Exhibit 10.1

 

 

 

 

 

NATIONAL SEMICONDUCTOR CORPORATION

 

RETIREMENT AND SAVINGS PROGRAM

 

 

 

 

 

 

 

 

 

 

 

 

 

Originally Effective June 1, 1975

Amended and Restated Effective January 1, 2008

 

 

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TABLE OF CONTENTS

 

ARTICLE I

1

1.01 Name

1

1.02 Effective Date

1

ARTICLE II

2

2.01 Accounts

2

2.02 Accrued Benefit

2

2.03 Actual Deferral Percentage

2

2.04 Allocation Date

2

2.05 Annual Profit Sharing Contributions

3

2.06 Beneficiary

3

2.07 Board

3

2.08 Code

3

2.09 Comlinear 401(k) Plan

3

2.10 Committee

3

2.11 Compensation

3

2.12 Consolidated Group

4

2.13 Disability

4

2.14 Disability Benefit Plan

5

2.15 Electronic Access System

5

2.16 Employee

5

2.17 Employer

6

2.18 Employer Match

6

2.19 Employment Date

6

2.20 ERISA

6

2.21 Fairchild 1988 Rollover Account

6

2.22 Fiscal Year

6

2.23 401(k) Account

6

2.24 Highly Compensated Employee

7

2.25 Hour of Service

7

2.26 Inactive Participant

7

2.27 Investment Fund

7

 

 

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2.28 Layoff or Laid Off

8

2.29 Nonhighly Compensated Employee

8

2.30 NSC Stock

8

2.31 NSC Stock Fund

8

2.32 One-Year Break-in-Service

8

2.33 Participant

9

2.34 Participant Elected Contribution

9

2.35 Plan

9

2.36 Plan Quarter

9

2.37 Plan Year

9

2.38 Profit Sharing Account

9

2.39 Rollover Account.

9

2.40 Rollover Contribution

9

2.41 Spouse and Surviving Spouse

10

2.42 Stock Bonus Account

10

2.43 Termination Date

10

2.44 Trust or Trust Agreement.

11

2.45 Trust Fund or Fund

11

2.46 Trustee

11

2.47 Valuation Date

11

2.48 Voluntary Contributions

11

2.49 Voluntary After-Tax Account

11

2.50 Years of Service

11

ARTICLE III

14

3.01 Eligibility Requirements

14

3.02 Ineligible Employees

14

3.03 Credit for Predecessor Employment

15

3.04 Credit for Consolidated Group Employment

16

ARTICLE IV

17

4.01 Participation on Re-employment

17

4.02 Inactive Participants

17

ARTICLE V

18

 

 

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5.01 Employer's Annual Profit Sharing Contributions

18

5.02 Participant Elected Contributions

20

5.03 Employer Match

21

5.04 Discontinued Contributions

22

5.04 Discontinued Contributions

22

5.05 Limitation on Contributions

22

5.06 Rollover Contributions

23

ARTICLE VI

25

6.01 Accounts

25

6.02 Employment Required at End of Plan Year

25

6.03 Allocation and Crediting of Contributions

25

6.04 Disposition of Forfeitures from Former Participant's Profit Sharing
Accounts

26

6.05 Adjustment of the Participant's Accounts.

27

6.06 Title to Assets in Trustee

27

6.07 Participant's NSC Stock Voting Rights

28

6.08 Limits with Respect to Transactions in NSC Stock

28

ARTICLE VII

29

7.01 Investment Funds in General

29

7.02 Investment of Accounts

29

7.03 Election of Investment Funds

30

7.04 Expenses

31

ARTICLE VIII

32

8.01 Vested Amounts

32

8.02 Forfeiture of Nonvested Accounts

34

8.03 Vesting on Re-Employment

35

8.04 Lost Participant or Beneficiary

35

ARTICLE IX

36

9.01 Retirement

36

ARTICLE X

37

10.01 Death of Participant

37

10.02 Payments Upon Failure to Designate Beneficiary

37

ARTICLE XI

38

 

 

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ARTICLE XII

39

12.01 Distribution of Benefits

39

12.02 Required Distributions Prior to 2003

44

12.03 Distribution to Minors and Incompetents

45

12.04 Qualified Domestic Relations Order

46

12.05 Hardship Withdrawals

47

12.06 In-Service Withdrawals

49

12.06 In-Service Withdrawals

49

12.07 Participant Loans

49

12.08 Direct Rollovers

51

12.09 Required Minimum Distributions on and after January 1, 2003

53

ARTICLE XIII

58

13.01 [Reserved]

58

13.02 Limitations on Allocations

58

13.03 Controlled Groups

60

13.04 ADP and ACP Test Safe Harbor

60

ARTICLE XIV

63

14.01 Applicability

63

14.02 Definitions

63

14.03 Top Heavy Requirements

66

14.04 Benefits Under Different Plans

68

ARTICLE XV

69

ARTICLE XVI

70

16.01 Appointment of Committee

70

16.02 Committee Action

70

16.03 Rights and Duties of Committee

70

16.04 Investments

71

16.05 Information, Reporting and Disclosure

72

16.06 Independent Qualified Accountant

72

16.07 Standard of Care Imposed Upon the Committee

72

16.08 Allocation and Delegation of Responsibility

73

16.09 Bonding

73

 

 

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16.10 Claims Procedure

73

16.11 Indemnification

75

ARTICLE XVII

76

17.01 Authority for Appointment

76

17.02 Investment Manager Discretion

76

ARTICLE XVIII

77

ARTICLE XIX

78

ARTICLE XX

79

ARTICLE XXI

80

21.01 Right to Amend and Terminate

80

21.02 Administrative Amendments

80

21.03 Protection of Accrued Benefits

80

21.04 No Re-vesting

81

21.05 Exclusive Benefit of Participants

81

21.06 Termination and Discontinuance of Contributions

81

ARTICLE XXII

82

22.01 Subsidiaries

82

22.02 Termination of Participation

82

22.03 Contributions and Allocations

82

22.04 Committee

83

22.05 Accounts

83

ARTICLE XXIII

84

ARTICLE XXIV

85

24.01 Internal Revenue Service Approval

85

24.02 Mistake of Fact

85

24.03 Disallowance of Deductibility

85

ARTICLE XXV

86

25.01 Governing Law

86

25.02 Severability of Provisions

86

25.03 Counterparts

86

25.04 Captions

86

25.05 Interchangeable Word Usage

86

 

 

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25.06 USERRA Provisions

86

 

 

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ARTICLE I

 

NAME AND EFFECTIVE DATE

 

1.01

Name.

 

This Plan shall be known as the National Semiconductor Corporation Retirement
and Savings Program (“Plan”).

 

1.02

Effective Date.

 

The original effective date of the Plan was June 1, 1975. This Restatement
reflects the consolidation of all amendments adopted since the date of the
latest restatement, as well as amendments adopted to conform with the
requirements of GUST (changes made by “GATT” (the Uruguay Round Agreements Act,
PL 103-465); “USERRA” (provisions in the Uniformed Services Employment and
Reemployment Rights Act of 1994, PL 103-353); “SBJPA” (the Small Business Job
Protection Act of '96, PL 104-188); “TRA '97” (the Taxpayer Relief Act of '97,
PL 105-34); “RRA '98” (the Internal Revenue Service Restructuring and Reform Act
of '98, PL 105-206) and “CRA” (the Community Renewal Tax Relief Act of 2000, PL
106-554)). Finally, this Restatement reflects the adoption of amendments to
reflect certain provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 (“EGTRRA”).

 

Unless otherwise stated, the effective date of the amendments made by this
restated Plan is January 1, 2008. This restated Plan shall only apply to
Participants who perform one or more Hours of Service on or after January 1,
2008.

 

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ARTICLE II

 

DEFINITIONS

 

Whenever used herein, unless the context clearly indicates otherwise, the
following words and phrases have the meanings indicated:

 

2.01

Accounts.

 

Accounts mean the separate accounts and sub-accounts established by the
Committee in the name of each Participant, in accordance with Section 6.01.

2.02

Accrued Benefit.

 

Accrued Benefit means the balance of a Participant's Accounts including
investment experience as of the most recent Valuation Date, plus accumulated
contributions since such date and less any distributions since such date.

2.03

Actual Deferral Percentage.

 

Actual Deferral Percentage means, with respect to the group of Highly
Compensated Participants and Nonhighly Compensated Participants, the average of
the ratios (calculated separately for each Employee in each such group) of the
sum of Employee elective contributions and any other contributions (which the
Plan Administrator may under Treasury regulations elect to include in the
calculation), to the Employee's compensation, as defined under Internal Revenue
Code Section 414(s), received during the Plan Year.

2.04

Allocation Date.

 

Allocation Date means the last day of each Plan Year for the purpose of
allocating Annual Profit Sharing Contributions made under Section 5.01 hereof,
each pay date of the Employer (or, prior to December 1, 1999, the last day of
each Plan Quarter) for which an Employee has made a Participant Elected
Contribution for the purpose of allocating the Employer Match made pursuant to
Section 5.03 hereof and such other dates as the Committee may determine pursuant
to Article VI hereof. The term Allocation Date refers to the date on which a
Participant is determined to be entitled to receive a contribution, and not to
the date on which such contribution is credited to the Participant's Accounts.
Solely for purposes of the allocation of the Annual Profit Sharing Contribution
with respect to Fiscal Year 2004, the Allocation Date shall be the last day of
such Fiscal Year. Because Fiscal Year 2004 ends after the short Plan Year ending
December 31, 2003, there shall be no allocation of, nor Allocation Date for,
Annual Profit Sharing Contributions for such short Plan Year.

 

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2.05        Annual Profit Sharing Contributions.

 

Annual Profit Sharing Contribution means the contribution made in respect of any
Plan Year by the Employer in accordance with Section 5.01, except that no
contribution shall be made in respect of the Plan Year ending December 31, 2003,
and the final Annual Profit Sharing Contribution under this Plan shall be made
in respect to Fiscal Year 2004 during the Plan Year commencing January 1, 2004.

2.06

Beneficiary.

 

Beneficiary means the person or persons designated as such by a Participant in
accordance with Article X.

2.07

Board.

 

Board means the Board of Directors of National Semiconductor Corporation.

2.08

Code.

 

Code means the Internal Revenue Code of 1986, as amended.

2.09

Comlinear 401(k) Plan.

 

Comlinear 401(k) Plan means the 401(k) plan formerly maintained by Comlinear,
Inc., the assets of which were merged into the Plan effective 12/31/95.

2.10

Committee.

 

Committee means the Administrative Committee appointed by the Board in
accordance with Article XVI.

2.11

Compensation.

 

 

A.

Compensation means the sum of:

 

 

1.

the Employee's basic or regular rate of compensation for each pay date during
that portion of the Plan Year in which the Employee is a Participant in the
Plan, plus

 

2.

all overtime, lead time, sales commissions and shift differential income
received for pay dates during the Plan Year.

Effective January 1, 2004, Compensation means wages within the meaning of
Section 3401(a) of the Code and all other payments of compensation to an
Employee of the Employer for which the Employer is required to furnish the
Employee a written statement under Sections 6041(d), 6051(a)(3), and 6052 of the
Code. Compensation must be

 

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determined without regard to rules under Section 3401(a) of the Code that limit
the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Section 3401(a)(2) of the Code). Compensation shall also include
amounts paid or made available during such year and shall include any elective
deferral (as defined in Section 402(g)(3) of the Code), and any amount which is
contributed or deferred by the Employer at the election of the Employee and
which is not includable in the gross income of the Employee by reason of Section
125 or 132(f)(4) of the Code.

 

Notwithstanding the foregoing, Compensation shall exclude all irregular or
additional compensation (except for any type of additional compensation for
Employees working outside their regularly scheduled tour of duty, such as
overtime, pay premiums for shift differential and call-in premiums).

 

B.

For Plan Years beginning after December 31, 1993 and before December 31, 2001,
no more than $150,000 (or such other amount as adjusted for costs of living
under Section 401(a)(17)(B) of the Code) of annual Compensation shall be taken
into consideration for any Employee for any reason under this Plan. For Plan
Years beginning after December 31, 2001, no more than $200,000 (or such other
amount as adjusted for costs of living under Section 401(a)(17)(B) of the Code)
of annual Compensation shall be taken into consideration for any Employee for
any reason under this Plan.

2.12

Consolidated Group.

 

Consolidated Group means those corporations whose earnings are taken into
account for purposes of preparing a consolidated annual report to shareholders
of the Employer.

2.13

Disability.

 

 

Disability means:

 

 

A.

Any medically determinable physical or mental impairment that causes a
Participant to be qualified for disability benefits (or that would have
qualified the Participant for disability benefits if the Participant had elected
disability coverage) under the Employer's Disability Benefit Plan, so long as
the Employer has a Disability Benefit Plan in effect; or

 

 

B.

If there is no Disability Benefit Plan in effect, any medically determinable
physical or mental impairment that causes a Participant to be unable:

 

 

1.

During the first twelve (12) months following determination of such impairment,
to substantially perform the regular material duties of the same occupation or
occupations for which the Participant has been employed by the Employer; and

 

 

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2.

Subsequent to the first twelve (12) months following determination of such
impairment, to substantially perform the material duties of any occupation for
which the Participant is or becomes qualified by reason of education, training,
or experience.

 

Disability shall be established by the certification of a physician, selected by
the Participant and approved by the Committee, that the Participant has suffered
a permanent disability, or, if the physician selected by the Participant shall
not be approved by the Committee, by a majority of three physicians, one
selected by the Participant (or his or her spouse, child, parent or legal
representative in the event of the Participant's inability to select a
physician), one by the Committee, and the third by the two physicians selected
by the Participant and the Committee. The decisions of the majority of such
three physicians shall be final and conclusive.

 

2.14

Disability Benefit Plan.

 

Disability Benefit Plan means the long term disability benefit provisions of the
income benefit plan created by the Employer and executed by and between the
Employer and the trustees of the trust created for such plan on July 13, 1981,
which were incorporated into a separate Long Term Disability Plan in 1992, as
such Disability Benefit Plan may hereafter be amended.

2.15

Electronic Access System.

 

Electronic Access System means the Retirement Connection or any other
interactive telephone, computer or electronic system adopted by the Committee or
its delegate for use in receiving communications from and/or providing
information to Participants and/or Beneficiaries.

2.16

Employee.

 

“Employee” shall mean any person who renders services to the Employer in the
status of an employee as that term is defined in Code Section 3121(d) and
specifically excludes any independent contractor. An individual shall only be
treated as an Employee if he or she is reported on the payroll records of the
Employer as a common law employee. This term does not include any other common
law employee. In particular, it is expressly intended that individuals not
treated as common law employees on the payroll records of the Employer are to be
excluded from Plan participation even if a determination is subsequently made by
the Internal Revenue Service, another governmental agency, a court or other
tribunal that such individuals are common law employees of the Employer for
purposes of pertinent Code sections or for any other purpose. An individual who
performs services for the Employer as a leased employee within the meaning of
Code Section 414(n) shall not be considered an Employee hereunder for a Plan
Year provided the Plan satisfies the coverage requirements of Code Section
410(b) on one day during each quarter of such Plan Year, after counting all such
leased employees as nonparticipating employees for purposes of testing whether
such requirements are satisfied. If the Plan fails to satisfy such requirements
in any Plan Year, all such leased

 

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employees shall be treated as Employees for such Plan Year in the manner and to
the extent provided for in Code Section 414(n), except as provided in Code
Section 414(n)(1)(B) or Code Section 414(n)(5). For purposes of this Subsection,
effective for Plan Years commencing after December 31, 1996, “leased employee”
means any person (other than an Employee) who pursuant to an agreement between
the Employer and any other person (“leasing organization”) has performed
services for the Employer (or for the Employer and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one year, and such services are performed under
the primary direction or control of the Employer.

2.17

Employer.

 

Employer means National Semiconductor Corporation; any subsidiary or affiliate
which, with the consent of National Semiconductor Corporation adopts this Plan;
and any corporation which acquires the Employer's business and adopts this Plan.

2.18

Employer Match.

 

Employer Match means the contribution made by the Employer in respect of
Participants' Elected Contributions for any Plan Year in accordance with Section
5.03.

2.19

Employment Date.

 

Employment Date means the first day on which Employee completes an Hour of
Service.

2.20

ERISA.

 

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.21

Fairchild 1988 Rollover Account.

 

The Account of a Participant who was employed at Fairchild Semiconductor
Corporation prior to October 8, 1987 to which were credited contributions under
its Profit Sharing Plan, which Account was rolled over into this Plan as of
January 1, 1988.

2.22

Fiscal Year.

 

Fiscal Year means the Employer's fiscal year for federal income tax purposes.

2.23

401(k) Account.

 

401(k) Account means the separately allocated Account of a Participant arising
from Participant Elected Contributions made in accordance with Section 5.02 and
the Employer Match made in accordance with Section 5.03.

 

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2.24        Highly Compensated Employee.

 

The term Highly Compensated Employee includes highly compensated active
employees and highly compensated former employees, determined pursuant to the
following rules:

 

A.

A highly compensated active employee is any Employee who:

 

 

1.

at any time during the Plan Year or the preceding Plan Year was a Five Percent
Owner; or

 

 

2.

received compensation from the Employer or any affiliated Employer during the
preceding Plan Year in excess of $80,000 (as adjusted pursuant to Section
414(q)(1) of the Code).

 

 

B.

A highly compensated former employee is determined based on the rules applicable
to determining highly compensated employee status as in effect for the Plan Year
(determination year), in accordance with section 1.414(q)-1T, A-4 of the
temporary Income Tax Regulations and Notice 97-45.

 

 

C.

In determining whether an Employee is a Highly Compensated Employee for years
beginning in 1997, the amendments to Code section 414(q) stated above are
treated as having been in effect for years beginning in 1996.

 

 

D.

For purposes of this Section 2.24, “compensation” has the meaning given to it
under Code section 415(c)(3), as that Code section has been amended by GUST to
reflect the inclusion of any elective deferrals (as defined in Code section
402(g)(3)), and any amount which is contributed or deferred by the Employer at
the election of the Employee and which is not includible in the gross income of
the Employee by reasons of Code sections 125, 132(f)(4) or 457.

 

2.25

Hour of Service.

 

Hour of Service means each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.

2.26

Inactive Participant.

 

Inactive Participant means a Participant who is ineligible to participate in the
allocation of Employer contributions and forfeitures pursuant to Section 4.02,
but remains employed by the Employer or within the Consolidated Group and
continues to have Accounts under this Plan.

2.27

Investment Fund.

 

Investment Fund means any investment option authorized by the Committee for the
investment of Participants' Accounts pursuant to Article VII hereof.

 

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2.28

Layoff or Laid Off.

 

Layoff or Laid Off means the involuntary cessation of an Employee's employment
with the Employer for business reasons administered in accordance with the
Employer's standard personnel practices.

2.29

Nonhighly Compensated Employee.

 

Nonhighly Compensated Employee means an Employee who is not a Highly Compensated
Employee.

2.30

NSC Stock.

 

NSC Stock means the common stock of National Semiconductor Corporation.

2.31

NSC Stock Fund.

 

NSC Stock Fund means the fund consisting of shares of NSC Stock and short-term
liquid investments, which is maintained by the Trustee to hold Employer Profit
Sharing Contributions made in the form of NSC Stock, and for the investment of
Stock Bonus Accounts and Participants' Accounts which are directed to be
invested in NSC Stock. Each Participant's interest in the NSC Stock Fund shall
be measured in units of participation, rather than shares of NSC Stock. Such
units shall represent a proportionate interest in all of the assets of the NSC
Stock Fund in accordance with the Trust Agreement.

Effective on and after the date the final Annual Profit Sharing Contribution is
made for Fiscal Year 2004, NSC Stock Fund means the fund consisting of shares of
NSC Stock and short-term liquid investments, which is maintained by the Trustee
for the investment of Participants’ Accounts which are directed to be invested
in NSC Stock. Each Participant’s interest in the NSC Stock Fund shall be
measured in units of participation, rather than shares of NSC Stock. Such units
shall represent a proportionate interest in all of the assets of the NSC Stock
Fund in accordance with the Trust Agreement.

 

2.32

One-Year Break-in-Service.

 

One-Year Break-in-Service means a twelve-consecutive-month period commencing on
an Employee's Termination Date (except in the case of a Laid Off Employee,
commencing on the first anniversary of the Termination Date) during which an
Employee fails to complete an Hour of Service.

 

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2.33        Participant.

 

Participant means an Employee who has satisfied the requirements for eligibility
under Section 3.01 or 4.01.

2.34

Participant Elected Contribution.

 

Participant Elected Contribution means the contribution made by the Employer
from salary deferrals elected by the Participant in accordance with Section
5.02.

2.35

Plan.

 

Plan means this Retirement and Savings Program and each part thereof.

2.36

Plan Quarter.

 

Plan Quarter means the three-consecutive-month period corresponding to quarters
of the Employer's Fiscal Year during each Plan Year.

2.37

Plan Year.

 

Plan Year means the twelve-consecutive-month period ending on the last day of
the Employer's Fiscal Year and in which period the records of this Plan are kept
and which period is also the limitation year for purposes of applying the limits
of Section 415 of the Code. The Plan Year commencing May 26, 2003 shall end on
December 31, 2003. Effective January 1, 2004, Plan Year means the calendar year
period beginning on January 1 ending on December 31.

2.38

Profit Sharing Account.

 

Profit Sharing Account means the Account of a Participant which arises from
Annual Profit Sharing Contributions made by the Employer pursuant to Section
5.01.

2.39

Rollover Account.

 

Rollover Account means the Account of a Participant which arises from any
rollover Contribution made by such Participant.

2.40

Rollover Contribution.

 

Rollover Contribution means a contribution made by an Employee to the Trust from
the proceeds of a distribution to such Employee from another qualified
retirement Plan. Rollover Contributions shall be accepted by the Trustee in
accordance with the provisions of Section 5.06.

 

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2.41        Spouse and Surviving Spouse.

 

Spouse means the lawful husband or wife of the Participant and Surviving Spouse
means the Participant's Spouse surviving at the date of the Participant's death,
or a former Spouse of the Participant if a qualified domestic relations order,
as defined under Section 414(p) of the Code, requires that such former Spouse be
treated as a Surviving Spouse for purposes of determining survivor benefits upon
the Participant's death.

2.42

Stock Bonus Account.

 

Stock Bonus Account means the separately allocated Account of a Participant
arising from stock bonus contributions made by the Employer prior to May 31,
1987 pursuant to Section 5.04.

2.43

Termination Date.

 

Termination Date means the earliest of:

 

A.

The date on which the Employee quits, is discharged, dies, or retires from
employment with the Consolidated Group;

 

 

B.

The second anniversary of the Employee's absence on account of:

 

 

1.

the individual's pregnancy;

 

 

2.

the birth of a child of the individual;

 

 

3.

the placement of a child with the individual in connection with the adoption of
such child by the individual;

 

 

4.

caring for such a child for a period immediately following such birth or
placement; or

 

 

5.

approved medical or industrial leave.

 

 

C.

The date on which the Employee is Laid Off, as that term is defined under
Section 2.28 above; or

 

 

D.

The first anniversary of the date the Employee is not performing duties for any
corporation in the Consolidated Group for any other reason. Provided, however,
that in the case of an absence due to service in the Armed Forces of the United
States which gives rise to re-employment rights under federal law, Termination
Date shall be the date provided pursuant to such law, notwithstanding the
one-year limitation, provided that the Employee complies with the relevant
provisions of federal law establishing such re-employment rights and, in fact,
returns to employment with the Company within the period provided by law.

 

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2.44        Trust or Trust Agreement.

 

Trust or Trust Agreement means the National Semiconductor Corporation Retirement
and Savings Program Trust made and executed by and between the Employer and the
Trustee, effective September 1, 1996 as amended.

2.45

Trust Fund or Fund.

 

Trust Fund or Fund means all contributions received by the Trustee for purposes
of the Plan, the investment thereof, and the earnings, losses and appreciation
or depreciation thereon, less payments made to carry out the Plan.

2.46

Trustee.

 

Trustee means Fidelity Management Trust Company, or any successor Trustee or
Trustees hereunder.

2.47

Valuation Date.

 

Valuation Date means any business day on which the stock market is open.

2.48

Voluntary Contributions.

 

Voluntary Contributions means the voluntary after-tax contributions of a
Participant made on or before May 31, 1984.

2.49

Voluntary After-Tax Account.

 

Voluntary After-Tax Account means the separately allocated Account of a
Participant arising from Voluntary Contributions made by such Participant on or
before May 31, 1984. No additional contributions are expected to be made to this
account.

2.50

Years of Service.

 

 

A.

Years of Service to determine a Participant's vested interest under Article VIII
means the whole number (disregarding any fraction) derived by dividing 365 into
the sum of:

 

1.

The period of time beginning on the Employee's Employment Date and ending on his
or her Termination Date, provided, that in applying the rule of this paragraph 1
to a Laid Off Employee, the period of time shall end on the first anniversary of
the Employee's Termination Date;

 

 

2.

The period of time beginning on the Employee's re-employment date and ending on
his or her Termination Date, provided, that in applying the rule to this
paragraph 2 to a Laid Off Employee, the period of time shall end on the first
anniversary of the Employee's Termination Date;

 

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3.

The period of time commencing on the Employee's Termination Date and ending on
the Employee's resumption of employment with the Employer providing the Employee
resumes such employment prior to incurring a One-Year Break-in-Service, as
defined in Section 2.32, provided, that in applying the rule of this paragraph 3
to a Laid Off Employee, the period of time shall commence on the first
anniversary of the Employee's Termination Date;

 

 

4.

The purpose of these Years of Service rules regarding vesting is to grant an
employee credit for all Years of Service as long as the Employee is in the
employ of the Employer. Under paragraphs 1 and 2, an Employee who is Laid Off is
granted one additional year for vesting. Under paragraph 3, the time between the
Termination Date and re-employment date also take into account the additional
year of vesting. The effect of 1, 2 and 3 together, is to give an Employee who
has been Laid-Off only one, not two, extra Years of Service for vesting.

 

 

5.

In addition to Years of Service credited pursuant to paragraphs 1 through 4
above, Employees shall be given credit for Years of Service credited under the
following predecessor plans, effective as of the date of acquisition by the
Employer of the plan sponsors, as follows:

 

                

Predecessor Plan

Acquisition Date

 

Mediamatics, Inc. 401(k) Plan

March 17, 1997

 

 

Future Integrated System 401(k)

Profit Sharing Plan

October 20, 1997

 

 

Cyrix 401(k) Retirement Plan

November 17, 1997

 

Provided, however, that for the year of acquisition, Employees shall receive
credit for the greater of the number of Years of Service that would have been
credited pursuant to the provisions of the applicable predecessor plan, or the
Years of Service that would be credited hereunder for such period.

 

 

6.

In addition to Years of Service credited pursuant to paragraphs 1 through 5
above, Employees shall be given credit for Years of Service with the following
predecessor employers, effective as of the date of hire of the Employees by the
employer, as follows:

 

 

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Predecessor Employer

Date of Hire

 

Comlinear, Inc.

January 1, 1996

 

 

Gulbransen, Inc.

January 22, 1998

 

 

ComCore Semiconductor, Inc.

May 27, 1998

 

 

Algorex, Inc.

January 1, 2000

 

 

East Coast Labs

October 1, 1996

 

 

Vivid Semiconductor, Inc.

August 14, 2000

 

 

innCOMM Wireless, Inc.

February 24, 2001

 

 

Hughes Aircraft Company

August 7, 1995

 

 

 

B.

If a Participant has had any One-Year Break-in-Service, the Participant's Years
of Service before the One-Year Break-in-Service shall be included in computing
Years of Service as soon as the Participant completes one Hour of Service after
his or her re-employment date.

 

 

C.

For purposes of calculating benefits upon re-employment, the following rule
shall be applied: Years of Services completed by a Participant after five (5)
consecutive One-Year Breaks-in-Service shall not be taken into account in
determining the Participant's nonforfeitable interest in his or her Accounts
which accrued before the five (5) year period of Breaks-in-Service.

 

 

D.

Years of Service completed with Fairchild Semiconductor Corporation (“FSC”), or
an affiliate of FSC, by an Employee who was in the service of FSC, or one of its
affiliates, on January 1, 1988, or was transferred from FSC, or one of its
affiliates, to NSC and was in NSC's service on January 1, 1988, shall be counted
to determine the Participant's vested interest under Article VIII.
Notwithstanding the first sentence of this paragraph D, an Employee described in
this paragraph D shall be fully vested under the Plan upon attainment of age 55
while in the service of the Employer.

 

 

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ARTICLE III

 

ELIGIBLE EMPLOYEES

 

3.01

Eligibility Requirements.

 

 

A.

General Eligibility.

 

Unless ineligible under Section 3.02, an Employee shall be eligible to
participate in the Plan on the date on which the Employee commences employment
with the Employer. Any election to defer Compensation pursuant to Section 5.02
hereof shall be effective as soon as administratively feasible following the
Employee's election in accordance with Section 5.02.

 

 

B.

Eligibility Under Prior Plan.

 

Employees who were eligible to participate in this Plan on August 31, 1996 shall
continue to participate in the Plan subject to the provisions of this restated
Plan.

 

 

C.

Expatriate Status.

 

Foreign nationals employed by the Employer, on “expatriate status” from the
United States, in locations outside of the United States or its territories
shall, provided they meet the eligibility requirements above, be eligible to
participate in this Plan.

 

3.02

Ineligible Employees.

 

 

A.

Collective Bargaining Agreement.

 

An Employee shall not participate in this Plan if the Employee is included in a
unit covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers if retirement benefits were the subject of good faith bargaining and
the agreement does not require participation in this Plan. For purposes of the
preceding sentence, an agreement shall not be considered a collective bargaining
agreement if it has been bargained for by an employee representative which is an
organization in which more than one-half of the members are owners, officers or
executives of the Employer.

 

 

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                B.            Foreign Nationals.

 

 

1.

Temporary Duty in United States.

 

Foreign nationals employed in the United States or its territories on temporary
duty assignment as defined under administrative policies of the Employer shall
not be eligible to participate in this Plan.

 

 

2.

Non-resident Aliens.

 

Foreign nationals employed by the Employer at locations outside of the United
States or its territories shall not be eligible to participate in this Plan,
except as provided in Section 3.01.C.

 

 

3.

Participation in Foreign Plan.

 

Foreign nationals temporarily employed by the Employer in the United States or
its territories who continue to be covered under a foreign retirement plan
sponsored by a company included in the Consolidated Group during such employment
shall not be eligible to participate in this Plan.

 

 

C.

Interim Contract Employees.

 

Employees who are hired or rehired, by the Employer after May 31, 1988 and
designated by the Employer as interim contract employees or co-op employees
(hereinafter referred to as “Interim Contract Employees or CO-OP Employees”)
shall not be eligible to participate in this Plan. If an Employee who formerly
participated in this Plan is rehired as an Interim Contract Employee or CO-OP
Employee after May 31, 1988 and an earlier forfeiture of such Employee's Accrued
Benefit is restored under the provisions of Sections 8.04 and 8.05, such
restoration shall be made, but the Employee shall not be entitled to make
further Participant Elected Contributions under the Plan nor be entitled to
further Employer contributions while the Employee is employed as an Interim
Contract Employee or CO-OP Employee.

 

3.03

Credit for Predecessor Employment.

 

In the event the Employer acquires all or a part of the assets of an unrelated
entity, and, as a result of such acquisition employs some or all of the
unrelated entity's employees, the Committee may provide that such employees be
treated as having been employed by the Employer for purposes of vesting and/or
participation for the period they were continuously employed by the predecessor
employer from whom the assets were acquired. While the Committee may provide
vesting and/or participation credit on an acquisition-by-acquisition basis, the
Committee shall treat all employees of each acquisition in a nondiscriminatory
manner.

 

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3.04

Credit for Consolidated Group Employment.

 

In the event an Employee of a corporation in the Consolidated Group becomes an
Employee of the Employer under this Plan, he or she shall receive credit for
vesting and participation for his or her employment within the Consolidated
Group.

 

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ARTICLE IV

 

RE-EMPLOYMENT AND INACTIVE PARTICIPANTS

 

4.01

Participation on Re-employment.

 

A former Participant shall become a Participant immediately upon the Employee's
return to the employ of the Employer in an eligible class of Employees.

 

4.02

Inactive Participants.

 

 

A.

In the event a Participant becomes ineligible to participate because he or she
is no longer a member of an eligible class of Employees, such Employee shall
participate immediately upon his or her return to an eligible class of
Employees.

 

B.

Such Employee shall participate in any contribution for the year that the
Employee left the eligible class, to the extent provided herein, on the basis of
the amount of his or her Compensation during that portion of the year that he or
she is eligible.

 

C.

For each succeeding year that such individual remains in the employment of the
Employer or a Consolidated Group corporation, no part of the Employer's
contribution and no forfeitures shall be allocated to his or her Accounts, but
such Accounts shall share proportionately in investment earnings, gains and
losses in accordance with Section 6.05 of this Plan.

 

D.

Benefits shall be paid to such individual upon termination of his or her
employment, in accordance with Article XII.

 

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ARTICLE V

 

CONTRIBUTIONS

 

5.01

Employer's Annual Profit Sharing Contributions.

 

 

A.

Annual Profit Sharing Contributions.

 

For each Fiscal Year beginning before January 1, 2004, the Employer intends, as
a part of a regular plan and program (but, except as otherwise provided herein,
does not hereby bind itself), to contribute from its current or accumulated net
profit an amount computed in the manner set forth in paragraph B below. No
further Annual Profit Sharing Contributions shall be made under the Plan with
respect to Fiscal Years that begin after December 31, 2003.

 

 

B.

Computation of Profit Sharing Contributions.

 

 

1.

For purposes of computing the Employer's Annual Profit Sharing Contribution, the
term “net pre-tax profits” for any Fiscal Year means:

 

 

a.

The earnings for such year of the Consolidated Group as reported for purposes of
its consolidated financial statements and the annual report to stockholders of
the Employer before the deduction of the Employer's Annual Profit Sharing
Contribution and any taxes based upon or measured by net income; but

 

 

b.

After excluding all extraordinary items of income or gain, charges or credits to
income; and

 

 

c.

After excluding such other items of income or gain or charges to income not
classified as extraordinary, but which have been designated for exclusion by the
Board.

 

 

2.

The Employer's Annual Profit Sharing Contribution for each Plan Year (beginning
with the June 1, 1992 Plan Year) shall be seventy-five percent (75%) in cash and
twenty-five percent (25%) in the form of NSC Stock, except as otherwise
determined by the Committee in its sole discretion. In making the NSC Stock
contribution, the Employer may contribute NSC Stock or cash to be used to
purchase NSC Stock as it deems appropriate during the Plan Year and the portion
of the Employer's Annual Profit Sharing Contribution required to be made in NSC
Stock shall be determined using the closing price of NSC Stock on any national
securities exchange on the date of contribution, or if the Employer made a cash
contribution, the amount of such cash without regard to the market price of NSC
Stock purchased with such cash.

 

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3.

Except as otherwise provided below, the amount of the Employer's Annual Profit
Sharing Contribution for any Fiscal Year (beginning with the June 1, 1992 Fiscal
Year) shall be the greater of:

 

 

a.

Five percent (5%) of net pre-tax profits for such year;

 

 

b.

One percent (1%) of the Compensation paid during the Plan Year to Participants
who, in accordance with Section 6.02, are entitled to an allocation of an Annual
Profit Sharing Contribution; or

 

 

c.

Such other amount as is determined for that Fiscal Year by the Board, in its
sole discretion, by a resolution adopted no later than the date permitted by law
for a tax deduction with respect to such contribution for that Fiscal Year.

 

 

4.

In the case of the merger or disposition of a corporate entity or division by
the Employer, the Committee shall have discretion to determine the amount of the
Annual Profit Sharing Contribution to be made by the Employer for affected
Employees with respect to the portion of any Plan Year during which the affected
Employees are Employees of the Employer.

 

 

5.

The Employer's determination of its Annual Profit Sharing Contribution shall be
binding on all Participants, the Committee and the Employer.

 

 

6.

Effective for Plan Years beginning after May 28, 2000, in no event shall the
amount of the Employer’s Annual Profit Sharing Contribution for any Plan Year
exceed five percent (5%) of the Compensation paid during the Plan Year to
Participants who, in accordance with Section 6.02, are entitled to an allocation
of an Annual Profit Sharing Contribution.

 

 

7.

Solely for purposes of the Annual Profit Sharing Contribution for Fiscal Year
2004 (to be made during the Plan Year beginning January 1, 2004), the amount of
the Employer’s Annual Profit Sharing Contribution otherwise required under this
Section shall be reduced by the difference between (a) the aggregate Employer
Match for all Participants required under Section 5.03 for the period beginning
January 1, 2004 and ending May 30, 2004, and (b) the aggregate Employer Match
for all Participants that would have been required for such period under the
formula in effect under Section 5.03 immediately prior to January 1, 2004. The
Committee shall have the authority to determine the amount of the Annual Profit
Sharing Contribution for Fiscal Year 2004.

 

 

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                C.            Date of Payment.

 

The Employer shall pay its Annual Profit Sharing Contribution to the Trustee not
later than the due date (including extensions thereof) for the filing of its
federal income tax return for the close of the Fiscal Year for which such
contribution is made.

 

5.02

Participant Elected Contributions.

 

 

A.

Election to Defer Compensation.

 

Each Participant may elect to defer any whole percentage of the Participant’s
Compensation up to the maximum percentage deferral determined by the Committee.
Prior to January 1, 2002, the amount of deferral shall not exceed $9,500 (or
such amount as adjusted under Section 402(g)(5) of the Code) during any calendar
year. After December 31, 2001, the amount of deferral shall not exceed the
dollar limitation contained in Section 402(g) of the Code in effect for such
taxable year, except to the extent permitted under Paragraph B of this Section
and Section 414(v) of the Code, if applicable. Such deferred amounts shall be
contributed by the Employer to the Participant's 401(k) Account. Except as
authorized by the Committee, contributions shall be made from payroll deductions
as authorized by the Participant through use of the Electronic Access System or
by written notification made in accordance with uniform procedures established
by the Committee. Each Participant may, through use of the Electronic Access
System or by written notification made in accordance with uniform procedures
established by the Committee, specify the percentage of Compensation to be
deferred and contributed to the Trust, and thereafter the Participant may
increase or decrease said contribution in accordance with uniform procedures
established by the Committee. A Participant's elections hereunder shall be
effective as soon as administratively feasible following the Participant's
election.

 

 

B.

Catch-Up Contributions.

 

This paragraph B shall apply to contributions after December 31, 2001. All
Participants who make elective deferrals under this Plan and who will attain age
50 before the close of the calendar year, shall be eligible to make catch-up
contributions in accordance with, and subject to the limitations of,
Section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of the provisions of the Plan implementing the required
limitations of sections 402(g) and 415 of the Code. The Plan shall not be
treated as failing to satisfy the provisions of the Plan implementing the
requirements of Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of
the Code, as applicable, by reason of the making of such catch-up contributions.

 

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C.              Payment to Trustee.

The Employer shall transmit to the Trustee the amounts withheld by it, pursuant
to Paragraph A above, as soon as practicable, but in no event later than
fifteenth (15th) business day of the month following the month in which the
amount is withheld. However, the Employer shall not transmit to the Trustee any
deferred amounts withheld by it for a Highly Compensated Employee, which in the
Committee's opinion, as communicated to the Employer, would cause the Plan to
fail to meet the requirements of Section 401(k) of the Internal Revenue Code for
that Plan Year.

 

 

D.

Suspension of Deferrals.

 

A Participant may, through use of the Electronic Access System or upon written
notice made in accordance with uniform procedures established by the Committee,
suspend his or her election under this Section 5.02 to have a portion of his or
her Compensation deferred. In the event of such a suspension, a Participant
shall not be entitled to make Participant Elected Contributions to this Plan for
such period as established by the Committee under uniform procedures. The
Participant shall, nevertheless, be considered a Participant hereunder for all
other purposes during such period of time if his or her employment continues
during that time. At any time after the expiration of such period, such
Participant may, upon application, again elect to have contributions made under
this Section 5.02.

 

5.03

Employer Match.

 

Prior to October 1, 2000, on behalf of each Participant who elects to defer
Compensation pursuant to Section 5.02 of the Plan (and, prior to December 1,
1999, who is employed as of the last day of the Plan Quarter during which such
Compensation is deferred, or who retires, dies, is Laid Off, becomes Disabled,
or becomes an Inactive Participant during the Plan Quarter), the Employer shall
contribute an amount equal to fifty percent (50%), or any other percentage as
the Board may determine for any given Plan Year or Years, of the Participant's
Elected Contributions made as of any given pay date (or, prior to December 1,
1999, during the Plan Quarter) that are not in excess of six percent (6%) of
such Participant's Compensation during such pay date (or, prior to December 1,
1999, such Plan Quarter). As of the last day of each Plan Year, the Employer
shall contribute an additional amount, if necessary, so that each Participant
who is employed on the last day of the Plan Year (or who retires, dies, is Laid
Off, becomes Disabled or becomes an Inactive Participant during the Plan Year)
receives an Employer Match for the Plan Year equal to fifty percent (50%), or
such other percentage as the Board may determine for any given Plan Year or
Years, of the Participant’s Elected Contributions made during the Plan Year that
are not in excess of six percent (6%) of the Participant’s Compensation for such
Plan Year.

Effective October 1, 2000, on behalf of each Participant who elects to defer
Compensation pursuant to Section 5.02 of the Plan, the Employer shall contribute
an

 

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amount equal to one-hundred percent (100%), or any other percentage as the Board
may determine for any given Plan Year or Years, of the Participant's Elected
Contributions made as of any given pay date that are not in excess of four
percent (4%) of such Participant's Compensation for such pay date. As of the
last day of each Plan Year, the Employer shall contribute an additional amount,
if necessary, so that each Participant who is employed on the last day of the
Plan Year (or who retires, dies, is Laid Off, becomes Disabled or becomes an
Inactive Participant during the Plan Year) receives an Employer Match for the
Plan Year equal to one-hundred percent (100%), or such other percentage as the
Board may determine for any given Plan Year or Years, of the Participant’s
Elected Contributions made during the Plan Year that are not in excess of four
percent (4%) of the Participant’s Compensation for all such pay dates within the
Plan Year.

Effective January 1, 2004, on behalf of each Participant who elects to defer
compensation pursuant to Section 5.02 of the Plan, the Employer shall contribute
an amount equal to one-hundred-fifty percent (150%), or any other percentage as
the Board may determine for any given Plan Year or Years, of the Participants’
Elected Contribution made as of any given pay date that are not in excess of
four percent (4%) of such Participant’s Compensation for such pay date. As of
the last day of each Plan Year, the Employer shall contribute an additional
amount, if necessary, so that each Participant who is employed on the last day
of the Plan Year (or who retires, dies, is Laid Off, becomes Disabled or becomes
an Inactive Participant during the Plan Year) receives an Employer Match for the
Plan Year equal to one-hundred-fifty percent (150%), or such other percentage as
the Board may determine for any given Plan Year or Years, of the Participant’s
Elected Contributions made during the Plan Year that are not in excess of four
percent (4%) of the Participant’s Compensation for all such pay dates within the
Plan Year.

 

Such Employer Match shall be remitted to the Trustee by the Employer no later
than the due date (including extensions thereof) for the filing of its federal
income tax return for the close of the Fiscal Year for which such contributions
are made.

 

5.04

Discontinued Contributions.

 

All contributions to Stock Bonus Accounts hereunder were suspended after May 31,
1987, due to changes in the Internal Revenue Code affecting credits for stock
bonus plans. All Participants were 100% vested in their Stock Bonus Accounts at
that time. No further contributions to Voluntary After-Tax Accounts were made
after May 31, 1984. No further contributions were made to Fairchild 1988
Rollover Accounts after December 31, 1987.

 

5.05

Limitation on Contributions.

 

Prior to January 1, 2002, in no event shall the sum of the deductible
contributions made by the Employer, in respect of any Plan Year, pursuant to
this Article V, be greater than:

 

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--------------------------------------------------------------------------------

 

A.

Fifteen percent (15%) of the total Compensation paid to or accrued for all
Participants; plus

 

 

B.

The maximum amount allowed as a deduction for federal income taxes in accordance
with Section 404 of the Code relating to the “carrying over” of contributions
allowed for Plan Years prior to January 1, 1987 in which less than the maximum
amount was contributed to the Plan.

 

5.06

Rollover Contributions.

 

An Employee of the Employer who has received an eligible rollover distribution,
within the meaning of Section 402 of the Code, from the qualified retirement
plan of a predecessor employer, may, in accordance with uniform procedures
established by the Committee, contribute a part or the entire amount of such
distribution to the Trust Fund. Such contribution may be made either as a direct
rollover from the qualified retirement plan, as a rollover contribution made by
the Employee within 60 days of the receipt of the distribution by such Employee,
or as a rollover contribution from an individual retirement account or annuity
into which such eligible rollover distribution was rolled over (a “conduit
IRA”), in accordance with Section 408(d)(3) of the Code.

Such contributions must be in cash arising from contributions made by one or
more predecessor employers to one or more qualified retirement plans in which
the contributing Employee was a participant and investment earnings on such
contribution and/or investment earnings on contributions made by the
contributing Employee under the provisions of such plans. An Employee wishing to
make a Rollover Contribution shall provide written representation that the
contribution satisfies these requirements.

Upon receipt of a Rollover Contribution and election, the Committee shall
establish a Rollover Account or Accounts in the name of the contributing
Employee. Except in the case of a direct rollover, such contributions must be
made by the contributing Employee on or before sixty (60) days following the
receipt of the distribution from the qualified retirement plan or conduit IRA.

Each Rollover Account will be separately accounted for by the Committee and
invested together with the 401(k) Accounts of Participants in accordance with
the contributing Employee's election, made through use of the Electronic Access
System or in writing under procedures established by the Committee.

Neither the Committee nor the Trustee shall have any responsibility for
determining the taxability of such contributions or earnings arising therefrom
upon the ultimate distribution of such funds from this Plan. Administration of
required tax withholding on such monies in accordance with provisions of the
Code or regulations pertaining thereto shall not be construed by any person to
constitute a determination of the taxability of such funds.

The Plan will accept participant rollover contributions and/or direct rollovers
of distributions made after December 31, 2001, from:

 

- 23 -

 

                                          
                                                             

 

--------------------------------------------------------------------------------

 

A.

        a qualified plan described in Sections 401(a) or 403(a) of the Code;

 

B.

          an annuity contract described in Section 403(b) of the Code;

 

C.

an eligible plan under Section 457(b) of the Code which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state; or

 

D.

an individual retirement account or annuity described in Sections 408(a) or
408(b) of the Code that is eligible to be rolled over and would otherwise be
includible in gross income.

 

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ARTICLE VI

 

PARTICIPANT ACCOUNTS AND CREDITING

 

OF CONTRIBUTIONS

 

6.01

Accounts.

 

The Committee shall establish, in the name of each Participant, a Profit Sharing
Account, a 401(k) Account, and if applicable, a Stock Bonus Account, a Voluntary
After-Tax Account, a Fairchild 1988 Rollover Account and a Rollover Account.

In addition, the Committee shall establish, in the name of each Participant,
subaccounts within each Participant's Accounts. These subaccounts shall
correspond to the various Investment Funds in which the Participant's Accounts
are invested in accordance with Article VII. Amounts credited to the foregoing
Accounts and Subaccounts shall be accounted for in accordance with Article VII.

6.02

Employment Required at End of Plan Year.

 

There shall be no Annual Profit Sharing Contribution allocated to any
Participant who is not in the actual employ of the Employer at the close of the
Plan Year for which the contribution is made, except that a Participant who
retires, dies, is Laid Off, becomes Disabled, or becomes an Inactive Participant
during a Plan Year shall share in the contributions and forfeitures for such
year. Notwithstanding the preceding sentence, in the case of the Annual Profit
Sharing Contribution with regard to Fiscal Year 2004 (to be made during the Plan
Year beginning January 1, 2004), there shall be no Annual Profit Sharing
Contribution allocated to any Participant who is not in the actual employ of the
Employer at the close of Fiscal Year 2004, except that a Participant who
retires, dies, is Laid Off, becomes Disabled, or becomes an Inactive Participant
during the Fiscal Year shall share in the contributions and forfeitures for such
Fiscal Year.

 

6.03

Allocation and Crediting of Contributions.

 

 

A.

Allocation of the Employer's Annual Profit Sharing Contribution.

 

Beginning with the June 1, 1992 Plan Year, each Participant will receive an
allocation pursuant to the following formula: A = B*(C/D) where:

 

A = a Participant’s allocated share for the Plan Year;

B = the total amount of the Employer’s Annual Profit-Sharing Contribution;

C = the amount of the Participant’s Compensation for the Plan Year; and

D = the total amount of Compensation of all Participants for such Plan Year.

 

Solely for purposes of the applying the preceding sentence with regard to the
Annual Profit Sharing Contribution for Fiscal Year 2004 (to be made during the
Plan Year beginning January 1, 2004), “C” shall equal the amount of the

 

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Participant’s Compensation for Fiscal Year 2004 and “D” shall equal the total
amount of Compensation of all Participants for such Fiscal Year.

 

The Employer's Annual Profit Sharing Contribution shall be allocated to each
Participant's Profit Sharing Account as of the Allocation Date for Profit
Sharing Contributions, and shall be credited to such Account on the day such
contribution is deemed to be received by the Trustee.

 

 

B.

Crediting of Participant Elected Contributions.

 

Employer Contributions arising from a Participant's election to defer
Compensation shall be credited to such Participant's 401(k) Account as soon as
they are received by the Trustee, and shall be allocated among the Participant's
401(k) Subaccounts in such proportions as the Participant has elected pursuant
to Article VII.

 

 

C.

Crediting of the Employer Match.

 

The Employer Match shall be credited to a Participant's 401(k) Account on the
date such contributions are deemed to be received by the Trustee, and shall be
allocated among the Participant's 401(k) Subaccounts in the same proportions as
his or her Participant Elected Contributions.

 

6.04

Disposition of Forfeitures from Former Participant's Profit Sharing Accounts.

 

Beginning with the June 1, 1992 Plan Year, Profit Sharing Account balances
forfeited by former Participants whose employment has terminated prior to
becoming fully vested, in accordance with Article VIII of the Plan, shall first
be used to restore the accounts of any reemployed Participant, in accordance
with Section 8.04. Any remaining amounts forfeited during the Plan Year shall be
re-allocated, as of the last day of each Plan Year, to the Profit Sharing
Accounts of all remaining Participants in the same manner as the Employer's
Annual Profit Sharing Contribution is allocated under Section 6.03 A (or would
have been allocated under Section 6.03A, disregarding the method for allocating
the Annual Profit Sharing Contribution for Fiscal Year 2004 and the
discontinuation of Annual Profit Sharing Contributions thereafter). In the event
the amount available to be re-allocated for a Plan Year but for the preceding
sentence is insufficient to be re-allocated for such Plan Year, such unallocated
amount shall be carried over until there are sufficient amounts to be
re-allocated during a Plan Year.

Notwithstanding the foregoing, if it is determined that a Participant has been
credited in any Plan Year with less than the amount of Employer contributions or
forfeitures to which the Participant was entitled under this Plan for such year,
then any forfeitures shall be allocated to such Participant, to the extent
necessary to correct any deficiencies in his or her Accounts (including foregone
earnings, if any), before such forfeitures are allocated in the manner
prescribed above. In the event that more than one Participant has been credited
with less than the amount of Employer contributions and forfeitures to which he
or she is entitled, and the forfeitures are insufficient in amount to correct
the

 

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deficiencies in the Accounts of each such Participant, then such forfeitures
shall be allocated to such Participants in accordance with rules established by
the Committee.

Notwithstanding the foregoing, effective November 17, 1997, the forfeitures of
former Cyrix employees shall be used to reduce the Employer Match due on behalf
of Employees who were former Cyrix employees for the third Plan Quarter of the
Plan Year in which the Cyrix acquisition date occurred. Any remaining
forfeitures of former Cyrix employees shall be used to reduce the Employer Match
due on behalf of Employees who were former Cyrix employees for the fourth Plan
Quarter of the Plan Year in which the Cyrix acquisition occurred. If there are
additional forfeitures of former Cyrix employees after such allocation, they
shall reduce the Employer’s Annual Profit Sharing Contribution for the Fiscal
Year end following such acquisition.

6.05

Adjustment of the Participant's Accounts.

 

The Trustee shall, on each Valuation Date, value all assets of the Trust Fund,
allocate net gains or losses, and process additions to and withdrawals from
Participants' Accounts in the following manner:

 

A.

The Trustee shall first compute the fair market value of securities and/or the
other assets comprising each Investment Fund. Each Participant Account balance
invested in each Investment Fund shall be adjusted each business day by applying
the closing market price of the Investment Fund on the current business day to
the share-unit balance of Participant's Account invested in the Investment Fund
as of the close of business on the current business day.;

 

 

B.

The Trustee shall then account for any requests for withdrawals made by any
Participant, and for allocations of contributions to Participants' Accounts. In
completing the valuation procedure described above, such adjustments in the
amounts credited to such Participants’ Accounts shall be made on the business
day to which the investment activity relates.

6.06

Title to Assets in Trustee.

 

Title to all assets under this Plan shall be vested in the Trustee, who shall
hold the Trust Fund and the income as a part thereof and make payments therefrom
as provided in this Plan.

 

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6.07        Participant's NSC Stock Voting Rights.

 

A Participant or Beneficiary shall be entitled to direct the Trustee how to
exercise the voting rights on NSC Stock allocated to his or her Accounts, and
the Trustee shall vote NSC Stock allocated to a Participant or Beneficiary's
Accounts as directed by such Participant or Beneficiary. In the case of combined
fractional shares of NSC Stock allocated to the Accounts of all Participants and
Beneficiaries, NSC Stock credited to Participants' and Beneficiaries' Accounts
as to which the Trustee does not receive voting directions, and all unallocated
NSC Stock held by the Trustee, such NSC Stock shall be voted by the Trustee
proportionately in the same manner as it votes NSC Stock on which it receives
voting directions, provided, however, that the Trustee shall not exercise the
voting rights for any NSC Stock allocated to a Stock Bonus Account for which the
Participant or Beneficiary fails to give a direction.

The Employer shall provide the Trustee and each Participant with such notices
and information statements relating to the time and manner in which voting
rights are to be exercised as is required by applicable law and the Employer's
charter and bylaws and as provided to shareholders other than Participants.

The provisions of this Section 6.07 shall not prevent the Board, or one or more
designees of the Board, from soliciting and exercising a Participant's voting
rights under a proxy provision applicable to all shareholders of NSC Stock.

In the case of one or more tender offers for NSC Stock, a Participant shall be
entitled to direct the Trustee on the acceptance or rejection of such offer in
regard to the NSC Stock allocated to such Participant's Accounts. Each
Participant's direction to the Trustee shall be treated as confidential.

6.08

Limits with Respect to Transactions in NSC Stock.

 

Each Participant subject to Section 16(b) of the Securities Exchange Act of 1934
(the “Exchange Act”), as amended, relating to employee benefit plans, shall be
subject to such limitations as the Committee, in its sole discretion, deems
necessary to comply with the rules of the Exchange Act.

 

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ARTICLE VII

 

INVESTMENT FUNDS

 

7.01

Investment Funds in General.

 

The Investment Funds available hereunder shall be selected by the Committee, and
shall include at least three (3) investment alternatives:

 

A.

each of which is diversified;

 

 

B.

each of which has materially different risk and return characteristics;

 

 

C.

which in the aggregate enable the Participant or Beneficiary by choosing among
them to achieve a portfolio with aggregate risk and return characteristics at
any point within the range normally appropriate for the Participant or
Beneficiary; and

 

 

D.

each of which when combined with investments in the other alternatives tend to
minimize through diversification the overall risk of a Participant's or
Beneficiary's portfolio.

 

7.02

Investment of Accounts.

 

 

A.

Profit Sharing Accounts and Fairchild 1988 Rollover Accounts.

 

All amounts in the Profit Sharing Accounts and Fairchild 1988 Rollover Accounts
of Participants shall be invested by the Trustee acting under the direction of
the Committee in accordance with Section 16.04 hereof and pursuant to the terms
of the Trust Agreement.

 

 

B.

Stock Bonus Accounts.

 

All amounts in the Stock Bonus Accounts shall be invested by the Trustee at the
direction of the Committee in the NSC Stock Fund.

 

 

C.

401(k) Accounts, Voluntary After-Tax Accounts and Rollover Accounts.

 

All amounts in each Participant's 401(k), Voluntary After-Tax and Rollover
Contributions Accounts shall be invested in one or a combination of the
available Investment Funds selected by the Committee, in accordance with the
election of such Participant (or Beneficiary, if applicable), made pursuant to
this Article VII and pursuant to Section 404(c) of ERISA. This Plan permits
Participants and Beneficiaries to exercise control over the assets in their
accounts in a manner that is intended to bring the Plan within the rules of
Section 404(c) of ERISA. Fiduciaries of the Plan shall be relieved of liability
for any losses or by reason of any breach which results from the Participant's
or Beneficiary's exercise of control under this Section.

 

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D.

Effective on and after the date the final Annual Profit Sharing Contribution is
made for Fiscal Year 2004, all amounts in each Participant’s Accounts shall be
invested in one or a combination of the available Investment Funds selected by
the Committee, in accordance with the election of such Participant (or
Beneficiary, if applicable), made pursuant to this Article VII and pursuant to
Section 404(c) of ERISA. This Plan permits Participants and Beneficiaries to
exercise control over the assets in their accounts in a manner that is intended
to bring the Plan within the rules of Section 404(c) of ERISA. Fiduciaries of
the Plan shall be relieved of liability for any losses or by reason of any
breach which results from the Participant’s or Beneficiary’s exercise of control
under this Section.

7.03

Election of Investment Funds.

 

The following procedures shall govern the making of elections regarding
Investment Funds.

 

A.

Initial Elections.

 

When an Employee first becomes a Participant hereunder, an Investment Fund or
Funds shall be specified for the investment of all amounts to be allocated to
his Accounts subject to Participant direction pursuant to Section 7.02.C. The
elected Investment Fund or Funds shall be effective with respect to Participant
Elected Contributions and the Employer Match made on and after the date upon
which the election is made. A separate election of the Investment Fund or Funds
shall be made with respect to the investment of any Rollover Contribution made
by a Participant. Each Participant must specify the Investment Funds for 100% of
such Participant's Participant Elected Contributions, Employer Match and
Rollover Contributions, if any.

 

 

B.

Subsequent Elections.

 

A Participant (or Beneficiary) may elect a new Investment Fund for future
contributions and may change the allocation of his existing Accounts among the
Investment Funds at any time, in accordance with procedures established by the
Committee. Each Participant must specify the Investment Funds for 100% of such
Participant's current contributions subject to Participant direction and for
100% of the value of such Participant's 401(k) Account, Voluntary After-Tax
Account and Rollover Account.

 

 

C.

Elections Regarding Investments.

 

A Participant's election to change the allocation of his existing Accounts must
specify either the percent of such Accounts to be reallocated, the specific
dollar amount to be transferred, or the specific number of shares to be
purchased and/or sold. A Participant's election to change the allocation of his
current contributions must specify the percent of such contributions to be
allocated to each elected

 

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Investment Fund. In addition, a Participant's election of a new Investment Fund
for future or existing amounts may be subject to restriction pursuant to the
terms of the contract(s) comprising the Investment Funds. Unless the
Participant's election otherwise specifies, the pattern of allocations elected
as to past Participant Elected Contributions and Employer Match shall apply to
all current and future contributions unless or until the Participant (or
Beneficiary) otherwise elects pursuant to B. above.

 

 

D.

Elections Involving NSC Stock Fund.

 

Any election by a Participant or Beneficiary regarding investment in or
transfers from the NSC Stock Fund shall be made in accordance with DOL Reg.
Section 2550.404c-1(d)(2)(ii)(E)(4). The Committee shall ensure that procedures
are designed to safeguard the confidentiality of all information relating to the
purchase, holding and sale of NSC Stock and the exercise of voting, tender and
similar rights with respect to NSC Stock by Participants and Beneficiaries, and
that such procedures are followed. An independent fiduciary shall be appointed
to carry out activities relating to any situations which the Committee
determines involve a potential for undue Employer influence upon Participants
and Beneficiaries with regard to the direct or indirect exercise of shareholder
rights.

 

 

E.

Additional Election Procedures.

 

The Committee shall comply with the Participant's (or Beneficiary's)
instructions except as otherwise provided in DOL Reg. Section
2550.404c-1(b)(2)(ii)(B) or (d)(2)(ii). Upon request, a Participant or
Beneficiary may obtain a written confirmation of his election instructions.

 

 

F.

Fees.

 

The fees of each Investment Fund shall be charged to the Accounts of the
Participants invested in such Investment Fund, unless such expenses are paid by
the Employer in accordance with Section 7.04 below. In accordance with Section
404(c) of ERISA, the Committee shall inform Participants and Beneficiaries of
any fees charged to their individual Accounts.

 

7.04

Expenses

 

Unless otherwise provided herein, the expenses of Plan administration shall be
paid out of Trust assets, unless paid by the Employer. The Employer may pay
directly any expenses of administering the Plan, including the compensation, if
any, of the Trustee. The Employer may advance such expenses subject to
reimbursement out of Trust assets, without obligating itself to pay such
expenses. In addition, except as otherwise provided, Investment Fund fees shall
be paid by Participants in accordance with Section 7.03.

 

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ARTICLE VIII

 

VESTED PERCENTAGE AND TERMINATION BENEFIT

 

8.01

Vested Amounts.

 

Upon death, retirement or Disability, the full amount credited to the
Participant's Accounts shall become fully vested. In the event of termination of
the employment of a Participant for any reason other than death, Disability, or
retirement, the Participant will receive a percentage of the balance of his or
her Accounts, according to said Participant's Years of Service as follows:

 

A.

Profit Sharing Accounts.

 

 

Years of Service

Vested Percent

 

Less than 3 years

0%

 

3 years, but less than 4

20%

 

4 years, but less than 5

40%

 

5 years, but less than 6

60%

 

6 years, but less than 7

80%

 

7 years or more

100%

 

 

B.

401(k) Accounts.

 

 

1.

The portion of a Participant's 401(k) Account attributable to his or her
Participant Elected Contributions is 100% vested at all times.

 

 

2.

The portion of a Participant's 401(k) Account attributable to Employer Match for
Plan Years beginning before June 1, 1990 shall be vested as follows:

 

 

Years of Service

Vested Percent

 

 

Less than 3

0%

 

3 or more

100%

 

 

3.

The portion of a Participant's 401(k) Account attributable to the Employer Match
for Plan Years beginning after May 31, 1990 shall be 100% vested at all times.

 

 

C.

Stock Bonus Accounts.

 

The total balance of each Participant's Stock Bonus Account is 100% vested at
all times.

 

 

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                D.            Voluntary After-Tax Accounts.

 

The total balance of each Participant's Voluntary After-Tax Account is 100%
vested at all times.

 

 

E.

Profit Sharing Accounts of Former Cyrix Employees.

The Profit Sharing account of any Employee who was an employee of Cyrix as of
November 16, 1997, and who transferred to the service of the Employer as of
November 17, 1997 (including contributions made pursuant to this Plan as well as
to the Cyrix Plan) shall vest at the rate of 25% per Year of Service, as
provided under the Cyrix Plan.

 

 

F.

Matching Contribution Accounts of Former Cyrix Employees.

Any Employee who was a participant in the Cyrix 401(k) Plan as of November 16,
1997, and who transferred to the service of the Employer as of November 17, 1997
shall be fully vested in the value of his employer matching contribution account
under the Cyrix Plan as of November 17, 1997, as well as in the portion of his
401(k) Accounts attributable to any Employer Match allocated to his Accounts
thereafter, regardless of the number of his Years of Service. Any former
employee of Cyrix who was not an employee as of November 16, 1997 and who had
not taken a distribution from the Cyrix Plan shall be 100% vested in his
accounts thereunder attributable to employer matching contributions. Any such
former employee of Cyrix who had previously obtained a distribution from the
Cyrix Plan shall forfeit the nonvested portion of his accounts under the Cyrix
Plan; provided, however, that such nonvested portion shall be reinstated to the
credit of the former participant if such former participant is rehired by
National and becomes an Employee hereunder before incurring five consecutive
One-Year Breaks in Service, determined beginning on the date of his or her
termination from Cyrix.

 

 

G.

Vesting for FSC Employees.

 

 

1.

Special Vesting Schedule.

 

An Employee of FSC, or an affiliate of FSC, on January 1, 1988, or an Employee
of NSC on January 1, 1988 who transferred to NSC from FSC, or an FSC affiliate,
who completed 5 or more years of Service (whether or not consecutive and without
regard to Breaks in Service) with FSC (or an FSC affiliate) on or before January
1, 1988, shall have the Employee's vested interest under this Article VIII
determined under the vesting schedule of the FSC Profit Sharing Plan as such
schedule existed immediately prior to January 1, 1988. In the case of an FSC
employee whose vested interest is not calculated under the vesting schedule of
the FSC Profit Sharing Plan by reason of the first sentence of this paragraph B,
such Employee's vested interest shall be determined under the vesting

 

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schedule of Section 8.01, provided, that such an Employee's vested interest
shall not be less than the Employee's vested interest under the vesting schedule
of the FSC Profit Sharing Plan immediately prior to January 1, 1988.

 

 

2.

Rehired FSC Employees.

 

If an Employee terminated from the service of FSC, or an FSC affiliate, prior to
September 30, 1987, and is rehired by the Employer after January 1, 1988, and
before the Employee incurs five (5) consecutive One-Year Breaks in Service, the
Employee shall be entitled to a restoration of the Employee's forfeited Accrued
Benefit, if any, under the rules of the FSC Profit Sharing Plan as it existed
immediately prior to January 1, 1988.

 

 

H.

Vesting for IA Business Unit Employees.

 

Effective on or after August 18, 2003, any Participant employed by IA Business
Unit who becomes employed by AMD, Inc., in connection with the sale of the IA
Business Unit to AMD, Inc., shall be 100% vested in his Profit Sharing Account.

 

8.02

Forfeiture of Nonvested Accounts.

 

The forfeitable portion of the Accounts of a Participant whose service with the
Consolidated Group terminates as defined under Section 2.43 shall be forfeited
in accordance with the following rules.

 

A.

The forfeitable amounts of an affected Participant shall be forfeited and
transferred to the forfeiture suspense account as of the earlier of the date on
which the Participant receives a distribution of his entire nonforfeitable
interest in the Plan, or the date on which the Participant incurs five (5)
consecutive One-Year Breaks-in-Service. Provided, however, that the amounts
forfeited on behalf of a Participant shall be restored to such Participant's
Accounts if the Participant returns to the service of the Consolidated Group
before incurring five (5) consecutive One-Year Breaks-in-Service. The forfeited
amount shall be restored to the Participant in accordance with paragraph B
below.

 

 

B.

Forfeited amounts, unadjusted by any investment increases or decreases, of an
Employee who returns to the Employer's service before incurring five (5)
consecutive One-Year Breaks-in-Service shall be restored to the Participant's
Account. If the forfeitable amount is reallocated by reason of a One-Year
Break-in-Service which occurs in a Plan Year beginning before January 1, 1985,
no restoration of the forfeitable amount shall be made.

 

 

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8.03        Vesting on Re-Employment.

 

A separate account shall be maintained for a Participant's interest remaining in
the Plan at the time of distribution if the Participant separates from the
Employer's service, is paid his or her nonforfeitable interest under the Plan
and returns to the Employer's service before incurring five (5) consecutive
One-Year Breaks-in-Service. At any relevant time, the Participant's vested
portion of the separate account shall not be less than an amount “X” determined
by the formula:

 

X = P(AB + (R x D))-(R x D)

 

For purposes of applying the formula:

 

P is the vested percentage at the relevant time;

 

AB is the account balance at the relevant time;

 

D is the amount of the distribution; and

R is the ratio of the account balance at the relevant time to the account
balance after distribution.

 

8.04

Lost Participant or Beneficiary.

 

In the event a benefit is payable to a Participant or a Beneficiary, but the
payee cannot be located, then at the close of the twelve-consecutive-month
period following the Employee's Termination Date or the date on which the amount
becomes payable to the Beneficiary, the benefit payable to the person shall be
treated as a forfeiture subject to Section 6.04. The benefit forfeited under
this Section 8.04 shall nevertheless be reinstated if the Participant, or
Beneficiary if applicable, makes a claim for the forfeited benefit.

 

 

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ARTICLE IX

 

RETIREMENT

 

9.01

Retirement.

 

A Participant shall be eligible for normal retirement on attainment of age
sixty-five (65), or, if a Participant is Laid Off by the Employer and has
attained the age of sixty-four (64), at the time of such lay-off. A Participant
may continue in the service of the Employer as a Participant in this Plan beyond
normal retirement age. In the event such Participant continues in the service of
the Employer, the Participant shall continue to be treated in all respects as a
Participant until actual retirement. No benefits shall become payable to such a
Participant until actual retirement and separation from employment, except as
provided for in Section 12.02. When a Participant retires, such Participant
shall be entitled to receive the entire amount credited to his or her Accounts
under Article VI as of the Plan Year-end following the Participant's actual date
of retirement. In addition, any Participant who terminates from employment after
attaining at least age fifty-five (55), provided that the sum of such
Participant's age plus Years of Service equals or exceeds sixty-five (65), will
be considered to have retired, and shall be 100% vested and entitled to share in
contributions for the Plan Year of termination pursuant to Sections 5.01 and
5.02.

 

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ARTICLE X

 

DEATH BENEFIT

 

10.01

Death of Participant.

 

A Participant who dies while in the service of the Employer shall be 100 percent
(100%) vested in the Participant's Accounts upon the Participant's death. Upon
the Participant's death, the nonforfeitable portion of the Participant's
Accounts (reduced by any security interest held by the Plan by reason of a loan
outstanding to the deceased Participant) shall be payable to the Participant's
Surviving Spouse, or the Participant's designated Beneficiary if the Participant
has no Surviving Spouse at the time of death, or if the Spouse has consented to
the designation of a Beneficiary other than the Surviving Spouse. The
designation of a Beneficiary to whom the Spouse has consented shall not be
changed without the Spouse's consent to such change. A Spouse's consent must be
in writing, it must acknowledge the effect of the Beneficiary designation, and
it must be witnessed by a notary public. A spouse's consent to a Beneficiary
designation as provided for under this Section is effective only with respect to
the Spouse. Payment of the death benefit shall be made in accordance with the
provisions of Article XII, provided that, the Surviving Spouse may request that
the payment be made within a reasonable time following the Participant's death.
Provided, however, nothing in this Section 10.01 shall override the provisions
of a Qualified Domestic Relations Order as set forth in Section 12.04.

 

10.02

Payments Upon Failure to Designate Beneficiary.

 

Any portion of the amount payable which is undisposed of because of the failure
to designate a Beneficiary or the failure of the Beneficiary to survive the
Participant shall be paid in order of survivorship to:

 

A.

The Participant's Spouse;

 

 

B.

The Participant's children, in equal shares;

 

 

C.

The Participant's brothers and/or sisters, in equal shares;

 

 

D.

The Surviving heirs of the Participant's estate, their respective identities and
shares determined by the laws of intestate succession in California at the time
of the Participant's death; or

 

 

E.

If none of the individuals in A through D survive the death of the Participant,
then such remaining benefit shall be forfeited in accordance with Section 8.06.

 

Notwithstanding the above, if the Committee is unable to locate any of the
persons listed above within twelve (12) months, the Committee shall forfeit the
remaining benefit in accordance with Section 8.06.

 

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ARTICLE XI

 

DISABILITY BENEFIT

 

Upon incurring a Disability, a Participant shall be fully vested and entitled to
receive the entire value of his or her Accounts. Disability benefits shall be
payable two (2) years after the date of the commencement of the Participant's
leave of absence attributable to such Disability, provided that the Participant
remains Disabled. Effective September 15, 1997, payment of benefits may commence
prior to such date, in the case of a Disabled Participant whose life expectancy
at the time of payment is certified by a medical professional to be less than 6
months, provided that the Participant (or his representative) and his spouse, if
applicable, consents to such distribution. The Trustee shall pay, at the
direction of the Committee, to said Participant his or her Disability benefit
from the Plan in accordance with Section 12.01.

 

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ARTICLE XII

 

DISTRIBUTIONS, WITHDRAWALS AND LOANS

 

12.01

Distribution of Benefits.

 

 

A.

Forms of Distribution.

 

Except as otherwise provided below, the entire vested balance of a Participant's
Accounts shall be paid either:

 

 

1.

in equal monthly, quarterly or annual installments over a period certain not to
exceed the life expectancy of the Participant (or Beneficiary in the case of a
Participant who dies prior to the time his benefits commenced) or the joint and
last survivor life expectancy of the Participant and his Beneficiary, or

 

 

2.

as a single-sum distribution consisting of a distribution:

 

 

a.

in kind of the number of whole shares of NSC Stock representing the vested
balance of his or her Accounts invested in the NSC Stock Fund; and

 

 

               

b.             cash, representing the remaining fair market value of his or her
vested interest in all Accounts, or

 

 

3.

as a single sum representing the fair market value of his or her entire vested
interest in the Accounts. In paying a Participant or Beneficiary in accordance
with this Section 12.01 A.3., the value of his or her units in the NSC Stock
Fund shall be added to the cash representing the remaining fair market value of
his or her Accounts and the vested portion of such total cash amounts shall be
the single sum payment made to the Participant or Beneficiary.

 

 

4.

Benefits of Former Comlinear Participants.

 

 

a.

In the case of a Participant who was participating in the Comlinear 401(k) Plan,
the portion of the Participant's Accrued Benefit equal to the Participant's
initial Account balance as of December 31, 1995, which was transferred into the
Plan shall be payable in the forms of benefit available under the Comlinear
401(k) Plan. Unless the Participant otherwise elects, subject to the consent of
his spouse, if applicable, such benefits shall be paid in the form of a
Qualified Joint and Survivor Annuity. The Qualified Joint and Survivor Annuity
is, for a Participant who is not married, a single life annuity, and, for a
Participant who is married, an annuity for the life of the Participant with a
benefit continued after the death of

 

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the Participant for the life of the surviving spouse in an amount equal to 50%
of the amount payable to the Participant.

 

 

b.

A Participant may, with the consent of his spouse, elect to waive the Qualified
Joint and Survivor Annuity. An election by the Participant to waive the joint
and survivor annuity must be made in writing during the 90-day election period
ending on the annuity starting date and must include the consent of the
Participant's spouse. The spouse's consent must specifically acknowledge the
designated Beneficiary, if any, and the effect of such election and must be
witnessed by a Plan representative or a notary public. The consent shall not be
required if it is established to the satisfaction of the Committee that it
cannot be obtained because there is no spouse, the spouse cannot be located, or
under such other circumstances as may be prescribed by Treasury regulations. The
Participant's election to waive the joint and survivor annuity may be revoked in
writing without the consent of the spouse at any time during the election
period. A change in designated Beneficiary made subsequent to a spousal consent
shall be deemed to be a revocation of the Participant's election to waive the
joint and survivor annuity unless the spousal consent expressly permits
designations by the Participant without any requirement for further consent by
the spouse. Any subsequent election to waive the joint and survivor annuity must
comply with the requirements of this paragraph.

 

The annuity starting date means the first day of the first period for which an
amount is payable as an annuity, or, for a benefit not payable as an annuity,
the first day on which all events have occurred that entitle the Participant to
such benefit.

 

 

c.

The Committee shall provide the Participant no less than thirty (30) days
(unless Regulations or administrative pronouncements permit a shorter period)
and no more than ninety (90) days before the annuity starting date, a written
explanation of:

 

(i)            the terms and conditions of the joint and survivor annuity;

 

 

 (ii)

the Participant's right to make, and the effect of, an election to waive the
joint and survivor annuity;

 

 

 (iii)

the requirement that the Participant's spouse consent to the waiver of the joint
and survivor annuity; and

 

 

(iv)

the Participant's right to revoke the waiver, and the effect thereof.

 

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Notwithstanding the foregoing, the written explanation may be provided after the
annuity starting date, provided that the election period shall not end before
the thirtieth (30th) day after the date on which the explanation is provided. A
Participant may elect (with spousal consent) to waive the thirty (30)-day period
if the distribution commences more than seven (7) days after such explanation is
provided.

 

 

d.

If the Participant has waived the Qualified Joint and Survivor Annuity pursuant
to Section 12.01 A.4.b, above, his benefit shall be paid to him under one of the
following options selected by the Participant with the consent of his spouse:

 

 

  (i)

 Lump sum distribution in cash;

 

 

  (ii)

 Single life annuity for the Participant's life only;

 

 (iii)         Life annuity with a guaranteed period of 5, 10 or 15 years;

 

 

  (iv)

 Life annuity with an installment refund;

 

 

 (v)

Life annuity with 50%, 66-2/3% or 100% continued after the Participant's death
to his Beneficiary; or

 

 

  (vi)

 Installments over months not exceeding the life expectancies of the Participant
and his or her spouse

 with any amounts remaining upon the death of the Participant payable to his or
her Beneficiary.

 

The Participant shall make his selection on an application for benefits filed
with the Committee in accordance with Section 16.10 hereof. Upon the
Participant's written request, the Committee shall furnish an explanation of the
effect of any other methods of distribution the Participant may select from the
available options.

 

 

e.

The accrued benefit of any Participant electing a distribution under this
Section 12.01 A.4 shall be debited to the extent necessary to pay the expenses
relating to the provision of the optional forms of benefit hereunder.

 

 

f.

Effective August 1, 2005, this Section 12.01A.4. shall no longer apply.

 

 

 

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B.

Time of Distribution.

 

 

1.

Termination Benefits.

 

Payment to a terminated Participant shall be made within a reasonable time
following the Participant's Termination Date. Provided, however, if the value of
a Participant’s nonforfeitable Account balance exceeds (or, for distributions
prior to March 23, 1999 has ever, at the time of any previous distribution,
exceeded) $3,500 ($5,000 effective for Plan Years commencing on or after August
6, 1997), or exceeds $1,000 after March 27, 2005, but before August 1, 2005,
payment shall not be made unless the Participant and the Participant's Spouse,
if applicable, consent in writing to the payment. For purposes of the preceding
sentence, after December 31, 2001, the value of a Participant’s nonforfeitable
Account balance shall be determined without regard to that portion of the
Account balance that is attributable to rollover contributions (and earnings
allocable thereto) within the meaning of sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16) of the Code. If the Participant and the
Participant's spouse, if applicable, fail to consent to the distribution, such
failure shall be deemed to be an election to defer distribution. Distribution
may commence as of any subsequent date as of which the Participant and spouse,
if applicable, elect to receive such distribution, subject to section 12.01 B.3
below.

 

Effective August 1, 2005, payment to a terminated Participant shall be made
within a reasonable time following the Participant’s Termination Date. If the
value of a Participant’s nonforfeitable Account balance exceeds $5,000, payment
shall not be made unless the Participant consents in writing to the payment. For
purposes of the preceding sentence, the value of a Participant’s nonforfeitable
Account balance shall be determined without regard to that portion of the
Account balance that is attributable to rollover contributions (and earnings
allocable thereto) within the meaning of sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16) of the Code. If the Participant fails to
consent to the distribution, such failure shall be deemed to be an election to
defer distribution. Distribution may commence as of any subsequent date as of
which the Participant elects to receive such distribution, subject to Section
12.01 B.3 below.

 

In the case of a Participant who is Laid Off, the Committee may authorize a
payment to such Participant of his or her nonforfeitable interest as of any date
after the end of the Plan Year following the Participant's Termination Date. In
the event the Committee authorizes an earlier payment to a Laid Off Participant,
the Committee may make the payment based on the nonforfeitable percentage the
Participant will have as of the first anniversary of his or her Termination
Date.

 

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2.

Retirement, Death and Disability Benefits.

 

Benefits due to a Participant or Beneficiary as a result of retirement, death,
or Disability shall be paid within a reasonable time after the end of the Plan
Year of such retirement, death or Disability, or at such earlier time as the
Committee, in its sole discretion, may determine. Provided that, in the case of
payment to a Participant or his surviving Spouse, the payment shall be made in
accordance with Section 12.01 B.1 above. The Committee may, acting in its sole
discretion, authorize an early distribution to a Participant or Beneficiary of
the balance of such Participant's Accounts valued as of any Valuation Date
following death or retirement. Such distribution shall be a total distribution
of the entire amount available to such Participant. Such Participant or
Beneficiary shall still be entitled to receive a share of the Employer's Annual
Profit Sharing and Employer Match as of the next applicable Allocation Date.

 

 

3.

Consent to Distribution.

 

If a Participant does not consent to receive payment of his or her benefit,
payment shall be made not later than sixty (60) days after the close of the Plan
Year in which the later of the following events occurs:

 

 

a.

The Participant attains age sixty-five (65); or

 

 

b.

The termination of the Participant's service with the Employer.

 

 

Payment shall be in accordance with Section 12.01 B.1 above.

 

Effective on and after October 6, 2003, if a Participant does not consent to
receive payment of his or her benefit, payment shall be made not later than the
earlier of the dates described in a. and b. below:

 

 

a.

Unless the Participant elects otherwise, sixty (60) days after the close of the
Plan Year in which the later of the             following events occurs:

 

 

(i)

the Participant attains age sixty-five (65); or

 

 

(ii)

the termination of the Participant’s service with the Employer.

 

 

b.

The date provided under Section 12.02 below.

 

Notwithstanding the provisions of Subsection 12.01.B.3.a above, the failure of a
Participant to consent to a distribution shall be

 

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deemed to be an election to defer commencement of payment as provided in
Subsection 12.01.B.3.a above.

 

Payment shall be in accordance with Section 12.01B.1 above.

 

12.02

Required Distributions Prior to 2003.

 

Notwithstanding any other provisions of this Plan to the contrary, the minimum
distribution requirements of Section 401(a)(9) of the Code and the regulations
thereunder are hereby incorporated by reference and the following shall apply to
active Participants.

 

A.

For Plan Years beginning after December 31, 1988, the interest of an active
Participant who attains age seventy and one-half (70½) while employed shall be
distributed in periodic installments designed to satisfy the minimum
distribution requirements of Section 401(a)(9) of the Code and regulations
thereunder, commencing not later than the April 1st following the calendar year
in which the Participant attains age seventy and one-half (70½). Provided,
however, that the distribution of a Participant's benefit need not commence
earlier than the April 1st following the calendar year in which the Participant
retires if the Participant attained age seventy and one-half (70½) before
January 1, 1988 and such Participant is not a five percent (5%) owner (as
defined under Section 416(i) of the Code) at any time during the Plan Year
ending with or within the calendar year in which the Participant attained age
sixty-six and one-half (66½) and during any subsequent Plan Year. For those
Participants who attained age seventy and one-half (70½) in the calendar year
1988, their deemed retirement date shall be January 1, 1989 for purposes of this
paragraph A, and such Participant's distribution must commence by April 1, 1990.
Payment to a Participant who terminates employment on or after attainment of age
seventy and one-half (70½) shall be made in accordance with Section 12.01 B.2
above.

 

Notwithstanding the foregoing, effective January 1, 1997, for a Participant who
attains age seventy and one-half on or after January 1, 1997 and who has not yet
retired, distribution of benefits from the Plan shall not commence prior to
retirement unless elected by the Participant; provided, however, that in no
event shall commencement of benefit distributions from the Plan be delayed
beyond April 1 of the calendar year following the later of the calendar year in
which the Participant attains age seventy and one-half (70½) or retires.

 

 

B.

If a Participant dies before distribution of the Participant's interest has
commenced, the Participant's entire interest shall be distributed within a
reasonable time, not to exceed five (5) years, following the Valuation Date next
following the Participant's death. In the event the Participant's designated
Beneficiary is the Participant's Spouse, payment to the Spouse shall be made in
accordance with Section 12.01 B.1 above, and shall in any event commence no
later than the date on which the Participant would have reached age seventy and
one-half (70½). If a deceased Participant's designated Beneficiary is the
Participant's Spouse and the Spouse dies before payments commence, the

 

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Participant's entire interest shall be distributed by applying the rules of this
paragraph as though the deceased spouse were the Participant.

 

 

C.

This Section shall not apply for purposes of determining required minimum
distributions after December 31, 2002. See Section 12.09 for provisions that
apply in determining required minimum distributions on and after January 1,
2003.

 

12.03

Distribution to Minors and Incompetents.

 

Distributions to minors or incompetents may be made to the legal guardian of
said person, or to the parent of said minor. The trustee shall not be required
to see to the application of any such distribution so made to any of said
persons, but said person's receipt shall be a full discharge of the Trustee's
duties.

 

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12.04              Qualified Domestic Relations Order.

 

 

A.

Distributions.

 

In the event a person (hereafter called the “alternate payee”) is designated by
a qualified domestic relations order, as defined under Section 414(p) of the
Code, as having a right to receive all or a portion of the benefits payable
under the Plan to a Participant, payment to the alternate payee may begin on the
date on which Participant is entitled to a distribution under the Plan, or such
earlier date as the alternate payee may elect, consistent with the terms of the
QDRO.

 

 

B.

The Committee shall abide by the terms of any qualified domestic relations order
A “qualified domestic relations order” means any judgment, decree, or order
(including approval of a property settlement agreement) which creates or
recognizes the existence of an alternate payee's right to receive all or a
portion of the benefits payable to a Participant hereunder pursuant to a State's
domestic relations law relating to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse, child, or other
dependent of the Participant; provided, however, that such order specifically
states:

 

 

1.

The name and last known mailing address of the Participant and of each alternate
payee covered by such order;

 

 

2.

The amount or percentage of the Participant's benefits to be paid by the Plan to
each alternate payee or the manner in which such amount or percentage is to be
determined;

 

 

3.

The number of payments or the period to which such order applies; and

 

 

4.

The name of each plan to which such order applies.

 

 

C.

The Committee shall establish reasonable written procedures to determine the
qualified status of domestic relations orders and to administer distributions
made thereunder in a manner consistent with the following:

 

 

1.

The Committee shall promptly notify the Participant and any named alternate
payee of the receipt of a domestic relations order and the Plan procedures used
for determining whether such order is a qualified domestic relations order;

 

 

2.

The Committee shall, within a reasonable period following receipt, determine
whether such order is qualified and notify the Participant and each alternate
payee of such determination;

 

 

3.

The Committee shall separately account for any amounts affected by the Order
(except for any amounts that would not be distributable in any event

 

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during the period in which the qualified status of the Order is being
determined), and shall make no distribution, withdrawal or loan from such
amounts until the earlier of the date of determination of the qualified status
of the order or the expiration of 18 months from the date on which the first
payment would be required to be made under the order;

 

 

4.

If, within the 18-month period referred to in 3. above, the order is determined
to be qualified, the Committee shall segregate the amounts payable to the
alternate payee into separate Accounts in the name of such alternate payee, and
shall administer such Accounts in all ways as if such alternate payee were a
Participant hereunder. The Committee shall pay the segregated amounts to the
alternative payee(s) pursuant to the terms of such order. If, within such 18
month period, the order is determined not to be qualified, or the order's status
is unresolved, the Committee shall pay the segregated amounts to the person or
persons, if any, who would be entitled to such amounts if no order had been
received; and

 

 

5.

A determination that a domestic relations order is qualified which is made later
than 18 months after the receipt of such order shall operate prospectively only.

 

 

D.

Distributions made pursuant to this Section 12.04 shall completely discharge the
Plan of its obligations with respect to the Participant, his Beneficiary and
each alternate payee to the extent of any distributions made.

 

12.05

Hardship Withdrawals.

 

A distribution from a Participant's vested Profit Sharing Account, 401(k)
Account (provided that income on Participant Elected Contributions after May 30,
1989 shall not be available for distribution upon hardship), Fairchild 1988
Rollover Account or Stock Bonus Account may be made to a Participant, upon the
Participant's request, if it is established that the Participant has an
immediate and heavy financial need and the distribution is necessary to satisfy
such need. The Committee shall establish the existence of the Participant's
immediate and heavy financial need and the Participant's need for a distribution
to satisfy such need by applying the following standards:

 

A.

Immediate and Heavy Financial Need.

 

The existence of an immediate and heavy financial need shall be established by
determining one of more of the following:

 

 

1.

Expenses incurred or necessary for medical care, described in Section 213(d) of
the Code, of the Participant, the Participant's Spouse, or any dependent of the
Participant (a dependent shall be determined under Section 152 of the Code);

 

 

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--------------------------------------------------------------------------------

 

2.

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

 

 

3.

Payment of tuition and related educational fees (and room and board expenses)
for the next twelve (12) months of post-secondary education for the Participant,
or a member of the Participant's immediate family;

 

 

4.

The need to prevent eviction of the Participant from the Participant's principal
residence or foreclosure on the mortgage of the Participant's principal
residence;

 

 

5.

The need to pay the funeral expenses of a family member; or

 

 

6.

Any other reason recognized to constitute an immediate and heavy financial need
by the Commissioner of Internal Revenue Service in a revenue ruling, notice or
other document of general applicability.

 

 

B.

Distribution Necessary to Satisfy the Financial Need.

 

The Participant's need for a distribution to satisfy a financial need as
established under paragraph A shall be determined as follows:

 

 

1.

The Committee shall consider all relevant facts and circumstances of the
Participant to determine whether the need may be satisfied from other resources
that are available to the Participant;

 

 

2.

The Participant represents, and swears under penalty of perjury, that the
financial need cannot be satisfied without causing further undue hardship:

 

 

a.

Through reimbursement or compensation by insurance or otherwise;

 

 

b.

By reasonable liquidation of savings or assets, to the extent such liquidation
would not itself cause an immediate and heavy financial need;

 

 

c.

By the Participant ceasing elective contributions under this Plan; and

 

 

d.

By other distributions or nontaxable loans from plans maintained by the Employer
or by any other employer, or by borrowing from commercial sources on reasonable
commercial terms.

 

 

3.

The Committee may impose such conditions on hardship distributions as it deems
necessary, so long as such conditions are applied equally to all Participants
who request hardship distributions.

 

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C.

Additional Rules.

 

The following rules shall apply to each request for a hardship distribution by a
Participant:

 

 

1.

The Participant's request for a hardship distribution shall be made on such
forms as are provided by the Trustee from time to time and the Participant shall
furnish the Trustee with such information as the Committee requests in its
evaluation of the Participant's request; and

 

 

2.

The amount distributed, if any, shall in no event exceed the amount required to
satisfy the immediate and heavy financial need of the Participant and to pay any
federal, state, or local taxes or penalties reasonably anticipated to result
from the distribution. Immediate and heavy financial need may include any taxes
or penalties paid by such Participant on such hardship distribution.

 

12.06

In-Service Withdrawals.

 

As of any Valuation Date, a Participant who has a Voluntary Contributions or a
Rollover Account may elect an in-service withdrawal. Such withdrawal will be
taken first from the Voluntary After-Tax Account, if any, and then from the
Rollover Account.

12.07

Participant Loans.

 

Loans may be made to Participants under this Plan in accordance with the
following provisions:

 

A.

At the request of a Participant, and under rules to be established from
time-to-time by the Committee, the Plan may make a loan of money to such
Participant from the Participant's Accounts (excluding any Voluntary After-Tax
Account), but not exceeding fifty percent (50%) of the cumulative vested
interest of the Participant in all of his or her Plan Accounts. All loans shall
be made available to Participants on a reasonably equivalent basis. A
Participant shall request a loan by submitting a completed loan application form
or initiate a loan by use of the Electronic Access System, together with such
application fee as the Committee may require on a uniform basis from
Participants applying for loans, and in the case of a residential loan
application, also submitting copies of the Purchase and Sales Agreement or
Contractor's bid, whichever the case may be. A Participant may have no more than
two (2) loans outstanding at the same time, which may be residential and/or
nonresidential loans.

 

 

B.

Notwithstanding the preceding, no loan may be made to the extent that such loan
(when added to the outstanding balance of any other loan to such Participant)
exceeds the lesser of:

 

 

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--------------------------------------------------------------------------------

 

1.

$50,000, reduced by the excess (if any) of the highest outstanding balance of
loans from the Plan during the one-year period ending on the day before the date
on which such loan was made, over the outstanding balance of loans from the Plan
on the date on which such loan was made; or

 

 

2.

one-half (1/2) of the vested balance of all accounts of the Participant in the
Plan, determined as of the origination date of the loan. In no event will a loan
be made which would be taxed under Code section 72(p) as a distribution from the
Plan.

 

A nonresidential loan shall, by its terms, be repaid within six (6) to sixty
(60) months, and a residential loan shall, by its terms, be repaid within six
(6) to one hundred twenty (120) months. Loan payments may generally be made only
by way of automatic payroll deduction, and a Participant shall be entitled to an
extension in loan payments in the event that due to a shutdown or short work
week the payroll check for a Participant is insufficient to cover the loan
payment due, but not beyond the time period required for loan repayment under
Section 72(p) of the Code, or pursuant to Regulations thereunder. In the event
that Participant is Laid Off, on an authorized leave of absence, is for any
other reason not receiving a paycheck, or is separated from service, such
Participant shall make direct monthly payments on any loan outstanding. In the
event that payment is not received by ninety (90) days after the due date, the
loan will be in default pursuant to subparagraph G. hereunder.

 

 

C.

The outstanding balance of any such loans, including interest at a reasonable
rate based on the prime rate as published in the Wall Street Journal, shall
constitute a lien against the Accounts of a Participant and shall be deductible
therefrom in the event of a distribution to the Participant for any reason
whatsoever. The interest rate to be charged on loans shall be established on the
first business day of each month for loans initiated during such month.

 

 

D.

Loans shall be secured by the Participant's Retirement and Savings Program
Accounts.

 

 

E.

Effective October 12, 1998, no assignment of a Comlinear Participant's vested
Accrued Benefit shall be made to secure a loan unless the Comlinear
Participant's Spouse consents in writing to the assignment, the consent
acknowledges that the Comlinear Participant's vested Retirement and Savings
Program Account Balance may be used to pay the loan if the Comlinear
Participant's service with the Employer terminates and the loan is delinquent,
and the Spouse's consent is witnessed by a notary public or a Plan
representative. To be effective, the Spouse's consent to the assignment must be
signed during the 90-day period ending on the date on which the loan is to be
assigned. Such consent shall thereafter be binding with respect to the
consenting Spouse or any subsequent Spouse with respect to that loan. A new
consent shall be required of the Spouse if

 

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there is a renegotiation, extension, renewal, or other revision of the loan.
Effective August 1, 2005, this Section 12.07E shall no longer apply.

 

 

F.

Any loan shall require substantially level amortization of the loan (with
payments not less frequently than quarterly) over the term of the loan.

 

 

G.

In the event of default, foreclosure on the note and attachment of the security
will not occur until a distributable event occurs in the Plan. Events that
constitute a default include, but are not limited to: 1) a missed monthly
payment due on or before the 15th day of the month in the case of a Participant
who is terminated, Laid Off, who is on an authorized leave of absence, or who is
not receiving a paycheck for any other reason. Default will occur as of the end
of the Plan Quarter following the Plan Quarter in which the failure to remit a
monthly payment occurs.

 

12.08

Direct Rollovers.

 

 

A.

This Section 12.08 applies to distributions made on or after January 1, 1993.

 

Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Article XII, a distributee may elect,
at the time and in the manner prescribed by the Committee, to have any portion
of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover. For purposes of this
Section, the following terms shall be defined as follows:

 

 

1.

Eligible rollover distribution: An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; the portion of any distribution
that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities),
and, effective January 1, 1999, any hardship distribution described in Code
section 401(k)(2)(B)(i)(IV).

 

 

2.

Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover

 

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distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.

 

 

3.

Distributee: A distributee includes an Employee or former Employee. In addition,
the Employee's or former Employee's Surviving Spouse and the Employee's or
former Employee's Spouse or former Spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code,
are distributees with regard to the interest of the Spouse or former Spouse.

 

 

4.

Direct rollover: A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.

 

 

B.

The Committee shall prescribe reasonable procedures for the election of direct
rollovers under this Section, including, but not limited to:

 

 

1.

Requirements that adequate information be provided by the distributee, including
the name of the eligible retirement plan to which the rollover is to be made,
representation from the eligible retirement plan as to the type of eligible
retirement plan it is, and that it will accept the direct rollover, and other
information necessary to make the direct rollover, such as the name and address
of the trustee of the eligible retirement plan;

 

 

2.

Requirements that direct rollover elections be made within the time periods
permitted for electing optional forms of payment pursuant to this Article XII;
and

 

 

3.

Limitations on the amount of a direct rollover, providing that direct rollover
may not be elected by a distributee whose eligible rollover distributions during
a year are reasonably expected to be less than $200, and providing that, in the
case of a distributee who elects to receive part of his distribution in cash and
to have the remainder paid to an eligible retirement plan, the portion to be
directly rolled over must be equal to at least $500.

 

 

C.

This paragraph C shall apply to distributions made after December 31, 2001.

 

1.

For purposes of the direct rollover provisions of this Section 12.08 of the
Plan, an eligible retirement plan shall also mean an annuity contract described
in Section 403(b) of the Code and an eligible plan under Section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state of political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from
this Plan. The definition of eligible retirement plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or former spouse
who is the alternate payee under a qualified domestic relation order, as defined
in Section 414(p) of the Code.

 

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2.

In addition, any amount that is distributed on account of hardship shall not be
an eligible rollover distribution and the distributee may not elect to have any
portion of such a distribution paid directly to an eligible retirement plan.

 

3.

Moreover, a portion of a distribution shall not fail to be an eligible rollover
distribution merely because the portion consists of after-tax employee
contributions which are not includible in gross income. However, such portion
may be transferred only to be an individual retirement account or annuity
described in Section 408(a) of the Code, or to a qualified defined contribution
plan described in Section 401(a) or 403(a) of the Code that agrees to separately
account for amounts so transferred, including separately accounting for the
portion of such distribution which is includible in gross income and the portion
of such distribution which is not so includible.

 

D.

This paragraph D shall apply to distributions made on or after August 1, 2005:

In the event of a mandatory distribution greater than $1,000 in accordance with
the provisions of Section 12.01, if the Participant does not elect to have such
distribution paid directly to an eligible retirement plan specified by the
Participant in a direct rollover or to receive the distribution directly in
accordance with Section 12.01, then the Committee will pay the distribution in a
direct rollover to an individual retirement plan designated by the Committee.

12.09

Required Minimum Distributions on and after January 1, 2003.

 

 

A.

General Rules.

 

1.

Effective Date. This Section will apply for purposes of determining required
minimum distributions for calendar years beginning with the 2003 calendar year.

 

2.

Requirements of Treasury Regulations Incorporated. All distributions required
under this Section will be determined and made in accordance with the Treasury
regulations under Section 401(a)(9) of the Internal Revenue Code.

 

3.

TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this
Section, distributions may be made under a designation made before January 1,
1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act (TEFRA) and the provisions of the Plan that relate to Section
242(b)(2) of TEFRA.

 

B.

Time and Manner of Distribution.

 

1.

Required Beginning Date. The Participant's entire interest will be distributed,
or begin to be distributed, to the Participant no later than the Participant's
required beginning date.

 

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2.

Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant's entire interest will be distributed, or
begin to be distributed, no later than as follows:

 

a.

If the Participant's surviving spouse is the Participant's sole designated
beneficiary, then distributions to the surviving spouse will begin by December
31 of the calendar year immediately following the calendar year in which the
Participant died, or by December 31 of the calendar year in which the
Participant would have attained age 70 1/2, if later.

 

b.

If the Participant's surviving spouse is not the Participant's sole designated
beneficiary, then distributions to the designated beneficiary will begin by
December 31 of the calendar year immediately following the calendar year in
which the Participant died.

 

c.

If there is no designated beneficiary as of September 30 of the year following
the year of the Participant's death, the Participant's entire interest will be
distributed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.

 

d.

If the Participant's surviving spouse is the Participant's sole designated
beneficiary and the surviving spouse dies after the Participant but before
distributions to the surviving spouse begin, this Section B.2, other than
Section B.2.a., will apply as if the surviving spouse were the Participant.

For purposes of this Section B.2 and Section D, unless Section B.2.d. applies,
distributions are considered to begin on the Participant's required beginning
date. If Section B.2.d. applies, distributions are considered to begin on the
date distributions are required to begin to the surviving spouse under Section
B.2.a. If distributions under an annuity purchased from an insurance company
irrevocably commence to the Participant before the Participant's required
beginning date (or to the Participant's surviving spouse before the date
distributions are required to begin to the surviving spouse under Section
B.2.a.), the date distributions are considered to begin is the date
distributions actually commence.

 

3.

Forms of Distribution. Unless the Participant's interest is distributed in the
form of an annuity purchased from an insurance company or in a single sum on or
before the required beginning date, as of the first distribution calendar year
distributions will be made in accordance with Sections C and D. If the
Participant's interest is distributed in the form of an annuity purchased from
an insurance company, distributions thereunder will be made in accordance with
the requirements of Section 401(a)(9) of the Code and the Treasury regulations.

 

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C.       Required Minimum Distributions During Participant's Lifetime.

 

1.

Amount of Required Minimum Distribution For Each Distribution Calendar Year.
During the Participant's lifetime, the minimum amount that will be distributed
for each distribution calendar year is the lesser of:

 

a.

the quotient obtained by dividing the Participant's account balance by the
distribution period in the Uniform Lifetime Table set forth in section
1.401(a)(9)-9 of the Treasury regulations, using the Participant's age as of the
Participant's birthday in the distribution calendar year; or

 

b.

if the Participant's sole designated beneficiary for the distribution calendar
year is the Participant's spouse, the quotient obtained by dividing the
Participant's account balance by the number in the Joint and Last Survivor Table
set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the
Participant's and spouse's attained ages as of the Participant's and spouse's
birthdays in the distribution calendar year.

 

2.

Lifetime Required Minimum Distributions Continue Through Year of Participant's
Death. Required minimum distributions will be determined under this Section C
beginning with the first distribution calendar year and up to and including the
distribution calendar year that includes the Participant's date of death

 

D.

Required Minimum Distributions After Participant's Death.

 

1.

Death On or After Date Distributions Begin.

 

a.

Participant Survived by Designated Beneficiary. If the Participant dies on or
after the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant's death is the quotient obtained by dividing
the Participant's account balance by the longer of the remaining life expectancy
of the Participant or the remaining life expectancy of the Participant's
designated beneficiary, determined as follows:

 

(i)

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

 

(ii)

If the Participant's surviving spouse is the Participant's sole designated
beneficiary, the remaining life expectancy of the surviving spouse is calculated
for each distribution calendar year after the year of the Participant's death
using the surviving spouse's age as of the spouse's birthday in that

 

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year. For distribution calendar years after the year of the surviving spouse's
death, the remaining life expectancy of the surviving spouse is calculated using
the age of the surviving spouse as of the spouse's birthday in the calendar year
of the spouse's death, reduced by one for each subsequent calendar year.

 

(iii)

If the Participant's surviving spouse is not the Participant's sole designated
beneficiary, the designated beneficiary's remaining life expectancy is
calculated using the age of the beneficiary in the year following the year of
the Participant's death, reduced by one for each subsequent year.

 

b.

No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the year of the Participant's death, the minimum amount that will
be distributed for each distribution calendar year after the year of the
Participant's death is the quotient obtained by dividing the Participant's
account balance by the Participant's remaining life expectancy calculated using
the age of the Participant in the year of death, reduced by one for each
subsequent year.

 

2.

Death Before Date Distributions Begin.

 

a.

Participant Survived by Designated Beneficiary. If the Participant dies before
the date distributions begin and there is a designated beneficiary, the minimum
amount that will be distributed for each distribution calendar year after the
year of the Participant's death is the quotient obtained by dividing the
Participant's account balance by the remaining life expectancy of the
Participant's designated beneficiary, determined as provided in Section D.1.

 

b.

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

 

c.

Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required
to Begin. If the Participant dies before the date distributions begin, the
Participant's surviving spouse is the Participant's sole designated beneficiary,
and the surviving spouse dies before distributions are required to begin to the
surviving spouse under Section B.2.a., this Section D.2. will apply as if the
surviving spouse were the Participant.

 

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C.

Definitions.

 

1.

Designated beneficiary. The individual who is designated as the beneficiary
under Article X of the Plan and is the designated beneficiary under Section
401(a)(9) of the Internal Revenue Code and Section 1.401(a)(9)-1, Q&A-4, of the
Treasury regulations.

 

2.

Distribution calendar year. A calendar year for which a minimum distribution is
required. For distributions beginning before the Participant's death, the first
distribution calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first distribution
calendar year is the calendar year in which distributions are required to begin
under Section B.2. The required minimum distribution for the Participant's first
distribution calendar year will be made on or before the Participant's required
beginning date. The required minimum distribution for other distribution
calendar years, including the required minimum distribution for the distribution
calendar year in which the Participant's required beginning date occurs, will be
made on or before December 31 of that distribution calendar year.

 

3.

Life expectancy. Life expectancy as computed by use of the Single Life Table in
Section 1.401(a)(9)-9 of the Treasury regulations.

 

4.

Participant's account balance. The account balance as of the last valuation date
in the calendar year immediately preceding the distribution calendar year
(valuation calendar year) increased by the amount of any contributions made and
allocated or forfeitures allocated to the account balance as of dates in the
valuation calendar year after the valuation date and decreased by distributions
made in the valuation calendar year after the valuation date. The account
balance for the valuation calendar year includes any amounts rolled over or
transferred to the Plan either in the valuation calendar year or in the
distribution calendar year if distributed or transferred in the valuation
calendar year.

 

5.

Required beginning date. The date specified in Section 12.02A.

 

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ARTICLE XIII

 

NONDISCRIMINATION TESTING AND LIMITATIONS ON ALLOCATIONS

 

13.01

Section 13.01 [Reserved]

 

13.02

Limitations on Allocations.

 

 

A.

Notwithstanding any other provisions of the Plan, the total annual addition
credited to a Participant's Accounts for any Plan Year shall not exceed an
amount equal to the smaller of: 1) $30,000 for Plan Years commencing prior to
January 1, 2002 ($40,000 for Plan Years commencing on or after January 1, 2002),
as adjusted for increases in the cost-of-living under Code section 415(d), or,
for limitation years starting before December 31, 1994, if greater, one-fourth
of the dollar limitation in effect under Section 415(b)(1)(A) of the Code; or 2)
effective for Plan Years commencing prior to January 1, 2002, twenty-five
percent (25%) of the compensation paid by the Employer to the Participant during
the Plan Year. Effective for Plan Years commencing on or after January 1, 2002,
the limit in (2) shall be equal to one-hundred percent (100%) of the amount of
the Participant’s compensation for the Plan Year.

 

 

B.

For purposes of imposing the limitations of Section 415 of the Code, “annual
additions” shall mean the sum of the following credited to the Participant’s
Accounts for the Plan Year: 1) Employer contributions; 2) the Participant's
contributions other than a rollover contribution as defined under Section
402(a)(5) of the Code; 3) Forfeitures; and, 4) Amounts allocated to a separate
account under a pension or annuity plan for a key employee (as defined under
Section 416(i) of the Code) in Plan Years beginning after March 31, 1984, to
provide post-retirement medical benefits to such Participant and his or her
spouse and dependents, and amounts paid after December 31, 1985, in tax years
ending after that date to a separate account under a welfare benefit plan (as
defined under Section 419(e) of the Code) of the Employer for a Participant who
is or was a key employee (as defined under Section 416(i) of the Code) to
provide post-retirement medical benefits to such Participant. Excess elective
deferrals determined pursuant to Section 5.02 D.2 of the Plan shall constitute
annual additions unless distributed pursuant to Section 5.02 D.2. Excess
contributions and excess aggregate contributions pursuant to Sections 5.02 C and
5.03 shall be treated as annual additions even if distributed from the Plan.

 

 

C.

For purposes of imposing the limitations of Section 415 of the Code,
“compensation” shall mean the Employee's wages, salary, and other amounts
received for personal services actually rendered, including but not limited to
overtime, bonuses, and commissions. Compensation shall not include Employer
contributions to deferred compensation plans, deductible contributions to
simplified employee pension plans under Section 408(k) of the Code,
distributions from deferred compensation plans, amounts realized from the

 

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exercise of nonqualified stock options, amounts realized from the vesting of
rights in restricted property, amounts realized from the sale of stock acquired
under a stock option, or other amounts which receive special tax benefits.
Notwithstanding the foregoing, effective for Plan Years commencing after
December 31, 1997, “compensation” for purposes of this Section 13.02 shall have
the meaning given to it under Section 415(c)(3) of the Code, as that Section of
the Code has been amended by GUST to reflect the inclusion of any elective
deferrals (as defined in Section 402(g)(3) of the Code), and any amount which is
contributed or deferred by the Employer at the election of the Employee and
which is not includible in the gross income of the Employee by reasons of
Sections 125, 132(f)(4) or 457 of the Code.

 

 

D.

All defined contribution plans maintained by the Employer shall be treated as a
single plan for purposes of the limitations of this Section.

 

 

E.

If, due to a reasonable error in the calculation of a Participant's Compensation
or the amount that may be deferred under the Plan or under other limited facts
and circumstances which the Commissioner of Internal Revenue finds justifiable,
the annual addition to the Account of a Participant exceeds the limitation of
this Section during a Plan Year, then such excess amount shall be eliminated
first by returning, to the extent necessary, the Employer's contribution to the
Participant's Account made by reason of the Participant's election to defer
compensation in excess of 4% of such Participant's Compensation (or, prior to
October 1, 2000, 6% of such Participant's Compensation) and then the Employer's
contribution to the Participant's Account made by reason of the Participant's
election to defer compensation that is not in excess of 4% of such Participant's
Compensation (or, prior to October 1, 2000, 6% of such Participant's
Compensation), together with the Employer Match attributable to such Elected
Contributions, and finally, to the extent necessary, by reducing the Employer's
contribution to the Participant's Profit Sharing Account. The amount of the
reduction (hereafter called the excess amount) shall be used to reduce the
Employer's contribution for the next Plan Year, and each succeeding Plan Year,
for that Participant if covered by the Plan as of the end of such Plan Year. If
the Participant is not covered by the Plan as of the end of the Plan Year and
the excess amount is a Participant elective deferral, the amount shall be
returned to the Participant. If the excess amount is an Employer contribution,
then the excess amount shall be held unallocated in a suspense account for the
Plan Year and allocated and reallocated in the next Plan Year, to the extent
possible, to reduce the Employer's contribution for such year. If a suspense
account is in existence during a Plan Year, other than the Year in which it is
established, the Employer shall make no contribution to the Plan until all
amounts in the suspense account have been allocated and reallocated to
Participant. No investment gains or losses or other income or expense shall be
allocated to a suspense account. In the event a suspense account is in existence
at the time this Plan terminates, any amount in the suspense account which
cannot then be allocated to Participants shall be returned to the Employer.

 

 

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F.

Effective for Plan Years commencing prior to January 1, 2000, in any case in
which an individual is a Participant in both a defined benefit plan and a
defined contribution plan maintained by the Employer, the sum of the defined
benefit plan fraction and the defined contribution plan fraction, as defined in
Section 415(e) of the Code, for any year may not exceed 1.0.

 

 

G.

Effective for Plan Years commencing prior to January 1, 2000, in the case of a
Participant whose combined plan fractions exceed the limitation of Subsection
13.02(F), such Participant's annual benefit or annual addition shall be reduced
to meet such limitation by making the necessary reduction in the following
sequence:

 

First - The Participant's voluntary nondeductible contribution shall be
returned, to the extent necessary, to comply with this Section.

Next - The Participant's annual benefit under the defined benefit plan shall be
limited, to the extent necessary, to comply with this Section.

Next - The annual addition for a Participant in a plan in which the contribution
is discretionary shall be reduced, to the extent necessary, to comply with this
Section.

Next - The annual addition for a Participant in a plan in which the contribution
is mandatory shall be reduced, to the extent necessary, to comply with this
Section.

 

13.03

Controlled Groups.

 

In applying the Section 415 limitations of Section 13.02 above, each member of a
controlled group of corporations (as defined in Section 414(b) as modified by
Section 415(h) of the Code), each member of a group of trades or businesses
(whether or not incorporated) which are under common control (as defined in
Section 414(c) as modified by Section 415(h) of the Code), and each member of an
affiliated service group (as defined in Section 414(m) of the Code) of which the
adopting Employer is a member shall be treated as a single employer.

 

13.04

ADP and ACP Test Safe Harbor.

 

 

A.

Rules of Application.

Effective January 1, 2008, the Employer has elected to use the ADP and ACP Test
Safe Harbor. The provisions of this Section shall apply for the Plan Year and
any provisions relating to the actual deferral percentage test described in
Section 401(k)(3) of the Code or the actual contribution percentage test
described in Section 401(m)(2) of the Code do not apply. This Section shall
remain effective until the Plan is amended to provide otherwise.

 

 

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--------------------------------------------------------------------------------

 

 

B.

ADP and ACP Test Safe Harbor Contribution.

 

1.

The Employer will contribute to the Plan for each Plan Year on behalf of each
Eligible Employee the Employer Match amount described under Section 5.03, which
amount shall constitute both an ADP and ACP Test Safe Harbor Contribution.

 

2.

The Participant’s accrued benefit derived from ADP and ACP Test Safe Harbor
Contributions is nonforfeitable and may not be distributed earlier than
separation from service, death, disability, an event described in Section
401(k)(10) of the Code, or the attainment of age 59-1/2. In addition, such
contributions shall satisfy the ADP Test Safe Harbor without regard to permitted
disparity under Section 401(l) of the Code.

 

C.

Definitions for purposes of this subsection,

 

 

1.

“ACP Test Safe Harbor” is the method described in subsection B for satisfying
the ACP test of Section 401(m)(2) of the Code.

 

 

2.

“ACP Test Safe Harbor Matching Contribution” is the Employer Match described in
Section 5.03.

 

 

3.

“ADP Test Safe Harbor” is the method described in subsection B for satisfying
the ADP test of Section 401(k)(3) of the Code.

 

 

4.

“ADP Test Safe Harbor Contribution” is the Employer Match described in Section
5.03.

 

 

5.

“Eligible Employee” means an Employee eligible to make Participant Elected
Contributions under the Plan for any part of the Plan Year or who would be
eligible to make Participant Elected Contributions but for a suspension due to a
hardship distribution or to statutory limitations, such as Sections 402(g) and
415 of the Code.

 

 

D.

Notice Requirement.

 

At least 30 days, but not more than 90 days, before the beginning of the Plan
Year, the Employer will provide each Eligible Employee a comprehensive notice of
the Employee’s rights and obligations under the Plan, written in a manner
calculated to be understood by the average Eligible Employee. If an Employee
becomes eligible after the 90th day before the beginning of the Plan Year and
does not receive the notice for that reason, the notice must be provided no more
than 90 days before the Employee becomes eligible but not later than the date
the Employee becomes eligible.

 

 

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--------------------------------------------------------------------------------

 

 

E.

Election Periods.

 

In addition to any other election periods provided under the plan, each Eligible
Employee may make or modify a deferral election during the 30-day period
immediately following receipt of the notice described in subsection D above.

 

 

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ARTICLE XIV

 

TOP HEAVY PROVISIONS

 

14.01

Applicability.

 

Notwithstanding any other provision of this Plan to the contrary, the provisions
of this Article shall apply for any Plan Year, beginning after December 31,
1983, in which this Plan is a Top-Heavy Plan as defined in Section 416(g) of the
Code.

14.02

Definitions.

 

 

A.

Aggregation Group.

 

Aggregation Group includes each plan maintained by the Employer (and as required
under Section 414(b), (c) or (m) of the Code each related Employer) in which a
Key Employee participates and such other plan maintained by the related
Employers which enables any plan in which a Key Employee participates to meet
the requirements of Section 401(a)(4) or 410 of the Code. In addition, the
Employer may elect to include other plans in the Aggregation Group which satisfy
the requirements of Code Sections 401(a)(4) and 410 when considered together
with the plans which are required to be aggregated. Any plan, however, which is
or may be permissively included in the Aggregation Group upon an election by the
Employer shall not be subject to the provisions of this Article.

 

 

B.

Compensation.

 

For purposes of applying the Top-Heavy provisions of this Article, compensation
as defined in Article II of this Plan shall not exclude amounts contributed
under a salary reduction agreement on behalf of the Employee to this Plan or
similar plans maintained by the Employer or to plans established under Section
125 of the Code. Compensation for the Plan Year shall be taken into
consideration. Notwithstanding the foregoing, effective for Plan Years
commencing after December 31, 1997, for purposes of this Article XIV, the term
compensation has the meaning given such term by Code section 415(c)(3), as that
Code section has been amended by GUST to reflect the inclusion of any elective
deferrals (as defined in Code section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of the Employee and
which is not includible in the gross income of the Employee by reasons of Code
sections 125, 132(f)(4) or 457.

 

 

C.

Determination Date.

 

Determination Date shall be the last day of the preceding Plan Year, or, if such
Plan Year is the first Plan Year of the Plan, the last day of such Plan Year. In
the case of plans included in an Aggregation Group, the present value of accrued

 

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benefits or accounts shall be combined for all aggregated plans which have a
Determination Date which falls in the same calendar year.

 

 

D.

Key Employee.

 

For Plan Years beginning before January 1, 2002, Key Employee means an Employee
or a former Employee (or the beneficiary of such an Employee) who during the
Plan Year ending on the Determination Date or during the four (4) preceding Plan
Years is, as determined under Section 416(i) of the Code:

 

 

1.

An officer of the Employer having an annual compensation greater than 50 percent
of the amount in effect under Section 415(b)(1)(A) of the Code for any such Plan
Year;

 

 

2.

One of the ten Employees having annual compensation from the Employer greater
than the amount in effect under Section 415(c)(1)(A) of the Code and owning (or
considered as owning within the meaning of Section 318 of the Code) the largest
interest in the Employer;

 

 

3.

A five (5) percent owner of the Employer; or

 

 

4.

A one (1) percent owner of the Employer who has annual compensation from the
Employer in excess of $150,000.

 

Section 416(i) of the Code is hereby incorporated in the Plan by reference for
the purpose of determining whether an Employee is a Key Employee, a former Key
Employee, or a non-Key Employee. For Plan Years beginning after December 31,
2001, Key Employee means any employee or former employee (including any deceased
employee) who at any time during the plan year that includes the determination
date was an officer of the employer having annual compensation greater than
$130,000 (as adjusted under Section 416(i)(1) of the Code for plan years
beginning after December 31, 2002), a 5-percent owner of the employer, or a
1-percent owner of the employer having annual compensation of more than
$150,000. For this purpose, annual compensation means compensation within the
meaning of Section 415(c)(3) of the Code. The determination of who is a Key
Employee will be made in accordance with Section 416(i)(1) of the Code and the
applicable regulations and other guidance of general applicability issued
thereunder.

 

 

E.

Non-Key Employee.

 

Non-Key Employee means an Employee or a former Employee (or the beneficiary of
such an Employee) who is not a Key Employee or former Key Employee as defined
under Section 416(i) of the Code.

 

 

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F.

Top-Heavy.

 

A plan or plans required to be included in the Aggregation Group shall be
Top-Heavy for a Plan Year if on the Determination Date for such Plan Year the
Top-Heavy Ratio exceeds sixty percent (60%).

 

 

G.

Top-Heavy Ratio.

 

Top-Heavy Ratio means the ratio determined from dividing the value of accrued
benefits and accounts for Key Employees by the total value of accrued benefits
and accounts for Key Employees and non-Key Employees. The value of accrued
benefits and accounts shall be determined as prescribed under subsection I
below.

 

 

H.

Valuation of Accrued Benefit.

 

 

1.

Defined Contribution Plan.

 

For Plan Years beginning prior to January 1, 2002, the present value of an
accrued benefit under a defined contribution plan is the account balance derived
from Employer and nondeductible Employee contributions as of the most recent
valuation date within the twelve (12) month period ending on the Determination
Date, plus any contributions actually made since such date or, in the case of a
plan subject to minimum funding requirements, contributions required to be made
as of the Determination Date. All defined contribution plans required to be
included or permissively included in the Aggregation Group shall be treated as a
single plan.

 

 

2.

Defined Benefit Plan.

 

For Plan Years beginning prior to January 1, 2002, the present value of an
accrued benefit under a defined benefit plan is the value of the monthly
retirement benefit derived from Employer and nondeductible Employee
contributions, determined as of the most recent valuation date within the twelve
(12) month period ending on the Determination Date, and determined as though the
individual terminated service as of such valuation date. The benefit of an
Employee, other than a Key Employee, shall be treated as accruing under the
method used to accrue benefits under the Plan or if no accrual method is
specified under the Plan, then under the slowest accrual method permitted under
Section 411(b)(1)(C) of the Code. Reasonable actuarial assumptions shall be used
to determine the value of the benefit under the Plan, provided, that assumptions
as to future withdrawal or future salary increases shall not be used. All
defined benefit plans required to be included or permissively included in the
Aggregation Group shall be treated as a single plan and the same actuarial

 

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assumptions shall be used to value benefits under each of the plans included in
the Aggregation Group.

 

 

3.

Accrued Benefits.

 

In determining the accrued benefits to be used to determine the Top-Heavy Ratio,
distributions within the period of five (5) consecutive Plan Years ending on the
Determination Date, and such rollover accounts as prescribed by regulation by
the Secretary of the Treasury, shall be added to the value of accrued benefits
as of such Date. The accrued benefits of a former Key Employee and the accrued
benefits of an individual who has not performed any services for the Employer
maintaining the Plan at any time during the five (5) year period ending on the
Determination Date shall, however, be disregarded.

 

 

I.

Determination of Present Value and Amounts for Plan Years Beginning After
December 31, 2001.

 

1.

For Plan Years beginning after December 31, 2001, the present values of accrued
benefits and the amounts of account balances of an employee as of the
determination date shall be increased by the distributions made with respect to
the employee under the Plan and any plan aggregated with the Plan under Section
416(g)(2) of the Code during the 1-year period ending on the determination date.
The preceding sentence shall also apply to distributions under a terminated plan
which, had it not been terminated, would have been aggregated with the plan
under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made
for a reason other than severance from employment, death, or disability, this
provision shall be applied by substituting “5-year period” for “1-year period.”

 

2.

For Plan Years beginning after December 31, 2001, the accrued benefits and
accounts of any individual who has not performed services for the employer
during the 1-year period ending on the determination date shall not be taken
into account.

14.03

Top Heavy Requirements.

 

For any Plan Year in which this Plan's Aggregation Group is Top-Heavy, the
following shall apply:

 

A.

Compensation.

 

Compensation shall mean compensation as defined in Section 2.11.

 

 

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--------------------------------------------------------------------------------

 

B.

Minimum Contribution.

 

The Employer contribution (excluding elective deferrals and, prior to January 1,
2002, matching contributions) and forfeitures allocated to a Participant who is
a non-Key Employee in the employ of the Employer on the last day of the Plan
Year shall be not less than the lesser of:

 

 

1.

Three percent (3%) of the Participant's compensation (within the meaning of Code
Section 415); or

 

 

2.

The percentage at which contributions are made under this Plan for the Key
Employee for whom such percentage is the highest for the Year. For Plan Years
beginning prior to January 1, 1989, this percentage shall be determined for such
Key Employee by dividing the contributions and forfeitures for such Employee by
so much of his total compensation for the Year as does not exceed $150,000, or
such other amount as is determined by the Secretary under Code Section
401(a)(17) to be in effect for that year. In determining the contribution rate
for a Key Employee, such Key Employee's elective contributions under a plan
qualified under Section 401(k) of the Code shall be counted.

 

If the Plan is required to be included in an Aggregation Group and this Plan
allows a defined benefit plan required to be in such Group to meet the
requirements of Section 401(a)(4) or 410 of the Code, the minimum contribution,
in such circumstances, shall be not less than three (3%) percent of the
Participant's compensation for the Year. All defined contribution plans required
to be included in the Aggregation Group shall be treated as a single plan.

 

 

C.

Minimum Vested Amounts.

 

A Participant's nonforfeitable interest under the Plan shall not be less than a
nonforfeitable interest determined under the following schedule, based upon the
Years of Service completed by the Participant:

 

 

Completed Years

Nonforfeitable

 

Of Service

Percentage

 

 

Less than 2

0%

 

2 but less than 3

20%

 

3 but less than 4

40%

 

4 but less than 5

60%

 

5 but less than 6

80%

 

6 or more

100%

 

 

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The number of a Participant's Years of service shall be determined as provided
for under this Plan, using the applicable Vesting Computation period to
determine Years of Service and Breaks in Service, provided, that a Participant's
nonforfeitable interest shall be determined under this Section only in the event
he completes at least One Hour of Service with the Employer after the date on
which the Plan becomes Top-Heavy.

 

A change in the Plan's vesting schedule (whether into or out of the Top-Heavy
schedule) shall not cause a Participant's nonforfeitable interest to be less
than his nonforfeitable interest immediately prior to the change.

 

In the case of a change in the Plan's vesting schedule (whether into or out of
the Top-Heavy schedule), a Participant who is credited with three (3) or more
Years of Service for vesting purposes at the time of the change shall have his
vested interest under the Plan determined under the schedule which gives the
Participant the largest nonforfeitable interest. For purposes of the preceding
sentence, the time at which a change in the vesting schedule occurs shall be the
later of the effective date of such change or the execution date of an amendment
which causes such change.

 

14.04

Benefits Under Different Plans.

 

If the Employer maintains one or more defined contribution plans (which shall be
treated as a single defined contribution plan for purposes of this Article) in
addition to a defined benefit plan and a non-Key Employee participates in both
types of plans, the Employer shall provide such Participant with the minimum
benefit required under the defined benefit pension plan, offset however, by any
benefit provided under the Employer's defined contribution plan.

 

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ARTICLE XV

 

PROVISIONS AGAINST ANTICIPATION

 

Until distribution pursuant to the terms hereof, no Participant shall have the
right or power to alienate, anticipate, commute, pledge, encumber or assign any
of the benefits, proceeds or avails set aside for him under the terms of this
Plan, and no such benefits, proceeds or avails shall be subject to seizure by
any creditor of the Participant under any writ or proceedings at law or in
equity, provided, that the terms of this Section shall not prohibit the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant if such creation, assignment, or recognition of a right
is made under a qualified domestic relations order as defined under Section
414(p) of the Code. Effective with respect to judgments, orders and decrees
issued and settlements entered into on or after August 4, 1997, this Article XV
shall not prevent the Trustee from offsetting a Participant’s Account against an
amount that the Participant is ordered or required to pay to the Plan pursuant
to a judgment, order, decree or settlement that satisfies the requirements of
Section 401(a)(13)(C) of the Code.

 

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ARTICLE XVI

 

ADMINISTRATIVE COMMITTEE

 

NAMED FIDUCIARY AND ADMINISTRATOR

 

16.01

Appointment of Committee.

 

The Board or such person(s) as it designates shall appoint a Committee comprised
of three or more persons (herein referred to as the Committee) to serve for such
terms as the Board may designate, or until a successor has been appointed or
until removal by the Board or its designee. The Committee shall be the Plan
Administrator and Named Fiduciary of the Plan within the meaning of ERISA. The
Board or its designee shall advise the Trustee in writing of the names of the
members of the Committee and any changes thereafter made in the membership of
the Committee. Vacancies due to resignation, death, removal or other causes
shall be filled by the Board or its designee. Members shall service without
bond, except as may otherwise be required by law, and without compensation for
service. All reasonable expenses of the Committee shall be paid by the Employer.
The number of the Committee may be changed by the Board at any time.

16.02

Committee Action.

 

The Committee shall appoint a secretary, who may or may not be a Member of the
Committee, who shall keep minutes of the Committee's proceedings and all data,
records and documents pertaining to the Committee's administration of the Plan.
The Committee shall act by majority vote of its members in office at that time,
such vote to be taken at a meeting or, in writing, without a meeting. The
Committee may, by such majority action, authorize its secretary, or any one or
more of its members, or any other person to execute any document or documents on
behalf of the Committee, in which event the Committee shall notify the Trustee
in writing of such action and the name or names of those so designated. The
Trustee shall accept and rely conclusively upon any direction or document
executed by such person(s) as representing action by the Committee, until the
Committee shall file with the Trustee a written revocation of such designation.
A member of the Committee who is also a Participant hereunder shall not vote or
act upon any matter relating solely to such member. In the event of a deadlock
or other situation which prevents agreement of a majority of the Committee
members, the matter shall be decided by the Board.

16.03

Rights and Duties of Committee.

 

The Committee shall have the authority to control and manage the operation and
administration of the Plan and shall have all powers necessary to accomplish
those purposes. Actions taken and decisions made by the Committee shall be final
and binding on all parties. The Committee shall have full power and complete
discretionary authority to discharge the Committee's responsibility and
authority hereunder, including, but not limited to, full power and discretionary
authority to:

 

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A.

Determine all questions relating to the eligibility of Employees to participate;

 

 

B.

Compute and certify to the Trustee the amount manner and time of payment of
benefits payable to Participants, Spouses and/or their Beneficiaries;

 

 

C.

Authorize all disbursements by the Trustee from the Trust;

 

 

D.

Maintain all necessary records for the administration of the Plan other than
those which the Trustee has specifically agreed to maintain;

 

 

E.

Construe and interpret the provisions of the Plan and publish such rules for the
regulation of the Plan as are deemed necessary and not inconsistent with the
terms of the Plan;

 

 

F.

Establish reasonable procedures to determine the qualified status of domestic
relations orders and administer distributions under such qualified orders; and
to notify the Participant and any other alternate payee, as defined under
Section 414(p)(8) of the Code, of the receipt of a domestic relations order, the
Plan's procedure for determining the qualified status of such an order, and the
determination made in connection with such order;

 

 

G.

Delegate and/or allocate responsibility and/or authority for one or more of its
duties to another person or persons, including but not limited to, individual
members of the Committee; and

 

 

H.

Approve and adopt Plan amendments and execute all documents required therewith,
in accordance with Section 21.02.

 

The interpretation and construction of any provisions of the Plan and the
exercise of any discretion granted hereunder to the Committee or any other
fiduciary with respect to the Plan (within the meaning of Section 3(21) of
ERISA) shall be final and binding on the Participants, their dependents and all
other interested persons.

16.04

Investments.

 

The Committee, as Named Fiduciary with respect to control and management of
assets of the Plan, and in accordance with provisions of the Trust Agreement,
may appoint in writing an investment manager(s) to manage and control all of the
investments of the Plan, or may delegate the responsibility for making
investment decisions to the Trustee, in which case the Trustee, to the extent
permitted by governing law, shall be the fiduciary of the Plan. No such
appointment shall be effective until the investment manger has acknowledged in
writing that he or she is a fiduciary of the Plan, and that he or she has
complied with the bonding requirements of ERISA. The Committee shall be
responsible for establishing and carrying out an investment policy for the Plan.
The investment policy and method so established shall be communicated to the
Trustee and/or the investment manager(s).

 

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16.05

Information, Reporting and Disclosure.

 

To enable the Committee to perform its functions, the Employer shall supply full
and timely information to the Committee on all matters relating to the
Compensation of all Participants; their continuous, regular employment; their
retirement, death or the cause for termination of employment; and such other
pertinent facts as the Committee may require, and the Committee shall furnish
the Trustee such information as may be pertinent to the Trustee's administration
of the Plan. The Committee shall be entitled to rely upon the information it
receives from the Employer. The Committee, as Plan Administrator, shall have the
responsibility of complying with the reporting and disclosure requirements of
ERISA and, to the extent applicable, any other federal or state law.

16.06

Independent Qualified Accountant.

 

Unless the Plan is exempt from the requirement by applicable law or regulation,
the Committee shall engage, on behalf of all Plan Participants, an independent
qualified public accountant who shall conduct such examinations of the financial
statements of the Plan and of other books and records of the Plan as the
accountant may deem necessary to enable the accountant to form an opinion as to
whether the financial statements and schedules required by law to be included in
any reports are presented fairly and in conformity with generally accepted
accounting principles applied on a basis consistent with that of any preceding
year.

16.07

Standard of Care Imposed Upon the Committee.

 

The Committee shall discharge its duties with respect to the Plan solely in the
interest of the Participants and Beneficiaries:

 

A.

For the Exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying reasonable expenses of the Plan;

 

 

B.

With the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of like character and
with like aims; and

 

 

C.

In accordance with the provisions of this Plan and any amendments to the Plan.

 

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16.08              Allocation and Delegation of Responsibility.

 

The Committee may, by written rule promulgated under Section 16.03 above,
allocate fiduciary responsibilities among Committee members and may delegate to
persons other than Committee members the authority to carry out fiduciary
responsibilities under the Plan, provided that no such responsibility shall be
allocated or delegated to the Trustee without its written consent. As used in
this Section, the term “fiduciary responsibility” shall not include any
responsibility to manage or control the assets of the Plan.

 

The Committee, in making the above allocation of fiduciary responsibilities, may
provide that a person or group of persons may serve, with respect to the Plan,
in more than one fiduciary capacity.

 

The Committee or, so long as the Committee shall have made written approval,
persons to whom fiduciary responsibilities have been delegated by the Committee
may employ one or more persons to render advice with regard to any
responsibility such fiduciary has under the Plan.

 

In the event a fiduciary responsibility is allocated to a Committee member, no
other Committee member shall be liable for any such act or omission of the
person to whom the responsibility is allocated except as required by law. If a
fiduciary responsibility is delegated to a person other than a Committee member,
the Committee shall not be responsible or liable for an act or omission of such
person in carrying out such responsibility except as may otherwise be required
by law.

 

16.09

Bonding.

 

When required by law, each fiduciary of the Plan and every person handling Plan
funds shall be bonded. It shall be the obligation of the Committee to assure
compliance with applicable bonding requirements. The Trustee shall not be
responsible for assuring that bonding requirements are complied with and such
responsibility is specifically allocated to the Committee.

16.10

Claims Procedure.

 

 

A.

Benefit Request.

 

A request for a distribution of Plan benefits shall be sent to the Committee in
writing on any forms prescribed by the Committee and signed by the Participant,
or, if for a death benefit, by the Participant's Beneficiary. Such request shall
be acted on within thirty (30) days after receipt. If any request is denied in
whole or in part, the Committee shall notify the claimant in writing of the
denial within ninety (90) days of receipt thereof, unless the Committee
determines that special circumstances require additional time, in which case a
decision shall be rendered not later than one-hundred eighty days (180) after
receipt of the claim by the Plan. If such extension of time is required, written
notice of the extension shall be furnished to the claimant before the end of the
original ninety (90) day period

 

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which explains the reasons for the extension and the date a decision is
expected. The notice of denial shall set forth the following: the specific
reason or reasons for the denial; reference to the specific Plan provisions on
which such denial is based; a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such additional material or information is necessary; a description of
the Plan’s review procedures and time limits; and a statement of the claimant’s
right to bring a civil action under section 502(a) of ERISA following a denial
on review.

 

 

B.

Benefit Denials.

 

In the case of any claimant whose application for benefits is denied in whole or
in part, the claimant or the duly authorized representative may appeal such
denial to the Committee for a full and fair review thereof by sending to the
Committee a written request for review within sixty (60) days after the date on
which such denial is received. The claimant making the request for review or his
duly authorized representative may discuss any issues relevant to the claim, may
review pertinent documents and may submit issues and comments in writing. The
review of a request which has been denied shall be made by the Committee within
sixty (60) days of the receipt of the request for review, unless the Committee
determines that special circumstances require additional time, in which case a
decision shall be rendered not later than one hundred twenty (120) days after
receipt of the request for review. If such an extension of time is required,
written notice of the extension shall be furnished to the claimant before the
end of the original sixty (60) day period which explains the reasons for the
extension and the date a decision is expected. The decision on review shall be
in writing, shall be written in a manner calculated to be understood by the
claimant, and shall include the following: the specific reason or reasons for
the denial; reference to the specific Plan provisions on which such denial is
based; a statement that the claimant is entitled to receive, upon request and
free of charge, access to and copies of all documents, records and other
information relevant to the claim; a statement of the claimant’s right to bring
a civil action under Section 502(a) of ERISA; and a description of any voluntary
appeals procedures offered by the Plan.

 

All interpretations, determinations and decisions of the Committee, with respect
to any claim under the Plan, shall be made in its sole and absolute discretion
and shall be final and conclusive.

 

 

C.

Disability Benefits

 

Notwithstanding the foregoing, if the provisions of Section 2.13(B) apply, the
claims procedures under 29 CFR section 2560.503-1 relating to disability plans
shall apply.

 

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16.11              Indemnification.

 

The Employer does hereby indemnify and hold harmless each Committee member or
its agents who are employees of a member of the Consolidated Group from any
loss, claim or suit arising out of the performance of obligations imposed
hereunder and not arising from said Committee member's or agent's willful
neglect, misconduct or gross negligence.

 

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ARTICLE XVII

 

APPOINTMENT OF INVESTMENT MANAGER

 

17.01

Authority for Appointment.

 

The Committee shall have the authority prescribed in ERISA Section 402(c)(3) and
under Section 16.04 of this Plan to appoint one or more investment managers and
contract with each for management of any part of the Trust Fund. Selection and
retention of an investment manager shall be in the Committee's discretion. Each
investment manager shall have the power to manage, acquire and dispose of that
part of the Trust Fund designated by the Committee. The investment manager has
no responsibility for Plan operation or administration.

17.02

Investment Manager Discretion.

 

 

Without limitation of the foregoing and if an investment manager is appointed:

 

 

A.

The Trustee, on Committee direction, shall segregate the Trust Fund or any part
thereof into one or more investment manager accounts. The Committee shall
appoint an investment manager for each account and designate to the Trustee the
part of the Trust Fund to be managed by each investment manager. The Trustee
shall follow the investment manager's directions, with respect to such
investment manager's account, and shall sign and vote the proxies under the
direction received from the investment manager with respect to such account.

 

 

B.

The Committee, by notice to the Trustee, may terminate at any time the authority
of an investment manager to manage the account. In such event or upon
resignation of an investment manager, the Committee shall either appoint a
successor investment manager for the account or direct the Trustee to assume
responsibility for the investment management of the assets in the accounts, in
which case such assets shall no longer be segregated from the other assets of
the Trust Fund.

 

 

C.

Each investment manager to whom any fiduciary responsibility with respect to the
Plan or Trust Funds is delegated shall discharge such responsibility in
accordance with the standards set forth in ERISA Section 404(a).

 

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ARTICLE XVIII

 

INVESTMENT OF ASSETS BY TRUSTEE

 

The Trustee, in accordance with the directions of the Committee, shall exercise
authority or discretion in the management and control of the assets of the Plan,
except to the extent the management of any part of the Trust Fund has been
delegated to any investment manager pursuant to Article XVII. Without limiting
the generality of the foregoing, the Trustee shall invest and reinvest the
principal and income of the Trust Fund in common investment funds, real estate,
government, municipal or corporation bonds, debentures or notes, common and
preferred stocks, or other forms of property whether real, personal or mixed,
including investments for which interest is guaranteed by a bank, insurance
company, or other financial institutions.

 

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ARTICLE XIX

 

CONSTRUCTION

 

This Plan shall be constructed in accordance with ERISA and regulations issued
thereunder and, to the extent applicable, the laws of the state in which the
principal office of the Employer is located.

 

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ARTICLE XX

 

MERGERS AND CONSOLIDATIONS

 

In the case of any merger or consolidation with any other plan or a transfer of
assets or liabilities to any other plan, each Participant shall be entitled to
be credited with a benefit immediately after such merger, consolidation or
transfer which is equal to the benefit to which he would have been entitled
immediately before such merger or consolidation had the Plan then terminated.

 

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ARTICLE XXI

 

AMENDMENT OR TERMINATION OF PLAN

 

21.01

Right to Amend and Terminate.

 

The Employer represents that the Plan is intended to be a continuing and
permanent program for Participants, but reserves the right to terminate the Plan
or any part of it at any time. The Employer may, by action of its Board or, with
respect to administrative provisions, by action of the Committee, modify, alter,
or amend this Plan in whole or in part. Such termination or amendment shall be
effective on the date specified by the Board. No such action shall reduce a
protected Accrued Benefit of a Participant.

21.02

Administrative Amendments.

 

Subject to the foregoing provisions of this Article, the Board hereby delegates
to the Committee the right to make administrative amendments to this Plan and
the Trust Agreement. An amendment will be considered an administrative amendment
properly within the delegated authority of the Committee only if such amendment
does not change the amount or level of Employer contributions under this Plan
(except as otherwise permitted in Section 5.01), the method of allocation or
crediting contributions as provided for in Article VI, or any other provision
specifically governed by action of the Board in accordance with the provisions
of this Plan or the Trust Agreement. The adoption of specific provisions
concerning contributions, distributions or Plan provisions affecting employees
involved in a corporate acquisition or disposition or similar transaction shall
be considered an administrative amendment within the delegated authority of the
Committee.

Any amendment adopted by the Committee pursuant to the delegated authority shall
be reported to the Board within a reasonable period following its adoption, but
in no event later than two and one-half (2-1/2) months after the close of the
Plan Year in which it becomes effective. Any such amendment shall become
effective as of the date specified by the Committee.

21.03

Protection of Accrued Benefits.

 

With the exception of an amendment described under Section 412(c)(8) of the
Code, no amendment to the Plan shall reduce the Accrued Benefit to a Participant
determined as of the date immediately preceding the adoption of the amendment.
In the case of any change in the Plan's vesting schedule, a Participant who is
credited with three (3) or more Years of Service for vesting purposes at the
time of the change shall have his vested interest under the Plan determined
under the schedule which gives the Participant the largest nonforfeitable
interest. For purposes of the preceding sentence, the time at which a change in
the vesting schedule occurs shall be the later of the effective date of such
change or the execution date of an amendment which causes such change.

 

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21.04

No Re-vesting.

No termination, modification, alteration or amendment shall have the effect of
re-vesting in the Employer any of its contributions or the income derived
therefrom.

21.05

Exclusive Benefit of Participants.

 

At no time during the existence hereof or at its termination may the Plan assets
be used for or directed to purposes other than for the exclusive benefit of
Participants or their Beneficiaries.

21.06

Termination and Discontinuance of Contributions.

 

The Employer shall have the right, at any time, to discontinue its contributions
hereunder and to terminate, or partially terminate, this Plan and the Trust by
delivering to the Trustee written notice of such discontinuance or termination.
Such termination or discontinuance shall be effective on the date specified by
the Board. Upon complete discontinuance of the Employer's contributions or full
or partial termination of the Trust, the Accounts and rights to benefits of all
affected Participants shall become fully vested and shall not thereafter be
subject to forfeiture, except to the extent that law or regulations may preclude
such vesting in order to prevent discrimination in favor of Highly Compensated
Employees. Upon final termination of the Trust, the Committee shall direct the
Trustee to distribute to the Participants all assets remaining in the Trust
after payment of any expenses properly chargeable against the Trust in
accordance with the value credited to such Participants, as of the date of such
termination, in cash or in kind and in such manner as the Committee shall
determine.

 

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ARTICLE XXII

 

OTHER PARTIES TO THIS PLAN

 

22.01

Subsidiaries.

 

Any corporation which is a subsidiary of National Semiconductor Corporation may
become a party to this Plan by a written agreement to this effect between
National Semiconductor Corporation and such subsidiary which shall set out,
among other things, the date on which the subsidiary shall become a party to
this Plan. Unless otherwise provided in the written agreement, service with such
subsidiary prior to the time it became a member of the Consolidated Group shall
be disregarded. Any such party to this Plan shall be subject to the following
special provisions of this Article, except as otherwise specifically provided in
the agreement making the subsidiary a party to this Plan. As used herein, the
term “subsidiary” shall mean a corporation with which National Semiconductor
Corporation is eligible to file a consolidated income tax return under the
federal income tax law and regulations, irrespective of whether such
consolidated return is actually filed.

22.02

Termination of Participation.

 

Upon approval of the Board, any party to this Plan, including National
Semiconductor Corporation, may at any time elect to terminate its participation
in this Plan in a manner set forth in Article XXI; or National Semiconductor
Corporation or any other party to this Plan may elect at any time by appropriate
amendment or action affecting only its own status hereunder to disassociate
itself from this Plan but to continue the Plan as it pertains to itself and its
Employees as an entity separate and distinct from this Plan. Termination of the
participation of National Semiconductor Corporation or any other party to this
Plan, or disassociation, shall not affect the participation of National
Semiconductor Corporation or any other party to this Plan nor terminate the Plan
or Trust with respect to them and their Employees; provided that, if National
Semiconductor Corporation shall terminate its participation, or disassociate
itself, then each remaining party to this Plan shall make such arrangements and
take such action as may be necessary to assume the duties of National
Semiconductor Corporation in providing for the operation and continued
administration of the Plan as the same pertains to the other parties to this
Plan.

22.03

Contributions and Allocations.

 

With respect to any Plan Year during which one or more subsidiaries of National
Semiconductor Corporation are parties to this Plan, National Semiconductor
Corporation and its subsidiary or subsidiaries which are parties to this Plan
shall together make contributions to the Trust for such Plan Year. Such
aggregate contributions shall be divided among the parties to this Plan in the
proportion that the Compensation of the Participants for the Plan Year of each
party to this Plan bears to the Compensation of all the Participants of all such
parties to this Plan for such Plan Year; provided, however, that if any party is
prevented from making a contribution because it has no current or accumulated
earnings or profits or has less earning or profits than the contribution which

 

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would otherwise have been made, the other party or parties to this Plan may make
contributions in behalf of such deficient party in accordance with the
provisions of Section 404(a)(3)(B) of the Internal Revenue Code and the
regulations promulgated thereunder. Such aggregate contribution for each Plan
Year shall be allocated among the Participants of all parties to this Plan in
accordance with Article VI.

22.04

Committee.

 

The Committee which administers this Plan as applied to National Semiconductor
Corporation shall also be the Committee as applied to each other party to this
Plan.

22.05

Accounts.

 

The Accounts under this Plan with respect to all of the Participants of all of
the parties to this Plan shall be maintained in accordance with the provisions
of Article VI.

 

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ARTICLE XXIII

 

RIGHT TO DISCHARGE EMPLOYEES

 

Neither the establishment of this Plan, nor any modification thereof, nor the
payment of any benefit shall be construed as giving any Participant or any other
person any legal or equitable right against the Employer or the Trustee, unless
the same shall be specifically provided for in this Plan, nor as giving any
Employee or Participant the right to be retained in the employ of the Employer.
All Employees shall remain subject to discharge by the Employer to the same
extent as if this Plan had never been adopted.

 

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ARTICLE XXIV

 

DECLARATION OF PLAN CONTINGENT UPON

 

INTERNAL REVENUE SERVICE APPROVAL

 

24.01

Internal Revenue Service Approval.

 

Upon adopting the Plan, or upon adopting a qualifying amendment to this Plan,
the Employer shall immediately apply to the Internal Revenue Service for a
determination letter that the Plan, as adopted or amended by the Employer, is a
qualified Plan under Internal Revenue Code Section 401(a). In the event the
Employer receives an unfavorable determination on a qualifying amendment and
does not effect an amendment which will cure the defect, such qualifying
amendment shall be null and void and this restated Plan shall remain in effect.

24.02

Mistake of Fact.

 

In the event a contribution is made by reason of a mistake of fact, the amount
that would not have been contributed had the mistake not occurred may be
returned to the Employer if the amount is returned within one year of the
mistaken contribution.

24.03

Disallowance of Deductibility.

 

In the event a contribution is conditioned upon its deductibility and the
deduction is disallowed, the amount that would not have been contributed had
there been no mistake in determining the deduction may be returned to the
Employer if the amount is returned within one year of the disallowance.

 

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ARTICLE XXV

 

MISCELLANEOUS

 

25.01

Governing Law.

 

The parties agree that all disputes relating to the performance or
interpretation of any term of this Plan shall be governed by the laws of the
State of California.

25.02

Severability of Provisions.

 

If a court of competent jurisdiction determines that any term of this Plan is
invalid or unenforceable to any extent under applicable law, the remainder of
this Plan shall not be affected thereby, and each remaining term shall be valid
and enforceable to the fullest extent permitted by law.

25.03

Counterparts.

 

This Plan may be executed in several counterparts, each of which shall be an
original, but all of which shall constitute one and the same instrument.

25.04

Captions.

 

The Table of Contents and captions to the Articles and Sections of this Plan are
for the convenience of reference only and in no way define, limit, describe, or
affect the scope or intent of any part of this Plan.

25.05

Interchangeable Word Usage.

 

Unless some other meaning and intent is apparent from the context, the plural
shall mean the singular and vice versa; and masculine, feminine and neuter words
shall be used interchangeably.

25.06

USERRA Provisions.

 

Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Internal Revenue Code. Loan
repayments will be suspended under this plan as permitted under Section
414(u)(4) of the Internal Revenue Code. The terms of this Section are effective
October 13, 1996 with respect to reemployments initiated on or after December
12, 1994.

 

 

 

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IN WITNESS WHEREOF, National Semiconductor Corporation, has caused this Plan to
be executed in its name and on this 14th day of August 2008.

 

/s/ Edward J. Sweeney

Edward Sweeney

Chairman, Retirement and Savings Program

Administrative Committee

 

 

 

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