TABLE OF CONTENTS

 

		PAGE(S)
ARTICLE 1	DEFINITIONS	2
1.1	Account	2
1.2	Base Pay	2
1.3	Beneficiary	2
1.4	Change in Control	2
1.5	Code	3
1.6	Committee	3
1.7	Company	3
1.8	Compensation	3
1.9	Contributions	3
1.10	Deferral Period	3
1.11	Disabled	3
1.12	Distributable Amount	3
1.13	Eligible Employee	3
1.14	Employee	4
1.15	ERISA	4
1.16	Fiscal Year	4
1.17	Fund or Funds	4
1.18	Fund Return	4
1.19	Initial Election Period	4
1.20	Insurable Participant	4
1.21	Key Employee	4
1.22	Participant	4
1.23	Plan	5
1.24	Plan Year	5
1.25	Retirement	5
1.26	Target Compensation	5
1.27	Termination of Participant’s Employment	5
1.28	Variable Pay	5
ARTICLE 2	PARTICIPATION	5
ARTICLE 3	CONTRIBUTIONS	6

 

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TABLE OF CONTENTS

(CONTINUED)

 

			Page(s)
3.1	Elections to Defer Compensation		6
	(a)	Initial Election Period	6
	(b)	General Rule	6
	(c)	Deferral Election Computation	6
	(d)	Minimum Deferrals	7
	(e)	Effect of Initial Election	7
	(f)	Duration of Base Pay Deferral Election or Variable Pay Deferral Election	7
	(g)	Elections Other Than Elections During the Initial Election Period	8
	(h)	Special Rules for Deferral Elections	8
3.2	Cancellation of Compensation Deferrals		9
	(a)	Automatic Cancellation	9
	(b)	Permissible Cancellation	9
	(c)	Section 401 and Section 409A Compliance	9
3.3	Company Discretionary Contributions		10
ARTICLE 4	INVESTMENT ELECTIONS		10
4.1	Participant Investment Designation		10
4.2	Change in Investment Designation		10
4.3	Company Responsibility for Investment Alternatives		10
ARTICLE 5	ACCOUNTS		10
5.1	Participant Accounts		10
5.2	Trust Funding		11
	(a)	Trustee Duties	11
	(b)	Employee Deferrals and Company Contributions	11
	(c)	General Creditors	11
ARTICLE 6	VESTING		11
6.1	Base Pay and Variable Pay Deferrals		11
6.2	Company Contributions		12
ARTICLE 7	DISTRIBUTIONS		12
7.1	Distributions from a Participant’s Account		12
	(a)	Distribution Election and Minimum Requirements	12

 

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TABLE OF CONTENTS

(CONTINUED)

 

			Page(s)
	(b)	Payment of Scheduled In-Service Withdrawals	12
	(c)	Payment Upon Termination of Participant’s Employment for Any Reason Other Than Retirement, Death or Becoming Disabled	13
	(d)	Payment Upon Termination of Participant’s Employment as a Result of Retirement or Becoming Disabled	13
7.2	Changes in Form or Time of Distribution		14
7.3	Default Provisions If No Election of Form of Distribution		15
7.4	Death Benefits		16
7.5	Unforeseeable Emergency		17
7.6	Inability To Locate A Participant		17
7.7	Key Employee Special Distribution Rule		17
7.8	Special Acceleration of Distribution Rules		18
ARTICLE 8	ADMINISTRATION		19
8.1	Committee		19
8.2	Committee Action		19
8.3	Powers and Duties of the Committee		19
8.4	Construction and Interpretation		20
8.5	Information		20
8.6	Compensation, Expenses and Indemnity		20
8.7	Quarterly Statements		21
ARTICLE 9	MISCELLANEOUS		21
9.1	Unsecured General Creditor		21
9.2	Restriction Against Assignment		21
9.3	Withholding		21
9.4	Disputes		21
9.5	Amendment, Modification, Suspension or Termination		23
9.6	Governing Law		23
9.7	Receipt or Release		23
9.8	Payments on Behalf of Incapacitated Persons		24
9.9	No Employment Rights		24
9.10	Department of Labor Determination		24

 

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TABLE OF CONTENTS

(CONTINUED)

 

		Page(s)
9.11	Headings, etc. Not Part of Agreement	24
9.12	Compliance with Section 409A of the Code	24
9.13	Electronic or Other Forms	24

 

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SYNOPSYS, INC.

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN II

 

SYNOPSYS, INC . (the “Company”) acting on behalf of itself and its designated subsidiaries hereby adopts the SYNOPSYS, INC. AMENDED AND RESTATED DEFERRED COMPENSATION PLAN II (the “Plan”).  Except as specifically provided herein or as necessary to comply with Section 409A of the Code, the Plan as amended and restated is effective as of December 31, 2008.

 

RECITALS

 

(a)           The Company intends to maintain the Plan as a supplemental retirement plan for the benefit of a select group of management or highly compensated employees as may be designated by the Company in its sole discretion.

 

(b)           The Plan provides for the payment of vested accrued benefits to Plan participants and their beneficiaries in accordance with the terms of this document.

 

(c)           Under the Plan, the Company pays all of the accrued benefits from its general assets.

 

(d)           The Company has entered into an agreement (the “Trust Agreement”) with a person or persons, including an entity that serves as trustee (the “Trustee”) under an irrevocable trust (the “Trust”) to be used in connection with the Plan.

 

(e)           The Company wishes to make contributions to the Trust so that contributions to be held by the Trustee shall be invested, reinvested and distributed, all in accordance with the provisions of the Plan and the Trust Agreement.

 

(f)            The Company intends that the amounts contributed to the Trust and the earnings thereon shall be used by the Trustee to satisfy the liabilities of the Company under the Plan with respect to each Plan Participant for whom an Account has been established and such use of the Trust assets shall be made in accordance with the procedures set forth herein.

 

(g)           The Company intends that the Trust be a “grantor trust” with the principal and income of the Trust treated as assets and income of the Company for federal and state income tax purposes.

 

(h)           The Company intends that the assets of the Trust shall at all times be subject to the claims of the general creditors of the Company as provided in the Trust Agreement.

 

(i)            The Company intends that the existence of the Trust shall not alter the characterization the Plan as “unfunded” for purposes of ERISA, and shall not be construed to provide income to Participants under the Plan prior to actual payment of the accrued benefits thereunder.

 

NOW THEREFORE , the Company does hereby adopt the Plan as follows:

 

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ARTICLE 1

DEFINITIONS

 

Whenever used in the Plan, the following terms shall have the meanings indicated below, unless a different meaning is plainly required by the context.  The singular shall include the plural, unless the context indicates otherwise.

 

1.1          Account .  “Account” means for each Participant the bookkeeping account maintained by the Committee that is credited with amounts equal to (i) the portion of the Participant’s Base Pay that he or she elects to defer, (ii) the portion of the Participant’s Variable Pay that he or she elects to defer, (iii) the Company’s discretionary contributions, if any, credited under the Plan for the Participant’s benefit, and (iv) adjustments to reflect deemed gains or losses pursuant to Section 5.1(c).

 

1.2          Base Pay .  “Base Pay” means the non-variable portion of an Eligible Employee’s annual cash compensation and such other non-cash, non-variable amounts payable to (or for the benefit of) an Eligible Employee as the Committee in its sole discretion may determine shall be included in the definition of “Base Pay” for the purposes of the Plan.

 

1.3          Beneficiary .  “Beneficiary” or “Beneficiaries” means the beneficiary last designated in writing by a Participant in accordance with procedures established by the Committee to receive the benefits specified hereunder in the event of the Participant’s death.  No beneficiary designation shall become effective until it is filed with the Committee.

 

1.4          Change in Control .  “Change in Control” means

 

(a)           The date that any one person or persons acting as a group acquires ownership of Company stock constituting more than fifty percent (50%) of the total fair market value or total voting power of the Company;

 

(b)           The date that any one person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company;

 

(c)           The date that any one person or persons acting as a group acquires assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition; or

 

(d)           The date that a majority of members of the Company’s Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors prior to the date of the appointment or elections.

 

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(e)           The term “Change in Control” is to be interpreted in accordance with Section 409A of the Code and regulations and guidance issued thereunder (including Treas. Reg. Section 1.409A-3(i)(5)).

 

1.5          Code .  “Code” means the Internal Revenue Code of 1986, as amended from time to time, and applicable valid regulations thereunder.

 

1.6          Committee .  “Committee” means the Synopsys Deferred Compensation Plans Committee.

 

1.7          Company .  “Company” means Synopsys, Inc., any successor corporation and any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity or investment interest, as determined by the Company.

 

1.8          Compensation .  “Compensation” means a Participant’s Base Pay and Variable Pay that is subject to deferral pursuant to Section 3.1.

 

1.9          Contributions .  “Contributions” means Base Pay or Variable Pay that a Participant elects to defer to the Plan pursuant to Article III, plus discretionary contributions contributed to the Participant’s Account by the Company pursuant to Section 3.3.

 

1.10        Deferral Period .  “Deferral Period” means, for each Plan Year, (i) the period from the first day of such Plan Year through the last day of the Fiscal Year of the Company that ends within that Plan Year, and (ii) the period from the first day of the Fiscal Year of the Company that begins within the Plan Year through the last day of that Plan Year.  Notwithstanding the foregoing, if a payroll period begins in one Deferral Period but ends in the subsequent Deferral Period, then, for purposes of the Plan, that payroll period shall be treated as if the payroll period both began and ended in the Deferral Period in which the payroll period actually ends.

 

1.11        Disabled .  “Disabled” means that a Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.

 

1.12        Distributable Amount .  “Distributable Amount” means the vested amount credited to a Participant’s Account.

 

1.13        Eligible Employee .  “Eligible Employee” for a Plan Year means (i) an Employee regularly performing services for the Company in the United States of America whose Target Compensation equals or exceeds, as of the October 1 immediately preceding the first day of the Plan Year, a dollar amount to be determined for each Plan Year by the Committee, (ii) an Employee (x) who was an Eligible Employee for a preceding Plan Year and (y) for whom an Account was maintained with a positive balance as of the end of the immediately preceding Plan Year, or (iii) any other Employee (x) who is designated by the Committee or an authorized representative of the Committee pursuant to procedures established by the Committee as eligible to participate in the Plan (including by being within a category of employee that has been so

 

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designated) and (y)  who has been given notice by the Committee or its authorized representative of such eligibility.  Notwithstanding the foregoing, the Committee may determine that an otherwise Eligible Employee shall not be eligible to participate in the Plan, shall not be eligible to continue to participate in the Plan or shall be eligible to participate beginning on a later date than would otherwise be provided by this Section 1.13.

 

1.14        Employee .  “Employee” means a common law employee of the Company who is treated by the Company as an employee for U.S. federal employment tax purposes and who has not been excluded by contract or employment classification from participating in employee benefit plans of the Company.

 

1.15        ERISA .  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and applicable valid regulations thereunder.

 

1.16        Fiscal Year .  “Fiscal Year” means the Company’s fiscal year as determined by the Company’s Board of Directors.

 

1.17        Fund or Funds .  “Fund” or “Funds” means one or more of the investment funds selected by the Committee pursuant to Section 4.1.

 

1.18        Fund Return .  “Fund Return” means, for each Fund, an amount equal to the net rate of gain or loss on the assets of such Fund during each month.

 

1.19        Initial Election Period .  “Initial Election Period” means the period beginning on the date the Eligible Employee is first notified by the Committee or the Committee’s authorized representative that the Eligible Employee is eligible to participate in the Plan and ending on the later of (i) the day immediately preceding commencement of the Plan Year for which such Eligible Employee may elect to become a Participant, and (ii) thirty (30) days after the date of delivery of such notice if the Plan Year for which such Eligible Employee may elect to become a Participant commenced prior to the date of delivery of such notice.  Notwithstanding the foregoing, in no event shall the Initial Election Period extend beyond the time period permitted by Treas. Reg. Section 1.409A-2(a).

 

1.20        Insurable Participant .  “Insurable Participant” means a Participant who satisfies underwriting standards for the issuance of life insurance determined by the insurance company selected by the Committee to provide the pre-termination death benefit described in Section 7.4(a).

 

1.21        Key Employee .  “Key Employee” means, for purposes of this Plan, and in accordance with Section 409A of the Code, a key employee as defined in Section 416(i) of the Code, without regard to paragraph (5) thereof, of the Company and any Eligible Employee who has been designated as a Key Employee by the Committee.

 

1.22        Participant .  “Participant” means any Eligible Employee (or former Eligible Employee) for whom an Account is maintained under the Plan.  For the avoidance of doubt, the term “Participant” shall not include a Beneficiary for whom an Account is maintained under the Plan following the death of a Participant.

 

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1.23        Plan .  “Plan” means the Synopsys Deferred Compensation Plan II set forth herein and in amendments from time to time made hereto.

 

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

 

1.25        Retirement .  “Retirement” means Termination of Participant’s Employment on or after attaining age fifty-five (55).

 

1.26        Target Compensation .  “Target Compensation” means annualized Base Pay plus annualized target commissions and target bonuses.

 

1.27        Termination of Participant’s Employment .  “Termination of Participant’s Employment” means a “separation from service” from the Company as defined in Treas. Reg. Section 1.409A-1(h)(1).

 

1.28        Variable Pay .  “Variable Pay” means any variable cash compensation including commissions, sales bonuses and/or other incentive compensation that is allocable to a Deferral Period as having been earned in such Deferral Period.  Variable Pay shall not include (a) retention bonuses, (b) other bonuses subject to possible repayment as a result of a specified future event (including sign-on bonuses and relocation bonuses), (c) severance payments, (d) any cash compensation if the Participant has the discretion to determine whether the compensation will be payable in cash or some other medium,  (e) any payments to the Participant from the Plan, the Synopsys Deferred Compensation Plan, or a plan sponsored by the Company under Section 125 or 401(k) of the Code, (f) a payment received from the Company by the Participant upon the exercise of a stock appreciation right, and (g) except with respect to commissions, payments made after the December 31st of the calendar year in which the payment became earned and vested.   Notwithstanding the foregoing, (x) Variable Pay shall include bonuses subject to possible repayment solely as a result of the Compensation Recovery Policy adopted by the Compensation Committee of the Board of Directors of the Company on December 10, 2008 as such policy may be amended from time to time, (y) cash compensation paid in the Company’s discretion in cash or in some other medium shall be excluded from Variable Pay if the inclusion of such compensation as Variable Pay would result in potential tax under Section 409A of the Code if the Plan were operated as described herein, and (z) the Committee may, in its sole discretion, determine from time to time that amounts excluded from the definition of Variable Pay by this Section 1.28 shall be included in the definition of “Variable Pay” for the purposes of the Plan.

 

ARTICLE 2

PARTICIPATION

 

An Eligible Employee shall become a Participant in the Plan by (a) electing to defer all or a portion of his or her Compensation, in accordance with Article III, and (b) if required by the Committee in its sole and absolute discretion, by filing a completed life insurance application along with his or her deferral election form, and complying with such applicable medical underwriting requirements as determined by a life insurance carrier elected by the Committee.  An Eligible Employee who completes the requirements of the preceding sentence shall become a

 

5

 

Participant in the Plan as of the first day of the first month in which such Eligible Employee’s Compensation is deferred.  In the event it is determined by the Committee that the proposed life insurance policy, if applicable, cannot be obtained in a cost efficient manner after medical underwriting requirements have been met, the Participant shall not be eligible to receive death benefits as provided under Section 7.4(a) of the Plan but shall otherwise be eligible to participate in the Plan.

 

ARTICLE 3

CONTRIBUTIONS

 

3.1          Elections to Defer Compensation .

 

(a)           Initial Election Period .  Each newly hired employee who becomes an Eligible Employee by designation and notification pursuant to Section 1.13 may elect to defer Compensation (as described in Section 3.1(e)) for the remainder of the Plan Year following such Eligible Employee’s Initial Election Period by filing with the third party administrator an election for such remaining Plan Year that conforms to the requirements of this Section.  Such election shall specify the amount to be deferred, if any, for the remainder of each Deferral Period in the relevant Plan Year as specified in Section 3.1(e) below.  Such election also shall specify the time at which and the form in which such deferred amounts shall be distributed to the Participant, as provided in Article VII.  Such election to defer Compensation and designate the distribution form and time must be received by the third party administrator no later than the last day of such Eligible Employee’s Initial Election Period.

 

(b)           General Rule .  Subject to the limitation set forth in Section 3.1(d) below, the amount of Compensation which an Eligible Employee may elect to defer during each Deferral Period is as follows:

 

(i)            Any whole percentage of Base Pay up to fifty percent (50%); and/or

 

(ii)           Any whole percentage of Variable Pay up to one hundred percent (100%);

 

provided, however, that no election made for one or both Deferral Periods in a Plan Year shall reduce the Compensation paid to an Eligible Employee for a calendar year to an amount that is less than the amount necessary to pay (a) applicable employment taxes (e.g., FICA, hospital insurance) payable with respect to amounts deferred hereunder, (b) except as provided in Section 3.1(c), amounts necessary to satisfy any other benefit plan withholding obligations, (c) any resulting income taxes required to be withheld with respect to Compensation that cannot be so deferred, and (d) any amounts necessary to satisfy any wage garnishment or similar type obligations.

 

(c)           Deferral Election Computation .  Deferral elections to the Plan shall be computed before taking into account (i)  any reduction in taxable income by contributions to plans sponsored by the Company under Sections 125 or 401(k) of the Code or (ii) any

 

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withholding of Compensation, for example, to participate in the Synopsys Employee Stock Purchase Plan.

 

(d)           Minimum Deferrals .  For each Plan Year during which the Eligible Employee is a Participant, the minimum amount that may be deferred for any Plan Year is one percent (1%) of the lesser of the eligible  Base Pay or the eligible Variable Pay during one of the Deferral Periods occurring within the Plan Year.

 

(e)           Effect of Initial Election .  An election to defer Compensation during the Initial Election Period shall be effective with respect to (i) Base Pay earned during the first pay period beginning after both the date the initial election becomes irrevocable and the start of the Deferral Period for which the election is made, and (ii) Variable Pay for services performed after the date on which the initial election becomes irrevocable and paid after the  start of the Deferral Period for which the election is made as provided by Treas. Reg. Section 1.409A-2(a)(7).

 

(f)            Duration of Base Pay Deferral Election or Variable Pay Deferral Election .  Except as provided in Section 3.1(h) below, a Base Pay deferral election or Variable Pay deferral election shall remain in effect from Plan Year to Plan Year, notwithstanding any change in a Participant’s Base Pay or Variable Pay, as applicable, until the Participant elects to amend or discontinue his or her Base Pay deferral election or Variable Pay deferral election, as applicable.  If the Participant does not amend or discontinue his or her deferral election for a Plan Year during the applicable election period that precedes such Plan Year, then the Participant will be deemed to have made a deferral election for that Plan Year, and for the Deferral Periods within the Plan Year, that is identical to the deferral election that was in effect for the Participant in the Plan Year that immediately preceded the Plan Year at issue.

 

If the Participant does amend or discontinue his or her deferral election for a Plan Year during the applicable election period that precedes such Plan Year, the percentage or dollar amount of Base Pay or Variable Pay designated by the Participant may be amended or discontinued by filing a new election, in accordance with the terms of this Section, with the third party administrator within the applicable election period for the Plan Year which contains the Deferral Period for which the election shall be in effect.  A Participant’s deferral election shall terminate with respect to future Base Pay or Variable Pay, as applicable, upon the earlier of (x) the Participant ceasing to be eligible to participate in the Plan, or (y) the Participant’s timely election to discontinue all deferrals for any subsequent Deferral Period.

 

Except as provided in Section 3.1(e), in the case of Variable Pay, the Participant’s elections in effect at the following times shall control:

 

(i)            In the case of commissions, the elections in effect at the beginning of the Plan Year in which the commission is paid.

 

(ii)           In the case of Variable Pay that is paid in a Plan Year and  qualifies as performance compensation within the meaning of Treas. Reg. Section 1.409A-1(e) with a performance period of at least twelve (12) months and with a performance period that commenced no earlier than the date that is two and one-half (2-1/2) months prior to the commencement of either such Plan Year or an earlier Plan Year and otherwise satisfying the

 

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conditions for an initial deferral election set forth in Treas. Reg. Section 1.409A-2(a)(8), the elections in effect at the commencement of the Plan Year that first follows the commencement of the performance period.

 

(iii)         In the case of all other Variable Pay, the elections in effect at the commencement of the period to which the Variable Pay relates.

 

(g)           Elections Other Than Elections During the Initial Election Period .  Any Eligible Employee who fails to elect to defer Compensation during his or her Initial Election Period may subsequently become a Participant provided he or she remains an Eligible Employee, and any Eligible Employee who has suspended a prior deferral election, may elect to defer Compensation provided he or she remains an Eligible Employee.  Such an election to defer Compensation shall be in such form as determined by the Committee in its sole discretion, must be filed with the third party administrator within the applicable election period for the relevant Plan Year and will be effective for Base Pay earned during pay periods beginning after such Plan Year begins and Variable Pay as provided in Section 3.1(f).

 

(h)           Special Rules for Deferral Elections .  The following special rules shall apply for the Plan Year beginning January 1, 2005 and the Plan Year beginning January 1, 2006, as applicable.

 

(i)            This Section 3.1(h)(i) applies only to a Participant who is notified by the Committee or the Committee’s delegate that the Participant is eligible to make the elections described in this Section 3.1(h)(i) (“Eligible Participant”).  Notwithstanding any other provision of the Plan to the contrary, for the Plan Year beginning January 1, 2005 (the “2005 Plan Year”) only, an Eligible Participant who elected to participate in the Plan for the 2005 Plan Year by filing a deferral of Compensation election form (or who is deemed to have filed such a deferral of Compensation election form pursuant to the deemed election procedures of Section 3.1(f)) on or before December 31, 2004, may elect to cancel the previously made deferral election for the 2005 Plan Year.  Such election to cancel a previously made election for the 2005 Plan Year shall be made by filing a change in election form with the third party administrator during the applicable election period, but no later than December 31, 2005.

 

An Eligible Participant who elects to cancel his or her previously made election for the 2005 Plan Year may elect to cancel (i) his or her entire election for the first Deferral Period in 2005, (ii) his or her entire election for the second Deferral Period in 2005, or (iii) his or her entire election for both Deferral Periods in 2005.  No partial cancellations of a previously made election for any Deferral Period in 2005 will be permitted; provided, however, that an election with respect to Base Pay shall be treated as a separate election from an election with respect to Variable Pay for the purposes of this Section 3.1(h)(i).  Any previously deferred amounts (including any gains and reduced by any losses) that are cancelled as provided under this Section 3.1(h)(i) shall be includable in the income of the Eligible Participant for the Eligible Participant’s 2005 taxable  year, or, if later, in the taxable year in which the amounts are earned and vested.

 

(ii)           Notwithstanding the foregoing provisions of this Section 3.1, for the Plan Year beginning January 1, 2006 (the “2006 Plan Year”), each Eligible Employee who

 

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intends to participate in the Plan for the 2006 Plan Year, must file an election to defer Compensation during the designated election period that precedes January 1, 2006.  For the 2006 Plan Year only, the provisions of Section 3.1(f) relating to deferral elections remaining in effect from year to year shall not be applicable.

 

(iii)         Notwithstanding any other provisions of this Plan to the contrary, the Committee may permit Participants to change payment elections prior to December 31, 2006; provided, however, that no such change may be permitted if such change would result in an impermissible subsequent deferral or acceleration as set forth in Section XI.C. of the preamble to the proposed regulations issued under Section 409A on September 29, 2005 (REG-158080-04).  For the avoidance of doubt, no change to a payment election shall be permitted in 2006 if either (x) the payment would have been made in 2006 in the absence of the change or (y) the change would cause a payment to be made in 2006.

 

3.2          Cancellation of Compensation Deferrals .

 

(a)           Automatic Cancellation .  In the event that a Participant receives a financial hardship withdrawal from the Synopsys 401(k) Savings and Success Sharing Plan or any other plan maintained by the Company which contains a qualified cash or deferred arrangement under Section 401(k) of the Code (the “401(k) Plan”), the Participant’s Compensation deferrals under this Plan (if any) shall be cancelled (i.e., the Participant’s deferral elections shall be deemed to be zero) for a period until the Participant elects a deferral election greater than zero effective with the commencement of a Plan Year that begins no earlier than six (6) months from the date that the Participant receives such hardship withdrawal.  Notwithstanding the foregoing, the Participant’s Compensation deferrals under this Plan shall not be so cancelled if the Committee determines that such cancellation is not required in order to preserve the tax-qualification of the 401(k) Plan.

 

(b)           Permissible Cancellation .  In the event that a Participant incurs an Unforeseeable Emergency (as defined in Section 7.5), the Committee, in its sole discretion, may cancel the Participant’s Compensation deferrals for the remainder of the Plan Year.  However, an election to make Compensation deferrals under Article III shall be irrevocable as to amounts deferred as of the effective date of any cancellation in accordance with this Section.

 

(c)           Section 401 and Section 409A Compliance .   The cancellation of deferrals described in  Section 3.2(a) shall be required to the extent necessary to preserve the tax-qualification of the 401(k) Plan.  The cancellation of deferrals described in Section 3.2(a) and Section 3.2(b) shall be permitted only in compliance with the requirements of Section 409A of the Code and regulations and other guidance issued thereunder.  Any Participant whose deferrals are cancelled under this Section 3.2 must meet the requirements for a new deferral election in order to restart deferrals under the Plan.  In the event the cancellation of deferrals described in this Section 3.2 are too short for the Plan to be in compliance with the requirements of Section 409A of the Code and regulations and other guidance issued thereunder, or for the 401(k) Plan to maintain its tax-qualification, such cancellation shall be automatically extended to the minimum extent necessary to be in such compliance or to maintain the tax-qualification of the 401(k) Plan.

 

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3.3          Company Discretionary Contributions .  The Company may, in its sole discretion, credit discretionary contributions to the Accounts of one or more Participants at such times and in such amounts as the Committee may determine.

 

ARTICLE 4

INVESTMENT ELECTIONS

 

4.1          Participant Investment Designation .  The Committee shall provide each Participant with a list of