Document:

* AGREEMENT

COST-SHARING AND COLLABORATION AGREEMENT

THIS AGREEMENT made in duplicate,

BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the Minister of Natural Resources, acting through the CANMET Energy Technology Centre, whose principal office is at 1 Haanel Drive, Ottawa, Ontario, Canada  K1A 1M1 

("CANMET")

AND:
SONIC ENVIRONMENTAL SOLUTIONS INC., a company registered in the Province of British Columbia, whose principal address is at 1778 West 2nd Avenue, Vancouver, British Columbia, V6J 1H6

("SONIC")

WHEREAS: 

(A) Cam has developed a patented process [CA patent #2,224,901/US patent #6,270,631] for the reactivation and pacification of ash from fluidized bed combustion (the "CANMET Process"); and

(B) SONIC has developed a sonic generator technology which it intends to apply to the sonification of industrial processes, including but not limited to conventional and fluidized bed combustion processes (the "SONIC's Technology");

(C) CANMET and SONIC wish to share the cost of evaluating the CANMET Process using SONIC's Technology for its commercialization potential (the "Purpose"); and

(D) CANMET and SONIC are desirous of entering into an Agreement on the terms and conditions hereinafter set forth.

NOW THEREFORE, the Parties hereto agree each with the other as follows:

PART 1

DEFINITIONS

1.1 Recitals are hereby included by reference.

1.2 Unless the context otherwise requires:
(a) "Agreement" means these articles of agreement, all schedules and amendments thereto;

(b) "Arising Technology" means Intellectual Property developed as a result of SONIC or CANMET undertaking Work under this Agreement;

(c) "Background Technology" means all Intellectual Property and Technical Information developed and owned by CANMET or SONIC prior to the performance of the Work;

(d) "Deliverables" means any Technical Information excluding all rights to proprietary software used or owned by CANMET, reports, presentations, and samples that one Party will supply to the other Party as a result of the Work;

(e) "Intellectual Property" means all rights in Technical Information including without limitation, patents, copyrights, trade secrets, trademarks, registered industrial designs and applications for same, and all rights therein;

(f) "Invention" means any new and useful act, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter;

(g) "Parties" means CANMET and SONIC and "Party" means either one of them, as the context requires;

(h) "Project" means the four-phase approach to the evaluation of the CANMET Process for the application of SONIC Technology.  The present Agreement shall cover Phase 1 only;

(i) "Technical Information" means any information of a scientific or technical nature, whether oral or recorded in any form or medium and whether or not protectable by copyright, including but not limited to data, techniques, methods, processes, know-how, inventions, designs, formulae, photographs, drawings, plans, specifications, reports, studies, technical and procedural manuals, computer hardware and computer software, data files, and documentation;

(j) The singular number shall include the plural and vice versa, and words importing gender shall include all genders; and

(k) "Work" is described in Schedule A.

PART 2

CANMET'S DUTIES

2.1 CANMET shall perform or have performed its share of the Work in accordance with the scope, terms and conditions set out in Schedule A of this Agreement.

2.2 CANMET shall use its best efforts to meet the activity milestones and complete its share of the Work by the scheduled dates specified in Schedule A.  If at any time CANMET considers that its share of the Work will not be completed by the said dates, CANMET shall notify and consult with SONIC and provide estimated new completion dates to SONIC in writing.

2.3 CANMET shall at all times perform its share of the Work in a diligent, thorough and workmanlike manner in accordance with good scientific and technical practices.

PART 3

SONIC'S DUTIES

3.1 SONIC shall perform or have performed its share of the Work in accordance with the scope, terms and conditions set out in Schedule A of this Agreement.

3.2 SONIC shall use its best efforts to meet the activity milestones and complete its share of the Work by the scheduled dates specified in Schedule A.  If at any time SONIC considers that its share of the Work will not be completed by the said dates, SONIC shall notify and consult with CANMET and provide estimated new completion dates to CANMET in writing.

3.3 SONIC shall at all times perform its share of the Work in a diligent, thorough and workmanlike manner in accordance with good scientific and technical practices.

PART 4

PROJECT MANAGEMENT

4.1 Each Party hereto shall keep accurate, detailed and complete Records at its principal place of business, make Records available to the other Party during normal business hours, permit the other Party and its authorized representatives to inspect, audit, take extracts from and make copies of, the Records and afford all facilities and collaboration to the other Party and its authorized representatives for such audits and inspections.  Each Party hereto shall also furnish the other Party's representatives with all information requisite to the understanding of the Records and shall preserve the Records for the life of this Agreement and for a period of two years thereafter.

4.2 The Parties hereto shall communicate on progress every month to determine and discuss the progress of all aspects of the Work and to take such corrective or other action as both Parties may deem necessary to achieve the objectives of the Work.

4.3 The statement of work, activities, Deliverables, milestones, estimated costs, time schedules, cost estimates or any other aspect of Schedule A may be amended by mutual written agreement of the Parties hereto.

4.4 At the end of the project, each Party shall submit to the other a complete, detailed and accurate final report, which details the activities completed.  The final actual costs associated with each completed activity shall be included and documented to an extent that would permit auditing of such costs and the report shall be certified to be accurate and correct by a duly authorized officer of the Party submitting the patroller progress report.

PART 5

EXCHANGE OF DELIVERABLES, CONFIDENTIALITY AND USE OF NAME

5.1 The Parties hereto shall exchange work-related information "as required" so as to enable the objectives of the Work to be achieved.

5.2 Each Party hereto agrees to keep confidential the Deliverables, Background Technology and any other information marked "Confidential" provided by either Party to the other under this Agreement.  The foregoing confidentiality obligations shall last for a period of five years from the Effective Date of this Agreement and shall not apply information which:
(a) is now, or which hereafter, through no act or failure to act on the part of the Party receiving the information (the "Receiving Party"), becomes generally known or available to the public without breach of this Agreement; or

(b) is subsequently disclosed to the Receiving Party by a third party, and such disclosure does not include a confidentiality obligation; or

(c) can be shown to have been known to the Receiving Party at the time of disclosure provided that the Receiving Party promptly notifies the Disclosing Party in writing of this prior knowledge within 30 days of receipt of the information;

(d) is required to be disclosed by law; or

(e) is disclosed with the written permission of the owner of the information (the "Disclosing Party").

5.3 CANMET reserves the right to use the Deliverables for policy formulation and for in-house research purposes, and to publish summary, non-confidential announcements.  Such announcements shall not be published without the consent of SONIC, which consent shall not be unreasonably withheld, subject to the requirements for patenting and protection.

5.4 SONIC agrees that no other oral or written public statement regarding the Work containing any reference to CANMET shall at any time be released, made, or given by SONIC, or by anyone with the consent of SONIC, unless CANMET has been notified at least 72 hours in advance and has agreed in writing to the release.  CANMET shall not unreasonably delay release thereafter.

PART 6

THE WORK AND PAYMENT FOR THE WORK

6.1 Each Party shall use its best efforts to complete its share of the Work by the dates specified in Schedule A.

6.2 All materials, assets and equipment acquired or purchased for the performance of the Work shall be the property of the purchasing Party.

6.3 Equipment, samples and other miscellaneous matter provided by SONIC shall be delivered at its own expense to CANMET in a condition such that they will not injure or damage CANMET's employees or property.  At the completion of the Work, all equipment, samples and other miscellaneous matter shall be returned to SONIC at its own expense or CANMET shall dispose of them and charge SONIC for this additional service.

6.4 SONIC shall pay monies owed to CANMET for completion of CANMET's performance of its share of the Work as outlined in Schedule B.

PART 7

ARISING INTELLECTUAL PROPERTY AND COPYRIGHT

7.1 All Background Technology pertaining to the Work which was in the possession of CANMET prior to the execution of this Agreement shall remain the property of CANMET.

7.2 All Background Technology pertaining to the Work which was in the possession of SONIC prior to the execution of this Agreement shall remain the property of SONIC.

7.3 All Arising Technology developed by CANMET shall be owned by and be the property of CANMET ("CANMET's Arising Technology") and the use of such Intellectual Property shall be afforded to SONIC pursuant to a separate license agreement as described in the option to licence granted to and accepted by SONIC, dated November 13, 2003 and entitled "Basic Principles of Proposed Licensing Agreement between SONIC and Natural Resources Canada".  Option to be exercised by March 31, 2005.

7.4 Should an invention arise from the Work on the CANMET Process, the parties shall consult each other with respect to the feasibility of filing for patent protection.  Should CANMET choose not to cover the cost of protection of CANMET's Arising Technology to CANMET's Process, and should SONIC wish to do so, then SONIC shall be entitled to deduct 50% of the cost from revenues owed to CANMET under the license agreement.  CANMET shall remain the owner of such protected technology.

7.5 SONIC hereby grants to CANMET, a non-exclusive, royalty-free license to use SONIC's Background Technology for the Term of this Agreement to perform the Work.

7.6 Following written permission from CANMET pursuant to Section 5.1, on a case-by-case basis, to permit reproduction and distribution of the final report, a non-exclusive and non-transferrable license is hereby granted by CANMET to SONIC with the right to reproduce in print and in electronic format and to distribute the final report.  This license is subject to acknowledgement of the Crown's copyright.
© Her Majesty the Queen in Right of Canada as represented by the Minister of Natural Resources, 2004 or year of first publication.

PART 8

WARRANTIES

8.1 The Parties make no representations or warranties respecting the performance or the results of their respective Arising Technology and Background Technology, either express or implied, arising by law or otherwise, including, but not limited to, implied warranties or conditions of merchantability or fitness for a particular purpose, including any warranties of accuracy, completeness or usefulness, or of freedom from infringement of patent or any other rights held by third Parties.  In no event with either Party have any obligation or liability arising from tort, or for loss of revenue or profit, or for indirect, special, incidental or consequential damages.

PART 9

INDEMNIFICATION AND CONSEQUENTIAL DAMAGE EXCLUSION

9.1 CANMET shall indemnify and hold harmless SONIC, and its employees and agents, from any and all claims, demands, losses, costs, including solicitor and client costs, damages, actions or suits resulting from or related to any wilful or negligent act or omission of CANMET or its employees and agents in the performance of its share of the Work.

9.2 SONIC shall indemnify and hold harmless CANMET, and its employees and agents, from any and all claims, demands, losses, costs, including solicitor and client costs, damages, actions or suits resulting from or related to any wilful or negligent act or omission of SONIC or its employees and agents in the performance of its share of the Work.

9.3 SONIC shall indemnify and save harmless CANMET, and its employees and agents, from any and all claims, demands, losses, costs, including lawyer's fees, damages, actions or suits that are in any manner based upon, arising out of, or attributable to SONIC's use of the Deliverables supplied by CANMET or any part thereto.  CANMET shall have the right to defend any such action or proceeding with counsel of its own choosing.

9.4 In no event shall either of the Parties have any liability to the other Party, their affiliates, subsidiaries, subcontractors, vendors or clients under or in connection with the Agreement, for any indirect, incidental or consequential damages which may be sustained, including but not limited to loss of revenue, profit, business reputation or opportunity whether such liability arises out of contract, tort (including negligence), strict liability, warranty or other legal theory whether at law, in equity or otherwise.

PART 10

TERMINATION

10.1 Either Party may, by giving 30 working days notice in writing to the other Party, terminate this Agreement.

10.2 Where a Party:
(a) becomes bankrupt or insolvent;

(b) goes into receivership or takes the benefit of any statute from time to time relating to bankruptcy or insolvency;

(c) is required to wind up or dissolve by an order or resolution; or

(d) fails to meet a term or condition of this Agreement,

an event of default shall be deemed to have occurred and a written notice thereof shall be provided to the defaulting Party.  Should the default go unremedied for 30 days after receipt of the notice of default, then the Agreement shall be terminated and upon termination the defaulting Party shall pay all expenses, related to the Work up to the date of termination.

10.3 Part 5, (Exchange of Deliverables, Confidentiality and Use of Name), Part 7, (Arising Intellectual Property and Copyright), Part 8 (Warranties), Part 9, (Indemnification and Consequential Damage Exclusion),  

10.4 Termination of this Agreement CANMET with SONIC shall not prejudice CANMET's continuation of the Work under subsequent agreements with the same or different parties.

PART 11

TERM OF THE AGREEMENT

11.1 This Agreement shall be effective from December 1, 2003 ("Effective Date") and shall conclude on June 30, 2004.  This duration may be extended by an exchange of letters between the Parties.

PART 12

ASSIGNMENT

12.1 This Agreement shall enure to the benefit of and be binding upon the successors and assigns of the Parties hereto, but shall not be assigned, transferred, conveyed, or encumbered by either Party except upon the prior written consent of the other Party.

PART 13

FORCE MAJEURE

13.1 Neither Party shall be liable to the other if performance under this Agreement is interrupted due to one of the following events:
(a) an Act of God, a storm, fire, flood, ice conditions weather conditions, epidemic, explosion, earthquake or lightening;

(b) a war, revolution, insurrection, riot, blockade, sabotage, civil disturbance, vandalism or any other unlawful act against public order or authority;

(c) a shortage of necessary labour, strike, walkout or other industrial disturbance;

(d) legislation, regulations, directions, order or restraint by a government or governmental agency or department having or purporting to have jurisdiction;

(e) a catastrophic computer failure or error; or

(f) an order of any court or tribunal.

13.2 The events enumerated in Section 13.1 shall be regarded as events of Force Majeure and the performance of the obligation affected by ant one of these events shall be delayed by the length of time over which the event lasted.  However, should the interruption continue for more than 30 days, this Agreement may be terminated by mutual consent.

13.3 Should either Party claim the existence of an Event of Force Majeure prompt notice thereof shall be given to the other Party.

PART 14

NOTICES

14.1 All notices or other communications required or permitted to be given hereunder shall be in writing and shall be sent by registered mail, facsimile, or courier addressed:
(a) in the case of CANMET to:
CANMET Energy Technology Centre

Natural Resources Canada

1 Haanel Drive

Ottawa, ON  K1A 1M1

Canada

Attention:M. Burke, P.Eng., MBA Technology Manager

c/o Ben Anthony, Ph.D., Project Leader

Telephone:(613) 995-2868

Facsimile:(613) 995-9584

E-Mail:ben.anthony@nrcan.gc.ca

(b) in the case of SONIC, to:
SONIC ENVIRONMENTAL SOLUTIONS INC.

1778 West 2nd Avenue

Vancouver, BC  V6J 1H5

Canada

Attention:Adam Sumel, President and CEO

Telephone:(604) 736-2552

Facsimile:(604) 736-2558

E-Mail:asumel@sesi.ca

or to such other address as either of the Parties may from time to time designate by notice in writing to the other.  Notices sent by facsimile or telex message shall be deemed to have been received the date of their dispatch, notices sent by courier shall be deemed to have been received one working day after dispatch and notices sent by registered or certified mail shall be deemed to have been received five working days after dispatch.

PART 15

DISPUTE RESOLUTION

15.1 The Parties shall attempt to resolve any dispute arising out of or pursuant to this Agreement by recourse to the dispute resolution methods identified in the following sequence, although steps may be by-passed by mutual consent:
(a) negotiations;

(b) non-binding mediation or conciliation;

(c) non-binding mini-trial; or

(d) binding arbitration.

15.2 If the Parties cannot agree on any of the foregoing dispute resolution mechanisms, either Party may, at any time, elect to have such dispute resolved by litigation in the proper judicial forum.

15.3 Any Party may within 15 days take the dispute to the next step if the Parties fail to agree on the appointment or procedure referred to in this Section.

15.4 When mediation or conciliation is selected by the Parties, they shall jointly appoint one impartial expert mediator or conciliator to undertake the process according to mutually agreed upon procedures.

15.5 When a mini-trial is selected for resolution of a dispute, the Parties shall jointly appoint one impartial third party show shall preside at a brief hearing at which the Parties present their respective positions to the impartial third party and to the highest level manager available from each Party authorized to settle the dispute.  If the mini-trial does not lead the Parties to a settlement of the dispute, either Party may ask the third party to prepare and deliver to them within 15 days a non-binding award that recommends the most fair and reasonable full settlement of the dispute.

15.6 If the Parties decide to submit a dispute to arbitration, it shall be carried out pursuant to the Commercial Arbitration Act of Canada.  The arbitral award shall be in terms of money only, and shall not include punitive damages, costs or interim measures.  The Parties shall attempt to appoint jointly one impartial expert arbitrator.  If the Parties cannot agree within 30 days on the choice of an arbitrator, each Party shall appoint, at its own cost, one impartial expert arbitrator and those two arbitrators shall appoint an expert third arbitrator as chairperson of an arbitral tribunal.

15.7 When one of the steps Section 15.1(b), Section 15.1(c)or Section 15.1(d) is selected to resolve a dispute, the Parties shall jointly enter into a contract with the required mediator or conciliator, third party, arbitrator or arbitrators, as the case may be, to pay the costs for the desired services and to bear their own costs of participating in the process involved.  The contracts referred to and contemplated by this section shall be in the form and content as proposed by CANMET and are available on request.

PART 16

GENERAL

16.1 This Agreement may be amended by mutual written agreement of the Parties.

16.2 This Agreement shall be interpreted in accordance with the laws in force in the Province of Ontario.

16.3 No member of the House of Commons and Senate shall be admitted to any share or part of this Agreement or to any benefit to arise here from.  No former public office holder who is not in compliance with the post-employment provisions of the Conflict of Interest and Post-Employment code for Public Office Holders shall derive a direct benefit from this Agreement.

16.4 HER MAJESTY THE QUEEN IN RIGHT OF CANADA is HER own Insurer an as such will assume all the risks and financial responsibility for any loss or damage to HER own property and premises caused by HER servants and agents.

16.5 This Agreement enters into force when signed by both Parties.  CANMET will sign last and this Agreement grants no rights until CANMET has signed it.

16.6 This Agreement constitutes the entire agreement of the Parties in respect of the subject matter hereof and supersedes all previous agreements, understandings and representations, written or verbal, in respect of the subject matter hereof.

16.7 This Agreement may be validly executed in counterpart and via facsimile.

IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by their proper officers, duly authorized in that behalf as of the Effective Date.

	
On behalf of the MINISTER OF NATURAL RESOURCES
	
On behalf of SONIC ENVIRONMENTAL SOLUTIONS INC.

	
                                                  

M. Burke, P. Eng, MBA Technology Manager
	
                                                  

Adam Sumel, President and CEO

	
                                                  

Date:
	
                                                  

Date:

	
                                                

Read  by Dr. Ben Anthony, Project Leader
	 
	
                                                  

Date:
	 

SCHEDULE A

WORK DESCRIPTION AND MAJOR MILESTONES/SCHEDULE

This Project is structured following a four-phase approach:  three experimental and one demonstration phase.  There are GO/NO GO decision points between each phase.  This approach will allow the Parties to evaluate the results from each phase and make a well-informed decision before moving to the next phase.  The work described in the present Statement of Work focuses on Phase 1: sulphation of reactivated ash by sonification using thermogravimetric analysis.

Objective for Phase 1

The objectives are as follows:
(a) to investigate the use of sonic energy to enhance the reactivity of CFBC ashes;

(b) to evaluate the practicality of introducing flue gas to the sonic generator as carbonation medium;

(c) to establish optimum operational parameters of the sonic generator;

(d) to evaluate the sulphur capture efficiency of sonificated ash.

Scope

Sonification experiments will be carried out by CANMET with the assistance of a SONIC engineer/technician in both 20 kW and 75 kW horizontal axis generators located in Surrey or Vancouver, B.C.  The sonic generators need to be modified in order to carry out reactivation tests in the presence of a gas mixture.  The engineering design and modifications to the sonic generators will be performed by SONIC.

Tests will be carried out with two ash samples obtained form two industrial CFBC boilers: NSPI-ash; Bed ash from 165 Mwe CFBC boiler, which is owned and operated by Nova Scotia Power Inc. ("NSPI").

NISCO-ash: Bed ash from two 100 Mwe CFBC boilers, which are owned and operated by Nelson Industrial Steam Company ("NISCO").

Obtaining the two ash samples will be arranged by CANMET while transportation of ash samples will be arranged by SONIC.  The ash samples in the amount of about 200 kg from SNPI and about 120 kg from NISCO will be shipped to either Surrey or Vancouver, B.C.

The tentative text matrix is described in detail under the "Milestones" section below.  The following parameters will be kept constant during the tests:
(a) simulated flue gas composition:  14% CO2 4% O2 and balance nitrogen as the carbonating medium;

(b) Sonic generator frequency:  200 kHz.

Following the sonification experiments a series of chemical and physical analysis will be performed on the reactivated ash samples by or for CANMET.  A limited number of thermogravimetric analysis (TGA) will be carried out by CANMET engineer in facilities located at the University of British Columbia.  The full ash sample set will also be analyzed with TGA in CANMET's research facility in Ottawa, Ontario.  Sulphation experiments will be performed in Ottawa by CANMET.  A preliminary economic analysis and market assessment will also be part of this work for which CANMET will provide assistance to SONIC.

CANMET'S WORK

	
Phase One:
	
Sulphation of Reactivated Ash by Sonification Using Thermogravimetric Analysis (TGA)

Milestones

The major milestones in Phase 1 are presented below.  Note that use of the 75 kW generator is subject to availability and may be substituted by SONIC with the 20 kW generator.

1. Sample Collection and Transportation

CANMET will identify and arrange for the physical collection of the SNPI-ash and NISCO-ash samples and arrange for the transportation for the NSPI-ash and NISCOC-ash samples to the CANMET Ottawa Complex, Ontario.

	
Expected Start Date:
	
Dec 1/2003 or within two weeks of execution of this Agreement

	
Expected Duration:
	
2-3 weeks

2. Modifications on the 20 kW and 75 kW sonic generators

CANMET will provide technical assistance in engineering redesign and integration of the required modifications to the sonic generators as per SONIC's Task 2.

	
Expected Start Date:
	
Dec 1/2003 or within two weeks of execution of this Agreement

	
Expected Duration:
	
2 weeks

3. Preliminary ash reactivation using 20 kW sonic generator

In order to establish proper, reliable and safe operating conditions with the modified sonic generator, preliminary experiments will be carried out using only the SNPI ash sample.  Total amount of about 50 kg of NSPI ash will be required.  Based on the experience obtained during these preliminary tests, the tentative test matrix will be evaluated and, if required, proper modification(s) will be made.

	
Expected Start Date:
	
Jan 12/2004

	
Expected Duration:
	
2-3 days

4. Ash reactivation with sonification using 20 kW sonic generator

Both NSPI and NISCO ashes will be reactivated in the sonic generator using a tentative suite of test conditions, which vary the water-to-solid weight ratio (1 to 5); the sonification time (5 to 15 minutes); and, the use of grinding media.  Total amount of ash samples required in this task will be about 80 kg for each ash.  Total of eight tests with each ash will be carried out, giving a total of 16 reactivated ash samples by sonification.

	
Expected Start Date:
	
Jan 15/2004

	
Expected Duration:
	
6-8 days

5. Ash reactivation using 75 kW sonic generator

NSPI ash will be used to evaluate the scale-up effect u sing 75 kW sonic generator.  Total of about 20 kg of ash will be reactivated in the generator using two different operating conditions.  The operating conditions will be determined based on the observations and experience gathered during the tests with 20 kW unit.

	
Expected Start Date:
	
Jan 27/2004

	
Expected Duration:
	
1-2 days

6. Analysis of reactivated ash using sonification

This task will evaluate the effectiveness of ash reactivation (CaO ®
 CaCO3) by sonification under different conditions.  A number of chemical and physical analyses on the two bed ashes and the carbonated ash samples will be performed:
(a) Chemical analysis (XRF) of NISCO-ash and NSPI-ash;

(b) TGA analysis to determine Ca(OH)2 and CaCO3 content of 15 reactivated ash samples produced by 20 kW generator and two reactivated ash samples produced by 75 kW generator;

(c) scanning electron microscope (SEM) of seven ash samples; and

BET surface area measurement of eight ash samples.

A limited number of TGA experiments will be done at the University of British Columbia by CANMET engineer.  These TGA tests will be repeated in the CANMET's Ottawa research facility.

	
Expected Start Date:
	
Feb 2/2004

	
Expected Duration:
	
10 weeks

7. Sulphation of the reactivated ash with TGA

The effect of carbonation by sonification on sulphation will be evaluated using eight samples of the NISCO-ash and eight samples of the NSPI-ash produced in 20 kW unit; and, two samples of NSPI ash produced in 75 kW unit.  The carbonated ash samples will be sulphated in TGA at 850°
C for 90 minutes of sulphation time using flue gas composition of 5000 ppm SO2 15% CO2 and 2.5% O2 with N2 balance.  The TGA experiments will be carried out in CANMET's Ottawa facility by CANMET engineer.

	
Expected Start Date:
	
Mar 1/2004

	
Expected Duration:
	
3 weeks - concurrent to Task 6

8. Preliminary economic process analysis and market assessment

CANMET will provide technical assistance to SONIC in performing the preliminary economic process analysis and market assessment.

	
Expected Start Date:
	
Mar 22/2004

	
Expected Duration:
	
4 weeks - concurrent to Task 6

9. Phase 1 Report

Write a final report on its experimental findings.

	
Expected Start Date:
	
Apr 19/2004

	
Expected Duration:
	
3 weeks

SONIC'S WORK

	
Phase One:
	
Sulphation of Reactivated Ash by Sonification Using Thermogravimetric Analysis (TGA)

Milestones

The major milestones in Phase 1 are presented below.

1. Sample Collection and Transportation

CANMET at its own expense will arrange for the transportation for the NSPI-ash and NISCOC-ash samples from the CANMET Ottawa Complex, Ontario for their delivery to either Surrey or Vancouver, B.C.

	
Expected Start Date:
	
Dec 15/2004

	
Expected Duration:
	
3-4 weeks

2. Modifications on the 20 kW and 75 kW sonic generators

In order to carry out reactivation tests in the presence of a gas mixture, the sonic generators (both the 20 kW and 75 kW) required to be modified.  Following instructions from CANMET, the engineering redesign and integration of the required modifications to the sonic generators will be performed by SONIC.

	
Expected Start Date:
	
Dec 1/2003

	
Expected Duration:
	
3-4 weeks

3. Preliminary ash reactivation using 20 kW sonic generator

A SONIC engineer/technician to assist CANMET by operating the SONIC equipment.

	
Expected Start Date:
	
Jan 12/2004

	
Expected Duration:
	
2-3 days

4. Ash reactivation with sonification using 20 kW sonic generator

A SONIC engineer/technician to assist CANMET by operating the SONIC equipment.

	
Expected Start Date:
	
Jan 15/2004

	
Expected Duration:
	
6-8 days

5. Ash reactivation using 75 kW sonic generator

A SONIC engineer/technician to assist CANMET by operating the SONIC equipment.

	
Expected Start Date:
	
Jan 27/2004

	
Expected Duration:
	
1-2 days

6. Analysis of reactivated ash using sonification

SONIC will perform a preliminary economic process analysis and market assessment.

	
Expected Start Date:
	
Mar 22/2004

	
Expected Duration:
	
4 weeks

7. Phase 1 Report

Write a final report on its experimental findings.  In addition, SONIC shall provide the financial figures for Item 4 which shall be known by then in the report, pursuant to Section 4.4.

	
Expected Start Date:
	
Apr 19/2004

	
Expected Duration:
	
3 weeks

GO/NO GO DECISION POINT

Upon completion of Phase 1, SONIC and CANMET shall consult with each other in order to decide whether or not to proceed to Phase 2.  No party shall be obliged to proceed to Phase 2.

Work under Phase 2 shall be under separate agreement.

PROJECT BUDGET

The estimated costs for Phase 1 are as follows:

	
CANMET
	
a)
	
Labour
	
$30,600.00

	 	
b)
	
Analysis by CANMET
	
19,800.00

	 	
c)
	
Analysis by external contractor
	
2,800.00

	 	
d)
	
Travel
	
3,100.00

	
Subtotal CANMET
	 	 	
$55,100.00

The estimated costs for Phase 1 are as follows:

	
SONIC
	
e)
	
Labour only
	
$17,000.00

	 	
f)
	
Redesign and Integration (Task 2)1
	
TBD

	 	
g)
	
Ash transportion
	
1,000

TBD - to be determined at a later date

For completion of Phase 1, SONIC will pay CANMET $27,800.00 (Cdn) plus all applicable taxes.

CANMET's work-in-kind contribution to Phase 1 will be 50% of items 4a) and 4b) plus full cost of item 4d) above.

SCHEDULE B

PAYMENT AND METHOD OF PAYMENT

CANMET shall invoice SONIC in accordance with the following payment schedule.  In addition, SONIC shall pay all applicable taxes.

	
(i) Upon execution of this Agreement
	
$10,000.00 (Cdn)

	
(ii) Upon delivery of the Phase 1 final Report
	
Balance

Terms of payment are net 30 days following the date of invoice.

Payment may be made in the form of cheque or money order payable to the Receiver General for Canada.  The invoice number should be referenced with payment to insure it is attributed to the correct project, thereby avoiding undue interest charges.  Payments should be sent to:
Natural Resources Canada

Cashier's Office

480 Booth Street, 4th Floor

Ottawa, ON  K1A 0E4

Canada

Job Number:  10870

Payments not received by the 30th day following the date of invoice shall be considered to be overdue debts for which interest charges shall accrue commencing the 31st day.

The rate of interest shall be 3% per annum more than the rate set by the Bank of Canada and in effect on the third week of the month preceding the month in which interest is computed.

CANMET reserves the right to change the above terms of credit on overdue accounts, and to cancel credit privileges on accounts 90 days overdue.<PAGE>

                                  EXHIBIT 10.1

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                            MONADNOCK COMMUNITY BANK

                          EMPLOYEE STOCK OWNERSHIP PLAN

                       (adopted effective January 1, 2004)

<PAGE>

                            MONADNOCK COMMUNITY BANK
                          EMPLOYEE STOCK OWNERSHIP PLAN

       This Employee Stock Ownership Plan, executed on the _________ day of
_____________, 2004, by the authorized officer of Monadnock Community Bank, a
federally chartered stock savings bank (the "Bank"),

                           W I T N E S S E T H T H A T

       WHEREAS, the board of directors of the Bank has resolved to adopt an
employee stock ownership plan for eligible employees of the Bank, in accordance
with the terms and conditions presented set forth herein.

       NOW, THEREFORE, the Bank hereby adopts the following Plan setting forth
the terms and conditions pertaining to contributions by the Employer and the
payment of benefits to Participants and Beneficiaries.

       IN WITNESS WHEREOF, the Bank has adopted this Plan and caused this
instrument to be executed by its duly authorized officers as of the above date.

ATTEST:

                                           By:
---------------------------------             ---------------------------------
Secretary                                                     President

<PAGE>

                                 C O N T E N T S

                                                                        PAGE NO.
SECTION 1.  PLAN IDENTITY......................................................3
        1.1   NAME.............................................................3
        1.2   PURPOSE..........................................................3
        1.3   EFFECTIVE DATE...................................................3
        1.4   FISCAL PERIOD....................................................3
        1.5   SINGLE PLAN FOR ALL EMPLOYERS....................................3
        1.6   INTERPRETATION OF PROVISIONS.....................................3
SECTION 2.    DEFINITIONS......................................................3
SECTION 3.    ELIGIBILITY FOR PARTICIPATION...................................11
        3.1   INITIAL ELIGIBILITY.............................................11
        3.2   DEFINITION OF ELIGIBILITY YEAR..................................11
        3.3   TERMINATED EMPLOYEES............................................11
        3.4   CERTAIN EMPLOYEES INELIGIBLE....................................11
        3.5   PARTICIPATION AND REPARTICIPATION...............................11
        3.6   OMISSION OF ELIGIBLE EMPLOYEE...................................12
SECTION 4.     CONTRIBUTIONS AND CREDITS......................................12
        4.1   DISCRETIONARY CONTRIBUTIONS.....................................12
        4.2   CONTRIBUTIONS FOR STOCK OBLIGATIONS.............................12
        4.3   CONDITIONS AS TO CONTRIBUTIONS..................................13
        4.4   ROLLOVER CONTRIBUTIONS..........................................13
SECTION 5.     LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS...................13
        5.1   LIMITATION ON ANNUAL ADDITIONS..................................13
        5.2   EFFECT OF LIMITATIONS...........................................15
        5.3   LIMITATIONS AS TO CERTAIN PARTICIPANTS..........................15
SECTION 6.     TRUST FUND AND ITS INVESTMENT..................................16
        6.1   CREATION OF TRUST FUND..........................................16
        6.2   STOCK FUND AND INVESTMENT FUND..................................16
        6.3   ACQUISITION OF STOCK............................................17
        6.4   PARTICIPANTS' OPTION TO DIVERSIFY...............................17
SECTION 7.     VOTING RIGHTS AND DIVIDENDS ON STOCK...........................18
        7.1   VOTING AND TENDERING OF STOCK...................................18
        7.2   DIVIDENDS ON STOCK..............................................19
SECTION 8.     ADJUSTMENTS TO ACCOUNTS........................................19
        8.1   ADJUSTMENTS FOR TRANSACTIONS....................................19
        8.2   VALUATION OF INVESTMENT FUND....................................20
        8.3   ADJUSTMENTS FOR INVESTMENT EXPERIENCE...........................20
SECTION 9.     VESTING OF PARTICIPANTS' INTERESTS.............................20
        9.1   DEFERRED VESTING IN ACCOUNTS....................................20
        9.2   COMPUTATION OF VESTING YEARS....................................20
        9.3   FULL VESTING UPON CERTAIN EVENTS................................21
        9.4   FULL VESTING UPON PLAN TERMINATION..............................22
        9.5   FORFEITURE, REPAYMENT, AND RESTORAL.............................22
        9.6   ACCOUNTING FOR FORFEITURES......................................22
        9.7   VESTING AND NONFORFEITABILITY...................................22
SECTION 10.    PAYMENT OF BENEFITS............................................22
        10.1  BENEFITS FOR PARTICIPANTS.......................................22
        10.2  TIME FOR DISTRIBUTION...........................................23
        10.3  MARITAL STATUS..................................................24
        10.4  DELAY IN BENEFIT DETERMINATION..................................24

<PAGE>

        10.5  ACCOUNTING FOR BENEFIT PAYMENTS.................................25
        10.6  OPTIONS TO RECEIVE STOCK OR CASH................................25
        10.7  RESTRICTIONS ON DISPOSITION OF STOCK............................26
        10.8  CONTINUING LOAN PROVISIONS; CREATIONS OF PROTECTIONS
                AND RIGHTS....................................................26
        10.9  DIRECT ROLLOVER OF ELIGIBLE DISTRIBUTION........................26
        10.10 WAIVER OF 30-DAY PERIOD AFTER NOTICE OF DISTRIBUTION............27
SECTION 11.   RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS............27
        11.1  CLAIM FOR BENEFITS..............................................27
        11.2  NOTIFICATION BY COMMITTEE.......................................27
        11.3  CLAIMS REVIEW PROCEDURE.........................................28
SECTION 12.   THE COMMITTEE AND ITS FUNCTIONS.................................28
        12.1  AUTHORITY OF COMMITTEE..........................................28
        12.2  IDENTITY OF COMMITTEE...........................................28
        12.3  DUTIES OF COMMITTEE.............................................28
        12.4  VALUATION OF STOCK..............................................29
        12.5  COMPLIANCE WITH ERISA...........................................29
        12.6  ACTION BY COMMITTEE.............................................29
        12.7  EXECUTION OF DOCUMENTS..........................................29
        12.8  ADOPTION OF RULES...............................................29
        12.9  RESPONSIBILITIES TO PARTICIPANTS................................29
        12.10 ALTERNATIVE PAYEES IN EVENT OF INCAPACITY.......................29
        12.11 INDEMNIFICATION BY EMPLOYERS....................................30
        12.12 NONPARTICIPATION BY INTERESTED MEMBER...........................30
SECTION 13.   ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.................30
        13.1  ADOPTION OF PLAN BY OTHER EMPLOYERS.............................30
        13.2  PLAN ADOPTION SUBJECT TO QUALIFICATION..........................30
        13.3  RIGHT TO AMEND OR TERMINATE.....................................30
SECTION 14.   MISCELLANEOUS PROVISIONS........................................31
        14.1  PLAN CREATES NO EMPLOYMENT RIGHTS...............................31
        14.2  NONASSIGNABILITY OF BENEFITS....................................31
        14.3  LIMIT OF EMPLOYER LIABILITY.....................................31
        14.4  TREATMENT OF EXPENSES...........................................31
        14.5  NUMBER AND GENDER...............................................31
        14.6  NONDIVERSION OF ASSETS..........................................31
        14.7  SEPARABILITY OF PROVISIONS......................................32
        14.8  SERVICE OF PROCESS..............................................32
        14.9  GOVERNING STATE LAW.............................................32
        14.10 EMPLOYER CONTRIBUTIONS CONDITIONED ON DEDUCTIBILITY.............32
        14.11 UNCLAIMED ACCOUNTS..............................................32
        14.12 QUALIFIED DOMESTIC RELATIONS ORDER..............................32
SECTION 15.   TOP-HEAVY PROVISIONS............................................33
        15.1  TOP-HEAVY PLAN..................................................33
        15.2  SUPER TOP-HEAVY PLAN............................................33
        15.3  DEFINITIONS.....................................................34
        15.4  TOP-HEAVY RULES OF APPLICATION..................................35
        15.5  MINIMUM CONTRIBUTIONS...........................................36
        15.6  MINIMUM CONTRIBUTIONS...........................................36
        15.7  TOP-HEAVY PROVISIONS CONTROL IN TOP-HEAVY PLAN..................36

                                       ii

<PAGE>

                            MONADNOCK COMMUNITY BANK
                          EMPLOYEE STOCK OWNERSHIP PLAN

SECTION 1. PLAN IDENTITY.

        1.1     NAME. The name of this Plan is "Monadnock Community Bank
Employee Stock Ownership Plan."

        1.2     PURPOSE. The purpose of this Plan is to describe the terms and
conditions under which contributions made pursuant to the Plan will be credited
and paid to the Participants and their Beneficiaries.

        1.3     EFFECTIVE DATE. The Effective Date of this Plan is January 1,
2004.

        1.4     FISCAL PERIOD. This Plan shall be operated on the basis of a
January 1 to December 31 fiscal year for the purpose of keeping the Plan's books
and records and distributing or filing any reports or returns required by law.

        1.5     SINGLE PLAN FOR ALL EMPLOYERS. This Plan shall be treated as a
single plan with respect to all participating Employers for the purpose of
crediting contributions and forfeitures and distributing benefits, determining
whether there has been any termination of Service, and applying the limitations
set forth in Section 5.

        1.6     INTERPRETATION OF PROVISIONS. The Employers intend this Plan and
the Trust to be a qualified stock bonus plan under Section 401(a) of the Code
and an employee stock ownership plan within the meaning of Section 407(d)(6) of
ERISA and Section 4975(e)(7) of the Code. The Plan is intended to have its
assets invested primarily in qualifying employer securities of one or more
Employers within the meaning of Section 407(d)(3) of ERISA, and to satisfy any
requirement under ERISA or the Code applicable to such a plan.

        Accordingly, the Plan and Trust Agreement shall be interpreted and
applied in a manner consistent with this intent and shall be administered at all
times and in all respects in a nondiscriminatory manner.

SECTION 2. DEFINITIONS.

        The following capitalized words and phrases shall have the meanings
specified when used in this Plan and in the Trust Agreement, unless the context
clearly indicates otherwise:

        "ACCOUNT" means a Participant's interest in the assets accumulated under
this Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, the Plan's
investment experience, and distributions and forfeitures.

        "ACTIVE PARTICIPANT" means a Participant who has satisfied the
eligibility requirements under Section 3 and who has at least 1,000 Hours of
Service during the current Plan Year. However, a Participant shall not qualify
as an Active Participant unless (i) he is in active Service with an Employer as
of the last day of the Plan Year, or (ii) he is on a Recognized Absence as of
that date, or (iii) his Service terminated during the Plan Year by reason of
Disability, death, Early or Normal Retirement.

                                       3
<PAGE>

        "BANK" means Monadnock Community Bank and any entity which succeeds to
the business of Monadnock Community Bank and adopts this Plan as its own
pursuant to Section 13.1 of the Plan.

        "BENEFICIARY" means the person or persons who are designated by a
Participant to receive benefits payable under the Plan on the Participant's
death. In the absence of any designation or if all the designated Beneficiaries
shall die before the Participant dies or shall die before all benefits have been
paid, the Participant's Beneficiary shall be his surviving Spouse, if any, or
his estate if he is not survived by a Spouse. The Committee may rely upon the
advice of the Participant's executor or administrator as to the identity of the
Participant's Spouse.

        "BREAK IN SERVICE" means any Plan Year, or, for the initial eligibility
computation period under Section 3.2, the 12-consecutive month period beginning
on the first day of which an Employee has an Hour of Service, in which an
Employee has 500 or fewer Hours of Service. Solely for this purpose, an Employee
shall be considered employed for his normal hours of paid employment during a
Recognized Absence (said Employee shall not be credited with more than 501 Hours
of Service to avoid a Break in Service), unless he does not resume his Service
at the end of the Recognized Absence. Further, if an Employee is absent for any
period (i) by reason of the Employee's pregnancy, (ii) by reason of the birth of
the Employee's child, (iii) by reason of the placement of a child with the
Employee in connection with the Employee's adoption of the child, or (iv) for
purposes of caring for such child for a period beginning immediately after such
birth or placement, the Employee shall be credited with the Hours of Service
which would normally have been credited but for such absence, up to a maximum of
501 Hours of Service.

        "CHANGE IN CONTROL" of the Bank or its mutual holding company parent,
Monadnock Bancorp, or any stock holding company of the Bank established
subsequent to the date of this Plan ("Stock Holding Company") (collectively, the
"Company") shall mean:

        (i)     a reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or the Company or a
similar transaction occurs in which the Bank is not the resulting entity.
Notwithstanding the foregoing, neither the conversion of the MHC to stock form
nor the reorganization of the MHC and the Bank into the two-tier mutual holding
company structure whereby the Bank becomes wholly-owned by a mid-tier holding
company which is the majority-owned subsidiary of the MHC will be considered a
Change in Control;

        (ii)    individuals who constitute the board of directors of the Bank or
the Company on the date hereof (the "Incumbent Board") cease for any reason to
constitute a majority thereof; provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by the Bank's or the Company's stockholders was approved
by the same nominating committee serving under an Incumbent Board, shall be, for
purposes of this clause (ii), considered as though he were a member of the
Incumbent Board; or

        (iii)   a change in control within the meaning of 12 C.F.R. ss. 574.4
occurs, as determined by the board of directors of the Bank or the Company.

        (iv)    With respect to the Bank, and in the event that the MHC converts
from the mutual to the stock form of organization, with respect to the resulting
Stock Holding Company, a "change in control" of the Bank or the Stock Holding
Company for purposes of this Agreement shall mean an event of a nature that: (A)
would be required to be reported in response to Item 1 of

                                       4
<PAGE>

the current report on Form 8-K, as in effect on the date hereof; pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (B) results in a Change in Control of the Bank or the Stock Holding Company
within the meaning of the Home Owners' Loan Act of 1933 and the Rules and
Regulations promulgated by the Office of Thrift Supervision, as in effect on the
date hereof; or (C) without limitation, such a change in control shall be deemed
to have occurred at such time as (1) any "person" (as the term is used in
Section 13(d) and 14(d) of the Exchange Act) other than the Stock Holding
Company is or becomes a "beneficial owner" (as defined in Rule 13-d under the
Exchange Act) directly or indirectly, of securities of the Bank representing 25%
or more of the Bank's outstanding securities ordinarily having the right to vote
at the election of directors except for any securities of the Bank purchased by
the Stock Holding Company in connection with the Reorganization and any
securities purchased by the Bank's employee stock ownership plan and trust shall
not be counted in determining whether such plan is the beneficial owner of more
than 25% of the Bank's securities; or (2) individuals who constitute the
Incumbent Board cease for any reason to constitute at least a majority thereof;
provided that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by the Bank's
or the Stock Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (2), considered as though he were a member of the Incumbent Board; or (3)
a reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Stock Holding Company or similar transaction occurs in
which the Bank or the Stock Holding Company is not the resulting entity and to
which the Incumbent Board does not consent; (4) a proxy statement soliciting
proxies from stockholders of the Bank or Stock Holding Company, by someone other
than the current management of the Bank, seeking stockholder approval of a plan
of reorganization, merger or consolidation of the Stock Holding Company or the
Bank or similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to the plan or
transaction are exchanged or converted into cash or property or securities not
issued by the Bank or the Stock Holding Company; or (5) a tender offer is made
for 25 % or more of the voting securities of the Bank and the shareholders
owning beneficially or of record 25 % or more of the outstanding securities of
the Bank or the Stock Holding Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror.

        "CODE" means the Internal Revenue Code of 1986, as amended.

        "COMMITTEE" means the committee responsible for the administration of
this Plan in accordance with Section 12.

        "DISABILITY" means only a disability which renders the Participant
totally unable, as a result of bodily or mental disease or injury, to perform
any duties for an Employer for which he is reasonably fitted, which disability
is expected to be permanent or of long and indefinite duration. However, this
term shall not include any disability directly or indirectly resulting from or
related to habitual drunkenness or addiction to narcotics, a criminal act or
attempt, service in the armed forces of any country, an act of war, declared or
undeclared, any injury or disease occurring while compensation to the
Participant is suspended, or any injury which is intentionally self-inflicted.
Further, this term shall apply only if (i) the Participant is sufficiently
disabled to qualify for the payment of disability benefits under the federal
Social Security Act or Veterans Disability Act, or (ii) the Participant's
disability is certified by a physician selected by the Committee. Unless the
Participant is sufficiently disabled to qualify for disability benefits under
the federal Social Security Act or Veterans Disability Act, the Committee may
require the Participant to be appropriately examined from time to time by one or
more physicians chosen by the Committee,

                                       5
<PAGE>

and no Participant who refuses to be examined shall be treated as having a
Disability. In any event, the Committee's good faith decision as to whether a
Participant's Service has been terminated by Disability shall be final and
conclusive.

        "EARLY RETIREMENT" means retirement on or after a Participant's
attainment of age 55 and the completion of ten (10) years of employment with an
Employer.

        "EFFECTIVE DATE" means January 1, 2004.

        "EMPLOYEE" means any individual who is or has been employed or
self-employed by an Employer. "Employee" also means an individual employed by a
leasing organization who, pursuant to an agreement between an Employer and the
leasing organization, has performed services for the Employer and any related
persons (within the meaning of Section 414(n)(6) of the Code) on a substantially
full-time basis for more than one year, if such services are performed under the
primary direction or control of the Employer. However, such a "leased employee"
shall not be considered an Employee if (i) he participates in a money purchase
pension plan sponsored by the leasing organization which provides for immediate
participation, immediate full vesting, and an annual contribution of at least 10
percent of the Employee's 415 Compensation, and (ii) leased employees do not
constitute more than 20 percent of the Employer's total work force (including
leased employees, but excluding Highly Paid Employees and any other Employees
who have not performed services for the Employer on a substantially full-time
basis for at least one year).

        "EMPLOYER" means the Bank or any affiliate within the purview of section
414(b), (c) or (m) and 415(h) of the Code, any other corporation, partnership,
or proprietorship which adopts this Plan with the Bank's consent pursuant to
Section 13.1, and any entity which succeeds to the business of any Employer and
adopts the Plan pursuant to Section 13.2.

        "ENTRY DATE" means the Effective Date of the Plan and each January 1 and
July 1 of each Plan Year after the Effective Date.

        "ERISA" means the Employee Retirement Income Security Act of 1974 (P.L.
93-406, as amended).

        "415 COMPENSATION"

                (a)     shall include the Participant's wages, salaries, fees
                for professional services and other amounts received (without
                regard to whether or not an amount is paid in cash) for personal
                services actually rendered in the course of employment with an
                Employer maintaining the Plan to the extent that the amounts are
                includible in gross income (including, but not limited to,
                commissions paid salesmen, compensation for services on the
                basis of a percentage of profits, commissions on insurance
                premiums, tips, bonuses, fringe benefits and reimbursements or
                other expense allowances, and in the case of a Participant who
                is an Employee within the meaning of Code Section 401(c)(1) and
                the regulations thereunder, the Participant's earned income (as
                described in Code Section 401(c)(2) and the regulations
                thereunder)) paid during the Plan Year. "415 Compensation" shall
                additionally include (i) amounts described in Sections
                104(a)(3), 105(a) and 105(h), to the extent includible in gross
                income, (ii) amounts received from an Employer for moving
                expenses which are not deductible under Section 217 of the Code,
                (iii) amounts includible in gross

                                       6
<PAGE>

                income in the year of, and on account of, the grant of a
                non-qualified stock option, (iv) amounts includible in gross
                income pursuant to Section 83(b) of the Code; and (v) amounts
                includible in gross income under an unfunded nonqualified plan
                of deferred compensation.

                (b)     Any elective deferral as defined in Code Section
                402(g)(3) (any Employer contributions made on behalf of a
                Participant to the extent not includible in gross income and any
                Employer contributions to purchase an annuity contract under
                Code Section 403(b) under a salary reduction agreement) and any
                amount which is contributed or deferred by the Employer at the
                election of the Participant and which is not includible in gross
                income of the Participant by reason of Code Section 125
                (Cafeteria Plan), Code Section 457 or 132(f)(4) shall also be
                included in the definition of 415 Compensation.

                (c)     except as provided in subsection (b) above, 415
                Compensation shall exclude:

                        (i)     Employer contributions to a plan of deferred
                compensation which are not includible in the employee's gross
                income for the taxable year in which contributed, or employer
                contributions under a simplified employee pension plan, or any
                distributions from a plan of deferred compensation;

                        (ii)    amounts realized from the exercise of a
                non-qualified stock option, or when restricted stock (or
                property) held by the employee either becomes freely
                transferable or is no longer subject to a substantial risk of
                forfeiture;

                        (iii)   amounts realized from the sale, exchange or
                other disposition of stock acquired under a qualified stock
                option; and

                        (iv)    other amounts which received special tax
                benefits, such as premiums for group term life insurance (but
                only to the extent that the premiums are not includible in the
                gross income of the Employee) or contributions made by the
                Employer (whether or not under a salary reduction agreement)
                towards the purchase of an annuity contract described in section
                403(b) of the Code (whether or not the contributions are
                actually excludible from the gross income of the Employee).

                (d)     415 Compensation in excess of $200,000 (as indexed)
                shall be disregarded for all Participants. For purposes of this
                sub-section, the $200,000 limit shall be referred to as the
                "applicable limit" for the Plan Year in question. The $200,000
                limit shall be adjusted for increases in the cost of living in
                accordance with Section 401(a)(17)(B) of the Code, effective for
                the Plan Year which begins within the applicable calendar year.
                For purposes of the applicable limit, 415 Compensation shall be
                prorated over short Plan Years.

        "HIGHLY PAID EMPLOYEE" for any Plan Year means an Employee who, during
either that or the immediately preceding Plan Year was at any time a five
percent owner of the Employer (as defined in Code Section 416(i)(1)) or, during
the immediately preceding Plan Year, had 415 Compensation exceeding $90,000 and
was among the most highly compensated one-fifth of all Employees (the $90,000
amount is adjusted at the same time and in the same manner as under

                                       7
<PAGE>

Code Section 415(d), provided, however, the base period is the calendar quarter
ending September 30, 1996). For these purposes, "the most highly compensated
one-fifth of all Employees" shall be determined by taking into account all
individuals working for all related Employer entities described in the
definition of "Service," but excluding any individual who has not completed six
months of Service, who normally works fewer than 17 1/2 hours per week or in
fewer than six months per year, who has not reached age 18, whose employment is
covered by a collective bargaining agreement, or who is a nonresident alien who
receives no earned income from United States sources. The applicable year for
which a determination is being made is called a "determination year" and the
preceding 12-month period is called a look-back year.

        "HOURS OF SERVICE" means hours to be credited to an Employee under the
following rules:

                (a)     Each hour for which an Employee is paid or is entitled
        to be paid for services to an Employer is an Hour of Service.

                (b)     Each hour for which an Employee is directly or
        indirectly paid or is entitled to be paid for a period of vacation,
        holidays, illness, disability, lay-off, jury duty, temporary military
        duty, or leave of absence is an Hour of Service. However, except as
        otherwise specifically provided, no more than 501 Hours of Service shall
        be credited for any single continuous period which an Employee performs
        no duties. No more than 501 Hours of Service will be credited under this
        paragraph for any single continuous period (whether or not such period
        occurs in a single computation period). Further, no Hours of Service
        shall be credited on account of payments made solely under a plan
        maintained to comply with worker's compensation, unemployment
        compensation, or disability insurance laws, or to reimburse an Employee
        for medical expenses.

                (c)     Each hour for which back pay (ignoring any mitigation of
        damages) is either awarded or agreed to by an Employer is an Hour of
        Service. However, no more than 501 Hours of Service shall be credited
        for any single continuous period during which an Employee would not have
        performed any duties. The same Hours of Service will not be credited
        both under paragraph (a) or (b) as the case may be, and under this
        paragraph (c). These hours will be credited to the employee for the
        computation period or periods to which the award or agreement pertains
        rather than the computation period in which the award agreement or
        payment is made.

                (d)     Hours of Service shall be credited in any one period
        only under one of the foregoing paragraphs (a), (b) and (c); an Employee
        may not get double credit for the same period.

                (e)     If an Employer finds it impractical to count the actual
        Hours of Service for any class or group of non-hourly Employees, each
        Employee in that class or group shall be credited with 45 Hours of
        Service for each weekly pay period in which he has at least one Hour of
        Service. However, an Employee shall be credited only for his normal
        working hours during a paid absence.

                (f)     Hours of Service to be credited on account of a payment
        to an Employee (including back pay) shall be recorded in the period of
        Service for which the payment was made. If the period overlaps two or
        more Plan Years, the Hours of Service credit shall be allocated in
        proportion to the respective portions of the period included in the
        several Plan Years. However, in the case of periods of 31 days or less,
        the Administrator

                                       8
<PAGE>

        may apply a uniform policy of crediting the Hours of Service to either
        the first Plan Year or the second.

                (g)     In all respects an Employee's Hours of Service shall be
        counted as required by Section 2530.200b-2(b) and (c) of the Department
        of Labor's regulations under Title I of ERISA.

        "INVESTMENT FUND" means that portion of the Trust Fund consisting of
assets other than Stock. Notwithstanding the above, assets from the Investment
Fund may be used to purchase Stock in the open market or otherwise, or used to
pay on the Stock Obligation, and shares so purchased will be allocated to a
Participant's Stock Fund.

        "NORMAL RETIREMENT" means retirement on or after the Participant's
Normal Retirement Date.

        "NORMAL RETIREMENT DATE" means the first date on which a Participant has
both attained age 62 and completed five Years of Service with the Employer.

        "PARTICIPANT" means any Employee who is an Active Participant
participating in the Plan, or Employee or former Employee who was previously an
Active Participant and still has a balance credited to his Account.

        "PLAN YEAR" means the twelve-month period commencing January 1 and
ending December 31, 2004, and each period of 12 consecutive months beginning on
January 1 of each succeeding year.

        "RECOGNIZED ABSENCE" means a period for which --

        (a)     an Employer grants an Employee a leave of absence for a limited
period, but only if an Employer grants such leave on a nondiscriminatory basis;
or

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

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

        "SERVICE" means an Employee's period(s) of employment or self-employment
with an Employer, excluding for initial eligibility purposes any period in which
the individual was a nonresident alien and did not receive from an Employer any
earned income which constituted income from sources within the United States. An
Employee's Service shall include any Service which constitutes Service with a
predecessor Employer within the meaning of Section 414(a) of the Code, provided,
however, that Service with an acquired entity shall not be considered Service
under the Plan unless required by applicable law or agreed to by the parties to
such transaction. An Employee's Service shall also include any Service with an
entity which is not an Employer, but only either (i) for a period after 1975 in
which the other entity is a member of a controlled group of corporations or is
under common control with other trades and businesses within the meaning of
Section 414(b) or 414(c) of the Code, and a member of the controlled group or
one of the trades and businesses is an Employer, (ii) for a period after 1979 in
which the other entity is a

                                       9
<PAGE>

member of an affiliated service group within the meaning of Section 414(m) of
the Code, and a member of the affiliated service group is an Employer, or (iii)
all Employers aggregated with the Employer under Section 414(o) of the Code (but
not until the Proposed Regulations under Section 414(o) become effective).
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.

        "SPOUSE" means the individual, if any, to whom a Participant is lawfully
married on the date benefit payments to the Participant are to begin, or on the
date of the Participant's death, if earlier. A former Spouse shall be treated as
the Spouse or surviving Spouse to the extent provided under a qualified domestic
relations order as described in section 414(p) of the Code.

        "STOCK" means shares of the Bank's voting common stock or preferred
stock meeting the requirements of Section 409(e)(3) of the Code issued by an
Employer which is a member of the same controlled group of corporations within
the meaning of Code Section 414(b).

        "STOCK FUND" means that portion of the Trust Fund consisting of Stock.

        "STOCK OBLIGATION" means an indebtedness arising from any extension of
credit to the Plan or the Trust which satisfies the requirements set forth in
Section 6.3 and which was obtained for any or all of the following purposes:

        (i)     to acquire qualifying Employer securities as defined in Treasury
                Regulations ss.54.4975-12;

        (ii)    to repay such Stock Obligation; or

        (iii)   to repay a prior exempt loan.

        "TRUST" OR "TRUST FUND" means the trust fund created under this Plan.

        "TRUST AGREEMENT" means the agreement between the Bank and the Trustee
concerning the Trust Fund. If any assets of the Trust Fund are held in a
co-mingled trust fund with assets of other qualified retirement plans, "Trust
Agreement" shall be deemed to include the trust agreement governing that
co-mingled trust fund. With respect to the allocation of investment
responsibility for the assets of the Trust Fund, the provisions of Article II of
the Trust Agreement are incorporated herein by reference.

        "TRUSTEE" means one or more corporate persons or individuals selected
from time to time by the Bank to serve as trustee or co-trustees of the Trust
Fund.

        "UNALLOCATED STOCK FUND" means that portion of the Stock Fund consisting
of the Plan's holding of Stock which have been acquired in exchange for one or
more Stock obligations and which have not yet been allocated to the
Participant's Accounts in accordance with Section 4.2.

        "VALUATION DATE" means the last day of the Plan Year and each other date
as of which the Committee shall determine the investment experience of the
Investment Fund and adjust the Participants' Accounts accordingly.

        "VALUATION PERIOD" means the period following a Valuation Date and
ending with the next Valuation Date.

                                       10
<PAGE>

        "VESTING YEAR" means a unit of Service credited to a Participant
pursuant to Section 9.2 for purposes of determining his vested interest in his
Account.

SECTION 3.      ELIGIBILITY FOR PARTICIPATION.

        3.1     INITIAL ELIGIBILITY. An Employee shall enter the Plan as of the
Entry Date coincident with or next following the later of the following dates:

                (a)     the last day of the Employee's first Eligibility Year,
        and

                (b)     the Employee's 18th birthday. However, if an Employee is
        not in active Service with an Employer on the date he would otherwise
        first enter the Plan, his entry shall be deferred until the next day he
        is in Service.

        3.2     DEFINITION OF ELIGIBILITY YEAR. An "Eligibility Year" means an
applicable eligibility period (as defined below) in which the Employee has
completed 1,000 Hours of Service for the Employer. For this purpose:

                (a)     an Employee's first "eligibility period" is the
        12-consecutive month period beginning on the first day on which he has
        an Hour of Service, and

                (b)     his subsequent eligibility periods will be
        12-consecutive month periods beginning on each January 1 after that
        first day of Service.

        3.3     TERMINATED EMPLOYEES. No Employee shall have any interest or
rights under this Plan if he is never in active Service with an Employer on or
after the Effective Date.

        3.4     CERTAIN EMPLOYEES INELIGIBLE.

                (a)     No Employee shall participate in the Plan while his
        Service is covered by a collective bargaining agreement between an
        Employer and the Employee's collective bargaining representative if (i)
        retirement benefits have been the subject of good faith bargaining
        between the Employer and the representative and (ii) the collective
        bargaining agreement does not provide for the Employee's participation
        in the Plan.

                (b)     Leased Employees are not eligible to participate in the
        Plan.

                (c)     An eligible Employee may elect not to participate in the
        Plan, provided, however, such election is made solely to meet the
        requirements of Code Section 409(n). For an election to be effective for
        a particular Plan Year, the Employee or Participant must file the
        election in writing with the Plan Administrator no later than the last
        day of the Plan Year for which the election is to be effective. The
        Employer may not make a contribution under the Plan for the Employee or
        for the Participant for the Plan Year for which the election is
        effective, nor for any succeeding Plan Year, unless the Employee or
        Participant re-elects to participate in the Plan. The Employee or
        Participant may elect again not to participate, but not earlier than the
        first Plan Year following the Plan Year in which the re-election was
        first effective.

        3.5     PARTICIPATION AND REPARTICIPATION. Subject to the satisfaction
of the foregoing requirements, an Employee shall participate in the Plan during
each period of his Service from the

                                       11
<PAGE>

date on which he first becomes eligible until his termination. For this purpose,
an Employee who returns before five (5) consecutive Breaks in Service who
previously satisfied the initial eligibility requirements or who returns after
five (5) consecutive one year Breaks in Service with a vested Account balance in
the Plan shall re-enter the Plan as of the date of his return to Service with an
Employer.

        3.6     OMISSION OF ELIGIBLE EMPLOYEE. If, in any Plan Year, any
Employee who should be included as a Participant in the Plan is erroneously
omitted and discovery of such omission is not made until after a contribution by
his Employer for the year has been made, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount which the said
Employer would have contributed regardless of whether or not it is deductible in
whole or in part in any taxable year under applicable provisions of the Code.

SECTION 4.      CONTRIBUTIONS AND CREDITS.

        4.1     DISCRETIONARY CONTRIBUTIONS. The Employer shall from time to
time contribute, with respect to a Plan Year, such amounts as it may determine
from time to time. The Employer shall have no obligation to contribute any
amount under this Plan except as so determined in its sole discretion. The
Employer's contributions and available forfeitures for a Plan Year shall be
credited as of the last day of the year to the Accounts of the Active
Participants in proportion to their amounts of 415 Compensation earned during
that portion of the Plan Year that such persons are Participants in the Plan.

        4.2     CONTRIBUTIONS FOR STOCK OBLIGATIONS. If the Trustee, upon
instructions from the Committee, incurs any Stock Obligation upon the purchase
of Stock, the Employer may contribute for each Plan Year an amount sufficient to
cover all payments of principal and interest as they come due under the terms of
the Stock Obligation. If there is more than one Stock Obligation, the Employer
shall designate the one to which any contribution is to be applied. Investment
earnings realized on Employer contributions and any dividends paid by the
Employer on Stock held in the Unallocated Stock Account, shall be applied to the
Stock Obligation related to that Stock, subject to Section 7.2.

        In each Plan Year in which Employer contributions, earnings on
contributions, or dividends on unallocated Stock are used as payments under a
Stock Obligation, a certain number of shares of the Stock acquired with that
Stock Obligation which is then held in the Unallocated Stock Fund shall be
released for allocation among the Participants. The number of shares released
shall bear the same ratio to the total number of those shares then held in the
Unallocated Stock Fund (prior to the release) as (i) the principal and interest
payments made on the Stock Obligation in the current Plan Year bears to (ii) the
sum of (i) above, and the remaining principal and interest payments required (or
projected to be required on the basis of the interest rate in effect at the end
of the Plan Year) to satisfy the Stock Obligation.

        At the direction of the Committee, the current and projected payments of
interest under a Stock Obligation may be ignored in calculating the number of
shares to be released in each year if (i) the Stock Obligation provides for
annual payments of principal and interest at a cumulative rate that is not less
rapid at any time than level annual payments of such amounts for 10 years, (ii)
the interest included in any payment is ignored only to the extent that it would
be determined to be interest under standard loan amortization tables, and (iii)
the term of the Stock Obligation, by reason of renewal, extension, or
refinancing, has not exceeded 10 years from the original acquisition of the
Stock.

                                       12
<PAGE>

        4.3     CONDITIONS AS TO CONTRIBUTIONS. Employers' contributions shall
in all events be subject to the limitations set forth in Section 5.
Contributions may be made in the form of cash, or securities and other property
to the extent permissible under ERISA, including Stock, and shall be held by the
Trustee in accordance with the Trust Agreement. In addition to the provisions of
Section 13.3 for the return of an Employer's contributions in connection with a
failure of the Plan to qualify initially under the Code, any amount contributed
by an Employer due to a good faith mistake of fact, or based upon a good faith
but erroneous determination of its deductibility under Section 404 of the Code,
shall be returned to the Employer within one year after the date on which the
contribution was originally made, or within one year after its nondeductibility
has been finally determined. However, the amount to be returned shall be reduced
to take account of any adverse investment experience within the Trust Fund in
order that the balance credited to each Participant's Account is not less that
it would have been if the contribution had never been made.

        4.4     ROLLOVER CONTRIBUTIONS. This Plan shall not accept a direct
rollover or rollover contribution of an "eligible rollover distribution" as such
term is defined in Section 10.9-1 of the Plan.

SECTION 5.      LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS.

        5.1     LIMITATION ON ANNUAL ADDITIONS. Notwithstanding anything herein
to the contrary, allocation of

Employer contributions for any Plan Year shall be subject to the following:

                5.1-1   If allocation of Employer contributions in accordance
        with Section 4.1 will result in an allocation of more than one-third the
        total contributions for a Plan Year to the Accounts of Highly Paid
        Employees, then allocation of such amount shall be adjusted so that such
        excess will not occur. In the event the allocation of the Employer's
        contribution would cause more than one-third of the shares of Stock
        released from the Unallocated Stock Account in a given year to be
        allocated to the Accounts of Highly Paid Employee Participants, and such
        allocation would cause any Highly Paid Employee Participant to exceed
        the limitations under Code Section 415(c) or the Employer to exceed the
        deduction limits under Code Section 404, then the Employer Contribution
        shall not be allocated to such Highly Paid Employee Participants in
        proportion to such Highly Paid Employee Participant's amount of 415
        Compensation. Rather, the Employer Contribution shall be allocated to
        the Accounts of Highly Paid Employee Participants in proportion to their
        "Relative 415 Compensation." For these purposes "Relative 415
        Compensation" shall mean the 415 Compensation for each Highly Paid
        Employee Participant which shall be taken into consideration for
        purposes of receiving an allocation of the Employer Contribution. The
        aggregate Relative 415 Compensation shall be determined by the following
        formula: (N / 2) - $1 = H, where "N" equals the aggregate amount of 415
        Compensation attributable to Employees who are not Highly Paid Employees
        and "H" equals the aggregate Relative 415 Compensation attributable to
        Highly Paid Employee Participants. Once the aggregate Relative 415
        Compensation for all Highly Paid Employee Participants is determined,
        the Relative 415 Compensation attributable to each Highly Paid Employee
        Participant is determined by Multiplying the aggregate Relative 415
        Compensation by a fraction, the numerator of which is the 415
        Compensation of a Highly Paid Employee Participant and the denominator
        of which is the 415 Compensation for all Highly Paid Employee
        Participants.

                5.1-2   After adjustment, if any, required by the preceding
        paragraph, the annual additions during any Plan Year to any
        Participant's Account under this and any other defined contribution
        plans maintained by the Employer or an affiliate (within the purview

                                       13
<PAGE>

        of Section 414(b), (c) and (m) and Section 415(h) of the Code, which
        affiliate shall be deemed the Employer for this purpose) shall not
        exceed the lesser of $40,000 (or such other dollar amount which results
        from cost-of-living adjustments under Section 415(d) of the Code) (the
        "dollar limitation") or 100 percent of the Participant's 415
        Compensation for such limitation year (the "percentage limitation"). The
        percentage limitation shall not apply to any contribution for medical
        benefits after separation from service (within the meaning of Section
        401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as
        an annual addition. If, as a result of the allocation of forfeitures, a
        reasonable error in estimating a Participant's annual compensation, a
        reasonable error in determining the amount of elective deferrals (within
        the meaning of Code Section 402(g)(3)) that may be made with respect to
        any individual under the limits of Code Section 415, or under other
        limited facts and circumstances that the Commissioner of the Internal
        Revenue Service finds justify the availability of the rules set forth in
        this paragraph, the annual additions under the terms of the Plan for a
        particular Participant would cause the limitations of Code Section 415
        applicable to that Participant for the limitation year to be exceeded,
        the excess amounts shall not be deemed annual additions in that
        limitation year if they are treated in accordance with any one of the
        following:

                (i)     Any excess amount at the end of the Plan Year that
        cannot be allocated to the Participant's Account shall be reallocated to
        the remaining Participants who are eligible for an allocation of
        Employer contributions for the Plan Year. The reallocation shall be made
        in accordance with Section 4.1 of the Plan as if the Participant whose
        Account otherwise would receive the excess amount is not eligible for an
        allocation of Employer contributions.

                (ii)    If the allocation or reallocation of the excess amounts
        causes the limitations of Code section 415 to be exceeded with respect
        to each Participant for the limitation year, then the excess amount will
        be held unallocated in a suspense account. The suspense account will be
        applied to reduce future Employer contributions for all remaining
        Participants in the next limitation year and each succeeding limitation
        year if necessary.

                (iii)   If a suspense account is in existence at any time during
        a limitation year, it will not participate in any allocation of
        investment gains and losses. All amounts held in suspense accounts must
        be allocated to Participants' Accounts before any contributions may be
        made to the Plan for the limitation year.

                (iv)    If a suspense account exists at the time of Plan
        termination, amounts held in the suspense account that cannot be
        allocated shall revert to the Employer.

                5.1-3   For purposes of this Section 5.1, the "annual addition"
        to a Participant's Accounts means the sum of (i) Employer contributions,
        (ii) Employee contributions, if any, and (iii) forfeitures. Annual
        additions to a defined contribution plan also include amounts allocated,
        after March 31, 1984, to an individual medical account, as defined in
        Section 415(l)(2) of the Internal Revenue Code, which is part of a
        pension or annuity plan maintained by the Employer, amounts derived from
        contributions paid or accrued after December 31, 1985, in taxable years
        ending after such date, which are attributable to post-retirement
        medical benefits allocated to the separate account of a Key Employee
        under a welfare benefit fund, as defined in Section 419A(d) of the
        Internal Revenue Code, maintained by the Employer. For these purposes,
        annual additions to a defined contribution plan shall not include the
        allocation of the excess amounts remaining in the

                                       14
<PAGE>

        Unallocated Stock Fund subsequent to a sale of stock from such fund in
        accordance with a transaction described in Section 8.1 of the Plan.

                5.1-4   Notwithstanding the foregoing, if no more than one-third
        of the Employer contributions to the Plan for a year which are
        deductible under Section 404(a)(9) of the Code are allocated to Highly
        Paid Employees (within the meaning of Section 414(q) of the Internal
        Revenue Code), the limitations imposed herein shall not apply to:

                (i)     forfeitures of Employer securities (within the meaning
        of Section 409 of the Code) under the Plan if such securities were
        acquired with the proceeds of a loan described in Section 404(a)(9)(A)
        of the Code), or

                (ii)    Employer contributions to the Plan which are deductible
        under Section 404(a)(9)(B) and charged against a Participant's Account.

                5.1-5   If the Employer contributes amounts, on behalf of
        Employees covered by this Plan, to other "defined contribution plans" as
        defined in Section 3(34) of ERISA, the limitation on annual additions
        provided in this Section shall be applied to annual additions in the
        aggregate to this Plan and to such other plans. Reduction of annual
        additions, where required, shall be accomplished first by reductions
        under such other plan pursuant to the directions of the named fiduciary
        for administration of such other plans or under priorities, if any,
        established under the terms of such other plans and then by allocating
        any remaining excess for this Plan in the manner and priority set out
        above with respect to this Plan.

                5.1-6   A limitation year shall mean each 12 consecutive month
        period beginning each January 1.

        5.2     EFFECT OF LIMITATIONS. The Committee shall take whatever action
may be necessary from time to time to assure compliance with the limitations set
forth in Section 5.1. Specifically, the Committee shall see that each Employer
restrict its contributions for any Plan Year to an amount which, taking into
account the amount of available forfeitures, may be completely allocated to the
Participants consistent with those limitations. Where the limitations would
otherwise be exceeded by any Participant, further allocations to the Participant
shall be curtailed to the extent necessary to satisfy the limitations. Where an
excessive amount is contributed on account of a mistake as to one or more
Participants' compensation, or there is an amount of forfeitures which may not
be credited in the Plan Year in which it becomes available, the amount shall be
corrected in accordance with Section 5.1-2 of the Plan. If it is determined at
any time that the Committee and/or Trustee has erred in accepting and allocating
any contributions or forfeitures under this Plan, or in allocating net gain or
loss pursuant to Sections 8.2 and 8.3, then the Committee, in a uniform and
nondiscriminatory manner, shall determine the manner in which such error shall
be corrected and shall promptly advise the Trustee in writing of such error and
of the method for correcting such error. The Accounts of any or all Participants
may be revised, if necessary, in order to correct such error.

        5.3     LIMITATIONS AS TO CERTAIN PARTICIPANTS. Aside from the
limitations set forth in Section 5.1, if the Plan acquires any Stock in a
transaction as to which a selling shareholder or the estate of a deceased
shareholder is claiming the benefit of Section 1042 of the Code, the Committee
shall see that none of such Stock, and no other assets in lieu of such Stock,
are allocated to the Accounts of certain Participants in order to comply with
Section 409(n) of the Code.

                                       15
<PAGE>

        This restriction shall apply at all times to a Participant who owns
(taking into account the attribution rules under Section 318(a) of the Code,
without regard to the exception for employee plan trusts in Section
318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation
which issued the Stock acquired by the Plan, or another corporation within the
same controlled group, as defined in Section 409(l)(4) of the Code (any such
class of stock hereafter called a "Related Class"). For this purpose, a
Participant who owns more than 25 percent of any Related Class at any time
within the one year preceding the Plan's purchase of the Stock shall be subject
to the restriction as to all allocations of the Stock, but any other Participant
shall be subject to the restriction only as to allocations which occur at a time
when he owns more than 25 percent of any Related Class.

        Further, this restriction shall apply to the selling shareholder
claiming the benefit of Section 1042 and any other Participant who is related to
such a shareholder within the meaning of Section 267(b) of the Code, during the
period beginning on the date of sale and ending on the later of (1) the date
that is ten years after the date of sale, or (2) the date of the Plan allocation
attributable to the final payment of acquisition indebtedness incurred in
connection with the sale.

        This restriction shall not apply to any Participant who is a lineal
descendant of a selling shareholder if the aggregate amounts allocated under the
Plan for the benefit of all such descendants do not exceed five percent of the
Stock acquired from the shareholder.

        5.4     ERRONEOUS ALLOCATIONS. No Participant shall be entitled to any
annual additions or other allocations to his Account in excess of those
permitted under Section 5. If it is determined at any time that the
administrator and/or Trustee have erred in accepting and allocating any
contributions or forfeitures under this Plan, or in allocating investment
adjustments, or in excluding or including any person as a Participant, then the
administrator, in a uniform and nondiscriminatory manner, shall determine the
manner in which such error shall be corrected and shall promptly advise the
Trustee in writing of such error and of the method for correcting such error.
The Accounts of any or all Participants may be revised, if necessary, in order
to correct such error.

        SECTION 6. TRUST FUND AND ITS INVESTMENT.

        6.1     CREATION OF TRUST FUND. All amounts received under the Plan from
Employers and investments shall be held as the Trust Fund pursuant to the terms
of this Plan and of the Trust Agreement between the Bank and the Trustee. The
benefits described in this Plan shall be payable only from the assets of the
Trust Fund, and none of the Bank, any other Employer, its board of directors or
trustees, its stockholders, its officers, its employees, the Committee, and the
Trustee shall be liable for payment of any benefit under this Plan except from
the Trust Fund.

        6.2     STOCK FUND AND INVESTMENT FUND. The Trust Fund held by the
Trustee shall be divided into the Stock Fund, consisting entirely of Stock, and
the Investment Fund, consisting of all assets of the Trust other than Stock. The
Trustee shall have no investment responsibility for the Stock Fund, but shall
accept any Employer contributions made in the form of Stock, and shall acquire,
sell, exchange, distribute, and otherwise deal with and dispose of Stock in
accordance with the instructions of the Committee. The Trustee shall have full
responsibility for the investment of the Investment Fund, except to the extent
such responsibility may be delegated from time to time to one or more investment
managers pursuant to Section 2.3 of the Trust Agreement, or to the extent the
Committee directs the Trustee to purchase Stock with the assets in the
Investment Fund.

                                       16
<PAGE>

        6.3     ACQUISITION OF STOCK. From time to time the Committee may, in
its sole discretion, direct the Trustee to acquire Stock from the issuing
Employer or from shareholders, including shareholders who are or have been
Employees, Participants, or fiduciaries with respect to the Plan. The Trustee
shall pay for such Stock no more than its fair market value, which shall be
determined conclusively by the Committee pursuant to Section 12.4. The Committee
may direct the Trustee to finance the acquisition of Stock by incurring or
assuming indebtedness to the seller or another party which indebtedness shall be
called a "Stock Obligation." The term "Stock Obligation" shall refer to a loan
made to the Plan by a disqualified person within the meaning of Section
4975(e)(2) of the Code, or a loan to the Plan which is guaranteed by a
disqualified person. A Stock Obligation includes a direct loan of cash, a
purchase-money transaction, and an assumption of an obligation of a
tax-qualified employee stock ownership plan under Section 4975(e)(7) of the Code
("ESOP"). For these purposes, the term "guarantee" shall include an unsecured
guarantee and the use of assets of a disqualified person as collateral for a
loan, even though the use of assets may not be a guarantee under applicable
state law. An amendment of a Stock Obligation in order to qualify as an "exempt
loan" is not a refinancing of the Stock Obligation or the making of another
Stock Obligation. The term "exempt loan" refers to a loan that satisfies the
provisions of this paragraph. A "non-exempt loan" fails to satisfy this
paragraph. Any Stock Obligation shall be subject to the following conditions and
limitations:

                6.3-1   A Stock Obligation shall be for a specific term, shall
        not be payable on demand except in the event of default, and shall bear
        a reasonable rate of interest.

                6.3-2   A Stock Obligation may, but need not, be secured by a
        collateral pledge of either the Stock acquired in exchange for the Stock
        Obligation, or the Stock previously pledged in connection with a prior
        Stock Obligation which is being repaid with the proceeds of the current
        Stock Obligation. No other assets of the Plan and Trust may be used as
        collateral for a Stock Obligation, and no creditor under a Stock
        Obligation shall have any right or recourse to any Plan and Trust assets
        other than Stock remaining subject to a collateral pledge.

                6.3-3   Any pledge of Stock to secure a Stock Obligation must

        provide for the release of pledged Stock in connection with payments on
        the Stock obligations in the ratio prescribed in Section 4.2.

                6.3-4   Repayments of principal and interest on any Stock
        Obligation shall be made by the Trustee only from Employer cash
        contributions designated for such payments, from earnings on such
        contributions, and from cash dividends received on Stock, in the last
        case, however, subject to the further requirements of Section 7.2.

                6.3-5   In the event of default of a Stock Obligation, the value
        of Plan assets transferred in satisfaction of the Stock Obligation must
        not exceed the amount of the default. If the lender is a disqualified
        person within the meaning of Section 4975 of the Code, a Stock
        Obligation must provide for a transfer of Plan assets upon default only
        upon and to the extent of the failure of the Plan to meet the payment
        schedule of said Stock Obligation. For purposes of this paragraph, the
        making of a guarantee does not make a person a lender.

        6.4     PARTICIPANTS' OPTION TO DIVERSIFY. The Committee shall provide
for a procedure under which each Participant may, during the qualified election
period, elect to "diversify" a portion of the Employer Stock allocated to his
Account, as provided in Section

                                       17
<PAGE>

401(a)(28)(B) of the Code. An election to diversify must be made on the
prescribed form and filed with the Committee within the period specified herein.
For each of the first five (5) Plan years in the qualified election period, the
Participant may elect to diversify an amount which does not exceed 25% of the
number of shares allocated to his Account since the inception of the Plan, less
all shares with respect to which an election under this Section has already been
made. For the last year of the qualified election period, the Participant may
elect to have up to 50 percent of the value of his Account committed to other
investments, less all shares with respect to which an election under this
Section has already been made. The term "qualified election period" shall mean
the six (6) Plan Year period beginning with the first Plan Year in which a
Participant has both attained age 55 and completed 10 years of participation in
the Plan. A Participant's election to diversify his Account may be made within
each year of the qualified election period and shall continue for the 90-day
period immediately following the last day of each year in the qualified election
period. Once a Participant makes such election, the Plan must complete
diversification in accordance with such election within 90 days after the end of
the period during which the election could be made for the Plan Year. In the
discretion of the Committee, the Plan may satisfy the diversification
requirement by any one of the following methods:

                6.4-1   The Plan may distribute all or part of the amount
        subject to the diversification election.

                6.4-2   The Plan may transfer the portion of the Participant's
        Account subject to the diversification election to another qualified
        defined contribution plan of the Employer that offers at least three
        investment options satisfying the requirements of the Regulations under
        Section 404(c) of ERISA.

                6.4-3   The Plan may transfer the portion of the Participant's
        Account subject to the diversification election to another qualified
        defined contribution plan of the Employer that offers at least three
        investment options satisfying the requirements of the Regulations under
        Section 404(c) of ERISA.

SECTION 7.      VOTING RIGHTS AND DIVIDENDS ON STOCK.

        7.1     VOTING AND TENDERING OF STOCK. The Trustee generally shall vote
all shares of Stock held under the Plan in accordance with the written
instructions of the Committee. However, if any Employer has registration-type
class of securities within the meaning of Section 409(e)(4) of the Code, or if a
matter submitted to the holders of the Stock involves a merger, consolidation,
recapitalization, reclassification, liquidation, dissolution, or sale of
substantially all assets of an entity, then (i) the shares of Stock which have
been allocated to Participants' Accounts shall be voted by the Trustee in
accordance with the Participants' written instructions, and (ii) the Trustee
shall vote any unallocated Stock and allocated Stock for which it has received
no voting instructions in the same proportions as it votes the allocated Stock
for which it has received instructions from Participants; provided, however,
that if an exempt loan, as defined in Section 4975(d) of the Code, is
outstanding and the Plan is in default on such exempt loan, as default is
defined in the loan documents, then to the extent that such loan documents
require the lender to exercise voting rights with respect to the unallocated
shares, the loan documents will prevail. In the event no shares of Stock have
been allocated to Participants' Accounts at the time Stock is to be voted and
any exempt loan which may be outstanding is not in default, each Participant
shall be deemed to have one share of Stock allocated to his or her Account for
the sole purpose of providing the Trustee with voting instructions.

                                       18
<PAGE>

        Notwithstanding any provision hereunder to the contrary, all unallocated
shares of Stock must be voted by the Trustee in a manner determined by the
Trustee to be for the exclusive benefit of the Participants and Beneficiaries.
Whenever such voting rights are to be exercised, the Employers shall provide the
Trustee, in a timely manner, with the same notices and other materials as are
provided to other holders of the Stock, which the Trustee shall distribute to
the Participants. The Participants shall be provided with adequate opportunity
to deliver their instructions to the Trustee regarding the voting of Stock
allocated to their Accounts. The instructions of the Participants' with respect
to the voting of allocated shares hereunder shall be confidential.

                7.1-1   In the event of a tender offer, Stock shall be tendered
        by the Trustee in the same manner as set forth above with respect to the
        voting of Stock. Notwithstanding any provision hereunder to the
        contrary, Stock must be tendered by the Trustee in a manner determined
        by the Trustee to be for the exclusive benefit of the Participants and
        Beneficiaries.

        7.2     DIVIDENDS ON STOCK. Dividends on Stock which are received by the
Trustee in the form of additional Stock shall be retained in the Stock Fund, and
shall be allocated among the Participant's Accounts and the Unallocated Stock
Fund in accordance with their holdings of the Stock on which the dividends have
been paid. Dividends on Stock credited to Participants' Accounts which are
received by the Trustee in the form of cash shall, at the direction of the
Employer paying the dividends, either (i) be credited to the Accounts in
accordance with Section 8.3 and invested as part of the Investment Fund, (ii) be
distributed immediately to the Participants in proportion with the Participants'
Stock Fund Account balance (iii) be distributed to the Participants within 90
days of the close of the Plan Year in which paid in proportion with the
Participants' Stock Fund Account balance or (iv) be used to make payments on the
Stock Obligation. If dividends on Stock allocated to a Participant's Account are
used to repay the Stock Obligation, Stock with a fair market value equal to the
dividends so used must be allocated to such Participant's Account in lieu of the
dividends. Dividends on Stock held in the Unallocated Stock Fund which are
received by the Trustee in the form of cash shall be allocated to Participants'
Investment Fund Accounts (pro rata based on the Participant's Account balance in
relation to all Participants' Account balances) and shall be applied as soon as
practicable to payments of principal and interest under the Stock Obligation
incurred with the purchase of the Stock.

        At the election of the Committee, Participants or their Beneficiaries
may elect to have dividends on Stock paid as provided in clause (ii) or (iii) in
the preceding paragraph, or elect to have such dividends paid to the Plan and
reinvested in qualifying employer securities. Such dividends on Stock shall be
"applicable dividends" for purposes of Code Section 404(k)(2)(A). All dividends
on Stock for which Participants may make an election shall be fully vested,
regardless of whether the Participant is vested in the underlying securities.

SECTION 8.      ADJUSTMENTS TO ACCOUNTS.

        8.1     Adjustments for Transactions. An Employer contribution pursuant
to Section 4.1 shall be credited to the Participants' Accounts as of the last
day of the Plan Year for which it is contributed, in accordance with Section
4.1. Stock released from the Unallocated Stock Fund upon the Trust's repayment
of a Stock Obligation pursuant to Section 4.2 shall be credited to the
Participants' Accounts as of the last day of the Plan Year in which the
repayment occurred, pro rata based on the cash applied from such Participant's
Account relative to the cash applied from all Participants' Accounts. Any excess
amounts remaining in the suspense account following a

                                       19
<PAGE>

sale of Stock from the Unallocated Stock Fund to repay a Stock Obligation shall
be allocated as of the last day of the Plan Year in which the repayment occurred
among the Participants' Accounts in proportion to 415 Compensation. Any benefit
which is paid to a Participant or Beneficiary pursuant to Section 10 shall be
charged to the Participant's Account as of the first day of the Valuation Period
in which it is paid. Any forfeiture or restoral shall be charged or credited to
the Participant's Account as of the first day of the Valuation Period in which
the forfeiture or restoral occurs pursuant to Section 9.6.

        8.2     VALUATION OF INVESTMENT FUND. As of each Valuation Date, the
Trustee shall prepare a balance sheet of the Investment Fund, recording each
asset (including any contribution receivable from an Employer) and liability at
its fair market value. Any liability with respect to short positions or options
and any item of accrued income or expense and unrealized appreciation or
depreciation shall be included; provided, however, that such an item may be
estimated or excluded if it is not readily ascertainable unless estimating or
excluding it would result in a material distortion. The Committee shall then
determine the net gain or loss of the Investment Fund since the preceding
Valuation Date, which shall mean the entire income of the Investment Fund,
including realized and unrealized capital gains and losses, net of any expenses
to be charged to the general Investment Fund and excluding any contributions by
the Employer. The determination of gain or loss shall be consistent with the
balance sheets of the Investment Fund for the current and preceding Valuation
Dates.

        8.3     ADJUSTMENTS FOR INVESTMENT EXPERIENCE. Any net gain or loss of
the Investment Fund during a Valuation Period, as determined pursuant to Section
8.2, shall be allocated as of the last day of the Valuation Period among the
Participants' Accounts in proportion to the opening balance in each Account, as
adjusted for benefit payments and forfeitures during the Valuation Period,
without regard to whatever Stock may be credited to an Account. Any cash
dividends received on Stock credited to Participant's Accounts shall be
allocated as of the last day of the Valuation Period among the Participants'
Accounts based on the opening balance in each Participant's Stock Fund Account.

SECTION 9.      VESTING OF PARTICIPANTS' INTERESTS.

        9.1     DEFERRED VESTING IN ACCOUNTS. A Participant's vested interest in
his Account shall be based on his Vesting Years in accordance with the following
table, subject to the balance of this Section 9:

           Vesting Years            Percentage of Interest Vested
           -------------            -----------------------------
           Fewer than 2                           0%
                 2                               20%
                 3                               40%
                 4                               60%
                 5                               80%
            6 or more                           100%

        9.2     COMPUTATION OF VESTING YEARS. For purposes of this Plan, a
"Vesting Year" means generally a Plan Year in which an Employee has at least
1,000 Hours of Service, beginning with the first Plan Year in which the Employee
has completed an Hour of Service with the Employer, and including Service with
other Employers as provided in the definition of "Service." Notwithstanding the
above, an Employee who was employed with the Employer prior to the Effective
Date of the Plan shall receive credit for vesting purposes for each calendar
year of continuous employment with the Employer in which the Employee has at
least 1,000 Hours of

                                       20
<PAGE>

Service. However, a Participant's Vesting Years shall be computed subject to the
following conditions and qualifications:

                9.2-1   A Participant's Vesting Years shall not include any
        Service prior to the date on which an Employee attains age 18.

                9.2-2   A Participant's vested interest in his Account
        accumulated before five (5) consecutive Breaks in Service shall be
        determined without regard to any Service after such five consecutive
        Breaks in Service. Further, if a Participant has five (5) consecutive
        Breaks in Service before his interest in his Account has become vested
        to some extent, pre-Break years of Service shall not be required to be
        taken into account for purposes of determining his post-Break vested
        percentage.

                9.2-3   In the case of a Participant who has 5 or more
        consecutive 1-year Breaks in Service, the Participant's pre-Break
        Service will count in vesting of the Employer-derived post-break accrued
        benefit only if either:

                (i)     such Participant has any nonforfeitable interest in the
        accrued benefit attributable to Employer contributions at the time of
        separation from Service, or

                (ii)    upon returning to Service the number of consecutive
        1-year Breaks in Service is less than the number of years of Service.

                9.2-4   Notwithstanding any provision of the Plan to the
        contrary, effective January 1, 1998, calculation of service for
        determining Vesting Years with respect to qualified military service
        will be provided in accordance with Section 414(u) of the Code.

                9.2-5   If any amendment changes the vesting schedule, including
        an automatic change to or from a top-heavy vesting schedule, any
        Participant with three (3) or more Vesting Years may, by filing a
        written request with the Employer, elect to have his vested percentage
        computed under the vesting schedule in effect prior to the amendment.
        The election period must begin not later than the later of sixty (60)
        days after the amendment is adopted, the amendment becomes effective, or
        the Participant is issued written notice of the amendment by the
        Employer or the Committee.

        9.3     FULL VESTING UPON CERTAIN EVENTS.

                9.3-1   Notwithstanding Section 9.1, a Participant's interest in
        his Account shall fully vest on the Participant's Normal Retirement
        Date. The Participant's interest shall also fully vest in the event that
        his Service is terminated by Early Retirement, Disability or by death.

                9.3-2   The Participant's interest in his Account shall also
        fully vest in the event of a "Change in Control" of the Bank.

                9.3-3   Upon a Change in Control, the Plan shall be terminated
        and the Plan Administrator shall direct the Trustee to sell a sufficient
        amount of Stock from the Unallocated Stock Fund to repay any outstanding
        Stock Obligation in full. The proceeds of such sale shall be used to
        repay such Stock Obligation. After repayment of the Stock Obligation,
        all remaining shares in the Unallocated Stock Fund (or the proceeds
        thereof,

                                       21
<PAGE>

        if applicable) shall be deemed to be earnings and shall be allocated in
        accordance with the requirements of Section 8.1.

        9.4     FULL VESTING UPON PLAN TERMINATION. Notwithstanding Section 9.1,
a Participant's interest in his Account shall fully vest upon termination of
this Plan or upon the permanent and complete discontinuance of contributions by
his Employer. In the event of a partial termination, the interest of each
affected Participant shall fully vest with respect to that part of the Plan
which is terminated.

        9.5     FORFEITURE, REPAYMENT, AND RESTORAL. If a Participant's Service
terminates before his interest in his Account is fully vested, that portion
which has not vested shall be forfeited if he either (i) receives a distribution
of his entire vested interest pursuant to Section 10.1, or (ii) incurs a
one-year Break in Service. If a Participant's Service terminates prior to having
any portion of his Account become vested, such Participant shall be deemed to
have received a distribution of his vested interest as of the Valuation Date
next following his termination of Service.

        If a Participant who has suffered a forfeiture of the nonvested portion
of his Account returns to Service before he has five (5) consecutive Breaks in
Service, the nonvested portion shall be restored, provided that, if the
Participant had received a distribution of his vested Account balance, the
amount distributed shall be repaid prior to such restoral. The Participant may
repay such amount at any time within five years after he has returned to
Service. The amount repaid shall be credited to his Account at the time it is
repaid; an additional amount equal to that portion of his Account which was
previously forfeited shall be restored to his Account at the same time from
other Employees' forfeitures and, if such forfeitures are insufficient, from a
special contribution by his Employer for that year. If the Participant did not
receive a distribution of his vested Account balance, any forfeiture restored
shall include earnings that would have been credited to the Account but for the
forfeiture. A Participant who was deemed to have received a distribution of his
vested interest in the Plan shall have his Account restored as of the first day
on which he performs an Hour of Service after his return.

        9.6     ACCOUNTING FOR FORFEITURES. If a portion of a Participant's
Account is forfeited, Stock allocated to said Participant's Account shall be
forfeited only after other assets are forfeited. If interests in more than one
class of Stock have been allocated to a Participant's Account, the Participant
must be treated as forfeiting the same proportion of each class of Stock. A
forfeiture shall be charged to the Participant's Account as of the first day of
the first Valuation Period in which the forfeiture becomes certain pursuant to
Section 9.5. Except as otherwise provided in that Section, a forfeiture shall be
added to the contributions of the terminated Participant's Employer which are to
be credited to other Participants pursuant to Section 4.1 as of the last day of
the Plan Year in which the forfeiture becomes certain.

        9.7     VESTING AND NONFORFEITABILITY. A Participant's interest in his
Account which has become vested shall be nonforfeitable for any reason.

SECTION 10.     PAYMENT OF BENEFITS.

        10.1    BENEFITS FOR PARTICIPANTS. For a Participant whose Service ends
for any reason, distribution will be made to or for the benefit of the
Participant or, in the case of the Participant's death, his Beneficiary, by
payment in a lump sum, in accordance with Section 10.2, either, or a combination
of the following methods:

                                       22
<PAGE>

                10.1-1  By payment in a lump sum, in accordance with Section
        10.2; or

                10.1-1  By payment in a series of substantially equal annual
        installments over a period not to exceed five (5) years, provided the
        maximum period over which the distribution of a Participant's Account
        may be made shall be extended by 1 year, up to five (5) additional
        years, for each $160,000 (or fraction thereof) by which such
        Participant's Account balance exceeds $800,000 (the aforementioned
        figures are subject to cost-of-living adjustments prescribed by the
        Secretary of the Treasury pursuant to Section 409(o)(2) of the Code).

        The Participant shall elect the manner in which his vested Account
        balance will be distributed to him. If a Participant so desires, he may
        direct how his benefits are to be paid to his Beneficiary. If a deceased
        Participant did not file a direction with the Committee, the
        Participant's benefits shall be distributed to his Beneficiary in a lump
        sum. Notwithstanding any provision to the contrary, if the value of a
        Participant's vested Account balance at the time of any distribution,
        does not equal or exceed $5,000, then such Participant's vested Account
        shall be distributed in a lump sum within 60 days after the end of the
        Plan Year in which employment terminates. If the value of a
        Participant's vested Account balance is, or has ever been, in excess of
        $5,000, then his benefits shall not be paid prior to the later of the
        time he has attained Normal Retirement or age 62 unless he elects an
        early payment date in a written election filed with the Committee. A
        Participant may modify such an election at any time, provided any new
        benefit payment date is at least 30 days after a modified election is
        delivered to the Committee. Failure of a Participant to consent to a
        distribution prior to the later of Normal Retirement or age 62 shall be
        deemed to be an election to defer commencement of payment of any benefit
        under this section.

        10.2    TIME FOR DISTRIBUTION.

                10.2.1  If the Participant and, if applicable, with the consent
        of the Participant's spouse, elects the distribution of the
        Participant's Account balance in the Plan, distribution shall commence
        as soon as practicable following his termination of Service, but no
        later than one year after the close of the Plan Year:

                (i)     in which the Participant separates from service by
        reason of attainment of Normal Retirement Age under the Plan,
        Disability, or death; or

                (ii)    which is the first Plan Year following the year in which
        the Participant resigns or is dismissed, unless he is reemployed before
        such date.

                10.2.2  Unless the Participant elects otherwise, the
        distribution of the balance of a Participant's Account shall commence
        not later than the 60th day after the latest of the close of the Plan
        Year in which -

                (i)     the Participant attains the age of 65;

                (ii)    occurs the tenth anniversary of the year in which the
        Participant commenced participation in the Plan; or

                (iii)   the Participant terminates his Service with the
        Employer.

                                       23
<PAGE>

                10.2.3  Notwithstanding anything to the contrary, (1) with
        respect to a 5-percent owner (as defined in Code Section 416),
        distribution of a Participant's Account shall commence (whether or not
        he remains in the employ of the Employer) not later than the April 1 of
        the calendar year next following the calendar year in which the
        Participant attains age 70 1/2, and (2) with respect to all other
        Participants, payment of a Participant's benefit will commence not later
        than April 1 of the calendar year following the calendar year in which
        the Participant attains age 70 1/2, or, if later, the year in which the
        Participant retires. A Participant's benefit from that portion of his
        Account committed to the Investment Fund shall be calculated on the
        basis of the most recent Valuation Date before the date of payment.

                10.2.4  Distribution of a Participant's Account balance after
        his death shall comply with the following requirements:

                (i)     If a Participant dies before his distributions have
        commenced, distribution of his Account to his Beneficiary shall commence
        not later than one year after the end of the Plan Year in which the
        Participant died; however, if the Participant's Beneficiary is his
        surviving Spouse, distributions may commence on the date on which the
        Participant would have attained age 70 1/2. In either case,
        distributions shall be completed within five years after they commence.

                (ii)    If the Participant dies after distribution has commenced
        pursuant to Section 10.1.2 but before his entire interest in the Plan
        has been distributed to him, then the remaining portion of that interest
        shall, in accordance with Section 401(a)(9) of the Code, be distributed
        at least as rapidly as under the method of distribution being used under
        Section 10.1.2 at the date of his death.

                (iii)   If a married Participant dies before his benefit
        payments begin, then unless he has specifically elected otherwise the
        Committee shall cause the balance in his Account to be paid to his
        Spouse. No election by a married Participant of a different Beneficiary
        shall be valid unless the election is accompanied by the Spouse's
        written consent, which (i) must acknowledge the effect of the election,
        (ii) must explicitly provide either that the designated Beneficiary may
        not subsequently be changed by the Participant without the Spouse's
        further consent, or that it may be changed without such consent, and
        (iii) must be witnessed by the Committee, its representative, or a
        notary public. (This requirement shall not apply if the Participant
        establishes to the Committee's satisfaction that the Spouse may not be
        located.)

                10.2.5  All distributions under this section shall be determined
        and made in accordance with the regulations under Code Section
        401(a)(9), including the minimum distribution incidental benefit
        requirements of Section 1.401(a)(9)-2 of the proposed regulations. The
        provisions reflecting Section 401(a)(9) override any distribution
        options in the Plan inconsistent with Section 401(a)(9).

        10.3    MARITAL STATUS. The Committee, the Plan, the Trustee, and the
Employers shall be fully protected and discharged from any liability to the
extent of any benefit payments made as a result of the Committee's good faith
and reasonable reliance upon information obtained from a Participant and his
Employer as to his marital status.

        10.4    DELAY IN BENEFIT DETERMINATION. If the Committee is unable to
determine the benefits payable to a Participant or Beneficiary on or before the
latest date prescribed for payment

                                       24
<PAGE>

pursuant to Section 10.1 or 10.2, the benefits shall in any event be paid within
60 days after they can first be determined, with whatever makeup payments may be
appropriate in view of the delay.

        10.5    ACCOUNTING FOR BENEFIT PAYMENTS. Any benefit payment shall be
charged to the Participant's Account as of the first day of the Valuation Period
in which the payment is made.

        10.6    OPTIONS TO RECEIVE STOCK OR CASH. Unless ownership of virtually
all Stock is restricted to active Employees and qualified retirement plans for
the benefit of Employees pursuant to the certificates of incorporation or
by-laws of the Employers issuing Stock, a terminated Participant or the
Beneficiary of a deceased Participant may instruct the Committee to distribute
the Participant's entire vested interest in his Account in the form of cash or
Stock or a combination thereof. In the event the Participant elects to receive
all Stock, the Committee shall apply the Participant's vested interest in the
Investment Fund to purchase sufficient Stock from the Stock Fund or from any
owner of Stock to make the required distribution.

        Any Participant who receives Stock pursuant to Section 10.1, and any
person who has received Stock from the Plan or from such a Participant by reason
of the Participant's death or incompetence, by reason of divorce or separation
from the Participant, or by reason of a rollover contribution described in
Section 402(a)(5) of the Code, shall have the right to require the Employer
which issued the Stock to purchase the Stock for its current fair market value
(hereinafter referred to as the "put right"). The put right shall be exercisable
by written notice to the Committee during the first 60 days after the Stock is
distributed by the Plan, and, if not exercised in that period, during the first
60 days in the following Plan Year after the Committee has communicated to the
Participant its determination as to the Stock's current fair market value.
However, the put right shall not apply to the extent that the Stock, at the time
the put right would otherwise be exercisable, may be sold on an established
market in accordance with federal and state securities laws and regulations.
Similarly, the put option shall not apply with respect to the portion of a
Participant's Account which the Employee elected to have reinvested under Code
Section 401(a)(28)(B). If the put right is exercised, the Trustee may, if so
directed by the Committee in its sole discretion, assume the Employer's rights
and obligations with respect to purchasing the Stock. Notwithstanding anything
herein to the contrary, in the case of a plan established by a bank (as defined
in Code Section 581), the put option shall not apply if prohibited by a federal
or state law and Participants are entitled to elect their benefits be
distributed in cash.

        If a Participant elects to receive his distribution in the form of a
lump sum pursuant to Section 10.1 of the Plan, the Employer or the Trustee, as
the case may be, may elect to pay for the Stock in equal periodic installments,
not less frequently than annually, over a period not longer than five years from
the day after the put right is exercised, with adequate security and interest at
a reasonable rate on the unpaid balance, all such terms to be set forth in a
promissory note delivered to the seller with normal terms as to acceleration
upon any uncured default.

        Nothing contained herein shall be deemed to obligate any Employer to
register any Stock under any federal or state securities law or to create or
maintain a public market to facilitate the transfer or disposition of any Stock.
The put right described herein may only be exercised by a person described in
the second preceding paragraph, and may not be transferred with any Stock to any
other person. As to all Stock purchased by the Plan in exchange for any Stock
Obligation, the put right shall be nonterminable. The put right for Stock
acquired through a Stock Obligation shall continue with respect to such Stock
after the Stock Obligation is repaid or the Plan ceases to be an employee stock
ownership plan.

                                       25
<PAGE>

        10.7    RESTRICTIONS ON DISPOSITION OF STOCK. Except in the case of
Stock which is traded on an established market, a Participant who receives Stock
pursuant to Section 10.1, and any person who has received Stock from the Plan or
from such a Participant by reason of the Participant's death or incompetence, by
reason of divorce or separation from the Participant, or by reason of a rollover
contribution described in Section 402(a)(5) of the Code, shall, prior to any
sale or other transfer of the Stock to any other person, first offer the Stock
to the issuing Employer and to the Plan at the greater of (i) its current fair
market value, or (ii) the purchase price offered in good faith by an independent
third party purchaser. This restriction shall apply to any transfer, whether
voluntary, involuntary, or by operation of law, and whether for consideration or
gratuitous. Either the Employer or the Trustee may accept the offer within 14
days after it is delivered. Any Stock distributed by the Plan shall bear a
conspicuous legend describing the right of first refusal under this Section
10.7, as well as any other restrictions upon the transfer of the Stock imposed
by federal and state securities laws and regulations.

        10.8    CONTINUING LOAN PROVISIONS; CREATIONS OF PROTECTIONS AND RIGHTS.
Except as otherwise provided in Sections 10.6 and 10.7 and this Section, no
shares of Employer Stock held or distributed by the Trustee may be subject to a
put, call or other option, or buy-sell arrangement. The provisions of this
Section shall continue to be applicable to such Stock even if the Plan ceases to
be an employee stock ownership plan under Section 4975(e)(7) of the Code.

        10.9    DIRECT ROLLOVER OF ELIGIBLE DISTRIBUTION. A Participant or
distributee may elect, at the time and in the manner prescribed by the Trustee
or the Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Participant or
distributee in a direct rollover.

                10.9-1  An "eligible rollover" is any distribution that does not
        include: any distribution that is one of a series of substantially equal
        periodic payments (not less frequently than annually) made for the life
        (or life expectancy) of the distributee or the joint lives (or joint
        life expectancies) of the Participant and the Participant's Beneficiary,
        or for a specified period of ten years or more; any distribution to the
        extent such distribution is required under Code Section 401(a)(9); any
        hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the
        Code; and the portion of any distribution that is not included in gross
        income (determined without regard to the exclusion for net unrealized
        appreciation with respect to employer securities). A portion of a
        distribution shall not fail to be an eligible rollover distribution
        merely because the portion consists of after-tax employee contributions
        which are not includible in gross income. However, such portion may be
        transferred only to an individual retirement account or annuity
        described in section 408(a) or (b) of the Code, or to a qualified
        defined contribution plan described in section 401(a) or 403(a) of the
        Code that agrees to separately accounting for the portion of such
        distribution which is includible in gross income and the portion of such
        distribution which is not so includible.

                10.9-2  An "eligible retirement plan" is an individual
        retirement account described in Code Section 408(a), an individual
        retirement annuity described in Code Section 408(b), an annuity plan
        described in Code Section 403(a), or a qualified trust described in Code
        Section 401(a), that accepts the distributee's eligible rollover
        distribution. In the case of distributions after December 31, 2001, an
        eligible retirement plan shall also include an annuity contract
        described in Section 403(b) of the Code and an eligible plan under
        Section 457(b) of the Code which is maintained by a state, or any agency
        or instrumentality of a state or political subdivision of a state and
        which agrees to

                                       26
<PAGE>

        separately account for amounts transferred into such plan from this
        plan. In the case of an eligible rollover distribution to a surviving
        Spouse, an eligible retirement plan is an individual retirement account
        or individual retirement annuity.

                10.9-3  A "direct rollover" is a payment by the Plan to the
        eligible retirement plan specified by the distributee.

                10.9-4  The term "distributee" shall refer to a deceased
        Participant's Spouse or a Participant's former Spouse who is the
        alternate payee under a qualified domestic relations order, as defined
        in Code Section 414(p).

        10.10   WAIVER OF 30-DAY PERIOD AFTER NOTICE OF DISTRIBUTION. If a
distribution is one to which Sections 401(a)(11) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:

                (i)     the Trustee or Committee, as applicable, clearly informs
        the Participant that the Participant has a right to a period of at least
        30 days after receiving the notice to consider the decision of whether
        or not to elect a distribution (and, if applicable, a particular
        option), and

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

SECTION 11.     RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS.

        11.1    CLAIM FOR BENEFITS. Any Participant or Beneficiary who qualifies
for the payment of benefits shall file a claim for his benefits with the
Committee on a form provided by the Committee. The claim, including any election
of an alternative benefit form, shall be filed at least 30 days before the date
on which the benefits are to begin. If a Participant or Beneficiary fails to
file a claim by the day before the date on which benefits become payable, he
shall be presumed to have filed a claim for payment for the Participant's
benefits in the standard form prescribed by Sections 10.1 or 10.2.

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

                (i)     each specific reason for the denial;

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

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

                (iv)    an explanation of the claims review procedures set forth
        in Section 11.3.

                                       27
<PAGE>

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

SECTION 12.     THE COMMITTEE AND ITS FUNCTIONS.

        12.1    AUTHORITY OF COMMITTEE. The Committee shall be the "plan
administrator" within the meaning of ERISA and shall have exclusive
responsibility and authority to control and manage the operation and
administration of the Plan, including the interpretation and application of its
provisions, except to the extent such responsibility and authority are otherwise
specifically (i) allocated to the Bank, the Employers, or the Trustee under the
Plan and Trust Agreement, (ii) delegated in writing to other persons by the
Bank, the Employers, the Committee, or the Trustee, or (iii) allocated to other
parties by operation of law. The Committee shall have exclusive responsibility
regarding decisions concerning the payment of benefits under the Plan. The
Committee shall have no investment responsibility with respect to the Investment
Fund except to the extent, if any, specifically provided in the Trust Agreement.
In the discharge of its duties, the Committee may employ accountants, actuaries,
legal counsel, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation.

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

        12.3    DUTIES OF COMMITTEE. The Committee shall keep whatever records
may be necessary to implement the Plan and shall furnish whatever reports may be
required from time to time by the Bank. The Committee shall furnish to the
Trustee whatever information may be necessary to properly administer the Trust.
The Committee shall see to the filing with the appropriate government agencies
of all reports and returns required of the Plan under ERISA and other laws.

        Further, the Committee shall have exclusive responsibility and authority
with respect to the Plan's holdings of Stock and shall direct the Trustee in all
respects regarding the purchase, retention, sale, exchange, and pledge of Stock
and the creation and satisfaction of Stock Obligations. The Committee shall at
all times act consistently with the Bank's long-term intention that the Plan, as
an employee stock ownership plan, be invested primarily in Stock. Subject to the
direction of the board as to the application of Employer contributions to Stock

                                       28
<PAGE>

Obligations, and subject to the provisions of Sections 6.4 and 10.6 as to
Participants' rights under certain circumstances to have their Accounts invested
in Stock or in assets other than Stock, the Committee shall determine in its
sole discretion the extent to which assets of the Trust shall be used to repay
Stock Obligations, to purchase Stock, or to invest in other assets to be
selected by the Trustee or an investment manager. No provision of the Plan
relating to the allocation or vesting of any interests in the Stock Fund or the
Investment Fund shall restrict the Committee from changing any holdings of the
Trust, whether the changes involve an increase or a decrease in the Stock or
other assets credited to Participants' Accounts. In determining the proper
extent of the Trust's investment in Stock, the Committee shall be authorized to
employ investment counsel, legal counsel, appraisers, and other agents and to
pay their reasonable expenses and compensation.

        12.4    VALUATION OF STOCK. If the valuation of any Stock is not
established by reported trading on a generally recognized public market, the
Committee shall have the exclusive authority and responsibility to determine its
value for all purposes under the Plan, subject to the requirements of Code
Section 401(a)(28)(c). Such value shall be determined as of each Valuation Date,
and on any other date as of which the Plan purchases or sells such Stock. The
Committee shall use generally accepted methods of valuing stock of similar
corporations for purposes of arm's length business and investment transactions,
and in this connection the Committee shall obtain, and shall be protected in
relying upon, the valuation of such Stock as determined by an independent
appraiser experienced in preparing valuations of similar businesses.

        12.5    COMPLIANCE WITH ERISA. The Committee shall perform all acts
necessary to comply with ERISA. Each individual member or employee of the
Committee shall discharge his duties in good faith and in accordance with the
applicable requirements of ERISA.

        12.6    ACTION BY COMMITTEE. All actions of the Committee shall be
governed by the affirmative vote of a number of members which is a majority of
the total number of members currently appointed, including vacancies.

        12.7    EXECUTION OF DOCUMENTS. Any instrument executed by the Committee
shall be signed by any member or employee of the Committee.

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

        12.9    RESPONSIBILITIES TO PARTICIPANTS. The Committee shall determine
which Employees qualify to enter the Plan. The Committee shall furnish to each
eligible Employee whatever summary plan descriptions, summary annual reports,
and other notices and information may be required under ERISA. The Committee
also shall determine when a Participant or his Beneficiary qualifies for the
payment of benefits under the Plan. The Committee shall furnish to each such
Participant or Beneficiary whatever information is required under ERISA (or is
otherwise appropriate) to enable the Participant or Beneficiary to make whatever
elections may be available pursuant to Sections 6 and 10, and the Committee
shall provide for the payment of benefits in the proper form and amount from the
assets of the Trust Fund. The Committee may decide in its sole discretion to
permit modifications of elections and to defer or accelerate benefits to the
extent consistent with applicable law and the best interests of the individuals
concerned.

        12.10   ALTERNATIVE PAYEES IN EVENT OF INCAPACITY. If the Committee
finds at any time that an individual qualifying for benefits under this Plan is
a minor or is incompetent, the

                                       29
<PAGE>

Committee may direct the benefits to be paid, in the case of a minor, to his
parents, his legal guardian, or a custodian for him under the Uniform Gifts to
Minors Act, or, in the case of an incompetent, to his spouse, or his legal
guardian, the payments to be used for the individual's benefit. The Committee
and the Trustee shall not be obligated to inquire as to the actual use of the
funds by the person receiving them under this Section 12.10, and any such
payment shall completely discharge the obligations of the Plan, the Trustee, the
Committee, and the Employers to the extent of the payment.

        12.11   INDEMNIFICATION BY EMPLOYERS. Except as separately agreed in
writing, the Committee, and any member or employee of the Committee, shall be
indemnified and held harmless by the Employer, jointly and severally, to the
fullest extent permitted by ERISA, and subject to and conditioned upon
compliance with 12 C.F.R. Section 545.121, to the extent applicable, against any
and all costs, damages, expenses, and liabilities reasonably incurred by or
imposed upon it or him in connection with any claim made against it or him or in
which it or he may be involved by reason of its or his being, or having been,
the Committee, or a member or employee of the Committee, to the extent such
amounts are not paid by insurance.

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

SECTION 13.     ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.

        13.1    ADOPTION OF PLAN BY OTHER EMPLOYERS. With the consent of the
Bank, any entity may become a participating Employer under the Plan by (i)
taking such action as shall be necessary to adopt the Plan, (ii) becoming a
party to the Trust Agreement establishing the Trust Fund, and (iii) executing
and delivering such instruments and taking such other action as may be necessary
or desirable to put the Plan into effect with respect to the entity's Employees.

        13.2    PLAN ADOPTION SUBJECT TO QUALIFICATION. Notwithstanding any
other provision of the Plan, the adoption of the Plan and the execution of the
Trust Agreement are conditioned upon their being determined initially by the
Internal Revenue Service to meet the qualification requirements of Section
401(a) of the Code, so that the Employers may deduct currently for federal
income tax purposes their contributions to the Trust and so that the
Participants may exclude the contributions from their gross income and recognize
income only when they receive benefits. In the event that this Plan is held by
the Internal Revenue Service not to qualify initially under Section 401(a), the
Plan may be amended retroactively to the earliest date permitted by U.S.
Treasury Regulations in order to secure qualification under Section 401(a). If
this Plan is held by the Internal Revenue Service not to qualify initially under
Section 401(a) either as originally adopted or as amended, each Employer's
contributions to the Trust under this Plan (including any earnings thereon)
shall be returned to it and this Plan shall be terminated. In the event that
this Plan is amended after its initial qualification and the Plan as amended is
held by the Internal Revenue Service not to qualify under Section 401(a), the
amendment may be modified retroactively to the earliest date permitted by U.S.
Treasury Regulations in order to secure approval of the amendment under Section
401(a).

        13.3    RIGHT TO AMEND OR TERMINATE. The Bank intends to continue this
Plan as a permanent program. However, each participating Employer separately
reserves the right to suspend, supersede, or terminate the Plan at any time and
for any reason, as it applies to that Employer's Employees, and the Bank
reserves the right to amend, suspend, supersede, merge,

                                       30
<PAGE>

consolidate, or terminate the Plan at any time and for any reason, as it applies
to the Employees of each Employer. No amendment, suspension, supersession,
merger, consolidation, or termination of the Plan shall (i) reduce any
Participant's or Beneficiary's proportionate interest in the Trust Fund, (ii)
reduce or restrict, either directly or indirectly, the benefit provided any
Participant prior to the amendment, or (iii) divert any portion of the Trust
Fund to purposes other than the exclusive benefit of the Participants and their
Beneficiaries prior to the satisfaction of all liabilities under the Plan.
Moreover, there shall not be any transfer of assets to a successor plan or
merger or consolidation with another plan unless, in the event of the
termination of the successor plan or the surviving plan immediately following
such transfer, merger, or consolidation, each participant or beneficiary would
be entitled to a benefit equal to or greater than the benefit he would have been
entitled to if the plan in which he was previously a participant or beneficiary
had terminated immediately prior to such transfer, merger, or consolidation.
Following a termination of this Plan by the Bank, the Trustee shall continue to
administer the Trust and pay benefits in accordance with the Plan as amended
from time to time and the Committee's instructions.

SECTION 14.     MISCELLANEOUS PROVISIONS.

        14.1    PLAN CREATES NO EMPLOYMENT RIGHTS. Nothing in this Plan shall be
interpreted as giving any Employee the right to be retained as an Employee by an
Employer, or as limiting or affecting the rights of an Employer to control its
Employees or to terminate the Service of any Employee at any time and for any
reason, subject to any applicable employment or collective bargaining
agreements.

        14.2    NONASSIGNABILITY OF BENEFITS. No assignment, pledge, or other
anticipation of benefits from the Plan will be permitted or recognized by the
Employer, the Committee, or the Trustee. Moreover, benefits from the Plan shall
not be subject to attachment, garnishment, or other legal process for debts or
liabilities of any Participant or Beneficiary, to the extent permitted by law.
This prohibition on assignment or alienation shall apply to any judgment,
decree, or order (including approval of a property settlement agreement) which
relates to the provision of child support, alimony, or property rights to a
present or former spouse, child or other dependent of a Participant pursuant to
a state domestic relations or community property law, unless the judgment,
decree, or order is determined by the Committee to be a qualified domestic
relations order within the meaning of Section 414(p) of the Code, as more fully
set forth in Section 14.12 hereof.

        14.3    LIMIT OF EMPLOYER LIABILITY. The liability of the Employer with
respect to Participants under this Plan shall be limited to making contributions
to the Trust from time to time, in accordance with Section 4.

        14.4    TREATMENT OF EXPENSES. All expenses incurred by the Committee
and the Trustee in connection with administering this Plan and Trust Fund shall
be paid by the Trustee from the Trust Fund to the extent the expenses have not
been paid or assumed by the Employer or by the Trustee.

        14.5    NUMBER AND GENDER. Any use of the singular shall be interpreted
to include the plural, and the plural the singular. Any use of the masculine,
feminine, or neuter shall be interpreted to include the masculine, feminine, or
neuter, as the context shall require.

        14.6    NONDIVERSION OF ASSETS. Except as provided in Sections 5.2 and
14.12, under no circumstances shall any portion of the Trust Fund be diverted to
or used for any purpose other

                                       31
<PAGE>

than the exclusive benefit of the Participants and their Beneficiaries prior to
the satisfaction of all liabilities under the Plan.

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

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

        14.9    GOVERNING STATE LAW. This Plan shall be interpreted in
accordance with the laws of the State of New Hampshire to the extent those laws
are applicable under the provisions of ERISA.

        14.10   EMPLOYER CONTRIBUTIONS CONDITIONED ON DEDUCTIBILITY. Employer
Contributions to the Plan are conditioned on deductibility under Code Section
404. In the event that the Internal Revenue Service shall determine that all or
any portion of an Employer Contribution is not deductible under that Section,
the nondeductible portion shall be returned to the Employer within one year of
the disallowance of the deduction.

        14.11   UNCLAIMED ACCOUNTS. Neither the Employer nor the Trustees shall
be under any obligation to search for, or ascertain the whereabouts of, any
Participant or Beneficiary. The Employer or the Trustees, by certified or
registered mail addressed to his last known address of record with the Employer,
shall notify any Participant or Beneficiary that he is entitled to a
distribution under this Plan, and the notice shall quote the provisions of this
Section. If the Participant or Beneficiary fails to claim his benefits or make
his whereabouts known in writing to the Employer or the Trustees within seven
(7) calendar years after the date of notification, the benefits of the
Participant or Beneficiary under the Plan will be disposed of as follows:

                (a)     If the whereabouts of the Participant is unknown but the
        whereabouts of the Participant's Beneficiary is known to the Trustees,
        distribution will be made to the Beneficiary.

                (b)     If the whereabouts of the Participant and his
        Beneficiary are unknown to the Trustees, the Plan will forfeit the
        benefit, provided that the benefit is subject to a claim for
        reinstatement if the Participant or Beneficiary make a claim for the
        forfeited benefit.

        Any payment made pursuant to the power herein conferred upon the
Trustees shall operate as a complete discharge of all obligations of the
Trustees, to the extent of the distributions so made.

        14.12   QUALIFIED DOMESTIC RELATIONS ORDER. Section 14.2 shall not apply
to a "qualified domestic relations order" defined in Code Section 414(p), and
such other domestic relations orders permitted to be so treated under the
provisions of the Retirement Equity Act of 1984. Further, to the extent provided
under a "qualified domestic relations order," a former Spouse of a Participant
shall be treated as the Spouse or surviving Spouse for all purposes under the
Plan.

        In the case of any domestic relations order received by the Plan:

                                       32
<PAGE>

                (a)     The Employer or the Committee shall promptly notify the
        Participant and any other alternate payee of the receipt of such order
        and the Plan's procedures for determining the qualified status of
        domestic relations orders, and

                (b)     Within a reasonable period after receipt of such order,
        the Employer or the Committee shall determine whether such order is a
        qualified domestic relations order and notify the Participant and each
        alternate payee of such determination. The Employer or the Committee
        shall establish reasonable procedures to determine the qualified status
        of domestic relations orders and to administer distributions under such
        qualified orders.

        During any period in which the issue of whether a domestic relations
order is a qualified domestic relations order is being determined (by the
Employer or Committee, by a court of competent jurisdiction, or otherwise), the
Employer or the Committee shall segregate in a separate account in the Plan or
in an escrow account the amounts which would have been payable to the alternate
payee during such period if the order had been determined to be a qualified
domestic relations order. If within eighteen (18) months the order (or
modification thereof) is determined to be a qualified domestic relations order,
the Employer or the Committee shall pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. If within eighteen
(18) months it is determined that the order is not a qualified domestic
relations order, or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Employer or the Committee shall pay
the segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a qualified domestic relations order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only. The term "alternate payee" means any Spouse, former Spouse,
child or other dependent of a Participant who is recognized by a domestic
relations order as having a right to receive all, or a portion of, the benefit
payable under a Plan with respect to such Participant.

SECTION 15.     TOP-HEAVY PROVISIONS.

        15.1    TOP-HEAVY PLAN. This Plan is top-heavy if any of the following
conditions exist:

                (a)     If the top-heavy ratio for this Plan exceeds sixty
        percent (60%) and this Plan is not part of any required aggregation
        group or permissive aggregation group;

                (b)     If this Plan is a part of a required aggregation group
        (but is not part of a permissive aggregation group) and the aggregate
        top-heavy ratio for the group of Plans exceeds sixty percent (60%); or

                (c)     If this Plan is a part of a required aggregation group
        and part of a permissive aggregation group and the aggregate top-heavy
        ratio for the permissive aggregation group exceeds sixty percent (60%).

        15.2    SUPER TOP-HEAVY PLAN This Plan will be a super top-heavy Plan if
any of the following conditions exist:

                (a)     If the top-heavy ratio for this Plan exceeds ninety
        percent (90%) and this Plan is not part of any required aggregation
        group or permissive aggregation group.

                                       33
<PAGE>

                (b)     If this Plan is a part of a required aggregation group
        (but is not part of a permissive aggregation group) and the aggregate
        top-heavy ratio for the group of Plans exceeds ninety percent (90%), or

                (c)     If this Plan is a part of a required aggregation group
        and part of a permissive aggregation group and the aggregate top-heavy
        ratio for the permissive aggregation group exceeds ninety percent (90%).

        15.3    DEFINITIONS.

In making this determination, the Committee shall use the following definitions
and principles:

                15.3-1  The "Determination Date", with respect to the first Plan
        Year of any plan, means the last day of that Plan Year, and with respect
        to each subsequent Plan Year, means the last day of the preceding Plan
        Year. If any other plan has a Determination Date which differs from this
        Plan's Determination Date, the top-heaviness of this Plan shall be
        determined on the basis of the other plan's Determination Date falling
        within the same calendar years as this Plan's Determination Date.

                15.3-2  A "Key Employee" means any employee or former employee
        (including any deceased employee) who at any time during the plan year
        that includes the determination date was an officer of the employer
        having annual compensation greater than $130,000 (as adjusted under
        section 416(i)(1) of the Code) for plan years beginning after December
        31, 2002, a 5-percent owner of the employer, or a 1-percent owner of the
        employer having annual compensation of more than $150,000. For this
        purpose, annual compensation means compensation within the meaning of
        section 415(c)(3) of the Code. The determination of who is a key
        employee will be made in accordance with section 416(i)(1) of the Code
        and the applicable regulations and other guidance of general
        applicability issued thereunder.

                15.3-3  A "Non-key Employee" means an Employee who at any time
        during the five years ending on the top-heavy Determination Date for the
        Plan Year has received compensation from an Employer and who has never
        been a Key Employee, and the Beneficiary of any such Employee.

                15.3-4  A "required aggregation group" includes (a) each
        qualified Plan of the Employer in which at least one Key Employee
        participates in the Plan Year containing the Determination Date and (b)
        any other qualified Plan of the Employer which enables a Plan described
        in (a) to meet the requirements of Code Sections 401(a)(4) or 410. For
        purposes of the preceding sentence, a qualified Plan of the Employer
        includes a terminated Plan maintained by the Employer within the period
        ending on the Determination Date. In the case of a required aggregation
        group, each Plan in the group will be considered a top-heavy Plan if the
        required aggregation group is a top-heavy group. No Plan in the required
        aggregation group will be considered a top-heavy Plan if the required
        aggregation group is not a top-heavy group. All Employers aggregated
        under Code Sections 414(b), (c) or (m) or (o) (but only after the Code
        Section 414(o) regulations become effective) are considered a single
        Employer.

                  15.3-5 A "permissive aggregation group" includes the required
         aggregation group of Plans plus any other qualified Plan(s) of the
         Employer that are not required to be aggregated but which, when
         considered as a group with the required aggregation group,

                                       34
<PAGE>

        satisfy the requirements of Code Sections 401(a)(4) and 410 and are
        comparable to the Plans in the required aggregation group. No Plan in
        the permissive aggregation group will be considered a top-heavy Plan if
        the permissive aggregation group is not a top-heavy group. Only a Plan
        that is part of the required aggregation group will be considered a
        top-heavy Plan if the permissive aggregation group is top-heavy.

        15.4    TOP-HEAVY RULES OF APPLICATION.

                For purposes of determining the value of Account balances and
the present value of accrued benefits the following provisions shall apply:

                15.4-1  The value of Account balances and the present value of
        accrued benefits will be determined as of the most recent Valuation Date
        that falls within or ends with the twelve (12) month period ending on
        the Determination Date.

                15.4-2  For purposes of testing whether this Plan is top-heavy,
        the present value of an individual's accrued benefits and an
        individual's Account balances is counted only once each year.

                15.4-3  The Account balances and accrued benefits of a
        Participant who is not presently a Key Employee but who was a Key
        Employee in a Plan Year beginning on or after January 1, 1984 will be
        disregarded.

                15.4-4  Employer contributions attributable to a salary
        reduction or similar arrangement will be taken into account. Employer
        matching contributions also shall be taken into account for purposes of
        satisfying the minimum contribution requirements of Section 416(c)(2) of
        the Code and the Plan.

                15.4-5  When aggregating Plans, the value of Account balances
        and accrued benefits will be calculated with reference to the
        Determination Dates that fall within the same calendar year.

                15.4-6  The present values of accrued benefits and the amounts
        of account balances of an employee as of the determination date shall be
        increased by the distributions made with respect to the employee under
        the plan and any plan aggregated with the plan under Section 416(g)(2)
        of the Code during the 1-year period ending on the determination date.
        The preceding sentence shall also apply to distributions under a
        terminated plan which, had it not been terminated, would have been
        aggregated with the plan under Section 416(g)(2)(A)(i) of the Code. In
        the case of a distribution made for a reason other than separation from
        service, death, or disability, this provision shall be applied by
        substituting "five (5) year period" for "one (1) year period."

                15.4-7  Accrued benefits and Account balances of an individual
        shall not be taken into account for purposes of determining the
        top-heavy ratios if the individual has performed no services for the
        Employer during the one (1) year period ending on the applicable
        Determination Date. Compensation for purposes of this subparagraph shall
        not include any payments made to an individual by the Employer pursuant
        to a qualified or non-qualified deferred compensation plan.

                15.4-8  The present value of the accrued benefits or the amount
        of the Account balances of any Employee participating in this Plan shall
        not include any rollover

                                       35
<PAGE>

        contributions or other transfers voluntarily initiated by the Employee
        except as described below. If this Plan transfers or rolls over funds to
        another Plan in a transaction voluntarily initiated by the Employee,
        then this Plan shall count the distribution for purposes of determining
        Account balances or the present value of accrued benefits. A transfer
        incident to a merger or consolidation of two or more Plans of the
        Employer (including Plans of related Employers treated as a single
        Employer under Code Section 414), or a transfer or rollover between
        Plans of the Employer, shall not be considered as voluntarily initiated
        by the Employee.

        15.5    MINIMUM CONTRIBUTIONS. For any Top-Heavy Year, each Employer
shall make a special contribution on behalf of each Participant to the extent
that the total allocations to his Account pursuant to Section 4 is less than the
lesser of:

                (i)     three percent of his 415 Compensation for that year, or

                (ii)    the highest ratio of such allocation to 415 Compensation
        received by any Key Employee for that year. For purposes of the special
        contribution of this Section 15.2, a Key Employee's 415 Compensation
        shall include amounts the Key Employee elected to defer under a
        qualified 401(k) arrangement. Such a special contribution shall be made
        on behalf of each Participant who is employed by an Employer on the last
        day of the Plan Year, regardless of the number of his Hours of Service,
        and shall be allocated to his Account.

        If the Employer maintains a qualified plan in addition to this Plan and
more than one such plan is determined to be Top-Heavy, a minimum contribution or
a minimum benefit shall be provided in one of such other plans, including a plan
that consists solely of a cash or deferred arrangement which meets the
requirements of Section 401(k)(12) of the Code and matching contributions with
respect to which the requirements of Section 401(m)(11) of the Code are met. If
the Employer has both a Top-Heavy defined benefit plan and a Top-Heavy defined
contribution plan and a minimum contribution is to be provided only in the
defined contribution plan, then the sum of the Employer contributions and
forfeitures allocated to the Account of each Non-key Employee shall be equal to
at least five percent (5%) of such Non-key Employee's 415 Compensation for that
year.

        15.6    MINIMUM VESTING. For any Plan Year in which this Plan is
Top-Heavy, a Participant's vested interest in his Account shall be based on the
following "top-heavy table":

           Vesting Years                    Percentage of Interest Vested
           -------------                    -----------------------------
           Fewer than 2                                   0%
                 2                                       20%
                 3                                       40%
                 4                                       60%
                 5                                       80%
             6 or more                                  100%

        15.7    TOP-HEAVY PROVISIONS CONTROL IN TOP-HEAVY PLAN. In the event
this Plan becomes top-heavy and a conflict arises between the top-heavy
provisions herein set forth and the remaining provisions set forth in this Plan,
the top-heavy provisions shall control.

                                       36

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