exv10w1



 





Exhibit 10.1




FIRST FEDERAL SAVINGS BANK

EMPLOYEE STOCK OWNERSHIP PLAN




Effective as of January 1, 2007





 









 








FIRST FEDERAL SAVINGS BANK

EMPLOYEE STOCK OWNERSHIP PLAN

CERTIFICATION




     I, Earl O. Bradley III, Chief Executive Officer of First Federal Savings Bank, hereby certify
that the attached First Federal Savings Bank Employee Stock Ownership Plan, effective January 1,
2007, was adopted at a duly held meeting of the Board of Directors of the Bank.



	 	 	 	 	 
	 	FIRST FEDERAL SAVINGS BANK

 	 
	 	By:  	 	 
	 	 	Earl O. Bradley III 	 
	 	 	Chief Executive Officer 	 
	 




 









 





First Federal Savings Bank

Employee Stock Ownership Plan




Table of Contents




	 	 	 	 	 
	Section 1 - Introduction
	 	 	1	 
	Section 2 - Definitions
	 	 	1	 
	Section 3 - Eligibility and Participation
	 	 	8	 
	Section 4 - Contributions
	 	 	10	 
	Section 5 - Plan Accounting
	 	 	12	 
	Section 6 - Vesting and Forfeitures
	 	 	18	 
	Section 7 - Distributions
	 	 	20	 
	Section 8 - Voting of Company Stock and Tender Offers
	 	 	25	 
	Section 9 - The Committee and Plan Administration
	 	 	26	 
	Section 10 - Rules Governing Benefit Claims
	 	 	29	 
	Section 11 - The Trust
	 	 	30	 
	Section 12 - Adoption, Amendment and Termination
	 	 	31	 
	Section 13 - General Provisions
	 	 	33	 
	Section 14 - Top-Heavy Provisions
	 	 	34	 






 









 





SECTION 1

Introduction




Section 1.01 Nature of the Plan.



Effective as of January 1, 2007 (the “Effective Date”), First Federal Savings Bank (the “Bank”)
hereby establishes the First Federal Savings Bank Employee Stock Ownership Plan (the “Plan”) to
enable Eligible Employees (as defined in Section 2.01(o) of the Plan) to acquire stock ownership
interests in First Advantage Bancorp (the “Company”), the holding company of the Bank. 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(l) and 4975(e)(8) of the Code.
Accordingly, the Plan and Trust Agreement (as defined in Section 2.01(mm) 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.



The Plan reflects certain provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 (“EGTRRA”). The provisions related to EGTRRA are intended as good faith compliance with
EGTRRA and the guidance issued thereunder. To the extent any provision of the Plan was operated
according to an effective date earlier than as required by law, then such date shall be the
effective date with respect to that provision of the Plan.




Section 1.02 Employers and Affiliates.



The Bank and each of its Affiliates (as defined in Section 2.01(c) of the Plan) that, with the
consent of the Bank, adopt the Plan 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.




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.




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	(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 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(l)(4) and 415(h) of the Code.
	 
	(d)	 	“Bank” means First Federal Savings Bank, and any entity that succeeds to the business of the
First Federal Savings Bank and adopts this Plan in accordance with the provisions of Section
12.02 of the Plan, or by written agreement assumes the obligations of the Plan.
	 
	(e)	 	“Beneficiary” means the person(s) entitled to receive benefits under the Plan following a
Participant’s death, pursuant to Section 7.03 of the Plan.
	 
	(f)	 	“Change in Control” means any one of the following events occurs:






	 	(i)	 	Merger: The Company or the Bank merges into or consolidates with
another corporation, or merges another corporation into the Company or the Bank, and as
a result less than a majority of the combined voting power of the resulting corporation
immediately after the merger or consolidation is held by persons who were stockholders
of the Company or the Bank immediately before the merger or consolidation;
	 
	 	(ii)	 	Acquisition of Significant Share Ownership: The Company files, or is
required to file, a report on Schedule 13D or another form or schedule (other than
Schedule 13G) required under Sections 13(d) or 14(d) of the Exchange Act, if the
schedule discloses that the filing person or persons acting in concert has or have
become the beneficial owner of twenty-five percent (25%) or more of a class of the
Company’s voting securities, but this clause (b) shall not apply to beneficial
ownership of Company voting shares held in a fiduciary capacity by an entity of which
the Company directly or indirectly beneficially owns fifty (50%) or more of its
outstanding voting securities;
	 
	 	(iii)	 	Change in Board Composition: During any period of two consecutive
years, individuals who constitute the Company’s or the Bank’s Board of Directors at the
beginning of the two-year period cease for any reason to constitute at least a majority
of the Bank’s or the Company’s Board of Directors; provided, however, that for purposes
of this clause (iii), each director who is first elected by the board (or first
nominated by the board for election by the stockholders) by a vote of at




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	 	 	 	least two-thirds (2/3) of the directors who were directors at the beginning of the
two-year period shall be deemed to have also been a director at the beginning of
such period; or
	 
	 	(iv)	 	Sale of Assets: The Company or the Bank sells to a third party all or
substantially all of its assets.






	(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 First Advantage Bancorp and any entity which succeeds to the business of
First Advantage Bancorp.
	 
	(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 a Participant’s wages as defined in Code Section 3401(a) and all other
payments of Compensation and all other payments of compensation by the Employer (in the course
of the Employer’s trade or business) for a Plan Year for which Employer is required to furnish
the Participant a written statement under Code Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under Section 3401(a) that limit
the remuneration included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)).
Compensation shall also include amounts not currently includible in gross income by reason of
the application of Code Sections 125 (cafeteria plan), 132(f)(4) (qualified transportation
fringe), 402(e)(3) (401(k) plan), 402(h)(1)(B)(simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan), 403(b) (tax sheltered annuity) or
457(b) (eligible deferred compensation plan).
	 
	 	 	A Participant’s Compensation shall not exceed the limit set forth in Section 401(a)(17)
of the Code ($225,000 for Plan Years beginning January 1, 2007). If the Plan Year for which
a Participant’s Compensation is measured is less than twelve (12) calendar months, then the
amount of Compensation taken into account for such Plan Year shall be the adjusted amount
for such Plan Year, as prescribed by the Secretary of the Treasury under Section 401(a)(17)
of the Code, multiplied by a fraction, the numerator of which is the number of months taken
into account for such Plan Year and the denominator of which is twelve (12). In determining
the dollar limitation hereunder, Compensation received from an Affiliate shall be recognized
as Compensation.




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	(m)	 	“Disability” means a physical or mental condition of a Participant resulting from bodily
injury, disease, or mental disorder which renders the Participant incapable of continuing any
gainful occupation and which condition constitutes total disability under the federal Social
Security Act. The Disability of a Participant shall be determined by the Plan Administrator,
in its sole discretion.
	 
	(n)	 	“Effective Date” means January 1, 2007.
	 
	(o)	 	“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.
	 
	(p)	 	“Employee” means any person who is actually performing services for the Employer or an
Affiliate in a common-law, employer-employee relationship as determined under Sections
31.3121(d)-1, 31.3306(i)-1, or 31.3401(c)-1 of the Treasury Regulations.
	 
	(q)	 	“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 which succeeds to
the business of the Bank or its Affiliates and which 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.
	 
	(r)	 	“Entry Date” means the January 1st or July 1st coincident with or next
following the date the Employee satisfies the requirements for participation under Section
3.01 of the Plan.
	 
	(s)	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
	 
	(t)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	 
	(u)	 	“Financed Shares” means shares of Company Stock acquired by the Trustee with the proceeds of
an Acquisition Loan, which shall constitute “qualifying employer securities” under Section
409(l) of the Code and any shares of Company Stock received upon conversion or exchange of
such shares.
	 
	(v)	 	“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 the limit in Section 414(q)(1) of
the Code ($100,000 for Plan Years beginning January 1, 2007).




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	(w)	 	“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 applicable worker’s or workmen’s compensation, 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 one 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 shall 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





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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 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.






	(x)	 	“Later 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.
	 
	(y)	 	“Loan Suspense Account” means that portion of the Trust Fund consisting of Company Stock
acquired with an Acquisition Loan which has not yet been allocated to the Participants’
Accounts.
	 
	(z)	 	“Named Fiduciary” means the Board of Directors of the Bank.
	 
	(aa)	 	“Normal Retirement Age” means attainment of age 65.
	 
	(bb)	 	“Normal Retirement Date” means the first day of the month coincident with or next following
the Participant’s attainment of Normal Retirement Age.
	 
	(cc)	 	“One Year Break in Service” means a twelve (12) consecutive month period during which the
Participant does not complete more than 500 Hours of Service.
	 
	(dd)	 	“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.
	 
	(ee)	 	“Participant” means any Eligible 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.
	 
	(ff)	 	“Plan” means this First Federal Savings Bank Employee Stock Ownership Plan, as amended from
time to time.
	 
	(gg)	 	“Plan Year” means the calendar year.




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	(hh)	 	“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 and the
Uniformed Services Employment and Reemployment Rights Act of 1994.






	(ii)	 	“Retirement Date” means a Participant’s Normal or Later Retirement Date, whichever is
applicable.
	 
	(jj)	 	“Service” means employment with the Bank or an Affiliate.
	 
	(kk)	 	“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 of the date on which such Employee’s service is terminated 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 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 absence for
maternity or paternity reasons set forth in Section 2.01 of the Plan shall incur a Termination
of Service for purposes of the Plan on the second anniversary of the date of such absence.
	 
	(ll)	 	“Treasury Regulations” mean the regulations promulgated by the Department of the Treasury
under the Code.
	 
	(mm)	 	“Trust” means the First Federal Savings Bank Employee Stock Ownership Plan Trust created in
connection with the establishment of the Plan.




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	(nn)	 	“Trust Agreement” means the trust agreement establishing the Trust.
	 
	(oo)	 	“Trust Fund” means the assets held in the Trust for the benefit of Participants and their
Beneficiaries.
	 
	(pp)	 	“Trustee” means the trustee or trustees from time to time in office under the Trust
Agreement.
	 
	(qq)	 	“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 Participants’
Accounts accordingly.
	 
	(rr)	 	“Valuation Period” means the period following a Valuation Date and ending with the next
Valuation Date.
	 
	(ss)	 	“Year of Service” shall mean a Plan Year in which an Employee is credited with at least 1,000
Hours of Service.





SECTION 3

Eligibility and Participation




Section 3.01 Participation.





	(a)	 	All Eligible Employees who are over 21 years of age on the closing date of the Bank’s mutual
to stock conversion shall enter the Plan and become Participants as of the later of: (i) the
Effective Date; or (ii) the Eligible Employee’s date of hire.
	 
	(b)	 	An Eligible Employee who is first employed by an Employer after the closing date of the
Bank’s mutual to stock conversion shall become a Participant in the Plan upon satisfying the
following requirements:






	 	(i)	 	The Eligible Employee is at least 21 years of age; and
	 
	 	(ii)	 	The Eligible Employee completes one-half Year of Service.






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




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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 of the Bank that has not adopted the Plan pursuant to Sections
12.01 or 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:






	 	(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.






	(b)	 	If a Participant transfers to an employment position that makes him ineligible to participate
in the Plan as of the date of such transfer, he shall cease active participation in the Plan
as of such date and his transfer shall be treated for all purposes under the Plan in the same
manner as any other termination of Service.





Section 3.04 Participation after Reemployment.





	(a)	 	If an Employee incurs a One Year Break in Service prior to satisfying the eligibility
requirements of Section 3.01 of the Plan, Service prior to such One Year Break in Service
shall be disregarded and the Employee must satisfy the eligibility requirements of Section
3.01 as a new Employee.
	 
	(b)	 	If an Employee incurs a One Year Break in Service after satisfying the eligibility
requirements of Section 3.01 of the Plan and again performs an Hour of Service, the
Employee shall receive credit for Service prior to his One Year Break in Service and shall
be eligible to participate in the Plan immediately upon reemployment, provided the




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	 	 	Employee
is not excluded from participation under the provisions of Section 3.02 of the Plan.





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.




SECTION 4

Contributions




Section 4.01 Employer Contributions.





	(a)	 	Discretionary Contributions. Each Plan Year, each Employer, in its discretion, may make a
contribution to the Trust. Each Employer making a contribution for any Plan Year under this
Section 4.01(a) will 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. 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.
	 
	(b)	 	Employer Contributions for Acquisition Loans. Each Plan Year, the Employers shall, subject
to any regulatory prohibitions, contribute an amount of cash 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.




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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, 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 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 Sections 5.04 or 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 Account 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 bears to the sum of the payments of principal and interest on the Acquisition Loan for that
Plan Year plus the total remaining payment 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.



In addition to the provisions of Section 12.03 of the Plan for the return of an Employer’s
contributions in connection with a failure of the Plan to qualify initially under the Code, 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 year after the date on which the Employer originally made
such contribution, or within one year after its nondeductibility has been finally determined.
However, the amount to be returned shall be reduced to take account of any adverse investment




11









 







experience within the Trust in order that the balance credited to each Participant Account is not
less than 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 to the Plan of assets from other tax-qualified retirement plans are not
permitted under the Plan.




Section 4.07 Trustee-to-Trustee Transfers.



Trustee-to-trustee transfers of assets from other tax-qualified retirement plans are not permitted
under the Plan.




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 the purpose of making allocations to Participants’
Accounts as 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 Accounts of Participants, 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 and payments made
to the Participant 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 the Participant’s Other Investments




12









 






	 	 	Account, and
adjust such Other Investments Account in accordance with the provisions of Section 5.03 of the
Plan;
	 
	(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.



Except as otherwise provided for under Section 5.08 of the Plan, 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 and payments
made to the Participant that have not previously been charged;
	 
	(b)	 	Next, if Company Stock is purchased with assets from a Participant’s Other Investments
Account, charge the Participant’s Other Investments Account accordingly;
	 
	(c)	 	Next, subject to the dividend provisions of Section 5.09 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 5.09 of the Plan, cash dividends that have not been used to repay any Acquisition Loan
and have been credited to a Participant’s Other Investments Account shall 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. In addition, any
earnings on:






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




13









 












	(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 such Participant’s
Other Investments Account shall be charged accordingly; and
	 
	(e)	 	Finally, 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.





Section 5.04 Allocation and Crediting of Employer Contributions.





	(a)	 	Except as otherwise provided for in Sections 5.08 and 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 (as defined in paragraph (b) of this Section 5.04) Company
Stock Account based on the ratio that each Active Participant’s Compensation bears to
the aggregate Compensation of all Active Participants for the Plan Year, and then
	 
	 	(ii)	 	The cash contributions not used to repay an Acquisition Loan and any other
property contributed for that year shall be allocated and credited to each Active
Participant’s Other Investments Account based on the ratio determined by comparing each
Active Participant’s Compensation to the aggregate Compensation of all Active
Participants for the Plan Year.






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






	 	(i)	 	are employed on the last day of the Plan Year; or
	 
	 	(ii)	 	terminated employment during the Plan Year by reason of death, Disability, or
attainment of their Normal or Later Retirement Date.





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.
	 
	(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.




14









 






	(c)	 	Limitation Year. The “limitation year” (within the meaning of Section 415 of the Code) shall
be the calendar year.
	 
	(d)	 	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.
	 
	(e)	 	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 violation of
Section 415 of the Code, the Committee shall allocate and reallocate employer contributions to
other Participants in the Plan for the limitation year or, if such allocation and reallocation
causes the limitations of Section 415 of the Code to be exceeded, shall hold excess amounts in
an unallocated suspense account for allocation in a subsequent Plan Year in accordance with
Section 1.415-6(b)(6)(i) of the Treasury Regulations. Such suspense account, if permitted,
will be credited before any allocation of contributions for subsequent limitation years.
	 
	(f)	 	Allocations Pursuant to Section 5.08. For purposes of this Section 5.05, no amount credited
to any Participant’s Account pursuant to Section 5.08 of the Plan shall be counted as an
“annual addition” for purposes of Section 415 of the Code. In the event any amount cannot be
allocated to Affected Participants (as defined in Section 5.08 of the Plan) under the Plan
pursuant to Section 5.08 of the Plan in the year of a Change in Control, the amount which may
not be so allocated in the year of the Change in Control shall be treated in accordance with
paragraph (e) of this Section 5.05.





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 be allocated to the Accounts of Highly
Compensated Employees. In order to ensure that 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 amount
of the next highest paid (based on such Participant’s Compensation) Highly Compensated Employee
(the “breakpoint amount”), then, for purposes of 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.




15









 








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 other 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 Company or any Affiliate, or
	 
	 	(ii)	 	the total value of any class of outstanding stock of the Company 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 Allocations Upon Termination Prior to Satisfaction of Acquisition Loan.





	(a)	 	Notwithstanding any other provision of the Plan, in the event of a Change in Control, the
Plan shall terminate as of the effective date of the Change in Control and, as soon as
practicable thereafter, the Trustee shall repay in full any outstanding Acquisition Loan. In
connection with such repayment, the Trustee shall: (i) apply cash, if any, received by the
Plan in connection with the transaction constituting a Change in Control, with respect to the
unallocated shares of Company Stock acquired with the proceeds of the Acquisition Loan, and
(ii) to the extent additionally required to effect the repayment of the Acquisition Loan,
obtain cash through the sale of any stock or security received by the Plan in connection with
such transaction, with respect to such unallocated shares of Company Stock. After repayment
of the Acquisition Loan, all remaining shares of Company Stock held in the Loan Suspense
Account, all other stock or securities, 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 Participants who were employed by an Employer on the date
immediately preceding the effective date of the Change in Control. Such allocations of shares
or cash proceeds shall be credited as earnings for purposes of Section 5.05 of the Plan and
Section 415 of the Code, as of the effective date of the Change in Control, to the Account of
each Participant who is either
in active Service with an Employer, or is on a Recognized Absence, on the date immediately
preceding the effective date of the Change of Control (each an “Affected




16









 












	 	 	Participant”), in
proportion to the opening balances in their Company Stock Accounts as of the first day of
the current Valuation Period. As of the effective date of a Change in Control, all
Participant Accounts shall be fully vested and nonforfeitable.
	 
	(b)	 	In the event of a termination of the Plan in connection with a Change in Control, this
Section 5.08 shall have no force and effect unless the price paid for the Company Stock in
connection with a 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 5.09 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 the 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, at the direction of the
Bank, either:






	 	(i)	 	be credited to Participants’ Accounts in accordance with Section 5.03 of the
Plan and invested as part of the Trust Fund;
	 
	 	(ii)	 	be distributed immediately to the Participants;
	 
	 	(iii)	 	be distributed to the Participants within ninety (90) days of the close of the
Plan Year in which paid; or
	 
	 	(iv)	 	be used to repay principal and interest on the Acquisition Loan used to acquire
Company Stock on which the dividends were paid.




In addition to the alternatives specified in the preceding paragraph regarding the treatment of
cash dividends paid with respect to shares of Company Stock credited to Participants’ Accounts, if
authorized by the Committee for the Plan Year, a Participant may elect that cash dividends paid on
Company Stock credited to the Participant’s Account shall either be:





	 	(i)	 	paid to the Plan, reinvested in Company Stock and credited to the Participant’s
Account;
	 
	 	(ii)	 	distributed in cash to the Participant; or
	 
	 	(iii)	 	distributed to the Participant within ninety (90) days of the close of the
Plan Year in which paid.




17









 










Dividends subject to an election under this paragraph (and any Company Stock acquired therewith
pursuant to a Participant’s election) shall at all times be fully vested. To the extent the
Committee authorizes dividend elections pursuant to this paragraph, the Committee shall establish
policies and procedures relating to Participant elections and, if applicable, the reinvestment of
cash dividends in Company Stock, which are consistent with guidance issued under Section 404(k) of
the Code.





	(c)	 	Cash Dividends on Unallocated Shares. Dividends on Company Stock held in the Loan Suspense
Account received by the Trustee in the form of cash shall be applied as soon as practicable to
payments of principal and interest under the Acquisition Loan incurred with the purchase of
Company Stock.
	 
	(d)	 	Financed Shares. Financed Shares released from the Loan Suspense Account by reason of
dividends paid with respect to Company Stock shall be allocated under Sections 5.03 and 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 the dividend
is declared by the Company; and
	 
	 	(ii)	 	Next, 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 6

Vesting and Forfeitures




Section 6.01 Deferred Vesting in Accounts.





	(a)	 	A Participant shall vest in his Accounts according to the following schedule.





	 	 	 	 	 
	Completed	 	 	 
	Years of Service	 	 	Vested Percentage
	Less than 2
	 	 	0	 
	2
	 	 	20	%
	3
	 	 	40	%
	4
	 	 	60	%
	5
	 	 	80	%
	6
	 	 	100	%







	(b)	 	For purposes of determining a Participant’s Years of Service under Section 6.01(a), all Years
of Service shall be included, beginning with the Employee’s initial service with the




18









 






	 	 	Employer.
Also for purposes of this Section 6.01, employment with the Bank or any affiliate shall be
deemed employment with the Employer.





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 the permanent and complete discontinuance of
contributions by the Employer to the Plan; provided, however, that in the event of a
partial termination of the Plan, 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 Normal Retirement Date;
	 
	 	(iii)	 	a Change in Control; or
	 
	 	(iv)	 	Termination of Service by reason of death or Disability.





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 a distribution of his entire vested benefits
under the Plan, or
	 
	 	(ii)	 	the date at which the Participant incurs five (5) consecutive One Year Breaks
in Service.






	(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 Breaks in Service, 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 previous
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 the 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




19









 






	 	 	to
incurring five (5) consecutive One Year Breaks in Service, any undistributed balance of his
Accounts from his prior participation which was not forfeited shall be maintained as a fully
vested subaccount within 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 reallocated among the other Participants in the Plan.





Section 6.04 Accounting for Forfeitures.



A forfeiture shall be charged to the 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, a forfeiture shall 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.




Section 6.05 Vesting Upon Reemployment.



If a Participant incurs a One Year Break in Service and again performs an Hour of Service, such
Participant shall receive credit, for purposes of Section 6.01 of the Plan, for his Years of
Service prior to his One Year Break in Service.




SECTION 7

Distributions




Section 7.01 Distribution of Benefit Upon a Termination of Employment.





	(a)	 	A Participant whose employment 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 on or before the 60th day 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 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, at the time such benefit was distributable, $1,000, his
benefits shall not be paid before the latest of his 65th birthday or the tenth 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




20









 






	 	 	his benefits under the Plan. The notice shall be provided no less than 30 days and no more
than ninety (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 ninety (90) days from the date the 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 on the required beginning date which is 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 his named Beneficiary should not survive
him, then the balance in his Accounts 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




21









 






		 	other than
his spouse as 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
	 
	 	(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 within sixty (60) days after they can first be determined.




Section 7.05 Options to Receive and Sell Company 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 7.05, 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




22









 






	 	 	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 sixty (60) days after
the Company Stock is distributed by the Plan, and, if not exercised in that period, during the
first sixty (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 Company 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.
	 
	(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 paragraph (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
must be nonterminable. The put right for Company Stock acquired through an 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 Company 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,
divorce or separation from the Participant, or 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





23









 







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)	 	Notwithstanding any provision of the Plan to the contrary that would otherwise limit a
distributee’s election under this Section, a distributee (as defined below) may elect to have
any portion of an eligible rollover distribution (as defined below) paid directly to an
eligible retirement plan (as defined below) specified by the distributee in a direct rollover
(as defined below). A “distributee” includes a Participant or former Participant. In
addition, the Participant’s or former Participant’s surviving spouse and the Participant’s or
former Participant’s spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse. For purposes of this Section 7.07 a
“direct rollover” is a payment by the Plan to the eligible retirement plan specified by the
distributee.
	 
	(b)	 	To effect such a direct transfer, the distributee must notify the Committee that a direct
rollover is desired and provide to the Committee sufficient 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 Committee
shall direct the Trustee to make a trustee-to-trustee transfer of the eligible rollover
distribution to the eligible retirement plan so specified.
	 
	(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 or, 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). To the extent applicable under the Plan, “eligible rollover distributions”
shall also not include 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 consistent 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




24









 






	 	 	408(b) of the Code, (iii) an
annuity or annuity plan described in Section 403(a) or Section 403(b) of the Code, (iv) a
qualified trust described in Section 401(a) of the Code, or (v) a governmental plan under
Section 457 of the Code that accepts the distributee’s eligible rollover distribution.
However, in the case of an eligible rollover distribution to a surviving spouse, an eligible
retirement plan means an individual retirement account or individual retirement annuity.
	 
	(e)	 	An eligible retirement plan shall also mean an annuity contract described in Section 403(b)
of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state which agrees to separately account for amounts transferred
into such plan from this Plan. The definition of eligible retirement plan shall also apply in
the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the
alternate payee under a qualified domestic relation order as defined in Section 414(p) of the
Code.





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)	 	Voting Prior to Allocation. In the event no shares of Company Stock have been allocated to
Participants’ Accounts at the time Company Stock is to be voted, each Participant shall be
deemed to have one share of Company Stock allocated to his Accounts for the sole purpose of
providing the Trustee with voting instructions.




25









 






	(e)	 	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.




SECTION 9

The Committee and Plan Administration




Section 9.01 Identity of the Committee.



The Committee shall consist of three 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 Employers, or the Trustee under the Plan and Trust
Agreement;
	 
	 	(ii)	 	delegated in writing to other persons by the Bank, the Employers, 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.




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	(c)	 	The Committee shall have full investment responsibility with respect to the Investment Fund
except to the extent, if any, specifically provided for 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
their 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, the Code and other applicable laws and regulations.
	 
	(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 Sections 7.05
and 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 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




27









 






	 	 	under the Plan.
Such value shall be determined as of each Valuation Date and on any other date as of which the
Trustee purchases or sells Company Stock in a manner consistent with Section 4975 of the Code
and the Treasury Regulations issued 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 (as defined in Section 401(a)(28)(c) of the Code).





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 Committee members. The members of the Committee may meet informally and may take any
action without meeting as a group.




Section 9.06 Execution of Documents.



Any instrument to be 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 that 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.





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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 upon 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.




Section 9.11 Abstention by Interested Member.



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




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 180 days, if special
circumstances require an extension of time and written notice of the extension is given to the
Participant or Beneficiary within ninety (90) days after receiving the claim for benefits), the
Committee shall notify the Participant or Beneficiary whether the claim has been approved or




29









 







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 sixty (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 sixty (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.




SECTION 11

The Trust




Section 11.01 Creation of Trust Fund.



All amounts received under the Plan from an Employer and investments shall be held 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






30









 







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 establish a procedure under which each Participant may, during the first five
years of a certain six-year period, elect to have up to twenty-five percent (25%) of the value of
his Accounts committed to alternative investment options within an “Investment Fund.” For the
sixth year in this period, the Participant may elect to have up to fifty percent (50%) of the value
of his Accounts committed to other investments. The six-year period shall begin with the Plan Year
following the first Plan Year in which the Participant has both reached age 55 and completed 10
years of participation in the Plan; a Participant’s election to diversify his Accounts must be made
within the 90-day period immediately following the last day of each of the six Plan Years. The
Committee shall see that the Investment Fund includes a sufficient number of investment options to
comply with Section 401(a)(28)(B) of the Code. The Committee may, in its discretion, permit a
transfer of a portion of the Participant’s Accounts to the First Federal Savings Bank Retirement
Plan in order to satisfy this Section 11.04, provided such investments comply with Section
401(a)(28)(B) of the Code and such transfer is not otherwise prohibited under the Code or ERISA.
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.




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.




31









 











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 ninety (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 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. If this Plan is held by the Internal Revenue
Service not to qualify initially under Section 401(a) of the Code either as originally adopted or
as amended, each Employer’s contributions to the Trust under this Plan (including any earnings
thereon) shall be returned to it and this Plan shall be terminated. 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.




Section 12.04 Right to Amend or Terminate.





	(a)	 	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.




32









 






	(b)	 	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, neither the provisions of Section 5.04 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.
	 
	(c)	 	In the event of a Change in Control, the Plan shall be terminated and allocations made to
Participants in accordance with the provisions of Section 5.08 of the Plan.





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. 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.




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.





33









 








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 Employer.




Section 13.04 Nondiversion of Assets.



Except as provided in Sections 5.05 and 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
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 the service of process upon the Plan shall be the Chairman of the Board of the Bank
and the Trustee, or such other person as may be designated from time to time by the Bank.




Section 13.07 Governing Law.



The Plan is established under, and its validity, construction and effect shall be governed by the
laws of the State of Tennessee 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 Exchange Act, 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 Exchange Act receiving a distribution of Company Stock from the
Plan must hold such Company Stock for a period of six 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.





34









 








Section 13.09 Military Service.



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




SECTION 14

Top-Heavy Provisions




Section 14.01 Top-Heavy Provisions.





	(i)	 	Key employee. Key employee means any employee or former employee (including any deceased
employee) who at any time during the Plan Year that includes the Determination Date was an
officer of the Employer having annual compensation greater than $130,000 (as adjusted under
Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a 5% owner of
the Employer or a 1% owner of the Employer having annual compensation of more than $150,000.
For this purpose, annual compensation means compensation within the meaning of Section
415(c)(3) of the Code. The determination of who is a key employee will be made in accordance
with Section 416(i)(1) of the Code and the applicable regulations and other guidance of
general applicability issued thereunder.
	 
	(ii)	 	Determination of present values and amounts. This section (ii) shall apply for purposes of
determining the present values of accrued benefits and the amounts of account balances of
Participants as of the distribution date.






	 	(A)	 	Distributions during year ending on the Determination Date. The present values
of accrued benefits and the amounts of account balances of a Participant as of the
Determination Date shall be increased by the distributions made with respect to the
Participant under the Plan and any Plan aggregated with the Plan under Section
416(g)(2) of the Code during the 1-year period ending on the Determination Date. The
preceding sentence shall also apply to distributions under a terminated plan which, had
it not been terminated, would have been aggregated with the Plan under Section
416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other
than separation from service, death or disability, this provision shall be applied by
substituting “5-year period” for “1-year period”.
	 
	 	(B)	 	Participants not performing services during the year ending on the
Determination Date. The accrued benefits and accounts of any individual who has not
performed services for the Employer during the 1-year period ending on the
Determination Date shall not be taken into account.




35









 











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 (as defined under 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.






	(b)	 	The preceding provision will remain in effect for the period in which the Plan is top-heavy.
If, for any particular year thereafter, the Plan is no longer top-heavy, the provisions
contained in this Section 14.02 shall cease to apply, except that any previously vested
portion of any Account balance shall remain nonforfeitable.






36