<PAGE>   1
                                                                     EXHIBIT 4.1
















                    CORRECTIONS CORPORATION OF AMERICA

                    401(K) SAVINGS AND RETIREMENT PLAN












                         Effective as of January 1, 1999
                        (Except Where Otherwise Provided)


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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                             <C>
PREAMBLE.........................................................................1

ARTICLE I DEFINITIONS............................................................2

ARTICLE II ELIGIBILITY AND PARTICIPATION........................................14

        Section 2.01 Eligibility................................................14
        Section 2.02 Entry and Participation....................................15
        Section 2.03 Reemployment...............................................15
        Section 2.04 Acceptance.................................................15
        Section 2.05 Employees Who Are Officers, Shareholders or Highly
                     Compensated................................................15
        Section 2.06 Absence in the Armed Services..............................15

ARTICLE III FINANCING OF PLAN AND INDIVIDUAL ACCOUNTS...........................16

        Section 3.01 Medium of Financing the Plan...............................16
        Section 3.02 Contributions..............................................16
        Section 3.03 Elections..................................................17
        Section 3.04 Nondiscrimination Test Compliance..........................17
        Section 3.05 Return of Excess Contributions.............................18
        Section 3.06 Form and Manner of Employer Contributions..................19
        Section 3.07 Prohibition of Reversion...................................20
        Section 3.08 Transfers from Qualified Plans.............................20
        Section 3.09 Participant's Election as to Investment Funds..............22
        Section 3.10 Purchase of Prison Realty Stock............................22

ARTICLE IV ALLOCATIONS TO INDIVIDUAL ACCOUNTS...................................23

        Section 4.01 Individual Accounts........................................23
        Section 4.02 Account Adjustments........................................23
        Section 4.03 Limitation on Allocations..................................24
        Section 4.04 Voting of Shares...........................................25

ARTICLE V BENEFITS..............................................................26

        Section 5.01 Payment of Benefits........................................26
        Section 5.02 Normal Retirement Benefit..................................27
        Section 5.03 Delayed Retirement Benefit.................................27
        Section 5.04 Disability Retirement Benefit..............................27
        Section 5.05 Vested Benefit.............................................28
</TABLE>



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<TABLE>
<S>                                                                            <C>
        Section 5.06 Death Benefit..............................................30
        Section 5.07 Participant Loans..........................................31
        Section 5.08 Failure to Locate..........................................33
        Section 5.09 Direct Rollover Election...................................33
        Section 5.10 Accounts for Participants Electing to Defer Distribution...34

ARTICLE VI MODIFICATIONS FOR TOP-HEAVY PLANS....................................35

        Section 6.01 Application of Provisions..................................35
        Section 6.02 Minimum Contribution.......................................35
        Section 6.03 Accelerated Vesting........................................35

ARTICLE VII ADMINISTRATION OF PLAN..............................................36

        Section 7.01 Plan Administrator.........................................36
        Section 7.02 Claims Procedure...........................................37
        Section 7.03 Records....................................................38
        Section 7.04 Delegation of Authority....................................38
        Section 7.05 Legal Incompetence.........................................39
        Section 7.06 Correction of Errors.......................................39
        Section 7.07 Qualified Domestic Relations Order Procedure...............39

ARTICLE VIII AMENDMENT OR TERMINATION...........................................40

        Section 8.01 Amendment of Plan..........................................40
        Section 8.02 Termination of Plan........................................40
        Section 8.03 Distribution Upon Termination..............................41
        Section 8.04 Merger of Plan.............................................41
        Section 8.05 Failure of Internal Revenue Service Qualification..........41
        Section 8.06 Distribution Limitation....................................41

ARTICLE IX MISCELLANEOUS........................................................42

        Section 9.01 Liability of Employer......................................42
        Section 9.02 Intent to Continue Plan and Trust..........................42
        Section 9.03 Binding on Parties.........................................43
        Section 9.04 Agent for Legal Process....................................43
        Section 9.05 Spendthrift Clause.........................................43
        Section 9.06 Successor to Business of Employer..........................43
        Section 9.07 Conflict of Provisions.....................................43
        Section 9.08 Successors to Trustee......................................43
        Section 9.09 Definition of Words........................................44
        Section 9.10 Titles.....................................................44
</TABLE>



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<TABLE>
<S>                                                                             <C>
        Section 9.11 Execution of the Plan......................................44

ARTICLE X PARTICIPATING EMPLOYERS...............................................44

        Section 10.01 Adoption by Other Employers...............................44
        Section 10.02 Requirements of Participating Employers...................44
        Section 10.03 Designation of Agent......................................45
        Section 10.04 Employer Transfers........................................45
        Section 10.05 Participating Employer Contribution.......................45
        Section 10.06 Amendment.................................................45
        Section 10.07 Discontinuance of Participation...........................45
        Section 10.08 Administrator's Authority.................................45
</TABLE>



                                       iii


<PAGE>   5

                                    PREAMBLE

        This Preamble sets forth certain background information relating to the
formation of Correctional Management Services Corporation, Prison Management
Services, Inc., and Juvenile and Jail Facility Management Services, Inc.
(collectively, the "Companies") and their adoption of the Corrections
Corporation of America 401(k) Savings and Retirement Plan (the "Plan"):

        A. The Companies were formed in August 1998 in connection with the
proposed merger of Corrections Corporation of America ("CCA") and CCA Prison
Realty Trust ("Prison Realty"). Pursuant to the merger, CCA and Prison Realty
will be merged into Prison Realty Corporation, a newly-formed Maryland
corporation ("New Prison Realty"). If consummated, the merger will occur on or
about January 1, 1999.

        B. In connection with the merger, the Companies will acquire the
operating assets of CCA, and employees of CCA will become employees of the
Companies. Following the merger, New Prison Realty, Prison Management Services,
Inc. and Juvenile and Jail Facility Management Services, Inc. will be part of
the same controlled group of corporations. Correctional Management Services
Corporation will be affiliated with Prison Management Services, Inc. and
Juvenile and Jail Facility Management Services, Inc., but will not be part of
the same controlled group of corporations.

        C. CCA is sponsor of the Corrections Corporation of America Employee
Savings and Stock Ownership Plan (the "CCA ESOP"). Also, in connection with a
prior acquisition, CCA assumed the U.S. Corrections Corporation Amended and
Restated 401(k) Plan (the "USCC 401(k) Plan").

        D. The Companies desire to establish the Plan for the benefit of those
persons who will become employees of the Companies after the merger of CCA and
Prison Realty into Prison Realty Corporation. The Plan is a multiple-employer
plan and will become effective generally as of the effective time of such
merger. As soon as practicable following the merger, the CCA ESOP and the USCC
401(k) Plan will be merged into the Plan. The assets transferred to the Plan in
the merger will thereafter be administered in accordance with the Plan. New
Prison Realty will not be a sponsor of the Plan but instead will establish a
separate plan for the benefit of its employees.



                                        1


<PAGE>   6

                                    ARTICLE I
                                   DEFINITIONS

        As used herein, the following words and phrases shall have the meaning
indicated unless otherwise defined or required by the context:

        Section 1.1 "Administrative Committee" or "Committee" shall mean the
Committee to which the administrative duties and responsibilities under the Plan
are delegated pursuant to Section 7.04 hereof.

        Section 1.2 "Administrator" or "Plan Administrator" shall mean, with
respect to the Plan, Correctional Management Services Corporation (a Tennessee
corporation).

        Section 1.3 "Alternate Payee" shall mean any spouse, former spouse,
child or other dependent of a Participant who is recognized by a Qualified
Domestic Relations Order as having a right to receive all or a portion of the
benefits payable under the Plan with respect to such Participant.

        Section 1.4 "Average Contribution Percentage for the Prohibited Group"
shall mean the average of the Contribution Percentages of the Prohibited Group
for a Plan Year as determined by adding together the Contribution Percentages of
each Participant who is a member of the Prohibited Group for the Plan Year and
dividing the sum by the number of Participants who are members of the Prohibited
Group for that Plan Year.

        Section 1.5 "Average Contribution Percentage for the Protected Group"
shall mean the average of the Contribution Percentages for the Protected Group
for a Plan Year as determined by adding together the Contribution Percentages of
each Participant who is a member of the Protected Group for the Plan Year and
dividing that sum by the number of Participants who are members of the Protected
Group for that Plan Year.

        Section 1.6 "Average Deferral Ratio for the Prohibited Group" shall mean
the average of the Deferral Ratios of the Prohibited Group for a Plan Year as
determined by adding together the Deferral Ratios of each Participant who is a
member of the Prohibited Group for the Plan Year and dividing the sum by the
number of Participants who are members of the Prohibited Group for that Plan
Year.

        Section 1.7 "Average Deferral Ratio for the Protected Group" shall mean
the average of the Deferral Ratios for the Protected Group for a Plan Year as
determined by adding together the Deferral Ratios of each Participant who is a
member of the Protected Group for the Plan Year and dividing that sum by the
number of Participants who are members of the Protected Group for that Plan
Year.

                                        2


<PAGE>   7



        Section 1.8 "Basic Employer Contributions" shall mean the contributions,
if any, made pursuant to Section 3.02(a) of the Plan.

        Section 1.9 "Basic Employer Contributions Account" shall mean the amount
of the Trust Fund standing to the credit of a Participant which is attributable
to the Basic Employer Contributions, together with adjustments allocable thereto
under the terms of the Plan.

        Section 1.10 "Beneficiary" shall mean the designated recipient or
recipients who shall receive any benefits payable under the Plan upon the death
of a Participant. If a Beneficiary has not been designated, the Trustee shall,
upon the death of the Participant, pay any benefit payable under the Plan to the
Participant's estate. Notwithstanding the preceding, if a Participant is
married, his Beneficiary shall be his spouse unless the Participant and his
spouse choose an alternate beneficiary in accordance with Section 5.06(b).

        Section 1.11 "Break in Employment" shall mean a computation period
during which an Employee has not been credited with more than five hundred (500)
Hours of Employment; for these purposes, the computation period considered shall
be determined in the same manner as under Section 1.77.

        Section 1.12 "CCA Employer Contributions Account" shall mean, with
respect to any Participant or Employee, the amounts transferred to the Trust
Fund pursuant to the CCA ESOP Merger which are attributable to basic employer
contributions and matching employer contributions, together with Fund Earnings
allocable thereto under the terms of the Plan.

        Section 1.13 "CCA ESOP Merger" shall mean the merger of the Corrections
Corporation of America Employee Savings and Stock Ownership Plan with and into
the Plan.

        Section 1.14 "Code" shall mean the Internal Revenue Code of 1986 as in
effect on the relevant date to be interpreted under this Plan. Reference to any
section of the Code shall include that section, any valid regulation promulgated
thereunder, and any comparable section or sections of any future legislation
that amends, supplements or supersedes said section.

        Section 1.15 "Compensation" shall mean the total salary and commissions
paid by an Employer to an Employee, inclusive of overtime and bonus, which is
attributable to the period of his participation in the Plan for each Plan Year
or other period; provided, however, that Compensation shall include elective
deferrals made to a cafeteria plan or a 401(k) plan, including the Plan, and
elective deferrals made to a 403(b) annuity. For purposes of applying Code
Sections 401(k)(3), 401(m)(3), 404(a), 414(q), 415 and 416, Compensation (i)
shall exclude amounts contributed by an Employer to a deferred compensation
plan, amounts realized from the exercise of nonqualified stock options or lapse
of restrictions on restricted property and amounts realized from the sale,
exchange, or other disposition of stock acquired pursuant to a qualified stock
option, but (ii) shall include amounts otherwise excluded from gross income by
reason of application of Code Sections 125, 402(a)(8), 402(h)(1)(B) and, in the
case of Employer contributions pursuant to a salary


                                        3


<PAGE>   8



reduction agreement, Code Section 403(b). Compensation shall exclude amounts in
excess of one hundred fifty thousand dollars ($150,000) (or such other amount
determined in accordance with the cost-of-living procedures described in section
416(d) of the Code).

        Section 1.16 "Contribution Percentage" shall mean the ratio, calculated
separately for each Employee, the numerator of which shall be any contribution
to a qualified plan by an Employer on such Employee's behalf based on a salary
reduction contribution or Employee contribution, and the denominator of which
shall be the Employee's Compensation for the Plan Year.

        Section 1.17  "Controlled Group Member" shall mean:

                (a)     any corporation which is a member of a controlled group
                        of corporations (as defined by section 414(b) of the
                        Code) of which the Employer is a member,

                (b)     any other trade or business (whether or not
                        incorporated) which is under common control with respect
                        to the Employer (as defined by section 414(c) of the
                        Code), or

                (c)     any organization which is a member of an affiliated
                        service group (as defined by section 414(m) of the
                        Code);

but only for the period during which such other corporation, trade, business or
organization and the Employer are members of such controlled group of
corporations, are under such common control or are serving as an affiliated
service group. All employees of the Controlled Group Members shall be treated as
employed by a single employer.

        Section 1.18 "Credited Employment" shall mean the sum of an Employee's
Years of Employment. In the case of an Employee not entitled to a Vested Benefit
as of a prior termination of Employment, he shall be credited with the number of
Years of Employment prior to his Break in Employment for purposes of
participation and vesting unless the number of consecutive Breaks in Employment
equals or exceeds the greater of (a) five (5), or (b) the total number of Years
of Employment before the Break in Employment. Credited Employment shall not be
interrupted by, but shall not include, an authorized Leave of Absence.

        Section 1.19 "Deferral Ratio" shall mean ratio, calculated separately
for each Employee, the numerator of which shall be any salary reduction
contribution to a qualified plan on such Employee's behalf, and the denominator
of which shall be the Employee's Compensation for such Plan Year prior to such
salary reduction contributions.

        Section 1.20 "Delayed Retirement Benefit" shall mean the benefit to
which a Participant is entitled at his delayed Retirement Date.


                                        4


<PAGE>   9



        Section 1.21 "Delayed Retirement Date" shall mean, for each Participant,
any date after his Normal Retirement Date.

        Section 1.22 "Determination Date" shall mean, for any Plan Year
subsequent to the first Plan Year, the last day of the preceding Plan Year and,
for the first Plan Year of the Plan, the last day of that year.

        Section 1.23 "Disability Retirement Benefit" shall mean the benefit to
which a Participant is entitled at his Disability Retirement Date.

        Section 1.24 "Disability Retirement Date" shall mean, for each
Participant, the first day of the month next following the Administrator's
determination that the Participant is disabled.

        Section 1.25 "Domestic Relations Order" shall mean a judgment, decree,
or order, including approval of a property settlement agreement, made pursuant
to state domestic relations law or community property law that relates to the
provision of child support or alimony payments to, or marital property rights
of, a spouse, former spouse, child or other dependent of a Participant.

        Section 1.26 "Effective Date" shall mean the original effective date of
the Plan which shall be the effective date of the merger of Corrections
Corporation of America and CCA Prison Realty Trust.

        Section 1.27 "Employee" shall mean an individual employed by an
Employer.

        Section 1.28 "Employer" shall mean Correctional Management Services
Corporation (a Tennessee corporation) and, where appropriate, shall include any
Participating Employers and/or Controlled Group Members.

        Section 1.29 "Employer Contributions" shall mean, if any, Basic Employer
Contributions and Matching Employer Contributions.

        Section 1.30 "Employer Contributions Account" shall mean the Basic
Employer Contributions Account, the Matching Employer Contributions Account and
the CCA Employer Contributions Account.

        Section 1.31 "Employment" shall mean the employment relationship as an
Employee of the Employer.

        Section 1.32 "ERISA" shall mean Public Law 93-406, the Employee
Retirement Income Security Act, as in effect on the relevant date to be
interpreted under the Plan and regulations relative thereto.


                                        5


<PAGE>   10



        Section 1.33 "Five-Percent Owner" shall mean any person who owns (or is
considered as owning within the meaning of section 318 of the Code) more than
five percent (5%) of the outstanding stock of the Employer or stock possessing
more than five percent (5%) of the total combined voting power of all stock of
the Employer.

        Section 1.34 "Forfeiture" shall mean the portion of a Participant's
Individual Account which is forfeited because of a Break in Employment before
full vesting occurs or because of application of Section 4.03 hereof.

        Section 1.35 "Fund" or "Investment Fund" shall mean one of the
investment funds (including Prison Realty Stock) established by the Trustee as
set forth in Section 3.09(a).

        Section 1.36 "Fund Earnings" shall mean, with respect to each Investment
Fund, the net gain or loss of such Fund as reflected by interest payments,
dividends, realized and unrealized gains and losses, and fees and expenses paid
by, or with respect, to the Fund.

        Section 1.37 "Highly Compensated Employee" shall mean, with respect to a
Plan Year, any Employee eligible to participate in the Plan or any other
qualified plan maintained by an Employer who:

                (a)     was at any time during the relevant Plan Year or the
                        next preceding Plan Year a Five Percent Owner; or

                (b)     received during the preceding Plan Year Compensation
                        from the Employer in excess of eighty thousand dollars
                        ($80,000) and, if the Employer elects for a Plan Year,
                        was in the top paid group of Employees (as defined in
                        Code Section 414(q)).

        The definition of "Highly Compensated Employee" shall be determined
pursuant to Code Section 414(q), any Regulations issued thereunder, and any cost
of living adjustments (as issued by the Secretary of the Treasury or delegate)
applicable to the dollar figures specified above.

        Section 1.38 "Hour of Employment" shall mean the following:

                (a)     Each hour for which an Employee is paid, or entitled to
                        payment of Compensation as defined in this Article I,
                        for the performance of duties for the Employer or for
                        any other Controlled Group Member during the applicable
                        computation period.

                (b)     Each hour for which an Employee is paid, or entitled to
                        payment of Compensation as defined in this Article I, by
                        the Employer or any other Controlled Group Member on
                        account of a period of time during which no duties are
                        performed (irrespective of whether the Employment
                        relationship has


                                        6


<PAGE>   11



                        terminated) due to vacation, holiday, illness,
                        incapacity (including disability), jury duty, military
                        duty or Leave of Absence; provided, however, that, with
                        respect to this subsection (b):

                        (1)     no more than five hundred and one (501) Hours of
                                Employment shall be credited to an Employee on
                                account of any single continuous period during
                                which the Employee performs no duties (whether
                                or not such period occurs in a single
                                computation period),

                        (2)     hours for which an Employee is directly or
                                indirectly paid, or entitled to payment, on
                                account of a period during which no duties are
                                performed shall not be credited if such payment
                                is made or due under a plan maintained solely
                                for the purpose of complying with applicable
                                workers' compensation, unemployment compensation
                                or disability insurance laws, and

                        (3)     hours shall not be credited for a payment which
                                solely reimburses an Employee for medical or
                                medically-related expenses incurred by the
                                Employee.

                        For purposes of this subsection (b), a payment shall be
                        deemed to be made by or due from the Employer regardless
                        of whether such payment is made by or due from the
                        Employer directly, or indirectly through, among others,
                        a trust fund, or insurer, to which the Employer
                        contributes or pays premiums and regardless of whether
                        contributions made or due to the trust fund, insurer or
                        other entity are for the benefit of particular Employees
                        or are on behalf of a group of Employees in the
                        aggregate.

                (c)     Each hour for which a Participant is absent from work
                        for any period by reason of the pregnancy of the
                        Participant, the birth of a child of the Participant,
                        placement of a child with the Participant in connection
                        with the adoption of such child by such Participant or
                        for purposes of caring for such child immediately
                        following such birth or placement, but solely for
                        determining whether a Participant has incurred a Break
                        in Employment. The hours to be credited to such
                        Participant in accordance with this subparagraph (c)
                        shall be the Hours of Employment which otherwise would
                        normally have been credited to such Participant but for
                        such absence, or in any case in which the Plan
                        Administrator is unable to determine such Hours of
                        Employment, eight (8) Hours of Employment per day of
                        such absence; provided, however, that with respect to
                        this subsection (c):


                                        7


<PAGE>   12



                        (1)     no more than five hundred and one (501) Hours of
                                Employment shall be credited to a Participant by
                                reason of any one such pregnancy or placement,

                        (2)     such hours shall be treated as Hours of
                                Employment in the Plan Year in which the absence
                                from work begins, if the Participant would be
                                prevented from incurring a Break in Employment
                                in such Plan Year solely because periods of
                                absence are treated as Hours of Employment, or
                                in any other case, in the immediately following
                                year, and

                        (3)     no Hours of Employment will be credited unless
                                the Participant furnishes to the Plan
                                Administrator such timely information as the
                                Plan Administrator may reasonably require to
                                establish that the absence from work is for
                                reasons referred to in this subsection (c)
                                including a statement of the number of days for
                                which there was such an absence.

                (d)     Each hour for which back pay irrespective of mitigation
                        of damages, is either awarded or agreed to by the
                        Employer. The same hours shall not be credited both
                        under subsection (a), (b) or (c) and under this
                        subsection. Hours credited for back pay under this
                        subsection with respect to periods described in
                        subsection (b) shall be subject to the limitations set
                        forth in subsection (b).

The provisions of paragraphs (b) and (c) of 29 CFR 2530.200b-2 shall be observed
in crediting Hours of Employment under this Section, which paragraphs are
incorporated herein by reference.

        Section 1.39 "Individual Account" shall mean the amount of the Fund
standing to the credit of each Participant attributable to all contributions
made under the Plan and amounts transferred to the Plan pursuant to the CCA ESOP
Merger and the USCC 401(k) Merger, together with adjustments allocable thereto
in accordance with the terms of the Plan. The Administrator may maintain one or
more sub-accounts on behalf of a Participant. Unless otherwise required by law,
the maintenance of sub-accounts shall be for bookkeeping purposes only, and no
segregation of Trust Fund assets shall be required. Any reference herein to a
Participant's Individual Account shall include any sub-accounts maintained
thereunder.

        Section 1.40 "Investment Manager" shall mean a person other than the
Trustee or the Plan Administrator:

                (a)     who (i) is registered as an investment advisor under the
                        Investment Advisors Act of 1940, (ii) is a bank as
                        defined in that Act, or (iii) is an insurance company
                        qualified to perform services relating to the
                        management, acquisition or deposition of assets of a
                        plan under the laws of more than one state; and


                                        8


<PAGE>   13



                (b)     who has acknowledged in writing that it is a fiduciary
                        with respect to the Plan.

        Section 1.41 "Key Employee" shall mean any Employee, former Employee or
Beneficiary thereof, who, at any time during the Plan Year in question or during
any of the four (4) preceding Plan Years, is:

                (a)     an officer of the Employer whose annual Compensation
                        exceeds one hundred fifty percent (150%) of the amount
                        in effect under Code section 415(c)(1)(A) for such Plan
                        Year,

                (b)     one of the ten (10) Employees having annual Compensation
                        greater than the limitation in effect under Code section
                        415(c)(1)(A) and owning (or considered as owning within
                        the meaning of section 318 of the Code) the largest
                        interests in the Employer,

                (c)     a Five-Percent Owner, or

                (d)     a one percent (1%) owner of the Employer having an
                        annual Compensation from the Employer of more than one
                        hundred fifty thousand dollars ($150,000).

For the purposes of paragraph (a), no more than fifty (50) Employees (or, if
less, the greater of three (3), or ten percent (10%), of the Employees) shall be
treated as officers. For the purposes of paragraph (b), if two (2) Employees
have the same interest in the Employer, the Employee having greater annual
Compensation shall be treated as having the larger interest. For the purposes of
applying the terms of this definition, the provisions of Code Section 416(i) are
incorporated herein by reference.

        Section 1.42 "Leave of Absence" shall mean that period during which the
Participant is absent without compensation and for which the Employer, in its
sole discretion, has determined him to be on a leave of absence rather than
having terminated his employment. Such discretion of the Employer shall be
exercised in a nondiscriminatory manner.

        Section 1.43 "Limitation Year" shall mean the Plan Year.

        Section 1.44 "Matching Employer Contributions" shall mean the
contributions, if any, made pursuant to Section 3.02(b) of the Plan.

        Section 1.45 "Matching Employer Contributions Account" shall mean the
amount of the Fund standing to the credit of a Participant which is attributable
to the Matching Employer Contributions together with adjustments allocable
thereto under the terms of the Plan.

        Section 1.46 "Non-Key Employee" shall mean an Employee who is not a Key
Employee.


                                        9


<PAGE>   14



        Section 1.47 "Normal Retirement Age" shall mean, for each Participant,
age sixty-two (62).

        Section 1.48 "Normal Retirement Benefit" shall mean the benefit to which
a Participant is entitled at his Normal Retirement Date.

        Section 1.49 "Normal Retirement Date" shall mean, for each Participant,
the first day of the month coinciding with or following his Normal Retirement
Age.

        Section 1.50 "Participant" shall mean any Employee who becomes a
Participant hereunder as provided in Article II.

        Section 1.51 "Participant-Directed Account" shall mean each
Participant's Individual Account.

        Section 1.52 "Participant Tax-Deferred Contributions" shall mean the
contributions, if any, made pursuant to Section 3.02(c) of the Plan.

        Section 1.53 "Participant Tax-Deferred Contributions Account" shall mean
the amount of the Fund standing to the credit of a Participant which is
attributable to his Participant Tax-Deferred Contributions together with Fund
Earnings allocable thereto under the terms of the Plan.

        Section 1.54 "Participating Employer" shall mean, initially, Prison
Management Services, Inc. (a Tennessee corporation) and Juvenile and Jail
Facility Management services, Inc. (a Tennessee corporation), and shall also
include any other employer which adopts the Plan in accordance with Article X.

        Section 1.55 "Participation Agreement" shall have the meaning ascribed
to it in Section 3.02(c).

        Section 1.56 "Permissive Aggregation Group" shall mean the Required
Aggregation Group of plans plus any other plan or plans of the Employer which,
when considered as a group with the Required Aggregation Group, would continue
to satisfy the requirements of sections 401(a)(4) and 410 of the Code.

        Section 1.57 "Plan" shall mean the Corrections Corporation of America
401(k) Savings and Retirement Plan, the Trust Agreement attached hereto as
Exhibit A and the Trust established under that Agreement.

        Section 1.58 "Plan Year" shall mean the twelve (12) month period ending
on December 31.

        Section 1.59 "Prison Realty Stock" shall mean the common stock of Prison
Realty Corporation, or any successor trust or corporation.


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<PAGE>   15



        Section 1.60 "Prison Realty Stock Fund" shall mean an Investment Fund
established by the Trustee which consists primarily of Prison Realty Stock.

        Section 1.61 "Prohibited Group" shall mean those Employees who are
considered Highly Compensated Employees.

        Section 1.62 "Protected Group" shall mean those Employees who are not
members of the Prohibited Group.

        Section 1.63 "Qualified Domestic Relations Order" shall mean a Domestic
Relations Order which creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to receive, all or
a portion of the benefits payable to a Participant under the Plan in accordance
with section 414(p) of the Code. Without limiting the generality of the
foregoing, a Qualified Domestic Relations Order may permit payment of benefits
to an Alternate Payee prior to the Participant's having attained his "earliest
retirement age" (within the meaning of section 414(p) of the Code).

        Section 1.64 "Reemployment Date" shall mean the date as of which an
Employee is credited with the first Hour of Employment upon a resumption of
Employment after an interruption in Employment.

        Section 1.65 "Required Aggregation Group" shall mean (a) each qualified
plan of the Employer in which at least one Key Employee participates or
participated at any time during the determination period (regardless of whether
the plan has terminated), and (b) each other qualified plan of the Employer
which enables a plan described in clause (a) to meet the requirements of
sections 401(a)(4) or 410 of the Code.

        Section 1.66 "Retirement" shall mean any of the forms of retirement set
forth in Article V, other than a termination of Employment pursuant to which a
Participant's Vested Benefit is determined under Section 5.05.

        Section 1.67 "Rollover Account" shall mean the amount of the Fund
standing to the credit of a Participant or Employee which is attributable to his
voluntary rollover of funds pursuant to Section 3.08, together with Fund
Earnings allocable thereto under the terms of the Plan.

        Section 1.68 "Top Heavy Plan" shall mean this Plan for any Plan Year if,
as of the Determination Date, any of the following conditions exist:

                (a)     the Top Heavy Ratio for this Plan exceeds sixty percent
                        (60%) and this Plan is not part of any Required
                        Aggregation Group or Permissive Aggregation Group of
                        plans,


                                       11


<PAGE>   16



                (b)     this Plan is a part of a Required Aggregation Group of
                        plans but not part of a Permissive Aggregation Group and
                        the Top Heavy Ratio for the group of plans exceeds sixty
                        percent (60%), or

                (c)     this Plan is a part of the Required Aggregation Group
                        and part of a Permissive Aggregation Group of plans and
                        the Top Heavy Ratio for the Permissive Aggregation Group
                        exceeds sixty percent (60%).

        Section 1.69 "Top Heavy Ratio" shall mean, for any Required or
Permissive Aggregation Group, as appropriate, a fraction, the numerator of which
is the sum of account balances hereunder plus, if the Employer maintains a
defined benefit plan in addition to this Plan, the sum of the present value of
accrued benefits thereunder for all Key Employees as of the Determination
Date(s), and the denominator of which is the sum of the account balances under
this Plan plus, if the Employer maintains a defined benefit plan, the present
value of accrued benefits thereunder for all Participants as of the
Determination Date(s), all determined in accordance with section 416 of the Code
and the regulations thereunder. The accrued benefits and account balances in
both the numerator and denominator to the Top Heavy Ratio are increased for any
distribution made in the five (5)-year period ending on the Determination Date.
For purposes of the above, the value of account balances and the present value
of accrued benefits will be determined as of the most recent valuation date that
falls within or ends with the twelve (12)-month period ending on the
Determination Date, except as provided in section 416 of the Code and the
regulations thereunder. The account balances and accrued benefits of a
Participant (1) who is not a Key Employee but who was a Key Employee in a prior
year, or (2) who has not been credited with at least one (1) Hour of Employment
with any employer maintaining the plan at any time during the five (5)-year
period ending on the Determination Date will be disregarded. The account
balances and accrued benefits of a former Employee who has performed no services
for the Employer for five (5) years shall be disregarded in determining whether
the Plan is Top Heavy. The calculation of the Top Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with section 416 of the Code and the regulations thereunder.
Employee contributions and salary deferrals will be taken into account for
purposes of computing the Top Heavy Ratio. When aggregating plans, the value of
account balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.

        Section 1.70 "Trust Agreement" shall mean Exhibit A as attached hereto
and incorporated by reference as part of this Plan.

        Section 1.71 "Trust Fund" shall mean the assets of the Plan held
pursuant to the Trust Agreement.

        Section 1.72 "Trustee" shall mean the party or parties designated as
such under the Trust Agreement.


                                       12


<PAGE>   17



        Section 1.73 "USCC Employer Contributions Account" shall mean, with
respect to any Participant or Employee, the amounts transferred to the Trust
Fund pursuant to the USCC 401(k) Merger which are attributable to basic employer
contributions and matching employer contributions, together with Fund Earnings
allocable thereto under the terms of the Plan.

        Section 1.74 "USCC 401(k) Merger" shall mean the merger of the U.S.
Corrections Corporation Amended and Restated 401(k) Plan with and into the Plan.

        Section 1.75 "Valuation Date" shall mean December 31st of each Plan
Year. The Plan Administrator may establish more frequent Valuation Dates, if the
Plan Administrator deems it appropriate.

        Section 1.76 "Vested Benefit" shall mean the portion of his Individual
Account value to which a Participant is entitled as determined under Section
5.05.

        Section 1.77 "Year of Employment" shall mean the computation period of
twelve (12) consecutive months, as set forth herein below, during which an
Employee has been credited with at least one thousand (1,000) Hours of
Employment.

                (a)     For purposes of eligibility for participation, the
                        initial computation period shall begin with the date on
                        which the Employee first performs an Hour of Employment.
                        The computation period beginning after a Break in
                        Employment shall be measured from the date on which the
                        Employee again performs an Hour of Employment. After the
                        initial computation period, the participation
                        computation period shall shift to the Plan Year which
                        includes the anniversary of the date on which the
                        Employee first performed an Hour of Employment.

                (b)     For purposes of determining Credited Employment, the
                        computation period shall be the Plan Year.

                (c)     Years of Employment for any Participant who is
                        transferred from one Employer (which term, for purposes
                        of this subparagraph, shall include a Participating
                        Employer) to a different Employer shall be determined in
                        accordance with Section 10.04.

                (d)     As to Employees who formerly were employees of
                        Corrections Corporation of America, Years of Employment
                        shall include all service with Corrections Corporation
                        of America. As to Employees who formerly were employees
                        of any subsidiary of Corrections Corporation of America,
                        Years of Employment shall include service with such
                        subsidiary only during the period that the subsidiary
                        was owned by Corrections Corporation of America.


                                       13


<PAGE>   18



                (e)     As to Employees who were employees of U.S. Corrections
                        Corporation (including any subsidiaries thereof) prior
                        to the acquisition of its operations by Corrections
                        Corporation of America on April 17, 1998 (the
                        "acquisition date"), (i) Years of Employment for
                        purposes of determining the vested portion of each
                        Employee's USCC Employer Contributions Account shall
                        include all service with U.S. Corrections Corporation
                        prior to the acquisition date, and (ii) Years of
                        Employment for purposes of determining the vested
                        portion of the remainder of each Employee's Individual
                        Account shall be determined in accordance with
                        subparagraph (d) above. The preceding notwithstanding,
                        Employees who were employees of U.S. Corrections
                        Corporation on the acquisition date shall be eligible to
                        participate in the Plan in accordance with Section
                        2.01(b) hereof.

                (f)     As to Employees who formerly were employed by Tulsa
                        County, Oklahoma at the Tulsa County Jail for a period
                        of one (1) year or more prior to their employment by the
                        Employer, Years of Employment for purposes of
                        determining participation shall include all service at
                        the Tulsa County Jail. The preceding notwithstanding, no
                        former employee of Tulsa County, Oklahoma shall be
                        eligible to enter the Plan prior to the first entry date
                        following their employment by the Employer. As to
                        Employees who formerly were employed by Tulsa County,
                        Oklahoma at the Tulsa County Jail for a period of less
                        than one (1) year prior to their employment by the
                        Employer, Years of Employment for purposes of
                        determining participation shall include only service
                        beginning with their employment by the Employer. As to
                        all Employees who formerly were employed by Tulsa
                        County, Oklahoma at the Tulsa County Jail, Years of
                        Employment for purposes of determining Credited
                        Employment shall include only service beginning with
                        their employment by the Employer.

                                   ARTICLE II
                          ELIGIBILITY AND PARTICIPATION

        Section 2.01 Eligibility.

                (a)     General. Each Employee shall be eligible to participate
                        in the Plan upon the latest of:

                        (i)     the Effective Date,

                        (ii)    the date on which he completes one (1) Year of
                                Employment, or

                        (iii)   the date on which he attains age eighteen (18).



                                       14


<PAGE>   19



                (b)     Certain Former Employees of U.S. Corrections
                        Corporation. Notwithstanding subparagraph (a) above,
                        Employees who were employed by U.S. Corrections
                        Corporation on or before April 17, 1998 shall be
                        eligible to participate in the Plan as of the Effective
                        Date.

                (c)     Exclusion of Nonresident Aliens. Notwithstanding
                        anything herein to the contrary, Employees who are
                        nonresident aliens (within the meaning of Code Section
                        7701(b)(1)(B)) and who receive no earned income (within
                        the meaning of Code Section 911(d)(2)) from the Employer
                        which constitutes income from sources within the United
                        states (within the meaning of Code section 861(a)(3))
                        shall not be eligible to participate in the Plan.

        Section 2.02 Entry and Participation. Each Employee shall become a
Participant and enter the Plan as of January 1 of the first Plan Year in which
he satisfies the conditions of eligibility; provided, however, that no Employee
shall become eligible to make Participant Tax-Deferred Contributions until the
January 1, April 1, July 1 or October 1 coincident with or next following the
date he has satisfied such conditions, and any Employee who is eligible to
become a Participant on the Effective Date shall enter the Plan on such date.

        Section 2.03 Reemployment. Notwithstanding the foregoing Section, an
Employee who is reemployed and who was a Participant, or who had satisfied the
conditions of eligibility as of a prior termination of Employment, shall become
a Participant and enter the Plan on his Reemployment Date.

        Section 2.04 Acceptance. The Plan shall not be deemed to constitute a
contract between the Employer and an Employee; neither shall it be a
consideration nor an inducement for the Employment of any Employee. No
provisions of the Plan shall be deemed to abridge or limit any managerial right
of the Employer, give any Employee the right to be retained in Employment, or to
interfere with the right of the Employer to discharge any Employee at any time
regardless of the effect which such discharge may have on him as a Participant.
By his act of participation in the Plan, each Participant on behalf of himself,
his heirs, his assigns and Beneficiary shall be deemed conclusively to have
agreed to and accepted the terms and conditions of the Plan.

        Section 2.05 Employees Who Are Officers, Shareholders or Highly
Compensated. Employees who are either officers or shareholders of the Employer
or are highly compensated may participate hereunder on and after the Effective
Date only if they meet the same eligibility requirements which must be met by
other Employees as stated herein in Section 2.01.

        Section 2.06 Absence in the Armed Services. In the case of an Employee
or a Participant who is granted a Leave of Absence by reason of service in the
armed forces of the United States of America and who returns to Employment on or
before the expiration of ninety (90) days after the date on which he is entitled
to be released from active duty in the armed forces (or at such other date as
the law may specify as to reemployment), such Employment, to the extent required
by law, shall


                                       15


<PAGE>   20



be treated as continuous despite such absence solely for purposes of determining
that the Employee has not incurred a Break in Employment.

                                   ARTICLE III
                    FINANCING OF PLAN AND INDIVIDUAL ACCOUNTS

        Section 3.01 Medium of Financing the Plan. Investment of all
contributions made under the Plan and all transactions of the Trust Fund shall
be made in accordance with the terms of the Trust Agreement, as it may be
amended from time to time, which shall constitute a part of the Plan and which
is attached hereto as Exhibit A.

        Section 3.02 Contributions.

                (a)     Basic Employer Contributions. For each Plan Year, the
                        Employer may pay to the Trustee on behalf of each
                        Participant who has been credited with at least one
                        thousand (1,000) Hours of Employment and who is employed
                        by the Employer on the last day of the Plan Year a Basic
                        Employer Contribution equal to an amount not to exceed
                        that percentage of such Participant's Compensation as
                        may be approved by the Plan Administrator. Until such
                        time as the Plan Administrator determines that a
                        different amount is to be contributed, the Employer
                        shall make a Basic Employer Contribution on behalf of
                        each Participant entitled to receive an allocation of
                        such contribution two percent (2%) of the Participant's
                        Compensation for the first Plan Year of participation
                        and one percent (1%) of Compensation for each Plan Year
                        thereafter.

                (b)     Matching Employer Contributions. For each Plan Year, the
                        Employer may pay to the Trustee on behalf of each
                        Participant who has been credited with at least one
                        thousand (1,000) Hours of Employment and who is employed
                        by the Employer on the last day of the Plan Year a
                        Matching Employer Contribution equal to a percentage of
                        Participant Tax-Deferred Contributions made on behalf of
                        such Participant. Until such time as the Plan
                        Administrator determines that a different amount is to
                        be contributed, the Employer shall make a Matching
                        Employer Contribution on behalf of each Participant
                        entitled to receive an allocation of such contribution
                        an amount equal to the Participant Tax-Deferred
                        Contribution made on behalf of such Participant, but in
                        no event more than four percent (4%) of the
                        Participant's Compensation.

                (c)     Participant Tax-Deferred Contributions. If a Participant
                        desires to make Participant Tax-Deferred Contributions
                        hereunder, such Participant shall sign a written
                        participation form (hereinafter referred to as the
                        "Participation Agreement"). The terms of the
                        Participation Agreement shall provide that the


                                       16


<PAGE>   21



                        Participant agrees to accept a reduction in Compensation
                        from the Employer, subject to the limitations
                        hereinafter described, only not to exceed fifteen
                        percent (15%) of his bi-weekly Compensation and not to
                        exceed the dollar limitation contained in Code Section
                        402(g), with this dollar limit adjusted for percentage
                        increases in the Consumer Price Index (CPI) according to
                        procedures by the Internal Revenue Service. In
                        consideration of such Agreement, the Employer will make
                        a contribution to the Plan on behalf of the Participant
                        in an amount equal to the total amount by which the
                        Participant's Compensation from the Employer was reduced
                        pursuant to the Participation Agreement.

        Section 3.03 Elections. Elections to make, discontinue, resume or change
the amount of Participant Tax-Deferred Contributions hereunder shall be
permitted at such time or times, and in such manner and form, as shall be
uniformly and nondiscriminatorily established by the Plan Administrator.

        Section 3.04 Nondiscrimination Test Compliance. Each Plan Year, the Plan
Administrator shall monitor the annual additions to the Individual Account of
each Participant to ensure that each of the following tests is satisfied:

                (a)     Nondiscrimination Test for Participant Tax-Deferred
                        Contributions. For each Plan Year,

                        (i)     the Average Deferral Ratio of the Prohibited
                                Group shall not exceed the Average Deferral
                                Ratio of the Protected Group for the preceding
                                Plan Year multiplied by one and one-quarter
                                (1.25), or

                        (ii)    the Average Deferral Ratio of the Prohibited
                                Group shall not exceed the Average Deferral
                                Ratio of the Protected Group for the preceding
                                Plan Year multiplied by two (2.0) and the excess
                                of such Average Deferral Ratio of the Prohibited
                                Group over such Average Deferral Ratio of the
                                Protected Group shall not be more than two (2)
                                percentage points.

                        In the event that neither of these tests is satisfied,
                        adjustments shall be made pursuant to Section 3.05.

                (b)     Nondiscrimination Test for Matching Employer
                        Contributions. For each Plan Year,

                        (i)     the Average Contribution Percentage of the
                                Prohibited Group shall not exceed the Average
                                Contribution Percentage of the Protected



                                       17


<PAGE>   22



                                Group for the preceding Plan Year multiplied by
                                one and one-quarter (1.25), or

                        (ii)    the Average Contribution Percentage of the
                                Prohibited Group shall not exceed the lesser of
                                the Average Contribution Percentage of the
                                Protected Group for the preceding Plan Year
                                multiplied by two (2.0) or the Average
                                Contribution Percentage of the Protected Group
                                for the preceding Plan Year plus two (2)
                                percentage points.

                        If necessary to ensure compliance with this requirement,
                        the Plan Administrator may direct that Participant
                        Tax-Deferred Contributions in the Plan Year also be
                        taken into account in calculating the Average
                        Contribution Percentage. In the event that neither of
                        these tests is satisfied, adjustments shall be made
                        pursuant to Section 3.05.

                (c)     Nondiscrimination Test for Aggregate Contributions. The
                        sum of the Average Deferral Ratio of the Prohibited
                        Group and the Average Contribution Percentage of the
                        Prohibited Group shall not exceed the aggregate limit
                        described hereinbelow. The aggregate limit is the sum of
                        (1) and (2) where

                        (1)     is one and one-quarter (1.25) multiplied by the
                                greater of

                                (i)     the Average Deferral Ratio of the
                                        Protected Group for the preceding Plan
                                        Year, or

                                (ii)    the Average Contribution Percentage of
                                        the Protected Group for the preceding
                                        Plan Year, and

                        (2)     is the lesser of (i) or (ii) above multiplied by
                                two (2), but in no event more than the lesser of
                                (i) or (ii) above plus two (2) percentage
                                points.

                        The Average Deferral Ratio and Average Contribution
                        Percentage of the Prohibited Group shall be determined
                        after any corrective distribution is made to ensure
                        compliance with Sections 3.04(a) or (b) above. In the
                        event the aggregate limit is exceeded, adjustments shall
                        be made pursuant to Section 3.05.

        Section 3.05 Return of Excess Contributions. In the event that
contributions are credited to a Participant's Individual Account in excess of
the limitations described in Section 3.02(c) or 3.04 hereinabove, such excess
contributions shall be disbursed to the Participant or recharacterized as
follows:


                                       18


<PAGE>   23



                (a)     Participant Tax-Deferred Contributions in excess of the
                        dollar limit described in Section 3.02(c) (including
                        appropriate adjustments) shall be distributed to the
                        Participant, along with Fund Earnings allocated thereto,
                        no later than April 15 following the calendar year in
                        which such contributions were made. If there has been a
                        net investment loss, instead of income, allocable to
                        such excess Participant Tax-Deferred Contributions, the
                        amount of such Participant Tax-Deferred Contributions to
                        be distributed hereunder shall be reduced by such loss
                        to the extent permitted by section 401(k)(8) or
                        401(m)(6) of the Code.

                (b)     Participant Tax-Deferred Contributions and Matching
                        Employer Contributions that exceed the maximum amount
                        permitted by the nondiscrimination tests described in
                        Section 3.04 shall be distributed to the Participant,
                        along with Fund Earnings allocable thereto no later than
                        the last day of the following Plan Year. If the excess
                        Matching Employer Contribution is not fully vested, such
                        non-vested portion shall constitute a Forfeiture and
                        shall be allocated as such according to Section 4.02(c),
                        except that such forfeited amounts shall not be
                        allocated to the Individual Account of a Participant
                        whose contributions have been reduced for the Plan Year
                        under this subsection (b). The maximum amount of
                        Participant Tax-Deferred and Matching Employer
                        Contributions permitted under the limitations of Section
                        3.04 shall be determined by reducing the amount of such
                        contributions made on behalf of Highly Compensated
                        Employees in the order of the amounts of their
                        Participant Tax-Deferred Contributions and Matching
                        Employer Contributions, beginning with the highest. This
                        determination of maximum amount shall be made in
                        accordance with the provisions of section 401(m) of the
                        Code and regulations thereunder.

                (c)     The Fund Earnings allocable to such excess contributions
                        for the Plan Year are determined by multiplying the Fund
                        Earnings allocable to the Participant Tax-Deferred
                        Contributions Account (or the Matching Employer
                        Contributions Account as applicable) by a fraction. The
                        numerator of the fraction is the excess contribution to
                        the respective account for the Plan Year and the
                        denominator is the total balance of the Plan Year,
                        reduced by Fund Earnings allocable to such account for
                        the Plan Year.

        Section 3.06 Form and Manner of Employer Contributions. Employer
Contributions may be made on any date or dates the Employer elects, but the
total amount of its contribution for any Plan Year shall be paid within the
period described in section 404(a)(6) of the Code. Although it is the intent of
the Employer that its contributions hereunder shall be regular and substantial,
the Employer shall be under no duty to contribute the same amount or to
contribute the same percentage of its profits for every Plan Year.


                                       19


<PAGE>   24



        Section 3.07 Prohibition of Reversion. Subject to Section 4.03, the
Employer Contributions to the Plan shall be made irrevocably and it shall be
impossible for the assets of the Plan to inure to the benefit of the Employer or
to be used in any manner other than for the exclusive purpose of either
providing benefits to Participants and Beneficiaries or defraying reasonable
expenses of administering the Plan; provided, however, that nothing herein shall
be construed to prohibit the return to the Employer of all or part of a
contribution as follows:

                (a)     which is made by the Employer by a mistake of fact,
                        provided the return of such contribution is made within
                        one (1) year after the payment thereof;

                (b)     to the extent a deduction thereof under section 404 of
                        the Code is disallowed, provided the return of such
                        contribution is limited to the amount disallowed and is
                        made within one year after the disallowance; or

                (c)     which is conditioned upon initial Internal Revenue
                        Service qualification of the Plan under Section 9.05
                        hereof, provided the return is made within one (1) year
                        after the denial of qualification of the Plan.

        Section 3.08 Transfers from Qualified Plans.

                (a)     General. With the consent of the Administrator, amounts
                        may be transferred from other qualified plans by
                        Employees, provided that the trust from which such funds
                        are transferred permits the transfer to be made and the
                        transfer will not jeopardize the tax exempt status of
                        the Plan or Trust or create adverse tax consequences for
                        the Employer. The amounts transferred by Employees shall
                        be set up in the transferring Employee's Rollover
                        Account, which account shall be fully vested at all
                        times and shall not be subject to forfeiture for any
                        reason.

                (b)     Distribution of Rollover Account. Amounts in a
                        Participant's Rollover Account shall be held by the
                        Trustee pursuant to the provisions of this Plan and may
                        not be withdrawn by, or distributed to, the Participant,
                        in whole or in part, except as follows:

                        (i)     Except as permitted by regulations (including
                                Regulation section 1.411(d)-4), amounts
                                attributable to elective contributions (as
                                defined in Regulation section 1.401(k)-1(g)(3)),
                                including amounts treated as elective
                                contributions, which are transferred from
                                another qualified plan in a plan-to-plan
                                transfer shall be subject to the distribution
                                limitations provided for in Regulation
                                1.401(k)-1(d).

                        (ii)    At Normal Retirement Date, or such other date
                                when the Participant or his Beneficiary shall be
                                entitled to receive benefits, the fair market


                                       20


<PAGE>   25



                                value of the Participant's Rollover Account
                                shall be used to provide additional benefits to
                                the Participant or his Beneficiary. Any
                                distributions of amounts held in the
                                Participant's Rollover Account shall be made in
                                a manner which is consistent with and satisfies
                                the provisions of Article V. Furthermore, such
                                amounts shall be considered as part of a
                                Participant's benefit in determining whether an
                                involuntary cash-out of benefits without
                                Participant consent may be made.

                (c)     Definitions. For purposes of this Section, the term
                        "qualified plan" shall mean any tax qualified plan under
                        Code section 401(a). The term "amounts transferred from
                        other qualified plans" shall mean: (i) amounts
                        transferred to this Plan directly from another qualified
                        plan; (ii) lump-sum distributions received by an
                        Employee from another qualified plan which are eligible
                        for tax free rollover to a qualified plan and which are
                        transferred by the Employee to this Plan within sixty
                        (60) days following his receipt thereof; (iii) amounts
                        transferred to this Plan from a conduit individual
                        retirement account, provided that the conduit individual
                        retirement account has no assets other than assets which
                        (A) were previously distributed to the Employee by
                        another qualified plan as a lump-sum distribution, (B)
                        were eligible for tax-free rollover to a qualified plan
                        and (C) were deposited in such conduit individual
                        retirement account within sixty (60) days of receipt
                        thereof and other than earnings on said assets; and (iv)
                        amounts distributed to the Employee from a conduit
                        individual retirement account meeting the requirements
                        of clause (iii) above, and transferred by the Employee
                        to this Plan within sixty (60) days of his receipt
                        thereof from such conduit individual retirement account.

                (d)     Certain Other Limitations. Prior to accepting any
                        transfers to which this Section applies, the
                        Administrator may require the Employee to establish that
                        the amounts to be transferred to this Plan meet the
                        requirements of this Section and may also require the
                        Employee to provide an opinion of counsel satisfactory
                        to the Employer that the amounts to be transferred meet
                        the requirements of this Section.

                (e)     Protected Benefits. Notwithstanding anything herein to
                        the contrary, any amounts transferred directly to this
                        Plan from another qualified plan (or pursuant to a
                        transaction, such as a merger, having the effect of such
                        transfer) shall be administered as to preserve any
                        benefits protected by Code section 411(d)(6). Without
                        limiting the generality of the foregoing, the Plan
                        Administrator shall disregard any provision in the Plan
                        to the extent that application of such provision would
                        cause the elimination or reduction of a protected
                        benefit and shall maintain a schedule of any such
                        benefit that the Plan must continue such for the
                        affected Participants.


                                       21


<PAGE>   26



        Section 3.09 Participant's Election as to Investment Funds.

                (a)     General. Subject to the terms and conditions set forth
                        herein, each Participant shall be entitled to make an
                        election to direct how his Participant-Directed Account
                        shall be invested. Each such Participant shall be
                        entitled to allocate his account balance in increments
                        of 5% in and among the Investment Funds provided by the
                        Plan Administrator. Until the Plan Administrator
                        determines otherwise, such Investment Funds shall
                        include the Prison Realty Stock Fund.

                (b)     Elections. Each Participant shall make an initial
                        election at the time of enrollment in the Plan. Until
                        the Participant makes a new election, the initial
                        election shall remain in effect and shall apply to all
                        present and future allocations to the Participant's
                        Participant-Directed Account. A Participant shall be
                        entitled to change his election within a specified
                        period of time established by the Administrator prior to
                        the date on which the change is to become effective.
                        Changes in investment elections by Participants
                        hereunder shall become effective at such time or times
                        as the Administrator, in a uniform and nondiscriminatory
                        manner, may determine. Should a Participant fail to make
                        an initial election for his Participant-Directed Account
                        to be invested in any Fund or combination of Funds or
                        fail to make an election which equals 100% of his
                        Participant-Directed Account, such undesignated amount
                        shall be invested in such Fund or Funds as designated by
                        the Plan Administrator in a uniform and
                        nondiscriminatory manner.

                (c)     Election to Transfer Assets. Each Participant shall be
                        entitled to transfer assets between and among the Funds.
                        Such election to transfer assets shall specify the
                        percentage of the Participant's Participant-Directed
                        Account balance to be transferred and shall specify the
                        funds involved. Each Participant shall be entitled to
                        elect such transfer as described herein within a
                        specified period of time established by the
                        Administrator prior to the date on which the change is
                        to become effective, subject to the limitations
                        described herein. Changes in investment elections by
                        Participants hereunder shall become effective at such
                        time or times as the Administrator, in a uniform and
                        nondiscriminatory manner, may determine.

                (d)     Form of Elections. Each election made pursuant to this
                        Section shall be made in such manner and at such time or
                        times as the Administrator in its sole discretion may
                        determine.

        Section 3.10 Purchase of Prison Realty Stock.

                (a)     Subject to the provisions of paragraph (b) below, the
                        Trustee shall purchase all shares of Prison Realty Stock
                        for the Prison Realty Stock Fund either (i) in


                                       22


<PAGE>   27



                        the open market, or (ii) privately from any other person
                        or entity (including, without limitation, Prison Realty
                        Corporation, a Participant or an Employer) at a price
                        per share not in excess of the closing sale price on the
                        date of purchase as reported by the New York Stock
                        Exchange, or if there were no such trades on the date of
                        purchase, at a price per share equal to the closing
                        price on the last day immediately preceding the date of
                        purchase on which shares of Prison Realty Stock were
                        traded on such exchange.

                (b)     Notwithstanding the foregoing provisions of paragraph
                        (a) above, (i) in no event shall the Trustee purchase
                        shares of Prison Realty Stock from a person or entity
                        the sale by whom would subject such person or entity to
                        liability under Section 16(b) of the Securities Exchange
                        Act of 1934, as amended, and (ii) in the event that the
                        Trustee purchases shares of Prison Realty Stock from any
                        person or entity that is a "party in interest" (within
                        the meaning of Section 3(14) of ERISA), then such
                        purchase shall satisfy in all respects the provisions of
                        Section 408(e) of ERISA (and the regulations promulgated
                        thereunder).

                                   ARTICLE IV
                       ALLOCATIONS TO INDIVIDUAL ACCOUNTS

        Section 4.01 Individual Accounts. On each Valuation Date the Trustee
shall determine the value of the Fund at its fair market value adjusted for
appropriate accrual items, and the balances of all Individual Accounts shall be
brought up to date in accordance with this Article so that the sum total of the
balances of all Individual Accounts shall equal the value of the Fund on such
date. All entries to Individual Accounts shall be conclusive and binding on all
Participants and Beneficiaries.

        Section 4.02 Account Adjustments.

                (a)     Allocation of Contributions. As of each Valuation Date,
                        the Participant Tax-Deferred Contributions Account,
                        Rollover Account, Basic Employer Contributions Account
                        and Matching Employer Contributions Account of each
                        Participant shall be brought up to date and credited
                        with contributions made since the last Valuation Date,
                        as applicable. Participant Tax-Deferred Contributions
                        may be considered allocated as of any date within the
                        Plan Year if such contributions are actually made to the
                        Plan no later than thirty (30) days after the end of the
                        Plan Year.

                (b)     Allocation of Fund Income. As of each Valuation Date,
                        Fund Earnings shall be allocated to each Participant's
                        respective accounts. The Fund Earnings shall be
                        allocated to the accounts in proportion to the value of
                        the account for the period since the last Valuation
                        Date, debited by the amount of withdrawals, if any, made
                        since that Valuation Date. Adjustments may be made in an


                                       23


<PAGE>   28



                        equitable manner, to accurately reflect Fund Earnings
                        based upon an average account balance during the period.

                (c)     Forfeitures. Subject to the limitations of Section
                        10.02(c), Forfeitures which become available for
                        reallocation under the terms of Sections 3.04 or 5.05
                        may be used to reduce or to augment the Matching
                        Employer Contributions made under Section 3.02(b), as
                        the Plan Administrator may direct in any Plan Year.
                        Forfeitures not used to reduce or augment Matching
                        Employer Contributions for any Plan Year shall be
                        allocated to each Participant's Individual Account in
                        the same proportion that such Participant's Compensation
                        bears to total Compensation of all Participants.

        Section 4.03 Limitation on Allocations.

                (a)     Annual Additions Limitation. Subject to further
                        reduction under subsections (b) and (c), the annual
                        additions to the Individual Account of a Participant
                        shall not exceed the Maximum Permissible Amount. For
                        purposes of this Section, "annual additions" shall mean,
                        for any Limitation Year, reallocated Forfeitures plus
                        the sum of the Participant's Tax-Deferred Contributions
                        and the Participant's allocable share of Employer
                        Contributions, all determined prior to any corrective
                        distribution or Forfeiture pursuant to Section 3.05.

                (b)     Maximum Permissible Amount. For any Limitation Year, the
                        Maximum Permissible Amount shall mean the lesser of:

                        (1)     thirty thousand dollars ($30,000) (or such
                                greater amount according to the cost-of-living
                                adjustment permissible under 415(d)(3) of the
                                Code and determined by the Commissioner of
                                Internal Revenue for the Limitation Year or, if
                                greater, one-fourth (1/4) of the limit for
                                defined benefit plans as set forth in Section
                                415(b)(1) of the Code as in effect for the
                                Limitation Year), or

                        (2)     twenty-five percent (25%) of the Compensation
                                received by the Participant from the Employer
                                for the Limitation Year.

                        If because of an amendment changing the Limitation Year
                        a short Limitation Year is created, then the Maximum
                        Permissible Amount will not exceed thirty thousand
                        dollars ($30,000) multiplied by the following fraction:

                             Number of months in the short Limitation Year
                             ---------------------------------------------
                                             twelve (12)

                (c)     Aggregation of Plans. If, in addition to this Plan, the
                        Employer maintains another defined contribution plan,
                        then the limitations under section 415 of the Code shall
                        apply as if such other plan and this Plan were one plan,
                        and the


                                       24


<PAGE>   29



                        limitation under subsection (a) shall be reduced
                        correspondingly by the amount of annual additions (as
                        defined in section 415(c) of the Code) allocated to the
                        account or accounts of a Participant covered under such
                        other plan.

                (d)     Disposition of Excess Amounts. If a reduction of amounts
                        to be allocated to a Participant's Individual Account is
                        necessitated by such facts and circumstances as the
                        Commissioner finds justify the application of the limits
                        imposed by section 415 of the Code, such reduction shall
                        be as follows:

                        (1)     the Participant Tax-Deferred Contributions in
                                excess of the limit shall be distributed to the
                                Participant prior to April 15 of the year
                                following the year of deferral;

                        (2)     the amount of such reduction consisting of
                                Employer Contributions shall be allocated and
                                reallocated to the Employer Contributions
                                Accounts of other Participants in accordance
                                with the formula for allocating Employer
                                Contributions in Section 4.02 to the extent that
                                such amounts do not exceed the limitations of
                                this Section; and

                        (3)     If such reductions cannot be allocated in the
                                foregoing manner, such reductions shall be
                                allocated to a suspense account and held therein
                                until the next Valuation Date and succeeding
                                Valuation Dates as of which such amounts can be
                                either allocated or credited under Section 4.02
                                until the amount in the suspense account is
                                exhausted. Notwithstanding the foregoing, the
                                Employer shall not contribute any amount that
                                would cause an allocation to the suspense
                                account as of the Valuation Date such
                                contribution is allocated. If the contribution
                                is made prior to the date as of which it is to
                                be allocated, then such contribution shall not
                                exceed an amount that would cause an allocation
                                to the suspense account if the date of
                                contribution were the date of allocation; and,
                                provided, further, that investment gains and
                                losses and other income shall not be allocated
                                to the suspense account. Upon termination of the
                                Plan, the suspense account shall revert to the
                                Employer to the extent it may not then be
                                allocated to any Individual Account of a
                                Participant.

        Section 4.04 Voting of Shares. Each Participant (or Beneficiary) shall
be entitled to direct the Trustee as to the manner in which shares of Prison
Realty Stock allocated to the Individual Account of such Participant (or
Beneficiary) are to be voted with respect to all corporate matters submitted to
shareholders; provided, however, that to the extent the Trustee does not timely
receive voting directions from a Participant (or Beneficiary) with respect to
any shares for which the Participant (or Beneficiary) has the right to vote, the
Trustee is hereby authorized to vote such shares in its sole discretion.


                                       25


<PAGE>   30



                                    ARTICLE V
                                    BENEFITS

        Section 5.01 Payment of Benefits.

                (a)     Determination of Value.

                        The value of an Individual Account which is to be
                        distributed pursuant to the normal form of benefit
                        described in Section 5.01(e) below shall be determined
                        by the Plan Administrator and shall be equal to the
                        vested balance of such Individual Account as of the
                        Valuation Date next preceding the date of the
                        termination of the Employment, or Retirement, of the
                        Participant, plus any contributions credited to his
                        account since that time, together with Fund Earnings
                        credited or charged thereto as of each subsequent
                        Valuation Date up to and including the Valuation Date
                        which next precedes the date such determination is made
                        less the sum of any loan proceeds or distributions to
                        such Participant since such Valuation Date and less the
                        portion of such account, if any, which is to be paid to
                        an Alternate Payee in accordance with the terms of a
                        Qualified Domestic Relations Order.

                (b)     General Conditions.

                        (1)     Before payment of any benefit hereunder, the
                                Administrator may require that written
                                application be made by the Participant or
                                Beneficiary, as the case may be, and submitted
                                to the Administrator in such form and manner as
                                it shall uniformly and nondiscriminatorily
                                prescribe.

                        (2)     The Plan Administrator shall require the written
                                consent of the Participant prior to the
                                commencement of the distribution of any part of
                                his benefit if the value of such benefit is
                                greater than five thousand dollars ($5,000).

                        (3)     Any payment made in accordance with the
                                provisions of the Plan to a Participant or
                                Beneficiary, or to their legal representative,
                                shall, to the extent of the method of
                                computation as well as the amount thereof,
                                constitute full satisfaction of claims hereunder
                                against the Trustee, the Committee and the
                                Administrator, any of whom may require such
                                Participant, Beneficiary or legal
                                representative, as a condition precedent to such
                                payment, to execute a receipt and release
                                therefor.



                                       26


<PAGE>   31



                        (4)     The distribution of the Participant's entire
                                vested interest in the Plan will be made in a
                                lump sum.

                (c)     Time of Payment. Benefits shall be paid as soon as is
                        practicable after the value thereof shall have been
                        determined, and when a Participant becomes eligible for
                        a benefit, in accordance with the terms of this Article
                        V. Unless a Participant elects to defer the payment of
                        his benefits until a later date, the payment shall be
                        made or commenced not later than sixty (60) days after
                        the close of the Plan Year in which the latest of the
                        following events occurs:

                        (1)     the Participant reaches his Normal Retirement
                                Date,

                        (2)     the tenth (10th) anniversary of the year in
                                which the Participant began participating in the
                                Plan, or

                        (3)     the Participant terminates his Employment with
                                the Employer.

                (d)     Required Distribution. Distribution of benefits shall
                        commence no later than the end of the taxable year in
                        which the Participant attains age seventy and one-half
                        (70 1/2), or in which he retires, whichever is later.
                        However, if a Participant is a five percent (5%) owner,
                        as defined in Section 416 of the Code, the distribution
                        of the Participant's Individual Account must begin no
                        later than April 1st following the calendar year in
                        which such Participant attains age seventy and one-half
                        (70 1/2), even though the Participant has not elected
                        Retirement or terminated his Employment.

                (e)     Normal Form of Payment. The form of payment of a benefit
                        under the Plan shall be a lump sum payment of the entire
                        nonforfeitable interest of the Participant in the Plan
                        within one (1) taxable year to the Participant or the
                        Beneficiary, as the case may be.

        Section 5.02 Normal Retirement Benefit. Each Participant shall be
eligible to retire on his Normal Retirement Date whereupon he shall be entitled
to a Normal Retirement Benefit equal to the value of his Individual Account. The
interest of a Participant in his Individual Account shall be fully vested and
nonforfeitable on the date the Participant attains his Normal Retirement Age.

        Section 5.03 Delayed Retirement Benefit. A Participant who continues
Employment beyond his Normal Retirement Date shall be entitled to a Delayed
Retirement Benefit equal to the value of his Individual Account.

        Section 5.04 Disability Retirement Benefit. For purposes of the Plan, a
Participant shall be deemed to be disabled or under a disability if he has a
physical or mental condition resulting from a bodily injury, disease or mental
disorder which renders him incapable of continuing his usual and


                                       27


<PAGE>   32



customary employment with the Employer. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator. The
determination shall be applied uniformly to all Participants. A Participant who
has become disabled as defined in this Section shall be retired on his
Disability Retirement Date whereupon he shall be entitled to a Disability
Retirement Benefit equal to the value of his Individual Account.

        Section 5.05 Vested Benefit.

                (a)     Determination of Vested Benefit. If a Participant
                        terminates Employment other than because of his death or
                        Retirement and if he then does not become entitled to a
                        benefit under any preceding Section of this Article V,
                        he shall be entitled to a Vested Benefit under this
                        Section equal to the vested value of his Individual
                        Account. Such vested value shall be determined as
                        follows:

                        (1)     The nonforfeitable percentage of his Employer
                                Contributions Account shall be determined
                                according to the following schedule:

<TABLE>
<CAPTION>
                                  Years of Credited               Percentage of
                              Employment at Termination          Account Vested
                              -------------------------          --------------
<S>                                                              <C>
                                      Less than 4                       0%
                                      4                                40%
                                      5 or more                       100%
</TABLE>

                        (2)     The nonforfeitable percentage of his USCC
                                Employer Contributions Account (if any) shall be
                                determined according to the following schedule:

<TABLE>
<CAPTION>
                                  Years of Credited                Percentage of
                              Employment at Termination           Account Vested
                              -------------------------           --------------
<S>                                                              <C>
                                      Less than 3                         0%
                                      3                                  30%
                                      4                                  60%
                                      5 or more                         100%
</TABLE>

                        (3)     The remainder of his Individual Account shall be
                                fully vested and nonforfeitable at all times.

                        Notwithstanding any other provision of the Plan to the
                        contrary, the right of any Participant to receive any
                        benefits payable under this Section shall not be
                        forfeited or waived for any reason for which such
                        Participant's Employment is terminated, provided that
                        such termination occurs after he has met the
                        requirements which would qualify him for benefits
                        hereunder.


                                       28


<PAGE>   33



                (b)     Distribution of Vested Benefit. The Vested Benefit shall
                        be payable as soon as practicable following the date
                        Employment is terminated. However, if the value of his
                        vested Individual Account is greater than $5,000, then
                        the Vested Benefit may not be distributed without the
                        Participant's consent prior to the time he attains what
                        would have been his Normal Retirement Date.

                        Any portion of the Employer Contributions Account of the
                        Participant which is in excess of the nonforfeitable
                        percentage thereof shall, upon termination of the
                        Participant's Employment under this Section, be
                        maintained until the Valuation Date coincident with or
                        following the earlier of:

                        (1)     the date on which the Vested Benefit is
                                distributed, or

                        (2)     the date on which the Participant incurs five
                                (5) consecutive one-year Breaks in Employment.

                        At that time, such excess shall constitute a Forfeiture
                        and shall be reallocated in accordance with Section
                        4.02(c).

                        If a Participant who is not fully vested at the time of
                        his termination of Employment and who has received a
                        distribution of the vested portion of his Individual
                        Account is reemployed before he has incurred five (5)
                        consecutive one-year Breaks in Employment and before his
                        prior Credited Employment may be disregarded, then the
                        previously forfeited portion of his Employer
                        Contributions Account shall be restored provided he
                        repays the amount distributed to him from his Employer
                        Contributions Account before the earlier of the close of
                        the Plan Year in which he incurs his fifth consecutive
                        one-year Break in Employment following the date of
                        distribution, or five years after the date on which he
                        is reemployed by the Employer. The Employer shall
                        contribute to such Participants' Employer Contributions
                        Account an amount equal to the amount (if any) which he
                        previously forfeited and his vested interest shall be
                        determined thereafter as if he had not ceased
                        Employment. Upon repayment, the nonvested amount
                        reinstated will not be less than the nonvested amount in
                        the Participant's Employer Contributions Account at the
                        time of distribution, unadjusted by any subsequent gains
                        or losses.

                        For purposes hereof, a terminated Participant whose
                        Vested Benefit is zero shall be deemed to have received
                        a distribution of such Vested Benefit upon termination
                        of employment and to have repaid such Vested Benefit
                        upon reemployment.


                                       29


<PAGE>   34



        Section 5.06 Death Benefit.

                (a)     Benefit. In the event a Participant's death occurs while
                        employed by the Employer a death benefit equal to the
                        value of his Individual Account shall be payable to the
                        Beneficiary of the Participant. In the event a
                        Participant's death occurs after having terminated
                        Employment but before distribution has commenced, a
                        death benefit equal to the portion of his Individual
                        Account to which he would otherwise have been entitled
                        shall be payable to the Beneficiary of the Participant,

                (b)     Designation of Alternate Beneficiary. A married
                        Participant may designate, in writing on forms provided
                        by the Administrator, a Beneficiary other than his
                        spouse if (i) the Participant's spouse consents in
                        writing to such election, (ii) the spouse's consent
                        acknowledges the effect of such election and (iii) such
                        election is witnessed by the Plan Administrator or a
                        Notary Public, or it is established to the satisfaction
                        of the Plan Administrator that the consent required
                        under (i) above may not be obtained because there is no
                        spouse or because the spouse cannot be located. Any
                        consent by a spouse (or assertion that the consent of a
                        spouse may not be obtained) under the preceding sentence
                        shall be effective only with respect to such spouse and
                        any subsequent change in the designation of the
                        Beneficiary is invalid without a new consent from the
                        spouse. The election must designate a Beneficiary (or a
                        form of benefits) which designations may not be changed
                        without spousal consent; however, the consent of the
                        spouse may expressly permit designations by the
                        Participant without further consent by the spouse.

                (c)     Distribution Upon Death. Upon the death of the
                        Participant, the following distribution provisions shall
                        take effect:

                        (1)     If the Participant dies after distribution of
                                his account has commenced, the remaining portion
                                of such account will continue to be distributed
                                at least as rapidly as under the method of
                                distribution being used prior to the
                                Participant's death.

                        (2)     If the Participant dies before distribution of
                                his account commences, the Participant's entire
                                account will be distributed no later than five
                                (5) years after the Participant's death except
                                to the extent that an election is made to
                                receive distributions in accordance with (i) or
                                (ii) below:

                                (i)     If any portion of the Participant's
                                        account is payable to a designated
                                        Beneficiary, distributions may be made
                                        in substantially equal installments over
                                        the life expectancy of the designated
                                        Beneficiary. Such distribution shall
                                        commence at such time as the Plan
                                        Administrator shall determine, but no


                                       30


<PAGE>   35



                                        later than sixty (60) days after the end
                                        of the Plan Year in which death occurs,
                                        or one (1 ) year after the date of
                                        death.

                                (ii)    If the designated Beneficiary is the
                                        Participant's surviving spouse, the date
                                        distributions are required to begin in
                                        accordance with (i) above shall not be
                                        earlier than the date on which the
                                        Participant would have attained age
                                        seventy and one-half (70 1/2), and, if
                                        the spouse dies before payments begin,
                                        subsequent distributions shall be made
                                        as if the spouse had been the
                                        Participant.

                        (3)     For purposes of (2) above, payments will be
                                calculated by use of the return multiples
                                specified in section 1.72-9 of the regulations.
                                Life expectancy of a surviving spouse may be
                                recalculated annually; however, in the case of
                                any other designated Beneficiary, such life
                                expectancy will be calculated at the time
                                payment first commences without further
                                recalculation.

                        (4)     For purposes of (1), (2) and (3) above, any
                                amount paid to a child of the Participant will
                                be treated as if it had been paid to the
                                surviving spouse if the amount becomes payable
                                to the surviving spouse when the child reaches
                                the age of majority.

                        (5)     Subject to the provisions of Section 5.01(e),
                                the Beneficiary may choose to receive payments
                                in accordance with Section 7.02.

                        (6)     The Plan Administrator may require such proper
                                proof of death and such evidence of the right of
                                any person to receive payment of the vested
                                benefits of a deceased Participant as the Plan
                                Administrator may deem desirable. The Plan
                                Administrator's determination of death and of
                                the right of any person to receive payment shall
                                be conclusive.

        Section 5.07 Participant Loans. Effective September 1, 1999, a
Participant may be granted a loan from the Plan, subject to the terms and
conditions as herein set forth. All loans must conform to the specific
provisions outlines in this Section 5.07 and any applicable requirements of
section 4975(d) and section 72(p) of the Code.

                (a)     Loans shall be made available to all Participants on a
                        reasonably equivalent basis. Loans shall not be made
                        available to Highly Compensated Employees in an amount
                        greater than that made available to other Employees.

                (b)     All loan applications must be made in writing delivered
                        to the Plan Administrator in such form and manner as the
                        Plan Administrator may require.


                                       31


<PAGE>   36



                (c)     The Plan Administrator shall review each loan
                        application and may, in its sole discretion, authorize
                        and direct the Trustee to make the loan from the Trust
                        to the applicant.

                (d)     A loan may be granted to a Participant no more than once
                        in any twelve (12) month period, and not more than one
                        (1) loan may be outstanding at any given time.

                (e)     The minimum loan amount shall be one thousand dollars
                        ($1,000).

                (f)     The maximum loan amount (when added to the outstanding
                        balance of all other loans made from the Plan) shall be
                        the lesser of:

                        (1)     one-half (1/2) of the Participant's vested
                                interest in his Individual Account (excluding
                                amounts attributable to accumulated deductible
                                employee contributions as defined by section
                                72(o) of the Code, if any), or

                        (2)     fifty thousand dollars ($50,000), reduced by

                                (i)     the highest outstanding balance of loans
                                        from the Plan during the one (1)-year
                                        period ending on the date before the
                                        date on which such loan was made, over

                                (ii)    the outstanding balance of loans from
                                        the Plan on the date on which the loan
                                        was made.

                                For this purpose, all qualified plans of the
                                Employer, all qualified plans or trades or
                                businesses which are under common control with
                                the Employer (within the meaning of Code section
                                414(b) or 414(c)), and all qualified plans of an
                                affiliated service group (within the meaning of
                                Code section 414(m)) of which the Employer is a
                                part must be aggregated.

                (g)     Loans shall be made from such Fund or Funds of each
                        Participant's Individual Account as the Administrator in
                        its sole discretion may determine. Loans shall be repaid
                        to such Fund or Funds in accordance with the
                        Participant's investment election pursuant to Section
                        3.09 at the time of repayment.

                (h)     A Participant loan must be adequately secured so that no
                        loss to the Plan will occur in the event of default. The
                        Participant's vested interest in his Individual Account
                        shall serve to collateralize the loan, as shall be
                        evidenced by a promissory note payable to the Trust and
                        signed by the Participant,


                                       32


<PAGE>   37



                        stating that any loan balance, together with accrued
                        interest, shall become immediately due and payable upon
                        default. A loan shall be deemed in default as of the
                        last day of the calendar quarter in which a Participant
                        fails to make a required payment. Upon default, the
                        Participant's Individual Account balance shall be
                        decreased by the amount in default, which shall be
                        considered a taxable distribution to the Participant.
                        Foreclosure of the loan may be delayed, however, as long
                        as no loss to the Plan occurs in consequence.

                (i)     The period of repayment for any loan shall be agreed
                        upon by the Plan Administrator and the borrowing
                        Participant. In no event shall the loan repayment period
                        exceed five (5) years.

                (j)     The interest rate for the loan shall be determined by
                        the Plan Administrator commensurate with the rates used
                        by commercial lenders for loans which would be made
                        under similar circumstances. Loans made at different
                        times may bear different rates of interest due to
                        changes in commercial interest rates. The Plan
                        Administrator shall review interest rates on a quarterly
                        basis to determine if the rates correctly reflect
                        current commercial rates.

                (k)     The loan shall be amortized in level payment made no
                        less frequently than quarterly, and shall be repaid
                        through payroll deductions. If the Participant
                        terminates employment prior to full repayment of the
                        loan, such loan shall become immediately due and payable
                        in full.

                (l)     No distribution shall be paid to any Participant or
                        Beneficiary unless and until the balance on all unpaid
                        loans, including accrued interest, has been collected.

        Section 5.08 Failure to Locate. If the Participant or Beneficiary to
whom benefits are to be distributed cannot be located, and reasonable efforts
have been made to find him, including sending notification by certified or
registered mail to his last known address, then the Plan Administrator shall
consider the balances in the Participant's Individual Account forfeited, and
such amounts shall be reallocated in accordance with Section 4.02(c). In the
event that such Participant or Beneficiary is subsequently located, the balance
in his Individual Account at the time of forfeiture shall be reinstated and
distributed to him.

        Section 5.09 Direct Rollover Election.

                (a)     Election. Notwithstanding any provision of the Plan to
                        the contrary that would otherwise limit a distributee's
                        election under this Section 5.09, a distributee may
                        elect, at the time and in the manner prescribed by the
                        Plan Administrator, to have any portion of an eligible
                        rollover distribution paid


                                       33


<PAGE>   38



                        directly to an eligible retirement plan specified by the
                        distributee in a direct rollover.

                (b)     Definitions.

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

                        (ii)    Eligible Retirement Plan. An "eligible
                                retirement plan" is an individual retirement
                                account described in section 408(a) of the Code,
                                an individual retirement annuity described in
                                section 408(b) of the Code, an annuity plan
                                described in section 403(a) of the Code, or
                                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 individual
                                retirement annuity.

                        (iii)   Distributee. A "distributee" includes an
                                employee or former employee. In addition, the
                                employee's or former employee's surviving spouse
                                and the employee's or former employee's spouse
                                or former spouse who is the alternate payee
                                under a Qualified Domestic Relations Order 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.

        Section 5.10 Accounts for Participants Electing to Defer Distribution.
If the Participant or Beneficiary elects to defer distribution of his vested
account balance, as determined under Section 5.05, then, the investment election
of the Participant shall remain in effect until such time as the


                                       34


<PAGE>   39



Participant or Beneficiary changes such election in accordance herewith or the
account is distributed to the Participant or Beneficiary.

                                   ARTICLE VI
                        MODIFICATIONS FOR TOP-HEAVY PLANS

        Section 6.01 Application of Provisions. Prior to the allocation of
contributions to Participant accounts pursuant to Section 4.02, the Plan
Administrator shall determine whether the Plan constitutes a Top Heavy Plan.
Should a determination be made that this Plan constitutes a Top Heavy Plan, the
provisions of this Article VI shall be applicable notwithstanding any other
provisions of this Plan to the contrary.

        Section 6.02 Minimum Contribution. A minimum Employer contribution shall
be provided to each Non-Key Employee who is employed on the last day of the Plan
Year. This minimum Employer contribution shall be made, even though under other
Plan provisions the Participant would not otherwise be entitled to receive an
allocation because of:

                (a)     his failure to complete 1,000 Hours of Employment during
                        the Plan Year,

                (b)     his failure to make contributions required for
                        participation in the Plan, or

                (c)     his level of Compensation.

        The minimum amount required under this Section shall be equal to three
percent (3%) of the Participant's Compensation. If, however, the sum of Employer
contributions and forfeitures for any Key Employee for such Plan Year, under
this and any other defined contribution plan required to be included in the Top
Heavy Ratio and maintained by the Employer, is less than three percent (3%) of
such Key Employee's total Compensation, then the minimum amount required need
not exceed the amount that results from the multiplying each Participant's
Compensation by the highest contribution rate of any Key Employee covered by the
Plan.

        Participant Tax-Deferred Contributions and Matching Employer
Contributions made on behalf of Key Employees shall be taken into account in
determining the minimum required amount. However, such contributions made on
behalf of Non-Key Employees shall not be treated as Employer contributions for
purposes of satisfying the minimum required amount as described above.

        There shall be disregarded for purposes of this Section any
contributions or benefits under chapter 21 of the Code (relating to the Federal
Insurance Contributions Act), Title II of the Social Security Act, or any other
federal or state law.

        Section 6.03 Accelerated Vesting. The Plan provides for a graduated
vesting schedule in Section 5.05. For any Plan Year in which this Plan is deemed
to be a Top Heavy Plan, the vesting schedule shall be as follows:


                                       35


<PAGE>   40




<TABLE>
<CAPTION>
                   Year of Credited             Percentage of
              Employment at Termination         Account Vested
              -------------------------         --------------
<S>                                             <C>
                     Less than 2                       0%
                          2                            20%
                          3                            40%
                          4                            60%
                      5 or more                       100%
</TABLE>

Should this Plan, in a later year, not be deemed a Top Heavy Plan, after
previously being so categorized, the original vesting schedule shall again be
effective, except that the vested percentage attained by Participants shall not
be reduced thereby and Participants with three (3) or more Years of Employment
shall have the right to select the schedule under which their Vested Benefit
will be determined.

                                   ARTICLE VII
                             ADMINISTRATION OF PLAN

        Section 7.01 Plan Administrator. The Administrator of the Plan shall
have the sole power, duty and responsibility of directing the administration
thereof in accordance with the provisions herein set forth. The Administrator
shall have the sole and absolute right and power to construe and to interpret
the provisions of the Plan and to administer it for the best interests of
Employees including, but not limited to, the following powers and duties:

                (a)     to construe any ambiguity and interpret any provision of
                        the Plan or supply any omission or reconcile any
                        inconsistencies in such manner as it deems proper;

                (b)     to determine eligibility to become a Participant in the
                        Plan in accordance with its terms;

                (c)     to decide all questions of eligibility for, and
                        determine the amount, manner, and time of payment of any
                        benefits hereunder, and to afford any person
                        dissatisfied with such decision or determination, upon
                        written notice thereof, the right to a full and fair
                        hearing thereon;

                (d)     to establish uniform rules and procedures to be followed
                        by Participants and Beneficiaries in filing applications
                        for benefits, in furnishing and verifying proofs
                        necessary to determine age, and in any other matters
                        required to administer the Plan;


                                       36


<PAGE>   41



                (e)     to adopt such reasonable accounting methods as it deems
                        necessary or desirable, and to receive and review the
                        annual allocation report on the Plan;

                (f)     to receive and review reports of the financial condition
                        and of the receipts and disbursements of the Fund from
                        the Trustee, and to determine and communicate to the
                        Trustee the long-term and short-term financial goals of
                        the Plan;

                (g)     to file such reports and statements with, and to make
                        such disclosures to the Secretary of Labor or his
                        delegate and the Internal Revenue Service as required by
                        law;

                (h)     to furnish to Participants and Beneficiaries such
                        information and statements with respect to the Plan and
                        their individual interests therein, as required by law,
                        and any additional information as it deems to be
                        appropriate;

                (i)     to establish reasonable procedures for determining
                        whether a Domestic Relations Order is a Qualified
                        Domestic Relations Order pursuant to the Plan and the
                        Retirement Equity Act; and

                (j)     to appoint one or more Investment Managers in accordance
                        with this Plan.

All directions by the Administrator shall be conclusive on all parties
concerned, including the Trustee, and all decisions of the Administrator as to
the facts of any case and the meaning, intent, or proper construction of any
provision of the Plan, or as to any rule or regulation in its application to any
case shall be final and conclusive; provided, however, that all rules and
decisions of the Administrator shall be uniformly and consistently applied to
all Employees in similar circumstances, and the Administrator shall have no
power administratively to add to, subtract from or modify any of the terms of
the Plan, or to change, add to or subtract from any benefits provided by the
Plan, or to waive or fail to apply any requirements of eligibility for
participation or for benefits under the Plan.

        Section 7.02 Claims Procedure. If the Administrator shall determine that
benefits applied for by a Participant or Beneficiary shall be denied either in
whole or in part, the following provisions shall govern:

                (a)     Notice of Denial. The Administrator shall, upon its
                        denial of a claim for benefits under the Plan, provide
                        the applicant with written notice of such denial setting
                        forth (1) the specific reason or reasons for the denial,
                        (2) specific reference to pertinent Plan provisions upon
                        which the denial is based, (3) a description of any
                        additional material or information necessary for the
                        claimant to perfect the claim, and (4) an explanation of
                        the claimant's rights


                                       37


<PAGE>   42



                        with respect to the claims review procedure as provided
                        in subsection (b) of this Section.

                (b)     Claims Review. Every claimant with respect to whom a
                        claim is denied shall, upon written notice of such
                        denial, have the right to (1) request a review of the
                        denial of benefits by written notice delivered to the
                        Administrator, (2) review pertinent documents and (3)
                        submit issues and comments in writing.

                (c)     Decision on Review. The Administrator shall, upon
                        receipt of a request for review submitted by the
                        claimant in accordance with subsection (b), appoint a
                        committee for the purpose of conducting such review and
                        provide the claimant with written notice of the decision
                        reached by the said committee setting forth the specific
                        reasons for the decision and specific references to the
                        provisions of the Plan upon which the decision is based.
                        Such notice shall be delivered to the claimant not later
                        than sixty (60) days following the receipt of the
                        request of the claimant, or, in the event that the
                        Administrator shall determine that a hearing is needed,
                        not later than one hundred twenty (120) days following
                        receipt of such request.

        Section 7.03 Records. All acts, determinations and correspondence with
respect to the Plan shall be duly recorded and all such records, together with
such other documents, including the Plan and all amendments thereto, if any,
pertinent to the Plan or the administration thereof, shall be preserved in the
custody of the Administrator and shall at all reasonable times be made available
to Participants and Beneficiaries for examination.

        Section 7.04 Delegation of Authority. The duties and responsibilities of
the Administrator as set forth in this Article and elsewhere in the Plan may be
delegated in whatever manner it chooses, in whole or in part, to an
Administrative Committee consisting of such persons as the Administrator shall
select. The Administrator shall certify to the Trustee in writing as to the
membership and extent of authority of such Committee and any changes relative
thereto as may occur from time to time. The authority of the Committee shall be
deemed to be that of the Administrator to the extent so certified by the
Administrator. The Trustee shall be entitled to rely on the last such
certification received and to continue to rely thereon until subsequent written
certification to the contrary is received from the Administrator. The
Administrator shall indemnify and hold harmless the members of the Committee,
and each of them, from any liability arising from the effects and consequences
of their acts, omissions and conduct in their official capacity with respect to
the Plan and the administration thereof, except to the extent that such
liability shall result from their own willful misconduct or gross negligence.
The Administrator, or the Administrative Committee to which it has delegated its
duties and responsibilities hereunder, may employ such competent agent or agents
as it may deem appropriate or desirable to perform such ministerial duties or
consultative or other services as the Administrator or its Committee may deem
necessary to facilitate the efficient and proper administration of the Plan. The
Administrator and its Committee shall be entitled to rely


                                       38


<PAGE>   43



upon all reports, advice and information furnished by such agent or agents, and
all action taken or suffered by them in good faith in reliance thereon shall be
conclusive upon all such agents, Participants, Beneficiaries and other persons
interested in the Plan.

        Section 7.05 Legal Incompetence. If any Participant or Beneficiary is a
minor, or is in the judgment of the Administrator otherwise legally incapable of
personally receiving and giving a valid receipt for any payment due him
hereunder, the Administrator may, unless and until a claim shall have been made
by a guardian or conservator of such person duly appointed by a court of
competent jurisdiction, direct the Trustee that payment be made to such person's
spouse, child, parent, brother, sister or other person deemed by the
Administrator to be a proper person to receive such payment. Any payment so made
shall be a complete discharge of any liability under the Plan for such payment.

        Section 7.06 Correction of Errors. If any change in records or error
results in any Participant or Beneficiary receiving from the Plan more or less
than he would have been entitled to receive had the records been correct or had
the error not been made, the Administrator, upon discovery of such error, shall
correct the error by adjusting, as far as is practicable, the payments in such a
manner that the benefits to which such person was correctly entitled shall be
paid.

        Section 7.07 Qualified Domestic Relations Order Procedure. In the case
of any Domestic Relations Order received by the Plan Administrator, the Plan
Administrator shall promptly notify the Participant and the Alternate Payee of
the receipt of such order and the Plan's procedures for determining the
qualified status of Domestic Relations Orders, and within a reasonable period
after receipt of such order, the Plan Administrator shall determine whether such
order is a Qualified Domestic Relations Order and notify the Participant and
each Alternate Payee of such determination.

        The Plan Administrator shall establish, in writing, reasonable
procedures to determine whether a Domestic Relations Order is a Qualified
Domestic Relations Order and if it is so determined, procedures to administer
the distribution of benefits to an Alternate Payee. An Alternate Payee, or any
person claiming to be an Alternate Payee, shall be given the notice of the
Plan's procedures for determining whether a Domestic Relations Order is
qualified and the Plan's procedures for the distribution of benefits under
Qualified Orders. Furthermore, an Alternate Payee, or any person claiming to be
an Alternate Payee, shall be given the opportunity to designate a representative
to receive any notices or information concerning the status of the Domestic
Relations Order and or the distribution of benefits under any such order which
is determined to be qualified.

        During any period in which the issue of whether a Domestic Relations
Order is a Qualified Domestic Relations Order is being determined (by the Plan
Administrator, by a court of competent jurisdiction, or otherwise), the Plan
Administrator shall segregate in a separate account in the Plan or in an escrow
account the amounts which would have been payable to the Alternate Payee during
such period if the order had been determined to be a Qualified Domestic
Relations Order. If within eighteen (18) months, it is determined that the order
is not a Qualified Domestic Relations Order, or the issue as to whether such
order is a Qualified Domestic Relations Order is not resolved, then


                                       39


<PAGE>   44



the Plan Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to such amounts
if there had been no order.

        Any determination that an order is a Qualified Domestic Relations Order
which is made after the close of the eighteen (18)-month period shall be applied
prospectively only. If the Plan Administrator or any fiduciary acts in
accordance with this Section in treating a Domestic Relations Order as being (or
not being) a Qualified Domestic Relations Order, or taking action under this
Section, then the Plan 's obligation to the Participant and each Alternate Payee
shall be discharged to the extent of any payment made pursuant to the Code.

                                  ARTICLE VIII
                            AMENDMENT OR TERMINATION

        Section 8.01 Amendment of Plan. The Administrator shall have the right
at any time to modify, alter or amend the Plan in whole or in part by instrument
in writing duly executed by the Administrator; provided, however, that no
amendment shall have the effect of causing or permitting any part of the Fund to
be used for or diverted to purposes other than for the exclusive benefit of
Participants and Beneficiaries and no amendment shall have the effect of giving
to the Employer the right to receive distribution of any portion of the Fund. No
amendment to the Plan shall decrease a Participant's account balance or
eliminate an optional form of distribution. No amendment to the vesting schedule
shall deprive a Participant of his nonforfeitable rights to benefits accrued to
the date of the amendment. If the vesting schedule of the Plan is amended, or if
the Plan is amended in any way which directly or indirectly affects the
computation of a Participant's nonforfeitable percentage of benefits, each
Participant with at least three (3) Years of Employment may elect, within a
reasonable period after such amendment is adopted, to have his nonforfeitable
percentage computed under the Plan without regard to such amendment. The period
during which the election may be made shall commence on the date of adoption of
the amendment and shall end on the latest of:

                (a)     sixty (60) days after the amendment is adopted;

                (b)     sixty (60) days after the amendment is effective; or

                (c)     sixty (60) days after the Participant is given written
                        notice of the amendment by the Administrator.

No amendment shall operate to increase the duties and responsibilities of the
Trustee except by written instrument duly executed by and between the
Administrator and the Trustee.

        Section 8.02 Termination of Plan. Although the Employer expects the Plan
to be continued indefinitely, it reserves the right at any time to terminate the
Plan by action of its board of directors and to discontinue all contributions
from time to time as it shall deem appropriate and necessary, and such
suspension of contributions shall not be considered to be a termination of the
Plan. In the event of termination of the Plan or a complete discontinuance of
contributions to the Plan, the

                                       40


<PAGE>   45



Administrator shall notify the Trustee in writing of such termination and, prior
to any distribution of assets hereunder, shall file notice with the Internal
Revenue Service.

        Section 8.03 Distribution Upon Termination. Upon termination or partial
termination of the Plan, or upon complete discontinuance of contributions, the
individual Account of each affected Participant shall become nonforfeitable
without regard to the Section of Article V entitled "Vested Benefit." The
Administrator, by written notice of termination of the Plan, shall direct the
Trustee to reduce such assets of the Fund to cash which are not designated by
the Administrator to be retained for distribution in kind. The Trustee shall
cause a valuation of the Fund to be made as of the date such assets are reduced
to cash, at which time the balances of Individual Accounts shall be brought up
to date in accordance with Section 4.02. Upon completion of such accounting and
receipt from the Administrator of directions as to the form of distributions,
the Trustee shall distribute the assets of the Fund to the Participants or
Beneficiaries, as the case may be, in accordance with such directions. The
Administrator shall consider the needs and financial situation of each
Participant or Beneficiary, as the case may be, to approve or disapprove the
optional form of benefit, or to determine the optional form of benefit after
making a good faith determination of the best interest of the person, and such
determination shall not be open to question by any person.

        Section 8.04 Merger of Plan. In the event of any merger or consolidation
with, or transfer of assets or liabilities to, any other retirement plan, the
benefit hereunder to which a Participant or Beneficiary is entitled (if the Plan
subsequently terminated) shall, immediately after such merger, consolidation or
transfer, be equal to, or greater than such benefit would have been immediately
before such merger, consolidation or transfer (if the Plan had then terminated).

        Section 8.05 Failure of Internal Revenue Service Qualification. This
Plan is adopted by the Employer upon the condition that it shall qualify
initially under the applicable provisions of the Code. Therefore, if the Plan
fails to so qualify, as evidenced by receipt of a letter to such effect from the
Internal Revenue Service, then the Employer reserves the following:

                (a)     the right to withdraw and terminate the Plan hereunder
                        whereupon the Participant shall have any right or claim
                        to any of the assets hereunder which are derived from
                        Employer contributions, notwithstanding any other
                        provision hereof; or

                (b)     the right to amend the Plan to the extent necessary to
                        secure a favorable determination that the Plan is so
                        qualified.

        Section 8.06 Distribution Limitation. Notwithstanding the foregoing
Section 8.03, funds attributable to Participant Tax-Deferred Contributions may
not be distributed earlier than upon one of the following events:

                (a)     the Participant's retirement, death, disability or
                        separation from service;



                                       41


<PAGE>   46



                (b)     the termination of the Plan without the establishment of
                        a successor plan;

                (c)     the date of the sale or other disposition by the
                        Employer to an unrelated corporation of substantially
                        all of the assets of the Employer, but only with respect
                        to an Employee who continues employment with the
                        corporation acquiring the assets;

                (d)     the date of the sale or other disposition by the
                        Employer of its interest in a subsidiary to an unrelated
                        entity, but only with respect to an Employee who
                        continues employment with such subsidiary; or

                (e)     the Participant's attainment of age 59 1/2.

                                   ARTICLE IX
                                  MISCELLANEOUS

        Section 9.01 Liability of Employer. No Employee, Participant or
Beneficiary shall have any right or claim to any benefit under the Plan except
in accordance with its provisions. Neither the establishment of the Plan or
Trust, nor any modification thereof, nor the creation of any fund or account,
nor the payment of any benefits shall be construed as giving to any Participant
or other person any legal or equitable right against the Employer, any officer,
director or employee thereof, or the Trustee except as otherwise expressly
provided by law. The Employer does not in any way guarantee the Trust from loss,
nor does the Employer guarantee the payment of any money which may be or may
become due to any person from the Trust. Any person having a right or claim
under the Plan shall look solely to the Trust assets, and in no event shall the
Employer or its employees, officers, directors or stockholders be liable to any
person on account of any claim arising by reason of the provisions of the Plan
or of any instrument or instruments implementing its provisions, or for the
failure of any Participant, Beneficiary or other person to be entitled to any
particular tax consequences with respect to the Plan, the Trust or any
contribution thereto or distribution therefrom. The Employer shall not be liable
to any person for failure on its part to make contributions, nor shall any
action lie to compel the Employer to make such contributions. Neither the
Employer nor its employees, officers, directors or stockholders shall have any
liability to any person by reason of the failure of the Plan to attain or
maintain qualified status under section 401(a) of the Code or the failure of the
Trust to attain or maintain tax-exempt status under section 501(a) of the Code,
regardless of whether or not such failure is due to any act or omission
(willful, negligent or otherwise) of the Employer or its employees, officers,
directors or stockholders. The provisions of this Section shall apply only to
the extent not inconsistent with the provisions of the Employee Retirement
Income Security Act of 1974, as amended.

        Section 9.02 Intent to Continue Plan and Trust. The Employer has
established the Plan and Trust with the bona fide intention and expectation that
from year to year it will be able to and will deem it advisable to make its
contributions as herein provided. However, the Employer realizes that


                                       42


<PAGE>   47



circumstances not now foreseen or circumstances beyond its control may make it
either impossible or inadvisable to continue to make its contributions as herein
provided.

        Section 9.03 Binding on Parties. Persons claiming any interest or
benefit under the Plan shall perform any and all acts, including the execution
of papers, which may be necessary for carrying out its terms. This Plan and acts
and decisions made by the Trustee, Administrator or Employer shall be binding
upon the heirs, executors, administrators, successors and assigns of any party
hereto or any persons claiming any benefit hereunder.

        Section 9.04 Agent for Legal Process. The Employer may appoint an agent
empowered to accept service of legal process for the Plan and the Employer shall
make such appointment known to the Administrator. In the absence of such
appointment, the resident agent of the Employer shall be empowered to accept
service of legal process for the Plan.

        Section 9.05 Spendthrift Clause. No interest, right or claim in or to
any part of the Trust Fund or any payment therefrom shall be assignable,
transferable or subject to sale, mortgage, pledge, hypothecation, garnishment,
attachment, execution, or levy of any kind whatsoever, and the Trustee shall not
issue any certificate or other documentation representing any interest, right or
claim in or to any part of the Trust Fund. Notwithstanding the preceding,
payment to an Alternate Payee pursuant to a Qualified Domestic Relations Order
and the withholding of federal income tax shall not be considered an assignment
or alienation of benefits under the Plan.

        Section 9.06 Successor to Business of Employer. Any successor to the
business of the Employer may continue the Plan and such successor shall
thereupon succeed to all the rights, powers and duties of the Employer
hereunder. The Employment of any Employee who has continued in the employ of
such successor which maintains the Plan shall not be deemed to have been
terminated or severed for any purpose hereunder. In the event that the Employer
is reorganized, or all or substantially all of its assets are sold without any
provision being made for the continuance of this Plan by a successor to the
business of the Employer, the Plan shall terminate and the assets shall be
distributed as provided in Section 9.03 hereof.

        Section 9.07 Conflict of Provisions. If any provision or term of this
Plan, or of the Trust Agreement entered into pursuant hereto, is deemed to be
substantively at variance with, or contrary to, any law of the United States or
other applicable state law, the provision of the law shall be deemed to govern,
but only to the extent necessary to bring this Plan and Trust Agreement into
compliance with such law, provided, further, that no provision of state law
shall be deemed to govern if it would disqualify the Plan and Trust Agreement
under section 401(a) and 501(a) of the Code.

        Section 9.08 Successors to Trustee. The provisions of this Plan, and of
the Trust Agreement entered into pursuant hereto, shall bind and inure to the
benefit of the successors to the Trustee named in said Agreement.


                                       43


<PAGE>   48



        Section 9.09 Definition of Words. The masculine form of pronouns is used
herein in order to comply with generally accepted grammatical rules, and the
feminine form of pronouns shall be deemed to be substituted herein where
appropriate, and the plural shall be substituted for the singular, in any place
or places herein where the context may require such substitution or
substitutions.

        Section 9.10 Titles. The titles of Articles and Sections are included
for convenience only and shall not be construed as a part of the Plan or in any
respect to affect or modify its provisions.

        Section 9.11 Execution of the Plan. This document may be executed in any
number of counterparts and each fully executed counterpart shall be deemed an
original.

                                    ARTICLE X
                             PARTICIPATING EMPLOYERS

        Section 10.01 Adoption by Other Employers. Notwithstanding anything
herein to the contrary, with the consent of the Plan Administrator, any
corporation or entity, whether an affiliate or subsidiary of an Employer or not,
may adopt this Plan and all of the provisions hereof by executing such
documentation as the Plan Administrator may require. By execution of this Plan
document, Prison Management Services, Inc. and Juvenile and Jail Facility
Management Services, Inc. shall be deemed to have adopted the Plan in accordance
with the preceding sentence. Prison Management Services, Inc., Juvenile and Jail
Facility Management Services, Inc. and any other corporation or entity which
adopts the Plan in accordance herewith shall for purposes of this Plan be known
as a Participating Employer.

        Section 10.02 Requirements of Participating Employers.

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

                (b)     The Trustee may, but shall not be required to,
                        commingle, hold and invest as one Trust Fund all
                        contributions made by Participating Employers, as well
                        as all increments thereof. However, the assets of the
                        Plan shall, on an ongoing basis, be available to pay
                        benefits to all Participants and Beneficiaries under the
                        Plan without regard to the Employer who contributed such
                        assets.

                (c)     Forfeitures shall inure to the benefit of all
                        Participants.

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



                                       44


<PAGE>   49




        Section 10.03 Designation of Agent. Each Participating Employer shall be
deemed to be a party to this Plan; provided, however, that with respect to all
of its relations with the Trustee and Administrator for purposes of this Plan,
each Participating Employer shall be deemed to have designated irrevocably the
Plan Administrator as its agent.

        Section 10.04 Employee Transfers. It is anticipated that an Employee may
be transferred among Employers, including Participating Employers. In the event
of any such transfer, the Employee involved shall carry with him his accumulated
service (including without limitation his accumulated Years of Employment) and
eligibility. No such transfer shall effect a termination of employment
hereunder, and the Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Employer from whom the Employee was transferred.

        Section 10.05 Participating Employer Contribution. All contributions
made to the Plan by an Employer (including a Participating Employer) shall be
determined separately by each Employer, and shall be allocated only among the
Participants who are Employees of the Employer making the contribution. On the
basis of the information furnished by the Plan Administrator, the Trustee shall
keep separate books and records concerning the affairs of each Participating
Employer hereunder and as to the accounts and credits of the Employees of each
Participating Employer.

        Section 10.06 Amendment. Amendment of this Plan by the Plan
Administrator at any time when there shall be a Participating Employer hereunder
shall only be with the written consent of each and every Participating Employer.

        Section 10.07 Discontinuance of Participation. Any Participating
Employer shall be permitted to discontinue or revoke its participation in the
Plan. At the time of any such discontinuance or revocation, satisfactory
evidence thereof and of any applicable conditions imposed shall be delivered to
the Trustee. The Trustee shall thereafter transfer, deliver and assign Trust
Fund assets allocable to the Participants of such Participating Employer to such
new Trustee as shall have been designated by such Participating Employer, in the
event that it has established a separate pension plan for its Employees;
provided, however, that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected benefits." If no
successor is designated, the Trustee shall retain such assets for the Employees
of said Participating Employer pursuant to the provisions hereof. In no such
event shall any part of the corpus or income of the Trust as it relates to such
Participating Employer be used for or diverted to purposes other than for the
exclusive benefit of the Employees of such Participating Employer.

        Section 10.08 Administrator's Authority. The Administrator shall have
authority to make any and all necessary rules or regulations, binding upon all
Participating Employers and all Participants, to effectuate the purpose of this
Article.


                                       45


<PAGE>   50


        IN WITNESS WHEREOF, the undersigned corporations have caused the Plan to
be signed by its duly authorized officer and adopted as of this 28th day of
December, 1998.


                                    CORRECTIONAL MANAGEMENT SERVICES
                                    CORPORATION



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------
                                    Its: Secretary and Chief Financial Officer
                                         ---------------------------------------



                                    PRISON MANAGEMENT SERVICES, INC.



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------
                                    Its: President
                                         ---------------------------------------



                                    JUVENILE AND JAIL FACILITY MANAGEMENT
                                    SERVICES, INC.



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------
                                    Its: President
                                         ---------------------------------------












                                       46

<PAGE>   51
                               FIRST AMENDMENT TO
                       CORRECTIONS CORPORATION OF AMERICA
                       401(K) SAVINGS AND RETIREMENT PLAN

        WHEREAS, Corrections Corporation of America ("CCA") was sponsor and
administrator of the Corrections Corporation of America 401(k) Savings and
Retirement Plan (the "Plan");

        WHEREAS, Prison Management Services, Inc, and Juvenile and Jail Facility
Management Services, Inc. (collectively, the "Participating Employers") have
also adopted the Plan and are participating employers in the Plan;

        WHEREAS, CCA has been merged with and into CCA Acquisition Sub, Inc., a
wholly owned subsidiary of Prison Realty Trust, Inc. ("CCA Acquisition Sub");

        WHEREAS, in connection with such merger (the "Merger"), CCA Acquisition
Sub adopted and became sponsor and administrator of the Plan (CCA Acquisition
Sub, in its capacity as administrator of the Plan, being referred to herein as
the "Administrator");

        WHEREAS, Sections 8.01 and 10.06 of the Plan permit the Administrator to
amend the Plan at any time, with the written consent of the Participating
Employers, pursuant to a written instrument executed by the Administrator.

        NOW, THEREFORE, the Plan is amended as follows:

        1. Effective as of the date of the Merger, the following new Section
1.77(g) shall be added to the Plan:

                (g) As to Employees who formerly were employed by Prison Realty
        Trust, Inc. ("Prison Realty") prior to the merger of Corrections
        Corporation of America (formerly Correctional Management Services, Inc.)
        with and into CCA Acquisition Sub, Inc., a wholly owned subsidiary of
        Prison Realty, Years of Employment for all purposes under this Plan
        shall include all service with Prison Realty.

        2. Effective September 1, 2000, the following new Section 3.09 shall be
added to the Plan:

                (e) Blackout Periods. Notwithstanding anything herein to the
        contrary, the Administrator shall have the power, upon written notice to
        Participants, to impose for a reasonable period of time, a blackout
        period ("Blackout Period"), during which the rights of Participants to
        direct the investment of their accounts shall be suspended. During such
        Blackout Periods any new contributions received by the Trust shall be
        invested pursuant to the directions of the Administrator and existing
        accounts shall remain invested in the Investment Funds in which the
        Administrator and existing accounts shall




<PAGE>   52




        remain invested in the Investment Funds in which they were invested
        immediately prior to the imposition of the Blackout Period. Upon
        cessation of the Blackout Period, any contributions invested during the
        Blackout Period pursuant to the direction of the Administrator, shall be
        promptly reinvested in accordance with the investment directions of the
        Participants, which are in effect as of the date the Blackout Period
        ends.

        3. Effective September 1, 2000, Section 4.04 of the Plan shall be
amended to read in its entirety as follows:

                Section 4.04 Voting of Shares. Each Participant (or Beneficiary)
        shall be entitled to direct the Trustee as to the manner in which shares
        of Prison Realty Stock allocated to the Individual Account of such
        Participant (or Beneficiary) are to voted with respect to all corporate
        matters submitted to shareholder; provided, however, that to the extent
        the Trustee does not timely receive voting directions from a Participant
        (or Beneficiary) with respect to any shares for which the Participant
        (or Beneficiary) has the right to vote, the Administrator is hereby
        authorized to vote such shares in its sole discretion.

                Notwithstanding anything herein to the contrary, any conversion
        rights associated with Prison Realty Trust, Inc. Series B Preferred
        Stock shall not pass through to Participants. Any conversion rights
        associated with such Prison Realty Trust, Inc. Series B Preferred Stock
        shall be exercised in accordance with the directions of Independence
        Trust Company, an independent fiduciary retained under that Special
        Fiduciary Agreement executed on September 16, 2000.

        4. Effective as of the date of the Merger, the following new Section
5.07(m) shall be added to the Plan:

                (m) No loans may be made during any Blackout Period.

        5. Effective January 1, 2000, the following new Section 5.11 shall be
added to the Plan:

                Section 5.11 Hardship Distributions for Former Participants in
        U.S. Corrections Corporation 401(k) Plan. Participants who are also
        former participants in the U.S. Corrections Corporation Amended and
        Restated 401(k) Plan shall be entitled to obtain hardship distributions,
        pursuant to the terms set forth below:

                (a)     Hardship distributions shall be granted only in the
                        event of an immediate and heavy financial need arising
                        from:



                                       2
<PAGE>   53

                                (i) expenses for medical care described
                        in ss.213(d) previously incurred by the Participant, his
                        or her spouse or any of his or her dependents (as
                        defined in ss.152) or necessary for these persons to
                        obtain such medical care;

                                (ii) costs directly related to the purchase of a
                        principal residence of the Participant (excluding
                        mortgage payments);

                                (iii) the payment of tuition and related
                        educational fees and room and board expenses for the
                        next 12 months of post-secondary education for the
                        Participant or his or her spouse, children or dependents
                        (as defined in ss.152); or

                                (iv) payments necessary to prevent the eviction
                        of the Participant from his or her principal residence
                        or foreclosure on the mortgage on that principal
                        residence.

                        The Administrator's determination of whether there is an
                        immediate and heavy financial need as defined above
                        shall be made solely on the basis of written evidence
                        furnished by the Participant. Such evidence must also
                        indicate the amount of such need.

                (b)     As soon as practicable after the Administrator's
                        determination that an immediate and heavy financial need
                        exists with respect to the Participant and that the
                        Participant has obtained all other distributions (other
                        than hardship distributions) and all nontaxable loans
                        currently available under the Plan and all other plans
                        maintained by the Affiliated Employers, the
                        Administrator will direct the Trustee to pay to the
                        Participant the amount necessary to meet the need
                        created by the hardship (but not in excess of the value
                        of the vested portion of the Participant's Accounts,
                        determined as of the Valuation Date next following the
                        Administrator's determination). The amount necessary to
                        meet the need may include any amounts necessary to pay
                        any federal, state, or local income taxes or penalties
                        reasonably anticipated to result form the distribution.
                        Distribution from the Participant's Accounts in the
                        event of a hardship will be made only from a
                        Participant's Tax Deferred Contributions Account
                        (provided that no



                                       3
<PAGE>   54

                        portion of such Account attributable to income may be
                        distributed due to a financial hardship).

                (c)     If a Participant receives a hardship distribution, then
                        any Participant Tax Deferred Contribution election, or
                        any other cash-or-deferred or employee contribution
                        election in effect with respect to the Participant under
                        the Plan or any other plan maintained by an Affiliated
                        Employer (including a stock purchase plan and any other
                        plan set forth in Regs. ss.1.401(k)-1(d)(2)(iv)(B)(4)
                        shall be suspended for the 12-month period beginning
                        with the date the Participant receives the distribution,
                        and the amount of Participant Tax Deferred Contributions
                        made for the benefit of the Participant, together with
                        any elective deferrals made on behalf of the Participant
                        under any other plan maintained by the Affiliated
                        Employers for the calendar year immediately following
                        the calendar year of the hardship distribution must not
                        exceed the applicable limit under ss.402(g) for such
                        next calendar year, less the amount of such
                        contributions made on behalf of the Participant for the
                        calendar year of the hardship distribution.

        EXECUTED AND DELIVERED as of this 1st day of October, 2000.


                                    CCA ACQUISITION SUB, INC.



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------

                                    Its: President
                                         ---------------------------------------














                                       4
<PAGE>   55

                       CONSENT BY PARTICIPATING EMPLOYERS

        The undersigned Participating Employers hereby consent to the foregoing
First Amendment to the Corrections Corporation of America 401(k) Savings and
Retirement Plan.


                                    PRISON MANAGEMENT SERVICES, INC.



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------

                                    Its: President
                                         ---------------------------------------

                                    Date: October 1, 2000
                                          --------------------------------------


                                    JUVENILE AND JAIL FACILITY
                                    MANAGEMENT SERVICES, INC.



                                    By: /s/ Darrell K. Massengale
                                        ----------------------------------------

                                    Its: President
                                         ---------------------------------------

                                    Date: October 1, 2000
                                          --------------------------------------






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