GENENTECH, INC. TAX REDUCTION INVESTMENT PLAN (January1, 2006 Restatement) TABLE OF CONTENTS

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(January 1, 2006 Restatement)

 

 

 

 

 

 

 

 

1.1   Affiliate. “Affiliate” means a corporation, trade or business which is, together with any Employer, a member of a controlled group of corporations or an affiliated service group or under common control (within the meaning of Section 414(b), (c), (m) or (o) of the Code), but only for the period during which such other entity is so affiliated with the Employer.

 

1.2   Alternate Payee. “Alternate Payee” means any spouse, former spouse, child or other dependent (within the meaning of Section 152 of the Code) of a Participant who is recognized by a QDRO (as defined in Section 8.5) as having a right to receive any immediate or deferred payment of all or a portion of the balance credited to a Participant’s Account under the Plan.

 

1.3   Beneficiary. “Beneficiary” means the person or persons entitled to receive benefits under the Plan upon the death of a Participant in accordance with Section 7.6.

 

1.4   Board of Directors. “Board of Directors” means the Board of Directors of the Company, as from time to time constituted.

 

1.5   Catch-Up Contributions. “Catch-Up Contributions” means as to each Participant the “catch-up contributions” (if any) contributed under the Plan by the Employers in accordance with Sections 3.2 and 5.1.

 

1.6   Code. “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific Section of the Code shall include such Section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such Section.

 

 

 

 

1.7   Committee. “Committee” means the administrative committee charged with responsibility for the general administration of the Plan pursuant to Section 9, as it may be constituted from time to time.

1.8   Common Stock. “Common Stock” means the common stock of the Company, par value $0.02, as from time to time constituted.

 

1.9   Common Stock Fund. “Common Stock Fund” means the Investment Fund that is wholly or primarily invested in shares of Common Stock.

 

1.10  Company. “Company” means Genentech, Inc., a Delaware corporation, and any successor by merger, consolidation or otherwise that assumes (in writing) the obligations of the Company under the Plan.

 

1.11   Compensation. “Compensation” means all salary, wages, Eligible Commissions and Eligible Bonuses paid by any Employer with respect to services performed during any period by an Employee, including Salary Deferrals and Catch-Up Contributions, but excluding (a) any contributions made by any Employer under this Plan (other than Salary Deferrals and Catch-Up Contributions) or any other employee benefit plan (within the meaning of Section 3(3) of ERISA), and (b) other items, even if reported as income on the Employee’s IRS Form W-2, such as income from the exercise of stock options, proceeds from the redemption of Common Stock, tuition reimbursements, reimbursements of health club dues, Genenchecks, sign-on bonuses, referral bonuses, severance payments, and relocation expenses, subject to the following:

 

(a) A Participant’s Compensation shall be determined without regard to any increase or decrease in the amount of his or her total remuneration that is paid in cash as the result of compensation reductions elected under Sections 125 or 132(f)(4) of the Code; and

 

 

 

 

(b) The determination of the amount of a Participant’s Compensation shall be made by his or her Employer (or its designee), in accordance with the records of the Employer, and shall be conclusive.

 

1.12   Compensation Limit. “Compensation Limit” means the dollar limit prescribed in Section 401(a)(17) of the Code, as adjusted pursuant to Sections 401(a)(17) and 415(d) of the Code (e.g., $220,000 for 2006). No portion of any Participant’s Compensation for a Plan Year that exceeds the Compensation Limit shall be taken into account for any purpose under the Plan for any Plan Year.

 

1.13   Disability. “Disability” means the mental or physical inability of a Participant to perform his or her normal job as evidenced by the certificate of a medical examiner satisfactory to the Committee (in its discretion) certifying that the Participant is disabled under the standards of the Company’s long-term disability plan.

 

1.14   Eligible Bonus. “Eligible Bonus” means (a) any annual cash bonus paid by the Employer to an Employee under the Company’s Corporate Bonus Program, or (b) any fourth calendar quarter commission payment under the Company’s Field Sales Incentive Compensation Plan (the “4^th Quarter Payout”); provided, however, that if the Participant receives both payments described in clauses (a) and (b) above in a given calendar year, then the term “Eligible Bonus” means the 4^th Quarter Payout. Notwithstanding the foregoing, all Eligible Bonus amounts shall be determined net of employee stock purchase plan and mandatory deductions including, without limitation, Employee-paid FICA and SDI withholdings.

 

1.15   Eligible Commissions. “Eligible Commissions” means any first, second or third calendar quarter commission payments under the Company’s Field Sales Incentive Compensation Plan.

 

 

 

 

1.16   Eligible Employee. “Eligible Employee” means every Employee of an Employer except:

(b)   An individual employed by any corporation or other business entity that is merged or liquidated into, or whose assets are acquired by any Employer, unless any two members of the Committee, acting in their capacities as officers of the Company rather than as fiduciaries with respect to the Plan, designate (in writing) the employees of that corporation or other business entity as Eligible Employees under the Plan;

 

(c) An Employee whose Compensation is not paid from any Employer’s United States payroll; and

 

(d) An individual who, as to any period of time, is classified or treated by an Employer as an independent contractor, a consultant, a Leased Employee or an employee of an employment agency or any entity other than an Employer, even if such individual is subsequently determined to have been a common-law employee of the Employer during such period.

1.17   Employee. “Employee” means an individual who is (a) employed by an Employer or Affiliate as a common-law employee, or (b) a Leased Employee. However, if Leased Employees constitute less than 20% of the nonhighly compensated work force (within the meaning of Section 414(n)(5)(C)(ii) of the Code), the term “Employee” shall not include those Leased Employees who are covered by a plan described in Section 414(n)(5) of the Code.

 

1.18   Employer. “Employer” means the Company and each Affiliate that adopts this Plan with the approval of the Board of Directors.

 

1.19   Employer Contributions. “Employer Contributions” means (collectively) Matching Contributions and Nonelective Contributions.

 

1.20   Entry Date. “Entry Date” means the first day of each payroll period.

 

 

 

 

1.21   ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific Section of ERISA shall include such Section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such Section.

 

1.22   Highly Compensated Employee or HCE. “Highly Compensated Employee” or “HCE” means a Highly Compensated Active Employee or a Highly Compensated Former Employee, as defined below:

(a)   “Highly Compensated Active Employee” means any Employee who performs services for an Employer or Affiliate during the Determination Year and who:

 

(1)   During the Look-Back Year (A) received Compensation in excess of the dollar limit prescribed in Section 414(q)(1)(B) of the Code, as adjusted pursuant to Sections 414(q)(1) and 415(d) of the Code (e.g., $100,000 for 2006), and (B) was a member of the top-paid group (within the meaning of Section 414(q)(3) of the Code) for such Year; or

 

(2)   Is or was a 5-percent owner (within the meaning of Section 414(q)(2) of the Code) at any time during the Determination Year or the Look-Back Year. 

 

(b)   “Highly Compensated Former Employee” means any Employee who (1) separated (or was deemed to have separated) from service prior to the Determination Year, (2) performed no services for any Employer or Affiliate during the Determination Year, and (3) was a Highly Compensated Active Employee for either the Plan Year in which the separation occurred or any Determination Year ending on or after his or her 55th birthday.

 

(c)   The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees who are in the top-paid group, shall be made in accordance with Section 414(q) of the Code.

 

(d)   For purposes of applying this Section 1.22:

 

(1)   “Compensation” means Total Compensation (as defined in Section 5.5.2(e) and applied using the definition of “Affiliate” in Section 1.1 rather than in Section 5.5.2(a));

 

(2)   “Determination Year” means the Plan Year for which the determination is being made; and

 

(3)   “Look-Back Year” means the Plan Year immediately preceding the Determination Year.

 

 

 

 

1.23   Hour of Service. “Hour of Service” means an hour credited to an Employee under this Section 1.23:

 

(a)   Paid Hours. An “Hour of Service” includes each hour for which:

 

(1)   An Employee is directly or indirectly paid or entitled to payment by an Employer or Affiliate for the performance of duties;

 

(2)   An Employee is directly or indirectly paid or entitled to payment by an Employer or Affiliate for periods during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including Disability), layoff, jury duty or Leave of Absence (with pay); and

 

(3)   Back pay (irrespective of mitigation damages) has been awarded or agreed to by an Employer or Affiliate.

 

(b)   No Duties Performed. Except as otherwise provided in subsection (d) below, no Hours of Service shall be credited for periods during which no duties are performed if payment by an Employer or Affiliate is made or due under a plan maintained solely for the purpose of complying with applicable worker’s compensation, unemployment compensation or disability insurance laws, or is made as reimbursement to an Employee for medical or medically related expenses. In no event will more than 501 Hours of Service be credited under this subsection (b) on account of any single continuous period during which an Employee performs no duties.

 

(c)   Crediting Rules. Hours of Service shall be credited under this Section 1.23 in accordance with U.S. Department of Labor Regulation Section 2530.200b-2(b) and (c).

 

(d)   Family-Related Absences. In the case of an Employee who is absent from active employment with an Employer or Affiliate for any period,

 

(1)   By reason of her pregnancy or the birth of his or her child,

 

(2)   By reason of the placement of a child with the Employee in connection with his or her adoption of such child,

 

(3)   For purposes of caring for any such child for a period beginning immediately following such birth or placement, or

 

(4)   On account of a leave of absence taken pursuant to the Family and Medical Leave Act of 1993, as amended (“FMLA”).

 

“Hour of Service” means any hour that is not credited as an Hour of Service (because the Employee is not paid or entitled to payment therefor) but which would otherwise normally have been credited to the Employee (but for the absence) under subsections (a) through (c) above. In any case in which the Committee is unable to determine the number of hours that would otherwise normally have been credited to an Employee (but for the absence) under this subsection (d), the Employee shall be

 

 

 

 

 credited with eight Hours of Service for each day of the absence. Notwithstanding the foregoing, (A) no more than 501 Hours of Service shall be credited under this subsection (d) to any individual on account of any single pregnancy, birth, placement or other FMLA leave, and (B) the hours described in this subsection (d) shall be treated as Hours of Service (i) for the Plan Year in which the absence begins, to the extent required to credit the Employee with 1,000 Hours of Service for that Plan Year, and (ii) with respect to the remainder of the 501 Hours of Service maximum, for the next following Plan Year.

 

1.24   Investment Funds. “Investment Funds” means (collectively) the investment funds described in Section 6.3.

 

1.25   Investment Manager. “Investment Manager” means any investment manager appointed by the Committee in accordance with Section 9.6.

 

1.26   Leased Employee. “Leased Employee” means any person (other than a common-law employee of the Employer or Affiliate) who, pursuant to an agreement between the Employer or Affiliate and any other person (“leasing organization”), has performed services for the Employer or Affiliate on a substantially full-time basis for a period of at least one (1) year, and such services are performed under the primary direction of or control by the Employer or Affiliate. Contributions or benefits provided a Leased Employee by a leasing organization which are attributable to services performed for the Employer or Affiliate shall be treated as provided by the Employer or Affiliate.

 

1.27   Leave of Absence. “Leave of Absence” means the period of an Employee’s absence from active employment:

 

(a)   Authorized by his or her Employer in accordance with its established and uniformly administered personnel policies, provided that the Employee returns to active employment after the authorized absence period expires, unless the Employee’s failure to return is attributable to his or her retirement or death; or

 

(b)   Because of military service in the armed forces of the United States, provided that the Employee returns to active employment following discharge within the period during which he or she retains reemployment rights under federal law.

 

 

 

 

1.28   Matching Contributions. “Matching Contributions” means as to each Participant the amounts (if any) contributed under the Plan by the Employers on account of Salary Deferrals in accordance with Sections 4.1 and 5.2.

 

1.29   1934 Act. “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time. Reference to a specific Section of the 1934 Act shall include any Section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such Section.

 

1.30   Nonelective Contributions. “Nonelective Contributions” means as to each Participant the amounts (if any) contributed under the Plan by the Employers in accordance with Sections 4.2 and 5.3.

 

1.31   Normal Retirement Age. “Normal Retirement Age” means age 55.

 

1.32   Participant. “Participant” means an Eligible Employee who has become a Participant in the Plan pursuant to Section 2.1 and has not ceased to be a Participant pursuant to Section 2.7, subject to the following:

 

(a)   For each Plan Year, a Participant shall be classified as an “Active Participant” if (1) he or she has enrolled in the Plan for any portion of the Plan Year by authorizing the required Salary Deferrals and/or Catch-Up Contributions in accordance with Sections 2.3, 3.1, 3.2 and 3.3, or (2) his or her active participation in the Plan is resumed during the Plan Year after the end of a suspension period in accordance with Section 2.4, 2.5 or 8.2.3; and

 

(b)   A Participant who is not an Active Participant shall be classified as an “Inactive Participant.”

 

1.33   Participant’s Accounts or Accounts. “Participant’s Accounts” or “Accounts” means as to any Participant the one or more separate accounts maintained in order to reflect his or her interest in the Plan. Each Participant’s Accounts shall be comprised of several separate subaccounts

 

 

1.33.1   “Catch-Up Contribution Account” means the subaccount maintained to record any Catch-Up Contributions that the Participant has elected to have contributed to his or her Catch-Up Contribution Account pursuant to Sections 3.2 and 3.3, and any adjustments relating thereto.

 

1.33.2   “GenenFlex Account” means the subaccount maintained to record any excess “flex credits” that the Participant previously elected under GenenFlex to have contributed to his or her GenenFlex Account during Plan Years when such contributions were permitted under the Plan (“Prior Excess Flex Credit Contributions”), and any adjustments relating thereto. For this purpose, “GenenFlex” means the cafeteria plan maintained by the Company under Section 125 of the Code.

 

1.33.3   “Loan Account” means the subaccount maintained to record any loans made to the Participant from his or her Accounts pursuant to Sections 5.4.3 and 8.4.

 

1.33.4   “Matching Account” means the subaccount maintained to record any Matching Contributions made on behalf of the Participant pursuant to Sections 4.1 and 5.2, and any adjustments relating thereto.

 

1.33.5   “Nonelective Contribution Account” means the subaccount maintained to record any Nonelective Contributions made on behalf of the Participant pursuant to Sections 4.2 and 5.3, and any adjustments relating thereto.

 

1.33.6   “Rollover Account” means the subaccount maintained to record any transfers to the Plan made by or on behalf of a Participant pursuant to Section 10.5, and any adjustments relating thereto.

 

 

 

 

1.33.7   “Salary Deferral Account” means the subaccount maintained to record any Salary Deferrals that the Participant has elected to have contributed to his or her Salary Deferral Account pursuant to Sections 3.1 and 3.3, and any adjustments relating thereto.

 

1.34   Plan. “Plan” means the Genentech, Inc. Tax Reduction Investment Plan, formerly the Genentech, Inc. Tax Incentive Savings Plan, as set forth in this instrument and as heretofore or hereafter amended from time to time in accordance with Section 11.2.

 

1.35   Plan Year. “Plan Year” means the calendar year.

 

1.36   Salary Deferrals. “Salary Deferrals” means as to each Participant the amounts (if any) contributed under the Plan by the Employers in accordance with Sections 3.4 and 5.1, pursuant to the salary deferral election made by the Participant in accordance with Sections 3.1 and 3.3.

 

1.37   Trust Agreement. “Trust Agreement” means the trust agreement entered into by and between the Company and the Trustee, as amended from time to time for the purpose of establishing and maintaining the Trust Fund.

 

1.38   Trust Fund. “Trust Fund” means all of the assets, at any time and from time to time, of the trust established by the Trust Agreement to hold the assets of the Plan.

 

1.39   Trustee. “Trustee” means Fidelity Management Trust Company, a Massachusetts trust company, and any additional, successor or substitute trustee or trustees from time to time acting as Trustee of the Trust Fund.

 

 

 

 

1.40 Valuation Date. “Valuation Date” means the last financial business day of each Plan Year, any other financial business day where a valuation is required under the terms of the Plan, and such other date(s) as the Committee (in its discretion) may designate from time to time.

 

 

 

2.1   Initial Eligibility.  An Employee shall become a Participant in the Plan on the date he or she becomes an Eligible Employee.

 

2.2   Employer Aggregation.  The status of an Employee as an Eligible Employee shall not be adversely affected merely by reason of his or her employment by more than one Employer during any Plan Year. The transfer of a Participant from employment with an Employer to employment with an Affiliate that is not an Employer shall not constitute an event entitling the Participant to a distribution under Section 7.

 

2.3   Participation.  Each Participant’s decision to become an Active Participant shall be entirely voluntary.

 

2.3.1   Active Participation. An Employee who has become a Participant under Section 2.1 may elect to become an Active Participant, effective as of any later Entry Date on which he or she is then an Eligible Employee, provided that he or she enrolls in the Plan and elects to make Salary Deferrals and/or Catch-Up Contributions, in such manner and within such advance notice period as the Committee (in its discretion) shall specify, in accordance with Section 3.

 

2.3.2   Inactive Participation.  A Participant who does not elect to become an Active Participant when eligible to do so, or whose active participation in the Plan is suspended pursuant to Section 2.4, 2.5 or 8.2.3, shall be treated as an Inactive Participant until the Entry Date as of which he or she becomes an Active Participant in accordance with Section 2.3.1 or Section 2.5(d).

 

 

 

 

2.3.3   Effect of Inactive Participation. An Inactive Participant shall not be able to make any Salary Deferrals or Catch-Up Contributions nor share in the allocation of Matching Contributions, and he or she may not later make the Salary Deferrals or Catch-Up Contributions that he or she might otherwise have made during the Participant’s period of inactive participation in the Plan. However, an Inactive Participant’s Accounts shall continue to share in the allocation of earnings and gains (or losses) of the Trust Fund as provided in Section 6.4. No distribution shall be made to a Participant solely as the result of any suspension of his or her active participation in the Plan. 

 

2.4   Voluntary Suspension.  An Active Participant may voluntarily suspend his or her active participation in the Plan, thereby suspending his or her Salary Deferrals and/or Catch-Up Contributions and becoming an Inactive Participant for future payroll periods during the suspension period by giving notice to such person, in such manner and within such advance notice period as the Committee (in its discretion) shall specify. A Participant whose active participation in the Plan has been voluntarily suspended pursuant to this Section 2.4 may resume his or her status as an Active Participant only in accordance with Section 2.3.1.

 

2.5   Mandatory Suspension.  If a Participant (1) ceases to be an Eligible Employee because he or she ceases to meet the requirements of Section 1.16, (2) is transferred to employment with an Affiliate which is not an Employer, (3) is granted a Leave of Absence without pay, (4) is on long-term disability, or (5) is placed on layoff or furlough status, then:

 

(a)   His or her active participation in the Plan shall be suspended (in accordance with Section 2.3.3) for each payroll period beginning during the continuation of such ineligible status;

 

(b)   He or she shall be treated as an Inactive Participant for the duration of the suspension period; and

 

 

 

 

(c)   After he or she again becomes an Eligible Employee and the conditions described in clauses (1) through (5) above cease to apply, his or her status as an Active Participant may be resumed only in accordance with Section 2.3.1.

 

(d)   Notwithstanding the foregoing, if a Participant’s active participation in the Plan is suspended because he or she is granted an unpaid Leave of Absence, his or her status as an Active Participant automatically will resume as of the Entry Date that coincides with or next follows his or her return to active employment with an Employer (provided that he or she is then an Eligible Employee).

 

2.6   Provision of Information.  Each Participant shall execute such forms as are required by the Committee and shall make available to the Committee and the Trustee any information they may reasonably request. By virtue of his or her participation in the Plan, a Participant agrees, on his or her own behalf and on behalf of all persons who may make any claim arising out of, relating to, or resulting from his or her participation in the Plan, to be bound by all of the provisions of the Plan, the Trust Agreement and any other related agreements.

 

2.7   Termination of Participation.  An Eligible Employee who has become a Participant shall remain a Participant until his or her employment with all Employers and Affiliates terminates or, if he or she remains alive, until his or her entire Account balance is distributed (whichever is later).

 

2.8   Acquisitions.  Notwithstanding any contrary Plan provision, if determined by the Committee (in its discretion), an Eligible Employee who becomes an Employee by reason of the acquisition by the Company or its Affiliate of the assets and liabilities of, or the voting stock of, another corporation or other business entity, or another type of business transaction effected by the Company or its Affiliate (an “Acquired Employee”), may elect to become an Active Participant effective as of the later of (a) the date on which he or she becomes an Eligible Employee, and (b) such other date as may be specified by the Committee (which shall in no event be later than the Entry Date next following the date on which the Acquired Employee became an Eligible Employee),

 

 

 

 

3.1 Salary Deferrals.

 

3.1.1 General. Each Active Participant may elect to defer portions of his or her Compensation payments and to have the amounts of such Salary Deferrals contributed by the Employer to the Trust Fund and credited to his or her Salary Deferral Account under the Plan, provided that he or she elects to make Salary Deferrals in accordance with Section 3.3. Subject to Section 5.5, an Active Participant may elect to defer:

 

(a)   For Plan Years prior to 2007:

 

(1)   A portion of each payment of Compensation that would otherwise be made to him or her, after the election becomes and while it remains effective, equal to any whole percentage from 1% to 50% (inclusive) of such payment; 

 

(2)   Subject to the issuance of a Compliance Statement by the Internal Revenue Service under its Employee Plans Compliance Resolution System, for the Plan Years beginning January 1, 2004, January 1, 2005 and January 1, 2006, in addition to any election made under subsection (1) above, a portion of any Eligible Bonus payment that would otherwise be made to him or her, after the election becomes and while it remains effective, equal to any whole percentage that exceeds the deferral election percentage then in effect under subsection (1) above but does not exceed 99% (or such lesser percentage as is determined by the Company to comply with mandatory tax withholding and applicable payroll deductions) of such payment; and

 

(b)   For Plan Years Beginning January 1, 2007 and after:

 

(1)   A portion of each payment of Compensation, other than any Eligible Bonus, that would otherwise be made to him or her, after the election becomes and while it remains effective, equal to any whole percentage from 1% to 50% (inclusive) of such payment;

 

(2)   In addition to any election made under subsection (1) above, a portion of any Eligible Bonus payment that would otherwise be made to him or her, after the election becomes and while it remains effective, equal to any whole percentage from 1% to 99% (inclusive)

 

 

3.1.2   Section 401(k) Ceiling. Notwithstanding any contrary Plan provision, the Committee:

 

(a)   May suspend or limit any Participant’s salary deferral election at any time in order to prevent the cumulative amount of the Salary Deferrals contributed on behalf of the Participant for any calendar year from exceeding the Section 401(k) Ceiling.

 

(b)   Shall cause any amount allocated to the Participant’s Salary Deferral Account as an excess deferral (calculated by taking into account only amounts deferred under this and any other cash or deferred arrangement maintained by any Employer or Affiliate and qualified under Section 401(k) of the Code), together with any income allocable thereto for the calendar year to which the excess deferral relates, as well as, for the Gap Period, to be distributed to the Participant no later than the April 15 that next follows the year of deferral in accordance with Section 402(g)(2)(A) of the Code. For this purpose, the “Gap Period” means the period beginning on the first day of the subsequent Plan Year and ending on either the day before the date of distribution or on a date selected in accordance with the safe harbor method set forth in Treas. Reg. § 1.401(k)-2(b)(2)(iv)(D).

 

(c)   May cause any other amount allocated to the Participant’s Salary Deferral Account and designated by the Participant as an excess deferral, together with any income allocable thereto for the calendar year to which the excess deferral relates, as well as for the Gap Period, to be distributed to the Participant in accordance with Section 402(g)(2)(A) of the Code.

 

(d)   Shall cause any Matching Contributions allocated to the Participant’s Matching Account by reason of any excess deferral distributed pursuant to subsection (b) or (c), together with any income allocable thereto for the calendar year to which the excess deferral relates, as well as for the Gap Period, to be forfeited at the time such distribution is made and applied to reduce the next succeeding Matching Contribution to the Plan.

For purposes of this Section 3.1.2 and Section 4.1.2, the “Section 401(k) Ceiling” is a dollar amount equal to the dollar limit prescribed in Section 402(g)(1) of the Code, as adjusted periodically pursuant to Sections 402(g)(5) and 415(d) of the Code (e.g., $15,000 in 2006).

 

3.1.3   Limitations on HCE Participants. For any Plan Year, the Committee (in its discretion) may limit the period for which, and/or specify a lesser maximum percentage at which, Salary Deferrals may be elected by HCE Participants (as defined in Section 3.1.4) in such manner as

 

 

3.1.4   HCE and Non-HCE Participants. All Participants who are Eligible Employees at any time during a Plan Year (whether or not they are Active Participants), and who are Highly Compensated Employees with respect to the Plan Year, shall be “HCE Participants” for the Plan Year. All other Participants who are Eligible Employees at any time during the Plan Year shall be “Non-HCE Participants” for the Plan Year.

 

3.1.5   Deferral Percentage Limitation. In no event shall the actual deferral percentage, determined in accordance with Section 3.1.6 (the “ADP”), for the HCE Participants for a Plan Year exceed the maximum ADP, as determined by reference to the ADP for the Non-HCE Participants, in accordance with the following table:

 

If the ADP for the Non-HCE Participants (“NHCEs’ ADP”) is:	Then the Maximum ADP for the HCE Participants is:
Less than 2%	2.0 x NHCEs’ ADP
2% to 8%	NHCEs’ ADP + 2%
More than 8%	1.25 x NHCEs’ ADP

 

3.1.6   Actual Deferral Percentage. The actual deferral percentage for the HCE or Non-HCE Participants for any Plan Year shall be calculated by computing the average of the deferral percentages (calculated separately for each HCE or Non-HCE Participant) (the “Deferral Rates”) determined by dividing (1) the total for the Plan Year of all Salary Deferrals made by the Participant and credited to his or her Salary Deferral Account, by (2) the Participant’s Testing Compensation (as defined in Section 3.1.7) for the Plan Year. In computing a Participant’s Deferral Rate, the following special rules shall apply:

 

(a) If any Employer or Affiliate maintains any other cash or deferred arrangement which is aggregated by the Company with this Plan for purposes of applying

 

 

 

(b)   If an HCE Participant is a participant in any other cash or deferred arrangement maintained by any Employer or Affiliate and qualified under Section 401(k) of the Code, the separate deferral rates determined for the Participant under all such cash or deferred arrangements shall be aggregated with the separate Deferral Rate determined for the Participant under this Section 3.1.6 for purposes of applying Section 3.1.5.

 

3.1.7   Testing Compensation. For purposes of applying Sections 3.1, 3.3 and 4.1 and the non-discrimination tests of Sections 401(k)(3) and 401(m)(2) of the Code, “Testing Compensation” means with respect to any Participant, his or her Total Compensation (as defined in Section 5.5.2(e) and applied using the definition of “Affiliate” in Section 1.1 rather than in Section 5.5.2(a)), subject to the following:

 

(a)   For any Plan Year, the Committee may specify an alternate definition of Testing Compensation, provided that such alternate definition satisfies the applicable requirements of Treas. Reg. § 1.401(k)-6;

 

(b)   No amount in excess of the Compensation Limit shall be taken into account under this Section 3.1.7 for any Plan Year; and

 

(c)   Compensation for periods prior to the time that the individual became a Participant shall not be taken into account.

 

3.2   Catch-Up Contributions.  Notwithstanding any contrary Plan provision: 

 

(a)   Eligible Participants. All Employees who are Participants eligible to make Salary Deferrals under this Plan and who have attained age fifty (50) before the close of the Plan Year shall be eligible to make “catch-up contributions” for the Plan Year in accordance with, and subject to the limitations of, Section 414(v) of the Code.

 

(b)   Certain Code Limitations Inapplicable. A Participant’s “catch-up contributions” shall not be taken into account for purposes of applying Plan provisions implementing the required limitations of Sections 402(g) and 415 of the Code, and the Plan shall not be treated as failing to satisfy Plan provisions implementing the requirements of Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b) or 416 of the Code, as applicable, by reason of “catch-up contributions” being or having been made under the Plan.

 

3.3 Salary Deferral and Catch-Up Contribution Election.  Each Active Participant shall determine the percentage(s) of his or her Compensation that shall be deferred and contributed to the

 

 

(a)   The Active Participant shall make such Salary Deferral and/or Catch-Up Contribution elections, in such manner and within such advance notice period as the Committee (in its discretion) shall specify;

 

(b)   No Salary Deferrals shall be made by any Active Participant except in accordance with his or her Salary Deferral election and the limitations of Sections 3.1 and 5.5; and

 

(c)   No Catch-Up Contributions shall be made by any Active Participant except in accordance with his or her Catch-Up Contribution election and the limitations of Section 3.2.

3.3.1   Amounts. The amount of Salary Deferrals or Catch-Up Contributions that may be made by each Active Participant for each payroll period shall be the amount in dollars and cents that is nearest to the amount of Compensation subject to the deferral election multiplied by the percentage elected by the Participant pursuant to Section 3.1.1 or 3.2, as applicable.

 

3.3.2   Changes. An Active Participant may change the percentage(s) determined under the first sentence of this Section 3.3 by giving notice in such manner and within such advance notice period as the Committee (in its discretion) shall specify, effective with respect to applicable Compensation paid on such date as the Committee (in its discretion) may specify. The Salary Deferral and/or Catch-Up Contribution elections made by an Active Participant shall remain in effect until his or her active participation in the Plan is terminated, except to the extent that the election is suspended in accordance with Sections 2.4, 2.5 or 8.2.3, changed in accordance with this Section 3.3.2, or reduced pursuant to Section 3.1.2 or 3.1.3 (as applicable).

 

3.3.3   Potential Excess ADP. In the event that (but for the application of this Section 3.3.3) the Committee determines that the ADP for HCE Participants would exceed the

 

 

3.3.4   Actual Excess ADP. In the event that the Committee determines that the ADP for the HCE Participants exceeds the ADP Maximum for any Plan Year, then the amount of any excess contributions (within the meaning of Section 401(k)(8)(B) of the Code) contributed on behalf of any HCE Participant shall be distributed, together with any income allocable thereto for the Plan Year to which the excess contributions relate as well as for the Gap Period (as defined in Section 3.1.2(b)), to the HCE Participant before the close of the Plan Year that next follows that Plan Year. 

 

(a)   Determination and Allocation of Excess Contributions. The amount of excess contributions for HCE Participants for the Plan Year shall be determined and allocated among HCE Participants in the following manner:

 

(1)   With respect to each HCE Participant whose Deferral Rate exceeds the ADP Maximum, the Committee shall calculate an excess contribution amount by calculating the excess of (A) his or her Salary Deferrals, over (B) the product of the ADP Maximum times his or her Testing Compensation. The aggregate of the excess contributions for all such HCE Participants shall be the total excess contributions to be distributed pursuant to this Section 3.3.4.

 

(2)   The Salary Deferrals of the HCE Participant with the highest total dollar amount of Salary Deferrals contributed shall be reduced to the extent necessary to cause the total dollar amount of his or her Salary Deferrals contributed to equal the lesser of the dollar

 

 

 

(3)   The amount of excess contributions to be distributed to an HCE Participant pursuant to this Section 3.3.4 shall be equal to the total amount by which his or her actual Salary Deferrals is reduced under subsection (a)(2) above, but reduced by the amount of any excess deferrals previously distributed to the HCE Participant for the Plan Year under Section 3.1.2.

 

(b)   Forfeiture of Related Matching Contributions. Any Matching Contributions allocated to the HCE Participant’s Matching Account by reason of any excess contributions distributed pursuant to this Section 3.3.4, together with any income allocable thereto for the Plan Year to which the excess contributions relate, shall be forfeited and applied to reduce the next succeeding Matching Contribution to the Plan.

 

(c)   Incorporation By Reference. The foregoing provisions of this Section 3 are intended to satisfy the requirements of Section 401(k)(3) of the Code and, to the extent not otherwise stated above, the provisions of Section 401(k)(3) of the Code, Treas. Reg. § 1.401(k)-1(a)(iv) (to the extent not inconsistent with amendments to the Code), and subsequent Internal Revenue Service guidance under Section 401(k)(3) of the Code are incorporated herein by reference.

 

3.4   Payment of Salary Deferrals and Catch-Up Contributions.  Subject to the foregoing provisions of this Section 3, Sections 5.5, 10.3 and Section 11, the Employers shall pay to the Trust Fund the amounts elected by Active Participants to be contributed as Salary Deferrals and/or Catch-Up Contributions. Any Salary Deferrals and/or Catch-Up Contributions to be contributed for a payroll period in accordance with the preceding sentence shall be paid to the Trust Fund as soon as practicable and in no event later than the 15th business day of the month that next follows the month in which the Compensation related to such Salary Deferrals and/or Catch-Up Contributions was paid.

 

 

 

 

 

 

4.1   Matching Contributions.  Subject to the provisions of this Section 4.1, Sections 5.5, 10.3 and Section 11, the Employers shall contribute to the Trust Fund as Matching Contributions amounts equal to the following:

 

4.1.1   Basic Matching Contributions. Effective as of October 1, 2006, the Employer will make Matching Contributions for each eligible Active Participant on a payroll by payroll basis equal to 100% of the eligible Active Participant’s Salary Deferral Contributions for the pay period, but not to exceed 5% of the eligible Active Participant’s Compensation for the pay period.

 

4.1.2   True-Up Matching Contributions. 

 

(a)   True-Up for Quarter Ending September 30, 2006. In addition to the Matching Contributions set forth in Section 4.1.1, the Employer will make additional Matching Contributions for the 2006 Plan Year, to be allocated as of September 29, 2006 (the Valuation Date immediately preceding the last day of the calendar quarter ending September 30, 2006) to eligible Active Participants as an adjustment to take into account any changes in Compensation or Participant Salary Deferral elections which may have occurred during the period from January 1, 2006 through September 29, 2006. The amount of the additional Matching Contributions for each eligible Active Participant shall be equal to the difference, if any, between (i) the Matching Contributions allocated to the eligible Active Participant pursuant to Section 4.1.1 for the period from January 1, 2006 through September 29, 2006, and (ii) a Matching Contribution equal to 100% of the eligible Active Participant’s Salary Deferrals but not to exceed 5% of the eligible Active Participant’s Compensation for the period from January 1, 2006 through September 29, 2006. Notwithstanding the foregoing, the only Compensation that shall be taken into account for purposes of this additional Matching Contribution shall be Compensation paid (or payable if deferred under Section 3) to the eligible Active Participant (a) for payroll periods for which he or she made Salary Deferrals or after which the Section 401(k) Ceiling took effect, and (b) as an Eligible Bonus. In order to be eligible for this additional Matching Contribution, a Participant must be an Eligible Employee on September 29, 2006, or his or her employment with the Employer must have been terminated during the period from January 1, 2006 through September 29, 2006 due to Disability or death.

 

(b)   2006 Year-End True-Up. In addition to the Matching Contributions set forth in Sections 4.1.1 and 4.1.2(a), the Employers will make additional Matching Contributions for the 2006 Plan Year, to be allocated as of December 29, 2006 (the last Valuation Date in the 2006 Plan Year) to eligible Active Participants as an adjustment to take into account any changes in

 

 

 

(c)   True-Up for Plan Years Beginning January 1, 2007 and After. In addition to the Matching Contributions set forth in Section 4.1.1, the Employers will make additional Matching Contributions for the Plan Year, to be allocated as of the last Valuation Date of the Plan Year to eligible Active Participants as an adjustment to take into account any changes in Compensation or Participant Salary Deferral elections which may have occurred during the Plan Year. The amount of the additional Matching Contributions for each eligible Active Participant shall be equal to the difference, if any, between (i) the Matching Contributions allocated to the eligible Active Participant pursuant to Section 4.1.1 for the Plan Year, and (ii) a Matching Contribution equal to 100% of the eligible Active Participant’s Salary Deferrals for the Plan Year but not to exceed 5% of the eligible Active Participant’s Compensation for the Plan Year. Notwithstanding the foregoing, the only Compensation that shall be taken into account for purposes of this additional Matching Contribution shall be Compensation paid (or payable if deferred under Section 3) to the eligible Active Participant (a) for payroll periods for which he or she made Salary Deferrals or after which the Section 401(k) Ceiling took effect, and (b) as an Eligible Bonus. In order to be eligible for this additional Employer Matching Contribution, a Participant must be an Eligible Employee on the last Valuation Date of the Plan Year, or his or her employment with the Employer must have been terminated during the Plan Year due to Disability or death.

 

4.1.3   Calculation Rules. Only those Salary Deferrals which are made pursuant to Sections 3.1 and 3.3) shall be taken into account in calculating the amount of the Matching Contribution (if any) to be made in respect of the Participant’s Salary Deferrals for any payroll period. In no event shall the amount of any Catch-Up Contributions contributed to any Participant’s Catch-Up Contribution Account, be taken into account in determining the amount of Matching Contributions to be made to the Trust Fund and/or allocated to his or her Matching Account.

 

 

 

 

4.1.4   Limitations on HCE Participants. For any Plan Year, the Committee (in its discretion) may limit the Matching Contributions to be made on behalf of HCE Participants (as defined in Section 3.1.4) in such manner as may be necessary or appropriate in order to assure that the limitation described in Section 4.1.5 will be satisfied.

 

4.1.5   Contribution Percentage Limitation. In no event shall the actual contribution percentage, determined in accordance with Section 4.1.6 (the “ACP”), for the HCE Participants for a Plan Year exceed the maximum ACP, as determined by reference to the ACP for the Non-HCE Participants (as defined in Section 3.1.4), in accordance with the following table:

 

If the ACP for the Non-HCE Participants (“NHCEs’ ACP”) is:	Then the Maximum ACP for the HCE Participants is
Less than 2%	2.0 x NHCEs’ ACP
2% to 8%	NHCEs’ ACP + 2%
More than 8%	1.25 x NHCEs’ ACP

 

4.1.6   Actual Contribution Percentage. The actual contribution percentage for the HCE or Non-HCE Participants for a Plan Year shall be calculated by computing the average of the percentages (calculated separately for each HCE or Non-HCE Participant) (the “Contribution Rates”) determined by dividing (a) the total of all Matching Contributions made on behalf of the Participant and credited to his or her Matching Account for the Plan Year, by (b) the Participant’s Testing Compensation (as defined in Section 3.1.7) for the Plan Year. The special testing and aggregation rules set forth in Section 3.1.6 with respect to calculation of the Participants’ Deferral Rates shall also apply to the calculation of their Contribution Rates.

 

4.1.7   Potential Excess ACP. In the event that (but for the application of this Section 4.1.7) the Committee determines that the ACP for the HCE Participants would exceed the maximum permitted under Section 4.1.5 for a Plan Year (the “ACP Maximum”), then the Committee

 

 

 

4.1.8   Actual Excess ACP. In the event that the Committee determines that the ACP for the HCE Participants exceeds the ACP Maximum for any Plan Year, then the amount of any excess aggregate contributions (within the meaning of Section 401(m)(6)(B) of the Code) contributed on behalf of any HCE Participant shall be distributed, together with any income allocable thereto for the Plan Year to which the excess aggregate contributions relate, as well as for the Gap Period (as defined in Section 3.1.2(b)), to the HCE Participant before the close of the Plan Year that next follows that Plan Year.

 

(a)   Determination and Allocation of Excess Aggregate Contributions. The amount of excess aggregate contributions for HCE Participants for the Plan Year shall be determined and allocated among HCE Participants in the manner provided in Section 3.3.4 with respect to excess contributions.

 

(b)   Determination of Allocable Income. The income allocable to any excess aggregate contributions for the Plan Year shall be determined in the manner provided in Section 3.3.4 with respect to excess contributions.

 

(c)   Incorporation By Reference. The foregoing provisions of this Section 4.1 are intended to satisfy the requirements of Section 401(m) of the Code and, to the extent not otherwise stated above, the provisions of Section 401(m)(2) of the Code, Treas. Reg. §1.401(m)-1(b) (to the extent not inconsistent with amendments to the Code), and subsequent Internal Revenue Service guidance under Section 401(m)(2) of the Code are incorporated herein by reference.

 

4.2   Nonelective Contributions.  Subject to the provisions of Sections 5.3 and Section 11, for any Plan Year each Employer shall also contribute to the Trust Fund such amount (if any) as the Board of Directors (in its discretion) may direct be contributed (a “Nonelective Contribution”) on

 

 

 

4.3   Timing.  Subject to the foregoing provisions of this Section 4, Section 10.3 and Section 11, Employer Contributions shall be paid to the Trust Fund within the time prescribed by law (including extensions) for filing the Company’s federal income tax return for its taxable year that ends with or within the Plan Year for which the Contributions are made.

 

4.4   Periodic Contributions.  Subject to the foregoing provisions of this Section 4, Sections 5.4 and Section 11, any Employer Contributions to be made for a Plan Year may be paid in installments from time to time during or after the Plan Year for which they are made. The Employers shall specify, as to each Employer Contribution payment made to the Trust Fund, the Plan Year to which the payment relates. The Employers intend the Plan to be permanent, but the Employers do not obligate themselves to make any Employer Contributions under the Plan whatsoever.

 

4.5   Reinstatements.  The Employers shall also contribute to the Trust Fund any amount necessary to reinstate closed Accounts pursuant to Section 7.8.

 

4.6   Profits Not Required.  Each Employer shall make any contributions otherwise required to be made for a Plan Year without regard to its current or accumulated earnings or profits for the taxable year that ends with or within the Plan Year for which the contributions are made. Notwithstanding the foregoing, the Plan is designed to constitute a qualified profit-sharing plan as described in Section 401(a) of the Code.

 

4.7   No After-Tax Contributions.  In no event shall any Participant be permitted to make contributions to the Plan or Trust Fund on an after-tax basis.

 

 

 

 

 

 

5.1   Salary Deferrals and Catch-Up Contributions.  Except as provided in Sections 3.1.2 and 3.3.4, the Salary Deferrals and/or Catch-Up Contributions made on behalf of an Active Participant for any period shall be allocated to his or her Salary Deferral Account and/or Catch-Up Contribution Account, as applicable, on the business day that coincides with or next follows the date on which such Salary Deferrals or Catch-Up Contributions are received by the Trust Fund.

 

5.2   Matching Contributions.  Except as provided in Section 4.1.8, the Matching Contributions made on behalf of an Active Participant for a Plan Year shall be allocated to his or her Matching Account on the business day that coincides with or next follows the date on which such Matching Contributions are received by the Trust Fund.

 

5.3   Nonelective Contributions.  Any Nonelective Contribution made by an Employer for a Plan Year shall be allocated, on the business day that coincides with or next follows the date on which such Nonelective Contribution is received by the Trust Fund, to the Nonelective Contribution Accounts of:

 

(a)   All Active or Inactive Participants (as determined under Section 2) who are Eligible Employees as of the last Valuation Date of the Plan Year for which the Nonelective Contribution was made; and

 

(b)   Those Participants who, during such Plan Year, ceased to be Employees on account of death or Disability.

 

The portion of the Employer’s Nonelective Contribution to be allocated to the Nonelective Contribution Account of each Participant who is eligible to share in the allocation pursuant to the preceding sentence shall be determined by multiplying the total amount of the Nonelective Contribution by a fraction, of which (1) the numerator is the total Compensation received by the

 

 

 

 

Participant while employed by the Employer during the Plan Year, and (2) the denominator is the aggregate total Compensation of all such Participants eligible to share in the allocation for such Plan Year.

 

5.4   Investment.  Each Participant (or, if deceased, his or her Beneficiary) shall elect, in such manner and at such times as the Committee (in its discretion) shall specify, the percentages of all amounts allocated to his or her Accounts that are to be invested in each of the Investment Funds. A Participant (or Beneficiary) may specify as to any Investment Fund any percentage that is a whole multiple of 1%, provided that the total of the percentages specified shall not exceed 100%.

 

5.4.1   Changes. The elections of a Participant (or Beneficiary) concerning the investment of the amounts allocated to his or her Accounts may be changed in accordance with such procedures as the Committee (in its discretion) shall designate from time to time. The designated procedures may include such rules and limitations (e.g., with respect to the timing and frequency of elections) as the Committee may specify from time to time, but at all times shall permit Participants (and Beneficiaries) to make investment changes in a manner designed to permit the Plan to qualify as a 404(c) plan (within the meaning of Section 404(c) of ERISA).

 

5.4.2   Failure to Elect. If a Participant (or Beneficiary) fails to direct the manner in which the amounts allocated (or to be allocated) to his or her Accounts are to be invested, such amounts shall be invested in the Investment Fund designated by the Committee for such purpose. Whenever the Committee discontinues an Investment Fund and the Participant (or Beneficiary) does not make a new election with respect to amounts allocated (or to be allocated) to the discontinued Investment Fund, such amounts shall be invested in the Investment Fund designated by the Committee for such purpose.

 

 

 

 

5.4.3   Participant Loans. In the event a loan is to be made to a Participant in accordance with Section 8.4, the Committee shall direct that an amount, in cash, equal to the amount of the loan be reallocated, as directed by the Committee (in its discretion), from the portions of the Participant’s Accounts that are invested in one or more of the other Investment Funds to a separate subaccount within the Participant’s Accounts (the “Loan Account”), which shall be maintained for the purpose of accounting for any loans made to the Participant from his or her Accounts. Interest and principal payments on loans made under the Plan to any Participant shall be allocated to his or her Loan Account as received by the Trustee and, after appropriate adjustments have been made to the Loan Account to reflect such payments, shall be reallocated to the Investment Funds in the same percentages as specified by the Participant pursuant to the introductory paragraph of this Section 5.4, or if there is no such designation currently in force, as the Committee (in its discretion) shall determine.

 

5.5   Limitations on Allocations.

 

5.5.1   Annual Addition Limitation. Notwithstanding any contrary Plan provision, in no event shall the Annual Addition to any Participant’s Accounts for any Plan Year exceed (a) the Defined Contribution Dollar Limit, or (b) 100% of the Participant’s Total Compensation for the Plan Year; provided, however, that clause (b) above shall not apply to any Annual Additions described in clauses (5) and (6) of Section 5.5.2(c).

 

5.5.2   Definitions. For purposes of this Section 5.5, the following definitions shall apply:

 

(a)   “Affiliate” means a corporation, trade or business which is, together with any Employer, a member of a controlled group of corporations or an affiliated service group or under common control (within the meaning of Section 414(b), (c), (m) or (o) of the Code, as modified by Section 415(h) of the Code), but only for the period during which such other entity is so affiliated with any Employer.

 

 

 

 

(b)   “Aggregated Plan” means any defined contribution plan that is aggregated with this Plan pursuant to Section 5.5.3.

 

(c)   “Annual Addition” means with respect to each Participant the sum for a Plan Year of (1) the Participant’s Salary Deferrals to be credited to the Participant’s Salary Deferral Account; (2) the share of any Matching Contributions and/or Nonelective Contributions to be credited to the Participant’s Matching Account and/or Nonelective Contribution Account (as applicable); (3) the share of all contributions made by all Employers and Affiliates (including salary reduction contributions made pursuant to Section 401(k) of the Code) and any forfeitures to be credited to the Participant’s account under any Aggregated Plan; (4) any after-tax employee contributions made by the Participant for the Plan Year under any Aggregated Plan; (5) any amount allocated to the Participant’s individual medical account (within the meaning of Section 415(l) of the Code) under a defined benefit plan maintained by an Employer or Affiliate; and (6) any amount attributable to post-retirement medical benefits that is allocated pursuant to Section 419A of the Code to the Participant’s separate account under a welfare benefits fund (within the meaning of Section 419(e) of the Code) maintained by an Employer or Affiliate.

 

(d)   “Defined Contribution Dollar Limit” means the dollar limit prescribed in Section 415(c)(1)(A) of the Code, as adjusted in accordance with Section 415(d) of the Code (e.g., $44,000 for 2006).

 

(e)   “Total Compensation” means the amount of an Employee’s:

 

(1)   Wages (within the meaning of Section 3401(a) of the Code) and all other payments of compensation which an Employer or Affiliate is required to report in Box 1 (“wages, tips, other compensation”) of IRS Form W-2 (or its successor):

 

(A)   Including the aggregate of his or her elective deferrals (within the meaning of Section 402(g)(3) of the Code) and any other amounts that are (i) contributed by any Employer or Affiliate at his or her election, and (ii) not includible in his or her gross income under Section 125, 132(f)(4) or 457 of the Code; but

 

(B)   Excluding amounts paid or reimbursed by the Employer or Affiliate for moving expenses incurred by the Participant, to the extent that at the time of payment it is reasonable to believe that such amounts qualify as a “qualified moving expense reimbursement” (within the meaning of Section 132(a)(6) of the Code); and

 

(C)   Determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the agricultural labor exception); or

 

(2)   Compensation calculated by the Committee in a manner which satisfies applicable requirements of Section 415(c)(3) of the Code and Treas. Reg. §1.415-2(d).

 

 

 

 

5.5.3   Other Defined Contribution Plans. All defined contribution plans (terminated or not) maintained by any Employer or Affiliate shall be aggregated with this Plan, and all plans so aggregated shall be considered as one plan in applying the limitations of this Section 5.5, provided that the special limitation applicable to employee stock ownership plans under Section 415(c)(6) of the Code shall be taken into account with respect to a Participant who participates in any such plan.

 

5.5.4   Adjustments. If, as a result of (1) a reasonable error in estimating a Participant’s Total Compensation, allocating forfeitures under any Aggregated Plan or other circumstances which permit the application of the rules stated in this Section 5.5.4, or (2) a reasonable error in determining the amount of Salary Deferrals that may be made or contributed under the limits of this Section 5.5, any of the limitations of this Section 5.5 otherwise would be exceeded with respect to any Participant for any Plan Year, then the following actions, but only to the extent necessary to avoid exceeding such limitations, shall be taken in the following order:

 

(a)   Any after-tax employee contributions made by the Participant under any Aggregated Plan for the Plan Year shall be returned to him or her;

 

(b)   In the circumstances described in clause (2) above, Salary Deferrals made on the Participant’s behalf for the Plan Year shall be distributed to the Participant to the extent required to reduce the excess Annual Addition to the Participant’s Accounts attributable to that circumstance;

 

(c)   Any Matching Contributions allocated to the Participant’s Matching Account under this Plan and/or any employer matching contributions allocated to his or her account under any Aggregated Plan shall be reallocated to a suspense account, and the balance credited to that account shall be applied to reduce the Matching Contributions or other employer matching contributions (of the same class) otherwise to be made for and allocated to all eligible Participants or participants in the Aggregated Plan for succeeding Plan Years in order of time;

 

(d)   Any Nonelective Contributions allocated to the Participant’s Nonelective Contribution Account under this Plan and/or any employer nonelective contributions allocated to his or her account under any Aggregated Plan shall be reallocated to a suspense account, and the balance credited to that account shall be applied to reduce the Nonelective Contributions or other employer nonelective contributions (of the same class) otherwise to be made for and allocated

 

 

 

(e)   The Participant’s Salary Deferrals and any salary reduction contributions made at the Participant’s election pursuant to Section 401(k) of the Code under any Aggregated Plan shall be reallocated to a suspense account and applied to reduce such Salary Deferrals or other salary reduction contributions as otherwise are to be made thereafter at his or her election under this or any Aggregated Plan.

 

5.5.5   Suspense Accounts. If a suspense account is created under Section 5.5.4 and exists in a later Plan Year, the amount allocated to the suspense account shall be reallocated to the Participant’s Accounts before any amount may be contributed to this or any Aggregated Plan on behalf of the Participant for that Plan Year. If the Participant for whom a suspense account is maintained terminates employment with all Employers and Affiliates before the suspense account balance has been reallocated pursuant to Section 5.5.4, that balance shall be reallocated among the Accounts of all Participants who remain Employees on the first day of the next following Plan Year, in direct proportion to each such Participant’s share of the aggregate Total Compensation paid to all such Participants for the Plan Year of termination (subject to the limitations of this Section 5.5), before any amount may be contributed to this or any Aggregated Plan for the Plan Year of reallocation. Suspense accounts shall not share in allocations of earnings and gains (or losses) of the Trust Fund. The balances credited to all suspense accounts shall be returned to the Employers upon termination of the Plan.

 

5.5.6   Limitation Year. For purposes of applying the limitations of Section 415 of the Code, the limitation year shall be the Plan Year.

 

 

 

 

 

 

6.1   Participants’ Accounts.  At the direction of the Committee, there shall be established and maintained for each Participant, as appropriate:

 

(a)   A Catch-Up Contribution Account, to which shall be credited all Catch-Up Contributions paid to the Trust Fund at his or her election under Section 3;

 

(b)   A GenenFlex Account, which shall continue to hold any Prior Excess Flex Credit Contributions (as defined in Section 1.33.2);

 

(c)   A Loan Account, to which shall be credited (pursuant to Section 5.4.3) any amounts loaned to the Participant in accordance with Section 8.4;

 

(d)   A Matching Account, to which shall be credited all Matching Contributions paid to the Trust Fund on his or her behalf under Section 4;

 

(e)   A Nonelective Contribution Account, to which shall be credited all Nonelective Contributions paid to the Trust Fund on his or her behalf under Section 4;

 

(f)   A Rollover Account, to which shall be credited all transfers made to the Trust Fund by or on behalf of the Participant under Section 10.5;

 

(g)   A Salary Deferral Account, to which shall be credited all Salary Deferrals paid to the Trust Fund at his or her election under Section 3; and

 

(h)   Such other Account(s) as the Committee shall deem necessary or appropriate, from time to time.

 

Each Participant’s Account also shall reflect the total value of its proportionate interest in each of the Investment Funds as of each Valuation Date. The maintenance of a separate Account for each Participant shall not be deemed to segregate for the Participant, nor to give the Participant any ownership interest in, any specific assets of the Trust Fund.

 

6.2   Trust Fund Assets.  The Trust Fund shall consist of the Participants’ Salary Deferrals, Catch-Up Contributions, Matching Contributions, Nonelective Contributions, Prior Excess Flex Credit Contributions (as defined in Section 1.33.2), rollovers or transfers made pursuant to

 

 

6.3   Investment Funds.  The Trustee shall establish three or more Investment Funds which shall be maintained for the purpose of investing such portions of Participants’ Accounts as are properly allocable to each such Fund pursuant to Section 5.4. At least three of the Investment Funds shall (a) be diversified, (b) have materially different risk and return characteristics, and (c) be designed to satisfy the broad range of investment alternatives requirement of 29 C.F.R. § 2550.404c-1(b)(3), all in a manner designed to permit the Plan to qualify as a 404(c) plan (within the meaning of Section 404(c) of ERISA).

 

6.3.1   Investment Media. Except to the extent that such investment responsibility has been transferred to the Trustee or an Investment Manager in accordance with Section 9.6, the Committee (in its discretion) shall direct the Trustee to invest each Investment Fund in (a) units, shares or other interests in one or more common, pooled, collective or other investment media that are (1) designated by the Committee, and (2) either (A) maintained by any person described in Section 3(38)(B) of ERISA or an affiliate of such person, or (B) registered under the Investment Company Act of 1940, as amended, or (b) prior to October 1, 2006, shares of Company Stock and, if applicable, short-term investments (as described in clause (a) above).

 

6.3.2   Changes. The Committee may from time to time change the number, identity or composition of the Investment Funds made available under this Section 6.3. Except to the extent that such investment responsibility has been transferred to the Trustee or an Investment Manager in

 

 

6.3.3   Reinvestments and Cash. All interest, dividends or other income realized from the investments of any of the Investment Funds shall be reinvested in the Investment Fund that realized such income. Temporary cash balances arising in any of the Investment Funds shall be invested in a manner that produces a reasonable rate of return and is consistent with the liquidity needs of the Fund.

 

6.3.4   Company Stock Fund. Effective as of October 1, 2006, and notwithstanding the foregoing provisions of this Section 6.3, one of the Investment Funds shall be a Company Stock Fund.

 

6.3.5   Limitation on Investment in Company Stock Fund. Effective as of October 1, 2006, and notwithstanding anything in the Plan to the contrary, the following restrictions on investment in the Company Stock Fund shall apply:

 

(a)   Investment of future contributions (Salary Deferrals, Matching Contributions, Nonelective Contributions and Rollovers) in the Company Stock Fund shall be limited to 30% of new money invested;

 

(b)   No Participant will be permitted to direct the transfer of assets invested in any other investment option under the Plan from that other investment option to the Company Stock Fund; and

 

(c)   Existing investments in the Company Stock Fund may be sold at any time (subject to any applicable trading restrictions) but once sold, may not be reinvested in the Company Stock Fund.

 

 

 

 

6.4   Valuation of Participants’ Accounts.  The Trustee shall determine the fair market values of the assets of the Investment Funds, and the Committee shall determine the fair market value of each Participant’s Account, as of each Valuation Date. In making such determinations and in crediting net earnings and gains (or losses) in the Investment Funds to the Participants’ Accounts, the Committee (in its discretion) may employ, and may direct the Trustee to employ, such accounting methods as the Committee (in its discretion) deems appropriate in order fairly to reflect the fair market values of the Investment Funds and each Participant’s Account. For this purpose the Trustee and the Committee (as appropriate) may rely upon information provided by the Committee, the Trustee or other persons believed by the Trustee or the Committee to be competent. The value of the interest of any Participant’s Accounts in the Common Stock Fund may be measured in units (rather than shares of Common Stock) in such manner as the Committee (in its discretion) shall specify.

 

6.5   Valuation of Shares.  For all purposes of the Plan, the Trustee shall determine the fair market value of a share of Common Stock, which, as of any date, shall be (except as set forth below) the closing price of the Common Stock on the New York Stock Exchange on that date, as published in The Wall Street Journal or, if no report is available for that date, on the next preceding date for which a report is available, except that in the case of a transaction involving the purchase or sale of share(s) of Common Stock, the fair market value of any share of Common Stock shall be the purchase or sale price of such share on the New York Stock Exchange.

 

6.6   Statements of Participants’ Accounts.  Each Participant shall be furnished with periodic statements reflecting his or her interest in the Plan at least annually. Within sixty (60) days of receipt of any such statement, each Participant must notify the Committee (or its designee) of any

 

 

 

6.7   Vesting of Participants’ Accounts.  Each Participant shall at all times be 100% vested in his or her Accounts under the Plan.

 

 

 

7.1   Events Permitting Distribution.  Subject to Section 7.3, the balance credited to a Participant’s Accounts shall become distributable only in the following circumstances:

 

(a)   Upon the Participant’s severance from employment with all Employers and Affiliates at or after Normal Retirement Age;

 

(b)   Upon the Participant’s severance from employment with all Employers and Affiliates by reason of Disability or death;

 

(c)   Upon the Participant’s severance from employment with all Employers and Affiliates in any circumstances other than those specified in subsection (a) or (b) above;

 

(d)   If the Participant is a 5-percent owner within the meaning of Section 416(i)(1)(B) of the Code (a “5-Percent Owner”), at any time during (and no later than) the April 1 that next follows the calendar year in which the Participant attains age 70½;

 

(e)   If and to the extent permitted by Section 401(k)(10) of the Code in connection with an Employer’s or Affiliate’s disposition of corporate assets or a subsidiary;

 

(f)   Upon the Committee’s approval of the Participant’s application for a withdrawal from his or her Account, but only to the limited extent provided in Section 8;

 

(g)   In accordance with and to the limited extent provided in Sections 3.1.2, 3.3.4, 4.1.8 or 5.5.4; or

 

(h)   Upon the creation or recognition of an Alternate Payee’s right to all or a portion of a Participant’s Account under a domestic relations order which the Committee determines is a QDRO (as defined in Section 8.5), but only as to the portion of the Participant’s Account that the QDRO states is payable to the Alternate Payee.

For purposes of determining whether a Participant has met the foregoing requirements, if a Participant experiences a change in employment status to that of a Leased Employee (as defined in

 

 

 

 

Section 1.26) and he or she continues to work for the Employer or any Affiliate, such change will not be treated as a severance from employment with all Employers and Affiliates for purposes of receiving a distribution under the Plan.

 

7.2   Times for Distribution.

 

7.2.1   General Rule. Subject to the consent requirements of Section 7.3 and except as provided in Section 8.5 (relating to QDROs), distributions from a Participant’s Accounts shall normally be made or commenced as soon as practicable after the Valuation Date that coincides with or next follows the later of (a) the date on which the event permitting the distribution occurs, or (b) the date on which any consent required under Section 7.3 is granted in such manner and within such advance notice period as the Committee (in its discretion) shall specify.

 

7.2.2   Distribution Deadline. Subject to all other provisions of this Section 7, all distributions not made sooner pursuant to the first sentence of Section 7.2.1 shall be made no later than sixty (60) days after the end of the Plan Year in which a distribution event described in Sections 7.1(a) through 7.1(c) occurs with respect to the Participant, or the Participant attains Normal Retirement Age (whichever is later), subject also to the following:

 

(a)   A Participant’s failure to consent to a distribution (if such consent is required under Section 7.3) shall be deemed to be an election to defer distribution of his or her Accounts; provided, however, that the Participant’s Accounts shall be distributed no later than his or her Deadline Date (as defined in Section 7.2.3).

 

(b)   If the amount of the distribution or the location of the Participant or his or her Beneficiary (after a reasonable search) cannot be ascertained by the deadline described above, distribution shall be made no later than sixty (60) days after the earliest date on which the amount or location (as appropriate) is ascertained, subject to the other provisions of this Section 7.

 

(c)   Distributions permitted by reason of the Participant’s death shall be made within five (5) years after his or her death.

 

 

 

 

7.2.3   For purposes of applying this Section 7.2, “Deadline Date” means:

 

(a)   With respect to a Participant who is a 5-Percent Owner (as defined in Section 7.1(d)), the April 1 that next follows the calendar year in which the Participant attains age 70½.

 

(b)   With respect to a Participant who is not a 5-Percent Owner, the April 1 that next follows the later of (i) the calendar year in which the Participant attains age 70½, or (ii) the calendar year in which the Participant’s employment with all Employers and Affiliates terminates.

 

7.2.4   Age 70½ Rule for 5-Percent Owners. If the Accounts of a Participant who continues in employment after attaining Normal Retirement Age become distributable pursuant to Section 7.1(d), the Accounts shall be distributed no later than the Deadline Date, and any subsequent allocations to the Account shall be distributed by the April 1 that next follows the Plan Year to which those allocations pertain.

 

7.3   Consent Requirement and Immediate Distributions. 

 

7.3.1   Consent Required Over Threshold Amount. If the balance credited to a Participant’s Accounts exceeds $5,000 (the “Threshold Amount”) as of the Valuation Date that next precedes the date of distribution from the Accounts, then no portion of the Participant’s Accounts shall be distributed to the Participant until he or she attains age 62, unless the Participant (or, if deceased, his or her Beneficiary) has consented to an earlier distribution in such manner and within such advance notice period as the Committee (in its discretion) shall specify. The Threshold Amount (as defined in this Section 7.3.1) shall be adjusted periodically pursuant to Section 411(a)(11)(A) of the Code.

 

7.3.2   Immediate Distributions of Small Accounts Permitted. Notwithstanding any contrary Plan provision:

 

(a)   Subject to paragraph (b) below, if the balance credited to a Participant’s Accounts does not exceed the Threshold Amount (as defined in Section 7.3.1) as of the

 

 

 

(b)   If a mandatory distribution that exceeds $1,000 is to be made to a Participant in accordance with the provisions of paragraph (a) above, then the Committee shall pay such distribution in cash (or its equivalent) in a direct rollover to an individual retirement plan (as defined in Section 7701(a)(37) of the Code) designated by the Committee for such purpose.

 

7.4   Form of Distribution. 

 

7.4.1   Cash. With respect to any portion of a Participant’s Accounts as is not invested in the Common Stock Fund, any distribution from such portion of the Accounts shall be made in the form of a single lump sum payment of cash (or its equivalent) equal to the balance credited to such portion of the Accounts as of the relevant Valuation Date, except to the extent that the distributee elects, in accordance with such procedures as the Committee (in its discretion) shall specify, to have such portion of the Accounts distributed in the form of the unliquidated assets credited to such portion of the Accounts as of that Valuation Date.

 

7.4.2   Common Stock. Any distribution from such portion of a Participant’s Accounts as is invested in the Common Stock Fund as of the Valuation Date shall be made in the form of a single lump sum payment, as elected by the distributee, in -

 

(a)   Such whole number of shares of Common Stock as is equivalent to the full value of the units of the Common Stock Fund then credited to such portion of the Accounts;

 

(b)   Cash (or its equivalent) equal to the full value of the units of the Common Stock Fund then credited to such portion of the Accounts; or

 

(c)   A combination of both.

 

7.4.3   Fractional Shares. If shares of Common Stock are to be distributed, only full shares shall be distributed and cash (or its equivalent) shall be distributed in lieu of any fractional share.

 

 

 

 

7.4.4   No Annuities. In no event shall any distribution from a Participant’s Accounts be made in the form of a life annuity.

 

7.4.5   Direct Rollovers. Notwithstanding any contrary Plan provision:

 

(a)   If a Distributee of any Eligible Rollover Distribution (1) elects to have at least $500 of such Distribution or, if less, the entire Distribution, paid directly to an individual retirement account (“IRA”), an annuity contract described in Section 403(b) of the Code, an eligible plan under Section 457(b) of the Code maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state or an eligible defined contribution plan (within the meaning of Section 401(a)(31)(D) of the Code), and (2) specifies such IRA, 403(b) plan, 457 plan or eligible defined contribution plan and the elected amount in such manner and within such advance notice period as the Committee (in its discretion) may specify, such Distribution (or elected portion thereof) shall be made in the form of a direct rollover to such IRA, 403(b) plan, 457 plan or eligible defined contribution plan, in accordance with and subject to the conditions and limitations of Section 401(a)(31) and related provisions of the Code; and

 

(b)   Such Distribution may commence less than 30 days after the notice required under Treas. Reg. § 1.411(a)-11(c) is given to the Distributee, provided that (1) the Distributee is clearly informed that he or she has a right to consider, for a period of at least 30 days after receiving the notice, a decision on whether to elect a distribution (and, if applicable, a particular distribution option), and (2) the Distributee, after receiving the notice, affirmatively elects a distribution.

 

(c)   “Distributee” means a Participant, a Beneficiary (if the surviving spouse of a Participant), or an Alternate Payee (if the spouse or former spouse of a Participant under a QDRO (as defined in Section 8.5)).

 

(d)   “Eligible Rollover Distribution” means a distribution of any portion of the balance credited to the Accounts of a Participant which is not: 

 

(1)   One of a series of substantially equal periodic payments made over (A) a specified period of ten years or more, or (B) 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;

 

(2)   Any distribution to the extent such distribution is required under Section 401(a)(9) of the Code;

 

(3)   Any hardship distribution described in Section 410(k)(2)(B)(i)(IV) of the Code; and

 

(4)   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),

 

 

 

 

to the extent that it constitutes an eligible rollover distribution (within the meaning of Section 401(a)(31)(C) of the Code).

 

7.5   Common Stock Restrictions.  Any Participant or other prospective Distributee who is to receive a distribution of Common Stock may be required to execute an appropriate stock transfer agreement, implementing and evidencing such restrictions on transferability as may be imposed by applicable federal and state securities laws, prior to receiving a distribution of the Common Stock. Any shares of Common Stock held or distributed by the Trustee may include such legend restrictions on transferability as the Company may reasonably require in order to assure compliance with applicable federal and state securities laws.

 

7.6   Beneficiary Designations.  Each Participant may designate one or more Beneficiaries in such manner as the Committee (in its discretion) shall specify. No such designation shall become effective until its receipt by the Company (as the Committee’s delegate under Section 9.4(u)) in the manner specified.

 

7.6.1   Spousal Consent. If a Participant designates any a person other than his or her spouse as a primary Beneficiary, the designation shall be ineffective unless the Participant’s spouse consents to the designation. Any spousal consent required under this Section 7.6.1 shall be void unless it (a) is set forth in writing, (b) acknowledges the effect of the Participant’s designation of another person as his or her Beneficiary under the Plan, and (c) is signed by the spouse and witnessed by an authorized agent of the Committee or a notary public. Notwithstanding the foregoing, if the Participant establishes to the satisfaction of the Committee that written spousal consent may not be obtained because there is no spouse or the spouse cannot be located, or because of other circumstances specified under Section 417(a)(2) of the Code, his or her designation shall be effective without spousal consent. Any spousal consent required under this Section 7.6.1 shall

 

 

 

7.6.2   Changes and Failed Designations. A Participant may designate different Beneficiaries (or revoke a prior Beneficiary designation) at any time by making a new designation (or a revocation of a prior designation) in such manner as the Committee (in its discretion) shall specify. No such designation shall become effective until its receipt by the Company (as the Committee’s delegate under Section 9.4(u)) in the manner specified, and the last effective designation received by the Company shall supersede all prior designations. If a Participant dies without having effectively designated a Beneficiary, or if no Beneficiary survives the Participant, the Participant’s Accounts shall be payable to his or her surviving spouse or, if the Participant is not survived by his or her spouse, the Accounts shall be paid to the individual representative of the Participant’s estate.

 

7.7   Payments to Minors or Incompetents.  If any individual to whom a benefit is payable under the Plan is a minor, or if the Committee (in its discretion) determines that any individual to whom a benefit is payable under the Plan is physically or mentally incompetent to receive such payment or to give a valid release therefore, payment shall be made to the guardian, committee or other representative of the estate of such individual which has been duly appointed by a court of competent jurisdiction. If no guardian, committee or other representative has been appointed, payment:

 

(a)   May be made to any person as custodian for the minor or incompetent under the California Uniform Transfers to Minors Act (or comparable law of another state), or

 

(b)   May be made to or applied to or for the benefit of the minor or incompetent, his or her spouse, children or other dependents, the institution or persons maintaining him or her, or

 

 

 

(c)   The release of the person or institution receiving the payment shall be a valid and complete discharge of any liability of the Plan with respect to any benefit so paid.

 

7.8   Undistributable Accounts.  Each Participant and (in the event of death) his or her Beneficiary shall keep the Committee advised of his or her current address. If the Committee is unable to locate the Participant or Beneficiary to whom a Participant’s Accounts are payable under this Section 7, (a) the Participant’s Accounts may be closed after 24 months have passed since the date the Account first became distributable to such Participant or Beneficiary, and (b) the balance credited to any Accounts so closed shall be credited as an offset against future Employer Contribution payments. If the Participant or Beneficiary whose Accounts were closed under the preceding sentence subsequently files a claim for distribution of his or her Accounts, and if the Committee (in its discretion) determines that such claim is valid, then the balance previously removed upon closure of the Accounts shall be restored to the Accounts by means of a special contribution which shall be made to the Trust Fund by the Employers.

 

 

 

8.1   General Rules.  In accordance with Sections 8.2 and 8.3, a Participant who is an Employee may make a withdrawal from his or her Accounts in cash (or its equivalent). Any application for a withdrawal shall be submitted to such person, in such manner and within such advance notice period as the Committee (in its discretion) shall specify. No Participant shall be permitted to make a withdrawal under Section 8.2 more often than once in any calendar year, and no Participant shall be permitted to make a withdrawal under Section 8.3 more often than once in any calendar year.

 

 

 

 

8.2   Hardship Withdrawal.  The Committee shall authorize a withdrawal under this Section 8.2 (subject to the provisions of Section 8.1) if the Participant provides evidence that is sufficient to enable the Committee to determine that the withdrawal satisfies the conditions of this Section 8.2.

 

8.2.1   Permissible Financial Obligations. A Participant may make a withdrawal under this Section 8.2 only to meet a financial obligation for:

 

(a)   For hardship withdrawal requests made prior to October 1, 2006:

 

(1)   Unreimbursed expenses for medical care (as defined in Section 213(d) of the Code) incurred by the Participant or his or her spouse or dependents as defined in Section 152 of the Code (“Dependents”), or necessary to enable any such person to obtain such care;

 

(2)   Down payment and closing costs (excluding mortgage payments) directly related to the purchase of the Participant’s principal residence;

 

(3)   Payment of tuition, room and board and related educational expenses for up to the next 12 months of post-secondary education for the Participant or his or her spouse, children or Dependents;

 

(4)   Prevention of the eviction of the Participant from his or her principal residence or foreclosure on the mortgage or deed of trust on the Participant’s principal residence; or

 

(5)   Such other expenses as may be permitted under published documents of general applicability as provided under Treas. Reg. § 1.401(k)-1(d)(2)(iv)(C).

 

(b)   For hardship withdrawal requests made on or after October 1, 2006:

 

(1)   Expenses incurred for medical care that would be deductible under Section 213(d) of the Code (determined without regard to whether the expenses exceed 7½% of adjusted gross income);

 

(2)   Costs (excluding mortgage payments) relating to the purchase of a principal residence for the Participant;

 

(3)   Payment of tuition, related educational fees and room and board expenses, for up to the next 12 months of post-secondary education for the Participant, his or her Spouse, children or dependents (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B) of the Code);

 

 

 

 

(4)   Payments necessary to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage or deed of trust on that principal residence;

 

(5)   Payments for burial or funeral expenses for the Participant’s deceased parent, Spouse, children or dependents (as defined in Section 152 of the Code, without regard to Section 152(d)(1)(B) of the Code); or

 

(6)   Expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Section 165 of the Code (determined without regard to whether the loss exceeds 10% of adjusted gross income).

 

8.2.2   Withdrawal Necessary to Meet Financial Obligation. No withdrawal shall be made under this Section 8.2 unless the Participant has elected to receive all distributions, withdrawals and loans available under this Plan and all other qualified plans maintained by the Employers and Affiliates.

 

8.2.3   Mandatory Suspension and Contribution Limitations. To the extent required by regulations, no withdrawal shall be made under this Section 8.2 unless the Participant irrevocably agrees, evidenced in such manner as the Committee (in its discretion) may specify, in his or her hardship withdrawal application that during the period beginning on the Entry Date that next follows the withdrawal approval date and ending six (6) months after that date, the Participant shall not make contributions to, compensation deferrals under or payments in connection with the exercise of any rights granted under this Plan or any other qualified plan or any nonqualified stock option, stock purchase, deferred compensation or similar plan (but not any health or welfare plan) maintained by any Employer or Affiliate. The Participant may elect to resume his or her active participation in the Plan as of any Entry Date coinciding with or following the end of the suspension period described above, provided that he or she elects to become an Active Participant in accordance with Section 2.3.1.

 

 

 

 

8.2.4   Limit on Withdrawal. No withdrawal under this Section 8.2 shall exceed the lesser of:

 

(a)   The amount which the Committee (in its discretion) determines is necessary to satisfy the financial obligation meeting the conditions of Section 8.2.1 (net of income or penalty taxes reasonably anticipated to result from the withdrawal); or

 

(b)   The excess of (1) the value of the Participant’s Accounts as of the Valuation Date that occurs on the withdrawal date reduced by amounts allocated pursuant to Section 8.5 to any subaccount of the Participant’s Account for any Alternate Payee under a QDRO (as defined in Section 8.5), over (2) the total amount due (including both principal and interest) under all outstanding loans made to the Participant pursuant to Section 8.4.

 

(c)   Notwithstanding the foregoing, the maximum amount that may be withdrawn from a Participant’s Salary Deferral Account, Catch-Up Contribution Account and GenenFlex Account for this purpose shall be equal to the excess of (1) the sum of all Salary Deferrals, Catch-Up Contributions and Prior Excess Flex Credit Contributions (as defined in Section 1.33.2) allocated to the Participant’s Salary Deferral Account, Catch-Up Contribution Account and/or GenenFlex Account (as applicable) on the date of the withdrawal plus the amount of any earnings credited to his or her Salary Deferral Account as of December 31, 1988, over (2) the sum of all amounts previously withdrawn or distributed from the Participant’s Salary Deferral Account, Catch-Up Contribution Account and GenenFlex Account.

 

8.2.5   Order of Withdrawal From Accounts. Any amount withdrawn under this Section 8.2 shall be deducted from the Participant’s Accounts in such order as may be determined by the Committee from time to time.

 

8.3   Age 59½ Withdrawal.  At any time after a Participant attains age 59½, the Participant (subject to the provisions of Section 8.1) may withdraw any amount up to the excess of (a) the value of his or her Accounts as of the Valuation Date that occurs on the withdrawal date, reduced by amounts allocated pursuant to Section 8.5 to any subaccount of the Participant’s Accounts for any Alternate Payee under a QDRO (as defined in Section 8.5), over (b) the total amount due (including both principal and interest) under all outstanding loans made to the Participant pursuant to Section 8.4. Any amount withdrawn under this Section 8.3 shall be deducted from the Participant’s Accounts in such order as may be determined by the Committee from time to time.

 

 

 

8.4 Loans to Participants. 

 

8.4.1   General Loan Rules. A Participant who is an Employee may, upon application to such person, in such manner and within such advance notice period as the Committee (in its discretion) shall specify, obtain a loan from the portion of the Trust Fund allocated to the Participant’s Accounts in accordance with the provisions of this Section 8.4. Loans shall be available to all Participants who are Employees, and to parties in interest (within the meaning of Section 3(14) of ERISA) with respect to the Plan who are non-Employee Participants or Beneficiaries of deceased Participants, on a reasonably equivalent basis.

 

(a)    Amount. The amount of the loan shall be neither less than $1,000 nor more than the excess of (1) 50% of the Participant’s Available Balance (as defined below), determined as of the Valuation Date that occurs on the date the loan is processed, over (2) the sum of the outstanding balances (including both principal and accrued interest) on all prior outstanding loans to the Participant under this Plan.

 

(b)   “Available Balance” means the total balance credited to the Participant’s Accounts as of the applicable date, reduced by amounts allocated pursuant to Section 8.5 to any subaccount of the Participant’s Accounts for any Alternate Payee under a QDRO (as defined in Section 8.5).

 

(c)   Additional Limits. The amount borrowed under this Section 8.4 shall not cause the sum of (i) the amount of the loan, plus (ii) the aggregate outstanding balance (including both principal and accrued interest) on all prior loans to the Participant under this Plan or any other qualified plan maintained by any Employer or Affiliate (an “Other Plan”), to exceed an amount equal to $50,000, reduced by the excess (if any) of (1) the highest aggregate outstanding balance on all loans under this Plan and all Other Plans during the one-year period ending on the day before the date the loan is to be made, over (2) the aggregate outstanding balance on all such loans on the date the loan is made.

 

(d)   Maximum Number of Loans. No Participant shall be permitted to borrow under this Section 8.4 if the borrowing would result in his or her having more than three (3) loans outstanding.

 

(e)   Twelve Months Required Between Loans. Notwithstanding the foregoing, no additional loan may be made to a Participant under this Section 8.4 until at least 12 months after the next earliest loan was made.

 

(f)   Unpaid Leave of Absence. If a Participant is granted an unpaid Leave of Absence and remains an Employee, he or she may elect to have his or her loan payments be

 

 

 

8.4.2   Minimum Requirements of Each Loan. Any loan made under this Section 8.4 shall be evidenced by a loan agreement and promissory note, and the Participant must evidence his or her agreement to the terms thereof in writing. Such terms shall satisfy the following minimum requirements:

 

(a)   Separate Accounting. Each loan shall be considered as a separate, earmarked investment of the Participant’s Loan Account and shall be accounted for as provided in Section 5.4.3.

 

(b)   Term. The term of the loan shall not exceed five years. The Participant may elect a term of either three or five years for each loan. However, the term of the loan may be fifteen years, provided that the Participant (1) certifies in writing that the loan proceeds will be used to purchase a dwelling unit which (within a reasonable period of time after the loan is made) will be the Participant’s principal residence, and (2) submits such certification to the Committee together with such supporting documentary evidence (e.g., a copy of the signed sale contract) as the Committee (in its discretion) may request.

 

(c)   Interest Rate. Each loan shall bear a reasonable rate of interest, as determined by the Committee (in its discretion), which shall be comparable to the interest rates charged under similar circumstances by persons in the business of lending money.

 

(d)   Payment Schedule. A definite payment schedule shall be established for each loan which shall require level and monthly payments of both principal and interest over the agreed term of the loan in accordance with the provisions of this Section 8.4. A Participant may prepay at any time the entire amount remaining due under the loan, but no partial prepayments shall be permitted.

 

(e)   Withholding Payments. No loan shall be made unless the Participant agrees to make principal and interest payments on each loan, together with any and all reasonable charges imposed by the Trustee at the direction of the Committee in connection with the loan:

 

 

 

 

(1)   By payroll withholding, in the case of a Participant who is receiving periodic wage payments from an Employer or Affiliate; or

 

(2)   By an automatic payment method which the Committee (in its discretion) determines will provide security comparable to that of payroll withholding, in the case of a Participant who is not receiving periodic wage payments from an Employer or Affiliate.

 

(f)   On Payroll. If during the term of the loan, a Participant who has been making payments by the automatic payment method described in Section 8.4.2(e)(2) begins receiving periodic wage payments from an Employer or Affiliate, the Participant shall authorize in writing payroll withholding for the remaining loan payments.

 

(g)   Off Payroll. Subject to Section 8.4.1(f), if during the term of the loan, a Participant who has been making loan payments by payroll withholding ceases to receive periodic wage payments from an Employer or Affiliate (and distribution of the Participant’s Account has not begun), the Participant shall authorize in writing an automatic payment method described in Section 8.4.2(e)(2) for the remaining loan payments.

 

(h)   Failure to Authorize. If any Participant fails to authorize any change in the method of payment required by Section 8.4.2(f) or (g), the outstanding balance (including unpaid principal and interest) on the loan shall become immediately due and payable.

 

(i)   Security. Each loan shall be adequately secured by collateral of sufficient value to secure payment of the loan principal and interest. Notwithstanding the provisions of Section 13.2, the Participant shall pledge 50% of his or her Available Balance (as defined in Section 8.4.1(b)), and shall provide such other collateral as the Committee (in its discretion) may require, to secure his or her loan payment obligations.

 

8.4.3 Default.   If a Participant defaults on his or her loan payment obligations and does not cure the default within thirty days of the date the Participant is notified of the default, the Committee shall take, or direct the Trustee to take, such action as shall be necessary or appropriate in the circumstances prevailing:

 

(a)   To realize upon the security interest of the Trust Fund in the collateral pledged to secure the loan, and/or

 

(b)   To reduce the balance credited to the Participant’s Accounts by the amount required to cure the default.

 

(c)   In applying the method of cure provided in subsection (a) above, if any losses are realized or expenses incurred, they shall be allocated only to the defaulting Accounts.

 

 

 

 

(d)   In applying the method of cure provided in subsection (b) above, the amount by which the Participant’s Accounts is to be reduced shall be credited to a separate suspense account for the Participant and shall be increased with interest, at the interest rate actually applicable to the loan pursuant to Section 8.4.2(c), for the period from the date of the default until the earlier of the date the Participant attains age 59½ or the first date on which distributions from the Account can be made under Section 7.1; the balance credited to the Accounts as of that first date shall be reduced by the amount then credited to the suspense account; and only the remaining balance (if any) shall be available for distribution under Section 7.

 

8.4.4   Effect of Distributions. If any amount remains outstanding as a loan obligation of a Participant when a distribution is made from his or her Account in connection with the Participant’s severance from employment with all Employers and Affiliates, (a) the outstanding loan balance (including both principal and accrued interest) shall then become immediately due and payable, and (b) the balance credited to the Participant’s Accounts shall be reduced to the extent necessary to discharge the obligation.

 

8.4.5   Transferred participant Loans. Notwithstanding any contrary Plan provision, any Participant loans that are transferred to the Trust Fund pursuant to Section 10.5.3 shall be administered under this Plan in accordance with such loans’ terms and conditions in effect as of the date of the transfer or as may be otherwise modified to conform to the administrative and/or payroll procedures of the Employer.

 

8.5   Qualified Domestic Relations Orders.  The Committee shall establish written procedures for determining whether a domestic relations order purporting to dispose of any portion of a Participant’s Account is a qualified domestic relations order (within the meaning of Section 414(p) of the Code) (a “QDRO”).

 

8.5.1   No Payment Unless a QDRO. No payment shall be made to any Alternate Payee until the Committee (in its discretion), or a court of competent jurisdiction reversing an initial

 

 

8.5.2   Immediate Payment Required. Payment shall be made to an Alternate Payee, in accordance with a QDRO, as soon as practicable after the QDRO determination is made, regardless of whether the distribution, if made to a Participant at the time specified in the order, would be permitted under the terms of the Plan.

 

8.5.3   Deferred Payment. If the QDRO does not provide for immediate payment to an Alternate Payee, the Committee shall establish a subaccount to record the Alternate Payee’s interest in the Participant’s Accounts. All investment decision with respect to amounts credited to the subaccount shall be made by the Alternate Payee in the manner provided in Section 5.4. Payment to the Alternate Payee shall not be deferred beyond the date of distribution to the Participant or (in the event of death) his or her Beneficiary is made or commenced.

 

8.5.4   Hold Procedures. Notwithstanding any contrary Plan provision, at any time the Committee (in its discretion) may place a hold upon all or a portion of a Participant’s Accounts for a reasonable period of time (as determined by the Committee) if the Committee receives notice that (a) a domestic relations order is being sought by the Participant, his or her spouse, former spouse, child or other dependent and (b) the Participant’s Accounts are a source of payment under such order. For purposes of this Section 8.5.4, a “hold” means that no withdrawals, loans or distributions may be made from a Participant’s Accounts. The Committee shall notify the Participant if a hold is placed upon his or her Accounts pursuant to this Section 8.5.4.

 

 

 

 

 

 

9.1   Plan Administrator.  The Company is hereby designated as the administrator of the Plan (within the meaning of Sections 414(g) and 3(16)(A) of the Code and ERISA, respectively).

 

9.2   Committee.  The Plan shall be administered by a Committee consisting of at least three members, appointed by and holding office at the pleasure of the Board of Directors. The Committee shall have the authority to control and manage the operation and administration of the Plan as a named fiduciary under Section 402(a)(1) of ERISA. Any member of the Committee who is also an Employee shall serve as such without additional compensation. Any member of the Committee may resign at any time by notice in writing mailed or delivered to the Board of Directors. The Board of Directors may remove any member of the Committee at any time and may fill any vacancy that exists.

 

9.3   Actions by Committee.  Each decision of a majority of the members of the Committee then in office shall constitute the final and binding act of the Committee. The Committee may act with or without a meeting being called or held and shall keep minutes of all meetings held and a record of all actions taken. Except as otherwise specifically or generally directed by the Committee, any action of the Committee may be evidenced by a writing signed by any two (2) members of the Committee.

 

9.4   Powers of Committee.  The Committee shall have all powers necessary to supervise the administration of the Plan and to control its operation in accordance with its terms, including, but not by way of limitation, the following discretionary powers:

 

(a)   To grant or deny benefits under the Plan;

 

 

 

 

(b)   To interpret the provisions of the Plan and to determine any question arising under, or in connection with the administration or operation of, the Plan;

 

(c)   To determine all questions concerning the eligibility of any Employee to become or remain a Participant and/or an Active Participant in the Plan;

 

(d)   To cause one or more separate Accounts to be maintained for each Participant;

 

(e)   To establish and revise an accounting method or formula for the Plan, as provided in Section 6.4;

 

(f)   To determine the manner and form, and to notify the Trustee, of any distribution to be made under the Plan;

 

(g)   To grant or deny withdrawal and loan applications under Section 8;

 

(h)   To determine the status and rights of Participants and their spouses, Beneficiaries or estates under this Plan;

 

(i)   To instruct the Trustee with respect to matters within the jurisdiction of the Committee;

 

(j)   To direct the Trustee, in accordance with Section 6.3, as to the establishment of Investment Funds and the investment of the Plan assets held in the Investment Funds;

 

(k)   To employ such counsel, agents and advisors, and to obtain such legal, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan;

 

(l)   To prescribe the form, manner and/or notice period in which any Participant, or his or her spouse or other Beneficiary, may make any election or designation provided under the Plan;

 

(m)   To establish rules for the performance of its powers and duties and for the administration of the Plan;

 

(n)   To arrange for annual distribution to each Participant of a statement of benefits accrued under the Plan;

 

(o)   To establish rules, regulations and/or procedures by which requests for Plan information from Participants are processed expeditiously and completely;

 

(p)   To provide to each terminated Participant notice of his or her vested interest under the Plan and to provide to each Participant in advance of the Participant’s receipt of an Eligible Rollover Distribution (as defined in Section 7.4.5(d)) the explanation described in Section 402(f) of the Code;

 

 

 

 

(q)   To publish a claims and appeal procedure satisfying the minimum standards of Section 503 of ERISA pursuant to which Participants or their spouses, Beneficiaries or estates may claim Plan benefits and appeal any denials of such claims;

 

(r)   To determine the liabilities of the Plan, to establish and communicate a funding policy to the Trustee and any Investment Manager appointed pursuant to Section 9.6, and in accordance with such funding policy, to coordinate the Plan’s investment policy with the Plan’s requirements for funds to pay expenses and benefits as they become due;

 

(s)   To act as agent for the Company in keeping all records and assisting with the preparation of all reports and disclosures necessary for purpose of complying with the reporting and disclosure requirements of ERISA and the Code;

 

(t) To arrange for the purchase of any bond required of the Committee members or others under Section 412 of ERISA;

 

(u) To delegate to the Trustee, the Company’s Payroll or Human Resources Department, or any other (including third-party) recordkeeper the authority, acting as an agent of the Committee, to give or receive notices, elections and other directions to or from Participants and Beneficiaries as provided in the Plan; and

 

(v) To delegate to any one or more of its members or to any other person, severally or jointly, the authority to perform for and on behalf of the Committee one or more of the fiduciary and/or ministerial functions of the Committee under the Plan.

 

9.5   Fiduciary Responsibilities.  To the extent permissible under ERISA, any person may serve in more than one fiduciary capacity with respect to the Plan. Except as required by specific provisions of ERISA, no person who is a fiduciary with respect to the Plan shall be under any obligation to perform any duty or responsibility with respect to the Plan which has been specifically allocated to another fiduciary.

 

9.6   Investment Responsibilities.  The Committee shall direct the Trustee to invest the Investment Funds in the investment media specified in Section 6.3.1. Subject to the provisions of this Section 9.6 and any contrary provision of the Plan or Trust Agreement, exclusive authority and discretion to manage and control the assets of the Trust Fund shall be vested in the Trustee, and the Trustee from time to time shall review the assets and make its determinations as to the investments of the Trust Fund.

 

 

9.6.1   Investment Manager Appointment. The Committee (in its discretion) may appoint, and thereafter may discharge, one or more investment managers (the “Investment Managers”) to manage the investment of one or more of the Investment Funds and/or other designated portions of the Trust Fund. In the event of any such appointment, the Trustee shall follow the instructions of the Investment Manager in investing and administering Trust Fund assets managed by the Investment Manager. Alternatively, the Committee (in its discretion) may delegate investment authority and responsibility with respect to any Investment Fund directly to any Investment Manager that has investment management responsibility for any collective investment fund in which the Investment Fund is invested.

 

9.6.2   Eligibility. Any person, firm or corporation appointed as Investment Manager (a) shall be a person described in Section 3(38)(B) of ERISA, (b) shall make such representations from time to time as the Committee (in its discretion) may require in order to determine its qualifications to be appointed and to continue to serve in such capacity, and (c) shall acknowledge in writing its status as a fiduciary with respect to the Plan upon acceptance of its appointment.

 

9.7  Voting and Tender Offer Rights in Common Stock. 

 

9.7.1   Pass-Through Issues. All Common Stock held in the Trust Fund shall be voted, tendered or exchanged, with respect to Pass-Through Issues, in accordance with Sections 9.7.3 through 9.7.6. For purposes of this Section 9.7, a “Pass-Through Issue” with respect to Common Stock is an issue which concerns:

 

(a)   The voting of shares of Common Stock with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business or any transaction which the Committee (in its discretion) determines to be similar to the foregoing;

 

(b)   Any tender or exchange offer for Common Stock or any transaction that the Committee (in its discretion) determines to be similar to the foregoing;

 

 

 

 

(c)   Any proposal by a shareholder pursuant to Rule 14a-8 under the 1934 Act;

 

(d)   Any election contest governed by Rule 14a-11 under the 1934 Act;

 

(e)   Any proposal with respect to which there is any solicitation in opposition (within the meaning of Rule 14a-6 under the 1934 Act); or

 

(f)   Any such other event that the Committee (in its discretion) designates as a Pass-Through Issue. It is anticipated that generally the Committee will designate all but nonsubstantive issues as Pass-Through Issues. The Committee shall have the authority (in its discretion) to determine which issues are nonsubstantive issues.

 

9.7.2   Voting On Issues Other Than Pass-Through Issues. Except with respect to Pass-Through Issues, Common Stock held in the Trust Fund shall be voted by the Trustee only in accordance with instructions received from the Committee. However, if with respect to some matter other than a Pass-Through Issue the Committee shall fail to give, or shall notify the Trustee in writing of its decision not to give, timely voting instructions to the Trustee, the Trustee (in its discretion) shall have the authority to vote such Common Stock in its sole discretion. The functions of the Committee and the Trustee with respect to other rights pertaining to such Common Stock on matters other than Pass-Through Issues shall be allocated between them in like manner.

 

9.7.3   Named Fiduciary Status. For purposes of this Section 9.7, each Participant (or, if deceased, his or her Beneficiary) shall be a named fiduciary (within the meaning of, but not limited to, Sections 402(a) and 403(a)(1) of ERISA) with respect to Pass-Through Issues for all shares of Common Stock as to which the Participant has the right of direction with respect to voting, tender and any other rights appurtenant to such Stock. That named fiduciary status shall apply with respect to Pass-Through Issues for such whole number of shares of Common Stock (if any) actually held for the benefit of any Participant (or Beneficiary) and allocable to his or her Account by reason of the Account’s investment (if any) in the Company Stock Fund (for purposes of this Section 9.7, “Allocable Shares”).

 

 

 

 

9.7.4   Confidentiality. In implementing this Section 9.7, each appropriate fiduciary shall take all steps necessary or appropriate to ensure that each Participant’s (or Beneficiary’s) instructions shall be kept in strictest confidence and shall not be divulged or released to any person, except as provided in the next sentence, including officers, directors or employees of the Company or any Affiliate. To the extent necessary for the operation of the Plan, however, the instructions may be provided to the Trustee and to a recordkeeper, auditor or other person providing services to the Plan if the person (a) is not the Company or an Affiliate, and (b) agrees not to divulge the instructions to any other person, including officers, directors or employees of the Company or any Affiliate.

 

9.7.5   Directed Voting and Consents.

 

(a)   Notwithstanding any contrary Plan provision, whenever any proxies or consents are solicited from the holders of Common Stock with respect to Pass-Through Issues, the Trustee shall exercise voting or other rights solely as directed in written instructions timely received from Participants (or if deceased, their Beneficiaries) and in accordance with this Section 9.7.

 

(b)   Each Participant (or if deceased, his or her Beneficiary) shall have the right, with respect to Pass-Through Issues for Allocable Shares, to instruct the Trustee, in accordance with procedures established by the Committee (in its discretion), as to the manner in which to vote such Allocable Shares at any stockholders’ meeting of the Company, or the manner in which the Trustee shall give or withhold consent with respect to such Allocable Shares.

 

(1)   The Trustee shall pool the results of instructions received from all Participants (and Beneficiaries) as to their Allocable Shares and shall vote or otherwise act accordingly on Pass-Through Issues with respect to such Allocable Shares and the aggregate of all fractional shares of Common Stock allocable to the Participants’ Accounts;

 

(2)   In the case of a deceased Participant who has more than one Beneficiary, the Trustee shall vote or otherwise act on Pass-Through Issues in accordance with the instructions of the Participant’s Beneficiaries in respect of the deceased Participant’s Allocable Shares in proportion to the Beneficiaries’ respective interests in the Participant’s Account in accordance with rules established by the Committee (in its discretion).

 

(3)   If and to the extent that no instructions are timely received from any Participant (or Beneficiary) with a right to instruct with respect to his or her Allocable Shares, (A) such person shall be deemed to have timely instructed the Trustee not to vote the

 

 

 

(c)   The Company shall use its best efforts to timely distribute or cause to be distributed to each Participant (or Beneficiary) such information concerning Pass-Through Issues as will be distributed to stockholders of the Company in connection with any stockholders’ meeting or any solicitation of voting or consents, together with a request for confidential instructions to the Trustee or its designee on how shares of Common Stock shall be voted on each such matter or how consents shall be given or withheld.

 

9.7.6   Tender or Exchange Offers.

 

(a)   Notwithstanding any contrary Plan provision, whenever (i) any tender or exchange offer is made for shares of Common Stock, or (ii) there occurs any transaction that the Committee (in its discretion) determines to be similar to the foregoing (as described in Section 9.7.1(b)), the Trustee shall tender or exchange (or refrain from tendering or exchanging) shares of Common Stock solely as directed in instructions timely received from Participants (or if deceased, their Beneficiaries) and in accordance with this Section 9.7.

 

(b)   Each Participant (or, if deceased, his or her Beneficiary) shall have the right, with respect to his or her Allocable Shares, to instruct the Trustee, in accordance with procedures established by the Committee (in its discretion), as to the manner in which to respond to such tender or exchange offer with respect to such Allocable Shares.

 

(1)   The Trustee shall pool the results of instructions received from all Participants (and Beneficiaries) as to their Allocable Shares and shall respond to such tender or exchange offer accordingly with respect to such Allocable Shares and the aggregate of all fractional shares of Common Stock allocable to the Participants’ Accounts.

 

(2)   In the case of a deceased Participant who has more than one Beneficiary, the Trustee shall respond to such tender or exchange offer in accordance with the instructions of the Participant’s Beneficiaries in respect of the deceased Participant’s Allocable Shares in proportion to the Beneficiaries’ respective interests in the Participant’s Account in accordance with rules established by the Committee (in its discretion).

 

(3)   If and to the extent that no instructions are timely received from any Participant (or Beneficiary) with a right to instruct with respect to his or her Allocable Shares, (A) such person shall be deemed to have timely instructed the Trustee not to tender or exchange the relevant Allocable Shares, and (B) the Trustee shall not tender or exchange such Allocable Shares nor take any other actions under this Section 9.7 with respect to such Allocable Shares on the Pass-Through Issue qualifying as such under Section 9.7.1(b).

 

(c)   The Company shall use its best efforts to timely distribute or cause to be distributed to each Participant (or Beneficiary) such information as will be distributed to stockholders of the Company in connection with any Pass-Through Issue qualifying as such under

 

 

 

9.8   Decisions of Committee.  All decisions of the Committee, and any action taken by it in respect of the Plan and within the powers granted to it under the Plan, and any interpretation of provision of the Plan or the Trust Agreement by the Committee, shall be conclusive and binding on all persons, and shall be given the maximum possible deference allowed by law.

 

9.9   Administrative Expenses.  All reasonable expenses actually incurred in connection with the administration of the Plan by the Employers, the Committee or otherwise, including legal, Trustee’s and investment management fees and expenses (“Administrative Expenses”), shall be payable from the Trust Fund, except to the extent paid by the Employers under clause (a) below. Notwithstanding the foregoing, Administrative Expenses shall be paid from the Trust Fund only to the extent that such payments (to the extent prohibited by Section 406) are exempt under Section 408 of ERISA. The Committee (in its discretion) shall determine which Administrative Expenses are not payable from the Trust Fund under the foregoing rules. The Company (in its discretion) may (a) direct the Employers to pay any or all Administrative Expenses, and/or (b) direct the Employers not to pay a greater share, portion or amount of such Expenses which would otherwise be allocable to the Accounts of Participants who are no longer employed by any Employer or Affiliate.

 

9.10   Eligibility to Participate.  No member of the Committee, who is also an Eligible Employee and otherwise eligible under Section 2, shall be excluded from participating in the Plan, but he or she, as a member of the Committee, shall not act or pass upon any matters pertaining specifically to his or her own Accounts under the Plan.

 

9.11   Indemnification.  Each of the Employers shall, and hereby does, indemnify and hold harmless any of its Employees, officers or directors who may be deemed to be a fiduciary of the

 

 

 

 

 

10.1   Trust Fund.  The Company shall establish a Trust Agreement with the Trustee in order to provide for the safekeeping, administration and investment of all amounts contributed or transferred to the Plan and the payment of benefits as provided in the Plan. The Trustee shall receive and place in the Trust Fund all such contributions and shall hold, invest, reinvest and distribute the Trust Fund in accordance with provisions of the Plan and Trust Agreement. Assets of this Plan may be commingled with the assets of other qualified plans through one or more collective investment funds described in Section 6.3; provided, however, that the assets of this Plan shall not be available to provide any benefits under any other such plan. The benefits provided under the Plan shall be only such as can be provided by the assets of the Trust Fund, and no liability for payment of benefits shall be imposed upon the Employers or any of their shareholders, directors or Employees. The Trust Fund shall continue for such time as may be necessary to accomplish the purposes for which it is created.

 

10.2   No Diversion of Assets.  Notwithstanding any contrary Plan provision, at no time shall any assets of the Plan be used for, or diverted to, purposes other than for the exclusive benefit of Eligible Employees, Participants, Beneficiaries and other persons receiving or entitled to receive

 

 

10.3   Continuing Conditions.  Any obligation of the Employer to contribute Salary Deferrals, Catch-Up Contributions, Matching Contributions and/or Nonelective Contributions under the Plan is hereby conditioned upon the deductibility of such Salary Deferrals, Catch-Up Contributions, Matching Contributions and/or Nonelective Contributions under Section 404(a) of the Code. That portion of any Salary Deferral, Catch-Up Contribution, Matching Contribution or Nonelective Contribution that is contributed or made by reason of a good faith mistake of fact, or by reason of a good faith mistake in determining the deductibility of such portion, shall be returned to the Employers as promptly as practicable, but not later than one year after the contribution was made or the deduction was disallowed (as the case may be). The amount returned pursuant to the preceding sentence shall be an amount equal to the excess of the amount actually contributed over the amount that would have been contributed if the mistake had not been made; provided, however, that gains attributable to the returnable portion shall be retained in the Trust Fund; and provided, further, that the returnable portion shall be reduced (a) by any losses attributable thereto and (b) to avoid a reduction in the balance of any Participant’s Accounts below the balance that would have resulted if the mistake had not been made.

 

10.4   Change of Investment Alternatives.  The Company reserves the right to change at any time the means through which the Plan is funded, including adding or substituting one or more contracts with an insurance company or companies, and thereupon may make suitable provision for the use of a designated portion of the assets of the Trust Fund to provide for the funding and/or payment of Plan benefits under any such insurance contract. No such change shall constitute a termination of the Plan or result in the diversion to the Employers of any portion of the Trust Fund.

 

 

10.5   Rollover Contributions.  Notwithstanding any contrary Plan provision, the Committee (in its discretion) may direct the Trustee to accept a transfer of assets to the Trust Fund for the benefit of a Participant or group of Participants. Such transfer may be in the form of a trust-to-trust transfer from the trustee of a tax-qualified plan under Section 401(a) of the Code and related tax-exempt trust under Section 501(a) of the Code that is not subject to the funding requirements of Section 412 of the Code, or in the form of a rollover by the Eligible Employee or a direct rollover from: (i) a qualified plan described in Section 401(a) or 403(a) of the Code (a “Qualified Plan”), excluding after-tax employee contributions; or (ii) an individual retirement account or annuity described in Section 408(a)or 408(b) of the Code that is eligible to be rolled over and would otherwise be includible in gross income, as described in Section 408(d)(3)(A)(ii), but only if no amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution from a Qualified Plan, plus any earnings thereon.

 

10.5.1   Rollover Account. Assets transferred to the Trust Fund pursuant to this Section 10.5 shall be credited to the Participant’s Rollover Account. A Participant’s interest in his or her Rollover Account shall be fully (100%) vested and nonforfeitable at all times. The Participant shall indicate, in such manner and within such advance notice period as the Committee (in its discretion) shall specify, the percentages of the amounts allocated to his or her Rollover Account that are to be invested in each of the Investment Funds. In all other respects Rollover Account investments shall be subject to Section 5.4.

 

 

 

 

10.5.2   Nonqualifying Rollovers. If it is later determined that a transfer to the Trust Fund made pursuant to this Section 10.5 did not in fact qualify as an eligible rollover contribution as described in Section 10.5 above, then the balance credited to the Participant’s Rollover Account shall immediately be (a) segregated from all other Plan assets, (b) treated as a nonqualified trust established by and for the benefit of the Participant, and (c) distributed to the Participant. Such a nonqualifying rollover shall be deemed never to have been a part of the Trust Fund.

 

10.5.3   Rollover of Certain Participant Loans Permitted. At the direction of the Committee (in its discretion), in the case of a Participant who becomes an Eligible Employee by reason of the acquisition by the Company or its Affiliate of the assets and liabilities of, or the voting stock of, another corporation or other business entity, or another type of business transaction effected by the Company or its Affiliate, assets may be transferred to the Trust Fund pursuant to Section 10.5 above in a direct rollover from the Qualified Plan maintained by the Participant’s prior employer (the “Prior Plan”) in the form of loan promissory notes, provided that the Participant elects to directly rollover his or her entire Prior Plan account balance that qualifies as an eligible rollover contribution to this Plan as described in Section 10.5.

 

 

 

11.1   Employers’ Obligations Limited.  The Plan is voluntary on the part of the Employers, and the Employers shall have no responsibility to satisfy any liabilities under the Plan. Furthermore, the Employers do not guarantee to continue the Plan, and the Company may, by appropriate amendment of the Plan, discontinue contributions of Salary Deferrals, Catch-Up Contributions, Matching Contributions and/or Nonelective Contributions for any reason at any time. Complete

 

 

11.2   Right to Amend or Terminate.  The Company reserves the right to alter, amend or terminate the Plan, or any part thereof, in such manner as it may determine. Amendments which do not add materially to the Company’s cost under the Plan and which are (i) necessary to comply with the Code, ERISA or other applicable law, (ii) technical, or (iii) intended to ease administration may be adopted if approved in writing by any two members of the Committee, acting in their capacities as officers of the Company rather than as fiduciaries with respect to the Plan. All other amendments shall be approved by the Board of Directors. Any such alteration, amendment or termination shall take effect upon the date indicated in the document embodying such alteration, amendment or termination; provided, however, that:

 

(a)   No such alteration or amendment shall (1) divest any portion of an Account that is then vested under the Plan, or (2) except as may be permitted by regulations or other IRS guidance, eliminate any optional form of benefit (within the meaning of Section 411(d)(6)(B)(ii) of the Code) with respect to benefits accrued prior to the adoption of the amendment; and

 

(b)   Any alteration, amendment or termination of the Plan or any part thereof, shall be subject to the restrictions in Section 10.2 which prohibit any diversion of the assets of the Plan.

 

11.3   Effect of Termination.  If the Plan is terminated or partially terminated, or if there is a complete discontinuance of all contributions of Salary Deferrals, Catch-Up Contributions and Employer Contributions, the interests of all affected Participants in their Accounts shall remain fully (100%) vested and nonforfeitable. In the event the Plan is terminated, the balance credited to the Matching Accounts, Nonelective Contribution Account and Rollover Accounts and, to the extent permitted by Section 401(k)(2)(B) of the Code, the Salary Deferral Accounts, Catch-Up Contribution Accounts and/or GenenFlex Accounts, of any Participants who are affected by the

 

 

 

 

 

12.1   Top-Heavy Plan Status.  Notwithstanding any contrary Plan provision, the provisions of this Section 12 shall apply with respect to any Plan Year for which the Plan is a top-heavy plan (within the meaning of Section 416(g) of the Code) (a “Top-Heavy Plan”).

 

12.1.1   60% Rule. The Plan shall be a Top-Heavy Plan with respect to any Plan Year if, as of the Determination Date, the value of the aggregate of the Accounts under the Plan for key employees (within the meaning of Sections 416(i)(1) and (5) of the Code) exceeds 60% of the value of the aggregate of the Accounts under the Plan for all Participants. For purposes of determining the value of the Accounts, the provisions of Section 416(g)(4)(E) of the Code and Treas. Reg. § 1.416-1 (Q&A T-1) are incorporated herein by reference.

 

12.1.2   Top-Heavy Determinations. The Committee, acting on behalf of the Employers, shall determine as to each Plan Year whether or not the Plan is a Top-Heavy Plan for that Plan Year. For purposes of making that determination as to any Plan Year:

 

(a)   “Determination Date” means the last day of the immediately preceding Plan Year;

 

(b)   The Plan shall be aggregated with each other qualified plan of any Employer or any Affiliate (1) in which a key employee (within the meaning of Sections 416(i)(1) and (5) of the Code) participates, and/or (2) which enables the Plan or any plan described in clause (1) above to meet the requirements of Section 401(a)(4) or 410(b) of the Code;

 

(c)   The Plan may be aggregated with any other qualified plan of any Employer or Affiliate, which plan is not required to be aggregated under subsection (b) (1) above, if the resulting group of plans would continue to meet the requirements of Sections 401(a)(4) and 410(b) of the Code; and

 

 

 

 

(d) In determining which Employees are key and non-key employees, an Employee’s compensation for the Plan Year shall be his or her Total Compensation (as defined in Section 5.5.2(e) and applied using the definition of “Affiliate” in Section 1.1 rather than in Section 5.5.2(a)).

 

12.2   Top-Heavy Plan Provisions.  For any Plan Year for which the Plan is a Top-Heavy Plan, the following provisions shall apply:

 

12.2.1   Minimum Allocation. The Employers shall make an additional contribution to the Accounts of each Participant who is a non-key employee (within the meaning of Sections 416(i)(2) and (5) of the Code), and who is employed on the last day of the Plan Year, in an amount which equals 3% of his or her Top-Heavy Compensation for the Plan Year; provided, however, that if the Key Employee Percentage (as defined in subsection (a) below) is less than 3%, then the percentage rate at which that additional Employer contribution shall be made for that Plan Year shall be reduced from 3% to the Key Employee Percentage. Matching Contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and the Plan. Matching Contributions that are used to satisfy such minimum contribution requirements shall be treated as Matching Contributions for purposes of the actual contribution percentage limitation in Section 4.1.5 and other requirements of Section 401(m) of the Code.

 

(a)   The determination of who is a key employee will be made in accordance with Section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability thereunder.

 

(b)   “Key Employee Percentage” means the largest percentage computed by dividing (a) the total amount of all Employer contributions allocated for that Plan Year to the Accounts of each Participant who is a key employee (within the meaning of Sections 416(i)(1) and (5) of the Code), by (b) his or her Top-Heavy Compensation.

 

(c)   The additional contribution required under this Section 12.2.1 shall be made without regard to the level of the Participant’s Top-Heavy Compensation for the Plan Year.

 

 

 

 

(d) Notwithstanding the foregoing, if a Participant is also covered under any Other Plan (as defined in Section 8.4.1(c)) and the minimum allocation of benefit requirement applicable to Top-Heavy Plans will be met under such Other Plan or Plans, no additional contribution will be made for the Participant under this Plan.

 

12.2.2   “Top-Heavy Compensation” means, with respect to any Participant for a Plan Year, his or her Total Compensation (as defined in Section 5.5.2(e) and applied using the definition of “Affiliate” in Section 1.1 rather than in Section 5.5.2(a)) and except that, for this purpose, no amount in excess of the Compensation Limit shall be taken into account for any Plan Year.

 

 

 

13.1   Plan Information.  Each Participant shall be advised of the general provisions of the Plan and, upon written request addressed to the Committee, shall be furnished with any information requested, to the extent required by applicable law, regarding his or her status, rights and privileges under the Plan.

 

13.2   Inalienability.  Except to the extent otherwise provided in Sections 8.4 and 8.5 or mandated by Section 401(a)(13)(C) of the Code or other applicable law, in no event may any Participant, former Participant or his or her spouse, Beneficiary or estate sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any right or interest under the Plan; and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process.

 

13.3   Rights and Duties.  No person shall have any rights in or to the Trust Fund or other assets of the Plan, or under the Plan, except as, and only to the extent, expressly provided for in the Plan. To the maximum extent permissible under Section 410 of ERISA, neither the Employers, the

 

 

 

13.4   No Enlargement of Employment Rights.  Neither the establishment or maintenance of the Plan, the making of any contributions nor any action of any Employer, the Trustee or Committee, shall be held or construed to confer upon any individual any right to be continued as an Employee nor, upon dismissal, any right or interest in the Trust Fund or any other assets of the Plan other than as provided in the Plan. Each Employer expressly reserves the right to discharge any Employee at any time.

 

13.5   Apportionment of Duties.  All acts required of the Employers under the Plan may be performed by the Company for itself and its Affiliates. Any costs incurred by the Company for itself or its Affiliates in connection with the Plan and the costs of the Plan, if not paid from the Trust Fund pursuant to Section 9.9, shall be equitably apportioned among the Company and the other Employers, as determined by the Committee (in its discretion). Whenever an Employer is permitted or required under the terms of the Plan to do or perform any act, matter or thing, it shall be done and performed by any officer or Employee of the Employer who is thereunto duly authorized by the board of directors of the Employer.

 

13.6   Merger, Consolidation or Transfer.  This Plan shall not be merged or consolidated with any other plan, nor shall there be any transfer of any assets or liabilities from this Plan to any other plan, unless immediately after such merger, consolidation or transfer, each Participant’s accrued benefit, if such other plan were then to terminate, is at least equal to the accrued benefit to which the Participant would have been entitled if this Plan had been terminated immediately before such merger, consolidation or transfer. Subject to the foregoing, the Board of Directors shall have the power (in its discretion) to direct that this Plan shall participate in any such transaction.

 

 

 

 

13.7   Military Service.  Notwithstanding any contrary Plan provision, Salary Deferrals, Catch-Up Contributions and Employer Contributions with respect to the qualified military service of an Employee on a Leave of Absence pursuant to Section 1.27(b) will be provided in accordance with Section 414(u) of the Code. In addition, Participant loan repayments under Section 8.4.2 shall be suspended as permitted under Section 414(u) of the Code, and interest on Participant loans shall be adjusted, if necessary, to conform to the requirements of the Servicemembers Civil Relief Act of 2003 or other applicable law.

 

13.8   Applicable Law.  The provisions of the Plan shall be construed, administered and enforced in accordance with ERISA and, to the extent applicable, the laws of the State of California.

 

13.9   Severability.  If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced as if such provision had not been included.

 

13.10   Captions.  The captions contained in and the table of contents prefixed to the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of the Plan nor in any way shall affect the construction of any provision of the Plan.

 

 

In Witness Whereof, Genentech, Inc., by its duly authorized officers, has executed this restated Plan on the date indicated below.

 

 

 

This Puerto Rico Supplement (the “Supplement”) pertains only to Puerto Rico Employees who are Participants (“Puerto Rico Participants”) in the Genentech, Inc. Tax Reduction Investment Plan (the “Plan”). Except as otherwise specified in this Supplement, (1) the provisions of the Plan shall apply to Puerto Rico Employees, and (2) all defined terms used in this Supplement shall have the meaning set forth in the Plan.

 

A.   Purpose. The purpose of this Supplement is to comply with the qualification requirements of Section 1165(a) of the PR Code. Accordingly, to the extent inconsistent with the general provisions of the Plan, the following provisions shall apply to Puerto Rico Employees. In the event of an amendment to the PR Code or enactment of a successor statute that replaces or renumbers a section of the PR Code references in this Supplement, all such references shall automatically be renumbered or replaced, as applicable.

 

B.   Applicable Trust. Plan assets attributable to Puerto Rico Participants shall be held by the Trustee and invested under the Plan in the Trust Fund. The Trust Fund, to the extent of assets attributable to Puerto Rico Participants, shall be exempt from Puerto Rico income taxes in accordance with PR Code Section 1165(a) and exempt from United States income taxes pursuant to Section 501(a) of the US Code and Section 1022(i) of ERISA.

 

1.   Affiliate. “Affiliate” and/or “member of a controlled group” means a related employer of the Company that belongs to the Company’s “controlled group” (as that term is defined by PR Code Section 1028).

 

 

 a.   for purposes of Salary Deferrals, Matching Contributions and Nonelective Contributions, have the same meaning as set forth in Section 1.11 of the Plan, except that references to IRS Form W-2 shall mean Puerto Rico Form 499R-2/W-2PR; and

b.   for all other purposes, have the same meaning as set forth in Section 5.5.2(e) of the Plan, consistent with PR Code Section 1165(h)(9).

3.   Direct Rollover. “Direct Rollover” means, with respect to a Puerto Rico Participant, a Direct Rollover as defined in Section 7.4.5 of the Plan, but with the following applicable definitions:

 

 

 

 

a.   Distributee: A Distributee includes a Puerto Rico Participant.

b.   Eligible Retirement Plan: An Eligible Retirement Plan refers to an individual retirement account described in PR Code Section 1169(a), an annuity plan described in PR Code Section 1165(a), or a qualified trust described in PR Code Section 1165(a), that accepts the Distributee’s Eligible Rollover Distribution.

c.   Eligible Rollover Distribution: An Eligible Rollover Distribution includes any distribution of all of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: 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 10 years or more; and 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).

4.   Highly Compensated Puerto Rico Employees. “Highly Compensated Puerto Rico Employees” for each Plan Year means Puerto Rico Employees who have greater Compensation than two-thirds of all other Puerto Rico Employees for that Plan Year (as set forth in Section 1165(e)(3)(E)(iii) of the PR Code).

 

5.   Non-Highly Compensated Puerto Rico Employees. “Non-Highly Compensated Puerto Rico Employees” for each Plan Year means Puerto Rico Employees who are not Highly Compensated Puerto Rico Employees.

 

6.   PR Code. “PR Code” means the Puerto Rico Internal Revenue Code of 1994, as amended. Reference to any Section or Subsection of the PR Code and the regulations promulgated thereunder includes reference to any comparable or succeeding provisions of any legislation that amends, supplements, or replaces such section or subsection.

 

7.   Puerto Rico Employee. “Puerto Rico Employee” means an Employee whose compensation is subject to Puerto Rico income tax and who is a bona fide resident of Puerto Rico.

 

8.   Puerto Rico Participant. “Puerto Rico Participant” means a Puerto Rico Employee who is an Eligible Employee, who has become a Participant in the Plan pursuant to Section 2.1 and who has not ceased to be a Participant pursuant to Section 2.7.

 

8. Rollover Contribution. “Rollover Contribution” means, with respect to a Puerto Rico Participant, a Rollover contribution that fulfills the requirements of PR Code Section 1165(b)(2).

 

9.   US Code. “US Code” means the United States Internal Revenue Code of 1986, as amended.

 

 

 

D.   Effective Date. The provisions of this Supplement are amended effective as of January 1, 2006.

 

E.   Rollover Contributions. A Puerto Rico Participant may elect to make a Rollover Contribution into the Plan, subject to the requirements of Section 1165(b)(2) of the PR Code. In addition, if so directed by the Plan Administrator, the Trustee will accept a direct transfer from another retirement plan qualified under Section 1165 of the PR Code on behalf of Puerto Rico Participants. Such transferred amounts will be treated as Rollover Contributions.

 

F.   Salary Deferrals.

 

1.   A Puerto Rico Participant may elect to defer a portion of his or her Compensation and to have the amounts of such Salary Deferrals contributed by his or her Employer to the Trust Fund. A Puerto Rico Participant may elect to defer an amount not less than 1% and not more than 10% (the maximum currently permissible under the PR Code), in whole increments of 1%.

 

2.   In addition to the above, the Actual Deferral Percentage for any Highly Compensated Puerto Rico Employee for the Plan Year who is eligible to have Salary Deferrals allocated to his or her account under two or more plans or arrangements described in PR Code Section 1165(e) that are maintained by the Employer, shall be determined as if such Salary Deferrals were made under a single arrangement.

 

G.   Annual Limitation on Salary Deferrals.

 

1.   Notwithstanding Section 3.1 of the Plan, a Puerto Rico Participant’s Salary Deferrals are limited to the amount specified under the PR Code. As of the Effective Date, that is the lesser of 10% of his or her Compensation or $8,000. These limits may be adjusted from time to time in accordance with applicable Puerto Rico tax laws.

 

2.   Furthermore, and until further notice, no ‘catch-up contributions,’ as referenced in US Code Section 414(v), are currently allowed under the PR Code.

 

H.   Minimum Coverage Requirements. In applying the statutory minimum coverage requirements to Puerto Rico Employees, which as to Employees other than Puerto Rico Employees are governed by US Code Section 410(b), the applicable provisions of the PR Code shall govern. In accordance with such provisions:

1.   at least 70% or more of Non-Highly Compensated Puerto Rico Employees are covered or eligible to participate in the Plan;

2.   the Plan shall benefit a percentage of Non-Highly Compensated Puerto Rico Employees that is at least 70% of the percentage of Highly Compensated Puerto Rico Employees who benefit under the Plan; or

 

3.   the Plan shall pass the ‘average benefit test’ (as described in PR Code Section 1165(a)(3)(B)).

 

 

 

 

I.   Nondiscrimination Testing Rules. Notwithstanding Section 3.1 of the Plan, which sets out the nondiscrimination provisions of the Plan with respect to Eligible Employees other than Puerto Rico Employees, the following nondiscrimination requirements shall apply to Puerto Rico Employees:

1.   ‘Puerto Rico Actual Deferral Percentage Test’ means the Puerto Rico Actual Deferral Percentage (as defined in subsection b below) of Highly Compensated Puerto Rico Employees for any Plan Year as compared to the Puerto Rico Actual Deferral Percentage for Non-Highly Compensated Puerto Rico Employees that must meet either of the following tests:

 

a.   The Puerto Rico Actual Deferral Percentage of Highly Compensated Puerto Rico Employees shall not be more than the Puerto Rico Actual Deferral Percentage of Non-Highly Compensated Puerto Rico Employees multiplied by 1.25; or

 

b.   The Puerto Rico Actual Deferral Percentage of Highly Compensated Puerto Rico Employees shall not be more than the Puerto Rico Actual Deferral Percentage of Non-Highly Compensated Puerto Rico Employees multiplied by 2.0 and the excess of the Puerto Rico Actual Deferral Percentage of Highly Compensated Puerto Rico Employees over the Actual Deferral Percentage for Non-Highly Compensated Puerto Rico Employees is not more than 2 percentage points.

 

2.   ‘Puerto Rico Actual Deferral Percentage’ means a percentage calculated separately for each of the following groups (i) Highly Compensated Puerto Rico Employees, and (ii) Non-Highly Compensated Puerto Rico Employees.

 

3.   Determination of Puerto Rico Actual Deferral Percentage. For each group being tested, the Puerto Rico Actual Deferral Percentage shall be the average of the ‘Employer Contributions’ (as defined in subsection 4 below) actually deposited in the Trust on behalf of each Puerto Rico Participant for the Plan Year, divided by his or her Compensation for the Plan Year (calculated separately for each member of each group).

 

4.   ‘Employer Contributions’ mean Salary Deferrals and Qualified Nonelective Contributions (defined in subsection 5.b below) made on behalf of a Puerto Rico Participant with respect to the Plan Year being tested.

 

5.   Corrective Procedures. If the Puerto Rico Actual Deferral Percentage Test is not met as of the end of the Plan Year, then the Committee may, in its sole and absolute discretion, take either of the following actions:

 

a.   cause the Salary Deferrals for Highly Compensated Puerto Rico Employees to be reduced and refunded to Highly Compensated Puerto Rico Employees until the Puerto Rico Actual Deferral Percentage Test is satisfied. The sequence of such reductions and refunds shall begin with Highly Compensated Puerto Rico Employee(s) who deferred the greatest percentage starting with the unmatched Salary Deferrals, then the second greatest percentage, continuing until the Puerto Rico Actual Deferral Percentage Test is satisfied. This process shall continue through the remaining unmatched Salary Deferrals until all such applicable unmatched

 

 

 

b.   require the Employer to make “Qualified Nonelective Contributions” (as such amounts are contemplated in Article 1165-8(b)(3) of the Puerto Rico Tax Regulations) on behalf of each Non-Highly Compensated Puerto Rico Employee for the Plan Year in which the Puerto Rico Actual Deferral Percentage Test was not met. If made, a Qualified Nonelective Contribution shall be consistent with the provisions of Article 1165-8(b)(3) of the Puerto Rico Tax Regulations, and shall be in such amount as will cause the Puerto Rico Average Deferral Percentage Test to be met. Any such Qualified Nonelective Contributions will be allocated, in the sole discretion of the Committee, to the Account of Non-Highly Compensated Puerto Rico Employees (1) in an equal dollar amount based on the number of Non-Highly Compensated Puerto Rico Employees eligible to receive an allocation of the Qualified Nonelective Contributions, or (2) to such Non-Highly Compensated Puerto Rico Employees and in such amounts as are necessary to satisfy the Puerto Rico Actual Deferral Percentage Test.

 

J.   Company Contributions. The Plan Administrator, in its discretion, may elect to have all or a portion of the Company contributions (that meet the requirements of the applicable Puerto Rico Treasury Regulations) for a calendar year taken into account in calculating the PR Code Section 1165(a)(3) tests for that year.

 

K.   In-Service Withdrawals. In accordance with Sections 8.2 and 8.3 of the Plan, a Puerto Rico Participant who is an Employee may make a withdrawal from his or her Accounts in cash (or its equivalent). Any application for a withdrawal shall be submitted to such person, in such manner and within such advance notice period as the Committee (in its discretion) shall specify. The active membership of a Puerto Rico Participant who makes a withdrawal under Section 8.2 shall be suspended, in the manner set forth in Section 8.2.3, for each payroll period that begins during the period starting on the withdrawal approval date and ending 12 months following that date. Following that suspension period, the Puerto Rico Participant may again become an Active Participant and resume his or her Salary Deferrals by again electing to become an Active Participant in the Plan.

 

 

 

 

L.   Distributions. Notwithstanding anything in the Plan to the contrary, for Puerto Rico Participants the Threshold Amount, as defined in Section 7.3.1 of the Plan, shall mean $1,000. Further, the provisions of Section 7.3.2(b) of the Plan shall not apply to Puerto Rico Participants.

 

M.   Plan Provisions and Terms. All terms and provisions of the Plan shall apply to this Supplement, except that where the terms and provisions of the Plan and this Supplement conflict, the terms and provisions of this Supplement shall govern.

 

N.   Miscellaneous

 

1.   Information between Plan Administrator and Trustee. The Plan Administrator (or, as applicable, the Committee) and Trustee will furnish each other such information relating to the Plan and Trust as may be required under the PR Code and any regulations issued or forms adopted by the Puerto Rico Treasury Department thereunder or under ERISA and any regulations issued or forms adopted by the US Labor Department thereunder.

 

2.   Governing Law. With respect to Puerto Rico Employees, the Plan will be construed, administered and enforced according to the laws of the Commonwealth of Puerto Rico to the extent such laws are not inconsistent with and preempted by ERISA and/or any applicable Section of the US Code. Notwithstanding any provision of this Supplement, to the extent that any provision described herein is modified by applicable Puerto Rico law, any such applicable modification shall be deemed to be incorporated herein by reference.