Exhibit 4.1
ALCON EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE DATE: October 25, 2002
SPONSORED BY ALCON, INC.
ALCON EXECUTIVE DEFERRED COMPENSATION PLAN
INDEX
SECTION:
I. Name and Purpose.......................................................1
II. Effective Date.........................................................1
III. Definitions............................................................1
IV. Eligibility............................................................6
V. Administration of the Plan.............................................6
VI. Election to Participate................................................6
VII. Plan Accounts..........................................................9
VIII. Method of Distribution................................................11
IX. Change in Distribution Schedule.......................................12
X. Offset for Obligations to Company.....................................14
XI. Liability of Company..................................................14
XII. Rights of a Participant...............................................14
XIII. Amendment and Termination.............................................14
XIV. Determination of Benefits.............................................14
XV. Notices...............................................................14
XVI. General Provisions....................................................15
XVII. Unfunded Status of Plan...............................................16
XVIII. Rights to Benefits....................................................16
APPENDIX A
I. Determination of Benefits.............................................1
i
ALCON EXECUTIVE DEFERRED COMPENSATION PLAN
I. NAME AND PURPOSE
The name of the plan is the Alcon Executive Deferred Compensation Plan (the
"Plan"). Its purpose is to provide certain individuals with the opportunity
to defer receipt of compensation and certain stock gains otherwise payable
currently and to accumulate earnings thereon on a tax-deferred basis. This
program has been adopted in recognition of the valuable service of eligible
individuals and the desire to provide them with additional flexibility in
their personal financial planning. This Plan is intended to be an unfunded
plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
II. EFFECTIVE DATE
The plan shall be effective as of October 25, 2002.
III. DEFINITIONS
A. ACCOUNT means the total balance credited to a Participant's
Compensation Deferral Account, Restricted Stock Deferral Account
and/or Stock Option Gain Account. The Account shall not constitute or
be treated as an escrow, trust fund, or any other type of funded
account for Code or ERISA purposes and, moreover, contingent amounts
credited thereto shall not be considered "plan assets" for ERISA
purposes. The Account merely provides a record of the bookkeeping
entries relating to the contingent benefits the Sponsor intends to
provide the Participant and shall thus reflect a mere unsecured
promise to pay amounts in the future.
B. BENEFICIARY means any person or persons so designated in accordance
with the provisions of SECTION IX.
C. BOARD OF DIRECTORS means the board of directors of Alcon, Inc.
D. CHANGE OF CONTROL of the Company means
(1) any "person" or "group" (as those terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended from time
to time (the "Exchange Act") (other than one or more Excluded Persons)
becomes the owner of 25% or more of the Common Stock of the Sponsor,
or, with respect to Holdings or the Participant's Employer, 33% or
more of the Common Stock or 33% or more of the Common Stock of the
general partner in any Employer that is a limited partnership; or
(2) individuals, who, as of the Effective Date, constitute the Board
of Directors of Sponsor, Holdings, the Participant's Employer, or (in
the case of an Employer
Page 1 of 17
that is a limited partnership) the general partner of Participant's
Employer (the "Continuing Directors") cease for any reason to
constitute at least a majority of such Board; provided, however, that
any individual becoming a director after the Effective Date whose
election or nomination for election by the shareholders, was approved
by a vote of at least a majority of the Continuing Directors will be
considered as though such individual were a Continuing Director, but
excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors.
(3) a reorganization, merger, consolidation or similar transaction
which results in the voting securities of the Sponsor, Holdings, the
Participant's Employer (or, in the case of an Employer that is a
limited partnership, the general partner of such Employer) outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 51% of the combined voting
power of the voting securities of the Sponsor, Holdings, the
Participant's Employer, or the general partner of such Employer, or
such surviving or acquiring entity outstanding immediately after such
merger or consolidation; or
(4) a liquidation or dissolution of the Participant's Employer or sale
of an operating division or substantially all of the assets of the
Participant's Employer. In addition, for purposes of this definition
the following terms have the meanings set forth below:
(a) "Common Stock" means, in the case of a corporation, the then
outstanding Common Stock plus, for purposes of determining the
stock ownership of any Person, the number of shares of Common
Stock which such Person has the right to acquire (whether such
right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights,
warrants, or options or otherwise. Notwithstanding the foregoing,
the term Common Stock does not include shares of preferred stock
or convertible debt or options or warrants to acquire shares of
Common Stock (including any shares of Common Stock issued or
issuable upon the conversion or exercise thereof) to the extent
that the Board of Directors of Sponsor, Holdings, or an Operating
Subsidiary, as applicable, expressly so determines in any future
transaction or transactions.
(b) "Holdings" means Alcon Holdings, Inc., a corporation
organized in Delaware.
(c) "Operating Subsidiary" means Alcon Manufacturing Ltd., a
Texas limited partnership, Alcon Laboratories, Inc., a Delaware
corporation,
Page 2 of 17
Alcon Research Ltd., a Texas limited partnership, Falcon
Pharmaceuticals, Ltd., a Texas limited partnership, Alcon
Pharmaceuticals, Inc., a Delaware corporation,
RefractiveHorizons, LP, a Texas limited partnership, Summit
Autonomous, Inc., a Massachusetts corporation, or any other
subsidiary of Holdings.
(d) The Participant's "Employer" refers to the Operating
Subsidiary for whom the Participant performs services as a common
law employee.
(e) "Excluded Persons" shall mean Nestle SA, the Sponsor,
Holdings, an Operating Subsidiary, or an affiliate of any of the
foregoing, or any employee benefit plan (or related trust)
sponsored by any of them.
(f) A Person will be deemed to be the "owner" of any Common Stock
of which such Person would be the "beneficial owner," as such
term is defined in Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Exchange Act.
E. CODE means the Internal Revenue Code of 1986, as amended, and the
regulations and other authority issued thereunder by the appropriate
governmental authority. References to the Code shall include
references to any successor section or provision of the Code.
F. COMMITTEE means the Chief Executive Officer and Chief Financial
Officer of Alcon Laboratories, Inc. or any other persons appointed by
the Board of Directors to administer the Plan and to perform the
functions set forth herein.
G. COMPANY means the Sponsor and each Participating Employer.
H. COMPENSATION means (i) base salary earned by a Participant on a
periodic basis throughout the Plan Year and subsequent to the
effective date of the Compensation Deferral Election, (ii) bonuses and
other incentive compensation paid to a Participant during a Plan Year
and subsequent to the effective date of the Compensation Deferral
Election; and (iii) income from Phantom Stock.
I. COMPENSATION DEFERRAL ACCOUNT means the sum of (i) the amounts
deferred by a Participant under all of his Compensation Deferral
Elections, (ii) the total amount of Discretionary Contributions; and
(iii) additional amounts credited/debited to the Participant's
Compensation Deferral Account as a result of the Participant's
selection of Investment Alternatives in accordance with SECTION VII,
less (iv) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan from the Participant's Compensation
Deferral Accounts, including any applicable penalties imposed pursuant
to SECTION IX E.
J. COMPENSATION DEFERRAL ELECTION means an irrevocable election made by
an Eligible Individual to defer the receipt of Compensation for a
given Plan Year. The Compensation Deferral Election shall be
documented on the Compensation
Page 3 of 17
Deferral Election Form provided by the Committee.
K. DEFERRAL ELECTION means a Compensation Deferral Election, Restricted
Stock Deferral Election, or Stock Option Deferral Election as defined
under this SECTION III.
L. DISCRETIONARY CONTRIBUTION means the amount contributed by the Company
to a Participant's Compensation Deferral Account pursuant to SECTION
VI of the Plan.
M. DISTRIBUTION EVENT means the date or dates designated in advance by
the Participant, in his or her Deferral Election Forms, upon which
payment of the Participant's Compensation Deferral Accounts,
Restricted Stock Deferral Account and/or Stock Option Gain Account
shall be deemed triggered for subsequent distribution, pursuant to
SECTION VIII.
N. ELIGIBLE INDIVIDUAL means each employee of the Company selected for
participation in this Plan pursuant to SECTION IV of the Plan.
O. ELIGIBLE STOCK OPTION means one or more stock option(s) exercisable
under a plan or arrangement of the Company.
P. FAIR MARKET VALUE means the average of the high and low sale prices of
a share of Stock on a national securities exchange on any day (if
Stock was not traded on such day, the most recent preceding trading
day). If Stock is not traded on a national securities exchange, the
Fair Market Value shall be determined by the Committee.
Q. INVESTMENT ALTERNATIVES means those Investment Alternatives chosen
from time to time by the Committee, as described in SECTION VII, and
reflected on the Deferral Election Forms provided on an annual basis
by the Company to the Participants. Such Investment Alternatives will
allow individual Participants to hypothetically invest the balance of
his or her Compensation Deferral Accounts during each Plan Year, among
Investment Alternatives selected by the Participant, and shall
determine the rate of appreciation (or depreciation) attributable to
the balance of such Participant's Compensation Deferral Accounts for
that Plan Year.
R. PARTICIPANT means an employee who is both eligible to participate in
the Plan under the terms of SECTION IV and has elected to participate
in the Plan.
S. PARTICIPATING EMPLOYER means Alcon Laboratories, Inc., Alcon Research,
Ltd., Alcon Manufacturing, Ltd. and Falcon Pharmaceuticals, Ltd. or
any other corporation or business organization which adopts the Plan,
with the consent of Sponsor.
T. PLAN YEAR means the twelve (12) month period ending on the December
31st of each year during which the Plan is in effect, provided that
the first Plan Year shall commence on the Effective Date and end on
December 31, 2002.
Page 4 of 17
U. PHANTOM STOCK means shares granted under the terms of the Phantom
Stock Plan of Alcon Laboratories, Inc., its Selected Affiliates,
Subsidiaries, and Related Corporations.
V. QUALIFYING GAIN shall mean the incremental value inuring to a
Participant upon the exercise of an Eligible Stock Option, using the
Stock-for-Stock payment method, during any Plan Year. Such incremental
value shall be deliverable to the Participant's Stock Option Gain
Account in the form of shares of Stock and shall be computed as
follows: (i) the total fair market value of the shares of Stock
held/acquired as a result of the exercise of an Eligible Stock Option
using the Stock-for-Stock payment method, minus (ii) the total
exercise price. For example, assume a Participant elects to exercise
an Eligible Stock Option to purchase 1,000 shares of stock at an
exercise price of $20 per share (i.e., a total exercise price of
$20,000), when the Stock has a current fair market value of $25 per
share (i.e., a total current fair market value of $25,000) and elects
to defer one hundred (100) percent of the Qualifying Gain (i.e.
$5,000). Using the Stock-for-Stock payment method, the Participant
would deliver 800 shares of Stock (worth $20,000 at exercise) plus a
Qualifying Gain, in the form of an unfunded and unsecured promise by
the Company for 200 additional shares of Stock in the future (worth
$5,000 at exercise). The number of additional shares of Stock
deliverable to the Participant in the future as a result of the
Qualifying Gain shall be fixed and determined as of the date of the
exercise of the Eligible Stock Option, using the closing price of the
Stock as of the end of the business day closest to the date of such
exercise.
W. RESTRICTED STOCK means Stock granted to an employee of the Company
subject to a substantial risk of forfeiture until a date on which
certain service-based requirements or non-competition provisions are
satisfied.
X. RESTRICTED STOCK DEFERRAL ACCOUNT means the aggregate value, measured
on any given date, of the sum of: (i) the number of shares of
Restricted Stock credited to the Participant's Restricted Stock
Deferral Account, less (ii) the number of shares of Restricted Stock
previously distributed, to the Participant (or his or her Beneficiary)
pursuant to this Plan from the Participant's Restricted Stock Deferral
Account, including any applicable penalties imposed pursuant to
SECTION IX E.
Y. RESTRICTED STOCK DEFERRAL AMOUNT means the amount of Restricted Stock
deferred in accordance with SECTION VI of this Plan.
Z. RESTRICTED STOCK DEFERRAL ELECTION means an irrevocable election made
by an Eligible Individual to defer receipt of compensation in the
amount of nonvested Restricted Stock for a given Plan Year pursuant to
the requirements and terms of SECTION VI hereof.
AA. SPONSOR means Alcon, Inc. and its successors and assigns.
Page 5 of 17
BB. Stock means Alcon, Inc. common stock.
CC. STOCK OPTION GAIN ACCOUNT means the aggregate value, measured on any
given date, of: (i) the number of shares of Stock deferred by a
Participant as a result of all Stock Option Gain Deferral Elections,
less (ii) the number of shares of Stock previously distributed to the
Participant (or his or her Beneficiary) pursuant to this Plan from the
Participant's Stock Option Gain Account, including any applicable
penalties imposed pursuant to SECTION IX E.
DD. STOCK OPTION GAIN AMOUNT means, for any Eligible Stock Option, the
portion of Qualifying Gains deferred in accordance with SECTION VI of
this Plan.
EE. STOCK OPTION GAIN DEFERRAL ELECTION means an irrevocable election made
by an Eligible Individual to defer the receipt of a stock Option Gain
Amount for a given Plan Year. The Stock Option Gain Deferral Election
shall be documented by the Participant on the Stock Option Gain
Deferral Election Form provided by the Committee.
FF. TRUST means the grantor trust established pursuant to the Plan.
GG. TRUSTEE means the trustee named in the agreement establishing the
Trust and such successor and/or additional trustees as may be named
pursuant to the terms of the agreement establishing the Trust.
IV. ELIGIBILITY
An employee of the Company shall be eligible to participate in the Plan if
the employee is approved to participate in the Plan by the Committee. An
employee shall become a Participant under the Plan upon the timely filing
of a Deferral Election Form, as described in SECTION VI.
V. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee which shall hold meetings
at such times as may be necessary for the proper administration of the
Plan. The Committee shall have the sole discretion to interpret the
provisions of the Plan.
VI. ELECTION TO PARTICIPATE
A. COMPENSATION DEFERRAL
(1) PARTICIPATION - An Eligible Individual becomes a Participant in
the Plan by filing a timely, irrevocable Compensation Deferral
Election Form with the Committee. An Eligible Individual who has made
a Compensation Deferral Election for any Plan Year and who continues
to have a balance in his or her Compensation Deferral Account is a
Participant. The Compensation Deferral Election shall be effective
only for the single Plan Year to which it specifically relates. A new
Compensation Deferral Election Form must be filed for each new
Page 6 of 17
Plan Year. Amounts deferred under a Compensation Deferral Election
shall be credited to a Compensation Deferral Account established
under the Plan for the Participant.
(2) COMPENSATION DEFERRAL ELECTION - The Compensation Deferral
Election Form shall consist of the Eligible Individual's election to
defer Compensation, election of Investment Alternatives and election
of the timing and form of distribution of amounts deferred as
described in SECTION VIII. An Eligible Individual may elect to defer
(subject to any limitations on Compensation imposed by the Committee
for the Plan Year), in any combination, all or a part of the Eligible
Individual's Compensation. The Eligible Individual shall specify for
each Compensation category an amount to be deferred, expressed either
as a percentage or a dollar amount. All Compensation Deferral Election
Forms must be submitted on a timely basis to the Committee, otherwise
the Participant shall be deemed to have not submitted a Compensation
Deferral Election Form for the Plan Year to which it relates. Except
as provided in SECTION VI A(3) as to newly Eligible Individuals, a
Compensation Deferral Election Form shall be deemed timely only if it
is submitted to the Committee by June 30th of the Plan Year
immediately preceding the Plan Year to which is relates.
(3) INITIAL COMPENSATION DEFERRAL ELECTION - A newly Eligible
Individual may make a compensation Deferral Election within thirty
(30) days of the date the Eligible Individual receives notification of
eligibility to participate in the Plan in order to defer Compensation
earned with respect to the current Plan Year.
(4) DISCRETIONARY CONTRIBUTION - The Committee, in its sole
discretion, may from time to time make Discretionary Contributions to
a Participant's Compensation Deferral Account.
B. RESTRICTED STOCK DEFERRAL
(1) PARTICIPATION - An Eligible Individual may elect to defer (subject
to any limitations imposed by the Committee for the Plan Year), all or
a portion of any nonvested Restricted Stock that would otherwise vest
at least six (6) months after the date of the Restricted Stock
Deferral Election. An Eligible Individual becomes a Participant in
Plan by filing a timely, irrevocable Restricted Stock Deferral
Election Form with the Committee.
(2) RESTRICTED STOCK DEFERRAL ELECTION - The Restricted Stock Deferral
Election shall be documented by the Participant on the Restricted
Stock Deferral Election Form provided by the Committee. The Restricted
Stock Deferral Election Form shall specify the number of shares to be
deferred and the election of the timing of the distribution of amounts
deferred as described in SECTION VIII.
For an election to defer Restricted Stock to be valid, the following
must occur: (i) a separate Restricted Stock Deferral Election Form
must be completed and signed by the Participant with respect to the
Plan Year, (ii) the Restricted Stock Deferral Election Form must be
delivered on a timely basis to the Committee and accepted
Page 7 of 17
by the Committee; and (iii) the Participant must relinquish the number
of shares of Restricted Stock to the Company on the day the Restricted
Stock Deferral Election is filed with the Committee.
All Restricted Stock Deferral Election Forms must be submitted on a
timely basis to the Committee, otherwise the Participant shall be
deemed to have not submitted a Restricted Stock Deferral Election Form
for the Plan Year to which it relates. A Restricted Stock Deferral
Election Form shall be deemed timely only if it is submitted at least
six (6) months prior to the date the relevant Restricted Stock would
otherwise vest.
C. STOCK OPTION GAIN DEFERRAL
(1) PARTICIPATION - An Eligible Individual may irrevocably elect,
prior to exercising an Eligible Stock Option, to participate in the
Plan and defer receipt of all or part of a Qualifying Gain (as defined
in SECTION III) that would otherwise have been payable to him or her,
to a distribution date defined in SECTION VIII. An Eligible Individual
becomes a Participant in the Plan by filing a timely, irrevocable
Stock Option Gain Deferral Election Form with the Committee.
(2) STOCK OPTION GAIN DEFERRAL ELECTION - For each Eligible Stock
Option, a Participant may elect to defer a minimum of ten (10) percent
and a maximum of one hundred (100) percent of the Qualifying Gain
related to exercise of the Eligible Stock Option, such deferred amount
to be known as his or her Stock Option Gain Amount. A Participant's
ability to defer may be further limited by other terms or conditions
set forth in the stock option plan or agreement under which such
options are granted.
For an election to defer the Qualifying Gain upon an Eligible Stock
Option exercise to be valid, the following must occur: (i) a separate
Stock Option Gain Deferral Election Form must be completed and signed
by the Participant with respect to the Plan Year, specifying the
plan(s) to which the Eligible Stock Option(s) relate, (ii) the Stock
Option Gain Deferral Election Form must be delivered on a timely basis
to the Committee and accepted by the Committee, (iii) the Eligible
Stock Option must be exercised using the Stock-for-Stock payment
method; and (iv) the Stock actually or constructively delivered by the
Participant to exercise the Eligible Stock Option must have been (a)
purchased by the Participant through a means which did not involve the
exercise of any stock option or (b) purchased by the Participant as a
result of stock option exercise and owned by the Participant during
the entire six (6) months prior to its delivery.
All Stock Option Gain Deferral Election Forms must be submitted on a
timely basis to the Committee, otherwise the Participant shall be
deemed to have not submitted a Stock Option Gain Deferral Election
Form for the Plan Year to which it relates. A Stock Option Gain
Deferral Election Form shall be deemed timely only if it is submitted
at least six (6) months prior to the date the Participant elects to
exercise the Eligible Stock Option.
Page 8 of 17
VII. PLAN ACCOUNTS
A. COMPENSATION DEFERRAL ACCOUNT
(1) INVESTMENT ALTERNATIVES - The Investment Alternatives available
for the Participant's Compensation Deferral Account will be selected
by the Committee, in its sole discretion, and specified on the
Compensation Deferral Election Form provided to the Participant by the
Committee. Such Investment Alternatives will allow individual
Participants to hypothetically invest the balance of their
Compensation Deferral Accounts during each Plan Year and shall
determine the rate of appreciation (or depreciation) which shall be
credited on the balance of such Compensation Deferral Account.
Allocation among the Investment Alternatives shall be in increments of
whole percentages. A Participant shall have no actual ownership rights
in any assets of the Company or the Trust as a result of such
Participant's selection of Investment Alternatives. Moreover, the
Company and/or Trust shall have no obligation to invest actual assets
in accordance with the Participant's selection of Investments.
(2) REALLOCATION AMONG INVESTMENT ALTERNATIVES - A Participant may
choose, on the first day of each month, to reallocate the deemed
investment of the amounts credited to such Participant's Compensation
Deferral Account among the Investment Alternatives in increments of
whole percentages. Such reallocation shall be achieved by submitting
an Investment Alternative Change Form to the Committee pursuant to the
procedures established by the Committee. The Investment Alternative
Change Form must be submitted to the Committee no later than the
twentieth (20th) day of the month prior to the date the reallocation
becomes effective.
(3) PERIODIC CREDITS OF COMPENSATION DEFERRAL AMOUNTS - The
Participant's Compensation Deferral Account shall be credited with the
amount of the deferred Compensation on the day such deferred
Compensation would have otherwise been paid to the Participant. All
periodic credits to a Participant's Compensation Deferral Account with
respect to Compensation shall be accounted for based on the Investment
Alternatives selected by the Participant on the Compensation Deferral
Election Form or Investment Alternative Change Form.
(4) INCREASE OR DECREASE TO COMPENSATION DEFERRAL ACCOUNTS - A
Participant's Compensation Deferral Account will be increased or
decreased on the last day of each month, in accordance with the
Participant's Investment Alternative election reflected on his or her
Compensation Deferral Election Form or Investment Alternative Change
Form.
(5) VESTING IN THE COMPENSATION DEFERRAL ACCOUNT - With the exception
of Discretionary Contributions, the Participant shall at all times be
one hundred (100) percent vested in his or her Compensation Deferral
Account. The Committee shall determine the vesting provisions of any
Discretionary Contributions to the Participant's Compensation Deferral
Account.
Page 9 of 17
B. RESTRICTED STOCK DEFERRAL ACCOUNT
(1) RESTRICTED STOCK DEFERRAL AMOUNT - Subject to any terms and
conditions imposed by the Committee, Participants may elect to defer,
under the Plan, all or a portion of any nonvested Restricted Stock
into his or her Restricted Stock Deferral Account. The amount deferred
shall be known as the Restricted Stock Deferral Amount. A
Participant's Restricted Stock Deferral Account will be credited with
the number of shares equal to the Restricted Stock Deferral Amount,
plus the number of shares equal to the amount of any accrued dividends
on such Restricted Stock divided by the Fair Market Value for the day
the Restricted Stock Deferral Election was made. Such amounts will be
credited to a Participant's Restricted Stock Deferral Account as soon
as administratively feasible following receipt of a Restricted Stock
Deferral Election Form. Restricted Stock Deferral Amounts shall be
reflected on the books of the Company as an unfunded, unsecured
promise to deliver to the Participant a specific number of shares of
Stock, upon a Distribution Event in the future. Such shares of Stock
would otherwise have been delivered to the Participant on a specified
vesting date but for the Participant's election to defer.
(2) INVESTMENT ONLY IN STOCK - The Participant's unfunded, unsecured
right to receive a number of shares of Stock, equal in value (as of
the date the Restricted Stock Deferral Election was made), to the
Restricted Stock Deferral Amount will be reflected on the books of the
Company. Dividends paid on Restricted Stock, while such Restricted
Stock is reflected in the Participant's Restricted Stock Deferral
Account, will be credited to the Restricted Stock Deferral Account in
the form of additional shares of Stock. The Participant shall not have
a right to diversify his Restricted Stock Deferral Account into
Investment Alternatives nor to receive cash equal to the value of the
Stock reflected in such Restricted Stock Deferral Account.
(3) VESTING IN THE RESTRICTED STOCK DEFERRAL ACCOUNT - The Participant
shall vest in Restricted Stock Deferral Amounts at the time the
restrictions that would otherwise apply to the Restricted Stock
pursuant to any other agreement between the Company and the
Participant lapse, in accordance with the terms of such other
agreements.
C. STOCK OPTION GAIN ACCOUNT
(1) STOCK OPTION GAIN AMOUNT - Subject to any terms and conditions
imposed by the Committee, Participants may elect to defer, under the
Plan, all or a portion of any Qualifying Gains attributable to an
Eligible Stock Option exercise, into his or her Stock Option Gain
Account. The amount deferred shall be known as the Stock Option Gain
Amount(s) and shall be reflected on the books of the Company as an
unfunded, unsecured promise to deliver to the Participant a specific
number of shares of Stock upon a Distribution Event in the future.
Such shares of Stock would otherwise have been delivered to the
Participant, pursuant to the Eligible Stock Option exercise, but for
the Participant's election to defer.
Page 10 of 17
(2) INVESTMENT ONLY IN STOCK - The Participant's unfunded, unsecured
right to receive a number of shares of Stock, equal in value (measured
as of the date of exercise of the Eligible Stock Option) to the Stock
Option Gain Amount will be reflected on the books of the Company.
Dividends paid on Stock while such Stock is reflected in the
Participant's Stock Option Gain Account will be credited to the Stock
Option Gain Account in the form of additional shares of Stock. The
Participant shall not have a right to diversify the balance of his
Stock Option Gain Account into Investment Alternatives nor to receive
cash equal to the value of the Stock reflected in such Stock Option
Gain Account.
(3) VESTING IN THE STOCK OPTION GAIN ACCOUNT - The Participant shall
at all times be one hundred (100) percent vested in his or her Stock
Option Gain Account.
VIII. METHOD OF DISTRIBUTION
A. Distribution of a Participant's Plan Account balance will commence
upon the Participant reaching a Distribution Event selected by the
Participant on his Deferral Election Forms. The Participant shall have
the ability to elect to receive distribution of his or her Plan
Account balances as follows:
(1) COMPENSATION DEFERRAL ACCOUNT BALANCE - The Participant's
Compensation Deferral Account balance shall be payable only in the
form of cash and shall be distributed in either a lump sum payment or
in substantially equal annual installments over a predetermined number
of years, selected by the Participant on his or her Compensation
Deferral Election Forms. If annual installments are selected by the
Participant, the initial installment shall be based on the value of
the Participant's Compensation Deferral Account, measured just prior
to distribution, and shall be equal to 1/n (where `n' is equal to the
total number of annual installments not yet distributed). Subsequent
installment shall be computed in a consistent fashion, with the
measurement date being the anniversary of the original measurement
date.
(2) RESTRICTED STOCK DEFERRAL ACCOUNT - The Participant's Restricted
Stock Deferral Account balance shall be payable in the form of Stock.
Restricted Stock Deferral Account balances shall be distributed in
either a lump sum or in equal annual installments over a predetermined
number of years selected by the Participant on his Restricted Stock
Deferral Election Forms. With respect to Stock, the number of shares
of Stock distributed as an annual installment will be equal to the
number of whole shares in the Participant's Restricted Stock Deferral
Account on the date of the first distribution date, divided by the
number of years elected by the Participant. Any fractional shares in
the Participant's Restricted Stock Deferral Account will be liquidated
on the date of the final installment payment and paid in cash to the
Participant.
(3) STOCK OPTION GAIN ACCOUNT - The Participant's Stock Option Gain
Account balance shall be
Page 11 of 17
payable only in the form of Stock and shall be distributed in either a
lump sum or in equal annual installments of Stock over a predetermined
number of years selected by the Participant on his Deferral Election
Form. If the annual distribution method is elected, the number of
shares of Stock distributed as an annual installment will be equal to
the number of whole shares in the Participant's Stock Option Gain
Account on the date of the first distribution date, divided by the
number of years elected by the Participant. Any fractional shares in
the Participant's Stock Option Gain Account will be liquidated on the
date of the final installment payment and paid in cash to the
Participant.
B. The annual installments will commence on the business day coinciding
with or next following the April 1st subsequent to the Participant's
applicable Distribution Event and continuing on each April 1st until
all annual installments have been distributed. Lump sum distributions
shall be paid by the Sponsor no later than thirty (30) days following
the applicable Distribution Event.
C. A Participant may elect on the Deferral Election Form to receive an
immediate distribution of his or her Account balances upon a Change of
Control, as defined in SECTION III. The Participant may modify these
elections by submitting revised election forms at any time prior to
the Change of Control. If the Participant does not elect to receive an
immediate distribution of his or her Stock Option Gain Account and/or
Restricted Stock Deferral Account, the shares of Stock held in his or
her Stock Option Gain Account and/or Restricted Stock Deferral Account
will be replaced with shares of stock in the new or acquiring entity,
which have an equivalent market value.
IX. CHANGE IN DISTRIBUTION SCHEDULE
A. DEATH OF PARTICIPANT - In the event of the death of a Participant before
distribution of the Participant's Account balance has commenced or been
completed, the Trustee shall pay the remaining balance of any deferred
amount in one lump sum, to the individual designated as primary beneficiary
on the latest executed Notice of Change of Beneficiary form on file, within
a reasonable time period but not later than one hundred (100) days after
the date of the Participant' s death. If the primary beneficiary designated
on the latest executed Notice of Change of Beneficiary form is no longer
living at the time of the Participant's death, the Trustee shall pay the
remaining balance of any deferred amount in one lump sum to the individual
designated as secondary beneficiary on the latest executed Notice of Change
of Beneficiary form on file. If the Secondary Beneficiary designated on the
latest executed Notice of Change of Beneficiary form is no longer living at
the time of the Participant's death, the Trustee shall pay the remaining
balance of any deferred amount in one lump sum to the Participant's estate.
If the Participant wishes to change the beneficiary, the Participant may do
so at any time by submitting a new Notice of Change of Beneficiary form to
the Committee, which form shall become effective upon receipt by the
Committee.
Page 12 of 17
B. PERMANENT DISABILITY OF THE PARTICIPANT - In the event of permanent
disability (as defined below) before distribution of a Participant's
Account balance has commenced or been completed, the Trustee upon
direction from and approval by the Committee (in its sole discretion)
shall be permitted to pay the balance of the Participant's Account in
one lump sum. Such payouts shall be made to the Participant or the
legal representative of such Participant subject to SECTION XVI C.
The Participant will be considered permanently disabled for purposes
of this Plan if, based on medical evidence, the Committee determines
that the Participant (i) is totally disabled, mentally or physically,
(ii) will remain so for the rest of his or her life; and (iii) is
therefore unable to continue to provide his or her services to the
Company.
C. UNFORSEEABLE EMERGENCY - In the event of a Participant's
"unforeseeable emergency," the Participant may submit a written
petition to the Committee for an early withdrawal from his or her
Account balance. The Committee shall have sole discretion in the
determination of the merits of petitioner's "Unforeseeble Emergency"
petition. Any early withdrawal approved by the Committee shall be
limited to the amount necessary to meet the emergency.
An unforeseeable emergency is severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in the Code)
of the Participant, (ii) loss of the Participant's property due to
casualty; or (iii) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.
The need to send a Participant's child to college or the desire to
purchase a home are not considered to be unforeseeable emergencies.
D. CHANGE IN DISTRIBUTION DATE - If a Participant wishes to modify the
payment schedule noted in SECTION VIII, he or she must submit a
written petition to the Committee for such change. The Committee has
sole discretion in whether to permit the requested change. The written
petition must be submitted to the Committee at least one (1) year
prior to the date the Participant would otherwise be receiving a
distribution in accordance with the most recently executed Deferral
Election.
E. EARLY LUMP SUM DISTRIBUTION - Notwithstanding any other provision of
this Plan, a Participant may elect to receive a lump sum distribution
of all or a portion of the funds accumulated in his Plan Account upon
submission of a written request and its approval by the Committee;
however, the distribution will be subject to a ten (10) percent early
withdrawal penalty. The withdrawal penalty is ten (10) percent of the
amount of the lump sum distribution and will reduce such distribution.
Page 13 of 17
X. OFFSET FOR OBLIGATIONS TO COMPANY
If the Participant has any debt, obligation or other liability representing
an amount owing to the Company or any affiliate of the Company, and if such
debt, obligation, or other liability is due and owing at the time benefit
payments are payable hereunder, the Company may offset the amount owing it
or any affiliate against the amount of benefits otherwise distributable
hereunder.
XI. LIABILITY OF COMPANY
Except as provided below, all contributions and distributions to be made as
required by this Plan shall be obligations of the Sponsor. On the basis of
the information furnished by the Committee, the Trustee shall keep separate
books and records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Participants of each
Participating Employer.
XII. RIGHTS OF A PARTICIPANT
Establishment of the Plan shall not be construed as giving any Participant
the right to be retained in the Company's service or employ or the right to
receive any benefits not specifically provided by the Plan.
Compensation, Qualifying Gain, and Restricted Stock deferred under this
Plan will not be segregated from the general funds of the Company, and no
Participant will have any claim on any specific assets of the Company. To
the extent that any Participant acquires a right to receive benefits under
this Plan, his or her right will be no greater than the right of any
unsecured general creditor of the Company and is not assignable or
transferable except to the Participant's estate as defined in SECTION IX.
XIII. AMENDMENT AND TERMINATION
The Board may amend, modify, or terminate the Plan at any time. No
amendment, modification, or termination shall reduce any benefits accrued
or rights entitled to by any Participant prior to such amendment,
modification, or termination.
XIV. DETERMINATION OF BENEFITS
See Appendix A.
XV. NOTICES
Notices and elections under this Plan must be in writing. A notice or
election is deemed delivered if it is delivered personally or mailed by
registered or certified mail to the person at his or her last known
business address.
Page of 14 of 17
XVI. GENERAL PROVISIONS
A. CONTROLLING LAW - Except to the extent superseded by federal law, the
laws of the State of Texas shall be controlling in all matters relating to
the Plan, including construction and performance thereof.
B. CAPTIONS - The captions of sections and paragraphs of this Plan are for
the convenience of reference only and shall not control or affect the
meaning or construction of any of its provisions.
C. FACILITY OF PAYMENT - Any amounts payable hereunder to any Participant
who is under legal disability or who, in the judgment of the Committee, is
unable to properly manage his or her financial affairs may be paid to the
legal representative of such Participant or may be applied for the benefit
of such Participant in any manner which the Committee may select, and any
such payment shall be deemed to be payment for such Participant's Account
and shall be a complete discharge of all liability of the Company with
respect to the amount so paid.
D. WITHHOLDING OF PAYROLL TAXES - The Company shall withhold from a
Participant's Compensation, all federal, state and local income, employment
and other taxes required to be withheld by the Company with respect to any
deferrals under the Plan, in amounts and in a manner to be determined in
the sole discretion of the Company.
The Company, or the Trustee of the Trust, shall withhold from any
distributions made to a Participant under this Plan, all federal, state and
local income, employment, and other taxes required to be withheld by the
Company or the Trustee of the Trust, in connection with such distributions,
in amounts and in a manner to be determined in the sole discretion of the
Company and/or the Trustee of the Trust.
E. ADMINISTRATIVE EXPENSES - All expenses of administering the Plan shall
be borne by the Company. No part thereof shall be charged against any
Participant's Account or any amounts distributable hereunder.
F. SEVERABILITY - Any provision of this Plan prohibited by the law of any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition without invalidating the remaining provisions hereof.
G. NO LIABILITIES - Except as otherwise expressly provided herein, no
member of the Board of Directors of the Company and no officer, employee,
or agent of the Company shall have any liability to any person, firm, or
corporation based on or arising out of the Plan, except in the case of
gross negligence or fraud.
H. BINDING ON ALL SUCCESSORS - In the event of a Change of Control, any
surviving or acquiring corporation shall (i) assume the Plan and all
obligations hereunder, and (ii) agree to substitute shares of common stock
of such surviving or acquiring corporation for shares of Stock in this
Plan. In the event any surviving or acquiring corporation refuses
Page 15 of 17
to assume the terms set out in this section, then each Participant will
receive the balance in his or her Compensation Deferral Account in a single
lump sum of cash, the balance of his or her Restricted Stock Deferral
Account in a single lump sum of Stock or cash, as applicable, and the
balance in his or her Stock Option Gain Account in a single lump sum of
Stock.
I. SECTION 16(B) - Notwithstanding any provision to the contrary,
Participants who are actually or potentially subject to section 16(b) of
the Securities Exchange Act of 1934, as amended, shall be subject to any
procedures adopted by the Committee, including without limitation the delay
of any payment from a Participant's Restricted Stock Deferral Account
and/or Stock Option Gain Account.
J. SECTION 162(M) DEDUCTION LIMITATION - In the event the Company would be
denied a deduction for amounts otherwise payable in any Plan Year to a
Participant under SECTION VIII by reason of the application of section
162(m) of the Code, the Committee, in its sole discretion, may reduce any
payment otherwise due to such Participant (but not below zero) to the
extent necessary to avoid such application of section 162(m) and such
amount not paid and the net earnings or dividend equivalents thereon shall
be paid to the Participant in the earliest Plan Year(s) in which payment
may be made without application of section 162(m).
XVII. UNFUNDED STATUS OF PLAN
It is the intention of the parties that the arrangements herein described
be unfunded for tax purposes and for purposes of Title I of ERISA. Plan
Participants have the status of general unsecured creditors of the Company
or any Participating Company. The Plan constitutes a mere promise by the
Company to make payments in the future.
The Company may establish the Trust(s) with the Trustee, pursuant to such
terms and conditions as are set forth in the Trust agreement(s) to be
entered into between the Company and the Trustee. The Trust is intended to
be treated as a "grantor" trust under the Code and the establishment of the
Trust is not intended to cause Participants to realize current income on
amounts contributed thereto, and the Trust shall be so interpreted.
XVIII. RIGHTS TO BENEFITS
A Participant's rights' to benefit payments under the plan are not subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiaries.
Page 16 of 17
IN WITNESS WHEREOF, by resolution dated October 10, 2002, the Sponsor has
authorized the undersigned officers of Alcon Laboratories, Inc. to execute and
implement this Plan.
ALCON LABORATORIES, INC.
By:
/s/ T.R.G Sear
- ------------------------------
T.R.G. Sear
Date:
October 25, 2002
By:
/s/ Jacqualyn A. Fouse
- ------------------------------
Jacqualyn A. Fouse
Date:
October 25, 2002
Page 17 of 17
APPENDIX A
I. DETERMINATION OF BENEFITS
A. CLAIM - A person who believes that he is being denied a benefit to
which he is entitled under the Plan (hereinafter referred to as a
"Claimant") may file a written request for such benefit with the Company,
setting forth his claim. The request must be addressed to the Board of
the Company related to the Participant at its then principal place of
business.
B. CLAIM DECISION - Upon receipt of a claim, the Company shall advise the
Claimant that a reply will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within such period. The Company may,
however, extend the reply period for an additional ninety (90) days for
reasonable cause. If the claim is denied in whole or in part, the Company
shall adopt a written report, using language calculated to be understood by
the Claimant, setting forth:
(1) The specific reason or reasons for such denial;
(2) The specific reference to pertinent provisions of this Plan upon
which such denial is based;
(3) A description of any additional material or information necessary
for the Claimant to clarify his claim and an explanation why such
material or such information is necessary;
(4) Appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review; and
(5) The time limits for requesting a review.
C. REQUEST FOR A REVIEW - Within sixty (60) days after the receipt by the
Claimant of the written report described above, the Claimant may request in
writing that the Board review the determination of the Company. Such
request must be addressed to the Board's principal place of business. The
Claimant or his duly authorized representative may, but need not, review
the pertinent documents and submit issues and comments in writing for
consideration by the Company. If the Claimant does not request a review of
the Company's determination by the Board within such sixty (60) day period,
he shall be barred and stopped from challenging the Company's
determination.
D. REVIEW OF DECISION - Within sixty (60) days after the Board's receipt
of a request for review, they will review the Company's determinations.
After considering all materials presented by the Claimant, the Board will
render a written report, written in a manner calculated to be understood
by the Claimant, setting forth the specific reasons for the decision and
containing specific references to the pertinent provisions of this Plan on
Page 1 of 2
which the decision is based. If special circumstances require that the
sixty (60) day time period be extended, the Board will so notify the
Claimant and will render the decision as soon as possible, but no later
than one hundred twenty (120) days after receipt of the request for review.
Page 2 of 2