**Exhibit 10(K)**

 

 

 

**FIRST COMMUNITY FINANCIAL GROUP, INC.**

 

**EMPLOYEE STOCK OWNERSHIP PLAN**

 

**(With 401(k) Provisions)**

 

**Amended and Restated as of November, 2001**

 

 

 

----

TABLE OF CONTENTS

 
| **SECTION**                                                                                  |   |
|----------------------------------------------------------------------------------------------|--------|
|                                                                                         |   |
| SECTION 1.    NATURE  OF PLAN                                                 |
| SECTION  2.    DEFINITIONS                                                    |
| SECTION 3.    ELIGIBILITY  AND PARTICIPATION                                  |
| SECTION 4.    EMPLOYER  AND EMPLOYEE CONTRIBUTIONS                            |
| SECTION 5      INVESTMENT  OF TRUST ASSTS                                |
| SECTION 6.    ALLOCATIONS  TO PARTICIPANT’S ACCOUNT                      |
| SECTION 7.    EXPENSES  OF THE PLAN AND TRUST                                 |
| SECTION 8.    VOTING  COMPANY STOCK                                           |
| SECTION 9.    DISCLOSURE  TO PARTICIPANTS                                     |
| SECTION 10.  CAPITAL  ACCUMULATION                                                      |
| SECTION 11.  RETIREMENT,  DISABILITY, OR DEATH                                          |
| SECTION 12.  OTHER  TERMINATION OF SERVICE, BREAK IN SERVICE, VESTING AND FORFEITURES   |
| SECTION 13.  CREDITED  SERVICE                                                          |
| SECTION 14.  WHEN  CAPITAL ACCUMULATION WILL BE DISTRIBUTED                             |
| SECTION 15.  HOW  CAPITAL ACCUMULATION WILL BE DISTRIBUTED                              |
| SECTION 16.  RIGHTS,  OPTIONS AND RESTRICTIONS ON COMPANY STOCK                         |
| SECTION 17.  No  ASSIGNMENT OF BENEFITS, DIVIDENDS, HARDSHIP AND OPTIONAL DISTRIBUTIONS |
| SECTION 18.  ADMINISTRATION                                                             |
| SECTION 19.  CLAIMS  PROCEDURE                                                          |
| SECTION 20.  GUARANTIES                                                                 |
| SECTION 21.  FUTURE  OF THE PLAN                                                        |
| SECTION 22.  “TOP  HEAVY” CONTINGENCY PROVISIONS                              |
| SECTION 23.  DIVERSIFICATION                                                            |
| SECTION 24.  QUALIFIED  MILITARY SERVICE                                                |
| SECTION 25.  GOVERNING  LAW                                                             |
| SECTION 26.  EXECUTION                                                                  |

 

i

----

 

**FIRST COMMUNITY FINANCIAL GROUP, INC.EMPLOYEE STOCK OWNERSHIP PLAN**(With 401(k)Provisions)

 

**SECTION 1****.  NATURE OF PLAN**

 

Thepurpose of this Plan is to enable participating Employees to share in thegrowth and prosperity of the Company through Employer contributions to the Planand to provide Participants with an opportunity to accumulate capital for theirfuture economic security. The Plan is designed to permit both Employer andEmployee contributions to the Plan. The primary purpose of the Plan is to enableParticipants to acquire stock ownership interests in the Bank. Therefore, theTrust Assets held under the Plan will be invested primarily in Company Stock.

 

ThePlan is also designed to be available as a technique of corporate finance tothe Bank. Accordingly, it may be used to accomplish the following objectives:

 

(a)                                  To meet general financing requirements of theBank, including capital growth and transfers in the ownership of Company Stock;

 

(b)                                 To provide Participants with beneficialownership of Company Stock and other assets through Employer and Employeecontributions to the Plan; and

 

(c)                                  To receive loans (or other extensions ofcredit) to finance the acquisition of Company Stock (“Acquisition Loans”), withsuch loans to be repaid by Employer Contributions to the Trust and dividendsreceived on such Company Stock.

 

ThePlan was initially effective as of January 1, 1980, as the First CommunityBancorp Employees Retirement plan. The Plan as herein restated is generallyeffective as of January 1, 1997, except as otherwise provided. The Plan is astock bonus plan containing Section 401 (k) features that is intended toqualify under Section 401(a) of the Internal Revenue Code. The Plan is alsodesigned to be an employee stock ownership plan under Section 4975(e)(7) of theCode.

 

AllTrust Assets under the Plan will be administered, distributed, forfeited andotherwise governed by the provisions of this Plan and the related TrustAgreement. The Plan is administered by a Board of Trustees and anAdministrative Committee for the exclusive benefit of Participants (and theirBeneficiaries), except as otherwise provided and permitted by applicable law.

 

1.1

----

 

**SECTION 2.   DEFINITIONS**

 

Inthis Plan, whenever the context so indicates, the singular or plural number andthe masculine, feminine or neuter gender shall be deemed to include the other,the terms “‘hers,” “his,” and “him” shall refer to a Participant and thecapitalized terms shall have the following meanings:

 

**Account**

One of  the severalaccounts maintained to record the interest of a Participant under the Plan. SeeSection 6.

 

**Acquisition Loan**

A loan made to an EmployeeStock Ownership Plan with 401(k) Provisions (“KSOP”) by a disqualified personor a loan to a KSOP which is guaranteed by a disqualified person. A direct loanof cash, a purchase money transaction, and an assumption of the obligation of aKSOP.

 

**Adjusted Compensation**

The total taxable salary orwages paid to an Employee as a Participant in each Plan Year, as reported onIRS Form W–2, plus the amount (if any) of his Salary Reduction Contributionsfor the Plan Year and any deferrals made to an Internal Revenue Code Section125 Cafeteria Plan and, for Plan Years beginning after 2000, any amounts excludedfrom the Employee’s gross income by operation of Section 132(f)(4) of the Code.For any Plan Years beginning after 1993, however Adjusted Compensationexceeding $200,000 ($160,000 for Plan Years beginning before 2002) for anyEmployee ( in any case as adjusted in accordance with the Section 415(d)(2) ofthe Code for cost of living increases) shall not be taken into account.

 

**Affiliated Company**

First Community Bank ofWashington and any other corporation or business which is a member of acontrolled group of corporations or businesses with the Company pursuant toSection 414(b), (c), (m) or (o) of the Code. All determinations related to acontrolled group of corporations or businesses which are under common controlshall consider any and all regulations promulgated by the Secretary of theTreasury.

 

**Anniversary Date**

December 31, the last day ofeach Plan Year.

 

**Annuity Starting Date**

The first day of the firstperiod for which an amount is payable as an annuity; or in the case of abenefit not payable in the form of an annuity, the first day on which allevents have occurred which entitle the participant to such benefit.

 

**Approved Absence**

A leave of absence (withoutpay) granted to an Employee by an Employer under its established leave policy.Approved absences include leaves granted under the Family and Medical LeaveAct.

 

**Beneficiary**

The person (or persons)entitled to receive any benefit under the Plan in the event of a Participantsdeath. See Section 15(b).

 

**Board of Directors**

The Board of Directors ofthe Company.

 

2.1

----

 

**Break in Service**

A Plan Year in which aParticipant is not credited with more than 500 Hours of Service. Thecomputation period used for measuring eligibility service will also be used tomeasure breaks in service. See Section 12(b).

 

**Buyout**

A transaction or series ofrelated transactions by which the Company is sold, either through the sale of aControlling Interest in the Company's voting stock or through the sale ofsubstantially all of the Company's assets to a party not having a ControllingInterest in the Company's voting stock on the date of execution of thisAgreement.

 

**Capital Accumulation**

A Participant’s vested,nonforfeitable interest in his Accounts under the Plan. See Section 10.

 

**Change in Control**

A Buyout, Merger orSubstantial Change in Ownership.

 

**Code**

The Internal Revenue Code of1986, as amended.

 

**Committee**

The Administrative Committeeappointed by the Board of Directors to administer the Plan. See Section 18.

 

**Company**

First Community FinancialGroup, Inc., a bank holding company organized under the laws of the state ofWashington.

 

**Company Stock**

Common stock issued by theEmployer (or by a corporation which is a member of the same control group)which is readily tradable on an established securities market. If there is nocommon stock which meets the requirements of the preceding sentence, the term “Company Stock” means common stock issued by the Employer (or by a corporationwhich is a member of the same control group) having a combination of votingpower and dividend rights equal to or in excess of (a) that class of commonstock of the Employer (or of any other such corporation) having the greatestvoting power, and (b) the class of common stock of the Employer (or of any suchcorporation) having the greatest dividend rights.

 

**Company Stock Account**

The Account of a Participantwhich reflects his interest in Company Stock held under the Plan. See Section6.

 

**Compensation**

Compensation is wages,salaries and fees from professional services and other amounts received(without regard to whether or not an amount is paid in cash) for personalservice actually rendered in the course of employment with the Employermaintaining the Plan to the extent that the amounts are includable in grossincome (including, but not limited to, commissions paid to salesmen,compensation for services on the basis of a percentage of profits, commissionon insurance premiums, tips, bonuses, fringe benefits, and reimbursements orother expense allowances under a nonaccountable Plan) as described inRegulation 1.62–2(c), and excluding the following:

 

(a)                  Employer Contributions to a plan of deferredcompensation which are not includable in the Employee’s gross income for thetaxable year in which contributed, or Employer contributions 

 

2.2

----

 

under a simplified employeepension plan to the extent such contributions are deductible by the Employee,or any distributions from a plan of deferred compensation;

 

(b)                 Amounts realized from the exercise of anonqualified stock option or restricted stock (or property) held by theEmployee which either becomes freely transferable or is no loner subject to asubstantial risk of forfeiture;

 

(c)                  Amounts realized from the sale exchange, orother disposition of stock acquired under a qualified stock option plan; and

 

(d)                 Other amounts which receive special taxbenefits, or contributions made by the employer (whether or not under a salaryreduction agreement) towards the purchase of an annuity contract described inSection 403(b) of the Code (whether or not the contributions are actuallyexcludable from the gross income of the Employee).

 

The Compensation that may betaken into account in determining contributions on behalf of any Employee islimited to no more than $160,000 for Plan Years beginning before 2002 and$200,000 for Plan Years beginning after 2001, in each case as adjusted underCode Section 401(a)(17)(B). If a determination period is less than 12 months,this limit will be decreased proportionately based on the number of months inthe measuring period. For purposes of the ADP and ACP test provisions of thePlan, a Participant’s Compensation may be limited to Compensation received forthe portion of the year for which the employee was an eligible Participant,provided this limit is applied uniformly to all eligible employees under thePlan for this purpose. Effective January 1, 2001, Compensation shall includeelective amounts that are not includable in the gross income of the employee byreason of Code §132(f)(4).

 

**Controlling Interest**

The ownership, eitherdirectly or indirectly, of more than twenty percent (20%) of the Company'svoting stock.

 

**Credited Service**

The number of Plan Yearsduring which an Employee is credited with at least 1,000 Hours of Service. SeeSection 13.

 

**Defined Contribution Dollar Limitation**

The dollar amount of $30,000for Plan Years beginning before 2002 and $40,000 for Plan Years beginning after2001, in each case as adjusted from time to time by the Secretary of theTreasury for purposes of Code Section 415.

 

**Determination Year**

The Plan Year for which thedetermination of who is highly compensated is being made.

 

**Direct Rollover**

A payment by the Plan to theEligible Retirement Plan specified by the Distributee.

 

**Distributee**

A Distributee includes anEmployee or former Employee. In addition, the Employee’s or former Employee’ssurviving spouse and the Employee’s or former Employee’s spouse or formerspouse 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 theinterests of the spouse or former spouse. In the case of a deceasedParticipant, the term Distributee includes the Participant’s Beneficiary.

 

2.3

----

 

**Eligible Retirement Plan**

An individual retirementaccount described in Section 408(a) of the Code, an individual retirementannuity described in Section 408(b) of the Code, an annuity plan described inSection 403(a) of the Code, or a qualified trust described in Section 401(a) ofthe Code, that accepts the Distributee’s Eligible Rollover Distribution. Fordistributions made after 2001, the term Eligible Retirement Plan shall alsoinclude an annuity contract described in Code Section 403(b) and a governmentalplan described in Code Section 457. However, in the case of an EligibleRollover Distribution to the surviving spouse, for distributions made before2002 an Eligible Retirement Plan includes only an individual retirement accountor individual retirement annuity.

 

**Eligible Rollover Distribution**

Any distribution of all orany portion of the balance to the credit of the Distributee, except that anEligible Rollover Distribution does not include: any distribution that is oneof a series of substantially equal periodic payments (not less frequently thanannually) made for the life (or life expectancy) of the Distributee or thejoint lives (or joint life expectancies) of the Distributee and theDistributee’s designated Beneficiary, or for a specified period of ten years ormore; any distribution to the extent such distribution is required underSection 401(a)(9) of the Code; any hardship distribution described in CodeSection 401(k)(2)(B)(i)(iv) which is received after 1999; any hardshipdistribution from any account received after 2001; and the portion of anydistribution that is not includable in gross income (determined without regardto the exclusion for net unrealized appreciation with respect to Employer securities).

 

**Employee**

Any person considered by theEmployer to be a common law employee of an Employer. Any person not consideredby the Employer to be its common law employee for any particular period shallnot be eligible to participate in the Plan for that period, even if thatdetermination is later deemed inaccurate by any person, court, body or entityother than the Employer. A Leased Employee shall not be eligible to participatein the Plan. Notwithstanding the foregoing or any other provision of the Planto the contrary, for Plan Years during which the Plan would otherwise fail tosatisfy the minimum coverage requirements of Code section 410(b) becauseEmployer contributions have not been allocated to an appropriate group ofEmployees, then the group of Employees eligible to share in the Employer’scontribution and/or forfeiture allocation for such Plan Year shall be expandedto include the minimum number of Participants who are not actively employed onthe last day of the Plan Year as are necessary to satisfy such coveragerequirements. The specific employees who shall become so eligible shall bethose Employees who, when compared to similarly situated Employees, have beencredited with the greatest number of hours of service for the Plan Year.

 

**Employer**

The Company, First CommunityFinancial Group, Inc. and any other Affiliated Company which is designated bythe Board of Directors as an Employer and which adopts the Plan for the benefitof its Employees.

 

**Employer Contributions**

Payments made to the Trustby an Employer which include Employer Discretionary Basic Contributions,Employer Discretionary Matching Contributions. Qualified Employer DiscretionaryMatching Contributions and Employer Discretionary Optional Contributions. SeeSection 4.

 

**Employer Discretionary Basic Contributions**

Plan contributions madepursuant to Plan Section 4(1)(a)(3).

 

**Employer Discretionary Matching Contributions**

Plan contributions madepursuant to Plan Section 4(l)(a)(2).

 

2.4

----

 

**Employer Discretionary Optional Contributions**

Plan contributions madepursuant to Plan Section 4(1)(a)(4).

 

**Entry Date**

The date an Employee becomesa Participant for a particular purpose, as determined in Section 3.

 

**ERISA**

The Employee RetirementIncome Security Act of 1974 as amended.

 

**Financed Shares**

Shares of Company Stockacquired by the Trust with the proceeds of an Acquisition Loan.

 

**Forfeiture**

Any portion of aParticipants Accounts which does not become a part of his Capital Accumulationand which is reapplied in accordance with the Forfeiture provisions of thePlan. See Section 12.

 

**Highly Compensated Participant**

An Employee who performsservice during the Determination Year and is described in one or more of thefollowing groups:

 

(1)          An Employee who is a more than five percent (5%) owner, as defined inSection 416(i)(1)(A)(iii), at any time during the Determination Year or theLook-Back Year, and

 

(2)          An Employee who receives Compensation in excess of $80,000 (indexed inaccordance with Section 415(d) except that the base period is the calendarquarter ended September 30, 1996) during the Look-Back Year and was in thetop-paid group for the Look-Back Year. For this purpose, an employee is in thetop-paid group for a year if (s)he is in the top 20% of employees when rankedon the basis of compensation received from the Employer for the year. For PlanYears after 1997, compensation for this purpose means compensation for purposesof Code Section 415(c)(3).

 

Employeesdescribed in Section 414(q)(8) and Q & A 9(b) of Section 1.414(q)-1T of theregulations are excluded.

 

A former employee will betreated as a Highly Compensated Participant if such employee was a HighlyCompensated Participant when (s)he separated from service with the Employer, orat any time after age fifty-five (55).

 

**Hour of Service**

Each hour of Service forwhich an Employee is credited under the Plan as described in Section 3(d).

 

**Key Employee**

For Plan Years beginningbefore 2002, an Employee who, and any time during the Plan Year or any of thefour (4) preceding Plan Years, is (i) an officer of the Employer having anannual compensation greater than fifty percent (50%) of the amount in effectunder Section 415(b)(1)(A) for any such Plan Year, (ii) one of the tenEmployees having an annual compensation from the Employer of more than thelimitation in effect under Section 415(c)(1)(A) and owning (or considered asowning within the meaning of Section 318) the largest interest in the Employer,or (iii) a five percent (5%) owner of the Employer, or (iv) a one percent (1%)owner of the Employer having an annual compensation from the Employer of morethan $150,000.

 

2.5

----

 

For Plan Years beginningafter 2001, an Employee who at any time during the Plan Year was (i) an officerof the Employer having annual compensation in excess of $130,000, (ii) a fivepercent (5%) owner of the Employer, or (iii) a one percent (1%) owner of theEmployer having annual compensation from the Employer in excess of $150,000.

 

For purposes of determiningfive percent (5%) and one percent (1%) owners, neither the aggregation rulesnor the rules of subsections (b), (c) and (m) of Section 414 apply.Beneficiaries of an Employee acquire the character of the Employee who performsservice for the Employer. Also, inherited benefits will retain the character ofthe benefits of the Employee who performs services for the Employer.

 

**Leased Employee**

An individual who is not anEmployee but who, pursuant to an agreement between the Employer and any otherperson, has performed services for the Employer and/or any Affiliate, on asubstantially full-time basis for at least a year under the primary directionor control of the service recipient. Compensation for a Leased Employeeincludes compensation from the leasing organization attributable to servicesfor the Employer.

 

**Loan Suspense Account**

The account to whichFinanced Shares are credited and maintained while an Acquisition Loan isoutstanding. See Sections 5(b) and 6(e).

 

**Look -Back Year**

The twelve (12) monthsperiod immediately preceding the Determination Year, or, if the Employerelects, the calendar year ending with or within the Determination Year.

 

**Merger**

A transaction or series oftransactions wherein the Company is combined with another business entity, andafter which the persons or entities who had owned, either directly orindirectly, a Controlling Interest in the Company's voting stock on the date ofexecution of this Agreement own less than a Controlling Interest in the votingstock of the combined entity.

 

**Non-Key Employee**

Any Employee or formerEmployee not defined as a Key Employee.

 

**Other Investments Account**

The portion of the Accountof a Participant which reflects his interest under the Plan attributable toTrust Assets other than Company Stock. See Section 6.

 

**Participant**

Any Employee who isparticipating in this Plan. See Section 3.

 

**Plan**

First Community FinancialGroup, Inc. Employee Stock Ownership Plan (With 401(k) Provisions), whichincludes the Trust Agreement.

 

**Plan Year**

The twelve-month periodending on each Anniversary Date.

 

**Profit Sharing Account**

The Account of a Participantrepresenting his interest in the Profit Sharing Plan.

 

2.6

----

 

**Profit Sharing Plan**

First Community BancorpEmployees Retirement Plan, originally effective January 1, 1980, and of whichthis Plan is a successor plan.

 

**Qualified Discretionary Matching Contributions**

Discretionary MatchingContributions which are fully vested when made and which are    subject to the distribution restrictions applicable to Salary ReductionContributions, and        which otherwise satisfythe requirements of Treasury Regulation §1.401(k)-1(g)(13).

 

**Rollover Contribution**

A contribution made to thePlan by a Participant in accordance with Section 4(5).

 

**Rollover Contribution Account**

The account maintained toreflect a Participant’s Rollover Contributions to the Plan and adjustmentsthereon reflecting investment experience.

 

**Salary Reduction Account**

The account balance of aParticipant attributable to Salary Reduction Contributions.

 

**Salary Reduction Contributions**

Plan contributions made as aresult of the salary reduction elections of Participants pursuant to PlanSection 4(2).

 

**Service**

Employment with the Company(or an Affiliated Company).

 

**Substantial Change in Ownership**

A transaction or series oftransactions in which a Controlling Interest in the Company is acquired by orfor a person or business entity, either of which did not own, either directlyor indirectly, a Controlling Interest in the Company on the date that thisAgreement was executed. The above shall not apply to stock purchased by thePlan.

 

**Treasury Regulation**

A regulation promulgatedunder Title 26 of the Code of Federal Regulations and formally adopted pursuantto a Treasury Directive.

 

**Trust**

First Community FinancialGroup, Inc. Employee Stock Ownership Trust created by the Trust Agreemententered into between the Company and the Trustee.

 

**Trust Agreement**

The agreement between theCompany and the Trustee establishing the Trust and specifying the duties of theTrustee.

 

**Trust Assets**

The Company Stock and otherassets held in the Trust for the benefit of Participants. See Section 5.

 

**Trustee**

The Board of Trustees (andany successor Trustee) appointed by the Board of Directors to hold and investthe Trust Assets. See Section 18.

 

2.7

----

 

**Valuation Date**

The last day of each PlanYear (or more frequently at the Board’s discretion) on which the value ofCompany Stock and/or other investments  of the Trust are determined.

 

**Valuation Period**

The twelve-month period (ormore frequently at the Board’s discretion) ending on each Valuation Date.

 

**Vested Account**

The fair market value of aParticipant’s nonforfeitable benefit under the Plan.

 

2.8

----

 

**SECTION 3****.   ELIGIBILITY AND PARTICIPATION**

 

(a)  All current Participants in the Plan willcontinue to participate in the Plan under this amendment and restatement of thePlan.  All other Employees will be eligible to make Salary ReductionContributions as of the January 1 next following his initial date of hire. EachEmployee will become  eligible to share in Employer contributions for theeligibility computation period in which he is credited with at least 1,000Hours of Service. The initial eligibility computation period is the 12consecutive month period beginning on the date the Employee first performs anHour of Service for the Employer (employment commencement date). The succeeding12 consecutive month periods commence with the first Plan Year which commencesprior to the first anniversary of the Employees employment commencement date.

 

(b)  A Participant is generally entitled to sharein the allocations of Employer Contributions and Forfeitures only for a PlanYear in which he was an Employee (or on Approved Absence) on the AnniversaryDate and has completed 1,000 Hours of Service during that Plan Year. AParticipant shall also share in the allocations of Employer Contributions forthe Plan Year of his retirement, disability or death (as provided in Section11), whether or not an Employee at the end of such Plan Year and without regardto Hours of Service credited for that Plan Year. Notwithstanding the foregoingor any other provision of the Plan to the contrary, for Plan Years during whichthe Plan would otherwise fail to satisfy the minimum coverage requirements ofCode section 410(b) because Employer contributions have not been allocated toan appropriate group of Employees, then the group of Employees eligible toshare in the Employer’s contribution and/or forfeiture allocation for such PlanYear shall be expanded to include the minimum number of Participants who arenot actively employed on the last day of the Plan Year as are necessary tosatisfy such coverage requirements. The specific employees who shall become soeligible shall be those Employees who, when compared to similarly situatedEmployees, have been credited with the greatest number of hours of service forthe Plan Year.

 

(c)  A former Employee who is reemployed by anEmployer and has previously satisfied the eligibility requirements of Section3(a) shall become a Participant as of his date of reemployment. An Employee whois on an Approved Absence shall not become a Participant until the end of hisApproved Absence but a Participant who is on an Approved Absence shall continueas a Participant during the period of his Approved Absence. Failure to returnto work by the end of the Approved Absence will terminate Service as of thebeginning of the Approved Absence.

 

(d)  **Hoursof Service**. For purposes of determining the Hours of Service tobe credited to an Employee under the Plan the following rules shall be applied:

 

(1)           Hours of Service shall include:

1.                                       each hour of Service for which an Employee ispaid, or entitled to payment for the performance of duties with such hours ofService being credited in the Plan Year in which the duties are performed; and

2.                                       each hour of Service for which an Employee ispaid, or entitled to payment for a period during which no duties are performed(irrespective of whether the employment relationship has terminated) due tovacation holiday, illness, incapacity (including disability), layoff, juryduty, military duty or leave of absence; provided that no more than 501 Hoursof Service need be credited for one continuous period during which an Employeedoes not perform duties; and

3.                                       each hour of Service for which back pay,irrespective of mitigation of damages, is either awarded or agreed to;provided, however, that Hours of Service credited under either subparagraph (a)or (b) above shall not be credited under this subparagraph (c). “These Hours ofService will be credited to Employee for the Plan Year to which the award oragreement pertains rather than the Plan Year in which the award agreement orpayment is made.

 

3.1

----

 

(2)                                  The crediting of Hours of Service shall bedetermined by the Committee in accordance with the rules set forth in Section2530.200b–2(b) and (c) of the regulations prescribed by the Department ofLabor, which rules shall be consistently applied with respect to all Employeeswithin the same job classification.

 

(3)                                  Hours of Service shall not be credited to anEmployee for a period during which no duties are performed if payment is madeor due under a plan maintained solely for the purpose of complying withapplicable worker’s compensation unemployment compensation or disabilityinsurance laws, and Hours of Service shall not be credited on account of anypayment made or due an Employee solely in reimbursement of medical ormedically–related expenses.

 

(4)                                  Hours of Service will be credited foremployment with other members of an affiliated service group (under Section414(m) of the Code), a controlled group of corporations (under Section 414(b)of the Code), a group of trades or businesses under common control (underSection 414(c) of the Code), or a group described in the regulationspromulgated under Section 414(o) of the Code of which an Employer is, or maybecome, a member.

 

(5)                                  For purposes of determining whether anEmployee has incurred a Break in Service and for vesting and participationpurposes, if an Employee begins a maternity/paternity leave of absencedescribed in Section 411(a)(6)(E)(i) of the Code his Hours of Service shallinclude the Hours of Service that would have been credited to him if he had notbeen so absent (or eight (8) Hours of Service for each day of such absence ifthe actual Hours of Service cannot be determined). An Employee shall becredited for such Hours of Service (up to a maximum of 501 Hours of Service) inthe Plan Year in which his absence begins (if such crediting will prevent himfrom incurring a Break in Service in such Plan Year) or, in all other cases, inthe following Plan Year. For purposes of this provision, a maternity/paternityleave of absence described in Section 411(a)(6)(E)(i) of the Code pertains to aParticipant who is absent from work for any period by reason of the pregnancyof the Participant, by reason of the birth of a child of the Participant, byreason of the placement of a child with the Participant in connection with theadoption of such child by such Participant, or for purposes of caring for suchchild for a period beginning immediately following such birth or placement.

 

3.2

----

 

**SECTION 4****   EMPLOYER AND EMPLOYEE CONTRIBUTIONS**

 

**1.             EmployerContributions**

(a)           The Employer shall or may, asapplicable, contribute the following amounts to the Plan each Plan Year:

 

1.                                       The amount of each Participants SalaryReduction Contribution made pursuant to Section 4(2). As provided in Section12(a), the interests of a Participant in the Salary Reduction Contributionsallocated to his account will always be 100% vested.

 

2.                                       An Employer Discretionary MatchingContribution on behalf of each Participant up to a maximum of fifty percent(50%) of the Participant’s Salary Reduction Contributions, provided however,that the maximum Employer Discretionary Matching Contribution shall be based ona percentage of a Participant’s Compensation selected by the Board ofDirectors, which shall in no event exceed six percent (6%) . The Board may, inits sole discretion, determine that the rate of Discretionary MatchingContributions for a Plan Year will be zero percent (0%).  The Employer maydetermine annually that additional Matching Contributions will be allocated tonon-Highly Compensated Participants’ accounts as Qualified EmployerDiscretionary Matching Contributions, and thus will be fully vested when made,will be subject to the distribution restrictions applicable to Salary ReductionContributions, and will meet such other requirements as may apply from time totime under Treasury Regulation §1.401(k)-1(g)(13). The Employer DiscretionaryMatching Contributions will vest in accordance with the schedule provided inSection 12(a). All Participants will normally receive the same percentage matchof their Salary Reduction Contribution. Any Qualified Employer DiscretionaryMatching Contributions for a Plan Year, however, will be allocated only tonon-Highly Compensated Participants, and consequently may cause the aggregaterate of match for that group to exceed the rate of match for Highly CompensatedParticipants.

 

3.                                       An Employer Discretionary Basic Contribution,which shall be determined at the sole discretion of the Board of Directors.Employer Discretionary Basic Contributions will only be made to non–HighlyCompensated Participants to the extent necessary to satisfy the actual deferralpercentage test and actual contribution percentage test under Sections 4(2) and4(3) of the Plan, respectively, in order to satisfy the nondiscriminationrequirements of Code Sections 401(k) and 401(m). As provided in Section 12(a),the interests of a Participant in the Employer Discretionary BasicContributions allocated to his account will always be 100% vested and willotherwise satisfy the requirements for qualified nonelective employercontributions under Code Section 401(m)(4)(C).

 

4.                                       An Employer Discretionary OptionalContribution, which shall be determined in the sole discretion of the Board ofDirectors. The interests of a Participant in the Employer DiscretionaryOptional Contributions allocated to his account will become nonforfeitablepursuant to the vesting schedule contained in Section 12(a).

 

(b)                                 Salary Reduction Contributions shall be paidto the Trustee as promptly as such Contributions can reasonably be segregatedfrom the general assets of the Employer.

 

(c)                                  Employer Discretionary Matching, QualifiedEmployer Discretionary Matching, Basic and Optional Contributions for each PlanYear shall be paid to the Trustee not later than the due date (includingextensions) for filing the Employers Federal income tax return for that PlanYear.

 

4.1

----

 

(d)                                 In the event Employer Contributions are paidto the Trust by reason of a mistake of fact, such Employer Contributions may bereturned to the Employer (upon the request of the Employer) by the Trusteewithin one (1) year after the payment to the Trust.

 

Themaximum amount that may be returned to the Employer in the case of a mistake offact is the excess of the amount contributed, over, as relevant the amount thatwould have been contributed had no mistake of fact occurred. Earningsattributable to excess contributions may not be returned to the Employer, butlosses attributable thereto must reduce the amount to be so returned.Furthermore, if the withdrawal of the amount attributable to the mistakencontribution would cause the balance of the individual account of anyParticipant to be reduced to less than the balance which would have been in theaccount had the mistaken amount not been contributed, then the amount to bereturned to the Employer must be limited so as to avoid such reduction.

 

5.  A Participant is entitled to share in theallocations of Employer Contributions and Forfeitures as provided in Section3(b).

 

**2**.             **Employee Salary Reduction Contributions**

(a)  A Participant may authorize his Employer tocontribute to the Trust on his behalf Salary Reduction Contributions. SuchSalary Reduction Contributions shall be stated as a whole percentage, and shallnot be less than 1%, or more than 15% (12% prior to January 1, 1999), of theParticipants Adjusted Compensation. The total amount of Salary ReductionContributions by a Participant for any calendar year shall not exceed $10,000,multiplied by any cost of living adjustment factor prescribed by the Secretaryof the Treasury under Section 415(d) of the Code. This limit applies to allsalary reduction contributions taken into account under Code Section 402(g) toall plans in which the Participant participates, whether or not maintained bythe Employer. Any Salary Reduction Contribution in excess of the aforementionedlimitation, plus any income allocable thereto, shall be returned to theparticipant no later than the first April 15 following the close of the taxyear in which such contributions were made. In the event this limit is exceededas a result of contributions to this Plan and another plan(s), the Participantmust notify the Plan Administrator in writing by March 1 of the followingcalendar year, allocating the excess between and among such plans, and statethat the applicable limit will be exceeded if the excess attributable to thisPlan is not distributed. In such event, the excess allocated to this Plan shallbe distributed to the Participant with allocable earnings, by April 15 of theyear following the calendar year in which the excess arose if practicable andin any event by December 31 of such year. A Participant may make a separatedeferral election with respect to annual bonuses.

 

For Plan Years beginningafter 2001, catch-up contributions for persons age fifty (50) or older whoseSalary Reduction Contributions  are otherwise limited by the Code arepermitted, under the terms and conditions, and within the limits of CodeSection 414(v). Notwithstanding any other provision of the Plan to thecontrary, any such contribution shall be taken into account in applying theremaining  contribution and discrimination provision of the Plan only tothe extent, if any, required by the Code and Regulations or other TreasuryDepartment issued thereunder. Further provided, and notwithstanding any otherprovision of the Plan, the Company and each Employer may uniformly elect toapply or not to apply the otherwise applicable matching contribution provisionsof the Plan to such catch-up contributions. In the absence of an election tothe contrary, the matching contribution provisions and determinations for aPlan Year to Salary Reduction Contributions which are not catch-upcontributions will apply to catch-up contributions.

 

4.2

----

 

(b)  Each Participant electing to have hisEmployer contribute Salary Reduction Contributions on his behalf during thePlan Year shall file a written notice with the Plan Administrator at leastthirty (30) days prior to the Entry Date that he intends such election to takeeffect. This requirement shall be waived on adoption of the Plan and eachParticipant shall be given a reasonable time to elect Salary ReductionContributions. Such written notice shall contain an election of the percentageof his Adjusted Compensation to be contributed and authorization for hisEmployer to reduce his Adjusted Compensation by such amount. Salary ReductionContributions may be suspended at any time by giving prior written notice.After suspension the Participant shall not be eligible for further SalaryReduction Contributions until the beginning of the next Plan Year, unless theCommittee determines that an earlier resumption is administratively feasible. AParticipant may change the percentage of his Salary Reduction Contributionsduring open enrollment on January 1 or July 1. A Participant shall be fullyvested at all times in the portion of his Account from Salary ReductionContributions.

 

(c)  For any Plan Year the Committee shall havethe right to limit or reduce the Salary Reduction Contributions of the HighlyCompensated Participants in order to insure that the Maximum DeferralPercentage Limit under Code Section 401(k) is not exceeded. Furthermore inaccordance with Treasury Regulation 1.401(k)–1(f), the Employer may make additionalEmployer Discretionary Basic Contributions and/or Qualified EmployerDiscretionary Matching Contributions or may distribute excess contributionsmade during the Plan Year, with allocable earnings, in order to provide thatthe Maximum Deferral Percentage Limit under Code Section 401(k) is notexceeded. The Maximum Deferral Percentage Limit under Code Section 401 (k) isequal to the greater of Limit 1 or Limit 2:

 

Limit 1. The Actual DeferralPercentage (ADP) of the Highly Compensated Participants for the current PlanYear may not exceed one hundred twenty–five percent (125%) of the ActualDeferral Percentage of all other Participants for the prior Plan Year; or

 

Limit 2. The Actual DeferralPercentage of the Highly Compensated Participants for the current Plan Year maynot exceed the lesser of

(a)           The Actual Deferral Percentage of all other Participantsfor the prior Plan Year plus two percent (2%), or

(b)           The Actual Deferral Percentage of all other Participantsfor the prior Plan Year, multiplied by  two hundred percent (200%).

 

The Employer may elect touse current Plan Year data for non-Highly Compensated Participants rather thanprior Plan Year data in performing the ADP test for the current Plan Year.However, if such election is made for a post-2000 Plan Year, the election maynot be changed until the sixth (6th) following Plan Year unless permitted bythe Secretary of the Treasury.

 

ActualDeferral Percentage with respect to any specific group of Participants for aPlan Year shall mean the average of the ratios (calculated separately for eachParticipant in such group) of (A) the amount of each eligible Employees SalaryReduction Contributions (including Employer Discretionary Basic Contributionsand Qualified Employer Discretionary Matching Contributions that are treated aselective contributions) paid into the Trust Fund on behalf of each Participantfor such Plan Year to (B) the Participant’s Compensation for the relevant PlanYear. For this purpose an eligible Employee is any Employee who is directly orindirectly eligible to make a cash or deferred election under the Plan for allor a portion of a Plan Year and includes; an Employee who would be a PlanParticipant but for the failure to make required contributions; an Employeewhose eligibility to make Salary Reduction Contributions has been suspendedbecause of an election (other than certain one–time elections) not toparticipate, a distribution or a loan; and an Employee who cannot defer becauseof the Section 415 limits on annual additions. In the case of an eligibleEmployee who makes no Salary Reduction Contributions the deferral ratio that isto be included in determining the ADP is zero.

 

4.3

----

 

Inthe case of a first Plan Year other than as a successor plan, the ADP ofnon-Highly Compensated Participants for the prior Plan Year may be deemed to be3% or the Employer may, at its option, use the ADP for the current Plan Year.

 

Forpurposes of determining whether a Plan satisfies the actual deferral percentagetest of Section 401(k), all Salary Reduction Contributions that are made undertwo or more Plans that are aggregated for purposes of Sections 401(a)(4) or410(b) (other than Section 410(b)(2)(A)(ii)) are to be treated as made under asingle Plan. If two or more plans are permissively aggregated for purposes ofSection 401(k), the aggregated plans must also satisfy Sections 401(a)(4) and410(b) as though they were a single plan.

 

EmployerDiscretionary Basic Contributions may be treated as elective contributions forpurposes of the actual deferral percentage test of 401(k) only if suchcontributions are nonforfeitable when made and subject to the same distributionrestrictions that apply to Salary Reduction Contributions. Employer DiscretionaryBasic Contributions and Qualified Employer Discretionary MatchingContributions  which may be treated as elective contributions must satisfythese requirements without regard to whether they are actually taken intoaccount as elective contributions. Employer Discretionary Basic Contributionsand/or Qualified Employer Discretionary Matching Contributions  may betreated as Salary Reduction Contributions only if the conditions described inSection 1.401(k)–1(b)(5) of the Regulations are satisfied.

 

ASalary Reduction Contribution will be taken into account under the actualdeferral percentage test of Section 401(k)(3)(A) of the Code for a Plan Yearonly if it relates to compensation that either would have been received by theEmployee in the Plan Year (but for the deferral election) or is attributable toservices performed by the Employee in the Plan Year and would have beenreceived by the Employee within 2 1/2 months after the close of the Plan Year(but for the deferral election).

 

ASalary Reduction Contribution will be taken into account under the actualdeferral percentage test of Section 401(k)(3)(A) of the Code for a Plan Yearonly if it is allocated to the Employee as of a date within that Plan Year. Forthis purpose, a Salary Reduction Contribution is considered allocated as of adate within a Plan Year if the allocation is not contingent on participation orperformance of services after such date and the Salary Reduction Contributionis actually paid to the trust no later than 12 months after the Plan Year towhich the contribution relates.

 

Incalculating the actual deferral percentage for purposes of Section 401(k), theactual deferral ratio of a Highly Compensated Participant will be determined bytreating all cash or deferred arrangements under which the Highly CompensatedParticipant is eligible (other than those that may not be permissivelyaggregated) as a single arrangement.

 

(d)  In the event the Maximum Deferral PercentageLimit under Code Section 401(k) is exceeded, the amount of excess contributionsfor a Highly Compensated Participant shall be distributed pursuant to TreasuryRegulation 1.401(k)–1(f)(2) and will be determined in the following manner. Thetotal excess contribution amount to be distributed for a Plan Year is theexcess of the amount of contributions taken into account for Highly CompensatedParticipants for the Plan Year over the maximum amount permitted under Limit 1or Limit 2 above, as applicable, determined by hypothetically reducingcontributions made by or on behalf of Highly Compensated Participants in orderof individual actual deferral percentages, beginning with the highestpercentage and continuing until the excess contribution amount is eliminated.This process defines the excess contribution amount. The Actual DeferralPercentage (ADP) of the Highly Compensated Participant with the highestcontribution amount will then be reduced to the extent necessary to eliminatethe excess amount or to cause such Participant’s contribution amount to equalthe contribution amount of the Highly Compensated Participant with the nexthighest contribution amount. This process is repeated until the total excessamount is eliminated by distributions. In the case of a Highly CompensatedParticipant that has excess contributions distributed on account of the MaximumDeferral Percentage Limit of IRC §401(k), said Highly Compensated Participantwill forfeit the applicable incremental Employer Discretionary MatchingContribution required to prevent the Highly Compensated Participant from receivinga higher level of match than the Non-Highly Compensated Participants. Followingthe distributions described in this paragraph, the ADP test is deemed to havebeen satisfied, even if that test would not be satisfied on a recalculatedbasis.

 

4.4

----

 

Theamount of a Participant’s excess contributions distributed pursuant to TreasuryRegulation 1.401(k)-1(f) shall be reduced by any excess deferrals previouslydistributed during such Plan Year. The distribution of excess contributionswill include any income attributable thereto. The income allocable to excesscontributions is equal to the sum of the allocable gain or loss for the PlanYear. The distribution of any excess contribution is to be made prior to thetwo and one–half month period following the end of the Plan Year in which suchexcess contributions were made.

 

(e)  In the event a Participant’s SalaryReduction Contribution or Employer Contribution:

 

(1)           is made under a mistake of fact;

 

(2)           is conditioned upon initial qualification of the Planunder Code Section 401(a) and the Plan does not so qualify,

 

the contribution may bereturned to the Employer within one (1) year after the payment of thecontribution, the disallowance  of the deduction to the extent disallowed,or the date of denial of the qualification of the Plan, whichever isapplicable.  Except as provided 

under this paragraph, theassets of the Plan will be used for the exclusive purpose of providing benefitsto Participants under the Plan and their Beneficiaries and for defrayingreasonable administrative expenses of the Plan.

 

(f)  Amounts attributable to Salary ReductionContributions, Employer Discretionary Basic Contributions and QualifiedEmployer Discretionary Matching Contributions  may not be distributedearlier than upon one of the following events:  (1)  The Employee’sretirement, death, disability, or (A) separation from service in the case ofdistributions before 2002, or (B) severance from employment not involving atransfer of any Plan assets to a plan maintained or created by the new employer(other than a rollover or elective transfer) in the case of distributions after2001, regardless of when the severance from employment occurred; (2)  The termination of the Plan without establishment or maintenance ofanother defined contribution plan (other than an ESOP or SEP);  (3) In thecase of a profit sharing or stock bonus plan, the Employee’s attainment of age59 1⁄2 or the Employee’s hardship;  (4)  The sale or other dispositionby a corporation to an unrelated corporation prior to 2002 of substantially allof the assets used in the trade or business, but only with respect to Employeeswho continue employment with the acquiring corporation and the acquiringcorporation does not maintain the Plan after the disposition; (5)  Thesale or other disposition by a corporation prior to 2002 of its interest in thesubsidiary to an unrelated entity, but only with respect to Employees whocontinue employment with the subsidiary and the acquiring entity does notmaintain the Plan after the disposition; and (6) such other circumstances asmay be permitted in accordance with Treasury Regulations under Code Section401(k) from time to time.  Items 2, 4, and 5 above, apply only if thedistributions are in the form of a lump sum.  Items 4 & 5 above, applyonly to transactions which occur prior to 2002 and only if the transferorcorporation continues to maintain the Plan.

 

***3.*****             *Limitations onMatching Contributions.***

(d)  For any Plan Year, the Committee shall havethe right to limit or reduce the Employer Discretionary Matching Contributionsattributable to the Highly Compensated Participants in order to insure that theMaximum Contribution Percentage Limit under Code Section 401(m) is notexceeded.  The Maximum Contribution Percentage Limit under Code Section401(m) is equal to the greater of Limit 1 or Limit 2:

 

Limit 1. The ActualContribution Percentage (ACP) of the Highly Compensated Participants for thecurrent Plan Year may not exceed one hundred twenty-five percent (125%) of theActual Contribution Percentage of all other Participants for the prior PlanYear; or

 

Limit 2. The ActualContribution Percentage of the Highly Compensated Participants for the currentPlan Year may not exceed the lesser of:

 

1.             the Actual Contribution Percentage of all otherParticipants for the prior Plan Year, plus two percent (2%), or

 

4.5

----

 

2.                                       the Actual Contribution Percentage of allother Participants for the prior Plan Year, multiplied by two hundred percent(200%).

 

TheEmployer may elect to use current Plan Year data for non-Highly CompensatedParticipants rather than prior Plan Year data in performing the ADP test forthe current Plan Year. However, if such election is made for a post-2000 PlanYear, the election may not be changed until the sixth (6th) following Plan Yearunless permitted by the Secretary of the Treasury.

 

ActualContribution Percentage with respect to any specific group of Participants fora Plan Year shall mean the average of the ratios (calculated separately foreach Participant in such group) of (A) the sum of the Employer DiscretionaryMatching Contributions that have been paid into the Trust Fund on behalf ofeach Participant for such Plan Year plus any Qualified Employer DiscretionaryMatching Contributions taken into account for such purpose, to (B) theParticipant’s Compensation for such Plan Year. The Employer DiscretionaryMatching Contributions are to be taken into account if they are paid to theTrust during the Plan Year or are paid to an agent of the Plan and aretransmitted to the Trust within a reasonable period after the end of the PlanYear. Excess deferred contributions which are recharacterized under Section4(2) of the Plan will be included in determining the actual contributionpercentage. An excess contribution to a cash or deferred arrangement that isrecharacterized is to be taken into account in the Plan Year in which thecontribution would have been received in cash by the Employee had the Employeenot elected to defer the amounts. The Plan will take into account the actualcontribution ratios of all eligible Employees for purposes of the actualcontribution percentage (ACP) test in Section 401(m). For this purpose aneligible Employee is any Employee who is directly or indirectly eligible toreceive an allocation of Employer Discretionary Matching Contributions or tomake Employee contributions and includes: an Employee who would be a PlanParticipant but for the failure to make required contributions; an Employeewhose right to make Employee contributions or receive Employer DiscretionaryMatching Contributions has been suspended because of an election (other thancertain one-time elections) not to participate; an Employee who cannot make anEmployee contribution or receive an Employer Discretionary MatchingContributions because Section 415(c)(1) or Section 415(e) prevents the Employeefrom receiving additional annual additions. In the case of an eligible Employeewho makes no Employee contributions and who receives no Employer DiscretionaryMatching Contributions the contribution ratio that is to be included indetermining the ACP is zero.

 

Inthe case of the first Plan Year other than as a successor plan, the ACP of thenon-Highly Compensated Participants for the prior Plan Year may be deemed to be3%, or the Employer may, at its option, use the ACP for the current Plan Year.

 

AnEmployer Discretionary Matching Contributions and/or Qualified EmployerDiscretionary Matching Contribution is taken into account for a Plan Year onlyif it is (1) made on account of the Employee’s Salary Reduction Contributionsfor the Plan Year, (2) allocated to the Employee’s account as of a date withinthat year, and (3) paid to the Trust by the end of the twelfth month followingthe close of that year. Qualified Employer Discretionary Matching Contributionswhich are used to meet the requirements of Section 401(k)(3)(A) are not to betaken into account for purposes of the ACP test of Section 401(m). EmployerDiscretionary Basic Contributions and/or Qualified Employer DiscretionaryMatching Contributions may be treated as Salary Reduction Contributions only ifthe conditions described in Section 1.401(k)-1(b)(5) of the Regulations aresatisfied.

 

Thedetermination of income for excess aggregate contributions will be determinedunder the method in Section 6(i). For purposes of determining whether a Plansatisfies the actual contribution percentage test of Section 401(m), allEmployee and Employer Discretionary Matching Contributions that are made undertwo or more plans that are aggregated for purposes of Sections 401(a)(4) and410(b) (other than Section 410(b)(2)(A)(ii)) are to be treated as made under asingle Plan. If two or more plans are permissively aggregated for purposes ofSection 401(m) the aggregated plans must also satisfy Sections 401(a)(4) and410(b) as though they were a single plan. The actual contribution ratio of aHighly Compensated Participant will be determined by treating all plans subjectto Section 401(m) under which the Highly Compensated Participant is eligible(other than those that may not be permissively aggregated) as a single plan.

 

(b)  In the event the Maximum ContributionPercentage Limit under Code Section 401(m) is exceeded the amount of excessaggregate contributions for a Highly Compensated Participant will bedistributed or forfeited pursuant to Treasury Regulation §1.401(m)-1(e) anddetermined in the following manner. The total excess aggregate

 

4.6

----

 

amount to be distributed fora Plan Year is the excess of the amount of contributions taken into account forHighly Compensated Participants for the Plan Year over the maximum amountpermitted under Limit 1 or Limit 2 above, as applicable, determined byhypothetically reducing contributions made by or on behalf of HighlyCompensated Participants in the order of individual contribution percentages,beginning with the highest of such percentages and continuing until the ACP testwould have been satisfied. This process defines the total excess aggregatecontribution amount. Contributions on behalf of the Highly CompensatedParticipant with the highest contribution amount will be reduced bydistributions to the extent necessary to eliminate the excess aggregatecontribution amount or to cause such Participant’s contribution amount to equalthe contribution amount for the Highly Compensated Participant with the nexthighest contribution amount. This process is repeated until the entire excessaggregate contribution amount is eliminated. The Participant to whom an excessis attributed will receive the excess as a distribution from the Plan.Following such distributions the ACP test is deemed to have been satisfied,even if the test would not then be satisfied on a recomputed basis.

 

Theamount of a Participants excess aggregate contributions distributed shall bereduced by any excess aggregate contributions previously distributed duringsuch Plan Year. The distribution of excess aggregate contributions will includeany income attributable thereto. The income allocable to the excess aggregatecontributions includes income for the Plan Year for which the excess aggregatecontributions  were made. The distribution of any excess aggregate contributionis to be made prior to the two and one-half month period following the end ofthe Plan Year in which such excess aggregate contributions were made.

 

Failureto correct excess aggregate contributions by the close of the Plan Yearfollowing the Plan Year for which they were made will cause the Plan to fail tosatisfy the requirements of Section 401(a)(4) of the Plan Year for which theexcess aggregate contributions were made and for all subsequent years theyremain uncorrected.

 

(c)  For any Plan Year beginning before 2002, theapplication of the Maximum Deferral Percentage Limitation and MaximumContribution Percentage Limitation pursuant to Sections 4(2)(c) and 4(3)(a) ofthe Plan shall be made in accordance with the multiple use limitations underRegulation §1.401(m)-2. If multiple use of the alternative limitation occurs,it must be corrected by reducing the actual deferral percentage of all HighlyCompensated Participants regardless of whether they are eligible under both thearrangement subject to Section 401(k) and a plan subject to Section 401(m).

 

(d)  To the extent Qualified EmployerDiscretionary Matching Contributions are used, pursuant to Plan Section4(2)(c), to compute the Maximum Deferral Percentage Limit under Code Section401(k), they will not be used to compute the Maximum Contribution PercentageLimit under Code Section 401(m). Furthermore, at the election of the Employer,Employer Discretionary Basic Contributions (to the extent not utilized tocompute the Maximum Deferral Percentage Limit under Code Section 401(k)) may beused in the computation of the Maximum Contribution Percentage Limit under CodeSection 401(m). Employer Discretionary Basic Contributions may be treated asQualified Employer Discretionary Matching Contributions for purposes of theactual contribution percentage test of Section 401(m) only if suchcontributions are nonforfeitable and made distributable only under thefollowing circumstances: (1) “The Employees retirement, death, disability, orseparation from service; (2) The termination of the Plan without establishmentor maintenance of another defined contribution plan (other than an ESOP orSEP); (3) In the case of a profit sharing or stock bonus plan, the Employee’sattainment of age 59 1/2 or the Employees hardships (4) The sale or otherdisposition by a corporation to an unrelated corporation of substantially allof the assets used in the trade or business, but only with respect to Employeeswho continue employment with the acquiring corporation and the acquiringcorporation does not maintain the Plan after the disposition; (5) The sale orother disposition by a corporation of its interest in the subsidiary to anunrelated entity, but only with respect to Employees who continue employmentwith the subsidiary and the acquiring entity does not maintain the Plan afterthe disposition, and (6)  such other circumstances as may permit adistribution of contributions as are subject to the restrictions  of CodeSection 401(k). Items 2, 4, and 5 above, apply only if the distributions are inthe form of a lump sum, Items 4 and 5 above apply only if the transferorcorporation continues to maintain the Plan. Employer Discretionary BasicContributions which may be treated as Qualified Employer Discretionary MatchingContributions roust satisfy these requirements without regard to whether theyare actually taken into account as Qualified Employer Discretionary MatchingContributions. Salary Reduction Contributions and/or Employer DiscretionaryBasic Contributions may be treated as Qualified Employer Discretionary MatchingContributions only if the conditions described in Section 1.401(m)-1(b)(5) ofthe Regulations are satisfied.

 

4.7

----

 

***4.*****             *Employee RolloverContribution***

(a)           With the Employer’s consent, aRollover Contribution may be made by or for an Employee if either of thefollowing conditions are met

 

(1)  The Contribution is a Rollover Contributionwhich the Code permits to be transferred to a plan that meets the requirements ofSection 401(a) of the Code; and

(2)  The Contribution is made within 60 daysafter the Employee receives or would be entitled to receive the distribution;and

(3)  The Employee furnishes evidence satisfactoryto the Committee that proposed transfer is in fact a Rollover Contributionwhich meets conditions (1) and (2) above.

**-OR-**

(4)  The Contribution is made pursuant to PlanSection 23 diversification requirements.

 

TheRollover Contribution may be made by the Employee or may be made with hisconsent by the named fiduciary of another plan. The Contribution will be madeaccording to procedures set up by the Committee.

 

(b)           If the Employee is not a Participantat the time the Rollover Contribution is made he will be deemed to be aParticipant only for the purposes of investment and distribution of theRollover Contribution. No Employer Contribution will be made for him and he maynot make Participant Contributions until the time he meets all of therequirements to become a Participant.

 

(c)           Any Rollover Contribution made by orfor an Employee is credited to his Account when made and is at all times fullyvested and nonforfeitable.

 

4.8

----

 

**SECTION 5**. **INVESTMENT OFTRUST ASSETS**

(a)  Subject to the exceptions contained inSection 5(c), Trust Assts under the Plan will be invested by the Trusteeprimarily in Company Stock in accordance with the Trust Agreement. EmployerContributions (and other Trust Assets) may be used to acquire shares of CompanyStock from Company shareholders or from the Company. The Trustee may alsoinvest Trust Assets in such other prudent investments as the Trustee deems tobe desirable for the Trust or Trust Assets may be held temporarily in cash. Allpurchases of Company Stock by the Trustee shall be made at prices which do notexceed the fair market value of Company Stock as determined in good faith bythe Trustee in accordance with the provisions of Section 18. The Trustee mayinvest and hold up to one hundred percent (100%) of the Trust Assets in CompanyStock.

 

(b)  Except for the put option described in CodeSection 409(h), no security acquired with the proceeds of an exempt loan may besubject to a put, call or other option buy-sell or other arrangement while heldby and when distributed from the Plan whether or not the Plan has continued tooperate as an Employee Stock Ownership Plan. Assets transferred in satisfactionof a loan must not exceed the amount of default. For a disqualified person theassets transferred to satisfy default can not exceed the payment schedule ofthe loan. The Trustee may incur Acquisition Loans exempt under Code Section4975(e)(7) from time to time to finance the acquisition of Company Stock(Financed Shares) for the Plan or to repay a prior Acquisition Loan. An AcquisitionLoan shall be for a specific term shall be used within a reasonable period oftime shall bear a reasonable rate of interest and shall not be payable ondemand except in the event of default. An Acquisition Loan may be secured by apledge of the Financed Shares so acquired (or acquired with the proceeds of aprior Acquisition Loan which is being refinanced). No other Trust Assets may bepledged as collateral for an Acquisition Loan and no lender shall have recourseagainst Trust Assets other than any Financed Shares remaining subject topledge. If the lender is a party in interest (as defined in ERISA), FinancedShares may be transferred to the lender only upon and to the extent of thefailure of the Plan to meet the payment schedule of the loan. Any pledge ofFinanced Shares must provide for the release of the shares so pledged aspayments on the Acquisition Loan are made by the Trustee and such FinancedShares are allocated to Participant Company Stock Accounts under Section 6.Except for the put option described in Code Section 409(h), no securityacquired with the proceeds of an exempt loan may be subject to a put call orother options buy-sell or other arrangement while held by and when distributedfrom the Plan, whether or not the Plan has continued to operate as an EmployeeStock Ownership Plan. Assets transferred in satisfaction of a loan must notexceed the amount of default. For a disqualified person the assets transferredto satisfy default can not exceed the payment schedule of the loan. Payments ofprincipal and interest on any Acquisition Loan shall be made by the Trusteeonly from Employer Contributions to enable the Trust to repay such AcquisitionLoan, and to the extent permitted under applicable law from earningsattributable to such Employer Contributions and from any dividends received bythe Trust on such Financed Shares.

 

(c)  A Participant’s Salary ReductionContributions or Rollover Contributions may be, at the Participant’s election,invested in Company Stock. A Participant may, with the consent of the Trusteedirect the investment of his existing  Salary Reduction Contributions andRollover Contributions in the following Investment Funds:

 

(1)           An Equity Fund shall be a fund, the principal investmentgoal of which shall be capital appreciation primarily through investment inCompany Stock. The Trustee may apply Employer Contributions and the ProfitSharing Accounts which are Participant-directed pursuant to this Section, topayments of principal and interest on an Acquisition Loan.

 

(2)           A Mutual Fund.

 

(3)           A Money Market Fund.

 

(4)           Any other Fund which the Trustees may establish from timeto time.

 

5.1

----

 

(d)  As of each Anniversary Date, the Trusteeshall determine the fair market value of each Investment Fund, whereapplicable, in accordance with Section 18 of this document. With respect toeach such Investment Fund, the Trustee shall determine the net gain or lossresulting from expenses paid, and realized and unrealized gains and losses.After each Anniversary Date, the net gain or loss of each Investment Fund shallbe allocated by the Committee, or its agent, to the Accounts of Participantsparticipating in such Investment Fund.

 

Thereasonable and equitable decision of the Trustee as to the value of eachInvestment Fund and of any Account as of each Anniversary Date shall beconclusive and binding upon all Participants having any interest, direct orindirect, in the Investment Funds or in any Account.

 

5.2

----

 

**SECTION 6**.   **ALLOCATIONS TO PARTICIPANT’S ACCOUNT**

 

SeparateAccounts shall be established to reflect each Participant’s interest in thePlan. Within each of the Accounts described in Sections (a), (b), and (c)herein, a separate Company Stock Account and Other Investments Account will bedetermined and maintained in accordance with the procedures contained inSubsection (e).

 

(a)  ***Matching Contribution Accounts.***

1.                                       ***EmployerDiscretionary Matching Contribution Account***.  The Employer Discretionary MatchingContribution Account maintained for each Participant will be credited annuallywith the amount of the Employer Discretionary Matching Contribution allocableto such Participant, as determined pursuant to Section (4)(1)(a)(2), and withhis share of the net income (or loss) of the Trust.

 

2.                                       ***QualifiedEmployer Discretionary Matching Contribution Account***. The Qualified Employer DiscretionaryMatching Contribution Account maintained for a Participant will be creditedwith the amount of any Qualified Employer Discretionary Matching Contributionallocable to the Participant in accordance with Section 4(1)(a)(2), and with its share of the income (or loss) of the Trust.  Qualified EmployerDiscretionary Matching Contributions will be allocated only among the accountsof non-Highly Compensated Participants.

 

(b)  ***Employer Discretionary Basic Contribution Account***.The Employer Discretionary Basic Contribution Account maintained for eachParticipant will be credited annually with his allocable share of EmployerDiscretionary Basic Contributions and with his share of the net income (orloss) of the Trust. Employer Discretionary Basic Contributions will be madeonly to satisfy the actual contribution percentage test and actual deferralpercentage test in Sections 4(2) and 4(3) of the Plan as of the AnniversaryDate among the Accounts of all non-highly Compensated Participants so entitledunder Section 3(b), based on the percentage of such non-Highly CompensatedParticipant’s Adjusted Compensation to the total Adjusted Compensation of allnon-Highly Compensated Participants.

 

(c)  ***Employee Salary Reduction Account***. TheEmployee Salary Reduction Contribution Account maintained for each Participantwill be credited (or debited) at least annually (or more frequently at theBoard’s discretion) with his share of the net income (or loss) of the Trust hisSalary Reduction Contributions if any, made during that Valuation Period andwith any financed shares released from the Loan Suspense Account on account of hisSalary Reduction Contributions. If securities acquired with the proceeds of anexempt loan available for distribution consist of more than one class aDistributee must receive substantially the same proportion of each such class.

 

(d)  ***Employee Rollover Contribution Account****. *TheRollover Contribution Account maintained for each Participant will be credited(or debited) at least annually (or more frequently at the Board’s discretion)with his share of net income (or loss) of the Trust and with his RolloverContributions, if any, made during that Valuation Period.

 

(e)  ***Profit Sharing  Account****. *TheProfit Sharing Account maintained for each Participant will be credited (ordebited) at least annually (or more frequently at the Board’s discretion) withhis share of net income (or loss) of the Trust.

 

(f)  ***Employer Discretionary Optional Contribution Account***. The Employer Discretionary Optional Contribution Account of a Participant willbe allocated, as of the Anniversary Date, its share of any Employer DiscretionaryOptional Contribution under Section 3(b), in the ratio which the AdjustedCompensation of each such 

 

6.1

----

 

Participant bears to theAdjusted Compensation of all such Participants for that Plan Year. A separateCompany Stock Account and Other Investments Account shall be established toreflect each Participant’s interest under the Employer Discretionary OptionalContribution portion of the Plan. The Company Stock Account maintained for eachParticipant will be credited annually with his allocable share of Company Stock(including fractional shares) purchased and paid for by the Trust orcontributed in kind to the Trust including any Forfeitures of Company Stock.Any stock dividends on Company Stock will be allocated to a Participant’sCompany Stock Account on an annual basis (or more frequently at the Board’sdiscretion). Financed Shares shall initially be credited to a Loan SuspenseAccount and shall be allocated to the Company Stock Accounts of Participantsonly as payments on the Acquisition Loan are made by the Trustee. The number ofFinanced Shares to be released from the Loan Suspense Account for allocation toParticipants’ Company Stock Accounts for each Plan Year shall be determined bythe Committee as described under (e)(1) and (e)(2) below.

 

***(1)***           ***General Rule***. Thenumber of Financed Shares held in the Loan Suspense Account immediately beforethe release for the current Plan Year shall be multiplied by a fraction. Thenumerator of the fraction shall be the amount of principal or principal andinterest paid on the Acquisition Loan for that Plan Year. The denominator ofthe fraction shall be the sum of the numerator plus the total payments ofprincipal or principal and interest on the Acquisition Loan projected to bepaid for all future Plan Years. For this purpose the interest to be paid infuture years is to be computed by using the interest rate in effect as of theAnniversary Date of the Plan Year.

 

***(2)***           ***Special Rule***. TheCommittee may elect (at the time an Acquisition Loan is incurred) or theprovisions of the Acquisition Loan may provide for the release of shares fromthe Loan Suspense Account based solely upon the ratio that the payments ofprincipal for each Plan Year bear to the total principal amount of theAcquisition Loan. This method may be used only if (A) the Acquisition Loanprovides for annual payments of principal and interest at a cumulative ratethat is not less rapid at any time than level annual payments of such amountsfor ten (10) years; (B) interest included in any payment on the AcquisitionLoan is disregarded only to the extent that it would be determined to beinterest under standard loan amortization tables and (C) the entire duration ofthe Acquisition Loan repayment period does not exceed ten (10) years, even inthe event of a renewal, extension or refinancing of the Acquisition Loan.

 

***(3)***           ***Other Investments Accounts***.The Other Investments Account maintained for each Participant will be credited(or debited) at least annually (or more frequently at the Board’s discretion)with his share of the net income (or loss) of the Trust with any cash dividendson Company Stock allocated to his Company Stock Account (other than currentlydistributed dividends) and with his allocable share of Employer Contributionsin cash. Any Forfeitures from the Other Investments Accounts will be allocatedon an annual basis. Such Account will be debited for the Participant’s share ofany cash payments made for the acquisition of Company Stock or for therepayment of any principal and interest on an Acquisition Loan.

 

Theallocations to Participants’ Accounts for each Plan Year will be made asfollows under the remaining subsections of this Section.

 

(g)  ***Employer Contributions and Forfeitures***.Employer Discretionary Optional Contributions and Forfeitures under Section12(b) and (c) for each Plan Year will be allocated as of the Anniversary Dateamong the Accounts of Participants so entitled under Sections 3(b) and 6(b) inthe ratio which the Adjusted Compensation of each such Participant bears to thetotal Adjusted Compensation of all such Participants for that Plan Year.Employer Discretionary Basic Contributions under Section 4 for each Plan Yearwill be allocated as of the Anniversary Date among the Accounts of allnon-Highly Compensated Participants so entitled in the ratio which the AdjustedCompensation of each such Participant bears to the total Adjusted Compensationof all such non-Highly Compensated Participants for that Plan Year. Employer DiscretionaryMatching Contributions and Qualified Employer Discretionary MatchingContributions will be allocated  as a percentage of the Salary ReductionContributions of all eligible Participants in the case on EmployerDiscretionary Matching Contributions, and non-Highly Compensated Participantsin the case of Qualified Employer Discretionary Matching Contributions. Seegenerally Sections 3(b) and 4 (1)(a)(2).  If securities acquired with theproceeds of an exempt loan available for distribution consist of more than oneclass a Distributee must receive substantially the same proportion of each suchclass.

 

6.2

----

 

(h)  ***Allocation Limitations***. The “limitationyear” for  purposes of applying the limits of Code Section 415 is the PlanYear. For each Plan Year the Annual Additions with respect to any Participantmay not exceed the lesser of:

 

(2)           twenty-five percent (25%) of his Compensation forlimitation years beginning before 2002, or one hundred percent (100%) of hisCompensation for limitation years beginning after 2001; or

 

(3)           the Defined Contribution Dollar Limitation.

 

For this purpose, “AnnualAdditions” shall be the total amount of any Employer Contributions, SalaryReduction Contributions, voluntary contributions and Forfeitures (including anyincome attributable to Forfeitures and amounts described in Code Sections415(1)(1) and 419A(d)(2)) allocated to the Participant in this Plan and anyother Employer defined contribution plan. For purposes of applying theselimitations only, for Plan Years beginning after 1997 the Plan uses the safeharbor definition of Compensation pursuant to Section 1.415-2(d)(10) of theTreasury Regulations, as defined in Section 2 of the Plan, adjusted to includedeferrals described in Code Section 415(c)(3)(D). In computing Annual AdditionsForfeitures of Company Stock and Employer Contributions of Company Stock shallbe based on the fair market value of Company Stock as of the Anniversary Date.

 

Priorto the allocation of the Employer Contributions for any Plan Year, theCommittee shall determine whether the amount to be allocated would cause thelimitation described herein to be exceeded as to any Participant. In the eventthat the limitation is exceeded for any Participant due to the allocation of aforfeiture or a reasonable error in the estimation of a Participant’sCompensation the excess shall be maintained in a separate suspense account andshall be allocated in the next subsequent Plan Year as if such amounts were anadditional contribution to the appropriate Account. No contributions whichwould be included in the next limitation year’s Annual Addition may be madebefore the total suspense account has been reallocated.

 

Anyexcess amount shall be reallocated among the Accounts of the other Participantsaccording to the ratio which the Adjusted Compensation of each such Participantbears to the total Adjusted Compensation of all such Participants for the PlanYear, to the extent possible without exceeding the limitations with respect toany other Participant for that Plan Year.

 

Inaddition, for any Participant who was covered under a defined benefit planAnnual Additions may not be allocated to his Accounts (under this Plan) inamounts which cause the sum of the defined benefit plan fraction and thedefined contribution plan fraction to exceed 1.0 for any Plan Year, For thispurpose, the “defined benefit plan fraction” shall have as its numerator theprojected annual benefit of the Participant under the defined benefit plan asof the Anniversary Date and shall have as its denominator the lesser of (i) theproduct of 1.25 multiplied by the dollar limitation in effect under Section415(b)(1)(A) of the Code for such Plan Year; or (ii) the product of 1.4multiplied by the amount which may be taken into account under Section415(b)(1)(B) of the Code with respect to the Participant for such Plan Year.The “defined contribution plan fraction” shall have as its numerator the totalof the Annul Additions of the Participant (under this Plan and any otherEmployer defined contribution plan) for all Plan Years and shall have as itsdenominator the sum of the lesser of the following amounts determined for suchPlan Years and for each prior year of Service with an Employer: (i) the productof 1.25 multiplied by the dollar limitation taken into account under Section415(c)(1)(A) of the Code for the yearn or (ii) the product of 1.4 multiplied bythe amount which may be taken into account under Section 415(c)(1)(B) of theCode with respect to such Participant for such year. Provided, however, thatthe provisions of this paragraph shall not apply in Plan Years beginning after1999.

 

Notwithstandingthe above, elective deferrals (within the meaning of Section 402(g)(3)) may bedistributed or Employee contributions (whether voluntary or mandatory) may bereturned to the extent that the distribution or return would reduce the excessamounts in the Participant’s Account. These amounts are disregarded forpurposes of 

 

6.3

----

 

Section 402(g), the actualdeferral percentage test of Section 401(k)(3) and the actual contributionpercentage test of Section 401(m)(2).

 

***(h)***           ***Special Limitation Provision***.Any Employer Contributions which are applied by the Trust (not later than thedue date, including extensions for filing the Company’s Federal income taxreturn for that Plan Year) to pay interest on an Acquisition Loan, and anyFinanced Shares which are allocated as Forfeitures shall not be included asAnnual Additions under Section 6(g); provided, however, that the provisions ofthis Section 6(h) shall be applicable only for Plan Years for which not morethan one-third (1/3) of the Employer Contributions applied to pay principal orinterest or both on an Acquisition Loan are allocated to Participants who areHighly Compensated Participants within the meaning of Code Section 414(q).

 

***(i)***            ***Net Income (or Loss) of the Trust***.The net income (or loss) of the Trust for each Valuation Period will bedetermined as of the Valuation Date. Each Participant’s share of the net income(or loss) will be allocated to his Accounts in the ratio which the balance ofsuch Accounts on the preceding Valuation Date plus fifty percent (50%) of suchParticipant’s Salary Reduction Contribution and Employer Contribution for thethen current Valuation Period (reduced by the amount of any distribution ofCapital Accumulation from such Account during the Valuation Period) bear to thesum of such Account balances and contributions for all Participants in thecurrent Valuation Period. The net income (or loss) of the Trust includes theincrease (or decrease) in the fair market value of Trust Assets (other thanCompany Stock), interest income, dividends and other income and gains (or loss)attributable to Trust Assets (other than any dividends on Company Stockallocated to Company Stock Accounts) since the preceding Valuation Date,reduced by any expenses charged to the Trust Assets for that Valuation Period.The computation of the net income (or loss) of the Trust shall not take intoaccount any interest paid by the Trust under an Acquisition Loan.

 

***(j)***            ***Dividends on Company Stock***. Cash dividends received on shares of Company Stock allocated to Participants’Accounts will be allocated to the respective Other Investments Account portionof the account to which such Company Stock was allocated. Cash dividendsreceived on unallocated shares of Company Stock shall be included in thecomputation of net income (or loss) of the Trust. Stock dividends received on CompanyStock shall be credited to the Accounts to which such Company Stock wasallocated. Any cash dividends which are currently distributed to Participants,used to repay a loan to the ESOP under Sections 17(b) or (c), or used to payadministrative expenses of the Plan shall not be credited to Participants’Accounts. Employer securities with a fair market value of not less than theamount of a dividend used to make payments on a loan in which the proceeds areused to acquire the Employer securities (whether or not allocated toParticipants with respect to which the dividend is paid are allocated to suchParticipant for the year which (but for Code Section 404(k)(2)(A)) suchdividend would have been allocated to such Participant.

 

***(k)***           ***Accounting for  Allocations***.The Committee shall establish accounting procedures for the purpose of makingthe allocations to Participants’ Accounts provided for in this Section. TheCommittee shall maintain adequate records of the aggregate cost basis ofCompany Stock allocated to each Participant’s Company Stock Account. TheCommittee shall also keep separate records of Financed Shares and of EmployerContributions (and any earnings thereon) made for the purpose of enabling theTrust to repay any Acquisition Loans. From time to time, the Committee maymodify the accounting procedures for the purposes of achieving equitable andnondiscriminatory allocations among the Accounts of Participants in accordancewith the general concepts of the Plan, the provisions of this Section and therequirements of the Code and ERISA.

 

***(l)***            ***Limitation on Allocation to CertainShareholders***. To the extent that a Company shareholder sellsqualifying Company securities to the Plan Trust and elects (with the consent ofthe Company) nonrecognition of gain under Section 1042 of the Code, no portionof the assets of the Plan attributable to (or allocable in lieu of) Employersecurities acquired by the Plan in a sale to which Section 1042 applies nayaccrue (or be allocated directly or indirectly under any plan of the Employermeeting the requirements of Section 401(a)); (a) during the nonallocationperiod for the benefit of (i) any taxpayer *who*make an election under Section 1042(a) with respect to Employer securities (ii)any individual *who is* related tothe taxpayer or the decedent (within the meaning of Section 267(b)), or (b) forthe benefit of any other person who owns (after application of Section 318(a))more than twenty-five percent (25%) of (i) any class of outstanding stock ofthe corporation which issued such Employer securities or of any corporationwhich is member of the same control group or corporation (within the meaning of

 

6.4

----

 

Code Section 409(1)(4)) ofsuch corporation or (ii) the total value of any class of outstanding stock ofany such corporation. For the purposes of (b) above Code Section 318(a) shallbe applied without regard to the employee trust exception in Section318(a)(2)(B)(i). Nonallocation period means the period beginning on the date ofsale of the qualified securities and ending on the later of: (i) the date whichis 10 years after the date of sale or (ii) the date of the Plan allocationattributable to the final payment of acquisition indebtedness incurred inconnection with such sale. The nonallocation period is the period beginning onthe date of the sale of the qualified securities and ending on the later of (i)the date which is 10 years after the date of sale or (ii) the date of the Planallocation attributable to the final payment of acquisition indebtednessincurred in connection with such sale.

 

***(m)***          ***Limit on Allocations In Certain SCorporation Years***. Notwithstanding any other provision ofthe Plan to the contrary, for any year in which the Plan holds securities in acorporation organized as an S corporation for federal income tax purposes, noportion of the Plan attributable to the assets of the Plan attributable to suchsecurities or allocable in lieu thereof shall, during a nonallocation yearwithin the contemplation of Code §409(p), accrue or be allocated directly orindirectly under any plan of the Employer or any Affiliate to a disqualifiedperson within the contemplation of such Code Section in a manner which would beprohibited by that Code Section. The provisions of this subsection areeffective generally for Plan Years beginning after 2004; provided, however,that for ESOPs established after March 14, 2001, or which convert to Scorporation status after that date, this subsection is effective for Plan Yearsending after that date.

 

6.5

----

 

**SECTION 7****.  EXPENSES OF THE PLAN AND TRUST**

 

Allexpenses of administering the Plan and Trust shall be charged to and paid outof the Trust Assets. The Company may pay all or any portion of such expenses,and payment of expenses by the Company shall not be deemed to be EmployerContributions.

 

7.1

----

 

**SECTION 8****.   VOTINGCOMPANY STOCK**

 

AllCompany Stock in the Trust shall normally be voted by the Trustee in suchmanner as it shall determine in its sole discretion. However, with respect toany corporate matter which involves the voting of Company Stock as to theapproval or disapproval of any corporate merger or consolidation,recapitalization, reclassification, liquidation, dissolution, sale ofsubstantially all assets of a trade or business, or such similar transactionsas may be prescribed in Code regulations, each Participant will be entitled todirect the Trustee as to the exercise of any voting rights attributable toshares of Company Stock then allocated to his Company Stock Account but only tothe extent required by Sections 401(a)(22) 409(e)(2) and 409(e)(3) of the Codeand the regulations thereunder. In that event, any allocated Company Stock withrespect to which voting instructions are not received from Participants shallnot be voted, and all Company Stock which is not then allocated toParticipants’ Company Stock Accounts shall be voted in the manner determined bythe Trustee.

 

8.1

----

 

**SECTION 9****.  DISCLOSURE TO PARTICIPANTS**

 

(a)                                  ***SummaryPlan Description***.Each Participant shall be furnished with the summary plan description requiredby Sections 102(a)(1) and 104(b)(1) of ERISA. Such summary plan descriptionshall be updated from time to time as required under ERISA and Department ofLabor regulations thereunder.

 

(b)                                 ***SummaryAnnual Report***.Within the time required after each Anniversary Date, each Participant shall befurnished with the summary annual report of the Plan required by Section104(b)(3) of ERISA, in the form required by regulations of the Department ofLabor.

 

(c)                                  ***Statements***. Each Participant shall be furnished with anannual statement (or more frequently at the Board’s discretion) reflecting thefollowing information:

 

(1)           The balance (if any) in his Accounts as of the beginningof the last statement.

 

(2)           The amounts of Employer Contributions, Salary ReductionContributions, and Forfeitures allocated to his Accounts for the ValuationPeriod.

 

(3)           The adjustments to his Accounts to reflect his share ofdividends (if any) on Company Stock and the net income (or loss) of the Trustfor the Valuation Period.

 

(4)           The new balance in his Accounts, including the number ofshares of Company Stock allocated to his Company Stock Account and the fairmarket value of Company Stock as of the Valuation Date.

 

(5)           His vested percentage in his Account balances (underSections 12 and 13) as of the Valuation Date.

 

(d)                                 ***AdditionalDisclosure***. TheCommittee shall make available for examination by any Participant copies of thePlan, the Trust Agreement and the latest annual report of the Plan filed (onForm 5500) with the Internal Revenue Service. Upon written request of anyParticipant, the Committee shall furnish copies of such documents and may makea reasonable charge to cover the cost of furnishing such copies, as provided inregulations of the Department of Labor.

 

9.1

----

 

**SECTION 10**.  **CAPITAL ACCUMULATION**

 

AParticipant’s vested (nonforfeitable) interest under the Plan is called hisCapital Accumulation. His Capital Accumulation shall be determined inaccordance with the provisions of Sections 11 and 12. Each Participant’sCapital Accumulation will be distributed as provided in Sections 14 and 15.

 

10.1

----

 

**SECTION 11****. RETIREMENT, DISABILITY, OR DEATH**

 

Upona Participant’s retirement, disability or death, his Capital Accumulation willbe the total of his Account balances (100% vested). The Participant will sharein the allocation of Employer Contributions and Forfeitures for the Plan Yearin which his Service terminates by retirement, disability, or death.

 

AParticipant will be treated as having retired under the Plan if his Serviceends by any of the following:

 

(a)           ***Normal Retirement***

A Participant’s right to hisor her normal retirement benefit will be nonforfeitable on attainment of normalretirement age as an Employee; that is, the earlier of Normal Retirement Ageunder the Plan; or the later of age 65 or the fifth anniversary of the time theParticipant commenced participation in the Plan.

 

(b)           ***Early Retirement Date***

A Participant may electearly retirement under the Plan at any time after he has attained agefifty-five (55) and completed at least five (5) years of Service with theEmployer.

 

(c)           ***Deferred Retirement***

In the event a Participant’sService continues beyond his Normal Retirement Age, he shall continue toparticipate in the Plan.

 

(d)           ***Disability Retirement***

If the Committee determinesthat a Participant has suffered a disability (while employed by the Company oran Affiliated Company) of a type that entitles him to receive total disabilitybenefits under Social Security, he will be granted disability retirement underthe Plan without regard to his age or period of Service.

 

11.1

----

 

**SECTION 12****. OTHER TERMINATION OF SERVICE, BREAK IN SERVICE, VESTING  ANDFORFEITURES**

 

(a)                                  If a Participant’s Service terminates for anyreason other than his retirement, disability or death, his Capital Accumulationattributable to his Employer Discretionary Optional Contribution Account,Profit Sharing Account and Employer Discretionary Matching Contributions willbe determined on the basis of his nonforfeitable interest, in accordance withthe following vesting schedule:

 
| **Credited  Service   Under Section 13** |   | **Nonforfeitable    Percentage** |   |
|------------------------------------------|--------|----------------------------------|--------|
|                                     |   |
| Less  than One Year                      |   | 0                                | %      |
| One  Year                                |   | 20                               | %      |
| Two  Years                               |   | 40                               | %      |
| Three  Years                             |   | 60                               | %      |
| Four  Years                              |   | 80                               | %      |
| Five  Years                              |   | 100                              | %      |

 

A Participant is 100% vestedat all times in his Account due to Employer Discretionary Basic Contributions,Qualified Employer Discretionary Matching Contributions, Employee SalaryReduction Contributions and Rollover Contributions.

 

(b)                                 ***Forfeitures***. Any portion of the final balances in aParticipant’s Accounts which is not vested (and does not become part of hisCapital Accumulation) will become a Forfeiture as of the Anniversary Date inthe Plan Year in which the Participant has received or is deemed to havereceived a distribution of his nonforfeitable interest in his Account balances.For periods prior to the date of execution hereof, no Forfeiture will occurprior to the date the individual incurs a Break in Service. If the Participanthas not received a distribution of his vested Account balances, then theportion of his Account balance which is not vested shall be forfeited only uponthe occurrence of a five consecutive year Break in Service. Forfeitures shallfirst be charged against a Participant’s Other Investments Account with anybalance charged against his Company Stock Account at the then fair market valueof Company Stock. Financed Shares shall be forfeited only after other shares ofCompany Stock have been forfeited. Forfeitures will be reallocated among theParticipants, as provided in Section 6(f), as of the Anniversary Date of thePlan Year in which a Forfeiture occurs. A Break in Service will  occuronly in a Plan Year for which a Participant is not credited with more than 500hours of Service. If more than one class of qualifying Employer securitiessubject to exempt loan provisions have been allocated to a Participant’sAccount the Plan must forfeit the same proportion of each such class.

 

12.1

----

 

(c)                                  ***Restorationof Forfeited Accounts***  If a Participant who has incurred aforfeiture is reemployed prior to the occurrence of a five-consecutive-yearBreak in Service, the portion of his Accounts (attributable to the prior periodof Service) that was forfeited shall be restored as if there had been noForfeiture, provided the Participant does not thereafter incur a fifthconsecutive Break in Service and repays any amounts previously distributedwithin five (5) years of the date of re-employment. Such restoration shall bemade out of Forfeitures in the Plan Year of reemployment (prior to allocationsunder Section 6(f)). To the extent such Forfeitures are not sufficient, theCompany shall make a special contribution to the Participant’s restoredAccounts. Any amount so restored to a Participant shall not constitute anAnnual Addition under Section 6(g). If more than one class of qualifyingEmployer Securities subject to exempt loan provisions have been allocated to aParticipant’s Account, the Plan must forfeit the same proportion of each suchclass. The loan for Employer Securities must primarily be for the benefit ofthe Plan Participants and Beneficiaries of the Plan.

 

(d)                                 ***SubsequentVesting***. If aParticipant receives a distribution of his Capital Accumulation and isre-employed prior to the occurrence of five consecutive one year Breaks inService, his Capital Accumulation (“X”) shall be determined prior to the datehe becomes fully vested in accordance with the following formula:

 

**X= P(AB+D) -D**

 

For purposes of applyingthis formula, P is the vested  percentage at the time of  the laterdetermination, AB is the total account balance at that time, and D is theamount previously distributed as a Capital Accumulation.

 

(e)                                  ***Change ofControl***.  Upona Change in Control a Participant will be 100% vested in his Company StockAccount and Other Investments Account.

 

12.2

----

 

**SECTION 13****.  CREDITED SERVICE**

 

(a)                                  ***GeneralRule***. For purposesof vesting, an Employee’s Credited Service includes the total number of PlanYears after 1979 in which he is credited with at least 1,000 Hours of Servicewith the Employer as determined pursuant to Section 3. Credited Service shallinclude such Service with the Company or any Affiliated Company. For purposesof vesting, service with an Employer includes service with Employers who aremembers of a controlled group of corporations within the meaning of CodeSection 1563(a)a without regard to Subsections (a)(4) and (e)(3)(C), andregardless of whether such members are adopting Employers of the Plan. In anycase in which the Employer maintains a plan of a predecessor employer, servicefor such predecessor shall be treated as service for the Employer. In any casein which the Employer maintains a plan which is not the plan maintained by apredecessor employer, service for such predecessor shall, to the extentprovided in regulations prescribed by the Secretary, be treated as service forthe Employer. Service of any Employee who is a Leased Employee to any Employeraggregated under Section 414(b), (c), or (m) must be credited for vestingpurposes whether or not such individual is eligible to participate in the Plan.

 

(b)                                 ***Reemployment***. If a former Participant is reemployed afterthe occurrence of a Break in Service, the following special rules shall applyin determining his Credited Service:

 

(1)           New Accounts will be established to reflect his interestin the Plan attributable to his Service after the Break in Service.

 

(2)           If he is reemployed after the occurrence of a fiveconsecutive year Break in Service, or if  Credited Service after the Breakin Service will not increase his vested interest in his Accounts attributableto Service prior to the Break in Service.

 

(3)           After he completes one (1) Plan Year of Credited Servicefollowing his reemployment, subject to the foregoing his Credited Service withrespect to his new Accounts will include his Credited Service accumulated priorto the Break in Service.

 

(4)           In the case of a Participant who is reemployed who has notattained a vested interest under this Plan, Service prior to the Break inService shall not be included in determining his Credited Service provided thenumber of consecutive one-year Breaks in Service equals or exceeds the greaterof five (5), or the aggregate number of years of Credited Service before suchconsecutive Breaks in Service.

 

13.1

----

 

**SECTION 14****  WHEN CAPITAL ACCUMULATION WILL BE DISTRIBUTED**

(a)***In General***.A Participant’s Capital Accumulation will be computed following the terminationof his Service, and will be available for distribution as soon as isadministratively practicable thereafter. In no event however, shall distributionin such case be delayed later than one year after the close of the Plan Year inwhich the Participant retires, is disabled or dies without the consent of theParticipant. Under certain circumstances described in Section 14(d), theCommittee may delay the timing of a distribution to the Participant because thePlan lacks sufficient cash liquidity to convert a Participant’s Stock Accountto cash. However, in no event shall distribution of the Other InvestmentsAccount of a Participant terminating for reasons other than retirementsdisability, or death be delayed later than the Anniversary Date of the PlanYear following the year of termination.

 

Inno event however (with the exception of Financed Shares described in thesucceeding sentence), shall distribution be deferred more than one year afterthe close of the fifth Plan Year following the Participant’s termination ofService (unless the Participant has been reemployed by the Company at the endof the fifth Plan Year following the termination of Service or the Participanthas chosen to delay the distribution of his Capital Accumulation beyond thisdate). In the event any portion of the Participant’s Account consists ofCompany Stock attributable to a loan made to the Plan (pursuant to Section 5 ofthe Plan) which has not been fully repaid if the Plan lacks sufficient cashliquidity as described in Section 14(d), the above timing as to distributionsmay be delayed until the earlier of the Plan Year in which sufficient cashliquidity is available or the Plan Year following the year in which the loan isfully repaid. Once entitled to distribution, the Participant will receive adistribution: of the Participant’s Capital Accumulation in a single sumdistribution. Provided, however, that for distributions made prior to April 1,2002, a Participant may also elect to receive (1) Distribution of theParticipant’s Capital Accumulation in substantially equal annual installmentsover a period not exceeding five (5) years (provided that such period does notexceed the life expectancy of the Participant); or  (2) Any combination ofa single sum distribution and installment payments described in (1).

 

AParticipant’s consent is required for distributions under Code Section411(a)(11) while such distributions are immediately distributable, The failureto consent to a distribution by a Participant constitutes an election to defer.The restrictions described therein are applicable to any distribution includingone under Code Section 409(o).

 

Notwithstandingany provision of the Plan to the contrary that would otherwise limit aDistributee’s election under Code Section 401(a)(31), a Distributee may electat the time and in the manner prescribed by the Plan Administrator, to have anyportion of an Eligible Rollover Distribution paid directly to an EligibleRetirement Plan specified by the Distributee in a Direct Rollover.Notwithstanding any provision of the Plan to the contrary that would otherwiselimit a Distributee’s election under Code Section 401(a)(31), a Distributee mayelect at the time and in the manner prescribed by the Plan administrator, tohave any portion of an Eligible Rollover Distribution paid directly to anEligible Retirement Plan specified by the Distributee in a Direct Rollover.

 

Furtherprovided, that on and after the effective date of the automatic direct rolloverprovisions of Code Section 401(a)(31)(B), distributions of  $1,000 or moreshall comply with those provisions.

 

Notwithstandingthe foregoing, if the fair market value of a Participants Account attributableto Company Stock is in excess of $500,000 as of the date distribution is tobegin, the five–year maximum distribution period shall be extended by oneadditional year (up to an additional five years) for each $100,000 increment,or fraction of such increment by which the value of the Participants’ Accountexceeds $500,000. The $500,000 and $100,000 dollar amount shall be subject toadjustment in accordance with Section 409(o)(2) of the Code.

 

(b)  ***Required Distributions***. Unless theParticipant otherwise elects, distribution of a Participant’s CapitalAccumulation shall commence not later than sixty (60) days after theAnniversary Date coinciding with or next following his Normal Retirement Age(or his termination of Service, if later). The distribution of the CapitalAccumulation of any Participant who is not a 5–percent owner of the Companymust commence not later than April 1 of the calendar year following the laterof the calendar year in which he attains age 70 1 /2 or has terminated service, regardless of any consent requirements pursuant to Section 15(c) of the Plan. Anon-5% owner may elect by such April 1 to delay distribution until a latertermination of service, but in the absence of an election to the contrarydistributions will begin by such April 1 If the Participant owns, directly orindirectly, more than 5–percent 

 

14.1

----

 

of the outstanding stock ofthe Company or stock possessing more than 5-percent of the total combinedvoting power of all stock of the Company, the distribution of the CapitalAccumulation of such Participant with respect to the calendar year in which heattains age 70 1/2 must commence not later than April 1 of the next calendaryear (even if he has not terminated Service and regardless of any consentrequirements pursuant to Section 15(c) of the Plan). Distributions from thePlan will be made in accordance with the requirements of the Regulations underSection 401(a)(9), including the minimum distribution incidental benefitrequirements of Section 1.401(a)(9)-2 of the proposed Regulations. With respectto distributions under the Plan made in calendar years beginning on or afterJanuary 1, 2001, the Plan will apply the minimum distribution requirements ofsection 401(a)(9) of the Internal Revenue Code in accordance with regulationsunder section 401(a)(9) that were proposed in January, 2001, notwithstandingany provision of the Plan to the contrary.  This amendment shall continuein effect until the end of the last calendar year beginning before theeffective date of final regulations under section 401(a)(9) or such other datespecified in guidance published by the Internal Revenue Service.

 

(c)  ***Post-Separation Accounts***. If any part ofa Participant’s Capital Accumulation is retained in the Trust after his Serviceor participation ends, his Accounts will continue to be treated as provided inSection 6. However, such Accounts will not be credited with any additionalEmployer Contributions or Forfeitures.

 

(d)  ***Necessary Delays***. In accordance withSection 15 of the Plan, if Company Stock is not readily tradable on anestablished market, the Participant must be given the right to demanddistribution of his Capital Accumulation entirely in cash, Company Stock, orsome combination of the two. In such case, the Trustees will strive to createsufficient cash reserves in the Plan to permit a terminating Participant toconvert the portion of his Capital Accumulation consisting of Company Stock tocash. However, should Plan cash reserves not permit conversion of Company Stockto cash, the Committee may delay distribution of a Participant’s CapitalAccumulation, within the limits described in Section 14(a), until the date suchPlan cash reserves can be reasonably generated through either additionalEmployer contributions to the Plan or a restructuring of existing Plan assets.

 

(e)  ***Unclaimed Accounts***. The Plan does notrequire either the Trustee or the Plan Administrator to search for, orascertain the whereabouts of, any Participant or Beneficiary.  At the timethe Participant’s or Beneficiary’s benefit becomes distributable, the PlanAdministrator, by certified or registered mail addressed to his last knownaddress of record with the Plan Administrator or the Employer, must notify any Participant,or Beneficiary, that he is entitled to a distribution under this Plan.  Ifthe Participant, or Beneficiary, fails to claim his distributive share or makehis whereabouts known in writing to the Plan Administrator within 6 months fromthe date of mailing of the notice, the Plan Administrator will treat theParticipant’s or Beneficiary’s unclaimed payable Account as forfeited and willreallocate the unclaimed payable Account in accordance with the Plan’sforfeiture provisions.  Where the benefit is distributable to theParticipant, the forfeiture under this paragraph occurs as of the last day ofthe notice period, if the Participant’s nonforfeitable Account does not exceed$5,000 (excluding the value of any rollover contributions and earnings thereonfor distributions made after 2001) ($3,500 prior to 1998), or as of the firstday the benefit is distributable without the Participant’s consent, if thepresent value of the participant’s nonforfeitable Account exceeds $5,000(excluding the value of any rollover contributions and earnings thereon fordistributions made after 2001) ($3,500 prior to 1998).  Where the benefitis distributable to a Beneficiary, the forfeiture occurs on the date the noticeperiod ends except, if the Beneficiary is the Participant’s spouse and theNonforfeitable Account payable to the spouse exceeds $5,000 (excluding thevalue of any rollover contributions and earnings thereon for distributions madeafter 2001) ($3,500 prior to 1998), the forfeiture occurs as of the first day thebenefit is distributable without the spouse’s consent.  Pendingforfeiture, the Plan Administrator, following the expiration of the noticeperiod, may direct the Trustee to segregate the nonforfeitable Account in asegregated Account and to invest that segregated Account in Federally insuredinterest bearing savings accounts or time deposits (or in a combination ofboth), or in other fixed income investments. If a Participant or Beneficiarywho has incurred such a forfeiture of his Account under the provisions of thisparagraph makes a claim, at any time, for his forfeited Account, the PlanAdministrator must restore the Participant’s or Beneficiary’s forfeited Accountto the same dollar amount as the dollar amount of the Account forfeited,unadjusted for any gains or losses occurring subsequent to the date of theforfeiture.  The Plan Administrator will make the restoration during thePlan Year in which the Participant or Beneficiary makes the claim, first fromthe amount, if any, of Participant forfeitures the Plan Administrator otherwisewould allocate for the Plan Year, then from the amount, if any, of the TrustFund net income or gain for the Plan Year and then from the amount, oradditional amount, the Employer contributes to 

 

14.2

----

 

enable the PlanAdministrator to make the required restoration.  The Plan Administrator will direct the Trustee to distribute theParticipant’s or Beneficiary’s restored Account to him not later than 60 daysafter the close of the Plan Year in which the Plan Administrator restores theforfeited Account.  The forfeiture provisions of this Section apply solelyto the Participant’s or to the Beneficiary’s Account derived from Employercontributions.

 

(f)  ***Small Capital Accumulations***.  Notwithstanding the other distributionprovisions of the Plan, if the Capital Accumulation of a terminatedParticipant’s Account does not exceed $5,000 (excluding the value of anyrollover contributions and earnings thereon for distributions made after 2001)($3,500 prior to 1998), the Capital Accumulation will be distributed in asingle sum as soon as is administratively practicable after a termination ofemployment. In the case of a terminated Participant who has no CapitalAccumulation, his Capital Accumulation will be deemed to have been distributedupon termination of employment.

 

(g)  Unless otherwise elected by the Participant,distribution of a Participant’s Capital Accumulation shall commence not laterthan sixty (60) days after the Anniversary Date coinciding with or nextfollowing his Normal Retirement Age (or his termination of Service, if later).The distribution of the Capital Accumulation of any Participant who is not a5-percent owner of the Company must commence not later than April 1 of the nextPlan Year following the later of the Plan Year in which he attains age 70 1 /2and has terminated service, regardless of any consent requirements pursuant toSection 15(c) of the Plan. If the Participant owns, directly or indirectly,more than 5 percent of the outstanding stock of the Company or stock possessingmore than 5 percent of the total combined voting power of all stock of theCompany, the distribution of the Capital Accumulation of such Participant withrespect to the Plan Year in which he attains age 70 1/2 must commence not laterthan April 1 of the next Plan Year (even if he has not terminated Service andregardless of any consent requirements pursuant to Section 15(c) of the Plan.Distributions from the Plan will be made in accordance with the requirements ofthe Regulations under Section 401(a)(9), including the minimum distributionincidental benefit requirements of Section 1.401(a)(9)-2 of the proposedRegulations. With respect to distributions under the Plan made in calendar yearsbeginning on or after January 1, 2001, the Plan will apply the minimumdistribution requirements of section 401(a)(9) of the Internal Revenue Code inaccordance with regulations under section 401(a)(9) that were proposed inJanuary, 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar yearbeginning before the effective date of final regulations under section401(a)(9) or such other date specified in guidance published by the InternalRevenue Service.

 

(h)  If any part of a Participant’s CapitalAccumulation is retained in the Trust after his Service or participation ends,his Accounts will continue to be treated as provided in Section 6. However,such Accounts will not be credited with any additional Employer Contributionsor Forfeitures.

 

(i)  In accordance with Section 15 of the Plan,if Company Stock is not readily tradable on an established market, theParticipant must be given the right to demand distribution of his CapitalAccumulation entirely in cash, Company Stock, or some combination of the two.In such case, the Trustees will strive to create sufficient cash reserves inthe Plan to permit a terminating Participant to convert the portion of hisCapital Accumulation consisting of Company Stock to cash. However, should Plancash reserves not permit conversion of Company Stock to cash, the Committee maydelay distribution of a Participant’s Capital Accumulation, within the limitsdescribed in Section 14(a), until the date such Plan cash reserves can bereasonably generated through either additional Employer contributions to thePlan or a restructuring of existing Plan assets.

 

14.3

----

 

**SECTION 15****.   HOW CAPITAL ACCUMULATION WILL BE DISTRIBUTED**

 

(a)                             Except as noted in paragraph (d) of thissection, distribution of a Participant’s Capital Accumulation will be made inwhole shares of Company Stock, cash or a combination of both, as determined bythe Committee; provided, however, that the Committee shall notify theParticipant of his right to demand distribution of his Capital Accumulationentirely in cash or entirely in whole shares of Company Stock (with the valueof any fractional share paid in cash); provided, however, that theParticipant’s request shall not be granted if the distribution of Stock wouldresult in the number of shareholders in excess of the number that a corporationmay then have and continue to qualify as an “S corporation” under Code Section1361. If Company Stock is readily tradable on an established market, aParticipant need not be given the right to demand distribution in cash. In theevent a distribution is to be made in shares of Company Stock, any balance in aParticipant’s Other Investments Account will be applied to provide whole sharesof Company Stock for distribution, at the then fair market value. If securitiesacquired with the proceeds of an exempt loan are available for distribution andconsist of more than one class of Company Stock, a Participant must receivesubstantially the same proportion of each such class of Company Stock.

 

(b)                            The Trustee will make distributions from theTrust only upon the direction of the Committee. Distribution will be made tothe Participant if living, and if not, to his Beneficiary. Upon the death of aParticipant, the Participant’s Beneficiary shall be his surviving spouse, or ifnone, his estate. A Participant (with the consent of his spouse, if any) maydesignate a different Beneficiary (and contingent Beneficiaries) and alternateform of distribution of his Capital Accumulation from time to time (and maychange such designation of Beneficiary or form of distribution at any time)with the consent of his spouse (unless the original consent permits subsequent choiceof Beneficiary or form of distribution without further spousal consent) byfiling a written designation with the Committee. The consent for a designationof a Beneficiary (or change in designation of Beneficiary and form ofdistribution) must be in writing, must acknowledge the effect of such election,and must be witnessed by a Plan representative or a notary public. A deceasedParticipant’s entire Capital Accumulation shall be distributed to hisBeneficiary within five (5) years after his death, except to the extent thatdistribution has previously commenced by the end of the year following the yearof death, in accordance with Section 14(a).

 

(c)                             The Company shall furnish the recipient of adistribution with the tax consequences explanation required by Section 402(f)of the Code and shall comply with the applicable withholding requirements ofSection 3405 of the Code with respect to distributions from the Trust (otherthan any dividend distributions under Section 17(b)). If a Participant’sAccumulation has at the time of any distribution or any prior distributionexceeded $5,000 (excluding the value of any rollover contributions and earningsthereon for distributions made after 2001) ($3,500 prior to 1998), no portionof this Accumulation shall be distributed to him without his consent, or if theParticipant has died, the consent of the surviving Participant’s Beneficiaryprior to the later of age 62 or normal retirement age. Regardless of the valueof a Participant’s Capital Accumulation, no distribution may be made under thepreceding sentence after the Annuity Starting Date unless the Participant andthe spouse of the Participant (or where the Participant has died, the survivingspouse) consents in writing to such distribution in accordance with Section 417of the Code and the Regulations thereunder.

 

(d)                            For any Plan Year after December 31, 1997, inwhich the Company has in effect an election under code Section 1362(a) to betreated as a Subchapter S small business corporation, distribution of a Participant’sCapital Accumulation will be made in whole shares of Company Stock, cash or acombination of both, as determined by the Committee; provided, however, thatthe Committee may elect to distribute the entire Participant’s CapitalAccumulation in cash pursuant to Code Section 409(h)(2), as amended, and theParticipant shall not have the right to demand distribution of his CapitalAccumulation in whole shares of Company Stock.

 

15.1

----

 

**SECTION 16**.   **RIGHTS,OPTIONS AND RESTRICTIONS ON BANK STOCK**

 

(a)                             Shares of Company Stock distributed by theTrust shall be subject to a “right of first refusal” if the Company Stock isnot publicly traded at the time the right may be exercised. The right of firstrefusal shall not be applicable if Company Stock is publicly traded at the timethe right may otherwise be exercised. For this purpose, “publicly traded”refers to shares of Company Stock which are listed on a national securitiesexchange or which are quoted on a system sponsored by a national securitiesassociation. If the Company Stock is subject to a right of first refusal, theright shall provide that, prior to any subsequent transfer of such shares, theshares must first be offered for purchase in writing to the Company, and thento the Trust, at the greater of their then fair market value or a bona fidethird party offer. A bona fide written offer from an independent prospectivebuyer shall be deemed to be the fair market value of such Company Stock forthis purpose. The Company and the Trustee shall have a total of fourteen (14)days to exercise the right of first refusal on the same terms offered by aprospective buyer. The Company or the Trustee may require that a Participantentitled to a distribution of Company Stock execute an appropriate stocktransfer agreement (evidencing the right of first refusal) prior to receiving adistribution of Company Stock.

 

(b)                            In accordance with Section 409(h) of the Codeand the regulations thereunder, the Company shall not be required to issue a“put option” to any Participant who receives a distribution of Company Stock ifthe Company Stock is readily tradable on any established market or if theCompany is not allowed by law to purchase its own stock. If the Company is permittedby law to purchase its own stock and the Company’s stock is not readilytradable on an established market, the Company shall issue a “put option” toany Participant who receives a distribution of Company Stock. The put optionshall permit the Participant to sell such Company Stock to the Company at anytime during two option periods, at the fair market value of such shares. Thefirst put option period shall be for at least sixty (60) days beginning on thedate of distribution. The second put option period shall be for at least sixty(60) days beginning after the new determination of the fair market value ofCompany Stock by the Trustee (and notice to the Participant) in the followingPlan Year. The Company may allow the Trustee to purchase shares of CompanyStock tendered to the Company under a put option. In the event neither theTrustee nor the Company wishes to purchase such shares, then the Participanthas the right to demand distribution in cash. If the distribution to theParticipant constituted a total distribution within the meaning of Code Section409(h)(5), payment of the fair market value of a Participants’ Accountconsisting of Company Stock may be made in five substantially equal annualpayments. The first installment shall be paid not later than 30 days after theParticipant exercises the put option. The Plan will pay a reasonable rate ofinterest (as determined by the Company or the Trustees) and will provideadequate security on amounts not paid after 30 days. If the distribution to theParticipant did not constitute a total distribution within the meaning of CodeSection 409(h)(5), the Participant shall be paid an amount equal to the fairmarket value of the Company Stock repurchased no later than 30 days after theParticipant exercises the put option.

 

(c)                             The Company or the Trustee may at any timeoffer to purchase any shares of Company Stock (including, if a put option isissued, those shares not sold under the put option described in Section 16(b))which are held by former Participants (or Beneficiaries), at the then fairmarket value. The terms of payment for any such purchase of Company Stock maybe either in a lump sum or in installments over a period not exceeding ten (10)years, with interest payable at a reasonable rate on any unpaid installmentbalance (as determined by the Trustee).

 

(d)                            Shares of Company Stock held or distributedby the Trustee may include such legend restrictions on transferability as theCompany may reasonably require in order to assure compliance with applicablefederal and state securities and banking laws. Except as otherwise provided inthis 

 

16.1

----

 

Section 16, no shares ofCompany Stock held or distributed by the Trustee may be subject to a put, callor other option, or buy-sell or similar arrangement. Furthermore, except asotherwise provided in this Section 16, the Trustee may not obligate the Plan orTrust to acquire securities from a particular security holder at an indefinitetime determined upon the happening of an event. The provisions of this Section16 shall continue to be applicable to Company Stock even if the Plan ceases tobe an employee stock ownership plan under Section 4975(e)(7) of the Code. Therights and protections required under Reg. Section 54.4975-(b)(4), relating toput, call or other options and to buy-sell or similar arrangements and Reg.Section 54.4975-(b)(10), (11) & (12), relating to put options arenonterminable, even if the loan is repaid or the Plan ceases to be a KSOP.

 

(e)                                  Shares of Company Stock distributed to aParticipant from the Plan shall be subject to the terms of the shareholdersagreement attached hereto as Appendix A.

 

16.2

----

 

**SECTION 17**.       **NO ASSIGNMENT OF BENEFITS, DIVIDENDS, HARDSHIP ANDOPTIONAL DISTRIBUTIONS**

 

(a)                                  **Nonalienation**. Prior to a Participant receiving distribution of his CapitalAccumulation, such Participant’s Capital Accumulation may not be anticipated,assigned (either at law or in equity), alienated or subject to attachment,garnishment, levy, execution or other legal or equitable process, except inaccordance with a “qualified domestic relations order” (as defined in Section414(p) of the Code) or a federal tax lien, to the extent required by applicablelaw.

 

(b)                                 **Dividends on Allocated Stock**. Any cash dividends on Company Stockallocated to the Accounts of Participants may be paid currently (or withinninety (90) days after the end of the Plan Year in which the dividends are paidto the Trust) in cash to such Participants on a nondiscriminatory basis, asdetermined by the Committee. Such distribution (if any) of cash dividends toParticipants may be limited to dividends on shares of Company Stock which arethen vested or may be applicable to dividends on all shares allocated toCompany Stock Accounts.

 

(c)                                  **Dividends Used to Repay Loanto Plan**. To the extentpermitted by applicable law, any cash dividends on allocated and/or unallocatedCompany Stock (and any distributions by a Subchapter S corporation based on itsstock) may be used to repay a loan to the Plan which meets the requirements ofCode Section 4975 and the Regulations thereunder.

 

(d)                                 **Trustee Discretion as toDividends**. The decisionas to whether cash dividends on Company Stock will be distributed toParticipants, used to repay a loan to the ESOP, or held in the Trust shall bemade in the sole discretion of the Trustee, and the Trustee may request theCompany to pay such dividends directly to Participants.

 

(e)                                  **Hardship Distributions**. Upon prior written notice but not more thanonce in any two-year period, a Participant under age 59 1⁄2 may be permitted tomake a withdrawal from his Other Investment Account or Salary Reduction Accountin accordance with the rules listed below:

 

(1)           An application for approval shall be made in writing on aform provided for such purposes by the Committee, and

 

(2)           Withdrawals shall be subject to the following conditions:

 

(i)                                                             Withdrawals shall be approved only on accountof an immediate and heavy financial hardship and shall be approved only up tothe amount that is necessary to satisfy such financial hardship. Thedetermination of the existence of an immediate and heavy financial hardship andof the amount necessary to meet such need is to be made in a nondiscriminatoryand objective manner on the basis of all relevant facts and circumstances. Thedetermination of the Committee as to justification of the withdrawal and theamount thereof shall be final.

 

(ii)                                                          A distribution will generally be treated asnecessary to satisfy a financial hardship if the Committee reasonably reliesupon the Participants’ representation that the need cannot be relieved:

 

17.1

----

 

(A)  through reimbursement or compensation byinsurance or otherwise, or

(B)  by reasonable liquidation of theParticipant’s assets (or those of his spouse), to the extent such liquidationwould not itself cause an immediate and heavy financial hardship, or

(C)  by cessation of Salary ReductionContributions under the Plan, or

(D)  by other distributions or nontaxable (at thetime of the loan) loans from any tax-qualified employee benefit plansmaintained by the Employer or any other employer of the Participant, or byborrowing from commercial sources on reasonable commercial terms.

 

(iii)                                                             For the purpose of this Section, the term“financial hardship” shall mean the financial inability to the Participant toprovide the necessary funds:

 

(A)  to meet the extraordinary medical expenses(described in Code Section 213(d)) incurred by the Participant, theParticipant’s spouse, or any dependents of the Participant (as defined in CodeSection 152), or

 

(B)  to provide payment of tuition and relatededucational fees for the next twelve (12) months of post-secondary educationfor the Participant, his or her spouse, children or dependents, or

 

(C)  to provide funds for the purchase (excludingmortgage payments) of a principal residence for the Participant or to providefunds to prevent the eviction of the Participant from his principal residenceor foreclosure on the mortgage of the Participant’s principal residence.

 

(vi)                                                      Withdrawals shall be in an amount of not lessthan five hundred dollars ($500) and shall not exceed one hundred percent(100%) of the portion of the Participant’s Salary Reduction Contribution whichis not invested in Company Stock.

 

(v)                                                         Withdrawals shall be made in cash.

 

(vi)                                                      Withdrawals are limited to the portion of theSalary Reduction Account which reflects Salary Deferrals thereto. Investmentexperience credited to the Account is not eligible for withdrawal under thisparagraph.

 

However,(i) in the case of a hardship withdrawal made before 2002, a Participant shallcease Salary Deferrals for a one year period after receipt of a hardshipdistribution, and (ii) in the case of a hardship withdrawal made after 2001, aParticipant shall cease Salary Deferrals for a six (6) month period afterreceipt of a hardship distribution..

 

(f)                                    ***In-ServiceDistributions After 59 1⁄2.***A Participant may elect to receive a distribution of all or any portionof his vested Account upon attainment of age fifty-nine and one-half (59 1/2)by providing written notification to the Administrative Committee.

 

17.2

----

 

**SECTION 18**.  **ADMINISTRATION**

 

ThePlan will be administered by a Board of Trustees (the “Trustee”) andAdministrative Committee (the “Committee”), each composed of individualsappointed by the Board of Directors to serve at its pleasure. The Trustee shallbe the named fiduciary with authority and responsibility for the management andinvestment of the Trust Assets. The Committee members shall be the namedfiduciaries with authority to control and manage all other aspects of theadministration of the Plan. Any Committee member may also serve as a Trustee ofthe Plan if so designated by the Board of Directors.

 

Committeeaction will be by vote of a majority of the members at a meeting or in writingwithout a meeting. Minutes of each meeting of the Committee shall be kept. TheCommittee shall make such rules, regulations, computations interpretations, anddecisions and shall maintain such records and accounts as may be necessary toadminister the Plan in a nondiscriminatory manner for the exclusive benefit ofthe Participants and their Beneficiaries, as required under the Code and ERISA.The Committee shall establish procedures to determine the qualified status ofdomestic relations orders and to administer distributions under such qualifiedorders (in accordance with Section 414(p) of the Code).

 

TheCommittee will give instructions to the Trustee with respect to matters whichrequire instructions, as provided in this Plan and the Trust Agreement. TheCommittee members may allocate their fiduciary responsibilities amongthemselves and may designate other persons (including the Trustee) to carry outits fiduciary responsibilities under the Plan. In the event that the Committeespecifically designates the Trustee to perform any of the Committees fiduciaryresponsibilities or if the Trustee is composed of the same individuals as theCommittee then any specific instructions otherwise required by the Plan orTrust Agreement from the Committee to the Trustee with respect to suchdesignated fiduciary responsibilities shall not be required.

 

TheTrustee shall be responsible for investing the Trust Assets under the Plan. TheTrustee shall establish a funding policy and method for acquiring Company Stockfor the Trust in a manner that is consistent with the objectives of the Planand the requirements of ERISA. If Company Stock is readily tradable on anestablished securities market, the fair market value of Company Stock shall bebased upon the offering price established by current bid and asked pricesquoted by persons independent of the Company, pursuant to Section 3(18)(A)(ii)of ERISA. In the absence of Company Stock trading on an established securitiesmarket, all valuations of Company Stock pursuant to activities carried on bythe Plan shall be made by an independent appraiser meeting requirements similarto those contained in Treasury Regulations under Section 170(a)(1) of the Code.In the case of a transaction between the Plan and a disqualified person valuemust be determined as of the date of the transaction. For all other purposesvalue must be determined as of the most recent valuation date under the Plan.An independent appraisal will not in itself be a good faith determination ofvalue in the case of a transaction between the Plan and a disqualified person.However, in other cases a determination of fair market value based on at leastan annual appraisal independently arrived at by a person who customarily makessuch appraisals and who is independent of any party to a transaction underSections 54.4975-7(b)(9) and (12) will be deemed to be a good faithdetermination of value.

 

TheTrustee and the Committee are empowered, on behalf of the Plan to employinvestment advisers accountants legal counsel and other agents to assist themin the performance of their duties under the Plan. The Company shall securefidelity bonding for the fiduciaries of the Plan as required by Section 412 ofERISA. All reasonable expenses of the Trustee and the Committee shall be paidas provided in Section 7. The Company shall indemnify each member of the Boardof Trustees and the Committee against any personal liability or expense, exceptsuch liability or expense as may result from his own willful misconduct.

 

TheCommittee shall be the Plan Administrator under Section 414(g) of the Code andunder Section 3(16)(A) of ERISA, except to the extent, if any, that the Companyelects to vest that authority in itself or another person(s). The Committeeshall be the designated agent of the Plan for the service of legal process. ThePlan Administrator shall have the sole and final power and authority toconstrue and interpret the Plan, including without limitation the power toconstrue any ambiguity and interpret any provision of the Plan, supply anyomission and reconcile any inconsistency in such manner as it deemsappropriate, to determine all questions relating to eligibility 

 

18.1

----

 

for the Plan and benefitsthereunder, to establish rules and procedures regarding the administration ofthe Plan, to adopt such reasonable accounting procedures  as it deemsnecessary or desirable, to receive and review reports, and to issue suchstatements and disclosures as may be required or appropriate. All decisions bythe Plan Administrator shall be final, binding and conclusive.

 

18.2

----

 

**SECTION 19****.**  **CLAIMS PROCEDURE**

 

AParticipant (or Beneficiary) who does not receive a distribution to which hebelieves he is entitled may present a claim to the Committee for any unpaidbenefits. All questions and claims regarding benefits under the Plan shall beacted upon by the Committee.

 

EachParticipant (or Beneficiary) who wishes to file a claim for benefits with theCommittee shall do so in writing, addressed to the Committee or to the Company.If the claim for benefits is wholly or partially denied, the Committee shallnotify the Participant (or Beneficiary) in writing of such denial of benefitswithin ninety (90) days after the Committee initially received the benefitclaim.

 

Anynotice of a denial of benefits shall advise the Participant (or Beneficiary)of:

 

(a)           the specific reason or reasons forthe denial;

 

(b)           the specific provisions of the Planon which the denial is based;

 

(c)                                  any additional material or informationnecessary for the Participant (or Beneficiary) to perfect his claim and anexplanation of why such material or information is necessary; and

 

(d)           the steps which the Participant (orBeneficiary) must take to have his claim for benefits reviewed.

 

EachParticipant (or Beneficiary) whose claim for benefits is denied shall have theopportunity to file a written request for a full and fair review of his claimby the Committee, to review all documents pertinent to his claim and to submita written statement regarding issues relative to his claim. Such writtenrequest for review of his claim must be filed by the Participant (orBeneficiary) within sixty (60) days after receipt of written notification ofthe denial of his claim.

 

Thedecision of the Committee will be made within sixty (60) days after receipt ofa request for review and shall be communicated in writing to the claimant. Suchwritten notice shall set forth the specific reasons and specific Planprovisions on which the Committee based its decision.  If there arespecial circumstances (such as the need to hold a hearing) which require anextension of time for completing the review, the Committee’s decision shall berendered not more than one hundred twenty (120) days after receipt of a requestfor review.

 

Allnotices by the Committee denying a claim for benefits, and all decisions onrequest for a review of the denial of a claim for benefits, shall be written ina manner calculated to be understood by the Participant (or Beneficiary) filingthe claim or requesting the review.

 

19.1

----

 

**SECTION 20**.  **GUARANTIES**

 

AllCapital Accumulations will be paid only from the Trust Assets.  AnEmployer, the Trustee or the Committee shall not have any duty or liability tofurnish the Trust with any funds, securities, or other assets, except asexpressly provided in the Plan.

 

Theadoption and maintenance of the Plan shall not be deemed to constitute acontract of employment or otherwise between an Employer and any Employee, or tobe a consideration for, or an inducement or condition of, any employment. Nothing contained in this Plan shall be deemed to give an Employee the right tobe retained in the Service of an Employer or to interfere with the right of anEmployer to discharge, with or without cause, any Employee at any time.

 

20.1

----

 

**SECTION 21**.  **FUTURE OF THE PLAN**

 

Asfuture conditions cannot be foreseen, the Company reserves the right to amendor terminate the Plan (in whole or in part) and the Trust Agreement at anytime, by action of its Board of Directors. Neither amendment nor terminationshall retroactively reduce the vested rights of Participants or permit any partof the Trust Assets to be diverted to or used for any purpose other than forthe exclusive benefit of the Participants (and their Beneficiaries).

 

TheCompany specifically reserves the right to amend the Plan and the TrustAgreement retroactively in order to satisfy any applicable requirements of theCode and ERISA. The Plan may only be amended to eliminate or reduce benefits ofa Participant within the contemplation of Code Section 411(d)(6) if theamendment constitutes timely compliance with a change in law affecting planqualification the IRS gives Code Section 7805(b) relief, and the elimination orreduction is made only to the extent necessary to comply with the planqualification rules.

 

TheCompany further reserves the right to terminate the Plan in the event of adetermination by the Internal Revenue Service (after a timely Application forDetermination is filed by the Company) that the Plan initially fails to satisfythe requirements of Section 401 (a) and 4975(e)(7) of the Code. In that eventall Trust Assets shall (upon written direction of the Company) be returned tothe Company, and the Plan and the Trust shall terminate.

 

Ifthe Plan is terminated (or partially terminated) by the Company, participationof all Participants affected by the termination will end. The Accounts of allaffected employees within the contemplation of Code Section 411(d)(3) upon thetermination or partial termination will become nonforfeitable as of the date oftermination. A complete discontinuance of Employer contributions shall bedeemed to be a termination of the Plan for this purpose. After termination ofthe Plan, the Trust will be maintained until the Capital Accumulation of allParticipants have been distributed. Capital Accumulations will be distributedfollowing termination of the Plan in accordance with Section 14 of the Plan.

 

Inthe event of the merger or consolidation of this Plan with another Plan, or thetransfer of Trust Assets (or liabilities) to another Plan, the Account balancesof each Participant immediately after such merger, consolidation or transfermust be at least as great as immediately before such merger, consolidation ortransfer (as if the Plan had then terminated).

 

21.1

----

 

**SECTION 22****.  “TOP HEAVY” CONTINGENCY PROVISIONS**

 

(a)                                  The provisions of this Section 22 areincluded in the Plan pursuant to Section 401(a)(10)(B)(ii) of the Code andshall become applicable only if the Plan becomes a “top-heavy plan” underSection 416(g) of the Code for any Plan Year.

 

(b)                                 The determination as to whether the Planbecomes “top-heavy” for any Plan Year shall be made as of the Anniversary Dateof the immediately preceding Plan Year by considering the Account balances ofParticipants in (1) the Plan, (2) any other plan (such as a definedcontribution or defined benefit plan) of the Employer in which a Key Employeeparticipates (in the Plan Year containing the determination date or any of thepreceding four Plan Years, even if the plan was terminated), and (3) each otherplan which enables any plan in which a Key Employee participates during theperiod tested to meet the requirements of Code Section 401(a)(4) or 410(b). Allemployers aggregated under Code Section 414(b), (c), (m) or (o) are considereda single employer. The Plan (and any other defined contribution plan or anydefined benefit plan) shall be “top-heavy” only if the total of the Accountbalances under the Plan and any other defined contribution plan and the valueof accrued benefits under any defined benefit plan for Key Employees as of thedetermination date for that Plan Year exceeds sixty percent (60%) of the totalof the Account balances for all Participants. For such purpose, Accountbalances (including Participants’ Account balances under any other definedcontribution plan) and accrued benefit values shall be computed and adjustedpursuant to Section 416(g) of the Code. In determining Key Employees under thisSection 22(b), the term “annual compensation” in Section 416(i)(1)(A) of theCode shall mean Compensation (as defined in Section 2).

 

EmployerDiscretionary Matching Contributions allocated to Key Employees are treated asEmployer Contributions for purposes of determining the minimum contribution orbenefit under section 416. However, if the Plan uses contributions allocated toEmployees other than Key Employees on the basis of Employee Contributions orSalary Reduction Contributions to satisfy the minimum contribution requirement,these contributions are not treated as Employer Discretionary MatchingContributions for purposes of applying the requirements of sections 401(k) and401(m) for Plan Years beginning after December 31, 1988. Notwithstanding theforegoing or any other provision of the Plan, for Plan Year beginning after2001, to the maximum extent permitted under Code Section 416 the Plan may takeinto account any matching contributions in satisfying any top-heavy minimumcontribution requirements.

 

(c)                                  (c) For any Plan Year in which the Plan is “top-heavy,” each Participant whois an Employee on the Anniversary Date and is not a participant in a definedbenefit plan and who is a Non-Key Employee shall receive, regardless of hisHours of Service for that Plan Year, a minimum allocation of EmployerContributions and Forfeitures which is equal to the lesser of:

 

(1)           Three percent (3%) of his Compensation; or

 

(2)           The same percentage of his Compensation as the allocationto the Key Employee for whom the Percentage is the highest for that Plan Year.For purposes of this calculation, any salary reduction or other similararrangement of a Key Employee shall be included in determining the percentageallocation to a Key Employee.

 

(d)                                 If such Employee is also a Participant in anyother defined contribution plan, he shall receive only the minimum allocationin this Plan and shall not receive the minimum allocation provided in the otherdefined contribution plan.

 

22.1

----

 

(e)                                  For any Plan Year in which the Plan is“top-heavy,” each Participant who is an Employee on the Anniversary Date and isalso a participant in a defined benefit plan and who is a Non-Key Employeeshall receive only the defined benefit minimum provided in the defined benefitplan and shall not receive the minimum allocation provided in Section 22(c) ofthis Plan (or the minimum allocation in any other defined contribution plan).

 

(f)                                    For any Plan Year before 2000 in which thePlan is “top-heavy,” with respect to any Participant who is covered under adefined benefit plan, the “defined benefit plan fraction” and the “definedcontribution plan fraction” referred to in Section 6(g) shall be computed bysubstituting “1.0” in lieu of “1.25” in both denominators.

 

(g)                                 The Capital Accumulation of an Employee whohas not performed any Service for the Employer at any time during the five-yearperiod ending on the determination date is excluded from the calculation todetermine top-heaviness.

 

22.2

----

 

**SECTION 23**.  **DIVERSIFICATION**

 

(a)                                  ***In General***. Within 90 days after the last day of eachPlan Year during the Participants’ Qualified Election Period, any PlanParticipant who has attained age fifty-five (55) and has completed ten (10)years of Credited Service while a Participant (i.e., a “Qualified Participant”)shall have the right to make an election to direct the Plan as to theinvestment of twenty-five percent (25%) of the total number of shares ofemployer securities acquired by or that have been contributed to the Plan thathave ever been allocated to a qualified Participant’s account on or before themost recent plan allocation date; less the number of shares of employersecurities previously distributed, transferred or diversified pursuant to adiversification election. Within 90 days after the close of the last Plan Yearin the Participant’s Qualified Election Period a Qualified Participant maydirect the Plan as to the investment of fifty percent (50%) of the value ofsuch Account. The term Qualified Election Period shall mean the six (6) PlanYear period beginning with the Plan Year in which a Plan Participant firstbecomes a Qualified Participant.

 

(b)                                 ***Method ofDirecting Investment***.The Participant’s election to diversify his Account shall be provided to thePlan Administrator in writing within ninety (90) days after the close of a PlanYear within the Qualified Election Period, and shall be effective no later than1 80 days after the close of the Plan Year to which the election applies.

 

(c)                                  ***Distributionof  Account***.Upon a Qualified Participant’s election to direct the investment of a portionof the Participant’s Account, the Plan may distribute the portion of theAccount that is covered by the election within 90 days after the last day ofthe period during which the election can be made. Such distribution shall besubject to such requirements of the Plan concerning put options (Section 16)and such provisions under Section 15 as require the consent of the Participantand the Participant’s spouse (if any) to a distribution with a value in excessof $5,000 (excluding the value of any rollover contributions and earningsthereon for distributions made after 2001).

 

23.1

----

 

**SECTION 24****.  QUALIFIED MILITARY SERVICE**

 

Notwithstandingany other provision of the Plan to the contrary, effective December 12, 1994,the following provisions with respect to an Employee’s rights resulting fromqualified military service shall control where applicable.

 

(a)           ***Contributions***

 

Supplemental EmployeeContributions shall be allocated to the Accounts of each Employee on account ofhis or her qualified military service in accordance with Chapter 43, Title 38of the Code. If any contribution is made to the Plan by the Company or anEmployee with respect to such Employee which is required on account of suchEmployee’s qualified military service, then:

 

(1)           Such contribution shall not be subject to any otherwiseapplicable limitation contained in Code Sections 402(g), 404(a), or 415, andshall not be taken into account in applying any such limitations to othercontributions or benefits under the Plan with respect to the year in which suchcontribution is made. Rather, such contribution shall be subject to saidlimitations with respect to the year to which such contribution relates (inaccordance with rules prescribed by the Secretary).

 

(2)           The Plan shall not be treated as failing to meet therequirements of Code Sections 401(a)(4), 401(a)(26), 401(k)(3 ), 401(k)(11),401(k)(12), 401(m), 410(b), or 416, by reason of the making of (or the right tomake) such contribution.

 

(b)           ***Limitation on Applicability***

 

The provisions of thissection shall not require:

(1)                                  Any crediting of earnings to an Employee withrespect to any contribution before such contribution is actually made; or

(2)                                  Any allocation of any forfeiture with respectto the period of such Employee’s qualified military service

 

(c)           ***Definitions***

 

The following terms shallhave the meanings set out below for purposes of the application of thissection:

 

(1)           “Qualified Military Service” means any service in theuniformed services (as defined in Chapter 43 of Title 38, United States Code)by any individual if such individual is entitled to reemployment rights undersaid chapter with respect to such service.

 

(2)           “Compensation.” For purposes of Code Section 415(c)(3), anEmployee who is in qualified military service shall be treated as receivingcompensation from the Employer during such period of service equal to

 

(i)                                                     the compensation such Employee would havereceived during such period if he were not in qualified military service,determined based on the rate of pay he would have received from the Employerbut for his absence during such period, or

 

24.1

----

 

(ii)                                                  if the compensation he would have receivedfrom the Employer during such period is uncertain, his average compensationfrom the Employer during the 12-month period (or, if shorter, the period ofemployment) immediately preceding the period of qualified military service.

 

(d)           ***Special Provisions Regarding Elective Deferrals***

 

An Employee entitled tobenefits under Chapter 43 of Title 38, United States Code, with respect to thePlan may make additional elective deferrals hereunder in the amount providedbelow (or such amount as the Employee elects) during the period which begins onhis date of reemployment and continues until the date which is the lesser of

 

(i)                                                     the product of 3 and the period of qualifiedmilitary service which resulted in such rights, and

 

(ii)                                                  5 years.

 

In addition, the Employershall make a matching contribution with respect to any additional elective deferralmade as described above which would have been required had such deferralactually been made during the period of such qualified military service.

 

The maximum amount ofelective deferrals that such Employee would have been permitted to makehereunder in accordance with the limitations set out in the preceding paragraphduring the period of qualified military service if he had continued to beemployed by the Employer during such period and received compensation (asdetermined above). Such amount may be adjusted for any elective deferralsactually made during the period of qualified military service.

For purposes of thissection, the term “elective deferral” has the meaning given by Code Section402(g)(3).

 

24.2

----

 

**SECTION 25**.  **GOVERNING LAW**

 

Theprovisions of the Plan and the Trust Agreement shall be construed,administered, and enforced in accordance with the laws of the State ofWashingtona, to the extent such laws are not superseded by ERISA.

 

25.1

----

 

**SECTION 26****.  EXECUTION**

 

Torecord the adoption of this Plan, the Company has caused this document to beexecuted this 20th day of November, 2001.

 
|   | FIRST  COMMUNITY FINANCIAL GROUP, INC. |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |  /s/  Ken F. Parsons, Sr. |   |
|   |                                   |
|   | Title:                                 |  Chairman/CEO/President |   |
|   |                                   |

 

 

26.1

----