance upon any such consultant, or firm or corporation which
employs one or more consultants, Trustee, Investment Manager, or counsel. Any
and all such things done or such action taken or suffered by the Committee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law. The Committee and any
delegated fiduciary may, but are not required to, rely upon all records of the
Company with respect to any matter or thing whatsoever, and may likewise treat
such records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise provided
by law.
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ARTICLE VIII
Amendment and Adoption of Plan
8.1 Right to Amend Plan. The Sponsor, by resolution of the
Board of Directors, shall have the right to amend this Plan and Trust Agreement
at any time and from time to time and in such manner and to such extent as it
may deem advisable, including retroactively, subject to the following
provisions:
(a) No amendment shall have the effect of reducing any
Participant's vested interest in the Plan or eliminating an optional
form of distribution.
(b) No amendment shall have the effect of diverting any
part of the assets of the Plan to persons or purposes other than the
exclusive benefit of the Participants or their Beneficiaries.
(c) No amendment shall have the effect of increasing the
duties or responsibilities of a Trustee without its written consent.
(d) No amendment shall result in discrimination in favor of
officers, shareholders, or other highly compensated or key employees.
The Committee shall have the right to amend the Plan, subject to the above
provisions (a) through (d), in accordance with the provisions of Section
7.5(g).
8.2 Adoption of Plan by Affiliated Companies. Subject to
approval by the Board of Directors, and consistent with the provisions of
ERISA, an Affiliated Company may adopt the Plan for all or any specified group
of its Eligible Employees by entering into an adoption agreement in the form
and substance prescribed by the Committee. The adoption agreement may include
such modification of the Plan provisions with respect to such Eligible
Employees as the Committee approves after having determined that no prohibited
discrimination or other threat to the qualification of the Plan is likely to
result. The Board of Directors may prospectively revoke or modify an
Affiliated Company's participation in the Plan at any time and for any or no
reason, without regard to the terms of the adoption agreement, or terminate the
Plan with respect to such Affiliated Company's Eligible Employees and
Participants. By execution of an adoption agreement (each of which by this
reference shall become part of the Plan), the Affiliated Company agrees to be
bound by all the terms and conditions of the Plan.
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ARTICLE IX
Discontinuance of Contributions
In the event the Company decides it is impossible or inadvisable
for business reasons to continue to make contributions under the Plan, it may,
by resolution of the Board of Directors, discontinue contributions to the Plan.
Upon the permanent discontinuance of contributions to the Plan and
notwithstanding any other provisions of the Plan, the rights of Participants
shall become fully vested and nonforfeitable unless replaced by a comparable
plan. The permanent discontinuance of contributions on the part of the Company
shall not terminate the Plan as to the funds and assets then held in the Trust,
or operate to accelerate any payments of distributions to or for the benefit of
Participants or Beneficiaries, and the Trust shall continue to be administered
in accordance with the provisions hereof until the obligations hereunder shall
have been discharged and satisfied. If, at the time of discontinuance, there
is any amount outstanding on an Exempt Loan, any amount remaining in the Exempt
Loan Suspense Subfund shall be disposed of as provided in any applicable loan
agreement.
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ARTICLE X
Termination and Merger
10.1 Right to Terminate Plan. In the event the Board of
Directors decides it is impossible or inadvisable for business reasons to
continue the Plan, then it may, by resolution, terminate the Plan. Upon and
after the effective date of such termination, the Company shall not make any
further contributions under the Plan. Upon the termination or partial
termination of the Plan for any reason, the interest in the Trust of each
affected Participant shall automatically become fully vested unless the Plan is
continued after its termination by conversion of this Plan into a comparable
Plan through Plan amendment or through merger. If, at the time of termination,
there is any amount outstanding in an Exempt Loan, any amount remaining in the
Exempt Loan Suspense Subfund shall be disposed of in a manner that provides for
the repayment of amounts outstanding in any such Exempt Loan. After the
satisfaction of all outstanding liabilities of the Plan to persons other than
Participants and Beneficiaries, all unallocated assets shall be allocated to
the ESOP Accounts of Participants to the maximum extent permitted by law. The
Trust Fund may not be fully or finally liquidated until all assets are
allocated to ESOP Accounts; alternatively any unallocated assets may be
transferred to another defined contribution plan maintained by the Sponsor or
an Affiliated Company qualified under Section 401 of the Code where such assets
shall be allocated among the accounts of Participants herein who are
participants in such transferee plan. In no event, however, shall any part of
the Plan revert to or be recoverable by the Company, or be used for or diverted
to purposes other than for the exclusive benefit of the Participants or their
Beneficiaries. Notwithstanding the foregoing, amounts held in the 415 Suspense
Account may revert to the Company in accordance with Section 11.7.
10.2 Effect on Trustee and Committee. The Trustee and the
Committee shall continue to function as such for such period of time as may be
necessary for the winding up of this Plan and for the making of distributions
in the manner prescribed by the Board of Directors at the time of termination
of the Plan.
10.3 Merger Restriction. Notwithstanding any other
provision in this Plan, this Plan shall not in whole or in part merge or
consolidate with, or transfer its assets or liabilities to, any other plan
unless each affected Participant in this Plan would (if such other plan then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).
10.4 Effect of Reorganization, Transfer of Assets or Change
in Control.
(a) In the event of a consolidation or merger of the
Company, or in the event of a sale and/or any other transfer of the
operating assets of the Company, any ultimate successor or successors to
the business of the Company may continue this Plan in full force and
effect by adopting the same by resolution of its board of directors and
by executing a proper supplemental or transfer agreement with the
Trustee.
(b) In the event of a Change in Control (as herein
defined), all Participants who were Participants on the date of such
Change in Control shall become 100% vested in any amounts allocated to
their ESOP Accounts on the date of such Change in Control and in any
amounts allocated to their ESOP Accounts subsequent to the date of the
Change in Control. Notwithstanding the foregoing, the Board of
Directors may, at its discretion, amend or delete this Paragraph (b) in
its entirety prior to the occurrence of any such Change in Control. For
the purpose of this Paragraph (b), "Change in Control" shall mean the
following and shall be deemed to occur if any of the following events
occur:
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(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Sponsor representing 50% or more of the
combined voting power of the Sponsor's then outstanding voting
securities;
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Sponsor's
stockholders, is approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election
contest relating to the election of the directors of the
Sponsor, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of
this Plan, be considered as though such person were a member of
the Incumbent Board;
(iii) The stockholders of the Sponsor approve a merger or
consolidation with any other corporation, other than
(A) a merger or consolidation which would result in
the voting securities of the Sponsor outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of another entity) more than 50%
of the combined voting power of the voting securities
of the Sponsor or such other entity outstanding
immediately after such merger or consolidation, and
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no person acquires 50% or more of
the combined voting power of the Sponsor's then
outstanding voting securities; or
(iv) The stockholders of the Sponsor approve a plan of
complete liquidation of the Company or an agreement for the sale
or other disposition by the Company of all or substantially all
of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (b), a Change
in Control shall not be deemed to have occurred (1) if the "person"
described in the preceding provisions of this Paragraph is an
underwriter or underwriting syndicate that has acquired the ownership of
50% or more of the combined voting power of the Sponsor's then
outstanding voting securities solely in connection with a public
offering of the Sponsor's securities or (2) if the "person" described in
the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company
that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
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ARTICLE XI
Limitation on Allocations
11.1 General Rule.
(a) Subject to Sections 11.1(b) and 11.3 through 11.6
hereof, the total Annual Additions under this Plan to a Participant's
ESOP Accounts for any Limitation Year shall not exceed the lesser of:
(1) Thirty Thousand Dollars ($30,000), or if greater,
one-fourth of the defined benefit dollar limitation set forth in
Section 415(b)(1) of the Code as in effect for the Limitation
Year; or
(2) Twenty-five percent (25%) of the Participant's
Compensation, from the Company for the Limitation Year. For
purposes of this Article XI, the "Limitation Year" shall mean
the Plan Year.
(b) For the purpose of this Article XI and XII only, the
term "Company" shall mean the Sponsor and any Affiliated Company whether
or not such Company has adopted the Plan pursuant to Section 8.2.
Solely for purposes of this Article XI, an entity shall be considered an
Affiliated Company by reference to Code Section 415(h).
11.2 Annual Additions. For purposes of Section 11.1, the
term "Annual Additions" shall mean with respect to a Participant, for any
Limitation Year with respect to this Plan and each other defined contribution
plan, within the meaning of Code Section 415(k), maintained by the Company
("Defined Contribution Plan"), the sum of the amounts determined under Sections
11.2(a), (b), (c), and (d) hereof:
(a) All amounts contributed or deemed contributed by the
Company, except that the Annual Addition shall exclude the portion of
the Company contribution representing interest on an Exempt Loan,
provided that no more than one-third of the Company's contributions to
the Trust Fund deductible under Section 404(a)(9) of the Code for a
Limitation Year are allocated to highly compensated employees (as that
term is defined in Section 414(q) of the Code).
(b) All amounts contributed by the Participant.
(c) Forfeitures allocated to such Participant. For
purposes of this Section 11.2, forfeitures shall not include forfeitures
of Company Stock acquired through the Trust Fund with the proceeds of an
Exempt Loan, provided that no more than one-third of the Company's
contributions to the Trust Fund deductible under Section 404(a)(9) of
the Code for a Limitation Year are allocated to highly compensated
employees (as that term is defined in Section 414(q) of the Code).
(d) All amounts described in Sections 415(l)(1) and
419A(d)(2) of the Code.
11.3 Other Defined Contribution Plans. If the Company
maintains any other Defined Contribution Plan, then each Participant's Annual
Additions under such Defined Contribution Plan shall be aggregated with the
Participant's Annual Additions under this Plan for the purposes of applying the
limitations of Section 11.1.
11.4 Defined Benefit Plans. If a Participant in this Plan
has also been a participant in a defined benefit plan (as defined in Section
415(k) of the Code) maintained by the
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Company ("Defined Benefit Plan"), then in addition to the limitation contained
in Section 11.1 hereof, the sum of the "Defined Benefit Fraction," as defined
in Section 11.4(a) hereof, and the "Defined Contribution Fraction," as defined
in Section 11.4(b) hereof, for any Limitation Year shall not exceed 1.0.
(a) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the total projected benefit of a Participant under
all Defined Benefit Plans expressed as either an annual straight life
annuity or a qualified joint and survivor annuity providing the maximum
permissible survivor benefit (determined as of the close of the
Limitation Year), and the denominator of which is the lesser of (1) the
maximum dollar amount otherwise allowable for such Limitation Year under
Section 415(b)(1)(A) of the Code times 1.25 or (2) the percentage of
compensation limit under Section 415(b)(1)(B) of the Code for such
Limitation Year times 1.4.
(b) "Defined Contribution Fraction" shall mean a fraction,
the numerator of which is the sum of the Participant's Annual Additions
to this Plan and all other Defined Contribution Plans as of the end of a
Limitation Year, and the denominator of which is the sum, determined for
such Limitation Year and each prior Limitation Year of the Participant's
service with the Company of the lesser of (1) the maximum dollar Annual
Addition under Section 415(c)(1)(A) of the Code (determined without
regard to Section 415(c)(6) of the Code) which could have been made for
the Limitation Year times 1.25 or (2) the amount determined under the
percentage of compensation limit for such Limitation Year under Section
415(c)(1)(B) of the Code times 1.4. In computing the Defined
Contribution Fraction under this Section 11.4(b) with respect to any
Limitation Year ending after December 31, 1982, the special transition
rule provided in Section 415(e)(6) of the Code shall be applicable.
11.5 Adjustments for Excess Combined Plan Fraction and
Excess Annual Additions. To the extent that the Annual Additions on behalf of
any Participant in a Limitation Year to this Plan and all other Defined
Contribution Plans exceed the limitations set forth in Sections 11.1 through
11.3 hereof, then excess Annual Additions shall be eliminated in accordance
with the following rules and in the following order:
(a) If the Annual Additions on behalf of a Participant in a
Limitation Year to the Plan and all other Defined Contribution Plans
would cause the sum of the Defined Contribution Fraction and Defined
Benefit Fraction to exceed 1.0 as determined under Section 11.4 hereof,
the excess shall be eliminated by first applying the provisions such
other Defined Benefit Plans or Defined Contribution Plans that are
applicable to reduce the Annual Addition or annual benefit under such
other plans (except to the extent that this may be prohibited by law or
by the terms of such plans).
(b) If, after the application of Paragraph (a) above,
excess Annual Additions on behalf of any Participant remain, such excess
shall be eliminated by reducing the allocation to the Participant's ESOP
Account by the amount of the excess and treating such amount as a
forfeiture under Section 5.3 hereof and reallocating such amount
proportionately to the ESOP Accounts of other Participants receiving
allocations for the Limitation Year up to the limits set forth in
Sections 11.1 through 11.3 hereof.
(c) After each Participant's ESOP Account has been credited
under Paragraph (b) with an amount bringing his ESOP Account up to his
maximum Annual Addition (determined under the provisions of this Article
XI), any remaining excess Annual Addition shall be transferred and
credited to a 415 Suspense Account established for the purpose of this
Section 11.5.
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(d) Any amounts held in the 415 Suspense Account shall be
treated as Company contributions and allocated to the ESOP Accounts of
Participants as of the last day of the next succeeding Plan Year in
accordance with the allocation formula applicable to Company
contributions provided in Section 4.2. The 415 Suspense Account shall
be exhausted before any Company contributions shall be allocated to the
ESOP Accounts of Participants subsequent to the date upon which any
residue excess Annual Addition as described in Paragraph (c) is credited
to the 415 Suspense Account.
11.6 Compensation. For purposes of this Article XI,
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 to the extent
that the amounts are includable in gross income (including, but not limited to,
commissions paid to 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 Section 1.62-2(c)), and shall exclude the
following:
(a) Company contributions to a plan of deferred
compensation which are not included in a Participant's gross income for
the taxable year in which contributed, Company contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Participant, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the
Participant becomes freely transferable, or is no longer subject to a
substantial risk of forfeiture;
(c) Amounts realized in the sale, exchange or other
disposition of stock acquired under a qualified stock option;
(d) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee).
(e) Any contribution for medical benefits (within the
meaning of Section 419(f)(2) of the Code) after termination of
employment which is otherwise treated as an Annual Addition; and
(f) Any amount otherwise treated as an Annual Addition
under Section 415(l)(1) of the Code.
Compensation for any Limitation Year is the compensation
actually paid or made available during such year, provided, however, that the
compensation taken into account for purposes of Article XI and Article XII
shall be limited in accordance with Code Section 401(a)(17) and related
regulations to $200,000 (or such amount as is adjusted by the Secretary of
Treasury).
11.7 Treatment of 415 Suspense Account Upon Termination. In
the event the Plan shall terminate at a time when all amounts in the 415
Suspense Account have not been allocated to the ESOP Accounts of the
Participants, the 415 Suspense Account amounts shall be applied as follows:
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(a) The amount in the 415 Suspense Account shall first be
allocated, as of the Plan termination date, to Participants in
accordance with the allocation formula applicable to Company
contributions provided under Section 4.2(a).
(b) If, after those allocations have been made, any further
residue funds remain in the 415 Suspense Account, the residue may revert
to the Company in accordance with applicable provisions of the Code,
ERISA, and the regulations thereunder.
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ARTICLE XII
Top-Heavy Rules
12.1 Applicability. Notwithstanding any provision in this
Plan to the contrary, and subject to the limitations set forth in Section 12.8,
the requirements of Sections 12.4, 12.5, 12.6 and 12.7 shall apply under this
Plan in the case of any Plan Year in which the Plan is determined to be a
Top-Heavy Plan under the rules of Section 12.3. For the purpose of this
Article XII and XI only, the term "Company" shall mean the Sponsor and any
Affiliated Company whether or not such company has adopted the Plan pursuant to
Section 8.2.
12.2 Definitions. For purposes of this Article XII, the
following special definitions and definitional rules shall apply:
(a) The term "Key Employee" means any Employee or former
Employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is or was:
(i) An officer of the Company having an annual Compensation
greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for the Plan Year; provided, however, for such
purposes no more than 50 Employees (or, if lesser, the greater
of three Employees or 10% of the Employees) shall be treated as
officers;
(ii) One of the ten Employees having annual Compensation
from the Company of more than the limitation in effect under
Code Section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code Section 318) the largest interests in
the Company. For this purpose, if two Employees have the same
interest in the Company, the Employee having greater annual
Compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual
Compensation from the Company of more than $150,000.
(b) The term "Five Percent Owner" means any person who owns
(or is considered as owning within the meaning of Code Section 318) more
than 5% of the outstanding stock of the Company or stock possessing more
than 5% of the total combined voting power of all stock of the Company.
(c) The term "One Percent Owner" means any person who would
be described in Paragraph (b) if "1%" were substituted for "5%" each
place where it appears therein.
(d) The term "Non-Key Employee" means any Employee who is
not a Key Employee.
(e) The term "Determination Date" means, with respect to
any plan year, the last day of the preceding plan year. In the case of
the first plan year of any plan, the term "Determination Date" shall
mean the last day of that plan year.
(f) The term "Aggregation Group" means (i) each plan of the
Company in which a Key Employee is a Participant, and (ii) each other
plan of the Company which enables any plan described in clause (i) to
meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
required to be included in an Aggregation Group
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under the preceding rules may be treated as being part of such group if
the group would continue to meet the requirements of Code Sections
401(a)(4) and 410 with the plan being taken into account.
(g) For purposes of determining ownership under Paragraphs
(a), (b) and (c) above, the following special rules shall apply: (i)
Code Section 318(a)(2)(C) shall be applied by substituting "5%" for
"50%", and (ii) the aggregation rules of Subsections (b), (c) and (m) of
Code Section 414 shall not apply, with the result that the ownership
tests of this Section 12.2 shall apply separately with respect to each
Affiliated Company.
(h) The terms "Key Employee" and "Non-Key Employee" shall
include their Beneficiaries, and the definitions provided under this
Section 12.2 shall be interpreted and applied in a manner consistent
with the provisions of Code Section 416(i) and the regulations
thereunder.
(i) For purposes of this Article XII, an Employee's
Compensation shall be determined in accordance with the rules of Section
11.6.
12.3 Top-Heavy Status
(a) The term "Top-Heavy Plan" means, with respect to any
Plan Year:
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under
the plan for Key Employees exceeds 60% of the present value of
the 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 (A) in the
case of a defined benefit plan, the same date which is used for
computing costs for minimum funding purposes, and (B) in the case of a
defined contribution plan, the most recent valuation date within a
12-month period ending on the applicable Determination Date.
(b) Each plan maintained by the Company required to be
included in an Aggregation Group shall be treated as a Top-Heavy Plan if
the Aggregation Group is a Top-Heavy Group.
(c) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of (i) the present value of
the cumulative accrued benefits for Key Employees under all defined
benefit plans included in the group, and (ii) the aggregate of the
account balances of Key Employees under all defined contribution plans
included in the group exceeds 60% of a similar sum determined for all
Employees. For purposes of determining the present value of the
cumulative accrued benefit of any Employee, or the amount of the account
balance of any Employee, such present value or amount shall be increased
by the aggregate distributions made with respect to the Employee under
the plan during the five year period ending on the Determination Date.
The preceding prior distribution rule shall also apply to distributions
under a terminated plan that, if it had not been terminated, would have
been required to be included in an Aggregation Group; provided, however,
any rollover contribution or similar transfer initiated by the Employee
and made after December 31, 1983, to a plan shall not be taken into
account with respect to
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the transferee plan for purposes of determining whether such plan is a
Top-Heavy Plan (or whether any Aggregation Group which includes such
plan is a Top-Heavy Group).
(d) If any individual is a Non-Key Employee with respect to
any plan for any plan year, but the individual was a Key Employee with
respect to the plan for any prior plan year, any accrued benefit for the
individual (and the account balance of the individual) shall not be
taken into account for purposes of this Section 12.3.
(e) If any individual has not performed services for the
Company at any time during the five year period ending on the
Determination Date, any accrued benefit for such individual (and the
account balance of the individual) shall not be taken into account for
purposes of this Section 12.3
(f) In applying the foregoing provisions of this Section,
the accrued benefit of a Non-Key Employee shall be determined (i) under
the method, if any, which is used for accrual purposes under all plans
of the Company and any Affiliated Companies, or (ii) if there is no such
uniform method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(g) For all purposes of this Article XII, the definitions
provided under this Section 12.3 shall be applied and interpreted in a
manner consistent with the provisions of Code Section 416(g) and the
Regulations thereunder.
12.4 Minimum Contributions. For any Plan Year in which the
Plan is determined to be a Top-Heavy Plan, the minimum Company Contributions
for that year shall be determined in accordance with the rules of this Section
12.4.
(a) Except as provided below, the minimum contribution
(including for Plan Years beginning after December 31, 1984, amounts
deferred under a cash or deferred arrangement under Code Section 401(k))
for each Non-Key Employee shall be not less than 3% of his compensation.
(b) Subject to the following rules of this Paragraph (b),
the percentage set forth in Paragraph (a) above shall not be required to
exceed the percentage at which contributions (including for Plan Years
beginning after December 31, 1984, amounts deferred under a cash or
deferred arrangement under Code Section 401(k)) are made (or are
required to be made) under the Plan for the year for the Key Employee
for whom the percentage is the highest for the year. This determination
shall be made by dividing the contributions for each Key Employee by so
much of his total compensation for the Plan Year as does not exceed
$200,000. For purposes of this Paragraph (b), all defined contribution
plans required to be included in an Aggregation Group shall be treated
as one plan. Notwithstanding the foregoing, the exceptions to Paragraph
(a) as provided under this Paragraph (b) shall not apply to any plan
required to be included in an Aggregation Group if the plan enables a
defined benefit plan to meet the requirements of Code Sections 401(a)(4)
or 410.
(c) The Participant's minimum contribution determined under
this Section 12.4 shall be calculated without regard to any Social
Security benefits payable to the Participant.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both
of which are determined to be Top-Heavy Plans, the Company shall satisfy
the minimum benefit requirements of Code Section 416 by providing (in
lieu of the minimum contribution described in Paragraph (a) above) a
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minimum benefit under the defined benefit plan so as to prevent the
duplication of required minimum benefits hereunder.
12.5 Reserved for Future Modifications.
12.6 Maximum Annual Addition.
(a) Except as set forth below, for any Plan Year in which
the Plan is determined to be a Top-Heavy Plan, the rules of Section
11.4(b) and (c) shall be applied by substituting "1.0" for "1.25".
(b) The rule set forth in Paragraph (a) above shall not
apply if (i) the minimum contribution requirement of Section 12.4(a)
above would be satisfied after substituting "4%" for "3%" where it
appears therein, and (ii) the Plan would not be a Top-Heavy Plan if
"90%" were substituted for "60%" each place it appears in Section
12.3(a)(ii).
(c) The rules of Paragraph (a) shall not apply with respect
to any Employee as long as there are no (i) Company Contributions
(including amounts deferred under a cash or deferred arrangement under
Code Section 401(k)), forfeitures, or voluntary nondeductible
contributions allocated to the Employee under a defined contribution
plan maintained by the Company, or (ii) accruals by the Employee under a
defined benefit plan maintained by the Company.
12.7 Minimum Vesting Rules.
(a) For any Plan Year in which it is determined that the
Plan is a Top-Heavy Plan, the vesting schedule of the Plan shall be
changed to that set forth below (unless the Plan's vesting schedule
otherwise provides for vesting at a rate at least as rapid as that set
forth below):
Number of Full Years of Nonforfeitable
Credited Service Percentage
----------------------- --------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 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 5.2 (the "Regular
Vesting Schedule"). If such reversion to the Regular Vesting Schedule
is deemed to constitute a vesting schedule change that is attributable
to a Plan amendment (within the meaning of Code Section 411(a)(10)),
then such reversion to said Regular Vesting Schedule shall be subject to
the requirements of Code Section 411(a)(10) of this Plan. For such
purposes, the date of the adoption of such deemed amendment shall be the
Determination Date as of which it is determined that the Plan has ceased
to be a Top-Heavy Plan.
12.8 Non-Eligible Employees. The rules of this Article XII
shall not apply to any Employee included in a unit of employees covered by a
collective bargaining agreement between employee representatives and one or
more employers if retirement benefits were the
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subject of good faith bargaining between such employee representatives and the
employer or employers.
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ARTICLE XIII
Restriction on Assignment or Other
Alienation of Plan Benefits
13.1 General Restrictions Against Alienation.
(a) The interest of any Participant or his Beneficiary in
the income, benefits, payments, claims or rights hereunder, or in the
Trust Fund, shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant and Beneficiary is
prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without
power to do so, except as may be permitted in connection with providing
security for a loan from the Plan to the Participant pursuant to the
provisions of this Plan as it may be amended from time to time. The
interest of any Participant or Beneficiary shall not be liable or
subject to his debts, liabilities, or obligations, now contracted, or
which may hereafter be contracted, and such interest shall be free from
all claims, liabilities, or other legal process now or hereafter
incurred or arising. Neither the interest of a Participant or
Beneficiary, nor any part thereof, shall be subject to any judgment
rendered against any such Participant or Beneficiary. Notwithstanding
the foregoing, a Participant's or Beneficiary's interest in the Plan may
be subject to the enforcement of a Federal tax levy made pursuant to
Code Section 6331 or the collection by the United States on a judgment
resulting from an unpaid tax assessment.
(b) In the event any person attempts to take any action
contrary to this Article 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 ERISA Section 206(d) as
construed and interpreted by authoritative judicial and administrative
rulings and regulations.
13.2 Qualified Domestic Relations Orders. The rules set
forth in Section 13.1 above shall not apply with respect to a "Qualified
Domestic Relations Order" as described below.
(a) A "Qualified Domestic Relations Order" is a judgment,
decree, or order (including approval of a property settlement agreement)
that:
(i) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable under this Plan
with respect to a Participant,
(ii) Relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child or other dependent of a Participant,
(iii) Is made pursuant to a State domestic relations law
(including a community property law), and
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(iv) Clearly specifies: (A) the name and last known mailing
address (if any) of the Participant and the name and mailing
address of each Alternate Payee covered by the order (if the
Plan Administrator does not have reason to know that address
independently of the order); (B) the amount or percentage of the
Participant's benefits to be paid to each Alternate Payee, or
the manner in which the amount or percentage is to be
determined; (C) the number of payments or period to which the
order applies; and (D) each plan to which the order applies.
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
(iii) In any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a joint
and survivor annuity with respect to the Alternate Payee and his
or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before his
earliest retirement age (as defined in Section 414(p)(4)(B)), the
Alternate Payee is entitled to benefits only if the Qualified Domestic
Relations Order requires survivor benefits to be paid to the Alternate
Payee.
(d) To the extent provided in any Qualified Domestic
Relations Order, the former spouse of a Participant shall be treated as
a surviving Spouse of the Participant for purposes of applying the rules
(relating to minimum survivor annuity requirements) of Code Sections
401(a)(11) and 417, and any current spouse of the Participant shall not
be treated as a spouse of the Participant for such purposes.
(e) In the case of any domestic relations order received by
the Plan, the Plan Administrator shall promptly notify the Participant
and any Alternate Payee of the receipt of
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the order and the Plan's procedures for determining the qualified status
of domestic relations orders. Within a reasonable period after the
receipt of the order, the Plan Administrator shall determine whether the
order is a Qualified Domestic Relations Order and shall notify the
Participant and each Alternate Payee of such determination.
(f) The Plan Administrator shall establish reasonable
procedures to determine the qualified status of domestic relations
orders and to administer distributions under Qualified Domestic
Relations Orders. During any period in which the issue of whether a
domestic relations order is a Qualified Domestic Relations Order is
being determined (by the Plan Administrator, by a court of competent
jurisdiction, or otherwise), the Plan Administrator shall segregate in a
separate account in the Plan (or in an escrow account) the amounts which
would have been payable to the Alternate Payee during the period if the
order had been determined to be a Qualified Domestic Relations Order.
If within the 18 Month Period (as defined below), the order (or
modification thereof) is determined to be a Qualified Domestic Relations
Order, the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. However,
if within the 18 Month Period (i) it is determined that the order is not
a Qualified Domestic Relations Order, or (ii) the issue as to whether
the order is a Qualified Domestic Relations Order is not resolved, then
the Plan Administrator shall pay the segregated amounts (plus any
interest thereon) to the person or persons who would have been entitled
to the amounts if there had been no order (assuming such benefits were
otherwise payable). Any determination that an order is a Qualified
Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this
Section 13.2, the "18 Month Period" shall mean the 18 month period
beginning with the date on which the first payment would be required to
be made under the domestic relations order.
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ARTICLE XIV
Miscellaneous Provisions
14.1 No Right of Employment Hereunder. The adoption and
maintenance of this Plan and Trust shall not be deemed to constitute a contract
of employment or otherwise between the Company and any Employee or Participant,
or to be a consideration for, or an inducement or condition of, any employment.
Nothing contained herein shall be deemed to give any Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge, with or without cause, any Employee or Participant at any
time, which right is hereby expressly reserved.
14.2 Limitation on Company Liability. Any benefits payable
under this Plan shall be paid or provided for solely from the Plan and the
Company assumes no liability or responsibility therefor.
14.3 Effect of Article Headings. Article headings are for
convenient reference only and shall not be deemed to be a part of the substance
of this instrument or in any way to enlarge or limit the contents of any
Article.
14.4 Gender. Masculine gender shall include the feminine
and the singular shall include the plural unless the context clearly indicates
otherwise.
14.5 Interpretation. The provisions of this Plan shall in
all cases be interpreted in a manner that is consistent with this Plan
satisfying (a) the requirements of Code Section 401(a) and related statutes for
qualification as a stock bonus plan and (b) the requirements of Code Section
4975(e)(7) and related statutes for qualification as an employee stock
ownership plan and eligibility for the prohibited transaction exemption
provided under Code Section 4975(d)(3) and its related statutes under ERISA.
14.6 Withholding For Taxes. Any payments from the Trust
Fund may be subject to withholding for taxes as may be required by any
applicable federal or state law.
14.7 California Law Controlling. All legal questions
pertaining to the Plan which are not controlled by ERISA shall be determined in
accordance with the laws of the State of California and all contributions made
hereunder shall be deemed to have been made in that State.
14.8 Plan and Trust as One Instrument. This Plan and the
Trust Agreement shall be construed together as one instrument. In the event
that any conflict arises between the terms and/or conditions of the Trust
Agreement and this Plan, the provisions of this Plan shall control, except that
with respect to the duties and responsibilities of the Trustee, the Trust
Agreement shall control.
14.9 Invalid Provisions. If any paragraph, section,
sentence, clause or phrase contained in this Plan shall become illegal, null or
void or against public policy, for any reason, or shall be held by any court of
competent jurisdiction to be incapable of being construed or limited in a
manner to make it enforceable, or is otherwise held by such court to be
illegal, null or void or against public policy, the remaining paragraphs,
sections, sentences, clauses or phrases contained in this Plan shall not be
affected thereby.
14.10 Counterparts. This instrument may be executed in one
or more counterparts each of which shall be legally binding and enforceable.
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IN WITNESS WHEREOF, Allergan, Inc. hereby executes this
instrument, evidencing the terms of the Allergan, Inc. Employee Stock Ownership
Plan as restated this 30th day of December, 1994.
ALLERGAN, INC.
By /s/ Susan J. Glass
_____________________________
Assistant Secretary
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