PRIMESOURCE CORPORATION

                               401(k) SAVINGS PLAN



                (Amended and Restated Effective January 1, 1997)







<PAGE>





                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN

                (Amended and Restated Effective January 1, 1997)




              PrimeSource  Corporation  (formerly  known as  Phillips  & Jacobs,
Incorporated),   a  Pennsylvania   corporation,   (the  "Company")  adopted  the
PrimeSource  Corporation  401(k)  Savings  Plan  (formerly  known as  Phillips &
Jacobs,  Incorporated  401(k)  Savings Plan) (the "Plan").  The Plan was amended
from time to time.

               The  Company  hereby  amends  and  completely  restates  the Plan
effective  January 1, 1997,  except as expressly  stated to the contrary herein,
subject to the subsequent  condition that the Internal  Revenue Service issues a
determination  that the Plan as amended and restated herein meets all applicable
requirements of section 401(a) of the Code (as defined in subsection 1(f)), that
employer  contributions  thereto remain deductible under section 404 of the Code
and that the trust fund maintained with respect thereto remains tax exempt under
section  501(a) of the Code.  The Plan, as herein  amended and  restated,  shall
apply only to an Employee who is credited with an Hour of Service (as defined in
subsection 1(p)) on or after January 1, 1997,  except as expressly stated to the
contrary herein. The rights and benefits,  if any, of a former employee shall be
determined  in  accordance  with the  provisions of the Plan as in effect on the
date he last was credited with an Hour of Service.


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                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)

                                TABLE OF CONTENTS

  Section                                                                  Page
        1           DEFINITIONS.............................................  1
                 (a)   Accrued Benefit......................................  1
                 (b)   Administrator or Plan Administrator..................  1
                 (c)   Annual Additions.....................................  1
                 (d)   Board of Directors...................................  1
                 (e)   Break in Service.....................................  1
                 (f)   Code.................................................  2
                 (g)   Committee............................................  2
                 (h)   Company..............................................  2
                 (i)   Compensation.........................................  2
                 (j)   Disability...........................................  2
                 (k)   Employee.............................................  3
                 (l)   Entry Date...........................................  3
                 (m)   ERISA................................................  3
                 (n)   Fiduciary............................................  3
                 (o)   Fund.................................................  4
                 (p)   Hour of Service......................................  4
                 (q)   Investment Category..................................  6
                 (r)   Investment Manager...................................  6
                 (s)   Limitation Year......................................  6
                 (t)   Matching Account.....................................  7
                 (u)   Member...............................................  7
                 (v)   Normal Retirement Date...............................  7
                 (w)   Participating Company................................  7
                 (x)   Period of Service....................................  7
                 (y)   Period of Severance..................................  7
                 (z)   Plan.................................................  8
                (aa)   Prior Year...........................................  8
                (ab)   PrimeSource Stock....................................  8
                (ac)   Prior Plan...........................................  8
                (ad)   Related Entity.......................................  8
                (ae)   Restatement Effective Date...........................  9
                (af)   Rollover Account.....................................  9
                (ag)   Salary Reduction Account.............................  9
                (ah)   Service..............................................  9
                (ai)   Severance Date....................................... 10
                (aj)   Transferred Account.................................. 11
                (ak)   Trust Agreement...................................... 11
                (al)   Trustee.............................................. 11
                (am)   Valuation Date....................................... 11
                (an)   Voluntary Contributions Account...................... 11
                (ao)   Year of Service for Eligibility...................... 11




<PAGE>


                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)

                                TABLE OF CONTENTS

  Section                                                                   Page
        2           ADMINISTRATION OF THE PLAN............................... 12
                 (a)   Allocation of Responsibility.......................... 12
                 (b)   Plan Administrator.................................... 12
                 (c)   Committee............................................. 12
                 (d)   Powers of Board of Directors.......................... 13
                 (e)   Powers of Trustee..................................... 14
                 (f)   Claims................................................ 14
                 (g)   Fiduciary Compensation................................ 15
                 (h)   Plan Expenses......................................... 15
                 (i)   Fiduciary Insurance................................... 15
                 (j)   Indemnification....................................... 15

        3           PARTICIPATION IN THE PLAN................................ 16
                 (a)    Initial Eligibility.................................. 16
                 (b)    Measuring Service.................................... 17
                 (c)    Termination and Requalification...................... 17
                 (d)    Commencement of Participation........................ 18
                 (e)    Special Rule for Rollovers........................... 18
                 (f)    Termination of Membership............................ 18

        4           MEMBER AND PARTICIPATING COMPANY CONTRIBUTIONS........... 19
                 (a)    Salary Reduction Contributions....................... 19
                 (b)    Salary Reduction Contribution Limitations............ 19
                 (c)    Salary Reduction Account............................. 21
                 (d)    Participating Company Matching Contributions......... 21
                 (e)    Matching Account..................................... 22
                 (f)    Compliance with Salary Reduction Contributions
                         Discrimination Tests................................ 22
                 (g)    Compliance with Participating Company Matching

                         Contributions Discrimination Tests.................. 26
                 (h)    Payroll Taxes........................................ 31
                 (i)    Rollovers............................................ 31
                 (j)    Other Member Contributions........................... 31
                 (k)    Transferred and Voluntary Contributions Accounts..... 31
                 (l)    Deductibility........................................ 32

        5           MAXIMUM CONTRIBUTIONS AND BENEFITS....................... 33
                 (a)    Defined Contribution Limitation...................... 33
                 (b)    Combined Limitation.................................. 34
                 (c)    Combined Limitation Computation...................... 34
                 (d)    Definition of "Compensation" for Code Limitations.... 35
                 (e)    Transition Provision................................. 37





<PAGE>


                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)

                                TABLE OF CONTENTS

  Section                                                                   Page
        6           ADMINISTRATION OF FUNDS.................................. 38
                 (a)   Investment Control.................................... 38
                 (b)   Employer Stock........................................ 38
                 (c)   Member Elections...................................... 39
                 (d)   No Member Election.................................... 39
                 (e)   Facilitation.......................................... 39
                 (f)   Valuations............................................ 40
                 (g)   Allocation of Gain or Loss............................ 40
                 (h)   Bookkeeping........................................... 40
                 (i)   Tender Offers......................................... 40
                 (j)   Voting Company Stock.................................. 41

        7           BENEFICIARIES AND DEATH BENEFITS......................... 42
                 (a)   Designation of Beneficiary............................ 42
                 (b)   Beneficiary Priority List............................. 42
                 (c)   Proof of Death........................................ 43
                 (d)   Divorce............................................... 43

        8           BENEFITS FOR MEMBERS..................................... 44
                 (a)   Retirement Benefit.................................... 44
                 (b)   Death Benefit......................................... 44
                 (c)   Disability Benefit.................................... 44
                 (d)   Termination of Employment Benefit..................... 44
                 (e)   Time of Forfeiture.................................... 47

        9           DISTRIBUTION OF BENEFITS................................. 48
                 (a)   Commencement.......................................... 48
                 (b)   Benefit Forms......................................... 49
                 (c)   Benefit Election...................................... 49
                 (d)   Distributions in Kind................................. 49
                 (e)   Deferred Payments and Installments.................... 49
                 (f)   Withholding........................................... 50
                 (g)   Compliance with Code Requirements..................... 50
                 (h)   Distribution Limitations ............................. 50
                 (i)   Rollover Election . . . .............................. 51

       10           IN-SERVICE DISTRIBUTIONS................................. 53
                 (a)   General Rule.......................................... 53
                 (b)   Elective Distributions................................ 53
                 (c)   Age 59-1/2............................................ 53
                 (d)   Hardship.............................................. 53
                 (e)   Special Vested Balance Calculation Rule............... 55





<PAGE>


                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)

                                TABLE OF CONTENTS

  Section                                                                  Page
       11           LOANS.................................................... 57
                 (a) Availability............................................ 57
                 (b) Minimum Requirements.................................... 57
                 (c) Accounting.............................................. 59

       12           TITLE TO ASSETS.......................................... 60

       13           AMENDMENT AND TERMINATION................................ 61
                 (a)  Amendment.............................................. 61
                 (b)  Termination............................................ 61
                 (c)  Conduct on Termination................................. 61

       14           LIMITATION OF RIGHTS..................................... 63
                 (a)  Alienation............................................. 63
                 (b)  Qualified Domestic Relations Order Exception........... 63
                 (c)  Employment............................................. 63

       15           MERGERS, CONSOLIDATIONS OR TRANSFERS OF PLAN ASSETS...... 65
                 (a)  General Rule........................................... 65
                 (b)  Protected Benefits..................................... 65
                 (c)  Special Provisions Applicable to Transferred Accounts
                       from The Momentum Money-Maker 401(k)
                       Retirement Plan and the Onondaga Litho Supply Co.,
                       Inc. Employees' Profit Sharing and Retirement Plan.... 65
                 (d)  In-Service Distribution from Certain Transferred

                        Accounts............................................. 69
                 (e)  Vesting -- Dixie Plan.................................. 69
                 (f)  Code Requirements...................................... 69

       16           PARTICIPATION BY RELATED ENTITIES........................ 70
                 (a)  Commencement........................................... 70
                 (b)  Termination............................................ 70
                 (c)  Single Plan............................................ 70
                 (d)  Delegation of Authority................................ 70

       17           TOP-HEAVY REQUIREMENTS................................... 71
                 (a) General Rule............................................ 71
                 (b) Calculation of Top-Heavy Status......................... 71
                 (c) Definitions............................................. 71
                 (d) Combined Benefit Limitation............................. 74
                 (e) Vesting................................................. 74
                 (f) Minimum Contribution.................................... 74





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                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)

                                TABLE OF CONTENTS

  Section                                                                   Page
       18           MISCELLANEOUS............................................ 76
                 (a) Incapacity.............................................. 76
                 (b) Reversions.............................................. 76
                 (c) Employee Data........................................... 77
                 (d) In Writing Requirement.................................. 77
                 (e) Doubt as to Right to Payment............................ 77
                 (f) Inability to Locate Distributee......................... 77
                 (g) Estoppel of Members and Their Beneficiaries............. 78
                 (h) Law Governing........................................... 78
                 (i) Pronouns................................................ 78
                 (j) Interpretation.......................................... 78

     Schedule A............................................................. A-1

































<PAGE>


1.       DEFINITIONS

               (a) "Accrued Benefit" shall mean on any date of determination the
               value of a Member's  share of the Fund.  (b)  "Administrator"  or
               "Plan  Administrator"  shall mean a plan administrator within the
               meaning  of  the  Code  and  ERISA.  The  Company  shall  be  the
               Administrator.  (c) "Annual Additions" shall mean the sum for any
               Limitation  Year of (i)  employer  contributions,  (ii)  employee
               contributions,  (iii)  forfeitures and (iv) amounts  described in
               sections 415(l) and 419A(d) of the Code,  which are (A) allocated
               to an account  which  provides  medical  benefits  under  section
               401(h)  or  419(e)  of  the  Code  and  (B)  treated  as  "Annual
               Additions"  to the account of a Member under such  provisions  of
               the Code. "Annual  Additions" shall include excess  contributions
               as defined in section  401(k)(8)(B) of the Code, excess aggregate
               contributions as defined in section  401(m)(6)(B) of the Code and
               excess  deferrals  as  described  in section  402(g) of the Code,
               regardless of whether such amounts are  distributed or forfeited.
               "Annual  Additions" shall not include (i) rollover  contributions
               (as  defined  in  sections  402(c),   403(a)(4),   403(b)(8)  and
               408(d)(3)  of  the  Code),  (ii)  employee   contributions  to  a
               simplified  employee pension plan which are excludable from gross
               income under  section  408(k)(6) of the Code or (iii)  "buy-back"
               contributions  made under  subsection  8(d)(iv) of the Plan.  (d)
               "Board of  Directors"  shall mean the Board of  Directors  of the
               Company  or  any  committee  or  delegee  thereof  designated  in
               accordance  with  subsection  2(d).  (e) "Break in Service" shall
               mean  for   purposes  of  Section  3  a  specified   twelve-month
               computation  period in which an Employee  is  credited  with less
               than 501 Hours of Service and for  purposes of Section 8 a Period
               of Severance of at least five years.

<PAGE>


               (f)  "Code"  shall mean the  Internal  Revenue  Code of 1986,  as
               amended,  and the same as may be  further  amended  from  time to
               time.  (g)  "Committee"  shall  mean the  individual  or group of
               individuals  designated  to control and manage the  operation and
               administration  of the Plan to the extent set forth  herein.  (h)
               "Company"  shall mean  PrimeSource  Corporation,  a  Pennsylvania
               corporation.   (i)  "Compensation"  shall  mean  the  total  cash
               remuneration  for services paid to an Employee by a Participating
               Company  for  services  during  the  portion  of a plan Year such
               Employee is eligible to participate  under  subsections  3(a) and
               3(d).   "Compensation"   shall  also  include   amounts  of  cash
               remuneration  for  services  which  an  Employee  elects  to have
               withheld from his  remuneration for services under this Plan or a
               plan which  meets the  requirements  of section  125 of the Code.
               "Compensation"  shall not  include  (i) income  from  exercise of
               stock  options,  receipt or vesting of  restricted  stock grants,
               exercise  of stock  appreciation  rights or similar  equity-based
               compensation  arrangements,  (ii)  severance  pay, (iii) deferred
               compensation,  (iv) expense  reimbursements  or allowances of any
               kind,  including,  but not limited to, tuition  reimbursement and
               car  allowances,  (v)  moving  expenses,  and (vi)  the  value of
               welfare benefits or perquisites or similar items.  "Compensation"
               with  respect to any Member for any Plan Year shall be limited to
               $150,000 (or an increased  amount  permitted in accordance with a
               cost of living adjustment under section 415(d) of the Code).
<PAGE>


                     (j)        "Disability" shall mean a medically determinable
physical or mental impairment which would qualify a
Member for benefits  under the  Company's  long-term  disability  plan,  without
regard to whether the Member  participates  in such plan and is of a potentially
permanent  character  which  prevents  a Member  from  continuing  his usual and
customary  employment  with  a  Participating   Company.   Disability  shall  be
determined  by the  Committee  in its absolute  discretion  on the basis of such
medical evidence as the Committee deems necessary or desirable.

                     (k)        "Employee" shall mean each and every person who
is an employee of a Participating Company or a Related
Entity.  The term  "Employee"  shall  also  include  a person  who is a  "leased
employee"  (within the meaning of section 414(n)(2) of the Code) with respect to
a Participating Company or a Related Entity.  Notwithstanding the foregoing,  no
person who is a "leased employee" or who a Participating  Company  determines is
not its employee for purposes of wage  withholding  required under section 3401,
et. seq. of the Code  (regardless of whether an  administrative  agency or court
rules that such person is a  Participating  Company's  employee for any purpose)
shall be eligible to  participate  in this Plan or be deemed an  "Employee"  for
purposes of eligibility to participate in this Plan.

                     (l) "Entry Date" shall mean the first day of each  January,
April, July and October of each Plan Year.

Effective  July 1, 1999,  "Entry Date" shall mean the first day of each calendar
month.

                     (m)        "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended, and the same as
may be further amended from time to time.
                     (n)        "Fiduciary" shall mean a person who, with
respect to the Plan, (i) exercises any discretionary
authority  or  discretionary  control  respecting  management  of  the  Plan  or
exercises any authority or control with respect to management or  disposition of
the  Plan's  assets,   (ii)  renders  investment  advice  for  a  fee  or  other
compensation,  direct or indirect,  with respect to any monies or other property
of the Plan, or has any authority or  responsibility  to do so, or (iii) has any
discretionary authority or discretionary responsibility in the administration of
the Plan.


<PAGE>


               (o)  "Fund"  shall mean the  assets of the Plan.  All  Investment
               Categories shall be part of the Fund.



               (p)        "Hour of Service"

               (i) General Rule.  "Hour of Service" shall mean each hour (A) for
               which an Employee is directly or indirectly  paid, or entitled to
               payment,  by a Participating  Company or a Related Entity for the
               performance of duties or (B) for which back pay,  irrespective of
               mitigation of damages,  has been either awarded or agreed to by a
               Participating  Company or a Related Entity.  These hours shall be
               credited to the  Employee  for the period or periods in which the
               duties were performed or to which the award or agreement pertains
               irrespective of when payment is made. The same hours shall not be
               credited under both (A) and (B) above.

               (ii) Paid  Absences.  An Employee shall also be credited with one
               "Hour  of  Service"  for each  hour for  which  the  Employee  is
               directly  or  indirectly  paid,  or  entitled  to  payment,  by a
               Participating  Company or a Related Entity for reasons other than
               the  performance  of duties or absence due to vacation,  holiday,
               illness, incapacity,  disability, layoff, jury duty or authorized
               leave of  absence  for a period  not  exceeding  one year for any
               reason in accordance  with a uniform  policy  established  by the
               Committee;  provided,  however,  not  more  than  501  "Hours  of
               Service" shall be credited to an Employee  under this  subsection
               1(p)(ii) on account of any single, continuous period during which
               the Employee  performs no duties and provided,  further,  that no
               credit  shall be given if payment (A) is made or due under a plan
               maintained  solely for the purpose of complying  with  applicable
               worker's  compensation,  unemployment  compensation or disability
               insurance laws or (B) is made solely to reimburse an Employee for
               medical or medically related expenses incurred by the Employee.

<PAGE>


               (iii) Military. An Employee shall also be credited with one "Hour
               of Service" for each  regularly  scheduled work hour during which
               the Employee is absent on active duty in the military  service of
               the  United   States   under  leave  of  absence   granted  by  a
               Participating  Company or a Related Entity provided he returns to
               employment  with a  Participating  Company  or a  Related  Entity
               within   90  days   after   his   release   from   active   duty.
               Notwithstanding  the  foregoing or any  provision of this Plan to
               the contrary,  Hours of Service  credit with respect to qualified
               military  service  will be provided in  accordance  with  section
               414(u) of the Code if that provides greater credit.

               (iv)  Maternity/Paternity.  For purposes of  subsection  1(e), an
               Employee  shall be credited  with one "Hour of Service"  for each
               hour that  otherwise  would  normally  have been  credited to the
               Employee but during  which such  Employee is absent from work for
               any  period  (A) by reason of the  Employee's  pregnancy,  (B) by
               reason of the birth of the Employee's child, (C) by reason of the
               placement  of a child with such  Employee in  connection  with an
               adoption  of such child by the  Employee  or (D) for  purposes of
               caring for a child for a period beginning  immediately  following
               such  birth or  placement,  provided  that an  Employee  shall be
               credited  with no more than 501 "Hours of  Service" on account of
               any  single  continuous  period of  absence by reason of any such
               pregnancy, birth or placement and provided further that "Hours of
               Service" credited to an individual on account of such a period of
               absence  shall be credited in the Plan Year in which such absence
               begins if an Employee  would  otherwise  fail to be credited with
               501 or more "Hours of Service" in such Plan Year or, in any other
               case, in the immediately following Plan year.


               (v) Equivalencies.  If, for Plan purposes,  an Employee's records
               are kept on other than an hourly  basis as described  above,  the
               Committee,  according to uniform  rules  applicable to a class of
               Employees or Members,  may apply the following  equivalencies for
               purposes of crediting "Hours of Service":


<PAGE>


Basis Upon Which Records        Credit Granted to Individual if Individual Earns
are Maintained                       One or More Hours of Service During Period

Shift                                      Actual hours for full shift
Day                                         10 Hours of Service
Week                                        45 Hours of Service
Semi-Monthly Payroll Period      95 Hours of Service
Months of Employment            190 Hours of Service

               (vi)  Miscellaneous.  For purposes of this  subsection  1(p), the
               regulations   issued  by  the   Secretary  of  Labor  at  29  CFR
               ss.2530.200b-2(b) and (c) are incorporated by reference.  Nothing
               herein shall be  construed  as denying an Employee  credit for an
               "Hour of Service" if credit is required by separate federal law.


               (q) "Investment Category" shall mean any separate investment fund
               which is made available under the terms of the Plan.

               (r) "Investment  Manager" shall mean any Fiduciary  (other than a
               Trustee) who:

                                (i)        has the power to manage, acquire, or
                                           dispose of any asset of the Plan;
                                (ii)       is:
                                           (A)   registered   as  an  investment
                                           advisor under the Investment Advisers
                                           Act of 1940;  (B) a bank,  as defined
                                           in  that  Act;  or (C)  an  insurance
                                           company qualified to perform services
                                           described in subsection 1(r)(i)

above under the laws of more than one state; and
                                (iii)      has acknowledged in writing that he
                                        is a Fiduciary with respect to the Plan.

                    (s)        "Limitation Year" shall mean the consecutive
twelve-month period commencing on January 1st and ending on December 31st.


<PAGE>


                     (t)        "Matching Account" shall mean the portion of the
 Member's Accrued Benefit derived from Participating

Company  contributions  under  subsection  4(d)  hereof  and  the  corresponding
provisions  of the  Plan  as  heretofore  effective,  adjusted  as  provided  in
subsection 4(e).

                     (u)        "Member" shall mean each Employee of a
Participating Company who satisfies the requirements for participation  under
Section 3 hereof and each other  person who has an AccruedBenefit held under the
Plan.

                     (v)        "Normal Retirement Date" shall mean the date on
which a Member attains age 65.
                                 ----------------------
                     (w)        "Participating Company" shall mean each Related
Entity with respect to the Company which adopts or is
                                 ---------------------
deemed to adopt this Plan pursuant to Section 16.  The term shall also include
the Company, unless the context otherwise requires.
                     (x)        "Period of Service" shall mean the period of
time commencing on the date on which an Employee first is
                                 -----------------
credited  with an Hour of Service  or, if  applicable,  on the date  following a
Period of Severance  of one year or more on which an Employee  first is credited
with an  Hour  of  Service  provided  he  requalifies  for  participation  under
subsection  3(c), and ending on the next  following  Severance  Date;  provided,
however,  the period  beginning on the  anniversary of the date of an Employee's
absence  due to  maternity  or  paternity  and ending on the second  anniversary
thereof  shall not be included in a Period of Service.  A Period of Severance of
less than one year shall be included in a Period of Service for all purposes.

                     (y)        "Period of Severance" shall mean the period of
time commencing on an Employee's Severance Date and
                                 -------------------
ending on the date on which the Employee first again is credited with an Hour of
Service,  exclusive  of periods  during  which an Employee is on an unpaid leave
pursuant to the Family and Medical Leave Act of 1993.


<PAGE>


                     (z)        "Plan" shall mean the PrimeSource Corporation
401(k) Savings Plan as amended and restated as set forth
                                 ----
herein  effective  January 1, 1997,  and the same as may be amended from time to
time.

                     (aa)       "Plan Year" shall mean the consecutive twelve-
month period commencing on January 1st and ending on December 31st.
                     (ab)       "PrimeSource Stock" shall mean PrimeSource
Corporation common stock.
                                 -----------------
                     (ac)       "Prior Plan" shall mean any retirement plan
which satisfies the applicable requirements of section
                                 ----------
401(a) of the Code and from which assets and liabilities are transferred to this
Plan in accordance  with section 414(l) of the Code so that this Plan is subject
to the requirements of section 411(d)(6) of the Code with respect to transferred
accounts.


<PAGE>


                     (ad)       "Related Entity" shall mean (i) all corporations
 which are members with a Participating Company in a
controlled  group of  corporations  within the meaning of section 1563(a) of the
Code,  determined  without  regard to sections  1563(a)(4)  and (e)(3)(C) of the
Code,  (ii) all trades or  businesses  (whether or not  incorporated)  which are
under common control with a  Participating  Company as determined by regulations
promulgated  under  section  414(c) of the Code,  (iii) all trades or businesses
which are members of an affiliated  service group with a  Participating  Company
within the meaning of section 414(m) of the Code and (iv) any entity required to
be aggregated with a Participating  Company under  regulations  prescribed under
section  414(o)  of the  Code  (to the  extent  provided  in such  regulations);
provided,  however,  for purposes of Section 5, the definition shall be modified
to  substitute  the  phrase  "more  than 50%" for the phrase "at least 80%" each
place it appears in section 1563(a)(1) of the Code. Furthermore, for purposes of
crediting  Hours of Service  for  eligibility  to  participate  and  Service for
purposes of vesting,  employment as a "leased  employee,"  within the meaning of
section 414(n) of the Code, of a Participating Company or a Related Entity shall
be treated as employment for a Participating  Company or a Related  Entity.  For
purposes of subsection 3(a) governing Hours of Service and periods of employment
credited for purposes of eligibility to participate, Bell Industries, Inc. shall
be deemed a "Related Entity" for periods through  September 14, 1998 for persons
who become  Employees on September 14, 1998 as a result of an asset  acquisition
from Bell Industries,  Inc. on that date. An entity the stock or assets of which
a Participating  Company  acquires on or after September 1, 1999 which is listed
on  Schedule  A shall be deemed a  "Related  Entity"  for the  purposes  and the
periods  prior to the date  set  forth in  Schedule  A for  persons  who  become
Employees incident to and within 30 days of such acquisition. In any other case,
an entity  is a  "Related  Entity"  only  during  those  periods  in which it is
included in a category described in this subsection.

                     (ae)       "Restatement Effective Date" shall mean January
1, 1997.
                                 --------------------------
                     (af)       "Rollover Account" shall mean the portion of the
 Member's Accrued Benefit derived from contributions
                                 ----------------
made under  subsection  4(i)(i) hereof and the  corresponding  provisions of the
Plan as heretofore effective, adjusted as provided in subsection 4(i)(ii).

                     (ag)       "Salary Reduction Account" shall mean the
portion of the Member's Accrued Benefit derived from
                                 ------------------------
contributions made under subsection 4(a) hereof and the corresponding provisions
of the Plan as heretofore effective, adjusted as provided in subsection 4(c).

                     (ah)       "Service" shall mean the sum of an Employee's
Periods of Service.  Service is measured in completed
                                 -------
years and days, where 365 days of Service equal one completed year of Service.


<PAGE>


                     (ai)       "Severance Date" shall mean the earlier of (i)
the date an Employee quits, is discharged (or severed,
if later), retires or dies or (ii) the first anniversary of the date an Employee
is  absent  from the  employ  of all  Participating  Companies  and all  Related
Entities  for any reason  other  than an  approved  leave of absence  granted in
writing  by  the  Company   according  to  a  uniform   rule   applied   without
discrimination  or in  accordance  with  applicable  law  provided  the Employee
returns  to the  employ of a  Participating  Company  or a Related  Entity  upon
completion  of the leave.  However,  if the Employee was on any period of unpaid
leave taken  pursuant to the Family and Medical  Leave Act of 1993, he shall not
incur a Severance  Date for purposes of subsection  1(e) until the leave expires
or,  if  applicable,  the  date  determined  under  the  last  sentence  of this
subsection.  Further,  an Employee who terminates  Service to enter the military
service of the United  States shall not suffer a Severance  Date as of such date
provided  (i) such  Employee's  rights are  protected  by the  Uniform  Services
Employment  and  Reemployment  Rights Act of 1994 or other  federal law and (ii)
such Employee  returns to employment with a  Participating  Company or a Related
Entity within the period required by law for  preservation of his rights.  Under
such circumstances,  an Employee shall receive credit for Service for his entire
period of absence.  If an Employee on an approved  leave of absence or qualified
military  service does not return to the employ of a Participating  Company or a
Related Entity upon completion of his leave or expiration of the period provided
by law in the case of qualified  military service,  his Severance Date generally
shall be the last day for which he received his regular  pay. In  addition,  for
purposes of subsection 1(e), an Employee shall not suffer a Severance Date until
the second  anniversary  of the date on which such  Employee is absent from work
(i) by reason of the  Employee's  pregnancy,  (ii) by reason of the birth of the
Employee's child, (iii) by reason of the placement of a child with such Employee
in connection with an adoption of


<PAGE>


such child by the Employee or (iv) for purposes of caring for a child for a
period beginning immediately following birth or placement.
                     (aj)       "Transferred Account" shall mean the portion of
the Member's Accrued Benefit transferred to this Plan
from a Prior Plan by reason of a plan  merger or direct  transfer  from  another
plan without the Member's consent.

                     (ak)       "Trust Agreement" shall mean the agreement or
agreements between the Company and a Trustee under which all or a portion of the
 Fund is held.
                     (al)       "Trustee" shall mean such person, persons or
corporate fiduciary designated to manage and control all or a portion of the
Fund pursuant to the terms of the Plan and a Trust Agreement.
                     (am)       "Valuation Date" shall mean any business day the
 New York Stock Exchange is open for trading and such other dates as the
 Committee  may specify from time to time.  With respect to a
Member's  Accrued  Benefit,  the  business  day  of  initial  investment  of new
contributions or liquidation of a Member's  investment credited to an Investment
Category for  reinvestment  or  distribution  shall be the "Valuation  Date" for
purposes of determining the amount of investment, reinvestment or distribution.

                     (an)       "Voluntary Contributions Account" shall mean the
 portion of a Member's Accrued Benefit derived from his  contributions  under a
Prior Plan which were includable in gross income forfederal income tax purposes.

                     (ao)       "Year of Service for Eligibility" shall mean a
consecutive twelve-month measuring period specified in Section 3 in which an
Employee is credited with 1,000 Hours of Service or more.


<PAGE>


20           ADMINISTRATION OF THE PLAN

                     (a)        Allocation of Responsibility.  The Board of
Directors, the Administrator, the Committee, each Trustee
and each Investment  Manager (if any) possess certain specified powers,  duties,
responsibilities and obligations under the Plan's governing  instruments.  It is
intended  under  this Plan that each  Fiduciary  be  responsible  solely for the
proper  exercise of its own functions and that each not be  responsible  for any
act or failure to act of another,  unless  otherwise  responsible as a breach of
its  fiduciary  duty or for breach of duty by another  Fiduciary  under  ERISA's
rules of  co-fiduciary  responsibility.  Any  person  may serve in more than one
fiduciary capacity.

                     (b)        Plan Administrator.  The Plan Administrator
shall file all reports and distribute to Members and
beneficiaries reports and other information required under ERISA or the Code and
shall discharge all other duties of a plan administrator under ERISA or the Code
with respect to the Plan.

                     (c)        Committee.  The Committee shall be the Plan's
named fiduciary (within the meaning of ERISA) and shall
have the power and duty to control and manage the operation  and  administration
of the Plan which shall include, but shall not be limited to, the performance of
the following acts:

                                (i)        the filing of all reports required of
the Plan, other than those which are the responsibility of the Administrator;
                                (ii)       the distribution to Members and
beneficiaries of all reports and other information required of the Plan, other
than reports and information required to be distributed by the Administrator;
                                (iii)      the keeping of complete records of
the administration of the Plan;


<PAGE>


                                (iv)       the promulgation of rules and
regulations for administration of the Plan consistent with the terms and
provisions of the Plan and the Trust Agreement and the establishment of a
procedure to determine the qualified status of a domestic relations order;
                                (v)        the establishment of a funding policy
 and method for the Plan, including, but not limited
to, selecting or establishing Investment Categories for the Plan; and
                                (vi)       the absolute discretion to interpret
the Plan and its terms, including the absolute
discretion to determine any questions of fact arising under the Plan and to make
all decisions  required by the Plan. The Committee's  interpretation of the Plan
and any actions and decisions  taken in good faith by the Committee based on its
interpretation  shall be final and  conclusive.  The  Committee  may correct any
defect,  or supply any omission,  or reconcile any  inconsistency in the Plan in
such  manner  and to such  extent as shall be  expedient  to carry the Plan into
effect and shall be the sole judge of such  expediency.  The  Committee  may (i)
delegate all or a portion of the  responsibilities  of controlling  and managing
the operation and  administration  of the Plan to one or more persons,  and (ii)
appoint   agents,   investment   advisers,    counsel,   physicians   or   other
representatives  to render  advice  with  regard to any of its  responsibilities
under the Plan.


<PAGE>


                     (d)        Powers of Board of Directors.  The Board of
Directors is responsible for appointing and removing each
Trustee, each Investment Manager (if any) and the Committee and for amending the
Plan, each Trust Agreement,  and each asset  management  agreement (if any). The
Board of  Directors  may  delegate  any power or duty it has under the Plan or a
Trust  Agreement,  including,  but not limited to,  amending the Plan or a Trust
Agreement,  to a  committee  of the Board of  Directors,  to any  officer(s)  or
Employee(s) of the Company or a Related Entity or to any other person or entity,
in which case such delegee and not the Board of Directors,  shall be responsible
for exercise of the delegated functions.

                     (e)        Powers of Trustee.  Each Trustee and each
Investment Manager (if any) is  responsible for the
management and control of the portion of the Fund over which it
has control to the extent provided in its Trust Agreement or asset management
agreement, respectively.
                     (f)        Claims.  If, pursuant to the rules, regulations
or other interpretations of the Plan, the Committee
denies the claim of a Member or  beneficiary  for benefits  under the Plan,  the
Committee  shall  provide  written  notice,  within 90 days after receipt of the
claim, setting forth in a manner calculated to be understood by the claimant:

                                (i)        the specific reasons for such denial;
                                (ii)       the specific reference to the Plan
provisions on which the denial is based;
                                (iii)      a description of any additional
material or information necessary to perfect the claim and
an explanation of why such material or information is needed; and
                                (iv)       an explanation of the Plan's claim
review procedure and the time limitations of this
subsection applicable thereto.


<PAGE>


A Member or  beneficiary  whose claim for  benefits  has been denied may request
review by the  Committee  of the denied  claim by  notifying  the  Committee  in
writing  within 60 days after receipt of the  notification  of claim denial.  As
part of said review procedure, the claimant or his authorized representative may
review  pertinent  documents  and submit issues and comments to the Committee in
writing.  The  Committee  shall  render its decision to the claimant in a manner
calculated to be understood by the claimant not later than 60 days after receipt
of the request for review,  unless special circumstances require an extension of
time,  in which case  decision  shall be  rendered  as soon after the  sixty-day
period as possible, but not later than 120 days after receipt of the request for
review. The decision on review shall state the specific reasons therefor and the
specific Plan references on which it is based.

                     (g)        Fiduciary Compensation.  Each Fiduciary who
already receives full-time pay from a Participating
Company or a Related Entity shall serve without  compensation  from the Plan for
his services as such, but he shall be reimbursed pursuant to subsection 2(h) for
any reasonable  expenses  incurred by him in the  administration  of the Plan. A
Fiduciary  who is not  already  receiving  full-time  pay  from a  Participating
Company may be paid such reasonable compensation as shall be agreed upon.

                     (h)        Plan Expenses.  All expenses of administration
of the Plan shall be paid out of the Fund unless paid
by the Company or a Member. According to uniform rules, the Committee may charge
expenses to a particular  Investment  Category,  a particular  Member's  Accrued
Benefit or a particular Member if the Committee  determines that such allocation
of expense or charge is desirable for the equitable administration of the Plan.

                     (i)        Fiduciary Insurance.  If the Committee so
directs, the Plan shall purchase insurance to cover the Plan
from liability or loss occurring by reason of the act or omission of a Fiduciary
provided such insurance permits recourse by the insurer against the Fiduciary in
the case of a breach of a fiduciary obligation by such Fiduciary.

                     (j)        Indemnification.  The Company shall indemnify
and hold harmless to the maximum extent permitted by its
by-laws each  Fiduciary who is an Employee or who is an officer or director of a
Participating  Company or any  Related  Entity from any claim,  damage,  loss or
expense,  including litigation expenses and attorneys' fees, resulting from such
person's service as a Fiduciary of the Plan provided the claim,  damage, loss or
expense does not result from the  Fiduciary's  gross  negligence or  intentional
misconduct.


<PAGE>


30           PARTICIPATION IN THE PLAN

                     (a)        Initial Eligibility
                                (i)  Service Requirement

                                           (A)  Prior to January 1,1999.  Each
and every Employee of a Participating Company not
excluded under subsection 3(a)(ii) shall be eligible to make contributions under
subsection  4(a) and be allocated  matching  contributions  for payroll  periods
commencing  coincident  with or next  following  the Entry Date the  Employee is
credited with one Year of Service for Eligibility,  or, if later, the Entry Date
after the Employee attains age 21.

                                           (B)  After December 31, 1998.  Each
and every Employee of a Participating Company not
excluded under subsection 3(a)(ii) shall be eligible to make contributions under
subsection  4(a) and be allocated  matching  contributions  for payroll  periods
commencing  coincident  with or next  following  the Entry Date the  Employee is
credited  with at least 250 Hours of  Service in a  consecutive  period of three
calendar  months,  or, if later, the first Entry Date after the Employee attains
age 21.

                                (ii)  Excluded Employees.  Notwithstanding the
foregoing provision of this subsection,


<PAGE>


                                           (A) no Employee whose terms and
conditions of employment are determined by a collective
bargaining  agreement  between  employee  representatives  and  a  Participating
Company  shall be eligible to  participate  unless  such  collective  bargaining
agreement  provides  to the  contrary,  in which  case  such  Employee  shall be
eligible to participate upon compliance with such provisions for eligibility and
participation  as such agreement shall provide;  except that no Employee who has
selected,  or in the future selects,  a union shall become ineligible during the
period  between  his  selection  of the  union  and the  execution  of the first
collective  bargaining  agreement  which  covers  him;  (B) no person  who is an
Employee by reason of the second  sentence of subsection  1(k) shall be eligible
to participate;

                                           (C) no person a Participating Company
determines is not its employee for purposes of
federal income tax withholding  shall be eligible to participate,  regardless of
whether  an  administrative  agency  or  court  rules  that  such  person  is  a
Participating Company's employee for any purpose; and

                                           (D) no Employee who is a nonresident
alien and who receives no earned income (within the
meaning of section  911(d)(2) of the Code) from a  Participating  Company  which
constitutes  income from sources within the United States (within the meaning of
section 861(a)(3) of the Code) shall be eligible to participate.

                     (b)        Measuring Service

                                           (A)     Prior to January 1, 1999.
For purposes of measuring service to satisfy the
eligibility  provisions,  the Year of Service for Eligibility computation period
shall begin with the date on which the Employee  first is credited  with an Hour
of Service;  provided,  however, if an Employee is credited with less than 1,000
Hours of Service in such measuring  period,  then subsequent  measuring  periods
shall begin with the January 1st next following the Employee's  date of hire and
continue on a Plan Year basis thereafter.

                                           (B)     After December 31, 1998.
For purposes of measuring Service to satisfy the
eligibility  provisions,  the  computation  period  shall begin with the date on
which the Employee first is credited with an Hour of Service.

                     (c)        Termination and Requalification.  An Employee
who has satisfied
the  applicable  service  requirement  of subsection  3(a) and who  subsequently
becomes  ineligible for any reason shall requalify for participation on the date
on which he is next


<PAGE>


credited  with  an Hour of  Service  in an  eligible  job  classification  under
subsection 3(a), or, if later, the Entry Date after he attains age 21.

                     (d)        Commencement of Participation.  An Employee who
satisfies all the requirements for eligibility under
subsection  3(a) shall  become a Member on the Entry Date  following  his timely
election  authorizing  amounts be withheld from his Compensation and be credited
to his Salary  Reduction  Account  under the Plan. An Employee who satisfies all
the requirements for eligibility under subsection 3(a) and who does not elect to
have amounts withheld from his Compensation shall be deemed a participant in the
Plan to the  extent  required  by ERISA on the first  Entry Date as of which his
election to have amounts withheld could have become effective.

                     (e)        Special Rule for Rollovers.  An Employee of a
Participating Company who will be eligible to
participate in the Plan after  satisfying the Service  requirement of subsection
3(a) may make a contribution  to the Plan under  subsection  4(i). An individual
who makes a contribution under subsection 4(i) shall become a Member on the date
of his  contribution;  however,  such individual shall not be considered to be a
Member for purposes of the remainder of Section 4 until he satisfies the Service
requirement of subsection 3(a).

                     (f)        Termination of Membership.  An Employee who
becomes a Member shall remain a Member as long as he has
an Accrued Benefit held under the Plan.


<PAGE>


40           MEMBER AND PARTICIPATING COMPANY CONTRIBUTIONS

                     (a)        Salary Reduction Contributions.  Each Employee
who becomes eligible to participate under subsection
3(a) may contribute any even multiple of 1.0%, but not less than 2% or more than
15%, of his  Compensation  for a payroll  period,  as he shall elect in a manner
prescribed  by the  Committee.  The  Committee  may limit  further the amount of
contribution  for all Members or a class of Members as the Committee  determines
is  necessary  or desirable to  facilitate  Plan  administration  or comply with
applicable Code provisions.  The initial election to contribute may be effective
as of any Entry Date. Such  contribution  shall be  accomplished  through direct
reduction of Compensation in each payroll period that the election is in effect.
For purposes of the Code,  such  contribution  shall be deemed to be made by the
Member's employer. A Member may elect to increase or reduce his contributions as
of an  Entry  Date or  terminate  his  contributions  as of any  date.  All such
elections  shall be made in a manner and shall become  effective on the date the
Committee prescribes as the effective date.  Contributions made by Participating
Companies  under  this  subsection  shall be made at such  times as the  Company
determines  and shall be  allocated  to the  Salary  Reduction  Accounts  of the
Members from whose  Compensation  the  contributions  were withheld in an amount
equal to the amount withheld.

                     (b)        Salary Reduction Contribution Limitations.
Contributions under subsection 4(a) shall be limited as provided below:


<PAGE>


                                (i)        Exclusion Limit.  The maximum amount
of contribution which any Member may make in any
calendar year under  subsection 4(a) is $9,500 (or such increased  annual amount
resulting from a cost of living  adjustment  pursuant to sections  402(g)(5) and
415(d)(1)  of the Code),  reduced by the amount of  elective  deferrals  by such
Member under all other plans,  contracts or  arrangements  of any  Participating
Company or Related  Entity.  If the  contribution  under  subsection  4(a) for a
Member for any calendar  year exceeds  $9,500 (or such  increased  annual amount
resulting from an adjustment  described  above),  the Committee shall direct the
Trustee  to  distribute  the excess  amount  (plus any income and minus any loss
allocable to such amount) to the Member not later than the April 15th  following
the close of such calendar  year. If (A) a Member  participates  in another plan
which includes a qualified cash or deferred arrangement or other program subject
to the limitations of section 402(g) of the Code, (B) such Member contributes in
the  aggregate   more  than  the  exclusion   limit  under  this  Plan  and  the
corresponding  provisions  of the other  plan and (C) the  Member  notifies  the
Committee not later than the March 1st following the close of such calendar year
of the  portion of the excess the Member has  allocated  to this Plan,  then the
Committee  may direct the  Trustee  to  distribute  to the Member not later than
April 15th following the close of such calendar year the excess amount (plus any
income and minus any loss  allocable to such amount) which the Member  allocated
to this Plan. A Member shall be deemed to have given the notification  described
in (C) above if the excess  results  from  contributions  solely to this Plan or
plans sponsored by Related Entities.

                                (ii)       Discrimination Test Limits.  The
Committee may limit the maximum amount of contribution for
Members who are "highly compensated  employees" (as defined below) to the extent
it determines  that such  limitation is necessary to keep the Plan in compliance
with section 401(a)(4) or section 401(k)(3) of the Code. Any limitation shall be
effective for all payroll periods  following the announcement of the limitation.
For purposes of Section 4 of the Plan,  the term "highly  compensated  employee"
shall  mean an  Employee  who is  described  in either or both of the  following
groups:

                                           (A)     an Employee who is a 5%
owner, as defined in section 416(i)(1) of the Code, at any
time during the current Plan Year or the last preceding Plan Year;


<PAGE>


                                           (B)     an Employee who receives
"compensation" (as defined below) in excess of $80,000
(or an increased amount resulting from a cost of living  adjustment)  during the
preceding Plan Year and was in the  "top-paid"  group (as defined below) for the
preceding Plan Year.

                                For purposes  hereof,  the  following  rules and
definitions shall apply:

                                           (C)     The "top-paid" group consists
of the top 20% of Employees ranked on the basis of
"compensation"  received during the year. For purposes of determining the number
of Employees in the "top-paid" group,  Employees  described in section 414(q)(5)
of the Code and Q&A 9(b) of section  1.414(q)-1T of the  regulations  thereunder
are excluded.

                                           (D)     "Compensation" is
compensation within the meaning of section 415(c)(3) of the
Code,  and for the 1997 Plan Year also  includes  elective  or salary  reduction
contributions to a cafeteria plan, cash or deferred arrangement or tax-sheltered
annuity under sections 125, 402(e)(3), 402(h)(3), and 403(b) of the Code.

                                           (E)     Employers aggregated under
section 414(b), (c), (m), or (o) of the Code are
treated as a single  employer,  subject to  application of the "separate line of
business rules" exception under section 410(b)(5) of the Code.

                     (c)        Salary Reduction Account.  Each Member's salary
reduction contributions, as adjusted for investment
gain or loss and income or expense,  constitute such Member's  Salary  Reduction
Account.  A Member  shall at all times  have a  nonforfeitable  interest  in the
portion of his Accrued Benefit derived from his Salary Reduction Account.

                     (d)        Participating Company Matching Contributions.
                                --------------------------------------------


<PAGE>


                                (i)        Amount.  Each Participating Company
shall contribute with respect to each Member employed
by it who is eligible under subsection 3(a) a percentage set by the Company, but
not to exceed 100%,  on or before the first day of the Plan Year of the Member's
salary reduction  contribution for each payroll period;  provided,  however, the
maximum amount of contribution under this subsection for any Member for any Plan
Year shall be $450.

                                (ii)       Forfeitures.  Amounts in the Matching
Accounts of Members which have been forfeited
pursuant to the  provisions  of  subsections  8(d) and 8(e) hereof during a Plan
Year shall be applied to reduce  Participating  Company  contributions  required
under subsection 4(d)(i).

                                (iii)      Payment Date.  The Participating
Companies shall pay over to the Fund all contributions
required under this subsection no later than the due date, including extensions,
for filing the  Participating  Companies'  federal  income tax  returns  for the
taxable year ended coincident with or immediately  following the end of the Plan
Year with respect to which such contributions are to be made.

                     (e)        Matching Account.  The Participating Company
contributions allocated to a Member under subsection 4(d)
and the  corresponding  provisions of the Plan as heretofore  effective,  all as
adjusted for the investment  gain or loss and income or expense,  constitute the
Member's Matching Account. A Member shall have a nonforfeitable  interest in the
portion of his Accrued Benefit  derived from his Matching  Account to the extent
provided under Section 8.

                     (f)        Compliance with Salary Reduction Contributions
Discrimination Tests.

                                (i)        Rule.  In no event shall the "actual
deferral percentage" (as defined below) for Members
who are "highly compensated employees" in a testing group for any Plan Year bear
a  relationship  to the  "actual  deferral  percentage"  for Members who are not
"highly  compensated  employees"  in such  testing  group which does not satisfy
either


<PAGE>


subsection  4(f)(i)(A) or (B) below. The test shall be separately  performed for
each testing group.  Each group of Members who  participate in the Plan pursuant
to a collective  bargaining  agreement shall be a separate testing group and all
other Members shall be a separate testing group.

                                           (A)     The requirement shall be
satisfied for a Plan Year if the "actual deferral
percentage"  for the  Plan  Year  for  the  group  of  Members  who are  "highly
compensated  employees" for the Plan Year is not more than the "actual  deferral
percentage" for the preceding Plan Year of all other Members multiplied by 1.25.

                                           (B)     The requirement shall be
satisfied for a Plan Year if (1) the excess of the
"actual  deferral  percentage" for the Plan Year for the Members who are "highly
compensated  employees" for the Plan Year over the "actual deferral  percentage"
for the  preceding  Plan Year of all  Members  who are not  "highly  compensated
employees" for the preceding  Plan Year is not more than two  percentage  points
(or such lower  amount as may be required by  applicable  regulations  under the
Code) and (2) the  "actual  deferral  percentage"  for  Members  who are "highly
compensated  employees" for the Plan Year is not more than the "actual  deferral
percentage"  of all Members who are not "highly  compensated  employees" for the
preceding Plan Year multiplied by two (or such lower multiple as may be required
by applicable regulations under the Code).

                                           (C)     The Plan may test using the
"actual deferral percentage" for non-highly
compensated  employees for the current Plan Year rather than the preceding  Plan
Year  if the  Administrator  so  elects  in  accordance  with  applicable  rules
promulgated  pursuant  to the Code.  The  Administrator  may only revoke such an
election in accordance with applicable rules  promulgated  pursuant to the Code.
For the 1997 Plan Year,  the Plan shall use the current  Plan Year for the test.
For the 1998 Plan Year, the Plan shall use the preceding Plan Year for the test.


<PAGE>


                                           (D)     If the Company elects to
apply section 410(b)(4)(B) of the Code in determining
whether the Plan satisfies the  requirements  of subsection  4(f) for Plan Years
beginning  after December 31, 1998,  the Company may exclude from  consideration
all  non-highly  compensated  employees  who  would not have  been  eligible  to
participate  if the Plan  contained  the greatest  age and service  requirements
permitted under section 410(a)(1)(A) of the Code.


<PAGE>


                                (ii)       QNEC or Refund.  If the relationship
of the "actual  deferral percentages" does not satisfy
subsection  4(f)(i)  for any Plan Year,  the  Participating  Companies  may make
"qualified  nonelective  contributions"  (within the meaning of the  regulations
promulgated  under section 401(k) of the Code) in an equal dollar amount for all
or a class of eligible  "nonhighly  compensated  employees".  Such contributions
shall be treated for all purposes of the Plan as contributions  made by a Member
under  subsection  4(a) for the Plan Year for which they are made and shall be a
subaccount  of the  Member's  Salary  Reduction  Account.  If the  Participating
Companies do not make such  contributions or such contributions do not result in
satisfaction of subsection 4(f)(i),  then the Committee shall direct the Trustee
to distribute  the "excess  contribution"  (as defined below) for such Plan Year
(plus any income and minus any loss allocable thereto for the Plan Year in which
the contributions were made as determined under the Plan's method for allocating
income and loss)  within  twelve  months after the close of the Plan Year to the
"highly  compensated  employees"  on the basis of the  amount  of  contributions
attributable to each until the "excess contribution" is eliminated.  The portion
of the "excess contribution"  attributable to a "highly compensated employee" is
determined by reducing the dollar amount of contributions  paid over to the Fund
on behalf of the  "highly  compensated  employees",  starting  with the  highest
dollar  amount  of  such  contributions,  until  the  "excess  contribution"  is
eliminated.  The amount of "excess  contributions"  to be  distributed  shall be
reduced by excess deferrals  previously  distributed for the taxable year ending
in the same Plan Year and excess  deferrals to be distributed for a taxable year
shall be reduced by excess  contributions  previously  distributed  for the Plan
Year  beginning in such taxable year.  Any refund made to a Member in accordance
with this subsection shall be drawn from his Salary Reduction Account.

                                (iii)      Additional Definitions.  For purposes
of this subsection 4(f), the term "Member" shall mean
each Employee eligible to make  contributions  under subsection 4(a) at any time
during a Plan Year.  The "actual  deferral  percentage"  for a specific group of
Members for a Plan Year shall be the average of the "actual  deferral ratio" for
each Member in the group for such Plan Year. The "actual  deferral  ratio" for a
particular  Member  for a  Plan  Year  shall  be the  ratio  of  the  amount  of
contributions  made under  subsection 4(a) no later than twelve months after the
close of the Plan Year for such  Member  out of  amounts  that  would  have been
received by him in the Plan Year but for his election under  subsection 4(a) and
which are  allocated  to the  Member on or before  the last day of the Plan Year
without regard to  participation  or  performance of services  thereafter to the
Member's  "compensation"  for such Plan Year.  For this purpose,  "compensation"
means  compensation for service  performed for a Participating  Company which is
currently  includable in gross income or which is  excludable  from gross income
pursuant to an election  under a qualified  cash or deferred  arrangement  under
section  401(k) of the Code or a cafeteria  plan under  section 125 of the Code;
provided, however, the Committee may elect to limit compensation for all Members
to amounts  paid during the portion of the Plan Year during which the Member was
eligible  to  participate  in the  Plan or use any  definition  of  compensation
permissible under section 414) of the Code and the regulations  thereunder.  The
"excess contribution" for any Plan Year is the excess of the aggregate amount of
contributions  paid over to the Fund  pursuant to  subsection  4(a) on behalf of
"highly


<PAGE>


compensated  employees"  for such  Plan  Year  over the  maximum  amount of such
contributions  permitted for "highly  compensated  employees"  under  subsection
4(f)(i).

                                (iv)       Aggregation of Contributions.  The
"actual deferral ratio"  for any Member who is a "highly compensated  employee"
for the Plan Year and who is eligible  to make  elective
contributions  excludable from income under sections 401(k) and 402(a)(8) of the
Code to any plan maintained by a Participating Company or a Related Entity shall
be determined as if all such contributions were made under this Plan.

                                (v)        Aggregation of Plans.  In the event
that this Plan satisfies the requirements of section
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the  requirements of section  401(a)(4) or
410(b) of the Code only if aggregated with this Plan,  then  subsection  4(f)(i)
shall be applied by determining  the "actual  deferral  ratios" of Members as if
all such plans were a single plan.

                                (vi)       Testing Alternatives.  To the extent
permitted by the Code, the Plan may treat
contributions  made under subsection 4(a) as contributions made under subsection
4(d),   and  vice  versa,   to  facilitate   satisfaction   of  any   applicable
nondiscrimination requirement.

                     (g)        Compliance with Participating Company Matching
Contributions Discrimination Tests.

                                (i)        Rule.  In no event shall the "actual
contribution  percentage" (as defined below) for
Members  who are  "highly  compensated  employees"  for  any  Plan  Year  bear a
relationship  to the "actual  contribution  percentage"  for Members who are not
"highly  compensated   employees"  which  does  not  satisfy  either  subsection
4(g)(i)(A) or (B) below.  The requirement of this subsection  shall not apply to
Members  who  participate  in this  Plan  pursuant  to a  collective  bargaining
agreement, and any such Members shall be excluded from the testing group.


<PAGE>


                                           (A)     The requirement shall be
satisfied for a Plan Year if the "actual contribution
percentage"  for the  Plan  Year  for  the  group  of  Members  who are  "highly
compensated  employees"  for  the  Plan  Year  is  not  more  than  the  "actual
contribution  percentage" for the preceding Plan Year of all Members who are not
"highly compensated employees" for the preceding Plan Year multiplied by 1.25.

                                           (B)     The requirement shall be
satisfied for a Plan Year if (1) the excess of the
"actual  contribution  percentage"  for the Plan  Year for the  Members  who are
"highly compensated  employees" for the Plan Year over the "actual  contribution
percentage"  of all Members who are not "highly  compensated  employees" for the
preceding Plan Year is not more than two percentage points (or such lower amount
as may be required by applicable regulations under the Code) and (2) the "actual
contribution  percentage"  for  the  Plan  Year  for  Members  who  are  "highly
compensated  employees"  for  the  Plan  Year  is  not  more  than  the  "actual
contribution  percentage" for the preceding Plan Year of all Members who are not
"highly compensated employees" for the preceding Plan Year multiplied by two (or
such lower  multiple  as may be  required by  applicable  regulations  under the
Code).

                                           (C)     The Plan may test using the
"actual contribution percentage" for non-highly
compensated  employees for the current Plan Year rather than the preceding  Plan
Year  if the  Administrator  so  elects  in  accordance  with  applicable  rules
promulgated  pursuant  to the Code.  The  Administrator  may only revoke such an
election in accordance with applicable rules  promulgated  pursuant to the Code.
For the 1997 Plan Year,  the Plan shall use the current  Plan Year for the test.
For the 1998 Plan Year, the Plan shall use the preceding Plan Year for the test.


<PAGE>


                                           (D)     If the Company elects to
apply section 410(b)(4)(B) of the Code in determining
whether the Plan satisfies the  requirements  of subsection  4(g) for Plan Years
beginning  after December 31, 1998,  the Company may exclude from  consideration
all  non-highly  compensated  employees  who  would not have  been  eligible  to
participate  if the Plan  contained  the greatest  age and service  requirements
permitted under section 410(a)(1)(A) of the Code.

                                (ii)       Refund.  If the relationship of the
"actual contribution percentages" does not satisfy
subsection  4(g)(i) for any Plan Year, then the  Administrator  shall direct the
Trustee to distribute the "excess aggregate contribution" (as defined below) for
such Plan Year  (plus any income and minus any loss  allocable  thereto  for the
Plan Year in which the  contributions  were made as determined  under the Plan's
method for  allocating  income and loss) within twelve months after the close of
the Plan Year to the "highly  compensated  employees" on the basis of the amount
of contributions  attributable to each until the "excess aggregate contribution"
is eliminated.  The portion of the "excess aggregate contribution"  attributable
to a "highly  compensated  employee" is determined by reducing the dollar amount
of  contributions  paid over to the Fund on behalf  of the  "highly  compensated
employees", starting with the highest dollar amount of such contributions, until
the "excess aggregate  contribution" is eliminated.  Any refund made to a Member
in accordance  with this  subsection  shall be drawn from his Matching  Account.
Notwithstanding  the foregoing,  if a Member does not have a 100% nonforfeitable
right to his Matching Account under subsection 8(d)(ii), the forfeitable portion
of any amount  withdrawn  from his Matching  Account  shall be forfeited and the
vested portion shall be distributed to the Member.

                                (iii)      Allocation of Forfeitures.  Any
amounts forfeited by "highly compensated employees" under
this subsection shall be applied to reduce Participating  Company  contributions
made pursuant to subsection 4(d).  Notwithstanding the foregoing,  no forfeiture
arising under this  subsection  shall be allocated to the account of any "highly
compensated employee."


<PAGE>


                                (iv)       Additional Definitions.  For purposes
of this subsection 4(g), the term "Member" shall mean
each  Employee  not covered by a  collective  bargaining  agreement  eligible to
receive a matching  contribution under subsection 4(d) at any time during a Plan
Year. The "actual contribution percentage" for a specific group of Members for a
Plan Year  shall be the  average  of the  "actual  contribution  ratio" for each
Member in the group for such Plan Year.  The "actual  contribution  ratio" for a
particular  Member  for a Plan  Year  shall  be the  ratio of the sum of (A) the
amount of  contributions  made under subsection 4(d) no later than twelve months
after the  close of the Plan Year for such  Member  which are  allocated  to the
Member  on  or  before  the  last  day  of  the  Plan  Year  without  regard  to
participation   or  performance  of  services   thereafter   plus  (B)  elective
contributions  of a non-highly  compensated  employee  which are permitted to be
treated as matching  contributions  under regulations  promulgated under section
401(m) of the Code and (C) after tax  employee  contributions  which are  Annual
Additions,  to the Member's "compensation" for such Plan Year. For this purpose,
"compensation"  means  compensation  for service  performed for a  Participating
Company  which is currently  includable  in gross income or which is  excludable
from gross  income  pursuant to an election  under a qualified  cash or deferred
arrangement  under section  401(k) of the Code or a cafeteria plan under section
125 of the  Code;  provided,  however,  the  Administrator  may  elect  to limit
compensation for all Members to amounts paid during the portion of the Plan Year
during  which the  Member was  eligible  to  participate  in the Plan or use any
definition of compensation  permissible under section 414(s) of the Code and the
regulations thereunder. The "excess aggregate contribution" for any Plan Year is
the excess of the aggregate  amount of matching  contributions  paid over to the
Fund pursuant to subsection 4(d) on behalf of "highly compensated employees" for
such Plan Year over the maximum amount of such matching contributions  permitted
for "highly compensated employees" under subsection 4(g)(i).


<PAGE>


                                (v)        Aggregation of Contributions.  The
"actual contribution  ratio" for any Member who is a
"highly  compensated  employee"  for the Plan Year and who is  eligible  to make
after-tax  contributions  to any  plan  subject  to  section  415  of  the  Code
maintained by a  Participating  Company or a Related  Entity or to have employer
matching  contributions  within the meaning of section  401(m)(4)(A) of the Code
allocated to his account under two or more plans  described in section 401(a) of
the Code that are  maintained  by a  Participating  Company or a Related  Entity
shall be determined as if all such  contributions  were made under this Plan and
each other plan.

                                (vi)       Aggregation of Plans.  In the event
that this Plan satisfies the requirements of section
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the  requirements of section  401(a)(4) or
410(b) of the Code only if aggregated with this Plan,  then  subsection  4(g)(i)
shall be applied by determining the "actual  contribution  ratios" of Members as
if all such plans were a single plan.

                                (vii)      Aggregate Limit -- Multiple Use of
Alternative Limitation.  The provisions of section
1.401(m)-2(b)  of the  regulations  under section  401(m) of the Code are hereby
incorporated by reference.  If the limitation  thereof is exceeded,  it shall be
corrected  through  reduction  of the "actual  contribution  percentage"  in the
manner  specified in  subsection  4(g)(ii)  with respect to "highly  compensated
employees" eligible under both subsection 4(a) and subsection 4(d) of the Plan.

                                (viii)     Testing Alternatives.  To the extent
 permitted by the Code, the Plan may treat
contributions  made under subsection 4(a) as contributions made under subsection
4(d),   and  vice  versa,   to  facilitate   satisfaction   of  any   applicable
nondiscrimination requirement.


<PAGE>


                     (h)        Payroll Taxes.  The Participating Companies
shall withhold from the Compensation of the Members and
remit to the  appropriate  government  agencies  such  payroll  taxes and income
withholding as the Company  determines is or may be necessary  under  applicable
statutes or ordinances and the regulations and rulings thereunder.

                     (i)        Rollovers.
                                ---------
                                (i)        Contributions.  Each Employee
eligible under subsection 3(e) and each Member actively
employed  by a  Participating  Company  may  contribute  to the  Fund an  amount
constituting an "eligible rollover  distribution" from a "qualified trust," both
within the meaning of section 402(c)(4) of the Code, from a previous  employer's
retirement plan (or an individual  retirement  account  consisting  solely of an
"eligible rollover distribution" from a "qualified trust").

                                (ii)       Rollover Account.  Each Member's
contributions under subsection 4(i)(i), as adjusted for
investment gain or loss and income or expense, constitute such Member's Rollover
Account.  A Member  shall at all times  have a  nonforfeitable  interest  in the
portion of his Accrued Benefit derived from his Rollover Account.

                                (iii)      Refunds.  If an Employee makes a
contribution under this subsection 4(i) which the
Committee subsequently determines is not eligible for contribution under section
402 of the Code,  then the  Committee  shall take such  corrective  action as it
determines is necessary or appropriate under applicable law.

                     (j)        Other Member Contributions.  A Member shall not
be permitted to make contributions to the Plan other
than as permitted under subsection 4(a), 4(i) or 8(d)(iv).
                     (k)       Transferred and Voluntary Contributions Accounts.
A Member's Transferred Account and/or Voluntary
Contributions   Account,   if  any,   shall  not  be  allocated  any  additional
contributions but shall be adjusted for investment gain or loss and income or


<PAGE>


expense.  A Member  shall at all times  have a  nonforfeitable  interest  in the
portion of his Accrued  Benefit derived from his  Transferred  and/or  Voluntary
Contributions Accounts.

                     (l)        Deductibility.  All Participating Company
contributions are expressly conditioned upon their
deductibility for federal income tax purposes.
Nondeductible  contributions  shall be abated  and to the  extent  permitted  by
applicable law,  refunded,  starting with  contributions  made under  subsection
4(d).


<PAGE>


50           MAXIMUM CONTRIBUTIONS AND BENEFITS


<PAGE>


                     (a)        Defined Contribution Limitation.  In the event
that the amount allocable to a Member from
contributions  to the Fund with  respect to any Plan Year would cause the Annual
Additions  allocated  to any Member  under  this Plan plus the Annual  Additions
allocated  to such Member  under any other plan  maintained  by a  Participating
Company or a Related Entity to exceed for any Limitation  Year the lesser of (i)
$30,000  (or  an  increased  amount  resulting  from a  cost-of-living  increase
pursuant  to  subsection  415(d)  of the  Code)  or (ii)  25% of  such  Member's
compensation (as defined in subsection 5(d)) for such Limitation Year, then such
amount allocable to such Member shall be reduced by the amount of such excess to
determine  the actual amount of the  contribution  allocable to such Member with
respect to such Plan Year. If the excess amount results from a reasonable  error
in determining the amount of contribution that may be made under subsection 4(a)
without violating the limitation of this subsection, then the excess amount with
earnings  attributable  thereto  shall be refunded  to the Member.  If, (i) as a
result of allocation  of  forfeitures,  (ii) a reasonable  error in estimating a
Member's  annual  compensation  (as defined in subsection  5(d)), or (iii) under
other limited facts and circumstances  that the Commissioner of Internal Revenue
finds justify the  availability of the remedy next following,  the excess amount
with earnings attributable thereto allocable to a Member's Accrued Benefit shall
be held in a  suspense  account  and  shall  be  used  to  reduce  contributions
allocable to the Member for the next Limitation Year (and succeeding  Limitation
Years as necessary)  provided the Member is covered by the Plan as of the end of
the Limitation Year. However, if the Member is not covered by the Plan as of the
end of the Limitation  Year, then the excess amount shall be held unallocated in
a suspense account and shall be allocated, after adjustment for investment gains
or losses,  among all Employees eligible to make contributions  under subsection
4(a) for such Limitation Year as an equal  percentage of their  Compensation for
such Limitation  Year. No excess amount may be distributed to a Member or former
Member.

                     (b)        Combined Limitation.  In addition to the
limitation of subsection 5(a), if a Participating Company or
a Related Entity  maintains or maintained a defined  benefit plan and the amount
required to be contributed to the Fund with respect to any Plan Year would cause
the  aggregate  amount  allocated to any Member  under all defined  contribution
plans  maintained by any  Participating  Company or Related Entity to exceed the
maximum  allocation as determined in subsection  5(c), then such amount required
to be contributed  with respect to such Member shall be reduced by the amount of
such excess to determine the actual amount of the  contribution  with respect to
such  Member for such Plan Year.  Notwithstanding  the  foregoing,  if an excess
amount is  contributed  with respect to any Member,  then the excess  allocation
shall be reallocated or held in a suspense account in accordance with subsection
5(a). The limitation of this subsection shall be applied to the Member's benefit
from  the  defined  benefit  plan  prior to  reduction  of the  Member's  Annual
Additions under this Plan.


<PAGE>






                     (c)        Combined Limitation Computation.  The maximum
allocation is the amount of Annual Additions which may
be allocated to a Member's  benefit  without  permitting  the sum of the defined
benefit plan fraction (as hereinafter defined) and the defined contribution plan
fraction (as  hereinafter  defined) from exceeding 1.0 for any Limitation  Year.
The defined benefit plan fraction applicable to a Member for any Limitation Year
is a fraction,  the  numerator of which is the projected  annual  benefit of the
Member under the plan  determined as of the close of the Limitation Year and the
denominator of which is the lesser of (i) the product of 1.25  multiplied by the
maximum then permitted  dollar amount of straight life annuity payable under the
defined benefit plan maximum benefit provisions of the Code and (ii) the product
of 1.4  multiplied  by the maximum  permitted  amount of straight  life annuity,
based on the  Member's  compensation,  payable  under the defined  benefit  plan
maximum benefit  provisions of the Code. For purposes of this subsection 5(c), a
Member's  projected annual benefit is equal to the annual benefit,  expressed in
the form of a straight life annuity, to which the Member would be entitled under
the terms of the  defined  benefit  plan based on the  assumptions  that (i) the
Member will continue  employment until reaching his normal  retirement age under
the plan (or current age, if later) at a rate of compensation  equal to that for
the Limitation Year under consideration and (ii) all other relevant factors used
to determine benefits under the plan for the Limitation Year under consideration
will remain constant for future Limitation Years. The defined  contribution plan
fraction  applicable  to a Member for any  Limitation  Year is a  fraction,  the
numerator of which is the sum of the Annual  Additions for all Limitation  Years
allocated  to the  Member  as of  the  close  of the  Limitation  Year  and  the
denominator  of which is the sum of the lesser,  separately  determined for each
Limitation  Year of the  Member's  employment  with a  Participating  Company or
Related  Entity,  of (i) the product of 1.25  multiplied  by the maximum  dollar
amount of Annual  Additions  which could have been allocated to the Member under
the Code for such  Limitation Year and (ii) the product of 1.4 multiplied by the
maximum amount,  based on the Member's  compensation,  of Annual Additions which
could have been allocated to the Member for such Limitation Year. (d) Definition
of "Compensation"  for Code Limitations.  For purposes of the limitations on the
allocation of Annual  Additions to a Member and maximum benefits under a defined
benefit plan as provided for in this Section 5,  "compensation" for a Limitation
Year shall mean the sum of amounts paid by a Participating  Company or a Related
Entity to the Member with  respect to personal  services  rendered by the Member
during the Limitation  Year plus (i) amounts  received by the Member (A) through
accident or health  insurance or under an accident or health plan  maintained or
contributed  to by a  Participating  Company  or a Related  Entity and which are
includable in the gross income of the Member,  (B) through a plan contributed to
by a  Participating  Company or a Related Entity  providing  payments in lieu of
wages on account  of a  Member's  permanent  and total  disability,  or (C) as a
moving expense allowance paid by a Participating Company or a Related Entity and
which are not deductible by the Member for federal income tax purposes; (ii) the
value of a non-statutory  stock option granted by a  Participating  Company or a
Related Entity to the Member to the extent included in the Member's gross income
for the taxable  year in which it was  granted;  and (iii) the value of property
transferred by a  Participating  Company or a Related Entity to the Member which
is  includable  in the  Member's  gross  income due to an election by the Member
under section 83(b) of the Code.  For Plan Years  beginning  after  December 31,
1997,  (i) elective  deferrals as defined in section  402(g)(3) of the Code, and
(ii) any amount which is contributed or deferred by a  Participating  Company or
Related Entity at the election of an Employee and which is not included in gross
income of the  Employee  by reason of  section  125 or 457 of the Code  shall be
included in "Compensation".  "Compensation"  shall not include (i) contributions
made by a Participating  Company or a Related Entity to a deferred  compensation
plan to the extent that, before application of the limitations of section 415 of
the Code to the plan,  such  contributions  are not  includable  in the Member's
gross  income for the taxable year in which  contributed,  except as provided in
the  preceding   provision;   (ii)  Participating   Company  or  Related  Entity
contributions  made on behalf of a Member to a simplified  employee pension plan
to the extent they are  deductible  by the Member  under  section  219(b) of the
Code,  (iii)  distributions  from a deferred  compensation  plan (except from an
unfunded  nonqualified  plan when  includable  in gross  income),  (iv)  amounts
realized from the exercise of a nonqualified  stock option,  or when  restricted
stock (or property) held by a Member either becomes freely transferable or is no
longer subject to a substantial  risk of forfeiture,  (v) amounts  realized from
the sale,  exchange or other  disposition of stock acquired under a qualified or
incentive  stock  option,  and (vi) other  amounts  which  receive  special  tax
benefits  such as  premiums  for  group  term  life  insurance  (to  the  extent
excludable from gross income),  except that for periods after December 31, 1997,
elective deferrals under sections 402(g)(3), 125 or 457 of the Code shall not be
excluded.

                     (e)        Transition Provision.  Notwithstanding the
foregoing provisions of this Section 5, the benefit of a
Member on January 1, 1987 under a defined benefit pension plan shall not be less
than it was on December 31, 1986 by reason of the  reduction in the dollar limit
of section 415(b) of the Code which then became effective.  However,  amounts in
excess of the  limitation by reason of changes in the terms and  conditions of a
defined benefit pension plan made after May 5, 1986 shall not be preserved.


<PAGE>


60           ADMINISTRATION OF FUNDS

                     (a)        Investment Control.  The management and control
of the assets of the Plan shall be vested in the
Trustee  designated  from  time to time by the  Company  through  its  Board  of
Directors;  provided,  however,  the Company  through its Board of Directors may
appoint one or more  Investment  Managers  to manage,  acquire or dispose of any
assets of the Plan.  The Committee  shall  instruct the Trustee or an Investment
Manager to establish Investment  Categories for selection by the Members and may
at any time add to or delete from the Investment Categories.

                     (b)        Employer Stock.  The Committee also shall direct
 the Trustee to establish two frozen Investment
Categories,  one consisting solely of PrimeSource Stock and the other consisting
solely  of the  common  stock of Tasty  Baking  Company.  Each  such  Investment
Category shall hold shares of common stock transferred to this Plan from a Prior
Plan.  No  amounts  invested  in  any  other  Investment  Category  and  no  new
contributions  shall be transferred or allocated to such Investment  Categories.
All dividends or other  distributions,  other than  distributions of stock, with
respect to a frozen  Investment  Category  shall be invested in accordance  with
uniform procedures  specified by the Committee,  in additional shares or, if the
Committee permits, in one or more of the Investment Categories established under
subsection  6(a). A Member may elect in accordance with subsection 6(c) that all
or a portion of the common  stock  held for his  benefit in a frozen  Investment
Category be liquidated for  reinvestment  in one or more  Investment  Categories
established under subsection 6(a).  Notwithstanding the foregoing, no person who
is an officer of the Company  shall be permitted  to  liquidate  his interest in
such  Investment  Categories  until  such time as  determined  by counsel to the
Company that such  liquidation  can be made without  penalty or violation of any
applicable securities law.


<PAGE>


                     (c         Member Elections.  In accordance with rules
established by the Committee and subject to subsection
6(b),  each Member shall have the right to designate the Investment  Category or
Categories in which new  contributions  allocated to and prior balances held for
such Member are invested. Any designation or change in designation of Investment
Category  shall be made in such  manner and subject to such  limitations  as the
Committee  shall from time to time  specify.  The  designation  or change  shall
become  effective as of the date specified by the Committee on or after which it
is received.  Any election of Investment  Category by any Member  shall,  on its
effective  date,  cancel  any  prior  election.  The  right to elect  Investment
Categories as set forth herein shall be the sole and exclusive  investment power
granted  to  Members.  The  Committee  may limit  the  right of a Member  (i) to
increase or decrease his contributions to a particular Investment Category, (ii)
to  transfer  amounts to or from a  particular  Investment  Category or (iii) to
transfer amounts between particular Investment Categories, if such limitation is
required by the rules  establishing  an Investment  Category.  The Committee may
promulgate  separate  accounting  and  administrative  rules to  facilitate  the
establishment or maintenance of an Investment Category.

                     (d         No Member Election.  If a Member does not make a
written election of Investment Category, then, except
as provided at  subsection  6(b),  the  Committee  shall direct that all amounts
allocated to such Member be invested in the Investment  Category  which,  in the
opinion of the Committee, best protects principal.

                     (e         Facilitation.  Notwithstanding any instruction
from any Member for investment of funds in an
Investment  Category as provided for herein, the Trustee shall have the right to
hold uninvested or invested in a short-term investment fund any amounts intended
for  investment or  reinvestment  until such time as  investment  may be made in
accordance with subsection 6(b) or 6(c) and the Trust Agreement.


<PAGE>


                     (f         Valuations.  The Fund and each Investment
Category shall be valued at fair market value as of each Valuation Date.
                     (g         Allocation of Gain or Loss.  The Trustee may
maintain separate accounts for each Member's investment
in each Investment Category.  If separate accounts are not maintained,  then any
increase or decrease in the market value of each Investment Category of the Fund
since  the  preceding  Valuation  Date and all  accrued  income or  expense  and
realized  profit or loss shall be added to or deducted  from the account of each
Member in the ratio that each Member's  account in such  Investment  Category at
the prior  Valuation  Date adjusted on a uniform basis to reflect  contributions
and  withdrawals  during  the  valuation  period  bears to the total of all such
adjusted  accounts  in  such  Investment  Category;   provided,   however,  such
allocation  for the first period  following the  establishment  of an Investment
Category  shall be made  based on the ratio that the  amount  allocated  to each
Member in such  Investment  Category  in the  period  bears to the total  amount
allocated to such Investment Category in the period.

                     (h         Bookkeeping.  The Committee shall direct that
separate bookkeeping accounts be maintained to reflect
each Member's Salary Reduction Account,  elective contributions under subsection
4(a),  Matching  Account,  Rollover Account,  Transferred  Account and Voluntary
Contributions Account.


<PAGE>


                     (i         Tender Offers.  Upon commencement of a tender
offer for PrimeSource Stock or Tasty Baking Company
common  stock,  the Trustee  shall notify each Member whose  Accrued  Benefit is
invested in the stock  which is the subject of the tender  offer and utilize its
best efforts to timely  distribute or cause to be  distributed to the Member the
same information that is distributed to shareholders of the issuer in connection
with the tender offer.  Each affected  Member shall have the right to direct the
Trustee in writing to tender or not to tender some or all of the shares credited
to him. The Trustee shall tender or not tender shares as the Member directs. The
Trustee shall not tender shares for which it has received no directions from the
Member.

                     (j         Voting Company Stock. Each Member shall have the
right to direct the Trustee as to the manner in
which the Trustee is to vote that number of shares of PrimeSource Stock or Tasty
Baking  Company  common  stock  credited  to his  accounts  in  accordance  with
procedures  established by the Trustee. The Trustee shall vote the shares as the
Member  directs.  The  Trustee  shall vote  shares for which it has  received no
directions from the Member in the same proportion as the shares for which it has
received instructions.


<PAGE>


7.           BENEFICIARIES AND DEATH BENEFITS

                     (a         Designation of Beneficiary.  Each Member shall
have the right to designate one or more beneficiaries
and contingent  beneficiaries to receive any benefit to which such Member may be
entitled hereunder in the event of the death of the Member prior to the complete
distribution of such benefit by filing a written  designation with the Committee
on the form prescribed by the Committee.  Such Member may thereafter designate a
different  beneficiary at any time by filing a new written  designation with the
Committee.  Notwithstanding  the  foregoing,  if a married  Member  designates a
beneficiary  other than his spouse,  such designation  shall not be valid unless
the  spouse  consents  thereto  in  writing  witnessed  by a  notary  public  or
authorized  representative  of the Plan. A spouse's  consent given in accordance
with the  Committee's  rules shall be  irrevocable by the spouse with respect to
the  beneficiary  then  designated  by the Member  unless the Member makes a new
beneficiary  designation.  Any written  designation  shall become effective only
upon its receipt by the Committee or its designee. If the beneficiary designated
pursuant to this subsection  dies on or before the  commencement of distribution
of benefits and the Member fails to make a new designation, then his beneficiary
shall be determined  pursuant to subsection 7(b).  Notwithstanding the above, to
the extent provided in a qualified  domestic relations order (within the meaning
of section 414(p) of the Code) the former spouse of the Member may be treated as
the spouse of the Member for purposes of this subsection, and the current spouse
will not be treated as the Member's spouse for such purposes.

                     (b         Beneficiary Priority List.If (i) a Member omits
or fails to designate a beneficiary, (ii) no
designated  beneficiary  survives the Member or (iii) the  Committee  determines
that the Member's  beneficiary  designation is invalid for any reason,  then the
death benefits shall be paid to the Member's  surviving spouse, or if the Member
is not  survived by his spouse,  then to the  Member's  estate.  If the Member's
designated


<PAGE>


beneficiary dies after the Member but before distribution of benefits,  then the
death benefits shall be paid to the beneficiary's estate.

                     (c         Proof of Death.  The Committee may, as a
condition precedent to making payment to any beneficiary,
require that a death certificate,  burial certificate or other evidence of death
acceptable to it be furnished.

                     (d         Divorce.  If a Member designates his spouse as
beneficiary and subsequent to making the designation a
decree of divorce is issued  which  terminates  the  Member's  marriage  to such
spouse,  then the Member's prior  beneficiary  designation shall be invalid and,
unless the Member makes a new designation, the Member shall be treated as having
died without designating a beneficary.


<PAGE>


8.           BENEFITS FOR MEMBERS

             The following are the only post-employment benefits provided by the
Plan:

                     (a         Retirement Benefit

                                (i         Valuation.  Each Member who retires
on or after his
Normal  Retirement Date shall be entitled to a retirement  benefit equal to 100%
of the Member's  Accrued  Benefit on the Valuation  Date as of which his Accrued
Benefit is liquidated for  distribution.  Distribution  will be made at the time
and in the manner  provided  by Section 9. The  Accrued  Benefit of a Member who
continues   in  Service   after  his  Normal   Retirement   Date  shall   become
nonforfeitable upon his attaining his Normal Retirement Date.

                                (ii        Late Retirement.  A Member who
continues employment beyond his Normal Retirement Date shall
continue to participate in the Plan.
                     (b         Death Benefit.  In the event of the death of a
Member, 100% of the Member's Accrued Benefit on the
Valuation Date after his death as of which his Accrued Benefit is liquidated for
distribution  shall  constitute  his  death  benefit  and  shall be  distributed
pursuant to  Sections 7 and 9 (i) to his  designated  beneficiary  or (ii) if no
designation  of  beneficiary is then in effect,  to the  beneficiary  determined
pursuant to subsection 7(b).

                     (c         Disability Benefit.  In the event a Member
suffers a Disability before actual retirement, 100% of the
Member's Accrued Benefit on the Valuation Date after his Disability occurs as of
which his Accrued Benefit is liquidated for  distribution  shall  constitute his
Disability benefit.

                     (d         Termination of Employment Benefit


<PAGE>


                                (i         Valuation.  In the event a Member
terminates employment with all Participating Companies
and all Related  Entities for reasons  other than those  covered by  subsections
8(a)-8(c) above, the Member shall be entitled to receive a benefit equal to 100%
of his Accrued Benefit derived from his Salary Reduction,  Rollover, Transferred
and  Voluntary   Contributions  Accounts  and  the  nonforfeitable  portion  (as
determined  under the vesting  schedule at subsection  8(d)(ii)) of the Member's
Matching  Account,  on the  Valuation  Date on  which  his  Accrued  Benefit  is
liquidated for distribution.

                                (ii        Vesting Schedule.  The nonforfeitable
 portion of a Member's Accrued Benefit derived from
his Matching Account is determined from the table below.
                                                                  Nonforfeitable

     Period of Service                                                Percentage

     Less than 1 year   0%
     1 year but less than 2 years                                            20%
     2 years but less than 3 years                                           40%
     3 years but less than 4 years                                           60%
     4 years but less than 5 years                                           80%
     5 years or more                                                        100%

                                (iii)      Special Vesting Rules

                                           (A)     Any Member who was a
participant in the Plan on January 1, 1994 shall have a 100%
nonforfeitable right to his Matching Account without regard to his length of
Service.
                                           (B)     Any Member who was a
participant in the Dixie Type and Supply Co. Inc. 401(k)
Retirement Plan on September 30, 1998 shall have a 100% nonforfeitable  right to
his Matching Account without regard to his length of Service.

                                (iii       Crediting Service.  For purposes of
determining Service under subsection 8(d)(ii), the
following rules shall apply.
                                           (A0     If a Member has a Break in
Service, then his Period of Service thereafter shall
not be taken  into  account  for  purposes  of  determining  the  nonforfeitable
percentage of the Member's  Accrued Benefit derived from  Participating  Company
contributions which accrued prior to such Break in Service.


<PAGE>


                                           (B0     If a Member has a Break in
Service and no nonforfeitable interest, then his
Periods of Service  prior to such Break in Service shall not be credited for any
purpose.

                                           (C0     In all other cases, a Member
shall receive credit for all his Periods of Service.
                                (iv        Cashouts.  If a Member has no
nonforfeitable interest in his Matching Account upon
termination of employment or if distribution of his Matching  Account is made to
a Member on account of termination of employment  prior to the date on which the
Member has a Break in Service and the Member  returns to  employment  covered by
the Plan, the Member's Matching Account shall subsequently be determined without
regard to the portion thereof derived from  predistribution  employment provided
the  Member  (A)  received  distribution  of the  entire  present  value  of the
nonforfeitable portion of his Matching Account at the time of distribution,  (B)
the  amount  of the  distribution  was  not  more  than  $5,000  or  the  Member
voluntarily elected to receive the distribution,  and (C) the Member upon return
to  employment  covered  by the Plan  does not  repay  the  full  amount  of the
distribution before the earlier of suffering a Break in Service commencing after
the  withdrawal  or five  years  after  the first  date on which  the  Member is
subsequently reemployed by a Participating Company. If timely repayment is made,
the  Member's  Matching  Account  shall equal the sum of the  repayment  and the
forfeitable   portion  of  the  Member's   Matching   Account  on  the  date  of
distribution, unadjusted by gains or losses subsequent to the distribution. If a
Member who had no  nonforfeitable  interest in his Matching  Account  returns to
employment, he shall be deemed to have made repayment on the date he first again
is  credited  with an Hour of  Service.  Restoration  shall be made  first  from
forfeitures in the Plan Year of repayment and second from Participating  Company
contributions.


<PAGE>


                                (v         Transition Rules.  No Member's
nonforfeitable percentage shall be less on the Restatement
Effective Date that it was on the day before the Restatement  Effective Date for
any reason other than a forfeiture  which  occurred on such date. For Plan Years
prior  to 1999,  "$3,500"  shall  be  substituted  for  "$5,000"  in  subsection
8(d)(iv).

                     (e         Time of Forfeiture. The nonvested portion of the
Matching Account of a Member (i) who separates with
no vested interest therein or (ii) who receives a distribution  prior to a Break
in  Service  shall  be  forfeited  on  the  date  of  (i)   separation  or  (ii)
distribution,  as the case may be,  subject  to the  right to  restoration.  The
nonvested portion of the Matching Account of any other Member shall be forfeited
on the last day of the Plan Year in which the Member suffers a Break in Service.
Forfeitures  shall be  applied  to offset  the  Participating  Company  matching
contributions  for the Plan Year in which the  forfeiture  occurs or to pay Plan
expenses.


<PAGE>


9.           DISTRIBUTION OF BENEFITS

                     (a         Commencement

                                (i         Vested and Retirement Benefits.
Generally, vested and retirement benefits shall begin to
be paid as soon  after the  Member's  termination  of  employment  as the Member
requests in writing,  but not sooner than 30 days after the Member  receives the
notice  required by section  1.411(a)-11(c)  of the  regulations  under  section
411(a)(11) of the Code unless the Member  receives  written notice that he has a
right to a period of at least 30 days after  receipt  of the notice to  consider
whether or not to elect a distribution and affirmatively elects after receipt of
the notice to accept a distribution  rather than the rollover provided for under
subsection 9(i).

                                (ii        Limitation and Required Commencement
Date.  In no event other than with the written consent
of the Member  shall the  payment of benefits  commence  later than the 60th day
after the close of the Plan Year in which the latest of the following occurs:

                                           (A0   The Member's Normal Retirement
                                                 Date;
                                           (B0   The Member's termination of
                                                 employment; or
                                           (C0   The tenth anniversary of the
                                                 year in which the Member first
                                                 commenced
participation in the Plan.
Furthermore,  distribution  of benefits must commence on or before the April 1st
of the calendar year following the calendar year in which the Member attains age
70-1/2 or has a Severance  Date,  whichever is later;  provided,  however,  if a
Member was a 5% owner (as  defined in section  416 of the Code) with  respect to
the Plan at any time during the Plan Year ending in the  calendar  year in which
he attained age 70-1/2,  then  distribution  of benefits  must commence no later
than the April 1st of the calendar year following the calendar year in which the
Member attains age 70-1/2.


<PAGE>


                                (iii       Death Benefits.  The payment of death
 benefits under the Plan shall be made at such time as
the Member's  beneficiary  shall request but not later than the December 31st of
the fifth  calendar  year  following  the calendar  year of the Member's date of
death.

                     (b         Benefit Forms

                                (i         Vested and Retirement Benefits.  A
Member entitled to benefit distribution under subsection
8(a), 8(c) or 8(d) may elect a lump sum distribution,  installment payments over
a period not to exceed the life expectancy of the Member and his beneficiary, or
a portion  paid as a lump sum and a portion paid in  installments  over a period
not to exceed  life  expectancy  of the  Member and his  beneficiary  commencing
before the required commencement date under subsection 9(a)(ii).

                                (ii        Transferred Accounts.  Subsection 15
(c) provides additional forms of distribution for certain Transferred Accounts.
                                (iii       Death Benefits.  Death benefits shall
 be distributed in one lump sum; provided, however, if
distribution  in  installments  commenced  before the Member's  death,  then the
installment  payments shall continue  unless the Member's  beneficiary  elects a
lump sum payment.

                     (c         Benefit Election.  The election or change of
election of a time or method of distribution of benefits
shall be in writing on forms prescribed by the Committee.
                     (d         Distributions in Kind.  A Member may direct that
 the portion of his Accrued Benefit held in
PrimeSource  Stock or Tasty Baking Company common stock be distributed to him in
kind, except that the value of a fractional share shall be distributed in cash.


<PAGE>


                     (e         Deferred Payments and Installments.  If benefits
 are to be paid directly by the Trustee in
installments or if the payment of benefits is to be deferred,  the undistributed
value of the benefit shall be retained in the Fund subject to the administrative
provisions of the Plan and the Trust Agreement.

                     (f         Withholding.  All distributions under the Plan
are subject to federal, state and local tax withholding
as required by applicable law as in effect from time to time.
                     (g         Compliance with Code Requirements.  All forms of
 benefit distributions and required benefit
commencement  dates shall be subject to and in compliance with section 401(a)(9)
of the Code and the regulations  thereunder,  including the minimum distribution
incidental  benefit  requirement.  Unless the Member  irrevocably  elects to the
contrary at the time required  distributions under section 401(a)(9) of the Code
begin,  required minimum  distributions shall be based on the life expectancy of
the Member, as determined under the Code, without recalculation.  The provisions
of  section  401(a)(9)  of the Code and the  regulations  thereunder,  including
proposed regulation  sections  1.401(a)(9)-1 and 2, shall override any provision
of the Plan inconsistent therewith.

                     (h         Distribution Limitations.  Amounts contributed
pursuant to subsection 4(a) of the Plan shall not be
distributed earlier than upon occurrence of one of the following events:
                                (i)        The Member's retirement, death,
disability or separation from service (within the meaning
of sections 401(a) and (k) of the Code);
                                (ii)       The termination of the Plan without
establishment or maintenance of another defined
contribution plan (other than an ESOP or SEP);
                                (iii)      The Member's attainment of age 59-1/2
 or suffering hardship;


<PAGE>


                                (iv)       The sale or other disposition by a
Participating Company to an unrelated corporation of
substantially  all of the  assets  used in a trade or  business,  but only  with
respect to employees who continue employment with the acquiring  corporation and
provided  the  acquiring  corporation  does  not  maintain  the Plan  after  the
disposition; and

                                (v)        The sale or other disposition by a
Participating Company of its interest in a subsidiary to
an unrelated  entity but only with respect to employees who continue  employment
with the subsidiary and provided the acquiring entity does not maintain the Plan
after the disposition.  Subsections 9(h)(ii), (iv) and (v), above, apply only if
the  distribution  is in the form of a lump sum.  Subsections  9(h)(iv) and (v),
above, apply if the transferor  corporation continues to maintain the Plan. This
subsection  9(h)  shall  not be  construed  as  giving  a  Member  a right  to a
distribution not otherwise  expressly  provided for by another subsection of the
Plan.

                     (i         Rollover Election. Notwithstanding any provision
 of the Plan to the contrary that would otherwise
limit a  "distributee's"  election under this  subsection,  a "distributee"  may
elect,  at the time and in the manner  prescribed by the Committee,  to have any
portion of an "eligible  rollover  distribution"  paid  directly to an "eligible
retirement  plan" specified by the  "distributee"  in a "direct  rollover".  For
purposes of this subsection, the definitions specified below shall apply:


<PAGE>


                                (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; any hardship distribution described in section  401(k)(2)(B)(i)(IV)
of the Code made after  December 31, 1999;  and the portion of any  distribution
that is not  includible  in  gross  income  (determined  without  regard  to the
exclusion for net unrealized appreciation with respect to employer securities).

                                (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 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 an 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  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.



<PAGE>


10.          IN-SERVICE DISTRIBUTIONS

                     (a         General Rule.  Except as provided in subsections
10(b)-10(d) below or in Section 15, a Member shall
not be permitted to receive any distribution from the Plan prior to his
Severance Date.
                     (b         Elective Distributions.  A Member may elect that
 all or a portion of his Rollover and Voluntary
Contributions  Accounts  be  distributed  to him by delivery of a request to the
Committee  on the  form or in the  manner  the  Committee  prescribes  for  that
purpose.

                     (c         Age 59-1/2. A Member who has attained age 59-1/2
may elect that all or a portion of his
nonforfeitable Accrued Benefit be distributed to him by delivery of a request to
the  Committee on the form or in the manner the  Committee  prescribes  for that
purpose.

                     (d         Hardship.A Member shall have the right to
receive an in-service distribution from his nonforfeitable
Accrued  Benefits  on  account  of  hardship.  A  distribution  is on account of
hardship  only if the  distribution  both (i) is made on account of an immediate
and heavy  financial  need of the Member and (ii) is  necessary  to satisfy such
financial need.


<PAGE>


                                (i         Need.  A distribution shall be deemed
to be made on account of an immediate and heavy
financial  need of the Member if the  distribution  is on account of (A) medical
expenses  described in section  213(d) of the Code incurred or to be incurred by
the Member,  the Member's  spouse or any  dependent of the Member (as defined in
section  152 of the Code);  (B)  purchase  (excluding  mortgage  payments)  of a
principal  residence  for  the  Member;  (C)  payment  of  tuition  and  related
educational fees, including room and board expenses,  for the next twelve months
of post-secondary  education for the Member,  the Member's spouse,  child or any
dependent of the Member (as defined in section 152 of the Code); (D) the need to
prevent the eviction of the Member from his principal  residence or  foreclosure
on the mortgage of the Member's principal residence; or (E) such other reason as
the Commissioner of Internal  Revenue  specifies as a deemed immediate and heavy
financial need through the publication of regulations,  revenue rulings, notices
or other documents of general applicability.

                                (ii        Satisfaction of Need.  A distribution
 shall be deemed to be necessary to satisfy an
immediate and heavy  financial need of a Member only if all of the  requirements
or  conditions  set forth below are  satisfied  or agreed to by the  Member,  as
appropriate.

                                           (A0     The distribution is not in
excess of the amount of the immediate and heavy
financial need of the Member, which amount shall be deemed to include
anticipated federal, state and local income taxes and penalties.
                                           (B0     The Member has obtained all
distributions, other than hardship distributions, and
all nontaxable loans currently  available under all plans subject to section 415
of the Code maintained by any Participating Company or any Related Entity.

                                           (C0     The Member's elective
contributions under this Plan and each other deferred
compensation plan (within the meaning of regulations under section 401(k) of the
Code)  maintained by a  Participating  Company or a Related  Entity in which the
Member  participates  shall be suspended for twelve full  calendar  months after
receipt of the distribution.

                                           (D0     The Member does not (and
is not permitted to) make elective contributions under
this Plan or any other plan maintained by a  Participating  Company or a Related
Entity for the year  immediately  following  the  taxable  year of the  hardship
distribution in excess of the applicable  limit under section 402(g) of the Code
for


<PAGE>


such next taxae year reduced by the amount of the Member's elective
contributions for the taxable year of the hardship distribution.
                                (iii     Limitations.  Distributions on account
of hardship shall be limited to the sum of (A) the
                                           -----------
Member's   elective   contributions   under   subsection   4(a)  plus   elective
contributions  to a Prior Plan, (B) income credited to the Member's  Transferred
Account  for  elective   contributions   as  of  December  31,  1988,   (C)  the
nonforfeitable  portion of the  Member's  Matching  Account and (D) the Member's
Rollover Account.  A distribution  under subsection 10(d) shall be charged first
against the Member's Rollover Account then against the nonforfeitable portion of
the Member's  Matching  Account and then against the Member's  Salary  Reduction
Account.  The  Committee  may  prescribe  rules  with  respect  to the  order of
Investment Category from which the distribution shall be paid.

                                (iv        Prior Withdrawal.  A Member shall not
 be permitted to receive a distribution under this
subsection 10(d) until he has withdrawn all amounts which are withdrawable under
subsections 10(b) and (c).

                     (e         Special Vested Balance Calculation Rule.  If a
distribution is made to a Member under this Section
from a Member's Matching Account at a time when his interest therein is not 100%
nonforfeitable,  then a separate  bookkeeping  account and calculation  shall be
established  for such  Member and be  retained  until the earlier of the date on
which the Member's  Matching Account becomes 100%  nonforfeitable  or the Member
forfeits the forfeitable portion of his Matching Account to reflect the Member's
nonforfeitable  interest in the  remainder of his Matching  Account.  Under such
separate accounting,  the Member's  nonforfeitable interest at any relevant time
shall be determined according to the formula X = P [AB + (RxD)] - (RxD) where:

                                           P  =    the Member's nonforfeitable
percentage under subsection 8(d) at the relevant time;

                                          AB  =    the Member's Accrued Benefit
derived from his Matching Account at the relevant time;



<PAGE>


                                           D =    the amount of the distribution
 from the Member's Accrued Benefit deriving from his
                                                   Matching Account; and

                                           R       = the  ratio of the  Member's
                                                   Accrued  Benefit derived from
                                                   his  Matching  Account at the
                                                   relevant time to such Accrued
                                                   Benefit       after       the
                                                   distribution.


<PAGE>


11.          LOANS

                     (a         Availability.  The Committee shall direct that a
 bona fide loan be made from the Fund to any Member
who  requests  the  same,  provided  the  Member  (i)  pays any  application  or
processing  fee which the  Committee  uniformly  charges  with  respect  to loan
requests  and (ii) on the date the loan  would be  disbursed  is  employed  by a
Participating  Company or Related Entity. All such loans shall be subject to the
requirements  of this  Section  which shall be deemed to include  written  rules
prescribed by the Committee from time to time with respect to loans. Eligibility
for and the rules with respect to loans shall be uniformly applied.

                     (b         Minimum Requirements.  Loans shall be subject to
 the following rules:

                                (i         Principal Amount.The principal amount
 of the loan to a Member may not be less than $1,000
                                           ----------------
and may not exceed,  when added to the outstanding balance of all other loans to
the Member from the Plan,  the lesser of (A)  $50,000,  reduced by the excess of
the highest  outstanding balance of loans to the Member from the Plan during the
one-year  period  ending on the day  before the date on which such loan was made
over the outstanding balance of loans to the Member from the Plan on the date on
which  such  loan  is made or (B)  50% of the  Member's  nonforfeitable  Accrued
Benefit on the date on which the loan is made.

                                (ii        Maximum Term.  The term of the loan
may not exceed five years.  If a Member's employment
with all Participating Companies and Related Entities terminates for any reason,
the loan  shall be due and  payable  on the  last  day of the  calendar  quarter
following the calendar quarter in which employment terminated.


<PAGE>


                                (iii       Interest Rate.  The interest rate
shall be a rate charged by commercial lenders for comparable loans on the date
the loan request is approved, as determined by the Committee.
                                (iv        Repayment.  The loan shall be repaid
 over its term in level installment payments
corresponding  to the  Member's  payroll  period.  As a condition  precedent  to
approval  of the  loan,  the  Member  shall be  required  to  authorize  payroll
withholding in the amount of each  installment for all periods he is employed by
a Participating Company.  Notwithstanding the foregoing, the loan repayment of a
Member who is in qualified military service within the meaning of section 414(u)
of the Code shall be suspended to the extent  permitted by section 414(u) of the
Code.

                                (v         Collateral. The loan shall be secured
by 50% of the Member's nonforfeitable Accrued Benefit.
                                (vi        Distribution of Accrued Benefit.  If
the nonforfeitable portion of a Member's Accrued
Benefit is to be distributed  prior to the Member's payment of all principal and
accrued interest due on any loan to such Member,  the distribution shall include
as an offset the amount of unpaid principal and interest due on the loan and the
note shall be distributed.

                                (vii       Notes.  All loans shall be evidenced
by a note containing such terms and conditions as the Committee shall require.
                                (viii      Multiple Loans.  A Member shall be
permitted only one outstanding loan at any time.
                                (ix)       Fees.  The Committee may adopt a rule
 pursuant to subsections 2(h) and 11(a) of the Plan
imposing a  reasonable  fee on a Member who  borrows  under this  Section 11 for
processing  his  loan   application,   preparing  his  loan   documentation   or
administering his loan.


<PAGE>


                     (c         Accounting.  The Committee may prescribe rules
with respect to the order of the accounts and
Investment  Categories  from  which the  principal  amount of any loan  shall be
drawn.  The loan  shall be  treated as a  separate  Investment  Category  of the
borrowing  Member.  All payments of principal  and interest with respect to such
loan shall be credited to the  borrowing  Member,  with  repayment  of principal
credited to the Member's  accounts  from which it was withdrawn in the order the
Committee  prescribes.  The repayment  shall be invested in accordance  with the
Member's current election for new contributions.


<PAGE>


12.          TITLE TO ASSETS

             No person  or entity  shall  have any legal or  equitable  right or
interest in the contributions  made by any Participating  Company,  or otherwise
received  into the  Fund,  or in any  assets of the  Fund,  except as  expressly
provided in the Plan.


<PAGE>


13.          AMENDMENT AND TERMINATION

                     (a         Amendment.  The provisions of this Plan may be
amended by the Board of Directors (or its delegee as
authorized by subsection  2(d)) from time to time and at any time in whole or in
part,  provided  that no  amendment  shall be  effective  unless  the Plan as so
amended  shall  be  for  the   exclusive   benefit  of  the  Members  and  their
beneficiaries,  and that no amendment shall operate to deprive any Member of any
rights  or  benefits  accrued  to him under  the Plan  prior to such  amendment.
Further,   no  amendment  to  the  Plan's  vesting  schedule  shall  reduce  the
nonforfeitable  percentage  of any  Member to an amount  less than it was on the
later of the amendment's  effective date or adoption date as determined  without
regard to such amendment.  Further, each Member who has completed three years of
Service on the later of the date an amendment to the Plan's vesting  schedule is
adopted or effective shall have his nonforfeitable percentage determined without
regard to the  amendment  if such  disregard  provides a greater  nonforfeitable
percentage.

                     (b         Termination. While it is the Company's intention
to continue the Plan in operation indefinitely, the
Company  nevertheless  expressly  reserves  the  right by action of the Board of
Directors   to  terminate   the  Plan  in  whole  or  in  part  or   discontinue
contributions.  Any such termination,  partial  termination or discontinuance of
contributions shall be effected only upon condition that such action is taken as
shall render it impossible  for any part of the corpus of the Fund or the income
therefrom  to be used for, or diverted  to,  purposes  other than the  exclusive
benefit of the Members and their beneficiaries.


<PAGE>


                     (c         Conduct on Termination.  If the Plan is to be
terminated at any time, the Company shall give written
notice to the Trustee which shall  thereupon  revalue the assets of the Fund and
the accounts of the Members as of the date of termination,  partial  termination
or  discontinuance  of contributions  and, after  discharging and satisfying any
obligations of the Plan,  shall allocate all  unallocated  assets to the Accrued
Benefits  of the  Members at the date of  termination,  partial  termination  or
discontinuance  of  contributions  in  accordance  with  subsection  6(g).  Upon
termination, partial termination or discontinuance of contributions, the Accrued
Benefits of Members  affected  thereby  shall  become fully vested and shall not
thereafter  be subject to forfeiture  in whole or in part.  The Committee  shall
instruct  the Trustee to continue to control and manage the Fund for the benefit
of  Members  to whom  distributions  will be made at the time and in the  manner
provided in Section 9. Notwithstanding the foregoing,  incident to a termination
or a  discontinuance  of  contributions,  the Company may amend the Plan and the
Trust Agreement to provide for distribution of Accrued Benefits to each affected
Member provided such distribution  does not violate any applicable  provision of
subsection 9(h) of the Plan or section 401(a) or 401(k) of the Code.


<PAGE>


14.          LIMITATION OF RIGHTS

                     (a         Alienation.  None of the payments, benefits or
rights of any Member shall be subject to any claim of
any creditor of such Member and, in particular,  to the fullest extent permitted
by law, shall be free from attachment,  garnishment,  trustee's process,  or any
other legal or equitable  process  available to any creditor of such Member.  No
Member shall have the right to alienate,  anticipate,  commute, pledge, encumber
or assign  any of the  benefits  or  payments  which he may  expect to  receive,
contingently  or  otherwise,  under this Plan,  except the right to  designate a
beneficiary or  beneficiaries in accordance with the Plan. This subsection shall
not apply to the  enforcement  of a federal tax levy made  pursuant to the Code,
the  collection by the United States on a judgment  resulting from an unpaid tax
assessment,  the pledging of a Member's  Accrued  Benefit as security for a loan
made to such Member  under  Section 11 or any other  exception  set forth in the
regulations under section 401(a)(13) of the Code.

                     (b         Qualified Domestic Relations Order Exception.
Subsection 14(a) shall not apply to the creation,
assignment or  recognition  of a right to any benefit  payable with respect to a
Member under a qualified  domestic relations order within the meaning of section
414(p) of the Code.  Notwithstanding Sections 8-10, distribution to an alternate
payee pursuant to a qualified  domestic relations order shall be made (i) at the
time  specified  in such order or (ii) if the order  permits,  as soon after the
Committee  approves  the order as is  administratively  feasible  provided  such
distribution is permitted under applicable provisions of the Code.


<PAGE>


                     (c         Employment.  Neither the establishment of the
Plan, nor any modification thereof, nor the creation of
any fund, trust or account, nor the payment of any benefit shall be construed as
giving any Member or Employee, or any person whomsoever,  any legal or equitable
right against any Participating  Company,  the Trustee or the Committee,  unless
such right shall be specifically provided for in the Trust Agreement or the Plan
or conferred by affirmative action of the Company,  the Trustee or the Committee
in accordance  with the terms and provisions of the Plan or as giving any Member
or Employee the right to be retained in the employ of any Participating Company.
All Members and other  Employees  shall remain  subject to discharge to the same
extent as if the Plan had never been adopted.


<PAGE>


15.          MERGERS, CONSOLIDATIONS OR TRANSFERS OF PLAN ASSETS

                     (a         General Rule.  In the case of any Plan merger or
Plan consolidation with, or transfer of assets or
liabilities  of the Plan to,  any other  plan,  each  Member in the Plan must be
entitled to receive a benefit  immediately after the merger,  consolidation,  or
transfer (if the Plan were then to terminate)  which is equal to or greater than
the  benefit  he would have been  entitled  to  receive  immediately  before the
merger, consolidation, or transfer (if the Plan had been terminated).

                     (b         Protected Benefits.  A Member shall have all of
the benefits, rights or features provided by the Prior
Plan which are protected  under section  411(d)(6) of the Code with respect to a
Transferred Account. The Committee shall provide for separate  recordkeeping for
a  Member's  Transferred  Account  and  such  additional  subaccounts  as may be
necessary  to comply with the  requirements  of this  subsection.  Except to the
extent  necessary  to comply  with the  requirements  of this  subsection  or an
express provision of the Plan, all Transferred  Accounts shall be subject to the
general  provisions of the Plan  applicable to the type of account to which they
would have been  credited had the amounts  initially  been  contributed  to this
Plan.

                     (c         Special Provisions Applicable to Transferred
Accounts from the Momentum Money-Maker 401(k) Retirement Plan and the Onondaga
Litho Supply Co., Inc. Employees' Profit Sharing and Retirement Plan.

                                (i         Distribution Options.  The following
additional distribution options shall apply to Transferred Accounts from the
Momentum and Onondaga Plans.
                                           (A0  a straight life annuity for the
                                           Member's life;


<PAGE>


                                           (B0     a joint and survivor annuity
                                           with the Member's spouse as
                                           contingent annuitant for an
                                           amount at least  equal to 50% but not
                                           more than 100% of the monthly  amount
                                           which is payable to the Member during
                                           his lifetime;  (C0 a life annuity for
                                           the Member's life,  with a minimum of
                                           60, 120 or 180 monthly

payments guaranteed;
                                           (D0  approximately  equal  monthly or
                                           quarterly   payments  over  a  period
                                           certain;  (E0 a  joint  and  survivor
                                           annuity with any contingent annuitant
                                           for an amount at least

equal                                      to 50% but not more  than 100% of the
                                           amount which is payable to the Member
                                           during his  lifetime;  (F0 a lump sum
                                           payment;  or (G0 any  combination  of
                                           the foregoing.

Notwithstanding the foregoing,  payments may not extend beyond the Member's life
expectancy  on the  date of the  Member's  election,  or,  if the  Member  has a
designated beneficiary, the joint life expectancy of the Member and the Member's
designated  beneficiary.  For  purposes  of this  subsection,  unless the Member
irrevocably elects to the contrary at the time benefit payments  commence,  life
expectancy  shall be  determined  based on the life  expectancy  of the  Member,
without recalculation, as determined under section 401(a)(9) of the Code and the
regulations thereunder.

Death benefits shall be distributed as the Member's  beneficiary shall elect (A)
in one lump sum or (B) in installments  over a period not extending  beyond five
years of the Member's date of death unless payment of benefit  commenced  before
the  Member's  date of death in which case  continuing  payments to the Member's
beneficiary  shall  be  made  at  least  as  rapidly  as  under  the  method  of
distribution in effect on the Member's date of death; provided,


<PAGE>


however, if any portion of the Member's Accrued Benefit is payable to or for the
benefit of a  designated  beneficiary,  such portion may be  distributed  over a
period of time not exceeding the life expectancy of such designated beneficiary,
provided  distribution  begins  not  later  than one year  after the date of the
Member's death or such later date as applicable  regulations  under the Code may
permit;  or if the  designated  beneficiary  referred  to above is the  Member's
surviving spouse,  the date on which distribution is required to begin shall not
be earlier than the date on which the Member would have attained age 70-1/2, the
benefit amount will be used to purchase a straight life annuity for the spouse's
life commencing as soon after the Member's date of death as is  administratively
feasible unless the spouse elects another form of settlement permitted under the
Plan and if the surviving  spouse should die before  distribution to such spouse
begins, this provision shall apply as if the surviving spouse were the Member.

                                (ii        Married Member's Annuity. If a Member
 is married to his then spouse for at least one year
on the  date on which  benefit  payments  are to  commence  and his  Transferred
Account exceeds $5,000, the Member may not elect that benefits be distributed in
any form of  settlement  other than the form of annuity  described in subsection
15(c)(i)(B)  unless the Member  receives  the written  consent of his spouse for
such election  witnessed by a notary public or authorized  representative of the
Plan on forms  prescribed by the Committee.  A Member may change his election at
any time during the election  period set forth herein.  No less than 30 days and
no more than 90 days before the payment of benefits begins,  the Committee shall
furnish to the Member a written  notification of the availability of the benefit
election  hereunder,  including the joint and survivor annuity and the effect of
electing not to take such annuity. A Member may at any time after receipt of the
written  notification  and prior to his actual  retirement  elect in writing the
form of benefit he desires.  A Member may change his  election at any time prior
to the expiration of the election period  described  above. If a Member requests
additional  information  within 60 days  after  receipt of the  notification  of
election,  the minimum  election  period shall be extended an additional 60 days
following his receipt of such additional information.


<PAGE>


                                (iii       Single Member's Annuity.  If, on the
date benefits are to commence, a Member is single or
has  not  been  married  to his  then  spouse  for at  least  one  year  and his
Transferred  Account  exceeds  $5,000,  benefits will be distributed in the form
described in subsection  15(c)(i)(A)  unless the Member elects an alternate form
of settlement.

                                (iv        Annuity Purchases. If benefits are to
be paid in a form of an annuity, the Committee shall
direct the  Trustee to apply the  Member's  Transferred  Account to  purchase an
appropriate nontransferable annuity contract and to deliver it to the Member.

                                (v         In-Service Distributions and Loans.
If a Member is married to his then spouse for at least
one year on the date on which an in-service  distribution  or loan is to be made
from his Transferred  Account and his  Transferred  Account then exceeds $5,000,
the Member may not receive a distribution or a loan from his Transferred Account
without  the prior  written  consent  of his  spouse  given in  accordance  with
subsection  15(c)(ii)  no more than 90 days before the  distribution  or loan is
made.

                                (vi        Explanation of Death Benefit.  The
Committee shall provide to the Member within the
"applicable  period" a written  explanation  of the terms and  conditions of the
spouse's right to death benefits with respect to the  Transferred  Account.  For
purposes of this  subsection  "applicable  period"  shall mean  whichever of the
following periods ends last:

                                           (A0     the period beginning with the
                                           first day of the Plan Year in which
                                           the Member attains
                                           age 32 and  ending  with the close of
                                           the Plan Year preceding the Plan Year
                                           in which the Member  attains  age 35;
                                           (B0 a  reasonable  period  after  the
                                           Member commences participation in the
                                           Plan; or


<PAGE>


                                           (C0     in the case of a Member who
separates from service before attaining age 35, a reasonable period after such
separation from service.
                                (vii       Transition Rule.  For periods prior
to January 1, 1999, "$3,500" shall be substituted for
"$5,000" each place it appears in this Section.
                     (d         In-Service Distribution from Certain Transferred
Accounts.  A Member may withdraw all or a portion of
his  Transferred   Account   reflecting   matching   contributions  or  employer
contributions  from a Prior Plan sponsored by Tasty Baking Company by submitting
a request for  distribution to the Committee on a form and in a manner which the
Committee prescribes for that purpose.

                     (e         Vesting -- Dixie Plan.  All Transferred Accounts
from the Dixie Type and Supply Co., Inc. 401(k)Retirement Plan are 100%
nonforfeitable.

                     (f         Code Requirements.  The Plan shall be deemed an
amendment to each plan which merges into this Plan on
or after  January  1, 1997 to the  extent  necessary  for such  plan to  satisfy
applicable  provisions of section 401(a) of the Code which became effective with
respect to such plan on or after January 1, 1997.


<PAGE>


16.          PARTICIPATION BY RELATED ENTITIES

                     (a         Commencement  Any entity which is a Related
Entity with respect to the Company may, with the
permission  of the  Board  of  Directors,  elect  to  adopt  this  Plan  and the
accompanying  Trust  Agreement.  If the Board of Directors  designates a Related
Entity  as a  Participating  Company,  then it shall be  deemed a  Participating
Company without the necessity for action by its separate board of directors.

                     (b         Termination.  The Company may, by action of the
Board of Directors, determine at any time that any
such  Participating  Company  shall  withdraw and  establish a separate plan and
fund. The withdrawal shall be effected by a duly executed  instrument  delivered
to the  Trustee  instructing  the  Trustee to  segregate  the assets of the Fund
allocable to the  Employees of such  Participating  Company and pay them over to
the separate  fund. On the date a  Participating  Company ceases to be a Related
Entity,  its participation in the Plan shall terminate and Members in its employ
shall be treated as having a Severance Date;  however,  no affected Member shall
be  eligible  for  distribution  of his  Accrued  Benefit  unless the  Committee
determines  that  distribution  will not adversely  affect the Plan's  qualified
status under the Code.  Alternatively,  the Board of  Directors  may, but is not
required to, provide for a transfer in accordance with Section 15 of the Accrued
Benefits of affected  Members to a separate plan which the former Related Entity
adopts.

                     (c)        Single Plan.  The Plan shall at all times be
administered and interpreted as a single plan for the
benefit of the Employees of all Participating Companies.
                     (d)        Delegation of Authority.  Each Participating
Company, by adopting (or being deemed to have adopted)
the Plan,  acknowledges  that the Company has all the rights and duties  thereof
under the Plan and the Trust Agreement, including the right to amend the same.


<PAGE>


17.          TOP-HEAVY REQUIREMENTS

                     (a)        General Rule.  For any Plan Year in which the
Plan is a top-heavy plan or included in a top-heavy
group, as determined  under subsection  17(b), the special  requirements of this
Section shall apply.

                     (b)        Calculation of Top-Heavy Status.  The Plan shall
be a top-heavy plan (if it is not included in an
"aggregation  group") or a plan included in a top-heavy group (if it is included
in an  "aggregation  group")  with respect to any Plan Year if the sum as of the
"determination  date" of the  "cumulative  accounts" of "key  employees" for the
Plan Year exceeds 60% of a similar sum determined for all "employees," excluding
"employees" who were "key employees" in prior Plan Years only.

                     (c)        Definitions.  For purposes of this Section 17,
the following definitions shall apply to be interpreted in accordance with the
provisions of section 416 of the Code and the regulations thereunder.
                                (i)        "Aggregation Group" shall mean the
plans of a Participating Company or a Related Entity
included below within the following categories:
                                           (A)     each such plan in which a
"key employee" is a participant including a terminated
plan in which a "key employee" was a participant within the five-years ending on
 the "determination date";
                                           (B)     each other such plan which
enables any plan in subsection (A) above to meet the
requirements of section 401(a)(4) or 410 of the Code; and
                                           (C)     each other plan not required
to be included in the "aggregation group" which the
Company  elects to include in the  "aggregation  group" in  accordance  with the
"permissive aggregation group" rules of the Code if such group would continue to
meet the  requirements  of  sections  401(a)  and 410 of the Code with such plan
being taken into account.


<PAGE>


                                (ii)       "Cumulative Account" for any
"employee" shall mean the sum of the amount of his accounts
under this Plan plus all defined contribution plans included in the "aggregation
group" (if any) as of the most recent valuation date for each such plan within a
twelve-month  period  ending  on  the  "determination  date,"  increased  by any
contributions due after such valuation date and before the "determination  date"
plus the present value of his accrued  benefit under all defined benefit pension
plans  included  in the  "aggregation  group" (if any) as of the  "determination
date." For a defined  benefit plan, the present value of the accrued  benefit as
of any particular  "determination date" shall be the amount determined under (A)
the method,  if any, that uniformly applies for accrual purposes under all plans
maintained by the Participating  Companies and all Related  Entities,  or (B) if
there is no such method,  as if such benefit accrued not more rapidly than under
the slowest accrual rate permitted under the fractional  accrual rule of section
411(b)(1)(C)  of the Code, as of the most recent  valuation date for the defined
benefit plan, under actuarial  equivalent  factors specified  therein,  which is
within a  twelve-month  period  ending  on the  "determination  date."  For this
purpose,  the  valuation  date  shall be the date for  computing  plan costs for
purposes of determining the minimum funding requirement under section 412 of the
Code.  "Cumulative  accounts" of "employees" who have not performed services for
any Participating Company or a Related Entity for the five-year period ending on
the  "determination  date" shall be  disregarded.  An  "employee's"  "cumulative
account" shall be increased by the aggregate  distributions during the five-year
period  ending on the  "determination  date" made with  respect to him under any
plan in the aggregation group.  Rollovers and direct  plan-to-plan  transfers to
this  Plan or to a plan in the  "aggregation  group"  shall  be  included  in an
"employee's"  "cumulative  account"  unless the  transfer  is  initiated  by the
"employee"  and  made  from a plan  maintained  by an  employer  which  is not a
Participating Company or a Related Entity.


<PAGE>


                                (iii)      "Determination Date" shall mean with
respect to any Plan Year the last day of the preceding Plan Year.
                                (iv)       "Employee" shall mean any person
(including a beneficiary thereof) who has or had an
accrued  benefit  held  under  this  Plan or a plan in the  "aggregation  group"
including  this  Plan at any  time  during  the  current  or any one of the four
preceding Plan Years.  Any "employee"  other than a "key employee"  described in
subsection  17(c)(v)  shall be  considered a "non-key  employee" for purposes of
this Section 17.

                                (v)        "Key Employee" shall mean any
"employee" or former "employee" (including a beneficiary
thereof) who is, at any time during the Plan Year, or was, during any one of the
four preceding Plan Years any one or more of the following:

                                           (A)     an officer of a Participating
Company or a Related Entity whose compensation (as
defined in subsection 5(d)) exceeds 50% of the dollar limitation in effect under
section  415(b)(1)(A) of the Code, unless 50 other such officers (or, if lesser,
a  number  of  such  officers  equal  to  the  greater  of  three  or 10% of the
"employees") have higher annual compensation;

                                           (B)     one of the ten persons
employed by a Participating Company or a Related Entity
both having annual compensation (as defined in subsection 5(d)) greater than the
limitation  in effect under  section  415(c)(1)(A)  of the Code,  and owning (or
considered  as owning within the meaning of section 318 of the Code) the largest
interests  (but  at  least  more  than a  0.5%  interest)  in the  Participating
Companies and all Related Entities.  For purposes of this subsection (B), if two
"employees" have the same interest,  the one with the greater compensation shall
be treated as owning the larger interest;

                                           (C)     any person owning (or
considered as owning within the meaning of section 318 of
the Code) more than 5% of the outstanding stock of all


<PAGE>


Participating                              Companies  or  Related   Entities  or
                                           stock  possessing more than 5% of the
                                           total  combined  voting power of such
                                           stock;  (D) a  person  who  would  be
                                           described in subsection  (C) above if
                                           1% were substituted for

5% each place the same  appears  in  subsection  (C)  above,  and who has annual
compensation of more than $150,000.

For  purposes  of  determining   ownership   under  this   subsection,   section
318(a)(2)(C) of the Code shall be applied by substituting 5% for 50%.

                     (d)        Combined Benefit Limitation.  For purposes of
the calculation of the combined limitation of subsection
5(c),  "1.0" shall be substituted for "1.25" each place the same appears in that
subsection.

                     (e)        Vesting.  The nonforfeitable portion of a
Member's Accrued Benefit derived from his Matching Account shall continue to
vest according to the schedule set forth in subsection 8(d)(ii).


<PAGE>


                     (f)        Minimum Contribution.  Minimum Participating
Company contributions for a Member who is not a "key
employee"  shall  be  required  in  an  amount  equal  to  the  lesser  of 3% of
compensation (as defined in subsection  5(d)) or the highest  percentage of such
compensation  limited to $150,000 (or an increased  amount resulting from a cost
of living  adjustment under section 415(d) of the Code) contributed for any "key
employee" under  subsections  4(a) and 4(d). For purposes of meeting the minimum
contribution  requirement,  employer social security  contributions and elective
contributions  on behalf of  "employees"  other  than "key  employees"  shall be
disregarded.  Each  "non-key  employee" of a  Participating  Company who has not
separated  from  service at the end of the Plan Year and who has  satisfied  the
eligibility   requirements   of  subsection   3(a)  shall  receive  any  minimum
contribution  provided under this Section 17 without regard to (i) whether he is
credited with 1,000 Hours of Service in the Plan Year,  (ii) earnings  level for
the Plan Year or (iii) whether he elects to make contributions  under subsection
4(a).  If an  "employee"  participates  in both  this Plan and  another  defined
contribution plan maintained by a Participating Company or a Related Entity, the
minimum  benefit  shall be  provided  under the other plan.  Furthermore,  if an
"employee"  participates in both this Plan and a defined benefit plan maintained
by a  Participating  Company or a Related  Entity,  the minimum benefit shall be
provided under the defined benefit plan.


<PAGE>


18.          MISCELLANEOUS

                     (a)        Incapacity.  If the Committee receives a copy of
 a certified court order, or other binding legal
certification,  that a person entitled to receive any benefit payment is under a
legal disability or is incapacitated in any way so as to be unable to manage his
financial  affairs,  the  Committee  shall direct that  payments be made to such
person's legally appointed  guardian or other  representative.  Any payment of a
benefit in accordance with the provisions of this subsection shall be a complete
discharge of any liability to make such payment.

                     (b)        Reversions.  In no event, except as provided
herein, shall the Trustee return to a Participating
Company any amount contributed by it to the Plan.

                                (i)        Mistake of Fact.  In the case of a
contribution made by a good faith mistake of fact, the
Trustee shall return the erroneous portion of the contribution, without increase
for investment earnings, but with decrease for investment losses, if any, within
one year after payment of the contribution to the Fund.

                                (ii)       Deductibility.  To the extent
deduction of any contribution determined by the Company to be
deductible  is  disallowed,  the  Trustee  shall  return  that  portion  of  the
contribution,  without  increase for  investment  earnings but with decrease for
investment  losses,  if any, for which deduction has been disallowed  within one
year after the disallowance of the deduction.

                                (iii)      Limitation. No return of contribution
shall be made under this subsection which adversely
affects  the  Plan's  qualified  status  under  regulations,  rulings  or  other
published  positions  of the  Internal  Revenue  Service  or  reduces a Member's
Accrued Benefit below the amount it would have been had such  contributions  not
been made.

                                (iv)       Compliance Refunds.  This subsection
shall not preclude refunds made in accordance with
subsection 4(b)(i), 4(f)(ii), 4(g)(ii) or 4(i)(iii).


<PAGE>


                     (c)        Employee Data.  The Committee or the Trustee may
require that each Employee provide such data as it
deems  necessary  upon his becoming a Member in the Plan.  Each  Employee,  upon
becoming a Member, shall be deemed to have approved of and to have acquiesced in
each and every provision of the Plan for himself, his personal  representatives,
distributees, legatees, assigns, and beneficiaries.

                     (d)        In Writing Requirement.  Unless otherwise
required by law, a requirement that a transaction or consent
under the Plan be "in  writing"  may, at the  discretion  of the  Committee,  be
effected through an interactive telephone system or by other types of electronic
communication.

                     (e)        Doubt as to Right to Payment.  If at any time
any doubt exists as to the right of any person to any
payment under the Plan or the amount or time of such payment (including, without
limitation,  any case of doubt as to  identity,  or any case in which any notice
has been received from any other person claiming any interest in amounts payable
hereunder,  or any case in which a claim from other  persons may exist by reason
of community  property or similar laws), the Committee may direct the Trustee to
hold such sum as a segregated amount in trust until such right or amount or time
is  determined  or until order of a court of competent  jurisdiction,  or to pay
such  sum into  court in  accordance  with  appropriate  rules of law or to make
payment only upon receipt of a bond or similar  indemnification  (in such amount
and in such form as is satisfactory to the Committee).

                     (f)        Inability to Locate Distributee. Notwithstanding
any other provision of the Plan, if the Committee
cannot  locate any person to whom a payment is due under this Plan,  the benefit
in respect of which such  payment is to be made shall be  forfeited at such time
as the Committee shall determine in its sole discretion (but in all events prior
to


<PAGE>


the time such benefit would otherwise  escheat under any applicable  state law);
provided,  that such benefit  shall be  reinstated  if such person  subsequently
makes a valid claim for such benefit.

                     (g)        Estoppel of Members and Their Beneficiaries.
The Participating Companies, Committee and Trustee may
rely upon any certificate,  statement or other representation made to them by an
Employee, Member or beneficiary with respect to age, length of service, leave of
absence, date of cessation of employment, marital status, or other fact required
to be  determined  under any other  provisions  of this  Plan,  and shall not be
liable  on  account  of the  payment  of any  moneys  or the doing of any act in
reliance upon any such certificate,  statement or other representation. Any such
certificate,  statement  or other  representation  made by an Employee or Member
shall be conclusively  binding upon such Employee or Member and his beneficiary,
and such  Employee,  Member or  beneficiary  shall  thereafter  and  forever  be
estopped from disputing the truth and correctness of such certificate, statement
or other representation. Any such certificate, statement or other representation
made  by  a  Member's  beneficiary  shall  be  conclusively  binding  upon  such
beneficiary and such  beneficiary  shall thereafter and forever be estopped from
disputing  the truth and  correctness  of such  certificate,  statement or other
representation.

                     (h)        Law Governing.  This Plan shall be construed,
administered and applied in a manner consistent with the laws of the
Commonwealth of Pennsylvania where those laws are not superseded by federal law.
                     (i)        Pronouns.  The use of the masculine pronoun
shall be extended to include the feminine gender wherever appropriate.
                     (j)        Interpretation.  The Plan is a profit sharing
plan including a qualified, tax exempt trust under
sections 401(a) and 501(a) of the Code and a qualified cash


<PAGE>


or deferred  arrangement  under section 401(k)(2) of the Code. The Plan shall be
interpreted in a manner  consistent with its satisfaction of all requirements of
the Code applicable to such a plan.

             IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by
the Company,  it has caused the same to be signed by its officers thereunto duly
authorized, and its corporate seal to be affixed hereto, this day of , 1999.

                                                   PRIMESOURCE CORPORATION
Attest:



                                                   By:Corporate
-----------------------------------------             -------------------------





(Corporate Seal)




<PAGE>




                   PRIMESOURCE CORPORATION 401(k) SAVINGS PLAN
                (Amended and Restated Effective January 1, 1997)


                                   Schedule A
                               (September 1, 1999)

                           [Intentionally Left Blank]





































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