Document:

<PAGE>
                                                                 EXHIBIT 10.17.7

                    FOURTH AMENDMENT AGREEMENT - AMENDED AND
                      RESTATED LOAN AND SECURITY AGREEMENT

         This FOURTH AMENDMENT AGREEMENT (this "FOURTH AMENDMENT") is made as
of this 28 day of January, 2004 by and among

                  FLEET RETAIL FINANCE INC. (the "LENDER"), a Delaware
         corporation with offices at 40 Broad Street, Boston, Massachusetts
         02109,

                  and

                  BAKERS FOOTWEAR GROUP, INC., f/k/a Weiss and Neuman Shoe Co.
         (the "BORROWER"), a Missouri corporation with its principal executive
         offices at 2815 Scott Avenue, Suite C, St. Louis, Missouri 63103,

in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,

                                  WITNESSETH:

         A.       Reference is made to that certain Amended and Restated Loan
                  and Security Agreement (as amended to date, the "LOAN
                  AGREEMENT") dated as of June 11, 2002 between the Borrower and
                  the Lender.

         B.       The Borrower has filed a registration statement on Form S-1
                  (No. 333-86322, as amended from time to time, the "EXISTING
                  REGISTRATION STATEMENT") with the Securities and Exchange
                  Commission under the Securities Act, which Existing
                  Registration Statement has not yet been declared effective by
                  the SEC. The Borrower anticipates that the Existing
                  Registration Statement will be declared effective and the IPO
                  will be consummated on or before February 29, 2004.

         C.       The Borrower has requested that the Lender agree to amend the
                  Loan Agreement in certain respects in anticipation of the IPO
                  and the Lender has agreed to do so on the terms and conditions
                  set forth herein.

         Accordingly, the Borrower and the Lender agree as follows:

         1. DEFINITIONS. Terms defined in the Recitals shall be incorporated
herein as therein defined. Capitalized terms and used herein and not otherwise
defined herein shall have meanings assigned to such terms in the Loan Agreement.

         2. AMENDMENT TO LOAN AGREEMENT. Clause B of the definition "Change in
Control" shall be deleted from Article I of the Loan Agreement and the
following shall be substituted therefor:

                  "B. On and after the occurrence of the IPO:

                  (i) The purchase or other acquisition by any Person or group
                  of Persons (within the meaning of Rule 13d-3 or Rule 14d of
                  the Securities Exchange Act of 1934, as amended) (excluding,
                  for this purpose, the Borrower or its subsidiaries or

                                       1
<PAGE>
            any employee benefit plan of the Borrower or its subsidiaries) of
            beneficial ownership (within the meaning of Rule 13d-3 of the
            Securities Exchange act of 1934, as amended) of thirty percent (30%)
            or more of either the then-outstanding shares of the Borrower's
            common stock or the combined voting power of the Borrower's
            then-outstanding voting securities entitled to vote generally in the
            election of directors; or

                  (ii) A reorganization, merger, consolidation, sale of all or
            substantially all of the assets of the Borrower, or similar
            transaction, in each case with respect to which Persons who were the
            stockholders of the Borrower immediately prior to such
            reorganization, merger or consolidation would not immediately
            thereafter own more than 50% of, respectively, the Borrower's common
            stock and the combined voting power entitled to vote generally in
            the election of directors of the reorganized, merged, consolidated
            or successor corporation's then-outstanding voting securities; or

                  (iii) During any period of two (2) consecutive years,
            individuals who at the beginning of such period constituted the
            board of directors of the Borrower (together with any directors
            whose election or appointment by the board of directors of the
            Borrower or whose nomination for election by the shareholders of the
            Borrower was approved by vote of a majority of the directors then
            still in office who are either directors at the beginning of such
            period or whose election or nomination for election was previously
            so approved) cease for any reason to constitute a majority of the
            board of directors of the Borrower then in office."

         3. ADDITIONAL ACKNOWLEDGEMENTS AND REPRESENTATIONS. As an inducement
for the Lender to execute this Fourth Amendment, the Borrower hereby represents
and warrants that as of the date hereof no Suspension Event has occurred and is
continuing.

         4. RATIFICATION OF LOAN DOCUMENTS; NO CLAIMS AGAINST LENDER. Except as
provided herein, all terms and conditions of the Loan Agreement and of the
other Loan Documents remain in full force and effect. Each of the Borrower and
the Guarantor hereby ratifies, confirms, and re-affirms all and singular the
terms and conditions, including execution and delivery, of the Loan Documents.
There is no basis nor set of facts on which any amount (or any portion thereof)
owed by the Borrower or the Guarantor to the Lender could be reduced, offset,
waived, or forgiven, by rescission or otherwise; nor is there any claim,
counterclaim, off set, or defense (or other right, remedy, or basis having a
similar effect) available to the Borrower or to the Guarantor with regard to
the respective Liabilities of the Borrower and the Guarantor to the Lender; nor
is there any basis on which the terms and conditions of any of the respective
Liabilities of the Borrower and of the Guarantor to the Lender could be claimed
to be other than as stated on the written instruments which evidence such
Liabilities. To the extent that the Borrower or the Guarantor has (or ever had)
any such claims against the Lender, each hereby affirmatively WAIVES and
RELEASES same.

         5. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall not be
effective until each of the following conditions precedent have been fulfilled
to the satisfaction of the Lender:

            (a) This Fourth Amendment shall have been duly executed and
         delivered by the respective parties hereto, shall be in full force and
         effect and shall be in form and substance satisfactory to the Lender;

            (b) All action on the part of the Borrower necessary for the valid
         execution, delivery and performance by the Borrower of this Fourth
         Amendment shall have been duly and effectively taken and evidence
         thereof satisfactory to the Lender shall have been provided to the
         Lender;

                                     ..2..
<PAGE>
         (c) The Borrower shall have paid to the Lender all fees and expenses
then due and owing pursuant to the Loan Agreement; and

         (d) The Borrower shall have provided such additional instruments and
documents to the Lender as the Lender and Lender's counsel may have reasonably
requested, each in form and substance satisfactory to the Lender.

6. MISCELLANEOUS

         (a) This Fourth Amendment may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument.

         (b) This Fourth Amendment expresses the entire understanding of the
parties with respect to the transactions contemplated hereby. No prior
negotiations or discussions shall limit, modify, or otherwise affect the
provisions hereof.

         (c) Any determination that any provisions of this Fourth Amendment or
any application hereof is invalid, illegal, or unenforceable in any respect and
in any instance shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity, legality, or
enforceability of any other provisions of this Fourth Amendment.

         (d) The Borrower shall pay on demand all reasonable costs and expenses
of the Lender, including, without limitation, reasonable attorneys' fees in
connection with the preparation, negotiation, execution, and delivery of this
Fourth Amendment.

         (e) THIS FOURTH AMENDMENT SHALL BE CONSTRUED, GOVERNED, AND ENFORCED
PURSUANT TO THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL
TAKE EFFECT AS SEALED INSTRUMENT.

                        [SPACE INTENTIONALLY LEFT BLANK]

                                     ..3..
<PAGE>
         IN WITNESS WHEREOF, the parties have hereunto caused this Fourth
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.

                                        BAKERS FOOTWEAR GROUP, INC.,
                                        F/K/A/ WEISS AND NEUMAN SHOE CO.

                                        By /s/ PETER EDISON
                                          -----------------------
                                        Name Peter Edison
                                            ---------------------
                                        Title Chairman/CEO
                                             --------------------

                                        FLEET RETAIL FINANCE INC.

                                        By /s/ JAMES J. WARD
                                          -----------------------
                                        Name James J. Ward
                                            ---------------------
                                        Title Managing Director
                                             --------------------

                                      /S-1/

<PAGE>
         The undersigned Guarantor hereby (i) consents to the terms and
conditions of this Fourth Amendment and hereby joins in the acknowledgements and
agreements set forth in this Fourth Amendment, all as of the date first above
written, (ii) ratifies and confirms the warranties and representations set forth
in the Guaranty, and acknowledges that pursuant to the terms of the Guaranty,
the Guarantor previously guaranteed the payment of the Liabilities of the
Borrower to the Lender to the extent set forth in such Guaranty, that this
acknowledgment is being executed as a confirmation of the Guarantor's
obligations to Lender under the Guaranty and that, subject to the limitations
contained in the Guaranty, the Guarantor shall remain liable for all of the
Liabilities, now existing or hereafter arising, whether or not any similar
confirmation letter is executed in the future and (iii) acknowledges and agrees
that he has no offsets, defenses, or counterclaims against the Lender with
respect to his obligations under the Guaranty or otherwise, and to the extent
that the Guarantor has any such offsets, defenses, or counterclaims, the
Guarantor hereby WAIVES and RELEASES the same.

                                                /s/ Peter Edison
                                                ----------------------
                                                PETER EDISONexv4w4

 

Exhibit 4.4

Piper Jaffray Companies

Retirement Plan

(Effective January 1, 2003)

 

 

PIPER JAFFRAY COMPANIES

RETIREMENT PLAN

(Effective January 1, 2003)

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	SECTION 1 INTRODUCTION	 	 	1	 
	 	1.1.	 	 	Plan Name
	 	 	1	 
	 	1.2.	 	 	IRS Qualification
	 	 	1	 
	 	1.3.	 	 	Plan Documents
	 	 	1	 
	 	1.4.	 	 	No Effect on Former Employees
	 	 	1	 
	 	1.5.	 	 	No Reduction of Protected Benefits
	 	 	1	 
	SECTION 2 DEFINITIONS	 	 	3	 
	 	2.1.	 	 	Definitions
	 	 	3	 
	 	 	 	 	2.1.1. 401(k) Enrollment Agreement
	 	 	3	 
	 	 	 	 	2.1.2. Accounts
	 	 	3	 
	 	 	 	 	2.1.3. Affiliate
	 	 	3	 
	 	 	 	 	2.1.4. Alternate Payee
	 	 	4	 
	 	 	 	 	2.1.5. Annual Valuation Date
	 	 	4	 
	 	 	 	 	2.1.6. Beneficiary or Beneficiaries
	 	 	4	 
	 	 	 	 	2.1.7. Benefits Administration Committee
	 	 	4	 
	 	 	 	 	2.1.8. Code
	 	 	4	 
	 	 	 	 	2.1.9. Company
	 	 	4	 
	 	 	 	 	2.1.10. Company Stock
	 	 	4	 
	 	 	 	 	2.1.11. Company Stock Fund
	 	 	4	 
	 	 	 	 	2.1.12. Disability
	 	 	4	 
	 	 	 	 	2.1.13. Effective Date
	 	 	5	 
	 	 	 	 	2.1.14. Employer
	 	 	5	 
	 	 	 	 	2.1.15. ERISA
	 	 	5	 
	 	 	 	 	2.1.16. ESOP Portion
	 	 	5	 
	 	 	 	 	2.1.17. Event of Maturity
	 	 	5	 
	 	 	 	 	2.1.18. Highly Compensated Employee
	 	 	5	 
	 	 	 	 	2.1.19. Investment Subfund
	 	 	5	 
	 	 	 	 	2.1.20. Leased Employee
	 	 	5	 
	 	 	 	 	2.1.21. Normal Retirement Age
	 	 	5	 
	 	 	 	 	2.1.22. Participant
	 	 	6	 
	 	 	 	 	2.1.23. Plan
	 	 	6	 
	 	 	 	 	2.1.24. Plan Year
	 	 	6	 
	 	 	 	 	2.1.25. Profit Sharing Portion
	 	 	6	 
	 	 	 	 	2.1.26. Recognized Compensation
	 	 	6	 
	 	 	 	 	2.1.27. Recognized Employment
	 	 	8	 
	 	 	 	 	2.1.28. Retirement Investment Committee
	 	 	9	 
	 	 	 	 	2.1.29. Spin-off Date
	 	 	9	 
	 	 	 	 	2.1.30. Trust Agreement
	 	 	9	 
	 	 	 	 	2.1.31. Trustee
	 	 	9	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	2.1.32. Trust Fund
	 	 	9	 
	 	 	 	 	2.1.33. Valuation Date
	 	 	9	 
	 	 	 	 	2.1.34. Vested
	 	 	9	 
	SECTION 3 SERVICE	 	 	10	 
	 	3.1.	 	 	Service Definitions
	 	 	10	 
	 	 	 	 	3.1.1. Eligibility Service
	 	 	10	 
	 	 	 	 	3.1.2. Hours of Service
	 	 	10	 
	 	 	 	 	3.1.3. One-Year Break in Service
	 	 	13	 
	 	 	 	 	3.1.4. Vesting Service
	 	 	13	 
	SECTION 4 ELIGIBILITY AND PARTICIPATION	 	 	14	 
	 	4.1.	 	 	Initial Eligibility Rules
	 	 	14	 
	 	 	 	 	4.1.1. Eligibility for 401(k) and Catch-up Contributions
	 	 	14	 
	 	 	 	 	4.1.2. Eligibility for Matching Contributions
	 	 	14	 
	 	 	 	 	4.1.3. Eligibility for Discretionary Profit Sharing Contributions
	 	 	15	 
	 	 	 	 	4.1.4. Eligibility for Rollover Contributions
	 	 	15	 
	 	4.2.	 	 	Special Rule for Former Participants
	 	 	16	 
	 	4.3.	 	 	Effect on Employment
	 	 	16	 
	SECTION 5 CONTRIBUTIONS AND ALLOCATION THEREOF	 	 	17	 
	 	5.1.	 	 	Employer Contributions
	 	 	17	 
	 	 	 	 	5.1.1. Source of Employer Contributions
	 	 	17	 
	 	 	 	 	5.1.2. Limitation
	 	 	17	 
	 	 	 	 	5.1.3. Form of Payment
	 	 	17	 
	 	5.2.	 	 	401(k) Contributions
	 	 	17	 
	 	 	 	 	5.2.1. Enrollment for 401(k) Contributions
	 	 	17	 
	 	 	 	 	5.2.2. 401(k) Enrollment Agreements
	 	 	17	 
	 	 	 	 	5.2.3. Modification of 401(k) Enrollment Agreements
	 	 	17	 
	 	 	 	 	5.2.4. Deposit in Trust Fund
	 	 	18	 
	 	 	 	 	5.2.5. Allocation
	 	 	18	 
	 	 	 	 	5.2.6. Section 401(k) Compliance
	 	 	18	 
	 	 	 	 	5.2.7. Effective on Spin-off Date
	 	 	18	 
	 	5.3.	 	 	Catch-up Contributions
	 	 	18	 
	 	 	 	 	5.3.1. Enrollment
	 	 	18	 
	 	 	 	 	5.3.2. Deposit in Trust Fund
	 	 	19	 
	 	 	 	 	5.3.3. Allocation
	 	 	19	 
	 	 	 	 	5.3.4. Limitations and Testing
	 	 	19	 
	 	 	 	 	5.3.5. Re-characterization of Catch-up Contributions as 401(k) Contributions
	 	 	19	 
	 	 	 	 	5.3.6. Re-characterization of 401(k) Contributions as Catch-up Contributions
	 	 	19	 
	 	 	 	 	5.3.7. Effective on Spin-off Date
	 	 	20	 
	 	5.4.	 	 	Matching Contributions
	 	 	20	 
	 	 	 	 	5.4.1. Amount
	 	 	20	 
	 	 	 	 	5.4.2. Eligible Participants
	 	 	20	 
	 	 	 	 	5.4.3. Transfers
	 	 	20	 
	 	 	 	 	5.4.4. Deposit in Trust Fund
	 	 	20	 
	 	 	 	 	5.4.5. Allocation
	 	 	20	 
	 	 	 	 	5.4.6. Section 401(m) Compliance
	 	 	21	 
	 	 	 	 	5.4.7. Effective on Spin-off Date
	 	 	21	 
	 	5.5.	 	 	Discretionary Profit Sharing Contributions
	 	 	21	 
	 	 	 	 	5.5.1. General
	 	 	21	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	5.5.2. Pro-Rata Contributions
	 	 	21	 
	 	 	 	 	5.5.3. Integrated Contributions
	 	 	21	 
	 	 	 	 	5.5.4. Eligible Participants
	 	 	21	 
	 	 	 	 	5.5.5. Transfers
	 	 	21	 
	 	 	 	 	5.5.6. Deposit in Trust Fund
	 	 	22	 
	 	 	 	 	5.5.7. Allocation
	 	 	22	 
	 	5.6.	 	 	Rollover Contributions
	 	 	22	 
	 	 	 	 	5.6.1. Eligible Contributions
	 	 	22	 
	 	 	 	 	5.6.2. Specific Review
	 	 	22	 
	 	 	 	 	5.6.3. Allocation
	 	 	23	 
	 	 	 	 	5.6.4. Effective on Spin-off Date
	 	 	23	 
	 	5.7.	 	 	Adjustments
	 	 	23	 
	 	 	 	 	5.7.1. Make-Up Contributions for Omitted Participants
	 	 	23	 
	 	 	 	 	5.7.2. Mistaken Contributions
	 	 	23	 
	 	5.8.	 	 	Limitation on Allocations
	 	 	23	 
	 	5.9.	 	 	Effect of Disallowance of Deduction or Mistake of Fact
	 	 	23	 
	 	5.10.	 	 	Vesting in Profit Sharing Accounts
	 	 	24	 
	 	 	 	 	5.10.1. Five-Year Vesting
	 	 	24	 
	 	 	 	 	5.10.2. Other Vesting
	 	 	24	 
	 	5.11.	 	 	Vesting in Other Accounts
	 	 	24	 
	SECTION 6 INVESTMENT AND ADJUSTMENT OF ACCOUNTS	 	 	25	 
	 	6.1.	 	 	Profit Sharing Portion
	 	 	25	 
	 	 	 	 	6.1.1. Establishing Investment Subfunds
	 	 	25	 
	 	 	 	 	6.1.2. Operational Rules
	 	 	25	 
	 	 	 	 	6.1.3. Revising Investment Subfunds
	 	 	25	 
	 	6.2.	 	 	ESOP Portion
	 	 	25	 
	 	 	 	 	6.2.1. Company Stock Fund
	 	 	25	 
	 	 	 	 	6.2.2. Investment of ESOP Portion
	 	 	25	 
	 	 	 	 	6.2.3. Diversification
	 	 	25	 
	 	 	 	 	6.2.4. Dividends on Company Stock
	 	 	25	 
	 	 	 	 	6.2.5. Voting of Company Stock
	 	 	26	 
	 	 	 	 	6.2.6. Tender Offer for Company Stock
	 	 	27	 
	 	 	 	 	6.2.7. Put Option
	 	 	28	 
	 	 	 	 	6.2.8. Valuation of Employer Securities
	 	 	29	 
	 	6.3.	 	 	ERISA § 404(c) Compliance
	 	 	29	 
	 	6.4.	 	 	Valuation and Adjustment of Accounts
	 	 	29	 
	 	 	 	 	6.4.1. Daily Adjustments
	 	 	29	 
	 	 	 	 	6.4.2. Processing Transactions Involving Accounts
	 	 	30	 
	 	6.5.	 	 	Benefit Statements
	 	 	30	 
	SECTION 7 MATURITY	 	 	31	 
	 	7.1.	 	 	Events of Maturity
	 	 	31	 
	 	7.2.	 	 	Forfeiture of Profit Sharing Accounts
	 	 	31	 
	 	 	 	 	7.2.1. Reemployment in Same Plan Year
	 	 	31	 
	 	 	 	 	7.2.2. Allocation of Forfeitures
	 	 	31	 
	 	 	 	 	7.2.3. Reemployment in Subsequent Plan Year
	 	 	31	 
	 	 	 	 	7.2.4. Funding of Reinstated Account
	 	 	32	 
	SECTION 8 DISTRIBUTION	 	 	33	 
	 	8.1.	 	 	Distributions to Participants upon Event of Maturity
	 	 	33	 

iii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	8.1.1. Application Required
	 	 	33	 
	 	 	 	 	8.1.2. Spousal Consent Not Required
	 	 	33	 
	 	 	 	 	8.1.3. Form of Distribution
	 	 	33	 
	 	 	 	 	8.1.4. Time of Distribution
	 	 	33	 
	 	 	 	 	8.1.5. Required Beginning Date
	 	 	34	 
	 	 	 	 	8.1.6. Death Prior to Distribution
	 	 	34	 
	 	8.2.	 	 	Distributions to Participants During Employment
	 	 	34	 
	 	 	 	 	8.2.1. Distributions from Rollover Accounts
	 	 	34	 
	 	 	 	 	8.2.2.
Age 59-1⁄2 Distributions
	 	 	34	 
	 	 	 	 	8.2.3. Hardship Distributions
	 	 	35	 
	 	8.3.	 	 	Distribution to Beneficiary
	 	 	37	 
	 	 	 	 	8.3.1. Separate Account for Each Beneficiary
	 	 	37	 
	 	 	 	 	8.3.2. Application for Distribution Required
	 	 	37	 
	 	 	 	 	8.3.3. Form of Distribution
	 	 	37	 
	 	 	 	 	8.3.4. Time of Distribution
	 	 	37	 
	 	8.4.	 	 	Designation of Beneficiaries
	 	 	39	 
	 	 	 	 	8.4.1. Right to Designate
	 	 	39	 
	 	 	 	 	8.4.2. Spousal Consent
	 	 	39	 
	 	 	 	 	8.4.3. Failure of Designation
	 	 	39	 
	 	 	 	 	8.4.4. Disclaimers by Beneficiaries
	 	 	40	 
	 	 	 	 	8.4.5. Definitions
	 	 	40	 
	 	 	 	 	8.4.6. Special Rules
	 	 	41	 
	 	8.5.	 	 	General Distribution Rules
	 	 	41	 
	 	 	 	 	8.5.1. Notices
	 	 	41	 
	 	 	 	 	8.5.2. Direct Rollover
	 	 	42	 
	 	 	 	 	8.5.3. Minimum Installment Requirements
	 	 	43	 
	 	 	 	 	8.5.4. Compliance with Code § 401(a)(9)
	 	 	44	 
	 	 	 	 	8.5.5. Distribution in Cash or in Kind
	 	 	44	 
	 	 	 	 	8.5.6. Facility of Payment
	 	 	45	 
	 	 	 	 	8.5.7. U.S. Money
	 	 	45	 
	 	 	 	 	8.5.8. Missing Participants or Beneficiaries
	 	 	45	 
	 	8.6.	 	 	Loans
	 	 	45	 
	 	 	 	 	8.6.1. Availability
	 	 	45	 
	 	 	 	 	8.6.2. Spousal Consent Not Required
	 	 	45	 
	 	 	 	 	8.6.3. Administration
	 	 	46	 
	 	 	 	 	8.6.4. Loan Terms
	 	 	46	 
	 	 	 	 	8.6.5. Collateral
	 	 	46	 
	 	 	 	 	8.6.6. Loan Rules
	 	 	47	 
	 	 	 	 	8.6.7. Tax Reporting
	 	 	49	 
	 	 	 	 	8.6.8. Truth in Lending
	 	 	49	 
	 	 	 	 	8.6.9. Effect of Participant in Bankruptcy
	 	 	49	 
	 	 	 	 	8.6.10. ERISA Compliance — Loans Available to Parties in Interest
	 	 	49	 
	 	 	 	 	8.6.11. Loan Rollovers
	 	 	49	 
	SECTION 9 SPENDTHRIFT PROVISIONS	 	 	51	 
	SECTION 10 AMENDMENT AND TERMINATION	 	 	52	 
	 	10.1.	 	 	Amendment
	 	 	52	 
	 	10.2.	 	 	Discontinuance of Contributions and Termination of Plan
	 	 	52	 
	 	10.3.	 	 	Merger or Spinoff of Plans
	 	 	52	 
	 	 	 	 	10.3.1. In General
	 	 	52	 

iv

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	10.3.2. Limitations
	 	 	52	 
	 	 	 	 	10.3.3. Beneficiary Designations
	 	 	53	 
	 	 	 	 	10.3.4. Consolidation or Merger of Plans
	 	 	53	 
	 	10.4.	 	 	Adoption by Affiliates
	 	 	53	 
	 	 	 	 	10.4.1. Adoption with Consent
	 	 	53	 
	 	 	 	 	10.4.2. Procedure for Adoption
	 	 	53	 
	 	 	 	 	10.4.3. Effect of Adoption
	 	 	53	 
	SECTION 11 TRUST FUND	 	 	55	 
	 	11.1.	 	 	Plan Assets
	 	 	55	 
	 	11.2.	 	 	No Diversion
	 	 	55	 
	 	11.3.	 	 	Funding Policy
	 	 	55	 
	SECTION 12 CLAIMS	 	 	56	 
	 	12.1.	 	 	Claims and Review Procedure
	 	 	56	 
	 	 	 	 	12.1.1. Initial Claim
	 	 	56	 
	 	 	 	 	12.1.2. Notice of Initial Adverse Determination
	 	 	56	 
	 	 	 	 	12.1.3. Request for Review
	 	 	56	 
	 	 	 	 	12.1.4. Claim on Review
	 	 	56	 
	 	 	 	 	12.1.5. Notice of Adverse Determination for Claim on Review
	 	 	57	 
	 	12.2.	 	 	Claims Rules
	 	 	57	 
	 	12.3.	 	 	Deadline to File Claim
	 	 	58	 
	 	12.4.	 	 	Exhaustion of Administrative Remedies
	 	 	58	 
	 	12.5.	 	 	Deadline to File Legal Action
	 	 	59	 
	 	12.6.	 	 	Knowledge of Fact by Participant Imputed to Beneficiary
	 	 	59	 
	SECTION 13 OTHER ADMINISTRATIVE MATTERS	 	 	60	 
	 	13.1.	 	 	Company
	 	 	60	 
	 	 	 	 	13.1.1. Officers
	 	 	60	 
	 	 	 	 	13.1.2. Chief Executive Officer
	 	 	60	 
	 	 	 	 	13.1.3. Corporate Versus Personal Liability
	 	 	60	 
	 	13.2.	 	 	Benefits Administration Committee
	 	 	60	 
	 	 	 	 	13.2.1. Appointment and Removal
	 	 	60	 
	 	 	 	 	13.2.2. Automatic Removal
	 	 	60	 
	 	 	 	 	13.2.3. Authority
	 	 	60	 
	 	 	 	 	13.2.4. Majority Decisions
	 	 	62	 
	 	13.3.	 	 	Retirement Investment Committee
	 	 	62	 
	 	 	 	 	13.3.1. Appointment and Removal
	 	 	62	 
	 	 	 	 	13.3.2. Automatic Removal
	 	 	62	 
	 	 	 	 	13.3.3. Authority
	 	 	62	 
	 	 	 	 	13.3.4. Majority Decisions
	 	 	63	 
	 	13.4.	 	 	Limitation on Authority
	 	 	63	 
	 	13.5.	 	 	Conflict of Interest
	 	 	63	 
	 	13.6.	 	 	Dual Capacity
	 	 	63	 
	 	13.7.	 	 	Administrator
	 	 	63	 
	 	13.8.	 	 	Named Fiduciary
	 	 	63	 
	 	13.9.	 	 	Service of Process
	 	 	63	 
	 	13.10.	 	 	Payment of Compensation, Fees and Expenses Out of Plan Assets
	 	 	64	 
	 	13.11.	 	 	Method of Executing Instruments
	 	 	64	 
	 	13.12.	 	 	Receipt of Documents
	 	 	64	 
	 	13.13.	 	 	Powers of Attorney
	 	 	64	 

v

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	13.14.	 	 	Guardians and Conservators
	 	 	65	 
	 	13.15.	 	 	Third-Party Service Providers
	 	 	65	 
	 	13.16.	 	 	Correction of Errors
	 	 	65	 
	 	13.17.	 	 	Indemnity
	 	 	65	 
	SECTION 14 IN GENERAL	 	 	66	 
	 	14.1.	 	 	Disclaimers
	 	 	66	 
	 	14.2.	 	 	Contingent Top Heavy Plan Rules
	 	 	67	 
	 	14.3.	 	 	Compliance with Uniformed Services Employment and
Re-employment Rights Act of 1994 (USERRA)
	 	 	67	 
	 	14.4.	 	 	Rules of Interpretation
	 	 	67	 
	SCHEDULE I                      PARTICIPATING EMPLOYERS	 	SI-1
	APPENDIX A                      LIMITATION ON ANNUAL ADDITIONS	 	 	A-1	 
	APPENDIX B                      CONTINGENT TOP HEAVY PLAN RULES	 	 	B-1	 
	APPENDIX C                      QUALIFIED DOMESTIC RELATIONS ORDERS	 	 	C-1	 
	APPENDIX D                     401(k), 401(m) & 402(g) COMPLIANCE	 	 	D-1	 
	APPENDIX E                      SPECIAL RULES	 	 	E-1	 

vi

 

PIPER JAFFRAY COMPANIES

RETIREMENT PLAN

(Effective January 1, 2003)

SECTION 1

INTRODUCTION

1.1. Plan Name. The name of the Plan set forth herein is “Piper Jaffray
Companies Retirement Plan.”

1.2. IRS Qualification. The Plan consists of the following:

	 	(a)	 	ESOP Portion. The ESOP Portion of the Plan is intended to
qualify as a stock bonus plan under Code § 401(a) and an employee
stock ownership plan under Code § 4975(e)(7).
	 
	 	(b)	 	Profit Sharing Portion. The remainder of the Plan, the
Profit Sharing Portion, is intended to qualify as a profit sharing
plan under Code § 401(a). The Profit Sharing Portion includes a
cash or deferred arrangement that is intended to qualify under Code
§ 401(k).
	 
	 	(c)	 	Trust Fund. The assets of the Plan will be held in a Trust
Fund which is intended to be exempt from taxation under Code §
501(a).

1.3. Plan Documents.

	 	(a)	 	Original Document. The Plan and Trust Fund were established
effective January 1, 2002, in an agreement dated December 23, 2002,
titled “U.S. Bancorp Piper Jaffray Companies Inc. Profit Sharing
Plan (Effective January 1, 2002).”
	 
	 	(b)	 	Amended and Restated Documents. The Plan provisions are
amended and restated effective January 1, 2003, in this document.
The Trust Fund provisions are amended and restated effective January
1, 2003, in a separate Trust Agreement.

1.4. No Effect on Former Employees. Except as may be otherwise specifically
provided or required by law, this amended and restated Plan document shall not
affect the rights of or benefits payable to, or with respect to, any
Participant who died, retired or otherwise terminated employment prior to
January 1, 2003. The rights of, and benefits payable to or with respect to,
any such person shall be governed (except as may be otherwise specifically
provided or required by law) by the Plan document in effect at the time of such
person’s death, retirement or other termination of employment.

1.5. No Reduction of Protected Benefits. Nothing in this amendment and
restatement of the Plan, or in any subsequent amendment of the Plan, shall
cause any “section 411(d)(6) protected benefits” (as defined by Treasury
Regulation § 1.411(d)-4) of any Participant to be reduced, eliminated or made
subject to Employer discretion in a way that violates Code § 411(d)(6), valid
regulations thereunder, or any other provision of the Code or ERISA. If any
such amendment would appear to have the effect of reducing a protected accrued
benefit, such amendment shall not be given effect to reduce the accrued benefit
below the level immediately prior to the effective date of the amendment (but
such amendment
may have the effect of temporarily or indefinitely curtailing the accrual of
additional benefits). If any such amendment would appear to have the effect of
reducing any other type of Code § 411(d)(6)

 

 

protected benefit, such amendment
shall not be given effect with respect to the portion of the Participant’s
benefit accrued prior to the effective date of the amendment.

2

 

SECTION 2

DEFINITIONS

2.1. Definitions. When the following terms are used herein with initial
capital letters, they shall have the following meanings:

     2.1.1.
401(k) Enrollment Agreement — the agreement entered into by a
Participant (or automatically by operation of this Plan document) to provide
for 401(k) Contributions under Section 5.2 and Catch-up Contributions under
Section 5.3.

     2.1.2. Accounts — the following accounts will be maintained under the
Plan for Participants:

	 	(a)	 	Total Account — for convenience of reference, a
Participant’s entire interest in the Trust Fund, including the
Participant’s 401(k) Account, Matching Account, Profit Sharing
Account, Rollover Account and Transfer Account, but excluding the
Participant’s interest in a Suspense Account.
	 
	 	(b)	 	401(k) Account — the account maintained for each Participant
to which is credited the 401(k) Contributions made pursuant to
Section 5.2 and Catch-up Contributions made pursuant to Section 5.3,
together with any increase or decrease thereon.
	 
	 	(c)	 	Matching Account — the account maintained for each
Participant to which is credited the Participant’s allocable share
of the Matching Contributions made pursuant to Section 5.4 or made
pursuant to Section 3.3 of Appendix D, together with any increase or
decrease thereon.
	 
	 	(d)	 	Profit Sharing Account — the account maintained for each
Participant to which is credited the Participant’s allocable share
of (i) Discretionary Profit Sharing Contributions made pursuant to
Section 5.5, and (ii) Suspense Accounts forfeited pursuant to
Section 7.2, together with any increase or decrease thereon.
	 
	 	(e)	 	Rollover Account — the account maintained for each
Participant to which is credited the Participant’s rollover
contributions made pursuant to Section 5.6, together with any
increase or decrease thereon.
	 
	 	(f)	 	Suspense Account — the account maintained for each
Participant to which is credited the Participant’s non-Vested Profit
Sharing Account upon the occurrence of an Event of Maturity (pending
reemployment or forfeiture pursuant to Section 7.2), together with
any increase or decrease thereon.
	 
	 	(g)	 	Transfer Account — the account maintained for each
Participant to which is credited the Participant’s interest, if any,
transferred from another qualified plan by the trustee of such other
plan and not credited to any other Account, together with any
increase or decrease thereon.

     2.1.3. Affiliate — a business entity which is under “common control” with
the Employer or which is a member of an “affiliated service group” that
includes the Employer, as those terms are defined in Code § 414(b), (c) and
(m). A business entity which is a predecessor to the Employer shall be treated

3

 

as an Affiliate if the Employer maintains a plan of such predecessor
business entity or if, and to the extent that, such treatment is otherwise
required by regulations prescribed by the Secretary of the Treasury under Code
§ 414(a). A business entity shall also be treated as an Affiliate if, and to
the extent that, such treatment is required by regulations under Code § 414(o).
In addition to such required treatment, the Company’s Chief Executive Officer
may, in his or her discretion, designate as an Affiliate any business entity
which is not such a “common control,” “affiliated service group” or
“predecessor” business entity but which is otherwise affiliated with the
Company, subject to such nondiscriminatory limitations as the Chief Executive
Officer may impose.

     2.1.4. Alternate Payee — any spouse, former spouse, child or other
dependent of a Participant who is recognized by a qualified domestic relations
order as having a right to receive all or a portion of the Account of a
Participant under the Plan.

     2.1.5. Annual Valuation Date — each December 31 (or, if such date is not
a Valuation Date, then the Annual Valuation Date shall instead be the nearest
preceding Valuation Date).

     2.1.6. Beneficiary or Beneficiaries — the person or persons designated by
a Participant (or automatically by operation of this Plan document) to receive
any benefit payable under the terms of this Plan document to a Beneficiary. A
person so designated shall not be considered a Beneficiary until the
Participant dies.

     2.1.7. Benefits Administration Committee — the committee appointed
pursuant to Section 13.2.

     2.1.8. Code — the Internal Revenue Code of 1986, including applicable
regulations for the specified section of the Code. Any reference in this Plan
document to a section of the Code, including the applicable regulation, shall
be considered also to mean and refer to any subsequent amendment or replacement
of that section or regulation.

     2.1.9. Company — the following corporation:

	 	(a)	 	Before the Spin-off Date: U.S. Bancorp Piper Jaffray
Companies Inc., a Delaware corporation; and
	 
	 	(b)	 	On and after the Spin-off Date: Piper Jaffray Companies, a
Delaware corporation, and any successor thereto.

     2.1.10. Company Stock — common stock (including associated rights, if
any) of the Company which is readily tradable on an established securities
market. If there is no such common stock, Company Stock shall mean only that
class of common stock of the Company having a combination of voting power and
dividend rights equal to or in excess of: (i) that class of common stock having
the greatest voting power, and (ii) that class of common stock having the
greatest dividend rights.

     2.1.11. Company Stock Fund — the Company Stock Fund established pursuant
to Section 6.2 to hold the ESOP Portion of the Plan.

     2.1.12. Disability — a physical or mental condition that (i) the
individual or entity responsible for determining benefit eligibility under the
Employer’s separate plan of long-term disability benefits has determined
renders the Participant eligible for long-term disability income loss benefits
under such plan, or (ii) solely in the case of a Participant who is not covered
by such plan (for example, because the Participant is not in employment covered
by such plan or because the Participant has opted out of

4

 

coverage) at the time short-term disability benefits for the condition
end, the Social Security Administration has determined renders the Participant
eligible for Social Security disability benefits. A Participant shall cease to
be treated as having a Disability for purposes of this Plan when the relevant
individual or entity (or in the case of a Participant whose Disability was
established by the Social Security Administration, such Administration)
determines that the Participant is no longer eligible for the disability
benefits that originally established the Participant’s Disability.

     2.1.13. Effective Date — January 1, 2003. However, as specified in this
Plan document, certain provisions will not become effective until the Spin-off
Date.

     2.1.14. Employer — the Company, each business entity listed in Schedule I
to this Plan document, and any business entity affiliated with the Company that
adopts the Plan pursuant to Section 10.4 and subject to such limitations (not
inconsistent with federal law) as the Company’s Chief Executive Officer may
impose with respect to the extent that service with such business entity prior
to such adoption will be recognized hereunder, and any successor thereof that
adopts the Plan.

     2.1.15. ERISA — the Employee Retirement Income Security Act of 1974, as
amended, including applicable regulations for the specified section of ERISA.
Any reference in this Plan document to a section of ERISA, including the
applicable regulation, shall be considered also to mean and refer to any
subsequent amendment or replacement of that section or regulation.

     2.1.16. ESOP Portion — the portion of the Plan that at any time consists
of all assets of the Plan that are invested in the Company Stock Fund.

     2.1.17. Event of Maturity — any of the occurrences described in Section 7
by reason of which a Participant or Beneficiary may become entitled to a
distribution from the Plan.

     2.1.18. Highly Compensated Employee — any employee who (a) is a five
percent (5%) owner (as defined in Appendix B) at any time during the current
Plan Year or the preceding Plan Year, or (b) receives compensation from the
Employer and all Affiliates during the preceding Plan Year in excess of Ninety
Thousand Dollars ($90,000) (as adjusted under the Code for cost-of-living
increases after 2003). For this purpose, “compensation” means compensation as
defined in Appendix A for purposes of Code § 415. Compensation for any
employee who performed services for only part of a year is not annualized for
this purpose

     2.1.19. Investment Subfund — a separate pool of assets of the Trust Fund
set aside for investment purposes under Section 6.

     2.1.20. Leased Employee — any individual (other than an employee of the
Employer or an Affiliate) who performs services for the Employer or an
Affiliate if (i) services are performed under an agreement between the Employer
or an Affiliate and any other individual or entity, (ii) the individual
performs services for the Employer or an Affiliate on a substantially full time
basis for a period of at least twelve (12) consecutive months, and (iii) the
individual’s services are performed under the primary direction or control of
the Employer or an Affiliate. In determining whether an individual is a Leased
Employee of the Employer or an Affiliate, all prior service with the Employer
or an Affiliate (including employment as a common law employee) shall be used
for purposes of satisfying (ii) above. No individual shall be considered a
Leased Employee unless and until all conditions have been satisfied.

     2.1.21. Normal Retirement Age — the date a Participant attains age
fifty-nine and one-half (59-1⁄2) years.

5

 

     2.1.22. Participant — an employee of the Employer who becomes a
Participant in the Plan in accordance with the provisions of Section 4. An
employee who has become a Participant shall be considered to continue as a
Participant in the Plan until the earliest of the following: (i) the date of
the Participant’s death, or (ii) if the Participant had a Vested Total Account
at termination of employment, the complete distribution of that Vested Total
Account after the termination of employment, or (iii) if the Participant did
not have a Vested Total Account at termination of employment, the date of
termination of employment.

     2.1.23. Plan — the defined contribution plan set forth herein (including
any Trust Agreements), as adopted by the Company and as amended from time to
time.

     2.1.24. Plan Year —  the calendar year.

     2.1.25. Profit Sharing Portion — the portion of the Plan that at any time
consists of all assets of the Plan other than those invested in the Company
Stock Fund.

     2.1.26. Recognized Compensation — wages within the meaning of Code §
3401(a) for purposes of federal income tax withholding at the source but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code § 3401(a)(2))
and paid to the Participant by the Employer for the applicable period; subject,
however, to the following:

	 	(a)	 	Included Items.

	 	(1)	 	For All Contributions. In determining a
Participant’s Recognized Compensation for all types of
contributions, there shall be included all of the
following: (i) elective contributions made by the Employer
on behalf of the Participant that are not includible in
gross income under Code §§ 125, 132(f), 402(e)(3), 402(h),
403(b), 414(h)(2) and 457 (including elective contributions
authorized by the Participant under a cafeteria plan, a
qualified transportation fringe benefit, or any qualified
cash or deferred arrangement under Code § 401(k)), (ii)
amounts deferred at the election of the Participant under a
nonqualified deferred compensation plan maintained by the
Employer, (iii) forgivable loans, as forgiven, and (iv)
short-term disability payments.
	 
	 	(2)	 	For Discretionary Profit Sharing
Contributions. In determining a Participant’s Recognized
Compensation for purposes of Discretionary Profit Sharing
Contributions under Section 5.5 and allocation of
forfeitures under Section 7.2.2, there also shall be
included restricted stock and restricted stock units at the
time specified in paragraph (e)(2) below, but any tax
gross-up amounts shall not be included.

	 	(b)	 	Excluded Items.

	 	(1)	 	For All Contributions. In determining a
Participant’s Recognized Compensation for all types of
contributions, there shall be excluded all of the
following: (i) expense reimbursements, car allowances and
other similar payments, including foreign service
allowances, station allowances, foreign tax equalization
payments and other similar payments, (ii) welfare and
fringe benefits (cash and noncash), including tuition
reimbursements, payments

6

 

	 	 	 	under an adoption assistance program, long-term disability
payments (but not continued payment of a Participant’s
normal compensation under the Employer’s policy regarding
short-term absences for medical reasons), payments for
vacation or sick leave accrued but not taken, and final
payments on account of termination of employment (e.g.,
severance payments), (iii) all noncash remuneration (other
than restricted stock and restricted stock units, as
specified in paragraphs (a)(2) and (e)(2)) including
income imputed from below-market loans and from insurance
coverages and premiums, (iv) employee discounts and other
similar amounts, (v) moving expenses, (vi) payments under
a nonqualified deferred compensation plan, (vii) the value
of all stock options, stock appreciation rights (whether
or not exercised), and other stock-based awards (other
than restricted stock and restricted stock units, as
specified in paragraphs (a)(2) and (e)(2)), (viii) cash
payments in lieu of retirement plan contributions that
could not be made due to the application of Code §
401(a)(17), (ix) retention bonuses, and (x) employee
recognition awards and merchandise awards.
	 
	 	(2)	 	For 401(k), Catch-up and Matching
Contributions. In determining a Participant’s Recognized
Compensation for purposes of 401(k) Contributions under
Section 5.2, Catch-up Contributions under Section 5.3, and
Matching Contributions under Section 5.4, there also shall
be excluded any restricted stock and restricted stock units
and any tax gross-up.
	 
	 	(3)	 	For Discretionary Profit Sharing
Contributions. In determining a Participant’s Recognized
Compensation for purposes of Discretionary Profit Sharing
Contributions under Section 5.5 and allocation of
forfeitures under Section 7.2.2, there also shall be
excluded any uniform cash awards, discretionary cash awards
and other cash awards paid at any time in connection with
the spin-off of the Company from U.S. Bancorp.

	 	(c)	 	Pre-Participation Employment. Remuneration paid by the
Employer attributable to periods prior to the date the Participant
became a Participant in the Plan for purposes of a specified type of
contributions shall not be taken into account in determining the
Participant’s Recognized Compensation for such contributions.
	 
	 	(d)	 	Non-Recognized Employment. Remuneration paid by the Employer
for employment that is not Recognized Employment shall not be taken
into account in determining a Participant’s Recognized Compensation.
	 
	 	(e)	 	Attribution to Periods. A Participant’s Recognized
Compensation shall be considered attributable to the period in which
it is actually paid and not when earned or accrued. For purposes of
Discretionary Profit Sharing Contributions under Section 5.5 and
allocation of forfeitures under Section 7.2.2, however, the
following special rules shall apply:

	 	(1)	 	Bonuses. Annual and semi-annual bonuses
shall be included in Recognized Compensation for the Plan
Year in which the services were performed that resulted in
the bonus, rather than the Plan Year in which the bonus is
paid, provided that the bonus is paid within two (2)
calendar months (with one pay period leeway to cover
adjustments) after the end of the Plan Year in which the
services were performed.

7

 

	 	(2)	 	Restricted Stock. Awards of restricted
stock and restricted stock units shall be included in
Recognized Compensation for the Plan Year in which the
services were performed that resulted in the award, rather
than the Plan Year in which the award is granted or the
Plan Year in which the restricted stock and restricted
stock units become vested, provided that the award is
granted within two (2) calendar months after the Plan Year
in which the services were performed.

	 	(f)	 	Excluded Periods. Amounts received more than thirty (30)
days after the Participant’s termination of employment shall not be
taken into account in determining a Participant’s Recognized
Compensation.
	 
	 	(g)	 	Multiple Employers. If a Participant is employed by more
than one Employer in a Plan Year, a separate amount of Recognized
Compensation shall be determined for each Employer.
	 
	 	(h)	 	Annual Maximum. A Participant’s Recognized Compensation for
any twelve-month period shall not exceed the annual compensation
limit under Code § 401(a)(17). For purposes of the foregoing, the
annual compensation limit under Code § 401(a)(17) shall be two
hundred thousand dollars ($200,000) for the twelve-month period
beginning January 1, 2003, and shall thereafter be adjusted as
provided under the Code for cost of living increases. However, this
limit shall not be applied in determining a Participant’s Recognized
Compensation for purposes of 401(k) Contributions under Section 5.2
and Catch-up Contributions under Section 5.3.

     2.1.27. Recognized Employment — all service with the Employer by persons
classified by the Employer as an employee on both payroll and personnel
records; subject, however, to the following:

	 	(a)	 	Exclusions. Service classified by the Employer as being
performed in any of the following categories of employment shall be
excluded from Recognized Employment:

	 	(1)	 	Employment in a unit of employees whose
terms and conditions of employment are subject to a
collective bargaining agreement between the Employer and a
union representing that unit of employees, unless (and to
the extent) such collective bargaining agreement provides
for the inclusion of those employees in the Plan;
	 
	 	(2)	 	Employment of a nonresident alien who is
not receiving any earned income from the Employer which
constitutes income from sources within the United States;
	 
	 	(3)	 	Employment of a United States citizen or a
United States resident alien outside the United States
unless and to the extent the Company’s Chief Executive
Officer shall designate such employment to be Recognized
Employment (if such a designation is made, the Chief
Executive Officer also shall specify the extent to which
the compensation payable to such citizen by the Employer,
the foreign Affiliate, or both shall be recognized for
purposes of the Plan);

8

 

	 	(4)	 	Employment by an Employer that began after
December 31, 2002, as a result of the Employer’s
acquisition, by merger, asset purchase, or otherwise, of
all or a portion of a trade or business, unless and to the
extent the Company’s Chief Executive Officer shall
designate such employment to be Recognized Employment; and
	 
	 	(5)	 	Employment of a Highly Compensated Employee
to the extent agreed to in writing by that individual.
	 
	 	(6)	 	Employment that is classified by the
Employer as temporary employment.

	 	(b)	 	Non-Employees. Service performed for the Employer by an
individual who is not classified by the Employer as an employee on
both payroll and personnel records shall not be considered
Recognized Employment. Without limiting the generality of the
foregoing, such service shall include service performed by an
individual classified by the Employer as a Leased Employee, leased
owner, leased manager, shared employee, shared leased employee,
temporary worker, independent contractor, contract worker, agency
worker, freelance worker or other similar classification.
	 
	 	(c)	 	Effect of Classification. The Employer’s classification of
an individual at the time of inclusion in or exclusion from
Recognized Employment shall be conclusive for the purpose of the
foregoing rules. No reclassification of an individual’s status with
the Employer, for any reason, without regard to whether it is
initiated by a court, governmental agency or otherwise and without
regard to whether or not the Employer agrees to such
reclassification, shall result in the individual being retroactively
included in Recognized Employment. Notwithstanding anything to the
contrary in this provision, however, the Company’s Chief Executive
Officer may designate that a reclassified individual will be
included in Recognized Employment prospectively. Any uncertainty
concerning an individual’s classification shall be resolved by
excluding the individual from Recognized Employment.

     2.1.28. Retirement Investment Committee — the committee appointed
pursuant to Section 13.3.

     2.1.29. Spin-off Date — the date on which shares of common stock of Piper
Jaffray Companies are distributed to stockholders of U.S. Bancorp.

     2.1.30. Trust Agreement — a trust agreement that creates a Trust Fund for the Plan.

     2.1.31. Trustee — a trustee specified as such in a Trust Agreement.

     2.1.32. Trust Fund — a fund created pursuant to a Trust Agreement.

     2.1.33. Valuation Date — each day on which trading is conducted on the
New York Stock Exchange.

     2.1.34. Vested — nonforfeitable.

9

 

SECTION 3

SERVICE

3.1. Service Definitions. When used herein with initial capital letters, the
following words and phrases have the following meanings:

     3.1.1. Eligibility Service — a measure of an employee’s service with the
Employer and all Affiliates which is equal to the number of computation periods
in which the employee is credited with at least one thousand (1,000) Hours of
Service, subject however to the following rules:

	 	(a)	 	Computation Periods. The computation periods for determining
an employee’s Eligibility Service shall be the twelve (12)
consecutive month period beginning with the date the employee first
performs an Hour of Service and all Plan Years beginning after such
date (regardless of any termination of employment and subsequent
reemployment); provided, however, that in addition to the
computation periods listed above, an employee whose employment with
the Employer and all Affiliates terminates and who subsequently is
reemployed by the Employer or an Affiliate shall also have a
computation period beginning with the date the employee first
performs an Hour of Service on or after the date of the employee’s
reemployment.
	 
	 	(b)	 	Completion. A year of Eligibility Service shall be deemed
completed as of the last day of the computation period (irrespective
of the date during such period that the employee completed one
thousand (1,000) Hours of Service). Fractional years of Eligibility
Service shall not be credited.
	 
	 	(c)	 	Pre-Plan Service. Service with the Employer and all
Affiliates prior to January 1, 2002, shall be recognized for the
purpose of determining an employee’s Eligibility Service.
	 
	 	(d)	 	Pre-Acquisition Service. If a person commences employment
with the Employer after December 31, 2002, such employment is
described in the limitation on Recognized Employment in Section
2.1.27(a)(4), and the Company’s Chief Executive Officer designates
such employment to be Recognized Employment, the person’s
pre-acquisition service for the acquired trade or business shall be
recognized for the purpose of determining such person’s Eligibility
Service unless, in his or her designation, the Chief Executive
Officer specifically provides to the contrary.

     3.1.2. Hours of Service — a measure of an employee’s service with the
Employer and all Affiliates, determined for a particular computation period and
equal to the number of hours credited to the employee under the following
rules:

	 	(a)	 	Paid Duty. An Hour of Service shall be credited for each
hour for which the employee is paid, or entitled to payment, for the
performance of duties for the Employer or an Affiliate. These Hours
of Service shall be credited to the employee for the computation
period or periods in which the duties are performed.
	 
	 	(b)	 	Paid Nonduty. An Hour of Service shall be credited for each
hour for which the employee is paid, or entitled to payment, by the
Employer or an Affiliate on account of a period of time during which
no duties are performed (irrespective of whether the

10

 

	 	 	 	employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence; provided, however,
that:

	 	(1)	 	No more than five hundred one (501) Hours
of Service shall be credited on account of a single
continuous period during which the employee performs no
duties (whether or not such period occurs in a single
computation period) unless such Hours in Service in excess
of five hundred one (501) hours are due to Disability or to
a period for which the employee is entitled to short-term
disability pay continuation benefits;
	 
	 	(2)	 	No Hours of Service shall be credited on
account of payments made under a plan maintained solely for
the purpose of complying with applicable worker’s
compensation, unemployment compensation or disability
insurance laws;
	 
	 	(3)	 	No Hours of Service shall be credited on
account of payments which solely reimburse the employee for
medical or medically related expenses incurred by the
employee; and
	 
	 	(4)	 	Payments shall be deemed made by or due
from the Employer or an Affiliate whether made directly or
indirectly from a trust fund or an insurer to which the
Employer or an Affiliate contributes or pays premiums.

	 	These Hours of Service shall be credited to the employee in
accordance with applicable regulations for the computation period
for which payment is made or, if the payment is not computed by
reference to units of time, the Hours of Service shall be credited
to the first computation period in which the event for which any
part of the payment is made occurred.

	 	(c)	 	Back Pay. An Hour of Service shall be credited for each hour
for which back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliate. The
same Hours of Service credited under paragraph (a) or (b) shall not
be credited under this paragraph (c). The crediting of Hours of
Service under this paragraph (c) for periods and payments described
in paragraph (b) shall be subject to all the limitations of that
paragraph. These Hours of Service shall 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)	 	Unpaid Absences.

	 	(1)	 	Military Leaves. During service in the
Armed Forces of the United States if the employee both
entered such service and returned to employment with an
Employer or an Affiliate from such service under
circumstances entitling the employee to reemployment rights
granted veterans under federal law, the employee shall be
credited with the number of Hours of Service which
otherwise would normally have been credited but for such
leave of absence; provided, however, that if the employee
does not return to employment for any reason other than
death, Disability or attainment of Normal Retirement Age
within the

11

 

	 	 	 	time prescribed by law for the retention of veteran’s
reemployment rights, such Hours of Service shall not
be credited.
	 
	 	(2)	 	Parenting Leaves. To the extent not
otherwise credited and solely for the purpose of
determining whether a One-Year Break in Service has
occurred, Hours of Service shall be credited to an employee
for any period of absence from work, due to pregnancy of
the employee, the birth of a child of the employee, the
placement of a child with the employee in connection with
the adoption of such child by the employee or for the
purpose of caring for such child for a period beginning
immediately following such birth or placement. The
employee shall be credited with the number of Hours of
Service which otherwise would normally have been credited
to such employee but for such absence. If it is impossible
to determine the number of Hours of Service which would
otherwise normally have been so credited, the employee
shall be credited with eight (8) Hours of Service for each
day of such absence. In no event, however, shall the
number of Hours of Service credited for any such absence
exceed five hundred one (501) Hours of Service. Such Hours
of Service shall be credited to the computation period in
which such absence from work begins if crediting all or any
portion of such Hours of Service is necessary to prevent
the employee from incurring a One-Year Break in Service in
such computation period. If the crediting of such Hours of
Service is not necessary to prevent the occurrence of a
One-Year Break in Service in that computation period, such
Hours of Service shall be credited in the immediately
following computation period (even though no part of such
absence may have occurred in such subsequent computation
period). These Hours of Service shall not be credited
until the employee furnishes timely information which may
be reasonably required by the Employer to establish that
the absence from work is for a reason for which these Hours
of Service may be credited.

	 	(e)	 	Special Rules. An Employee will not receive credit for the
same Hour of Service under more than one subsection of this section.
To the extent not inconsistent with other provisions hereof,
Department of Labor Regulations 29 C.F.R. § 2530.200b-2(b) and (c)
are hereby incorporated by reference herein. To the extent required
under Code § 414, services of leased employees, leased owners,
leased managers, shared employees, shared leased employees and other
similar classifications by the Employer or an Affiliate shall be
taken into account as if such services were performed as a common
law employee of the Employer for eligibility purposes and for
determining Eligibility Service, Vesting Service and One-Year Breaks
in Service as applied to Eligibility Service and Vesting Service.
(These classifications of persons are not employees. They are,
therefore, not eligible to participate in this Plan or accrue
benefits under this Plan for such services.) Application of the
leased employee rules under Code § 414(n) shall be subject to the
following: (i) “contingent services” shall mean services performed
by a person for the Employer or an Affiliate during the period the
person has not performed the services on a substantially full time
basis for a period of at least twelve (12) consecutive months, (ii)
except as provided in (iii), contingent services shall not be taken
into account for eligibility purposes and for determining
Eligibility Service and Vesting Service, (iii) contingent services
performed by a person who has become a

12

 

	 	 	 	Leased Employee shall be taken into account for eligibility
purposes and for determining Eligibility Service and Vesting
Service, and (iv) all service performed as a Leased Employee
(i.e., all service following the date an individual has
satisfied all three requirements for becoming a Leased Employee)
shall be taken into account for eligibility purposes and for
determining Eligibility Service and Vesting Service.
	 
	 	(f)	 	Equivalency for Exempt Employees. Notwithstanding anything
to the contrary in this Section 3.1.2, with respect to any period
during which an employee is engaged in service for which the
Employer and its Affiliates are not required by state or federal
“wage and hour” or other law to count hours worked, and any other
period during which it is not administratively feasible to count
Hours of Service as otherwise provided in this Section 3.1.2
(including certain periods during which no duties were performed),
Hours of Service shall be credited at the rate of ninety-five (95)
Hours of Service for each semi-monthly payroll period with respect
to which, under the provisions of this section (other than this
paragraph), such employee would be entitled to credit for at least
one (1) Hour of Service.

     3.1.3. One-Year Break in Service — a 12-month period during which an
employee is credited with fewer than five hundred (500) Hours of Service. The
12-month period will be the Plan Year.

     3.1.4. Vesting Service — a measure of an employee’s service with the
Employer and all Affiliates which is equal to the number of computation periods
in which the employee is credited with at least one thousand (1,000) Hours of
Service, subject however to the following rules:

	 	(a)	 	Computation Periods. The computation period for determining
an employee’s Vesting Service shall be the Plan Year.
	 
	 	(b)	 	Completion. A year of Vesting Service shall be deemed
completed as of the date in the computation period that the employee
completes one thousand (1,000) Hours of Service. Fractional years
of Vesting Service shall not be credited.
	 
	 	(c)	 	Pre-Plan Service. Service with the Employer and all
Affiliates prior to January 1, 2002, shall be recognized for the
purpose of determining an employee’s Vesting Service.
	 
	 	(d)	 	Pre-Acquisition Service. If a person commences employment
with the Employer after December 31, 2002, such employment is
described in the limitation on Recognized Employment in Section
2.1.27(a)(4), and the Company’s Chief Executive Officer designates
such employment to be Recognized Employment, the person’s
pre-acquisition service for the acquired trade or business shall be
recognized for the purpose of determining such person’s Vesting
Service unless, in his or her designation, the Chief Executive
Officer specifically provides to the contrary.

13

 

SECTION 4

ELIGIBILITY AND PARTICIPATION

4.1. Initial Eligibility Rules.

     4.1.1. Eligibility for 401(k) and Catch-up Contributions. For purposes of
401(k) Contributions under Section 5.2 and Catch-up Contributions under Section
5.3, an employee shall become a Participant as follows:

	 	(a)	 	General Rule. An employee who is normally scheduled to work
one thousand (1,000) or more hours per year in Recognized Employment
in accordance with the employment practices of the Employer shall
become a Participant on the first day of the first month following
the employee’s first Hour of Service, if the employee is then
employed in such Recognized Employment. If the employee is not then
employed in such Recognized Employment, the employee shall become a
Participant on the first day thereafter upon which the employee
enters such Recognized Employment.
	 
	 	(b)	 	Part-time Employees. An employee who is not normally
scheduled to work one thousand (1,000) or more hours per year in
Recognized Employment in accordance with the employment practices of
the Employer shall become a Participant on the January 1 or July 1
following the employee’s completion of one year of Eligibility
Service, if the employee is then employed in Recognized Employment.
If the employee is not then employed in Recognized Employment, the
employee shall become a Participant on the first day thereafter upon
which the employee enters Recognized Employment.
	 
	 	(c)	 	Spin-off Transition Rule. Each employee who on the Spin-off
Date is normally scheduled to work one thousand (1,000) or more
hours per year in Recognized Employment in accordance with the
employment practices of the Employer shall become a Participant on
the Spin-off Date.
	 
	 	(d)	 	Effective on Spin-off Date. This Section 4.1.1 shall become
effective on the Spin-off Date.

     4.1.2. Eligibility for Matching Contributions. For purposes of Matching
Contributions under Section 5.4, an employee shall become a Participant as
follows:

	 	(a)	 	General Rule. An employee who is normally scheduled to work
one thousand (1,000) or more hours per year in Recognized Employment
in accordance with the employment practices of the Employer shall
become a Participant on the January 1 following the employee’s first
Hour of Service, if the employee is then employed in such Recognized
Employment. If the employee is not then employed in such Recognized
Employment, the employee shall become a Participant on the first day
thereafter upon which the employee enters such Recognized
Employment.
	 
	 	(b)	 	Part-time Employees. An employee who is not normally
scheduled to work one thousand (1,000) or more hours per year in
Recognized Employment in accordance with the employment practices of
the Employer shall become a Participant on the

14

 

	 	 	 	January 1 or July 1
following the employee’s completion of one year of Eligibility
Service, if the employee is then employed in Recognized
Employment. If the employee is not then employed in Recognized
Employment, the employee shall become a Participant on the first
day thereafter upon which the employee enters Recognized
Employment.
	 
	 	(c)	 	Spin-off Transition Rule. Each employee who on the Spin-off
Date is normally scheduled to work one thousand (1,000) or more
hours per year in Recognized Employment in accordance with the
employment practices of the Employer and who is eligible to receive
a matching contribution under the U.S. Bancorp 401(k) Savings Plan
for the calendar year in which the Spin-off Date occurs shall become
a Participant on the Spin-off Date. Any other employee who on the
Spin-off Date who is normally scheduled to work one thousand (1,000)
or more hours per year in Recognized Employment in accordance with
the employment practices of the Employer shall become a Participant
on January 1, 2004, if the employee is then employed in such
Recognized Employment.
	 
	 	(d)	 	Effective on Spin-off Date. This Section 4.1.2 shall become
effective on the Spin-off Date.

     4.1.3. Eligibility for Discretionary Profit Sharing Contributions. For
purposes of Discretionary Profit Sharing Contributions under Section 5.5 and
allocation of forfeitures under Section 7.2.2, an employee shall become a
Participant as follows:

	 	(a)	 	General Rule. An employee who is normally scheduled to work
one thousand (1,000) or more hours per year in Recognized Employment
in accordance with the employment practices of the employer shall
become a Participant on the January 1 or July 1 following the
employee’s first Hour of Service, if the employee is then employed
in such Recognized Employment. If the employee is not then employed
in such Recognized Employment, the employee shall become a
Participant on the first day thereafter upon which the employee
enters such Recognized Employment.
	 
	 	(b)	 	Part-time Employees. An employee who is not normally
scheduled to work one thousand (1,000) or more hours per year in
Recognized Employment in accordance with the employment practices of
the Employer shall become a Participant on the January 1 or July 1
following the employee’s completion of one year of Eligibility
Service, if the employee is then employed in Recognized Employment.
If the employee is not then employed in Recognized Employment, the
employee shall become a Participant on the first day thereafter upon
which the employee enters Recognized Employment.

     4.1.4. Eligibility for Rollover Contributions. For purposes of Rollover
Contributions under Section 5.6, an employee shall become a Participant as
follows:

	 	(a)	 	General Rule. An employee who is normally scheduled to work
one thousand (1,000) or more hours per year in Recognized Employment
in accordance with the employment practices of the Employer shall
become a Participant on the date of the employee’s first Hour of
Service, if the employee is then employed in such Recognized
Employment. If the employee is not then employed in such Recognized
Employment, the employee shall become a Participant on the first day
thereafter upon which the employee enters such Recognized
Employment.

15

 

	 	(b)	 	Part-time Employees. An employee who is not normally
scheduled to work one thousand (1,000) or more hours per year in
Recognized Employment in accordance with the employment practices of
the Employer shall become a Participant on the January 1 or July 1
following the employee’s completion of one year of Eligibility
Service, if the employee is then employed in Recognized Employment.
If the employee is not then employed in Recognized Employment, the
employee shall become a Participant on the first day thereafter upon
which the employee enters Recognized Employment.
	 
	 	(c)	 	Spin-off Transition Rule. Each employee who on the Spin-off
Date is normally scheduled to work one thousand (1,000) or more
hours per year in Recognized Employment in accordance with the
employment practices of the Employer shall become a Participant on
the Spin-off Date.
	 
	 	(d)	 	Effective on Spin-off Date. This Section 4.1.4 shall become
effective on the Spin-off Date.

4.2. Special Rule for Former Participants. A Participant whose employment with
the Employer terminates and who subsequently is reemployed by the Employer in
Recognized Employment shall reenter the Plan as a Participant immediately upon
returning to Recognized Employment.

4.3. Effect on Employment. Participation in this Plan or eligibility for
participation in it shall not give any employee the right to be retained in the
Employer’s employment nor, upon dismissal or severance of employment, to have
any right or interest under this Plan or the Trust Fund other than is herein
provided.

16

 

SECTION 5

CONTRIBUTIONS AND ALLOCATION THEREOF

5.1. Employer Contributions.

     5.1.1. Source of Employer Contributions. All Employer contributions to
the Plan may be made without regard to profits.

     5.1.2. Limitation. The contribution of the Employer to the Plan for any
year, when considered in light of its contribution for that year to all other
tax-qualified plans it maintains, shall, in no event, exceed the maximum amount
deductible by it for federal income tax purposes under Code § 404. Each such
contribution to the Plan is conditioned upon its deductibility for such
purpose.

     5.1.3. Form of Payment. The appropriate contribution of the Employer to
the Plan, determined as herein provided, shall be paid to the Trustee for
deposit in the Trust Fund and may be paid either in cash or in Company Stock of
a value equal to the amount of the contribution or in any combination of those
ways.

5.2. 401(k) Contributions.

     5.2.1. Enrollment for 401(k) Contributions. Each Participant eligible
under Section 4.1.1 may authorize reductions in compensation effective as of
his or her initial eligibility date or the first day of any subsequent pay
period. To do so, the Participant must complete a 401(k) Enrollment Agreement
and deliver it to the Company prior to that effective date. The Company may,
but need not, permit such enrollment to be made by telephonic, electronic or
similar methods, in lieu of an enrollment in writing, and shall determine what
information shall be required to be furnished in connection with the
Participant’s enrollment.

     5.2.2. 401(k) Enrollment Agreements. Subject to the following rules, each
Participant eligible under Section 4.1.1 may execute a 401(k) Enrollment
Agreement which provides for a reduction of not less than one percent (1%) nor
more than fifty percent (50%) of the amount of Recognized Compensation which
otherwise would be paid to the Participant by the Employer each payday, and for
equal amounts to be contributed by the Employer to the Plan (“401(k)
Contributions”). The reduction agreed to by the Participant shall be made by
the Employer from the Participant’s Recognized Compensation each payday for so
long as the 401(k) Enrollment Agreement remains in effect. Such 401(k)
Contributions and any elective contributions made under any other plans of the
Employer and Affiliates for a taxable year of a Participant, however, shall not
exceed the limit in effect for such taxable year under Code § 402(g).

     5.2.3. Modification of 401(k) Enrollment Agreements. A 401(k) Enrollment
Agreement may be modified as follows:

	 	(a)	 	Increase or Decrease. A Participant may, upon giving prior
notice in a manner authorized by Company, amend his or her 401(k)
Enrollment Agreement to increase or decrease the amount of reduction
effective as soon as administratively feasible after the receipt of
such notice.
	 
	 	(b)	 	Cancellation. A Participant who has a 401(k) Enrollment
Agreement in effect may, upon giving prior notice in a manner
authorized by the Company, completely

17

 

	 	 	 	terminate his or her 401(k) Enrollment Agreement effective as
soon as administratively feasible after the receipt of such
notice. Thereafter, such Participant may, upon giving prior
notice in a manner authorized by the Company, enter into a new
401(k) Enrollment Agreement effective as of the first day of any
subsequent pay period if, on that effective date, the
Participant is employed in Recognized Employment.
	 
	 	(c)	 	Termination of Recognized Employment. The 401(k) Enrollment
Agreement of a Participant who ceases to be employed in Recognized
Employment shall be terminated automatically as soon as
administratively feasible after the date the Participant ceases to
be employed in Recognized Employment. If such Participant returns
to Recognized Employment, the Participant may, upon giving prior
notice in a manner authorized by the Company, enter into a new
401(k) Enrollment Agreement effective as of the date of the
Participant’s return to Recognized Employment or the first day of
any subsequent pay period if, on that effective date, the
Participant is employed in Recognized Employment.
	 
	 	(d)	 	Form of Agreement. The Company shall specify the form of all
401(k) Enrollment Agreements, the form of any notices regarding such
agreements and all procedures for the delivery and acceptance of
forms and notices.

     5.2.4. Deposit in Trust Fund. Within the time required by regulations of
the United States Department of Labor, the Employer shall contribute to the
Trustee for deposit in the Trust Fund the reduction in Recognized Compensation
which was agreed to by each Participant pursuant to a 401(k) Enrollment
Agreement.

     5.2.5. Allocation. Each 401(k) Contribution made with respect to a
Participant shall be allocated to that Participant’s 401(k) Account for the
Plan Year with respect to which it is made and, for the purposes of Section 6,
shall be credited as soon as administratively feasible after it is received by
the Trustee.

     5.2.6. Section 401(k) Compliance. The 401(k) Contributions made under
this Section 5.2 shall satisfy the nondiscrimination requirements of Code §
401(k) by applying the applicable rules set forth in Appendix D.

     5.2.7. Effective on Spin-off Date. This Section 5.2 shall become
effective on the Spin-off Date. Any earnings reduction agreements in effect
under the U.S. Bancorp 401(k) Savings Plan immediately before the Spin-off Date
shall become effective under this Plan as of the Spin-off Date and shall remain
effective until changed or terminated as provided in Section 5.2.3.

5.3. Catch-up Contributions.

     5.3.1. Enrollment. A Participant eligible under Section 4.1.1 who attains
age fifty (50) or more during a calendar year and whose 401(k) Contributions
for that calendar year reach the dollar limit under Code § 402(g) (the “402(g)
limit”) before the last day of that calendar year will be deemed to have
elected to make additional contributions to the Plan from his or her Recognized
Compensation. Such additional contributions shall be in the same percent of
Recognized Compensation as the percent in effect for the Participant’s 401(k)
Contributions when the 402(g) limit was reached and shall continue for the
remainder of the calendar year, subject to the Participant’s election to
discontinue contributions or to contribute a different percent of Recognized
Compensation as provided in Section 5.2.3. If a Participant is not expected to
reach the 402(g) limit but has elected to defer the maximum percent of
Recognized

18

 

Compensation permitted under Section 5.2, the Participant may elect to
contribute an additional amount of his or her Recognized Compensation to the
Plan. The additional contributions authorized by this Section 5.3.1 shall be
referred to as “Catch-up Contributions.”

     5.3.2. Deposit in Trust Fund. Within the time required by regulations of
the United States Department of Labor, the Employer shall contribute to the
Trustee for deposit in the Trust Fund the reduction in Recognized Compensation
which was authorized under Section 5.3.1 as a Catch-up Contribution.

     5.3.3. Allocation. Each Catch-up Contribution made with respect to a
Participant shall be allocated to that Participant’s 401(k) Account for the
Plan Year with respect to which it is made and, for the purposes of Section 6,
shall be credited as soon as administratively feasible after it is received by
the Trustee.

     5.3.4. Limitations and Testing. Except as hereinafter provided for
re-characterized Catch-up Contributions and notwithstanding any other provision
of this Plan document to the contrary, the following rules shall apply to
Catch-up Contributions.

	 	(a)	 	Section 402(g) Limit. Catch-up Contributions shall not be
subject to the annual contribution limit under Code § 402(g), but
shall be subject to the applicable annual contribution limit
specified in Code § 414(v) (i.e., $2,000 in 2003).
	 
	 	(b)	 	ADP Testing. Catch-up Contributions shall not be subject to
the average deferral percentage test under Code § 401(k) and
Appendix D of this Plan document.
	 
	 	(c)	 	Section 415(c) Annual Addition Limit. Catch-up Contributions
shall not be subject to the limitation on annual additions to the
Participant’s Account under Code § 415(c) and Appendix A of this
Plan document.
	 
	 	(d)	 	Matching Contributions. Catch-up Contributions, whether
initially designated under Section 5.3.1 or re-characterized as
Catch-up Contributions under Section 5.3.6, shall not be eligible
for any Matching Contributions under Section 5.4.

     5.3.5. Re-characterization of Catch-up Contributions as 401(k)
Contributions. To the extent that, apart from Catch-up Contributions, a
Participant has failed to make the maximum allowable elective contributions for
the Participant’s taxable year (i.e., the Participant could have made
additional elective contributions (i) without exceeding the 402(g) limit, (ii)
without exceeding the maximum allowed after the application of the average
deferral percentage test specified in Code § 401(k) and Appendix D of this Plan
document, (iii) without exceeding the limitations on annual additions under
Code § 415(c) and Appendix A of this Plan document, and (iv) without exceeding
any other limit imposed under the Plan), any amounts initially characterized as
Catch-up Contributions shall be re-characterized, as of the last day of the
calendar year, as 401(k) Contributions (and not Catch-up Contributions). Any
amounts re-characterized shall be treated as 401(k) Contributions (and not
Catch-up Contributions) for all purposes of the Plan, except that such
contributions shall not be eligible for Matching Contributions under Section
5.4.

     5.3.6. Re-characterization of 401(k) Contributions as Catch-up
Contributions. To the extent that (i) a Participant is eligible to make
Catch-up Contributions as provided under Section 5.3.1, (ii) the Participant
has excess elective deferrals (either in excess of the 402(g) limit, in excess
of the percentage limit in Section 5.2.2 of this Plan document, or in excess of
the average deferral percentage test specified in Code § 401(k) and Appendix D
of this Plan document), and (iii) the Participant has not

19

 

exceeded the applicable annual contribution limit specified in Code §
414(v), any amount initially characterized as 401(k) Contributions (and not as
Catch-up Contributions) shall be re-characterized as Catch-up Contributions to
the extent permitted under Code § 414(v). Any amounts re-characterized shall
be treated as Catch-up Contributions (and not 401(k) Contributions) for all
purposes of the Plan.

     5.3.7. Effective on Spin-off Date. This Section 5.3 shall become
effective on the Spin-off Date.

5.4. Matching Contributions.

     5.4.1. Amount. The Employer shall make a Matching Contribution to the
Plan for each eligible Participant for each Plan Year in an amount equal to one
hundred percent (100%) of the Participant’s reduction in Recognized
Compensation for the Plan Year which was agreed to by the Participant pursuant
to a 401(k) Enrollment Agreement, up to a maximum Matching Contribution of four
percent (4%) of the Participant’s Recognized Compensation, but disregarding any
Recognized Compensation that is in excess of the social security taxable wage
base (as determined under section 230 of the Social Security Act) in effect at
the beginning of the Plan Year.

     5.4.2. Eligible Participants. A Participant shall be eligible to receive a
Matching Contribution for a Plan Year only if such Participant is eligible
under Section 4.1.2 and is employed in Recognized Employment on the last
business day of the Plan Year. Any Participant who is then on a parental leave
or who is in active service in the Armed Forces of the United States whose
benefit is protected under USERRA shall be deemed to meet this requirement. No
other Participant (including, without limitation, Participants who have severed
or terminated employment, retired, or died) shall be eligible to receive a
Matching Contribution.

     5.4.3. Transfers. The following special rules shall apply to certain
Participants who transfer to or from Recognized Employment after December 31,
2002:

	 	(a)	 	If a Participant (i) is employed by an Affiliate, but not by
the Employer, on the last day of such Plan Year, and (ii) during
such Plan Year has at least 1,000 Hours of Service with the
Employer, then the Participant shall be an eligible Participant for
such Plan Year with respect to Recognized Compensation from the
Employer for such Plan Year.
	 
	 	(b)	 	If a Participant is employed in Recognized Employment on the
last day of the Plan Year, and during such Plan Year (i) has at
least 1,000 Hours of Service of combined service with the Employer
and all Affiliates, (ii) has less than 1,000 Hours of Service with
the Employer, and (iii) has less than 1,000 Hours of Service with
the Affiliates, then the Participant shall be an eligible
Participant for such Plan Year with respect to Recognized
Compensation from the Employer for such Plan Year.

     5.4.4. Deposit in Trust Fund. The Matching Contributions for all eligible
Participants for a Plan Year shall be delivered to the Trustee for deposit in
the Trust Fund not later than the time prescribed by federal law (including
extensions) for filing the federal income tax return of the Employer for the
taxable year in which the Plan Year ends.

     5.4.5. Allocation. The Matching Contribution made for an eligible
Participant for a Plan Year shall be allocated to that Participant’s Matching
Account as of the Annual Valuation Date of the Plan Year with respect to which
it is made and, for the purposes of Section 6, shall be credited as soon as
administratively feasible after it is received by the Trustee.

20

 

     5.4.6. Section 401(m) Compliance. The Matching Contributions made under
this Section 5.3 shall satisfy the nondiscrimination requirements of Code §
401(m) by applying the applicable rules set forth in Appendix D.

     5.4.7. Effective on Spin-off Date. This Section 5.4 shall become
effective on the Spin-off Date.

5.5. Discretionary Profit Sharing Contributions.

     5.5.1. General. The Employer may (but shall not be required to) make a
Discretionary Profit Sharing Contribution to the Plan for each Plan Year in
such amount as the Employer may determine in its sole discretion. The
Discretionary Profit Sharing Contribution for a Plan Year may be a Pro-Rata
Contribution and/or an Integrated Contribution as provided below.

     5.5.2. Pro-Rata Contributions. If a Pro-Rata Contribution is made for a
Plan Year, it shall be allocated to the Profit Sharing Accounts of the eligible
Participants for the Plan Year in the proportion that the Recognized
Compensation of each eligible Participant bears to the total Recognized
Compensation of all eligible Participants for the Plan Year.

     5.5.3. Integrated Contributions. If an Integrated Contribution is made
for a Plan Year, the amount to be allocated to the Profit Sharing Account of
each eligible Participant for the Plan Year shall be calculated using a “Base
Percentage” and an “Excess Percentage” determined by the Employer in its sole
discretion and applied to each eligible Participant on a uniform basis. The
Excess Percentage cannot exceed the lesser of (i) twice the Base Percentage, or
(ii) the Base Percentage plus 5.7%. The amount allocated to the Profit Sharing
Account of each eligible Participant for the Plan Year shall be equal to the
following:

	 	(a)	 	The “Base Percentage” multiplied by the Participant’s
Recognized Compensation for the Plan Year; plus
	 
	 	(b)	 	The “Excess Percentage” multiplied by the Participant’s
Recognized Compensation for the Plan Year that is in excess of the
social security taxable wage base (as determined under section 230
of the Social Security Act) in effect at the beginning of the Plan
Year.

     5.5.4. Eligible Participants. A Participant shall be eligible to receive a
Discretionary Profit Sharing Contribution for a Plan Year only if such
Participant (i) is eligible under Section 4.1.3, (ii) is employed in Recognized
Employment on the last day of such Plan Year, and (iii) during such Plan Year
has at least 1,000 Hours of Service with the Employer. Any Participant who is
then on parental leave and any Participant called to active service in the
Armed Forces of the United States whose benefit is protected under USERRA shall
be deemed to meet this requirement. No other Participant (including, without
limitation, Participants who have severed or terminated employment, retired, or
died) shall be eligible to receive a Discretionary Profit Sharing Contribution.

     5.5.5. Transfers. The following special rules shall apply to certain
Participants who transfer to or from Recognized Employment after December 31,
2002:

	 	(a)	 	If a Participant (i) is employed by an Affiliate, but not by
the Employer, on the last day of such Plan Year, and (ii) during
such Plan Year has at least 1,000 Hours of Service with the
Employer, then the Participant shall be an eligible Participant for

21

 

	 	 	 	such Plan Year with respect to Recognized Compensation from the
Employer for such Plan Year.
	 
	 	(b)	 	If a Participant is employed in Recognized Employment on the
last day of the Plan Year, and during such Plan Year (i) has at
least 1,000 Hours of Service of combined service with the Employer
and all Affiliates, (ii) has less than 1,000 Hours of Service with
the Employer, and (iii) has less than 1,000 Hours of Service with
the Affiliates, then the Participant shall be an eligible
Participant for such Plan Year with respect to Recognized
Compensation from the Employer for such Plan Year.

     5.5.6. Deposit in Trust Fund. The Discretionary Profit Sharing
Contribution (if any) for a Plan Year shall be delivered to the Trustee for
deposit in the Trust Fund not later than the time prescribed by federal law
(including extensions) for filing the federal income tax return of the Employer
for the taxable year in which the Plan Year ends.

     5.5.7. Allocation. The Discretionary Profit Sharing Contribution (if any)
made for an eligible Participant for a Plan Year shall be allocated to that
Participant’s Profit Sharing Account as of the Annual Valuation Date of the
Plan Year with respect to which it is made and, for the purposes of Section 6,
shall be credited as soon as administratively feasible after it is received by
the Trustee.

5.6. Rollover Contributions.

     5.6.1. Eligible Contributions. A Participant eligible under Section 4.1.4
may make Rollover Contributions to the Plan, in such form and manner as may be
prescribed by the Company in accordance with the provisions of federal law
relating to rollover contributions, of cash (or the cash proceeds from
distributed property) and the following promissory notes for loans made to him
or her under a tax-qualified plan, that in either case are received by the
Participant in an eligible rollover distribution:

	 	(a)	 	Promissory notes outstanding under the U.S. Bancorp 401(k)
Savings Plan immediately before the Spin-off Date, but only if the
Participant rolls over to this Plan the entire eligible rollover
distribution from that plan; and
	 
	 	(b)	 	Solely in the case of a Participant whose Recognized
Employment began as a result of the Employer’s acquisition by
merger, asset purchase or otherwise of all or a portion of a trade
or business, promissory notes for loans made to the Participant
under the tax-qualified plan of the Participant’s previous employer.

The permitted sources for an eligible rollover distribution include: (i) an
eligible retirement plan that is a tax-qualified retirement plan under Code §
401(a), (ii) a plan described in Code §§ 403(a) or 403(b), (iii) an eligible
plan under Code § 457(b) which is maintained by a state, political subdivision
of a state, or any agency or instrumentality of a state or political
subdivision of a state, and (iv) an individual retirement account or annuity
described in Code §§ 408(a) or 408(b). Rollover Contributions shall be subject
to such conditions and limitations as the Company may prescribe from time to
time for administrative convenience and to preserve the tax-qualified status of
the Plan. The Plan will not accept a Rollover Contribution of after-tax
employee contributions to other employer plans or nondeductible contributions
to an individual retirement account or annuity.

     5.6.2. Specific Review. The Company shall have the right to reject or
return any such Rollover Contribution if, in its opinion, the acceptance
thereof might jeopardize the tax-qualified status of the Plan or unduly
complicate its administration, but the acceptance of any such Rollover
Contribution

22

 

shall not be regarded as an opinion or guarantee on the part of the
Company, the Trustee, or the Plan as to the tax consequences which may result
to the contributing Participant thereby.

     5.6.3. Allocation. The Rollover Contributions made by a Participant to the
Plan shall be delivered to the Trustee for deposit in the Trust Fund and shall
be allocated to a Rollover Account established for such Participant. For the
purposes of Section 6, the amount allocated to the Participant’s Rollover
Account shall be credited as soon as administratively feasible after it is
received by the Trustee.

     5.6.4. Effective on Spin-off Date. This Section 5.6 shall become
effective on the Spin-off Date.

5.7. Adjustments.

     5.7.1. Make-Up Contributions for Omitted Participants. If, after the
Employer’s annual contribution for a Plan Year has been made and allocated, it
should appear that, through oversight or a mistake of fact or law, a
Participant (or an employee who should have been considered a Participant) who
should have been entitled to share in such contribution received no allocation
or received an allocation which was less than the Participant should have
received, the Company may, at its election, and in lieu of reallocating such
contribution, direct the Employer to make a special make-up contribution for
the Account of such Participant in an amount adequate to provide for him the
same addition to the Participant’s Account for such Plan Year as the
Participant should have received.

     5.7.2. Mistaken Contributions. If, after the Employer’s annual
contribution for a Plan Year has been made and allocated, it should appear
that, through oversight or a mistake of fact or law, a Participant (or an
individual who was not a Participant) received an allocation which was more
than the Participant should have received, the Company may direct that the
mistaken contribution, adjusted for its pro rata share of any net loss or net
gain in the value of the Trust Fund which accrued while such mistaken
contribution was held therein, shall be withdrawn from the Account of such
individual and retained in the Trust Fund and added to the next succeeding
contribution of the Employer to the Trust Fund made after the determination
that such mistaken contribution had occurred.

     5.8. Limitation on Allocations. In no event shall amounts be allocated to the
Account of any Participant if, or to the extent, such amounts would exceed the
limitations set forth in Appendix A to this Plan document.

     5.9. Effect of Disallowance of Deduction or Mistake of Fact. All Employer
contributions to the Plan are conditioned on their qualification for deduction
for federal income tax purposes under Code § 404. If such deduction should be
disallowed, in whole or in part, for any Employer contribution to the Plan for
any year, or if any Employer contribution to the Plan is made by reason of a
mistake of fact, then there shall be calculated the excess of the amount
contributed over the amount that would have been contributed had there not
occurred a mistake in determining the deduction or a mistake of fact. The
Company, at its election, may direct the Trustee to return such excess,
adjusted for its pro rata share of any net loss (but not any net gain) in the
value of the Trust Fund which accrued while such excess was held therein, to
the Employer within one (1) year of the disallowance of the deduction or the
mistaken payment of the contribution, as the case may be. If the return of
such amount would cause the balance of any Account of any Participant to be
reduced to less than the balance which would have been in such Account had the
mistaken amount not been contributed, however, the amount to be returned to the
Employer shall be limited so as to avoid such reduction.

23

 

5.10. Vesting in Profit Sharing Accounts.

     5.10.1. Five-Year Vesting. Each Participant’s Profit Sharing Account
shall be fully (100%) Vested when the Participant completes five (5) years of
Vesting Service.

     5.10.2. Other Vesting. A Participant who is not Vested under Section
5.10.1 above shall be fully (100%) Vested in his or her Profit Sharing Account
upon the earliest occurrence of any of the following events while in the
employment of the Employer or an Affiliate:

	 	(a)	 	The Participant’s attainment of Normal Retirement Age,
	 
	 	(b)	 	The Participant’s Disability,
	 
	 	(c)	 	The Participant’s death,
	 
	 	(d)	 	A partial termination of the Plan affecting the Participant,
or
	 
	 	(e)	 	A complete termination of the Plan.

5.11. Vesting in Other Accounts. Each Participant’s 401(k) Account, Matching
Account, Rollover Account and Transfer Account shall be fully (100%) Vested at
all times.

24

 

SECTION 6

INVESTMENT AND ADJUSTMENT OF ACCOUNTS

6.1. Profit Sharing Portion.

     6.1.1. Establishing Investment Subfunds. At the direction of the Company,
the Trustee shall divide the Trust Fund into three (3) or more Investment
Subfunds, which shall serve as vehicles for the investment of the Accounts of
Participants and Beneficiaries. The Company shall determine the general
investment characteristics and objectives of each Investment Subfund.

     6.1.2. Operational Rules. In accordance with uniform rules, the Company
shall determine the circumstances under which a particular Investment Subfund
may be elected by Participants and Beneficiaries, or shall be automatically
utilized, the minimum or maximum amount or percentage of an Account which may
be invested in a particular Investment Subfund, the procedures for making or
changing investment elections and the effect of a Participant’s or
Beneficiary’s failure to make an effective election with respect to all or any
portion of an Account.

     6.1.3. Revising Investment Subfunds. The Company shall have the power,
from time to time, to dissolve Investment Subfunds, to direct that additional
Investment Subfunds be established, and to establish uniform rules implementing
Investment Subfund changes, limiting participation in a particular Investment
Subfund, or regulating withdrawals from Investment Subfunds.

6.2. ESOP Portion.

     6.2.1. Company Stock Fund. In addition to the Investment Subfunds created
pursuant to Section 6.1, the Trustee also shall maintain an Investment Subfund
referred to as the Company Stock Fund, which shall serve as a vehicle for the
investment of Participants’ Accounts and shall be managed by the Trustee. The
Company Stock Fund shall constitute the ESOP Portion of the Plan.

     6.2.2. Investment of ESOP Portion. The ESOP Portion of the Plan is
designed to invest primarily in Company Stock and shall be invested exclusively
in Company Stock, except for such amounts (if any) as the Trustee determines
are appropriate for liquidity. In no event shall the Trustee pay more than
adequate consideration (as defined in ERISA § 3(18)) for Company Stock that it
purchases for the Plan or receive less than adequate consideration for Company
Stock that it sells for the Plan. The primary purpose of the ESOP Portion is
to benefit Participants and Beneficiaries by obtaining and retaining for them,
individually and collectively, a position of equity ownership in the Company
and not by producing retirement income or investment gains.

     6.2.3. Diversification. Any amounts in a Participant’s or Beneficiary’s
Accounts that are invested in the Company Stock Fund may be reinvested at any
time in other Investment Subfunds. All investment, diversification, and
reinvestment elections shall be made in accordance with such rules regarding
the form of such elections, and the procedures for making or changing such
elections as shall be established from time to time by the Company.

     6.2.4. Dividends on Company Stock. Dividends on Company Stock held in the
Company Stock Fund shall be allocated to the Participants and Beneficiaries who
have any portion of their Accounts invested in the ESOP Portion of the Plan on
the applicable dividend record date, in proportion to their Company Stock Fund
balances on such record date. The dividends so allocated to a Participant or
Beneficiary shall be subject to the following rules:

25

 

	 	(a)	 	Election of Dividend Payment or Investment. Participants and
Beneficiaries shall have the opportunity to elect whether any
dividends allocated to them shall be paid to them in cash or
invested in the Company Stock Fund. Such elections shall remain in
force until changed by the Participant or Beneficiary. If a
Participant or Beneficiary does not make an initial election, then
any dividend allocated to that Participant or Beneficiary shall be
invested in the Company Stock Fund. The Company shall establish the
form of such elections, the procedures for making and changing such
elections, the frequency of such elections (provided that the
frequency is not less than once a year), and the restrictions (if
any) on the periods during which such elections may be made.
	 
	 	(b)	 	Payment of Dividends. For those Participants and
Beneficiaries who elect to receive their dividends in cash, such
dividends may, at the discretion of the Company, be paid by the
Company (or its agent) either directly to such Participant or
Beneficiary or to the Trustee. If such dividends are paid to the
Trustee, the Trustee shall pay the dividends to such Participant or
Beneficiary not later than ninety (90) days after the end of Plan
Year during which such dividends were paid to the Trustee. The
Company may decide to use either method or both methods in any Plan
Year, so long as the methods are applied to in a nondiscriminatory
manner. Such payment shall not be considered a distribution under
Section 8 and shall not qualify as an eligible rollover
distribution.
	 
	 	(c)	 	Investment of Dividends. Any investment of dividends in the
Company Stock Fund shall not be treated as an annual addition for
the purposes of Code § 415, as an elective contribution for purposes
of Code § 401(k), or as a matching contribution or employee
contribution for purposes of Code § 401(m).

     6.2.5. Voting of Company Stock. The Trustee shall vote Company Stock held
in the Trust Fund as specified below.

	 	(a)	 	Issuance of Proxies. As soon as practicable after (i) notice
of any shareholders’ meeting is received by the Trustee from the
Company, and (ii) any necessary information about Participants and
Beneficiaries and their respective interests in the Company Stock
Fund is received by the Trustee from the Company, the Trustee shall
prepare and deliver to each Participant and Beneficiary of a
deceased Participant a form of proxy (and related materials, all of
which shall be the same in form and content as are issued to
shareholders in general) directing the Trustee as to how it shall
vote at such meeting, or any adjournment thereof, the Participant’s
or Beneficiary’s respective shares of Company Stock held in the
Company Stock Fund as of the most recent Valuation Date for which a
valuation has been completed. The Trustee also shall specify the
deadline by which the directions of Participants and Beneficiaries
must be received by the Trustee in order to be given effect.
	 
	 	(b)	 	Voting. The Trustee shall vote the shares of Company Stock
for which it has received timely directions from Participants and
Beneficiaries, as they direct. The combined fractional shares of
Participants and Beneficiaries shall be voted to the extent possible
to reflect the directions of the Participants and Beneficiaries with
fractional shares. The directions received by the Trustee from
Participants and Beneficiaries shall be held by the Trustee in
confidence and shall not be divulged or released to any person,
including officers or employees of an Employer or any Affiliate,
except as necessary to administer the Plan.

26

 

	 	(c)	 	Nonresponse. The Trustee shall vote any shares of Company
Stock for which it has not received timely directions from
Participants and Beneficiaries in the same proportions as the shares
for which it did receive timely directions.

     6.2.6. Tender Offer for Company Stock. This Section 6.2.6 shall be
effective only if and when the Trustee determines that a bona fide tender offer
has been made for some or all of the Company Stock held in the Company Stock
Fund. A bona fide tender offer shall be deemed to have been made if the maker
of the offer has filed copies of the offer with the Securities and Exchange
Commission pursuant to section 14(d)(1) of the Securities Exchange Act of 1934.

	 	(a)	 	Receipt of Tender. As soon as practicable after (i)
notification of a bona fide tender offer for some or all of the
Company Stock held in the Company Stock Fund is received by the
Trustee from the maker of the offer, and (ii) any necessary
information about Participants and Beneficiaries and their
respective interests in the Company Stock Fund is received by the
Trustee from the Company, the Trustee shall prepare and deliver to
each Participant and Beneficiary of a deceased Participant a
notification (and related materials, all of which shall be the same
in form and content as are issued to shareholders in general) of the
existence of such a tender offer and shall solicit from each such
Participant and Beneficiary binding directions with respect to
whether the Trustee should tender the shares of Company Stock held
for the benefit of such Participant or Beneficiary. The Trustee
also shall specify the deadline by which the directions of
Participants and Beneficiaries must be received by the Trustee in
order to be given effect.
	 
	 	(b)	 	Tender of Securities. The Trustee shall tender the shares of
Company Stock for which it has received timely directions from
Participants and Beneficiaries, as they direct. The combined
fractional shares of Participants and Beneficiaries shall be
tendered (or not) to the extent possible to reflect the directions
of Participants and Beneficiaries with fractional shares. The
Trustee shall not honor or recognize any proxy given by any
Participant or Beneficiary to any person other than the Trustee.
The directions received by the Trustee from Participants and
Beneficiaries shall be held by the Trustee in confidence and shall
not be divulged or released to any person, including officers or
employees of an Employer or any Affiliate, except as necessary to
administer the Plan.
	 
	 	(c)	 	Nonresponse. The Trustee shall tender any shares of Company
Stock for which it has not received timely directions from
Participants and Beneficiaries in the same proportions as the shares
for which it did receive timely directions.
	 
	 	(d)	 	Fractional Tender. A Participant or Beneficiary may direct
the Trustee to tender some but less than all of the Participant’s or
Beneficiary’s shares of Company Stock.
	 
	 	(e)	 	Proportional Tender. If, under the terms of the tender
offer, the Trustee is able to sell some but less than all of the
shares of Company Stock for which it received timely directions to
sell, the Trustee shall tender a uniform percentage of each
Participant’s or Beneficiary’s shares which were under directions to
be tendered.
	 
	 	(f)	 	Securities Law Restrictions. In no case shall the Trustee
honor the direction of any Participant or Beneficiary to tender his
or her shares of Company Stock if the Trustee has determined that it
is prevented by securities law from tendering such shares.

27

 

	 	(g)	 	Future Investments. If the Trustee sells any of a
Participant’s or Beneficiary’s shares of Company Stock pursuant to
the Participant’s or Beneficiary’s directions or pursuant to
subsection (c) above, the proceeds from such sale shall be
reinvested in other Investment Subfunds in the manner elected by the
Participant or Beneficiary or, in the absence of such an election,
in the manner established by the Company, which shall not provide
for reinvestment in Company Stock.

     6.2.7. Put Option. If shares of Company Stock distributed from the
Company Stock Fund are not publicly traded when distributed or are subject to a
trading limitation when distributed, they shall be subject to a “put option” as
follows:

	 	(a)	 	The put option shall be exercised by the Participant or a
Beneficiary, by any person to whom the Company Stock has passed by
gift, and by any person (including an estate or a recipient of the
estate) to whom the Company Stock passed upon the death of the
Participant or Beneficiary (hereinafter the “Holder”).
	 
	 	(b)	 	The put option must be exercised during the sixty (60) day
period beginning on the date the Company Stock is first distributed
by the Plan or during the sixty (60) day period that begins one (1)
year after such date. The period during which the put option is
exercisable shall not include any time when a Holder is unable to
exercise the put option because the Company is prohibited from
honoring the put option by federal or state law.
	 
	 	(c)	 	To exercise the put option, the Holder shall notify the
Company in writing that the put option is being exercised.
	 
	 	(d)	 	Upon receipt of such notice, the Company shall tender to the
Holder within thirty (30) days of exercise the fair market value
either in cash or in a combination of cash equal to at least sixteen
and two-thirds percent (16-2/3%) of the fair market value and a
promissory note providing payment of the balance in not more than
five (5) equal annual installments of principal (that is, 16-2/3% of
total fair market value each), with the first installment due one
(1) year after exercise and the last annual installment due five (5)
years after exercise. The note shall provide for full right of
prepayment without penalty. The interest rate on such promissory
note shall be equal to the annual rate of interest on twenty-year
Treasury constant maturities as determined by the U.S. Department of
Treasury for the second month preceding the month in which the
promissory note is issued. The note shall be secured by (and only
by) a pledge of the shares sold.
	 
	 	(e)	 	The Trustee shall have the option to cause the Trust Fund to
assume the Company’s rights and obligations to acquire Company Stock
for cash under the put option.
	 
	 	(f)	 	For the purposes of this Section 6.2.7, a “trading
limitation” on a security is a restriction under any federal or
state securities law, any regulation thereunder, or an agreement
effecting the security which would make the security not as freely
tradable as one not subject to such restrictions.
	 
	 	(g)	 	If the shares of Company Stock were publicly traded and were
not subject to a trading limitation when distributed but cease to be
so traded during the period described in subsection (b) above, the
Company must notify each Holder in writing

28

 

	 	 	 	within ten (10) days after the shares cease to be so traded that
for the remainder of such period the shares are subject to the
put option described in this Section 6.2.7.

     6.2.8. Valuation of Employer Securities. The fair market value of any
Employer securities (including Company Stock) that are not publicly traded
shall be determined by a qualified “independent appraiser” (within the meaning
of Code § 401(a)(28)(C)) selected by the Trustee. The determination of fair
market value shall be made in accordance with applicable law and the
regulations and rulings thereunder and on the basis of all relevant factors for
determining the fair market value of securities. In the case of a transaction
between the Plan and a disqualified person (as defined in Code § 4975(e)(2)) or
a party in interest (as defined in ERISA § 3(14)), fair market value must be
determined as of the date of the transaction. In all other cases, fair market
value shall be determined as of the most recent Annual Valuation Date.

6.3. ERISA § 404(c) Compliance. The Plan, the Investment Subfunds and the
operational rules are intended to comply with ERISA § 404(c) and the
regulations and rulings thereunder.

6.4. Valuation and Adjustment of Accounts.

     6.4.1. Daily Adjustments. Accounts shall be adjusted as of each Valuation
Date as follows:

	 	(a)	 	Contributions. Contributions made with respect to a
Participant shall be added to the balance of the appropriate Account
as soon as administratively practicable after such contributions are
deposited in the Trust Fund. However, for purposes of applying the
nondiscrimination tests under Code §§ 401(a)(4), 401(k), and 401(m),
for purposes of calculating the deductions under Code § 404, for
purposes of determining the maximum allocations under Code § 415 and
for any other qualification provision of the Code, a contribution
shall be treated as having been made for the Plan Year designated by
the Company, provided that such contribution is deposited in the
Trust Fund by such deadline as may be prescribed for the applicable
provision of the Code.
	 
	 	(b)	 	Gain or Loss on Investment Subfunds. The gain or loss on the
Investment Subfunds in which Accounts are invested will be reflected
in such Accounts as follows:

	 	(1)	 	In the case of any mutual fund, the value
of that portion of a Account invested in the mutual fund as
of any date will equal the value of a share in such mutual
fund multiplied by the number of shares credited to the
Account.
	 
	 	(2)	 	In the case of any pooled Investment
Subfund, gains or losses on the Investment Subfund will be
allocated among the Accounts in proportion to the value of
that portion of each Account invested in the Investment
Subfund immediately prior to the allocation, and the gain
or loss allocated to each will be credited to or charged
against the Account. Alternatively, unit values may be
established for a pooled Investment Subfund in accordance
with investment rules prescribed for this purpose by the
Company, and the value of that portion of a Account
invested in a pooled Investment Subfund will equal the
value of a unit in the Investment Subfund multiplied by the
number of units credited to the Account.

29

 

	 	(3)	 	In the case of any investment that is held
specifically for an Account, any gain or loss on such
investment will be credited to or charged against the
Account.

	 	 	 	Any investment gain or loss of the Trust Fund that is not
directly attributable to the investment of the Account of any
Participant or Beneficiary (including, for example, any “float”
earned on a contribution or disbursement account established for
the Plan and not treated as part of the compensation of the
Trustee or paying agent for the Plan, and any 12b-1 or similar
fees paid to the Plan) shall be applied to pay administrative
expenses of the Plan, with any excess remaining at the close of
the Plan Year being allocated among the Accounts in accordance
with rules established for this purpose by the Company.
	 
	 	(c)	 	Participant Loan Interest Payments. The interest payments
received on a loan made to a Participant shall be added to the
balance of the appropriate Account as soon as administratively
practicable after such interest payments are deposited in the Trust
Fund. Interest accrued but unpaid on a loan on the date of any
distribution from an Account against which the loan is to be offset
shall be added to the balance of the Account prior to such offset
(or as of such earlier date as may be specified in the loan
procedures for the Participant loan program).
	 
	 	(d)	 	Distributions and Transfers. The distributions and transfers
made from an Account will be subtracted from the balance of the
Account as of the Valuation Date specified by the Company to
coincide with or immediately precede the date on which money is
withdrawn from the Investment Subfund to make the distribution or
transfer.

	 	 	Any items of income, gain or loss, or expense not provided for under
the above provisions and not applied to pay expenses of the Plan will be
allocated among the Accounts in accordance with rules prescribed for this
purpose by the Company and the portion allocated to each will be added to
or subtracted from the Account as of the date established by the Company.

		
	 	     6.4.2. Processing Transactions Involving Accounts. Accounts shall
be adjusted to reflect contributions, distributions and other
transactions as provided in Section 6.4.1. However, all information
necessary to properly reflect a given transaction in the Accounts may not
be immediately available, in which case the transaction will be reflected
in the Accounts when such information is received and processed.
Further, subject to express limits that may be imposed under the Code or
ERISA, the Company reserves the right to delay the processing of any
contribution, distribution or other transaction for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive net
asset values or prices, or to correct for the Company’s errors or
omissions or the errors or omissions of any service provider). With
respect to any contribution, distribution or other transaction, the
processing date of the transaction will be considered the applicable
Valuation Date for that transaction and will be binding for all purposes
of the Plan.

	 	 	6.5 Benefit Statements. The Company may cause benefit statements to be
issued from time to time advising Participants and Beneficiaries of the
status of their Accounts, but it is not required to issue benefit
statements (except at the request of a Participant or Beneficiary
pursuant to ERISA) and the issuance of such benefit statements (and any
errors that may be reflected in benefit statements) will not in any way
alter or affect the rights of Participants and Beneficiaries with respect
to the Plan and Trust Fund.

30

 

SECTION 7

MATURITY

7.1. Events of Maturity. A Participant’s Total Account shall mature and the
Vested portion shall become distributable in accordance with Section 8 upon the
earliest occurrence of any of the following events while in the employment of
the Employer or an Affiliate:

	 	(a)	 	The Participant’s death;
	 
	 	(b)	 	The Participant’s severance from employment, whether
voluntary or involuntary, including, without limitation, the
disposition by the Employer to a non-Affiliate of the Employer’s
interest in a subsidiary (within the meaning of Code § 409(d)(3))
which employs the Participant; or
	 
	 	(c)	 	The Participant’s Disability;

provided, however, that a transfer from Recognized Employment to employment
with the Employer that is other than Recognized Employment or a transfer from
the employment of one Employer participating in the Plan to another such
Employer or to any Affiliate shall not constitute an Event of Maturity.

7.2. Forfeiture of Profit Sharing Accounts. If a Participant is not Vested in
his or her Profit Sharing Account upon the occurrence of an Event of Maturity,
the non-Vested Profit Sharing Account shall be transferred to the Participant’s
Suspense Account as of the Valuation Date next following the Event of Maturity.
Thereafter, the disposition of the Suspense Account shall be as provided
below.

     7.2.1. Reemployment in Same Plan Year. If the Participant is subsequently
reemployed by the Employer or an Affiliate on or before the last day of the
Plan Year in which the Event of Maturity occurred, the Suspense Account shall
be reinstated as a Profit Sharing Account for the Participant as of the
Valuation Date on which the Participant first performs an Hour of Service upon
returning. During the period of subsequent employment, the Participant may
become Vested in the Profit Sharing Account under Section 5.10.

     7.2.2. Allocation of Forfeitures. If the Participant is not reemployed
before the last day of the Plan Year in which the Event of Maturity occurred,
the value of the Suspense Account shall be forfeited as of that date. The
Participant shall lose all claim to the Suspense Account when the forfeiture
occurs. Forfeitures shall be used in the following order: (i) to restore any
forfeited Profit Sharing Accounts that require reinstatement pursuant to
Section 7.2.3, and (ii) to be reallocated as of the last day of the Plan Year
in which the forfeiture occurs to the Profit Sharing Accounts of eligible
Participants in the same manner as the Discretionary Profit Sharing
Contribution for that Plan Year. If no Discretionary Profit Sharing
Contribution is made for that Plan Year, the forfeitures shall be reallocated
in the same manner as a Pro-Rata Contribution would have been allocated for
that Plan Year.

     7.2.3. Reemployment in Subsequent Plan Year. If a former Participant
whose Profit Sharing Account was forfeited under Section 7.2.2 is subsequently
reemployed by the Employer or an Affiliate and completes a year of Vesting
Service before incurring five consecutive One-Year Breaks in Service, a Profit
Sharing Account shall be reinstated for the Participant as of the Annual
Valuation Date of the Plan Year in which such year of Vesting Service is
completed. During the period of subsequent employment, the Participant may
become Vested in the Profit Sharing Account under Section 5.10. The value of
the Profit Sharing Account upon reinstatement shall be equal to the value of
the Suspense

31

 

Account as of the forfeiture date referred to in Section 7.2.2. The
reinstated Profit Sharing Account shall be funded as provided in Section 7.2.4.

     7.2.4. Funding of Reinstated Account. The amount required to reinstate a
Profit Sharing Account pursuant to Section 7.2.3 shall be provided from the
following sources in the priority indicated:

	 	(a)	 	Amounts forfeited under this Section 7.2 for the Plan Year,
	 
	 	(b)	 	Discretionary Profit Sharing Contributions for the Plan Year,
or
	 
	 	(c)	 	Net income or gain of the Trust Fund not previously allocated to other
Accounts.

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SECTION 8

DISTRIBUTION

8.1. Distributions to Participants upon Event of Maturity.

     8.1.1. Application Required. No distribution shall be made from the Plan
until the Participant entitled to a distribution has made a request for
distribution in the form and manner established by the Company. The Company
may, but need not, permit such application to be made by telephonic, electronic
or similar methods, in lieu of an application in writing, and shall determine
what additional information shall be required to be furnished in connection
with the Participant’s request.

	 	(a)	 	Exception for Small Amounts. If a Participant’s Vested Total
Account is Five Thousand Dollars ($5,000) or less at any time
following the Participant’s Event of Maturity, then the Vested Total
Account shall be distributed automatically (without an application
for distribution) in a single lump sum as soon as administratively
practicable. However, this subsection (a) shall not apply to a
Participant if the Participant’s Vested Total Account exceeded Five
Thousand Dollars ($5,000) at the time any previous distribution was
made to the Participant after the Event of Maturity.
	 
	 	(b)	 	Exception for Required Distributions. If no application has
been received within a reasonable period of time before the date by
which distribution is required to begin pursuant to Code § 401(a)(9)
or, if earlier, pursuant to the Plan, then the Vested Total Account
shall be distributed automatically (without an application for
distribution) in a single lump sum.

     8.1.2. Spousal Consent Not Required. The consent of a Participant’s
spouse shall not be required to make distributions from the Plan unless (i) the
Participant’s Account includes assets attributable to a merger or transfer
described in Section 10.3 that are subject to the survivor annuity rules of
Code § 401(a)(11), and (ii) the amount to be distributed includes such assets.

     8.1.3. Form of Distribution. Except as otherwise provided in this Section
8.1, the Participant’s Vested Total Account shall be distributed in such one or
more of the following ways as the Participant may request:

	 	(a)	 	Lump Sum – in a single lump sum distribution of the entire
Vested Total Account.
	 
	 	(b)	 	Partial Distribution – in a distribution of such portion of
the Vested Total Account as the Participant may request.
	 
	 	(c)	 	Installment Distributions – in a series of annual, quarterly
or monthly installment distributions. At any time after the
commencement of such distributions, the Participant may elect to
increase, decrease or stop such distributions, subject, however, to
Section 8.5.3.

     8.1.4. Time of Distribution. Upon receipt of a complete and properly
submitted request from the Participant for distribution after an Event of
Maturity, and after the right of the Participant to receive a distribution has
been established, the Company shall cause the Trustee to make or commence
distribution of the Participant’s Vested Total Account on or as soon as
administratively practicable after

33

 

the date requested by the Participant. Except as provided in Section
8.1.1, no distribution shall be made as of a Valuation Date preceding the date
the Participant’s completed request has been properly submitted.

     8.1.5. Required Beginning Date. Notwithstanding anything in this Section
8.1 to the contrary, distribution to a Participant shall be made or commenced
not later than the Participant’s required beginning date.

	 	(a)	 	Required Beginning Date for Five Percent (5%) Owners. If a
Participant is a five percent (5%) owner (as defined in Appendix B)
at any time during the Plan Year in which the Participant attains
age seventy and one-half (70-1⁄2) years, the Participant’s
required beginning date shall be the April 1 following the calendar
year in which the Participant attains age seventy and one-half
(70-1⁄2) years.
	 
	 	(b)	 	Required Beginning Date for All Other Participants. If a
Participant is not subject to (a) above, the Participant’s required
beginning date shall be the later of (i) the April 1 following the
calendar year in which the Participant attains age seventy and
one-half (70-1⁄2) years, or (ii) the April 1 following the
calendar year in which the Participant terminates employment with
the Employer and all Affiliates.

     8.1.6. Death Prior to Distribution. If a Participant dies before
distribution of the Participant’s Vested Total Account has been completed, the
undistributed Vested Total Account shall be distributed to the Participant’s
Beneficiary as provided in Section 8.3.

8.2. Distributions to Participants During Employment.

     8.2.1. Distributions from Rollover Accounts. While employed by the
Employer or an Affiliate, a Participant may receive a distribution of all or
any portion of the Participant’s Rollover Account. To receive such a
distribution, the Participant must complete and submit a request for the
distribution in the form and manner established by the Company. The Company
may, but need not, permit such application to be made by telephonic, electronic
or similar methods, in lieu of an application in writing, and shall determine
what information shall be required to be furnished in connection with the
Participant’s request in addition to the dollar amount to be distributed. The
distribution shall be made as soon as administratively practicable following
approval of the request.

	 	(a)	 	Spousal Consent Not Required. Spousal consent shall not be
required to make a distribution from a Rollover Account to a married
Participant.
	 
	 	(b)	 	Coordination with Section 6. If the Rollover Account is
invested in more than one Investment Subfund, the amount withdrawn
shall be charged to each Investment Subfund in the same proportions
as the Account is invested in each Investment Subfund.

     8.2.2.
Age 59-1⁄2 Distributions. While employed by the Employer or an
Affiliate, a Participant may receive a distribution of all or any portion of
the Participant’s Total Account if the Participant has attained age fifty-nine
and one-half (59-1⁄2) years. To receive such a distribution, the Participant
must complete and submit a request for the distribution in the form and manner
established by the Company. The Company may, but need not, permit such
application to be made by telephonic, electronic or similar methods, in lieu of
an application in writing, and shall determine what information shall be
required to be furnished in connection with the Participant’s request in
addition to the dollar

34

 

amount to be distributed. The distribution shall be made as soon as
administratively practicable following approval of the request.

	 	(a)	 	Spousal Consent Not Required. Spousal consent shall not be
required to make an age 59-1⁄2 distribution to a married
Participant unless (i) the Participant’s Account includes assets
attributable to a merger or transfer described in Section 10.3 that
are subject to the survivor annuity rules of Code § 401(a)(11), and
(ii) the amount to be distributed includes such assets.
	 
	 	(b)	 	Sequence of Accounts. Each distribution made pursuant to
this Section 8.2.2 shall first be taken from and charged to the
Participant’s Accounts in the following sequence:

	 	(1)	 	Rollover Account
	 
	 	(2)	 	401(k) Account
	 
	 	(3)	 	Matching Account
	 
	 	(4)	 	Profit Sharing Account
	 
	 	(5)	 	Transfer Account

	 	(c)	 	Coordination with Section 6. If a distribution is made from
an Account which is invested in more than one Investment Subfund,
the amount distributed shall be charged to each Investment Subfund
in the same proportions as the Account is invested in each
Investment Subfund.

     8.2.3. Hardship Distributions. While employed by the Employer or an
Affiliate, a Participant may receive a hardship distribution from the
Participant’s 401(k) Account and Transfer Account if the Company determines
that such distribution is for one of the purposes described in (a) below and
the conditions in (b) and (d) below have been fulfilled. To receive such a
hardship distribution, the Participant must complete and submit a request for
the distribution in the form and manner established by the Company. The
Company may, but need not, permit such application to be made by telephonic,
electronic or similar methods, in lieu of an application in writing, and shall
determine what information shall be required to be furnished in connection with
the Participant’s request in addition to the dollar amount to be distributed.
The distribution shall be made as soon as administratively practicable
following approval of the request.

	 	(a)	 	Purposes. Hardship distributions shall be allowed under this
Section 8.2.3 only if the Participant establishes that the
distribution is to be made for one of the following purposes:

	 	(1)	 	Expenses for medical care described in Code
§ 213(d) previously incurred by the Participant, the
Participant’s spouse or any dependents of the Participant
(as defined in Code § 152) or necessary for these persons
to obtain medical care described in Code § 213(d);
	 
	 	(2)	 	Costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage
payments);

35

 

	 	(3)	 	Payment of tuition, related educational
fees and room and board expenses for the next twelve (12)
months of post-secondary education for the Participant, or
the Participant’s spouse, children or dependents (as
defined in Code § 152); or
	 
	 	(4)	 	Payments necessary to prevent the eviction
of the Participant from the Participant’s principal
residence or foreclosure on the mortgage of that principal
residence.

	 	 	 	Such purposes shall be considered to be an immediate and heavy
financial need of the Participant.

	 	(b)	 	Limitations. In no event shall the cumulative amount of
hardship distributions from a Participant’s 401(k) Account exceed
the amount of 401(k) Contributions to that Account (i.e., hardship
distributions from that Account shall not include any earnings on
such contributions or any curative allocations or earnings on
curative allocations made pursuant to Section 2.3 of Appendix D).
The amount of the hardship distribution shall not exceed the amount
of the Participant’s immediate and heavy financial need; provided,
however, that the amount of the immediate and heavy financial need
may include amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result from the
distribution. In addition, a hardship distribution shall not be
allowed unless the Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans (at the time
of the loan) currently available under all plans maintained by the
Employer and Affiliates. Other funds are not currently available
unless the funds are available prior to or coincidently with the
date the hardship distribution is available.
	 
	 	(c)	 	Spousal Consent Not Required. Spousal consent shall not be
required to make a hardship distribution to a married Participant
unless (i) the Participant’s Account includes assets attributable to
a merger or transfer described in Section 10.3 that are subject to
the survivor annuity rules of Code § 401(a)(11), and (ii) the amount
to be distributed includes such assets.
	 
	 	(d)	 	Coordination with Other Plans. The rules described in this
Section 8.2.3(d) apply only if the hardship distribution includes a
portion of the Participant’s 401(k) Account. The Participant’s
401(k) Enrollment Agreement and elective contributions and employee
contributions under all other plans maintained by the Employer and
Affiliates shall be canceled for six (6) months after receipt of a
hardship distribution and shall not be automatically reinstated.
Thereafter, the Participant may, upon giving prior notice to the
Company, enter into a new 401(k) Enrollment Agreement effective as
of the first day of any pay period following such six (6) month
period, provided the Participant is in Recognized Employment on that
effective date. For the purposes of this Section 8.2.3(d), all
other plans maintained by the Employer and Affiliates shall mean all
qualified and nonqualified plans of deferred compensation maintained
by the Employer and Affiliates (including stock option, stock
purchase or similar plans).
	 
	 	(e)	 	Sequence of Accounts. Each hardship distribution made
pursuant to this Section 8.2.3 shall first be taken from and charged
to the Participant’s Accounts in the following sequence:

36

 

	 	(1)	 	Transfer Account
	 
	 	(2)	 	401(k) Account.

	 	(f)	 	Coordination with Section 6. If the hardship distribution is
made from an Account which is invested in more than one Investment
Subfund, the amount withdrawn shall be charged to each Investment
Subfund in the same proportions as the Account is invested in each
Investment Subfund.

8.3. Distribution to Beneficiary.

     8.3.1. Separate Account for Each Beneficiary. If more than one
Beneficiary is entitled to distribution following the Participant’s death, the
portion of the Participant’s Vested Total Account that is distributable to each
Beneficiary shall be segregated into a separate Account for such Beneficiary.
If the Participant’s Vested Total Account is invested in more than one
Investment Subfund, the amount segregated for each Beneficiary shall be charged
to each Investment Subfund in the same proportions as the Participant’s Vested
Total Account is invested in each Investment Subfund.

     8.3.2. Application for Distribution Required. To receive a distribution,
a Beneficiary must complete and submit a request for the distribution in the
form and manner established by the Company. The Company may, but need not,
permit such application to be made by telephonic, electronic or similar
methods, in lieu of an application in writing, and shall determine what
information shall be required to be furnished in connection with the
Beneficiary’s request.

	 	(a)	 	Exception for Small Amounts. If the Beneficiary’s Account is
Five Thousand Dollars ($5,000) or less at any time following the
Participant’s death, then the Beneficiary’s Account shall be
distributed automatically (without an application for distribution)
in a single lump sum as soon as administratively practicable.
	 
	 	(b)	 	Exception for Required Distributions. If no application has
been received within a reasonable period of time before the date by
which distribution is required to begin pursuant to Code § 401(a)(9)
or, if earlier, pursuant to the Plan, then the Beneficiary’s Account
shall be distributed automatically (without an application for
distribution) in a single lump sum.

     8.3.3. Form of Distribution. Except as otherwise provided in this Section
8.3, the Beneficiary’s Account shall be distributed in such one or more of the
following ways as the Beneficiary may request:

	 	(a)	 	Lump Sum – a single lump sum distribution of the
Beneficiary’s entire Account.
	 
	 	(b)	 	Partial Distribution – a distribution of such portion of the
Beneficiary’s Account as the Beneficiary may request.
	 
	 	(c)	 	Installment Distributions – in a series of annual, quarterly
or monthly installment distributions. At any time after the
commencement of such distributions, the Beneficiary may elect to
increase, decrease or stop such distributions, subject, however, to
Section 8.5.3.

     8.3.4. Time of Distribution. Upon receipt of a complete and properly
submitted request from the Beneficiary for distribution after the Participant’s
death, and after the right of the Beneficiary to

37

 

receive a distribution has been established, the Company shall cause the
Trustee to make or commence distribution of the Beneficiary’s Account on or as
soon as administratively practicable after the date requested by the
Beneficiary, subject to the following:

	 	(a)	 	Death Before Participant’s Required Beginning Date. If the
Participant dies before his or her required beginning date under
Section 8.1.5, the Beneficiary’s Account shall be distributed to the
Beneficiary not later than December 31 of the year containing the
fifth anniversary of the Participant’s death, subject to the
following:

	 	(1)	 	Distributions to a designated Beneficiary (as
defined in subsection (d) below) may extend beyond five (5)
years from the death of the Participant if they are in the
form of installment distributions where the minimum amount
that will be distributed each distribution calendar year after
the year of the Participant’s death is the quotient obtained
by dividing the Beneficiary’s Account balance on the most
recent Valuation Date preceding the distribution calendar year
(adjusted as may be required by Treasury Regulations) by the
remaining life expectancy of the Account’s designated
Beneficiary (determined as provided in subsection (c) below)
provided such installment distributions begin not later than
December 31 of the year following the year in which the
Participant’s death occurred (except as provided in paragraph
(2) below).
	 
	 	(2)	 	If the Beneficiary is the surviving spouse of the
Participant, installment distributions may commence at any
time on or before the later of (i) December 31 of the year in
which the Participant would have reached age 701⁄2, or (ii)
December 31 of the year following the year in which the
Participant’s death occurred.

	 	 	 	If a surviving spouse who is entitled to distributions under this
subsection (a) dies before distributions to the surviving spouse
begin, this subsection (other than paragraph (2)) shall be applied
as if the surviving spouse were the Participant, with the date of
death of the surviving spouse being substituted for the date of
death of the Participant.
	 
	 	(b)	 	Death After Participant’s Required Beginning Date. If the
Participant dies on or after his or her required beginning date
under Section 8.1.5 and after beginning to receive installment
distributions, the remaining installment distributions shall be made
to the Beneficiary, with the minimum amount that must be distributed
to the Beneficiary for each distribution calendar year after the
year of the Participant’s death being determined under Section
8.5.3(a).
	 
	 	(c)	 	Life Expectancy Calculations. For purposes of this Section
8.3.4, life expectancies shall be calculated by use of the Single
Life Table in Treasury Regulation § 1.401(a)(9)-9 in accordance with
the following:

	 	(1)	 	If the Participant’s sole designated
Beneficiary is the Participant’s surviving spouse, the
remaining life expectancy of the surviving spouse is
calculated for each distribution calendar year from the
Single Life Table in Treasury Regulation § 1.401(a)(9)-9
using the surviving spouse’s age as of the spouse’s
birthday in that year; provided, that for distribution
calendar years after the year of the spouse’s death, the
remaining life expectancy of the surviving spouse is
calculated using the age of the surviving spouse as of the

38

 

	 	 	 	spouse’s birthday in the calendar year of the spouse’s
death reduced by one for each subsequent calendar year.
	 
	 	(2)	 	If the Participant’s surviving spouse is
not the sole designated Beneficiary, the remaining life
expectancy of the designated Beneficiary is calculated from
the Single Life Table in Treasury Regulation §
1.401(a)(9)-9 using the age of the designated Beneficiary
in the year following the year of the Participant’s death
reduced by one for each subsequent year.

	 	(d)	 	Designated Beneficiary. For purposes of this Section 8.3.4,
“designated Beneficiary” means any individual who (i) is a
Beneficiary under the Plan and (ii) is the designated beneficiary
under Code § 401(a)(9) and Treasury Regulation § 1.401(a)(9)-1,
Q&A-4.

8.4. Designation of Beneficiaries.

     8.4.1. Right to Designate. Each Participant may designate, upon forms to
be furnished by and filed with the Company, one or more primary Beneficiaries
or alternative Beneficiaries to receive all or a specified part of the
Participant’s Total Account in the event of the Participant’s death. The
Participant may change or revoke any such designation from time to time without
notice to or consent from any Beneficiary. No such designation, change or
revocation shall be effective unless signed by the Participant and received by
the Company during the Participant’s lifetime. The Company may establish rules
for the use of electronic signatures. Until such rules are established,
electronic signatures shall not be effective.

     8.4.2. Spousal Consent. Notwithstanding anything in Section 8.4.1 to the
contrary, a designation will not be valid for the purpose of paying benefits
from the Plan to anyone other than a surviving spouse of the Participant (if

there is a surviving spouse) unless that surviving spouse consents in writing
to the designation of another person as Beneficiary. To be valid, the consent
of such spouse must be in writing, must acknowledge the effect of the
designation of the Beneficiary and must be witnessed by a notary public. The
consent of the spouse must be to the designation of a specific named
Beneficiary which may not be changed without further spousal consent. The
consent of the surviving spouse need not be given at the time the designation
is made. The consent of the surviving spouse need not be given before the
death of the Participant. The consent of the surviving spouse will be
required, however, before benefits can be paid to any person other than the
surviving spouse. The consent of a spouse shall be irrevocable and shall be
effective only with respect to that spouse.

     8.4.3. Failure of Designation. If a Participant: (i) fails to designate
a Beneficiary, (ii) designates a Beneficiary and thereafter such designation is
revoked without another Beneficiary being named, or (iii) designates one or
more Beneficiaries and all such Beneficiaries so designated fail to survive the
Participant, such Participant’s Total Account, or the part thereof as to which
such Participant’s designation fails, as the case may be, shall be payable to
the first class of the following classes of automatic Beneficiaries with a
member surviving the Participant and (except in the case of the Participant’s
surviving issue) in equal shares if there is more than one member in such class
surviving the Participant:

	 	(a)	 	Participant’s surviving spouse
	 
	 	(b)	 	Participant’s surviving issue per stirpes and not per capita
	 
	 	(c)	 	Participant’s surviving parents

39

 

	 	(d)	 	Participant’s surviving brothers and sisters
	 
	 	(e)	 	Representative of Participant’s estate.

     8.4.4. Disclaimers by Beneficiaries. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant’s Total Account may
disclaim his or her interest therein subject to the following requirements. To
be eligible to disclaim, such Beneficiary must be a natural person, must not
have received a distribution of all or any portion of a Total Account at the
time such disclaimer is executed and delivered, and must have attained at least
age twenty-one (21) years as of the date of the Participant’s death. Any
disclaimer must be in writing and must be signed by the Beneficiary and
acknowledged by a notary public. A disclaimer shall state that the
Beneficiary’s entire interest in the undistributed Total Account is disclaimed
or shall specify what portion thereof is disclaimed. To be effective, the
disclaimer must be both signed and actually delivered to the Company after the
date of the Participant’s death but not later than nine (9) months after the
date of the Participant’s death. A disclaimer shall be irrevocable when
delivered to the Company. A disclaimer shall be considered to be delivered to
the Company only when actually received by the Company. The Company shall be
the sole judge of the content, interpretation and validity of a purported
disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be
considered not to have survived the Participant as to the interest disclaimed.
A disclaimer by a Beneficiary shall not be considered to be a transfer of an
interest in violation of the provisions of Section 9 and shall not be
considered to be an assignment or alienation of benefits in violation of
federal law prohibiting the assignment or alienation of benefits under the
Plan. No other form of attempted disclaimer shall be recognized by the
Company.

     8.4.5. Definitions. When the following terms are used herein and, unless
the Participant has otherwise specified in the Participant’s Beneficiary
designation, they shall have the following meaning:

	 	(a)	 	Issue — all persons who are lineal descendants of the person
whose issue are referred to, subject to the following:

	 	(1)	 	A legally adopted child and the adopted
child’s lineal descendants always shall be lineal
descendants of each adoptive parent (and of each adoptive
parent’s lineal ancestors).
	 
	 	(2)	 	A legally adopted child and the adopted
child’s lineal descendants never shall be lineal
descendants of any former parent whose parental rights were
terminated by the adoption (or of that former parent’s
lineal ancestors); except that if, after a child’s parent
has died, the child is legally adopted by a stepparent who
is the spouse of the child’s surviving parent, the child
and the child’s lineal descendants shall remain lineal
descendants of the deceased parent (and the deceased
parent’s lineal ancestors).
	 
	 	(3)	 	If the person (or a lineal descendant of
the person) whose issue are referred to is the parent of a
child (or is treated as such under applicable law) but
never received the child into that parent’s home and never
openly held out the child as that parent’s child (unless
doing so was precluded solely by death), then neither the
child nor the child’s lineal descendants shall be issue of
the person.

	 	(b)	 	Child — an issue of the first generation.

40

 

	 	(c)	 	Per Stirpes — in equal shares among living children of the
person whose issue are referred to and the issue (taken
collectively) of each deceased child of such person, with such issue
taking by right of representation of such deceased child.
	 
	 	(d)	 	Survive and Surviving — living after the death of the
Participant.

     8.4.6. Special Rules. Unless the Participant has otherwise specified in
the Participant’s Beneficiary designation, the following rules shall apply:

	 	(a)	 	If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it shall be
deemed that the Beneficiary was not living at the time of the death
of the Participant.
	 
	 	(b)	 	The automatic Beneficiaries specified in Section 8.4.3 and
the Beneficiaries designated by the Participant shall become fixed
at the time of the Participant’s death so that, if a Beneficiary
survives the Participant but dies before the receipt of all payments
due such Beneficiary hereunder, such remaining payments shall be
payable to the representative of such Beneficiary’s estate.
	 
	 	(c)	 	If the Participant designates as a Beneficiary the person who
is the Participant’s spouse on the date of the designation, either
by name or by relationship, or both, the dissolution, annulment or
other legal termination of the marriage between the Participant and
such person shall automatically revoke such designation. (The
foregoing shall not prevent the Participant from designating a
former spouse as a Beneficiary on a form signed by the Participant
and received by the Company after the date of the legal termination
of the marriage between the Participant and such former spouse, and
during the Participant’s lifetime.)
	 
	 	(d)	 	Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the Participant
shall be given effect without regard to whether the relationship to
the Participant exists either then or at the Participant’s death.
	 
	 	(e)	 	Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to designate
the person or persons standing in such relationship to the
Participant at the Participant’s death.

A Beneficiary designation is permanently void if it either is signed or is
filed by a Participant who, at the time of such signing or filing, is then a
minor under the law of the state of the Participant’s legal residence. The
Company shall be the sole judge of the content, interpretation and validity of
a purported Beneficiary designation.

8.5. General Distribution Rules.

     8.5.1. Notices. The Company will issue such notices as may be required
under Code §§ 402(f) and 411(a)(11), and any other Code sections in connection
with distributions from the Plan, and no distribution will be made unless it is
consistent with such notice requirements. Generally, distributions may not
commence as of a date that is more than ninety (90) days or less than thirty
(30) days after such notices are given to the distributee. Distribution may
commence less than thirty (30) days after the notice required under Treasury
Regulation § 1.411(a)-11(c) or the notice required under Treasury Regulation §
1.402(f)-2T is given, provided however, that:

41

 

	 	(a)	 	The distributee is clearly informed that he or she has a
right to a period of at least thirty (30) days after receiving such
notice to consider whether or not to elect distribution; and
	 
	 	(b)	 	The distributee, after receiving the notice, affirmatively
elects a distribution.

     8.5.2. Direct Rollover. A distributee who is eligible to elect a direct
rollover may elect, at the time and in the manner prescribed by the Company, to
have all or any portion of an eligible rollover distribution paid directly to
an eligible retirement plan specified by the distributee in a direct rollover.
A distributee who is eligible to elect a direct rollover includes only a
Participant, a Beneficiary who is the surviving spouse of a Participant and a
Participant’s spouse or former spouse who is the Alternate Payee under a
qualified domestic relations order, as defined in Appendix C.

	 	(a)	 	Eligible Rollover Distribution. “Eligible rollover
distribution” means any distribution of all or any portion of an
Account to a distributee who is eligible to elect a direct rollover
except (i) any distribution that is one of a series of substantially
equal installments payable monthly, quarterly or annually over a
period of time not extending beyond the remaining life expectancy of
such distributee or pursuant to the applicable table under Treasury
Regulation § 1.401(a)(9)-9 and (ii) any distribution that is one of
a series of substantially equal installments payable not less
frequently than annually over a specified period of ten (10) years
or more, and (iii) any distribution to the extent such distribution
is required under Code § 401(a)(9), and (iv) any hardship
distribution, and (v) the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
	 
	 	 	 	To the extent an eligible rollover distribution consists of
after-tax employee contributions which are not includible in
gross income, such portion may be transferred only to an
individual retirement account or annuity described in Code §
408(a) or 408(b), or to a qualified defined contribution plan
described in Code § 401(a) or 403(a) that agrees to separately
account for amounts so transferred, including 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.
	 
	 	(b)	 	Eligible Retirement Plan. “Eligible retirement plan” means
(i) an individual retirement account described in Code § 408(a), or
(ii) an individual retirement annuity described in Code § 408(b), or
(iii) a plan described in Code § 403(a) or Code § 403(b), or (iv) a
qualified trust described in Code § 401(a) that accepts the eligible
rollover distribution, or (v) eligible plan under Code § 457(b)
which is maintained by a state, political subdivision of a state, or
any agency or instrumentality of a state or political subdivision of
a state and which agrees to separately account for amounts
transferred into such plan from this Plan. The definition of
eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse
who is an Alternate Payee.
	 
	 	(c)	 	Direct Rollover. “Direct rollover” means the payment of an
eligible rollover distribution by the Plan to the eligible
retirement plan specified by the distributee who is eligible to
elect a direct rollover.

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     8.5.3. Minimum Installment Requirements. If installment distributions are
being made, a minimum amount shall be distributed each calendar year beginning
with the calendar year immediately preceding the calendar year which contains
the Participant’s required beginning date under Section 8.1.5 (the “first
distribution calendar year”), determined in accordance with the following:

	 	(a)	 	During Participant’s Lifetime. The minimum amount to be
distributed during the Participant’s lifetime for each distribution
calendar year, beginning with the first distribution calendar year,
must be at least equal to the quotient obtained by dividing the
Participant’s Total Account balance on the most recent Valuation
Date preceding the distribution calendar year (adjusted as may be
required by Treasury Regulations) by whichever of the following
numbers is applicable:

	 	(1)	 	In the case of distributions to a
Participant whose designated Beneficiary (as defined in
subsection (c) below) for the distribution calendar year is
not solely the Participant’s spouse, the number equal to
the distribution period in the Uniform Lifetime Table set
forth in Treasury Regulation § 1.401(a)(9)-9, using the
Participant’s age as of the Participant’s birthday in the
distribution calendar year.
	 
	 	(2)	 	In the case of distributions to a
Participant whose sole designated Beneficiary for the
distribution calendar year is the Participant’s spouse, the
number equal to the greater of (i) the distribution period
in the Uniform Lifetime Table set forth in Treasury
Regulation § 1.401(a)(9)-9, using the Participant’s age as
of the Participant’s birthday in the distribution calendar
year, or (ii) the number in the Joint and Last Survivor
Table set forth in Treasury Regulation § 1.401(a)(9)-9,
using the Participant’s and spouse’s attained ages as of
the Participant’s and spouse’s birthdays in the
distribution calendar year.

	 	(b)	 	After Participant’s Death. If the Participant dies on or
after the date installment distributions begin and there is a
designated Beneficiary, the minimum amount to be distributed to the
designated Beneficiary for each distribution calendar year after the
year of the Participant’s death must be at least equal to the
quotient obtained by dividing the designated Beneficiary’s Account
balance on the most recent Valuation Date preceding the distribution
calendar year (adjusted as may be required by Treasury Regulations)
by whichever of the following numbers is applicable:

	 	(1)	 	In the case of distributions to a
designated Beneficiary who is not the Participant’s spouse,
the number equal to the greater of (i) the Participant’s
remaining life expectancy, calculated from the Single Life
Table in Treasury Regulation § 1.401(a)(9)-9 using the age
of the Participant in the year of death reduced by one for
each subsequent year, or (ii) the remaining life expectancy
of the designated Beneficiary, calculated from the Single
Life Table in Treasury Regulation § 1.401(a)(9)-9 using the
age of the designated Beneficiary in the year following the
year of the Participant’s death reduced by one for each
subsequent year.
	 
	 	(2)	 	In the case of distributions to a
designated Beneficiary who is the Participant’s surviving
spouse, the number equal to the greater of (i) the
Participant’s remaining life expectancy, calculated from
the Single Life Table in Treasury Regulation §
1.401(a)(9)-9 using the age of the Participant

43

 

	 	 	 	in the year of death reduced by one for each subsequent
year, or (ii) the remaining life expectancy of the
surviving spouse, calculated for each distribution
calendar year after the year of the Participant’s death
from the Single Life Table in Treasury Regulation §
1.401(a)(9)-9 using the surviving spouse’s age as of the
spouse’s birthday in that year; provided, that for
distribution calendar years after the year of the spouse’s
death, the remaining life expectancy of the surviving
spouse is calculated using the age of the surviving spouse
as of the spouse’s birthday in the calendar year of the
spouse’s death reduced by one for each subsequent calendar
year.
	 
	 	 	 	If the Participant dies on or after the date installment
distributions begin and there is no designated Beneficiary
as of September 30 of the year after the year of the
Participant’s death (for example, if the Beneficiary is a
trust), the minimum amount to be distributed to the
Beneficiary for each distribution calendar year after the
year of the Participant’s death must be at least equal to
the quotient obtained by dividing the Beneficiary’s
Account balance on the most recent Valuation Date
preceding the distribution calendar year (adjusted as may
be required by Treasury Regulations) by the Participant’s
remaining life expectancy, calculated from the Single Life
Table in Treasury Regulation § 1.401(a)(9)-9 using the age
of the Participant in the year of death reduced by one for
each subsequent year.

	 	(c)	 	Designated Beneficiary. For purposes of this Section 8.5.3,
“designated Beneficiary” means any individual who (i) is a
Beneficiary under the Plan and (ii) is the designated beneficiary
under Code § 401(a)(9) and Treasury Regulation § 1.401(a)(9)-1,
Q&A-4.

     8.5.4. Compliance with Code § 401(a)(9). Notwithstanding the foregoing
provisions of this Section 8, all distributions under the Plan shall comply
with the minimum distribution requirements of Code § 401(a)(9), including the
incidental death benefit requirements of Code § 401(a)(9)(G) and the
regulations thereunder. No distribution option otherwise permitted under this
Plan document will be available to a Participant or Beneficiary if such
distribution option does not meet the requirements of Code § 401(a)(9),
including subparagraph (G) thereof.

     8.5.5. Distribution in Cash or in Kind. Distribution of a Participant’s
Total Account shall be made in cash (or cash equivalents). If, however, the
Total Account to be distributed consists in whole or in part of a Participant’s
unpaid promissory note, the note shall be distributed in kind. If the Total
Account to be distributed is in whole or in part invested in the Company Stock
Fund, the Participant or Beneficiary of a deceased Participant may elect
distribution of that portion of the Total Account in one of the following ways:

	 	(a)	 	Shares of Company Stock and such cash as may be necessary to
represent a fractional share of Company Stock, or
	 
	 	(b)	 	Entirely in cash.

In the absence of an election to receive shares of Company Stock, the portion
of the Total Account invested in the Company Stock Fund shall be distributed
entirely in cash. In the case of a cash distribution in lieu of shares (and a
fractional share) of Company Stock, such shares (and such fractional share)
shall be valued as of the Valuation Date specified by the Company to coincide
with or immediately

44

 

precede the date on which money is withdrawn from the Company Stock Fund in
order to make the distribution.

     8.5.6. Facility of Payment. In case of the legal disability, including
minority, of any person entitled to receive any distribution under the Plan,
payment shall be made, if the Company shall be advised of the existence of such
condition:

	 	(a)	 	To the duly appointed guardian, conservator, attorney-in-fact
or other legal representative of such person, or
	 
	 	(b)	 	To a individual or institution entrusted with the care or
maintenance of such person, provided, however, such individual or
institution has satisfied the Company that the payment will be used
for the best interest and to assist in the care of such person, and
provided further, that no prior claim for said payment has been made
by a duly appointed guardian, conservator, attorney-in-fact or other
legal representative of such person.

Any payment made in accordance with the foregoing provisions of this Section
shall constitute a complete discharge of any liability or obligation of the
Company, the Trustee and the Plan therefor.

     8.5.7. U.S. Money. All cash payments hereunder shall be in lawful money
of the United States of America.

     8.5.8. Missing Participants or Beneficiaries. A Participant or
Beneficiary must maintain his or her most recent post office address on file
with the Company. Any communication addressed to the Participant or
Beneficiary at the post office address on file with the Company will be binding
on the Participant or Beneficiary for all purposes of the Plan, and the Company
is not obligated to search for any Participant or Beneficiary. If a
Participant or Beneficiary fails to claim any amount payable under the Plan (or
fails to cash any check drawn on the disbursement account established for the
Plan), such amount will be forfeited by the Participant or Beneficiary at such
time as is deemed appropriate by the Company, or may be disposed of in such
other equitable manner as is deemed appropriate by the Company. Any forfeited
amounts will be used to pay administrative expenses of the Plan or will be
applied to reduce Matching Contributions made to the Plan. If a Participant or
Beneficiary claims a forfeited amount prior to termination of the Plan, the
value forfeited (measured as of the date of the forfeiture) shall be restored
to the Participant or Beneficiary (without adjustment for any subsequent income
or appreciation). The Company shall make an additional contribution to the
Plan as necessary to provide for the restoration.

8.6. Loans. The provisions of this Section 8.6 shall be subject to the
following rules, conditions and limitations:

     8.6.1. Availability. Loans shall be made available to all Participants
who are actively employed by the Employer or an Affiliate subject to
limitations and conditions established under this Section 8.6 by the Company on
a reasonably equivalent basis. Loans shall not be made available to Highly
Compensated Employees in an amount (expressed as a percentage of their Total
Accounts) greater than is made available to other employees.

     8.6.2. Spousal Consent Not Required. Spousal consent shall not be
required to make a loan to a married Participant unless the Company establishes
a rule to the contrary for all similarly situated Participants, or both: (i)
the Participant’s Account includes assets attributable to a transfer or merger
described in Section 10.3 that are subject to the survivor annuity rules of
Code § 401(a)(11), and (ii) the amount to be loaned includes such assets. In
the event that spousal consent is required, no loan

45

 

shall be made pursuant to this Section 8.6 unless the spouse of the
Participant consents to the loan. To be valid, the consent of such spouse must
be in writing, must acknowledge the effect of the loan and the use of the
Account as security for the loan and must be witnessed by a notary public. The
consent of the spouse must be given within ninety (90) days prior to the date
the loan is made and must relate to that specific loan. The consent given by
the spouse to whom the Participant was married at the time the loan was made
shall be effective with respect to that spouse and each subsequent spouse of
the Participant. A new consent shall be required if the Account is used for
renegotiation, extension, renewal or other revision of the loan.

     8.6.3. Administration. Loan requests shall be granted or denied solely on
the basis of this Section 8.6. There shall be no discretion to grant or deny a
loan request. Denials shall be processed under the claims procedure rules of
the Plan. Loans shall be approved (or denied) by the Company. The Company
shall be contacted for this purpose at the address shown in the summary plan
description. A copy of these rules, loan application forms, specimen
promissory notes and any other information that is available concerning loans
shall be made available at that address upon written request. Loans under this
Plan and any other plan maintained by the Employer will be considered separate
loans. Therefore, separate loan applications and promissory notes will need to
be completed for loans from this Plan or any other plan. A loan will be made
upon completion of a loan application, the execution of a promissory note and
the completing of such other forms and the furnishing of such other information
as may be required to comply with this Section 8.6. The promissory note will
be a negotiable instrument. The Trustee will not, however, sell any such
promissory note. The Company may prescribe rules regarding the form of such
application, the method of filing such application (including telephonic,
electronic or similar methods) and the information required to be furnished in
connection with such application.

     8.6.4. Loan Terms. The total amount of such loans to any Participant
shall not exceed the lesser of:

	 	(a)	 	Fifty percent (50%) (or such lower percentage as the Company
may establish from time to time) of the Participant’s Vested Total
Account, or
	 
	 	(b)	 	Fifty Thousand Dollars ($50,000);

provided, however, that the Fifty Thousand Dollar ($50,000) limitation shall be
reduced by the excess (if any) of: (i) the highest outstanding balance of
loans from this Plan (and all other plans of the Employer and all Affiliates)
to such Participant during the one-year period ending on the day before the new
loan is made, over (ii) the outstanding balance of all loans from this Plan
(and all other plans of the Employer and all Affiliates) to such Participant on
the day the new loan is made.

Except for any permitted suspension of payments during a leave of absence, any
such loan must be repaid at least monthly in substantially level amounts,
including principal and interest, over the term of the loan. Any such loan
shall provide that it shall be repaid within a definite period of time to be
specified by the Participant in the loan application and the promissory note.
That period shall not exceed five (5) years unless such loan is to a
Participant and is used to acquire a principal residence (as defined in Code §
121) for the Participant and then it shall not exceed fifteen (15) years.

     8.6.5. Collateral. Every loan made under these rules shall be secured by
that portion of the Participant’s Account which does not exceed fifty percent
(50%) of the sum total of the Participant’s Total Account. This dollar amount
shall be determined immediately after the origination of the loan (and shall be
reduced by the amount of any unpaid principal and interest on any earlier loan
which is similarly secured). This security interest shall exist without regard
to whether it is or is not referenced in the loan documents. The Plan shall be
permitted to realize on this collateral (as hereinafter provided) by any

46

 

means including (but not limited to) foreclosure (i.e., offset). No other
collateral shall be permitted or required.

     8.6.6. Loan Rules. The Company may adopt rules for the administration of
loans that are not inconsistent with the provisions of Sections 8.6.1 through
8.6.5. Unless amended by the Company, the following rules shall apply:

	 	(a)	 	Loan Amount. Loans will not be made in a principal amount
less than One Thousand Dollars ($1,000).
	 
	 	(b)	 	Loan Interest Rate. The interest rate on any loan shall be
equal to the prime rate (the base rate on corporate loans at large
United States money center commercial banks) as published by The
Wall Street Journal in its Money Rates column (or any comparable
successor rate so published) on the business day immediately
preceding the business day on which the loan is granted, plus one
percent (1%). If the prime rate is published as a range of rates,
the highest prime rate in the range shall be used.
	 
	 	(c)	 	Accounting for Loan. For the purpose of determining the
extent to which a Total Account is entitled to share in income,
gains or losses of the Trust Fund under Section 6, the same shall be
deemed to be reduced by the unpaid balance of any outstanding loans
to the Participant, and the interest payments on such loans shall be
credited to the Participant’s Total Account. If a loan is made to a
Participant who has assets in more than one Account, such loan shall
be deemed to have been made from the Accounts in the following
sequence:

	 	(1)	 	Rollover Account
	 
	 	(2)	 	Matching Account
	 
	 	(3)	 	401(k) Account
	 
	 	(4)	 	Transfer Account.

	 	 	 	Repayments of principal on loans and payments of interest shall
be apportioned among the Accounts from which the loan was made
in proportion to the amounts by which the Accounts were
initially reduced in order to make the loan. If a loan is made
from an Account which is invested in more than one Investment
Subfund authorized and established under Section 6, the amount
withdrawn in order to make the loan shall be charged to each
Investment Subfund in the same proportions as the Account is
invested in each Investment Subfund. All repayments of principal
and interest shall be reinvested in the same manner as
contributions under the Participant’s investment elections in
effect at the time the repayment is received.
	 
	 	(d)	 	Payments. All Participants shall make payment of loans by
monthly or more frequent payroll deduction to the extent of their
available pay. The making of the loan shall be considered an
irrevocable authorization for payroll deduction.
	 
	 	(e)	 	Prepayments. The loan may be prepaid in whole at any time.
	 
	 	(f)	 	Termination of Employment. The entire outstanding principal
and unpaid interest shall be due and payable on the date ninety (90)
days after the Participant’s

47

 

	 	 	 	termination of employment with the Employer and all Affiliates,
unless the Participant’s termination of employment entitles him
or her to receive severance payments from the Employer. For the
purposes of this subsection (f), “severance payments” means
payments made at regular payroll intervals under any severance
plan of the Participant’s Employer. If the Participant receives
severance payments from the Employer, then the entire
outstanding principal and unpaid interest shall be due and
payable on the date ninety (90) days after the date the Employer
pays the last regular severance payment to the Participant. If
the entire outstanding principal and unpaid interest is not paid
within the ninety (90) day period following the Participant’s
termination of employment or, if applicable, the date the
Employer pays the last regular severance payment to the
Participant, then the unpaid principal and interest due and
owing on that date shall be offset against the Participant’s
Total Account.
	 
	 	(g)	 	Death of the Participant. The death of the Participant shall
terminate the loan. The unpaid principal and interest due and owing
on the date of the Participant’s death shall be offset against the
Participant’s Total Account. No payments shall be permitted after
the Participant’s death. The tax consequences of the offset shall
be reported to the Participant or the Participant’s estate and not
to the Beneficiary.
	 
	 	(h)	 	Event of Default. Subject to subsections (f) and (i) of this
Section 8.6.6, any failure to make a loan payment on or before the
last day of the quarter following the quarter in which the payment
is due shall be an event of default. If a payment following an
event of default is not made by payroll deduction, then payment
shall be considered made for this purpose only when it is received
in fact by the Trustee or the Company as agent for the Trustee.
Upon the occurrence of an event of default, the Participant’s
Accounts in the Plan given as security shall be offset by the amount
of the then outstanding balance of the loan in default (including,
to the extent required under the Code, interest on the amount in
default from the time of the default until the time of the offset).
In the case of a Participant who has not had an Event of Maturity,
however, this offset shall be deferred until an Event of Maturity as
to such Participant, and, in the interim, it shall be possible to
cure the default. Such offset shall be automatic. No notice shall be
required prior to offset.
	 
	 	(i)	 	Suspension of Payments During Unpaid Leave of Absence. If
the Participant is on an authorized unpaid leave of absence as
determined by the Company, then loan payments are automatically
suspended for a period of time beginning after the unpaid leave of
absence commences and ending not later than the earlier of (i) the
duration of the authorized unpaid leave of absence, or (ii) twelve
(12) consecutive calendar months following the calendar month that
the Participant’s authorized unpaid leave of absence began;
provided, however, that the Participant’s termination of employment
or death even while payments are suspended shall accelerate the loan
as provided in subsections (f) and (g). Upon the expiration of the
suspension period, the then outstanding principal and interest on
the loan shall be reamortized into equal periodic payments which the
Participant shall resume paying over the remaining term of the loan;
provided, however, that the interest rate used in the reamortization
is the same as in the loan note and the final payment on the loan is
due by the original maturity date of the loan. Any such
reamortization shall not be considered a new loan or a rewriting or
extension of the existing loan.

48

 

	 	(j)	 	Suspension of Payments Due to Military Service. If a
Participant is called upon or volunteers to perform service in the
uniformed services (as defined in chapter 43 of title 38, United
States Code), the Plan shall suspend the obligation to repay the
loan during the period the Participant performs such service until
the Participant returns to employment with the Employer or
terminates employment with the Employer. The Participant may
voluntarily elect to continue to make loan payments during the
period the Participant performs service in the uniformed services.
	 
	 	(k)	 	Miscellaneous. The Company may direct that loans shall not
be made by the Plan during any designated month or months and shall
determine the frequency with which loans shall be made. No
Participant shall be permitted to borrow if such Participant then
has two loans outstanding. A loan in default that has not yet been
offset as provided in subsection (h) above shall be considered an
outstanding loan for purposes of the preceding sentence.
	 
	 	(l)	 	Fees. The loan shall be subject to any origination and
periodic maintenance fees approved by the Company. No loan
application shall be approved unless it is accompanied by any
required origination fee.
	 
	 	(m)	 	Form of Payment. Prepayments, payments following an event of
default, and payments following acceleration in accordance with
subsection (f) above, must be made by cashier’s check, certified
check or money order (and not by personal check) if they are not
made by payroll deduction. The Company may permit payment by
personal check in any other case.

     8.6.7. Tax Reporting. To the extent required by Code § 72(p), the Trustee
shall report, from time to time, distributions of income in connection with
loans made under the Plan. The operation of those tax rules is entirely
independent of the rules of the Plan.

     8.6.8. Truth in Lending. The Plan shall make all disclosures required
under federal truth-in-lending regulations (Regulation Z issued by the Board of
Governors of the Federal Reserve System).

     8.6.9. Effect of Participant in Bankruptcy. To the extent required by
bankruptcy laws, loans shall be subject to stay, discharge, reinstatement and
other matters.

     8.6.10. ERISA Compliance — Loans Available to Parties in Interest.
Notwithstanding anything to the contrary in this Section 8.6, loans shall be
available to Participants and Beneficiaries who are parties in interest (as
defined in ERISA § 3(14)). An Alternate Payee shall be considered a
Beneficiary for this purpose only after the domestic relations order has been
finally determined to be a qualified domestic relations order as defined in
Appendix C to this Plan document.

     8.6.11. Loan Rollovers. Notwithstanding any of the foregoing provisions
of this Section 8.6, the terms and conditions of any plan loan (an “acquired
loan”) (i) that was made to the Participant under the U.S. Bancorp 401(k)
Savings Plan and was acquired by this Plan as a result of a direct rollover on
or after the Spin-off Date, or (ii) that was made to a Participant under the
tax-qualified plan of the Participant’s prior employer and was acquired by this
Plan as a result of a direct rollover following the Employer’s acquisition by
merger, asset purchase or otherwise of all or a portion of a trade or business
maintained by the Participant’s prior employer, shall continue in effect after
such rollover, subject to the following modifications:

49

 

	 	(a)	 	Any provision requiring accelerated payment of the acquired
loan upon termination of the Participant’s employment with the prior
employer shall be deemed modified to the extent necessary to prevent
such acceleration from occurring prior to termination of the
Participant’s employment with the Employer and the Affiliates.
	 
	 	(b)	 	Any payroll deduction authorization for the making of
payments on the acquired loan shall be deemed to apply to the
Participant’s pay from the Employer and any Affiliate.
	 
	 	(c)	 	The loan rules contained in Section 8.6 will apply to the
acquired loan to the extent that they are not inconsistent with the
terms and conditions otherwise applicable to such loan (as modified
by paragraphs (a) and (b) above).

Participants whose plan loans are to be rolled over to this Plan shall be
notified of the foregoing modifications. If a Participant rolls over a plan
loan after receiving such notice, the Participant shall be deemed to have
consented to these modifications.

If a payment with respect to a Participant’s acquired loan is received prior to
the date on which the Participant first executes a 401(k) Enrollment Agreement,
such payment shall be reinvested in the same manner as the non-loan portion of
the Participant’s rollover contribution. Payments received on or after the
date on which the Participant first executes a 401(k) Enrollment Agreement
shall be reinvested in the same manner as contributions under the Participant’s
investment election in effect at the time the payment is received.

50

 

SECTION 9

SPENDTHRIFT PROVISIONS

No Participant or Beneficiary shall have any transmissible interest in any
Account nor shall any Participant or Beneficiary have any power to anticipate,
alienate, dispose of, pledge or encumber the same while in the possession or
control of the Trustee, nor shall the Company or the Trustee recognize any
assignment thereof, either in whole or in part, nor shall any Account be
subject to attachment, garnishment, execution following judgment or other legal
process while in the possession or control of the Trustee.

The power to designate Beneficiaries to receive the Vested Total Account of a
Participant in the event of the Participant’s death shall not permit or be
construed to permit such power or right to be exercised by the Participant so
as thereby to anticipate, pledge, mortgage or encumber the Participant’s Vested
Total Account or any part thereof, and any attempt of a Participant so to
exercise said power in violation of this provision shall be of no force and
effect and shall be disregarded by the Company and the Trustee.

This Section shall not prevent the Company from exercising, in its discretion,
any of the applicable powers and options granted to it upon the occurrence of
an Event of Maturity, as such powers may be conferred upon it by any applicable
provision hereof, nor prevent the Plan from offsetting a Participant’s Vested
Total Account by the amount of the then outstanding balance of the
Participant’s loan in default. This Section shall not prevent the Company or
the Trustee from observing the terms of a qualified domestic relations order as
provided in the Appendix C to this Plan document.

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SECTION 10

AMENDMENT AND TERMINATION

10.1. Amendment. The Company reserves the power to amend the Plan, either
prospectively or retroactively or both, at any time and from time to time. An
amendment may be adopted:

	 	(a)	 	By resolution of the Company’s Board of Directors (including,
without limitation, ratification of any action by a committee of the
Board) to amend the Plan in any respect; and
	 
	 	(b)	 	By written action of the Company’s Chief Executive Officer to
conform the Plan to the requirements of applicable law and the
regulations and rulings thereunder.

However, no amendment shall be effective to reduce or divest the Total Account
of any Participant unless the same (i) shall have been adopted with the consent
of the Secretary of Labor pursuant to the provisions of ERISA, or in order to
comply with the provisions of the Code and the regulations and rulings
thereunder affecting the tax-qualified status of the Plan and the deductibility
of Employer contributions thereto, or (ii) is otherwise permitted by Code §
411(d)(6) and the regulations issued thereunder.

An amendment will not reduce the Vested percentage of a Participant determined
as of the later of the effective or adoption date of the amendment. Further,
if the Company amends the vesting schedule under the Plan, with respect to any
Participant who has three (3) or more years of Vesting Service, the Company
either will permit such Participant to elect to have his or her Vested
percentage computed without regard to such amendment or will amend the Plan to
provide that the Vested interest of such Participant will be the greater of his
or her Vested interest with regard to such amendment or his or her Vested
interest without regard to such amendment.

10.2. Discontinuance of Contributions and Termination of Plan. The Company
reserves the right to discontinue all contributions to the Plan and to
terminate the Plan in its entirety at any time. Any such action shall be taken
by resolution of the Company’s Board of Directors (including, without
limitation, ratification of any action by a committee of the Board).

10.3. Merger or Spinoff of Plans.

     10.3.1. In General. The Company’s Chief Executive Officer may cause all
or a part of this Plan to be merged with all or a part of any other plan and
may cause all or a part of the assets and liabilities to be transferred from
this Plan to another plan. In the case of merger or consolidation of this Plan
with, or transfer of assets and liabilities of this Plan to, any other plan,
each Participant shall (if such other plan were then terminated) receive a
benefit immediately after the merger, consolidation or transfer which is not
less than the benefit the Participant would have been entitled to receive
immediately before the merger, consolidation or transfer (if this Plan had then
terminated). If the Company’s Chief Executive Officer agrees to a transfer of
assets and liabilities to or from another plan, the agreement under which such
transfer is concluded (or an amendment of or appendix to this Plan document)
shall specify the Accounts to which the transferred amounts are to be credited.

     10.3.2. Limitations. In the event the Company’s Chief Executive Officer:

	 	(a)	 	Causes assets to be transferred to this Plan from any plan
that offers one or more optional forms of benefit that must be
preserved with respect to the transferred assets

52

 

	 	 	 	in order to satisfy the optional form of benefit requirements of
Code § 411(d)(6)(B)(ii) and, where applicable, the distribution
rules of Code § 401(k), or
	 
	 	(b)	 	Causes this Plan to merge with such a plan,

this Plan shall be deemed amended, effective as of the time of the transfer or
merger, to preserve all such optional forms of benefit, but only with respect
to amounts attributable to such transferred or merged assets. In no event
shall assets be transferred from this Plan to any other plan unless such other
plan complies (or has been amended to comply) with the optional form of benefit
requirements of Code § 411(d)(6)(B)(ii) and, where applicable, the distribution
rules of Code § 401(k) with respect to such transferred assets.

     10.3.3. Beneficiary Designations. If assets and liabilities are
transferred from another plan to this Plan, Beneficiary designations made under
that plan shall become void on the date as of which such transfer is made and
the Beneficiary designation rules of this Plan document shall apply beginning
on such date.

     10.3.4. Consolidation or Merger of Plans. If this Plan consolidates or
merges with any other plan or the assets of this Plan are transferred to any
other plan, each Participant will be entitled to a benefit immediately after
the merger, consolidation or transfer (if the other plan were then terminated)
equal to or greater than the benefit immediately before such merger,
consolidation or transfer (if this Plan had then terminated).

10.4. Adoption by Affiliates.

     10.4.1. Adoption with Consent. In addition to the business entities
listed in Schedule I, the Company’s Chief Executive Officer may consent to the
adoption of the Plan by other business entities affiliated in ownership with
the Company subject to such conditions as the Company’s Chief Executive Officer
may impose.

     10.4.2. Procedure for Adoption. Any such adopting business entity shall
initiate its adoption of the Plan by delivery of a certified copy of the
resolutions of its Board of Directors (or other governing authority) adopting
the Plan to the Company’s Chief Executive Officer. Upon the consent by the
Company’s Chief Executive Officer to the adoption by the adopting business
entity, and the delivery to the Trustee of written evidence of such consent,
the adoption of the Plan by the adopting business entity shall be effective as
of the date specified by the Company’s Chief Executive Officer. (The business
entities listed in Schedule I shall not be required to obtain approval for
their continued participation in the Plan.)

     10.4.3.
Effect of Adoption. Upon the adoption of the Plan by an
adopting business entity as heretofore provided, the adopting
business entity shall be an Employer hereunder in all respects. Each
business entity listed in Schedule I and each other adopting business
entity, as a condition of continued participation in the Plan,
delegates to the Company the sole power and authority:

	 	(a)	 	To terminate the Plan (except that each adopting business
entity shall have the power to terminate the Plan as applied to it);
to amend the Plan (except that each adopting business entity shall
have the power to amend the Plan as applied to it by establishing a
successor plan to which assets and liabilities may be transferred as
provided in Section 10.3);

53

 

	 	(b)	 	To appoint, remove and accept the resignation of a Trustee;
to appoint or remove members of the Benefits Administration
Committee and the Retirement Investment Committee; and to act as the
plan administrator;
	 
	 	(c)	 	To direct the Trustee to return an Employer contribution that
was made by mistake or which is not deductible;
	 
	 	(d)	 	To designate Affiliates; to establish conditions and
limitations upon such adoption of the Plan by affiliated employers;
and
	 
	 	(e)	 	To cause this Plan to be merged with another plan and to
transfer assets and liabilities between this Plan and another plan.

Each reference herein to the Employer shall include the Company and all
adopting business entities unless the context clearly requires otherwise.
Employment with the Company or any adopting business entity shall be credited
with the Employer for eligibility and vesting purposes and for determining the
minimum annual service requirement for allocation of contributions.
Contributions of the Company and each adopting business entity shall be
allocated only among those persons who were their employees during the Plan
Year with respect to which the contribution is made.

54

 

SECTION 11

TRUST FUND

11.1. Plan Assets. The assets of the Plan will be held in trust by one or more
Trustees appointed by the Company under one or more Trust Agreements. The
Company may cause the assets held under any Trust Agreement to be divided into
any number of parts for investment purposes or any other purpose deemed
necessary or advisable for the proper administration of the Plan.

11.2. No Diversion. The Trust Fund will be maintained for the exclusive
purpose of providing benefits to Participants and Beneficiaries and defraying
reasonable expenses of administering the Plan. No part of the corpus or income
of the Trust Fund may be used for, or diverted to, purposes other than for the
exclusive benefit of Participants and Beneficiaries. Notwithstanding the
foregoing, contributions shall be returned to the Employers as provided in this
Plan document. Also, if any residual assets remain in the Trust Fund after the
liabilities of the Plan to Participants and Beneficiaries have been satisfied
and all reasonable expenses of the Plan have been paid, the Trustee shall, upon
written direction of the Company, return such residual assets to the Employer.

11.3. Funding Policy. The Company will adopt a procedure, and revise it from
time to time as the Company considers advisable, for establishing and carrying
out a funding policy and method consistent with the objectives of the Plan and
the requirements of ERISA.

55

 

SECTION 12

CLAIMS

12.1. Claims and Review Procedure. The claims and review procedure set forth
in this Section shall be the mandatory claims and review procedure for the
resolution of disputes and disposition of claims filed under the Plan. An
application for benefits shall be considered as a claim for the purposes of
this Section.

     12.1.1. Initial Claim. An individual may, subject to any applicable
deadline, file with the Company a written claim for benefits under the Plan in
a form and manner prescribed by the Company.

	 	(a)	 	If the claim is denied in whole or in part, the Company shall
notify the claimant of the adverse benefit determination within
ninety (90) days after receipt of the claim.
	 
	 	(b)	 	The ninety (90) day period for making the claim determination
may be extended for ninety (90) days if the Company determines that
special circumstances require an extension of time for determination
of the claim, provided that the Company notifies the claimant, prior
to the expiration of the initial ninety (90) day period, of the
special circumstances requiring an extension and the date by which a
claim determination is expected to be made.

     12.1.2. Notice of Initial Adverse Determination. A notice of an adverse
determination shall set forth in a manner calculated to be understood by the
claimant:

	 	(a)	 	The specific reasons for the adverse determination;
	 
	 	(b)	 	References to the specific provisions of the Plan document
(or other applicable Plan document) on which the adverse
determination is based;
	 
	 	(c)	 	A description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary; and
	 
	 	(d)	 	A description of the claims review procedure, including the
time limits applicable to such procedure, and a statement of the
claimant’s right to bring a civil action under ERISA § 502(a)
following an adverse determination on review.

     12.1.3. Request for Review. Within sixty (60) days after receipt of an
initial adverse benefit determination notice, the claimant may file with the
Company a written request for a review of the adverse determination and may, in
connection therewith submit written comments, documents, records and other
information relating to the claim benefits. Any request for review of the
initial adverse determination not filed within sixty (60) days after receipt of
the initial adverse determination notice shall be untimely.

     12.1.4. Claim on Review. If the claim, upon review, is denied in whole or
in part, the Company shall notify the claimant of the adverse benefit
determination within sixty (60) days after receipt of such a request for
review.

	 	(a)	 	The sixty (60) day period for deciding the claim on review
may be extended for sixty (60) days if the Company determines that
special circumstances require an extension

56

 

	 	 	 	of time for determination of the claim, provided that the
Company notifies the claimant, prior to the expiration of the
initial sixty (60) day period, of the special circumstances
requiring an extension and the date by which a claim
determination is expected to be made.
	 
	 	(b)	 	In the event that the time period is extended due to a
claimant’s failure to submit information necessary to decide a claim
on review, the claimant shall have sixty (60) days within which to
provide the necessary information and the period for making the
claim determination on review shall be tolled from the date on which
the notification of the extension is sent to the claimant until the
date on which the claimant responds to the request for additional
information or, if earlier, the expiration of sixty (60) days.
	 
	 	(c)	 	The Company’s review of a denied claim shall take into
account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial
benefit determination.

     12.1.5. Notice of Adverse Determination for Claim on Review. A notice of
an adverse determination for a claim on review shall set forth in a manner
calculated to be understood by the claimant:

	 	(a)	 	The specific reasons for the denial;
	 
	 	(b)	 	References to the specific provisions of the Plan document
(or other applicable document) on which the adverse determination is
based;
	 
	 	(c)	 	A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the claimant’s
claim for benefits;
	 
	 	(d)	 	A statement describing any voluntary appeal procedures
offered by the Plan and the claimant’s right to obtain information
about such procedures; and
	 
	 	(e)	 	A statement of the claimant’s right to bring an action under
ERISA § 502(a).

12.2. Claims Rules.

	 	(a)	 	No inquiry or question shall be deemed to be a claim or a
request for a review of a denied claim unless made in accordance
with the established claim procedures. The Company may require that
any claim for benefits and any request for a review of a denied
claim be filed on forms to be furnished by the Company upon request.
	 
	 	(b)	 	All decisions on claims and on requests for a review of
denied claims shall be made by the Company unless delegated as
provided for in the Plan, in which case references in this Section
12 to the Company shall be treated as references to the Company’s
delegate.
	 
	 	(c)	 	Claimants may be represented by a lawyer or other
representative at their own expense, but the Company reserves the
right to require the claimant to furnish written authorization and
establish reasonable procedures for determining whether an

57

 

	 	 	 	individual has been authorized to act on behalf of a claimant.
A claimant’s representative shall be entitled to copies of all
notices given to the claimant.
	 
	 	(d)	 	The decision of the Company on a claim and on a request for a
review of a denied claim may be provided to the claimant in
electronic form instead of in writing at the discretion of the
Company.
	 
	 	(e)	 	In connection with the review of a denied claim, the claimant
or the claimant’s representative shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant’s claim for
benefits.
	 
	 	(f)	 	The time period within which a benefit determination will be
made shall begin to run at the time a claim or request for review is
filed in accordance with the claims procedures, without regard to
whether all the information necessary to make a benefit
determination accompanies the filing.
	 
	 	(g)	 	The claims and review procedures shall be administered with
appropriate safeguards so that benefit claim determinations are made
in accordance with governing Plan documents and, where appropriate,
the Plan provisions have been applied consistently with respect to
similarly situated claimants.
	 
	 	(h)	 	For the purpose of this Section, a document, record, or other
information shall be considered “relevant” if such document, record,
or other information: (i) was relied upon in making the benefit
determination; (ii) was submitted, considered, or generated in the
course of making the benefit determination, without regard to
whether such document, record, or other information was relied upon
in making the benefit determination; or (iii) demonstrates
compliance with the administration processes and safeguards designed
to ensure that the benefit claim determination was made in
accordance with governing Plan documents and that, where
appropriate, the Plan provisions have been applied consistently with
respect to similarly situated claimants.
	 
	 	(i)	 	The Company may, in its discretion, rely on any applicable
statute of limitation or deadline as a basis for denial of any
claim.

12.3. Deadline to File Claim. To be considered timely under the Plan’s claim
and review procedure, a claim must be filed with the Company within one year
after the claimant knew or reasonably should have known of the principal facts
upon which the claim is based.

12.4. Exhaustion of Administrative Remedies. The exhaustion of the claim and
review procedure is mandatory for resolving every claim and dispute arising
under the Plan. As to such claims and disputes:

	 	(a)	 	No claimant shall be permitted to commence any legal action
to recover Plan benefits or to enforce or clarify rights under the
Plan under ERISA § 502 or ERISA § 510 or under any other provision
of law, whether or not statutory, until the claim and review
procedure set forth herein have been exhausted in their entirety;
and
	 
	 	(b)	 	In any such legal action all explicit and all implicit
determinations by the Company (including, but not limited to,
determinations as to whether the claim, or a request for

58

 

	 	 	 	a review of a denied claim, was timely filed) shall be afforded
the maximum deference permitted by law.

12.5. Deadline to File Legal Action. No legal action to recover Plan benefits
or to enforce or clarify rights under the Plan under ERISA § 502 or ERISA § 510
or under any other provision of law, whether or not statutory, may be brought
by any claimant on any matter pertaining to the Plan unless the legal action is
commenced in the proper forum before the earlier of:

	 	(a)	 	Thirty (30) months after the claimant knew or reasonably
should have known of the principal facts on which the claim is
based, or
	 
	 	(b)	 	Six (6) months after the claimant has exhausted the claim and
review procedure.

12.6. Knowledge of Fact by Participant Imputed to Beneficiary. Knowledge of
all facts that a Participant knew or reasonably should have known shall be
imputed to every claimant who is or claims to be a Beneficiary of the
Participant or otherwise claims to derive an entitlement by reference to the
Participant for the purpose of applying the previously specified periods.

59

 

SECTION 13

OTHER ADMINISTRATIVE MATTERS

13.1. Company.

     13.1.1. Officers. Except as hereinafter provided, functions generally
assigned to the Company shall be discharged on behalf of the Company by the
officers of the Company or delegated and allocated as provided herein.

     13.1.2. Chief Executive Officer. Except as otherwise provided herein, the
Company’s Chief Executive Officer may on behalf of the Company delegate or
redelegate and allocate or reallocate to one or more persons or to a committee
of persons jointly or severally, and whether or not such persons are directors,
officers or employees, such functions assigned to the Chief Executive Officer
or to the Company hereunder as the Chief Executive Officer may from time to
time deem advisable.

     13.1.3. Corporate Versus Personal Liability. The Company as a legal
entity can only act through others. The Company’s intent is that, while the
Company will at times be a fiduciary (as that term is used in ERISA) with
respect to the Plan, the individual officers and employees of the Company
through which the Company acts (including but not limited to the Chief
Executive Officer and the members of the Benefits Administration Committee and
the Retirement Investment Committee) shall not individually be considered to be
fiduciaries.

13.2. Benefits Administration Committee.

     13.2.1. Appointment and Removal. The Benefits Administration Committee
shall consist of such members as may be determined and appointed from time to
time by the Company’s Chief Executive Officer and who shall serve at the
pleasure of the Chief Executive Officer. Members of the Benefits
Administration Committee shall serve without compensation, but their reasonable
expenses shall be an expense of the administration of the Plan and shall be
paid by the Trustee from and out of the Trust Fund except to the extent the
Company, in its discretion, directly pays such expenses. The Company’s Chief
Executive Officer shall designate the Chairperson of the Benefits
Administration Committee and shall appoint a secretary, who need not be a
member of the Benefits Administration Committee, to keep its records and
otherwise assist the Benefits Administration Committee in the performance of
its duties.

     13.2.2. Automatic Removal. If any individual who is a member of the
Benefits Administration Committee is a director, officer or employee when
appointed as a member of the Benefits Administration Committee, then such
individual shall be automatically removed as a member of the Benefits
Administration Committee at the earliest time such individual ceases to be a
director, officer or employee. This removal shall occur automatically and
without any requirement for action by the Company’s Chief Executive Officer or
any notice to the individual so removed.

     13.2.3. Authority. Except as otherwise provided herein, the Company,
acting through the Benefits Administration Committee, shall control and manage
the operation and administration of the Plan and shall make all decisions and
determinations incident thereto. In carrying out its Plan responsibilities on
behalf of the Company, the Benefits Administration Committee shall have
discretionary authority to interpret and construe this Plan document, the Trust
Agreement and all relevant documents and information, and to determine all
factual and legal questions related to its responsibilities under the Plan,
including, but not limited to, the entitlement of all persons to benefits and
the amounts of their benefits. Its discretionary authority shall include all
matters arising under the Plan including, but not

60

 

limited to, the determination of whether a domestic relations order is a
qualified domestic relations order and the interpretation and administration of
a qualified domestic relations order. The Benefits Administration Committee,
in accordance with written bylaws issued by the Company’s Chief Executive
Officer, shall:

	 	(a)	 	Establish rules for the functioning of the Benefits
Administration Committee, including the times and places for holding
meetings, the notices to be given in respect of such meetings and
the number of members who shall constitute a quorum for the
transaction of business;
	 
	 	(b)	 	Allocate and delegate to such of its members as it shall
select authority to execute or authenticate rules, advisory opinions
or instructions, and other instruments adopted or authorized by the
Benefits Administration Committee; keep a record of all its
proceedings and acts and keep all books of account, records and
other data as may be necessary for the proper administration of the
Plan; notify the Employer and the Trustee of any action taken by the
Benefits Administration Committee and, when required, notify any
other interested person or persons;
	 
	 	(c)	 	Determine from the records of the Employer the compensation,
service records, status and other facts regarding Participants and
other employees;
	 
	 	(d)	 	Prescribe forms to be used for applications for
participation, benefits, notifications, etc., as may be required in
the administration of the Plan;
	 
	 	(e)	 	Set up such rules, applicable to all Participants similarly
situated, as are deemed necessary to carry out the provisions of
this Plan document and the Trust Agreement;
	 
	 	(f)	 	Perform all other acts reasonably necessary for administering
the Plan and carrying out the provisions of this Plan document and
the Trust Agreement and performing the duties imposed on it
thereunder;
	 
	 	(g)	 	Resolve all questions of administration of the Plan not
specifically referred to in this Section;
	 
	 	(h)	 	In accordance with Section 12 of this Plan document and the
regulations of the Secretary of Labor:
	 

	 	(1)	 	Provide adequate notice in writing to any
Participant or Beneficiary whose claim for benefits under
the Plan has been denied, setting forth the specific
reasons for such denial, written in a manner calculated to
be understood by the Participant, and
	 
	 	(2)	 	Afford a reasonable opportunity to any
Participant whose claim for benefits has been denied for a
full and fair review by the Benefits Administration
Committee of the decision denying the claim; and

	 
	 	(i)	 	Delegate or redelegate to one or more persons, jointly or
severally, and whether or not such persons are members of the
Benefits Administration Committee or employees of the Employer, such
functions assigned to the Benefits Administration Committee
hereunder as it may from time to time deem advisable.

61

 

     13.2.4. Majority Decisions. If there shall at any time be three (3) or
more members of the Benefits Administration Committee serving hereunder who are
qualified to perform a particular act, the same may be performed, on behalf of
all, by a majority of those qualified, with or without the concurrence of the
minority. No person who failed to join or concur in such act shall be held
liable for the consequences thereof, except to the extent that liability is
imposed under ERISA.

13.3. Retirement Investment Committee.

     13.3.1. Appointment and Removal. The Retirement Investment Committee
shall consist of such members as may be determined and appointed from time to
time by the Company’s Chief Executive Officer and who shall serve at the
pleasure of the Chief Executive Officer. Members of the Retirement Investment
Committee shall serve without compensation, but their reasonable expenses shall
be an expense of the administration of the Plan and shall be paid by the
Trustee from and out of the Trust Fund except to the extent the Company, in its
discretion, directly pays such expenses. The Company’s Chief Executive Officer
shall designate the Chairperson of the Retirement Investment Committee and
shall appoint a secretary, who need not be a member of the Retirement
Investment Committee, to keep its records and otherwise assist the Retirement
Investment Committee in the performance of its duties.

     13.3.2. Automatic Removal. If any individual who is a member of the
Retirement Investment Committee is a director, officer or employee when
appointed as a member of the Retirement Investment Committee, then such
individual shall be automatically removed as a member of the Retirement
Investment Committee at the earliest time such individual ceases to be a
director, officer or employee. This removal shall occur automatically and
without any requirement for action by the Company’s Chief Executive Officer or
any notice to the individual so removed.

     13.3.3. Authority. The Company, acting through the Retirement Investment
Committee, shall control and manage the investment-related matters of the Plan
and shall make all decisions and determinations incident thereto. In carrying
out its Plan responsibilities on behalf of the Company, the Retirement
Investment Committee shall have discretionary authority to interpret and
construe this Plan document, the Trust Agreement and all relevant documents and
information, and to determine all factual and legal questions related to its
responsibilities under the Plan. The Retirement Investment Committee, in
accordance with written bylaws issued by the Company’s Chief Executive Officer,
shall:

	 	(a)	 	Establish rules for the functioning of the Retirement
Investment Committee, including the times and places for holding
meetings, the notices to be given in respect of such meetings and
the number of members who shall constitute a quorum for the
transaction of business;
	 
	 	(b)	 	Allocate and delegate to such of its members as it shall
select authority to execute or authenticate rules, advisory opinions
or instructions, and other instruments adopted or authorized by the
Retirement Investment Committee; keep a record of all its
proceedings and acts and keep all books of account, records and
other data as may be necessary for the proper performance of its
duties under the Plan; notify the Employer and the Trustee of any
action taken by the Retirement Investment Committee and, when
required, notify any other interested person or persons;
	 
	 	(c)	 	Set up such rules, applicable to all Participants similarly
situated, as are deemed necessary to carry out the
investment-related provisions of this Plan document and the Trust
Agreement;

62

 

	 	(d)	 	Perform all other acts reasonably necessary for supervising
the investment-related matters of the Plan and carrying out the
investment-related provisions of this Plan document and the Trust
Agreement and performing the duties imposed on it thereunder; and
	 
	 	(e)	 	Delegate or redelegate to one or more persons, jointly or
severally, and whether or not such persons are members of the
Retirement Investment Committee or employees of the Employer, such
functions assigned to the Retirement Investment Committee hereunder
as it may from time to time deem advisable.

     13.3.4. Majority Decisions. If there shall at any time be three (3) or
more members of the Retirement Investment Committee serving hereunder who are
qualified to perform a particular act, the same may be performed, on behalf of
all, by a majority of those qualified, with or without the concurrence of the
minority. No person who failed to join or concur in such act shall be held
liable for the consequences thereof, except to the extent that liability is
imposed under ERISA.

13.4. Limitation on Authority. No action taken by any fiduciary, if authority
to take such action has been delegated or redelegated to it hereunder, shall be
the responsibility of any other fiduciary except as may be required by the
provisions of ERISA. Except to the extent imposed by ERISA, no fiduciary shall
have the duty to question whether any other fiduciary is fulfilling all of the
responsibility imposed upon such other fiduciary by this Plan document or by
ERISA or by any regulations or rulings issued thereunder.

13.5. Conflict of Interest. If any Trustee, any member of the Benefits
Administration Committee or Retirement Investment Committee or the Employer,
any member of the Board of Directors or any officer or employee of the Employer
to whom authority has been delegated or redelegated hereunder shall also be a
Participant in the Plan, that individual shall have no authority as such
Trustee, member, officer or employee with respect to any matter specifically
affecting the Participant’s individual interest hereunder (as distinguished
from the interests of all Participants and Beneficiaries or a broad class of
Participants and Beneficiaries), all such authority being reserved exclusively
to the other Trustees, members, officers or employees, as the case may be, to
the exclusion of such Participant, and such Participant shall act only in the
Participant’s individual capacity in connection with any such matter.

13.6. Dual Capacity. Individuals, firms, corporations or partnerships
identified herein or delegated or allocated authority or responsibility
hereunder may serve in more than one fiduciary capacity.

13.7. Administrator. The Company shall be the administrator for purposes of
ERISA § 3(16)(A).

13.8. Named Fiduciary. The Company is a “named fiduciary” of the Plan (within
the meaning of ERISA § 402(a)) with authority to appoint additional named
fiduciaries and to allocate responsibilities among them, and the power to
appoint one or more investment managers (as defined in ERISA § 3(38)) to manage
any assets of the Plan (including the power to acquire and dispose of such
assets). If so permitted by the Company in the appointment of a named
fiduciary, such named fiduciary may designate another person to carry out any
or all of the fiduciary responsibilities of the named fiduciary, except that a
named fiduciary may not designate another person to carry out any
responsibilities relating to the management or control of Plan assets other
than in exercise of a power granted under the Trust Agreement to appoint an
investment manager.

13.9. Service of Process. The Secretary of the Company is designated as the
appropriate and exclusive agent for the receipt of service of process directed
to the Plan in any legal proceeding, including arbitration, involving the Plan.

63

 

13.10. Payment of Compensation, Fees and Expenses Out of Plan Assets. Any
fiduciary (other than the Employer, an employee of the Employer, or a
Participant), and any recordkeeper, consultant, accountant, attorney, or other
non-fiduciary service provider to the Plan, will be entitled to receive such
reasonable compensation for services rendered, and to reimbursement of
reasonable expenses properly and actually incurred in the performance of such
services, as may be agreed to with the Company, and will be entitled to payment
of such compensation, fees, and expenses out of the Trust Fund if (i) not
prohibited by ERISA and (ii) if such amounts are not paid directly by the
Company. Such compensation, fees and expenses include, but are not limited to,
recordkeeping fees, trustee and custodial fees, check processing fees, audit
fees, fees and expenses for investment education services or investment advice,
and premiums on bonds required under ERISA. Any direct costs incurred by the
Company or any other Employer also may be reimbursed from the Trust Fund to the
extent that reimbursement is not prohibited by ERISA.

	 	(a)	 	In the event the Company initially pays compensation, fees,
and expenses that would otherwise be properly payable out of the
Trust Fund, the Company shall have a period of ninety (90) days
after such payment in which to seek reimbursement from the Trust
Fund. If any such payments are made by the Company before any
contributions have been deposited in the Trust Fund, however, the
Company shall have a period of ninety (90) days after the initial
deposit of contributions in the Trust Fund to seek reimbursement
from the Trust Fund.
	 
	 	(b)	 	The Company in its discretion shall determine which
compensation, fees and expenses are properly payable out of the
Trust Fund. The Company shall also determine whether such
compensation, fees, and expenses are to be paid as a general expense
of the Trust Fund or allocated to the Accounts of individual
Participants and Beneficiaries and, if so, in what proportion.
	 
	 	(c)	 	The Company will provide such information to Participants and
Beneficiaries as the Company deems appropriate with respect to the
way in which compensation, fees, and expenses are allocated to the
Accounts of individual Participants and Beneficiaries, and with
respect to the overall fees charged by or fee arrangements with any
fiduciary or non-fiduciary service provider.

13.11. Method of Executing Instruments. Information to be supplied or written
notices to be made or consents to be given by the Company or any other
Employer, the Benefits Administration Committee or the Retirement Investment
Committee pursuant to any provision of this Plan document may be signed in the
name of the Company or other Employer by any officer thereof who has been
authorized to make such certification or to give such notices or consents or by
any Benefits Administration Committee member or Retirement Investment Committee
member.

13.12. Receipt of Documents. If a form or document must be filed with or
received by the Company or the Trustee, it must be actually received by the
appropriate entity to be effective. The determination of whether or when a
form or document has been received by the appropriate entity shall be made by
the Company, on the basis of what documents are acknowledged by the appropriate
entity to be in its actual possession without regard to the “mailbox rule” or
similar rule of evidence. The absence of a document in the appropriate
entity’s records and files shall be conclusive and binding proof that the
document was not received by the appropriate entity.

13.13. Powers of Attorney. The Plan shall recognize as valid a document
submitted to the Company by which a Participant or Beneficiary appoints another
person as his or her attorney in fact, under the following rules:

64

 

	 	(a)	 	The Company shall not be required to determine whether the
document complies with the applicable state law regarding powers of
attorneys or attorneys in fact.
	 
	 	(b)	 	If the document enumerates one or more specific powers in
addition to a general power to act, the enumeration of one or more
specific powers shall not be deemed to limit the generality of the
general power to act; in other words, the general power shall
continue to be in force.
	 
	 	(c)	 	The document must be signed by the Participant or Beneficiary
and be notarized.

The Company may establish additional rules for the acceptance of powers of
attorneys for Plan purposes. If there is a conflict between the action of a
court appointed guardian or conservator and an attorney in fact, then the
authority of the court appointed guardian or conservator shall be recognized as
superior to that of an attorney in fact.

13.14. Guardians and Conservators. The Plan shall recognize the authority of a
court appointed guardian or conservator to act on behalf of a Participant or
Beneficiary to the extent such action is within the authority granted to the
court appointed guardian or conservator.

13.15. Third-Party Service Providers. The Company may from time to time
contract with or appoint a recordkeeper or other third-party service provider
for the Plan. Any such recordkeeper or other third-party service provider will
serve in a nondiscretionary capacity and will act in accordance with directions
given and procedures established by the Company.

13.16. Correction of Errors. Errors may occur in the operation and
administration of the Plan. The Company reserves the power to cause such
equitable adjustments to be made to correct for such errors as it considers
appropriate. Such adjustments will be final and binding on all persons.

13.17. Indemnity. Each director, officer or employee of the Employer shall,
except as prohibited by law, be indemnified and held harmless by the Employer
from any and all liabilities, costs and expenses (including legal fees), to the
extent not covered by liability insurance, arising out of any actin taken by
such individual with respect to the Plan, whether imposed under ERISA or
otherwise, unless such liability arises from the individual’s claim for the
individual’s own benefit, the proven gross negligence, the bad faith or, if the
individual had reasonable cause to believe the individual’s own conduct was
unlawful, the criminal misconduct of such individual. This indemnification
shall continue as to an individual who has ceased to be an director, officer or
employee of the Employer and shall inure to the benefit of the heirs, executors
and administrators of such an individual.

65

 

SECTION 14

IN GENERAL

14.1. Disclaimers.

	 	(a)	 	Neither the terms of this Plan document nor the benefits
hereunder nor the continuance thereof shall be a term of the
employment of any employee, and the Employer shall not be obliged to
continue the Plan.
	 
	 	(b)	 	The terms of this Plan document shall not give any employee
the right to be retained in the employment of any Employer.
	 
	 	(c)	 	Neither the Employer nor any of its officers or members of
its Board of Directors nor the Trustee nor any member of the
Benefits Administration Committee or Retirement Investment Committee
in any way guarantee the Trust Fund against loss or depreciation,
nor do they guarantee the payment of any benefit or amount which may
become due and payable hereunder to any Participant or Beneficiary.
Each Participant, Beneficiary or other person entitled at any time
to payments hereunder shall look solely to the assets of the Trust
Fund for such payments.
	 
	 	(d)	 	Neither the Employer nor any of its officers or members of
its Board of Directors nor any members of the Benefits
Administration Committee or Retirement Investment Committee shall in
any manner be liable to any Participant, Beneficiary or other person
for any act or omission of the Trustee (except to the extent that
liability is imposed under ERISA).
	 
	 	(e)	 	Neither the Employer nor any of its officers or members of
its Board of Directors nor the Trustee nor any members of the
Benefits Administration Committee or Retirement Investment Committee
shall be under any liability or responsibility (except to the extent
that liability is imposed under ERISA) for failure to effect any of
the objectives or purposes of the Plan by reason of loss or
fluctuation in the value of Trust Fund or for the form, genuineness,
validity, sufficiency or effect of any Trust Fund asset, or for the
failure of any person, firm or corporation indebted to the Trust
Fund to pay such indebtedness as and when the same shall become due
or for any delay occasioned by reason of any applicable law, order
or regulation or by reason of any restriction or provision contained
in any security or other asset held by the Trust Fund.
	 
	 	(f)	 	Except as is otherwise provided in ERISA, the Employer, its
officers and the members of its Board of Directors, the Trustee, the
members of the Benefits Administration Committee and Retirement
Investment Committee, and other Plan fiduciaries shall not be liable
for an act or omission of another person with regard to a fiduciary
responsibility that has been allocated to or delegated to such other
person pursuant to the terms of this Plan document or pursuant to
procedures set forth in this Plan document.
	 
	 	(g)	 	Neither the Employer nor the Benefits Administration
Committee nor Retirement Investment Committee nor the Trustee shall
be liable or responsible for any error in the computation of the
Account of a Participant resulting from any misstatement of

66

 

	 	 	 	fact made by the Participant, directly or indirectly, to the
Employer, the Benefits Administration Committee, the Retirement
Investment Committee or the Trustee and used by them in
determining the Participant’s Account. Neither the Employer nor
the Benefits Administration Committee nor the Retirement
Investment Committee nor the Trustee shall be obligated or
required to increase the Account of such Participant which, on
discovery of the misstatement, is found to be understated as a
result of such misstatement of the Participant. However, the
Account of any Participant which is overstated by reason of any
such misstatement shall be reduced to the amount appropriate for
the Participant in view of the truth. Any reduction of an
Account shall be retained in the Trust Fund and used to reduce
the next succeeding contribution of the Employer to the Plan

14.2. Contingent Top Heavy Plan Rules. The terms of Appendix B (concerning
additional provisions that apply if the Plan becomes top heavy under the terms
of the Tax Equity and Fiscal Responsibility Act of 1982) are incorporated
herein.

14.3. Compliance with Uniformed Services Employment and Re-employment Rights
Act of 1994 (USERRA). Effective for veterans hired or rehired on or after the
Effective Date, and notwithstanding any provision of the Plan document to the
contrary, contributions, benefits or service credits, if any, will be provided
in accordance with Code § 414(u).

14.4. Rules of Interpretation. Notwithstanding any other provision of this
Plan document or any election or designation made under the Plan, any
individual who feloniously and intentionally kills a Participant or Beneficiary
shall be deemed for all purposes of the Plan and all elections and designations
made under the Plan to have died before such Participant or Beneficiary. A
final judgment of conviction of felonious and intentional killing is conclusive
for the purposes of this section. In the absence of a conviction of felonious
and intentional killing, the Company shall determine whether the killing was
felonious and intentional for the purposes of this Section. Whenever
appropriate, words used herein in the singular may be read in the plural, or
words used herein in the plural may be read in the singular; the masculine may
include the feminine; and the words “hereof,” “herein” or “hereunder” or other
similar compounds of the word “here” shall mean and refer to this entire Plan
document and not to any particular paragraph or section of this Plan document
unless the context clearly indicates to the contrary. The titles given to the
various sections of this Plan document are inserted for convenience of
reference only and are not part of this Plan document, and they shall not be
considered in determining the purpose, meaning or intent of any provision
hereof. Any reference in this Plan document to a statute or regulation shall
be considered also to mean and refer to any subsequent amendment or replacement
of that statute or regulation. This document has been executed and delivered
in the State of Minnesota and has been drawn in conformity to the laws of that
State and shall, except to the extent that federal law is controlling, be
construed and enforced in accordance with the laws of the State of Minnesota
(without regard to its conflict of law principles).

67

 

     IN WITNESS WHEREOF, each Company has caused these presents to be executed,
as of the 23rd day of December, 2003.

	 	 	 
	 	
U.S. BANCORP PIPER JAFFRAY

COMPANIES INC.
	 	 	 
	 	By	  /s/ Andrew S. Duff
	 	 	

	 	 	Its President and
CEO

	 	 	 
	 	And
	 	 	 
	 	By	  /s/ James L. Chosy
	 	 	

	 	 	Its Secretary

	 	 	 
	 	
PIPER JAFFRAY COMPANIES
	 	 	 
	 	By	  /s/ Andrew S. Duff
	 	 	

	 	 	Its President

	 	 	 
	 	And
	 	 	 
	 	By	  /s/ James L. Chosy
	 	 	

	 	 	Its Secretary

68

 

SCHEDULE I

PARTICIPATING EMPLOYERS

A.     From January 1, 2003, to the Spin-off Date:

	 	 	 	 	 
	Name	 	EIN
	
	 	

	U.S. Bancorp Piper Jaffray Companies Inc.
	 	 	41-1233380	 
	U.S. Bancorp Piper Jaffray Inc.
	 	 	41-0953246	 
	U.S. Bancorp Piper Jaffray Ventures, Inc.
	 	 	41-1455072	 

B.     On and After the Spin-off Date:

	 	 	 	 	 
	Name	 	EIN
	
	 	

	Piper Jaffray Companies
	 	 	30-0168701	 
	Piper Jaffray & Co.
	 	 	41-0953246	 
	Piper Jaffray Ventures, Inc.
	 	 	41-1455072	 

SI-1

 

APPENDIX A

LIMITATION ON ANNUAL ADDITIONS

SECTION 1

INTRODUCTION

Terms defined in the Plan document shall have the same meanings when used in
this Appendix. In addition, when used in this Appendix, the following terms
shall have the following meanings:

1.1. Annual Addition. Annual addition means, with respect to any Participant
for a limitation year, the sum of:

	 	(a)	 	All employer contributions (including employer contributions
of the Participant’s earnings reductions under Code §§ 401(k),
403(b) and 408(k)) allocable as of a date during such limitation
year to the Participant under all defined contribution plans;
	 
	 	(b)	 	All forfeitures allocable as of a date during such limitation
year to the Participant under all defined contribution plans; and
	 
	 	(c)	 	All Participant contributions made as of a date during such
limitation year to all defined contribution plans.

          1.1.1. Specific Inclusions. With regard to a plan which contains a
qualified cash or deferred arrangement or matching contributions or employee
contributions, excess contributions and excess aggregate contributions (whether
or not distributed during or after the limitation year) shall be considered
annual additions in the year contributed. Excess deferrals that are not
distributed in accordance with the regulations under Code § 402(g) are annual
additions.

          1.1.2. Specific Exclusions. The annual addition shall not, however,
include any portion of a Participant’s rollover contributions or any additions
to accounts attributable to a plan merger or a transfer of plan assets or
liabilities or any other amounts excludable under law. Excess deferrals that
are distributed in accordance with the regulations under Code § 402(g) are not
annual additions.

          1.1.3. ESOP Rules. In the case of an employee stock ownership plan within
the meaning of Code § 4975(e)(7), annual additions shall not include any
dividends or gains on sale of employer securities held by the employee stock
ownership plan (regardless of whether such dividends or gains are (i) on
securities which are allocated to Participants’ accounts or (ii) on securities
which are not allocated to Participants’ accounts which, in the case of
dividends used to pay principal on an employee stock ownership plan loan,
result in employer securities being allocated to Participants’ accounts or, in
the case of a sale, result in sale proceeds being allocated to Participants’
accounts). In the case of an employee stock ownership plan within the meaning
of Code § 4975(e)(7) under which no more than one-third (1/3rd) of the employer
contributions for a limitation year which are deductible under Code § 404(a)(9)
are allocated to highly compensated employees (as defined in Code § 414(q)),
annual additions shall not include forfeitures of employer securities under the
employee stock ownership plan if such securities were acquired with the
proceeds of an exempt loan or, if the Employer is not an S corporation as
defined in Code § 1361(a)(1), employer contributions to the employee stock
ownership

A-1

 

plan which are deductible by the employer under Code § 404(a)(9)(B) and
charged against the Participant’s account (i.e., interest payments).

1.2. Controlled Group Member. Controlled group member means the Employer and
each member of a controlled group of corporations (as defined in Code § 414(b)
and as modified by Code § 415(h)), all commonly controlled trades or businesses
(as defined in Code § 414(c) and as modified by Code § 415(h)), affiliated
service groups (as defined in Code § 414(m)) of which the Employer is a part
and other organizations required to be aggregated for this purpose under Code §
414(o).

1.3. Defined Contribution Plans. Defined contribution plan shall have the
meaning assigned to that term by Code § 415(k)(1). Whenever reference is made
to defined contribution plans in this Appendix, it shall include all such plans
maintained by the Employer and all controlled group members.

1.4. Individual Medical Account. Individual medical account means an account,
as defined in Code § 415(1)(2) maintained by the Employer or a controlled group
member which provides an annual addition.

1.5. Limitation Year. Limitation year means the Plan Year.

1.6. Maximum Permissible Addition.

     1.6.1. General Rule. Maximum permissible addition (a term that is
relevant only with respect to defined contribution plans) means, for any one
limitation year, the lesser of:

	 	(a)	 	Forty Thousand Dollars ($40,000), as adjusted automatically
for increases in the cost of living by the Secretary of the
Treasury, or
	 
	 	(b)	 	One hundred percent (100%) of the Participant’s § 415
compensation for such limitation year.

          1.6.2. Medical Benefits. The dollar limitation in Section 1.6.1(i), but
not the amount determined in Section 1.6.1(ii), shall be reduced by the amount
of employer contributions which are allocated to a separate account established
for the purpose of providing medical benefits or life insurance benefits with
respect to a key employee (as defined in Code § 416) under a welfare benefit
fund or an individual medical account.

1.7. Section 415 Compensation. Section 415 compensation (sometimes, “§ 415
compensation”) shall mean, with respect to any limitation year, the total
wages, salaries, fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer and all controlled group members to the extent that such amounts are
includible in gross income but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code § 3401(a)(2)). Without regard to whether it is or is not
includible in gross income, subject to other limitations and rules of this
Section, (i) § 415 compensation shall include foreign earned income as defined
in Code § 911(b) whether or not excludable from gross income under Code § 911,
and (ii) § 415 compensation shall be determined without regard to the
exclusions from gross income in Code § 931 and Code § 933. Section 415
compensation shall be determined on a cash basis. Section 415 compensation
shall also include any elective deferral as defined in Code § 402(g)(3) and any
amount which is contributed or deferred by an Employer at the election of the
employee and which is not includible in the gross income of the employee by
reason of Code § 125, Code § 132(f) or Code § 457.

A-2

 

1.8. Welfare Benefit Fund. Welfare benefit fund means a fund as defined in
Code § 419(e) which provides post-retirement medical benefits allocated to
separate accounts for key employees as defined in Code § 419A(d)(3).

SECTION 2

DEFINED CONTRIBUTION LIMITATION

Notwithstanding anything to the contrary contained in the Plan document, there
shall not be allocated to the account of any Participant under a defined
contribution plan for any limitation year an amount which would cause the
annual addition for such Participant to exceed the maximum permissible
addition.

SECTION 3

REMEDIAL ACTION

3.1. Abatement. If a Participant’s annual additions for a limitation year
would exceed the maximum permissible addition, to the extent necessary to
eliminate the excess the following shall occur in the following sequence.

3.2. Employee After Tax Contributions and Elective Deferrals. The defined
contribution plan shall:

	 	(a)	 	Return any unmatched employee contributions made by the
Participant for the limitation year to the Participant (adjusted for
their proportionate share of gains but not losses while held in the
defined contribution plan), and
	 
	 	(b)	 	Distribute unmatched elective deferrals (within the meaning
of Code § 402(g)(3)) made for the limitation year to the Participant
(adjusted for their proportionate share of gains but not losses
while held in the defined contribution plan), and
	 
	 	(c)	 	Return any matched employee contributions made by the
Participant for the limitation year to the Participant (adjusted for
their proportionate share of gains but not losses while held in the
defined contribution plan), and
	 
	 	(d)	 	Distribute matched elective deferrals (within the meaning of
Code § 402(g)(3)) made for the limitation year to the Participant
(adjusted for their proportionate share of gains but not losses
while held in the defined contribution plan).

To the extent matched employee contributions are returned or any matched
elective deferrals are distributed, any matching contribution made with respect
thereto shall be forfeited and reallocated to Participants as provided in the
defined contribution plan.

3.3. Employer Contributions. If, after taking all the actions contemplated by
Section 3.2, an excess still exists, the defined contribution plan shall
dispose of the excess as follows.

	 	(a)	 	Covered. If that Participant is covered by the defined
contribution plan at the end of the limitation year, the Employer
shall cause such excess to be used to reduce employer contributions
for the next limitation year (“second limitation year”) and
succeeding limitation years, as necessary, for that Participant.

A-3

 

	 	(b)	 	Not Covered. If the Participant is not covered by the
defined contribution plan at the end of the limitation year,
however, then the excess amounts must be held unallocated in an
“excess account” for the second limitation year (or succeeding
limitation years) and allocated and reallocated in the second
limitation year (or succeeding limitation year) to all the
remaining Participants in the defined contribution plan as if an
employer contribution for the second limitation year (or succeeding
limitation year). However, if the allocation or reallocation of
the excess amounts pursuant to the provisions of the defined
contribution plan causes the limitations of this Appendix to be
exceeded with respect to each Participant for the second limitation
year (or succeeding limitation years), then these amounts must be
held unallocated in an excess account. If an excess account is in
existence at any time during the second limitation year (or any
succeeding limitation year), all amounts in the excess account must
be allocated and reallocated to Participants’ accounts (subject to
the limitations of this Appendix) as if they were additional
employer contributions before any employer contribution and any
Participant contributions which would constitute annual additions
may be made to the defined contribution plan for that limitation
year. Furthermore, the excess amounts must be used to reduce
employer contributions for the second limitation year (and
succeeding limitation years, as necessary) for all of the remaining
Participants.
	 
	 	(c)	 	No Distributions. Excess amounts may not be distributed
from the defined contribution plan to Participants or former
Participants.

     If an excess account is in existence at any time during a limitation year,
the gains and losses and other income attributable to the excess account shall
be allocated to such excess account. To the extent that investment gains or
other income or investment losses are allocated to the excess account, the
entire amount allocated to Participants from the excess account, including any
such gains or other income or less any losses, shall be considered as an annual
addition. If the defined contribution plan should be terminated prior to the
date any such temporarily held, unallocated excess can be allocated to the
Accounts of Participants, the date of termination shall be deemed to be an
Annual Valuation Date for the purpose of allocating such excess and, if any
portion of such excess cannot be allocated as of such deemed Annual Valuation
Date by reason of the limitations of this Appendix, such remaining excess shall
be returned to the Employer.

3.4. Sequence of Plans. Each step of remedial action under Section 3.2 and
Section 3.3 as may be necessary to correct an excess allocation shall be made
in all defined contribution plans before the next step of remedial action is
made. Each such step shall be made in the defined contribution plans in the
following sequence:

	 	(a)	 	All profit sharing and stock bonus plans containing cash or
deferred arrangements,
	 
	 	(b)	 	All money purchase pension plans other than money purchase
pension plans that are part of employee stock ownership plans,
	 
	 	(c)	 	All profit sharing and stock bonus plans other than profit
sharing and stock bonus plans containing cash or deferred
arrangements and employee stock ownership plans,
	 
	 	(d)	 	All employee stock ownership plans.

A-4

 

If an excess allocation occurs in two (2) or more plans in the same category,
correction of the excess allocation shall be made in chronological order as
determined by the effective date of each plan (using the original effective
date of the plan) beginning with the most recently established plan.

A-5

 

APPENDIX B

CONTINGENT TOP HEAVY PLAN RULES

Notwithstanding any of the foregoing provisions of the Plan document, if, after
applying the special definitions set forth in Section 1 of this Appendix, this
Plan is determined under Section 2 of this Appendix to be a top heavy plan for
a Plan Year, then the special rules set forth in Section 3 of this Appendix
shall apply. For so long as this Plan is not determined to be a top heavy
plan, the special rules in Section 3 of this Appendix shall be inapplicable to
this Plan.

SECTION 1

SPECIAL DEFINITIONS

Terms defined in the Plan document shall have the same meanings when used in
this Appendix. In addition, when used in this Appendix, the following terms
shall have the following meanings:

1.1. Aggregated Employers. Aggregated employers means the Employer and each
other corporation, partnership or proprietorship which is a “predecessor” to
the Employer, or is under “common control” with the Employer, or is a member of
an “affiliated service group” that includes the Employer, as those terms are
defined in Code §§ 414(b), (c), (m) or (o).

1.2. Aggregation Group. Aggregation group means a grouping of this Plan and:

	 	(a)	 	If any Participant in the Plan is a key employee, each
other qualified pension, profit sharing or stock bonus plan of the
aggregated employers in which a key employee is a Participant (and
for this purpose, a key employee shall be considered a Participant
only during periods when he is actually accruing benefits and not
during periods when he has preserved accrued benefits attributable
to periods of participation when he was not a key employee), and
	 
	 	(b)	 	Each other qualified pension, profit sharing or stock bonus
plan of the aggregated employers which is required to be taken into
account for this Plan or any plan described in paragraph (a) above
to satisfy the qualification requirements under Code § 410 or Code
§ 401(a)(4), and
	 
	 	(c)	 	Each other qualified pension, profit sharing or stock bonus
plan of the aggregated employers which is not included in paragraph
(a) or (b) above, but which the Employer elects to include in the
aggregation group and which, when included, would not cause the
aggregation group to fail to satisfy the qualification requirements
under Code § 410 or Code § 401(a)(4).

1.3. Compensation. Unless the context clearly requires otherwise, compensation
means the wages, tips and other compensation paid to the Participant by the

Employer and reportable in the box designated “wages, tips, other compensation”
on Treasury Form W-2 (or any comparable successor box or form) for the
applicable period but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code § 3401(a)(2)). Compensation for this purpose shall include
elective contributions made by the Employer on behalf of the Participant that
are not includible in gross income

B-1

 

under Code §§ 125, 132(f), 402(e)(3), 402(h), 403(b), 414(h)(2) and 457
including elective contributions authorized by the Participant under a
cafeteria plan or any qualified cash or deferred arrangement under Code §
401(k). For the purposes of this Appendix (excluding Section 1.6 of this
Appendix), compensation for a Plan Year shall not exceed the annual
compensation limit under Code § 401(a)(17) (which is Two Hundred Thousand
Dollars ($200,000) for the Plan Year ending December 31, 2003, and shall be
adjusted thereafter as provided under the Code).

1.4. Determination Date. Determination date means, for the first Plan Year of
a plan, the last day of such first Plan Year, and for each subsequent Plan
Year, the last day of the immediately preceding Plan Year.

1.5. Five Percent Owner. Five percent owner means for each aggregated employer
that is a corporation, any person who owns (or is considered to own within the
meaning of the shareholder attribution rules) more than five percent (5%) of
the value of the outstanding stock of the corporation or stock possessing more
than five percent (5%) of the total combined voting power of the corporation,
and, for each aggregated employer that is not a corporation, any person who
owns more than five percent (5%) of the capital interest or the profits
interest in such aggregated employer. For the purposes of determining
ownership percentages, each corporation, partnership and proprietorship
otherwise required to be aggregated shall be viewed as a separate entity.

1.6. Key Employee. Key employee means each Participant (whether or not then an
employee) who at any time during the Plan Year is:

	 	(a)	 	An officer of any aggregated employer (excluding persons
who have the title of an officer but not the authority and
including persons who have the authority of an officer but not the
title) having an annual compensation from all aggregated employers
for such Plan Year in excess of one hundred thirty thousand dollars
($130,000) for such Plan Year (adjusted as provided in Code §
416(i)(1)(A)), or
	 
	 	(b)	 	A five percent owner, or
	 
	 	(c)	 	A one percent owner having an annual compensation from the
aggregated employers of more than One Hundred Fifty Thousand
Dollars ($150,000);

provided, however, that no more than fifty (50) employees (or, if lesser, the
greater of three of all the aggregated employers’ employees or ten percent of
all the aggregated employers’ employees) shall be treated as officers. For the
purposes of determining ownership percentages, each corporation, partnership
and proprietorship otherwise required to be aggregated shall be viewed as a
separate entity. For the purpose of determining compensation, all compensation
received from all aggregated employers shall be taken into account. The term
“key employee” shall include the beneficiaries of a deceased key employee.

1.7. One Percent Owner. One percent owner means, for each aggregated employer
that is a corporation, any person who owns (or is considered to own within the
meaning of the shareholder attribution rules) more than one percent (1%) of the
value of the outstanding stock of the corporation or stock possessing more than
one percent (1%) of the total combined voting power of the corporation, and,
for each aggregated employer that is not a corporation, any person who owns
more than one percent (1%) of the capital or the profits interest in such
aggregated employer. For the purposes of determining ownership percentages,
each corporation, partnership and proprietorship otherwise required to be
aggregated shall be viewed as a separate entity.

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1.8. Shareholder Attribution Rules. Shareholder attribution rules means the
rules of Code § 318, (except that subparagraph (C) of Code § 318(a)(2) shall be
applied by substituting “5 percent” for “50 percent”) or, if the Employer is
not a corporation, the rules determining ownership in such Employer which shall
be set forth in regulations prescribed by the Secretary of the Treasury.

1.9. Top Heavy Aggregation Group. Top heavy aggregation group means any
aggregation group for which, as of the determination date, the sum of:

	 	(a)	 	The present value of the cumulative accrued benefits for
key employees under all defined benefit plans included in such
aggregation group, and
	 
	 	(b)	 	The aggregate of the accounts of key employees under all
defined contribution plans included in such aggregation group,

exceed sixty percent (60%) of a similar sum determined for all employees. In
applying the foregoing, the following rules shall be observed:

	 	(a)	 	For the purpose of determining the present value of the
cumulative accrued benefit for any employee under a defined benefit
plan, or the amount of the account of any employee under a defined
contribution plan, such present value or amount shall be increased
by the aggregate distributions made with respect to such employee
under the plan on account of separation from service, death or
disability during the one (1) year period ending on the
determination date and the aggregate distributions made with
respect to such employee under the plan for any other reason during
the five (5) year period ending on the determination date.
	 
	 	(b)	 	Any rollover contribution (or similar transfer) initiated
by the employee, made from a plan maintained by one employer to a
plan maintained by another employer and made after December 31,
1983, to a plan shall not be taken into account with respect to the
transferee plan for the purpose of determining whether such
transferee plan is a top heavy plan (or whether any aggregation
group which includes such plan is a top heavy aggregation group).
Any rollover contribution (or similar transfer) not described in
the preceding sentence shall be taken into account with respect to
the transferee plan for the purpose of determining whether such
transferee plan is a top heavy plan (or whether any aggregation
group which includes such plan is a top heavy aggregation group).
	 
	 	(c)	 	If any individual is not a key employee with respect to a
plan for any Plan Year, but such individual was a key employee with
respect to a plan for any prior Plan Year, the cumulative accrued
benefit of such employee and the account of such employee shall not
be taken into account.
	 
	 	(d)	 	The determination of whether a plan is a top heavy plan
shall be made once for each Plan Year of the plan as of the
determination date for that Plan Year.
	 
	 	(e)	 	In determining the present value of the cumulative accrued
benefits of employees under a defined benefit plan, the
determination shall be made as of the actuarial valuation date last
occurring during the twelve (12) months preceding the determination
date and shall be determined on the assumption that the employees
terminated employment on the valuation date except as provided in
Code § 416 and the regulations thereunder for the first and second
Plan Years of a defined

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	 	 	 	benefit plan. The accrued benefit of any employee (other
than a key employee) shall be determined under the method
which is used for accrual purposes for all plans of the
employer or if there is no method which is used for accrual
purposes under all plans of the employer, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under Code § 411(b)(1)(C). In determining this
present value, the mortality and interest assumptions shall
be those which would be used by the Pension Benefit Guaranty
Corporation in valuing the defined benefit plan if it
terminated on such valuation date. The accrued benefit to be
valued shall be the benefit expressed as a single life
annuity.
	 
	 	(f)	 	In determining the accounts of employees under a defined
contribution plan, the account values determined as of the most
recent asset valuation occurring within the twelve (12) month
period ending on the determination date shall be used. In
addition, amounts required to be contributed under either the
minimum Trust Funding standards or the plan’s contribution formula
shall be included in determining the account. In the first year of
the plan, contributions made or to be made as of the determination
date shall be included even if such contributions are not required.
	 
	 	(g)	 	If any individual has not performed any services for any
employer maintaining the plan at any time during the one (1) year
period ending on the determination date, any accrued benefit of the
individual under a defined benefit plan and the account of the
individual under a defined contribution plan shall not be taken
into account.
	 
	 	(h)	 	For this purpose, a terminated plan shall be treated like
any other plan and must be aggregated with other plans of the
employer if it was maintained within the last five (5) years ending
on the determination date for the Plan Year in question and would,
but for the fact that it terminated, be part of the aggregation
group for such Plan Year.

1.10. Top Heavy Plan. Top heavy plan means a qualified plan under which (as of
the determination date):

	 	(a)	 	If the plan is a defined benefit plan, the present value of
the cumulative accrued benefits for key employees exceeds sixty
percent (60%) of the present value of the cumulative accrued
benefits for all employees, and
	 
	 	(b)	 	If the plan is a defined contribution plan, the aggregate
of the accounts of key employees exceeds sixty percent (60%) of the
aggregate of all of the accounts of all employees.

In applying the foregoing, the following rules shall be observed:

	 	(a)	 	Each plan of an Employer required to be included in an
aggregation group shall be a top heavy plan if such aggregation
group is a top heavy aggregation group.
	 
	 	(b)	 	For the purpose of determining the present value of the
cumulative accrued benefit for any employee under a defined benefit
plan, or the amount of the account of any employee under a defined
contribution plan, such present value or amount shall be increased
by the aggregate distributions made with respect to

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	 	 	 	such employee under the plan during the five (5) year period
ending on the determination date.
	 
	 	(c)	 	Any rollover contribution (or similar transfer) initiated
by the employee, made from a plan maintained by one employer to a
plan maintained by another employer and made after December 31,
1983, to a plan shall not be taken into account with respect to the
transferee plan for the purpose of determining whether such
transferee plan is a top heavy plan (or whether any aggregation
group which includes such plan is a top heavy aggregation group).
Any rollover contribution (or similar transfer) not described in
the preceding sentence shall be taken into account with respect to
the transferee plan for the purpose of determining whether such
transferee plan is a top heavy plan (or whether any aggregation
group which includes such plan is a top heavy aggregation group).
	 
	 	(d)	 	If any individual is not a key employee with respect to a
plan for any Plan Year, but such individual was a key employee with
respect to the plan for any prior Plan Year, the cumulative accrued
benefit of such employee and the account of such employee shall not
be taken into account.
	 
	 	(e)	 	The determination of whether a plan is a top heavy plan
shall be made once for each Plan Year of the plan as of the
determination date for that Plan Year.
	 
	 	(f)	 	In determining the present value of the cumulative accrued
benefits of employees under a defined benefit plan, the
determination shall be made as of the actuarial valuation date last
occurring during the twelve (12) months preceding the determination
date and shall be determined on the assumption that the employees
terminated employment on the valuation date except as provided in
Code § 416 and the regulations thereunder for the first and second
Plan Years of a defined benefit plan. The accrued benefit of any
employee (other than a key employee) shall be determined under the
method which is used for accrual purposes for all plans of the
employer or if there is no method which is used for accrual
purposes under all plans of the employer, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under Code § 411(b)(1)(C). In determining this present value, the
mortality and interest assumptions shall be those which would be
used by the Pension Benefit Guaranty Corporation in valuing the
defined benefit plan if it terminated on such valuation date. The
accrued benefit to be valued shall be the benefit expressed as a
single life annuity.
	 
	 	(g)	 	In determining the accounts of employees under a defined
contribution plan, the account values determined as of the most
recent asset valuation occurring within the twelve (12) month
period ending on the determination date shall be used. In
addition, amounts required to be contributed under either the
minimum Trust Funding standards or the plan’s contribution formula
shall be included in determining the account. In the first year of
the plan, contributions made or to be made as of the determination
date shall be included even if such contributions are not required.
	 
	 	(h)	 	If any individual has not performed any services for any
employer maintaining the plan at any time during the five (5) year
period ending on the determination date, any accrued benefit of the
individual under a defined benefit plan and the

B-5

 

	 	 	 	account of the individual under a defined contribution plan
shall not be taken into account.
	 
	 	(i)	 	For this purpose, a terminated plan shall be treated like
any other plan and must be aggregated with other plans of the
employer if it was maintained within the last five (5) years ending
on the determination date for the Plan Year in question and would,
but for the fact that it terminated, be part of the aggregation
group for such Plan Year.
	 
	 	(j)	 	A plan shall not be a top heavy plan if it consists solely
of (i) a cash or deferred arrangement which meets the requirements
of Code § 401(k)(12), and (ii) matching contributions with respect
to which the requirements of section 401(m)(11) are met. If, but
for the preceding sentence, a plan would be treated as a top heavy
plan because it is a member of an aggregation group which is a top
heavy group, contributions under the Plan may be taken into account
in determining whether any other plan in the group meets the
requirements of Section 3.3.

SECTION 2

DETERMINATION OF TOP HEAVINESS

Once each Plan Year, as of the determination date for that Plan Year, the
administrator of this Plan shall determine if this Plan is a top heavy plan.

SECTION 3

CONTINGENT PROVISIONS

3.1. When Applicable. If this Plan is determined to be a top heavy plan for
any Plan Year, the following provisions shall apply for that Plan Year (and, to
the extent hereinafter specified, for subsequent Plan Years), notwithstanding
any provisions to the contrary in the Plan.

3.2. Vesting Requirement.

     3.2.1. General Rule. During any Plan Year that the Plan is determined to
be a Top Heavy Plan, then all accounts of all Participants in a defined
contribution plan that is a top heavy plan and the accrued benefits of all
Participants in a defined benefit plan that is a top heavy plan shall be vested
and nonforfeitable in accordance with the following schedule if, and to the
extent, that it is more favorable than other provisions of the Plan:

	 	 	 	 	 
	If the Participant Has	 	The Vested
	Completed the Following	 	Percentage
	Years of Vesting Service:	 	Shall Be:
	
	 	

	Less than 3 years
	 	 	0	%
	3 years or more
	 	 	100	%

     3.2.2. Subsequent Year. In each subsequent Plan Year that the Plan is
determined not to be a top heavy plan, the other nonforfeitability provisions
of the Plan document (and not this section)

B-6

 

shall apply in determining the vested and nonforfeitable rights of
Participants who do not have three (3) or more years of Vesting Service as of
the beginning of such subsequent Plan Year; provided, however, that they shall
not be applied in a manner which would reduce the vested and nonforfeitable
percentage of any Participant.

     3.2.3. Cancellation of Benefit Service. If this Plan is a defined benefit
plan and if the Participant’s vested percentage is determined under this
Appendix and if a Participant receives a lump sum distribution of the present
value of the vested portion of his accrued benefit, the Plan shall:

	 	(a)	 	Thereafter disregard the Participant’s service with respect
to which he or she received such distribution in determining his
accrued benefit, and
	 
	 	(b)	 	Permit the Participant who receives a distribution of less
than the present value of his entire accrued benefit to restore
this service by repaying (after returning to employment covered
under the Plan) to the trustee the amount of such distribution
together with interest at the interest rate of five percent (5%)
per annum compounded annually (or such other interest rate as is
provided by law for such repayment). If the distribution was on
account of separation from service such repayment must be made
before the earlier of,
	 

	 	(1)	 	Five (5) years after the first date
on which the Participant is subsequently reemployed by
the employer, or
	 
	 	(2)	 	The close of the first period of five
(5) consecutive one-year breaks in service commencing
after the distribution.

If the distribution was on account of any other reason, such repayment must be
made within five (5) years after the date of the distribution.

3.3. Defined Contribution Plan Minimum Benefit Requirement.

     3.3.1. General Rule. If this Plan is a defined contribution plan, then
for any Plan Year that this Plan is determined to be a top heavy plan, the
Employer shall make a contribution for allocation to the account of each
employee who is a Participant for that Plan Year and who is not a key employee
in an amount (when combined with other Employer contributions and forfeited
accounts allocated to his account) which is at least equal to three percent
(3%) of such Participant’s compensation. (This minimum contribution amount
shall be further reduced by all other Employer contributions to this Plan or
any other defined contribution plans.) This contribution shall be made for
each Participant who has not separated from service with the Employer at the
end of the Plan Year (including for this purpose any Participant who is then on
temporary layoff or authorized leave of absence or who, during such Plan Year,
was inducted into the Armed Forces of the United States from employment with
the Employer) including, for this purpose, each employee of the Employer who
would have been a Participant if he had: (i) completed one thousand (1,000)
Hours of Service (or the equivalent) during the Plan Year, and (ii) made any
mandatory contributions to the Plan, and (iii) earned compensation in excess of
the stated amount required for participation in the Plan.

     3.3.2. Special Rule. Subject to the following rules, the percentage
referred to in Section 3.3.1 of this Appendix shall not exceed the percentage
at which contributions are made (or required to be made) under this Plan for
the Plan Year for that key employee for whom that percentage is the highest for
the Plan Year.

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	 	(a)	 	The percentage referred to above shall be determined by
dividing the Employer contributions for such key employee for such
Plan Year by his compensation for such Plan Year.
	 
	 	(b)	 	For the purposes of this Section 3.3, all defined
contribution plans required to be included in an aggregation group
shall be treated as one (1) plan.
	 
	 	(c)	 	The exception contained in this Section 3.3.2 shall not
apply to (be available to) this Plan if this Plan is required to be
included in an aggregation group if including this Plan in an
aggregation group enables a defined benefit plan to satisfy the
qualification requirements of Code § 410 or Code § 401(a)(4).

     3.3.3. Salary Reduction and Matching Contributions. For the purpose of
this Section 3.3, all Employer contributions attributable to a salary reduction
or similar arrangement shall be taken into account for the purpose of
determining the minimum percentage contribution required to be made for a
particular Plan Year for a Participant who is not a key employee but not for
the purpose of determining whether that minimum contribution requirement has
been satisfied.

3.4. Defined Benefit Plan Minimum Benefit Requirement.

     3.4.1. General Rule. If this Plan is a defined benefit plan, then for any
Plan Year that the Plan is determined to be a top heavy plan, the accrued
benefit for each Participant who is not a key employee shall not be less than
one-twelfth (l/12th) of the applicable percentage of the Participant’s average
compensation for years in the testing period.

     3.4.2. Special Rules and Definitions. In applying the general rule of
Section 3.4.1 of this Appendix, the following special rules and definitions
shall apply:

	 	(a)	 	The term “applicable percentage” means the lesser of:
	 

	 	(1)	 	Two percent (2%) multiplied by the
number of years of service with the Employer, or
	 
	 	(2)	 	Twenty percent (20%).
	 

	 	(b)	 	For the purpose of this Section 3.4, a Participant’s years
of service with the Employer shall be equal to the Participant’s
Vesting Service except that a year of Vesting Service shall not be
taken into account if:
	 

	 	(1)	 	The Plan was not a top heavy plan for
any Plan Year ending during such year of Vesting
Service, or
	 
	 	(2)	 	Such year of Vesting Service was
completed in a Plan Year beginning before January l,
1984, or
	 
	 	(3)	 	The service occurs during a Plan Year
when the Plan benefits (within the meaning of Code §
410(b)) no key employee or former key employee.

B-8

 

	 	(c)	 	A Participant’s “testing period” shall be the period of
five (5) consecutive years during which the Participant had the
greatest compensation from the Employer; provided, however, that:
	 

	 	(1)	 	The years taken into account shall be
properly adjusted for years not included in a year of
service, and
	 
	 	(2)	 	A year shall not be taken into
account if such year ends in a Plan Year beginning
before January l, 1984, or such year begins after the
close of the last year in which the Plan was a top heavy
plan.
	 

	 	(d)	 	An individual shall be considered a Participant for the
purpose of accruing the minimum benefit only if such individual has
at least one thousand (1,000) Hours of Service during a benefit
accrual computation period (or equivalent service determined under
Department of Labor regulations). Furthermore, such individual
shall accrue a minimum benefit only for a benefit accrual
computation period in which such individual has one thousand
(1,000) Hours of Service (or equivalent service). An individual
shall not fail to accrue the minimum benefit merely because the
individual: (i) was not employed on a specified date, or (ii) was
excluded from participation (or otherwise failed to accrue a
benefit) because the individual’s compensation was less than a
stated amount, or (iii) because the individual failed to make any
mandatory contributions.

     3.4.3. Accruals Preserved. In years subsequent to the last Plan Year in
which this Plan is a top heavy plan, the other benefit accrual rules of the
Plan document shall be applied to determine the accrued benefit of each
Participant, except that the application of such other rules shall not serve to
reduce a Participant’s accrued benefit as determined under this Section 3.4.

3.5. Priorities Among Plans. In applying the minimum benefit provisions of
this Appendix in any Plan Year that this Plan is determined to be a top heavy
plan, the following rules shall apply:

	 	(a)	 	If an employee participates only in this Plan, the employee
shall receive the minimum benefit applicable to this Plan.
	 
	 	(b)	 	If an employee participates in both a defined benefit plan
and a defined contribution plan and only one (1) of such plans is a
top heavy plan for the Plan Year, the employee shall receive the
minimum benefit applicable to the plan which is a top heavy plan.
	 
	 	(c)	 	If an employee participates in both a defined contribution
plan and a defined benefit plan and both are top heavy plans, then
the employee, for that Plan Year, shall receive the defined benefit
plan minimum benefit unless for that Plan Year the employee has
received employer contributions and forfeitures allocated to his
account in the defined contribution plan in an amount which is at
least equal to five percent (5%) of his compensation.
	 
	 	(d)	 	If an employee participates in two (2) or more defined
contribution plans which are top heavy plans, then the employee,
for that Plan Year, shall receive the defined contribution plan
minimum benefit in that defined contribution plan which has the
earliest original effective date.

B-9

 

3.6. Bargaining Units. The requirements of Section 3.2 through Section 3.5 of
this Appendix shall not apply with respect to any employee included in a unit
of employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one (1) or
more employers if there is evidence that retirement benefits are the subject of
good faith bargaining between such employee representatives and such employer
or employers.

B-10

 

APPENDIX C

QUALIFIED DOMESTIC RELATIONS ORDERS

SECTION 1

GENERAL MATTERS

Terms defined in the Plan document shall have the same meanings when used in
this Appendix.

1.1. General Rule. The Plan shall not honor the creation, assignment or
recognition of any right to any benefit payable with respect to a Participant
pursuant to a domestic relations order unless that domestic relations order is
a qualified domestic relations order.

1.2. Alternate Payee Defined. The only persons eligible to be considered
Alternate Payees with respect to a Participant shall be that Participant’s
spouse, former spouse, child or other dependent.

1.3. DRO Defined. A domestic relations order is any judgment, decree or order
(including an approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child or other dependent of a Participant and which is
made pursuant to a state domestic relations law (including a community property
law).

1.4. QDRO Defined. A qualified domestic relations order is a domestic
relations order which creates or recognizes the existence of an Alternate
Payee’s right to (or assigns to an Alternate Payee the right to) receive all or
a portion of the Account of a Participant under the Plan and which satisfies
all of the following requirements.

     1.4.1. Names and Addresses. The order must clearly specify the name and
the last known mailing address, if any, of the Participant and the name and
mailing address of each Alternate Payee covered by the order.

     1.4.2. Amount. The order must clearly specify the amount or percentage of
the Participant’s Account to be paid by the Plan to each such Alternate Payee
or the manner in which such amount or percentage is to be determined.

     1.4.3. Payment Method. The order must clearly specify the number of
payments or period to which the order applies.

     1.4.4. Plan Identity. The order must clearly specify that it applies to
this Plan.

     1.4.5. Settlement Options. Except as provided in Section 1.4.8 of this
Appendix, the order may not require the Plan to provide any type or form of
benefits or any option not otherwise provided under the Plan.

     1.4.6. Increased Benefits. The order may not require the Plan to provide
increased benefits.

C-1

 

     1.4.7. Prior Awards. The order may not require the payment of benefits to
an Alternate Payee which are required to be paid to another Alternate Payee
under another order previously determined to be a qualified domestic relations
order.

     1.4.8. Exceptions. The order will not fail to meet the requirements of
Section 1.4.5 of this Appendix if:

	 	(a)	 	The order requires payment of benefits be made to an
Alternate Payee before the Participant has separated from service
but as of a date that is on or after the date on which the
Participant attains (or would have attained) the earliest payment
date described in Section 1.4.10 of this Appendix; and
	 
	 	(b)	 	The order requires that payment of benefits be made to an
Alternate Payee as if the Participant had retired on the date on
which payment is to begin under such order (but taking into account
only the present value of benefits actually accrued); and
	 
	 	(c)	 	The order requires payment of benefits to be made to an
Alternate Payee in any form in which benefits may be paid under the
Plan to the Participant (other than in the form of a joint and
survivor annuity with respect to the Alternate Payee and his or her
subsequent spouse).

In lieu of the foregoing, the order will not fail to meet the requirements of
Section 1.4.5 of this Appendix if the order: (1) requires that payment of
benefits be made to an Alternate Payee in a single lump sum as soon as is
administratively feasible after the order is determined to be a qualified
domestic relations order, and (2) does not contain any of the provisions
described in Section 1.4.9 of this Appendix, and (3) provides that the payment
of such single lump sum fully and permanently discharges all obligations of the
Plan to the Alternate Payee.

     1.4.9. Deemed Spouse. Notwithstanding the foregoing:

	 	(a)	 	The order may provide that the former spouse of a
Participant shall be treated as a surviving spouse of such
Participant for the purposes of Section 8 of the Plan document (and
that any subsequent or prior spouse of the Participant shall not be
treated as a spouse of the Participant for such purposes); and
	 
	 	(b)	 	The order may provide that, if the former spouse has been
married to the Participant for at least one (1) year at any time,
the surviving former spouse shall be deemed to have been married to
the Participant for the one (1) year period ending on the date of
the Participant’s death.

     1.4.10. Payment Date Defined. For the purpose of Section 1.4.8 of this
Appendix, the earliest payment date means the earlier of:

	 	(a)	 	The date on which the Participant is entitled to a
distribution under the Plan; or
	 
	 	(b)	 	The later of (i) the date the Participant attains age fifty
(50) years, or (ii) the earliest date on which the Participant
could begin receiving benefits under the Plan if the Participant
separated from service.

C-2

 

SECTION 2

PROCEDURES

2.1. Actions Pending Review. During any period when the issue of whether a
domestic relations order is a qualified domestic relations order is being
determined by the Company, the Company shall cause the Plan to separately
account for the amounts which would be payable to the Alternate Payee during
such period if the order were determined to be a qualified domestic relations
order.

2.2. Reviewing DROs. Upon the receipt of a domestic relations order, the
Company shall determine whether such order is a qualified domestic relations
order.

     2.2.1. Receipt. A domestic relations order shall be considered to have
been received only when the Company shall have received a copy of a domestic
relations order which is complete in all respects and is originally signed,
certified or otherwise officially authenticated.

     2.2.2. Notice to Parties. Upon receipt of a domestic relations order, the
Company shall notify the Participant and all persons claiming to be Alternate
Payees and all prior Alternate Payees with respect to the Participant that such
domestic relations order has been received. The Company shall include with
such notice a copy of this Appendix.

     2.2.3. Comment Period. The Participant and all persons claiming to be
Alternate Payees and all prior Alternate Payees with respect to the Participant
shall be afforded a comment period of thirty (30) days from the date such
notice is mailed by the Company in which to make comments or objections to the
Company concerning whether the domestic relations order is a qualified domestic
relations order. By the unanimous written consent of the Participant and all
persons claiming to be Alternate Payees and all prior Alternate Payees with
respect to the Participant, the thirty (30) day comment period may be
shortened.

     2.2.4. Initial Determination. Within a reasonable period of time after
the termination of the comment period, the Company shall give written notice to
the Participant and all persons claiming to be Alternate Payees and all prior
Alternate Payees with respect to the Participant of its decision that the
domestic relations order is or is not a qualified domestic relations order. If
the Company determines that the order is not a qualified domestic relations
order or if the Company determines that the written objections of any party to
the order being found a qualified domestic relations order are not valid, the
Company shall include in its written notice:

	 	(a)	 	The specific reasons for its decision;
	 
	 	(b)	 	The specific reference to the pertinent provisions of this
Plan document upon which its decision is based;
	 
	 	(c)	 	A description of additional material or information, if
any, which would cause the Company to reach a different conclusion;
and
	 
	 	(d)	 	An explanation of the procedures for reviewing the initial
determination of the Company.

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     2.2.5. Appeal Period. The Participant and all persons claiming to be
Alternate Payees and all prior Alternate Payees with respect to the Participant
shall be afforded an appeal period of sixty (60) days from the date such an
initial determination and explanation is mailed in which to make comments or
objections concerning whether the original determination of the Company is
correct. By the unanimous written consent of the Participant and all persons
claiming to be Alternate Payees and all prior Alternate Payees with respect to
the Participant, the sixty (60) day appeal period may be shortened.

     2.2.6. Final Determination. In all events, the final determination of the
Company shall be made not later than eighteen (18) months after the date on
which first payment would be required to be made under the domestic relations
order if it were a qualified domestic relations order. The final determination
shall be communicated in writing to the Participant and all persons claiming to
be Alternate Payees and all prior Alternate Payees with respect to the
Participant.

2.3. Final Disposition. If the domestic relations order is finally determined
to be a qualified domestic relations order and all comment and appeal periods
have expired, the Plan shall pay all amounts required to be paid pursuant to
the domestic relations order to the Alternate Payee entitled thereto. If the
domestic relations order is finally determined not to be a qualified domestic
relations order and all comment and appeal periods have expired, benefits under
the Plan shall be paid to the person or persons who would have been entitled to
such amounts if there had been no domestic relations order.

2.4. Orders Being Sought. If the Company has notice that a domestic relations
order is being or may be sought but has not received the order, the Company
shall not (in the absence of a written request from the Participant) delay
payment of benefits to a Participant or Beneficiary which otherwise would be
due. If the Company has determined that a domestic relations order is not a
qualified domestic relations order and all comment and appeal periods have
expired, the Company shall not (in the absence of a written request from the
Participant) delay payment of benefits to a Participant or Beneficiary which
otherwise would be due even if the Company has notice that the party claiming
to be an Alternate Payee or the Participant or both are attempting to rectify
any deficiencies in the domestic relations order. Notwithstanding the above,
after the commencement of a divorce action, the Company shall comply with a
restraining order, duly issued by the court handling the divorce, reasonably
prohibiting the disposition of a Participant’s benefits pending the submission
to the Company of a domestic relations order or prohibiting the disposition of
a Participant’s benefits pending resolution of a dispute with respect to a
domestic relations order.

SECTION 3

PROCESSING OF AWARD

3.1. General Rules. If a benefit is awarded to an Alternate Payee pursuant to
an order which has been finally determined to be a qualified domestic relations
order, the following rules shall apply.

     3.1.1. Source of Award. If a Participant shall have a Vested interest in
more than one Account under the Plan, the benefit awarded to an Alternate Payee
shall be withdrawn from the Participant’s Accounts in proportion to his Vested
interest in each of them.

     3.1.2. Effect on Account. For all purposes of the Plan, the Participant’s
Account (and all benefits payable under the Plan which are derived in whole or
in part by reference to the Participant’s Account) shall be permanently
diminished by the portion of the Participant’s Account which is awarded to the
Alternate Payee. The benefit awarded to an Alternate Payee shall be considered
to have been a

C-4

 

distribution from the Participant’s Account for the limited purpose of
applying any rules of the Plan document relating to distributions from an
Account that is only partially Vested.

     3.1.3. After Death. After the death of an Alternate Payee, all amounts
awarded to the Alternate Payee which have not been distributed to the Alternate
Payee and which continue to be payable shall be paid in a single lump sum
distribution to the personal representative of the Alternate Payee’s estate as
soon as administratively feasible, unless the qualified domestic relations
order clearly provides otherwise. The Participant’s Beneficiary designation
shall not be effective to dispose of any portion of the benefit awarded to an
Alternate Payee, unless the qualified domestic relations order clearly provides
otherwise.

     3.1.4. In-Service Benefits. Any in-service distribution provisions of the
Plan document shall not be applicable to the benefit awarded to an Alternate
Payee.

3.2. Segregated Account. If the Company determines that it would facilitate
the administration or the distribution of the benefit awarded to the Alternate
Payee or if the qualified domestic relations order so requires, the benefit
awarded to the Alternate Payee shall be established on the books and records of
the Plan as a separate account belonging to the Alternate Payee.

3.3. Former Alternate Payees. If an Alternate Payee has received all benefits
to which the Alternate Payee is entitled under a qualified domestic relations
order, the Alternate Payee will not at any time thereafter be deemed to be an
Alternate Payee or prior Alternate Payee for any substantive or procedural
purpose of this Plan.

C-5

 

APPENDIX D

401(k), 401(m) & 402(g) COMPLIANCE

     Introduction. This Appendix D contains rules for complying with the
nondiscrimination provisions of Code §§ 401(k) and 401(m) and the limitations
imposed under Code § 402(g).

     Priority. Determinations under this Appendix shall be made in the
following order:

	 	(a)	 	Excess deferrals under Section 1,
	 
	 	(b)	 	If required to satisfy Code § 401(k) because the
requirements of Code § 401(k)(12) have not been met, excess
contributions under Section 2, and
	 
	 	(c)	 	If required to satisfy Code § 401(m) because the
requirements of Code § 401(m)(11) have not been met, excess
aggregate contributions under Section 3.

The amount of excess contributions shall be reduced by excess deferrals
previously distributed to such Participant for the Participant’s taxable year
ending with or within such Plan Year.

SECTION 1

SECTION 402(g) COMPLIANCE

1.1 Excess Deferrals.

     1.1.1. In General. A Participant may attribute to this Plan any excess
deferrals made during a taxable year of the Participant by notifying the
Company in writing not later than the March 1 following such taxable year of
the amount of the excess deferral to be assigned to the Plan. A Participant
shall be deemed to have notified the Plan of excess deferrals to the extent the
Participant has excess deferrals for the taxable year calculated by taking into
account only the amount of elective contributions allocated to the
Participant’s 401(k) Account and to any other plan of the Employer and
Affiliates. Notwithstanding any other provision of the Plan document, a
Participant’s excess deferrals, plus any income and minus any loss allocable
thereto, shall be distributed to the Participant no later than the first April
15 following the close of the Participant’s taxable year.

     1.1.2. Definitions. For purposes of this Appendix, excess deferrals shall
mean the amount of elective contributions allocated to the Participant’s 401(k)
Account for a Participant’s taxable year and which the Participant or the
Employer, where applicable, allocates to this Plan pursuant to the claim
procedure described below.

     1.1.3. Claims. The Participant’s claim shall be in writing; shall be
submitted to the Company not later than March 1 with respect to the immediately
preceding taxable year; shall specify the amount of the Participant’s excess
deferrals for the preceding taxable year; and shall be accompanied by the
Participant’s written statement that if such amounts are not distributed, such
excess deferrals, when added to amounts deferred under other plans or
arrangements described in Code §§ 401(k), 408(k) or 403(b), will exceed the
limit imposed on the Participant by Code § 402(g) for the taxable year in which

D-1

 

the deferral occurred. The Company shall notify the Plan on behalf of the
Participant where the excess deferrals occur in the Plan or the combined plans
of the Employer and Affiliates.

     1.1.4. Determination of Income or Loss. The excess deferrals shall be
adjusted for income or loss. Unless the Company and the Trustee agree
otherwise in writing, the income or loss allocable to excess deferrals shall be
determined by multiplying the income or loss allocable to the Participant’s
elective contributions for the Plan Year ending within such preceding taxable
year by a fraction, the numerator of which is the excess deferrals on behalf of
the Participant for such preceding taxable year and the denominator of which is
the Participant’s 401(k) Account balance attributable to elective contributions
on the Valuation Date coincident with or immediately before the last day of
such preceding taxable year without regard to any income or loss occurring
during such taxable year.

     1.1.5. Accounting for Excess Deferrals. Excess deferrals shall be
distributed from the Participant’s 401(k) Account.

     1.1.6. Orphaned Matching Contributions. If excess deferrals are
distributed pursuant to this Section 1.1, applicable Matching Contributions
under Section 5.4 of the Plan document shall be treated as forfeitures and
reallocated as if such forfeitures were Matching Contributions under Section
5.4 of the Plan document made for those Participants who were entitled to
receive a Matching Contribution for that Plan Year.

SECTION 2

SECTION 401(k) COMPLIANCE

2.1. Section 401(k) Compliance.

     2.1.1. Safe Harbor Compliance. If the Plan satisfies the requirements of
Code § 401(k)(12) for any Plan Year, the provisions of this Section 2.1 of
Appendix D shall not apply to the Plan for such Plan Year.

     2.1.2. Special Definitions. For purposes of this Section 2, the following
special definitions shall apply:

	 	(a)	 	An eligible employee means an individual who is entitled to
provide a 401(k) Enrollment Agreement for all or a part of the Plan
Year (whether or not the individual does so).
	 
	 	(b)	 	An eligible Highly Compensated Employee means an eligible
employee who is a Highly Compensated Employee.
	 
	 	(c)	 	Deferral percentage means the ratio (calculated separately
for each eligible employee) of:
	 

	 	(1)	 	The total amount, for the Plan Year,
of Employer contributions credited to the eligible
employee’s 401(k) Account excluding any Employer
contributions to the 401(k) Account used in determining
the contribution

D-2

 

	 	 	 	percentage in Section 3.1.2(c)(i) and
including, if the Company elects, all
or a portion of the amount of Employer contributions
credited to the eligible employee’s 401(k) Account that
are not used in determining the contribution percentage
in Section 3.1.2(c)(i), provided such Employer matching
contributions are fully (100%) vested and not available
for in-service distribution prior to the Participant’s
attainment of age 59-1/2, whether for hardship or
otherwise, to
	 
	 	(2)	 	The eligible employee’s compensation,
as defined below for the portion of such Plan Year that
the employee is an eligible employee.
	 

	 	 	 	For this purpose, Employer contributions will be considered
made in the Plan Year if they are allocated as of a date
during such Plan Year and are delivered to the Trustee within
twelve (12) months after the end of such Plan Year.
	 
	 	(d)	 	Compensation means compensation for services performed for
the Employer defined as “§ 415 compensation” in Appendix A to this
Plan document. Notwithstanding the definition of “§ 415
compensation” in Appendix A to this Plan document compensation
shall always be determined on a cash (and not on an accrual) basis
and compensation shall be determined on a Plan Year basis (which is
not necessarily the same as the limitation year). An eligible
employee’s compensation for a Plan Year shall not exceed the annual
compensation limit under Code § 401(a)(17) (which is Two Hundred
Thousand Dollars ($200,000) for the Plan Year ending December 31,
2003, and shall be adjusted thereafter as provided under the Code).
	 
	 	(e)	 	Average deferral percentage means, for a specified group of
eligible employees for the Plan Year, the average of the deferral
percentages for all eligible employees in such group.

     2.1.3. Special Rules. For purposes of this Section 2.1, the following
special rules apply:

	 	(a)	 	Rounding. The deferral percentage of each eligible
employee and the average deferral percentage for each group of
eligible employees shall be calculated to the nearest one-hundredth
of one percent.
	 
	 	(b)	 	Multiple Plans. In the case of an eligible Highly
Compensated Employee who participates in any other plan of the
Employer and Affiliates (other than an employee stock ownership
plan described in Code §§ 409(a) and 4975(e)(7)) to which Employer
contributions are made on behalf of the eligible Highly Compensated
Employee pursuant to a salary reduction agreement, all such
Employer contributions, and if used to determine the deferral
percentage of eligible employees, matching contributions (as
defined in Code § 401(m)(4)(A)) which meet the requirements of Code
§§ 401(k)(2)(B) and 401(k)(2)(C), shall be aggregated for purposes
of determining the eligible Highly Compensated Employee’s deferral
percentage; provided, however, that such Employer contributions
made under an employee stock ownership plan shall not be
aggregated.

D-3

 

	 	(c)	 	Permissive Aggregation. If this Plan satisfies the
requirements of Code §§ 401(k), 401(a)(4) or 410(b) only if
aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this Plan, then
this Section 2.1 shall be applied by determining the average
deferral percentage of eligible employees as if all such
plans were a single plan. Plans may be aggregated in order
to satisfy Code § 401(k) only if they have the same Plan Year
and use the same 401(k) testing method.

     2.1.4. The 401(k) Tests. Notwithstanding the foregoing provisions, at
least one of the following two (2) tests must be satisfied for each Plan Year:

	 	Test 1: 	 	The average deferral percentage for the group of
eligible Highly Compensated Employees for the current Plan Year is
not more than the average deferral percentage of all other eligible
employees for the current Plan Year multiplied by one and
twenty-five hundredths (1.25).
	 
	 	Test 2: 	 	The excess of the average deferral percentage for the
group of eligible Highly Compensated Employees for the current Plan
Year over the average deferral percentage of all other eligible
employees for the current Plan Year is not more than two (2)
percentage points, and the average deferral percentage for the
group of eligible Highly Compensated Employees for the current Plan
Year is not more than the average deferral percentage of all other
eligible employees for the current Plan Year multiplied by two (2).

The Company may, however, elect in accordance with further guidance issued by
the Secretary of the Treasury to substitute the average deferral percentage of
all other eligible employees for the preceding Plan Year for the average
deferral percentage of all other eligible employees for the current Plan Year
in Tests 1 and 2 above. Any election made by the Company to use the average
deferral percentage of all other eligible employees for the preceding Plan Year
in Tests 1 and 2 above, may only be changed in the manner prescribed by the
Secretary of the Treasury.

     2.1.5. Preventative Action Prior to Plan Year End. If the Company
determines that neither of the tests described in Section 2.1.4 will be
satisfied (or may not be satisfied) for a Plan Year, then during such Plan
Year, the Company may from time to time establish (and modify) a maximum amount
of contributions that can be made pursuant to a 401(k) Enrollment Agreement by
eligible Highly Compensated Employees that is less than the amount that would
otherwise be permitted. No contributions shall be permitted to be made in
excess of that maximum after the date such maximum is effective. The Company
shall prescribe rules concerning such modifications, including the frequency of
applying the tests described in Section 2.1.4 and the commencement and
termination dates for any modifications.

D-4

 

2.2. Distribution of Excess Contributions.

     2.2.1. In General. Notwithstanding any other provision of the Plan
document, excess contributions for a Plan Year, plus any income and minus any
loss allocable thereto, shall be distributed no later than the last day of the
following Plan Year, to eligible Highly Compensated Employees as determined in
this Section.

     2.2.2. Determining Excess Contributions. For purposes of this Section
2.2, excess contributions shall mean, with respect to any Plan Year, the excess
of:

	 	(a)	 	The aggregate amount of Employer contributions taken into
account in computing the average deferral percentage of eligible
Highly Compensated Employees for such Plan Year, over
	 
	 	(b)	 	The maximum amount of such contributions permitted by the
section 401(k) test described in Section 2.1 of this Appendix.
Such maximum amount of contributions shall be determined by
reducing (not distributing) eligible Highly Compensated Employees’
contributions as follows:
	 

	 	(1)	 	The contributions made pursuant to a
401(k) Enrollment Agreement of the eligible Highly
Compensated Employee who has the highest deferral
percentage (as defined in Section 2.1 of this Appendix)
shall be reduced by the amount required to cause such
eligible Highly Compensated Employee’s deferral
percentage to equal the next highest deferral percentage
of an eligible Highly Compensated Employee.
	 
	 	(2)	 	If neither the tests is satisfied
after such reduction, the contributions made pursuant to
a 401(k) Enrollment Agreement of the eligible Highly
Compensated Employees who then have the highest deferral
percentage (including those eligible Highly Compensated
Employees whose contributions were reduced under (i)
above) shall be reduced by the amount required to cause
such eligible Highly Compensated Employees’ deferral
percentage to equal the next highest deferral percentage
of an eligible Highly Compensated Employee.
	 
	 	(3)	 	If neither of the tests is satisfied
after such reduction, this method of reduction shall be
repeated one or more additional times until one of the
tests is satisfied.

     2.2.3. Method of Distributing Excess Contributions. Excess contributions,
plus any income and minus any loss allocable thereto, shall be distributed from
the 401(k) Account and Matching Account, if applicable, in proportion to the
Participant’s elective contributions and matching contributions, if applicable,
(as defined in Code § 401(m)(4)(A) which meet the requirements of Code §§
401(k)(2)(B) and 401(k)(2)(C)) for the Plan Year. The amount of excess
contributions to be distributed on behalf of each eligible Highly Compensated
Employee for the Plan Year shall be equal to the amount of reduction determined
as follows:

D-5

 

	 	(a)	 	The contributions made pursuant to a 401(k) Enrollment
Agreement of the eligible Highly Compensated Employee who has the
highest dollar amount of such contributions shall be reduced by
the amount required to cause such
eligible Highly Compensated Employee’s contributions to equal
the next highest dollar amount contributed by eligible Highly
Compensated Employees (and the amount credited pursuant to
Section 5.2 of the Plan document, and the applicable amount
of Matching Contributions, if any, credited pursuant to
Section 5.4 of the Plan document, shall be reduced
accordingly).
	 
	 	(b)	 	If any excess contributions remain after performing (a),
then the eligible Highly Compensated Employees who have the next
highest dollar amount of contributions made pursuant to a 401(k)
Enrollment Agreement (including those eligible Highly Compensated
Employees reduced under (a) above) shall be reduced by the amount
required to cause such eligible Highly Compensated Employees’
contributions to equal the next highest dollar amount contributed
by eligible Highly Compensated Employees (and the amount credited
pursuant to Section 5.2 of the Plan document, and the applicable
amount of Matching Contributions, if any, credited pursuant to
Section 5.4 of the Plan document, shall be reduced accordingly).
	 
	 	(c)	 	If any excess contributions remain after performing (a) and
(b), this method of reduction shall be repeated one or more
additional times until no excess contributions remain.

However, if the total amount of reduction determined in (a), (b) and (c) would
be greater than the amount of excess contributions, then the final reduction
amount shall be decreased so that the total amount of reductions equals the
amount of excess contributions.

     2.2.4. Determination of Income or Loss. The excess contributions to be
distributed to any eligible Highly Compensated Employee shall be adjusted for
income or loss. Unless the Company and the Trustee agree otherwise in writing,
the income or loss allocable to excess contributions to be distributed shall be
determined by multiplying the income or loss allocable to the eligible Highly
Compensated Employee’s elective contributions, and if used to determine an
eligible Highly Compensated Employee’s deferral percentage under Section 2.1 of
this Appendix, matching contributions (as defined in Code § 401(a)(4) which
meet the requirements of Code §§ 401(k)(2)(B) and 401(k)(2)(C)) for the Plan
Year by a fraction, the numerator of which is the excess contributions to be
distributed to the eligible Highly Compensated Employee for the Plan Year and
the denominator of which is the sum of the eligible Highly Compensated
Employee’s account balances attributable to elective contributions and such
matching contributions on the last day of the Plan Year, without regard to any
income or loss occurring during such Plan Year.

     2.2.5. Orphaned Matching Contributions. If excess contributions are
distributed pursuant to this Section 2.2, applicable Matching Contributions
under Section 5.4 of the Plan document shall be treated as forfeitures and
reallocated as if such forfeitures were Matching Contributions under Section
5.4 of the Plan document made for those Participants who were entitled to
receive a Matching Contribution for that Plan Year.

D-6

 

2.3. Section 401(k) Curative Allocation.

     2.3.1. Amount and Eligibility. If neither of the section 401(k) tests set
forth in Section 2.1 of this Appendix has been satisfied and a distribution of
“excess contributions” has not been made pursuant to Section 2.2 of this
Appendix, then the Employer shall make a discretionary contribution for that
Plan Year. Only those Participants who were not eligible Highly Compensated
Employees for that Plan Year and for whom some contribution was made pursuant
to Section 5.2 of the Plan document for such Plan Year shall share in such
allocation. This allocation shall be made first to the Participant with the
least amount of compensation and then, in ascending order of compensation, to
other Participants. The amount of the Employer discretionary contribution to
be so allocated shall be that amount required to cause the Plan to satisfy
either of the section 401(k) tests set forth in Section 2.1 of this Appendix
for the Plan Year; provided, however, that in no case shall amounts be so
allocated to cause a Participant’s deferral percentage to exceed twenty percent
(20%). Such Employer discretionary contribution shall be treated as elective
contributions subject to Treasury Regulation § 1.401(k)-1(b)(5), which is
incorporated herein.

     2.3.2. Crediting to Account. The Employer discretionary contribution
which is so allocated to a Participant shall be allocated to that Participant’s
401(k) Account for the Plan Year with respect to which it is made and, for the
purposes of Section 4, shall be credited as soon as practicable after it is
received by the Trustee.

SECTION 3

SECTION 401(m) COMPLIANCE

3.1. Section 401(m) Compliance.

     3.1.1. Safe Harbor Compliance. If the Plan satisfies the requirements of
Code § 401(m)(11) for any Plan Year, the provisions of this Section 3.1 of
Appendix D shall not apply to the Plan for such Plan Year.

     3.1.2. Special Definitions. For purposes of this Section 3, the following
special definitions shall apply:

	 	(a)	 	An eligible employee means an individual who is eligible to
receive a Matching Contribution for any portion of the Plan Year
(whether or not the individual does so).
	 
	 	(b)	 	An eligible Highly Compensated Employee means an eligible
employee who is a Highly Compensated Employee.
	 
	 	(c)	 	Contribution percentage means the ratio (calculated
separately for each eligible employee) of:

	 	(1)	 	The total amount, for the Plan Year,
of Employer contributions credited to the eligible
employee’s Matching Account excluding any Matching
Contributions used in determining the deferral
percentage under

D-7

 

	 	 	 	Section 2.1.2(c)(i) of this Appendix, and including, if
the Company elects, all or a portion of the amount of
Employer contributions credited to the eligible
employee’s 401(k) Account, provided that the 401(k)
compliance testing under Section 2.1 of this Appendix
is satisfied both with and without exclusion of such
Employer contributions, to
	 
	 	(2)	 	The eligible employee’s compensation,
as defined below for the portion of such Plan Year that
the employee is an eligible employee.

	 	 	 	For this purpose, Employer contributions will be considered
made in the Plan Year if they are allocated as of a date
during such Plan Year and are delivered to the Trustee within
twelve (12) months after the end of such Plan Year.

	 	(d)	 	Compensation means compensation for services performed for
the Employer defined as “§ 415 compensation” in Appendix A to this
Plan document. Notwithstanding the definition of “§ 415
compensation” in Appendix A to this Plan document, compensation
shall always be determined on a cash (and not on an accrual) basis
and compensation shall be determined on a Plan Year basis (which is
not necessarily the same as the limitation year). An eligible
employee’s compensation for a Plan Year shall not exceed the limit
on annual compensation under Code § 401(a)(17) (which is Two
Hundred Thousand Dollars ($200,000) for the Plan Year ending
December 31, 2003, and shall be adjusted thereafter as provided
under the Code).
	 
	 	(e)	 	Average contribution percentage means, for a specified
group of eligible employees for the Plan Year, the average of the
contribution percentages for all eligible employees in such group.

     3.1.3. Special Rules. For purposes of this Section 3.1, the following
special rules apply:

	 	(a)	 	Rounding. The contribution percentage of each eligible
employee and the average contribution percentage for each group of
eligible employees shall be calculated to the nearest one-hundredth
of one percent.
	 
	 	(b)	 	Multiple Plans. In the case of an eligible Highly
Compensated Employee who participates in any other plan of the
Employer and Affiliates (other than an employee stock ownership
plan described in Code §§ 409(a) and 4975(e)(7)) to which Employer
matching contributions are made on behalf of the eligible Highly
Compensated Employee, all such Employer matching contributions, and
if used to determine the contribution percentage of eligible
employees, Employer contributions made pursuant to a salary
reduction agreement shall be aggregated for purposes of determining
the eligible Highly Compensated Employee’s contribution percentage;
provided, however, that such Employer contributions made under an
employee stock ownership plan shall not be aggregated.
	 
	 	(c)	 	Permissive Aggregation. If this Plan satisfies the
requirements of Code §§ 401(m), 401(a)(4) or 410(b) only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the

D-8

 

	 	 	 	Code only if aggregated with this Plan, then this Section 3.1
shall be applied by determining the average contribution
percentage of eligible employees as if all such plans were a
single plan. Plans may be aggregated in order to satisfy
Code § 401(m) only if they have the same Plan Year and they
use the same 401(m) testing method.

     3.1.4. The 401(m) Tests. Notwithstanding the foregoing provisions, at
least one of the following two tests must be satisfied for each Plan Year:

	 	 	 	 
	 	
Test 1:
	 	The average contribution percentage for the group of
eligible Highly Compensated Employees for the current Plan Year is
not more than the average contribution percentage of all other
eligible employees for the current Plan Year multiplied by one and
twenty-five hundredths (1.25).
	 	 	 	 
	 	
Test 2:
	 	The excess of the average contribution percentage for
the group of eligible Highly Compensated Employees for the current
Plan Year over the average contribution percentage of all other
eligible employees for the current Plan Year is not more than two
(2) percentage points, and the average contribution percentage for
the group of eligible Highly Compensated Employees for the current
Plan Year is not more than the average contribution percentage of
all other eligible employees for the current Plan Year multiplied
by two (2).

The Company may, however, elect in accordance with further guidance issued by
the Secretary of the Treasury to substitute the average contribution percentage
of all other eligible employees for the preceding Plan Year for the average
contribution percentage of all other eligible employees for the current Plan
Year in Tests 1 and 2 above. Any election made by the Company to use the
average contribution percentage of all other eligible employees for the
preceding Plan Year in Tests 1 and 2 above may only be changed in the manner
prescribed by the Secretary of the Treasury.

     3.1.5. Preventative Action Prior to Plan Year End. If the Company
determines that neither of the tests described in Section 3.1.4 will be
satisfied (or may not be satisfied) for a Plan Year, then during such Plan
Year, the Company may from time to time establish (and modify) maximums for
Matching Contributions of eligible Highly Compensated Employees that are less
than the contributions which would otherwise be permitted or provided. No
Matching Contributions shall be made in excess of such maximums after the date
such maximums are effective. The Company shall prescribe rules concerning such
modifications, including the frequency of applying the tests designed in
Section 3.1.4 and the commencement and termination dates for any modifications.

3.2. Distribution of Excess Aggregate Contributions.

     3.2.1. In General. Notwithstanding any other provision of the Plan
document, excess aggregate contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last day of the
following Plan Year to eligible Highly Compensated Employees as determined in
this Section.

     3.2.2. Determining Excess Aggregate Contributions. For purposes of this
Section, excess aggregate contributions shall mean, with respect to any Plan
Year, the excess of:

D-9

 

	 	(a)	 	The aggregate amount of contributions taken into account in
computing the average contribution percentage of eligible Highly
Compensated Employees for such Plan Year, over
	 
	 	(b)	 	The maximum amount of such contributions permitted by the
section 401(m) tests described in Section 3.1 of this Appendix.
Such maximum amount of contributions shall be determined by
reducing (not distributing) eligible Highly Compensated Employees’
contributions as follows:

	 	(1)	 	The Matching Contributions for the
eligible Highly Compensated Employee who has the
highest contribution percentage shall be reduced by the
amount required to cause such eligible Highly
Compensated Employee’s contribution percentage to equal
the next highest contribution percentage of an eligible
Highly Compensated Employee.
	 
	 	(2)	 	If neither of the tests is satisfied
after such reduction, the Matching Contributions for
eligible Highly Compensated Employees who then have the
highest contribution percentage (including those reduced
under (i) above) shall be reduced by the amount required
to cause such eligible Highly Compensated Employees’
contribution percentage to equal the next highest
contribution percentage of an eligible Highly
Compensated Employee.
	 
	 	(3)	 	If neither of the tests is satisfied
after such reductions, this method of reduction shall be
repeated one or more additional times until one of the
tests is satisfied.

     3.2.3. Distribution of Excess Aggregate Contributions. Excess aggregate
contributions, plus any income and minus any loss allocable thereto, shall be
distributed from the Participant’s Matching Account and, if applicable, the
Participant’s 401(k) Account in proportion to the Participant’s Matching
Contributions and, if used to determine the contribution percentage under
Section 3.1 of this Appendix, elective contributions for the Plan Year. The
amount of excess aggregate contributions to be distributed on behalf of each
eligible Highly Compensated Employee for the Plan Year shall be equal to the
amount of reduction determined as follows:

	 	(a)	 	The Matching Contributions of the eligible Highly
Compensated Employee who has the highest dollar amount of such
contributions shall be reduced by the amount required to cause such
eligible Highly Compensated Employee’s contributions to equal the
next highest dollar amount received by eligible Highly Compensated
Employees.
	 
	 	(b)	 	If any excess aggregate contributions remain after
performing (a), then the eligible Highly Compensated Employees who
have the next highest dollar amount of Matching Contributions
(including those reduced under (a) above) shall be reduced by the
amount required to cause such eligible Highly Compensated
Employees’ contributions to equal the next highest dollar amount
received by eligible Highly Compensated Employees.

D-10

 

	 	(c)	 	If any excess aggregate contributions remain after
performing (a) and (c), this method of reduction shall be repeated
one or more additional times until no excess aggregate
contributions remain.

However, if the total amount of reduction determined in (a) through (c) would
be greater than the amount of excess aggregate contributions, then the final
reduction amount shall be decreased so that the total amount of reductions
equals the amount of excess aggregate contributions.

     3.2.4. Determination of Income or Loss. The excess aggregate
contributions to be distributed to any eligible Highly Compensated Employee
shall be adjusted for income or loss. Unless the Company and the Trustee agree
otherwise in writing, the income or loss allocable to excess aggregate
contributions to be distributed shall be determined by multiplying the income
or loss allocable to the eligible Highly Compensated Employee’s Matching
Contributions (to the extent used to determine the eligible Highly Compensated
Employee’s contribution percentage under Section 3.1 of this Appendix), and if
used to determine an eligible Highly Compensated Employee’s contribution
percentage under Section 3.1 of this Appendix, elective contributions for the
Plan Year by a fraction, the numerator of which is the excess aggregate
contributions to be distributed to the eligible Highly Compensated Employee for
the Plan Year and the denominator of which is the sum of the eligible Highly
Compensated Employee’s account balances attributable to Matching Contributions
and such elective contributions or qualified nonelective contributions, or
both, on the last day of the Plan Year, without regard to any income or loss
occurring during such Plan Year.

     3.2.5. Orphaned Matching Contributions. If elective contributions treated
as excess aggregate contributions are distributed pursuant to this Section 3.2,
applicable Matching Contributions under Section 5.4 of the Plan document shall
be treated as forfeitures and reallocated as if such forfeitures were a
Matching Contribution under Section 5.4 of the Plan document made for those
Participants who were entitled to receive a Matching Contribution for that Plan
Year.

3.3. Section 401(m) Curative Allocation.

     3.3.1. Amount and Eligibility. If neither of the section 401(m) tests set
forth in Section 3.1 of this Appendix has been satisfied and a distribution of
“excess aggregate contributions” has not been made pursuant to Section 3.2 of
this Appendix, then the Employer shall make an additional matching
contribution for that Plan Year. Only those Participants who were not eligible
Highly Compensated Employees for that Plan Year and who were entitled to
receive an Matching Contribution shall share in such allocation. This
allocation shall be made first to the Participant with the least amount of
compensation and then, in ascending order of compensation, to other
Participants. The amount of the Matching Contribution to be so allocated shall
be that amount required to cause the Plan to satisfy either of the section
401(m) tests set forth in Section 3.1 of this Appendix for the Plan Year.

     3.3.2. Crediting to Account. The Matching Contribution which is so
allocated to a Participant shall be allocated to that Participant’s Matching
Account for the Plan Year with respect to which it is made and, for the
purposes of Section 4, shall be credited as soon as practicable after it is
received by the Trustee.

D-11

 

APPENDIX E

SPECIAL RULES

1.1. In Service Withdrawal – Merged Plans Generally. To the extent that its
distribution prior to severance from employment is not authorized elsewhere in
this Appendix E or by the other provisions of this Plan document, any portion
of a Participant’s Total Account that:

	 	(a)	 	Is attributable to amounts that were held by a plan that
merged into this Plan after the Effective Date and
	 
	 	(b)	 	Immediately prior to the merger date, was available for
distribution prior to severance from employment,

shall continue to be available for such distribution to the same extent such
distribution was permitted immediately prior to the merger date.

E-1

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