Document:

Form of senior debt security

 Exhibit 4.01 
 LEHMAN BROTHERS HOLDINGS INC. 
 9.55% Reverse Exchangeable Notes Linked to the SPDR Trust, Series 1 Due April 29, 2009

  

			
	Number R-1	 	$7,005,000
	ISIN US5252M0FG74	 	CUSIP 5252M0FG7

 See Reverse for Certain Definitions 
 THIS SECURITY (THIS “SECURITY”) IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 LEHMAN BROTHERS
HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the
office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private
debts, for each $1,000 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity and to make coupon payments on the principal amount hereof, as provided below under “Coupon Payments.” 
 Any amount payable hereon on the Maturity Date will be paid only upon presentation and surrender of this Security. 
 REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. 

 This Security shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof. 
 “Standard & Poor’s®”, “S&P®” and “S&P 500®” are trademarks of The McGraw-Hill Companies, Inc. and are expected to be licensed for use by the Company. The Company is expected to enter into a non-exclusive license agreement with
Standard & Poor’s (“S&P”), a division of The McGraw Hill Companies, Inc. for use of “Standard & Poor’s Depositary Receipts®” and
“SPDR®” which are also trademarks of The McGraw-Hill Companies, Inc. The Securities, which are linked to the performance of the SPDR Trust, Series 1, are not sponsored, endorsed,
sold or promoted by S&P, State Street Bank and Trust Company (“SSBTC”), as trustee for the Index Fund, and PDR Services LLC, as sponsor of the Index Fund (the “Index Fund Sponsor”). S&P, SSBTC and the Index Fund Sponsor
makes no representation regarding the advisability of investing in the Securities. S&P has no obligation or liability in connection with the operation, marketing, trading or sale of the Securities. 
  

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 IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this instrument to be signed by its
Chairman of the Board, its President, its Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its Treasurer, by manual or facsimile signature under its corporate seal, attested by its Secretary or one of its Assistant
Secretaries by manual or facsimile signature. 
  

							
	Dated: April 29, 2008	 	LEHMAN BROTHERS HOLDINGS INC.	 	
				
	[SEAL]	 	By:	 	  
	 	
		 		 	Vice President	 	
				
		 	Attest:	 	  
	 	
		 		 	Assistant Secretary	 	

  
 TRUSTEE’S CERTIFICATE OF
AUTHENTICATION 
 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 
  

			
	 CITIBANK, N.A.
 as
Trustee

		
	By:	 	  

		 	    Authorized Officer

  

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 Reverse of Security 
 This Security is one of a duly authorized series of Securities of the Company designated as 9.55% Reverse Exchangeable Notes Linked to the SPDR Trust, Series 1 Due April 29, 2009 (herein called the
“Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional
securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite
number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank,
N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities. 
 The
Payment at Maturity and the amount to be paid on each Coupon Payment Date shall, at the request of the Trustee, be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by
the Calculation Agent of the Payment at Maturity and the amount to be paid on each Coupon Payment Date and shall have no duty to make any such determination. At or prior to 11:00 a.m. on the Business Day preceding the Maturity Date and each Coupon
Payment Date the Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at Maturity and the amount to be paid on each Coupon Payment Date. 
 All calculations with respect to the Initial Share Price, the Price or Closing Price, as applicable, of the Index Fund during the Monitoring Period, the
Final Share Price and the Payment at Maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal
amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward. 
 This Security is not subject to
any sinking fund. 
 If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the
Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated
as though the date of acceleration were the Maturity Date, and the third Business Day immediately preceding the date of acceleration were the Observation Date, plus, if applicable, any accrued and unpaid coupon payments on the Securities. Upon any
acceleration of the Securities, any coupon payment will be calculated on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed from and including the previous Coupon Payment Date for which a coupon payment was
made. If the maturity of the Securities is accelerated because of an 

 
Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice
the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration. 
 The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Securities (as defined in the Indenture) of each series affected by a proposed
supplemental indenture (each series voting as a class), evidenced as provided in the Indenture, to execute such supplemental indenture for the purpose of adding any provisions to, or changing in any manner or eliminating any provisions of, the
Indenture or of any supplemental indenture or, modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things,
(i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or
premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Outstanding Security so affected, or (ii) change the place of payment on any Security,
or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each
Outstanding Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series
Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or
the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made
upon this Security or such other Securities. 
 No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Payment at Maturity and coupon payments with respect to this Security. 
 The Securities are issuable in denominations of $1,000 and any whole multiples thereof. 
 The Company, the Trustee, and any agent of the Company or of the Trustee may deem and treat the registered holder (the “Holder”) hereof
as the absolute owner of this Security (whether or not this Security shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment hereof, or on account hereof, and for 

  

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all other purposes and neither the Company nor the Trustee nor any agent of the Company or of the Trustee shall be affected by any notice to the contrary.
All such payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid, effectually satisfy and discharge liability for moneys payable on this Security. 
 No recourse for the payment of the principal of, or premium, if any, on this Security, or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the Corporate Trust Office or agency in a Place of Payment for this Security, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities of this series or of like tenor and of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or transferees. 
 The Company intends to treat, and by
purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a unit comprising (i) a put option and (ii) a debt instrument. 
 THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 
 Definitions 
 Set forth below are definitions of the terms used in this Security. 
 “Business Day”, notwithstanding any provision in the Indenture, shall mean any day that is not a Saturday or Sunday and that is not a
day on which banking institutions in the City of New York are authorized or obligated by law to close. 
 “Calculation Agency
Agreement” shall mean the Calculation Agency Agreement, dated as of December 21, 2006 between the Company and the Calculation Agent, as amended from time to time, or any successor calculation agency agreement. 
  

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 “Calculation Agent” shall mean the person that has entered into an agreement with the
Company providing for, among other things, the determination of the Payment at Maturity, which term shall, unless the context otherwise requires, include its successors and assigns. The initial Calculation Agent shall be Lehman Brothers Inc.

 “Cash Value” shall mean the amount in cash equal to the product of (1) $1,000 divided by the Initial Share Price
and (2) the Final Share Price. 
 “Closing Price” of one share of the Index Fund (or any Successor Index Fund) or one
unit of any other security for which a Closing Price must be determined on any Trading Day means: 
  

	 	•	 	 if the Index Fund (or any such Successor Index Fund or such other security) is listed or admitted to trading on a national securities exchange, the last reported
sale price, regular way, of the principal trading session on such day on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on which the Index Fund (or any
such Successor Index Fund or such other security) is listed or admitted to trading; 

  

	 	•	 	 if the Index Fund (or any such Successor Index Fund or such other security) is listed or admitted to trading on any national securities exchange but the last
reported sale price is not available pursuant to the preceding bullet point, the last reported sale price of the principal trading session on the over-the-counter market as reported on the OTC Bulletin Board-Service (the “OTC Bulletin
Board”) operated by Financial Industry Regulatory Authority, Inc. (“FINRA”) on such day; 

  

	 	•	 	 if the Index Fund (or any such Successor Index Fund or such other security) is not listed or admitted to trading on any national securities exchange but is included
in the OTC Bulletin Board, the last reported sale price of the principal trading session on the OTC Bulletin Board on such day; 

  

	 	•	 	 if the Index Fund (or any such Successor Index Fund) is de-listed, liquidated or otherwise terminated, the Closing Price calculated pursuant to the alternative
methods of calculation of the Closing Price described below under “Alternative Calculation of Closing Price”; or 

  

	 	•	 	 if, because of a Market Disruption Event or otherwise, the last reported sale price for the Index Fund (or any such Successor Index Fund or such other security) is
not available pursuant to the preceding bullet points, the Calculation Agent’s good faith estimate of the price of a share of the Index Fund (or any such Successor Index Fund or such other security) as of the close of trading on such Trading
Day, in its sole discretion, 

  

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 in each case subject to the provisions of “Alternative Calculation of Closing Price” below.
The term OTC Bulletin Board will include any successor service thereto. 
 “Company” shall have the meaning set forth on
the face of this Security. 
 “Coupon Payment Date” shall mean the 29th day of each month, commencing on May 29, 2008
to, and including, the Maturity Date (provided, however, that for the month of February the coupon payment date will be the 28th day of the month). If any Coupon Payment Date falls on a day that is not a Business Day, then any payment required to be
made on such Coupon Payment Date will instead be made on the next succeeding Business Day following such scheduled Coupon Payment Date, unless that day falls in the next calendar month, in which case the Coupon Payment Date will be the first
preceding day that is a Business Day; provided, however, that the final coupon payment will be made with the Payment at Maturity. 
 “Coupon Period” is the period beginning on, and including, the issue date of the Securities and ending on, but excluding, the first Coupon Payment Date, and each successive period beginning on, and including, a Coupon
Payment Date and ending on, but excluding, the next succeeding Coupon Payment Date. 
 “Coupon Rate” shall mean
9.55% per annum. 
 “Final Share Price” shall equal the Closing Price of one share of the Index Fund on the
Observation Date. 
 “Holder” shall have the meaning set forth on the reverse of this Security. 
 “Indenture” shall have the meaning set forth on the reverse of this Security. 
 “Index Fund” shall be the SPDR Trust, Series 1. 
 “Initial Share Price” shall equal $137.88, divided by the Share Adjustment Factor. 
 “Market Disruption Event” shall mean, with respect to the Index Fund (or any Successor Index Fund or other security for which a Closing Price must be determined) on any day, any of the following events on such day as
determined by the Calculation Agent: 
 (1) the occurrence or existence of a suspension, absence or material limitation of trading of the
shares of the Index Fund (or such Successor Index Fund or such other security) on the primary market for such shares (or such Successor Index Fund or such other security) at any time during the one hour period preceding the close of the principal
trading session in such market; or 
 (2) a breakdown or failure in the price and trade reporting systems of the primary market for the
shares of the Index Fund (or such Successor Index Fund or such other security) as a result of which the reported trading prices for such shares (or such Successor Index Fund or such other security) during the last one-hour preceding the close of the
principal trading session in such market are materially inaccurate; or 
  

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 (3) the occurrence or existence of a suspension, absence or material limitation of trading on the
primary market for trading in futures or options contracts related to the shares of the Index Fund (or such Successor Index Fund or such other security), if available, during the last one-hour period preceding the close of the principal trading
session in the applicable market; or 
 (4) the occurrence or existence of a suspension, absence or material limitation of trading of stocks
then constituting 20% or more of the level of the Underlying Index (or the underlying index related to the Successor Index Fund) on the Relevant Exchanges for such stocks at any time during the one-hour period preceding the close of the principal
trading session on such Relevant Exchange; or 
 (5) a breakdown or failure in the price and trade reporting systems of the primary market
of any Relevant Exchange as a result of which the reported trading prices for stocks then constituting 20% or more of the level of the Underlying Index (or the underlying index related to the Successor Index Fund) at any time during the one-hour
period preceding the close of the principal trading session on such Relevant Exchange are materially inaccurate; or 
 (6) a suspension,
absence or material limitation of trading on any major securities exchange for trading in futures or options contracts related to the Underlying Index (or the underlying index related to the Successor Index Fund) or shares of the Index Fund (or such
Successor Index Fund or such other security) at any time during the one-hour period preceding the close of the principal trading session on such exchange; or 
 (7) a decision to permanently discontinue trading in the relevant futures or options contracts; 
 in each
case, as determined by the Calculation Agent in its sole discretion. 
 For the purpose of determining whether a Market Disruption Event
exists at any time, if trading in a security included in the Underlying Index (or the underlying index related to the Successor Index Fund) is materially suspended or materially limited at that time, then the relevant percentage contribution of that
security to the level of the Underlying Index (or the underlying index related to the Successor Index Fund) shall be based on a comparison of: 
  

	 	•	 	 the portion of the level of the Underlying Index (or the underlying index related to the Successor Index Fund) attributable to that security relative to

  

	 	•	 	 the overall level of the Underlying Index (or the underlying index related to the Successor Index Fund), 

  

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 in each case immediately before that suspension or limitation. 
 For purposes of determining whether a Market Disruption Event has occurred: 
 (1) a limitation on the hours or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the
regular business hours of the Relevant Exchange or market; 
 (2) limitations pursuant to the rules of any Relevant Exchange similar to NYSE
Rule 80B (or any applicable rule or regulation enacted or promulgated by any other self-regulatory organization or any government agency of scope similar to NYSE Rule 80B as determined by the Calculation Agent in its sole discretion) on trading
during significant market fluctuations will constitute a suspension, absence or material limitation of trading; 
 (3) a suspension of
trading in futures or options contracts on the Underlying Index (or the underlying index related to the Successor Index Fund) or shares of the Index Fund (or such Successor Index Fund or such other security) by the primary securities market trading
in such contracts by reason of: 
  

	 	•	 	 a price change exceeding limits set by such exchange or market, 

  

	 	•	 	 an imbalance of orders relating to such contracts, or 

  

	 	•	 	 a disparity in bid and ask quotes relating to such contracts 

 will, in each such case, constitute a suspension, absence or material limitation of trading in futures or options contracts related to the Underlying Index (or the underlying index related to the Successor Index Fund)
or the shares of the Index Fund (or such Successor Index Fund or such other security); and 
 (4) a “suspension, absence or material
limitation of trading” on any Relevant Exchange or on the primary market on which futures or options contracts related to the Underlying Index (or the underlying index related to the Successor Index Fund) or the shares of the Index Fund (or
such Successor Index Fund or such other security) are traded will not include any time when such market is itself closed for trading under ordinary circumstances. 
  

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 “Maturity Date” shall mean April 29, 2009, unless that day is not a Business Day,
in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following April 29, 2009; provided, that if due to a non-Trading Day or a Market Disruption Event, the Observation Date is
postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Observation Date, as postponed. 
 “Monitoring Period” shall mean the period from, and including, the Pricing Date to, and including, the Observation Date. 
 “NYSE” shall mean The New York Stock Exchange, Inc. 
 “Observation Date” shall mean April 24, 2009, provided, that if the Observation Date is not a Trading Day or if there is a Market Disruption Event on such day, the Calculation Agent will
determine the Final Share Price by reference to the Closing Price of the Index Fund on the next Trading Day for the Index Fund on which there is not a Market Disruption Event; provided, however, if a Market Disruption Event with respect to
the Index Fund occurs on each of the eight scheduled Trading Days following the originally scheduled Observation Date, then the Calculation Agent shall determine the Final Share Price based upon its good faith estimate of the price of the Index Fund
as of the close of trading on that eighth scheduled Trading Day, in its sole discretion. 
 “Payment at Maturity”, as
calculated by the Calculation Agent, for each $1,000 principal amount Security shall equal $1,000 plus any accrued and unpaid coupon payments unless: 
  

	 	(i)	the Final Share Price is less than the Initial Share Price; and 

  

	 	(ii)	a Trigger Event has occurred. 

 If the conditions described in
(i) and (ii) are both satisfied, the Payment at Maturity shall be, instead of $1,000 for each $1,000 principal amount Security, a cash payment per $1,000 principal amount Security equal to the Cash Value, plus any accrued and unpaid coupon
payments. 
 “Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

 “Price” of one share of the Index Fund (or one unit of any other security for which a Price must be determined) on any
Trading Day means: 
  

	 	•	 	 if the Index Fund (or any such other security) is listed or admitted to trading on a national securities exchange, the highest intraday bid price of the shares of
the Index Fund on such day on the principal United States securities exchange registered under the Exchange Act, on which the Index Fund (or any such other security) is listed or admitted to trading; 

  

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	 	•	 	 if the Index Fund (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin Board,
the highest reported bid price of the shares of the Index Fund reported on the OTC Bulletin Board on such day; or 

  

	 	•	 	 if a bid price of the shares of the Index Fund is not available pursuant to the preceding bullet points, the calculation agent’s good faith estimate of such
bid price, in its sole discretion. 

 The term OTC Bulletin Board will include any successor service thereto. 
 “Pricing Date” shall mean April 24, 2008. 
 “Relevant Exchange” shall mean the primary exchange, quotation system (which includes bulletin board services) or other market of trading for the shares of the Index Fund (or any Successor Index Fund)
or any security (or any combination thereof) then included in the Underlying Index (or any underlying index related to the Successor Index Fund). 
 “Securities” shall have the meaning set forth on the reverse of this Security. 
 “Security”
shall have the meaning set forth on the face of this Security. 
 “Share Adjustment Factor” for the Index Fund shall
initially equal 1.0, subject to adjustment under certain circumstances as described under “Anti-Dilution Adjustments” below. 
 “Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on the NYSE, the American Stock Exchange (the “AMEX”), the Nasdaq Global Select Market, the Nasdaq Global
Market, the Chicago Mercantile Exchange, the Chicago Board Options Exchange and in the over-the-counter market for equity securities in the United States. 
 “Trigger Event” shall occur if, on any Trading Day during the Monitoring Period, the Closing Price of the Index Fund is below the Trigger Price. 
 “Trigger Price” shall equal a dollar amount that represents 75% of the applicable Initial Share Price in effect on such Trading Day.
The Trigger Price of the Index Fund shall initially be $103.41. 
 “Trustee” shall have the meaning set forth on the
reverse of this Security. 
 “Underlying Index” shall mean the index underlying the Index Fund. 
 All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture. 
  

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 Calculation Agent 
 The Calculation Agent will determine, among other things, the Initial Share Price, the Trigger Price, the Closing Price of the Index Fund on any Trading Day during the Monitoring Period, the Share Adjustment Factor,
anti-dilution adjustments, the selection of any Successor Index Fund, the Final Share Price, the amount of any coupon payment payable on any Coupon Payment Date and the Payment at Maturity, as well as, in determining whether a Trigger Event has
occurred and whether the Final Share Price is below the Initial Share Price. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event and whether a day is a Coupon Payment Date. All determinations made by
the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and the Company. The Company may appoint a different Calculation Agent
from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders. 
 Anti-Dilution
Adjustments 
 Share Splits and Reverse Share Splits 
 If the shares of the Index Fund are subject to a share split or reverse share split, then once such split has become effective, the Share Adjustment
Factor will be adjusted so that it equals the product of: 
  

	 	•	 	 the Share Adjustment Factor before such adjustment, and 

  

	 	•	 	 the number of shares that a holder of one share of the Index Fund before the effective date of the share split or reverse share split would have owned or been
entitled to receive immediately following the applicable effective date. 

 Share Dividends or Distributions

 If the Index Fund is subject to a (i) share dividend, i.e., an issuance of additional shares of the Index Fund that is
given ratably to all or substantially all holders of shares of the Index Fund or (ii) distribution of shares of the Index Fund as a result of the triggering of any provision of the corporate charter of the Index Fund, then, once the dividend or
distribution has become effective and the shares of the Index Fund are trading ex-dividend, the Share Adjustment Factor will be adjusted so that it equals the Share Adjustment Factor before such adjustments plus the product of: 
  

	 	•	 	 the Share Adjustment Factor before such adjustment, and 

  

	 	•	 	 the number of additional shares issued in the share dividend or distribution with respect to one share of the Index Fund. 

  

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 Non-cash Distributions 
 If the Index Fund distributes shares of capital stock, evidences of indebtedness or other assets or property of the Index Fund to all or substantially
all holders of shares of the Index Fund (other than (i) share dividends or distributions referred to under “—Share Dividends or Distributions” above and (ii) cash dividends referred under “—Cash Dividends or
Distributions” below), then, once the distribution has become effective and the shares of the Index Fund are trading ex-dividend, the Share Adjustment Factor will be adjusted so that it equals the product of: 
  

	 	•	 	 the Share Adjustment Factor before such adjustment, and 

  

	 	•	 	 a fraction whose numerator is the Current Market Price of one share of the Index Fund and whose denominator is the amount by which such Current Market Price exceeds
the Fair Market Value of such distribution. 

 The “Current Market Price” of the Index Fund means the arithmetic
average of the Closing Prices of one share of the Index Fund for the ten Trading Days prior to the Trading Day immediately preceding the ex-dividend date of the distribution requiring an adjustment to the Share Adjustment Factor. 
 The “ex-dividend date” is, with respect to a dividend or distribution on the Index Fund, the first Trading Day on which transactions in the
shares of the Index Fund trade on the Relevant Exchange without the right to receive that dividend or distribution. 
 The “Fair Market
Value” of any such distribution is the value of such distribution on the ex-dividend date for such distribution, as determined by the Calculation Agent. If such distribution consists of property traded on the ex-dividend date on a U.S. national
securities exchange, the Fair Market Value will equal the Closing Price of such distributed property on such ex-dividend date. 
 Cash
Dividends or Distributions 
 If the issuer of any shares of the Index Fund pays dividends or makes other distributions consisting
exclusively of cash to all or substantially all holders of shares of the Index Fund during any fiscal quarter during the term of the Securities, in an aggregate amount that, together with other such dividends or distributions made during such
quarterly fiscal period, exceeds the Dividend Threshold, then, once the dividend or distribution has become effective and the shares of the Index Fund are trading ex-dividend, the Share Adjustment Factor will be adjusted so that it equals the
product of: 
  

	 	•	 	 the Share Adjustment Factor before such adjustment, and 

  

	 	•	 	 a fraction whose numerator of which is the Current Market Price of one share of the Index Fund and whose denominator is the amount by which such Current Market
Price exceeds the amount in cash per share the Index Fund distributes to holders of shares of the Index Fund in excess of the Dividend Threshold. 

  

 11 

 “Dividend Threshold” shall mean the amount of any cash dividend or cash distribution
distributed per share of the Index Fund that exceeds the immediately preceding cash dividend or other cash distribution, if any, per share of the Index Fund by more than 10% of the Closing Price of the Index Fund on the Trading Day immediately
preceding the ex-dividend date. 
 The Calculation Agent will provide information as to any adjustments to the Share Adjustment Factor upon
written request by any Holder. 
 Alternative Calculation of Closing Price 
 If the Index Fund (or a Successor Index Fund (as defined herein) is de-listed from the AMEX (or any other Relevant Exchange), liquidated or otherwise
terminated, the Calculation Agent will substitute an exchange traded fund that the Calculation Agent determines, in its sole discretion, is comparable to the discontinued Index Fund (or such successor index fund) (such index fund being referred to
herein as a “Successor Index Fund”). If the Index Fund (or a Successor Index Fund) is de-listed, liquidated or otherwise terminated and the Calculation Agent determines that no Successor Index Fund is available, then the Calculation Agent
will, in its sole discretion, calculate the appropriate Closing Price of the shares of the Index Fund (or a Successor Index Fund) by a computation methodology that the Calculation Agent determines will as closely as reasonably possible replicate the
Index Fund (or a Successor Index Fund). If a Successor Index Fund is selected or the Calculation Agent calculates a Closing Price by a computation methodology that the Calculation Agent determines will as closely as reasonably possible replicate the
Index Fund (or a Successor Index Fund), that Successor Index Fund or Closing Price, as applicable, will be substituted for the Index Fund (or such Successor Index Fund) for all purposes of the Securities. 
 If at any time: 
  

	 	•	 	 the Underlying Index (or the underlying index related to a Successor Index Fund) is changed in a material respect, or 

  

	 	•	 	 the Index Fund (or a Successor Index Fund) in any other way is so modified that it does not, in the opinion of the Calculation Agent, fairly represent the Closing
Price of the shares of the Index Fund (or such Successor Index Fund) in the absence of those changes or modifications, 

 then, from and
after that time, the Calculation Agent shall make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a Closing Price of an exchange traded fund comparable to the Index
Fund (or such Successor Index Fund) as if those changes or modifications had not been made, and the Calculation Agent shall calculate the Closing Price with reference to the shares of such Index Fund (or such Successor Index Fund), as adjusted. The
Calculation Agent also may determine that no adjustment is required by the modification of the method of calculation. 
  

 12 

 The Calculation Agent will provide information as to the method of calculating the Closing Price of the
shares of the Index Fund (or such Successor Index Fund) upon written request by any Holder. 
 Coupon Payments 
 For each Coupon Period for each $1,000 principal amount Security, the coupon payment for each Coupon Period will be calculated as follows: 

$1,000 x Coupon Rate x (number of days in the Coupon Period / 360), 
 where the number of days will be calculated on the basis of a year of 360 days with twelve months of thirty days each. 
 Coupon payments will be made at the Coupon Rate. Coupon payments will accrue from, and including, the issue date of the Securities to, but excluding, the Maturity Date. Coupon payments will be paid in arrears on each
Coupon Payment Date to, and including, the Maturity Date, to the Holders at the close of business on the date 15 calendar days prior to that Coupon Payment Date, whether or not such fifteenth calendar day is a Business Day. If the Maturity Date is
adjusted as the result of a Market Disruption Event, the coupon payment due on the Maturity Date will be made on the Maturity Date as adjusted, with the same force and effect as if the Maturity Date had not been adjusted, but no additional coupon
payment will accrue or be payable as a result of the delayed payment. 
  

 13 

 The following abbreviations, when used in the inscription on the face of the within Security, shall be
construed as though they were written out in full according to applicable laws or regulations: 
  

							
	TEN COM -	    	as tenants in common	    	UNIF GIFT MIN ACT - _________ Custodian _________
		    		    	                          (Cust)             
     (Minor)

	TEN ENT -	    	as tenants by the entireties	    	under Uniform Gifts to Minors
	JT TEN -	    	as joint tenants with right of	    	Act	  	  

		    	Survivorship and not as tenants in common	    		  	( State)

 Additional abbreviations may also be used though not in the above list. 
                                       
                   
 FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto 
 PLEASE INSERT SOCIAL SECURITY OR 
 OTHER IDENTIFYING NUMBER OF ASSIGNEE 
  

			
	 	 	
	 	 	
	 	 	

  
  

	
	
	 

 (Name and Address of Assignee, including zip code, must be printed or typewritten.) 
  

	
	 

 the within Security, and all rights thereunder, hereby irrevocably constituting and appointing 
  

	
	 

 to transfer the said Security on the books of the Company, with full power of substitution in the premises.

 Dated: 
 __________________________________________ 
 NOTICE: The signature to this assignment must correspond with the name as it appears
upon the face of the within Security in every particular, without alteration or enlargement or any change whatever. 
 Signature(s) Guaranteed: 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. 
  

 14The Colonial BancGroup 401(k)

 Exhibit 4.1 
  

					
	 The Colonial
	  		  	
	 BancGroup
	  		  
	 401(k) Plan
	  	

	  

 Summary Plan Description 
 2003 
 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS 
 COVERING SECURITIES THAT HAVE BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933 

 The Colonial BancGroup 401(k) 
 Plan Summary Plan Description 
 January 1, 2002 

 YOUR PLAN 
 The Colonial BancGroup, Inc. (the “Company”) has always “looked to the future,” pursuing its many opportunities, and as a result, has enjoyed steady growth over the years. The Company sponsors The Colonial BancGroup
401(k) Plan (the “Plan”) to help you “look to the future,” in preparation for your retirement years. Today, working hard is not enough. You will need to make the most of your Company benefits and other sources of income
you’ll have when you retire. 
 Your benefit from the Plan, Social Security, The Colonial Retirement Plan, and your personal savings can provide the
income you’ll need after you retire. You may want to think of this plan as a cornerstone in building your future financial security. 
 Whether
you’re new to the Company or retirement is just around the corner, understanding your Company benefits is very important. The time to look to the future is now. Learning about your Company benefits, one plan at a time, is a good place to start.

 The purpose of this booklet is to help you do just that. This booklet, called a Summary Plan Description or SPD, explains the important features of the
Plan, as revised effective January 1, 2002. This booklet is also intended to serve as a prospectus relating to 2,000,000 shares of common stock, $2.50 par value, of The Colonial BancGroup, Inc. that have been registered with the United States
Securities and Exchange Commission and may be issued in connection with the Plan. 
 Beginning on January 1, 2002, this Plan was amended to be an
employee stock ownership plan (“ESOP”) as well as a 401(k) plan. In essence, the portion of funds invested in Company stock comprise the ESOP portion of the Plan. Your ability to invest in Company stock and move amounts out of the Company
Stock Fund remain unchanged. The Plan covers all eligible employees of the Company and its affiliates that participate in the Plan. In this booklet, all of these participating companies will be collectively referred to as the “Company.”

 Read this Summary Plan Description carefully and share it with your family so they’ll understand your benefits too. If you have questions about the
Plan, please contact the Human Resources Department at (334) 833-3119. 

 THE PLAN AT A GLANCE 
  

			
	 Plan Feature
	  	 For More Information, See:

	You may join the before-tax and matching contribution portions of the Plan as of the first day of any calendar month after you complete 3 months of service.	  	Before-tax and Matching Contributions Page 1
		
	You may join the profit sharing contribution portion of the Plan as of the first day of any calendar quarter after you complete 1,000 hours of service during a 12-month period.	  	Profit Sharing Contributions Page 1
		
	You can choose to contribute from 1% to 70% of your pay with before-tax dollars to the Plan each year.	  	How Much Can You Save? Page 3
		
	Your contributions are deducted from your pay before federal (and most state) income taxes are taken out.	  	Before-tax Contributions Page 3
		
	You may contribute over the government and Plan limits if you are age 50 or over.	  	Catch-Up Contributions Page 4
		
	You may roll over a payment from certain qualified retirement plans, annuities and individual retirement accounts into your account.	  	Rollover Contributions Page 5
		
	The Company matches your contribution $.50 for every $1.00 you contribute (including catch-up contributions) up to 6% of your pay.	  	Matching Contributions Page 6 Maximum Contributions Page 5
		
	If you are employed on the last day of the Plan Year, you may also receive a profit sharing contribution.	  	Profit Sharing Contributions Page 6
		
	You can choose to invest your account in one or more of a variety of investment funds with different investment goals.	  	Investing Your Savings Page 8
		
	You receive quarterly updates of your Plan account.	  	Account Statements Page 10
		
	You are always 100% vested in your before-tax and catch-up contributions to the Plan. You become vested in employer contributions gradually, over a period of five years. Vesting is your right to
the value of your account — even if you leave the Company before retirement.	  	VESTING Page 11
		
	Special rules may apply if you leave the Company and are later rehired.	  	If You Are Rehired Page 12

			
	 Plan Feature
	  	 For More Information, See:

	Under certain conditions, you may withdraw amounts from your account while you are actively employed.	  	IN-SERVICE WITHDRAWALS Page 13
		
	You may be able to borrow money from your account while you are actively employed.	  	LOANS Page 16
		
	You may receive a benefit when you retire or leave the Company.	  	DISTRIBUTIONS Page 18
		
	If you die, your beneficiary will receive your vested account.	  	If You Die Page 18
		
	Your benefit is paid in a lump sum.	  	Payment of Your Benefits Page 18
		
	You can name a beneficiary to receive your vested account if you die.	  	Naming a Beneficiary Page 19
		
	If your claim for a benefit is denied, you can appeal the denial.	  	CLAIMS PROCEDURES Page 24
		
	You have certain rights under ERISA.	  	YOUR RIGHTS UNDER ERISA Page 28
		
	The Telephone Hotline and Internet Website can give you quick and convenient access to your account.	  	TELEPHONE HOTL INE AND INTERNET WEBSITE Page 20
		
	You do not pay taxes on your account balance until you receive it.	  	FEDERAL INCOME TAX CONSEQUENCES Page 32
		
	You have certain rights if you have invested part of your account in Company Stock.	  	SECURITIES MATTERS Page 35
		
	You have a right to elect distribution of dividends on Company Stock.	  	DISTRIBUTION OF DIVIDENDS ON COMPANY STOCK Page 37

 BASIC PLAN INFORMATION 
 Introduction 
 The Plan is a defined contribution plan and employee stock ownership plan providing retirement benefits
for eligible participants and beneficiaries. The Plan Number is 002, and the Plan Year is January 1 to December 31. The Investment Committee’s members are approved by the Board of Directors of The Colonial BancGroup, Inc. 

Plan Name 
 The Colonial BancGroup 401(k) Plan 
 Employer and Plan Sponsor 
 The Colonial BancGroup, Inc. 

One Commerce Street 
 Montgomery, Alabama 36104 
 (334) 833-3119 
 A complete list of the employers adopting the Plan may be
obtained by participants and beneficiaries upon written request to the Plan Administrator and is available for examination by participants and beneficiaries. 
 Employer ID Number 
 63-0661573 
 Plan
Administrator 
 The Plan is administered by the Administrative Committee, the members of which are appointed by the Board of Directors of The Colonial
BancGroup, Inc. 
 The Administrative Committee for The Colonial BancGroup 401(k) Plan 
 The Colonial BancGroup, Inc. 32 Commerce Street, 1st Floor Montgomery, 
 Alabama 36104 
 (334) 833-3119 
 Agent for Service of Legal Process 
 Legal process regarding any matter related to the Plan may be served on the Administrative Committee or the Trustee at their respective addresses. 

 Plan Financing 
  

	 	•	 	 Employer and employee contributions fund the Plan. 

  

	 	•	 	 Contributions go into a trust fund, and are held and managed by the Trustee. 

  

	 	•	 	 While you direct the investment of your Plan account, the Investment Committee directs the Trustee in regard to the underlying investments and investment policies.

 Investment Committee 
 The Investment
Committee for The Colonial BancGroup 401(k) Plan 
 The Colonial BancGroup, Inc. 32 Commerce Street, 1
st Floor Montgomery, Alabama 36104 
 (334) 833-3119

 Plan Trustee 
 The Charles Schwab Trust Company

 425 Market Street 7th Floor 
 San Francisco, California 94105

 (877) 319-2782 

 TABLE OF CONTENTS 
  

			
	 ELIGIBILITY
	  	1
		
	 Before-tax and Matching Contributions
	  	1
	 Profit Sharing Contributions
	  	1
	 Ineligible Employees
	  	1
	 How Service Is Counted?
	  	1
	 Break-in-Service
	  	2
	 How to Join
	  	2
		
	 CONTRIBUTIONS
	  	3
		
	 How Much Can You Save?
	  	3
	 Definition of Pay
	  	3
	 Before-tax Contributions
	  	3
	 Catch-Up Contributions
	  	4
	 An Example of How You Save Through the Plan And Save on Taxes
	  	4
	 Maximum Contributions
	  	5
	 After-Tax Contributions
	  	5
	 Rollover Contributions
	  	5
	 Changing Your Contributions
	  	6
	 Matching Contributions
	  	6
	 Profit Sharing Contributions
	  	6
	 Pre-1987 Vested Contributions
	  	6
	 Supplemental Contributions
	  	6
	 When Are Contributions Allocated to My Account?
	  	7
		
	 INVESTMENTS
	  	8
		
	 Who Holds the Investments in the Plan
	  	8
	 Investing Your Savings
	  	8
	 Your Investment Choices
	  	8
	 Your Investment Strategy
	  	8
	 Changing Your Investments
	  	9
	 Investment Earnings
	  	9
	 An Example of How Your Savings Can Grow
	  	9
	 Account Statements
	  	10
		
	 VESTING
	  	11
		
	 Your Contributions
	  	11
	 Company Contributions
	  	11
	 Full Vesting for Other Reasons
	  	11
	 If You Cease to be an Employee
	  	11
	 If You Are Rehired
	  	12
	 Restoring Service
	  	12
		
	 IN-SERVICE WITHDRAWALS
	  	13
		
	 General Withdrawal Rules
	  	13

			
	Age 59 1/2 Withdrawals	  	13
	Hardship Withdrawals	  	14
	Pre-1987 Vested Account and After-Tax Account Withdrawals	  	14
	Distribution of Dividends on Company Stock	  	15
		
	LOANS	  	16
		
	How to Apply	  	16
	Amount	  	16
	Security	  	16
	Interest Rate	  	16
	Repayment	  	17
	Defaulting on a Loan	  	17
		
	DISTRIBUTIONS	  	18
		
	If You Leave the Company for Reasons Other Than Death	  	18
	If You Die While You Are an Employee	  	18
	Payment of Your Benefits	  	18
	Required Beginning Date	  	18
	Naming a Beneficiary	  	19
		
	TELEPHONE HOTLINE	  	20
		
	Internet Access	  	20
	Toll-free Telephone Hotline	  	20
	Internet and Telephone Hotline Security	  	20
	Hotline PIN	  	20
	Internet Password	  	20
	Confirmations	  	21
	Benefits Service Center	  	21
		
	MISCELLANEOUS MATTERS	  	22
		
	If the Plan Becomes Top Heavy	  	22
	IRS Approval	  	22
	Circumstances That May Affect Your Benefits or Your Account	  	22
	Assignment of Benefits	  	22
	Permitted Offsets	  	23
	Qualified Domestic Relations Order	  	23
	Pension Benefit Guaranty Corporation	  	23
	Future of the Plan	  	23
		
	CLAIMS PROCEDURES	  	24
		
	Claims Involving Claims Other Than Disability Benefits or Disability Determination	  	24
	Appeal of Denied Claim	  	24
	Claims Involving Disability Benefits and Disability Determinations	  	25
	Appeal of a Denied Disability Claim	  	26

			
	YOUR RIGHTS UNDER ERISA	  	29
		
	Background	  	29
	ERISA Provisions	  	29
	ERISA Duties	  	29
	Enforce Your Rights	  	30
	Assistance with Your Questions	  	30
		
	KEY TERMS TO KNOW	  	32
		
	FEDERAL INCOME TAX CONSEQUENCES	  	34
		
	Contributions	  	34
	Distributions	  	34
	Character of Taxable Distribution	  	35
	Sale of Company Stock Distributed	  	35
	Rollovers	  	36
		
	SECURITIES MATTERS	  	38
		
	Voting and Tendering of Company Stock	  	38
	Incidents of Ownership of Other Investment Funds	  	39
	Restrictions on Resale of Company Stock	  	40
		
	DISTRIBUTION OF DIVIDENDS ON COMPANY STOCK	  	40
		
	INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE	  	41
		
	SCHEDULE A Description of Investment Funds	  	A-1
	SCHEDULE B Historical Annual Rates Of Return	  	B-1

 ELIGIBILITY 
 Before-tax and Matching Contributions 
 You are eligible to join the before-tax and matching contribution portions of the Plan as of the
first day of any calendar month if you complete 3 months of service (starting with your date of hire). 
 However, if you are a part-time, temporary, or
seasonal employee who is scheduled to work less than 20 hours per week, you are not eligible to join the before-tax and matching contribution portions of the Plan until you complete 1,000 hours of service (starting with your date of hire) during
your first 12-month period of employment, or during any calendar year after that. 
 Profit Sharing Contributions 
 You are eligible to join the profit sharing contribution portion of the Plan as of the first day of any calendar quarter (January 1, April 1, July 1,
or October 1) following your completion of 1,000 hours of service (starting with your date of hire) by the end of your first 12-month period of employment, or during any calendar year after that. 
 Ineligible Employees 
 You are not eligible to participate in the Plan
if you are a: 
  

	 	•	 	 leased employee or independent contractor as determined under the Company’s worker classification procedures; 

  

	 	•	 	 union employee; 

  

	 	•	 	 nonresident alien with no U.S. source income; or 

  

	 	•	 	 part-time, temporary, or seasonal employee who is scheduled to work less than 20 hours per week and you have not completed 1,000 hours of service during any
calendar year. 

 How Is Service Counted? 
 An “hour of service” is each hour for which you are paid or are entitled to payment by the Company. This
includes the time you have worked for the Company or any company in the Company’s “controlled group.” Controlled group companies include those that are 80% or more owned by or under common control of the Company. For a complete list
of controlled groups or any other companies that have adopted the Plan, contact the Human Resources Department at 32 Commerce Street, 1st Floor,
Montgomery, AL 36064. 

 You are given credit for certain times you don’t work. For example, you receive credit for up to 501 hours of
service for vacation, holiday, illness, disability, layoff, jury duty, military duty, authorized leaves of absence, and periods for which back pay is awarded. 
 Break-in-Service 
 A break-in-service occurs when you work less than 501 hours of service in a Plan Year. 
 If you are on maternity or paternity leave, you will be credited with up to 501 hours of service in the year you take the leave, for the purpose of determining whether a
breakin-service has occurred. If you already have 501 hours of service when your leave begins, you may be credited with up to 501 hours in the following year. 
 How to Join 
 You may join the Plan when you first become eligible. You can obtain an enrollment kit that will include information about the
Plan and forms to complete. 
 If you do not wish to join the Plan when you first become eligible, you can enroll at any time thereafter. 

 CONTRIBUTIONS 
 How Much Can You Save? 
 When you join the Plan, you choose how much you will save from 1% to 70% of your before-tax pay. For each year in
which you are 50 or older, you also are eligible to make catch-up contributions (see Catch-Up Contributions, Page 4). 
 Highly paid employees can contribute
only 6% of their pay, up to the IRS compensation limit, to the Plan. You will be notified if this limit applies to you. 
 Definition of “Pay”

 Your “pay” is gross pay on which you are taxed (that is, the amount that is included on your W-2 form for the portion of the year you
participate in the Plan) including: 
  

	 	•	 	 base pay, 

  

	 	•	 	 before-tax contributions, 

  

	 	•	 	 Cafeteria Plan contributions, overtime pay, 

  

	 	•	 	 bonuses, and 

  

	 	•	 	 commissions. 

 “Pay” does not include:

  

	 	•	 	 pay earned before you became a participant in the Plan, 

  

	 	•	 	 employer-paid contributions under the Plan, 

  

	 	•	 	 fringe benefits, 

  

	 	•	 	 reimbursements and expense allowances, 

  

	 	•	 	 moving expenses, 

  

	 	•	 	 welfare benefits (e.g., employer-provided accident and health insurance benefits), 

  

	 	•	 	 any other amounts that receive special tax benefits, and 

  

	 	•	 	 pay in excess of the IRS compensation limit which is $200,000 for 2002. 

 Before-tax Contributions 
 You make your contributions to the Plan with before-tax dollars through payroll deductions.
You may contribute from 1% to 70% of your pay (in 1% increments). Please note, if you are a highly paid employee, your contributions are limited to 6% of your pay. 
 Before-tax contributions are deducted from your pay before federal (and most state) income taxes are taken out. However, you still pay Social Security (FICA) taxes on your before-tax contributions. 

 You do not pay taxes on your savings or investment earnings until you receive your benefits from the Plan, usually not
until you leave the Company or retire. 
 Catch-Up Contributions 
 If you are age 50 or older at any time during the Plan Year, you may contribute an additional amount in before-tax dollars through payroll deductions. This additional contribution is called a “catch-up” contribution and cannot
exceed $1,000 in 2002, $2,000 in 2003, $3,000 in 2004, $4,000 in 2005 and $5,000 in 2006. Catch-up contributions allow you to contribute in excess of the government and Plan limits. 
 An Example of How You Save Through the Plan And Save on Taxes 
 Let’s say you earn $30,000 a year, and you are
single. You save 6% of your pay - $150 a month - before-tax through the Plan, instead of after-tax through a bank savings account: 
  

												
	 Before-tax Contributions
	  	 	 	 	 	  	After-tax Contributions	 
	Annual pay	  	$	30,000	 	 			  	$	30,000	 
	Before-tax savings (6% of annual pay)	  	 	(1,800	)	 			  	 	n/a	 
	Taxable pay	  	$	28,200	 	 			  	$	30,000	 
	Estimated federal income tax*	  	 	(3,116	)	 			  	 	(3,386	)
	Social Security and Medicare taxes (7.65% of annual pay)	  	 	(2,295	)	 			  	 	(2,295	)
	After-tax savings (6% of annual pay)	  	 	n/a	 	 			  	 	(1,800	)
	Take home pay	  	$	22,789	 	 			  	$	22,519	 
	Tax savings	  				 	 	$270	  			

  

	*	Estimated federal income taxes are based on a 2001 tax rate of single with one exemption of $2,900 and a standard deduction of $4,550. 

 In this example, you can save $270 in federal income taxes by saving through the Plan. That’s a savings of $22.50 per month. 

 Maximum Contributions 
 The government limits how much before-tax money you can save each year through the Plan. The dollar limit is $11,000 in 2002, $12,000 in 2003 and $13,000 in 2004. If you are eligible, catch-up contributions can be made in excess of this
limit. 
 Annual contributions to your account under the Plan, which include your contributions and Company contributions, may not be more than the lesser
of: 
  

	 	•	 	 $40,000, or 

  

	 	•	 	 100% of your annual IRS Form W-2 earnings plus your before-tax contributions under the Plan and the Company’s Cafeteria Plan. 

 No more than $200,000 of annual income in 2002 may be taken into account in calculating how much you may contribute to the Plan. 
 NOTE: Contribution limits may change in future years. 
 Additional limits
may apply to certain highly paid employees. If contributions made on behalf of highly paid employees exceed these limits, the following may occur: 
  

	 	•	 	 a portion of the highly paid employees’ contributions may be refunded, 

  

	 	•	 	 matching contributions for highly paid employees may be forfeited, or 

  

	 	•	 	 additional contributions (called “supplemental contributions”) to the Plan may be made on behalf of the nonhighly paid employees.

 If you are affected by these limits, you will be notified. 
 After-Tax Contributions 
 You may not make after-tax contributions to the Plan. However, you will have an aftertax
account maintained for you to the extent you made after-tax contributions prior to January 1, 1986. 
 Rollover Contributions 
 If you came to work for the Company from another employer that had a qualified retirement plan, you may roll over funds from your prior employer’s qualified plan
into the Plan. In addition, you may roll over funds from certain individual retirement accounts, individual retirement annuities, annuity plans, annuity contracts and other eligible plans maintained by a state, political subdivision of a state or
any agency or instrumentality of a state or political subdivision of a state. This is known as a “rollover contribution.” You may roll over a payment from another plan, even if you do not choose to make before-tax contributions to the
Plan. 

 However, funds must be rolled over into the Plan within 60 days after you receive them from the other qualified plan. You
may avoid tax withholding if you roll over the payment directly into the Plan. A minimum of 20% will be deducted for federal income taxes from any payment you receive which is not directly rolled over into another qualified plan or an IRA.

 You may request a rollover form via www.millimanonline.com or through the Telephone Hotline. 
 Changing Your Contributions 
 You may stop, start, increase or
decrease your percentage any time via www.millimanonline.com or through the Telephone Hotline. After the Colonial Payroll Department processes your request, it is effective on the next available payroll. 
 Matching Contributions 
 The first 6% of pay that you contribute to
the Plan and your catch-up contributions are eligible for a matching contribution by the Company. For every $1.00 of your such contributions to the Plan, the Company contributes an extra $.50 to your account. 
 EXAMPLE: Suppose you earn $30,000 each year and you choose to contribute 6% or $1,800 of your pay on a before-tax basis. The Company will match 50% of your
contributions. 
 You contribute $1,800 The Company matches 50% of of your before-tax 
 pay your $1,800 contribution or $900 
 THE TOTAL AMOUNT GOING INTO THE Plan IS 9% OF YOUR PAY OR $2,700
($1,800 of your before-tax contributions plus $900 of your matching contributions). 
 Profit Sharing Contributions 
 Each year, the Company may add a profit sharing contribution to the account of each participant who is employed on the last day of the Plan Year. The profit
sharing contribution is calculated based on a percentage of your eligible pay. You are eligible for the profit sharing contribution even if you do not contribute to the Plan. 
 Pre-1987 Vested Contributions 
 You will have a pre-1987 vested contributions account maintained for you to the extent
certain employer contributions were made on your behalf prior to January 1, 1987. 

 Supplemental Contributions 
 The amount of before-tax and matching contributions made to the Plan must pass certain limits required by the Internal Revenue Code. If conditions exist that cause the Plan to exceed these limits, the Company may (but is not required to)
contribute additional amounts to the Plan. 
 These additional contributions are called supplemental contributions. If the Company makes any supplemental
contributions for a Plan Year, they will be allocated to the accounts of nonhighly paid employees based on the formula in the Plan that is selected by the Administrative Committee. 
 When Are Contributions Allocated to My Account? 
 Employee and Matching
Contributions 
 Your before-tax, catch-up, rollover, and matching contributions will be allocated to the ESOP portion of the Plan as soon as
administratively feasible after they are received by the Trustee, on any day the Plan is valued. The Plan accounts are valued each day that the New York Stock Exchange is open. During the next year the portion of your ESOP account that is not
invested in Company stock as of the preceding December 31 will be transferred to the non-ESOP portion of the Plan. Your ability to make investment changes is not affected by having amounts credited to your ESOP account or non-ESOP account.

 Profit Sharing Contributions 
 Profit sharing contributions are allocated as of the last day of the Plan Year to participants who are employed on the last day of the Plan Year. 
 Supplemental Contributions 
 If the Company
makes any supplemental contributions for a Plan Year, they are allocated as of the last day of the Plan Year. 

 INVESTMENTS 
 Who Holds the Investments in the Plan 
 The Company has established a trust fund to hold the assets of the Plan. The trust fund is held by
the Trustee as named in the “BASIC PLAN INFORMATION” section of this booklet. All contributions made to the Plan will be received by the Trustee. 
 Investing Your Savings 
 The Trustee, based on directions from the Plan’s Investment Committee, will select investment funds for the
Plan. 
 You decide how to invest the money in your Plan account in these investment funds. When you enroll in the Plan, you indicate on your enrollment form
what percentage of your account you want to invest in each of the eight investment funds available under the Plan. You may invest in any or all of the investment funds. 
 Your investments must be in whole percentages and must total 100%. If you do not designate any investments for your account, or if the total of the investments you select does not add up to 100%, your account or the
portion you have not directed investment will be invested in the Balanced Fund. 
 Your Investment Choices 
 The Plan offers a variety of investment choices, including a company stock fund, which is a unitized investment fund primarily invested in The Colonial BancGroup, Inc.
Common Stock (“Company Stock”). To the extent you elect to invest all or a portion of your account in the Company Stock Fund, you will have certain rights. These rights are described under the Securities Matters heading on page 35 of this
booklet. Amounts invested in the Company Stock Fund remain in the ESOP portion of the Plan. 
 A brief description of the available investment funds is set
forth on Schedule A, and their historical annual rates of return are set forth on Schedule B. 
 Your Investment Strategy 
 Each fund offers certain advantages and risks. Depending on the level of risk you want to accept, you can create an investment strategy that meets your savings goals.
Before investing in a particular fund, you should read its prospectus carefully. 
 When you enroll in the Plan, you will receive summary information
regarding each of the currently available investment funds. You may obtain updated summaries at any time via www.millimanonline.com or through the Telephone Hotline. You may also receive a current prospectus (or similar information) for any
fund by requesting it via www.millimanonline.com or through the Telephone Hotline. 

 If you need assistance in making your investment choices, you should contact a tax or financial adviser. The Company can
give you general information about the available funds but cannot give you investment advice. 
 The Plan is intended to be a plan described in
Section 404(c) of ERISA. This means that if you choose to direct the investment of your Plan account, the fiduciaries of the Plan may be relieved of liability for any losses attributable to that portion of your Plan account which is the direct
and necessary result of any investment instructions given by you. 
 Changing Your Investments 
 You may also change the percentage you want to invest in the investment funds at any time via www.millimanonline.com or through the Telephone Hotline. 

Investment Earnings 
 As of each business day, your Plan account
will be credited with earnings and losses actually experienced by it through your chosen investments. All investment earnings grow in your account on a tax-deferred basis. This means that you pay no federal income taxes on those earnings until you
receive a distribution. 
 An Example of How Your Savings Can Grow 
 Let’s say: 
  

	 	•	 	 you make $30,000 a year, 

  

	 	•	 	 you save 6% before-tax contributions each year ($150 a month; about $35 a week), 

  

	 	•	 	 the Company matches $.50 for each dollar you contribute to the Plan, adding $900 to your account each year, and 

  

	 	•	 	 let’s assume you earn a 6% return on your account each year. 

 Here’s how much you could have in your account if you save for one, five, ten, or twenty years: 
  

											
	 One Year
	 	Five Years	 	Ten Years	 	Twenty Years
	$	2,749	 	$	15,497	 	$	36,234	 	$	101,123

 Of course, this is just an example. The actual amount you will receive from the Plan will depend on your actual
pay, pay increases over the years, your contributions, the Company’s contributions, and earnings or losses on your account. 

 Remember, too, that you will pay taxes on your contributions, Company contributions and earnings when they are
distributed to you as explained more fully in the section entitled “FEDERAL INCOME TAX CONSEQUENCES” of this booklet. 
 Account Statements 

 You will receive a personal statement of your account’s current value quarterly. The statement will show your account activity, including your
contributions, Company contributions, gains or losses on your investments, and any loans or withdrawals. 

 VESTING 
 You must “vest” (or earn a right over time) in your account. When you leave the Company, you have a right to receive all or a portion of your vested account from the Plan. 
 Your Contributions 
 You are always 100% vested in your before-tax,
catch-up, pre-1987 vested, after-tax, supplemental and rollover contributions—adjusted for investment gains and losses. 
 Company Contributions 

 You become vested in your matching and profit sharing contributions made by the Company according to the following vesting schedule. These contributions
are adjusted for investment gains and losses. 
  

			
	 Vesting Schedule
  

	 Years of Vesting Service
	 	 Vesting

	 1
	 	20%
	 2
	 	40%
	 3
	 	60%
	 4
	 	80%
	 5
	 	100%

 You earn one year of vesting service for each Plan Year in which you are credited with 1,000 hours of service with
the Company. A Plan Year is January 1 through December 31. 
 Full Vesting for Other Reasons 
 Regardless of your length of service, you become 100% vested in your account if you are an active employee of the Company and you: 
  

	 	•	 	 reach age 65, 

  

	 	•	 	 become disabled (as defined under the terms of the Plan), or 

  

	 	•	 	 die. 

 If You Cease to be an Employee

 If you cease to be an employee before you become fully vested in your matching and profit sharing contributions, you will forfeit (or lose) the
nonvested portion of those contributions and will not be entitled to payment of those contributions. Forfeitures may, in the discretion of the Administrative Committee, be used to pay Plan expenses or used to reduce the Company’s matching
and/or profit sharing contributions. 

 If You Are Rehired 
 If your employment terminates and you are later rehired, special provisions of the Plan may apply to you. 
 Restoring Service 
 If you terminate and are later rehired, the Plan will restore your previously forfeited amounts and your years of vesting service, if you had less than five consecutive
one-year breaks-in-service before you were rehired. You have a “break-in-service” when you work less than 501 hours in a Plan Year. 

 IN-SERVICE WITHDRAWALS 
 Although the Plan is intended as a way to save for retirement, it is designed to be flexible to help you with emergencies. You may withdraw money from your account while you participate in the Plan. This is called an
“in-service withdrawal.” The Plan has three types of in-service withdrawals: 
  

	 	 •
	 	 age 59 1/2 withdrawals, 

  

	 	•	 	 hardship withdrawals, and 

  

	 	•	 	 pre-1987 vested account and after-tax account withdrawals. 

 General Withdrawal Rules 
 If you choose to make one of these withdrawals and the assets of your account are invested in more than one
investment fund, the amount of your withdrawal will be charged against each investment fund in the percentage your account is invested in that fund. 
 Your
withdrawal will be paid to you in a lump sum in cash or, at your request, in Company Stock to the extent your account is invested in Company Stock. 
 Withdrawal amounts are taken from your account in the following order: 
  

	 	•	 	 after-tax account, 

  

	 	•	 	 pre-1987 vested account, 

  

	 	•	 	 rollover account, 

  

	 	•	 	 vested matching account, 

  

	 	•	 	 vested profit sharing account, and 

  

	 	•	 	 before-tax account. 

 You will need to plan ahead to
withdraw money from the Plan because it may take up to 30 days to process your request and issue a check. 
 A processing fee of $35.00 will be deducted from
the amount of your withdrawal. 
 If you are considering making a withdrawal, you should also read the “FEDERAL INCOME TAX CONSEQUENCES” section of
this booklet and consult your tax and financial adviser. 
 Age 59 1/2 Withdrawals  
 If you are age 59 1/2 or older, you may request a withdrawal of all or part of your vested account at any time. You may obtain the proper form to request a withdrawal by requesting it via www.millimanonline.com or through the
Telephone Hotline. 

 Hardship Withdrawals 
 The Plan may allow you to withdraw funds from your Vested Account if you have an immediate financial need for which you have no other resources. The Plan allows withdrawal of funds needed to pay: 
  

	 	•	 	 certain unreimbursed medical expenses for you, your spouse, or your dependents; 

  

	 	•	 	 the purchase of your primary residence, but not for regular mortgage payments; 

  

	 	•	 	 tuition, room and board and related educational expenses for the next 12 months of post-secondary education for you, your spouse, or your dependents; or

  

	 	•	 	 past-due mortgage or rent payments in order to prevent foreclosure on the mortgage of your principal residence or your eviction. 

 To meet the Plan’s qualifications you: 
  

	 	•	 	 must have no other reasonably available source of funds to meet the financial need, 

  

	 	•	 	 must have obtained all other withdrawals or loans from other sources, including the Plan, and 

  

	 	•	 	 must have elected to receive currently available dividends on vested shares of Company Stock if you are invested in Company Stock under the Plan.

 The minimum hardship withdrawal amount you can request is $500. 
 You may obtain the proper form to request a hardship withdrawal by requesting it via www.millimanonline.com or through the Telephone Hotline. 
 Pre-1987 Vested Account and After-Tax Account Withdrawals 
 You may make a withdrawal at any time of all or part of
the value of: 
  

	 	•	 	 your after-tax account, and 

  

	 	•	 	 your pre-1987 vested account. 

 You may obtain the proper form to request a withdrawal by requesting the form via www.millimanonline.com or
through the Telephone Hotline. 
 Distribution of Dividends on Company Stock 
 You have the right to elect to have dividends paid on vested shares of Company Stock held under the Plan distributed to you or you can reinvest such dividends. Unless you otherwise elect prior to the record date of a
dividend, you will be deemed to have chosen to have the dividends automatically reinvested in Company Stock. You may elect to receive you dividends or change your election at any time via www.millimanonline.com or through the Telephone
Hotline. 

 LOANS 
 If you are an active employee, you may be able to borrow money from your Plan account. One of the advantages of borrowing is that the proceeds of a loan, unlike an in-service withdrawal, are not taxable. Also, as you repay a loan, your
principal and interest payments are credited back to your own account. Additional detailed information is provided in the loan procedures for the Plan. You may obtain a copy of the loan procedures from the Human Resources Department upon request.

 How to Apply 
 To apply for a loan and to learn how
much money you have available for a loan, call the Telephone Hotline or log on to the Internet Website. You can also use www.millimanonline.com or the Telephone Hotline to model your loan by determining the amount of loan payments and
repayment period that best fits your situation. Once you’ve decided the amount you wish to borrow, use www.millimanonline.com or the Telephone Hotline to request a loan. A loan origination fee of $50 will be deducted from your account.
In addition, a $4 monthly administrative fee will be built into your loan repayments. 
 Amount 
 The amount you are permitted to borrow is determined, in part, by the value of your vested account. The minimum amount you can borrow is $1,000. The maximum is the lesser
of: 
  

	 	•	 	 50% of the value of your vested account minus the total amount of all Plan loans outstanding, or 

  

	 	•	 	 $50,000 minus your highest outstanding loan balance in the preceding 12 months. 

 Security 
 To secure the repayment of your loan, you must give a security interest in up to 50% of your account. That
means that up to one-half of your account will serve as collateral for your loan. 
 Interest Rate 
 When you repay your Plan loan, you will also pay a fixed rate of interest. Both the interest and principal will go back into your account. Once the rate for your loan is
determined, the rate is fixed for the term of the loan. 

 Repayment 
 Loan
repayments will be made over the term of the loan (up to 60 months) through automatic payroll deductions. At anytime, you can prepay the entire outstanding balance of your loan without penalty, but you must repay the loan in full—partial
prepayments will not be accepted. All payments of principal and interest are invested according to your investment direction at the time of repayment. 
 Defaulting on a Loan 
 The outstanding balance of your loan will be considered in default if: 
  

	 	•	 	 you cannot make the regularly scheduled payroll deduction for repayment; or 

  

	 	•	 	 your employment with the Company terminates for any reason and you are unable to repay the outstanding loan balance. 

 In the event of termination, you have 90 days to repay the outstanding loan balance in one lump-sum payment. 
 Otherwise, your loan will be considered in default at the end of the calendar quarter following the calendar
quarter in which repayments ceased (the “cure period”). If repayments do not resume before the end of the cure period, the outstanding balance plus interest accrued through the end of the cure period will be deemed as being distributed to
you and will be reported to the IRS. You will be required to pay income tax on this “distribution” for the tax year in which the default occurs and an additional 10% penalty will also apply if the default occurs before age 59 1/2. 

 DISTRIBUTIONS 
 If You Leave the Company for Reasons Other Than Death 
 If you leave the Company for any reason (other than your death) or if you become
“totally and permanently disabled,” you will be entitled to receive a distribution of your vested account balance. 
 Under the Plan, you are
considered “totally and permanently disabled” if you are qualified, or would qualify, for the Company’s Long-Term Disability Plan. 
 If
You Die While You Are an Employee 
 If you die while you are an employee of the Company or one of its subsidiaries, you will become 100% vested in your
account and your beneficiary will receive payment of your account balance. 
 Payment of Your Benefits 
 If the value of your vested account is less than $5,000, you (or your beneficiary in the event of your death) will automatically receive payment in a single lump sum.
However, if the value of your vested account is $5,000 or more, your account will not be paid to you without your consent. 
 If your account is invested in
Company Stock, you may elect payment of that portion of your account invested in Company Stock in either cash or in whole shares of Company Stock. Any fractional shares of Company Stock will be paid in cash. 
 Lump-sum distributions are made as soon as administratively possible after you leave the Company, become disabled, retire, or die. You may request a distribution via
www.millimanonline.com or through the Telephone Hotline. 
 Delaying the Payment of Your Account 
 If the value of your vested account is $5,000 or more and you are no longer employed by the Company, you have the option to delay payment of your vested account until you
reach normal retirement age (age 65). 
 Required Beginning Date 
 If you are not a 5% or more owner of the Company’s stock, and you continue to work beyond age 70 1/2, you will begin to receive your benefit on the date you actually retire. 
 If you are a 5% or more owner of the Company’s stock, federal law requires that you must begin receiving your
benefits no later than the April 1 of the calendar year following the calendar year in which you reach age 70 1/2, even if
you are still actively working for the Company. 

 Naming a Beneficiary 
 You may name a beneficiary to receive your account balance if you die. If you are married, your spouse is automatically your beneficiary. Your spouse must give his or her written permission for you to name someone else as your beneficiary.
You must also have your spouse’s permission to change your beneficiary in the future. Your spouse’s written permission must be witnessed by a notary public. If you are not married, you may name anyone you want as your beneficiary and
change your beneficiary at any time. 
 If you do not name a beneficiary or your beneficiary dies before you and you do not name a new one, the value of your
account will be paid in the following order to: 
  

	 	•	 	 your surviving spouse, if any, then to 

  

	 	•	 	 your estate. 

 To name or change your beneficiary,
request a Beneficiary Designation Form via www.millimanonline.com or through the Telephone Hotline. 

 TELEPHONE HOTLINE AND INTERNET WEBSITE 
 Internet Access: www.millimanonline.com  
 Access to your
account is always at your fingertips. Through www.millimanonline.com, you can access up-to-date information on your account balance, provisions of the Plan and investment fund information. The website also provides you with access to
retirement planning tools through the Retirement Toolbox. 
 You can: 
  

	 	•	 	 Change your payroll deduction at any time. After your request is processed, it is effective on the next available payroll. 

  

	 	•	 	 Transfer funds 

  

	 	•	 	 Change your investment elections 

  

	 	•	 	 Apply for loans or in-service withdrawals 

  

	 	•	 	 Explore different investment strategies using the Investor Risk Profile 

  

	 	•	 	 Determine your retirement income needs and ways to achieve your goals through the Retirement Income Analyzer 

 Toll-free Telephone Hotline: 1-888-895-9416 
 Through a convenient
toll-free 1-888-895-9416, available seven days a week, you can get many of the same types of information and conduct the same transactions as through the Internet website. 
 Internet and Telephone Hotline Security 
 To ensure that only you can access your account information, a security
system requires your Social Security number and personal identification number (PIN) or password. 
 Hotline PIN 
 The first time you call, your assigned 4-digit Telephone Hotline PIN is your birth month and year (MM/YY). For your security and protection, you must change your PIN
during your first call. 
 Internet Password 
 At first,
your Internet password is the same as your 4-digit Telephone Hotline PIN. However, when you log on to www.millimanonline.com, you must change your password to a 6- to 10-digit password made up of letters and numbers. 

 Using your PIN and/or password has the force of signature. This means transactions requested through the telephone
hotline or Internet are legally binding — as if you had personally signed the request. 
 For your protection, www.millimanonline.com is a secure
website. However, to ensure that only you have access to your account information, always select Log Off when exiting the system. 
 Confirmations

 You can print confirmations when using www.millimanonline.com to make changes in your account(s). When using the Telephone Hotline, a
transaction confirmation is mailed within two working days of your request. In either case, you should review each confirmation and notify your benefits representative immediately if you think an error has occurred. Every possible effort is made to
correct errors reported within 30 days of the date the confirmation was mailed. Failure to report an error within 30 days indicates your acceptance of the transaction. 
 Benefits Service Center 
 When you have a question and cannot find the answer on the Telephone Hotline menu, press
“0” to speak with a Benefits Service Representative. Representatives are available Monday through Friday from 7:00AM until 7:00PM Central Time. 

 MISCELLANEOUS MATTERS 
 If the Plan Becomes Top Heavy 
 The Internal Revenue Code requires that all plans contain specific provisions to follow if the Plan becomes
top heavy. A top-heavy plan provides more than 60% of its benefits to certain “key” employees. A key employee (as defined by the Code) is usually a highly paid officer, a major stockholder, or other highly paid individual. It is unlikely
that the Plan will become top heavy, but if it does, the Company will let you know how your benefits will be affected. 
 IRS Approval 
 The Plan is subject to continued approval by the Internal Revenue Service, which makes possible certain tax advantages for you and the Company. If material changes in the
Plan are required for that approval, you will be notified. 
 Circumstances That May Affect Your Benefits or Your Account 
 You are always vested in your before-tax, catch-up, after-tax, pre-1987 vested, rollover and supplemental contributions. However, you are not always vested in the
employer match and profit sharing contributions; you could lose your right to all or a portion of those contributions if you leave before you are 100% vested in your account (see “VESTING”). Your investment choices will affect your account
balance. Just as gains can increase your account balance, losses can reduce the balance of your account and, thus, the amount of benefits you receive from the Plan. 
 Assignment of Benefits 
 Your Plan benefits may not be pledged, assigned, or garnished in payment of any debts.
Because your Plan benefit is designed to provide security during your retirement, benefits are not assignable or subject to the claim of any creditor. However, as required by federal law, the Plan provides that: 
  

	 	•	 	 your benefits may be paid to a divorced spouse, child, or other dependents under a Qualified Domestic Relations Order (“QDRO”), or your benefits may be
offset by an amount ordered or required to be paid by the Plan, or 

  

	 	•	 	 your benefits may be offset due to a judgment, order, decree or settlement agreement that expressly provides for the offset of all or part of the amount ordered or
required to be paid to the Plan against your benefit under the Plan. 

 Permitted Offsets 
 If
you are ordered or otherwise required to make a payment to the Plan, the Plan (in lieu of demanding such payment) may offset the amount of any benefit payments which the Plan might owe you by the amount you owe the Plan if the order or requirement
to repay the Plan arises: 
 (1) under a judgment for conviction for a crime involving the Plan, 
 (2) under a civil judgment (including a consent order or decree) entered by a Court in an action brought in connection with a violation or alleged
violation of part 4 of subtitle B of Title I of ERISA, or 
 (3) pursuant to a settlement agreement between the Secretary of Labor and you in
connection with a violation or alleged violation of part 4 of such subtitle by a fiduciary or any other person, and the judgment order, decree or settlement agreement expressly provides for the offset of all or part of the amount ordered or required
to be paid to the Plan against your benefit under the Plan. 
 Qualified Domestic Relations Order 
 A domestic relations order is any judgment, decree, or order (including certain property settlement agreements) that provides for child support, alimony, and/or marital
property rights to a spouse, former spouse, child, or other dependents under state domestic relations law, including a community property law. 
 The order
must meet specific requirements and have specific procedures regarding the amount and timing of payments in order to be recognized by the Administrative Committee as a QDRO. If you are affected by such an order, you will be notified. 
 You or your beneficiary may obtain, without charge, a copy of the QDRO procedures from the Administrative Committee. 
 Pension Benefit Guaranty Corporation 
 Because the benefits payable to
participants under the Plan depend solely on the amounts held in their individual accounts, the Plan is not insured by the Pension Benefit Guaranty Corporation. 
 Future of the Plan 
 The Company expects to continue the Plan indefinitely but reserves the right to change its features or terminate the
Plan at any time. If the Plan is terminated, your account will become fully vested and you will receive a distribution of the total amount credited to your account through the date of the distribution. In addition, each participating employer
reserves the right to terminate its participation in the Plan, even if the Plan continues to operate for other participating employers and their employees. 

 CLAIMS PROCEDURES 
 Claims Involving Claims Other Than Disability Benefits or Disability Determination 
 The Administrative Committee will review all claims and
may require you to provide it with whatever information that it decides is necessary to make a decision about your claim. Within 90 days after the Administrative Committee receives your claim (other than claims regarding disability determination),
it will notify you of its decision, unless special circumstances require an extension of time. If an extension of time is required, the Administrative Committee will notify you of the extension in writing before the end of the first 90-day period.
In no event may the extension be longer than 90 days from the end of the initial 90-day period. The extension notice will indicate the special circumstances requiring the extension of time and the date by which you can expect to receive a decision.

 If your claim is denied, in whole or in part, the Administrative Committee will provide you with written notice setting forth the following: 

 

	 	•	 	 the specific reason for the denial, 

  

	 	•	 	 the reference to the provisions of the Plan on which the denial is based, 

  

	 	•	 	 an explanation of what additional information or material, if any, is needed to perfect the claim and why such information or material is needed,

  

	 	•	 	 a description of the Plan’s review procedures and applicable time limits, and 

  

	 	•	 	 a statement of the right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. 

Appeal of Denied Claim 
 If you want your claim reconsidered, you
or your representative must appeal the Administrative Committee’s decision by submitting a written request for review by the Administrative Committee to the Human Resources Department within 60 days after you receive the written notification
denying your claim. Any such request should be accompanied by documents, records or other information in support of the appeal. In addition, you or your representative may have reasonable access to, and copies of, all documents, records, and other
information relevant to the claim, free of charge. A failure to request a review of a claim which is denied will be treated as full and complete agreement with the denial. 
 The Administrative Committee will review all relevant material, including any issues or comments submitted in writing by you or your representative (regardless of whether such information was submitted or considered
in the initial benefit determination), and will 

 
render a decision on the claim within 60 days after it receives your written request for review. If an extension of time is required, the Administrative
Committee will notify you of the extension in writing before the end of the first 60-day period. In no event may the extension be longer than 60 days from the end of the initial 60-day period. The extension notice will indicate the special
circumstances requiring the extension of time and the date by which you can expect to receive a decision. The Administrative Committee will render a decision no later than 120 days after it receives your request. 
 The decision of the Administrative Committee will be in writing and will include specific reasons for the decision as well as specific references to the pertinent Plan
provisions on which the decision is based. Such decision will also include: 
  

	 	•	 	 the specific reason for the denial, 

  

	 	•	 	 the reference to the provisions of the Plan on which the denial is based, 

  

	 	•	 	 a statement that you are entitled to receive, upon request and free of charge, reasonable access to pertinent documents, records, and other information relevant to
your claim for benefits, 

  

	 	•	 	 a description of the Plan’s voluntary appeal procedures (if any), and 

  

	 	•	 	 a statement of your right to bring an action under ERISA Section 502(a). 

 The Administrative Committee has the right and discretionary authority to interpret the provisions of the Plan and its decision will be conclusive and binding. 
 If your claim for benefits is denied, you cannot bring a lawsuit to recover benefits under the Plan unless you have timely exercised all appeal rights available to you
under the Plan’s administrative claims procedures for a denied claim and your appeal seeking benefits have been denied by the Plan. 
 Claims
Involving Disability Benefits and Disability Determinations 
 The Administrative Committee will review all claims regarding disability benefits and
disability determinations and may require you to provide it with whatever information that it decides is necessary to make a decision about your claim. The Administrative Committee will notify you of its decision within 45 days after it receives
your claim regarding disability benefits or a disability determination. The 45-day period may be extended by the Administrative Committee for up to 30 days (with the possibility of an additional 30 days, for a total extension period of 60 days),
provided the Administrative Committee determines that such extensions are necessary due to matters beyond the control of the Administrative Committee and notifies you or your representative before to the expiration of the initial 45-day period (and
before the expiration of the initial 30-day extension period for the additional 30-day extension period) of the circumstances requiring the extension of time and the date by which the Administrative Committee expects to render a decision.

 In the case of any extension, the notice of extension shall specifically explain the standards on which entitlement to a
benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and you will be afforded 45 days within which to provide the specified information. 
 The Administrative Committee’s notice of denial will include: 
  

	 	•	 	 the specific reason for the denial, 

  

	 	•	 	 the reference to the provisions of the Plan on which the denial is based, 

  

	 	•	 	 an explanation of what additional information or material, if any, is needed to perfect the claim and an explanation of why such information is necessary,

  

	 	•	 	 a description of the Plan’s claim review procedures and applicable time limits, 

  

	 	•	 	 a statement of the right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. 

 

	 	•	 	 if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the denial, either a copy of or statement that such a rule,
guideline, protocol, or other similar criterion was relied upon in making the determination will be provided to you free of charge upon request, and 

  

	 	•	 	 if the denial is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the
denial, applying the terms of the Plan to the participant’s medical circumstances or a statement that such an explanation will be provided to you free of charge upon request. 

 Appeal of a Denied Disability Claim 
 If you want your claim
reconsidered, you or your representative must submit a written appeal with the Administrative Committee within 180 days after receiving the denial. Any such request should be accompanied by documents, records, or other information in support of the
appeal. You or your representative may have reasonable access to, and copies of, all documents, records, and other information relevant to the claim free of charge. The appeal will take into account all documents, records and other information you
or your representative submit regarding your claim, without regard to whether the information was considered in the initial benefit determination. The appeal will not give deference to the initial decision to deny the claim and will be conducted by
the Administrative Committee by an individual who is neither the individual who made the initial denial, nor the subordinate of such individual. 

 In reconsidering any denial that is based in whole or in part on a medical judgment, the Administrative Committee shall
consult with a health care professional, whose identification must be provided upon request, and who has appropriate training and experience in the field of medicine involved in the medical judgment, and who is not the individual that was consulted
in connection with the initial denial of the claim nor a subordinate of any such individual. A failure to timely request an appeal of a denied claim will be treated as full and complete agreement with the denial. 
 The Administrative Committee shall respond to you within 45 days of your appeal seeking reconsideration of the denied claim, or 90 days under special circumstances (in
which case you will be notified in writing of the extension, of the reasons for the extension, and the date the reconsideration is expected to conclude). In its response to the appeal, the Administrative Committee will explain, in writing:

  

	 	•	 	 the reference to the provisions of the Plan on which the denial is based, 

  

	 	•	 	 an explanation of what additional information or material, if any, is needed to perfect the claim and an explanation of why such information is necessary,

  

	 	•	 	 that you are entitled to receive, upon request and free of charge, reasonable access to pertinent documents, records, and other information relevant to your claim
for benefits, 

  

	 	•	 	 your right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review, 

  

	 	•	 	 if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the denial, either a copy of or statement that such rule, guideline,
protocol, or other similar criterion was relied upon in making the determination will be provided free of charge to you upon request, and 

  

	 	•	 	 if the denial is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the
denial, applying the terms of the Plan to the participant’s medical circumstances or a statement that such an explanation will be provided to you free of charge upon request. 

 The Plan’s claims review procedures do not include any voluntary levels of appeal (such as voluntary arbitration). 

 Finally, you and the Plan may have other voluntary alternative dispute resolution options, such as mediation. One way to
find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency. 

 YOUR RIGHTS UNDER ERISA 
 Background 
 As a participant in the Plan, you are entitled to certain rights and protections under the Employee
Retirement Income Security Act of 1974 (ERISA). 
 ERISA Provisions 
 ERISA provides that all Plan participants shall be entitled to: 
 Examine, without charge, at the Administrative
Committee’s office and at other specified locations, such as worksites, all documents governing the Plan, including insurance contracts, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of
Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. 
 Obtain, upon written request to the Administrative
Committee, copies of documents governing the operation of the Plan, including insurance contracts, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Administrative Committee may make a reasonable
charge for the copies. 
 Receive a summary of the Plan’s annual financial report. The Administrative Committee is required by law to furnish each
participant with a copy of the Plan’s Summary Annual Report. 
 Obtain free of charge a statement telling you whether you have a right under the Plan to
receive a benefit at normal retirement age (age 65) and, if so, what your benefits would be at normal retirement age if you stop working now. If you do not have a right to a benefit, the statement will tell you how many more years you have to work
to be eligible to receive a right to a benefit. This statement must be requested in writing and is not required to be given more than once a year. 
 ERISA Duties 
 ERISA imposes duties on the people who are responsible for the operation of the Plan (the “fiduciaries”).

 Fiduciaries have a duty to operate the Plan prudently and in the interest of you and other Plan participants and beneficiaries. 
 No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension or welfare
benefit or from exercising your rights under ERISA. 

 Enforce Your Rights 
 If your claim for a pension benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain
time schedules. 
 Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest
annual report from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Administrative Committee to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the control of the Administrative Committee. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In
addition, if you disagree with the Plan’s decision or lack thereof concerning the qualified status of a domestic relations order or a medical child support order, you may file suit in Federal court. If it should happen that the Plan fiduciaries
misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and
legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. 
 Assistance with Your Questions 
 If you have any questions about your
Plan, you should contact the Administrative Committee. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Administrative Committee, you should contact the
nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor,
200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. 

 This booklet summarizes the terms and conditions of The Colonial BancGroup 401(k) Plan as it is in effect as of
January 1, 2002. 
 Every effort has been made to provide, in easily understandable language, a clear and accurate description of the Plan. However, in
the event of a conflict between this booklet and the Plan document, the Plan document will govern. 
 It is up to you to make your own Plan investment
decisions. Before investing in a fund, you should read its prospectus carefully. Investments in the Plan are not FDIC-insured, are not deposits or other obligations of, and are not guaranteed by The Colonial BancGroup, Inc., Colonial Bank, your
employer or any other institution. An investment in the Plan involves investment risks, including the possible loss of the principal amount invested. The Company can give you general investment information but cannot act as your financial or tax
adviser. If you have questions or need help in making your investment decisions, contact a financial or tax adviser. 
 Participation in the Plan is not a
guarantee of continued employment. Under no circumstances should this summary or participation in the Plan be construed or represented to be a contract that specifies terms or conditions of employment. 

 KEY TERMS TO KNOW 
 Here are definitions of some key terms which may come in handy as you read this booklet or for your future reference. 
 After-tax contributions. Savings to the Plan deducted from your paycheck after federal and state income taxes are deducted. Because these savings are taxed going into the Plan, they are not taxed when paid out. 
 Before-tax contributions. Savings to the Plan deducted from your paycheck before federal and state income taxes (but after FICA taxes) are deducted.
Because these savings are not taxed going into the Plan, they are taxable when paid out. 
 Bond. A loan issued by corporations,
governments or municipalities to raise money. A bond certificate is like an IOU and shows the amount loaned (the principal), the rate of interest to be paid on the loan, and the date the principal will be paid back (the maturity date). 

Catch-Up Contributions. Additional Before-tax Contributions in excess of the government and Plan limits for participants who are age 50 or older at any
time during the Plan Year. 
 Common Stock. Shares of ownership in a company. Generally, common stock is eligible for dividends based on
corporate earnings and capital growth. 
 Company. The Colonial BancGroup, Inc. and affiliated companies that have adopted the Plan.

 Equity. Stocks or other investment vehicles—such as mutual funds—that are composed of stocks. Equity represents ownership
in a company. 
 Financial or Tax Adviser. A professional who helps individuals and families manage their money and plan for their future
financial goals. For example, a Certified Public Accountant (CPA), Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), or a tax attorney. 
 Lump-Sum Distribution. A payment of your entire Plan benefit at one time. To avoid taxes, you may be able to make a direct rollover of your Plan payment to an IRA or to another qualified employer retirement plan. 

Securities. Stocks, bonds or cash equivalents—instruments that represent the equity or debt of a corporation, a federal, state, or local government
or a legal trust. 
 Vesting. Your right to receive all or a portion of your account from the Plan when you leave the Company. You are always
100% vested in your before-tax, catch-up, aftertax, pre-1987 vested, and rollover contributions. You are 100% vested in the Company matching and profit sharing contributions after five years. You earn a right to vest in 20% of those contributions
each year. 

 FEDERAL INCOME TAX CONSEQUENCES 
 The Company intends that the Plan and the related trust qualify for favorable tax status under Sections 401(a), 401(k), 501(a) and 4975 of the Internal Revenue Code. Under present law, regulations and interpretations,
participation in the Plan will have the following federal income tax consequences, assuming that the Plan is administered in accordance with the requirements of the Internal Revenue Code. 
 Contributions 
 Your before-tax and catch-up contributions are not
subject to federal income tax at the time they are made to the Plan. However, Social Security taxes still must be withheld. Because you will still pay the full amount of your Social Security taxes due on your earnings, you will receive your full
Social Security benefit when you retire or otherwise become eligible to receive this benefit. 
 Employer contributions made to the Plan by the Company and
before-tax contributions made on your behalf will be deductible by the Company on its federal income tax return for the taxable year for which they are made. These contributions will be taxable to you for the taxable year in which they are
distributed. 
 The earnings attributable to all contributions held by the Custodian on behalf of the Trustee will not be taxable to you until the taxable
year in which they are withdrawn by or distributed to you. Generally, no earnings are taxable to the trust. 
 Distributions 
 Amount of Taxable Distribution 
 Distributions of cash or Company Stock from your account generally will be taxable in the year of distribution. The taxable amount of a distribution will depend on whether or not it qualifies as a lump-sum distribution. A lump-sum
distribution is the payment, within a single taxable year, of all remaining benefits payable to you under the Plan because of your separation from service. 
 If the distribution qualifies as a lump-sum distribution, the taxable portion generally will be an amount equal to the sum of (i) the cash distributed, and (ii) the cost to the Trustee of acquiring the Company Stock distributed to
you (or, if lower, the fair market value of such stock on the date of distribution). If the distribution does not qualify as a lump-sum distribution, the taxable portion of the distribution generally will be equal to the sum of (i) the cash
distributed, and (ii) the fair market value of the shares of Company Stock distributed. 
 An
additional 10% federal excise tax or penalty will be deducted from any “early distributions” you receive from the Plan. In general, a distribution is an early distribution if you receive it before you are age 59 1/2. However, a distribution will not be considered early if, at the time it is made: 
  

	•	you are no longer living, 

	 	•	 	 you are totally and permanently disabled, 

  

	 	 •
	 	 you are age 59 1/2 or older, 

  

	 	•	 	 you are age 55 or older and have terminated employment with the Company, 

  

	 	•	 	 the payment is used to pay certain unreimbursed medical expenses, 

  

	 	•	 	 the payment is paid to someone under a Qualified Domestic Relations Order, or 

  

	 	•	 	 you choose a direct rollover to an IRA or another employer’s qualified plan (see discussion in the section entitled “Rollovers” below).

 You should seek competent tax advice from a qualified professional whenever you decide to receive a payment from the Plan. 

Character of Taxable Distribution 
 The manner in which a distribution upon separation from service is taxable depends upon a number of factors. A lump-sum distribution will be taxable as ordinary income. You may elect to have the ordinary income portion of a lump-sum
distribution taxed under a 5-year averaging method that operates in a manner so that the ordinary income portion of a distribution is treated as if it were received evenly over a 5-year period, and the federal tax rates in effect in the year of
distribution would apply. Congress has repealed 5-year averaging for periods after 1999. 
 If your distribution from the Plan does not qualify as a lump-sum
distribution, you have not participated in the Plan for at least 5 years, or you choose not to elect the special income averaging rules described above, your distribution will be taxed as ordinary income in the year received. (But see discussion in
the section entitled “Rollovers” below.) 
 Sale of Company Stock Distributed 
 Upon a subsequent sale of Company Stock distributed under the Plan, your tax basis for determining gain or loss generally will be equal to the taxable portion of the
distribution, less any cash received as part of the distribution and any income tax withheld with respect to the distribution. To obtain your basis in each share, the various costs of all shares purchased for your account are totaled and then
divided by the total number of shares you received. 
 If the shares of Company Stock distributed from the Plan are sold or disposed of at a gain, the
character of the gain will depend on whether the shares are received in a distribution qualifying for lump-sum treatment. If the shares are received in a lump-sum distribution, the amount of the gain, if any, not in excess of the “net
unrealized appreciation” in the shares may be taxed as long-term 

 
capital gain in the year of such sale or disposition. “Net unrealized appreciation” is the excess, if any, of the market value of the Company Stock
on the date of distribution over your tax basis in such stock. Any gain in excess of the “net unrealized appreciation” will be treated as long-term or short-term capital gain, depending on your holding period from the date of distribution
from the Plan. If the shares are not received in a lump-sum distribution, the gain will be treated as long-term or short-term capital gain, depending on your holding period from the date of distribution from the Plan. 
 If the shares distributed from the Plan are sold at a loss (regardless of whether or not the stock was received in a lump-sum distribution), the loss will be treated as
long-term or short-term capital loss, depending upon your holding period from the date of distribution. 
 Rollovers 
 You can defer the payment of income taxes on certain distributions to the extent that all or a portion of the cash and/or Company Stock received upon distribution is
“rolled over” to an individual retirement account, an individual retirement annuity, an annuity plan, annuity contract, a plan maintained by state, political subdivision of a state, or any agency or instrumentality of a state or political
subdivision of a state or another employer plan that accepts rollovers that agrees to separately account for amounts transferred into such plan. Generally, any distribution from a qualified plan that would be subject to income tax and is payable to
you, and in certain cases your spouse, or an alternate payee under a QDRO who is your spouse or former spouse, is eligible for rollover treatment. 
 The following distributions are not eligible for rollover treatment: (i) a distribution which is required to
be paid to you because you attain age 70 1/2; (ii) a hardship withdrawal, (iii) a distribution which is one of a series
of substantially equal periodic payments made, not less frequently than annually, (iv) the portion of any distribution that is not includible in your gross income (unless transferred to an individual retirement account or annuity that
separately accounts for these amounts) and (vi) any dividends. 
 You can choose a “direct rollover” of all or any portion of a payment
that is eligible for rollover treatment. In a direct rollover, the distribution is paid directly from the Plan to an IRA, annuity contract, annuity plan or another employer plan that accepts rollovers. Alternatively, you can choose to have the
distribution (or any portion thereof) paid to you. In that case, the amount paid to you will be subject to income tax unless, within 60 days, you roll over the payment to an IRA or another employer plan that accepts rollovers. 
 The Plan must withhold and send to the Internal Revenue Service 20% of any distribution eligible for rollover treatment which is not directly rolled over. However,
eligible distributions of less than $200 are not subject to withholding. Furthermore, Company Stock included in your distribution does not have to be sold to meet the withholding requirements. (So, if Company Stock makes up more 

 
than 80% of the value of your taxable distribution, the amount withheld to pay your taxes will be less than 20%; however, you still will be responsible for
paying income taxes on the entire distribution.) Any distribution not eligible for rollover treatment is taxable, but the mandatory withholding rules do not apply; in that case, you may elect not to have withholding apply. 

 SECURITIES MATTERS 
 Voting and Tendering of Company Stock 
 Stockholder Information

 The Trustee or its designee will provide you the same information that is provided to the Trustee or its designee as a stockholder of the Company. The
Trustee or its designee will provide this information to you as soon as practicable after it receives the information and may coordinate the process with the Company. However, as described below, all information relating to the buying, holding and
selling of Company Stock will be maintained in a confidential manner, except to the extent required by applicable law. 
 Voting
Of Shares 
 At the time of mailing the notice of each annual or extraordinary general meeting of the stockholders of the Company, the Company
will provide the Trustee or the Trustee’s designee with a copy of any materials for the meeting generally provided to stockholders. The Trustee or its designee will distribute that information to each participant and, upon return of
instructions from participants, will vote the Company Stock as instructed. The Trustee or its designee will vote any shares of Company Stock for which it does not receive timely voting instructions in the manner directed by the Investment Committee,
or if it does not receive any such directions, in the same proportion as it votes the Company Stock for which it does receive such instructions. As described below, all information relating to the holding and voting of Company Stock will be
maintained in a confidential manner. 
 Tender Offers 
 If there is a tender offer or exchange offer for Company Stock, each participant will be provided with the same materials relating to that offer as are provided to other
stockholders. Each participant may elect, to the extent the offer is open to stockholders, that some or all of the Company Stock allocated to his or her account be tendered by the Trustee or its designee on his or her behalf. Upon timely receipt of
instructions from a participant, the Trustee or its designee will tender or exchange Company Stock allocated to the participant’s account to the extent directed to do so. Any Company Stock allocated to a participant’s account and as to
which the Trustee receives either no instructions or incomplete instructions will not be tendered. A participant who instructs the Trustee to tender some or all of the Company Stock allocated to the participant’s account may, at any time prior
to the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee will withdraw the directed number of shares of Company Stock from the tender offer prior to the offer withdrawal deadline. A
participant will not be limited as to the number of directions to tender or withdraw that he or she may give to the Trustee. Unallocated shares of Company Stock will be tendered by the Trustee if the Investment Committee instructs the Trustee to
tender them. 

 Other Incidents of Ownership 
 If the opportunity to exercise any other rights relating to incidents of ownership is made available to holders of Company Stock, the Trustee or its designee will make
these rights available to participants. Similar rules relating to the pass-through of voting and tender offer rights as well as confidentiality will be maintained with respect to these other incidents of ownership. The Administrative Committee or
the Investment Committee may provide the Trustee or its designee with instructions relating to these rights as long as the requisite confidentiality is maintained. 
 Confidentiality 
 The Administrative Committee will appoint one or more of the Company’s
employees, or other designees, to maintain all information relating to the purchase, holding and sale of Company Stock, and the exercise of voting, tender and other rights with respect to these shares by participants in a confidential manner, such
that neither the Administrative Committee nor the management of the Company will have access to that information, except to the extent required by applicable law. In the event that the appointed employees or other designees are unable to act without
guidance with respect to Company Stock, the appointed employees or other designees nevertheless will seek guidance from the Company, the Administrative Committee, the Investment Committee or the Trustee without divulging the names or identities of
any participants in relation to Company Stock held in the Plan. 
 The Administrative Committee, or its designee, will be responsible for monitoring the
actions of the appointed employees or other designees in regard to confidentiality and for ensuring that these confidentiality procedures remain sufficient and are followed. 
 In the event that the Administrative Committee determines there exists a potential for undue employer influence on participants and beneficiaries (including, but not limited to, tender offers, exchange offers and
contested board elections), the Administrative Committee will appoint an independent fiduciary to monitor the actions of the appointed employees or other designees in regard to confidentiality and to ensure that the Plan’s confidentiality
procedures remain sufficient and are followed. 
 Notwithstanding anything in this Plan description to the contrary, to the extent necessary to comply with
state or federal laws, information otherwise required to be maintained as confidential may be disclosed to the Company or any other person. 
 Incidents
of Ownership of Other Investment Funds 
 The Trustee will exercise all powers of ownership with respect to each other investment fund other than the
Company Stock Fund. 

 Restrictions on Resale of Company Stock 
 A person who is an affiliate of the Company generally should resell shares only in compliance with the provisions of Rule 144 promulgated by the Securities and Exchange Commission (the “Commission”) under
the Securities Act of 1933 (the “1933 Act”). “Affiliates” of the Company generally include all of the directors and principal officers as well as any principal shareholders of the Company and may include executive officers of the
Company’s subsidiaries if they play a policy-making role at the Company level. 
 A person who, at the time of resale of Company Stock acquired pursuant
to the 401 (k) Plan and registered under the 1933 Act, is not an affiliate of the Company generally may resell shares acquired by him or her pursuant to the Plan without restriction. 
 DISTRIBUTION OF DIVIDENDS ON COMPANY STOCK 
 You have the right to
elect to have dividends paid on vested shares of Company Stock held under the Plan distributed to you or to have such dividends automatically reinvested in Company Stock. Unless you otherwise elect prior to the record date of a dividend, you will be
deemed to have chosen to have the dividends automatically reinvested in Company Stock. You may change your election at any time and the election in effect on the record date of a dividend controls with respect to that dividend payment. Therefore, if
you apply for a hardship distribution, you will be deemed to have elected to receive a distribution of all dividends currently payable. 

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 
 The following documents previously filed with the Commission by the Company are incorporated herein by reference and made a part hereof: 
 1 The Company’s Annual Report on Form 10-K for its most recently ended fiscal year; 
 2 The
Company’s reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) since the end of the fiscal year covered by the Company’s annual report for its most recently ended
fiscal year; 
 3 The Company’s Form 8-A dated November 22, 1994 and effective as of February 22, 1995, containing a
description of the Company’s Common Stock; and 
 4 The Plan’s annual report on Form 11-K for its most recently ended fiscal year.

 All reports and other documents subsequently filed by the Company and the Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, as
amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, will be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such documents. 
 The Company will provide without charge
to each person to whom this plan description is delivered, at the written or oral request of such persons, a copy of any or all of the foregoing documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into the foregoing documents). The Company also will provide without charge upon request a copy of the Company’s latest Annual Report to Shareholders. Written or telephone requests should be directed
to the Administrative Committee at The Colonial BancGroup, Inc., 32 Commerce Street, 1st Floor, Montgomery, Alabama 36104, (334) 833-3119.

 SCHEDULE A 
 THE COLONIAL BANCGROUP 401(K) PLAN 
 Description of Investment Funds 
 Stable Value Fund (Schwab Institutional Advantage Money Fund) 
 Seeks
to provide a consistent rate of return while preserving capital and minimizing risk. The fund consists of assets whose principal value remains stable regardless of stock and bond market fluctuations. These assets may include guaranteed investment
contracts (GICs) issued by insurance companies, and bank investment contracts (BICs) issued by banks. These assets may also include money market instruments, such as bank certificates of deposit, banker’s acceptances and short-term treasury
bills. 
 Intermediate Bond Fund (PIMCO Total Return Fund) 
 Seeks total return consistent with prudent investment management. The fund invests in fixed-income securities, including corporate bonds, U.S. government securities, mortgage-related securities, and money-market instruments. This fund is
intended to maintain a portfolio duration range of three to five years. 
 Balanced Fund (Dodge & Cox Balanced Fund) 
 Seeks income, conservation of principal, and long-term growth of principal and income. The fund may invest a large portion of its assets in common stocks and convertible
securities. Prospective earnings and dividends are major considerations in these purchases. Individual securities are selected with regard to financial strength and economic background. The balance of the fund’s assets is invested in
investment-grade fixed-income securities. 
 Large Cap Growth Fund (American Century Income & Growth Fund) 
 Seeks capital appreciation by investing primarily in equity securities of companies with earnings that are expected to grow at an above-average rate. Current income is a
secondary objective and is achieved by investing in dividend-paying common stocks and convertible securities. 
 THIS DOCUMENT CONSTITUTES
PART OF A PROSPECTUS 
 COVERING SECURITIES THAT HAVE BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933 
  

 A-1 

 Small Cap Growth Fund (Managers Special Equity Fund) 
 Seeks maximum capital growth. The fund invests primarily in common stocks and favors securities of companies expected to benefit from special factors or trends. These may include established companies, small companies
or new issues. The fund may also invest in debt securities and in foreign securities. 
 Large Cap Growth Fund (Dreyfus Appreciation Fund) 

Seeks rapid capital growth by investing primarily in small to medium-sized companies that are expected to demonstrate growth in earnings and revenue. These companies
may be concentrated in a few industries that are experiencing rapid growth. The fund may use aggressive investment techniques, such as short selling, leveraging and frequent trading. The fund may also invest in debt securities and in foreign
securities. 
 International Equity Fund (American AAdvantage International Equity Fund) 
 Seeks long-term capital appreciation. The fund ordinarily invests in at least 80% of assets in common stocks and convertibles of foreign issuers from at least three countries. Management selects securities based on a
country’s economic outlook, market valuation, and potential changes in currency exchange rates. The fund may invest in high-quality foreign debt. 
 Company Stock Fund (The Colonial BancGroup, Inc. Company Stock Fund) 
 A unitized investment fund primarily invested in Company Stock, with a
small cash component, this fund is designed for participants who want to develop or enhance their proprietary interests in the Company’s success. As is the case with all common stock funds, all or a part of a participant’s investment could
be lost. If you invest a portion of your account in the fund, you may direct the Trustee as to how to vote the shares of Company Stock allocated to your account, and if there is a tender offer with respect to Company Stock, you will be given the
opportunity to direct the Trustee as to whether or not to tender the shares of Company Stock credited to your account. 
 THIS DOCUMENT
CONSTITUTES PART OF A PROSPECTUS 
 COVERING SECURITIES THAT HAVE BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933 
  

 A-2 

 SCHEDULE B THE COLONIAL BANCGROUP 
 401(K) PLAN Historical Annual Rates Of Return 
 INVESTMENT
FUND        2002 2001 2000 1999 1998 
 Schwab
Institutional Advantage 1.48% 3.97% 6.13% 4.89% 5.27% Money Fund1 PIMCO Total Return Fund2 
10.2% 9.48% 12.09% -0.28% 9.77% 
 Dodge & Cox Balanced Fund -2.94% 10.05% 15.14% 12.06% 6.69% American
Century Income & Growth -19.37% -8.37% -10.53% 17.96% 27.67% Fund 
 Managers Special Equity Fund -21.98% -8.07% -2.56% 54.11% 0.2% Dreyfus
Appreciation Fund -17.14% -10.75% 1.8% 9.97% 30.85% American AAdvantage International -14.1% -15.75% -4.36% 26.52% 11.52% 
 Equity Fund The Colonial BancGroup, Inc. -12.1% 36.1% 8.5% -10.8% -28.8% Company Stock Fund3 
  

	 1
	 The fund commenced on January 4, 1994.

	 2
	 The Fund’s fiscal year end is March 31. Therefore, the
information shown above reflects the Fund’s performance for the fiscal year ending March 31. 

	 3
	 The Colonial BancGroup, Inc. Company Stock Fund will be
comprised of Company Stock and a small cash component. 

 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS 

COVERING SECURITIES THAT HAVE BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933 
  

 B-1

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