<PAGE>
 
                                                                  10. (iv)(H)(3)



                      MONTGOMERY WARD & CO., INCORPORATED
                                 SAVINGS PLAN



                        (AMENDED AND RESTATED EFFECTIVE
                             AS OF JANUARY 1, 1998)
<PAGE>
 
               Montgomery Ward & Co., Incorporated Savings Plan

                               TABLE OF CONTENTS
                               -----------------

<TABLE> 
<CAPTION> 
Section                                                                     Page
-------                                                                     ----
<S>                                                                         <C> 
1    Purpose.............................................................      1
                                                                              
2    Definitions.........................................................      3
                                                                              
3    Membership..........................................................     13
                                                                              
4    Required Basic Contributions........................................     17
                                                                              
5    Pre-Tax Supplemental Contributions                                       
     and After-Tax Supplemental Contributions............................     18
                                                                              
6    Company Contributions...............................................     23
                                                                              
7    Transfer of Amounts Attributable to Members'                             
     Contributions and Profit-Sharing Plan Balances                           
     Under the Retirement Security Plan..................................     32
                                                                              
8    Transfer of Amounts Attributable to Members'                             
     Account Balance Under the Lechmere Plan.............................     34
                                                                              
9    Investment of Contributions.........................................     36
                                                                              
10   Valuations and Maintenance of Members' Accounts.....................     38
                                                                              
11   Eligibility for Benefits............................................     41
                                                                              
12   Method of Payment of Benefits.......................................     49
                                                                              
13   Maximum Amount of Allocation........................................     54
                                                                              
14   Designation of Beneficiaries........................................     55
                                                                              
15   Loans to Members....................................................     56
                                                                              
16   Administration of the Plan..........................................     59
                                                                              
17   Termination of Employer Participation...............................     66
                                                                              
18   Amendment or Termination of the Plan and Trust......................     68
                                                                              
19   General Limitations and Provisions..................................     70
                                                                              
20   Top Heavy Provisions................................................     74
</TABLE> 
<PAGE>

                              SECTION 1 PURPOSE 

     1.1  The purpose of the Plan is to encourage Associates to make and
continue careers with the Company by providing Eligible Associates with a
convenient way to save on a regular and long-term basis, all as set forth
herein, and in the Trust adopted as a part of this Plan. This Plan is an
amendment and restatement of the Montgomery Ward & Co., Incorporated Savings
Plan, as amended.
          
          The benefits provided under this Plan are supplemented by the transfer
to the Trust of amounts attributable to Associate contributions under this Plan
made after December 31, 1980 and before April 1, 1983, by amounts attributable
to the Profit-Sharing Plan Balances under certain defined benefit pension plans
maintained by the Company for the benefit of eligible Associates, and by the
transfer to the Trust of account balances under the Lechmere Plan. This Plan,
and the Trust established thereunder, are intended to qualify as a plan and
trust which meet the requirements of Sections 401(a), 401(k), 401(m) and 501(a),
respectively, of the Internal Revenue Code of 1986, as now in effect or
hereafter amended, or any other applicable provisions of law including, without
limitation, the Employee Retirement Income Security Act of 1974, as now in
effect or hereafter amended. The rights of any person who terminated employment
or who retired on or before the effective date of a particular amendment,
including his eligibility for benefits and the time and form in which benefits,
if any, will be paid, shall be determined solely under the terms of the Plan as
in effect on the date of his termination of employment or retirement, unless
such person is thereafter reemployed and again becomes a Member.

     1.2  Although this restatement is generally effective January 1, 1998, the
inclusion of amendments to conform with applicable laws and other changes to the
Plan necessitates different effective dates for certain Plan provisions.
Accordingly, notwithstanding the general effective date of this restatement,
certain Plan sections herein have special effective dates as described therein,
including, but not limited to, the following Plan sections which have special
effective dates: 
<PAGE>
 
<TABLE> 
<CAPTION> 
          Sections                                    Effective Date
          --------                                    --------------
          <S>                                         <C> 
             2.22                                     July 1, 1997    
             2.23                                     January 1, 1997
             2.24(last sentence only)                 January 1, 1996 
             2.36                                     July 1, 1997    
             2.37                                     July 1, 1997    
             2.45                                     January 1, 1996 
             2.50                                     July 1, 1997    
             2.52                                     July 1, 1997     
             2.60(last two sentence only)             January 1, 1996
             3.1(b)(second sentence only)             July 1, 1997
             3.1(d)                                   January 1, 1996
             3.1(e)                                   July 1, 1997
             4.1(last sentence only)                  July 1, 1997
             5.1(a)(second sentence only)             July 1, 1997
             5.1(b)(i) and (v)                        January 1, 1997
             5.1(b)(iv)                               July 1, 1997
             6.1(a) and (b)                           July 1, 1997
             6.3(a) and (c)                           January 1, 1997
             6.3(b)                                   July 1, 1997
             6.4(last sentence only)                  February 3, 1997
             7                                        June 30, 1994
             9.2                                      July 1, 1997
             9.3                                      July 1, 1997
            10.6                                      January 1, 1996
            11.2                                      July 1, 1997
            11.2(last ten sentences only)             July 1, 1994
            11.6(c)                                   July 1, 1997
            11.6(e)                                   July 1, 1997
            11.6(g)                                   July 1, 1997
            12.1(d)                                   January 1, 1993
            12.3(second sentence only)                January 1, 1996
            15.6(second sentence only)                December 12, 1994
            18.1(first sentence only)                 July 1, 1997
            19.6(b)                                   August 5, 1997
            19.10                                     December 12, 1994
</TABLE> 

                                      -2-
<PAGE>
 
                            SECTION 2  DEFINITIONS

         When used herein the following terms shall have the following meanings:

         2.1   "Account" means the account established and maintained in respect
of a Member pursuant to Section 3.7. 

         2.2   "Administrative Director" means the Administrative Director of
the Plan appointed by the Committee in accordance with Section 16.3 hereof.

         2.3   "Affiliate" means any corporation which is a member of a
controlled group of corporations, as determined in accordance with Section
414(b) of the Code, which includes the Company; any trade or business (whether
or not incorporated) which, as defined in Section 414(c) of the Code is under
common control with the Company, any organization (whether or not incorporated)
which is a member of an affiliated service group as defined in Section 414(m) of
the Code, which includes the Company, and any other entity required to be
aggregated with the Company pursuant to Regulations under Section 414(o) of the
Code. For purposes of Section 13, Section 414(b) and (c) of the Code shall be
applied as modified by Section 415(h) of the Code.

         2.4   "After-Tax Supplemental Contribution" and "After-Tax Supplemental
Contribution Account" mean those Member contributions made on or before June 30,
1994 pursuant to Section 5.1(c) and that portion of the Member's Account to
which such contributions are credited.

         2.5   "Basic Contribution" and "Basic Contribution Account" mean those
Member contributions made pursuant to Section 4.1 and that portion of the
Member's Account to which such contributions are credited. For purposes of
Sections 9.2, 9.3, 9.4, 9.5, 11.6(c) and 12, the Basic Contributions made while
an Associate of Signature shall be treated as either After-Tax Supplemental
Contributions or Pre-Tax Supplemental Contributions, as appropriate.

         2.6   "Beneficiary" means the beneficiary or beneficiaries designated
by a Member pursuant to Section 14 to receive the amount, if any, payable under
the Plan upon the death of such Member.

                                      -3-
<PAGE>
 
         2.7   "Benefit Derived from Associate Contributions" means the Benefit
Derived from Associate Contributions as determined by enrolled actuaries under
the Retirement Security Plan as of March 31, 1983.

         2.8   "Board of Directors" means the Board of Directors of Ward.

         2.9   "Break in Service" means the year during which or immediately
after which an Associate terminates Service and does not perform Service during
at least 12 weeks. Notwithstanding the preceding sentence, any Associate who
actually performs at least 500 Hours of Service during any Plan Year, as
determined by the Committee in accordance with the Regulations, shall not be
considered as having incurred a Break in Service. Solely for purposes of
determining whether a Break in Service has occurred, an individual shall be
credited with the Hours of Service which such individual would have completed
but for a maternity or paternity absence, as determined by the Committee in
accordance with this Section 2.10 and the Code and Regulations, provided,
however, that the total Hours of Service so credited shall not exceed 501 hours
and that the individual timely provide the Committee with such information as it
shall require. Hours of Service credited for a maternity or paternity absence
shall be credited entirely (a) in the Plan Year in which the absence began if
such Hours of Service are necessary to prevent a Break in Service in such year,
or (b) in the following Plan Year. For purposes of this Section 2.9, maternity
or paternity absence shall mean an absence from work by reason of the
individual's pregnancy, the birth of the individual's child or the placement of
a child with the individual in connection with adoption of the child by such
individual, or for purposes of caring for a child for the period immediately
following such birth or placement.

         2.10  "Code" means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.

         2.11  "Committee" means the Benefit Plans Committee provided for in
Section 16. For purposes of ERISA, the members of the Benefit Plans Committee
shall be the named fiduciaries (with respect to the

                                      -4-
<PAGE>
 
matters for which they are hereby made responsible under the Plan) of the Plan,
and shall be the administrator of the Plan.

         2.12  "Company" means Montgomery Ward & Co., Incorporated and each
other Participating Company, or any of them.

         2.13  "Compensation" means for each Plan Year, an Associate's first
$150,000 (adjusted for cost of living to the extent permitted by the Code and
Regulations) of compensation, including salary, wages, overtime premium,
commissions, holiday pay, vacation pay, bonuses, cash incentives other than from
contests, and salary continuance, paid or payable to or on behalf of, or
otherwise includable in the gross income of an Associate for Service while an
Associate and a Member during that Plan Year, as determined by the Committee.
Compensation shall not include amounts contributed to the Trust Fund pursuant to
the Plan or paid or contributed to any group insurance plan or other employee
benefit plan, if any, established or maintained by the employer of an
individual, and excludable from his or her gross income, other than amounts
contributed on behalf of a Member under Section 5.1 of the Plan.

         2.14  "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.

         2.15  "Distributee" means an Associate or former Associate. In
addition, the Associate's or former Associate's surviving Spouse or former
Spouse who is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are Distributees with regard to the
interest of the Spouse or former Spouse.

         2.16  "Effective Date" means January 1, 1998, the general effective
date of this amendment and restatement.

         2.17  "Electric Ave." means Electric Ave. and More.

         2.18  "Eligible Retirement Plan" means 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

                                      -5-
<PAGE>
 
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to the
surviving Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.

         2.19  "Eligible Rollover Distribution" means 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 10 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 includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).

         2.20  "Employee", "Associate", "Eligible Employee" or "Eligible
Associate" means any individual who is employed by the Company, as determined by
the Committee, excluding (a) any associate who is included in a unit of
associates covered by a negotiated collective bargaining agreement which does
not provide for his membership in the Plan, (b) any associate who actively
participates in any other tax-qualified pension or profit-sharing plan
maintained by the Company (other than the Jefferson Stores Plan and the
Retirement Security Plan), (c) any associate of a division of the Company which
the Committee has determined to treat as though it is an Affiliate which is not
a Participating Company and (d) any nonresident alien. Notwithstanding the
foregoing, associates who are on the Company payroll and who work at Montgomery
Ward (Hong Kong) Limited shall be eligible to become a Member. A director of the
Company is not eligible to become a Member unless he is also an Associate.

         2.21  "ERISA" means the Employee Retirement Income Security Act of
1974, as now in effect or as hereafter amended.

                                      -6-
<PAGE>
 
         2.22 "Full-Time" means an Associate who is classified as working 30
hours or more per week on a continuing basis. 

         2.23 "Highly Compensated Associate" means effective January 1, 1997 an
Associate or Member who (a) was a five percent owner at any time during the Plan
Year or the preceding Plan Year, or (b) for the preceding Plan Year (i) had
compensation (as defined under Section 415(c)(3) of the Code) from the Company
in excess of $80,000 (as adjusted for increases in the cost of living in
accordance with Section 414(q)(1) of the Code), or (ii) if the Committee in its
sole discretion elects the application of this Subsection (ii) for the preceding
Plan Year, was in the group consisting of the top 20% of employees when ranked
on the basis of compensation (as defined under Section 415(c)(3) of the Code)
paid in the preceding Plan Year.

         2.24 "Hours of Service" means any hour during which an Associate
performs Service (or is treated as performing Service under Section 2.47) and
for which he is paid, or entitled to payment for the performance of duties for
the Company (including back pay irrespective of mitigation of damages). In
addition, Hours of Service shall also include up to 501 hours of non-working
time during any single continuous period of absence which does not otherwise
constitute Service, but for which an Associate is directly or indirectly paid or
entitled to payment. The determination of Hours of Service to be credited
hereunder shall be made by the Committee in accordance with the Regulations,
including Sections 2530.200b-2(b) and (c) of the Labor Department Regulations
and Sections 825.214 through 825.216 of the Family and Medical Leave Act
("FMLA") Regulations. For purposes of determining the Associate's membership
under Section 3, for purposes of determining the Associate's nonforfeitable
interest in amounts under Section 11 or for purposes of determining both the
Associate's eligibility for membership and nonforfeitable interest in amounts,
an Associate shall be entitled to be credited with Hours of Service to which the
Associate was credited as an employee of any organization which operated any
trade or business, or any separate unit of a trade or business, substantially
acquired by the Company, but only to the extent so provided by appropriate
action of the Committee.

                                      -7-
<PAGE>
 
         2.25 "Investment Fund" means the Funds provided for in Section 9 or any
of them.

         2.26 "Investment Manager" means an Investment Manager, as that term is
defined in ERISA, appointed by the Trustees in accordance with Section 16.2
hereof.
         2.27 "IRS" means the United States Internal Revenue Service.

         2.28 "Jefferson Stores Plan" means the Retirement Plan for Employees of
Jefferson Stores, Inc., as amended effective January 1, 1984.

         2.29 "Labor Department" means the United States Department of Labor.

         2.30 "Lechmere" means Lechmere, Inc.

         2.31 "Lechmere Plan" means the Lechmere, Inc. Supplemental Retirement
and Savings Plan, as amended and restated as of February 28, 1994.

         2.32 "Lechmere Account" means the account, if any, established and
maintained as part of a Member's Account to reflect amounts transferred with
respect to a Member's Account Balance under the Lechmere Plan pursuant to
Section 8.2.

         2.33 "Matching Contribution" and "Matching Contribution Account" mean
those contributions made pursuant to Section 6.1 and that portion of a Member's
Account to which such contributions are credited.

         2.34 "Member" means any Associate who is enrolled in the membership of
the Plan as provided in Section 3.

         2.35 "Participating Company" means any company which is an Affiliate,
designated by the Board of Directors as such, the board of directors or
equivalent governing body of which shall adopt the Plan by appropriate action
and the Associates of which shall be eligible to participate in the Plan in the
manner and to the extent determined by the Board of Directors so long as that
company remains so designated. Any such company so designated and which adopts
the Plan shall be deemed thereby to appoint Ward, the Committee, the
Administrative Director and the Trustees its exclusive agents to exercise on its
behalf all of the powers 

                                      -8-
<PAGE>
 
conferred hereby or by the Trust upon the Company, the Committee, the
Administrative Director and the Trustees, respectively, and shall make its
allocable contributions to the Plan. The authority of Ward, the Committee, the
Administrative Director and the Trustees, respectively, to act as such agent
shall continue until the Plan has terminated as to such company and the relevant
Trust Fund assets have been distributed by the Trustees as provided in Section
18.4 hereof.

         2.36 "Part-Time" means an Associate who is classified as working less
than 30 hours per week on a continuing basis.

         2.37 "Plan" means the Montgomery Ward & Co., Incorporated Savings Plan,
as the same may be amended from time to time.

         2.38 "Plan Year" means the calendar year.

         2.39 "Pre-Tax Supplemental Contribution" and "Pre-Tax Supplemental
Contribution Account" mean those Member contributions made pursuant to Section
5.1(a) and that portion of the Member's Account to which such contributions are
credited.

         2.40 "Profit Sharing Contribution" and "Profit Sharing Contribution
Account" mean those contributions made pursuant to Section 6.2 and that portion
of the Member's Account to which such contributions are credited.

         2.41 "Profit-Sharing Plan Balance" means the fair market value of the
amounts credited to a Member's account under the Retirement Security Plan which
were transferred to the Retirement Security Plan and attributable to a Member's
service under the Montgomery Ward & Co., Incorporated Profit-Sharing Plan as of
December 31, 1974, reduced by any portion thereof withdrawn prior to the
Effective Date, plus interest on such net amount compounded annually at the rate
of six percent per annum from December 31, 1974 to the date such amount was
transferred to the Trust from the Retirement Security Plan pursuant to Section
7.

                                      -9-
<PAGE>
 
         2.42 "Profit-Sharing Plan Balance Account" means the account, if any,
established and maintained as a part of a Member's Account to reflect amounts
transferred with respect to a Member's Profit-Sharing Plan Balance pursuant to
Section 7.

         2.43 "Regulations" means the applicable regulations issued under the
Code, ERISA or other applicable law, by the IRS, the Labor Department or any
other governmental authority and any proposed or temporary regulations or rules
promulgated by such authorities pending the issuance of such regulations.

         2.44 "Retirement Security Plan" means the Montgomery Ward & Co.,
Incorporated Retirement Security Plan, effective January 1, 1998, and as amended
from time to time.

         2.45 "Rollover Contribution" and "Rollover Contribution Account" means
those contributions made pursuant to Section 10.6 and that portion of the
Member's Account to which such contributions are credited.

         2.46 "Salary Reduction Account" means the salary reduction account, if
any, established and maintained as part of a Member's Account to reflect salary
reduction contributions contributed to the Plan prior to January 1, 1989.

         2.47 "Service" means employment with the Company or with any
Affiliate. Service shall also include the following: 

              (a) Any authorized leave of absence under rules determined by the
         Committee, which are uniformly applicable to all associates similarly
         situated and in accordance with the Regulations (including Sections
         2530.200b-2(b) and (c) of the Labor Department Regulations and Sections
         825.214 through 825.216 of the FMLA Regulations; provided the associate
         returns to active Service within the period authorized for such leave;

              (b) Service in any of the United States Armed Forces, if and to
the extent required 

                                      -10-
<PAGE>
 
               by the Military Selective Service Act, as amended, the FMLA, the
               Uniformed Services Employment and Reemployment Rights Act of 1994
               or any other federal law, or as otherwise recognized by the
               Committee;

               (c) Any period of layoff not in excess of 90 days during which
        the associate retains reemployment rights and provided that the
        associate reports to work after recall and within the 90 day period;

               (d) Any period of suspension of participation, as provided for 
        in Section 5.2 hereof; and 

               (e) Any period of a Member's prior employment by any organization
        upon such terms and conditions as the Committee may approve and subject
        to any required IRS approval.

        2.48   "Signature" means Signature Financial/Marketing, Inc., the
subsidiaries of Signature Financial/Marketing, Inc. which are Participating
Employers, and the subsidiaries of the subsidiaries of Signature
Financial/Marketing, Inc. which are Participating Employers.

         2.49  "Spouse" means the legal spouse of a Member as determined in
accordance with applicable state law.

         2.50  "Supplemental Matching Contribution" and "Supplemental Matching
Contribution Account" mean those contributions made for periods beginning on or
after July 1, 1997, pursuant to Section 6.1, if any, and that portion of a
Member's Account to which such contributions are credited.

         2.51  "Surviving Spouse" means the survivor of a deceased former Member
to whom such deceased former Member had been legally married (as determined by
the Committee) on the earlier of (a) the time payments commenced under the Plan
or (b) for at least one year at the date of the Member's death.

         2.52  "Temporary" means an Associate who is employed for a period of
less than 90 days.

         2.53  "Transferred Contribution Account" means the account, established
and maintained as part of a Member's Account, to reflect amounts transferred
with respect to a Member's Benefit Derived from Associate Contributions,
pursuant to Section 7.

                                      -11-
<PAGE>
 
         2.54  "Trust" or "Trust Fund" means the trust established by the
Company as a part of the Plan.

         2.55  "Trustees" means the trustees of the Trust.

         2.56  "Unit" means the unit measuring the value of a Member's
proportionate interest in the Investment Funds.

         2.57  "Valuation Date" means the last day of each Plan Year and the
last day of any month or months in a Plan Year as the Committee in its
discretion may from time to time determine or any other day as the Committee in
its discretion may from time to time determine.

         2.58  "Ward" means Montgomery Ward & Co., Incorporated, an Illinois
corporation, and any successor to all or substantially all of its business and
assets.
         2.59  "Year" means the 12 consecutive month period beginning on the
date an Associate's Service commenced or recommenced after a Break in Service,
as determined by the Committee, or an anniversary date thereof.

         2.60  "Year of Service" means a Year in which an Associate performs
1,000 Hours of Service. For purposes of determining Years of Service under
Sections 3 and 11, each Member who was employed by Amoco Oil Company or its
affiliates on December 31, 1995 and who became an Associate of Signature, on
January 1, 1996 in connection with the Stock Purchase Agreement By and Between
Amoco Oil Company, Amoco Oil Holding Company, Montgomery Ward & Co.,
Incorporated and Signature Financial/Marketing, Inc., dated December 29, 1995
shall have all years of service with Amoco Oil Company or its affiliates treated
as Years of Service with the Company. Also, for purposes of determining Years of
Service under Sections 3 and 11, each Member who was an employee of Emanacom
Data Services Inc. on July 16, 1996 and who became an Associate of Signature on
July 16, 1996 shall have all years of service with Emanacom Data Services Inc.
treated as Years of Service with the Company.

                                      -12-
<PAGE>
 
                             SECTION 3  MEMBERSHIP


    3.1 (a) Subject to the following provisions of this Section 3, each
    Associate who was a Member of the Plan immediately prior to the Effective
    Date shall continue to be a Member on and after the Effective Date. Each
    other Eligible Associate in Service immediately prior to the Effective Date,
    but who was not a Member of the Plan, shall be eligible for membership in
    the Plan on the later of the Effective Date or the first day of the month
    following the date on which he satisfies the requirements for membership in
    the Plan as set forth in Section 3.1(b).

        (b) Each Associate who commences Service on or after the Effective Date
    shall be eligible to participate in the Plan (other than with respect to
    contributions made under Sections 7 and 8 of the Plan), subject to the
    following provisions of this Section 3 and provided he is then an Eligible
    Associate, on the first day of the month following the later of (i) the date
    on which he attains age 21, or (ii) the date on which he completes one Year
    of Service. An Eligible Associate who is not employed by either Electric
    Ave., Signature or Lechmere shall become eligible to receive Supplemental
    Matching Contributions as provided in Section 6.1 beginning with the first
    full pay period which occurs in the month following the later of (i) the
    date on which the Eligible Associate attains age 21, or (ii) the date on
    which he completes one Year of Service. If an individual becomes an Eligible
    Associate after the later of the dates specified in (i) and (ii) above and
    after completing one Year of Service, he shall be eligible to participate in
    the Plan as of the first day of the month following the date on which he
    becomes an Eligible Associate. Notwithstanding the above, with respect to
    transfers made under Sections 7 and 8 of the Plan, the individual with
    respect to which such transfers are made shall be treated as a Member with
    respect to such transfers. 

        (c) Notwithstanding the foregoing, each participant in the Lechmere Plan
    on July 1, 1994 shall become a Member in the Plan as of July 1, 1994.

                                      -13-
<PAGE>
 
          (d) Notwithstanding the foregoing, each participant in the Amoco
     Employee Savings Plan ("Amoco Plan") on December 31, 1995 and each
     participant in the Amoco Oil Company Retirement Plan ("Amoco Oil Plan") on
     December 31, 1995 who became an Associate of Signature on January 1, 1996
     (or, with respect to a participant in the Amoco Plan or the Amoco Oil Plan
     on December 31, 1995 who on January 1, 1996 was on medical, military,
     personal, educational or family leave status from Amoco Oil Company or its
     affiliates, who became an Associate of Signature on any date prior to
     January 1, 1997), shall be eligible to become a Member in the Plan as of
     the first day of the first month following the date he becomes an Associate
     of Signature even if such Associate shall have had less than one Year of
     Service, in which case such Associate shall be granted one Year of Service
     credit for purposes of eligibility and shall be deemed to be age 21 for
     purposes of Section 3, unless such Associate is a Highly Compensated
     Associate. Notwithstanding the foregoing, each employee of Emanacom Data
     Services Inc. on July 16, 1996 who became an Associate of Signature on July
     16, 1996 shall become a Member in the Plan as of the first day of the first
     month following July 16, 1996.

          (e) Notwithstanding the foregoing, with respect to periods beginning
     on or after July 1, 1997, each Full-Time Associate who is not a Temporary
     Associate, who is not employed by either Electric Ave., Signature or
     Lechmere and who has attained the age of 21 shall be eligible to
     participate in the Plan solely with respect to Sections 4 and 5, in the
     manner described therein, as of the first day of the fourth calendar month
     following commencement of such Associate's employment with the Company.
     Solely with respect to contributions made to the Plan on behalf of an
     Associate who has not yet met the eligibility requirements of Section
     3.1(b) pursuant to Sections 4, 5 and 10.6, (which relates to rollover
     contributions), such an Associate shall be treated as a Member with respect
     to such contributions.

                                      -14-
<PAGE>
 
          (f) Notwithstanding the foregoing, each Associate who is employed by
     the Company at Montgomery Ward & Co., Incorporated Romeoville, Illinois
     Distribution Center on September 2, 1997, shall be eligible to participate
     in the Plan as of such date.  

     3.2  An Eligible Associate shall be enrolled in the membership of the Plan
as of the first day of the month coincident with or next following the date on
which he becomes eligible for membership and duly files the written enrollment
form prescribed by the Committee.

     3.3  An Eligible Associate shall duly file the prescribed written
enrollment form, in accordance with procedures adopted by the Committee. The
written enrollment form shall include an election to reduce the Member's
Compensation, specifying the amount of his contributions under Sections 4.1 and
5.1, and authorizing any necessary payroll deductions, an investment direction,
a beneficiary designation, and an agreement to be bound by all the terms and
conditions of the Plan and Trust and any agreement with any other funding
agency, including an insurance company, constituting a part of the Plan and
Trust Fund. If a Member does not elect to reduce his Compensation in his
application, he shall, notwithstanding any provisions of the Plan to the
contrary, be entitled solely to the benefits provided under Sections 7.3 and
8.4, if applicable.

     3.4  The Committee shall notify each Associate when he becomes eligible
for membership, shall furnish an enrollment application form, and shall take any
other necessary or appropriate action to enroll each Associate eligible to be
enrolled under Section 3. If it is determined that an Eligible Associate has not
been enrolled in the membership of the Plan due to error, such Associate may be
retroactively enrolled. The Account of an Associate who is retroactively
enrolled shall upon such enrollment, consist solely of the aggregate amount of
contributions which would have been allocated to his Account had he been
enrolled when first eligible, which shall be paid within the time and upon the
conditions prescribed by the Committee under rules of uniform applicability to
all such Associates.

                                      -15-
<PAGE>
 
         3.5 The membership of a Member shall cease upon payment to the Member
of the entire balance in his Account or upon the Member's death prior to such
payment.

         3.6 If a Member who terminates Service and incurs a Break in Service
shall again become an Associate, he shall become eligible for membership in the
Plan as of the first day of the month coincident with or next following the date
he again became an Eligible Associate.

         3.7 The Committee shall establish and maintain or cause to be
established and maintained in respect to each Member an Account showing his
interest under the Plan and in the Trust Fund (including separate accounts
showing his respective interests, if any, in each of the Investment Funds) with
respect to (a) pre-tax contributions made under Section 4.1, (b) after-tax
contributions made under Section 4.1, (c) contributions made under Sections
5.1(a) and 5.1(c), (d) contributions made under Sections 6.1 and 6.2, (e) all
amounts transferred to the Plan pursuant to Sections 7 and 8 and (f) all amounts
contributed to the Plan prior to the Effective Date and all other relevant data
pertaining thereto. Each Member shall be furnished with a written statement of
his Account at least annually and upon any distribution to him. In maintaining
the Accounts under the Plan or causing them to be maintained, the Committee can
conclusively rely on the valuations of the Trust Fund in accordance with the
Plan and the terms of the Trust.

         3.8 The establishment and maintenance of, or allocations and credits
to, the Account of any Member shall not vest in any Member any right, title or
interest in and to any Plan assets or benefits except at the time or times and
upon the terms and conditions and to the extent expressly set forth in the Plan
and in accordance with the terms of the Trust.

                                      -16-
<PAGE>
 
                    SECTION 4  REQUIRED BASIC CONTRIBUTIONS

         4.1 Each Member other than a Member working at Electric Ave. is
required to contribute an amount equal to three percent of his Compensation.
Commencing on or after January 1, 1989, these required Basic Contributions shall
be made on an after-tax basis. Prior to January 1, 1989, required Basic
Contributions were made on a salary-reduction basis. No Member working at
Electric Ave. is permitted to make Basic Contributions. Notwithstanding the
foregoing, with respect to periods beginning on or after July 1, 1997, each 
Full-Time Associate who is not a Temporary Associate, who is not employed by
Electric Ave., Signature or Lechmere and who has not yet met the eligibility
requirements of Section 3.1(b) may contribute an amount equal to not less than
nor more than three percent of his Compensation on an after-tax basis.

                                      -17-
<PAGE>
 
                 SECTION 5  PRE-TAX SUPPLEMENTAL CONTRIBUTIONS
                   AND AFTER-TAX SUPPLEMENTAL CONTRIBUTIONS

         5.1 (a) A Member may elect to reduce his Compensation by an amount not
         less than one percent and not more than 10% of such Compensation for
         such Plan Year in any whole percentage in accordance with procedures
         adopted by the Committee, which procedures may include limitations on
         the elections of Highly Compensated Associates, and the Employer shall
         contribute such amount to the Plan on behalf of the Member as a Pre-Tax
         Supplemental Contribution. Notwithstanding the foregoing, with respect
         to periods beginning on or after July 1, 1997, each Full-Time Associate
         who is not a Temporary Associate, who is not employed by either
         Electric Ave., Signature or Lechmere and who has not yet met the
         eligibility requirements of Section 3.1(b) and who has made Basic
         Contributions as provided in Section 4.1, may elect to reduce his
         Compensation by an amount not less than one percent and not more than
         10% of such Compensation for such Plan Year in any whole percentage in
         accordance with procedures adopted by the Committee, which procedures
         may include limitations on the elections of Highly Compensated
         Associates, and the Employer shall contribute such amount to the Plan
         on behalf of the Associate as a Pre-Tax Supplemental Contribution.
         Notwithstanding the foregoing, the Committee may amend or revoke a
         Member's election to reduce his Compensation if such revocation or
         amendment is necessary to ensure that a Member's contributions for any
         Plan Year will not exceed the limitations of Section 415 of the Code,
         to ensure that the discrimination tests of Section 401(k) of the Code
         are met for such Plan Year, to ensure that no more than $7,000, as
         adjusted for increases in the cost of living in accordance with Section
         402(g)(5) of the Code, is deferred by any Member for any calendar year,
         or, to ensure that the Company contributions for the Plan Year do not
         exceed the amount deductible by the Company with respect to such year
         for federal income tax purposes under section 404(a)(3)(A) of the Code.
         In the event that the aggregate amount of Pre-Tax Supplemental
         Contributions for a Member exceeds the limitation of Section 402(g)(5)
         of the Code, the amount of such excess ("excess deferrals"), increased

                                      -18-
<PAGE>
 
         by any income and decreased by any losses attributable thereto, shall
         be refunded to the Member no later than the April 15th of the calendar
         year following the calendar year for which the Pre-Tax Supplemental
         Contributions were made. If a Member also participates, in any calendar
         year, in any other plans subject to the limitations set forth in
         Section 402(g) of the Code and has made excess deferrals under this
         Plan when combined with the other plans subject to such limits, to the
         extent the Member, in writing submitted to the Committee no later than
         the March 1 of the Plan Year following the Plan Year for which the Pre-
         Tax Supplemental Contributions were made, designates any Pre-Tax
         Supplemental Contributions under this Plan as excess deferrals, the
         amount of such designated excess, increased by any income and decreased
         by any losses attributable thereto, shall be refunded to the Member no
         later than the April 15th of the calendar year following the calendar
         year for which the Pre-Tax Supplemental Contributions were made.

                           (b)(i) Effective January 1, 1997, notwithstanding any
                  other provision of this Section 5.1, the actual deferral
                  percentage for the Plan Year for Highly Compensated Associates
                  who are eligible to participate in the Plan shall not exceed
                  the greater of the following actual deferral percentage tests:
                  (A) the actual deferral percentage for the preceding Plan Year
                  of those Eligible Associates who are not Highly Compensated
                  Associates multiplied by 1.25; or (B) the actual deferral
                  percentage for the preceding Plan Year of those Eligible
                  Associates who are not Highly Compensated Associates
                  multiplied by two, provided that the actual deferral
                  percentage for Highly Compensated Associates does not exceed
                  the actual deferral percentage in the preceding Plan Year for
                  such other Eligible Associates who are not Highly Compensated
                  by more than two percent. For purposes of this Section 5.1,
                  the "actual deferral percentage" for the applicable Plan Year
                  means, for each specified group of Associates, the average of
                  the actual deferral ratios (calculated separately for each
                  Associate in such group) of (A) the amount of contributions
                  made to the Member's Pre-Tax Supplemental Contribution Account
                  for the applicable Plan Year, to (B) the amount of the
                  Member's compensation (as defined in Section 414(s) of the
                  Code) for the applicable Plan Year. For purposes of this
                  Section 5.1, the "applicable Plan Year" with respect to Highly
                  Compensated Associates is the current Plan Year and the
                  "applicable Plan Year" with respect to Eligible Associates who
                  are not Highly Compensated Associates is the preceding Plan
                  Year. The Committee may elect to apply the current Plan Year
                  as the "applicable Plan Year" with respect to Eligible
                  Associates who are not Highly Compensated Associates; however,
                  any such election may not be changed except as provided by the
                  Secretary of the Treasury. An Eligible Associate's actual
                  deferral percentage shall be zero if no Pre-Tax Supplemental
                  Contribution is made on his behalf for such applicable Plan
                  Year. In calculating the actual deferral percentage for a Plan
                  Year, Pre-Tax Supplemental Contributions shall be taken into
                  account only if they are allocated to a Member's Account
                  within such applicable Plan Year.

                                      -19-
<PAGE>
 
                           (ii)  The Committee shall determine as of the end of
                  the Plan Year, and at such time or times in its discretion,
                  whether one of the actual deferral percentage tests specified
                  in Subsection 5.1(b)(i) is satisfied for such Plan Year and
                  shall maintain records sufficient to demonstrate satisfaction
                  of such actual deferral percentage tests. This determination
                  shall be made after first determining the treatment of excess
                  deferrals within the meaning of Section 402(g) of the Code
                  under Section 5.1(a). In the event that neither of such actual
                  deferral percentage tests is satisfied, the Committee shall,
                  to the extent permissible under the Code and the Regulations,
                  and to the extent any such recharacterization would not cause
                  a violation of Section 6.3(a), if the Member so elects,
                  recharacterize such excess contributions as After-Tax
                  Supplemental Contributions, in the manner described in
                  Subsection 5.1(b)(iii) or, to the extent such
                  recharacterization is not possible or the Member does not so
                  elect, refund the excess contributions in the manner described
                  in Subsection 5.1(b)(iv). For purposes of this Section 5.1,
                  "excess contributions" means, with respect to any Plan Year,
                  the excess of the aggregate amount of Pre-Tax Supplemental
                  Contributions (and any earnings and losses allocable thereto)
                  made to the Pre-Tax Supplemental Contribution Accounts of
                  Highly Compensated Associates for such Plan Year, over the
                  maximum amount of such contributions that could be made to the
                  Pre-Tax Supplemental Contribution Accounts of such Members
                  without violating the requirements of Subsection 5.1(b)(i),
                  determined by reducing Pre-Tax Supplemental Contributions made
                  on behalf of Highly Compensated Associates in order of the
                  actual deferral percentages beginning with the highest of such
                  percentages.

                           (iii) To the extent provided in Subsection
                  5.1(b)(ii), in accordance with the Code and the Regulations,
                  if a Highly Compensated Associate so elects in writing no
                  later than the March 1 following the Plan Year for which such
                  excess contributions were made, the Committee may
                  recharacterize excess contributions of such Member for a Plan
                  Year as After-Tax Supplemental Contributions in order to
                  satisfy the requirements of Subsection 5.1(b)(i), in which
                  event the amount of excess contributions so recharacterized
                  shall, to the extent permitted by the Code and the
                  Regulations, be treated as having been refunded to the Member
                  and then contributed by the Member to the Member's After-Tax
                  Supplemental Contribution Account. Any excess contributions
                  not so recharacterized shall be distributed before the end of
                  the Plan Year immediately following the Plan Year for which
                  such excess contributions were made.

                           (iv)  If a Highly Compensated Associate does not
                  elect recharacterization under Section 5.1(b)(iii), or, if
                  required in order to comply with the provisions of Subsection
                  5.1(b)(i) and the Code, the Committee shall refund excess
                  contributions for a Plan Year to the affected Highly
                  Compensated Associate. The distribution of such excess
                  contributions shall be made to Highly Compensated Associates
                  to the extent practicable before the 15th day of the third
                  month immediately following the Plan Year for which such
                  excess contributions were made, but in no event later than the
                  end of the Plan Year following such Plan Year. Any such
                  distribution shall be made to each Highly Compensated
                  Associate on the basis of the respective portions of such
                  amounts attributable to each such Highly Compensated
                  Associate. Notwithstanding the foregoing, for purposes of
                  determining whether the Plan satisfies the actual deferral
                  percentage test, the Plan may be treated as comprising
                  separate plans as described in Sections 1.410(b)-6(b)(3) and
                  1.410(b)-7(c)(3) of the Regulations.

                                      -20-
<PAGE>
 
                           (v)  Effective January 1, 1997, excess contributions
                  are allocated to the Highly Compensated Associate with the
                  largest amounts of Pre-Tax Supplemental Contributions taken
                  into account in calculating the actual deferral percentage
                  test for the year in which the excess arose, beginning with
                  the Highly Compensated Associates with the largest amount of
                  Pre-Tax Supplemental Contributions and continuing in
                  descending order until all the excess contributions have been
                  allocated. For purposes of the preceding sentence, the
                  "largest amount" is determined after distribution of any
                  excess contributions.

                           (vi) For purposes of determining whether the Plan
                  satisfies the actual deferral percentage test, all salary
                  reduction contributions that are made under two or more plans
                  that are aggregated for purposes of Section 401(a)(4) or
                  410(b) of the Code (other than Section 401(b)(2)(A)(ii) of the
                  Code) shall be treated as made under a single plan and, if two
                  or more plans are permissively aggregated for purposes of
                  Section 401(k) of the Code, the aggregated plans must also
                  satisfy Section 401(a)(4) or 410(b) of the Code as though they
                  were a single plan; provided, however, that plans may be
                  aggregated to satisfy the actual deferral percentage test only
                  if they have the same plan year. In calculating the actual
                  deferral percentage, a Highly Compensated Associate's actual
                  deferral ratio shall be determined by treating all cash or
                  deferred arrangements of the Company or any Affiliate under
                  which the Highly Compensated Associate is eligible to
                  participate (other than those which may not be permissively
                  aggregated) as a single arrangement. Notwithstanding the
                  foregoing, for purposes of determining whether the Plan
                  satisfies the actual deferral percentage test, the Plan may be
                  treated as comprising separate plans as described in Sections
                  1.410(b)-6(b)(3) and 1.410(b)-7(c)(3) of the Regulations.

                  (c) On or before June 30, 1994, subject to Subsections 5.1(d)
         and 6.3(a), a Member could have elected to make After-Tax Supplemental
         Contributions to the Plan of an amount of up to 10% of his Compensation
         in any whole percentage through payroll deductions, in accordance with
         procedures adopted by the Committee. Effective July 1, 1994, After-Tax
         Supplemental Contributions may not be made to the Plan.

                  (d) The aggregate percentage of the Pre-Tax Supplemental
         Contribution made on behalf of a Member and such Member's After-Tax
         Supplemental Contribution must not exceed 10% of the Member's
         Compensation.

         5.2      A Member may temporarily suspend the reduction of his
Compensation and any payroll deduction contributions elected under Section 5.1,
as of the first day of any month without terminating his membership in the Plan,
by giving at least 30 days' prior written notice thereof to the Committee. A
Member may resume reduction of his Compensation and any payroll deduction
contributions under Section 5.1 as the

                                      -21-
<PAGE>
 
first day of any month following the date of such suspension and must give the
Committee prior written notice of any subsequent election under Section 5.1,
specifying the first day of the month in which his Compensation is to be reduced
and any deduction to be made from his paycheck. A Member may not temporarily
suspend the reduction of his Compensation and any payroll deduction
contributions more often than once in any Plan Year.

                                      -22-
<PAGE>
 
                       SECTION 6  COMPANY CONTRIBUTIONS

         6.1   (a) Effective July 1, 1997, the Company shall make no Matching
         Contributions with respect to a Member's Basic Contribution unless such
         Member is employed by either Signature or Lechmere, in which case the
         Company shall make a Matching Contribution equal to 25% of the amount
         of the Basic Contributions made by the Member pursuant to Section 4.1.
         No contributions shall be made by the Company to Members employed by
         either Signature or Lechmere with respect to any such Member's
         contributions pursuant to Section 5.

               (b) Effective July 1, 1997, the Company shall contribute in
         respect of each pay period on behalf of each of the Eligible Associates
         who are Members and who are not employed by either Electric Ave.,
         Signature or Lechmere with respect to Supplemental Matching
         Contributions, a certain percentage, as specified in the chart below,
         of the amount of the Pre-Tax Supplemental Contributions made by such
         Member pursuant to Section 5.1(a) (with no such Member's Pre-Tax
         Supplemental Contributions in excess of three percent of such Member's
         Compensation counted for this purpose) as Supplemental Matching
         Contributions.

         Supplemental Matching Contribution on First Three Percent of
                      Pre-Tax Supplemental Contributions
                      ----------------------------------

<TABLE> 
<CAPTION> 
                                                           Percent of Eligible        
                                                           Pre-Tax Supplemental       
               Member's Age as of each January 1           Contributions Matched      
               ---------------------------------           ---------------------      
               <S>                                         <C> 
                        Under 40 years                               5%               
                        40-44 years                                 10%               
                        45-49 years                                 15%               
                        50-54 years                                 30%               
                        55-59 years                                 40%               
                        60 years and over                           50%                
</TABLE> 

         For purposes of determining a Member's Supplemental Matching
         Contribution, a Member's age on January 1 will be his age on his next
         birthday if such birthday is on or before June 30, or his age on his
         last birthday if his next birthday is on or after July 1.

                                      -23-
<PAGE>
 
         6.2   (a) In addition to contributions under Sections 4.1 and 5.1, the
         Company may make Profit Sharing Contributions, as determined by the
         Board of Directors in its sole discretion. Any such Profit Sharing
         Contributions may not exceed the maximum amount permitted for
         deductions under the Code. The Board of Directors may designate all or
         a portion of the Profit Sharing Contributions as Electric Ave. Profit
         Sharing Contributions or as allocable among Members employed by
         particular Participating Companies or divisions.

               (b) All Profit Sharing Contributions under Section 6.2(a), other
         than Electric Ave. Profit Sharing Contributions, shall be allocated
         among the Eligible Associates who are Members in Service of the
         applicable Participating Company or division as of the last day of the
         Plan Year other than those Members working at Electric Ave. (and if
         necessary for the Plan to meet the requirements of Section 410(b) of
         the Code, such additional Members with the highest number of Hours of
         Service other than those Members working at Electric Ave. with the
         number of Members as required to meet the requirements of Section
         410(b) of the Code, whether or not in Service as of the last day of the
         Plan Year) in the proportion that the Basic Contributions made on
         behalf of or by each such Member pursuant to Section 4.1 bears to the
         total of the contributions made pursuant to Section 4.1 for such Plan
         Year on behalf of or by all such Members in Service of the applicable
         Participating Company or division as of the last day of the Plan Year
         other than those Members working at Electric Ave. All Electric Ave.
         Profit Sharing Contributions under Section 6.2(a) shall be allocated
         among the Eligible Associates who are Members working at Electric Ave.
         and in Service as of the last day of the Plan Year (and if necessary
         for the Plan to meet the requirements of Section 410(b) of the Code,
         such additional Members working at Electric Ave. and with the highest
         number of Hours of Service with the number of Members as required to
         meet the requirements of Section 410(b) of the Code, whether or not in
         Service as of the last day of the Plan Year) in the proportion that the
         Pre-Tax Supplemental Contributions made on behalf of or by each such
         Member working at Electric Ave. pursuant to

                                      -24-
<PAGE>
 
         Section 5.1 up to three percent of such Member's Compensation bears to
         the total of the Pre-Tax Supplemental Contributions (with no Member's
         Pre-Tax Supplemental Contributions in excess of three percent of such
         Member's Compensation counted for this purpose) made on behalf of or by
         all such Members working at Electric Ave. in Service as of the last day
         of the Plan Year pursuant to Section 5.1 for such Plan Year.

               6.3 (a) Effective January 1, 1997, notwithstanding any other
         provision of this Section 6, the average contribution percentage for
         the Plan Year for Highly Compensated Associates shall not exceed the
         greater of the following average contribution percentage tests: (i) the
         average contribution percentage for the preceding Plan Year of those
         Eligible Associates who are not Highly Compensated Associates
         multiplied by 1.25; or (ii) the average contribution percentage for the
         preceding Plan Year of those Eligible Associates who are not Highly
         Compensated Associates multiplied by two, provided that the average
         contribution percentage for Highly Compensated Associates does not
         exceed the average contribution percentage in the preceding Plan Year
         for such other Eligible Associates who are not Highly Compensated by
         more than two percent. For purposes of this Section 6.3, the "average
         contribution percentage" for the applicable Plan Year means, for each
         specified group of Associates, the average of the actual contribution
         ratios (calculated separately for each Associate in such group) of (i)
         the sum of (A) Matching Contributions and Profit Sharing Contributions
         described in Sections 6.1 and 6.2, respectively credited to his
         Employer Contribution Account for the applicable Plan Year, (B) after-
         tax Basic Contributions credited to his Basic Contribution Account for
         the applicable Plan Year, (C) After-Tax Supplemental Contributions
         credited to his After-Tax Supplemental Contribution Account for the
         applicable Plan Year and (D) if the Committee so elects in accordance
         with and to the extent permitted by the Regulations, Pre-Tax
         Supplemental Contributions credited to his Pre-Tax Supplemental for the
         applicable Plan Year, to (ii) the amount of the Member's compensation
         (as defined in Section 414(s) of the Code) for the

                                      -25-
<PAGE>
 
         applicable Plan Year. For purposes of this Section 6.3, the "applicable
         Plan Year with respect to Highly Compensated Associates is the current
         Plan Year and the "applicable Plan Year" with respect to Eligible
         Associates who are not Highly Compensated Associates is the preceding
         Plan Year. The Committee may elect to apply the current Plan Year as
         the "applicable Plan Year" with respect to Eligible Associates who are
         not Highly Compensated Associates; however, any such election may not
         be changed except as provided by the Secretary of the Treasury. An
         Eligible Associate's average contribution percentage shall be zero if
         no contributions are made on his behalf for such applicable Plan Year.
         In calculating the average contribution percentage for a Plan Year,
         contributions shall be taken into account only if they are allocated to
         a Member's Account within such applicable Plan Year. For this purpose,
         contributions are considered allocated as of a date within an
         applicable Plan Year if the allocation is not contingent on
         participation or performance of services after such date and the
         contributions are actually paid to the Trust no later than 12 months
         after the close of the applicable Plan Year to which the contributions
         relate.

               (b) For purposes of determining whether the Plan satisfies the
         average contribution percentage test, all employee and employer
         matching contributions that are made under two or more plans that are
         aggregated for purposes of Section 401(a) or 410(b) of the Code (other
         than Section 410(b)(2)(A)(ii) of the Code) shall be treated as made
         under a single plan and, if two or more such plans are permissively
         aggregated for purposes of Section 401(m) of the Code, the aggregated
         plans must also satisfy Sections 401(a)(4) and 410(b) of the Code as
         though they were a single plan; provided, however, that plans may be
         aggregated to satisfy the average contribution percentage test only if
         they have the same plan year. For purposes of calculating the average
         contribution percentage, the actual contribution ratio of a Highly
         Compensated Associate shall be determined by treating all plans of the
         Company and may Affiliate under which the Highly Compensated Associate
         participates as a single plan. Notwithstanding the foregoing, for
         purposes of determining whether the

                                      -26-
<PAGE>
 
     Plan satisfies the average contribution percentage test, the Plan may be
     treated as comprising separate plans as described in sections 1.410(b)-
     6(b)(3) and 1.410(b)-7(c)(3) of the Regulations.

          (c)  The Committee shall determine as of the end of the Plan Year, and
     at such time or times in its discretion, whether one of the average
     contribution percentage tests specified in Subsection 6.3(a) is satisfied
     for such Plan Year. This determination shall be made after first
     determining the treatment of excess deferrals within the meaning of Section
     402(g) of the Code under Section 5.1(a) and then determining the treatment
     of excess contributions under Section 5.1(b). In the event that neither of
     the average contribution percentage tests is satisfied, the Committee shall
     refund or forfeit the excess contributions in the manner described in
     Subsection 6.3(e). For purposes of this Section 6.3, "excess aggregate
     contributions" means, with respect to any Plan Year and with respect to any
     Member, the excess of the aggregate amount of contributions (and any
     earnings and losses allocable thereto) made to (i) the Matching
     Contribution Account, (ii) the Profit Sharing Contribution Account, (iii)
     the after-tax Basic Contribution Account, (iv) After-Tax Supplemental
     Contribution Account and (v) the Pre-Tax Supplemental Contribution Account
     (if the Regulations permit and the Committee elects to take into account
     Pre-Tax Supplemental Contributions when calculating the average
     contribution percentage) of Highly Compensated Associates for such Plan
     Year, over the maximum amount of such contributions that could be made to
     the Matching Contribution Account, Profit Sharing Contribution Account,
     after-tax Basic Contribution Account, After-Tax Supplemental Contribution
     Account and Pre-Tax Supplemental Contribution Account of such Members
     without violating the requirements of Subsection 6.3. Effective January 1,
     1997, excess aggregate contributions are allocated to the Highly
     Compensated Associates with the largest amounts of aggregate contributions
     taken into account in calculating the actual contribution percentage test
     for the year in which the excess arose, beginning with the Highly
     Compensated Associates with the largest amounts of excess aggregate
     contributions and continuing in descending order until all the 

                                      -27-
<PAGE>
 
         excess aggregate contributions have been allocated. For purposes of the
         preceding sentence the "largest amount" is determined after
         distribution of any excess aggregate contributions.

                  (d) If the Committee is required to refund excess aggregate
         contributions for any Highly Compensated Associate for a Plan Year in
         order to satisfy the requirements of Subsection 6.3(a), then the refund
         of such excess aggregate contributions shall be made with respect to
         such Highly Compensated Associates to the extent practicable before the
         15th day of the third month immediately following the Plan Year for
         which such excess aggregate contributions were made, but in no event
         later than the end of the Plan Year following such Plan Year. For each
         of such Associates, the amounts so refunded shall be made in the
         following order of priority (i) by distributing amounts contributed to
         the After-Tax Supplemental Contribution Account, and earnings thereon;
         (ii) by distributing amounts contributed to the Pre-Tax Supplemental
         Account (to the extent such amounts are included in the average
         contribution percentage), and earnings thereon; (iii) by distributing
         amounts contributed to the after-tax Basic Contribution Account, and
         earnings thereon and Matching Contributions related thereto; (iv) by
         distributing amounts contributed to the Matching Contribution Account,
         and earnings thereon; and (v) by distributing amounts contributed to
         the Profit Sharing Contribution Account and earnings thereon.

                  (e) Notwithstanding any other provision of the Plan, the sum
         of the actual deferral percentage determined in accordance with
         Subsection 5.1(b)(i) of those Highly Compensated Associates and the
         average contribution percentage determined in accordance with Section
         6.3(a) of those Highly Compensated Associates shall not exceed the
         Aggregate Limit (as defined below). The actual deferral percentage and
         the average contribution percentage of the Highly Compensated
         Associates are determined after any corrections required to meet the
         actual deferral percentage and average contribution percentage tests
         are made.

                                      -28-
<PAGE>
 
                  (f) For purposes of Section 6.3(d) above, "Aggregate Limit"
         for a Plan Year means the greater of: (i) the sum of (A) 1.25 times the
         greater of the actual deferral percentage of those non-Highly
         Compensated Associates eligible to participate in the Plan ("eligible
         NHCAs") for the preceding Plan Year or the average contribution
         percentage of the eligible NHCAs for the preceding Plan Year, and (B)
         two percentage points plus the lesser of the actual deferral percentage
         of the eligible NHCAs for the preceding Plan Year or the average
         contribution percentage of the eligible NHCAs for the preceding Plan
         Year (in no event, however, may this amount exceed twice the lesser of
         the actual deferral percentage of the eligible NHCAs for the preceding
         Plan Year or the average contribution percentage of the eligible NHCAs
         for the preceding Plan Year); or (ii) the sum of (A) 125% of the lesser
         of the actual deferral percentage of the eligible NHCAs for the
         preceding Plan Year or the average contribution percentage of the
         eligible NHCAs for the preceding Plan Year, and (B) two percentage
         points plus the greater of the actual deferral percentage of the
         eligible NHCAs for the preceding Plan Year or the average contribution
         percentage of the eligible NHCAs for the preceding Plan Year. In no
         event, however, may this amount exceed twice the greater of the actual
         deferral percentage of the eligible NHCAs for the preceding Plan Year
         or the average contribution percentage of the eligible NHCAs for the
         preceding Plan Year.

                  (g) The Committee shall determine as of the end of the Plan
         Year, and at such time or times in its discretion, whether the
         Aggregate Limit has been exceeded. In the event that the Aggregate
         Limit is exceeded, the average contribution percentage of the eligible
         Highly Compensated Associates shall be reduced in the same manner as
         described in Sections 6.3(c)-(d).

         6.4 The Company's contributions under Sections 5.1, 6.1 and 6.2, and
any Member's contributions under Sections 4.1 and 5.1, if any, shall be paid
directly to the Trustee under the Trust during the month in respect of which
they are made, or during the month next following, as the Committee may
determine, provided that the total amount of the Company's contributions under
the Plan for any taxable year 

                                      -29-
<PAGE>
 
shall be paid in full on or before such date as the federal income tax laws
applicable to such payment require the payment to be made in order to permit
deduction of such payment for such taxable year. Notwithstanding anything herein
to the contrary, effective February 3, 1997, any Pre-Tax Supplemental
Contributions (or any other pre-tax contributions) shall be made as soon as such
amounts can reasonably be segregated from the general assets of the Company and
each Participating Company, provided that in no event shall such contributions
be made later than the 15th business day of the month immediately following the
month in which such amounts would otherwise have been payable to the Member in
cash.

         6.5 The Company's contributions made for a taxable year pursuant to
Sections 5.1, 6.1 and 6.2, if any, and any Member's contributions under Sections
4.1 and 5.1, shall be paid directly by the Company to the Trustee in cash, or,
at the option of the Company, in whole or in part in other property acceptable
to the Trustee.

         6.6 Amounts forfeited pursuant to Section 11 shall be used to reduce
the Company's contribution obligations pursuant to this Section 6. Amounts shall
be deemed forfeited pursuant to Section 11 as determined by the Committee upon
the earlier of the commencement of a distribution of the Member's nonforfeitable
interest in the Member's Account or the Member's incurrence of five consecutive
one-year Breaks in Service.

                                      -30-
<PAGE>
 
         6.7 If Basic Contributions for any Member for a Plan Year exceed the
compensation limitations of Section 401(a)(17) of the Code, such excess
contributions shall reduce the Member's obligation to make Basic Contributions
in the following year.

                                      -31-
<PAGE>
 
            SECTION 7 TRANSFER OF AMOUNTS ATTRIBUTABLE TO MEMBERS' 
               CONTRIBUTIONS AND PROFIT- SHARING PLAN BALANCES 
                      UNDER THE RETIREMENT SECURITY PLAN


         7.1 The Committee shall establish and maintain or cause to be
established and maintained, as part of a Member's Account, a Transferred
Contribution Account and a Profit-Sharing Plan Balance Account, showing the
Member's interest under the Plan and in the Trust Fund allocable to the amounts
transferred from the trust established as part of the Retirement Security Plan
and attributable to the Member's Benefit Derived from Associate Contributions
and Profit Sharing Plan Balance, if any, as determined by the Committee in its
sole discretion, and all relevant data pertaining thereto. The amount
transferred with respect to a Member's Benefit Derived from Associate
Contributions shall be credited by the Committee to the Member's Transferred
Contribution Account. The amount transferred with respect to a Member's
Profit-Sharing Plan Balance shall be credited by the Committee to the Member's
Profit-Sharing Plan Balance Account. All such transferred amounts shall be held
by the Trustee for the exclusive benefit of such Member in accordance with the
terms of the Plan, to be commingled, managed, invested and reinvested with the
other assets of the Plan. Upon such transfer, the trustees of the Retirement
Security Plan shall have no further liability whatsoever with respect to the
respective transferred amounts or the benefits which had been based thereon, and
the Member shall look solely to the Plan for any payment or other benefit in
respect of the amount so transferred.

         7.2 Except to the extent otherwise determined by the Committee with
respect to payments from a Member's Account, adjustments, charges or allocations
to the Member's Transferred Contribution Account and Profit-Sharing Plan Balance
Account shall be made by adding thereto, or deducting therefrom, as the case may
be, such proportion of any adjustments, charges or allocations as the amount
therein as of the last preceding Valuation Date bears to the total amount in the
Member's Account as of such preceding Valuation Date. In making such
adjustments, charges or allocations the Committee can conclusively rely on the
valuations of the Trust Fund by the Trustee and in accordance with the Plan and
the terms of the Trust.

                                      -32-
<PAGE>
 
         7.3 Except as otherwise provided in Section 11.5, any amount credited
to a Member's Transferred Contribution Account and Profit-Sharing Plan Balance
Account, if any, shall be paid from the Trust Fund to the Member or his
Beneficiary or Surviving Spouse at the same time and in the same manner as any
payment made in accordance with Section 12.

                                      -33-
<PAGE>
 
            SECTION 8 TRANSFER OF AMOUNTS ATTRIBUTABLE TO MEMBERS' 
                    ACCOUNT BALANCE UNDER THE LECHMERE PLAN

         8.1 Each Member who was a member of the Lechmere Plan on June 30, 1994
shall have an amount equal to his account balance under the Lechmere Plan, if
any, transferred from the trust established as part of the Lechmere Plan to the
Trust.

         8.2 The Committee shall establish and maintain or cause to be
established and maintained, as part of the Account of a Member, a Lechmere
Account, which shall provide for a separate accounting in the name of each such
Member which shall reflect all contributions of such Member during his
participation in the Lechmere Plan, all amounts contributed by a participating
employer of the Lechmere Plan on his behalf, earnings on all such contributions,
any distributions, withdrawals and any expenses charged against such
contributions (the "Lechmere Account"). The separate accounting in the name of
each Member who was a participant in the Lechmere Plan shall include a separate
accounting for pre-tax contributions, after-tax contributions, rollover
contributions and matching contributions made on behalf of such Member under the
Lechmere Plan. The amount transferred to the Trust pursuant to Section 8.1 with
respect to a Member's account balance under the Lechmere Plan shall be credited
by the Committee to the Member's Lechmere Account. All such transferred amounts
shall be held by the Trustee for the exclusive benefit of such Member in
accordance with the terms of the plan, to be commingled, managed, invested and
reinvested with the other assets of the Plan. Upon such transfer, the Member
shall look solely to the Plan for any payment or other benefit in respect of the
amount so transferred.

         8.3 Except to the extent otherwise determined by the Committee with
respect to payments from a Member's Account, adjustments, charges or allocations
to the Member's Lechmere Account shall be made by adding thereto, or deducting
therefrom, as the case may be, such proportion of any adjustments, charges or
allocations as the amount therein as of the last preceding Valuation Date bears
to the total amount in the Member's Account as of such preceding Valuation Date.
In making such adjustments or charges, the 

                                      -34-
<PAGE>
 
Committee can conclusively rely on the valuations of the Trust Fund by the
Trustee and in accordance with the Plan and the terms of the Trust.

         8.4 Except as otherwise provided in Section 11.5, any amount credited
to a Member's Lechmere Account, if any, shall be paid from the Trust Fund to the
Member or his Beneficiary or Surviving Spouse at the same time and in the same
manner as any payment made in accordance with Section 12.

                                      -35-
<PAGE>
 
SECTION 9  INVESTMENT OF CONTRIBUTIONS

         9.1 All amounts of money, securities or other property received under
the Plan, including any amounts transferred to the Plan under Sections 7 and 8,
shall be delivered to the Trustee under the Trust, to be managed, invested,
reinvested and distributed for the exclusive benefit of the Members and their
Beneficiaries in accordance with the Plan, the Trust and any agreement with an
insurance company or other financial institution constituting a part of the Plan
and Trust. The Trustee shall cause to be established and maintained six funds or
such other number of funds as the Committee shall determine, to be designated
respectively as Fund A, Fund B, Fund C, Fund D, Fund E, and Fund F, or as
otherwise designated by the Committee, for the investment of all such amounts.

         9.2 Effective for periods beginning on or after July 1, 1997, a Member
may, by making a telephonic investment direction, specify the percentage (in
multiples of five percent or such other percentage as the Committee may
determine) of such Member's Account to which the member is permitted investment
direction as described below that shall be invested in one or more of the Funds
designated by the Committee pursuant to the uniform and nondiscriminatory
procedures established by the Committee. Unless an effective investment
direction is received, all amounts with respect to which the Member is permitted
investment direction as described below shall be invested in Fund A. For periods
beginning on or after May 1, 1998, Members may direct the investment of all
amounts in the Member's Account. For periods beginning on or after July 1, 1997
and ending before May 1, 1998 Members employed by Lechmere or Signature could
direct the investment of all amounts in the Member's Account, other than amounts
in the Member's Basic Contribution Account and Transferred Contribution Account.
For periods beginning before July 1, 1997 all amounts in a Member's Basic
Contribution Account and Transferred Contribution Account were invested in such
percentages as the Committee specified, in any of the Funds.

         9.3 Effective July 1, 1997, a Member may change an investment direction
as to his Account once in each calendar month, by providing a telephonic notice
of such change in investment direction (or by such other 

                                      -36-
<PAGE>
 
method as the Committee may permit). With respect to future contributions, such
telephonic notice shall be processed in due course and will be effective as soon
as administratively feasible. With respect to a change in the investment of a
Member's existing Account balances, such change will be processed in due course
and will be effective as soon as administratively feasible.

         9.4  The Plan is intended to constitute a plan described in Section
404(c) of ERISA and Title 29 of the Code of Federal Regulations Section
2550.404c-1.

                                      -37-
<PAGE>
 
          SECTION 10  VALUATIONS AND MAINTENANCE OF MEMBERS' ACCOUNTS

         10.1 As of each Valuation Date, the Trust Fund shall be valued pursuant
to the terms of the Trust to reflect the effect of income received and accrued,
realized and unrealized profits and losses, and all other transactions of the
preceding period, but such valuation shall not include any contributions
received by the Trustee during such month. Such valuation shall be conclusive
and binding upon all persons having an interest in the Trust Fund.

         10.2 All contributions made on behalf of, or allocated to, a Member
shall be credited to his Account. The value of a Member's Account may be
determined by aggregating the value of his separate interests, if any, in each
Fund.
         10.3 (a) For the first month for which contributions are received in an
         Investment Fund under the Plan, a Unit in each Investment Fund shall be
         valued at one dollar and there shall be credited to each Member as of
         the Valuation Date in such month one Unit in each Fund for each dollar
         of the contributions made by him or on his behalf and received by the
         Trustee during such month which is invested in such Investment Fund in
         accordance with the Plan. As of each subsequent Valuation Date, the
         value of a Unit in each Investment Fund shall be determined by dividing
         (i) the sum of the cash and the fair market value of any other
         property, as determined by the Trustee in accordance with Section 10.1,
         then held in such Investment Fund, by (ii) the total number of
         outstanding Units for such Investment Fund immediately prior to such
         Valuation Date.

              (b) As soon as practicable after the end of each month
         following the first month during which contributions are received by
         the Trustee, there shall be credited to each Member a number of Units
         (or fractions thereof) in each such Investment Fund calculated by
         dividing (i) the portion of the contributions made by him or on his
         behalf and received by the Trustee for such month which is invested in
         such Investment Fund in accordance with the Plan, by (ii) the value of
         a Unit in such Investment Fund as of the Valuation Date in such month.
         A Member's Account at any time shall reflect all Units credited

                                      -38-
<PAGE>
 
         thereto as provided in the foregoing provisions of Section 10 less all
         Units the value of which has been previously withdrawn by him from such
         Account.

         10.4  The expenses of administering the Plan, including (a) the fees
and expenses of any Associate and of the Trustee for the performance of their
duties under the Plan and Trust, (b) the expenses incurred by the members of the
Committee in the performance of their duties under the Plan (including
reasonable compensation for any legal counsel, certified public accountants,
consultants, and agents and cost of services rendered in respect of the Plan),
and (c) all other proper charges and disbursements of the Trustee or the members
of the Committee (including settlements of claims or legal actions approved by
counsel to the Plan) may be paid out of the Trust Fund, and allocated to and
deducted from the Accounts of Members by the Committee in accordance with the
provisions of Section 10.3 above, if the Company does not pay such expenses
directly.

         10.5  Brokerage fees, transfer taxes and other expenses incident to the
purchase or sale of securities by the Trustee shall be deemed to be part of the
cost of such securities, or deducted in computing the proceeds therefrom, as the
case may be. Taxes, if any, of any and all kinds whatsoever, which are levied or
assessed on any assets held or income received by the Trustee shall be allocated
to and deducted from the Accounts of Members by the Committee in accordance with
the provisions of Section 10.3 above.

         10.6  Notwithstanding anything herein to the contrary, the Committee,
in its sole discretion in connection with the Company's acquisition of
businesses, may authorize an Associate to transfer to the Trust, to be held as
part of the Associate's Rollover Contribution Account, cash received by the
Associate in one or more distributions together constituting, under the Code, an
Eligible Rollover Distribution from or under another qualified trust or
qualified plan. The Committee may, in its sole discretion, develop procedures
for accepting Eligible Rollover Distributions to the Plan. The interest of an
Associate with respect to a Rollover Contribution to the Trust, together with
earnings thereon, shall be fully vested, and the assets attributable thereto
shall be held, invested and distributed pursuant to the terms of the Plan
governing the Associate's After-Tax Supplemental

                                      -39-
<PAGE>
 
Contribution Account; provided, however, that the interest of an Associate with
respect to Rollover Contributions shall be segregated for accounting and
reporting purposes.

                                      -40-
<PAGE>
 
                     SECTION 11 ELIGIBILITY FOR BENEFITS

         11.1  At all times, each Eligible Associate who became a Member before
July 1, 1994 shall have a nonforfeitable interest in all amounts credited to his
Account.

         11.2  (a) Each Eligible Associate who becomes a Member of the Plan
         after June 30, 1994 shall have a nonforfeitable interest in amounts
         credited to his Matching Contribution Account, Profit Sharing
         Contribution Account, and, with respect to periods beginning on or
         after July 1, 1997, his Supplemental Matching Contribution Account if
         applicable, in accordance with the following schedule:

                   Years of                                      Vested
                   Service                                     Percentage
                   -------                                     -----------

                   less than 3                                      0%
                   3 or more                                      100%

               (b)  Notwithstanding the foregoing, a Member who is employed by
         the Company on his (i) normal retirement date, as determined under the
         Retirement Security Plan, (ii) death, or (iii) disability, shall have a
         nonforfeitable interest in this Matching Contribution Account, Profit
         Sharing Contribution Account and, with respect to periods beginning on
         or after July 1, 1997, his Supplemental Matching Contribution Account,
         if applicable, as of such normal retirement date, death or disability.
         Furthermore, an Associate who terminates in his third year of
         employment shall have a nonforfeitable interest in his Matching
         Contribution Account, Profit Sharing Contribution Account, and, with
         respect to periods beginning on or after July 1, 1997, his Supplemental
         Matching Contribution Account, if applicable, if he performs two Years
         of Service and at least five months of Service in his third (final)
         year of employment. If a Member has received a distribution of less
         than 100% of the Member's Account and is subsequently rehired before
         incurring five consecutive one year Breaks in Service, he may repay the
         amount of the distribution to the Trust before the earlier of five
         years after the first day the Associate is rehired, or the close of the
         first period of five consecutive one year Breaks in Service commencing
         after the distribution. If upon termination of a Member's Service the
         balance of his nonforfeitable Account 

                                      -41-
<PAGE>
 
         is zero, the Member shall be deemed to have received a distribution of
         such nonforfeitable Account upon termination of his Service. If a
         Member is deemed to have received a distribution, he may notify the
         Committee of his return to Service and his desire to have his account
         reinstated before the close of the first period of five consecutive one
         year Breaks in Service commencing after the deemed distribution
         ("Committee Notification"). Upon such repayment or Committee
         Notification, the Member shall be credited on the vesting schedule with
         all previous Years of Service, and the Member's Account will be
         credited with the amount of his Account which was not vested at the
         time of the termination of his Service. No additional Years of Service
         shall be credited, however, until the Member shall have completed 1,000
         Hours of Service in any Plan Year ending after re-employment by the
         Company.

               The amount credited to the Account of a rehired Associate upon
         repayment of a distribution or Committee Notification will be restored
         from the following sources, to the extent necessary, in the order
         listed:

                    (i)   Forfeitures for the Plan Year;

                    (ii)  Company contributions;

                    (iii) Trust earnings or gains.

               In the event that the amount derived from the foregoing sources
         shall not be sufficient to restore the amount credited to the Member's
         Account upon repayment or Committee Notification, the Company shall be
         obligated to make an additional contribution to the Trust to the extent
         required.

               A Member who has received a distribution or is deemed to have
         received a distribution of his vested interest and either elects not to
         make repayment of such amount or elects not to perform Committee
         Notification and who has incurred five consecutive one year Breaks in
         Service, shall not be entitled to an increase in the Member's pre-Break
         in Service credit based upon any post-Break in Service credit, but in
         determining the Member's post-Break in Service credit all of his
         pre-Break in Service and post-Break in Service credit shall be
         aggregated. If a termination of a Member's Service shall occur prior 

                                      -42-
<PAGE>
 
         to the vesting of any of the Member's interest in his Account and if he
         is subsequently rehired, his pre-Break in Service and post-Break in
         Service credit will be aggregated if the period of his absence does not
         exceed the greater of five consecutive one year Breaks in Service or
         his Years of Service with the Company. If the Member's period of
         absence does exceed the greater of five consecutive one year Breaks in
         Service or his Years of Service with the Company, his pre-Break in
         Service credit shall not be considered in determining his vested
         interest.

               (c)  Notwithstanding anything herein to the contrary, if the
         Plan's vesting schedule is amended, or if the Plan is amended in any
         way that directly or indirectly affects the computation of the Member's
         nonforfeitable percentage or if the Plan is deemed amended by an
         automatic change to or from a top-heavy vesting schedule, each Member
         with at least three Years of Service with the Company may elect, within
         a reasonable period after the adoption of the amendment or change, to
         have such Member's vested interest in such Matching Contribution
         Account, Profit Sharing Contribution Account and with respect to
         periods beginning on or after July 1, 1997, his supplemental Matching
         Contribution Account, if applicable, computed under the Plan without
         regard to such amendment or change.

               The period during which the election may be made shall commence
         with the date the amendment is adopted or deemed to be made and shall
         end on the latest of:

                    (i)   60 days after the amendment is adopted;

                    (ii)  60 days after the amendment becomes effective; or

                    (iii) 60 days after the Member is issued written notice of
               the amendment by the Company or Plan Administrator.

         11.3  Notwithstanding the foregoing, the nonforfeitable interest of a
Member who was employed by the Company on or before July 1, 1994 in amounts
credited to his Matching Contribution Account and Profit Sharing Contribution
Account shall not be less than his vested percentage determined as of June 30,
1994. In addition, notwithstanding the foregoing, a Member who was a participant
in the Lechmere Plan shall have a nonforfeitable interest in the portion of his
Lechmere Account attributable to matching contributions under the 

                                      -43-
<PAGE>
 
Lechmere Plan in accordance with the following schedule to the extent that the
following schedule results in a greater nonforfeitable interest in such
contributions:

                           Years                              Vested
                           of Service                         Percentage
                           ----------                         ----------

                           Less than 1                           0%
                           1 but less than 2                    20%
                           2 but less than 3                    40%
                           3 or more                           100%

         11.4  Subject to Section 12.2, after termination of a Member's Service
payment of the Member's vested Account shall be made by one of the methods of
distribution described and at the time specified in Section 12 below.

         11.5  If a former Member dies before payment of the full value of his
vested Account from the Trust Fund, an amount equal to the value of the unpaid
portion thereof shall be paid to his Beneficiary from the Trust Fund. Such
payment shall be made by one of the methods of distribution described and at the
time specified in Section 12 below.

         11.6  (a) A Member may, while in Service, withdraw out of the Trust
         Fund amounts permitted by the Committee, pursuant to Subsections (b),
         (c) or (f) below, under rules uniformly applicable to all Members
         similarly situated, by giving prior notice to the Committee and the
         Participating Company that employs him, and in the case of each such
         withdrawal, which shall be not less than 30 days following the date
         such notice is given to the Committee, as of which the withdrawal is to
         be made, and explaining the reason for such withdrawal.

               (b)  Profit Sharing Plan Balance Account. Subject to Subsection
         (a) above, the Committee may permit a Member to withdraw all or part of
         the amount credited to his Profit-Sharing Plan Balance Account for any
         reason listed in Subsection (d) below or for any of the following
         reasons:

                    (i)  the Member's entrance into the United States Armed
                         Forces;

                    (ii) to purchase a place of residence for the Member;

                                      -44-
<PAGE>
 
                    (iii) to provide for the college expenses for the Member's
                          children;

                    (iv)  death in the Member's immediate family; or

                    (v)   extreme financial hardship of any nature, as
                          determined solely by the Committee.

               (c)   After-Tax Supplemental Contribution Account, Pre-Tax
                     ----------------------------------------------------
         Supplemental Contribution Account, Matching Contribution Account, Basic
         -----------------------------------------------------------------------
         Contribution Account and Profit-Sharing Plan Balance Account. Subject
         ------------------------------------------------------------
         to Subsection (a) above, upon a showing of immediate and heavy
         financial hardship caused by unusual expenses beyond the control of a
         Member, the Committee may permit a Member to withdraw amounts credited
         to his:

                    (i)   After-Tax Supplemental Contribution Account;

                    (ii)  Pre-Tax Supplemental Contribution Account (exclusive
               of earnings thereon credited on or after January 1, 1989); and

                    (iii) for periods beginning on or after July 1, 1997, and
               for Members other than Members employed by Electric Ave.,
               Signature or Lechmere:

                          (A) the vested portion of his Matching Contribution
                    Account, including the vested portion of his Supplemental
                    Matching Contribution Account;

                          (B) amounts credited to his Basic Contribution Account
                    (exclusive of earnings credited on pre-tax Basic
                    Contributions on or after January 1, 1989); and

                          (C) his Profit-Sharing Plan Balance Account.

               The amount of any such withdrawal may not exceed the amount
         required to meet the immediate and heavy financial need created by such
         hardship (including amounts necessary to pay any federal, state or
         local income taxes or penalties reasonably anticipated to result from
         the distribution) and not reasonably available from other resources of
         the Member, including amounts available for withdrawal under
         Subsections (b) above and (f) below and amounts available for loan
         under Section 15 of this Plan or any other plan maintained by a
         Participating Company. To the extent administratively feasible, such
         withdrawals shall be charged against the Member's Account, to the
         extent applicable, in the following order:

                                      -45-
<PAGE>
 
                    (i)   first, against the Member's Profit-Sharing Plan
               Balance Account, if any;

                    (ii)  second, against the Member's pre-1987 after-tax Basic
               Contributions and After-Tax Supplemental Contributions, if any;

                    (iii) third, against the Member's post-1986 after-tax Basic
               Contributions and After-Tax Supplemental Contributions and any
               earnings thereon, if any;

                    (iv)  fourth, against the earnings on the Member's pre-1987
               after-tax Basic Contributions and After-Tax Supplemental
               Contributions, if any;

                    (v)   fifth, against the Member's pre-tax Basic
               Contributions and Pre-Tax Supplemental Contribution Account, if
               any; and

                    (vi)  sixth, against the vested portion of the Member's
               Matching Contribution Account, if any.

         The amount available for withdrawal under this Subsection (c) shall be
         limited by the amounts reflected in the positions of the Member's
         Account set forth in the preceding sentence.

               (d)  For purposes of Subsection (c) above, hardship withdrawals
         shall be available only if the withdrawal is made on account of an
         immediate and heavy hardship of the Member resulting from:

                    (i)   uninsured medical expenses described in Section 213(d)
               of the Code incurred by the Member, his spouse or any dependent
               of the Member (as defined in Section 152 of the Code),

                    (ii)  the purchase (excluding mortgage payments) of a
               principal residence of the Member,

                    (iii) payment of tuition, related educational fees, and room
               and board expenses, for the next 12 months of post-secondary
               education for the Member or his Spouse, children or dependents,

                    (iv)  the need to prevent the eviction of the Member from
               his principal residence or foreclosure on the mortgage of the
               Member's principal residence,

                    (v)   death in Member's immediate family; "immediate family"
               means Spouse, Children, or Parents of Member; or

                    (vi)  such other events as may be prescribed by Regulations
               or other procedures under the Code and adopted by the Committee.

               (e)  Any Member who makes a hardship withdrawal of amounts
         credited to his pre-tax Basic Contributions and Pre-Tax Supplemental
         Contribution Account pursuant to Subsection (d) of this 

                                      -46-
<PAGE>
 
         Section 11.6 shall not be permitted to make pre-tax Basic Contributions
         or Pre-Tax Supplemental Contributions under the Plan after the
         expiration of the 12-month period immediately following the date on
         which such hardship withdrawal is received.

               (f)  Lechmere Account. Subject to Subsection (a) above, the
                    ----------------
         Committee may permit a Member to withdraw all or part of the balance in
         his Lechmere Account for any of the reasons listed in Subsection (d)
         above or for any of the following reasons:

                         (i)  the Member's attainment of age 59-1/2; or

                         (ii) the permanent disability of the Member.

               Notwithstanding the foregoing, any Member who has after-tax
         contributions and rollover contributions in his Lechmere Account, may
         withdraw the portion of his Lechmere Account attributable to such
         after-tax contributions and rollover contributions in accordance with
         Subsection (a).

               (g)  After Tax Supplemental Contribution Account, Basic
                    --------------------------------------------------
         Contribution Account and Profit-Sharing Plan Balance Account. Subject
         ------------------------------------------------------------
         to Subsection (a) above, upon a showing of need as described below, the
         Committee may permit a Member, other than a Member employed by either
         Electric Ave., Signature or Lechmere, to withdraw not more frequently
         than once during each Plan Year amounts credited to his After-Tax
         Supplemental Contribution Account; for periods beginning on or after
         July 1, 1997, amounts credited to his Basic Contribution Account
         attributable to after-tax Contributions; and amounts credited to his
         Profit-Sharing Plan Balance Account attributable to after-tax
         Contributions; provided, however, that the minimum withdrawal that may
         be made by a Member is $500.00. For purposes of this Subsection (g),
         withdrawals will be permitted only if the withdrawal is needed to pay
         for:

                    (i)  adoption fees associated with the Member's adoption of
               a child under the age of 18;

                    (ii) child care expenses for the Member's children;

                                      -47-
<PAGE>
 
                    (iii)  adult care expenses for the Member or the
               Member's spouse, child, parent or sibling;

                    (iv)   expenses related to the purchase or repair of the
               Member's automobile, or payments to prevent the repossession of
               the Member's automobile;

                    (v)    expenses related to home repairs or improvements
               undertaken by the Member;

                    (vi)   payments by the Member to prevent eviction or
               foreclosure on any residence, including, but not limited to,
               mortgage, rent or tax payments;

                    (vii)  legal expenses for the Member or the Member's spouse,
               child or parent;

                    (viii) primary or secondary school tuition expenses for the
               Member's children; and

                    (ix)   any financial hardship as determined by the
               Administrative Director.

               (h)  No Other Withdrawals Permitted. A Member may not withdraw
                    ------------------------------
         any amounts from his Account except as provided in this Section 11.6 or
         in 11.7.

         11.7  Notwithstanding any of the provisions of this Plan, including
Section 11.6 above, any Member who remains in Service after his normal
retirement date, as determined under the Retirement Security Plan, may elect, no
later than 60 days after his normal retirement date, to receive in one lump sum,
the value of his Profit-Sharing Plan Balance Account.

                                      -48-
<PAGE>
 
                   SECTION 12  METHOD OF PAYMENT OF BENEFITS

         12.1  (a)  Any benefit payable under the Plan shall be paid in one of
         the following methods of distribution, as the Member (or in the case of
         the Member's death, the Member's Beneficiary) may elect:

                         (i)   the purchase therewith and delivery to the Member
               (or Beneficiary) by the Trustee of a single premium immediate or
               deferred annuity (fixed or variable) contract issued by such
               insurance company and containing such provisions as the Committee
               shall designate, which contract shall (A) provide for monthly
               payments continuing, in the case of a Member, for the life of the
               Member or the joint lives of the Member and his Beneficiary or
               for a period not in excess of the life expectancy, as determined
               under the Regulations, of such Member, or the joint life
               expectancy, as determined under the Regulations, of such Member
               and his Beneficiary, if any, and, in the case of a Beneficiary,
               for the life of such Beneficiary or for a period not in excess of
               the life expectancy, as determined under the Regulations, of such
               Beneficiary, (B) contain, if the Committee so determines,
               provisions which prevent the cash surrender thereof and which
               make the payments due thereunder nonassignable, (C) provide that
               the actuarial value of any payments to a contingent annuitant
               other than the spouse of the Member shall not exceed one-half of
               the actuarial value of the monthly payments which the Member
               would otherwise have received without optional modification;

                         (ii)  one lump sum payment thereof from the Trust Fund;
               or

                         (iii) in any combination of (i) or (ii) above; provided
               that, the entire Basic Account Balance must be paid by either (i)
               or (ii), and all other Account Balances must be paid by either
               method (i) or (ii).

                         (iv)  notwithstanding the foregoing, if the total value
               of the Member's Account Balances is $3,500, or less (or for
               periods beginning on or after January 1, 1998, $5,000 or less),
               or such other amount prescribed in the Regulations, payment shall
               be made to the Member in one lump-sum.

               (b)  Notwithstanding the foregoing, any Member who was a
         Participant in the Lechmere Plan (or Beneficiary thereof) may elect, by
         completing such form as required by the Committee, to have his benefit
         payable under the Plan in a series of substantially equal monthly or
         annual installments. If such Member (or Beneficiary thereof) elects the
         form of distribution under this Section 12.1(b), the period over which
         payments are to be made shall not exceed the life expectancy, as
         determined under the Regulations, of the Member, or the joint life
         expectancy, as determined under the Regulations, of the Member and his
         Beneficiary, if any, and, in the case of a Beneficiary, for the life of
         such Beneficiary or

                                      -49-
<PAGE>
 
         for a period not in excess of the life expectancy, as determined under
         the Regulations, of such Beneficiary.

               (c)  The Committee, in its sole discretion, may direct the
         Trustee to make one or more advances from the Trust Fund to a
         terminated Member, Beneficiary or Member's estate prior to the date
         upon which a final distribution would otherwise be made from the Trust
         Fund in accordance with the Plan. Such advances shall be based upon the
         Committee's estimate of the benefit amount which would be payable, and
         shall reduce the amount which becomes payable as of the date of such
         final distribution. In any case where installment payments are to be
         paid or are being paid to a Beneficiary, any balance of unpaid
         installments upon or after said Beneficiary's death shall be payable to
         the estate of such Beneficiary.

               (d)  Notwithstanding any provision of the Plan to the contrary,
         a Distributee may elect, at the time and in the manner prescribed by
         the Committee, to have any portion of an Eligible Rollover Distribution
         paid directly to an Eligible Retirement Plan specified by the
         Distributee in a Direct Rollover. 12.2 (a Notwithstanding any other
         provision of the Plan, for periods beginning before January 1, 1999,
         any benefit payable to a Member shall commence no later than the April
         1st of the calendar year following the calendar year in which such
         Member attains age 70 1/2; provided, however, if a Member attained age
         70 1/2 prior to January 1, 1988, except as otherwise provided in
         Subsection 12.2(e), any benefit payable to such Member shall commence
         no later than the April 1st of the calendar year following the later of
         (i) the calendar year in which the Participant attains age 70 1/2 or
         (ii) the calendar year in which the Member retires. Notwithstanding the
         preceding provisions, for periods beginning on or after January 1,
         1999, any benefit payable to a Member who is not a five percent owner
         (as described in Subsection (e)) shall commence no later than April 1st
         of the calendar year following the calendar year in which the Member
         retires. Any benefit payable hereunder shall be paid, in accordance
         with the Regulations, over a period not extending beyond the life
         expectancy of such Member or the joint life

                                      -50-
<PAGE>
 
         expectancies of such Member and his Beneficiary. Life expectancy for
         purposes of this Section shall not be recalculated annually in
         accordance with the Regulations.

               (b)  If distribution of a Member's benefit has commenced prior
         to a Member's death, and such Member dies before his entire benefit is
         distributed to him, distribution of the remaining portion of the
         Member's benefit to the Member's Beneficiary shall be made at least as
         rapidly as under the method of distribution in effect on the date of
         the Member's death.

               (c)  If a Member dies before distribution of his benefit has
         commenced, distributions to any Beneficiary shall be made on or before
         the December 31st of the calendar year which contains the fifth
         anniversary of the date of such Member's death; provided, however, that
         any distribution to a Beneficiary may be made over the life of the
         Beneficiary or a period not extending beyond the life expectancy of the
         Beneficiary. Such distribution shall commence not later than the
         December 31 of the calendar year immediately following the calendar
         year in which the Member died, or, in the event such Beneficiary is the
         Member's Surviving Spouse, not later than the date on which such Member
         would have attained age 70 1/2, if later (or, in either case, on any
         later date prescribed by Regulations). If such Member's Surviving
         Spouse dies after such Member's death but before distributions to such
         Surviving Spouse commence, this Subsection (c) shall be applied to
         require payment of any further benefits as if such Surviving Spouse
         were the Member.

               (d)  Pursuant to Regulations, any benefits paid to a child shall
         be treated as if paid to a Member's Surviving Spouse if such amount
         will become payable to such Surviving Spouse on the child's attaining
         majority, or other designated event permitted by Regulations.

               (e)  If a Member who is a five percent owner attained age 70 1/2
         before January 1, 1988, any benefit payable to such Member shall
         commence no later than the April 1st of the calendar year following the
         later of (i) the calendar year in which the Member attains age 70 1/2
         or (ii) the earlier of (A) the calendar year within which the Member
         becomes a five percent owner or (B) the calendar year in 

                                      -51-
<PAGE>
 
         which the Member retires. For purposes of this Subsection (e), a five
         percent owner shall mean a five percent owner of such Member's employer
         as defined in Section 416(i) of the Code at any time during the Plan
         Year ending with or within the calendar year in which such owner
         attains age 70 1/2. Once distributions have begun to a five percent
         owner pursuant to this Subsection (e), they must continue even if the
         Member ceases to be a five percent owner in a subsequent year.

         12.3  Subject to Section 12.1(a)(iv) and the third sentence of this
Section 12.3, after a Member's termination of Service, the Member must make an
election before payments will commence pursuant to the provisions of the Plan;
provided, however, if the payee is the Member, the Member's spouse must consent,
in writing, to such election or any revocation or change therein (unless the
Committee makes a written determination in accordance with the Code and
Regulations that no such consent is required). If a distribution is one to which
the qualified joint and survivor and qualified preretirement survivor annuity
rules do not apply and the Committee informs the Member that the Member has a
right to a period of at least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution or a particular distribution
option, and the Member, after receiving such notice, affirmatively elects a
distribution, the Committee may authorize the commencement of such distribution
to begin as soon as administratively feasible in accordance with such
administrative practices as determined by the Committee. In no event shall
payment commence later than 60 days after the close of the Plan Year during
which the later of the Member's attainment of age 65 or the termination of the
Member's Service occurs, unless specifically authorized by the Member. In the
case of a Beneficiary, all benefits shall be paid in one lump cash sum unless
other optional methods of distribution which may be permissible under the Code
and Regulations are made available to the Member or his Beneficiary by the
Committee.

         12.4  In any case where distribution of any benefit amount from the
Trust Fund is to be deferred, the Committee shall, upon the written request of
the former Member, direct the Trustee to invest such benefit amount in the same
manner as the normal Accounts maintained for Members pursuant to the Plan, from
which account 

                                      -52-
<PAGE>
 
such payment shall be made. Any benefit amount so deferred pursuant to the
foregoing sentence shall be held in the normal Accounts maintained for Members
pursuant to the Plan.

                                      -53-
<PAGE>
 
                   SECTION 13  MAXIMUM AMOUNT OF ALLOCATION

         13.1   The provisions of this Section 13 shall govern notwithstanding
any other provisions of the Plan.

         13.2   Except as otherwise provided in Section 13.3, Annual Additions
to a Member's Account in respect of any Plan Year may not exceed the limitations
set forth in Section 415 of the Code, which are incorporated herein by
reference. For this purpose, the term "Annual Additions" shall have the meaning
set forth in Section 415(c)(2) of the Code, as modified elsewhere in the Code
and Regulations. For purposes of this Section 13.2, a Member's contributions
shall be determined without regard to any amounts transferred to the Plan
pursuant to Sections 7 and 8.

         13.3   In the event that the amounts which would otherwise be allocated
to a Member's Account must be reduced by reason of Section 13.2, the amounts
shall be allocated at the end of the next succeeding Plan Year first, to the
extent permissible under Section 13.2 after taking account of contributions made
for such succeeding Plan Year, to the Member's Account, and any unallocated
portion of such amount shall be allocated to the Accounts of other Members as
the Committee in its sole and uncontrolled discretion, based on
nondiscriminatory standards, shall determine.

         13.4   The Committee shall, to the extent required by ERISA and in
accordance with the Regulations in order to maintain the tax-qualified status of
the Plan, apply the limitations contained in this Section 13 (after giving due
consideration to the wishes of the Member) by taking into account the benefits
payable and the contributions made under any other plans maintained by the
Company or any Affiliate which are qualified under Section 401(a) of the Code,
and if such other plan is a defined benefit plan, for periods beginning on or
before December 13, 1999, the sum of the defined benefit plan fraction and the
defined contribution plan fraction (as described in Section 415(e) of the Code,
including Subsection (6) thereof) shall not exceed one.

                                      -54-
<PAGE>
 
                   SECTION 14  DESIGNATION OF BENEFICIARIES

         14.1  Each Member shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive the
amount, if any, payable under the Plan upon his death. A Member may from time to
time revoke or change his beneficiary designation without the consent of any
prior Beneficiary by filing a new designation with the Committee.
Notwithstanding the foregoing, if the Member is married, his spouse must
consent, in writing, to such designation or any revocation or change therein
(unless the Committee makes a written determination in accordance with the Code
and Regulations that no such consent is required). The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless received
by the Committee prior to the Member's death, and in no event shall it be
effective as of a date prior to such receipt.

         14.2  If no such beneficiary designation is in effect at the time of a
Member's death, or if no designated Beneficiary survives the Member, the payment
of the amount, if any, payable under the Plan upon his death shall be made to
the Member's Surviving Spouse, if any, or if the Member has no Surviving Spouse,
then to his children, parents, brothers, and sisters, or other relatives as the
Committee shall determine. If the Committee is in doubt as to the right of any
person to receive such amount, the Committee may direct the Trustee to retain
such amount, without liability for any interest thereon, until the rights
thereto are determined, or the Committee may direct the Trustee to pay such
amount into any court of appropriate jurisdiction and such payment shall be a
complete discharge of the liability of the Plan and the Trust therefor.

                                      -55-
<PAGE>
 
                         SECTION 15  LOANS TO MEMBERS

         15.1  A Member may borrow from his interest in the Trust Fund once each
Plan Year, subject to the following provisions of this Section 15.1 and to such
additional standards as the Committee may adopt pursuant thereto, by making
prior written application to the Committee on a form provided for that purpose
by the Committee. Such application (hereinafter referred to as a "completed
application") shall (a) specify the terms pursuant to which the loan is
requested to be made, including the requested effective date, which shall be the
last day of a month and no less than 15 days following the date the completed
application is given to the Committee, (b) designate the extent, if any, that
the loan will be made from fixed income or equity fund, in which the Member has
an interest, (c) authorize the repayment of the loan through payroll deductions,
(d) provide such information and documentation as the Committee shall require,
and (e) include a note, duly executed by the Member, granting a security
interest in his entire interest in the Trust Fund to secure the loan.

         15.2  The Committee shall establish standards in accordance with ERISA
and the Code, which shall be uniformly applicable to all Members similarly
situated and shall govern the Committee's approval or disapproval of completed
applications. The terms for each loan shall be set solely in accordance with
such standards. Such standards shall prescribe the annual rate of interest to be
charged on each loan to a Member under the Plan, which shall be determined by
reference to the prevailing interest rates charged by commercial lenders under
similar circumstances. Such standards may also prescribe a maximum percentage of
a Member's pay which may be subjected to payroll deductions for loan repayment
under varying circumstances, minimum and maximum repayment periods, a maximum
and minimum loan amount, and other relevant factors. Each time a Member takes
such a loan, he shall not be permitted to take a subsequent loan under the Plan
until the first loan has been repaid in full. The maximum amount available for
loan under the Plan shall not exceed the lesser of: (a) $50,000, or (b) 50% of
the Member's Account as of the Valuation Date immediately following the date on
which the Committee receives the completed application.

                                      -56-
<PAGE>
 
         15.3   The Committee shall, in accordance with its established
standards, review and approve or disapprove a completed application as soon as
practicable after its receipt thereof, and shall promptly notify the applying
Member of such approval or disapproval. Notwithstanding the foregoing, the
Committee may defer its review of a completed application, or defer payment of
the proceeds of an approved loan, if the proceeds of the loan would otherwise be
paid during the period commencing on December 1st and ending on the following
January 31st. In addition, in the event the Trustee, in its sole discretion,
determines that it is not reasonably and prudently able, in the interests of
Members, to liquidate the necessary amount from any of the fixed income or
equity funds to comply with all the designations in Members' completed
applications in accordance with this Section 15.3, the Trustee shall notify the
Committee, and the amount to be paid to each Member whose completed application
designated that a loan be made from such fixed income or equity fund shall be
reduced in proportion to the ratio which the aggregate amount that the Trustee
has advised the Committee may prudently be liquidated bears to the aggregate
amount which all such Members designated to be paid from such fixed income or
equity fund.

         15.4  Subject to Section 15.3, the Committee, upon approval of a
completed application, shall cancel all or any part of the Member's interest in
the fixed income or equity funds in the aggregate amount, if any, necessary to
make payment of the loan from each such Investment Fund to the extent designated
in the completed application and shall direct the Trustee to transfer cash to
the Member in such aggregate amount from each such Investment Fund. The
Committee shall maintain sufficient records regarding such amounts to permit an
accurate crediting of repayments of the loan.

         15.5  The unpaid balance owed by a Member on a loan under the Plan
shall not reduce the amount credited to his or her Account. However, from the
time of payment of the proceeds of the loan to the Member such Account shall he
deemed invested, to the extent of such unpaid balance, in such loan until the
complete repayment thereof or distribution from such Account.

                                      -57-
<PAGE>
 
         15.6  Each loan to a Member under the Plan shall be repaid in level
amounts through regular payroll deductions; provided, however, that a Member
shall be permitted to prepay a loan without penalty. Effective as of December
12, 1994, loan repayments by a Member who is performing service in the uniformed
services (as defined in Chapter 43 of title 38, United States Code) will be
suspended under the Plan as permitted under Section 414(u) of the Code. Except
as otherwise permitted by the Code and the Regulations, each loan shall have a
repayment period not to exceed five years, unless the loan is used to acquire
any dwelling unit which within a reasonable period of time is to be used as the
principal residence of the Member. Principal residence status shall be
determined by the Committee at the time the loan is made. Repayments of
principal and interest on a loan made to a Member under the Plan shall be made
to the fixed income or equity fund in the same proportion as that in which each
such Investment Fund was liquidated in order to make payment of the loan
proceeds to the Member; provided, however, that, if a Member has elected,
pursuant to Section 9.2 to have all or any portion of his interest in the fixed
income or equity fund transferred to such other Investment Fund, then the
aforementioned purchase proportion on repayment shall be adjusted pro rata by
the Committee to reflect such transfer.

         15.7  Repayment of all loans under the Plan shall be secured by the
Member's entire interest in the Trust Fund. If at any time prior to the full
repayment of a loan to a Member under the Plan the Member should cease to be a
Member by reason of his retirement, death or otherwise, or the Plan should
terminate, the unpaid balance owed by the Member on the loan shall be due and
payable immediately, and, to the extent not repaid, the amount of the
distribution otherwise payable to the Member (or, in the case of his death, to
his designated Beneficiary) shall be reduced by the amount owed on the loan at
the time of such distribution. Such reduction shall constitute a complete
discharge of all liability to the Plan for the loan.

                                      -58-
<PAGE>
 
                    SECTION 16  ADMINISTRATION OF THE PLAN

         16.1  The Committee shall have authority and responsibility for the
administration and interpretation of the Plan, and, for purposes of ERISA, shall
be the "administrator" of the Plan and its "named fiduciary" with respect to
matters for which it is responsible; provided that the Board of Directors shall
have the sole authority to amend, suspend or terminate the Plan, except as
otherwise provided in Subsection 16.4(c) hereof. The Committee shall consist of
not less than three persons, who need not be directors of Ward, as from time to
time appointed by the Board of Directors. Any Committee member may resign and
the Board of Directors may remove any Committee member, with or without cause,
at any time. To the maximum extent permitted by ERISA, every action and
determination of the Committee in accordance with this Section shall be final
and binding upon each Member, Beneficiary, other Associate and every other
person entitled to or claiming participation in the Plan or benefits from the
Plan. No member of the Committee shall be entitled to act on or decide any
matter relating solely to himself or to any of his rights or benefits under the
Plan.

         16.2  The Committee shall appoint the Trustees, and may remove any
Trustees in accordance with the Trust Agreement. Upon acceptance of their
appointments, the Trustees shall have exclusive authority to manage and control
the Trust Fund, subject to the provisions of the Plan and the Trust Agreement
and, for purposes of ERISA, shall be the "named fiduciary" of the Plan with
respect to matters for which they are responsible; provided that, as provided in
the Trust Agreement, the Trustees may appoint one or more Investment Managers
and may delegate authority to the Investment Managers so appointed as provided
therein and permitted by ERISA.

         16.3  The Committee shall appoint an Administrative Director and may
from time to time allocate or delegate to any subcommittee or member of the
Committee, the Administrative Director and others, not necessarily Associates,
such duties relative to compliance with the reporting and disclosure obligations
of ERISA and the administration and interpretation of the Plan as it deems
necessary or appropriate including matters involving the exercise of discretion.
The Administrative Director may from time to time delegate to others not

                                      -59-
<PAGE>
 
necessarily Associates, such of his duties as he deems necessary or appropriate.
The Committee may remove, with or without cause, at any time the Administrative
Director and any person to whom duties are delegated by the Committee or the
Administrative Director in accordance with this Section.

         16.4  In furtherance of, and not by way of limitation on, the
responsibilities and authority conferred on the Committee in Section 16.1
hereof, the Committee shall administer the Plan in accordance with its terms and
provisions and shall have the following specific responsibilities and
authorities:

               (a)  to construe and interpret the Plan and determine all
         questions arising in its operation;

               (b)  to develop and from time to time review a policy for funding
         the Plan which shall be consistent with the objectives of the Plan in
         accordance with the Regulations and to advise the Trustees of such
         policy and of any changes therein from time to time;

               (c)  to make such amendments in the Plan and the Trust Agreement
         as it deems necessary or appropriate; 

               (d) to receive reports from the Trustees and from the
         Administrative Director on the discharge of their duties and authority
         with respect to the Plan, including in the case of the Administrative
         Director the preparation, distribution and maintenance of all documents
         necessary or appropriate for compliance with the reporting, disclosure
         and recordkeeping requirements contained in ERISA, as well as such
         other records or data as may be necessary or appropriate for the proper
         administration of the plan;

               (e)  to employ such certified public accountants, legal counsel
         and other persons as may be required by ERISA or as it shall otherwise
         deem necessary or appropriate in connection with the operation of the
         Plan;

               (f)  to adopt such rules and procedures as the Committee deems
         necessary or appropriate in order to fulfill its responsibilities with
         respect to the Plan; provided that such rules and procedures are
         uniformly and consistently applied to persons in similar circumstances;

                                      -60-
<PAGE>
 
               (g)  to hold regular meetings designed to insure the discharge of
         its responsibilities hereunder, and to maintain an accurate written
         record of all such meetings; and

               (h)  to furnish the Board of Directors with reports, including
         subjects reported upon to it by the Trustees and the Administrative
         Director.

         16.5  Subject to the by-laws of the Company and the resolutions of the
Board of Directors, the Committee shall establish its own rules of procedure and
the time and place of its meetings. A majority of the members of the Committee
shall constitute a quorum for the transaction of business, and the act of a
majority of the Committee members at a meeting at which a quorum is present
shall be the act of the Committee. Any action which may be taken at a meeting of
the Committee may be taken without a meeting if a consent, in writing, setting
forth the action so taken, shall be signed by all of the members of the
Committee.

         16.6  The Company has entered into the Trust Agreement with the
Trustees providing for the administration and management of the Trust Fund. All
benefits and other amounts payable hereunder shall be paid exclusively from the
Trust Fund, and neither the Company, the Committee, any Trustee, the
Administrative Director, nor any director, officer, Associate or agent of the
Company assumes any responsibility or liability therefor. The Trust Fund may be
commingled for investment purposes with like separate trust funds of any other
plans and trusts of Ward or any Affiliate which meet the requirements of
Sections 401(a) and 501(a) of the Code. Each Member, each Beneficiary or each
other person who shall claim the right to any payment under the Plan shall look
exclusively to the Trust Fund therefor and shall not have any right or claim
therefor against the Company, the Committee, any Trustee, the Administrative
Director or any director, officer, Associate or agent of the Company. Except as
otherwise required by ERISA, neither the Company, the Committee, the
Administrative Director, nor any director, officer, Associate or agent of the
Company shall be required to inquire into or be responsible for any act or
failure to act of any Trustee or any Member. To the maximum extent permitted by
ERISA and applicable state law, each member of the Committee, each Trustee, the
Administrative Director and each director and officer of the Company, and each
Associate who performs service on behalf of the

                                      -61-
<PAGE>
 
Plan or the Trust, shall be indemnified and saved harmless by the Company out of
its own assets (including the proceeds of any insurance policy the premiums of
which are paid by the Company) from and against any and all losses, costs and
expenses (including any amounts paid in settlement of a claim with the
Committee's approval) to which any of them may be subjected by reason of any act
done or omitted to be done in good faith in their official capacities with
respect to the Plan or the Trust Agreement, including all expenses reasonably
incurred in their defense.

         16.7  (a)  Any claim for benefits shall be submitted on a prescribed
         claim form to the claimant's local personnel department. If the claim
         is wholly or partially denied, written notice of the denial shall be
         furnished within 90 days after receipt of the claim; provided that, if
         special circumstances require an extension of time for processing the
         claim, an additional 90 days from the end of the initial period shall
         be allowed for processing the claim, in which event the claimant shall
         be furnished with a written notice of the extension prior to the
         termination of the initial 90-day period indicating the special
         circumstances requiring an extension. The written notice denying the
         claim shall set forth the reasons for the denial, including specific
         reference to pertinent provisions of the Plan on which the denial is
         based, a description of any additional information necessary to perfect
         the claim and information regarding review of the claim and its denial.


               (b)  All disputed claims for benefits shall be submitted within
         60 days after receipt by the claimant of the written notice of denial
         to, and decided within a reasonable period of time by, the
         Administrative Director or one member of the Committee designated by
         its Chairman. Written notice of the decision on each such claim shall
         be furnished to the claimant within 60 days after receipt by the
         Administrative Director of a request for review, unless special
         circumstances require an extension of time for processing, in which
         event an additional 60 days shall be allowed for review and the
         claimant shall be so notified in writing. If the claim is wholly or
         partially denied, such written notice shall set forth an explanation of
         the specific findings and conclusions on which such denial is based. A
         claimant may

                                      -62-
<PAGE>
 
         review all pertinent documents and may request a review by the
         Committee of such a decision denying the claim. Such a request shall be
         made in writing and filed with the Committee within 60 days after
         delivery to the claimant of written notice of the decision. Such
         written request for review shall contain all additional information
         which the claimant wishes the Committee to consider. The Committee may
         hold a hearing or conduct an independent investigation, and the
         decision on review shall be made as soon as possible after the
         Committee's receipt of the request for review, but in no event later
         than the third regularly scheduled meeting of the Committee after the
         Committee's receipt of the request for review. Written notice of the
         decision on review shall be promptly furnished to the claimant and
         shall include specific reasons for the decision. For all purposes under
         the Plan, such decision on claims (where no review is requested) and
         decision on review (where review is requested) shall be final, binding
         and conclusive on all interested persons as to participation and
         benefits eligibility, the amount of benefits and as to any other matter
         of fact or interpretation relating to the Plan. In the case of a Member
         covered by a collective bargaining agreement, a disputed claim for
         benefits shall be governed by the grievance and arbitration procedures
         established under such agreement; provided, however, that, if such
         agreement permits, the Committee will review such a claim before it is
         referred to formal grievance procedures.

         16.8  Except as otherwise provided in the Plan or the Trust Agreement,
all expenses and charges incurred in the administration and operation of the
Plan and the Trust Agreement shall be paid out of the Trust Fund. No
compensation shall be paid by the Plan to any member of the Committee, any
Trustee or the Administrative Director if employed by the Company or any
Affiliate, but said persons may be reimbursed for their reasonable expenses
incurred in carrying out their duties, responsibilities and authority hereunder,
and the compensation, or a properly allocable portion thereof, paid to other
Associates who are involved in the administration of the Plan and all other
properly allowable expenses shall, to the extent not paid by the Company, be
treated as administrative expenses. No bond shall be required of the members of
the Committee, the Trustees or the Administrative Director, except as otherwise
required by law.

                                      -63-
<PAGE>
 
         16.9   Any notice, election, application, instruction, designation or
other form of communication required to be given or submitted by any Member,
other Associate or Beneficiary shall be in such form as is prescribed from time
to time by the Committee, sent by first class mail or delivered in person to the
Administrative Director of the Plan, Montgomery Ward & Co., Incorporated,
Montgomery Ward Plaza, Chicago, Illinois 60671, and shall be deemed to be duly
given only upon actual receipt thereof by the Administrative Director. Any
notice, statement, report and other communication from the Company, the
Committee or the Administrative Director to any Member, other Associate or
Beneficiary required or permitted by the Plan shall be deemed to have been duly
given when delivered to such person or mailed by first class mail to such person
at his address last appearing on the records of the Company. Each person
entitled to receive a payment under the Plan shall file in accordance herewith
his complete mailing address and each change therein. A check or communication
mailed to any person at his address on file with the Administrative Director
shall be deemed to have been received by such person for all purposes of the
Plan, and neither the Committee, the Administrative Director nor any Associate
or agent of the Company shall be obliged to search for or ascertain the location
of any such person except as required by ERISA. If the Administrative Director
shall be in doubt as to whether payments are being received by the person
entitled thereto, it may, by registered mail addressed to such person at his
address last known to the Administrative Director, notify such person that all
future payments will be withheld until such person submits to the Administrative
Director his proper mailing address and such other information as the
Administrative Director may reasonably request.

         16.10  Each Member shall file with the Committee such pertinent
information concerning himself and his Beneficiary, and each Beneficiary shall
file with the Committee such information concerning himself, as the Committee or
the Administrative Director may specify, and in such manner and form as the
Committee or Administrative Director may specify or provide, and no Member or
Beneficiary shall have any right or be entitled to any benefits or further
benefits under the Plan unless such information is filed by him or on his
behalf.

                                      -64-
<PAGE>
 
         16.11  If the Committee receives notification from the Trustee of any
trust fund established by the Company as a part of an employee benefit plan
other than the Trust Fund that such Trustees have a claim against the Trust Fund
by reason of overpayment or otherwise, then the Committee may, subject to the
restrictions provided in Section 19.6, direct the Trustees to withhold further
payments under the Plan, pay the amount of such claim to any court of competent
jurisdiction or take any other action which the Committee shall deem
appropriate.

         16.12  The Agent for the service of legal process of the Plan shall be
the Secretary of Ward.

                                      -65-
<PAGE>
 
               SECTION 17  TERMINATION OF EMPLOYER PARTICIPATION

     17.1  Any Participating Company may terminate its participation in the
Plan by giving the Committee prior written notice specifying a termination date
which shall be the last day of a month at least 60 days subsequent to the date
such notice is received by the Committee. The Committee may terminate any
Participating Company's participation in the Plan, as of any termination date
specified by the Committee, for the failure of the Participating Company to make
proper contributions or to comply with any other provision of the Plan and shall
terminate a Participating Company's participation upon complete and final
discontinuance of the contributions. In the event of any such termination, the
Committee shall promptly notify the IRS and request such determination as
counsel to the Plan may recommend and as the Committee may deem desirable.

     17.2  Upon termination of the Plan as to any Participating Company, such
Participating Company shall not make any further contributions under the Plan
and no amount shall thereafter be payable under the Plan to or in respect of any
Members then employed by such Participating Company except as provided in this
Section 17. To the maximum extent permitted by ERISA, any rights of Members no
longer employed by such Participating Company and of former Members and their
Beneficiaries and Surviving Spouses under the Plan shall be unaffected by such
termination and any transfers, distributions or other dispositions of the assets
of the Plan as provided in this Section 17 shall constitute a complete discharge
of all liabilities under the Plan with respect to such Participating Company's
participation in the Plan and any Member then employed by such Participating
Company.

     Upon receipt by the Committee of IRS approval of such termination, the
full current value of such amount shall be paid from the Trust Fund in the
manner described in Section 18.4 or transferred to a successor employee benefit
plan which is qualified under Section 401(a) of the Code; provided, however,
that in the event of any transfer of assets to a successor employee benefit plan
the provisions of Section 17.3 will apply. No advances against such payments
shall be made prior to such receipt of approval, but after such receipt the

                                      -66-
<PAGE>
 
Committee, in its sole discretion, may direct the Trustee to make one or more
advances in accordance with Section 12.1.

     All determinations, approvals and notifications referred to above shall
be in form and substance and from a source satisfactory to counsel for the Plan.
To the maximum extent permitted by ERISA, the termination of the Plan as to any
Participating Company shall not in any way affect any other Participating
Company's participation in the Plan.

     17.3  No transfer of the Plan's assets and liabilities to a successor
employee benefit plan (whether by merger or consolidation with such successor
plan or otherwise) shall be made unless each Member would, if either the Plan or
such successor plan then terminated, receive a benefit immediately after such
transfer which (after taking account of any distributions or payments to them as
part of the same transaction) is equal to or greater than the benefit he would
have been entitled to receive immediately before such transfer if the Plan had
then been terminated. The Committee may also request appropriate indemnification
from the employer or employers maintaining such successor plan before making
such a transfer.

                                      -67-
<PAGE>
 
          SECTION 18  AMENDMENT OR TERMINATION OF THE PLAN AND TRUST

     18.1  Subject to the provisions of Section 16.4(c), the Board of
Directors reserves the right at any time to amend, suspend, discontinue or
terminate the Plan, any contributions thereunder, the Trust, in whole or in part
and for any or no reason and without the consent of any Participating Company,
Member, Beneficiary or Surviving Spouse; and the Committee may adopt amendments
as it deems necessary or appropriate. Each Participating Company by its adoption
of the Plan shall be deemed to have delegated this authority to the Board of
Directors and the Committee. The Plan shall automatically be terminated upon
complete and final discontinuance of contributions thereunder.

     18.2  Subject to the provisions of Section 18.1, any amendment,
modification, suspension or termination of any provisions of the Plan may be
made retroactively if necessary or appropriate to qualify or maintain the Plan
and Trust as a plan and trust meeting the requirements of Sections 401(a),
401(k), 401(m) and 501(a) of the Code or any other applicable section of law
(including ERISA) and the Regulations issued thereunder.

     18.3  Notice of any amendment, modification, suspension or termination
of the Plan shall be given by the Board of Directors or the Committee, whichever
adopts the amendment to the other and to the Trustees and all Participating
Companies and, where and to the extent required by law, to Members and other
interested parties.

     18.4  Upon termination of the Plan, the Company shall not make any
further contributions under the Plan and no amount shall thereafter be payable
under the Plan in respect of any Member except as provided in this Section 18.
To the maximum extent permitted by ERISA transfers, distributions or other
dispositions of the assets of the Plan as provided in this Section 18 shall
constitute a complete discharge of all liabilities under the Plan. The Committee
shall remain in existence and all of the provisions of the Plan which in the
opinion of the Committee are necessary for the execution of the Plan and the
administration and distribution, transfer or other disposition of the assets of
the Plan in accordance with this Section 18.4 shall remain in force. After (a)
payment 

                                      -68-
<PAGE>
 
of or provision for all expenses and charges referred to in Sections 10.4 and
10.5 and appropriate adjustment of all Accounts for such expenses and charges in
the manner described in Section 10.3, and (b) adjustment for profits and losses
of the Trust to such termination date in the manner described in Section 10.3
the amount in each Account shall be held, administered, and distributed,
transferred or otherwise disposed of in accordance with the following provisions
of this Section 18.4.

     Upon receipt by the Committee of IRS approval of such termination, the
assets of the Plan shall be applied for the benefit of Members, former Members,
Beneficiaries and Surviving Spouses, to the extent of the amounts held under the
Plan for their benefit, in such manner as the Committee shall determine.

     All determinations, approvals and notifications referred to above shall
be in form and substance and from a source satisfactory to counsel.

     18.5 No transfer of the Plan's assets and liabilities to a successor
employee benefit plan (whether by merger or consolidation with such successor
plan or otherwise) shall be made unless each Member would, if either the Plan or
such successor plan then terminated, receive a benefit immediately after such
transfer which (after taking account of any distributions or payments to them as
part of the same transaction) is equal to or greater than the benefit he would
have been entitled to receive immediately before such transfer if the Plan had
then been terminated. The Committee may also request appropriate indemnification
from the employer or employers maintaining such successor plan before making
such a transfer.

     18.6 In no event shall any part of the funds of the Plan (other than
such part as is required to pay taxes, if any, and expenses as provided in
Section 10.4) be used for or diverted to any purposes other than for the
exclusive benefit of Members and their Beneficiaries and Surviving Spouses under
the Plan.

                                      -69-
<PAGE>
 
                SECTION 19  GENERAL LIMITATIONS AND PROVISIONS

     19.1  Each Member, former Member, Beneficiary and Surviving Spouse shall
assume all risk in connection with any decrease in the value of the assets of
the Trust and the Members' Accounts or special accounts and neither the
Participating Companies nor the Committee shall be liable or responsible
therefor.

     19.2  The Trust shall be the sole source of benefits under the Plan and,
except as otherwise required by ERISA, the Company, the Committee and the
Administrative Director assume no liability or responsibility for payment of
such benefits, and each Member, Surviving Spouse, Beneficiary or other person
who shall claim the right to any payment under the Plan shall be entitled to
look only to the Trust for such payment and shall not have any right, claim or
demand therefor against the Company, the Committee or the Administrative
Director or any member thereof, or any associate or director of the Company.

     19.3  Nothing contained in the Plan shall give any associate the right
to be retained in the employment of the Company or any of its subsidiaries or
affiliated or associated corporations or affect the right of any such employer
to dismiss any associate. The adoption and maintenance of the Plan shall not
constitute a contract between the Company and any associate or consideration
for, or an inducement to or condition of, the employment of any associate.

     19.4  Notwithstanding any other provision of this Plan, the payment of
benefits to Members and their Beneficiaries, Surviving Spouses and other
eligible survivors under the Plan may be paid as a part of and concomitantly
with any benefits to which he is entitled under the Retirement Security Plan.

     19.5  If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due him or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so elects, be paid to his spouse, a child,
a relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise 

                                      -70-
<PAGE>
 
entitled to payment. Any such payment shall be a complete discharge of the
liability of the Plan and the Trust therefor.

     19.6 (a) Except insofar as may otherwise be required by law or pursuant to
     the terms of a Qualified Domestic Relations Order, no amount payable at any
     time under the Plan and the Trust shall be subject in any manner to
     alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge,
     attachment, charge or encumbrance of any kind nor in any manner be subject
     to the debts or liabilities of any person and any attempt to so alienate or
     subject any such amount, whether presently or thereafter payable, shall be
     void. If any person shall attempt to, or shall, alienate, sell, transfer,
     assign, pledge, attach, charge or otherwise encumber any amount payable
     under the Plan and Trust, or any part thereof, or if by reason of his
     bankruptcy or other event happening at any such time such amount would be
     made subject to his debts or liabilities or would otherwise not be enjoyed
     by him, then the Committee, if it so elects, may direct that such amount be
     withheld and that the same or any part thereof be paid or applied to or for
     the benefit of such person, his spouse, children or other dependents, or
     any of them, in such manner and proportion as the Committee may deem
     proper. For purposes of the Plan, a "Qualified Domestic Relations Order"
     means any judgment, decree or order (including approval of a settlement
     agreement) which has been determined by the Committee in accordance with
     procedures established under the Plan, to contribute a qualified domestic
     relations order within the meaning of Section 414(p)(1) of the Code.
     
          (b) Notwithstanding the preceding Subsection (a) effective with
     respect to judgments, orders and decrees issued, and settlement agreements
     entered into, on or after August 5, 1997, the Plan shall not be treated as
     failing to meet the requirements of the preceding Subsection (a) solely by
     reason of any offset of a Member's benefits against an amount that the
     Member is ordered or required to pay to the Plan as a result of the
     Member's breach of fiduciary duty to the Plan or commission of a criminal
     act against the Plan to the extent permitted under Section 401(a)(13)(C)-
     (D) of the Code.

                                      -71-
<PAGE>
 
     19.7 If the Committee cannot ascertain the whereabouts of any person to
whom a payment is due under the Plan, and if, after five years from the date
such payment is due, a notice of such payment due is mailed to the last known
address of such person, as shown on the records of the Committee or the Company,
and within three months after such mailing such person has not made written
claim therefor, the Committee, if it so elects, after receiving advice from
counsel to the Plan, may direct that such payment and all remaining payments
otherwise due to such person be cancelled on the records of the Plan and the
amount thereof applied to reduce the contributions of the Company, and upon such
cancellation, the Plan and the Trust shall have no further liability therefor
except that, in the event such person later notifies the Committee of his
whereabouts and requests the payment or payments due to him under the Plan, the
amount so applied shall be paid to him as provided in Section 12.

     19.8 Any and all rights or benefits accruing to any persons under the
Plan shall be subject to the terms of the trust agreement which Ward shall enter
into with the Trustees providing for the administration of the Trust Fund.

     19.9 Upon such terms and conditions as the Committee may approve, and
subject to any required IRS approval, benefits may be provided under the Plan to
a Member with respect to any period of his prior employment by any organization,
and such benefits may be provided for, in whole or in part, by funds
transferred, directly or indirectly (including a rollover from an individual
retirement account, or an individual retirement annuity as described in Section
408 of the Code), to the Trust from an employee benefit plan of such
organization which qualified under Section 401(a) of the Code.

     19.10 Effective as of December 12, 1994, notwithstanding any provision
of the Plan to the contrary, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with
Section 414(u) of the Code.

     19.11 Whenever used in the Plan the masculine gender includes the
feminine.

                                      -72-
<PAGE>
 
     19.12 The captions preceding the sections of the Plan have been
inserted solely as a matter of convenience and in no way define or limit the
scope or intent of any provisions of the Plan.

     19.13 The Plan and all rights thereunder shall be governed by and
construed in accordance with ERISA and the laws of the State of Illinois.

                                      -73-
<PAGE>
 
                        SECTION 20 TOP HEAVY PROVISIONS

     20.1 The Plan will be considered a Top Heavy Plan for any Plan Year if
it is determined to be a Top Heavy Plan as of the last day of the preceding Plan
Year. Notwithstanding any other provisions in the Plan, the provisions of this
Section 20 shall apply and supersede all other provisions in the Plan with
respect to a Plan Year with respect to which the Plan is determined to be a Top
Heavy Plan.

     20.2 For purposes of this Section 20 and as otherwise used in this Plan,
the following terms shall have the meanings set forth below:

          (a) "Affiliate" shall mean any entity affiliated with the Company
     within the meaning of Section 414(b), 414(c), 414(m) or 414(o) of the Code,
     except that for purposes of applying the provisions hereof with respect to
     the limitation on contributions, Section 415(h) of the Code shall apply.
     
          (b) "Aggregation Group" shall mean the group composed of each
     qualified retirement plan of the Company or an Affiliate in which a Key
     Associate is a participant and each other qualified retirement plan of the
     Company or an Affiliate which enables a plan of the Company or an Affiliate
     in which a Key Associate is a participant to satisfy Sections 401(a)(4) or
     410(b) of the Code. In addition, the Company may choose to treat any other
     qualified retirement plan as a member of the Aggregation Group if such
     Aggregation Group will continue to satisfy Sections 401(a)(4) and 410(b) of
     the Code with such plan being taken into account.

          (c) "Key Associate" shall mean a "Key Employee" as defined in Section
     416(i)(1) and (5) of the Code and Regulations promulgated thereunder.

          (d) "Top Heavy Plan" shall mean a "Top Heavy Plan" as defined in
     Section 416(g) of the Code and Regulations promulgated thereunder.

     20.3 Subject to Section 20.4, for each Plan Year that the Plan is a Top
Heavy Plan, the Company's contribution (including contributions attributable to
salary reduction) allocable to the Account of each Member who is in Service at
the end of the Plan Year and who is not a Key Associate, shall not be less than
the lesser of 

                                      -74-
<PAGE>
 
(a) three percent of such Member's compensation (as described in Section 415 of
the Code), or (b) the percentage at which contributions for such Plan Year are
made and allocated on behalf of the Key Associate for whom such percentage is
the highest. For the purpose of determining the appropriate percentage under
Subsection (b), all defined contribution plans required to be included in an
Aggregation Group shall be treated as one plan. Subsection (b) shall not be
applicable if the Plan is required to be included in an Aggregation Group which
enables a defined benefit plan also required to be included in said Aggregation
Group to satisfy Sections 401(a)(4) or 410(b) of the Code.

     20.4 (a) For each Plan Year that the Plan is a Top Heavy Plan, one shall be
     substituted for 125% as the multiplicand of the dollar limitation in
     determining the denominator of the defined benefit plan fraction and of the
     defined contribution plan fraction for purposes of Section 415(e) of the
     Code.
     
          (b) If, after substituting 90% for 60% wherever the latter appears in
     Section 416(g) of the Code, the Plan is not determined to be a Top Heavy
     Plan, the provisions of Subsection (a) hereof shall not be applicable if
     the minimum contribution by the Company allocable to the Account of any
     Member who is not a Key Associate as specified in Section 20.3 is
     determined by substituting "four percent" for "three percent".

                                      -75-
<PAGE>
 
     20.5 The Committee shall, to the extent permitted by the Code and in
accordance with Regulations, apply the provisions of this Section 20 by taking
into account the benefits payable and the contributions made under any other
plans maintained by the Company or any of its subsidiaries or affiliated or
associated entities which are qualified under Section 401(a) of the Code to
prevent inappropriate omissions or duplication of minimum benefits or
contributions.

                                   MONTGOMERY WARD & CO., INCORPORATED

                                   By:  /s/ Philip Dobias 
                                        -----------------------------------

                                   Its: VP Comp, Benefits and HR Strategy 
                                        -----------------------------------     
ATTEST:

By:  /s/ Jill S. Chapman                             
     -------------------------- 

Its: Benefits Director                              
     --------------------------

                                      -76-