<PAGE>
 
                                                                   Exhibit 10(d)


                          EMPLOYEE STOCK OWNERSHIP PLAN

                                       OF

                          MOORESVILLE SAVINGS BANK, SSB















                                  Prepared By:

              Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
                     Greensboro and Raleigh, North Carolina
<PAGE>
 
<TABLE> 
<CAPTION> 
                               TABLE OF CONTENTS

                                                                       Page
                                                                       ----
<S>                                                                      <C> 
DEFINITIONS AND CONSTRUCTION..............................................2

EMPLOYEE PARTICIPANTS....................................................12

EMPLOYER CONTRIBUTIONS...................................................14

ALLOCATIONS..............................................................20

TERMINATION OF SERVICE-PARTICIPANT VESTING...............................26

TIME AND METHOD OF PAYMENT OF BENEFITS...................................32

EMPLOYER SECURITIES......................................................37

EMPLOYER ADMINISTRATIVE PROVISIONS.......................................43

ADMINISTRATION COMMITTEE.................................................44

PARTICIPANT ADMINISTRATIVE PROVISIONS....................................48

FIDUCIARIES' DUTIES......................................................52

DISCONTINUANCE, AMENDMENT AND TERMINATION................................56

THE TRUST................................................................59

TOP HEAVY RULES..........................................................60

MISCELLANEOUS............................................................64
</TABLE> 
<PAGE>
 
                                 NATURE OF PLAN


         MOORESVILLE SAVINGS BANK, SSB (the "Company"), in order to provide its
eligible employees with an opportunity to share in the growth and prosperity of
the Company and to accumulate capital for their retirement through the
acquisition of a proprietary interest in Coddle Creek Financial Corp., of which
the Company is a wholly-owned subsidiary, establishes the Employee Stock
Ownership Plan of Mooresville Savings Bank, SSB
<PAGE>
 
                                   ARTICLE I

                         DEFINITIONS AND CONSTRUCTION

         1.01 DEFINITIONS. For the purpose of this Plan, the following
              -----------
definitions shall apply unless the context requires otherwise:

                  (a) "Accounts or Account" shall mean the separate accounts
                       -------------------
         maintained by the Administration Committee or Trustee to record the
         interest of a Participant under the Plan.

                  (b) "Accrued Benefit" shall mean the amount standing in a
                       ---------------
         Participant's Account(s) as of any date derived from both Employer
         contributions and Employee contributions, if any.

                  (c) "Act" shall mean the Employee Retirement Income Security
                       ---
         Act of 1974, as amended from time to time.

                  (d) "Active Participant" shall mean for each Plan Year any
                       ------------------
         Employee who satisfies the eligibility requirements of Article II and
         who completes at least one thousand (1,000) Hours of Service during
         such Plan Year.

                  (e) "Administration Committee" shall mean the Plan
                       ------------------------
         Administration Committee as from time to time constituted.

                  (f) "Anniversary Date" shall mean the last day of the Plan
                       ----------------
         Year.

                  (g) "Beneficiary" shall mean any person or fiduciary
                       -----------
         designated by a Participant who is or may become entitled to a benefit
         under the Plan following the death of the Participant. A Beneficiary
         who becomes entitled to a benefit under the Plan remains a Beneficiary
         under the Plan until the Trustee has fully distributed his benefit to
         him. A Beneficiary's right to (and the Plan Administrator's,
         Administration Committee's or Trustee's duty to provide to the
         Beneficiary) information or data concerning the Plan does not arise
         until he first becomes entitled to receive a benefit under the Plan.

                  (h) "Board of Directors" shall mean the Board of Directors of
                       ------------------
         Mooresville Savings Bank, SSB unless otherwise indicated or the context
         otherwise requires.

                  (i) "Break in Service" shall occur in any Plan Year during
                       ----------------
         which a Participant does not complete more than five hundred (500)
         Hours of Service, determined as of the end of the Plan Year.

                  (j) "Code" shall mean the Internal Revenue Code of 1986, as
                       ----
         amended from 

                                       2
<PAGE>
 
         time to time.

                  (k) "Company" shall mean Mooresville Savings Bank, SSB or any
                       -------
         successor thereto which shall adopt this Plan.

                  (l) "Compensation" shall mean, except as specifically provided
                       ------------
         elsewhere in this Plan, the Participant's earned income, wages,
         salaries, fees for professional service and other amounts received for
         personal services actually rendered in the course of employment with
         the Employer maintaining the plan (including, but not limited to,
         commissions paid salesmen, compensation for services on the basis of a
         percentage of profits, commissions on insurance premiums, tips, fringe
         benefits and reimbursements or other expense allowances under a
         nonaccountable plan, and elective contributions), but excluding
         Christmas bonuses. "Elective contributions" are amounts excludible from
         the Employee's gross income under Code (S) 402(a)(8) (relating to a
         Code (S) 401(k) arrangement), Code (S) 402(h) (relating to a simplified
         employee pension), Code (S) 125 (relating to a cafeteria plan) or Code
         (S) 403(b) (relating to a tax-sheltered annuity) and contributed at the
         Employee's election. The term "Compensation" does not include:

                           (i) Employer contributions (other than "elective
                  contributions") to a plan of deferred compensation to the
                  extent the contributions are not included in the gross income
                  of the Employee for the taxable year in which contributed, on
                  behalf of an Employee to a simplified employee pension plan to
                  the extent such contributions are excludible from the
                  Employee's gross income, and any distributions from a plan of
                  deferred compensation, regardless of whether such amounts are
                  includible in the gross income of the Employee when
                  distributed.

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

                           (iii) Amounts realized from the sale, exchange or
                  other disposition of stock acquired under a qualified stock
                  option.

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

                  Any reference in this Plan to Compensation is a reference to
         the definition in this Section 1.01(l), unless the Plan reference
         specifies a modification to this definition. The Administration
         Committee will take into account only Compensation actually paid for
         the 


                                       3
<PAGE>
 
         relevant period.

                  The Administration Committee must take into account only the
         first $150,000 for Plan Years beginning after December 31, 1993 (or
         such larger amount as the Commissioner of Internal Revenue may
         prescribe) of any Participant's Compensation. The $150,000 Compensation
         limitation applies to the combined Compensation of the Employee and of
         any family member aggregated with the Employee for purposes of
         determining who is an "Highly Compensated Employee" and who is either
         (i) the Employee's spouse; or (ii) the Employee's lineal descendant
         under the age of nineteen (19) years. If the $150,000 Compensation
         limitation applies to the combined Compensation of the Employee and one
         or more family members, the Administration Committee will apply the
         contribution and allocation provisions of Article III by prorating the
         $150,000 limitation among the affected individuals in proportion to
         each such individual's Compensation determined prior to application of
         this limitation.

                  For purposes of determining whether the Plan discriminates in
         favor of Highly Compensated Employees, Compensation means Compensation
         as defined in this Section 1.01(l), without regard to any exceptions.
         For purposes of this nondiscrimination definition, the Employer may
         elect to include all elective contributions made by the Employer on
         behalf of the Employees. The Employer's election to include elective
         contributions must be consistent and uniform with respect to Employees
         and all plans of the Employer of any particular Plan Year. The Employer
         may make this election to include elective contributions for
         nondiscrimination testing purposes, irrespective of whether the
         Employer includes elective contributions in the general Compensation
         definition applicable to the Plan.

                  (m) "Disqualified Person" shall have the same meaning as
                       -------------------
         ascribed to the term under Code ss. 4975(e)(2).

                  (n) "Effective Date" of this Plan shall be the 1st day of
                       --------------
         January, 1997, except as otherwise noted.

                  (o) "Employee" shall mean any person on the payroll of the
                       --------
         Employer whose wages from the Employer are subject to withholding for
         purposes of Federal income taxes and for purposes of the Federal
         Insurance Contributions Act. Notwithstanding the foregoing, Employee
         shall not include any person on the payroll of the Employer who is
         included in a unit of employees covered by an agreement which the
         Secretary of Labor finds to be a collective bargaining agreement
         between employee representatives and the Employer, if there is evidence
         that retirement benefits were the subject of good faith bargaining
         between such employee representatives and the Employer. The term
         "employee representatives" does not include any organization more than
         half the members of which are owners, officers or executives of the
         Employer.

                  (p) "Employer" shall mean the Company and any corporation or
                       --------
         other 


                                       4
<PAGE>
 
         organization that is affiliated (as defined in Section 407(d)(7)
         of the Act) with the Company which duly adopts the Plan with the
         approval of the Company.

                  (q) "Employer Securities" shall mean the common stock issued
                       -------------------
         by Coddle Creek Financial Corp. which shares constitute "employer
         securities" under Code ss. 409(l).

                  (r) "Employer Securities Account" shall mean a separate
                       ---------------------------
         account maintained for each Participant and consisting of his allocable
         share of Employer Securities allocated to each Participant under the
         Plan.

                  (s) "Employment Commencement Date" shall mean the date on
                       ----------------------------
         which an Employee first performs an Hour of Service for the Employer.

                  (t) "Exempt Loan" shall mean a loan made to this Plan by a
                       -----------
         Disqualified Person, or a loan to this Plan which a Disqualified Person
         guarantees, provided the loan satisfies the requirements of Treas. Reg.
         ss. 54.4975-7(b).

                  (u) "Fiscal Year" shall mean the Employer's taxable year for
                       -----------
         federal income tax purposes.

                  (v) "Former Participant" shall mean any individual who has
                       ------------------
         been a Participant hereunder and who has not yet received the entire
         benefit to which he is entitled under the Plan.

                  (w) "General Investment Account" shall mean a separate account
                       --------------------------
         maintained for each Participant and consisting of his allocable share
         of Employer contributions, forfeitures, earnings of the Trust allocable
         to such account, and realized and unrealized gains and losses allocable
         to such account, less any amounts distributed to the Participant or his
         Beneficiary from such account and which have not been invested in
         Employer Securities.

                  (x) "Highly Compensated Employee" shall mean an Employee who,
                       ---------------------------
         during the Plan Year or during the preceding twelve (12)-month period:

                       (i) is a more than five percent (5%) owner of the
                  Employer (applying the constructive ownership rules of
                  Code ss.318);
     
                       (ii) has Compensation in excess of $75,000 (as adjusted
                  by the Commissioner of Internal Revenue for the relevant
                  year);

                       (iii) has Compensation in excess of $50,000 (as
                  adjusted by the Commissioner of Internal Revenue for the
                  relevant year) and is part of the top-paid twenty percent
                  (20%) group of Employees (based on Compensation for the
                  relevant year); or


                                       5
<PAGE>
 
                       (iv) has Compensation in excess of fifty percent (50%)
                  of the dollar amount prescribed in Code (S) 415(b)(1)(A)
                  (relating to defined benefit plans) and is an officer of the
                  Employer.

                  If the Employee satisfies the definition in clause (ii), (iii)
         or (iv) in the Plan Year but not during the preceding twelve (12)
         -month period and does not satisfy clause (i) in either period, the
         Employee is a Highly Compensated Employee only if he is one of the 100
         most highly compensated Employees for the Plan Year. The number of
         officers taken into account under clause (iv) will not exceed the
         greater of three (3) or ten percent (10%) of the total number (after
         application of the exclusions under Code (S) 414(q)) of Employees, but
         no more than fifty (50) officers. If no Employee satisfies the
         Compensation requirement in clause (iv) for the relevant year, the
         Administration Committee will treat the highest paid officer as
         satisfying clause (iv) for that year.

                  For purposes of this definition, "Compensation" means
         Compensation as defined in Section 1.01(l) but must include: (i)
         elective deferrals under a Code (S) 401(k) arrangement or under a
         simplified employee pension plan maintained by the Employer; and (ii)
         amounts paid by the Employer which are not currently includible in the
         Employee's gross income because of Code (S) 125 (cafeteria plans) or
         (S) 403(b)(tax-sheltered annuities). The Administration Committee must
         make the determination of who is a Highly Compensated Employee,
         including the determinations of the number and identity of the top paid
         twenty percent (20%) group, the top 100 paid Employees, the number of
         officers includible in clause (iv) and the relevant Compensation,
         consistent with Code (S) 414(q) and regulations issued under that Code
         section. The Employer may make a calendar year election to determine
         the Highly Compensated Employees for the Plan Year, as prescribed by
         Treasury regulations. A calendar year election must apply to all plans
         and arrangements of the Employer. For purposes of applying any
         nondiscrimination test required under the Plan or under the Code, in a
         manner consistent with applicable Treasury regulations, the
         Administration Committee will not treat as a separate Employee a family
         member (a spouse, a lineal ascendant or descendant, or a spouse of a
         lineal ascendant or descendant) of a Highly Compensated Employee
         described in clause (i) of this Section 1.01(x), or a family member of
         one of the ten (10) Highly Compensated Employees with the greatest
         Compensation for the Plan Year, but will treat the Highly Compensated
         Employee and all family members as a single Highly Compensated
         Employee. This aggregation rule applies to a family member even if that
         family member is a Highly Compensated Employee without family
         aggregation.

                  The term "Highly Compensated Employee" also includes any
         former Employee who separated from Service (or has a deemed separation
         from Service, as determined under Treasury regulations) prior to the
         Plan Year, performs no Service for the Employer during the Plan Year,
         and was a Highly Compensated Employee either for the separation year or
         any Plan Year ending on or after his fifty-fifth (55th) birthday. If
         the former 


                                       6
<PAGE>
 
         Employee's separation from Service occurred prior to January 1, 1987,
         he is a Highly Compensated Employee only if he satisfied clause (i) of
         this Section 1.01(x) or received Compensation in excess of $50,000
         during: (i) the year of his separation from Service (or the prior
         year); or (ii) any year ending after his fifty-fourth (54th) birthday.

                  (y)      "Hour of Service" shall mean:

                           (i) Each Hour of Service for which the Employer,
                  either directly or indirectly, pays an Employee, or for which
                  the Employee is entitled to payment, for the performance of
                  duties during the Plan Year. The Administration Committee
                  shall credit Hours of Service under this paragraph (i) to the
                  Employee for the Plan Year in which the Employee performs the
                  duties, irrespective of when paid;

                           (ii) Each Hour of Service for back pay, irrespective
                  of mitigation of damages, to which the Employer has agreed or
                  for which the Employee has received an award. The
                  Administration Committee shall credit Hours of Service under
                  this paragraph (ii) to the Employee for the Plan Year(s) to
                  which the award or the agreement pertains rather than for the
                  Plan Year in which the award, agreement or payment is made;
                  and

                           (iii) Each Hour of Service for which the Employer,
                  either directly or indirectly, pays an Employee, or for which
                  the Employee is entitled to payment (irrespective of whether
                  the employment relationship is terminated), for reasons other
                  than for the performance of duties during a Plan Year, such as
                  leave of absence, vacation, holiday, sick leave, illness,
                  incapacity (including disability), layoff, jury duty or
                  military duty. The Administration Committee shall not credit
                  more than five hundred one (501) Hours of Service under this
                  paragraph (iii) to an Employee on account of any single
                  continuous period during which the Employee does not perform
                  any duties (whether or not such period occurs during a single
                  Plan Year). The Administration Committee shall credit Hours of
                  Service under this paragraph (iii) in accordance with the
                  rules of paragraphs (b) and (c) of Labor Reg. ss. 2530.200b-2,
                  which the Plan, by this reference, specifically incorporates
                  in full within this paragraph (iii).

                  The Administration Committee shall not credit an Hour of
         Service under more than one (1) of the above paragraphs. Furthermore,
         if the Administration Committee is to credit Hours of Service to an
         Employee for the twelve (12) month period beginning with the Employee's
         Employment Commencement Date or with an anniversary of such date, then
         the twelve (12) month period shall be substituted for the term "Plan
         Year" wherever the latter term appears in this Section 1.01(y). The
         Administration Committee shall resolve any ambiguity with respect to
         the crediting of an Hour of Service in favor of the Employee.


                                       7
<PAGE>
 
                  The Administration Committee shall credit every Employee with
         Hours of Service on the basis of the "actual" method. For purposes of
         the Plan, "actual" method means the determination of Hours of Service
         from records of hours worked and hours for which the Employer makes
         payment or for which payment is due from the Employer. An Employee or
         Participant for whom hourly records are not maintained shall be
         credited with forty-five (45) Hours of Service, if compensated weekly,
         ninety-five (95) Hours of Service, if compensated semimonthly, or one
         hundred ninety (190) Hours of Service, if compensated monthly, for each
         period described above if the Employee were hourly rated and would have
         been credited with one Hour of Service under paragraphs (i), (ii) and
         (iii) above.

                  Solely for purposes of determining whether the Employee incurs
         a Break in Service under any provision of this Plan, the Administration
         Committee shall credit Hours of Service during an Employee's unpaid
         absence period due to maternity or paternity leave. The Administration
         Committee shall consider an employee on maternity or paternity leave if
         the Employee's absence is due to the Employee's pregnancy, the birth of
         the Employee's child, the placement with the Employee of an adopted
         child, or the care of the Employee's child immediately following the
         child's birth or placement. The Administration Committee shall credit
         Hours of Service under this paragraph on the basis of the number of
         Hours of Service the Employee would receive if he were paid during the
         absence period or, if the Administration Committee cannot determine the
         number of Hours of Service the Employee would receive, on the basis of
         eight (8) hours per day during the absence period. The Administration
         Committee only shall credit the number of Hours of Service (up to 501
         Hours of Service) necessary to prevent an Employee's Break in Service.
         The Administration Committee shall credit all Hours of Service
         described in this paragraph to the computation period in which the
         absence period begins or, if the Employee does not need these Hours of
         Service to prevent a Break in Service in the computation period in
         which his absence period begins, the Administration Committee shall
         credit these Hours of Service to the immediately following computation
         period.

                  (z) "Leave of Absence" shall mean any period of absence from
         the active employment of the Employer due to jury duty and compulsory
         service in the Armed Forces of the United States if the Employee
         returns to active Service with the Employer within ninety (90) days
         after he first becomes eligible for release from such active duty. A
         Leave of Absence may be granted by the Employer for sickness, accident,
         vacation, disability, or other similar reasons under rules established
         by it and uniformly applied by it to all individuals similarly
         situated. If the Employee does not return to active Service with the
         Employer within thirty (30) days of the termination of his Leave of
         Absence, his Service will be deemed to have ceased on the date his
         absence first commenced.

                  (aa) "Loan Suspense Account" shall mean an account established
         for the crediting and holding of Employer Securities purchased with the
         proceeds of an Exempt Loan during the pledge period and repayment of
         the Exempt Loan.


                                       8
<PAGE>
 
                  (bb) "Nonforfeitable" shall mean a Participant's or
                        --------------
         Beneficiary's unconditional claim, legally enforceable against the
         Plan, for the Participant's Accrued Benefit.

                  (cc) "Participant" shall mean an Employee or former Employee
                        -----------
         who has an account balance under the Plan, or an Employee who has met
         the eligibility requirements of the Plan.

                  (dd) "Plan" shall mean the Employee Stock Ownership Plan of
                        ----
         Mooresville Savings Bank, SSB as established herein and amended from
         time to time.

                  (ee) "Plan Administrator" shall mean the Company unless the
                        ------------------
         Employer designates another person to hold the position of Plan
         Administrator. In addition to his other duties, the Plan Administrator
         shall have full responsibility for compliance with the reporting and
         disclosure rules under the Act as respects this Agreement.

                  (ff) "Plan Entry Date" shall mean the first day of the Plan
                        ---------------
         Year and the first day of the seventh month of the Plan Year.

                  (gg) "Plan Year" shall mean the fiscal year of the Plan which
                        ---------
         shall be the twelve month period ending on the 31st day of December of
         each year.

                  (hh) "Related Group" shall mean the Employers as defined in
                        -------------
         Section 1.02.

                  (ii) "Segregated Account" shall mean the Participant Account
                        ------------------
         which is divided or segregated for investment or accounting purposes as
         required by the Plan for which a special treatment is required.

                  (jj) "Service" shall mean any period of time the Employee is
                        -------
         in the employ of the Employer, including any period the Employee is on
         Leave of Absence authorized by the Employer under a uniform
         non-discriminatory policy applicable to all Employees.

                  (kk) "Suspense Account" shall mean the Employer contributions
                        ----------------
         and forfeitures which can not be allocated pursuant to Article III.

                  (ll) "Trust" shall mean the separate Trust established to
                        -----
         hold, administer, and invest the contributions made under the Plan.

                  (mm) "Trust Agreement" shall mean the agreement between the
                        ---------------
         Employer and the Trustee or any successor Trustee establishing the
         Trust and specifying the duties of the Trustee.

                  (nn) "Trust Fund" shall mean all property of every kind held
                        ----------
         or acquired by the Trustee under the Trust Agreement, other than
         incidental benefit insurance contracts.


                                       9
<PAGE>
 
                  (oo) "Trustee" shall mean the persons or entities from time to
                        -------
         time appointed as Trustee under the Trust Agreement.

                  (pp) "Valuation Date" shall mean the Anniversary Date of each
                        --------------
         Plan Year or such other dates as the Administration Committee shall
         from time to time require. Unless otherwise specified in the Plan, the
         Administration Committee will make all Plan allocations for a
         particular Plan Year as of the Valuation Date for that Plan Year.

         1.02 CONTROLLED BUSINESSES/LEASED EMPLOYEES. If the Employer is a
              --------------------------------------
member of a Related Group, the Plan shall treat all employees of the members of
such Related Group as if employed by a single employer for purposes of
determining Years of Service for participation and vesting. An employee shall
receive no credit for Years of Service for purposes of benefit accrual unless
employed by a member of the "Related Group" which adopts the Plan. A Related
Group is a controlled group of corporations (as defined in Code (S) 414(b)),
trades or businesses (whether or not incorporated) which are under common
control (as defined in Code (S) 414(c)) or an affiliated service group (as
defined in Code (S) 414(m) or in Code (S) 414(o)).

         The Plan also shall treat an Employee who is a Leased Employee as an
employee of the Employer. However, the Employer shall treat contributions or
benefits provided the Leased Employee by the leasing organization as
contributions or benefits provided by the Employer to the extent attributable to
services the Leased Employee performed for the Employer. A "Leased Employee" is
an individual (who otherwise is not an employee of the Employer) who, pursuant
to a leasing agreement between the Employer and any other person, has performed
services for the Employer (or for the Employer and any persons related to the
Employer within the meaning of Code (S) 144(a)(3)) on a substantially full-time
basis for at least one year and who performs services historically performed by
employees in the Employer's business field.

         Notwithstanding the preceding provisions of this paragraph, the Plan
shall not treat an employee as a Leased Employee if, prior to the application of
this exception, twenty percent (20%) or less of the Employer's Employees (other
than Highly Compensated Employees) are leased employees, and the leasing
organization covers the employee in a money purchase pension plan providing
immediate participation for all employees of the leasing organization (other
than employees who perform substantially all of their services for the leasing
organization or whose compensation from the leasing organization in each Plan
Year during the four-year period ending with the Plan Year is less than $1,000),
full immediate vesting, and a nonintegrated contribution formula equal to at
least ten percent (10%) of the employee's compensation without regard to
employment by the leasing organization on a specified date.

         1.03 CHANGE IN NON-PARTICIPATING STATUS. If an Employee does not
              ----------------------------------
participate in the Plan by reason of employment within an excluded
classification, service with the Employer will be counted for purposes of
determining participation and vesting should the Employee's status change to a
non-excluded classification.

                                       10
<PAGE>
 
         1.04 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
              --------------------------------
plan of a predecessor employer, the Plan shall treat service of the Employee
with the predecessor employer as service with the Employer. If the Plan the
Employer maintains is not the plan of a predecessor employer, no credit shall be
given unless specifically provided for in this Plan.

         1.05 WORD USAGE. Words used in the masculine shall apply to the
              ----------
feminine where applicable, and wherever the context of the Plan dictates, the
plural shall be read as the singular and the singular as the plural.

         1.06 CONSTRUCTION. It is the intention of the Employer that the Plan be
              ------------
qualified under the provisions of the Code and the Act and all provisions hereof
shall be construed to that result.

                                       11
<PAGE>
 
                                  ARTICLE II

                             EMPLOYEE PARTICIPANTS

         2.01 ELIGIBILITY. Each Employee shall become a Participant in the Plan
              -----------
on the Plan Entry Date (if he is employed on that date) coincident with or
immediately following the date on which he completes one (1) year of Service
with the Employer and attains the age of twenty-one (21) years. Employees
otherwise eligible on the Effective Date shall begin participation immediately.

         2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of participation
              ------------------------------- 
under Section 2.01, the Plan shall take into account all of an Employee's Years
of Service with the Employer. Year of Service shall mean a twelve (12)
consecutive month period during which the Employee completes not less than one
thousand (1,000) Hours of Service. The initial eligibility computation period is
the first twelve (12) consecutive month period measured from the Employment
Commencement Date. After the initial eligibility computation period, the Plan
measures the eligibility computation period as the twelve (12) consecutive month
period beginning with each anniversary of an Employee's Employment Commencement
Date.

         2.03 BREAK IN SERVICE - PARTICIPATION. For purposes of participation in
              --------------------------------
the Plan, the Plan shall not apply any Break in Service rules.

         2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
              --------------------------------
terminates shall re-enter the Plan as a Participant on the date of his
re-employment. An Employee who terminates his employment after satisfying the
eligibility requirements of the Plan but before becoming a Participant shall
enter the Plan as a Participant on the later of the Plan Entry Date on which he
would have entered the Plan had he not terminated employment, or the date of his
re-employment. Any other Employee whose employment terminates and who is
subsequently re-employed shall become a Participant in accordance with the
provisions of Sections 2.01 and 2.02.

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

         2.06 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any fiscal year, any
              --------------------------------
person who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made until
after a contribution for the year has been made and 

                                       12
<PAGE>
 
allocated, the Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a forfeiture
for the Plan Year in which the discovery is made.

                                       13
<PAGE>
 
                                  ARTICLE III

                            EMPLOYER CONTRIBUTIONS

         3.01 EMPLOYER CONTRIBUTIONS. For each Plan Year that ends with or
              ----------------------
within the Employer's taxable year, the Employer shall contribute to the Trust
such amount as the Board of Directors may from time to time deem advisable. The
Employer shall make all contributions without regard to current or accumulated
earnings and profits for the taxable year or years ending with or within such
Plan Year. The Employer's contribution shall not exceed the Maximum Permissible
Amount as hereinafter defined.

         3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
              -----------------------------
shall determine the amount of any contributions to be made by it to the Trust
under the terms of the Plan; provided however, the contribution of the Employer
shall be paid in cash to the extent needed to provide the Trust with cash
sufficient to pay any currently maturing obligations under any Exempt Loan,
notwithstanding the direction of the Board of Directors.

         3.03 TIME AND METHOD OF PAYMENT OF CONTRIBUTION. The Employer may pay
              ------------------------------------------
its contribution for each Plan Year in one (1) or more installments, without
interest. The Employer's contribution for any Plan Year shall be due on the last
day of its taxable year with or within which such Plan Year ends, and, unless
paid before, shall be payable then or as soon thereafter as practicable, but not
later than the time prescribed by law for filing the Employer's federal income
tax return (including extensions thereof) for such taxable year, without
interest. Contributions made after the end of the Plan Year but prior to the
filing of the Employer's federal income tax return shall be deemed a
contribution for the Employer's taxable year to which such tax return relates,
unless the contribution shall be accompanied by the Employer's signed statement
to the Trustee that payment is on account of another taxable year. Contributions
shall be paid in cash or in Employer Securities. All contributions for each Plan
Year shall be deemed to be paid as of the last day of such Plan Year.

         3.04 RETURN OF EMPLOYER CONTRIBUTIONS. Notwithstanding any provision
              --------------------------------
herein to the contrary (other than Section 2.06), upon the Employer's request, a
contribution which was made upon a mistake of fact, conditioned upon initial
qualification of the Plan, or disallowed as a deduction under Code (S) 404 shall
be returned to the Employer within one year after payment of the contribution or
denial of the qualification or deduction, as the case may be. The Trustee will
not increase the amount of the Employer contribution returnable under this
Section 3.04 for any earnings attributable to the contribution, but the Trustee
will decrease the Employer contribution returnable for any losses attributable
to it. The Trustee may require the Employer to furnish it whatever evidence the
Trustee deems necessary to enable the Trustee to confirm the amount the Employer
has requested be returned is properly returnable under ERISA.

         3.05 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The amount
              ----------------------------------------------------
of Annual Additions which the Administration Committee may allocate under this
Plan on 

                                       14
<PAGE>
 
a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Employer otherwise would contribute to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, the Employer will reduce the amount of
its contribution so the Annual Additions for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.05(b)) to the
Participant's Account, the Administration Committee will reallocate the Excess
Amount to the remaining Participants who are eligible for an allocation of
Employer contributions for the Plan Year in which the Limitation Year ends. The
Administration Committee will make this reallocation on the basis of the
allocation method under the Plan as if the Participant whose Account otherwise
would receive the Excess Amount is not eligible for an allocation of Employer
Contributions.

                  (a) Estimation of Compensation. Prior to the determination of
                      --------------------------
         the Participant's actual Compensation for a Limitation Year, the
         Administration Committee may determine the Maximum Permissible Amount
         on the basis of the Participant's estimated annual Compensation for
         such Limitation Year. The Administration Committee must make this
         determination on a reasonable and uniform basis for all Participants
         similarly situated. The Administration Committee must reduce any
         Employer contributions (including any allocation of forfeitures) based
         on estimated annual Compensation by any Excess Amounts carried over
         from prior years. As soon as is administratively feasible after the end
         of the Limitation Year, the Administration Committee will determine the
         Maximum Permissible Amount for such Limitation Year on the basis of the
         Participant's actual Compensation for such Limitation Year.

                  (b) Disposition of Excess Amount. If, pursuant to Section
                      ----------------------------
         3.05(a), or because of the allocation of forfeitures, there is an
         Excess Amount with respect to a Participant for a Limitation Year, the
         Administration Committee will dispose of such Excess Amount as follows:

                           (1) The Administration Committee will return any
                  nondeductible voluntary Employee contributions to the
                  Participant to the extent that the return would reduce the
                  Excess Amount.

                           (2) If, after the application of paragraph (1), an
                  Excess Amount still exists, and the Plan covers the
                  Participant at the end of the Limitation Year, then the
                  Administration Committee will use the Excess Amount(s) to
                  reduce future Employer contributions (including any allocation
                  of forfeitures) under the Plan for the next Limitation Year
                  and for each succeeding Limitation Year, as is necessary, for
                  the Participant.

                           (3) If, after the application of paragraph (1), an
                  Excess Amount still exists, and the Plan does not cover the
                  Participant at the end of the Limitation 

                                       15
<PAGE>
 
                  Year, then the Administration Committee will hold the Excess
                  Amount unallocated in a suspense account. The Administration
                  Committee will apply the suspense account to reduce Employer
                  contributions (including allocation of forfeitures) for all
                  remaining Participants in the next Limitation Year, and in
                  each succeeding Limitation Year if necessary.

                           (4) The Administration Committee will not distribute
                  any Excess Amount(s) to Participants or to former 
                  Participants.

                  (c) More Than One Plan. The Employer may contribute under
                      ------------------
         another defined contribution plan in addition to its contributions
         under this Plan. If the Administration Committee allocated an Excess
         Amount to a Participant's Account on an allocation date of this Plan
         which coincides with an allocation date of the other defined
         contribution plan, the Administration Committee will attribute the
         total Excess Amount allocated as of such date to the other defined
         contribution plan.

                  (d) Defined Benefit Plan Limitation. If the Participant
                      -------------------------------
         presently participates, or has ever participated under a defined
         benefit plan maintained by the Employer, then the sum of the defined
         benefit plan fraction and the defined contribution plan fraction for
         the Participant for that Limitation Year must not exceed 1.0. To the
         extent necessary to satisfy this limitation, the Employer will reduce
         its contribution or allocation on behalf of the Participant to the
         defined contribution plan under which the Participant participates and
         then, if necessary, the Participant's projected annual benefit under
         the defined benefit plan under which the Participant participates.

                  3.06 DEFINITIONS - ARTICLE III. For purposes of this Article
                       -------------------------
III, the following terms have the following meanings:

                  (a) "100% Limitation" - If the 100% Limitation applies, the
         Administration Committee must determine the denominator of the defined
         benefit plan fraction and the denominator of the defined contribution
         plan fraction by substituting 100% for 125%. The 100% limitation
         applies only if: (i) the Plan's top heavy ratio exceeds 90%; or (ii)
         the Plan's top heavy ratio is greater than 60%, and the Employer does
         not provide extra minimum benefits which satisfy Code (S) 416(h)(2).

                  (b) "Annual Addition" - The sum of the following amounts
         allocated on behalf of a Participant for a Limitation Year: (i) all
         Employer contributions; (ii) all forfeitures; and (iii) all Employee
         contributions. Except to the extent provided in Treasury regulations,
         Annual Additions include excess contributions described in Code (S)
         401(k) and excess aggregate contributions described in Code (S) 401(m),
         irrespective of whether the Plan distributes or forfeits such excess
         amounts. Excess deferrals under Code (S) 402(g) are not Annual
         Additions unless distributed after the correction period described in
         Code (S) 402(g). Annual Additions also include Excess Amounts reapplied
         to reduce 

                                       16
<PAGE>
 
         Employer contributions under Section 3.05. Amounts allocated after
         March 31, 1984, to an individual medical account (as defined in Code
         (S) 415(l)(2)) included as part of a defined benefit plan maintained by
         the Employer are Annual Additions. Furthermore, Annual Additions
         include contributions paid or accrued after December 31, 1985, for
         taxable years ending after December 31, 1985, attributable to
         post-retirement medical benefits allocated to the separate account of a
         key employee (as defined in Code (S) 419A(d)(3)) under a welfare
         benefit fund (as defined in Code (S) 419(e)) maintained by the
         Employer, but only for purposes of the dollar limitation applicable to
         the Maximum Permissible Amount.

                  (c) "Compensation" - Compensation as determined under the
         general definition of Compensation in Section 1.01 except it does not
         include elective contributions.

                  (d) "Defined benefit plan" - A retirement plan which does not
         provide for individual accounts for Employer contributions. The
         Administration Committee must treat all defined benefit plans (whether
         or not terminated) maintained by the Employer as a single plan.

                  (e) "Defined Benefit Plan Fraction" -

                         Projected annual benefit of the Participant
                              under the defined benefit plan(s)
                 -------------------------------------------------------------
                   The lesser of (i) 125% (subject to the "100% Limitation"
                          in paragraph (a)) of the dollar limitation
                          in effect under Code (S) 415(b)(1)(A) for
                          the Limitation Year, or (ii) 140% of the
                         Participant's average Compensation for his
                         high three (3) consecutive Years of Service

                  To determine the denominator of this fraction, the
         Administration Committee will make any adjustment required under Code
         (S) 415(b) and will determine a Year of Service as a Plan Year in which
         the Employee completed at least 1,000 Hours of Service. The "projected
         annual benefit" is the annual retirement benefit (adjusted to an
         actuarially equivalent straight life annuity if the plan expresses such
         benefit in a form other than a straight life annuity or qualified joint
         and survivor annuity) of the Participant under the terms of the defined
         benefit plan on the assumptions he continues employment until his
         normal retirement age (or current age, if later) as stated in the
         defined benefit plan, his compensation continues at the same rate as in
         effect in the Limitation Year under consideration until the date of his
         normal retirement age and all other relevant factors used to determine
         benefits under the defined benefit plan remain constant as of the
         current Limitation Year for all future Limitation Years.

                  Current Accrued Benefit. If the Participant accrued benefits
         in one or more 

                                       17
<PAGE>
 
         defined benefit plans maintained by the Employer which were in
         existence on May 5, 1986, the dollar limitation used in the denominator
         of this fraction will not be less than the Participant's Current
         Accrued Benefit. A Participant's Current Accrued Benefit is the sum of
         the annual benefits under such defined benefit plans which the
         Participant had accrued as of the end of the 1986 Limitation Year (the
         last Limitation Year beginning before January 1, 1987), determined
         without regard to any change in the terms or conditions of the Plan
         made after May 5, 1986, and without regard to any cost of living
         adjustment occurring after May 5, 1986. This Current Accrued Benefit
         rule applies only if the defined benefit plans individually and in the
         aggregate satisfied the requirements of Code (S) 415 as in effect at
         the end of the 1986 Limitation Year.

                  (f) "Defined contribution plan" - A retirement plan which
         provides for an individual account for each participant and for
         benefits based solely on the amount contributed to the participant's
         account, and any income, expenses, gains and losses, and any
         forfeitures of accounts of other participants which the plan may
         allocate to such participant's account. The Administration Committee
         must treat all defined contribution plans (whether or not terminated)
         maintained by the Employer as a single plan. Solely for the purposes of
         the limitations of this Article III, the Administration Committee will
         treat employee contributions made to a defined benefit plan maintained
         by the Employer as a separate defined contribution plan. The
         Administration Committee also will treat as a defined contribution plan
         an individual medical account (as defined in Code (S) 415(l)(2))
         included as part of a defined benefit plan maintained by the Employer
         and, for taxable years ending after December 31, 1985, a welfare
         benefit fund under Code (S) 419(e) maintained by the Employer to the
         extent there are post-retirement medical benefits allocated to the
         separate account of a key employee (as defined in Code (S) 419(d)(3)).

                  (g) "Defined Contribution Plan Fraction" -

                        The sum, as of the close of the Limitation Year,
                          of the Annual Additions to the Participant's
                         Account under the defined contribution plan(s)
                 -------------------------------------------------------------
                   The sum of the lesser of the following amounts determined
                   for the Limitation Year and for each prior Year of Service
                 with the Employer: (i) 125% (subject to the "100% Limitation"
                     in paragraph (a)) of the dollar limitation in effect under
                    Code (S) 415(c)(1)(A) for the Limitation Year (determined
                  without regard to the special dollar limitations for employee
                    stock ownership plans), or (ii) 35% of the Participant's
                                Compensation for the Limitation Year

                  For purposes of determining the defined contribution plan
         fraction, the Administration Committee will not recompute Annual
         Additions in Limitation Years beginning prior to January 1, 1987, to
         treat all Employee contributions as Annual Additions. If the Plan

                                       18
<PAGE>
 
         satisfied Code (S)415 for Limitation Years beginning prior to January
         1, 1987, the Administration Committee will redetermine the defined
         contribution plan fraction and the defined benefit plan fraction as of
         the end of the 1986 Limitation Year, in accordance with this Section
         3.06. If the sum of the redetermined fractions exceeds 1.0, the
         Administration Committee will subtract permanently from the numerator
         of the defined contribution plan fraction an amount equal to the
         product of (1) the excess of the sum of the fractions over 1.0, times
         (2) the denominator of the defined contribution plan fraction. In
         making the adjustment, the Administration Committee must disregard any
         accrued benefit under the defined benefit plan which is in excess of
         the Current Accrued Benefit. This Plan continues any transitional rules
         applicable to the determination of the defined contribution plan
         fraction under the Employer's Plan as of the end of the 1986 Limitation
         Year.

                  (h) "Employer" - The Employer that adopts this Plan and any
         related employers described in Section 1.02. Solely for purposes of
         applying the limitations of this Article III, the Administration
         Committee will determine related employers described in Section 1.02 by
         modifying Code (S)414(b) and (c) in accordance with Code (S)415(h).

                  (i) "Excess Amount" - The excess of the Participant's Annual
         Additions for the Limitation Year over the Maximum Permissible Amount.

                  (j) "Limitation Year" - The Plan Year. If the Employer amends
         the Limitation Year to a different 12 consecutive month period, the new
         Limitation Year must begin on a date within the Limitation Year for
         which the Employer makes the amendment, creating a short Limitation
         Year.

                  (k) "Maximum Permissible Amount" - The lesser of (i) $30,000
         (or, if greater, one-fourth of the defined benefit dollar limitation
         under Code(S) 415(b)(1)(A)), or (ii) 25% of the Participant's
         Compensation for the Limitation Year. If there is a short Limitation
         Year because of a change in Limitation Year, the Administration
         Committee will multiply the $30,000 (or adjusted) limitation by the
         following fraction:

                  Number of months in the short Limitation Year
                -------------------------------------------------
                                       12

                                       19
<PAGE>
 
                                   ARTICLE IV

                                   ALLOCATIONS

         4.01 PARTICIPANT ACCOUNTS. For each Participant, the Administration
              --------------------
Committee shall establish an Employer Securities Account to reflect a
Participant's interest in Employer Securities held by the Trust and shall
establish an account designated as the General Investments Account to reflect
the Participant's interest in the Trust Fund attributable to assets other than
Employer Securities.

         If a Participant re-enters the Plan subsequent to his having a
Forfeiture Break in Service, a separate Account for the Participant's
pre-Forfeiture Break in Service Accrued Benefit and a separate Account for his
post-Forfeiture Break in Service Accrued Benefit, unless the Participant's
entire Accrued Benefit under the Plan is one hundred percent (100%)
Nonforfeitable, shall be maintained.

         4.02 VALUATION OF ACCOUNTS. The value of each Participant's Accrued
              ---------------------
Benefit shall consist of that proportion of the net worth (at fair market value)
of the Trust Fund which the net credit balance in his Account bears to the total
net credit balance in the Accounts of all Participants. For purposes of a
distribution under the Plan, the value of a Participant's Accrued Benefit
attributable to his General Investment Account shall be its value as of the
Valuation Date, or other valuation date, immediately preceding the date of the
distribution.

         As of the Anniversary Date of each Plan Year, the Administration
Committee first shall reduce the General Investments Accounts (excluding
segregated Accounts) for any forfeitures arising under Section 5.05 and then
shall allocate the net income (or net loss) from the Trust and the increase or
decrease in the fair market value of the assets of the Trust for the Plan Year
pro rata to the General Investments Accounts of the Participants under the Plan
as the General Investments Accounts stood at the beginning of the current Plan
Year, but excluding the amount of any General Investments Account which the
Trustee has fully distributed since the immediately preceding Valuation Date or
utilized for the purchase of Employer Securities. In making its allocations, the
Administration Committee shall exclude Employer Securities allocated to Employer
Securities Accounts, stock dividends on allocated Employer Securities, and
payments by the Trust on an Exempt Loan. The Administration Committee shall
include as income any cash dividends on Employer Securities except cash
dividends which the Administration Committee has directed the Trustee to
distribute in accordance with Section 7.03.

         A segregated investment account receives all income it earns and bears
all expense or loss it incurs. As of the Valuation Date, the Administration
Committee must reduce a segregated investment account for any forfeiture arising
under Section 5.05 after the Administration Committee has made all other
allocations, changes or adjustments to such Account for the Plan Year.

                                       20
<PAGE>
 
         In making a forfeiture reduction, the Administration Committee shall
forfeit pro rata from a Participant's General Investments Account and from any
segregated investment account before making a forfeiture from his Employer
Securities Account.

         4.03 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. Subject to the limitations
              -------------------------------------
of Article III, Code (S)415, and Section 4.08 of the Plan:


               (a) Employer Securities Account. As of the Anniversary Date of
                   ---------------------------
         each Plan Year, the Administration Committee first shall reduce the
         Employer Securities Accounts for any forfeitures arising under Section
         5.05 and then shall credit the Employer Securities Account maintained
         for each Participant with the Participant's allocable share of Employer
         Securities (including fractional shares) purchased and paid for by the
         Trust or contributed in kind to the Trust, with any forfeitures of
         Employer Securities and with any stock dividends on Employer Securities
         allocated to his Employer Securities Account. Employer Securities
         purchased or contributed in kind shall be allocated as of the
         Anniversary Date among the Participants in accordance with the ratio of
         the Participant's Compensation to the total Compensation of all
         Participants. The Administration Committee shall allocate Employer
         Securities acquired with an Exempt Loan in accordance with Section
         4.04. Except as otherwise specifically provided in Section 4.04, the
         Administration Committee shall base allocations to the Participants'
         Accounts on dollar values expressed as shares of Employer Securities or
         on the basis of actual shares where there is a single class of Employer
         Securities. Employer Securities purchased with the proceeds of the
         General Investment Account will be allocated directly to the same
         Participant's Employer Securities Account.

               (b) General Investments Account. Employer contributions and
                   ---------------------------
         forfeitures not allocated under Section 4.03 (a) above shall be
         allocated as of the Anniversary Date among the Participants in
         accordance with the ratio of the Participant's Compensation to the
         total Compensation of all Participants.

               (c) Dividends on Employer Securities. The Administration
                   --------------------------------
         Committee will allocate any cash dividends the Employer pays with
         respect to Employer Securities to the General Investments Accounts of
         Participants in the same ratio, determined on the dividend declaration
         date, that Employer Securities allocated to a Participant's Employer
         Securities Account bear to the Employer Securities allocated to all
         Employer Securities Accounts. The Administration Committee will not
         allocate to the General Investments Accounts any cash dividends the
         Employer directs the Trustee to apply to the payment of an Exempt Loan
         nor any cash dividends the Administration Committee directs the Trustee
         to distribute in accordance with Section 7.03. If the Employer directs
         the Trustee to apply cash dividends on Employer Securities to the
         payment of an Exempt Loan, the Administration Committee first will
         allocate the released Employer Securities to the Participants' Employer
         Securities 

                                       21
<PAGE>
 
         Accounts in the same ratio, determined on the dividend declaration
         date, that Employer Securities allocated to a Participant's Employer
         Securities Account bear to the Employer Securities allocated to all
         Employer Securities Accounts. If the dividends are to qualify under
         Section 404(k) of the Code: (i) First, allocation of released Employer
         Securities must equal the greater of the shares of released Employer
         Securities equal to the fair market value of the cash dividends
         attributable to the allocated Employer Securities, or equal to the
         number of shares of all released Employer Securities attributable to
         the cash dividends on allocated Employer Securities and (ii) if any
         released Employer Securities remain unallocated after the first
         allocation, the Administration Committee will allocate these remaining
         released Employer Securities under this Section 4.03 as if the Employer
         has made an Employer contribution equal to the amount of the cash
         dividend attributable to the unallocated Employer Securities.

         4.04 EXEMPT LOAN PROCEEDS ALLOCATION LIMITATION. In withdrawing assets
              ------------------------------------------
from the Loan Suspense Account, the Trustee shall apply the provisions of Treas.
Reg. (S)(S)54.4975-7(b)(8) and (15) as if all securities in the Loan Suspense
Account were encumbered. Upon the payment of any portion of the loan, the
Trustee shall effect the release of assets in the Loan Suspense Account from
encumbrances. For each Plan Year during the duration of the loan, the number of
Employer Securities released must equal the number of encumbered Employer
Securities held immediately before release for the current Plan Year multiplied
by a fraction. The numerator of the fraction is the amount of principal and
interest paid for the Plan Year. The denominator of the fraction is the sum of
the numerator plus the principal and interest to be paid for all future Plan
Years. The number of future Plan Years under the loan must be definitely
ascertainable and must be determined without taking into account any possible
extension or renewal periods. If the interest rate under the loan is variable,
the interest to be paid in future Plan Years must be computed by using the
interest rate applicable as of the end of the Plan Year. If collateral includes
more than one (1) class of Employer Securities, the number of Employer
Securities of each class to be released for a Plan Year must be determined by
applying the same fraction to each such class. The Administration Committee
shall allocate assets withdrawn from the Loan Suspense Account to the Accounts
of Participants who otherwise share in the allocation of the Employer's
contribution for the Plan Year for which the Trustee has paid the portion of the
loan resulting in the release of the assets. The Administration Committee
consistently shall make this allocation as of each Anniversary Date on the basis
of non-monetary units, taking into account the relative Compensation of all such
Participants for such Plan Year.

         The Administration Committee may also elect at the initiation of the
Exempt Loan to have the Employer Securities released from the Loan Suspense
Account solely with reference to principal payments. However, if release is
determined with reference to principal payments only, the following additional
rules apply: (1) the Exempt Loan must provide for annual payments of principal
and interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for 10 years; (2) interest included in any
payment is disregarded only to the extent that it would be determined to be
interest under standard loan amortization tables; and (3) the entire duration of
the Exempt Loan repayment period does not exceed 10 years, even in the event of
a renewal, extension or refinancing of the Exempt Loan.

                                       22
<PAGE>
 
         4.05 EXCESS ALLOCATIONS. The excess amount of any allocations shall be
              ------------------
distributed or reallocated as provided in Article III.

         4.06 EMPLOYER CONTRIBUTIONS CONSIDERED MADE ON LAST DAY OF PLAN YEAR.
              ---------------------------------------------------------------
For purposes of this Article IV, the Employer's contribution under the Plan
which remains unallocated on the last day of any Plan Year will be considered to
have been made on the last day of that year, regardless of when paid to the
Trustee.

         4.07 ACCRUAL OF BENEFITS. The Administration Committee shall determine
              -------------------
a Participant's Accrued Benefit on the basis of the Limitation Year. In
allocating Employer contributions and forfeitures to a Participant's Accounts,
the Administration Committee shall only take into account the Compensation
earned during that part of the Limitation Year the Employee is actually a
Participant in the Plan.

         4.08 PARTICIPANTS TO WHOM EMPLOYER CONTRIBUTIONS AND FORFEITURES WILL
              ---------------------------------------------------------------- 
BE ALLOCATED. The Employer contributions for any Limitation Year, plus any
------------
forfeitures which arose under the Plan during that year, will be allocated among
and credited to the Accounts of:

               (a) Participants who complete 1,000 Hours of Service during
         the Limitation Year and who are in the employ of the Employer on the
         Anniversary Date; provided, however, that an Employee who enters or
         re-enters the Plan as a Participant on any date other than the first
         day of the Limitation Year shall be considered to have completed 1,000
         Hours of Service for purposes of allocation of Employer contributions
         and Forfeitures for the Limitation Year in which he enters or re-enters
         the Plan as a Participant;

               (b) Participants on Leave of Absence on the Anniversary Date
         who received Compensation from the Employer during the Limitation Year;
         and

               (c) Participants who died, retired, or became permanently
         disabled during the Limitation Year who received Compensation from the
         Employer during that year.

               (d) Highly Compensated Participants, otherwise qualifying for
         an allocation, shall be limited to no more than one-third (1/3) of the
         contributions which are deductible under Code (S) 404(a)(9)(B) and
         forfeitures of Employer Securities purchased with proceeds of an Exempt
         Loan, which limitations shall be applied pro rata to the limited Highly
         Compensated Participants.

Notwithstanding the foregoing, in the case of a sale to the Plan in which a
seller elects nonrecognition of gain under Code (S) 1042 of Employer
Securities, no portion of such Employer Securities acquired may be allocated or
accrue (directly or indirectly under any plan of the Employer meeting the
requirements of (S) 401(a) of the Code) during the "nonallocation period" to

                                       23
<PAGE>
 
         (i) any Participant who makes an election under (S) 1042 of the Code,

    (ii) any individual who is related to the Participant within the meaning of
         (S) 267(b) of the Code (this provision shall not apply to lineal
         descendants of the electing Participant if the aggregate amount
         allocated to the benefit of all such lienal descendants during the
         "nonallocation period" does not exceed more than five percent (5%) of
         the Employer Securities (or amounts allocated in lieu thereof) held by
         the Plan which are attributable to the sale to the Plan by the
         Participant related to such descendants (within the meaning of (S)
         267(c) of the Code) or

   (iii) any other person who owns (after application of Code (S) 318(a) and
         without regard to the employee trust exception of Code (S)
         318(a)(2)(B(i)) more than twenty-five percent (25%) of any class of
         outstanding stock of the Employer which issued such Employer Securities
         or of any corporation which is a member of the same controlled group of
         corporations or of the total value of such class of outstanding stock
         of any such corporation as defined in (S) 409 of the Code.

The "nonallocation period" shall mean the period beginning on the date of the
sale of the Employer Securities and ending on the later of the date which is 10
years after the date of sale or the date of the plan allocation attributable to
the final payment of the Exempt Loan.

         4.09 EQUITABLE ALLOCATIONS. If the Administration Committee determines
              --------------------- 
in making any valuation, allocation, correction or addition of interest to any
Account under the provisions of the Plan that the strict application of the
provisions of the Plan will not produce an equitable and nondiscriminatory
allocation among the Accounts of the Participants, it may modify any procedure
specified in the Plan for the purpose of achieving an equitable and
nondiscriminatory allocation in accordance with the general concepts of the
Plan; provided, however, that any such modification shall not reduce any
Participant's Accrued Benefit and shall be consistent with the provisions of
(S) 401(a)(4) of the Code. Should the Administration Committee in good faith
determine that certain expenses of administration paid by the Trustee during the
Plan Year under consideration are not general, ordinary, and usual and should
not equitably be borne by all Participants, but should be borne only by one or
more Participants, for whom or because of whom such expenses were incurred, the
Administration Committee shall make suitable adjustments by debiting the
particular Account or Accounts of such one or more Participants, Former
Participants, or Beneficiaries; provided, however, that any such adjustment must
be nondiscriminatory and consistent with the provisions of (S) 401(a) of the
Code.

         4.10 VALUATION OF THE TRUST FUND. The Administration Committee shall
              ---------------------------
direct the Trustee, as of each Valuation Date, and at such other date or dates
deemed necessary by the Administration Committee, to determine the net worth of
the assets comprising the Trust Fund. In determining such net worth, the Trustee
shall value the assets comprising the Trust Fund at their fair market value as
of the Valuation Date. With respect to activities carried on by the Plan, an
independent appraiser meeting requirements similar to those prescribed by
regulations under 

                                       24
<PAGE>
 
Code (S) 170(a)(1) must perform all valuations of Employer Securities which are
not readily tradeable on an established securities market. The valuation
requirement of the immediately preceding sentence applies to all Employer
Securities acquired by the Plan. Fair market value of Employer Securities means
the value (i) determined as of the date of the exercise of an option if the
exercise is by a Disqualified Person, or (ii) in all other cases, determined as
of the most recent Valuation Date.

         4.11 ALLOCATION DOES NOT CREATE RIGHTS. No Participant shall acquire
              ---------------------------------
any right to or interest in any specific asset of the Trust as a result of the
allocations provided for in the Plan.

                                       25
<PAGE>
 
                                    ARTICLE V

                   TERMINATION OF SERVICE-PARTICIPANT VESTING

         5.01 NORMAL RETIREMENT. A Participant's Normal Retirement Age
              -----------------  
(hereinafter so-called) is age sixty-five (65). A Participant who remains in the
employ of the Employer after attaining Normal Retirement Age shall continue to
participate in Employer contributions until the date of his actual retirement.
Upon termination of a Participant's employment for any reason after attaining
Normal Retirement Age, the Administration Committee shall direct the Trustee to
make payment of the full value of the Participant's Accrued Benefit to him at
such times and in such manner as provided in Article VI hereof. The value of the
Participant's Accrued Benefit shall be determined as of the Anniversary Date
which is on or, if not on, immediately follows the date of the Participant's
employment termination. Provided however, the Trustee may, at the direction of
the Administration Committee, value the Participant's Accrued Benefit as of the
Anniversary Date immediately preceding the date of the Participant's employment
termination, for purposes of making an immediate distribution to the Participant
of his Accrued Benefit, and shall make a subsequent lump sum distribution to the
Participant of any additional benefit accruing subsequent to the date of his
termination through and including the Valuation Date immediately following the
date of the Participant's termination of employment. Immediate distributions may
be reduced by the Trustee to take into account declines in market value.

         5.02 EARLY RETIREMENT. A Participant who is at least sixty-two (62)
              ----------------
years of age and who has completed ten (10) Years of Service may elect to take
early retirement. In the event that a Participant makes such an election, the
Administration Committee shall direct the Trustee to make payment of the full
value of the Participant's Accrued Benefit to him at such times and in such
manner as provided in Article VI hereof. The value of the Participant's Accrued
Benefit shall be determined as of the Anniversary Date which is on or, if not
on, immediately follows the date of the Participant's employment termination.
Provided however, the Trustee may, at the direction of the Administration
Committee, value the Participant's Accrued Benefit as of the Anniversary Date
immediately preceding the date of the Participant's employment termination, for
purposes of making an immediate distribution to the Participant of his Accrued
Benefit, and shall make a subsequent lump sum distribution to the Participant of
any additional benefit accruing subsequent to the date of his termination
through and including the Valuation Date immediately following the date of the
Participant's termination of employment. Immediate distributions may be reduced
by the Trustee to take into account declines in market value.

         5.03 DISABILITY. A Participant who becomes permanently disabled shall
              ----------
have the full value of his Accrued Benefit paid to him at such times and in such
manner as provided in Article VI hereof. The value of a disabled Participant's
Accrued Benefit shall be determined as of the Valuation Date which is on, or if
not on, which immediately follows the date of the Participant's termination of
employment due to disability. Provided however, the Trustee may, at the
direction of the Administration Committee, value the Participant's Accrued
Benefit as of the Valuation Date immediately preceding the date of the
Participant's employment termination, for purposes of 

                                       26
<PAGE>
 
making an immediate distribution to the Participant of his Accrued Benefit, and
shall make a subsequent lump sum distribution to the Participant of any
additional benefit accruing subsequent to the date of his termination through
and including the Valuation Date immediately following the date of the
Participant's termination of employment. A Participant shall be considered
"disabled" if he is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. The disability of a
Participant shall be determined by a licensed physician chosen by the
Administration Committee. However, if the condition constitutes total disability
under the Federal Social Security Acts, the Administration Committee may rely
upon such determination that the Participant is totally disabled for purposes of
this Plan. The Administration Committee shall apply the provisions of this
Section 5.03 in a non-discriminatory, consistent and uniform manner.

         5.04 DEATH. Upon the death of a Participant, his Beneficiary shall be
              ----- 
entitled to receive the full value of the deceased Participant's Accrued Benefit
determined as of the Valuation Date which is on or, if not on, which immediately
follows the date of such Participant's death, at such times and in such manner
as provided in Article VI hereof. Provided however, the Trustee may, at the
direction of the Administration Committee, value the Participant's Accrued
Benefit as of the Valuation Date immediately preceding the date of the
Participant's death, for purposes of making an immediate distribution to the
Participant's Beneficiary of his Accrued Benefit, and shall make a subsequent
lump sum distribution to said Beneficiary of any additional benefit accruing
subsequent to the date of the Participant's death through and including the
Valuation Date immediately following the date of the Participant's death.

         5.05 TERMINATION OF SERVICE PRIOR TO NORMAL RETIREMENT AGE. If a
              -----------------------------------------------------
Participant's employment terminates prior to Normal Retirement Age for any
reason other than death or permanent disability, then for each Year of Service
he shall receive a percentage of his Accrued Benefit derived from Employer
contributions and forfeitures allocated to Participant Accounts (the balance
being a forfeiture) equal to the following percentage:

         ---------------------------------------------------------

         Years of Service                   Percentage of Accrued
         With the Employer                     Benefit Payable
         ---------------------------------------------------------

         Less than 5 years                               0%
         5 years or more                               100%
         ---------------------------------------------------------

                                       27
<PAGE>
 
         Forfeitures shall be reallocated among the remaining Participants who
are entitled to share in Employer contributions and forfeitures for the Plan
Year in which such forfeiture occurs in accordance with the provisions of
Section 4.08. A Participant shall be 100% vested in his Accounts upon the
attainment of Normal Retirement Age, death or permanent disability.

         5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under Section
              -------------------------
5.05, Year of Service means any Plan Year during which an Employee completes not
less than 1,000 Hours of Service.

         5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
              --------------------------
Participant incurs a "Break in Service" if during any Plan Year he does not
complete more than 500 Hours of Service.

         5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
              -----------------------------------
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer except any Year of Service
before a Break in Service if the number of consecutive Breaks in Service equals
or exceeds the greater of five (5) or the aggregate number of Years of Service
prior to the Break. This exception applies only if the Participant is 0% vested
in his Accrued Benefit derived from Employer contributions at the time he has a
Break in Service. Furthermore, the aggregate number of Years of Service before a
Break in Service does not include Years of Service not required to be taken into
account under this exception by reason of any prior Break in Service.

         For the sole purpose of determining a Participant's nonforfeitable
percentage of his Accrued Benefit derived from Employer contributions which
accrued for his benefit prior to a Forfeiture Break in Service, the Plan
disregards any Year of Service after the Participant first incurs a Forfeiture
Break in Service. The Participant incurs a Forfeiture Break in Service when he
incurs five (5) consecutive Breaks in Service.

         The Plan does not apply the Break in Service rule under Code (S)
411(a)(6)(B). Therefore, an Employee need not complete a Year of Service after a
Break in Service before the Plan takes into account the Employee's otherwise
includible Years of Service under this Section 5.08.

         5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
              -----------------
Accrued Benefit derived from Employer contributions occurs under the Plan on the
earlier of:

              (a) The last day of the Plan Year in which the Participant
         first incurs a Forfeiture Break in Service; or

              (b) The date the Participant receives a cash-out distribution.

              The Administration Committee determines the percentage of a
         Participant's Accrued Benefit forfeiture, if any, under this Section
         5.09 solely by reference to 

                                       28
<PAGE>
 
         the vesting schedule of Section 5.05. A Participant does not forfeit
         any portion of his Accrued Benefit for any other reason or cause except
         as expressly provided by this Section 5.09 or as provided under the
         Plan's unclaimed account procedure. Any forfeiture of a Participant's
         Accrued Benefit shall be made first from the Participant's General
         Investment Account, and after it is exhausted, from the Participant's
         Employer Securities Account, in accordance with applicable Treasury
         regulations.

         5.10 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
              --------------------------------------------------------  
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
----------------------------------------
partially-vested Participant receives a cash-out distribution before he incurs a
Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Accrued Benefit derived from Employer contributions, as
provided in Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable percentage determined under Section 5.05 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.

              (a) Restoration and Conditions upon Restoration. A
                  -------------------------------------------
         partially-vested Participant who is re-employed by the Employer after
         receiving a cash-out distribution of the Nonforfeitable percentage of
         his Accrued Benefit may repay the Trustee the amount of the cash-out
         distribution attributable to Employer contributions, unless the
         Participant no longer has a right to restoration under the requirements
         of this Section 5.10. If a partially-vested Participant makes the
         cash-out distribution repayment, the Administration Committee, subject
         to the conditions of this Section 5.10(a), must restore his Accrued
         Benefit attributable to Employer contributions to the same dollar
         amount as the dollar amount of his Accrued Benefit on the Valuation
         Date, or other valuation date, immediately preceding the date of the
         cash-out distribution, unadjusted for any gains or losses occurring
         subsequent to that Valuation Date, or other valuation date. Restoration
         of the Participant's Accrued Benefit includes restoration of all Code
         (S). 411(d)(6) protected benefits with respect to that restored Accrued
         Benefit, in accordance with applicable Treasury regulations.

                  The Administration Committee will not restore a re-employed
         Participant's Accrued Benefit under this Section 5.10(a) if:

                           (1) five (5) years or more have elapsed since the
                  Participant's first re-employment date with the Employer
                  following the cash-out distribution; or

                           (2) the Participant incurred a Forfeiture Break in
                  Service (as defined in Section 5.08). This condition also
                  applies if the Participant makes repayment within the Plan
                  Year in which he incurs the Forfeiture Break in Service and
                  that Forfeiture Break in Service would result in a complete
                  forfeiture of the amount the Administration Committee
                  otherwise would restore.

                                       29
<PAGE>
 
               (b) Time and Method of Restoration. If neither of the two
                   ------------------------------
         conditions preventing restoration of the Participant's Accrued Benefit
         applies, the Administration Committee will restore the Participant's
         Accrued Benefit as of the Plan Year Valuation Date coincident with or
         immediately following the repayment. To restore the Participant's
         Accrued Benefit, the Administration Committee, to the extent necessary,
         will allocate to the Participant's Account:

                         (1) first, from the amount, if any, of Participant
                  forfeitures the Administration Committee would otherwise
                  allocate under Section 5.05;

                         (2) second, from the amount, if any, of the Trust Fund
                  net income or gain for the Plan Year; and

                         (3) third, from the Employer contribution for the Plan
                  Year to the extent made under a discretionary formula.

         To the extent the amounts described in clauses (1), (2) and (3) are
         insufficient to enable the Administration Committee to make the
         required restoration, the Employer must contribute, without regard to
         any requirement or condition of Section 3.01, the additional amount
         necessary to enable the Administration Committee to make the required
         restoration. If, for a particular Plan Year, the Administration
         Committee must restore the Accrued Benefit of more than one re-employed
         Participant, then the Administration Committee will make the
         restoration allocations to each such Participant's Account in the same
         proportion that a Participant's restored amount for the Plan Year bears
         to the restored amount for the Plan Year of all re-employed
         Participants. The Administration Committee will not take into account
         any allocation under this Section 5.10 in applying the limitation on
         allocations under Article III.

                  (c) 0% Vested Participant. The deemed cash-out rule applies to
                      ---------------------
         a 0% vested Participant. A 0% vested Participant is a Participant whose
         Accrued Benefit derived from Employer contributions is entirely
         forfeitable at the time of his separation from Service. Under the
         deemed cash-out rule, the Administration Committee will treat the 0%
         vested Participant as having received a cash-out distribution on the
         date of the Participant's separation from Service or, if the
         Participant's Account is entitled to an allocation of Employer
         contributions for the Plan Year in which he separates from Service, on
         the last day of that Plan Year. For purposes of applying the
         restoration provisions of this Section 5.10, the Administration
         Committee will treat the 0% vested Participant as repaying his cash-out
         "distribution" on the first date of his re-employment with the
         Employer.

         5.11 SEGREGATED INVESTMENT ACCOUNT FOR REPAID AMOUNT. Until the
              -----------------------------------------------
Administration Committee restores the Participant's Accrued Benefit, as
described in Section 5.10, the Trustee will invest the cash-out amount the
Participant has repaid in a segregated 

                                       30
<PAGE>
 
investment account maintained solely for that Participant. The Trustee must
invest the amount in the Participant's segregated investment account in
Federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. Until commingled
with the balance of the Trust Fund on the date the Administration Committee
restores the Participant's Accrued Benefit, the Participant's segregated
investment account remains a part of the Trust, but it alone shares in any
income it earns and it alone bears any expense or loss it incurs. The
Administration Committee will direct the Trustee to repay to the Participant as
soon as is administratively practicable the full amount of the Participant's
segregated investment account if the Administration Committee determines either
of the conditions of Section 5.10(a) prevents restoration as of the applicable
Valuation Date, notwithstanding the Participant's repayment.

                                       31
<PAGE>
 
                                   ARTICLE VI

                     TIME AND METHOD OF PAYMENT OF BENEFITS

         6.01 DISTRIBUTION AND PAYMENT REQUIREMENTS. Unless the Participant
              -------------------------------------
elects in writing to have the Trustee apply other distribution provisions of the
Plan, the Trustee must distribute the Nonforfeitable portion of the
Participant's Accrued Benefit no later than the time prescribed by this Section
6.01, irrespective of any other provision of the Plan. The distribution
provisions of this Section 6.01 are subject to the consent and form of
distribution requirements of the Plan.

                  (a) Retirement, Disability and Death. If the Participant
                      --------------------------------
         separates from Service by reason of the attainment of Normal Retirement
         Age, death, or disability, the Administration Committee will direct the
         Trustee to commence distribution of the Accrued Benefit not later than
         the 60th day after the close of the Plan Year in which the applicable
         event occurs or separation from Service, if later.

                  (b) Other Separation from Service. If the Participant
                      -----------------------------
         separates from Service for any reason other than by reason of the
         attainment of Normal Retirement Age, death or disability, the
         Administration Committee will direct the Trustee to commence
         distribution of the Participant's Nonforfeitable Accrued Benefit not
         later than one year after the close of the fifth Plan Year following
         the Plan Year in which the Participant separated from Service. If the
         Participant resumes employment with the Employer on or before the last
         day of the fifth Plan Year following the Plan Year of his separation
         from Service, the mandatory distribution provisions of this paragraph
         (b) do not apply. For purposes of this Section 6.01(b), the Accrued
         Benefit does not include any Employer Securities acquired with the
         proceeds of an Exempt Loan until the close of the Plan Year in which
         the borrower repays the Exempt Loan in full.

                  (c) Required Beginning Date. If any distribution commencement
                      -----------------------
         date described under Paragraph (a) of this Section 6.01, either by Plan
         provision or by Participant election (or nonelection), is later than
         the Participant's Required Beginning Date, the Administration Committee
         instead must direct the Trustee to make distribution under this Section
         6.01 on the Participant's Required Beginning Date. A Participant's
         Required Beginning Date is the April 1 following the close of the
         calendar year in which the Participant attains age 70 1/2. A mandatory
         distribution at the Participant's Required Beginning Date will be in
         lump sum unless an alternate method is provided for in the Plan.

                  (d) Distribution in Excess of $3500. No distribution shall be
                      -------------------------------
         made to a Participant without the Participant's consent if the
         Nonforfeitable Accrued Benefit shall exceed $3500, unless the
         Participant shall have attained Normal Retirement Age. For Plan Years
         beginning after December 31, 1997, the $3,500 amount shall be increased
         to $5,000.

                                       32
<PAGE>
 
                  (e) Death of the Participant. The Administration Committee
                      ------------------------
         will direct the Trustee, in accordance with this Section, to distribute
         to the Participant's Beneficiary the Participant's Nonforfeitable
         Accrued Benefit remaining in the Trust at the time of the Participant's
         death subject to the requirements of Code ss. 401(a)(9) and any
         regulations issued thereunder.

                           (1) Deceased Participant's Nonforfeitable Accrued
                               ---------------------------------------------
                  Benefit Does Not Exceed $3,500. The Administration Committee
                  ------------------------------
                  must direct the Trustee to distribute the deceased
                  Participant's Nonforfeitable Accrued Benefit in lump sum, as
                  soon as administratively practicable following the
                  Participant's death or, if later, the date on which the
                  Administration Committee receives notification of or otherwise
                  confirms the Participant's death. For Plan Years beginning
                  after December 31, 1997, the $3,500 amount shall be increased
                  to $5,000.

                           (2) Deceased Participant's Nonforfeitable Accrued
                               ---------------------------------------------
                  Benefit Exceeds $3,500. The Administration Committee will
                  ----------------------
                  direct the Trustee to distribute the deceased Participant's
                  Nonforfeitable Accrued Benefit at the time and in the method
                  elected by the Participant or, if applicable, by the
                  Beneficiary, as permitted under this Article VI. In the
                  absence of an election the Administration Committee will
                  direct the Trustee to distribute the Participant's
                  undistributed Nonforfeitable Accrued Benefit in lump sum on
                  the first distribution date following the close of the Plan
                  Year in which the Participant's death occurs or, if later, the
                  first distribution date following the date the Administration
                  Committee receives notification of or otherwise confirms the
                  Participant's death. For Plan Years beginning after December
                  31, 1997, the $3,500 amount shall be increased to $5,000.

                  If the death benefit is payable in full to the Participant's
         surviving spouse, the surviving spouse, in addition to the distribution
         options provided in this Section, may elect, if available, distribution
         at any time or in any form this Article VI would permit for a
         Participant.

                  (f) Distribution Date. A distribution date, unless otherwise
                      -----------------
         specified within the Plan, is the first day of each month of each Plan
         Year or as soon as administratively practicable thereafter.

         6.02 ELECTION AND MANNER OF PAYMENT. Not earlier than ninety (90) days,
              ------------------------------
but not later than thirty (30) days, before the Participant's distribution date,
the Administration Committee shall provide a benefit notice to the Participant.
The notice shall explain the options and material features available to the
Participant regarding the benefit distribution and the Participant's right to
defer distribution until attainment of Normal Retirement Age.

                                       33
<PAGE>
 
         The Administration Committee will direct the Trustee to make
distribution of the Accrued Benefit in a lump sum. In the event any part of the
Accrued Benefit is subject to the "put option" of Section 7.01 and the
distribution for all Participants exceeds $50,000, the Administrative Committee
may defer payment of the distribution over a period of years, not exceeding five
(5) years from the date a Participant is entitled to receive his Accrued
Benefit. The Administrative Committee shall make its decision to defer payment
of the distribution over the deferred period based upon the availability of
liquid assets of the Trust and the Company which will be required in the
distributions. If a Participant's Accrued Benefit attributable to Employer
Securities exceeds $500,000, the maximum payment period, subject to a contrary
election by the Participant, is five (5) years plus one additional year (but no
more than five (5) additional years) for each $100,000 (or fraction of $100,000)
by which the Employer Securities Account exceeds $500,000. The Administration
Committee will apply this Section 6.02 by adjusting the $500,000 and $100,000
limitations by the adjustment factor prescribed by the Secretary of the Treasury
under Code ss. 415(d).

         6.03 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
              -----------------------------------------------------------
joint and survivor annuity requirements do not apply to this Plan. The Plan does
not provide any annuity distribution to Participants nor to surviving spouses.

         6.04 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained
              ---------------------------------------------
in this Plan prevents the Trustee, in accordance with the direction of the
Administration Committee, from complying with the provisions of a qualified
domestic relations order (as defined in Code ss. 414(p)). This Plan specifically
permits distribution to an alternate payee under a qualified domestic relations
order at any time, irrespective of whether the Participant has attained his
earliest retirement age (as defined under Code ss. 414(p)) under the Plan. A
distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the order specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $3,500 ($5,000
for Plan Years beginning after December 31, 1997), and the order requires, the
alternate payee consents to any distribution occurring prior to the
Participant's attainment of earliest retirement age. Nothing in this Section
6.05 permits a Participant to receive distribution at a time otherwise not
permitted under the Plan nor does it permit the alternate payee to receive a
form of payment not permitted under the Plan.

         The Administration Committee must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Administration Committee promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the Administration Committee must determine the
qualified status of the order and must notify the Participant and each alternate
payee, in writing, of its determination. The Administration Committee must
provide notice under this paragraph by mailing to the individual's address
specified in the domestic relations order, or in a manner consistent with
applicable 

                                       34
<PAGE>
 
regulations.

         If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Administration Committee is making its
determination of the qualified status of the domestic relations order, the
Administration Committee must make a separate accounting of the amounts payable.
If the Administration Committee determines the order is a qualified domestic
relations order within eighteen (18) months of the date amounts first are
payable following receipt of the order, the Administration Committee will direct
the Trustee to distribute the payable amounts in accordance with the order. If
the Administration Committee does not make its determination of the qualified
status of the order within the 18-month determination period, the Administration
Committee will direct the Trustee to distribute the payable amounts in the
manner the Plan would distribute if the order did not exist and will apply the
order prospectively if the Administration Committee later determines the order
is a qualified domestic relations order.

         To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Administration Committee may direct the
Trustee to invest any partitioned amount in a segregated subaccount or separate
account and to invest the account in Federally insured, interest-bearing savings
account(s) or time deposit(s) (or a combination of both), or in other fixed
income investments. A segregated subaccount remains a part of the Trust, but it
alone shares in any income it earns, and it alone bears any expense or loss it
incurs. The Trustee will make any payments or distributions required under this
Section 6.04 by separate benefit checks or other separate distribution to the
alternate payee(s).

         6.05 DISTRIBUTION DEMAND FOR EMPLOYER SECURITIES. Distribution of a
              -------------------------------------------
Participant's benefit may be made in cash or Employer Securities or both,
provided, however, that if a Participant or Beneficiary so demands, such benefit
shall be distributed only in the form of Employer Securities. Prior to making a
distribution of benefits, the Administrator shall advise the Participant or his
Beneficiary, in writing, of the right to demand that benefits be distributed
solely in Employer Securities.

         If a Participant or Beneficiary demands that benefits be distributed
solely in Employer Securities, distribution of a Participant's benefit will be
made entirely in whole shares or other units of Employer Securities. Any balance
in a Participant's General Investment Account will be applied to acquire for
distribution the maximum number of whole shares or other units of Employer
Securities at the then fair market value. Any fractional unit value unexpended
will be distributed in cash. If Employer Securities are not available for
purchase by the Trustee, then the Trustee shall hold such balance until Employer
Securities are acquired and then make such distribution, subject to this
Article.

         If the charter or bylaws of the Company restrict the ownership of
substantially all outstanding shares of Employer Securities to current Employees
and the Trust, the distribution of a Participant's Accrued Benefit may be made
entirely in cash without granting him the right to demand distribution in
Employer Securities. Alternatively, Employer Securities may be 

                                       35
<PAGE>
 
distributed subject to the requirement that they be immediately resold to the
Company under payment terms that comply with Section 7.01.

         Any balance in a Participant's segregated investment account is not
subject to the demand right that benefits be distributed in the form of Employer
Securities.

         The Trustee will make distribution from the Trust only on instructions
from the Plan Administrator.

         6.06 ROLLOVER OF LUMP SUM DISTRIBUTION. This Section applies to all
              ---------------------------------
distributions other than the distribution of Employer Securities.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Article, a distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.

         For purposes of this Section, the following definitions apply:

                  (a) "Eligible rollover distribution." An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: (i) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary, or for a
specified period of ten (10) years or more; (ii) any distribution to the extent
such distribution is required under Code ss.401(a)(9); and (iii) the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion of net unrealized appreciation with respect to Employer
Securities).

                  (b) "Eligible retirement plan." An eligible retirement plan is
an individual retirement account described in Code ss.408(a), an individual
retirement annuity described in Code ss.408(b), an annuity plan described in
Code ss.403(a), or a qualified trust described in Code ss.401(a), that accepts
the distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement annuity.

                  (c) "Distributee." A distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
Code ss.414(p), are distributees with regard to the interest of the spouse or
former spouse.

                  (d) "Direct rollover." A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee.

                                       36
<PAGE>
 
                                   ARTICLE VII

                               EMPLOYER SECURITIES

         7.01 PUT OPTION. The Employer will issue a "put option" to each
              ----------
Participant receiving a distribution of Employer Securities from the Trust if
the Employer Securities are not publicly traded. The put option will permit the
Participant to sell the Employer Securities to the Employer, at any time during
two option periods, at the current fair market value.

         The first put option period runs for a period of at least sixty (60)
days commencing on the date of distribution of Employer Securities to the
Participant. The second put option period runs for a period of at least sixty
(60) days commencing after the new determination of the fair market value of
Employer Securities by the Administration Committee and notice to the
Participant of the new fair market value. A Disqualified Person shall be
required to wait for the determination of the next current fair market value
determination as required by Section 4.10.

         If a Participant (or his Beneficiary) exercises his put option, the
Employer must purchase the Employer Securities at fair market value upon the
terms provided under this Section 7.01. The Employer may grant the Trust an
option to assume the Employer's rights and obligations at the time a Participant
exercises an option under this Section 7.01.

         If the Employer (or the Trustee, at the direction of the Administration
Committee) exercises an option to purchase a Participant's Employer Securities
pursuant to an offer given under this Section 7.01, the purchaser(s) must make
payment in lump sum or, if the distribution to the Participant (or to his
Beneficiary) constitutes a Total Distribution, in substantially equal
installments over a period not exceeding five (5) years, subject to the
Participant's election for a longer payment period than five (5) years. A "Total
Distribution" to a Participant (or to a Beneficiary) is the distribution, within
one taxable year of the recipient, of the entire balance to the Participant's
credit under the Plan.

         In the case of a distribution which is not a Total Distribution or
which is a Total Distribution with respect to which the purchaser(s) will make
payment in lump sum, the purchaser(s) must pay the Participant (or Beneficiary)
the fair market value of the Employer Securities repurchased no later than
thirty (30) days after the date the Participant (or Beneficiary) exercises the
put option. In the case of a Total Distribution with respect to which the
purchaser(s) will make installment payments, the purchaser(s) must make the
first installment payment no later than thirty (30) days after the Participant
(or Beneficiary) exercises the put option. For installment amounts not paid
within thirty (30) days of the exercise of the put option, the purchaser(s) must
evidence the balance of the purchase price by executing a promissory note,
delivered to the selling Participant at the Closing. The note delivered at
Closing must bear a reasonable rate of interest, determined as of the Closing
Date, and the purchaser(s) must provide adequate security. The note must provide
for equal annual installments with interest payable with each installment, the
first installment being due and payable one year after the Closing Date. The
note further must provide 

                                       37
<PAGE>
 
for acceleration in the event of thirty (30) days' default of the payment on
interest or principal and must grant to the maker of the note the right to
prepay the note in whole or in part at any time or times without penalty;
provided however, the purchaser(s) may not have the right to make any prepayment
during the calendar year or fiscal year of the Participant (or Beneficiary) in
which the Closing Date occurs.

         In the case of a purchase from a Disqualified Person, all purchases of
Employer Securities shall be made at prices which, in the judgment of an
Independent Appraiser, do not exceed the fair market value of such shares as of
the date of the transaction.

         The requirements of this Section 7.01 shall not apply to the
distribution of any portion of a Participant's Accrued Benefit which has been
diversified or transferred to another plan pursuant to the provisions of Section
7.02 hereof.

         Notwithstanding the foregoing, the foregoing shall not be applicable to
a financial institution as defined in Code ss. 581 which is prohibited from
redeeming or purchasing its own securities, if the Participant has been provided
the option to receive its distribution from the Plan in cash.

         The protections and rights described in this Section 7.01 are
nonterminable with respect to all Employer Securities acquired with an Exempt
Loan. Should this Plan cease to be an employee stock ownership plan, or should
the Exempt Loan be repaid, Employer Securities acquired with the proceeds of an
Exempt Loan will continue to be subject to the provisions of this Section 7.01
after the loan is paid.

         7.02 DIVERSIFICATION OF INVESTMENTS. Within ninety (90) days after the
              ------------------------------
close of each Plan Year in the Qualified Election Period, each Participant who
has attained age fifty-five (55) and has completed ten (10) years of
participation under the Plan shall be permitted to direct the Plan as to the
investment of at least twenty-five percent (25%) of the number of shares ever
allocated to the Employer Securities Account, less those shares previously
diversified and or distributed. In the case of the sixth (6th) year of the
Qualified Election Period, the preceding sentence shall be applied by
substituting "fifty percent (50%)" for "twenty-five percent (25%)." The
Participant's direction shall be effective no later than ninety (90) days after
the close of the Plan Year.

         For purposes of this Section, Qualified Election Period shall mean the
six (6) Plan Year periods beginning with the Plan Year in which the Participant
was first eligible to make the election.

         The Administration Committee shall offer at least three (3) investment
options (not inconsistent with regulations prescribed by Internal Revenue
Service regulations) to each Participant who makes an election under this
Section 7.02 and such funds shall be held in a segregated investment account
under the General Investment Account.

                                       38
<PAGE>
 
         In lieu of offering such investment options, the Administration
Committee may direct that all amounts subject to Participant elections under
this Section 7.02 be distributed to Participants. All such distributions shall
be distributed within ninety (90) days after the close of the Plan Year and
shall be subject to the requirements of Article VI of this Plan.

         In lieu of receiving a cash distribution under this Section 7.02, a
Participant may direct the Plan to transfer his distribution to another
qualified plan of the Company which accepts such transfers, provided that such
plan permits employee-directed investments and does not invest in Employer
Securities to a substantial degree. Such transfer shall be made within ninety
(90) days after the close of the Plan Year.

         7.03 CASH DIVIDENDS. Cash dividends, if any, on shares of Employer
              --------------
Securities allocated to Participant Accounts may be accumulated in the Trust or
may be paid to Participants currently as determined in the discretion of the
Board of Directors of the Company, exercised in a uniform and nondiscriminatory
manner. Provided that if the Plan is primarily invested in Employer Securities,
it is intended that the Company shall be allowed a deduction with respect to any
dividends paid on shares of Employer Securities of any class held by the Plan on
the record date to the extent such dividends are paid in cash directly to the
Participants, or their Beneficiaries, or are paid to the Plan and are
distributed from the Plan to the Participants or their Beneficiaries not later
than ninety (90) days after the close of the Plan Year in which paid. Provided
further that if the Plan is primarily invested in Employer Securities and the
dividends otherwise qualify as a deductible dividend under Section 404(k) of the
Code, it is also intended that the Company shall be allowed a deduction for any
dividends paid on shares of Employer Securities (whether or not allocated) and
used to make payments on an Exempt Loan, provided that in the case of dividends
paid on allocated shares, Employer Securities having a fair market value equal
to the dividends will be allocated to such Participants for the year in which
such dividends would otherwise have been allocated to such Participants.

         7.04 RIGHT OF FIRST REFUSAL. If any Participant (or Beneficiary) who
              ----------------------
receives Employer Securities which are not publicly traded, under this Plan
desires to dispose of any of his Employer Securities for any reason during his
lifetime (whether by sale, assignment, gift or any other method of transfer), he
first must offer the Employer Securities for sale to the Employer. The
Administration Committee may require a Participant (or Beneficiary) entitled to
a distribution of Employer Securities to execute an appropriate stock transfer
agreement (evidencing the right of first refusal) prior to receiving a
certificate for Employer Securities.

         In the case of an offer by a third party, the offer of the Employer is
subject to all the terms and conditions set forth in Section 7.01, based on the
price equal to the fair market value per share and payable in accordance with
the terms of Section 7.01, unless the selling price and terms offered to the
Participant by the third party are more favorable to the Participant than the
selling price and terms of Section 7.01, in which event, the selling price and
terms of the offer of the third party apply. The Employer must give written
notice to the offering Participant of its acceptance 

                                       39
<PAGE>
 
of the Participant's offer within fourteen (14) days after the Participant has
given written notice to the Employer, or the Employer's rights under this
Section 7.04 will lapse. The Employer may grant the Plan the option to assume
the Employer's rights and obligations with respect to all or any part of the
Employer Securities offered to the Employer under this Section 7.04.

         7.05  VOTING EMPLOYER SECURITIES.  The Trustee shall vote all Employer
               --------------------------
Securities held by it as part of the Plan assets unless provided otherwise
hereinafter:

               (a)  If any agreement entered into by the Trust provides for
         voting of any shares of Employer Securities pledged as security for any
         obligation of the Plan, then such shares of Employer Securities shall
         be voted in accordance with such agreement. Otherwise, the Trustee
         shall vote the Employer Securities pledged.

               (b)  If the Employer has a registration-type class of securities,
         each Participant or Beneficiary shall be entitled to direct the Trustee
         as to the manner in which the Employer Securities which are allocated
         to the Employer Securities Account of such Participant or Beneficiary
         is to be voted.

               (c)  If the Employer does not have a registration-type class of
         securities, each Participant or Beneficiary in the Plan shall be
         entitled to direct the Trustee as to the manner in which voting rights
         on shares of Employer Securities which are allocated to the Employer
         Securities Account of such Participant or Beneficiary are to be
         exercised with respect to any corporate matter which involves the
         voting of such shares with respect to the approval or disapproval of
         any corporate merger or consolidation, recapitalization,
         reclassification, liquidation, dissolution, sale of substantially all
         assets of a trade or business, or such similar transaction as
         prescribed in applicable regulations.

               (d)  If the Employer does not have a registration-type class of
         securities and the by-laws of the Employer require the Plan to vote an
         issue in a manner that reflects a one-man, one-vote philosophy, each
         Participant or Beneficiary shall be entitled to cast one vote on an
         issue and the Trustee shall vote the shares held by the Plan in
         proportion to the results of the votes cast on the issue by the
         Participants and Beneficiaries. The Trustee may not vote Employer
         Securities which a Participant or Beneficiary, pursuant to this
         Section, fails to exercise unless compelled to by Department of Labor
         rules and regulations.

               (e)  For purposes of this Section 7.05, the term "registration-
         type class of securities" means: (i) a class of securities required to
         be registered under Section 12 of the Securities Exchange Act of 1934;
         and (ii) a class of securities which would be required to be so
         registered except for the exemption from registration provided in
         subsection (g)(2)(H) of such Section 12.

         7.06  LOANS TO PURCHASE EMPLOYER SECURITIES.  The Trustee is 
               -------------------------------------
specifically
              

                                       40
<PAGE>
 
authorized to borrow money or to assume indebtedness for the purpose of
acquiring Employer Securities, subject to the following terms and conditions
which shall apply to the Exempt Loan:

               (a)  The Trustee will use the proceeds of the loan within a
         reasonable time after receipt only for any or all of the following
         purposes: (i) to acquire Employer Securities, (ii) to repay such loan,
         or (iii) to repay a prior Exempt Loan. Except as provided in this
         Section 7.06, no Employer Security acquired with the proceeds of an
         Exempt Loan may be subject to a put, call or other option, or buy-sell
         or similar arrangement while held by and when distributed from this
         Plan, whether or not this Plan is then an employee stock ownership
         plan.

               (b)  The interest rate of the Exempt Loan may not be more than
         a reasonable rate of interest.

               (c)  Any collateral the Trustee pledges to the creditor must
         consist only of the assets purchased by the borrowed funds and those
         assets the Trust used as collateral on the prior Exempt Loan repaid
         with the proceeds of the current Exempt Loan.

               (d)  The creditor may have no recourse against the Trust under
         the Exempt Loan except with respect to such collateral given for the
         Exempt Loan, contributions (other than contributions of Employer
         Securities) that the Employer makes to the Trust to meet its
         obligations under the Exempt Loan, and earnings attributable to such
         collateral and the investment of such contributions. The payment made
         with respect to an Exempt Loan by the Plan during a Plan Year must not
         exceed an amount equal to the sum of such contributions and earnings
         received during or prior to the year less such payments in prior years.
         The Administration Committee and the Trustee must account separately
         for such contributions and earnings in the books of account of the Plan
         until the Trust repays the Exempt Loan.

               (e)  In the event of default upon the loan, the value of Plan
         assets transferred in satisfaction of the Exempt Loan must not exceed
         the amount of the default, and if the lender is a Disqualified Person,
         the Exempt Loan must provide for transfer of Plan assets upon default
         only upon and to the extent of the failure of the Plan to meet the
         payment schedule of the Exempt Loan.

               (f)  The Trustee must add and maintain all assets acquired with
         the proceeds of an Exempt Loan in a Loan Suspense Account. In
         withdrawing assets from the Loan Suspense Account, the Trustee will
         apply the provisions of Treas. Reg. (S)(S) 54.4975-7(b)(8) and (15) as
         if all securities in the Loan Suspense Account were encumbered. Upon
         the payment of any portion of the loan, the Trustee will effect the
         release of assets in the Loan Suspense Account from encumbrances. For
         each Plan Year during the duration of the Exempt Loan, the number of
         Employer Securities released must equal the number of encumbered
         Employer Securities held immediately before release for the current
         Plan 

                                       41
<PAGE>
 
         Year multiplied by a fraction. The numerator of the fraction is the
         amount of principal and interest paid for the Plan Year. The
         denominator of the fraction is the sum of the numerator plus the
         principal and interest to be paid for all future Plan Years. The number
         of future Plan Years under the loan must be definitely ascertainable
         and must be determined without taking into account any possible
         extension or renewal periods. If the interest rate under the Exempt
         Loan is variable, the interest to be paid in future Plan Years must be
         computed by using the interest rate applicable as of the end of the
         Plan Year. If collateral includes more than one class of Employer
         Securities, the number of Employer Securities of each class to be
         released for a Plan Year must be determined by applying the same
         fraction to each such class. The Administration Committee will allocate
         assets withdrawn from the Loan Suspense Account to the Accounts of
         Participants who otherwise share in the allocation of the Employer's
         contribution for the Plan Year for which the Trustee has paid the
         portion of the Exempt Loan resulting in the release of the assets. The
         Administration Committee consistently will make this allocation as of
         each Anniversary Date on the basis of non-monetary units, taking into
         account the relative Compensation of all such Participants for such
         Plan Year.

               The Administration Committee may also elect at the initiation of
         the Exempt Loan to have the Employer Securities released from the Loan
         Suspense Account solely with reference to principal payments. However,
         if release is determined with reference to principal payments only, the
         following additional rules apply: (1) the Exempt Loan must provide for
         annual payments of principal and interest at a cumulative rate that is
         not less rapid at any time than level annual payments of such amounts
         for ten (10) years; (2) interest included in any payment is disregarded
         only to the extent that it would be determined to be interest under
         standard loan amortization tables; and (3) the entire duration of the
         Exempt Loan repayment period does not exceed ten (10) years, even in
         the event of a renewal, extension or refinancing of the Exempt Loan.

               (g)  The loan must be for a specific term and may not be payable
         at the demand of any person except in the case of default.

               (h)  Notwithstanding the fact this Plan ceases to be an employee
         stock ownership plan, Employer Securities acquired with the proceeds of
         an Exempt Loan will continue after the Trustee repays the loan to be
         subject to the provisions of Section 7.01 and 7.04 (if applicable) as
         required by Treas. Reg. (S)(S) 54.4975-7(b)(4), (10), (11) and (12)
         relating to put, call or other options and to buy-sell or similar
         arrangements, and shall not be subjected to any additional puts, calls,
         options, buy-sell or similar arrangements while held by or when
         distributed from the Plan, except to the extent provided therein.

                                       42
<PAGE>
 
                                  ARTICLE VIII

                       EMPLOYER ADMINISTRATIVE PROVISIONS

         8.01 INFORMATION. The Employer shall, upon request or as may be
              -----------
specifically required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the
Administration Committee and Trustee to perform their respective duties and
functions under the Plan. The Employer's records as to the current information
the Employer furnishes to the Administration Committee and Trustee shall be
conclusive as to all persons.

         8.02 NO LIABILITY. The Employer assumes no obligation or responsibility
              ------------
to any of the Employees, Participants, or Beneficiaries for any act of, or
failure to act, on the part of the Administration Committee (unless the Employer
is the Administration Committee), or the Plan Administrator (unless the Employer
is the Plan Administrator).

         8.03 EMPLOYER ACTION. Any action required of the Employer shall be by
              ---------------
resolution of its Board of Directors or by a person authorized to act by Board
resolution.

         8.04 INDEMNITY. The Employer agrees it will indemnify and save harmless
              ---------
the Board of Directors, individual Trustee(s), and the members of the
Administration Committee, and each of them, from and against any and all loss
resulting from liability to which the Board of Directors, individual Trustee(s),
and the Administration Committee, or the members of the Board of Directors and
Administration Committee, may be subjected by reason of any act or conduct
(except willful or reckless misconduct) in their official capacities in the
administration of this Plan or Trust or both, including all expenses reasonably
incurred in their defense, in case the Employer fails to provide such defense.
The indemnification provisions of this Section 8.04 shall not relieve the Board
of Directors, individual Trustee(s), or any members of the Administration
Committee from any liability each may have under the Act for breach of a
fiduciary duty.

                                       43
<PAGE>
 
                                   ARTICLE IX

                            ADMINISTRATION COMMITTEE

         9.01 APPOINTMENT OF COMMITTEE. The Employer shall appoint an
              ------------------------
Administration Committee to administer the Plan, the members of which may or may
not be Participants in the Plan.

         9.02 TERM. Each member of the Administration Committee shall serve
              ----
until his successor is appointed. Any member of the Administration Committee may
be removed by the Board of Directors, with or without cause, which shall have
the power to fill any vacancy which may occur. An Administration Committee
member may resign upon written notice to the Employer.

         9.03 COMPENSATION. The members of the Administration Committee shall
              ------------
serve without compensation for services as such, but the Employer shall pay all
expenses, including the expenses for any bond required under Act (S) 412. To the
extent such expenses are not paid by the Employer, they shall be paid by the
Trustee from the Trust Fund.

         9.04 POWERS OF ADMINISTRATION COMMITTEE. The Administration Committee
              ----------------------------------
shall have the following powers and duties, which it shall exercise under the
Plan in a uniform and nondiscriminatory manner:

               (a)  To direct the administration of the Plan in accordance with
         the provisions herein set forth;

               (b)  To adopt rules of procedure and regulations necessary for
         the administration of the Plan provided the rules are not inconsistent
         with the terms of the Plan;

               (c)  To determine all questions with regard to rights of
         Employees, Participants, and Beneficiaries under the Plan, including
         but not limited to rights of eligibility of an Employee to participate
         in the Plan, the value of a Participant's Accrued Benefit, and the
         Accrued Benefit of each Participant;

               (d)  To enforce the terms of the Plan and the rules and
         regulations it adopts;

               (e)  To direct the Trustee as respects the crediting and
         distribution of the Trust and all other matters within its discretion
         as provided in the Trust Agreement;

               (f) To review and render decisions respecting a claim for (or
         denial of a claim for) a benefit under the Plan;

                                       44
<PAGE>
 
               (g)  To furnish the Employer with information which the Employer
         may require for tax or other purposes;

               (h)  To engage the service of counsel (who may, if appropriate,
         be counsel for the Employer) and agents whom it may deem advisable to
         assist it with the performance of its duties;

               (i)  To prescribe procedures to be followed by distributees in
         obtaining benefits;

               (j)  To receive from the Employer and from Employees such
         information as shall be necessary for the proper administration of the
         Plan;

               (k)  To receive and review reports of the financial condition and
         of the receipts and disbursements of the Trust Fund from the Trustee;

               (l)  To establish a nondiscriminatory policy which the Trustee
         shall observe in making loans, if any, to Participants;

               (m)  To maintain, or cause to be maintained, separate Accounts in
         the name of each Participant to reflect each Participant's Accrued
         Benefit under the Plan;

               (n)  To select a secretary, who need not be a member of the
         Administration Committee;

               (o)  To interpret and construe the Plan;

               (p)  To select the issuing company or companies from which
         insurance contracts, if any, shall be purchased as provided herein; and
         to determine the form, type, and kind of such contract;

               (q)  To engage the services of an Investment Manager or Managers
         (as defined in Act (S) 3(38)), each of whom shall have full power and
         authority to manage, acquire or dispose of (or direct the Trustee with
         respect to such acquisition or disposition) any plan asset under its
         control; and

               (r)  To direct the Trustee in the investment, reinvestment, and
         disposition of the Trust Fund as provided in the Trust Agreement.

         9.05 MANNER OF ACTION. The decision of a majority of the members of the
              ----------------
Administration Committee appointed and qualified shall control. In case of a
vacancy in the membership of the Administration Committee, the remaining members
of the Administration Committee may exercise any and all of the powers,
authorities, duties, and discretions conferred 

                                       45
<PAGE>
 
upon such Administration Committee pending the filling of the vacancy. The
Administration Committee may, but need not, call or hold formal meetings. Any
decisions made or action taken pursuant to written approval of a majority of the
then members shall be sufficient. The Administration Committee shall maintain
adequate records of its decisions.

         9.06 AUTHORIZED REPRESENTATIVE. The Administration Committee may
              -------------------------
authorize any one of its members, or its secretary, to sign on its behalf any
notice, directions, applications, certificates, consents, approvals, waivers,
letters, or other documents. The Administration Committee must evidence this
authority by an instrument signed by all its respective members and filed with
the Trustee.

         9.07 NONDISCRIMINATION. The Administration Committee shall administer
              -----------------
the Plan in a uniform, nondiscriminatory manner for the exclusive benefit of the
Participants and their Beneficiaries.

         9.08 INTERESTED MEMBER. No member of the Administration Committee may
              -----------------
decide or determine any matter concerning the distribution, nature, or method of
settlement of his own benefits under the Plan unless there is only one person
acting alone in the capacity as the Administration Committee.

         9.09 FUNDING POLICY. The Administration Committee shall review, not
              --------------
less often than annually, all pertinent Employee information and Plan data in
order to establish the funding policy of the Plan and to determine the
appropriate methods of carrying out the Plan's objectives. The Administration
Committee shall communicate annually to the Trustee and to any Plan Investment
Manager the Plan's short-term and long-term financial needs so investment policy
can be coordinated with Plan financial requirements.

         9.10 INDIVIDUAL STATEMENT. As soon as practicable after the Valuation
              --------------------
Date of each Plan Year but within the time prescribed by the Act and the
regulations under the Act, the Administration Committee will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his Accrued Benefit in the Trust as of that date and such other information the
Act requires be furnished the Participant or Beneficiary. No Participant, except
a member of the Administration Committee, shall have the right to inspect the
records reflecting the Account of any other Participant.

         9.11 BOOKS AND RECORDS. The Administration Committee shall maintain, or
              -----------------
cause to be maintained, records which will adequately disclose at all times the
state of the Trust Fund and of each separate interest therein. The books, forms,
and methods of accounting shall be the responsibility of the Administration
Committee.

         9.12 UNCLAIMED ACCOUNT PROCEDURE. Neither the Trustee nor the
              ---------------------------
Administration Committee shall be obliged to search for, or ascertain the
whereabouts of, any Participant or Beneficiary. The Administration Committee, by
certified or registered mail addressed to his last known address of record with
the Administration Committee or the 

                                       46
<PAGE>
 
Employer, shall notify any Participant or Beneficiary that he is entitled to a
distribution under this Plan, and the notice shall quote the provisions of this
Section. If the Participant or Beneficiary fails to claim his distributive share
or make his whereabouts known in writing to the Administration Committee within
six (6) months from the date of mailing of the notice, or before this Plan is
terminated or discontinued, whichever should first occur, the Administration
Committee shall direct the Trustee to segregate the Participant's unclaimed
Accrued Benefit in a segregated interest bearing Account in the name of the
Participant or Beneficiary. The Administration Committee shall then notify the
Social Security Administration of the Participant's (or Beneficiary's) failure
to claim the distribution to which he is entitled. The Administration Committee
shall request the Social Security Administration to notify the Participant (or
Beneficiary) in accord with the procedures it has established for this purpose.
The segregated Account shall be entitled to all income it earns and shall bear
all expense or loss it incurs.

                                       47
<PAGE>
 
                                    ARTICLE X

                      PARTICIPANT ADMINISTRATIVE PROVISIONS

         10.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
               -----------------------
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee shall pay his Accrued Benefit in the event of his death. A
Participant's Beneficiary designation shall not be valid unless the
Participant's spouse consents to the Beneficiary designation. A Participant's
Beneficiary designation does not require spousal consent if the Participant's
spouse is the Participant's designated Beneficiary, or if the Participant and
his spouse were not married throughout the one-year period ending on the date of
the Participant's death. The spousal consent shall be in a manner consistent
with (S) 401(a)(11) and (S) 417(a)(2)(A) of the Code, shall be in writing, shall
acknowledge the effect of the consent, and shall be witnessed by a notary public
or the Plan Administrator (or his representative). The Administration Committee
shall prescribe the form for the written designation of Beneficiary and, upon
the Participant's filing the form with the Administration Committee, it
effectively shall revoke all designations filed prior to that date by the same
Participant.

         10.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
               --------------------------
Beneficiary in accordance with Section 10.01, or if the Beneficiary named by a
Participant predeceases him or dies before complete distribution of the
Participant's Accrued Benefit, then the Trustee shall pay the Participant's
Accrued Benefit in accordance with Article VII hereof in the following order of
priority:

               (a)  To the Participant's surviving spouse;

               (b)  To the Participant's surviving children, including adopted
         children, in equal shares;

               (c)  To the Participant's surviving parents, in equal shares; or

               (d)  To the legal representative of the estate of the last to
         die of the Participant and his Beneficiary.

         The Administration Committee shall direct the Trustee as to the method
and to whom the Trustee shall make payment under this Section 10.02.

         10.03 PERSONAL DATA TO ADMINISTRATION COMMITTEE. Each Participant and
               -----------------------------------------
Beneficiary must furnish to the Administration Committee evidence, data, or
information as the Administration Committee considers necessary or desirable for
the purpose of administering the Plan. The provisions of this Plan are effective
for the benefit of each Participant upon the condition precedent that each
Participant will furnish promptly full, true, and complete evidence, data, and
information when requested by the Administration Committee, provided the

                                       48
<PAGE>
 
Administration Committee shall advise each Participant of the effect of his
failure to comply with its request.

         10.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary
               ------------------------
of a deceased Participant shall file with the Administration Committee, in
writing, his post office address, and each subsequent change of such post office
address. Any payment or distribution hereunder, and any communication addressed
to a Participant or his Beneficiary, mailed to the last address filed with the
Administration Committee, or if no such address has been filed, then to the last
address indicated on the records of the Employer, shall be deemed to have been
delivered to the Participant or his Beneficiary on the date that such
distribution or communication is deposited in the United States Mail, postage
prepaid.

         10.05 ASSIGNMENT OR ALIENATION. Subject to Code (S) 414(p) relating to
               ------------------------
qualified domestic relations orders, no benefit payable under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse, or for any other
relative of the Participant, prior to actually being received by the person
entitled to the benefit under the terms of the Plan. The Trust Fund shall not in
any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any person entitled to benefits hereunder.

         10.06 LITIGATION AGAINST THE TRUST. If any legal action which is filed
               ----------------------------
against the Trustee, Board of Directors, or the Administration Committee, or
against any member or members of the Administration Committee or Board of
Directors, by or on behalf of any Participant or Beneficiary, results adversely
to the Participant or to the Beneficiary, the Trustee shall reimburse itself,
the Board of Directors, Administration Committee, and any member or members of
the Administration Committee or Board of Directors, all costs and fees expended
by it or them by surcharging all costs and fees against the same payable under
the Plan to the Participant or to the Beneficiary, but only to the extent a
court of competent jurisdiction specifically authorizes and directs any such
surcharges.

         10.07 INFORMATION AVAILABLE. Any Participant in the Plan or any
               ---------------------
Beneficiary may examine copies of the summary plan description, the latest
annual report, any bargaining agreement, this Plan, contracts, or any other
instrument under which the Plan was established or is operated. The
Administration Committee will maintain all of the items listed in this Section
in its office, or in such other place or places as may be designated from time
to time in order to comply with the regulations issued under the Act, for
examination during reasonable business hours. Upon the written request of a
Participant or Beneficiary, the Administration Committee shall furnish him with
a copy of any item listed in this Section. The Administration Committee may make
a reasonable charge to the requesting person for the copy so furnished.

         10.08 BENEFICIARY'S RIGHT TO INFORMATION. A Beneficiary's right to (and
               ----------------------------------
the Administration Committee's duty to provide to the Beneficiary) information
or data concerning 

                                       49
<PAGE>
 
the Plan shall not arise until he first becomes entitled to receive a benefit
under the Plan.

         10.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Administration
               ---------------------------------------
Committee shall provide adequate notice in writing to any Participant or to any
Beneficiary ("Claimant") whose claim for benefits under the Plan has been
denied. The Administration Committee's notice to the Claimant shall set forth:

               (a)  The specific reason for the denial;

               (b)  Specific references to pertinent Plan provisions on which
         the Administration Committee based its denial;

               (c)  A description of any additional material and information
         needed for the Claimant to perfect his claim and an explanation of why
         the material or information is needed;

               (d)  A statement that the Claimant may;

                    (i)   Request a review upon written application to the
               Administration Committee;

                    (ii)  Review pertinent Plan documents; and

                    (iii) Submit issues and comments in writing; and

               (e)  That any appeal the Claimant wishes to make of the adverse
         determination must be in writing to the Administration Committee within
         seventy-five (75) days after receipt of the Administration Committee's
         notice of denial of benefits. The Administration Committee's notice
         must further advise the Claimant that his failure to appeal the action
         to the Administration Committee in writing within the seventy-five
         (75)-day period will render the Administration Committee's
         determination final, binding, and conclusive.

         If the Claimant should appeal to the Administration Committee, he, or
his duly authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent. The
Administration Committee shall re-examine all facts related to the appeal and
make a final determination as to whether the denial of benefits is justified
under the circumstances. The Administration Committee shall advise the Claimant
of its decision within sixty (60) days of the Claimant's written request for
review, unless special circumstances (such as a hearing) would make a rendering
of a decision within the sixty (60) day limit infeasible, but in no event shall
the Administration Committee render a decision respecting a denial for a claim
for benefits later than one hundred twenty (120) days after its receipt of a
request for review. A written statement stating the decision on review, the
specific reasons for the decision, and the specific Plan provisions on which the
decision is based shall be mailed or delivered to the 

                                       50
<PAGE>
 
Claimant within such sixty (60) (or one hundred twenty (120)) day period.

         The Administration Committee's notice of denial of benefits shall
identify the name of each member of the Administration Committee and the name
and address of the Administration Committee member to whom the Claimant may
forward his appeal.

         10.10 NO RIGHTS IMPLIED. Nothing contained in this Plan, or any
               -----------------
modification or amendment to the Plan, or in the creation of any benefit, or the
payment of any benefit, shall give any Employee, Participant, or any Beneficiary
any right to continue employment, or any legal or equitable right against the
Employer or any officer, director, or Employee of the Employer, or its agents or
employees, except as expressly provided by the Plan, or the Act.

         10.11 NOTICE OF CHANGE OF TERMS. The Plan Administrator, within the
               -------------------------
time prescribed by the Act and the applicable regulations, shall furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by the Act to be furnished without charge.

                                       51
<PAGE>
 
                                   ARTICLE XI

                               FIDUCIARIES' DUTIES

         11.01 NAMED FIDUCIARY. The "Named Fiduciary" of the Plan shall consist
               ---------------
of the following:

                  (a) The Employer;

                  (b) The Administration Committee;

                  (c) The Trustee; and

                  (d) Such other person or persons that are designated to carry
         out fiduciary responsibilities under the Plan in accordance with
         Section 11.03(c) hereof.

Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan. A Named Fiduciary may employ one or more persons to
render advice with regard to any responsibility such Named Fiduciary has under
the Plan.

         11.02 ALLOCATION OF RESPONSIBILITIES. The powers and responsibilities
               ------------------------------
of the Named Fiduciary are hereby allocated as indicated below:

               (a) Employer. The Employer shall be responsible for all
                   --------
         functions assigned or reserved to it under the Plan and Trust
         Agreement. Any authority assigned or reserved to the Employer under the
         Plan and Trust Agreement shall be exercised by resolution of the
         Employer's Board of Directors.

               (b) Administration Committee. The Administration Committee
                   ------------------------
         shall have the responsibility and authority to control the operation
         and administration of the Plan in accordance with the terms of the Plan
         and Trust Agreement, except with respect to duties and responsibilities
         specifically allocated to other fiduciaries. The Administration
         Committee shall have the responsibility and authority to control the
         investment of the Trust Fund in accordance with the terms of the Plan
         and Trust Agreement, except with respect to duties and responsibilities
         specifically allocated to other fiduciaries. The Administration
         Committee shall have the authority to issue written directions to the
         Trustee to the extent provided in the Trust Agreement. The Trustee
         shall follow the Administration Committee's directions unless it is
         clear that the actions to be taken under those directions would be
         violations of applicable fiduciary standards or would be contrary to
         the terms of the Plan or Trust Agreement.

               (c) Trustee. The Trustee shall have the duties and
                   -------
         responsibilities set out in the Trust Agreement, subject, however, to
         direction by the Administration Committee as

                                       52
<PAGE>
 
         set out in the Trust Agreement.

               (d) Allocation. Powers and responsibilities may be allocated
                   ----------
         to other fiduciaries in accordance with Section 11.03 hereof, or as
         otherwise provided herein or in the Trust Agreement.

This Article is intended to allocate to each Named Fiduciary the individual
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by two
or more of such Named Fiduciaries unless such sharing shall be provided by a
specified provision of the Plan or Trust Agreement.

         11.03 PROCEDURES FOR DELEGATION AND ALLOCATION OF RESPONSIBILITIES.
               ------------------------------------------------------------
Fiduciary responsibilities may be allocated as follows:

               (a) The Administration Committee may specifically allocate
         responsibilities to a specified member or members of the Administration
         Committee.

               (b) The Administration Committee may designate a person or
         persons other than a Named Fiduciary to carry out fiduciary
         responsibilities under the Plan. This authority shall not cause any
         person or persons employed to perform ministerial acts and services for
         the Plan to be deemed fiduciaries of the Plan.

               (c) The Administration Committee may appoint an Investment
         Manager or managers to manage (including the power to acquire and
         dispose of) the assets of the Plan (or a portion thereof).

               (d) If at any time there be more than one Trustee serving
         under the Trust Agreement, such Trustees may allocate specific
         responsibilities, obligations, or duties among themselves in such
         manner as they shall agree.

Any allocation of responsibilities pursuant to this Section shall be made by
filing a written notice thereof with the Administration Committee specifically
designating the person or persons to whom such responsibilities or duties are
allocated and specifically setting out the particular duties and
responsibilities with respect to which the allocation or designation is made.

         11.04 GENERAL FIDUCIARY STANDARDS. Subject to Section 11.05 hereof, a
               ---------------------------
Named Fiduciary shall discharge his duties with respect to the Plan solely in
the interest of the Participants and their Beneficiaries,

               (a) for the exclusive purpose of providing benefits to
         Participants and their Beneficiaries and defraying reasonable expenses
         of administering the Plan; and

               (b) with the care, skill, prudence, and diligence under the
         circumstances then prevailing that a prudent man acting in a like
         capacity and familiar with such matters 

                                       53
<PAGE>
 
         would use in the conduct of any enterprise of a like character and with
         like aims; and

               (c) by diversifying the investments of the Plan, other than
         the investment in Employer Securities, so as to minimize the risk of
         large losses, unless under the circumstances it is clearly prudent not
         to do so; and

               (d) in accordance with the documents and instruments governing
         the Plan, insofar as such documents and instruments are consistent with
         the provisions of Title I of the Act.

         11.05 LIABILITY AMONG CO-NAMED FIDUCIARIES.
               ------------------------------------  

               (a) General. Except for any liability which he may have under
                   -------
         the Act, a fiduciary shall not be liable for the breach of a fiduciary
         duty or responsibility by another fiduciary of the Plan except in the
         following circumstances:

                   (i)   He participates knowingly in, or knowingly undertakes
               to conceal, an act or omission of such other fiduciary, knowing
               such act or omission is a breach;

                   (ii)  By his failure to comply with the general fiduciary
               standards set out in Section 11.04 hereof in the administration
               of his specific responsibilities which give rise to his status as
               a fiduciary to commit a breach; or

                   (iii) He has knowledge of a breach by such other fiduciary
               and he does not undertake reasonable efforts under the
               circumstances to remedy the breach.

               (b) Co-Trustees. In the event that there are two or more
                   -----------
         Trustees serving under the Trust Agreement, each should use reasonable
         care to prevent a Co-Trustee from committing a breach of fiduciary
         responsibility and they shall jointly manage and control assets of the
         Plan, except that in the event of an allocation of responsibilities,
         obligations, or duties, a Trustee to whom such responsibilities,
         obligations, or duties have not been allocated shall not be liable to
         any person by reason of this Section, either individually or as a
         Trustee, for any loss resulting to the Plan arising from the acts or
         omissions on the part of the Trustee to whom such responsibilities,
         obligations, or duties have been allocated.

               (c) Liability Where Allocation is in Effect. To the extent
                   ---------------------------------------
         that fiduciary responsibilities are specifically allocated by a Named
         Fiduciary, or pursuant to the express terms hereof, to any person or
         persons, then such Named Fiduciary shall not be liable for any act or
         omission of such person in carrying out such responsibility except to
         the extent that the Named Fiduciary violated Section 11.04 hereof: (i)
         with respect to such allocation or designation, (ii) with respect to
         the establishment or implementation of the procedure for making such an
         allocation or designation, (iii) in continuing the allocation or

                                       54
<PAGE>
 
         designation, or (iv) the Named Fiduciary would otherwise be liable in
         accordance with this Section 11.05.

               (d) Liability of Trustee Following Administration Committee
                   -------------------------------------------------------
         Directions. No Trustee shall be liable for following instructions of
         ----------
         the Administration Committee given pursuant to Section 11.02(b) and (c)
         hereof.

               (e) No Responsibility for Employer Action. Neither the Trustee
                   -------------------------------------   
         nor the Administration Committee shall have any obligation or
         responsibility with respect to any action required by the Plan to be
         taken by the Employer, any Participant or eligible Employee, or the
         failure of any of the above persons to act or make any payment or
         contribution, or to otherwise provide any benefit contemplated under
         this Plan, nor shall the Trustee or the Administration Committee be
         required to collect any contribution required under the Plan, or
         determine the correctness of the amount of any Employer contribution.

               (f) No Duty to Inquire. Neither the Trustee nor the
                   ------------------
         Administration Committee shall have any obligation to inquire into or
         be responsible for any action or failure to act on the part of others.

               (g) Liability of Trustee Where Investment Manager Appointed.
                   -------------------------------------------------------
         If an Investment Manager has been appointed pursuant to Section
         11.03(c) hereof, then neither the Trustee nor the Administration
         Committee shall be liable for the acts or omissions of such Investment
         Manager, or be under any obligation to invest or otherwise manage any
         assets of the Plan which are subject to the management of such
         Investment Manager.

               (h) Successor Fiduciary. No Named Fiduciary shall be liable
                   -------------------
         with respect to any breach of fiduciary duty if such breach was
         committed before he became a Named Fiduciary or after he ceased to be a
         Named Fiduciary.

                                       55
<PAGE>
 
                                   ARTICLE XII

                    DISCONTINUANCE, AMENDMENT AND TERMINATION

         12.01 DISCONTINUANCE. The Employer shall have the right, at any time,
               --------------
to suspend or discontinue its contribution under the Plan.

         12.02 AUTHORITY TO AMEND THE PLAN. The Employer may amend the Plan at
               ---------------------------
any time. However, it shall be impossible, at any time before the satisfaction
of all liabilities hereunder, for any monies to revert to the Employer or be
used for any purpose other than the exclusive benefit of the Participants and
persons claiming through them.

         Provided however, that the amendment of the Plan (including any
         Restatement) shall not:

               (a)      revise the vested Accrued Benefit of a Participant
         determined as of the later of the date such amendment is adopted, or
         the date such amendment becomes effective, if such revised vested
         Accrued Benefit is less than that computed under the Plan without
         regard to such amendment; or

               (b)      revise the vesting schedule under the Plan unless each
         Participant having at least three (3) years or more of Service is
         permitted to elect within a reasonable period after the adoption of
         such amendment to have his vested Accrued Benefit computed under the
         Plan without regard to such amendment. For Plan Years beginning prior
         to January 1, 1989, the election described above applies only to
         Participants having at least five (5) Years of Service with the
         Employer. A reasonable period for purposes of this Section 12.02(b)
         shall be a period which begins no later than the date the Plan
         amendment is adopted and ends no later than the last to occur of the
         following:

                        (i)      sixty (60) days after the day the Plan
               amendment is adopted;

                        (ii)     sixty (60) days after the day on which the Plan
               amendment becomes effective; or

                        (iii)    sixty (60) days after a Participant is issued
               written notice of the Plan amendment.

         Provided further, no amendment shall:

               (a) Authorize or permit any of the Trust Fund (other than the
         part which is required to pay taxes and administration expenses) to be
         used for or diverted to purposes other than for the exclusive benefit
         of the Participants or their Beneficiaries;

               (b) Cause or permit any portion of the Trust Fund to revert to
         or become the 

                                       56
<PAGE>
 
         property of the Employer;

               (c) Increase the duties or responsibilities of the Trustee or
         the Administration Committee without the written consent of the
         affected Trustee or the affected member of the Administration
         Committee.

The Employer shall make all amendments in writing. Each amendment shall state
the date to which it is either retroactively or prospectively effective.

         12.03 TERMINATION. The Employer shall have the right to terminate the
               -----------
Plan at any time. The Plan shall terminate upon the first to occur of the
following:

               (a) The date terminated by action of the Board of Directors;

               (b) The date the Employer shall be judicially declared
         bankrupt or insolvent; or

               (c) The dissolution, merger, consolidation, or reorganization
         of the Employer or the sale by the Employer of all or substantially all
         of its assets, unless the successor or purchaser makes provisions to
         continue the Plan, in which event the successor or purchaser shall be
         substituted as the Employer under this Plan.

         12.04 VESTING ON TERMINATION OR SUSPENSION. Notwithstanding any other
               ------------------------------------
provision of the Plan to the contrary, upon the date of full or partial
termination of the Plan, or, upon complete discontinuance of contributions to
the Plan, an affected Participant's right to his Accrued Benefit shall be one
hundred percent (100%) Nonforfeitable. The Administration Committee shall
interpret and administer this Section 12.04 in accord with the intent and scope
of the regulations issued under Code (S) 411(d)(3).

         12.05 PROCEDURE ON TERMINATION. In the event of termination of the Plan
               ------------------------
or permanent discontinuance of Employer contributions, the Employer shall, in
its sole discretion, authorize any one of the following procedures:

               (a) Continue Plan. To continue the Plan in operation in all
                   ------------- 
         respects until the Trustee has distributed all benefits under the Plan,
         except that no further persons shall become Participants, no further
         Employee contributions shall be made, all Accounts shall be fully
         vested, and no further payments shall be made except in distribution of
         the Trust Fund and payment of administration expenses; or

               (b) Liquidate Plan. To wind up and liquidate the Plan and
                   -------------- 
         Trust and distribute the assets thereof after deduction of all expenses
         to the Participants, Former Participants, and Beneficiaries in
         accordance with their respective Accounts as then constituted. If the
         Employer makes no election before termination, then this subsection (b)
         will govern distribution of the Trust Fund.

                                       57
<PAGE>
 
         12.06 MERGER. The Trustee shall not consent to, or be a party to, any
               ------
merger or consolidation with another plan, or to a transfer of assets or
liabilities to another plan, unless immediately after the merger, consolidation,
or transfer, the surviving Plan provides each Participant a benefit equal to or
greater than the benefit each Participant would have received had the Plan
terminated immediately before the merger, consolidation, or transfer.

         12.07 NOTICE OF CHANGE OF TERMS. The Administration Committee, within
               -------------------------
the time prescribed by the Act and applicable regulations, shall furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by the Act to be furnished without charge.

         12.08 INITIAL QUALIFICATION. Notwithstanding any other provisions of
               ---------------------
this Plan, the Employer's adoption of this Plan is subject to the condition
precedent that the Plan initially shall be approved and deemed qualified by the
Internal Revenue Service as satisfying the requirements of (S) 401(a) of the
Code and that the Trust shall be entitled to exemption under the provisions of
(S) 501(a). In the event the Employer shall fail to secure such initial
determination, the contributions made by the Employer together with any income
received or accrued thereon less any expenses paid shall be returned to the
Employer and the Plan and Trust shall terminate. No Participant or Beneficiary
shall have any right or claim to the Trust Fund or to any benefit under the Plan
before the Internal Revenue Service initially determines that the Plan and Trust
qualify under the provisions of (S)(S) 401(a) and 501(a) of the Code.

         12.09 REVERSION OF EXCESS ACCOUNT. Notwithstanding any provisions
               ---------------------------
contained herein to the contrary, the Employer reserves the right to recover
upon the termination of the Plan and Trust Fund any amounts held in an excess
account that cannot be allocated to the accounts of Participants and their
Beneficiaries in the year of termination because of the limitations contained in
Article III of the Plan and (S) 415 of the Code after the satisfaction of all
fixed and contingent obligations to Participants and their Beneficiaries under
the Plan.

                                       58
<PAGE>
 
                                  ARTICLE XIII

                                    THE TRUST

         13.01 PURPOSE OF THE TRUST FUND. A Trust Fund has been created and will
               -------------------------
be maintained for the purposes of the Plan, and the assets thereof shall be
invested in accordance with the terms of the Trust Agreement. The primary
purpose of the Plan is for the investment in Employer Securities. The Trustee
will apply contributions to pay any outstanding obligations of the Trust
incurred for the purchase of Employer Securities or they may be applied to
purchase additional Employer Securities from current shareholders, treasury
shares, or newly issued shares from the Company. All contributions will be paid
into the Trust Fund, and all benefits under the Plan will be paid from the Trust
Fund.

         13.02 APPOINTMENT OF TRUSTEE. Trustee(s) shall be appointed by the
               ----------------------
Board of Directors to administer the Trust Fund. The Trustee's obligations,
duties, and responsibilities shall be governed solely by the terms of the Trust
Agreement.

         13.03 EXCLUSIVE BENEFIT OF PARTICIPANTS. Subject to Sections 3.04 and
               ---------------------------------
12.08 hereof, the Trust Fund will be used and applied only in accordance with
the provisions of the Plan to provide the benefits thereof, and no part of the
corpus or income of the Trust Fund shall be used for or diverted to purposes
other than for the exclusive benefit of the Participants and their Beneficiaries
and with respect to expenses of administration. Notwithstanding the preceding
sentence, as provided in Section 12.09 hereof, the Employer reserves the right
to recover any amounts held in an excess account at the termination of the Trust
Fund that cannot be allocated to the accounts of Participants and their
Beneficiaries in the year of termination because of the limitations contained in
Article III of the Plan and (S) 415 of the Code.

         13.04 BENEFITS SUPPORTED ONLY BY THE TRUST FUND. Any person having any
               -----------------------------------------
claim under the Plan will look solely to the assets of the Trust Fund for
satisfaction.

                                       59
<PAGE>
 
                                   ARTICLE XIV

                                 TOP HEAVY RULES

         14.01 MINIMUM EMPLOYER CONTRIBUTION. If this Plan is top heavy in any
               -----------------------------
Plan Year, the Plan guarantees a minimum contribution (subject to the provisions
of this Article XIV) of three percent (3%) of Compensation for each Non-Key
Employee who is a Participant employed by the Employer on the Valuation Date of
the Plan Year, without regard to Hours of Service completed by such Participant
during the Plan Year. The Plan satisfies the guaranteed minimum contribution for
the Non-Key Employee if the Non-Key Employee's contribution rate is at least
equal to the minimum contribution. For purposes of this paragraph, a Non-Key
Employee Participant includes any Employee otherwise eligible to participate in
the Plan but who is not a Participant because his Compensation does not exceed a
specified level.

         If the contribution rate for the Key Employee with the highest
contribution rate is less than three percent (3%), the guaranteed minimum
contribution for Non-Key Employees shall equal the highest contribution rate
received by a Key Employee. The contribution rate is the sum of Employer
contributions (not including Employer contributions to Social Security) and
forfeitures allocated to the Participant's Account for the Plan Year divided by
his Compensation for the Plan Year. For purposes of determining the minimum
contribution, the Administration Committee shall consider contributions made to
any plan pursuant to a salary reduction agreement or similar arrangement as
Employer contributions with respect to Highly Compensated Employees, but shall
not consider such contributions as Employer contributions with respect to
non-Highly Compensated Employees. To determine the contribution rate, the
Administration Committee shall consider all qualified top heavy defined
contribution plans maintained by the Employer as a single plan.

         14.02 ADDITIONAL CONTRIBUTION. If the contribution rate for the Plan
               -----------------------
Year with respect to a Non-Key Employee described in Section 14.01 is less then
the minimum contribution, the Employer will increase its contribution for such
Employee to the extent necessary so his contribution rate for the Plan Year will
equal the guaranteed minimum contribution. The Administration Committee shall
allocate the additional contribution to the Account of the Non-Key Employee for
whom the Employer makes the contribution.

         14.03 DETERMINATION OF TOP HEAVY STATUS. The Plan is top heavy for a
               ---------------------------------
Plan Year if the top heavy ratio as of the Determination Date exceeds sixty
percent (60%). The top heavy ratio is a fraction, the numerator of which is the
sum of the present value of Accrued Benefits of all Key Employees as of the
Determination Date, the contributions due as of the Determination Date, and
distributions made within the five (5) Plan Year period ending on the
Determination Date, and the denominator of which is a similar sum determined for
all Employees. The Administration Committee shall calculate the top heavy ratio
by disregarding the Accrued Benefit of any Non-Key Employee who was formerly a
Key Employee. The Administration Committee shall calculate the top heavy ratio
by disregarding the Accrued Benefit (including 

                                       60
<PAGE>
 
distributions, if any, of the Accrued Benefit) of an individual who has not
performed any service for the Employer during the five (5) Plan Year period
ending on the Determination Date. The Administration Committee shall calculate
the top heavy ratio, including the extent to which it must take into account
distributions, rollovers and transfers, in accordance with Code (S) 416 and the
regulations under that Code section.

         If the Employer maintains other qualified plans (including a simplified
employee pension plan), this Plan is top heavy only if it is a part of the
Required Aggregation Group, and the top heavy ratio for both the Required
Aggregation Group and the Permissive Aggregation Group exceeds sixty percent
(60%). The Administration Committee will calculate the top heavy ratio in the
same manner as required by the first paragraph of this Section 14.03, taking
into account all plans within the Aggregation Group. To the extent the
Administration Committee must take into account distributions to a Participant,
the Administration Committee shall include distributions from a terminated plan
which would have been part of the Required Aggregation Group if it were in
existence on the Determination Date. The Administration Committee shall
calculate the present value of Accrued Benefits and the other amounts the
Administration Committee must take into account under defined benefit plans or
simplified employee pension plans included within the group in accordance with
the terms of those plans, Code (S) 416 and the regulations under that Code
section. If an aggregated plan does not have a valuation date coinciding with
the Determination Date, the Administration Committee shall value the Accrued
Benefits in the aggregated plan as of the most recent valuation date falling
within the twelve-month period ending on the Determination Date. The
Administration Committee shall calculate the top heavy ratio with reference to
the Determination Dates that fall within the same calendar year.

         14.04 LIMITATION ON ALLOCATIONS. If, during any Limitation Year, this
               -------------------------
Plan is top heavy, the Administration Committee shall apply the limitations of
Article III to a Participant by substituting "100%" for "125%" each place it
appears in Section 3.06. This Section 14.04 shall not apply if:

               (a)   The contribution rate for a Non-Key Employee who
         participates only in the defined contribution plan(s) would satisfy
         Section 14.01 if the Administration Committee substituted four percent
         (4%) for three percent (3%).

               (b)   A Non-Key Employee who participates in the top heavy
         defined benefit plan(s) receives an extra minimum contribution or
         benefit which satisfies Code (S) 416(h)(2); and

               (c)   The top heavy ratio does not exceed ninety percent (90%).

         14.05 DEFINITIONS. For purposes of applying the provisions of this
               ----------- 
Article XIV:

               (a) "Key Employee" shall mean, as of any Determination Date,
         any Employee or former Employee (or Beneficiary of such Employee) who,
         at any time 

                                       61
<PAGE>
 
         during the Plan Year (which includes the Determination Date) or during
         the preceding four (4) Plan Years, is an officer (having annual
         Compensation in excess of 150% of the Code (S) 415(c)(1)(A) limitation
         in effect for any such Plan Years) of the Employer, one of the
         Employees (having annual Compensation in excess of the Code (S)
         415(c)(1)(A) limitation in effect for any such Plan Years) owning the
         ten (10) largest interests in the Employer, a more than five percent
         (5%) owner of the Employer, or a more than one percent (1%) owner of
         the Employer who has annual Compensation of more than $150,000. The
         constructive ownership rules of Code (S) 318 (or the principles of that
         section, in the case of an unincorporated Employer,) will apply to
         determine ownership in the Employer. The Administration Committee will
         make the determination of who is a Key Employee in accordance with Code
         (S) 416(i) and the regulations under that Code section.

               (b)  "Non-Key Employee" is an Employee who does not meet the
         definition of Key Employee.

               (c)  "Required Aggregation Group" means:

                    (1)  Each qualified plan of the Employer in which at least
               one (1) Key Employee participates; and

                    (2)  Any other qualified plan of the Employer which enables
               a plan described in (1) to meet the requirements of Code (S)
               401(a)(4) or Code (S) 410.

               (d)  "Permissive Aggregation Group" is the Required Aggregation
         Group plus any other qualified plans maintained by the Employer, but
         only if such group would satisfy in the aggregate the requirements of
         Code (S) 401(a)(4) and Code (S) 410. The Administration Committee shall
         determine which plans to take into account in determining the
         Permissive Aggregation Group.

               (e)  "Employer" shall mean all the members of a controlled
         group of corporations (as defined in Code (S) 414(b)), of a commonly
         controlled group of trades or businesses (whether or not incorporated)
         (as defined in Code (S) 414(c)), or an affiliated service group (as
         defined in Code (S) 414(m)), of which the Employer is a part. However,
         the Administration Committee shall not aggregate ownership interests in
         more than one member of a related group to determine whether an
         individual is a Key Employee because of his ownership interest in the
         Employer.

               (f)  "Determination Date" for any Plan Year is the Valuation
         Date of the preceding Plan Year or, in the case of the first Plan Year
         of the Plan, the Valuation Date of that Plan Year.

                                       62
<PAGE>
 
         14.06 MINIMUM VESTING. For any Plan Year in which this Plan is top
               ---------------
heavy, the minimum vesting schedule will automatically apply to the Plan, unless
the vesting schedule specified in Section 5.05 of the Plan results in more rapid
vesting for Participants.
         If the minimum vesting schedule automatically applies, it shall apply
to all benefits within the meaning of (S) 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits accrued before the
effective date of Code (S) 416 and benefits accrued before the Plan became top
heavy. Further, no reduction in vested benefits may occur in the event the
Plan's status as top heavy changes for any Plan Year. However, this Section does
not apply to the Accrued Benefit of any Employee who does not have an Hour of
Service after the Plan has initially become top heavy, and such Employee's
Accrued Benefit attributable to Employer contributions and forfeitures will be
determined without regard to this Section.

         The nonforfeitable interest of each Employee in his or her Accrued
Benefit attributable to Employer Contributions shall be determined on the basis
of the following:

               20% vesting after 2 years of service 
               40% vesting after 3 years of service 
               60% vesting after 4 years of service 
               80% vesting after 5 years of service
              100% vesting after 6 years of service

Should the Plan cease to be top heavy, the above-stated vesting schedule shall
revert to that stated in Article V subject to the conditions of Article XII and
it shall be deemed that all Participants having three (3) or more years of
Service shall have elected to retain the schedule stated in this Section if it
results in more rapid vesting.

         14.07 NONAPPLICATION OF THIS ARTICLE. If the Participant is provided
               ------------------------------
with the minimum benefit required by (S) 416 of the Code which is subject to the
above-stated vesting schedule in another plan of the Employer, the provisions of
this Article XIV will have no application.

                                       63
<PAGE>
 
                                   ARTICLE XV

                                  MISCELLANEOUS


         15.01 EXECUTION OF RECEIPTS AND RELEASES. Any payment to any
               ---------------------------------- 
Participant, or to his legal representative or Beneficiary, in accordance with
the provisions of the Plan, shall to the extent thereof be in full satisfaction
of all claims hereunder against the Plan and Trust. The Administration Committee
may require such a Participant, legal representative, or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release therefor
in such form as it shall determine.

         15.02 NO GUARANTEE OF INTERESTS. Neither the Trustee, the
               ------------------------- 
Administration Committee, nor the Employer guarantee the Trust Fund from loss or
depreciation. The Employer does not guarantee the payment of any money which may
be due or may become due to any person from the Trust Fund. The liability of the
Administration Committee and the Trustee to make any payment from the Trust Fund
is limited to the then available assets of the Trust.

         15.03 PAYMENT OF EXPENSES. All expenses incident to the administration,
               -------------------
termination, protection of the Plan and Trust, including but not limited to
legal, accounting, and Trustee fees, shall be paid by the Employer, except that
in case of failure of the Employer to pay the expenses, they will be paid from
the Trust Fund, and until paid, shall constitute a first and prior claim and
lien against the Trust Fund.

         15.04 EMPLOYER RECORDS. Records of the Employer as to an Employee's or
               ----------------
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence, re-employment, and compensation will be conclusive
on all persons, unless determined to be incorrect.

         15.05 INTERPRETATIONS AND ADJUSTMENTS. To the extent permitted by law,
               -------------------------------   
an interpretation of the Plan and a decision of any matter within the Named
Fiduciary's discretion made in good faith is binding on all persons. A
misstatement or other mistake of fact shall be corrected when it becomes known
and the person responsible shall make such adjustment on account thereof as he
considers equitable and practicable.

         15.06 UNIFORM RULES. In the administration of the Plan, uniform rules
               -------------
will be applied to all Participants similarly situated.

         15.07 EVIDENCE. Evidence required of anyone under the Plan may be by
               --------
certificate, affidavit, document, or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.

         15.08 SEVERABILITY. In the event any provision of the Plan shall be
               ------------
held to be illegal or invalid for any reason, the illegal or invalid provisions
of the Plan shall be fully severable and 

                                       64
<PAGE>
 
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.

         15.09 NOTICE. Any notice required to be given herein by the Trustee,
               ------
the Employer, or the Administration Committee, shall be deemed delivered, when
(a) personally delivered, or (b) placed in the United States mail, postage
prepaid, in an envelope addressed to the last known address of the person to
whom the notice is given.

         15.10 WAIVER OF NOTICE. Any person entitled to notice under the Plan
               ----------------
may waive the notice.

         15.11 SUCCESSORS. The Plan shall be binding upon all persons entitled
               ----------
to benefits under the Plan, their respective heirs and legal representatives,
upon the Employer, its successors and assigns, and upon the Trustee, the
Administration Committee, and their successors.

         15.12 HEADINGS. The titles and headings of Articles and Sections are
               --------
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.

         15.13 GOVERNING LAW. All questions arising with respect to the
               -------------
provisions of this Agreement shall be determined by application of the laws of
the State of North Carolina except to the extent North Carolina law is preempted
by Federal statute.

         Signed the 5th day of December, 1997, effective as of the 1st day of
January, 1997.

                             MOORESVILLE SAVINGS BANK, SSB



                             By: /s/ George W. Brawley, Jr. 
                                ---------------------------------
                                            President



ATTEST:

/s/ Billy R. Williams
----------------------------
 Secretary

                                       65
<PAGE>
 
                         EMPLOYEE STOCK OWNERSHIP TRUST

                                       OF

                          MOORESVILLE SAVINGS BANK, SSB


















                                  Prepared By:

              Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
                     Greensboro and Raleigh, North Carolina
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE> 
<CAPTION> 
                                                                                    Page
<S>      <C>       <C>                                                              <C> 
RECITALS...............................................................................1

TITLE AND DESCRIPTIONS.................................................................2
         1.01      TITLE...............................................................2
         1.02      TERMS DEFINED IN PLAN...............................................2
         1.03      WORD USAGE..........................................................2

PLAN AND TRUST COMPLEMENTARY...........................................................3
         2.01      COMPLEMENTARY.......................................................3
         2.02      INTENT TO QUALIFY...................................................3

CONTRIBUTIONS..........................................................................4
         3.01      CONTRIBUTIONS.......................................................4
         3.02      COMMINGLING OF FUNDS................................................4

PAYMENTS FROM TRUST FUND...............................................................5
         4.01      DISTRIBUTIONS.......................................................5
         4.02      DIRECTION BY PLAN ADMINISTRATOR.....................................5
         4.03      TRUST FUND FOR EXCLUSIVE BENEFIT OF PARTICIPANTS....................5
         4.04      LIABILITY FOR PAYMENTS..............................................5
         4.05      RETURN OF EMPLOYER CONTRIBUTIONS....................................5
         4.06      PAYMENT IN THE EVENT OF DISABILITY OR INCAPACITY....................5

INVESTMENT OF TRUST FUND...............................................................7
         5.01      INVESTMENTS.........................................................7
         5.02      INVESTMENT MANAGER..................................................7
         5.03      DIRECTION OF INVESTMENTS............................................8
         5.04      SEPARATE INVESTMENT ACCOUNTS........................................9
         5.05      INVESTMENT IN POOLED FUND...........................................9

POWERS OF THE TRUSTEE.................................................................10
         6.01      INVESTMENT POWERS..................................................10
         6.02      ANCILLARY TRUSTEE..................................................12

ADMINISTRATIVE PROVISIONS.............................................................14
         7.01      ACCOUNTS AND RECORDS...............................................14
         7.02      INTENTION TO QUALIFY...............................................14
         7.03      PLAN ADMINISTRATOR ACTION..........................................14
         7.04      VALUATION OF TRUST.................................................14
</TABLE> 
<PAGE>
 
<TABLE> 

                                                                                    Page
         <S>       <C>                                                                <C> 
         7.05      EMPLOYER ACTION....................................................15
         7.06      RELIANCE ON WRITTEN INSTRUMENT.....................................15
         7.07      LIABILITY FOR PAYMENT OF FUNDS.....................................15
         7.08      LIABILITY OF TRUSTEE...............................................15
         7.09      COURT PROCEEDINGS..................................................15
         7.10      PARTIES TO LITIGATION..............................................15
         7.11      THIRD PARTY........................................................15
         7.12      AUTHORIZATION WITH RESPECT TO TAXES................................16
         7.13      CONSULTATION WITH COUNSEL..........................................16
         7.14      NO INTEREST IN EMPLOYER............................................16
         7.15      FEES AND EXPENSES..................................................16
         7.16      BONDING OF TRUSTEE.................................................16
         7.17      RELATIONSHIP OF FIDUCIARIES........................................16
         7.18      PRUDENT MAN RULE...................................................17
         7.19      ALIENATION.........................................................17
         7.20      LIMITATION ON LIABILITY - IF INVESTMENT MANAGER
                           APPOINTED..................................................17
         7.21      INSURANCE COMPANY PROTECTED........................................17

TRUSTEE LIABILITY.....................................................................18
         8.01      TRUSTEE LIABILITY..................................................18

SUBSTITUTION OF TRUSTEE...............................................................19
         9.01      TRUSTEE............................................................19
         9.02      RESIGNATION........................................................19
         9.03      REMOVAL............................................................19
         9.04      SUCCESSION OF TRUSTEE..............................................19
         9.05      MERGER OF CORPORATE TRUSTEE........................................19

AMENDMENT AND TERMINATION.............................................................20
         10.01     AMENDMENT..........................................................20
         10.02     TERMINATION........................................................20
         10.03     SUSPENSION OF CONTRIBUTIONS........................................20
         10.04     MERGER OR CONSOLIDATION............................................20
         10.05     REVERSION OF SUSPENSE ACCOUNT......................................20

OTHER EMPLOYERS; SUCCESSOR EMPLOYERS..................................................21
         11.01     ADOPTION BY OTHER EMPLOYERS........................................21
         11.02     CONTINUATION BY EMPLOYER'S SUCCESSOR...............................21

MISCELLANEOUS PROVISIONS..............................................................22
         12.01     CONTRIBUTIONS NOT RECOVERABLE......................................22
         12.02     LIMITATIONS ON PARTICIPANTS' RIGHTS................................22
         12.03     INDEMNIFICATION OF INDIVIDUAL TRUSTEE..............................22
         12.04     RECEIPT OF RELEASE.................................................22
</TABLE> 
<PAGE>
 
<TABLE> 
                                                                                    Page
         <S>       <C>                                                              <C> 
         12.05     ACCEPTANCE.........................................................22
         12.06     ACCOUNTING PERIOD..................................................22
         12.07     TITLE OF TRUST ASSETS..............................................22
         12.08     NOTICE.............................................................23
         12.09     HEADINGS...........................................................23
         12.10     GOVERNING LAW......................................................23
         12.11     EXECUTIONS AND COUNTERPARTS........................................23
</TABLE> 
<PAGE>
 
                         EMPLOYEE STOCK OWNERSHIP TRUST
                                       OF
                          MOORESVILLE SAVINGS BANK, SSB




         This Agreement by and between MOORESVILLE SAVINGS BANK, SSB, a North
Carolina corporation (the "Employer" and sometimes referred to herein as the
"Company"), and the undersigned Trustee(s) (the "Trustee").




                                    RECITALS
                                    --------

         WHEREAS, MOORESVILLE SAVINGS BANK, SSB has adopted an Employee Stock
Ownership Plan for the benefit of its employees;

         NOW, THEREFORE, the Employee Stock Ownership Trust of Mooresville
Savings Bank, SSB is hereby adopted in its entirety so that it shall provide as
follows:

                                       1
<PAGE>
 
                                   ARTICLE I

                            TITLE AND DESCRIPTIONS

         1.01 TITLE. This Trust Agreement shall be known as the Employee Stock
              -----
Ownership Trust of Mooresville Savings Bank, SSB.

         1.02 TERMS DEFINED IN PLAN. The definitions set forth in the Plan are
              ---------------------
hereby incorporated by reference.

         1.03 WORD USAGE. Words used in the masculine shall apply to the
              ----------
feminine where applicable, and wherever the context of the Plan dictates, the
plural shall be read as the singular and the singular as the plural.

                                       2
<PAGE>
 
                                  ARTICLE II

                         PLAN AND TRUST COMPLEMENTARY

         2.01 COMPLEMENTARY. This Trust Agreement is established effective as of
              -------------
the 1st day of January, 1997. The Trustee's rights, powers, titles, duties,
responsibilities, discretions, and immunities shall be governed solely by this
Trust Agreement except as specifically referenced in the provisions of the Plan.

         2.02 INTENT TO QUALIFY. The Plan and Trust are intended to satisfy the
              -----------------
requirements of Sections 401 and 501 of the Code and the requirements of the
Act, and all provisions hereof shall be construed to that result.

                                       3
<PAGE>
 
                                  ARTICLE III

                                 CONTRIBUTIONS

         3.01 CONTRIBUTIONS. The Trustee shall receive all contributions made to
              -------------
it in cash or in other property acceptable to it. All contributions so received
together with the income therefrom and any other increment thereon shall be
held, managed, and administered by the Trustee pursuant to the terms of the Plan
and Trust without distinction between principal and income. The Trustee shall be
accountable to the Employer for the funds contributed to it by the Employer, but
shall have no duty to administer the Plan nor to determine that the
contributions received from the Employer comply with the provisions of the Plan
or that the assets of the Trust are adequate to provide any benefit payable
pursuant to the Plan. The Trustee shall not be obligated to collect any
contributions from the Employer, nor be obligated to see that funds deposited
with it are deposited according to the provisions of the Plan.

         3.02 COMMINGLING OF FUNDS. Unless otherwise directed by the Plan
              --------------------
Administrator, the Trustee shall hold, invest, and administer the Trust assets
as a single fund without identification of any part of the Trust assets to the
Employer or to any Participant or group of Participants or their Beneficiaries.

                                       4
<PAGE>
 
                                  ARTICLE IV

                           PAYMENTS FROM TRUST FUND

         4.01 DISTRIBUTIONS. Payments shall be made from the Trust Fund by the
              -------------
Trustee to such persons, in such manner, at such times, and in such amounts as
the Plan Administrator shall from time to time direct in writing, provided,
however, the Trustee may withhold compliance with the Plan Administrator's
direction to the extent that, and so long as, the Trustee shall deem such
withholding necessary to insure payment of the Trustee's expenses or to protect
the Trustee against liability for taxes or any other liability.

         4.02 DIRECTION BY PLAN ADMINISTRATOR. The Trustee shall not be liable
              -------------------------------
for any distribution made or acts done by it pursuant to written directions of
the Plan Administrator. The Trustee shall not be obligated to inquire as to
whether any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the manner of
making any payment or distribution. The Trustee shall be accountable only to the
Plan Administrator for any payment or distribution made by it on the order or
direction of the Plan Administrator.

         4.03 TRUST FUND FOR EXCLUSIVE BENEFIT OF PARTICIPANTS. Subject to
              ------------------------------------------------
Section 4.05 hereof, it shall be impossible, at any time, for any part of the
Trust Fund, other than such part as is required to pay taxes and administration
expenses, to revert to the Employer, or to be used for, or diverted to, purposes
other than for the exclusive benefit of the Participants, Former Participants,
or their Beneficiaries prior to the satisfaction of all liabilities under the
Plan. The term "liability" as used herein includes both fixed and contingent
obligations owed to the Participants and their Beneficiaries. It shall be
impossible for the Employer to recover any portion of the Trust Fund other than
such amounts, if any, as may remain in the Trust Fund because of erroneous
actuarial calculations, after the satisfaction of all fixed and contingent
obligations to Participants and their Beneficiaries under the Plan.

         4.04 LIABILITY FOR PAYMENTS. The liability of the Trustee to make
              ----------------------
payments from the Trust Fund is limited to the available assets of the Trust.

         4.05 RETURN OF EMPLOYER CONTRIBUTIONS. Notwithstanding any provisions
              --------------------------------
herein to the contrary, upon the Employer's request, a contribution which was
made upon a mistake of fact, conditioned upon qualification of the Plan, or upon
deductibility of the contribution under Section 404 of the Code, shall be
returned to the Employer within one year after payment of the contribution,
denial of the qualification, or disallowance of the deduction (to the extent
disallowed), as the case may be.

         4.06 PAYMENT IN THE EVENT OF DISABILITY OR INCAPACITY. If any person
              ------------------------------------------------
entitled to benefits hereunder (the "Payee") shall be under a legal disability,
or, in the sole judgment of the Plan Administrator, shall be unable to apply
such payment in furtherance of his own interest and advantage, payments
hereunder may be made in any one or more of the

                                       5
<PAGE>
 
following ways as directed by the Plan Administrator:

                  (a) To the Payee directly;

                  (b) To the guardian of his person or his estate;

                  (c) To a relative of the Payee, to be expended for his
         benefit; or

                  (d) To the custodian of the Payee under any Uniform Gifts (or
         Transfers) to Minors Act.

The Trustee shall not be obligated to determine whether any Payee is a minor or
is so incapacitated, but may rely on the Plan Administrator's directions as to
payment of benefits. The Plan Administrator's determination of minority or
incapacity of the Payee shall be final. Any payment made by the Trustee pursuant
to the powers herein conferred shall operate as a complete discharge of all
obligations of the Trustee and the Plan Administrator, to the extent of the
distributions so made.

                                       6
<PAGE>
 
                                   ARTICLE V

                           INVESTMENT OF TRUST FUND

         5.01 INVESTMENTS. The Trust Fund, except such estimated amounts as in
              -----------
the opinion of the Trustee are required by current payments and expenses, shall
be invested and reinvested by the Trustee without distinction between principal
and income in Employer Securities unless specifically provided to the contrary.
It is specifically acknowledged that the purpose of this Trust is to invest in
Employer Securities as provided in the Act. Subject to the provisions of this
Article V and Article VI hereof, the Trustee is authorized to invest and
reinvest the Trust Fund in such bonds, notes, debentures, mortgages,
interest-bearing accounts and certificates (including those maintained by the
Trustee, if the Trustee is a bank), investment trust certificates, preferred or
common stock, real estate, savings and loan accounts, interest in oil, gas and
minerals, Insurance Contracts, with or without cash surrender value, or in such
other property, real, personal or mixed, either within or without the state of
North Carolina, without being limited by any statute or rule of law regarding
investments by trustees. The Trustee may invest in any common collective trust
fund or pooled investment fund (which could constitute a permissible investment
with respect to the Plan) maintained by any bank (including itself, if the
Trustee is a bank) in North Carolina or in any other state of the United States.
The Trustee may hold any portion of the Trust Fund in cash for a reasonable
period pending investment or payment of expenses or benefits. The Trustee shall
have the further right, to the extent permissible under applicable law and the
Plan, to (a) purchase, sell, exchange, and retain preferred or common stocks or
other marketable obligations, consisting of bonds, debentures, notes,
certificates, or other evidences of indebtedness, issued by an Employer or by an
Affiliate and (b) acquire and hold parcels or real property (and related
personal property) which is leased, or is to be leased, to an Employer or to an
Affiliate. For the purposes of this Section, an Affiliate shall mean any
corporation which is an Affiliate (within the meaning of Section 407(d)(7) of
the Act) of any Employer.

         5.02 INVESTMENT MANAGER. The Plan Administrator is given the power to
              ------------------
appoint one or more Investment Managers (herein so called) to exercise full
investment management authority with respect to all or a portion of the assets
of the Trust Fund and to authorize payment of the fees and expenses of such
Investment Manager from the assets of the Trust Fund. In the event the Plan
Administrator exercises this right, the Plan Administrator shall certify to the
Trustee and such Investment Manager the scope of the duties and responsibilities
of the Investment Manager. Such Investment Manager shall be either (a)
registered as an investment adviser under the Investment Advisers Act of 1940,
(b) a bank, as defined in the Investment Advisers Act of 1940, or (c) an
insurance company qualified to manage, acquire or dispose of plan assets under
the laws of more than one state. Upon its appointment, the Investment Manager
shall certify and acknowledge in writing to the Plan Administrator and the
Trustee that he is a fiduciary with respect to the Plan and Trust, and that he
has assumed the duties and responsibilities conferred upon him by the Plan
Administrator. The duties, responsibilities, and authority of any such
Investment Manager may be revoked or modified by the Plan Administrator at any
time by written notice to such Investment Manager and to the Trustee. Any
Investment

                                       7
<PAGE>
 
Manager duly appointed and authorized by the Plan Administrator, shall, during
the period of his appointment, possess fully and absolutely those powers,
rights, and duties of the Trustee (to the extent delegated by the Plan
Administrator and to the extent permissible under the terms of this Trust
Agreement) with respect to the investment or reinvestment of that portion of the
plan assets over which such Investment Manager has investment management
authority. During any period of time when such Investment Manager is so
appointed and serving, and with respect to those assets of the Trust Fund over
which such Investment Manager exercises investment management authority, the
Trustee's responsibility shall be limited to holding such assets as a custodian,
providing accounting services, disbursing benefits as authorized, and executing
such investment instructions only as directed by such Investment Manager. The
Trustee shall not be responsible for any acts or omissions of such Investment
Manager. Any certificates or other instrument duly signed by such Investment
Manager (or the authorized representative of such Investment Manager),
purporting to evidence any instruction, direction or order of such Investment
Manager with respect to the investment of those assets of the Plan over which
the Investment Manager has investment management authority shall be accepted by
the Trustee as conclusive proof thereof. The Trustee shall also be fully
protected in acting in good faith upon any notice, instruction, direction,
order, certification, opinion, letter, telegram, or other document believed by
the Trustee to be genuine and to be by such Investment Manager (or the
authorized representative of such Investment Manager). The Trustee shall not be
liable for any action taken or omitted by such Investment Manager or for any
mistakes of judgment or other action made, taken or omitted by the Trustee in
good faith upon direction of such Investment Manager.

         5.03 DIRECTION OF INVESTMENTS. Notwithstanding any provision contained
              ------------------------
herein to the contrary, the Plan Administrator shall have the right and power at
any time and from time to time (but shall not be obliged) to direct the Trustee
in writing to purchase, sell, lease, retain, or otherwise act for the Trustee in
regard to any property, real, personal, or mixed, tangible or intangible and the
Trustee shall comply with and carry out such directions without being liable or
responsible in any way for any losses or unfavorable results resulting from its
compliance with such directions; provided that:

                  (a) So long as, and to the extent that, the Plan Administrator
         fails to deliver directions to the Trustee under this Section, the
         Trustee shall manage, control, invest, and reinvest the Trust Fund
         under the powers granted in Article VI hereof with the same force and
         effect as if this Section were not a part of this Agreement.

                  (b) No person dealing with the Trustee shall be required to
         determine whether any sale or purchase by the Trustee has been
         authorized or directed by the Plan Administrator, but each person shall
         be fully protected in dealing with the Trustee in the same manner as if
         this Section were not a part of this Agreement; and

                  (c) The Plan Administrator shall not direct the Trustee to
         invest in the stocks, bonds, notes, debentures, or other obligations of
         an Employer or any of its subsidiaries, whether domestic or foreign,
         nor direct the purchase of any such investment or any other
         property from, or sell to, an Employer or any of its subsidiaries
         without first obtaining a 

                                       8
<PAGE>
 
         prior ruling from the Internal Revenue Service that such purchase or
         sale would not adversely affect the qualified status of this Trust
         under Section 401(a) of the Code. The Trustee, in its sole discretion,
         may refuse to comply with any direction of the Plan Administrator which
         the Trustee deems to be improper or contrary to the provisions of the
         Plan or any applicable Federal or state statutes.

         5.04 SEPARATE INVESTMENT ACCOUNTS. The Plan Administrator may direct
              ----------------------------
the Trustee to maintain separate Investment Accounts (herein so called) for each
Participant and Beneficiary. The Administration Committee may direct the Trustee
as to the investment of each separate Investment Account and the Trustee shall
be fully protected with respect to any investment so made. If separate
Investment Accounts are established, as of the Valuation Date for each
Limitation Year, the Trustee shall allocate and credit the net income (or net
loss) of each Participant's segregated Investment Account solely to such
Investment Account.

         5.05 INVESTMENT IN POOLED FUND. If a bank is acting as Trustee, the
              -------------------------
Plan Administrator may specifically authorize the Trustee to invest all or any
portion of the assets comprising the Trust Fund in any collective investment
trust which at the time of the investment provides for the pooling of the assets
of plans described in Section 401(a) of the Code. This authorization applies
solely to a collective investment trust the Trustee maintains and only if the
Trustee has received a determination letter from the Internal Revenue Service to
the effect the collective investment trust is exempt from Federal income tax.
The provisions of the collective investment trust agreement, as amended by the
Trustee from time to time, are by this reference incorporated within the Plan
and this Trust. The provisions of the collective investment trust shall govern
any investment of Plan assets in that trust.

                                       9
<PAGE>
 
                                  ARTICLE VI

                             POWERS OF THE TRUSTEE

         6.01 INVESTMENT POWERS. Subject to the provisions of Article VIII, the
              -----------------
Trustee is authorized and empowered, but not by way of limitation, with the
following powers, rights, and duties:

                  (a) Property Transactions. To sell, exchange, convey,
                      ---------------------
         transfer, or dispose of and also to grant options with respect to any
         property, whether real or personal, at any time held by it, and any
         sale may be made by private contract or by public auction, and no
         person dealing with the Trustee shall be bound to see to the
         application of the purchase money or to inquire into the validity,
         expediency, or propriety of any such sale or other disposition.

                  (b) Operation and Lease. To retain, manage, operate, repair,
                      -------------------
         and improve and to mortgage or lease for any period and on such terms
         as the Trustee shall deem proper any
         real estate or personal property held by the Trustee, including power
         to demolish any buildings or other improvements in whole or in part; to
         erect buildings or other improvements; to make leases that may extend
         beyond the term of the Trust; and to foreclose, extend, renew, assign,
         release or partially release and discharge mortgages or other liens.

                  (c) Vote. To vote in person or by proxy, with or without power
                      ----
         of substitution, any stocks, bonds, or other securities held in Trust.

                  (d) Stock Rights. To exercise any options appurtenant to any
                      ------------
         stocks, bonds, or other securities for the conversion thereof into
         other stocks, bonds or securities, or to exercise any rights to
         subscribe for additional stocks, bonds, or other securities and to make
         any and all necessary payments thereof; to join in, dissent from, or
         oppose the reorganization, recapitalization, consolidation, sale, or
         merger of corporations or properties in which it may be interested as
         Trustee, upon such terms and conditions as it may deem wise and to
         accept any securities which may be issued upon any such reorganization,
         recapitalization, consolidation, sale, or merger and thereafter to hold
         the same.

                  (e) Bank Trustee: Transaction by Trustee with Itself. If the
                      ------------------------------------------------
         Trustee is a bank, to contract or otherwise enter into transactions
         between itself as Trustee and as a bank, between itself as Trustee and
         the Employer, its subsidiaries and affiliates or any of them, or
         between itself as Trustee and any other institution for which it then,
         theretofore, or thereafter may be acting as Trustee, subject to the
         provisions of the Act.

                  (f) Borrow. To borrow money from any source in such amounts
                      ------
         and upon such terms and for such purposes as the Trustee may determine
         and in connection

                                      10
<PAGE>
 
         therewith to execute promissory notes, mortgages, or other obligations
         and to pledge or mortgage any Trust assets as security.

                  (g) Cash. To retain in cash so much of the Trust Fund as it
                      ----
         may deem advisable to satisfy liquidity needs of the Plan and to
         deposit any cash held in the Trust Fund in a bank account without
         liability for the highest rate of interest available, including, if a
         bank is acting as Trustee, specified authority to invest in deposits of
         the Trustee.

                  (h) Investments. To invest and reinvest all or any part of the
                      -----------
         Trust Fund in bonds, debentures, mortgages, notes, common or preferred
         stocks, with or without par value, real estate, and such other property
         as the Trustee deems proper.

                  (i) Mineral Investments. To purchase, convey, lease, and
                      -------------------
         otherwise deal with oil, gas and other minerals, mineral rights, and
         royalties; to operate and develop oil, gas, and other mineral
         properties and interest, including, but not limited to, the power to
         make and release oil, gas, and mineral leases and subleases; to make
         mineral deeds and royalty transfers; to create, reserve and dispose of
         overriding royalties, oil payments, gas payments, and any other
         interests; to execute division orders and transfer orders; to enter
         into development and drilling contracts, operating agreements and
         utilization agreements; and to make agreements for present or future
         pooling of any and all interests in oil, gas and other minerals.

                  (j) Agents. To employ and compensate accountants, attorneys,
                      ------
         brokers, attorneys-in-fact, attorneys-at-law, tax specialists,
         appraisers, and other advisers and agents deemed by the Trustee
         necessary or appropriate for the proper administration of the Trust
         created hereunder.

                  (k) Nominee. To hold securities or other property in the name
                      -------
         of the Trustee or its nominee, or in another form as it may deem best,
         with or without disclosing the trust relationship.

                  (l) Documents. To make, execute and deliver any and all
                      ---------
         contracts, deeds, leases, waivers, releases, guaranties, pledges,
         conveyances, powers of attorney, or other instruments necessary or
         proper for the accomplishment of any of the powers herein granted.

                  (m) Litigation. To begin, maintain, or defend any litigation
                      ----------
         necessary in connection with the administration of the Plan, except
         that the Trustee shall not be obliged or required to do so unless
         indemnified to its satisfaction.

                  (n) Compromise Claims. To compromise, arbitrate, contest, or
                      -----------------
         abandon any claims or demands.

                  (o) Taxes. To file all tax returns required of the Trustee and
                      -----
         pay any estate, inheritance, income, or other tax, charge or assessment
         attributable to any benefit payable

                                      11
<PAGE>
 
         under the Plan required of the Trustee; to defer making payment of any
         tax, charge, or assessment if it is indemnified to its satisfaction in
         the premises; and to require before making any payment a release or
         other document from any lawful taxing authority.

                  (p) Retention of Funds. To retain any funds or property
                      ------------------
         subject to any dispute, and to decline to make payment or delivery of
         the funds or property until final adjudication is made by a court of
         competent jurisdiction.

                  (q) Common Funds. To invest in undivided interests, in common
                      ------------
         with any other trust, or trusts, however created, or any other
         individual, or individuals, including investments in so-called "common
         funds", or in partnerships or joint ventures, operated or created by
         any person, trust, or corporation.

                  (r) Loans. To invest in loans to a Participant in accord with
                      -----
         the loan policy established by the Plan Administrator, provided any
         loan is adequately secured, bears a reasonable rate of interest,
         provides for repayment within a specified time, and otherwise conforms
         to the Participant loan exemption provided by the Code.

                  (s) General Authorization. To exercise all the further rights,
                      ---------------------
         powers, options, and privileges granted, provided for, or vested in
         trustees generally under applicable Federal and North Carolina laws, as
         amended from time to time, it being intended that, except as herein
         otherwise provided, the powers conferred upon the Trustee herein shall
         not be construed as being in limitation of any authority conferred by
         law, but shall be construed as in addition thereto.

Notwithstanding anything in the Plan or Trust to the contrary, the Trustee shall
not be required by any fiduciary to engage in any action, nor make any
investment which constitutes a prohibited transaction or is otherwise contrary
to the provisions of Sections 406, 407, 408, and 2003 of the Act, or which is
otherwise contrary to law or the terms of the Plan or Trust.

         6.02 ANCILLARY TRUSTEE. Whenever and as often as the Trustee deems such
              -----------------
action desirable, it may by written instrument appoint any person or corporation
in any State of the United States to act as "Ancillary Trustee" with respect to
any portion of the Trust Fund then held or about to be acquired on behalf of the
Trust. Each such Ancillary Trustee shall have such rights, powers, duties, and
discretions as are delegated to it by the Trustee, but shall exercise the same
subject to limitations or further directions of the Trustee as shall be
specified in the instrument evidencing its appointment.

         The Ancillary Trustee may resign or may be removed by the Trustee as to
all or any portion of the assets so held at any time or from time to time by
written instrument delivered one to the other, and the Trustee may thereupon
appoint another Ancillary Trustee as successor to whom such assets shall be
transferred, or may itself receive such assets in termination of the Ancillary
Trusteeship to that extent. Each Ancillary Trustee shall be accountable solely
to the Trustee. The Trustee may pay the Ancillary Trustee reasonable
compensation and may absolve it

                                      12
<PAGE>
 
from any requirement that it post bond or other security.

                                      13
<PAGE>
 
                                  ARTICLE VII

                           ADMINISTRATIVE PROVISIONS

         7.01 ACCOUNTS AND RECORDS. The Trustee shall maintain accurate records
              --------------------
and accounts of all transactions hereunder, which shall be available at all
reasonable times for inspection or audit by any person or persons designated by
the Plan Administrator. If the Plan Administrator so directs, the Trustee shall
submit to the Plan Administrator such interim valuations, reports, or other
information as the Plan Administrator may reasonably require. Within ninety (90)
days following (a) the close of each Plan Year or (b) the effective date of the
removal or resignation of the Trustee, the Trustee shall file with the Plan
Administrator a written account setting forth all transactions effected by it
subsequent to the end of the period for the last previous report and account, in
such form and detail as the Plan Administrator may request. The approval of any
such report and account by the Plan Administrator shall be a full acquittance
and discharge by the Plan Administrator of the Trustee with respect to the
matters therein set forth. Nothing herein contained, however, shall be deemed to
preclude the Trustee from its right to have its accounts judicially settled by a
court of competent jurisdiction, in which event only the Trustee and the
Employer shall be necessary parties.

         7.02 INTENTION TO QUALIFY. It is intended that this Trust and Plan
              --------------------
constitute a qualified trust under Section 401(a) of the Code and that this
Trust constitutes a tax-exempt trust under Section 501 of the Code, and until
advised to the contrary in writing, the Trustee may assume that the Trust is so
qualified and is entitled to the exemption from Federal income taxes provided
for in said sections. In the event the Trustee at any time believes such
exemption to be uncertain, the Trustee may take such steps and withhold such
payments as it deems necessary to protect itself.

         7.03 PLAN ADMINISTRATOR ACTION. The Employer shall promptly notify the
              -------------------------
Trustee of the name of the Plan Administrator as of the date of this Agreement
and of any subsequent changes in the Plan Administrator. In the absence of any
notification of changes, the Trustee may assume that the Plan Administrator is
the same as last reported by the Employer to the Trustee. The Plan Administrator
shall furnish the Trustee with all the necessary factual information required by
it to perform its duties as Trustee hereunder, including a specimen signature of
the Plan Administrator. The Trustee shall not be required to verify the facts so
furnished by the Plan Administrator. The Trustee, in following the directions of
the Plan Administrator, is authorized to act upon the written instructions of
the Plan Administrator and shall not be liable for its acts with respect to
payments from the Trust Fund when following such instructions or directions, or
for failure to act in the absence of such instructions or directions.

         7.04 VALUATION OF TRUST. The Trustee shall value the Trust Fund as of
              ------------------
the end of the Plan Year to determine the fair market value of its assets. The
Trustee shall value the Trust Fund on such other date(s) as may be necessary for
the purpose of the Plan and Trust.

         7.05 EMPLOYER ACTION. Any action by an Employer hereunder, pursuant to
              ---------------
the

                                      14
<PAGE>
 
Plan, shall be evidenced by a certified copy of a resolution of its Board of
Directors, or by written instrument executed by any person authorized by the
Board of Directors to take such action, and the Trustee shall be fully protected
in acting in accordance with such written instrument or resolution delivered to
it.

         7.06 RELIANCE ON WRITTEN INSTRUMENT. The Trustee shall be fully
              ------------------------------
protected in acting upon any instrument, certificate, resolution, instruction,
direction, order, opinion, letter, telegram, or other document believed by it to
be genuine, and to be signed or presented by the proper person or persons, and
the Trustee shall be under no duty to make any investigation or inquiry as to
any statement contained in any such writing but may accept the same as
conclusive evidence of the truth and accuracy of the statements therein
contained.

         7.07 LIABILITY FOR PAYMENT OF FUNDS. The Trustee shall not be liable
              ------------------------------
for its action in making payment or delivery of any cash or other property to
any person at the direction of the Plan Administrator and, in the event of
litigation, the Trustee shall not be liable for declining to make delivery
thereof until final adjudication shall be made in a court of competent
jurisdiction by agreement of the parties. The Trustee, at its discretion, may
bring any action in the nature of an interpleader, but shall not be obligated to
do so.

         7.08 LIABILITY OF TRUSTEE. The Trustee shall not be liable for any
              --------------------
action taken or omitted upon direction of the Plan Administrator or the
Employer. If at any given time the Plan Administrator or the Employer should
fail to give directions or instructions to the Trustee as provided in this
Agreement, the Trustee shall act or refrain from acting without such directions
or instructions and may exercise its own discretion and judgment as seems
appropriate and advisable under the circumstances in carrying out the purposes
of this Agreement, without liability to the Plan Administrator or the Employer
therefor.

         7.09 COURT PROCEEDINGS. The Trustee may institute, maintain, or defend
              -----------------
any litigation necessary in connection with the administration of the Trust
Fund, provided, the Trustee shall be under no duty or obligation to do so unless
it shall have been indemnified to its satisfaction against all expenses and
liabilities which it may sustain or reasonably anticipate by reason thereof. All
costs and expenses of litigation for which the Trustee would be liable shall be
paid by the Employer, or if not paid by the Employer, from the Trust Fund.

         7.10 PARTIES TO LITIGATION. Except as otherwise provided by the Act,
              ---------------------
only the Employer, the Plan Administrator, and the Trustee shall be necessary
parties to any court proceeding involving the Trustee or the Trust Fund. No
Participant or Beneficiary shall be entitled to any notice of process unless
required by the Act. Any final judgment entered in any proceeding shall be
binding upon the Employer, the Plan Administrator, the Trustee, Participants,
and Beneficiaries.

         7.11 THIRD PARTY. No person dealing with the Trustee shall be obligated
              -----------
to see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with

                                      15
<PAGE>
 
the Trustee may act upon any notice, request, or representation in writing by
the Trustee, or by the Trustee's duly authorized agent, and shall not be liable
to any person whomever in so doing. The certificate of the Trustee that it is
acting in accordance with the Plan shall be conclusive in favor of the person
relying on the certificate.

         7.12 AUTHORIZATION WITH RESPECT TO TAXES. The Trustee may pay out of
              -----------------------------------
the Trust Fund all real and personal property taxes, income taxes, and other
taxes of any and all kinds levied or assessed under existing or future laws
against the Trust Fund, or against the Trustee by reason of its office. The
Trustee is further authorized, but not required, to withhold from distributions
to any payee such sum as the Trustee may reasonably estimate as necessary to
cover Federal and states taxes for which the Trustee may be liable, which are,
or may be, assessed with regard to the amount distributable to such payee. Prior
to making any payment or distribution hereunder, the Trustee may require such
releases or other documents from any lawful taxing authority and may require
such indemnity from any payee or distributee as the Trustee shall reasonably
deem necessary for its protection.

         7.13 CONSULTATION WITH COUNSEL. Trustee may consult with legal counsel,
              -------------------------
who may be counsel for the Employer, if appropriate, with respect to any of its
rights, duties, or obligations hereunder.

         7.14 NO INTEREST IN EMPLOYER. Neither the creation of this Trust nor
              -----------------------
anything contained in this Agreement shall be construed as giving any person
entitled to benefits hereunder or other employee of the Employer any equity or
other interest in the assets, business, or affairs of the Employer.

         7.15 FEES AND EXPENSES. The Trustee shall be reimbursed for all of its
              -----------------
expenses and shall be paid such reasonable fees as may be agreed upon from time
to time by the Employer and the Trustee. Such fees and compensation shall be
paid from the Trust Fund if not paid by the Employer; provided, however, that
any person who already receives full-time pay from the Employer shall not
receive any fees for his services as Trustee.

         7.16 BONDING OF TRUSTEE. The Trustee shall not be required to furnish
              ------------------
any bond or security for the performance of its powers and duties hereunder,
unless, irrespective of this provision, the Trustee is required to do so by
state or Federal statute or regulation.

         7.17 RELATIONSHIP OF FIDUCIARIES. It is the intent of all fiduciaries
              ---------------------------
under the Plan and Trust that each fiduciary shall be solely responsible for its
own acts or omissions. Except to the extent imposed by the Act or the Code, no
fiduciary shall have the duty to question whether any other fiduciary is
fulfilling all of the responsibilities imposed upon such other fiduciary by the
Act or by any regulations or rulings issued thereunder. No fiduciary shall have
any liability for a breach of fiduciary responsibility of another fiduciary with
respect to the Plan and this Trust unless he participates knowingly in such
breach, knowingly undertakes to conceal such breach, has actual knowledge of
such breach and fails to take reasonable remedial action to remedy said breach
or, through his negligence in performing his own specific fiduciary

                                      16
<PAGE>
 
responsibilities which give rise to his status as a fiduciary, has enabled such
other fiduciary to commit a breach of the latter's fiduciary responsibilities.

         7.18 PRUDENT MAN RULE. The Trustee, the Plan Administrator, and all
              ----------------
other Fiduciaries with respect to the Plan and Trust are required to discharge
their duties solely in the interests of Participants and Beneficiaries and for
the exclusive purpose of providing benefits to Participants and Beneficiaries
and defraying reasonable expenses of administration with the care, skill,
prudence, and diligence, under the circumstances then prevailing, that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims by diversifying
the investments so as to minimize the risks of large losses unless under the
circumstances it is clearly prudent not to do so, and in accordance with the
Plan, this Trust Agreement, the rules and directions of the Plan Administrator
and the provisions of the Act.

         7.19 ALIENATION. Except as otherwise provided in the Plan, the
              ----------
benefits, proceeds, payments, or claims of any Participant or Beneficiary
payable from the Trust assets shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any such liability which is for alimony or other payments
for support of a spouse or former spouse. Any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, garnish, levy, or otherwise dispose of
or execute upon any right or benefit payable hereunder shall be void. The Trust
assets shall not in any manner be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any Participant entitled to benefits
hereunder and such benefits shall not be considered an asset of the Participant
in the event of his insolvency or bankruptcy.

         7.20 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED. The
              ---------------------------------------------------------
Trustee shall not be liable for the acts or omissions of any Investment Manager
or Managers the Plan Administrator may appoint, nor shall the Trustee be under
any obligation to invest or otherwise manage any assets of the Plan which is
subject to the management of a properly appointed Investment Manager.

         7.21 INSURANCE COMPANY PROTECTED. No insurance company shall be under
              ---------------------------
any duty to inquire into the terms of this Trust Agreement or see to the
application of any proceeds of insurance paid to the Trustee pursuant to any
policy of insurance payable to this Trust. The receipt of the Trustee for any
such payment shall be a full and complete acquittance to the insurance company
making payment.

                                      17
<PAGE>
 
                                 ARTICLE VIII

                               TRUSTEE LIABILITY

         8.01 TRUSTEE LIABILITY. Notwithstanding any provision in this Trust
              -----------------
Agreement to the contrary, the Trustee shall be subject to the standards of
conduct, and shall have the powers and immunities set out in Article VI of the
Plan.

                                      18
<PAGE>
 
                                  ARTICLE IX

                            SUBSTITUTION OF TRUSTEE

         9.01 TRUSTEE. There shall be one or more individual Trustees or one
              -------
corporate Trustee, or any combination thereof, as determined from time to time
by the Company. Each Trustee shall serve until a successor Trustee shall be
named by the Company or until such Trustee's resignation, death, incapacity, or
removal, in which event the Company shall name a successor Trustee. The word
"Trustee" as used herein, shall include the original and any successor Trustee
or Trustees, whether corporate or individual.

         9.02 RESIGNATION. Any Trustee may resign at any time upon giving sixty
              -----------
(60) days' written notice in advance to the Company and to the Plan
Administrator unless such notice shall be waived.

         9.03 REMOVAL. The Company, by giving thirty (30) days' written notice
              -------
in advance to the Trustee, may remove any Trustee with or without cause.

         9.04 SUCCESSION OF TRUSTEE. Each successor Trustee shall succeed to the
              ---------------------
title to the Trust vested in his predecessor by accepting in writing his
appointment as successor Trustee and filing the acceptance with the former
Trustee and the Plan Administrator without the signing or filing of any further
statement. The resigning or removed Trustee, upon receipt of acceptance in
writing of the Trust by the successor Trustee, shall execute all documents and
do all acts necessary to vest the title of record in any successor Trustee. Each
successor Trustee shall have and enjoy all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. No successor
Trustee shall be personally liable for any act or failure to act of any
predecessor Trustee.

         9.05 MERGER OF CORPORATE TRUSTEE. If any corporate Trustee should,
              ---------------------------
before or after qualification, change its name, become consolidated or merged
with another corporation or otherwise should reorganize, any resulting
corporation which succeeds to the fiduciary business of such corporate Trustee
shall become a Trustee hereunder in lieu of such corporate Trustee.

                                      19
<PAGE>
 
                                   ARTICLE X

                           AMENDMENT AND TERMINATION

         10.01 AMENDMENT. The Company shall have the right at any time by an
               ---------
instrument in writing to amend the Trust in any manner provided no amendment
shall:

                  (a) Authorize or permit any of the Trust Fund (other than the
         part which is required to pay taxes and administration expenses) to be
         used for or diverted to purposes other than for the exclusive benefit
         of the Participants or their Beneficiaries.

                  (b) Cause or permit any portion of the Trust Fund to revert to
         or become the property of the Employer.

                  (c) Increase the duties or responsibilities of the Trustee
         without the written consent of the affected Trustee.

         10.02 TERMINATION. This Trust may be terminated at any time by the
               -----------
Company by delivery to the Trustee of a copy of the resolution of the Board of
Directors specifying such termination. In the event of termination of the Trust,
the Trustee shall distribute all property then constituting the Trust Fund, less
any amounts constituting charges against the Trust Fund, in such manner and at
such times as may be directed by the Plan Administrator. This Trust shall
automatically terminate when no cash or other property remains in the Trust.

         10.03 SUSPENSION OF CONTRIBUTIONS. Nothing in this Agreement shall be
               ---------------------------
construed to prevent the Employer from suspending contributions to the Trust for
any period whatsoever or permanently. Such a suspension, whether temporary or
permanent, shall not, of itself, terminate the Trust.

         10.04 MERGER OR CONSOLIDATION. The Plan and this Trust shall not be
               -----------------------
merged or consolidated with, nor shall its assets or liabilities be transferred
to, any other plan unless each Participant in the Plan (if the Plan then
terminated) would receive a benefit immediately after the merger, consolidation
or transfer which is equal to or greater than the benefit such Participants,
respectively, would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had been terminated). Where the
foregoing requirements are satisfied the Plan and this Trust may be merged or
consolidated with another qualified plan and trust.

         10.05 REVERSION OF SUSPENSE ACCOUNT. Notwithstanding any provisions
               -----------------------------
contained herein to the contrary, the Employer reserves the right upon
termination of the Plan and trust to recover any amounts held in a Suspense
Account that cannot be allocated to the accounts of Participants and their
Beneficiaries in the year of termination because of the limitations contained in
Article III of the Plan and Section 415 of the Code after the satisfaction of
all fixed and contingent obligations to Participants and their Beneficiaries
under the Plan.
                                  ARTICLE XI

                                      20
<PAGE>
 
                     OTHER EMPLOYERS; SUCCESSOR EMPLOYERS

         11.01 ADOPTION BY OTHER EMPLOYERS. Pursuant to the Plan, any business
               ---------------------------
entity, which is eligible to and does in fact adopt the Plan, may pursuant to
resolutions of its board of directors, adopt this Trust by written instrument,
duly executed, acknowledged, and delivered to the Trustee, the Plan
Administrator, and the Board of Directors of the Company.

         11.02 CONTINUATION BY EMPLOYER'S SUCCESSOR.  Any corporation succeeding
               ------------------------------------
to the interest of an Employer by sale, transfer, consolidation, merger, or
bankruptcy, may elect to continue this Trust by adopting this Trust Agreement
and assuming the duties and responsibilities of the Plan and Trust, or such
corporation may establish a separate plan and trust for the continuation of
benefits for its employees in which event the Trust Fund, held on behalf of the
Employees or the prior Employer, shall (subject to Section 10.04 hereof) be
transferred to the trustee of the new trust.

                                      21
<PAGE>
 
                                  ARTICLE XII

                           MISCELLANEOUS PROVISIONS

         12.01 CONTRIBUTIONS NOT RECOVERABLE. Except where contributions are
               -----------------------------
required to be returned to the Employer by the provisions of the Plan as
permitted or required by the Act or by the Code, no part of the principal or
income of this Trust shall be used for, or diverted to, purposes other than the
exclusive benefit of Participants or Beneficiaries.

         12.02 LIMITATIONS ON PARTICIPANTS' RIGHTS. Participation in this Trust
               -----------------------------------
shall not give the Employee the right to be retained as an Employee of the
Employer or any right or interest in this Trust other than as herein provided.
The Employer reserves the right to dismiss any Employee without any liability
for any claim either against this Trust, except to the extent provided herein,
or against the Employer. All benefits payable hereunder shall be provided solely
from the assets of the Trust.

         12.03 INDEMNIFICATION OF INDIVIDUAL TRUSTEE. The Employer hereby agrees
               -------------------------------------
to indemnify and hold harmless any individual Trustee for any claim, suit,
judgment, or liability arising from the performance of the Trustee hereunder and
as otherwise required by the Plan, so long as such claim, suit, judgment, or
liability does not result from the willful or reckless misconduct of the
individual Trustee. The Trustee assumes no obligation or responsibility with
respect to any action required by this Trust Agreement or by the Plan on the
part of the Employer.

         12.04 RECEIPT OF RELEASE. Any payment to any Participant or Beneficiary
               ------------------
in accordance with the provisions of this Trust shall, to the extent thereof, be
in full satisfaction of all claims against the Trustee, the Plan Administrator,
and the Employer and the Trustee may require such Participant or Beneficiary, as
a condition precedent to such payment, to execute a receipt and release to such
effect.

         12.05 ACCEPTANCE. The Trustee accepts the Trust created under the Plan
               ----------
and agrees to perform the obligations imposed therein.

         12.06 ACCOUNTING PERIOD. This Trust shall adopt for accounting purposes
               -----------------
the fiscal year beginning January 1 of each year and ending on the last day of
December.

         12.07 TITLE OF TRUST ASSETS. The legal and equitable title and
               ---------------------
ownership of all assets at any time constituting a part of the Trust Fund shall
be and remain with the Trustee and neither the Employer nor any Participant
shall ever have legal or equitable estate therein, save and except that a
Participant shall be entitled to receive distributions as and when lawfully made
under the terms of the Plan and this Trust.

         12.08 NOTICE. Any notices required to be given herein by the Trustee
               ------
shall be deemed delivered when placed in the United States mails, postage
prepaid, in an envelope addressed to the last known address of the person to
whom the notice is given.

                                      22
<PAGE>
 
         12.09 HEADINGS. The titles and headings of Articles and Sections are
               --------
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.

         12.10 GOVERNING LAW. All questions arising with respect to the
               -------------
provisions of this Agreement shall be determined by application of the laws of
the State of North Carolina except to the extent North Carolina law is
superseded by Federal statute.

         12.11 EXECUTIONS AND COUNTERPARTS. This Agreement may be executed in a
               ---------------------------
number of counterparts, each of which shall be deemed an original.

         IT WITNESS WHEREOF, this Agreement has been executed this the 5th day
of December 1997, effective as of the 1st day of January, 1997.

                              A S E M P L O Y E R
                              -------------------

                                      MOORESVILLE SAVINGS BANK, SSB


                                      By: /s/ George W Brawley, Jr.
                                          --------------------------------------
                                               George W. Brawley, Jr.
                                               President


ATTEST:

/s/ Billy R. Williams
----------------------------------------
 Secretary

(Corporate Seal)

                               A S T R U S T E E
                               -----------------

                                     /s/ Willis L. Barnette       (SEAL)
                                     -----------------------------
                                     Willis L. Barnette


                                     /s/ Jack G. Lawler           (SEAL)
                                     -----------------------------
                                     Jack G. Lawler

                                     /s/ Claude U. Voils, Jr.     (SEAL)
                                     -----------------------------
                                     Claude U. Voils, Jr.

                                      23