Exhibit
4(c)
SECOND
AMENDMENT TO THE
NEOPROBE
CORPORATION 401(k) PLAN (the “Plan”)
Pursuant to the authority of Section
13.01 of the Plan, Neoprobe Corporation (the “Employer”) hereby amends the Plan
as follows, effective as stated herein;
Part
I: Amendments to the Plan for
Final 401(k) and 401(m) Regulations.
The Employer hereby amends to the Plan
to conform the Plan to final regulations under Code Sections 401(k) and 401(m)
as published by the Internal Revenue Service (“IRS”) on December 29, 2004.
This amendment is intended as good faith compliance with the interim amendment
requirements under IRS Revenue Procedure 2005-66 and IRS Notice 2005-95 and Code
Sections 401(k) and 401(m). Unless otherwise set forth below, this amendment
shall be effective with respect to Plan Years beginning after December 31,
2005.
This amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this amendment.
1. Section
2.18 is amended by the addition of the following paragraph to the end of the
Section as set forth below:
“A
Contribution Agreement under Section 5.02 cannot relate to Compensation that is
currently available prior to the adoption or effective date of Section 5.02.
Elective Deferrals cannot precede the earlier of (1) the performance of services
relating to the Elective Deferral Contribution or (2) when the Compensation that
is subject to the Contribution Agreement would be currently available to the
Employee in the absence of an election to defer. Notwithstanding the foregoing
provisions, the timing of Elective Deferrals will not fail to satisfy the
requirements of this paragraph merely because contributions for a pay period are
occasionally made before the services with respect to that pay period are
performed, provided the contributions are made early in order to accommodate
bona fide administrative considerations.”
2. Section
2.49 is amended by the addition of the following paragraphs to the end of the
Section as set forth below:
“Employer
contributions are not matching contributions made on account of Elective
Deferrals if they are contributed before the cash or deferred election is made
or before the Employees’ performance of services with respect to which the
Elective Deferrals are made (or when the cash that is subject to the cash or
deferred elections would be currently available, if earlier). In addition, an
employer contribution is not a Matching Contribution made on account of an
Employee After-Tax Contribution if it is contributed before the Employee
After-Tax Contribution. This paragraph does not apply to a forfeiture that is
allocated as a Matching Contribution. In addition, an allocation of shares from
an employee stock ownership plan loan suspense account described in Treasury
Regulation Section 54.4975-11(c) and (d) will not fail to be treated as a
Matching Contribution solely because the Employer contribution that resulted in
the release and allocation of those shares from the suspense account is made
before the Employees’ performance of services with respect to which the Elective
Deferrals are made (or when the cash that is subject to the cash or deferred
elections would be currently available, if earlier) provided
that:
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(1)
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The
contribution is for a required payment that is due under the loan terms;
and
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(2)
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The
contribution is not made early with a principal purpose of accelerating
deductions.
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The
timing of contributions will not be treated as failing to satisfy the
requirements of the immediately preceding paragraph merely because contributions
are occasionally made before the Employees’ performance of services with respect
to which the Elective Deferrals are made (or when the cash that is subject to
the cash or deferred elections would be currently available, if earlier) in
order to accommodate bona fide administrative considerations and are not paid
early with a principal purpose of accelerating deductions.”
3. Section
6.01(b)(i) is amended in its entirety as set forth below:
“(i) The
actual deferral ratio of any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Elective Deferral Contributions
(and Qualified Nonelective Contributions and/or Qualified Matching
Contributions, if treated as Elective Deferral Contributions for purposes of the
ADP test) allocated to such Participant’s accounts under two (2) or more cash or
deferred arrangements described in Code Section 401(k), that are maintained by
the same employer, shall be determined as if such Elective Deferral
Contributions (and, if applicable, such Qualified Nonelective Contributions
and/or Qualified Matching Contributions) were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements of the Employer that have different Plan Years, then all Elective
Deferral Contributions made during the Plan Year being tested under all such
cash or deferred arrangements shall be aggregated, without regard to the plan
years of the other plans. However, for Plan Years beginning before the effective
date of this amendment, if the plans have different plan years, then all such
cash or deferred arrangements ending with or within the same calendar year shall
be treated as separate if mandatorily disaggregated under the Regulations of
Code Section 401(k).”
4. Section
6.01(b) is amended by the addition of this new subsection 6.01(b)(viii) as set
forth below:
“(viii)
Except as otherwise provided in this paragraph, the Plan may use the current
year testing method or prior year testing method for the ADP test for a Plan
Year without regard to whether the current year testing method or prior year
testing method is used for the ACP test for that Plan Year. However, if the Plan
uses different testing methods, then the Plan cannot use:
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(a)
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The
recharacterization method of Regulation Section 1.401(k)-2(b)(3) to
correct excess contributions for a Plan
Year;
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(b)
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The
rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Deferral
Contributions into account under the ACP test (rather than the ADP test);
or
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(c)
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The
rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP
test).”
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5. Section
6.02(c) is amended in its entirety to read as follows:
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“(c)
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Determination of
Income or Loss. Excess Contributions shall be adjusted for any gain
or loss (hereinafter “income”) up to the date of distribution, including
an adjustment for income for the period between the end of the Plan Year
and the date of the distribution (the “gap period”). The Administrator has
the discretion to determine and allocate income using any of the methods
set forth below:
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(i)
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Reasonable method of
allocating income. The Administrator may use any reasonable method
for computing the income allocable to Excess Contributions, provided that
the method does not violate Code Section 401(a)(4), is used consistently
for all Participants and for all corrective distributions under the Plan
for the Plan Year, and is used by the Plan for allocating income to
Participant’s Accounts.
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(ii)
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Alternative method of
allocating income. The Administrator may allocate income to Excess
Deferral Contributions for the Plan Year by multiplying the income for the
Plan Year allocable to the Elective Deferral Contributions and other
amounts taken into account under the ADP test (including contributions
made for the Plan Year), by a fraction, the numerator of which is the
Excess Contributions for the Employee for the Plan Year, and the
denominator of which is the sum of
the:
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(1)
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Account
balance attributable to Elective Deferral Contributions and other amounts
taken into account under the ADP test as of the beginning of the Plan
Year, and
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(2)
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Any
additional amount of such contributions made for the Plan
Year.
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(iii)
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Safe harbor method of
allocating gap period income. The Administrator may use the safe
harbor method in this paragraph to determine income on Excess
Contributions for the gap period. Under this safe harbor method, income on
Excess Contributions for the gap period is equal to ten percent (10%) of
the income allocable to Excess Contributions for the Plan Year that would
be determined under paragraph (b) above, multiplied by the number of
calendar months that have elapsed since the end of the Plan Year. For
purposes of calculating the number of calendar months that have elapsed
under the safe harbor method, a corrective distribution that is made on or
before the fifteenth (15th)
day of a month is treated as made on the last day of the preceding month
and a distribution made after the fifteenth day of the month is treated as
made on the last day of the month.
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(iv)
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Alternative method for
allocating Plan Year and gap period income. The Administrator may
determine the allocable gain or loss for the aggregate of the Plan Year
and the gap period, by applying the alternative method provided by
paragraph (ii) above to this aggregate period. This is accomplished by
substituting the income for the Plan Year and the gap period, for the
income for the Plan Year, and by substituting the contributions taken into
account under the ADP test for the Plan Year and the gap period, for the
contributions taken into account under the ADP test for the Plan Year in
determining the fraction that is multiplied by that
income.
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The
Plan will not fail to use a reasonable method for computing income merely
because the income allocable to Excess Contributions is determined on a
date that is no more than seven (7) days before the
distribution.”
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6. Section
6.04(b)(ii) is amended in its entirety as set forth below:
“(ii) The
actual contribution ratio for any Participant who is a Highly Compensated
Employee and who is eligible to have Matching Contributions or Employee
After-Tax Contributions allocated to his or her account under two (2) or more
plans described in Code Section 401(a), or arrangements described in Code
Section 401(k) that are maintained by the same Employer, shall be determined as
if the total of such contributions was made under each plan and arrangement. If
a Highly Compensated Employee participates in two (2) or more such plans or
arrangements that have different plan years, then all Matching Contributions and
Employee After-Tax Contributions made during the Plan Year being tested under
all such plans and arrangements shall be aggregated without regard to the plan
years of the other plans. For Plan Years beginning before the effective date of
this amendment, all such plans and arrangements ending with or within the same
calendar year shall be treated as separate if mandatorily disaggregated under
the Regulations of Code Section 401(m).”
7. Section
6.04(b) is amended by the addition of this new subsection 6.04(b)(viii) as set
forth below:
“(viii)
Except as otherwise provided in this paragraph, the Plan may use the current
year testing method or prior year testing method for the ADP test for a Plan
Year without regard to whether the current year testing method or prior year
testing method is used for the ACP test for that Plan Year. However, if the Plan
uses different testing methods, then the Plan cannot use:
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(a)
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The
recharacterization method of Regulation Section 1.401(k)-2(b)(3) to
correct excess contributions for a Plan
Year;
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(b)
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The
rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Deferral
Contributions into account under the ACP test (rather than the ADP test);
or
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(c)
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The
rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP
test).”
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8. Section
6.05(c) is amended in its entirety as set forth below:
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“(c)
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Determination of
Income of Loss. Distributions of Excess Aggregate Contributions
must be adjusted for income, including an adjustment for income for the
period between the end of the Plan Year and the date of the distribution
(the “gap period”). For the purposes of this Section, income shall be
determined and allocated in accordance with the provisions of Section
6.02(c) of this amendment, except that such Section shall be applied by
substituting “Excess Contributions” with “Excess Aggregate Contributions”
and by substituting amounts taken into account under the ACP test for
amounts taken into account under the ADP
test.”
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9. Section
6.06 is amended in its entirety as set forth below:
6.06 Qualified Employer
Contributions.
The
Employer may elect to treat all or a part of its Matching Contributions and its
Employer Contributions as Qualified Employer Contributions for purposes of
meeting the ADP test or ACP tests and as necessary to meet the nondiscrimination
tests described in this Article VI. Qualified Employer Contributions shall be
allocated to Nonhighly Compensated and Highly Compensated Participants’
Qualified Employer Contribution Account (and which such Contributions may be
allocated to some Plan Participants but not others as set forth below) in an
amount sufficient to pass the test and such contributions shall be fully vested
and nonforfeitable at all times. The Employer, at the time such contributions
are made, will designate whether these contributions are Qualified Nonelective
Contributions or Qualified Matching Contributions as defined in Regulation
Section 1.401(k)-6 and Regulation Section 1.401(m)-5,
respectively.
Additionally,
the Employer may make additional contributions to the Plan which the Employer
designates as Qualified Employer Contributions for purposes of meeting the ADP
or ACP tests. Such contributions will be allocated to Nonhighly Compensated
Participants’ Qualified Employer Contribution Account (and which such
Contributions may be allocated to some Plan Participants but not others as set
forth below) in an amount sufficient to pass the test and such contributions
shall be fully vested and nonforfeitable at all times.
In
applying the requirements set forth in Code Sections 401(k)(3)(A)(ii),
401(m)(2), 410(b) and 401(a)(4), the Employer may, at its option, utilize such
testing procedures as may be permitted under Code Sections 401(a)(4), 401(k),
401(m) or 410(b), including without limitation, (i) aggregation of the Plan with
one or more other qualified plans, (ii) restructuring of the Plan into one or
more component plans, (iii) inclusion of Qualified Matching Contributions,
Qualified Nonelective Contributions or Elective Deferrals described in, and
meeting the requirements of, Regulations under Code Sections 401(k) and 401(m)
to any other qualified plan of the Employer, or (iv) any permissible combination
thereof.
The
provisions of this Section 6.06 may not be used for purposes of meeting the
nondiscrimination tests described in this Article VI if the Employer elects to
use the prior year testing method as described in Section 6.01(a) and/or
6.04(a).
Additionally,
Qualified Nonelective Contributions cannot be taken into account in determining
the actual deferral ratio for a Plan Year for a Non-Highly Compensated Employee
to the extent such contributions exceed the product of that Non-Highly
Compensated Employee’s Code Section 414(s) compensation and the greater of five
percent (5%) or two (2) times the Plan’s “representative contribution rate.” Any
Qualified Nonelective Contribution taken into account under an ACP test under
Regulation Section 1.401(m)-2(a)(6) (including the determination of the
representative contribution rate for purposes of Regulation Section
1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes
of this Section (including the determination of the “representative contribution
rate” under this Section). For purposes of this Section:
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(a)
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The
Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible Non-Highly Compensated Employee among a
group of eligible Non-Highly Compensated Employees that consists of half
of all eligible Non-Highly Compensated Employees for the Plan Year (or, if
greater, the lowest “applicable contribution rate” of any eligible
Non-Highly Compensated Employee who is in the group of all eligible
Non-Highly Compensated Employees for the Plan Year and who is employed by
the Employer on the last day of the Plan Year),
and
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(b)
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The
‘applicable contribution rate’ for an eligible Non-Highly Compensated
Employee is the sum of the Qualified Matching Contributions taken into
account in determining the actual deferral ratio for the eligible
Non-Highly Compensated Employee for the Plan Year and the Qualified
Nonelective Contributions made for the eligible Non-Highly Compensated
Employee for the Plan Year, divided by the eligible Non-Highly Compensated
Employee’s Code Section 414(s) compensation for the same
period.
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Notwithstanding
the above, Qualified Nonelective Contributions that are made in connection with
an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act,
Public Law 71-798, Service Contract Act of 1965, Public Law 89-286, or similar
legislation can be taken into account for a Plan Year for a Non-Highly
Compensated Employee to the extent such contributions do not exceed 10 percent
(10%) of that Non-Highly Compensated Employee’s Code Section 414(s)
compensation.
Qualified
Matching Contributions may only be used to calculate an actual deferral ratio to
the extent that such Qualified Matching Contributions are Matching Contributions
that are not precluded from being taken into account under the ACP test for the
Plan Year under the rules of Regulation Section 1.401(m)-2(a)(5)(ii) and as set
forth in this Section in the below paragraphs.
A
Matching Contribution with respect to an Elective Deferral Contribution for a
Plan Year is not taken into account under the ACP test for a Non-Highly
Compensated Employee to the extent it exceeds the greater of:
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(a)
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five
percent (5%) of the Non-Highly Compensated Employee’s Code Section 414(s)
compensation for the Plan Year;
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(b)
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the
Non-Highly Compensated Employee’s Elective Deferral Contributions for the
Plan Year; and
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(c)
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the
product of two (2) times the Plan’s ‘representative matching rate’ and the
Non-Highly Compensated Employee’s Elective Deferral Contributions for the
Plan Year.
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For
purposes of this Section, the Plan’s “representative matching rate” is the
lowest “matching rate” for any eligible Non-Highly Compensated Employee among a
group of Non-Highly Compensated Employees that consists of half of all eligible
Non-Highly Compensated Employees in the Plan for the Plan Year who make Elective
Deferral Contributions for the Plan Year (or, if greater, the lowest “matching
rate” for all eligible Non-Highly Compensated Employees in the Plan who are
employed by the Employer on the last day of the Plan Year and who make Elective
Deferral Contributions for the Plan Year).
For
purposes of this Section, the Plan’s “matching rate” for an Employee generally
is the Matching Contributions made for such Employee divided by the Employee’s
Elective Deferral Contributions for the Plan Year. If the matching rate is not
the same for all levels of Elective Deferral Contributions for an Employee, then
the Employee’s “matching rate” is determined assuming that an Employee’s
Elective Deferral Contributions are equal to six percent (6%) of Code Section
414(s) compensation.
If the
Plan provides a Matching Contribution with respect to the sum of the Employee’s
After-Tax Contributions and Elective Deferral Contributions, then for purposes
of this Section, that sum is substituted for the amount of the Employee’s
Elective Deferral Contributions in subsections (b) and (c) above and in
determining the ‘matching rate,’ and Employees who make either Employee
After-Tax Contributions or Elective Deferral Contributions are taken into
account in determining the Plan’s ‘representative matching rate.’ Similarly, if
the Plan provides a match with respect to the Employee’s After-Tax
Contributions, but not Elective Deferral Contributions, then for purposes of
this subsection, the Employee’s After-Tax Contributions are substituted for the
amount of the Employee’s Elective Deferral Contributions in subsections (b) and
(c) above and in determining the ‘matching rate,’ and Employees who make
Employee After-Tax Contributions are taken into account in determining the
Plan’s ‘representative matching rate.’
Qualified
Nonelective Contributions cannot be taken into account under the ACP test for a
Plan Year for a Non-Highly Compensated Employee to the extent such contributions
exceed the product of that Non-Highly Compensated Employee’s Code Section 414(s)
compensation and the greater of five percent (5%) or two (2) times the Plan’s
‘representative contribution rate.’ Any Qualified Nonelective Contribution taken
into account under an ADP test under Regulation Section 1.401(k)-2(a)(6)
(including the determination of the “representative contribution rate” for
purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be
taken into account for purposes of this Section (including the determination of
the “representative contribution rate” for purposes of subsection (a) below).
For purposes of this Section:
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(a)
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The
Plan’s ‘representative contribution rate’ is the lowest ‘applicable
contribution rate’ of any eligible Non-Highly Compensated Employee among a
group of eligible Non-Highly Compensated Employees that consists of half
of all eligible Non-Highly Compensated Employees for the Plan Year (or, if
greater, the lowest “applicable contribution rate” of any eligible
Non-Highly Compensated Employee who is in the group of all eligible
Non-Highly Compensated Employees for the Plan Year and who is employed by
the Employer on the last day of the Plan Year),
and
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(b)
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The
‘applicable contribution rate’ for an eligible Non-Highly Compensated
Employee is the sum of the Matching Contributions taken into account in
determining the actual deferral rate for the eligible Non-Highly
Compensated Employee for the Plan Year and the Qualified Nonelective
Contributions made for that Non-Highly Compensated Employee for the Plan
Year, divided by that Non-Highly Compensated Employee’s Code Section
414(s) compensation for the Plan
Year.
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Notwithstanding
the above, Qualified Nonelective Contributions that are made in connection with
an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act,
Public Law 71-798, Service Contract Act of 1965, Public Law 89-286, or similar
legislation can be taken into account for a Plan Year for a Non-Highly
Compensated Employee to the extent such contributions do not exceed 10 percent
(10%) of that Non-Highly Compensated Employee’s Code Section 414(s)
compensation.
Qualified
Nonelective Contributions and Qualified Matching Contributions cannot be taken
into account under this Section to determine an actual deferral ratio to the
extent such contributions are taken into account for purposes of satisfying any
other ADP test, any ACP test, or the requirements of Regulation Section
1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus for example, Matching Contributions
that are made pursuant to Regulation Section 1.401(k)-3(c) cannot be taken into
account under the ADP test. Additionally, if the Plan switches from the current
year testing method to the prior year testing method under Regulation Section
1.401(k)-2(c), Qualified Nonelective Contributions that are taken into account
under the current year testing method for a Plan Year may not be taken into
account under the prior year testing method for the subsequent Plan
Year.”
10. Section
8.03(b) is amended by the addition of the following paragraph to the end of the
Section as set forth below:
“Notwithstanding
the above deemed cashout provisions, the Plan shall otherwise take a
Participant’s Elective Deferral Contributions into account to determine whether
a Participant has a nonforfeitable right to contributions for the purpose of the
forfeiture provisions under Code Section 411(a)(6) and 410(a)(5) and for the
purpose of permitting repayment of distributions and restoration of
forfeitures.”
11. Section
9.10(a) is amended in its entirety, as set forth below:
“(a) The
following are the only financial needs considered immediate and heavy: (1)
deductible medical expenses or deductible expenses necessary to obtain medical
care (within the meaning of Section 213(d) of the Code) for the Employee, the
Employee’s Spouse, children, or dependents (as dependents are defined in Section
152 of the Code); (2) costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Employee; (3) payment of tuition,
related educational fees, and room and board expense for up to the next twelve
(12) months of post-secondary education for the Employee, the Employee’s Spouse,
children or dependents (as dependents are defined in Section 152 of the Code);
(4) the need to prevent the eviction of the Employee from, or a foreclosure on
the mortgage of the Employee’s principal residence; (5) payments for burial or
funeral expenses for the Employee’s deceased parent, Spouse, children or
dependents (as defined in Section 152 of the Code; or (6) expenses for the
repair of damage to the Employee’s principal residence that would qualify for
the casualty deduction under Section 165 of the Code (determined without regard
to whether the loss exceeds 10% of adjusted gross income).
The
definition of dependent for all purposes under this Plan is defined in Code
Section 152, and, for taxable years beginning on or after January 1, 2005,
without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B).”
Part
II: Miscellaneous
Amendment.
1. The
First Amendment to the Plan shall be changed to clarify that the Plan Section
number referenced at Item 11 of the amendment as 9.11(b)(iv) should reference
Plan Section number 9.10(b)(iv).
The remainder of the Plan remains
unchanged.
This amendment has been executed this
22nd day of December, 2006.
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EMPLOYER:
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NEOPROBE
CORPORATION
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By:
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/s/ Brent L. Larson
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Brent
L. Larson
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Its:
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V.P. Finance/CFO
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TRUSTEE:
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NEOPROBE
CORPORATION
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By:
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/s/ Brent L. Larson
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Brent
L. Larson
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Its:
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V.P.
Finance/CFO
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