ALLERGAN, INC. PENSION PLAN

EXHIBIT 10.18

 

 

 

 

 

ALLERGAN, INC.

PENSION PLAN

 

 

 

 

 

RESTATED

2008

TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

 

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ALLERGAN, INC.

PENSION PLAN

ARTICLE I

INTRODUCTION

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

1.2         Plan Purpose .    The purpose of the Allergan, Inc. Pension Plan (Restated 2008), hereinafter referred to as the “Plan,” is to provide additional retirement income to Eligible Employees of Allergan, and any Affiliated Companies that are authorized by the Board of Directors of Allergan to participate in the Plan for their future economic security. The Plan is fully funded through Company contributions and the assets of the Plan shall be administered, distributed, forfeited and otherwise governed by the provisions of the Plan, which is to be administered by the Committee for the exclusive benefit of Participants in the Plan and their Beneficiaries.

1.3         Effective Date of 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 payment of benefits under the Plan.

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

(a)        This Plan document that restates the Plan by incorporating the provisions of the First and Second Amendments to the Allergan, Inc. Pension 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, (ii) to comply with certain changes made by the Pension Protection Act of 2006 by (1) adding a 75% contingent beneficiary payment option, (2) extending the distribution election period from 90 days to up to 180 days and providing that distribution elections will include an explanation of a Participant’s right to defer and the effect of deferring benefit payment,

and (3) permitting non-spouse beneficiaries to elect direct rollovers of lump sum distributions, and (iii) to clarify certain operational provisions regarding, including but not limited to, the pension amount paid for benefit commencement dates after age 65.

(b)        The Plan document for the Allergan, Inc. Pension Plan (Restated 2005) that incorporated the provisions of the amendments made under the First and Second Amendments to the Allergan, Inc. Pension Plan (Restated 2003) and amended the Plan to eliminate the mandatory cash-out of Accrued Benefits that do not exceed $5,000 effective March 28, 2005.

(c)        Amendments to the Plan that (i) limited participation in the Plan to those Employees who were Eligible Employees (as defined in Section 2.17(b)) on September 30, 2002 who made a one-time irrevocable election to continue active participation in the Plan for Plan Years beginning on and after January 1, 2003 until their participation is terminated under the terms of the Plan in lieu of ceasing active participation in the Plan and participating in the Retirement Contribution feature of the Allergan, Inc. Savings and Investment Plan as provided under and subject to the terms of that plan and (ii) provided further that those Employees who elected to cease active participation in the Plan: (1) shall not be credited with Benefit Years after December 31, 2002 but shall continue to be credited with Vesting Years as provided under the terms of the Plan and (2) shall be entitled to a monthly pension upon completing five (5) Vesting Years or upon reaching the Special Retirement Eligibility Date and completing one (1) Vesting Year, the amount of which shall be equal to their Accrued Benefit determined as of December 31, 2002, at such times and in such forms as permitted under the Plan.

(d)        Amendments to the Plan that in connection with the distribution of the stock of Advanced Medical Optics, Inc. (“AMO”) by Allergan to its stockholders on June 29, 2002, provided that (i) AMO Employees (as defined in Section 2.20) shall cease to be eligible to participate in the Plan and shall cease to be credited with Benefit Years and Vesting Years under the Plan, (ii) AMO Employees shall have a nonforfeitable interest in their Accrued Benefits notwithstanding Section 5.11, and (iii) the assets attributable to, and the liabilities relating to, arising out of, or resulting from the Accrued Benefits of AMO Employees shall remain with the Pension Plan and shall be payable from the Plan to AMO Employees at such times and in such forms as permitted under the Plan.

(e)        Amendments to the Plan that in connection with the closure of the Allergan, Inc. Medical Plastics facility in Santa Ana, California (“Medical Plastics”), provided that (i) Participants whose employment is terminated as a result of the closure of Medical Plastics, as determined by the payroll records of the Sponsor or any Affiliated Company shall have a nonforfeitable interest in their Accrued Benefits notwithstanding Section 5.11 effective as of their termination dates, and (ii) the Accrued Benefits of such Participants shall be payable from the Plan to such Participants at such times and in such forms as permitted under the Plan.

 

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1.5         Plan Qualification .    The Plan is an employee benefit plan that is intended to qualify under Code Section 401(a) as a qualified pension plan so as to assure that the trust created under the Plan is tax exempt pursuant to Code Section 501(a). The Plan’s last determination letter was issued by the Internal Revenue Service on March 7, 2003 with respect to the Allergan, Inc. Pension Plan (Restated 2003). 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 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         Accrued Benefit .    “Accrued Benefit” shall mean, for each Participant, the amount of pension accrued by him or her under Article IV as of the date of reference. An Accrued Benefit shall only be payable in accordance with Articles V and VII.

2.2         Active Participant .    “Active Participant” shall mean a Participant who is an Eligible Employee.

2.3         Actuarial Equivalent .    “Actuarial Equivalent” shall mean a benefit of equal actuarial value under the assumptions set forth in Appendix A.

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

2.5         Age .    “Age” shall mean a Participant’s age at his or her most recent birthday.

2.6         Annuity Starting Date .    “Annuity Starting Date” shall mean the first day of the first period for which a Participant’s pension is paid as an annuity or as any other optional form of benefit.

2.7         Average Earnings .    “Average Earnings” shall mean, for each Participant, 12 times the monthly average of his or her Earnings for the 60 consecutive months that yield the highest average. For purposes of this Section, (i) nonconsecutive months interrupted only by months in which a Participant has no Earnings shall be treated as consecutive and (ii) unless the Sponsor expressly determines otherwise, and except as is expressly provided otherwise in the Plan or in resolutions of the Board of Directors, amounts paid to a Participant by a domestic Affiliated Company prior to the effective date on which it became an Affiliated Company (that would have been Earnings if paid by the Company) before he or she became a Participant shall be treated as Earnings but only to the extent such Earnings when added to the Earnings actually paid by the Company do not result in more than 60 consecutive months of Earnings. If a Participant does not have Earnings for 60 consecutive months, his or her Average Earnings shall be 12 times the monthly average of his or her Earnings. For periods beginning on or after April 1, 2000, a partial month of employment shall be taken into account only if doing so yields a higher monthly average.

 

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2.8         Beneficiary .    “Beneficiary” or “Beneficiaries” shall mean the person or persons last designated by the Participant to receive the interest of a deceased Participant.

2.9         Benefit Year .    “Benefit Year” shall mean a credit used to measure a Participant’s service in calculating his or her Accrued Benefit. Each Participant shall be credited with a number of Benefit Years equal to 1/365th of (i) the aggregate number of days between his or her Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date) and (ii) the aggregate number of days during a Period of Severance of less than 30 days, but in each case, disregarding any day such Participant is not an Active Participant and, for periods beginning on or after January 1, 2003, any day such Participant is on an “Extended Leave of Absence” as such term is defined in the Allergan, Inc. Welfare Benefits Plan.

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

2.11       Code .    “Code” shall mean the United States Internal Revenue Code of 1986 and the regulations thereunder. “Puerto Rico Code” shall mean the Puerto Rico Internal Revenue Code of 1994 and the regulations thereunder. Reference to a specific United States Internal Revenue Code Section or Puerto Rico Internal Revenue Code Section shall be deemed also to refer to any applicable regulations under that Section, and shall also include any comparable provisions of future legislation that amend, supplement or supersede that specific Section.

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

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

2.14       Earnings .    “Earnings” shall mean the following:

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

 

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(b)        Earnings shall include amounts of salary reduction elected by the Employee under a Code Section 401(k) cash or deferred arrangement or a Code Section 125 cafeteria plan or a Puerto Rico Code Section 1165(e) cash or deferred arrangement, amounts deferred under the Executive Deferred Compensation Plan, and amounts paid to an Employee pursuant to a “split pay arrangement” between the Company and an Affiliated Company.

(c)        Earnings shall not include business expense reimbursements; Company gifts or the value of Company gifts; Company stock related options and payments; employee referral awards; flexible compensation credits paid in cash; special overseas payments, allowances and adjustments including, but not limited to, pay for cost of living adjustments and differentials paid for service outside of the United States (including Puerto Rico), expatriate reimbursement payments, and tax equalization payments; forms of imputed income; long-term disability pay; payment for loss of Company car; Company car allowance; payments for patents or for writing articles; relocation and moving expenses; retention and employment incentive payments; severance pay; long-term incentive awards, bonuses or payments; “Impact Award” payments; “Employee of the Year” payments; “Awards for Excellence” payments; special group incentive payments and individual recognition payments which are nonrecurring in nature; tuition reimbursement; and contributions by the Company under the Plan or distributions hereunder, any contributions or distributions pursuant to any other plan sponsored by the Company and qualified under Code Section 401(a) and/or Puerto Rico Code Section 1165 (other than contributions constituting salary reduction amounts elected by the Employee under a Code Section 401(k) cash or deferred arrangement or a Puerto Rico Code Section 1165(e) cash or deferred arrangement), any payments under a health or welfare plan sponsored by the Company, or premiums paid by the Company under any insurance plan for the benefit of Employees.

(d)        For purposes of this Section and notwithstanding paragraph (a) above, (i) for periods on or after January 1, 2005, Earnings shall not include lump sum amounts paid to Employees under the Company’s vacation buy-back policy, (ii) for periods beginning on or after January 1, 2003, if a Participant is not an Active Participant at any time during the month, he or she shall be deemed to have no Earnings for that month, (iii) for the period beginning on April 1, 2001 and ending on December 31, 2002, if a Participant is an Employee at any time during a month, Earnings for that month shall be the Earnings actually paid to the Participant during such month, and (iv) for periods prior to April 1, 2001, if a Participant is not an Employee for the entire month, he or she shall be deemed to have no Earnings for that month.

(e)        Earnings shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B), for purposes of determining all benefits provided under the Plan. Any cost-of-living adjustments in effect for a calendar year shall apply to the Plan Year beginning with or within such calendar year. For purposes of determining benefits provided under the Plan in a Plan Year beginning on or after January 1, 2002, Earnings for any prior Plan Year shall not exceed $200,000.

 

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2.15       Effective Date .    “Effective Date” of this restated Plan shall mean January 1, 2005 except as provided herein or as otherwise required for the Plan to continue to maintain its qualified status under Code Section 401(a). The “Original Effective Date” of the Plan shall mean July 26, 1989.

2.16       Eligibility Computation Period .    “Eligibility Computation Period” shall mean a 365 day period used for determining whether an Employee is eligible to participate in the Plan. Each Employee shall be credited with (i) the aggregate number of days between each Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date) and (ii) the aggregate number of days during a Period of Severance of less than twelve months.

2.17       Eligible Employee .    “Eligible Employee” shall mean:

(a)        For Plan Years beginning on or after January 1, 2003 and subject to paragraph (d) below, an Eligible Employee is any “Election Eligible Employee” who makes a one-time irrevocable election under procedures established by the Sponsor to continue as an Active Participant for Plan Years beginning on or after January 1, 2003 and who did not incur a Severance on or after October 1, 2002. An “Election Eligible Employee” is any Employee who is an Eligible Employee (as defined in paragraph (b) below) on September 30, 2002. The classification of an Employee as an Eligible Employee for Plan Years beginning on or after January 1, 2003 shall be determined solely from the records obtained during the election period established by the Sponsor.

(b)        For the 2002 Plan Year only and subject to paragraph (d) below, an Eligible Employee is any Employee who is employed by the Company but not by a joint venture in which the Company is a joint venturer and whose Employment Commencement Date or most recent Reemployment Commencement Date is prior to October 1, 2002; provided, however, if a former Employee is rehired on or after October 1, 2002 but prior to January 1, 2003 and would be an Eligible Employee but for his or her Reemployment Commencement Date, he or she shall be an Eligible Employee commencing on his or her Reemployment Commencement Date but shall cease to be an Eligible Employee as of January 1, 2003. Notwithstanding the foregoing, a Leased Employee or an Employee of the Company who, as of October 1, 2002, is neither a United States citizen nor a United States resident shall not be an Eligible Employee.

(c)        For Plan Years beginning prior to January 1, 2002 and subject to paragraph (d) below, an Eligible Employee is any Employee who is employed by the Company but not by a joint venture in which the Company is a joint venturer; provided, however, a Leased Employee or an Employee of the Company who is neither a United States citizen nor a United States resident shall not be an Eligible Employee.

 

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(d)        Notwithstanding paragraphs (a), (b), and (c) above, (i) an Employee with respect to whom retirement benefits have been the subject of good faith collective bargaining shall be an Eligible Employee to the extent a collective bargaining agreement relating to him or her so provides and (ii) a temporary employee classified as such by the Sponsor or an Affiliated Company shall not be an Eligible Employee for Plan Years beginning prior to January 1, 1996.

2.18       Eligible Retirement Plan .    “Eligible Retirement Plan” shall mean (i) an individual retirement account or annuity described in Code Section 408(a) or 408(b), (ii) a qualified retirement plan described in Code Section 401(a) or 403(a) that accepts Eligible Rollover Distributions, (iii) an annuity contract described in Code Section 403(b) that accepts Eligible Rollover Distributions, and (iv) an eligible plan described in Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. Notwithstanding the foregoing, “Eligible Retirement Plan” shall mean (i) with respect to a Participant or Beneficiary who is a resident of Puerto Rico, a qualified retirement plan described in Code Section 401(a) or 403(a) that accepts Eligible Rollover Distributions and that is also a qualified plan under Puerto Rico Code Section 1165 and (ii) with respect to a non-spouse Beneficiary, an individual retirement account or annuity described in Code Section 408(a) or 408(b).

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

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

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

(c)        the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and

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

For purposes of this Section, ‘Distributee’ shall mean any Employee or former Employee receiving a distribution from the Plan. A Distributee also includes the Employee or former Employee’s Beneficiary 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 XIII) with regard to the interest of the spouse or former spouse. For purposes of the Puerto Rico Code, any

 

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distribution to a Distributee who is a resident of Puerto Rico shall be an Eligible Rollover Distribution.

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

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

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

(c)        Any individual whose employment is transferred from the Sponsor or an Affiliated Company to Advanced Medical Optics, Inc. (“AMO”) in connection with the distribution of the stock of AMO by the Sponsor to its stockholders, effective as of the day following such transfer, hereinafter referred to as an “AMO Employee.” An individual is an AMO Employee if classified or identified as such in the payroll records of the Sponsor or an Affiliated Company or in the Employee Matters Agreement entered into between the Sponsor and AMO.

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

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

2.23       Fund .    “Fund” shall mean the assets accumulated for purposes of the Plan.

 

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

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

(i)      Employees who at any time during the Plan Year or preceding Plan Year are or were Five Percent Owners (as defined in Section 12.2).

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

(b)        The term “Highly Compensated Employee” includes a Former Highly Compensated Employee. A Former Highly Compensated Employee is any Employee who was (i) a Highly Compensated Employee when he or she terminated employment with the Company or (ii) a Highly Compensated Employee at any time after attaining age 55. Notwithstanding the foregoing, an Employee who separated from service prior to 1987 shall be treated as a Former Highly Compensated Former Employee only if during the separation year (or year preceding the separation year) or any year after the Employee attains age 55 (or the last year ending before the Employee’s 55th birthday), the Employee either received Compensation in excess of $50,000 or was a Five Percent Owner (as defined in Section 12.2).

(c)        For the purpose of this Section , the term “Compensation” means compensation as defined in Code Section 415(c)(3), as set forth in Section 5.12.

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

The determination of who is a Highly Compensated Employee, including the determination of the Compensation that is considered, shall be made in accordance with Code Section 414(q) and applicable regulations to the extent permitted thereunder.

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

2.26       Investment Manager .    “Investment Manager” shall mean the one or more Investment Managers, if any, that are appointed pursuant to the provisions of Section 9.15 and who constitute investment managers under Section 3(38) of ERISA.

2.27       Leased Employee .    “Leased Employee” shall mean any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full

 

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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.

2.28       Normal Retirement Date .    “Normal Retirement Date” shall mean the date a Participant attains age 65.

2.29       Participant .    “Participant” shall mean: (i) an Active Participant, or (ii) a former Active Participant who is eligible for an immediate or deferred benefit under Article V.

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

2.31       Plan .    “Plan” shall mean the Allergan, Inc. Pension Plan described herein and as amended from time to time.

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

2.33       Plan Year .    “Plan Year” shall mean the calendar year. The Plan Year shall be the limitation year for purposes of computing limitations on contributions, benefits and allocations.

2.34       Primary Social Security Benefit .    “Primary Social Security Benefit” shall mean for purposes of determining a Participant’s Accrued Benefit:

(a)        for an Employee whose Severance occurs on or after the date he or she attains Age 62, the immediate benefit that is or would have been payable to him or her at Age 65 or his or her actual retirement, if earlier, under the Social Security Act (or foreign equivalent) as then in effect; or

(b)        for an Employee whose Severance occurs prior to Age 62, the benefit that would be payable to him or her at Age 62 under the Social Security Act (or foreign equivalent) as in effect when he or she incurs a Severance, without adjustments for cost of living, projected on the assumption that for each month before Age 60, he or she continues to receive wages for Social Security purposes equal to one-twelfth of his or her Earnings for the calendar year preceding the year in which his or her Severance occurs,

 

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and that he or she shall receive no further wages for Social Security purposes after the later of Age 60 or his or her actual Severance.

2.35       Qualified Joint and Survivor Annuity .    “Qualified Joint and Survivor Annuity” shall mean the form of pension benefit described in this Section. Under a Qualified Joint and Survivor Annuity, monthly payments to the Participant shall begin on the date provided in Article V and continue until the last day of the month in which the Participant’s death occurs. On the first day of the following month, monthly payments in an amount equal to 50% of the monthly payment to the Participant which is attributable to his or her Accrued Benefit shall begin to his or her surviving spouse but only if the spouse was married to the Participant on the date as of which payments to the Participant began. Payments to a surviving spouse under a Qualified Joint and Survivor Annuity shall end on the last day of the month in which the spouse’s death occurs. The anticipated payments under a Qualified Joint and Survivor Annuity shall be the actuarial equivalent of a pension in the form of a Single Life Annuity in the amount set forth in Article V.

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

2.37       Severance .    “Severance” shall mean the termination of an Employee’s employment with the Sponsor or an Affiliated Company by reason of such Employee’s death, retirement, resignation or discharge, or otherwise. For purposes of determining a Participant’s Vesting Years and Benefit Years, such Participant shall not incur a Severance by reason of the following:

(a)        absence due to service in the Armed Forces of the United States, if the Employee makes application to the Company for resumption of work with the Company, following discharge, within the time specified by then applicable law or absence due to qualified military service if so required by Code Section 414(u);

(b)        absence resulting from temporary disability on account of illness or accident;

(c)        absence while covered by a long term disability plan maintained by the Company that is prior to the earlier of (i) a Participant’s Normal Retirement Date (or, if later, such date the Participant is no longer classified as an Eligible Employee as determined by the payroll records of the Sponsor or Affiliated Company or (ii) the date

 

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his or her pension under the Plan commences, provided that the Participant has at least five (5) Vesting Years as of the first date of such absence; or

(d)        such other types of absence as the Company may determine by uniform policy.

2.38       Severance Date .    “Severance Date” shall mean, in the case of any Employee who incurs a Severance, the day on which such Employee is deemed to have incurred such Severance as determined in accordance with the provisions of Section 2.37. In the case of any Employee who incurs a Severance as provided under Section 2.37 and who is entitled to a subsequent payment of compensation for reasons other than future services (e.g., as back pay for past services rendered or as payments in the nature of severance pay), the Severance Date of such Employee shall be as of the effective date of the Severance event (e.g., the date of his or her death, effective date of a resignation or discharge, etc.), and the subsequent payment of the aforementioned type of post-Severance compensation shall not operate to postpone the timing of the Severance Date for purposes of the Plan except as provided in Section 2.37.

2.39       Single Life Annuity .    “Single Life Annuity” shall mean the form of pension benefit described in this Section. Under a Single Life Annuity, monthly payments to the Participant shall begin on the date provided in Article V and continue until the last day of the month in which the Participant’s death occurs.

2.40       SKB Plan .    “SKB Plan” shall mean the Retirement Plan for Employees of SmithKline Beckman Corporation.

2.41       Special Retirement Eligibility Date .    “Special Retirement Eligibility Date” shall mean the date a Participant attains age 62.

2.42       Spin-Off Date .    “Spin-Off Date” shall mean on or about July 26, 1989, SmithKline Beckman Corporation distributed the stock of the Sponsor to its shareholders, rendering Eligible Employees of the Company ineligible to participate in the SKB Plan. The liability for the accrued benefits of Eligible Employees under the SKB Plan and assets sufficient to satisfy applicable legal requirements were transferred to the Plan in November of 1989. The benefits which were previously provided by the SKB Plan for former employees of Company who terminated prior to the Spin-Off Date shall be paid under the Plan.

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

2.44       Trust .    “Trust” or” Trust Fund” shall mean the one or more trusts created for funding purposes under the Plan.

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

 

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2.46       Vesting Year .    “Vesting Year” shall mean a credit awarded as follows:

(a)        In the case of any Employee who was employed by the Sponsor or an Affiliated Company at any time prior to the Original Effective Date, for the period prior to the Original Effective Date, such Employee shall be credited with that number of Vesting Years under this Plan equal to the number of Vesting Years (as that term is defined in the SKB Plan) credited to such Employee under the SKB Plan as of the Original Effective Date.

(b)        In the case of any Employee who is employed by the Sponsor or an Affiliated Company on or after the Original Effective Date, an Employee shall be credited with a number of Vesting Years equal to 1/365th of (i) the aggregate number of days between each Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date) and (ii) the aggregate number of days for any Period of Severance of less than twelve months. Solely for the purpose of determining an Employee’s Vesting Years under this paragraph (b), in the case of an Employee who is employed by the Sponsor or an Affiliated Company on the Original Effective Date, that date shall be deemed to be an Employment Commencement Date of the Employee (with Vesting Years for the period prior to the Original Effective Date determined under paragraph (a) above).

(c)        In the case of any Employee who is employed under Departments 120 through 130 at the Allergan Medical Optics - Lenoir facility, such Employee shall be credited with a number of Vesting Years equal to 1/365th of (i) the aggregate number of days between each Employment Commencement Date (or Reemployment Commencement Date) of the Employee and the Severance Date which immediately follows that Employment Commencement Date (or Reemployment Commencement Date) and (ii) the aggregate number of days for any Period of Severance of less than twelve months. Solely for the purpose of determining an Employee’s Vesting Years under this paragraph (c), an Employee’s Employment Commencement Date or Reemployment Commencement Date shall include dates prior to Allergan Medical Optics - Lenoir facility becoming an Affiliated Company.

 

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ARTICLE III

PARTICIPATION

3.1         Participation for the 2003 Plan Year and thereafter .    For Plan Years beginning on or after January 1, 2003, participation in the Plan shall be determined as follows:

(a)        Each Employee or former Employee who is a Participant in the Plan as of December 31, 2002 shall continue as a Participant and each Participant who is an Active Participant in the Plan as of December 31, 2002 shall continue as an Active Participant so long as he or she is an Eligible Employee (as defined in Section 2.17(a)). Any other Employee shall not be eligible to become a Participant in the Plan and any Participant who is not an Active Participant on January 1, 2003 shall not be eligible to become an Active Participant in the Plan.

(b)        If an Active Participant incurs a Severance after January 1, 2003 and is subsequently reemployed, he or she shall not be reinstated as an Active Participant but shall continue to be credited with Vesting Service in accordance with Section 2.46 and shall be entitled to a monthly pension upon completing five (5) Vesting Years or reaching the Special Retirement Eligibility Date and completing one (1) Vesting Year, the amount of which shall be equal to his or her Accrued Benefit determined as of his or her first Severance Date following January 1, 2003, at such times and in such forms as permitted under Article V.

3.2         Participation for the 2002 Plan Year .    For the 2002 Plan Year, each Employee or former Employee who is a Participant in the Plan as of December 31, 2001 shall continue as a Participant and each Participant who is an Active Participant in the Plan as of December 31, 2001 shall continue as an Active Participant so long as he or she is an Eligible Employee (as defined in Section 2.17(b)). Any other Eligible Employee (as defined in Section 2.17(b)) shall become a Participant in the Plan on the later of: (i) the date the Eligible Employee completes his or her Eligibility Computation Period, or December 31, 2002, if earlier, or (ii) the date the Employee becomes an Eligible Employee, and shall continue as an Active Participant so long as he or she is an Eligible Employee.

3.3         Participation prior to the 2002 Plan Year .    For Plan Years prior to January 1, 2002, each Eligible Employee (as defined in Section 2.17(c)) became a Participant in the Plan on the later of: (i) the date the Employee completed his or her Eligibility Computation Period or (ii) the date the Employee became an Eligible Employee, and continued as an Active Participant so long as he or she was an Eligible Employee.

 

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ARTICLE IV

ACCRUAL OF BENEFITS

4.1         Accrued Benefit Formula .    Each Participant shall have an Accrued Benefit equal to one-twelfth (1/12) of the sum of:

(a)        1.23% of his or her Average Earnings not in excess of Covered Compensation multiplied by the number of his or her Benefit Years to a maximum of 35 Benefit Years; plus

(b)        1.73% of his or her Average Earnings in excess of Covered Compensation multiplied by the number of his or her Benefit Years to a maximum of 35 Benefit Years; plus

(c)        .50% of his or her Average Earnings multiplied by the number of his or her Benefit Years in excess of 35 Benefit Years.

For purposes of this Section, “Covered Compensation” is the average (without indexing) of the social security wage bases in effect for each calendar year during the 35-year period ending with the calendar year in which the Participant attains (or will attain) the social security retirement age as defined in Code Section 415(b)(8). In determining a Participant’s Covered Compensation for a Plan Year, it is assumed that the social security wage base in effect at the beginning of the Plan Year will remain the same for all future calendar years.”

4.2         Minimum Accrued Benefit .    Notwithstanding any other provision of the Plan, under no circumstances shall any Participant’s Accrued Benefit under the Plan be less than the amount of his or her accrued benefit under the SKB Plan as of the Spin-Off Date under the terms of the SKB Plan in effect as of that date, including any amendments made to the SKB Plan which are effective on the Spin-Off Date, notwithstanding the fact that they may have been adopted after such date.

4.3         Accrued Benefit for Participants with Earnings in excess of $150,000 prior to January 1, 1994 .    The Accrued Benefit of a “Section 401(a)(17) Employee” shall be the greater of:

(a)        The Section 401(a)(17) Employee’s Accrued Benefit determined under the benefit formula in effect on or after January 1, 1994 taking into account all Benefit Years of the Section 401(a)(17) Employee; or

(b)        the sum of:

(i)      the Section 401(a)(17) Employee’s Accrued Benefit determined as of December 31, 1993 frozen in accordance with Section 1.401(a)(4)-13 of the Treasury Regulations; and

 

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(ii)     the Section 401(a)(17) Employee’s Accrued Benefit determined under the benefit formula applicable for Plan Years beginning on or after January 1, 1994 taking into account only those Benefit Years of the Section 401(a)(17) Employee credited on or after January 1, 1994; or

(c)        the sum of:

(i)      the Employee’s Accrued Benefit determined as of December 31, 1988 under the SKB Plan and frozen in accordance with Section 1.401(a)(4)-13 of the Treasury Regulations; and

(ii)     the Section 401(a)(17) Employee’s Accrued Benefit determined under the benefit formula applicable for Plan Years beginning on or after January 1, 1989 taking into account only those Benefit Years of the Section 401(a)(17) Employee credited on or after January 1, 1989 and before January 1, 1994; and

(iii)    the Section 401(a)(17) Employee’s Accrued Benefit determined under the benefit formula applicable for Plan Years beginning on or after January 1, 1994 taking into account only those Benefit Years of the Section 401(a)(17) Employee credited on or after January 1, 1994.

For purposes of this Section, a “Section 401(a)(17) Employee” means a Participant whose current Accrued Benefit as of January 1, 1994 is based on Earnings in excess of $150,000.

4.4         Accrued Benefit for Participants participating in the Voluntary Early Retirement Incentive Program (“VERI”) .    The Accrued Benefit of a “VERI Employee” shall be determined as follows:

(a)        For the purpose of calculating the Accrued Benefit of a VERI Employee under Section 4.1, a VERI Employee shall be credited with five (5) Benefit Years in addition to the number of Benefit Years credited under Section 2.9.

(b)        The early retirement reduction factors of Sections 5.3(a) and 5.3(b) shall not apply to reduce the monthly pension derived from the Accrued Benefit of a VERI Employee.

For purposes of this Section 4.4 and Section 4.5 below, a “VERI Employee” means a Participant who has elected by August 31, 1998 (or such later date as approved by the Sponsor but in no event later than September 30, 1998) to participate in the Voluntary Early Retirement Incentive program offered by the Sponsor.

4.5         Temporary Supplemental Monthly Benefit for Participants participating in the Voluntary Early Retirement Incentive Program .    In addition to his or her Accrued Benefit, a VERI Employee shall receive a temporary supplemental monthly pension determined as follows:

 

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(a)        A VERI Employee who is unmarried when his or her monthly pension payments begin shall receive a temporary supplemental monthly pension following the month in which his or her retirement occurs and continuing until the earlier of (i) the month in which the VERI Employee attains age 62 or (ii) the month in which the VERI Employee dies. The amount of the temporary supplemental monthly pension shall be determined in accordance with the following Table:

 

(b)        A VERI Employee who is married when his or her monthly pension payments begin shall receive a temporary supplemental monthly pension following the month in which his or her retirement occurs and continuing until the earlier of (i) the month in which the VERI Employee attain age 62 or (ii) the month in which the VERI Employee dies unless the VERI Employee elects to receive his or her monthly pension in the form of (i) a contingent beneficiary option, (ii) a guaranteed payment option, or (iii) a level income option as described in Section 6.4. In such case, if the married VERI Employee dies before reaching age 62, his or her temporary supplemental monthly pension shall be paid to his or her spouse, if living, and shall continue until the month in which the VERI Employee would have attained age 62. The amount of the temporary supplemental monthly pension shall be determined in accordance with the Table set forth in subsection (a) above.

 

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ARTICLE V

BENEFITS

5.1         Normal Retirement .    If a Participant incurs a Severance on account of retirement on or between the Special Retirement Eligibility Date and the Normal Retirement Date, he or she shall be entitled to a monthly pension that begins as of the first day of the month coincident with or next following his or her Severance Date which is equal to his or her Accrued Benefit.

5.2         Postponed Retirement .    If a Participant incurs a Severance on account of retirement after attaining the Normal Retirement Date, he or she shall be entitled to a monthly pension that begins as of the first day of the month coincident with or next following his or her Severance Date which is equal to his or her Accrued Benefit determined as of the Normal Retirement Date increased by the greater of (i) any additional benefit accruals provided under Article IV after the Normal Retirement Date, or (ii) an actuarial adjustment to take into account a delay in the payment of the Participant’s Accrued Benefit using the actuarial assumptions set forth in Appendix A for determining actuarial equivalence. The foregoing provisions of this Section 5.2 shall be interpreted and applied in accordance with the provisions of Proposed Treasury Regulation Section 1.411(b)-2(b)(4)(iii) or the corresponding provision of any subsequently adopted final regulations.

5.3         Early Retirement .    A Participant shall be eligible for Early Retirement as set forth below:

(a)        If a Participant who has at least five (5) Vesting Years and whose age is at least 55 incurs a Severance on account of retirement, he or she shall be eligible for Early Retirement as set forth in this paragraph (a):

(i)      Such Participant shall be entitled to a monthly pension that begins as of the first day of the month coincident with or next following his or her Severance Date or, at his or her election, a monthly pension that begins as of the first day of any subsequent month not later than the Normal Retirement Date.

(ii)     Such Participant’s monthly pension shall be equal to his or her Accrued Benefit but reduced in accordance with the following Table, with the percentage for a fractional part of a year of age being prorated on the basis of a number of full months.

 

 

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(iii)    A Participant who is an AMO Employee (as defined in Section 2.20) shall be treated as having not less than five (5) Vesting Years as of the day following his or her transfer to Advanced Medical Optics, Inc. for purposes of this paragraph (a).

(b)        If a Participant who was a Participant on June 26, 1990, and who has at least five (5) Vesting Years, and whose age plus Benefit Years sum to at least 55 incurs a Severance on account of retirement, he or she shall be eligible for Early Retirement as set forth in this paragraph (b):

(i)      Such Participant shall be entitled to a monthly pension that begins as of the first day of the month coincident with or next following his or her Severance Date or, at his or her election, a monthly pension that begins as of the first day of any subsequent month not later than the Normal Retirement Date.

(ii)     Such Participant’s monthly pension shall be equal to his or her Accrued Benefit determined as of June 26, 1990, as set forth under the formula contained in Appendix B, but reduced in accordance with the following Table, with the percentage for a fractional part of a year of age being prorated on the basis of a number of full months.

 

Provided, that the above percentages shall be increased by 1% to a maximum of 10% for each of the Participant’s Benefit Years in excess of 20, with the percentage for a fractional part of a Benefit Year being prorated on the basis of the number of full months. In no event, however, shall a percentage be increased above 100%.

 

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(iii)    Notwithstanding subparagraph (ii) above, (1) if the Participant is age 55 or older when payments begin, the Participant shall receive a total monthly pension which is the greater of the amount determined under paragraph (a)(ii) or paragraph (b)(ii) above, and (2) if the Participant is less than age 55 when benefit payments begin, the Participant shall receive a monthly pension which is determined under paragraph (b)(ii) plus an additional monthly pension commencing at age 55 which is actuarially equivalent to the excess, if any, of the actuarial equivalent value of the monthly pension under paragraph (a)(ii) determined at age 55 over the actuarial equivalent value of the monthly pension under paragraph (b)(ii) determined at age 55.

(c)        A Participant who has elected by August 31, 1998 (or such later date as approved by the Sponsor but in no event later than September 30, 1998) to participate in the Voluntary Early Retirement Incentive program offered by the Sponsor shall be entitled to a monthly pension that begins as of the first day of the month coincident with or next following his or her Severance Date or, at his or her election, a monthly pension that begins as of the first day of any subsequent month not later than the Normal Retirement Date.

(d)        If a Participant incurs a Severance and retires under this Section, and his or her monthly pension begins after the first day of the month coincident with or next following the Special Retirement Eligibility Date, such Participant shall be entitled to the monthly pension payments he or she would have received had his or her pension began as of the first day of the month following the Special Retirement Eligibility Date.

5.4         Termination of Employment .

(a)        If a Participant who has at least five (5) Vesting Years incurs a Severance for any reason other than death and is not eligible to retire under Section 5.3, he or she shall be entitled to a monthly pension that begins on the first day of the month coincident with or next following the date he or she attains age 55, or at his or her election, a monthly pension that begins as of the first day of any subsequent month not later than the Normal Retirement Date. In the event a Participant elects that his or her monthly pension begin prior to the Special Retirement Eligibility Date, the amount of his or her monthly pension shall be determined as provided in Section 5.3(a).

(b)        If a Participant who has at least five (5) Vesting Years incurs a Severance for any reason other than death and is not eligible to retire under Section 5.3 but was a Participant on June 26, 1990, he or she shall be entitled to a monthly pension that begins on the first day of the month coincident with or next following the date his or her Age and Benefit Years total 55 years, or at his or her election, a monthly pension that begins as of the first day of any subsequent month not later than the Normal Retirement Date. In the event a Participant elects that his or her monthly pension begin prior to the Special

 

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Retirement Eligibility Date, the amount of his or her monthly pension shall be determined as provided in Section 5.3(b).

(c)        If a Participant incurs a Severance and is entitled to a monthly pension under this Section, and his or her monthly pension begins after the first day of the month coincident with or next following the Special Retirement Eligibility Date, such Participant shall be entitled to the monthly pension payments he or she would have received had his or her pension began as of the first day of the month following the Special Retirement Eligibility Date. If a Participant incurs a Severance and is entitled to a monthly pension under this Section, and his or her monthly pension begins after the first day of the month coincident with or next following the Normal Retirement Date, such Participant shall be entitled to the monthly pension payments he or she would have received had his or her pension began as of the first day of the month following the Special Retirement Eligibility Date (or, if later, his or Severance Date) or, in lieu thereof, a monthly pension which is equal to his or her Accrued Benefit determined as of the Special Retirement Eligibility increased by an actuarial adjustment to take into account a delay in the payment of the Participant’s Accrued Benefit using the actuarial assumptions set forth in Appendix A for determining actuarial equivalence.

5.5         Consent to Pension Payments .    The Participant and, if applicable, the Participant’s spouse must consent to the payment or commencement of the Participant’s pension prior to the Normal Retirement Date in accordance with the following rules:

(a)        The consent of the Participant shall be obtained in writing within the election period established by the Committee which shall commence no more than 180 days prior to the Participant’s Annuity Starting Date. No such consent shall be effective with respect to a married Participant unless the Participant’s spouse consents thereto in writing. Spousal consent shall not be required if a married Participant elects a joint and survivor option providing for payment of at least 50% of his or her annuity to his or her surviving spouse or the Sponsor determines there is no spouse or the spouse cannot be located. Neither the consent of the Participant nor the Participant’s spouse shall be required to the extent the payment or commencement of the Participant’s pension is required to begin under Section 5.8.

(b)        Each Participant shall receive in written nontechnical language, a notice which shall include a general description of the material features, and an explanation of the relative values of, the available optional forms of benefit. Such notice shall be furnished to the Participant no less than 30 days and no more than 180 days prior to the Participant’s Annuity Starting Date; provided, however, the Participant’s pension may be paid or commence less than 30 days after such notice is furnished if the notice clearly informs the Participant that he or she has at least 30 days after receiving the notice to consider the decision of whether or not to elect the commencement of his or her pension (and, if applicable, an optional form of benefit), and the Participant, after receiving the notice, affirmatively elects to commence his or her pension.

 

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5.6         Maximum Pension .    The largest aggregate annual pension that may be paid to any Participant in any Plan Year under the Plan shall be determined as follows:

(a)        Subject to paragraphs (b) through (d), the largest aggregate annual pension that may be paid to any Participant in any Plan Year, when added to the pension under any other qualified defined benefit plan maintained by the Sponsor or any Affiliated Company, shall not exceed the lesser of:

(i)      The Defined Benefit Dollar Limitation of $160,000 ($90,000 for Plan Years prior to the 2002 Limitation Year), multiplied by a fraction the numerator of which is the number of the Participant’s years of participation (or a part thereof) in the Plan or, up to the Spin-Off Date in the SKB Plan or in the Beckman Instruments, Inc. Pension Plan, not in excess of ten, and the denominator of which is ten; or

(ii)     The Defined Benefit Compensation Limitation of 100% of the Participant’s average annual total cash remuneration from the Company in the thirty-six consecutive months which yield the highest average, multiplied by a fraction the numerator of which is the number of the Participant’s Vesting Years (or a part thereof) not in excess of ten and the denominator of which is ten.

Benefit increases resulting from the increase in the Defined Benefit Dollar Limitation and the Defined Benefit Compensation Limitation under the Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to all Employees participating in the Plan who have one (1) Hour of Service on or after January 1, 2002.

(b)        The limitations set forth in this Section 5.6 shall be determined as provided below:

(i)      The Defined Benefit Dollar Limitation shall automatically be adjusted annually for increases in the cost of living as provided in Code Section 415(d). The adjusted limitation shall be effective as of January 1st of each calendar year and shall be applicable to Limitation Years ending with or within that calendar year. Such new limitation is incorporated herein by this reference and shall be substituted for the Defined Benefit Dollar Limitation set forth in paragraph (a) above.

(ii)     “Cash remuneration” shall mean “compensation” as defined in Section 5.12.

(iii)    For purposes of this Section, a Participant’s pension shall be measured as a Single Life Annuity or Qualified Joint and Survivor Annuity. A pension benefit shall be treated as a Qualified Joint and Survivor Annuity if it meets all of the requirements as defined in Section 2.35 except that the periodic payments to the spouse may be equal to or greater than 50%, but not more than 100%, of those to the Participant.

 

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(iv)     A benefit payable in a form other than a Single Life Annuity or Qualified Joint and Survivor Annuity described in subparagraph (iii) above shall be adjusted to the Actuarial Equivalent of a Straight Life Annuity before applying the limitations of this Section. Effective for Limitation Years commencing on or after January 1, 1995, Actuarial Equivalent for the form of benefit shall be determined using (1) the interest rate and mortality table specified in Appendix A or (2) 5% interest (or for lump sums or other benefits subject to Code Section 417(e)(3), the applicable interest rate under Code Section 415(b)(2)(E)(ii) as determined as provided in Appendix A) and the applicable mortality table under Code Section 415(b)(2)(E)(v), whichever produces the greater Actuarial Equivalent value.

(v)      In addition to other limitations set forth in the Plan and notwithstanding any other provisions of the Plan, the accrued benefit, including the right to any optional benefits provided in the Plan (and all other defined benefit plans required to be aggregated with this Plan under the provisions of Code Section 415) shall not increase to an amount in excess of the amount permitted under Code Section 415 at any time.

(c)        For Limitation Years beginning on or after January 1, 2002, the Defined Benefit Dollar Limitation for any Participant shall be adjusted as follows:

(i)      If a Participant’s pension begins prior to age 62, the Defined Benefit Dollar Limitation applicable to the Participant at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the Defined Benefit Dollar Limitation applicable to the Participant at age 62 (as adjusted under paragraph (a) above, if required). The Defined Benefit Dollar Limitation applicable at an age prior to age 62 is determined as the lesser of (1) the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using the factors specified in Section 5.3 or (2) the actuarial equivalent (at such age) of the Defined Benefit Dollar Limitation computed using a 5 percent interest rate and the applicable mortality table specified in Appendix A to the Plan. Any decrease in the Defined Benefit Dollar Limitation determined in accordance with this paragraph (c) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Participant. If any benefits are forfeited upon death, the full mortality decrement is taken into account.

(ii)     If a Participant’s pension begins after age 65, the Defined Benefit Dollar Limitation applicable to the Participant at such later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the Participant at age 65 (as adjusted under paragraph (a) above, if required). The Defined Benefit Dollar Limitation applicable at an age after age 65 is determined as the lesser of (1) the Actuarial Equivalent (at such age) of the Defined Benefit Dollar Limitation computed using the interest rate and mortality table specified in Appendix A to the Plan or (2) the actuarial equivalent (at such age) of the Defined Benefit Dollar Limitation computed using a 5 percent interest rate assumption and

 

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the applicable mortality table specified in Appendix A to the Plan. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored.

(d)        For Limitation Years beginning prior to January 1, 2002, the Defined Benefit Dollar Limitation for any Participant shall be adjusted if a Participant’s pension begins before or after he or she attains his or her Social Security Retirement Age. In such case, the Defined Benefit Dollar Limitation shall be adjusted to its Actuarial Equivalent beginning at the Participant’s Social Security Retirement Age; except that if his or her pension begins before he or she attains his or her Social Security Retirement Age, but after he or she attains age 62, the Defined Benefit Dollar Limitation shall be reduced by 5/9 of 1% for each