Exhibit 10.1(C)

OceanFirst Bank

Matching Contribution Employee Stock Ownership Plan

Effective December 27, 2006

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OceanFirst Bank

Matching Contribution Employee Stock Ownership Plan

Table of Contents

 

           Page Section 1    Introduction    1 Section 2    Definitions    3
Section 3    Eligibility and Participation    11 Section 4    Contributions   
13 Section 5    Plan Accounting    16 Section 6    Vesting    24 Section 7   
Distributions    26 Section 8    Voting of Company Stock and Tender Offers    31
Section 9    The Committee and Plan Administration    32 Section 10    Rules
Governing Benefit Claims    36 Section 11    The Trust    37 Section 12   
Adoption, Amendment and Termination    39 Section 13    General Provisions    41
Section 14    Top-Heavy Provisions    43

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OceanFirst Bank

Matching Contribution Employee Stock Ownership Plan

Section 1

Introduction

Section 1.01 Nature of the Plan.

OceanFirst Bank established the OceanFirst Bank Matching Contribution Employee
Stock Ownership Plan (the “Plan”) effective of December 27, 2006 as a spinoff
plan containing the matching contribution feature of the OceanFirst Bank
Employee Stock Ownership Plan. The intent of the spinoff transaction is to
enable the OceanFirst Bank Employee Stock Ownership Plan (the “Predecessor
Plan”) to satisfy requirements of Code Section 401(a)(35)(E)(ii) beginning in
the 2007 Plan Year.

The Bank sponsors the Plan to enable Eligible Employees (as defined in
Section 2.01(r) of the Plan) to acquire stock ownership interests in OceanFirst
Financial Corp., the holding company of the Bank (the “Company”). The Bank
intends this Plan to be a tax-qualified stock bonus plan under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the “Code”) and an employee stock
ownership plan within the meaning of Section 407(d)(6) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and Sections 409
and 4975(e)(7) of the Code. The Plan is designed to invest primarily in the
common stock of the Company, which stock constitutes “qualifying employer
securities” within the meaning of Section 407(d)(5) of ERISA and Sections 409(1)
and 4975(e)(8) of the Code. Accordingly, the Plan and Trust Agreement (as
defined in Section 2.01(qq) of the Plan) shall be interpreted and applied in a
manner consistent with the Bank’s intent for it to be a tax-qualified plan
designed to invest primarily in qualifying employer securities.

 

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Section 1.02 Employers and Affiliates.

The Bank and each of its Affiliates (as defined in Section 2.01(c) of the Plan)
that adopt the Plan with the consent of the Bank and pursuant to the provisions
of Section 12.01 of the Plan are collectively referred to as the “Employers” and
individually as an “Employer.” The Plan shall be treated as a single plan with
respect to all participating Employers.

 

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Section 2

Definitions

Section 2.01 Definitions.

In this Plan, whenever the context so indicates, the singular or the plural
number and the masculine or feminine gender shall be deemed to include the
other, the terms “he,” “his,” and “him,” shall refer to a Participant or
Beneficiary, as the case may be, and, except as otherwise provided, or unless
the context otherwise requires, the capitalized terms shall have the following
meanings:

(a) “Account” or “Accounts” mean a Participant’s or Beneficiary’s Company Stock
Account and/or his Other Investments Account, as the context so requires.

(b) “Acquisition Loan” means a loan (or other extension of credit, including an
installment obligation to a “party in interest” (as defined in Section 3(14) of
ERISA)) incurred or assumed by the Trustee in connection with the purchase of
Company Stock.

(c) “Affiliate” means any corporation, trade or business, which, at the time of
reference, is together with the Bank, a member of a controlled group of
corporations, a group of trades or businesses (whether or not incorporated)
under common control, or an affiliated service group, as described in Sections
414(b), 414(c), and 414(m) of the Code, respectively, or any other organization
treated as a single employer with the Bank under Section 414(o) of the Code;
provided, however, that, where the context so requires, the term “Affiliate”
shall be construed to give full effect to the provisions of Sections 409(1)(4)
and 415(h) of the Code.

(d) “Bank” means OceanFirst Bank and any entity that succeeds to the business of
OceanFirst Bank and adopts this Plan in accordance with the provisions of
Section 12.02 of the Plan or by written agreement assuming the obligations under
the Plan.

(e) “Beneficiary” means the person(s) entitled to receive benefits under the
Plan, pursuant to Section 7.03 of the Plan, following a Participant’s death.

(f) “Change in Control” means, with respect to the Bank or the Company, an event
of a nature that; (i) would be required to be reported in response to Item 1 of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”);
or (ii) results in a Change in Control of the Bank or the Company within the
meaning of the Home Owners’ Loan Act of 1933, as amended and the Rules and
Regulations promulgated by the Office of Thrift Supervision (“OTS”) (or its
predecessor agency), as in effect on the date hereof (provided, that in applying
the definition of change in control as set forth under the rules and regulations
of the OTS, the Board shall substitute its judgment for that of the OTS); or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (A) any “person” (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Bank or the Company representing 20% or more of the Bank’s or the Company’s
outstanding securities except for any securities of the Bank purchased by the
Company in connection with the conversion of the Bank to the stock form,
securities purchased by any tax qualified employee

 

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benefit plan of the Bank or securities acquired by the OceanFirst Foundation; or
(B) individuals who constitute the Board on the date hereof (the “Incumbent
Board”) cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company’s
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (B), considered as though
he were a member of the Incumbent Board; or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Company or similar transaction occurs in which the Bank or Company is not
the resulting entity; or (D) solicitations of shareholders of the Company, by
someone other than the current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or consolidation of the Company or
Bank or similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to the plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Company shall be distributed; or (E) a tender
offer is made for 51 % or more of the voting securities of the Bank or the
Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Committee” means the individual(s) responsible for the administration of
the Plan in accordance with Section 9 of the Plan.

(i) “Company” means OceanFirst Financial Corp. and any entity which succeeds to
the business of OceanFirst Financial Corp.

(j) “Company Stock” means shares of the voting common stock or preferred stock,
meeting the requirements of Section 409 of the Code and Section 407(d)(5) of
ERISA, issued by the Company or its Affiliates.

(k) “Company Stock Account” means the account established and maintained in the
name of each Participant or Beneficiary to reflect his share of the Trust Fund
invested in Company Stock.

(l) “Compensation” means

(i) an Employee’s regular basic monthly salary or wages.

(ii) Notwithstanding the above, Compensation shall include any amount which is
contributed by the Employer pursuant to a salary reduction agreement and which
is not includible in the gross income of the employee under Sections 125 and
402(e)(3), but shall exclude overtime, bonuses, fees and special payments.

Notwithstanding the foregoing, to the extent this definition of compensation
does not satisfy the requirements of Section 414(s) of the Code for any
particular Plan Year, then, for that Plan Year, Compensation shall have the
meaning set forth in Sections 1.415-2(d)(2) and (3) of the Treasury Regulations.
A Participant’s Compensation shall not exceed $200,000 (as periodically adjusted
pursuant to Section 401(a)(17) of the Code). If a Participant’s Compensation is
determined on the basis of a period of less than twelve (12) calendar months,
then the Compensation limit for

 

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such Participant shall be the limit in effect for the Plan Year in which the
period begins, multiplied by a ratio obtained by dividing the number of full
months in the period by twelve (12).

(m) “Disability” means a condition which renders the Participant totally and
permanently disabled due to sickness or injury, such disability is likely to be
continuous and permanent, and renders the Participant unable to continue a like
gainful occupation. In any event, the Committee’s good faith decision as to
whether a Participant’s Service has been terminated by Disability shall be final
and conclusive.

(n) “Early Retirement Age” means the date a Participant attains age 55 with ten
(10) Years of Service with an Employer.

(o) “Early Retirement Date” means the first day of the month following the date
the Participant attains Early Retirement Age.

(p) “Effective Date” means December 27, 2006.

(q) “Eligibility, Computation Period” means a twelve (12) consecutive month
period. An Employee’s first Eligibility Computation Period shall begin on the
date he first performs an Hour of Service for the Employer (“employment
commencement date”). Subsequent Eligibility Computation Periods shall be the
Plan Year, commencing with the Plan Year that includes the first anniversary
date of the Employee’s employment commencement date. To determine the first
Eligibility Computation Period after a One Year Break in Service, the Plan shall
use the twelve (12) consecutive month period beginning on the date the Employee
again performs an Hour of Service for the Employer.

(r) “Eligible Employee” means any Employee who is not precluded from
participating in the Plan by reason of the provisions of Section 3.02 of the
Plan.

(s) “Employee” means any person who is employed by the Bank or an Affiliate in
any capacity, any portion of whose income is subject to withholding of income
tax and/or for whom Social Security contributions are made by the Bank or an
Affiliate, as well as any other person qualifying as a common-law employee of
the Bank or an Affiliate, except that such term shall not include:

(i) Any individual who performs services for the Bank or an Affiliate and who is
classified and paid as an independent contractor (regardless of his
classification for federal tax or other legal purposes) by the Bank or an
Affiliate, and

(ii) Any individual, whether a “leased employee” (within the meaning of
Section 414(n) of the Code) or otherwise, who pursuant to an agreement with the
Employer and any other person, including a leasing organization, has performed
services for the Employer (or for the Employer and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one year, and such services are performed under
the primary direction and control of the Employer.

 

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(t) “Employer” or “Employers” means the Bank and any of its Affiliates that
adopt the Plan in accordance with the provisions of Section 12.01 of the Plan,
and any entity that succeeds to the business of the Bank or its Affiliates and
adopts the Plan in accordance with the provisions of Section 12.02 of the Plan
or by written agreement assumes the obligations under the Plan.

(u) “Entry Date” means the first day of each January and July coinciding with or
next following the date the Employee satisfies the eligibility requirements
under Section 3.01 of the Plan.

(v) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

(w) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(x) “Financed Shares” means shares of Company Stock transferred from the
Predecessor Plan that have been acquired by the Predecessor Plan Trustee with
the proceeds of an Acquisition Loan, which shall constitute “qualifying employer
securities” under Section 409(1) of the Code and any shares of Company Stock
received upon conversion or exchange of such shares.

(y) “Highly Compensated Employee” means an Employee who, for a particular Plan
Year, satisfies one of the following conditions:

(i) was a “5-percent owner” (as defined in Section 414(q)(2) of the Code) during
the year or the preceding year, or

(ii) for the preceding year had “compensation” (as defined in Section 414(q)(4)
of the Code) from the Bank and its Affiliates exceeding $80,000 (as periodically
adjusted pursuant to Section 414(q)(1) of the Code).

(z) “Hours of Service” means:

(i) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer during the applicable computation period.

(ii) Each hour for which an Employee is paid, or entitled to payment, for a
period during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. Notwithstanding the preceding sentence, no credit shall be given to the
Employee for:

(A) more than 501 hours under this clause (ii) because of any single continuous
period in which the Employee performs no duties (whether or not such period
occurs in a single computation period);

(B) an hour for which the Employee is directly or indirectly paid, or entitled
to payment, because of a period in which no duties are performed if such payment
is made or due under a plan maintained solely for the purpose of complying with

 

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applicable worker’s or workmen’s compensation, or unemployment, or disability
insurance laws; or

(C) an hour or a payment which solely reimburses the Employee for medical or
medically-related expenses incurred by the Employee.

(iii) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer; provided, however, that hours
credited under either clause (i) or (ii) above shall not also be credited under
this clause (iii). Crediting of hours for back pay awarded or agreed to with
respect to periods described in clause (ii) above will be subject to the
limitations set forth in that clause.

The crediting of Hours of Service shall be determined by the Committee in
accordance with the rules set forth in Section 2530.200b-2 of the regulations
prescribed by the Department of Labor, which rules shall be consistently applied
with respect to all Employees within the same job classification. If an Employer
finds it impracticable to count actual Hours of Service for any class or group
of non-hourly Employees, each Employee in that class or group shall be credited
with 45 Hours of Service for each weekly period in which he has at least an Hour
of Service. However, an Employee shall be credited with Hours of Service only
for his normal working hours during a paid absence. Hours of Service will be
credited for employment with an Affiliate.

For purposes of determining whether an Employee has incurred a One Year Break in
Service and for vesting and participation purposes, if an Employee begins a
maternity/paternity leave of absence described in Section 411(a)(6)(E)(i) of the
Code, his Hours of Service shall include the Hours of Service that would have
been credited to him if he had not been so absent (or 45 Hours of Service for
each week of such absence if the actual Hours of Service cannot be determined).
An Employee shall be credited for such Hours of Service (up to a maximum of 501
Hours of Service) in the Plan Year in which his absence begins (if such
crediting will prevent him from incurring a One Year Break in Service in such
Plan Year) or, in all other cases, in the following Plan Year. An absence from
employment for maternity or paternity reasons means an absence:

(i) by reason of pregnancy of the Employee,

(ii) by reason of a birth of a child of the Employee,

(iii) by reason of the placement of a child with the Employee in connection with
the adoption of such child by such Employee, or

(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement.

(aa) “Loan Suspense Account” means that portion Trust Fund consisting of Company
Stock acquired with an Acquisition Loan which has not yet been allocated to the
Participants’ Accounts.

(bb) “Normal Retirement Age” means age sixty-five (65).

 

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(cc) “Normal Retirement Date” means the first day of the month coincident with
or next following the Participant’s attainment of Normal Retirement Age.

(dd) “One Year Period of Severance” means a twelve (12) consecutive month period
following an Employee’s termination of Service with the Employer during which
the Employee did not perform an Hour of Service. Notwithstanding the foregoing,
if an Employee is absent from employment for maternity or paternity reasons,
such absence during the twenty-four (24) month period commencing on the first
date of such absence shall not constitute a One Year Period of Severance. An
absence from employment for maternity or paternity reasons means an absence:

(i) by reason of the pregnancy of the Employee;

(ii) by reason of the birth of a child of the Employee;

(iii) by reason of the placement of a child with the Employee in connection with
the adoption of such child by such Employee; or

(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement.

(ee) “Other Investments Account” means the account established and maintained in
the name of each Participant or Beneficiary to reflect his share of the Trust
Fund, other than Company Stock.

(ff) “Participant” means any active Employee who has become a participant in
accordance with Section 3.01 of the Plan or any other person with an Account
balance under the Plan.

(gg) “Period of Service” means a period commencing on the date an Employee first
performs an Hour of Service for the Employer upon initial employment or, if
applicable, upon reemployment, and ending on the date such Employee first incurs
a Termination of Service. Notwithstanding the foregoing, the period between the
first and second anniversary of the first date of a maternity or paternity
absence described under Section 2.01(dd) of the Plan shall not be included in
determining a Period of Service. A period during which an individual was not
employed by the Employer shall nevertheless be deemed to be a Period of Service
if such individual incurred a Termination of Service and:

(i) such Termination of Service was the result of resignation, discharge or
retirement and such individual is reemployed by the Employer within one(1) year
after such Termination of Service; or

(ii) such Termination of Service occurred when the individual was otherwise
absent for less than one (1) year and he was reemployed by the Employer within
one (1) year of the date such absence began.

All Periods of Service not disregarded under Section 6.03 of the Plan shall be
aggregated. Whenever used in the Plan, a Period of Service means the quotient
obtained by dividing the days

 

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in all Periods of Service not disregarded hereunder by 365 and disregarding any
fractional remainder.

(hh) “Plan” means this OceanFirst Bank Matching Contribution Employee Stock
Ownership Plan, as amended from time to time.

(ii) “Plan Year” means the calendar year.

(jj) “Postponed Retirement Date” means the first day of the month coincident
with or next following a Participant’s date of actual retirement which occurs
after his Normal Retirement Date.

(kk) “Recognized Absence” means a period for which:

(i) an Employer grants an Employee a leave of absence for a limited period of
time, but only if an Employer grants such leaves of absence on a
nondiscriminatory basis to all Eligible Employees; or

(ii) an Employee is temporarily laid off by an Employer because of a change in
the business conditions of the Employer; or

(iii) an Employee is on active military duty, but only to the extent that his
employment rights are protected by the Military Selective Service Act of 1967
(38 U.S.C. sec. 2021).

(ll) “Retirement Date” means a Participant’s Early Retirement Date, Normal
Retirement Date or Postponed Retirement Date, whichever is applicable.

(mm) “Service” means employment with the Bank or an Affiliate. Participants
shall be given credit for Service while covered by the Predecessor Plan in
determining Service under the Plan.

(nn) “Termination of Service” means the earlier of (a) the date on which an
Employee’s Service is terminated by reason of his resignation, retirement,
discharge, death or Disability or (b) the first anniversary date on which such
Employee’s service for disability of a short-term nature or any other reason.
Service in the Armed Forces of the United States shall not constitute a
Termination of Service but shall be considered to be a period of employment by
the Employer provided (i) such military service is caused by war or other
emergency or the Employee is required to serve under the laws of conscription in
a time of peace, (ii) the Employee returns to employment with the Employer
within six (6) months following discharge from such military service, and
(iii) such Employee is reemployed by the Employer at a time when the Employee
had a right to reemployment at his former position or substantially similar
position upon separation from such military duty in accordance with seniority
rights as protected under the laws of the United States. A leave of absence
granted to an Employee by the Employer shall not constitute a Termination of
Service provided that the Participant returns to the active service of the
Employer at the expiration of any such period for which leave has been granted.
Notwithstanding the foregoing, an Employee who is absent from service with the
Employer beyond the first anniversary of the first date of his absence for
maternity or paternity reasons set forth in Section 2.01(dd) of the Plan shall
incur a Termination of Service for purposes of the Plan on the second
anniversary of the date of such absence.

 

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(oo) “Treasury Regulations” means the regulations promulgated by the Department
of the Treasury under the Code.

(pp) “Trust” means the trust agreement(s) created in connection with the
operation of this Plan.

(qq) “Trust Agreement” means the trust agreement establishing the Trust.

(rr) “Trust Fund” means the assets held in the Trust for the benefit of
Participants and their Beneficiaries.

(ss) “Trustee” means the trustee or trustees from time to time in office under
the Trust Agreement.

(tt) “Valuation Date” means the last day of the Plan Year and each other date as
of which the Committee shall determine the investment experience of the Trust
Fund and adjust the Participants’ Accounts accordingly.

(uu) “Valuation Period” means the period following a Valuation Date and ending
with the next Valuation Date.

(vv) “Year of Service” means an applicable twelve month period during which an
Employee completes at least 1,000 Hours of Service for eligibility purposes.
With respect to the vesting provisions of the Plan, Year of Service means a one
year Period of Service.

 

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Section 3

Eligibility and Participation

Section 3.01 Participation.

(a) Participants as of the Effective Date. Notwithstanding any other provision
of this Section 3, since this Plan is formed by the spinoff of a portion of the
Predecessor Plan, all Employees and all former Employees who were Participants
in the Predecessor Plan as of the Effective Date shall remain Participants in
this Plan. Any former Employee who was a Participant in the Predecessor Plan
prior to the Effective Date and who received a distribution of his entire
nonforfeitable Account balance on account of termination of Service may become
eligible to participate in this Plan upon re-employment either as a newly-hired
Employee or by satisfaction of the eligibility requirements of Section 3.04 of
the Plan.

(b) Other Employees. An Eligible Employee who is not a Participant as of the
Effective Date of the Plan shall become eligible to enter the Plan upon the
completion of one (1) Year of Service during an Eligibility Computation Period
and attainment of age 21. Notwithstanding anything in the Plan to the Contrary,
Service with Columbia Home Loans, LLC, formerly known as Columbia Equities,
Ltd., prior to August 14, 2000 shall be counted for purposes of determining
eligibility to participate in the Plan.

(c) An Eligible Employee who has satisfied the eligibility requirements of
paragraph (b) of this Section 3.01 shall enter the Plan and become a Participant
on the Entry Date coincident with or next following the date he satisfies such
requirements.

Section 3.02 Certain Employees Ineligible.

The following Employees are ineligible to participate in the Plan:

(a) Employees covered by a collective bargaining agreement between the Employer
and the Employee’s collective bargaining representative if:

(i) retirement benefits have been the subject of good faith bargaining between
the Employer and the representative, and

(ii) the collective bargaining agreement does not expressly provide that
Employees of such unit be covered under the Plan;

(b) Employees who are nonresident aliens and who receive no earned income from
an Employer which constitutes income from sources within the United States; and

(c) Employees of an Affiliate that has not adopted the Plan pursuant to
Section 12.01 or Section 12.02 of the Plan.

Section 3.03 Transfer to and from Eligible Employment.

(a) If an Employee, ineligible to participate in the Plan by reason of
Section 3.02 of the Plan, transfers to employment as an Eligible Employee, he
shall enter the Plan as of the later of:

 

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(i) the first Entry Date after the date of transfer, or

(ii) the first Entry Date on which he could have become a Participant pursuant
to Section 3.01 of the Plan if his prior employment with the Bank or Affiliate
had been as an Eligible Employee.

(b) If a Participant transfers to a position of employment that is not eligible
to participate in the Plan by reason of Section 3.02 of the Plan, he shall cease
active participation in the Plan as of the date of such transfer and his
transfer shall be treated for all purposes of the Plan as any other termination
of Service.

Section 3.04 Participation After Reemployment.

(a) Any Employee re-entering Service with an Employer after a One Year Break in
Service who has never satisfied the eligibility requirements of Section 3.01(b)
of the Plan shall not receive credit for prior Service with an Employer and
shall be required to meet the eligibility requirements of Section 3.01(b) of the
Plan before becoming a Participant.

(b) An Employee who has satisfied the eligibility requirements of
Section 3.01(b) of the Plan, but who terminates Service prior to entering the
Plan and becoming a Participant in accordance with Section 3.01(c) of the Plan,
will become a Participant on the later of:

(i) the first Entry Date on which he would have entered the Plan had he not
terminated Service, or

(ii) the date he re-commences Service.

(c) A Participant whose Service terminates will re-enter the Plan as a
Participant on the date he recommences Service, provided the Participant returns
to Service prior to incurring five consecutive One Year Breaks in Service. A
Participant who terminates Service and then returns to Service following five
consecutive One Year Breaks in Service shall not receive credit for prior
Service with an Employer and shall be required to meet the eligibility
requirements of Section 3.01(b) of the Plan before again becoming a Participant.

Section 3.05 Participation Not Guarantee of Employment.

Participation in the Plan does not constitute a guarantee or contract of
employment and will not give any Employee the right to be retained in the employ
of the Bank or any of its Affiliates nor any right or claim to any benefit under
the terms of the Plan unless such right or claim has specifically accrued under
the Plan.

 

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Section 4

Contributions

Section 4.01 Employer Contributions.

(a) Employer Matching Contributions under the Savings Plan. For each Plan Year
each Employer, in its discretion, may make a contribution to the Trust equal to
a percentage of the Employee’s voluntary contributions made for the Plan Year
under the Savings Plan (as defined below). Each Employer making a contribution
for any Plan Year under this Section 4.01(a) shall contribute to the Trustee
cash equal to, or Company Stock or other property having an aggregate fair
market value equal to, such amount as the Board of Directors of the employer
shall determine by resolution or as shall be set forth pursuant to a formula
under the Savings Plan, as applicable. Notwithstanding the Employer’s discretion
with respect to the medium of contribution, an Employer shall not make a
contribution in any medium which would make such contribution a prohibited
transaction (for which no exemption is provided) under Section 406 of ERISA or
Section 4975 of the Code. For purposes of this Plan, “Savings Plan” means a
defined contribution tax-qualified retirement plan sponsored by the Employer
under which Participants may defer compensation pursuant to Section 401(k) of
the Code.

(b) Employer Contributions for Acquisition Loans. Each Plan Year, the Employers
shall, subject to any regulatory prohibitions, contribute an amount of cash
(including amounts contributed under paragraph (a) of this Section 4.01)
sufficient to enable the Trustee to discharge any indebtedness incurred with
respect to an Acquisition Loan pursuant to the terms of the Acquisition Loan.
The Employers’ obligation to make contributions under this Section 4.01(b) shall
be reduced to the extent of any investment earnings attributable to such
contributions and any cash dividends paid with respect to Company Stock held by
the Trustee in the Loan Suspense Account. If there is more than one Acquisition
Loan, the Employers shall designate the one to which any contribution pursuant
to this Section 4.01(b) is to be applied.

Section 4.02 Limitations on Contributions.

In no event shall an Employer’s contribution(s) made under Section 4.01 of the
Plan for any Plan Year exceed the lesser of:

(a) The maximum amount deductible under Section 404 of the Code by that Employer
as an expense for Federal income tax purposes; and

(b) The maximum amount which can be credited for that Plan Year in accordance
with the allocation limitation provisions of Section 5.05 of the Plan.

Section 4.03 Acquisition Loans.

The Trustee may incur Acquisition Loans from time to time to finance the
acquisition of Company Stock for the Trust or to repay a prior Acquisition Loan.
An Acquisition Loan shall be for a specific term, shall bear a reasonable rate
of interest, and shall not be payable on demand except in the event of default,
and shall be primarily for the benefit of Participants and Beneficiaries of the
Plan. An Acquisition Loan may be secured by a collateral pledge of the Financed
Shares so acquired and any other Plan assets which are permissible securities
within

 

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the provisions of Section 54.4975-7(b) of the Treasury Regulations. No other
assets of the Plan or Trust may be pledged as collateral for an Acquisition
Loan, and no lender shall have recourse against any other Trust assets. Any
pledge of Financed Shares must provide for the release of shares so pledged on a
basis equal to the principal and interest (or if the requirements of
Section 54.4975-7(b)(8)(ii) of the Treasury Regulations are met and the Employer
so elects, principal payments only), paid by the Trustee on the Acquisition
Loan. The released Financed Shares shall be allocated to Participants’ Accounts
in accordance with the provisions of Section 5.04 or Section 5.08 of the Plan,
whichever is applicable. Payment of principal and interest on any Acquisition
Loan shall be made by the Trustee only from the Employer contributions paid in
cash to enable the Trustee to repay such loan in accordance with Section 4.01(b)
of the Plan, from earnings attributable to such contributions, and any cash
dividends received by the Trustee on Financed Shares acquired with the proceeds
of the Acquisition Loan (including contributions, earnings and dividends
received during or prior to the year of repayment, less such payments in prior
years), whether or not allocated. Financed Shares shall initially be credited to
the Loan Suspense Account and shall be transferred for allocation to the Company
Stock Accounts of Participants only as payments of principal and interest (or,
if the requirements of Section 54.4975-7(b)(8)(ii) of the Treasury Regulations
are met and the Employer so elects, principal payments only), on the Acquisition
Loan are made by the Trustee. The number of Financed Shares to be released from
the Loan Suspense Account for allocation to Participants’ Company Stock Accounts
for each Plan Year shall be based on the ratio that the payments of principal
and interest (or, if the requirements of Section 54.4975-7(b)(8)(ii) of the
Treasury Regulations are met and the Employer so elects, principal payments
only), on the Acquisition Loan for that Plan Year bear to the sum of the
payments of principal and interest on the Acquisition Loan for that Plan Year
plus the total remaining payments of principal and interest projected (or, if
the requirements of Section 54.4975-7(b)(8)(ii) of the Treasury Regulations are
met and the Employer so elects, principal payments only), on the Acquisition
Loan over the duration of the Acquisition Loan repayment period, subject to the
provisions of Section 5.05 of the Plan.

Section 4.04 Conditions as to Contributions.

Any amount contributed by an Employer due to a good faith mistake of fact, or
based upon a good faith but erroneous determination of its deductibility under
Section 404 of the Code, shall be returned to the Employer within one (1) year
after the date on which the Employer originally made such contribution, or
within one (1) year after its nondeductibility has been finally determined.
However, the amount to be returned shall be reduced to take account for any
adverse investment experience within the Trust in order that the balance
credited to each Participant’s Accounts is not less that it would have been if
the contribution had never been made by the Employer.

Section 4.05 Employee Contributions.

Employee contributions are neither required nor permitted under the Plan.

Section 4.06 Rollover Contributions.

Rollover contributions of assets from other tax-qualified retirement plans are
not permitted under the Plan.

 

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Section 4.07 Trustee-to-Trustee Transfers.

Except for assets transferred from the Predecessor Plan in connection with the
establishment of the Plan, trustee-to-trustee transfers of assets from other
tax-qualified retirement plans are not permitted under the Plan.

 

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Section 5

Plan Accounting

Section 5.01 Accounting for Allocations.

The Committee shall establish the Accounts (and sub-accounts, if deemed
necessary) for each Participant, and the accounting procedures for purposes of
making allocations to the Participants’ Accounts provided for in this Section 5.
The Committee shall maintain adequate records of the cost basis of shares of
Company Stock allocated to each Participant’s Company Stock Account. The
Committee also shall keep separate records of Financed Shares attributable to
each Acquisition Loan and of contributions made by the Employers (and any
earnings thereon) made for the purpose of enabling the Trustee to repay any
Acquisition Loan. From time to time, the Committee may modify its accounting
procedures for the purpose of achieving equitable and nondiscriminatory
allocations among the Participants’ Accounts, in accordance with the provisions
of this Section 5 and the applicable requirements of the Code and ERISA. In
accordance with Section 9 of the Plan, the Committee may delegate the
responsibility for maintaining Accounts and records.

Section 5.02 Maintenance of Participants’ Company Stock Accounts.

As of each Valuation Date, the Committee shall adjust the Company Stock Account
of each Participant to reflect activity during the Valuation Period as follows:

(a) First, charge to each Participant’s Company Stock Account all distributions,
payments and expenses that have not been previously charged;

(b) Next, credit to each Participant’s Company Stock Account the shares of
Company Stock, if any, that have been purchased with amounts from his Other
Investments Account, and adjust such Other Investments Account in accordance
with the provisions of Section 5.03 of the Plan; and

(c) Next, credit to each Participant’s Company Stock Account the shares of
Company Stock representing contributions made by the Employers in the form of
Company Stock and the number of Financed Shares released from the Loan Suspense
Account under Section 4.03 of the Plan that are to be allocated and credited as
of that date in accordance with the provisions of Section 5.04 of the Plan; and

(d) Finally, credit to each Participant’s Company Stock Account the shares of
Company Stock released from the Loan Suspense Account that are to be allocated
in accordance with the provisions of Section 5.09 of the Plan.

Section 5.03 Maintenance of Participants’ Other Investments Accounts.

As of each Valuation Date, the Committee shall adjust the Other Investments
Account of each Participant to reflect activity during the Valuation Period as
follows:

(a) First, charge to each Participant’s Other Investments Account all
distributions, payments and expenses that have not previously been charged;

 

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(b) Next, if Company Stock is purchased with assets from a Participant’s Other
Investments Account, the Participant’s Other Investments Account shall be
charged accordingly;

(c) Next, subject to the dividend provisions of Section 5.08 of the Plan, credit
to the Other Investments Account of each Participant any cash dividends paid to
the Trustee on shares of Company Stock held in that Participant’s Company Stock
Account (as of the record date for such cash dividends) and dividends paid on
shares of Company Stock held in the Loan Suspense Account that have not been
used to repay any Acquisition Loan. Subject to the provisions of Section 5.08 of
the Plan, cash dividends that have not been used to repay an Acquisition Loan
and have been credited to a Participant’s Other Investments Account shall, from
time to time, be applied by the Trustee to purchase shares of Company Stock,
which shares shall then be credited to the Company Stock Account of such
Participant. The Participant’s Other Investments Account shall then be charged
by the amount of cash used to purchase such Company Stock or used to repay any
Acquisition Loan. In addition, any earnings on:

(i) Other Investments Accounts will be allocated to Participants’ Other
Investments Accounts, pro rata, based on such Other Investment Account balances
as of the first day of the Valuation Period, and

(ii) The Loan Suspense Account, other than dividends used to repay the
Acquisition Loan, will be allocated to Participants’ Other Investments Accounts,
pro rata, based on their Other Investment Account balances as of the first day
of the Valuation Period.

(d) Next, allocate and credit the Employer contributions made pursuant to
Section 4.01(b) of the Plan for the purpose of repaying any Acquisition Loan in
accordance with Section 5.04 of the Plan. Such amount shall then be used to
repay any Acquisition Loan and each Participant’s Other Investments Account
shall be charged accordingly; and

(e) Next, allocate and credit the Employer contributions (other than amounts
contributed to repay an Acquisition Loan) that are made in cash (or property
other than Company Stock) for the Plan Year to the Other Investments Account of
each Participant in accordance with Section 5.04 of the Plan; and

(f) Finally, credit to each Participant’s Other Investments Account the proceeds
from the disposition of shares of Company Stock from the Loan Suspense Account
that are to be allocated in accordance with the provisions of Section 5.09 of
the Plan.

Section 5.04 Allocation and Crediting of Employer Contributions.

(a) Except as otherwise provided for in Section 5.08 and Section 5.09 of the
Plan, as of the Valuation Date for each Plan Year:

(i) Company Stock released from the Loan Suspense Account for that year and
shares of Company Stock contributed directly to the Plan shall be allocated and
credited to each Active Participant’s Account (as defined in paragraph
Section 5.04(b) of this Section 5.04) as follows:

 

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(A) first, the number of shares of Company Stock with a fair market value
(valued as of the last day of each calendar quarter) equal to the matching
contributions made under Section 4.01(a) of the Plan on behalf of an Active
Participant shall be credited to the Active Participant’s Company Stock Account
(and a matching contribution sub-account); and then

(B) the remaining number of shares of Company Stock shall be credited to the
Active Participant’s Company Stock Account (and matching contribution
sub-account) in the same ratio as the Active Participant’s matching contribution
under Section 4.01(a) of the Plan bears to the aggregate matching contributions
of all Active Participants (while Participants) for the Plan Year.

(ii) The cash contributions not used to repay an Acquisition Loan and any other
property (other than shares of Company Stock) contributed for that year shall be
allocated and credited to each Active Participant’s Account as follows:

(A) first, an amount which, when added to contributions under
Section 5.04(a)(1)(A), is equal to the matching contributions made under
Section 4.01(a) of the Plan on behalf of an Active Participant, shall be
credited to the Active Participant’s Company Stock Account (and a matching
contribution sub-account); and then

(B) additional cash contributions shall be allocated to each Participant’s Other
Investments Account based on the ratio determined by comparing each Active
Participant’s Compensation while a Participant to the aggregate Compensation of
all Active Participants (while Participants) for the Plan Year.

(b) For purposes of this Section 5.04, the term “Active Participant” means those
Employees who:

(i) completed 1,000 Hours of Service during the Plan Year, and

(ii) were employed by an Employer, including Employees on a Recognized Absence,
on the last day of the Plan Year or terminated employment during the Plan Year
by reason of death, Disability, or attainment of their Retirement Date.

Notwithstanding the above, a Participant shall be considered an Active
Participant for purposes of allocations of matching contributions made pursuant
to Section 4.01(a) of the Plan if the Participant would otherwise be eligible
for an allocation of matching contributions under the Savings Plan.

Section 5.05 Limitations on Allocations.

(a) In General. Subject to the provisions of this Section 5.05, Section 415 of
the Code shall be incorporated by reference into the terms of the Plan. No
allocation shall be made under Section 5.04 of the Plan that would result in a
violation of Section 415 of the Code.

 

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(b) Code Section 415 Compensation. For purposes of this Section 5.05,
Compensation shall be adjusted to reflect the general rule of Section 1.415-2(d)
of the Treasury Regulations.

Limitation Year. The “limitation year” (within the meaning of Section 415 of the
Code) shall be the calendar year. For limitation years beginning on or after
January 1, 2001, for purposes of applying the limitations described in this
Section 5.05 and as required by Section 415 of the Code, Compensation paid or
made available under such limitation years shall include elective amounts that
are not includible in the gross income of the employee by reason of
Section 132(f) of the Code.

(c) Multiple Defined Contribution Plans. In any case where a Participant also
participates in another defined contribution plan of the Bank or its Affiliates,
the appropriate committee of such other plan shall first reduce the after-tax
contributions under any such plan, shall then reduce any elective deferrals
under any such plan subject to Section 401(k) of the Code, shall then reduce all
other contributions under any other such plan and, if necessary, shall then
reduce contributions under this Plan, subject to the provisions of paragraph
Section 5.05(d) of this Section 5.05.

(d) Excess Allocations. If, after applying the allocation provisions under
Section 5.04 of the Plan, allocations under Section 5.04 of the Plan would
otherwise result in a Participant’s account being in violation of Section 415 of
the Code, the Committee shall reduce the Employer contributions for the next
limitation year (and succeeding limitation years, as necessary) for that
Participant if that Participant is covered by the Plan as of the end of the
limitation year. However, if that Participant is not covered by the Plan as of
the end of the limitation year, then the excess amounts shall be held
unallocated in a suspense account for the limitation year and allocated and
reallocated in the next limitation year to all the remaining Participants in the
Plan; furthermore, the excess amounts shall be used to reduce Employer
contributions for the next limitation year (and succeeding limitation years, as
necessary) for all the remaining Participants in the Plan.

(e) Allocations Pursuant to Section 5.09. For purposes of this Section 5.05, no
amount credited to any Participant’s Account pursuant to Section 5.09 of the
Plan shall be counted as an “annual addition” for purposes of Section 415 of the
Code.

Section 5.06 Other Limitations.

Aside from the limitations set forth in Section 5.05 of the Plan, in no event
shall more than one-third of the Employer contributions to the Plan for any Plan
Year be allocated to the Accounts of Highly Compensated Employees. In order to
ensure such allocations are not made, the Committee shall, beginning with the
Participants whose Compensation exceeds the limit then in effect under
Section 401(a)(17) of the Code, reduce the amount of Compensation of such Highly
Compensated Employees on a pro-rata basis per individual that would otherwise be
taken into account for purposes of allocating benefits under Section 5.04 of the
Plan. If, in order to satisfy this Section 5.06, any such Participant’s
Compensation must be reduced to an amount that is lower than the Compensation of
the next highest paid (based on such Participant’s Compensation) Highly
Compensated Employee (the “breakpoint amount”), then, for purposes of

 

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allocating benefits under Section 5.04 of the Plan, the Compensation of all
concerned Participants shall be reduced to an amount not to exceed such
breakpoint amount.

Section 5.07 Limitations as to Certain Section 1042 Transactions.

To the extent that a shareholder of Company Stock sells qualifying Company Stock
to the Plan and elects (with the consent of the Bank) nonrecognition of gain
under Section 1042 of the Code, no portion of the Company Stock purchased in
such nonrecognition transaction (or dividends or other income attributable
thereto) may accrue or be allocated during the nonallocation period (the ten
(10) year period beginning on the later of the date of the sale of the qualified
Company Stock or the date of the Plan allocation attributable to the final
payment of an Acquisition Loan incurred in connection with such sale) for the
benefit of:

(a) The selling shareholder;

(b) The spouse, brothers or sisters (whether by the whole or half blood),
ancestors or lineal descendants of the selling shareholder or descendant
referred to in (a) above; or

(c) Any other person who owns, after application of Section 318(a) of the Code,
more than twenty-five percent (25%) of

(i) any class of outstanding stock of the Bank or any Affiliate, or

(ii) the total value of any class of outstanding stock of the Bank or any
Affiliate.

For purposes of this Section 5.07, Section 318(a) of the Code shall be applied
without regard to the employee trust exception of Section 318(a)(2)(B)(i) of the
Code.

Section 5.08 Dividends.

(a) Stock Dividends. Dividends on Company Stock which are received by the
Trustee in the form of additional Company Stock shall be retained in the portion
of the Trust Fund consisting of Company Stock, and shall be allocated among
Participants’ Accounts and the Loan Suspense Account in accordance with their
holdings of the Company Stock on which the dividends have been paid.

(b) Cash Dividends on Allocated Shares. Dividends on Company Stock credited to
Participants’ Accounts which are received by the Trustee in the form of cash
shall be, at the direction of the Bank, either be:

(i) credited to Participants’ Accounts in accordance with Section 5.03 of the
Plan and invested as part of the Trust Fund;

(ii) distributed immediately to the Participants;

(iii) distributed to the Participants within ninety (90) days of the close of
the Plan Year in which paid; or

 

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(iv) used to repay first principal and then, if available, interest on the
Acquisition Loan used to acquire Company Stock on which the dividends were paid.

In addition to the above methods of treating dividends on allocated shares, for
Plan Years beginning after December 31, 2001, at the sole discretion of the
Committee, Participants may elect that dividends on Company Stock credited to
their Accounts which are received by the Trustee in the form of cash shall
either be:

(v) paid to the Plan and reinvested in Company Stock and credited to the
Participant’s Account;

(vi) distributed in cash to the Participant; or

(vii) distributed to the Participant within ninety (90) days of the close of the
Plan Year in which paid.

Dividends subject to an election under this paragraph (and any Stock acquired
therewith pursuant to a Participant’s election) shall at all times be fully
vested. To the extent the Committee allows elections pursuant to this Section,
the Committee will establish policies and procedures consistent with guidance
issued under Section 404(k) of the Code or which the Committee believes is
consistent with the provisions of Section 404(k) of the Code in the absence of
relevant regulatory guidance.

(c) Cash Dividends on Unallocated Shares. Dividends on Company Stock held in the
Loan Suspense Account which are received by the Trustee in the form of cash
shall be applied as soon as practicable to payments of first principal and then,
if available, interest under the Acquisition Loan incurred with the purchase of
the Company Stock.

(d) Financed Shares. Financed Shares released from the Loan Suspense Account by
reason of dividends paid with respect to such Company Stock shall be allocated
under Section 5.03 and Section 5.04 of the Plan as follows:

(i) First, Financed Shares with a fair market value at least equal to the
dividends paid with respect to the Company Stock allocated to Participants’
Accounts shall be allocated among and credited to the Accounts of such
Participants, pro rata, according to the number of shares of Company Stock held
in such accounts on the date such dividend is declared by the Company;

(ii) Then, any remaining Financed Shares released from the Loan Suspense Account
by reason of dividends paid with respect to Company Stock held in the Loan
Suspense Account shall be allocated among and credited to the Accounts of all
Participants, pro rata, according to each Participant’s Compensation.

Section 5.09 Change in Control Provisions.

(a) Upon a Change in Control, the Committee shall direct the Trustee to sell or
otherwise dispose of a sufficient number of shares of Company Stock held in the
Loan Suspense Account, and the proceeds of such sale or disposition shall be
used to repay in full any outstanding

 

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Acquisition Loan of the Plan. After repayment of any Acquisition Loans, all
remaining shares of Company Stock held in the Loan Suspense Account and any cash
proceeds from the sale or other disposition of any shares of Company Stock held
in the Loan Suspense Account shall be allocated among the Accounts of all
Affected Participants (as defined below). Such allocation of shares or cash
proceeds shall be credited as of the date on which the Change in Control occurs
to the Accounts of each Participant who is either in active Service with an
Employer immediately preceding the date on which the Change in Control occurs or
is on a Recognized Absence immediately preceding the date on which the Change in
Control occurs (each an “Affected Participant”), in proportion to the opening
balances in their Accounts as of the first day of the current Valuation Period.

(b) Notwithstanding any other provision of the Plan, this Section 5.09 may not
be amended on or after the effective date of a Change in Control, unless
required by the Internal Revenue Service as a condition of the continued
treatment of the Plan as a tax-qualified plan under Section 401(a) of the Code.

(c) This Section 5.09 shall have no force and effect unless the price paid for
the Company Stock in connection with the Change in Control is greater than the
average basis of the unallocated Company Stock held in the Loan Suspense Account
as of the date of the Change in Control.

Section 5.10 Nondiscrimination Test for Matching Contributions.

(a) Notwithstanding anything herein to the contrary, the Plan shall meet the
nondiscrimination test of Section 401(m) of the Code for each Plan Year. In
order to meet the nondiscrimination test, any or all of the following steps may
be taken:

(i) At any time during the Plan Year, the Committee may limit the amount of
matching contributions that may be made on behalf of Highly Compensated
Employees;

(ii) The Committee may distribute to Highly Compensated Employees the excess
aggregate contributions made for the Plan Year, to the extent necessary to meet
the requirements of Section 401(m) of Code, on the basis of the amount of
contributions on behalf of, or by, each Highly Compensated Employee;

(iii) The Committee may recommend to the Board of Directors of the Bank that the
Employer make an additional matching contribution to the Plan for the benefit of
Participants who are not Highly Compensated Employees to the extent necessary to
meet the requirements of Section 401(m) of the Code; and

(iv) The Committee may take any other steps that the Committee deems
appropriate.

(b) Excess aggregate contributions distributed pursuant to Section 5.10(a)(ii)
shall be adjusted for any income and loss up to the date of distribution equal
to income or loss allocable to the Participant’s Company Stock Account and Other
Investments Account multiplied by a fraction, the numerator which is such
Participant’s excess aggregate contributions for the year and the denominator of
which is the Participant’s account balance(s) attributable to Matching
Contributions, without regard to any income or loss during the Plan Year.

 

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(c) The nondiscrimination requirements of Section 401(m) of the Code require
that, in each Plan Year, the “Contribution Percentage” (as defined below) of the
eligible Highly Compensated Employees for such Plan Year shall not exceed the
greater of:

(i) The Contribution Percentage of all other eligible Employees for the
preceding Plan Year multiplied by 1.25; or

(ii) The lesser of the Contribution Percentage of all other eligible Employees
for the preceding Plan Year multiplied by 2, or the Contribution Percentage of
all other eligible Employees for the preceding Plan Year plus 2 percentage
points. (For Plan Years prior to January 1, 2002, use of this alternative
limitation shall be subject to the provisions of Section 1.401(m)-2 of the
Treasury Regulations regarding the multiple use of the alternative deferral
tests set forth in Section 401(k) and 401(m) of the Code.)

The Committee may elect to calculate the Contribution Percentages using the
current Plan Year rather than the preceding Plan Year; provided, however, that
if the Committee so elects, the election may only be changed as provided by the
Secretary of the Treasury.

(d) The “Contribution Percentage” for a group of Employees is the average of the
ratios, calculated separately for each Employee in the group, of the amount of
Matching Contributions that are credited under the Plan on behalf of each
Employee for the Plan Year, to each Employee’s Compensation for the Plan Year.

 

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Section 6

Vesting

Section 6.01 Deferred Vesting in Accounts.

(a) A Participant shall become vested in his Accounts with respect to
contributions made pursuant to Section 4.01(a) or Section 4.01(b) of the Plan in
accordance with the following schedule:

 

Years of Service

   Vested Percentage  

Fewer than 2 years

   0 %

2 years

   20 %

3 years

   40 %

4 years

   60 %

5 years

   80 %

6 or more years

   100 %

(b) For purposes of determining a Participant’s Years of Service under this
Section 6.01, employment with the Bank or an Affiliate shall be deemed
employment with the Employer. Except as otherwise provided for in this
Section 6.01 and in Section 6.05 of the Plan, for purposes of determining the
Vested Percentage of all Participants, all Service with an Employer shall be
included, beginning with the Employee’s initial Service with the Employer.

(c) Notwithstanding anything in this Plan to the contrary, Service with Columbia
Home Loans, LLC, formerly known as Columbia Equities, Ltd., prior to August 14,
2000 shall not be counted for purposes of determining a Participant’s Vested
Percentage under this Section 6.

Section 6.02 Immediate Vesting in Certain Situations.

(a) Notwithstanding Section 6.01(a) of the Plan, a Participant shall become
fully vested in his Accounts upon the earlier of:

(i) Termination of the Plan or upon the permanent and complete discontinuance of
contributions by the Employer to the Plan; provided, however, that in the event
of a partial termination, the interest of each Participant shall fully vest only
with respect to that part of the Plan which is terminated;

(ii) Termination of Service on or after the Participant’s Early Retirement Date;

(iii) A Change in Control; or

(iv) Termination of Service by reason of death or Disability.

 

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Section 6.03 Treatment of Forfeitures.

(a) If a Participant who is not fully vested in his Accounts terminates
employment, that portion of his Accounts in which he is not vested shall be
forfeited upon the earlier of:

(i) The date the Participant receives or is deemed to have received a
distribution of his entire vested benefits under the Plan, or

(ii) The date at which the Participant incurs five (5) consecutive One Year
Periods of Severance; or

(iii) The date at which the Participant attains Normal Retirement Age.

(b) If a Participant who has terminated employment and has received a
distribution of his entire vested benefits under the Plan is subsequently
reemployed by an Employer prior to incurring five (5) consecutive One Year
Periods of Severance, he shall have the portion of his Accounts which was
previously forfeited restored to his Accounts, provided he repays to the Trustee
within five (5) years of his subsequent employment date an amount equal to the
distribution. The amount restored to the Participant’s Account shall be credited
to his Account as of the last day of the Plan Year in which the Participant
repays the distributed amount to the Trustee and the restored amount shall come
from other Employees’ forfeitures and, if such forfeitures are insufficient,
from a special contribution by his Employer for that year. If a Participant’s
employment terminates prior to his Account having become vested, such
Participant shall be deemed to have received a distribution of his entire vested
interest as of the Valuation Date next following his termination of employment.

(c) If a Participant who has terminated employment, but has not received a
distribution of his entire vested benefits under the Plan, is subsequently
reemployed by an Employer subsequent to incurring five (5) consecutive One Year
Periods of Severance any undistributed balance of his Account from his prior
participation which was not forfeited shall be maintained as a fully vested
subaccount with his Account.

(d) If a portion of a Participant’s Account is forfeited, assets other than
Company Stock must be forfeited before any Company Stock may be forfeited.

(e) Forfeitures shall be applied to reduce future Employer contributions or
reallocated among the other Participants in the Plan.

Section 6.04 Accounting for Forfeitures.

A forfeiture shall be-charged to a Participant’s Account as of the first day of
the first Valuation Period in which the forfeiture becomes certain pursuant to
Section 6.03 of the Plan. Except as otherwise provided in Section 6.03 of the
Plan, at the discretion of the Committee, a forfeiture shall be used to reduce
any matching contributions made by the terminated Participant’s Employer under
Section 4.01(a) or be added to the contributions of the terminated Participant’s
Employer which are to be credited to other Participants pursuant to Section 5,
as of the last day of the Plan Year in which the forfeiture becomes certain.

 

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Section 6.05 Vesting Upon Reemployment.

(a) If an Employee is not vested in his Accounts, incurs a One Year Period of
Severance and again performs an Hour of Service, such Employee shall receive
credit for his Years of Service prior to his One Year Break in Service or One
Year Period of Severance, as applicable, only if the number of consecutive One
Year Breaks in Service or One Year Periods of Severance is less than the greater
of: (i) five (5) years or (ii) the aggregate number of his years of Service
credited before his One Year Break in Service or One Year Period of Severance.

(b) If a Participant is partially vested in his Accounts, incurs a One Year
Period of Severance and again performs an Hour of Service, such Participant
shall receive credit for his years of Service prior to his One Year Break in
Service or One Year Period of Severance, as applicable; provided, however, that
after five (5) consecutive One Year Periods of Severance, a former Participant’s
vested interest in his Accounts attributable to Service prior to his One Year
Period of Severance shall not be increased as a result of his years of Service
following his reemployment date.

(c) If a Participant is fully vested in his Accounts, incurs a One Year Period
of Severance and again performs an Hour of Service, such Participant shall
receive credit for all his years of Service prior to his One Year Period of
Severance.

Section 7

Distributions

Section 7.01 Distribution of Benefit Upon a Termination of Employment.

(a) Subject to the requirements of Section 7.02, a Participant whose Service
terminates for any reason shall receive the entire vested portion of his
Accounts in a single payment on a date selected by the Committee; provided,
however, that such date shall be as soon as practicable after the end of the
Plan Year in which the Participant’s employment terminated. The benefits from
that portion of the Participant’s Other Investments Account shall be calculated
on the basis of the most recent Valuation Date before the date of payment.
Subject to the provisions of Section 7.05 of the Plan, if the Committee so
provides, a Participant may elect that his benefits be distributed to him in the
form of either Company Stock, cash, or some combination thereof.

(b) Notwithstanding paragraph (a) of this Section 7.01, if the balance credited
to a Participant’s Accounts exceeds $1,000, his benefits shall not be paid
before 60 days after the latest of the close of the Plan Year in which the
Participant attains age 65 or in which occurs the 10th anniversary of the year
in which he commenced participation in the Plan, unless he elects an early
payment date in a written election filed with the Committee. Such an election is
not valid unless it is made after the Participant has received the required
notice under Section 1.411(a)-11(c) of the Treasury Regulations that provides a
general description of the material features of a lump sum distribution and the
Participant’s right to defer receipt of his benefits under the Plan. The notice
shall be provided no less than 30 days and no more than 90 days before the first
day on which all events have occurred which entitle the Participant to such
benefit. Written consent of the Participant to the distribution generally may
not be made within 30 days of the date the Participant receives the notice and
shall not be made more than 90 days from the date the

 

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Participant receives the notice. However, a distribution may be made less than
30 days after the notice provided under Section 1.411(a)-11(c) of the Treasury
Regulations is given, if:

(i) the Committee clearly informs the Participant that he 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

(ii) the Participant, after receiving the notice, affirmatively elects a
distribution.

A Participant may modify such an election at any time, provided any new benefit
payment date is at least 30 days after a modified election is delivered to the
Committee.

Section 7.02 Minimum Distribution Requirements.

With respect to all Participants, other than those who are “5% owners” (as
defined in Section 416 of the Code), benefits shall be paid no later than the
April 1st of the later of:

(i) the calendar year following the calendar year in which the Participant
attains age 70-1/2, or

(ii) the calendar year in which the Participant retires.

With respect to all Participants who are 5% owners within the meaning of
Section 416 of the Code, such Participants benefits shall be paid no later than
the April 1st of the calendar year following the calendar year in which the
Participant attains age 70-1/2.

Section 7.03 Benefits on a Participant’s Death.

(a) If a Participant dies before his benefits are paid pursuant to Section 7.01
of the Plan, the balance credited to his Accounts shall be paid to his
Beneficiary in a single distribution on or before the 60th day after the end of
the Plan Year in which the Participant died. If the Participant has not named a
Beneficiary or if his named Beneficiary should not survive him, then the balance
in his Account shall be paid to his estate. The benefits from that portion of
the Participant’s Other Investments Account shall be calculated on the basis of
the most recent Valuation Date before the date of payment.

(b) If a married Participant dies before his benefit payments begin, then,
unless he has specifically elected otherwise, the Committee shall cause the
balance in his Accounts to be paid to his spouse, as Beneficiary. A married
Participant may name an individual other than his spouse as his Beneficiary,
provided that such election is accompanied by the spouse’s written consent,
which must:

(i) acknowledge the effect of the election;

(ii) explicitly provide either that the designated Beneficiary may not
subsequently be changed by the Participant without the spouse’s further consent
or that it may be changed without such consent; and

 

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(iii) must be witnessed by the Committee, its representative, or a notary
public.

This requirement shall not apply if the Participant establishes to the
Committee’s satisfaction that the spouse may not be located.

(c) The Committee shall from time to time take whatever steps it deems
appropriate to keep informed of each Participant’s marital status. Each Employer
shall provide the Committee with the most reliable information in the Employer’s
possession regarding its Participants’ marital status, and the Committee may, in
its discretion, require a notarized affidavit from any Participant as to his
marital status. The Committee, the Plan, the Trustee, and the Employers shall be
fully protected and discharged from any liability to the extent of any benefit
payments made as a result of the Committee’s good faith and reasonable reliance
upon information obtained from a Participant as to the Participant’s marital
status.

Section 7.04 Delay In Benefit Determination.

If the Committee is unable to determine the benefits payable to a Participant or
Beneficiary on or before the latest date prescribed for payment pursuant to this
Section 7, the benefits shall in any event be paid as soon as practicable after
they can first be determined, with whatever makeup payments may be appropriate
in view of the delay.

Section 7.05 Options to Receive and Sell Stock.

(a) Unless ownership of virtually all Company Stock is restricted to active
Employees and qualified retirement plans for the benefit of Employees pursuant
to the certificates of incorporation or by-laws of the Employers issuing Company
Stock, a terminated Participant or the Beneficiary of a deceased Participant may
instruct the Committee to distribute the Participant’s entire vested interest in
his Accounts in the form of Company Stock. In that event, the Committee shall
apply the Participant’s vested interest in his Other Investments Account to
purchase sufficient Company Stock to make the required distribution.

(b) Any Participant who receives Company Stock pursuant to this Section 7, and
any person who has received Company Stock from the Plan or from such a
Participant by reason of the Participant’s death or incompetency, by reason of
divorce or separation from the Participant, or by reason of a rollover
distribution described in Section 402(c) of the Code, shall have the right to
require the Employer which issued the Company Stock to purchase the Company
Stock for its current fair market value (hereinafter referred to as the “put
right”). The put right shall be exercisable by written notice to the Committee
during the first 60 days after the Company Stock is distributed by the Plan,
and, if not exercised in that period, during the first 60 days in the following
Plan Year after the Committee has communicated to the Participant its
determination as to the Company Stock’s current fair market value. If the put
right is exercised, the Trustee may, if so directed by the Committee in its sole
discretion, assume the Employer’s rights and obligations with respect to
purchasing the Stock. However, the put right shall not apply to the extent that
the Company Stock, at the time the put right would otherwise be exercisable, may
be sold on an established market in accordance with federal and state securities
laws and regulations.

 

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(c) With respect to a put right, the Employer or the Trustee, as the case may
be, may elect to pay for the Company Stock in equal periodic installments, not
less frequently than annually, over a period not longer than five (5) years from
the 30th day after the put right is exercised pursuant to paragraph (b) of this
Section 7.05, with adequate security and interest at a reasonable rate on the
unpaid balance, all such terms to be set forth in a promissory note delivered to
the seller with normal terms as to acceleration upon any uncured default.

(d) Nothing contained in this Section 7.05 shall be deemed to obligate any
Employer to register any Company Stock under any federal or state securities law
or to create or maintain a public market to facilitate the transfer or
disposition of any Company Stock. The put right described in this Section 7.05
may only be exercised by a person described in the paragraph Section 7.05(b) of
this Section 7.05, and may not be transferred with any Company Stock to any
other person. As to all Company Stock purchased by the Plan in exchange for any
Acquisition Loan, the put right be nonterminable. The put right for Company
Stock acquired through a Acquisition Loan shall continue with respect to such
Company Stock after the Acquisition Loan is repaid or the Plan ceases to be an
employee stock ownership plan. Except as provided above, in accordance with the
provisions of Sections 54.4975-7(b)(4) of the Treasury Regulations, no Company
Stock acquired with the proceeds of an Acquisition Loan may be subject to any
put, call or other option or buy-sell or similar arrangement while held by, and
when distributed from, the Plan, whether or not the Plan is then an employee
stock ownership plan.

Section 7.06 Restrictions on Disposition of Stock.

Except in the case of Company Stock which is traded on an established market, a
Participant who receives Company Stock pursuant to this Section 7, and any
person who has received Company Stock from the Plan or from such a Participant
by reason of the Participant’s death or incompetency, by reason of divorce or
separation from the Participant, or by reason of a rollover distribution
described in Section 402(c) of the Code, shall, prior to any sale or other
transfer of the Company Stock to any other person, first offer the Company Stock
to the issuing Employer and to the Plan at its current fair market value. This
restriction shall apply to any transfer, whether voluntary, involuntary, or by
operation of law, and whether for consideration or gratuitous. Either the
Employer or the Trustee may accept the offer within 14 days after it is
delivered. Any Company Stock distributed by the Plan shall bear a conspicuous
legend describing the right of first refusal under this Section 7.06, as
applicable, as well as any other restrictions upon the transfer of the Company
Stock imposed by federal and state securities laws and regulations.

Section 7.07 Direct Transfer of Eligible Plan Distributions.

(a) A Participant or Beneficiary may direct that an “eligible rollover
distribution” (as defined below) included in a payment made pursuant to this
Section 7 be paid directly to an “eligible retirement plan” (as defined below).

(b) To effect such a direct transfer, the Participant or Beneficiary must notify
the Committee that a direct transfer is desired and provide to the Committee all
necessary information regarding the eligible retirement plan to which the
payment is to be made. Such notice shall be made in such form and at such time
as the Committee may prescribe. Upon receipt of such notice, the

 

29

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Committee shall direct the Trustee to make a trustee-to-trustee transfer of the
eligible rollover distribution to the specified eligible retirement plan.

(c) For purposes of this Section 7.07, an “eligible rollover distribution” shall
have the meaning set forth in Section 402(c)(4) of the Code and any Treasury
Regulations promulgated thereunder. To the extent such meaning is not
inconsistent with the above references, an eligible rollover distribution shall
mean any distribution of all or any portion of the Participant’s Account, except
that such term shall not include any distribution which is one of a series of
substantially equal periodic payments (not less frequently than annually) made
(i) for the life (or life expectancy) of the Participant or the joint lives (or
joint life expectancies) of the Participant and a designated Beneficiary, or
(ii) for a period of ten (10) years or more. Further, the term “eligible
rollover distribution” shall not include any distribution required to be made
under Section 401(a)(9) of the Code, the portion of any distribution that is not
includible in gross income (determined without regard to the exclusions for net
unrealized appreciation with respect to Company Stock) or, to the extent
applicable under the Plan, any hardship distribution described in
Section 401(k)(2)(B)(i)(IV) of the Code.

(d) For purposes of this Section 7.07, an “eligible retirement plan” shall have
the meaning set forth in Section 402(c)(8) of the Code and any Treasury
Regulations promulgated thereunder. To the extent such meaning is not
inconsistent with the above references, an eligible retirement plan shall mean:
(i) an individual retirement account described in Section 408(a) of the Code;
(ii) an individual retirement annuity described in Section 408(b) of the Code
(other than an endowment contract), (iii) a qualified trust described in
Section 401(a) of the Code and exempt under Section 501(a) of the Code, and
(iv) an annuity plan described in Section 403(a) of the Code.

 

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Section 8

Voting of Company Stock and Tender Offers

Section 8.01 Voting, of Company Stock.

(a) In General. The Trustee shall generally vote all shares of Company Stock
held in the Trust in accordance with the provisions of this Section 8.01.

(b) Allocated Shares. Shares of Company Stock which have been allocated to
Participants’ Accounts shall be voted by the Trustee in accordance with the
Participants’ written instructions.

(c) Uninstructed and Unallocated Shares. Shares of Company Stock which have been
allocated to Participants’ Accounts, but for which no written instructions have
been received by the Trustee regarding voting, shall be voted by the Trustee in
a manner calculated to most accurately reflect the instructions the Trustee has
received from Participants regarding voting shares of allocated Company Stock.
Shares of unallocated Company Stock shall also be voted by the Trustee in a
manner calculated to most accurately reflect the instructions the Trustee has
received from Participants regarding voting shares of allocated Company Stock.
Notwithstanding the preceding two sentences, all shares of Company Stock which
have been allocated to Participants’ Accounts and for which the Trustee has not
timely received written instructions regarding voting, and all unallocated
shares of Company Stock, must be voted by the Trustee in a manner determined by
the Trustee to be solely in the best interests of the Participants and
Beneficiaries.

(d) Procedure and Confidentiality. Whenever such voting rights are to be
exercised, the Employers, the Committee and the Trustee shall see that all
Participants and Beneficiaries are provided with the same notices and other
materials as are provided to other holders of the Company Stock, and are
provided with adequate opportunity to deliver their instructions to the Trustee
regarding the voting of Company Stock allocated to their Accounts or deemed
allocated to their Accounts for purposes of voting. The instructions of the
Participants with respect to the voting of shares of Company Stock shall be
confidential.

Section 8.02 Tender Offers.

In the event of a tender offer, Company Stock shall be tendered by the Trustee
in the same manner set forth in Section 8.01 of the Plan regarding the voting of
Company Stock.

 

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Section 9

The Committee and Plan Administration

Section 9.01 Identity of the Committee.

The Committee shall consist of three (3) or more individuals selected by the
Bank. Any individual, including a director, trustee, shareholder, officer, or
Employee of an Employer, shall be eligible to serve as a member of the
Committee. The Bank shall have the power to remove any individual serving on the
Committee at any time without cause upon ten (10) days written notice to such
individual and any individual may resign from the Committee at any time without
reason upon ten (10) days written notice to the Bank. The Bank shall notify the
Trustee of any change in membership of the Committee.

Section 9.02 Authority of Committee.

(a) The Committee shall be the “plan administrator” within the meaning of ERISA
and shall have exclusive responsibility and authority to control and manage the
operation and administration of the Plan, including the interpretation and
application of its provisions, except to the extent such responsibility and
authority are otherwise specifically:

(i) allocated to the Bank, the Employer, or the Trustee under the Plan and Trust
Agreement;

(ii) delegated in writing to other persons by the Bank, the Employer, the
Committee, or the Trustee; or

(iii) allocated to other parties by operation of law.

(b) The Committee shall have exclusive responsibility regarding decisions
concerning the payment of benefits under the Plan.

(c) The Committee shall have full investment responsibility with respect to the
Investment Fund except to the extent, if any, specifically provided in the Trust
Agreement.

(d) In the discharge of its duties, the Committee may employ accountants,
actuaries, legal counsel, and other agents (who also may be employed by an
Employer or the Trustee in the same or some other capacity) and may pay such
individuals reasonable compensation and expenses for services rendered with
respect to the operation or administration of the Plan to the extent such
payments are not otherwise prohibited by law.

Section 9.03 Duties of Committee.

(a) The Committee shall keep whatever records may be necessary in connection
with the maintenance of the Plan and shall furnish to the Employers whatever
reports may be required from time to time by the Employers. The Committee shall
furnish to the Trustee whatever information may be necessary to properly
administer the Trust. The Committee shall see to the filing with the appropriate
government agencies of all reports and returns required with respect to the Plan
under ERISA and the Code and other applicable laws.

 

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(b) The Committee shall have exclusive responsibility and authority with respect
to the Plan’s holdings of Company Stock and shall direct the Trustee in all
respects regarding the purchase, retention, sale, exchange, and pledge of
Company Stock and the creation and satisfaction of any Acquisition Loan to the
extent such responsibilities are not set forth in the Trust Agreement.

(c) The Committee shall at all times act consistently with the Bank’s long-term
intention that the Plan, as an employee stock ownership plan, be invested
primarily in Company Stock. Subject to the direction of the Committee with
respect to any Acquisition Loan pursuant to the provisions of Section 4.03 of
the Plan, and subject to the provisions of Section 7.05 and Section 11.04 of the
Plan as to Participants’ rights under certain circumstances to have their
Accounts invested in Company Stock or in assets other than Company Stock, the
Committee shall determine, in its sole discretion, the extent to which assets of
the Trust shall be used to repay any Acquisition Loan, to purchase Company
Stock, or to invest in other assets selected by the Committee or an investment
manager. No provision of the Plan relating to the allocation or vesting of any
interests in the Company Stock or investments other than Company Stock shall
restrict the Committee from changing any holdings of the Trust Fund, whether the
changes involve an increase or a decrease in the Company Stock or other assets
credited to Participants’ Accounts. In determining the proper extent of the
Trust Fund’s investment in Company Stock, the Committee shall be authorized to
employ investment counsel, legal counsel, appraisers, and other agents and to
pay their reasonable compensation and expenses to the extent such payments are
not prohibited by law.

(d) If the valuation of any Company Stock is not established by reported trading
on a generally recognized public market, then the Committee shall have the
exclusive authority and responsibility to determine the value of the Company
Stock for all purposes under the Plan. Such value shall be determined as of each
Valuation Date and any other date on which the Trustee purchases or sells
Company Stock in a manner consistent with Section 4975 of the Code and the
Treasury Regulations thereunder. The Committee shall use generally accepted
methods of valuing stock of similar corporations for purposes of arm’s length
business and investment transactions, and in this connection the Committee shall
obtain, and shall be protected in relying upon, the valuation of Company Stock
as determined by an independent appraiser experienced in preparing valuations of
similar businesses.

Section 9.04 Compliance with ERISA and the Code.

The Committee shall perform all acts necessary to ensure the Plan’s compliance
with ERISA and the Code. Each individual member of the Committee shall discharge
his duties in good faith and in accordance with the applicable requirements of
ERISA and the Code.

Section 9.05 Action by Committee.

All actions of the Committee shall be governed by the affirmative vote of a
majority of the total number of members of the Committee. The members of the
Committee may meet informally and may take any action without meeting as a
group.

 

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Section 9.06 Execution of Documents.

Any instrument executed by the Committee may be signed by any member of the
Committee.

Section 9.07 Adoption of Rules.

The Committee shall adopt such rules and regulations of uniform applicability as
it deems necessary or appropriate for the proper operation, administration and
interpretation of the Plan.

Section 9.08 Responsibilities to Participants.

The Committee shall determine which Employees qualify to participate in the
Plan. The Committee shall furnish to each Eligible Employee whatever summary
plan descriptions, summary annual reports, and other notices and information may
be required under ERISA. The Committee also shall determine when a Participant
or his Beneficiary qualifies for the payment of benefits under the Plan. The
Committee shall furnish to each such Participant or Beneficiary whatever
information is required under ERISA or the Code (or is otherwise appropriate) to
enable the Participant or Beneficiary to make whatever elections may be
available pursuant to Section 7, and the Committee shall provide for the payment
of benefits in the proper form and amount from the Trust. The Committee may
decide in its sole discretion to permit modifications of elections and to defer
or accelerate benefits to the extent consistent with the terms of the Plan,
applicable law, and the best interests of the individuals concerned.

Section 9.09 Alternative Payees in Event of Incapacity.

If the Committee finds at any time that an individual qualifying for benefits
under this Plan is a minor or is incompetent, the Committee may direct the
benefits to be paid, in the case of a minor, to his parents, his legal guardian,
a custodian for him under the Uniform Transfers to Minors Act, or the person
having actual custody of him, or, in the case of an incompetent, to his spouse,
his legal guardian, or the person having actual custody of him. The Committee
and the Trustee shall not be obligated to inquire as to the actual use of the
funds by the person receiving them under this Section 9.09, and any such payment
shall completely discharge the obligations of the Plan, the Trustee, the
Committee, and the Employers to the extent of the payment.

Section 9.10 Indemnification by Employers.

Except as separately agreed in writing, the Committee, and any member or
employee of the Committee, shall be indemnified and held harmless by the
Employers, jointly and severally, to the fullest extent permitted by law,
against any and all costs, damages, expenses, and liabilities reasonably
incurred by or imposed upon the Committee or such individual in connection with
any claim made against the Committee or such individual or in which the
Committee or such individual may be involved by reason of being, or having been,
the Committee, or a member or employee of the Committee, to the extent such
amounts are not paid by insurance.

 

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Section 9.11 Abstention by Interested Member.

Any member of the Committee who also is a Participant in the Plan shall take no
part in any determination specifically relating to his own participation or
benefits under the Plan, unless his abstention would render the Committee
incapable of acting on the matter.

 

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Section 10

Rules Governing Benefit Claims

Section 10.01 Claim for Benefits.

Any Participant or Beneficiary who qualifies for the payment of benefits shall
file a claim for benefits with the Committee on a form provided by the
Committee. The claim, including any election of an alternative benefit form,
shall be filed at least thirty (30) days before the date on which the benefits
are to begin. If a Participant or Beneficiary fails to file a claim by the 30th
day before the date on which benefits become payable, he shall be presumed to
have filed a claim for payment for the Participant’s benefits in the standard
form prescribed by Section 7 of the Plan.

Section 10.02 Notification by Committee.

Within ninety (90) days after receiving a claim for benefits (or within one
hundred and eighty (180) days, if special circumstances require an extension of
time and written notice of the extension is given to the Participant or
Beneficiary within 90 days after receiving the claim for benefits), the
Committee shall notify the Participant or Beneficiary whether the claim has been
approved or denied. If the Committee denies a claim in any respect, the
Committee shall set forth in a written notice to the Participant or Beneficiary:

(a) each specific reason for the denial;

(b) specific references to the pertinent Plan provisions on which the denial is
based;

(c) a description of any additional material or information which could be
submitted by the Participant or Beneficiary to support his claim, with an
explanation of the relevance of such information; and

(d) an explanation of the claims review procedures set forth in Section 10.03 of
the Plan.

Section 10.03 Claims Review Procedure.

Within sixty (60) days after a Participant or Beneficiary receives notice from
the Committee that his claim for benefits has been denied in any respect, he may
file with the Committee a written notice of appeal setting forth his reasons for
disputing the Committee’s determination. In connection with his appeal the
Participant or Beneficiary or his representative may inspect or purchase copies
of pertinent documents and records to the extent not inconsistent with other
Participants’ and Beneficiaries’ rights of privacy. Within 60 days after
receiving a notice of appeal from a prior determination (or within one hundred
and twenty (120) days, if special circumstances require an extension of time and
written notice of the extension is given to the Participant or Beneficiary and
his representative within 60 days after receiving the notice of appeal), the
Committee shall furnish to the Participant or Beneficiary and his
representative, if any, a written statement of the Committee’s final decision
with respect to his claim, including the reasons for such decision and the
particular Plan provisions upon which it is based.

 

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Section 11

The Trust

Section 11.01 Creation of Trust Fund.

All amounts received under the Plan from an Employer and investments shall
beheld in a Trust Fund pursuant to the terms of this Plan and the Trust
Agreement. The benefits described in this Plan shall be payable only from the
assets of the Trust Fund. Neither the Bank, any other Employer, its board of
directors or trustees, its stockholders, its officers, its employees, the
Committee, nor the Trustee shall be liable for payment of any benefit under this
Plan except from the Trust Fund.

Section 11.02 Company Stock and Other Investments.

The Trust Fund held by the Trustee shall be divided into Company Stock and
investments other than Company Stock. The Trustee shall have no investment
responsibility for the portion of the Trust Fund consisting of Company Stock,
but shall accept any Employer contributions made in the form of Company Stock,
and shall acquire, sell, exchange, distribute, and otherwise deal with and
dispose of Company Stock in accordance with the instructions of the Committee.

Section 11.03 Acquisition of Company Stock.

From time to time the Committee may, in its sole discretion, direct the Trustee
to acquire Company Stock from the issuing Employer or from shareholders,
including shareholders who are or have been Employees, Participants, or
fiduciaries with respect to the Plan. The Trustee shall pay for such Company
Stock no more than its fair market value, which shall be determined conclusively
by the Committee pursuant to Section 9.03(d) of the Plan. The Committee may
direct the Trustee to finance the acquisition of Company Stock through an
Acquisition Loan subject to the provisions of Section 4.03 of the Plan.

Section 11.04 Participants’ Option to Diversify.

The Committee shall provide for a procedure conforming to the requirements of
Section 401(a)(35) of the Code and this section allowing Participants to elect
to divest Company Stock held in their Company Stock matching sub-account and
reinvest an equivalent amount in alternative diversified investment options in
an Investment Fund established within the Trust.

(a) Each Participant who has attained age 55 and completed at least three years
of service (based on third anniversary of date of hire) as of the Effective
Date, shall be eligible to diversify all Company Stock held in their Accounts.

(b) Each Participant who has completed at least three years of service with the
Employer (based on the third anniversary of date of hire) shall be eligible to
diversify the Eligible Percentage of Company Stock in the Participant’s Company
Stock Account that was acquired prior to the 2007 Plan Year, in accordance with
the following schedule:

 

Plan Year

   Eligible Percentage

 

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2007    33% 2008    66% 2009    100%

(c) Each Participant who has completed at least three years of service (based on
third anniversary of date of hire) shall be eligible to diversify all Company
Stock held in the Participant’s Company Stock Account that is acquired in or
after the 2007 Plan Year.

The Committee shall ensure that the Investment Fund includes at least three
alternative investment options sufficient to satisfy Section 401(a)(35)(D)(i) of
the Code. The Trustee shall comply with any investment directions received from
Participants in accordance with the procedures adopted from time to time by the
Committee under this Section 11.04.

 

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Section 12

Adoption, Amendment and Termination

Section 12.01 Adoption of Plan by Other Employers.

With the consent of the Bank, any entity may become a participating Employer
under the Plan by:

(a) taking such action as shall be necessary to adopt the Plan;

(b) becoming a party to the Trust Agreement establishing the Trust Fund; and

(c) executing and delivering such instruments and taking such other action as
may be necessary or desirable to put the Plan into effect with respect to the
entity’s Employees.

Section 12.02 Adoption of Plan by Successor.

In the event that any Employer shall be reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that an entity other than an
Employer shall succeed to all or substantially all of the Employer’s business,
the successor entity may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the Trust Agreement. Contributions by
the Employer shall be automatically suspended from the effective date of any
such reorganization until the date upon which the substitution of the successor
entity for the Employer under the Plan becomes effective. If, within 90 days
following the effective date of any such reorganization, the successor entity
shall not have elected to become a party to the Plan, or if the Employer shall
adopt a plan of complete liquidation other than in connection with a
reorganization, the Plan shall be automatically terminated with respect to
Employees of the Employer as of the close of business on the 90th day following
the effective date of the reorganization, or as of the close of business on the
date of adoption of a plan of complete liquidation, as the case may be.

Section 12.03 Plan Adoption Subject to Qualification.

Notwithstanding any other provision of the Plan, the adoption of the Plan and
the execution of the Trust Agreement are conditioned upon their being determined
initially by the Internal Revenue Service to meet the tax qualification
requirements of Section 401(a) of the Code, so that the Employers may deduct
currently for federal income tax purposes their contributions to the Trust and
so that the Participants may exclude the contributions from their gross income
and recognize income only when they receive benefits. In the event that this
Plan is held by the Internal Revenue Service not to qualify initially under
Section 401(a) of the Code, the Plan may be amended retroactively to the
earliest date permitted by the Code and the applicable Treasury Regulations in
order to secure qualification under Section 401(a) of the Code. In the event
that this Plan is amended after its initial qualification and the Plan as
amended is held by the Internal Revenue Service not to qualify under
Section 401(a) of the Code, the amendment may be modified retroactively to the
earliest date permitted by the Code and the applicable Treasury Regulations in
order to secure approval of the amendment under Section 401(a) of the Code.

 

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Section 12.04 Right to Amend or Terminate.

The Bank intends to continue this Plan as a permanent program. However, each
participating Employer separately reserves the right to suspend, supersede, or
terminate the Plan at any time and for any reason, as it applies to that
Employer’s Employees, and the Bank reserves the right to amend, suspend,
supersede, merge, consolidate, or terminate the Plan at any time and for any
reason, as it applies to the Employees of all Employers. No amendment,
suspension, supersession, merger, consolidation, or termination of the Plan
shall reduce any Participant’s or Beneficiary’s proportionate interest in the
Trust Fund, or shall divert any portion of the Trust Fund to purposes other than
the exclusive benefit of the Participants and their Beneficiaries prior to the
satisfaction of all liabilities under the Plan. Except as is required for
purposes of compliance with the Code or ERISA, the provisions of Section 4.04
relating to the crediting of contributions, forfeitures and shares of Company
Stock released from the Loan Suspense Account, nor any other provision of the
Plan relating to the allocation of benefits to Participants, may be amended more
frequently than once every six months. Moreover, there shall not be any transfer
of assets to a successor plan or merger or consolidation with another plan
unless, in the event of the termination of the successor plan or the surviving
plan immediately following such transfer, merger, or consolidation, each
participant or beneficiary would be entitled to a benefit equal to or greater
than the benefit he would have been entitled to if the plan in which he was
previously a participant or beneficiary had terminated immediately prior to such
transfer, merger, or consolidation. Following a termination of this Plan by the
Bank, the Trustee shall continue to administer the Trust and pay benefits in
accordance with the Plan and the Committee’s instructions.

 

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Section 13

General Provisions

Section 13.01 Nonassignability of Benefits.

The interests of Participants and other persons entitled to benefits under the
Plan shall not be subject to the claims of their creditors and may not be
voluntarily or involuntarily assigned, alienated, pledged, encumbered, sold, or
transferred, except to the extent provided for under Section 401(a)(13)(C) of
the Code. The prohibitions set forth in this Section 13.01 shall also apply to
any judgment, decree, or order (including approval of a property or settlement
agreement) which relates to the provision of child support, alimony, or property
rights to a present or former spouse, child or other dependent of a Participant
pursuant to a domestic relations order, unless such judgment, decree or order is
determined to be a “qualified domestic relations order” as defined in
Section 414(p) of the Code or is subject to a special rule for certain judgments
and settlements described in Section 401(a)(13)(C) of the Code.

Section 13.02 Limit of Employer Liability.

The liability of the Employers with respect to-Participants and other persons
entitled to benefits under the Plan shall be limited to making contributions to
the Trust from time to time, in accordance with Section 4 of the Plan.

Section 13.03 Plan Expenses.

All expenses incurred by the Committee or the Trustee in connection with
administering the Plan and Trust shall be paid by the Trustee from the Trust
Fund to the extent the expenses have not been paid or assumed by the Employers
or by the Trustee.

Section 13.04 Nondiversion of Assets.

Except as provided in Section 5.05 and Section 12.03 of the Plan, under no
circumstances shall any portion of the Trust Fund be diverted to or used for any
purpose other than the exclusive benefit of the Participants and their
Beneficiaries prior to the satisfaction of all liabilities under the Plan.

Section 13.05 Separability of Provisions.

If any provision of the Plan is held to be invalid or unenforceable, the other
provisions of the Plan shall not be affected but shall be applied as if the
invalid or unenforceable provision had not been included in the Plan.

Section 13.06 Service of Process.

The agent for service of process upon the Plan shall be the president of the
Bank and the Trustee, or such other person as may be designated from time to
time by the Bank.

 

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Section 13.07 Governing Law.

The Plan is established under, and its validity, construction and effect shall
be governed by the laws of New Jersey to the extent those laws are not preempted
by federal law, including the provisions of ERISA.

Section 13.08 Special Rules for Persons Subject to Section 16(b) Requirements.

Notwithstanding anything herein to the contrary, any former Participant who is
subject to the provisions of Section 16(b) of the Securities Exchange Act of
1934, who becomes eligible to again participate in the Plan, may not become a
Participant prior to the date that is six months from the date such former
Participant terminated participation in the Plan. In addition, any person
subject to the provisions of Section 16(b) of the 1934 Act receiving a
distribution of Company Stock from the Plan must hold such Company Stock for a
period of 6 months commencing with the date of distribution. However, this
restriction will not apply to Company Stock distributions made in connection
with death, retirement, disability or termination of employment, or made
pursuant to the terms of a qualified domestic relations order.

Section 13.09 Rules Relating to Military Service.

Notwithstanding anything in the Plan to the contrary, contributions, benefits
and Service credit with respect to qualified military service will be provided
in accordance with Section 414(u) of the Code.

 

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Section 14

Top-Heavy Provisions

Section 14.01 Top-Heavy Provisions.

If, as of the last day of the first Plan Year, or thereafter, if as of the day
next preceding the beginning of any Plan Year (the “Determination Date”), the
Plan is a “top-heavy plan” (determined in accordance with the provisions of
Section 416(g) of the Code); that is, the aggregate present value of the accrued
benefits and account balances of all “Key Employees” (within the meaning of
Section 416(i) of the Code and for this purpose using the definition of
Compensation, as modified under Section 5.05(b) of the Plan) and their
Beneficiaries exceeds 60% of the aggregate present value of the accrued benefits
and account balances of all employees and their Beneficiaries, the provision
specified in this Section 14.01 will automatically become effective as of the
first day of the Plan Year. For purposes of the above sentence, the aggregate
present value of the accrued benefits and account balances of a Participant who
has not performed any services for the Bank or any of its Affiliates during the
five-year period ending on the Determination Date shall not be taken into
account. This calculation shall be made in accordance with Section 416(g) of the
Code, taking into consideration plans which are considered part of the
Aggregation Group. The term “Aggregation Group” shall include each plan of the
Bank or any of its Affiliates that includes a Key Employee, each terminated plan
of the Bank or any of its Affiliates that included a Key Employee within the
five-year period ending on the Determination Date, and each plan of the Bank or
any of its Affiliates that allows the Plan to meet the requirements of
Section 401(a)(4) of the Code or Section 410 of the Code. The Aggregation Group
may include any other plan of the Bank or any of its Affiliates, if the
Aggregation Group would continue to meet the requirements of Sections 401(a)(4)
and 410 of the Code.

Section 14.02 Plan Modifications Upon Becoming Top-Heavy.

(a) Minimum Accruals. Section 5.04 of the Plan will be modified to provide that
the aggregate amount of Employer contributions allocated in each Plan Year to
the Accounts of each Participant who is a Non-Key Employee (within the meaning
of Section 416(i)(1) of the Code), and who is employed by an Employer as of the
last day of the Plan Year, may not be less than the lesser of

(i) three percent (3%) of his Compensation for the Plan Year; and

(ii) a percentage of his Compensation equal to the largest percentage obtained
by dividing the sum of the amount credited to the Accounts of any Key Employee
by that Key Employee’s Compensation.

 

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(b) Vesting. If a Participant’s vested interest in his Account is to be
determined in a top-heavy year, it shall be based on the following schedule:

 

Years of Service

   Vested Percentage  

Fewer than 2 years

   0 %

2 years

   33 1/3 %

3 years

   66 2/3 %

4 or more years

   100 %

* * *

IN WITNESS WHEREOF, OceanFirst Bank has caused this OceanFirst Bank Matching
Contribution Employee Stock Ownership Plan to be executed and delivered on its
behalf by its President and Chief Executive Officer.

 

Date:  

 

    By:  

 

        John R. Garbarino         President and Chief Executive Officer

 

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