EXHIBIT 10.16

ALLERGAN, INC.

SAVINGS AND INVESTMENT PLAN

 

RESTATED

2008

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TABLE OF CONTENTS

 

      PAGE ARTICLE I    INTRODUCTION      1 1.1    Plan Name      1 1.2    Plan
Purpose      1 1.3    Effective Date of 2008 Restated Plan      1 1.4   
Amendments to Plan      1 1.5    Plan Qualification      2 ARTICLE II   
DEFINITIONS      4 2.1    Accounts      4 2.2    Affiliated Company      4 2.3
   After Tax Deposits      4 2.4    After Tax Deposits Account      4 2.5   
Anniversary Date      4 2.6    Before Tax Deposits      4 2.7    Before Tax
Deposits Account      4 2.8    Beneficiary      4 2.9    Board of Directors   
  5 2.10    Break in Service      5 2.11    Code      5 2.12    Committee      5
2.13    Company      5 2.14    Company Contributions      5 2.15    Company
Contributions Accounts      5 2.16    Company Stock      5 2.17    Compensation
     5 2.18    Credited Service      7 2.19    Disability      8 2.20   
Effective Date      9 2.21    Eligible Employee      9 2.22    Eligible
Retirement Plan      9 2.23    Eligible Rollover Distribution      9 2.24   
Employee    10 2.25    Employment Commencement Date    11 2.26    ERISA    11
2.27    Forfeitures    11 2.28    415 Suspense Account    11 2.29    Highly
Compensated Employee    11 2.30    Hour of Service    12 2.31    Investment
Manager    12 2.32    Leased Employee    12

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TABLE OF CONTENTS

 

      PAGE 2.33    Leave of Absence    12 2.34    Matched Deposits    14 2.35   
Matching Contributions    14 2.36    Matching Contributions Account    14 2.37
   Normal Retirement Age    14 2.38    Participant    14 2.39    Participant
Deposits    14 2.40    Period of Severance    14 2.41    Plan    14 2.42    Plan
Administrator    15 2.43    Plan Year    15 2.44    Reemployment Commencement
Date    15 2.45    Retirement Account Participant    15 2.46    Retirement
Contributions    15 2.47    Retirement Contributions Account    15 2.48   
Rollover Contributions    15 2.49    Rollover Contributions Account    15 2.50
   Severance    15 2.51    Severance Date    16 2.52    Sponsor    16 2.53   
Trust    16 2.54    Trust Agreement    16 2.55    Trustee    16 2.56   
Valuation Date    17 ARTICLE III    ELIGIBILITY AND PARTICIPATION    18 3.1   
General Eligibility and Participation    18 3.2    Eligibility for Retirement
Contributions    18 3.3    Duration of Participation    19 3.4    Eligibility
and Participation After Normal Retirement Age    19 ARTICLE IV    PARTICIPANT
DEPOSITS    20 4.1    Election    20 4.2    Amount Subject to Election    21 4.3
   Limitation on Compensation Deferrals    22 4.4    Provisions for Return of
Excess Before Tax Deposits    25 4.5   

Provision for Recharacterization or Return of Excess Deferrals

by Highly Compensated Participants

   27 4.6   

Termination, Change in Rate, or Resumption of

Before Tax Deposits or After Tax Deposits

   29

 

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TABLE OF CONTENTS

 

      PAGE 4.7    Character of Deposits    29 4.8    Rollover Contributions   
29 ARTICLE V    TRUST FUND AND COMPANY CONTRIBUTIONS    32 5.1    General    32
5.2    Single Trust    32 5.3    Matching Contributions    32 5.4    Retirement
Contributions    33 5.5    Form of Company Contributions    33 5.6    Investment
of Trust Assets    33 5.7    Irrevocability    36 5.8    Company, Committee and
Trustee Not Responsible for Adequacy of Trust Fund    37 5.9    Certain Offers
for Company Stock    37 5.10    Voting of Company Stock    41 5.11    Securities
Law Limitation    42 5.12    Distributions    43 5.13    Taxes    43 5.14   
Trustee Records to be Maintained    43 5.15    Annual Report of Trustee    43
5.16    Appointment of Investment Manager    43 ARTICLE VI    ACCOUNTS AND
ALLOCATIONS    45 6.1    Participants’ Accounts    45 6.2    Allocation of
Participant Deposits    45 6.3    Allocation of Company Contributions and
Forfeitures    45 6.4    Valuation of Participants’ Accounts    46 6.5   
Valuation of Company Stock    46 6.6    Dividends, Splits, Recapitalizations,
Etc.    46 6.7    Stock Rights, Warrants or Options    46 6.8    Treatment of
Accounts Upon Severance    47 6.9    Cash Dividends    47 6.10    Miscellaneous
Allocation Rules    47 6.11    Limitations on After Tax Deposits and Matching
Contributions    48 6.12   

Provision for Disposition of Excess After Tax Deposits or Matching Contributions

on Behalf of Highly Compensated Participants

   52

 

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TABLE OF CONTENTS

 

      PAGE ARTICLE VII    VESTING IN PLAN ACCOUNTS    55 7.1    No Vested Rights
Except as Herein Provided    55 7.2    Vesting of Participant Deposits    55 7.3
   Vesting of Company Contributions    55 ARTICLE VIII    PAYMENT OF PLAN
BENEFITS    57 8.1    Withdrawals During Employment    57 8.2    Distributions
Upon Termination of Employment or Disability    58 8.3    Distribution Upon
Death of Participant    59 8.4    Designation of Beneficiary    59 8.5   
Hardship Withdrawal Rules    60 8.6    Distribution Rules    61 8.7   
Forfeitures    67 8.8    Valuation of Accounts Upon Distribution    68 8.9   
Lapsed Benefits    68 8.10    Persons Under Legal Disability    69 8.11   
Additional Documents    70 8.12    Trustee-to-Trustee Transfers    70 8.13   
Loans to Participants    70 ARTICLE IX    OPERATION AND ADMINISTRATION    73 9.1
   Appointment of Committee    73 9.2    Appointment of Investment Subcommittee
   73 9.3    Transaction of Business    73 9.4    Voting    74 9.5   
Responsibility of Committees    74 9.6    Committee Powers    75 9.7   
Additional Powers of Committee    76 9.8    Investment Subcommittee Powers    76
9.9    Periodic Review of Funding Policy    77 9.10    Claims Procedures    77
9.11    Appeals Procedures    78 9.12    Limitation on Liability    79 9.13   
Indemnification and Insurance    79 9.14    Compensation of Committees and Plan
Expenses    79 9.15    Resignation    80 9.16    Reliance Upon Documents and
Opinions    80

 

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TABLE OF CONTENTS

 

      PAGE ARTICLE X    AMENDMENT AND ADOPTION OF PLAN    81 10.1    Right to
Amend Plan    81 10.2    Adoption of Plan by Affiliated Companies    81 ARTICLE
XI    DISCONTINUANCE OF CONTRIBUTIONS    82 ARTICLE XII    TERMINATION AND
MERGER    83 12.1    Right to Terminate Plan    83 12.2    Merger Restriction   
83 12.3    Effect on Trustee and Committee    83 12.4    Effect of
Reorganization, Transfer of Assets or Change in Control    83 ARTICLE XIII   
LIMITATION ON ALLOCATIONS    86 13.1    General Rule    86 13.2    Annual
Additions    86 13.3    Other Defined Contribution Plans    87 13.4   
Adjustments for Excess Annual Additions    87 13.5    Compensation    87 13.6   
Treatment of 415 Suspense Account Upon Termination    88 ARTICLE XIV   
TOP-HEAVY RULES    89 14.1    Applicability    89 14.2    Definitions    89 14.3
   Top-Heavy Status    90 14.4    Minimum Contributions    91 14.5    Minimum
Vesting Rules    92 14.6    Noneligible Employees    92 ARTICLE XV   
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS    93 15.1   
General Restrictions Against Alienation    93 15.2    Qualified Domestic
Relations Orders    93

 

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TABLE OF CONTENTS

 

      PAGE ARTICLE XVI    MISCELLANEOUS PROVISIONS    97 16.1    No Right of
Employment Hereunder    97 16.2    Effect of Article Headings    97 16.3   
Limitation on Company Liability    97 16.4    Gender    97 16.5   
Interpretation    97 16.6    Withholding For Taxes    97 16.7    California Law
Controlling    97 16.8    Plan and Trust as One Instrument    97 16.9    Invalid
Provisions    97 16.10    Counterparts    98 APPENDIX A   

 

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ALLERGAN, INC.

SAVINGS AND INVESTMENT PLAN

ARTICLE I

INTRODUCTION

1.1          Plan Name.  This document, made and entered into by Allergan, Inc.,
a Delaware corporation (“Allergan”), amends and restates in its entirety the
“Allergan, Inc. Savings and Investment Plan (Restated 2005)” and shall be known
hereafter as the “Allergan, Inc. Savings and Investment Plan (Restated 2008).”

1.2          Plan Purpose.  The purpose of the Allergan, Inc. Savings and
Investment Plan (Restated 2008), hereinafter referred to as the “Plan,” is to
enable Eligible Employees of Allergan, and any Affiliated Companies that are
authorized by the Board of Directors to participate in the Plan, to share in the
growth and prosperity of the Company and to provide Participants with an
opportunity to accumulate capital for their future economic security. All assets
acquired under the Plan as a result of Participant Deposits and Company
Contributions, income, and other additions to the Fund under the Plan shall be
administered, distributed, forfeited and otherwise governed by the provisions of
the Plan, which is to be administered by the Committee for the exclusive benefit
of Participants in the Plan and their Beneficiaries.

1.3          Effective Date of 2008 Restated Plan.  The Effective Date of this
amended and restated Plan shall be January 1, 2008 unless otherwise specified in
the Plan. The provisions of this Plan document apply generally to Employees who
have completed at least one (1) Hour of Service for Allergan or any Affiliated
Companies on or after January 1, 2008 and the rights and benefits, if any, of
Employees or Participants whose employment with Allergan or any Affiliated
Companies terminated prior to January 1, 2008 shall be determined in accordance
with the provisions of the Plan then in effect unless otherwise provided herein
and subject to any modification provided herein that may affect the holding or
distribution of Participants’ Accounts.

1.4          Amendments to Plan.  The Plan has been amended from time to time
since its Original Effective Date of July 26, 1989 to reflect changes in the
Plan’s operations and applicable law including, but not limited to, the
following:

(a)        This Plan document that restates the Plan by incorporating the
provisions of the First, Second, and Third Amendments to the Allergan, Inc.
Savings and Investment Plan (Restated 2005) and amends the Plan: (i) to comply
with all changes made by the Economic Growth and Tax Relief Reconciliation Act
of 2001 (with technical corrections made by the Job Creation and Worker
Assistance Act of 2002), the Pension Funding Equity Act of 2004, the American
Jobs Creation Act of 2004, and the Gulf Opportunity Zone Act of 2005 as well as
the changes to the qualification requirements listed on the “2006 Cumulative
List of Changes in Plan Qualification Requirements” as set forth in Notice
2007-3, and (ii) to comply with certain changes made by the Pension Protection
Act of 2006 by (1) by treating a Participant’s Beneficiary the same as the
Participant’s spouse or dependent for purposes of the Plan’s hardship
withdrawals, (2) expanding the

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Plan’s rollover distribution provisions to permit the direct rollover of
after-tax contributions to and from an annuity contract described in Code
Section 403(b), and (3) permitting non-spouse beneficiaries to elect direct
rollovers of lump sum distributions.

(b)        The Plan document for the Allergan, Inc. Savings and Investment Plan
(Restated 2005) that incorporated the provisions of the First, Second, and Third
Amendments to the Allergan, Inc. Savings and Investment Plan (Restated 2003) and
amended the Plan, effective March 28, 2005, so that the Plan’s mandatory
distribution rule applies only to Accounts, the vested portions of which, do not
exceed $1,000.

(c)        The Plan document for the Allergan, Inc. Savings and Investment Plan
(Restated 2003) that incorporated the provisions of the First Amendment to the
Allergan, Inc. Savings and Investment Plan (Restated 2001) and amended the Plan
to enhance Company Contributions made to the Plan by (i) increasing the
Company’s Matching Contributions from an average 50% match on certain
Participant Deposits not to exceed 5% of Compensation to a 100% match on certain
Participant Deposits not to exceed 4% of Compensation and (ii) adding a
Retirement Contribution feature for certain Eligible Employees hired on or after
October 1, 2002 and other Eligible Employees who made a one-time irrevocable
election to cease active participation in the Allergan, Inc. Pension Plan.

(d)        Amendments to the Plan that in accordance with Code Section 414(l),
Regulation Section 1.414(1)-1, and Section 208 of ERISA, (i) provided for the
merger of the Inamed Corporation Retirement Savings Plan was with and into the
Plan effective as of December 31, 2006 and provided further that all account
balances transferred to the Plan as a result of the merger are to be
administered, distributed, forfeited and otherwise governed by the provisions of
the Plan, (ii) in connection with the distribution of the stock of Advanced
Medical Optics, Inc. (“AMO”) by the Plan Sponsor to its stockholders on June 29,
2002, provided for the transfer of assets and liabilities attributable to the
Accounts of AMO Employees (as defined in Section 2.24) from the Plan to the
Advanced Medical Optics, Inc. 401(k) Plan, a qualified profit sharing plan with
a qualified cash or deferred arrangement, and the allocation of AMO stock to
Participants’ Accounts, and (iii) provided for the merger of the Allergan, Inc.
Puerto Rico Savings and Investment Plan with and into the Plan effective as of
January 1, 1999 and provided further that all account balances transferred to
the Plan as a result of the merger are to be administered, distributed,
forfeited and otherwise governed by the provisions of the Plan and Appendix A,
which is attached hereto and made a part hereof.

1.5          Plan Qualification.  The Plan is an employee benefit plan that is
intended to qualify under Code Section 401(a) as a qualified profit sharing plan
and under Code Section 401(k) as a qualified cash or deferred arrangement. The
Plan’s last determination letter was issued by the Internal Revenue Service on
July 22, 2002 with respect to the Allergan, Inc. Savings and Investment Plan
(Restated 2001). This Plan document is intended to reflect all law changes made
by the Economic Growth and Tax Relief Reconciliation Act of 2001 (with technical
corrections made by the Job Creation and Worker Assistance Act of 2002), the
Pension

 

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Funding Equity Act of 2004, the American Jobs Creation Act of 2004, and the Gulf
Opportunity Zone Act of 2005 as well as the changes to the qualification
requirements listed on the “2006 Cumulative List of Changes in Plan
Qualification Requirements” as set forth in Notice 2007-3.

 

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ARTICLE II

DEFINITIONS

2.1.          Accounts.  “Accounts” or “Participant’s Accounts” shall mean the
After Tax Deposits Accounts, Before Tax Deposits Accounts, Matching
Contributions Accounts, Retirement Contributions Accounts, and Rollover
Contributions Accounts maintained for the various Participants.

2.2.          Affiliated Company.  “Affiliated Company” shall mean (i) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Code Section 414(b)) of which the Sponsor is
a member, (ii) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Code Section 414(c)) with the Sponsor,
(iii) any entity or organization, other than the Sponsor, which is a member of
an affiliated service group (within the meaning of Code Section 414(m)) of which
the Sponsor is a member, and (iv) any entity or organization, other than the
Sponsor, which is affiliated with the Sponsor under Code Section 414(o). An
entity shall be an Affiliated Company pursuant to this Section only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
Original Effective Date of the Plan.

2.3.          After Tax Deposits.  “After Tax Deposits” shall mean those
contributions made by a Participant which represent after-tax contributions.

2.4.          After Tax Deposits Account.    “After Tax Deposits Account” shall
mean a Participant’s individual account in the Trust Fund in which are held his
or her After Tax Deposits and the earnings thereon.

2.5.          Anniversary Date.  “Anniversary Date” shall mean the last day of
each Plan Year.

2.6.          Before Tax Deposits.    “Before Tax Deposits” shall mean those
contributions made by a Participant which represent pre-tax contributions.

2.7.          Before Tax Deposits Account.    “Before Tax Deposits Account”
shall mean a Participant’s individual account in the Trust Fund in which are
held his or her Before Tax Deposits, any pre-tax contributions (elective
deferrals as defined in Code Section 402(g)(3)) transferred from the
Participant’s account in the Inamed Corporation Retirement Savings Plan, and the
earnings thereon. Any pre-tax contributions transferred from a Participant’s
account in the Inamed Corporation Retirement Savings Plan shall be fully vested

2.8.          Beneficiary.  “Beneficiary” or “Beneficiaries” shall mean the
person or persons last designated by a Participant as set forth in Section 8.4
or, if there is no designated Beneficiary or surviving Beneficiary, the person
or persons designated pursuant to Section 8.4 to receive the interest of a
deceased Participant in such event.

 

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2.9.          Board of Directors.  “Board of Directors” shall mean the Board of
Directors of the Sponsor (or its delegate) as it may from time to time be
constituted.

2.10.        Break in Service.  “Break in Service” shall mean, with respect to
an Employee, each period of 12 consecutive months during a Period of Severance
that commences on the Employee’s Severance Date or on any anniversary of such
Severance Date.

2.11.        Code.  “Code” shall mean the Internal Revenue Code of 1986 and the
regulations thereunder. Reference to a specific Code Section shall be deemed
also to refer to any applicable regulations under that Section, and shall also
include any comparable provisions of future legislation that amend, supplement
or supersede that specific Section.

2.12.        Committee.  “Committee” shall mean the committee to be appointed
under the provisions of Section 9.1 to administer the Plan.

2.13.        Company.  “Company” shall mean collectively the Sponsor and each
Affiliated Company that adopts the Plan in accordance with Section 10.2.

2.14.        Company Contributions.    “Company Contributions” shall mean
Matching Contributions and Retirement Contributions (whether in cash or other
property, including Company Stock), paid by the Company pursuant to Sections 5.3
and 5.4 into the Trust Fund established and maintained under the provisions of
the Plan for the purpose of providing benefits for Participants and their
Beneficiaries. Unless expressly stated otherwise in the Plan, Company
Contributions shall not include Before Tax Deposits, After Tax Deposits, or
Rollover Contributions.

2.15.        Company Contributions Accounts.    “Company Contributions Accounts”
shall mean a Participant’s Matching Contributions Account and Retirement
Contributions Account.

2.16.        Company Stock.  “Company Stock” shall mean any class of stock of
the Sponsor which both constitutes “qualifying employer securities” as defined
in Section 407(d)(5) of ERISA and “employer securities” as defined in Code
Section 409(l).

2.17.        Compensation.  “Compensation” shall mean the following:

(a)        Compensation shall include amounts paid during a Plan Year to a
Participant by the Company for services rendered, including base earnings,
commissions and similar incentive compensation, cost of living allowances earned
within the United States of America, holiday pay, overtime earnings, pay
received for election board duty, pay received for jury and witness duty, pay
received for military service (annual training), pay received for being
available for work, if required (call-in premium), shift differential and
premium, sickness/accident related pay, vacation pay (other than as excluded in
paragraph (c) below), vacation shift premium, and bonus amounts paid under the
(i) Sales Bonus Program, (ii) Management Bonus Plan or Executive Bonus Plan,
either in cash or in restricted stock, and (iii) group performance sharing
payments, such as the “Partners for Success.”

 

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(b)        Compensation shall include amounts of salary reduction elected by a
Participant under a Code Section 401(k) cash or deferred arrangement, a Code
Section 125 cafeteria plan and, solely for purposes of determining Retirement
Contributions under Section 5.4, amounts deferred under the Executive Deferred
Compensation Plan.

(c)        Compensation shall not include business expense reimbursements;
Company gifts or the value of Company gifts; Company stock related options and
payments; employee referral awards; flexible compensation credits paid in cash;
special overseas payments, allowances and adjustments including, but not limited
to, pay for cost of living adjustments and differentials paid for service
outside of the United States, expatriate reimbursement payments, and tax
equalization payments; forms of imputed income; long-term disability pay;
payment for loss of Company car; Company car allowance; payments for patents or
for writing articles; relocation and moving expenses; retention and employment
incentive payments; severance pay; long-term incentive awards, bonuses or
payments; “Impact Award” payments; “Employee of the Year” payments; “Awards for
Excellence” payments; “Hidden Gem Award” payments; special group incentive
payments and individual recognition payments which are nonrecurring in nature;
tuition reimbursement; lump sum amounts paid to Employees under the Company’s
vacation buy-back policy; and contributions by the Company under the Plan or
distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Code Section 401(a)
(other than contributions constituting salary reduction amounts elected by the
Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees.

(d)        Solely for purposes of determining Retirement Contributions under
Section 5.4, Compensation shall include compensation paid by Oculex
Pharmaceuticals, Inc. to an Eligible Employee prior to Oculex Pharmaceuticals,
Inc. becoming an Affiliated Company but only to the extent provided in
paragraphs (a), (b), and (c) above and only to the extent of compensation paid
by Oculex Pharmaceuticals, Inc. in 2003.

(e)        Compensation for any Plan Year shall not include amounts in excess of
$210,000, as adjusted for cost-of-living increases in accordance with Code
Section 401(a)(17)(B) for purposes of determining all benefits provided under
the Plan for any Plan Year. Any cost-of-living adjustments in effect for a
calendar year shall apply to the Plan Year beginning with or within such
calendar year.

(f)        Notwithstanding the foregoing, for purposes of applying the
provisions of Articles XIII and XIV, a Participant’s Compensation shall be
determined pursuant to the definition of “Compensation” as set forth in
Section 13.5 or 14.2(i), as the case may be.

 

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2.18.      Credited Service.  “Credited Service” shall mean, with respect to
each Employee, his or her years and months of Credited Service determined in
accordance with the following rules:

(a)        In the case of any Employee who was employed by the Company at any
time prior to the Original Effective Date, for the period prior to January 1,
1989 such Employee shall be credited with Credited Service under the Plan equal
to the period (if any) of service credited to such Employee under the SmithKline
Beckman Savings and Investment Plan.

(b)        In the case of any Employee who is employed by the Company on or
after the Original Effective Date, an Employee shall receive Credited Service
for the elapsed period of time between each Employment Commencement Date (or
Reemployment Commencement Date) of the Employee and the Severance Date which
immediately follows that Employment Commencement Date (or Reemployment
Commencement Date). Solely for the purpose of determining an Employee’s Credited
Service under this paragraph (b), in the case of an Employee who is employed on
January 1, 1989, that date shall be deemed to be an Employment Commencement Date
of the Employee (with service credit for periods prior to January 1, 1989 to be
determined under paragraph (a) above). An Employee who is absent from work on an
authorized Leave of Absence shall be deemed to have incurred a Severance (if
any) in accordance with the rules of Section 2.50.

(c)        An Employee shall receive Credited Service credit for periods between
a Severance and his or her subsequent Reemployment Commencement Date in
accordance with the following rules:

(i)        If an Employee incurs a Severance by reason of a quit, discharge,
Disability, or retirement whether or not such a Severance occurs during an
approved Leave of Absence and the Employee is later reemployed by the Company
prior to his or her incurring a Break in Service, he or she shall receive
Credited Service for the period commencing with his or her Severance Date and
ending with his or her subsequent Reemployment Commencement Date.

(ii)       Other than as expressly set forth above in this paragraph (c), an
Employee shall receive no Credited Service with respect to periods between a
Severance and a subsequent Reemployment Commencement Date.

(d)        For all purposes of the Plan, an Employee’s total Credited Service
shall be determined by aggregating any separate periods of Credited Service
separated by any Breaks in Service.

(e)        An Employee shall be credited with Credited Service with respect to a
period of employment with an Affiliated Company, but only to the extent that
such period of employment would be so credited under the foregoing rules set
forth in this Section had such Employee been employed during such period by the
Company.

 

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(f)        Notwithstanding the foregoing, unless the Sponsor shall so provide by
resolution of its Board of Directors, or unless otherwise expressly stated in
the Plan, an Employee shall not receive such Credited Service credit for any
period of employment with an Affiliated Company prior to such entity becoming an
Affiliated Company.

(g)        In accordance with paragraph (f) above, an Eligible Employee shall
receive Credited Service for any period of employment with Allergan Medical
Optics - Lenoir facility, Oculex Pharmaceuticals, Inc., or Inamed Corporation
and any subsidiary of Inamed Corporation prior to each becoming an Affiliated
Company but only to the extent provided in paragraph (e) above. Notwithstanding
anything in this Section to the contrary and for purposes of this Plan only, the
Employment Commencement Date (or Reemployment Commencement Date) of an Eligible
Employee described in this paragraph (g) shall mean, for purposes of paragraph
(b), the date (or, in the case of a Reemployment Commencement Date, the date
following a Severance) on which the Eligible Employee was first credited with an
Hour of Service with Allergan Medical Optics - Lenoir facility, Oculex
Pharmaceuticals, Inc., or Inamed Corporation and any subsidiary of Inamed
Corporation including any date prior to Allergan Medical Optics - Lenoir
facility, Oculex Pharmaceuticals, Inc., or Inamed Corporation and any subsidiary
of Inamed Corporation becoming an Affiliated Company.

(h)        In accordance with paragraph (f) above, an Eligible Employee who was
employed by Esprit Pharma, Inc. on October 16, 2007 and who is classified or
identified as such in the payroll records of the Company or in the Stock
Purchase Agreement by and between Allergan, Inc. and Esprit Pharma, Inc. shall,
for purposes of the vesting and in-service withdrawal provisions of the Plan
only, receive Credited Service for any period of employment with Esprit Pharma,
Inc. prior to it becoming an Affiliated Company but only to the extent provided
in paragraph (e) above. Notwithstanding anything in this Section to the contrary
and for purposes of determining Credited Service under this paragraph, the
Employment Commencement Date (or Reemployment Commencement Date) of an Eligible
Employee described in this paragraph (i) shall mean, for purposes of paragraph
(b), the date (or, in the case of a Reemployment Commencement Date, the date
following a Severance) on which the Eligible Employee was first credited with an
Hour of Service with Esprit Pharma, Inc. including any date prior to Esprit
Pharma, Inc. becoming an Affiliated Company.

(i)        Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service shall be provided in accordance with Code Section 414(u).

2.19.      Disability.  “Disability” shall mean any mental or physical condition
which, in the judgment of the Committee, based on such competent medical
evidence as the Committee may require, renders an individual unable to engage in
any substantial gainful activity for the Company for which he or she is
reasonably fitted by education, training, or experience and which condition can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of at least 12 months. The determination by the
Committee, upon

 

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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.

2.20.      Effective Date.  “Effective Date” of this restated Plan shall mean
January 1, 2008 unless otherwise specified in the Plan. The “Original Effective
Date” of the Plan shall mean July 26, 1989.

2.21.      Eligible Employee.  “Eligible Employee” shall mean any United
States-based payroll Employee and any Puerto Rico-based payroll Employee of the
Company and any expatriate Employee of the Company who is a United States
citizen or permanent resident, but excluding:

(a)        any non-resident alien of the United States and Puerto Rico,
non-regular manufacturing site transition Employee, Leased Employee, or Employee
covered by a collective bargaining agreement; and

(b)        prior to January 1, 2007, any Employee who is employed by (i) Inamed
Corporation and any of its subsidiaries (or any Affiliated Company that is
designated by the Sponsor as a successor thereto) on or after the “Effective
Time” as defined in the Agreement and Plan of Merger dated as of December 20,
2005 by and among Allergan, Inc., Banner Acquisition, Inc., and Inamed
Corporation or (ii) the Company as of the date he or she becomes classified as
“Inamed-benefited” in the payroll records of the Company.

2.22.      Eligible Retirement Plan.  “Eligible Retirement Plan” shall mean
(i) an individual retirement account or annuity described in Code Section 408(a)
or 408(b), (ii) a qualified retirement plan described in Code Section 401(a) or
403(a) that accepts Eligible Rollover Distributions, (iii) an annuity contract
described in Code Section 403(b) that accepts Eligible Rollover Distributions,
and (iv) an eligible plan described in Code Section 457(b) which is maintained
by a state, political subdivision of a state, or any agency or instrumentality
of a state or political subdivision of a state that accepts Eligible Rollover
Distributions and agrees to separately account for amounts transferred into such
plan from this Plan. Notwithstanding the foregoing, “Eligible Retirement Plan”
shall mean an individual retirement account or annuity described in Code
Section 408(a) or 408(b) with respect to a non-spouse Beneficiary.

2.23.      Eligible Rollover Distribution.  “Eligible Rollover Distribution”
shall mean any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution shall not
include:

(a)        any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee of the joint lives (or joint life expectancies)
of the Distributee and the Distributee’s designated beneficiary, or for a
specified period of ten years or more;

(b)        any distribution to the extent such distribution is required under
Code Section 401(a)(9);

 

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(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);

(d)        any hardship withdrawal made pursuant to Section 8.1(e); and

(e)        any other distribution that is reasonably expected to total less than
$200 during the year.

A portion of a distribution shall not fail to be an Eligible Rollover
Distribution merely because the portion consists of After Tax Deposits or the
portion consists of rollover after tax employee contributions made pursuant to
Section 4.8. which are not includible in gross income. However, such portion(s)
may be transferred only to an individual retirement account or annuity described
in Code Section 408(a) or 408(b), to a qualified defined contribution plan
described in Code Section 401(a) or 403(a) or, on or after January 1, 2007, to
an annuity contract described in Code Section 403(b) that agrees to separately
account for amounts so transferred, including separately accounting for the
portion of such distribution which is includible in gross income and the portion
of such distribution which is not so includible. For purposes of this Section,
“Distributee” shall mean any Employee or former Employee receiving a
distribution from the Plan. A Distributee also includes the Employee or former
Employee’s surviving spouse and the Employee or former Employee’s spouse or
former spouse who is the Alternate Payee under a Qualified Domestic Relations
Order (as defined in Article XV) with regard to the interest of the spouse or
former spouse and, on or after, January 1, 2007, the Employee or former
Employee’s Beneficiary.

2.24.      Employee.  “Employee” shall mean, for purposes of the Plan, any
individual who is employed by the Sponsor or an Affiliated Company in any
capacity, any portion of whose income is subject to withholding of income tax
and/or for whom Social Security contributions are made by the Sponsor or an
Affiliated Company, including any Puerto Rico-based payroll Employee of the
Sponsor or an Affiliated Company; provided, however, that such term shall not
include:

(a)        Any individual who performs services for the Sponsor or an Affiliated
Company and who is classified or paid as an independent contractor as determined
by the payroll records of the Sponsor or an Affiliated Company even if a court
or administrative agency determines that such individual is a common-law
employee and not an independent contractor;

(b)        Any individual who performs services for the Sponsor or an Affiliated
Company pursuant to an agreement between the Sponsor or an Affiliated Company
and any other person including a leasing organization except to the extent such
individual is a Leased Employee; and

(c)        Any individual whose employment is transferred from the Sponsor or an
Affiliated Company to Advanced Medical Optics, Inc. (“AMO”) in connection with
the

 

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distribution of the stock of AMO by the Sponsor to its stockholders, effective
as of the day following such transfer, hereinafter referred to as an “AMO
Employee.” An individual is an AMO Employee if classified or identified as such
in the payroll records of the Sponsor or an Affiliated Company or in the
Employee Matters Agreement entered into between the Sponsor and AMO.

2.25.      Employment Commencement Date.    “Employment Commencement Date” shall
mean the date on which an Employee is first credited with an Hour of Service for
the Sponsor or an Affiliated Company. An Employee shall not, for the purpose of
determining his or her Employment Commencement Date, be deemed to have commenced
employment with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company unless the Sponsor expressly determines
otherwise, and except as is expressly provided otherwise in the Plan or in
resolutions of the Board of Directors.

2.26.      ERISA.    “ERISA” shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.

2.27.      Forfeitures.    “Forfeitures” shall mean the nonvested portion of a
Participant’s Matching Contributions Account or Retirement Contributions
Account, whichever the case may be, that is forfeited in accordance with the
provisions of Article VIII.

2.28.      415 Suspense Account.    “415 Suspense Account” shall mean the
account (if any) established and maintained in accordance with the provisions of
Article XIII for the purpose of holding and accounting for allocations of excess
Annual Additions (as defined in Article XIII).

2.29.      Highly Compensated Employee.    “Highly Compensated Employee” shall
mean:

 (a)        An Employee who performed services for the Employer during the Plan
Year or preceding Plan Year and is a member of one or more of the following
groups:

(i)        Employees who at any time during the Plan Year or preceding Plan Year
were Five Percent Owners (as defined in Section 14.2).

(ii)       Employees who received Compensation during the preceding Plan Year
from the Employer in excess of $80,000 (as adjusted in such manner as permitted
under Code Section 414(q)(1)).

 (b)        For the purpose of this Section, the term “Compensation” means
compensation as defined in Code Section 415(c)(3), as set forth in Section 13.5.

 (c)        The term “Highly Compensated Employee” includes a Former Highly
Compensated Employee. A Former Highly Compensated Employee is any Employee who
was (i) a Highly Compensated Employee when he or she terminated employment

 

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with the Employer or (ii) a Highly Compensated Employee at any time after
attaining age 55. Notwithstanding the foregoing, an Employee who separated from
service prior to 1987 shall be treated as a Former Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee’s 55th birthday), the Employee either received Compensation
in excess of $50,000 or was a Five Percent Owner.

 (d)        For the purpose of this Section, the term “Employer” shall mean the
Sponsor and any Affiliated Company.

 (e)        The determination of who is a Highly Compensated Employee, including
the determination of the Compensation that is considered, shall be made in
accordance with Code Section 414(q) and applicable regulations to the extent
permitted thereunder. The Committee, for administrative convenience, may
establish rules and procedures for purposes of identifying Highly Compensated
Employees, which rules and procedures may result in an Eligible Employee being
deemed to be a Highly Compensated Employee for purposes of the limitations of
Article IV and Article VI, whether or not such Eligible Employee is a Highly
Compensated Employee described in Code Section 414(q).

2.30.      Hour of Service.    “Hour of Service” shall mean an hour for which an
Employee is paid or entitled to payment for the performance of duties for the
Sponsor and any Affiliated Company.

2.31.      Investment Manager.    “Investment Manager” shall mean the one or
more Investment Managers, if any, that are appointed pursuant to Section 5.16
and who constitute investment managers under Section 3(38) of ERISA.

2.32.      Leased Employee.    “Leased Employee” shall mean any person (other
than an Employee of the recipient) who pursuant to an agreement between the
recipient and any other person (“leasing organization”) has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one (1) year, and such services are performed under the
primary direction or control by recipient employer. Contributions or benefits
provided to a Leased Employee by a leasing organization which are attributable
to services performed for the recipient employer shall be treated as provided by
the recipient employer. A Leased Employee shall not be considered an Employee of
the recipient if Leased Employees do not constitute more than 20 percent of the
recipient’s nonhighly compensated workforce and such Leased Employee is covered
by a money purchase pension plan providing (i) a nonintegrated employer
contribution rate of at least ten (10) percent of compensation as defined under
Code Section 415(c)(3); (ii) immediate participation; and (iii) full and
immediate vesting.

2.33.      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

 

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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 the Plan only to the extent
consistent with the following rules:

(i)        For purposes of determining whether a Break in Service has occurred,
the Severance Date of a Participant who is absent by reason of a Maternity or
Paternity Leave shall not be deemed to occur any earlier than the second
anniversary of the date upon which such Maternity or Paternity Leave commences.

(ii)       The Maternity or Paternity Leave shall be treated as a Leave of
Absence solely for purposes of determining whether or not an Employee has
incurred a Break in Service. Accordingly, such a Maternity or Paternity Leave
shall not result in an accrual of Credited Service for purposes of the vesting
provisions of the Plan or for purposes of the eligibility and participation
provisions of Article III (except only in determining whether a Break in Service
has occurred).

(iii)      A Maternity or Paternity Leave shall not be treated as a Leave of
Absence unless the Employee provides such timely information as the Committee
may reasonably require to establish that the absence is for the reasons listed
in paragraph (b) above and to determine the number of days for which there was
such an absence.

 (d)        Notwithstanding the limitations provided in paragraph (c) above, a
Maternity or Paternity Leave described in paragraph (b) above shall be treated
as an authorized Leave of Absence, as described in paragraph (a), for all
purposes of the Plan to the extent the period of absence is one authorized as a
Leave of Absence under the Company’s standard personnel practices and thus is
covered by the provisions of

 

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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).

2.34.      Matched Deposits.    “Matched Deposits” of a Participant shall mean
his or her Participant Deposits (whether Before Tax, including “catch up” Before
Tax Deposits described in Section 4.2(e) or After Tax but excluding Rollover
Contributions) not in excess of four percent (4%) of Compensation. Matched
Deposits shall participate in allocations of Matching Contributions and Matching
Contribution Forfeitures.

2.35.      Matching Contributions.    “Matching Contributions” shall mean all
amounts (whether in cash or other property, including Company Stock) paid by the
Company pursuant to Sections 5.3(a) and 5.3(b) into the Trust Fund established
and maintained under the provisions of the Plan for the purpose of providing
benefits for Participants and their Beneficiaries.

2.36.      Matching Contributions Account.    “Matching Contributions Account”
shall mean a Participant’s individual account in the Trust Fund in which are
held Matching Contributions, any amounts transferred from the Participant’s
account in the SmithKline Beckman Savings and Investment Plan to the Plan, any
matching contributions transferred from the Participant’s account in the Inamed
Corporation Retirement Savings Plan, and the earnings thereon. Any amounts
transferred from the Participant’s account in the SmithKline Beckman Savings and
Investment Plan shall be fully vested. Any matching contributions transferred
from a Participant’s account in the Inamed Corporation Retirement Savings Plan
shall be fully vested including the matching contributions of a Participant who
terminated prior to December 31, 2006 so long as his or her Participant’s
account in the Inamed Corporation Retirement Savings Plan was greater than zero
on December 31, 2006.

2.37.      Normal Retirement Age.    “Normal Retirement Age” shall mean a
Participant’s sixty-fifth (65th) birthday.

2.38.      Participant.      “Participant” shall mean any Eligible Employee or
former Eligible Employee who has commenced participation in the Plan pursuant to
Section 3.1 and who retains rights under the Plan.

2.39.      Participant Deposits.    “Participant Deposits” shall mean all of a
Participant’s deposits to the Plan, including After Tax Deposits, Before Tax
Deposits, and Rollover Contributions.

2.40.      Period of Severance.    “Period of Severance” shall mean the period
of time commencing on an Employee’s Severance Date and ending on the Employee’s
subsequent Reemployment Commencement Date, if any.

2.41.      Plan.    “Plan” shall mean the Allergan, Inc. Savings and Investment
Plan described herein and as amended from time to time.

 

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2.42.      Plan Administrator.    “Plan Administrator” shall mean the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be the Allergan Executive Committee whose members are
appointed by the Board of Directors pursuant to the provisions of Section 9.1 to
administer the Plan.

2.43.      Plan Year.    “Plan Year” shall mean the calendar year.

2.44.      Reemployment Commencement Date.    “Reemployment Commencement Date”
shall mean, in the case of an Employee who incurs a Severance and who is
subsequently reemployed by the Sponsor or an Affiliated Company, the first day
following the Severance on which the Employee is credited with an Hour of
Service for the Sponsor or an Affiliated Company with respect to which he or she
is compensated or entitled to compensation by the Sponsor or an Affiliated
Company. An Employee shall not, for the purpose of determining his or her
Reemployment Commencement Date, be deemed to have commenced employment with an
Affiliated Company prior to the effective date on which such entity becomes an
Affiliated Company unless the Sponsor shall expressly determine otherwise, and
except as is expressly provided otherwise in the Plan or in resolutions of the
Board of Directors.

2.45.      Retirement Account Participant.    “Retirement Account Participant”
shall mean any Eligible Employee who has met the eligibility requirements of
Section 3.2 but excluding any Eligible Employee who is an “Active Participant”
in the Allergan, Inc. Pension Plan as such term is defined therein.

2.46.      Retirement Contributions.    “Retirement Contributions” shall mean
all amounts (whether in cash or other property, including Company Stock) paid by
the Company pursuant to Section 5.4 into the Trust Fund established and
maintained under the provisions of the Plan for the purpose of providing
benefits for Participants and their Beneficiaries.

2.47.      Retirement Contributions Account.    “Retirement Contributions
Account” shall mean a Participant’s individual account in the Trust Fund in
which are held Retirement Contributions and the earnings thereon.

2.48.      Rollover Contributions.    “Rollover Contributions” shall mean those
contributions made by a Participant pursuant to Section 4.8.

2.49.      Rollover Contributions Account.    “Rollover Contributions Account”
shall mean a Participant’s individual account in the Trust Fund in which are
held Rollover Contributions made pursuant to Section 4.8.

2.50.      Severance.    “Severance” shall mean the termination of an Employee’s
employment with the Sponsor or an Affiliated Company by reason of such
Employee’s quit, discharge, Disability, death, retirement, or otherwise. For
purposes of determining whether an Employee has incurred a Severance, the
following rules shall apply:

(a)        An Employee shall not be deemed to have incurred a Severance
(i) because of his or her absence from employment with the Sponsor or an
Affiliated

 

15

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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 the Plan, an Employee shall be deemed to have
incurred a Severance on the earlier of (i) the date on which he or she dies,
resigns, is discharged, or otherwise terminates his or her employment with the
Sponsor or an Affiliated Company; or (ii) the date on which he or she is
scheduled to return to work after the expiration of an approved Leave of
Absence, if he or she does not in fact return to work on the scheduled
expiration date of such Leave. In no event shall an Employee’s Severance be
deemed to have occurred before the last day on which such Employee performs any
services for the Sponsor or an Affiliated Company in the capacity of an Employee
with respect to which he or she is compensated or entitled to compensation by
the Sponsor or an 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 2.33(c)-(d) shall apply for purposes of determining whether such a
Participant has incurred a Break in Service by reason of such Leave.

2.51.      Severance Date.    “Severance Date” shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.50, provided, however, that the special rules set forth under
Section 2.33(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 2.50 and who is entitled to a subsequent payment of compensation for
reasons other than future services (e.g., as back pay for past services rendered
or as payments in the nature of severance pay), the Severance Date of such
Employee shall be as of the effective date of the Severance event (e.g., the
date of his or her death, effective date of a resignation or discharge, etc.),
and the subsequent payment of the aforementioned type of post-Severance
compensation shall not operate to postpone the timing of the Severance Date for
purposes of the Plan.

2.52.      Sponsor.    “Sponsor” shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.

2.53.      Trust.    “Trust” or “Trust Fund” shall mean the trust maintained
pursuant to the Trust Agreement and as described in Section 5.1 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.

2.54.      Trust Agreement.    “Trust Agreement” shall mean the agreement
between the Trustee and the Sponsor pursuant to which the Trust is maintained.

2.55.      Trustee.    “Trustee” shall mean the individual or entity acting as a
trustee of the Trust Fund.

 

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2.56.      Valuation Date.    “Valuation Date” shall mean the date as of which
the Trustee shall determine the value of the assets in the Trust Fund for
purposes of determining the value of each Account, which shall be each business
day in accordance with rules applied in a consistent and uniform basis.

 

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ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1        General Eligibility and Participation.    An Eligible Employee shall
participate in the Plan on the later of: (i) his or her Employment Commencement
Date or (ii) the date he or she becomes an Eligible Employee. A Participant who
incurs a Severance shall participate in the Plan immediately upon his or her
Reemployment Commencement Date so long as he or she is reemployed as an Eligible
Employee.

3.2        Eligibility for Retirement Contributions.    An Eligible Employee
shall be eligible to receive allocations of Retirement Contributions as provided
in Section 5.4 only if he or she is a Retirement Account Participant as
described below:

 (a)        An Eligible Employee shall become a Retirement Account Participant
on the date that immediately follows the later of:

(i)        The date such Eligible Employee performs an Hour of Service as an
Eligible Employee;

(ii)       The date such Eligible Employee completes six (6) months of Credited
Service with the Sponsor or an Affiliated Company as an Employee; or

(iii)      The date such Eligible Employee ceases to be an “Active Participant”
in the Allergan, Inc. Pension Plan as such term is defined therein.

 (b)        A Participant who becomes a Retirement Account Participant shall
remain an active Retirement Account Participant until he or she: (i) incurs a
Severance, (ii) transfers employment to an Affiliated Company that has not
adopted the Plan pursuant to Section 10.2, or (iii) is no longer an Eligible
Employee even though he or she remains an Employee of the Company, at which time
such Retirement Account Participant shall become an inactive Retirement Account
Participant and shall no longer be eligible to receive allocations of Retirement
Contributions as provided in Section 5.4.

 (c)        A Retirement Account Participant or an Employee who is not a
Retirement Account Participant but who has completed the service requirement
specified in paragraph (a)(i) above shall, if he or she incurs a Severance and
is subsequently reemployed as an Eligible Employee, become a Retirement Account
Participant immediately upon his or her Reemployment Commencement Date. A
Retirement Account Participant who becomes an inactive Retirement Account
Participant shall become a Retirement Account Participant upon the date he or
she resumes Eligible Employee status. An Employee who has not completed the
service requirement specified in paragraph (a)(i) above shall, if he or she
incurs a Severance and is subsequently reemployed, become a Retirement Account
Participant on the date determined under paragraph (a) above.

 

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3.3        Duration of Participation.    An Eligible Employee who becomes a
Participant shall remain an active Participant until he or she incurs a
Severance, at which time he or she shall become an inactive Participant until he
or she receives a distribution of the entire vested portion of his or her
Accounts. Once such a distribution is made, such Participant shall no longer be
considered a Participant in the Plan. A Participant who (i) transfers out of
employment with the Company but who remains an Employee of an Affiliated Company
that has not adopted the Plan pursuant to Section 10.2, or (ii) remains an
Employee of the Company but is no longer an Eligible Employee, shall become an
inactive Participant.

3.4        Eligibility and Participation After Normal Retirement Age.    An
Eligible Employee may become, or continue as, a Participant or a Retirement
Account Participant after reaching his or her Normal Retirement Age in the same
manner as an Eligible Employee who has not reached his or her Normal Retirement
Age.

 

19

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ARTICLE IV

PARTICIPANT DEPOSITS

4.1        Election.

 (a)        Each Eligible Employee may elect to defer the receipt of a portion
of his or her Compensation and to have the deferred amount contributed directly
by the Company to the Plan as Before Tax Deposits. Before Tax Deposits may be
made only by means of payroll deduction.

 (b)        Each Eligible Employee may elect to contribute to the Plan a portion
of his or her Compensation as After Tax Deposits. After Tax Deposits may be made
only by means of payroll deduction.

 (c)        The Committee shall prescribe procedures to implement automatic
enrollment elections, pursuant to which an Eligible Employee or, if limited to
newly hired Eligible Employees as determined by the Committee, shall be deemed
to have elected to defer the receipt of three percent (3%) of his or her
Compensation and to have such deferred amount contributed directly by the
Company to the Plan as Before Tax Deposits if such Eligible Employee fails to
change or terminate the automatic election for any Plan Year within the time
period prescribed by the Committee (or, in the case of newly hired Eligible
Employee, he or she fails to change or terminate the automatic election within
30 days of his or her hire date). Such procedures shall require that an Eligible
Employee receive a written notice of explanation of the automatic election
informing the Eligible Employee of the effective date of the automatic election,
the automatic deferral percentage and his or her right to terminate the
automatic election or to change the amount of his or her Before Tax Deposits
made to the Plan as well as the procedures for exercising such rights and the
timing for implementing a different election. An automatic election under this
paragraph (c) shall be effective as of the first pay period of the Plan Year
(or, in the case of newly hired Eligible Employee, the first pay period
following the 30-day period beginning on his or her date of hire) and shall
remain in effect until superseded by a subsequent election by the Eligible
Employee. Amounts contributed directly by the Company to the Plan under this
paragraph (c) shall be invested in the Balanced Fund described in Section 5.6(b)
until superseded by a subsequent election by the Eligible Employee.

 (d)        Notwithstanding anything in this Section to the contrary, a
Participant who makes a withdrawal of After Tax Deposits (whether Matched
Deposits or non-Matched Deposits) pursuant to Section 8.1(a) or a hardship
withdrawal pursuant to Section 8.1(e) shall not be permitted to make Before Tax
Deposits or After Tax Deposits to the Plan during the 6-month period beginning
as soon as administratively feasible following the date of the hardship
withdrawal. The foregoing sentence shall not apply to a withdrawal of After Tax
Deposits if the After Tax Deposits can also be withdrawn under Section 8.1(d) or
the withdrawal is comprised solely of After Tax Deposits which are not Matched
Deposits and which were contributed prior to July 1, 2000.

 

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 (e)        The Committee shall prescribe such procedures, either in writing or
in practice, and provide such forms as are necessary or appropriate for each
Participant and each Eligible Employee who will become a Participant to make
Deposits pursuant to this Article IV subject, however to the requirement that an
election by a Participant shall not be adopted retroactively.

4.2        Amount Subject to Election.

 (a)        Each Participant may elect to contribute a whole percentage of his
or her Compensation to the Plan as Before Tax Deposits not to exceed the lesser
of one hundred percent (100%) when aggregated with the After Tax Deposits
contributed by such Participant pursuant to paragraph (b) below. Notwithstanding
the foregoing except to the extent permitted under the catch-up provisions of
paragraph (e) below and Code Section 414(v), no Participant shall be permitted
to make Before Tax Deposits to the Plan during any taxable year in excess of:
(i) $12,000 (or such larger amount as may be determined by the Secretary of the
Treasury pursuant to Code Section 402(g), hereinafter referred to as the “Before
Tax Deposit Limit”, (ii) the Actual Deferral Percentage test limitation set
forth in Section 4.3, or (iii) the Annual Addition limitation set forth in
Section 13.1. For purposes of the Before Tax Deposit Limit described in
preceding clause (i), the Before Tax Deposits of a Participant for any taxable
year is the sum of all Before Tax Deposits under the Plan and all salary
reduction amounts under any other qualified cash or deferred arrangement (as
defined in Code Section 401(k)), a simplified employee pension (as defined in
Code Section 408(k) and Code Section 402(h)(1)(B)), a deferred compensation plan
under Code Section 457, a trust described in Code Section 501(c)(18) and any
salary reduction amount used to purchase an annuity contract under Code
Section 403(b) whether or not sponsored by the Company but shall not include any
amounts properly distributed as excess annual additions.

 (b)        Each Participant may elect to contribute a whole percentage of his
or her Compensation to the Plan as After Tax Deposits not to exceed one hundred
percent (100%) when aggregated with the Before Tax Deposits contributed by such
Participant pursuant to paragraph (a) above. Notwithstanding the foregoing, no
Participant shall be permitted to make After Tax Deposits to the Plan during any
Plan Year in excess of the Actual Contribution Percentage test limitation set
forth in Section 6.11 or the Annual Addition limitation set forth in
Section 13.1 and the Committee may, in its discretion, establish an “After Tax
Deposit Limit” for a Plan Year.

 (c)        Notwithstanding paragraphs (a) and (b), a Participant’s combined
Before Tax Deposits and After Tax Deposits shall not exceed a Participant’s
Compensation net of his or her salary deductions or reductions (including but
not limited to, federal withholding taxes and “FICA” taxes deducted pursuant
Code Sections 3102 and 3402, respectively, withholding of state taxes, and
amounts contributed by the Company pursuant to a salary reduction agreement
which are excludable from an Employee’s gross income under Code Sections 125,
132(f)(4), 402(e)(3), 402(h)(1)(B) and 403(b)) as determined by the payroll
records of the Sponsor or an Affiliated Company.

 

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(d)        Notwithstanding paragraphs (a) and (b), a Participant who makes a
hardship withdrawal pursuant to Section 8.1(e) or a withdrawal of After Tax
Deposits (whether Matched Deposits or non-Matched Deposits) pursuant to
Section 8.1(a) shall not be permitted to make Before Tax Deposits or After Tax
Deposits to the Plan during the 6-month period beginning as soon as
administratively feasible following the date of the withdrawal. The preceding
sentence shall not apply to a withdrawal of After Tax Deposits if such Deposits
can also be withdrawn under Section 8.1(d) or the withdrawal is comprised solely
of After Tax Deposits which are not Matched Deposits and which were contributed
prior to July 1, 2000.

(e)        Each Participant who has attained age 50 before the close of the Plan
Year may elect to contribute a percentage of his or her Compensation to the Plan
as “catch-up” Before Tax Deposits in accordance with, and subject to the
limitations of, Code Section 414(v). Such catch-up Before Tax Deposits shall not
be taken into account under paragraph (a) above or Section 13.1 or any other
provision of the Plan implementing the contribution limitations of Code
Sections 402(g) and 415. Moreover, the Plan shall not be treated as failing to
satisfy the provisions of the plan implementing the requirements of Code
Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by
reason of a Participant electing to contribute catch-up Before Tax Deposits to
the Plan pursuant to this paragraph.

(f)        The Committee shall prescribe such procedures, either in writing or
in practice, as it deems necessary or appropriate regarding the maximum amount
that a Participant may elect to defer and the timing of such an election. These
procedures shall apply to all individuals eligible to make an election described
in Section 4.1. The Committee may, at any time during a Plan Year, require the
suspension, reduction, or recharacterization of Before Tax Deposits or the
suspension or reduction of After Tax Deposits of any Highly Compensated Employee
such that the limitations of Section 4.2(a) and (b) are satisfied.

4.3        Limitation on Compensation Deferrals. With respect to each Plan Year,
Compensation Deferral Contributions by a Participant for the Plan Year shall not
exceed the limitation on contributions by or on behalf of Highly Compensated
Participants under Code Section 401(k), as provided in this Section. In the
event that Compensation Deferral Contributions under the Plan by or on behalf of
Highly Compensated Participants exceed the limitations of this Section for any
reason, either such excess contributions shall be recharacterized as After Tax
Deposits or such excess contributions, adjusted for any income or loss allocable
thereto, shall be returned to the Participant, as provided in Section 4.5.

(a)        The Compensation Deferral Contributions by Participants for a Plan
Year shall satisfy the Actual Deferral Percentage Test set forth in (i) below,
or, to the extent not precluded by applicable regulations, the alternative
Actual Deferral Percentage test set forth in (ii) below:

 

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(i)      The average Actual Deferral Percentage of Highly Compensated
Participants for the Plan Year shall not be more than the prior Plan Year’s
average Actual Deferral Percentage of Participants who were not Highly
Compensated Employees for the prior Plan Year multiplied by 1.25, or

(ii)     The average Actual Deferral Percentage of Highly Compensated
Participants for the Plan Year shall not be more than the prior Plan Year’s
Actual Deferral Percentage of Participants who were not Highly Compensated
Employees for the prior Plan Year multiplied by 2.0, provided that the average
Actual Deferral Percentage of Highly Compensated Participants does not exceed
the average Actual Deferral Percentage of Participants who were not Highly
Compensated Employees for the prior Plan Year by more than two (2) percentage
points.

(b)        Notwithstanding any other provisions of the Plan, for the purposes of
the limitations of this Section 4.3 and Section 4.5 only, the following
definitions shall apply:

(i)      “Actual Deferral Percentage” shall mean, with respect to the group of
Highly Compensated Participants and the group of all other Participants for a
Plan Year, the ratios calculated separately and to the nearest one-hundredth of
one percent for each Participant in such group, as follows:

(A)        For a Highly Compensated Participant, the ratio of such Participant’s
Compensation Deferral Contributions for the current Plan Year to such
Participant’s Compensation for the current Plan Year; provided, however, that
the Actual Deferral Percentage of a Highly Compensated Participant with no
Compensation Deferral Contributions made on his or her behalf shall be zero.

(B)        For any other Participant, the ratio of such Participant’s
Compensation Deferral Contributions for the preceding Plan Year to such
Participant’s Compensation for the preceding Plan Year; provided, however, that
the Actual Deferral Percentage of a Participant with no Compensation Deferral
Contributions made on his or her behalf shall be zero.

To the extent determined by the Committee and in accordance with regulations
issued by the Secretary of the Treasury, qualified nonelective contributions on
behalf of a Participant that satisfy the requirements of Code
Section 401(k)(3)(c)(ii) may also be taken into account for the purpose of
determining the Actual Deferral Percentage of a Participant.

(ii)     “Highly Compensated Participant” shall mean for any Plan Year any
Participant who is a Highly Compensated Employee. A Participant is a Highly
Compensated Employee for a particular Plan Year if he or she meets the
definition of a Highly Compensated Employee in effect for that Plan Year.

 

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Similarly, a Participant is not a Highly Compensated Employee for a particular
Plan Year if he or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.

(iii)    “Participant” shall mean any Eligible Employee who satisfied the
requirements of Section 3.1 during the Plan Year, whether or not such Eligible
Employee has elected to contribute to the Plan for such Plan Year.

(iv)     “Compensation Deferral Contributions” shall mean amounts contributed to
the Plan by a Participant as Before Tax Deposits pursuant to Section 4.2(a),
including excess Before Tax Deposits (as defined in Section 4.4(a)) of Highly
Compensated Participants but excluding (1) excess Before Tax Deposits of all
other Participants that arise solely from Before Tax Deposits made under the
Plan or plans of the Company, (2) Before Tax Deposits that are taken into
account in the Actual Contribution Percentage test (as defined in Section 6.11)
provided that the Actual Deferral Percentage test is satisfied both with and
without exclusions of these Before Tax Deposits, and (3) any deferrals properly
distributed as excess Annual Additions. Compensation Deferral Contributions may
include, at the election of the Company, any Company Contributions that meet the
requirements for such inclusion under Code Section 401(k)(3)(C).

(v)      “Compensation” shall mean compensation as described below:

(A)        Compensation means compensation determined by the Company in
accordance with the requirements of Code Section 414(s) and the regulations
thereunder.

(B)        For purposes of this Section 4.3, Compensation may, at the Company’s
election, exclude amounts which are excludable from a Participant’s gross income
under Code Section 125 (pertaining to cafeteria plans) and Code
Section 402(e)(3) (pertaining to 401(k) salary reductions). The Company may
change its election provided such change does not discriminate in favor of
Highly Compensated Employees.

(C)        Compensation taken into account for any Plan Year shall not exceed
$210,000, as adjusted for cost-of-living increases in accordance with Code
Section 401(a)(17)(B). Any cost-of-living adjustments in effect for a calendar
year shall apply to the Plan Year beginning with or within such calendar year.

(c)        In the event the Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4) or 410(b) only if aggregated with one or more other
plans which include arrangements under Code Section 401(k), then this
Section 4.3 shall be applied by determining the Actual Deferral Percentages of
Participants as if all such plans were a single plan, in accordance with
regulations prescribed by the Secretary of the

 

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Treasury under Code Section 401(k). Any adjustments to the Actual Deferral
Percentage of Participants who are not Highly Compensated Employees for the
prior year shall be made in accordance with Notice 98-1 and any superseding
guidance. Plans may be aggregated in order to satisfy Code Sections 401(k) only
if they have the same Plan Year and use the same Actual Deferral Percentage
testing method.

(d)        For the purposes of this Section 4.3, the “Actual Deferral
Percentage” for any Highly Compensated Participant who is a Participant under
two or more Code Section 401(k) arrangements of the Company shall be determined
by taking into account the Highly Compensated Participant’s compensation under
each such arrangement and contributions under each such arrangement which
qualify for treatment under Code Section 401(k), in accordance with regulations
prescribed by the Secretary of the Treasury under Code Section 401(k). If the
arrangements have different Plan Years, this paragraph shall be applied by
treating all such arrangements ending with or within the same calendar year as a
single arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate plans if mandatorily disaggregated pursuant to regulations
under Code Section 401(k).

(e)        For purposes of the Actual Deferral Percentage test, Compensation
Deferral Contributions must be made before the last day of the twelve-month
period immediately following the Plan Year to which such contributions relate.

(f)        The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of the
Treasury.

(g)        The Committee shall keep or cause to have kept such records as are
necessary to demonstrate that the Plan satisfies the requirements of Code
Section 401(k) and (m) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.

4.4        Provisions for Return of Excess Before Tax Deposits.

(a)        In the event that due to error or otherwise, an amount of a
Participant’s Compensation in excess of the Before Tax Deposit Limit (after
application of any necessary adjustment) described in Section 4.2(a) is deferred
under the Plan in any calendar year pursuant to such Participant’s Compensation
deferral agreement (but without regard to amounts deferred under any other plan)
the excess Before Tax Deposits, if any, together with income allocable to such
amount shall be returned to the Participant (after withholding applicable
federal, state and local taxes due on such amounts) on or before the first
April 15 following the close of the calendar year in which such excess
contribution is made; provided, however, if there is a loss allocable to the
excess Before Tax Deposits, the amount distributed shall be the amount of the
excess as adjusted to reflect such loss. Any Matching Contributions allocated to
the Participant’s Matched Deposits pursuant to Section 6.3(b) which are
attributable to any excess Before Tax Deposits by a Participant, and any income
or loss allocable to such Matching

 

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Contributions, shall either be returned to the Company or applied to reduce any
future Matching Contributions by the Company.

(b)        The amount of income or loss attributable to any excess Before Tax
Deposits described in paragraph (a) above shall be equal to the sum of the
following:

(i)      The income or loss allocable to the Participant’s Before Tax Deposits
Account for the Plan Year multiplied by a fraction, the numerator of which is
the excess Before Tax Deposits as determined under paragraph (a) above, and the
denominator of which is the balance of the Participant’s Before Tax Deposits
Account as of the last day of the Plan Year, without regard to any income or
loss allocable to such Account during the Plan Year; and

(ii)     The amount of allocable income or loss for the Gap Period using the
“safe harbor” method set forth in regulations prescribed by the Secretary of the
Treasury under Code Section 402(g). Under the “safe harbor” method, such
allocable income or loss is equal to 10% of the amount calculated under
Section 4.4(b)(i) above, multiplied by the number of calendar months from the
last day of the Plan Year until the date of distribution of the Participant’s
excess Before Tax Deposits. A distribution on or before the 15th of the month is
treated as made on the last day of the preceding month, a distribution after the
15th of the month is treated as made on the first day of the next month.

(c)        For the purpose of this Section 4.4, “Gap Period” shall mean the
period between the last day of the Plan Year and the date of distribution of any
excess Before Tax Deposits.

(d)        In accordance with procedures as may be established, either in
writing or in practice, by the Committee, not later than March 1 of a calendar
year a Participant may submit a claim to the Committee in which he or she
certifies in writing the specific amount of his or her Before Tax Deposits for
the preceding calendar year which, when added to amounts deferred for such
calendar year under other plans or arrangements described in Code
Sections 401(k), 408(k) or 403(b), shall cause the Participant to exceed the
Before Tax Deposit Limit (after application of any necessary adjustment)
described in Section 4.2(a) for such preceding calendar year. Notwithstanding
the amount of the Participant’s Before Tax Deposits under the Plan for such
preceding calendar year, the Committee shall treat the amount specified by the
Participant in his or her claim as a Before Tax Deposit in excess of the Before
Tax Deposit Limit (after application of any necessary adjustment) for such
calendar year and return it to the Participant in accordance with Section 4.4(a)
above. A Participant is deemed to notify the Committee of any excess Before Tax
Deposits that arise by taking into account only those Before Tax Deposits made
to the Plan and other plans of the Company.

(e)        Any Before Tax Deposits in excess of the Before Tax Deposit Limit
(after application of any necessary adjustment) described in Section 4.2(a)
which are distributed to a Participant in accordance with this Section, shall to
the extent required by regulations

 

26

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issued by the Secretary of the Treasury be treated as Annual Additions under
Article XIII for the Plan Year for which the excess Before Tax Deposits were
made, unless such amounts are distributed no later than the first April 15th
following the close of the Participant’s taxable year.

(f)        The Committee shall not be liable to any Participant (or his or her
Beneficiary, if applicable) for any losses caused by a mistake in calculating
the amount of any Participant’s excess Before Tax Deposits or the income or
losses attributable thereto.

4.5         Provision for Recharacterization or Return of Excess Deferrals by
Highly Compensated Participants. The provisions of this Section 4.5 shall be
applied after implementation of the provisions of Section 4.4.

(a)        The Committee shall determine in accordance with the procedures set
forth in Section 4.3, as soon as is reasonably possible following the close of
each Plan Year, the extent (if any) to which deferral treatment under Code
Section 401(k) may not be available for Compensation Deferral Contributions on
behalf of any Highly Compensated Participants. If, pursuant to these
determinations by the Committee, a Highly Compensated Participant’s Compensation
Deferral Contributions are not eligible for tax-deferral treatment then, as
determined by the Committee, either (i) any excess Compensation Deferral
Contributions shall be recharacterized as After Tax Deposits in accordance with
regulations issued under Code Section 401(k), or (ii) any excess Compensation
Deferral Contributions together with any income or loss allocable thereto shall
be returned to the Highly Compensated Participant (after withholding applicable
federal, state, and local taxes due on such amounts). Such return or
recharacterization shall be made within the first two and one-half (2-1/2)
months following the close of the Plan Year for which such excess deferrals were
made, provided however, that if any excess deferrals and income or loss
allocable thereto are, due to error or otherwise, not returned by such date,
such amounts as are required to be returned shall be returned not later than the
end of the first Plan Year following the Plan Year for which such excess
deferrals were made.

(b)        For purposes of satisfying the Actual Deferral Percentage test of
Section 4.3(a), the amount of any excess Compensation Deferral Contributions by
a Highly Compensated Participant shall be determined by the Committee by
application of a leveling method under which the Compensation Deferral
Contributions of the Highly Compensated Participant who has the highest dollar
amount of Compensation Deferral Contributions for such Plan Year is reduced to
the extent required to cause such Highly Compensated Participant’s Compensation
Deferral Contributions to equal the Compensation Deferral Contributions of the
Highly Compensated Participant with the next highest Compensation Deferral
Contributions; provided, however, if a lesser amount, when added to the total
dollar amount already returned under this paragraph (b), equals the total excess
Compensation Deferral Contributions that are required to be returned to enable
the Plan to satisfy the Actual Deferral Percentage test, the lesser amount shall
be returned. This process shall be repeated until the Plan satisfies the Actual
Deferral Percentage test.

 

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(c)        The amount of income or loss attributable to any excess Compensation
Deferral Contributions by a Highly Compensated Participant for a Plan Year shall
be equal to the sum of the following:

(i)      The income or loss allocable to the Highly Compensated Participant’s
Compensation Deferral Contribution Accounts for the Plan Year multiplied by a
fraction, the numerator of which is the excess Compensation Deferral
Contribution as determined under Section 4.3, and the denominator of which is
the balance of the Highly Compensated Participant’s Compensation Deferral
Contribution Accounts as of the last day of the Plan Year without regard to any
income or loss allocable to such Accounts during the Plan Year; and

(ii)     The amount of allocable income or loss for the Gap Period using the
“safe harbor” method set forth in the regulations prescribed by the Secretary of
the Treasury under Code Section 401(k). Under the “safe harbor” method, such
allocable income or loss is equal to 10% of the amount calculated under
Section 4.5(c)(i) above, multiplied by the number of calendar months from the
last day of the Plan Year until the date of distribution of the Participant’s
excess Compensation Deferral Contribution. A distribution on or before the 15th
of the month is treated as made on the last day of the preceding month, a
distribution after the 15th of the month is treated as made on the first day of
the next month.

(d)        For the purpose of this Section 4.5 the following shall apply:

(i)      “Compensation Deferral Contribution Accounts” shall mean the
Participant’s Before Tax Deposits Account and shall mean any other accounts of
the Participant to which Company Contributions has been allocated where such
Company Contributions has been included as Compensation Deferral Contributions
pursuant to Section 4.3(b)(iv).

(ii)     “Gap Period” shall mean the period beginning with the last day of the
Plan Year and the date of distribution of any excess Compensation Deferral
Contributions.

(e)        For purposes of this Section, the amount of Compensation Deferral
Contributions by a Participant who is not a Highly Compensated Participant for a
Plan Year shall be reduced by any Before Tax Deposits which have been
distributed to the Participant under Section 4.4, in accordance with regulations
prescribed by the Secretary of the Treasury under Code Section 401(k).

(f)        In the event that the Committee determines that an amount to be
deferred pursuant to the Compensation deferral agreement provided in Section 4.1
would cause Company Contributions under this and any other tax-qualified
retirement plan maintained by the Company to exceed the applicable deduction
limitations contained in Code Section 404, or to exceed the maximum Annual
Addition determined in accordance with

 

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Article XIII, the Committee may treat such amount in accordance with the rules
set forth above in Section 4.5(a).

(g)        The Committee shall not be liable to any Participant (or his or her
Beneficiary, if applicable) for any losses caused by a mistake in calculating
the amount of any Participant’s excess Compensation Deferral Contribution or the
income or losses attributable thereto.

(h)        To the extent required by regulations under Code Sections 401(k) or
415, any excess Compensation Deferral Contributions with respect to a Highly
Compensated Participant shall be treated as Annual Additions under Article XIII
for the Plan Year for which the excess Compensation Deferral Contributions were
made, notwithstanding the distribution of such excess in accordance with the
provisions of this Section.

4.6        Termination, Change in Rate, or Resumption of Before Tax Deposits or
After Tax Deposits.

(a)        A Participant may, at any time, terminate, change the rate, or resume
Before Tax Deposits or After Tax Deposits in 1% increments.

(b)        The right of a Participant to make Before Tax Deposits or After Tax
Deposits shall cease during any Period of Severance.

(c)        Any termination, change in rate or resumption of Before Tax Deposits
or After Tax Deposits made by a Participant pursuant to paragraph (a) above
shall be effective as of the following pay period or, if later, as soon as
administratively feasible.

4.7        Character of Deposits. Before Tax Deposits shall be treated as
Company Contributions for purposes of Code Sections 401(k) and 414(h). After Tax
Deposits shall not constitute “qualified voluntary employee contributions” under
Code Section 219 (relating to the deductibility of those amounts).

4.8        Rollover Contributions.

(a)        Pursuant to procedures as the Committee may prescribe (either in
writing or practice), an Eligible Employee may make a Direct Rollover
Contribution, a Participant Rollover Contribution, or an IRA Rollover
Contribution to the Plan.

(b)        A “Direct Rollover Contribution” shall mean a contribution by an
Eligible Employee which is a direct rollover of an Eligible Rollover
Distribution from:

(i)      A qualified plan described in Code Section 401(a) or 403(a) including
any portion attributable to after-tax employee contributions; provided, that
such portion can be accounted for separately, including separately accounting
for the portion which is includible in gross income and the portion of which is
not so includible;

 

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(ii)     An annuity contract described in Code Section 403(b) including, on or
after January 1, 2007, any portion attributable to after-tax employee
contributions; provided, that such portion can be accounted for separately,
including separately accounting for the portion which is includible in gross
income and the portion of which is not so includible; or

(iii)    An eligible plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state; provided, that such Direct Rollover
Contribution can be accounted for separately.

(c)        A “Participant Rollover Contribution” shall mean a contribution by an
Eligible Employee which is an Eligible Rollover Distribution (excluding any
portion attributable to after-tax employee contributions) received by the
Trustee not later than 60 days after such distribution was received by the
Eligible Employee; provided, such Eligible Rollover Distribution is from:

(i)      A qualified plan described in Code Section 401(a) or 403(a);

(ii)     An annuity contract described in Code Section 403(b); or

(iii)    An eligible plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state.

The 60-day rollover requirement shall not apply if the Participant substantiates
that the 60-day rollover requirement has been waived by the Secretary of the
Treasury.

(d)        An “IRA Rollover Contribution” shall mean a contribution by an
Eligible Employee which is a distribution (excluding any portion attributable to
after-tax employee contributions) from an individual retirement account or
annuity described in Code Section 408(a) or 408(b) received by the Trustee not
later than 60 days after such distribution was received by the Eligible Employee
or received by the Plan through a direct trustee-to-trustee transfer from such
individual retirement arrangement or annuity. The 60-day rollover requirement
shall not apply if the Participant substantiates that the 60-day rollover
requirement has been waived by the Secretary of the Treasury.

(e)        Pursuant to procedures as the Committee may prescribe (either in
writing or practice), a former Eligible Employee who commenced participation in
the Plan pursuant to Section 3.1 may make Rollover Contributions to the Plan
from his or her account in the Allergan, Inc. Employee Stock Ownership Plan so
long as he or she retains rights under the Plan.

(f)        An Eligible Employee’s Rollover Contributions made pursuant the rules
of this Section 4.8 shall be held in a separate Rollover Contributions Account
for the

 

30

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Eligible Employee. A Rollover Contributions Account shall not share in any
allocations of Company Contributions or Forfeitures under Section 6.3.

 

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ARTICLE V

TRUST FUND AND COMPANY CONTRIBUTIONS

5.1          General.    All contributions made under the Plan and investments
made and property of any kind or character acquired with any such funds or
otherwise contributed, and all income, profits, and proceeds derived therefrom,
shall be held in Trust and shall be held and administered by the Trustee in
accordance with the provisions of the Plan and Trust Agreement.

5.2          Single Trust.     Assets of the Trust shall be held in a separate
fund which shall consist of the Trust Fund. Individual Participant interests in
the Trust Fund shall be reflected in the Accounts maintained for the
Participants. Notwithstanding the foregoing, the Trust Fund shall be treated as
a single trust for purposes of investment and administration, and nothing
contained herein shall require a physical segregation of assets for any fund or
for any Account maintained under the Plan.

5.3          Matching Contributions.  Subject to the limitations of Article
XIII, the suspension provisions of Section 8.1 and to the extent that the
Company has current or accumulated profits, the Company shall make Matching
Contributions to the Plan on behalf of Participants in accordance with the
following rules:

(a)        The Company shall contribute and allocate Matching Contributions on a
pay period basis which, when added to Matching Contribution Forfeitures
available after application of Section 6.3, is equal to 100% of each
Participant’s Matched Deposits for the pay period. The Board of Directors,
acting upon the advice and direction of the Committee, may authorize and direct
that Matching Contributions (expressed as a percentage of Participants’ Matched
Deposits as set forth above) be changed from time to time from a minimum of 0%
to a maximum of 100%.

(b)        For each Plan Year, the Company shall contribute on behalf of each
Eligible Participant, additional Matching Contributions which, when added to
Matching Contribution Forfeitures available after application of Section 6.3, is
equal to the difference, if any, between the amount of each Eligible
Participant’s Matching Contributions determined under paragraph (a) and the
amount of such Eligible Participant’s Matching Contributions if paragraph (a)
was applied on a Plan Year basis instead of a pay period basis. For the purpose
of this paragraph (b), the term “Eligible Participant” shall include only those
Participants who are Eligible Employees on the first and last business day of
the Plan Year and who did not incur a Severance during the Plan Year. The
additional Matching Contributions contributed on behalf of Eligible Participants
shall be allocated to the Matching Contributions Account of such Eligible
Participants as of the last day of each Plan Year and shall be paid to the Trust
at such times as determined by the Sponsor.

(c)        The Company shall contribute amounts sufficient to satisfy the
Matching Contributions reinstatement requirements of Section 8.7 to the extent
Matching

 

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Contribution Forfeitures are insufficient to satisfy the reinstatement
requirement of Section 8.7 if so directed and at such times as may be determined
by the Committee.

5.4          Retirement Contributions.  Subject to the limitations of Article
XIII and to the extent that the Company has current or accumulated profits, the
Company shall make Retirement Contributions to the Plan on behalf of Retirement
Account Participants in accordance with the following rules:

(a)        The Company shall contribute and allocate Retirement Contributions on
a Plan Year basis for each Retirement Account Participant who is employed by the
Company or an Affiliated Company on the last day of such Plan Year or who
incurred a Severance during the Plan Year by reason of Disability, death, or
retirement on or after age 55; the amount of which, when added to Retirement
Contribution Forfeitures available after the application of Section 6.3, shall
be equal to five percent (5%) of the Retirement Account Participant’s
Compensation (as adjusted pursuant to paragraph (c) below) for such Plan Year. A
Retirement Account Participant’s Compensation received while such Retirement
Account Participant is an inactive Participant as defined in Section 3.2(b) or
an “Active Participant” in the Allergan, Inc. Pension Plan as such term is
defined therein or while he or she is not an Eligible Employee shall not be
taken into account in determining such Participant’s Retirement Contributions.

(b)        Retirement Contributions contributed on behalf of Retirement Account
Participants shall be allocated to the Retirement Contributions Account of such
Retirement Account Participants as of the last day of each Plan Year and shall
be paid to the Trust at such times as determined by the Sponsor.

(c)        Solely for the purpose of determining Retirement Contributions
pursuant to this Section 5.4, a Retirement Account Participant’s Compensation
shall include his or her “Annual Deferrals” (as defined in the Allergan, Inc.
Executive Deferred Compensation Plan) for the Plan Year.

(d)        The Company shall contribute amounts sufficient to satisfy the
Retirement Contributions reinstatement requirements of Section 8.7 to the extent
Retirement Contribution Forfeitures are insufficient to satisfy the
reinstatement requirement of Section 8.7 if so directed and at such times as may
be determined by the Committee.

5.5          Form of Company Contributions.  Company Contributions to the Trust
Fund shall be paid in cash, property, or Company Stock as the Sponsor may from
time to time determine.

5.6          Investment of Trust Assets.

(a)        The manner in which assets of the Trust will be invested shall be
chosen by the Committee at its discretion, although the Committee may delegate
the management to one or more Investment Managers appointed pursuant to
Section 5.16. Notwithstanding the foregoing, Matching Contributions shall be
invested in Company Stock except to the extent invested pursuant to
Section 5.6(e).

 

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(b)        The Committee may establish separate investment funds under the Plan,
with each fund representing an investment alternative available to Participants
for the investment of their Accounts as provided in Section 5.6(c) and
(d) below. Each Participant shall have a subaccount under the Plan corresponding
to the Participant’s interest which is allocated to each investment fund. Each
such subaccount may be valued separately. The Committee may, at its discretion,
establish alternative investment funds or eliminate any previously established
funds, including but not limited to the following types of investment funds:

(i)          The Interest Income Fund investing in group annuity contracts with
major insurance companies.

(ii)         The Balanced Fund investing in common stocks, bonds, government
securities and similar types of investments.

(iii)        The Equity Fund investing in a mutual fund which may invest in
equity securities, bonds, preferred stocks, and interest-bearing cash
investments.

(iv)        The Company Stock Fund consisting exclusively of Company Stock.

(v)         The AMO Stock Fund consisting exclusively of AMO Stock.

Notwithstanding the establishment of separate investment funds, up to one
hundred percent (100%) of the assets of the Plan may be invested in Company
Stock.

(c)        A Participant may elect the investment fund to which his or her
Participant Deposits or Retirement Contributions are invested under the Plan or
may change such elections at any time; provided, however, that any allocations
among the investment funds shall be made in 1% increments. Any change in
investment funds shall be effective as soon as administratively feasible. Any
investment elections shall be limited to the investment funds currently offered
and currently available to Participants as determined by the Committee pursuant
to paragraphs (a) and (b) above. A Participant shall effect an investment
election by properly completing and submitting the form authorized by the
Committee for this purpose.

(d)        A Participant may elect at any time to transfer amounts accumulated
in his or her Accounts among any of the investment funds currently offered and
currently available to Participants as determined by the Committee pursuant to
paragraphs (a) and (b) above; provided, however, the total amount transferred
shall be made in 1% increments of the amount accumulated in the investment fund.
Any transfer among investment funds shall be effective as soon as
administratively feasible. A Participant shall effect a transfer election by
properly completing and submitting the form authorized by the Committee for this
purpose.

 

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(e)        Notwithstanding the requirement of paragraph (a) above that Matching
Contributions be invested in the Company Stock Fund, (i) any Participant may
elect that amounts accumulated in his or her Matching Contributions Account
which are held in the Company Stock Fund be reinvested and (ii) any Participant
on or after the date he or she attains age 55 may elect that any future Matching
Contributions be invested, in any of the investment funds currently offered and
currently available to Participants as determined by the Committee pursuant to
paragraphs (a) and (b) above. An election made under this paragraph (e) shall be
effective as soon as administratively feasible. A Participant shall make any
election, and may change any election, at such times and in accordance with the
requirements imposed by paragraphs (c) and (d) above.

(f)        Amounts invested in any one of the investment funds shall not share
in gains and losses experienced by any other fund.

(g)        Notwithstanding the establishment of separate investment funds within
the Trust, the Trust shall at all times constitute a single trust.

(h)        Notwithstanding anything to the contrary in this Section 5.6 or
Section 4.1 or Section 8.1, the following additional transfer and withdrawal
restrictions shall apply to all Participants who are Insiders. For the purpose
of this Section 5.6, the term “Insider” shall mean any Participant who is
directly or indirectly the beneficial owner of more than 10% of any class of any
equity security (other than an exempted security) of the Sponsor (or the
Company) which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934 (the “Exchange Act”) or who is a “director” or an “officer” of the
Sponsor or the Company as those terms are interpreted for the purpose of
determining persons subject to Section 16 of the Exchange Act.

(i)          Any Insider who transfers amounts invested in the Company Stock
Fund out of such fund and into another fund or withdraws cash in a transaction
that results in the liquidation of amounts in the Company Stock Fund (pursuant
to Sections 8.1 or 8.13), may not for a period of six months following the
Participant’s election to so transfer funds, withdraw cash or take a loan, as
the case may be, make an election to transfer amounts from another fund into the
Company Stock Fund.

(ii)         Any Insider who transfers amounts invested in a fund other than the
Company Stock Fund into the Company Stock Fund, may not for a period of six
months following the Participant’s election to so transfer funds make an
election to (1) transfer amounts from the Company Stock Fund into another fund,
(2) withdraw cash or take a loan in a transaction that results in the
liquidation of amounts in the Company Stock Fund or (3) utilize the
diversification rule of Section 5.12 of the Allergan Inc. Employee Stock
Ownership Plan or the provision of any Company plan covered by Rule 16b-3
(promulgated pursuant to the Exchange Act) then in existence that would result
in the transfer out of a Company equity securities fund.

 

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(i)        It is intended that to the extent a Participant may direct the
investment of his or her Accounts under the Plan that the Plan constitute a plan
described in Section 404(c) of ERISA and the regulations thereunder, and neither
the Company, Committee, nor any fiduciary with respect to the Plan who is
employed by the Company shall be liable for investment losses sustained by any
Participant or Beneficiary as a direct and necessary result of the investment
instructions given by such Participant or Beneficiary. Such fiduciaries set
forth in the preceding sentence shall be under no duty to question the
investment direction of the Participant or Beneficiary or to advise a
Participant or Beneficiary as to the manner in which his or her Accounts is to
be invested. The fact that an investment option is offered shall not be
construed to be a recommendation of investment.

(j)        The Committee, in its sole discretion, may select a default
investment fund that meets the requirements of a “qualified default investment
alternative” or “QDIA” as described in Section 2550.404c-5 of the Department of
Labor Regulations as amended from time to time. In such case: (i) a Participant
on whose behalf an investment in a QDIA may be made shall be notified at least
30 days in advance of the first such investment and shall be notified at least
30 days in advance of each subsequent Plan Year and (2) any material relating to
the Participant’s investment in the QDIA (e.g., account statements,
prospectuses) shall be provided to such Participant. If a QDIA is selected by
the Committee, it is intended that to the extent provided under
Section 2550.404c-5 of the Department of Labor Regulations, as amended from time
to time, neither the Company nor the Committee shall be liable for investment
losses sustained by any Participant or Beneficiary that is the direct and
necessary result of (i) investing all or a part of a Participant’s or
Beneficiary’s Account in a QDIA and (ii) investment decisions made in connection
with the management of the QDIA.

(k)        On June 29, 2002, Allergan spun-off AMO and distributed the stock of
AMO (referred to in the Plan as “AMO Stock”) to its shareholders. The following
provisions of the Plan shall apply to AMO Stock as if the term “AMO Stock” was
substituted for the term “Company Stock”: Section 5.9 (Certain Offers for
Company Stock); Section 5.10 (Voting of Company Stock); Section 5.11 (Securities
Law Limitation); Section 5.16 (Appointment of Investment Manager); Section 6.4
(Valuation of Participants’ Accounts); Section 6.5 (Valuation of Company Stock);
Section 6.6 (Dividends, Splits, Recapitalizations, Etc.); Section 6.7 (Stock
Rights, Warrants or Options); Section 6.9 (Cash Dividends); Section 6.10
(Miscellaneous Allocation Rules); Section 9.1 (Appointment of Committee);
Section 9.2 (Appointment of Investment Subcommittee); Section 9.7 (Additional
Powers of Committee); and Section 9.14 (Compensation of Committees and Plan
Expenses), as applicable.

5.7        Irrevocability.  The Company shall have no right or title to, nor
interest in, the contributions made to the Trust Fund, and no part of the Trust
Fund shall revert to the Company except that on or after the Original Effective
Date funds may be returned to the Company as follows:

 

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(a)        In the case of Company Contributions which are made by a mistake of
fact and at the Sponsor’s written request, such contributions shall be returned
to the Company as directed by the Sponsor within one (1) year after it is made.

(b)        All Company Contributions contributed to the Trust are hereby
conditioned upon the Plan satisfying all of the requirements of Code
Section 401(a). If the Plan does not qualify, the Plan may be revoked at the
Sponsor’s written election and all such contributions shall be returned to the
Company as directed by the Sponsor within one year after the date of Internal
Revenue Service denial of the qualification of the Plan. Upon such a revocation
the affairs of the Plan and Trust shall be terminated and wound up as the
Sponsor shall direct.

(c)        All Company Contributions to the Plan are conditioned upon the
deductibility of those contributions under Code Section 404. To the extent a
deduction is disallowed and at the Sponsor’s written request, such contributions
shall be returned to the Company as directed by the Sponsor within one year
after the disallowance.

(d)        In the event that the Plan is terminated when there are amounts
remaining in the Suspense Account, the excess funds shall revert to the Company
as directed by the Sponsor to the extent provided in Section 13.6.

5.8        Company, Committee and Trustee Not Responsible for Adequacy of Trust
Fund.

(a)        The Company, Committee, and the Trustee shall not be liable or
responsible for the adequacy of the Trust Fund to meet and discharge any or all
payments and liabilities hereunder. All Plan benefits will be paid only from the
Trust assets, and neither the Company, the Committee nor the Trustee shall have
any duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan.

(b)        Except as required under the Plan or Trust or under Part 4 of
Subtitle B of Title I of ERISA, the Company shall not be responsible for any
decision, act or omission of the Trustee, the Committee, or the Investment
Manager (if applicable), and shall not be responsible for the application of any
moneys, securities, investments or other property paid or delivered to the
Trustee.

5.9        Certain Offers for Company Stock.  Notwithstanding any other
provision of the Plan to the contrary, in the event an offer shall be received
by the Trustee (including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect) to acquire any or all shares of Company Stock held by the
Trust (an “Offer”), the discretion or authority to sell, exchange or transfer
any of such shares of Company Stock shall be determined in accordance with the
following rules:

(a)        The Trustee shall have no discretion or authority to sell, exchange
or transfer any Company Stock pursuant to an Offer except to the extent, and
only to the

 

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extent, that the Trustee is timely directed to do so in writing by each
Participant with respect to shares of Company Stock that are allocated to such
Participant’s Accounts.

(b)        To the extent there remains any residual fiduciary responsibility
with respect to Company Stock pursuant to an Offer after application of
paragraph (a) above, the Trustee shall sell, exchange or transfer such Company
Stock as directed by the Committee or as directed by an independent fiduciary if
duly appointed by the Sponsor. To the extent the Committee or an independent
fiduciary is required to exercise any residual fiduciary responsibility with
respect to an Offer, the Committee or independent fiduciary shall take into
account in exercising its fiduciary judgment, unless it is clearly imprudent to
do so, directions timely received from Participants, as such directions are most
indicative of what action is in the best interests of Participants. Further, the
Committee or independent fiduciary, in addition to taking into consideration any
relevant financial factors bearing on any such decision, shall take into
consideration any relevant non-financial factors, including, but not limited to,
the continuing job security of Participants as employees of the Sponsor or any
Affiliated Company, conditions of employment, employment opportunities and other
similar matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan.

(c)        Upon timely receipt of such instructions, the Trustee shall, subject
to the provisions of paragraphs (e) and (o) of this Section, sell, exchange or
transfer pursuant to such Offer, only such shares as to which such instructions
were given. The Committee shall use its best efforts to communicate or cause to
be communicated to each Participant the consequences of any failure to provide
timely instructions to the Trustee.

(d)        In the event, under the terms of an Offer or otherwise, any shares of
Company Stock tendered for sale, exchange or transfer pursuant to such Offer may
be withdrawn from such Offer, the Trustee shall follow such instructions
respecting the withdrawal of such shares from such Offer in the same manner and
the same proportion as shall be timely received by the Trustee from the
Participants entitled under this paragraph (a) to give instructions as to the
sale, exchange or transfer of shares pursuant to such Offer.

(e)        In the event that an Offer for fewer than all of the shares of
Company Stock held by the Trustee in the Trust shall be received by the Trustee,
each Participant shall be entitled to direct the Trustee as to the acceptance or
rejection of such Offer (as set forth herein) with respect to the largest
portion of such Company Stock as may be possible given the total number or
amount of shares of Company Stock the Plan may sell, exchange or transfer
pursuant to the Offer based upon the instructions received by the Trustee from
all other Participants who shall timely instruct the Trustee pursuant to this
paragraph to sell, exchange or transfer such shares pursuant to such Offer, each
on a pro rata basis in accordance with the maximum number of shares each such
Participant would have been permitted to direct under paragraph (a) had the
Offer been for all shares of Company Stock held in the Trust.

 

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(f)        In the event an Offer is received by the Trustee and instructions
have been solicited from Participants regarding such Offer, and prior to
termination of such Offer, another Offer is received by the Trustee for the
Company Stock subject to the first Offer, the Trustee shall inform the Committee
of such other Offer and the Committee shall use its best efforts under the
circumstances to solicit instructions from the Participants (i) with respect to
securities tendered for sale, exchange or transfer pursuant to the first Offer,
whether to withdraw such tender, if possible, and, if withdrawn, whether to
tender any Company Stock so withdrawn for sale, exchange or transfer pursuant to
the second Offer and (ii) with respect to Company Stock not tendered for sale,
exchange or transfer pursuant to the first Offer, whether to tender or not to
tender such Company Stock for sale, exchange or transfer pursuant to the second
Offer. The Trustee shall follow all such instructions received in a timely
manner from Participants in the same manner and in the same proportion as
provided in paragraph (a) of this Section. With respect to any further Offer for
any Company Stock received by the Trustee and subject to any earlier Offer
(including successive Offers from one or more existing offers), the Trustee
shall act in the same manner as described above.

(g)        With respect to any Offer received by the Trustee, the Trustee shall
inform the Sponsor of such Offer and the Sponsor shall distribute, at its
expense, copies of all relevant material including but not limited to material
filed with the Securities and Exchange Commission with such Offer or regarding
such Offer, which shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to paragraph (a).
The identities of Participants, the amount of Company Stock allocated to their
Accounts, and the Compensation of each Participant shall be determined from the
list of Participants delivered to the Sponsor by the Committee which shall take
all reasonable steps necessary to provide the Sponsor with the latest possible
information.

(h)        The Sponsor shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to paragraph (a), an
instruction form to be used by each such Participant who wishes to instruct the
Trustee. The instruction form shall state that (i) if the Participant fails to
return an instruction form to the Trustee by the indicated deadline, the Company
Stock with respect to which he or she is entitled to give instructions shall not
be sold, exchanged or transferred pursuant to such Offer, (ii) the Participant
shall be a named fiduciary (as described in paragraph (m) below) with respect to
all shares of Company Stock for which he or she is entitled to give
instructions, and (iii) the Company acknowledges and agrees to honor the
confidentiality of the Participant’s instructions to the Trustee.

(i)        Each Participant may choose to instruct the Trustee in one of the
following two ways: (i) not to sell, exchange or transfer any shares of Company
Stock for which he or she is entitled to give instructions, or (ii) to sell,
exchange or transfer all Company Stock for which he or she is entitled to give
instructions. The Sponsor shall follow up with additional mailings and postings
of bulletins, as reasonable under the time constraints then prevailing, to
obtain instructions from Participants not otherwise responding to such requests
for instructions. Subject to paragraph (e), the Trustee shall

 

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then sell, exchange or transfer shares according to instructions from
Participants, except that shares for which no instructions are received shall
not be sold, exchanged or transferred unless directed otherwise as provided in
paragraph (b) above.

(j)        The Sponsor shall furnish former Participants who have received
distributions of Company Stock so recently as to not be shareholders of record
with the information given to Participants pursuant to paragraphs (g), (h) and
(i) of this Section. The Trustee shall then sell, exchange or transfer shares
according to instructions from such former Participants, except that shares for
which no instructions are received shall not be sold, exchanged or transferred.

(k)        Neither the Company, the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant concerning the
Offer, nor shall they have any authority or responsibility to do so.

(l)        The Trustee shall not reveal or release a Participant’s instructions
to the Company, its officers, directors, employees, or representatives. If some
but not all Company Stock held by the Trust is sold, exchanged, or transferred
pursuant to an Offer, the Company, with the Trustee’s cooperation, shall take
such action as is necessary to maintain the confidentiality of Participant’s
records including, without limitation, establishment of a security system and
procedures which restrict access to Participant records and retention of an
independent agent to maintain such records. If an independent record keeping
agent is retained, such agent must agree, as a condition of its retention by the
Sponsor, not to disclose the composition of any Participant Accounts to the
Company, its officers, directors, employees, or representatives. The Company
acknowledges and agrees to honor the confidentiality of Participants’
instructions to the Trustee.

(m)        Each Participant shall be a named fiduciary (as that term is defined
in Section 402(a)(2) of ERISA) with respect to Company Stock allocated to his or
her Accounts under the Plan solely for purposes of exercising the rights of a
shareholder with respect to an Offer pursuant to this Section 5.9 and voting
rights pursuant to Section 5.10.

(n)        To the extent that an Offer results in the sale of Company Stock in
the Trust, the Committee or the Participants, if so permitted under the terms of
the Plan, shall instruct the Trustee as to the investment of the proceeds of
such sale.

(o)        In the event a court of competent jurisdiction shall issue to the
Plan, the Committee, the Sponsor or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to be made
as to whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to an Offer or cause any such provision or provisions to
conflict with securities laws, then, upon notice thereof to the Committee, the
Sponsor or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In such
circumstances, the Trustee

 

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shall continue to follow instructions received from Participants, to the extent
such instructions have not been invalidated by such order or opinion. To the
extent the Trustee is required by such opinion or order to exercise any residual
fiduciary responsibility with respect to such Offer, the Sponsor shall appoint
an independent fiduciary who shall exercise such residual fiduciary
responsibility as provided in paragraph (b) above and shall direct the Trustee
as to whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to such Offer.

5.10      Voting of Company Stock.  Notwithstanding any other provision of the
Plan to the contrary, the Trustee shall have no discretion or authority to vote
Company Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions received
by the Trustee from either the Committee or Participants, depending on who has
the right to direct the voting of such Company Stock as provided in the
following provisions of this Section 5.10.

 (a)        All Company Stock held in the Trust Fund shall be voted by the
Trustee as the Committee directs in its absolute discretion, except as provided
in this Section 5.10(a).

(i)        If the Sponsor has a registration-type class of securities (as
defined in Code Section 409(e)(4)), then with respect to all corporate matters,
each Participant shall be entitled to direct the Trustee as to the voting of all
Company Stock allocated and credited to his or her Accounts.

(ii)       If the Sponsor does not have a registration-type class of securities,
then only with respect to such matters as the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of trade or business,
or such similar transactions as may be prescribed in Code Section 409(e)(4) and
the regulations thereunder, each Participant shall be entitled to direct the
Trustee as to the voting of all Company Stock allocated and credited to his or
her Accounts.

 (b)        To the extent there remains any residual fiduciary responsibility
with respect to the voting of Company Stock after application of paragraph (a)
above, the Trustee shall vote such Company Stock as directed by the Committee or
as directed by an independent fiduciary if duly appointed by the Sponsor. To the
extent the Committee or an independent fiduciary is required to exercise any
residual fiduciary responsibility with respect to the voting of Company Stock,
the Committee or independent fiduciary shall take into account in exercising its
fiduciary judgment, unless it is clearly imprudent to do so, directions timely
received from Participants, as such directions are most indicative of what
action is in the best interests of Participants. Further, the Committee or
independent fiduciary, in addition to taking into consideration any relevant
financial factors bearing on any such decision, shall take into consideration
any relevant non-financial factors, including, but not limited to, the
continuing job security of Participants as employees of the Sponsor or any
Affiliated Company, conditions of employment, employment

 

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opportunities and other similar matters, and the prospect of the Participants
and prospective Participants for future benefits under the Plan.

 (c)        All Participants entitled to direct such voting shall be notified by
the Sponsor, pursuant to its normal communications with shareholders, of each
occasion for the exercise of such voting rights within a reasonable time before
such rights are to be exercised. Such notification shall include all information
distributed to shareholders either by the Sponsor or any other party regarding
the exercise of such rights. Such Participants shall be so entitled to direct
the voting of fractional shares (or fractional interests in shares), provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect the
aggregate direction of all Participants giving directions with respect to
fractional shares (or fractional interests in shares). To the extent that a
Participant shall fail to direct the Trustee as to the exercise of voting rights
arising under any Company Stock credited to his or her Accounts, such Company
Stock shall not be voted unless the Trustee is directed otherwise as provided in
paragraph (b) above. The Trustee shall maintain confidentiality with respect to
the voting directions of all Participants.

 (d)        Each Participant shall be a named fiduciary (as that term is defined
in Section 402(a)(2) of ERISA) with respect to Company Stock for which he or she
has the right to direct the voting under the Plan but solely for the purpose of
exercising voting rights pursuant to this Section 5.10 or certain Offers
pursuant to Section 5.9.

 (e)        In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Committee, the Sponsor or the Trustee, which
shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee,
invalidate under ERISA, in all circumstances or in any particular circumstances,
any provision or provisions of this Section regarding the manner in which
Company Stock held in the Trust shall be voted or cause any such provision or
provisions to conflict with ERISA, then, upon notice thereof to the Committee,
the Sponsor or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In such
circumstances the Trustee shall continue to follow instructions received from
Participants, to the extent such instructions have not been invalidated by such
order or opinion. To the extent the Trustee is required by such opinion or order
to exercise any residual fiduciary responsibility with respect to voting, the
Sponsor shall appoint an independent fiduciary who shall exercise such residual
fiduciary responsibility as provided in paragraph (b) above and shall direct the
Trustee as to the manner in which Company Stock held by the Trustee shall be
voted.

5.11      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.

 

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5.12      Distributions.  Money and property of the Trust shall be paid out,
disbursed, or applied by the Trustee for the benefit of Participants and
Beneficiaries under the Plan in accordance with directions received by the
Trustee from the Committee. Upon direction of the Committee, the Trustee may pay
money or deliver property from the Trust for any purpose authorized under the
Plan. The Trustee shall be fully protected in paying out money or delivering
property from the Trust from time to time upon written order of the Committee
and shall not be liable for the application of such money or property by the
Committee. The Trustee shall not be required to determine or to make any
investigation to determine the identity or mailing address of any person
entitled to benefits hereunder and shall have discharged its obligation in that
respect when it shall have sent checks or other property by first-class mail to
such persons at their respective addresses as may be certified to it by the
Committee.

5.13      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.

5.14      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 Sections 5.9(l) and
5.10(c)).

5.15      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 Sections 5.9(l) and
5.10(c)).

5.16      Appointment of Investment Manager.    From time to time the Committee,
in accordance with Section 9.7 hereof, may appoint one or more Investment
Managers who shall have investment management and control over assets of the
Trust not invested or to be invested in Company Stock. The Committee shall
notify the Trustee of such assets of the appointment of

 

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the Investment Manager. In the event more than one Investment Manager is
appointed, the Committee shall determine which assets shall be subject to
management and control by each Investment Manager and shall also determine the
proportion in which funds withdrawn or disbursed shall be charged against the
assets subject to each Investment Manager’s management and control. As shall be
provided in any contract between an Investment Manager and the Committee, such
Investment Manager shall hold a revocable proxy with respect to all securities
which are held under the management of such Investment Manager pursuant to such
contract (except for Company Stock), and such Investment Manager shall report
the voting of all securities subject to such proxy on an annual basis to the
Committee.

 

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ARTICLE VI

ACCOUNTS AND ALLOCATIONS

6.1        Participants’ Accounts.    In order to account for the allocated
interest of each Participant in the Trust Fund, there shall be established and
maintained for each Participant (making such form of contribution) a Before Tax
Deposits Account, an After Tax Deposits Account, a Matching Contributions
Account, a Retirement Contributions Account, and a Rollover Contributions
Account.

6.2        Allocation of Participant Deposits.  All Participant Deposits shall
be allocated to the separate Accounts established and maintained for that
Participant. Participant Deposits shall be paid by the Company to the Trustee as
soon as the amount can reasonably be identified and separated from the Company’s
other assets, but in any event no later than the 15th business day of the month
following the month in which such amounts would otherwise be payable to the
Participant, or such other time provided in applicable regulations under the
Code or ERISA.

6.3        Allocation of Company Contributions and Forfeitures.  Company
Contributions and Forfeitures shall be allocated as follows:

(a)        Matching Contributions shall be allocated to the Matching
Contributions Accounts of all Participants who made Matched Deposits in such
amounts and at such times as provided in Sections 5.3(a) and 5.3(b).

(b)        Retirement Contributions shall be allocated to the Retirement
Contributions Accounts of all Retirement Account Participants in such amounts
and at such times as provided in Sections 5.4(a) and 5.4(b).

(c)        Matching Contribution Forfeitures and Retirement Contribution
Forfeitures shall first be used to restore the Matching Contributions Accounts
of rehired Participants and the Retirement Contributions Accounts of rehired
Retirement Account Participants, respectively, if so required under Section 8.7
and shall then be allocated to the Matching Contributions Accounts of
Participants and Retirement Contributions Accounts of Retirement Account
Participants, respectively, to the extent necessary to correct insufficient
allocations made to such Accounts in prior months discovered during the Plan
Year to which such Forfeitures are attributable.

(d)        After application of paragraph (c) above, any remaining Matching
Contribution Forfeitures and Retirement Contribution Forfeitures shall be used
to reduce Matching Contributions and Retirement Contributions, respectively,
made by the Company pursuant to Sections 5.3 and 5.4 unless applied towards plan
expenses consistent with the allocation described under Section 9.14.

(e)        Any other Company Contributions shall be used to restore the Accounts
of rehired Participants if so required under Section 8.7 and to the extent
Forfeitures are

 

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unavailable. Any amounts remaining may be used to pay Plan expenses to the
extent described in Section 9.14.

The allocations of Company Contributions under this Section 6.3 shall be made
only after any allocations required by Sections 6.10 and 13.4 have been made.

6.4        Valuation of Participants’ Accounts.  Within sixty (60) days after
each Valuation Date the Trustee shall value the assets of the Trust on the basis
of fair market values. Company Stock held by the Trust shall be valued in
accordance with Section 6.5. If separate investment funds are maintained under
the Trust pursuant to Section 5.6(b) then each such fund shall be valued
separately so that gains or losses of the various funds shall not be commingled.
Upon receipt of these valuations from the Trustee, the Committee shall revalue
the Accounts and subaccounts (as established pursuant to Section 5.6(b)), if
any, of each Participant as of the applicable Valuation Date so as to reflect,
among other things, a proportionate share in any increase or decrease in the
fair market value of the assets in the Trust Fund, determined by the Trustee as
of that date as compared with the value of the assets in the Trust Fund as of
the immediately preceding Valuation Date.

6.5        Valuation of Company Stock.  Company Stock held by the Trust shall be
valued according to the following rules:

(a)        In the case of Company Stock that is publicly traded on a national
securities exchange, such stock shall be valued by reference to the closing
price of such stock on such exchange on the last trading day of the month for
which such stock is being valued.

(b)        In the case of Company Stock that is not publicly traded on a
national securities exchange, such stock shall be valued as of the first day of
each Plan Year, or such other time as established by the Committee, by
determining the fair market value of such stock through the use of an
independent appraiser. Such fair market valuation shall be used to determine the
valuation of each Participant’s Company Stock Account on each Valuation Date in
such Plan Year pursuant to Section 6.4.

6.6        Dividends, Splits, Recapitalizations, Etc.  Any Company Stock
received by the Trustee as a stock split, dividend, or as a result of a
reorganization or other recapitalization of the Company shall be allocated in
the same manner as the Company Stock to which it is attributable is then
allocated.

6.7        Stock Rights, Warrants or Options.

(a)        In the event any rights, warrants, or options are issued on Company
Stock held in the Trust Fund, the Trustee shall exercise them for the
acquisition of additional Company Stock as directed by the Committee to the
extent that cash is then available in the Trust Fund.

 

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(b)        Any Company Stock acquired in this fashion shall be treated as
Company Stock purchased by the Trustee for the net price paid and shall be
allocated in the same manner as the funds used to purchase the Company Stock
were or would be allocated under the provisions of the Plan. Thus, if the funds
used to purchase the stock consisted of unallocated Company Contributions, the
stock would be allocated under the terms of Section 6.3; if the funds used
consisted of the unallocated net income of the Trust, the stock would be
allocated as provided in Section 6.4; and if the funds used consisted of funds
previously allocated to the Accounts, the stock would be allocated in the manner
in which the Accounts or subaccounts are debited and credited.

(c)        Any rights, warrants, or options on Company Stock which cannot be
exercised for lack of cash may, as directed by the Committee, be sold by the
Trustee and the proceeds allocated in accordance with the source of the Company
Stock with respect to which the rights, warrants, or options were issued in
accordance with rules of paragraph (b) above.

6.8        Treatment of Accounts Upon Severance.    Upon a Participant’s
Severance, pending distribution of the Participant’s benefit pursuant to the
provisions of Article VIII, the Participant’s Accounts shall continue to be
maintained and accounted for in accordance with all applicable provisions of the
Plan, including but not limited to the allocation of Company Contributions and
net income or loss to which the Accounts are entitled under the applicable
provisions of Sections 6.3 and 6.4 as of any Valuation Date or other date
preceding the distribution of the Participant’s entire benefit under the Plan.

6.9        Cash Dividends.

(a)        All cash dividends paid to the Trustee with respect to Company Stock
that has been allocated to a Participant’s Account as of the quarterly date on
which the dividend is received by the Trustee shall be allocated to the
Participant’s Account.

(b)        If a Participant (or Beneficiary) has a current right to a
distribution in Company Stock pursuant to Article VIII and such stock has not
yet been re-registered in the name of the Participant (or Beneficiary) as of the
record date of any dividend on such stock, such dividend shall be distributed to
the Participant (or Beneficiary).

(c)        Notwithstanding the provisions of paragraphs (a) and (b) above, the
Committee may determine, in its discretion, that cash dividends on such shares
may be used to purchase additional shares of Company Stock, or in whatever other
manner it deems appropriate.

6.10      Miscellaneous Allocation Rules.

(a)        In the event that there is more than one class of Company Stock to be
allocated to Participants’ Accounts, there shall be allocated to the Account of
each Participant (entitled to share in allocations of Company Stock as of any
applicable date) the portion of each class of Company Stock (to be allocated as
of that date) which the

 

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amount to be allocated to the Account of the Participant bears to the total
amount to be allocated to the Accounts of all Participants entitled to share in
such allocation.

(b)        Allocations of all assets other than Company Stock shall be made on
the basis of, and expressed in terms of dollar value. Allocations of Company
Stock shall be on the basis of the number of shares of Company Stock (including
fractional shares) and valuations, as of each Valuation Date, shall be expressed
in terms of number of shares and dollar value.

(c)        The Committee and the Trustee shall establish such additional
accounting procedures as may be necessary for the purpose of making the
allocations, valuations, withdrawals, and adjustments to Participants’ Accounts
provided for in this Article VI. From time to time the Committee and Trustee may
modify such additional accounting procedures for the purpose of achieving
equitable, nondiscriminatory, and administratively feasible allocations among
the Accounts of Participants in accordance with the general concepts of the Plan
and the provisions of this Article VI.

(d)        The Company, the Committee and Trustee do not in any manner or to any
extent whatsoever warrant, guarantee or represent that the value of a
Participant’s Account shall at any time equal or exceed the amount previously
contributed thereto.

6.11      Limitations on After Tax Deposits and Matching Contributions.  With
respect to each Plan Year, After Tax Deposits and Matching Contributions under
the Plan for the Plan Year shall not exceed the limitations by or on behalf of
Highly Compensated Participants under Code Section 401(m), as provided in this
Section. In the event that After Tax Deposits and Matching Contributions under
the Plan by or on behalf of Highly Compensated Participants for any Plan Year
exceed the limitations of this Section for any reason, such excess After Tax
Deposits and Matching Contributions and any income or loss allocable thereto
shall be disposed of in accordance with Section 6.12.

(a)        The After Tax Deposits by Participants and Matching Contributions on
behalf of Participants for a Plan Year shall satisfy the Actual Contribution
Percentage test set forth in (i) below, or, to the extent not precluded by
applicable regulations, the alternative Actual Contribution Percentage test set
forth in (ii) below:

(i)        The Actual Contribution Percentage of Highly Compensated Participants
for the Plan Year shall not be more than the prior Plan Year’s Actual
Contribution Percentage of Participants who were not Highly Compensated
Employees for the prior Plan Year multiplied by 1.25, or

(ii)       The Actual Contribution Percentage of Highly Compensated Participants
for the Plan Year shall not be more than the prior Plan Year’s Actual
Contribution Percentage of Participants who were not Highly Compensated
Employees for the prior Plan Year multiplied by 2.0, provided that the Actual
Contribution Percentage of Highly Compensated Participants does not exceed the
Actual Contribution Percentage of Participants who were not Highly

 

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Compensated Employees for the prior Plan Year by more than two (2) percentage
points.

(iii)      If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement and a plan subject to the Actual Contribution
Percentage test maintained by the Sponsor or an Affiliated Company and the sum
of the Actual Deferral Percentage and Contribution Percentage of those Highly
Compensated Employees subject to either or both test exceeds the Aggregate
Limit, then the Contribution Percentages of those Highly Compensated Employees
who also participate in the cash or deferred arrangement shall be reduced
(beginning with such Highly Compensated Employee whose Actual Contribution
Percentage is the highest) so that the limit is not exceeded. The amount by
which each Highly Compensated Employee’s Contribution Percentage is reduced
shall be treated as an Excess Aggregate Contribution. The Actual Deferral
Percentage and Contribution Percentage of the Highly Compensated Employee are
determined after any corrections required to meet the Actual Deferral Percentage
and Actual Contribution Percentage tests and are deemed to be the maximum
permitted under such tests for the Plan Year.

(b)       For purposes of this Section 6.11 and Section 6.12 the following
definitions shall apply:

(i)        “Actual Contribution Percentage” shall mean the average of the
Contribution Percentages, with respect to the group of Highly Compensated
Participants and the group of all other Participants for a Plan Year. The
“Contribution Percentage” for any Participant shall mean the ratio, calculated
separately and to the nearest one-hundredth of one percent for each Participant
in such group, determined as follows:

(A)        For a Highly Compensated Participant, the ratio of such Participant’s
After Tax Deposits and Matching Contributions for the current Plan Year to such
Participant’s Compensation for the current Plan Year; provided, however, that
the Contribution Percentage of a Highly Compensated Participant with no After
Tax Deposits and Matching Contributions made on his or her behalf shall be zero.

(B)        For any other Participant, the ratio of such Participant’s After Tax
Deposits and Matching Contributions for the preceding Plan Year to such
Participant’s Compensation for the preceding Plan Year; provided, however, that
the Contribution Percentage of a Participant with no After Tax Deposits and
Matching Contributions made on his or her behalf shall be zero.

The Contribution Percentage, in each case, however, shall not include Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contribution to which they relate are excess Before
Tax Deposits, excess After Tax Deposits, or Excess Aggregate Contributions. To
the extent determined by the Committee and in accordance with regulations issued
by the Secretary of the Treasury under Code Section 401(m)(3), Before

 

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Tax Deposits and any qualified nonelective contributions, within the meaning of
Code Section 401(m)(4)(C) on behalf of a Participant may also be taken into
account for purposes of calculating the Contribution Percentage of a
Participant. However, if any Before Tax Deposits are taken into account for
purposes of determining Actual Deferral Percentages under Section 4.3 then such
Before Tax Deposits shall not be taken into account under this Section 6.11.

(ii)       “Highly Compensated Participant” shall mean for any Plan Year any
Participant who is a Highly Compensated Employee. A Participant is a Highly
Compensated Employee for a particular Plan Year if he or she meets the
definition of a Highly Compensated Employee in effect for that Plan Year.
Similarly, a Participant is not a Highly Compensated Employee for a particular
Plan Year if he or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.

(iii)      “Participant” shall mean any Eligible Employee who satisfied the
requirements of Section 3.1 during the Plan Year whether or not such Eligible
Employee has elected to contribute to the Plan for such Plan Year.

(iv)      “Compensation” shall mean compensation as described below:

(A)        Compensation means compensation determined by the Company in
accordance with the requirements of Code Section 414(s) and the regulations
thereunder.

(B)        For purposes of this Section 6.11, Compensation may, at the Company’s
election, exclude amounts which are excludable from a Participant’s gross income
under Code Section 125 (pertaining to cafeteria plans) and Code
Section 402(e)(3) (pertaining to 401(k) salary reductions). The Company may
change its election provided such change does not discriminate in favor of
Highly Compensated Employees.

(C)        Compensation taken into account for any Plan Year shall not exceed
$210,000, as adjusted for cost-of-living increases in accordance with Code
Section 401(a)(17)(B). Any cost-of-living adjustments in effect for a calendar
year shall apply to the Plan Year beginning with or within such calendar year.

(v)       “Aggregate Limit” shall mean the sum of (1) 125 percent of the greater
of the average Actual Deferral Percentage of all Non-Highly Compensated
Participants for the Plan Year or the Actual Contribution Percentage of
Non-Highly Compensated Participants under the Plan subject to Code
Section 401(m) for the Plan Year beginning with or within the Plan Year of the
cash or deferred

 

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arrangement and (2) the lesser of 200% or two plus the lesser of such average
Actual Deferral Percentage or Actual Contribution Percentage. “Lesser” is
substituted for “greater” in (1) above, and “greater” is substituted for
“lesser” after “two plus the” in (2) above if it would result in a larger
Aggregate Limit.

(vi)        “Excess Aggregate Contributions” shall mean, with respect to any
Plan Year, the excess of:

(A)        The aggregate After Tax Deposits and Matching Contributions taken
into account in computing the numerator of the Contribution Percentage actually
made on behalf of Highly Compensated Employees for such Plan year, over

(B)        The maximum After Tax Deposits and Matching Contributions permitted
under the Actual Contribution Percentage test as determined by reducing such
Matching Contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages, beginning with the highest of such
percentages.

Such determination shall be made after first determining excess Before Tax
Deposits pursuant to Sections 4.2(a) and 4.3.

(c)        In the event the Plan satisfies the requirements of Code Sections
401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans
which include arrangements under Code Section 401(k), then this Section 6.11
shall be applied by determining the Contribution Percentages of Participants as
if all such plans were a single plan. Any adjustments to the Contribution
Percentages of Participants who are not Highly Compensated Employees for the
prior year shall be made in accordance with Notice 98-1 and any superseding
guidance. Plans may be aggregated in order to satisfy Code Section 401(m) only
if they have the same Plan Year and use the same Actual Contribution Percentage
testing method.

(d)        For purposes of this Section 6.11, the Contribution Percentage for
any Highly Compensated Participants who is eligible to have After Tax Deposits
or Matching Contributions allocated to his or her account under two or more
plans maintained by the Sponsor or an Affiliated Company shall be determined as
if the total of such After Tax Deposits or Matching Contributions was made under
each plan. If a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be treated as
separate plans if mandatorily disaggregated pursuant to regulations under Code
Section 401(m).

(e)        For purposes of the Actual Contribution Percentage test, After Tax
Deposits shall be considered to have been made in the Plan Year in which
contributed to

 

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the Trust. Matching Contributions shall be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the day after
the close of the Plan Year.

(f)        The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.

(g)        The Committee shall keep or cause to have kept such records as are
necessary to demonstrate that the Plan satisfies the requirements of Code
Section 401(m) and the regulations thereunder, in accordance with regulations
prescribed by the Secretary of the Treasury.

6.12      Provision for Disposition of Excess After Tax Deposits or Matching
Contributions on Behalf of Highly Compensated Participants.  After application
of the provisions of Section 4.4 and 4.5, the following provisions shall be
implemented:

(a)        The Committee shall determine, as soon as is reasonably possible
following the close of each Plan Year, the extent (if any) to which
contributions by or on behalf of Highly Compensated Participants may cause the
Plan to exceed the limitations of Section 6.11 for such Plan Year. If, pursuant
to the determination by the Committee and as required by the leveling method
described in paragraph (b) below, contributions by or on behalf of a Highly
Compensated Participant may cause the Plan to exceed such limitations, then the
Committee shall take the following steps:

(i)        First, any excess After Tax Deposits that were not matched by
Matching Contributions, together with income or loss allocable to such amount
(determined in accordance with paragraph (c) below) shall be returned to the
Highly Compensated Participant.

(ii)       Second, if any excess remains after the provisions of (i) above are
applied, to the extent necessary to eliminate the excess, Matching Contributions
with respect to the Highly Compensated Participant, any corresponding matched
After Tax Deposits, and any income or loss allocable thereto, shall either be
distributed (if non-forfeitable) to the Highly Compensated Participant or
forfeited (to the extent forfeitable under the Plan) on a pro-rata basis.
Amounts of excess Matching Contributions forfeited by Highly Compensated
Participants under this Section 6.12, including any income or loss allocable
thereto, shall be applied to reduce Matching Contributions by the Company or the
Affiliated Company that made the Matching Contribution on behalf of the Highly
Compensated Participant for the Plan Year for which the excess contribution was
made.

(iii)      If administratively feasible, any amounts distributed pursuant to
subparagraphs (i) or (ii) above shall be returned within two and one-half
(2-1/2) months following the close of the Plan Year for which such excess After
Tax Deposits or Matching Contributions were made, but in any event no later than
the

 

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end of the first Plan Year following the Plan Year for which the excess After
Tax Deposits or Matching Contributions were made. After Tax Deposits and
Matching Contributions for any Plan Year shall be made on the basis of the
respective portions of such excess After Tax Deposits and Matching Contributions
attributable to each Highly Compensated Participant.

(b)        For purposes of satisfying the Actual Contribution Percentage test,
the amount of any excess After Tax Deposits or Matching Contributions by or on
behalf of Highly Compensated Participants for a Plan Year under Section 6.11
shall be determined by application of a leveling method under which the After
Tax Deposits or Matching Contributions of the Highly Compensated Participant who
has the highest dollar amount of After Tax Deposits or Matching Contributions
for such Plan Year is reduced to the extent required to cause such Highly
Compensated Participant’s After Tax Deposits and Matching Contributions to equal
the After Tax Deposits and Matching Contributions of the Highly Compensated
Participant with the next highest After Tax Deposits and Matching Contributions;
provided, however, if a lesser amount, when added to the total dollar amount
already distributed under this paragraph (b), equals the total excess After Tax
Deposits and Matching Contributions that are required to be distributed to
enable the Plan to satisfy the Actual Contribution Percentage test, the lesser
amount shall be distributed. This process shall be repeated until the Plan
satisfies the Actual Contribution Percentage test.

(c)        The amount of income or loss attributable to any excess After Tax
Deposits or Matching Contributions, as determined under this Section 6.12 (the
“Excess Aggregate Contribution”) by a Highly Compensated Participant for a Plan
Year shall be equal to the sum of the following:

(i)        The income or loss allocable to the Highly Compensated Participant’s
Excess Aggregate Contribution Accounts for the Plan Year multiplied by a
fraction, the numerator of which is the Excess Aggregate Contribution and the
denominator of which is the sum of the balance of the Highly Compensated
Participant’s Excess Aggregate Contribution Accounts without regard to any
income or loss allocable to such Accounts during the Plan Year; and

(ii)       The amount of allocable income or loss for the Gap Period using the
“safe harbor” method set forth in regulations prescribed by the Secretary of the
Treasury under Code Section 401(m). Under the “safe harbor” method, such
allocable income or loss is equal to 10% of the amount calculated under
Section 6.12(c)(i) above, multiplied by the number of calendar months from the
last day of the Plan Year until the date of distribution of the Participant’s
excess After Tax Deposits or Matching Contributions. A distribution on or before
the 15th of the month is treated as made on the last day of the preceding month,
a distribution after the 15th of the month is treated as made on the first day
of the next month.

 

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(d)        For the purpose of this Section 6.12, the following shall apply:

(i)        “Excess Aggregate Contribution Accounts” shall mean the Participant’s
After Tax Deposits Account and Matching Contributions Account.

(ii)       “Gap Period” shall mean the period between last day of the Plan Year
and the date of distribution of any Excess Aggregate Contributions.

(e)        Any excess After Tax Deposits and/or Matching Contributions
distributed to a Highly Compensated Participant or forfeited by a Highly
Compensated Participant in accordance with this Section 6.12, shall be treated
as Annual Additions under Article XIII for the Plan Year for which the excess
contribution was made.

(f)        Neither the Committee nor the Company shall be liable to any
Participant (or his or her Beneficiary, if applicable) for any losses caused by
a mistake in calculating the amount of any Excess Aggregate Contributions by or
on behalf of a Highly Compensated Participant and the income or loss allocable
thereto.

 

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ARTICLE VII

VESTING IN PLAN ACCOUNTS

7.1        No Vested Rights Except as Herein Provided.    No Participant shall
have any vested right or interest to, or any right of payment of, any assets of
the Trust Fund, except as expressly provided in the Plan. Neither the making of
any allocations nor the credit to any Account of a Participant shall vest in any
Participant any right, title, or interest in or to any assets of the Trust Fund.

7.2        Vesting of Participant Deposits.  A Participant shall be fully vested
at all times in the amounts allocated to his or her Before Tax Deposits Account,
After Tax Deposits Account, and Rollover Contributions Account.

7.3        Vesting of Company Contributions.

(a)        A Participant’s interest in his or her Matching Contributions Account
shall vest in accordance with the following schedule:

 

Years of Credited Service

   Vested Percentage Less than 3        0% 3 or more    100%

(b)        A Participant’s interest in his or her Retirement Contributions
Account shall vest in accordance with the following schedule:

 

Years of Credited Service

   Vested Percentage Less than 1        0% 1 but less than 2      20% 2 but less
than 3      40% 3 but less than 4      60% 4 but less than 5      80% 5 or more
   100%

(c)        A Participant shall at all times be 100% vested in all amounts
transferred from the SmithKline Beckman Corporation Savings and Investment Plan
and all amounts transferred from the Inamed Corporation Retirement Savings Plan
to the Plan.

(d)        Notwithstanding paragraphs (a) and (b) above, a Participant shall
become fully vested in his or her Matching Contributions Account and Retirement
Contributions Account upon the occurrence of any of the following events, if
such Participant is then still an Employee:

(i)        Attainment of age sixty-two (62);

 

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(ii)        Death;

(iii)       Severance due to a Disability; or

(iv)       Occurrence of a Change in Control pursuant to Section 12.4.

 

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ARTICLE VIII

PAYMENT OF PLAN BENEFITS

8.1        Withdrawals During Employment.    A Participant may withdraw, once in
any calendar quarter, amounts of at least $500 from his or her Accounts while an
Employee in accordance with the following rules:

(a)        A Participant may, for any reason, withdraw any portion of the amount
allocated to his or her After Tax Deposits Account (excluding any After Tax
Deposits recharacterized as such under Section 4.5). A Participant who makes a
withdrawal of After Tax Deposits (whether Matched Deposits or non-Matched
Deposits) shall not be permitted to make any After Tax or and Before Tax
Deposits during the six (6) month period beginning as soon as administratively
feasible following the date of the withdrawal unless the After Tax Deposits can
also be withdrawn under paragraph (d) below or the withdrawal is comprised
solely of After Tax Deposits which are not Matched Deposits and which were
contributed prior to July 1, 2000.

(b)        A Participant may, for any reason, withdraw any portion of the amount
allocated to his or her Rollover Contributions Account.

(c)        After withdrawing all After Tax Deposits pursuant to paragraph (a)
and all amounts allocated to his or her Rollover Contributions Account under
paragraph (b) above, a Participant with 3 or more years of Credited Service may,
for any reason, withdraw any portion of the amount allocated to his or her
Matching Contributions Account that was so allocated 2 or more years prior to
the date of such a withdrawal.

(d)        On or after the attainment of age 59-1/2, a Participant may withdraw
any vested portion of the amounts allocated to any of his or her Accounts.

(e)        After withdrawing all amounts permitted pursuant to paragraphs (a),
(b) (c), and (d) above, a Participant may withdraw amounts from his or her
Before Tax Deposits Account (excluding any earnings attributable to such Account
after December 31, 1988), the vested portion of his or her Matching
Contributions Account, and any remaining amount in his or her After Tax Deposits
(amounts which were recharacterized as After Tax Deposits under Section 4.5 but
excluding any earnings attributable to recharacterized After Tax Deposits after
December 31, 1988) but excluding amounts from his or her Retirement
Contributions Account upon incurring a hardship as defined in Section 8.5.

(f)        Except as provided in paragraphs (a) through (e) above, Participants
may not receive a distribution of their benefits under the Plan prior to
termination of employment.

(g)        Except as provided in Section 8.5(c), all withdrawals shall be made
in cash, except to the extent any of the vested portion of a Participant’s
Account to be

 

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withdrawn is invested in the Company Stock Fund or in the stock of Advanced
Medical Optics, Inc., then such withdrawal may be made in Company Stock or in
the stock of Advanced Medical Optics, Inc. at the election of the Participant to
the extent so invested.

(h)        Except as provided in Section 8.5(c), all withdrawals shall be made
to Participants as soon as reasonably practicable following the Valuation Date
in the month for which a properly completed withdrawal request is deemed
perfected. All withdrawals shall be based on the Account balances of a
Participant as of such Valuation Date. If a properly completed withdrawal
request is received by the Company during any month and on or before the
fifteenth day of such month, the withdrawal request shall be deemed perfected in
such month, otherwise such withdrawal request shall be deemed perfected in the
immediately following month.

(i)        Notwithstanding anything to the contrary in this Section 8.1 or
Section 4.1, the additional withdrawal restrictions stated in Section 5.6(h)
shall apply to all Participants who are Insiders, as that term is defined
Section 5.6(h).

8.2        Distributions Upon Termination of Employment or Disability.

(a)        Subject to the provisions of Section 8.6, if a Participant incurs a
Severance for any reason (including Disability) other than death, all or a
portion of such Participant’s entire vested portion of his or her Accounts under
the Plan shall be (i) distributed directly to such Participant or (ii) at the
election of the Participant, distributed as an Eligible Rollover Distribution
and paid directly by the Trustee to the trustee of an Eligible Retirement Plan.

(b)        Any distribution made pursuant to paragraph (a) shall be paid no more
than once in any calendar quarter in amounts of at least $500 (or the
Participant’s entire vested portion of his or her Accounts under the Plan if
lesser) and shall be made in cash except to the extent any of the vested portion
of such Participant’s Accounts is invested in the Company Stock Fund or in the
stock of Advanced Medical Optics, Inc. then, to the extent so invested, such
distribution may be made in Company Stock or in the stock of Advanced Medical
Optics, Inc. at the election of the Participant.

(c)        Notwithstanding the provisions contained in the foregoing paragraphs
of this Section 8.2 or Section 8.1, any provision which restricts or would deny
a Participant through the withholding of consent or the exercise of discretion
by some person or persons other than the Participant (and where relevant, other
than the Participant’s spouse) of an alternative form of benefit, in violation
of Code Section 411(d)(6) and the regulation promulgated thereunder, is hereby
amended by the deletion of the consent and/or discretion requirement.

(d)        Notwithstanding the provisions contained in the foregoing paragraphs
of this Section 8.2 or Section 8.1, upon receipt of a Qualified Domestic
Relations Order, the amount payable to an Alternate Payee (as such terms are
described in Section 15.2) may be distributed to the Alternate Payee as soon as
administratively feasible.

 

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8.3        Distribution Upon Death of Participant.  Subject to the provisions of
Section 8.6, in the event of the death of a Participant, the entire vested
portion of the Participant’s Accounts shall be distributed to the surviving
spouse as Beneficiary (if still alive) unless the Participant designated another
Beneficiary pursuant to Section 8.4. The Participant’s Beneficiary (or prior to
January 1, 2007, a Beneficiary who is the surviving spouse of the Participant),
may elect to have an Eligible Rollover Distribution paid directly by the Trustee
to the trustee of an Eligible Retirement Plan. Distributions to the Beneficiary
pursuant to this Section 8.3 shall be in the same form as specified in
Section 8.2(b) above, as elected by the Beneficiary. All such distributions
shall be made as soon as practicable after the death of the Participant. A
Beneficiary may not elect to defer such a distribution.

8.4        Designation of Beneficiary.  At any time, and from time to time, each
Participant shall have the unrestricted right to designate the Beneficiary or
Beneficiaries to receive the entire vested portion of his or her Accounts upon
his or her death and to revoke any such designation subject to paragraphs
(a) and (b) below. Each such designation shall be evidenced by a written
instrument signed by the Participant and filed with the Committee.

(a)        If the Participant is married and designates a Beneficiary other than
his or her spouse, said designation shall not be honored by the Committee unless
accompanied by the written consent of said spouse to said designation. Such
consent (i) must designate a Beneficiary which may not be changed without the
consent of the spouse (or the consent of the spouse expressly permits
designation by the Participant without any further consent by the spouse),
(ii) must acknowledge the effect of the designation, and (iii) must be witnessed
by a Plan representative or a notary public. No consent of such spouse shall be
necessary if it is established to the satisfaction of a Plan representative that
the consent required under this paragraph (a) 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 (a) or any determination that the
consent of the spouse cannot (or need not) be obtained, shall be effective only
with respect to that spouse. If a Participant becomes married following his or
her designation of a Beneficiary other than his or her spouse, such designation
shall be ineffective unless the spousal consent requirements of this paragraph
are satisfied with respect to such spouse (subject, however, to the provisions
of Article XV regarding Qualified Domestic Relations Orders).

(b)        If the Participant is married and does not designate a Beneficiary,
the Participant’s spouse shall be his or her Beneficiary for purposes of this
Section. If the deceased Participant is not married and shall have failed to
designate a Beneficiary, or if the Committee shall be unable to locate the
designated Beneficiary after reasonable efforts have been made, or if such
Beneficiary shall be deceased, distribution of the Participant’s death benefit
shall be made by payment of the deceased Participant’s entire interest in the
Trust to his or her personal representative in a single lump-sum payment. In the
event the deceased Participant is not a resident of California at the date of
his or her death, the Committee, in its discretion, may require the
establishment of ancillary

 

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administration in California. If the Committee cannot locate a qualified
personal representative of the deceased Participant, or if administration of the
deceased Participant’s estate is not otherwise required, the Committee, in its
discretion, may pay the deceased Participant’s interest in the Trust to his or
her heirs at law (determined in accordance with the laws of the State of
California as they existed at the date of the Participant’s death).

8.5        Hardship Withdrawal Rules.    A hardship withdrawal shall be made to
a Participant only if the Committee (or its representative) determines that the
Participant has an immediate and heavy financial need and that a withdrawal from
the Plan is necessary to satisfy such need as set forth in paragraphs (a) and
(b) below.

(a)        A hardship withdrawal shall be authorized by the Committee only if
the Committee, based upon the Participant’s representation and such other facts
as are known to the Committee, determines that the requested withdrawal is on
the account of:

(i)        Medical expenses described in Code Section 213(d) incurred by the
Participant or the Participant’s spouse, Beneficiary or any dependents of the
Participant (as defined in Code Section 152, without regard to Code
Section 152(b)(1), (b)(2), and (d)(1)(B));

(ii)       The purchase (excluding mortgage payments) of a principal residence
for the Participant only;

(iii)      The payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the Participant or the
Participant’s spouse, Beneficiary, children, or dependents (as defined in
subparagraph (i) above);

(iv)      The need to prevent the eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the Participant’s
principal residence;

(v)       The payment of burial or funeral expenses for the Participant’s
parents, spouse, Beneficiary, children, or dependents (as defined in
subparagraph (i) above);

(vi)      The payment of expenses to repair damage of the Participant’s
principal residence that would qualify as a casualty loss under Code
Section 165; or

(vii)      Any other situation deemed as immediate and heavy financial needs by
the Internal Revenue Service through the publication of revenue rulings,
notices, and other documents of general applicability.

 

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(b)        A hardship withdrawal shall be authorized by the Committee only if
the Committee, based upon the Participant’s representation and such other facts
as are known to the Committee, determines that all of the following conditions
are or will be satisfied:

(i)              The amount of the withdrawal is not in excess of the amount
required to relieve the financial need (including amounts necessary to pay any
federal, state, or local income taxes or penalties reasonably anticipated to
result from the withdrawal).

(ii)             The Participant has obtained all distributions (including
distributions of ESOP dividends or Code Section 404(k)), other than hardship
withdrawals, and all nontaxable (at the time of the loan) loans from the Plan or
any other plan maintained by the Company.

(iii)            The Participant shall not be permitted to make Before Tax
Deposits or After Tax Deposits during the 6-month period beginning as soon as
administratively feasible following the date of the hardship withdrawal from the
Plan or any other plan maintained by the Company.

(c)        Notwithstanding the provisions of Section 8.1(g), all hardship
withdrawals shall be made in cash regardless of the fund from which such
withdrawal is made. The Committee may, at its discretion, establish written
procedures whereby Participants may receive an estimated prepayment of a
hardship withdrawal based on the last available valuation of such Participant’s
Accounts with a reconciling adjustment made to such Participant’s Accounts after
current valuation data is available.

8.6        Distribution Rules.  Notwithstanding any other provisions of this
Article VIII of the Plan regarding distributions of Participant’s Accounts, the
following additional rules shall apply to all such distributions.

(a)        In no event shall any benefits under the Plan, including benefits
upon retirement, Severance, or Disability, be paid (or commence to be paid) to a
Participant prior to the “Consent Date” (as defined herein) unless the
Participant consents in writing to the payment (or commencement of payment) of
such benefits prior to said Consent Date. As used herein, the term “Consent
Date” shall mean the later of (i) the Participant’s 62nd birthday, or (ii) the
Participant’s Normal Retirement Age. Notwithstanding the foregoing, the
provisions of this paragraph shall not apply (i) following the Participant’s
death, or (ii) to the extent paragraph (b) below applies.

(b)        Notwithstanding anything to the contrary in the Plan, if the total
amount of the vested portion of a Participant’s Accounts does not exceed $1,000
($5,000, prior to March 28, 2005), the vested portion of such Participant’s
Accounts shall be distributed, in a single lump-sum payment, as soon as
practicable following the Participant’s Severance Date. For purposes of this
paragraph (b), Rollover Contributions and the earnings thereon, shall be
included in determining the value of the vested portion of a Participant’s

 

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Accounts for distributions made after December 31, 2001 with respect to
Participants who incur a Severance after December 31, 2001.

(c)        Unless a Participant elects otherwise pursuant to paragraph (a)
above, distributions of the vested portion of a Participant’s Accounts shall
commence no later than the 60th day after the close of the Plan Year in which
the latest of the following events occurs: (i) the Participant’s Normal
Retirement Age; (ii) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or (iii) the termination of the
Participant’s employment with the Company.

(d)        Minimum Required Distributions during Participant’s Lifetime.
Notwithstanding anything to the contrary in the Plan unless the entire vested
portion of a Participant’s Accounts is distributed in a single sum on or before
the Required Beginning Date, distributions shall be made in accordance with this
paragraph (d) as of the first Distribution Calendar Year and the entire vested
portion of a Participant’s Accounts shall be distributed, or begin to be
distributed, to the Participant no later than the Participant’s Required
Beginning Date as set forth below:

(i)          Amount of Minimum Required Distribution for each Distribution
Calendar Year. During the Participant’s lifetime, the minimum amount that shall
be distributed for each Distribution Calendar Year is the lesser of:

    (A)        the quotient obtained by dividing the Participant’s Account
Balance by the distribution period in the Uniform Lifetime Table set forth in
Regulation Section 1.401(a)(9)-9, using the Participant’s age as of the
Participant’s birthday in the Distribution Calendar Year; or

    (B)        if the Participant’s sole Designated Beneficiary for the
Distribution Calendar Year is the Participant’s spouse, the quotient obtained by
dividing the Participant’s Account Balance by the number in the Joint and Last
Survivor Table set forth in Regulation Section 1.401(a)(9)-9, using the
Participant’s and spouse’s attained ages as of the Participant’s and spouse’s
birthdays in the Distribution Calendar Year.

(ii)         Lifetime Minimum Required Distributions continue through Year of
Participant’s Death. Minimum required distributions shall be determined under
this paragraph (d) beginning with the first Distribution Calendar Year and up to
and including the Distribution Calendar Year that includes the Participant’s
date of death.

(iii)        Minimum Required Distributions for the 2002 Distribution Calendar
Year. Notwithstanding the foregoing, with respect to distributions made for the
2002 Distribution Calendar Year, the Plan will apply the minimum distribution
requirements of Code Section 401(a)(9) in accordance with the

 

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regulations under Code Section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary.

  (iv)        Treasury Regulations Incorporated by Reference. All distributions
required under this paragraph shall be determined and made in accordance with
the Treasury Regulations under Code Section 401(a)(9).

(e)        Minimum Required Distributions following Participant’s Death.
Notwithstanding anything to the contrary in the Plan if a Participant dies
before the entire vested portion of his or her Accounts is distributed, the
following rules shall apply:

(i)        Required Distribution Dates. If a Participant dies before the entire
vested portion of his or her Accounts is distributed, distributions shall be
made, or begin to be made, no later than as follows:

(A)    If the Participant’s surviving spouse is the Participant’s sole
Designated Beneficiary, then, except as provided in subparagraph (iv) below,
distributions to the surviving spouse shall begin by December 31 of the calendar
year immediately following the calendar year in which the Participant died, or
by December 31 of the calendar year in which the Participant would have attained
age 70-1/2, if later.

(B)    If the Participant’s surviving spouse is not the Participant’s sole
Designated Beneficiary, then, except as provided in subparagraph (iv) below,
distributions to the Designated Beneficiary shall begin by December 31 of the
calendar year immediately following the calendar year in which the Participant
died.

(C)    If there is no Designated Beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire interest
shall be distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.

(D)    If the Participant’s surviving spouse is the Participant’s sole
Designated Beneficiary and the surviving spouse dies after the Participant but
before distributions to the surviving spouse begin, this subparagraph (i), other
than clause (A), shall apply as if the surviving spouse were the Participant.

    For purposes of this subparagraph (i) and subparagraphs (ii) and
(iii) below, unless clause (D) above applies, distributions are considered to
begin on the Participant’s Required Beginning Date. If clause (D) applies,
distributions are considered to begin on the date distributions are required to
begin to the surviving spouse under clause (A).

 

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    (ii)        Forms of Distribution if Participant Dies On or After
Distributions Begin. Unless the entire vested portion of a Participant’s
Accounts is distributed in a single sum on or before the dates set forth in
subparagraph (i) above, the entire vested portion of a Participant’s Accounts
shall be distributed, or begin to be distributed, as set forth below:

(A)    Participant Survived by Designated Beneficiary. If the Participant dies
on or after the date distributions begin and there is a Designated Beneficiary,
the minimum amount that shall be distributed for each Distribution Calendar Year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s Account Balance by the longer of the remaining life expectancy
of the Participant or the remaining life expectancy of the Participant’s
Designated Beneficiary, determined as follows:

(1)        The Participant’s remaining life expectancy is calculated using the
age of the Participant in the year of death, reduced by one for each subsequent
year.

(2)        If the Participant’s surviving spouse is the Participant’s sole
Designated Beneficiary, the remaining life expectancy of the surviving spouse is
calculated for each Distribution Calendar Year after the year of the
Participant’s death using the surviving spouse’s age as of the spouse’s birthday
in that year. For Distribution Calendar Years after the year of the surviving
spouse’s death, the remaining life expectancy of the surviving spouse is
calculated using the age of the surviving spouse as of the spouse’s birthday in
the calendar year of the spouse’s death, reduced by one for each subsequent
calendar year.

(3)        If the Participant’s surviving spouse is not the Participant’s sole
Designated Beneficiary, the Designated Beneficiary’s remaining life expectancy
is calculated using the age of the beneficiary in the year following the year of
the Participant’s death, reduced by one for each subsequent year.

(B)    No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no Designated Beneficiary as of September 30 of
the year after the year of the Participant’s death, the minimum amount that
shall be distributed for each Distribution Calendar Year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
Account Balance by the Participant’s remaining life expectancy calculated

 

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using the age of the Participant in the year of death, reduced by one for each
subsequent year.

    (iii)        Forms of Distribution if Participant Dies Before Distributions
Begin. Unless the entire vested portion of a Participant’s Accounts is
distributed in a single sum on or before the dates set forth in subparagraph (i)
above, the entire vested portion of a Participant’s Accounts shall be
distributed, or begin to be distributed, as set forth below:

(A)        Participant Survived by Designated Beneficiary. Except as provided in
subparagraph (iv) below, if the Participant dies before the date distributions
begin and there is a Designated Beneficiary, the minimum amount that shall be
distributed for each Distribution Calendar Year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
Account Balance by the remaining life expectancy of the Participant’s Designated
Beneficiary, determined as provided in subparagraph (ii)(A) above.

(B)        No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no Designated Beneficiary as of September 30 of
the year following the year of the Participant’s death, distribution of the
Participant’s entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant’s death.

(C)        Death of Surviving Spouse Before Distributions to Surviving Spouse
Are Required to Begin. If the Participant dies before the date distributions
begin, the Participant’s surviving spouse is the Participant’s sole Designated
Beneficiary, and the surviving spouse dies before distributions are required to
begin to the surviving spouse under subparagraph (i)(A) above, this
subparagraph (iii) shall apply as if the surviving spouse were the Participant.

    (iv)        Election to Apply 5-Year Rule to Distributions to Designated
Beneficiaries. If the Participant dies before the entire vested portion of his
or her Accounts is distributed and there is a Designated Beneficiary,
distribution to the Designated Beneficiary is not required to begin by the date
specified in subparagraph (i) if the Participant or Designated Beneficiary
elects that the entire vested portion of the Participant’s Accounts be
distributed to the Designated Beneficiary by December 31 of the calendar year
containing the fifth anniversary of the Participant’s death. If the
Participant’s surviving spouse is the Participant’s sole Designated Beneficiary
and the surviving spouse dies after the Participant but before distributions to
either the Participant or the surviving spouse begin, an election under this
subparagraph shall apply as if the surviving spouse were the Participant. The
election must be made no later than the earlier of September 30 of the calendar
year in which distribution would be required to begin under

 

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subparagraph (i), or by September 30 of the calendar year which contains the
fifth anniversary of the Participant’s (or, if applicable, surviving spouse’s)
death. If neither the Participant nor Designated Beneficiary makes an election
under this subparagraph, distributions shall be made in accordance with
subparagraphs (i) and (iii).

(v)        Election to Allow Designated Beneficiary Receiving Distributions
under 5-Year Rule to Elect Life Expectancy Distributions. A Designated
Beneficiary who is receiving payments under the 5-year rule described in
subparagraph (iv) above, may make a new election to receive payments under the
life expectancy rule until December 31, 2003, provided that all amounts that
would have been required to be distributed under the life expectancy rule for
all Distribution Calendar Years before 2004 are distributed by the earlier of
December 31, 2003 or the end of the 5-year period.

(vi)       Minimum Required Distributions for the 2002 Distribution Calendar
Year. Notwithstanding the foregoing, with respect to distributions made for the
2002 Distribution Calendar Year, the Plan shall apply the minimum distribution
requirements of Code Section 401(a)(9) in accordance with the regulations under
Code Section 401(a)(9) that were proposed on January 17, 2001, notwithstanding
any provision of the Plan to the contrary.

(vii)      Treasury Regulations Incorporated by Reference. All distributions
required under this paragraph shall be determined and made in accordance with
the Treasury Regulations under Code Section 401(a)(9).

(f)        Definitions for Minimum Required Distribution Rules. For purposes of
paragraphs (d) and (e) above, the following definitions shall apply:

(i)        “Account Balance” shall mean the account balance of a Participant’s
Account as of the last valuation date in the calendar year immediately preceding
the Distribution Calendar Year (valuation calendar year) increased by the amount
of any contributions made and allocated or forfeitures allocated to a
Participant’s Accounts as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation calendar
year after the valuation date. The Account Balance for the valuation calendar
year includes any amounts rolled over or transferred to the plan either in the
valuation calendar year or in the Distribution Calendar Year if distributed or
transferred in the valuation calendar year.

(ii)       “Designated Beneficiary” shall mean the individual who is designated
as the Beneficiary under Section 8.4 and is the Designated Beneficiary under
Code Section 401(a)(9) and Regulation Section 1.401(a)(9)-1, Q&A-4.

(iii)      “Distribution Calendar Year” shall mean a calendar year for which a
minimum distribution is required. For distributions beginning before the

 

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Participant’s death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant’s
Required Beginning Date. For distributions beginning after the Participant’s
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin under paragraph (e). The minimum required
distribution for the Participant’s first Distribution Calendar Year shall be
made on or before the Participant’s Required Beginning Date. The minimum
required distribution for other Distribution Calendar Years, including the
minimum required distribution for the Distribution Calendar Year in which the
Participant’s Required Beginning Date occurs, shall be made on or before
December 31 of that Distribution Calendar Year.

(iv)        “Life expectancy” shall mean as computed by use of the Single Life
Table in Regulation Section 1.401(a)(9)-9.

(v)         “Required Beginning Date” shall mean the April 1 of the calendar
year immediately following the later of the calendar year in which the
Participant attains age 70-1/2 or incurs a Severance; provided, however, if such
Participant is a Five Percent Owner (as defined in Code Section 416(i) and
applicable regulations) with respect to the Plan Year ending in the calendar
year in which such Participant attains age 70-1/2, the Required Beginning Date
shall be April 1 of the calendar year immediately following the year in which
such Participant attains age 70-1/2.

(g)        If it is not administratively practical to calculate and commence
payments by the latest date specified in the rules of paragraphs (b), (c),
(d) and (e) above because the amount of the Participant’s benefit cannot be
calculated, or because the Committee is unable to locate the Participant (or
eligible Beneficiary) after making reasonable efforts to do so, the payment
shall be made as soon as is administratively possible (but not more than
60 days) after the amount of the benefit can be ascertained or the Participant
(or Beneficiary) can be located.

8.7        Forfeitures.  The non-vested portion of a Participant’s Accounts
shall be forfeited in accordance with the following rules:

(a)        In the event a Participant who incurs a Severance receives a
distribution of the entire vested portion of his or her Accounts when he or she
is not fully vested in such Accounts, the non-vested portion of the
Participant’s Accounts shall be forfeited as of the Participant’s distribution
date. A Participant who incurs a Severance when no portion of his or her
Accounts are vested shall be deemed to have received a distribution pursuant to
this paragraph (a) as of his or her Severance Date and his or her Accounts shall
be forfeited as of the Participant’s Severance Date. If the Participant is
rehired by the Company prior to the date he or she incurs five consecutive
Breaks in Service, the amounts forfeited shall be reinstated to the
Participant’s Accounts as of the Participant’s Reemployment Commencement Date
(without regard to any interest or investment earnings on such amount).

 

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(b)        In the event a Participant who incurs a Severance does not receive a
distribution of the entire vested portion of his or her Accounts when he or she
is not fully vested in such Accounts, the Participant’s Accounts shall be held
by the Trustee as provided in Section 6.8 for 90 days at which time, the
nonvested portion of the Participant’s Accounts shall be forfeited as of the
last day of the month in which the 90-day period ends. If the Participant is
rehired by the Company prior to the date he or she incurs five consecutive
Breaks in Service, the amount so forfeited plus an amount equal to the rate of
return that the amount forfeited would have received but for forfeiture pursuant
to this paragraph (b) shall be reinstated to the Participant’s Accounts as of
the Participant’s Reemployment Commencement Date. The Company shall be obligated
to contribute to the Trust Fund any amounts necessary after application of
Section 6.3 to reinstate a Participant’s Accounts if reinstatement is required
under the provisions of this paragraph.

(c)        At any relevant time after application of paragraphs (a) and
(b) above, a Participant’s vested portion of his or her Accounts 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 7.2

AB = the Account balance at the relevant time

D = the total amount of any distributions from the Accounts since such Severance

(d)        Forfeitures shall be allocated in the manner provided in Section 6.3
at such times as determined by the Committee and to the extent available shall
be used to reduce contributions made by the Company pursuant to Sections 5.3 and
5.4.

8.8        Valuation of Accounts Upon Distribution.  For the purpose of any
distribution of Accounts under this Article VIII, the amount of such
distribution shall be based on the value of a Participant’s Accounts as of the
Valuation Date in the month in which the application for such distribution is
deemed perfected. If a properly completed distribution application is received
by the Committee during any month and on or before the fifteenth day of such
month, the distribution application shall be deemed perfected in such month,
otherwise such distribution application shall be deemed perfected in the
immediately following month.

8.9        Lapsed Benefits.

(a)        In the event that a Participant’s Accounts is payable under the Plan
and after reasonable efforts the Participant cannot be located for the purpose
of paying his or her Accounts during a period of three consecutive years, the
Participant shall be

 

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presumed dead and his or her Accounts shall, upon the expiration of that three
year period, be paid to the Participant’s Beneficiary. If the Participant’s
Beneficiary cannot be located for the purpose of paying the Participant’s
Accounts for the following two years, then the Participant’s Accounts shall,
upon expiration of such two-year period, be forfeited and reallocated to the
Accounts of other Participants in accordance with Section 6.3.

(b)        If a Participant dies prior to receiving a distribution of the entire
vested portion of his or her Accounts (other than a Participant presumed to have
died as provided above) and if after reasonable efforts the Beneficiary of the
Participant cannot be located for the purpose of paying the Participant’s
Accounts during a period of five consecutive years, the benefit shall, upon
expiration of such five-year period, be forfeited and reallocated to the
Accounts of the other Participants in accordance with Section 6.3.

(c)        For purposes of this Section, the term “Beneficiary” shall include
any person entitled under Section 8.4 to receive the vested interest of a
deceased Participant or deceased designated Beneficiary. It is the intention of
this Section that during the relevant waiting period (two years or five years)
the vested portion of a Participant’s Accounts shall be distributed to a
Beneficiary in a lower priority category under Section 8.4 if no Beneficiary in
a higher priority category can be located by the Committee after reasonable
efforts have been made.

(d)        Notwithstanding the foregoing rules, if after such a forfeiture the
Participant or a Beneficiary claims the forfeited Accounts, the amount forfeited
shall be reinstated (without regard to any interest or investment earnings on
such amount) and paid to the Participant or Beneficiary as soon as practical
following the production of reasonable proof of the identity of the Participant
or Beneficiary and his or her entitlement to the amounts forfeited (determined
pursuant to the Plan’s normal claim procedures under Section 9.10).

(e)        The Committee shall direct the Trustee with respect to the procedures
to be followed concerning a missing Participant (or Beneficiary), and the
Company shall be obligated to contribute to the Trust Fund any amounts necessary
after the application of Section 6.3 to pay any reinstated benefit after it has
been forfeited pursuant to the provisions of this Section.

8.10      Persons Under Legal Disability.

(a)        If any payee under the Plan is a minor or if the Committee reasonably
believes that any payee is legally incapable of giving a valid receipt and
discharge for any payment due him/her, the Committee may have the payment, or
any part thereof, made to the person (or persons or institution) whom it
reasonably believes is caring for or supporting the payee, unless it has
received due notice of claim therefor from a duly appointed guardian or
committee of the payee.

 

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(b)        Any such payment shall be a payment from the Accounts of the payee
and shall, to the extent thereof, be a complete discharge of any liability under
the Plan to the payee.

8.11      Additional Documents.

(a)        The Committee or the Company may require satisfactory proof of any
matter under the Plan from or with respect to any Employee, Participant, or
Beneficiary, and no person shall be entitled to receive any benefits under the
Plan until the required proof shall be furnished.

(b)        The Committee or Trustee, or both, may require the execution and
delivery of such documents, papers and receipts as the Committee or Trustee may
determine necessary or appropriate in order to establish the fact of death of
the deceased Participant and of the right and identity of any Beneficiary or
other person or persons claiming any benefits under this Article VIII.

(c)        The Committee or the Trustee, or both, may, as a condition precedent
to the payment of death benefits hereunder, require an inheritance tax release
and/or such security as the Committee or Trustee, or both, may deem appropriate
as protection against possible liability for State or Federal death taxes
attributable to any death benefits.

8.12      Trustee-to-Trustee Transfers.  In the case of any Participant or
Participants who have terminated employment with the Company and all Affiliated
Companies and subsequently become employed by an unrelated successor employer,
the Committee, shall at the request of such Participant or Participants, direct
the Trustee to transfer the assets in the Accounts of such Participant or
Participants directly to the trustee of any retirement plan maintained by such
successor employer or employers in lieu of any distribution described in the
preceding provisions of this Article VIII but only if (i) the retirement plan
maintained by such successor employer is determined to the satisfaction of the
Committee to be qualified under Code Section 401, (ii) the sponsor and trustee
of such plan consent to the transfer, and (iii) such transfer satisfies the
conditions of Section 12.2 hereof.

8.13      Loans to Participants.  A Participant may borrow from his or her
Accounts except from his or her Retirement Contributions Account while an
Employee in accordance with the following rules:

(a)        Subject to minimum and maximum loan requirements, a Participant may
borrow up to 50% of his or her After Tax Deposits Account, Before Tax Deposits
Account, Rollover Contributions Account, and the vested portion of his or her
Matching Contributions Account. Only one loan may be outstanding to a
Participant any time. The minimum loan amount shall be $1,000 and the maximum
loan amount shall be $50,000. The $50,000 maximum loan amount shall be reduced
by the excess, if any, of the highest outstanding balance of loans from the Plan
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ending on the day before the loan is made over the outstanding balance of loans
on the date the loan is made.

(b)        A loan to a Participant shall be made solely from his or her
Account(s) and shall be considered an investment directed by the Participant.
Loan amounts shall be funded from the Participant’s Accounts as determined under
procedures established by the Committee; provided, however, that principal
repayments shall be credited to the Participant’s Accounts in the inverse of the
order used to fund the loan and interest payments shall be credited to the
Participant’s Accounts in direct proportion to the principal repayments.

(c)        A loan to a Participant shall bear an interest rate equal to the
prime rate reported in the Wall Street Journal on first business day of the
month in which the loan is granted (the last business day of the previous month
for loans made prior to July 1, 2000) plus one percent (1%) and shall remain
fixed throughout the term of the loan. Notwithstanding the preceding sentence,
if the Committee determines that such rate is not reasonable or otherwise not in
accordance with applicable requirements under the Code or ERISA, the Committee
shall set an alternate interest rate at the time that the loan is taken.

(d)        A loan to a Participant shall have a definite maturity date. Loans,
other than loans made for the purpose of acquiring the principal residence of
the Participant, shall be made for a period not to exceed five (5) years. Loans
made for the purpose of acquiring the principal residence of the Participant
shall be made for a period not to exceed fifteen (15) years.

(e)        A loan to a Participant shall have a definite repayment schedule and
shall be amortized on a substantially level basis with repayments occurring not
less frequently than quarterly. Notwithstanding the foregoing, the loan
repayments shall be suspended during an unpaid Leave of Absence not to exceed
one year at which time loan repayments shall resume in accordance with
Regulation Section 1.72(p)-1. In the case of a Leave of Absence due to uniformed
service, loan repayments shall be suspended as permitted under Code
Section 414(u)(4) and in accordance with Regulation Section 1.72(p)-1.

(f)        A loan to a Participant shall be secured by the vested portion of the
Participant’s Account(s). No more than 50% of the Participant’s vested
Account(s) as determined on the date the loan is issued shall be considered by
the Plan as security for a loan. A Participant who borrows from the Plan hereby
agrees that, unless expressly provided otherwise in loan documents, any such
loan is automatically secured by 50% of his or her vested Account(s).

(g)        A loan to a Participant shall be evidenced by a promissory note
and/or such other documentation as required by the Committee.

 

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(h)        A loan to a Participant shall be treated as a distribution unless the
entire principal amount and any interest accrued thereon is repaid within ninety
(90) days after the occurrence of a Participant’s Severance. Absent repayment by
the Participant, the Committee shall instruct the Trustee to distribute the note
to the Participant as part of his or her distribution and the Participant’s
vested Account(s) shall be reduced to the extent of such distribution and
treatment shall be in accordance with Regulation Section 1.72(p)-1.

(i)        The Committee shall establish the participant loan program and have
the duty to manage and administer the participant loan program in accordance
with the terms and provisions of this Section. The Committee shall have, but not
by way of limitation, the following discretionary powers and authority:

(i)        To determine the manner in which loan repayments shall occur whether
it be through automatic payroll deductions or otherwise.

(ii)       To determine the amount of loan repayments following suspension due
to an unpaid Leave of Absence subject to the requirement that the loan must be
repaid by the latest date permitted under paragraph (d).

(iii)      To establish any fees, including but not limited to application fees
and maintenance fees, and the manner in which such fees are collected from the
Participant.

(iv)      To consider only those factors which would be considered in a normal
commercial setting by persons in the business of making similar types of loans
in establishing the participant loan program. Such factors may include the
applicant’s credit worthiness and financial need, but may not include any factor
which would discriminate against Participants who are not Highly Compensated
Employees. Loans shall be made available to all Participants without regard to a
Participant’s race, color, religion, sex, age or national origin and shall not
be made available to Participants who are Highly Compensated Employees in an
amount greater than the amount made available to Participants who are not Highly
Compensated Employees.

 

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ARTICLE IX

OPERATION AND ADMINISTRATION

9.1        Appointment of Committee.  There is hereby created a committee (the
“Committee”) which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall from
time to time fill all vacancies occurring in said Committee. The members of the
Committee shall constitute the Named Fiduciaries of the Plan within the meaning
of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 5.9
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts and solely for purposes of
Section 5.10, Participants shall be Named Fiduciaries with respect to shares of
Company Stock allocated to their respective Accounts on matters as to which they
are entitled to provide voting directions.

9.2        Appointment of Investment Subcommittee.  There is hereby created an
investment subcommittee of the Committee (hereinafter referred to as the
“Investment Subcommittee” for purposes of this Article IX) which shall exercise
management and control over the assets of the Trust. The Board of Directors,
acting through its Organization and Compensation Committee, shall determine the
number of members of the Investment Subcommittee. The members of the Investment
Subcommittee shall be appointed by the Board of Directors, acting through its
Organization and Compensation Committee, and shall from time to time appoint
such members to or fill any vacancies in the Investment Subcommittee. The
members of the Investment Subcommittee shall constitute the Named Fiduciaries of
the Plan within the meaning of Section 402(a)(2) of ERISA with respect to the
management and control of the assets of the Trust; provided that solely for
purposes of Section 5.9 hereof, Participants shall be Named Fiduciaries with
respect to shares of Company Stock allocated to their respective Accounts and
solely for purposes of Section 5.10, Participants shall be Named Fiduciaries
with respect to shares of Company Stock allocated to their respective Accounts
on matters as to which they are entitled to provide voting directions.

9.3        Transaction of Business.  The Committee and Investment Subcommittee
shall transact business as provided in paragraphs (a) and (b), respectively:

(a)        A majority of the Committee shall constitute a quorum for the
transaction of business. Actions of the Committee may be taken either by vote at
a meeting or in writing without a meeting. All action taken by the Committee at
any meeting shall be by a vote of the majority of those present at such meeting.
All action taken in writing without a meeting shall be by a vote of the majority
of those responding in writing. All notices, advices, directions and
instructions to be transmitted by the Committee shall be in writing and signed
by or in the name of the Committee. In all its communications with the Trustee,
the Committee may, by either of the majority actions specified above, authorize
any one or more of its members to execute any document or documents on behalf of
the Committee, in which event it shall notify the Trustee in writing of such
action and the name or names of its members so designated and the Trustee shall

 

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thereafter accept and rely upon any documents executed by such member or members
as representing action by the Committee until the Committee shall file with the
Trustee a written revocation of such designation.

(b)        A majority of the Investment Subcommittee shall constitute a quorum
for the transaction of business. Actions of the Investment Subcommittee may be
taken either by vote at a meeting or in writing without a meeting. All action
taken by the Investment Subcommittee at any meeting shall be by a vote of the
majority of those present at such meeting. All action taken in writing without a
meeting shall be by a vote of the majority of those responding in writing. All
notices, advices, directions and instructions to be transmitted by the
Investment Subcommittee shall be in writing and signed by or in the name of the
Investment Subcommittee. In all its communications with the Trustee, the
Investment Subcommittee may, by action specified above, authorize any one or
more of its members to execute any document or documents on behalf of the
Investment Subcommittee, in which event it shall notify the Trustee in writing
of such action and the name or names of its members so designated and the
Trustee shall thereafter accept and rely upon any documents executed by such
member or members as representing action by the Investment Subcommittee until
the Investment Subcommittee shall file with the Trustee a written revocation of
such designation.

9.4        Voting.  Any member of the Committee who is also a Participant
hereunder shall not be qualified to act or vote on any matter relating solely to
himself or herself, and upon such matter his or her presence at a meeting shall
not be counted for the purpose of determining a quorum. If, at any time a member
of the Committee is not so qualified to act or vote, the qualified members of
the Committee shall be reduced below two (2) and the Board of Directors shall
promptly appoint one or more special members to the Committee so that there
shall be at least one qualified member to act upon the matter in question. Such
special Committee members shall have power to act only upon the matter for which
they were especially appointed and their tenure shall cease as soon as they have
acted upon the matter for which they were especially appointed.

9.5        Responsibility of Committees.  The responsibilities of the Committee
and Investment Subcommittee shall be as provided in paragraphs (a) and (b),
respectively:

(a)        The authority to manage and control the operation and administration
of the Plan, the general administration of the Plan, the responsibility for
carrying out the Plan, and to the extent provided in Section 9.7(f), the
authority and responsibility to manage and control the assets of the Trust are
hereby delegated by the Board of Directors to and vested in the Committee except
to the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the limitations of the Plan, the Committee shall, from time to time,
establish rules for the performance of its functions and the administration of
the Plan. In the performance of its functions, the Committee shall not
discriminate in favor of Highly Compensated Employees.

(b)        The authority and responsibility to manage and control the assets of
the Trust are hereby delegated by the Board of Directors, acting through its
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Compensation Committee, to and vested in the Investment Subcommittee except to
the extent reserved to the Board of Directors or the Board of Directors, acting
through its Organization and Compensation Committee, or the Sponsor. Subject to
the limitations of the Plan, the Investment Subcommittee shall, from time to
time, establish rules for the performance of its functions.

9.6        Committee Powers.  The Committee shall have all discretionary powers
necessary to supervise the administration of the Plan and control its
operations. In addition to any discretionary powers and authority conferred on
the Committee elsewhere in the Plan or by law, the Committee shall have, but not
by way of limitation, the following discretionary powers and authority:

(a)        To designate agents to carry out responsibilities relating to the
Plan, other than fiduciary responsibilities as provided in Section 9.7.

(b)        To employ such legal, actuarial, medical, accounting, clerical, and
other assistance as it may deem appropriate in carrying out the provisions of
the Plan, including one or more persons to render advice with regard to any
responsibility any Named Fiduciary or any other fiduciary may have under the
Plan.

(c)        To establish rules and regulations from time to time for the conduct
of the Committee’s business and the administration and effectuation of the Plan.

(d)        To administer, interpret, construe, and apply the Plan and to decide
all questions which may arise or which may be raised under the Plan by any
Employee, Participant, former Participant, Beneficiary or other person
whatsoever, including but not limited to all questions relating to eligibility
to participate in the Plan, the amount of Credited Service of any Participant,
and the amount of benefits to which any Participant or his or her Beneficiary
may be entitled.

(e)        To determine the manner in which the assets of the Plan, or any part
thereof, shall be disbursed.

(f)        Subject to provisions (a) through (d) of Section 10.1, to make
administrative amendments to the Plan that do not cause a substantial increase
or decrease in benefit accruals to Participants and that do not cause a
substantial increase in the cost of administering the Plan.

(g)        To perform or cause to be performed such further acts as it may deem
to be necessary, appropriate or convenient in the efficient administration of
the Plan.

Any action taken in good faith by the Committee in the exercise of discretionary
powers conferred upon it by the Plan shall be conclusive and binding upon the
Participants and their Beneficiaries. All discretionary powers conferred upon
the Committee shall be absolute; provided, however, that all such discretionary
power shall be exercised in a uniform and nondiscriminatory manner.

 

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9.7        Additional Powers of Committee.    In addition to any discretionary
powers or authority conferred on the Committee elsewhere in the Plan or by law,
such Committee shall have the following discretionary powers and authority:

(a)        To appoint one or more Investment Managers pursuant to Section 5.16
to manage and control any or all of the assets of the Trust not invested or to
be invested in Company Stock.

(b)        To designate persons (other than the members of the Committee) to
carry out fiduciary responsibilities, other than any responsibility to manage or
control the assets of the Trust;

(c)        To allocate fiduciary responsibilities among the members of the
Committee, other than any responsibility to manage or control the assets of the
Trust;

(d)        To cancel any such designation or allocation at any time for any
reason;

(e)        To direct the voting of any Company Stock or any other security held
by the Trust subject to Sections 5.10 and 9.16 hereof; and

(f)        To exercise management and control over the assets of the Trust to
the extent provided in paragraph (a) above and in Section 9.9 (relating to
review by the Committee of the long-run and short-run financial needs of the
Plan and the determination of the funding policy for the Plan).

Any action under this Section 9.7 shall be taken in writing, and no designation
or allocation under paragraphs (a), (b) or (c) shall be effective until accepted
in writing by the indicated responsible person.

9.8        Investment Subcommittee Powers.    The Investment Subcommittee shall
have all discretionary powers necessary to manage and control the assets of the
Trust, including but not limited to, the following:

(a)        To exercise management and control over the assets of the Trust
except to the extent the Committee appoints an Investment Manager pursuant to
Section 9.7(a) and subject to the requirement that all action taken by the
Investment Subcommittee shall be in accordance and consistent with the funding
policy established by the Committee and shall be communicated to the Committee
at periodic intervals.

(b)        To employ consulting, actuarial, and other assistance as it may deem
appropriate in carrying out its responsibilities under the Plan, including one
or more persons to render advice with regard to any fiduciary responsibility the
Investment Subcommittee may have under the Plan.

 

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(c)        To establish rules and regulations from time to time for the conduct
of the Investment Subcommittee’s business.

(d)        To direct the Trustee, in writing, from time to time, to invest and
reinvest the Trust Fund, or any part thereof, or to purchase, exchange, or lease
any property, real or personal, which the Investment Subcommittee may designate.
This shall include the right to direct the investment of all or any part of the
Trust in any one security or any one type of securities permitted hereunder.

(e)        To direct the purchase and sale of Company Stock (and any other
securities that are “qualifying employer securities” as defined in Code
Section 4975(e)) for the Trust.

Any action taken in good faith by the Investment Subcommittee in the exercise of
discretionary powers conferred upon it by the Plan shall be conclusive and
binding upon the Participants and their Beneficiaries.

9.9        Periodic Review of Funding Policy.  Notwithstanding the delegation of
authority and responsibility to manage and control the assets of the Trust to
the Investment Subcommittee, the Committee, at periodic intervals, shall review
the long-run and short-run financial needs of the Plan and shall determine a
funding policy for the Plan consistent with the objectives of the Plan and the
minimum funding standards of ERISA, if applicable. In determining such funding
policy the Committee shall take into account, at a minimum, not only the
long-term investment objectives of the Trust Fund consistent with the prudent
management of the assets thereof, but also the short-run needs of the Plan to
pay benefits. All actions taken by the Committee with respect to the funding
policy of the Plan, including the reasons therefor, shall be fully reflected in
the minutes of the Committee.

9.10      Claims Procedures.  If a Participant or his or her Beneficiary
believes that he or she is being denied any rights or benefits under the Plan,
the Participant, Beneficiary, or in either case, his or her authorized
representative (the “Claimant”) shall follow the administrative procedures for
filing a claim for benefits as set forth in this Section. A claim for benefits
shall be in writing and shall be reviewed by the Committee or a claims official
designated by the Committee. The Committee or claims official shall review a
claim for benefits in accordance with the procedures established by the
Committee subject to the following administrative procedures set forth in this
Section.

(a)        The Committee shall furnish the Claimant with written or electronic
notice of the decision rendered with respect to a claim for benefits within
90 days following receipt by the Committee (or its delegate) of the claim unless
the Committee determines that special circumstances require an extension of time
for processing the claim. In the event an extension is necessary, written or
electronic notice of the extension shall be furnished to the Claimant prior to
the expiration of the initial 90 day period. The notice shall indicate the
special circumstances requiring an extension of time and the date by which a
final decision is expected to be rendered. In no event shall the period of the
extension exceed 90 days from the end of the initial 90 day period.

 

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(b)        In the case of a denial of the Claimant’s claim, the written or
electronic notice of such denial shall set forth (i) the specific reasons for
the denial, (ii) references to the Plan provisions upon which the denial is
based, (iii) a description of any additional information or material necessary
for perfection of the claim (together with an explanation why such material or
information is necessary), (iv) an explanation of the Plan’s appeals procedures,
and (v) a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA if his or her claim is denied upon appeal.

(c)        In the case of a denial of a claim, a Claimant who wishes to appeal
the decision shall follow the administrative procedures for an appeal as set
forth in Section 9.11 below.

9.11      Appeals Procedures.  A Claimant who wishes to appeal the denial of his
or her claim for benefits shall follow the administrative procedures for an
appeal as set forth in this Section and shall exhaust such administrative
procedures prior to seeking any other form of relief. Appeals shall be reviewed
in accordance with the procedures established by the Committee subject to the
following administrative procedures set forth in this Section.

(a)        In order to appeal a decision rendered with respect to his or her
claim for benefits, a Claimant must file an appeal with the Committee in writing
within 60 days following his or her receipt of the notice of denial with respect
to the claim.

(b)        The Claimant’s appeal may include written comments, documents,
records and other information relating to his or her claim. The Claimant may
review all pertinent documents and, upon request, shall have reasonable access
to or be provided free of charge, copies of all documents, records, and other
information relevant to his or her claim.

(c)        The Committee shall provide a full and fair review of the appeal and
shall take into account all claim related comments, documents, records, and
other information submitted by the Claimant without regard to whether such
information was submitted or considered under the initial determination or
review of the initial determination. Where appropriate, the Committee will
overturn a notice of denial if it determines that an error was made in the
interpretation of the controlling plan documents or if the Committee determines
that an existing interpretation of the controlling plan documents should be
changed on a prospective basis. In the event the Claimant is a subordinate, as
determined by the Committee, to an individual conducting the review, such
individual shall recuse himself or herself from the review of the appeal.

(d)        The Committee shall furnish the Claimant with written or electronic
notice of the decision rendered with respect to an appeal within 60 days
following receipt by the Committee of the appeal unless the Committee determines
that special circumstances require an extension of time for processing the
appeal. In the event an extension is necessary, written or electronic notice of
the extension shall be furnished to the Claimant prior to the expiration of the
initial 60 day period. The notice shall indicate the special circumstances
requiring an extension of time and the date by which a final decision is

 

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expected to be rendered. In no event shall the period of the extension exceed
60 days from the end of the initial 60 day period.

(e)        In the case of a denial of an appeal, the written or electronic
notice of such denial shall set forth (i) the specific reasons for the denial,
(ii) references to the Plan provisions upon which the denial is based, (iii) a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relating to his or her claim for benefits, and (iv) a statement of
the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

9.12      Limitation on Liability  Each of the fiduciaries under the Plan shall
be solely responsible for its own acts and omissions and no fiduciary shall be
liable for any breach of fiduciary responsibility resulting from the act or
omission of any other fiduciary or person to whom fiduciary responsibilities
have been allocated or delegated pursuant to Section 9.2 or 9.7, except as
provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. Neither the
Committee nor the Investment Subcommittee shall have responsibility over assets
as to which management and control has been delegated to an Investment Manager
appointed pursuant to Section 5.16 hereof or as to which management and control
has been retained by the Trustee.

9.13      Indemnification and Insurance.  To the extent permitted by law, the
Company shall indemnify and hold harmless the Committee, the Investment
Subcommittee and each member thereof, the Board of Directors and each member
thereof, and such other persons as the Board of Directors may specify, from the
effects and consequences of his or her acts, omissions, and conduct in his or
her official capacity in connection with the Plan and Trust. To the extent
permitted by law, the Company may also purchase liability insurance for such
persons.

9.14      Compensation of Committees and Plan Expenses.  Members of the
Committee and the Investment Subcommittee shall serve as such without
compensation unless the Board of Directors shall otherwise determine, but in no
event shall any member of the Committee or Investment Subcommittee who is an
Employee receive compensation from the Plan for his or her services as a member
of the Committee or the Investment Subcommittee. All members shall be reimbursed
for any necessary expenditures incurred in the discharge of duties as members of
the Committee or the Investment Subcommittee. The compensation or fees, as the
case may be, of all officers, agents, counsel, the Trustee or other persons
retained or employed by the Committee or the Investment Subcommittee shall be
fixed by the Committee, subject to approval by the Board of Directors. The
expenses incurred in the administration and operation of the Plan, including but
not limited to the expenses incurred by the members of the Committee or the
Investment Subcommittee in exercising their duties, shall be paid by the Plan
from the Trust Fund, unless paid by the Company, provided, however, that the
Plan and not the Company shall bear the cost of interest and normal brokerage
charges which are included in the cost of securities purchased by the Trust Fund
(or charged to proceeds in the case of sales). With respect to the expenses that
are paid by the Plan from the Trust Fund, such expenses shall be allocated among
Participants’ Accounts in a manner determined by the Committee. Any Forfeitures
remaining after application of Section 6.3(c) shall share in such allocation to
the extent required under applicable law. The Investment Subcommittee shall
direct the Trustee to use Plan assets (and, if

 

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necessary, to sell the shares of Company Stock that represent such Plan assets)
to pay such expenses.

9.15      Resignation.  Any member of the Committee or Investment Subcommittee
may resign by giving fifteen (15) days notice to the Board of Directors, and any
member shall resign forthwith upon receipt of the written request of the Board
of Directors, whether or not said member is at that time the only member of the
Committee or the Investment Subcommittee.

9.16      Reliance Upon Documents and Opinions.  The members of the Committee,
the Investment Subcommittee, the Board of Directors, the Company and any person
delegated to carry out any fiduciary responsibilities under the Plan
(hereinafter a “delegated fiduciary”), shall be entitled to rely upon any
tables, valuations, computations, estimates, certificates and reports furnished
by any consultant, or firm or corporation which employs one or more consultants,
upon any opinions furnished by legal counsel, and upon any reports furnished by
the Trustee or any Investment Manager. The members of the Committee, the
Investment Subcommittee, the Board of Directors, the Company and any delegated
fiduciary shall be fully protected and shall not be liable in any manner
whatsoever for anything done or action taken or suffered in reliance upon any
such consultant, or firm or corporation which employs one or more consultants,
Trustee, Investment Manager, or counsel. Any and all such things done or such
action taken or suffered by the Committee, the Investment Subcommittee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law. The Committee, the Investment
Subcommittee, and any delegated fiduciary may, but are not required to, rely
upon all records of the Company with respect to any matter or thing whatsoever,
and may likewise treat such records as conclusive with respect to all Employees,
Participants, Beneficiaries, and any other persons whomsoever, except as
otherwise provided by law.

 

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ARTICLE X

AMENDMENT AND ADOPTION OF PLAN

10.1      Right to Amend Plan.   The Sponsor, by resolution of the Board of
Directors, shall have the right to amend the Plan and Trust Agreement at any
time and from time to time and in such manner and to such extent as it may deem
advisable, including retroactively, subject to the following provisions:

(a)        No amendment shall have the effect of reducing any Participant’s
vested interest in the Plan or eliminating an optional form of distribution.

(b)        No amendment shall have the effect of diverting any part of the
assets of the Plan to persons or purposes other than the exclusive benefit of
the Participants or their Beneficiaries.

(c)        No amendment shall have the effect of increasing the duties or
responsibilities of a Trustee without its written consent.

(d)        No amendment shall result in discrimination in favor of officers,
shareholders, or other highly compensated or key employees.

The Committee shall have the right to amend the Plan, subject to paragraphs (a)
through (d), in accordance with the provisions of Section 9.6(f).

10.2      Adoption of Plan by Affiliated Companies.  Subject to approval by the
Board of Directors and consistent with the provisions of ERISA, an Affiliated
Company may adopt the Plan for all or any specified group of its Eligible
Employees by entering into an adoption agreement in the form and substance
prescribed by the Committee. The adoption agreement may include such
modification of the Plan provisions with respect to such Eligible Employees as
the Committee approves after having determined that no prohibited discrimination
or other threat to the qualification of the Plan is likely to result. The Board
of Directors may prospectively revoke or modify an Affiliated Company’s
participation in the Plan at any time and for any or no reason, without regard
to the terms of the adoption agreement, or terminate the Plan with respect to
such Affiliated Company’s Eligible Employees and Participants. By execution of
an adoption agreement (each of which by this reference shall become part of the
Plan), the Affiliated Company agrees to be bound by all the terms and conditions
of the Plan.

 

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ARTICLE XI

DISCONTINUANCE OF CONTRIBUTIONS

In the event the Company decides it is impossible or inadvisable for business
reasons to continue to make contributions under the Plan, it may, by resolution
of the Board of Directors, discontinue contributions to the Plan. Upon the
permanent discontinuance of contributions to the Plan and notwithstanding any
other provisions of the Plan, the rights of Participants shall become fully
vested and nonforfeitable unless replaced by a comparable plan. The permanent
discontinuance of contributions on the part of the Company shall not terminate
the Plan as to the funds and assets then held in the Trust, or operate to
accelerate any payments of distributions to or for the benefit of Participants
or Beneficiaries, and the Trust shall continue to be administered in accordance
with the provisions hereof until the obligations hereunder shall have been
discharged and satisfied.

 

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ARTICLE XII

TERMINATION AND MERGER

12.1      Right to Terminate Plan.    In the event the Board of Directors
decides it is impossible or inadvisable for business reasons to continue the
Plan, then it may, by resolution, terminate the Plan. Upon and after the
effective date of such termination, the Company shall not make any further
contributions under the Plan. Upon the termination or partial termination of the
Plan for any reason, the interest in the Trust of each affected Participant
shall automatically become fully vested unless the Plan is continued after its
termination by conversion of the Plan into a comparable Plan through Plan
amendment or through merger. After the satisfaction of all outstanding
liabilities of the Plan to persons other than Participants and Beneficiaries,
all unallocated assets shall be allocated to the Accounts of Participants to the
maximum extent permitted by law. The Trust Fund may not be fully or finally
liquidated until all assets are allocated to Accounts; alternatively any
unallocated assets may be transferred to another defined contribution plan
maintained by the Sponsor or an Affiliated Company qualified under Code
Section 401 where such assets shall be allocated among the accounts of
Participants herein who are participants in such transferee plan. In no event,
however, shall any part of the Plan revert to or be recoverable by the Company,
or be used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries. Notwithstanding the foregoing, amounts
held in the 415 Suspense Account may revert to the Company in accordance with
Section 13.6.

12.2      Merger Restriction.    Notwithstanding any other provision in the
Plan, the Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to, any other plan unless each affected
Participant in the Plan would (if such other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).

12.3      Effect on Trustee and Committee.  The Trustee and the Committee shall
continue to function as such for such period of time as may be necessary for the
winding up of the Plan and for the making of distributions in the manner
prescribed by the Board of Directors at the time of termination of the Plan.

12.4      Effect of Reorganization, Transfer of Assets or Change in Control.

(a)        In the event of a consolidation or merger of the Company, or in the
event of a sale and/or any other transfer of the operating assets of the
Company, any ultimate successor or successors to the business of the Company may
continue the Plan in full force and effect by adopting the same by resolution of
its board of directors and by executing a proper supplemental or transfer
agreement with the Trustee.

(b)        In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control shall
become 100% vested in any amounts allocated to their Company Contributions

 

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Accounts on the date of such Change in Control and in any amounts allocated to
their Company Contributions Accounts subsequent to the date of the Change in
Control. Notwithstanding the foregoing, the Board of Directors may, at its
discretion, amend or delete this paragraph (b) in its entirety prior to the
occurrence of any such Change in Control. For the purpose of this paragraph (b),
“Change in Control” shall mean the following and shall be deemed to occur if any
of the following events occur:

(i)        Any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”),
is or becomes the “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act (a “Beneficial Owner”), directly or indirectly, of securities of
the Sponsor representing (1) 20% or more of the combined voting power of the
Sponsor’s then outstanding voting securities, which acquisition is not approved
in advance of the acquisition or within 30 days after the acquisition by a
majority of the Incumbent Board (as hereinafter defined) or (2) 33% or more of
the combined voting power of the Sponsor’s then outstanding voting securities,
without regard to whether such acquisition is approved by the Incumbent Board;

(ii)       Individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the Board of Directors, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Sponsor’s stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Sponsor, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall, for the purposes of the Plan, be
considered as though such person were a member of the Incumbent Board of the
Sponsor;

(iii)      The consummation of a merger, consolidation or reorganization
involving the Sponsor, other than one which satisfies both of the following
conditions:

 (A)        a merger, consolidation or reorganization which would result in the
voting securities of the Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of another entity) at least 55% of the combined voting
power of the voting securities of the Sponsor or such other entity resulting
from the merger, consolidation or reorganization (the “Surviving Corporation”)
outstanding immediately after such merger, consolidation or reorganization and
being held in substantially the same proportion as the ownership in the
Sponsor’s voting

 

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securities immediately before such merger, consolidation or reorganization, and

 (B)        a merger, consolidation or reorganization in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Sponsor representing 20% or more of the combined voting power of the Sponsor’s
then outstanding voting securities; or

(iv)      The stockholders of the Sponsor approve a plan of complete liquidation
of the Sponsor or an agreement for the sale or other disposition by the Sponsor
of all or substantially all of the Sponsor’s assets.

Notwithstanding the preceding provisions of this paragraph (b), a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this paragraph (b) is (i) an underwriter or underwriting
syndicate that has acquired any of the Sponsor’s then outstanding voting
securities solely in connection with a public offering of the Sponsor’s
securities, (ii) the Sponsor or any subsidiary of the Sponsor or (iii) an
employee stock ownership plan or other employee benefit plan maintained by the
Sponsor or an Affiliated Company that is qualified under the provisions of the
Code. In addition, notwithstanding the preceding provisions of this paragraph
(b), a Change in Control shall not be deemed to have occurred if the Person
described in the preceding provisions of this paragraph (b) becomes a Beneficial
Owner of more than the permitted amount of outstanding securities as a result of
the acquisition of voting securities by the Sponsor or an Affiliated Company
which, by reducing the number of voting securities outstanding, increases the
proportional number of shares beneficially owned by such Person, provided, that
if a Change in Control would occur but for the operation of this sentence and
such Person becomes the Beneficial Owner of any additional voting securities
(other than through the exercise of options granted under any stock option plan
of the Sponsor or through a stock dividend or stock split), then a Change in
Control shall occur.

(c)        For purposes of this Section 12.4, a Change of Control shall not be
deemed to have occurred upon the distribution of the stock of Advanced Medical
Optics, Inc. on June 29, 2002 by the Sponsor to its stockholders.

 

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ARTICLE XIII

LIMITATION ON ALLOCATIONS

13.1      General Rule.

(a)        The total Annual Additions under the Plan to a Participant’s Accounts
shall not exceed the lesser of:

(i)        Forty Thousand Dollars ($40,000) as adjusted for increases in the
cost-of-living under Code Section 415(d); or

(ii)       One Hundred Percent (100%) of the Participant’s Compensation (as
defined in Section 13.5), from the Company for the Limitation Year,

except to the extent “catch-up” contributions are permitted under Section 4.2(e)
and Code Section 414(v). Notwithstanding the foregoing sentence, the
compensation limit set forth in subparagraph (ii) shall not apply to any
contribution for medical benefits after separation from service (within the
meaning of Code Section 401(h) or Code Section 419A(f)(2)) which is otherwise
treated as an Annual Addition.

(b)        For the purpose of this Article XIII, the term “Company” shall mean
the Sponsor and any Affiliated Company (determined by reference to Code
Section 415(h)) whether or not such Affiliated Company has adopted the Plan
pursuant to Section 10.2 and the term “Limitation Year” shall mean the Plan
Year.

13.2      Annual Additions.  For purposes of Section 13.1, the term “Annual
Additions” shall mean with respect to a Participant, for any Limitation Year
with respect to the Plan, the sum of the amounts described below:

(a)        All amounts contributed or deemed contributed by the Company.

(b)        All amounts contributed by the Participant.

(c)        Forfeitures allocated to such Participant.

(d)        Any amounts allocated, after March 31, 1984, to an individual medical
account as defined in Code Section 415(l)(2) established under a pension or
annuity plan maintained by the Company.

(e)        Any amounts allocated for such Plan Year which amounts are derived
from contributions paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to postretirement medical
benefits allocated to the separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Company.

 

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(f)        Excess deferral amounts determined pursuant to Sections 4.5 and 6.12.

(g)       Excess deferral amounts determined pursuant to Section 4.4 to the
extent such amounts are distributed after the first April 15th following the
close of the Participant’s taxable year.

Notwithstanding the foregoing, a Participant’s Rollover Contributions shall not
be considered an Annual Addition.

13.3      Other Defined Contribution Plans.  If the Company maintains any other
defined contribution plan, then each Participant’s Annual Additions under such
defined contribution plan shall be aggregated with the Participant’s Annual
Additions under the Plan for the purposes of applying the limitations of
Section 13.1.

13.4      Adjustments for Excess Annual Additions.    If as a result of the
allocation of forfeitures, a reasonable error in estimating a Participant’s
Compensation, or under other limited facts and circumstances that the
Commissioner of Internal Revenue finds justify the availability of the rules set
forth in Regulation Section 1.415-6(b)(6), the Annual Additions on behalf of any
Participant in a Limitation Year to the Plan and all other defined contribution
plans maintained by the Company exceed the limitation set forth in Section 13.1,
such Participant’s Annual Additions for the Plan shall be reduced in the
following order: (i) After Tax Deposits that are not Matched Deposits,
(ii) After Tax Deposits that are Matched Deposits, (iii) Before Tax Deposits
that are not Matched Deposits, (iv) Before Tax Deposits that are Matched
Deposits, (v) Matching Contributions, and (vi) Retirement Contributions. The
portion of the reduction attributable to After Tax Deposits and Before Tax
Deposits shall be refunded to the Participants and the balance attributable to
Matching Contributions, if any, shall be held unallocated in a 415 Suspense
Account established for the purpose of this Section 13.4 and shall be used to
reduce Company Contributions for the next limitation year (and succeeding
limitation year, as necessary) for all Participants in the Plan. The 415
Suspense Account shall be exhausted before any Company contributions shall be
allocated to the Accounts of Participants.

13.5      Compensation.  For the purpose of this Article XIII, Compensation
shall mean a Participant’s earned income, wages, salaries, fees for professional
services, and other amounts received (without regard to whether or not an amount
is paid in cash) for personal services actually rendered in the course of
employment with the Company maintaining the Plan and shall be determined as
described below:

(a)        Compensation shall include to the extent that the amounts are
includible in gross income (including, but not limited to, commissions paid
salespeople, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan as
described in Regulation 1.62-2(c)).

(b)        Compensation shall include any elective deferral as defined in Code
Section 402(g)(3), any amount which is contributed or deferred by the Company at
the election of the Employee that is excludable from an Employee’s gross income
under

 

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Code Sections 125 or 457 and, for Plan Years beginning on or after January 1,
1998, any elective amount that is excludable from an Employee’s gross income
under Code Section 132(f)(4).

(c)        Compensation shall not include (i) any employer contributions to a
plan of deferred compensation which are not included in the Employee’s gross
income for the taxable year in which contributed, (ii) any distributions from a
plan of deferred compensation, (iii) any amounts realized from the exercise of a
non-qualified stock option or when restricted stock or property held by the
Employee becomes either freely transferable or is no longer subject to a
substantial risk of forfeiture under Code Section 83 if such option, stock, or
property was granted to the Employee by the Company, (iv) any amounts realized
from the sale, exchange, or other disposition of stock acquired under a
qualified stock option, (v) any contribution for medical benefits (within the
meaning of Code Section 419(f)(2) after termination of employment which is
otherwise treated as an Annual Addition, and (vi) any amount otherwise treated
as an Annual Addition under Code Section 415(l)(1).

13.6      Treatment of 415 Suspense Account Upon Termination.  In the event the
Plan shall terminate at a time when all amounts in the 415 Suspense Account have
not been allocated to the Accounts of the Participants, the 415 Suspense Account
amounts shall be applied as follows:

(a)        The amount in the 415 Suspense Account shall first be allocated, as
of the Plan termination date, to Participants in accordance with the allocation
formula applicable to Company Contributions provided under Section 6.3.

(b)        If, after those allocations have been made, any further residue funds
remain in the 415 Suspense Account, the residue may revert to the Company in
accordance with applicable provisions of the Code, ERISA, and the regulations
thereunder.

 

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ARTICLE XIV

TOP-HEAVY RULES

14.1      Applicability.  Notwithstanding any provision in the Plan to the
contrary, and subject to the limitations set forth in Section 14.6, the
requirements of Sections 14.4 and 14.5 shall apply under the Plan in the case of
any Plan Year in which the Plan is determined to be a Top-Heavy Plan under the
rules of Section 14.3. For the purpose of this Article XIV, the term “Company”
shall mean the Sponsor and any Affiliated Company whether or not such Affiliated
Company has adopted the Plan.

14.2      Definitions.  For purposes of this Article XIV, the following special
definitions and rules shall apply:

(a)        The term “Key Employee” means any Employee or former Employee
(including any deceased Employee) who, at any time during the Plan Year that
includes the Determination Date, was an officer of the Company having annual
Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for
Plan Years beginning after December 31, 2002), a Five Percent Owner of the
Company, or an One Percent Owner of the Company having annual Compensation of
more than $150,000.

(b)        The term “Five Percent Owner” means any person who owns (or is
considered as owning within the meaning of Code Section 318) more than 5% of the
outstanding stock of the Company or stock possessing more than 5% of the total
combined voting power of all stock of the Company.

(c)        The term “One Percent Owner” means any person who would be described
in paragraph (b) if “1%” were substituted for “5%” each place where it appears
therein.

(d)        The term “Non-Key Employee” means any Employee who is not a Key
Employee.

(e)        The term “Determination Date” means, with respect to any plan year,
the last day of the preceding plan year. In the case of the first plan year of
any plan, the term “Determination Date” shall mean the last day of that plan
year.

(f)        The term “Aggregation Group” means (i) each qualified plan of the
Company in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Company which enables a
plan described in clause (i) to meet the requirements of Code Sections 401(a)(4)
or 410. Any plan not required to be included in an Aggregation Group under the
preceding rules may be treated as being part of such group if the group would
continue to meet the requirements of Code Sections 401(a)(4) and 410 with the
plan being taken into account.

 

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(g)        For purposes of determining ownership under paragraphs (a), (b) and
(c) above, the following special rules shall apply: (i) Code
Section 318(a)(2)(C) shall be applied by substituting “5%” for “50%”, and
(ii) the aggregation rules of Code Sections 414(b), (c) and (m) shall not apply,
with the result that the ownership tests of this Section 14.2 shall apply
separately with respect to each Affiliated Company.

(h)        The terms “Key Employee” and “Non-Key Employee” shall include their
Beneficiaries, and the definitions provided under this Section 14.2 shall be
interpreted and applied in a manner consistent with the provisions of Code
Section 416(i) and the regulations thereunder.

(i)        For purposes of this Article XIV, an Employee’s Compensation shall be
determined in accordance with the rules of Section 13.5.

14.3      Top-Heavy Status.

(a)        The term “Top-Heavy Plan” means, with respect to any Plan Year:

(i)        Any defined benefit plan if, as of the Determination Date, the
present value of the cumulative accrued benefits under the plan for Key
Employees exceeds 60% of the present value of the cumulative accrued benefits
under the plan for all Employees; and

(ii)       Any defined contribution plan if, as of the Determination Date, the
aggregate of the account balances of Key Employees under the plan exceeds 60% of
the aggregate of the account balances of all Employees under the plan.

In applying the foregoing provisions of this paragraph (a), the valuation date
to be used in valuing Plan assets shall be (i) in the case of a defined benefit
plan, the same date which is used for computing costs for minimum funding
purposes, and (ii) in the case of a defined contribution plan, the most recent
valuation date within a 12-month period ending on the applicable Determination
Date.

(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
(including a terminated plan which, had it not been terminated,

 

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would have been aggregated with the plan under Code Section 416(g)(2)(A)(i))
during the one year period ending on the Determination Date. In the case of
distributions made for a reason other than separation from service, death, or
disability, the preceding sentence shall be applied by substituting “five year
period” for “one year period.” Any rollover contribution or similar transfer
initiated by the Employee and made after December 31, 1983, to a plan shall not
be taken into account with respect to the transferee plan for purposes of
determining whether such plan is a Top-Heavy Plan (or whether any Aggregation
Group which includes such plan is a Top-Heavy Group).

(d)        If any individual is a Non-Key Employee with respect to any plan for
any plan year, but the individual was a Key Employee with respect to the plan
for any prior plan year, any accrued benefit for the individual (and the account
balance of the individual) shall not be taken into account for purposes of this
Section 14.3.

(e)        If any individual has not performed services for the Company at any
time during the one year period ending on the Determination Date, any accrued
benefit for such individual (and the account balance of the individual) shall
not be taken into account for purposes of this Section 14.3.

(f)        In applying the foregoing provisions of this Section, the accrued
benefit of a Non-Key Employee shall be determined (i) under the method, if any,
which is used for accrual purposes under all plans of the Company and any
Affiliated Companies, or (ii) if there is no such uniform method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted under
Code Section 411(b)(1)(C).

(g)        For all purposes of this Article XIV, the definitions provided under
this Section 14.3 shall be applied and interpreted in a manner consistent with
the provisions of Code Section 416(g) and the regulations thereunder.

14.4      Minimum Contributions.  For any Plan Year in which the Plan is
determined to be a Top-Heavy Plan, the minimum employer contributions for that
year shall be determined in accordance with the rules of this Section 14.4.

(a)        Except as provided below, the minimum contribution for each Non-Key
Employee shall be not less than 3% of his or her compensation. Before Tax
Deposits shall not be taken into account but Matching Contributions as defined
in Section 6.11 shall be taken into account for purposes of satisfying the
minimum contribution requirement. Matching Contributions that are used to
satisfy the minimum contribution requirement shall be treated as matching
contributions for purposes of the actual contribution percentage test and other
requirements of Code Section 401(m).

(b)        Subject to the following rules of this paragraph (b), the percentage
set forth in paragraph (a) above shall not be required to exceed the percentage
at which contributions (including amounts deferred under a cash or deferred
arrangement under Code Section 401(k)) are made (or are required to be made)
under the Plan for the year for the Key Employee for whom the percentage is the
highest for the year. This

 

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determination shall be made by dividing the contributions for each Key Employee
by so much of his or her total compensation for the Plan Year as does not exceed
the applicable Compensation limit. For purposes of this paragraph (b), all
defined contribution plans required to be included in an Aggregation Group shall
be treated as one plan. Notwithstanding the foregoing, the exceptions to
paragraph (a) as provided under this paragraph (b) shall not apply to any plan
required to be included in an Aggregation Group if the plan enables a defined
benefit plan to meet the requirements of Code Sections 401(a)(4) or 410.

(c)        The Participant’s minimum contribution determined under this
Section 14.4 shall be calculated without regard to any Social Security benefits
payable to the Participant.

(d)        In the event a Participant is covered by both a defined contribution
and a defined benefit plan maintained by the Company, both of which are
determined to be Top-Heavy Plans, the Company shall satisfy the minimum benefit
requirements of Code Section 416 by providing (in lieu of the minimum
contribution described in paragraph (a) above) a minimum benefit under the
defined benefit plan so as to prevent the duplication of required minimum
benefits hereunder.

14.5      Minimum Vesting Rules.  For any Plan Year in which it is determined
that the Plan is a Top-Heavy Plan, the vesting schedule for Matching
Contributions shall be the vesting schedule set forth in Section 7.2(a) and the
vesting schedule for Retirement Contributions shall be the vesting schedule set
forth in Section 7.2(b).

14.6      Noneligible Employees.    The rules of this Article XIV shall not
apply to any Employee included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more employers
if retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.

 

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ARTICLE XV

RESTRICTION ON ASSIGNMENT OR

OTHER ALIENATION OF PLAN BENEFITS

15.1      General Restrictions Against Alienation.

(a)        The interest of any Participant or his or her Beneficiary in the
income, benefits, payments, claims or rights hereunder, or in the Trust Fund,
shall not in any event be subject to sale, assignment, hypothecation, or
transfer. Each Participant and Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his or her interest under
the Trust Fund, and is without power to do so, except as may be permitted in
connection with providing security for a loan from the Plan to the Participant
pursuant to the provisions of the Plan as it may be amended from time to time.
The interest of any Participant or Beneficiary shall not be liable or subject to
his or her debts, liabilities, or obligations, now contracted, or which may
hereafter be contracted, and such interest shall be free from all claims,
liabilities, or other legal process now or hereafter incurred or arising.
Neither the interest of a Participant or Beneficiary, nor any part thereof,
shall be subject to any judgment rendered against any such Participant or
Beneficiary. Notwithstanding the foregoing, a Participant’s or Beneficiary’s
interest in the Plan may be subject to the enforcement of a Federal tax levy
made pursuant to Code Section 6331 or the collection by the United States on a
judgment resulting from an unpaid tax assessment.

(b)        In the event any person attempts to take any action contrary to this
Article XV, such action shall be null and void and of no effect, and the
Company, the Committee, the Trustee and all Participants and their
Beneficiaries, may disregard such action and are not in any manner bound
thereby, and they, and each of them, shall suffer no liability for any such
disregard thereof, and shall be reimbursed on demand out of the Trust Fund for
the amount of any loss, cost or expense incurred as a result of disregarding or
of acting in disregard of such action.

(c)        The foregoing provisions of this Section shall be interpreted and
applied by the Committee in accordance with the requirements of Code
Section 401(a)(13) and Section 206(d) of ERISA as construed and interpreted by
authoritative judicial and administrative rulings and regulations.

15.2      Qualified Domestic Relations Orders.  The rules set forth in
Section 15.1 above shall not apply with respect to a “Qualified Domestic
Relations Order” as described below.

(a)        A “Qualified Domestic Relations Order” is a judgment, decree, or
order (including approval of a property settlement agreement) that:

(i)        Creates or recognizes the existence of an Alternate Payee’s right to,
or assigns to an Alternate Payee the right to, receive all or a portion of the
benefits payable under the Plan with respect to a Participant,

 

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(ii)        Relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child or other dependent of
a Participant,

(iii)       Is made pursuant to a State domestic relations law (including a
community property law), and

(iv)      Clearly specifies: (A) the name and last known mailing address (if
any) of the Participant and the name and mailing address of each Alternate Payee
covered by the order (if the Committee does not have reason to know that address
independently of the order); (B) the amount or percentage of the Participant’s
benefits to be paid to each Alternate Payee, or the manner in which the amount
or percentage is to be determined; (C) the number of payments or period to which
the order applies; and (D) each plan to which the order applies.

For purposes of this Section 15.2, “Alternate Payee” means any spouse, former
spouse, child or other dependent of a Participant who is recognized by a
domestic relations order as having a right to receive all, or a portion of, the
benefits payable with respect to the Participant.

(b)        A domestic relations order is not a Qualified Domestic Relations
Order if it requires:

(i)        The Plan to provide any type or form of benefit, or any option, not
otherwise provided under the Plan;

(ii)       The Plan to provide increased benefits; or

(iii)      The payment of benefits to an Alternate Payee that are required to be
paid to another Alternate Payee under a previous Qualified Domestic Relations
Order.

(c)        A domestic relations order shall not be considered to fail to satisfy
the requirements of paragraph (b)(i) above with respect to any payment made
before a Participant has separated from service solely because the order
requires that payment of benefits be made to an Alternate Payee:

(i)        On or after the date on which the Participant attains (or would have
first attained) his or her earliest retirement age (as defined in Code
Section 414(p)(4)(B));

 

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(ii)        As if the Participant had retired on the date on which such payment
is to begin under such order (but taking into account only the present value of
accrued benefits and not taking into account the present value of any subsidy
for early retirement benefits); and

(iii)       In any form in which such benefits may be paid under the Plan to the
Participant (other than in the form of a joint and survivor annuity with respect
to the Alternate Payee and his or her subsequent spouse).

Notwithstanding the foregoing, if the Participant dies before his or her
earliest retirement age (as defined in Code Section 414(p)(4)(B)), the Alternate
Payee is entitled to benefits only if the Qualified Domestic Relations Order
requires survivor benefits to be paid to the Alternate Payee.

(d)        To the extent provided in any Qualified Domestic Relations Order, the
former spouse of a Participant shall be treated as a surviving Spouse of the
Participant for purposes of applying the rules (relating to minimum survivor
annuity requirements) of Code Sections 401(a)(11) and 417, and any current
spouse of the Participant shall not be treated as a spouse of the Participant
for such purposes.

(e)        In the case of any domestic relations order received by the Plan, the
Committee shall promptly notify the Participant and any Alternate Payee named in
the order that an order has been received and shall provide a copy of the Plan’s
procedures for determining the qualified status of domestic relations orders. An
Alternate Payee may designate a representative for receipt of copies of notices
and plan information that are sent to the Alternate Payee with respect to
domestic relations order. Within a reasonable period after the receipt of the
order, the Committee shall determine whether the order is a Qualified Domestic
Relations Order and shall notify the Participant and each Alternate Payee of
such determination.

(f)        The Committee shall establish reasonable procedures to determine the
qualified status of domestic relations orders and to administer distributions
under Qualified Domestic Relations Orders. During any period in which the issue
of whether a domestic relations order is a Qualified Domestic Relations Order is
being determined (by the Committee, by a court of competent jurisdiction, or
otherwise), the Committee shall direct the Trustee to segregate in a separate
account in the Plan (or in an escrow account) the amounts which would have been
payable to the Alternate Payee during the period if the order had been
determined to be a Qualified Domestic Relations Order. If within the 18 Month
Period (as defined below), the order (or modification thereof) is determined to
be a Qualified Domestic Relations Order, the Committee shall direct the Trustee
to pay the segregated amounts (plus any interest thereon) to the person or
persons entitled thereto. However, if within the 18 Month Period (i) it is
determined that the order is not a Qualified Domestic Relations Order, or
(ii) the issue as to whether the order is a Qualified Domestic Relations Order
is not resolved, then the Committee shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to the amounts if there had been no order (assuming
such

 

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benefits were otherwise payable).   Any determination that an order is a
Qualified Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this Section 15.2,
the “18 Month Period” shall mean the 18 month period beginning with the date on
which the first payment would be required to be made under the domestic
relations order.

 

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ARTICLE XVI

MISCELLANEOUS PROVISIONS

16.1      No Right of Employment Hereunder.  The adoption and maintenance of the
Plan and Trust shall not be deemed to constitute a contract of employment or
otherwise between the Company and any Employee or Participant, or to be a
consideration for, or an inducement or condition of, any employment. Nothing
contained herein shall be deemed to give any Employee the right to be retained
in the service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any Employee or Participant at any time, which
right is hereby expressly reserved.

16.2      Effect of Article Headings.  Article headings are for convenient
reference only and shall not be deemed to be a part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article.

16.3      Limitation on Company Liability.  Any benefits payable under the Plan
shall be paid or provided for solely from the Plan and the Company assumes no
liability or responsibility therefor.

16.4      Gender.  Masculine gender shall include the feminine and the singular
shall include the plural unless the context clearly indicates otherwise.

16.5      Interpretation.  The provisions of the Plan shall in all cases be
interpreted in a manner that is consistent with the Plan satisfying (i) the
requirements of Code Section 401(a) and related statutes for qualification as a
defined contribution plan and (ii) the requirements of Code Section 401(k) and
related statutes for qualification as a cash or deferred arrangement.

16.6      Withholding For Taxes.  Any payments from the Trust Fund may be
subject to withholding for taxes as may be required by any applicable federal or
state law.

16.7      California Law Controlling.  All legal questions pertaining to the
Plan which are not controlled by ERISA shall be determined in accordance with
the laws of the State of California and all contributions made hereunder shall
be deemed to have been made in that State.

16.8      Plan and Trust as One Instrument.  The Plan and the Trust Agreement
shall be construed together as one instrument. In the event that any conflict
arises between the terms and/or conditions of the Trust Agreement and the Plan,
the provisions of the Plan shall control, except that with respect to the duties
and responsibilities of the Trustee, the Trust Agreement shall control.

16.9      Invalid Provisions.  If any paragraph, section, sentence, clause or
phrase contained in the Plan shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of competent
jurisdiction to be incapable of being construed or limited in a manner to make
it enforceable, or is otherwise held by such court to be illegal, null

 

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or void or against public policy, the remaining paragraphs, sections, sentences,
clauses or phrases contained in the Plan shall not be affected thereby.

16.10      Counterparts.  This instrument may be executed in one or more
counterparts each of which shall be legally binding and enforceable.

 

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IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument, evidencing
the terms of the Allergan, Inc. Savings and Investment Plan as restated this
29th day of January, 2008.

 

ALLERGAN, INC. By:   /s/ Douglas S. Ingram           Douglas S. Ingram  

Executive Vice President, Chief Administrative Officer, General Counsel

and Secretary

 

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APPENDIX A

SPECIAL PROVISIONS FOR PUERTO RICO-BASED PAYROLL EMPLOYEES

PART I

INTRODUCTION

1.1          Effective Date.  The effective date of this Appendix A is
January 1, 2008.

1.2          Purpose of Appendix A.  The provisions of the Plan shall apply to
all Puerto Rico-based payroll Employees except as specifically provided in this
Appendix A.

1.3          Plan Qualification.  The Plan is an employee benefit plan that is
intended to qualify under PR-Code Section 1165(a) as a qualified profit sharing
plan and under PR-Code Section 1165(e) as a qualified cash or deferred
arrangement.

PART II

DEFINITIONS

The Definitions of Article II of the Plan shall apply to all Puerto Rico-based
Employees and shall have the same meaning for the purpose of this Appendix A
except as set forth below:

2.1          Plan Section 2.17.  “Compensation” shall have the same meaning as
set forth in Plan Section 2.17 except that in the case of a Puerto Rico-based
Employee, Compensation shall also include cost of living allowances earned
within Puerto Rico, amounts paid under the Christmas bonus program, and amounts
of salary reduction elected by a Puerto Rico-based Participant under a PR-Code
Section 1165(e) cash or deferred arrangement, but shall exclude contributions or
distributions pursuant to any other plan sponsored by the Company and qualified
under PR-Code Section 1165(a).

2.2          Plan Section 2.18.  “Credited Service” shall have the same meaning
as set forth in Plan Section 2.18 except that in the case of a Puerto Rico-based
Employee who was employed by the Company at any time prior to the Original
Effective Date, for the period prior to January 1, 1989, Credited Service shall
include service, if any, credited to such Employee under the Savings and
Investment Plan for Employees of Subsidiaries of SmithKline Beckman Corporation
Whose Principal Office is Located in Puerto Rico.

2.3          Plan Section 2.21.  For the purpose of this Appendix A only, the
definition of “Eligible Employee” as defined in Plan Section 2.21 shall not
apply and “Eligible Employee” or “Eligible Puerto Rico-based Employee” shall
mean any Puerto Rico-based Employee but shall exclude any non-regular
manufacturing site transition employee, any non-resident alien of Puerto Rico
and the United States, any Leased Employee, and any Employee covered by a
collective bargaining agreement.

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2.4          Plan Section 2.24.  For the purpose of this Appendix A only, the
definition of “Employee” as defined in Plan Section 2.24 shall not apply and
“Employee” or “Puerto Rico-based Employee” shall mean any person who is employed
in any capacity by the Sponsor or any Affiliated Company at its Puerto Rico
locations, any portion of whose income is subject to withholding of income tax
and/or for whom Social Security contribution are made by the Sponsor or an
Affiliated Company except that such term shall not include (i) any individual
who performs services for the Sponsor or an Affiliated Company and who is
classified or paid as an independent contractor as determined by the payroll
records of the Sponsor or an Affiliated Company even if a court or
administrative agency determines that such individual is a common-law employee
and not an independent contractor, (ii) any individual who performs services for
the Sponsor or an Affiliated Company pursuant to an agreement between the
Sponsor or an Affiliated Company and any other person including a leasing
organization except to the extent such individual is a Leased Employee, and
(iii) any individual whose employment is transferred from the Sponsor or an
Affiliated Company to Advanced Medical Optics, Inc. (“AMO”) in connection with
the distribution of the stock of AMO by the Sponsor to its stockholders,
effective as of the day following such transfer, hereinafter referred to as an
“AMO Employee.” An individual is an AMO Employee if classified or identified as
such in the payroll records of the Sponsor or an Affiliated Company or in the
Employee Matters Agreement entered into between the Sponsor and AMO.

2.5          Plan Section 2.38.  For the purpose of this Appendix A only,
“Participant” as defined in Plan Section 2.38 shall not apply and “Participant”
or “Puerto Rico-based Participant” shall mean a Puerto Rico-based Employee or
former Puerto Rico-based Employee who has commenced participation in the Plan
pursuant to Section 3.1 and who retains rights under the Plan.

2.6          Additional Terms.  Additional terms shall have the following
meaning:

  (a)        “PR-Code” shall mean the Puerto Rico Internal Revenue Code of 1994,
as amended. Where the context so requires a reference to a particular PR-Code
Section shall also refer to any successor provision of the PR-Code to such
PR-Code Section.

  (b)        “Top One-Third Highly Compensated Employee” shall mean any Eligible
Puerto Rico-based Employee who has Compensation for a Plan Year that is greater
than the Compensation for such Plan Year of two-thirds (2/3) of all Eligible
Puerto Rico-based Employees.

PART III

ELIGIBILITY AND PARTICIPATION

The provisions of Article III of the Plan shall apply to all Puerto Rico-based
Employees.

 

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PART IV

PARTICIPANT DEPOSITS

The provisions of Article IV of the Plan shall apply to all Puerto Rico-based
Employees except as set forth below:

4.1        Plan Section 4.1.    The provisions of Plan Section 4.1(d) shall
apply to all Puerto Rico-based Participants except that Puerto Rico-based
Participants who make hardship withdrawals pursuant to Plan Section 8.1(e) shall
not be permitted to make Before Tax Deposits or After Tax Deposits to the Plan
during the 12-month period beginning as soon as administratively feasible
following the date of the hardship withdrawal. Also, to the extent permissible
by ERISA and the Code, each contribution made by the Company to the Plan under
Plan Section 4.1 with respect to the Before Tax Deposits of a Puerto Rico-based
Participant shall be made only to the extent that the Company has current or
accumulated earnings and profits, as determined under the PR-Code, and is
expressly conditioned on the deductibility of such contribution under
Section 1023(n) of the PR-Code for the taxable year for which contributed. If
the Puerto Rico Secretary of the Treasury disallows the deduction, or if the
contribution was made by a mistake of fact, such contribution shall be returned
to the Company within one (1) year after the disallowance of the deduction (to
the extent disallowed), or after the payment of such contribution, respectively.
Such contributions to the Plan by the Company shall be paid to the Trustee not
later than the date for filing the Company’s Puerto Rico income tax return for
the taxable year in which such payroll period falls, including any extensions
thereof.

4.2        Plan Section 4.2.    The provisions of Plan Section 4.2 shall apply
to all Puerto Rico-based Employees except as set forth below:

(a)        Notwithstanding the provisions of paragraph (a) of Plan Section 4.2,
a Puerto Rico-based Participant may elect to contribute a whole percentage of
his or her Compensation to the Plan as Before Tax Deposits; provided, however,
that no Puerto Rico-based Participant shall be permitted to make Before Tax
Deposits to the Plan during any taxable year in excess of: (i) ten percent
(10%) of Compensation up to a maximum of $8,000, or such larger amount as may be
determined by the Puerto Rico Secretary of the Treasury pursuant to the PR-Code;
provided that, if a Puerto Rico-based Participant contributes to a Puerto Rico
individual retirement account as described in PR-Code Section 1169, the maximum
amount of his or her Before Tax Deposits may not exceed the difference, if any,
between the amount available as a contribution up to the limit of $8,000 and the
contribution made to a Puerto Rico individual retirement account, or as
otherwise provided by the PR-Code, (ii) the Actual Deferral Percentage test
limitation set forth in Plan Section 4.3 and Section 4.3 of this Appendix, and
(iii) the Annual Addition limitation set forth in Plan Section 13.1.

(b)        Notwithstanding the provisions of paragraph (e) of Plan Section 4.2,
a Puerto Rico-based Participant who has attained age 50 before the close of the
Plan Year may elect to contribute a percentage of his or her Compensation to the
Plan as “catch-up” Before Tax Deposits in accordance with, and subject to the
limitations of, the PR-Code. Such catch-up Before Tax Deposits shall not be
taken into account under paragraph (a) above, Section 4.3 of this Appendix to
the extent permitted under the PR-Code, Plan Section 4.3, Plan Section 13.1 or

 

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any other provision of the Plan implementing the contribution limitations of
Code Sections 402(g) and 415.

4.3        Additional Contribution Deferral Limitation.    In addition to the
limitations on Compensation Deferral Contributions set forth in Plan
Section 4.3, Compensation Deferral Contributions by a Puerto Rico-based
Participant shall not exceed the limitation on contributions by or on behalf of
the Top One-Third Highly Compensation Employees under PR-Code Section 1165(e),
as provided in this Section 4.3 with respect to each Plan Year. In the event
that Compensation Deferrals Contributions under the Plan by or on behalf of the
Top One-Third Highly Compensated Employees exceed the limitations of this
Section for any reason, such excess contributions shall be recharacterized as
After Tax Deposits or such excess contributions, adjusted for any income or loss
allocable thereto, shall be returned to such Participant, as provided in Plan
Section 4.5.

(a)      The Compensation Deferral Contributions by Participants for a Plan Year
shall satisfy the Actual Deferral Percentage test under the PR-Code as set forth
in subparagraph (i) below, or to the extent not precluded by applicable
regulations, the alternate Actual Deferral Percentage test as set forth in
(ii) below:

(i)        The average “Actual Deferral Percentage” for the Top One-Third Highly
Compensated Employees shall not be more than the average Actual Deferral
Percentage of all non-Top One-Third Highly Compensated Employees multiplied by
1.25, or

(ii)        The excess of the average Actual Deferral Percentage for the Top
One-Third Highly Compensated Employees over the average Actual Deferral
Percentage for all non-Top One-Third Highly Compensated Employees shall not be
more than two (2) percentage points and the average Actual Deferral Percentage
for the Top One-Third Highly Compensated Employee shall not be more than the
average Actual Deferral Percentage of all non-Top One-Third Highly Compensated
Employees multiplied by 2.0.

  (b)      For the purpose of this Section 4.3 only, the following definitions
shall apply:

(i)        “Actual Deferral Percentage” shall mean, with respect to the group of
all Top One-Third Highly Compensated Employees and the group of all non-Top
One-Third Highly Compensated Employees for a Plan Year, the ratio, calculated
separately for each Participant in such group, of the amount of the
Participant’s Compensation Deferral Contribution for such Plan Year, to such
Participant’s Compensation for such Plan Year, in accordance with regulations
prescribed by the Puerto Rico Secretary of the Treasury under PR-Code
Section 1165(e). For purposes of computing the Actual Deferral Percentage, an
Eligible Employee who would be a Participant but for the failure to make Before
Tax Deposits shall be treated as a Participant on whose behalf no Before Tax
Deposits are made.

 

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(ii)         “Participant” shall mean any Eligible Puerto Rico-based Employee
who satisfied the requirements under Plan Article III during the Plan Year,
whether or not such Eligible Employee elected to contribute to the Plan for such
Plan Year.

(iii)        “Compensation Deferral Contributions” shall mean amounts
contributed to the Plan by a Participant as Before Tax Deposits pursuant to
Section 4.1(a) of this Appendix, including any other amounts prescribed under
PR-Code Section 1165(e) and applicable regulations. To the extent determined by
the Committee and in accordance with regulations issued by the Puerto Rico
Secretary of the Treasury, matching contributions and qualified nonelective
contributions on behalf of a Participant that satisfy the requirements of
PR-Code Section 1165(e)(3)(D)(ii) may also be taken into account for the purpose
of determining the Actual Deferral Percentage of such Participant.

(iv)        “Compensation” shall mean compensation as defined in PR-Code
Section 1165(e) and applicable regulations.

  (c)      In the event that as of the first day of Plan Year, the Plan
satisfies the requirements of PR-Code Section 1165(a) only if aggregated with
one or more other plans which include arrangements under PR-Code
Section 1165(e), then this Section 4.3 shall be applied by determining the
Actual Deferral Percentages of Participants as if all such plans were a single
plan, in accordance with regulations prescribed by the Secretary of the Treasury
under PR-Code Section 1165(e). Plans may be considered one plan for purposes of
satisfying PR-Code Section 1165(e) only if they have the same Plan Year.

  (d)      For the purpose of this Section 4.3, the “Actual Deferral Percentage”
for any Top One-Third Highly Compensated Employee who is a Participant under two
or more PR-Code Section 1165(e) arrangements of the Company shall be determined
by taking into account the Top One-Third Highly Compensated Employee’s
Compensation under each such arrangement and contributions under each such
arrangement which qualify for treatment under PR-Code Section 1165(e) in
accordance with regulations prescribed by the Puerto Rico Secretary of the
Treasury under PR-Code Section 1165(e). If the arrangements have different Plan
Years, this paragraph shall be applied by treating all such arrangements ending
with or within the same calendar year as a single arrangement. Notwithstanding
the foregoing, certain plans shall be treated as separate plans if mandatorily
disaggregated pursuant to regulations under Code Section 401(k).

  (e)      For purposes of the Actual Deferral Percentage test under the
PR-Code, Compensation Deferral Contributions must be made before the last day of
the twelve-month period immediately following the Plan Year to which such
contributions relate.

  (f)      The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant under this
Section 4.3 shall satisfy such other requirements as may be prescribed by the
Puerto Rico Secretary of the Treasury.

 

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(g)        The Committee shall keep or cause to have kept such records as are
necessary to demonstrate that the Plan satisfies the requirements of PR-Code
Section 1165(e) and the regulations thereunder, in accordance with regulations
prescribed by the Puerto Rico Secretary of the Treasury.

(h)        Notwithstanding any provision of this Appendix A to the contrary, to
the extent permitted by the PR-Code and its regulations, all Employees employed
by the Sponsor and any Affiliated Company that participates in the Plan may be
aggregated for purposes of determining compliance by the Plan with the Actual
Deferral Percentage test under the PR-Code and the determination of Top
One-Third Highly Compensated Employees.

4.4        Plan Section 4.4.    The provisions of Plan Section 4.4 entitled
“Provisions for Return of Excess Before Tax Deposits” shall be applied by
substituting the dollar limitation contained in Section 4.2 of this Appendix for
the “Before Tax Deposit Limit” in each place it appears.

4.5        Plan Section 4.5.    The provisions of Plan Section 4.5 entitled
“Provision for Recharacterization or Return of Excess Deferrals by Highly
Compensated Participants” shall be applied as follows:

(a)        “Highly Compensated Participant and Top One-Third Highly Compensated
Employee” shall be substituted for “Highly Compensated Participant” in each
place it appears.

(b)        For purposes of satisfying the Actual Deferral Percentage test under
the PR-Code, the amount of any excess Compensation Deferral Contributions by a
Top One-Third Highly Compensated Employee shall be determined by the Committee
taking into account the leveling method applied under the PR-Code and its
regulations that provide that the leveling method shall begin with the Top
One-Third Highly Compensated Employee who has the highest deferral percentage.

(c)        Any reference to Code Sections shall include reference to the
corresponding PR-Code Section unless the context clearly indicates otherwise.
For example, references to “Code Section 401(k)” and “Code Section 404” shall
include references to PR-Code Section 1165(e) and PR-Code Section 1023(n),
respectively.

4.6        Reserved for Future Modification.

4.7        Plan Section 4.7.    In addition to the provisions of Plan
Section 4.7 entitled “Character of Deposits,” Before Tax Deposits shall be
treated as employer contributions for purposes of PR-Code Section 1165(e).

4.8        Plan Section 4.8.    For purposes of Plan Section 4.8, a “Direct
Rollover Contribution” or a “Participant Rollover Contribution” from a
retirement plan qualified under PR-Code Section 1165(a) (unless such plan is
also qualified under Code Section 401(a)) or an “IRA Rollover Contribution” from
a Puerto-Rico individual retirement account or annuity shall not be permitted
under the Plan.

 

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PART V

TRUST FUND AND MATCHING CONTRIBUTIONS

The provisions of Article V shall apply to all Puerto Rico-based Employees
except as set forth below:

5.1        Plan Section 5.6.    The provisions of Plan Section 5.6 entitled
“Irrevocability” shall be applied by including a corresponding reference to
“PR-Code Section 1165(a)” and “PR-Code Section 1023(n)” in each place “Code
Section 401(a)” and “Code Section 404” appears, respectively.

PART VI

ACCOUNTS AND ALLOCATIONS

The provisions of Article VI of the Plan shall apply to all Puerto Rico-based
Employees.

PART VII

VESTING IN PLAN ACCOUNTS

The provisions of Article VII of the Plan shall apply to all Puerto Rico-based
Employees.

PART VIII

PAYMENT OF PLAN BENEFITS

The provisions of Article VIII of the Plan shall apply to all Puerto Rico-based
Employees except as set forth below:

8.1        Plan Section 8.2(a).  For purposes of Plan Section 8.2(a), a Puerto
Rico-based Participant may elect, at the time and in the manner prescribed by
the Committee, to have the entire portion of a lump-sum distribution from the
Plan paid directly to a qualified trust described in PR-Code Section 1165(a)
that accepts the Puerto Rico-based Participant’s distribution or an individual
retirement account or annuity described in PR-Code Sections 1169(a) and (b),
respectively.

8.2        Plan Section 8.4.    In addition to the provisions of Plan
Section 8.4 entitled “Designation of Beneficiary,” the following rules shall
apply to a Participant, as defined in Section 2.6 of this Appendix:

    (a)        In the event a deceased Participant is not a resident of Puerto
Rico at the date of his or her death, the Committee, in its discretion, may
require the establishment of ancillary administration in Puerto Rico.

 

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(b)        If the Committee cannot locate a qualified personal representative of
the deceased Participant, or if administration of the deceased Participant’s
estate is not otherwise required, the Committee, in its discretion, may pay the
deceased Participant’s interest in the Trust Fund to his or her heirs at law
(determined in accordance with the laws of the Commonwealth of Puerto Rico) as
they existed at the date of the Participant’s death.

8.3        Plan Section 8.5.  Notwithstanding the provisions of Plan
Section 8.5, a hardship withdrawal shall be made to a Puerto Rico-based
Participant only if the Committee (or its representative), based upon the
Participant’s representation and such other facts as are known to the Committee,
determines that the requested withdrawal is on the account of:

(a)        A deductible medical expense (within the meaning of PR-Code
Section 1023(aa)(2)(p)) incurred by the Participant, his or her spouse, children
or dependents;

(b)        The purchase (excluding mortgage payments) of a principal residence
for the Participant;

(c)        The payment of tuition for the next twelve (12) months of
post-secondary education for the Participant, the Participant’s spouse,
children, or dependents;

(d)        The need to prevent the eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the Participant’s
principal residence; and

(e)        Such other events as the PR-Code, regulations or the Puerto Rico
Secretary of the Treasury may allow.

Notwithstanding anything in the Plan to the contrary, Puerto Rico-based
Participants who make hardship withdrawals pursuant to Plan Section 8.1(e) shall
not be permitted to make Before Tax Deposits or After Tax Deposits to the Plan
during the 12-month period beginning as soon as administratively feasible
following the date of the hardship withdrawal.

8.4        Plan Section 8.6(a).    Notwithstanding the provisions of Plan
Section 8.6(a) entitled “Distribution Rules,” in the case of a Puerto Rico-based
Participant in no event shall any benefits under the Plan, including benefits
upon retirement, Severance, or Disability, be paid (or commence to be paid) to a
participant prior to the “Consent Date” (as defined herein) unless the
Participant consents in writing to the payment (or commencement of payment) of
such benefits prior to said Consent Date. As used herein, the term “Consent
Date” shall mean the later of (i) the Participant’s 62nd birthday, or (ii) the
Participant’s Normal Retirement Age. Notwithstanding the foregoing, the
provisions of this Paragraph shall not apply (i) following the Participant’s
death, or (ii) with respect to a lump sum distribution of the vested portion of
a Participant’s Account if the total amount of such vested portion does not
exceed $1,000 ($5,000 for lump sum distributions made prior to March 28, 2005).

 

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8.5        Plan Section 8.11(c).  The provisions of Plan Section 8.11(c)
entitled “Additional Documents” shall be applied by including reference to
“Puerto Rico” in each place “State or Federal” appears.

8.6        Plan Section 8.12.  The provisions of Plan Section 8.12 entitled
“Trustee-Trustee Transfers” shall be applied by including a corresponding
reference to “PR-Code Section 1165” in each place “Code Section 401” appears.

PART IX

PLAN ARTICLES IX THROUGH XI

The provisions of Articles IX through XI of the Plan shall apply to all Puerto
Rico-based Employees.

PART X

TERMINATION AND MERGER

The provisions of Articles XII of the Plan shall apply to all Puerto Rico-based
Employees except as follows:

10.1        Plan Section 12.1.    In addition to the provisions of Plan
Section 12.1, the Committee may determine that no distributions shall be made to
a Puerto Rico-based Participant in the event the Plan is terminated, until such
time as the Puerto Rico Department of the Treasury shall have determined in
writing that such termination will not adversely affected the prior
qualification of the Plan under the PR-Code.

10.2        Plan Section 12.2.  In addition to the provisions of Plan
Section 12.2, any merger or consolidation of the Plan with, or transfer in whole
or in part of the assets and liabilities of the Trust to, another trust fund as
applied to a Puerto Rico-based Participant will be limited to the extent such
other plan and trust are qualified under PR-Code Section 1165(a).

PART XI

PLAN ARTICLES XIII THROUGH XV

The provisions of Articles XIII through XV of the Plan shall apply to all Puerto
Rico-based Employees.

PART XII

MISCELLANEOUS PROVISIONS

 

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The provisions of Article XVI of the Plan shall apply to all Puerto Rico-based
Employees except as follows:

12.1        Plan Section 16.5.    In addition to the provisions of Plan
Section 16.5 entitled “Interpretation,” the provisions of the Plan shall be
interpreted in a manner consistent with the Plan satisfying (i) the requirements
of PR-Code Section 1165(a) and related statutes for qualification as a defined
contribution plan and (ii) the requirements of PR-Code Section 1165(e) and
related statutes for qualification as a cash or deferred arrangement to the
extent such interpretation would not violate (i) the requirements of Code
Section 401(a) and related statutes for qualification as a defined contribution
plan and (ii) the requirements of Code Section 401(k) and related statutes for
qualification as a cash or deferred arrangement.

12.2        Plan Section 16.6.    In addition to the provisions of Plan
Section 16.6 entitled “Withholding for Taxes,” any payments from the Trust Fund
may be subject to withholding for taxes as may be required by any applicable
Puerto Rico law.

12.3        Plan Section 16.7.    In addition to the provisions of Plan
Section 16.7 entitled “California Law Controlling,” the Committee shall
determine whether all legal questions pertaining to the Plan which are not
controlled by ERISA shall be determined in accordance with the laws of the
Commonwealth of Puerto Rico or the laws of the State of California in the case
of a Puerto Rico-based Employee or Participant.

 

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