<PAGE>
 
                                                                    EXHIBIT 10.3

                         PATINA OIL & GAS CORPORATION
                   PROFIT SHARING AND SAVINGS PLAN AND TRUST

     PATINA OIL & GAS CORPORATION, a Delaware Corporation, having its principal
office in Denver, Colorado (hereinafter referred to as "Employer"), and KEITH M.
CROUCH ("Initial Trustee") and MERRILL LYNCH TRUST COMPANY OF AMERICA
(hereinafter referred to as "Trustee") make this Agreement.

                               R E C I T A L S:
                               - - - - - - - - 

     A.  The Employer has adopted the Snyder Oil Corporation Profit Sharing and
Savings Plan and Trust (the "Prior Plan") for the benefit of its eligible
Employees and their Beneficiaries.

     B.  The Employer recognizes the lasting contribution made by its Employees
to its successful operation and wants to reward their contribution by continuing
the Profit Sharing and Savings Plan and Trust.

     C.  The Employer wishes to establish a separate Profit Sharing and Savings
Plan and Trust.  The Employer intends to continue its participation in the
Snyder Oil Corporation Profit Sharing and Savings Plan and Trust through
December 31, 1997, but shall make no further Employer Contributions under
Section 5.1(a) of the Snyder Oil Corporation Plan effective for Plan Years after
December 31, 1996.

     D.  The Employer has authorized the execution of this Agreement intended to
establish a Profit Sharing and Savings Plan and Trust to qualify under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986 as amended and the
regulations promulgated thereunder.

     E.  As soon as administratively feasible following the close of the Plan
Year ending December 31, 1997, the accounts of all Employees of Patina Oil & Gas
Corporation who are active participants in the Snyder Oil Corporation Profit
Sharing and Savings Plan and Trust, and the trust funds allocable thereto, shall
be transferred to the Patina Oil & Gas Corporation Profit Sharing and Savings
Plan and Trust; shall be reflected in such Participant's separate accounts
established pursuant to Article XVII of the Plan and Trust; and shall be used to
fund benefits under the Plan and Trust as therein provided.

     F.  If an Employee terminates employment with the Employer prior to the
Effective Date, that Employee shall be entitled to benefits under the terms of
the Snyder Oil Corporation Profit Sharing Plan and Trust as such Plan existed on
the Employee's termination date.

     G.  The Trustee is willing to act as Trustee under the terms of the Plan
and Trust contained in this Agreement.

     NOW, THEREFORE, considering the premises and their mutual covenants, the
Employer and the Trustee agree as follows:

                                       1
<PAGE>
 
     ARTICLE I
     ---------
 

                                  Definitions
                                  -----------

The following terms used in this Agreement shall have the meanings set forth in
this Article unless a different meaning is clearly indicated by the context:

1.1. Account Balance
     ---------------

     Account Balance means the amount standing in a Participant's Individual
     Account(s) as of any date derived from both Employer Contributions and
     Employee Contributions, if any.

1.2. Accounting Date, Valuation Date
     -------------------------------

     The term Accounting Date means the last day of each Accounting Period and
     any other days within the Accounting Period upon which, consistent with
     established methods and guidelines, the Trustee applies the valuation
     procedures specified in Article IV.  The term Valuation Date, unless
     otherwise specified, means any business day on which the New York Stock
     Exchange is open.  The Accounting Date is a Valuation Date.

1.3. Accounting Period
     -----------------

     Accounting Period means each of the 3-month periods which end on March 31,
     June 30, September 30 and December 31.

1.4. Administrator
     -------------

     Administrator means PATINA OIL & GAS CORPORATION unless Patina Oil & Gas
     Corporation designates another person to hold the position of Administrator
     by written Employer action.  In addition to its other duties, Patina Oil &
     Gas Corporation has full responsibility for compliance with the reporting
     and disclosure rules under ERISA pertaining to this Agreement.

1.5. Agreement
     ---------

     Agreement means this Plan and Trust Agreement and all amendments or
     addendums to this Agreement.

1.6. Alternate Payee
     ---------------

     Alternate Payee means any spouse, former spouse, child, or other dependent
     of a Participant who is recognized by a domestic relations order as having
     a right to receive all, or a portion of, the benefits payable under the
     Plan with respect to such Participant.

1.7. Anniversary Date
     ----------------

     Anniversary Date means DECEMBER 31 of each Plan Year.  The Anniversary Date
     is an Allocation Date.

1.8. Annual Compensation
     -------------------

     (a) Annual Compensation, pursuant to the safe harbor definition of Treasury
         Regulation Section 1.415-2(d)(11), means wages as defined in Code
         Section 3401(a) and all other payments of compensation to an Employee
         by the Employer in the course of the Employer's trade or business for
         which the Employer is required to furnish the Employee a written
         statement under Code Sections 6041(d) and 6051(a)(3).  Compensation
         must be determined without regard to any rules under Code Section
         3401(a) that limit the remuneration included in wages based on the
         nature or location of the employment or the services performed such as
         the exception for agricultural labor in Code Section 3401(a)(2).

     (b) Notwithstanding the foregoing, Compensation received prior to a
         Participant's Entry Date shall be excluded.

     (c) In addition to other applicable limitations set forth in the Plan, and
         notwithstanding any other provision of the Plan to the contrary, the
         annual compensation of each employee taken into account under the Plan
         shall not exceed $160,000, as adjusted by the Commissioner for
         increases in the cost of living in accordance with Section
         401(a)(17)(B) of the Internal Revenue Code (the "Annual Compensation
         Limit").  The cost-of-living adjustment in effect for a calendar year
         applies to any period, not exceeding 12 months, over which compensation
         is determined (determination period) beginning in such calendar year.
         If a determination period consists of fewer than 12 months, the Annual
         Compensation Limit will be multiplied by a fraction, the numerator of
         which is the number of months in the determination period, and the
         denominator of which is 12.

         If compensation for any prior determination period is taken into
         account in determining an employee's benefits accruing in the current
         plan year, the compensation for that prior determination period is
         subject to the Annual Compensation Limit in effect for that prior
         determination period.

                                       2
<PAGE>
 
      (d) For purposes of determining whether the Plan discriminates in favor of
          Highly Compensated Employees, Annual Compensation means Annual
          Compensation defined in this Section 1.8, except any exclusions from
          Annual Compensation other than the exclusions described in clauses
          (a)(i), (ii), (iii), (iv), and (v) do not apply. The Employer also may
          elect to use an alternate nondiscriminatory definition, under Code
          Section 414(s) and the applicable Treasury regulations. In determining
          Annual Compensation under this paragraph, the Employer may elect to
          include all Elective Contributions made by the Employer on behalf of
          the Employees. The Employer's election to include Elective
          Contributions must be consistent and uniform for Employees and all
          plans of the Employer for any particular Plan Year. The Employer may
          make this election to include Elective Contributions for
          nondiscrimination testing purposes, whether or not this Section
          includes Elective Contributions in the general Annual Compensation
          definition of the Plan.

      (e) Notwithstanding the foregoing, Annual Compensation for any Self-
          Employed Individual means Earned Income.

      (f) Notwithstanding the foregoing, Annual Compensation includes, pursuant
          to the safe harbor definition of Treasury Regulation Section 
          1.414.(s)-1(c)(4):

          (i)   Elective Contributions that are made by the Employer on behalf
                of its Employees that are not includable in gross income under
                Code Section 125 relating to a cafeteria plan; Code Section
                402(a)(8) relating to a Code Section 401(k) arrangement; Code
                Section 402(h) relating to a simplified employee pension plan;
                Code Section 403(b) relating to a tax sheltered annuity plan;
                and Code Section 402(k) relating to simple retirement accounts;

          (ii)  Compensation deferred under an eligible deferred compensation
                plan defined in Code Section 457(b) for state and local
                governments and tax-exempt organizations; and

          (iii) Employee Contributions under governmental plans described in
                Code Section 414(h)(2) picked up by the employing unit and
                treated as Employer Contributions.
 
      (g) For purposes of Participant Elective Deferral Contributions, Annual
          Compensation shall include bonuses paid to a Participant by the
          Employer during the Plan Year.

      (h) For purposes of Employer Non-Elective Contributions, Annual
          Compensation shall exclude bonuses paid to a Participant by the
          Employer during the Plan Year.

1.9.  Beneficiary
      -----------

      Beneficiary means any person or fiduciary designated by a Participant or
      Former Participant who is or may become entitled to receive benefits under
      Article VII following the death of the Participant or Former Participant.
      A Beneficiary who becomes entitled to a benefit under the Plan shall
      remain a Beneficiary under the Plan until the Trustee has fully
      distributed the benefits to the Beneficiary. A Beneficiary's right to
      information or data concerning the Plan, and the respective duties of the
      Administrator, the Committee and the Trustee to provide to the Beneficiary
      information or data concerning the Plan, shall not arise until the
      Beneficiary first becomes entitled to receive a benefit under the Plan.
      For purposes of determining whether the Plan is a Top-Heavy Plan, a
      Beneficiary of a deceased Participant shall be considered a Key Employee
      or a Non-Key Employee in accordance with the applicable Treasury
      Regulations.

1.10. Cash Value
      ----------

      Cash Value means the cash surrender value of any Contract acquired under
      the Plan, including all dividends or other accumulations remaining with
      the Insurance Company as part of such Contract, on the date cash value is
      to be determined.

1.11. Code
      ----

      Code means the Internal Revenue Code of 1986, as amended from time to
      time. A reference to a Code Section in this Agreement means the provisions
      or successor provisions of the particular Code Section, as amended or
      replaced from time to time.

1.12. Committee
      ---------

      Committee means the Plan Committee as from time to time constituted
      pursuant to Article XII.

1.13. Contract
      --------

      Contract means any life insurance, annuity, or other contract which may be
      issued by an Insurance Company.

1.14. Determination Date
      ------------------

      Determination Date means (a) the last day of the preceding Plan Year or
      (b) in the case of the first Plan Year, the last day of the first Plan
      Year.

                                       3
<PAGE>
 
1.15.  Disability
       ----------

       Disability means a Participant's total and permanent, mental or physical
       disability resulting in termination of employment as evidenced by
       presentation of medical evidence satisfactory to the Administrator.

1.16.  Early Retirement Date
       ---------------------

       An Early Retirement Date is not provided under this Plan.

1.17.  Effective Date
       --------------

       The Effective Date of this Plan JANUARY 1, 1997.

1.18.  Employee
       --------

       (a) Employee means any individual currently employed by the Employer
           maintaining the Plan or of any other Employer required to be
           aggregated with the Employer under Code Sections 414(b), (c), (m) or
           (o).

       (b) The Plan treats any Leased Employee as an Employee of the Employer
           unless excluded by an exclusion classification in Section 2.1. A
           Leased Employee is an individual, who otherwise is not an Employee of
           the Employer, who, pursuant to a leasing agreement between the
           Employer and any other person, has performed services for the
           Employer (or for the Employer and any persons related to the Employer
           within the meaning of Code Section 144(a)(3)) on a substantially full
           time basis for at least one (1) year and who performs services
           historically performed by Employees in the Employer's business field.
           If a Leased Employee is treated as an Employee because of this
           Section 1.18, Annual Compensation includes compensation from the
           leasing organization which is attributable to services performed for
           the Employer.

       (c) Notwithstanding the foregoing, the Plan does not treat any Leased
           Employee as an Employee of the Employer if the leasing organization
           covers the Employee in a safe harbor plan and, prior to the
           application of this safe harbor plan exception, twenty percent (20%)
           or less of the Employer's Employees (other than Highly Compensated
           Employees) are Leased Employees. A safe harbor plan is a money
           purchase pension plan providing immediate participation, full and
           immediate vesting, and a nonintegrated contribution formula equal to
           at least ten percent (10%) of the employee's compensation without
           regard to employment by the leasing organization on a specified date.
           The safe harbor plan must determine the ten percent (10%)
           contribution on the basis of compensation defined in Code Section
           415(c)(3) plus salary deferrals.

       (d) The Committee must apply this Section 1.18 in a manner consistent
           with Code Sections 414(n) and 414(o) and the applicable Treasury
           regulations. The Committee will reduce a Leased Employee's allocation
           of Employer Contributions under this Plan by the Leased Employee's
           allocation under the leasing organization's plan, but only to the
           extent that allocation is attributable to the Leased Employee's
           service provided to the Employer. The leasing organization's plan
           must be a money purchase pension plan which would satisfy the
           definition under this Section 1.18 of a safe harbor plan,
           irrespective of whether the Employer is able to apply the safe harbor
           plan exception.

1.19.  Employer
       --------

       Employer means PATINA OIL & GAS CORPORATION, a Delaware Corporation,
       successor in interest to Gerrity Oil and Gas Corporation, or any other
       employer who with the written consent of Patina Oil & Gas Corporation
       adopts this Plan.


1.20.  Employer Securities
       -------------------

       Employer Securities means:

       (i)    Common stock issued by the Employer (or by a corporation which is
              a member of the same controlled group) which is readily tradeable
              on an established securities market; or

       (ii)   If there is no common stock which meets the requirements of (i)
              above, then common stock issued by the Employer (or by a
              corporation which is a member of the same controlled group) having
              a combination of voting power and dividend rights equal to or in
              excess of:

              (A)  that class of common stock of the Employer (or any other such
                   corporation) having the greatest voting power; and

              (B)  that class of common stock of the Employer (or of any other
                   such corporation) having the greatest dividend rights; or

       (iii)  Noncallable preferred stock, if such stock is convertible at any
              time into stock which meets the requirements of (i) or (ii) above
              (whichever is applicable) and if such conversion is at a
              conversion price that is reasonable. A preferred stock will be
              considered

                                       4
<PAGE>
 
         noncallable if after the call there will be a reasonable opportunity
         for a conversion which meets the requirements of the preceding sentence
         in accordance with applicable Treasury regulations.

1.21.  Entry Date
       ----------

       Entry Date means the Effective Date and every JANUARY 1 and JULY 1 after
       the Effective Date.  EFFECTIVE JANUARY 1, 1998, Entry Date means every
       JANUARY 1, APRIL 1, JULY 1 and OCTOBER 1 of each Plan Year.

1.22.  ERISA
       -----

       ERISA means the Employee Retirement Income Security Act of 1974, as
       amended.

1.23.  Forfeiture
       ----------

       Forfeiture means the loss, by a Participant or Beneficiary, pursuant to
       Section 9.4, of that part of the benefit which the Participant or
       Beneficiary otherwise would have received under the Plan at any time
       prior to the termination of the Plan or the complete discontinuance of
       benefits under the Plan, arising from the Participant's severance of
       employment.

1.24.  Former Employee
       ---------------

       Former Employee means any individual who is no longer employed by the
       Employer.

1.25.  Former Participant
       ------------------

       Former Participant means any individual who has been a Participant in the
       Plan, but who is either no longer employed by the Employer or is
       otherwise no longer eligible to participate and has not yet received the
       entire benefit to which the individual is entitled under the Plan.

1.26.  Highly Compensated Employee
       ---------------------------

       Highly Compensated Employee means any Participant or Former Participant
       who is a Highly Compensated Employee, defined in Code Section 414(q).
       Generally, any Participant or Former Participant is considered a Highly
       Compensated Employee if, during the Plan Year (the "Determination Year")
       or during the twelve month period immediately preceding the Determination
       Year or, if the Employer elects, the calendar year ending with or within
       the Determination Year (the "Look Back Year"), the Participant or Former
       Participant:

       (a) was at any time during the Plan Year or during the preceding Plan
           Year a Five Percent Owner as defined in Section 1.47(g); or

       (b) for the preceding Plan Year (a) had Compensation from the Employer in
           excess of $80,000, as adjusted by the Secretary of the Treasury for
           the relevant year and (b) if the Employer elects, was in the top-paid
           group during the preceding Plan Year.

       (c) An Employee is in the top-paid group of Employees for any Plan Year
           if such Employee is in the group consisting of the top twenty percent
           (20%) of the Employees when ranked on the basis of Annual
           Compensation paid during the Plan Year. However, solely for
           determining the total number of active Employees for a year, the
           following Employees are disregarded:

           (i)  The Employees described in this subsection (i) are excluded on
                the basis of age or Service:

                (A)  Employees who have not completed six (6) months of Service
                     by the end of the year. (An Employee's Service in the
                     immediately preceding year is added to the Employee's
                     Service in the current year to determine whether the
                     exclusion applies in the current year.);

                (B)  Employees who normally work less than 17 1/2 hours per
                     week. (This determination is made independently for each
                     year. Weeks during which the Employee did not work are not
                     considered. An Employee who works less than 17 1/2 hours a
                     week for fifty percent (50%) or more of the total weeks
                     worked by the Employee during the year is deemed to
                     normally work less than 17 1/2 hours per week under this
                     rule.);

           (ii) Employees who are included in a unit of employees covered by an
                agreement that the Secretary of Labor finds to be a collective
                bargaining agreement between Employee representatives and the
                Employer which satisfies Code Section 7701(a)(46) and Temporary
                Treasury Regulation Section 301.7701-17T are included in
                determining the number of Employees in the top-paid group unless
                the following exception applies. If ninety percent (90%) or more
                of the Employees of the Employer are covered under collective
                bargaining agreements that the Secretary of Labor finds to be
                collective bargaining agreements between Employee
                representatives and the Employer, which agreements satisfy Code
                Section 7701(a)(46) and Temporary Treasury Regulation Section
                301.7701-17T, and the Plan covers only Employees who are not
                covered under the agreements, then the Employees who are covered
                under the agreements are (A) not counted in determining the
                number of noncollective bargaining employees who will be
                included in the top-paid group in testing the Plan; and (B) not
                included in the top-paid group in testing the Plan.

                                       5
<PAGE>
 
       The Committee must make the determination of who is a Highly Compensated
       Employee consistent with Code Section 414(q) and regulations issued under
       that Code Section. The Employer may make a calendar year election to
       determine the Highly Compensated Employees for the Look Back Year, as
       prescribed by Treasury regulations. A calendar year election must apply
       to all plans and arrangements of the Employer.

       A Former Participant who separated from Service, or is deemed to have
       separated from Service under applicable Treasury regulations, prior to
       the Plan Year, performs no Service for the Employer during the Plan Year
       and was a Highly Compensated Employee either for the Separation Year or
       any Plan Year ending on or after such Former Participant attained age
       fifty-five (55) years is considered a Highly Compensated Employee.
       Generally, Separation Year means the Plan Year during which the Employee
       separates from Service with the Employer. A Former Participant who
       separated from Service prior to January 1, 1987 is considered a Highly
       Compensated Employee only if the Former Participant was a Five Percent
       Owner or received Compensation in excess of $50,000 during (a) the
       Participant's Separation Year or the year preceding the Separation Year
       or (b) any year ending on or after such Former Participant attained age
       fifty-five (55) years or the last year ending before such Former
       Participant attained age fifty-five (55) years.

       For purposes of this Section, Compensation means Annual Compensation
       defined in Section 1.8, and including deferrals under (a) Code Section
       402(a)(8) relating to a Code Section 401(k) arrangement; (b) Code Section
       125 relating to a cafeteria plan; (c) Code Section 403(b) relating to a
       tax sheltered annuity plan; (d) Code Section 408(h) relating to a
       simplified employee pension; and (e) effective JANUARY 1, 1998, Code
       Section 402(k) relating to a simple retirement account. Compensation from
       each Related Employer shall be taken into account.

1.27.  Hour of Service
       ---------------

       (a) Any Employee or Participant who is compensated on an hourly-rated
           basis shall be credited with an Hour of Service for:

           (i)   each hour for which the Employee or Participant is either
                 directly or indirectly paid or entitled to payment by the
                 Employer for the performance of duties or for reasons other
                 than for the performance of duties due to vacation, holiday,
                 illness, incapacity (including disability), layoff, jury duty,
                 military duty or leave of absence, whether or not the
                 employment relationship was terminated; and

           (ii)  each hour for which back pay has been awarded to the Employee
                 or Participant or agreed to by the Employer, irrespective of
                 mitigation of damages.

       (b) Any Employee or Participant who is compensated on a basis other than
           an hourly-rated basis and who, if hourly-rated, would be credited
           with one (1) Hour of Service pursuant to the preceding sentence,
           shall be credited with the number of Hours of Service as follows:

           (i)   ten (10) hours of service per day, if compensated on a daily
                 basis;

           (ii)  forty-five (45) hours of service per week, if compensated on a
                 weekly basis;

           (iii) ninety (90) hours of service per bi-weekly period, if
                 compensated on a bi-weekly basis;

           (iv)  ninety-five (95) hours of service per semi-monthly period, if
                 compensated on a semi-monthly basis; or

           (v)   one hundred ninety (190) hours of service per month, if
                 compensated on a monthly basis.

       (c) The number of Hours of Service which shall be credited to an Employee
           or Participant for being entitled to payment for reasons other than
           for the performance of duties shall be determined under Sections
           2530.200b-2(b) and (c) of the Department of Labor Regulations which
           are incorporated herein by this reference. The method for crediting
           Hours of Service under Section 1.27(b) for each Participant shall be
           the same method used for crediting Hours of Service for which the
           Participant received compensation. Notwithstanding the foregoing, not
           more than five hundred one (501) Hours of Service shall be credited
           to any Employee or Participant during any Computation Period for any
           single, continuous period during which the Employee or Participant
           performs no duties.

       (d) An Hour of Service performed for any other entity that is a Related
           Employer with respect to the Employer shall be considered an Hour of
           Service performed for the Employer.

1.28.  Individual Accounts
       -------------------

       Individual Accounts means accounts or records maintained by the Committee
       or its agent indicating the monetary value of the total interest in the
       Trust Fund of each Participant, each Former Participant, and each
       Beneficiary.  The types of Individual Accounts under this Plan are:

       (a) Employer Contribution Accounts holding Employer Contributions made to
           ------------------------------                                       
           the Plan under Section 3.1 and attributable earnings.  The types of
           Employer Contribution Accounts maintained under this Plan are:

                                       6
<PAGE>
 
         (i)   Employer Non-Elective Contribution Accounts holding Employer
               -------------------------------------------                 
               Contributions made to the Plan for the benefit of an Employee
               which the Employee could not have elected to receive in the form
               of cash or other taxable benefit.

     (b) Participant Contribution Accounts holding Participant Contributions
         ---------------------------------                                  
         made to the Plan and attributable earnings.  The types of Participant
         Contribution Accounts maintained under this Plan are:

         (i)   Rollover Accounts holding the Participant's qualified rollover to
               -----------------                                                
               the Plan pursuant to Article XVII plus amounts transferred from
               the Snyder Oil Corporation Profit Sharing and Savings Plan and
               Trust Agreement attributable to Rollover Contributions.

         (ii)  Participant Voluntary After Tax Contribution Accounts holding the
               -----------------------------------------------------            
               after-tax contributions of the Participant accounts transferred
               from the Snyder Oil Corporation Profit Sharing and Savings Plan
               and Trust.

         (iii) Prior Match Accounts holding amounts transferred from the Snyder
               --------------------                                            
               Oil Corporation Profit Sharing and Savings Plan and Trust
               attributable to Matching Contributions and Qualified Non-Elective
               Contributions under the Gerrity Oil & Gas Corporation 401(k)
               Retirement Plan and amounts transferred from the DelMar Operating
               Plan designated as Matching Contributions.

         (iv)  Salary Deferral Accounts holding the amount contributed by the
               ------------------------                                      
               Employer as the result of an election by a Participant to have
               that amount contributed to the Plan rather than paid as cash or
               other taxable benefit pursuant to Section 3.1.

1.29.  Insurance Company
       -----------------

       Insurance Company means any legal reserve life insurance company which
       may issue a Contract under this Agreement.

1.30.  Limitation Year
       ---------------

       Limitation Year means the Plan Year.

1.31.  Named Fiduciary
       ---------------

       Named Fiduciary means one or more fiduciaries named in this Agreement who
       jointly and severally shall have authority to control or manage the
       operation and administration of the Plan. The Committee shall be the
       Named Fiduciary unless the Employer designates another person by written
       Employer action.

1.32.  Nonforfeitable
       --------------
 
       Nonforfeitable means a vested interest attained by a Participant or
       Beneficiary in that part of the Participant's benefit under the Plan
       arising from the Participant's Service, which claim is unconditional and
       legally enforceable against the Plan.

1.33.  Non-Highly Compensated Employee
       -------------------------------

       Non-Highly Compensated Employee means an Employee, Former Employee or
       Beneficiary who is not a Highly Compensated Employee.

1.34.  Normal Retirement Age
       ---------------------

       Normal Retirement Age means, for each Participant, the date the
       Participant attains age 59 1/2 years. Notwithstanding the foregoing, any
       Participant who attained Normal Retirement Age under the terms of the
       Prior Plan on or before the date of adoption of this Plan shall be
       considered as having attained Normal Retirement Age.

1.35.  Normal Retirement Date
       ----------------------

       Normal Retirement Date means, for each Participant, the first day of the
       month coincident with or next following the date the Participant attains
       Normal Retirement Age.

1.36.  One Year Break in Service
       -------------------------

       (a) A One Year Break in Service, for purposes of eligibility, means a
           Period of Severance of at least twelve (12) consecutive months.  A
           Period of Severance means a continuous period of time during which an
           Employee is not employed by the Employer.  Such period shall begin on
           the date the Employee retires, quits, is discharged, or dies, or, if
           earlier, the twelve (12) month anniversary of the date on which the
           Employee was otherwise first absent from work.

                                       7
<PAGE>
 
       (b) A One Year Break in Service, for purposes of vesting, means a
           Computation Period described in Section 1.50(b) relating to Year of
           Service, during which an Employee has not completed more than five
           hundred (500) Hours of Service with the Employer.

       (c) An Employee shall not incur a One Year Break in Service for the Plan
           Year in which the Employee becomes a Participant, dies, retires or
           suffers total and permanent disability.

       (d) Further, solely for the purpose of determining whether a Participant
           has incurred a One Year Break in Service under (a) or (b) above,
           Hours of Service shall be recognized for "authorized leaves of
           absence" and "maternity and paternity leaves of absence."

           (i)  An "authorized leave of absence" means an unpaid temporary
                cessation from active employment with the Employer pursuant to
                an established nondiscriminatory policy, whether occasioned by
                illness, military service or any other reason.

           (ii) A "maternity or paternity leave of absence" means an absence
                from work for any period because of the Employee's pregnancy,
                birth of the Employee's child, placement of a child with the
                Employee relating to the adoption of the child, or any absence
                for the purpose of caring for the child for a period immediately
                following the birth or placement. For purposes of a maternity
                and paternity leave of absence, Hours of Service shall be
                credited for the Computation Period in which the absence from
                work begins, only if the credit is necessary to prevent the
                Employee from incurring a One Year Break in Service, or, in any
                other case, in the immediately following Computation Period. The
                Hours of Service credited for a "maternity or paternity leave of
                absence" shall be those which would normally have been credited
                but for the absence, or, in any case in which the Administrator
                is unable to determine the hours normally credited, eight (8)
                Hours of Service per day. The total Hours of Service required to
                be credited for a "maternity or paternity leave of absence"
                shall not exceed five hundred one (501) hours.

1.37.  Owner-Employee
       --------------

       Owner-Employee means a sole proprietor or a partner who owns more than
       ten percent (10%) of either the capital interest or profits interest in
       an unincorporated Employer and who receives income from such
       unincorporated Employer for personal services.

1.38.  Participant
       -----------

       Participant means an Employee of the Employer who has met the eligibility
       requirements of this Plan and who has been enrolled as a Participant in
       this Plan.

1.39.  Participating Employer
       ----------------------

       Participating Employer means any Related Employer that may elect to adopt
       this Plan pursuant to Article XI.

1.40.  Plan
       ----

       Plan means the profit sharing and savings plan embodied in this
       Agreement, as amended from time to time, designated as the PATINA OIL &
       GAS CORPORATION PROFIT SHARING AND SAVINGS PLAN AND TRUST.

1.41.  Plan Year
       ---------

       Plan Year means the twelve (12) consecutive month period from JANUARY 1
       of each year to the next following DECEMBER 31.

1.42.  Predecessor Employer
       --------------------

       Predecessor Employer means a business organization which has been
       acquired by the Employer, whether by merger, stock purchase or
       acquisition of the assets and business of the business organization.

1.43.  Related Employer
       ----------------

       A related group of employers is a controlled group of corporations
       (defined in Code Section 414(b)), trades or businesses (whether or not
       incorporated) which are under common control (defined in Code Section
       414(c)) or an affiliated service group (defined in Code Section 414(m) or
       in Code Section 414(o)). If the Employer is a member of a related group,
       the term "Employer" includes the related group members for purposes of
       crediting Hours of Service, determining Years of Service and Breaks in
       Service under Articles II and IX, applying the participation test of Code
       Section 401(a)(26) and the coverage test of Code Section 410(b), applying
       the limitations on allocations in Article V, applying the top-heavy rules
       and the minimum allocation requirements of Article V, the definitions of
       Employee, Highly Compensated Employee, Compensation and Leased Employee,
       and for any other purpose required by the applicable Code Section or by a
       Plan provision. However, an Employer may contribute to the Plan only by
       being a signatory to a Participation Agreement to the Plan. If one or
       more of the Employer's related group members become Participating
       Employers by executing a Participation Agreement to the Plan, the term
       "Employer" includes the participating related group members for all
       purposes of the Plan, and Administrator means the

                                       8
<PAGE>
 
       Employer that is the signatory to the Plan. For Plan allocation purposes,
       Compensation does not include Compensation received from a Related
       Employer that is not participating in this Plan.

1.44.  Self-Employed Individual
       ------------------------

       Self-Employed Individual means an individual who has earned income for
       the taxable year from the trade or business for which the Plan is
       established or an individual who would have had earned income for the
       fact that the trade or business had no net profits for the taxable year.

1.45.  Service
       -------

       (a) Service means any period of time the Employee is in the employ of the
           -------                                                              
           Employer.  Service in all cases includes periods during which the
           Employee is on an "authorized leave of absence" or a "maternity or
           paternity leave of absence" defined in Section 1.36(d) relating to
           One Year Break in Service. Leaves of absence also shall include
           periods of absence in connection with military service during which
           the Employee's re-employment rights are legally protected. Except for
           absence by reason of military service, leaves of absence shall be for
           a maximum period of two (2) years. Leaves of absence shall be granted
           on a uniform and nondiscriminatory basis.

       (b) If the Employer maintains the plan of a Predecessor Employer, Service
           shall include service for the Predecessor Employer.  To the extent it
           may be required under applicable Treasury regulations under Code
           Section 414, Service shall include all service for any Predecessor
           Employer.

1.46.  Shareholder-Employee
       --------------------

       Shareholder-Employee means a Participant who owns more than five percent
       (5%) of the Employer's outstanding capital stock during any year in which
       the Employer elected to be taxed as a Small Business Corporation under
       Code Section 1362(a) and who receives income from the Employer for
       personal services.

1.47.  Top-Heavy Plan Status/Super Top-Heavy Plan Status
       -------------------------------------------------

       This Plan shall be a Top-Heavy Plan in any Plan Year in which, as of the
       Determination Date, (a) the Present Value of Accrued Benefits of Key
       Employees, or (b) the sum of the Aggregate Accounts of Key Employees of
       any plan of an Aggregation Group, exceeds sixty percent (60%) of the
       Present Value of Accrued Benefits or Aggregate Accounts of all
       Participants under this Plan and any plan of an Aggregation Group.

       If any Participant is a Non-Key Employee for any Plan Year, but the
       Participant was a Key Employee for any prior Plan Year, the Participant's
       Aggregate Account balance shall not be taken into account in determining
       whether this Plan is a Top-Heavy Plan (or whether any Aggregation Group
       which includes this Plan is a Top-Heavy Group) as further defined in Code
       Section 416(g) and the applicable Treasury regulations.

       This Plan shall be a Super Top-Heavy Plan for any Plan Year in which, as
       of the Determination Date, (a) the Present Value of Accrued Benefits of
       Key Employees, or (b) the sum of the Aggregate Accounts of Key Employees
       of any plan of an Aggregation Group, exceeds ninety percent (90%) of the
       Present Value of Accrued Benefits and the Aggregate Accounts of all
       Participants under this Plan and any plan of an Aggregation Group.

       If any Participant is a Non-Key Employee for any Plan Year, but the
       Participant was a Key Employee for any prior Plan Year, the Participant's
       Aggregate Account balance shall not be taken into account in determining
       whether this Plan is a Super Top-Heavy Plan (or whether any Aggregation
       Group which includes this Plan is a Top-Heavy Group) as further defined
       in Code Section 416(g) and the applicable Treasury regulations.

       For purposes of determining Top-Heavy and Super Top-Heavy status, the
       following definitions shall apply:
       
       (a) Aggregate Account means, as of the Determination Date, the sum of:
           -----------------                                                 

           (i)   the Participant Contribution Account and Employer Contribution
                 Account balances as of the most recent Valuation Date occurring
                 within a twelve (12) month period ending on the Determination
                 Date;

           (ii)  the contributions that would be allocated as of a date not
                 later than the Determination Date, even though those amounts
                 are not yet made or required to be made;

           (iii) any plan distributions made during the Determination Period
                 (However, in the case of distributions made after the Valuation
                 Date and prior to the Determination Date, such distributions
                 are not included as distributions for Top-Heavy purposes to the
                 extent that the distributions are already included in the
                 Participant's Aggregate Account balance as of the Valuation
                 Date.); and

                                       9
<PAGE>
 
           (iv) any Employee contributions, whether voluntary or mandatory
                (However, amounts attributable to Participant Deductible
                Voluntary Contributions shall not be considered to be a part of
                the Participant's Aggregate Account balance.).

           (v)  Regarding unrelated rollovers and plan-to-plan transfers (those
                which are (A) initiated by the Employee and (B) made from a plan
                maintained by one employer to a plan maintained by another
                employer), if this Plan provides for rollovers or plan-to-plan
                transfers, an unrelated rollover or plan-to-plan transfer shall
                be considered as a distribution for purposes of this Section. If
                this Plan is the plan accepting an unrelated rollover or plan-
                to-plan transfer, an unrelated rollover or plan-to-plan transfer
                accepted after December 31, 1983 shall not be considered as part
                of the Participant's Aggregate Account balance. However,
                unrelated rollovers or plan-to-plan transfers accepted prior to
                January 1, 1984 shall be considered as part of the Participant's
                Aggregate Account balance.

           (vi) Regarding related rollovers and plan-to-plan transfers (those
                either (A) not initiated by the Employee or (B) made to a plan
                maintained by the same Employer), if this Plan provides for
                rollovers or plan-to-plan transfers, a related rollover or plan-
                to-plan transfer shall be considered as a distribution for
                purposes of this Section.  If this Plan is the plan accepting a
                related rollover or plan-to-plan transfer, a related rollover or
                plan-to-plan transfer shall be considered as part of the
                Participant's Aggregate Account balance, irrespective of the
                date on which the related rollover or plan-to-plan transfer is
                accepted.

       (b) Aggregation Group means either a Required Aggregation Group or a
           -----------------                                               
           Permissive Aggregation Group as hereinafter determined.

           (i)   Required Aggregation Group means the group of plans composed of
                 --------------------------                                     
                 (A) each plan of the Employer in which a Key Employee is a
                 participant or participated at any time during the
                 Determination Period, regardless of whether the plan has
                 terminated; and (B) each other plan of the Employer which
                 enables any plan in which a Key Employee participates to meet
                 the requirements of Code Sections 401(a)(4) or 410, which shall
                 be aggregated.

                 In the case of a Required Aggregation Group, each plan in the
                 group will be considered a Top-Heavy Plan if the Required
                 Aggregation Group is a Top-Heavy Group. No plan in the Required
                 Aggregation Group will be considered a Top-Heavy Plan if the
                 Required Aggregation Group is not a Top-Heavy Group.

           (ii)  Permissive Aggregation Group means the Required Aggregation 
                 ----------------------------
                 Group plus any other plan not required to be included in the
                 Required Aggregation Group, provided the resulting group, taken
                 as a whole, would continue to satisfy Code Sections 401(a)(4)
                 and 410.

                 In the case of a Permissive Aggregation Group, only a plan that
                 is part of the Required Aggregation Group will be considered a
                 Top-Heavy Plan if the Permissive Aggregation Group is a Top-
                 Heavy Group. No plan in the Permissive Aggregation Group will
                 be considered a Top-Heavy Plan if the Permissive Aggregation
                 Group is not a Top-Heavy Group.

           (iii) Only those plans of the Employer in which the Determination
                 Dates fall within the same calendar year shall be aggregated to
                 determine whether the plans are Top-Heavy Plans.

       (c) Determination Date means for any Plan Year (i) the last day of the
           ------------------                                                
           preceding Plan Year, or (ii) in the case of the first Plan Year of
           the Plan, the last day of the first Plan Year.

       (d) Determination Period means the five (5) year period ending on the
           --------------------                                             
           Determination Date.

       (e) Employer means the Employer that adopts this Plan.  Related Employers
           --------                                                             
           shall be considered a single Employer for purposes of applying the
           limitations of these top-heavy rules.

       (f) Excluded Employees means any Employee who has not performed any 
           -------------------
           Service for the Employer during the five (5) year period ending on
           the Determination Date. Excluded Employees shall be excluded for
           purposes of a Top-Heavy determination.

       (g) Key Employee means any Employee or Former Employee, or Beneficiary of
           ------------                                                         
           the Employee, who, for any Plan Year in the Determination Period is:

           (i)   An officer of the Employer having Compensation from the
                 Employer and any Related Employer greater than fifty percent
                 (50%) of the amount in effect under Code Section 415(b)(1)(A);

           (ii)  One of the ten (10) Employees having Compensation from the
                 Employer and any Related Employer of more than the limitation
                 in effect under Code Section 415(c)(1)(A) and owning (or
                 considered as owning within the meaning of Code Section 318)
                 the largest interests in the Employer;

           (iii) A Five Percent Owner of the Employer (Five Percent Owner means
                 any person owning, or considered as owning within the meaning
                 of Code Section 318, more than five percent (5%) of the
                 outstanding stock of the Employer or

                                       10
<PAGE>
 
                       stock possessing more than five percent (5%) of the total
                       combined voting power of all stock of the Employer; or in
                       the case of an unincorporated business, any person who
                       owns more than five percent (5%) of the capital or
                       profits interest in the Employer.); or

                (iv)   A One Percent Owner of the Employer having Compensation
                       from the Employer of more than $150,000 (One Percent
                       Owner means any person having Compensation from the
                       Employer and any Related Employer in excess of $150,000
                       and owning, or considered as owning within the meaning of
                       Code Section 318, more than one percent (1%) of the
                       outstanding stock of the Employer or stock possessing
                       more than one percent (1%) of the total combined voting
                       power of all stock of the Employer; or in the case of an
                       unincorporated business, any person who owns more than
                       one percent (1%) of the capital or profits interest in
                       the Employer.).

                (v)    Notwithstanding the foregoing, Key Employee shall have
                       the meaning set forth in Code Section 416(i), as amended.

                (vi)   For purposes of determining whether an Employee or Former
                       Employee is an officer under this subsection (g), an
                       officer of the Employer shall have the meaning set forth
                       in the regulations under Code Section 416(i).

                (vii)  For purposes of this Section, Compensation means
                       Compensation determined under Section 1.26 for the
                       definition of a Highly Compensated Employee.

                (viii) For purposes of determining ownership hereunder,
                       employers that would otherwise be aggregated as Related
                       Employers shall be treated as separate employers.

       (h) Non-Key Employee means any Employee or Former Employee, or 
           ----------------
           Beneficiary of the Employee, who is not a Key Employee.

                (i)    Present Value of Accrued Benefit.  Solely for the 
                       --------------------------------  
                       purpose of determining if the Plan, or any other plan
                       included in a Required Aggregation Group of which this
                       Plan is a part, is a Top-Heavy Plan, the Accrued Benefit
                       of a Non-Key Employee shall be determined under (i) the
                       method, if any, that uniformly applies for accrual
                       purposes under all plans maintained by the Related
                       Employers, or (ii) if there is no uniform method, in
                       accordance with the slowest accrual rate permitted under
                       the fractional accrual method described in Code Section
                       411(b)(1)(C). To calculate the Present Value of Accrued
                       Benefits from a defined benefit plan, the Committee will
                       use the actuarial assumptions for interest and mortality
                       only, prescribed by the defined benefit plan(s) to value
                       benefits for Top-Heavy purposes. If an aggregated plan
                       does not have a Valuation Date coinciding with the
                       Determination Date, the Committee must value the Accrued
                       Benefits in the aggregated plan as of the most recent
                       Valuation Date falling within the twelve (12) month
                       period ending on the Determination Date, except as Code
                       Section 416 and applicable Treasury regulations require
                       for the first and second plan year of a defined benefit
                       plan. The Committee will determine whether a plan is Top-
                       Heavy by referring to Determination Dates that fall
                       within the same calendar year.

       (j) Top-Heavy Group means an Aggregation Group in which, as of the
           ---------------                                               
           Determination Date, the sum of:

                (i)    the Present Value of Accrued Benefits of Key Employees
                       under all defined benefit plans included in the group;
                       and

                (ii)   the Aggregate Accounts of Key Employees under all defined
                       contribution plans included in the group exceeds sixty
                       percent (60%) of a similar sum determined for all
                       Participants.

       (k) For purposes of this Section, Valuation Date means the Determination
                                         --------------                        
           Date defined above.

1.48.  Trust Fund
       ----------

       Trust Fund means all assets of any kind and nature from time to time held
       by the Trustee or its agent under this Agreement without distinction
       between income and principal.  This Plan creates a single Trust for all
       Employers participating under the PATINA OIL & GAS CORPORATION PROFIT
       SHARING AND SAVINGS PLAN AND TRUST. However, the Trustee will maintain
       separate records of account to reflect properly each Participant's
       Accrued Benefit derived from each Participating Employer.

1.49.  Trustee
       -------

       Trustee means KEITH M. CROUCH until the effective date of acceptance by
       MERRILL LYNCH TRUST COMPANY OF AMERICA as Trustee and any successor
       Trustee.

1.50.  Year of Service
       ---------------

       (a) Four Months of Eligibility Service means the four (4) consecutive 
           ---------------------------------- 
           month period commencing on an Employee's Employment Commencement Date
           and ending on the same day of the fourth month following the
           Employee's Employment Commencement Date. If an Employee fails to
           complete Four Months of Eligibility Service during the initial
           Computation Period, the Employee shall be deemed to complete Four
           Months of Eligibility Service upon the completion of four (4) months
           of Service. An Employee shall receive credit for the aggregate of all
           time periods commencing with the first day the Employee is entitled
           to credit for an
                                       11
<PAGE>
 
           Hour of Service, including the Re-Employment Commencement Date, and
           ending on the date a Break in Service begins. An Employee also shall
           receive credit for any Period of Severance of less than four (4)
           consecutive months. Fractional periods of a year shall be expressed
           in terms of months, with credit for a month of service being given
           for each thirty (30) days of Elapsed Time.

       (b) Year of Vesting Service means any Plan Year during which the Employee
           -----------------------                                              
           performs not less than one thousand (1,000) Hours of Service for the
           Employer. If (i) an Employee's Eligibility Computation Period for a
           Plan requiring One Year of Service for eligibility overlaps two
           vesting Computation Periods; and (ii) the Employee completes one
           thousand (1,000) Hours of Service in the Eligibility Computation
           Period but fails to complete the one thousand (1,000) Hours of
           Service in either of the overlapping Vesting Computation Periods; and
           (iii) the Employee is admitted to participation in the Plan, then the
           Year of Eligibility Service completed shall also be considered a Year
           of Vesting Service when the Employee becomes a Participant. In
           computing an Employee's Years of Vesting Service, the following rules
           shall apply:

                (i)    For an Employee who terminates employment and is
                       subsequently re-employed after incurring a One Year Break
                       in Service, Service prior to the Break in Service shall
                       not be taken into account until the Employee has
                       completed a Year of Service after re-employment.

                (ii)   For a Participant who terminates employment and who
                       subsequently is re-employed after incurring five (5)
                       consecutive One Year Breaks in Service, Years of Service
                       after the Break in Service shall not be taken into
                       account for purposes of determining the Nonforfeitable
                       percentage of an Employee's Account Balance derived from
                       Employer Contributions which accrued before the Break in
                       Service.

                (iii)  For a Participant who terminates employment without any
                       vested right to the Employer Contribution Account and who
                       is re-employed after a One Year Break in Service, Service
                       before the Break in Service shall not be taken into
                       account if the number of consecutive One Year Breaks in
                       Service equals or exceeds the greater of (A) five (5), or
                       (B) the aggregate number of Years of Service before the
                       Break in Service.

                (iv)   Years of Service, for purposes of vesting, shall include
                       all Years of Service of the Employee with GERRITY OIL AND
                       GAS CORPORATION and SNYDER OIL CORPORATION prior to
                       January 1, 1998.

                (v)    Years of Service with the Employer before a Participant
                       enters the Plan shall be considered for purposes of
                       vesting.

       (c) If the Employer is a member of a group of Related Employers, then
           Year of Service for purposes of eligibility and vesting shall include
           Service with any Related Employer.

                                 * * * * * * *

                                      12
<PAGE>
 
                                  ARTICLE II
                                  ----------

                         Eligibility and Participation
                         -----------------------------

2.1. Eligibility Conditions
     ----------------------

     (a) Each Employee shall be eligible to participate in this Plan on the
         Entry Date coincident with or next following the attainment of age
         eighteen (18) and the completion of four (4) months of Service with the
         Employer.

     (b) Notwithstanding the preceding sentence, an Employee who has attained
         age eighteen (18) and completed at least four (4) months of Service
         with the Employer on the Effective Date of this Plan shall be eligible
         to participate in this Plan on the Effective Date.

     (c) The following Employees are not eligible to participate in the Plan:

         .    Collective Bargaining Employees.  Each Employee who is a member of
              a collective bargaining unit shall not be eligible to participate
              in this Plan unless the collective bargaining agreement provides
              otherwise.  An Employee is a member of a collective bargaining
              unit if the Employee is included in a unit of Employees covered by
              an agreement which the Secretary of Labor finds to be a collective
              bargaining agreement between Employee representatives and one or
              more employers if there is evidence that retirement benefits were
              the subject of good faith bargaining between the Employee
              representatives and the employer or employers.  The term "Employee
              representatives" does not include an organization of which more
              than one-half ( 1/2) the members are owners, officers, or
              executives of the Employer.

         .    Nonresident aliens who do not receive any earned income (as
              defined in Code Section 911(d)(2)) from the Employer which
              constitutes United States source income (as defined in Code
              Section 861(a)(3)).

         .    Individuals classified by the Employer as Leased Employees,
              whether or not subsequently determined to be Employees of the
              Employer for purposes of the Internal Revenue Code.

         .    Individuals classified by the Employer as Independent Contractors,
              whether or not subsequently determined to be Employees of the
              Employer for purposes of the Internal Revenue Code.

         If a Participant is no longer a member of an eligible class of
         Employees and becomes ineligible to participate but has not incurred a
         Break in Service, such Employee will participate immediately upon
         returning to an eligible class of Employees.  If a Participant incurs a
         Break in Service, eligibility will be determined under the Break in
         Service rules of Section 1.36.

         If an Employee who is not a member of an eligible class of Employees
         becomes a member of an eligible class, the Employee will participate
         immediately if the Employee has satisfied the minimum age and service
         requirements and would have otherwise previously become a Participant.

2.2. Participation
     -------------

     Whenever a new Employee is hired by the Employer, the Employer immediately
     shall give notice to the Committee of the employment and shall identify the
     new Employee.  The Committee shall notify in writing each new Employee of
     the pending eligibility as soon as administratively feasible prior to the
     date on which the Employee will become eligible and shall furnish the
     Employee a copy of this Agreement or any other explanation of the Plan that
     the Committee shall provide for that purpose.  Each Employee so notified
     automatically will become a Participant upon meeting the requirements of
     Section 2.1.

2.3. Participant Re-Entry
     --------------------

     If the employment of a Participant is terminated and the Participant
     subsequently is re-employed, the re-employed Employee shall become a
     Participant on the date of re-employment.  If an Employee terminates
     employment prior to satisfying the eligibility requirements of Section 2.1
     and subsequently is re-employed, the re-employed Employee shall become a
     Participant after meeting the eligibility requirements of Section 2.1, but
     shall be credited for Service retroactively to the date of re-employment
     for purposes of eligibility and vesting.  If an Employee becomes eligible
     but terminates employment prior to the first Entry Date, and the Employee
     is later re-employed, the Employee shall become a Participant on the date
     of re-employment.

                                 * * * * * * *

                                      13
<PAGE>
 
     ARTICLE III
     -----------
 

                         Contributions and Withdrawals
                         -----------------------------


3.1. Employer Contributions
     ----------------------

     (a) Employer Elective Contributions and Participant Elective Deferrals.
         ------------------------------------------------------------------  
         For each Plan Year beginning on or after JANUARY 1, 1998, the amount of
         the Employer Elective Contribution to the Trust Fund will equal the
         amount determined under this paragraph.  Each Participant may elect to
         defer from 1% to 15% of Annual Compensation, as defined in Section 1.8,
         modified by 1.8(g), but shall not elect to defer an amount to cause the
         Plan to violate the limitations of this Section or Section 5.3, or to
         exceed the maximum amount allowable as a deduction to the Employer
         under Code Section 404.  A Participant may elect to defer Annual
         Compensation only in an amount which the Participant otherwise could
         elect to receive in cash and which is currently available to the
         Participant.  Annual Compensation is not currently available to the
         Participant if the Participant is not eligible to receive it at the
         time of the deferral election.  The amounts by which a Participant
         elects to reduce Annual Compensation under this Plan shall be that
         Participant's Elective Deferrals.  The Employer shall contribute to the
         Trust Fund the amount of each Participant's Elective Deferrals which
         shall be treated as Employer Elective Contributions and credited to
         that Participant's Salary Deferral Account.

         (i)   The Employer and the Committee shall adopt a procedure necessary
               to implement the deferral elections.

         (ii)  The Employer shall permit changes in a Participant's deferral
               election on the Entry Date(s) of each Plan Year.

         (iii) Elective Deferrals, for purposes of the following clauses (iv)
               ------------------                                            
               through (viii), means for any taxable year the sum of:

               (A) any Employer contribution under a qualified cash or deferred
                   arrangement defined in Code Section 401(k), to the extent not
                   includable in gross income for the taxable year under Code
                   Section 402(a)(8), determined without regard to the dollar
                   limitation under Code Section 402(g);

               (B) any Employer contribution under a simplified employee pension
                   as defined in Code Section 408(k)(6), pursuant to a salary
                   reduction agreement; and

               (C) any Employer contribution toward the purchase of a tax
                   sheltered annuity contract as defined in Code Section 403(b),
                   pursuant to a salary reduction agreement.
 
               Elective Deferrals shall not include any deferrals properly
               distributed as excess annual additions.

         (iv)  A Participant's Elective Deferrals shall not exceed the statutory
               dollar limitation under Code Section 402(g) for the taxable year
               of the Participant.  The dollar limitation under Code Section
               402(g) is $10,000 in 1998 indexed in subsequent Plan Years for
               cost-of-living adjustments under Code Section 415(d) or the
               amount of the dollar limitation under Code Section 402(g) in
               effect on January 1 of each calendar year, as adjusted annually
               by the Secretary of the Treasury.

         (v)   Excess Elective Deferrals means those Elective Deferrals that are
               -------------------------                                        
               includable in a Participant's gross income under Code Section
               402(g) to the extent the Participant's Elective Deferrals for a
               taxable year exceed the dollar limitation under Code Section
               402(g).  Excess Elective Deferrals shall be treated as Annual
               Additions under the Plan, unless such amounts are distributed no
               later than the first April 15 following the close of the
               Participant's taxable year.

         (vi)  If the statutory dollar limitation in clause (iv) is exceeded,
               the Committee shall direct the Trustee to distribute the Excess
               Elective Deferrals, and any income or loss allocable to the
               Excess Elective Deferrals, to the Participant not later than the
               first April 15 following the close of the Participant's taxable
               year. If there is a loss allocable to the Excess Elective
               Deferral, the distribution shall in no event be less than the
               lesser of the Participant's Salary Deferral Account or the
               Participant's Elective Deferrals for the Plan Year. The amount of
               Excess Elective Deferrals to be distributed to an Employee for a
               taxable year will be reduced by Excess Contributions previously
               distributed or recharacterized for the Plan Year beginning in the
               taxable year of the Employee.

         (vii) If a Participant is also a participant in (A) another qualified
               cash or deferred arrangement defined in Code Section 401(k); (B)
               a simplified employee pension defined in Code Section 408(k); or
               (C) a salary reduction arrangement pursuant to which an employer
               purchases a tax sheltered annuity contract defined in Code
               Section 403(b), and the Elective Deferrals made under the other
               arrangement(s) and this Plan cumulatively exceed $10,000 in 1998
               indexed in subsequent Plan Years for cost-of-living adjustments
               under Code Section 415(d) or the amount of the dollar limitation
               under Code Section 402(g) in effect on January 1 of each calendar
               year, as adjusted annually by the Secretary of the Treasury, then
               the Participant may, not later than March 1 following the close
               of the Participant's taxable year, notify the Administrator in
               writing of the excess and request that the Participant's Elective
               Deferrals under this Plan be reduced by an amount specified by
               the Participant. The specified amount then shall be distributed

                                      14
<PAGE>
 
                in the same manner as provided in clause (vi). A Participant is
                deemed to notify the Administrator of any Excess Elective
                Deferrals that arise by taking into account only those Elective
                Deferrals made to this Plan and any other plans of this
                Employer.

         (viii) If any of the foregoing provisions of this Section are not in
                conformity with applicable Treasury regulations, the
                nonconforming provisions may be amended retroactively to assure
                conformity.

     (b) Employer Non-Elective Contributions.  For each Plan Year, the amount of
         -----------------------------------                                    
         the Employer Non-Elective Contribution to the Trust Fund will equal the
         amount, if any, the Employer may from time to time determine and
         authorize.  Such contribution shall be in cash for the 1997 Plan Year
         and may be in either cash or in the form of Employer Securities
         (subject to Trustee acceptance) or both, as the Employer, in its
         discretion, shall determine in subsequent Plan Years.  Any contribution
         in the form of Employer Securities shall be credited to each eligible
         Participant's Employer Non-Elective Contribution Account and allocated
         to the Employer Securities Investment Fund.  Although the Employer may
         contribute to this Plan whether or not it has net profits, the Employer
         intends the Plan to be a profit sharing plan including a qualified cash
         or deferred arrangement for all purposes of the Code.  The Employer
         shall not authorize contributions at such times or in such amounts that
         the Plan in operation discriminates in favor of Highly Compensated
         Employees.  Notwithstanding the foregoing, the Employer Non-Elective
         Contribution for any Plan Year shall not exceed the maximum amount
         allowable as a deduction to the Employer under Code Section 404.  The
         Employer Non-Elective Contributions shall be allocated to the
         Participant Employer Non-Elective Contribution Accounts under the
         formula provided in Section 5.2.

     (c) Qualified Non-Elective Contributions.  For each Plan Year, the amount
         ------------------------------------                                 
         of the Qualified Non-Elective Contribution to the Trust Fund will equal
         the amount, if any, the Employer may from time to time determine and
         authorize.  The Employer shall not authorize contributions at such
         times or in such amounts that the Plan in operation discriminates in
         favor of Highly Compensated Employees.  Notwithstanding the foregoing,
         the Qualified Non-Elective Contribution for any Plan Year shall not
         exceed the maximum amount allowable as a deduction to the Employer
         under Code Section 404.  The Qualified Non-Elective Contributions shall
         be allocated to the Participant Employer Non-Elective Contribution
         Accounts under the formula provided in Section 5.2.

3.2. Deadline for Employer Contributions
     -----------------------------------

     (a) The Employer shall pay to the Trustee the Employer Elective
         Contribution for the Plan Year no later than thirty (30) days, or
         within the time prescribed by applicable Treasury regulations, after
         the Plan Year for which they are deemed paid.  Notwithstanding the
         foregoing, Employer Elective Contributions accumulated through payroll
         deductions shall be paid to the Trustee with reasonable promptness and
         not later than fifteen (15) business days after the end of the month in
         which payroll deductions were made.

     (b) The Employer shall pay to the Trustee the Employer Contributions (other
         than Elective Contributions) at any time and from time to time; except
         that the total Employer Contribution for any Plan Year shall be paid in
         full not later than the time prescribed by Code Section 404(a)(6) to
         enable the Employer to obtain a deduction on its federal income tax
         return for the Employer's taxable year.  The total Employer
         Contribution for any Plan Year shall be deemed made on the Accounting
         Date immediately following the date the contribution was made, except
         for contributions made after the end of the Plan Year, but within the
         time prescribed by Code Section 404(a)(6), which shall be deemed made
         on the last day of the Plan Year.

3.3. Deposit of Employer Contributions
     ---------------------------------

     All Employer Contributions shall be added immediately to and become a part
     of the Trust Fund.

3.4. Crediting of Employer Contributions
     -----------------------------------

     All Employer Elective Contributions shall be credited to the Salary
     Deferral Account of each Participant as of each Accounting Date.  All
     Employer Non-Elective Contributions shall be credited as of each
     Anniversary Date as provided in Article V.

3.5. Withdrawal of Employer Contributions Before Separation From Service.
     --------------------------------------------------------------------

     If the Employer shall permit under a uniform and nondiscriminatory written
     policy, a Participant shall have the right, subject to the following
     limitations and subject to the spousal consent requirements of Code
     Sections 411(a)(11) and 417, if applicable, to request withdrawal of all,
     any portion, or a fixed percentage of the following fully vested and
     Nonforfeitable Participant Accounts: (1) Participant Voluntary After-Tax
     Contribution Account and (2) Rollover Account.  Prior to attainment of age
     59 1/2, the Participant shall be limited to one (1) withdrawal from his
     Participant After-Tax Contribution Account and Rollover Account during a
     12-month period.  Upon attainment of age 59 1/2, a Participant shall have
     the right to request withdrawal of all, any portion, or a fixed percentage
     of all amounts credited to his Individual Accounts.  There is no
     restriction on the number of withdrawals permitted to a Participant after
     attainment of age 59 1/2.

                                      15
<PAGE>
 
     All determinations of the amount credited to a Participant's Individual
     Accounts shall be made as of the most recent Valuation Date.  The written
     policy of the Employer shall set forth the criteria for eligibility for
     withdrawal and the Account sources and funding order.  The Committee shall
     establish procedures to verify that a Participant satisfies one or more of
     the eligibility criteria.  If the Committee determines that the Participant
     is eligible to withdraw benefits from the Plan, then the Committee shall
     inform the Trustee in writing and shall instruct the Trustee on the amount
     to distribute to the Participant.  A Participant shall make an election
     under this Section on a form prescribed by and delivered to the Committee
     at any time during the Plan Year for which the election will be effective.
     In the written election, the Participant shall specify the desired
     percentage or dollar amount to be distributed by the Trustee to the
     Participant.  Furthermore, the Participant's election shall relate solely
     to the percentage or dollar amount specified in the election form.  The
     Participant's right to elect to receive an amount, if any, for a particular
     Plan Year greater than the dollar amount or percentage specified in the
     election form shall terminate on the Anniversary Date.  The Trustee shall
     distribute to a Participant as elected under this Section within the ninety
     (90) day period, or as soon as administratively feasible, after the
     Participant files the written election with the Trustee.  The Trustee shall
     distribute the balance of the Participant's Individual Account not
     distributed pursuant to the election(s) according to the option selected
     under Article X and subject to the survivor annuity requirements of Article
     VI, if applicable, when the Participant separates from Service.  The amount
     of the distribution and the administrative expenses directly related to the
     distribution shall be debited from the applicable Account.

3.6. Participant Voluntary After Tax Contributions
     ---------------------------------------------

     This Plan does not permit nor accept Participant Voluntary After Tax
     Contributions.

3.7. Withdrawal of Employer Elective Contributions (Participant Elective
     -------------------------------------------------------------------
     Deferrals), Employer Qualified Non-Elective Contributions, and Employer
     -----------------------------------------------------------------------
     Qualified Matching Contributions
     --------------------------------

     (a) Restrictions on Distributions.  Amounts held in the Participant's
         -----------------------------                                    
         Salary Deferral Account may not be distributable prior to the earliest
         of:

         (i)   separation from Service, total and permanent disability or death;

         (ii)  attainment of age fifty-nine and one-half (59 1/2) years;

         (iii) Plan termination without establishment of another defined
               contribution plan, other than an employee stock ownership plan
               (as defined in Code Sections 4975(e) or 409) or a simplified
               employee pension plan as defined in Code Section 408(k);

         (iv)  disposition by a corporation to an unrelated corporation of
               substantially all of the assets (within the meaning of Code
               Section 409(d)(2)) used in a trade or business of the
               corporation, if the corporation continues to maintain this Plan
               after the disposition, but only with respect to Employees who
               continue employment with the corporation acquiring the assets;

         (v)   disposition by a corporation to an unrelated entity of the
               corporation's interest in a subsidiary (within the meaning of
               Code Section 409(d)(3)) if the corporation continues to maintain
               this Plan, but only with respect to Employees who continue
               employment with the subsidiary; or

         (vi)  proven financial hardship, subject to the following limitations.

         All distributions that may be made pursuant to one or more of the
         foregoing distributable events are subject to the spousal and
         participant consent requirements, if applicable, of Code Sections
         401(a)(11) and 417.  In addition, distributions that are triggered by
         one of the preceding events enumerated as (iii), (iv) or (v) must be
         made in a lump sum distribution.

     (b) Hardship Distributions.  Distribution of Elective Deferrals made
         ----------------------                                          
         pursuant to a Participant's Elective Deferrals, may be made to a
         Participant in the event of hardship.  For the purposes of this
         Section, a hardship distribution is defined as a distribution necessary
         to satisfy an immediate and heavy financial need of an Employee who
         lacks other available resources.  Hardship distributions are subject to
         the spousal consent requirements contained in Code Sections 401(a)(11)
         and 417.

         (i)   A distribution will be considered to satisfy an immediate and
               heavy need of an Employee if the distribution is for:

               (A)  expenses incurred for or necessary to obtain medical care,
                    described in Code Section 213(d), of the Employee, the
                    Employee's spouse, children, or dependents;

               (B)  costs directly related to the purchase, excluding mortgage
                    payments, of a principal residence for the Employee;
 
               (C)  payment of tuition and related educational fees for the next
                    twelve (12) months of post-secondary education for the
                    Employee, the Employee's spouse, children or dependents; or

                                      16
<PAGE>
 
               (D) payment necessary to prevent the eviction of the Employee
                   from, or a foreclosure on the mortgage of, the Employee's
                   principal residence.

         (ii)  A distribution will be considered necessary to satisfy an
               immediate and heavy financial need of an Employee who lacks other
               available resources only if:

               (A) the Employee has obtained all distributions, other than
                   hardship distributions, and all nontaxable loans under all
                   plans maintained by the Employer; and
 
               (B) the distribution is not in excess of the amount of an
                   immediate and heavy financial need, including amounts
                   necessary to pay any federal, state or local income taxes or
                   penalties reasonably anticipated to result from the
                   distribution.

         (iii) In addition to the conditions above:

               (A) each plan maintained by the Employer or a legally enforceable
                   arrangement provide that the Employee's Deferrals and
                   Employee Contributions will be suspended for twelve (12)
                   months after the receipt of the hardship distribution; and

               (B) each plan maintained by the Employer or a legally enforceable
                   arrangement prohibit the Employee from making Elective
                   Deferrals for the Employee's taxable year immediately
                   following the taxable year of the hardship distribution in
                   excess of the applicable limit under Code Section 402(g) for
                   such taxable year less the amount of such Employee's Elective
                   Deferrals for the taxable year of the hardship distribution.

               (C) any hardship withdrawal to a Participant made pursuant to
                   this Section shall be increased by an amount equal to the
                   lesser of:

                   (1)   all federal, state, and local income taxes and
                         associated penalties (including, if applicable, the
                         additional income tax described in Section 72(t) of the
                         Internal Revenue Code) imposed with respect to such
                         hardship withdrawal; or

                   (2)   the amount, if any, in such Participant's Elective
                         Deferrals Account in excess of such hardship
                         withdrawal.

3.8. Limitations on Employer Elective Contributions
     ----------------------------------------------

     (a) Actual Deferral Percentage Test.  The annual allocation derived from
         -------------------------------                                     
         Employer Elective Contributions to a Participant's Salary Deferral
         Account shall satisfy one of the following tests:

         (i)   The Average Actual Deferral Percentage for Participants who are
               Eligible Highly Compensated Employees for the Plan Year shall not
               exceed the Average Actual Deferral Percentage for Participants
               who are Eligible Nonhighly Compensated Employees for the Plan
               Year multiplied by 1.25; or

         (ii)  The Average Actual Deferral Percentage for Participants who are
               Eligible Highly Compensated Employees for the Plan Year shall not
               exceed the Average Actual Deferral Percentage for Participants
               who are Eligible Nonhighly Compensated Employees for the Plan
               Year multiplied by two (2); provided that the Average Actual
               Deferral Percentage for Participants who are Eligible Highly
               Compensated Employees for the Plan Year does not exceed the
               Average Actual Deferral Percentage for Participants who are
               Eligible Nonhighly Compensated Employees for the Plan Year by
               more than two (2) percentage points or the amount as may be
               prescribed in applicable Treasury regulations to prevent the
               multiple use of this alternative limitation for any Highly
               Compensated Employee.

     (b) Definitions.  For the purposes of this Section, the following
         -----------                                                  
         definitions shall apply:

         (i)   Actual Deferral Percentage means the ratio, expressed as a
               --------------------------                                
               percentage, of (A) the amount of Employer Elective Contributions
               actually paid to the Trust Fund on behalf of the Eligible
               Participant for the Plan Year to (B) the Eligible Participant's
               Compensation for the Plan Year, whether or not the Employee was a
               Participant for the entire Plan Year. Employer Contributions on
               behalf of any Participant shall include: (A) any Employer
               Elective Contributions made pursuant to the Eligible
               Participant's Elective Deferrals, (including Excess Elective
               Deferrals of Highly Compensated Employees), but excluding (1)
               Excess Elective Deferrals of Nonhighly Compensated Employees that
               arise solely from Elective Deferrals made under the plan or plans
               of this Employer, and (2) Employer Elective Contributions that
               are taken into account in the Contribution Percentage Test
               (provided the Actual Deferral Percentage Test is satisfied both
               with and without exclusion of these Employer Elective
               Contributions); and (B) at the election of the Employer,
               Qualified Non-Elective Contributions and Qualified Matching
               Contributions. An Employer Elective Contribution will be taken
               into account under the Actual Deferral Percentage Test for a Plan
               Year only if it relates to compensation that either would have
               been received by the Employee in the Plan Year, but for the

                                      17
<PAGE>
 
               deferral election, or is attributable to services performed by
               the Employee in the Plan Year and would have been received by the
               Employee within two and one-half (2 1/2) months after the close
               of the Plan Year, but for the deferral election. To compute
               Actual Deferral Percentages, an Employee who would be a
               Participant but for the failure to make Elective Deferrals shall
               be treated as a Participant on whose behalf no Employer Elective
               Contributions are made.

         (ii)  Average Actual Deferral Percentage means the average, expressed
               ----------------------------------       
               as a percentage, of the Actual Deferral Percentages of the
               Eligible Participants in a group.

         (iii) Eligible Participant means any Employee of the Employer who is
               --------------------                                          
               otherwise authorized under the Plan to have Employer Elective
               Contributions (or Qualified Non-Elective Contributions or
               Qualified Matching Contributions, or both, if treated as Employer
               Elective Contributions for the Actual Deferral Percentage Test)
               allocated to his or her Salary Deferral Account for the Plan 
               Year.

         (iv)  Qualified Non-Elective Contributions means Employer 
               ------------------------------------
               Contributions, other than Employer Elective Contributions and
               Matching Contributions, allocated to Participants' accounts which
               are 100% Nonforfeitable at all times and which are subject to the
               distribution restrictions described in Section 3.7(a). Non-
               Elective Contributions are not 100% Nonforfeitable at all times
               if the Employee has a 100% Nonforfeitable interest because of
               Years of Service taken into account under a vesting schedule. Any
               Non-Elective Contributions allocated to a Participant's Salary
               Deferral Account under the Plan automatically satisfy the
               definition of Qualified Non-Elective Contributions.

         (v)   Qualified Matching Contributions means Employer Matching
               --------------------------------                        
               Contributions allocated to Participants' accounts which are 100%
               Nonforfeitable at all times and which are subject to the
               distribution restrictions described in Section 3.7(a).  Matching
               Contributions are not 100% Nonforfeitable at all times if the
               Employee has a 100% Nonforfeitable interest because of Years of
               Service taken into account under a vesting schedule. Any Matching
               Contributions allocated to a Participant's Salary Deferral
               Account under the Plan automatically satisfy the definition of
               Qualified Matching Contributions.

     (c) Special Rules
         -------------

         (i)   For purposes of this Section, the Actual Deferral Percentage for
               any Participant who is a Highly Compensated Employee for the Plan
               Year who is eligible to have Employer Elective Contributions (or
               Qualified Non-Elective Contributions or Qualified Matching
               Contributions, or both, if treated as Employer Elective
               Contributions for the Actual Deferral Percentage Test) allocated
               to his or her account under two (2) or more plans or arrangements
               described in Code Section 401(k) that are maintained by the
               Employer or a Related Employer shall be determined as if all
               Employer Elective Contributions (and, if applicable, Qualified
               Non-Elective Contributions or Qualified Matching Contribution, or
               both) were made under a single arrangement. If a Highly
               Compensated Employee participates in two (2) or more cash or
               deferred arrangements that have different plan years, all cash or
               deferred arrangements ending with or within the same calendar
               year shall be treated as a single arrangement. Notwithstanding
               the foregoing, certain plans shall be treated as separate if
               mandatorily disaggregated under applicable Treasury regulations
               pursuant to Code Section 401(k).

         (ii)  If this Plan satisfies the requirements of Code Sections 401(k),
               401(a)(4) or 410(b) only if aggregated with one or more other
               plans, or if one or more other plans satisfy the requirements of
               the Code Sections only if aggregated with this Plan, then this
               Section shall be applied by determining the Actual Deferral
               Percentage of Employees as if all such plans were a single plan.
               For Plan Years beginning after December 31, 1989, plans may be
               aggregated to satisfy Code Section 401(k) only if they have the
               same Plan Year.

         (iii) To determine the Actual Deferral Percentage Test, Employer
               Elective Contributions, Qualified Non-Elective Contributions, and
               Qualified Matching Contributions must be made before the last day
               of the twelve (12) month period immediately following the Plan
               Year to which contributions relate.

         (iv)  The Employer shall maintain records sufficient to demonstrate
               satisfaction of the Actual Deferral Percentage Test and the
               amount of Qualified Non-Elective Contributions or Qualified
               Matching Contributions, or both, used in the test.

         (v)   The determination and treatment of the Actual Deferral Percentage
               amounts of any Participant shall satisfy other requirements
               prescribed by applicable Treasury regulations.

         (vi)  Other than an organization that is a Related Employer to the Plan
               Sponsor, for purposes of this Section, Participants who are
               leased employees of a recipient organization under an employee
               leasing agreement with the Plan Sponsor shall be treated as
               Participants in a separate plan maintained by the recipient
               organization, and all contributions on behalf of such
               Participants shall be treated as contributed to such separate
               plan for purposes of apply the requirements of this Section.

                                      18
<PAGE>
 
     (d) Fail-Safe Provisions
         --------------------

         If the initial allocations of the Employer Elective Contributions do
         not satisfy one of the tests set forth in paragraph (a) of this
         Section, the Administrator shall adjust the accounts of the
         Participants pursuant to one (1) or more of the following options:

         (i)   Distribution of Excess Contributions.  If the Committee 
               ------------------------------------
               determines that the initial allocations of the Employer Elective
               Contributions do not satisfy one of the Actual Deferral
               Percentage Tests set forth in paragraph (a) of this Section, the
               Administrator must distribute the Excess Contributions, as
               adjusted for allocable income, during the next Plan Year.
               However, the Employer will incur an excise tax equal to 10% of
               the amount of Excess Contributions for a Plan Year not
               distributed to the appropriate Highly Compensated Employees
               during the first 2 1/2 months of the next Plan Year. The Excess
               Contributions are the amount of Employer Elective Contributions
               made at the election of the Highly Compensated Employees which
               causes the Plan to fail to satisfy the Actual Deferral Percentage
               Test. The Administrator shall make distributions to each Highly
               Compensated Employee of his or her respective share of the Excess
               Contributions pursuant to the following steps:

               (A)  The Administrator shall calculate total Excess Contributions
                    for the Highly Compensated Employees.

               (B)  The Administrator shall calculate the total dollar amount by
                    which the Excess Contributions for the Highly Compensated
                    Employees must be reduced in order to satisfy the Average
                    Deferral Percentage Test.

               (C)  The Administrator shall calculate the total dollar amount of
                    the Excess Contributions for each Highly Compensated 
                    Employee.

               (D)  The Administrator shall reduce the Excess Contributions of
                    the Highly Compensated Employee(s) with the highest dollar
                    amount of Excess Contributions by refunding such
                    contributions to such Highly Compensated Employee(s) in the
                    amount required to cause the dollar amount of such Highly
                    Compensated Employee(s)' Employer Elective Contributions to
                    equal the dollar amount of the Employer Elective
                    Contributions of the Highly Compensated Employee(s) with the
                    next highest dollar amount of Employer Elective
                    Contributions.

               (E)  If the total dollar amount distributed pursuant to (D) above
                    is less than the total dollar amount of Excess
                    Contributions, Step (D) shall be applied to the Highly
                    Compensated Employee(s) with the next highest dollar amount
                    of Excess Contributions until the total amount of
                    distributed Excess Contributions equals the total dollar
                    amount calculated in Step (B).

               (F)  When calculating the amount of a distribution under Step
                    (D), if a lessor reduction, when added to any amounts
                    already distributed under this Section, would equal the
                    total amount of distributions necessary to permit the Plan
                    to satisfy the requirements of Section 3.8(a), the lesser
                    amount shall be distributed from the Plan.

               Allocable Income.  To determine the amount of the corrective
               ----------------                                            
               distribution required under this Section, the Administrator must
               calculate the allocable income for the Plan Year in which the
               Excess Contributions arose and for the "gap period" measured from
               the beginning of the next Plan Year to the date of the
               distribution.  The income allocable to Excess Contributions is
               equal to the sum of the allocable gain or loss for the Plan Year
               and the allocable gain or loss for the gap period.

               (A)  Method of Allocating Income.  The Administrator may use any
                    ---------------------------                                
                    reasonable method for computing the income allocable to
                    Excess Contributions, provided that the method does not
                    violate Code Section 401(a)(4), is used consistently for all
                    Participants and for all corrective distributions under the
                    Plan for the Plan Year, and is used by the Plan for
                    allocating income to Participants' Accounts.

               (B)  Alternative Method of Allocating Income.  A Plan may 
                    ---------------------------------------   
                    allocate income to Excess Contributions by multiplying the
                    income for the Plan Year and the gap period allocable to
                    Elective Contributions and amounts treated as Elective
                    Contributions by a fraction. The numerator of the fraction
                    is the Excess Contributions for the Employee for the Plan
                    Year. The denominator of the fraction is equal to the sum
                    of:

                    (I)   The total account balance of the Employee attributable
                          to Elective Contributions and amounts treated as
                          Elective Contributions as of the beginning of the Plan
                          Year; plus

                    (II)  The Employee's Elective Contributions, and amounts
                          treated as Elective Contributions for the Plan Year
                          and for the gap period.

               (C)  Safe Harbor Method of Allocating Gap Period Income.  Under
                    --------------------------------------------------        
                    the safe harbor method, income or Excess Contributions for
                    the gap period will equal ten percent (10%) of the income
                    allocable to Excess Contributions for the Plan Year
                    (calculated under the method described in paragraph (B) of
                    this Section), multiplied by the number of calendar months
                    that have elapsed since the end of the Plan Year.  For

                                      19
<PAGE>
 
                   purposes of calculating the number of calendar months that
                   have elapsed under the safe harbor method, a corrective
                   distribution that is made on or before the fifteenth day of
                   the month is treated as made on the last day of the preceding
                   month.  A distribution made after the fifteenth day of the
                   month is treated as made on the first day of the next month.

         (ii)  Recharacterization of Excess Contributions.  If the Plan permits
               ------------------------------------------                      
               Participant Voluntary After Tax Contributions in Section 3.6, a
               Participant may treat his or her Excess Contributions as an
               amount distributed to the Participant and then contributed by the
               Participant to the Plan. Recharacterized amounts will remain
               nonforfeitable and subject to the same distribution requirements
               as Elective Deferrals. Amounts may not be recharacterized by a
               Highly Compensated Employee to the extent that such amount in
               combination with other Employee Contributions made by that
               Employee would exceed any stated limit under the Plan on Employee
               Contributions. Recharacterization must occur no later than two
               and one-half (2 1/2) months after the last day of the Plan Year
               in which such Excess Contributions arose, and is deemed to occur
               no earlier than the date the last Highly Compensated Employee is
               informed in writing of the amount recharacterized and the
               consequences thereof. Recharacterized amounts will be taxable to
               the Participant for the Participant's tax year in which the
               Participant would have received them in cash. The amount of
               Excess Contributions to be recharacterized with respect to an
               Employee for a Plan Year shall be reduced by any Excess Deferrals
               previously distributed to the Employee for the Employee's taxable
               year ending with or within the Plan Year.

         (iii) Recharacterization of Matching Contributions.  A portion of the
               --------------------------------------------
               Employer's Matching Contribution shall be deemed an Employer
               Elective Contribution for purposes of paragraph (a) of this
               Section and for vesting and withdrawal purposes. The portion
               shall be equal to an amount necessary to satisfy one of the tests
               set forth in paragraph (a) of this Section, taking into account
               the Administrator's action under any option herein and shall be
               reallocated to the Salary Deferral Account. Reallocation of the
               Employer's Matching Contribution shall be made on behalf of
               Participants who are Nonhighly Compensated Employees.

         (iv)  Qualified Non-Elective and Qualified Matching Contributions.  The
               -----------------------------------------------------------      
               Employer shall make Qualified Non-Elective Contributions or
               Qualified Matching Contributions on behalf of Participants who
               are Nonhighly Compensated Employees in an amount sufficient to
               satisfy one of the tests set forth in paragraph (a) of this
               Section, taking into account the Administrator's action under any
               option herein. The contribution shall be treated as an Employer
               Elective Contribution and shall be allocated to the Salary
               Deferral Account of each Participant who is a Nonhighly
               Compensated Employee in the same proportion that each Nonhighly
               Compensated Employee's Elective Deferrals for the year bears to
               the total Elective Deferrals of all Participants who are
               Nonhighly Compensated Employees. The Qualified Non-Elective and
               Qualified Matching Contributions may be treated as Elective
               Contributions provided that each of the following requirements,
               to the extent applicable, is satisfied:

               (A)  The amount of Non-Elective Contributions, including those 
                    Qualified Non-Elective Contributions treated as Elective
                    Contributions for purposes of the Actual Deferral Percentage
                    Test, satisfies the requirements of Code Section 401(a)(4).

               (B)  The amount of Non-Elective Contributions, excluding those
                    Qualified Non-Elective Contributions treated as Elective
                    Contributions for purposes of the Actual Deferral Percentage
                    Test and those Qualified Non-Elective Contributions treated
                    as Matching Contributions under Treasury Regulations Section
                    1.401(m)-1(b)(5) for purposes of the Average Contribution
                    Percentage Test, satisfies the requirements of Code Section
                    401(a)(4).

               (C)  The Matching Contributions, including those Qualified
                    Matching Contributions treated as Elective Contributions for
                    purposes of the Actual Deferral Percentage Test, satisfy the
                    requirements of Code Section 401(a)(4).

               (D)  The Matching Contributions, excluding those Qualified
                    Matching Contributions treated as Elective Contributions for
                    purposes of the Actual Deferral Percentage Test, satisfy the
                    requirements of Code Section 401(a)(4).

               (E)  The Qualified Non-Elective Contributions and Qualified
                    Matching Contributions satisfy the requirements of Treasury
                    Regulations Section 1.401(k)-1(b)(4)(i) for the Plan Year as
                    if the contributions were Elective Contributions.

               (F)  The plan that includes the cash or deferred arrangement and
                    the plan or plans to which the Qualified Non-Elective
                    Contributions and Qualified Matching Contributions are made
                    could be aggregated for purposes of Code Section 410(b).
 
3.9. Limitations on Employee Contributions and Matching Employer Contributions
     -------------------------------------------------------------------------

                                      20
<PAGE>
 
     (a) Average Contribution Percentage Test.  The annual allocation derived
         ------------------------------------                                
         from Employee Contributions, Employer Matching Contributions, and
         Qualified Matching Contributions to a Participant's Individual Account
         shall satisfy one of the following tests:

         (i)   The Average Contribution Percentage for Participants who are
               Eligible Highly Compensated Employees for the Plan Year shall not
               exceed the Average Contribution Percentage for Participants who
               are Eligible Nonhighly Compensated Employees for the Plan Year
               multiplied by 1.25; or

         (ii)  The Average Contribution Percentage for Participants who are
               Eligible Highly Compensated Employees for the Plan Year shall not
               exceed the Average Contribution Percentage for Participants who
               are Eligible Nonhighly Compensated Employees for the Plan Year
               multiplied by two (2); provided that the Average Contribution
               Percentage for Participants who are Eligible Highly Compensated
               Employees for the Plan Year does not exceed the Average
               Contribution Percentage for Participants who are Eligible
               Nonhighly Compensated Employees for the Plan Year by more than
               two (2) percentage points or the amount prescribed in applicable
               Treasury regulations to prevent the multiple use of this
               alternative limitation for any Highly Compensated Employee.

     (b) Definitions
         -----------

         (i)   Aggregate Limit means the greater of (A) or (B), described as
               ---------------                                              
               follows:

               (A)  The sum of:

                    (I)   1.25 multiplied by the greater of the Actual Deferral
                          Percentage or the Average Contribution Percentage for
                          Participants who are Eligible Nonhighly Compensated
                          Employees, and

                    (II)  Two (2) percentage points plus the lesser of Actual
                          Deferral Percentage or the Average Contribution
                          Percentage of Participants who are Eligible Nonhighly
                          Compensated Employees.  (In no event shall this amount
                          exceed twice the lesser of the Actual Deferral
                          Percentage or Average Contribution Percentage of
                          Participants who are Eligible Nonhighly Compensated
                          Employees).

               (B)  The sum of:

                    (I)   1.25 multiplied by the lesser of the Actual Deferral
                          Percentage or the Average Contribution Percentage of
                          Participants who are Eligible Nonhighly Compensated
                          Employees, and

                    (II)  Two (2) percentage points plus the greater of Actual
                          Deferral Percentage or the Average Contribution
                          Percentage of Participants who are Eligible Nonhighly
                          Compensated Employees.  (In no event shall this amount
                          exceed twice the greater of the Actual Deferral
                          Percentage or Average Contribution Percentage of
                          Participants who are Eligible Nonhighly Compensated
                          Employees).

         (ii)  Average Contribution Percentage means the average, expressed as a
               -------------------------------                                  
               percentage, of the Contribution Percentages of the Eligible
               Participants in a group.

         (iii) Contribution Percentage means the ratio, expressed as a
               -----------------------                                
               percentage, of the sum of the Employee Contributions and Matching
               Contributions under the Plan on behalf of the Eligible
               Participant for the Plan Year to the Eligible Participant's
               Compensation for the Plan Year.

         (iv)  Contribution Percentage Amounts means the sum of the Employee
               -------------------------------                              
               Contributions, Matching Contributions and Qualified Matching
               Contributions, to the extent not taken into account for purposes
               of the Actual Deferral Percentage Test, made under the Plan on
               behalf of the Participant for the Plan Year.  Contribution
               Percentage Amounts shall include Forfeitures of Excess Aggregate
               Contributions or Matching Contributions allocated to the
               Participant's Account which shall be taken into account in the
               year in which the Forfeiture is allocated. Notwithstanding the
               foregoing, Contribution Percentage Amounts shall not include
               Matching Contributions that are forfeited either to correct
               Excess Aggregate Contributions or because the contributions to
               which they relate are Excess Deferrals, Excess Contributions, or
               Excess Aggregate Contributions. The Employer may include
               Qualified Non-Elective Contributions in the Contribution
               Percentage Amounts. The Employer also may elect to use Employer
               Elective Contributions in the Contribution Percentage Amount if
               the Actual Deferral Percentage Test is met before the Employer
               Elective Contributions are used in the Average Contribution
               Percentage Test and continues to be met following the exclusion
               of those Employer Elective Contributions that are used to meet
               the Average Contribution Percentage Test.

         (v)   Eligible Participant means any Employee who is eligible to make
               -------------------- 
               an Employee Contribution, or an Elective Deferral, if the
               Employer takes the contributions into account in calculating the
               Contribution Percentage, or to receive a Matching Contribution,
               including Forfeitures, or a Qualified Matching Contribution. If
               an Employee Contribution is

                                      21
<PAGE>
 
                required as a condition of participation in the Plan, any
                Employee who would be a Participant in the Plan if the Employee
                made a required contribution shall be treated as an Eligible
                Participant on behalf of whom no Employee Contributions are
                made.

         (vi)   Employee Contribution means any contribution made to the Plan by
                ---------------------                                           
                or on behalf of a Participant that is included in the
                Participant's gross income in the year in which made and that is
                maintained under a separate account to which earnings and losses
                are allocated. Employer Elective Contributions are not Employee
                Contributions.

         (vii)  Employer Matching Contribution means an Employer Contribution
                ------------------------------                               
                made to this or any other defined contribution plan on behalf of
                a Participant on account of an Employee Contribution made by the
                Participant, or on account of a Participant's election to defer
                a portion of his or her Annual Compensation under a plan
                maintained by the Employer.

         (viii) Qualified Non-Elective Contributions means Employer
                ------------------------------------               
                Contributions, other than Employer Elective Contributions and
                Employer Matching Contributions, allocated to Participants'
                accounts which are 100% Nonforfeitable at all times and which
                are subject to the distribution restrictions described in
                Section 3.7(a). Employer Non-Elective Contributions are not 100%
                Nonforfeitable at all times if the Employee has a 100%
                Nonforfeitable interest because of Years of Service taken into
                account under a vesting schedule. Any Employer Non-Elective
                Contributions allocated to a Participant's Salary Deferral
                Account under the Plan automatically satisfy the definition of
                Qualified Non-Elective Contributions.

         (ix)   Qualified Matching Contributions means Employer Matching
                --------------------------------                        
                Contributions allocated to Participants' accounts which are 100%
                Nonforfeitable at all times and which are subject to the
                distribution restrictions described in Section 3.7(a). Employer
                Matching Contributions are not 100% Nonforfeitable at all times
                if the Employee has a 100% Nonforfeitable interest because of
                Years of Service taken into account under a vesting schedule.
                Any Employer Matching Contributions allocated to a Participant's
                Salary Deferral Account under the Plan automatically satisfy the
                definition of Qualified Matching Contributions.

     (c) Special Rules
         -------------

         (i)    Multiple Use.  If one or more Highly Compensated Employees
                ------------                                              
                participate in both a cash or deferred arrangement subject to
                Code Section 401(k) and a plan maintained by the Employer
                subject to Code Section 401(m) and the sum of the Actual
                Deferral Percentage and Average Contribution Percentage of those
                Highly Compensated Employees subject to either or both tests
                exceeds the Aggregate Limit, then the Average Contribution
                Percentage of those Highly Compensated Employees who also
                participate in a cash or deferred arrangement will be reduced,
                beginning with the Highly Compensated Employee whose Average
                Contribution Percentage is the highest, so that the limit is not
                exceeded. The amount by which each Highly Compensated Employee's
                Contribution Percentage Amount is reduced shall be treated as an
                Excess Aggregate Contribution. The Actual Deferral Percentage
                and Average Contribution Percentage of the Highly Compensated
                Employees are determined after

                (A)  use of Qualified Non-Elective Contributions and Qualified
                     Matching Contributions to meet the Actual Deferral
                     Percentage Test;

                (B)  use of Qualified Non-Elective Contributions and Elective
                     Contributions to meet the Actual Deferral Percentage Test;

                (C)  any corrective distribution or forfeiture of Excess
                     Deferrals, Excess Contributions or Excess Aggregate
                     Contributions; and

                (D)  after any recharacterization of Excess Contributions
                     required without regard to multiple use of the alternative
                     limitation.

                Multiple use occurs if the Actual Deferral Percentage and
                Average Contribution Percentage of the Highly Compensated
                Employees exceeds 1.25 multiplied by the Actual Deferral
                Percentage and Average Contribution Percentage of the Nonhighly
                Compensated Employees.

         (ii)   For purposes of this Section, the Contribution Percentage for
                any Participant who is an Eligible Highly Compensated Employee
                for the Plan Year who is eligible to have Contribution
                Percentage Amounts allocated under two (2) or more plans
                described in Code Section 401(a) or arrangements described in
                Code Section 401(k) that are maintained by the Employer or a
                Related Employer shall be determined as if the total of the
                Contribution Percentage Amounts were made under each plan. If a
                Highly Compensated Employee participates in two (2) or more cash
                or deferred arrangements that have different plan years, all
                cash or deferred arrangements ending with or within the same
                calendar year shall be treated as a single arrangement.
                Notwithstanding the foregoing, certain plans shall be treated as
                separate if mandatorily disaggregated under regulations pursuant
                to Code Section 401(m).

                                      22
<PAGE>
 
         (iii) If this Plan satisfies the requirements of Code Sections 401(m),
               401(a)(4) or 410(b) only if aggregated with one (1) or more other
               plans, or if one (1) or more other plans satisfy the requirements
               of the Code Sections only if aggregated with this Plan, then this
               Section shall be applied by determining the Contribution
               Percentages of Eligible Participants as if all such plans were a
               single plan.

         (iv)  The Employer shall maintain records sufficient to demonstrate
               satisfaction of the Average Contribution Percentage Test.

         (v)   The determination and treatment of the Contribution Percentage of
               any Participant shall satisfy other requirements prescribed by
               applicable Treasury regulations.

         (vi)  Other than an organization that is a Related Employer to the Plan
               Sponsor, for purposes of this Section, Participants who are
               leased employees of a recipient organization under an employee
               leasing agreement with the Plan Sponsor shall be treated as
               Participants in a separate plan maintained by the recipient
               organization, and all contributions on behalf of such
               Participants shall be treated as contributed to such separate
               plan for purposes of apply the requirements of this Section.

     (d) Fail Safe Provisions.  If the initial allocations of the Employer
         --------------------                                             
         Matching Contributions and Employee Contributions do not satisfy one of
         the tests set forth in paragraph (a) of this Section, the Administrator
         shall adjust the accounts of the Participants pursuant to one (1) or
         more of the following options:

         (i)   Distribution of Excess Aggregate Contributions.  The 
               ----------------------------------------------   
               Administrator will determine Excess Aggregate Contributions after
               determining Excess Deferrals under Section 3.1(a)(vi) and Excess
               Employer Elective Contributions under Section 3.8(d)(i). If the
               Administrator determines that the Plan fails to satisfy the
               Average Contribution Percentage Test for a Plan Year, it must
               distribute the Excess Aggregate Contributions, as adjusted for
               allocable income, during the next Plan Year. However, the
               Employer will incur an excise tax equal to 10% of the amount of
               Excess Aggregate Contributions for a Plan Year not distributed to
               the appropriate Highly Compensated Employees during the first 2
               1/2 months of the next Plan Year. The Excess Aggregate
               Contributions are the amount of aggregate contributions allocated
               on behalf of the Highly Compensated Employees which causes the
               Plan to fail to satisfy the Average Contribution Percentage Test.
               The Administrator shall make distributions to each Highly
               Compensated Employee of his or her respective share of the Excess
               Aggregate Contributions in accordance with the following steps:

               (A)  The Administrator shall calculate total Excess Aggregate
                    Contributions for the Highly Compensated Employees.

               (B)  The Administrator shall calculate the total dollar amount by
                    which the Excess Aggregate Contributions for the Highly
                    Compensated Employees must be reduced in order to satisfy
                    the Average Contribution Percentage Test.

               (C)  The Administrator shall calculate the total dollar amount of
                    the Excess Aggregate Contributions for each Highly
                    Compensated Employee.

               (D)  The Administrator shall reduce the Excess Aggregate
                    Contributions of the Highly Compensated Employee(s) with the
                    highest dollar amount of Excess Aggregate Contributions by
                    refunding such contributions to such Highly Compensated
                    Employee(s) in the amount required to cause the dollar
                    amount of such Highly Compensated Employee(s)' Employee
                    Contributions, Employer Matching Contributions and Qualified
                    Matching Contributions, on a pro rata basis, to equal the
                    sum of the Employee Contributions, Employer Matching
                    Contributions and Qualified Matching Contributions of the
                    Highly Compensated Employee(s) with the next highest dollar
                    amount of such contributions.

               (E)  If the total dollar amount distributed pursuant to (D) above
                    is less than the total dollar amount of Excess Aggregate
                    Contributions, Step (D) shall be applied to the Highly
                    Compensated Employee(s) with the next highest dollar amount
                    of Excess Aggregate Contributions until the total amount of
                    distributed Excess Aggregate Contributions equals the total
                    dollar amount calculated in Step (B).

               (F)  When calculating the amount of a distribution under Step
                    (D), if a lessor reduction, when added to any amounts
                    already distributed under this Section, would equal the
                    total amount of distributions necessary to permit the Plan
                    to satisfy the requirements of Section 3.9(a), the lesser
                    amount shall be distributed from the Plan.

               Allocable Income.  To determine the amount of the corrective
               ----------------                                            
               distribution required under this Section, the Administrator must
               calculate the allocable income for the Plan Year in which the
               Excess Contributions arose and for the "gap period" measured from
               the beginning of the next Plan Year to the date of the
               distribution.  The income 

                                      23
<PAGE>
 
               allocable to Excess Contributions is equal to the sum of the
               allocable gain or loss for the Plan Year and the allocable gain
               or loss for the gap period.

               Allocable Income.  To determine the amount of the corrective
               ----------------                                            
               distribution required under this Section, the Administrator must
               calculate the allocable income for the Plan Year in which the
               Excess Aggregate Contributions arose and for the "gap period"
               measured from the beginning of the next Plan Year to the date of
               the distribution. The income allocable to Excess Aggregate
               Contributions is equal to the sum of the allocable gain or loss
               for the Plan Year and the allocable gain or loss for the gap
               period.

               (A)  Method of Allocating Income.  The Administrator may use any
                    ---------------------------                                
                    reasonable method for computing the income allocable to
                    Excess Aggregate Contributions, provided that the method
                    does not violate Code Section 401(a)(4), is used
                    consistently for all Participants and for all corrective
                    distributions under the Plan for the Plan Year, and is used
                    by the Plan for allocating income to Participants' Accounts.

               (B)  Alternative Method of Allocating Income.  A Plan may 
                    ---------------------------------------
                    allocate income to Excess Aggregate Contributions by
                    multiplying the income for the Plan Year and the gap period
                    allocable to Employee Contributions, Employer Matching
                    Contributions, and amounts treated as Employer Matching
                    Contributions by a fraction. The numerator of the fraction
                    is the Excess Aggregate Contributions for the Employee for
                    the Plan Year. The denominator of the fraction is equal to
                    the sum of:

                    (I)   The total account balance of the Employee attributable
                          to Employee Contributions and Employer Matching
                          Contributions, and amounts treated as Employer
                          Matching Contributions as of the beginning of the Plan
                          Year; plus

                    (II)  The Employee Contributions and Employer Matching
                          Contributions, and amounts treated as Employer
                          Matching Contributions for the Plan Year and for the
                          gap period.

               (C)  Safe Harbor Method of Allocating Gap Period Income.  Under
                    --------------------------------------------------        
                    the safe harbor method, income or Excess Aggregate
                    Contributions for the gap period will equal ten percent
                    (10%) of the income allocable to Excess Aggregate
                    Contributions for the Plan Year (calculated under the method
                    described in paragraph (B) of this Section), multiplied by
                    the number of calendar months that have elapsed since the
                    end of the Plan Year. For purposes of calculating the number
                    of calendar months that have elapsed under the safe harbor
                    method, a corrective distribution that is made on or before
                    the fifteenth day of the month is treated as made on the
                    last day of the preceding month. A distribution made after
                    the fifteenth day of the month is treated as made on the
                    first day of the next month.

         (ii)  Characterization of Excess Aggregate Contributions.  The
               --------------------------------------------------      
               Administrator will treat a Highly Compensated Employee's
               allocable share of Excess Aggregate Contributions in the
               following priority: (A) first as attributable to his or her
               Employee Contributions which are voluntary contributions, if any;
               (B) then as Employer Matching Contributions allocable with
               respect to Excess Contributions determined under the Actual
               Deferral Percentage Test described in Section 3.8(a); (C) then on
               a pro rata basis to Employer Matching Contributions and to the
               Employer Elective Contributions relating to those Employer
               Matching Contributions which the Administrator has included in
               the Average Contribution Percentage Test; (D) then on a pro rata
               basis to Employee Contributions which are mandatory
               contributions, if any, and to the Employer Matching Contributions
               allocated on the basis of those mandatory contributions; and (E)
               last to Qualified Non-Elective Contributions used in the Average
               Contribution Percentage Test. To the extent the Highly
               Compensated Employee's Excess Aggregate Contributions are
               attributable to Employer Matching Contributions, and he or she is
               not 100% vested in the Account Balance attributable to Employer
               Matching Contributions, the Administrator will distribute only
               the vested portion and forfeit the nonvested portion. The vested
               portion of the Highly Compensated Employee's Excess Aggregate
               Contributions attributable to Employer Matching Contributions is
               the total amount of the Excess Aggregate Contributions (as
               adjusted for allocable income) multiplied by his or her vested
               percentage (determined as of the last day of the Plan Year for
               which the Employer made the Employer Matching Contribution).

         (iii) Qualified Non-Elective and Elective Contributions.  The Employer
               -------------------------------------------------               
               shall make Qualified Non-Elective Contributions or Elective
               Contributions that, in combination with Employee Contributions
               and Employer Matching Contributions, satisfy one of the tests set
               forth in paragraph (a) of this Section, taking into account the
               Administrator's action under any option herein. The contribution
               shall be treated as an Employer Elective Contribution and shall
               be allocated to the Salary Deferral Account of each Participant
               who is a Nonhighly Compensated Employee. The Qualified Non-
               Elective and Elective Contributions may be treated as Employer
               Matching Contributions provided that each of the following
               requirements, to the extent applicable, is satisfied:

               (A)  The amount of Non-Elective Contributions, including those
                    Qualified Non-Elective Contributions treated as Employer
                    Matching Contributions for purposes of the Average
                    Contribution Percentage Test, satisfies the requirements of
                    Code Section 401(a)(4).

                                       24
<PAGE>
 
              (B)  The amount of Non-Elective Contributions, excluding those
                   Qualified Non-Elective Contributions treated as Employer
                   Matching Contributions for purposes of the Average
                   Contribution Percentage Test and those Qualified Non-Elective
                   Contributions treated as Elective Contributions under
                   Treasury Regulations Section 1.401(k)-1(b)(5) for purposes of
                   the Actual Deferral Percentage Test, satisfies the
                   requirements of Code Section 401(a)(4).

              (C)  The Elective Contributions, including those treated as
                   Qualified Matching Contributions for purposes of the Average
                   Contribution Percentage Test, satisfy the requirements of
                   Code Section 401(k)(3) for the Plan Year.

              (D)  The Qualified Non-Elective Contributions are allocated to the
                   Employee under the Plan as of a date within the Plan Year,
                   and the Elective Contributions satisfy the requirements of
                   Treasury Regulations Section 1.401(k)-1(b)(4)(i) for the Plan
                   Year.

              (E)  The plan that takes Qualified Non-Elective Contributions and
                   Elective Contributions into account in determining whether
                   Employee Contributions and Employer Matching Contributions
                   satisfy the requirements of Code Section 401(m)(2)(A), and
                   the plans to which the Qualified Non-Elective Contributions
                   and Elective Contributions are made, are or could be
                   aggregated for purposes of Code Section 410(b).

         (iv) Forfeiture of Non-Vested Employer Matching Contributions.
              --------------------------------------------------------  
              Employer Matching Contributions that are not vested may be
              forfeited to correct Excess Aggregate Contributions.
              Notwithstanding the foregoing sentence, Excess Aggregate
              Contributions for a Plan Year may not remain unallocated or be
              allocated to a suspense account for allocation to one or more
              Employees in any future year.  Forfeitures of Employer Matching
              Contributions to correct Excess Aggregate Contributions shall be:

              (A)  Applied to reduce Employer Contributions for the Plan Year in
                   which the excess arose, but allocated according to the
                   following paragraph (B), to the extent the excess exceeds
                   Employer Contributions or the Employer has already
                   contributed for the Plan Year.

              (B)  Allocated, after all other Forfeitures under the Plan, to the
                   Employer Matching Contribution Account of each Nonhighly
                   Compensated Participant who made Elective Deferrals or
                   Employee Contributions in the ratio which each such
                   Participant's Compensation for the Plan Year bears to the
                   total Compensation of all such Participants for the Plan
                   Year.


                                 * * * * * * *

                                      25
<PAGE>
 
     ARTICLE IV
     ----------
 

                       Adjustment of Individual Accounts
                       ---------------------------------


4.1. Adjustment Rules
     ----------------

     As of the end of each Accounting Period on the Accounting Date, the Trustee
     will determine the fair market value of each Investment Fund being
     administered by the Trustee.  To determine the gain or loss of the Accounts
     in each Investment Fund, the Trustee will first calculate the change in
     value of each Investment Fund between the current Accounting Period and the
     last preceding Accounting Period.  The net gain or loss in each Investment
     Fund will be allocated to the accounts of those Participants who are
     participating in each Investment Fund on the Accounting Date.  The Trustee
     will then charge to the prior account balances all previously uncharged
     payments or distributions made from the Accounts since the last preceding
     Accounting Period.  Finally, the Trustee will allocate and credit Employer
     Contributions that are to be allocated and credited as of that date in
     accordance with Article V.


                                 * * * * * * *

                                      26
<PAGE>
 
     ARTICLE V
     ---------
 

          Allocation of Employer Contributions to Individual Accounts
         ----------------------------------------------------------- 
                              

5.1. Allocation Rules
     ----------------

     As of each Anniversary Date, but after the adjustment of Individual
     Accounts as provided in Article IV, the Employer Non-Elective
     Contributions, including any Forfeitures allocated as of the Anniversary
     Date, for the Plan Year which ends on the Anniversary Date shall be
     allocated and credited to the Employer Non-Elective Contribution Account of
     each eligible Participant in the Plan on the Anniversary Date.  A
     Participant who completes one thousand (1,000) Hours of Service and is
     employed by the Employer on the Anniversary Date for the Plan Year will be
     allocated Employer Non-Elective Contributions and Participant Forfeitures
     under the allocation formula of Section 5.2.  A Participant who has failed
     to aggregate at least one thousand (1,000) Hours of Service during the Plan
     Year for which the contribution was made shall not share in an allocation,
     unless the failure to aggregate one thousand (1,000) Hours of Service
     occurred because of the Participant's death, disability or retirement.  No
     Participant, other than one who died, became disabled or retired during the
     Plan Year, shall be entitled to have any Employer Non-Elective
     Contributions allocated to his or her Individual Account, unless the
     Participant shall be employed by the Employer on the Anniversary Date for
     the Plan Year.

     The Committee will suspend the accrual requirements for Includable
     Employees who are Participants, beginning first with the Includable
     Employee(s) employed with the Employer on the last day of the Plan Year,
     then the Includable Employee(s) who have the latest Separation from Service
     during the Plan Year, and continuing to suspend in descending order the
     accrual requirements for each Includable Employee who incurred an earlier
     Separation from Service, from the latest to the earliest Separation from
     Service date, until the Plan satisfies both the Code Section 401(a)(26)
     Participation Test and the Code Section 410(b) Coverage Test for the Plan
     Year.  If two or more Includable Employees have a Separation from Service
     on the same day, the Committee will suspend the accrual requirements for
     all such Includable Employees, irrespective of whether the Plan can satisfy
     the Code Section 401(a)(26) Participation Test and the Code Section 410(b)
     Coverage Test by accruing benefits for fewer than all such Includable
     Employees.  If the Plan suspends the accrual requirements for an Includable
     Employee, that Employee will share in the allocation of Employer
     contributions and Participant forfeitures, if any, without regard to the
     number of Hours of Service he has earned for the Plan Year and without
     regard to whether he is employed by the Employer on the last day of the
     Plan Year.  If the Employer's Plan includes Employer matching contributions
     subject to Code Section 401(m), this suspension of accrual requirements
     applies separately to the Code Section 401(m) portion of the Plan, and the
     Committee will treat an Employee as benefiting under that portion of the
     Plan if the Employee is an Eligible Employee for purposes of the Code
     Section 401(m) nondiscrimination test.  "Includable" Employees are all
     Employees other than:  (a) those Employees excluded from participating in
     the Plan for the entire Plan Year by reason of the collective bargaining
     unit exclusion or the nonresident alien exclusion or by reason of the
     participation requirements of Section 2.1 and (b) any Employee who incurs a
     Separation from Service during the Plan Year and fails to complete at least
     501 Hours of Service for the Plan Year.

5.2. Allocation Formula
     ------------------

     Subject to the minimum allocation for Top-Heavy Plans under Section 5.4 and
     any restoration allocation required under Section 9.7, the Committee shall
     allocate the Employer Non-Elective Contributions and Participant
     Forfeitures, if any, to each eligible Participant's Employer Non-Elective
     Contribution Account as follows:

     (a) The Committee shall make simultaneous allocations of Employer Non-
         Elective Contributions and Participant Forfeitures under this
         paragraph.  The simultaneous allocations must result in an equal
         allocation percentage (not exceeding the greater of 5.7% or the
         percentage equal to the portion of the rate of tax applicable under
         Code Section 3111(a) relating to the Employer's Old Age Insurance Tax,
         as defined in Code Section 401(l), in effect at the beginning of the
         Plan Year) of each Participant's Annual Compensation and of each
         Participant's Excess Compensation.  The allocation based on a
         Participant's Annual Compensation is in the same ratio that the
         Participant's Annual Compensation for the Plan Year bears to the total
         Annual Compensation of all Participants for the Plan Year.  The
         allocation based on a Participant's Excess Compensation is in the same
         ratio that the Participant's Excess Compensation for the Plan Year
         bears to the total Excess Compensation of all Participants for the Plan
         Year.

     (b) The Committee shall allocate any remaining portion of the Employer Non-
         Elective Contributions and Participant Forfeitures in the same ratio
         that each Participant's Annual Compensation for the Plan Year bears to
         the total Annual Compensation of all Participants eligible to share in
         the allocation for the Plan Year.

     (c) The Integration Level shall be the Taxable Wage Base.  Excess
         Compensation means Annual Compensation in excess of the Taxable Wage
         Base.  The Taxable Wage Base is the maximum amount of compensation
         which may be considered wages for the Plan Year under Code Section
         3121(a)(1).  For a Participant whose Entry Date is other than the first
         day of the Plan Year, the Integration Level of the Participant for the
         Plan Year in which the Participant enters the Plan shall be reduced by
         a fraction, the numerator of which is the number of days in the Plan
         Year remaining on and after the Participant's Entry Date and the
         denominator of which is the total number of days in the Plan Year.

     (d) For Section 5.2(a), the applicable percentage that is the maximum
         allocation percentage for allocations shall be determined under the
         following table:

                                       27
<PAGE>
 
                    Integration Level
         (As a Percentage of the Taxable Wage Base)  Applicable Percentage
         ------------------------------------------  ---------------------

         100%                                                 5.7%
         More than 80%, but less than 100%                    5.4%
         More than 20%, (but not less than $10,001) 
          and not more than 80%                               4.3%
         20% (or $10,000, if greater) or less                 5.7%

     (e) For purposes of this Section, Annual Compensation shall be determined
         in accordance with Section 1.8, as modified by Section 1.8(h).

     Subject to the minimum allocation for Top-Heavy Plans under Section 5.4 and
     any restoration allocation required under Section 9.7, the Committee will
     allocate a Participant Forfeiture from an Employer Non-Elective
     Contribution Account under the allocation formula in this Section, to
     reduce the Employer Non-Elective Contribution for the Plan Year in which
     the Forfeiture occurs.  The Committee will continue to hold the
     undistributed, nonvested portion of a terminated Participant's Account
     Balance in the Individual Account solely for the benefit of the Participant
     until a Forfeiture occurs at the time specified in Section 9.4.

5.3. Limitations on Allocations
     --------------------------

     (a) Defined Contribution Plan Limits.  The amount of Annual Additions which
         --------------------------------                                       
         the Committee may allocate under this Plan on a Participant's behalf
         for a Limitation Year may not exceed the Maximum Permissible Amount.
         If the amount the Employer otherwise would contribute to the
         Participant's Account would cause the Annual Additions for the
         Limitation Year to exceed the Maximum Permissible Amount, the Employer
         will reduce the amount of its contribution so the Annual Additions for
         the Limitation Year will equal the Maximum Permissible Amount.  If an
         allocation of Employer Contributions pursuant to Section 5.2 would
         result in an Excess Amount (other than an Excess Amount resulting from
         the circumstances described in Section 5.3(c)) to the Participant's
         Account, the Committee will reallocate the Excess Amount to the
         remaining Participants who are eligible for an allocation of Employer
         Contributions for the Plan Year in which the Limitation Year ends.  The
         Committee will make this reallocation on the basis of the allocation
         method under the Plan as if the Participant whose Individual Account
         otherwise would receive the Excess Amount is not eligible for an
         allocation of Employer Contributions.

     (b) Estimation.  Prior to the determination of the Participant's actual
         ----------                                                         
         Annual Compensation for a Limitation Year, the Committee may determine
         the Maximum Permissible Amount on the basis of the Participant's
         estimated Annual Compensation defined in Section 5.3(f) for the
         Limitation Year.  The Committee must make this determination on a
         reasonable and uniform basis for all Participants similarly situated.
         The Committee must reduce any Employer Contributions (including any
         allocation of Forfeitures) based on estimated Annual Compensation by
         any Excess Amounts carried over from prior years.  As soon as
         administratively feasible after the end of the Limitation Year, the
         Committee will determine the Maximum Permissible Amount for the
         Limitation Year based on the Participant's actual Annual Compensation
         for the Limitation Year.

     (c) Disposition of Excess Amount.  If, pursuant to Section 5.3(b) or
         ----------------------------                                    
         because of an allocation of Forfeitures, there is an Excess Amount
         attributable to a Participant for a Limitation Year, then the Committee
         will dispose of the Excess Amount as follows:

         (i)   The Committee shall return any nondeductible Participant
               Voluntary After Tax Contributions to the Participant to the
               extent that the return would reduce the Excess Amount.

         (ii)  If, after the application of clause (i) an Excess Amount still
               exists, and the Plan covers the Participant at the end of the
               Limitation Year, then the Committee will use the Excess Amounts
               to reduce future Employer Contributions (including any allocation
               of Forfeitures) under the Plan for the next Limitation Year and
               for each succeeding Limitation Year, as is necessary, for the
               Participant. The Participant may elect to limit Compensation for
               allocation purposes to the extent necessary to reduce the
               allocation for the Limitation Year to the Maximum Permissible
               Amount and eliminate the Excess Amount.

         (iii) If, after the application of clause (i) an Excess Amount still
               exits and the Plan does not cover the Participant at the end of
               the Limitation Year, then the Committee shall hold the Excess
               Amount in a suspense account and use the Excess Amount to reduce
               Employer Contributions on behalf of remaining Participants and
               shall allocate and reallocate to the Individual Accounts of
               remaining Participants in succeeding Limitation Years to the
               extent permissible under the foregoing limitations, prior to any
               further Annual Additions to the Plan. If the Plan should be
               terminated or contributions should be completely discontinued,
               the funds in the suspense account will be allocated to the extent
               not prohibited by Code Section 415. Any suspense account shall
               not be adjusted for investment gains or losses of the Trust Fund.

         (iv)  The Committee will not distribute any Excess Amount(s) to
               Participants or to Former Participants.

         (v)   Notwithstanding the foregoing sentence and the foregoing
               paragraphs (i), (ii), (iii), and (iv), the Committee may
               distribute Elective Deferrals (within the meaning of Code Section
               402(g)(3)) or return voluntary or mandatory

                                      28
<PAGE>
 
              Employee Contributions, to the extent the distribution or return
              would reduce the excess amounts in the Participant's account.

     (d) Multiple Defined Contribution Plan Limits.  If the Employer maintains
         -----------------------------------------                            
         any other qualified defined contribution plan, the amount of the Annual
         Addition which may be allocated to a Participant's Individual Account
         in this Plan shall not exceed the Maximum Permissible Amount, reduced
         by the amount of Annual Additions to such Participant's accounts for
         the same Limitation Year in the other plan(s).  The Excess Amount
         attributed to this Plan equals the product of:

         (i)  the total Excess Amount allocated as of such date (including any
              amount the Committee would have allocated but for the limitations
              of Code Section 415), multiplied by

         (ii) the ratio of

              (A)  the amount allocated to the Participant as of such date under
                   this Plan, divided by

              (B)  the total amount allocated as of such date under all
                   qualified defined contribution plans (determined without
                   regard to the limitations of Code Section 415).

     (e) Defined Benefit Plan Limits.  The Employer does not maintain and never
         ---------------------------                                           
         has maintained a defined benefit plan covering any Participant in this
         Plan.  Accordingly, no special defined benefit plan limitation applies
         under this Plan.

     (f) Definitions.  For purposes of the limitations of Code Section 415 set
         -----------                                                          
         forth in this Section, the following definitions shall apply:

         (i)  Annual Additions means the sum of the following amounts allocated
              ----------------                                                 
              on behalf of a Participant for a Limitation Year:

              (A)  all Employer Contributions;

              (B)  all Forfeitures;

              (C)  all Employee Contributions;

              (D)  excess contributions described in Code Section 401(k) and
                   excess aggregate contributions described in Code Section
                   401(m), irrespective of whether the Plan distributes or
                   forfeits such Excess Amounts, and excess deferrals described
                   in Code Section 402(g), unless the excess deferrals are
                   distributed no later than the first April 15 following the
                   close of the Participant's taxable year;

              (E)  Excess Amounts reapplied to reduce Employer Contributions
                   under this Section 5.3;

              (F)  amounts allocated after March 31, 1984 to an individual
                   medical account, as defined in Code Section 415(l)(2),
                   included as part of a pension or annuity plan maintained by
                   the Employer;

              (G)  contributions paid or accrued after December 31, 1985, in
                   taxable years ending after that date, which are attributable
                   to post-retirement medical benefits allocated to the separate
                   account of a Key Employee as defined in Code Section
                   419A(d)(3), under a welfare benefit fund, as described in
                   Code Section 419(e), maintained by the Employer; and

              (H)  allocations under a simplified employee pension plan.


         (ii) Annual Compensation means the total amount of salary, wages,
              -------------------                                         
              commissions, bonuses and overtime, paid or otherwise includable in
              the gross income of a Participant during the Limitation Year, but
              excluding:

              (A)  Employer contributions to any deferred compensation plan (to
                   the extent the contributions are not included in the
                   Participant's gross income for the taxable year in which
                   contributed) or simplified employee pension under Code
                   Section 408(k) (to the extent the contributions are
                   excludable from the Participant's gross income) except that
                   for Plan Years beginning after December 31, 1997, Elective
                   Contributions under Code Section 402(a)(8) relating to a
                   401(k) arrangement shall not be excluded from the definition
                   of Annual Compensation.

              (B)  distributions from any plan of deferred compensation,
                   regardless of whether such amounts are includable in the
                   gross income of the Employees when distributed;

              (C)  amounts realized from the exercise of any nonqualified stock
                   option, or when restricted stock becomes freely transferrable
                   or is no longer subject to a substantial risk of forfeiture;

                                      29
<PAGE>
 
                (D)  amounts realized from the sale, exchange, or other
                     disposition of stock acquired under a qualified stock
                     option described in Part II, Subchapter D, Chapter 1 of the
                     Code;

                (E)  premiums paid by the Employer for group term life insurance
                     (to the extent the premiums are not includable in the
                     Participant's gross income); contributions by the Employer
                     to an annuity under Code Section 403(b) (to the extent not
                     includable in the Participant's gross income); and any
                     other amounts received under any Employer sponsored fringe
                     benefit plan (to the extent not includable in the
                     Participant's gross income);

                (F)  any contribution for medical benefits, within the meaning
                     of Code Section 419A(f)(2), after separation from Service
                     which is otherwise treated as an Annual Addition; and

                (G)  any amount otherwise treated as an Annual Addition under 
                     Code Section 415(l)(1).

         (iii)  Average Annual Compensation means the average compensation
                ---------------------------                               
                during a Participant's highest three (3) consecutive Years of
                Service, which period is the three (3) consecutive calendar
                years (or the actual number of consecutive years of employment
                for those Employees who are employed for less than three (3)
                consecutive years with the Employer) during which the
                Participant had the greatest aggregate compensation from the
                Employer.

         (iv)   Employer means the Employer that adopts this Plan.  All Related
                --------                                                       
                Employers shall be considered a single Employer for purposes of
                applying the limitations of this Section.

         (v)    Excess Amount means the excess of the Participant's Annual
                -------------                                             
                Additions for the Limitation Year over the Maximum Permissible
                Amount, less administrative charges allocable to such Excess
                Amount.

         (vi)   Limitation Year means the Limitation Year specified in the Plan
                ---------------                                                
                or, if none is specified, the calendar year. 

         (vii)  Maximum Permissible Amount means the lesser of:
                --------------------------                     

                (A)  the Defined Contribution Dollar Limitation, or

                (B)  twenty-five percent (25%) of the Participant's
                     Compensation, within the meaning of Code Section 415(c)(3)
                     for a Limitation Year with respect to any Participant.

                Defined Contribution Dollar Limitation means $30,000 or, if
                greater, twenty-five percent (25%) of the Defined Benefit Dollar
                Limitation set forth in Code Section 415(b)(1)(A) as in effect
                for the Limitation Year.

         (viii) Projected Annual Benefit means the benefit of the Participant
                ------------------------                                     
                payable annually in the form of a straight life annuity (with no
                ancillary benefits) under the terms of a defined benefit plan to
                which employees do not contribute and under which no rollover
                contributions are made, assuming that the Participant continues
                employment until Normal Retirement Age (or current age, if
                later), compensation continues at the same rate as in effect in
                the Limitation Year under consideration until the date of Normal
                Retirement Age, and all other relevant factors used to determine
                benefits under the defined benefit plan remain constant as of
                the current Limitation Year for all future Limitation Years.

5.4. Top-Heavy Minimum Allocation
     ----------------------------

     (a) Minimum Allocation.  Notwithstanding the foregoing, for any Plan Year
         ------------------                                                   
         in which the Plan is determined to be Top-Heavy, the amount of Employer
         Non-Elective Contributions and Forfeitures allocated to the Individual
         Account of each Non-Key Employee shall be equal to the lesser of three
         percent (3%) of each Non-Key Employee's Compensation or the highest
         contribution rate for the Plan Year made on behalf of any Key Employee.
         However, if a defined benefit plan maintained by the Employer which
         benefits a Key Employee depends on this Plan to satisfy the
         nondiscrimination rules of Code Section 401(a)(4) or the coverage rules
         of Code Section 410 (or another plan benefitting the Key Employee so
         depends on the defined benefit plan), the top heavy minimum allocation
         is three percent (3%) of the Non-Key Employee's Compensation regardless
         of the contribution rate for the Key Employee.

     (b) Compensation.  For purposes of this Section, Compensation means Annual
         ------------                                                          
         Compensation defined in Section 1.8 except (i) Compensation does not
         include Elective Contributions, and (ii) any exclusions from Annual
         Compensation (other than the exclusion of Elective Contributions and
         the exclusions described in clauses (i) through (v) of Section 1.8, if
         applicable) do not apply.  Notwithstanding the definition of Annual
         Compensation in Section 1.8, the period preceding a Participant's Entry
         Date shall be included in determining the minimum top-heavy allocation
         provided by this Section.

     (c) Contribution Rate.  For purposes of this Section, a Participant's
         -----------------                                                
         contribution rate is the sum of Employer Contributions (not including
         Employer Contributions to Social Security) and Forfeitures allocated to
         the Participant's Account for the Plan Year 

                                      30
<PAGE>
 
         divided by his or her Compensation for the entire Plan Year. To
         determine a Participant's contribution rate, the Committee must treat
         all qualified top-heavy defined contribution plans maintained by the
         Employer (or by any related Employers described in Section 1.43) as a
         single plan. For purposes of this Section, for Plan Years beginning
         after 1988, the following rules apply:

         (i)   Employer Elective Contributions on behalf of Key Employees are
               taken into account in determining the minimum required
               contribution under Code Section 416(c)(2). However, Employer
               Elective Contributions on behalf of Employees other than Key
               Employees may not be treated as Employer Contributions for the
               minimum contribution or benefit requirement of Code Section 416.

         (ii)  Employer Matching Contributions allocated to Key Employees are
               treated as Employer Contributions for determining the minimum
               contribution or benefit under Code Section 416.  However, if a
               plan utilizes Matching Contributions allocated to Employees other
               than Key Employees as Employee Contributions or Elective
               Contributions to satisfy the minimum contribution requirement,
               the Matching Contributions are not treated as Matching
               Contributions for applying the requirements of Code Section
               401(k) and 401(m).

         (iii) Qualified Non-Elective Contributions described in Code Section
               401(m)(4)(C) may be treated as Employer Contributions for the
               minimum contribution or benefit requirement of Code Section 416.

     (d) Participant Entitled to Top-Heavy Minimum Allocation.  The minimum
         ----------------------------------------------------              
         allocation under this Section shall be provided to each Non-Key
         Employee who is a Participant and is employed by the Employer on the
         last day of the Plan Year, whether or not the Participant has been
         credited with one thousand (1,000) Hours of Service for the Plan Year.
         The minimum allocation under this Section shall not be provided to any
         Participant who was not employed by the Employer on the last day of the
         Plan Year.  The provisions of this Section shall not apply to any
         Participant to the extent the Participant is covered under any other
         plan or plans of the Employer under which the minimum allocation or
         benefit requirements under Code Section 416(c)(1) or (c)(2) are met for
         the Participant.

     (e) Compliance.  The Plan will satisfy the top-heavy minimum allocation
         ----------                                                         
         under this Section.  The Committee first will allocate the Employer
         Contributions (and Participant Forfeitures, if any) for the Plan Year
         pursuant to the allocation formula under Section 5.2.  The Employer
         then will contribute an additional amount for the Individual Account of
         any Participant entitled under this Section to a top-heavy minimum
         allocation and whose contribution rate for the Plan Year, under this
         Plan and any other plan aggregated under this Section, is less than the
         top-heavy minimum allocation.  The additional amount is the amount
         necessary to increase the Participant's contribution rate to the top-
         heavy minimum allocation.  The Committee will allocate the additional
         contribution to the Account of the Participant on whose behalf the
         Employer makes the contribution.

                                      31
<PAGE>
 
5.5. Post-Allocation Adjustments to Accounts
     ---------------------------------------

     After the amount or amounts have been allocated and credited to each
     Participant's Employer Non-Elective Contribution Account, as provided in
     this Article, the then value of each Employer Non-Elective Contribution
     Account shall remain unchanged until the next Anniversary Date.
     Notwithstanding the foregoing, the Participant's Employer Contribution
     Accounts may be adjusted prior to the next Anniversary Date under:

     (a) other provisions in this Agreement authorizing the Committee to reduce
         the Participant's Employer Contribution Accounts by disbursements
         properly chargeable to them or increased by funds received and credited
         to them; or

     (b) a special valuation of the Participant's Employer Contribution Account
         required under Articles VII, VIII, and IX.

5.6. Employer Contribution Accounts Defined
     --------------------------------------

     For purposes of this Article, reference to the Employer Contribution
     Accounts of Participants shall include the Employer Contribution Accounts
     of those Participants who die, become disabled or retire during the Plan
     Year considered.

                                 * * * * * * *

                                      32
<PAGE>
 
     ARTICLE VI
     ----------

                                  Retirement
                                  ----------


6.1. Crediting, Adjustment of Accounts Upon Retirement
     -------------------------------------------------

     At Normal Retirement Age, a Participant shall be fully vested in the
     Participant's Individual Accounts and the Trustee shall hold the Individual
     Accounts for the Participant's benefit.  A Participant has an ongoing
     election to receive distribution of normal retirement benefits as stated
     hereunder.  Upon a Participant's request for distribution after attainment
     of Normal Retirement Age, the Committee shall credit and adjust the
     Individual Accounts of the Participant, as provided in Articles IV and V,
     as of the Valuation Date immediately preceding the date of distribution of
     the Participant's vested benefits.  A Participant shall be entitled to
     benefits under Section 6.3 after attaining Normal Retirement Age or upon
     retiring after attaining Normal Retirement Age.

6.2. Early Retirement
     ----------------

     This Plan does not provide for retirement by a Participant prior to the
     Normal Retirement Date.

6.3. Payment of Retirement Benefits
     ------------------------------

     As soon as administratively feasible after the Committee has credited and
     adjusted a Participant's Individual Accounts as provided in Section 6.1,
     the Trustee shall make payments to the Participant pursuant to Article X.
     Subject to the mandatory distribution requirements of Section 6.4, the
     survivor annuity requirements of Section 6.5, if applicable, and the
     immediate cashout provisions of Sections 9.3(b) and 9.3(c), payments shall
     begin as soon as administratively feasible after the Participant attains
     Normal Retirement Age, whether or not the Participant actually retires or
     elects to receive retirement benefit distributions after attaining Normal
     Retirement Age.  The Committee shall charge each payment to the
     Participant's Individual Account and payment shall continue until death
     (when Article VII shall control the disposition of the deceased
     Participant's Nonforfeitable Account Balance) or until the Nonforfeitable
     Account Balance is paid to the Participant in full, whichever event shall
     occur first.  Unless a Participant elects otherwise, payment of benefits
     shall commence as soon as administratively feasible after the end of the
     Plan Year in which the latest of the follow events occur:  (a) the date on
     which the Participant attains the earlier of age sixty-five (65) or Normal
     Retirement Age under the Plan; (b) the tenth (10th) anniversary of the year
     in which the Participant commenced participation in the Plan; or (c) the
     date on which the Participant terminates service with the Employer.
     Notwithstanding the foregoing, a Participant may not defer commencement of
     benefits or elect a form of installment payment which would result in the
     Participant receiving less than fifty-one percent (51%) of the total
     benefits to be paid during the Participant's life expectancy.

6.4. Mandatory Distribution of Retirement Benefits
     ---------------------------------------------

     The Committee may not direct the Trustee to distribute the Participant's
     Nonforfeitable Account Balance, nor may the Participant elect to make the
     Trustee distribute the Nonforfeitable Account Balance under a method of
     payment which, as of the Required Beginning Date, does not satisfy the
     minimum distribution requirements under Code Section 401(a)(9) and the
     applicable Treasury regulations.

     (a) Limits on Distribution Periods.  As of the first Distribution Calendar
         ------------------------------                                        
         Year, distributions, if not made in a lump sum, may only be made over
         one of the following periods or a combination of such periods:

         (i)   the life of the Participant;

         (ii)  the life of the Participant and a Designated Beneficiary, subject
               to the requirements of Code Section 401(a)(9) and the applicable
               Treasury regulations;

         (iii) a period certain not extending beyond the life expectancy of the
               Participant; or

         (iv)  a period certain not extending beyond the joint and last survivor
               expectancy of the Participant and a Designated Beneficiary.

         Under no circumstances may a Participant elect payment of benefits in
         the form of an annuity.  All distributions required under this Article
         shall be determined and made under Code Section 401(a)(9) and
         applicable Treasury regulations, including the minimum distribution
         incidental benefit requirements of Treasury Regulations Section
         1.401(a)(9)-2.  A mandatory distribution at the Participant's Required
         Beginning Date will be in lump sum unless the Participant, pursuant to
         this Article, makes a valid election to receive an alternative form of
         payment.

     (b) Minimum Distribution Amounts
         ----------------------------

         (i)   Non-Lump Sum Distribution.  If the Participant's entire interest
               -------------------------                                       
               will be distributed in other than a lump sum, then the minimum
               distribution for a calendar year equals the Participant's
               Nonforfeitable Account Balance as of the last Valuation Date
               preceding the beginning of the calendar year divided by the
               Participant's life expectancy or, if 

                                      33
<PAGE>
 
              applicable, the joint and last survivor expectancy of the
              Participant and his or her Designated Beneficiary, subject to the
              requirements of Code Section 401(a)(9) and the applicable Treasury
              regulations. The Committee will increase the Participant's
              Nonforfeitable Account Balance, as determined on the relevant
              Valuation Date, for Contributions or Forfeitures allocated after
              the Valuation Date and by December 31 of the Valuation Calendar
              Year, and will decrease the valuation by distributions made after
              the Valuation Date and by December 31 of the Valuation Calendar
              Year. For purposes of this valuation, the Committee will treat any
              portion of the minimum distribution for the first Distribution
              Calendar Year made after the close of that year as a distribution
              occurring in the first Distribution Calendar Year. Life expectancy
              and joint and last survivor expectancy must be computed by the use
              of the expected return multiples contained in Section 1.72-9 of
              the Income Tax Regulations. Unless otherwise elected by the
              Participant, or Spouse in the case of distributions described in
              this Section 6.4(b), by the time distributions are required to
              begin, life expectancies shall be recalculated annually. The
              election shall be irrevocable for the Participant, or spouse, and
              shall apply to all subsequent years. The life expectancy of a non-
              spouse Beneficiary may not be recalculated.

         (ii) Non-Spouse Beneficiary.  If the Participant's spouse is not the
              ----------------------                                         
              Designated Beneficiary, a method of payment to the Participant may
              not provide more than incidental benefits to the Beneficiary.  The
              Plan must satisfy the minimum distribution incidental benefit
              ("MDIB") requirements in the applicable Treasury regulations under
              Code Section 401(a)(9) for distributions made on or after the
              Participant's Required Beginning Date and before the Participant's
              death.  To satisfy the MDIB requirement, the Committee will
              compute the minimum distribution required by this Section 6.4(b)
              by substituting the applicable MDIB divisor for the applicable
              life expectancy factor, if the MDIB divisor is a lesser number.
              Following the Participant's death, the Committee will compute the
              minimum distribution required by this Section 6.4(b) solely on the
              basis of the applicable life expectancy factor and will disregard
              the MDIB factor.  For Plan Years beginning prior to January 1,
              1989, the Plan satisfies the incidental benefits requirement if
              the distributions to the Participant satisfied the MDIB
              requirement or if the present value of the retirement benefits
              payable solely to the Participant is greater than fifty percent
              (50%) of the present value of the total benefits payable to the
              Participant and Beneficiaries.  The Committee must determine
              whether benefits to the Beneficiary are incidental on the date the
              Trustee is to commence payment of the retirement benefits to the
              Participant, or on the date the Trustee redetermines the payment
              period to the Participant.

     (c) Commencement of Benefits.  The Trustee must distribute or begin to
         ------------------------                                          
         distribute the entire interest of a Participant no later than the
         Participant's Required Beginning Date.  The minimum distribution for
         the first Distribution Calendar Year is due by the Participant's
         Required Beginning Date.  The minimum distribution for each subsequent
         Distribution Calendar Year, including the calendar year of the
         Participant's Required Beginning Date, is due by December 31 of that
         year.  A Participant's "Required Beginning Date" shall be as follows:

         (i)  For a Participant who is a Five Percent Owner, the Required
              Beginning Date shall commence on the first day of April following
              the later of:

              (a)  the calendar year in which the Participant attains age
                   seventy and one-half (70 1/2) years; or

              (b)  the earlier of the calendar year with or within which ends
                   the Plan Year in which the Participant becomes a Five Percent
                   Owner, or the calendar year in which the Participant retires.

         (ii) For a Participant who is not a Five Percent Owner, the Required
              Beginning Date is the first day of April of the calendar year
              immediately following the later of:

              (a)  the calendar year in which the Participant attains age
                   seventy and one-half (70 1/2); or

              (b)  the calendar year in which the Participant terminates
                   employment with the Employer.

         A Participant is treated as a "Five Percent Owner" for purposes of this
         Section if the Participant is a Five Percent Owner as defined in
         Section 1.47(g)(iii) and Code Section 416(i) (determined under Code
         Section 416 but without regard to whether the Plan is Top-Heavy) at any
         time during the Plan Year ending with or within the calendar year in
         which the owner attains age sixty-six and one-half (66 1/2) years or
         any subsequent Plan Year.  Once distributions have begun to a Five
         Percent Owner under this Section, they must continue to be distributed,
         even if the Participant ceases to be a Five Percent Owner in a
         subsequent year.

     (d) Definitions
         -----------

         (i)  Applicable Life Expectancy means the life expectancy (or joint and
              --------------------------                                        
              last survivor expectancy) calculated using the attained age of the
              Participant (or Designated Beneficiary) as of the Participant's
              (or Designated Beneficiary's) birthday in the applicable calendar
              year reduced by one for each calendar year which has elapsed since
              the date life expectancy was calculated first.  If life expectancy
              is being recalculated, the applicable life expectancy shall be the
              life expectancy as so recalculated.  The applicable calendar year
              shall be the first Distribution Calendar Year and, if life
              expectancy is being recalculated, the succeeding calendar year.

                                      34
<PAGE>
 
         (ii)  Designated Beneficiary means the individual who is designated as
               ----------------------                                          
               the Beneficiary under the Plan in accordance with Code Section
               401(a)(9) and the applicable Treasury regulations.

         (iii) Distribution Calendar Year means a calendar year for which a
               --------------------------                                  
               minimum distribution is required.  For distributions beginning
               before the Participant's death, the first Distribution Calendar
               Year is the calendar year immediately preceding the calendar year
               which contains the Participant's Required Beginning Date.

         (iv)  Participant's Nonforfeitable Account Balance means the account
               --------------------------------------------                  
               balance as of the last Valuation Date in the calendar year
               immediately preceding the Distribution Calendar Year (Valuation
               Calendar Year), increased by the amount of any Contributions or
               Forfeitures allocated to the account balance as of the dates in
               the Valuation Calendar Year after the Valuation Date and
               decreased by distributions made in the Valuation Calendar Year
               after the Valuation Date. If any portion of the minimum
               distribution for the first Distribution Calendar Year is made in
               the second Distribution Calendar Year on or before the Required
               Beginning Date, the amount of the minimum distribution made in
               the second Distribution Calendar Year shall be treated as if it
               had been made in the immediately preceding Distribution Calendar
               Year.

6.5. Joint and Survivor Annuity Requirements
     ---------------------------------------

     The joint and survivor annuity requirements do not apply to this Plan.  The
     Plan does not provide any annuity distributions to Participants nor to
     surviving spouses.  A transfer agreement described in Section 17.2 may not
     permit a plan which is subject to Code Section 417 to transfer assets to
     this Plan, unless the transfer is an elective transfer as described in
     Section 17.3.


                                 * * * * * * *

                                      35
<PAGE>
 
     ARTICLE VII
     -----------

                                     Death
                                     -----


7.1. Beneficiary Designation
     -----------------------

     (a) Each Participant and Former Participant may from time to time select
         one or more Beneficiaries to receive benefits under this Article on the
         death of the Participant or Former Participant.  The selection shall be
         made in writing on a form provided by the Committee and shall be filed
         with the Committee.  Subject to Section 7.1(b), the last selection
         filed with the Committee shall control.

         A married Participant's Beneficiary designation is not valid unless the
         Participant's spouse consents, in writing, to the Beneficiary
         designation.  The spouse's consent must acknowledge the effect of that
         consent and a notary public or the Administrator (or Plan
         representative) must witness that consent.  The spousal consent
         requirements of this paragraph do not apply if:

         (i)   the Participant and spouse are not married throughout the one
               year period ending on the date of the Participant's death;

         (ii)  the Participant's spouse is the Participant's sole primary
               beneficiary;

         (iii) the Administrator is not able to locate the Participants'
               spouse;

         (iv)  the Participant is legally separated or has been abandoned
               (within the meaning of State law) and the Participant has a court
               order to that effect; or

         (v)   other circumstances exist under which the Secretary of the
               Treasury will excuse the consent requirement.

         If the Participant's spouse is legally incompetent to give consent, the
         spouse's legal guardian (even if the guardian is the Participant) may
         give consent.  If a Participant fails to name a Beneficiary under this
         Section, Section 7.1(b) shall control.

     (b) Unless elected in accordance with Section 7.1(c), the Beneficiary of
         the death benefit shall be the Participant's spouse, who shall receive
         the benefit in the manner prescribed in this Article.  Notwithstanding
         the foregoing sentence, the Participant may designate a Beneficiary
         other than the spouse if:

         (i)   the Participant has no spouse; or

         (ii)  the spouse cannot be located.

     (c) In the case of a married Participant or Former Participant, the
         designation of a non-spouse as Beneficiary shall be valid only if:

         (i)   the spouse consents in writing to the designation;

         (ii)  the designation specifies the beneficiary and the method of
               payment of benefits and may not be changed without spousal
               consent (or the spouse's consent expressly permits designations
               by the Participant without any requirement of further spousal
               consent); and

         (iii) the spouse's consent acknowledges the effect of the election and
               the written consent is witnessed by a Plan representative or by a
               Notary Public.

     (d) If a Participant dies without a spouse or alternative Beneficiary
         surviving; if the alternative Beneficiary (other than the spouse) does
         not survive until final distribution of the Participant's balance; if a
         Participant who is not married dies without having designated a
         Beneficiary and/or alternative Beneficiary; or if a Participant who is
         not married dies after having made and revoked a designation but prior
         to having made a subsequent designation, then the amount remaining in
         the deceased Participant's Individual Account shall be payable in the
         following descending order to:

         (i)   the Participant's surviving children, including adopted persons
               and their descendants;

         (ii)  the Participant's other living heirs-at-law determined under the
               Texas laws concerning intestate succession;

         (iii) the Participant's estate, personal representatives, heirs or
               devisees; and

         (iv)  the estate, personal representatives, heirs or devisees of the
               deceased Participant's prior Beneficiary.

                                      36
<PAGE>
 
         The Committee shall determine the applicable person, class of persons,
         or legal entity to whom the benefit shall be paid beginning with (i),
         in the descending order of (i) to (iv).  Each class shall be determined
         to be not in existence and, therefore, inapplicable by the Committee
         before proceeding to the next class.  In determining if a
         classification is inapplicable, the Committee shall be required only to
         make reasonable inquiry into the existence of the person or persons.

         Remaining death benefits shall be payable under Section 7.4 regarding
         mandatory distributions.  Payment made pursuant to the power conferred
         on the Committee in this Section shall operate as a complete discharge
         of all obligations under the Plan concerning the share of a deceased
         Participant and shall not be subject to review by anyone but shall be
         final, binding and conclusive on all persons for all purposes.

7.2. Crediting, Adjusting of Accounts Upon Death
     -------------------------------------------

     Upon death, a Participant or Former Participant shall be fully vested in
     his or her Individual Accounts and the Trustee shall hold the Individual
     Accounts for the benefit of the Designated Beneficiary or Beneficiaries.
     The Committee shall credit and adjust the Individual Accounts of a deceased
     Participant or Former Participant, as provided in Articles IV and V, as of
     the Valuation Date immediately preceding the date of distribution of the
     Participant's vested benefits.  The Designated Beneficiary or Beneficiaries
     shall be entitled to benefits under Section 7.3 after the death of the
     Participant or Former Participant.  At its discretion, the Committee may
     conduct a special valuation to establish the value of a deceased
     Participant's Individual Accounts as of death, or any other date that is
     administratively feasible, in which case payment of death benefits can
     commence immediately thereafter.

7.3. Payment of Death Benefits
     -------------------------

     As soon as administratively feasible after the Committee has credited and
     adjusted the Individual Accounts of the deceased Participant or Former
     Participant as provided in Section 7.2, the Trustee shall make payments to
     the Designated Beneficiary or Beneficiaries pursuant to Article X.  Subject
     to the survivor annuity requirements of Section 6.5, if applicable, the
     mandatory distribution requirements of Section 7.4, and the immediate
     cashout provisions of Sections 9.3(b) and 9.3(c), the payments shall begin
     as soon as administratively feasible after the Participant dies.  The
     Committee shall charge each payment to the Participant's or Former
     Participant's Individual Account.  Payments shall continue until the death
     of the last survivor of the Beneficiaries or until the Individual Account
     is paid in full, whichever event shall occur first.

7.4. Mandatory Distribution of Death Benefits
     ----------------------------------------

     The Committee may not direct the Trustee to distribute the Participant's
     Nonforfeitable Account Balance, to the Beneficiary or Designated
     Beneficiary, under a method of payment which, as of the Required Beginning
     Date, does not satisfy the minimum distribution requirements under Code
     Section 401(a)(9) and the applicable Treasury regulations.

     (a) Limits on Distribution Periods
         ------------------------------

         (i)  If the Participant or Former Participant dies after distribution
              has commenced, the Trustee shall continue to distribute the
              remaining portion of the Participant's or Former Participant's
              Nonforfeitable Account Balance at least as rapidly as under the
              method of distribution used prior to the Participant's death.

         (ii) If the Participant or Former Participant dies before distribution
              commences, the Trustee shall complete distribution of the
              Participant's or Former Participant's Nonforfeitable Account
              Balance by December 31 of the calendar year containing the fifth
              (5th) anniversary of the Participant's or Former Participant's
              death, except to the extent that the Designated Beneficiary elects
              to receive distributions under paragraphs (A) or (B) below:

              (A)  If any portion of the Participant's or Former Participant's
                   Nonforfeitable Account Balance is payable to a Designated
                   Beneficiary, the Designated Beneficiary may elect
                   distributions over the life or over a period certain not
                   greater than the life expectancy of the Designated
                   Beneficiary commencing on or before December 31 of the
                   calendar year immediately following the calendar year in
                   which the Participant or Former Participant died;

              (B)  If the Designated Beneficiary is the Participant's Surviving
                   Spouse, the date distributions must begin under paragraph (A)
                   above shall not be earlier than the later of: (1) December 31
                   of the calendar year immediately following the calendar year
                   in which the Participant or Former Participant died; and (2)
                   December 31 of the calendar year in which the Participant or
                   Former Participant would have attained age seventy and one-
                   half (70 1/2) years.  If the Participant has not made an
                   election pursuant to this Section by the time of death, the
                   Designated Beneficiary must elect the method of distribution
                   no later than the earlier of: (1) December 31 of the calendar
                   year in which distributions must begin under this Section; or
                   (2) December 31 of the calendar year which contains the fifth
                   (5th) anniversary of the date of death of the Participant or
                   Former Participant.  If the Participant has no Designated
                   Beneficiary, or if the Designated Beneficiary does not elect
                   a method of distribution, distribution of the Nonforfeitable
                   Account Balance of the Participant or Former Participant must
                   be completed by December 31 of the calendar year containing
                   the fifth (5th) anniversary of death.

                                      37
<PAGE>
 
               (C)  If the Surviving Spouse is the Beneficiary of any portion of
                    a deceased Participant's or Former Participant's benefits
                    under the Plan, the Surviving Spouse shall be permitted to
                    direct that this distribution of benefits commence at a
                    reasonable time following the death of the Participant or
                    Former Participant under applicable Treasury regulations.

               (D)  If the Surviving Spouse dies after the Participant or Former
                    Participant, but before payments to the Spouse begin, the
                    preceding provisions of this Section, with the exception of
                    paragraph (B), shall be applied as if the Surviving Spouse
                    had been the Participant.

     (b) Minimum Distribution Amounts.  If the Trustee will distribute a
         ----------------------------                                   
         Participant's or Former Participant's Nonforfeitable Account Balance in
         accordance with the Designated Beneficiary's life expectancy, the
         minimum distribution for a calendar year equals the Participant's
         Nonforfeitable Account Balance as of the latest Valuation Date
         preceding the beginning of the calendar year divided by the Designated
         Beneficiary's life expectancy.

         For purposes of this Section, payments will be calculated by using the
         expected return multiples specified in Tables V and VI of Treasury
         Regulations Section 1.72-9.  Life expectancy of a Surviving Spouse
         shall be recalculated annually; however, in the case of any other
         Designated Beneficiary, life expectancy will be calculated when the
         first payment commences without further recalculation.  For purposes of
         this Section, any amount paid to a child of the Participant or Former
         Participant will be treated as if it had been paid to the Surviving
         Spouse, if the amount becomes payable to the Surviving Spouse when the
         child reaches the age of majority.

     (c) Commencement of Benefits
         ------------------------

         (i)   General Rule.  For the purposes of this Section, distribution 
               ------------
               of a Participant's or Former Participant's Nonforfeitable Account
               Balance is considered to begin on the Participant's or Former
               Participant's Required Beginning Date or, if Section
               7.4(a)(ii)(D) applies, the date distribution is required to begin
               to the Surviving Spouse pursuant to Section 7.4(a)(ii)(A). If
               distribution in the form of an annuity irrevocably commences
               before the Required Beginning Date, the date distribution is
               considered to begin is the date distribution actually commences.
               Except as otherwise provided, the Required Beginning Date of a
               Participant or Former Participant is the first day of April of
               the calendar year following the calendar year in which the
               Participant attains age seventy and one-half (70 1/2) years.

         (ii)  Transitional Rules.  The Required Beginning Date of a Participant
               ------------------                                               
               or Former Participant who attains age seventy and one-half (70
               1/2) years before January 1, 1988, shall be determined under
               paragraphs (A) or (B) below:

               (A)  Other Than Five Percent Owners.  The Required Beginning Date
                    ------------------------------                              
                    of a Participant or Former Participant who is not a Five
                    Percent Owner is the first day of April of the calendar year
                    following the calendar year in which the later of retirement
                    or the attainment of age seventy and one-half (70 1/2) years
                    occurs. The Required Beginning Date of a Participant who is
                    not a Five Percent Owner who attains age seventy and one-
                    half (70 1/2) years during 1988 and who has not retired as
                    of January 1, 1989, is April 1, 1990.

               (B)  Five Percent Owners.  The Required Beginning Date of a
                    -------------------                                   
                    Participant or Former Participant who is a Five Percent
                    Owner during any year beginning after December 31, 1979, is
                    the first day of April following the later of:

                    (1)   the calendar year in which the Participant attains age
                          seventy and one-half (70 1/2) years, or

                    (2)   the earlier of the calendar year with or within which
                          ends the Plan Year in which the Participant becomes a
                          Five Percent Owner, or the calendar year in which the
                          Participant retires.

         (iii) Five Percent Owner.  A Participant is treated as a Five Percent
               ------------------                                             
               Owner for purposes of this Section 7.4 if the Participant is a
               Five Percent Owner as defined in Section 1.47(g)(iii) and Code
               Section 416(i) (determined under Code Section 416 but without
               regard to whether the Plan is Top-Heavy) at  any time during the
               Plan Year ending with or within the calendar year in which the
               owner attains age sixty-six and one-half (66 1/2) years or any
               subsequent Plan Year.  If distributions have begun to a Five
               Percent Owner under this Section, they must continue to be
               distributed, even if the Participant ceases to be a Five Percent
               Owner in a subsequent year.

     (d) Definitions
         -----------

         (i)   Applicable Life Expectancy means the life expectancy calculated
               --------------------------                                     
               using the attained age of the Designated Beneficiary as of the
               Designated Beneficiary's birthday in the applicable calendar year
               reduced by one for each calendar year which has elapsed since the
               date life expectancy was calculated first. If life expectancy is
               being recalculated, the Applicable Life Expectancy shall be the
               life expectancy as recalculated. The applicable calendar year
               shall be the first Distribution Calendar Year and, if life
               expectancy is being recalculated, the succeeding calendar year.

                                      38
<PAGE>
 
         (ii)  Designated Beneficiary means the individual who is designated as
               ----------------------                                          
               the Beneficiary under the Plan under Code Section 401(a)(9) and
               the applicable Treasury regulations.

         (iii) Distribution Calendar Year means a calendar year for which a
               --------------------------                                  
               minimum distribution is required.  For distributions beginning
               after the Participant's death, the first Distribution Calendar
               Year is the calendar year in which distributions are required to
               begin pursuant to this Section.

         (iv)  Participant's Nonforfeitable Account Balance means the Account
               --------------------------------------------                  
               Balance as of the last Valuation Date in the calendar year
               immediately preceding the Distribution Calendar Year (Valuation
               Calendar Year), increased by the amount of any Contributions or
               Forfeitures allocated to the Account Balance as of the dates in
               the Valuation Calendar Year after the Valuation Date and
               decreased by distributions made in the Valuation Calendar Year
               after the Valuation Date. If any portion of the minimum
               distribution for the first Distribution Calendar Year is made in
               the second Distribution Calendar Year on or before the Required
               Beginning Date, the amount of the minimum distribution made in
               the second Distribution Calendar Year shall be treated as if it
               had been made in the immediately preceding Distribution Calendar
               Year.


                                 * * * * * * *

                                      39
<PAGE>
 
     ARTICLE VIII
     ------------
 
                                  Disability
                                  ----------


8.1. Crediting, Adjusting of Accounts Upon Disability
     ------------------------------------------------

     Upon termination of employment due to disability, a Participant shall be
     fully vested in his or her Individual Accounts and the Trustee shall hold
     the Individual Accounts for the Participant's benefit.  The Committee shall
     credit and adjust the Individual Accounts of a disabled Participant, as
     provided in Articles IV and V, as of the Valuation Date immediately
     preceding the date of distribution of the Participant's vested benefits.
     The disabled Participant shall be entitled to benefits under Section 8.2
     after the date of disability.  At its discretion, the Committee may conduct
     a special valuation to establish the value of a disabled Participant's
     Individual Accounts as of the date of disability, or any other date that is
     administratively feasible, in which case payment of disability benefits can
     commence immediately thereafter.

8.2. Payment of Disability Benefits
     ------------------------------

     As soon as administratively feasible after the Committee has credited and
     adjusted the Individual Accounts of the disabled Participant as provided in
     Section 8.1, the Trustee shall make payments to the disabled Participant
     pursuant to Article X.  Subject to the mandatory distribution requirements
     of Section 6.4, the survivor annuity requirements of Section 6.5, if
     applicable, and the immediate cashout provisions of Sections 9.3(b) and
     9.3(c), payments shall begin as soon as administratively feasible after the
     Participant terminates Service with the Employer.  The Committee shall
     charge each payment to the disabled Participant's Individual Account, and
     payments shall continue until death (when Article VII shall control the
     disposition of the deceased Participant's Nonforfeitable Account Balance)
     or until the Participant's Nonforfeitable Account Balance is paid to the
     disabled Participant in full, whichever event shall occur first.


                                 * * * * * * *

                                      40
<PAGE>
 
     ARTICLE IX
     ----------

                   Termination of Employment and Forfeiture
                   ----------------------------------------


9.1. Crediting and Adjusting of Accounts Upon Termination
     ----------------------------------------------------

     If a Participant's employment by the Employer shall terminate for any
     reason other than retirement, death or disability, the Participant shall
     become vested in his or her Individual Accounts as provided in Section 9.2
     and the Trustee shall hold the Participant's Nonforfeitable Account Balance
     in the Individual Accounts for the Participant's benefit.  The Committee
     shall credit and adjust the Individual Accounts of the terminated
     Participant, as provided in Articles IV and V, as of the Valuation Date
     immediately preceding the date of distribution of the Participant's vested
     benefits.  The terminated Participant shall be entitled to benefits under
     Sections 9.2 and 9.3 after the date of termination.  At its discretion, the
     Committee may conduct a special valuation to establish the value of the
     terminated Participant's Individual Accounts as of the date of termination,
     or any other date that is administratively feasible.

9.2. Vesting
     -------

     (a) A Participant to whom Section 9.1 applies shall be fully vested at all
         times in amounts credited to the Participant's After-Tax Contribution
         Account, Salary Deferral Account, Rollover Account and Prior Match
         Account.  In addition, the Participant also shall be entitled to
         receive a Nonforfeitable percentage of the balance credited to the
         Employer Non-Elective Account, determined under the following vesting
         schedule:


                                                   Nonforfeitable
                                                   --------------
                 Years of Service                    Percentage
                 ----------------                    ----------

              Less than 1 year                            0%
              At least 1 but less than 2 years            0%
              At least 2 but less than 3 years           40%
              At least 3 but less than 4 years           80%
              At least 4 years                          100%


9.3. Payment of Termination Benefits
     -------------------------------

     (a) The Committee shall combine the Nonforfeitable percentage of the
         Individual Accounts of a Participant determined under Section 9.2 with
         the Participant Contribution Account into one Individual Account, and
         the Trustee shall make payments to the Participant pursuant to Article
         X.  Subject to the third and fourth sentences of Section 6.3, the
         mandatory distribution requirements of Section 6.4 and the survivor
         annuity requirements of Section 6.5, if applicable, payments shall
         begin as soon as administratively feasible after the Participant
         terminates.  The Committee shall charge each payment to the
         Participant's Individual Account and payment shall continue until death
         (when Article VII shall control the disposition of the deceased
         Participant's Nonforfeitable Account Balance) or until the
         Participant's Nonforfeitable Account Balance is paid to the Participant
         in full, whichever event shall occur first.

     (b) Notwithstanding the foregoing paragraph, if a Participant separates
         from Service with the Employer and the Participant's Nonforfeitable
         Account Balance determined under Section 9.2 is $3,500 or less, the
         Committee may direct the Trustee to make immediate distribution to the
         Participant in the form of a lump sum distribution; provided, however,
         the Trustee shall not make a lump sum distribution after benefit
         distributions have commenced, without the written consent of the
         Participant and spouse.  For purposes of this paragraph, if the value
         of an Employee's vested Account Balance is zero (0), the Employee shall
         be deemed to have received a distribution of his or her vested Account
         Balance.  Notwithstanding any contrary provision, if the Nonforfeitable
         Account Balance of a Participant exceeds $3,500, then the Trustee shall
         make no distribution without the Participant's and the spouse's consent
         pursuant to Article X until the later of attainment of age sixty-two
         (62) years or attainment of Normal Retirement Age.  The foregoing
         sentence shall not apply after the death of the Participant.

     (c) If requested by a Participant and approved by the spouse in writing
         after the Participant has separated from Service with the Employer, the
         Committee shall direct the Trustee to distribute the Participant's
         Nonforfeitable Account Balance determined under Section 9.2 in the form
         of a lump sum distribution.

9.4. Forfeitures
     -----------

     A Participant to whom this Article applies shall forfeit that portion of
     the amount of the Individual Account to which the Participant is not
     entitled under Section 9.2 on the earlier of the date on which the
     Participant incurs five (5) consecutive One Year Breaks in Service or the
     date on which the Participant receives a Cashout Distribution (the
     Forfeiture Event).  A Cashout Distribution means a lump sum 

                                      41
<PAGE>
 
     distribution pursuant to Sections 9.3(b) and 9.3(c), that occurs no later
     than the last day of the second Plan Year following the Plan Year in which
     the Participant separates from Service. For purposes of this Section, a
     Participant who separates from Service without a Nonforfeitable percentage
     in the Participant's Employer Contribution Account shall be deemed to have
     received a distribution of the Nonforfeitable Account Balance on the date
     of separation from Service. The amount forfeited under this Section shall
     remain in the Trust Fund and shall be applied to restore the Individual
     Accounts of Former Participants pursuant to Sections 9.7 or 10.7, pay Plan
     fees and expenses, or reduce the Employer Non-Elective Contribution for the
     Plan Year during which the Forfeiture Event occurred. If any amounts remain
     unallocated, the additional amounts shall be allocated under Article V
     among the Individual Accounts of the remaining Participants as of the
     Anniversary Date coincident with or next following the Forfeiture Event.

9.5. Determination of Amount of Vested Undistributed Account, Forfeiture
     -------------------------------------------------------------------

     If the Trustee pays any amount outstanding to the credit of a Participant
     in the Participant's Individual Account while the Participant is not fully
     vested in the Individual Account, other than a Cashout Distribution defined
     in Section 9.4, and prior to the Anniversary Date on which the Participant
     shall incur five (5) consecutive One Year Breaks in Service, the value of
     his or her vested and undistributed Account shall be held in a separate
     account and shall be determined at any time prior to and including the
     Anniversary Date on which the Participant shall incur five (5) consecutive
     One Year Breaks in Service under the following formula:

                          X = P(AB + (RxD)) - (RxD).

     For this formula, the variables represent the following factors:

     X is the value of the vested portion of the Participant's Account;

     P is the Participant's Nonforfeitable percentage at the relevant time;

     AB is the Account Balance at the relevant time;

     D is the amount of the distribution; and

     R is the ratio of the Account Balance at the relevant time to the Account
     Balance after the distribution.

     The nonvested portion of the Participant's Individual Account shall be
     forfeited on the Anniversary Date on which the Participant incurs five (5)
     consecutive One Year Breaks in Service.

9.6. Crediting Years of Vesting Service
     ----------------------------------

     (a) If a Participant's Service with the Employer is terminated and the
         Former Participant receives a distribution from the Trustee and
         subsequently re-enters the Service of the Employer after incurring five
         (5) consecutive One Year Breaks in Service, the reemployed
         Participant's Years of Service after the break need not be taken into
         account to determine the Nonforfeitable percentage of the Participant's
         Account Balance derived from Employer Contributions which accrued
         before the Break in Service.  Notwithstanding the foregoing sentence,
         any reemployed Participant's Years of Service prior to the Break in
         Service must be taken into account to determine the Nonforfeitable
         percentage of the Participant's Account Balance derived from Employer
         Contributions which accrued after the Break in Service; provided that,
         for vesting purposes, the pre-break Service shall not be taken into
         account until the Participant completes a Year of Service measured on a
         twelve (12) month Computation Period commencing with the date of re-
         employment of the Participant.

     (b) If a Participant's Service with the Employer is terminated and the
         Participant is reemployed by the Employer prior to incurring five (5)
         consecutive One Year Breaks in Service, the reemployed Participant
         shall continue to vest at the level in the vesting schedule in Section
         9.2 that the Participant had attained prior to termination in both the
         pre-separation and post-separation Account Balance.

9.7. Restoration of Account Balance
     ------------------------------

     If a partially vested Participant is reemployed after termination of
     employment, but prior to incurring five (5) consecutive One Year Breaks in
     Service, the Participant shall have the right to repay the amount
     previously distributed pursuant to Sections 9.3(b) or 9.3(c).  If the
     Participant repays the entire amount previously distributed prior to the
     earlier of (a) incurring five (5) consecutive One Year Breaks in Service
     commencing after the withdrawal, or (b) five years after the first date on
     which the Participant is subsequently reemployed by the Employer, then the
     Committee shall restore to the Participant's Individual Account an amount
     equal to the amount forfeited under Section 9.4.  The Committee will treat
     a non-vested Participant who is deemed to have received a distribution on
     the date of separation from Service of the Participant's Nonforfeitable
     Account Balance as having repaid the deemed distribution on the first date
     of the Participant's reemployment with the Employer.  Restoration of the
     Participant's Account Balance includes restoration of all Code Section
     411(d)(6) protected benefits pertaining to that restored Account under
     applicable Treasury regulations.


                                 * * * * * * *

                                      42
<PAGE>
 
     ARTICLE X
     ---------

                           Optional Forms of Benefit
                           -------------------------


10.1. Optional Forms of Payment of Benefits
      -------------------------------------

      (a) Whenever a Participant, Former Participant or Beneficiary is entitled
          to receive a distribution of benefits, he or she may elect that
          benefits be paid in any one (1) or more of the following forms:

          (i)  A lump sum, payable in cash, in kind or partly in cash and partly
               in kind, at the fair market value when distributed;

          (ii) A transfer or rollover to:

               (A)  another plan qualified under Code Section 401(a);
 
               (B)  an individual retirement account defined in Code Section
                    408(a); or

               (C)  an individual retirement annuity defined in Code Section
                    408(b).

         (iii) Periodic installments over the periods of time and in the amounts
               the Committee shall determine. The total payments for each year
               shall not be less than an amount sufficient to cause the
               Participant's Employer Contribution Account to be paid in full
               not later than the end of a period measured by the joint life
               expectancy of the Participant and Spouse. Notwithstanding the
               foregoing, the annual amount payable under this paragraph shall
               be at least as large as would be provided under a life annuity
               with a period certain extending to age eighty-five (85) years.
               Under no circumstances shall benefits be paid in the form of a
               life annuity. If the Trustee pays the Individual Account of a
               Participant, Former Participant or Beneficiary under an
               installment method prescribed in this paragraph, the Trustee
               shall invest and reinvest the entire unpaid balance remaining in
               the Individual Account from time to time and shall credit and
               charge the Individual Account its proportionate share of gains
               and losses of the Trust Fund under Article V until the entire
               Individual Account is paid pursuant to this Article.

      (b) The Participant shall be limited in the optional forms of payment of
          benefits to those which will result in the payment of greater than
          fifty percent (50%) of the anticipated benefits over the Participant's
          life expectancy.  The purpose of this limitation is to ensure that
          death benefits will be incidental to retirement benefits under Revenue
          Ruling 72-241.

      (c) If the Participant so requests, the Committee may direct the Trustee
          to distribute any Contract, other than an annuity contract held for
          the Participant, to that Participant, provided that under no
          circumstances may the Trustee continue to pay premiums on the
          Contracts after the actual separation from Service of a Participant.

      (d) Notwithstanding the foregoing, a distribution made pursuant to this
          Section shall be subject to the immediate cashout provisions of
          Sections 9.3(b) and 9.3(c).

10.2. Direct Rollover Optional Form of Benefit
      ----------------------------------------

      (a) Direct Rollover.  Notwithstanding any provision of the Plan to the
          ---------------                                                   
          contrary that would otherwise limit a distributee's election under
          this Section, a distributee may elect, at the time and in the manner
          prescribed by the Plan Administrator, to have any portion of an
          eligible rollover distribution paid directly to an eligible retirement
          plan specified by the distributee in a direct rollover.

      (b) Definitions
          -----------

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

         (ii)  Eligible Retirement Plan.  An eligible retirement plan is an
               ------------------------                                    
               individual retirement account described in Section 408(a) of the
               Code, an individual retirement annuity described in Section
               408(b) of the Code, an annuity plan described in Section 403(a)
               of the Code, or a qualified trust described in Section 401(a) of
               the Code, that accepts the distributee's
                                       43
<PAGE>
 
               eligible rollover distribution. However, in the case of an
               eligible rollover distribution to the surviving spouse, an
               eligible retirement plan is an individual retirement account or
               individual retirement annuity.

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

         (iv)  Direct Rollover.  A direct rollover is a payment by the plan to
               ---------------                                                
               the eligible retirement plan specified by the distributee.

10.3. Election to Defer Receipt of Benefits
      -------------------------------------

      Notwithstanding the foregoing, a Participant who leaves the employment of
      the Employer before his or her Normal Retirement Date or Early Retirement
      Date may elect to leave his or her Nonforfeitable Account Balance under
      the management of the Trustee until Normal Retirement Date or Early
      Retirement Date. The Trustee shall invest and reinvest and shall credit
      and charge the Individual Account with its proportionate share of gains
      and losses of the Trust Fund pursuant to Article V until the
      Nonforfeitable Account Balance is paid out to the Former Participant under
      this Article. Any election made under this Section shall be irrevocable
      and shall be made no later than fourteen (14) days before the electing
      Participant becomes entitled to receive his or her Nonforfeitable Account
      Balance in the Plan. Notwithstanding the foregoing, a Participant who has
      elected to leave his or her Nonforfeitable Account Balance under the
      management of the Trustee may later elect to have the Account Balance
      transferred to any pension or profit sharing plan maintained by another
      Employer in which the Participant has, at the time of the later election,
      become a participant under the transferee plan.

10.4. Election of Form of Payment of Benefits
      ---------------------------------------

      (a) The Participant, Former Participant, or Beneficiary shall elect the
          form or forms of payment of benefits permitted in Section 10.1 which
          the Committee and Trustee shall implement. Not earlier than ninety
          (90) days, but not later than thirty (30) days, before the
          Participant's Annuity Starting Date, the Committee must provide a
          benefit notice to a Participant who is eligible to make an election
          under this Section. The Participant's Annuity Starting Date means the
          first day of the first period for which an amount is paid as an
          annuity or any other form. The benefit notice must explain the
          optional forms of benefit in the Plan, including the material features
          and relative values of those options, and the Participant's right to
          defer distribution until he or she attains the later of Normal
          Retirement Age or age 62.

      (b) If a distribution is one to which Code Sections 401(a)(11) and 417 do
          not apply, such distribution may commence less than thirty (30) days
          after the notice required under Section 1.411(a)-11(c) of the Income
          Tax Regulations is given, provided that:

          (i)  the Plan Administrator clearly informs the Participant that he or
               she has a right to a period of at least thirty (30) days after
               receiving the notice to consider the decision of whether or not
               to elect a distribution (and, if applicable, a particular
               distribution option), and

          (ii) the Participant, after receiving the notice, affirmatively elects
               a distribution.

      (c) If a Participant, Former Participant, or Beneficiary makes an election
          prescribed by this Section, the Committee will direct the Trustee to
          distribute the Participant's Nonforfeitable Account Balance pursuant
          to that election. Any election under this Section is subject to the
          mandatory distribution requirements of Sections 6.4 and 7.4 and the
          survivor annuity requirements of Section 6.5, if applicable. The
          Participant, Former Participant or Beneficiary must make an election
          under this Section by filing an election form with the Committee at
          any time before the Trustee otherwise would commence to pay a
          Participant's Account Balance under the applicable requirements of
          Articles VI, VII, VIII, IX, and X.

10.5. Minority or Disability
      ----------------------

      During the minority or disability of an individual entitled to receive
      benefits under this Plan, the Participant may elect to have the Committee
      instruct the Trustee to make payments due the individual directly to the
      individual or to the spouse or a relative or to any individual or
      institution having custody of the individual. Neither the Committee nor
      the Trustee shall be required to cause or to verify the application of any
      payments so made, and the receipt of the payee, including the endorsement
      of a check or checks, shall be conclusive to all interested parties.

10.6. Commencement of Payment of Benefits
      -----------------------------------

      Unless a Participant elects otherwise, payment of benefits shall commence
      not later than sixty (60) days after the end of the Plan Year in which the
      latest of the following events occur:

      (a) the day the Participant attains the earlier of age sixty-five (65)
          years or Normal Retirement Age;

      (b) the tenth (10th) anniversary of the year in which the Participant
          commenced participation in the Plan; or

                                      44
<PAGE>
 
      (c) the day the Participant terminates employment with the Employer.

10.7. Unclaimed Account Procedure
      ---------------------------

      The Plan does not require either the Trustee or the Committee to search
      for, or to ascertain the whereabouts of, any Participant or Beneficiary.
      At the time the Participant's or Beneficiary's benefit becomes
      distributable under Articles VI, VII, VIII or IX, the Committee, by
      certified or registered mail addressed to his or her last known address of
      record with the Committee or the Employer, must notify any Participant, or
      Beneficiary, that he or she is entitled to a distribution under this Plan.
      The notice must quote the provisions of this Section and otherwise must
      comply with the applicable notice requirements of Article VI. If the
      Participant, or Beneficiary, fails to claim his or her distributive share
      or make his or her whereabouts known in writing to the Committee within
      (6) months from the date of mailing of the notice, the Committee will
      treat the Participant's or Beneficiary's unclaimed payable Accrued Benefit
      as forfeited and will reallocate the unclaimed payable Accrued Benefit to
      reduce the Employer's contribution for the Plan Year in which the
      forfeiture occurs. A forfeiture under this paragraph will occur at the end
      of the notice period or, if later, the earliest date applicable Treasury
      Regulations would permit the forfeiture. Pending forfeiture, the
      Committee, following the expiration of the notice period, may direct the
      Trustee to segregate the Nonforfeitable Accrued Benefit in a segregated
      Account and to invest that segregated Account in Federally insured
      interest bearing savings accounts or time deposits (or in combination or
      both), or in other fixed income investments.

      If a Participant or Beneficiary who has incurred a forfeiture of his or
      her Accrued Benefit under the provisions of the first paragraph of this
      Section makes a claim, at any time, for the forfeited Accrued Benefit, the
      Committee must restore the Participant's or Beneficiary's forfeited
      Accrued Benefit to the same dollar amount as the dollar amount of the
      Accrued Benefit forfeited, unadjusted for any gains or losses occurring
      subsequent to the date of the forfeiture. The Committee will make the
      restoration during the Plan Year in which the Participant or Beneficiary
      makes the claim, first from the amount, if any, of Participant forfeitures
      the Committee otherwise would allocate for the Plan Year, then from the
      amount, if any, of the Trust Fund net income or gain for the Plan Year,
      then from the amount, or additional amount, the Employer contributes to
      enable the Committee to make the required restoration. The Committee must
      direct the Trustee to distribute the Participant's or Beneficiary's
      restored Accrued Benefit not later than 60 days after the close of the
      Plan Year in which the Committee restores the forfeited Accrued Benefit.
      The forfeiture provisions of this Section apply solely to the
      Participant's or the Beneficiary's Accrued Benefit derived from Employer
      Contributions.

      Upon termination of the Plan, in lieu of the unclaimed account procedure
      set forth in this Section, Section 18.6 shall apply.


                                 * * * * * * *

                                      45
<PAGE>
      ARTICLE XI
      ----------
                                 The Employer
                                 ------------

11.1. Employer Action
      ---------------

      Whenever the Employer is permitted or required to do or perform any act
      under this Agreement, it shall be done and performed by a person duly
      authorized to do or perform the act by its legally constituted authority.
      The legally constituted authority of a corporation shall be the Board of
      Directors.

11.2. Plan Amendment
      --------------

      (a) At any time the Employer, by formal written action, may amend or
          modify this Agreement in any manner it deems necessary or desirable,
          retroactively or prospectively, subject to the following provisions of
          this Article.

      (b) The Employer must make all amendments in writing, signed by duly
          authorized persons with the legally constituted authority of the
          Employer and with the consent or approval, if any, as provided in this
          Section. An amendment shall become effective upon its delivery to the
          Trustee. Each amendment must state the date on which it is either
          retroactively or prospectively effective.

      (c) Unless it is made to secure the approval of the Commissioner of the
          Internal Revenue Service or other governmental bureau or agency, no
          amendment or modification of this Agreement by the Employer shall:

          (i)   operate retroactively to reduce or divest the then vested
                interest in any Individual Account or to reduce or divest any
                benefit then payable hereunder unless all Participants, Former
                Participants and Beneficiaries then having Individual Accounts
                or benefit payments affected thereby shall consent to the
                amendments or modifications;

          (ii)  directly or indirectly affect any Participant's Nonforfeitable
                percentage outside the protection of Treasury Regulations
                Section 1.411(a)(8);

          (iii) decrease a Participant's accrued benefit, except to the extent
                permitted under Code Section 412(c)(8), and reduce or eliminate
                Code Section 411(d)(6) protected benefits determined immediately
                prior to the adoption date (or, if later, the effective date) of
                the amendment, except as permitted by applicable Treasury
                regulations (An amendment reduces or eliminates Code Section
                411(d)(6) protected benefits if the amendment has the effect of
                either: (A) eliminating or reducing an early retirement benefit
                or a retirement-type subsidy (as defined in applicable Treasury
                regulations); or (B) except as provided by applicable Treasury
                regulations, eliminating an optional form of benefit. The
                Committee must disregard an amendment to the extent application
                of the amendment would fail to satisfy this paragraph. If the
                Committee must disregard an amendment because the amendment
                would violate clause (A) or clause (B), the Committee must
                maintain a schedule of the early retirement option or other
                optional forms of benefit the Plan must continue for the
                affected Participant.); or

          (iv)  affect the rights, duties or responsibilities of the Trustees,
                the Plan Administrator or the Committee without the written
                consent or approval of the Trustee, Administrator, or affected
                Committee member.

      (d) If the vesting schedule described in Section 9.2 is amended, a
          Participant's vested interest in any contribution to which the vesting
          schedule in Section 9.2 applied, shall not be less than the
          Nonforfeitable percentage determined as of the later of the effective
          date of the amendment or the date of its adoption. A Participant with
          at least three (3) Years of Service on the last day of the election
          period described in this paragraph, may elect to have the
          Nonforfeitable percentage of the Employer Contribution Accounts
          determined without regard to the amendment. For Participants who do
          not have at least one (1) Hour of Service in any Plan Year beginning
          after December 31, 1988, the preceding sentence shall be applied by
          substituting "five (5) Years of Service" for "three (3) Years of
          Service" where the language appears. If a Participant fails to make an
          election, then the Participant shall be subject to the new vesting
          schedule. The election period shall commence on the date the amendment
          is adopted or deemed to be made and shall end sixty (60) days after
          the latest of:

          (i)   the date of the adoption of the amendment;

          (ii)  the effective date of the amendment; or

          (iii) the date the Participant receives written notice of the
                amendment from the Employer or Administrator.

11.3. Discontinuance, Termination of Plan
      -----------------------------------

                                      46
<PAGE>
 
      (a) The Employer has the right, at any time, to suspend or discontinue its
          contributions under the Plan to the Trust Fund, and to terminate, at
          any time, the Plan and the Trust created under this Agreement.  The
          Plan will terminate on the first to occur of the following events:

          (i)   the date the Plan is terminated by action of the Employer;

          (ii)  the date the Employer is judicially declared bankrupt or
                insolvent, unless the proceeding authorized continued
                maintenance of the Plan; or

          (iii) the dissolution, merger, consolidation or reorganization of the
                Employer or the sale by the Employer of all or substantially all
                of its assets, unless the successor or purchaser elects and
                makes provision to continue the Plan, in which event the
                successor or purchaser will substitute itself as the Employer
                under this Plan.

      (b) Upon either full or partial termination of the Plan, or, if
          applicable, upon complete discontinuance of contributions to the Plan,
          the Individual Accounts of all Participants, Former Participants and
          Beneficiaries shall be and become fully vested and Nonforfeitable,
          notwithstanding the Nonforfeitable percentage which otherwise would
          apply under Article IX. The Trustee, in its discretion, may convert
          some or all of the Trust Fund to cash and shall deduct therefrom all
          unpaid charges and expenses, except as the same may be paid by the
          Employer. The Committee then shall adjust the balance of all
          Individual Accounts on the basis of the net cash balance and fair
          market value of all property in the Trust Fund. Thereafter, the
          Trustee shall distribute the amount to the credit of each Participant,
          Former Participant and Beneficiary in cash, in kind, or partly in cash
          and partly in kind, as the Committee shall direct. Notwithstanding the
          foregoing, a distribution made because of a termination of the Plan
          shall be subject to the mandatory distribution requirements of
          Sections 6.4 and 7.4, the survivor annuity requirements of Section
          6.5, if applicable, and the immediate cashout distribution provisions
          of Sections 9.3(b) and 9.3(c).

11.4. Prohibition Against Reversion to Employer
      -----------------------------------------

      Under no circumstances or conditions, other than those specifically
      provided herein, shall the Trust Fund or any portion thereof revert to the
      Employer or be used for or diverted to purposes other than the exclusive
      benefit of the Participants, Former Participants and Beneficiaries. No
      amendment or revocation by the Employer of this Section may cause or
      permit any portion of the Trust Fund to revert to or become a property of
      the Employer.

11.5. Adoption by Related Employer
      ----------------------------

      Notwithstanding any contrary provision contained in this Agreement, with
      the written consent of the Plan Sponsor, any other association,
      corporation, or other business organization, which is a Related Employer
      may adopt this Plan and Trust in its entirety, participate herein and be
      known as a Participating Employer, by executing a properly authorized
      document evidencing the intent and will of the Participating Employer.
      Unless the context of this Agreement clearly indicates the contrary, the
      term "Employer" shall be deemed to include each Participating Employer
      relating to its adoption of the Plan.

11.6. Requirements for Adoption by Related Employer
      ---------------------------------------------

      The following requirements shall apply to any Participating Employer who
      elects to adopt this Plan pursuant to this Article:

      (a) Each Participating Employer shall be required to use the same Trustee
          as provided in this Agreement.

      (b) The Trustee may, but shall not be required to, commingle, hold and
          invest as one (1) Trust Fund all contributions made by Participating
          Employers and all increments thereof.

      (c) The transfer of any Participant from or to any corporation
          participating in this Plan, whether the Participant is an Employee of
          the Plan Sponsor or a Participating Employer, shall not affect the
          Participant's rights under the Plan; all amounts credited to the
          Participant's Individual Account, all accumulated service with the
          transferor or Predecessor Employer, and the length of participation in
          the Plan shall continue to the Participant's credit.

      (d) All rights and values forfeited by termination of employment shall
          inure only to the benefit of the Employees and Participants of the
          Participating Employer which employed the forfeiting Participant,
          except, if the Forfeiture is for an Employee whose Employer is a
          Related Employer, then the Forfeiture shall be allocated based on
          Annual Compensation to all Individual Accounts of Participating
          Employers who are Related Employers.  Should an Employee of one
          ("First") Employer be transferred to a Related ("Second") Employer the
          transfer shall not cause the Employee's Account Balance, generated
          while an Employee of the First Employer, in any manner or by any
          amount, to be forfeited.  The Employee's Account Balance for all
          purposes of the Plan, including length of service, shall be considered
          as though the Employee had always been employed by the Second Employer
          and as such had received contributions, forfeitures, earnings or
          losses, and appreciation or depreciation in value of assets totaling
          the amount so transferred.

      (e) Upon an Employee's transfer between Participating Employers, the
          Employee involved shall carry accumulated Years of Service for
          eligibility and vesting.  No transfer shall effect a termination of
          employment under this Agreement and the Participating 

                                      47
<PAGE>
 
           Employer to which the Employee transfers shall thereupon become
           obligated under this Agreement to the Employee in the same manner as
           the Participating Employer from whom the Employee transfers.

       (f) Any expenses of the Plan and Trust which are to be paid by the
           Employer or borne by the Trust Fund shall be paid by each
           Participating Employer in the same proportion that the total amount
           standing to the credit of all Participants employed by the
           Participating Employer bears to the total amount standing to the
           credit of all Participants.

       (g) Any contributions made by a Participating Employer under this Plan,
           shall be paid to and held by the Trustee for the exclusive benefit of
           the Employees of the Participating Employer and the Beneficiaries of
           the Employees, subject to all the terms and conditions of this
           Agreement.

       (h) Based on information furnished by the Administrator, the Committee
           and the Trustee shall keep separate books and records concerning the
           affairs of each Participating Employer and of the Account Balances of
           the Participants of each Participating Employer. The Trustee may, but
           need not, register Contracts to evidence that a particular
           Participating Employer is the interested Employer under this
           Agreement, but upon an Employee's transfer from one Participating
           Employer to another, the employing Employer shall immediately notify
           the Trustee of the transfer.

11.7.  Plan Sponsor as Agent of Participating Employer
       -----------------------------------------------

       Each Participating Employer shall be deemed to be a part of this Plan;
       however, each Participating Employer shall be deemed to have designated
       irrevocably the Plan Sponsor as its agent in all of its relations with
       the Trustee, the Committee and the Administrator under this Agreement.

11.8.  Participating Employer Contributions
       ------------------------------------

       (a) All contributions provided for in this Plan made by each
           Participating Employer who is a member of the same controlled group
           and/or affiliated service group shall be combined and allocated among
           the eligible Participants as if made by a single employer. The
           Participating Employers shall pay the contributions to the Trustee
           who shall hold the contribution for the exclusive benefit of the
           Employees (and their Beneficiaries) of the Participating Employers
           who are members of the same controlled group and/or affiliated
           service group, subject to all of the terms and conditions of this
           Plan.

       (b) All contributions made by a Participating Employer who is not a
           member of a controlled group and/or affiliated service group provided
           for in this Plan shall be determined separately on the basis of its
           net profit and total Annual Compensation paid. The Participating
           Employer shall pay the contributions to the Trustee who shall hold
           the contribution for the exclusive benefit of the Employees of the
           Participating Employer and the Beneficiaries of the Employees,
           subject to all of the terms and conditions of this Plan.

11.9.  Amendment by Plan Sponsor, Participating Employers
       --------------------------------------------------

       Amendment of this Plan by the Plan Sponsor at any time when there shall
       be a Participating Employer under this Agreement shall be effective only
       upon the written action of each and every Participating Employer and with
       the consent of the Trustee where the consent is necessary under this
       Agreement.

11.10. Revocation of Participation by Participating Employer
       -----------------------------------------------------

       Any Participating Employer shall be permitted to discontinue or revoke
       its participation in this Plan. Upon any discontinuance or revocation,
       satisfactory evidence thereof and of any applicable conditions imposed
       shall be delivered to the Trustee. The Trustee shall thereafter transfer,
       deliver and assign Contracts and other Trust Fund assets allocable to the
       Participants of the Participating Employer to the new plan as shall have
       been designated by the Participating Employer, if it has established a
       separate employee benefit pension plan for its employees. If no successor
       plan is designated, the Trustee shall retain the assets for the Employees
       of the Participating Employer under Article X. No part of the corpus or
       income of the Trust Fund relating to the Participating Employer shall be
       used for or diverted to purposes other than the exclusive benefit of the
       Employees of the Participating Employer and the Beneficiaries of the
       Employees.

11.11. Authority of Administrator over Participating Employers
       -------------------------------------------------------

       The Administrator shall have the authority to make any and all necessary
       rules or regulations binding on all Participating Employers and all
       Participants and Beneficiaries to effectuate the purposes of this
       Article.

                                      48
<PAGE>
 
11.12. Deficiency of Earnings or Profits
       ---------------------------------

       If any Participating Employer is prevented in whole or in part from
       making a contribution to the Trust Fund which it otherwise would have
       made under the Plan because of having no current or accumulated earnings
       or profits, or because the earnings or profits are less than the
       contribution which it otherwise would have made, then so much of the
       contribution which the Participating Employer was prevented from making
       may be made for the benefit of the participating Employees of the
       Participating Employer by the other Participating Employers who are
       Related Employers. The contribution by each other Participating Employer
       shall be limited to the proportion of its total current and accumulated
       earnings or profits remaining after adjustment for its contribution to
       the Plan made without regard to this Section, which the total prevented
       contribution bears to the total current and accumulated earnings or
       profits of all the Participating Employers remaining after adjustment for
       all contributions made to the Plan without regard to this Section. A
       Participating Employer on behalf of whose Employees a contribution is
       made under this Section shall not reimburse the contributing
       Participating Employer unless it has otherwise agreed to do so in
       writing.


                                 * * * * * * *


       ARTICLE XII
       -----------
 

                                 The Committee
                                 -------------


12.1.  Committee Appointment
       ---------------------

       The Employer shall appoint a Committee consisting of one (1) or more
       members. The Employer may remove any member of the Committee at any time
       and a member may resign by written notice to the Employer. Any vacancy in
       the membership of the Committee shall be filled by appointment made by
       the Employer, but pending the filling of any vacancy, the then members of
       the Committee may act under this Agreement as though they alone
       constitute the full Committee. The Employer shall notify the Trustee
       promptly of the appointment of the original Committee and of any change
       in the membership of the Committee.

12.2.  Committee Action and Procedure
       ------------------------------

       (a) Any and all acts and decisions of the Committee shall be by at least
           a majority of the then members. The Committee may delegate to any one
           or more of its members the authority to sign notices or other
           documents on its behalf or to perform ministerial acts for it, in
           which event the Trustee and any other person may accept the notice,
           document or act without question as having been authorized by the
           Committee.

       (b) The Committee may, but need not, call or hold formal meetings, and
           any decisions made or actions taken pursuant to written approval of a
           majority of the then members shall be sufficient.

       (c) The Committee shall maintain adequate records of its decisions, which
           records shall be subject to inspection by the Employer and by any
           Participant, Former Participant, or Beneficiary, but only to the
           extent that they apply to the individuals.

       (d) The Committee may designate one (1) of its members as Chairman and
           one (1) of its members as Secretary and may establish policies and
           procedures governing it if they are consistent with this Agreement.

12.3.  Committee Powers and Duties
       ---------------------------

       The Committee shall perform the duties and may exercise the powers and
       discretion given to it in this Agreement, and its decisions and actions
       shall be final and conclusive regarding all persons affected thereby. The
       Committee shall exercise its discretion at all times in a
       nondiscriminatory manner. Subject to any limitations stated in this
       Agreement, the Committee is authorized and empowered with the following
       powers, rights, and duties:

       (a) To select a Secretary, who need not be a member of the Committee;

       (b) To determine the rights of eligibility of an Employee to participate
           in the Plan, the value of a Participant's Account Balance and the
           Nonforfeitable percentage of each Participant's Accrued Benefit;

       (c) To adopt rules of procedure and regulations necessary for the proper
           and efficient administration of the Plan provided the rules are
           consistent with the terms of this Agreement;

       (d) To construe and enforce the terms of the Plan and the rules and
           regulations it adopts, including interpretation of the Plan documents
           and documents related to the Plan's operation;

       (e) To direct the Trustee concerning the crediting and distribution of
           the Trust;

                                      49
<PAGE>
 
       (f) To review and render decisions respecting a claim for, or denial of a
           claim for, a benefit under the Plan;

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

       (h) To engage the service of agents whom it may deem advisable to assist
           it with the performance of its duties;

       (i) To engage the services of an Investment Manager or Managers (as
           defined in ERISA Section 3(38)), each of whom will have full power
           and authority to manage, acquire or dispose, or direct the Trustee
           with respect to acquisition or disposition, of any Plan asset under
           its control;

       (j) To establish, in its sole discretion, a nondiscriminatory policy,
           pursuant to this Section, which the Trustee must observe in making
           loans, if any, to Participants and Beneficiaries; and

       (k) To establish and maintain a funding standard account and to make
           credits and charges to the account to the extent required by and in
           accordance with applicable Code provisions.

       The Committee must exercise all of its powers, duties, and discretion
       under the Plan in a uniform and nondiscriminatory manner.

12.4.  Committee Reliance
       ------------------

       The Trustee may rely without question on any notices or other documents
       received from the Committee. The Employer shall furnish the Committee
       with all data and information available to the Employer, which the
       Committee may reasonably require to perform its functions under this
       Agreement. The Committee may rely without question on any data or
       information furnished by the Employer.

12.5.  Committee Authority
       -------------------

       Any and all disputes which may arise involving Participants, Former
       Participants, Beneficiaries and/or the Trustee shall be referred to the
       Committee, and its decisions shall be final and conclusive regarding all
       affected persons. Furthermore, if any issue arises concerning the
       meaning, interpretation or application of any provisions of this
       Agreement, the decision of the Committee on any issue shall be final.

12.6.  Conflicts in Interest
       ---------------------

       Notwithstanding any other provisions of this Agreement, no member of the
       Committee shall vote or act on any matter involving the Committee
       member's rights, benefits or other participation under this Agreement.

12.7.  Appointment of Agent and Legal Counsel
       --------------------------------------

       The Committee may engage agents to assist it and may engage legal counsel
       who may be counsel for the Employer. The Committee shall not be
       responsible for any action taken or omitted to be taken on the advice of
       counsel. All reasonable expenses incurred by the Committee shall be paid
       by the Employer.

12.8.  Appointment of Investment Manager
       ---------------------------------

       The Committee may delegate investment management authority pertaining to
       all or a portion of the Plan assets by appointing an Investment
       Manager(s) and may authorize payment of the fees and expenses of the
       Investment Manager(s) from the Plan assets. For purposes of this
       Agreement, any Investment Manager so appointed shall, during the period
       of appointment, possess fully and absolutely those powers, rights and
       duties of the Trustee (to the extent delegated by the Committee)
       regarding the investment or reinvestment of that portion of the Plan
       assets over which the Investment Manager has investment management
       authority. An Investment Manager must be one (1) of the following:

       (a) an Investment Advisor registered under the Investment Advisors Act of
           1949;

       (b) a bank, as defined in the Investment Advisors Act of 1940; or

       (c) an insurance company qualified to manage, acquire, or dispose of Plan
           assets under the laws of more than one (1) state.

       Any Investment Manager shall acknowledge in writing to the party making
       the appointment and to the Trustee that it is a fiduciary respecting the
       Plan. During any period when the Investment Manager is appointed and
       serving, and regarding those assets in the Plan over which the Investment
       Manager exercises investment management authority, the Trustee's
       responsibility shall be limited to holding assets as a custodian,
       providing accounting services, disbursing benefits as authorized, and
       executing investment instructions only as directed by the Investment
       Manager. Any certificates or other instrument duly signed by the
       Investment Manager (or the authorized representative of the Investment
       Manager), purporting to evidence any instruction, direction or order of
       the Investment Manager regarding the investment of those assets of the
       Plan over which the Investment Manager has investment management
       authority, shall be accepted by the Trustee as conclusive proof thereof.
       The Trustee also shall be fully protected in acting in good faith on any
       notice, instruction, direction, order,

                                      50
<PAGE>
 
        certificate, opinion, letter, telegram or other document believed by the
        Trustee to be genuine and to be from the Investment Manager (or the
        authorized representative of the Investment Manager). The Trustee shall
        not be liable for any action taken or omitted by the Investment Manager
        or for any mistakes of judgment or other action made, taken or omitted
        by the Trustee in good faith on direction of the Investment Manager.


12.9.   Quarterly Accounting
        --------------------

        As soon as administratively feasible after the Accounting Date of each
        Plan Year, but within the time prescribed by ERISA and the applicable
        Labor regulations and at least annually, the Committee shall advise each
        Participant, Former Participant and Beneficiary for whom Individual
        Accounts are held under this Plan of the then balance in the
        Participant's Individual Accounts and the other information ERISA
        requires to be furnished. No Participant except a member of the
        Committee shall have the right to inspect the records reflecting the
        Individual Accounts of any other Participant.

12.10.  Funding Policy
        --------------

        The Committee will review, not less often than annually, all pertinent
        Employee information and Plan data to establish the funding policy of
        the Plan and to determine the appropriate methods of carrying out the
        Plan's objectives. The Committee must communicate periodically, as it
        deems appropriate, to the Trustee and to any Plan Investment Manager the
        Plan's short-term and long-term financial needs so investment policy can
        be coordinated with Plan financial requirements.


                                  * * * * * *

                                      51
<PAGE>
 
                                 ARTICLE XIII
                                 ------------

                                Administration
                                --------------


13.1.  Administrator Appointment
       -------------------------

       The Employer shall be the Administrator of this Plan and shall be
       responsible for filing all reporting and disclosure documents required by
       the Department of Labor and the Internal Revenue Service in accordance
       with ERISA, the Code and the respective regulations. The Employer may
       delegate any of its duties and responsibilities as Administrator to the
       Committee. Service of process on the Plan or Trust may be obtained by
       personal service on the Employer or any Committee member.

13.2.  Summary Plan Description
       ------------------------

       The Administrator shall furnish a summary plan description to each
       Participant within ninety (90) days after becoming a Participant and to
       each Beneficiary receiving benefits under the Plan within ninety (90)
       days after beginning to receive benefits. Every fifth (5th) year after
       the Effective Date of the Plan, the Administrator shall furnish an
       updated summary plan description, which integrates all amendments made
       within the five (5) year period, to each Participant and Beneficiary
       receiving benefits. If no amendments have been made within the five (5)
       year period, the Administrator shall furnish the updated summary plan
       description only every tenth (10th) year. If there is a modification or
       change in the Plan, the Administrator shall furnish to each Participant
       and each Beneficiary who is receiving benefits, a summary description of
       the change or modification not later than two hundred ten (210) days
       after the end of the Plan Year in which the change is adopted.

13.3.  Summary Annual Report
       ---------------------

       The Administrator shall furnish to each Participant and each Beneficiary
       receiving benefits a summary of the Annual Return/Report of the Plan
       containing a statement of the Plan assets and liabilities, receipts and
       disbursements and other information fairly summarizing the Plan's
       financial statement within two hundred ten (210) days after the close of
       each Plan Year, or an extended period as may be permitted by the
       Secretary of Labor.

13.4.  Individual Benefit Statements
       -----------------------------

       The Administrator shall furnish to any Participant or Beneficiary
       receiving benefits, who requests in writing, a statement reporting the
       total benefits accrued and the Nonforfeitable benefits, if any, which
       have accrued or the earliest date on which benefits will become
       Nonforfeitable. In no event shall a Participant or Beneficiary be
       entitled to receive the report described in this Section more than once
       in every twelve (12) month period.

13.5.  Copies of Additional Documents
       ------------------------------

       Upon written request from a Participant or Beneficiary receiving
       benefits, the Administrator shall furnish a copy of any one (1) or all of
       the following documents: the latest updated summary plan description, the
       latest annual report, any terminal report, Trust agreement, contract or
       other instruments under which the Plan was established or is operated.
       The Administrator may make a reasonable charge to cover the cost of
       furnishing complete copies.

13.6.  Documents Available for Examination
       -----------------------------------

       Copies of the Plan description and the latest annual report, Trust
       agreement, contract or other instruments under which the Plan was
       established or is operated shall be available for examination at the
       principal office of the Employer by any Participant or Beneficiary
       receiving benefits. Examination may be made during reasonable hours in
       person or by agent, accountant or attorney.

13.7.  Notice of Participant Rights under ERISA
       ----------------------------------------

       The Committee shall furnish to each Participant and to each Beneficiary
       receiving benefits information on their rights under the Plan and how the
       rights may be protected by law.

13.8.  Notice to Participant on Participant Termination
       ------------------------------------------------

       The Administrator shall furnish a statement to a Participant who
       terminated Service with the Employer for any of the reasons set forth in
       Articles VI through IX, describing the nature, amount and form of the
       Nonforfeitable Account Balance, if any, to which the Participant is
       entitled as soon as administratively feasible after the close of the Plan
       Year in which the Participant terminated Service.

13.9.  Notice to Trustee on Participant Termination
       --------------------------------------------

                                      52
<PAGE>
 
        (a) As soon as practicable after a Participant terminates Service with
            the Employer for any of the reasons set forth in Articles VI through
            IX, the Committee shall give written notice to the Trustee,
            including the following information and directions which may be
            necessary or advisable under the circumstances:

            (i)   name and address of the Participant;

            (ii)  reason the Participant terminated Service with the Employer;

            (iii) name and address of the Beneficiary or Beneficiaries of a
                  deceased Participant;

            (iv)  Nonforfeitable percentage or amount to which the Participant
                  is entitled on termination of employment pursuant to Article
                  IX; and

            (v)   time, manner and amount of payment to be made pursuant to the
                  Participant's election under Article X.

            If a Former Participant or Beneficiary dies, the Committee shall
            give like notice to the Trustee, but only if the Committee learns of
            the death.

        (b) At any time and from time to time after giving the notice provided
            under this Section, the Committee may modify the original notice or
            any subsequent notice by a further written notice or notices to the
            Trustee, but any action taken or payments made by the Trustee
            pursuant to a prior notice shall not be affected by a subsequent
            notice.

        (c) A copy of each notice provided under this Section shall be mailed by
            the Committee to the Participant, Former Participant or Beneficiary
            involved, but the failure to send or receive the copy shall not
            affect the validity of any action taken or payment made pursuant
            thereto.

        (d) Upon receipt of any notice provided under this Section, the Trustee
            shall promptly take any action and make any payments directed in the
            notice. The Trustee may rely on the information and directions in
            the notice absolutely and without question. However, the Trustee may
            inform the Committee of any error or oversight which the Trustee
            believes to exist in any notice.

13.10.  Claim for Benefits
        ------------------

        Normally, whenever a Participant or Beneficiary becomes entitled to
        benefits under this Agreement, the Committee and the Trustee will
        automatically initiate procedures to provide for the payment of the
        benefits. If a Participant or Beneficiary believes that he or she is
        entitled to the payment of benefits under this Agreement and no action
        is forthcoming from the Committee or the Trustee, then the Participant
        or Beneficiary may file a written claim for benefits with the Committee
        or the Trustee.

13.11.  Appeal for Decision of Committee
        --------------------------------

        (a) If any Participant or Beneficiary files a claim for benefits under
            this Plan ("Claimant") and the claim is denied in whole or in part,
            the Administrator shall give notice of the decision to the Claimant
            in writing setting forth:

            (i)   the specific reasons for the denial;

            (ii)  a specific reference to pertinent provisions of the Plan, if
                  any, upon which the denial is based;

            (iii) a description of any additional material or information
                  necessary for the Claimant to perfect the claim with an
                  explanation of the necessity therefor; and

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

        (b) The written notice shall be given to the Claimant as soon as
            administratively feasible after the decision is made, but not later
            than sixty (60) days after the claim is filed. The Claimant shall
            have the right to be represented, to review pertinent documents and
            to present written and oral evidence.

        (c) If the Claimant should appeal to the Committee, the Claimant or the
            duly authorized representative, may submit, in writing, issues and
            comments the Claimant or the duly authorized representative
            considers pertinent. The Committee shall render the decision on the
            review and shall set forth the specific reasons for the decision
            with specific references to pertinent provisions. The Committee
            shall render the decision in writing within sixty (60) days after
            receipt of the request for review unless special circumstances, such
            as the need for a hearing, require an extension which shall not
            exceed an additional sixty (60) days.

                                      53
<PAGE>
 
                                 * * * * * * *

                                      54
<PAGE>
 
       ARTICLE XIV
       -----------
 

                                  The Trustee
                                  -----------

14.1.  Acceptance of Trust
       -------------------
 

       The Trustee accepts the Trust created under this Agreement and agrees to
       perform the obligations imposed.

14.2.  General Trustee Duties
       ----------------------

       The Trustee is accountable to the Employer for the funds contributed to
       the Trust Fund by the Employer but does not have any duty to ascertain
       that the contributions received comply with Plan provisions. The Trustee
       shall maintain adequate books and records reflecting all transactions
       affecting the Trust Fund, which books and records shall be open at all
       reasonable times for the inspection of the Employer and the Committee or
       their authorized representatives. Furthermore, the Trustee shall furnish
       the Committee, at least annually, statements showing the assets then held
       in the Trust Fund and showing all transactions in the Trust Fund since
       the last preceding statement. Each statement shall be conclusive and
       final as between the Trustee and all interested parties unless the
       Committee delivers written objections to the statement to the Trustee
       within sixty (60) days after receipt of such statement.

14.3.  Bonding
       -------

       Any Trustee shall comply with the fiduciary bonding requirements of ERISA
       Section 412 unless specifically exempt.

14.4.  Compensation
       ------------

       The Trustee shall be paid reasonable compensation commensurate with the
       services and responsibilities involved under this Agreement from time to
       time. The Employer shall pay the Trustee's compensation, but, if not so
       paid, the Trustee may pay itself from the Trust Fund. No Trustee who
       already receives full-time pay from the Employer shall receive any
       compensation except as provided in the following Section.

14.5.  Payment of Expenses
       -------------------

       The Trustee may employ counsel, brokers or agents and may pay for their
       services and any other reasonable expenses incurred by the Trustee from
       the Trust Fund.

14.6.  Investment Powers
       -----------------

       The Employer designates the Trustee to administer the Trust as a
       nondiscretionary Trustee. The Trustee will not have any discretion or
       authority regarding investment of the Trust Fund, but must act solely as
       a directed trustee of the funds contributed to it. Subject to any
       limitations stated in this Agreement, the Trustee is authorized and
       empowered, but not by way of limitation, with the following powers,
       rights and duties, each of which the nondiscretionary Trustee exercises
       solely as a directed trustee according to the written direction of the
       Named Fiduciary (except to the extent a Plan asset is subject to the
       control and management of a properly appointed Investment Manager or
       subject to Committee or Participant direction of investment):

       (a) To hold, manage, control, collect, and use the Trust Fund pursuant to
           the terms of this Agreement under the direction of the Named
           Fiduciary;

       (b) To invest, reinvest, pay, expend or otherwise apply the Trust Fund
           for any purpose, in any manner, and in any kind of property, real,
           personal or mixed, wherever situated, whether or not productive of
           income or whether consisting of wasting assets, of any description
           whatsoever (including without limitation, oil, gas and other mineral
           leases, royalties, overriding royalties, and other interests, stocks,
           common or preferred, securities, bonds, notes and debentures,
           convertible stock and securities [including securities and stock of
           the Trustee or an affiliate to the extent consistent with Section
           113.055 of the Texas Trust Code], or any other interest in any
           corporation, leaseholds, mortgages [including, without limitation,
           any collective or part interest in any bond and mortgages, or note
           and mortgages], certificates of deposit or time deposits [including
           any deposit with any bank serving as Trustee, or an affiliate,
           hereunder if the deposits bear a reasonable rate of interest], shares
           of investment trusts or companies and mutual funds, interests in
           partnerships and trusts, interests or shares of "Massachusetts
           Business Trusts," and contracts), and to make any other investments
           the Named Fiduciary deems appropriate. As the Named Fiduciary directs
           in writing, the Trustee may make or hold investments of any part of
           the Trust Fund in common or undivided interests with other persons or
           entities, including an undivided interest in any property in which
           the Trustee, individually or otherwise, may hold an undivided
           interest, and may buy, sell and deal with any person or entity
           regardless of any relationship of the Trustee or an Employee to the
           person or entity unless the action would constitute a prohibited
           transaction under ERISA or the Code. Except as required by ERISA, the
           investment powers shall not be restricted to any class of investments
           which fiduciaries under any character of trust are permitted by law
           or any regulation to make, and may be exercised without any regard to
           any requirements of diversification of kind or amount;

                                      55
<PAGE>
 
     (c) To invest in insurance contracts at the direction of the Committee or
         Participants subject to the limitations contained in this Article
         regarding individual direction of investment and Article XV regarding
         Contracts.  To the extent directed by the Committee, the Trustee may
         buy investment insurance contracts, and may buy ordinary, group, and
         term life insurance contracts (and shall be the sole and exclusive
         beneficiary under the contracts) on the life of any officer or Employee
         of the Employer, which insurance, and including proceeds, dividends or
         refunds thereof, shall be treated as any other investment of the Trust
         Fund;

     (d) To assume indebtedness, lend or borrow money in any manner, including
         by joint and several obligations, with or without security, under the
         terms, regardless of the duration of the Trust created by this
         instrument, and to mortgage (including the making of purchase money
         mortgages), pledge, or in any other manner encumber all or any part of
         the Trust Fund, as the Named Fiduciary may deem advisable;

     (e) To exchange, sell, partition or lease (including leases for terms
         exceeding the duration of the Trust created by this instrument) for
         cash, property or credit, on the terms and conditions, all or any part
         of the assets of the Trust Fund as the Named Fiduciary directs in
         writing;

     (f) To partition any property or interest held as part of the Trust Fund,
         and to pay or receive money or property necessary or advisable to
         equalize differences; to credit the Trust and to make any distribution
         from the Trust Fund in cash or in kind (including an undivided interest
         in any property), or both, as directed by the Committee, and to value
         any property belonging to the Trust Fund;

     (g) To execute lease, pooling or unitization agreements (including
         agreements extending beyond the terms of the Trust created by this
         instrument) regarding any mineral or royalty interests held or acquired
         by the Trust Fund; to drill or contract for the drilling of wells for
         oil, gas or other minerals; to make dry hole or bottom hole
         contributions; to enter into any operating agreements regarding any
         mineral leases or properties held or acquired by the Trust Fund as the
         Named Fiduciary directs in writing; and generally, regarding oil, gas
         and other mineral properties and operations, to enter into the
         agreements and to do all other things (whether or not presently
         recognized as common or proper practice) as the Named Fiduciary may
         deem to be advantageous;

     (h) To vote in person or by proxy, with or without power of substitution,
         any stocks, bonds or other securities held by it; to exercise any
         options appurtenant to any stocks, bonds or other securities for the
         conversion thereof into other stocks, bonds or securities, or to
         exercise any rights to subscribe for additional stocks, bonds or other
         securities and to make any and all necessary payments thereof, if the
         exercise of any of these powers is at the direction of the Named
         Fiduciary;

     (i) To hold uninvested, in cash, without liability for interest thereon,
         any reasonable amount of money until it shall be reinvested or
         distributed from the Trust, and to deposit any cash held in the Trust
         Fund in a bank account at reasonable interest as the Named Fiduciary
         directs in writing;

     (j) To cause any investment to be registered and held in the name of the
         nondiscretionary Trustee one or more of its nominees, or in the nominee
         of any system for the centralized handling of securities, or in bearer
         or Federal Reserve Book-Entry form, without any increase or decrease of
         liability as the Named Fiduciary may deem best, with or without
         disclosing the custodial relationship;

     (k) To combine into a single trust (i) the assets of the Trust Fund and
         (ii) the assets of any other trusts having trust provisions
         substantially identical to the trust provisions in this Plan, if each
         other trust is a "qualified trust" under Code Section 401(a) and is
         maintained for another plan of the Employer; or to administer jointly
         the Trust Fund and the assets of any other trusts if deemed desirable
         by the Trustee;

     (l) To begin, join in, maintain, defend, compromise, submit to arbitration,
         settle, or abandon any litigation, claim, obligation or controversy in
         favor of or against the Trust Fund, all in the name of the Named
         Fiduciary and without the joinder of any Participant except that the
         Trustee is not obliged or required to do so unless indemnified to its
         satisfaction;

     (m) To retain any funds or property subject to any dispute without
         liability for the payment of interest, and to decline to make payment
         or delivery of the funds or property until final adjudication is made
         by a court of competent jurisdiction as the Named Fiduciary directs in
         writing;

     (n) To file all tax returns required of the Trustee;

     (o) To furnish to the Named Fiduciary, the Employer, the Administrator, and
         the Committee an annual statement of account showing the condition of
         the Trust Fund and all investments, receipts, disbursements, and other
         transactions effected by the Trustee during the Plan Year covered by
         the statement and also stating the assets of the Trust held at the end
         of the Plan Year, which accounts are conclusive on all persons,
         including the Named Fiduciary, the Employer, the Administrator and the
         Committee, except for any act or transaction concerning which the Named
         Fiduciary, the Employer, the Administrator or the Committee files with
         the Trustee written exceptions or objections within ninety (90) days
         after the receipt of the accounts or for which ERISA authorizes a
         longer period within which to object;

                                      56
<PAGE>
 
      (p) To perform any and all other acts in its judgment the Named Fiduciary
          deems necessary or appropriate for the proper and advantageous
          management, investment and distribution of the Trust;

      (q) To employ accountants, lawyers, brokers, banks, investment counsel or
          other agents or employees and to delegate to them the duties, rights,
          and powers of the Trustee (including the power to vote shares of
          stock) that the Named Fiduciary deems advisable in administering the
          Trust Fund;

      (r) To appoint any person or corporation in any state of the United States
          to act as Ancillary Trustee for any portion of the Trust Fund as the
          Named Fiduciary directs in writing. Any Ancillary Trustee shall have
          the rights, powers, duties and discretions delegated to it by the
          Named Fiduciary, but shall exercise the same subject to the
          limitations or further directions of the Named Fiduciary as shall be
          specified in the instrument evidencing its appointment. Any Ancillary
          Trustee shall be accountable solely to the Named Fiduciary and shall
          be entitled to reasonable compensation;

      (s) To exercise all the rights, powers, options, and privileges now or
          hereafter granted to trustees under the Texas Trust Code, and any
          amendments thereto, except those which conflict with the terms of this
          Agreement or ERISA, provided the exercise of any powers is at the
          direction of the Named Fiduciary.

      (t) To acquire or hold qualifying employer securities, defined in ERISA
          Section 407(d)(5), or qualifying employer real property, defined in
          ERISA Section 407(d)(4), of an Employer not to exceed a stated
          percentage, if any, of the Trust Fund and such additional authority as
          enumerated above under the description of the Trustee's authority, to
          the extent necessary and convenient to carry out its duties.

14.7. Investment of Employer Non-Elective Contribution
      ------------------------------------------------

      Such portion of the Employer Non-Elective Contributions in cash, to the
      extent directed by the Board of Directors of the Employer, shall be
      invested by the Trustee in Employer Securities, as defined in Section
      1.20, as soon as administratively feasible after receipt.

14.8. Appointment of Custodian/Nondiscretionary Trustee
      -------------------------------------------------

      (a) Appointment.  The Employer may appoint a Custodian under the Plan, the
          -----------                                                           
          acceptance by the Custodian indicated on the execution page of this
          Agreement. A Custodian has the same powers, rights, and duties as a
          nondiscretionary Trustee, described in Section 14.6. The Custodian
          accepts the terms of the Plan and Trust by executing the Agreement.
          Any reference in the Plan to a Trustee also is a reference to a
          Custodian where the context of the Plan dictates. A limitation of the
          Trustee's liability by Plan provision also acts as a limitation of the
          Custodian's liability. Any action taken by the Custodian at the
          discretionary Trustee's direction satisfies any provision in the Plan
          referring to the Trustee's taking that action.

      (b) Modification of Powers/Limited Responsibility.  The Employer and the
          ---------------------------------------------                       
          Custodian or nondiscretionary Trustee, by letter agreement, may limit
          the powers of the Custodian or nondiscretionary Trustee to any
          combination of powers listed within Section 14.6. If there is a
          Custodian or a nondiscretionary Trustee under the Employer's Plan,
          then the Employer, in adopting this Plan acknowledges the Custodian or
          nondiscretionary Trustee has no discretion concerning the investment
          or re-investment of the Trust Fund and that the Custodian or
          nondiscretionary Trustee is acting solely as custodian or as directed
          trustee with respect to the assets comprising the Trust Fund.

     (c)  Limitation of Powers of Certain Custodians.  If a Custodian is a bank
          ------------------------------------------                           
          which, under its governing state law, does not possess trust powers,
          then paragraphs (b), (c), (d), (e), (g), (h), and (k) of Section 14.6
          do not apply to that bank and that bank only has the power and
          authority to exercise the remaining powers, rights and duties under
          Section 14.6.

     (d)  Named Fiduciary/Limitation of Liability of Nondiscretionary Trustee or
          ----------------------------------------------------------------------
          Custodian.  Under a nondiscretionary Trustee designation, the Named
          ---------                                                          
          Fiduciary under the Employer's Plan has the sole responsibility for
          the management and control of the Employer's Trust Fund, except
          regarding a Plan asset under the control or direction of a properly
          appointed Investment Manager or regarding a Plan asset properly
          subject to Participant or Committee direction of investment. If the
          Employer appoints a Custodian, the Named Fiduciary is the
          discretionary Trustee. Under a nondiscretionary Trustee designation,
          unless the Employer designates in writing another person or persons to
          serve as Named Fiduciary, the Named Fiduciary under the Plan is the
          president of a corporate Employer, the managing partner of a
          partnership Employer or the sole proprietor, as appropriate. The Named
          Fiduciary will exercise its management and control of the Trust Fund
          through its written direction to the nondiscretionary Trustee or to
          the Custodian, whichever applies to the Employer's Plan.

          The nondiscretionary Trustee or Custodian has no duty to review or to
          make recommendations regarding investments made at the written
          direction of the Named Fiduciary. The nondiscretionary Trustee or
          Custodian must retain any investment obtained at the written direction
          of the Named Fiduciary until further directed in writing by the Named
          Fiduciary to dispose of the investment. The nondiscretionary Trustee
          or Custodian is not liable in any manner or for any reason for making,
          retaining or disposing of any investment pursuant to any written
          direction described in this paragraph. Furthermore, the Employer
          agrees to indemnify and to hold the nondiscretionary Trustee or
          Custodian harmless from any damages, costs or expenses, including
          reasonable counsel fees, which the nondiscretionary Trustee or
          Custodian may incur as a result of any claim asserted against the
          nondiscretionary Trustee,

                                      57
<PAGE>
 
           the Custodian or the Trust arising out of the nondiscretionary
           Trustee's or Custodian's compliance with any written direction
           described in this paragraph.

14.9.   Investment in Common Trust Fund and Group Trust Fund
        ----------------------------------------------------

        The Trustee is authorized, pursuant to written directions of the Named
        Fiduciary, to invest all or any portion of the assets comprising the
        Trust Fund in any common trust fund which at the time of the investment
        provides for the pooling of the assets of plans qualified under Code
        Section 401(a). The authorization applies solely to a common trust fund
        the Trustee, any affiliate, or its agent, maintains and only if the
        common trust fund: (a) is exempt from taxation under Code Section 584 or
        under Code Section 501(a); (b) expressly limits participation to pension
        and profit sharing trusts which are exempt under Code Section 501(a) for
        qualifying under Code Section 401(a); (c) prohibits that part of its
        corpus or income which equitably belongs to any participant trust from
        being used for or diverted to any purposes other than for the exclusive
        benefit of the Employees or their Beneficiaries who are entitled to
        benefits under such participating trust; (d) prohibits assignment by
        participating trust of any part of its equity or interest in the group
        trust; and (e) the sponsor of the group trust created or organized the
        group trust in the United States and maintains the group trust at all
        times as a domestic trust in the United States. The provisions of the
        common trust fund agreement, as amended by the Trustee from time to
        time, are by this reference incorporated within this Agreement. The
        provisions of the common trust fund shall govern any investment of Plan
        assets in that fund. In addition, the Trustee shall have the power,
        pursuant to written directions of the Named Fiduciary, to invest all or
        any part of the Trust Fund in any single, collective, or common trust
        fund permitted for employee benefit plans qualified under Code Section
        401(a), as amended, maintained by the Trustee or its affiliates.
        Specifically, the Trustee may invest and reinvest the assets transferred
        to it in an interest in any group trust fund that has been or shall be
        created and maintained by the Trustee or its affiliates as trustee for
        the collective investment of funds of trust for employee benefit plans
        qualified under Code Section 401(a), as amended, and to the extent
        required by Revenue Ruling 81-100 and further to the extent consistent
        with this Agreement, the instrument creating such trust fund, together
        with any amendments thereto, is hereby incorporated and made a part of
        this Agreement.

14.10.  Reliance by Trustee
        -------------------

        The Trustee may rely on any notice, certificate, letter, telegram,
        facsimile or other paper or document believed by it to be genuine or on
        any evidence believed by it to be sufficient in making any payment or in
        taking any action whatsoever under this Agreement.

14.11.  Delegation of Authority Among Trustees
        --------------------------------------

        At any time and from time to time, the Trustee is authorized to delegate
        to any Co-Trustee the exercise of any or all powers or duties,
        discretionary or otherwise, and to revoke any delegation at will. The
        delegation of any power, and also the revocation of any delegation,
        shall be evidenced by an instrument in writing, executed and
        acknowledged and delivered to the Co-Trustee to whom the power or duty
        may have been delegated. So long as any delegation is in effect, any of
        the powers or duties, discretionary or otherwise, thereby granted and so
        delegated may be exercised or carried out and action may be taken by the
        Co-Trustee with the same force and effect as if the Trustee joined in
        the exercise of the power and/or taking of the action. Any person or
        corporation dealing with the Trustee may rely on the certification of
        the Co-Trustee to whom the power or duty has been delegated that the Co-
        Trustee has full authority to act.

14.12.  Appointment of Ancillary Trustee
        --------------------------------

        Whenever and as often as the Named Fiduciary deems such action
        desirable, the Trustee may appoint, by written instrument, pursuant to
        written directions of the Named Fiduciary, any person or corporation in
        any state of the United States to act as Ancillary Trustee with respect
        to any portion of the Trust Fund assets then held or about to be
        acquired on behalf of the Trustee. Each Ancillary Trustee shall have the
        rights, duties and discretionary powers delegated to it by the Trustee,
        but shall exercise them subject to the limitations or further directions
        of the Trustee as shall be specified in the instrument evidencing its
        appointment. The Ancillary Trustee may resign or may be removed by the
        Trustee, as directed by the Named Fiduciary, regarding all or any
        portion of the assets so held at any time or from time to time, by
        written instrument delivered one to the other, and the Trustee may
        thereupon appoint another Ancillary Trustee or successor, as directed by
        the Named Fiduciary, to whom the assets shall be transferred, or may
        itself receive the assets in termination of the ancillary trusteeship to
        that extent. The Ancillary Trustee shall be accountable solely to the
        Trustee and shall be entitled to reasonable compensation.

14.13.  Removal or Resignation of Trustee
        ---------------------------------

        The Employer may remove any Trustee at any time by sixty (60) days
        written notice to the Trustee, and any Trustee may resign at any time by
        sixty (60) days written notice to the Employer. Upon the removal or
        resignation of the Trustee, the Employer shall appoint a Successor
        Trustee. The receipt by the Successor Trustee of all securities,
        property and money then held hereunder shall be a full and complete
        acquittance and discharge of the Trustee who has been removed or
        resigned.

14.14.  Multiple Trustees
        -----------------

                                       58
<PAGE>
 
        If more than two persons act as Trustee, a decision of the majority of
        such persons controls with respect to any decision regarding the
        administration or investment of the Trust Fund, or any portion of the
        Trust Fund with respect to which such persons act as Trustee. However,
        the signature of only one Trustee is necessary to effect any transaction
        on behalf of the Trust.

14.15.  Separate Investment Funds
        -------------------------

        (a) The Plan Committee will select the Investment Funds available under
            the Plan in a separate written Investment Policy and is delegated
            the authority to direct the Trustee to invest Trust assets in one or
            more of such Investment Funds. The Committee shall maintain such
            Investment Funds in accordance with the Employer's written
            Investment Policy. The Investment Funds selected by the Committee
            shall be communicated to Participants in writing. The number and
            composition of the Investment Funds may be changed from time to
            time. 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:

            (i)   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;

            (ii)  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);

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

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

            (v)   Employer Securities.
 
            All Individual Accounts shall be allocated by the Committee to the
            Plan's Investment Funds specified in a separate written Investment
            Policy. Dividends, interest and other distributions shall be
            reinvested in the same Investment Fund from which received.
 
            Except as provided hereafter in this Section, the assets of each
            such Investment Fund shall be invested exclusively in shares of the
            registered investment company designated by the Board, provided that
            such shares constitute securities described in ERISA Section
            401(b)(1). Amounts in any such Investment Fund in amounts estimated
            by the Trustee to be needed for cash withdrawals, or in amounts too
            small to be reasonably invested, or in amounts which the Trustee
            deems to be in the best interest of the Participants, may be
            retained by the Trustee in cash or invested temporarily.

        (b) Each Participant shall by written or telephonic direction to the
            Committee, direct that the contributions made to his or her accounts
            for which the Participant may direct investments be invested in one
            or more of the Investment Funds chosen by the Employer in a separate
            written Investment Policy as investment vehicles for the Trust Fund.
            The Participant's direction shall include the percentage of his or
            her accounts to be invested pro rata in each such Investment Fund.

        (c) A Participant may change an investment direction with respect to
            future contributions. A Participant may elect to transfer all or a
            portion of such Participant's interest in each Investment Fund
            (based on the value of such interest on the date immediately
            preceding such election) to any other of the Investment Funds
            selected by the Employer.

14.16.  Composition and Maximum Permitted Investment in Employer Securities
        -------------------------------------------------------------------

        The Employer Securities Fund shall be comprised of Employer Securities
        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.

14.17.  Individual Direction of Investment
        ----------------------------------

        A Participant may elect to have all or any portion of his Individual
        Accounts invested in one or more Investment Funds established hereunder;
        provided, however, that such election shall apply either equally to
        existing Individual Accounts, or current contributions made on behalf of
        or by Participants or both, as the Participant shall so direct. Such
        election shall be expressed in terms of the percentage amount of the
        Individual Accounts to be allocated pro rata to each Investment Fund. To
        the extent a Participant fails to direct the investment of all or any
        portion of his account, it shall be invested in the Investment Fund or
        Funds selected by the Committee. Upon a Participant's termination of
        employment or cessation of participation for any reason, including
        death, total and permanent disability or retirement, if payment of such
        Participant's Individual Accounts is to be deferred, such Participant
        shall no longer have the right to direct the investment of his
        Individual Accounts. Individual Accounts shall be invested in the
        Investment Fund(s) selected by the Committee.

14.18.  Change of Investment Designation
        --------------------------------

        A Participant may change telephonically such Participant's designation
        of the manner for investment of such Participant's existing Individual
        Accounts or current contributions made on behalf of or by the
        Participant or both to any other manner permitted hereunder.

                                      59
<PAGE>
 
        The change shall be applicable to contributions made after the date the
        change was entered in the voice response system, or to the interest of
        the Participant in each Investment Fund, as of the date the application
        for change shall have become effective, as the case may be. In order to
        comply with applicable federal or state securities laws, the Committee
        may establish such rules with respect to the change of investment
        designation by participants as it shall deem necessary or advisable to
        prevent possible violations of such laws.

14.19.  Valuation of Investment Funds and Individual Accounts
        -----------------------------------------------------

        (a) As of each Accounting Period ending on the Accounting Date, the
            Committee shall determine the fair market value of each Investment
            Fund being administered by the Trustee. With respect to each such
            Investment Fund, the Committee shall determine (a) the change in
            value between the current Accounting Period and the then last
            preceding Accounting Period, (b) the net gain or loss resulting from
            expenses paid (including fees and expenses, if any, which are to be
            charged to such Fund) and (c) realized and unrealized gains and
            losses.

            The transfer of funds to or from an Investment Fund pursuant to
            Section 14.17 and payments, distributions and withdrawals from an
            Investment Fund to provide benefits under the Plan for Participants
            or Beneficiaries shall not be deemed to be gains, expenses or losses
            of an Investment Fund.

            After each Accounting Period, the Committee shall allocate the net
            gain or loss of each Investment Fund on the Accounting Date to the
            accounts of Participants participating in such Investment Fund on
            such Accounting Date. Contributions and rollovers received and
            credited to Participants' accounts as of such Accounting Date, or as
            of an earlier date since the last preceding Accounting Period shall
            not be considered in allocating gains or losses allocated to
            Participants' accounts.

        (b) The reasonable and equitable decision of the Committee as to the
            value of each Investment Fund, and of any Individual Account as of
            each Accounting Period shall be conclusive and binding upon all
            persons having any interest, direct or indirect, in the Investment
            Funds or in any account.

14.20.  Indemnification of Officer/Director Trustee
        -------------------------------------------

        The Employer shall indemnify and save harmless any Trustee who is an
        Officer or Director of the Employer ("Officer/Director Trustee") from
        and against any and all loss resulting from liability to which the
        Trustee may be subjected by reason of any act or conduct (except willful
        misconduct or gross negligence unless done with knowledge and consent or
        at the direction of the Board of Directors of the Employer) in its
        official capacity in the administration of the Plan and Trust, including
        all court costs and other expenses reasonably incurred in the
        Officer/Director Trustee's defense, in the event that the Employer fails
        to provide such defense. The indemnification provisions of this Section
        do not relieve the Trustee from any liability under ERISA that may
        result from breach of a fiduciary duty. The indemnification provisions
        of this Section do not relieve the Officer/Director Trustee from any
        liability determined by a court of competent jurisdiction from which no
        appeal can be taken pursuant to a final judgment that the actions or
        omissions were the result of gross negligence or willful misconduct,
        unless such actions or omissions were done with the knowledge and
        consent or at the direction of the Board of Directors of the Employer.
        The Officer/Director Trustee and the Employer may execute a letter
        agreement further delineating the indemnification agreement of this
        Section, provided that the letter agreement is consistent with and does
        not violate ERISA and Texas law.


                                 * * * * * * *

                                      60
<PAGE>
 
       ARTICLE XV
       ----------
 

                              Insurance Contracts
                              -------------------


15.1.  Investment in Insurance Contracts for the Benefit of the Trust Fund
       -------------------------------------------------------------------

       At the written direction of the Committee, the Trustee shall have the
       right to apply for and pay premiums on Contracts for the benefit of the
       Trust Fund as a whole. The Contracts may be on the lives of any persons
       in whom there is an insurable interest, including Participants. The
       Employer shall direct the Trustee regarding the insurance company and
       insurance agent through which the Trustee shall purchase the Contracts,
       the amount of the coverage and the applicable dividend plan.

15.2.  Ownership of Contracts for the Benefit of the Trust Fund
       --------------------------------------------------------

       (a) Each application for a policy, and the policies themselves, must
           designate the Trustee as sole owner, with the right reserved to the
           Trustee to exercise any right or option contained in the policies,
           subject to the terms and provisions of this Agreement. The Trustee
           must be the named beneficiary of the insured for the Trust Fund.

       (b) All Contracts owned by the Trustee for the benefit of the Trust Fund
           as a whole shall be treated as investments of the Trust Fund. The
           cash value of the Contracts shall be used in valuing the Trust Fund,
           and all premiums paid thereon by the Trustee shall be charged to the
           Trust Fund and shall not be charged to any Individual Accounts. All
           dividends, death benefits and other payments actually received by the
           Trustee under the Contracts shall be credited to the Trust Fund, the
           same as proceeds derived from the sale of an asset held under this
           Agreement.

15.3.  Investment in Insurance Contracts for the Benefit of the Participant
       --------------------------------------------------------------------

       If the Employer shall permit, each Participant shall have the right to
       request that the Committee direct the Trustee to purchase one (1) or more
       Contracts for the benefit of an Individual Account of the Participant,
       subject to the following restrictions:

       (a) If only ordinary life insurance contracts are purchased, the
           aggregate premiums payable thereon in the case of each Participant
           shall not exceed forty-nine percent (49%) of the total contributions
           allocated to the Individual Account of the Participant.

       (b) If only term life, accident and/or health insurance contracts
           (including hospitalization, major medical or similar types of
           insurance) are purchased, the aggregate premiums payable thereon in
           the case of each Participant shall not exceed twenty-five percent
           (25%) of the total Contributions allocated to the Individual Account
           of the Participant.

       (c) If both ordinary life and term life, accident and/or health insurance
           contracts are purchased, the amount expended for the term life,
           accident and/or health insurance premiums plus one-half ( 1/2) of the
           amount expended for the ordinary life insurance premiums shall not
           exceed, in the aggregate, twenty-five percent (25%) of the total
           Contributions allocated to the Individual Account of the Participant.

       (d) The payment of the premiums thereon shall be reasonably assured,
           taking into consideration the then credit balance in the
           Participant's Individual Account and the probable sums to be credited
           thereto in the future.

       (e) Any Contract which provides primarily life insurance protection shall
           be one which can be converted at or before retirement of the
           Participant to provide periodic income payable to him on retirement,
           but provided that the periodic income cannot be paid in the form of a
           life annuity. When a Contract is obtained, the Trustee shall be
           required to convert the entire value of the Contract at or before
           retirement into cash, or to provide periodic income so that no
           portion of the value may be used to continue life insurance
           protection beyond retirement; or the Trustee may, at the option of
           the Participant, distribute the entire Contract to the Participant.

       (f) Any Contract may contain a waiver of premium benefit if and when the
           insured becomes disabled. The cost of the benefits may be paid either
           by the Participant or by the Trustee, but if the cost will be paid by
           the Trustee, the requirements of paragraphs (a), (b) and (c) of this
           Section shall remain fully applicable, and no cost of the waiver of
           premium benefit shall be paid by the Trustee which would violate the
           restrictions.

       (g) The incidental insurance benefits requirement does not apply to the
           Plan if the Plan purchases life insurance benefits only from Employer
           Contributions accumulated in the Participant's Individual Account for
           at least two years measured from the Allocation Date.

15.4.  Ownership of Contracts for the Benefit of a Participant
       -------------------------------------------------------

       (a) Each application for a policy, and the policies themselves, must
           designate the Trustee as sole owner, with the right reserved to the
           Trustee to exercise any right or option contained in the policies,
           subject to the terms and provisions of this Agreement. The Trustee
           must be the named beneficiary for the Individual Account of the
           insured Participant.

                                      61
<PAGE>
 
       (b) All Contracts owned by the Trustee for the individual benefit of a
           Participant shall be noted on the Participant's Individual Accounts,
           but so long as the individual remains a Participant, the Contracts
           shall be treated as having no value for the Individual Accounts. All
           dividends and other payments actually received by the Trustee on any
           Contract shall be credited to the Individual Account of the
           Participant for whose individual benefit the Contract is held.
           Contracts for the individual benefit of Participants may be continued
           after Normal Retirement Date during the period of continued
           employment of a Participant who elects not to retire, if the
           preceding limitations on the protection of funds so expendable are
           applied.

       (c) All premiums paid by the Trustee on Contracts held under this
           Agreement for the individual benefit of Participants shall be charged
           against the Individual Account of the respective Participants for
           whom the Contracts are held; however, the Trustee shall not pay a
           premium unless the balance in the Individual Account to be charged is
           sufficient to pay the premium. The premium first shall be charged
           against the Participant Contribution Account until the Account is
           reduced to zero (0), and thereafter against the Employer Contribution
           Account of the Participant. If the balance is not sufficient to pay a
           premium when due, the Trustee shall notify the Committee of that fact
           and shall take the action on the Contract that the Committee shall
           direct.

       (d) Proceeds of Contracts paid to the Participant's Individual Account
           under this Article are subject to the distribution requirements of
           Articles VI, VII, VIII, IX and X.  The Trustee will not retain any
           proceeds for the benefit of the Trust.

15.5.  Payment of Insurance Premiums
       -----------------------------

       The Trustee shall take the action regarding all Contracts held under the
       Plan that the Committee may from time to time direct in writing. Unless
       the Committee directs otherwise, the Trustee may pay the net premium due
       on any Contract by applying any available dividend to reduce the premium.

15.6.  Duties of Insurance Company
       ---------------------------

       (a) No insurance company is a party to this Agreement nor shall any
           insurance company be responsible for the validity of this Agreement.
           No insurance company is required to examine the terms of this
           Agreement nor be responsible for any action taken by the Trustee.

       (b) Any Insurance Company issuing a Contract or Contracts under this
           Agreement shall be fully protected in dealing with the Trustee and
           shall not be required to ascertain whether the Trustee is acting
           pursuant to this Agreement. For the purpose of making application to
           an insurance company and in the exercise of any right or option
           contained in any policy, the insurance company may rely on the
           signature of the Trustee and shall be saved harmless and completely
           discharged in acting at the direction and authorization of the
           Trustee. An insurance company shall be discharged from all liability
           for any amount paid to the Trustee or paid pursuant to the direction
           of the Trustee, and it shall not be obliged to see to the
           distribution or further application of any monies it so pays.

15.7.  Execution of Contracts
       ----------------------

       For convenience of administration, the Trustee and the Committee,
       respectively, may designate one of their number to sign all applications
       and other forms required by any Insurance Company issuing Contracts under
       this Agreement, and the signature of any individual Trustee or Committee
       member in regard to the Insurance Company applications and forms shall be
       binding on the Trust and may be relied on by the Insurance Company.


                                 * * * * * * *

                                      62
<PAGE>
 
       ARTICLE XVI
       -----------
 

                               Participant Loans
                               -----------------


16.1.  Participant Loan Program
       ------------------------

       This Plan authorizes the Trustee to make loans on a nondiscriminatory
       basis to a Participant or Beneficiary in accordance with the loan policy
       established by the Committee, provided (a) the loan policy satisfies the
       requirements of Section 12.3; (b) loans are available to all Participants
       and Beneficiaries on a reasonably equivalent basis and are not available
       in a greater amount for Highly Compensated Employees than for other
       Employees; (c) any loan is adequately secured and bears a reasonable rate
       of interest; (d) the loan provides for repayment within a specified time;
       (e) the default provisions of the note prohibit offset of the
       Participant's Nonforfeitable Accrued Benefit prior to the time the
       Trustee otherwise would distribute the Participant's Nonforfeitable
       Accrued Benefit; (f) the amount of the loan does not exceed (at the time
       the Plan extends the loan) the present value of the Participant's
       Nonforfeitable Accrued Benefit; and (g) the loan otherwise conforms to
       the exemption provided by Code Section 4975(d)(1). If the joint and
       survivor requirements of Article VI apply to the Participant, the
       Participant may not pledge any portion of his or her Accrued Benefit as
       security for a loan made after August 18, 1985, unless, within the 90-day
       period ending on the date the pledge becomes effective, the Participant's
       spouse, if any, consents (in a manner described in Section 6.5 other than
       the requirement relating to the consent of a subsequent spouse) to the
       security or, by separate consent, to an increase in the amount of
       security. If the Employer is an unincorporated trade or business, a
       Participant who is an Owner-Employee may not receive a loan from the
       Plan, unless he or she has obtained a prohibited transaction exemption
       from the Department of Labor. If the Employer is an "S Corporation," a
       Participant who is a shareholder-employee (an employee or an officer)
       who, at any time during the Employer's taxable year, owns more than 5%,
       either directly or by attribution under Code Section 318(a)(1), of the
       Employer's outstanding stock may not receive a loan from the Plan, unless
       he has obtained a prohibited transaction exemption from the Department of
       Labor. If the Employer is not an unincorporated trade or business nor an
       "S Corporation," this Section does not impose any restrictions on the
       class of Participants eligible for a loan from the Plan.

16.2.  Loan Application
       ----------------

       (a) Applicants.  Any Plan Participant may apply for a loan from the Plan.
           ----------
           For purposes of this Section, "Participant" means any Participant,
           Former Participant or Beneficiary who is a party in interest,
           determined under ERISA Section 3(14) with respect to the Plan.
           Notwithstanding the immediately preceding sentence, an Owner-Employee
           or Shareholder-Employee, as these terms are defined in Article I, or
           a member of the family of the Owner-Employee or Shareholder-Employee,
           shall not be eligible to apply for or receive a Participant loan,
           unless an administrative exemption from the Prohibited Transaction
           Rules under ERISA has been granted in advance of the loan and only
           under the terms and conditions of the written administrative
           exemption issued by the U. S. Department of Labor. For purposes of
           this paragraph, "member of the family" means the individual's
           brothers and sisters (whether by whole or half blood), spouse,
           ancestors and lineal descendants under Code Section 267(c)(4).

       (b) Application Form.  All Participants shall have equal rights to 
           ----------------
           obtain a Participant loan, and the Committee shall not favor
           Participants who are officers, shareholders or Highly Compensated
           Employees. A Participant must apply for each loan in writing on an
           application form provided by the Committee which specifies the
           desired amount, requested duration and security for the loan.

16.3.  Loan Approval
       -------------

       The Committee shall review each loan application and, if the Participant
       satisfies all conditions established by this Article, the Committee shall
       approve the loan. The Committee shall not approve any loan if, based on
       the information at its disposal, it is reasonably likely that the
       Participant will not repay the loan under its terms.

16.4.  Limitation on Type of Loan
       --------------------------

       A Participant loan may be approved for one (1) or any combination of the
       following purposes:

       (a) expenses incurred for or necessary to obtain medical care, described
           in Code Section 213(d), of the Employee, the Employee's spouse,
           children, or dependents;

       (b) costs directly related to the purchase, excluding mortgage payments,
           of a principal residence for the Employee;

       (c) payment of tuition and related educational fees for the next twelve
           (12) months of post-secondary education for the Employee, the
           Employee's spouse, children or dependents; or

       (d) payment necessary to prevent the eviction of the Employee from, or a
           foreclosure on the mortgage of, the Employee's principal residence.

16.5.  Limitation on Amount of Loan
       ----------------------------

                                      63
<PAGE>
 
        The Committee will approve a Participant loan only if the loan, plus the
        current outstanding balance of all other outstanding loans to the
        Participant, does not exceed fifty percent (50%) of the Participant's
        vested Account Balance on the date of the loan. The maximum aggregate
        dollar amount of loans outstanding to any Participant may not exceed
        $50,000, considering all Participant loans from other employer qualified
        plans, reduced by the excess of the Participant's highest outstanding
        Participant loan balance during the twelve (12) month period ending on
        the date of the loan over the Participant's current outstanding
        Participant loan balance on the date of the loan. The minimum loan
        amount that the Committee may approve is $1,000.00.

16.6.   Limitation on Number of Outstanding Loans
        -----------------------------------------

        A Participant may have no more than two (2) loans outstanding at any
        time.

16.7.   Evidence of Loan
        ----------------

        The Committee shall document every loan in the form of a promissory note
        signed by the Participant for the face amount of the loan bearing a
        commercially reasonable rate of interest.

16.8.   Terms of Loan    
        -------------

        (a) Interest Rate.  The Committee will determine the applicable interest
            -------------                                                       
            rate by obtaining at least one (1) quote from a financial
            institution, chosen by the Committee, that is in the business of
            lending money. The quote must address the term of the loan, the
            security on the loan, the Participant's creditworthiness; whether
            the interest rate is adjustable during the term of the loan, and the
            intended use of the loan proceeds. The quote must reflect a
            commercially reasonable rate for the geographical region in which
            the Participant lives. The Committee must reevaluate interest rates
            for loans made more than one (1) month since the most recent
            Participant loan made by the Committee. The interest rate may be
            fixed or adjustable, as negotiated between the Committee and the
            Participant. The Committee will determine whether the interest rate
            is commercially reasonable when it approves the loan and at each
            scheduled adjustment, if any.

        (b) Payment.  The loan must provide for at least quarterly payments 
            -------  
            under a level amortization schedule.

        (c) Term.  The term for repayment of the loan will be fixed by the
            ----                                                          
            Committee. The term shall not be greater than five (5) years unless
            the loan is a home loan. A home loan may be repaid over a term not
            exceeding a period that is commercially reasonable. A home loan is a
            Participant loan used to acquire a dwelling which, within a
            reasonable time, the Participant will use as a principal residence.

        (d) Loan Renewal.  The Trustee may renew any loan against a vested 
            ------------
            Account Balance except that for purposes of the limitations
            contained in Section 16.5, the outstanding balance of any loan which
            is renegotiated, extended, renewed, or revised shall be treated as
            an amount received as a loan on the date of the renegotiation,
            extension, renewal, or revision.

16.9.  Security for Loan
       -----------------

        (a) Form
            ----

            (i)  A Participant must secure each loan with an irrevocable pledge
                 and assignment of the Participant's Account Balance in the form
                 provided by the Committee; and

            (ii) A Participant shall, as the Committee may require, secure each
                 loan with additional security the Committee accepts as
                 adequate.

        (b) Additional Collateral.  The Committee subsequently may request the
            ---------------------                                             
            Participant to secure each loan with additional collateral or
            substitute collateral if the original collateral is determined to be
            inadequate.



16.10.  Default Events
        --------------

        The Committee shall treat a Participant loan in default:

        (a) if any scheduled payment remains unpaid more than ninety (90) days;

        (b) upon the making or furnishing of any representation or statement to
            the Plan by or on behalf of the Participant which proves to have
            been false in any material respect when made or furnished;

        (c) upon the loss, theft, damage, destruction, sale or encumbrance to or
            of any of the collateral, or the making of any levy seizure or
            attachment thereof or thereon; or

                                       64
<PAGE>
 
        (d) upon the insolvency, business failure, appointment of receiver of
            any part of the property of, assignment for the benefit of creditors
            by, or the commencement of any proceeding under any bankruptcy or
            insolvency laws of, by or against the Participant, unless the
            Participant provides reasonable assurance to the Plan Committee that
            the ability of the Participant to repay the loan has not been
            substantially impaired and the obligation of the Participant to
            repay the loan will not be affected by any proceeding under
            applicable bankruptcy law.

        The Participant will make the opportunity to repay the loan, restore the
        loan to current status by paying any delinquent payments plus interest
        or, request distribution of the note, if and when the Participant is
        entitled to a Plan distribution. If the loan remains in default, the
        Committee may foreclose on other security or offset the Participant's
        vested account balance by the outstanding balance of the loan, if and
        when the Participant is entitled to a Plan distribution. If the amount
        of any payment or distribution is inadequate to repay the remaining
        balance of the note, the Participant shall be liable for any unpaid
        principal and accrued interest payment on the balance due.

        Notwithstanding the provisions of Articles VI through IX, if a
        Participant shall be in default under the terms of any Participant loans
        held by the Plan, then, for purposes of the Trustee's ability to
        foreclose, the Participant's Account, to the extent of such default,
        shall be considered immediately distributable at any time after the
        Participant's separation from Service with the Employer.

16.11.  Participant Directed Investment
        -------------------------------

        The Committee shall administer any Participant loan as a Participant
        directed investment of that portion of the Participant's vested Account
        Balance equal to the outstanding principal balance of the loan. The Plan
        will credit that portion of the Participant's interest with the interest
        earned on the note and with principal payments received. The Plan will
        charge that portion of the Participant's Account Balance with expenses
        directly related to the loan application, investigation of the
        Participant's credit, maintenance and collection of the note.

16.12.  Procedure on Benefit Distribution
        ---------------------------------

        When a Participant's vested benefits are distributable, the Trustee
        first shall offset any amount to which a Participant or Beneficiary
        otherwise shall be entitled by the outstanding balance of any loan made
        by the Participant.


                                 * * * * * * *

                                      65
<PAGE>
 
       ARTICLE XVII
       ------------
 
                     Rollovers, Mergers, Direct Transfers
                     ------------------------------------


17.1.  Participant Rollover Contributions
       ----------------------------------

       Any Participant who has the Employer's written consent and who has filed
       with the Trustee the form prescribed by the Committee may contribute cash
       or other property to the Trust other than as a voluntary contribution if
       the contribution is a Rollover Contribution which the Code permits an
       Employee to transfer either directly or indirectly from one qualified
       plan to another qualified plan. Before accepting a Rollover Contribution,
       the Employer or Trustee may require an Employee to furnish satisfactory
       evidence that the proposed transfer is in fact a Rollover Contribution
       which the Code permits an Employee to make to a qualified plan. A
       Rollover Contribution is not an Annual Addition.

       An eligible Employee, prior to satisfying the Plan's conditions, may make
       a Rollover Contribution to the Trust to the same extent and in the same
       manner as a Participant. If an Employee makes a Rollover Contribution to
       the Trust prior to satisfying the Plan's eligibility conditions, the
       Committee and Trustee must treat the Employee as a Participant for all
       purposes of the Plan except the Employee is not a Participant for
       purposes of sharing in Employer Contributions or Participant Forfeitures
       under the Plan until the Employee actually becomes a Participant in the
       Plan. If the Employee has a separation from Service prior to becoming a
       Participant, the Trustee will distribute the Rollover Account to the
       Participant as if it were an Employer Contribution Account.

       For any Rollover Contribution, the following requirements shall be met:

       (a) The Committee shall maintain a Participant's Rollover Contributions
           in a separate Rollover Account;

       (b) The Employer will direct the Trustee to invest the Rollover
           Contribution in a segregated investment Rollover Account for the
           Participant's sole benefit unless the Employer directs the Trustee to
           invest the Rollover Contribution as part of the Trust Fund. The
           Trustee will not have any investment responsibility for a
           Participant's segregated Rollover Account. The Participant, however,
           from time to time, may direct the Trustee in writing as to the
           investment of the segregated Rollover Account in property, or
           property interests, of any kind, real, personal or mixed; provided
           however, the Participant may not direct the Trustee to make loans to
           the Employer. A Participant's segregated Rollover Account alone will
           bear any extraordinary expenses resulting from investments made at
           the direction of the Participant. As of the Accounting Date, or other
           Valuation Date, for each Plan Year, the Committee will allocate and
           credit the net income or charge the net loss from a Participant's
           segregated Rollover Account and credit or charge respectively the
           increase or decrease in the fair market value of the assets of a
           segregated Rollover Account solely to that Rollover Account. The
           Trustee is not liable nor responsible for any loss resulting to any
           Beneficiary, nor to any Participant, because of any sale or
           investment made or other action taken pursuant to and in accordance
           with the direction of the Participant. In all other respects, the
           Trustee will hold, administer and distribute a Rollover Contribution
           in the same manner as any Employer Contribution made to the Trust
           Fund.

       (c) A Participant's Rollover Contributions shall not be forfeitable nor
           reduce in any way the obligations of the Employer under this
           Agreement.

17.2.  Merger and Direct Transfer
       --------------------------

       The Employer possesses the specific authority to enter into merger
       agreements or direct transfer of assets agreements with the trustees of
       other retirement plans described in Code Section 401(a), including an
       Elective Transfer defined in Section 17.3, and to accept the direct
       transfer of plan assets or to transfer plan assets, as a party to any
       agreement. Further, the Employer may permit the transfer of plan assets
       to an individual retirement account or an individual retirement annuity.
       However, the Employer, before any merger or direct transfer is
       consummated, shall be satisfied that the holding of any transferred
       assets is permitted by the transferee trusts. When the Trustee is so
       satisfied, the Trustee shall accept the direct transfer of plan assets or
       shall cause to be transferred the assets directed to be transferred and
       as appropriate shall direct the insurance company to transfer any
       Contracts held by it to the new Trustee. The Employer may direct the
       Trustee to accept a direct transfer of plan assets on behalf of an
       Employee prior to the date the Employee satisfies the Plan's eligibility
       conditions. If the Employer directs the Trustee to accept a direct
       transfer of plan assets, the Committee and Trustee must treat the
       Employee as a Participant for all purposes of the Plan except that the
       Employee is not a Participant for purposes of sharing in Employer
       Contributions or Participant Forfeitures under the Plan until the
       Employee actually becomes a Participant in the Plan.

       The Employer may not consent to, or be a party to, any merger or
       consolidation with another plan or to a transfer of assets and
       liabilities to another plan, unless, immediately after the merger,
       consolidation or transfer the surviving plan provides each Participant a
       benefit equal to or greater than the benefit each Participant would have
       received had the plan terminated immediately before the merger,
       consolidation or transfer.

17.3.  Certain Rollovers, Mergers and Direct Transfers Prohibited
       ----------------------------------------------------------

                                      66
<PAGE>
 
     Notwithstanding any contrary provision, neither the Employer nor the
     Trustee, after August 9, 1988, may consent to or be a party to a rollover,
     merger, consolidation or transfer of assets from a qualified plan which is
     required to provide benefits in the form of a joint and survivor annuity
     under Code Section 417, except with respect to an Elective Transfer, or
     unless the transferred benefits are in the form of paid-up individual
     annuity contracts guaranteeing the payment of the transferred benefits
     under the terms of the transferor plan and in a manner consistent with the
     Code and ERISA.  The Employer will direct the Trustee to hold, administer
     and distribute the transferred assets as a part of the Trust Fund and to
     maintain a separate Employer Contribution Account for the benefit of the
     Employee on whose behalf the Trustee accepted the transfer to reflect the
     value of the transferred assets.

     Unless a transfer of assets to this Plan is an Elective Transfer, the Plan
     will preserve all Code Section 411(d)(6) protected benefits with respect to
     those transferred assets, in the manner described in Section 11.2(c)(iii).
     A transfer is an Elective Transfer if: (a) the transfer satisfies Section
     17.2; (b) the transfer is voluntary, under a fully informed election by the
     Participant; (c) the Participant has an alternative that retains his or her
     Code Section 411(d)(6) protected benefits, including an option to leave the
     benefit in the transferor plan, if that plan is not terminating; (d) the
     transfer satisfies the applicable spousal consent requirements of the Code;
     (e) the transferor plan satisfies the joint and survivor notice
     requirements of the Code, if the Participant's transferred benefit is
     subject to those requirements; (f) the Participant has a right to immediate
     distribution from the transferor plan, in lieu of the Elective Transfer;
     (g) the transferred benefit is at least the greater of the single sum
     distribution provided by the transferor plan for which the Participant is
     eligible or the present value of the Participant's Accrued Benefit under
     the transferor plan payable at that plan's normal retirement age; (h) the
     Participant has a one hundred percent (100%) Nonforfeitable interest in the
     transferred benefit; and (i) the transfer otherwise satisfies applicable
     Treasury regulations.  An Elective Transfer may occur between qualified
     plans of any type.

     If the Plan receives a direct transfer, by merger or otherwise, of Elective
     Contributions, or amounts treated as Elective Contributions, under a Plan
     with a Code Section 401(k) arrangement, the distribution restrictions of
     Code Sections 401(k)(2) and 401(k)(10) continue to apply to those
     transferred Elective Contributions.


                                 * * * * * * *

                                       67
<PAGE>
 
       ARTICLE XVIII
       -------------
 

                                 Exclusive Benefit
                                 -----------------


18.1.  Exclusive Benefit
       -----------------

       Except as provided under this Article and Article III, the Employer has
       no beneficial interest in any asset of the Trust and no part of any asset
       in the Trust may ever revert to or be repaid to an Employer, either
       directly or indirectly. Further, prior to the satisfaction of all
       liabilities with respect to the Participants and their Beneficiaries
       under the Plan, no part of the corpus or income of the Trust Fund, or any
       asset of the Trust, may be used for, or diverted to, purposes other than
       the exclusive benefit of the Participants or their Beneficiaries. No
       amendment or revocation by the Employer of this Section may cause or
       permit any portion of the Trust Fund to revert to or become a property of
       the Employer.

18.2.  Denial of Request for Initial Approval
       --------------------------------------

       Any contribution to the Trust Fund associated with this Plan is
       conditioned on initial qualification of the Plan under applicable Code
       Sections 401(a), 403(a) or 405(a) and of the exemption of the Trust
       created under the Plan under Code Section 501(a). If the Commissioner of
       the Internal Revenue Service, upon the Employer's request for initial
       approval of this Plan and Trust, determines that the Plan is not
       qualified or the Trust is not exempt, then the Trustee may return to the
       Employer, within one (1) year after the date of final disposition of the
       Employer's request for initial approval, any contribution made by the
       Employer, and any increment attributable to the contribution.

18.3.  Mistake of Fact
       ---------------

       Notwithstanding any contrary provision in this Agreement, if a
       contribution is made by an Employer by a mistake of fact, the
       contribution may be returned to the Employer within one (1) year after
       the payment of the contribution. The amount of the mistaken contribution
       is equal to the excess of (a) the amount contributed over (b) the amount
       that would have been contributed had there not occurred a mistake of
       fact. Earnings attributable to mistaken contributions may not be returned
       to the Employer, but losses attributable thereto shall reduce the amount
       to be returned.

18.4.  Disallowance of Deduction
       -------------------------

       Notwithstanding any contrary provision in this Agreement, any
       contributions by the Employer to the Plan and Trust are conditioned on
       the deductibility of the contribution by the Employer under the Code. To
       the extent any deduction is disallowed, the Employer, within one (1) year
       following a final determination of the disallowance, whether by agreement
       with the Internal Revenue Service or by final decision in a court of
       competent jurisdiction, may demand repayment of the disallowed
       contribution, and the Trustee shall return the contribution within one
       (1) year following the disallowance. Earnings attributable to excess
       contributions may not be returned to the Employer, but losses
       attributable thereto shall reduce the amount to be returned.
 
18.5.  Spendthrift Clause
       ------------------

       Except as provided below, no Participant, Former Participant or
       Beneficiary shall have the right to anticipate, assign or alienate any
       benefit provided under the Plan and the Trustee will not recognize any
       anticipation, assignment or alienation. Furthermore, a benefit under the
       Plan is not subject to attachment, garnishment, levy, execution or other
       legal or equitable process. All provisions of this Agreement shall be for
       the exclusive benefit of those designated herein. These restrictions
       shall not apply in the following case(s):

       .   Participant Loans. If a Participant, Former Participant or
           -----------------
           Beneficiary who has become entitled to receive payment of benefits
           under this Agreement is indebted to the Trustee, by virtue of a
           Participant Loan, the Committee may direct the Trustee to pay the
           indebtedness and charge it against the Individual Account of the
           Participant, Former Participant or Beneficiary; provided that in the
           case of a married Participant, the Participant's spouse must consent
           in writing to the application of the Participant's benefits toward
           the repayment and discharge of the Participant Loan.

       .   Distributions Pursuant to Qualified Domestic Relations Orders.  The
           -------------------------------------------------------------      
           Committee may direct the Trustee under the nondiscriminatory policy
           adopted by the Committee to pay an Alternate Payee designated under a
           Qualified Domestic Relations Order as defined in Code Section 414(p)
           or any domestic relations order entered before January 1, 1985 if
           payment of benefits pursuant to the order has commenced as of that
           date. To the extent provided under a Qualified Domestic Relations
           Order, a former spouse of a Participant shall be treated as the
           spouse or surviving spouse for all purposes of the Plan.

       .   Distributions Under Domestic Relations Orders. Nothing contained in
           ---------------------------------------------                      
           this Plan prevents the Trustee, under the direction of the Committee,
           from complying with the provisions of a qualified domestic relations
           order, as defined in Code Section 414(p) ("QDRO"). This Plan
           specifically permits distribution to an Alternate Payee under a QDRO
           at any time, whether or not the Participant has attained the earliest
           retirement age (as defined under Code Section 414(p)) under the Plan.
           A distribution to an Alternate Payee prior to the Participant's
           attainment of earliest retirement age is available only if: (1) the
           order specifies

                                       68
<PAGE>
 
         distribution at that time or permits an agreement between the Plan and
         the Alternate Payee to authorize an earlier distribution; and (2) if
         the present value of the Alternate Payee's benefits under the Plan
         exceeds $3,500, and the order requires, the Alternate Payee's consent
         to any distribution occurring prior to the Participant's attainment of
         earliest retirement age. Nothing in this Section gives a Participant a
         right to receive distribution at a time otherwise not permitted under
         the Plan nor does it permit the Alternate Payee to receive a form of
         payment not otherwise permitted under the Plan.

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

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

         To the extent it is consistent with the provisions of the QDRO, the
         Committee may direct the Trustee to invest any partitioned amount in a
         segregated subaccount or separate account and to invest the account in
         Federally insured, interest-bearing savings account(s) or time
         deposit(s) (or a combination of both), or in other fixed income
         investments. A segregated subaccount remains a part of the Trust, but
         it alone shares in any income it earns, and it alone bears any expense
         or loss it incurs. The Trustee will make any payments or distributions
         required under this Section by separate benefit checks or other
         separate distribution to the Alternate Payee(s).

18.6.    Termination
         -----------

         Upon termination of the Plan, in lieu of the distribution provisions of
         Article X, the Committee will direct the Trustee to distribute each
         Participant's Nonforfeitable Account Balance, in a single sum, as soon
         as administratively feasible after the later of the termination of the
         Plan or the receipt of a favorable determination letter from the Office
         of the Key District Director, if an application is filed, irrespective
         of the present value of the Participant's Nonforfeitable Account
         Balance and whether the Participant consents to that distribution. This
         paragraph applies only if:

         (a) the Plan does not provide an annuity option;

         (b) the Plan is a profit sharing plan on its termination date; and

         (c) as of the period between the Plan termination date and the final
             distribution of assets, the Employer does not maintain any other
             defined contribution plan (other than an employee stock ownership
             plan).

         For Participants or Beneficiaries who cannot be located upon Plan
         termination, and whose Nonforfeitable Account Balance exceeds $3,500,
         to liquidate the Trust, the Committee will purchase a deferred annuity
         contract, distribute the benefits to an individual retirement account,
         or transfer the account to an ongoing qualified plan of a Related
         Employer. If the Committee distributes the lost Participant's or
         Beneficiary's benefits to an individual retirement account or purchases
         an annuity, and the Participant's or Beneficiary's whereabouts remain
         unknown for the duration of the escheat period, the benefits will
         ultimately escheat to the state under applicable state law.

                                       69
<PAGE>
 
18.7.  Employees in Qualified Military Service
       ---------------------------------------

       Notwithstanding any provision of this Plan to the contrary,
       contributions, benefits and service credits with respect to qualified
       military service will be provided in accordance with Section 414(u) of
       the Internal Revenue Code.

                                 * * * * * * *

                                      70
<PAGE>
 
       ARTICLE XIX
       -----------
 

                                 Construction
                                 ------------


19.1.  Headings
       --------

       The headings in this Agreement are for convenience only and shall not be
       considered in construing this Agreement.

19.2.  Context
       -------

       In this Agreement, wherever the context of the Plan dictates, words used
       in the masculine may be construed in the feminine, the plural includes
       the singular and the singular includes the plural.

19.3.  Employment Not Guaranteed
       -------------------------

       Nothing contained in this Agreement, or regarding the establishment of
       the Plan or Trust, or any modification or amendment to the Agreement,
       Plan or Trust, or in the creation of any Individual Account, or the
       payment of any benefit, shall be construed as giving any Employee,
       Participant or Beneficiary whomsoever any right to continue in the
       Service of the Employer, any legal or equitable right against the
       Committee, against the Employer, its stockholders, officers or directors
       or against the Trustee, except as expressly provided by the Agreement,
       the Plan, the Trust, ERISA or by separate agreement. Employment of all
       persons by the Employer shall remain subject to termination by the
       Employer to the same extent as if this Agreement had never been executed.

19.4.  State Law
       ---------

       This Agreement and each of its provisions shall be construed and their
       validity determined by the laws of the State of Texas and applicable
       Federal law to the extent Federal statute supersedes Texas law.

19.5.  Parties Bound
       -------------

       This Agreement shall be binding on all persons entitled to benefits under
       the Plan, their respective heirs and legal representatives, on the
       Employer, its successors and assigns, and on the Trustee, the Committee
       and their successors.


                                 * * * * * * *

                                       71
<PAGE>
 
                                  ARTICLE XX
                                  ----------

                  Provisions Relating to Employer Securities
                  ------------------------------------------


20.1.  Investment in Employer Securities
       ---------------------------------

       (a) The Trustee may invest Participant Accounts in Employer Securities.
           The Employer Securities may be Treasury Stock which has been
           purchased by the Employer; stock which has been authorized, but never
           issued by the Employer; Employer Securities traded on a public
           market; or Employer Securities owned by shareholders of the Employer.

       (b) Purchase Price.  For the purchase of Employer Securities from the
           --------------                                                   
           Employer or from a shareholder of the Employer, the Trustee shall not
           pay more than fair market value as determined by the current market
           price of the Employer Securities. For the purchase of Company Stock
           from a Disqualified Person, the value of the Company Stock must be
           determined as of the date of the transaction. For any other purchase,
           the value shall be at the discretion of the Trustee, based on a
           current valuation or based upon the price fixed as of the most recent
           Valuation Date. Notwithstanding the preceding provisions of this
           Section, the Trustee may purchase Employer Securities at a price
           lower than that determined in accordance with the preceding
           provisions of this Section from any source whatsoever. If a public
           market is made for the Employer Securities, the Trustee shall
           purchase the Employer Securities at the public trading price
           determined at the time of the purchase regardless of whether such
           stock is purchased from the Employer or on the open market.

20.2.  Voting Rights
       -------------

       Regarding the Employer Securities held in the Trust Fund, the Trustee may
       vote the same in person or by proxy; may join in any merger,
       reorganization of capital adjustment; may exercise or sell any
       conversion, subscription, or similar rights; and may hold any assets in
       the name of its nominee or unregistered agent. A majority vote of the
       Trustees shall control the vote of the Employer Securities.

       Notwithstanding the foregoing, if the Employer has a registration-type
       class of securities defined in Code Section 409(e)(4), each Participant
       or Beneficiary in the Plan shall be entitled to direct the Trustee as to
       the manner in which his or her allocable share of the Employer Securities
       held in the Trust Fund will be voted. If the Employer does not have a
       registration-type class of securities defined in Code Section 409(e)(4),
       each Participant or Beneficiary shall be entitled to direct the Trustee
       as to the manner in which the voting rights under securities of the
       Employer which are allocated to his or her account are to be exercised
       regarding any corporate matter involving the voting of the shares with
       respect to the approval or disapproval of any corporate merger or
       consolidation, recapitalization, reclassification, liquidation,
       dissolution, sale of substantially all assets of a trade or business, or
       any similar transaction which the Secretary may prescribe in regulations.

20.3.  Tender Offers
       -------------

       Each Participant, or, in the event of his death, his Beneficiary, shall
       have the right, to the extent of the number of full shares of Employer
       Securities in his account, to direct the Trustee in writing as to the
       manner in which to respond to a tender or exchange offer with respect to
       shares of such Employer Securities.

       The Employer shall utilize its best efforts to timely distribute or cause
       to be distributed to each Participant (or Beneficiary) such information
       as will be distributed to shareholders of the Employer in connection with
       any such tender or exchange offer.

       The Trustee shall, with respect to all Employer Securities held in the
       Trust Fund, accept or reject the terms of any tender offer and,
       accordingly, tender Employer Securities held by the Trustee in the Trust
       Fund in accordance with the terms and provisions of any tender offer, or
       not tender such Employer Securities, as directed by the respective
       Participants (or Beneficiaries). With respect to shares of Employer
       Securities which are allocated to Participants who have not given
       directions, the Trustee shall not tender any shares of Employer
       Securities with respect to which such Participants (or Beneficiaries)
       have the right of direction.

       The Committee may establish such rules and guidelines as it deems
       appropriate to properly effect the provisions of this Section.

20.4.  Shareholder Agreements
       ----------------------

       The Trustee may enter into agreements with shareholders to purchase
       shares of Employer Securities under which the Trustee is granted an
       option to purchase all or a portion of the shares of Employer Securities
       owned by the shareholders on the death of the shareholder or
       shareholders. To provide for the funding of the purchase of shares of
       Employer Securities, the Trustee may apply for and pay premiums on
       contracts of life insurance on the life of such shareholder for the
       benefit of the Trust Fund as a whole, provided, however, that if this
       Plan invests in Leveraged Employer Securities the Trustee may not enter
       into any agreement which would obligate the Plan and Trust to purchase
       Employer Securities from a particular shareholder at an indefinite time
       determined upon the happening of an event such as the death of the
       shareholder.

20.5.  Special Provisions Applicable to Employer Securities
       ----------------------------------------------------

                                       72
<PAGE>
 
           In accordance with Rule 16(b)-3 adopted by the Securities and
           Exchange Commission, the following provisions shall apply with
           respect to purchases, sales and allocations to Participant accounts
           of Employer Securities, notwithstanding anything else to the contrary
           in this Plan or in any rules adopted hereunder:

       (a) Annual Limit on Shares Acquired or Awarded
           ------------------------------------------

           The Plan shall not acquire or award to Participants in any fiscal
           year of the Plan more than 2% of the outstanding shares of Employer
           Securities of the Corporation based on the number of such shares
           outstanding as of the beginning of each such fiscal year; and

       (b) Fiduciary Duties with regard to Prices and Values
           -------------------------------------------------

           The Trustee and other Plan Fiduciaries shall act in accordance with
           their fiduciary duties in determining the prices at which the Trustee
           shall purchase Employer Securities and in determining the value used
           in allocating such securities to Participant Accounts.

20.6.  Limitation with Respect to an Electing Estate or Shareholder
       ------------------------------------------------------------

       (a) If the executor of the estate of a deceased shareholder sells
           Employer Securities to the Trust and elects (with the consent of the
           Corporation) an estate tax deduction pursuant to Section 2057(a) of
           the Code, or if a shareholder sells Employer Securities to the Trust
           and elects (with the consent of the Corporation) favorable tax
           treatment under Section 1042 of the Code, then no portion of the
           Trust Assets attributable to (or allocable in lieu of) the Employer
           Securities acquired by the Trust in such transaction may be allocated
           (directly or indirectly):

           (i)    During the "nonallocation period", to the Accounts of the
                  decedent whose estate makes such sale; or to the shareholder
                  who makes the sale;

           (ii)   During the "nonallocation period" to the Accounts of any
                  person related to the decedent or shareholder (within the
                  meaning of Section 267(b) of the Code; or

           (iii)  To the Accounts of any shareholder owning (as determined under
                  Section 318(a) of the Code, at any time described in Code
                  Section 409(n)(3)(B), more than 25% (in value or in number of
                  shares) of any class of outstanding stock of the Company.

       (b) For purposes of this Section, the "nonallocation period" is the ten-
           year period beginning on the later of:

           (i)    the date on which the Employer Securities held by the estate
                  or shareholder are sold to the Plan, or
           (ii)   if such Employer Securities are acquired with the proceeds of
                  an exempt loan, the date of allocation of the shares of
                  Employer Securities released from the suspense account with
                  respect to the final payment on such exempt loan.

                                 * * * * * * *

                                       73
<PAGE>
 
     IN WITNESS WHEREOF, the Employer, PATINA OIL & GAS CORPORATION, and the
Trustee, MERRILL LYNCH TRUST COMPANY OF AMERICA, have caused this instrument to
be executed on this _________________ day of December, 1997.
 
                              EMPLOYER:

                              PATINA OIL & GAS CORPORATION



                              By:_______________________________ President


                              INITIAL TRUSTEE



                              By:_______________________________ Keith M.
                              Crouch


                              TRUSTEE:

                              MERRILL LYNCH TRUST COMPANY OF AMERICA



                              By:_______________________________

                                       74