<PAGE>

                                                                   Exhibit 10.4
                                                                   ------------ 
                                L.A. GEAR, INC.
                          EMPLOYEE STOCK SAVINGS PLAN

                            PLAN AND TRUST AGREEMENT



                                SECOND COMPLETE
                           AMENDMENT AND RESTATEMENT
                       GENERALLY EFFECTIVE AUGUST 1, 1993
<PAGE>
 
             L.A. Gear, Inc. Employee Stock Savings Plan and Trust

  Second Complete Amendment and Restatement Generally Effective August 1, 1993


L.A. Gear, Inc. established the Retirement Plan for Employees of L.A. Gear,
effective December 1, 1985, intended to constitute a qualified profit sharing
plan, as described in Code section 401(a), for the benefit of eligible employees
of the Company and its participating affiliates.  The Retirement Plan for
Employees of L.A. Gear was renamed the L.A. Gear, Inc. Employee Stock Savings
Plan effective December 1, 1986, and concurrently amended and restated to add a
qualified cash or deferred arrangement, as described in Code section 401(k) and
provisions to provide for a qualified stock bonus plan, as described in Code
section 401(a), designated as an employee stock ownership plan, as described in
Code section 4975(e)(7).

The provisions related to the employee stock ownership plan are discontinued,
which provisions were never effected.  The Plan, as amended and restated
generally effective August 1, 1993, is intended to constitute a qualified profit
sharing plan, as described in Code section 401(a), which includes a qualified
cash or deferred arrangement, as described in Code section 401(k).

The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between L.A. Gear, Inc. and Wells
Fargo Bank, National Association.  The Trust is intended to be tax exempt as
described under Code section 501(a).

The L.A. Gear, Inc. Employee Stock Savings Plan and Trust, as set forth in this
document, is hereby amended and restated generally effective as of August 1,
1993.  This constitutes the second complete amendment and restatement generally
effective August 1, 1993.



Date:  November 9, 1995              L.A. Gear, Inc.
 
                                     By: /s/ Victor J. Trippetti, Linda Burakof
                                         --------------------------------------

                                      Title: 401(k) committee members
                                            -----------------------------------

The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.

Date: November 9, 1995               Wells Fargo Bank, National Association

                                     By: /s/ Gwen Slack
                                        ---------------------------------------

                                      Title: 
                                            -----------------------------------
                   
Date: November 9, 1995               Wells Fargo Bank, National Association

                                     By: /s/ Dolores Upton
                                        ---------------------------------------

                                      Title: 
                                            -----------------------------------

<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>

<C>         <S>                                                            <C>
  1   DEFINITIONS.......................................................    1
      -----------

  2   ELIGIBILITY.......................................................   10
      -----------
      2.1   Eligibility.................................................   10
      2.2   Ineligible Employees........................................   10
      2.3   Ineligible or Former Participants...........................   11

  3   PARTICIPANT CONTRIBUTIONS.........................................   12
      -------------------------
      3.1   Employee 401(k) Contribution Election.......................   12
      3.2   After-Tax Contribution Election.............................   12
      3.3   Changing a Contribution Election............................   12
      3.4   Revoking and Resuming a Contribution Election...............   12
      3.5   Contribution Percentage Limits..............................   13
      3.6   Refunds When Contribution Dollar Limit Exceeded.............   13
      3.7   Timing, Posting and Tax Considerations......................   14

  4   ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS.........   15
      ---------------------------------------------------------
      4.1   Rollovers...................................................   15
      4.2   Transfers From and To Other Qualified Plans.................   15

  5   EMPLOYER CONTRIBUTIONS............................................   16
      ----------------------
      5.1   Employer Matching Contributions.............................   16
      5.2   Matching Stock Contributions................................   17
      5.3   Matching Cash Contributions.................................   17
      5.4   Qualifying Contributions....................................   18

  6   ACCOUNTING........................................................   19
      ----------
      6.1   Individual Participant Accounting...........................   19
      6.2   Sweep Account is Transaction Account........................   19
      6.3   Trade Date Accounting and Investment Cycle..................   19
      6.4   Accounting for Investment Funds.............................   19
      6.5   Payment of Fees and Expenses................................   19
      6.6   Accounting for Participant Loans............................   20
      6.7   Error Correction............................................   20
      6.8   Participant Statements......................................   21
      6.9   Special Accounting During Conversion Period.................   21
      6.10  Accounts for QDRO Beneficiaries.............................   21

  7   INVESTMENT FUNDS AND ELECTIONS....................................   22
      ------------------------------
      7.1   Investment Funds............................................   22
      7.2   Investment Fund Elections...................................   22
      7.3   Responsibility for Investment Choice........................   23
      7.4   Default if No Election......................................   23
      7.5   Timing......................................................   23
      7.6   Investment Fund Election Change Fees........................   23
</TABLE>

                                       i
<PAGE>
 
<TABLE>
<C>          <S>                                                           <C>
   8   VESTING & FORFEITURES............................................   24
       ---------------------
       8.1   Fully Vested Contribution Accounts.........................   24
       8.2   Full Vesting upon Certain Events...........................   24
       8.3   Vesting Schedule...........................................   24
       8.4   Forfeitures................................................   25
       8.5   Rehired Employees..........................................   25

   9   PARTICIPANT LOANS................................................   26
       -----------------
       9.1   Participant Loans Permitted................................   26
       9.2   Loan Application, Note and Security........................   26
       9.3   Spousal Consent............................................   26
       9.4   Loan Approval..............................................   26
       9.5   Loan Funding Limits, Account Sources and Funding Order.....   26
       9.6   Maximum Number of Loans....................................   27
       9.7   Source and Timing of Loan Funding..........................   27
       9.8   Interest Rate..............................................   27
       9.9   Loan Payment...............................................   27
       9.10  Loan Payment Hierarchy.....................................   28
       9.11  Repayment Suspension.......................................   28
       9.12  Loan Default...............................................   28
       9.13  Call Feature...............................................   28

  10  IN-SERVICE WITHDRAWALS............................................   29
      ----------------------
      10.1   In-Service Withdrawals Permitted...........................   29
      10.2   In-Service Withdrawal Application and Notice...............   29
      10.3   Spousal Consent............................................   29
      10.4   In-Service Withdrawal Approval.............................   29
      10.5   Minimum Amount, Payment Form and Medium....................   29
      10.6   Source and Timing of In-Service Withdrawal Funding.........   30
      10.7   Hardship Withdrawals.......................................   30
      10.8   After-Tax Account Withdrawals..............................   32
      10.9   Over Age 59 1/2 Withdrawals................................   32

 11   DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW..........   34
      --------------------------------------------------------
      11.1   Benefit Information, Notices and Election..................   34
      11.2   Spousal Consent............................................   34
      11.3   Payment Form and Medium....................................   34
      11.4   Distribution of Small Amounts..............................   35
      11.5   Source and Timing of Distribution Funding..................   35
      11.6   Deemed Distribution........................................   35
      11.7   Latest Commencement Permitted..............................   36
      11.8   Payment Within Life Expectancy.............................   36
      11.9   Incidental Benefit Rule....................................   36
      11.10  Payment to Beneficiary.....................................   37
      11.11  Beneficiary Designation....................................   37
</TABLE>

                                      ii
<PAGE>
 
<TABLE>
<C>         <S>                                                           <C>
12   ADP AND ACP TESTS..................................................  38
     -----------------
     12.1   Contribution Limitation Definitions.........................  38
     12.2   ADP and ACP Tests...........................................  41
     12.3   Correction of ADP and ACP Tests.............................  41
     12.4   Multiple Use Test...........................................  43
     12.5   Correction of Multiple Use Test.............................  43
     12.6   Adjustment for Investment Gain or Loss......................  43
     12.7   Testing Responsibilities and Required Records...............  44
     12.8   Separate Testing............................................  44

13   MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS.......................  45
     --------------------------------------------
     13.1   "Annual Addition" Defined...................................  45
     13.2   Maximum Annual Addition.....................................  45
     13.3   Avoiding an Excess Annual Addition..........................  45
     13.4   Correcting an Excess Annual Addition........................  45
     13.5   Correcting a Multiple Plan Excess...........................  46
     13.6   "Defined Benefit Fraction" Defined..........................  46
     13.7   "Defined Contribution Fraction" Defined.....................  46
     13.8   Combined Plan Limits and Correction.........................  46

14   TOP HEAVY RULES....................................................  47
     ---------------
     14.1   Top Heavy Definitions.......................................  47
     14.2   Special Contributions.......................................  48
     14.3   Adjustment to Combined Limits for Different Plans...........  49

15   PLAN ADMINISTRATION................................................  50
     -------------------
     15.1   Plan Delineates Authority and Responsibility................  50
     15.2   Fiduciary Standards.........................................  50
     15.3   Company is ERISA Plan Administrator.........................  50
     15.4   Administrator Duties........................................  51
     15.5   Advisors May be Retained....................................  51
     15.6   Delegation of Administrator Duties..........................  52
     15.7   Committee Operating Rules...................................  52

16   MANAGEMENT OF INVESTMENTS..........................................  53
     -------------------------
     16.1   Trust Agreement.............................................  53
     16.2   Investment Funds............................................  53
     16.3   Authority to Hold Cash......................................  54
     16.4   Trustee to Act Upon Instructions............................  54
     16.5   Administrator Has Right to Vote Registered Investment 
            Company Shares..............................................  54
     16.6   Custom Fund Investment Management...........................  54
     16.7   Authority to Segregate Assets...............................  55
     16.8   Maximum Permitted Investment in Company Stock...............  55
     16.9   Participants Have Right to Vote and Tender Company Stock....  55
     16.10  Registration and Disclosure for Company Stock...............  56
</TABLE>

                                      iii
<PAGE>
 
<TABLE>
<C>         <S>                                                    <C>
17   TRUST ADMINISTRATION.......................................   57
     --------------------
     17.1   Trustee to Construe Trust...........................   57
     17.2   Trustee To Act As Owner of Trust Assets.............   57
     17.3   United States Indicia of Ownership..................   57
     17.4   Tax Withholding and Payment.........................   58
     17.5   Trust Accounting....................................   58
     17.6   Valuation of Certain Assets.........................   58
     17.7   Legal Counsel.......................................   59
     17.8   Fees and Expenses...................................   59
     17.9   Trustee Duties and Limitations......................   59

18   RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION..........   60
     -------------------------------------------------
     18.1   Plan Does Not Affect Employment Rights..............   60
     18.2   Limited Return of Contributions.....................   60
     18.3   Assignment and Alienation...........................   60
     18.4   Facility of Payment.................................   61
     18.5   Reallocation of Lost Participant's Accounts.........   61
     18.6   Claims Procedure....................................   61
     18.7   Construction........................................   62
     18.8   Jurisdiction and Severability.......................   62
     18.9   Indemnification by Employer.........................   62

19   AMENDMENT, MERGER, DIVESTITURES AND TERMINATION............   63
     -----------------------------------------------
     19.1   Amendment...........................................   63
     19.2   Merger..............................................   63
     19.3   Divestitures........................................   63
     19.4   Plan Termination....................................   64
     19.5   Amendment and Termination Procedures................   64
     19.6   Termination of Employer's Participation.............   64
     19.7   Replacement of the Trustee..........................   65
     19.8   Final Settlement and Accounting of Trustee..........   65

APPENDIX A - INVESTMENT FUNDS...................................   66

APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES..................   67

APPENDIX C - LOAN INTEREST RATE.................................   68

</TABLE>
                                      iv
<PAGE>
 
1    DEFINITIONS
     -----------

     When capitalized, the words and phrases below have the following meanings
     unless different meanings are clearly required by the context:

     1.1  "Account".  The records maintained for purposes of accounting for a
          Participant's interest in the Plan.  "Account" may refer to one or all
          of the following accounts which have been created on behalf of a
          Participant to hold specific types of Contributions under the Plan:

          (a)   "Employee 401(k) Account".  An account created to hold Employee
                401(k) Contributions.

          (b)   "After-Tax Account".  An account created to hold After-Tax
                Contributions.

          (c)   "Rollover Account".  An account created to hold Rollover
                Contributions.

          (d)   "Employer Matching Account".  An account created to hold
                Employer Matching Contributions.

          (e)   "Matching Stock Account".  An account created to hold Matching
                Stock Contributions and, effective December 1, 1995, amounts
                designated as Employer Matching Contributions, which amounts
                prior to December 1, 1995, were held in a Participant's Employer
                Matching Account.

          (f)   "Matching Cash Account".  An account created to hold Matching
                Cash Contributions.

          (g)   "Qualifying Account".  An account created to hold Qualifying
                Contributions.

     1.2  "ACP" or "Average Contribution Percentage".  The percentage calculated
          in accordance with Section 12.1.

     1.3  "Administrator".  The Company, which may delegate all or a portion of
          the duties of the Administrator under the Plan to a Committee in
          accordance with Section 15.6.

     1.4  "ADP" or "Average Deferral Percentage".  The percentage calculated in
          accordance with Section 12.1.

     1.5  "Beneficiary". The person or persons who is to receive benefits after
          the death of the Participant pursuant to the "Beneficiary Designation"
          paragraph in Section 11, or as a result of a QDRO.

                                       1
<PAGE>
 
     1.6  "Break in Service".  The end of five consecutive Plan Years (or six
          consecutive Plan Years if absence from employment was due to a
          Parental Leave) for which a Participant is credited with no Hours of
          Service.

     1.7  "Code".  The Internal Revenue Code of 1986, as amended.  Reference to
          any specific Code section shall include such section, any valid
          regulation promulgated thereunder, and any comparable provision of any
          future legislation amending, supplementing or superseding such
          section.

     1.8  "Committee".  If applicable, the committee which has been appointed by
          the Company to administer the Plan in accordance with Section 15.6.

     1.9  "Company".  L.A. Gear, Inc. or any successor by merger, purchase or
          otherwise.

     1.10 "Company Stock".  Shares of common stock of the Company, or its
          successors or assigns, or any corporation with or into which said
          corporation may be merged, consolidated or reorganized, or to which a
          majority of its assets may be sold.

     1.11 "Compensation".  The sum of a Participant's Taxable Income and salary
          reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h),
          403(b), 414(h)(2) or 457, excluding reimbursements or other expense
          allowances, cash and non-cash fringe benefits, moving expenses,
          deferred compensation and welfare benefits.  Effective December 1,
          1995, the preceding reference to "excluding reimbursements or other
          expense allowances, cash and non-cash fringe benefits, moving
          expenses, deferred compensation and welfare benefits" shall no longer
          apply.

          For purposes of determining benefits under this Plan, Compensation is
          limited to $200,000, (as adjusted for the cost of living pursuant to
          Code sections 401(a)(17) and 415(d)) per Plan Year.  For purposes of
          determining benefits under this Plan for Plan Years beginning after
          December 31, 1993, Compensation is limited to $150,000, (as adjusted
          for the cost of living pursuant to Code sections 401(a)(17) and
          415(d)) per Plan Year.

          For purposes of the preceding paragraph, in the case of an HCE who is
          a 5% Owner or one of the 10 most highly compensated Employees, (i)
          such HCE and such HCE's family group (as defined below) shall be
          treated as a single employee and the Compensation of each family group
          member shall be aggregated with the Compensation of such HCE, and (ii)
          the limitation on Compensation shall be allocated among such HCE and
          his or her family group members in proportion to each individual's
          Compensation before the application of this sentence. For purposes of
          this Section, the term "family group" shall mean an Employee's spouse
          and lineal descendants who have not attained age 19 before the close
          of the year in question. 

                                       2
<PAGE>
 
          For purposes of determining HCEs and key employees, Compensation for
          the entire Plan Year shall be used.  For purposes of determining ADP
          and ACP, Compensation shall be limited to amounts paid to an Eligible
          Employee while a Participant.

     1.12 "Contribution".  An amount contributed to the Plan by the Employer or
          an Eligible Employee, and allocated by contribution type to
          Participants' Accounts, as described in Section 1.1.  Specific types
          of contribution include:

          (a)   "Employee 401(k) Contribution".  An amount contributed by an
                eligible Participant in conjunction with his or her Code section
                401(k) salary deferral election which shall be treated as made
                by the Employer on an eligible Participant's behalf.

          (b)   "After-Tax Contribution".  An amount contributed by an eligible
                Participant on an after-tax basis.

          (c)   "Rollover Contribution".  An amount contributed by an Eligible
                Employee which originated from another employer's or an
                Employer's qualified plan.

          (d)   "Employer Matching Contribution".  An amount contributed by the
                Employer on an eligible Participant's behalf based upon the
                amount contributed by the eligible Participant for periods prior
                to December 1, 1995.

          (e)   "Matching Stock Contribution".  An amount contributed by the
                Employer on an eligible Participant's behalf based upon the
                amount contributed by the eligible Participant as set forth in
                Section 5.2.

          (f)   "Matching Cash Contribution".  An amount contributed by the
                Employer on an eligible Participant's behalf based upon the
                amount contributed by the eligible Participant as set forth in
                Section 5.3.

          (g)   "Qualifying Contribution".  An amount contributed by the
                Employer on an eligible Participant's behalf and allocated on a
                pay based formula.

     1.13 "Contribution Dollar Limit". The annual limit placed on each
          Participant's Employee 401(k) Contributions, which shall be $7,000 per
          calendar year (as adjusted for the cost of living pursuant to Code
          sections 402(g)(5) and 415(d)). For purposes of this Section, a
          Participant's Employee 401(k) Contributions shall include (i) any
          employer contribution made under any qualified cash or deferred
          arrangement as defined in Code section 401(k) to the extent not
          includible in gross income for the taxable year under Code section
          402(e)(3) or 402(h)(1)(B) (determined without regard to Code section
          402(g)), and (ii) any employer contribution to purchase an annuity
          contract under Code section 403(b) under a salary reduction agreement
          (within the meaning of Code section 3121(a)(5)(D)). 

                                       3
<PAGE>
 
     1.14 "Conversion Period".  The period of converting the prior accounting
          system of the Plan and Trust, if such Plan and Trust were in existence
          prior to the Effective Date, or the prior accounting system of any
          plan and trust which is merged into this Plan and Trust subsequent to
          the Effective Date, to the accounting system described in Section 6.

     1.15 "Direct Rollover".  An Eligible Rollover Distribution that is paid
          directly to an Eligible Retirement Plan for the benefit of a
          Distributee.

     1.16 "Disability".  A Participant's total and permanent, mental or physical
          disability  as evidenced by presentation of medical evidence
          satisfactory to the Administrator preventing a Participant from
          engaging in his or her normal job, provided that the Participant
          receives, or is anticipated to receive, disability benefits under the
          Social Security Act.

     1.17 "Distributee".  An Employee or former Employee, the surviving spouse
          of an Employee or former Employee and a spouse or former spouse of an
          Employee or former Employee determined to be an alternate payee under
          a QDRO.

     1.18 "Effective Date".  The date upon which the provisions of this document
          become effective.  This date is August 1, 1993, unless stated
          otherwise and specifically except that the provisions related to
          Qualifying Contributions and related Accounts are effective November
          1, 1994, provisions related to Employer Matching Contributions and
          related Accounts are discontinued effective November 30, 1995 and
          provisions related to Matching Stock and Matching Cash Contributions
          and related Accounts are effective December 1, 1995.  In general, the
          provisions of this document only apply to Participants who are
          Employees on or after the Effective Date.  However, investment and
          distribution provisions apply to all Participants with Account
          balances to be invested or distributed after the Effective Date.

     1.19 "Eligible Employee".  An Employee of an Employer, except any Employee:

          (a)   whose compensation and conditions of employment are covered by a
                collective bargaining agreement to which an Employer is a party
                unless the agreement calls for the Employee's participation in
                the Plan;

          (b)   who is treated as an Employee because he or she is a Leased
                Employee

          (c)   who is a nonresident alien who (i) either receives no earned
                income (within the meaning of Code section 911(d)(2)), from
                sources within the United States under Code section 861(a)(3);
                or (ii) receives such earned income from such sources within the
                United States but such income is exempt from United States
                income tax under an applicable income tax convention; or

          (d)   who is a Temporary Employee.

                                       4
<PAGE>
 
          Effective December 1, 1995, an Eligible Employee shall include a
          Temporary Employee other than a Temporary Employee, if any, described
          in (a), (b) or (c) above.

     1.20 "Eligible Retirement Plan".  An individual retirement account
          described in Code section 408(a), an individual retirement annuity
          described in Code section 408(b), an annuity plan described in Code
          section 403(a), or a qualified trust described in Code section 401(a),
          that accepts a Distributee's Eligible Rollover Distribution, except
          that with regard to an Eligible Rollover Distribution to a surviving
          spouse, an Eligible Retirement Plan is an individual retirement
          account or individual retirement annuity.

     1.21 "Eligible Rollover Distribution".  A distribution of all or any
          portion of the balance to the credit of a Distributee, excluding a
          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 a Distributee or the joint lives (or joint life
          expectancies) of a Distributee and the Distributee's designated
          Beneficiary, or for a specified period of ten years or more; a
          distribution to the extent such distribution is required under Code
          section 401(a)(9); and the portion of a distribution that is not
          includible in gross income (determined without regard to the exclusion
          for net unrealized appreciation with respect to Employer securities).

     1.22 "Employee".  An individual who is:

          (a)   directly employed by any Related Company and for whom any income
                for such employment is subject to withholding of income or
                social security taxes, or

          (b)   a Leased Employee.

     1.23 "Employer".  The Company and any Subsidiary or other Related Company
          of either the Company or a Subsidiary which adopts this Plan with the
          approval of the Company.

     1.24 "ERISA".  The Employee Retirement Income Security Act of 1974, as
          amended.  Reference to any specific section shall include such
          section, any valid regulation promulgated thereunder, and any
          comparable provision of any future legislation amending, supplementing
          or superseding such section.

     1.25 "Expatriate Employee".  The employment status of an Eligible Employee
          during the period he or she is on an international assignment and
          residing in a location other this his or her home country.

     1.26 "Forfeiture Account". An account holding amounts forfeited by
          Participants who have terminated employment with all Related
          Companies, invested in interest bearing deposits of the Trustee,
          pending disposition as provided in this Plan and Trust and as directed
          by the Administrator.

                                       5
<PAGE>
 
     1.27 "HCE" or "Highly Compensated Employee".  An Employee described as a
          Highly Compensated Employee in Section 12.

     1.28 "Hour of Service".  Each hour for which an Employee is entitled to:

          (a)   payment for the performance of duties for any Related Company;

          (b)   payment from any Related Company for any period during which no
                duties are performed (irrespective of whether the employment
                relationship has terminated) due to vacation, holiday, sickness,
                incapacity (including disability), layoff, leave of absence,
                jury duty or military service;

          (c)   back pay, irrespective of mitigation of damages, by award or
                agreement with any Related Company (and these hours shall be
                credited to the period to which the agreement pertains); or

          (d)   no payment, but is on a Leave of Absence (and these hours shall
                be based upon his or her normally scheduled hours per week or a
                40 hour week if there is no regular schedule).

          The crediting of hours for which no duties are performed shall be in
          accordance with Department of Labor regulation sections 2530.200b-2(b)
          and (c).  Actual hours shall be used whenever an accurate record of
          hours are maintained for an Employee.  Otherwise, an equivalent number
          of hours shall be credited for each payroll period in which the
          Employee would be credited with at least 1 hour.  The payroll period
          equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours
          semimonthly and 190 hours monthly.

          Hours credited prior to a Break in Service are included.

          An Employee's service with a predecessor or acquired company shall
          only be counted in the determination of his or her Hours of Service
          for eligibility and/or vesting purposes if (1) the Company directs
          that credit for such service be granted, or (2) a qualified plan of
          the predecessor or acquired company is subsequently maintained by any
          Employer or Related Company.

     1.29  "Ineligible".  The Plan status of an individual during the period in
          which he or she is (1) an Employee of a Related Company which is not
          then an Employer, (2) an Employee, but not an Eligible Employee, or
          (3) not an Employee.

     1.30 "Investment Fund" or "Fund". An investment fund as described in
          Section 16.2. The Investment Funds authorized by the Administrator to
          be offered under the Plan as of the Effective Date, or such date as
          otherwise specified, are set forth in Appendix A. 

                                       6
<PAGE>
 
     1.31 "Leased Employee".  An individual who is deemed to be an employee of
          any Related Company as provided in Code section 414(n) or (o).

     1.32 "Leave of Absence".  A period during which an individual is deemed to
          be an Employee, but is absent from active employment, provided that
          the absence:

          (a)   was authorized by a Related Company; or

          (b)   was due to military service in the United States armed forces
                and the individual returns to active employment within the
                period during which he or she retains employment rights under
                federal law.

     1.33 "Loan Account".  The record maintained for purposes of accounting for
          a Participant's loan and payments of principal and interest thereon.

     1.34 "NHCE" or "Non-Highly Compensated Employee".  An Employee described as
          a Non-Highly Compensated Employee in Section 12.

     1.35 "Normal Retirement Date".  The date of a Participant's 65th birthday.

     1.36 "Owner".  A person with an ownership interest in the capital, profits,
          outstanding stock or voting power of a Related Company within the
          meaning of Code section 318 or 416 (which exclude indirect ownership
          through a qualified plan).

     1.37 "Parental Leave".  The period of absence from work by reason of
          pregnancy, the birth of an Employee's child, the placement of a child
          with the Employee in connection with the child's adoption, or caring
          for such child immediately after birth or placement as described in
          Code section 410(a)(5)(E).

     1.38 "Participant".  An Eligible Employee who begins to participate in the
          Plan after completing the eligibility requirements as described in
          Section 2.1.  An Eligible Employee who makes a Rollover Contribution
          prior to completing the eligibility requirements as described in
          Section 2.1 shall also be considered a Participant, except that he or
          she shall not be considered a Participant for purposes of provisions
          related to Contributions, other than a Rollover Contribution, until he
          or she completes the eligibility requirements as described in Section
          2.1. A Participant's participation continues until his or her
          employment with all Related Companies ends and his or her Account is
          distributed or forfeited.

     1.39 "Pay". All cash compensation paid to an Eligible Employee by an
          Employer while a Participant during the current period, except that
          "base pay" shall be substituted for the preceding reference to "All
          cash compensation" with regard to an Eligible Employee during any
          period he or she is an Expatriate Employee. Pay excludes
          reimbursements or other expense allowances, cash and non-cash fringe
          benefits, moving expenses, deferred compensation and welfare benefits.

                                       7
<PAGE>
 
          Pay is neither increased by any salary credit or decreased by any
          salary reduction pursuant to Code sections 125 or 402(e)(3).  Pay is
          limited to $200,000 (as indexed for the cost of living pursuant to
          Code sections 401(a)(17) and 415(d)) per Plan Year. Pay is limited to
          $150,000 (as adjusted for the cost of living pursuant to Code sections
          401(a)(17) and 415(d)) per Plan Year for Plan Years beginning after
          December 31, 1993.

     1.40 "Plan".  The L.A. Gear, Inc. Employee Stock Savings Plan set forth in
          this document, as from time to time amended.

     1.41 "Plan Year".  The annual accounting period of the Plan and Trust which
          ends on each November 30.

     1.42 "QDRO".  A domestic relations order which the Administrator has
          determined to be a qualified domestic relations order within the
          meaning of Code section 414(p).

     1.43 "Related Company".  With respect to any Employer, that Employer and
          any corporation, trade or business which is, together with that
          Employer, a member of the same controlled group of corporations, a
          trade or business under common control, or an affiliated service group
          within the meaning of Code sections 414(b), (c), (m) or (o), except
          that for purposes of Section 13 "within the meaning of Code sections
          414(b), (c), (m) or (o), as modified by Code section 415(h)" shall be
          substituted for the preceding reference to "within the meaning of Code
          section 414(b), (c), (m) or (o)".

     1.44 "Regular Employee".  An Employee of an Employer other than an Employee
          classified as a Temporary Employee.

     1.45 "Settlement Date".  For each Trade Date, the Trustee's next business
          day.

     1.46 "Spousal Consent".  The written consent given by a spouse to a
          Participant's  Beneficiary designation.  The spouse's consent must
          acknowledge the effect on the spouse of the Participant's designation,
          and be duly witnessed by a Plan representative or notary public.
          Spousal Consent shall be valid only with respect to the spouse who
          signs the Spousal Consent and only for the particular choice made by
          the Participant which requires Spousal Consent.  A Participant may
          revoke (without Spousal Consent) a prior designation that required
          Spousal Consent at any time before payments begin.  Spousal Consent
          also means a determination by the Administrator that there is no
          spouse, the spouse cannot be located, or such other circumstances as
          may be established by applicable law.

     1.47 "Subsidiary".  A company which is 50% or more owned, directly or
          indirectly, by the Company.

                                       8
<PAGE>
 
     1.48 "Sweep Account".  The subsidiary Account for each Participant through
          which all transactions are processed, which is invested in interest
          bearing deposits of the Trustee.

     1.49 "Sweep Date".  The cut off date and time for receiving instructions
          for transactions to be processed on the next Trade Date.

     1.50 "Taxable Income".  Compensation in the amount reported by the Employer
          or a Related Company as "Wages, tips, other compensation" on Form W-2,
          or any successor method of reporting under Code section 6041(d).

     1.51 "Temporary Employee".  An Employee of an Employer whose work
          assignment is not intended to exceed 120 days and therefore whose
          employment commencement date and termination date is not intended to
          be more than 120 days apart.

     1.52 "Trade Date".  Each day the Investment Funds are valued, which is
          normally every day the assets of such Funds are traded.

     1.53 "Trust".  The legal entity created by those provisions of this
          document which relate to the Trustee.  The Trust is part of the Plan
          and holds the Plan assets which are comprised of the aggregate of
          Participants' Accounts, any unallocated funds invested in deposit or
          money market type assets pending allocation to Participants' Accounts
          or disbursement to pay Plan fees and expenses and the Forfeiture
          Account.

     1.54 "Trustee".  Wells Fargo Bank, National Association.

     1.55 "Year of Vesting Service".  A 12 consecutive month period ending on
          the last day of a Plan Year in which an Employee is credited with at
          least 1,000 Hours of Service.  An Employee shall be credited with a
          Year of Vesting Service at such time as he or she is credited with
          1,000 Hours of Service during such 12 consecutive month period.

          Years of Vesting Service shall include service credited prior to
          December 1, 1985.

                                       9
<PAGE>
 
2    ELIGIBILITY
     -----------

     2.1  Eligibility

          All Participants as of August 1, 1993 shall continue their eligibility
          to participate.  Each other Eligible Employee shall become a
          Participant on the later of August 1, 1993 or thereafter, on the first
          day of the next month after the date he or she attains age 21, and
          completes a three month eligibility period in which he or she is
          credited with at least 250 Hours of Service.  The initial eligibility
          period begins on the date an Employee first performs an Hour of
          Service. Subsequent eligibility periods begin with the start of each
          quarter of the Plan Year beginning after the first Hour of Service is
          performed.

          Effective February 1, 1995, all Participants as of February 1, 1995
          shall continue their eligibility to participate.  Each other Eligible
          Employee shall become a Participant on the later of February 1, 1995
          or thereafter, on the first day of the next payroll period after the
          date he or she attains age 21, and completes a 30 day eligibility
          period in which he or she is credited with at least 83 Hours of
          Service.  The initial eligibility period begins on the date an
          Employee first performs an Hour of Service. Subsequent eligibility
          periods begin with the start of each month beginning after the first
          Hour of Service is performed.

          Effective December 1, 1995, all Participants as of December 1, 1995
          shall continue their eligibility to participate.  Each other Eligible
          Employee, other than a Temporary Employee or a Regular Employee
          classified as part-time, shall become a Participant on the first day
          of the next payroll period after the date he or she attains age 21,
          and completes a 30 day eligibility period in which he or she is
          credited with at least 83 Hours of Service.  The initial eligibility
          period begins on the date an Employee first performs an Hour of
          Service. Subsequent eligibility periods begin with the start of each
          month beginning after the first Hour of Service is performed.

          Each Eligible Employee who is a Temporary Employee or a Regular
          Employee classified as part-time, shall become a Participant on the
          later of December 1, 1995 or thereafter, on the first day of the next
          payroll period after the date he or she attains age 21, and completes
          a twelve month eligibility period in which he or she is credited with
          at least 1,000 Hours of Service.  The initial eligibility period
          begins on the date an Employee first performs an Hour of Service.
          Subsequent eligibility periods begin with the start of each Plan Year
          after the first Hour of Service is performed.

     2.2  Ineligible Employees

          If an Employee completes the above eligibility requirements, but is
          Ineligible at the time participation would otherwise begin (if he or
          she were not Ineligible), he or she shall become a Participant on the
          first subsequent date on which he or she is an Eligible Employee. 

                                      10
<PAGE>
 
     2.3  Ineligible or Former Participants

          A Participant may not make or share in Plan Contributions, nor
          generally be eligible for a new Plan loan, during the period he or she
          is Ineligible, but he or she shall continue to participate for all
          other purposes. An Ineligible Participant or former Participant shall
          automatically become an active Participant on the date he or she again
          becomes an Eligible Employee. 

                                      11
<PAGE>
 
3    PARTICIPANT CONTRIBUTIONS
     -------------------------

     3.1  Employee 401(k) Contribution Election

          Upon becoming a Participant, an Eligible Employee may elect to reduce
          his or her Pay by an amount which does not exceed the Contribution
          Dollar Limit, within the limits described in the Contribution
          Percentage Limits paragraph of this Section 3, and have such amount
          contributed to the Plan by the Employer as a Employee 401(k)
          Contribution.  The election shall be made as a whole percentage of Pay
          in such manner and with such advance notice as prescribed by the
          Administrator.  In no event shall an Employee's Employee 401(k)
          Contributions under the Plan and comparable contributions to all other
          plans, contracts or arrangements of all Related Companies exceed the
          Contribution Dollar Limit for the Employee's taxable year beginning in
          the Plan Year.

     3.2  After-Tax Contribution Election

          Upon becoming a Participant, an Eligible Employee may elect to make
          After-Tax Contributions to the Plan in an amount which does not exceed
          the limits described in the Contribution Percentage Limits paragraph
          of this Section 3.  The election shall be made as a whole percentage
          of Pay in such manner and with such advance notice as prescribed by
          the Administrator.

     3.3  Changing a Contribution Election

          A Participant who is an Eligible Employee may change his or her
          Employee 401(k) and/or After-Tax Contribution election at any time,
          but no more frequently than once in any 3-month period, in such manner
          and with such advance notice as prescribed by the Administrator, and
          such election shall be effective with the first payroll paid after
          such date.  Participants' Contribution election percentages shall
          automatically apply to Pay increases or decreases.

     3.4  Revoking and Resuming a Contribution Election

          A Participant may revoke his or her Employee 401(k) and/or After-Tax
          Contribution election at any time in such manner and with such advance
          notice as prescribed by the Administrator, and such revocation shall
          be effective with the first payroll paid after such date.

          A Participant who has revoked his or her Employee 401(k) and/or After-
          Tax Contribution election shall be required to wait at least three
          months before he or she may resume Employee 401(k) and/or After-Tax
          Contributions to the Plan. Thereafter, a Participant who is an
          Eligible Employee may resume Employee 401(k) and/or After-Tax
          Contributions by making a new Contribution election at any time in
          such manner and with such advance notice as prescribed by the
          Administrator, and such election shall be effective with the first
          payroll paid after such date.

                                      12
<PAGE>
 
     3.5  Contribution Percentage Limits

          The Administrator may establish and change from time to time, in
          writing, without the necessity of amending this Plan and Trust, the
          minimum, if applicable, and maximum Employee 401(k) and After-Tax
          Contribution percentages, and/or a maximum combined Employee 401(k)
          and After-Tax Contribution percentage, prospectively or
          retrospectively (for the current Plan Year), for all Participants.  In
          addition, the Administrator may establish any lower percentage limits
          for Highly Compensated Employees as it deems necessary to satisfy the
          tests described in Section 12.  As of the Effective Date, the minimum
          Employee 401(k) and After-Tax Contribution Percentages are 1%, and the
          maximum Contribution percentages are:

          <TABLE>
          <CAPTION>
                                  HIGHLY
          CONTRIBUTION         COMPENSATED      ALL OTHER      
          TYPE                  EMPLOYEES     PARTICIPANTS     
          ------------------   ------------   -------------    
          <S>                  <C>            <C>              
          Employee 401(k)               17%             17%    
          After-Tax                     10%             10%    
          Sum of Both                   17%             17%    
          </TABLE>                                             
                                                                
          Irrespective of the limits that may be established by the
          Administrator in accordance with this paragraph, in no event shall the
          contributions made by or on behalf of a Participant for a Plan Year
          exceed the maximum allowable under Code section 415.

     3.6  Refunds When Contribution Dollar Limit Exceeded

          A Participant who makes Employee 401(k) Contributions for a calendar
          year to this Plan and comparable contributions to any other qualified
          defined contribution plan in excess of the Contribution Dollar Limit
          may notify the Administrator in writing by the following March 1 (or
          as late as April 14 if allowed by the Administrator) that an excess
          has occurred.  In this event, the amount of the excess specified by
          the Participant, adjusted for investment gain or loss, shall be
          refunded to him or her by April 15 and shall not be included as an
          Annual Addition under Code section 415 for the year contributed.
          Refunds shall not include investment gain or loss for the period
          between the end of the applicable calendar year and the date of
          distribution.

          Excess amounts shall first be taken from unmatched Employee 401(k)
          Contributions and then from matched Employee 401(k) Contributions.
          Any Employer Matching Contributions attributable to refunded excess
          Employee 401(k) Contributions as described in this Section shall be
          forfeited and used as described in Section 8.4.  For the calendar year
          commencing January 1, 1995, "Any Employer Matching, Matching Stock and
          Matching Cash Contributions" shall be substituted for the reference to
          "Any Employer Matching Contributions" in the preceding sentence and
          for calendar years commencing

                                      13
<PAGE>
 
          on or after January 1, 1996, "Any Matching Stock and Matching Cash
          Contributions" shall be substituted for the reference to "Any Employer
          Matching Contributions" in the preceding sentence.

     3.7  Timing, Posting and Tax Considerations

          Participants' Contributions, other than Rollover Contributions, may
          only be made through payroll deduction. Such amounts shall be paid to
          the Trustee in cash and posted to each Participant's Account(s) as
          soon as such amounts can reasonably be separated from the Employer's
          general assets and balanced against the specific amount made on behalf
          of each Participant. In no event, however, shall such amounts be paid
          to the Trustee more than 90 days after the date amounts are deducted
          from a Participant's Pay. Employee 401(k) Contributions shall be
          treated as Contributions made by an Employer in determining tax
          deductions under Code section 404(a). 

                                      14
<PAGE>
 
4    ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
     ---------------------------------------------------------

     4.1  Rollovers

          The Administrator may authorize the Trustee to accept a rollover
          contribution, within the meaning of Code section 402(c) or
          408(d)(3)(A)(ii), in cash, directly from an Eligible Employee or as a
          Direct Rollover from another qualified plan on behalf of the Eligible
          Employee, even if he or she is not yet a Participant.  The Employee
          shall be responsible for furnishing satisfactory evidence, in such
          manner as prescribed by the Administrator, that the amount is eligible
          for rollover treatment.  A rollover contribution received directly
          from an Eligible Employee must be paid to the Trustee in cash within
          60 days after the date received by the Eligible Employee from a
          qualified plan or conduit individual retirement account.
          Contributions described in this paragraph shall be posted to the
          applicable Employee's Rollover Account as of the date received by the
          Trustee.

          If it is later determined that an amount contributed pursuant to the
          above paragraph did not in fact qualify as a rollover contribution
          under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to
          the Employee's Rollover Account shall immediately be (1) segregated
          from all other Plan assets, (2) treated as a nonqualified trust
          established by and for the benefit of the Employee, and (3)
          distributed to the Employee.  Any such nonqualifying rollover shall be
          deemed never to have been a part of the Plan.

     4.2  Transfers From and To Other Qualified Plans

          The Administrator may instruct the Trustee to receive assets in cash
          or in kind directly from another qualified plan or transfer assets in
          cash or in kind directly to another qualified plan; provided that a
          transfer should not be directed if:

          (a)   any amounts are not exempted by Code section 401(a)(11)(B) from
                the annuity requirements of Code section 417 unless, in the
                event of a receipt of assets, the Plan complies with such
                requirements or, in the event of a transfer of assets, the
                receiving Plan complies with such requirements; or

          (b)   any amounts include benefits protected by Code section 411(d)(6)
                which would not be preserved under applicable Plan provisions,
                in the event of a receipt of assets or, under the applicable
                provisions of the receiving plan, in the event of a transfer of
                assets.

          The Trustee may refuse the receipt of any transfer if:

          (a)   the Trustee finds the in-kind assets unacceptable; or

          (b)   instructions for posting amounts to Participants' Accounts are
                incomplete.

          Such amounts shall be posted to the appropriate Accounts of
          Participants as of the date received by the Trustee.

                                      15
<PAGE>
 
5    EMPLOYER CONTRIBUTIONS
     ----------------------

     The provisions of Section 5.1 are discontinued effective November 30, 1995.
     The provisions of Sections 5.2 and 5.3 are effective December 1, 1995.  The
     provisions of Section 5.4 are effective November 1, 1994.

     5.1  Employer Matching Contributions
 
          (a)   Frequency and Eligibility.  For each Plan Year, the Employer
                shall make Employer Matching Contributions, as described in the
                following Allocation Method paragraph, on behalf of each
                Participant who contributed during the period and was an
                Eligible Employee on the last day of the period.

                Such Contributions shall also be made on behalf of each
                Participant who contributed during the period but who ceased
                being an Employee during the period after having attained age
                65, or by reason of his or her Disability or death.

          (b)   Allocation Method.  The Employer Matching Contributions
                (including any Forfeiture Account amounts applied as Employer
                Matching Contributions in accordance with Section 8.4) for each
                period shall total 50% of each eligible Participant's Employee
                401(k) Contributions for the period, provided that no Employer
                Matching Contributions (and Forfeiture Account amounts) shall be
                made based upon a Participant's Contributions in excess of 6% of
                his or her Pay.  The Employer may change the 50% matching rate
                or the 6% of considered Pay to any other percentages, including
                0%, generally by notifying eligible Participants in sufficient
                time to adjust their Contribution elections prior to the start
                of the period for which the new percentages apply, or in the
                case of an increased percentage matching rate or increased
                percentage of considered Pay, no later than the due date,
                including extensions, for filing the Employer's federal income
                tax return for the applicable year.

          (c)   Timing, Medium and Posting. The Employer shall make each
                period's Employer Matching Contribution in cash as soon as
                administratively feasible, and for purposes of deducting such
                Contribution, not later than the Employer's federal tax filing
                date, including extensions. The Trustee shall post such amount
                to each Participant's Employer Matching Account once the total
                Contribution received has been balanced against the specific
                amount to be credited to each Participant's Employer Matching
                Account.

                                      16
<PAGE>
 
     5.2  Matching Stock Contributions
 
          (a)   Frequency and Eligibility.  For each Participant for which
                Participants' Contributions are made, the Employer shall make
                Matching Stock Contributions, as described in the following
                Allocation Method paragraph, on behalf of each Participant who
                contributed during the period.

          (b)   Allocation Method.  The Matching Stock Contributions (including
                any Forfeiture Account amounts applied as Matching Stock
                Contributions in accordance with Section 8.4) for each period
                shall total 25% of each eligible Participant's Employee 401(k)
                Contributions for the period, provided that no Matching Stock
                Contributions (and Forfeiture Account amounts) shall be made
                based upon a Participant's Contributions in excess of 6% of his
                or her Pay.  The Employer may change the 25% matching rate or
                the 6% of considered Pay to any other percentages, including 0%,
                generally by notifying eligible Participants in sufficient time
                to adjust their Contribution elections prior to the start of the
                Plan Year for which the new percentages apply.

          (c)   Timing, Medium and Posting.  The Employer shall make each
                period's Matching Stock Contribution in cash as soon as
                administratively feasible, and for purposes of deducting such
                Contribution, not later than the Employer's federal tax filing
                date, including extensions.  The Trustee shall post such amount
                to each Participant's Matching Stock Account once the total
                Contribution received has been balanced against the specific
                amount to be credited to each Participant's Matching Stock
                Account.

     5.3  Matching Cash Contributions

          (a)   Frequency and Eligibility.  For each period for which
                Participants Contributions are made, the Employer shall make
                Matching Cash Contributions, as described in the following
                Allocation Method paragraph, on behalf of each Participant who
                contributed during the period.

          (b)   Allocation Method. The Matching Cash Contributions (including
                any Forfeiture Account amounts applied as Matching Cash
                Contributions in accordance with Section 8.4) for each period
                shall total 25% of each eligible Participant's Employee 401(k)
                Contributions for the period, provided that no Matching Cash
                Contributions (and Forfeiture Account amounts) shall be made
                based upon a Participant's Contributions in excess of 6% of his
                or her Pay. The Employer may change the 25% matching rate or the
                6% of considered Pay to any other percentages, including 0%,
                generally by notifying eligible Participants in sufficient time
                to adjust their Contribution elections prior to the start of the
                Plan Year for which the new percentages apply. 

                                      17
<PAGE>
 
          (c)   Timing, Medium and Posting.  The Employer shall make each
                period's Matching Cash Contribution in cash as soon as
                administratively feasible, and for purposes of deducting such
                Contribution, not later than the Employer's federal tax filing
                date, including extensions.  The Trustee shall post such amount
                to each Participant's Matching Cash Account once the total
                Contribution received has been balanced against the specific
                amount to be credited to each Participant's Matching Cash
                Account.

     5.4  Qualifying Contributions

          (a)   Frequency and Eligibility.  For each Plan Year, the Employer may
                make a Qualifying Contribution on behalf of a Non-Highly
                Compensated Employee Participant who was an Eligible Employee at
                any time during the period.

          (b)   Allocation Method.  The Qualifying Contribution for each period
                shall be in an amount determined by the Employer, not in excess
                of the amount determined necessary to satisfy the tests
                described in Section 12, and allocated among eligible
                Participants in order of each Participant's Taxable Income for
                the Plan Year beginning with the Participant with the lowest
                Taxable Income, in an amount representing the lesser of the
                amount determined necessary to satisfy the tests described in
                Section 12 or that results in the Annual Addition, as defined in
                Section 13.1, to the Participant's Account equaling, but not
                exceeding, the Maximum Annual Addition, as defined in Section
                13.2.  This process shall be repeated with the Participant with
                the next lowest Taxable Income and so forth as necessary until
                the tests described in Section 12 are satisfied.

          (c)   Timing, Medium and Posting. The Employer shall make each
                period's Qualifying Contribution in cash as soon as
                administratively feasible, and for purposes of deducting such
                Contribution, not later than the Employer's federal tax filing
                date, including extensions. Notwithstanding, for purposes of
                satisfying the tests described in Section 12, Qualifying
                Contributions shall be made before the end of the Plan Year
                following the Plan Year being tested. The Trustee shall post
                such amount to each Participant's Qualifying Account once the
                total Contribution received has been balanced against the
                specific amount to be credited to each Participant's Qualifying
                Account. 

                                      18
<PAGE>
 
6    ACCOUNTING
     ----------

     6.1  Individual Participant Accounting

          The Administrator shall maintain an individual set of Accounts for
          each Participant in order to reflect transactions both by type of
          Contribution and investment medium.  Financial transactions shall be
          accounted for at the individual Account level by posting each
          transaction to the appropriate Account of each affected Participant.
          Participant Account values shall be maintained in shares for the
          Investment Funds and in dollars for the Sweep and Loan Accounts.  At
          any point in time, the Account value shall be determined using the
          most recent Trade Date values provided by the Trustee.

     6.2  Sweep Account is Transaction Account

          All transactions related to amounts being contributed to or
          distributed from the Trust shall be posted to each affected
          Participant's Sweep Account.  Any amount held in the Sweep Account
          shall be credited with interest up until the date on which it is
          removed from the Sweep Account.

     6.3  Trade Date Accounting and Investment Cycle

          Participant Account values shall be determined as of each Trade Date.
          For any transaction to be processed as of a Trade Date, the Trustee
          must receive instructions for the transaction by the Sweep Date.  Such
          instructions shall apply to amounts held in the Account on that Sweep
          Date.  Financial transactions of the Investment Funds shall be posted
          to Participants' Accounts as of the Trade Date, based upon the Trade
          Date values provided by the Trustee, and settled on the Settlement
          Date.

     6.4  Accounting for Investment Funds

          Investments in each Investment Fund shall be maintained in shares.
          The Trustee is responsible for determining the share values of each
          Investment Fund as of each Trade Date.  To the extent an Investment
          Fund is comprised of collective investment funds of the Trustee, or
          any other fiduciary to the Plan, the share values shall be determined
          in accordance with the rules governing such collective investment
          funds, which are incorporated herein by reference.  All other share
          values shall be determined by the Trustee.  The share value of each
          Investment Fund shall be based on the fair market value of its
          underlying assets.

     6.5  Payment of Fees and Expenses

          Except to the extent Plan fees and expenses related to Account
          maintenance, transaction and Investment Fund management and
          maintenance, as set forth below, are paid by the Employer directly, or
          indirectly, through the Forfeiture

                                      19
<PAGE>
 
          Account as directed by the Administrator, such fees and expenses shall
          be paid as set forth below. The Employer may pay a lower portion of
          the fees and expenses allocable to the Accounts of Participants who
          are no longer Employees or who are not Beneficiaries, unless doing so
          would result in discrimination.

          (a)   Account Maintenance:  Account maintenance fees and expenses, may
                include but are not limited to, administrative, Trustee,
                government annual report preparation, audit, legal,
                nondiscrimination testing and fees for any other special
                services.  Account maintenance fees shall be charged to
                Participants on a per Participant basis provided that no fee
                shall reduce a Participant's Account balance below zero.

          (b)   Transaction: Transaction fees and expenses, may include but are
                not limited to, periodic installment payment Investment Fund
                election change and loan fees.  Transaction fees shall be
                charged to the Participant's Account involved in the transaction
                provided that no fee shall reduce a Participant's Account
                balance below zero.

          (c)   Investment Fund Management and Maintenance:  Management and
                maintenance fees and expenses related to the Investment Funds
                shall be charged at the Investment Fund level and reflected in
                the net gain or loss of each Fund.

          As of the Effective Date, a breakdown of which Plan fees and expenses
          shall generally be borne by the Trust (and charged to individual
          Participants' Accounts or charged at the Investment Fund level and
          reflected in the net gain or loss of each Fund) and those that shall
          be paid by the Employer is set forth in Appendix B and may be changed
          from time to time by the Administrator,  in writing, without the
          necessity of amending this Plan and Trust.

          The Trustee shall have the authority to pay any such fees and
          expenses, which remain unpaid by the Employer for 60 days, from the
          Trust.

     6.6  Accounting for Participant Loans

          Participant loans shall be held in a separate Loan Account of the
          Participant and accounted for in dollars as an earmarked asset of the
          borrowing Participant's Account.

     6.7  Error Correction

          The Administrator may correct any errors or omissions in the
          administration of the Plan by restoring any Participant's Account
          balance with the amount that would be credited to the Account had no
          error or omission been made.  Funds necessary for any such restoration
          shall be provided through payment made by the Employer, or by the
          Trustee to the extent the error or omission is

                                      20
<PAGE>
 
          attributable to actions or inactions of the Trustee, or if the
          restoration involves an Account holding amounts contributed by an
          Employer, the Administrator may direct the Trustee to use amounts from
          the Forfeiture Account.

     6.8  Participant Statements

          The Administrator shall provide Participants with statements of their
          Accounts as soon after the end of each quarter of the Plan Year as
          administratively feasible.

     6.9  Special Accounting During Conversion Period

          The Administrator and Trustee may use any reasonable accounting
          methods in performing their respective duties during any Conversion
          Period.  This includes, but is not limited to, the method for
          allocating net investment gains or losses and the extent, if any, to
          which contributions received by and distributions paid from the Trust
          during this period share in such allocation.

     6.10 Accounts for QDRO Beneficiaries

          A separate Account shall be established for an alternate payee
          entitled to any portion of a Participant's Account under a QDRO as of
          the date and in accordance with the directions specified in the QDRO.
          In addition, a separate Account may be established during the period
          of time the Administrator, a court of competent jurisdiction or other
          appropriate person is determining whether a domestic relations order
          qualifies as a QDRO.  Such a separate Account shall be valued and
          accounted for in the same manner as any other Account.

          (a)   Distributions Pursuant to QDROs.  If a QDRO so provides, the
                portion of a Participant's Account payable to an alternate payee
                may be distributed, in a form as permissible under Section 11,
                to the alternate payee at the time specified in the QDRO,
                regardless of whether the Participant is entitled to a
                distribution from the Plan at such time.

          (b)   Participant Loans.  Except to the extent required by law, an
                alternate payee, on whose behalf a separate Account has been
                established, shall not be entitled to borrow from such Account.
                If a QDRO specifies that the alternate payee is entitled to any
                portion of the Account of a Participant who has an outstanding
                loan balance, all outstanding loans shall generally continue to
                be held in the Participant's Account and shall not be divided
                between the Participant's and alternate payee's Accounts.

          (c)   Investment Direction. Where a separate Account has been
                established on behalf of an alternate payee and has not yet been
                distributed, the alternate payee may direct the investment of
                such Account in the same manner as if he or she were a
                Participant. 

                                      21
<PAGE>
 
7    INVESTMENT FUNDS AND ELECTIONS
     ------------------------------

     7.1  Investment Funds

          Except for Participants' Sweep and Loan Accounts, the Trust shall be
          maintained in various Investment Funds.  The Administrator shall
          select the Investment Funds offered to Participants and may change the
          number or composition of the Investment Funds, subject to the terms
          and conditions agreed to with the Trustee.  As of the Effective Date
          or such date as otherwise specified, a list of the Investment Funds
          offered under the Plan is set forth in Appendix A, and may be changed
          from time to time by the Administrator, in writing, and as agreed to
          by the Trustee, without the necessity of amending this Plan and Trust.

     7.2  Investment Fund Elections

          Each Participant shall direct the investment of all of his or her
          Contribution Accounts except for these Accounts:

                Employer Matching Account

          which shall be entirely invested in the Investment Fund specified by
          the Administrator, which Investment Fund as of the Effective Date is
          set forth in Appendix A. However, a Participant who has attained age
          55 may direct the investment of the balances in his or her Employer
          Matching Account.  Future amounts allocated to his or her Employer
          Matching Account shall continue to be entirely invested in the
          Investment Fund specified by the Administrator, until otherwise
          directed by the Participant.

          Effective December 1, 1995, "Matching Stock Account" (which effective
          December 1, 1995 includes amounts previously held in a Participant's
          Employer Matching Account) shall be substituted for each reference to
          "Employer Matching Account" in the preceding paragraph.

          A Participant shall make his or her investment election in any
          combination of one or any number of the Investment Funds offered in
          accordance with the procedures established by the Administrator and
          Trustee.  However, during any Conversion Period, Trust assets may be
          held in any investment vehicle permitted by the Plan, as directed by
          the Administrator, irrespective of Participant investment elections.

          The Administrator may set a maximum percentage of the total election
          that a Participant may direct into any specific Investment Fund, which
          maximum, if any, as of the Effective Date is set forth in Appendix A,
          and may be changed from time to time by the Administrator, in writing,
          without the necessity of amending this Plan and Trust. 

                                      22
<PAGE>
 
     7.3  Responsibility for Investment Choice

          Each Participant shall be solely responsible for the selection of his
          or her Investment Fund choices.  No fiduciary with respect to the Plan
          is empowered to advise a Participant as to the manner in which his or
          her Accounts are to be invested, and the fact that an Investment Fund
          is offered shall not be construed to be a recommendation for
          investment.

     7.4  Default if No Election

          The Administrator shall specify an Investment Fund for the investment
          of that portion of a Participant's Account which is not yet held in an
          Investment Fund and for which no valid investment election is on file.
          The Investment Fund specified as of the Effective Date is set forth in
          Appendix A, and may be changed from time to time by the Administrator,
          in writing, without the necessity of amending this Plan and Trust.

     7.5  Timing

          A Participant shall make his or her initial investment election upon
          becoming a Participant and may change his or her investment election
          at any time in accordance with the procedures established by the
          Administrator and Trustee.  Investment elections received by the
          Trustee by the Sweep Date shall be effective on the following Trade
          Date.

     7.6  Investment Fund Election Change Fees

          A reasonable processing fee may be charged directly to a Participant's
          Account for Investment Fund election changes in excess of a specified
          number per year as determined by the Administrator.

                                      23
<PAGE>
 
8    VESTING & FORFEITURES
     ---------------------

     8.1  Fully Vested Contribution Accounts

          A Participant shall be fully vested in these Accounts at all times:

                Employee 401(k) Account
                After-Tax Account
                Rollover Account
                Qualifying Account

     8.2  Full Vesting upon Certain Events

          A Participant's entire Account shall become fully vested once he or
          she has attained his or her Normal Retirement Date as an Employee or
          upon his or her terminating employment with all Related Companies due
          to his or her Disability or death.

     8.3  Vesting Schedule

          In addition to the vesting provided above, a Participant's Employer
          Matching Account shall become vested in accordance with the following
          schedule:

          <TABLE>                             
          <CAPTION>                           
            YEARS OF VESTING       VESTED     
                SERVICE           PERCENTAGE   
          --------------------   -----------  
          <S>                    <C>          
          Less than 1                     0%  
          1 but less than 2              20%  
          2 but less than 3              40%  
          3 but less than 4              60%  
          4 but less than 5              80%  
          5 or more                     100%  
          </TABLE>                            
                                               
          Effective December 1, 1995, "Matching Stock and Matching Cash
          Accounts" (which, with regard to "Matching Stock Account" effective
          December 1, 1995, includes amounts previously held in a Participant's
          Employer Matching Account) shall be substituted for the preceding
          reference to "Employer Matching Account".

          If this vesting schedule is changed, the vested percentage for each
          Participant shall not be less than his or her vested percentage
          determined as of the last day prior to this change, and for any
          Participant with at least three Years of Vesting Service when the
          schedule is changed, vesting shall be determined using the more
          favorable vesting schedule.

                                      24
<PAGE>
 
     8.4  Forfeitures

          A Participant's non-vested Account balance shall be forfeited as of
          the Settlement Date following the Sweep Date on which the
          Administrator has reported to the Trustee that the Participant's
          employment has terminated with all Related Companies.  Forfeitures
          from all Employer Contribution Accounts shall be transferred to and
          maintained in a single Forfeiture Account, which shall be invested in
          interest bearing deposits of the Trustee.  Forfeiture Account amounts
          shall be utilized to restore Accounts, to pay Plan fees and expenses
          and to reduce Employer Matching Contributions as directed by the
          Administrator.

          Effective December 1, 1995, "Matching Stock and Matching Cash
          Contributions" shall be substituted for the reference to "Employer
          Matching Contributions" in the preceding paragraph.

     8.5  Rehired Employees

          (a)   Service.  If a former Employee is rehired, all Years of Vesting
                Service credited when his or her employment last terminated
                shall be counted in determining his or her vested interest.

          (b)   Account Restoration.  If a former Employee is rehired before he
                or she has a Break in Service, the amount forfeited when his or
                her employment last terminated shall be restored to his or her
                Account.  The restoration shall include the interest which would
                have been credited had such forfeiture been invested in the
                Sweep Account from the date forfeited until the date the
                restoration amount is restored.  The amount shall come from the
                Forfeiture Account to the extent possible, and any additional
                amount needed shall be contributed by the Employer.  The vested
                interest in his or her restored Account shall then be equal to:

                         V% times (AB + D) - D

                where:

                V% = current vested percentage
                AB = current account balance
                D  = amount previously distributed

                                      25
<PAGE>
 
9    PARTICIPANT LOANS
     -----------------

     9.1  Participant Loans Permitted

          Loans to Participants are permitted pursuant to the terms and
          conditions set forth in this Section.

     9.2  Loan Application, Note and Security

          A Participant shall apply for any loan in such manner and with such
          advance notice as prescribed by the Administrator.  All loans shall be
          evidenced by a promissory note, secured only by the portion of the
          Participant's Account from which the loan is made, and the Plan shall
          have a lien on this portion of his or her Account.

     9.3  Spousal Consent

          A Participant is not required to obtain Spousal Consent in order to
          take out a loan under the Plan.

     9.4  Loan Approval

          The Administrator, or the Trustee, if otherwise authorized by the
          Administrator and agreed to by the Trustee, is responsible for
          determining that a loan request conforms to the requirements described
          in this Section and granting such request.

     9.5  Loan Funding Limits, Account Sources and Funding Order

          The loan amount must meet all of the following limits as determined as
          of the Sweep Date the loan is processed and shall be funded from the
          Participant's Accounts as follows:

          (a)   Plan Minimum Limit.  The minimum amount for any loan is $500.

          (b)   Plan Maximum Limit, Account Sources and Funding Order.  Subject
                to the legal limit described in (c) below, the maximum a
                Participant may borrow, including the outstanding balance of
                existing Plan loans, is 100% of the following of the
                Participant's Accounts which are fully vested in the priority
                order as follows:

                     Employee 401(k) Account
                     Qualifying Account
                     Rollover Account
                     After-Tax Account

                                      26
<PAGE>
 
          (c)   Legal Maximum Limit.  The maximum a Participant may borrow,
                including the outstanding balance of existing Plan loans, is 50%
                of his or her vested Account balance, not to exceed $50,000.
                However, the $50,000 maximum is reduced by the Participant's
                highest outstanding loan balance during the 12 month period
                ending on the day before the Sweep Date as of which the loan is
                made.  For purposes of this paragraph, the qualified plans of
                all Related Companies shall be treated as though they are part
                of this Plan to the extent it would decrease the maximum loan
                amount.

     9.6  Maximum Number of Loans

          A Participant may have a maximum of two loans outstanding at any given
          time.

     9.7  Source and Timing of Loan Funding

          A loan to a Participant shall be made solely from the assets of his or
          her own Account.  The available assets shall be determined first by
          Account type and then within each Account used for funding a loan,
          amounts shall first be taken from the Sweep Account and then taken by
          Investment Fund in direct proportion to the market value of the
          Participant's interest in each Investment Fund as of the Trade Date on
          which the loan is processed.

          The loan shall be funded on the Settlement Date following the Trade
          Date as of which the loan is processed.  The Trustee shall make
          payment to the Participant as soon thereafter as administratively
          feasible.

     9.8  Interest Rate

          The interest rate charged on Participant loans shall be a fixed
          reasonable rate of interest, determined from time to time by the
          Administrator, which provides the Plan with a return commensurate with
          the prevailing interest rate charged by persons in the business of
          lending money for loans which would be made under similar
          circumstances.  As of the Effective Date, the interest rate is
          determined as set forth in Appendix C, and may be changed from time to
          time by the Administrator, in writing, without the necessity of
          amending this Plan and Trust.

     9.9  Loan Payment

          Substantially level amortization shall be required of each loan with
          payments made at least monthly, generally through payroll deduction.
          Loans may be prepaid in full or in part at any time. The Participant
          may choose the loan repayment period, not to exceed 5 years, except
          that the repayment period may be for any period not to exceed 10 years
          if the purpose of the loan is to acquire the Participant's principal
          residence.

                                      27
<PAGE>
 
     9.10 Loan Payment Hierarchy

          Loan principal payments shall be credited to the Participant's
          Accounts in the inverse of the order used to fund the loan.  Loan
          interest shall be credited to the Participant's Accounts in direct
          proportion to the principal payment.  Loan payments are credited to
          the Investment Funds based upon the Participant's current investment
          election for new Contributions.

     9.11 Repayment Suspension

          The Administrator may agree to a suspension of loan payments for up to
          12 months for a Participant who is on a Leave of Absence without pay.
          During the suspension period interest shall continue to accrue on the
          outstanding loan balance.  At the expiration of the suspension period
          all outstanding loan payments and accrued interest thereon shall be
          due unless otherwise agreed upon by the Administrator.

     9.12 Loan Default

          A loan is treated as a default if scheduled loan payments are more
          than 90 days late.  A Participant shall then have 30 days from the
          time he or she receives written notice of the default and a demand for
          past due amounts to cure the default before it becomes final.

          In the event of default, the Administrator may direct the Trustee to
          report the outstanding principal balance of the loan and accrued
          interest thereon as a taxable distribution.  As soon as a Plan
          withdrawal or distribution to such Participant would otherwise be
          permitted, the Administrator may instruct the Trustee to execute upon
          its security interest in the Participant's Account by distributing the
          note to the Participant.

     9.13 Call Feature

          The Administrator shall have the right to call any Participant loan
          once a Participant's employment with all Related Companies has
          terminated or if the Plan is terminated.

                                      28
<PAGE>
 
10   IN-SERVICE WITHDRAWALS
     ----------------------

     10.1 In-Service Withdrawals Permitted

          In-service withdrawals to a Participant who is an Employee are
          permitted pursuant to the terms and conditions set forth in this
          Section and as required by law as set forth in Section 11.

     10.2 In-Service Withdrawal Application and Notice

          A Participant shall apply for any in-service withdrawal in such manner
          and with such advance notice as prescribed by the Administrator.  The
          Participant shall be provided the notice prescribed by Code section
          402(f).

          If an in-service withdrawal is one to which Code sections 401(a)(11)
          and 417 do not apply, such in-service withdrawal may commence less
          than 30 days after the aforementioned notice is provided, if:

          (a)   the Participant is clearly informed that he or she has the right
                to a period of at least 30 days after receipt of such notice to
                consider his or her option to elect or not elect a Direct
                Rollover for all or a portion, if any, of his or her in-service
                withdrawal which shall constitute an Eligible Rollover
                Distribution; and

          (b)   the Participant after receiving such notice, affirmatively
                elects a Direct Rollover for all or a portion, if any, of his or
                her in-service withdrawal which shall constitute an Eligible
                Rollover Distribution or alternatively elects to have all or a
                portion made payable directly to him or her, thereby not
                electing a Direct Rollover for all or a portion thereof.

     10.3 Spousal Consent

          A Participant is not required to obtain Spousal Consent in order to
          make an in-service withdrawal under the Plan.

     10.4 In-Service Withdrawal Approval

          The Administrator, or the Trustee, if otherwise authorized by the
          Administrator and agreed to by the Trustee, is responsible for
          determining that an in-service withdrawal request conforms to the
          requirements described in this Section and granting such request.

     10.5 Minimum Amount, Payment Form and Medium

          There is no minimum amount for any type of withdrawal.

          The form of payment for an in-service withdrawal shall be a single
          lump sum and payment shall be made in cash.

                                      29
<PAGE>
 
          With regard to the portion of a withdrawal representing an Eligible
          Rollover Distribution, a Participant may elect a Direct Rollover for
          all or a portion of such amount.

     10.6 Source and Timing of In-Service Withdrawal Funding

          An in-service withdrawal to a Participant shall be made solely from
          the assets of his or her own Account and shall be based on the Account
          values as of the Trade Date the in-service withdrawal is processed.
          The available assets shall be determined first by Account type and
          then within each Account used for funding an in-service withdrawal,
          amounts shall first be taken from the Sweep Account and then taken by
          Investment Fund in direct proportion to the market value of the
          Participant's interest in each Investment Fund (which excludes his or
          her Loan Account balance) as of the Trade Date on which the in-service
          withdrawal is processed.

          The in-service withdrawal shall be funded on the Settlement Date
          following the Trade Date as of which the in-service withdrawal is
          processed.  The Trustee shall make payment as soon thereafter as
          administratively feasible.

     10.7 Hardship Withdrawals

          (a)   Requirements.  A Participant who is an Employee may request the
                withdrawal of up to the amount necessary to satisfy a financial
                need including amounts necessary to pay any federal, state or
                local income taxes or penalties reasonably anticipated to result
                from the withdrawal.  Only requests for withdrawals (1) on
                account of a Participant's "Deemed Financial Need" or
                "Demonstrated Financial Need", and (2) which are "Demonstrated
                as Necessary" to satisfy the financial need shall be approved.

          (b)   "Deemed Financial Need".  An immediate and heavy financial need
                relating to:

                (1)  the payment of unreimbursable medical expenses described
                     under Code section 213(d) incurred (or to be incurred) by
                     the Employee, his or her spouse or dependents;

                (2)  the purchase (excluding mortgage payments) of the
                     Employee's principal residence;

                (3)  the payment of unreimbursable tuition and related
                     educational fees (which, effective January 1, 1995 ,include
                     room and board) for up to the next 12 months of post-
                     secondary education for the Employee, his or her spouse or
                     dependents;

                                      30
<PAGE>
 
                (4)  the payment of amounts necessary for the Employee to
                     prevent losing his or her principal residence through
                     eviction or foreclosure on the mortgage; or

                (5)  any other circumstance specifically permitted under Code
                     section 401(k)(2)(B)(i)(IV).

          (c)   "Demonstrated Financial Need".  A determination by the
                Administrator that an immediate and heavy financial need exists
                relating to:

                (1)  a sudden and unexpected illness or accident to the Employee
                     or his or her spouse or dependents;

                (2)  the loss, due to casualty, of the Employee's property other
                     than nonessential property (such as a boat or a
                     television); or

                (3)  some other similar extraordinary and unforeseeable
                     circumstances arising as a result of events beyond the
                     control of the Employee.

          (d)   "Demonstrated as Necessary".  A withdrawal is "demonstrated as
                necessary" to satisfy the financial need only if the withdrawal
                amount does not exceed the financial need, the Employee
                represents that he or she is unable to relieve the financial
                need (without causing further hardship) by doing any or all of
                the following and the Administrator does not have actual
                knowledge to the contrary:

                (1)  receiving any reimbursement or compensation from insurance
                     or otherwise;

                (2)  reasonably liquidating his or her assets and the assets of
                     his or her spouse or minor children that are reasonably
                     available to the Employee;

                (3)  ceasing his or her contributions to this Plan;

                (4)  obtaining other withdrawals and nontaxable loans available
                     from this Plan, plans maintained by Related Companies and
                     plans maintained by any other employer; and

                (5)  obtaining loans from commercial sources on reasonable
                     commercial terms.
 
          (e)   Account Sources and Funding Order. All available amounts must
                first be withdrawn from a Participant's After-Tax Account. The
                remaining withdrawal amount shall come from the following of the
                Participant's fully vested Accounts, in the priority order as
                follows:

                                      31
<PAGE>
 
                     Rollover Account
                     Employee 401(k) Account

                The amount that may be withdrawn from a Participant's Employee
                401(k) Account shall not include any earnings credited to his or
                her Employee 401(k) Account.

          (f)   Permitted Frequency.  There is no restriction on the number of
                Hardship withdrawals permitted to a Participant.

          (g)   Suspension from Further Contributions.  A Hardship withdrawal
                shall not affect a Participant's ability to make or be eligible
                to receive further Contributions.

     10.8 After-Tax Account Withdrawals

          (a)   Requirements.  A Participant who is an Employee may withdraw
                from the Accounts listed in paragraph (b) below.

          (b)   Account Sources and Funding Order.  The withdrawal amount shall
                come from a Participant's After-Tax Account.

          (c)   Permitted Frequency.  The maximum number of After-Tax Account
                withdrawals permitted to a Participant in any 12-month period is
                one.

          (d)   Suspension from Further Contributions.  An After-Tax Account
                withdrawal shall not affect a Participant's ability to make or
                be eligible to receive further Contributions.

     10.9 Over Age 59 1/2 Withdrawals

          (a)   Requirements.  A Participant who is an Employee and over age 59
                1/2 may withdraw from the Accounts listed in paragraph (b)
                below.

          (b)   Account Sources and Funding Order.  The withdrawal amount shall
                come from the following of the Participant's fully vested
                Accounts, in the priority order as follows, except that the
                Participant may instead choose to have amounts taken from his or
                her After-Tax Account first:

                     Rollover Account
                     Employee 401(k) Account
                     Qualifying Account
                     Employer Matching Account
                     Matching Cash Account
                     After-Tax Account

                                      32
<PAGE>
 
                Effective December 1, 1995, "Matching Stock Account" (which
                effective December 1, 1995 includes amounts previously held in a
                Participant's Employer Matching Account) shall be substituted
                for the preceding reference to "Employer Matching Account".

          (c)   Permitted Frequency.  The maximum number of Over Age 59 1/2
                withdrawals permitted to a Participant in any 12-month period is
                one.

          (d)   Suspension from Further Contributions.  An Over Age 59 1/2
                withdrawal shall not affect a Participant's ability to make or
                be eligible to receive further Contributions.

                                      33
<PAGE>
 
11   DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
     ---------------------------------------------------------

     11.1 Benefit Information, Notices and Election

          A Participant, or his or her Beneficiary in the case of his or her
          death, shall be provided with information regarding all optional times
          and forms of distribution available, to include the notices prescribed
          by Code section 402(f) and Code section 411(a)(11).  Subject to the
          other requirements of this Section, a Participant, or his or her
          Beneficiary in the case of his or her death, may elect, in such manner
          and with such advance notice as prescribed by the Administrator, to
          have his or her vested Account balance paid to him or her beginning
          upon any Settlement Date following the Participant's termination of
          employment with all Related Companies or, if earlier, at the time
          required by law as set forth in Section 11.7.

          If a distribution is one to which Code sections 401(a)(11) and 417 do
          not apply, such distribution may commence less than 30 days after the
          aforementioned notices are provided, if:

          (a)   the Participant is clearly informed that he or she has the right
                to a period of at least 30 days after receipt of such notices to
                consider the decision as to whether to elect a distribution and
                if so to elect a particular form of distribution and to elect or
                not elect a Direct Rollover for all or a portion, if any, of his
                or her distribution which shall constitute an Eligible Rollover
                Distribution; and

          (b)   the Participant after receiving such notices, affirmatively
                elects a distribution and a Direct Rollover for all or a
                portion, if any, of his or her distribution which shall
                constitute an Eligible Rollover Distribution or alternatively
                elects to have all or a portion made payable directly to him or
                her, thereby not electing a Direct Rollover for all or a portion
                thereof.

     11.2 Spousal Consent

          A Participant is not required to obtain Spousal Consent in order to
          receive a distribution under the Plan.

     11.3 Payment Form and Medium

          Except to the extent otherwise provided by Section 11.4, a Participant
          may elect to be paid in any of these forms:

          (a)  a single lump sum;

          (b)  a portion paid in a lump sum, and the remainder paid later; or

          (c)  periodic installments over a period not to exceed the life
               expectancy of the Participant and his or her Beneficiary. 

                                      34
<PAGE>
 
          Distributions shall be made in cash, except to the extent a
          distribution consists of a loan call as described in Section 9.
          Alternatively, a Participant may elect that a lump sum payment be made
          in the form of whole shares of Company Stock and cash in lieu of
          fractional shares to the extent invested in the Company Stock Fund.

          With regard to the portion of a distribution representing an Eligible
          Rollover Distribution, a Distributee may elect a Direct Rollover for
          all or a portion of such amount.

     11.4 Distribution of Small Amounts

          If after a Participant's employment with all Related Companies ends,
          the Participant's vested Account balance is $3,500 or less, the
          Participant's benefit shall be paid as a single lump sum as soon as
          administratively feasible in accordance with procedures prescribed by
          the Administrator.  Effective December 1, 1995, "If after a
          Participant's employment with all Related Companies ends, the
          Participant's vested Account balance is $3,500 or less, and if at the
          time of any prior in-service withdrawal or distribution the
          Participant's vested Account balance did not exceed $3,500," shall be
          substituted for the preceding reference to "If after a Participant's
          employment with all Related Companies ends, the Participant's vested
          Account balance is $3,500 or less,".

     11.5 Source and Timing of Distribution Funding

          A distribution to a Participant shall be made solely from the assets
          of his or her own Accounts and shall be based on the Account values as
          of the Trade Date the distribution is processed.  The available assets
          shall be determined first by Account type and then within each Account
          used for funding a distribution, amounts shall first be taken from the
          Sweep Account and then taken by Investment Fund in direct proportion
          to the market value of the Participant's interest in each Investment
          Fund as of the Trade Date on which the distribution is processed.

          The distribution shall be funded on the Settlement Date following the
          Trade Date as of which the distribution is processed.  The Trustee
          shall make payment as soon thereafter as administratively feasible.

     11.6 Deemed Distribution

          For purposes of Section 8.4, if at the time a Participant's employment
          with all Related Companies has terminated, the Participant's vested
          Account balance attributable to Accounts subject to vesting as
          described in Section 8, is zero, his or her vested Account balance
          shall be deemed distributed as of the Settlement Date following the
          Sweep Date on which the Administrator has reported to the Trustee that
          the Participant's employment with all Related Companies has
          terminated. 

                                      35
<PAGE>
 
     11.7 Latest Commencement Permitted

          In addition to any other Plan requirements and unless a Participant
          elects otherwise, his or her benefit payments shall begin not later
          than 60 days after the end of the Plan Year in which he or she attains
          his or her Normal Retirement Date or retires, whichever is later.
          However, if the amount of the payment or the location of the
          Participant (after a reasonable search) cannot be ascertained by that
          deadline, payment shall be made no later than 60 days after the
          earliest date on which such amount or location is ascertained but in
          no event later than as described below.  A Participant's failure to
          elect in such manner as prescribed by the Administrator to have his or
          her vested Account balance paid to him or her, shall be deemed an
          election by the Participant to defer his or her distribution.

          Benefit payments shall begin by the April 1 immediately following the
          end of the calendar year in which the Participant attains age 70 1/2,
          whether or not he or she is an Employee, except that distribution for
          an Employee who was born before July 1, 1917 does not need to begin
          until his or her employment with all Related Companies ends.

          If benefit payments cannot begin at the time required because the
          location of the Participant cannot be ascertained (after a reasonable
          search), the Administrator may, at any time thereafter, treat such
          person's Account as forfeited subject to the provisions of Section
          18.5.

     11.8 Payment Within Life Expectancy

          The Participant's payment election must be consistent with the
          requirement of Code section 401(a)(9) that all payments are to be
          completed within a period not to exceed the lives or the joint and
          last survivor life expectancy of the Participant and his or her
          Beneficiary.  The life expectancies of a Participant and his or her
          Beneficiary may not be recomputed annually.

     11.9 Incidental Benefit Rule

          The Participant's payment election must be consistent with the
          requirement that, if the Participant's spouse is not his or her sole
          primary Beneficiary, the minimum annual distribution for each calendar
          year, beginning with the year in which he or she attains age 70 1/2
          (or such later date as provided otherwise in Section 11), shall not be
          less than the quotient obtained by dividing (a) the Participant's
          vested Account balance as of the last Trade Date of the preceding year
          by (b) the applicable divisor as determined under the incidental
          benefit requirements of Code section 401(a)(9). 

                                      36
<PAGE>
 
   11.10  Payment to Beneficiary

          Payment to a Beneficiary must either: (1) be completed by the end of
          the calendar year that contains the fifth anniversary of the
          Participant's death or (2) begin by the end of the calendar year that
          contains the first anniversary of the Participant's death and be
          completed within the period of the Beneficiary's life or life
          expectancy, except that:

          (a)   If the Participant dies after the April 1 immediately following
                the end of the calendar year in which he or she attains age 
                70 1/2, payment to his or her Beneficiary must be made at least
                as rapidly as provided in the Participant's distribution
                election;

          (b)   If the surviving spouse is the Beneficiary, payments need not
                begin until the end of the calendar year in which the
                Participant would have attained age 70 1/2 and must be completed
                within the spouse's life or life expectancy; and

          (c)   If the Participant and the surviving spouse who is the
                Beneficiary die (1) before the April 1 immediately following the
                end of the calendar year in which the Participant would have
                attained age 70 1/2 and (2) before payments have begun to the
                spouse, the spouse shall be treated as the Participant in
                applying these rules.

   11.11  Beneficiary Designation

          Each Participant may complete a beneficiary designation form
          indicating the Beneficiary who is to receive the Participant's
          remaining Plan interest at the time of his or her death.  The
          designation may be changed at any time.  However, a Participant's
          spouse shall be the sole primary Beneficiary unless the designation
          includes Spousal Consent for another Beneficiary.  If no proper
          designation is in effect at the time of a Participant's death or if
          the Beneficiary does not survive the Participant, the Beneficiary
          shall be, in the order listed, the:

          (a)   Participant's surviving spouse,

          (b)   Participant's children, in equal shares, (or if a child does not
                survive the Participant, and that child leaves issue, the issue
                shall be entitled to that child's share, by right of
                representation) or

          (c)   Participant's estate.

                                      37
<PAGE>
 
12   ADP AND ACP TESTS
     -----------------

     12.1 Contribution Limitation Definitions

          The following definitions are applicable to this Section 12 (where a
          definition is contained in both Sections 1 and 12, for purposes of
          Section 12 the Section 12 definition shall be controlling):

          (a)   "ACP" or "Average Contribution Percentage".  The Average
                Percentage calculated using Contributions allocated to
                Participants as of a date within the Plan Year.

          (b)   "ACP Test".  The determination of whether the ACP is in
                compliance with the Basic or Alternative Limitation for a Plan
                Year (as defined in Section 12.2).

          (c)   "ADP" or "Average Deferral Percentage".  The Average Percentage
                calculated using Deferrals allocated to Participants as of a
                date within the Plan Year.

          (d)   "ADP Test".  The determination of whether the ADP is in
                compliance with the Basic or Alternative Limitation for a Plan
                Year (as defined in Section 12.2).

          (e)   "Average Percentage".  The average of the calculated percentages
                for Participants within the specified group.  The calculated
                percentage refers to either the "Deferrals" or "Contributions"
                (as defined in this Section) made on each Participant's behalf
                for the Plan Year, divided by his or her Compensation for the
                portion of the Plan Year in which he or she was an Eligible
                Employee while a Participant.  (Employee 401(k) Contributions to
                this Plan or comparable contributions to plans of Related
                Companies which shall be refunded solely because they exceed the
                Contribution Dollar Limit are included in the percentage for the
                HCE Group but not for the NHCE Group.)

          (f)   "Contributions" shall include Employer Matching and After-Tax
                Contributions.  For Plan Years commencing on or after December
                1, 1995, "Matching Stock, Matching Cash and After-Tax
                Contributions" shall be substituted for the reference to
                "Employer Matching and After-tax Contributions" in the preceding
                sentence.

                In addition, Contributions may include Employee 401(k) and,
                effective for Plan Years commencing on or after December 1,
                1993, Qualifying Contributions, but only to the extent that (1)
                the Employer elects to use them, (2) they are not used or
                counted in the ADP Test, (3) Qualifying Contributions are fully
                vested when made, not withdrawable by an Employee before he or
                she attains age 59 1/2 and (4) they otherwise

                                      38
<PAGE>
 
                satisfy the requirements as prescribed under Code section 401(m)
                permitting treatment as Contributions for purposes of the ACP
                Test, including with regard to Qualifying Contributions
                satisfaction of the requirements of Code section 401(a) in the
                manner prescribed under Code section 401(m).

          (g)   "Deferrals" shall include Employee 401(k) Contributions.

                In addition, effective for Plan Years commencing on or after
                December 1, 1993, Deferrals may include Qualifying
                Contributions, but only to the extent that (1) the Employer
                elects to use them, (2) they are not used or counted in the ACP
                Test, (3) they are fully vested when made, not withdrawable by
                an Employee before he or she attains age 59 1/2 and (4) they
                otherwise satisfy the requirements as prescribed under Code
                section 401(k) permitting treatment as Deferrals for purposes of
                the ADP Test, including satisfaction of the requirements of Code
                section 401(a) in the manner prescribed under Code section
                401(k).

          (h)   "Family Member".  An Employee who is, at any time during the
                Plan Year or Lookback Year, a spouse, lineal ascendant or
                descendant, or spouse of a lineal ascendant or descendant of (1)
                an active or former Employee who at any time during the Plan
                Year or Lookback Year is a more than 5% Owner (within the
                meaning of Code section 414(q)(3)), or (2) an HCE who is among
                the 10 Employees with the highest Compensation for such Year.

          (i)   "HCE" or "Highly Compensated Employee".  With respect to each
                Employer and its Related Companies, an Employee during the Plan
                Year or Lookback Year who (in accordance with Code section
                414(q)):

                (1)  Was a more than 5% Owner at any time during the Lookback
                     Year or Plan Year;

                (2)  Received Compensation during the Lookback Year (or in the
                     Plan Year if among the 100 Employees with the highest
                     Compensation for such Year) in excess of (i) $75,000 (as
                     adjusted for such Year pursuant to Code sections 414(q)(1)
                     and 415(d)), or (ii) $50,000 (as adjusted for such Year
                     pursuant to Code sections 414(q)(1) and 415(d)) in the case
                     of a member of the "top-paid group" (within the meaning of
                     Code section 414(q)(4)) for such Year), provided, however,
                     that if the conditions of Code section 414(q)(12)(B)(ii)
                     are met, the Company may elect for any Plan Year to apply
                     clause (i) by substituting $50,000 for $75,000 and not to
                     apply clause (ii);

                (3)  Was an officer of a Related Company and received
                     Compensation during the Lookback Year (or in the Plan Year
                     if

                                      39
<PAGE>
 
                     among the 100 Employees with the highest Compensation for
                     such Year) that is greater than 50% of the dollar
                     limitation in effect under Code section 415(b)(1)(A) and
                     (d) for such Year (or if no officer has Compensation in
                     excess of the threshold, the officer with the highest
                     Compensation), provided that the number of officers shall
                     be limited to 50 Employees (or, if less, the greater of
                     three Employees or 10% of the Employees); or

                (4)  Was a Family Member at any time during the Lookback Year or
                     Plan Year, in which case the Deferrals, Contributions and
                     Compensation of the HCE and his or her Family Members shall
                     be aggregated and they shall be treated as a single HCE.

                A former Employee shall be treated as an HCE if (1) such former
                Employee was an HCE when he separated from service, or (2) such
                former Employee was an HCE in service at any time after
                attaining age 55.

                The determination of who is an HCE, including the determinations
                of the number and identity of Employees in the top-paid group,
                the top 100 Employees and the number of Employees treated as
                officers shall be made in accordance with Code section 414(q).

          (j)   "HCE Group" and "NHCE Group".  With respect to each Employer and
                its Related Companies, the respective group of HCEs and NHCEs
                who are eligible to have amounts contributed on their behalf for
                the Plan Year, including Employees who would be eligible but for
                their election not to participate or to contribute, or because
                their Pay is greater than zero but does not exceed a stated
                minimum.

                (1)  If the Related Companies maintain two or more plans which
                     are subject to the ADP or ACP Test and are considered as
                     one plan for purposes of Code sections 401(a)(4) or 410(b),
                     all such plans shall be aggregated and treated as one plan
                     for purposes of meeting the ADP and ACP Tests, provided
                     that the plans may only be aggregated if they have the same
                     Plan Year.

                (2)  If an HCE, who is one of the top 10 paid Employees or a
                     more than 5% Owner, has any Family Members, the Deferrals,
                     Contributions and Compensation of such HCE and his or her
                     Family Members shall be combined and treated as a single
                     HCE. Such amounts for all other Family Members shall be
                     removed from the NHCE Group percentage calculation and be
                     combined with the HCE's.

                (3)  If an HCE is covered by more than one cash or deferred
                     arrangement, or more than one arrangement permitting

                                      40
<PAGE>
 
                     employee or matching contributions, maintained by the
                     Related Companies, all such plans shall be aggregated and
                     treated as one plan (other than those plans that may not be
                     permissively aggregated) for purposes of calculating the
                     separate percentage for the HCE which is used in the
                     determination of the Average Percentage.

          (k)   "Lookback Year".  Pursuant to Code section 414(q), the Company
                elects as the Lookback Year the 12 months ending immediately
                prior to the start of the Plan Year.

          (l)   "Multiple Use Test".  The test described in Section 12.4 which a
                Plan must meet where the Alternative Limitation (described in
                Section 12.2(b)) is used to meet both the ADP and ACP Tests.

          (m)   "NHCE" or "Non-Highly Compensated Employee".  An Employee who is
                not an HCE.

     12.2 ADP and ACP Tests

          For each Plan Year, the ADP and ACP for the HCE Group must meet either
          the Basic or Alternative Limitation when compared to the respective
          ADP and ACP for the NHCE Group, defined as follows:

          (a)   Basic Limitation.  The HCE Group Average Percentage may not
                exceed 1.25 times the NHCE Group Average Percentage.

          (b)   Alternative Limitation.  The HCE Group Average Percentage is
                limited by reference to the NHCE Group Average Percentage as
                follows:

           <TABLE>                                                   
           <CAPTION>                                                 
               IF THE NHCE GROUP           THEN THE MAXIMUM HCE      
           AVERAGE PERCENTAGE IS:      GROUP AVERAGE PERCENTAGE IS:  
           -------------------------   ----------------------------- 
           <S>                         <C> 
                 Less than 2%          2 times NHCE Group Average %  
                 2% to 8%              NHCE Group Average % plus 2%  
                 More than 8%          NA - Basic Limitation applies 
           </TABLE>                                                  
                                                                      
     12.3 Correction of ADP and ACP Tests

          If the ADP or ACP Tests are not met, the Administrator shall
          determine, no later than the end of the next Plan Year, a maximum
          percentage to be used in place of the calculated percentage for all
          HCEs that would reduce the ADP and/or ACP for the HCE group by a
          sufficient amount to meet the ADP and ACP Tests. ADP and/or ACP
          corrections shall be made in accordance with the leveling method as
          described below. 

                                      41
<PAGE>
 
          (a)   ADP Correction.  The HCE with the highest Deferral percentage
                shall have his or her Deferral percentage reduced to the lesser
                of the extent required to meet the ADP Test or to cause his or
                her Deferral percentage to equal that of the HCE with the next
                highest Deferral percentage.  The process shall be repeated
                until the ADP Test is met.

                To the extent an HCE's Deferrals were determined to be reduced
                as described in the paragraph above, Employee 401(k)
                Contributions shall, by the end of the next Plan Year, be
                refunded to the HCE in an amount equal to the actual Deferrals
                minus the product of the maximum percentage and the HCE's
                Compensation, except that such amount to be refunded shall be
                reduced by Employee 401(k) Contributions previously refunded
                because they exceeded the Contribution Dollar Limit.

                The excess amounts shall first be taken from unmatched Employee
                401(k) Contributions and then from matched Employee 401(k)
                Contributions.  Any Employer Matching Contributions attributable
                to refunded excess Employee 401(k) Contributions as described in
                this Section shall be forfeited and used as described in Section
                8.4.  For Plan Years commencing on or after December 1, 1995,
                "Any Matching Stock and Matching Cash Contributions" shall be
                substituted for the reference to "Any Employer Matching
                Contributions" in the preceding sentence.

          (b)   ACP Correction.  The HCE with the highest Contribution
                percentage shall have his or her Contribution percentage reduced
                to the lesser of the extent required to meet the ACP Test or to
                cause his or her Contribution percentage to equal that of the
                HCE with the next highest Contribution percentage.  The process
                shall be repeated until the ACP Test is met.

                To the extent an HCE's Contributions were determined to be
                reduced as described in the paragraph above, Contributions
                shall, by the end of the next Plan Year, be refunded to the HCE
                to the extent vested, and forfeited to the extent such amounts
                were not vested, as of the end of the Plan Year being tested, in
                an amount equal to the actual Contributions minus the product of
                the maximum percentage and the HCE's Compensation.

                The excess amounts shall first be taken from After-Tax
                Contributions and then from Employer Matching Contributions. For
                Plan Years commencing on or after December 1, 1995, "and then as
                a proportional combination of Matching Stock and Matching Cash
                Contributions" shall be substituted for the reference to "and
                then from Employer Matching Contributions" in the preceding
                sentence. 

                                      42
<PAGE>
 
          (c)   Investment Fund Sources.  Once the amount of excess Deferrals
                and/or Contributions is determined and with regard to excess
                Contributions, allocated by type of Contribution, amounts shall
                first be taken from the Sweep Account and then taken by
                Investment Fund in direct proportion to the market value of the
                Participant's interest in each Investment Fund (which excludes
                his or her Loan Account balance) as of the Trade Date on which
                the correction is processed.

          (d)   Family Member Correction.  To the extent any reduction is
                necessary with respect to an HCE and his or her Family Members
                that have been combined and treated for testing purposes as a
                single Employee, the excess Deferrals and Contributions from the
                ADP and/or ACP Test shall be prorated among each such
                Participant in direct proportion to his or her Deferrals or
                Contributions included in each Test.

     12.4 Multiple Use Test

          If the Alternative Limitation (defined in Section 12.2) is used to
          meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
          must also comply with the requirements of Code section 401(m)(9). Such
          Code section requires that the sum of the ADP and ACP for the HCE
          Group (as determined after any corrections needed to meet the ADP and
          ACP Tests have been made) not exceed the sum (which produces the most
          favorable result) of:

          (a)   the Basic Limitation (defined in Section 12.2) applied to either
                the ADP or ACP for the NHCE Group, and

          (b)   the Alternative Limitation applied to the other NHCE Group
                percentage.

     12.5 Correction of Multiple Use Test

          If the multiple use limit is exceeded, the Administrator shall
          determine a maximum percentage to be used in place of the calculated
          percentage for all HCEs that would reduce either or both the ADP or
          ACP for the HCE Group by a sufficient amount to meet the multiple use
          limit.  Any excess shall be handled in the same manner that the
          distribution of excess Deferrals or Contributions are handled.

     12.6 Adjustment for Investment Gain or Loss

          Any excess Deferrals or Contributions to be refunded to a Participant
          or forfeited in accordance with Section 12.3 or 12.5 shall be adjusted
          for investment gain or loss. Refunds or forfeitures shall include
          investment gain or loss for the period between the end of the
          applicable Plan Year and the date of distribution. For Plan Years
          commencing on or after December 1, 1993, "shall not include" shall be
          substituted for the reference to "shall include" in the preceding
          sentence. 

                                      43
<PAGE>
 
     12.7 Testing Responsibilities and Required Records

          The Administrator shall be responsible for ensuring that the Plan
          meets the ADP Test, the ACP Test and the Multiple Use Test, and that
          the Contribution Dollar Limit is not exceeded.  In carrying out its
          responsibilities, the Administrator shall have sole discretion to
          limit or reduce Deferrals or Contributions at any time.  The
          Administrator shall maintain records which are sufficient to
          demonstrate that the ADP Test, the ACP Test and the Multiple Use Test,
          have been met for each Plan Year for at least as long as the
          Employer's corresponding tax year is open to audit.

     12.8 Separate Testing

          (a)   Multiple Employers:  The determination of HCEs, NHCEs, and the
                performance of the ADP Test, the ACP Test and Multiple Use Test,
                and any corrective action resulting therefrom, shall be made
                separately with regard to the Employees of each Employer (and
                its Related Companies) that is not a Related Company with the
                other Employer(s).

          (b)   Collective Bargaining Units:  The performance of the ADP Test,
                and if applicable, the ACP Test and Multiple Use Test, and any
                corrective action resulting therefrom, shall be applied
                separately to Employees who are eligible to participate in the
                Plan as a result of a collective bargaining agreement.

          In addition, separate testing may be applied, at the discretion of the
          Administrator and to the extent permitted under Treasury regulations,
          to any group of Employees for whom separate testing is permissible. 

                                      44
<PAGE>
 
13   MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
     --------------------------------------------

     13.1 "Annual Addition" Defined

          The sum of all amounts allocated to the Participant's Account for a
          Plan Year.  Amounts include contributions (except for rollovers or
          transfers from another qualified plan), forfeitures and, if the
          Participant is a Key Employee (pursuant to Section 14) for the
          applicable or any prior Plan Year, medical benefits provided pursuant
          to Code section 419A(d)(1).  For purposes of this Section 13.1,
          "Account" also includes a Participant's account in all other defined
          contribution plans currently or previously maintained by any Related
          Company.  The Plan Year refers to the year to which the allocation
          pertains, regardless of when it was allocated.  The Plan Year shall be
          the Code section 415 limitation year.

     13.2 Maximum Annual Addition

          The Annual Addition to a Participant's accounts under this Plan and
          any other defined contribution plan maintained by any Related Company
          for any Plan Year shall not exceed the lesser of (1) 25% of his or her
          Taxable Income or (2) the greater of $30,000 or one-quarter of the
          dollar limitation in effect under Code section 415(b)(1)(A), except
          that for Plan Years beginning after December 31, 1994, "(2) $30,000
          (as adjusted for the cost of living pursuant to Code section 415(d))"
          shall be substituted for the preceding reference to "(2) the greater
          of $30,000 or one-quarter of the dollar limitation in effect under
          Code section 415(b)(1)(A)".

     13.3 Avoiding an Excess Annual Addition

          If, at any time during a Plan Year, the allocation of any additional
          Contributions would produce an excess Annual Addition for such year,
          Contributions to be made for the remainder of the Plan Year shall be
          limited to the amount needed for each affected Participant to receive
          the maximum Annual Addition.

     13.4 Correcting an Excess Annual Addition

          Upon the discovery of an excess Annual Addition to a Participant's
          Account (resulting from forfeitures, allocations, reasonable error in
          determining Participant compensation or the amount of elective
          contributions, or other facts and circumstances acceptable to the
          Internal Revenue Service) the excess amount (adjusted to reflect
          investment gains) shall first be returned to the Participant to the
          extent of his or her After-Tax Contributions, and then to the extent
          of his or her Employee 401(k) Contributions (however to the extent
          Employee 401(k) Contributions were matched, the applicable Employer
          Matching Contributions shall be forfeited in proportion to the
          returned matched Employee 401(k) Contributions) and the remaining
          excess, if any, shall be forfeited by the Participant and used as
          described in Section 8.4. For Plan Years commencing on or after
          December 1, 1995, "the applicable Matching Stock and Matching Cash
          Contributions" shall be substituted for the reference to "the
          applicable Employer Matching Contributions" in the preceding sentence.

                                      45
<PAGE>
 
     13.5 Correcting a Multiple Plan Excess

          If a Participant, whose Account is credited with an excess Annual
          Addition, received allocations to more than one defined contribution
          plan, the excess shall be corrected by reducing the Annual Addition to
          this Plan only after all possible reductions have been made to the
          other defined contribution plans.

     13.6 "Defined Benefit Fraction" Defined

          The fraction, for any Plan Year, where the numerator is the "projected
          annual benefit" and the denominator is the greater of 125% of the
          "protected current accrued benefit" or the normal limit which is the
          lesser of (1) 125% of the maximum dollar limitation provided under
          Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount
          which may be taken into account under Code section 415(b)(1)(B) for
          the Plan Year, where a Participant's:

          (a)   "projected annual benefit" is the annual benefit provided by the
                Plan determined pursuant to Code section 415(e)(2)(A), and

          (b)   "protected current accrued benefit" in a defined benefit plan in
                existence (1) on July 1, 1982, shall be the accrued annual
                benefit provided for under Public Law 97-248, section 235(g)(4),
                as amended, or (2) on May 6, 1986, shall be the accrued annual
                benefit provided for under Public Law 99-514, section
                1106(i)(3).

     13.7 "Defined Contribution Fraction" Defined

          The fraction where the numerator is the sum of the Participant's
          Annual Addition for each Plan Year to date and the denominator is the
          sum of the "annual amounts" for each year in which the Participant has
          performed service with a Related Company.  The "annual amount" for any
          Plan Year is the lesser of (1) 125% of the Code section 415(c)(1)(A)
          dollar limitation (determined without regard to subsection (c)(6)) in
          effect for the Plan Year and (2) 140% of the Code section 415(c)(1)(B)
          amount in effect for the Plan Year, where:

          (a)   each Annual Addition is determined pursuant to the Code section
                415(c) rules in effect for such Plan Year, and

          (b)   the numerator is adjusted pursuant to Public Law 97-248, section
                235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).

     13.8 Combined Plan Limits and Correction

          If a Participant has also participated in a defined benefit plan
          maintained by a Related Company, the sum of the Defined Benefit
          Fraction and the Defined Contribution Fraction for any Plan Year may
          not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
          Year, the Participant's benefit under any defined benefit plan (to the
          extent it has not been distributed or used to purchase an annuity
          contract) shall be limited so that the combined fraction does not
          exceed 1.0 before any defined contribution limits shall be enforced.

                                      46
<PAGE>
 
14   TOP HEAVY RULES
     ---------------

     14.1 Top Heavy Definitions

          When capitalized, the following words and phrases have the following
          meanings when used in this Section:

          (a)   "Aggregation Group".  The group consisting of each qualified
                plan of an Employer (and its Related Companies) (1) in which a
                Key Employee is a participant or was a participant during the
                determination period (regardless of whether such plan has
                terminated), or (2) which enables another plan in the group to
                meet the requirements of Code sections 401(a)(4) or 410(b).  The
                Employer may also treat any other qualified plan as part of the
                group if the group would continue to meet the requirements of
                Code sections 401(a)(4) and 410(b) with such plan being taken
                into account.

          (b)   "Determination Date".  The last Trade Date of the preceding Plan
                Year or, in the case of the Plan's first year, the last Trade
                Date of the first Plan Year.

          (c)   "Key Employee".  A current or former Employee (or his or her
                Beneficiary) who at any time during the five year period ending
                on the Determination Date was:

                (1)  an officer of a Related Company whose Compensation (i)
                     exceeds 50% of the amount in effect under Code section
                     415(b)(1)(A) and (ii) places him within the following
                     highest paid group of officers:

                <TABLE>                                              
                <CAPTION>                                            
                   NUMBER OF EMPLOYEES             NUMBER OF         
                NOT EXCLUDED UNDER CODE           HIGHEST PAID       
                   SECTION 414(Q)(8)            OFFICERS INCLUDED    
                --------------------------   ----------------------  
                <S>                          <C>                     
                Less than 30                          3              
                30 to 500                    10% of the number of    
                                             Employees not excluded  
                                             under Code section      
                                             414(q)(8)               
                More than 500                        50              
                                                                      
</TABLE>

                (2)  a more than 5% Owner,

                (3)  a more than 1% Owner whose
                     Compensation exceeds $150,000, or

                                      47
<PAGE>
 
                (4)  a more than 0.5% Owner who is among the 10 Employees owning
                     the largest interest in a Related Company and whose
                     Compensation exceeds the amount in effect under Code
                     section 415(c)(1)(A).

          (d)   "Plan Benefit".  The sum as of the Determination Date of (1) an
                Employee's Account, (2) the present value of his or her other
                accrued benefits provided by all qualified plans within the
                Aggregation Group, and (3) the aggregate distributions made
                within the five year period ending on such date.  Plan Benefits
                shall exclude Rollover Contributions and plan to plan transfers
                made after December 31, 1983 which are both employee initiated
                and from a plan maintained by a non-related employer.

          (e)   "Top Heavy".  The Plan's status when the Plan Benefits of Key
                Employees account for more than 60% of the Plan Benefits of all
                Employees who have performed services at any time during the
                five year period ending on the Determination Date.  The Plan
                Benefits of Employees who were, but are no longer, Key Employees
                (because they have not been an officer or Owner during the five
                year period), are excluded in the determination.

     14.2 Special Contributions

          (a)   Minimum Contribution Requirement.  For each Plan Year in which
                the Plan is Top Heavy, the Employer shall not allow any
                contributions (other than a Rollover Contribution from a plan
                maintained by a non-related employer) to be made by or on behalf
                of any Key Employee unless the Employer makes a contribution
                (other than contributions made by an Employer in accordance with
                a Participant's salary deferral election or contributions made
                by an Employer based upon the amount contributed by a
                Participant) on behalf of all Participants who were Eligible
                Employees as of the last day of the Plan Year in an amount equal
                to at least 3% of each such Participant's Taxable Income.  The
                Administrator shall remove any such contributions (including
                applicable investment gain or loss) credited to a Key Employee's
                Account in violation of the foregoing rule and return them to
                the Employer or Employee to the extent permitted by the Limited
                Return of Contributions paragraph of Section 18.

          (b)   Overriding Minimum Benefit.  Notwithstanding, contributions
                shall be permitted on behalf of Key Employees if the Employer
                also maintains a defined benefit plan which automatically
                provides a benefit which satisfies the Code section 416(c)(1)
                minimum benefit requirements, including the adjustment provided
                in Code section 416(h)(2)(A), if applicable.  If this Plan is
                part of an aggregation group in which a Key Employee is
                receiving a benefit and no minimum is provided in any other
                plan, a minimum contribution of at least 3% of Taxable Income
                shall be

                                      48
<PAGE>
 
                provided to the Participants specified in the preceding
                paragraph.  In addition, the Employer may offset a defined
                benefit minimum by contributions (other than contributions made
                by an Employer in accordance with a Participant's salary
                deferral election or contributions made by an Employer based
                upon the amount contributed by a Participant) made to this Plan.

     14.3 Adjustment to Combined Limits for Different Plans

          For each Plan Year in which the Plan is Top Heavy, 100% shall be
          substituted for 125% in determining the Defined Benefit Fraction and
          the Defined Contribution Fraction.

                                      49
<PAGE>
 
15   PLAN ADMINISTRATION
     -------------------

     15.1 Plan Delineates Authority and Responsibility

          Plan fiduciaries include the Company, the Administrator, the Committee
          and/or the Trustee, as applicable, whose specific duties are
          delineated in this Plan and Trust.  In addition, Plan fiduciaries also
          include any other person to whom fiduciary duties or responsibility is
          delegated with respect to the Plan.  Any person or group may serve in
          more than one fiduciary capacity with respect to the Plan.  To the
          extent permitted under ERISA section 405, no fiduciary shall be liable
          for a breach by another fiduciary.

     15.2 Fiduciary Standards

          Each fiduciary shall:

          (a)   discharge his or her duties in accordance with this Plan and
                Trust to the extent they are consistent with ERISA;

          (b)   use that degree of care, skill, prudence and diligence that a
                prudent person acting in a like capacity and familiar with such
                matters would use in the conduct of an enterprise of a like
                character and with like aims;

          (c)   act with the exclusive purpose of providing benefits to
                Participants and their Beneficiaries, and defraying reasonable
                expenses of administering the Plan;

          (d)   diversify Plan investments, to the extent such fiduciary is
                responsible for directing the investment of Plan assets, so as
                to minimize the risk of large losses, unless under the
                circumstances it is clearly prudent not to do so; and

          (e)   treat similarly situated Participants and Beneficiaries in a
                uniform and nondiscriminatory manner.

     15.3 Company is ERISA Plan Administrator

          The Company is the plan administrator, within the meaning of ERISA
          section 3(16), which is responsible for compliance with all reporting
          and disclosure requirements, except those that are explicitly the
          responsibility of the Trustee under applicable law. The Administrator
          and/or Committee shall have any necessary authority to carry out such
          functions through the actions of the Administrator, duly appointed
          officers of the Company, and/or the Committee.

                                      50
<PAGE>
 
     15.4 Administrator Duties

          The Administrator shall have the discretionary authority to construe
          this Plan and Trust, other than the provisions which relate to the
          Trustee, and to do all things necessary or convenient to effect the
          intent and purposes thereof, whether or not such powers are
          specifically set forth in this Plan and Trust.  Actions taken in good
          faith by the Administrator shall be conclusive and binding on all
          interested parties, and shall be given the maximum possible deference
          allowed by law.  In addition to the duties listed elsewhere in this
          Plan and Trust, the Administrator's authority shall include, but not
          be limited to, the discretionary authority to:

          (a)   determine who is eligible to participate, if a contribution
                qualifies as a rollover contribution, the allocation of
                Contributions, and the eligibility for loans, withdrawals and
                distributions;
 
          (b)   provide each Participant with a summary plan description no
                later than 90 days after he or she has become a Participant (or
                such other period permitted under ERISA section 104(b)(1)), as
                well as informing each Participant of any material modification
                to the Plan in a timely manner;

          (c)   make a copy of the following documents available to Participants
                during normal work hours: this Plan and Trust (including
                subsequent amendments), all annual and interim reports of the
                Trustee related to the entire Plan, the latest annual report and
                the summary plan description;

          (d)   determine the fact of a Participant's death and of any
                Beneficiary's right to receive the deceased Participant's
                interest based upon such proof and evidence as it deems
                necessary;

          (e)   establish and review at least annually a funding policy bearing
                in mind both the short-run and long-run needs and goals of the
                Plan.  To the extent Participants may direct their own
                investments, the funding policy shall focus on which Investment
                Funds are available for Participants to use; and

          (f)   adjudicate claims pursuant to the claims procedure described in
                Section 18.

     15.5 Advisors May be Retained

          The Administrator may retain such agents and advisors (including
          attorneys, accountants, actuaries, consultants, record keepers,
          investment counsel and administrative assistants) as it considers
          necessary to assist it in the performance of its duties. The
          Administrator shall also comply with the bonding requirements of ERISA
          section 412.

                                      51
<PAGE>
 
     15.6 Delegation of Administrator Duties

          The Company, as Administrator of the Plan, has appointed a Committee
          to administer the Plan on its behalf.  The Company shall provide the
          Trustee with the names and specimen signatures of any persons
          authorized to serve as Committee members and act as or on its behalf.
          Any Committee member appointed by the Company shall serve at the
          pleasure of the Company, but may resign by written notice to the
          Company.  Committee members shall serve without compensation from the
          Plan for such services.  Except to the extent that the Company
          otherwise provides, any delegation of duties to a Committee shall
          carry with it the full discretionary authority of the Administrator to
          complete such duties.

     15.7 Committee Operating Rules

          (a)   Actions of Majority.  Any act delegated by the Company to the
                Committee may be done by a majority of its members.  The
                majority may be expressed by a vote at a meeting or in writing
                without a meeting, and a majority action shall be equivalent to
                an action of all Committee members.

          (b)   Meetings.  The Committee shall hold meetings upon such notice,
                place and times as it determines necessary to conduct its
                functions properly.

          (c)   Reliance by Trustee.  The Committee may authorize one or more of
                its members to execute documents on its behalf and may authorize
                one or more of its members or other individuals who are not
                members to give written direction to the Trustee in the
                performance of its duties.  The Committee shall provide such
                authorization in writing to the Trustee with the name and
                specimen signatures of any person authorized to act on its
                behalf.  The Trustee shall accept such direction and rely upon
                it until notified in writing that the Committee has revoked the
                authorization to give such direction.  The Trustee shall not be
                deemed to be on notice of any change in the membership of the
                Committee, parties authorized to direct the Trustee in the
                performance of its duties, or the duties delegated to and by the
                Committee until notified in writing.

                                      52
<PAGE>
 
16   MANAGEMENT OF INVESTMENTS
     -------------------------

     16.1 Trust Agreement

          All Plan assets shall be held by the Trustee in trust, in accordance
          with those provisions of this Plan and Trust which relate to the
          Trustee, for use in providing Plan benefits and paying Plan fees and
          expenses not paid directly by the Employer.  Plan benefits shall be
          drawn solely from the Trust and paid by the Trustee as directed by the
          Administrator. Notwithstanding, the Administrator may appoint, with
          the approval of the Trustee, another trustee to hold and administer
          Plan assets which do not meet the requirements of Section 16.2.

     16.2 Investment Funds

          The Administrator is hereby granted authority to direct the Trustee to
          invest Trust assets in one or more Investment Funds.  The number and
          composition of Investment Funds may be changed from time to time,
          without the necessity of amending this Plan and Trust.  The Trustee
          may establish reasonable limits on the number of Investment Funds as
          well as the acceptable assets for any such Investment Fund.  Each of
          the Investment Funds may be comprised of any of the following:

          (a)   shares of a registered investment company, whether or not the
                Trustee or any of its affiliates is an advisor to, or other
                service provider to, such company;

          (b)   collective investment funds maintained by the Trustee, or any
                other fiduciary to the Plan, which are available for investment
                by trusts which are qualified under Code sections 401(a) and
                501(a);

          (c)   individual equity and fixed income securities which are readily
                tradeable on the open market;

          (d)   guaranteed investment contracts issued by a bank or insurance
                company;

          (e)   interest bearing deposits of the Trustee; and

          (f)   Company Stock.

          Any Investment Fund assets invested in a collective investment fund,
          shall be subject to all the provisions of the instruments establishing
          and governing such fund. These instruments, including any subsequent
          amendments, are incorporated herein by reference.

                                      53
<PAGE>
 
     16.3 Authority to Hold Cash

          The Trustee shall have the authority to cause the investment manager
          of each Investment Fund to maintain sufficient deposit or money market
          type assets in each Investment Fund to handle the Fund's liquidity and
          disbursement needs.  Each Participant's and Beneficiary's Sweep
          Account, which is used to hold assets pending investment or
          disbursement, shall consist of interest bearing deposits of the
          Trustee.

     16.4 Trustee to Act Upon Instructions

          The Trustee shall carry out instructions to invest assets in the
          Investment Funds as soon as practicable after such instructions are
          received from the Administrator, Participants, or Beneficiaries.  Such
          instructions shall remain in effect until changed by the
          Administrator, Participants or Beneficiaries.

     16.5 Administrator Has Right to Vote Registered Investment Company Shares

          The Administrator shall be entitled to vote proxies or exercise any
          shareholder rights relating to shares held on behalf of the Plan in a
          registered investment company.  Notwithstanding, the authority to vote
          proxies and exercise shareholder rights related to such shares held in
          a Custom Fund is vested as provided otherwise in Section 16.

     16.6 Custom Fund Investment Management

          The Administrator may designate, with the consent of the Trustee, an
          investment manager for any Investment Fund established by the Trustee
          solely for Participants of this Plan (a "Custom Fund").  The
          investment manager may be the Administrator, Trustee or an investment
          manager pursuant to ERISA section 3(38).  The Administrator shall
          advise the Trustee in writing of the appointment of an investment
          manager and shall cause the investment manager to acknowledge to the
          Trustee in writing that the investment manager is a fiduciary to the
          Plan.

          A Custom Fund shall be subject to the following:

          (a)   Guidelines.  Written guidelines, acceptable to the Trustee,
                shall be established for a Custom Fund.  If a Custom Fund
                consists solely of collective investment funds or shares of a
                registered investment company (and sufficient deposit or money
                market type assets to handle the Fund's liquidity and
                disbursement needs), its underlying instruments shall constitute
                the guidelines.

          (b)   Authority of Investment Manager.  The investment manager of a
                Custom Fund shall have the authority to vote or execute proxies,
                exercise shareholder rights, manage, acquire, and dispose of
                Trust

                                      54
<PAGE>
 
                assets.  Notwithstanding, the authority to vote proxies and
                exercise shareholder rights related to shares of Company Stock
                held in a Custom Fund is vested as provided otherwise in Section
                16.

          (c)   Custody and Trade Settlement.  Unless otherwise agreed to by the
                Trustee, the Trustee shall maintain custody of all Custom Fund
                assets and be responsible for the settlement of all Custom Fund
                trades.  For purposes of this section, shares of a collective
                investment fund, shares of a registered investment company and
                guaranteed investment contracts issued by a bank or insurance
                company, shall be regarded as the Custom Fund assets instead of
                the underlying assets of such instruments.

          (d)   Limited Liability of Co-Fiduciaries.  Neither the Administrator
                nor the Trustee shall be obligated to invest or otherwise manage
                any Custom Fund assets for which the Trustee or Administrator is
                not the investment manager nor shall the Administrator or
                Trustee be liable for acts or omissions with regard to the
                investment of such assets except to the extent required by
                ERISA.

     16.7 Authority to Segregate Assets

          The Company may direct the Trustee to split an Investment Fund into
          two or more funds in the event any assets in the Fund are illiquid or
          the value is not readily determinable.  In the event of such
          segregation, the Company shall give instructions to the Trustee on
          what value to use for the split-off assets, and the Trustee shall not
          be responsible for confirming such value.

     16.8 Maximum Permitted Investment in Company Stock

          If the Company provides for a Company Stock Fund  the Fund shall be
          comprised of Company Stock and sufficient deposit or money market type
          assets to handle the Fund's liquidity and disbursement needs. The Fund
          may be as large as necessary to comply with Participants' and
          Beneficiaries' investment elections (if the Company Stock Fund is
          designated as an Investment Fund offered to Participants and
          Beneficiaries) as well the total investment of Participants' and
          Beneficiaries' Employer Matching Accounts.  Effective December 1,
          1995, "Matching Stock Account" (which effective December 1, 1995
          includes amounts previously held in a Participant's Employer Matching
          Account) shall be substituted for the reference to "Employer Matching
          Account" in the preceding sentence.

     16.9 Participants Have Right to Vote and Tender Company Stock

          Each Participant or Beneficiary shall be entitled to instruct the
          Trustee as to the voting or tendering of any full or partial shares of
          Company Stock held on his or her behalf in the Company Stock Fund.
          Prior to such voting or tendering of

                                      55
<PAGE>
 
          Company Stock, each Participant or Beneficiary shall receive a copy of
          the proxy solicitation or other material relating to such vote or
          tender decision and a form for the Participant or Beneficiary to
          complete which confidentially instructs the Trustee to vote or tender
          such shares in the manner indicated by the Participant or Beneficiary.
          Upon receipt of such instructions, the Trustee shall act with respect
          to such shares as instructed.  The Administrator shall instruct the
          Trustee with respect to how to vote or tender any shares for which
          instructions are not received from Participants or Beneficiaries.

   16.10  Registration and Disclosure for Company Stock

          The Administrator shall be responsible for determining the
          applicability (and, if applicable, complying with) the requirements of
          the Securities Act of 1933, as amended, the California Corporate
          Securities Law of 1968, as amended, and any other applicable blue sky
          law.  The Administrator shall also specify what restrictive legend or
          transfer restriction, if any, is required to be set forth on the
          certificates for the securities and the procedure to be followed by
          the Trustee to effectuate a resale of such securities.

                                      56
<PAGE>
 
17   TRUST ADMINISTRATION
     --------------------

     17.1 Trustee to Construe Trust

          The Trustee shall have the discretionary authority to construe those
          provisions of this Plan and Trust which relate to the Trustee and to
          do all things necessary or convenient to the administration of the
          Trust, whether or not such powers are specifically set forth in this
          Plan and Trust.  Actions taken in good faith by the Trustee shall be
          conclusive and binding on all interested parties, and shall be given
          the maximum possible deference allowed by law.

     17.2 Trustee To Act As Owner of Trust Assets

          Subject to the specific conditions and limitations set forth in this
          Plan and Trust, the Trustee shall have all the power, authority,
          rights and privileges of an absolute owner of the Trust assets and,
          not in limitation but in amplification of the foregoing, may:

          (a)   receive, hold, manage, invest and reinvest, sell, tender,
                exchange, dispose of, encumber, hypothecate, pledge, mortgage,
                lease, grant options respecting, repair, alter, insure, or
                distribute any and all property in the Trust;

          (b)   borrow money, participate in reorganizations, pay calls and
                assessments, vote or execute proxies, exercise subscription or
                conversion privileges, exercise options and register any
                securities in the Trust in the name of the nominee, in federal
                book entry form or in any other form as shall permit title
                thereto to pass by delivery;

          (c)   renew, extend the due date, compromise, arbitrate, adjust,
                settle, enforce or foreclose, by judicial proceedings or
                otherwise, or defend against the same, any obligations or claims
                in favor of or against the Trust; and

          (d)   lend, through a collective investment fund, any securities held
                in such collective investment fund to brokers, dealers or other
                borrowers and to permit such securities to be transferred into
                the name and custody and be voted by the borrower or others.

     17.3 United States Indicia of Ownership

          The Trustee shall not maintain the indicia of ownership of any Trust
          assets outside the jurisdiction of the United States, except as
          authorized by ERISA section 404(b).

                                      57
<PAGE>
 
     17.4 Tax Withholding and Payment

          (a)   Withholding.  The Trustee shall calculate and withhold federal
                (and, if applicable, state) income taxes with regard to any
                Eligible Rollover Distribution that is not paid as a Direct
                Rollover in accordance with the Participant's withholding
                election or as required by law if no election is made or the
                election is less than the amount required by law.  With regard
                to any taxable distribution that is not an Eligible Rollover
                Distribution, the Trustee shall calculate and withhold federal
                (and, if applicable, state) income taxes in accordance with the
                Participant's withholding election or as required by law if no
                election is made.

          (b)   Taxes Due From Investment Funds.  The Trustee shall pay from the
                Investment Fund any taxes or assessments imposed by any taxing
                or governmental authority on such Fund or its income, including
                related interest and penalties.

     17.5 Trust Accounting

          (a)   Annual Report.  Within 60 days (or other reasonable period)
                following the close of the Plan Year, the Trustee shall provide
                the Administrator with an annual accounting of Trust assets and
                information to assist the Administrator in meeting ERISA's
                annual reporting and audit requirements.

          (b)   Periodic Reports.  The Trustee shall maintain records and
                provide sufficient reporting to allow the Administrator to
                properly monitor the Trust's assets and activity.

          (c)   Administrator Approval.  Approval of any Trustee accounting
                shall automatically occur 90 days after such accounting has been
                received by the Administrator, unless the Administrator files a
                written objection with the Trustee within such time period.
                Such approval shall be final as to all matters and transactions
                stated or shown therein and binding upon the Administrator.

     17.6 Valuation of Certain Assets

          If the Trustee determines the Trust holds any asset which is not
          readily tradeable and listed on a national securities exchange
          registered under the Securities Exchange Act of 1934, as amended, the
          Trustee may engage a qualified independent appraiser to determine the
          fair market value of such property, and the appraisal fees shall be
          paid from the Investment Fund containing the asset.

                                      58
<PAGE>
 
     17.7 Legal Counsel

          The Trustee may consult with legal counsel of its choice, including
          counsel for the Employer or counsel of the Trustee, upon any question
          or matter arising under this Plan and Trust.  When relied upon by the
          Trustee, the opinion of such counsel shall be evidence that the
          Trustee has acted in good faith.

     17.8 Fees and Expenses

          The Trustee's fees for its services as Trustee shall be such as may be
          mutually agreed upon by the Company and the Trustee.  Trustee fees and
          all reasonable expenses of counsel and advisors retained by the
          Trustee shall be paid in accordance with Section 6.

     17.9 Trustee Duties and Limitations

          The Trustee's duties, unless otherwise agreed to by the Trustee, shall
          be confined to construing the terms of the Plan and Trust as they
          relate to the Trustee, receiving funds on behalf of and making
          payments from the Trust, safeguarding and valuing Trust assets,
          investing and reinvesting Trust assets in the Investment Funds as
          directed by the Administrator, Participants or Beneficiaries and those
          duties as described in this Section 17.

          The Trustee shall have no duty or authority to ascertain whether
          Contributions are in compliance with the Plan, to enforce collection
          or to compute or verify the accuracy or adequacy of any amount to be
          paid to it by the Employer. The Trustee shall not be liable for the
          proper application of any part of the Trust with respect to any
          disbursement made at the direction of the Administrator.

                                      59
<PAGE>
 
18   RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
     -------------------------------------------------

     18.1 Plan Does Not Affect Employment Rights

          The Plan does not provide any employment rights to any Employee.  The
          Employer expressly reserves the right to discharge an Employee at any
          time, with or without cause, without regard to the effect such
          discharge would have upon the Employee's interest in the Plan.

     18.2 Limited Return of Contributions

          Except as provided in this paragraph, (1) Plan assets shall not revert
          to the Employer nor be diverted for any purpose other than the
          exclusive benefit of Participants or their Beneficiaries; and (2) a
          Participant's vested interest shall not be subject to divestment.  As
          provided in ERISA section 403(c)(2), the actual amount of a
          Contribution made by the Employer (or the current value of the
          Contribution if a net loss has occurred) may revert to the Employer
          if:

          (a)   such Contribution is made by reason of a mistake of fact;

          (b)   initial qualification of the Plan under Code section 401(a) is
                not received and a request for such qualification is made within
                the time prescribed under Code section 401(b) (the existence of
                and Contributions under the Plan are hereby conditioned upon
                such qualification); or

          (c)   such Contribution is not deductible under Code section 404 (such
                Contributions are hereby conditioned upon such deductibility) in
                the taxable year of the Employer for which the Contribution is
                made.

          The reversion to the Employer must be made (if at all) within one year
          of the mistaken payment of the Contribution, the date of denial of
          qualification, or the date of disallowance of deduction, as the case
          may be.  A Participant shall have no rights under the Plan with
          respect to any such reversion.

     18.3 Assignment and Alienation

          As provided by Code section 401(a)(13) and to the extent not otherwise
          required by law, no benefit provided by the Plan may be anticipated,
          assigned or alienated, except:

          (a)   to create, assign or recognize a right to any benefit with
                respect to a Participant pursuant to a QDRO, or

          (b)   to use a Participant's vested Account balance as security for a
                loan from the Plan which is permitted pursuant to Code section
                4975.

                                      60
<PAGE>
 
     18.4 Facility of Payment

          If a Plan benefit is due to be paid to a minor or if the Administrator
          reasonably believes that any payee is legally incapable of giving a
          valid receipt and discharge for any payment due him or her, the
          Administrator shall have the payment of the benefit, or any part
          thereof, made to the person (or persons or institution) whom it
          reasonably believes is caring for or supporting the payee, unless it
          has received due notice of claim therefor from a duly appointed
          guardian or conservator of the payee.  Any payment shall to the extent
          thereof, be a complete discharge of any liability under the Plan to
          the payee.

     18.5 Reallocation of Lost Participant's Accounts

          If the Administrator cannot locate a person entitled to payment of a
          Plan benefit after a reasonable search, the Administrator may at any
          time thereafter treat such person's Account as forfeited and use such
          amount as described in Section 8.4.  If such person subsequently
          presents the Administrator with a valid claim for the benefit, such
          person shall be paid the amount treated as forfeited, plus the
          interest that would have been earned in the Sweep Account to the date
          of determination.  The Administrator shall pay the amount through an
          additional amount contributed by the Employer or direct the Trustee to
          pay the amount from the Forfeiture Account.

     18.6 Claims Procedure
 
          (a)   Right to Make Claim.  An interested party who disagrees with the
                Administrator's determination of his or her right to Plan
                benefits must submit a written claim and exhaust this claim
                procedure before legal recourse of any type is sought.  The
                claim must include the important issues the interested party
                believes support the claim.  The Administrator, pursuant to the
                authority provided in this Plan, shall either approve or deny
                the claim.

          (b)   Process for Denying a Claim.  The Administrator's partial or
                complete denial of an initial claim must include an
                understandable, written response covering (1) the specific
                reasons why the claim is being denied (with reference to the
                pertinent Plan provisions) and (2) the steps necessary to
                perfect the claim and obtain a final review.

          (c)   Appeal of Denial and Final Review. The interested party may make
                a written appeal of the Administrator's initial decision, and
                the Administrator shall respond in the same manner and form as
                prescribed for denying a claim initially.

                                      61
<PAGE>
 
          (d)   Time Frame.  The initial claim, its review, appeal and final
                review shall be made in a timely fashion, subject to the
                following time table:
<TABLE> 
<CAPTION> 
                                                            Days to Respond
                Action                                      From Last Action
                ------                                      ----------------
                <S>                                         <C> 
                Administrator determines benefit                       NA
                Interested party files initial request            60 days
                Administrator's initial decision                  90 days
                Interested party requests final review            60 days
                Administrator's final decision                    60 days
</TABLE> 
                However, the Administrator may take up to twice the maximum
                response time for its initial and final review if it provides an
                explanation within the normal period of why an extension is
                needed and when its decision shall be forthcoming.

     18.7 Construction

          Headings are included for reading convenience.  The text shall control
          if any ambiguity or inconsistency exists between the headings and the
          text.  The singular and plural shall be interchanged wherever
          appropriate.  References to Participant shall include Beneficiary when
          appropriate and even if not otherwise already expressly stated.

     18.8 Jurisdiction and Severability

          The Plan and Trust shall be construed, regulated and administered
          under ERISA and other applicable federal laws and, where not otherwise
          preempted, by the laws of the State of California.  If any provision
          of this Plan and Trust shall become invalid or unenforceable, that
          fact shall not affect the validity or enforceability of any other
          provision of this Plan and Trust.  All provisions of this Plan and
          Trust shall be so construed as to render them valid and enforceable in
          accordance with their intent.

     18.9 Indemnification by Employer

          The Employers hereby agree to indemnify all Plan fiduciaries against
          any and all liabilities resulting from any action or inaction,
          (including a Plan termination in which the Company fails to apply for
          a favorable determination from the Internal Revenue Service with
          respect to the qualification of the Plan upon its termination), in
          relation to the Plan or Trust (1) including (without limitation)
          expenses reasonably incurred in the defense of any claim relating to
          the Plan or its assets, and amounts paid in any settlement relating to
          the Plan or its assets, but (2) excluding liability resulting from
          actions or inactions made in bad faith, or resulting from the
          negligence or willful misconduct of the Trustee. The Company shall
          have the right, but not the obligation, to conduct the defense of any
          action to which this Section applies. The Plan fiduciaries are not
          entitled to indemnity from the Plan assets relating to any such
          action.

                                      62
<PAGE>
 
19   AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
     -----------------------------------------------

     19.1 Amendment

          The Company reserves the right to amend this Plan and Trust at any
          time, to any extent and in any manner it may deem necessary or
          appropriate.  The Company (and not the Trustee) shall be responsible
          for adopting any amendments necessary to maintain the qualified status
          of this Plan and Trust under Code sections 401(a) and 501(a).  If the
          Committee is acting as the Administrator in accordance with Section
          15.6, it shall have the authority to adopt Plan and Trust amendments
          which have no substantial adverse financial impact upon any Employer
          or the Plan.  All interested parties shall be bound by any amendment,
          provided that no amendment shall:

          (a)   become effective unless it has been adopted in accordance with
                the procedures set forth in Section 19.5;

          (b)   except to the extent permissible under ERISA and the Code, make
                it possible for any portion of the Trust assets to revert to an
                Employer or to be used for, or diverted to, any purpose other
                than for the exclusive benefit of Participants and Beneficiaries
                entitled to Plan benefits and to defray reasonable expenses of
                administering the Plan;

          (c)   decrease the rights of any Employee to benefits accrued
                (including the elimination of optional forms of benefits) to the
                date on which the amendment is adopted, or if later, the date
                upon which the amendment becomes effective, except to the extent
                permitted under ERISA and the Code; nor

          (d)   permit an Employee to be paid the balance of his or her Employee
                401(k) Account unless the payment would otherwise be permitted
                under Code section 401(k).

     19.2 Merger

          This Plan and Trust may not be merged or consolidated with, nor may
          its assets or liabilities be transferred to, another plan unless each
          Participant and Beneficiary would, if the resulting plan were then
          terminated, receive a benefit just after the merger, consolidation or
          transfer which is at least equal to the benefit which would be
          received if either plan had terminated just before such event.

     19.3 Divestitures

          In the event of a sale by an Employer which is a corporation of: (1)
          substantially all of the Employer's assets used in a trade or business
          to an unrelated corporation, or (2) a sale of such Employer's interest
          in a subsidiary to an unrelated entity or individual, lump sum
          distributions shall be permitted from the Plan, except as provided
          below, to Participants with respect to Employees who continue
          employment with the corporation acquiring such assets or who continue
          employment with such subsidiary, as applicable.

                                      63
<PAGE>
 
          Notwithstanding, distributions shall not be permitted if the purchaser
          agrees, in connection with the sale, to be substituted as the Company
          as the sponsor of the Plan or to accept a transfer of the assets and
          liabilities representing the Participants' benefits into a plan of the
          purchaser or a plan to be established by the purchaser.

     19.4 Plan Termination

          The Company may, at any time and for any reason, terminate the Plan in
          accordance with the procedures set forth in Section 19.5, or
          completely discontinue contributions.  Upon either of these events, or
          in the event of a partial termination of the Plan within the meaning
          of Code section 411(d)(3), the Accounts of each affected Employee who
          has not yet incurred a Break in Service shall be fully vested.  If no
          successor plan is established or maintained, lump sum distributions
          shall be made in accordance with the terms of the Plan as in effect at
          the time of the Plan's termination or as thereafter amended provided
          that a post-termination amendment shall not be effective to the extent
          that it violates Section 19.1 unless it is required in order to
          maintain the qualified status of the Plan upon its termination.  The
          Trustee's and Employer's authority shall continue beyond the Plan's
          termination date until all Trust assets have been liquidated and
          distributed.

     19.5 Amendment and Termination Procedures

          The following procedural requirements shall govern the adoption of any
          amendment or termination (a "Change") of this Plan and Trust:

          (a)   The Company may adopt any Change by action of its board of
                directors in accordance with its normal procedures.

          (b)   The Committee, if acting as Administrator in accordance with
                Section 15.6, may adopt any amendment within the scope of its
                authority provided under Section 19.1 and in the manner
                specified in Section 15.7(a).

          (c)   Any Change must be (1) set forth in writing, and (2) signed and
                dated by the Company's board of directors or its designee.

          (d)   If the effective date of any Change is not specified in the
                document setting forth the Change, it shall be effective as of
                the date it is signed in accordance with clause (2) above,
                except to the extent that another effective date is necessary to
                maintain the qualified status of this Plan and Trust under Code
                sections 401(a) and 501(a).

          (e)   No Change affecting the Trustee in its capacity as Trustee or in
                any other capacity shall become effective until it is accepted
                and signed by the Trustee (which acceptance shall not
                unreasonably be withheld).

     19.6 Termination of Employer's Participation

          Any Employer may, at any time and for any reason, terminate its Plan

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<PAGE>
 
          participation by action of its board of directors in accordance with
          its normal procedures. Written notice of such action shall be signed
          and dated by an executive officer of the Employer and delivered to the
          Company. If the effective date of such action is not specified, it
          shall be effective on, or as soon as reasonably practicable after, the
          date of delivery. Upon the Employer's request, the Company may
          instruct the Trustee and Administrator to spin off all affected
          Accounts and underlying assets into a separate qualified plan under
          which the Employer shall assume the powers and duties of the Company.
          Alternatively, the Company may treat the event as a partial
          termination described above or continue to maintain the Accounts under
          the Plan.

     19.7 Replacement of the Trustee

          The Trustee may resign as Trustee under this Plan and Trust or may be
          removed by the Company at any time upon at least 90 days written
          notice (or less if agreed to by both parties).  In such event, the
          Company shall appoint a successor trustee by the end of the notice
          period.  The successor trustee shall then succeed to all the powers
          and duties of the Trustee under this Plan and Trust.  If no successor
          trustee has been named by the end of the notice period, the Company's
          chief executive officer shall become the trustee, or if he or she
          declines, the Trustee may petition the court for the appointment of a
          successor trustee.

     19.8 Final Settlement and Accounting of Trustee

          (a)   Final Settlement.  As soon as administratively feasible after
                its resignation or removal as Trustee, the Trustee shall
                transfer to the successor trustee all property currently held by
                the Trust.  However, the Trustee is authorized to reserve such
                sum of money as it may deem advisable for payment of its
                accounts and expenses in connection with the settlement of its
                accounts or other fees or expenses payable by the Trust.  Any
                balance remaining after payment of such fees and expenses shall
                be paid to the successor trustee.

          (b)   Final Accounting.  The Trustee shall provide a final accounting
                to the Administrator within 90 days of the date Trust assets are
                transferred to the successor trustee.

          (c)   Administrator Approval.  Approval of the final accounting shall
                automatically occur 90 days after such accounting has been
                received by the Administrator, unless the Administrator files a
                written objection with the Trustee within such time period.
                Such approval shall be final as to all matters and transactions
                stated or shown therein and binding upon the Administrator.

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<PAGE>
 
                         APPENDIX A - INVESTMENT FUNDS


I.   Investment Funds Available

     The Investment Funds offered under the Plan as of the Effective Date to
     Participants and Beneficiaries include this set of daily valued funds,
     except that "as of December 1, 1995" shall be substituted for the preceding
     reference to "as of the Effective Date" with regard to the LifePath and
     Company Stock Funds:

                CATEGORY                FUNDS
                --------                -----

                MONEY MARKET            Money Market
                ------------                      
 
                INCOME                  Bond Index
                ------                      

                BALANCED                Asset Allocation
                --------                          

                EQUITY                  Company Stock
                ------                  Growth Stock
                                        S&P 500 Stock

                COMBINATION             LifePath
                -----------                       

     Prior to December 1, 1995, the Investment Funds included a Company Stock
     Fund but solely for the investment of a Participant's or Beneficiary's
     Employer Matching Account as directed by the Administrator.

II.  Default Investment Fund

     The default Investment Fund as of the Effective Date is the Money Market
     Fund.

III. Contribution Accounts For Which Investment is Restricted

     A Participant or Beneficiary may direct the investment of his or her entire
     Account except for the following Contribution Accounts, and except as
     otherwise provided in Section 7, which shall be invested as of the
     Effective Date as follows:

          Employer Matching Account   Company Stock Fund

     Effective December 1, 1995, "Matching Stock Account" (which effective
     December 1, 1995 includes amounts previously held in a Participant's
     Employer Matching Account) shall be substituted for the preceding reference
     to "Employer Matching Account".

IV.  Maximum Percentage Restrictions Applicable to Certain Investment Funds

     As of the Effective Date, there are no maximum percentage restrictions
     applicable to any Investment Funds.

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                 APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES


As of the Effective Date, payment of Plan fees and expenses shall be as follows:

1)   Investment Management Fees:  These are paid by Participants in that
     management fees reduce the investment return reported and credited to
     Participants, except that the Employer shall pay the fees related to the
     Company Stock Fund.  These are paid by the Employer on a quarterly basis.

2)   Recordkeeping Fees: These are paid by the Employer on a quarterly basis.

3)   Loan Fees:  A $3.50 per month fee is assessed and billed/collected
     quarterly from the Account of each Participant who has an outstanding loan
     balance for loans entered into on or after August 1, 1993.  For loans
     entered into prior to August 1, 1993, these are paid by the Employer on a
     quarterly basis.

4)   Investment Fund Election Changes:  For each Investment Fund election change
     by a Participant, in excess of 4 changes per year, a $10 fee shall be
     assessed and billed/collected quarterly from the Participant's Account.

5)   Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed
     and billed/collected quarterly from the Participant's Account.

6)   Additional Fees Paid by Employer:  All other Plan related fees and expenses
     shall be paid by the Employer.  To the extent that the Administrator later
     elects that any such fees shall be borne by Participants, estimates of the
     fees shall be determined and reconciled, at least annually, and the fees
     shall be assessed monthly and billed/collected from Accounts quarterly.

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<PAGE>
 
                        APPENDIX C - LOAN INTEREST RATE


As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the Trustee's prime rate, plus 2%.

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