Exhibit 10.7

 

 

 

CALIFORNIA INDEPENDENT BANCORP

EMPLOYEE STOCK OWNERSHIP PLAN

(Amendment and Restatement)

 

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TABLE OF CONTENTS

 

ARTICLE I
DEFINITIONS

 

ARTICLE II
TOP HEAVY AND ADMINISTRATION

 

2.1

Top Heavy Plan Requirements

 

 

2.2

Determination of Top Heavy Status

 

 

2.3

Powers and Responsibilities of the Employer

 

 

2.4

Designation of Administrative Authority

 

 

2.5

Allocation and Delegation of Responsibilities

 

 

2.6

Powers and Duties of the Administrator

 

 

2.7

Records and Reports

 

 

2.8

Appointment of Advisers

 

 

2.9

Information From Employer

 

 

2.10

Payment of Expenses

 

 

2.11

Majority Actions

 

 

2.12

Claims Procedures

 

 

2.13

Claims Review Procedure

 

 

ARTICLE III
ELIGIBILITY

 

 

3.1

Conditions of Eligibility

 

 

3.2

Effective Date of Participation

 

 

3.3

Determination of Eligibility

 

 

3.4

Termination of Eligibility

 

 

3.5

Omission of Eligible Employee

 

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3.6

Inclusion of Ineligible Employee

 

 

3.7

Election Not to Participate

 

 

ARTICLE IV
CONTRIBUTION AND ALLOCATION

 

 

4.1

Formula for Determining Employer’s Contribution

 

 

4.2

Time of Payment of Employer Contribution

 

 

4.3

Allocation of Contribution, Forfeitures and Earnings

 

 

4.4

Maximum Annual Additions

 

 

4.5

Diversification

 

 

ARTICLE V
FUNDING AND INVESTMENT POLICY

 

 

5.1

Investment Policy

 

 

5.2

Application of Cash

 

 

5.3

Transaction Involving Company Stock

 

 

5.4

Loans to the Trust

 

 

ARTICLE VI
VALUATIONS

 

 

6.1

Valuation of the Trust Fund

 

 

6.2

Method of Valuation

 

 

ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS

 

 

7.1

Determination of Benefits Upon Retirement

 

 

7.2

Determination of Benefits Upon Death

 

 

7.3

Disability Retirement Benefits

 

 

7.4

Determination of Benefits Upon Termination

 

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7.5

Distribution of Benefits

 

 

7.6

How Plan Benefit Will be Distributed

 

 

7.7

Distribution for Minor Beneficiary

 

 

7.8

Location of Participant or Beneficiary Unknown

 

 

7.9

Right of First Refusals

 

 

7.10

Stock Certificates Legend

 

 

7.11

Nonterminable Protections and Rights

 

 

7.12

Qualified Domestic Relations Order Distributions

 

 

7.13

Put Option

 

 

ARTICLE VIII
TRUSTEE

 

 

8.1

Basic Responsibilities of the Trustee

 

 

8.2

Investment Powers and Duties of the Trustee

 

 

8.3

Other Powers of the Trustee

 

 

8.4

Voting Company Stock

 

 

8.5

Duties of the Trustee Regarding Payments

 

 

8.6

Trustee’s Compensation and Expenses and Taxes

 

 

8.7

Annual Report of the Trustee

 

 

8.8

Audit

 

 

8.9

Resignations, Removal and Succession of Trustee

 

 

8.10

Transfer of Interest

 

 

8.11

Direct Rollover

 

 

ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS

 

 

9.1

Amendment

 

 

9.2

Termination

 

 

9.3

Merger or Consolidation

 

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ARTICLE X
MISCELLANEOUS

 

 

10.1

Participants’ Rights

 

 

10.2

Alienation

 

 

10.3

Construction for Plan

 

 

10.4

Gender and Number

 

 

10.5

Legal Action

 

 

10.6

Prohibition Against Diversion of Funds

 

 

10.7

Bonding

 

 

10.8

Receipt and Release for Payments

 

 

10.9

Action by the Employer

 

 

10.10

Named Fiduciaries and Allocation of Responsibility

 

 

10.11

Headings

 

 

10.12

Approval by Internal Revenue Service

 

 

10.13

Uniformity

 

 

10.14

Securities and Exchange Commission Approval

 

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CALIFORNIA INDEPENDENT BANCORP

EMPLOYEE STOCK OWNERSHIP PLAN

(Amendment and Restatement)

 

THIS AGREEMENT, hereby made and entered into this ___________________day of
________________________, 2001 between California Independent Bancorp (herein
referred to as the “Employer”) and Theresa Cole, Cindy Seidel, and Robert Epley
(hereinafter referred to as the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, the Employer heretofore established an Employee Stock Ownership Plan
and Trust effective January 1, 1989 (hereinafter called the “Effective Date”),
known as Feather River State Bank Employee Stock Ownership Plan (hereinafter
referred to as the “Plan”) in recognition for the contribution made to its
successful operation by its employees and for the exclusive benefit of its
eligible employees; and

 

WHEREAS, under the terms of the Plan, the Employer has the ability to amend the
Plan, provided the Trustee joins in such amendment if the provisions of the P1an
affecting the Trustee are amended; and

 

WHEREAS, contributions to the Plan will be made by the Employer and such
contributions made to the trust will be invested primarily in the capital stock
of the Employer;

 

NOW, THEREFORE, effective January 1, 2001, except as otherwise provided, the
Employer and the Trustee in accordance with the provisions of the Plan
pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:

 

 

ARTICLE I

DEFINITIONS

 

1.1  “Act” means the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.

 

1.2  “Administrator” means the person or entity designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.

 

1.3  “Affiliated Employer” means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant” to Regulations under Code Section 414(o).

 

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1.4  “Aggregate Account” means, with respect to each Participant, the value of
all accounts maintained on behalf of a Participant, subject to the provisions of
Section 2.2.

 

1.5  “Anniversary Date” means December 31st .

 

1.6  “Beneficiary” means the person to whom the share of a deceased
Participant’s total account is payable, subject to the restrictions of Sections
7.2 and 7.5.

 

1.7  “Code” means the Internal Revenue Code of 1986, as amended or replaced from
time to time.

 

1.8  “Company Stock” means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations) which is
readily tradeable on an established securities market. If there is no common
stock which meets the foregoing requirement, the term “Company Stock” means
common stock issued by the Employer (or by a corporation which is a member of
the same controlled group) having a combination of voting power and dividend
rights equal to or in excess of: (A) that class of common stock of the Employer
(or of any other such corporation) preferred having the greatest voting power,
and (B) that class of common stock of the Employer (or of any other such
corporation) having the greatest dividend rights.  Noncallable preferred stock
shall be deemed to be “Company Stock” if such stock is convertible at any time
into stock which constitutes “Company Stock” hereunder and if such conversion is
at a conversion price which (as of the date of the acquisition by, the Trust) is
reasonable. For purposes of the preceding sentence, pursuant to Regulations,
preferred stock shall be treated as noncallable if after the call there will be
a reasonable opportunity for a conversion which meets the requirements of the
preceding sentence.

 

1.9  “Company Stock Account” means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
Fund or contributed to the Trust Fund

 

1.10  “Compensation”, effective January 1, 1998, with respect to any Participant
means such Participant’s wages as defined in Code Section 3401(a) and all other
payments of compensation by the Employer or any Affiliated Employer (in the
course of the Employer’s trade or business) for a Plan Year for which the
Employer or any Affiliated Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation
must be determined without regard to any rules under Code Section 3401 (a) that
limit the remuneration included in wages based on the nature of location of the
employment or the services, performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).

 

For purposes of this Section, the determination of Compensation shall be made by
including amounts which are contributed by the Employer pursuant to a salary
reduction agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 132(f), 402(e)(3), 402(h), 403(b) or 457,
and Employee contributions described in Code Section 414(h)(2) that are treated
as Employer contributions.

 

For a Participant’s initial year of participation, Compensation shall be
recognized for the entire Plan year.

 

Compensation in excess of $160,000 shall be disregarded. Such amount shall be
adjusted at the same time and in such manner as permitted under Code Section
401(a)(17). For any short Plan Year the Compensation limit shall be an amount
equal to the Compensation limit for the

 

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calendar year in which the Plan Year begins multiplied by the ratio obtained by
dividing the number of full months in the short Plan Year by twelve (12).

 

1.11  “Early Retirement Date” means any Anniversary Date (prior to the Normal
Retirement date) coinciding with or following the date on which a Participant or
Former Participant attains age 55 and has completed at least 7 Years of Service
with the Employer (Early Retirement Age). A Participant shall become fully
Vested upon satisfying this requirement if still employed at his Early
Retirement Age.

 

A Former Participant who terminates employment after satisfying the service
requirement for early Retirement and who thereafter reaches the age requirement
contained herein shall be entitled to receive his benefits under this Plan.

 

1.12  “Eligible Employee” means any Employee.

 

Employees of Affiliated Employers shall not be eligible to participate in this
Plan unless such Affiliated Employers have specifically adopted this Plan in
writing.

 

1.13  “Employee” means any person who is employed by the Employer or Affiliated
Employer, but excludes any person who is an independent contractor. Employee
shall include Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and such Leased Employees do not constitute more than 20% of
the recipient’s non-highly compensated work force.

 

1.14  “Employer” means California Independent Bancorp and any successor which
shall maintain this Plan, any predecessor which has maintained this Plan, and
each Affiliated Employer which has been designated by California Independent
Bancorp as an Employer under the Plan and which has adopted the Plan for the
benefit of its Employees. The Employer is a corporation with principal offices
in the State of California.

 

1.15  “Employer Contributions” means contributions made to the Plan for a Plan
Year by the Employer pursuant to section 4.1 below.

 

1.16  “ESOP” means an employee stock ownership plan that meets the requirements
of Code Section 4975(e)(7) and regulation 54.4975-11.

 

1.17  “Exempt Loan” means a loan made to the Plan by a disqualified person or a
loan to the Plan which is guaranteed by a disqualified person and which
satisfies the requirements of Section 2550.408b-3 of the Department of Labor
Regulations,

Section 54.4975-7(b) of the Treasury Regulations and Section 5.4 hereof.

 

1.18  “Family Member” means, with respect to an affected Participant, such
Participant’s spouse and such Participant’s lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).

 

1.19  “Fiduciary” means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets, (b)
renders investment advice for a fee or other compensation, direct or indirect,
with respect to any monies or other property of the Plan or has any authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.

 

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1.20  “Fiscal Year” means the Employer’s accounting year of 12 months commencing
on January 1st of each year and ending the following December 31st.

 

1.21  “Forfeiture” means that portion of a Participant’s Account that is not
Vested, and occurs on the earlier of:

 

(a)  the distribution of the entire Vested portion of a Terminated Participant’s
Account, or

 

(b)  the last day of the Plan Year in which the Participant incurs five (5)
consecutive 1-Year Breaks in Service.

 

Furthermore, for purposes of paragraph (a) above, in the case of a Terminated
Participant whose Vested benefit is zero, such Terminated Participant shall be
deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 7.4(g)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.

 

1.22  “Former Participant” means a person who has been a Participant, but who
has ceased to be a Participant for any reason.

 

1.23  “415 Compensation”, effective January 1, 1998, with respect to any
Participant means such Participant’s wages as defined in Code Section 3401(a)
and all other payments of compensation by the Employer (in the course of the
Employer’s trade or business) for a Plan Year for which the Employer is required
to furnish the Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052 and specifically includes any elective deferral as defined
in Code section 402(g)(3) and any amount which is contributed or deferred by the
Employer at the election of the Participant and which is not includible in the
gross income of the Participant by reason of Code section 125, 132(f)(4) or 457.
“415 Compensation” must be determined without regard to any rules under Code
Section 3401(a) 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 Code Section 3401(a)(2)).

 

If, in connection with the adoption of this amendment and restatement, the
definition of “415 Compensation” has been modified, then, for Plan Years prior
to the Plan Year which includes the adoption date of this amendment and
restatement, “415 Compensation” means compensation determined pursuant to the
Plan then in effect.

 

1.24  “414(s) Compensation”, effective January 1, 1998, with respect to any
Participant means such Participant’s “415 Compensation” paid during a Plan Year.
The amount of “414(s) Compensation” with respect to any Participant shall
include “414(s) Compensation” for the entire twelve (12) month period ending on
the last day of such Plan Year.

 

For purposes of this Section, the determination of “414(s) Compensation” shall
be made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 132(f), 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.

 

The annual Compensation of each Employee taken into account under the Plan shall
not exceed $160,000 adjusted by the Commissioner for increase in the cost of
living in accordance

 

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with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.

 

If, in connection with the adoption of this amendment and restatement, the
definition of “414(s) Compensation” has been modified, then, for Plan Years
prior to the plan Year which includes the adoption date of this amendment and
restatement, “414(s) Compensation” means compensation determined pursuant to the
Plan then in effect.

 

1.25  “Highly Compensated Employee” means effective January 1, 1997, an Employee
who performs Service during a determination year and who is described in one or
more of the following groups:

 

(1)  An Employee who is a 5% owner during either the current or preceding Plan
year, or

 

(2)  An Employee who earned in excess of $80,000 (as such may be adjusted by the
IRS for future cost of living) during the preceding Plan Year.

 

1.26  “Highly Compensated Former Employee” means a former Employee who had a
separation year prior to the “determination year” and was a Highly Compensated
Employee in the year of separation from service or in any “determination year”
after attaining age 55. For purposes of this Section, “determination year,” “415
Compensation” and “five percent owner” shall be determined in accordance with
Section 1.31. Highly Compensated Former Employees shall be treated as Highly
Compensated Employees. The method set forth in this Section for determining who
is a “Highly Compensated Former Employee” shall be applied on a uniform and
consistent basis for all purposes for which the Code Section 414(q) definition
is applicable.

 

1.27  “Highly Compensated Participant” means any Highly Compensated Employee who
is eligible to participate in the Plan.

 

1.28  “Hour of Service” means (1) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer for the
performance of duties during the applicable computation period; (2) each hour
for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty,
or leave of absence) during the applicable computation period; (3) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
The same Hours of Service shall not be credited both under (1) or (2), as the
case may be and under (3).

 

Notwithstanding the above, (i) no more than 501 Hours of Service are required to
be credited to an Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such period occurs in a
single computation period); (ii) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period during which no
duties are performed is not required to be credited to the Employee if

 

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such payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker’s compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.

 

For purposes for this Section, a payment shall be deemed to be made by or due
from the Employer regardless of whether such payment is made by or due from the
Employer directly or indirectly through, among others, a trust fund, or insurer,
to which the Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are for
the benefit of particular Employees or are on behalf of a group of Employees in
the aggregate.

 

An Hour of Service must be counted for the purposes of determining a Year of
Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment commencement
date). In addition, Hours of Service will be credited for employment with other
Affiliated Employers. The provisions of Department of Labor Regulations
2530.200(b) and (c) are incorporated herein by reference .

 

1.29  “Investment Manager” means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.

 

1.30  “Key Employee” means an Employee as defined in Code Section 416(i) and the
Regulations thereunder. Generally, any Employee or former Employee (as well as
each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the “Determination Date” or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:

 

(a)  an officer of the Employer (as that term is defined within the meaning of
the Regulations under Code Section 416) having annual “415 Compensation” greater
than 50 percent of the amount in effect under Code Section 415(b)(1)(A) for any
such Plan Year.

(b)  One of the ten employees having annual “415 Compensation” from the Employer
for a Plan Year greater than the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan Year ends and owning (or
considered as owning within the meaning of Code Section 318) both more than
one-half percent interest and the largest interests in the Employer.

 

(c)  a “five percent owner” of the Employer. “Five percent owner” means any
person who owns (or is considered as owning within the meaning of Code Section
318) more than five percent (5%) of the outstanding stock of the Employer or
stock possessing more than five percent (5%) of the total combined voting power
of all stock of the Employer or, in the case of an unincorporated business, any
person who owns more than five percent (5%) of the capital or profits interest
in the Employer. In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c), (m) and (o) shall
be treated as separate employers.

 

(d)  a “one percent owner” of the Employer having an annual “415 Compensation”
from the Employer of more than $150,000. “One percent owner”

 

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means any person who owns (or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding stock of the Employer
or stock possessing more than one percent (1%) of the total combined voting
power of all stock of the Employer or, in the case of an unincorporated
business, any person who owns more than one percent (1%) of the capital or
profits interest in the Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in determining
whether an individual has “415 Compensation” of more than $150,000, “415
Compensation” from each employer required to be aggregated under Code Sections
414(b), (c), (m) and (o) shall be taken into account.

 

For purposes of this Section, effective January 1, 1998, the determination of
“415 Compensation” shall be made by including amounts which are contributed by
the Employer pursuant to a salary reduction agreement and which are not
includible in the gross income of the Participant under Code Sections 125,
132(f), 402(e)(3), 402(h), 403(b) or 457, and Employee contributions described
in Code Section 414(h)(2) that are treated as Employer contributions.

 

1.31  “Late Retirement Date” means the Anniversary Date coinciding with or next
following a Participant’s actual Retirement Date after having reached his Normal
Retirement Date.

 

1.32  “Leased Employee” means, effective January 1, 1997, any person (other than
an Employee of the recipient) who pursuant to an agreement between the recipient
and any other person (“leasing organization”) has performed services for the
recipient (or for the recipient and related persons determined in accordance
with Code Section 414(n)(6)) 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 recipient employer. Contributions or benefits provided a
Leased Employee by the leasing organization, which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer. A Leased Employee shall not be considered an Employee of the
recipient:

 

(a)  if such employee is covered by a money purchase pension plan providing:

 

(1)     a non-integrated employer contribution rate of at least 10% of
compensation, as defined in Code  Section 415(c)(3), but including amounts which
are contributed by the Employer pursuant to a salary reduction agreement and
which are not includible in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h), 403(b) or 457, and Employee contributions
described in Code Section 414(h)(2) are treated as Employer contributions;

 

(2)     immediate participation;

 

(3)     full and immediate vesting; and

 

(b)  if Leased Employees do not constitute more than 20% of the recipient’s
non-highly compensated work force.

 

1.33  “Limitation Year’’ means the Plan Year.

 

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1.34  “Net Profit” means with respect to any Fiscal Year the Employer’s net
income or profit for such Fiscal Year determined upon the basis of the
Employer’s books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan.

 

1.35  “Non-Highly Compensated Participant” means any Participant who is not a
Highly Compensated Employee.

 

1.36  “Non-Key Employee” means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.

 

1.37  “Normal Retirement Age” means the Participant’s 65th birthday. A
Participant shall become fully vested in his Participant’s Account upon
attaining his Normal Retirement Age.

 

1.38  “Normal Retirement Date” means the Anniversary Date coinciding with or
next following the Participant’s Normal Retirement Age.

 

1.39  “1-Year Break In Service” means the applicable computation period during
which an Employee has not completed more than 500 Hours of Service with the
Employer. Further, solely for the purpose of determining whether a Participant
has incurred a 1-Year Break in Service, Hours of Service shall be recognized for
“authorized leaves of absence” and “maternity and paternity leaves of absence.”
“Years of Service and I-Year Breaks in Service shall be measured on the same
computation period.

 

“Authorized leave of absence” means an unpaid, temporary cessation from active
employment with the Employer pursuant to an established nondiscriminatory
policy, whether occasioned by illness, military service, or any other reason.

 

A “maternity, or paternity leave of absence” means an absence from work for any
period by reason of the Employee’s pregnancy, birth of the Employee’s child,
placement of a child with the Employee in connection with the adoption of such
child, or any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the absence from
work begins, only if credit therefore is necessary to prevent the Employee from
incurring a 1-Year Break in Service, or, in any other case, in the immediately
following computation period. The Hours of Service credited for a “maternity or
paternity leave of absence” shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8) Hours of Service per
day. The total Hours of Service required to be credited for a “maternity or
paternity leave of absence” shall not exceed 501.

 

1.40  “Other Investments Account” means the account of a Participant which is
credited with his share of the net gain (or loss) of the Plan, Forfeitures and
Employer contributions in other than Company Stock and which is debited with
payments made to pay for Company Stock.

 

1.41  “Participant” means any Eligible Employee who participates in the Plan as
provided in Sections 3.2 and 3.3, and has not for any reason become ineligible
to participate further in the Plan.

 

1.42  “Plan” means this instrument, including all amendments thereto.

 

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1.43  “Plan Year” means the Plan’s accounting year of 12 months commencing on
January 1st of each year and ending the following December 31st.

 

1.44  “Regulation” means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time .

 

1.45  “Retired Participant” means a person who has been a Participant, but who
has become entitled to retirement benefits under the Plan.

 

1.46  “Retirement Date” means the date as of which a Participant retires whether
such retirement occurs on a Participant’s Normal Retirement Date, Early or Late
Retirement Date (see Section 7.1).

 

1.47  “Super Top Heavy Plan” means a plan described in Section 2.2(b).

 

1.48  “Terminated Participant” means a person who has been a Participant, but
whose employment has been terminated other than by death or retirement.

 

1.49  “Top Heavy Plan” means a plan described in Section 2.2 (a).

 

1.50  “Top Heavy Plan Year” means a Plan Year during which the Plan is a Top
Heavy Plan.

 

1.51  “Top Paid Group” means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of “415 Compensation” (determined for this purpose in accordance with
Section 1.31) received from the Employer during such year. All affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
86l(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:

 

(a)  Employees with less than six (6) months of service;

 

(b)  Employees who normally work less than 17 ½ hours per week;

 

(c)  Employees who normally work less than six (6) months during a year; and

 

(d)  Employees who have not yet attained age 21.

 

In addition, if 90 percent or more of the Employees of the Employer are covered
under agreements the Secretary of Labor finds to be collective bargaining
agreements between Employee representatives and the Employer, and the Plan
covers only Employees who are not covered under such agreements, then Employees
covered by such agreements shall be excluded from both the total number of
active Employees as well as from the identification of particular Employees in
the Top Paid Group.

 

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The foregoing exclusions set forth in this Section shall be applied on a uniform
and consistent basis for all purposes for which the Code Section 414(q)
definition is applicable.

 

1.52  “Trustee” means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.

 

1.53  “Trust Fund” means the assets of the Plan and Trust as the same shall
exist from time to time.

 

1.54  “Unallocated Company Stock Suspense Account” means an account containing
Company Stock acquired with the proceeds of an Exempt Loan and which has not
been released from such account and allocated to the Participants’ Company Stock
Accounts.

 

1.55  “Vested” means the nonforfeitable portion of any account maintained on
behalf of a Participant.

 

1.56  “Year of Service” means the computation period of twelve (12) consecutive
months, herein set forth, during which an Employee has at least 1000 Hours of
Service.

 

For purposes of eligibility for participation, the initial computation period
shall begin with the date on which the Employee first performs an Hour of
Service. The participation computation period beginning after a 1-Year Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the computation
period beginning after a 1-Year Break in Service) and the Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service, shall be credited with two (2) Years of Service for purposes of
eligibility to participate.

 

For vesting purposes, the computation period shall be the Plan Year, including
periods prior to the Effective Date of the Plan.

 

For all other purposes, the computation period shall be the Plan Year.

 

Notwithstanding the foregoing, for any short Plan Year, the determination of
whether an Employee has completed a Year of Service shall be made in accordance
with Department of Labor regulation 2530.203-2(c). However, in determining
whether an Employee has completed a Year of Service for benefit accrual purposes
in the short Plan Year, the number of the Hours of Service required shall be
proportionately reduced based on the number of full months in the short Plan
Year.

 

Years of Service with any affiliated Employer shall be recognized.

 

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ARTICLE II

TOP HEAVY AND ADMINISTRATION

 

2.1                                 Top Heavy Plan Requirements

 

                   For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b) pursuant to Section 7.4 of
the Plan and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 4.4 of the Plan.

 

2.2                                 Determination of Top Heavy Status

 

(a)  This Plan shall be a Top Heavy Plan for any Plan year in which, as of the
Determination Date, (1) the Present Value of Accrued Benefits of Key Employees
and (2) the sum of the Aggregate Accounts of Key Employees under this Plan and
all plans of an Aggregation Group, exceeds sixty percent (60%) of the Present
Value of accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.

 

If any Participant is a Non-Key Employee for any Plan year, but such Participant
was a Key Employee for any prior Plan Year, such Participant’s Present Value of
Accrued benefit and/or Aggregate Account balance shall not be taken into account
for purposes of determining whether this Plan is a Top Heavy or Super Top Heavy
Plan (or whether any Aggregation Group which includes this Plan is a Top Heavy
Group).  In addition, if a Participant or Former Participant has not performed
any services for any Employer maintaining the Plan at any time during the five
year period ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy or Super Top Heavy
Plan.

 

(b)  This Plan shall be a Super Top Heavy Plan for any Plan Year in which, as of
the Determination Date, (1) the Present Value of Accrued Benefits of Key
Employees and (2) the sum of the Aggregate Accounts of Key Employees under this
Plan and all plans of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an Aggregation Group.

 

(c)  Aggregate Account:  A Participant’s Aggregate Account as of the
Determination Date is the sum of:

 

(1)     his Participant’s Account balance as of the most recent valuation
occurring within a twelve (12) month period ending on the Determination Date.

 

(2)     an adjustment for any contributions due as of the Determination Date. 
Such adjustment shall be the amount of any contributions actually made after the
valuation date but due on or before the Determination Date, except for the first
Plan Year when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are allocated as of a date
in that first Plan Year.

 

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(3)     any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.  However, in the
case of distributions made after the valuation date and prior to the
Determination Date, such distributions are not included as distributions for top
heavy purposes to the extent that such distributions are already included in the
Participant’s Aggregate Account balance as of the valuation date. 
Notwithstanding anything herein to the contrary, all distributions, including
distributions under a terminated plan which if it had not been terminated would
have been required to be included in an Aggregation Group, will be included in
an Aggregation Group, will be counted.  Further, distributions from the Plan of
a Participant’s account balance because of death shall be treated as a
distribution for the purposes of this paragraph.

 

(4)     with respect to unrelated rollovers and plan-to-plan transfers (ones
which are both initiated by the Employee and made from a plan maintained by one
employer to a plan maintained by another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the purposes of this Section.  If
this Plan is the plan accepting such rollovers or plan-to-plan transfers, it
shall not consider such rollovers or plan-to-plan transfers as part of the
Participant’s Aggregate Account balance.

 

(5)     with respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Employee or made to a plan maintained by the same
employer), if this Plan provides the rollover or plan-to-plan transfer, it shall
not be counted as a distribution for purposes of this Section.  If this Plan is
the plan accepting such rollover or plan-to-plan transfer, it shall consider
such rollover or plan-to-plan transfer as part of the Participant’s Account
balance, irrespective of the date on which such rollover or plan-to-plan
transfer is accepted.

 

(6)     For the purposes of determining whether two employers are to be treated
as the same employer in (4) and (5) above, all employers aggregated under Code
Section 414(b), (c), (m) and (o) are treated as the same employer.

 

(d)  “Aggregation Group” means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.

 

(1)     Required Aggregation Group:  In determining a Required Aggregation Group
hereunder, each plan of the Employer in which a Key Employee is a participant in
the Plan Year containing the Determination Date or any of the four preceding
Plan years, and each other plan of the Employer which enables any plan in which
a Key Employee participates to meet the requirements of Code Sections 401(a)(4)
or 410, will be required to be aggregated.  Such group shall be known as a
Required Aggregation Group.

 

In the case of a Required Aggregation Group, each plan in the group will be
considered a Top Heavy Plan if the Required Aggregation Group is a Top Heavy
Group.  No plan in the Required Aggregation Group will be

 

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considered a Top Heavy Plan if the Required Aggregation Group is not a Top Heavy
Group.

 

(2)     Permissive Aggregation Group:  The Employer may also include any other
plan not required to be included in the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to satisfy the provisions of
Code Sections 401(a)(4) and 410.  Such group shall be known as a Permissive
Aggregation Group.

 

In the case of a Permissive Aggregation Group, only a plan that is part of the
Required Aggregation Group will be considered a Top Heavy Plan if the Permissive
Aggregation Group will be considered a Top Heavy Plan if the Permissive
Aggregation Group is not a Top Heavy Group.

 

(3)     Only those plans of the Employer in which the Determination Dates fall
within the same calendar year shall be aggregated in order to determine whether
such plans are Top Heavy Plans.

 

(4)     An Aggregation Group shall include any terminated plan of the Employer
if it was maintained within the last five (5) years endings on the Determination
Date.

 

(e)  “Determination Date” means (a) the last day of the preceding Plan Year, or
(b) in the case of the first Plan Year, the last day of such Plan Year.

 

(f)   Present Value of Accrued Benefit:  In the case of a defined benefit plan,
the Present Value of Accrued Benefit for a Participant other than a Key
Employee, shall be as determined using the single accrual method used for all
plans of the Employer and Affiliated Employers, or if no such single method
exists, using a method which results in benefits accruing not more rapidly than
the slowest accrual rate permitted under Code Section 411(b)(1)(C).  The
determination of the Present Value of Accrued Benefit shall be determined as of
the most recent valuation date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in Code Section 416
and the Regulations thereunder for the first and second plan years of a defined
benefit plan.

 

(g)  “Top Heavy Group” means an Aggregation Group in which, as of the
determination Date, the sum of:

 

(1)     the Present Value of Accrued Benefits of Key Employees under all defined
benefit plans included in the group, and

 

(2)     the Aggregate Accounts of Key Employees under all defined contribution
plans included in the group, exceeds sixty percent (60%) of a similar sum
determined from all Participants.

 

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2.3                                 Powers and Responsibilities of the Employer

 

(a)  The Employer shall be empowered to appoint and remove the Trustee and the
Administrator from time to time as it deems necessary for the proper
administration of the Plan to assure that the Plan is being operated for the
exclusive benefit of the Participants and their Beneficiaries in accordance with
the terms of the Plan, the Code, and the Act.

 

(b)  The Employer shall establish a “funding policy and method,” i.e., it shall
determine whether the Plan has a short run need for liquidity (e.g., to pay
benefits) or whether liquidity is a long run goal and investment growth (and
stability of same) is a more current need, or shall appoint a qualified person
to do so.  The Employer or its delegate shall communicate such needs and goals
to the Trustee, who shall coordinate such Plan needs with its investment
policy.  The communication of such a “funding policy and method” shall not,
however, constitute a directive to the Trustee as to investment of the Trust
Funds.  Such “funding policy and method” shall be consistent with the objectives
of this Plan and with the requirements of Title I of the Act.

 

(c)  The Employer shall periodically review the performance of any Fiduciary or
other person to whom duties have been delegated or allocated by it under the
provisions of this Plan or pursuant to procedures established hereunder.  This
requirement may be satisfied by formal periodic review by the Employer or by a
qualified person specifically designated by the Employer, through day-to-day
conduct and evaluation, or through other appropriate ways.

 

(d)  The Employer will furnish Plan Fiduciaries and Participants with notices
and information statements when voting rights must be exercised pursuant to
Section 8.5.

 

2.4                                 Designation of Administrative Authority

 

                   The Employer shall appoint one or more Administrators.  Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator.  Any person so appointed shall signify
his acceptance by filing written acceptance with the Employer.  An Administrator
may resign by delivering his written resignation to the Employer or be removed
by the Employer by delivery of written notice of removal, to take effect at a
date specified therein, or upon delivery to the Administrator if no date is
specified.

 

                   The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to this
position.  If the Employer does not appoint an Administrator, the Employer will
function as the Administrator.

 

2.5                                 Allocation and Delegation of
Responsibilities

 

                   If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator.  In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator.  The Trustee thereafter shall accept and rely upon any
documents executed by the

 

14

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appropriate Administrator until such time as the Employer or the Administrators
file with the Trustee a written revocation of such designation.

 

2.6                                 Powers and Duties of the Administrator

 

                   The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan.  The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and to determine all questions
arising in connection with the administration, interpretation, and application
of the Plan.  Any such determination by the Administrator shall be conclusive
and binding upon all persons.  The Administrator may establish procedures,
correct any defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of the Plan; provided, however, that any procedure,
discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with the
terms of the Act and all regulations issued pursuant thereto.  The Administrator
shall have all powers necessary or appropriate to accomplish his duties under
this Plan.

 

                   The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to, the
following:

 

(a)  the discretion to determine all questions relating to the eligibility of
Employees to participate or remain a Participant hereunder and to receive
benefits under the Plan;

 

(b)  to compute, certify, and direct the Trustee with respect to the amount and
the kind of benefits to which any Participant shall be entitled hereunder;

 

(c)  to authorize and direct the Trustee with respect to all nondiscretionary or
otherwise directed disbursements from the Trust;

 

(d)  to maintain all necessary records for the administration of the Plan;

 

(e)  to interpret the provisions of the Plan and to make and publish such rules
for regulation of the Plan as are consistent with the terms hereof;

 

(f)   to determine the size and type of any Contract to be purchased from any
insurer, and to designate the insurer from which such Contract shall be
purchased;

 

(g)  to compute and certify to the Employer and to the Trustee from time-to-time
the sums of money necessary or desirable to be contributed to the Plan;

 

(h)  to consult with the Employer and the Trustee regarding the short and
long-term liquidity needs of the Plan in order that the Trustee can exercise any
investment discretion in a manner designed to accomplish specific objectives;

 

(i)   to establish and communicate to participants a procedure and method to
insure that each Participant will vote Company Stock allocated to such
Participant’s Company Stock Account pursuant to Section 8.5;

 

(j)   to assist any Participant regarding his rights, benefits, or elections
available under the Plan.

 

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2.7                                 Records and Reports

 

                   The Administrator shall keep a record of all actions taken
and shall keep all other books of account, records, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.

 

2.8                                 Appointment of Advisors

 

                   The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisors, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection with
the administration or this Plan.

 

2.9                                 Information From Employer

 

                   To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the Administrator on all
matters relating to the Compensation of all Participants, their Hours of
Services, their Years of Service, their retirement, death, disability, or
termination of employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee’s duties under the Plan.  The
Administrator may rely upon such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.

 

2.10                           Payment of Expenses

 

                   All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer.  Such expenses shall include any expenses
incident to the functioning of the Administrator, including, but not limited to,
fees of accountants, counsel, and other specialists and their agents, and other
costs of administering the Plan.  Until paid, the expenses shall constitute a
liability of the Trust Fund.

 

2.11                           Majority Actions

 

                   Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.

 

2.12                           Claims Procedure

 

                   Claims for benefits under the Plan may be filed in writing
with the Administrator.  Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed.  In the
event the claim is denied, the reasons for the denial shall be specifically set
forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided.  In
addition, the claimant shall be furnished with an explanation of the Plan’s
claims review procedure.

 

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2.13                           Claims Review Procedure

 

                   Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to Section
2.12 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator (on a form which may
be obtained from the Administrator) a request for a hearing.  Such request,
together with a written statement of the reasons why the claimant believes his
claim should be allowed, shall be filed with the Administrator no later than 60
days after receipt of the written notification provided for in Section 2.12. 
The Administrator shall then conduct a hearing within the next 60 days, at which
the claimant may be represented by an attorney or any other representative of
his choosing and at which the claimant shall have an opportunity to submit
written and oral evidence and arguments in support of his claim.  At the hearing
(or prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance.  Either the claimant or the Administrator may cause a
court reporter to attend the hearing and record the proceedings.  In such event,
a complete written transcript of the proceedings shall be borne by the party
causing the court reporter to attend the hearing.  A final decision as to the
allowance of the claim shall be made by the Administrator within 60 days of
receipt of the appeal (unless there has been an extension of 60 days due to
special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period).  Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.

 

17

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ARTICLE III

ELIGIBILITY

 

3.1                                 Conditions of Eligibility

 

                   Any Eligible Employee who has completed ninety (90) days of
Service and has attained age 21 shall be eligible to participate hereunder as of
the date he has satisfied such requirements.  An Eligible Employee will be
deemed to have completed ninety (90) days of Service if he is in the employ of
the Employer at any time ninety (90) days after his employment commencement
date.  Notwithstanding the foregoing, any Employee who was a Participant in the
Plan on the last day of the Plan Year prior to the general effective date of
this amendment and restatement shall continue to participate in the Plan without
interruption.

 

3.2                                 Effective Date of Participation

 

                   An Eligible Employee shall become a participant effective as
of the first day of January, April, July or October coinciding with or next
following the date such Employee met the eligibility requirements of Section
3.1, provided said Employee was still employed as of such date (or if not
employed on such date, as of the date of rehire if a 1-Year Break in Service has
not occurred).

 

3.3                                 Determination of Eligibility

 

                   The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer.  Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act.  Such
determination shall be subject to review per Section 2.13.

 

3.4                                 Termination of Eligibility

 

(a)  In the event a Participant shall go from a classification of an Eligible
Employee to an ineligible Employee, such Former Participant shall continue to
vest in his interest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as his Participant’s Account shall be
forfeited or distributed pursuant to the terms of the Plan.  Additionally, his
interest in the Plan shall continue to share in the earnings of the Trust Fund.

 

(b)  In the event a Participant is no longer a member of an eligible class of
Employees and becomes ineligible to participate but has not incurred a 1-Year
Break in Service, such Employee will participate immediately upon returning to
an eligible class of Employees.  If such Participant incurs a 1-Year Break in
Service, eligibility will be determined under the break in service rules of the
Plan.

 

3.5                                 Omission of Eligible Employee

 

                   If, in any Plan Year, any Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Employee in the amount which the said Employer would have contributed
with respect to him had he not been omitted.  Such contribution shall be made
regardless of whether or not it is applicable provisions of the Code.

 

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3.6                                 Inclusion of Ineligible Employee

 

                   If, in any Plan Year, any person who should not have been
included as a Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution for the year has
been made, the Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is allowable with respect to such contribution.  In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
for the Plan Year in which the discovery is made.

 

3.7                                 Election Not to Participate

 

                   An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan.  The election not to
participate must be communicated to the Employer, in writing, at least thirty
(30) days before the beginning of a Plan Year.

 

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ARTICLE IV

CONTRIBUTION AND ALLOCATION

 

4.1                                 Formula for Determining Employer’s
Contributions

 

                   For each Plan year, the Employer shall contribute to the
Plan:

 

(a)  A discretionary amount out of its current or accumulated Net Profit, which
amount shall be deemed an Employer Contribution.

 

(b)  Notwithstanding the foregoing, however, the Employer’s Contributions for
any Plan Year shall not exceed the maximum amount allowable as a deduction to
the Employer under the provisions of Code Section 404.  All contributions by the
Employer shall be made in cash, Company Stock or in such property as is
acceptable to the Trustee.

 

(c)  Except, however, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds current
accumulated Net Profit or the amount which is deductible under Code Section 404.

 

4.2                                 Time of Payment of Employer Contribution

 

                   Employer contributions will be paid in cash, Company Stock or
other property as the Employer may from time to time determine.  Company Stock
and other property will be valued at their then fair market value.  The Employer
shall generally pay to the Trustee its contribution to the Plan for each Plan
Year, within the time prescribed by law, including extensions of time, for the
filing of the Employer’s federal income tax return for the Fiscal Year.

 

4.3                                 Allocation of Contribution, Forfeitures and
Earnings

 

(a)  The Administrator shall establish and maintain an account in the name of
each Participant to which the Administrator shall credit as of each Anniversary
Date all amounts allocated to each such participant as set forth herein.

 

(b)  The Employer shall provide the Administrator with all information required
by the Administrator to make a proper allocation of the Employer’s Contributions
for each Plan Year.  Within a reasonable period of time after the date of
receipt by the Administrator of such information, the Administrator shall
allocate such contribution as follows:

 

(1)     With respect to the Employer Contribution made pursuant to Section
4.1(a), to each Participant’s Account in the same proportion that each such
Participant’s Compensation for the year bears to the total Compensation of all
Participants for such year.

 

                   Only Participants who have completed a Year of Service during
the Plan Year shall be eligible to share in the Employer Contribution for the
Plan Year.

 

(c)  The Company Stock Account of each Participant shall be credited as of each
Anniversary Date with Forfeitures of Company Stock and his Allocable

 

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share of Company Stock (including fractional shares) purchased and paid for by
the Plan or contributed in kind by the Employer.  Stock dividends on Company
Stock held in his Company Stock Account shall be credited to his Company Stock
Account when paid.  Cash dividends on Company Stock held in his Company Stock
Account shall, in the sole discretion of the Administrator, either be credited
to his Other Investments Account when paid or be used to repay an Exempt Loan;
provided, however, that when cash dividends are used to repay an Exempt Loan,
Company Stock shall be released from the Unallocated Company Stock Suspense
Account and allocated to the Participant’s Company Stock Account pursuant to
Section 4.3(f) and, provided further, that Company Stock allocated to the
Participant’s Company Stock Account shall have a fair market value not less than
the amount of cash dividends which would have been allocated to such
Participant’s Other Investments Account for the year.

 

Company Stock acquired by the Plan with the proceeds of an Exempt Loan shall
only be allocated to each Participant’s Company Stock Account upon release from
the Unallocated Company Stock Suspense Account as provided in Section 4.3(f)
herein.  Company Stock acquired with the proceeds of an Exempt Loan shall be an
asset of the Trust Fund and maintained in the Unallocated Company Stock Suspense
Account.

 

(d)  As of each Anniversary Date or other valuation date, before the current
valuation period allocation of Employer contributions and after allocation of
Forfeitures, any earnings or losses (net appreciation or net depreciation) of
the Trust Fund shall be allocated in the same proportion that each Participant’s
and Former Participant’s nonsegregated accounts (other than each Participant’s
Company Stock Account) bear to the total of all Participant’s and Former
Participant’s nonsegregated accounts (other than Participant’s Company Stock
Accounts) as of such date.

 

Earnings or losses do not include the interest paid under any installment
contract for the purchase of Company Stock by the Trust Fund or on any loan used
by the Trust Fund to purchase Company Stock, nor does it include income received
by the Trust Fund with respect to Company Stock acquired with the proceeds of an
Exempt Loan; all income received by the Trust Fund from Company Stock acquired
with the proceeds of an Exempt Loan may, at the discretion of the Administrator,
be used to repay such loan.

 

Participants’ transfers from other qualified plans deposited in the general
Trust Fund shall share in any earnings and losses (net appreciation or net
depreciation) of the Trust Fund in the same manner provided above.  Each
segregated account maintained on behalf of a Participant shall be credited or
charged with its separate earnings and losses.

 

(e)  Participants’ accounts shall be debited for any insurance or annuity
premiums paid, if any, and credited with any dividends received on insurance
contracts.

 

(f)   All Company Stock acquired by the Plan with the proceeds on an Exempt Loan
must be added to and maintained in the Unallocated Company Stock Suspense
Account.  Such Company Stock shall be released and withdrawn from that account
as if all Company Stock in that account were encumbered.  For each

 

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Plan Year during the duration of the loan, the number of shares of Company Stock
released shall equal the number of encumbered shares held immediately before
release for the current Plan Year multiplied by a fraction, the numerator for
which is the amount of principal and interest paid for the Plan Year and the
denominator of which is the sum of the numerator plus the principal and interest
to be paid for all future Plan Years.  As of each Anniversary Date, the Plan
must consistently allocate to each Participant’s Account, in the same manner as
Employer Contributions pursuant to Section 4.1(a) are allocated, non-monetary
units (shares and fractional shares of Company Stock) representing each
Participant’s interest in Company Stock withdrawn from the Unallocated Company
Stock Suspense Account.  However, Company Stock released from the Unallocated
Company Stock Suspense Account with cash dividends pursuant to Section 4.3(c)
shall be allocated to each Participant’s Company Stock Account in the same
proportion that each such Participant’s number of shares of Company Stock
sharing in such cash dividends bears to the total number of shares of all
Participants’ Company Stock sharing in such cash dividends.  Income earned with
respect to Company Stock in the Unallocated Company Stock Suspense Account shall
be used, at the discretion of the Administrator, to repay the Exempt Loan used
to purchase such Company Stock.  Company Stock released from the Unallocated
Company Stock Suspense Account with such income, and any income which is not so
used, shall be allocated as of each Anniversary Date or other valuation date in
the same proportion that each Participant’s and Former Participant’s
nonsegregated accounts after the allocation of any earnings of losses pursuant
to Section 4.4(d) bear to the total of all Participants’ and Former
Participants’ nonsegregated accounts after the allocation of any earnings or
losses pursuant to Section 4.3(d).

 

(g)  As of each Anniversary Date any amounts which became Forfeitures since the
last Anniversary Date shall first be made available to reinstate previously
forfeited account balances of Former Participants, if any, in accordance with
Section 7.4(g)(2).  The remaining Forfeitures, if any shall be allocated to
Participants’ Accounts and used to reduce the contribution of the Employer
hereunder for the Plan Year in which such Forfeitures occur in the following
manner:

 

(1)     Forfeitures attributable to Employer Contributions made pursuant to
Section 4.1(a) shall be added to the Employer Contribution for the Plan Year in
which such Forfeitures occur and allocated among the Participants’ Accounts in
the same manner as the Employer Contributions.

 

Provided, however, that in the event the allocation of Forfeitures provided
herein shall cause the “annual addition” (as defined in Section 4.9) to any
Participant’s Account to exceed the amount allowable by the Code, the excess
shall be reallocated in accordance with Section 4.10.

 

(h)  For any Top Heavy Plan Year, Non-Key Employees not otherwise eligible to
share in the allocation of contributions and Forfeitures as provided above,
shall receive the minimum allocation provided for in Section 4.3(j) if eligible
pursuant to the provisions of Section 4.3(l).

 

(i)   Participants who are not actively employed on the last day of the Plan
Year due to Retirement (Early, Normal or Late) or death shall share in the

 

22

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allocation of contributions and Forfeitures for that Plan Year only if otherwise
eligible in accordance with this Section.

 

(j)   Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding the
foregoing, for any Top Heavy Plan Year, the sum of the Employer’s Contributions
and Forfeitures allocated to the Participant’s Combined Account of each Non-Key
Employee shall be equal to at least three percent (3%) of such Non-Key
Employee’s “415 Compensation” (reduced by contributions and forfeitures, if any,
allocated to each Non-Key Employee in any defined contribution plan included
with this plan in a Required Aggregation Group).  However, if (1) the sum of the
Employer’s Contributions and Forfeitures allocated to the Participant’s combined
Account of each Key Employee for such Top Heavy Plan Year is less than three
percent (3%) of each Key Employee’s “415 Compensation” and (2) this Plan is not
required to be included in an Aggregation Group to enable a defined benefit plan
to meet the requirements of Code Section 401(a)(4) or 410, the sum of the
Employer’s Contributions and Forfeitures allocated to the Participant’s Combined
Account of each Non-Key Employee shall be equal to the largest percentage
allocated to the Participant’s Account of any Key Employee.

 

However, no such minimum allocation shall be required in this Plan for any
Non-Key Employee who participates in another defined contribution plan subject
to Code Section 412 providing such benefits included with this Plan in a
Required Aggregation Group.

 

(k)  For purposes of the minimum allocations set forth above, the percentage
allocated to the Participant’s Account of any Key Employee shall be equal to the
ratio of the sum of the Employer’s Contributions and Forfeitures allocated on
behalf of such Key Employee divided by the “Compensation” for such Key Employee.

 

(l)   For any Top Heavy Plan Year, the minimum allocations set forth above shall
be allocated to the Participant’s Account of all Non-Key Employees who are
Participants and who are employed by the Employer on the last day of the Plan
Year, including Non-Key Employees who have failed to complete a Year of Service.

 

(m) For the purposes of this Section, “Compensation” shall be limited to
$170,000, as adjusted by the Commissioner for increases in the cost of living in
accordance with Code Section 401(a)(17)(B).  The cost of living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in such
calendar year.  If a determination period consists of fewer than 12 months, the
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.

 

(n)  If a Former Participant is reemployed after five (5) consecutive 1-Year
Breaks in Service, then separate accounts shall be maintained as follows:

 

(1)     one account for nonforfeitable benefits attributable to pre-break
service; and

 

(2)     one account representing his status in the Plan attributable to
post-break service.

 

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(o)  Notwithstanding anything to the contrary, for any Plan Year, if this is a
Plan that would otherwise fail to meet the requirements of Code Sections
410(b)(1) or 410(b)(2)(A)(i) and the Regulations thereunder because Employer
Contributions would not be allocated to a sufficient number or percentage of
Participants for that Plan Year, then the following rules shall apply:

 

(1)     The group of Participants eligible to share in the Employer’s
Contribution and Forfeitures for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above.  The specific
Participants who shall become eligible under the terms of this paragraph shall
be those who are actively employed on the last day of the Plan Year and, when
compared to similarly situated Participants, have completed the greatest number
of Hours of Service in the Plan Year.

 

(2)     If after application of paragraph (1) above, the applicable test is
still not satisfied, then the group of Participants eligible to share in the
Employer Contribution and Forfeitures for the Plan Year shall be further
expanded to include the minimum number of Participants who are not actively
employed on the last day of the Plan Year as are necessary to satisfy the
applicable test.  The specific Participants who shall become eligible to share
shall be those Participants, when compared to similarly situated Participants,
who have completed the greatest number of Hours of Service in the Plan Year
before terminating employment.

 

(3)     Nothing in this Section shall permit the reduction of a Participant’s
accrued benefit.  Therefore any amounts that have previously been allocated to
Participants may not be reallocated to satisfy these requirements.  In such
event, the Employer shall make an additional contribution equal to the amount
such affected Participants would have received had they been included in the
allocations, even if it exceeds the amount which would be deductible under Code
Section 404.  Any adjustment to the allocations pursuant to this paragraph shall
be considered a retroactive amendment adopted by the last day of the Plan Year.

 

(4)     Notwithstanding the foregoing, for any Top Heavy Plan Year, if the Plan
would fail to satisfy Code Section 410(b) if the coverage tests were applied by
treating those Participants whose only allocation would otherwise be provided
under the top heavy formula as if they were not currently benefiting under the
Plan, then, for purposes of this Section 4.3(p), such Participants shall be
treated as not benefiting and shall therefore be eligible to be included in the
expanded class of Participants who will share in the allocation provided under
the Plan’s non top heavy formula.

 

24

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4.4                                 Maximum Annual Additions

 

(a)  Effective January 1, 1995, in no event may a Participant’s annual additions
to all defined contribution plans maintained by the Employer and allocated to a
Participant’s Accounts in a given Limitation Year exceed the lesser of:

 

(i)      Twenty-five percent (25%) of his Compensation; or

 

(ii)     $30,000 (as adjusted for cost of living increases pursuant to Sections
415(c)(1), 415(d)(1) and 415(d)(3) of the Code).

 

(b)  For purposes of the foregoing limitations, annual additions include:

 

(i)      Employer Contributions,

 

(ii)     Employee Contributions, if any not including roll-over amounts as
defined in Section 402(c) of the Code,

 

(iii)    Forfeitures, and

 

(iv)    Amounts allocated to individual medical accounts as defined in Section
415(1)(2) of the Code and accounts of key employees to provide post retirement
medical benefits as defined in Section 418A(d)(1) of the Code, except as such
amounts may have already been treated as annual additions under another
provision of this sub-section.

 

(c)  Pursuant to Code Section 415(c)(6), provided that no more than 1/3 of the
Contribution for a given Plan Year is allocated to the Accounts of Highly
Compensated Employees, the “annual addition” for such Limitation Year will
include neither Contributions applied by the Trustee to service interest on an
ESOP Loan nor Forfeitures of Financed Shares.

 

(d)  For purposes of determining “annual additions” Forfeitures of Company Stock
shall be valued as of the Anniversary Date for which the allocation is being
made.

 

(e)  For purposes of this Section, effective January 1, 1998, compensation shall
mean a Participant’s earned income, wages, salaries, and fees for professional
services, and other amounts received for personal service actually rendered in
the course of employment with the employer maintaining the Plan (including, but
not limited to, commissions paid salesmen, compensation for services on a basis
of a percentage of profits, commissions on insurance premiums, tips, bonuses,
any salary reduction elected pursuant to any employee benefit plan as defined
fin Section 401(k) of the Code, any cafeteria plan as described in Section 125
of the Code, or any deferred compensation plan as defined in Section 457 of the
Code), and excluding the following:

 

(i)      Employer contributions to a plan of deferred compensation, other than
as included above, which are not included in the Employee’s gross income for the
taxable year in which contributed or any distributions from a plan of deferred
compensation;

 

25

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(ii)     Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;

 

(iii)    Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and

 

(iv)    Other amounts which received special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity contract described in Section 403(b) of the Code (Whether
or not the amounts are actually excludible from the gross income of the
Employee.

 

(f)   If the limitation would be exceeded as to any Participant for any Plan
Year, the allocation to his Accounts for Limitation Year will be reduced to an
amount which would limit the total “annual additions” to the maximum permitted.

 

(g)  Any amount by which Employer Contributions for a Participant must be
reduced under (i)(6) above will be reallocated to the Accounts of the remaining
Participants (under subsections(d) and (e) of this Section 6) to the extent
possible without exceeding the limitation with respect to any other Participant.

 

(h)  The limits described in this Section shall apply to all qualified
contribution plans sponsored by the Employer in aggregate.  To the extent these
limits would be exceeded in aggregate, adjustments shall be made to other
defined contribution plans before being made to this Plan.

 

(j)   Any Forfeitures which cannot be allocated to any Participant’s Accounts by
reason of this limitation will be credited to a Forfeiture Suspense Account and
treated (for allocation purposes) as Forfeitures and allocated first for the
succeeding Plan Year (or Years, if necessary) until exhausted, provided that any
such Forfeiture Suspense Account will not share in the allocation of any income
or other gains and losses of the Trust except for changes in its own fair market
value.

 

(k)  For the purpose of this Section, all qualified defined benefit plans
(whether terminated or not) ever maintained by the Employer shall be treated as
one defined benefit plan, and all qualified defined contribution plans (whether
terminated or not) ever maintained by the Employer shall be treated as one
defined contribution plan.

 

(l)   For the purpose of this Section, if the Employer is a member of a
controlled group of corporations, trades or businesses under common control (as
defined by Code Section 1563(a) or Code Section 41(b) and (c) as modified by
Code Section 415(h)), is a member of an affiliated service group (as defined by
Code Section 414(m)), or is a member of a group of entities required to be

 

26

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aggregated pursuant to Regulations under Code Section 414(o), all Employees of
such Employers shall be considered to be employed by a single Employer.

 

(m) For the purpose of this Section, if this Plan is a Code Section 413(c) plan,
all Employers of a Participant who maintain this Plan will be considered to be a
single Employer.

 

(n)                                 (1)     If a Participant participates in
more than one defined contribution plan maintained by the employer which have
different Anniversary Dates, the maximum “annual additions” under this Plan
shall equal the maximum “annual additions” for the “limitation year” minus any
“annual additions” previously credited to such Participant’s Accounts during the
“limitation year.”

 

(2)     If a Participant participates in both a defined contribution plan
subject to Code Section 412 and a defined contribution plan not subject to Code
Section 412 maintained by the Employer which have the same Anniversary Date,
“annual additions” will be credited to the Participant’s accounts under the
defined contribution plan subject to Code Section 412 prior to crediting “annual
additions” to the Participant’s accounts under the defined contribution plan not
subject to Code Section 412.

 

(3)     If a Participant participates in more than one defined contribution plan
not subject to Code Section 412 maintained by the Employer which have the same
Anniversary Date, the maximum “annual additions” under this Plan shall equal the
product of (A) the maximum “annual additions” for the limitation year” minus any
“annual additions” previously credited under subparagraphs (1) or (2) above,
multiplied by (B) a fraction (i) the numerator of which is the “annual
additions” which would be credited to such Participant’s accounts under this
Plan without regard to the limitations of Code Section 415 and (ii) the
denominator of which is such “annual additions” for all plans described in this
subparagraph.

 

(o)  Effective only for Plan Years Commencing prior to January 1, 2000, if an
Employee is (or has been) a Participant in one or more defined benefit plans and
one or more defined contribution plans maintained by the Employer, the sum of
the defined benefit plan fraction and the defined contribution plan fraction for
any “limitation year” may not exceed 1.0.

 

(1)     The defined benefit plan fraction for any “limitation year” is a
fraction, the numerator of which is the sum of the Participant’s projected
annual benefits under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser or 125
percent  of the dollar limitation determined for the “limitation year” under
Code Sections 415(b) and (d) or 140 percent of the highest average compensation,
including any adjustment under Code Section 415(b).

 

(2)     Notwithstanding the above, if the Participant was a Participant as of
the first day of the first “limitation year” beginning after December 31, 1986,
in one or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator or this fraction

 

27

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will not be less than 125 percent of the sum of the annual benefits before
January 1, 1987, disregarding any changes in the terms and conditions of the
plan after May 5, 1986.  The preceding sentence applies only if the defined
plans individually and in the aggregate satisfied  the requirements of Code
Section 415 for all “limitation years beginning before January 1, 1986

 

(3)     The defined contribution plan fraction for any “limitation year” is a
fraction, the numerator of which is the sum of the annual additions to the
Participant’s Account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior “limitation
years” (including the annual additions attributable to the Participant’s
nondeductible Employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in Code Section 419 9(e),
and individual medical accounts, as defined in Code Section 415(1)(2),
maintained by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior “Limitation years” of
service with the Employer (regardless of whether a defined contribution plan was
maintained by the Employer).  The maximum aggregate amount in any “limitation
year” is the lesser of 125 percent of the dollar limitation determined under
Code Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35
percent of the Participant’s Compensation for such year.

 

(4)     If the Employee was a Participant as of the end of the first day of the
first “limitation year” beginning after December 31, 1986, in one or more
defined contribution plans maintained by the employer which were in existence on
May 6, 1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this Plan.  Under the adjustment, an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction.  The adjustment is calculated using the fractions as they would be
computed as of the end of the last “limitation year” beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the Code Section 415 limitation applicable to the
first “limitation year” beginning on or after January 1, 1987 shall not be
computed to treat all Employee contributions as annual additions.

 

(5)     Notwithstanding the foregoing, for any “limitation year” in which the
Plan is a Top Heavy Plan, 100 percent shall be substituted for 125 percent in
Sections 4.9(1) and 4.9(m) unless the extra minimum allocation is being provided
pursuant to Section 4.4. However, for any “limitation year” in which the Plan is
a Super Top Heavy Plan, 100percent shall be substituted for 125 percent in any
event.

 

(p)  Notwithstanding anything contained in this Section to the contrary, the
limitations, adjustments and other requirements prescribed in this Section shall
at

 

28

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all times comply with the provisions of Code Section 415 and the Regulations
thereunder, the terms of which are specifically incorporated herein by
reference.

 

4.5                                 Diversification

 

(a)  Each “Qualified Participant” may elect within ninety (90) days after the
close of each Plan Year during the “Qualified Election Period” to direct the
Trustee in writing as to the investment of 25 percent of the total number of
shares of Company Stock acquired by or contribute to the Plan that have ever
been allocated to such “Qualified Participant’s” Company Stock Account (reduced
by the number of shares of Company Stock previously invested pursuant to a prior
election).  In the case of the election year in which the Participant can make
his last election, the preceding sentence shall be applied by substituting “50
percent” for “25 percent”.  If the “Qualified Participant” elects to direct the
Trustee as to the investment of his Company Stock Account, such direction shall
be effective no later than 180 days after the close of the Plan Year to which
such direction applies.  In lieu of directing the Trustee as to the investment
of his Company Stock Account, the “Qualified Participant” may elect a
distribution in cash or Company Stock of the portion of his Company Stock
Account covered by the election within ninety (90) days after the last day of
the period during with the election can be made.

 

Notwithstanding the above, if the fair market value (determined pursuant to
Section 6.1 at the Plan valuation date immediately preceding the first day on
which a “Qualified Participant” is eligible to make an election) of Company
Stock acquired by or contributed to the Plan and allocated to a “Qualified
Participant’s Company Stock Account is $500 or less, then such Company Stock
shall not be subject to this paragraph.  For purposes of determining whether the
fair market value exceeds $500, Company Stock held in accounts of all employee
stock owner ship plans (as defined in Code Section 4975(e)(7)) and tax credit
employee stock ownership plans (as defined in Code 409(a)) maintained by the
Employer or any Affiliated Employer shall be considered as held by the Plan.

 

(b)  For the purposes of this Section the following definitions shall apply:

 

(1)     “Qualified Participant” means any Participant or Former Participant who
has completed ten (10) Plan Years of Service as a Participant and has attained
age 55.

 

(2)     “Qualified Election Period” means the six (6) Plan year period beginning
with the first Plan Year in which the Participant first became a “Qualified
Participant”.

 

29

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ARTICLE V

FUNDING AND INVESTMENT POLICY

5.1                                 Investment Policy

 

(a)  The Plan is designed to invest primarily in Company Stock.

 

(b)  With due regard to subparagraph (a) above, the Administrator may also
direct the Trustee to invest funds under the Plan in other property described in
the Trust or in life insurance policies to the extent permitted by subparagraph
(c) below, or the Trustee may hold such funds in cash or cash equivalents.

 

(c)  With due regard to subparagraph (a) above, the Administrator may also
direct the Trustee to invest funds under the Plan in insurance policies on the
life of any “keyman” Employee.  The proceeds of a “keyman” insurance policy may
not be used for the repayment of any indebtedness owed by the Plan which is
secured by Company Stock.  In the event any “keyman” insurance is purchased by
the Trustee, the premiums paid thereon during any Plan Year, net of any policy
dividends and increases in cash surrender values, shall be treated as the cost
of Plan investment and any death benefit or cash surrender value received shall
be treated as proceeds from an investment of the Plan.

 

(d)  The Plan may not obligate itself to acquire Company Stock under a put
option binding upon the plan.  However, at the time a put option is exercised,
the Plan may be given an option to assume the rights and obligations of the
Employer under a put option binding upon the Employer.

 

(e)  All purchases of Company Stock shall be made at a price which, in the
judgment of the Administrator, does not exceed the fair market value thereof. 
All sales of Company Stock shall be made at a price which, in the judgment of
the Administrator, is not less than the fair market value thereof.  The
valuation rules set forth in Article VI shall be applicable.

 

5.2                                 Application of Cash

 

                   Employer contributions in cash and other cash received by the
Trust Fund shall first be applied to pay any Current Obligations of the Trust
Fund.

 

5.3                                 Transactions Involving Company Stock

 

(a)  No portion of the Trust Fund attributable to (or allocable in lieu of)
Company Stock acquired by the Plan in a sale to which Code Section 1042 applied
may accrue or be allocated directly or indirectly under any plan maintained by
the Employer meeting the requirements of Code Section 401(a):

 

(1)     during the “Nonallocation Period”, for the benefit of

 

(i)          any taxpayer who makes an election under Code Section 1042(a) with
respect to Company Stock,

 

(ii)         any individual who is related to the taxpayer (within the meaning
of Code Section 267(b)), or

 

30

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(2)     for the benefit of any other person who owns (after application of Code
Section 318(a) applied without regard to the employee trust exception in Code
Section 3l8(a)(2)(B)(i)) more than 25 percent of

 

(i)          any class of outstanding stock of the Employer or Affiliated
Employer which issued such Company Stock, or

 

(ii)         the total value of any class of outstanding stock of the Employer
or Affiliated Employer.

 

(b)  Except, however, subparagraph (a)(1)(ii) above shall not apply to lineal
descendants of the taxpayer, provided that the aggregate amount allocated to the
benefit of all such lineal descendants during the “Nonallocation Period” does
not exceed more than five (5) percent of the Company Stock (or amounts allocated
in lieu thereof) held by the Plan which are attributable to a sale to the Plan
by any person related to such descendants (within the meaning of Code Section
267(c)(4)) in a transaction to which Code Section 1042 is applied.

 

(c)  A person shall be treated as failing to meet the stock ownership limitation
under paragraph (a)(2) above if such person fails such limitation:

 

(1)     at any time during the one (1) year period ending on the date of sale of
Company Stock to the Plan, or

 

(2)     on the date as of which Company Stock is allocated to Participants in
the Plan.

 

(d)  For purposes of this Section, “Nonallocation Period” means the period
beginning on the date of the sale of the Company Stock and ending on the late
of:

 

(1)     the data which is ten (10) years after the date of sale, or

 

(2)                                  the date of the Plan allocation
attributable to the final payment of the Exempt Loan incurred in connection with
such sale.

 

5.4           Loans to the Trust

 

(a)  The Plan may borrow money for any lawful purpose, provided the proceeds of
an Exempt Loan are used within a reasonable time after receipt only for any or
all of the following purposes:

 

(1)     To acquire Company Stock.

 

(2)     To repay such loan.

 

(3)     To repay a prior Exempt Loan.

 

(b)  All loans to the Trust which are made or guaranteed by a disqualified
person must satisfy all requirements applicable to Exempt Loans including but
not limited to the following:

 

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(1)     The loan must be at a reasonable rate of interest;

 

(2)     Any collateral to the creditor by the Plan shall consist only of the
Company Stock purchased with the borrowed funds;

 

(3)     Under the terms of the loan, any pledge of Company Stock shall provide
for the release of shares so pledged on a pro-rata basis pursuant to Section
4.3(f);

 

(4)     Under the terms of the loans, the creditor shall have no recourse
against the Plan except with respect to such collateral, earnings attributable
to such collateral, Employer contributions (other than contributions of Company
Stock) that are made to meet Current Obligations and earnings attributable to
such contributions;

 

(5)     The loan must be for a specific term and may not be payable at the
demand of any person, except in the case of default;.

 

(6)     In the event of default upon an Exempt Loan, the value of the Trust Fund
transferred in satisfaction of the Exempt Loan shall not exceed the amount of
default. If the lender is a disqualified person, as Exempt Loan shall provide
for a transfer of Trust Funds upon default only upon and to the extent of the
failure of the Plan to meet the payment schedule of the Exempt Loan;

 

(7)     Exempt Loan payments during a Plan Year must not exceed an amount equal
to: (A) the sum, over all Plan Years, of all contributions and cash dividends
paid by the Employer to the Plan with respect to such Exempt Loan and earnings
on such Employer contributions and cash dividends and earnings until the Exempt
Lean is repaid.

 

(c)  For purposes of this Section, the term “disqualified person” means a person
who is a Fiduciary, a person providing services to the Plan, an Employer any of
whose Employees are covered by the Plan, an employee organization any of whose
member are covered by the Plan, an owner, direct or indirect, of 50% or more of
the total combined voting power of all classes of voting stock or of the total
value of all classes of the stock, or an officer, director, 10% or more
shareholder, or a Highly Compensated  Employee.

 

32

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ARTICLE VI

VALUATIONS

 

6.1                                 Valuation of the Trust Fund

 

                   The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary by the
Administrator, herein called “valuation date,” to determine the net worth of the
assets comprising the Trust Fund as it exists on the “valuation date.”  In
determining such net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the “valuation date” and shall
deduct all expenses for which the Trustee has not yet obtained reimbursement
from the Employer or the Trust Fund.

 

6.2                                 Method of Valuation

 

                   Valuations must be made is good faith and based on all
relevant factors for determining the fair market value of securities. In the
case of a transaction between a plan and a disqualified person, value must be
determined as of the data of the transaction. For all other Plan purposes, value
must be determined as of the most recent “valuation date” under the Plan. An
independent appraisal will not in itself be a good faith determination of value
in the case of a transaction between the Plan and a disqualified person.
However, in other cases, a determination of fair market value based on at least
an annual appraisal independently arrived at by a person who customarily makes
appraisals for such purposes and who is independent of any party to the
transaction will be deemed to be a good faith determination for value. Company
Stock not readily tradeable on an established securities market shall be valued
by an independent appraiser meeting requirements similar to the requirements of
the Regulations prescribed under Code Section 170(a)(1). Notwithstanding
anything in this Plan to the contrary, determination, of the fair market value
of Company Stock will in all cases be made based on the opinion of an
independent third-party appraiser experienced in valuing the securities of
closely held companies for ESOP purposes as required by Code Section
401(a)(28)(C).

 

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ARTICLE VII

DETERMINATION AND DISTRIBUTION OF BENEFITS

 

7.1                                 Determination of Benefits Upon Retirement

 

                   Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal Retirement Date or
Early Retirement Data.  However, a Participant may postpone the termination of
his employment with the Employer to a later date, in which event the
participation of such Participant in the Plan, including the right to receive
allocations pursuant to Section 4.3, shall continue until his Late Retirement
Date. Upon a Participant’s Retirement Date, or as soon thereafter as is
practicable, the Trustee shall distribute all amounts credited to such
Participant’s Account in accordance with Sections 7.5 and 7.6.

 

7.2                                 Determination of Benefits Upon Death

 

(a)  Upon the death of a participant before his Retirement Date or other
termination of his employment, all amounts credited to such Participant’s
Combined Account shall become fully Vested. If elected, distribution of the
Participant’s Combined Account shall commence not later than one (1) year after
the close of the Plan Year in which such Participant’s death occurs. The
Administrator shall direct the Trustee, in accordance with the provisions of
Sections 7.5 and 7.6, to distribute the value of the deceased Participant’s
accounts to the Participant’s Beneficiary.

 

(b)  Upon the death of a Former Participant, the Administrator shall direct the
Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to
distribute any remaining Vested amounts credited to the accounts of a deceased
Former Participant to such Former Participant’s Beneficiary.

 

(c)  Any security interest held by the Plan by reason of as outstanding loan to
this Participant or Former Participant shall be taken into account in
determining the amount of the death benefit.

 

(d)  The Administrator may require such proper proof of death and such evidence
of the right of any person to receive payment of the value of the account of a
deceased Participant or Former Participant as the Administrator may deem
desirable. The Administrator’s determination of death and of the right of any
person to receive payment shall be conclusive.

 

(e)  The Beneficiary of the death benefit payable pursuant to this Section shall
be the Participant’s spouse. Except, however, the Participant may designate a
Beneficiary other than his spouse if:

 

(1)     the spouse has waived the right to be the Participant’s Beneficiary or

 

(2)     the Participant is legally separated or has been abandoned (within the
meaning of local law) and the Participant has a court order to such effect (and
there is no “qualified domestic relations” as defined in Code Section 414(p)
which provides otherwise), or

 

(3)     the Participant has no spouse, or

 

34

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(4)     the spouse cannot be located.

 

In such event, the designation of a Beneficiary shall be made on a form
satisfactory Administrator. A Participant may at any time revoke his designation
of a Beneficiary or change his Beneficiary by filing written notice of such
revocation or change with the Administrator. However, the Participant’s spouse
must again consent in writing to any change in Beneficiary unless the original
consent acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to relinquish such
right. In the event no valid designation of Beneficiary exists at the time of
the Participant’s death, the death benefit shall be payable to his estate.

 

(f)   Any consent by the Participant’s spouse to waive any rights to the death
benefit must be in writing, must acknowledge the effect of such waiver, and be
witnessed by a plan representative or a notary public. Further, the spouse’s
consent must be irrevocable and must acknowledge the specific nonspouse
Beneficiary.

 

7.3                                 Disability Retirement Benefits.

 

                   No disability benefits, other than those payable upon
termination of employment, are provided in this Plan.

 

7.4                                 Determination of Benefits Upon Termination

 

(a)  On or before the Anniversary Data coinciding with or subsequent to the
termination, of a Participant’s employment for any reason other then death or
retirement, the Administrator may direct the Trustee to segregate the amount of
the Vested portion of such Terminated Participant’s Account and invest the
aggregate amount thereof in a separate, federally insured savings account,
certificate of deposit, common or collective trust fund of a bank or a deferred
annuity. In the event the Vested portion of a Participant’s Account is not
segregated, the amount shall remain in a separate account for the Terminated
participant and share in allocations pursuant to Section 4.3 until such time as
a distribution is made to the Terminated Participant.

 

If a portion of a Participant’s Account is forfeited, Company Stock allocated to
the Participant’s Company Stock Account must be forfeited only after the
Participant’s Other Investments Account has bean depleted. If interest in more
than one class of Company Stock has been allocated to a Participant’s Account,
the Participant must be treated as forfeiting the same proportion of each such
class.

 

In the event that the amount of Vested portion of the Terminated Participant’s
Accounts equals or exceeds the fair market value of any insurance Contracts, the
Trustee, when so directed by the Administrator and agreed to by the Terminated
Participant, shall assign, transfer, and set over to such Terminated Participant
all Contracts on his life in such form or with such endorsements so that the
settlement options and forms of payment are consistent with the provisions of
Section 7.5. In the event that the Terminated Participants Vested portion does
not at least equal the fair market value of the Contracts, if any, the

 

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Terminated Participant may pay over to the Trustee the sum needed to make the
distribution equal to the value of the Contracts being assigned or transferred,
or, the Trustee, pursuant to the Participant’s election, may borrow the cash
value of the Contracts from the insurer so that the value of the Contracts is
equal to the Vested portion of the Terminated Participant’s amount and then 
assign the Contracts to the Terminated Participant.

 

Distribution of the funds due to a Terminated Participant shall be made on the
occurrence of an event which would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the Participant’s
death, Early or Normal Retirement). However, at the election of the Participant,
the Administrator shall direct the Trustee to cause the entire Vested portion of
the Terminated Participant’s Account to be payable to such Terminated
Participant as soon as administratively feasible after the Anniversary Date
coinciding with or next following termination of employment. Distribution to a
Participant shall not include any Company Stock acquired with the proceeds of an
Exempt Loan until the close of the Plan Year in which such loan is repaid in
full. Any distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Section 7.5 and 7.6, including,
but not limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.

 

Effective for distributions on or after August 1, 1997, if the value of a
Terminated Participant’s Vested benefit derived from Employer contributions does
not exceed $5,000, the Administrator shall direct the Trustee to cause the
entire Vested to benefit paid to such Participant in a single lump sum.

 

For purposes of this Section 7.4, if the value of a Terminated Participant’s
Vested benefit is zero, the Terminated Participant shall be deemed to have
received a distribution of such Vested benefit as of the date of his termination
of Service with the Employer.

 

(b)  The Vested portion of any Participant’s Account shall be a percentage of
the total amount credited to his Participant’s Account determined on the basis
of the Participant’s number of Years of Service.

 

A Participant’s Vested percentage of the Employer Contribution made pursuant to
Section 4.1(a) shall be determined according to the following schedule:

 

Vesting Schedule

 

Years of Service:

 

Percentage:

 

2

 

20

%

3

 

40

%

4

 

60

%

5

 

80

%

6

 

100

%

 

(c)  Notwithstanding, the vesting schedule provided for in paragraph (b) above,
for any Top Heavy Plan Year, the Vested portion of the Participant’s Account of
any Participant who has an Hour of Service after the Plan becomes

 

36

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Top Heavy shall be a percentage of the total amount credited to his
Participant’s Account determined on the basis of the participant’s number of
Years of Service according to the schedule described above, which meets the
requirements for a Top Heavy Plan Year.

 

(d)  Notwithstanding the vesting schedule above, upon the complete a
discontinuance of the Employer’s Contributions to the Plan or upon any full or
partial termination of the Plan, all amounts credited to the account of any
affected Participant shall become 100% Vested and shall not thereafter be
subject to Forfeiture.

 

(e)  The computation of a Participant’s nonforfeitable percentage of his
interest in the Plan shall not be reduced as the result of any direct or
indirect amendment to this Plan. In the event that the Plan is amended to change
or modify any vesting schedule, a Participant with at least three (3) Years of
Service as of the expiration date of the election period may elect to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment. If a Participant fails to make such election, then such Participant
shall be subject to the new vesting schedule. The Participant’s election period
shall commence on the adoption date of the amendment and shall end 60 days after
the latest of:

 

(1)   the adoption date of the amendment,

 

(2)   the effective date of the amendment, or

 

(3)   the date the Participant receives written notice of the amendment from the
Employer or Administrator.

 

(f)                    (1)   If any Former Participant shall be reemployed by
the Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had not
occurred.

 

(2)   If any Former Participant shall be reemployed by the Employer before five
(5) consecutive 1-Year Breaks in Service, and such Former Participant had
received, or was deemed to have received, a distribution of his entire Vested
interest prior to his reemployment, his forfeited account shall be reinstated
only if he repays the full amount distributed to him before the earlier of five
(5) year after the first date on which the Participant is subsequently
reemployed by the Employer or the close of the first period of five (5)
consecutive 1-Year Breaks in Service commencing after the distribution, or in
the event of a deemed distribution, upon the reemployment of such Former
Participant. In, the event the Former Participant does repay the full amount
distributed to him, or in the event of a deemed distribution, the undistributed
portion of the Participant’s Account must be restored in full, unadjusted by any
gains or losses occurring subsequent to the Anniversary Date or other valuation
date coinciding with or preceding his termination. The source for such
reinstatement shall first be any Forfeitures occurring during the year. If such
source is insufficient, then the Employer shall contribute an amount which is
sufficient to restore any such forfeited Accounts provided, however, that is a
discretionary contribution is made for such year pursuant to Section 4.1(c),
such contribution shall first be applied to

 

37

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restore any such Accounts and remainder shall be allocated in accordance with
Section 4.4

 

(3)   If any Former Participant is reemployed at a 1-Year Break Service has
occurred, Yeas of Service shall include Years of Service prior to his 1-Year
Break in Service subject to the following rules:

 

(i)          If a Former participant has a 1-Year Break in Service his pre-break
and post-break service shall be used for computing Years of Service for
eligibility and for vesting purposes only after he has been employed for one (1)
Year of Service following the date of his reemployment with the Employer;

 

(ii)         Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from Employer
contributions shall lose credits otherwise allowable under (i) above if his
consecutive 1-Year Breaks in Service equal or exceed the greater of (A) five (5)
or (B) the aggregate number of his pre-break Years of Service;

 

(iii)        After five (5) consecutive 1-year Breaks in Service, a Former
Participant’s Vested Account balance attributable to pre break service shall not
be increased as a result of post-break service;

 

(iv)       If a Former Participant who has not had his Years of Service before a
1-Year Break in Service disregarded pursuant to (ii) above completes one (1)
Year of Service for eligibility purposes following his reemployment with the
Employer, he shall participate in the Plan retroactively from his date of
reemployment;

 

(v)        If a Former Participant who has not had his Years of Service before a
1-Year Break in Service disregarded pursuant to (ii) above completes a Year of
Service (a 1-Year Break in Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively from the first day
of the Plan Year during which he completes one (1) Year of Service.

 

(h)  In determining Years of Service for purposes of vesting under the Plan,
Years of Service prior to the vesting computation period in which an Employee
attained his eighteenth birthday shall be excluded.

 

7.5                                 Distribution of Benefits

 

(a)  The Administrator, pursuant to the election of the Participant (or if no
election has been made prior to the participant’s death, by his Beneficiary),
shall direct the Trustee to distribute to a Participant or his Beneficiary any
amount to which he is entitled under the Plan in one or more of the following
methods:

 

(1)     One lump-sum payment;

 

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(2)     Payments over a period certain in monthly, quarterly, semiannual, or
annual installments. The period over which such payment is to be made shall not
extend beyond the earlier of the Participant’s life expectancy (or the life
expectancy of the Participant and his designated Beneficiary) or the limited
distribution period provided for in Section 7.5(b).

 

(b)  Unless the Participant elects in writing a longer distribution period,
distributions to a Participant or his Beneficiary attributable to Company Stock
shall be in substantially equal monthly, quarterly, semiannual, or annual
installments over a period not longer than five (5) years. In the case of a
Participant with an account balance attributable to Company stock in excess of
$780,000, the five (5) year period shall be extended one (1) additional year
(but not more than five (5) additional years) for each $155,000 or fraction
thereof by which such balance exceeds $780,000. The dollar limits herein shall
be adjusted at the same time and in the same manner as provided in Code Section
415(d).

 

(c)  Effective far distributions after August 5, 1997, any distribution to a
Participant who has a benefit which exceeds $5,000 shall require such
Participant’s consent if such distribution commences prior to the later of his
Normal Retirement Age or age 62. With regard to this required consent:

 

(1)     The Participant must be informed of his right to defer receipt of the
distribution. If a Participant fails to consent, it shall be deemed an election
to defer the commencement of payment of any benefit. However, any election to
defer the receipt of benefits shall not apply with respect to distributions
which are required under Section 7.5(f).

 

(2)     Notice of the rights specified under this paragraph shall be provided no
less than 30 days and no more than 90 days before the first day on which ail
events have occurred which entitle the Participant to such benefit.

 

(3)     Written consent of the Participant to the distribution must not be made
before the Participant receives the notice and must not be made more than 9 days
before the first day on which all events have occurred which entitle the
Participant to such benefit.

 

(4)     No consent shall be valid if a significant detriment is imposed under
the Plan on any Participant who does not consent to the distribution.

 

If a distribution is one to which Code Sections 401(a)(11) and 417 do not apply,
such distribution may commence less than 30 days after the notice required under
Regulation 1.411(a)-11(c) is given, provided that: (1) the Administrator clearly
informs the Participant that the Participant has a right to a period of at least
30 days after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively elects a
distribution.

 

(d)  Notwithstanding anything herein to the contrary, the Administrator, in his
sole discretion, may direct that cash dividends on shares of Company Stock
allocable to Participants’ or Former Participants’ Company Stock Accounts be

 

39

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

 

distributed to such Participants or Former Participants within 90 days after the
close of the Plan Year in which the dividends are paid.

 

(e)  Any part of a Participant’s benefit which is retained in the Plan after the
Anniversary Date on which his participation ends will continue to be treated as
a Company Stock Account or as an Other Investments Account (subject to Section
7.4(a)) as provided in Article IV.  However, neither account will be credited
with any further Employer contributions or Forfeitures.

 

(f)   Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant’s benefits shall be made in accordance with the
following requirements and shall otherwise comply with Code Section 401(a)(9)
and the Regulations thereunder (including Regulation 1.401(a)(9)-2), the
provisions of which are incorporated herein by reference:

 

(1)     Effective January 1, 1997, a Participant’s benefits shall be distributed
to him not later than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70½ or (ii) the calendar
year in which the Participant retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a  “five (5) percent owner”.

 

(2)     Distributions to a Participant and his Beneficiaries shall only be made
in accordance with the incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.

 

(g)  Notwithstanding any provision in the Plan to the contrary, distributions
upon the death of a Participant shall be made in accordance with the following
requirements and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder. If it is determined pursuant to Regulations that the
distribution of a Participant’s interest has begun and the Participant dies
before his entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the method of
distribution selected pursuant to Section 7.5 as of his date of death. If a
Participant dies before he has begun to receive any distributions of his
interest under the Plan or before distributions are deemed to have begun
pursuant to Regulations, then his death benefit shall be distributed to his
Beneficiaries by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.

 

However, the 5-year distribution, requirement of the preceding paragraph shall
not apply to any portion of the deceased Participant’s interest which is payable
to or for the benefit of a designated Beneficiary. In such event, such portion
shall be distributed over a period not beyond the life expectancy of such
designated Beneficiary provided such distribution begins not later than December
31st of the calendar year immediately following the calendar year in which the
Participant died. However, in the event the Participant’s spouse (determined as
of the date of the Participant’s death) is his Beneficiary, the requirement that
distributions commence within one year of a Participant’s death shall not apply.
In lieu thereof, distributions must commence on or before the later of: (1)
December 31st of the calendar year immediately following the calendar year in
which the Participant died; or (2) December 31st of the calendar year in which
the Participant would have attained age 70½.  If the surviving

 

40

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

 

spouse dies before distributions to such spouse begin, then the 5-year
distribution requirement of this Section shall apply as if the spouse was the
Participant.

 

(h)  For purposes for this Section, the life expectancy of a Participant and a
Participant’s spouse shall not be redetermined in accordance with Code Section
401(a)(9)(D).

 

(i)   Except as limited by Sections 7.5 and 7.6, whenever the Trustee is to make
a distribution or to commence a series of payments on or as of an Anniversary
Date, the distribution or series of payments may be made or begun on such date
or as soon thereafter as is practicable. However, unless a Former Participant
elects in writing to defer the receipt of benefits (such election may not result
in a death benefit that is more than incidental), the payment of benefits shall
begin not later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:

 

(1)     the date on which the Participant attains the earlier of age 65 or the
Normal Retirement Age specified herein;

 

(2)     the 10th anniversary of the year in which the Participant commenced
participation in the Plan; or

 

(3)     the date the Participant terminates his service with the Employer.

 

(j)   If a distribution is made at a time when a Participant is not fully Vested
in his Participant’s Account (employment has not terminated) and the Participant
may increase the Vested percentage in such account:

 

(1)     a separate account shall be established for the Participant’s interest
in the Plan as of the time of the distribution; and

 

(2)     at any relevant time, the Participant’s Vested portion of the separate
account shall be equal to an amount (“X”) determined by the formula:

 

X equals P (AB plus (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
distribution, and R is the ratio of the account balance at the relevant time to
the account balance after distribution.

 

7.6                                 How Plan Benefit Will be Distributed

 

(a)  Distribution of a Participant’s benefit may be made in cash or Company
Stock or both, provided, however, that if a Participant or Beneficiary so
demands, such benefit (other than Company stock previously diversified pursuant
to Section 4.12(a)) shall be distributed only in the form of Company Stock.
Prior to making a distribution of benefit, the Administrator shall advise the
Participant or his Beneficiary, in writing, of the right to demand that benefits
be distributed solely in Company Stock.

 

41

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(b)  If a Participant or Beneficiary demands that benefits be distributed solely
in Company Stock, distribution of a Participant’s benefit will be made entirely
in whole shares or other units of Company Stock; Any balance in a Participant’s
Other Investments Account will be applied to acquire for distribution the
maximum number of whole shares or other units of Company Stock at the then fair
market value. Any fractional unit value unexpended will be distributed in cash.
If Company Stock is not available for purchase by the Trustee, then the Trustee
shall hold such balance until Company Stock is acquired and then make such
distribution, subject to Sections 7.5(i) and 7.5(f).

 

(c)  The Trustee will make distribution from the Trust only on instructions from
the Administrator.

 

(d)  Notwithstanding anything contained herein to the contrary, if the
Employer’s charter or by-laws restrict ownership of substantially all shares of
Company Stock to Employer and the Trust Fund, as described in Code Section
409(h)(2), the Administrator shall distribute a Participant’s Combined Account
entirely in cash without granting the Participant the right to demand
distribution in shares of Company Stock.

 

(e)  Except as otherwise provided herein, Company Stock distributed by the
Trustee may be restricted as to sale or transfer by the by-laws or articles of
incorporation of the Employer, provided restrictions are applicable to all
Company Stock of the same class. If a Participant is required to offer the sale
of his Company Stock to the Employer before offering to sell his Company Stock
to a third party, in no event may the Employer pay a price less than that
offered to the distributee by another potential buyer making a bona fide offer
and in no event shall the Trustee pay a price less than the fair market value of
the Company Stock.

 

(f)   If Company Stock acquired with the proceeds of an Exempt Loan (described
in Section 5.4 hereof) is available for distribution and consists of more than
one class, a Participant or his Beneficiary must receive substantially the same
proportion of each such class.

 

7.7                                 Distribution for Minor Beneficiary

 

                   In the event a distribution is to made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.

 

7.8                                 Location of Participant or Beneficiary
Unknown

 

                   In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at time a
distribution would be otherwise payable, remain unpaid solely by reason of the
inability of the Administrator, after sending a registered letter, rerun receipt
requested, to the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his Beneficiary, the amount so
distributable shall be treated as

 

42

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a Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit shall be
restored.

 

7.9                                 Rights of First Refusal

 

(a)  If any Participant, his Beneficiary or any other person to whom shares of
Company Stock are distributed from the Plan (the “Selling Participant”) shall,
at any time, desire to sell scene or all of such shares (the “Offered Shares”)
to a third party (the “Third Party”), the Selling Participant shall give written
notice of such desire to the Employer and the Administrator, which notice shall
contain the number of shares offered for sale, the proposed terms of the sale
and the names and addresses of both the Selling Participant and Third Party.
Both the Trust Fund and the Employer shall each have the right of first refusal
for a period of fourteen (14) days from the date the Selling Participant gives
such written notice to the Employer and the Administrator (such fourteen (14)
day period to run concurrently against the Trust Fund and the Employer) to
acquire the Offered Shares. As between the Trust Fund and the Employer, the
Trust Fund shall have priority to acquire the shares pursuant to the right of
first refusal. The selling price and terms shall be the same as offered by the
Third Party.

 

(b)  If the Trust Fund and the Employer do not exercise their right of first
refusal within the required fourteen (14) day period provided above, the Selling
Participant shall have the right, at any time following the expiration of such
fourteen (14) day period, to dispose of the Offered Shares to the Third Party;
provided, however, that (i) no disposition shall be made to the Third Party on
terms more favorable to the Third Party than those set forth in the written
notice delivered by the Selling Participant above, and (ii) if such disposition
shall not be made to a third party on the terms offered to the Employer and the
Trust Fund, the offered Shares shall again be subject to the right of first
refusal set forth above.

 

(c)  The closing pursuant to the exercise of the right of first refusal under
Section 7.9(a) above shall take place at such place agreed upon between the
Administrator and the Selling Participant, but not later than ten (10) days
after the Employer, or the Trust Fund shall be notified the Selling Participant
of the exercise of the right of first refusal. At such closing, the Selling
Participant shall deliver certificates representing the Offered Shares duly
endorsed in blank for transfer, or with stock powers attached duly executed in
blank with all required transfer tax stamps attached, or provided for, and the
Employer or the Trust Fund shall deliver the purchase Selling Participant.

 

(d)  Except as provided in this paragraph (d), no Company Stock acquired with
the proceeds of an Exempt Loan complying with the requirements of Section 5.4
hereof shall be subject to a right of first refusal. Company Stock acquired with
the proceeds of an Exempt Loan, which is distributed to a Participant or
Beneficiary, shall be subject to the right of first refusal provided for in
paragraph (a) of this Section only so long as the Company Stock is not publicly
traded. The term “publicly traded” refers to a securities exchange registered
under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or that
is quoted on a system sponsored by a national securities association registered
under Section 15A(b) of the Securities Exchange Act (15 U.S.C. 780). In
addition, in the case of Company Stock which was acquired with proceeds of a
loan described in Section 5.4, the selling price and other terms under the right
must not be less

 

43

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favorable to the seller than the greater of the value of the security determined
under Section 6.2, or the purchase price and other terms offered by a buyer
(other than the Employer or the Trust fund), making a good faith offer to
purchase the security. The right of first refusal must lapse no later than
fourteen (14) days after the security holder gives notice to the holder of the
right that an offer by a third party to purchase the security has been made. The
right of first refusal shall comply with the provisions of paragraphs (a), (b)
and (c) of this Section, except to the extent those provisions may conflict with
the provisions of this paragraph.

 

7.10                           Stock Certificate Legend

 

                   Certificates for shares distributed pursuant to the Plan
shall contain the following legend:

 

                   “The shares represented by this certificate are transferable
only upon compliance with the terms of CALIFORNIA INDEPENDENT BANCORP EMPLOYEE
STOCK OWNERSHIP PLAN effective as of January 1, 1989, which grants to California
Independent Bancorp a right of first refusal, a copy of said Plan being on file
in the office of the Company.”

 

7.11                           Nonterminable Protections and Rights

 

                   No Company Stock, except as specifically described in this
Plan, may be subject to a put, call, or other option, or buy-sell or similar
anent when held by and when distributed from the Trust Fund, whether or not the
Plan is then an ESOP. The protections and rights granted in this Section are
nonterminable, and such protections and rights shall continue to exist under the
terms of this Plan so long as any Company Stock acquired with the proceeds of a
loan described in Section 5.4 hereof is held by the Trust Fund or by any
Participant or other person for whose benefit such protections and rights have
been created, and neither the repayment of such loan nor the failure of the Plan
to termination of said protections and rights.

 

7.12                           Qualified Domestic Relations Order Distributions

 

                   All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
“alternate payee” under a “qualified domestic relations order.” Furthermore, a
distribution to an “alternate payee” shall be permitted if such distribution is
authorized by a “qualified domestic relations off,” even if the affected
Participant has not separated from service and has rot reached the “earliest
retirement age” under the Plan. For the purposes of this Section, “alternate
payee,” “qualified domestic relations order” and “earliest retirement age” shall
have the meaning set forth under Code Section 414(p).

 

7.13                           Put Option

 

(a)  The Employee will issue a put option on all Financed Shares and all other
shares of Company Stock acquired by the Trust after December 31, 1986
(regardless of how such shares were acquired).

 

(b)  The Put Option will allow the Participant to deliver a written notice of
exercise on a form provided by the Committee requiring the Employer to
repurchase (or commence repurchasing) distributed shares during either of two
option periods.

 

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(c)  The first put option period is the period of sixty (60) days commencing on
the day following the date of distribution.

 

(d)  If the put option is not exercised during the initial put option period,
then the second option period will be the sixty (60) day period beginning after
the determination of the fair market value of Financed Shares (and notice to the
Participant or Beneficiary) in the following Plan Year.

 

(e)  The price of shares purchased unto this put option will be that determined
by an independent appraiser experienced in the valuation of businesses for ESOP
purposes which determination shall conform in all respects to the requirements
of Code Section 401(a)(28).

 

(f)   The Trustee may be given the opportunity to purchase shares tendered to
the Employer under the put option.

 

(g)  In general, payment for shares purchased as a result of the exercise of the
put option shall be made in substantially equal installments payable no less
frequently than annually over a period not exceeding five (5) years.

 

(h)  Installment repurchases under this put option shall begin no later than
thirty (30) days after the put option is exercised, shall be adequately secured,
and shall bear it payable at a reasonable rate art any unpaid principal balance.

 

(i)   The put option periods described in this Section will be extended by any
period during which the Company is prohibited from honoring the option by
applicable Federal or State Law.

 

(j)   Shares of Company Stock which are distributed by the Trustee which are
neither Financed Shares nor shares acquired after December 31, 1986, may, but
need not, be accompanied by a put option identical to the option described in
this Section 7.13).

 

(k)  These provisions relating to the put option on shares distributed by the
Trust shall be nonterminable and shall therefore continue to be applicable even
if the Plan ceases to be an employee stock ownership plan under Section
4975(e)(7) of the Code or if the ESOP Loan is repaid.

 

(l)   In the case of a plan established and maintained by a bank (as defined in
Section 581 of the code) which is prohibited by law from redeeming or purchasing
its own securities, the requirements of this Section 7.13 shall not apply if the
Plan provides that Participants entitled to a distribution from the Plan shall
have a right to receive a distribution in cash.

 

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ARTICLE VIII

TRUSTEE

 

8.1                                 Basic Responsibilities of the Trustee

 

                   The Trustee shall have the following categories of
responsibilities:

 

(a)  Consistent with the “funding policy and method” determined by the Employer,
to invest, manage, and control the Plan assets subject, however, to the
direction of an Investment Manager if the Trustee should appoint such manager as
to all or a portion of the assets of the Plan;

 

(b)  At the direction of the Administrator, to pay benefits required under the
Plan to be paid to Participant, or, in the event of their death, to their
Beneficiaries;

 

(c)  To maintain records of receipts an disbursements and furnish to the
Employer and/or Administrator for each Plan Year a written annual report per
Section 8.8; and

 

(d)  If there shall be more than one Trustee, they shall act by a majority of
their number, but may authorize one or more of them to sign papers on their
behalf.

 

8.2                                 Investment Powers and Duties of the Trustee

 

(a)  The Trustee shall invest and reinvest the Trust fund to keep the Trust Fund
invested without distinction between principal and income and in such securities
or property, real, or personal, wherever situated, as the Trustee shall deem
advisable, including, but not limited to, stocks, common or preferred, bonds and
other evidences of indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs of the
Plan on the basis of information furnished by the Employer. In making such
investments, theTrustee shall not be restricted to securities or other property
of the character expressly authorized by the applicable laws for trust
investments; limitations imposed by the Code or the Act so that at all times the
Plan may qualify as an Employee Stock Ownership Plan and Trust,

 

(b)  The Trustee may employ a bank or trust company pursuant to the terms of its
usual and customary bank agency agreement, under which the duties of such bank
or trust company shall be of a custodial, clerical and record-keeping nature.

 

(c)  In the event the Trustee invests any part of the Trust Fund, pursuant to
the directions of the Administrator, in any shares of stock issued by the
Trustee to dispose of such investment, or any part thereof, under circumstances
which in the opinion of counsel for the Trustee, require registration of the
securities under the Securities Act of 933 and/or qualification of the
securities under the Blue Sky laws of any state or states, then the Employer at
its own expense, will take or cause to be taken any and all such action as may
be necessary or appropriate to effect such registration and/or qualification.

 

(d)  The Trustee, at the direction of the Administrator, shall ratably apply
for, own, and pay premiums on Contracts on the lives of the Participants. If a
life

 

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insurance policy is to be purchased for a Participant, the aggregate premium for
ordinary life insurance for each Participant must be less than 50% of the
aggregate of the contributions and Forfeitures to the credit of the Participant
at any particular time. If term insurance is purchased with such contributions,
the aggregate premium must be less than 25% of the aggregate contributions and
Forfeitures allocated to a Participant’s Account. If both term insurance and
ordinary life insurance are purchased with such contributions, the amount
expended for term insurance plus one-half of the premium for ordinary life
insurance may not in the aggregate exceed 25% of the aggregate contributions and
Forfeitures allocated to a Participant’s Account. The trustee must convert the
entire value of the life insurance contracts at or before retirement into cash
or provide for a periodic income so that no portion of such value may be used to
continue life insurance protection beyond retirement, or distribute the
Contracts to the Participant. In the event of any conflict between the terms of
this Plan and the terms of any insurance Contract purchased hereunder, the Plan
provisions shall control.

 

8.3                                 Other Powers of the Trustee

 

                   The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other provisions of the
Plan, shall have the following powers and authorities, to be exercised in the
Trustee’s sole discretion:

 

(a)  To purchase, or subscribe for, any securities or other property and to
retain the same. In conjunction with the purchase of securities, margin accounts
may be opened and maintained;

 

(b)  To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or, other property held by the Trustee, by
private contract or at public auction. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or to inquire into the
validity, expediency, or propriety of any such sale or other disposition, with
or without advertisement;

 

(c)  To vote upon any stock, bonds, or other securities; to give general or
special proxies or powers of attorney with or without power of substitution; to
exercise any conversion privileges, subscription rights or other options, and to
make any payments incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes affecting corporate
securities, and to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the powers of
an owner with respect to stock, bonds, securities, or other property;

 

(d)  To cause any securities or other property to be registered in the Trustee’s
own name or in the name of one or more of the Trustee’s nominees, and to hold
any investments in bearer form, but the books and records of the Trustee shall
at all times show that all such investments are part of the Trust Fund;

 

(e)  To borrow or raise money for the purposes of the Plan in such amount, and
upon such terms and conditions, as the Trustee shall deem advisable; and for any
sum so borrowed, to issue a promissory note as Trustee, and to secure the
repayment thereof by pledging lending money to the Trustee shall be bound to see

 

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to the application of the money lent or to inquire into the validity,
expediency, or, propriety of any borrowing;

 

(f)   To keep such portion of the Trust Fund, in cash or cash balances as the
Trustee may, from time to time, deem to be in the best interests of the Plan,
without liability for interest thereon;

 

(g)  To accept and retain for such time as the Trustee may deem advisable any
securities or other property received or acquired as Trustee hereunder, whether
or not such securities or other property would normally be purchased as
investments hereunder;

 

(h)  To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers herein granted;

 

(i)   To settle, compromise, or submit to arbitration any claims, debts, or
damages due or owing, to or from the Plan, to commence or defend suits or legal
or Administrative proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;

 

(j)   To employ suitable agents and counsel and to pay their reasonable expenses
and compensation, and such agent or counsel may or may not be agent or counsel
for the Employer;

 

(k)  To apply for and procure from responsible insurance companies, to be
selected by the Administrator, as an investment of the Trust Fund such annuity,
or other Contracts (on the life of any Participant) as the Administrator shall
deem proper; to exercise, at any time or from time to time, whatever rights and
privileges may be granted under such annuity, or other Contracts as and when
entitled to do so under the provisions thereof;

 

(l)   To invest funds of the Trust in time deposits or savings accounts bearing
a reasonable rate of interest in the Trustee’s bank;

 

(m) To invest in Treasury Bills and other forms of United States government
obligations;

 

(n)  To invest in shares of investment companies registered under the Investment
Company Act of 1940;

 

(o)  To deposit monies in federally insured savings accounts or certificates of
deposit in banks or savings and loan associations;

 

(p)  To vote Company Stock as provided in Section 8.4;

 

(q)  To consent to or otherwise participate in reorganizations, consolidations,
mergers and similar transactions with, respect to Company Stock or any other
securities and to pay any assessments or charges in connection therewith;

 

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(r)   To deposit such Company Stock (but only if such deposit does not violate
the provisions of Section 8.4 hereof) or other securities in any voting trust,
or trustee or with depositories designated thereby;

 

(s)  To sell or excise any options, subscription rights and conversion
privileges and to make any payments in incidental thereto;

 

(t)   To exercise any of the powers of an owner, with respect to such Company
Stock and other securities or other property comprising the Trust Fund. The
Administrator, with the Trustee’s Approval, may authorize the Trustee to act on
any administrative matter or class of matters with respect to which direction or
instruction to the Trustee by the Administrator is called for hereunder without
specific direction or other instruction from the Administrator;

 

(u)  To sell, purchase and acquire put or call options if the options are traded
on and purchased through a national securities exchange registered under the
Securities Exchange Act of 1934, as amended, or, if the options are not traded
on a national securities exchange, are guaranteed by a member firm for the New
York Stock Exchange;

 

(v)  To do all such acts and exercise all such rights and privileges, although
not specifically mentioned herein, as the Trustee may deem necessary to carry
out the purposes of the Plan.

 

8.4                                 Voting Company Staff

 

                   The Trustee shall vote all Company Stock held by it as part
of the Plan assets.  Provided, however, that if any agreement entered into by
the Trust provides for voting of any shares of Company Stock pledged as security
for any obligation on the Plan, then such shares of Company Stock shall be voted
in accordance with such agreement. The Trustee shall not vote Company Stock
which a Participant or Beneficiary fails to exercise pursuant to this Section.

 

                   Notwithstanding the foregoing, if the Employer has a
registration-type class of securities or, with respect to Company Stock acquired
by, or transferred to, the Plan in connection with a securities acquisition loan
(as defined in Code Section 133(b)) after July 10, 1989, each Participant or
Beneficiary shall be entitled to direct the Trustee as to the manner in which
the Company Stock which is entitled to vote and which is allocated to the
Company Stock Account of such Participant or Beneficiary is to be voted. If the
Employer does not have a registration-type class of securities, with respect to
Company Stock other then Company Stock acquired by, or transferred to, the Plan
in connection with a securities acquisition loan (as defined in Code 133(b))
after July 10, 1989, each Participant or Beneficiary in the Plan shall be
entitled to direct the Trustee as to the manner in which voting rights on shares
of Company Stock which are allocated to the Company Stock Account of such
Participant of Beneficiary are to be exercised with respect to any corporate
matter which involves the voting of such shares with respect to the approval or
disapproval of any corporate merger, or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets of
a trade or business, or such similar transaction as prescribed in Regulations.
For purposes of this Section the term “registration-type class of securities”
means: (A) a class of securities required to be registered under Section 12 of
the Securities Exchange Act 1934; and (B) a class of securities which would be
required to be so registered except for the exemption from registration provided
in subsection (g)(2)(H) of such Section 12.

 

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                   If the Employer does not have a registration-type class of
securities and the by-laws of the Employer require the Plan to vote an issue in
a manner that reflects a one-man, one-vote philosophy, each Participant or
Beneficiary shall vote the shares held by the Plan in proportion to the results
of the votes cast on the issue by the Participants and Beneficiaries.

 

8.5                                 Duties of the Trustee Regarding Payments

 

(a)  The Trustee shall make distributions from the Trust Fund at such times and
in such numbers of shares or other units of Company Stock and amounts of cash to
or for the benefit for the person entitled thereto under the Plan as the
Administrator directs in writing.  Any undistributed part of a Participant’s
interest in his accounts shall be retained in the Trust Fund until the
Administrator directs its distribution.  Where distribution is directed in
Company Stock, the Trustee shall cause an appropriate certificate to be issued
to the person entitled thereto and mailed to the address furnished it by the
Administrator. Any portion of a Participant’s Account to be distributed in cash
shall be paid by the Trustee mailing its check to the same person at the same
address. If a dispute arises as to who is entitled to or should receive any
benefit or payment, the Trustee may withhold or cause to be withheld such
payment until the dispute has been resolved.

 

(b)  As directed by the Administrator, the Trustee shall make payments out of
the Trust Fund. Such directions or instructions need rot specify the purpose of
the payments so directed and the Trustee shall not be responsible in any way
respecting the purpose or propriety of such payments except as mandated by the
Act,

 

(c)  In the event that any distribution or payment directed by the Administrator
shall be mailed by the Trustee to the person specified in such direction at the
latest address of such person filed with the administrator and shall be returned
to the Trustee because such person cannot be located at such address, the
Trustee shall promptly notify the Administrator of such return. Upon the
expiration of sixty (60) days after such notification, such direction shall
become void and unless and until a further direction by the Administrator is
received by the Trustee with respect to such distribution or payment, the
Trustee shall thereafter continue to administer the Trust as if such direction
had not been made by the Administrator. The Trustee shall not be obligated to
search for or ascertain the whereabouts of any such person.

 

8.6                                 Trustee's Compensation and Expenses and
Taxes

 

                   The Trustee shall be paid such reasonable compensation as
shall from time to time be agreed upon in writing by the Employer and the
Trustee. An individual serving as Trustee who already receives full-time pay
from the Employer shall not receive compensation from the Plan. In addition, the
Trustee shall be reimbursed for any reasonable expenses, including reasonable
counsel fees incurred by it as Trustee. Such compensation and expenses shall be
paid from the Trust Fund unless paid or advanced by the Employer. All taxes of
any kind and all kinds whatsoever that may be levied or assessed under existing
or future laws upon, or in respect of, the Trust Fund or the income thereof,
shall be paid from the Trust Fund.

 

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8.7                                 Annual Report of the Trustee

 

                   Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer’s Contributions for each Plan Year,
the Trustee shall furnish to the Employer and Administrator a written-statement
of account with respect to the Plan Year for which such contribution was made
setting forth:

 

(a)  the net income, or loss, of the Trust Fund;

 

(b)  the gains, or losses, realized by the Trust Fund upon sales or other
disposition of the assets;

 

(c)  the increase, or decrease, in the value of the Trust Fund;

 

(d)  all payments and distributions made from the Trust Fund; and

 

(e)  such further information as the Trustee and/or Administrator deems
appropriate. The Employer, forthwith upon its receipt of each such statement of
account, shall acknowledge receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof. Failure by the
Employer to disapprove any such statement of account within thirty (30) days
after its receipt thereof shall be deemed as approval thereof. The approval by
the Employer of any statement of account shall be binding as to all matters
embraced therein as between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment or decree in an
action for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all parsons having or
claiming an interest in the Plan were parties; provided, however, that nothing
herein contained shall deprive the Trustee of its right to have its accounts
judicially settled if the Trustee so desires.

 

8.8                                 Audit

 

(a)  If an audit of the Plan’s records shall be required by the Act and the
regulations thereunder for any Plan Year, the Administrator shall direct the
Trustee to engage on behalf of all Participants an independent qualified public
accountant for that purpose. Such accountant shall, after an audit of the books
and records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close for the Plan Year, furnish
to the Administrator and the Trustee a report of his audit setting forth his
opinion as to whether any statements, schedules or lists that are required by
Act Section 103 or the Secretary of Labor to be filed with the Plan’s annual
report, are presented fairly in conformity with generally accepted accounting
principles applied consistently. All auditing and accounting fees shall be an
expense of any may, at the election of the Administrator, be paid from the Trust
Fund.

 

(b)  If some or all of the information necessary to enable the Administrator to
comply with Act Section 103 is maintained by a bank, insurance company, or
similar institution regulated and supervised and subject to periodic examination
by a state or federal agency, it shall transmit and certify the accuracy of that
information to the Administrator as provided in Act Section 103(b) within one
hundred twenty (120) days may be prescribed under regulations of the Secretary
of Labor.

 

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8.9                                 Resignation, Removal and Succession of
Trustee

 

(a)  The Trustee may resign at any time by delivering to the Employer, at least
thirty (30) days before its effective date, written notice of his resignation.

 

(b)  The Employer may remove the Trustee by mailing by registered or certified
mail, addressed to such Trustee at his last known address, at least thirty (30)
days before its effective date, a written notice of his removal:

 

(c)  Upon the death, resignation, incapacity, or removal of any Trustee, a
successor may be appointed by the Employer, and such successor, upon accepting
such appointment in writing and delivering same to the Employer, shall without
further act, become vested with all estate, rights, powers, discretions, and
duties of his predecessor with like respect as if he were originally named as a
Trustee herein. Until such a successor is, appointed, the remaining Trustee or
Trustees shall have full authority to act under the terms of the Plan.

 

(d)  The Employer may designate one or more successors prior to the death,
resignation, incapacity, or removal of a Trustee.  In the event a successor is
so designated by the Employer and accepts such designation, the successor shall,
without further act, become vested with all the estate, rights, powers,
discretion, and duties of his predecessor with the like effect as if he were
originally named as Trustee herein immediately upon the death, resignation,
incapacity, or removal of his predecessor.

 

(e)  Whenever any Trustee hereunder ceases to serve as such, he shall furnish to
the Employer and Administrator a written statement of account with respect to
the portion of the Plan Year during which he served as Trustee. This statement
shall be either (i) included as part of the annual statement of account for the
Plan Year required under Section 8.8 or (ii) set forth in a special statement.
Any such special statement of account should be rendered to the Employer no
later than the due date of the annual statement of account for the Plan Year.
The procedures set forth in Section 8.8 for the approval by the Employer of
annual statements of account rendered hereunder and approval by the Employer of
any such special statement in the manner provided in Section 8.7 shall have the
same effect upon the statement as the Employer’s approval of an annual statement
of account. No successor to the Trustee shall have any duty or responsibility to
investigate the acts or transactions of any predecessor who has rendered all
statements of account required by Section 8.7 and this subparagraph.

 

8.10                           Transfer of Interest

 

                   Notwithstanding any other provision contained in this Plan,
the Trustee at the direction of the Administrator shall transfer the vested
interest, if any, of such participant in his account to another trust forming
part of a pension, profit sharing or stock bonus plan maintained by such
Participant’s new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided the transfer to be
made.

 

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8.11                           Direct Rollover

 

(a)  Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee’s election under this Section, a distributee may
elect, at the time and in the manner prescribed by the Plan Administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.

 

(b)  For purposes of this. Section the following definitions shall apply:

 

(1)     Effective January 1, 1999, 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 expectancy) 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; and 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 any hardship
distribution described in Section 40l(k)(2)(B)(i)(IV) of the Code.

 

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

 

(3)     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 Code Section 414(p), are distributees
with regard to the interest of the spouse or former spouse.

 

(4)     A direct rollover is a payment by, the Plan to the eligible retirement
plan specified by the distributes.

 

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ARTICLE IX

AMENDMENT, TERMINATION AND MERGERS

 

9.1                                 Amendment

 

(a)  The Employer shall have the right at any time to amend the Plan, subject to
the limitations of this Section.  However, any amendment which affects the
rights, duties or responsibilities of the Trustee and Administrator may only be
made with the Trustee’s and Administrator’s written consent. Any such amendment
shall become effective as provided therein upon its execution. The Trustee shall
not be required to execute any such amendment unless the Trust provisions
contained affects the duties of the Trustee hereunder.

 

(b)  No amendment to the Plan shall be effective if it authorizes or permits any
part of the Trust Fund (other than such part as is required to pay taxes and
administration expenses) to be used for or diverted to any purposes other than
for the exclusive benefit of the Participants or their Beneficiaries or estates;
or causes any reduction in the amount credited to the account of any
Participant; or causes or permits any portion of the Trust Fund to revert to or
become property of the Employer.

 

(c)  Except as permitted by Regulations, no plan amendment or transaction having
the effect of a Plan amendment (such as a merger, plan transfer or similar
transaction) shall be effective to the extent it eliminates or reduces any
“Section 411(d)(6) protected benefit” or adds or modifies conditions relating to
“Section 41l(d)(6) protected benefits” the result of which is a further
restriction on such benefit unless such protected benefits are preserved with
respect to benefits accrued as of the later of the adoption date or effective
date of the amendment.  “Section 411(d)(6) protected benefits” are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms for benefit.

 

In addition, no such amendment shall be the effect of terminating the
protections and rights set forth in Section 7.11, unless such termination shall
then be permitted under the applicable provisions of the Code and Regulations;
such a termination is currently expressly prohibited by Regulation
54.4975-11(a)(3)(ii).

 

9.2                                 Termination

 

(a)  The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee, and Administrator written notice of such termination.
Upon any full or partial termination, all amounts, credited to the affected
Participants’ Accounts shall become 100% Vested as provided in Section 7.4 and
shall not thereafter be subject to forfeiture, and all unallocated amounts shall
be allocated to the accounts of all Participants in accordance with the
provisions hereof.

 

(b)  Upon the full termination of the Plan, the Employer shall direct the
distribution of the assets of the Trust Fund to Participants in a manner which
is consistent- with and satisfies the provisions of Sections 7.5 and 7.6. 
Except as permitted by Regulation, the termination of the Plan shall not result
in the

 

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reduction for “Section 411(d)(6) protected benefits” in accordance with Section
9.1(c).

 

9.3                                 Merger or Consolidation

 

                   This Plan and Trust may be merged or consolidated with, or
its assets and/or liabilities may be transferred to any other plan and trust
only if the benefits which would be received by a Participant of this Plan, in
the event of a termination of the plan immediately after such transfer, merger,
or consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any “Section 411(d)(6) protected
benefits” in accordance with Section 9.1(c).

 

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ARTICLE X

MISCELLANEOUS

 

10.1                           Participants’ Rights

 

                   This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee. Nothing contained
in this Plan shall be deemed to give any Participant or Employee the right to be
retained in the service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time regardless of the
effect which such discharge shall have upon him as a Participant of this Plan.

 

10.2                           Alienation

 

(a)  Subject to the exceptions provided below, no benefit which shall be payable
out of the Trust Fund to any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be
void; and no such benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements; or torts or any such person, nor
shall it be subject to attachment or legal process for or against such person,
and the same shall not be recognized by the Trustee, except to such extent as
may be required by law.

 

(b)  This provision shall not apply to the extent a Participant or Beneficiary
is indebted to the Plan, as a result of a loan from the Plan.  At the time a
distribution is to be made to or for a Participant’s or Beneficiary’s benefit,
such proportion of the amount distributed as shall equal such loan
indebtedness.  Prior to making a payment, however, the Participant or
Beneficiary must be given written notice by the Administrator that such loan
indebtedness is to be so paid in whole or part from his Participant’s Combined
Account.  If the Participant or Beneficiary does not agree that the loan
indebtedness is a valid claim against his Vested Participant’s Account, he shall
be entitled to a review of the validity of the claim in accordance with
procedures provided in Sections 2.12 and 2.13.

 

(c)  This provisions shall not apply to a” qualified domestic relations order”
defined in Code Section 414(p), and those other domestic relations orders
permitted to be so treated by the Administrator under the provisions of the
Retirement Equity Act of 1984. The Administrator shall establish a written
procedure to determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the extent
provided under a “qualified domestic relations order,” a former spouse of a
Participant shall be treated as the spouse or surviving spouse for all purposes
under the Plan.

 

10.3                           Construction of Plan

 

                   This Plan and Trust shall be construed and enforced according
to the Act and the laws of the State of California, other than its laws
respecting choice of law, to the extent not preempted by the Act.

 

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10.4                           Gender and Number

 

                   Wherever any words are used herein in the masculine, feminine
or neuter gender, they shall be construed as though they were also used in
another gender in all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would so
apply.

 

10.5                           Legal Action

 

                   In the event any claim suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the Trustee or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee or Administrator, they shall be entitled to be
reimbursed from the Trust Fund for any and all costs, attorney’s fees, and other
expenses pertaining thereto incurred by them for which they shall have become
liable.

 

10.6                           Prohibition Against Diversion of Funds

 

(a)  Except as provided below and otherwise specifically permitted by law, it
shall be impossible by operation of the plan or of the Trust, by termination of
either, by power of revocation or amendment, by the happening of any
contingency, by collateral arrangement or by any other means, for any part of
the corpus or income of any trust fund maintained pursuant to the Plan or any
funds contributed thereto to be used for, or diverted to, purposes other than
the exclusive benefit of Participants Retired Participants, or their
Beneficiaries.

 

(b)  In the event the Employer shall make an excessive contribution under a
mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer may demand
repayment of such excessive contribution at any time within one (1) year
following the time for payment and the Trustees shall return such amount to the
Employer within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.

 

10.7                           Bonding

 

                   Every Fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be bonded in an
amount not less than 10% of amount of the funds such Fiduciary handles;
provided, however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled shall be determined at the beginning of
each Plan Year by the amount of funds handled by such person, group, or class to
be covered and their predecessors, if any, during .the preceding Plan Year, or
if there is no preceding Plan Year, then by the amount of the funds to be
handled during the then current year. The bond shall provide protection to the
Plan against any loss by reason for acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding anything in the
Plan to the contrary, the cost of such bonds shall be an expense of and) may, at
the election for the Administrator, be paid from the Trust Fund or by the
Employer.

 

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10.8                           Receipt and Release for Payments

 

                   Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of the Plan, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the Trustee and
the Employer, either of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to such payment, to
execute a receipt and release thereof in such form as shall be determined by the
Trustee or Employer.

 

10.9                           Action by the Employer

 

                   Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or thing, it shall be
done and performed by a person duly authorized by its legally constituted
authority.

 

10.10                     Named Fiduciaries and Allocation of Responsibility

 

                   The “named Fiduciaries” of this Plan are (1) the Employer,
(2) the Administrator and (3) the Trustee. The named Fiduciaries shall have only
those specific powers, duties, responsibilities and obligations as are
specifically given them under the Plan. In general, the Employer shall have the
sole responsibility for making the contributions provided for under Section 4.1;
and shall have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan’s “funding policy and method”; and to amend
or terminate, in whole or in part, the Plan. The Administrator shall have the
sole responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the sole
responsibility of management of the assets held under the Trust, except those
assets, the management of which has been assigned to an Investment Manager, who
shall be solely responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action.  It is intended
under the Plan that each named Fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and obligations under the
Plan. No named Fiduciary shall guarantee the Trust Fund in any manner against
investment loss or depreciation in asset value. Any person or group may serve in
more than one Fiduciary capacity. In the furtherance of their responsibilities
hereunder, the “named fiduciaries” shall be empowered to interpret the Plan and
Trust and to resolve ambiguities, inconsistencies and omissions, which findings
shall be binding, final and conclusive.

 

10.11                     Headings

 

                   The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any construction of the
provisions hereof

 

10.12                   Approval by Internal Revenue Service

 

(a)  Notwithstanding anything herein to the contrary, contributions to this Plan
are conditioned upon, the initial qualification of the Plan under Code Section
401. If the Plan receives an adverse determination with respect to its initial

 

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qualification, then the Plan may return such contributions to the Employer
within one year after such determination, provided the application for the
determination is made by the time prescribed by law for filing the Employer’s
return for the taxable years in which the Plan was adopted, or such later data
as the Secretary of the Treasury may prescribe.

 

(b)  Notwithstanding any provisions to the contrary, except Sections 3.6, 3.7,
and 4.1(e), any contribution by the Employer to the Trust Fund is conditioned
upon the deductibility of the contribution by the Employer under the Code and,
to the extent any such deduction is disallowed, the Employer may, within one (1)
year following the disallowance of the deduction, demand repayment of such
disallowed contribution and the Trustee shall return such contribution within
one (1) year following the disallowance. Earnings of the Plan attributable to
the excess contribution may not be returned thereto must reduce the amount so
returned.

 

10.13                   Uniformity

 

                   All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner.

 

10.14                   Securities and Exchange Commission Approval

 

                   The Employer may request an interpretative letter from the
Securities and Exchange Commission stating that the transfers of Company Stock
contemplated hereunder do not involve transactions requiring a registration of
such Company Stock under the Securities Act of 1933. In the event that a
favorable interpretative letter is not obtained, the Employer reserves the right
to amend the Plan and Trust retroactively to their Effective Dates in order to
obtain a favorable interpretative letter or to terminate the Plan.

 

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IN WITNESS WHEREOF, this plan has been executed the day and year first above
written.

 

 

California Independent Bancorp:

 

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

President

 

 

:

By:

/s/ [ILLEGIBLE]

 

 

 

Secretary

 

 

Trustee:

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

Trustee

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

Trustee

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

Trustee

 

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Feather River State Bank hereby adopts the California Independent Bancorp
Employee Stock Ownership Plan (Amendment and Restatement) effective as of
January 1, 2001 as an Affiliated Employer.

 

Dated this 18th day of December, 2001.

 

 

Feather River State Bank:

 

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

President

 

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

Secretary

 

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