BANKNORTH GROUP, INC. 401(k) PLAN

The Banknorth Group, Inc. 401(k) Plan (the “Plan”) set forth herein is effective generally January 1, 2004 (“Effective Date”). The Plan is a continuation of the Banknorth Group, Inc. Thrift Incentive Plan, which was last amended and restated effective generally January 1, 1996, the Banknorth Group, Inc. Profit Sharing and Employee Stock Ownership Plan, which was last amended and restated effective generally January 1, 1997, reflecting the merger of such plans as of January 1, 2001, and the subsequent merger into this Plan of the Predecessor Plans listed in the Appendix. The provisions of the Plan shall apply to eligible employees who terminate employment with Banknorth Group, Inc. and all affiliated companies on or after January 1, 2004, except as is otherwise indicated herein or may be required in accordance with applicable law.

The Plan is intended to qualify as a profit-sharing plan with a cash or deferred arrangement under Section 401(a) and (k) of the Internal Revenue Code of 1986, as amended (“Code”), as a stock bonus plan under Section 401(a) of the Code, and as an employee stock ownership plan under Section 4975(e)(7) of the Code. The related Trust is intended to be exempt from federal income tax under Section 501(a) of the Code. The Plan and Trust are further intended to comply with all applicable requirements of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan and trust agreement shall be construed, wherever possible, so as to maintain such qualified and tax-exempt status and to satisfy the applicable requirements of ERISA.

ARTICLE I. Definitions

When the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary. Additional words and phrases are defined in the text of the Plan. Words in the masculine gender shall be construed to include the feminine gender, and words in the singular shall be construed to included the plural and vice versa, unless the context clearly indicates otherwise.

1.01 “Acquisition Loan” means a loan (or other extension of credit) made to the Trustee for the purpose of financing the acquisition of Stock or repaying a prior Acquisition Loan pursuant to Article VII, which loan may constitute an extension of credit to the Trustee and the Trust Fund from a Party in Interest and is intended to fall within the scope of the exemptions set forth in ERISA Section 408(b)(3) and Code Section 4975(d)(3).

1.02 “Actual Deferral Percentage” means, for any Plan Year, the average of the ratios, calculated separately for each Participant in a specified group of Participants, of (a) the amount of the Salary Deferrals actually paid to the Trust on behalf of each such Participant for such Plan Year, over (b) the total Earnings paid to each such Participant during such Plan Year. Prior to computing such average, the ratio of each Participant shall be expressed as a percentage that is rounded to the nearest one hundredth of one percent (0.01%). If a Participant does not make any Salary Deferrals for the Plan Year, such Participant’s ratio for such year shall be zero. At the election of the Plan Administrator, Matching Contributions and Qualified Nonelective Contributions may be treated as Salary Deferrals in accordance with the provisions of Treas. Reg. § 1.401(k)-l(b)(5), which is incorporated by reference herein. Any Salary Deferrals or Qualified Nonelective Contributions that are taken into account in determining the Average Contribution Percentage for a Plan Year shall be disregarded in determining the Actual Deferral Percentage for such year.

Notwithstanding the foregoing, for purposes of determining whether the Early Participant Deferral Portion of the Plan meets the requirements of Section 3.04(a) with respect to any Plan Year, the Actual Deferral Percentage shall be calculated by taking into account only Participants who have not completed one Year of Service for the part of the Plan Year during which they benefited under the Early Participant Deferral Portion and by excluding (a) the Salary Deferrals (plus, at the election of the Company, any Qualified Nonelective Contributions) made on behalf of such Participants for any part of the Plan Year during which they benefited under the Safe Harbor Deferral Portion of the Plan and (b) such Participants’ Earnings for any part of the Plan Year during which they benefited under the Safe Harbor Deferral Portion of the Plan.

1.03 “Affiliate” means an organization that is a member of a “controlled group” (as defined in Section 414(b) or (c) of the Code) or an “affiliated service group” (as defined in Section 414(m) of the Code) with Banknorth Group, Inc., and any other entity required to be aggregated with Banknorth Group, Inc. under regulations promulgated under Section 414(o) of the Code; provided, however, that for purposes of Section 5.04, the definitions prescribed by Section 414(b) and (c) of the Code are to be modified as provided by Code Section 415(h).

1.04 “Aggregate Account” means the account established and maintained by the Trustee for each Participant that reflects the Participant’s share of the Trust Fund and separately reflects the balance of the following sub-accounts: Salary Deferral Contribution Account, Matching Contribution Account, ESOP Account, Discretionary Contribution Account, Rollover Contribution Account, and Predecessor Plan Account(s) (to the extent not included in the foregoing). Effective for Plan Years for which the requirements of Code Sections 401(k)(12)(B) and 401(m)(11) are satisfied, the Trustee shall assure that each Participant’s Aggregate Account separately reflects the balance of such account attributable to Matching Contributions paid for such years.

1.05 “Annuity Starting Date” means the first day of the first period for which an amount is paid as a benefit under the Plan.

1.06 “Average Contribution Percentage” means, for any Plan Year, the average of the ratios, calculated separately for each Participant in a specified group of Participants, of (a) the amount of the Matching Contributions paid on behalf of each such Participant for such Plan Year, over (b) the total Earnings paid to each such Participant during such Plan Year. Prior to computing such average, the ratio of each Participant shall be expressed as a percentage that is rounded to the nearest one hundredth of one percent (0.01%). At the election of the Plan Administrator, Salary Deferrals and Discretionary Contributions shall be treated as Matching Contributions in accordance with the provisions of Treas. Reg. §1.401(m)-l(b)(5), which is incorporated by reference herein. Any Matching Contributions or Discretionary Contributions that are taken into account in determining the Actual Deferral Percentage for a Plan Year shall be disregarded in determining the Average Contribution Percentage for such year.

Notwithstanding the foregoing, for purposes of determining whether the Early Participant Match Portion of the Plan meets the requirements of Section 4.03(a) with respect to any Plan Year, the Average Contribution Percentage shall be calculated by taking into account only Participants who have not completed one Year of Service for the part of the Plan Year during which they benefited under the Early Participant Match Portion and by excluding (a)  the Matching Contributions (plus, at the election of the Company, any Salary Deferral or Discretionary Contributions that may be taken into account) made on behalf of such Participants for any part of the Plan Year during which they benefited under the Safe Harbor Match Portion of the Plan and (b) such Participants’ Earnings for any part of the Plan Year during which they benefited under the Safe Harbor Match Portion of the Plan.

1.07 “Beneficiary” means the person, trust, estate or other entity last designated by a Participant to receive benefits which may be payable on account of the death of the Participant; provided, however, that in the case of a married Participant, the Participant’s spouse shall be the Beneficiary unless the Participant’s spouse waives his or her rights as the Beneficiary, the Participant is legally separated or has been abandoned and the Participant has a court order to such effect, or the Participant’s current spouse cannot be located. A Participant may at any time during his or her lifetime change or revoke a Beneficiary designation, provided that such action may not be taken without subsequent spousal consent unless the original consent expressly permits designation by the Participant without any requirement of further spousal consent. Any consent by the Participant’s spouse to waive rights to death benefits must be in writing, must acknowledge the effect of such waiver and must be witnessed by a notary public. The Participant’s spouse may not revoke consent to a specific waiver of a joint and survivor form of benefit.

1.08 “Board” means the Board of Directors of Banknorth Group, Inc. (or, before May 10, 2000, Peoples Heritage Financial Group, Inc.), as constituted from time to time.

1.09 “Break in Service” means a vesting computation period beginning on or after January 1, 1976, during which an Employee is credited with no more than five hundred (500) Hours of Service.

(a)   In determining whether an Employee has completed at least five hundred (500) Hours of Service during a vesting computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight (8) Hours of Service per day of such absence. An absence from work for maternity or paternity reasons shall mean an absence by reason of the individual’s pregnancy, the birth of the individual’s child, a child’s placement with the individual in connection with the individual’s adoption of such child, or the individual’s caring for such child for a period beginning immediately following such birth or placement. Hours of Service hereunder shall be credited to the computation period in which the absence begins if such crediting is necessary to prevent a Break in Service in that period, or in all other cases, in the following computation period.

(b)   Notwithstanding anything to the contrary in this Section, employment with the Company and its Affiliates shall not be deemed to have been interrupted by a Break in Service solely by reason of a leave of absence granted by the Company or an Affiliate on a uniform and nondiscriminatory basis for sickness, military service, accident or other cause, provided that an Employee granted a leave of absence who fails to return to active employment at or before the expiration of such leave (other than on account of death, disability or retirement) shall, for purposes of this Plan, be deemed to have terminated employment as of the beginning of such Employee’s leave of absence.

1.10 “Calendar Quarter” means, for any Plan Year, the three-month period beginning on January 1, April 1, July 1, and October 1.

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

1.12 “Company” means Banknorth Group, Inc., known before May 10, 2000, as Peoples Heritage Financial Group, Inc.

1.13 “Company Contributions” means Fixed Contributions, Discretionary Contributions and Qualified Nonelective Contributions.

1.14 “Direct Rollover” means the direct transfer of all or a portion of an Eligible Rollover Distribution from the Plan, as elected by an eligible distributee, to an eligible retirement plan in accordance with the requirements under Section 401(a)(31) of the Code and Section 10.11.

1.15 “Disability” means that an injury or illness prevents a Participant from engaging in any substantial gainful activity by reason of an illness or injury that can be expected to result in death, or which has lasted (or can be expected to last) a continuous period of not less than twelve (12) months. Notwithstanding the foregoing, a Participant shall be deemed disabled upon becoming eligible to receive disability benefits under the terms of a long-term disability plan maintained by Company or an Affiliate.

1.16 “Discretionary Contributions” means contributions made to the Plan by the Company under Section 4.01(b).

1.17 “Discretionary Contribution Account” means a bookkeeping entry maintained by the Plan Administrator for each Participant that records the Discretionary Contributions allocated to the Participant under Article IV, adjustments for allocations of income or loss, distributions and all other information affecting the value of such account.

1.18 “Early Participant Deferral Portion” means the Salary Deferrals portion of the Plan benefiting Participants who have not completed one Year of Service.

1.19 “Early Participant Match Portion” means the Matching Contributions portion of the Plan benefiting Participants who have not completed one Year of Service.

1.20 “Earnings” means the total compensation paid by the Company to the Employee for services rendered that constitutes wages as defined in Section 3401(a) of the Code and all other payments made by the Company to an Employee for services rendered for which the Company is required to furnish the Employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or service performed. Notwithstanding the foregoing to the contrary, Earnings shall include (a) effective January 1, 1998, elective contributions made by the Company on behalf of an Employee that are not includable in income under Section 125, Section 402(e)(3), or Section 402(h) of the Code; and (b) effective January 1, 2001, elective amounts that are not includable in the gross income of the Employee by reason of Code Section 132(f). In all cases, Earnings shall be reduced by reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation and welfare benefits.

Notwithstanding the foregoing to the contrary, the annual Earnings of each Employee taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed two hundred thousand dollars ($200,000), as adjusted for cost of living increases in accordance with Code Section 401(a)(17)(B). In the event Earnings are determined based on a period of time which contains fewer than twelve (12) calendar months, the annual Earnings limit shall be an amount equal to the annual Earnings limit for the calendar year in which the period begins multiplied by a fraction, the numerator of which is the number of full calendar months and the denominator of which is twelve (12).

1.21 “Effective Date” means January 1, 2004, as to this amendment and restatement of the Plan, except as otherwise specifically provided herein or required by applicable law.

1.22 “Eligible Employee” means each Employee of a Participating Employer.

1.23 “Eligible Rollover Distribution” means any distribution to a Participant or Beneficiary from the Plan in the amount of two hundred dollars ($200) or more, or any distribution to an Employee of all or any portion of his or her benefit from another qualified trust, but excluding the following:

(a)   A distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for a specified period of ten (10) years or longer, for the distributee’s life expectancy (or the joint life expectancy of the distributee and his or her designated Beneficiary), or for the distributee’s life (or the joint lives of the distributee and his or her designated Beneficiary);

(b)   A required distribution pursuant to Section 401(a)(9) of the Code;

(c)   A return of Salary Deferrals pursuant to Section 5.04;

(d)   A corrective distribution pursuant to Section 3.02, 3.04, or 4.03;

(e)   The portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation described in Section 402(e)(4) of the Code);

(f)   A loan pursuant to Section 8.03 that is treated as a deemed distribution pursuant to Section 72(p) of the Code;

(g)   Effective for distributions made after December 31, 1998, any amount that is distributed on account of hardship;

(h)   Any similar item designated by the Commissioner of Internal Revenue as set forth in a Treasury regulation, revenue ruling, notice, or other document of general applicability.

A portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

1.24 “Employee” means any individual regularly employed, whether on a full-time or part-time basis, by the Company or any Affiliate, excluding the following: (a) any person serving solely as a director of the Company or any Affiliate, (b) any person who is an independent contractor for whom neither the Company nor any Affiliate is required to make FICA contributions, and (c) any person who is a “leased employee” of the Company or an Affiliate within the meaning of Section 414(n)(2) of the Code. The determination whether an individual is a director or independent contractor under clauses (a) and (b) shall be based upon the classification by the Employer (without regard to the classification of such individual by a third party).

As used herein, effective January 1, 1997, “leased employee” means any person who is not an employee of the Employer and who provides services to the Employer if:

(a)   such services are provided pursuant to an agreement between the Employer and any leasing organization;

(b)   such person has performed such services for the Employer (or for the Employer and any related person determined in accordance with Section 414(n)(6) of the Code) 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.

Contributions or benefits provided to a leased employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provide by the Employer. A leased employee shall not be considered an Employee if:

(aa)   he or she is covered by a money purchase pension plan providing (1) an employer contribution rate (without regard to Section 401(l) of the Code) of at least ten percent (10%) of compensation, as defined in Section 414(n)(5)(C)(iii) of the Code; (2) immediate participation; and (3) full and immediate vesting; and

(bb)   Leased employees do not constitute more than twenty percent (20%) of the Employer’s nonhighly compensated work force.

1.25 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.26 “ESOP Account” means a bookkeeping entry maintained by the Plan Administrator for each Participant that records:

(a) for Plan Years ending before the Effective Date (and on and after such date, for purposes of Sections 7.10, 7.11 and 7.12), the Participant’s interest in the Trust Fund attributable to the Separate ESOP for Plan Years ending before January 1, 2001, and to allocations of Stock or cash on and after such date resulting from payments of principal and interest on any Acquisition Loan, plus adjustments for allocations of income or loss, distributions and all other information affecting the value of such account; and

(b) for Plan Years beginning on and after the Effective Date, the Participant’s interest in the Trust Fund attributable to the Company Stock Fund (ESOP), and to allocations of Stock or cash on and after such date resulting from payments of principal and interest on any Acquisition Loan, plus adjustments for allocations of income or loss, distributions and all other information affecting the value of such account.

Each Participant’s ESOP Account shall be divided into sub-accounts reflecting the part of the ESOP Account consisting of Stock at any date of determination and the part of the ESOP Account consisting of investments other than Stock at any date of determination.

1.27 “Excess Aggregate Contributions” means, for any Plan Year, the excess of (a) the aggregate amount of contributions actually taken into account in computing the Average Contribution Percentage of the group of Participants who are Highly Compensated Employees, over (b) the maximum amount of such contributions permitted under Section 4.03 (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their individual contribution percentages, beginning with the highest such percentage).

1.28 “Excess Salary Deferrals” means, for any Plan Year, the excess of (a) the aggregate amount of Salary Deferrals actually taken into account in computing the Actual Deferral Percentage of the group of Participants who are Highly Compensated Employees, over (b) the maximum amount of such deferrals permitted under Section 3.04 (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their individual actual deferral percentages, beginning with the highest such amount).

1.29 “Fair Market Value” means, with respect to shares of Stock, the sale price at the time in question of such shares on the principal United States securities exchange registered under the Securities Exchange of 1934, as amended, on which such Stock is listed or, if such Stock is not listed on any such exchange, the sale price with respect to a share of such Stock on the NASDAQ National Market System or any system then in use; or if no quotations are available, the Fair Market Value at the time in question of a share of Stock shall be determined by independent appraisal in compliance with applicable provisions of ERISA.

1.30 “Financed Shares” means shares of Stock acquired by the Trust Fund with the proceeds of an Acquisition Loan, whether or not pledged as collateral to secure the repayment of that Acquisition Loan.

1.31 “Fixed Contributions” means contributions made to the Plan by the Company under Section 4.01(a).

1.32 “Highly Compensated Employee” means effective January 1, 1997 (and, on and after such date, for purposes of determining whether an employee was a Highly Compensated Employee for the Plan Year beginning January 1, 1996), any employee of the Company or any Affiliate who (a) at any time during the Plan Year or the preceding Plan Year is a 5-percent owner (as defined in Section 416(i)(1) of the Code), or (b) for the preceding Plan Year received Section 415 Compensation from the Company or any Affiliate in excess of eighty thousand dollars ($80,000) (or such higher amount as the Secretary of the Treasury may prescribe). A former employee of the Company or an Affiliate shall be treated as a Highly Compensated Employee if that employee was a Highly Compensated Employee when he or she separated from service or at any time after attaining age fifty-five (55).

1.33 “Hour of Service” means:

(a)   each hour during which an Employee is directly or indirectly paid, or entitled to payment, for the performance of duties,

(b)   each hour during which an Employee is directly or indirectly paid, or entitled to payment, on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability, pregnancy and any other similar condition which prevents an employee from performing duties), layoff, jury duty, military duty or leave of absence, and

(c)   each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Company or an Affiliate and for which credit is not otherwise counted.

Notwithstanding the foregoing, no Hours of Service shall be recognized for any payment made due to severance of employment or in compliance with worker’s compensation, unemployment compensation or disability insurance laws, or any payments made solely to reimburse an Employee for medical or medically-related expenses.

(d)   In the case of a payment described in Paragraph (b) above, during which no duties are performed, the number of Hours of Service counted shall be determined as follows:

(i)   If the payment for a period in which no duties are performed is calculated on the basis of a unit of time, the number of Hours of Service counted for such period shall be the number of hours regularly scheduled for performance of duties during such period.

(ii)   If the payment for a period in which no duties are performed is not calculated on the basis of a unit of time, the number of hours counted for such period shall be determined by dividing the total of such payments by the Employee’s most recent hourly rate of compensation as determined under the provisions of Department of Labor Regulation Section 2530.200b-2(b)(2)(ii), but shall not exceed the number of hours scheduled for performance of duties during such period.

(e)   Hours of service shall be credited to the computation period determined under the provisions of paragraph (c) of Department of Labor Regulation Section 2530.200b-2, which is hereby incorporated by reference into this Plan.

(f)   Solely for determining whether a Break in Service has occurred, an Employee who is absent from employment for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited but for such absence, or in any case in which such hours cannot be determined, eight (8) Hours of Service per day of such absence; provided, however, that the credit given under this Paragraph (d) for any such reason shall not exceed five hundred one (501) hours. For purposes of this Paragraph (f), absence for maternity or paternity reasons hereunder shall mean the Employee’s absence on account of pregnancy of the Employee, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of such child by such Employee, or for purposes of caring for such child for a period immediately following such birth or placement. The Hours of Service to be credited under this Paragraph (d) shall be credited in the Plan Year in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, or in all other cases, in the following Plan Year.

(g)   Nothing in this Plan shall be construed to deny any employee credit for an hour of service if such credit is otherwise required by federal law.

1.34 “Insider” means a Participant who is subject to the provisions of Section 16 of the Securities and Exchange Act of 1934 with respect to transactions involving shares of Stock.

1.35 “Matching Contributions” means Fixed Contributions made to the Plan by the Company under Section 4.01(a) for the purpose of matching Salary Deferrals in cash or stock at the rate specified in such subsection.

1.36 “Matching Contribution Account” means a bookkeeping entry maintained by the Plan Administrator for each Participant that records the Matching Contributions allocated to the Participant under Article V, adjustments for allocations of income or loss, distributions and all other information affecting the value of such account.

1.37 “Normal Retirement Age” means the first day of the month coincident with or next following the date the Participant attains age sixty-five (65).

1.38 “Participant” means any Eligible Employee who has met the requirements of Article II and is participating in the Plan, or who is a former Eligible Employee who has not received a distribution of his or her entire Vested Interest. Notwithstanding the above, an Eligible Employee who would be a Participant but for the failure to make Salary Deferrals shall be treated as a Participant for purposes of Sections 3.04 and 4.03.

1.39 “Participating Employer” means the Company and any Affiliate that adopts this Plan in accordance with the provisions of Article XV.

1.40 “Participation Agreement” means an election by the Participant that (a) authorizes the Company to withhold a portion of such Participant’s current Earnings as a Salary Deferral under Section 3.01, (b) specifies the investment funds under Article V in which the Participant’s allocable share of the Trust Fund shall be invested, and (c) designates the Beneficiary or Beneficiaries to receive the death benefits provided under Article X, or any permitted modification thereof. A Participation Agreement shall be made by such written, electronic or telephonic means and at such time as the Plan Administrator shall specify.

1.41 “Plan” means the Banknorth Group, Inc. 401(k) Plan, as set forth herein and as it may be amended from time to time.

1.42 “Plan Administrator” means a committee of not less than four (4) individuals appointed by the Board.

1.43 “Plan Affiliation Date” means the date on which a Predecessor Plan was merged into or consolidated with the Plan. The Plan Affiliation Date for each Predecessor Plan shall be separately set forth in Appendix attached to the Plan and made a part hereof.

1.44 “Plan Year” means the calendar year.

1.45 “Predecessor Plan” means each plan listed in the Appendix attached to the Plan and made a part hereof. Any defined contribution plan, maintained by a corporation or other organization that becomes a Participating Employer after the Effective Date, or of which some or all of the business and assets are acquired by, merged with or consolidated with the Company or an Affiliate after the Effective Date, shall be a Predecessor Plan if the Board of Directors authorizes such plan to be merged with this Plan.

1.46 “Predecessor Plan Account” means the aggregate value of a Predecessor Plan Participant’s interest in his or her account or accounts under a Predecessor Plan, determined as of the Plan Affiliation Date.

1.47 “Predecessor Plan Participant” means an individual who was a participant in a Predecessor Plan on the day immediately preceding such plan’s Plan Affiliation Date.

1.48 “Qualified Domestic Relations Order” means any judgment, decree, or order (including approval of a property settlement agreement) relating to the provision of child support, alimony payment, or marital property rights to a spouse, former spouse, child, or other dependent of a Participant which (a) is made pursuant to a State domestic relations law (including a community property law), (b) creates or recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits or funds payable with respect to a Participant under the Plan, and (c) satisfies the requirements of Section 414(p)(2) and (3) of the Code.

1.49 “Qualified Nonelective Contribution” means a contribution, other than a Salary Deferral, Fixed Contribution or Discretionary Contribution, made to the Plan under Section 4.01(c) which (a) is treated as a Salary Deferral, (b) is nonforfeitable when made, (c) is distributable only in accordance with the provisions of Article X that apply to Salary Deferrals, and (d) satisfies the requirements of Section 401(a)(4) of the Code.

1.50 “Rollover Contribution Account” means a bookkeeping entry maintained by the Plan Administrator for each Participant who makes a rollover contribution in accordance with Section 3.06, in which shall be recorded the amount of his or her rollover contributions, adjustments for allocations of income or loss, distributions and all other information affecting the value of such account.

1.51 “Safe Harbor Deferral Portion” means the Salary Deferrals portion of the Plan benefiting Participants who have completed one Year of Service.

1.52 “Safe Harbor Match Portion” means the Matching Contributions portion of the Plan benefiting Participants who have completed one Year of Service.

1.53 “Salary Deferrals” means amounts that a Participant elects to defer by payroll withholding from current Earnings under a Participation Agreement, which amounts are contributed to the Plan by the Company and allocated to such Participant’s Salary Deferral Contribution Account as described in Section 3.01.

1.54 “Salary Deferral Contribution Account” means a bookkeeping entry maintained by the Plan Administrator for each Participant who has elected to make Salary Deferrals in which shall be recorded the Salary Deferrals and Qualified Nonelective Contributions to be allocated on the Participant’s behalf under Articles III and IV, adjustments for allocations of income or loss, distributions and all other information affecting the value of such account.

1.55 “Section 415 Compensation” means, with respect to a Plan Year, the total compensation paid by the Company to an Employee for services rendered while an Employee that constitutes wages as defined in Section 3401(a) of the Code and all other payments by the Company to an Employee for services rendered while an Employee for which the Company is required to furnish the Employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or services performed.

(a) For Limitation Years beginning after December 31, 1991, for purposes of applying the limitations of Section 5.04, Section 415 Compensation for a Limitation Year shall mean the compensation actually paid or includable in gross income during such Limitation Year. Notwithstanding the preceding sentence, Section 415 Compensation with respect to a Participant who is permanently and totally disabled (within the meaning of Section 22(e)(3) of the Code) shall mean the compensation such Participant would have received for the Limitation Year if he or she had been paid at the rate of earnings paid immediately before becoming permanently and totally disabled; provided such imputed earnings may be taken into account only if the Participant is not a Highly Compensated Employee and contributions made on behalf of such Participant are not forfeitable when made.

(b) For purposes of applying the limitations of Section 5.04 and for purposes of Article XVII:

(i) For Limitation Years beginning after December 31, 1997, Section 415 Compensation for a year shall also include any elective deferrals within the meaning of Section 402(g)(3) of the Code and any amount that is contributed or deferred by the Employer or an Affiliate at the election of an Employee and which is not includable in the gross income of the Employee by reason of Section 125 of the Code, unless the Plan Administrator elects not to include such amounts; and

(ii) For Limitation Years beginning after December 31, 2000, Section 415 Compensation for a year shall also include any elective amounts that are not includable in gross income of the Employee by reason of Code Section 132(f).

1.56 “Separate ESOP” means the Banknorth Group, Inc. Profit Sharing and Employee Stock Ownership Plan as in effect on December 31, 2000.

1.57 “Stock” means common stock, $.01 par value per share, of Banknorth Group, Inc. (or, before May 10, 2000, Peoples Heritage Financial Group, Inc.), that is readily tradable on an established securities market or that otherwise constitutes “employer securities” within the meaning of Section 409(l) of the Code and “qualifying employer securities” within the meaning of Section 4975(e)(8) of the Code and Section 407(d)(5) of ERISA.

1.58 “Thrift Incentive Plan” means the Banknorth Group, Inc. Thrift Incentive Plan, as in effect on December 31, 2000.

1.59 “Trust” means the legal entity created under the Trust Agreement to hold the Trust Fund.

1.60 “Trust Agreement” means the separate agreement entered into by Banknorth Group, Inc. and the Trustee for the purpose of holding the Trust Fund.

1.61 “Trust Fund” means all monies, securities and assets held by the Trustee for the benefit of Participants and Beneficiaries.

1.62 “Trustee” means the trustee appointed by the Board under the Trust Agreement.

1.63 “Valuation Date” means, for any Plan Year, the last day of each Calendar Quarter and such additional dates as the Plan Administrator may designate.

1.64 “Vested Interest” means the fair market value of the Participant’s nonforfeitable interest in his or her Aggregate Account determined as of the next following Valuation Date.

1.65 “Year of Service” means:

(a)   For participation purposes, before January 1, 2002, a computation period of twelve (12) consecutive months during which an Employee is credited with at least one thousand (1,000) Hours of Service. The initial computation period shall begin with the date that the Employee first performs one Hour of Service upon commencing employment or re-employment, as the case may be, with the Company or an Affiliate. Upon completion of the initial computation period, the computation period for participation shall shift to the Plan Year and shall include the Plan Year in which the initial computation period is completed. Effective January 1, 2002, “Year of Service” means a computation period of twelve (12) consecutive months during which an Employee is continuously employed by the Employer, provided that each affected Employee shall be credited with one Year of Service hereunder for his or her computation period ending in 2002 if he or she either completes at least one thousand (1,000) Hours of Service or completes twelve (12) consecutive months of continuous employment during such computation period.

(b)   For vesting purposes, a computation period of twelve (12) consecutive months during which is an Employee is credited with at least one thousand (1,000) Hours of Service.

(1)   In the case of an Employee who commences participation in the Plan before January 1, 1998, the computation period shall begin with the date that the Employee first performs one Hour of Service upon commencing employment, and each anniversary thereafter; provided, however, that if the Employee terminates employment and is re-employed by the Company or an Affiliate, the computation period for future service shall begin with the date that the Employee first performs one Hour of Service upon re-commencing employment, and each anniversary thereafter.

(2)   In the case of a Employee who commences participation in the Plan on or after January 1, 1998, the computation period for vesting purposes shall be the Plan Year.

(c)   All Years of Service prior to and following the Effective Date, with the Company and any Affiliate, shall be recognized for participation and vesting purposes under the Plan. In the case of any Participant who was a participant in any Predecessor Plan, his or her years of service credited under the Predecessor Plan shall be credited for participation and vesting purposes under this Plan. In addition, in the case of any other Participant who was an employee of any of the following banks or other organizations (including any affiliated organizations the stock or assets of which were acquired by or merged or consolidated with the Company) on the acquisition date identified below, years of service with such bank or other organization shall be credited for participation and vesting purposes under this Plan as of the effective date stated below, provided that no year of service shall be counted more than once under this Section:

(d)   For any other Eligible Employee who was an employee of any corporation or other organization that becomes a Participating Employer after the Effective Date, or some or all of the business and assets of which are acquired by or merged or consolidated with the Participating Employer after such date, Years of Service for purposes of eligibility for participation and vesting shall include all years of service with such corporation or other organization prior to the time it became a Participating Employer, or prior to the effective date of the acquisition of its business and assets by or its merger or consolidation with the Participating Employer, to the same extent as if employees of such corporation or other organization had been employed by the Participating Employer instead of by such corporation or other organization, if the Board of Directors shall so provide by resolution or otherwise.

ARTICLE II. Participation

2.01 Eligibility . Each participant in the Plan immediately prior to the Effective Date who is an Eligible Employee on the Effective Date shall be an active Participant in this Plan as of the Effective Date. In the case of any other Eligible Employee on or after the Effective Date:

(a)   Salary Deferrals . Effective October 1, 2000, each Eligible Employee may commence participation with respect to Salary Deferrals on the first day of the month coincident with or next following his or her completion of one month of service (measured from the date on which he or she first performs an Hour of Service to the corresponding date in the following month) (“initial entry date”), provided that a timely Participation Agreement has been filed with the Plan Administrator. If the Eligible Employee does not commence participation on his or her initial entry date, then he or she may commence participation on the first day of any month thereafter by filing a timely Participation Agreement. For purposes of the Plan, a Participation Agreement is timely if it is filed with the Plan Administrator not later than the fifteenth (15 ^th ) day of the month immediately preceding the date participation is to begin.

Notwithstanding the foregoing to the contrary, effective January 1, 2002, the initial entry date of an Eligible Employee who is classified on the payroll records of the Employer as a temporary employee shall be the first day of the month coincident or next following his or her completion of one Year of Service (determined as a computation period of twelve (12) consecutive months during which the Employee is credited with at least one thousand (1,000) Hours of Service), provided that, if such employee transfers to a regular employment classification, his or her initial entry date shall be the first day of the month coinciding with or next following the later of his or her transfer date and his or her completion of one month of service.

(b)   Company Contributions. Each Eligible Employee shall become a Participant with respect to Company Contributions on the first day of the Calendar Quarter coincident with or next following his or her completion of one Year of Service.

2.02 Termination of Participation. A Participant who fails to qualify as an Eligible Employee for any reason shall be ineligible thereafter to make Salary Deferrals for any succeeding payroll periods or to share in the allocation of any future Company Contributions. Such individual again shall become a Participant as of the first day of the Calendar Quarter immediately following the date on which he or she again becomes an Eligible Employee, provided that a Participation Agreement has been filed with the Plan Administrator by the fifteenth (15 ^th ) day of the month immediately preceding such Calendar Quarter.

2.03   Special Participation Rules.

(a)   If an Eligible Employee was previously employed by CFX Corporation or any of its subsidiaries (collectively, “CFX”) immediately prior to the date on which CFX was acquired by the Company and:

(i)   is both employed by any former CFX subsidiary except Safety Fund National Bank on June 30, 1998, and a participant receiving elective deferrals under the CFX Corporation 401(k) Plan (“CFX Plan”) or the Concord Savings Bank 401(k) Plan on such date, then his or her deferral election in effect under the applicable plan on such date shall constitute his or her initial Participation Agreement under this Plan, provided that any terms of such deferral election that are not consistent with the provisions of this Plan shall be of no effect hereunder, and provided further that the Employee may file a new Participation Agreement by June 15, 1998.

(ii)   is both employed by Safety Fund National Bank on May 22, 1998, and a participant receiving elective deferrals under the CFX Plan on such date, then such Employee shall be eligible to participate in this Plan as of May 22, 1998, and his or her deferral election in effect under the CFX Plan on such date shall constitute his or her initial Participation Agreement under this Plan, provided that any terms of such deferral election that are not consistent with the provisions of this Plan shall be of no effect hereunder.

(b)   If an Eligible Employee was previously employed by ALLTEL Information Services immediately prior to the commencement of his or her employment with a Participating Employer, and commenced such eligible employment as of July 1, 2002, then:

(i)   he or she may commence participation with respect to Salary Deferrals on July 1, 2002, provided a timely Participation Agreement has been filed with the Plan Administrator; and

(ii)   effective July 1, 2002, his or her years of service with ALLTEL Information Services shall be credited for purposes of participation with respect to Company Contributions.

(c)   Notwithstanding Section 2.01(b) to the contrary, the following special rule shall be effective for the Plan Year beginning January 1, 2003 (“2003 Plan Year”). Each Eligible Employee who (i) was an eligible employee under either the Morse Payson & Noyes Incentive Savings Plan or the Arthur A. Watson & Company, Inc. Employees’ Master Retirement Plan on the day immediately preceding such plan’s Plan Affiliation Date; (ii) is credited with less than one Year of Service as of the Plan Affiliation Date; and (iii) is not a Highly Compensated Employee for the 2003 Plan Year, shall become a Participant with respect to Company Contributions on the first day of the Calendar Quarter coincident with or next following his or her completion of six months of service. This special rule shall apply only for the 2003 Plan Year, and shall be of no force or effect on and after January 1, 2004.

ARTICLE III. Participant Contributions

3.01 Salary Deferrals. A Participant may elect, subject to the right of the Plan Administrator to establish uniform and nondiscriminatory rules and, from time to time, to modify or change such rules governing the manner and methods by which Salary Deferrals shall be made, to reduce his or her current Earnings by a deferral percentage, which amount the Company shall then contribute to the Trust for allocation to the Participant’s Salary Deferral Contribution Account in accordance with the following provisions:

(a)   A Participant may elect to defer between one percent (1%) and fifty percent (50%) of his or her Earnings while a Participant, in increments of one percent (1%).

(b)   A Participant may direct the Plan Administrator to cease Salary Deferrals as soon as practicable after written notice to such effect has been delivered by such Participant to the Plan Administrator. If a Participant ceases to make Salary Deferrals, such Participant shall not be entitled to again make Salary Deferrals until the first payroll period of the following Calendar Quarter.

(c)   A Participant may increase or decrease the amount of his or her Salary Deferrals during the Plan Year. If a request for change is received by the Plan Administrator between the first day of a Calendar Quarter and the 15 ^th day of the month immediately preceding the first day of the next Calendar Quarter, then the change in deferral percentage shall be effective as of the first day of the Calendar Quarter immediately following its receipt. If the request for change is received by the Plan Administrator after the 15 ^th day of the month immediately preceding the first day of a Calendar Quarter, and on or before the 15 ^th day of the month immediately preceding the first day of the next Calendar Quarter, then the change in deferral percentage shall be effective as of the first day of such next Calendar Quarter.

(d)   The Plan Administrator may reduce or discontinue, as necessary, future Salary Deferrals to some or all of the Participants who are Highly Compensated Employees for the Plan Year in order to maintain the qualified status of the Plan or to avoid subjecting the Highly Compensated Employees to Federal income tax currently with respect to such Salary Deferrals. The amount by which a Participant’s Salary Deferrals are reduced or discontinued shall be paid to such Participant in cash.

3.02 Annual Limitation on Salary Deferrals.

(a)   Except to the extent permitted under Section 3.07 and Code Section 414(v), the Salary Deferrals that may be allocated to a Participant’s Salary Deferral Contribution Account for any taxable year shall not exceed the dollar limitation contained in Code Section 402(g) in effect for the taxable year, reduced by the amount of any employer contributions for such year on behalf of the Participant pursuant to an election to defer compensation under any qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement within the meaning of Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under Section 457 of the Code, any plan within the meaning of Section 501(c)(18) of the Code and a salary reduction agreement for the purchase of an annuity contract under Section 403(b) of the Code. For purposes of this Section, any Salary Deferrals returned to a Participant pursuant to Section 5.04 shall be disregarded.

(b)   In the event that the limitation of Paragraph (a) is exceeded with respect to any Participant, not later than April 15 of the following calendar year, the Plan Administrator shall distribute the excess deferral (plus any income and minus any loss allocable thereto), provided that the Plan Administrator has received the notice prescribed in Paragraph (c). Excess deferrals shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to excess deferrals shall be determined in the same manner in which income or loss is allocated to the Participants’ Aggregate Accounts under Article V of the Plan.

The amount of excess deferral with respect to a Participant for any calendar year shall be reduced by the amount of any contributions previously distributed to such Participant under this Article for the Plan Year beginning with or within the calendar year.

(c)   It shall be the responsibility of the Participant to notify the Plan Administrator of any excess deferral for a calendar year. Such notice shall be in writing; shall specify the amount of the excess deferral; shall state that if the excess deferral is not distributed, such excess shall be includable in the Participant’s gross income under Section 402(g) of the Code; and shall be submitted to the Plan Administrator not later than March 1 of the following calendar year. A Participant shall be deemed to have notified the Plan Administrator of an excess deferral to the extent such Participant has an excess deferral for a calendar year, taking into account only Salary Deferrals under the Plan and any other plans of the Company or its Affiliates subject to Section 402(g) of the Code.

3.03 Time and Form of Salary Deferrals. The Company shall contribute Salary Deferrals to the Trust as of the earliest date on which said contributions can reasonably be segregated from the general assets of the Participant’s Employer; provided in no event shall the date determined pursuant to this provision occur later than the fifteenth (15 ^th ) business day of the month following the month in which such contributions would otherwise have been payable to the Participant in cash (the “maximum time period”), unless the Employer extends the maximum time period as provided in 29 C.F.R. Section 2510.3-102(d).

3.04 Limitations on Actual Deferral Percentage. In the event a Participant who is a Highly Compensated Employee (“Highly Compensated Participant”) participates in two or more cash or deferred arrangements (under Section 401(k) of the Code) that have different plan years, for purposes of this Section, all such arrangements ending with or within the same calendar year shall be treated as a single arrangement. For purposes of this Section, this Plan and any other Code Section 401(k) plan maintained by the Company or any of its Affiliates shall be treated as a single plan if such plans are treated as one plan for purposes of Section 401(a)(4) or Section 410(b) of the Code or if a Highly Compensated Employee participates in such other plan. Plans may be aggregated to satisfy Section 401(k) of the Code only if such plans have the same Plan Year.

For purposes of this Section and Code Sections 401(a)(4) and 410(b), the Safe Harbor Deferral Portion of the Plan shall be disaggregated from the Early Participant Deferral Portion of the Plan. Notwithstanding any other provision of the Plan to the contrary, the Safe Harbor Deferral Portion shall be treated as meeting the requirements of Paragraph (a) below with respect to any Plan Year beginning on and after January 1, 2003, for which such portion of the Plan meets the requirements of Code Section 401(k)(12). In the event Section 4.01(a) is amended to reduce or eliminate Matching Contributions during a Plan Year such that the contribution requirements of Code Section 401(k)(12)(B) cease to be satisfied, Paragraph (a) and Section 4.03(a) shall apply to the Safe Harbor Deferral Portion with respect to the entire Plan Year.

(a)   The Actual Deferral Percentage for Highly Compensated Participants for any Plan Year commencing after December 31, 2002, shall not exceed the greater of:

(i)   the Actual Deferral Percentage for all other Participants for such Plan Year multiplied by 1.25; or

(ii)   the lesser of the Actual Deferral Percentage for all other Participants for such Plan Year multiplied by two (2), or the Actual Deferral Percentage for such Participants for such Plan Year plus two percent (2%).

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

For purposes of this Section, Salary Deferrals and Matching Contributions must be made before the last day of the twelve (12) month period immediately following the Plan Year to which such contributions relate, and any Salary Deferrals returned to a Participant pursuant to Section 5.04 shall be disregarded.

The Company shall maintain records sufficient to demonstrate compliance with this Section and the amount of any Matching Contributions used to satisfy this Section. The determination and treatment of the contributions on behalf of any Participant that are taken into account for purposes of this Section shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

3.05 Restrictions and Adjustments. The Plan Administrator may restrict the deferral percentages elected by Participants if the Plan Administrator determines such restriction is necessary to comply with Section 3.02, Section 3.04, Section 4.03 or Section 5.04.

In the event that the Actual Deferral Percentage of the Highly Compensated Participants for any Plan Year exceeds the limitations prescribed in Paragraph 3.04(a), the Plan Administrator shall, within twelve (12) months after the end of such year (and within two and one half (2½) months after the end of such year to avoid the excise tax under Code Section 4979), distribute the Excess Salary Deferrals (plus any income and minus any loss allocable thereto) to such Participants on the basis of the respective portions of the Excess Salary Deferrals attributable to each such Participant and shall designate such distribution as a distribution of Excess Salary Deferrals (plus any income and minus any loss allocable thereto).

Effective January 1, 1997, the amount of any Excess Salary Deferrals of a Highly Compensated Participant shall be determined by reducing contributions on behalf of all such Participants in the order of their respective amounts of Salary Deferrals, beginning with the highest such amount. The amount of Excess Salary Deferrals with respect to a Highly Compensated Participant for any Plan Year shall be reduced by the amount of excess deferrals previously distributed to such Participant under Section 3.02 for the calendar year ending with or within the Plan Year; provided, however, that notwithstanding the distribution of an excess deferral in accordance with Section 3.02 to a Highly Compensated Participant, such distributed amount shall be taken into account under Section 4.03.

Excess Salary Deferrals shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Salary Deferrals shall be determined by the same manner in which income or loss is allocated to Participants’ Aggregate Accounts under Article V of the Plan.

Notwithstanding the foregoing provisions of this Section to the contrary, in lieu of distributing Excess Salary Deferrals (plus any income and minus any loss allocable thereto), the Company may make Qualified Nonelective Contributions to the Plan.

3.06 Notice of Rights and Obligations. No earlier than 90 days and no later than 30 days before the beginning of each Plan Year, the Plan Administrator shall provide each Eligible Employee who meets the participation requirements of Section 2.01(a) with a written notice of his or her rights and obligations under the Plan. Notwithstanding the foregoing to the contrary, with respect to an Eligible Employee who does not receive the notice within the period described in the preceding sentence because he or she becomes eligible to participate in the Plan after the 90 ^th day before the beginning of the Plan Year, the Plan Administrator shall provide such notice during the 90-day period ending on the date such Employee meets the participation requirements of Section 2.01(a). The notice shall meet the content requirement of Section V.C. of IRS Notice 98-52, as modified by Q&A-8 of Section III of IRS Notice 2000-3 and any subsequent guidance.

In the event Section 4.01(a) is amended to reduce or eliminate Matching Contributions during a Plan Year, the Plan Administrator shall provide each Eligible Employee who meets the participation requirements of Section 2.01(a) with a supplemental notice that (a) explains the consequences of the amendment, (b) discloses the effective date of the reduction or elimination of Matching Contributions and (c) discloses that he or she has a reasonable opportunity (including a reasonable period) prior to the reduction or elimination of Matching Contributions to change his or her Salary Deferral election.

In lieu of providing any notice described in this Section to an Eligible Employee on a written paper document, the Plan Administrator may provide such notice through an electronic medium that is reasonably accessible to the Eligible Employee, provided the system under which the electronic notice is provided satisfies the requirements of Q&A-7 of Section III of IRS Notice 2000-3.

3.07 Catch-Up Contributions. All Eligible Employees who are eligible to make Salary Deferrals under this Plan and who have attained age fifty (50) before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as applicable, by reason of the making of such catch-up contributions.

Notwithstanding any other provision of the Plan to the contrary, no Matching Contribution shall be allocated with respect to any catch-up contribution.

3.08 Rollover Contributions. An Eligible Employee who has received an Eligible Rollover Distribution may transfer all or any portion of such distribution to the Trust, provided the transfer is made to the Trust not later than the sixtieth (60 ^th ) day following the day on which he or she received such distribution. In addition, an Employee who receives a distribution from an individual retirement account (within the meaning of Section 408(a) of the Code) that is attributable solely to an Eligible Rollover Distribution may transfer the entire amount distributed to the Trust, provided the transfer is made to the Trust not later than the sixtieth (60 ^th ) day following the day on which he or she received such distribution. Notwithstanding the foregoing to the contrary, an Employee who has received an Eligible Rollover Distribution solely by reason of the death of his or her spouse, or a distribution from an individual retirement account (as hereinabove defined) of amounts received by reason of the death of his or her spouse, may not transfer any portion of such distribution to the Trust. Before January 1, 1997, the amount transferred to the Trust under this Section must be one thousand dollars ($1,000) or more.

A rollover contribution shall be credited to a Rollover Contributions Account on behalf of the contributing Employee, and such Employee shall have a fully vested and nonforfeitable interest in his or her Rollover Contributions Account.

An Eligible Employee who has made a rollover contribution in accordance with this Section who has not otherwise become a Participant shall become a Participant coincident with such rollover contribution, provided that such Participant shall not have a right to defer Earnings or to share in any Matching Contributions until he or she has otherwise satisfied the eligibility requirements imposed by Article II.

Effective October 31, 2001, with respect to an Eligible Employee who was employed on such date by MetroWest Bank or Andover Savings Bank, if the Employee elects a direct rollover to this Plan of his or her vested interest in the SBERA 401(k) Plan as Adopted by MetroWest Bank or the SBERA 401(k) Plan as Adopted by Andover Savings Bank, and his or her vested interest in the applicable plan includes any outstanding loans that are not in default, then he or she may transfer such unpaid loans to this Plan. The promissory note(s) evidencing such loan(s) shall be assigned to this Plan, and the Participant’s obligation thereunder shall be as set forth in Section 8.03.

Effective August 1, 2002, with respect to an Eligible Employee who was a participant in the SBERA 401(k) Plan as Adopted by IpswichBank (“IpswichBank Plan”), if the Employee elects a direct rollover to this Plan of his or her vested interest in the IpswichBank Plan, and his or her vested interest in such plan includes any outstanding loans that are not in default, then he or she may transfer such unpaid loans to this Plan. The promissory note(s) evidencing such loan(s) shall be assigned to this Plan, and the Participant’s obligation thereunder shall be as set forth in Section 8.03.

ARTICLE IV. Company Contributions

4.01 Company Contributions. For each Plan Year, in addition to Salary Deferrals under Section 3.01, the Company shall contribute to the Plan:

(a)   Fixed Contributions, in the amount required to allocate Matching Contributions to each Participant entitled to receive such contributions for the Plan Year at the rate, for pay periods ending on or after October 1, 2001, of one dollar ($1.00) for each one dollar ($1.00) of Salary Deferrals made on behalf of the Participant up to three percent (3%) of his or her Earnings while a Participant; plus fifty cents ($0.50) for each one dollar ($1.00) of Salary Deferrals made on his or her behalf in excess of three percent (3%) and not exceeding six percent (6%) of such Earnings while a Participant.

Notwithstanding the foregoing, however, no Matching Contribution shall be allocated with respect to any excess deferral under Section 3.02, any Excess Salary Deferral under Section 3.04, or any Salary Deferral that is returned to the Participant pursuant to Section 5.04; and provided further that the Fixed Contributions for a Plan Year shall not be less than the sum of any required principal and interest payments on all Acquisition Loans.

(b)   Discretionary Contributions, if any, in such amount as may be determined by the Board; and

(c)   the Qualified Nonelective Contributions, if any, to be made on behalf of non-Highly Compensated Employees in an amount that enables the Plan to satisfy the requirements set forth in Section 3.04 or 4.03.

4.02 Time and Form of Company Contributions.

(a)   Fixed Contributions and Discretionary Contributions, if any, with respect to any Plan Year shall be paid to the Trust at such time or times as may be determined by the Company, but not later than the date prescribed by law for filing the Company’s federal income tax return for its taxable year which ends with or within such Plan Year, including extensions which have been granted for filing such return; provided that amounts contributed to allocate Matching Contributions with respect to Salary Deferrals made during a Plan Year quarter shall be paid to the Trust no later than the last day of the following Plan Year quarter. Qualified Nonelective Contributions, if any, with respect to any Plan Year shall be paid to the Trust within twelve (12) months after the end of such Plan Year.

(b)   Contributions shall be made in cash or in shares of Stock (including Treasury shares or authorized by unissued shares) to the extent that contributions are to be invested in the Company Stock Fund, as determined by the Company in its sole discretion, provided that Fixed Contributions are paid in cash in such amounts (and at such times, notwithstanding Paragraph (a)) as may be needed to provide the Trust Fund with cash sufficient to pay any currently maturing debt service obligation, including interest as well as principal, of the Trust Fund with respect to any Acquisition Loan. If and to the extent that a contribution is made in shares of Stock, the value of the shares of Stock for purposes of determining the amount of the contribution shall be the Fair Market Value of such shares on the trading day next following the day on which such contributions are delivered to the Trustee.

4.03 Special Rules for Matching Contributions. For purposes of this Section and Code Sections 401(a)(4) and 410(b), the Safe Harbor Match Portion of the Plan shall be disaggregated from the Early Participant Match Portion of the Plan. Notwithstanding any other provision of the Plan to the contrary, the Safe Harbor Match Portion of the Plan shall be treated as meeting the requirements of Paragraph (a) with respect to any Plan Year beginning on or after January 1, 2003, for which such portion of the Plan meets the requirements of Code Section 401(m)(11). In the event Section 4.01(a) is amended to reduce or eliminate Matching Contributions during a Plan Year such that the contribution requirements of Code Sections 401(k)(12)(B) and 401(m)(11) cease to be satisfied, Paragraph (a) shall apply to the Safe Harbor Portion of the Plan with respect to the entire Plan Year.

(a)   The Average Contribution Percentage for Highly Compensated Participants for any Plan Year commencing after December 31, 2002, shall not exceed the greater of:

(i)   the Average Contribution Percentage for all other Participants for such Plan Year multiplied by 1.25; or

(ii)   the lesser of the Average Contribution Percentage for all other Participants for such Plan Year multiplied by 2, or the Average Contribution Percentage for such Participants for the preceding Plan Year plus two percent (2%).

(b)   For purposes of this Section, if two or more qualified plans maintained by the Company or any of its Affiliates are treated as one plan to meet the requirements of Section 401(a)(4), Section 410(b) or Section 401(m) of the Code, such plans shall be treated as a single plan. If a Highly Compensated Participant participates in any other qualified plan maintained by the Company to which Matching Contributions or Employee contributions are made, all such contributions for Plan Years ending with or within the same calendar year shall be aggregated for purposes of this Section. If a Highly Compensated Participant participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same plan year.

(c)   To the extent Salary Deferrals are taken into account under this Section, any Salary Deferrals returned to a Participant pursuant to Section 5.04 shall be disregarded for purposes of Paragraph (a).

(d)   Notwithstanding Article IX to the contrary, any Matching Contribution that is attributable to an excess deferral under Section 3.02 or an Excess Salary Deferral shall be forfeited and shall be disregarded for purposes of Paragraph (a). Such forfeitures shall be used to reduce future Matching Contributions.

(e)   For purposes of this Section, Matching Contributions shall be treated as made for a Plan Year if such contributions are made no later than the end of the twelve (12) month period beginning on the day after the close of the Plan Year. The Company shall maintain records sufficient to demonstrate satisfaction of this Section and the amount of any Salary Deferrals taken into account under this Section. The determination and treatment of the individual contribution percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(f)   In the event that the Average Contribution Percentage of the Highly Compensated Participants for any Plan Year on or after the Effective Date exceeds the limitation of Paragraph (a) above, the Plan Administrator shall, within two and one half (2½) months after the end of such year, distribute the Excess Aggregate Contributions (plus any income and minus any loss allocable thereto) to such Participants on the basis of the respective portions of the Excess Aggregate Contributions attributable to each such Participant and shall designate such distribution as a distribution of Excess Aggregate Contributions (plus any income and minus any loss allocable thereto).

(g)   Excess Aggregate Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Aggregate Contributions shall be determined in the same manner in which income or loss is allocated to Participants’ Aggregate Accounts under Article V.

(h)   The amount of Excess Aggregate Contributions of any Highly Compensated Participant shall be determined by reducing contributions on behalf of all such Participants in the order of their respective amounts, beginning with the highest such amount. The determination of the amount of Excess Aggregate Contributions with respect to the Plan shall be made after first determining the amount of excess deferrals under Section 3.02 and second determining the amount of Excess Salary Deferrals under Section 3.04.

(i)   Notwithstanding the foregoing provisions of this Section to the contrary, in lieu of distributing Excess Aggregate Contributions (plus any income and minus any loss allocable thereto) to Highly Compensated Participants in order to comply with Paragraph (a) above for any Plan Year, the Company may make Qualified Nonelective Contributions as provided in Section 4.01(c).

4.04 Return of Contributions to the Company. Notwithstanding any other provisions of the Plan to the contrary:

(a)   Contributions to the Plan by the Company are contingent upon their deductibility under Section 404 of the Code. To the extent that a deduction for any contribution hereunder is disallowed, such contribution shall, upon the written demand of the Company, be returned to the Company by the Trustee within one year after the date of disallowance, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto.

(b)   If any contribution to the Plan is made as a result of a mistake of fact, such contribution shall, upon the written demand of the Company, be returned to the Company by the Trustee no later than one (1) year after the payment thereof, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto. The portion of any contribution returned to the Company in accordance with this Section that represents Salary Deferrals shall be paid promptly to the Participants on whose behalf such deferrals were made.

4.05 Maximum Contributions. In no event shall the contributions made by the Company for any Plan Year exceed the maximum amount that the Company is permitted to deduct for federal income tax purposes or cause the Annual Addition (as defined in Section 5.04) for any Participant to exceed the amount permitted under the Plan.

ARTICLE V. Allocations

5.01 Suspense Accounts.

(a)   All contributions and net income (or net loss) of the Trust Fund shall be held in a suspense account until allocated to Participants’ Aggregate Accounts under this Article or applied by the Trustee (as directed by the Plan Administrator) to make payments of principal or interest on any Acquisition Loan.

(b)   Any Financed Shares acquired with the proceeds of an Acquisition Loan or a prior Acquisition Loan refinanced with a new Acquisition Loan, whether or not pledged to secure repayment of an Acquisition Loan, must be credited to a separate account (the “Acquisition Loan Suspense Account”) and not to any Participant’s account. A number of shares of Stock equal to the number of Financed Shares released from the pledge securing the repayment of an Acquisition Loan (or, in the case of Financed Shares credited to the Acquisition Loan Suspense Account that are not pledged to secure repayment of an Acquisition Loan, that would have been so released had those Financed Shares been so pledged), must be withdrawn from the Acquisition Loan Suspense Account as of the Valuation Date next following the date on which the release occurs (or would have occurred) and must be allocated to the ESOP Accounts of the Participants as of that Valuation Date in the manner provided for in Section 5.02(b).

5.02 Allocation of Contributions.

(a)   Salary Deferrals shall be allocated to each Participant’s Salary Deferral Contribution Account in an amount equal to each such Participant’s designated percentage of deferred Earnings effective no later than the last day of the Calendar Quarter in which such contributions were paid to the Trustee.

(b)   Fixed Contributions shall be allocated to each Participant’s Matching Contribution Account in the amount determined under Section 4.03(a) effective no later than the last day of the Calendar Quarter in which such contributions were paid to the Trustee. Notwithstanding the preceding sentence, in the event that Fixed Contributions are applied by the Trustee to make payments of principal or interest on any Acquisition Loan, a number of shares of Stock equal to the number of Financed Shares released from the pledge securing repayment of the Acquisition Loan by such application of Fixed Contributions shall be allocated to each Participant’s ESOP Account as such Matching Contributions, and the remainder of such contributions, if any, shall be allocated in accordance with Paragraph (c). The value of the shares of Stock for purposes of determining the allocation of Matching Contributions and Discretionary Contributions, if any, shall be the average price per share (net of brokerage fees and transfer fees) of Stock sold by the Trustee for all Participants who have elected pursuant to Section 6.02(c) to reinvest shares of Stock allocated as such contributions for the payroll period in which the contributions are made.

(c)   Discretionary Contributions shall be allocated to the Discretionary Contributions Account of each Eligible Employee in the same proportion that his or her Earnings while a Participant for the applicable Plan Year bear to the total Earnings while a Participant of all Eligible Employees who are eligible to participate in allocations of Discretionary Contributions under Section 2.01(b) for such Plan Year effective no later than the last day of the Calendar Quarter in which such contributions were paid to the Trustee.

(d)   Qualified Nonelective Contributions shall be allocated to the Salary Deferral Contribution Account of each Participant who is a non-Highly Compensated Employee in the same proportion that his or her Earnings while a Participant for the applicable Plan Year bear to the total Earnings while a Participant of all Participants who are non-Highly Compensated Employees for such Plan Year effective no later than the last day of the Calendar Quarter in which such contributions were paid to the Trustee.

(e)   Rollover Contributions made by a Participant under Section 3.06 shall be allocated to his or her Rollover Contribution Account as of the Valuation Date next following the receipt of such contribution by the Trustee.

5.03 Allocation of Net Income or Loss.

(a)   As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund assets and the net income (or net loss) of the Trust Fund. The net income (or net loss) of each investment fund within the Trust Fund since the next preceding Valuation Date shall be ascertained by the Trustee and shall be determined on the accrual basis of accounting; provided, however, that such net income (or net loss) shall include any net increase or net decrease in the value of the assets of each such Fund since the next preceding Valuation Date to the extent not otherwise accrued. As soon as is practicable after each Valuation Date, the Trustee shall deliver to the Plan Administrator a written statement of such determination.

(b)   For purposes of allocations of net income (or net loss) of the Trust Fund, a Participant’s accounts shall be divided into subaccounts to reflect the investment of such accounts under Article VI. As of each Valuation Date, the Plan Administrator shall adjust such accounts of each Participant as follows:

(i)   The net income (or net loss) of each investment fund, separately and respectively, shall be allocated among the corresponding subaccounts of the Participants who had such corresponding subaccounts on the next preceding Valuation Date and each such corresponding subaccounts on such date; provided, however, that the value of such subaccounts as of the next preceding Valuation Date shall be reduced by the amount of any withdrawals or distributions made therefrom since the next preceding Valuation Date.

(ii)   The net appreciation (or net depreciation) in the value of the ESOP Assets (as defined in Section 6.04) shall be determined by taking into account expenses of the Plan with respect to such assets and excluding cash dividends with respect to shares of Stock allocated to the ESOP Accounts of the Participants as of the record date for which such dividends are declared, cash dividends with respect to shares of Stock allocated to the Acquisition Loan Suspense Account as of the record date for which such dividends are declared to the extent that such dividends are applied to pay principal and/or interest on an Acquisition Loan, and any other amount applied to pay principal and/or interest on an Acquisition Loan.

5.04 Limitation on Allocations.

(a)   For purposes of this Section, the following terms and phrases shall have the meanings specified below:

(i)   “Annual Addition” means, with respect to each Participant for any Limitation Year, the sum of (A) the Salary Deferrals allocated to the Participant’s Aggregate Account for the year; (B) the Company Contributions allocated to the Participant’s Aggregate Account for the year; provided that, to the extent permitted by Section 415(c)(6) of the Code, the portion, if any, of a Fixed Contribution applied to pay interest on one or more Acquisition Loans not later than the time prescribed by law (including permitted extensions of time) for filing the Company’s federal income tax return for the fiscal year for which the contribution is made will not be taken into account for purposes of this clause (B); (C) any forfeitures allocated to the Participant’s Aggregate Account for the year; provided that, to the extent permitted by Section 415(c)(6) of the Code, forfeitures will not be taken into account for purposes of this clause (C) to the extent that the forfeitures consist of shares of Stock purchased with the proceeds of one or more Acquisition Loans; and (D) any other amounts treated as an “annual addition” in accordance with Section 415(c)(2) of the Code.

(ii)   “Limitation Year” means the Plan Year.

(iii)   “Maximum Annual Additions” means, for any Participant for any Limitation Year beginning after December 31, 2001, and except to the extent permitted under Section 3.07 and Code Section 414(v), the lesser of (A) forty thousand dollars ($40,000), as adjusted for increases in the cost-of-living under Code Section 415(d); or (B) one hundred percent (100%) of such Participant’s Section 415 Compensation during such year, except the limitation in this Clause (B) shall not apply to any contribution for medical benefits (within the meaning of Code Sections 401(h) or 419A(f)(2)) after a Participant’s termination of employment with the Company or an Affiliate which is otherwise treated as an Annual Addition.

(b)   Notwithstanding any other provision in the Plan regarding the allocation of contributions, under no circumstances shall the Annual Additions credited to a Participant’s Aggregate Account for any Limitation Year exceed the Maximum Annual Additions for such Participant for such year. If, as a result of a reasonable error in estimating a Participant’s Earnings or because of other limited facts and circumstances, the Annual Additions which would be credited to a Participant’s Aggregate Account for a Limitation Year would nonetheless exceed the Maximum Annual Additions for such Participant for such year, the excess Annual Additions which, but for this Section, would have been allocated to such Participant’s Aggregate Account shall be disposed of as follows:

(i)   Any such excess Annual Additions in the form of Salary Deferrals, shall, to the extent such amounts would have otherwise been allocated to such Participant’s Salary Deferral Contribution Account, be returned to the Participant;

(ii)   Any such excess Annual Additions in the form of Fixed Contributions remaining in the Plan after the application of Paragraph (b)(i) above, shall, to the extent such amounts would have otherwise been allocated to such Participant as Matching Contributions, be allocated instead to a suspense account and shall be held therein until used to reduce future contributions in the same manner as a forfeiture;

(iii)   Any such excess Annual Additions in the form of Discretionary Contributions remaining in the Plan after the application of Paragraphs (b)(i) and (ii) above, shall, to the extent such amounts would have otherwise been allocated to such Participant’s Discretionary Contribution Account, be allocated instead to a suspense account and shall be held therein until used to reduce future contributions in the same manner as a forfeiture; and

(iv)   Any such excess Annual Additions in the form of Qualified Nonelective Contributions remaining in the Plan after the application of Paragraphs (b)(i), (ii) and (iii) above, shall be allocated instead to a suspense account and shall be held therein until allocated to such Participant’s Salary Deferral Contribution Account in future Limitation Years before any Salary Deferrals or Qualified Nonelective Contributions are made to the Plan on behalf of such Participant.

(c)   If a suspense account is in existence at any time during a Limitation Year pursuant to this Section, it will not participate in allocations of the net income (or net loss) of the Trust Fund.

(d)   For purposes of determining whether the Annual Additions under this Plan exceed the limitations herein provided, all defined contribution plans of the Company and its Affiliates shall be treated as one defined contribution plan. If the Annual Additions credited to a Participant’s Aggregate Account for any Limitation Year under this Plan plus the additions credited on his or her behalf under other defined contribution plans required to be aggregated pursuant to this Paragraph would exceed the Maximum Annual Additions for such Participant for such Limitation Year, the Annual Additions under this Plan and the additions under such other plans shall be reduced first, in this Plan, from Salary Deferrals above six percent (6%) of Earnings and then, as necessary, on a pro rata basis and allocated, reallocated or returned in accordance with applicable plan provisions regarding Annual Additions in excess of Maximum Annual Additions.

(e)   Effective for Limitation Years beginning before January 1, 2000, in the case of a Participant who also participates in a defined benefit plan of the Company or an Affiliate, the Annual Additions credited to the Aggregate Account of such Participant shall be reduced to the extent necessary to prevent the limitations set forth in Section 415(e) of the Code from being exceeded; provided, however, that this Paragraph (e) shall not be operative to the extent that such defined benefit plan provides for a reduction of benefits thereunder to ensure that the limitation set forth in Section 415(e) of the Code is not exceeded.

ARTICLE VI. Investment Of Contributions In General

6.01 Investment Funds. The Trustee shall establish a Company Stock Fund in accordance with Section 7.01 and one or more other Investment Funds, as the Plan Administrator shall from time to time direct. Each Investment Fund, other than the Company Stock Fund, shall be invested, as the Plan Administrator shall direct:

(a)   at the discretion of the Trustee in accordance with such investment guidelines and objectives as may be established by the Plan Administrator for such Investment Fund;

(b)   at the discretion of a duly appointed Investment Manager in accordance with such investment guidelines and objectives as may be established by the Plan Administrator; or

(c)   in such investments as the Plan Administrator may specify for such Investment Fund.

The Plan Administrator may from time to time change its direction with respect to any Investment Fund and may, at any time, eliminate any Investment Fund. Whenever an Investment Fund is eliminated, the Trustee shall promptly liquidate the assets of such Investment Fund and reinvest the proceeds thereof in accordance with the direction of the Plan Administrator.

The Trustee shall transfer to each Investment Fund such portion of the assets of the Trust as the Plan Administrator may from time to time direct in accordance with the terms of the Plan. All interest, dividends and other income received with respect to, and any proceeds realized from the sale or other disposition of, assets held in any Investment Fund shall be credited to and reinvested in such Investment Fund, and all expenses properly attributable to any Investment Fund shall be paid therefrom unless paid by the Company.

6.02 Investment of Contributions.

(a)   On and after the Effective Date, each Participant may direct that contributions made on his or her behalf shall be invested in any one or more of the Investment Funds, provided that no Participant shall be permitted to reinvest any portion of contributions to his or her ESOP Account if the Trustee determines that reinvestment would cause the ESOP Assets (as defined in Section 7.01) to fail to be invested primarily in Stock. An investment direction shall be made by such written, telephonic or electronic means as shall be prescribed by the Plan Administrator.

A Participant’s investment direction, if received by the Plan Administrator prior to the date he or she commences participation, shall be effective as of said date. If a Participant does not make an investment direction or an investment direction is not received by the Plan Administrator before the Participant commences participation, contributions on behalf of such Participant to his or her ESOP Account shall remain invested in Stock and all other contributions shall be invested in the fund which presents the least risk of loss as determined by the Plan Administrator. An investment direction received by the Plan Administrator after the date a Participant commences participation shall be effective as soon as practicable following receipt by the Plan Administrator (or by the person or persons specified by the Plan Administrator).

(b)   A Participant may modify an investment direction to have future contributions on his or her behalf invested in the Investment Funds in proportions other than those previously elected, by such written, telephonic or electronic means as shall be prescribed by the Plan Administrator. A modification shall be effective as soon as practicable following receipt by the Plan Administrator (or by the person or persons specified by the Plan Administrator).

(c)   A Participant may elect to reinvest all or a portion of the balance credited to one or more of his or her accounts in any one or more of the Investment Funds; provided that he or she may not reinvest any portion of the balance credited his or her ESOP Account that is attributable to payments of principal and interest on an outstanding Acquisition Loan on or after the Effective Date; and provided further that no Participant shall be permitted to reinvest any portion of such account if the Trustee determines that reinvestment would cause the ESOP Assets (as defined in Section 7.01) to fail to be invested primarily in Stock. An election to reinvest shall be made by such written, telephonic or electronic means as shall be prescribed by the Plan Administrator, and shall be effective as soon as practicable after receipt by the Plan Administrator (or by the person or persons specified by the Plan Administrator).

6.03 Valuation of Investment Funds. As of each Valuation Date, the Trust Fund, and each of the investment funds comprising the Trust Fund, shall be valued on the basis of its current fair market value. For purposes of allocating accruals pursuant to Section 5.03, the Trust Fund and each of the investment funds of the Trust Fund shall be valued as of a Valuation Date as if each contribution to, reallocation to, reallocation out of, or benefit payment out of the Trust Fund made after the last preceding Valuation Date had been made immediately following the valuation of the Trust Fund then being made.

ARTICLE VII. Employee Stock Ownership; Acquisition Loans

7.01 Company Stock Fund. Effective January 1, 2004, the Trustee shall establish the following two sub-funds under the Company Stock Fund:

(a)   The “Company Stock Fund (non-ESOP)” shall consist of all amounts held by the Plan that are invested in Stock that are attributable to Salary Deferrals and Company Contributions for the current Plan Year.

(b)   The “Company Stock Fund (ESOP)” shall be an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986, as amended, and shall consist of all amounts held by the Plan that are invested in Stock that are not attributable to Salary Deferrals and Company Contributions for the current Plan Year. Such amounts (together with any Acquisition Loan Suspense Account) shall be the “ESOP Assets” under the Plan.

As soon as practicable following the last day of each Plan Year, the contributions attributable to such Plan Year that are invested in the Company Stock Fund (non-ESOP), adjusted for gains or losses, shall automatically be transferred to the Company Stock Fund (ESOP).

The Trustee shall invest the Company Stock Fund (non-ESOP) and the ESOP Assets in accordance with the Plan and Trust Agreement and the applicable provisions of the Code, ERISA, and (excluding the Company Stock Fund (non-ESOP)) any other laws affecting tax qualified pension benefit plans designed to qualify as employee stock ownership plans; provided that, in aggregate, the ESOP Assets shall be invested primarily in Stock.

7.02 Acquisition Loans. The Company may direct the Trustee to incur Acquisition Loans from time to time to finance the acquisition by the Trust Fund of shares of Stock or to repay a prior Acquisition Loan. An Acquisition Loan may be made by a Party in Interest and may be guaranteed by the Company or one or more Affiliates. Any Acquisition Loan must be primarily for the benefit of the Participants and their Beneficiaries. In furtherance of the foregoing:

(a)   The interest rate payable with respect to any Acquisition Loan and the price of any Stock to be acquired with the proceeds thereof must not be such that the Trust Fund might be “drained off” (as such term is used in the applicable regulations under Section 4975 of the Code), and the terms of any Acquisition Loan, whether or not the lender is a Party in Interest, must at the time such Acquisition Loan is made be at least as favorable to the Trust Fund as the terms of a comparable loan resulting from arm’s length negotiations between independent parties would be. An Acquisition Loan must be for a specific term, must bear a reasonable rate of interest, and must not be payable upon demand except in the event of a default; however, if the lender of the Acquisition Loan is a “disqualified person” within the meaning of Section 4975(e)(2) of the Code, the Acquisition Loan must be payable upon demand in the event of a default only to the extent of any default in any required payments due and payable under that Acquisition Loan (without regard to any rights of acceleration on the part of the lender).

(b)   An Acquisition Loan may be secured by a collateral pledge of the Financed Shares acquired with the proceeds of that Acquisition Loan (or any prior Acquisition Loan repaid with the proceeds from the Acquisition Loan); however, no lender or guarantor of an Acquisition Loan that is a Participating Employer or an Affiliate may have any rights or recourse with respect to the Financed Shares, if any, pledged as collateral to secure the repayment