As filed with the Securities and Exchange Commission on July 6, 2007
Registration No. 333 - _________________
 
UNITED STATES
SECURITIES  AND  EXCHANGE  COMMISSION
WASHINGTON,  D.C.  20549

Form S-8
REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT  OF  1933
 
HUNTINGTON  BANCSHARES  INCORPORATED
 (Exact name of Registrant as specified in its charter)
Maryland
31-0724920
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
Huntington Center
41 South High Street
Columbus, Ohio 43287
 (Address of Registrant’s principal executive offices)
 
Huntington Bancshares Incorporated 2007 Stock and Long-Term Incentive Plan
 Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan, as amended
Sky Financial Group, Inc. Non-Qualified Retirement Plan, as amended
Sky Financial Group, Inc. Non-Qualified Retirement Plan II, as amended
Inducement Grant
 (Full title of the Plan)
 
Richard A. Cheap, Esq.
General Counsel and Secretary
Huntington Bancshares Incorporated
Huntington Center
41 South High Street
Columbus, Ohio 43287
614/480-8300
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
 
Copies of Correspondence to:
Mary Beth M. Clary, Esq.
Erin F. Siegfried, Esq.
Porter, Wright, Morris & Arthur LLP
41 South High Street
Columbus, Ohio 43215
 
Calculation of Registration Fee
 
Title of Securities to be registered
 
Amount to be
Registered
(1)(2)  
Proposed
Maximum
Offering Price
Per Share (3)
Proposed
Maximum
Aggregate
Offering Price (3)  
 
Amount of
Registration
Fee  
Common Stock, $0.01 par value, to be issued
under the Huntington Bancshares Incorporated
2007 Stock and Long-Term Incentive Plan
 
 
9,000,000
 
 
 
$22.55
 
 
$202,950,000
 
 
 
$6,230.57
 
Common Stock, $0.01 par value, to be issued
under the Sky Financial Group, Inc. Profit
Sharing, 401(k) and ESOP Plan
 
 
1,000,000
 
 
 
$22.55
 
 
  $22,550,000
 
 
 
  $692.29
 
Common Stock, $0.01 par value, to be issued
 
 
 
 
 
 
 
 
 
under the Sky Financial Group, Inc. Non-
Qualified Retirement Plan
 
 
0
 
 
 
$22.55
 
 
$0
 
 
 
$0.00
 
Common Stock, $0.01 par value, to be issued
under the Sky Financial Group, Inc. Non-
Qualified Retirement Plan II
 
 
0
 
 
 
$22.55
 
 
$0
 
 
 
$0.00
 
Common Stock, $0.01 par value, to be issued as
an inducement grant
 
221,569
 
 
$22.55
 
$4,996,381
 
 
$153.39
 
Total
10,221,569
   
$230,496,381
 
$7,076.25
 
(1)
Pursuant to Rule 416(a) of the Securities Act of 1933 (the “Securities Act”), this Registration Statement shall be deemed to cover an indeterminate number of additional shares of Common Stock that become issuable under the Huntington Bancshares Incorporated 2007 Stock and Long-Term Incentive Plan, the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan, the Sky Financial Group, Inc. Non-Qualified Retirement Plan, the Sky Financial Group, Inc. Non-Qualified Retirement Plan II and the inducement grant by reason of any future stock dividends, stock splits or similar transactions.
(2)
In addition, pursuant to Rule 416(c) of the Securities Act, this Registration Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan, the Sky Financial Group, Inc. Non-Qualified Retirement Plan and the Sky Financial Group, Inc. Non-Qualified Retirement Plan II.
(3)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(h) of the Securities Act, based upon the average of the high and low sales prices of our Common Stock as reported on the Nasdaq National Market as of July 2, 2007.
 


PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

The information specified in Item 1 and Item 2 of Part I of the Registration Statement is omitted from this filing in accordance with the provisions of Rule 428 of the Securities Act and the introductory note to Part I of the Registration Statement.  The documents containing the information specified in Part I will be delivered to the participants in the plans covered by this Registration Statement as required by Rule 428(b)(1).


PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.          Incorporation of Documents By Reference.

The following documents previously filed by us with the SEC are incorporated by reference:

 
1.
Annual Report on Form 10-K for the fiscal year ended December 31, 2006;

 
2.
Joint Proxy Statement/Prospectus dated April 19, 2007, in connection with our 2007 Annual Meeting of Shareholders;

 
3.
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007;

 
4.
Current Reports on Form 8-K, dated January 18, 2007, April 5, 2007, April 18, 2007, April 19, 2007, May 1, 2007, May 2, 2007, May 7, 2007 (2 reports), May 14, 2007, May 30, 2007, June 4, 2007, June 20, 2007 and July 2, 2007, to report annual and/or quarterly earnings and certain other developments disclosed therein; and

We also incorporate by reference any future filings we make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, until we sell all of the securities offered by the prospectus or otherwise terminate the offering.  Any statement contained in a document incorporated or deemed to be incorporated by reference in this registration statement shall be deemed to be modified
 
II-1
 
or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference in this Registration Statement modifies or supersedes the statement.  Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

Item 4.          Description of Securities.

Not applicable .

Item 5.          Interests of Named Experts and Counsel.

Not applicable.

Item 6.          Indemnification of Directors and Officers.

Our Articles of Incorporation, as amended, provide that we shall indemnify our officers and directors to the full extent of the general laws of the State of Maryland now or hereafter in force, including the advance of expenses to our officers and directors.  Our obligation to advance expenses incurred by our officers and directors as a result of any threatened, pending or completed action, suit or proceeding, whether it be civil, criminal, administrative or investigative is subject to the procedures provided by Section 2-418 and other sections of the Maryland general corporation law.  Our Articles of Incorporation, as amended, also provide that we may indemnify our officers who are not directors to such further extent as shall be authorized by the Board of Directors, provided that such additional indemnification is consistent with the law.

Section 2-418 of the Maryland general corporation law provides, generally, that a corporation may indemnify any officer or director made a party to any proceeding by reason of his or her service in that capacity against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the officer or director in connection with the proceeding, unless it is proved that the act or omission of the officer or director was material to the cause of action adjudicated in the proceeding and that such act or omission was committed in bad faith or was the result of active and deliberate dishonesty; or the officer or director actually received an improper personal benefit in money, property, or services; or, in the case of any criminal proceeding, the officer or director had reasonable cause to believe that the act or omission was unlawful.  Notwithstanding the above, an officer or director may not be indemnified for any judgments, penalties, fines, settlements or expenses arising out of any proceeding brought by or in the right of the corporation, in which such officer or director shall have been adjudged liable to the corporation or any judgments, penalties, fines, settlements or expenses arising out of any proceeding charging improper receipt of a personal benefit by such officer or director.

The termination of any proceeding by judgment, order, or settlement does not create a presumption that the officer or director did not meet the standard of conduct required for such officer or director to be indemnified.  However, the termination of any proceeding by conviction, plea of nolo contendere or its equivalent, or the entry of an order of probation prior to judgment, creates a rebuttable presumption that the officer or director did not meet standard of conduct required for such officer or director to be indemnified.  Indemnification of an officer or director is not permitted unless authorized for a specific proceeding.  Such authorization shall only be given following a determination (1) by a majority of a quorum of directors not at the time parties to the proceeding (or a majority of a committee of two or more such directors designated by the full board); (2) by special legal counsel selected by the board of directors; or (3) by the stockholders, that indemnification is permissible because the officer or director met the standard of conduct required for such officer or director to be indemnified.

The reasonable expenses incurred by an officer or director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of the proceeding upon receipt by the corporation of both a written affirmation by the officer or director of his or her good faith belief that the standard of conduct necessary for indemnification by the corporation has been met, and a written undertaking by or on behalf of the officer or director to repay the amount if it shall be ultimately determined that the standard of conduct has not been
 
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met.

The indemnification and advancement of expenses provided or authorized by Section 2-418 are not exclusive of any other rights to which an officer or director may be entitled both as to action in his official capacity and as to action in another capacity while holding such office.

Pursuant to Section 2-418, a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or who, while serving in such capacity, is or was at the request of the corporation serving as a director, officer, partner, trustee, employee, or agent of another corporation or legal entity or of an employee benefit plan, against liability asserted against and incurred by such person in any of those capacities or arising out of such person’s position, regardless of whether or not the corporation would have the power to indemnify against liability under Section 2-418.  A corporation may provide similar protection, including a trust fund, letter of credit, or surety bond, so long as the form of such protection is not inconsistent with Section 2-418.  Additionally, a subsidiary or an affiliate of the corporation may provide the insurance or similar protection.

Subject to certain exceptions, our directors and officers and our affiliates are insured to the extent of 100% of loss up to a maximum of $40,000,000 (subject to certain deductibles) in each policy year because of any claim or claims made against them by reason of their wrongful acts while acting in their capacities as such directors or officers and up to a maximum of $40,000,000 (subject to certain deductibles) in each policy year because of any claim or claims made against them by reason of their wrongful acts while acting in their capacities as fiduciaries in the administration of certain of our employee benefit programs.  We are insured, subject to certain retentions and exceptions, to the extent we shall have indemnified our directors and officers for such loss.

Item 7.          Exemption from Registration Claimed.

Not applicable.

Item 8.          Exhibits.
 
Exhibit
 
Exhibit
Number
 
Description
     
     
4(a)
 
Huntington Bancshares Incorporated 2007 Stock and Long-Term Incentive Plan, effective for long-term performance award cycles beginning on or after January 1, 2007, and for grants of stock options, restricted stock, restricted stock units, stock appreciation rights, and deferred stock on or after May 30, 2007 - previously filed as Appendix G to Definitive Proxy Statement for the 2007 Annual Meeting of Stockholders, and incorporated herein by reference.
     
4(b)*
 
Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan.
     
4(c)*
 
Sky Financial Group, Inc. Non-Qualified Retirement Plan.
     
4(d)*
 
Sky Financial Group, Inc. Non-Qualified Retirement Plan II.
     
4(e)*
 
Inducement grant.
     
4(f)
 
Articles V, VIII and X of Articles of Restatement of Charter, as amended and supplemented - previously filed as Exhibit 3(i) to Annual Report on Form 10-K for the year ended December 31, 1993, and Exhibit 3(i)(c) to Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998, and incorporated herein by reference.  Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.
 
II-3
 
5(a)*
 
Opinion of Porter, Wright, Morris & Arthur LLP regarding the legality of the Common Stock being registered pursuant hereto.
     
5(b)*
 
IRS determination letter for the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan.
     
23(a)*
 
Consent of Porter, Wright, Morris & Arthur LLP (included in Exhibit 5 filed herewith).
     
23(b)*
 
Consent of Deloitte & Touche LLP.
     
23(c)*
 
Consent of Deloitte & Touche LLP.
     
24*
 
Power of Attorney.
 
*Filed herewith.

Item 9.          Undertakings.

We hereby undertake:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.  Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by us pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(5) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to Registrant’s indemnification provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such
 
II-4
 
indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-5

Signatures

Pursuant to the requirements of the Securities Act of 1933, Huntington Bancshares Incorporated certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on July 6, 2007.

   
HUNTINGTON BANCSHARES INCORPORATED
     
 
By
      /s/ Richard A. Cheap
   
 Richard A. Cheap, Secretary and General Counsel


Pursuant to the requirements of the Securities Act of 1933, the trustees (or other person who administer the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan (the “Plan”)) have duly caused this Registration Statement to be signed on behalf of the Plan by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on July 6, 2007.

     
 
By
      /s/ Lee Topley
   
Lee Topley, Senior Vice President, Sky Trust,
National Association
 
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
 
 
Signature
 
Title
 
Date
 
 
       
 
/s/ Thomas E. Hoaglin*
 
Chairman, Chief Executive Officer,
)
 
 
Thomas E. Hoaglin
 
President, and Director (Principal
)
 
 
 
  Executive Officer)
)
 
 
 
       
 
/s/ Donald R. Kimble*
 
Chief Financial Officer, Executive
)
 
 
Donald R. Kimble
 
Vice President, and Treasurer
)
 
 
  (Principal Financial Officer)
)
 
 
 
       
 
/s/ Thomas P. Reed*
 
Senior Vice President and Controller
)
 
 
Thomas P. Reed
 
(Principal Accounting Officer)
)
 
 
 
       
 
/s/ Raymond J. Biggs*
 
Director
)
 
 
Raymond J. Biggs
   
)
 
 
 
       
 
/s/ Don M. Casto, III*
 
Director
)
July 6, 2007
 
Don M. Casto, III
   
)
 
 
 
       
 
/s/ Michael J. Endres*
 
Director
)
 
 
Michael J. Endres
   
)
 
 
 
       
 
/s/ John B. Gerlach, Jr.*
 
Director
)
 
 
John B. Gerlach, Jr.
   
)
 
 
 
       
 
/s/ David P. Lauer*
 
Director
)
 
 
David P. Lauer
   
)
 
 
 
       
 
/s/ Wm. J. Lhota*
 
Director
)
 
 
Wm. J. Lhota
   
)
 
 
II-6
 
 
 
       
 
/s/ Gene E. Little*
 
Director
)
 
 
Gene E. Little
   
)
 
 
 
       
 
/s/ David L. Porteous*
 
Director
)
 
 
David L. Porteous
   
)
 
           
 
/s/ Kathleen H. Ransier*
 
Director
)
 
 
Kathleen H. Ransier
   
)
 
 
 
       
 
*By:
    /s/ Richard A. Cheap
 
 
Richard A. Cheap, attorney-in-fact
 
 
for each of the persons indicated
 

II-7

Registration No. 333-_______
 
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549


FORM S-8
 
REGISTRATION STATEMENT
 
Under
 
THE SECURITIES ACT OF 1933



Huntington Bancshares Incorporated

EXHIBITS
 
 
 
EXHIBIT INDEX

Exhibit
 
Exhibit
 
Number
 
Description
 
       
4(a)
 
Huntington Bancshares Incorporated 2007 Stock and Long-Term Incentive Plan, effective for long-term performance award cycles beginning on or after January 1, 2007, and for grants of stock options, restricted stock, restricted stock units, stock appreciation rights, and deferred stock on or after May 30, 2007 - previously filed as Appendix G to previously filed as Appendix G to Definitive Proxy Statement for the 2007 Annual Meeting of Stockholders, and incorporated herein by reference.
 
       
4(b)*
 
Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan.
 
       
4(c)*
 
Sky Financial Group, Inc. Non-Qualified Retirement Plan.
 
       
4(d)*
 
Sky Financial Group, Inc. Non-Qualified Retirement Plan II.
 
       
4(e)*
 
Inducement grant.
 
       
4(f)
 
Articles V, VIII and X of Articles of Restatement of Charter, as amended and supplemented - previously filed as Exhibit 3(i) to Annual Report on Form 10-K for the year ended December 31, 1993 and Exhibit 3(i)(c) to Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998, and incorporated herein by reference.  Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.
 
       
5(a)*
 
Opinion of Porter, Wright, Morris & Arthur LLP regarding the legality of the Common Stock being registered pursuant hereto.
 
       
5(b)*
 
IRS determination letter for the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan.
 
       
23(a)*
 
Consent of Porter, Wright, Morris & Arthur LLP (included in Exhibit 5 filed herewith).
 
       
23(b)*
 
Consent of Deloitte & Touche LLP.
 
       
23(c)*
 
Consent of Deloitte & Touche LLP.
 
       
24*
 
Power of Attorney.
 

*Filed herewith.
 

Exhibit 4(b)
 
 
 
S KY F INANCIAL G ROUP , I NC . P ROFIT S HARING , 401( K ) AND ESOP P LAN
 
 
 
(As Amended and Restated Effective January 1, 2004)
 
 
S KY F INANCIAL G ROUP , I NC . P ROFIT S HARING , 401( K ) AND ESOP P LAN
 
(As Amended and Restated Effective January 1, 2004)
 
 
 
Table of Contents
 
 
 
I NTRODUCTION
 
   1
ARTICLE I
 
    
DEFINITIONS
 
   3
   
1.01  
 
   Account or Accounts    3
   
1.02
 
   Acquired Employer    3
   
1.03
 
   Annual Compensation    3
   
1.04
 
   Annuity Starting Date    4
   
1.05
 
   Applicable Period    4
   
1.06
 
   Break in Service    4
   
1.07
 
   Change in Control    4
   
1.08
 
   Code    4
   
1.09
 
   Company    4
   
1.10
 
   Company Stock    4
   
1.11
 
   Company Stock Fund    4
   
1.12
 
   Disability    4
   
1.13
 
   Dividend Reinvestment Account    5
   
1.14
 
   Employee    5
   
1.15
 
   Employer    6
   
1.16
 
   Entry Date    6
   
1.17
 
   ERISA    6
   
1.18
 
   Hour of Service    6
   
1.19
 
   Investment Fund    7
   
1.20
 
   Named Fiduciary    7
   
1.21
 
   Normal Retirement Age    7
   
1.22
 
   Normal Retirement Date    7
   
1.23
 
   Participant    7
   
1.24
 
   Plan    7
   
1.25
 
   Plan Administrator    7
   
1.26
 
   Plan Year    7
   
1.27
 
   Qualified Election    7
   
1.28
 
   Qualifying Employer Securities    7
   
1.29
 
   Related Entity    7
   
1.30
 
   Sky ESOP    8
   
1.31
 
   Spouse    8
   
1.32
 
   Trust    8
   
1.33
 
   Trustee    8
   
1.34
 
   Trust Fund    8
   
1.35
 
   Valuation Date    8
   
1.36
 
   Year of Service    8
 
 
i
 
 
Table of Contents
 
(Cont’d)
 
 
 
              Page
ARTICLE II
 
    
ELIGIBILITY
 
   10
   
2.01  
 
   Eligibility    10
   
2.02
 
   Eligibility Upon Re-employment    11
ARTICLE III
 
    
CONTRIBUTIONS
 
   12
   
3.01
 
   Employer Contributions    12
   
3.02
 
   401(k) Contributions    12
   
3.03
 
   Matching Contributions    13
   
3.04
 
   Profit Sharing Contributions    14
   
3.05
 
   ESOP Contributions    14
   
3.06
 
   Catch-Up Contributions    15
   
3.07
 
   Catch-Up Matching Contributions    16
   
3.08
 
   Rollover Contributions    16
   
3.09
 
   Special Rules Relating to Veterans Re-employment Rights Under USERRA    16
   
3.10
 
   Automatic 401(k) Contributions    18
ARTICLE IV
 
    
ALLOCATIONS
 
   19
   
4.01
 
   Participant Accounts    19
   
4.02
 
   Allocation of Profit Sharing Contributions    20
   
4.03
 
   Allocation of ESOP Contributions    20
   
4.04
 
   Allocation of 401(k) Contributions    20
   
4.05
 
   Allocation of Matching Contributions    20
   
4.06
 
   Allocation of Investment Gain or Loss    21
   
4.07
 
   Allocation of Cash Dividends    21
   
4.08
 
   Valuations    21
   
4.09
 
   Allocation of Gain or Loss    21
   
4.10
 
   Annual Report to Participants    21
ARTICLE V
 
    
BENEFITS TO PARTICIPANTS
 
   22
   
5.01
 
   Upon Retirement or Disability    22
   
5.02
 
   Upon Death    22
   
5.03
 
   Nonforfeitable Interest Upon Termination of Employment    22
   
5.04
 
   Change in Control    24
   
5.05
 
   Forfeiture Upon Termination of Employment    24
ARTICLE VI
 
    
DISTRIBUTIONS
 
   26
   
6.01
 
   Commencement of Benefits    26
   
6.02
 
   Payment of Benefits    26
 
 
ii
 
 
Table of Contents
 
(Cont’d)
 
 
 
              Page
    6.03    Distribution Provisions Applicable to ESOP Accounts    26
    6.04    Definitions    27
    6.05    Mandatory Commencement of Benefits    29
    6.06    Distributions After Death of a Participant    30
    6.07    Right to Have Accounts Transferred    31
    6.08    Restrictions on Distributions of 401(k) Contributions and Safe Harbor Matching Contributions    32
ARTICLE VII
 
    
LIMITATION ON CONTRIBUTIONS AND BENEFITS
 
   33
    7.01    Definitions    33
    7.02    Limitation on Annual Additions    33
    7.03    Limitation of Benefits Under All Plans    34
ARTICLE VIII
 
    
NONDISCRIMINATION REQUIREMENTS
 
   35
    8.01    Definitions    35
    8.02    Nondiscrimination Requirements for 401(k) Contributions.    37
    8.03    Nondiscrimination Requirements for Matching Contributions and Employee Contributions.    38
    8.04    Distribution Rules for Excess Contributions and Excess Aggregate Contributions.    39
    8.05    Applicability to Safe Harbor Plan    40
ARTICLE IX
 
    
TRUST FUND AND INVESTMENT FUNDS
 
   41
    9.01    Individual Investment Funds    41
    9.02    Direction of Individual Investment Funds    41
    9.03    Direction of ESOP Accounts    41
ARTICLE X
 
    
AMENDMENT OR TERMINATION
 
   44
    10.01    Amendment    44
    10.02    Plan Termination or Discontinuance of Contributions    44
    10.03    Merger, Consolidation or Transfer of Assets    44
ARTICLE XI
 
    
ADMINISTRATION
 
   45
    11.01    Plan Administrator’s Powers and Duties    45
    11.02    Records and Reports    45
    11.03    Payment of Expenses    45
    11.04    Claims Procedure    45
    11.05    Indemnification    46
 
 
iii
 
 
Table of Contents
 
(Cont’d)
 
 
 
              Page
ARTICLE XII
 
    
PARTICIPATING EMPLOYERS
 
   47
   
12.01
 
   Commencement    47
   
12.02
 
   Termination    47
   
12.03
 
   Delegation of Authority    47
   
12.04
 
   Disposition of Assets or Subsidiary    47
ARTICLE XIII
 
    
SUMMARY OF PLAN MERGERS AND SPIN-OFFS
 
   48
   
13.01
 
   Merger of Sky ESOP Accounts Effective January 15, 2004    48
   
13.02
 
   Merger of Frozen First Western Plan Accounts Effective June 30, 2000    48
   
13.03
 
   Merger of Frozen Picton Cavanaugh Plan Accounts Effective June 30, 2000    49
   
13.04
 
   Merger of Frozen TOB Plan Accounts Effective August 1, 2000    49
   
13.05
 
   Transfer of Defined Benefit Plan Assets    50
   
13.06
 
   Merger of Three Rivers Plan Accounts Effective January 1, 2003    50
   
13.07
 
   Merger of Metropolitan Plan Accounts Effective January 1, 2004    51
   
13.08
 
   Merger of GLB Plan Accounts Effective January 1, 2004    51
   
13.09
 
   Merger of Spencer-Patterson Plan Accounts Effective April 1, 2004    52
   
13.10
 
   Spin-off of Certain Frozen Plan Accounts Effective September 30, 1999    52
ARTICLE XIV
 
    
LOANS AND IN-SERVICE WITHDRAWALS
 
   53
   
14.01
 
   Loans to Participants    53
   
14.02
 
   Hardship Distributions    54
   
14.03
 
   In-Service Withdrawals Relating to the Adrian State Bank Plan.    54
   
14.04
 
   Hardship Distribution from Rollover Accounts    55
   
14.05
 
   In-Service Withdrawals    55
ARTICLE XV
 
    
EMPLOYEE STOCK OWNERSHIP PLAN PROVISIONS
 
   56
   
15.01
 
   Employee Stock Ownership Plan Portion    56
   
15.02
 
   Operation of Employee Stock Ownership Plan Portion.    56
   
15.03
 
   Election to Receive Dividends on Employee Stock Ownership Plan Portion.    56
   
15.04
 
   General Rules    57
   
15.05
 
   Participants’ Right to Vote Company Stock    58
   
15.06
 
   Employee Stock Ownership Plan Requirements    58
   
15.07
 
   Disaggregation of Employee Stock Ownership Plan Portion    58
   
15.08
 
   Exempt Loan    59
ARTICLE XVI
 
    
MISCELLANEOUS
 
   60
   
16.01
 
   Participant’s Rights    60
   
16.02
 
   Assignment or Alienation of Benefits.    60
 
 
iv
 
 
Table of Contents
 
(Cont’d)
 
 
 
              Page
   
16.03
 
   Reversion of Funds to Employer    61
   
16.04
 
   Action by Company    61
   
16.05
 
   Allocation of Responsibilities    61
   
16.06
 
   Construction of Plan    61
   
16.07
 
   Gender and Number    62
   
16.08
 
   Headings    62
   
16.09
 
   Incapacity    62
   
16.10
 
   Employee Data    62
   
16.11
 
   Unclaimed Amounts    62
   
16.12
 
   Reduction for Overpayment    62
   
16.13
 
   Invalidity of Certain Provisions    62
   
16.14
 
   Plan Supplements    62
ARTICLE XVII
 
    
TOP HEAVY PROVISIONS
 
   63
   
17.01
 
   Definitions    63
   
17.02
 
   Determination of Top Heavy Status    64
   
17.03
 
   Minimum Contribution    64
   
17.04
 
   Minimum Vesting    65
ARTICLE XVIII
 
    
MINIMUM DISTRIBUTION REQUIREMENTS
 
   66
   
18.01
 
   General Rules.    66
   
18.02
 
   Time and Manner of Distribution.    66
   
18.03
 
   Required Minimum Distributions During Participant’s Lifetime.    67
   
18.04
 
   Required Minimum Distribution After Participant’s Death.    67
   
18.05
 
   Definitions    69
 
 
v
 
 
E XECUTION P AGE
 
 
 
I N W ITNESS W HEREOF , on behalf of Sky Financial Group, Inc., the undersigned officer has executed this amendment and restatement of the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan, effective as of January 1, 2004.
 
 
 
Dated this 6 th day of April, 2004.
 
 
 
S KY F INANCIAL G ROUP , I NC .
 
By:
 
 
/s/ Thomas A. Sciorilli
 
   
Thomas A. Sciorilli
 
Its:
 
 
Senior Vice President & Chief Human Resources Officer
 
    (Seal)
 
S KY F INANCIAL G ROUP , I NC . P ROFIT S HARING , 401( K ) AND ESOP P LAN
 
(As Amended and Restated Effective January 1, 2004)
 
 
 
I NTRODUCTION
 
 
 
The Sky Financial Group Inc. Profit Sharing, 401(k) and ESOP Plan (the “Plan”) was originally established as the Mid American National Bank & Trust Company Profit Sharing Retirement Plan, effective January 1, 1966. Effective July 1, 1989, Mid Am, Inc. (“Mid Am”) assumed sponsorship of the Plan. Mid Am last amended and restated the Plan effective January 1, 1995. Mid Am merged into Citizens Bancshares, Inc. (“Citizens”) effective October 2, 1998 (the “Merger Date”), with the resulting corporation renamed Sky Financial Group, Inc. (the “Company”). The Company became the sponsor of the Mid Am Inc. Profit Sharing and 401(k) Plan on the Merger Date.
 
 
 
Effective January 1, 1999, the Company amended and restated the Mid Am, Inc. Profit Sharing and 401(k) Plan as the Sky Financial Group Inc. Profit Sharing and 401(k) Plan. On this January 1, 1999 date, eligible employees of Citizens and The Ohio Bank, and eligible employees of their respective subsidiaries, become eligible to participate in the Plan.
 
 
 
Prior to June 30, 1999, a portion of the Plan (the “ESOP Portion”) was invested in Qualifying Employer Securities and designed to qualify as a stock bonus plan and an employee stock ownership plan under Code Section 4975(e)(7) and the regulations thereunder. Effective June 30, 1999, the ESOP Portion of the Plan was spun-off and merged into the Sky Financial Group, Inc. Employee Stock Ownership Pension Plan (the “Sky ESOP”).
 
 
 
The frozen Mid Am, Inc. Profit Sharing and 401(k) Plan (the “Frozen Plan”) was merged into this Plan, and effective September 30, 1999, the portion of the Plan containing Participant Frozen Plan accounts invested in Sky Financial Group, Inc. common stock was spun-off and merged into the Sky ESOP.
 
 
 
Effective June 30, 2000, a portion of the First Western Bancorp, Inc. 401(k) Profit-Sharing and Stock Bonus Plan (the “First Western Plan”) was merged into, and amended and restated in the form of, the Plan. Effective June 30, 2000, the portion of the First Western Plan that was intended to constitute an employee stock ownership plan under Code Section 4975(e)(7) was spun-off and merged into the Sky ESOP. Also effective June 30, 2000, the remaining portion of the First Western Plan was amended, restated and merged into this Plan.
 
 
 
Effective July 1, 2000, the Picton Cavanaugh, Inc. Profit-Sharing Retirement Plan (the “Picton Cavanaugh Plan”) was merged into, and amended and restated in the form of, the Plan. Eligible employees of Picton Cavanaugh, Inc. were eligible to participate in the Plan beginning January 1, 2000.
 
 
 
Effective August 1, 2000, The Ohio Bank Employees’ Profit Sharing Plan (the “TOB Plan”) was merged into, and amended and restated in the form of, the Plan. The Company acquired The Ohio Bank in 1998, and The Ohio Bank became a participating Employer under this Plan effective January 1, 1999.
 
 
Effective as of January 1, 2004, the Company amended and restated the Plan as the Sky Financial Group Inc. Profit Sharing, 401(k) and ESOP Plan. Also effective as of January 1, 2004, the Company amended the Plan to add an employee stock ownership plan (“ESOP”) component pursuant to Code Section 4975(e)(7), which is intended to be a stock bonus plan pursuant to Code Section 401(a). The ESOP is intended to invest primarily in employer securities, within the meaning of Code Section 409(l), and the ESOP and profit sharing plan portions of this Plan are intended to constitute a single plan under Treasury Regulations Section 1.414(l)-1(b)(1).
 
 
 
Effective as of January 15, 2004, the Sky Financial Group, Inc. Employee Stock Ownership Pension Plan (the “Sky ESOP”) was merged into, and amended and restated in the form of, the Plan. Also effective as of January 15, 2004, the Sky ESOP was amended to cease any further employer contributions and benefit accruals.
 
 
 
The Sky ESOP was originally established as the Mid Am, Inc. Employee Stock Ownership Pension Plan, effective on July 1, 1989. Prior to October 2, 1998, Mid Am, Inc. (“Mid Am”) maintained the Mid Am Inc. Employee Stock Ownership Pension Plan (the “Mid Am ESOP”). Mid Am merged into Citizens Bancshares, Inc. (“Citizens”) effective October 2, 1998 (the “Merger Date”), with the resulting corporation renamed Sky Financial Group, Inc. The Company became the sponsor of the Mid Am ESOP Plan on the Merger Date, and amended and completely restated the Mid Am ESOP Plan effective January 1, 1999 in the form of the Sky ESOP. Effective on the January 1, 1999 amendment and restatement date, the eligible employees of Citizens and The Ohio Bank, and the eligible employees of their respective subsidiaries, become eligible to participate in the Sky ESOP. Prior to December 31, 2001 (the “Citizens ESOP Merger Date”), the Company maintained the Citizens Bancshares, Inc. Employee Stock Ownership Plan (the “Citizens ESOP”) for the benefit of current and former employees who were employed by Citizens Bancshares, Inc. and its subsidiaries, and their beneficiaries. Effective on the Citizens ESOP Merger Date, the Citizens ESOP was merged into, and amended and restated in the form of the Sky ESOP.
 
 
 
Effective January 1, 2004, the Metropolitan Bank and Trust Company 401(k) Plan (the “Metropolitan Plan”) was merged into, and amended and restated in the form of, the Plan. The Metropolitan Plan was originally established effective January 1, 1992, and was last amended and restated effective January 1, 2002. The Company acquired Metropolitan Financial Corp. in 2003, and Metropolitan Financial Corp. became a participating Employer under this Plan effective January 1, 2004.
 
 
 
Effective January 1, 2004, the GLB 401(k) Plan (the “GLB Plan”) was merged into, and amended and restated in the form of, the Plan. The Company acquired Great Lakes Bank in 2003, and Great Lakes Bank became a participating Employer under this Plan effective January 1, 2004.
 
 
 
This document is an amendment and restatement of the Plan generally effective as of January 1, 2004, except as and to the extent otherwise provided herein. The Company intends that the Plan, together with the Trust Agreement, meet all the pertinent requirements of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as amended, and shall be interpreted, wherever possible, to comply with the terms of the Code and ERISA.
 
 
 
- 2 -
 
 
ARTICLE I
 
DEFINITIONS
 
 
 
In addition to other terms defined elsewhere in this Plan document, the following terms shall have the following meanings:
 
 
 
1.01 Account or Accounts. “Account” or “Accounts” means the record of a Participant’s interest in the Trust Fund, including, where applicable, the Participant’s Profit Sharing Contributions Account, 401(k) Contributions Account, Matching Contributions Account, Safe Harbor Matching Contributions Account, Prior Plan Account, Rollover Contributions Account, Frozen Plan Account, Dividend Reinvestment Account and ESOP Account.
 
 
 
1.02 Acquired Employer. “Acquired Employer” means any organization, corporate or otherwise, that is acquired by the Company or a Related Entity, by purchase, merger, consolidation or any other method, except for asset purchase.
 
 
 
1.03 Annual Compensation. “Annual Compensation” means a Participant’s earned income, wages, salaries, fees for professional services, and other amounts received for personal services actually rendered in the course of employment with the Employers (including, but not limited to, commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses), but excluding the following:
 
 
 
(a) Employer contributions to a plan of deferred compensation, including this Plan, that are not included in the Employee’s gross income for the taxable year in which contributed, Employee contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee or any distributions from a plan of deferred compensation.
 
 
 
(b) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
 
 
 
(c) Amounts realized from the sale, exchange or other disposition of stock acquired under an incentive stock option;
 
 
 
(d) Reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation and welfare benefits (even if included in gross income); and
 
 
 
(e) Other amounts that received special tax benefits or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in Code Section 403(b) (whether or not the amounts are actually excludible from the gross income of the Employee).
 
 
 
Notwithstanding paragraph (a) above, Annual Compensation includes a Participant’s voluntary reductions in cash consideration made in accordance with arrangements established by the Employer under Code Sections 125, 132(f)(4) and 401(k).
 
 
 
- 3 -
 
 
In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, the Annual Compensation of each Employee taken into account under the Plan shall not exceed the limit set forth in Code Section 401(a)(17)(A) ($205,000 for 2004), as adjusted by the Commissioner of Internal Revenue for the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.
 
 
 
1.04 Annuity Starting Date. “Annuity Starting Date” is defined in Section 6.04.
 
 
 
1.05 Applicable Period. The “Applicable Period” is defined in Section 6.04.
 
 
 
1.06 Break in Service. “Break in Service” means a Plan Year in which an Employee has not completed more than 500 Hours of Service.
 
 
 
1.07 Change in Control. “Change in Control” means the occurrence of any one or more of the following events: (a) the merger or consolidation of the Company with or into any other corporation and the Company is not the surviving corporation; (b) in excess of 24.99% of the outstanding Company Stock is owned, held or controlled by an entity, person or group acting in concert with the power to control the Company as that term is defined in Rule 405 of the Securities Act of 1933, as amended; (c) the sale or exchange in excess of 24.99% of the assets of the Company to an entity, person or group acting in concert; (d) the recapitalization, reclassification of securities or reorganization of the Company that has the effect of either subpart (b) or (c) above; (e) the issuance by the Company of securities in an amount in excess of 24.99% of the outstanding Company Stock to any entity, person or group acting in concert and intending to exercise control of the Company; or (f) the removal, termination or retirement of more than 50% of the members of the Board of Directors of the Company during any consecutive 12-month period.
 
 
 
1.08 Code. “Code” means the Internal Revenue Code of 1986, as amended.
 
 
 
1.09 Company. “Company” means Sky Financial Group, Inc.
 
 
 
1.10 Company Stock. “Company Stock” means the common stock of Sky Financial Group, Inc.
 
 
 
1.11 Company Stock Fund. “Company Stock Fund” means the Investment Fund established by the Trustee within the Trust Fund that is designed to invest solely in shares of Company Stock.
 
 
 
1.12 Disability. “Disability” means a physical or mental condition of a Participant resulting from a bodily injury or disease or mental disorder and incurred while the Participant was in active employment with an Employer that results in the Participant’s cessation of active employment and renders the Participant eligible for benefits under the Company’s long-term disability plan.
 
 
 
- 4 -
 
 
1.13 Dividend Reinvestment Account. “Dividend Reinvestment Account” means a Participant’s Account attributable to Company Stock purchased with dividends the Company pays on Company Stock held in the Company Stock Funds.
 
 
 
1.14 Employee. “Employee” means each and every person employed by an Employer who is classified by an Employer as a common law employee; provided that, only individuals who are paid as common law employees from the payroll of an Employer shall be deemed to be Employees for purposes of the Plan. Any person who agrees in writing with an Employer that he or she will not be a Participant will not be eligible to participate in the Plan.
 
 
 
For purposes of this definition of Employee, and notwithstanding any other provisions of the Plan to the contrary, individuals who are not classified by an Employer, in its discretion, as employees under Code Section 3121(d) (including, but not limited to, individuals classified by the Employer as independent contractors and non-employee consultants) and individuals who are classified by an Employer, in its discretion, as employees of any entity other than an Employer do not meet the definition of Employee and are ineligible for benefits under the Plan, even if the classification by the Employer is determined to be erroneous, or is retroactively revised. In the event the classification of an individual who is excluded from the definition of Employee under the preceding sentence is determined by a third party to be erroneous or is retroactively revised, the individual shall nonetheless continue to be excluded from the definition of Employee and shall be ineligible for benefits for all periods prior to the date the Employer determines its classification of the individual is erroneous or should be revised. The foregoing sets forth a clarification of the intention of the Company regarding participation in the Plan for any Plan Year, including Plan Years prior the amendment of this definition of Employee.
 
 
 
No person classified by an Employer as a temporary, seasonal or summer employee shall be deemed to be an Employee. No person who is classified by an Employer as an independent contractor shall be deemed to be an Employee. No person who is classified by an Employer as a “leased employee” shall be deemed to be an Employee. “Leased employee” shall mean any person who is not an Employee but who provides services to an Employer if:
 
 
 
(a) Such services are provided pursuant to an agreement between the Employer and any leasing organization;
 
 
 
(b) Such person has performed services for the Employer (or for the Employer and any related person within the meaning of Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one (1) year; and
 
 
 
(c) Such services are performed under the primary direction or control of the Employer.
 
 
 
Except as provided below, a “leased employee” shall be treated as an employee of an Employer for nondiscrimination testing and other purposes specified in Code Section 414(n). However, contributions or benefits provided by the leasing organization that are attributable to services performed for an Employer shall be treated as provided by the Employer. A “leased employee” shall not be treated as an employee if such “leased employee” is covered by a money purchase pension plan of the leasing organization, and the number of leased employees does not
 
 
 
- 5 -
 
 
constitute more than 20% of the Employers’ “non-highly compensated work force” as defined by Code Section 414(n)(5)(C). The money purchase pension plan of the leasing organization must provide benefits equal to or greater than: (i) a non-integrated employer contribution rate of at least 10% of compensation, (ii) immediate participation, and (iii) full and immediate vesting.
 
 
 
1.15 Employer. “Employer” means any Related Entity with respect to the Company that adopts this Plan pursuant to Article XII. The term also includes the Company, unless the context otherwise requires.
 
 
 
1.16 Entry Date. “Entry Date” means the first day of each calendar month in the Plan Year.
 
 
 
1.17 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
 
 
1.18 Hour of Service. “Hour of Service” means:
 
 
 
(a) Each hour for which an Employee is directly or indirectly paid or entitled to payment by either the Company or the Employer for the performance of duties;
 
 
 
(b) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by either the Company or the Employer for reasons (such as vacation, sickness, disability, or similar leave of absence) other than for the performance of duties, and for military leaves, maternity/paternity leaves or leaves for jury duty; and
 
 
 
(c) Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by either the Company or the Employer provided that the same Hours of Service shall not be credited under this Section (c) and Sections (a) or (b) above, as the case may be.
 
 
 
(d) An Employee shall also be credited with one Hour of Service for each hour that otherwise would normally have been credited to the Employee but during which such Employee is absent from work for any period (i) by reason of the Employee’s pregnancy, (ii) by reason of the birth of the Employee’s child, (iii) by reason of the placement of a child with such Employee in connection with an adoption of such child by the Employee or (iv) for purposes of caring for a child for a period beginning immediately following birth or placement, provided that an Employee shall be credited with no more than 501 Hours of Service on account of any single continuous period of absence by reason of any such pregnancy, birth or placement and provided further that Hours of Service credited to an individual on account of such a period of absence shall be credited only for the Break in Service computation period in which such absence begins if an Employee would otherwise fail to be credited with 501 or more Hours of Service in such period or, in any other case, in the immediately following computation period.
 
 
 
Hours of Service computed hereunder shall be computed in accordance with Section 2530.200b-2(b) and (c) of the Department of Labor Regulations, which is incorporated herein by reference. In no event shall more than 501 Hours of Service be credited for any one continuous period of absence during or for which the employee receives payment for nonperformance of duties whether or not such period occurs in a single computation period.
 
 
 
- 6 -
 
 
1.19 Investment Fund. “Investment Fund” means the funds established from time to time by the Plan Administrator in accordance with Section 9.02 for the investment of Participants’ Accounts.
 
 
 
1.20 Named Fiduciary. “Named Fiduciary” means a fiduciary named in this document, or who, pursuant to a procedure specified in the Plan, is identified as a Named Fiduciary.
 
 
 
1.21 Normal Retirement Age. “Normal Retirement Age” means age 65 years.
 
 
 
1.22 Normal Retirement Date. “Normal Retirement Date” means the first day of the month coinciding with or next following the date on which a Participant attains Normal Retirement Age. If an Employee first performs an Hour of Service after attaining age 65, his or her Normal Retirement Date shall be the date of hire.
 
 
 
1.23 Participant. “Participant” means an Employee who has satisfied the eligibility requirements for the participation in the Plan.
 
 
 
1.24 Plan. “Plan” means the Sky Financial Group, Inc. Profit Sharing, 401(k) and ESOP Plan.
 
 
 
1.25 Plan Administrator. “Plan Administrator” means the Sky Financial Group, Inc. Benefit Plans Committee (the “Committee”). The Plan Administrator shall be the Plan’s Named Fiduciary. The Plan Administrator shall have no responsibility for the custody or management of the Trust Fund.
 
 
 
1.26 Plan Year. “Plan Year” means the 12-month period beginning on January 1 and ending on the following December 31 of each year.
 
 
 
1.27 Qualified Election. “Qualified Election” is defined in Section 6.04(e).
 
 
 
1.28 Qualifying Employer Securities. “Qualifying Employer Securities” means an Employer security that is common stock issued by the Company having a combination of voting power and dividend rights equal to or in excess of the class of Company common stock having the greatest voting power and the class of Company common stock having the greatest dividend rights, within the meaning of Code Section 4975(e)(8).
 
 
 
1.29 Related Entity. “Related Entity” means: (a) all corporations that are members with the Company in a controlled group of corporations within the meaning of Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(c); (b) all trades or businesses (whether or not incorporated) that are under common control with the Company as determined by regulations promulgated under Code Section 414(c); (c) all trades or businesses that are members of an affiliated service group with the Company within the meaning of Code Section 414(m); and (d) any other entity required to be aggregated with the Company in accordance with regulations under Code Section 414(o); provided, however, for purposes of Article VII, the definition shall be modified to substitute the phrase “more than 50%” for the phrase “at least 80%” each place it appears in Code Section 1563(a)(1). The term “Related Entity” shall include the predecessor of the Company and any Related Entity.
 
 
 
- 7 -
 
 
1.30 Sky ESOP. “Sky ESOP” means the Sky Financial Group, Inc. Employee Stock Ownership Pension Plan that was merged into, and amended and restated in the form of, the Plan, effective as of January 15, 2004.
 
 
 
1.31 Spouse. “Spouse” means the person to whom a Participant is legally married as determined under the Defense of Marriage Act.
 
 
 
1.32 Trust. “Trust” means one or more Trusts established to fund the Plan. The Trustee shall receive any contributions paid to it. All contributions so received together with the income thereon shall be held, managed and administered in the Trust pursuant to the terms of the Plan.
 
 
 
1.33 Trustee. “Trustee” means Sky Trust, N.A. The Trustee shall have the authority and discretion to manage and control the assets of the Plan. The Trustee is a Named Fiduciary.
 
 
 
1.34 Trust Fund. “Trust Fund” means all assets of whatever kind or nature held by the Trustee pursuant to the terms of the Plan, unless indicated otherwise. The Trust Fund may consist of more than one trust agreement with more than one Trustee.
 
 
 
1.35 Valuation Date. “Valuation Date” shall mean each business day on which the Nasdaq Stock Market is open.
 
 
 
1.36 Year of Service. For purposes of determining eligibility to participate in the Plan in accordance with Sections 2.01(b) and 2.01(c) hereof, “Year of Service” means a 12-consecutive month period, commencing on the date of an Employee’s first Hour of Service with an Employer, during which the Employee is continuously employed by an Employer.
 
 
 
(a) For purposes of determining a Participant’s nonforfeitable interest pursuant to Section 5.03, “Year of Service” means a Plan Year during which such Participant is credited with at least 1,000 Hours of Service. For purposes of Section 5.03, a Participant will be credited with a Year of Service if the Participant completes 1,000 Hours of Service during said period, even though the Participant is not employed for the full 12-month period.
 
 
 
(b) An Employee who does not initially meet the eligibility requirements of Section 2.01 and later becomes a Participant will have all Years of Service counted for Plan purposes, both prior to and subsequent to becoming a Participant, subject to paragraphs (e) and (f) below.
 
 
 
(c) In the event a terminated Participant is re-hired by an Employer, all Years of Service with an Employer shall be counted for purposes of Sections 2.01 and 5.03 hereof, subject to paragraphs (e) and (f) below.
 
 
 
(d) Solely for purposes of determining a Participant’s nonforfeitable interest pursuant to Section 5.03 hereof, “Year of Service” means any Plan Year during which an individual was a leased employee (as defined in Code Section 414(n)) of the Company or any entity that must be aggregated with the Company under Code Sections 414(b), (c) or (m) and during which the individual earned at least 1,000 Hours of Service.
 
 
 
- 8 -
 
 
(e) If a Participant who has no nonforfeitable rights under Article V has five consecutive Breaks in Service, then the Plan shall not take into account Years of Service after such consecutive Breaks in Service for purposes of determining the nonforfeitable percentage of the Participant’s Accounts that accrued before the Break in Service.
 
 
 
(f) If a Participant who has no nonforfeitable rights incurs a Break in Service for the greater of (i) five or more consecutive Plan Years or (ii) the Participant’s accumulated Years of Service prior to the Break in Service, then the Plan shall not take into account Years of Service prior to such consecutive Breaks in Service for the purpose of determining the nonforfeitable percentage of the Participant’s Accounts that accrues after the Break in Service.
 
 
 
(g) Effective for Plan Years beginning on and after January 1, 2001, all hours, years and/or other periods of service that an Employee had with an Acquired Employer shall be credited toward Years of Service under the terms and conditions of this Section solely for purposes of determining the Employee’s (i) eligibility to participate in the Plan under Section 2.01, and (ii) nonforfeitable interest in his or her Accounts under Section 5.03.
 
 
 
 
 
- 9 -
 
 
ARTICLE II
 
ELIGIBILITY
 
 
 
2.01 Eligibility. Subject to the terms of this Section 2.01 and the remainder of the Plan, each Employee who was a Participant in the Plan as of December 31, 2003, shall continue to participate in the Plan on and after January 1, 2004. Each other Employee will become a Participant according to the following:
 
 
 
(a) Each Employee shall be eligible to make 401(k) Contributions provided for under Section 3.02 hereof and receive Employer Matching Contributions provided for under Section 3.03, beginning with the first day the Employee completes an Hour of Service, or on the first Entry Date thereafter, if the Employee meets both of the following requirements:
 
 
 
(i) the Employee has attained age 18 years; and
 
 
 
(ii) the Employee is not a member of a collective bargaining unit unless the collective bargaining agreement between the Employer and the union provides for participation in this Plan.
 
 
 
(b) Except as set forth below, with respect to ESOP Contributions provided for under Section 3.05 of the Plan, each Employee shall participate in the Plan on the first Entry Date coincident with or next following the date the Employee meets all of the following requirements:
 
 
 
(i) the Employee is credited with one Year of Service;
 
 
 
(ii) the Employee has attained age 18 years;
 
 
 
(iii) the Employee is not a member of a collective bargaining unit unless the collective bargaining agreement between the Employer and the union provides for participation in this Plan; and
 
 
 
(iv) the Employee is not subject to an employment agreement that provides that the Employee is not entitled to contributions under an employer-sponsored profit sharing or employee stock ownership plan.
 
 
 
Notwithstanding the foregoing, an Employee who completes the requirements of this Section 2.01(b) during the month of December in a Plan Year shall be eligible to participate in the Plan as of the December 1 in that Plan Year.
 
 
 
(c) Except as set forth below, with respect to Profit Sharing Contributions provided for under Section 3.04 of the Plan, each Employee shall participate in the Plan on the first Entry Date coincident with or next following the date the Employee meets all of the following requirements:
 
 
 
(i) the Employee is credited with one Year of Service;
 
 
 
(ii) the Employee has attained age 18 years; and
 
 
 
- 10 -
 
 
(iii) the Employee is not a member of a collective bargaining unit unless the collective bargaining agreement between the Employer and the union provides for participation in this Plan.
 
 
 
Notwithstanding the foregoing, no Employee of Sky Insurance, Inc. or of any company acquired by Sky Insurance, Inc. by purchase, merger, consolidation or any other method will be eligible to receive Profit Sharing Contributions provided for under Section 3.04 of the Plan, unless such Employee’s employment agreement explicitly provides for such contributions.
 
 
 
Also notwithstanding the foregoing, an Employee who completes the requirements of this Section 2.01(c) during the month of December in a Plan Year shall be eligible to participate in the Plan as of the December 1 in that Plan Year.
 
 
 
2.02 Eligibility Upon Re-employment. A former Participant, or former Employee who met the eligibility requirements of Sections 2.01(b) or 2.01(c) for participation in the Plan at the time he or she terminated employment, and who is subsequently rehired by an Employer, shall participate in the Plan on the Entry Date coinciding with or next following his or her re-employment by the Employer, if the Employee then meets the requirements for participation described in Section 2.01.
 
 
 
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ARTICLE III
 
CONTRIBUTIONS
 
 
 
3.01 Employer Contributions. The Plan is designed to qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412 and 417. The Employer may make contributions to the Plan without regard to current or accumulated earnings and profits for any taxable year or years ending with or within such Plan Year.
 
 
 
Prior to January 1, 1999, Employers’ Profit Sharing Contributions were made and invested solely in Qualifying Employer Securities. On and after January 1, 1999, Employers’ Profit Sharing Contributions could be made in cash. Each Participant’s Profit Sharing Contributions Account as of December 31, 1998 (including any Profit Sharing Contribution for the 1998 Plan Year), was renamed the Participant’s “ESOP Account” effective January 1, 1999, and a new Profit Sharing Contributions Account was established for each Participant on January 1, 1999, pursuant to Section 4.01. Effective June 30, 1999, the portion of the Plan consisting of all ESOP Accounts was spun off from this Plan and merged into the Sky ESOP.
 
 
 
3.02 401(k) Contributions. Each Employee who becomes eligible to participate may elect to defer a percentage of his or her Annual Compensation for each pay period that he or she remains a Participant in accordance with procedures established by the Plan Administrator. The Participant’s election shall be made at such time and in such manner as the Plan Administrator shall determine. The Participant’s election shall remain in effect until revoked or superseded by a subsequent election pursuant to procedures established by the Plan Administrator.
 
 
 
(a) Amount. A Participant may specify a 401(k) Contribution amount equal to any whole percentage of his or her Annual Compensation; provided that a Participant may not elect a 401(k) Contribution from his or her annual salary of more than seventy-five percent (75%) of such annual salary (or such other maximum percentage as the Plan Administrator may from time to time specify).
 
 
 
(b) Change. A Participant may change the specified percentage of 401(k) Contributions at any time, but not retroactively, by making a revised election, unless the Plan Administrator shall specify that changes are permitted less frequently.
 
 
 
(c) Suspension. A Participant may suspend his or her election to make 401(k) Contributions at any time, but not retroactively.
 
 
 
(d) Compensation Reduction. A Participant’s Annual Compensation for a Plan Year shall be reduced by the amount of the 401(k) Contribution that the Participant elects for such Plan Year.
 
 
 
(e) Election. All elections shall be made at the time, in the manner, and subject to the conditions specified by the Plan Administrator, who shall prescribe uniform and nondiscriminatory rules for such elections.
 
 
 
(f) Timing of Contributions. The Employers shall pay over to the Trust Fund all Participants’ 401(k) Contributions made under this Section 3.02 with respect to a Plan Year as of the earliest day on which such amounts can reasonably be segregated from the Employer’s
 
 
 
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general assets; provided, however that such contributions shall be made no later than the fifteenth business day of the month following the date on which such amounts would otherwise have been payable to the Participant in cash, or as of such earlier or later date (in the case of any available extensions of time) as may be required or permitted by regulations issued pursuant to ERISA. Contributions made by Employers under this Section shall be allocated to the 401(k) Accounts of the Participants from whose Annual Compensation the contributions were withheld in an amount equal to the amount withheld. Such contributions shall be deemed to be employer contributions made on behalf of Participants to a qualified cash or deferred arrangement (within the meaning of Code Section 401(k)(2)).
 
 
 
(g) Nondiscrimination Limitations. For each Plan Year in which the Employer makes Safe Harbor Matching Contributions pursuant to Section 3.03 that satisfy the requirements of Code Sections 401(k)(12), Sections 8.01 through 8.04 hereof will not apply. In any Plan Year in which the Employer does not make Safe Harbor Matching Contributions pursuant to Section 3.03 that comply with Code Section 401(k)(12), Sections 8.01 through 8.04 hereof will apply.
 
 
 
(h) Exclusion Limitations. Except as provided herein, the Employer shall contribute to the Plan on behalf of the Participant the full amount of the 401(k) Contribution authorized by each Participant. In no event, however, shall a Participant’s 401(k) Contributions to the Plan for any calendar year exceed the “Applicable Dollar Amount” specified in Code Section 402(g)(1)(B) ($13,000 for 2004). The Employer shall automatically discontinue 401(k) Contributions for the remainder of the year on behalf of a Participant who reaches this limitation. If due to a mistake in fact, a 401(k) Contribution in excess of the Applicable Dollar Amount is allocated in a calendar year to the 401(k) Contribution Account of any Participant, the expectation is that the Trustee will return to such Participant the portion of his or her 401(k) Contribution in excess of the Applicable Dollar Amount plus any earnings and less any losses attributable to such excess not later than the April 15 immediately following the calendar year during which such excess contribution was made. If in a calendar year a Participant’s 401(k) Contributions under the Plan, when aggregated with any other elective deferrals made by such Participant in such calendar year to any other qualified retirement plan under Code Sections 401(k), 403(b), 408(k) and 414(p), whether or not maintained by an Employer, would otherwise exceed the Applicable Dollar Amount, such Participant may before the March 1 immediately following such calendar year notify the Plan Administrator in writing as to the portion of the amount in excess of the Applicable Dollar Amount to be allocated to the Plan, and the Plan Administrator may, but is not required to, direct the Trustee to pay to such Participant the amount of the excess that was allocated to the Plan by such Participant plus any earnings allocated to such excess amount before the April 15 immediately following the calendar year during which the excess contribution was made. The Applicable Dollar Amount contained in this Section shall be automatically adjusted in accordance with Code Sections 402(g)(4).
 
 
 
3.03 Matching Contributions. For each pay period beginning on or after the first Entry Date on which the Participant has satisfied the eligibility requirements of Section 2.01(a) the Employer shall contribute to the Trust Fund on behalf of each Participant an amount equal to (i) 100% of the first 3% of the 401(k) Contributions for the pay period, and (ii) 50% of the next 2% of 401(k) Contributions made for the pay period. Matching Contributions made pursuant to this Section 3.03 shall be deemed “Safe Harbor Matching Contributions” and are intended to satisfy the requirements of Code Sections 401(k)(12) and 401(m)(11). For each Plan Year in
 
 
 
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which the Employer makes Safe Harbor Matching Contributions pursuant to this Section 3.03 that satisfy the requirements of Code Sections 401(m)(11), Sections 8.01 through 8.04 hereof will not apply. Matching Contributions shall be periodically contributed by the Employer to the Trust Fund in accordance with the Employer’s established payroll procedures in a manner uniformly applied to all Participants similarly situated.
 
 
 
Notwithstanding the foregoing, no later than the end of each Plan Year, if any Participant’s account was not credited with the full amount of Matching Contributions to which he or she was entitled under the terms of the Plan (for example, where the Participant did not make 401(k) Contributions of at least 3% during a pay period because such Participant had already made 401(k) Contributions for the Plan Year up to the limit prescribed under Code Section 402(g)), such Participant shall receive an adjusted Matching Contribution as soon as administratively feasible after December 31 of such Plan Year. The adjusted Matching Contribution shall equal the amount that would have been credited on behalf of the Participant under the terms of the Plan absent the fact that the Participant did not make 401(k) Contributions of at least 3% during a pay period, less the amount actually credited to him or her.
 
 
 
(a) Nondiscrimination Limitations. Contributions to a Participant’s Matching Contributions Account must meet the nondiscrimination requirements of Code Section 401(m) pursuant to Section 8.03 hereof.
 
 
 
(b) Timing of Contributions. Matching Contributions shall be periodically contributed by the Employer to the Trust Fund in accordance with the Employer’s established payroll procedures in a manner uniformly applied to all Participants similarly situated.
 
 
 
3.04 Profit Sharing Contributions. Each year the Employers may make a Profit Sharing Contribution to the Trust Fund in such amounts as the Company, in its sole discretion, shall determine. Profit Sharing Contributions shall be held and administered in trust by the Trustee according to the terms and conditions of the Plan and Trust. To the extent that the Trust has obligations arising from an extension of credit to the Trust that is payable in cash within one year of the date of the Employer’s contribution is made, such contribution will be paid to the Trust in cash. Any such contribution shall be allocated in accordance with Section 4.02 hereof, to those Participants eligible to receive such contribution in accordance with Section 2.01(c).
 
 
 
The Employer’s Profit Sharing Contribution, if any, shall be made to the Trustee in full within such time as may be permitted for Federal Income Tax purposes to obtain a deduction for the contribution by the Employer for such taxable year.
 
 
 
3.05 ESOP Contributions . Each year the Employer will make an ESOP Contribution to the Trust Fund on behalf of each Participant eligible to receive such contribution, including a Participant who continues in the employ of the Employer after his or her Normal Retirement Date, in an amount equal to three percent (3%) of the eligible Participant’s Annual Compensation. ESOP Contributions shall be held and administered in trust by the Trustee according to the terms and conditions of the Plan and Trust. Any such contribution shall be allocated in accordance with Section 4.02 hereof, to those Participants eligible to receive such contribution in accordance with Section 2.01(b).
 
 
 
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ESOP Contributions will be paid in cash or shares of Company Stock. Shares of Company Stock will be valued at their current fair market value. To the extent that the Trust has obligations arising from an extension of credit to the Trust which is payable in cash within one year of the date the Employer’s contribution is made, such contribution will be paid to the Trust in cash.
 
 
 
The annual contribution of the Employer shall be made to the Trustee in full within such time as may be permitted for Federal Income Tax purposes to obtain a deduction for the contribution by the Employer for such taxable year.
 
 
 
3.06 Catch-Up Contributions . The Plan will permit each “Catch-Up Eligible Participant” to make 401(k) Contributions in excess of the applicable limits set forth in paragraph (c) below (“Catch-Up Contributions”) in any Plan Year. Catch-up Contributions may be pro-rated over the course of the Plan Year and shall only be available if a Participant’s 401(k) Contribution election would cause the Participant to exceed the applicable limits set forth in paragraph (c) below. Whether a contribution by a Participant qualifies as a Catch-up Contribution will be determined at the end of the Plan Year, and any Contribution that was intended to be a Catch-up Contribution but fails to qualify as such shall be recharacterized as a 401(k) Contribution.
 
 
 
(a) The Plan shall not permit a Participant to make Catch-Up Contributions in any Plan Year that exceed the lesser of:
 
 
 
(i) the applicable dollar limit prescribed by Code Section 414(v) ( e.g. , $3,000 for Plan Year 2004); and
 
 
 
(ii) the excess (if any) of (A) the Participant’s compensation (as defined in Code Section 415(c)(3)) for the year, over (B) any other 401(k) Contributions the Catch-Up Eligible Participant makes for the Plan Year, other than Catch-Up Contributions under this Section 3.06.
 
 
 
(b) Catch-Up Contributions to the Plan under this Section 3.06 shall not, with respect to the Plan Year in which the contribution is made:
 
 
 
(i) be taken into account in applying the limits of Code Sections 401(a)(30), 401(k)(11), 402(h), 402A(c)(2), 403(b)(1)(E), 404(h), 408(k), 408(p), 415 or 457 to other contributions or benefits under the Plan or under any other plan of the Employers;
 
 
 
(ii) cause the Plan to be treated as failing to meet the requirements of Code Sections 401(a)(4), 401(k)(3), 401(k)(8), 402(g), 403(b)(12), 408(k), 410(b) or 416 by reason of the making of (or the right to make) Catch-Up Contributions.
 
 
 
For all other purposes of the Plan, Catch-Up Contributions shall be treated as 401(k) Contributions.
 
 
 
(c) For purposes of this Section 3.06, the term “Catch-Up Eligible Participant” means, with respect to any Plan Year, each Participant in the Plan who: (i) has attained, or will attain, age 50 before the close of the Plan Year, and (ii) who is otherwise eligible to make 401(k)
 
 
 
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Elections during the Plan Year, except by reason of the application of any limitation or other restriction described in Code Section 401(a)(30), 402(h), 403(b)(1)(E), 404(h), 408(k), 408(p), 415, 457, 401(k)(8)(C) or 408(k)(6) or any comparable limitation or restriction contained in the terms of the Plan.
 
 
 
3.07 Catch-Up Matching Contributions . Effective for Plan Years beginning after December 31, 2001, each Employer may contribute for each Catch-Up Eligible Participant in its employ at the end of the Plan Year an amount (“Catch-Up Matching Contributions”) based on the Catch-Up Contributions, if any, made by the Catch-Up Eligible Participant during such Plan Year. Each Employer will determine the amount of any Catch-Up Matching Contribution in its discretion, subject to the limitations described in Section 7.02. Any Catch-Up Matching Contributions shall be paid to the Trustee no later than the time required for the filing of the Employer’s federal income tax returns for its fiscal year in which such Plan Year ends, including extensions of time thereof. For all other purposes of the Plan, Catch-Up Matching Contributions shall be treated as Matching Contributions.
 
 
 
3.08 Rollover Contributions. The Trustee may accept transfers on behalf of a Participant from:
 
 
 
(a) a qualified pension, profit sharing or stock bonus plan maintained by a former employer of the Participant;
 
 
 
(b) a previously qualified pension, profit sharing or stock bonus plan maintained by the Employer;
 
 
 
(c) a “rollover” Individual Retirement Account as that term is defined in Code Section 408(d)(3)(A)(ii);
 
 
 
(d) a plan in which assets are held on behalf of an Owner-Employee as defined in Code Section 401(c)(3), which satisfies the applicable requirements of Code Sections 401(a) and 401(d) and with respect thereto: (i) the transferred funds shall be maintained in separate accounts in the name of the respective Participants; and (ii) a Participant’s interest in the separate account shall be nonforfeitable;
 
 
 
(e) an annuity contract described in Code Section 403(b); or
 
 
 
(f) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.
 
 
 
Notwithstanding the above, no direct transfer may be made from a plan maintained by the Company that is subject to the requirements of Code Section 401(a)(11)(A).
 
 
 
3.09 Special Rules Relating to Veterans Re-employment Rights Under USERRA. Effective December 12, 1994, the following special provisions shall apply to an Employee or Participant who is re-employed in accordance with the re-employment provisions of the Uniformed Services Employment and Re-employment Rights Act (USERRA) following a period of qualifying military service (as determined under USERRA):
 
 
 
(a) Each period of qualifying military service served by an Employee or Participant shall, upon such re-employment with an Employer, be deemed to constitute service with the Employer for all purposes of the Plan.
 
 
 
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(b) The Participant shall be permitted to make up 401(k) Contributions missed during the period of qualifying military service. The Participant shall have a period of time beginning on the date of the Participant’s re-employment with an Employer following his or her period of qualifying military service and extending over the lesser of (i) the Participant’s period of qualifying military service multiplied by three, and (ii) 5 years, to make up such missed 401(k) Contributions.
 
 
 
(c) If the re-employed Participant elects to make up 401(k) Contributions in accordance with paragraph (b) above, the Employer shall make any Matching Contributions that would have been made on behalf of such Participant had the Participant made such 401(k) Contributions during the period of qualifying military service.
 
 
 
(d) If the Employer made any Profit Sharing Contributions to the Plan during the period of qualifying military service, the Employer shall make a Profit Sharing Contribution on behalf of the Participant upon the Participant’s re-employment following his or her period of qualifying military service, in the amount that would have been made on behalf of such Participant had the Participant been employed during the period of qualifying military service.
 
 
 
(e) If the Employer made any ESOP Contributions to the Plan during the period of qualifying military service, the Employer shall make an ESOP Contribution on behalf of the Participant upon the Participant’s re-employment following his or her period of qualifying military service, in the amount that would have been made on behalf of such Participant had the Participant been employed during the period of qualifying military service.
 
 
 
(f) The Plan shall not (i) credit earnings to a Participant’s Accounts with respect to any 401(k) or Matching Contribution before such contribution is actually made, or (ii) make up any allocation of forfeitures, with respect to the period of qualifying military service. A re-employed Participant shall be entitled to accrued benefits attributable to 401(k) Contributions only if such contributions are actually made.
 
 
 
(g) For all purposes under the Plan, including an Employer’s liability for making contributions on behalf of a re-employed Participant as described above, the Participant shall be treated as having received Annual Compensation from the Employer based on the rate of Annual Compensation the Participant would have received during the period of qualifying military service, or if that rate is not reasonably certain, on the basis of the Participant’s average rate of Annual Compensation during the 12-month period immediately preceding such period.
 
 
 
(h) If a Participant makes a 401(k) Contribution or the Employer makes a Matching Contribution in accordance with the foregoing provisions of this Section 3.09:
 
 
 
(i) such contributions shall not be subject to any otherwise applicable limitation under Code Section 402(g), 404(a) or 415, and shall not be taken into account in applying such limitations to other Participant or Employer contributions under the Plan or any other plan with respect to the year in which such contributions are made, and such
 
 
 
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contributions shall be subject to these limitations only with respect to the year to which such contributions relate and only in accordance with regulations prescribed by the Internal Revenue Service; and
 
 
 
(ii) the Plan shall not be treated as failing to meet the requirements of Code Section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 401(m), 410(b) or 416 by reason of such contributions.
 
 
 
3.10 Automatic 401(k) Contributions. The Company may, in its sole discretion, implement an automatic 401(k) Contribution feature as to all Employees who first become eligible under Section 2.01(a) of the Plan, effective as of any date the Company specifies in the future. Pursuant to this automatic 401(k) Contribution feature, the Plan Administrator will withhold a 401(k) Contribution amount equal to 3% of the Annual Compensation of each Employee who first becomes eligible under Section 2.01(a) after the effective date the Company specifies for the automatic 401(k) Contribution feature, as if the Participant had elected to defer that percentage of his or her Annual Compensation for each pay period. The Participant’s deemed election shall remain in effect until the Participant files a subsequent election revoking or superseding the deemed election, pursuant to procedures established by the Plan Administrator.
 
 
 
(a) A Participant may suspend his or her deemed election to make 401(k) Contributions at any time, but not retroactively. A Participant may change the deemed election percentage at any time, but not retroactively, by making a revised election, unless the Plan Administrator specifies that changes are permitted less frequently.
 
 
 
(b) 401(k) Contributions deemed authorized by each Participant and contributed by the Employer pursuant to Section 3.02 hereof, shall be credited to the Participant’s 401(k) Contributions Account. If the Participant does not direct the manner in which such Contributions are to be invested among the Investment Funds, the Plan Administrator shall specify an Investment Fund or Funds into which such Contributions will be invested.
 
 
 
(c) The Company intends that this Section 3.05 comply, and be administered in accordance with, the provisions of Revenue Ruling 2000-8, and any successor Revenue Ruling thereto.
 
 
 
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ARTICLE IV
 
ALLOCATIONS
 
 
 
4.01 Participant Accounts. The Plan Administrator shall direct the Trustee to maintain such separate Accounts for each Participant as the Plan Administrator shall from time to time determine, including the following:
 
 
 
(a) Profit Sharing Contributions Account. The amount of the Employer’s Profit Sharing Contribution to the Trust Fund pursuant to Section 3.04 hereof and allocated pursuant to Section 4.02(a) hereof, and any amount allocated to a Participant’s Profit Sharing Account pursuant to Article XIII, together with such Participant’s share of all income, gains and accumulations thereon, shall be credited and losses debited to each Participant’s Profit Sharing Contributions Account.
 
 
 
(b) 401(k) Contributions Account. 401(k) Contributions authorized by each Participant and contributed by the Employer pursuant to Section 3.02 or 3.06 hereof, and any amount allocated to a Participant’s 401(k) Contributions Account pursuant to Article XIII, together with such Participant’s share of all income, gains and accumulations thereon, shall be credited and losses debited to each Participant’s 401(k) Contributions Account.
 
 
 
(c) Matching Contributions Account . Matching Contributions made by the Employer pursuant to Section 3.03 or 3.07 hereof, and any amount allocated to a Participant’s Matching Contribution Account pursuant to Article XIII, together with such Participant’s share of all income, gains and accumulations thereon, shall be credited and losses debited to such Participant’s Matching Contributions Account. Notwithstanding the foregoing, Safe Harbor Matching Contributions made on or after January 1, 2003, pursuant to Section 3.03 hereof, together with such Participant’s share of all income, gains and accumulations thereon, shall be credited and losses debited to such Participant’s Safe Harbor Matching Contributions Account, which will be a subaccount of his or her Matching Contributions Account.
 
 
 
(d) Prior Plan Account. Amounts transferred from a previous qualified plan of an Employer, together with such Participant’s share of income, gains and accumulations thereon, shall be credited and losses debited to each Participant’s Prior Plan Account.
 
 
 
(e) Rollover Contributions Account. Rollover Contributions made by a Participant pursuant to Section 3.08 hereof, together with such Participant’s shares of all income, gains and accumulations thereon, shall be credited and losses debited to such Participant’s Rollover Contributions Account.
 
 
 
(f) Frozen Plan Account. Amounts transferred to this Plan as a result of the merger of the frozen Mid Am, Inc. Profit Sharing and 401(k) Plan (the “Frozen Plan”) into this Plan, and remaining in this Plan under the terms of Section 13.10, together with such Participant’s share of income, gains and accumulations thereon, shall be credited and losses debited to each Participant’s Frozen Plan Account.
 
 
 
(g) ESOP Account. The amount of the Employer’s ESOP Contribution to the Trust Fund pursuant to Section 3.05 hereof and allocated pursuant to Section 4.03 hereof, and any amount allocated to a Participant’s ESOP Account pursuant to Section 13.01, together with such Participant’s share of all income, gains and accumulations thereon, shall be credited and losses debited to each Participant’s ESOP Account.
 
 
 
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4.02 Allocation of Profit Sharing Contributions. Effective as of the last day of each Plan Year, any amount contributed by the Employers pursuant to Section 3.04 hereof shall be allocated and credited to the Profit Sharing Contributions Account of each eligible Participant. An allocation will be made only if the Participant was employed by the Employer on the last day of such Plan Year and was credited with at least 1,000 Hours of Service during such Plan Year, except that any Participant who incurred a Disability, died or terminated employment with the Employer on or after attaining Normal Retirement Age during such Plan Year shall receive an allocation.
 
 
 
Allocations of Profit Sharing Contributions shall be determined in the same proportion that such Participant’s Annual Compensation bears to the total Annual Compensation of all Participants eligible to share in the Employers’ Profit Sharing Contribution for such Plan Year. For this purpose, Annual Compensation shall (i) only include compensation earned while the Participant was an Employee of an Employer, and (ii) include compensation for the entire Plan Year, even if the Participant first became a Participant during the Plan Year.
 
 
 
4.03 Allocation of ESOP Contributions. Effective as of the last day of each Plan Year, any amount contributed by the Employers pursuant to Section 3.05 hereof shall be allocated and credited to the ESOP Account of each eligible Participant. An allocation will be made only if the Participant was employed by the Employer on the last day of such Plan Year and was credited with at least 1,000 Hours of Service during such Plan Year, except that any Participant who incurred a Disability, died or terminated employment with the Employer on or after attaining Normal Retirement Age during such Plan Year shall receive an allocation.
 
 
 
Allocations of ESOP Contributions shall be determined in the same proportion that such Participant’s Annual Compensation bears to the total Annual Compensation of all Participants eligible to share in the Employers’ ESOP Contribution for such Plan Year. For this purpose, Annual Compensation shall (i) only include compensation earned while the Participant was an Employee of an Employer, and (ii) include compensation for the entire Plan Year, even if the Participant first became a Participant during the Plan Year.
 
 
 
4.04 Allocation of 401(k) Contributions. All 401(k) Contributions made by the Employers pursuant to Section 3.02 for any pay period shall be allocated and credited to the 401(k) Contributions Account of each eligible Participant who made 401(k) Contributions for that pay period, according to such Participant’s 401(k) Contributions for the pay period. All Catch-Up Contributions made by the Employer pursuant to Section 3.06 for any pay period shall be allocated and credited to the 401(k) Contributions Account of each Catch-Up Eligible Participant who made Catch-Up Contributions for that pay period, according to such Catch-Up Eligible Participant’s Catch-Up Contributions for the pay period.
 
 
 
4.05 Allocation of Matching Contributions. Any Matching Contributions made by the Employers pursuant to Section 3.03 or 3.07 for any pay period shall be allocated and credited to the Matching Contributions Account of each eligible Participant who made 401(k) Contributions for that pay period, according to such Participant’s 401(k) Contributions for the
 
 
 
- 20 -
 
 
pay period. Any Catch-Up Matching Contributions made by the Employers pursuant to Section 3.07 for any pay period shall be allocated and credited to the Matching Contributions Account of each eligible Participant who made Catch-Up Contributions for that period. Such allocations shall be determined in the same proportion that such Participant’s Annual Compensation bears to the total Annual Compensation of all Participant’s eligible to share in the Employer’s Catch-Up Matching Contribution for such pay period. For this purpose, Annual Compensation shall (i) only include compensation earned while the Participant was an Employee of an Employer, and (ii) include compensation for the entire Plan Year, even if the Participant first became a Participant during the Plan Year.
 
 
 
4.06 Allocation of Investment Gain or Loss. Any net gain or net loss resulting from the operation of the Investment Funds of the Trust for such year, determined in accordance with Article IX hereof, shall be allocated by the Trustee to the respective Participant’s Accounts in proportion to the value of the respective interests in the Investment Fund immediately preceding such revaluation.
 
 
 
4.07 Allocation of Cash Dividends. Cash dividends on Company Stock allocated to a Participant’s Company Stock Funds shall be credited to the Participant’s Dividend Reinvestment Account, to the extent the Cash Dividends are not distributed directly to the Participant outside of the Plan pursuant to a Dividend Payment Election under Section 15.03.
 
 
 
4.08 Valuations. The Trust Fund and each Investment Fund shall be valued by the Trustee at fair market value as of each Valuation Date. The “adjusted net worth” of an Investment Fund as of any Valuation Date means the net worth of that Investment Fund as determined by the Trustee in accordance with the provisions of the Trust Agreement.
 
 
 
4.09 Allocation of Gain or Loss. Any increase or decrease in the market value of each Investment Fund of the Trust Fund since the preceding Valuation Date and all income earned, expenses incurred and realized profits and losses, shall be determined in accordance with accounting methods uniformly and consistently applied and shall be added to or deducted from the Account of each Participant based on the amount of a Participant’s Account in such Investment Fund at the prior Valuation Date in accordance with non-discriminatory procedures and rules adopted by the Plan Administrator. Before reallocation, the Accounts of the Participants shall be reduced by any payments made thereon in the period. At the Plan Administrator’s discretion uniformly applied, administrative expenses directly connected or associated with a particular Participant’s Account may be charged to the Account. Notwithstanding the foregoing, allocation shall not be required to the extent the Trust Fund, or any Investment Fund thereof, is administered in a manner that permits separate valuation of each Participant’s interest therein without separate incremental cost to the Plan or the Plan Administrator otherwise provides for separate valuation.
 
 
 
4.10 Annual Report to Participants. The Plan Administrator shall notify each Participant in writing of the financial status of his or her Accounts as of the last day of each Plan Year.
 
 
 
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ARTICLE V
 
BENEFITS TO PARTICIPANTS
 
 
 
5.01 Upon Retirement or Disability. When a Participant attains Normal Retirement Age, or incurs a Disability, the entire interest in the Participant’s Accounts, including the amount of any contributions for the Plan Year in which the Participant’s termination of employment with the Employers on or after his or her Normal Retirement Date or Disability occurs, shall become nonforfeitable. A Participant who remains in the employment of the Employers after the Participant attains Normal Retirement Age shall continue to participate in the Plan.
 
 
 
5.02 Upon Death. Upon the death of a Participant, the entire interest in the Participant’s Accounts, including the amount of any contributions for the Plan Year in which the Participant’s death occurs, shall become nonforfeitable. The Plan Administrator, in accordance with the provisions of Article VI of the Plan, shall then direct the Trustee to distribute the entire interest in the Participant’s Accounts to such Participant’s designated beneficiary or beneficiaries. The Plan Administrator may require proper proof of death and evidence of the right of any person to receive payment of the entire interest in the Accounts of the deceased Participant as the Plan Administrator deems desirable and the Plan Administrator’s determination shall be conclusive. The Trustee shall make such distribution as soon as administratively feasible following the Participant’s death and in accordance with the rules and procedures established by the Plan Administrator.
 
 
 
Unless the Participant has made a Qualified Election, the Trustee shall make all payments to the Participant’s spouse in a lump sum, or, if applicable, in a ESOP Qualified Pre-Retirement Survivor Annuity pursuant to Section 6.02. Each Participant, by written instrument delivered to the Plan Administrator, shall have the unqualified right to designate, and from time to time change, the beneficiary or beneficiaries to receive the entire interest in his Accounts in the event of his death, subject to the Qualified Election requirements in Section 6.04(e).
 
 
 
In the event that (i) the Participant fails to designate a beneficiary or beneficiaries or (ii) the Plan’s records of beneficiary designations are lost or destroyed, then the entire interest in the Participant’s Accounts shall be distributed first to the Participant’s spouse if then living, or second to the Participant’s estate. In the event that the Participant (i) designates a beneficiary who predeceases the Participant or (ii) designates a beneficiary who disclaims the benefit under the Plan, then such beneficiary’s entire interest in the Participant’s Accounts shall be distributed first to the Participant’s spouse if then living, or second to the Participant’s estate.
 
 
 
5.03 Nonforfeitable Interest Upon Termination of Employment. Upon termination of a Participant’s employment for any reason other than Disability, death or termination of employment with the Employer after attaining the Normal Retirement Age, the Trustee shall, in accordance with the provisions of Section 6.01 of the Plan and at the instruction of the Plan Administrator, distribute to the Participant the entire interest then constituting his or her 401(k) Contributions Account, Safe Harbor Matching Contributions Account, Dividend Reinvestment Account and Rollover Contributions Account, which are always nonforfeitable, and the nonforfeitable interest in the Participant’s Matching Contributions Account, Profit Sharing Contributions Account, ESOP Account, Frozen Plan Account and Prior Plan Account based on the Participant’s Years of Service determined in accordance with the applicable schedule below:
 
 
 
Years of Service
  Nonforfeitable Interest
Less than 2   0%
2 but less than 3   40%
3 but less than 4   60%
4 but less than 5   80%
5 or more   100%
 
 
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(a) Any Participant who, prior to January 1, 1999, was a Participant in the Mid Am, Inc. Profit Sharing and 401(k) Plan, and who has completed at least three Years of Service as of January 1, 1999, may elect in writing to have his or her nonforfeitable interest computed under the Plan’s five year cliff vesting schedule in effect prior to January 1, 1999, by the later of: (i) the Participant’s termination of employment with the Employers, or (ii) the date that is 60 days after the day the Plan Administrator gives written notice of the Plan amendment to the Participant.
 
 
 
(b) In the event the nonforfeitable interest schedule is amended, or the nonforfeitable interest schedule of an existing plan is amended by the Plan, then any Participant who has completed at least three Years of Service on the later of the date the amendment is adopted, or the date the amendment is effective may elect in writing to have his or her nonforfeitable interest computed under the prior applicable nonforfeitable interest schedule, beginning on the date the Plan amendment is adopted and ending on the later of: (i) the Participant’s termination of employment with the Employers, (ii) the date that is 60 days after the day the Plan amendment is adopted, (iii) the date that is 60 days after the day the Plan amendment becomes effective, or (iv) the date that is 60 days after the day the Plan Administrator gives written notice of the Plan amendment to the Participant.
 
 
 
(c) Notwithstanding any contrary provision of this Plan, each Participant who was an employee of Sky Investments, Inc. on March 7, 2001, the effective date of the sale of Sky Investments, Inc., acquired a 100% nonforfeitable interest in his or her Accounts under the Plan as of that date.
 
 
 
(d) Notwithstanding any contrary provision of this Plan, a Participant shall always be 100% vested in his or her Dividend Reinvestment Account without regard to the vested percentage of underlying stock.
 
 
 
(e) Each Participant in the Mid Am Inc. Employee Stock Ownership Pension Plan and/or the Mid Am, Inc. Profit Sharing and 401(k) Plan on October 2, 1998, the effective date of the merger of Mid Am, Inc. into Citizens Bancshares, Inc., acquired a 100% nonforfeitable interest in his or her Account under the Mid Am Inc. Employee Stock Ownership Pension Plan and the Mid Am, Inc. Profit Sharing and 401(k) Plan as of that date. The Employer contributions made under the Mid Am Inc. Employee Stock Ownership Pension Plan, Mid Am, Inc. Profit Sharing and 401(k) Plan, the Sky ESOP and this Plan, on and after October 2, 1998, shall be subject to the vesting schedule contained in this Section, based on the Participant’s Years of Service.
 
 
 
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5.04 Change in Control. In the event of a Change in Control, each Participant who is employed by an Employer on the effective date of a Change in Control shall acquire a 100% nonforfeitable interest in his or her Accounts as of that date.
 
 
 
5.05 Forfeiture Upon Termination of Employment. If a Participant terminates employment with the Employers, and the value of the Participant’s vested Accounts is not (or at the time of any prior, periodic distribution was not) greater than $5,000, the Participant will receive a distribution of the value of the entire vested portion of his or her Accounts and the nonvested portion will be treated as a forfeiture. The value of the Participant’s vested Accounts shall be determined without regard to that portion of his or her Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16).
 
 
 
(a) If a Participant terminates service and elects to receive a distribution of the vested portion of his or her Accounts pursuant to Article VI of the Plan, the nonvested portion will be treated as a forfeiture.
 
 
 
(b) If distribution is made to a Participant on account of termination of employment, which is less than the value of the Participant’s Account, prior to the date on which the Participant has a Break in Service for five consecutive Plan Years, and the Participant returns to employment covered by the Plan, the Participant’s Account shall subsequently be determined without regard to the portion thereof derived from predistribution employment, provided the Participant (i) received distribution of the entire present value of the nonforfeitable portion of his or her Account at the time of distribution, (ii) the amount of the distribution did not exceed the dollar limit under Code Section 411(a)(11)(A) or the Participant (with spousal consent, if applicable) voluntarily elected to receive the distribution, and (iii) the Participant upon return to employment covered by the Plan does not repay the full amount of the distribution before the earlier of suffering five consecutive one year Breaks in Service, or at the close of the first period of five consecutive one year Breaks in Service commencing after the distribution. If the Participant makes a timely repayment, the Participant’s Account shall equal the sum of the repayment and the forfeitable portion of the Participant’s Account on the date of distribution, unadjusted by gains or losses subsequent to the distribution. Restoration of forfeitures under this paragraph shall be made, to the extent necessary, first from forfeitures in the Plan Year of repayment and second from Employer contributions.
 
 
 
(c) If a Participant does not receive a distribution pursuant to Article VI, the nonvested portion of the Participant’s Accounts will be treated as a forfeiture on the last day of the Plan Year in which the Participant terminated employment.
 
 
 
(d) Except as provided in paragraph (b) above, forfeitures will be used to reduce the contribution due from the Employer for the Plan Year in which the forfeiture occurs, or for the immediately following Plan Year.
 
 
 
(e) For purposes of this Section 5.05, if a Participant does not have any nonforfeitable interest in his or her Accounts, the Participant will be deemed to have received a distribution of the entire vested portion of his or her Accounts in accordance with the provisions of subparagraph (a) above without having submitted any application for benefits to the Plan
 
 
 
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Administrator. If such Participant returns to active service with an Employer prior to incurring five consecutive Breaks in Service, the Participant will be deemed to have paid back the distribution and his or her Accounts will be restored as provided in subparagraph (b) above.
 
 
 
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ARTICLE VI
 
DISTRIBUTIONS
 
 
 
6.01 Commencement of Benefits. The Plan shall distribute a Participant’s Account as soon as administratively feasible after the Participant’s termination of employment with the Employers, except as provided below. If the nonforfeitable portion of the Participant’s Account exceeds (or at the time of any prior, periodic distribution ever exceeded) $5,000, the Plan shall not distribute the Participant’s Account before the Participant attains Normal Retirement Date, unless the Participant consents to such distribution in writing. The value of a Participant’s nonforfeitable Account shall be determined without regard to that portion of his or her Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16).
 
 
 
With respect to distributions of amounts held in a Participant’s ESOP Account only, the notice of the right to defer distributions shall also give a general description of the material features, and an explanation of the relative values, of the normal and optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Code Section 417(a)(3). The Plan Administrator must give such notice no less than 30 days and no more than 90 days prior to the Annuity Starting Date, unless the Participant waives the notice requirement as provided in Code Section 417(a)(7)(B) or the requirements of Code Section 417(a)(7)(A) are met.
 
 
 
If the Participant does not consent to distribution, the Participant’s Account shall be retained in the Trust Fund until such later date as the Participant requests distribution. If the Participant does not request distribution prior to the Participant’s Normal Retirement Date or death, the Plan shall distribute the Participant’s Account as soon as administratively feasible after the Valuation Date next following the first to occur of the Participant’s Normal Retirement Date or death (provided the Plan Administrator receives notice of the Participant’s death).
 
 
 
6.02 Payment of Benefits. A Participant, or his or her designated beneficiary, may elect to have the vested balance of the Participant’s Account distributed in either (i) a lump sum payment, or (ii) substantially equal monthly, quarterly, semi-annual or annual installments over any period of time not exceeding the Participant’s then life expectancy or the joint and last survivor expectancy of the Participant and a designated beneficiary. If there is any remaining balance in the Participant’s Account upon his or her death, such balance shall be payable as a death benefit in accordance with Section 6.06 below. If a Participant elects to receive distribution of his or her Account in the form of a lump sum payment, the Participant may elect to receive his or her ESOP Account and that portion of his or her other Accounts that is invested in the Company Stock Fund in Company Stock.
 
 
 
6.03 Distribution Provisions Applicable to ESOP Accounts. Notwithstanding the provisions of Section 6.02, the following provisions shall apply to ESOP Accounts.
 
 
 
(a) Payment of Benefits. The normal form of benefit under the Plan with respect to amounts held in the ESOP Accounts is the ESOP Qualified Joint and Survivor Annuity, unless the Participant and his or her spouse execute a Qualified Election selecting an optional form of benefit within the 90-day period ending on the date the Plan is to commence benefit payments.
 
 
 
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If the Participant is married and dies prior to the commencement of his or her benefits, the Participant’s Account shall be used to provide a ESOP Qualified Pre-Retirement Survivor Annuity for the Participant’s spouse unless the Participant and/or his or her spouse execute a Qualified Election selecting another form of distribution, within the “Election Period.”
 
 
 
(b) Optional Forms of Benefit. A Participant may elect to waive the ESOP Qualified Joint and Survivor Annuity and have his or her Account distributed in one of the following optional forms of distribution:
 
 
 
(i) a lump sum payment;
 
 
 
(ii) a straight life annuity for the Participant’s life; or
 
 
 
(iii) substantially equal monthly, quarterly, semi-annual or annual installments over any period of time not exceeding the Participant’s then life expectancy or the joint and last survivor expectancy of the Participant and a designated beneficiary. If there is any remaining balance in the Participant’s Account upon his or her death, such balance shall be payable as a death benefit in accordance with Section 6.06 below.
 
 
 
(c) Distributions Other Than Lump Sum. If the Participant’s entire Account is to be distributed in other than a lump sum, then the amount to be distributed each year must be at least an amount equal to the quotient obtained by dividing the Participant’s entire interest by the life expectancy of the Participant or joint and last survivor expectancy of the Participant and designated beneficiary. Life expectancy and joint and last survivor life expectancy are computed by the use of the return multiples contained in Section 1.72-9 of the Income Tax Regulations. For purposes of this computation, a Participant’s life expectancy may be recalculated no more frequently than annually, however, the life expectancy of a non-spouse beneficiary may not be recalculated. If the Participant’s spouse is not the designated beneficiary, the method of distribution selected must assure that more than 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. All distributions must be the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the proposed regulations.
 
 
 
6.04 Definitions . The following definitions shall apply to Section 6.03:
 
 
 
(a) Annuity Starting Date. “Annuity Starting Date” means the first day of the first period for which an amount is paid as an annuity, regardless of when or whether payment is actually made. In the case of benefits not payable as an annuity, the Annuity Starting Date is the date the benefit is received.
 
 
 
(b) ESOP Qualified Joint and Survivor Annuity. “ESOP Qualified Joint and Survivor Annuity” means an annuity for the life of the Participant with a survivor annuity for the life of the spouse that is not less than 50% and not more than 100% of the amount of the annuity that is payable during the joint lives of the Participant and the spouse, which is the actuarial equivalent of the normal form of benefit, or if greater, any optional form of benefit. An ESOP Qualified Joint and Survivor Annuity for a Participant who is not married shall be an annuity for the life of such Participant.
 
 
 
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(c) ESOP Qualified Pre-Retirement Survivor Annuity. “ESOP Qualified Pre-Retirement Survivor Annuity” means an annuity for the life of the Participant’s surviving spouse, if any, applying the Participant’s vested Account to purchase such life annuity. The spouse of the deceased Participant may elect to receive the full value of such Participant’s Account in a lump sum in lieu of the ESOP Qualified Pre-Retirement Survivor Annuity.
 
 
 
Subject to the rules in Section 6.03, the surviving spouse shall begin to receive payments immediately, unless such surviving spouse elects a later date, except that the surviving spouse shall receive an immediate distribution if the value of the Participant’s vested Accounts is not (or at the time of any prior, periodic distribution was not) greater than $5,000.
 
 
 
(d) Applicable Period. The “Applicable Period” for the explanation of the ESOP Qualified Joint and Survivor Annuity shall be no less than 30 days (or no less than 7 days if the Participant waives the 30-day period pursuant to Code Section 417(a)(7)(B)) and no more than 90 days prior to the Participant’s Annuity Starting Date, or soon after the Participant’s Annuity Starting Date if the requirements of Code Section 417(a)(7)(A) are met. The “Applicable Period” for the ESOP Qualified Pre-Retirement Survivor Annuity” means, with respect to a particular Participant, the latest of the following:
 
 
 
(i) The period that begins with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan year in which the Plan Year in which the Participant attains age 35;
 
 
 
(ii) a reasonable period after the Employee becomes a Participant;
 
 
 
(iii) a reasonable period after this Section no longer applies to the Participant; or
 
 
 
(iv) a reasonable period after the Participant’s separation from service in the case of a Participant who separates from service before attaining age 35.
 
 
 
Within the Applicable Period, the Plan Administrator shall give the Participant written notification of the availability of the Qualified Election with respect to the ESOP Qualified Joint and Survivor Annuity. The notification shall explain the terms and conditions of the ESOP Qualified Joint and Survivor Annuity, the rights of the spouse, the effect of electing not to take such annuity, and the right to revoke a previous election to waive such annuity. The Participant (and the Participant’s spouse) must complete the election on or before the Annuity Starting Date, or after the Annuity Starting Date if the requirements of Code Section 417(a)(7)(A) are met. The Participant may revoke an election not to take the Joint and Survivor Annuity or choose again to take such annuity at any time and any number of times within the applicable election period. If a Participant requests additional information within 60 days after receipt of the notification of election, the minimum election period shall be extended an additional 60 days following the Participant’s receipt of such additional information.
 
 
 
Within the Applicable Period, the Plan Administrator shall give each Participant a written explanation of the ESOP Qualified Pre-Retirement Survivor Annuity which shall contain the following: (i) the terms and conditions of a ESOP Qualified Pre-Retirement Survivor Annuity; (ii) the Participant’s right to make and the effect of an election to waive this form of benefit; (iii)
 
 
 
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the rights of the Participant’s spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the ESOP Qualified Pre-Retirement Survivor Annuity. In the case of a Participant who enters the Plan after the first day of the Plan Year in which the Participant attained age 32, the Plan Administrator shall provide the required notice no later than the close of the second Plan Year succeeding the entry of the Participant in the Plan.
 
 
 
(e) Qualified Election. “Qualified Election” means an election by a Participant to (i) waive the ESOP Qualified Joint and Survivor Annuity or ESOP Qualified Pre-Retirement Survivor Annuity, pursuant to Section 6.03, and elect an optional form of distribution, (ii) designate a beneficiary other than the Participant’s spouse, pursuant to Section 6.03, or (iii) begin distributions prior to the Participant’s Normal Retirement Date, pursuant to Section 6.01, which satisfies the following consent requirements:
 
 
 
(i) The spouse’s consent shall be witnessed by a Plan representative or notary public.
 
 
 
(ii) The spouse’s consent must acknowledge the effect of the election, including that the spouse had the right to limit consent only to a specific beneficiary or a specific form of benefit, if applicable, and that the relinquishment of one or both such rights was voluntary. Unless the consent of the spouse expressly permits designations by the Participant without a requirement of further consent by the spouse, the spouse’s consent must be limited to the form of benefit, if applicable, and the beneficiary, class of beneficiaries, or contingent beneficiary named in the election.
 
 
 
(iii) Spousal consent is not required if the Participant establishes to the satisfaction of the plan representative that the consent of the spouse cannot be obtained because there is no spouse or the spouse cannot be located.
 
 
 
(iv) A spouse’s consent under this Section shall not be valid with respect to any other spouse.
 
 
 
(v) A Participant may revoke a prior election without the consent of the spouse. Any new election will require a new spousal consent, unless the consent of the spouse expressly permits such election by the Participant without further consent by the spouse.
 
 
 
(vi) A spouse’s consent may be revoked at any time within the Participant’s election period.
 
 
 
6.05 Mandatory Commencement of Benefits. In no event other than the written direction of the Participant will distribution of the Participant’s benefits under the Plan commence later than the 60th day after the end of the Plan Year in which the later of the following events occurs:
 
 
 
(a) The Participant attains Normal Retirement Age;
 
 
 
(b) The tenth anniversary of the year in which the Participant commences participation in the Plan; or
 
 
 
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(c) The Participant terminates employment with the Employer.
 
 
 
A Participant may elect to defer the commencement of distributions under the Plan to a date later than set forth above, provided, however, that the Participant must make any such election by submitting to the Plan Administrator a signed written statement describing the method and medium of distribution and the date on which such distribution shall commence.
 
 
 
Anything above to the contrary notwithstanding, distributions of a Participant’s benefits must commence by April 1 of the calendar year following the later of (i) the calendar year in which the Participant attains age 70  1 / 2 , or (ii) the calendar year in which the Participant retires, in accordance with the minimum distribution requirements of Code Section 401(a)(9). Notwithstanding the foregoing sentence, for any Participant who is a 5-percent owner of an Employer, the distributions of benefits must commence by April 1 of the calendar year following the calendar year in which the Participant attains age 70  1 / 2 . A Participant who attained age 70  1 / 2 during the 1998 calendar year and who is not a 5-percent owner may elect to postpone receiving such distributions until April 1 of the calendar year following the year in which the Participant retires, as long as he or she so elects in the manner prescribed by the Plan Administrator before April 1, 1999. For purposes of this minimum distribution, the Participant may elect prior to the date of the first required distribution to have his or her life expectancy and his or her spouse’s life expectancy recalculated annually. Such election shall be irrevocable once made, and shall apply for all subsequent Plan Years. The Participant and his or her spouse shall have the right to separately elect as to whether each wants his or her life expectancy recalculated, and the election of one shall not affect the election of the other. In the event that either the Participant or his or her spouse fails to make an election, his or her life expectancy shall be recalculated annually.
 
 
 
The mandatory commencement of distribution to a Participant or beneficiary pursuant to this Section 6.05 shall not apply provided (i) that prior to January 1, 1984, or such other date permitted by law, a Participant (including Key Employees) who had an Account balance under this Plan as of December 31, 1983, made a written designation for a method of distribution of the benefit that satisfy the provisions of Code Section 401(a)(9) as in effect prior to the enactment of the Tax Equity and Fiscal Responsibility Act of 1982 (including rules relating to incidental death benefits). Any written designation, if made, shall be binding upon the Plan Administrator. In addition, the mandatory commencement of distribution shall not apply to any Participant who attained age 70  1 / 2 prior to January 1, 1988 and who was not a five percent owner at any time after he or she attained age 66  1 / 2 .
 
 
 
The rules governing required minimum distributions are set forth in Article XVIII and shall apply to distributions commencing in 2003.
 
 
 
6.06 Distributions After Death of a Participant. Subject to the provisions of Section 6.02 and 6.03 above, if a Participant dies before the Plan has distributed any portion of his or her Account, the Plan shall distribute the Participant’s Account in one of the following methods:
 
 
 
(a) The Plan shall distribute the Participant’s Account no later than December 31 of the calendar year that contains the fifth anniversary of the date of the Participant’s death, regardless of who is to receive the distribution.
 
 
 
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(b) If the distribution is to be made to a designated beneficiary, the distribution of a Participant’s interest shall commence not later than December 31 of the calendar year immediately following the calendar year in which the Participant died, and payments shall occur over a period not extending beyond the life expectancy of such designated beneficiary. If distribution is to be made to the Participant’s surviving spouse, distribution must commence on or before the later of: (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, or (ii) December 31 of the calendar year in which the Participant would have attained age 70  1 / 2 . Such distribution shall occur over a period not extending beyond the life expectancy of such designated beneficiary.
 
 
 
A Participant or the Participant’s spouse or designated beneficiary, subject to a Qualified Election, may elect the method of distribution described in subparagraph (b) above. Such election must be made no later than the earlier of: (i) the date that distribution would have to occur according to the provisions of subparagraph (a) above, or (ii) the date that distribution would have to occur according to the provisions of subparagraph (b) above. As of such date, the election is irrevocable and shall apply for all subsequent years and any subsequent beneficiaries. If no such election is made, distribution shall be made in accordance with subparagraph (a) above.
 
 
 
If the Participant’s surviving spouse dies before the Plan begins distributions to such spouse, the payment of the Participant’s interest shall be made as if the surviving spouse were the Participant. If the Plan has begun distribution of the Participant’s interest at the time of such Participant’s death, distribution may be made for a term certain at least as rapidly as under the method of distribution used prior to the death of the Participant.
 
 
 
6.07 Right to Have Accounts Transferred. Notwithstanding any provision of the Plan to the contrary that would otherwise limit an “eligible distributee” election under this Article VI, an eligible distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an “eligible rollover distribution” paid directly to an “eligible retirement plan” specified by the eligible distributee in a “direct rollover.”
 
 
 
(a) “Eligible rollover distribution” means any distribution of all or any portion of the balance to the credit of the eligible distributee, except that an eligible rollover distribution shall not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the eligible distributee and the eligible distributee’s designated beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) any hardship distribution; and (iv) 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).
 
 
 
(b) “Eligible retirement plan” means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state or a qualified trust described in Code Section 401(a), that accepts the eligible distributee’s
 
 
 
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rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan shall only be an individual retirement account or individual retirement annuity.
 
 
 
(c) An “eligible distributee” means Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p), are eligible distributees with regard to the interest of the spouse or former spouse.
 
 
 
(d) A “direct rollover” means a payment by the plan to the eligible retirement plan specified by the eligible distributee.
 
 
 
If a distribution is one to which Code Sections 401(a)(11) and 417 do not apply, such distribution may commence less than 30 days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that: (i) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and (ii) the Participant, after receiving the notice, affirmatively elects a distribution.
 
 
 
6.08 Restrictions on Distributions of 401(k) Contributions and Safe Harbor Matching Contributions. 401(k) Contributions and Safe Harbor Matching Contributions may not be distributed from this Plan prior to the earlier of:
 
 
 
(a) retirement, severance from employment, death or Disability of the Participant;
 
 
 
(b) attainment of age 59  1 / 2 by the Participant, if procedures have been established by the Plan Administrator;
 
 
 
(c) occurrence of a hardship (as described in Section 13.02 of the Plan); or
 
 
 
(d) termination of the Plan without establishment of a successor plan.
 
 
 
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ARTICLE VII
 
LIMITATION ON CONTRIBUTIONS AND BENEFITS
 
 
 
7.01 Definitions. The following definitions shall apply for purposes of this Section 7.01:
 
 
 
(a) Annual Addition. “Annual Addition” means for each Plan Year the sum of the following amounts credited to a Participant’s Accounts for the Limitation Year under all Defined Contribution Plans maintained by the Employer:
 
 
 
(i) Employer contributions,
 
 
 
(ii) Employee contributions,
 
 
 
(iii) Forfeitures, and
 
 
 
(iv) Any amounts allocated to an individual medical account (as defined in Code Section 415(l)(2)) that is part of any pension or annuity plan maintained by the Employer are treated as Annual Additions to a Defined Contribution Plan. Amounts derived from contributions paid or accrued after December 31, 1985 in taxable years ending after such date that are attributable to post retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419(d)(3)) under a welfare benefit fund (as defined in Code Section 419(e)) maintained by the Employer are treated as Annual Additions to a Defined Contribution Plan. These amounts are treated as Annual Additions but are not subject to the Compensation limit set forth in Section 7.02 below.
 
 
 
Rollover Contributions made by a Participant pursuant to Section 3.08 hereof, shall not be taken into account in computing Annual Additions. Catch-Up Contributions made by a Participant pursuant to Section 3.06 hereof, shall not be taken into account in computing Annual Additions.
 
 
 
(b) Defined Contribution Plan. “Defined Contribution Plan” means a pension plan or profit sharing plan that provides for an individual account for each Participant and for benefits based solely upon the amount contributed to the Participant’s account and any income, expenses, gains, losses and any forfeitures of accounts of other Participants that may be allocated to such Participant’s account.
 
 
 
(c) Compensation. “Compensation” means compensation received from the Employer during the Plan Year that is includible in gross income for income tax purposes, including any elective deferrals (as defined in Code Section 402(g)(3)) and amounts contributed or deferred by the Employer at the election of the Employee and that is not includible in the gross income of the Employee by reason of Code Section 125, 132(f)(4) or 457.
 
 
 
(d) Limitation Year. “Limitation Year” means the Plan Year.
 
 
 
7.02 Limitation on Annual Additions. Any other provision of this Plan to the contrary notwithstanding, the maximum Annual Addition to the Accounts of any Participant
 
 
 
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under the Plan and any other Defined Contribution Plan maintained by an Employer may not exceed the lesser of:
 
 
 
(a) $40,000 (as adjusted under Code Section 415(d)), or
 
 
 
(b) 100% of a Participant’s Compensation for the Limitation Year.
 
 
 
If, as the result of a reasonable error in estimating a Participant’s Compensation, the allocation of forfeitures, or under other limited facts and circumstances as may be provided under the Regulations to Code Section 415, the Annual Addition exceeds the maximum under this and any other Defined Contribution Plan maintained by the Employer, the Plan Administrator shall distribute an amount of the Participant’s 401(k) Contributions necessary to eliminate the excess Annual Addition, or as much of the excess as possible, as permitted by Code Section 415 or the regulations thereunder. Such distributions shall first be made from amounts of the Participant’s 401(k) Contributions that did not receive an associated Matching Contribution. If the Plan Administrator distributes matched amounts pursuant to the preceding sentence, the Plan Administrator shall reduce from the Participant’s Account any Matching Contributions attributable to such returned 401(k) Contributions, and utilize the reduced Matching Contributions to reduce the Employer contribution required for the next succeeding Plan Year. Any such sums shall not share in the gains or losses of the Trust Fund.
 
 
 
7.03 Limitation of Benefits Under All Plans. For Plan Years beginning before January 1, 2000, if an Employee was (or had been) a Participant under the Plan and a defined benefit plan maintained by the Employer, the sum of the defined contribution fraction and the defined benefit fraction for any Limitation Year could not exceed 1.0 as computed under the terms and conditions as set forth under Code Section 415(e). If the sum exceeded 1.0, the Participant’s defined contribution fraction was reduced until the sum equaled 1.0. The defined benefit plan fraction and the defined contribution fraction were defined in Code Section 415(e).
 
 
 
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ARTICLE VIII
 
NONDISCRIMINATION REQUIREMENTS
 
 
 
8.01 Definitions. The following definitions shall apply for purposes of this Article VIII:
 
 
 
(a) Actual Contribution Percentage. “Actual Contribution Percentage” means the average (expressed as a percentage) of the Actual Contribution Ratios of the Participants in a group.
 
 
 
(b) Actual Contribution Ratio. “Actual Contribution Ratio” means the ratio (expressed as a percentage) of the Participant’s Employee Contributions and Matching Contributions to the Plan for the Plan Year (and any other plan that is aggregated with the Plan for purposes of meeting the nondiscrimination requirements of Code Section 401(m)) to the Participant’s Compensation for the Plan Year. The Actual Contribution Ratio of a Participant who is eligible, but neither makes Employee Contributions nor receives Matching Contributions is zero. An Actual Contribution Ratio for a Participant who has met the requirements of Section 2.01(a), but not the requirements of 2.01(b), is not calculated or included in the calculation of the Actual Contribution Percentage.
 
 
 
(c) Actual Deferral Percentage. “Actual Deferral Percentage” means the average (expressed as a percentage) of the Actual Deferral Ratios of the Participants in a group.
 
 
 
(d) Actual Deferral Ratio. “Actual Deferral Ratio” means the ratio (expressed as a percentage) of the Participant’s Elective Contributions for the Plan Year (under the Plan and any other plan that is aggregated with the Plan for purposes of meeting the nondiscrimination requirements of Code Section 401(k)) to the Participant’s Compensation for the Plan Year. At the option of the Plan Administrator, Qualified Matching Contributions and/or Qualified Nonelective Contributions may be included for purposes of determining each Participant’s Actual Deferral Ratio. The Actual Deferral Ratio of a Participant who is eligible but has no Elective Contributions, Qualified Matching Contributions or Qualified Nonelective Contributions is zero. The Actual Deferral Ratio for a Participant who has met the requirements of Section 2.01(a) but has no Elective Contributions is zero.
 
 
 
(e) Compensation. “Compensation” means compensation received from the Employer during the Plan Year that is includible in gross income for income tax purposes, including any amounts contributed by the Employer pursuant to the election of the Employee and that is not includible in the gross income of the Employee by reason of Code Section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b).
 
 
 
(f) Elective Contributions. “Elective Contributions” means 401(k) Contributions and any other Employer contributions made to the Plan, and any other plan that is aggregated with the Plan for purposes of meeting the nondiscrimination requirements of Code Section 401(k), that were subject to a cash or deferred arrangement.
 
 
 
(g) Employee Contributions. “Employee Contributions” means any contributions to the Plan (and any other plan that is aggregated with the Plan for purposes of meeting the
 
 
 
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nondiscrimination requirements of Code Section 401(m)) that are designed or treated as after-tax Employee contributions and are allocated to a separate account to which attributable earnings and losses are allocated.
 
 
 
(h) Excess Contributions. “Excess Contributions” means the excess of: (i) the Elective Contributions, Qualified Matching Contributions and/or Qualified Nonelective Contributions of a Highly Compensated Employee for such Plan Year, over (ii) the maximum amount of such contributions permitted under the limits determined in accordance with Section 8.03 hereof.
 
 
 
(i) Excess Aggregate Contributions. “Excess Aggregate Contributions” means the excess of: (i) the Employee Contributions and Matching Contributions actually made by or on behalf of a Highly Compensated Employee for such Plan Year, over (ii) the maximum amount of such contributions permitted under the limits determined in accordance with Section 8.03 hereof.
 
 
 
(j) Highly Compensated Employee. The term “Highly Compensated Employee” or “HCE” means any Employee who performs service for an Employer during the Plan Year and who: (i) was a 5-percent owner during the year or the preceding year; or (ii) for the preceding year received Compensation from the Employers in excess of $90,000 (as adjusted pursuant to Code Section 415(d)) and was in the top-paid group of employees for such preceding year.
 
 
 
An Employee is in the top-paid group of Employees for any year if such Employee is in the group consisting of the top 20% of the Employees when ranked on the basis of Compensation paid during such year. For purposes of determining the number of Employees in the top-paid group (but not for identifying the particular Employees in the top-paid group), certain Employees may be excluded in accordance with Code Section 414(q)(5).
 
 
 
A former employee will be treated as an HCE if he or she was an HCE for (i) the separation year, or (ii) any Plan Year ending on or after the Employee’s 55 th birthday.
 
 
 
Before determining who are Highly Compensated Employees, Code Sections 414(b), (c), (m), (n) and (o) shall first be applied.
 
 
 
(k) Matching Contributions. “Matching Contributions” means:
 
 
 
(i) an Employer contribution made to the Plan (or any plan required to be aggregated with the Plan for purposes of the nondiscrimination requirements of Code Section 401(m)) on account of Employee Contributions to the Plan;
 
 
 
(ii) an Employer contribution made to the Plan (or any plan required to be aggregated with the Plan for purposes of the nondiscrimination requirements of Section 401(m)) on account of an Elective Contribution to the Plan; or
 
 
 
(iii) a forfeiture allocable on the basis of Excess Aggregate Contributions.
 
 
 
A contribution made by the Employer in order to meet the Top Heavy minimum contribution requirements of Article XVI may not be treated as a Matching Contribution.
 
 
 
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(l) Non-Highly Compensated Employee. “Non-Highly Compensated Employee” or “Non-HCE” means any Employee who is not a Highly Compensated Employee.
 
 
 
(m) Qualified Matching Contributions. “Qualified Matching Contributions” means Matching Contributions that are fully vested at the time of contribution and are subject to the withdrawal restrictions of Section 14.02.
 
 
 
(n) Qualified Nonelective Contributions. “Qualified Nonelective Contributions” means Employer contributions, other than Elective Contributions and Matching Contributions, that are fully vested at the time of contribution and are not subject to the withdrawal restrictions of Section 14.02.
 
 
 
8.02 Nondiscrimination Requirements for 401(k) Contributions.
 
 
 
(a) Actual Deferral Percentage Test. In no event shall the Actual Deferral Percentage of Participants who are HCEs exceed the Actual Deferral Percentage of the Participants who are Non-HCEs by more than the greater of:
 
 
 
(i) 125% of the Actual Deferral Percentage for Participants who are Non-HCEs, or
 
 
 
(ii) The lesser of 200% of the Actual Deferral Percentage for Participants who are Non-HCEs or two percentage points higher than the Actual Deferral Percentage for Participants who are Non-HCEs.
 
 
 
(b) Excess Contributions. If the Plan does not satisfy the Actual Deferral Percentage Test for nondiscrimination in Code Section 401(k) for any Plan Year, then the Excess Contributions for such Plan Year (plus any income and minus any loss allocable thereto as calculated in accordance with Section 8.02(c)) shall be distributed to the HCEs by the last day of the following Plan Year, as determined under this Section. If such Excess Contributions are distributed more than 2  1 / 2 months after the last day of the Plan Year in which such Excess Contributions arose, a 10% excise tax will be imposed on the Company or Employer maintaining the Plan with respect to such amounts. The portion of the Excess Contributions attributable to an HCE is determined as follows:
 
 
 
First, the Plan Administrator shall determine the dollar amount of Excess Contributions for each affected HCE, by reducing the Actual Deferral Ratio for each HCE whose Actual Deferral Ratio(s) is the highest at any one time in the following manner until the ADP Test is satisfied:
 
 
 
(i) The Actual Deferral Ratio of each HCE whose Actual Deferral Ratio is the greatest shall be reduced by one-hundredth (1/100) of one percentage point.
 
 
 
(ii) If more reduction is needed, the Actual Deferral Ratio of each HCE whose Actual Deferral Ratio is the greatest (including the Actual Deferral Ratio of any HCE whose Actual Deferral Ratio was adjusted under step (i)) shall be reduced by one-hundredth (1/100) of one percentage point.
 
 
 
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(iii) If more reduction is needed, the procedures in step (ii) shall be repeated.
 
 
 
However, in applying steps (i) through (iii) above, rather than actually distributing the amount of 401(k) Contributions necessary to reduce the Actual Deferral Ratio of each affected HCE to an amount sufficient to satisfy the ADP Test in order of such HCE’s Actual Deferral Ratios, the total of the dollar amounts calculated in steps (i) through (iii) above (the “Excess Contributions”) will be determined and distributed as follows:
 
 
 
(iv) The 401(k) Contributions of the HCE with the highest dollar amount of 401(k) Contributions will be reduced by the amount required to cause that HCE’s 401(k) Contributions to equal the dollar amount of the 401(k) Contributions of the HCE with the next highest dollar amount of 401(k) Contributions. Then this amount would be distributed to the HCE with the highest dollar amount of 401(k) Contributions. However, if a lesser reduction, when added to the total dollar amount already distributed under this step, would equal the total Excess Contributions, then the lesser dollar amount will be distributed.
 
 
 
(v) If the total amount distributed under step (iv) is less than the total Excess Contributions, then the step (iv) will be repeated.
 
 
 
Any refund made in accordance with this Section to a Participant shall be drawn from the Participant’s 401(k) Contributions Account. Any such amounts shall be drawn first from a Participant’s Elective Deferrals that are not eligible for matching under Section 3.02.
 
 
 
Matching Contributions with respect to such distributed 401(k) Contributions shall be forfeited (unless paid to the Participant due to a correction under the Actual Contribution Percentage correction).
 
 
 
The amount of Excess Contributions to be distributed shall be reduced by excess 401(k) Contributions previously distributed pursuant to Section 3.02(h) for the taxable year ending in the same Plan Year. Furthermore, excess 401(k) Contributions to be distributed for a taxable year pursuant to Section 3.02(h) will be reduced by Excess Contributions previously distributed pursuant to this Section 8.02(b) hereof for the Plan Year beginning in such taxable year.
 
 
 
(c) Allocation of Income . Excess 401(k) Contributions under Section 3.02(h) and Excess Contributions under this Section will be adjusted for any income or loss up to the date of distribution. Such income or loss will be computed according to a reasonable method permitted under Treas. Reg. § 1.401(k)-1(f)(4).
 
 
 
8.03 Nondiscrimination Requirements for Matching Contributions and Employee Contributions.
 
 
 
(a) Actual Contribution Percentage Test. In no event shall the Actual Contribution Percentage of Participants who are HCEs exceed the Actual Contribution Percentage of the Participants who are Non-HCEs by more than the greater of:
 
 
 
(i) 125% of the Actual Contribution Percentage for Participants who are Non-HCEs, or
 
 
 
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(ii) The lesser of 200% of the Actual Contribution Percentage for Participants who Non-HCEs or two percentage points higher than the Actual Contribution Percentage for Participants who are Non-HCEs.
 
 
 
(b) Excess Aggregate Contributions. If the plan fails the Actual Contribution Percentage Test for nondiscrimination under Code Section 401(m), the Excess Aggregate Contributions for such Plan Year (plus any income and minus any loss allocable thereto including the period between the end of the Plan Year and the date of distribution or forfeiture) shall be distributed to the HCEs by the last day of the following Plan Year, as determined under this Section. If such Excess Aggregate Contributions are distributed more than 2  1 / 2 months after the last day of the Plan Year in which such excess amounts arose, a 10% excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts.
 
 
 
The portion of the Excess Aggregate Contributions attributable to an HCE is determined under the procedures specified in Section 8.02(b). Any refund made to a Participant in accordance with this Section shall be drawn from his or her Matching Contributions Account. Notwithstanding the foregoing, if a Participant does not have a 100% nonforfeitable right to his or her Matching Contributions Account under Section 5.03, the forfeitable portion of any amount withdrawn from the Participant’s Contributions Account shall be forfeited and the vested portion shall be distributed to the Participant.
 
 
 
(c) Allocation of Income. Excess Aggregate Contributions will be adjusted for any income or loss up to the date of distribution. Such income or loss will be computed according to a reasonable method permitted under Treas. Reg. §1.401(k)-1(f)(4).
 
 
 
8.04 Distribution Rules for Excess Contributions and Excess Aggregate Contributions.
 
 
 
(a) Income or loss attributable to Excess Contributions and/or Excess Aggregate Contributions shall be determined in the same proportion that the amount of the Participant’s Employee Contributions or Matching Contributions distributed bears to the balance of his or her appropriate Account.
 
 
 
(b) The distribution of Excess Contributions, Excess Aggregate Contributions, and any income thereon may be made without the consent of the Participant or his or her spouse, and shall be considered as income to the Participant, except to the extent of Employee Contributions distributed, for purposes of Code Section 61.
 
 
 
(c) The Plan Administrator may re-characterize Elective Deferrals as Employee Contributions as an alternative to distributing Excess Contributions, provided the following requirements are met:
 
 
 
(i) The amount of recharacterized Elective Contributions, when combined with the HCE’s other Employee Contributions, does not exceed any limit on Employee Contributions to the Plan, including the nondiscrimination restrictions provided in Section 8.03.
 
 
 
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(ii) The recharacterized Elective Contributions must be considered as Employee Contributions for the Plan year in which the Elective Contributions were made.
 
 
 
8.05 Applicability to Safe Harbor Plan . For each Plan Year in which the Employer makes Safe Harbor Matching Contributions pursuant to Section 3.03 that satisfy the requirements of Code Sections 401(m)(11), Sections 8.01 through 8.04 hereof will not apply.
 
 
 
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ARTICLE IX
 
TRUST FUND AND INVESTMENT FUNDS
 
 
 
9.01 Individual Investment Funds. The Company shall direct the Trustee to establish certain Investment Funds within the Trust Fund, including a Company Stock Fund. A Participant may direct the investment of his or her Accounts, subject to the terms of Section 9.02 below. The Company may establish additional Investment Funds or remove an Investment Fund from the Plan from time to time in its sole discretion.
 
 
 
9.02 Direction of Individual Investment Funds. A Participant may, in any manner made available by the Plan Administrator, direct the manner in which all contributions and allocations to the Participant’s 401(k) Contributions Account, Profit Sharing Contributions Account, Matching Contributions Account, Rollover Contributions Account and Prior Plan Account shall be invested (an “Investment Election”). The Participant may direct the investment of such Accounts in one or more of the Investment Funds, in increments of at least 1%.
 
 
 
(a) A Participant may change the investments of his or her 401(k) Contributions Account, Profit Sharing Contributions Account, Matching Contributions Account, Rollover Contributions Account and Prior Plan Account daily; provided however, that the Plan Administrator may impose restrictions on excessive trading by Participants. A Participant may make changes in the Investment Election at any time by written election filed with the Plan Administrator, or by such other method, such as a voice response system, that the Plan Administrator makes available. Each change shall be effective as soon as practicable following receipt, but in no event later than 5 business days following the receipt of the election. The Participant may elect to invest future contributions differently than present Account balances.
 
 
 
(b) The Trustee shall revalue the assets of each Investment Fund at their fair market value as of each Valuation Date. The Accounts of each Participant shall then be adjusted by apportioning the Investment Fund, including income, as thus revalued, among Participants’ Accounts in proportion to the value of their respective interests in the Investment Fund immediately preceding such revaluation.
 
 
 
(c) The Plan is intended to constitute a plan described in Section 404(c) of ERISA and Title 29 of the Code of Federal Regulations Section 2550.404c-1. The Trustee, Plan Administrator and any other fiduciary of the Plan are relieved of liability for losses that are the direct and necessary result of investment instructions given by a Participant or beneficiary.
 
 
 
(d) If the Participant fails to direct 100% of his or her 401(k) Contributions Account, Profit Sharing Contributions Account, Matching Contributions Account, Rollover Contributions Account and Prior Plan Account to an Investment Fund, the balance not directed shall be invested in such Investment Fund as the Plan Administrator deems to be the most conservative. In the event the Participant’s investment elections exceed 100% of his or her Accounts, the balance shall be invested among the Participant’s selected Investment Funds, on a pro rata basis, to equal 100%.
 
 
 
9.03 Direction of ESOP Accounts. Section 9.03 shall apply only to the ESOP Accounts of the Plan.
 
 
 
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(a) Notwithstanding the provisions of Section 9.02, a Participant is not permitted to direct the manner in which amounts held in the Participant’s ESOP Account shall be invested, except as otherwise provided in the remainder of this Section 9.03.
 
 
 
(b) Definitions.
 
 
 
(i) “Qualified Participant” means a Participant who has attained age 55 and who has completed at least ten Years of Service (as that term is defined in the first paragraph Section 1.28 for purposes of determining eligibility to participate in the Plan). For purposes of this subsection, all service that a Participant had with an Acquired Employer shall be credited toward Years of Service.
 
 
 
(ii) “Qualified Election Period” means the Plan Year in which a Participant becomes a Qualified Participant and the five succeeding Plan Years thereafter.
 
 
 
(c) Election by Qualified Participants. Each Qualified Participant shall be permitted to direct the Plan, within 90 days following the end of a Plan Year in the Qualified Election Period, as to the investment of 25% of the value of that portion of the Participant’s Account invested in Qualifying Employer Securities. A Qualified Participant in the final year of his or her Qualified Election Period may direct the Plan as to the investment of 50% of the value of that portion of his or her Account. Amounts for which diversification elections pursuant to this Section 9.03 are made will reduce the amount to which any future election under this Section in a later Plan Year may be applied.
 
 
 
(d) Method of Directing Investment. The Participant’s direction shall be provided to the Plan Administrator in writing; shall be effective no later than 180 days after the close of the Plan Year to which the direction applies; and shall specify which, if any, of the options set forth in Section (e) below the Participant selects.
 
 
 
(e) Investment Options. The Plan shall give each Qualified Participant an opportunity to elect between the following:
 
 
 
(i) To have the Plan distribute (notwithstanding Code Section 409(d)) the portion of the Participant’s Account that is covered by the election within 90 days after the last day of the period during which the election can be made. This paragraph (e)(i) shall apply notwithstanding any other provision of the Plan other than such provisions as require the consent of the Participant to a distribution with a value in excess of $5,000. If the Participant does not consent, such amount shall be retained in this Plan.
 
 
 
(ii) In lieu of distribution under Section 9.03(e)(1) hereof, the Qualified Participant who has the right to receive a cash distribution under Section 9.03(e)(i) hereof may direct the Plan to transfer the portion of the Participant’s Account that is covered by the election to another qualified plan of the Employer which accepts such transfers, provided that such Plan permits Employee-directed investment and does not invest in Qualifying Employer Securities to a substantial degree. Such transfer shall be made no later than 90 days after the 1st day of the period during which the election can be made.
 
 
 
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(iii) In lieu of alternatives (i) and (ii) of this Section 9.03(e), the Participant shall be provided an opportunity to select among at least three investment options to include, but not limited to, a stock fund, a bond fund and a money market or cash equivalent fund. The Participant’s election shall be made in accordance with rules and procedures established by the Committee with amounts invested in one or more funds in increments of at least 10%.
 
 
 
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ARTICLE X
 
AMENDMENT OR TERMINATION
 
 
 
10.01 Amendment. The Company reserves the power, right and authority, at any time and from time to time, to amend in whole or in part either retroactively or prospectively any or all of the provisions of the Plan without the consent of any Employer or Participant. Such amendment shall be stated in a written instrument adopted or executed by the Company. The Company may delegate its power, right and authority to amend the Plan to the Plan Administrator.
 
 
 
Upon the Company’s adoption or execution of any amendment, the Plan shall be deemed to have been amended and the Company, the Employers and all Plan Participants and their beneficiaries shall be bound thereby; provided, however, that no amendment shall:
 
 
 
(a) authorize, cause or permit any part of the Trust Fund (other than such part as is required to pay taxes and reasonable administrative expenses) to be used or diverted to purposes other than the benefit of the Participants, former Participants or their beneficiaries or estates (except as described in Section 16.03);
 
 
 
(b) affect the rights, duties or responsibilities of the Trustee without its consent; or
 
 
 
(c) have any retroactive effect so as to deprive any Participant of his or her nonforfeitable interest already accrued, or eliminate an optional form of benefit, except only that any amendment may be made retroactive which is necessary to conform the Plan to mandatory provisions of Federal or State law, regulations or rulings.
 
 
 
10.02 Plan Termination or Discontinuance of Contributions. The Company shall have the right, at any time, to terminate the Plan. Upon such termination, or any partial termination, the entire interest of each affected Participant’s Accounts shall become nonforfeitable. Upon the discontinuance of Employer contributions or suspension thereof on other than a temporary basis, the entire interest of each affected Participant’s Accounts shall become nonforfeitable. Any unallocated funds (other than funds attributable to excess contributions and held in a suspense account) existing at the time of such termination or discontinuance shall be allocated to the then affected Participants in the same manner as Employer contributions under Section 4.02. Distribution upon Plan termination shall be made in accordance with the provisions of Article VI of the Plan.
 
 
 
10.03 Merger, Consolidation or Transfer of Assets. The Company may merge or consolidate the Plan with, or transfer the Plan’s assets or liabilities to, any other plan, provided each Participant would receive a benefit immediately after such merger, consolidation or transfer, if the successor plan then terminated, that is equal to or greater than the benefit the Participant would have received immediately prior to such merger, consolidation or transfer if the Plan were to have terminated on such date.
 
 
 
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ARTICLE XI
 
ADMINISTRATION
 
 
 
11.01 Plan Administrator’s Powers and Duties. The Plan Administrator shall administer the Plan in accordance with its terms, and shall have all powers necessary to administer the Plan in accordance with the provisions set forth in the Plan. The Plan Administrator shall have the discretion to interpret the Plan and shall determine all questions, whether of law or of fact or mixed questions of law and fact, arising in the administration, interpretation and application of the Plan. Any such determination by the Plan Administrator shall be con