Document:

exv10w3

 

Exhibit 10.3

FORM OF

ESOP LOAN AGREEMENT

     THIS
LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of the ___ day of
___, 2007, by and between the FIRST FEDERAL SAVINGS BANK EMPLOYEE STOCK OWNERSHIP PLAN
TRUST (“Borrower”), a trust forming part of the First Federal Savings Bank Employee Stock Ownership
Plan (“ESOP”), and FIRST ADVANTAGE BANCORP (“Lender”), a corporation organized and existing under
the laws of Tennessee.

W I T N E S S E T H

     WHEREAS, the Borrower is authorized to purchase shares of common stock of First Advantage
Bancorp (“Common Stock”), either directly from First Advantage Bancorp or in open market purchases
in an amount not to exceed ___ (___) shares of Common Stock.

     WHEREAS, the Borrower is authorized to borrow funds from the Lender for the purpose of
financing authorized purchases of Common Stock; and

     WHEREAS, the Lender is willing to make a loan to the Borrower for such purpose.

     NOW, THEREFORE, the parties agree hereto as follows:

ARTICLE I

DEFINITIONS

     The following definitions shall apply for purposes of this Loan Agreement, except to the
extent that a different meaning is plainly indicated by the context:

     Business Day means any day other than a Saturday, Sunday or other day on which banks
are authorized or required to close under federal or local law or regulation.

     Code means the Internal Revenue Code of 1986, as amended (including the corresponding
provisions of any succeeding law).

     Default means an event or condition which would constitute an Event of Default. The
determination as to whether an event or condition would constitute an Event of Default shall be
determined without regard to any applicable requirements of notice or lapse of time.

     ERISA means the Employee Retirement Income Security Act of 1974, as amended (including
the corresponding provisions of any succeeding law).

     Event of Default means an event or condition described in Article 5.

     Loan means the loan described in section 2.1.

     Loan Documents means, collectively, the Loan Agreement, the Promissory Note and the
Pledge Agreement and all other documents now or hereafter executed and delivered in connection with
such documents, including all amendments, modifications and supplements of or to all such
documents.

 

 

     Pledge Agreement means the agreement described in section 2.8(a).

     Principal Amount means the face amount of the Promissory Note, determined as set forth
in section 2.1(c).

     Promissory Note means the promissory note described in section 2.3.

     Register means the register described in section 2.9.

ARTICLE II

THE LOAN; PRINCIPAL AMOUNT;

INTEREST; SECURITY; INDEMNIFICATION

     Section 2.1 The Loan; Principal Amount.

     (a) The Lender hereby agrees to lend to the Borrower such amount, and at such time, as shall
be determined under this Section 2.1; provided, however, that in no event shall the aggregate
amount lent under this Loan Agreement from time to time exceed the
greater of (i) $___ or
(ii) the aggregate amount paid by the Borrower to purchase up to
___ shares of Common Stock.

     (b) Subject to the limitations of Section 2.1(a), the Borrower shall determine the amounts
borrowed under this Agreement, and the time at which such borrowings are effected. Each such
determination shall be evidenced in a writing which shall set forth the amount to be borrowed and
the date on which the Lender shall disburse such amount, and such writing shall be furnished to the
Lender by notice from the Borrower. The Lender shall disburse to the Borrower the amount specified
in each such notice on the date specified therein or, if later, as promptly as practicable
following the Lender’s receipt of such notice; provided, however, that the Lender shall have no
obligation to disburse funds pursuant to this Agreement following the occurrence of a Default or an
Event of Default until such time as such Default or Event of Default shall have been cured.

     (c) For all purposes of this Loan Agreement, the Principal Amount on any date shall be equal
to the excess, if any, of:

	 	(i)	 	the aggregate amount disbursed by the Lender pursuant
to section 2.1(b) on or before such date; over
	 
	 	(ii)	 	the aggregate amount of any repayments of such amounts
made before such date.

The Lender shall maintain on the Register a record of, and shall record in the Promissory Note, the
Principal Amount, any changes in the Principal Amount and the effective date of any changes in the
Principal Amount.

     Section 2.2 Interest.

     (a) The Borrower shall pay to the Lender interest on the Principal Amount, for the period
commencing with the first disbursement of funds under this Loan Agreement and continuing until the
Principal Amount shall be paid in full, at the rate of
___ percent (___%) per
annum. Interest payable under this Agreement shall be computed on the

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basis of a year of 365 days and actual days elapsed (including the first day but excluding the
last) occurring during the period to which the computation relates.

     (b) Accrued interest on the Principal Amount shall be payable by the Borrower on the dates set
forth in Schedule I to the Promissory Note. All interest on the Principal Amount shall be paid by
the Borrower in immediately available funds.

     (c) Anything in the Loan Agreement or the Promissory Note to the contrary notwithstanding, the
obligation of the Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the extent that the Lender’s
receipt thereof would not be permissible under the law or laws applicable to the Lender limiting
rates of interest which may be charged or collected by the Lender. Any such payment referred to in
the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment
date or dates on which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charged or collected by the Lender. Such deferred
interest shall not bear interest.

     Section 2.3 Promissory Note.

     The Loan shall be evidenced by the Promissory Note of the Borrower attached hereto as an
exhibit payable to the order of the lender in the Principal Amount and otherwise duly completed.

     Section 2.4 Payment of Trust Loan.

     The Principal Amount of the Loan shall be repaid in accordance with Schedule I to the
Promissory Note on the dates specified therein until fully paid.

     Section 2.5 Prepayment.

     The Borrower shall be entitled to prepay the Loan in whole or in part, at any time and from
time to time; provided, however, that the Borrower shall give notice to the Lender of any such
prepayment; and provided, further, that any partial prepayment of the Loan shall be in an amount
not less than $1,000. Any such prepayment shall be: (a) permanent and irrevocable; (b) accompanied
by all accrued interest through the date of such prepayment; (c) made without premium or penalty;
and (d) applied on the inverse order of the maturity of the installment thereof unless the Lender
and the Borrower agree to apply such prepayments in some other order.

     Section 2.6 Method of Payments.

     (a) All payments of principal, interest, other charges (including indemnities) and other
amounts payable by the Borrower hereunder shall be made in lawful money of the United States, in
immediately available funds, to the Lender at the address specified in or pursuant to this Loan
Agreement for notices to the Lender, on the date on which such payment shall become due. Any such
payment made on such date but after such time shall, if the amount paid bears interest, and except
as expressly provided to the contrary herein, be deemed to have been made on, and interest shall
continue to accrue and be payable thereon until, the next succeeding Business Day. If any payment
of principal or interest becomes due on a day other than a Business Day, such payment may be made
on the next succeeding Business Day, and when paid, such payment shall include interest to the day
on which payment is in fact made.

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     (b) Notwithstanding anything to the contrary contained in this Loan Agreement or the
Promissory Note, the Borrower shall not be obligated to make any payment, repayment or pre-payment
on the Promissory Note if doing so would cause the ESOP to cease to be an employee stock ownership
plan within the meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of the
Code or cause the Borrower to cease to be a tax exempt trust under section 501(a) of the Code or if
such act or failure to act would cause the Borrower to engage in any “prohibited transaction” as
such term is defined in the section 4975(c) of the Code and the regulations promulgated thereunder
which is not exempted by section 4975(c)(2) or (d) of the Code and the regulations promulgated
thereunder or in section 406 of ERISA and the regulations promulgated thereunder which is not
exempted by section 408(b) of ERISA and the regulations promulgated thereunder; provided, however,
that in each case, the Borrower, may act or refrain from acting pursuant to this section 2.6(b) on
the basis of an opinion of counsel, and any opinion of such counsel. The Borrower may consult with
counsel, and any opinion of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel. Nothing contained in this section 2.6(b) shall be construed as
imposing a duty on the Borrower to consult with counsel. Any obligation of the Borrower to make
any payment, repayment or prepayment on the Promissory Note or refrain from taking any other act
hereunder or under the Promissory Note which is excused pursuant to this section 2.6(b) shall be
considered a binding obligation of the Borrower, or both, as the case may be, for the purposes of
determining whether a Default or Event of Default has occurred hereunder or under the Promissory
Note and nothing in this section 2.6(b) shall be construed as providing a defense to any remedies
otherwise available upon a Default or an Event of Default hereunder (other than the remedy of
specific performance).

     Section 2.7 Use of Proceeds of Loan.

     The entire proceeds of the Loan shall be used solely for acquiring shares of Common Stock, and
for no other purpose whatsoever.

     Section 2.8 Security.

     (a) In order to secure the due payment and performance by the Borrower of all of its
obligations under this Loan Agreement, simultaneously with the execution and delivery of this Loan
Agreement by the Borrower, the Borrower shall:

	 	(i)	 	pledge to the Lender as Collateral (as defined in the
Pledge Agreement), and grant to the Lender a first priority lien on and
security interest in, the Common Stock purchased with the Principal
Amount, by the execution and delivery to the lender of the Pledge
Agreement attached hereto as an exhibit; and
	 
	 	(ii)	 	execute and deliver, or cause to be executed and
delivered, such other agreement, instruments and documents as the
Lender may reasonably require in order to effect the purposes of the
Pledge Agreement and this Loan Agreement.

     (b) The Lender shall release from encumbrance under the Pledge Agreement and transfer to the
Borrower, as of the date on which any payment or repayment of the Principal Amount is made, a
number of shares of Common Stock held as Collateral determined pursuant to the applicable
provisions of the ESOP.

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     Section 2.9 Registration of the Promissory Note.

     (a) The Lender shall maintain a Register providing for the registration of the Principal
Amount and any stated interest and of transfer and exchange of the Promissory Note. Transfer of
the Promissory Note may be effected only by the surrender of the old instrument and either the
reissuance by the Borrower of the old instrument to the new holder or the issuance by the Borrower
of a new instrument to the new holder. The old Promissory Note so surrendered shall be canceled by
the Lender and returned to the Borrower after such cancellation.

     (b) Any new Promissory Note issued pursuant to section 2.9(a) shall carry the same rights to
interest (unpaid and to accrue) carried by the Promissory Note so transferred or exchanged so that
there will not be any loss or gain of interest on the note surrender. Such new Promissory Note
shall be subject to all of the provisions and entitled to all of the benefits of this Agreement.
Prior to due presentment for registration or transfer, the Borrower may deem and treat the
registered holder of any Promissory Note as the holder thereof for purposes of payment and other
purposes. A notation shall be made on each new Promissory Note of the amount of all payments of
principal and interest theretofore paid.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

     The Borrower hereby represents and warrants to the Lender as follows:

     Section 3.1 Power, Authority, Consents.

     The Borrower has the power to execute, deliver and perform this Loan Agreement, the Promissory
Note and Pledge Agreement, all of which have been duly authorized by all necessary and proper
corporate or other action.

     Section 3.2 Due Execution, Validity, Enforceability.

     Each of the Loan Documents, including, without limitation, this Loan Agreement, the Promissory
Note and the Pledge Agreement, has been duly executed and delivered by the Borrower; and each
constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance
with its terms.

     Section 3.3 Properties, Priority of Liens.

     The liens which have been created and granted by the Pledge Agreement constitute valid, first
liens on the properties and assets covered by the Pledge Agreement, subject to no prior or equal
lien.

     Section 3.4 No Defaults, Compliance with Laws.

     The Borrower is not in default in any material respect under any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it
is bound, or any other agreement or other instrument by which any of the properties or assets owned
by it is materially affected.

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     Section 3.5 Purchase of Common Stock.

     Upon consummation of any purchase of Common Stock by the Borrower with the proceeds of the
Loan, the Borrower shall acquire valid, legal and marketable title to all of the Common Stock so
purchased, free and clear of any liens, other than a pledge to the Lender of the Common Stock so
purchased pursuant to the Pledge Agreement. Neither the execution and delivery of the Loan
Documents nor the performance of any obligation thereunder violates any provisions of law or
conflicts with or results in a breach of or creates (with or without the giving of notice of lapse
of time, or both) a default under any agreement to which the Borrower is a party or by which it is
bound or any of its properties is affected. No consent of any federal, state, or local
governmental authority, agency, or other regulatory body, the absence of which could have a
materially adverse effect on the Borrower or the Trustee, is or was required to be obtained in
connection with the execution, delivery, or performance of the Loan Documents and the transaction
contemplated therein or in connection therewith, including without limitation, with respect to the
transfer of the shares of Common Stock purchased with the proceeds of the Loan pursuant thereto.

     Section 3.6 ESOP; Contributions.

     As of the effective date of the ESOP sponsor’s conversion, the ESOP and the Borrower will be
duly created, organized and maintained by the ESOP sponsor in compliance with all applicable laws,
regulations and rulings. The ESOP will qualify as an “employee stock ownership plan” as defined in
section 4975(e)(7) of the Code. The ESOP provides that the ESOP sponsor may make contributions to
the ESOP in an amount necessary to enable the Trustee to amortize the Loan in accordance with the
terms of the Promissory Note; provided, however, that no such contributions shall be required if
they would adversely affect the qualification of the ESOP under section 401(a) of the Code.

     Section 3.7 Trustee.

     The trustee of the ESOP has been duly appointed by the ESOP sponsor.

     Section 3.8 Compliance with Laws; Actions.

     Neither the execution and delivery by the Borrower of this Loan Agreement or any instruments
required thereby, nor compliance with the terms and provisions of any such documents by the lender,
constitutes a violation of any provision of any law or any regulation, order, writ, injunction or
decree of any court or governmental instrumentality, or an event of default under any agreement, to
which the Borrower is a party, to which the Borrower is bound or to which the Borrower is subject,
which violation or event of default would have a material adverse effect on the Borrower. There is
no action or proceeding pending or threatened against either the ESOP or the Borrower before any
court or administrative agency.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE LENDER

     The Lender hereby represents and warrants to the Borrower as follows:

     Section 4.1 Power, Authority, Consents.

     The Lender has the power to execute, deliver and perform this Loan Agreement, the Pledge
Agreement and all documents executed by the Lender in connection with the Loan, all of

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which have been duly authorized by all necessary and proper corporate or other action. No consent,
authorization or approval or other action by any governmental authority or regulatory body, and no
notice by the Lender to, or filing by the Lender with, any governmental authority or regulatory
body is required for the due execution, delivery and performance of this Loan Agreement.

     Section 4.2 Due Execution, Validity, Enforceability.

     This Loan Agreement and the Pledge Agreement have been duly executed and delivered by the
Lender, and each constitutes a valid and legally binding obligation of the Lender, enforceable in
accordance with its terms.

ARTICLE V

EVENTS OF DEFAULT

     Section 5.1 Events of Default under Loan Agreement.

     Each of the following events shall constitute an “Event of Default” hereunder:

     (a) Failure to make any payment or mandatory prepayment of principal of the Promissory Note
when due, or failure to make any payment of interest on the Promissory Note not later than five (5)
Business Days after the date when due.

     (b) Failure by the Borrower to perform or observe any term, condition or covenant of this Loan
Agreement or of any of the other Loan Documents, including, without limitation, the Promissory Note
and the Pledge Agreement.

     (c) Any representation or warranty made in writing to the Lender in any of the Loan Documents,
or any certificate, statement or report made or delivered in compliance with this Loan Agreement,
shall have been false or misleading in any material respect when made or delivered.

     Section 5.2 Lender’s Rights upon Event of Default.

     If an Event of Default under this Loan Agreement shall occur and be continuing, the Lender
shall have no rights to assets of the Borrower other than: (a) contributions (other than
contributions of Common Stock) that are made by the ESOP sponsor to enable the Borrower to meet its
obligations pursuant to this Loan Agreement and earnings attributable to the investment of such
contributions and (b) “Eligible Collateral” (as defined in the Pledge Agreement); provided,
however, that: (i) the value of the Borrower’s assets transferred to the Lender following an Event
of Default in satisfaction of the due and unpaid amount of the Loan shall not exceed the amount in
default (without regard to amounts owing solely as a result of any acceleration of the Loan); (ii)
the Borrower’s assets shall be transferred to the Lender following an Event of Default only to the
extent of the failure of the Borrower to meet the payment schedule of the Loan; and (iii) all
rights of the Lender to the Common Stock purchased with the proceeds of the Loan covered by the
Pledge Agreement following an Event of Default shall be governed by the terms of the Pledge
Agreement.

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ARTICLE VI

MISCELLANEOUS PROVISIONS

     Section 6.1 Payments Due to the Lender.

     If any amount is payable by the Borrower to the Lender pursuant to any indemnity obligation
contained herein, then the Borrower shall pay, at the time or times provided therefor, any such
amount and shall indemnify the Lender against and hold it harmless from any loss or damage
resulting from or arising out of the nonpayment or delay in payment of any such amount. If any
amounts as to which the Borrower has so indemnified the Lender hereunder shall be assessed or
levied against the Lender, the Lender may notify the Borrower and make immediate payment thereof,
together with interest or penalties in connection therewith, and shall thereupon be entitled to and
shall receive immediate reimbursement therefor from the Borrower, together with interest on each
such amount as provided for in section 2.2(c). Notwithstanding any other provision contained in
this Loan Agreement, the covenants and agreements of the Borrower contained in this section 6.1
shall survive: (a) payment of the Promissory Note and (b) termination of this Loan Agreement.

     Section 6.2 Payments.

     All payments hereunder and under the Promissory Note shall be made without set-off or
counterclaim and in such amounts as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this Loan Agreement and the Promissory
Note, subject to any applicable tax withholding requirements. Upon payment in full of the
Promissory Note, the Lender shall mark such Promissory Note “Paid” and return it to the Borrower.

     Section 6.3 Survival.

     All agreements, representations and warranties made herein shall survive the delivery of this
Loan Agreement and the Promissory Note.

     Section 6.4 Modifications, Consents and Waivers; Entire Agreement.

     No modification, amendment or waiver of or with respect to any provision of this Loan
Agreement, the Promissory Note, the Pledge Agreement, or any of the other Loan Documents, nor
consent to any departure from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by the party against whom enforcement thereof is
sought. Any such waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No consent to or demand on a party in any case shall, of itself, entitle
it to any other or further notice or demand in similar or other circumstances. This Loan Agreement
embodies the entire agreement and understanding between the Lender and the Borrower and supersedes
all prior agreements and understandings relating to the subject matter hereof.

     Section 6.5 Remedies Cumulative.

     Each and every right granted to the Lender hereunder or under any other document delivered
hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Lender or the holder of the Promissory
Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor
shall any single or partial exercise of any right preclude any other or future exercise thereof or
the exercise of any other right. The due payment and performance of the

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obligations under the Loan Documents shall be without regard to any counterclaim, right of offset
or any other claim whatsoever which the Borrower may have against the Lender and without regard to
any other obligation of any nature whatsoever which the Lender may have to the Borrower, and no
such counterclaim or offset shall be asserted by the Borrower in any action, suit or proceeding
instituted by the Lender for payment or performance of such obligations.

     Section 6.6 Further Assurances; Compliance with Covenants.

     At any time and from time to time, upon the request of the Lender, the Borrower shall execute,
deliver and acknowledge or cause to be executed, delivered and acknowledged, such further documents
and instruments and do such other acts and things as the Lender may reasonably request in order to
fully effect the terms of this Loan Agreement, the Promissory Note, the Pledge Agreement, the other
Loan Documents and any other agreements, instruments and documents delivered pursuant hereto or in
connection with the Loan.

     Section 6.7 Notices.

     Except as otherwise specifically provided for herein, all notice, requests, reports and other
communications pursuant to this Loan Agreement shall be in writing, either by letter (delivered by
hand or commercial messenger service or sent by registered or certified mail, return receipt
requested, except for routine reports delivered in compliance with Article VI hereof which may be
sent by ordinary first-class mail) or telex or telecopier addressed as follows:

     (a) If to the Borrower:

     (b) If to the Lender:

First Advantage Bancorp

1430 Madison Street

Clarksville, Tennessee 37040

Any notice, request or communication hereunder shall be deemed to have been given on the day on
which it is delivered by hand or by commercial messenger service, or sent by telex or telecopier,
to such party at its address specified above, or, if sent by mail, on the third Business Day after
the day deposited in the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been given only when
actually received by the party to whom it is addressed.

     Section 6.8 Counterparts.

     This Loan Agreement may be signed in any number of counterparts which, when taken together,
shall constitute one and the same document.

     Section 6.9 Construction; Governing Law.

     The headings used in the table of contents and in this Loan Agreement are for convenience only
and shall not be deemed to constitute a part hereof. All uses herein of any gender or of singular
or plural terms shall be deemed to include uses of the other genders or plural or singular terms,
as the context may require. All references in this Loan Agreement of an

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Article or section shall be to an Article or section of this Loan Agreement, unless otherwise
specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and the other Loan
Documents shall be governed by, and construed and interpreted in accordance with, the laws of the
State of Tennessee.

     Section 6.10 Severability.

     Wherever possible, each provision of this Loan Agreement shall be interpreted in such manner
as to be effective and valid under applicable law; however, the provisions of this Loan Agreement
are severable, and if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect
such clause or provision in any other jurisdiction, or any other clause or provisions in this Loan
Agreement in any jurisdiction. Each of the covenants, agreements and conditions contained in this
Loan Agreement are independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any action the effect of
which shall constitute a breach or violation of any provision of this Loan Agreement.

     Section 6.11 Binding Effect: No Assignment or Delegation.

     This Loan Agreement shall be binding upon and inure to the benefit of the Borrower and its
successors and the Lender and its successors and assigns. The rights and obligations of the
Borrower under this Agreement shall not be assigned or delegated without the prior written consent
of the Lender, and any purported assignment or delegation without such consent shall be void.

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     IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed as of the date
first written above.

	 	 	 	 	 
	 	FIRST FEDERAL SAVINGS BANK

EMPLOYEE STOCK OWNERSHIP PLAN TRUST

 

Authorized Trust Officer

FIRST ADVANTAGE BANCORP

 	 
	 	By:  	 	 
	 	 	Earl O. Bradley III 	 
	 	 	Chief Executive Officer 	 

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FORM OF

PLEDGE AGREEMENT

     THIS
PLEDGE AGREEMENT (“Pledge Agreement”) is made as of the ___ day of ___,
2007, by and between the FIRST FEDERAL SAVINGS BANK EMPLOYEE STOCK OWNERSHIP PLAN TRUST
(“Pledgor”), and FIRST ADVANTAGE BANCORP (“Pledgee”).

W I T N E S S E T H

     WHEREAS, this Pledge Agreement is being executed and delivered to the Pledgee pursuant to the
terms of a Loan Agreement (“Loan Agreement”), by and between the Pledgor and the Pledgee;

     NOW, THEREFORE, in consideration of the mutual agreements contained herein and in the Loan
Agreement, the parties hereto do hereby covenant and agree as follows:

     Section 1. Definitions. The following definitions shall apply for purposes of this Pledge
Agreement, except to the extent that a different meaning is plainly indicated by the context; all
capitalized terms used but not defined herein shall have the respective meanings assigned to them
in the Loan Agreement:

     Collateral shall mean the Pledged Shares and, subject to section 5 hereof, and to the
extent permitted by applicable law, all rights with respect thereto, and all proceeds of such
Pledged Shares and rights.

     ESOP shall mean the First Federal Savings Bank Employee Stock Ownership Plan.

     Event of Default shall mean an event so defined in the Loan Agreement.

     Liabilities shall mean all the obligations of the Pledgor to the Pledgee, howsoever
created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, under the Loan Agreement and the Promissory Note.

     Pledged Shares shall mean all the Shares of Common Stock of the Pledgee purchased by
the Pledgor with the proceeds of the loan made by the Pledgee to the Pledgor pursuant to the Loan
Agreement, but excluding any such shares previously released pursuant to section 4.

     Section 2. Pledge. To secure the payment of and performance of all the Liabilities, the
Pledgor hereby pledges to the Pledgee, and grants to the Pledgee, a security interest in, and lien
upon, the Collateral.

     Section 3. Representations and Warranties of the Pledgor. The Pledgor represents, warrants,
and covenants to the Pledgee as follows:

     (a) the execution, delivery and performance of this Pledge Agreement and the pledging of the
Collateral hereunder do not and will not conflict with, result in a violation of, or constitute a
default under, any agreement binding upon the Pledgor;

     (b) the Pledged Shares are and will continue to be owned by the Pledgor free and clear of any
liens or rights of any other person except the lien hereunder and under the Loan Agreement in favor
of the Pledgee, and the security interest of the Pledgee in the Pledged Shares and the proceeds
thereof is and will continue to be prior to and senior to the rights of all others;

 

 

     (c) this Pledge Agreement is the legal, valid, binding and enforceable obligation of the
Pledgor in accordance with its terms;

     (d) the Pledgor shall, from time to time, upon request of the Pledgee, promptly deliver to the
Pledgee such stock powers, proxies, and similar documents, satisfactory in form and substance to
the Pledgee, with respect to the Collateral as the Pledgee may reasonably request; and

     (e) subject to the first sentence of section 4(b), the Pledgor shall not, so long as any
Liabilities are outstanding, sell, assign, exchange, pledge or otherwise transfer or encumber any
of its rights in and to any of the Collateral.

     Section 4. Eligible Collateral.

     (a) As used herein the term “Eligible Collateral” shall mean the amount of Collateral which
has an aggregate fair market value equal to the amount by which the Pledgor is in default (without
regard to any amounts owing solely as the result of an acceleration of the Loan Agreement) or such
lesser amount of Collateral as may be required pursuant to section 13 of this Pledge Agreement.

     (b) The Pledged Shares shall be released from this Pledge Agreement in a manner conforming to
the requirements of Treasury Regulations Section 54.4975-7(b)(8), as the same may be from time to
time amended or supplemented, and the applicable provisions of the ESOP. Subject to such
Regulations, the Pledgee may from time to time, after any Default or Event of Default, and without
prior notice to the Pledgor, transfer all or any part of the Eligible Collateral in the name of the
Pledgee or its nominee, without disclosing that such Eligible Collateral is subject to any rights
of the Pledgor and may from time to time, whether before or after any of the Liabilities shall
become due and payable, without notice to the Pledgor, take all or any of the following actions:
(i) notify the parties obligated on any of the Eligible Collateral to make payment to the Pledgee
of any amounts due or due to become due thereunder, (ii) release or exchange all or any part of the
Eligible Collateral, or compromise or extend or renew for any period (whether or not longer than
the original period) any obligations of any nature of any party with respect thereto, and (iii)
take control of any proceeds of the Eligible Collateral.

     Section 5. Delivery.

     (a) The Pledgor shall deliver to the Pledgee upon execution of this Pledge Agreement (i)
either (A) certificates for the Pledged Shares, each certificate duly signed in blank by the
Pledgor or accompanied by a stock transfer power duly signed in blank by the Pledgor and each such
certificate accompanied by all required documentary or stock transfer tax stamps or (B) if the
Trustee does not yet have possession of the Pledged Shares, an assignment by the Pledgor of all the
Pledgor’s rights to and interest in the Pledged Shares and (ii) an irrevocable proxy, in form and
substance satisfactory to the Pledgee, signed by the Pledgor with respect to the Pledged Shares.

     (b) So long as no Default or Event of Default shall have occurred and be continuing, (i) the
Pledgor shall be entitled to exercise any and all voting and other rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms of this Pledge
Agreement, and (ii) the Pledgor shall be entitled to receive any and all cash dividends or other
distributions paid in respect of the Collateral.

2

 

     Section 6. Events of Default.

     (a) If a Default or Event Default shall be existing, in addition to the rights it may have
under the Loan Agreement, the Promissory Note, and this Pledge Agreement, or by virtue of any other
instrument, (i) the Pledgee may exercise, with respect to the Eligible Collateral, from time to
time, any rights and remedies available to it under the Uniform Commercial Code as in effect from
time to time in the State of Tennessee or otherwise available to it and (ii) the Pledgee shall have
the right, for and in the name, place and stead of the Pledgor, to execute endorsement,
assignments, stock powers and other instruments of conveyance or transfer with respect to all or
any of the Eligible Collateral. Written notification of intended disposition of any of the
Eligible Collateral shall be given by the Pledgee to the Pledgor at least three (3) business days
before such disposition. Subject to section 13 below, any proceeds of any disposition of Eligible
Collateral may be applied by the Pledgee to the payment of expenses in connection with the Eligible
Collateral, including, without limitation, reasonable attorneys’ fees and legal expenses, and any
balance of such proceeds may be applied by the Pledgee toward the payment of such of the
Liabilities as are in Default, and in such order of application, as the Pledgee may from time to
time elect. No action of the Pledgee permitted hereunder shall impair or affect its rights in and
to the Eligible Collateral. All rights and remedies of the Pledgee expressed hereunder are in
addition to all other rights and remedies possessed by it, including, without limitation, those
contained in the documents referred to in the definition of Liabilities in section 1 hereof.

     (b) In any sale of any of the Eligible Collateral after a Default or an Event of Default shall
have occurred, the Pledgee is hereby authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel if necessary in order to avoid violation
of applicable law (including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers or further restrict such prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for their own account
for investment and not with a view to the distribution or resale of such Eligible Collateral), or
in order to obtain such required approval of the sale or of the purchase by any governmental
regulatory authority or official, and the Pledgor further agrees that such compliance shall not
result in such sale’s being considered or deemed not to have been made in a commercially reasonable
manner, nor shall the Pledgee be liable or accountable to the Pledgor for any discount allowed by
reason of the fact that such Eligible Collateral is sold in compliance with any such limitation or
restriction.

     Section 7. Payment in Full. Upon the payment in full of all outstanding Liabilities, this
Pledge Agreement shall terminate and the Pledgee shall forthwith assign, transfer and deliver to
the Pledgor, against receipt and without recourse to the Pledgee, all Collateral then held by the
Pledgee pursuant to the Pledge Agreement.

     Section 8. No Waiver. No failure or delay in the part of the Pledgee in exercising any right
or remedy hereunder or under any other document which confers or grants any rights to the Pledgee
in respect of the Liabilities shall operate as a waiver thereof nor shall any single or partial
exercise of any such rights or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy of the Pledgee.

     Section 9. Binding Effect; No Assignment or Delegation. This Pledge Agreement shall be
binding upon and inure to the benefit of the Pledgor, the Pledgee and their respective successors
and assigns, except that the Pledgor may not assign or transfer its rights hereunder without the
prior written consent of the Pledgee (which consent shall not unreasonably be withheld). Each duty
or obligation of the Pledgor to the Pledgee pursuant to the provisions of this Pledge Agreement
shall be performed in favor of any person or entity designated by the

3

 

Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be performed by any other
person or entity designated by the Pledgee.

     Section 10. Governing Law. This Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee applicable to agreements to be performed wholly
within the State of Tennessee.

     Section 11. Notices. All notices, requests, instructions or documents hereunder shall be in
writing and delivered personally or sent by United States mail, registered or certified, return
receipt requested, with proper postage prepaid as follows:

	 	(a)	 	If to the Pledgee:

First Advantage Bancorp

1430 Madison Avenue

Clarksville, Tennessee 37040
	 
	 	(b)	 	If to the Pledgor:

First Federal Savings Bank

Employee Stock Ownership Plan Trust

[ADDRESS]

or at such other address as either of the parties may designate by written notice to the other
party. If delivered personally, the date on which a notice, request, instruction or document is
delivered shall be the date on which such delivery is made, and, if delivered by mail, the date on
which such notice, request, instruction, or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on which it is
delivered.

     Section 12. Interpretation. Wherever possible each provision of this Pledge Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision herein shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions hereof.

     Section 13. Construction. All provisions hereof shall be construed so as to maintain (a) the
ESOP as a qualified leveraged employee stock ownership plan under section 401(a) and 4975(e)(7) of
the Internal Revenue Code of 1986 (the “Code”), (b) the Trust as exempt from taxation under section
501(a) of the Code and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the
Treasury Regulations and as described in Department of Labor Regulation section 2550.408b-3.

4

 

     IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the parties hereto as of
the day and year first above written.

	 	 	 	 	 
	 	FIRST FEDERAL SAVINGS BANK

EMPLOYEE STOCK OWNERSHIP PLAN TRUST

 

Authorized Trust Officer

FIRST ADVANTAGE BANCORP

 	 
	 	By:  	 	 
	 	 	Earl O. Bradley III 	 
	 	 	Chief Executive Officer 	 

5

 

	 	 	 	 	 

FORM OF

PROMISSORY NOTE

     FOR VALUE RECEIVED, the undersigned, FIRST FEDERAL SAVINGS BANK EMPLOYEE STOCK OWNERSHIP PLAN
TRUST (the “Borrower”), hereby promises to pay to the order of FIRST ADVANTAGE BANCORP (the
“Lender”) up to $___ payable in accordance with the Loan Agreement made and entered into
between the Borrower and the Lender of even date herewith (“Loan Agreement”) pursuant to which this
Promissory Note is issued.

     The Principal Amount of this Promissory Note shall be payable in accordance with the schedule
attached hereto (“Schedule I”).

     This Promissory Note shall bear interest at the rate per annum set forth or established under
the Loan Agreement, such interest to be payable in accordance with Schedule I.

     Anything herein to the contrary notwithstanding, the obligation of the Borrower to make
payments of interest shall be subject to the limitation that payments of interest shall not be
required to be made to the Lender to the extent that the Lender’s receipt thereof would not be
permissible under the law or laws applicable to the Lender limiting rates on interest which may be
charged or collected by the Lender. Any such payments on interest which are not made as a result
of the limitation referred to in the preceding sentence shall be made by the Borrower to the Lender
on the earliest interest payment date or dates on which the receipt thereof would be permissible
under the laws applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

     Payments of both principal and interest on this Promissory Note are to be made at the
principal office of the Lender or such other place as the holder hereof shall designate to the
Borrower in writing, in lawful money of the United States of America in immediately available
funds.

     Failure to make any payments of principal on this Promissory Note when due, or failure to make
any payment of interest on this Promissory Note not later than five (5) Business Days after the
date when due, shall constitute a default hereunder, whereupon the principal amount of accrued
interest on this Promissory Note shall immediately become due and payable in accordance with the
terms of the Loan Agreement.

     This Promissory Note is secured by a Pledge Agreement between the Borrower and the Lender of
even date herewith and is entitled to the benefits thereof.

FIRST FEDERAL SAVINGS BANK

EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                                            

Authorized Trust Officerexv10w4

 

Exhibit 10.4

FIRST FEDERAL SAVINGS BANK

401(K) AND PROFIT SHARING PLAN

 

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

ARTICLE II

ADMINISTRATION

	 	 	 	 	 	 	 
	2.1	 	POWERS AND RESPONSIBILITIES OF THE EMPLOYER
	 	 	12	 
	2.2	 	DESIGNATION OF ADMINISTRATIVE AUTHORITY
	 	 	12	 
	2.3	 	POWERS AND DUTIES OF THE ADMINISTRATOR
	 	 	12	 
	2.4	 	RECORDS AND REPORTS
	 	 	14	 
	2.5	 	APPOINTMENT OF ADVISERS
	 	 	14	 
	2.6	 	PAYMENT OF EXPENSES
	 	 	14	 
	2.7	 	CLAIMS PROCEDURE
	 	 	14	 
	2.8	 	CLAIMS REVIEW PROCEDURE
	 	 	15	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE III
	 	 	 	 
	 	 	ELIGIBILITY
	 	 	 	 
	 	 	 
	 	 	 	 
	3.1	 	CONDITIONS OF ELIGIBILITY
	 	 	15	 
	3.2	 	EFFECTIVE DATE OF PARTICIPATION
	 	 	15	 
	3.3	 	DETERMINATION OF ELIGIBILITY
	 	 	16	 
	3.4	 	TERMINATION OF ELIGIBILITY
	 	 	16	 
	3.5	 	OMISSION OF ELIGIBLE EMPLOYEE
	 	 	16	 
	3.6	 	INCLUSION OF INELIGIBLE EMPLOYEE
	 	 	16	 
	3.7	 	REHIRED EMPLOYEES AND BREAKS IN SERVICE
	 	 	16	 
	3.8	 	ELECTION NOT TO PARTICIPATE
	 	 	18	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IV
	 	 	 	 
	 	 	CONTRIBUTION AND ALLOCATION
	 	 	 	 
	 	 	 
	 	 	 	 
	4.1	 	FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
	 	 	18	 
	4.2	 	PARTICIPANT’S SALARY REDUCTION ELECTION
	 	 	18	 
	4.3	 	TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
	 	 	22	 
	4.4	 	ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
	 	 	22	 
	4.5	 	ACTUAL DEFERRAL PERCENTAGE TESTS
	 	 	25	 

 

	 	 	 	 	 	 	 
	4.6	 	ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
	 	 	28	 
	4.7	 	ACTUAL CONTRIBUTION PERCENTAGE TESTS
	 	 	30	 
	4.8	 	ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
	 	 	33	 
	4.9	 	MAXIMUM ANNUAL ADDITIONS
	 	 	36	 
	4.10	 	ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
	 	 	38	 
	4.11	 	ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
	 	 	39	 
	4.12	 	DIRECTED INVESTMENT ACCOUNT
	 	 	41	 
	4.13	 	QUALIFIED MILITARY SERVICE
	 	 	43	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE V
	 	 	 	 
	 	 	VALUATIONS
	 	 	 	 
	 	 	 
	 	 	 	 
	5.1	 	VALUATION OF THE TRUST FUND
	 	 	43	 
	5.2	 	METHOD OF VALUATION
	 	 	43	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VI
	 	 	 	 
	 	 	DETERMINATION AND DISTRIBUTION OF BENEFITS
	 	 	 	 
	 	 	 
	 	 	 	 
	6.1	 	DETERMINATION OF BENEFITS UPON RETIREMENT
	 	 	44	 
	6.2	 	DETERMINATION OF BENEFITS UPON DEATH
	 	 	44	 
	6.3	 	DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
	 	 	45	 
	6.4	 	DETERMINATION OF BENEFITS UPON TERMINATION
	 	 	45	 
	6.5	 	DISTRIBUTION OF BENEFITS
	 	 	47	 
	6.6	 	DISTRIBUTION OF BENEFITS UPON DEATH
	 	 	49	 
	6.7	 	TIME OF SEGREGATION OR DISTRIBUTION
	 	 	49	 
	6.8	 	DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
	 	 	50	 
	6.9	 	LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
	 	 	50	 
	6.10	 	PRE-RETIREMENT DISTRIBUTION
	 	 	50	 
	6.11	 	ADVANCE DISTRIBUTION FOR HARDSHIP
	 	 	51	 
	6.12	 	QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
	 	 	52	 
	6.13	 	DIRECT ROLLOVER
	 	 	52	 

 

	 	 	 	 	 	 	 
	 	 	ARTICLE VII
	 	 	 	 
	 	 	AMENDMENT, TERMINATION, MERGERS AND LOANS
	 	 	 	 
	 	 	 
	 	 	 	 
	7.1	 	AMENDMENT
	 	 	53	 
	7.2	 	TERMINATION
	 	 	54	 
	7.3	 	MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
	 	 	55	 
	7.4	 	LOANS TO PARTICIPANTS
	 	 	55	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VIII
	 	 	 	 
	 	 	TOP HEAVY
	 	 	 	 
	 	 	 
	 	 	 	 
	8.1	 	TOP HEAVY PLAN REQUIREMENTS
	 	 	57	 
	8.2	 	DETERMINATION OF TOP HEAVY STATUS
	 	 	57	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IX
	 	 	 	 
	 	 	MISCELLANEOUS
	 	 	 	 
	 	 	 
	 	 	 	 
	9.1	 	PARTICIPANT’S RIGHTS
	 	 	60	 
	9.2	 	ALIENATION
	 	 	60	 
	9.3	 	CONSTRUCTION OF PLAN
	 	 	61	 
	9.4	 	GENDER AND NUMBER
	 	 	61	 
	9.5	 	LEGAL ACTION
	 	 	61	 
	9.6	 	PROHIBITION AGAINST DIVERSION OF FUNDS
	 	 	61	 
	9.7	 	EMPLOYER’S AND TRUSTEE’S PROTECTIVE CLAUSE
	 	 	62	 
	9.8	 	INSURER’S PROTECTIVE CLAUSE
	 	 	62	 
	9.9	 	RECEIPT AND RELEASE FOR PAYMENTS
	 	 	62	 
	9.10	 	ACTION BY THE EMPLOYER
	 	 	62	 
	9.11	 	NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
	 	 	63	 
	9.12	 	HEADINGS
	 	 	63	 
	9.13	 	APPROVAL BY INTERNAL REVENUE SERVICE
	 	 	63	 
	9.14	 	UNIFORMITY
	 	 	64	 

 

FIRST FEDERAL SAVINGS BANK

401(K) AND PROFIT SHARING PLAN

     THIS PLAN, hereby adopted this                      day of                                        
 , by First Federal Savings Bank (herein referred to as the “Employer”).

W I T N E S S E T H:

     WHEREAS, the Employer heretofore established a 401(k) Profit Sharing Plan effective July 1,
2005, (hereinafter called the “Effective Date”) known as First Federal Savings Bank 401(k) and
Profit Sharing Plan (herein referred to as the “Plan”) in recognition of the contribution made to
its successful operation by its employees and for the exclusive benefit of its eligible employees;
and

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

     NOW, THEREFORE, effective January 1, 2007, except as otherwise provided, the Employer in
accordance with the provisions of the Plan pertaining to amendments thereof, hereby amends the Plan
in its entirety and restates the Plan to provide as follows:

ARTICLE I

DEFINITIONS

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

     1.2 “Administrator” means the Employer unless another person or entity has been designated by
the Employer pursuant to Section 2.2 to administer the Plan on behalf of the Employer.

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

     1.4 “Aggregate Account” means, with respect to each Participant, the value of all accounts
maintained on behalf of a Participant, whether attributable to Employer or Employee contributions,
subject to the provisions of Section 8.2.

     1.5 “Anniversary Date” means the last day of the Plan Year.

     1.6 “Beneficiary” means the person (or entity) to whom the share of a deceased Participant’s
total account is payable, subject to the restrictions of Sections 6.2 and 6.6.

1

 

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

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

     For purposes of this Section, the determination of Compensation shall be made by:

     (a) including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.

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

               Compensation in excess of $150,000 (or such other amount provided in the Code) shall be
disregarded for all purposes other than for purposes of salary deferral elections pursuant to
Section 4.2. Such amount shall be adjusted for increases in the cost of living in accordance with
Code Section 401(a)(17)(B), except that the dollar increase in effect on January 1 of any calendar
year shall be effective for the Plan Year beginning with or within such calendar year. For any
short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the
calendar year in which the Plan Year begins multiplied by the ratio obtained by dividing the number
of full months in the short Plan Year by twelve (12).

     1.9 “Contract” or “Policy” means any life insurance policy, retirement income policy or
annuity contract (group or individual) issued pursuant to the terms of the Plan. In the event of
any conflict between the terms of this Plan and the terms of any contract purchased hereunder, the
Plan provisions shall control.

     1.10 “Deferred Compensation” with respect to any Participant means the amount of the
Participant’s total Compensation which has been contributed to the Plan in accordance with the
Participant’s deferral election pursuant to Section 4.2 excluding any such amounts distributed
as excess “annual additions” pursuant to Section 4.10(a).

     1.11 “Designated Investment Alternative” means a specific investment identified by name by the
Employer (or such other Fiduciary who has been given the authority to select investment options) as
an available investment under the Plan to which Plan assets may be invested by the Trustee pursuant
to the investment direction of a Participant.

2

 

     1.12 “Directed Investment Option” means one or more of the following:

     (a) a Designated Investment Alternative.

     (b) any other investment permitted by the Plan and the Participant Direction
Procedures to which Plan assets may be invested by the Trustee pursuant to the
investment direction of a Participant.

     1.13 “Early Retirement Date.” This Plan does not provide for a retirement date prior to Normal
Retirement Date.

     1.14 “Elective Contribution” means the Employer contributions to the Plan of Deferred
Compensation excluding any such amounts distributed as excess “annual additions” pursuant to
Section 4.10(a). In addition, any Employer Qualified Non-Elective Contribution made pursuant to
Section 4.6(b) which is used to satisfy the “Actual Deferral Percentage” tests shall be considered
an Elective Contribution for purposes of the Plan. Any contributions deemed to be Elective
Contributions (whether or not used to satisfy the “Actual Deferral Percentage” tests or the “Actual
Contribution Percentage” tests) shall be subject to the requirements of Sections 4.2(b) and 4.2(c)
and shall further be required to satisfy the nondiscrimination requirements of Regulation
1.401(k)-1(b)(5) and Regulation 1.401(m)-1(b)(5), the provisions of which are specifically
incorporated herein by reference.

     1.15 “Eligible Employee” means any Employee.

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

          Employees classified by the Employer as independent contractors who are subsequently
determined by the Internal Revenue Service to be Employees shall not be Eligible Employees.

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

     1.17 “Employer” means First Federal Savings Bank and any successor which shall maintain this
Plan; and any predecessor which has maintained this Plan. The Employer is a corporation, with
principal offices in the State of Tennessee.

     1.18 “Excess Aggregate Contributions” means, with respect to any Plan Year, the excess of the
aggregate amount of the Employer matching contributions made pursuant to Section 4.1(b) and any
qualified non-elective contributions or elective deferrals taken into account pursuant to Section
4.7(c) on behalf of Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a) (determined by hypothetically
reducing contributions made on behalf of Highly Compensated Participants in order of the actual
contribution ratios beginning with the highest of such ratios). Such determination shall

3

 

be made
after first taking into account corrections of any Excess Deferred Compensation pursuant to Section
4.2 and taking into account any adjustments of any Excess Contributions pursuant to Section 4.6.

     1.19 “Excess Contributions” means, with respect to a Plan Year, the excess of Elective
Contributions used to satisfy the “Actual Deferral Percentage” tests made on behalf of Highly
Compensated Participants for the Plan Year over the maximum amount of such contributions permitted
under Section 4.5(a) (determined by hypothetically reducing contributions made on behalf of Highly
Compensated Participants in order of the actual deferral ratios beginning with the highest of such
ratios). Excess Contributions shall be treated as an “annual addition” pursuant to Section 4.9(b).

     1.20 “Excess Deferred Compensation” means, with respect to any taxable year of a Participant,
the excess of the aggregate amount of such Participant’s Deferred Compensation and the elective
deferrals pursuant to Section 4.2(f) actually made on behalf of such Participant for such taxable
year, over the dollar limitation provided for in Code Section 402(g), which is incorporated herein
by reference. Excess Deferred Compensation shall be treated as an “annual addition” pursuant to
Section 4.9(b) when contributed to the Plan unless distributed to the affected Participant not
later than the first April 15th following the close of the Participant’s taxable year.
Additionally, for purposes of Sections 8.2 and 4.4(g), Excess Deferred Compensation shall continue
to be treated as Employer contributions even if distributed pursuant to Section 4.2(f). However,
Excess Deferred Compensation of Non-Highly Compensated Participants is not taken into account for
purposes of Section 4.5(a) to the extent such Excess Deferred Compensation occurs pursuant to
Section 4.2(d).

     1.21 “Fiduciary” means any person who (a) exercises any discretionary authority or
discretionary control respecting management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders investment advice for a fee or
other compensation, direct or indirect, with respect to any monies or other property of the Plan or
has any authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.

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

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

     (a) the distribution of the entire Vested portion of the Participant’s Account
of a Former Participant who has severed employment with the Employer, or

     (b) the last day of the Plan Year in which a Former Participant who has severed
employment with the Employer incurs five (5) consecutive 1-Year Breaks in Service.

          Regardless of the preceding provisions, if a Former Participant is eligible to share in the
allocation of Employer contributions or Forfeitures in the year in which the Forfeiture would
otherwise occur, then the Forfeiture will not occur until the end of the first Plan Year for which
the

4

 

Former Participant is not eligible to share in the allocation of Employer contributions or
Forfeitures. Furthermore, the term “Forfeiture” shall also include amounts deemed to be Forfeitures
pursuant to any other provision of this Plan.

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

     1.25 “415 Compensation” with respect to any Participant means such Participant’s wages as
defined in Code Section 3401(a) and all other payments of compensation by the Employer (in the
course of the Employer’s trade or business) for a Plan Year for which the Employer is required to
furnish the Participant a written statement under Code Sections 6041(d), 6051(a)(3) and 6052. “415
Compensation” must be determined without regard to any rules under Code Section 3401(a) that limit
the remuneration included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)).

          For purposes of this Section, the determination of “415 Compensation” shall include any
elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or
deferred by the Employer at the election of the Participant and which is not includible in the
gross income of the Participant by reason of Code Sections 125, 132(f)(4) or 457.

     1.26 “414(s) Compensation” means any definition of compensation that satisfies the
nondiscrimination requirements of Code Section 414(s) and the Regulations thereunder. The period
for determining 414(s) Compensation must be either the Plan Year or the calendar year ending with
or within the Plan Year. An Employer may further limit the period taken into account to that part
of the Plan Year or calendar year in which an Employee was a Participant in the component of the
Plan being tested. The period used to determine 414(s) Compensation must be applied uniformly to
all Participants for the Plan Year.

     1.27 “Highly Compensated Employee” means an Employee described in Code Section 414(q) and the
Regulations thereunder, and generally means any Employee who:

     (a) was a “five percent owner” as defined in Section 1.32(c) at any time during
the “determination year” or the “look-back year”; or

     (b) for the “look-back year” had “415 Compensation” from the Employer in excess
of $80,000. The $80,000 amount is adjusted at the same time and in the same manner
as under Code Section 415(d), except that the base period is the calendar quarter
ending September 30, 1996.

          The “determination year” means the Plan Year for which testing is being performed, and the
“look-back year” means the immediately preceding twelve (12) month period.

          A highly compensated former Employee is based on the rules applicable to determining Highly
Compensated Employee status as in effect for the “determination year,” in accordance with
Regulation 1.414(q)-1T, A-4 and IRS Notice 97-45 (or any superseding guidance).

          In determining who is a Highly Compensated Employee, Employees who are non-resident aliens and
who received no earned income (within the meaning of Code 

5

 

Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code
Section 861(a)(3) shall not be
treated as Employees. Additionally, all Affiliated Employers shall be taken into account as a
single employer and Leased Employees within the meaning of Code Sections 414(n)(2) and 414(o)(2)
shall be considered Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the Employer. The
exclusion of Leased Employees for this purpose shall be applied on a uniform and consistent basis
for all of the Employer’s retirement plans. Highly Compensated Former Employees shall be treated as
Highly Compensated Employees without regard to whether they performed services during the
“determination year.”

     1.28 “Highly Compensated Participant” means any Highly Compensated Employee who is eligible to
participate in the component of the Plan being tested.

     1.29 “Hour of Service” means (1) each hour for which an Employee is directly or indirectly
compensated or entitled to compensation by the Employer for the performance of duties (these hours
will be credited to the Employee for the computation period in which the duties are performed); (2)
each hour for which an Employee is directly or indirectly compensated or entitled to compensation
by the Employer (irrespective of whether the employment relationship has terminated) for reasons
other than performance of duties (such as vacation, holidays, sickness, jury duty, disability,
lay-off, military duty or leave of absence) during the applicable computation period (these hours
will be calculated and credited pursuant to Department of Labor regulation 2530.200b-2 which is
incorporated herein by reference); (3) each hour for which back pay is awarded or agreed to by the
Employer without regard to mitigation of damages (these hours will be credited to the Employee for
the computation period or periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made). The same Hours of Service
shall not be credited both under (1) or (2), as the case may be, and under (3).

          Notwithstanding (2) above, (i) no more than 501 Hours of Service are required to be credited
to an Employee on account of any single continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation period); (ii) an hour for which
an Employee is directly or indirectly paid, or entitled to payment, on account of a period during
which no duties are performed is not required to be credited to the Employee if such payment is
made or due under a plan maintained solely for the purpose of complying with applicable worker’s
compensation, or unemployment compensation or disability insurance laws; and (iii) Hours of Service
are not required to be credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.

          For purposes of (2) above, a payment shall be deemed to be made by or due from the Employer
regardless of whether such payment is made by or due from the Employer directly, or indirectly
through, among others, a trust fund, or insurer, to which the Employer contributes or pays premiums
and regardless of whether contributions made or due to the trust fund, insurer, or other entity are
for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate.

          For purposes of this Section, Hours of Service will be credited for employment with other
Affiliated Employers. The provisions of Department of Labor regulations 2530.200b-2(b) and (c) are
incorporated herein by reference.

6

 

     1.30 “Income” means the income or losses allocable to Excess Deferred Compensation, Excess
Contributions or Excess Aggregate Contributions which amount shall be allocated in the same manner
as income or losses are allocated pursuant to Section 4.4(f).

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

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

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

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

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

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

7

 

employer required to be aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken into account.

          For purposes of this Section, the determination of “415 Compensation” shall be made by
including amounts which are contributed by the Employer pursuant to a salary reduction agreement
and which are not includible in the gross income of the Participant under Code Sections 125,
132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.

     1.33 “Late Retirement Date” means the first day of the month coinciding with or next following
a Participant’s actual Retirement Date after having reached Normal Retirement Date.

     1.34 “Leased Employee” means any person (other than an Employee of the recipient Employer) who
pursuant to an agreement between the recipient Employer and any other person or entity (“leasing
organization”) has performed services for the recipient (or for the recipient and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one year, and such services are performed under primary direction or control by
the recipient Employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient Employer shall be
treated as provided by the recipient Employer. Furthermore, Compensation for a Leased Employee
shall only include Compensation from the leasing organization that is attributable to services
performed for the recipient Employer. A Leased Employee shall not be considered an Employee of the
recipient Employer:

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

     (1) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3);

     (2) immediate participation;

     (3) full and immediate vesting; and

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

     1.35 “Non-Elective Contribution” means the Employer contributions to the Plan excluding,
however, contributions made pursuant to the Participant’s deferral election provided for in Section
4.2 and any Qualified Non-Elective Contribution used in the “Actual Deferral Percentage” tests.

     1.36 “Non-Highly Compensated Participant” means any Participant who is not a Highly
Compensated Employee. However, for purposes of Section 4.5(a) and Section 4.6, if the prior year
testing method is used, a Non-Highly Compensated Participant shall be determined using the
definition of Highly Compensated Employee in effect for the preceding Plan Year.

8

 

     1.37 “Non-Key Employee” means any Employee or former Employee (and such Employee’s or former
Employee’s Beneficiaries) who is not, and has never been a Key Employee.

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

     1.39 “Normal Retirement Date” means the first day of the month coinciding with or next
following the Participant’s Normal Retirement Age.

     1.40 “1-Year Break in Service” means the applicable computation period during which an
Employee has not completed more than 500 Hours of Service with the Employer. Further, solely for
the purpose of determining whether a Participant has incurred a 1-Year Break in Service, Hours of
Service shall be recognized for “authorized leaves of absence” and “maternity and paternity leaves
of absence.” Years of Service and 1-Year Breaks in Service shall be measured on the same
computation period.

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

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

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

     1.42 “Participant Direction Procedures” means such instructions, guidelines or policies, the
terms of which are incorporated herein, as shall be established pursuant to Section 4.12 and
observed by the Administrator and applied and provided to Participants who have Participant
Directed Accounts.

     1.43 “Participant’s Account” means the account established and maintained by the Administrator
for each Participant with respect to such Participant’s total interest in the Plan and Trust
resulting from the Employer Non-Elective Contributions.

          A separate accounting shall be maintained with respect to that portion of the Participant’s
Account attributable to Employer matching contributions made pursuant to

9

 

 Section 4.1(b), Employer
discretionary contributions made pursuant to Section 4.1(c) and any Employer Qualified Non-Elective
Contributions.

     1.44 “Participant’s Combined Account” means the total aggregate amount of each Participant’s
Elective Account and Participant’s Account.

     1.45 “Participant’s Directed Account” means that portion of a Participant’s interest in the
Plan with respect to which the Participant has directed the investment in accordance with the
Participant Direction Procedure.

     1.46 “Participant’s Elective Account” means the account established and maintained by the
Administrator for each Participant with respect to the Participant’s total interest in the Plan and
Trust resulting from the Employer Elective Contributions used to satisfy the “Actual Deferral
Percentage” tests. A separate accounting shall be maintained with respect to that portion of the
Participant’s Elective Account attributable to such Elective Contributions pursuant to Section 4.2
and any Employer Qualified Non-Elective Contributions.

     1.47 “Participant’s Transfer/Rollover Account” means the account established and maintained by
the Administrator for each Participant with respect to the Participant’s total interest in the Plan
resulting from amounts transferred to this Plan from a direct plan-to-plan transfer and/or with
respect to such Participant’s interest in the Plan resulting from amounts transferred from another
qualified plan or “conduit” Individual Retirement Account in accordance with Section 4.11.

          A separate accounting shall be maintained with respect to that portion of the Participant’s
Transfer/Rollover Account attributable to transfers (within the meaning of Code Section 414(l)) and
“rollovers.”

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

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

     1.50 “Qualified Non-Elective Contribution” means any Employer contributions made pursuant to
Section 4.6(b) and Section 4.8(f). Such contributions shall be considered an Elective Contribution
for the purposes of the Plan and used to satisfy the “Actual Deferral Percentage” tests or the
“Actual Contribution Percentage” tests.

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

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

     1.53 “Retirement Date” means the date as of which a Participant retires for reasons other than
Total and Permanent Disability, whether such retirement occurs on a Participant’s Normal Retirement
Date or Late Retirement Date (see Section 6.1).

10

 

     1.54 “Terminated Participant” means a person who has been a Participant, but whose employment
has been terminated other than by death, Total and Permanent Disability or retirement.

     1.55 “Top Heavy Plan” means a plan described in Section 8.2(a).

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

     1.57 “Total and Permanent Disability” means a physical or mental condition of a Participant
resulting from bodily injury, disease, or mental disorder which renders such Participant incapable
of continuing usual and customary employment with the Employer. The disability of a Participant
shall be determined by a licensed physician chosen by the Administrator. The determination shall be
applied uniformly to all Participants.

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

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

     1.60 “Valuation Date” means the Anniversary Date and may include any other date or dates
deemed necessary or appropriate by the Administrator for the valuation of the Participants’
accounts during the Plan Year, which may include any day that the Trustee, any transfer agent
appointed by the Trustee or the Employer or any stock exchange used by such agent, are open for
business.

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

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

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

          The computation period shall be the Plan Year if not otherwise set forth herein.

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

          Years of Service with any Affiliated Employer shall be recognized.

11

 

ARTICLE II

ADMINISTRATION

2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER

     (a) In addition to the general powers and responsibilities otherwise provided
for in this Plan, the Employer shall be empowered to appoint and remove the Trustee
and the Administrator from time to time as it deems necessary for the proper
administration of the Plan to ensure that the Plan is being operated for the
exclusive benefit of the Participants and their Beneficiaries in accordance with the
terms of the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and other persons
as the Employer deems necessary or desirable in connection with the exercise of its
fiduciary duties under this Plan. The Employer may compensate such agents or
advisers from the assets of the Plan as fiduciary expenses (but not including any
business (settlor) expenses of the Employer), to the extent not paid by the
Employer.

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

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

2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY

          The Employer shall be the Administrator. The Employer may appoint any person, including, but
not limited to, the Employees of the Employer, to perform the duties of the Administrator. Any
person so appointed shall signify acceptance by filing written acceptance with the Employer. Upon
the resignation or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.

2.3 POWERS AND DUTIES OF THE ADMINISTRATOR

          The primary responsibility of the Administrator is to administer the Plan for the exclusive
benefit of the Participants and their Beneficiaries, subject to the specific terms of the Plan. The
Administrator shall administer the Plan in accordance with its terms and shall have the power 

12

 

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

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

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

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

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

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

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

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

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

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

     (i) to prepare and implement a procedure to notify Eligible Employees that they
may elect to have a portion of their Compensation deferred or paid to them in cash;

     (j) to act as the named Fiduciary responsible for communications with
Participants as needed to maintain Plan compliance with Act Section 404(c),
including, but not limited to, the receipt and transmitting of Participant’s
directions

13

 

as to the investment of their account(s) under the Plan and the
formulation of policies, rules, and procedures pursuant to which Participants may
give investment instructions with respect to the investment of their accounts;

(k) to determine the validity of, and take appropriate action with respect to,
any qualified domestic relations order received by it; and

(l) to assist any Participant regarding the Participant’s rights, benefits, or
elections available under the Plan.

2.4 RECORDS AND REPORTS

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

2.5 APPOINTMENT OF ADVISERS

          The Administrator, or the Trustee with the consent of the Administrator, may appoint counsel,
specialists, advisers, agents (including nonfiduciary agents) and other persons as the
Administrator or the Trustee deems necessary or desirable in connection with the administration of
this Plan, including but not limited to agents and advisers to assist with the administration and
management of the Plan, and thereby to provide, among such other duties as the Administrator may
appoint, assistance with maintaining Plan records and the providing of investment information to
the Plan’s investment fiduciaries and to Plan Participants.

2.6 PAYMENT OF EXPENSES

          All expenses of administration may be paid out of the Trust Fund unless paid by the Employer.
Such expenses shall include any expenses incident to the functioning of the Administrator, or any
person or persons retained or appointed by any named Fiduciary incident to the exercise of their
duties under the Plan, including, but not limited to, fees of accountants, counsel, Investment
Managers, agents (including nonfiduciary agents) appointed for the purpose of assisting the
Administrator or the Trustee in carrying out the instructions of Participants as to the directed
investment of their accounts and other specialists and their agents, the costs of any bonds
required pursuant to Act Section 412, and other costs of administering the Plan. Until paid, the
expenses shall constitute a liability of the Trust Fund.

2.7 CLAIMS PROCEDURE

          Claims for benefits under the Plan may be filed in writing with the Administrator. Written
notice of the disposition of a claim shall be furnished to the claimant within ninety (90) days
after the application is filed, or such period as is required by applicable law or Department of
Labor regulation. In the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how
the claimant can perfect the claim 

14

 

will be provided. In addition, the claimant shall be furnished
with an explanation of the Plan’s claims review procedure.

2.8 CLAIMS REVIEW PROCEDURE

          Any Employee, former Employee, or Beneficiary of either, who has been denied a benefit by a
decision of the Administrator pursuant to Section 2.7 shall be entitled to request the
Administrator to give further consideration to a claim by filing with the Administrator a written
request for a hearing. Such request, together with a written statement of the reasons why the
claimant believes the claim should be allowed, shall be filed with the Administrator no later than
sixty (60) days after receipt of the written notification provided for in Section 2.7. The
Administrator shall then conduct a hearing within the next sixty (60) days, at which the claimant
may be represented by an attorney or any other representative of such claimant’s choosing and
expense and at which the claimant shall have an opportunity to submit written and oral evidence and
arguments in support of the claim. At the hearing (or prior thereto upon five (5) business days
written notice to the Administrator) the claimant or the claimant’s representative shall have an
opportunity to review all documents in the possession of the Administrator which are pertinent to
the claim at issue and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a complete written
transcript of the proceedings shall be furnished to both parties by the court reporter. The full
expense of any such court reporter and such transcripts shall be borne by the party causing the
court reporter to attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within sixty (60) days of receipt of the appeal (unless there has been an
extension of sixty (60) days due to special circumstances, provided the delay and the special
circumstances occasioning it are communicated to
the claimant within the sixty (60) day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific reasons for the
decision and specific references to the pertinent Plan provisions on which the decision is based.

ARTICLE III

ELIGIBILITY

3.1 CONDITIONS OF ELIGIBILITY

          Any Eligible Employee who has completed six (6) months of service and has attained age 21
shall be eligible to participate hereunder as of the date such Employee has satisfied such
requirements. However, any Employee who was a Participant in the Plan prior to the effective date
of this amendment and restatement shall continue to participate in the Plan.

          For purposes of this Section, an Eligible Employee will be deemed to have completed the
required number of months of service if such Employee is in the employ of the Employer at any time
after such months after the Employee’s employment commencement date. Employment commencement date
shall be the first day that the Employee is entitled to be credited with an Hour of Service for the
performance of duty.

3.2 EFFECTIVE DATE OF PARTICIPATION

          An Eligible Employee shall become a Participant effective as of the earlier of the first day
of the Plan Year or the first day of the seventh month of such Plan Year coinciding with or

15

 

next
following the date such Employee met the eligibility requirements of Section 3.1, provided said
Employee was still employed as of such date (or if not employed on such date, as of the date of
rehire if a 1-Year Break in Service has not occurred or, if later, the date that the Employee would
have otherwise entered the Plan had the Employee not terminated employment).

3.3 DETERMINATION OF ELIGIBILITY

          The Administrator shall determine the eligibility of each Employee for participation in the
Plan based upon information furnished by the Employer. Such determination shall be conclusive and
binding upon all persons, as long as the same is made pursuant to the Plan and the Act. Such
determination shall be subject to review pursuant to Section 2.8.

3.4 TERMINATION OF ELIGIBILITY

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

3.5 OMISSION OF ELIGIBLE EMPLOYEE

          If, in any Plan Year, any Employee who should be included as a Participant in the Plan is
erroneously omitted and discovery of such omission is not made until after a contribution by the
Employer for the year has been made and allocated, then the Employer shall make a subsequent
contribution, if necessary after the application of Section 4.4(c), so that the omitted Employee
receives a total amount which the Employee would have received (including both Employer
contributions and earnings thereon) had the Employee not been omitted. Such contribution shall be
made regardless of whether it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.

3.6 INCLUSION OF INELIGIBLE EMPLOYEE

          If, in any Plan Year, any person who should not have been included as a Participant in the
Plan is erroneously included and discovery of such inclusion is not made until after a contribution
for the year has been made and allocated, the Employer shall be entitled to recover the
contribution made with respect to the ineligible person provided the error is discovered within
twelve (12) months of the date on which it was made. Otherwise, the amount contributed with respect
to the ineligible person shall constitute a Forfeiture for the Plan Year in which the discovery is
made. Notwithstanding the foregoing, any Deferred Compensation made by an ineligible person shall
be distributed to the person (along with any earnings attributable to such Deferred Compensation).

3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE

     (a) If any Participant becomes a Former Participant due to severance from
employment with the Employer and is reemployed by the Employer before a

16

 

1-Year Break in Service occurs, the Former Participant shall become a Participant as of the
reemployment date.

     (b) If any Participant becomes a Former Participant due to severance from
employment with the Employer and is reemployed after a 1-Year Break in Service has
occurred, Years of Service shall include Years of Service prior to the 1-Year Break
in Service subject to the following rules:

(1) In the case of a Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from Employer
contributions, Years of Service before a period of 1-Year Break in Service
will not be taken into account if the number of consecutive 1-Year Breaks in
Service equal or exceed the greater of (A) five (5) or (B) the aggregate
number of pre-break Years of Service. Such aggregate number of Years of
Service will not include any Years of Service disregarded under the
preceding sentence by reason of prior 1-Year Breaks in Service.

(2) A Former Participant shall participate in the Plan as of the date of
reemployment.

     (c) After a Former Participant who has severed employment with the Employer
incurs five (5) consecutive 1-Year Breaks in Service, the Vested portion of said
Former Participant’s Account attributable to pre-break service shall not be
increased as a result of post-break service. In such case, separate accounts will be
maintained as follows:

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

(2) one account representing the Participant’s Employer derived account
balance in the Plan attributable to post-break service.

     (d) If any Participant becomes a Former Participant due to severance of
employment with the Employer and is reemployed by the Employer before five (5)
consecutive 1-Year Breaks in Service, and such Former Participant had received a
distribution of the entire Vested interest prior to reemployment, then the forfeited
account shall be reinstated only if the Former Participant repays the full amount
which had been distributed. Such repayment must be made before the earlier of five
(5) years after the first date on which the Participant is subsequently reemployed
by the Employer or the close of the first period of five (5) consecutive 1-Year
Breaks in Service commencing after the distribution. If a distribution occurs for
any reason other than a severance of employment, the time for repayment may not end
earlier than five (5) years after the date of distribution. In the event the Former
Participant does repay the full amount distributed, the undistributed forfeited
portion of the Participant’s Account must be restored in full, unadjusted by any
gains or losses occurring subsequent to the Valuation Date preceding the
distribution. The source for such reinstatement may be Forfeitures occurring during
the Plan Year. If such source is insufficient, then the Employer will contribute an
amount which is

17

 

sufficient to restore any such forfeited Accounts provided, however,
that if a discretionary contribution is made for such year pursuant to Section
4.1(c), such contribution will first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section 4.4.

3.8 ELECTION NOT TO PARTICIPATE

          An Employee may, subject to the approval of the Employer, elect voluntarily not to participate
in the Plan. The election not to participate must be irrevocable and communicated to the Employer,
in writing, within a reasonable period of time before the beginning of the first Plan Year.

ARTICLE IV

CONTRIBUTION AND ALLOCATION

4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION

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

     (a) The amount of the total salary reduction elections of all Participants made
pursuant to Section 4.2(a), which amount shall be deemed an Employer Elective
Contribution.

     (b) On behalf of each Participant who is eligible to share in matching
contributions for the Plan Year, a discretionary matching contribution equal to a
uniform percentage of each such Participant’s Deferred Compensation, the exact
percentage, if any, to be determined each year by the Employer, which amount, if
any, shall be deemed an Employer Non-Elective Contribution.

     (c) A discretionary amount, which amount, if any, shall be deemed an Employer
Non-Elective Contribution.

     (d) Additionally, to the extent necessary, the Employer shall contribute to the
Plan the amount necessary to provide the top heavy minimum contribution. All
contributions by the Employer shall be made in cash or in such property as is
acceptable to the Trustee.

4.2 PARTICIPANT’S SALARY REDUCTION ELECTION

     (a) Each Participant may elect to defer a portion of Compensation which would
have been received in the Plan Year (except for the deferral election) by up to the
maximum amount which will not cause the Plan to violate the provisions of Sections
4.5(a) and 4.9. A deferral election (or modification of an earlier election) may not
be made with respect to Compensation which is currently available on or before the
date the Participant executed such election. For purposes of this Section,
Compensation shall be determined prior to any reductions made pursuant to Code
Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as Employer
contributions.

18

 

               Additionally, each Participant may elect to defer up to 100% of any cash bonus
to be paid by the Employer during the Plan Year. A deferred election may not be made
with respect to cash bonuses which are currently available on or before the date the
Participant executes such election.

               The amount by which Compensation and/or cash bonuses are reduced shall be that
Participant’s Deferred Compensation and be treated as an Employer Elective
Contribution and allocated to that Participant’s Elective Account.

     (b) The balance in each Participant’s Elective Account shall be fully Vested at
all times and, except as otherwise provided herein, shall not be subject to
Forfeiture for any reason.

     (c) Notwithstanding anything in the Plan to the contrary, amounts held in the
Participant’s Elective Account may not be distributable (including any offset of
loans) earlier than:

(1) a Participant’s separation from service, Total and Permanent Disability,
or death;

(2) a Participant’s attainment of age 59 1/2;

(3) the termination of the Plan without the existence at the time of Plan
termination of another defined contribution plan or the establishment of a
successor defined contribution plan by the Employer or an Affiliated
Employer within the period ending twelve months after distribution of all
assets from the Plan maintained by the Employer. For this purpose, a defined
contribution plan does not include an employee stock ownership plan (as
defined in Code Section 4975(e)(7) or 409), a simplified employee pension
plan (as defined in Code Section 408(k)), or a simple individual retirement
account plan (as defined in Code Section 408(p));

(4) the date of disposition by the Employer to an entity that is not an
Affiliated Employer of substantially all of the assets (within the meaning
of Code Section 409(d)(2)) used in a trade or business of such corporation
if such corporation continues to maintain this Plan after the disposition
with respect to a Participant who continues employment with the corporation
acquiring such assets;

(5) the date of disposition by the Employer or an Affiliated Employer who
maintains the Plan of its interest in a subsidiary (within the meaning of
Code Section 409(d)(3)) to an entity which is not an Affiliated Employer but
only with respect to a Participant who continues employment with such
subsidiary; or

(6) the proven financial hardship of a Participant, subject to the
limitations of Section 6.11.

19

 

     (d) For each Plan Year, a Participant’s Deferred Compensation made under this
Plan and all other plans, contracts or arrangements of the Employer maintaining this
Plan shall not exceed, during any taxable year of the Participant, the limitation
imposed by Code Section 402(g), as in effect at the beginning of such taxable year.
If such dollar limitation is exceeded, a Participant will be deemed to
have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section 4.2(f). The dollar limitation shall
be adjusted annually pursuant to the method provided in Code Section 415(d) in
accordance with Regulations.

     (e) In the event a Participant has received a hardship distribution from the
Participant’s Elective Account pursuant to Section 6.11(c) or pursuant to Regulation
1.401(k)-1(d)(2)(iv)(B) from any other plan maintained by the Employer, then such
Participant shall not be permitted to elect to have Deferred Compensation
contributed to the Plan for a period of twelve (12) months following the receipt of
the distribution. Furthermore, the dollar limitation under Code Section 402(g) shall
be reduced, with respect to the Participant’s taxable year following the taxable
year in which the hardship distribution was made, by the amount of such
Participant’s Deferred Compensation, if any, pursuant to this Plan (and any other
plan maintained by the Employer) for the taxable year of the hardship distribution.

     (f) If a Participant’s Deferred Compensation under this Plan together with any
elective deferrals (as defined in Regulation 1.402(g)-1(b)) under another qualified
cash or deferred arrangement (as described in Code Section 401(k)), a simplified
employee pension (as described in Code Section 408(k)(6)), a simple individual
retirement account plan (as described in Code Section 408(p)), a salary reduction
arrangement (within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Code Section 457(b), or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed by Code Section 402(g) (as
adjusted annually in accordance with the method provided in Code Section 415(d)
pursuant to Regulations) for such Participant’s taxable year, the Participant may,
not later than March 1 following the close of the Participant’s taxable year, notify
the Administrator in writing of such excess and request that the Participant’s
Deferred Compensation under this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator may direct the Trustee to distribute
such excess amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the close of the
Participant’s taxable year. Any distribution of less than the entire amount of
Excess Deferred Compensation and Income shall be treated as a pro rata distribution
of Excess Deferred Compensation and Income. The amount distributed shall not exceed
the Participant’s Deferred Compensation under the Plan for the taxable year (and any
Income allocable to such excess amount). Any distribution on or before the last day
of the Participant’s taxable year must satisfy each of the following conditions:

(1) the distribution must be made after the date on which the Plan received
the Excess Deferred Compensation;

20

 

(2) the Participant shall designate the distribution as Excess Deferred
Compensation; and

(3) the Plan must designate the distribution as a distribution of Excess
Deferred Compensation.

               Matching contributions which relate to Excess Deferred Compensation which is
distributed pursuant to this Section 4.2(f) shall be forfeited.

     (g) Notwithstanding Section 4.2(f) above, a Participant’s Excess Deferred
Compensation shall be reduced, but not below zero, by any distribution of Excess
Contributions pursuant to Section 4.6(a) for the Plan Year beginning with or within
the taxable year of the Participant.

     (h) At Normal Retirement Date, or such other date when the Participant shall be
entitled to receive benefits, the fair market value of the Participant’s Elective
Account shall be used to provide additional benefits to the Participant or the
Participant’s Beneficiary.

     (i) Employer Elective Contributions made pursuant to this Section may be
segregated into a separate account for each Participant in a federally insured
savings account, certificate of deposit in a bank or savings and loan association,
money market certificate, or other short-term debt security acceptable to the
Trustee until such time as the allocations pursuant to Section 4.4 have been made.

     (j) The Employer and the Administrator shall implement the salary reduction
elections provided for herein in accordance with the following:

(1) A Participant must make an initial salary deferral election within a
reasonable time, not to exceed thirty (30) days, after entering the Plan
pursuant to Section 3.2. If the Participant fails to make an initial salary
deferral election within such time, then such Participant may thereafter
make an election in accordance with the rules governing modifications. The
Participant shall make such an election by entering into a written salary
reduction agreement with the Employer and filing such agreement with the
Administrator. Such election shall initially be effective beginning with the
pay period following the acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and shall remain in force
until revoked.

(2) A Participant may modify a prior election during the Plan Year and
concurrently make a new election by filing a written notice with the
Administrator within a reasonable time before the pay period for which such
modification is to be effective. However, modifications to a salary deferral
election shall only be permitted semi-annually, during election periods
established by the Administrator prior to the first day of a Plan Year and
the first day of the seventh month of a Plan Year. Any modification shall
not have retroactive effect and shall remain in force until revoked.

21

 

(3) A Participant may elect to prospectively revoke the Participant’s salary
reduction agreement in its entirety at any time during the Plan Year by
providing the Administrator with thirty (30) days written notice of such
revocation (or upon such shorter notice period as may be acceptable to the
Administrator). Such revocation shall become effective as of the beginning
of the first pay period coincident with or next following the expiration of
the notice period. Furthermore, the termination of the Participant’s
employment, or the cessation of participation for any reason, shall be
deemed to revoke any salary reduction agreement then in effect, effective
immediately following the close of the pay period within which such
termination or cessation occurs.

4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION

          The Employer may make its contribution to the Plan for a particular Plan Year at such time as
the Employer, in its sole discretion, determines. If the Employer makes a contribution for a
particular Plan Year after the close of that Plan Year, the Employer will designate to the Trustee
the Plan Year for which the Employer is making its contribution.

4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS

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

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

(1) With respect to the Employer Elective Contribution made pursuant to
Section 4.1(a), to each Participant’s Elective Account in an amount equal to
each such Participant’s Deferred Compensation for the year.

(2) With respect to the Employer Non-Elective Contribution made pursuant to
Section 4.1(b), to each Participant’s Account in accordance with Section
4.1(b).

Any Participant actively employed during the Plan Year shall be eligible to
share in the matching contribution for the Plan Year.

22

 

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

Only Participants who have completed a Year of Service during the Plan Year
and are actively employed on the last day of the Plan Year shall be eligible
to share in the discretionary contribution for the year.

     (c) On or before each Anniversary Date any amounts which became Forfeitures
since the last Anniversary Date may be made available to reinstate previously
forfeited account balances of Former Participants, if any, in accordance with
Section 3.7(d), be used to satisfy any contribution that may be required pursuant to
Section 3.5 and/or 6.9, or be used to pay any administrative expenses of the Plan.
The remaining Forfeitures, if any, shall be used to reduce the contribution of the
Employer hereunder for the Plan Year in which such Forfeitures occur in the
following manner:

(1) Forfeitures attributable to Employer matching contributions made
pursuant to Section 4.1(b) shall be used to reduce the Employer contribution
for the Plan Year in which such Forfeitures occur.

(2) Forfeitures attributable to Employer discretionary contributions made
pursuant to Section 4.1(c) shall be used to reduce the Employer contribution
for the Plan Year in which such Forfeitures occur.

     (d) For any Top Heavy Plan Year, Non-Key Employees not otherwise eligible to
share in the allocation of contributions as provided above, shall receive the
minimum allocation provided for in Section 4.4(g) if eligible pursuant to the
provisions of Section 4.4(i).

     (e) Notwithstanding the foregoing, Participants who are not actively employed
on the last day of the Plan Year due to Retirement (Normal or Late), Total and
Permanent Disability or death shall share in the allocation of contributions for
that Plan Year.

     (f) As of each Valuation Date, before the current valuation period allocation
of Employer contributions, any earnings or losses (net appreciation or net
depreciation) of the Trust Fund shall be allocated in the same proportion that each
Participant’s and Former Participant’s nonsegregated accounts bear to the total of
all Participants’ and Former Participants’ nonsegregated accounts as of such date.
Earnings or losses with respect to a Participant’s Directed Account shall be
allocated in accordance with Section 4.12.

               Participants’ transfers from other qualified plans deposited in the general
Trust Fund shall share in any earnings and losses (net appreciation or net
depreciation) of the Trust Fund in the same manner provided above. Each

23

 

segregated account maintained on behalf of a Participant shall be credited or
charged with its separate earnings and losses.

     (g) Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding the
foregoing, for any Top Heavy Plan Year, the sum of the Employer contributions
allocated to the Participant’s Combined Account of each Non-Key Employee shall be
equal to at least three percent (3%) of such Non-Key Employee’s “415 Compensation”
(reduced by contributions and forfeitures, if any, allocated to each Non-Key
Employee in any defined contribution plan included with this Plan in a Required
Aggregation Group). However, if (1) the sum of the Employer contributions allocated
to the Participant’s Combined Account of each Key Employee for such Top Heavy Plan
Year is less than three percent (3%) of each Key Employee’s “415 Compensation” and
(2) this Plan is not required to be included in an Aggregation Group to enable a
defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410, the
sum of the Employer contributions allocated to the Participant’s Combined Account of
each Non-Key Employee shall be equal to the largest percentage allocated to the
Participant’s Combined Account of any Key Employee. However, in determining whether
a Non-Key Employee has received the required minimum allocation, such Non-Key
Employee’s Deferred Compensation and matching contributions needed to satisfy the
“Actual Contribution Percentage” tests pursuant to Section 4.7(a) shall not be taken
into account.

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

     (h) For purposes of the minimum allocations set forth above, the percentage
allocated to the Participant’s Combined Account of any Key Employee shall be equal
to the ratio of the sum of the Employer contributions allocated on behalf of such
Key Employee divided by the “415 Compensation” for such Key Employee.

     (i) For any Top Heavy Plan Year, the minimum allocations set forth above shall
be allocated to the Participant’s Combined Account of all Non-Key Employees who are
Participants and who are employed by the Employer on the last day of the Plan Year,
including Non-Key Employees who have (1) failed to complete a Year of Service; and
(2) declined to make mandatory contributions (if required) or, in the case of a cash
or deferred arrangement, elective contributions to the Plan.

     (j) For the purposes of this Section, “415 Compensation” in excess of $150,000
(or such other amount provided in the Code) shall be disregarded. Such amount shall
be adjusted for increases in the cost of living in accordance with Code Section
401(a)(17)(B), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within such
calendar year. If “415 Compensation” for any prior determination period is taken
into account in determining a Participant’s minimum benefit for the current Plan
Year, the “415 Compensation” for such determination period is subject to the

24

 

applicable annual “415 Compensation” limit in effect for that prior period. For
this purpose, in determining the minimum benefit in Plan Years beginning on or after
January 1, 1989, the annual “415 Compensation” limit in effect for determination
periods beginning before that date is $200,000 (or such other amount as adjusted for
increases in the cost of living in accordance with Code Section 415(d) for
determination periods beginning on or after January 1, 1989, and in accordance with
Code Section 401(a)(17)(B) for determination periods beginning on or after January
1, 1994). For determination periods beginning prior to January 1, 1989, the $200,000
limit shall apply only for Top Heavy Plan Years and shall not be adjusted. For any
short Plan Year the “415 Compensation” limit shall be an amount equal to the “415
Compensation” limit for the calendar year in which the Plan Year begins multiplied
by the ratio obtained by dividing the number of full months in the short Plan Year
by twelve (12).

     (k) Notwithstanding anything herein to the contrary, Participants who
terminated employment for any reason during the Plan Year shall share in the salary
reduction contributions made by the Employer for the year of termination without
regard to the Hours of Service credited.

     (l) Notwithstanding anything in this Section to the contrary, all information
necessary to properly reflect a given transaction may not be available until after
the date specified herein for processing such transaction, in which case the
transaction will be reflected when such information is received and processed.
Subject to express limits that may be imposed under the Code, the processing of any
contribution, distribution or other transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or computer
programs, failure of the means of the transmission of data, force majeure, the
failure of a service provider to timely receive values or prices, and the correction
for errors or omissions or the errors or omissions of any service provider). The
processing date of a transaction will be binding for all purposes of the Plan.

4.5 ACTUAL DEFERRAL PERCENTAGE TESTS

     (a) Maximum Annual Allocation: For each Plan Year, the annual allocation
derived from Employer Elective Contributions to a Highly Compensated Participant’s
Elective Account shall satisfy one of the following tests:

(1) The “Actual Deferral Percentage” for the Highly Compensated Participant
group shall not be more than the “Actual Deferral Percentage” of the
Non-Highly Compensated Participant group (for the preceding Plan Year if the
prior year testing method is used to calculate the “Actual Deferral
Percentage” for the Non-Highly Compensated Participant group) multiplied by
1.25, or

(2) The excess of the “Actual Deferral Percentage” for the Highly
Compensated Participant group over the “Actual Deferral Percentage” for the
Non-Highly Compensated Participant group (for the preceding Plan Year
if the prior year testing method is used to calculate the “Actual Deferral

25

 

Percentage” for the Non-Highly Compensated Participant group) shall not be
more than two percentage points. Additionally, the “Actual Deferral
Percentage” for the Highly Compensated Participant group shall not exceed
the “Actual Deferral Percentage” for the Non-Highly Compensated Participant
group (for the preceding Plan Year if the prior year testing method is used
to calculate the “Actual Deferral Percentage” for the Non-Highly Compensated
Participant group) multiplied by 2. The provisions of Code Section 401(k)(3)
and Regulation 1.401(k)-1(b) are incorporated herein by reference.

However, in order to prevent the multiple use of the alternative method
described in (2) above and in Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make elective deferrals pursuant to
Section 4.2 and to make Employee contributions or to receive matching
contributions under this Plan or under any other plan maintained by the
Employer or an Affiliated Employer shall have a combination of such
Participant’s Elective Contributions and Employer matching contributions
reduced pursuant to Section 4.6(a) and Regulation 1.401(m)-2, the provisions
of which are incorporated herein by reference.

     (b) For the purposes of this Section “Actual Deferral Percentage” means, with
respect to the Highly Compensated Participant group and Non-Highly Compensated
Participant group for a Plan Year, the average of the ratios, calculated separately
for each Participant in such group, of the amount of Employer Elective Contributions
allocated to each Participant’s Elective Account for such Plan Year, to such
Participant’s “414(s) Compensation” for such Plan Year. The actual deferral ratio
for each Participant and the “Actual Deferral Percentage” for each group shall be
calculated to the nearest one-hundredth of one percent. Employer Elective
Contributions allocated to each Non-Highly Compensated Participant’s Elective
Account shall be reduced by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan maintained by the Employer.

     Notwithstanding the above, if the prior year test method is used to calculate
the “Actual Deferral Percentage” for the Non-Highly Compensated Participant group
for the first Plan Year of this amendment and restatement, the “Actual Deferral
Percentage” for the Non-Highly Compensated Participant group for the preceding Plan
Year shall be calculated pursuant to the provisions of the Plan then in effect.

     (c) For the purposes of Sections 4.5(a) and 4.6, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any Employee
eligible to make a deferral election pursuant to Section 4.2, whether or not such
deferral election was made or suspended pursuant to Section 4.2.

               Notwithstanding the above, if the prior year testing method is used to
calculate the “Actual Deferral Percentage” for the Non-Highly Compensated
Participant group for the first Plan Year of this amendment and restatement,
for

26

 

purposes of Section 4.5(a) and 4.6, a Non-Highly Compensated Participant shall
include any such Employee eligible to make a deferral election, whether or not such
deferral election was made or suspended, pursuant to the provisions of the Plan in
effect for the preceding Plan Year.

     (d) For the purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(k), if two or more plans which include cash or deferred arrangements are
considered one plan for the purposes of Code Section 401(a)(4) or 410(b) (other than
Code Section 410(b)(2)(A)(ii)), the cash or deferred arrangements included in such
plans shall be treated as one arrangement. In addition, two or more cash or deferred
arrangements may be considered as a single arrangement for purposes of determining
whether or not such arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k).
In such a case, the cash or deferred arrangements included in such plans and the
plans including such arrangements shall be treated as one arrangement and as one
plan for purposes of this Section and Code Sections 401(a)(4), 410(b) and 401(k).
Any adjustment to the Non-Highly Compensated Participant actual deferral ratio for
the prior year shall be made in accordance with Internal Revenue Service Notice 98-1
and any superseding guidance. Plans may be aggregated under this paragraph (d) only
if they have the same plan year. Notwithstanding the above, if two or more plans
which include cash or deferred arrangements are permissively aggregated under
Regulation 1.410(b)-7(d), all plans permissively aggregated must use either the
current year testing method or the prior year testing method for the testing year.

               Notwithstanding the above, an employee stock ownership plan described in Code
Section 4975(e)(7) or 409 may not be combined with this Plan for purposes of
determining whether the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(b) and 401(k).

     (e) For the purposes of this Section, if a Highly Compensated Participant is a
Participant under two or more cash or deferred arrangements (other than a cash or
deferred arrangement which is part of an employee stock ownership plan as defined in
Code Section 4975(e)(7) or 409) of the Employer or an Affiliated Employer, all such
cash or deferred arrangements shall be treated as one cash or deferred arrangement
for the purpose of determining the actual deferral ratio with respect to such Highly
Compensated Participant. However, if the cash or deferred arrangements have
different plan years, this paragraph shall be applied by treating all cash or
deferred arrangements ending with or within the same calendar year as a single
arrangement.

     (f) For the purpose of this Section, when calculating the “Actual Deferral
Percentage” for the Non-Highly Compensated Participant group, the current year
testing method shall be used. Any change from the current year testing method to the
prior year testing method shall be made pursuant to Internal Revenue Service Notice
98-1, Section VII (or superseding guidance), the provisions of which are
incorporated herein by reference.

27

 

     (g) Notwithstanding anything in this Section to the contrary, the provisions of
this Section and Section 4.6 may be applied separately (or will be applied
separately to the extent required by Regulations) to each plan within the meaning of
Regulation 1.401(k)-1(g)(11). Furthermore, the provisions of Code Section
401(k)(3)(F) may be used to exclude from consideration all Non-Highly Compensated
Employees who have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).

4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS

          In the event (or if it is anticipated) that the initial allocations of the Employer Elective
Contributions made pursuant to Section 4.4 do (or might) not satisfy one of the tests set forth in
Section 4.5(a), the Administrator shall adjust Excess Contributions pursuant to the options set
forth below:

     (a) On or before the fifteenth day of the third month following the end of each
Plan Year, but in no event later than the close of the following Plan Year, the
Highly Compensated Participant having the largest dollar amount of Elective
Contributions shall have a portion of such Participant’s Elective Contributions
distributed until the total amount of Excess Contributions has been distributed, or
until the amount of such Participant’s Elective Contributions equals the Elective
Contributions of the Highly Compensated Participant having the second largest dollar
amount of Elective Contributions. This process shall continue until the total amount
of Excess Contributions has been distributed. In determining the amount of Excess
Contributions to be distributed with respect to an affected Highly Compensated
Participant as determined herein, such amount shall be reduced pursuant to Section
4.2(f) by any Excess Deferred Compensation previously distributed to such affected
Highly Compensated Participant for such Participant’s taxable year ending with or
within such Plan Year.

(1) With respect to the distribution of Excess Contributions pursuant to (a)
above, such distribution:

(i) may be postponed but not later than the close of the Plan Year
following the Plan Year to which they are allocable;

(ii) shall be adjusted for Income; and

(iii) shall be designated by the Employer as a distribution of Excess
Contributions (and Income).

(2) Any distribution of less than the entire amount of Excess Contributions
shall be treated as a pro rata distribution of Excess Contributions and
Income.

(3) Matching contributions which relate to Excess Contributions shall be
forfeited unless the related matching contribution is distributed as an
Excess Aggregate Contribution pursuant to Section 4.8.

28

 

     (b) Notwithstanding the above, within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified Non-Elective Contribution in
accordance with one of the following provisions which contribution shall be
allocated to the Participant’s Elective Account of each Non-Highly Compensated
Participant eligible to share in the allocation in accordance with such provision.
The Employer shall provide the Administrator with written notification of the amount
of the contribution being made and for which provision it is being made pursuant to:

(1) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.5(a). Such contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant’s 414(s) Compensation for the year
(or prior year if the prior year testing method is being used) bears to the
total 414(s) Compensation of all Non-Highly Compensated Participants for
such year.

(2) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.5(a). Such contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant electing salary reductions pursuant
to Section 4.2 in the same proportion that each such Non-Highly Compensated
Participant’s Deferred Compensation for the year (or at the end of the prior
Plan Year if the prior year testing method is being used) bears to the total
Deferred Compensation of all such Non-Highly Compensated Participants for
such year.

(3) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.5(a). Such contribution shall be allocated in equal amounts (per capita).

(4) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants electing salary reductions pursuant to
Section 4.2 in an amount sufficient to satisfy (or to prevent an anticipated
failure of) one of the tests set forth in Section 4.5(a). Such contribution
shall be allocated for the year (or at the end of the prior Plan Year if the
prior year testing method is used) to each Non-Highly Compensated
Participant electing salary reductions pursuant to Section 4.2 in equal
amounts (per capita).

(5) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in

29

 

Section
4.5(a). Such contribution shall be allocated to the Non-Highly Compensated
Participant having the lowest 414(s) Compensation, until one of the tests
set forth in Section 4.5(a) is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has received
the maximum “annual addition” pursuant to Section 4.9. This process shall
continue until one of the tests set forth in Section 4.5(a) is satisfied (or
is anticipated to be satisfied).

               Notwithstanding the above, at the Employer’s discretion, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the prior year testing method is being used) shall not be
eligible to receive a special Qualified Non-Elective Contribution and shall be
disregarded.

               Notwithstanding the above, if the testing method changes from the current year
testing method to the prior year testing method, then for purposes of preventing the
double counting of Qualified Non-Elective Contributions for the first testing year
for which the change is effective, any special Qualified Non-Elective Contribution
on behalf of Non-Highly Compensated Participants used to satisfy the “Actual
Deferral Percentage” or “Actual Contribution Percentage” test under the current year
testing method for the prior year testing year shall be disregarded.

     (c) If during a Plan Year, it is projected that the aggregate amount of
Elective Contributions to be allocated to all Highly Compensated Participants under
this Plan would cause the Plan to fail the tests set forth in Section 4.5(a), then
the Administrator may automatically reduce the deferral amount of affected Highly
Compensated Participants, beginning with the Highly Compensated Participant who has
the highest deferral ratio until it is anticipated the Plan will pass the tests or
until the actual deferral ratio equals the actual deferral ratio of the Highly
Compensated Participant having the next highest actual deferral ratio. This process
may continue until it is anticipated that the Plan will satisfy one of the tests set
forth in Section 4.5(a). Alternatively, the Employer may specify a maximum
percentage of Compensation that may be deferred.

     (d) Any Excess Contributions (and Income) which are distributed on or after 2
1/2 months after the end of the Plan Year shall be subject to the ten percent (10%)
Employer excise tax imposed by Code Section 4979.

4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS

     (a) The “Actual Contribution Percentage” for the Highly Compensated Participant
group shall not exceed the greater of:

(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year testing
method is used to calculate the “Actual Contribution Percentage” for the
Non-Highly Compensated Participant group); or

30

 

(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the “Actual Contribution Percentage” for
the Non-Highly Compensated Participant group), or such percentage for the
Non-Highly Compensated Participant group (for the preceding Plan Year if the
prior year testing method is used to calculate the “Actual Contribution
Percentage” for the Non-Highly Compensated Participant group) plus 2
percentage points. However, to prevent the multiple use of the alternative
method described in this paragraph and Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make elective deferrals pursuant to
Section 4.2 or any other cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make Employee contributions or to
receive matching contributions under this Plan or under any plan maintained
by the Employer or an Affiliated Employer shall have a combination of
Elective Contributions and Employer matching contributions reduced pursuant
to Regulation 1.401(m)-2 and Section 4.8(a). The provisions of Code Section
401(m) and Regulations 1.401(m)-1(b) and 1.401(m)-2 are incorporated herein
by reference.

     (b) For the purposes of this Section and Section 4.8, “Actual Contribution
Percentage” for a Plan Year means, with respect to the Highly Compensated
Participant group and Non-Highly Compensated Participant group (for the preceding
Plan Year if the prior year testing method is used to calculate the “Actual
Contribution Percentage” for the Non-Highly Compensated Participant group), the
average of the ratios (calculated separately for each Participant in each group and
rounded to the nearest one-hundredth of one percent) of:

     (1) the sum of Employer matching contributions made pursuant to Section
4.1(b) on behalf of each such Participant for such Plan Year; to

     (2) the Participant’s “414(s) Compensation” for such Plan Year.

     Notwithstanding the above, if the prior year testing method is used to
calculate the “Actual Contribution Percentage” for the Non-Highly Compensated
Participant group for the first Plan Year of this amendment and restatement, for
purposes of Section 4.7(a), the “Actual Contribution Percentage” for the Non-Highly
Compensated Participant group for the preceding Plan Year shall be determined
pursuant to the provisions of the Plan then in effect.

     (c) For purposes of determining the “Actual Contribution Percentage,” only
Employer matching contributions contributed to the Plan prior to the end of the
succeeding Plan Year shall be considered. In addition, the Administrator may elect
to take into account, with respect to Employees eligible to have Employer matching
contributions pursuant to Section 4.1(b) allocated to their accounts, elective
deferrals (as defined in Regulation 1.402(g)-1(b)) and qualified non-elective
contributions (as defined in Code Section 401(m)(4)(C)) contributed to any plan
maintained by the Employer. Such elective deferrals and qualified non-elective
contributions shall be treated as Employer matching contributions subject to

31

 

Regulation 1.401(m)-1(b)(5) which is incorporated herein by reference. However, the
Plan Year must be the same as the plan year of the plan to which the elective
deferrals and the qualified non-elective contributions are made.

     (d) For purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(m), if two or more plans of the Employer to which matching contributions,
Employee contributions, or both, are made are treated as one plan for purposes of
Code Sections 401(a)(4) or 410(b) (other than the average benefits test under Code
Section 410(b)(2)(A)(ii)), such plans shall be treated as one plan. In addition, two
or more plans of the Employer to which matching contributions, Employee
contributions, or both, are made may be considered as a single plan for purposes of
determining whether or not such plans satisfy Code Sections 401(a)(4), 410(b) and
401(m). In such a case, the aggregated plans must satisfy this Section and Code
Sections 401(a)(4), 410(b) and 401(m) as though such aggregated plans were a single
plan. Any adjustment to the Non-Highly Compensated Participant actual contribution
ratio for the prior year shall be made in accordance with Internal Revenue Service
Notice 98-1 and any superseding guidance. Plans may be aggregated under this
paragraph (d) only if they have the same plan year. Notwithstanding the above, if
two or more plans which include cash or deferred arrangements are permissively
aggregated under Regulation 1.410(b)-7(d), all plans permissively aggregated must
use either the current year testing method or the prior year testing method for the
testing year.

               Notwithstanding the above, an employee stock ownership plan described in Code
Section 4975(e)(7) or 409 may not be aggregated with this Plan for purposes of
determining whether the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(b) and 401(m).

     (e) If a Highly Compensated Participant is a Participant under two or more
plans (other than an employee stock ownership plan as defined in Code Section
4975(e)(7) or 409) which are maintained by the Employer or an Affiliated Employer to
which matching contributions, Employee contributions, or both, are made, all such
contributions on behalf of such Highly Compensated Participant shall be aggregated
for purposes of determining such Highly Compensated Participant’s actual
contribution ratio. However, if the plans have different plan years, this
paragraph shall be applied by treating all plans ending with or within the same
calendar year as a single plan.

     (f) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated Participant
and Non-Highly Compensated Participant shall include any Employee eligible to have
Employer matching contributions (whether or not a deferral election was made or
suspended) allocated to the Participant’s account for the Plan Year.

               Notwithstanding the above, if the prior year testing method is used to
calculate the “Actual Contribution Percentage” for the Non-Highly Compensated
Participant group for the first Plan Year of this amendment and restatement, for the
purposes of Section 4.7(a), a Non-Highly Compensated Participant shall include any
such Employee eligible to have Employer matching contributions (whether or not a

32

 

deferral election was made or suspended) allocated to the Participant’s account for
the preceding Plan Year pursuant to the provisions of the Plan then in effect.

     (g) For the purpose of this Section, when calculating the “Actual Contribution
Percentage” for the Non-Highly Compensated Participant group, the current year
testing method shall be used. Any change from the current year testing method to the
prior year testing method shall be made pursuant to Internal Revenue Service Notice
98-1, Section VII (or superseding guidance), the provisions of which are
incorporated herein by reference.

     (h) Notwithstanding anything in this Section to the contrary, the provisions of
this Section and Section 4.8 may be applied separately (or will be applied
separately to the extent required by Regulations) to each plan within the meaning of
Regulation 1.401(k)-1(g)(11). Furthermore, the provisions of Code Section
401(k)(3)(F) may be used to exclude from consideration all Non-Highly Compensated
Employees who have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).

4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS

     (a) In the event (or if it is anticipated) that the “Actual Contribution
Percentage” for the Highly Compensated Participant group exceeds (or might exceed)
the “Actual Contribution Percentage” for the Non-Highly Compensated Participant
group pursuant to Section 4.7(a), the Administrator (on or before the fifteenth day
of the third month following the end of the Plan Year, but in no event later than
the close of the following Plan Year) shall direct the Trustee to distribute to the
Highly Compensated Participant having the largest dollar amount of contributions
determined pursuant to Section 4.7(b)(1), the Vested portion of such contributions
(and Income allocable to such contributions) and, if forfeitable, forfeit such
non-Vested contributions attributable to Employer matching contributions (and Income
allocable to such forfeitures) until the total amount of Excess Aggregate
Contributions has been distributed, or until the Participant’s remaining amount
equals the amount of contributions determined pursuant to Section 4.7(b)(1) of the
Highly Compensated Participant having the second largest dollar amount of
contributions. This process shall continue until the total amount of Excess
Aggregate Contributions has been distributed.

          If the correction of Excess Aggregate Contributions attributable to Employer
matching contributions is not in proportion to the Vested and non-Vested portion of
such contributions, then the Vested portion of the Participant’s Account
attributable to Employer matching contributions after the correction shall be
subject to Section 6.5(g).

     (b) Any distribution and/or forfeiture of less than the entire amount of Excess
Aggregate Contributions (and Income) shall be treated as a pro rata distribution
and/or forfeiture of Excess Aggregate Contributions and Income. Distribution of
Excess Aggregate Contributions shall be designated by the Employer

33

 

as a distribution
of Excess Aggregate Contributions (and Income). Forfeitures of Excess Aggregate
Contributions shall be treated in accordance with Section 4.4.

     (c) Excess Aggregate Contributions, including forfeited matching contributions,
shall be treated as Employer contributions for purposes of Code Sections 404 and 415
even if distributed from the Plan.

               Forfeited matching contributions that are reallocated to Participants’ Accounts
for the Plan Year in which the forfeiture occurs shall be treated as an “annual
addition” pursuant to Section 4.9(b) for the Participants to whose Accounts they are
reallocated and for the Participants from whose Accounts they are forfeited.

     (d) The determination of the amount of Excess Aggregate Contributions with
respect to any Plan Year shall be made after first determining the Excess
Contributions, if any, to be treated as after-tax voluntary Employee contributions
due to recharacterization for the plan year of any other qualified cash or deferred
arrangement (as defined in Code Section 401(k)) maintained by the Employer that ends
with or within the Plan Year or which are treated as after-tax voluntary Employee
contributions due to recharacterization pursuant to Section 4.6(a).

     (e) If during a Plan Year the projected aggregate amount of Employer matching
contributions to be allocated to all Highly Compensated Participants under this Plan
would, by virtue of the tests set forth in Section 4.7(a), cause the Plan to fail
such tests, then the Administrator may automatically reduce proportionately or in
the order provided in Section 4.8(a) each affected Highly Compensated Participant’s
projected share of such contributions by an amount necessary to satisfy one of the
tests set forth in Section 4.7(a).

     (f) Notwithstanding the above, within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified Non-Elective Contribution in
accordance with one of the following provisions which contribution shall be
allocated to the Participant’s Account of each Non-Highly Compensated eligible to
share in the allocation in accordance with such provision. The Employer shall
provide the Administrator with written notification of the amount of the
contribution being made and for which provision it is being made pursuant to:

(1) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.7. Such contribution shall be allocated in the same proportion that each
Non-Highly Compensated Participant’s 414(s) Compensation for the year (or
prior year if the prior year testing method is being used) bears to the
total 414(s) Compensation of all Non-Highly Compensated Participants for
such year.

(2) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in

34

 

Section
4.7. Such contribution shall be allocated in the same proportion that each
Non-Highly Compensated Participant electing salary reductions pursuant to
Section 4.2 in the same proportion that each such Non-Highly Compensated
Participant’s Deferred Compensation for the year (or at the end of the prior
Plan Year if the prior year testing method is being used) bears to the total
Deferred Compensation of all such Non-Highly Compensated Participants for
such year.

(3) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.7. Such contribution shall be allocated in equal amounts (per capita).

(4) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants electing salary reductions pursuant to
Section 4.2 in an amount sufficient to satisfy (or to prevent an anticipated
failure of) one of the tests set forth in Section 4.7. Such contribution
shall be allocated for the year (or at the end of the prior Plan Year if the
prior year testing method is used) to each Non-Highly Compensated
Participant electing salary reductions pursuant to Section 4.2 in equal
amounts (per capita).

(5) A special Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth in Section
4.7. Such contribution shall be allocated to the Non-Highly
Compensated Participant having the lowest 414(s) Compensation, until one of
the tests set forth in Section 4.7 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has received
the maximum “annual addition” pursuant to Section 4.9. This process shall
continue until one of the tests set forth in Section 4.7 is satisfied (or is
anticipated to be satisfied).

               Notwithstanding the above, at the Employer’s discretion, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the prior year testing method is being used) shall not be
eligible to receive a special Qualified Non-Elective Contribution and shall be
disregarded.

               Notwithstanding the above, if the testing method changes from the current year
testing method to the prior year testing method, then for purposes of preventing the
double counting of Qualified Non-Elective Contributions for the first testing year
for which the change is effective, any special Qualified Non-Elective Contribution
on behalf of Non-Highly Compensated Participants used to satisfy the “Actual
Deferral Percentage” or “Actual Contribution Percentage” test under the current year
testing method for the prior year testing year shall be disregarded.

35

 

     (g) Any Excess Aggregate Contributions (and Income) which are distributed on or
after 2 1/2 months after the end of the Plan Year shall be subject to the ten
percent (10%) Employer excise tax imposed by Code Section 4979.

4.9 MAXIMUM ANNUAL ADDITIONS

     (a) Notwithstanding the foregoing, the maximum “annual additions” credited to a
Participant’s accounts for any “limitation year” shall equal the lesser of: (1)
$30,000 adjusted annually as provided in Code Section 415(d) pursuant to the
Regulations, or (2) twenty-five percent (25%) of the Participant’s “415
Compensation” for such “limitation year.” If the Employer contribution that would
otherwise be contributed or allocated to the Participant’s accounts would cause the
“annual additions” for the “limitation year” to exceed the maximum “annual
additions,” the amount contributed or allocated will be reduced so that the “annual
additions” for the “limitation year” will equal the maximum “annual additions,” and
any amount in excess of the maximum “annual additions,” which would have been
allocated to such Participant may be allocated to other Participants. For any short
“limitation year,” the dollar limitation in (1) above shall be reduced by a
fraction, the numerator of which is the number of full months in the short
“limitation year” and the denominator of which is twelve (12).

     (b) For purposes of applying the limitations of Code Section 415, “annual
additions” means the sum credited to a Participant’s accounts for any “limitation
year” of (1) Employer contributions, (2) Employee contributions, (3) forfeitures,
(4) amounts allocated, after March 31, 1984, to an individual medical account, as
defined in Code Section 415(l)(2) which is part of a pension or annuity plan
maintained by the Employer and (5) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate account
of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit
plan (as defined in Code Section 419(e)) maintained by the Employer. Except,
however, the “415 Compensation” percentage limitation referred to in paragraph
(a)(2) above shall not apply to: (1) any contribution for medical benefits
(within the meaning of Code Section 419A(f)(2)) after separation from service
which is otherwise treated as an “annual addition,” or (2) any amount otherwise
treated as an “annual addition” under Code Section 415(l)(1).

     (c) For purposes of applying the limitations of Code Section 415, the transfer
of funds from one qualified plan to another is not an “annual addition.” In
addition, the following are not Employee contributions for the purposes of Section
4.9(b)(2): (1) rollover contributions (as defined in Code Sections 402(e)(6),
403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans made to a Participant
from the Plan; (3) repayments of distributions received by an Employee pursuant to
Code Section 411(a)(7)(B) (cash-outs); (4) repayments of distributions received by
an Employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions); and (5)
Employee contributions to a simplified employee pension excludable from gross income
under Code Section 408(k)(6).

36

 

     (d) For purposes of applying the limitations of Code Section 415, the
“limitation year” shall be the Plan Year.

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

     (f) For the purpose of this Section, if the Employer is a member of a
controlled group of corporations, trades or businesses under common control (as
defined by Code Section 1563(a) or Code Section 414(b) and (c) as modified by Code
Section 415(h)), is a member of an affiliated service group (as defined by Code
Section 414(m)), or is a member of a group of entities required to be aggregated
pursuant to Regulations under Code Section 414(o), all Employees of such Employers
shall be considered to be employed by a single Employer.

     (g) If this is a plan described in Code Section 413(c) (other than a plan
described in Code Section 413(f)), then all of the benefits or contributions
attributable to a Participant from all of the Employers maintaining this Plan shall
be taken into account in applying the limits of this Section with respect to such
Participant. Furthermore, in applying the limitations of this Section with respect
to such a Participant, the total “415 Compensation” received by the Participant from
all of the Employers maintaining the Plan shall be taken into account.

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

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

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

37

 

     (i) Notwithstanding anything contained in this Section to the contrary, the
limitations, adjustments and other requirements prescribed in this Section shall at
all times comply with the provisions of Code Section 415 and the Regulations
thereunder.

4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS

     (a) If, as a result of a reasonable error in estimating a Participant’s
Compensation, a reasonable error in determining the amount of elective deferrals
(within the meaning of Code Section 402(g)(3)) that may be made with respect to any
Participant under the limits of Section 4.9 or other facts and circumstances to
which Regulation 1.415-6(b)(6) shall be applicable, the “annual additions” under
this Plan would cause the maximum “annual additions” to be exceeded for any
Participant, the “excess amount” will be disposed of in one of the following
manners, as uniformly determined by the Administrator for all Participants similarly
situated.

(1) Any matched Deferred Compensation and Employer matching contributions
which relate to such Deferred Compensation will be proportionately reduced
to the extent they would reduce the “excess amount.” The Deferred
Compensation (and any gains attributable to such Deferred Compensation) will
be distributed to the Participant and the Employer matching contributions
(and any gains attributable to such matching contributions) will be used to
reduce the Employer contribution in the next “limitation year”;

(2) If, after the application of subparagraph (1) above, an “excess amount”
still exists, and the Participant is covered by the Plan at the end of the
“limitation year,” the “excess amount” will be used to reduce the Employer
contribution for such Participant in the next “limitation year,” and each
succeeding “limitation year” if necessary;

(3) If, after the application of subparagraphs (1) and (2) above, an “excess
amount” still exists, and the Participant is not covered by the Plan at the
end of the “limitation year,” the “excess amount” will be held unallocated
in a “Section 415 suspense account.” The “Section 415 suspense account” will
be applied to reduce future Employer contributions for all remaining
Participants in the next “limitation year,” and each succeeding “limitation
year” if necessary;

(4) If a “Section 415 suspense account” is in existence at any time during
the “limitation year” pursuant to this Section, it will not participate in
the allocation of investment gains and losses of the Trust Fund. If a
“Section 415 suspense account” is in existence at any time during a
particular “limitation year,” all amounts in the “Section 415 suspense
account” must be allocated and reallocated to Participants’ accounts before
any Employer contributions or any Employee contributions may be made to the
Plan for that “limitation
year.” Except as provided in (1) above, “excess amounts” may not be
distributed to Participants or Former Participants.

38

 

     (b) For purposes of this Article, “excess amount” for any Participant for a
“limitation year” shall mean the excess, if any, of (1) the “annual additions” which
would be credited to the Participant’s account under the terms of the Plan without
regard to the limitations of Code Section 415 over (2) the maximum “annual
additions” determined pursuant to Section 4.9.

     (c) For purposes of this Section, “Section 415 suspense account” shall mean an
unallocated account equal to the sum of “excess amounts” for all Participants in the
Plan during the “limitation year.”

4.11 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS

     (a) With the consent of the Administrator, amounts may be transferred (within
the meaning of Code Section 414(l)) to this Plan from other tax qualified plans
under Code Section 401(a) by Eligible Employees, provided the trust from which such
funds are transferred permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or Trust or create adverse tax
consequences for the Employer. Prior to accepting any transfers to which this
Section applies, the Administrator may require an opinion of counsel that the
amounts to be transferred meet the requirements of this Section. The amounts
transferred shall be set up in a separate account herein referred to as a
Participant’s Transfer/Rollover Account. Furthermore, for vesting purposes, the
Participant’s portion of the Participant’s Transfer/Rollover Account attributable to
any transfer shall be subject to Section 6.4(b).

         Except as permitted by Regulations (including Regulation 1.411(d)-4), amounts
attributable to elective contributions (as defined in Regulation 1.401(k)-1(g)(3)),
including amounts treated as elective contributions, which are transferred from
another qualified plan in a plan-to-plan transfer (other than a direct rollover)
shall be subject to the distribution limitations provided for in Regulation
1.401(k)-1(d).

     (b) With the consent of the Administrator, the Plan may accept a “rollover” by
Eligible Employees, provided the “rollover” will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences for the Employer. Prior to
accepting any “rollovers” to which this Section applies, the Administrator may
require the Employee to establish (by providing opinion of counsel or otherwise)
that the amounts to be rolled over to this Plan meet the requirements of this
Section. The amounts rolled over shall be set up in a separate account herein
referred to as a “Participant’s Transfer/Rollover Account.” Such account shall be
fully Vested at all times and shall not be subject to Forfeiture for any reason.

         For purposes of this Section, the term “qualified plan” shall mean any tax
qualified plan under Code Section 401(a), or, any other plans from which
distributions are eligible to be rolled over into this Plan pursuant to the Code.
The term “rollover” means: (i) amounts transferred to this Plan directly from
another qualified plan; (ii) distributions received by an Employee from other
“qualified plans”

39

 

which are eligible for tax-free rollover to a “qualified plan” and
which are transferred by the Employee to this Plan within sixty (60) days following
receipt thereof; (iii) amounts transferred to this Plan from a conduit individual
retirement account provided that the conduit individual retirement account has no
assets other than assets which (A) were previously distributed to the Employee by
another “qualified plan,” (B) were eligible for tax-free rollover to a “qualified
plan” and (C) were deposited in such conduit individual retirement account within
sixty (60) days of receipt thereof; (iv) amounts distributed to the Employee from a
conduit individual retirement account meeting the requirements of clause (iii)
above, and transferred by the Employee to this Plan within sixty (60) days of
receipt thereof from such conduit individual retirement account; and (v) any other
amounts which are eligible to be rolled over to this Plan pursuant to the Code.

     (c) Amounts in a Participant’s Transfer/Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be withdrawn by, or
distributed to the Participant, in whole or in part, except as provided in Section
6.10 and Section 6.11 and paragraph (d) of this Section. The Trustee shall have no
duty or responsibility to inquire as to the propriety of the amount, value or type
of assets transferred, nor to conduct any due diligence with respect to such assets;
provided, however, that such assets are otherwise eligible to be held by the Trustee
under the terms of this Plan.

     (d) At such date when the Participant or the Participant’s Beneficiary shall be
entitled to receive benefits, the Participant’s Transfer/Rollover Account shall be
used to provide additional benefits to the Participant or the Participant’s
Beneficiary. Any distributions of amounts held in a Participant’s Transfer/Rollover
Account shall be made in a manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations thereunder. Furthermore,
such amounts shall be considered as part of a Participant’s benefit in determining
whether an involuntary cash-out of benefits may be made without Participant consent.

     (e) The Administrator may direct that Employee transfers and rollovers made
after a Valuation Date be segregated into a separate account for each Participant
until such time as the allocations pursuant to this Plan have been made, at which
time they may remain segregated or be invested as part of the general Trust Fund or
be directed by the Participant pursuant to Section 4.12.

     (f) This Plan shall not accept any direct or indirect transfers (as that term
is defined and interpreted under Code Section 401(a)(11) and the Regulations
thereunder) from a defined benefit plan, money purchase plan (including a target
benefit plan), stock bonus or profit sharing plan which would otherwise have
provided for a life annuity form of payment to the Participant.

     (g) Notwithstanding anything herein to the contrary, a transfer directly to
this Plan from another qualified plan (or a transaction having the effect of such a

40

 

transfer) shall only be permitted if it will not result in the elimination or
reduction of any “Section 411(d)(6) protected benefit” as described in Section 7.1.

4.12 DIRECTED INVESTMENT ACCOUNT

     (a) Participants may, subject to a procedure established by the Administrator
(the Participant Direction Procedures) and applied in a uniform nondiscriminatory
manner, direct the Trustee, in writing (or in such other form which is acceptable to
the Trustee), to invest all of their accounts in specific assets, specific funds or
other investments permitted under the Plan and the Participant Direction Procedures,
including effective March 1, 2007, but not limited to, stock of the Employer or its
parent company that meets the requirements of Section 407(d)(5)(A) of the Act as
“qualifying employer securities.” That portion of the interest of any Participant so
directing will thereupon be considered a Participant’s Directed Account.

     (b) As of each Valuation Date, all Participant Directed Accounts shall be
charged or credited with the net earnings, gains, losses and expenses as well as any
appreciation or depreciation in the market value using publicly listed fair market
values when available or appropriate as follows:

(1) to the extent that the assets in a Participant’s Directed Account are
accounted for as pooled assets or investments, the allocation of earnings,
gains and losses of each Participant’s Directed Account shall be based upon
the total amount of funds so invested in a manner proportionate to the
Participant’s share of such pooled investment; and

(2) to the extent that the assets in the Participant’s Directed Account are
accounted for as segregated assets, the allocation of earnings, gains and
losses from such assets shall be made on a separate and distinct basis.

     (c) Investment directions will be processed as soon as administratively
practicable after proper investment directions are received from the Participant. No
guarantee is made by the Plan, Employer, Administrator or Trustee that investment
directions will be processed on a daily basis, and no guarantee is made in any
respect regarding the processing time of an investment direction. Notwithstanding
any other provision of the Plan, the Employer, Administrator or Trustee reserves the
right to not value an investment option on any given Valuation Date for any reason
deemed appropriate by the Employer, Administrator or Trustee. Furthermore, the
processing of any investment transaction may be delayed for any legitimate business
reason (including, but not limited to, failure of systems or computer programs,
failure of the means of the transmission of data, force majeure, the failure of a
service provider to
timely receive values or prices, and correction for errors or omissions or the
errors or omissions of any service provider). The processing date of a transaction
will be binding for all purposes of the Plan and considered the applicable Valuation
Date for an investment transaction.

41

 

     (d) The Participant Direction Procedures shall provide an explanation of the
circumstances under which Participants and their Beneficiaries may give investment
instructions, including, but need not be limited to, the following:

(1) the conveyance of instructions by the Participants and their
Beneficiaries to invest Participant Directed Accounts in Directed Investment
Options;

(2) the name, address and phone number of the Fiduciary (and, if applicable,
the person or persons designated by the Fiduciary to act on its behalf)
responsible for providing information to the Participant or a Beneficiary
upon request relating to the Directed Investment Options;

(3) applicable restrictions on transfers to and from any Designated
Investment Alternative;

(4) any restrictions on the exercise of voting, tender and similar rights
related to a Directed Investment Option by the Participants or their
Beneficiaries;

(5) a description of any transaction fees and expenses which affect the
balances in Participant Directed Accounts in connection with the purchase or
sale of Directed Investment Options; and

(6) general procedures for the dissemination of investment and other
information relating to the Designated Investment Alternatives as deemed
necessary or appropriate, including but not limited to a description of the
following:

(i) the investment vehicles available under the Plan, including
specific information regarding any Designated Investment Alternative;

(ii) any designated Investment Managers; and

(iii) a description of the additional information which may be
obtained upon request from the Fiduciary designated to provide such
information.

     (e) With respect to assets in a Participant’s Directed Investment Account, the
Participant or Beneficiary shall direct the Trustee with regard to any voting,
tender and similar rights associated with the ownership of such assets, (hereinafter
referred to as the “Stock Rights”) as follows:

(1) each Participant or Beneficiary shall direct the Trustee to vote or
otherwise exercise such Stock Rights in accordance with the provisions,
conditions and terms of any such Stock Rights;

42

 

(2) to the extent to which a Participant or Beneficiary does not instruct
the Trustee to vote or otherwise exercise such Stock Rights, such
Participants or Beneficiaries shall be deemed to have directed the Trustee
that such Stock Rights remain nonvoted and unexercised.

     (f) Any information regarding investments available under the Plan, to the
extent not required to be described in the Participant Direction Procedures, may be
provided to the Participant in one or more written documents (or in any other form
including, but not limited to, electronic media) which are separate from the
Participant Direction Procedures and are not thereby incorporated by reference into
this Plan.

     (g) The Administrator may, in its discretion, include in or exclude by
amendment or other action from the Participant Direction Procedures such
instructions, guidelines or policies as it deems necessary or appropriate to ensure
proper administration of the Plan, and may interpret the same accordingly.

4.13 QUALIFIED MILITARY SERVICE

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

ARTICLE V

VALUATIONS

5.1 VALUATION OF THE TRUST FUND

          The Administrator shall direct the Trustee, as of each Valuation Date, to determine the net
worth of the assets comprising the Trust Fund as it exists on the Valuation Date. In determining
such net worth, the Trustee shall value the assets comprising the Trust Fund at their fair market
value (or their contractual value in the case of a Contract or Policy) as of the Valuation Date and
shall deduct all expenses for which the Trustee has not yet obtained reimbursement from the
Employer or the Trust Fund. The Trustee may update the value of any shares held in the Participant
Directed Account by reference to the number of shares held by that Participant, priced at the
market value as of the Valuation Date.

5.2 METHOD OF VALUATION

          In determining the fair market value of securities held in the Trust Fund which are listed on
a registered stock exchange, the Administrator shall direct the Trustee to value the same at the
prices they were last traded on such exchange preceding the close of business on the Valuation
Date. If such securities were not traded on the Valuation Date, or if the exchange on which they
are traded was not open for business on the Valuation Date, then the securities shall be valued at
the prices at which they were last traded prior to the Valuation Date. Any unlisted security held
in the Trust Fund shall be valued at its bid price next preceding the close of business on the
Valuation Date, which bid price shall be obtained from a registered broker or an investment banker.
In determining the fair market value of assets other than securities for which trading or bid
prices can

43

 

be obtained, the Trustee may appraise such assets itself, or in its discretion, employ
one or more appraisers for that purpose and rely on the values established by such appraiser or
appraisers.

ARTICLE VI

DETERMINATION AND DISTRIBUTION OF BENEFITS

6.1 DETERMINATION OF BENEFITS UPON RETIREMENT

          Every Participant may terminate employment with the Employer and retire for the purposes
hereof on the Participant’s Normal Retirement Date. However, a Participant may postpone the
termination of employment with the Employer to a later date, in which event the participation of
such Participant in the Plan, including the right to receive allocations pursuant to Section 4.4,
shall continue until such Participant’s Late Retirement Date. Upon a Participant’s Retirement Date,
or as soon thereafter as is practicable, the Trustee shall distribute, at the election of the
Participant, all amounts credited to such Participant’s Combined Account in accordance with Section
6.5.

6.2 DETERMINATION OF BENEFITS UPON DEATH

     (a) Upon the death of a Participant before the Participant’s Retirement Date or
other termination of employment, all amounts credited to such Participant’s Combined
Account shall become fully Vested. The Administrator shall direct the Trustee, in
accordance with the provisions of Sections 6.6 and 6.7, to distribute the value of
the deceased Participant’s accounts to the Participant’s Beneficiary.

     (b) Upon the death of a Former Participant, the Administrator shall direct the
Trustee, in accordance with the provisions of Sections 6.6 and 6.7, to distribute
any remaining Vested amounts credited to the accounts of a deceased Former
Participant to such Former Participant’s Beneficiary.

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

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

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

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

(2) the Participant is legally separated or has been abandoned (within the
meaning of local law) and the Participant has a court order to such effect

44

 

(and there is no “qualified domestic relations order” as defined in Code
Section 414(p) which provides otherwise), or

(3) the Participant has no spouse, or

(4) the spouse cannot be located.

         In such event, the designation of a Beneficiary shall be made on a form
satisfactory to the Administrator. A Participant may at any time revoke a
designation of a Beneficiary or change a Beneficiary by filing written (or in such
other form as permitted by the Internal Revenue Service) notice of such revocation
or change with the Administrator. However, the Participant’s spouse must again
consent in writing (or in such other form as permitted by the Internal Revenue
Service) to any change in Beneficiary unless the original consent acknowledged that
the spouse had the right to limit consent only to a specific Beneficiary and that
the spouse voluntarily elected to relinquish such right.

     (f) In the event no valid designation of Beneficiary exists, or if the
Beneficiary is not alive at the time of the Participant’s death, the death benefit
will be paid to the Participant’s estate. If the Beneficiary does not predecease the
Participant, but dies prior to distribution of the death benefit, the death benefit
will be paid to the Beneficiary’s estate.

     (g) Notwithstanding anything in this Section to the contrary, if a Participant
has designated the spouse as a Beneficiary, then a divorce decree or a legal
separation that relates to such spouse shall revoke the Participant’s designation of
the spouse as a Beneficiary unless the decree or a qualified domestic relations
order (within the meaning of Code Section 414(p)) provides otherwise.

     (h) Any consent by the Participant’s spouse to waive any rights to the death
benefit must be in writing (or in such other form as permitted by the Internal
Revenue Service), must acknowledge the effect of such waiver, and be witnessed by a
Plan representative or a notary public. Further, the spouse’s consent must be
irrevocable and must acknowledge the specific nonspouse Beneficiary.

6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY

          In the event of a Participant’s Total and Permanent Disability prior to the Participant’s
Retirement Date or other termination of employment, all amounts credited to such Participant’s
Combined Account shall become fully Vested. In the event of a Participant’s Total and Permanent
Disability, the Administrator, in accordance with the provisions of Sections 6.5 and 6.7, shall
direct the distribution to such Participant of all Vested amounts credited to such Participant’s
Combined Account.

6.4 DETERMINATION OF BENEFITS UPON TERMINATION

     (a) If a Participant’s employment with the Employer is terminated for any
reason other than death, Total and Permanent Disability or retirement, then such

45

 

Participant shall be entitled to such benefits as are provided hereinafter pursuant
to this Section 6.4.

         Distribution of the funds due to a Terminated Participant shall be made on the
occurrence of an event which would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the Participant’s death,
Total and Permanent Disability or Normal Retirement). However, at the election of
the Participant, the Administrator shall direct the Trustee that the entire Vested
portion of the Terminated Participant’s Combined Account be payable to such
Terminated Participant. Any distribution under this paragraph shall be made in a
manner which is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.

         If the value of a Terminated Participant’s Vested benefit derived from Employer
and Employee contributions does not exceed $5,000, then the Administrator shall
direct the Trustee to cause the entire Vested benefit to be paid to such Participant
in a single lump sum.

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

	 	 	 	 	 
	Vesting Schedule
	Years of Service	 	 	Percentage
	1
	 	 	20	%
	2
	 	 	40	%
	3
	 	 	60	%
	4
	 	 	80	%
	5
	 	 	100	%

     (c) Notwithstanding the vesting schedule above, the Vested percentage of a
Participant’s Account shall not be less than the Vested percentage attained as of
the later of the effective date or adoption date of this amendment and restatement.

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

     (e) The computation of a Participant’s nonforfeitable percentage of such
Participant’s interest in the Plan shall not be reduced as the result of any direct
or indirect amendment to this Plan. In the event that the Plan is amended to change
or modify any vesting schedule, or if the Plan is amended in any way that directly
or indirectly affects the computation of the Participant’s nonforfeitable
percentage, or if

46

 

the Plan is deemed amended by an automatic change to a top heavy
vesting schedule, then each Participant with at least three (3) Years of Service as
of the expiration date of the election period may elect to have such Participant’s
nonforfeitable percentage computed under the Plan without regard to such amendment
or change. If a Participant fails to make such election, then such Participant shall
be subject to the new vesting schedule. The Participant’s election period shall
commence on the adoption date of the amendment and shall end sixty (60) days after
the latest of:

(1) the adoption date of the amendment,

(2) the effective date of the amendment, or

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

6.5 DISTRIBUTION OF BENEFITS

     (a) The Administrator, pursuant to the election of the Participant, shall
direct the Trustee to distribute to a Participant or such Participant’s Beneficiary
any amount to which the Participant is entitled under the Plan in one lump-sum
payment in cash.

     (b) Any distribution to a Participant who has a benefit which exceeds $5,000,
shall require such Participant’s written (or in such other form as permitted by the
Internal Revenue Service) consent if such distribution occurs prior to the time the
benefit is “immediately distributable.” A benefit is “immediately distributable” if
any part of the benefit could be distributed to the Participant (or surviving
spouse) before the Participant attains (or would have attained if not deceased) the
later of the Participant’s Normal Retirement Age or age 62.

     (c) The following rules will apply to the consent requirements set forth in
subsection (b):

(1) The Participant must be informed of the right to defer receipt of the
distribution. If a Participant fails to consent, it shall be deemed an
election to defer the distribution of any benefit. However, any election to
defer the receipt of benefits shall not apply with respect to distributions
which are required under Section 6.5(d).

(2) Notice of the rights specified under this paragraph shall be provided no
less than thirty (30) days and no more than ninety (90) days before the date
the distribution commences.

(3) Written (or such other form as permitted by the Internal Revenue
Service) consent of the Participant to the distribution must not be made
before the Participant receives the notice and must not be made more than
ninety (90) days before the date the distribution commences.

47

 

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

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

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

(1) A Participant’s benefits shall be distributed or must begin to be
distributed not later than April 1st of the calendar year following the
later of (i) the calendar year in which the Participant attains age 70 1/2
or (ii) the calendar year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the case of a Participant
who is a “five (5) percent owner” at any time during the Plan Year ending
with or within the calendar year in which such owner attains age 70 1/2.
Such distributions shall be equal to or greater than any required
distribution.

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

         With respect to distributions under the Plan made for calendar years beginning
on or after January 1, 2002, the Plan will apply the minimum distribution
requirements of Code Section 401(a)(9) in accordance with the Regulations under Code
Section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any
provision of the Plan to the contrary. This amendment shall continue in effect until
the end of the last calendar year beginning before the effective date of final
Regulations under Code Section 401(a)(9) or such other date specified in guidance
published by the Internal Revenue Service.

     (e) For purposes of this Section, the life expectancy of a Participant and a
Participant’s spouse may, at the election of the Participant or the Participant’s
spouse, be redetermined in accordance with Regulations. The election, once made,
shall be irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the Participant’s spouse
shall not be subject to recalculation. Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.

48

 

     (f) All annuity Contracts under this Plan shall be non-transferable when
distributed. Furthermore, the terms of any annuity Contract purchased and
distributed to a Participant or spouse shall comply with all of the requirements of
the Plan.

     (g) If a distribution is made to a Participant who has not severed employment
and who is not fully Vested in the Participant’s Account and the Participant may
increase the Vested percentage in such account, then, at any relevant time the
Participant’s Vested portion of the account will be equal to an amount (“X”)
determined by the formula:

X equals P(AB plus D) — D

         For purposes of applying the formula: P is the Vested percentage at the
relevant time, AB is the account balance at the relevant time, and D is the amount
of distribution.

6.6 DISTRIBUTION OF BENEFITS UPON DEATH

     (a) The death benefit payable pursuant to Section 6.2 shall be paid to the
Participant’s Beneficiary in one lump-sum payment in cash subject to the rules of
Section 6.6(b).

     (b) Notwithstanding any provision in the Plan to the contrary, distributions
upon the death of a Participant shall be made in accordance with the following
requirements and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder. If it is determined, pursuant to Regulations, that the
distribution of a Participant’s interest has begun and the Participant dies before
the entire interest has been distributed, the remaining portion of such interest
shall be distributed at least as rapidly as under the method of distribution
selected pursuant to Section 6.5 as of the date of death. If a Participant dies
before receiving any distributions of the interest in the Plan or before
distributions are deemed to have begun pursuant to Regulations, then the death
benefit shall be distributed to the Participant’s Beneficiaries by December 31st of
the calendar year in which the fifth anniversary of the Participant’s date of death
occurs.

     (c) For purposes of this Section, any amount paid to a child of the Participant
will be treated as if it had been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches the age of majority.

6.7 TIME OF SEGREGATION OR DISTRIBUTION

          Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to make a distribution the
distribution may be made on such date or as soon thereafter as is practicable. However, unless a
Former Participant elects in writing to defer the receipt of benefits (such election may not result
in a death benefit that is more than incidental), the payment of benefits shall occur not later
than the sixtieth (60th) day after the close of the Plan Year in which the latest of the following
events occurs: (a) the date on which the Participant attains the earlier of age 65 or the Normal
Retirement Age

49

 

specified herein; (b) the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or (c) the date the Participant terminates service
with the Employer.

          Notwithstanding the foregoing, the failure of a Participant to consent to a distribution that
is “immediately distributable” (within the meaning of Section 6.5), shall be deemed to be an
election to defer the commencement of payment of any benefit sufficient to satisfy this Section.

6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY

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

6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN

          In the event that all, or any portion, of the distribution payable to a Participant or
Beneficiary hereunder shall, at the later of the Participant’s attainment of age 62 or Normal
Retirement Age, remain unpaid solely by reason of the inability of the Administrator, after sending
a registered letter, return receipt requested, to the last known address, and after further
diligent effort, to ascertain the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan. Notwithstanding the foregoing,
if the value of a Participant’s Vested benefit derived from Employer and Employee contributions
does not exceed $5,000, then the amount distributable may, in the sole discretion of the
Administrator, either be treated as a Forfeiture, or be paid directly to an individual retirement
account described in Code Section 408(a) or an individual retirement annuity described in Code
Section 408(b) at the time it is determined that the whereabouts of the Participant or the
Participant’s Beneficiary cannot be ascertained. In the event a Participant or Beneficiary is
located subsequent to the Forfeiture, such benefit shall be restored, first from Forfeitures, if
any, and then from an additional Employer contribution if necessary. However, regardless of the
preceding, a benefit which is lost by reason of escheat under applicable state law is not treated
as a Forfeiture for purposes of this Section nor as an impermissible forfeiture under the Code.

6.10 PRE-RETIREMENT DISTRIBUTION

          At such time as a Participant shall have attained the age of 59 1/2 years, the Administrator,
at the election of the Participant who has not severed employment with the Employer, shall direct
the Trustee to distribute all or a portion of the amount then credited to the accounts maintained
on behalf of the Participant. However, no distribution from the Participant’s Account shall occur
prior to 100% vesting. In the event that the Administrator makes such a distribution, the
Participant shall continue to be eligible to participate in the Plan on the same basis as any other
Employee. Any distribution made pursuant to this Section shall be made in a manner consistent with
Section 6.5, including, but not limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.

50

 

          Notwithstanding the above, pre-retirement distributions from a Participant’s Elective Account
shall not be permitted prior to the Participant attaining age 59 1/2 except as otherwise permitted
under the terms of the Plan.

6.11 ADVANCE DISTRIBUTION FOR HARDSHIP

     (a) The Administrator, at the election of the Participant, shall direct the
Trustee to distribute to any Participant in any one Plan Year up to the lesser of
100% of the Participant’s Elective Account and Participant’s Account and
Participant’s Transfer/Rollover Account valued as of the last Valuation Date or the
amount
necessary to satisfy the immediate and heavy financial need of the Participant.
Any distribution made pursuant to this Section shall be deemed to be made as of the
first day of the Plan Year or, if later, the Valuation Date immediately preceding
the date of distribution, and the Participant’s Elective Account and Participant’s
Account and Participant’s Transfer/Rollover Account shall be reduced accordingly.
Withdrawal under this Section is deemed to be on account of an immediate and heavy
financial need of the Participant only if the withdrawal is for:

(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, the Participant’s spouse, or any of the Participant’s
dependents (as defined in Code Section 152) or necessary for these persons
to obtain medical care as described in Code Section 213(d);

(2) The costs directly related to the purchase (excluding mortgage payments)
of a principal residence for the Participant;

(3) Payment of tuition, related educational fees, and room and board
expenses for the next twelve (12) months of post-secondary education for the
Participant and the Participant’s spouse, children, or dependents; or

(4) Payments necessary to prevent the eviction of the Participant from the
Participant’s principal residence or foreclosure on the mortgage on that
residence.

     (b) No such distribution shall be made from the Participant’s Account until
such Account has become fully Vested.

     (c) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant’s representation and such other facts as
are known to the Administrator, determines that all of the following conditions are
satisfied:

(1) The distribution is not in excess of the amount of the immediate and
heavy financial need of the Participant. The amount of the immediate and
heavy financial need may include any amounts necessary to pay any federal,
state, or local income taxes or penalties reasonably anticipated to result
from the distribution;

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(2) The Participant has obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan) loans currently
available under all plans maintained by the Employer;

(3) The Plan, and all other plans maintained by the Employer, provide that
the Participant’s elective deferrals and after-tax voluntary Employee
contributions will be suspended for at least twelve (12) months after
receipt of the hardship distribution or, the Participant, pursuant to a
legally enforceable agreement, will suspend elective deferrals and after-tax
voluntary Employee contributions to the Plan and all other plans maintained
by the
Employer for at least twelve (12) months after receipt of the hardship
distribution; and

(4) The Plan, and all other plans maintained by the Employer, provide that
the Participant may not make elective deferrals for the Participant’s
taxable year immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Code Section 402(g) for
such next taxable year less the amount of such Participant’s elective
deferrals for the taxable year of the hardship distribution.

     (d) Notwithstanding the above, distributions from the Participant’s Elective
Account pursuant to this Section shall be limited solely to the Participant’s total
Deferred Compensation as of the date of distribution, reduced by the amount of any
previous distributions pursuant to this Section and Section 6.10.

     (e) Any distribution made pursuant to this Section shall be made in a manner
which is consistent with and satisfies the provisions of Section 6.5, including, but
not limited to, all notice and consent requirements of Code Section 411(a)(11) and
the Regulations thereunder.

6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION

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

6.13 DIRECT ROLLOVER

     (a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a “distributee’s” election under this Section, a “distributee” may
elect, at the time and in the manner prescribed by the Administrator, to have any
portion of an “eligible rollover distribution” that is equal to at least $500 paid
directly to an “eligible retirement plan” specified by the “distributee” in a
“direct rollover.”

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

(1) An “eligible rollover distribution” is any distribution of all or any
portion of the balance to the credit of the “distributee,” except that an
“eligible rollover distribution” does not include: any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
“distributee” or the joint lives (or joint life expectancies) of the
“distributee” and the
“distributee’s” designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under Code Section 401(a)(9); the portion of any other distribution that is
not includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities); any
hardship distribution described in Code Section 401(k)(2)(B)(i)(IV); and any
other distribution that is reasonably expected to total less than $200
during a year.

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

(3) A “distributee” includes an Employee or former Employee. In addition,
the Employee’s or former Employee’s surviving spouse and the Employee’s or
former Employee’s spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code Section 414(p), are
“distributees” with regard to the interest of the spouse or former spouse.

(4) A “direct rollover” is a payment by the Plan to the “eligible retirement
plan” specified by the “distributee.”

ARTICLE VII

AMENDMENT, TERMINATION, MERGERS AND LOANS

7.1 AMENDMENT

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

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

     (c) Except as permitted by Regulations (including Regulation 1.411(d)-4) or
other IRS guidance, no Plan amendment or transaction having the effect of a Plan
amendment (such as a merger, plan transfer or similar transaction) shall be
effective if it eliminates or reduces any “Section 411(d)(6) protected benefit” or
adds or modifies conditions relating to “Section 411(d)(6) protected benefits” which
results in a further restriction on such benefits unless such “Section 411(d)(6)
protected benefits” are preserved with respect to benefits accrued as of the later
of the adoption date or effective date of the amendment. “Section 411(d)(6)
protected benefits” are benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and optional forms of benefit. A
Plan amendment that eliminates or restricts the ability of a Participant to receive
payment of the Participant’s interest in the Plan under a particular optional form
of benefit will be permissible if the amendment satisfies the conditions in (1) and
(2) below:

(1) The amendment provides a single-sum distribution form that is otherwise
identical to the optional form of benefit eliminated or restricted. For
purposes of this condition (1), a single-sum distribution form is otherwise
identical only if it is identical in all respects to the eliminated or
restricted optional form of benefit (or would be identical except that it
provides greater rights to the Participant) except with respect to the
timing of payments after commencement.

(2) The amendment is not effective unless the amendment provides that the
amendment shall not apply to any distribution with an annuity starting date
earlier than the earlier of: (i) the ninetieth (90th) day after the date the
Participant receiving the distribution has been furnished a summary that
reflects the amendment and that satisfies the Act requirements at 29 CFR
2520.104b-3 (relating to a summary of material modifications) or (ii) the
first day of the second Plan Year following the Plan Year in which the
amendment is adopted.

7.2 TERMINATION

     (a) The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such termination. Upon
any full or partial termination, all amounts credited to the affected Participants’
Combined Accounts shall become 100% Vested as provided in Section 6.4 and shall not
thereafter be subject to forfeiture, and all unallocated amounts, including

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Forfeitures, shall be allocated to the accounts of all Participants in accordance
with the provisions hereof.

     (b) Upon the full termination of the Plan, the Employer shall direct the
distribution of the assets of the Trust Fund to Participants in a manner which is
consistent with and satisfies the provisions of Section 6.5. Distributions to a
Participant shall be made in cash or through the purchase of irrevocable
nontransferable deferred commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not result in the reduction of
“Section 411(d)(6) protected benefits” in accordance with Section 7.1(c).

7.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS

          This Plan may be merged or consolidated with, or its assets and/or liabilities may be
transferred to any other plan and trust only if the benefits which would be received by a
Participant of this Plan, in the event of a termination of the Plan immediately after such
transfer, merger or consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or consolidation, and
such transfer, merger or consolidation does not otherwise result in the elimination or reduction of
any “Section 411(d)(6) protected benefits” in accordance with Section 7.1(c).

7.4 LOANS TO PARTICIPANTS

     (a) The Trustee may, in the Trustee’s discretion, make loans to Participants
and Beneficiaries under the following circumstances: (1) loans shall be made
available to all Participants and Beneficiaries on a reasonably equivalent basis;
(2) loans shall not be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants and Beneficiaries; (3)
loans shall bear a reasonable rate of interest; (4) loans shall be adequately
secured; and (5) loans shall provide for periodic repayment over a reasonable period
of time.

     (b) Loans made pursuant to this Section (when added to the outstanding balance
of all other loans made by the Plan to the Participant) may, in accordance with a
uniform and nondiscriminatory policy established by the Administrator, be limited to
the lesser of:

(1) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one year period
ending on the day before the date on which such loan is made, over the
outstanding balance of loans from the Plan to the Participant on the date on
which such loan was made, or

(2) one-half (1/2) of the present value of the non-forfeitable accrued
benefit of the Participant under the Plan.

         For purposes of this limit, all plans of the Employer shall be considered one
plan.

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     (c) Loans shall provide for level amortization with payments to be made not
less frequently than quarterly over a period not to exceed five (5) years. However,
loans used to acquire any dwelling unit which, within a reasonable time, is
to be used (determined at the time the loan is made) as a “principal residence”
of the Participant shall provide for periodic repayment over a reasonable period of
time that may exceed five (5) years. For this purpose, a “principal residence” has
the same meaning as a “principal residence” under Code Section 1034. Loan repayments
may be suspended under this Plan as permitted under Code Section 414(u)(4).

     (d) Any loans granted or renewed shall be made pursuant to a Participant loan
program. Such loan program shall be established in writing and must include, but
need not be limited to, the following:

(1) the identity of the person or positions authorized to administer the
Participant loan program;

(2) a procedure for applying for loans;

(3) the basis on which loans will be approved or denied;

(4) limitations, if any, on the types and amounts of loans offered;

(5) the procedure under the program for determining a reasonable rate of
interest;

(6) the types of collateral which may secure a Participant loan; and

(7) the events constituting default and the steps that will be taken to
preserve Plan assets.

         Such Participant loan program shall be contained in a separate written document
which, when properly executed, is hereby incorporated by reference and made a part
of the Plan. Furthermore, such Participant loan program may be modified or amended
in writing from time to time without the necessity of amending this Section.

     (e) Notwithstanding anything in this Plan to the contrary, if a Participant or
Beneficiary defaults on a loan made pursuant to this Section, then the loan default
will be a distributable event to the extent permitted by the Code and Regulations.

     (f) Notwithstanding anything in this Section to the contrary, any loans made
prior to the date this amendment and restatement is adopted shall be subject to the
terms of the plan in effect at the time such loan was made.

     (g) Notwithstanding the foregoing, the Trustee shall make no loans from this
Plan after February 28, 2007.

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ARTICLE VIII

TOP HEAVY

8.1 TOP HEAVY PLAN REQUIREMENTS

           For any Top Heavy Plan Year, the Plan shall provide the special vesting requirements of Code
Section 416(b) pursuant to Section 6.4 of the Plan and the special minimum allocation requirements
of Code Section 416(c) pursuant to Section 4.4 of the Plan.

8.2 DETERMINATION OF TOP HEAVY STATUS

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

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

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

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

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

(3) any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years. However, in
the case of distributions made after the Valuation Date and prior to the
Determination Date, such distributions are not included as distributions for
top heavy purposes to the extent that such distributions are already
included

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in the Participant’s Aggregate Account balance as of the Valuation
Date. Notwithstanding anything herein to the contrary, all distributions,
including distributions under a terminated plan which if it had not been
terminated would have been required to be included in an Aggregation Group,
will be counted. Further, distributions from the Plan (including the cash
value of life insurance policies) of a Participant’s account balance because
of death shall be treated as a distribution for the purposes of this
paragraph.

(4) any Employee contributions, whether voluntary or mandatory. However,
amounts attributable to tax deductible qualified voluntary employee
contributions shall not be considered to be a part of the Participant’s
Aggregate Account balance.

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

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

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

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

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

In the case of a Required Aggregation Group, each plan in the group will be
considered a Top Heavy Plan if the Required Aggregation Group is a Top

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Heavy
Group. No plan in the Required Aggregation Group will be considered a Top
Heavy Plan if the Required Aggregation Group is not a Top Heavy Group.

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

In the case of a Permissive Aggregation Group, only a plan that is part of
the Required Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is a Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan if the Permissive
Aggregation Group is not a Top Heavy Group.

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

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

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

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

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

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

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(2) the Aggregate Accounts of Key Employees under all defined contribution
plans included in the group,

         exceeds sixty percent (60%) of a similar sum determined for all Participants.

ARTICLE IX

MISCELLANEOUS

9.1 PARTICIPANT’S RIGHTS

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

9.2 ALIENATION

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

     (b) Subsection (a) shall not apply to the extent a Participant or Beneficiary
is indebted to the Plan, by reason of a loan made pursuant to Section 7.4. At the
time a distribution is to be made to or for a Participant’s or Beneficiary’s
benefit, such proportion of the amount to be distributed as shall equal such
indebtedness shall be paid to the Plan, to apply against or discharge such
indebtedness. Prior to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such indebtedness is to be so
paid in whole or part from the Participant’s Combined Account. If the Participant or
Beneficiary does not agree that the indebtedness is a valid claim against the Vested
Participant’s Combined Account, the Participant or Beneficiary shall be entitled to
a review of the validity of the claim in accordance with procedures provided in
Sections 2.7 and 2.8.

     (c) Subsection (a) shall not apply to a “qualified domestic relations order”
defined in Code Section 414(p), and those other domestic relations orders permitted
to be so treated by the Administrator under the provisions of the Retirement Equity
Act of 1984. The Administrator shall establish a written

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procedure to determine the
qualified status of domestic relations orders and to administer distributions under
such qualified orders. Further, to the extent provided under a “qualified domestic
relations order,” a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.

     (d) Subsection (a) shall not apply to an offset to a Participant’s accrued
benefit against an amount that the Participant is ordered or required to pay the
Plan with respect to a judgment, order, or decree issued, or a settlement entered
into in accordance with Code Sections 401(a)(13)(C) and (D).

9.3 CONSTRUCTION OF PLAN

          This Plan shall be construed and enforced according to the Code, the Act and the laws of the
State of Tennessee, other than its laws respecting choice of law, to the extent not pre-empted by
the Act.

9.4 GENDER AND NUMBER

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

9.5 LEGAL ACTION

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

9.6 PROHIBITION AGAINST DIVERSION OF FUNDS

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

     (b) In the event the Employer shall make an excessive contribution under a
mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer may demand
repayment of such excessive contribution at any time within one (1) year following
the time of payment and the Trustees shall return such amount to the Employer within
the one (1) year period. Earnings of the Plan attributable to the

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contributions may
not be returned to the Employer but any losses attributable thereto must reduce the
amount so returned.

     (c) Except for Sections 3.5, 3.6, and 4.1(d), any contribution by the Employer
to the Trust Fund is conditioned upon the deductibility of the contribution by the
Employer under the Code and, to the extent any such deduction is disallowed, the
Employer may, within one (1) year following the final determination of the
disallowance, whether by agreement with the Internal Revenue Service or by final
decision of a competent jurisdiction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one (1) year
following the disallowance. Earnings of the Plan attributable to the contribution
may not be returned to the Employer, but any losses attributable thereto must reduce
the amount so returned.

9.7 EMPLOYER’S AND TRUSTEE’S PROTECTIVE CLAUSE

          The Employer, Administrator and Trustee, and their successors, shall not be responsible for
the validity of any Contract issued hereunder or for the failure on the part of the insurer to make
payments provided by any such Contract, or for the action of any person which may delay payment or
render a Contract null and void or unenforceable in whole or in part.

9.8 INSURER’S PROTECTIVE CLAUSE

          Except as otherwise agreed upon in writing between the Employer and the insurer, an insurer
which issues any Contracts hereunder shall not have any responsibility for the validity of this
Plan or for the tax or legal aspects of this Plan. The insurer shall be protected and held harmless
in acting in accordance with any written direction of the Trustee, and shall have no duty to see to
the application of any funds paid to the Trustee, nor be required to question any actions directed
by the Trustee. Regardless of any provision of this Plan, the insurer shall not be required to take
or permit any action or allow any benefit or privilege contrary to the terms of any Contract which
it issues hereunder, or the rules of the insurer.

9.9 RECEIPT AND RELEASE FOR PAYMENTS

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

9.10 ACTION BY THE EMPLOYER

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

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9.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY

          The “named Fiduciaries” of this Plan are (1) the Employer, (2) the Administrator, (3) the
Trustee and (4) any Investment Manager appointed hereunder. The named Fiduciaries shall have only
those specific powers, duties, responsibilities, and obligations as are specifically given them
under the Plan including, but not limited to, any agreement allocating or delegating their
responsibilities, the terms of which are incorporated herein by reference. In general, the Employer
shall have the sole responsibility for making the contributions provided for under Section 4.1; and
shall have the authority to appoint and remove the Trustee and the Administrator; to formulate the
Plan’s “funding policy and method”; and to amend or terminate, in whole or in part, the Plan. The
Administrator shall have the sole responsibility for the administration of the Plan, including, but
not limited to, the items specified in Article II of the Plan, as the same may be allocated or
delegated thereunder. The Administrator shall act as the named Fiduciary responsible for
communicating with the Participant according to the Participant Direction Procedures. The Trustee
shall have the sole responsibility of management of the assets held under the Trust, except to the
extent directed pursuant to Article II or with respect to those assets, the management of which has
been assigned to an Investment Manager, who shall be solely responsible for the management of the
assets assigned to it, all as specifically provided in the Plan. Each named Fiduciary warrants that
any directions given, information furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information or action of
another named Fiduciary as being proper under the Plan, and is not required under the Plan to
inquire into the propriety of any such direction, information or action. It is intended under the
Plan that each named Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan as specified or allocated herein. No named
Fiduciary shall guarantee the Trust Fund in any manner against investment loss or depreciation in
asset value. Any person or group may serve in more than one Fiduciary capacity.

9.12 HEADINGS

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

9.13 APPROVAL BY INTERNAL REVENUE SERVICE

          Notwithstanding anything herein to the contrary, if, pursuant to an application for
qualification filed by or on behalf of the Plan by the time prescribed by law for filing the
Employer’s return for the taxable year in which the Plan is adopted, or such later date that the
Secretary of the Treasury may prescribe, the Commissioner of Internal Revenue Service or the
Commissioner’s delegate should determine that the Plan does not initially qualify as a tax-exempt
plan under Code Sections 401 and 501, and such determination is not contested, or if contested, is
finally upheld, then if the Plan is a new plan, it shall be void ab initio and all amounts
contributed to the Plan by the Employer, less expenses paid, shall be returned within one (1) year
and the Plan shall terminate, and the Trustee shall be discharged from all further obligations. If
the disqualification relates to an amended plan, then the Plan shall operate as if it had not been
amended.

63

 

9.14 UNIFORMITY

          All provisions of this Plan shall be interpreted and applied in a uniform, nondiscriminatory
manner. In the event of any conflict between the terms of this Plan and any Contract purchased
hereunder, the Plan provisions shall control.

64

 

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

	 	 	 	 	 	 	 	 	 
	 	 	First Federal Savings Bank	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	EMPLOYER	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	ATTEST	 	 	 	 
	 

	 	 	 	
 
	 	 

65

 

AMENDMENT OF THE PLAN FOR EGTRRA

REVENUE PROCEDURE 2002-29

INTERNAL REVENUE SERVICE NOTICE 2005-5

AND

FINAL 401(K) AND 401(M) REGULATIONS

AMENDMENT NUMBER ONE TO

FIRST FEDERAL SAVINGS BANK

401(K) AND PROFIT SHARING PLAN

 

 

AMENDMENT OF THE PLAN FOR EGTRRA

AND

REVENUE PROCEDURE 2002-29

AMENDMENT NUMBER ONE TO

FIRST FEDERAL SAVINGS BANK

401(K) AND PROFIT SHARING PLAN

     BY THIS AGREEMENT, First Federal Savings Bank 401(k) and Profit Sharing Plan (herein referred
to as the Plan) is hereby amended as follows:

ARTICLE I

PREAMBLE

1.1 Adoption and effective date of amendment. This amendment of the Plan is adopted to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and
the model amendment of Revenue Procedure 2002-29. This amendment is intended as good faith
compliance with the requirements of EGTRRA and the model amendment of Revenue Procedure 2002-29 and
is to be construed in accordance with EGTRRA and the model amendment of Revenue Procedure 2002-29
and guidance issued thereunder. Except as otherwise provided, this amendment shall be effective
July 1, 2005.

1.2 Supersession of inconsistent provisions. This amendment shall supersede the provisions of the
Plan to the extent those provisions are inconsistent with the provisions of this amendment.

ARTICLE II

LIMITATIONS ON CONTRIBUTIONS

2.1 Effective date. This Article shall be effective for “limitation years” beginning on and after
July 1, 2005.

2.2 Maximum annual addition. Except to the extent permitted under Article VIII of this amendment
and Code Section 414(v), the “annual addition” that may be contributed or allocated to a
Participant’s account under the Plan for any “limitation year” shall not exceed the lesser of:

     (a) $40,000, as adjusted for increases in the cost-of-living under Code Section 415(d),
or

     (b) one-hundred percent (100%) of the Participant’s “415 Compensation” for the
“limitation year.”

     The “415 Compensation” limit referred to in (b) shall not apply to any contribution for
medical benefits after separation from service (within the meaning of Code Section 401(h) or Code
Section 419A(f)(2)) which is otherwise treated as an “annual addition.”

1

 

ARTICLE III

INCREASE IN COMPENSATION LIMIT

     The annual Compensation of each Participant taken into account in determining allocations for
any Plan Year beginning on and after July 1, 2005, shall not exceed $200,000, as adjusted for
cost-of-living increases in accordance with Code Section 401(a)(17)(B).

ARTICLE IV

MODIFICATION OF TOP-HEAVY RULES

4.1 Effective date. This Article shall apply for purposes of determining whether the Plan is a Top
Heavy plan under Code Section 416(g) for Plan Years beginning on and after July 1, 2005, and
whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years.
This Article amends Article IX of the Plan.

4.2 Determination of top-heavy status.

     (a) Key employee. Key employee means any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the determination date
was an officer of the Employer having “415 Compensation” greater than $130,000 (as adjusted
under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002), a 5-percent
owner of the Employer, or a 1-percent owner of the Employer having “415 Compensation” of
more than $150,000. The determination of who is a key employee will be made in accordance
with Code Section 416(i)(1) and the applicable regulations and other guidance of general
applicability issued thereunder.

     (b) Determination of present values and amounts. This section (b) shall apply for
purposes of determining the present values of accrued benefits and the amounts of account
balances of Employees as of the determination date.

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

(2) Employees not performing services during year ending on the determination date.
The accrued benefits and accounts of any individual who has not performed services
for the Employer during the 1-year period ending on the determination date shall not
be taken into account.

4.3 Minimum benefits. Employer matching contributions shall be taken into account for purposes of
satisfying the minimum contribution requirements of Code Section 416(c)(2) and the

2

 

Plan. The preceding sentence shall apply with respect to matching contributions under the Plan or,
if the Plan provides that the minimum contribution requirement shall be met in another plan, such
other plan. Employer matching contributions that are used to satisfy the minimum contribution
requirements shall be treated as matching contributions for purposes of the actual contribution
percentage test and other requirements of Code Section 401(m).

ARTICLE V

DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

5.1 Effective date. This Article shall apply to distributions made on and after July 1, 2005.

5.2 Modification of definition of eligible retirement plan. For purposes of the direct rollover
provisions in Section 7.12 of the Plan, an eligible retirement plan shall also mean an annuity
contract described in Code Section 403(b) and an eligible plan under Code Section 457(b) which is
maintained by a state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state and which agrees to separately account for amounts
transferred into such plan from this Plan. The definition of eligible retirement plan shall also
apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is
the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p).

5.3 Modification of definition of eligible rollover distribution to exclude hardship distributions.
For purposes of the direct rollover provisions in Section 7.12 of the Plan, any amount that is
distributed on account of hardship shall not be an eligible rollover distribution and the
distributee may not elect to have any portion of such a distribution paid directly to an eligible
retirement plan.

ARTICLE VI

ROLLOVERS FROM OTHER PLANS

     The Administrator, operationally and on a nondiscriminatory basis, may limit the source of
rollover contributions that may be accepted by this Plan.

ARTICLE VII

REPEAL OF MULTIPLE USE TEST

     The multiple use test described in Treasury Regulation Section 1.401(m)-2 and Section
4.7(a)(2) of the Plan shall not apply for Plan Years beginning after December 31, 2001.

ARTICLE VIII

CATCH-UP CONTRIBUTIONS

8.1 Effective date. This Article shall apply to catch-up contributions made on and after July 1,
2005.

8.2 Applicability. All Employees who are eligible to make salary reductions under this Plan and
who are projected to attain age 50 before the end of a calendar year shall be eligible to make
catch-up contributions as of the January 1st of that calendar year in accordance with, and subject
to the limitations of, Code Section 414(v). Such catch-up contributions shall not be taken into
account for purposes of the provisions of the Plan implementing the required limitations of Code

3

 

Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the
Plan implementing the requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or
416, as applicable, by reason of the making of such catch-up contributions.

ARTICLE IX

DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT

9.1. Effective date. This Article shall apply for distributions occurring on and after July 1,
2005 regardless of when severance from employment occurred.

9.2. New distributable event. A Participant’s Elective Contributions and earnings attributable to
these contributions shall be distributed on account of the Participant’s severance from employment.
However, such a distribution shall be subject to the other provisions of the Plan regarding
distributions, other than provisions that require a separation from service before such amounts may
be distributed.

ARTICLE X

MODEL AMENDMENT UNDER REVENUE PROCEDURE 2002-29

MINIMUM DISTRIBUTION REQUIREMENTS

10.1 General Rules.

     (a) Effective Date. The provisions of this Article will apply for purposes of
determining required minimum distributions for calendar years beginning with the 2003
calendar year.

     (b) Precedence. The requirements of this Article will take precedence over any
inconsistent provisions of the Plan.

     (c) Requirements of Treasury Regulations Incorporated. All distributions required
under this Article will be determined and made in accordance with the Treasury regulations
under Code Section 401(a)(9).

10.2 Time and Manner of Distribution.

     (a) Required Beginning Date. The Participant’s entire interest will be distributed, or
begin to be distributed, to the Participant no later than the Participant’s required
beginning date.

     (b) Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant’s entire interest will be distributed, or begin to be
distributed, no later than as follows:

(1) If the Participant’s surviving spouse is the Participant’s sole designated
Beneficiary, then, except as provided in Section 10.2(b)(3), distributions to the
surviving spouse will begin by December 31st of the calendar year immediately
following the calendar year in which the Participant died, or by December 31st of
the calendar year in which the Participant would have attained age 70 1/2, if later.

4

 

(2) If the Participant’s surviving spouse is not the Participant’s sole designated
Beneficiary, then, except as provided in Section 10.2(b)(3), distributions to the
designated Beneficiary will begin by December 31st of the calendar year immediately
following the calendar year in which the Participant died.

(3) If the Participant dies before distributions begin and there is a designated
Beneficiary, distribution to the designated Beneficiary is not required to begin by
the date specified in Section 10.2(b), but the Participant’s entire interest will be
distributed to the designated Beneficiary by December 31st of the calendar year
containing the fifth anniversary of the Participant’s death. If the Participant’s
surviving spouse is the Participant’s sole designated Beneficiary and the surviving
spouse dies after the Participant but before distributions to either the Participant
or the surviving spouse begin, then this Section 10.2(b)(3) will apply as if the
surviving spouse were the Participant. This Section 10.2(b)(3) will apply to all
distributions.

(4) If there is no designated Beneficiary as of September 30th of the year following
the year of the Participant’s death, the Participant’s entire interest will be
distributed by December 31st of the calendar year containing the fifth anniversary
of the Participant’s death.

(5) If the Participant’s surviving spouse is the Participant’s sole designated
Beneficiary and the surviving spouse dies after the Participant but before
distributions to the surviving spouse begin, this Section 10.2(b), other than
Section 10.2(b)(1), will apply as if the surviving spouse were the Participant.

          For purposes of this Section 10.2(b) and Section 10.4, unless Section 10.2(b)(5)
applies, distributions are considered to begin on the Participant’s required beginning date.
If Section 10.2(b)(5) applies, distributions are considered to begin on the date
distributions are required to begin to the surviving spouse under Section 10.2(b)(1).

     (c) Form of Distribution. Unless the Participant’s interest is distributed in a single
sum on or before the required beginning date, as of the first distribution calendar year
distributions will be made in accordance with Sections 10.3 and 10.4 of this Article.

10.3 Required Minimum Distributions During Participant’s Lifetime.

     (a) Amount of Required Minimum Distribution For Each Distribution Calendar Year.
During the Participant’s lifetime, the minimum amount that will be distributed for each
distribution calendar year is the lesser of:

(1) the quotient obtained by dividing the Participant’s account balance by the
distribution period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9
of the Treasury regulations, using the Participant’s age as of the Participant’s
birthday in the distribution calendar year; or

(2) if the Participant’s sole designated Beneficiary for the distribution calendar
year is the Participant’s spouse, the quotient obtained by dividing the
Participant’s

5

 

account balance by the number in the Joint and Last Survivor Table set forth in
Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays in the
distribution calendar year.

     (b) Lifetime Required Minimum Distributions Continue Through Year of Participant’s
Death. Required minimum distributions will be determined under this Section 10.3 beginning
with the first distribution calendar year and up to and including the distribution calendar
year that includes the Participant’s date of death.

10.4 Required Minimum Distributions After Participant’s Death.

     (a) Death On or After Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. If the Participant dies on or
after the date distributions begin and there is a designated Beneficiary, the
minimum amount that will be distributed for each distribution calendar year after
the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the longer of the remaining life expectancy of the
Participant or the remaining life expectancy of the Participant’s designated
Beneficiary, determined as follows:

(i) The Participant’s remaining life expectancy is calculated using the age
of the Participant in the year of death, reduced by one for each subsequent
year.

(ii) If the Participant’s surviving spouse is the Participant’s sole
designated Beneficiary, the remaining life expectancy of the surviving
spouse is calculated for each distribution calendar year after the year of
the Participant’s death using the surviving spouse’s age as of the spouse’s
birthday in that year. For distribution calendar years after the year of the
surviving spouse’s death, the remaining life expectancy of the surviving
spouse is calculated using the age of the surviving spouse as of the
spouse’s birthday in the calendar year of the spouse’s death, reduced by one
for each subsequent calendar year.

(iii) If the Participant’s surviving spouse is not the Participant’s sole
designated Beneficiary, the designated Beneficiary’s remaining life
expectancy is calculated using the age of the beneficiary in the year
following the year of the Participant’s death, reduced by one for each
subsequent year.

(2) No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated Beneficiary as of September 30th of
the year after the year of the Participant’s death, the minimum amount that will be
distributed for each distribution calendar year after the year of the Participant’s
death is the quotient obtained by dividing the Participant’s account balance by the
Participant’s remaining life expectancy calculated using the age of the Participant
in the year of death, reduced by one for each subsequent year.

6

 

     (b) Death Before Date Distributions Begin.

(1) Participant Survived by Designated Beneficiary. Except as provided in Section
10.4(b)(2), if the Participant dies before the date distributions begin and there is
a designated Beneficiary, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant’s death is the quotient
obtained by dividing the Participant’s account balance by the remaining life
expectancy of the Participant’s designated Beneficiary, determined as provided in
Section 10.4(a).

(2) If the Participant dies before distributions begin and there is a designated
Beneficiary, distribution to the designated Beneficiary is not required to begin by
the date specified in Section 10.2(b), but the Participant’s entire interest will be
distributed to the designated Beneficiary by December 31st of the calendar year
containing the fifth anniversary of the Participant’s death. If the Participant’s
surviving spouse is the Participant’s sole designated Beneficiary and the surviving
spouse dies after the Participant but before distributions to either the Participant
or the surviving spouse begin, then this Section 10.4(b)(2) will apply as if the
surviving spouse were the Participant. This Section 10.4(b)(2) will apply to all
distributions.

(3) No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no designated Beneficiary as of September 30th of
the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31st of the calendar
year containing the fifth anniversary of the Participant’s death.

(4) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required
to Begin. If the Participant dies before the date distributions begin, the
Participant’s surviving spouse is the Participant’s sole designated Beneficiary, and
the surviving spouse dies before distributions are required to begin to the
surviving spouse under Section 10.2(b)(1), this Section 10.4(b) will apply as if the
surviving spouse were the Participant.

10.5 Definitions.

     (a) Designated Beneficiary. The individual who is designated as the Beneficiary under
Section 1.6 of the Plan and is the designated Beneficiary under Code Section 401(a)(9) and
section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

     (b) Distribution calendar year. A calendar year for which a minimum distribution is
required. For distributions beginning before the Participant’s death, the first distribution
calendar year is the calendar year immediately preceding the calendar year which contains
the Participant’s required beginning date. For distributions beginning after the
Participant’s death, the first distribution calendar year is the calendar year in which
distributions are required to begin under Section 10.2(b). The required minimum distribution
for the Participant’s first distribution calendar year will be made on or before the
Participant’s required beginning date. The required minimum distribution for other

7

 

distribution calendar years, including the required minimum distribution for the
distribution calendar year in which the Participant’s required beginning date occurs, will
be made on or before December 31st of that distribution calendar year.

     (c) Life expectancy. Life expectancy as computed by use of the Single Life Table in
section 1.401(a)(9)-9 of the Treasury regulations.

     (d) Participant’s account balance. The account balance as of the last valuation date
in the calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions made and allocated or
forfeitures allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation calendar year
after the valuation date. The account balance for the valuation calendar year includes any
amounts rolled over or transferred to the plan either in the valuation calendar year or in
the distribution calendar year if distributed or transferred in the valuation calendar year.

     (e) Required beginning date. The date specified in Sections 6.5(d) and 6.6(b) of the
Plan.

ARTICLE XI

MANDATORY DISTRIBUTIONS

11.1 Effective date. This Article shall be effective with respect to distributions made on and
after March 28, 2005.

11.2 Applicability. The provisions of the Plan that provide for the mandatory distribution of the
Vested accrued benefit of a Participant without the Participant’s consent are hereby modified to
provide that the mandatory distribution threshold be reduced to $1,000. Accordingly, if a
Participant’s Vested accrued benefit exceeds $1,000, then Participant consent shall now be required
before a distribution may be made. The provisions of this Article do not affect the other
provisions of the Plan relating to the form or timing of a distribution nor the consent rules that
are applicable with respect to individuals other than Participants.

ARTICLE XIII

FINAL 401(k) AND 401(m) REGULATIONS

SECTION 1

PREAMBLE

	12.1.1	 	Adoption and effective date of amendment. This Article of this Amendment to the Plan
is adopted to reflect certain provisions of the Final Regulations under Code Sections 401(k)
and 401(m) that were published on December 29, 2004 (hereinafter referred to as the “Final
401(k) Regulations”). This Article is intended as good faith compliance with the requirements
of these provisions. This Article shall be effective with respect to Plan Years beginning
after December 31, 2005.
	 
	12.1.2	 	Supersession of inconsistent provisions. This Article shall supersede the provisions
of the Plan to the extent those provisions are inconsistent with the provisions of this
Article.

8

 

SECTION 2

GENERAL RULES

	12.2.1	 	Deferral elections. A cash or deferred arrangement (“CODA”) is an arrangement under
which eligible Employees may make elective deferral elections. Such elections cannot relate to
compensation that is currently available prior to the adoption or effective date of the CODA.
In addition, except for occasional, bona fide administrative considerations, contributions
made pursuant to such an election cannot precede the earlier of (1) the performance of
services relating to the contribution and (2) when the compensation that is subject to the
election would be currently available to the Employee in the absence of an election to defer.
	 
	12.2.2	 	Vesting provisions. Elective Contributions are always fully vested and
nonforfeitable. The Plan shall disregard Elective Contributions in applying the vesting
provisions of the Plan to other contributions or benefits under Code Section 411(a)(2).
However, the Plan shall otherwise take a participant’s Elective Contributions into account in
determining the Participant’s vested benefits under the Plan. Thus, for example, the Plan
shall take Elective Contributions into account in determining whether a Participant has a
nonforfeitable right to contributions under the Plan for purposes of forfeitures, and for
applying provisions permitting the repayment of distributions to have forfeited amounts
restored, and the provisions of Code Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii)
permitting a plan to disregard certain service completed prior to breaks-in-service (sometimes
referred to as “the rule of parity”).

SECTION 3

ACTUAL DEFERRAL PERCENTAGE (ADP) TEST

	12.3.1	 	Targeted contribution limit. Qualified Nonelective Contributions (as defined in
Regulation Section 1.401(k)-6) cannot be taken into account in determining the Actual Deferral
Ratio (ADR) for a Plan Year for a Non-Highly Compensated Employee (NHCE) to the extent such
contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the
greater of five percent (5%) or two (2) times the Plan’s “representative contribution rate.”
Any Qualified Nonelective Contribution taken into account under an Actual Contribution
Percentage (ACP) test under Regulation Section 1.401(m)-2(a)(6) (including the determination
of the representative contribution rate for purposes of Regulation Section
1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this
Section (including the determination of the “representative contribution rate” under this
Section). For purposes of this Section:

	 	(a)	 	The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists
of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable
contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for
the Plan Year and who is employed by the Employer on the last day of the Plan Year),
and
	 
	 	(b)	 	The “applicable contribution rate” for an eligible NHCE is the sum of the
Qualified

9

 

	 	 	 	Matching Contributions (as defined in Regulation Section 1.401(k)-6) taken into account in
determining the ADR for the eligible NHCE for the Plan Year and the Qualified
Nonelective Contributions made for the eligible NHCE for the Plan Year, divided by the
eligible NHCE’s Code Section 414(s) compensation for the same period.

	 	 	Notwithstanding the above, Qualified Nonelective Contributions that are made in connection
with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat.
1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286,
or similar legislation can be taken into account for a Plan Year for an NHCE to the extent
such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s)
compensation.
	 
	 	 	Qualified Matching Contributions may only be used to calculate an ADR to the extent that
such Qualified Matching Contributions are matching contributions that are not precluded from
being taken into account under the ACP test for the Plan Year under the rules of Regulation
Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 12.5.1.
	 
	12.3.2	 	Limitation on QNECs and QMACs. Qualified Nonelective Contributions and Qualified
Matching Contributions cannot be taken into account to determine an ADR to the extent such
contributions are taken into account for purposes of satisfying any other ADP test, any ACP
test, or the requirements of Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus,
for example, matching contributions that are made pursuant to Regulation Section 1.401(k)-3(c)
cannot be taken into account under the ADP test. Similarly, if a plan switches from the
current year testing method to the prior year testing method pursuant to Regulation Section
1.401(k)-2(c), Qualified Nonelective Contributions that are taken into account under the
current year testing method for a year may not be taken into account under the prior year
testing method for the next year.
	 
	12.3.3	 	ADR of HCE if multiple plans. The Actual Deferral Ratio (ADR) of any Participant who
is a Highly Compensated Employee (HCE) for the Plan Year and who is eligible to have Elective
Contributions (as defined in Regulation Section 1.401(k)-6) (and Qualified Nonelective
Contributions and/or Qualified Matching Contributions, if treated as Elective Contributions
for purposes of the ADP test) allocated to such Participant’s accounts under two (2) or more
cash or deferred arrangements described in Code Section 401(k), that are maintained by the
same Employer, shall be determined as if such Elective Contributions (and, if applicable, such
Qualified Nonelective Contributions and/or Qualified Matching Contributions) were made under a
single arrangement. If an HCE participates in two or more cash or deferred arrangements of the
Employer that have different Plan Years, then all Elective Contributions made during the Plan
Year being tested under all such cash or deferred arrangements shall be aggregated, without
regard to the plan years of the other plans. However, for Plan Years beginning before the
effective date of this Amendment, if the plans have different Plan Years, then all such cash
or deferred arrangements ending with or within the same calendar year shall be treated as a
single cash or deferred arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated under the Regulations of Code Section 401(k).
	 
	12.3.4	 	Plans using different testing methods for the ADP and ACP test. Except as otherwise

10

 

	 	 	provided in this Section, the Plan may use the current year testing method or prior year testing
method for the ADP test for a Plan Year without regard to whether the current year testing
method or prior year testing method is used for the ACP test for that Plan Year. However, if
different testing methods are used, then the Plan cannot use:

	 	(a)	 	The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct
excess contributions for a Plan Year;
	 
	 	(b)	 	The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective
Contributions into account under the ACP test (rather than the ADP test); or
	 
	 	(c)	 	The rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP test).

SECTION 4

ADJUSTMENT TO ADP TEST

	12.4.1	 	Distribution of Income attributable to Excess Contributions. Distributions of Excess
Contributions must be adjusted for income (gain or loss), including an adjustment for income
for the period between the end of the Plan Year and the date of the distribution (the “gap
period”). The Administrator has the discretion to determine and allocate income using any of
the methods set forth below:

	 	(a)	 	Reasonable method of allocating income. The Administrator may use any
reasonable method for computing the income allocable to Excess Contributions, provided
that the method does not violate Code Section 401(a)(4), is used consistently for all
Participants and for all corrective distributions under the Plan for the Plan Year, and
is used by the Plan for allocating income to Participant’s accounts. A Plan will not
fail to use a reasonable method for computing the income allocable to Excess
Contributions merely because the income allocable to Excess Contributions is determined
on a date that is no more than seven (7) days before the distribution.
	 
	 	(b)	 	Alternative method of allocating income. The Administrator may allocate
income to Excess Contributions for the Plan Year by multiplying the income for the Plan
Year allocable to the Elective Contributions and other amounts taken into account under
the ADP test (including contributions made for the Plan Year), by a fraction, the
numerator of which is the Excess Contributions for the Employee for the Plan Year, and
the denominator of which is the sum of the:

	 	(1)	 	Account balance attributable to Elective Contributions and
other amounts taken into account under the ADP test as of the beginning of the
Plan Year, and
	 
	 	(2)	 	Any additional amount of such contributions made for the Plan
Year.

	 	(c)	 	Safe harbor method of allocating gap period income. The Administrator
may use the safe harbor method in this paragraph to determine income on Excess
Contributions

11

 

	 	 	 	for the gap period. Under this safe harbor method, income on Excess Contributions
for the gap period is equal to ten percent (10%) of the income allocable to Excess
Contributions for the Plan Year that would be determined under paragraph (b) above,
multiplied by the number of calendar months that have elapsed since the end of the
Plan Year. For purposes of calculating the number of calendar months that have
elapsed under the safe harbor method, a corrective distribution that is made on or
before the fifteenth (15th) day of a month is treated as made on the last day of the
preceding month and a distribution made after the fifteenth day of a month is
treated as made on the last day of the month.
	 
	 	(d)	 	Alternative method for allocating Plan Year and gap period income. The
Administrator may determine the income for the aggregate of the Plan Year and the gap
period, by applying the alternative method provided by paragraph (b) above to this
aggregate period. This is accomplished by (1) substituting the income for the Plan Year
and the gap period, for the income for the Plan Year, and (2) substituting the amounts
taken into account under the ADP test for the Plan Year and the gap period, for the
amounts taken into account under the ADP test for the Plan Year in determining the
fraction that is multiplied by that income.

	12.4.2	 	Corrective contributions. If a failed ADP test is to be corrected by making an
Employer contribution, then the provisions of the Plan for the corrective contributions shall
be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions
to an amount that does not exceed the targeted contribution limits of Section 12.3.1 of this
Amendment, or in the case of a corrective contribution that is a Qualified Matching
Contribution, the targeted contribution limit of Section 12.5.1 of this Amendment.

SECTION 5

ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST

	12.5.1	 	Targeted matching contribution limit. A matching contribution with respect to an
Elective Contribution for a Plan Year is not taken into account under the Actual Contribution
Percentage (ACP) test for an NHCE to the extent it exceeds the greatest of:

	 	(a)	 	five percent (5%) of the NHCE’s Code Section 414(s) compensation for the Plan
Year;
	 
	 	(b)	 	the NHCE’s Elective Contributions for the Plan Year; and
	 
	 	(c)	 	the product of two (2) times the Plan’s “representative matching rate” and the
NHCE’s Elective Contributions for the Plan Year.

	 	 	For purposes of this Section, the Plan’s “representative matching rate” is the lowest
“matching rate” for any eligible NHCE among a group of NHCEs that consists of half of all
eligible NHCEs in the Plan for the Plan Year who make Elective Contributions for the Plan
Year (or, if greater, the lowest “matching rate” for all eligible NHCEs in the Plan who are
employed by the Employer on the last day of the Plan Year and who make Elective
Contributions for the Plan Year).

12

 

	 	 	For purposes of this Section, the “matching rate” for an Employee generally is the matching
contributions made for such Employee divided by the Employee’s Elective Contributions for
the Plan Year. If the matching rate is not the same for all levels of Elective Contributions
for an Employee, then the Employee’s “matching rate” is determined assuming that an
Employee’s Elective Contributions are equal to six percent (6%) of Code Section 414(s)
compensation.
	 
	 	 	If the Plan provides a match with respect to the sum of the Employee’s after-tax Employee
contributions and Elective Contributions, then for purposes of this Section, that sum is
substituted for the amount of the Employee’s Elective Contributions in subsections (b) & (c)
above and in determining the “matching rate,” and Employees who make either after-tax
Employee contributions or Elective Contributions are taken into account in determining the
Plan’s “representative matching rate.” Similarly, if the Plan provides a match with respect
to the Employee’s after-tax Employee contributions, but not Elective Contributions, then for
purposes of this subsection, the Employee’s after-tax Employee contributions are substituted
for the amount of the Employee’s Elective Contributions in subsections (b) & (c) above and
in determining the “matching rate,” and Employees who make after-tax Employee contributions
are taken into account in determining the Plan’s “representative matching rate.”

	12.5.2	 	Targeted QNEC limit. Qualified Nonelective Contributions (as defined in Regulation
Section 1.401(k)-6) cannot be taken into account under the Actual Contribution Percentage
(ACP) test for a Plan Year for an NHCE to the extent such contributions exceed the product of
that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2)
times the Plan’s “representative contribution rate.” Any Qualified Nonelective Contribution
taken into account under an Actual Deferral Percentage (ADP) test under Regulation Section
1.401(k)-2(a)(6) (including the determination of the “representative contribution rate” for
purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be taken into
account for purposes of this Section (including the determination of the “representative
contribution rate” for purposes of subsection (a) below). For purposes of this Section:

	 	(a)	 	The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists
of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable
contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for
the Plan Year and who is employed by the Employer on the last day of the Plan Year),
and
	 
	 	(b)	 	The “applicable contribution rate” for an eligible NHCE is the sum of the
matching contributions (as defined in Regulation Section 1.401(m)-1(a)(2)) taken into
account in determining the ACR for the eligible NHCE for the Plan Year and the
Qualified Nonelective Contributions made for that NHCE for the Plan Year, divided by
that NHCE’s Code Section 414(s) compensation for the Plan Year.

	 	 	Notwithstanding the above, Qualified Nonelective Contributions that are made in connection
with an Employer’s obligation to pay prevailing wages under the Davis-Bacon
Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public

13

 

	 	 	Law 89-286, or similar legislation can be taken into account for a Plan Year for an NHCE to
the extent such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section
414(s) compensation.

	12.5.3	 	ACR of HCE if multiple plans. The Actual Contribution Ratio (ACR) for any
Participant who is a Highly Compensated Employee (HCE) and who is eligible to have matching
contributions or after-tax Employee contributions allocated to his or her account under two
(2) or more plans described in Code Section 401(a), or arrangements described in Code Section
401(k) that are maintained by the same Employer, shall be determined as if the total of such
contributions was made under each plan and arrangement. If an HCE participates in two (2) or
more such plans or arrangements that have different plan years, then all matching
contributions and after-tax Employee contributions made during the Plan Year being tested
under all such plans and arrangements shall be aggregated, without regard to the plan years of
the other plans. For plan years beginning before the effective date of this Amendment, all
such plans and arrangements ending with or within the same calendar year shall be treated as a
single plan or arrangement. Notwithstanding the foregoing, certain plans shall be treated as
separate if mandatorily disaggregated under the Regulations of Code Section 401(m).
	 
	12.5.4	 	Plans using different testing methods for the ACP and ADP test. Except as otherwise
provided in this Section, the Plan may use the current year testing method or prior year
testing method for the ACP test for a Plan Year without regard to whether the current year
testing method or prior year testing method is used for the ADP test for that Plan Year.
However, if different testing methods are used, then the Plan cannot use:

	 	(a)	 	The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct
excess contributions for a Plan Year;
	 
	 	(b)	 	The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective
Contributions into account under the ACP test (rather than the ADP test); or
	 
	 	(c)	 	The rules of Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP test).

SECTION 6

ADJUSTMENT TO ACP TEST

	12.6.1	 	Distribution of Income attributable to Excess Aggregate Contributions. Distributions
of Excess Aggregate Contributions must be adjusted for income (gain or loss), including an
adjustment for income for the period between the end of the Plan Year and the date of the
distribution (the “gap period”). For the purpose of this Section, “income” shall be determined
and allocated in accordance with the provisions of Section 12.4.1 of this Amendment, except
that such Section shall be applied by substituting “Excess Contributions” with “Excess
Aggregate Contributions” and by substituting amounts taken into account under the ACP test for
amounts taken into account under the ADP test.
	 
	12.6.2	 	Corrective contributions. If a failed ACP test is to be corrected by making an
Employer contribution, then the provisions of the Plan for the corrective contributions shall
be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions
to an

14

 

	 	 	amount that does not exceed the targeted contribution limits of Sections 12.5.1 and 12.5.2
of this Amendment.

SECTION 7

HARDSHIP DISTRIBUTIONS

	12.7.1	 	Applicability and Effective Date. The provisions of this Section 7 apply if the Plan
provides for hardship distributions upon satisfaction of the deemed immediate and heavy
financial need standards set forth in Regulation Section 1.401(k)-1(d)(2)(iv)(A) as in effect
prior to the issuance of the Final 401(k) Regulations. The Effective Date of this Section
shall be January 1, 2007.
	 
	12.7.2	 	Hardship events. A distribution under the Plan is hereby deemed to be on account of
an immediate and heavy financial need of an Employee if the distribution is for one of the
following or any other item permitted under Regulation Section 1.401(k)-1(d)(3)(iii)(B):

	 	(a)	 	Expenses for (or necessary to obtain) medical care that would be deductible
under Code Section 213(d) (determined without regard to whether the expenses exceed
7.5% of adjusted gross income);
	 
	 	(b)	 	Costs directly related to the purchase of a principal residence for the
Employee (excluding mortgage payments);
	 
	 	(c)	 	Payment of tuition, related educational fees, and room and board expenses, for
up to the next twelve (12) months of post-secondary education for the Employee, the
Employee’s spouse, children, or dependents (as defined in Code Section 152, and, for
taxable years beginning on or after January 1, 2005, without regard to Code Section
152(b)(1), (b)(2), and (d)(1)(B));
	 
	 	(d)	 	Payments necessary to prevent the eviction of the Employee from the Employee’s
principal residence or foreclosure on the mortgage on that residence;
	 
	 	(e)	 	Payments for burial or funeral expenses for the Employee’s deceased parent,
spouse, children or dependents (as defined in Code Section 152, and, for taxable years
beginning on or after January 1, 2005, without regard to Code Section 152(d)(1)(B)); or
	 
	 	(f)	 	Expenses for the repair of damage to the Employee’s principal residence that
would qualify for the casualty deduction under Code Section 165 (determined without
regard to whether the loss exceeds 10% of adjusted gross income).

	13.7.3	 	Reduction of Code Section 402(g) limit following hardship distribution. If the Plan
provides for hardship distributions upon satisfaction of the safe harbor standards set forth
in Regulation Sections 1.401(k)-1(d)(3)(iii)(B) (deemed immediate and heavy financial need)
and 1.401(k)-1(d)(3)(iv)(E) (deemed necessary to satisfy immediate need), then there shall be
no reduction in the maximum amount of elective deferrals that a Participant may make pursuant
to Code Section 402(g) solely because of a hardship distribution made by this Plan or any
other plan of the Employer.

15

 

     IN WITNESS WHEREOF, this Amendment has been executed this                      day of                     .

	 	 	 	 	 	 	 	 	 
	 	 	First Federal Savings Bank	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	EMPLOYER	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	ATTEST	 	 	 	 
	 

	 	 	 	
 
	 	 

16

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