GENENTECH, INC.
TAX REDUCTION INVESTMENT PLAN
(January 1, 1994 Restatement)
PREAMBLE
GENENTECH, INC. (the "Company") having established the Genentech, Inc.
Tax Reduction Investment Plan (the "Plan") effective as of January 1, 1985,
amended and restated the Plan effective (most recently) as of January 1, 1991,
and amended the restated Plan on two prior occasions, hereby again amends and
restates the Plan in its entirety effective as of January 1, 1994.
The Plan is maintained for the benefit of Eligible Employees of the
Company and its participating Affiliates, in order (1) to provide Eligible
Employees with a means of supplementing their retirement income on a tax-
favored basis, (2) to provide Eligible Employees with an incentive to continue
and increase their efforts to contribute to the success of the Company, and
(3) to enable Eligible Employees to acquire an equity ownership interest in
the Company. The Plan is designed to constitute a qualified profit-sharing
plan, as described in section 401(a) of the Code, which includes a qualified
cash or deferred arrangement, as described in section 401(k) of the Code. The
Plan is also designed to qualify as a 404(c) plan (within the meaning of
section 404(c) of ERISA).
SECTION 1
DEFINITIONS
The following capitalized words and phrases shall have the following
meanings unless a different meaning is plainly required by the context:
1.1 "Affiliate" shall mean 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 any Employer.
1.2 "Alternate Payee" shall mean any spouse, former spouse, child or
other dependent (within the meaning of section 152 of the Code) of a Member
who is recognized by a QDRO (as defined in Section 8.5) as having a right to
receive any immediate or deferred payment from a Member's Account under this
Plan.
1.3 "Beneficiary" shall mean the person or persons entitled to receive
benefits under the Plan upon the death of a Member in accordance with
Section 7.6.
1.4 "Board of Directors" shall mean the Board of Directors of the
Company, as from time to time constituted.
1.5 "Code" shall mean 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.
1.6 "Commingled Funds" shall mean (collectively) the commingled funds
described in Section 6.3.
1.7 "Committee" shall mean the administrative committee appointed by the
Board of Directors (as provided in Section 9.2) and charged with the general
administration of the Plan pursuant to Section 9.
1.8 "Common Stock" shall mean the redeemable common stock of the
Company, par value $0.02, while such redeemable common stock is outstanding,
and effective October 25, 1995, the callable putable common stock of the
Company, par value $0.02, while such callable putable common stock is
outstanding, and the common stock of the Company as from time to time
constituted.
1.9 "Company" shall mean 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.
1.10 "Compensation" shall mean all salary, wages, annual cash bonuses
and sales commissions paid by any Employer with respect to services performed
during any period by an Employee, including Salary Deferrals, but excluding
contributions made by any Employer (other than Salary Deferrals) under this
Plan or any other employee benefit plan (within the meaning of section 3(3) of
ERISA). No portion of the Compensation of any Member for a Plan Year which
exceeds $150,000 (as adjusted pursuant to sections 401(a)(17) and 415(d) of
the Code) shall be taken into account under the Plan for any Plan Year. In
applying that $150,000 limit for a Plan Year, Section 1.17(c) shall apply
except that the term "Family Member" shall only include a spouse or a lineal
descendant who has not attained age 19 before the close of the Plan Year.
1.11 "Disability" shall mean the mental or physical inability of a
Member to perform his or her normal job as evidenced by the certificate of a
medical examiner satisfactory to the Committee certifying that the Member is
disabled under the standards of the Company's long-term disability plan.
1.12 "Eligible Employee" shall mean every Employee of an Employer
except:
(a) An Employee who is employed on a temporary basis as defined by an
Employer; provided, however, that any such Employee who is credited with
at least 1,000 Hours of Service for a 12-month period beginning on his
or her date of hire or any anniversary thereof shall become an Eligible
Employee as of the Entry Date that next follows the last day of such 12-
month period;
(b) A part-time Employee who is not normally scheduled to work at least
20 hours per week; provided, however, that any such Employee who is
credited with at least 1,000 Hours of Service for a 12-month period
beginning on his or her date of hire or any anniversary thereof shall
become an Eligible Employee as of the Entry Date that next follows the
last day of such 12-month period;
(c) An Employee who is a member of a collective bargaining unit and who
is covered by a collective bargaining agreement where retirement
benefits were the subject of good faith bargaining, unless the agreement
specifically provides for coverage of such Employee under this Plan;
(d) 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 (2) of the officers identified in Section 11.2
designate (in writing) the employees of that corporation or other
business entity as Eligible Employees under the Plan; provided, however,
that the exclusion of any individual under this paragraph (c) does not
make unavailable an exemption from section 16(a) or (b) of the 1934 Act;
(e) An Employee whose Compensation is not paid from any Employer's U.S.
payroll; and
(f) Leased Employees.
For purposes of this Section 1.12, "date of hire" shall mean the date on which
an Employee first completes an Hour of Service.
1.13 "Employee" shall mean an individual who is a (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.
1.14 "Employer" shall mean the Company and each Affiliate that adopts
this Plan with the approval of the Board of Directors.
1.15 "Entry Date" shall mean the first day of each calendar quarter.
1.16 "ERISA" shall mean 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.
1.17 "Highly Compensated Employee" shall mean a Highly Compensated
Active Employee or a Highly Compensated Former Employee, as defined below:
(a) "Highly Compensated Active Employee" shall mean any Employee who
performs services for an Employer or Affiliate during the Determination
Year (as defined in Section 1.17(e)(1)) and who:
(1) During the Look-Back Year (as defined in Section 1.17(e)(2))
(A) was a 5-percent owner (within the meaning of section 414(q)(3)
of the Code) (a "5% Owner"), (B) received Compensation in excess
of $75,000 (as adjusted pursuant to sections 414(q)(1) and 415(d)
of the Code), (C) received Compensation in excess of $50,000 (as
adjusted pursuant to sections 414(q)(1) and 415(d) of the Code)
and was a member of the top-paid group (within the meaning of
section 414(q)(4) of the Code) for that Look-Back Year, or (D) was
an officer of an Employer or Affiliate and received Compensation
for that Look-Back Year that is greater than 50% of the dollar
limitation then in effect under section 415(b)(1)(A) and (d) of
the Code or (if no officer has Compensation in excess of that
threshold) was the highest paid officer for that Look-Back Year;
(2) (A) Would be described in clause (B), (C) or (D) of
paragraph (a)(1) above if the term "Determination Year" were
substituted for the term "Look-Back Year" and (B) is one of the
100 Employees who received the most Compensation for the
Determination Year; or
(3) Is a 5% Owner at any time during the Determination Year.
Subject to the satisfaction of such conditions as may be prescribed
under section 414(q)(12)(B)(ii) of the Code, the Company may elect for
any Plan Year (i) to apply paragraph (a)(1)(B) above by substituting
"$50,000" for "$75,000" and (ii) not to apply paragraph (a)(1)(C) above.
(b) "Highly Compensated Former Employee" shall mean 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) If an Employee is, at any time during a Determination Year or Look-
Back Year, a spouse, lineal ascendant or descendant, or spouse of a
lineal ascendant or descendant (a "Family Member") of either (1) a 5%
Owner (as defined in Section 1.17(a)(1)(A)) who is an active or former
Employee or (2) a Highly Compensated Employee who is one of the ten most
highly compensated employees ranked on the basis of Compensation paid
for that Year (in either case, a "Family Employee"), then for that Year
the Family Member and the Family Employee shall be aggregated and
treated as one Employee receiving Compensation and contributions under
the Plan equal to the sum of such Compensation and contributions
received by the Family Member and the Family Employee.
(d) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in
the top-paid group, the top 100 Employees and the number of Employees
treated as officers, shall be made in accordance with section 414(q) of
the Code.
(e) For purposes of applying this Section 1.17:
(1) "Determination Year" shall mean the Plan Year for which the
determination is being made;
(2) "Look-Back Year" shall mean the Plan Year preceding the
Determination Year, unless the Committee elects to make Look-Back
Year calculations based on the Determination Year; and
(3) "Compensation" shall mean Testing Compensation (as defined in
Section 3.1.6), but without regard to the last three sentences
thereof.
1.18 "Hour of Service" means an hour credited to an Employee under this
Section 1.18:
(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 paragraph (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 1.18 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 ("FMLA"),
"Hour of Service" shall mean 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 paragraphs (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 paragraph (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 paragraph (d) to any individual
on account of any single pregnancy, birth, placement or other FMLA
leave, and (B) the hours described in this paragraph (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.
1.19 "Investment Manager" shall mean any investment manager appointed
by the Committee in accordance with Section 9.6.
1.20 "Leased Employee" shall mean an individual who is a leased
employee (within the meaning of section 414(n)(2) of the Code) with respect
to an Employer or Affiliate.
1.21 "Leave of Absence" shall mean the period of an Employee's absence
from active employment (a) authorized by any 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.
1.22 "Matching Contributions" shall mean as to each Member the amounts
contributed under the Plan by the Employers, excluding Salary Deferrals, in
accordance with Section 4.1.
1.23 "Member" shall mean an Eligible Employee who has become a Member
of the Plan pursuant to Section 2.1 and has not ceased to be a Member
pursuant to Section 2.6.
(a) For each Plan Year a Member shall be classified as an "Active
Member" if (1) he or she has enrolled in the Plan for any portion of
the Plan Year by authorizing the required Salary Deferrals in
accordance with Sections 2.3, 3.1 and 3.2, or (2) his or her active
membership is resumed during the Plan Year after the end of a
suspension period in accordance with Section 2.4 or 2.5.
(b) A Member who is not an Active Member shall be classified as an
"Inactive Member."
1.24 "Member's Account" or "Account" shall mean as to any Member the
separate account maintained in order to reflect his or her interest in the
Plan. Each Member's Account shall be comprised of up to four separate
subaccounts, as follows:
1.24.1 "Loan Account" shall mean the subaccount maintained to
record any loans made to the Member from his or her Account pursuant to
Section 5.3.3.
1.24.2 "Matching Account" shall mean the subaccount maintained to
record Matching Contributions made on behalf of the Member and any
adjustments relating thereto.
1.24.3 "Rollover Account" shall mean the subaccount maintained to
record any transfers to the Plan made by or on behalf of a Member pursuant
to Section 10.5 and any adjustments relating thereto.
1.24.4 "Salary Deferral Account" shall mean the subaccount
maintained to record the Salary Deferrals made on behalf of the Member and
any adjustments relating thereto.
1.25 "1934 Act" shall mean 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.
1.26 "Normal Retirement Age" shall mean age 55.
1.27 "Plan" shall mean 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.
1.28 "Plan Year" shall mean the calendar year.
1.29 "Salary Deferrals" shall mean as to each Member the amounts
contributed under the Plan by the Employers in accordance with Section 3.3,
pursuant to the salary deferral election made by the Member in accordance
with Sections 3.1 and 3.2.
1.30 "Trust Fund" shall mean the trust fund established by and
maintained under the Trust Agreement entered into by and between any
Employer and the Trustee, as amended from time to time, for the purpose of
funding the benefits provided by the Plan, as provided in Section 10.
1.31 "Trustee" shall mean 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.
1.32 "Valuation Date" shall mean:
(a) For purposes of valuing Plan assets and Members' Accounts for
periodic reports and statements, the date as of which such reports or
statements are made; and
(b) For purposes of determining the amount of assets actually
distributed to the Member, his or her Beneficiary or an Alternate
Payee (or available for loan or withdrawal), the date on which occur
the relevant transactions required to liquidate to cash the assets
allocated to the Member's Account, provided that when such
transactions occur on more than one date, there shall be several
Valuation Dates, as appropriate.
In any other case, the Valuation Date shall be the date designated by the
Committee (in its discretion) or the date otherwise set out in this Plan.
In all cases, the Committee may (in its discretion) change the Valuation
Date, on a uniform and nondiscriminatory basis, as is necessary or
appropriate. Notwithstanding the foregoing, the Valuation Date shall occur
at least annually.
SECTION 2
ELIGIBILITY AND MEMBERSHIP
2.1 Initial Eligibility. An Employee shall become a Member of 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 Member from employment with an Employer to employment with an Affiliate
which is not an Employer shall not be an event entitling the Member to a
distribution under Section 7.
2.3 Membership. Each Member's decision to become an Active Member
shall be entirely voluntary.
2.3.1 Active Membership. An Employee who has become a Member
under Section 2.1 may elect to become an Active Member, effective as of the
first day of the first payroll period beginning on or after any Entry Date,
provided that he or she enrolls in the Plan and elects to make Salary
Deferrals, on forms provided by the Committee, at least 15 days before the
Entry Date.
2.3.2 Inactive Membership. A Member who does not elect to become
an Active Member when eligible to do so shall be at all times treated as an
Inactive Member until the Entry Date as of which he or she elects to become
an Active Member.
2.4 Voluntary Suspension. An Active Member may voluntarily suspend
his or her active membership in the Plan, by suspending his or her Salary
Deferrals for any number of calendar quarters, as of the first day of any
payroll period, by giving at least 15 days' prior written notice to the
Committee, provided that any Member who is subject to section 16 of the 1934
Act may suspend his or her Salary Deferrals only as of an Entry Date.
2.4.1 Effect. With respect to the period for which a Member's
active membership is suspended, he or she shall not make any Salary
Deferrals nor share in the allocation of Matching Contributions, and he or
she may not later make the Salary Deferrals that he or she might otherwise
have made during the suspension period. No distribution shall be made to a
Member solely as the result of any suspension of his or her active
membership.
2.4.2 Resumption of Active Membership. A Member whose active
membership in the Plan has been suspended may voluntarily resume his or her
Salary Deferrals, effective with respect to Compensation paid for the first
payroll period beginning on or after any Entry Date, by again electing to
become an Active Member in accordance with Section 2.3; provided, however,
that with respect to any Member who is subject to section 16 of the 1934 Act
and whose active membership has been suspended (whether voluntarily,
mandatorily or in any other fashion), such Member shall not resume active
membership for a minimum of six (6) months after the Entry Date on which
such Member's suspension became effective.
2.5 Mandatory Suspension. If a Member (1) ceases to be an Eligible
Employee because he or she ceases to meet the requirements of Section 1.12,
(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 status as an Active Member shall be suspended (in
accordance with Section 2.4.1) for each payroll period beginning
during the continuation of such ineligible status, and
(b) 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 Member may be resumed only in
accordance with Section 2.4.2.
Notwithstanding any contrary Plan provision, a Member's Compensation which
is paid for any portion of a payroll period that includes a period of
mandatory suspension shall not be subject to any salary deferral election
nor contributed under the Plan as Salary Deferrals.
2.6 Termination of Membership. An Eligible Employee who has become a
Member shall remain a Member 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).
SECTION 3
SALARY DEFERRALS
3.1 Salary Deferrals. Each Active Member may elect to defer portions
of his or her Compensation payments and to have the amounts of such Salary
Deferrals contributed by the Employers to the Trust Fund and credited to his
or her Salary Deferral Account under the Plan. An Active Member may elect
to defer 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 15% (inclusive) of his
or her Compensation.
3.1.1 Section 401(k) Ceiling. Notwithstanding the foregoing, the
Committee:
(a) May suspend or limit any Member's salary deferral election at any
time in order to prevent the cumulative amount of the Salary Deferrals
contributed on behalf of the Member for any calendar year from
exceeding the Section 401(k) Ceiling;
(b) Shall cause any amount allocated to the Plan 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 to that amount for the
calendar year to which the excess deferral relates, to be distributed
to the Member in accordance with section 402(g)(2)(A) of the Code; and
(c) May cause any other amount allocated to the Member's Account and
designated by the Member as an excess deferral, together with any
income allocable thereto for the calendar year to which the excess
deferral relates, to be distributed to the Member in accordance with
section 402(g)(2)(A) of the Code.
(d) The "Section 401(k) Ceiling" is a dollar amount equal to the
dollar limit prescribed in section 402(g)(3) of the Code (as adjusted
pursuant to sections 402(g)(5) and 415(d) of the Code).
3.1.2 Limitations on HCE Members. 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
Members (as defined in Section 3.1.3) in such manner as may be necessary or
appropriate in order to assure that the limitation described in
Section 3.1.4 will be satisfied.
3.1.3 HCE and Non-HCE Members. All Members who are Eligible
Employees at any time during a Plan Year (whether or not they are Active
Members), and who are Highly Compensated Employees (as defined in Section
1.17) with respect to the Plan Year, shall be "HCE Members" for the Plan
Year. All other Members who are Eligible Employees at any time during the
Plan Year shall be "Non-HCE Members" for the Plan Year.
3.1.4 Deferral Percentage Limitation. In no event shall the
actual deferral percentage, determined in accordance with Section 3.1.5 (the
"ADP"), for the HCE Members for a Plan Year exceed the maximum ADP, as
determined by reference to the ADP for the Non-HCE Members, in accordance
with the following table:
If the ADP for
Non-HCE Members Then the Maximum ADP
("NHCEs' ADP") is: for HCE Members is:
_________________ ____________________
Less than 2% 2.0 x NHCEs' ADP
2% to 8% NHCEs' ADP + 2%
More than 8% 1.25 x NHCEs' ADP
3.1.5 Actual Deferral Percentage. The actual deferral percentage
for the HCE or Non-HCE Members for a Plan Year shall be calculated by
computing the average of the percentages (calculated separately for each HCE
or Non-HCE Member) (the "Deferral Rates") determined by dividing (1) the
total of all Salary Deferrals made by the Member and credited to his or her
Salary Deferral Account for the Plan Year, by (2) the Member's Testing
Compensation (as defined in Section 3.1.6) for the Plan Year. In computing
a Member'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 section 401(a)(4) or 410(b) of the Code, then all
such cash or deferred arrangements shall be treated as one plan for
purposes of applying Section 3.1.4.
(b) If an HCE Member is a participant in any other cash or deferred
arrangement maintained by any Employer or Affiliate, the separate
Deferral Rates determined for the Member under all such cash or
deferred arrangements shall be aggregated with the separate Deferral
Rate determined for the Member for purposes of applying Section 3.1.4.
(c) If an HCE Member is subject to the family aggregation rules of
Section 1.17(c), the Deferral Rate of the family unit shall be the
greater of (1) the combined Deferral Rate of all Family Members (as
defined in Section 1.17(c)) who are HCE Members without regard to
family aggregation, or (2) the combined Deferral Rate of all eligible
Family Members.
3.1.6 Testing Compensation. For purposes of applying Sections
3.1, 3.2 and 4.1 and the discrimination tests of sections 401(k) and 401(m)
of the Code, "Testing Compensation" shall mean with respect to any Member:
(a) The sum of (1) his or her Total Compensation (as defined in
Section 5.4.2(d)), (2) Salary Deferrals credited to his or her Salary
Deferral Account, and (3) other amounts that are contributed to an
employee benefit plan by any Employer pursuant to a salary reduction
agreement and are not includible in gross income under section 125,
401(k), 402(e)(3), 402(h), 403(b) or 414(h)(2) of the Code; or
(b) The amount of his or her compensation calculated by the Committee
in a manner which satisfies applicable requirements of Treas. Reg.
section 1.401(k)-1(g)(2)(i).
Compensation for periods prior to the time that the individual becomes a
Member shall not be taken into account. No amount in excess of $150,000 (as
adjusted pursuant to sections 401(a)(17) and 415(d) of the Code) shall be
taken into account under this Section 3.1.6 for any Plan Year. In applying
that $150,000 limit for a Plan Year, Section 1.17(c) shall apply except that
the term "Family Member" shall only include a spouse or lineal descendant
who has not attained age 19 before the close of the Plan Year.
3.2 Salary Deferral Election. Each Active Member shall determine the
percentage of his or her Compensation that shall be deferred and contributed
to the Trust Fund as his or her Salary Deferrals, subject to the limitations
of Section 3.1, at the time he or she becomes an Active Member and
thereafter may redetermine such percentage from time to time as of any Entry
Date. In either event the Active Member shall execute and deliver a salary
deferral election with respect to his or her Salary Deferrals, and no Salary
Deferrals shall be made by any Active Member except in accordance with his
or her salary deferral election and the limitations of Section 3.1.
3.2.1 Amount. The amount of Salary Deferrals that may be made by
each Active Member for each payroll period shall be the amount in dollars
and cents that is nearest to the amount of Compensation subject to the
salary deferral election multiplied by the percentage elected by the Active
Member pursuant to Section 3.1.
3.2.2 Changes. An Active Member may change the percentage
determined under the first sentence of this Section 3.2, effective with
respect to Compensation paid for the first payroll period beginning on or
after any Entry Date, or such other date as the Committee (in its
discretion) may specify, by giving written notice on such form and within
such advance notice period as the Committee shall specify. The salary
deferral election made by an Active Member shall remain in effect until his
or her active membership in the Plan is terminated, except to the extent
that the election is suspended in accordance with Section 2.4, 2.5 or 8.1,
changed in accordance with this Section 3.2.2, or reduced pursuant to
Section 3.1.1 or 3.1.2.
3.2.3 Potential Excess ADP. In the event that (but for the
application of this Section 3.2.3) the Committee determines that the ADP for
HCE Members would exceed the maximum permitted under Section 3.1.4 for a
Plan Year (the "ADP Maximum"), then the Committee (in its discretion) may
reduce, in accordance with Section 3.1.2, the percentage or amount of Salary
Deferrals subsequently to be contributed on behalf of the HCE Members by
such percentage or amount as, and for as long as, the Committee (in its
discretion) may determine is necessary or appropriate in the circumstances
then prevailing. If the Committee determines that it is no longer necessary
to reduce the Salary Deferrals contributed on behalf of (current or former)
HCE Members, the Committee (in its discretion) may permit some or all HCE
Members, on a uniform and nondiscriminatory basis, to make new salary
deferral elections with respect to their Salary Deferrals and shall
establish a policy as to the deferral percentages that shall apply with
respect to those HCE Members who do not make new elections.
3.2.4 Actual Excess ADP. In the event that the Committee
determines that the ADP for the HCE Members exceeds the ADP Maximum for any
Plan Year, then (1) the amount of any excess contributions (within the
meaning of section 401(k)(8)(B) of the Code) contributed on behalf of any
HCE Member, and (2) any Matching Contributions allocated to the HCE Member's
Matching Account by reason of excess contributions distributed pursuant to
clause (1), shall be distributed, together with any income allocable to
those amounts for the Plan Year to which the excess contributions relate, to
the HCE Member before the close of the Plan Year that next follows that Plan
Year.
(a) Determination of Excess Contributions. The amount of excess
contributions for a HCE Member shall be determined in the following
manner:
(1) The Salary Deferrals of the HCE Member with the highest
Deferral Rate shall be reduced to the extent necessary to
satisfy the ADP test or cause such Rate to equal the Deferral
Rate of the HCE Member with the next highest Deferral Rate.
This process shall be repeated until the ADP test is satisfied.
(2) The amount of excess contributions for a HCE Member shall be
equal to his or her Salary Deferrals (calculated using the
Member's original Deferral Rate), minus his or her Deferrals
calculated using the Member's Deferral Rate as reduced under
paragraph (a)(1) above.
(3) The amount of excess contributions, as determined according
to the method described in this paragraph (a), shall be reduced
by any excess deferrals previously distributed to a Member for
the Plan Year under Section 3.1.1.
(b) Family Aggregation. In the case of an HCE Member whose Deferral
Rate is determined under the family aggregation rules of Section
3.1.5(c), the Deferral Rate shall be reduced in accordance with the
"levelling" method described in Treas. Reg. section 1.401(k)-1(f)(2).
Excess contributions for the family unit shall be allocated among the
Family Members in proportion to the Salary Deferrals of each Family
Member that have been combined.
(c) Determination of Allocable Income. The income allocable to any
excess contributions for the Plan Year, excluding income for the
period between the end of the Plan Year and the date of distribution,
shall be determined in accordance with section 401(k)(8)(A)(i) of the
Code.
(d) 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) and 401(m)(9) of the Code
and Treas. Reg. section 1.401(k)-1(b) and 1.401(m)-2 are incorporated
herein by reference.
3.3 Payment of Deferrals. Subject to the provisions of Sections 3.1,
3.2, 10.3 and 11, the Employers shall pay to the Trust Fund the amounts
elected by Members to be contributed as Salary Deferrals pursuant to
Section 3. Any Salary Deferrals 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 90 days) after the end of
such period.
SECTION 4
MATCHING CONTRIBUTIONS
4.1 Amount of Matching Contributions. Subject to the provisions of
this Section 4.1 and Sections 10.3 and 11, the Employers shall contribute to
the Trust Fund as Matching Contributions amounts equal to the Matching
Amount (determined pursuant to Section 4.1.1) determined by the Salary
Deferrals made for each payroll period by each eligible Active Member
(determined pursuant to Section 4.1.3). Only those Salary Deferrals which
are made pursuant to such portion of each eligible Active Member's Deferral
Rate (determined pursuant to Section 3.1) as does not exceed the Matching
Ceiling (determined pursuant to Section 4.1.2) shall be taken into account
in calculating the amount of the Matching Contribution (if any) to be made
in respect of the Member's Salary Deferrals.
4.1.1 Matching Amount. The rate at which the amount of Employer
Matching Contributions shall be made for any Plan Year (the "Matching
Amount") shall be determined as follows:
If the Salary Deferral
Contribution Rate for an Then the Matching Amount
eligible Active Member is: for the Member shall be:
Less than or equal to 2% Equal to the Salary Deferrals
Greater than 2% Equal to the first 2% of Salary
deferrals plus one-half (1/2) of
Salary Deferrals greater than 2%
and less than or equal to 6%
The "Salary Deferral Contribution Rate" for an Active Member is determined
on a Plan Year basis and is (Salary Deferrals) divided by (Compensation),
expressed as a percentage. Subject to the limitations of Section 5.4, the
Matching Amount may be changed for any Plan Year to such extent (if any) as
the Board of Directors (in its discretion) may determine by resolution and
without amending the Plan pursuant to Section 11.2; provided, however, that
no decrease in the Matching Amount applicable to any Salary Deferral
contribution rate shall take effect before the first payroll period that
begins after the decrease is announced to eligible Active Members.
4.1.2 Maximum Matched Rate. For any Plan Year for which a
different rate is not determined in accordance with the following sentence,
the maximum Salary Deferral contribution rate that shall be taken into
account in determining the amount of the Matching Contribution (if any) to
be made on behalf of any eligible Active Member pursuant to this Section 4.1
(the "Matching Ceiling") shall be 6%, i.e., the amount of Matching
Contributions (if any) to be made on behalf of any eligible Active Member
shall not exceed 4% of his or her Compensation. Subject to the limitations
of Section 5.4, the Board of Directors (in its discretion) may change for
any Plan Year the maximum Salary Deferral contribution rate stated in the
preceding sentence; provided, however, that no decrease in the Matching
Ceiling shall take effect before the first payroll period that begins after
the decrease is announced to eligible Members.
4.1.3 Eligible Members. Notwithstanding the foregoing provisions
of this Section 4.1, no Matching Contribution shall be made on behalf of an
Active Member for a Plan Year unless (a) he or she remains an Eligible
Employee on the last Valuation Date of the Plan Year, or (b) his or her
employment with all Employers and Affiliates terminated at any time during
the Plan Year by reason of death or Disability.
4.1.4 Limitations on HCE Members. For any Plan Year, the
Committee (in its discretion) may limit the period for which, and/or specify
a lesser Matching Amount and/or Matching Ceiling with respect to the amount
of Matching Contributions to be made on behalf of HCE Members (as defined in
Section 3.1.3) 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 Members for a Plan Year exceed the maximum ACP, as
determined by reference to the ACP for the Non-HCE Members, in accordance
with the following table:
If the ACP for
Non-HCE Members Then the Maximum ACP
("NHCEs' ACP") is: for HCE Members 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 Members for a Plan Year shall be
calculated by computing the average of the percentages (calculated
separately for each HCE or Non-HCE Member) (the "Contribution Rates")
determined by dividing (a) the total of all Matching Contributions made on
behalf of the Member and credited to his or her Matching Account for the
Plan Year, by (b) the Member's Testing Compensation (as defined in Section
3.1.6) for the Plan Year. The special aggregation rules set forth in
Section 3.1.5 with respect to calculation of the Members' ADPs shall also
apply to the calculation of their ACPs.
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 Members would exceed the maximum permitted under Section 4.1.5 for a
Plan Year (the "ACP Maximum"), then the Committee (in its discretion) may
reduce, in accordance with Section 4.1.4, the percentage or amount of
Matching Contributions subsequently to be made on behalf of the HCE Members
by such percentage or amount as, and for as long as, the Committee (in its
discretion) may determine is necessary or appropriate in the circumstances
then prevailing.
4.1.8 Actual Excess ACP. In the event that the Committee
determines that the ACP for the HCE Members exceeds the ACP Maximum for a
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 Member shall be distributed, together with any income allocable to that
amount for the Plan Year to which the excess aggregate contributions relate,
to the HCE Member before the close of the Plan Year that next follows that
Plan Year.
(a) Determination of Excess Aggregate Contributions. The amount of
excess aggregate contributions for an HCE Member, the income allocable
thereto and the application of the family aggregation rules shall be
determined in the manner provided in Section 3.2.4 with respect to
excess contributions.
(b) Prohibition on Multiple Use. Notwithstanding any contrary Plan
provision, multiple use of the alternative methods of compliance with
sections 401(k) and 401(m) of the Code, as set forth in sections
401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) of the Code, shall not be
permitted. In the event that multiple use occurs, it shall be
corrected by reducing the ADP and/or ACP for HCE Members (in the
discretion of the Committee), and treating such reductions as excess
contributions and/or excess aggregate contributions (as appropriate)
under Section 3.2.4 or this Section 4.1.8.
(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) and (9) of the Code and Treas. Reg.
section 1.401(m)-1(b) and 1.401(m)-2 are incorporated herein by
reference.
4.2 Timing. Subject to the provisions of Sections 4.1.4, 10.3 and 11,
Matching 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 Matching Contributions are made.
4.3 Periodic Contributions. Subject to the foregoing provisions of
this Section 4, any Matching 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 Matching
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 Matching Contributions
under the Plan whatsoever.
4.4 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.
4.5 After-Tax Contributions. In no event shall any Member be
permitted to make contributions to the Plan or Trust Fund on an after-tax
basis.
SECTION 5
ALLOCATIONS AND INVESTMENT
5.1 Salary Deferrals. Except as provided in Section 3.2.4, the Salary
Deferrals made on behalf of an Active Member for any period shall be
allocated to his or her Salary Deferral Account as of the date on which such
Salary Deferrals 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 Member for a Plan Year
shall be allocated to his or her Matching Account as of the date on which
such Matching Contributions are received by the Trust Fund.
5.3 Investment. Each Active Member shall indicate on the salary
deferral election made pursuant to Section 3.2, or in such other manner as
the Committee may designate, the percentages of all amounts allocated to his
or her Account that are to be invested in each of the Commingled Funds.
Other Members shall indicate, on such election forms as the Committee may
prescribe or in such other manner as the Committee may designate and at such
times as the Committee may permit, the percentages of all amounts allocated
to their Accounts that are to be invested in each of the Commingled Funds.
A Member may specify as to any Commingled Fund any percentage provided that
the total of the percentages specified shall not exceed 100%.
5.3.1 Changes. The instructions of a Member, including a Member
whose employment has terminated but whose entire Account balance has not yet
been distributed, concerning the investment of the amounts allocated to his
or her Account may be changed in accordance with such procedures as the
Committee shall designate from time to time. The designated procedures at
all times shall permit Members to make investment changes in accordance with
designated procedures effective at a minimum of four (4) times per each Plan
Year, and more frequently if administratively feasible, all in a manner
designed to permit the Plan to qualify as a section 404(c) plan (within the
meaning of section 404(c) of ERISA).
5.3.2 Failure to Elect. If a Member fails to direct the manner
in which the amounts allocated to his or her Account are to be invested,
such amounts shall be invested in the Short-Term Fund (as described in
Section 6.3.2).
5.3.3 Member Loans. In the event a loan is to be made to a
Member 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, from the portion of the Member's Account invested in one
or more of the other Commingled Funds to a separate subaccount within the
Member's Account (the "Loan Account"), which shall be maintained for the
purpose of accounting for any loans made to the Member from his or her
Account. Interest and principal payments on loans made to any Member 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 Commingled Funds in the same
percentages as specified by the Member pursuant to the introductory
paragraph of this Section 5.3 (or if there is no such designation currently
in force, as the Committee shall determine).
5.4 Limitations on Allocations.
5.4.1 Annual Addition Limitation. Notwithstanding any contrary
Plan provision, in no event shall the Annual Addition to any Member's
Account for any Plan Year exceed the lesser of (a) $30,000 or (if greater)
25% of the dollar limitation in effect under section 415(b)(1)(A) of the
Code, or (b) 25% of the Member's Total Compensation for the Plan Year;
provided, however, that clause (b) shall not apply to Annual Additions
described in clauses (5) and (6) of Section 5.4.2(c).
5.4.2 Definitions. For purposes of this Section 5.4, the
following definitions shall apply:
(a) "Affiliate" shall mean 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" shall mean any defined contribution plan which
is aggregated with this Plan pursuant to Section 5.4.3.
(c) "Annual Addition" shall mean with respect to each Member the sum
for a Plan Year of (1) the Member's Salary Deferrals to be credited to
the Member's Salary Deferral Account; (2) any Matching Contributions
to be credited to the Member's Matching Account; (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 Member's account under any
Aggregated Plan; (4) any after-tax employee contributions made by the
Member for the Plan Year under any Aggregated Plan; (5) any amount
allocated to the Member'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 Member'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) "Total Compensation" shall mean 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, but (A) excluding amounts paid
or reimbursed by the Employer or Affiliate for moving expenses
incurred by the Member, 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 (B) 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 Treas. Reg.
section 1.415-2(d).
5.4.3 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 5.4, 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
Member who participates in any such plan.
5.4.4 Defined Benefit Plans. If any Member participates both in
this Plan and in one or more defined benefit plans maintained by any
Employer or Affiliate for the same Plan Year, then the sum of the amounts in
(a) and (b) below shall not exceed 1.0:
(a) The ratio of (1) the annual additions actually made to his or her
accounts under this Plan and all other defined contribution plans
(subject to section 415(e)(4) of the Code) for all of his or her years
of service with all Employers and Affiliates (his or her "Total
Service") to (2) the sum of the lesser of the following amounts
(determined for each Plan Year included in his or her Total Service):
(i) An amount equal to the product of (A) 1.4 and (B) the
percentage limitation in effect under section 415(c)(1)(B) of
the Code for the Plan Year, multiplied by the Member's Total
Compensation for the Plan Year, or
(ii) An amount equal to the product of 1.25 and the dollar
limitation in effect under section 415(c)(1)(A) and (d) of the
Code for the Plan Year,
when added to:
(b) The ratio of (1) the aggregate of his or her projected annual
retirement benefits under all such defined benefit plans (determined
as of the end of the Plan Year) to (2) the lesser of (A) an amount
equal to 140% of the Member's average Total Compensation for the
three (3) consecutive years included in his or her Total Service in
which he or she had the highest Total Compensation and was an active
participant in any such defined benefit plan or (B) the product of
1.25 and the dollar limitation in effect under section 415(b)(1)(A) of
the Code (as adjusted in accordance with section 415(d) of the Code)
for the Plan Year.
5.4.5 Adjustments. If, as a result of (1) a reasonable error in
estimating a Member's Total Compensation, allocating forfeitures under any
Aggregated Plan or other circumstances which permit the application of the
rules stated in this Section 5.4.5, or (2) a reasonable error in determining
the amount of Salary Deferrals that may be made under the limits of this
Section 5.4, any of the limitations of this Section 5.4 otherwise would be
exceeded with respect to any Member 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 Member 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 shall be distributed to the Member to the extent required to
reduce the excess annual addition to the Member's Account attributable
to that circumstance;
(c) The Member's accrued benefit under any defined benefit plan shall
be frozen and/or the rate of its future accrual shall be reduced;
(d) Any Matching Contributions allocated to the Member'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 Members or participants in the
Aggregated Plan for succeeding Plan Years in order of time;
(e) The Member's Salary Deferrals and any salary reduction
contributions made at the Member'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; and
(f) Any employer contributions otherwise to be allocated to the
Member's account under any Aggregated Plan shall be reallocated to a
suspense account, and the balance credited to that account shall be
applied to reduce other employer matching contributions (of the same
class) otherwise to be made for and allocated to all eligible
participants in the Aggregated Plan for succeeding Plan Years in order
of time.
5.4.6 Suspense Accounts. If a suspense account is created under
Section 5.4.5(d), (e) and/or (f) and exists in a later Plan Year, the amount
allocated to the suspense account shall be reallocated to the Member's
account before any amount may be contributed to this or any Aggregated Plan
on behalf of the Member for that Plan Year. If the Member 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 5.4.5, that balance shall be reallocated among the accounts of
all Members who remain Employees on the first day of the next following Plan
Year, in direct proportion to each such Member's share of the aggregate
Total Compensation paid to all such Members for the Plan Year of termination
(subject to the limitations of this Section 5.4), 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.
5.4.7 Limitation Year. For purposes of applying the limitations
of section 415 of the Code, the limitation year shall be the Plan Year.
SECTION 6
ACCOUNTS AND COMMINGLED FUNDS
6.1 Members' Accounts. At the direction of the Committee, there shall
be established and maintained for each Active Member, as appropriate:
(a) 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;
(b) A Matching Account, to which shall be credited all Matching
Contributions paid to the Trust Fund on his or her behalf under
Section 4;
(c) A Rollover Account, to which shall be credited all transfers made
to the Trust Fund by or on behalf of the Member under Section 10.5;
and
(d) A Loan Account, to which shall be credited (pursuant to
Section 5.3.3) any amounts loaned to the Member in accordance with
Section 8.4.
Each Member's Account shall also reflect the value of its proportionate
interest in each of the Commingled Funds as of each Valuation Date. The
maintenance of a separate Account for each Member shall not be deemed to
segregate for the Member, nor to give the Member any ownership interest in,
any specific assets of the Trust Fund.
6.2 Trust Fund Assets. The Trust Fund shall consist of the Members'
Salary Deferrals, Matching Contributions, rollovers made pursuant to Section
10.5, all investments and reinvestments made therewith, and all earnings and
gains (less any losses) thereon. The Trustee shall hold and administer all
assets of the Trust Fund in the Commingled Funds, and each Member and his or
her Account shall have only an undivided interest in any of the Commingled
Funds.
6.3 Commingled Funds. All assets of the Trust Fund shall be invested
in the following Commingled Funds:
6.3.1 Common Stock Fund. Effective as of April 1, 1985, or such
later date as the Committee may direct to assure compliance with all
applicable federal and state securities laws, the Trustee shall establish or
maintain a Common Stock Fund which shall be a commingled fund maintained for
the purpose of investing such portions of Members' Accounts as are, pursuant
to Members' investment instructions made in accordance with Section 5.3,
properly allocable to the Common Stock Fund.
(a) The Common Stock Fund shall be invested in Common Stock and may
be used to purchase shares of Common Stock in the open market.
(b) The Trustee may invest and hold up to 100% of the assets of the
Common Stock Fund in Common Stock. The Trustee may also hold such
assets in cash or cash equivalents as necessitated by the cash
requirements of the Common Stock Fund, as determined by the Committee.
6.3.2 Short-Term Fund. The Trustee shall establish or maintain a
Short-Term Fund which shall be a commingled fund maintained for the purpose
of investing such portions of Members' Accounts as are, pursuant to Members'
investment instructions made in accordance with Section 5.3, properly
allocable to the Short-Term fund. The Short-Term Fund shall be invested by
the Trustee in units, shares or other interests in one or more common,
pooled or other collective short-term investment funds which are either
(a) maintained by the Trustee or any other bank (within the meaning of
section 581 of the Code), the trustee of or investment advisor to any such
fund in which any other Commingled Fund is invested or an affiliate of such
trustee or investment advisor, or (b) registered under the Investment
Company Act of 1940.
6.3.3 Other Funds. In accordance with directions of the
Committee, the Trustee shall establish or maintain one or more other
Commingled Funds which shall be maintained for the purpose of investing such
portions of Members' Accounts as are, pursuant to Members' investment
instructions made in accordance with Section 5.3, properly allocable to each
such Fund. Each such other Commingled Fund shall be invested in units,
shares or other interests in one or more common, pooled or other collective
investment funds which are either (a) maintained by the Trustee, any other
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. At
least three (3) of the Commingled Funds shall (a) be diversified, (b) have
materially different risk and return characteristics, and (c) be structured
to satisfy the broad range of investment alternatives requirement, all in
manner designed to permit the Plan to qualify as a 404(c) plan (within the
meaning of section 404(c) of ERISA).
6.3.4 Designations, Redesignations and Reinvestments. Except to
the extent that investment responsibility for one or more of the Commingled
Funds (other than the Common Stock Fund) has been transferred to an
Investment Manager in accordance with Section 9.6, the Committee shall
designate the common, pooled or other collective investment funds in which
the Commingled Funds (other than the Common Stock Fund) shall be invested.
The Committee may from time to time change the number, identity or
composition of the Commingled Funds made available under this Section 6.3
and redesignate the collective investment funds in which any Commingled Fund
shall be invested. All interest, dividends or other income realized from
the investments of any of the Commingled Funds shall be reinvested in the
Commingled Fund that realized such income. Temporary cash balances arising
in any of the Commingled Funds shall be invested where feasible in any
collective investment fund which would qualify as an investment medium for
the Short-Term Fund.
6.4 Valuation of Members' Accounts. The Trustee shall determine the
fair market values of the assets of the Commingled Funds, and the Committee
shall determine the fair market value of each Member's Account, as of each
Valuation Date. In making such determinations and in crediting net earnings
and gains (or losses) in the Commingled Funds to the Members' Accounts, the
Committee may employ, and may direct the Trustee to employ, such accounting
methods as the Committee may deem appropriate in order fairly to reflect the
fair market values of the Commingled Funds and each Member'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.
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 Members' Accounts. Each Member shall be furnished
with periodic statements of his or her interest in the Plan, at least
annually.
6.7 Accounts Nonforfeitable. Each Member shall at all times have a
fully (100%) vested and nonforfeitable interest in his or her Account.
SECTION 7
DISTRIBUTIONS
7.1 Events Permitting Distribution. Subject to Section 7.3, the
balance credited to a Member's Account shall become distributable only in
the following circumstances:
(a) Upon termination of the Member's employment at or after Normal
Retirement Age;
(b) Upon termination of the Member's active employment by reason of
Disability or death;
(c) Upon termination of the Member's employment with all Employers
and Affiliates (whether by reason of resignation or dismissal) for any
reason other than those specified in paragraph (a) or (b) above;
(d) Upon the January 1, and no later than the April 1, that next
follows the calendar year in which the Member attains age 70 1/2, if
the Member attains age 70 1/2 after December 31, 1987, but no earlier
than April 1, 1990, if the Member is not a 5-percent owner (within the
meaning of section 416(i)(1) of the Code);
(e) Upon the Committee's approval of the Member's application for a
withdrawal from his or her Account, to the limited extent provided in
Section 8;
(f) In accordance with and to the limited extent provided in
Section 3.2.4 or 4.1.8; or
(g) Upon the creation or recognition of an Alternate Payee's right to
all or a portion of a Member'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 Member's Account that
the QDRO states is payable to the Alternate Payee.
7.2 Times for Distribution. Subject to the consent requirement of
Section 7.3 and except as provided in Section 8.5 (relating to QDROs),
distributions from a Member's Account shall occur at the following times:
7.2.1 Disability or Death. Distributions permitted under
Section 7.1(b) shall normally be made as soon as practicable after the end
of the calendar month in which occurs the event permitting the distribution,
but at the written election of the Member or his or her Beneficiary (if
applicable) shall be made after the last day of the Plan Year during which
such event occurs.
7.2.2 Employment Termination. A distribution permitted under
Section 7.1(a) or (c) by reason of the termination of the Member's
employment shall normally be made as soon as practicable after the end of
the calendar month in which the Member's employment terminates.
7.2.3 Withdrawals. A distribution arising from the Member's
exercise of his or her withdrawal rights shall occur at the time set forth
in Section 8.
7.2.4 Distribution Deadline. All distributions not made sooner
pursuant to one of the foregoing provisions of this Section 7.2 shall be
made no later than 60 days after the end of the Plan Year in which a
distribution event described in Sections 7.1(a) through (c) occurs or the
Member attains Normal Retirement Age (whichever is later); provided,
however, that if the amount of the distribution or the location of the
Member or his or her Beneficiary (after a reasonable search) cannot be
ascertained by that date, distribution shall be made no later than 60 days
after the earliest date on which the amount or location (as appropriate) is
ascertained; and provided, further, that distributions permitted by reason
of the Member's death shall be made within five (5) years after his or her
death. Notwithstanding the foregoing, if a Member continues in employment
after attaining Normal Retirement Age and his or her Account becomes
distributable pursuant to Section 7.1(d), the Account shall be distributed
no later than the April 1 specified in Section 7.1(d), and any subsequent
allocations to the Account (after the period of suspension described in
Section 2.5) shall be distributed by the April 1 that next follows the Plan
Year to which those allocations pertain.
7.3 Consent Requirement. If the balance credited to a Member's
Account exceeds $3,500 as of the Valuation Date that (a) next precedes the
date of the distribution or (b) next preceded the date of any prior
distribution or withdrawal from the Account, no portion of the Member's
Account shall be distributed to the Member, until he or she attains age 62,
except upon receipt of the Member's written consent to an earlier
distribution. For purposes of this Section 7.3, the Valuation Date is the
end of the calendar month following the event that is the basis for the
distribution (e.g., termination of employment).
7.4 Form of Distribution.
7.4.1 Cash. With respect to any portion of a Member's Account as
is not invested in the Common Stock Fund, any distribution from such portion
of the Account 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 Account as of the Valuation Date, except where the distributee elects,
in accordance with procedures established by the Committee, to have such
portion of the Account distributed in the form of the unliquidated assets
credited to such portion of the Account as of the Valuation Date.
7.4.2 Common Stock. Any distribution from such portion of a
Member's Account as is invested in the Common Stock Fund shall be made in
the form of a single lump sum payment in (a) whole shares of the Common
Stock allocable to such portion of the Account as of the Valuation Date,
(b) cash equal to the fair market value of such Common Stock as of the
Valuation Date, or (c) a combination of both, as elected by the distributee;
provided, however, that if fewer than 100 shares of Common Stock are
allocable to the Member's Account, the distribution shall be made in cash
(or its equivalent) to that extent.
7.4.3 Fractional Shares. If shares of Common Stock are to be
distributed, only full shares shall be distributed and cash shall be
distributed in lieu of any fractional share. The amount of cash to be
distributed in any such case shall be determined pursuant to Section 6.5 as
of the Valuation Date.
7.4.4 No Annuities. In no event shall any distribution from a
Member's Account be made in the form of a life annuity.
7.4.5 Direct Rollovers. Effective as of January 1, 1993, and
notwithstanding any contrary Plan provision:
(a) If a Distributee of any Eligible Rollover Distribution (1) elects
to have at least $500 of such Distribution paid directly to an
individual retirement account ("IRA") or other eligible retirement
plan (within the meaning of section 401(a)(31)(D) of the Code), and
(2) specifies such IRA or plan and the elected amount in such manner
and within such advance notice period as the Committee may specify,
such Distribution (or elected portion thereof) shall be made in the
form of a direct rollover to such IRA or 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. section 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" shall mean a Member, a Beneficiary (if the
surviving spouse of a Member), or an Alternate Payee (as defined in
Section 1.2) (if the surviving spouse of a Member under a QDRO (as
defined in Section 8.5)).
(d) "Eligible Rollover Distribution" shall mean a distribution of any
portion of the balance credited to the Account of a Member which is
not one of a series of substantially equal periodic payments made over
(1) a specified period of ten years or (2) the life or life expectancy
of the Distributee, 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 Member 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
certificate for 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 Member may designate one or more
Beneficiaries in a signed writing delivered to the Committee.
7.6.1 Spousal Consent. If a Member designates any a person other
than his or her spouse as a primary Beneficiary, the designation shall be
ineffective unless the Member's spouse consents to the designation. Any
spousal consent required under this Section 7.6 shall be void unless it
(a) is set forth in writing, (b) acknowledges the effect of the Member'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 Member
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, his or her designation shall be effective without spousal
consent. Any spousal consent required under this Section 7.6.1 shall be
irrevocable and valid only with respect to the spouse who signs the consent.
A Member may revoke his or her Beneficiary designation in writing at any
time, regardless of his or her spouse's previous consent to the revoked
designation, and any such revoked designation shall be void.
7.6.2 Changes and Failed Designations. A Member may designate
different Beneficiaries (or may revoke a prior Beneficiary designation) at
any time by delivering a new designation (or a signed revocation of a prior
designation) in like manner. Any designation shall become effective only
upon its receipt by the Committee but shall cease to be effective when a
written revocation of that designation by the Member is received by the
Committee. The last effective designation received by the Committee shall
supersede all prior designations. If a Member dies without having
effectively designated a Beneficiary, or if no Beneficiary survives the
Member, the Member's Account shall be payable to his or her surviving spouse
or, if the Member is not survived by his or her spouse, the Account shall be
paid to one or more of the following persons in the following priority
order:
(a) The Member's surviving Children (whether or not adopted) in equal
shares or the trustees of any trust or trusts established for the
benefit of the Member's surviving Children; for the purposes of
applying this Section, "Children" shall mean the Member's children and
the issue of the Member's deceased children, by right of
representation;
(b) The Member's surviving parents or parent, in equal shares or the
trustees of any trust or trusts established for the benefit of the
Member's surviving parents or parent; or
(c) The executors and/or administrators of his or her estate.
7.7 Payments to Incompetents. If any individual to whom a benefit is
payable under the Plan is a minor, or if the Committee 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
therefor, 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 any of them, in such
proportions as the Committee from time to time shall determine.
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 Member 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 Member or
Beneficiary to whom a Member's Account is payable under this Section 7,
(a) the Member's Account may be closed after 24 months have passed since the
date the Account first became distributable to such Member or Beneficiary,
and (b) the balance credited to any Account so closed shall be reallocated
among the remaining Members' Accounts as of the next succeeding Valuation
Date in the same manner as Trust Fund earnings. If the Member or
Beneficiary whose Account was closed under the preceding sentence
subsequently files a claim for distribution of his or her Account, and if
the Committee determines that such claim is valid, then the balance
previously removed upon closure of the Account shall be restored to the
Account by means of a special contribution which shall be made to the Trust
Fund by the Employers.
SECTION 8
WITHDRAWALS, LOANS AND DOMESTIC RELATIONS ORDERS
8.1 General Rules. In accordance with Sections 8.2 and 8.3, a Member
who is an Employee may withdraw, in cash, from his or her Account any amount
up to 100% of the balance credited to the Account as of the Valuation Date
that next precedes the date of the withdrawal. Any application for a
withdrawal shall be submitted to the Committee in writing on such form as it
may prescribe. No Member shall be permitted to make a withdrawal under this
Section 8 more often than once in any period of four (4) consecutive
calendar quarters. The active membership of a Member who makes a withdrawal
under Section 8.2 or 8.3 shall be suspended, in the manner set forth in
Section 2.5, for each payroll period that begins during the period starting
on the withdrawal approval date and ending on the last day of the fourth
full calendar quarter that begins after that date. Following that
suspension period, the Member may again become an Active Member and resume
his or her Salary Deferrals, effective with respect to Compensation paid for
the first payroll period beginning on or after any Entry Date, only by again
electing to become an Active Member in accordance with Section 2.3.
8.2 Hardship Withdrawal. The Committee shall authorize a distribution
under this Section 8.2 if the Member provides evidence which 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 Member may make a
withdrawal under this Section 8.2 only to meet a financial obligation for:
(a) Unreimbursed expenses for medical care (as defined in
section 213(d) of the Code) incurred by the Member, his or her spouse
or any dependent (as defined in section 152 of the Code) of the
Member, or necessary to enable any such person to obtain such care;
(b) The purchase of the Member's principal residence;
(c) Payment of tuition and related educational expenses up to the
next 12 months of post-secondary education for the Member, his or her
spouse or any dependent (as defined in section 152 of the Code) of the
Member;
(d) Prevention of the eviction of the Member from his or her
principal residence or foreclosure on the mortgage or deed of trust on
the Member's principal residence;
(e) Such other expenses as may be permitted under published documents
of general applicability as provided under Treas. Reg.
section 1.401(k)-1(d)(2)(ii)(B).
8.2.2 Withdrawal Necessary to Meet Financial Obligation. No
withdrawal shall be made under this Section 8.2 unless the Member 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 Contribution Limitations. To the extent required by
regulations, no withdrawal shall be made under this Section 8.2 unless the
Member irrevocably agrees in writing to the following limitations:
(a) The Member shall agree to refrain during the period beginning on
the withdrawal approval date and ending on the last day of the 12th
full month ending thereafter from making contributions to,
compensation deferrals under or payments in connection with the
exercise of any rights granted under 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.
(b) If the Member elects to become an Active Member again following
the suspension of his or her active membership pursuant to
Section 8.1, the total amount of the Member's Salary Deferrals for the
calendar year that next follows the withdrawal date shall not exceed
an amount equal to (1) the Section 401(k) Ceiling (as defined in
Section 3.1) for that calendar year, minus (2) the Member's Salary
Deferrals for the calendar year of the withdrawal under this
Section 8.2.
8.2.4 Limit on Withdrawal. No withdrawal under this Section 8.2
shall exceed the lesser of:
(a) The amount which the Committee determines is necessary (net of
income or penalty taxes reasonably anticipated to result from the
withdrawal) to satisfy the financial obligations meeting the
conditions of Section 8.2.1;
(b) The excess of (1) the value of the Member's Accounts as of the
Valuation Date that occurs on or next precedes the withdrawal date,
over (2) the total amount due (including both principal and interest)
under all outstanding loans made pursuant to Section 8.4 by the
Member; or
(c) To the extent that the withdrawal is made from the Member's
Salary Deferral Account, the excess of (1) the sum of all Salary
Deferrals allocated to the Member's Salary Deferral Account on or
before the date of the withdrawal plus the amount of the earnings
credited to that Account as of December 31, 1988, over (2) the sum of
all amounts previously withdrawn or distributed from the Member's
Salary Deferral Account.
8.2.5 Order of Withdrawal From Accounts. Any amount withdrawn
under this Section 8.2 shall be deducted from the Member's Accounts in the
following order: the Rollover Account, the Matching Account, the Salary
Deferral Account, and any other Accounts. Subject to the preceding
sentence, the Member shall designate in writing the order in which amounts
invested in the Commingled Funds shall be withdrawn.
8.3 Age 59 1/2 Withdrawal. At any time after a Member attains age 59
1/2, the Member (subject to the provisions of Section 8.1) may withdraw an
amount from his or her Account.
8.4 Loans to Members.
8.4.1 General Loan Rules. A Member who is an Employee may, upon
written application to the Committee on such form as the Committee shall
prescribe, obtain a loan from the portion of the Trust Fund allocated to the
Member's Account in accordance with the provisions of this Section 8.4.
Loans shall be available to all Members 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 Members or Beneficiaries of deceased Members, 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 Member's Available Balance,
determined as of the Valuation Date, over (2) the sum of the
outstanding balances (including both principal and accrued interest)
on all prior outstanding loans to the Member under this Plan.
(b) "Available Balance" shall mean the vested balance credited to the
Member's Account as of the applicable date, reduced by amounts
allocated pursuant to Section 8.5 to any subaccount of the Member's
Account 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 Member 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) Number of Loans. No Member shall be permitted to borrow under
this Section 8.4 if the borrowing would result in his or her having
more than two (2) loans outstanding, and an additional loan may not be
made to a Member until at least 12 months after the next earliest loan
was made; provided, however, that the Committee (in its discretion)
may nevertheless permit a Member to make a second or third loan if the
Member provides evidence sufficient to show that the second or third
loan is necessary in light of his or her immediate and heavy financial
needs.
8.4.2 Minimum Requirements of Each Loan. The terms of any loan
made under this Section 8.4 shall be evidenced by a promissory note signed
by the Member, and such terms shall satisfy the following minimum
requirements:
(a) Separate Accounting. Each loan shall be considered as a
separate, ear-marked investment of the Member's Loan Account and shall
be accounted for as provided in Section 5.3.3.
(b) Term. The term of the loan shall not exceed five (5) years. The
Member may elect a term of either three (3) or five (5) years for each
loan.
(c) Interest Rate. Each loan shall bear a reasonable rate of
interest, as determined by the Committee, 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 periodic
payments of both principal and interest over the agreed term of the
loan. The Committee may require on a uniform basis that loans with a
term of five (5) years be repaid in 58 equal monthly installments. A
Member 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 Member
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 Member 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 Member who is not
receiving periodic wage payments from an Employer or Affiliate.
(f) On Payroll. If during the term of the loan, a Member 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 Member shall authorize in writing payroll
withholding for the remaining loan payments.
(g) Off Payroll. If during the term of the loan, a Member who has
been making loan payments by payroll withholding ceases to receive
periodic wage payments from an Employer or Affiliate (and distribution
of the Member's Account has not begun), the Member 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 Member 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 Member shall
pledge 50% of his or her interest in the Member's Account, and shall
provide such other collateral as the Committee may require, to secure
his or her loan payment obligations.
(j) Spousal Consent. No loan may be made to a Member who is married
at the time the loan is to be made unless, no more than 90 days before
the date of the loan, the Member's spouse consents in writing to the
loan and to the possible reduction of the Member's Account balance in
the event the loan is in default. Any spousal consent required under
this Section 8.4.2 shall be void unless it (1) is set forth in
writing, (2) acknowledges the loan and possible effect of the loan in
the Member's Account balance, and (3) is signed by the spouse and
witnessed by an authorized agent of the Company or a notary public.
Notwithstanding the foregoing, if the Member 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,
his or her designation shall be effective without spousal consent.
The same spousal consent requirement shall apply with respect to any
renegotiation, renewal or other revision of the loan.
8.4.3 Default. If a Member defaults on his or her loan payment
obligations and does not cure the default within 30 days of the date the
Committee notifies him or her 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 Member's Account by the
amount required to cure the default.
(c) In applying the method of cure provided in paragraph (a) above,
if any losses are realized or expenses incurred, they shall be
allocated only to the defaulting Account.
(d) In applying the method of cure provided in paragraph (b) above,
the amount by which the Member's Account is to be reduced shall be
credited to a separate suspense account for the Member and shall be
increased annually with interest, at the greater of (1) the average
rate of interest earned by the Short-Term Fund for each Plan Year, or
(2) the interest rate that actually applies 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 Member attains age 59 1/2 or the first
date on which distributions from the Account can be made under
Section 7.1; the balance credited to the Account 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 Member when a distribution is made from his or her
Account under Section 7 (including, but not limited to, a distribution in
connection with termination of 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 Member's Account shall be reduced to the extent
necessary to discharge the obligation.
8.4.5 Transition Rule. The provisions of this Section 8.4 shall
apply only with respect to loans made after the effective date of Amendment
No. 2 to the Plan (as restated effective January 1, 1991), and prior
provisions of the Plan shall apply with respect to loans made on or before
that date.
8.5 Qualified Domestic Relations Orders. The Committee shall
establish written procedures for determining whether a domestic relations
orders purporting to dispose of any portion of a Member'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 (or a court of competent jurisdiction
reversing an initial adverse determination by the Committee) determines that
the order is a QDRO. Payment shall be made to any Alternate Payee only as
specified in the QDRO.
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 Member 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 Member's Account.
All investment decision with respect to amounts credited to the subaccount
shall be made by the Alternate Payee in the manner provided in Section 5.3.
Payment to the Alternate Payee shall not be deferred beyond the date of
distribution to the Member or (in the event of death) his or her Beneficiary
is made or commenced.
SECTION 9
ADMINISTRATION OF THE PLAN
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 (3) 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 which 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 interpret the provisions of the Plan and to determine any
question arising under, or in connection with the administration or
operation of, the Plan;
(b) To determine all questions concerning the eligibility of any
Employee to become or remain a Member and/or an Active Member of the
Plan;
(c) To cause one or more separate Accounts to be maintained for each
Member;
(d) To establish and revise an accounting method or formula for the
Plan, as provided in Section 6.4;
(e) To determine the manner and form, and to notify the Trustee, of
any distribution to be made under the Plan;
(f) To grant or deny hardship withdrawal and loan applications under
Section 8;
(g) To determine the status and rights of Members and their spouses,
Beneficiaries or estates;
(h) To instruct the Trustee with respect to matters within the
jurisdiction of the Committee;
(i) To direct the Trustee, in accordance with Section 6.3, as to the
establishment of Commingled Funds and the investment of the Plan
assets held in the Commingled Funds (other than the Common Stock
Fund);
(j) 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;
(k) To prescribe the form and manner in which any member, or his or
her spouse or other Beneficiary, shall make any election or
designation required under the Plan;
(l) To establish rules for the performance of its powers and duties
and for the administration of the Plan;
(m) To arrange for annual distribution to each Member of a statement
of benefits accrued under the Plan;
(n) To establish rules and regulations by which requests for Plan
information from Members are processed expeditiously and completely;
(o) To provide to each terminated Member notice of his or her vested
interest under the Plan and the written explanation described in
section 402(f) of the Code;
(p) To publish a claims and appeal procedure satisfying the minimum
standards of section 503 of ERISA pursuant to which Members or their
spouses, Beneficiaries or estates may claim Plan benefits and appeal
denials of such claims;
(q) 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;
(r) 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;
(s) To arrange for the purchase of any bond required of the Committee
members or others under section 412 of ERISA; and
(t) 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 Commingled Funds (other than the Common Stock Fund) in
one or more common, pooled or other collective investment funds. 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 the one or
more of the Commingled Funds and other designated portions of the Trust Fund
(other than the Common Stock 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 may delegate investment authority and
responsibility with respect to any Commingled Fund (other than the Common
Stock Fund) directly to any Investment Manager which has investment
management responsibility for any collective investment fund in which the
Commingled 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 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 determines (in its discretion) to be similar to
the foregoing;
(b) Any tender or exchange offer for Common Stock;
(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 designates 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 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, all 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 shall exercise the power 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 Member (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 Member 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
all shares of Common Stock allocable to the Member's Account.
9.7.4 Confidentiality. In implementing this Section 9.7, each
appropriate fiduciary shall take all steps necessary or appropriate to
ensure that each Member'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 Members (or if deceased, their Beneficiaries) and in
accordance with this Section 9.7.
(b) Each Member (or if deceased, his or her Beneficiary) shall have
the right, with respect to Pass-Through Issues for shares of Common
Stock allocable to his or her Account, to instruct the Trustee in
writing as to the manner in which to vote those shares at any
stockholders' meeting of the Company, or the manner in which the
Trustee shall give or withhold consent with respect to the shares.
(1) The Trustee shall pool the results of instructions received
from all Members to whose Accounts fractional shares are
allocable and shall vote or otherwise act accordingly with
respect to those shares on Pass-Through Issues;
(2) In the case of a deceased Member who has more than one
Beneficiary, the Trustee shall vote or otherwise act on Pass-
Through Issues in accordance with the instructions of the
Member's Beneficiaries in respect of the shares allocable to the
deceased Member's Account in proportion to the Beneficiaries'
respective interests in the Member's Account in accordance with
rules established by the Committee.
(3) If no instructions are received with respect to shares of
Common Stock allocable to a Member's Account, those shares shall
not be voted nor shall any other actions under this Section 9.7
be taken with respect to the shares on Pass-Through Issues.
(c) The Company shall use its best efforts to timely distribute or
cause to be distributed to each Member (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 any tender
or exchange offer is made for shares of Common Stock, the Trustee
shall tender or exchange shares of Common Stock (or refrain from
tendering or exchanging) solely as directed in written instructions
timely received from Members (or if deceased, their Beneficiaries) and
in accordance with this Section 9.7.
(b) Each Member (or, if deceased, his or her Beneficiary) shall have
the right, with respect to shares of Common Stock allocable to his or
her Account, to instruct the Trustee in writing as to the manner in
which to respond to a tender or exchange offer with respect to those
shares.
(1) If, and to the extent that the Trustee shall not have
timely received instructions from any Member (or Beneficiary)
with a right to instruct, such person shall be deemed to have
timely instructed the Trustee not to tender or exchange the
relevant shares of Common Stock.
(2) The Trustee shall pool the results of instructions received
from all Members to whose Accounts fractional shares are
allocable and shall respond to the tender or exchange offer
accordingly with respect to those shares.
(3) In the case of a deceased Member who has more than one
Beneficiary, the Trustee shall respond to the tender or exchange
offer in accordance with the instructions of the Member's
Beneficiaries in respect of the shares allocated to the deceased
Member's Account in proportion to the Beneficiaries' respective
interests in the Member's Account in accordance with rules
established by the Committee.
(4) Shares allocated to a Member's Account with respect to
which no timely instructions are furnished shall be treated as
shares with respect to which instructions not to tender or
exchange have been timely furnished.
(c) The Company shall use its best efforts to timely distribute or
cause to be distributed to each Member (or Beneficiary) such
information as will be distributed to stockholders of the Company in
connection with any tender or exchange offer, together with a request
for confidential instructions to the Trustee or its designee to
respond to the tender or exchange offer.
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 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 Members 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 membership 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 Account 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 Plan, and the members of the
Committee, from and against any and all losses, claims, damages, expenses
and liabilities (including reasonable attorneys' fees and amounts paid, with
the approval of the Board of Directors, in settlement of any claim) arising
out of or resulting from the implementation of a duty, act or decision with
respect to the Plan, so long as such duty, act or decision does not involve
gross negligence or willful misconduct on the part of any such individual.
SECTION 10
TRUST FUND AND ROLLOVER CONTRIBUTIONS
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 Salary Deferrals, Matching Contributions and rollover
contributions made under the Plan, the maintenance of Members' Accounts, 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,
Members, Beneficiaries and other persons receiving or entitled to receive
benefits or payments under the Plan. Except to the limited extent permitted
by Sections 5.4.6 and 10.3, no assets of the Plan shall ever revert to or
become the property of the Employers.
10.3 Continuing Conditions. Any obligation to contribute Salary
Deferrals and/or to make Matching Contributions under the Plan after initial
qualification is hereby conditioned upon the continued qualification of the
Plan under section 401(a) of the Code and the exempt status of the Trust
Fund under section 501(a) of the Code and upon the deductibility of such
Salary Deferrals and/or Matching Contributions under section 404(a) of the
Code. That portion of any Salary Deferral or Matching Contribution which 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
Member's Account 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.
Notwithstanding the implementation of any such change of funding medium, all
references in the Plan to the Trust Fund shall also refer to the Plan's
interest in or the assets held under any other such funding medium.
10.5 Rollover Contributions. Notwithstanding any contrary Plan
provision, the Committee may direct the Trustee to accept a transfer of
assets to the Trust Fund by a Member of this Plan, but only if the transfer
qualifies as a rollover under section 402(c) or 408(d)(3)(A)(ii) of the
Code. Any assets transferred to the Trust Fund in accordance with the
preceding sentence must be in the form of cash.
10.5.1 Rollover Account. Assets transferred to the Trust Fund
pursuant to this Section 10.5 shall be credited to the Member's Rollover
Account. A Member's interest in his or her Rollover Account shall be fully
(100%) vested and nonforfeitable at all times. The Member shall indicate,
on such form or in such manner and within such advance notice period as the
Committee shall prescribe, the percentages of the amounts allocated to his
or her Rollover Account that are to be invested in each of the Commingled
Funds. In all other respects Rollover Account investments shall be subject
to Section 5.3.
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 a rollover under section 402(c) or 408(d)(3)(A)(ii) of the
Code, then the balance credited to the Member'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 Member, and
(c) distributed to the Member. Such a nonqualifying rollover shall be
deemed never to have been a part of the Trust Fund.
SECTION 11
MODIFICATION OR TERMINATION OF PLAN
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 Salary Deferrals and/or Matching
Contributions for any reason at any time. Complete discontinuance of all
Salary Deferral and Employer contributions shall be deemed a termination of
the Plan.
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 either necessary to comply with the Code,
ERISA or other applicable law, are technical or intended to ease
administration may be adopted if approved in writing by any two (2) of the
following officers of the Company:
Vice-President, Human Resources
Treasurer
Chief Financial Officer
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(a)(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 Salary Deferral
and Matching Contributions, the interests of all Members affected by such
termination or discontinuance in their Accounts shall remain fully (100%)
vested and nonforfeitable. Notwithstanding the foregoing, the balances
credited to the Salary Deferral Accounts of any Members who are affected by
the termination may be distributed prior to the occurrence of a distribution
event described in Section 7.1, but only to the extent permitted by section
401(k)(2)(B) of the Code.
SECTION 12
TOP-HEAVY PLAN
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 section 416(i) of the Code) exceeds 60% of the value of the
aggregate of the Accounts under the Plan for all Members. For purposes of
determining the value of the Accounts, the provisions of section
416(g)(4)(E) of the Code and Treas. Reg. section 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" shall mean 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 section 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 paragraph (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 5.4.2(d)).
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 Account of each Member who is a non-key
employee (within the meaning of section 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 (as defined in Section 12.2.2) for
the Plan Year; provided, however, that if the Key Employee Percentage 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.
(a) "Key Employee Percentage" shall mean the largest percentage
computed by dividing (a) the total amount of Salary Deferrals and
Matching Contributions allocated for that Plan Year to the Account of
each Member who is a key employee (within the meaning of
section 416(i)(1) and (5) of the Code), by (b) his or her Top-Heavy
Compensation.
(b) The additional contribution required under this Section 12.2.1
shall be made without regard to the level of the Member's Top-Heavy
Compensation for the Plan Year.
(c) Notwithstanding the foregoing, if a Member 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 Member under this Plan.
12.2.2 "Top-Heavy Compensation", with respect to any Member for a
Plan Year, shall mean the sum of (a) his or her Total Compensation (as
defined in Section 5.4.2(d)), (b) Salary Deferrals credited to his or her
Salary Deferral Account, and (c) other amounts that are contributed to an
employee benefit plan by any Employer pursuant to a salary reduction
agreement and are not includible in gross income under section 125, 401(k),
402(e)(3), 402(h), 403(b) or 414(h)(2) of the Code. No amount in excess of
$150,000 (as adjusted pursuant to sections 401(a)(17) and 415(d) of the
Code) shall be taken into account under this Section 12.2.2 for any Plan
Year. In applying that $150,000 limit, Section 1.17(c) shall apply except
that the term "Family Member" shall only include a spouse or a lineal
descendant who has not attained age 19 before the close of the Plan Year.
12.2.3 Defined Benefit Plan. With respect to each Member who is
also a participant in a qualified defined benefit plan maintained by any
Employer or Affiliate which is also a top-heavy plan (within the meaning of
section 416(g) of the Code), then provided that the aggregation group of
which the Plan is a member is not super top-heavy (within the meaning of
section 416(h)(2)(B) of the Code), the additional Employer contribution
required to be made to the Account of each non-key employee (within the
meaning of section 416(i)(2) and (5) of the Code) under Section 12.2.1 shall
be in an amount which equals 7.5% of his or her Top-Heavy Compensation.
SECTION 13
GENERAL PROVISIONS
13.1 Plan Information. Each Member 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 applicable law, in no event may any
Member, former Member 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
Trustee nor the Committee shall be subject to any liability or duty under
the Plan except as expressly provided in the Plan, or for any other action
taken, omitted or suffered in good faith.
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 Member's accrued benefit,
if such other plan were then to terminate, is at least equal to the accrued
benefit to which the Member would have been entitled if this Plan had been
terminated immediately before such merger, consolidation or transfer.
13.7 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.
13.8 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.
13.9 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.
EXECUTION
IN WITNESS WHEREOF, Genentech, Inc., by its duly authorized officers,
has executed this January 1, 1994 Restatement of the Plan on the date
indicated below.
GENENTECH, INC.
By
_______________________________
Title:
Dated
By
_______________________________
Title:
Dated
GENENTECH, INC.
TAX REDUCTION INVESTMENT PLAN
(January 1, 1994 Restatement)
TABLE OF CONTENTS
Page
PREAMBLE ......................................................... 1
SECTION 1 DEFINITIONS ........................................... 2
SECTION 2 ELIGIBILITY AND MEMBERSHIP ............................ 12
2.1 Initial Eligibility ....................................... 12
2.2 Employer Aggregation ...................................... 12
2.3 Membership ................................................ 12
2.4 Voluntary Suspension ...................................... 13
2.5 Mandatory Suspension ...................................... 14
2.6 Termination of Membership ................................. 14
SECTION 3 SALARY DEFERRALS ...................................... 15
3.1 Salary Deferrals .......................................... 15
3.2 Salary Deferral Election .................................. 18
3.3 Payment of Deferrals ...................................... 21
SECTION 4 MATCHING CONTRIBUTIONS ................................ 21
4.1 Amount of Matching Contributions .......................... 21
4.2 Timing .................................................... 26
4.3 Periodic Contributions .................................... 26
4.4 Profits Not Required ...................................... 26
4.5 After-Tax Contributions ................................... 27
SECTION 5 ALLOCATIONS AND INVESTMENT ............................ 27
5.1 Salary Deferrals .......................................... 27
5.2 Matching Contributions .................................... 27
5.3 Investment ................................................ 27
5.4 Limitations on Allocations ................................ 29
SECTION 6 ACCOUNTS AND COMMINGLED FUNDS ......................... 34
6.1 Members' Accounts ......................................... 34
6.2 Trust Fund Assets ......................................... 34
6.3 Commingled Funds .......................................... 35
6.4 Valuation of Members' Accounts ............................ 37
6.5 Valuation of Shares ....................................... 38
6.6 Statements of Members' Accounts ........................... 38
6.7 Accounts Nonforfeitable ................................... 38
SECTION 7 DISTRIBUTIONS ......................................... 38
7.1 Events Permitting Distribution ............................ 38
7.2 Times for Distribution .................................... 39
7.3 Consent Requirement ....................................... 40
7.4 Form of Distribution ...................................... 41
7.5 Common Stock Restrictions ................................. 43
7.6 Beneficiary Designations .................................. 43
7.7 Payments to Incompetents .................................. 45
7.8 Undistributable Accounts .................................. 46
SECTION 8 WITHDRAWALS, LOANS AND DOMESTIC RELATIONS ORDERS ...... 46
8.1 General Rules ............................................. 46
8.2 Hardship Withdrawal ....................................... 47
8.3 Age 59 1/2 Withdrawal ..................................... 49
8.4 Loans to Members .......................................... 49
8.5 Qualified Domestic Relations Orders ....................... 53
SECTION 9 ADMINISTRATION OF THE PLAN ............................ 55
9.1 Plan Administrator ........................................ 55
9.2 Committee ................................................. 55
9.3 Actions by Committee ...................................... 55
9.4 Powers of Committee ....................................... 56
9.5 Fiduciary Responsibilities ................................ 57
9.6 Investment Responsibilities ............................... 58
9.7 Voting and Tender Offer Rights in Common Stock ............ 59
9.8 Decisions of Committee .................................... 63
9.9 Administrative Expenses ................................... 63
9.10 Eligibility to Participate ................................ 64
9.11 Indemnification ........................................... 64
SECTION 10 TRUST FUND AND ROLLOVER CONTRIBUTIONS ................ 64
10.1 Trust Fund ............................................... 64
10.2 No Diversion of Assets ................................... 65
10.3 Continuing Conditions .................................... 65
10.4 Change of Investment Alternatives ........................ 66
10.5 Rollover Contributions ................................... 67
SECTION 11 MODIFICATION OR TERMINATION OF PLAN .................. 68
11.1 Employers' Obligations Limited ........................... 68
11.2 Right to Amend or Terminate .............................. 68
11.3 Effect of Termination .................................... 69
SECTION 12 TOP-HEAVY PLAN ....................................... 70
12.1 Top-Heavy Plan Status .................................... 70
12.2 Top-Heavy Plan Provisions ................................ 71
SECTION 13 GENERAL PROVISIONS ................................... 73
13.1 Plan Information ......................................... 73
13.2 Inalienability ........................................... 73
13.3 Rights and Duties ........................................ 73
13.4 No Enlargement of Employment Rights ...................... 74
13.5 Apportionment of Duties .................................. 74
13.6 Merger, Consolidation or Transfer ........................ 74
13.7 Applicable Law ........................................... 75
13.8 Severability ............................................. 75
13.9 Captions ................................................. 75
EXECUTION ........................................................ 76
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SF3-44540.2
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NY1-53134.1