<PAGE>   1

                                                                    EXHIBIT 10.3



                            FLOWERS INDUSTRIES, INC.
                         401(k) RETIREMENT SAVINGS PLAN


             AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1997



<PAGE>   2

                            FLOWERS INDUSTRIES, INC.
                         401(k) RETIREMENT SAVINGS PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
PREAMBLE .........................................................................................................1

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

         1.1      Account.........................................................................................2
         1.2      ACP Contributions...............................................................................2
         1.3      Actual Deferral Percentage......................................................................2
         1.4      ADP Contributions...............................................................................2
         1.5      Allocation Participant..........................................................................2
         1.6      Annual Additions................................................................................2
         1.7      Average Actual Deferral Percentage..............................................................2
         1.8      Average Contribution Percentage.................................................................2
         1.9      Beneficiary.....................................................................................2
         1.10     Benefit Commencement Date.......................................................................2
         1.11     Code............................................................................................3
         1.12     Company.........................................................................................3
         1.13     Company Basic Contributions.....................................................................3
         1.14     Company Basic Contributions Account.............................................................3
         1.15     Compensation....................................................................................3
         1.16     Contribution Percentage.........................................................................5
         1.17     Controlled Group................................................................................5
         1.18     Defined Benefit Fraction........................................................................5
         1.19     Defined Contribution Dollar Limitation..........................................................5
         1.20     Defined Contribution Fraction...................................................................5
         1.21     Determination Date..............................................................................5
         1.22     Disabled........................................................................................5
         1.23     Effective Date..................................................................................5
         1.24     Election........................................................................................5
         1.25     Election Period.................................................................................5
         1.26     Elective Contributions..........................................................................5
         1.27     Elective Contributions Account..................................................................6
         1.28     Elective Deferrals..............................................................................6
         1.29     Eligibility Computation Period..................................................................6
         1.30     Eligible Employee...............................................................................7
         1.31     Eligible Highly Compensated Employee............................................................7
         1.32     Employee........................................................................................7
         1.33     Employer........................................................................................7
         1.34     Employment Commencement Date....................................................................7
         1.35     Entry Date......................................................................................7
</TABLE>



<PAGE>   3



<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
         <S>                                                                                                     <C>
         1.36     ERISA...........................................................................................7
         1.37     Excess Amount...................................................................................8
         1.38     Excess Deferrals................................................................................8
         1.39     Forfeitable Account.............................................................................8
         1.40     Highest Average Compensation....................................................................8
         1.41     Highly Compensated Employee.....................................................................8
         1.42     Highly Compensated Participant..................................................................9
         1.43     Hours of Service................................................................................9
         1.44     Key Employee...................................................................................11
         1.45     Leased Employee................................................................................11
         1.46     Limitation Year................................................................................12
         1.47     Matching Elective Contributions................................................................12
         1.48     Matching Elective Contributions Account........................................................12
         1.49     Nonforfeitable Accounts........................................................................12
         1.50     Maximum Permissible Amount.....................................................................12
         1.51     Normal Retirement Age..........................................................................12
         1.52     Normal Retirement Date.........................................................................12
         1.53     One-Year Break in Service (or Break in Service)................................................12
         1.54     Participant....................................................................................13
         1.55     Permissive Aggregation Group...................................................................13
         1.56     Plan...........................................................................................13
         1.57     Plan Administrator.............................................................................13
         1.58     Plan Year......................................................................................13
         1.59     Present Value..................................................................................13
         1.60     Projected Annual Benefit.......................................................................13
         1.61     Qualified Matching Contributions...............................................................13
         1.62     Qualified Matching Contributions Account.......................................................13
         1.63     Qualified Nonelective Contributions............................................................13
         1.64     Qualified Nonelective Contributions Account....................................................13
         1.65     Qualified Spousal Waiver.......................................................................13
         1.66     Required Aggregation Group.....................................................................14
         1.67     Required Beginning Date........................................................................14
         1.68     Rollover Contributions.........................................................................14
         1.69     Rollover Contributions Account.................................................................14
         1.70     Self-Employed Individual.......................................................................14
         1.71     Spouse.........................................................................................14
         1.72     Surviving Spouse...............................................................................14
         1.73     Top-Heavy Plan.................................................................................14
         1.74     Top-Heavy Ratio................................................................................14
         1.75     Trust..........................................................................................14
         1.76     Trust Agreement................................................................................14
         1.77     Trust Fund.....................................................................................15
</TABLE>



                                       ii

<PAGE>   4
<TABLE>
<CAPTION>

                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
         1.78     Trustee........................................................................................15
         1.79     Valuation Date.................................................................................15
         1.80     Vesting Computation Period.....................................................................15
         1.81     Year of Eligibility Service....................................................................15
         1.82     Year of Vesting Service........................................................................15

ARTICLE II
ELIGIBILITY FOR PARTICIPATION....................................................................................17

         2.1      Initial Attainment of Participation Status.....................................................17
         2.2      Reemployment of Former Employees...............................................................18
         2.3      Reemployment of Former Participants............................................................18
         2.4      Transfers to/from Eligible Class...............................................................18
         2.5      Family and Medical Leave Act...................................................................19

ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS....................................................................................20

         3.1      Employer Contributions.........................................................................20
         3.2      Employee Contributions.........................................................................22
         3.3      Time of Payment of Contributions...............................................................23
         3.4      Return of Contributions........................................................................23
         3.5      Provisions Regarding Elective Contributions....................................................24
         3.6      Limitation of Elective Deferrals...............................................................26
         3.7      Limitation of Employee and Employer Matching Contributions.....................................28
         3.8      Corrections Required by Discrimination Tests...................................................30
         3.9      Multiple Use of Alternative Limitation.........................................................33
         3.10     Discretionary Cutbacks to Satisfy Discrimination Tests.........................................35
         3.11     401(k)/401(m) Testing Provision................................................................35

ARTICLE IV
LIMITATION ON ALLOCATIONS........................................................................................36

         4.1      General Rules..................................................................................36
         4.2      Applicable Definitions.........................................................................38
         4.3      Adjustments for Top Heavy Plan.................................................................42
ARTICLE V
VESTING IN ACCOUNTS..............................................................................................43

         5.1      Vesting of Nonforfeitable Accounts.............................................................43
         5.2      Vesting of Forfeitable Account.................................................................43
</TABLE>



                                       iii

<PAGE>   5

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
         5.3      Forfeitures....................................................................................45
         5.4      Reemployed Former Employees....................................................................45
         5.5      Years of Vesting Service Disregarded...........................................................46
         5.6      Vesting Upon Termination.......................................................................46
         5.7      Family and Medical Leave Act...................................................................46

ARTICLE VI
ACCOUNTS AND INVESTMENTS.........................................................................................47

         6.1      Separate Accounts..............................................................................47
         6.2      Investment of Trust Fund.......................................................................47
         6.3      Trustee's Reliance.............................................................................48

ARTICLE VII
ALLOCATION OF EARNINGS AND LOSSES TO ACCOUNTS
OF PARTICIPANTS..................................................................................................50

         7.1      Allocations of Trust Fund Earnings and Losses..................................................50
         7.2      Allocations Regarding Specific Investments.....................................................50

ARTICLE VIII
PAYMENT OF BENEFITS..............................................................................................51

         8.1      Time of Payment of Benefits....................................................................51
         8.2      Benefits Upon Death............................................................................52
         8.3      Form of Payment of Benefits....................................................................54
         8.4      Valuation of Accounts for Payments.............................................................54
         8.5      Forfeitures....................................................................................54
         8.6      Benefit Payment Commencement...................................................................55
         8.7      Notice and Consent Requirements................................................................56
         8.8      Restrictions on Elective Contribution Distributions............................................57
         8.9      Payments to Alternate Payees...................................................................58
         8.10     Hardship Distributions of Elective Contributions...............................................58
         8.11     Loan of Account Balances to Participants.......................................................59
         8.12     Rollover Distribution Election.................................................................64
         8.13     Provision Pursuant to Code Section 401(a)(9)...................................................66

ARTICLE IX
THE TRUST FUND AND THE TRUSTEE...................................................................................68

         9.1      Existence of Trust.............................................................................68
         9.2      Exclusive Benefit Rule.........................................................................68
</TABLE>



                                       iv

<PAGE>   6

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
         9.3      Removal or Resignation of Trustee..............................................................68
         9.4      Powers of Trustee..............................................................................68
         9.5      Integration of Trust Agreement.................................................................68
         9.6      Records and Accounts...........................................................................68
         9.7      Annual Reports.................................................................................69

ARTICLE X
ADMINISTRATION...................................................................................................70

         10.1     Allocation of Responsibility...................................................................70
         10.2     Administrative Expenses........................................................................70
         10.3     Plan Administrator Powers and Duties...........................................................70
         10.4     Records and Reports............................................................................70
         10.5     Reporting and Disclosure.......................................................................70
         10.6     Named Fiduciary................................................................................70
         10.7     Administrator..................................................................................70
         10.8     Interpretation of the Plan and Findings of Facts...............................................71
         10.9     Bonding, Insurance and Indemnity...............................................................71

ARTICLE XI
AMENDMENT, TERMINATION, MERGER, CONSOLIDATION
AND ADOPTION.....................................................................................................73

         11.1     Permanency of Plan.............................................................................73
         11.2     Right to Amend Plan............................................................................73
         11.3     Right to Terminate Plan........................................................................74
         11.4     Termination of Participation in Plan by Employer other than Company............................75
         11.5     Merger, Consolidation, or Transfer of Assets...................................................75
         11.6     Adoption of Plan by Controlled Group Members...................................................76

ARTICLE XII
GENERAL PROVISIONS...............................................................................................78
         12.1     Participant's Rights to Employment, Etc........................................................78
         12.2     No Guarantee of Interests......................................................................78
         12.3     Standard of Conduct............................................................................78
         12.4     Allocation of Duties...........................................................................78
         12.5     Claims Procedure...............................................................................79
         12.6     Nonalienation or Assignment; QDRO's............................................................80
         12.7     Plan Continuance Voluntary.....................................................................82
         12.8     Payments to Minors and Others..................................................................82
         12.9     Location of Payee; Unclaimed Benefits..........................................................82
</TABLE>


                                        v

<PAGE>   7

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         12.10    Governing Law..................................................................................82
         12.11    Correction of Participants' Accounts...........................................................82
         12.12    Action of Employer and Plan Administrator......................................................83
         12.13    Employer Records...............................................................................83
         12.14    Gender and Number..............................................................................83
         12.15    Headings.......................................................................................83
         12.16    Liability Limited..............................................................................83
         12.17    Prohibited Discrimination......................................................................83
         12.18    Legal References...............................................................................83
         12.19    Military Service...............................................................................83
         12.20    Electronic Means of Communication..............................................................83
         12.21    Plan Conversions...............................................................................84

ARTICLE XIII
SPECIAL RULES APPLICABLE TO TOP HEAVY PLAN YEARS.................................................................85

         13.1     Top-Heavy Provisions...........................................................................85
         13.2     Top-Heavy Special Definitions..................................................................86

APPENDIX I
SPECIAL PROVISIONS RELATING TO ANNUITY PAYMENTS..................................................................90

         1.1      Forms of Benefit for Certain Accounts..........................................................90
         1.2      Annuities......................................................................................91
         1.3      Death On or After Benefit Commencement Date....................................................91
         1.4      Valuation of Accounts for Payments.............................................................91
         1.5      Definitions....................................................................................92

APPENDIX II
SPECIAL PROVISIONS REGARDING MERGER OF THE
MRS. BOEHME'S HOLSUM BAKERY, INC. 401(k) RETIREMENT
PLAN WITH AND INTO THE PLAN......................................................................................93

         2.1      General Provisions.............................................................................93
         2.2      Separate Accounting............................................................................93
         2.3      Transfer of Plan Assets........................................................................93
         2.4      Conditions for Merger and Transfer.............................................................93
         2.5      Forms of Benefits for Boehme's Accounts........................................................94
         2.6      Benefits Upon Death............................................................................95
         2.7      Vesting........................................................................................95
         2.8      In-Service Withdrawals.........................................................................95
         2.9      Hours of Service...............................................................................96
</TABLE>



                                       vi

<PAGE>   8

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
APPENDIX III
SPECIAL PROVISIONS REGARDING MERGER OF THE
HOLSUM BAKING COMPANY RETIREMENT PLAN
WITH AND INTO THE PLAN...........................................................................................97

         3.1      General Provisions.............................................................................97
         3.2      Separate Accounting............................................................................97
         3.3      Transfer of Plan Assets........................................................................97
         3.4      Conditions for Merger and Transfer.............................................................98
         3.5      Additional Forms of Benefit for Holsum Accounts................................................98
         3.6      Vesting........................................................................................98
         3.7      In-Service Withdrawals.........................................................................98
         3.8      Hours of Service...............................................................................99

APPENDIX IV
SPECIAL PROVISIONS REGARDING MERGER OF THE
SHIPLEY BAKING COMPANY 401(k) RETIREMENT PLAN
AND TRUST WITH AND INTO THE PLAN................................................................................100

         4.1      General Provisions............................................................................100
         4.2      Separate Accounting...........................................................................100
         4.3      Transfer of Plan Assets.......................................................................100
         4.4      Conditions for Merger and Transfer............................................................101
         4.5      Additional Forms of Benefit for Shipley Accounts..............................................101
         4.6      Benefits Upon Death...........................................................................102
         4.7      Vesting.......................................................................................102
         4.8      In-Service Withdrawals........................................................................102
         4.9      Hours of Service..............................................................................103

APPENDIX V
SPECIAL PROVISIONS REGARDING MERGER OF THE
FRANKLIN BAKING COMPANY, INC. PROFIT SHARING
PLAN AND THE FRANKLIN BAKING COMPANY, INC. 401(k)
RETIREMENT SAVINGS PLAN WITH AND INTO THE PLAN..................................................................104

         5.1      General Provisions............................................................................104
         5.2      Separate Accounting...........................................................................104
         5.3      Transfer of Plan Assets.......................................................................104
         5.4      Conditions for Merger and Transfer............................................................105
         5.5      Additional Forms of Benefit for Franklin Accounts.............................................105
         5.6      Vesting.......................................................................................105
</TABLE>



                                       vii

<PAGE>   9

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         5.7      In-Service Withdrawals........................................................................105
         5.8      Hours of Service..............................................................................105

APPENDIX VI
SPECIAL PROVISIONS REGARDING MERGER OF THE
PIES, INC. RETIREMENT SAVINGS PLAN WITH AND INTO THE PLAN.......................................................106

         6.1      General Provisions............................................................................106
         6.2      Separate Accounting...........................................................................106
         6.3      Transfer of Plan Assets.......................................................................106
         6.4      Conditions for Merger and Transfer............................................................106
         6.5      Vesting.......................................................................................107
         6.6      In-Service Withdrawals........................................................................107
         6.7      Hours of Service..............................................................................107

EXHIBIT A TO FLOWERS INDUSTRIES, INC.
401(K) RETIREMENT SAVINGS PLAN..................................................................................108
</TABLE>



                                      viii

<PAGE>   10

                            FLOWERS INDUSTRIES, INC.
                         401(k) RETIREMENT SAVINGS PLAN

                                    PREAMBLE


         This Flowers Industries, Inc. 401(k) Retirement Savings Plan (the
"Plan") and the Trust which forms a part of the Plan, are intended to be and to
remain qualified and exempt from taxation under Sections 401 and 501 of the
Internal Revenue Code of 1986, and shall be interpreted and administered in such
manner as shall be necessary to carry out this intention.

         The original effective date of the Plan was April 1, 1995.

         The Plan is herein amended and restated in order to comply with
applicable provisions of the Uruguay Round Agreements Act, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal
Revenue Service Restructuring and Reform Act of 1998.

         The effective date of the amendment and restatement of this Plan is
generally January 1, 1997, and the amendment and restatement shall apply only to
a Participant who is credited with an Hour of Service on or after that date,
except as may be otherwise stated herein. The rights and benefits of a
Participant who is not credited with an Hour of Service on or after January 1,
1997 shall be determined in accordance with the provisions of the Plan as in
effect on the Participant's termination of employment with the Employer.



<PAGE>   11

                                    ARTICLE I

                                   DEFINITIONS


         The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:

         1.1      Account shall mean a separate account which is established and
maintained for a Participant (or his Beneficiary) and to which contributions
made under this Plan which are allocated to such Participant, if any, and
earnings or losses thereon, if any, shall be credited. See Section 6.1 herein.

         1.2      ACP Contributions.  See Section 3.7(b)(iii) of this Plan.

         1.3      Actual Deferral Percentage. See Section 3.6(b)(ii) of this
Plan.

         1.4      ADP Contributions.  See Section 3.6(b)(iii) of this Plan.

         1.5      Allocation Participant shall, for a Plan Year, mean those
Participants who are employed with the Employer on the last day of the Plan
Year.

         1.6      Annual Additions.  See Section 4.2(a) of this Plan.

         1.7      Average Actual Deferral Percentage. See Section 3.6(b)(i) of
this Plan.

         1.8      Average Contribution Percentage. See Section 3.7(b)(i) of this
Plan.

         1.9      Beneficiary shall mean any person or persons, including a
trust for the benefit of individuals, last designated in writing by a
Participant pursuant to the provisions and conditions of Section 8.2(c), who is
or may become entitled to a benefit hereunder. If, at any time, no Beneficiary
has been validly designated by the Participant, or the Beneficiary validly
designated by the Participant is no longer living or no longer exists, whichever
is applicable, then the Participant's Beneficiary shall be deemed to be the
person or persons in the first of the following classes of beneficiaries with
one or more members of such class surviving or in existence as of the
Participant's death, and in the absence thereof, the Participant's estate:

                  (a)      the Participant's Surviving Spouse; or

                  (b)      the Participant's lineal descendants, per stirpes.

         1.10     Benefit Commencement Date means the date of the distribution
determined pursuant to the provisions of Article VIII herein.



                                       2
<PAGE>   12

         1.11     Code shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.

         1.12     Company shall mean Flowers Industries, Inc., its successors
and assigns, and any other corporation, partnership or sole proprietorship into
which the Company may be merged or consolidated or to which all or substantially
all of its assets may be transferred unless such organization indicates in
writing that it does not approve of such automatic succession.

         1.13     Company Basic Contributions shall mean Employer contributions,
if any, made to this Plan pursuant to Section 3.1(e) of this Plan, and shall be
allocated pursuant to Section 3.1(e)(ii) hereof.

         1.14     Company Basic Contributions Account shall mean the Account of
a Participant to which are credited any Company Basic Contributions allocated
to the Participant each Plan Year under Section 3.1(e) of this Plan.

         1.15     Compensation.

                  (a) General Definition. Subject to subsections (b) through (e)
         below, Compensation for a Plan Year with respect to an Employee shall
         mean "compensation" as that term is defined in Code ss.415(c)(3) and
         Treas. Reg. ss.1.415-2(d)(1) and (2) and paid by an Employer to such
         Employee.

                  (b) Safe Harbor Exclusions. Notwithstanding the provisions of
         subsection (a) above, none of the following items shall be included in
         the definition of Compensation, whether or not includable in taxable
         gross income:

                           (i)      reimbursement or other expense allowances;

                           (ii)     fringe benefits (cash and noncash);

                           (iii)    moving expenses;

                           (iv)     deferred compensation;

                           (v)      welfare benefits;

         and, additionally, solely with respect to Highly Compensated Employees:

                           (vi) amounts received from the exercise of any
                  nonqualified stock options issued by an Employer;

                           (vii) amounts received from the sale or exchange of
                  stock transferred pursuant to the exercise of an incentive
                  stock option; and



                                       3
<PAGE>   13

                  (viii) amounts required to be reported as income pursuant to
         Code ss.7872.

         (c)      Non-Safe Harbor Exclusions. Notwithstanding the provisions of
subsection (a) above, and in addition to those items listed in subsection (b)
above, none of the following items shall also be included in the definition of
Compensation, whether or not includable in taxable gross income:

                  (i)      job injury benefits pay;

                  (ii)     sales contest prizes and safety contest prizes;

                  (iii)    longevity pay;

                  (iv) restricted stock dividends, equity incentive award
         dividends, and gain from purchase or receipt of stock or other property
         or cash pertaining to either type of award; and

                  (v)      lump sum bonus.

         (d)      Salary Reduction Arrangements. Notwithstanding the preceding
subsections of this Section, Compensation shall include any amount which is
contributed by an Employer pursuant to a salary reduction agreement and which is
not includable in the gross income of the Employee under Code ss.ss.125,
402(e)(3), 402(h) or 403(b).

         (e)      Limitation. The annual Compensation of each Employee taken
into account in determining contributions or benefits under the Plan for any
Plan Year shall not exceed the applicable "annual compensation limit" (as
defined in Code ss. 401(a)(17)) for the calendar year in which the Plan Year
begins. If the Plan determines Compensation for a period of time that contains
fewer than 12 calendar months, the above limitation is to be proportionately
reduced; provided, however, no proration is required for Employees who are
covered under the Plan for less than 1 full year if the contributions under the
Plan are based on Compensation for a period of at least 12 months.

         In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year.

         For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.



                                       4
<PAGE>   14

                  (f) Special Provisions. The term Compensation may be specially
         defined for purposes of certain provisions of this Plan. See, e.g.,
         Sections 1.41(g)(iv), 1.45(b), 3.6(b)(iv), 3.7(b)(iv), 4.2(b),
         13.1(a)(ii) and 13.2(f) of this Plan.

         1.16     Contribution Percentage.  See Section 3.7(b)(ii) of this Plan.

         1.17 Controlled Group shall mean the Company and any other entity which
is required to be aggregated with the Company pursuant to Code ss.ss.414(b),
(c), (m) or (o).

         1.18     Defined Benefit Fraction.  See Section 4.2(c) of this Plan.

         1.19     Defined Contribution Dollar Limitation. See Section 4.2(d) of
this Plan.

         1.20     Defined Contribution Fraction. See Section 4.2(e) of this
Plan.

         1.21     Determination Date.  See Section 13.2(d) of this Plan.

         1.22     Disabled shall mean unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment arising after an Employee has become a Participant and while employed
by an Employer resulting from demonstrable injury or disease that can be
expected to continue for an indefinite period of greater than 12 months or to
result in death and which prevents the Participant from engaging in his
occupation or performing any gainful occupation for which he is qualified by
reason of education, training or experience as determined by a qualified
physician selected by the Plan Administrator.

         1.23     Effective Date shall mean the day on which this amended and
restated Plan becomes effective, which shall be January 1, 1997. The original
effective date of the Plan was April 1, 1995.

         1.24     Election shall mean the election made by an Eligible Employee
to have the Employer make Elective Contributions on behalf of such Employee
pursuant to the provisions of Section 3.5 of this Plan. The Election may be made
by means of instructions provided by the Employee pursuant to any voice-response
system utilized by the Plan, and any hard copy confirmation of such verbal
instructions, as well as on any written form provided by the Plan Administrator
for said purpose.

         1.25     Election Period shall mean, for each Participant, his payroll
period.

         1.26     Elective Contributions shall mean Employer contributions, if
any, made to this Plan pursuant to Section 3.1(a) of this Plan that were subject
to a cash or deferred election under which, pursuant to Section 3.5 of this
Plan, an Eligible Employee could elect to have the Employer either contribute an
amount to this Plan or provide such amount to the Eligible Employee in cash or
in the form of some other taxable benefit. Elective Contributions shall be
allocated to Eligible Employees pursuant to Section 3.1(a)(ii) of this Plan.



                                       5
<PAGE>   15

         1.27     Elective Contributions Account shall mean the Account of a
Participant to which are credited any Elective Contributions allocated to the
Participant each Plan Year under Section 3.1(a) of this Plan.

         1.28     Elective Deferrals shall mean:

                  (a) Any elective contribution (as defined in Treas. Reg.
         ss.1.401(k)-1(g)(3)) by a given individual under any qualified cash or
         deferred arrangement (as defined in Code ss.401(k)) to the extent such
         contribution is not includible in the individual's gross income for the
         taxable year on account of Code ss.402(e)(3), including Elective
         Contributions to this Plan.

                  (b) Any employer contribution on behalf of a given individual
         to a simplified employee pension (as defined in Code ss.408(k)) to the
         extent such contribution is not includible in the individual's gross
         income for the taxable year on account of Code ss.402(h)(1)(B).

                  (c) Any employer contribution on behalf of a given individual
         to an annuity contract under Code ss.403(b) pursuant to a salary
         reduction agreement (within the meaning of Code ss.3121(a)(5)(D)) to
         the extent such contribution is not includible in the individual's
         gross income for the taxable year on account of Code ss.403(b).

                  (d) Any employee contribution by a given individual which is
         designated as deductible under a trust described in Code ss.501(c)(18),
         to the extent that such contribution is deductible from such
         individual's income for the taxable year on account of Code
         ss.501(c)(18).

         1.29     Eligibility Computation Period shall mean, for purposes of
determining Years of Eligibility Service and One-Year Breaks in Service for
eligibility, the following:

                  (a) The initial Eligibility Computation Period is the 12
         consecutive month period beginning on the Employee's Employment
         Commencement Date.

                  (b) The succeeding 12-consecutive-month Eligibility
         Computation Periods commence with the first plan year which commences
         prior to the first anniversary of the Employee's employment
         commencement date regardless of whether the Employee is entitled
         to be credited with 1,000 hours of service during the initial
         Eligibility Computation Period. An Employee who is credited with 1,000
         hours of service in both the initial Eligibility Computation Period and
         the first Plan Year which commences prior to the first anniversary of
         the Employee's initial Eligibility Computation Period will be credited
         with two Years of Eligibility Service.

                  (c) In the case of a reemployed Employee, the Eligibility
         Computation Period of such Employee after the Employee's date of
         reemployment shall commence on his reemployment date.



                                       6
<PAGE>   16

         1.30     Eligible Employee.

                  (a) In General. Eligible Employee shall mean an Employee (i)
         who is employed by an Employer, and (ii) who is eligible to participate
         in this Plan and become a Participant for all or a portion of a Plan
         Year pursuant to Article II of this Plan. (Employees described in
         subsections (c) through (f) of Section 2.1 shall not be Eligible
         Employees while such description is applicable.)

                  (b) Special Rules. Solely for purposes of applying the
         discrimination tests in Article III associated with ADP Contributions
         and ACP Contributions, an Eligible Employee generally means an Employee
         who is directly or indirectly eligible to make Elective Contributions
         and receive an allocation of Matching Elective Contributions under the
         Plan for a Plan Year. An Employee who would be eligible to make
         Elective Contributions or receive an allocation of Matching Elective
         Contributions but for a suspension due to a hardship withdrawal or an
         election not to participate in the Plan, is treated as an Eligible
         Employee for purposes of applying the discrimination tests in Article
         III associated with ADP Contributions and ACP Contributions. An
         Employee will also be considered an Eligible Employee for such tests
         even though the Employee does not receive additional Annual Additions
         because of an Excess Amount.

         1.31     Eligible Highly Compensated Employee shall mean an Eligible
Employee who is also a Highly Compensated Employee.

         1.32     Employee shall mean a person who performs services for a
member of the Controlled Group and who is a common law employee of such
Controlled Group member and any Self-Employed Individual who is treated as
an employee of a member of the Controlled Group pursuant to Code ss.401(c)(1).
The term Employee shall also include any Leased Employee of a Controlled Group
member. The term "Employee" shall not include an individual who provides
services to the Employer or another Controlled Group member pursuant to a
contractual arrangement with another entity, but who is not deemed to
constitute a Leased Employee.

         1.33     Employer shall mean the Company and each member of the
Controlled Group which has adopted this Plan pursuant to Section 11.6 herein.
See also Section 4.2(f) for a special definition applicable in Article IV.

         1.34     Employment Commencement Date shall mean the date on which an
Employee first performs an Hour of Service (as defined in subsection (a) of
Section 1.43) for any member of the Controlled Group.

         1.35     Entry Date shall mean the first day of the payroll period
beginning on or after the first day of the calendar month following the
Eligibility Computation Period in which an Eligible Employee first completes
1 Year of Service.

         1.36     ERISA shall mean the Employee Retirement Income Security
Act of 1974, as the same may be amended from time to time.



                                       7
<PAGE>   17

         1.37     Excess Amount.  See Section 4.2(g) of this Plan.

         1.38     Excess Deferrals shall mean Elective Deferrals made by a
Participant for a calendar year in excess of the maximum amount specified in
Code ss.402(b)(1), as adjusted pursuant to Code ss.ss.402(g)(4) and (5),
applicable for such calendar year.

         1.39     Forfeitable Account shall mean a Participant's Matching
Elective Contributions Account and/or Employer Contribution Account.

         1.40     Highest Average Compensation. See Section 4.2(h) of this Plan.

         1.41     Highly Compensated Employee shall mean the following:

                  (a) An individual shall be a Highly Compensated Employee, with
         respect to a Plan Year, if the individual is described under either or
         both subsection (b) or subsection (c) below.

                  (b) An individual is described under this subsection (b) if
         the individual is performing services during the determination period
         for the Controlled Group and: (1) the individual received compensation
         from the Controlled Group during the look-back year in excess of
         $80,000 and was a member of the top-paid group for such look-back year;
         or (2) the individual was a 5-percent owner at any time during either
         or both the look-back year or the determination period.

                  (c) An individual is described under this subsection (c) if
         the individual was, at one time, an Employee of the Controlled Group
         and the individual separated from service (or was deemed to have
         separated from service pursuant to Treas. Reg. ss.1.414(q)-1T(Q&A-5))
         from the Controlled Group prior to the determination period, such
         individual performs no service for the Controlled Group during the
         determination period, and such individual is a "highly compensated
         employee" (as defined in Code ss.414(q)) for either the determination
         period during which the individual separated from service with the
         Controlled Group or any determination period ending on or after the
         individual's 55th birthday.

                  (d) For purposes of this Section, the applicable dollar
         amounts specified in clause (1) of subsection (b) shall be the
         applicable dollar amount prescribed in Code ss.ss.414(q)(1)(B) and
         shall be adjusted pursuant to the last sentence of Code ss.414(q)(1).

                  (e) For purposes of this Section the term "determination
         period" shall mean the respective Plan Year specified in subsection (a)
         above, and the term "look-back year" shall mean the 12-month period
         immediately preceding the determination period.

                  (f) In determining who is a Highly Compensated Employee, the
         following definitions shall apply:



                                       8
<PAGE>   18

                           (i) Top-paid group shall mean the top 20% of
                  Employees of the Controlled Group ranked on the basis of
                  compensation received during the determination period or
                  look-back year, as applicable. For purposes of determining the
                  number of Employees in the top-paid group, Employees described
                  in Treas. Reg. ss.1.414(q)-1T(Q&A-9)(b) are excluded.

                           (ii) 5-percent owner shall mean a 5-percent owner
                  determined pursuant to Treas. Reg. ss.1.416-1(T-17) and
                  (T-18). If an individual is a 5-percent owner at any time
                  during a determination period or look-back year, the
                  individual shall be considered a 5-percent owner for such
                  period or year.

                           (iii) Compensation shall mean compensation as defined
                  in Section 4.2(b) herein, except that compensation shall
                  include any amount which is contributed by the Controlled
                  Group pursuant to a salary reduction agreement and which is
                  not includible in the gross income of the Employee under Code
                  ss.ss.125, 402(a)(8) or 403(b).

                  (g) The determination of who is a Highly Compensated Employee,
         including the determinations of the number and identity of the
         Employees in the top-paid group, the top 100 Employees, the number of
         individuals treated as officers and the compensation that is
         considered, will be made in accordance with Code ss.414(q) and the
         regulations thereunder.

         1.42     Highly Compensated Participant shall mean a Participant who
         is a Highly Compensated Employee.

         1.43     Hours of Service shall mean those hours calculated in
         accordance with the following provisions:

                  (a) An Employee shall receive credit for an Hour of Service
         for each hour for which he is paid or entitled to payment by the
         Employer for the performance of duties.

                  (b) An Employee shall also receive credit for an Hour of
         Service for each hour for which he is paid or entitled to payment by
         the Employer on account of a period of time during which no duties are
         performed (irrespective of whether the employment relationship has
         terminated) due to vacation, holiday, illness, incapacity (including
         disability), layoff, jury duty or military duty; provided, however,
         that:

                           (i) No more than 501 Hours of Service shall be
                  credited because of this subsection (b) to an Employee on
                  account of any single continuous period during which the
                  Employee performs no duties (whether or not said period occurs
                  in a single computation period), except as provided in
                  subsection (d) below;

                           (ii) An hour for which an Employee is directly or
                  indirectly paid or entitled to payment on account of a period
                  during which no duties are performed shall not be credited to
                  an Employee if said payment is made or due under a plan



                                       9
<PAGE>   19

                  maintained solely for the purpose of complying with applicable
                  worker's compensation, unemployment compensation, or
                  disability insurance laws; and

                           (iii) Hours of Service shall not be credited for a
                  payment which reimburses an Employee solely for medical or
                  medically related expenses incurred by the Employee.

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

                  (c) An Employee shall also receive credit for an Hour of
         Service for each hour for which back pay, irrespective of mitigation of
         damages, is either awarded or agreed to by the Employer provided that
         no Hour of Service shall be credited pursuant both to this subsection
         (c) and subsections (a) or (b) above. Crediting of Hours of Service for
         back pay awarded or agreed to with respect to periods described in
         subsection (b) above shall be subject to the limitations set forth in
         that subsection.

                  (d) In addition to the Service for which an Hour of Service
         must be credited pursuant to subsections (a), (b) and (c) above, an
         Employee shall receive credit for an Hour of Service for:

                           (i) Each hour, whether or not said Employee is paid
                  therefor, during which he would otherwise perform an Hour of
                  Service, except for the fact that he is on an approved leave
                  of absence. If he does not return to work on or before the end
                  of his leave, service will be deemed to have terminated as of
                  the beginning of his leave; and

                           (ii) Each hour for which an Employee performs no
                  duties due to absence during any military service so long as
                  such hours are required to be taken into account under the
                  Selective Service and Training Act of 1940, as amended, the
                  Military Selective Service Act of 1967, as amended, and/or the
                  Vietnam Era Veteran's Readjustment Act of 1974, as amended, or
                  other applicable federal law.

                  (e) Each Employee for whom the Employer does not keep records
         of actual Hours of Service shall be credited with 45 Hours of Service
         for each week for which said Employee would be required to be credited
         with at least 1 Hour of Service, in accordance with this Section and
         applicable regulations promulgated by the Department of Labor.

                  (f) In determining and crediting to computation periods the
         number of Hours of Service to be credited to an Employee, the
         provisions of DOL Reg. ss.ss.2530.200b-2(b) and 2(c) are incorporated
         herein by reference.



                                       10
<PAGE>   20

         (g) If an Employee is absent from service with the Employer as a result
         of a maternity/paternity absence, then, solely for purposes of
         determining whether the Employee incurs a One Year Break in Service for
         purposes of eligibility to participate and vesting in benefits, the
         Employee will be credited with up to 501 Hours of Service with respect
         to the period of maternity/paternity absence. Such 501 Hours of Service
         shall be credited at the rate at which the Employee would have
         otherwise accrued Hours of Service but for the maternity/paternity
         absence, provided that, if the Plan Administrator is unable to
         determine the Hours of Service that would have otherwise been credited,
         such Hours of Service shall be credited at the rate of eight hours for
         each day of the maternity/paternity absence. Such 501 Hours of Service
         shall be credited only in the Eligibility Computation Period or Vesting
         Computation Period, as applicable, in which the Employee's
         maternity/paternity absence commences if the Employee would have
         incurred a One Year Break in Service in such Eligibility Computation
         Period or Vesting Computation Period, as applicable, but for the
         crediting of the additional Hours of Service. If such Hours of Service
         (not in excess of 501) are not credited to the Eligibility Computation
         Period or Vesting Computation Period, as applicable, in which the
         maternity/paternity absence commences pursuant to the immediately
         preceding sentence, such Hours of Service shall be credited to the next
         Eligibility Computation Period or Vesting Computation Period, as
         applicable, commencing after the maternity/paternity absence commences.
         For purposes of this subsection, the term "maternity/paternity absence"
         means an absence from service with the Employer by an Employee if the
         absence is caused:

                           (i) By reason of the pregnancy of the Employee;

                           (ii) By reason of the birth of a child of the
                  Employee;

                           (iii) By reason of the placement of a child with the
                  Employee in connection with the adoption of such child by the
                  Employee; or

                           (iv) For purposes of caring for such child for a
                  period beginning immediately following such birth or
                  placement.

                  (h) For purposes of this Section, employment with other
         members of the Controlled Group shall be considered employment with the
         Employer. In addition, in the case of a Leased Employee of any member
         of the Controlled Group, service with such member shall be considered
         employment with the Employer.

         1.44     Key Employee.  See Section 13.2(f) of this Plan.

         1.45     Leased Employee.

                  (a) Leased Employee shall mean any person (other than a common
         law employee of a member of the Controlled Group) who pursuant to an
         agreement between a member of the Controlled Group and any other person
         ("leasing organization") has performed services for a member of the
         Controlled Group (or for a member of the Controlled Group and related




                                       11
<PAGE>   21

         persons determined in accordance with Code ss.414(n)(6)) on a
         substantially full time basis for a period of at least one year, and
         such services are performed under primary direction and control of a
         member of the Controlled Group. Contributions or benefits provided a
         Leased Employee by the leasing organization which are attributable to
         services performed for a member of the Controlled Group shall be
         treated as provided by a member of the Controlled Group.

                  (b) A Leased Employee shall not, however, be considered an
         Employee of a member of the Controlled Group if: (i) such Employee is
         covered by a money purchase pension plan of his legal employer
         providing: (1) a nonintegrated employer contribution rate of at least
         10% of compensation (as defined in Code ss.415(c)(3), but including
         amounts contributed pursuant to a salary reduction agreement which are
         excludable from the Employee's gross income under Code ss.ss.125,
         402(a)(8), 402(h) or 403(b)), (2) immediate participation, and (3) full
         and immediate vesting; and (ii) Leased Employees do not constitute more
         than 20% of the Controlled Group's nonhighly compensated workforce. For
         purposes of this subsection (b), the term "nonhighly compensated
         workforce" means the total number of individuals (other than Highly
         Compensated Employees) who are either Employees of a member of the
         Controlled Group or Leased Employees of a member of the Controlled
         Group.

         1.46     Limitation Year.  See Section 4.2(i) of this Plan.

         1.47     Matching Elective Contributions shall mean Employer
contributions, if any, made to this Plan pursuant to Section 3.1(b)(i) of this
Plan and allocated to all Participants pursuant to Section 3.1(b)(ii) of this
Plan.

         1.48     Matching Elective Contributions Account shall mean the
Account of a Participant to which are credited any Matching Elective
Contributions allocated to the Participant under Section 3.1(b) of this Plan.

         1.49     Nonforfeitable Accounts shall mean a Participant's Elective
Contributions Account, Qualified Nonelective Contributions Account, Qualified
Matching Contributions Account and Rollover Contributions Account.

         1.50     Maximum Permissible Amount.  See Section 4.2(j) of this Plan.

         1.51     Normal Retirement Age shall mean age 65.

         1.52     Normal Retirement Date shall mean the first day of the
calendar month coincident with or next following the date the Participant
attains his Normal Retirement Age.

         1.53     One-Year Break in Service (or Break in Service) shall mean a
12-consecutive-month period (the Eligibility Computation Period or the Vesting
Computation Period, whichever the context requires) during which the Employee
does not complete more than 500 Hours of Service with the Employer.



                                       12
<PAGE>   22
         1.54    Participant shall mean an Eligible Employee who has met the
requirements of Article II for participation in this Plan and who is potentially
eligible to receive a benefit of any type from this Plan or whose Beneficiaries
are potentially eligible to receive a benefit of any type from this Plan, or a
former Employee who retains any Account balance in this Plan. An Eligible
Employee who has not completed the eligibility service requirement of Section
2.1(b) shall be treated as a Participant solely with respect to any Rollover
Contributions he made.

         1.55    Permissive Aggregation Group. See Section 13.2(b) of this Plan.

         1.56    Plan shall mean the Flowers Industries, Inc. 401(k) Retirement
Savings Plan, and all amendments to such plan made from time to time. This Plan
is intended to be a profit sharing plan within the meaning of Code ss.401(a) and
Treas. Reg. ss.1.401-1 under which contributions shall be made without regard to
current or accumulated profits as permitted by Code ss.401(a)(27)(A).

         1.57    Plan Administrator shall mean the person or persons appointed
by the President of the Company to administer the Plan pursuant to Article X
herein. If no such appointment is made, the Company shall be the Plan
Administrator.

         1.58    Plan Year shall mean the 12 consecutive month period for
keeping the books and records of the Plan, which shall be the calendar year.

         1.59    Present Value. See Section 13.2(e) of this Plan.

         1.60    Projected Annual Benefit. See Section 4.2(k) of this Plan.

         1.61    Qualified Matching Contributions shall mean Employer
contributions, if any, made to this Plan pursuant to Section 3.1(c)(i) of this
Plan and allocated to a certain group of Eligible Employees pursuant to Section
3.1(c)(ii) of this Plan.

         1.62     Qualified Matching Contributions Account shall mean the
Account of a Participant to which are credited any Qualified Matching
Contributions allocated to the Participant each Plan Year under Section 3.1(c)
of this Plan.

         1.63     Qualified Nonelective Contributions shall mean Employer
contributions, if any, made to this Plan pursuant to Section 3.1(d)(i) of this
Plan and allocated to a certain group of Eligible Employees pursuant to Section
3.1(d)(ii) of this Plan.

         1.64     Qualified Nonelective Contributions Account shall mean the
Account of a Participant to which are credited any Qualified Nonelective
Contributions allocated to the Participant in a given Plan Year under Section
3.1(d) of this Plan.

         1.65     Qualified Spousal Waiver shall mean a Participant's written
election, delivered to the Plan Administrator, signed by the Participant's
Spouse, and witnessed by a notary public or an authorized Plan representative,
which consents to the payment of all or a specified part of the Participant's
benefit to a named Beneficiary other than the Participant's Spouse. Such
election may



                                       13
<PAGE>   23

not be changed without Spousal consent (unless the consent expressly permits
designations by the Participant without further consent of the Spouse). A
Participant (but not the Participant's Spouse) may, however, revoke a Qualified
Spousal Waiver at any time prior to his Benefit Commencement Date by way of a
written signed statement to the Plan Administrator and a Qualified Spousal
Waiver shall not be effective at any time following delivery of such a
revocation to the Plan Administrator provided that such revocation is received
by the Plan Administrator prior to the Participant's Benefit Commencement Date.
If a Participant revokes a Qualified Spousal Waiver, the Participant's benefits
shall be payable under the terms and provisions of this Plan as if no Qualified
Spousal Waiver had ever been in existence.

         1.66    Required Aggregation Group. See Section 13.2(c) of this Plan.

         1.67    Required Beginning Date shall mean, with respect to a
Participant, the April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2.

         1.68    Rollover Contributions shall mean contributions, if any, made
by an Eligible Employee to the Plan which qualify as a "rollover contribution"
within the meaning of Code ss.ss.402(c)(5), 403(a)(4) or 408(d)(3), or a direct
trustee-to-trustee transfer within the meaning of Code ss. 401(a)(31).

         1.69    Rollover Contributions Account shall mean the Account of a
Participant to which are credited the Rollover Contributions made by the
Participant in a given Plan Year pursuant to Section 3.2 of this Plan.

         1.70    Self-Employed Individual shall mean an individual who has
Earned Income for the taxable year from the trade or business for which the Plan
is established; also an individual who would have Earned Income but for the fact
that the trade or business has no net profits for the taxable year.

         1.71    Spouse shall mean the legally recognized spouse of a
Participant determined as of the Participant's Benefit Commencement Date, or, if
earlier, determined as of the Participant's date of death.

         1.72    Surviving Spouse shall mean the surviving Spouse of a deceased
Participant. To the extent required by a qualified domestic relations order, an
alternate payee under such order shall be treated as the Surviving Spouse of a
deceased Participant. See Section 12.6 herein.

         1.73    Top-Heavy Plan.  See Section 13.2(g) of this Plan.

         1.74    Top-Heavy Ratio.  See Section 13.2(a) of this Plan.

         1.75    Trust shall mean the trust accompanying the Plan hereby
created.

         1.76    Trust Agreement shall mean the agreement between the Trustee
                 and the Company creating the Trust accompanying the Plan.



                                       14
<PAGE>   24
         1.77    Trust Fund shall mean the assets of the Trust held by the
Trustee pursuant to the provisions of the Trust Agreement and the Plan.

         1.78    Trustee shall mean the entity, person or persons who have
entered into the Trust Agreement with the Company to act as trustee(s) of the
assets of the Plan.

         1.79    Valuation Date shall mean each day of the Plan Year as of which
Plan assets held in the Trust and the Account balances of Participants shall be
valued by the Trustee. The Valuation Dates of the Plan shall be the last day of
each calendar month.

         1.80    Vesting Computation Period shall mean, for purposes of
determining Years of Vesting Service and One-Year Breaks in Service for vesting,
the 12 consecutive month period coincident with the Plan Year.

         1.81    Year of Eligibility Service.

                  (a) In General. A Year of Eligibility Service shall mean an
         Eligibility Computation Period during which the Employee completes
         1,000 Hours of Service.

                  (b) Other Controlled Group Service. For purposes of this
         Section, employment with other members of the Controlled Group shall be
         considered employment with the Employer. In addition, in the case of a
         Leased Employee of any employing person or entity described in the
         preceding sentence, employment with such employer shall be considered
         employment with the Employer.

                  (c) Service with Predecessor Employer. For purposes of this
         Section, in any case in which the Employer maintains a plan of a
         predecessor employer, service for such predecessor shall be treated as
         service for the Employer in accordance with Code ss.414(a).

                  (d) Special Rules. See Article II for special rules relating
         to the determination of Years of Eligibility Service. In addition, the
         instrument by which an Employer adopts the Plan (in cases of adoptions
         subsequent to April 1, 1995) may contain special provisions with
         respect to credit for service rendered prior to the Employer's becoming
         a member of the Controlled Group.

         1.82     Year of Vesting Service.

                  (a) In General. A Year of Vesting Service shall mean a Vesting
         Computation Period during which an Employee completes 1,000 Hours of
         Service.

                  (b) Other Controlled Group Service. For purposes of this
         Section, employment with other members of the Controlled Group shall be
         considered employment with the Employer. In addition, in the case of a
         Leased Employee of any employing person or entity described in the
         preceding sentence, employment with such employer shall be considered
         employment with the Employer.



                                       15
<PAGE>   25

                  (c) Service with Predecessor Employer. For purposes of this
         Section, in any case in which the Employer maintains a plan of a
         predecessor employer, service for such predecessor shall be treated as
         service for the Employer in accordance with Code ss. 414(a).

                  (d) Special Rules. See Article V for special rules relating to
         the determination of Years of Vesting Service. In addition, the
         instrument by which an Employer adopts the Plan (in cases of adoptions
         subsequent to April 1, 1995) may contain special provisions with
         respect to credit for service rendered prior to the Employer's becoming
         a member of the Controlled Group.



                                       16
<PAGE>   26

                                   ARTICLE II

                          ELIGIBILITY FOR PARTICIPATION


         2.1 Initial Attainment of Participation Status.

         (a) Subject to the special rules of Sections 2.2 through 2.5 below, all
Employees who are Eligible Employees shall become Participants hereunder on the
first Entry Date coincident with or next following the date on which the
Employee satisfies the eligibility requirements set forth in subsection (b)
below, provided such Employee is still in the service of an Employer as an
Eligible Employee on such Entry Date.

         (b) Eligibility Requirements. For purposes of this Plan, the
eligibility requirements for participation in this Plan shall be as follows:

                  (i) An Employee must complete an Eligibility Computation
         Period during which the Employee receives credit for 1 Year of
         Eligibility Service.

                  (ii) In determining the Years of Eligibility Service completed
         by an Employee for purposes of paragraph (i) above, Years of
         Eligibility Service shall be determined pursuant to Sections 1.81, 2.2,
         2.3, and 2.5 of this Plan.

         (c) Leased Employees and Certain Independent Contractors Excluded.
Leased Employees shall not be Eligible Employees and shall not be eligible to
participate in this Plan while they remain Leased Employees notwithstanding any
provision of this Plan to the contrary. No individual shall be eligible to
participate if he is classified by a member of the Controlled Group as an
independent contractor performing services for the Controlled Group and as to
whom such member or members have determined in good faith that they (i) are not
required by law to, and do not pay, Federal Insurance Contributions Act taxes
with respect to such individual, or (ii) are required to pay taxes only by
reason of Code ss. 3121(d)(3).

         (d) Collective Bargaining Employees Excluded. Employees shall not be
Eligible Employees if they are included in a unit of employees covered by a
collective bargaining agreement between the representative of such Employees and
the Employer if retirement benefits were the subject of good faith bargaining
between such representative and the Employer. If, however, the collective
bargaining agents of any collective bargaining unit accept the Plan, the
employees who are members of such unit shall become Eligible Employees for the
period of any such acceptance and until it is revoked, should that occur.

         (e) Nonresident Aliens. Employees who are nonresident aliens and who
receive no earned income (within the meaning of Code ss.911(d)(2)) from the
Employer which constitutes income from sources within the United States (within
the meaning of Code ss.861(a)(3)) shall not be Eligible Employees and shall not
be eligible to participate in this Plan notwithstanding any provision of this
Plan to the contrary.



                                       17
<PAGE>   27

         (f) Distributors and Thrift Store Operators. Notwithstanding any
provision of the Plan to the contrary, individuals who are distributors or
thrift store operators and who have executed a written agreement with a member
of the Controlled Group for the distribution or sale of goods or products (and
any employees, agents or independent contractors of such distributors or thrift
store operators) shall not be eligible to participate in this Plan.

         2.2      Reemployment of Former Employees.

         (a) Any former Employee who terminated employment with the Controlled
Group prior to becoming a Participant hereunder shall, upon being rehired by the
Controlled Group as an Eligible Employee, receive credit for purposes of Years
of Eligibility Service for all service prior to his or her separation from
service, subject to subsections (b) and (c) below.

         (b) One Year Holdout. Any former Employee who terminated employment
prior to becoming a Participant hereunder and who has a One-Year Break in
Service shall not receive credit for service prior to such break in service
unless and until such Employee has completed a Year of Eligibility Service after
his return.

         (c) Rule of Parity. Any former Employee (i) who terminated employment
prior to becoming a Participant hereunder, (ii) who has one or more One-Year
Breaks in Service and (iii) for whom the number of consecutive One-Year Breaks
in Service prior to such Employee's reemployment equals or exceeds the greater
of 5 or the aggregate number of Years of Eligibility Service before such
One-Year Breaks in Service shall not receive credit for service prior to such
One-Year Breaks in Service.

         2.3      Reemployment of Former Participants.

         General Rule. Any former Participant who terminated employment with the
Controlled Group shall, upon being rehired by the Controlled Group as an
Eligible Employee, immediately become a Participant hereunder.

         2.4      Transfers to/from Eligible Class.

         (a) Exclusion After Participation. A Participant who ceases to be an
Eligible Employee, but who has not ceased to be an Employee, shall not share in
any contributions under Section 3.1 of this Plan until such Participant again
becomes an Eligible Employee. However, such Participant shall be entitled to
benefits in accordance with the other provisions of this Plan and shall continue
to earn Years of Eligibility Service and Years of Vesting Service nonetheless,
and amounts previously credited to the Participant's Accounts shall continue to
receive allocations of earnings and losses under Article VII of this Plan.

         (b) Participation After Exclusion. An Employee who has not been an
Eligible Employee but who becomes an Eligible Employee shall become a
Participant hereunder as



                                       18
<PAGE>   28

of the first Entry Date coincident with or next following the date on which the
Employee becomes an Eligible Employee.

         2.5     Family and Medical Leave Act. Any period while an Employee is
on a leave of absence under the Family and Medical Leave Act of 1993 will be
treated as continued service for the purpose of computing Years of Eligibility
Service.



                                       19
<PAGE>   29

                                   ARTICLE III

                          CONTRIBUTIONS AND ALLOCATIONS


         3.1     Employer Contributions. Each Employer may make contributions to
the Plan (all of which are hereby expressly conditioned on their deductibility
under Code ss.404) by making payments to the Trustee in one or more of the
methods described in subsections (a) through (e) below. Said contributions shall
be made in cash, or by payments of property acceptable to the Trustee if such
payments (i) are purely voluntary, (ii) do not relieve the Employer of an
obligation to make contributions to this Plan, and (iii) do not constitute
prohibited exchanges under ERISA ss.406(a)(1)(A)).

                  (a)      Elective Contributions.

                           (i) Amount. For each Election Period, the Employer
                  shall make Elective Contributions to this Plan in an amount
                  equal to the aggregate Elective Contributions elected by
                  Participants pursuant to Elections consistent with the
                  provisions of Section 3.5 of this Plan, subject to the
                  limitation on allocations pursuant to Article IV of this Plan.

                           (ii) Allocation. Elective Contributions elected by a
                  Participant pursuant to Elections consistent with the
                  provisions of Section 3.5 of this Plan shall, subject to the
                  limitations of Sections 3.5, 3.6, 3.8, 3.9, 3.10 and Article
                  IV of this Plan, be allocated to such Participant's Elective
                  Contributions Account. The Participant's salary or wages from
                  the Employer shall be reduced accordingly.

                  (b)      Matching Elective Contributions.

                           (i) Amount. For each Election Period, the Employer
                  shall make Matching Elective Contributions to this Plan in an
                  amount equal to the aggregate of the amounts to be allocated
                  to Participants under paragraph (ii) below.

                           (ii) Allocation. Matching Elective Contributions and
                  any forfeitures under Sections 3.5(f), 3.8(c) and 8.5 to be
                  reallocated for a Plan Year shall be allocated as of the date
                  contributed or for the Plan Year in which forfeited, as
                  appropriate, so that the amount allocated shall equal that
                  percentage, described in the relevant exhibit hereto for the
                  Employer in question, of the Participant's Elective
                  Contributions received during the Election Period (excluding
                  any Qualified Nonelective Contributions or Qualified Matching
                  Contributions treated as Elective Contributions under Section
                  3.6(b)(iii) of this Plan), subject to the limitations of
                  Sections 3.7, 3.8, 3.9, 3.10 and Article IV of this Plan. A
                  Participant need not remain employed as of the last day of the
                  Plan Year in order to receive a Matching Elective
                  Contribution. The stated percentage referred to in the first
                  sentence of this subsection and any other conditions or
                  provisions with respect to said contributions shall be set



                                       20
<PAGE>   30

                  forth in Exhibit A of this Plan with respect to each Employer
                  which elects to make Matching Elective Contributions.

                           (iii) Limitations Concerning Matching Elective
                  Contributions. In addition to the other conditions and
                  limitations set forth in this Plan, Matching Elective
                  Contributions which are, for a Plan Year, allocated to the
                  Matching Elective Contributions Account of a Participant who
                  is an Eligible Highly Compensated Employee, and which cause
                  the Plan to fail the Contribution Percentage Test of Section
                  3.7 of this Plan or the special limitation of Section 3.9 of
                  this Plan for such Plan Year shall be corrected pursuant to
                  Section 3.8. Furthermore, in the case of each Participant, no
                  Matching Elective Contributions shall be allocated to a
                  Participant's Matching Elective Contributions Account which
                  would cause the Plan to fail to satisfy the limitations of
                  Article IV of this Plan.

                  (c)      Qualified Matching Contributions.

                           (i) Amount. For each Plan Year, the Employer may make
                  Qualified Matching Contributions to this Plan in an amount
                  which shall be determined solely in the discretion of the
                  Company, and which shall be used to satisfy the Deferral
                  Percentage Test of Section 3.6 of this Plan and/or the
                  Contribution Percentage Test of Section 3.7 of this Plan.

                           (ii) Allocation. Qualified Matching Contributions for
                  a Plan Year shall be allocated as of the date contributed to
                  the Qualified Matching Contributions Account of each
                  Allocation Participant who is not a Highly Compensated
                  Participant in proportion to the ratio which his or her
                  Elective Contributions for such Plan Year bears to the total
                  of all such contributions of all such Allocation Participants
                  for such Plan Year, subject to the limitations of Sections 3.7
                  and 3.9 and Article IV of this Plan.

                  (d)      Qualified Nonelective Contributions.

                           (i) Amount. For each Plan Year, the Employer may make
                  Qualified Nonelective Contributions to this Plan in an amount
                  which shall be determined solely in the discretion of the
                  Company, and which shall be used to satisfy the Deferral
                  Percentage Test of Section 3.6 of this Plan, the Special
                  Limitation of Section 3.9 of this Plan and/or the Contribution
                  Percentage Test of Section 3.7 of this Plan.

                           (ii) Allocation. Qualified Nonelective Contributions
                  for a Plan Year shall be allocated as of the last day of such
                  Plan Year to the Qualified Nonelective Contributions Account
                  of each Allocation Participant who is not a Highly Compensated
                  Participant in proportion to the ratio which his or her
                  Compensation during the Plan Year bears to the total
                  Compensation during such period of all such Participants
                  subject to the limitations of Article IV of this Plan.



                                       21
<PAGE>   31

                  (e)      Company Basic Contributions.

                           (i) Amount. Each Employer may, in lieu of or in
                  addition to the contributions described in subsections (a)
                  through (d) above, elect to make contributions on another
                  legally permissible basis to the Plan for the benefit of those
                  Participants who are employed by said Employer. In said event,
                  the Employer shall execute a description of the special
                  contribution formula which shall be included in its adopting
                  resolution referred to in Section 11.6, attached hereto, and
                  shall be reflected on Exhibit A to this Plan.

                           (ii) Allocation. In the event that an Employer shall
                  elect to make contributions pursuant to subparagraph (i) of
                  this subsection (e), said contributions shall be allocated to
                  Participants' accounts as described in each case in Exhibit A,
                  which may contain any other special provisions or definitions
                  relevant thereto.

         In no event shall the aggregate contributions made by the Employer
         under this Section exceed the amount deductible under Code ss.404. All
         allocations to be made under this Section shall be subject to the
         provisions of Section 13.1(a) of this Plan, if applicable.

         3.2      Employee Contributions.

                  Rollover Contributions. Each Eligible Employee may, without
         regard to whether such Eligible Employee is a Participant under this
         Plan and subject to the consent of the Plan Administrator based on
         satisfying the requirements of this subsection, make one or more
         Rollover Contributions which shall be allocated to the Eligible
         Employee's Rollover Contribution Account if the Rollover Contribution
         is:

                  (a) all or any portion of a distribution which is an "eligible
         rollover distribution" within the meaning of Code ss.402(c)(4);

                  (b) a distribution which is a "rollover contribution" within
         the meaning of Code ss.408(d)(3)(A)(ii) (or a "partial rollover" within
         the meaning of Code ss.408(d)(3)(D) and meeting the requirements
         therein);

                  (c) all or any portion of a distribution which is a "rollover
         amount" within the meaning of Code ss.403(a)(4); or

                  (d) in cash only, except that those Participants who direct a
         rollover from the Flowers Industries, Inc. Employee Stock Ownership
         Plan may rollover Company stock received from that plan.

         The Plan Administrator shall have the right to reject any Rollover
         Contribution which it determines in its sole judgment does not qualify
         under the above-referenced provisions. Any Rollover Contributions
         accepted by the Plan Administrator shall be promptly remitted to the
         Trustee to be held in a Rollover Contribution Account for the Eligible
         Employee's sole



                                       22
<PAGE>   32

         benefit, and shall be nonforfeitable at all times, but otherwise
         subject to all of the terms and provisions of this Plan, including but
         not limited to, restrictions upon availability.

         3.3     Time of Payment of Contributions. Employer contributions made
under Section 3.1 of this Plan shall be made for each Plan Year within the time
prescribed by law (including extensions thereof) for filing the Employer's
federal income tax return for the Employer's taxable year ending with or within
the Plan Year and shall actually be paid to the Trustee no later than the
12-month period immediately following the Plan Year to which such contributions
relate. Elective Contributions and Rollover Contributions under Section 3.2 of
this Plan shall be remitted to the Trustee as of the earliest date on which such
amounts can reasonably be segregated from the Employer's general assets, but in
any event not later than the 15th business day after the end of the calendar
month in which such Contributions are withheld or would otherwise have been paid
to the Participant.

         3.4     Return of Contributions. All contributions made to the Trustee
shall be irrevocable except as follows:

                  (a) Mistake of Fact. If an Employer contribution is made by an
         Employer under a mistake of fact, the amount of such contribution
         described in subsection (d) below shall be returned to the Employer
         within one year after the payment of said contribution.

                  (b) Deductibility Condition. All contributions of the Employer
         made to this Plan are hereby expressly conditioned on their
         deductibility under Code ss.404; if an Employer contribution is
         disallowed as a deduction under Code ss.404, the amount of the
         contribution described in subsection (d) below shall be returned to the
         Employer within one year after the disallowance of the deduction.

                  (c) Initial Qualification. All contributions made to this Plan
         prior to the receipt of an initial determination from the Internal
         Revenue Service that the Plan is qualified under Code ss.401(a) are
         hereby expressly conditioned on the initial qualification of the Plan
         under Code ss.401, and if a timely application for a determination has
         been made to the Internal Revenue Service by the Employer, but is
         denied, then said contribution shall be returned to the Employer within
         one year after the date of said denial of qualification of the Plan.

                  (d) Amount Returned. For purposes of subsections (a) and (b)
         above, the amount which may be returned to the Employer is the excess
         of (i) the amount contributed over (ii) the amount that would have been
         contributed had there not occurred a mistake of fact or a mistake in
         determining the deduction. Earnings attributable to such amount will
         not be returned to the Employer, but losses attributable thereto will
         reduce the amount so returned. Furthermore, if the return of an amount
         attributable to a mistaken contribution would cause the accrued benefit
         of any Participant to be reduced to less than it would have been had
         the mistaken amount not been contributed, then the amount to be
         returned to the Employer will be limited so as to avoid such reduction.



                                       23
<PAGE>   33

         3.5      Provisions Regarding Elective Contributions.

                  (a) Elective Contribution Elections. Each Eligible Employee
         may make an Election by which the Eligible Employee shall state the
         percentage (in whole percentages) of his Compensation which shall
         constitute his Elective Contribution applicable to each paycheck
         received within said Election Period. Said amount shall be contributed
         to his Elective Contribution Account by the Employer rather than paid
         to the Eligible Employee as taxable cash compensation. The maximum
         Elective Contribution that may be elected by an Eligible Employee for
         any Election Period shall not exceed 15% of the Eligible Employee's
         Compensation received during such Election Period and the minimum
         percentage shall be one percent (1%) of said Compensation. Any
         Participant who was a Highly Compensated Employee on the last day of
         the prior Plan Year and is a Highly Compensated Employee during the
         current Plan Year shall not be permitted to make Elective Contributions
         for a given Plan Year in excess of an amount determined by the Plan
         Administrator and communicated to said Employees. If an Eligible
         Employee has an Elective Contribution election in effect for an
         Election Period, such election automatically shall apply for the next
         succeeding Election Periods unless the Eligible Employee modifies or
         revokes the election in accordance with this Section. The Employer
         shall contribute to the Elective Contribution Account of each Eligible
         Employee the amount specified in an Eligible Employee's Elective
         Contribution election for so long as such election is in effect.

                  (b) Effective Time of Initial Elections or Modification of
         Elective Contribution Elections. An Eligible Employee may make an
         Election which changes the percentage of the Eligible Employee's
         Compensation to be deferred as an Elective Contribution. Any such
         modification will become effective as soon as reasonably practicable
         after said Election is made.

                  (c) Revocation of Elective Contribution Election. An election
         to revoke Elective Contributions may be made at any time, and shall be
         effective as soon as practicable after receipt of said election by the
         Plan Administrator. An Eligible Employee who revokes his Elective
         Contribution election may file a new Elective Contribution election to
         be effective prior to the first Election Period beginning after the
         date the Eligible Employee revoked his Elective Contribution election.

                  (d) Procedure for Making Elections. The Plan Administrator
         shall have complete discretion to adopt and revise procedures to be
         followed in making Elective Contribution elections. Such procedures may
         include, but are not limited to, the format of the Election Forms, if
         any, the ability of Participants to make elections orally or
         telephonically, the deadline for making Elective Contribution elections
         and for requesting a modification or revocation of an Elective
         Contribution election, and the procedures for approval of Elective
         Contribution elections; provided, however, that no election may be made
         to defer as an Elective Contribution any amount of Compensation that
         has already been paid to a Eligible Employee. Any procedures adopted by
         the Plan Administrator which have been set forth in writing and
         communicated to Eligible Employees that are inconsistent with the
         deadlines



                                       24
<PAGE>   34

         specified in this Section shall supersede such provisions of this
         Section without the necessity of a Plan amendment, and shall be applied
         in a uniform and nondiscriminatory manner.

                  (e) Elective Contribution Limitations. Notwithstanding any
         provision of this Plan to the contrary, an Eligible Employee shall not
         be allowed to elect to make, and may not make, Elective Contributions
         which, in the aggregate during a calendar year, exceed the maximum
         amount specified in Code ss.402(g)(1), as adjusted pursuant to Code
         ss.ss.402(g)(4) and (5), applicable to such calendar year.

                  (f) Return of Elective Deferrals; Correcting Distributions. To
         the extent that an Eligible Employee elects during a calendar year to
         make Elective Deferrals under a combination of this Plan and some other
         plan, arrangement or annuity in excess of the maximum amount specified
         in Code ss.402(g)(1), as adjusted pursuant to Code ss.402(g)(4) and
         (5), applicable to such calendar year, the Plan Administrator, sua
         sponte or upon written request of the Eligible Employee received by
         March 1 of the following calendar year, shall direct the Trustee to
         distribute, on or after January 1 of such following calendar year, but
         in no event later than April 15 of such following calendar year, to
         such Eligible Employee the portion of such Eligible Employee's Elective
         Contributions made during the calendar year which the Plan
         Administrator determines should be considered an Excess Deferral or
         which the Eligible Employee has designated as an Excess Deferral in
         such written request. Simultaneously therewith, the Matching Elective
         Contributions attributable to such portion of the Eligible Employee's
         Elective Contributions made during the calendar year shall be forfeited
         and held in a suspense account to be used to reduce the amount of
         future Matching Elective Contributions.

                  (g) Coordination with other Provisions. Any Elective
         Contributions designated as an Excess Deferral under subsection (f)
         above which are returned to the Participant pursuant to subsection (f)
         shall nonetheless be included as Elective Contributions for purposes of
         the Deferral Percentage Test specified in Section 3.6 of this Plan
         unless such Participant is not a Highly Compensated Participant, and
         may be distributed without regard to any notice or consent otherwise
         required by the terms of this Plan. The portion of a Participant's
         Elective Contributions made during a calendar year which has been
         designated as an Excess Deferral and which is to be distributed under
         subsection (f) above shall be reduced by any excess contributions (as
         determined under Section 3.8(c) of this Plan) previously distributed
         under Section 3.8(a) of this Plan with respect to such Participant for
         the Plan Year beginning with or within such calendar year.

                  (h) Other Limitations Concerning Elective Contributions. In
         addition to the other conditions and limitations set forth in this
         Plan, Elective Contributions which may, for a Plan Year, be allocated
         to a Participant's Account shall not be permitted, in the case of each
         Highly Compensated Participant, if they would cause the Plan to fail
         the Deferral Percentage Test specified in Section 3.6 of this Plan for
         such Plan Year, and, in the case of each Participant, if they would
         cause the Plan to fail to satisfy the limitations of Article IV of this
         Plan for such Plan Year.



                                       25
<PAGE>   35

         3.6      Limitation of Elective Deferrals.

                  (a) Deferral Percentage Test. The Deferral Percentage Test
         shall be satisfied for any Plan Year if the Average Actual Deferral
         Percentage for the Eligible Highly Compensated Employees for such Plan
         Year does not exceed the greater of (i) or (ii) as follows:

                           (i) The Average Actual Deferral Percentage for the
                  prior Plan Year for the Eligible Employees who are not Highly
                  Compensated Employees times 1.25; or

                           (ii)     The lesser of:

                                    (A) The Average Actual Deferral Percentage
                           for the prior Plan Year for the Eligible Employees
                           who are not Highly Compensated Employees times 2; or

                                    (B) The Average Actual Deferral Percentage
                           for the prior Plan Year for the Eligible Employees
                           who are not Highly Compensated Employees plus two
                           percentage points.

                  (b)      Definitions.

                           (i) Average Actual Deferral Percentage. For purposes
                  of this Section, the term "Average Actual Deferral Percentage"
                  of a group of Eligible Employees shall, for a Plan Year, mean
                  the numeric average of the Actual Deferral Percentages
                  calculated separately for each Eligible Employee in the group.

                           (ii) Actual Deferral Percentage. The Actual Deferral
                  Percentage of an Eligible Employee shall be obtained by
                  dividing the amount of ADP Contributions credited to the
                  Account of such Eligible Employee during such Plan Year by the
                  Eligible Employee's Compensation for the Plan Year, calculated
                  to the nearest one-hundredth of one percent. The Actual
                  Deferral Percentage of an Eligible Employee who has no ADP
                  Contributions credited to his Account during a Plan Year shall
                  be zero for such Plan Year.

                           (iii) ADP Contributions. "ADP Contributions" shall
                  mean the sum of Elective Contributions and, to the extent that
                  the Plan Administrator elects (uniformly with respect to all
                  Eligible Employees) to treat the following contributions as
                  Elective Contributions under Treas. Reg. ss.1.401(k)-1(b)(3)
                  and this paragraph (iii), Qualified Nonelective Contributions
                  and Qualified Matching Contributions. Any Qualified
                  Nonelective Contributions or Qualified Matching Contributions
                  which the Plan Administrator elects to treat as Elective
                  Contributions under the preceding sentence must not
                  discriminate in favor of Highly Compensated Employees within
                  the meaning of Code ss.401(a)(4).



                                       26
<PAGE>   36

                           (iv)     Compensation.

                                    (A) General Definition. Subject to
                           subparagraphs (B) through (D) below, for purposes of
                           this Section 3.6 Compensation for a Plan Year with
                           respect to an Employee shall mean the Employee's
                           "wages" as defined in Code ss. 3401(a) for purposes
                           of income tax withholding at the source paid by an
                           Employer but determined without regard to any rules
                           that limit the remuneration included in wages based
                           on the nature or location of the employment or the
                           services performed (such as the exception for
                           agricultural labor in Code ss. 3401(a)(2)) and all
                           other payments of compensation (in the course of the
                           Employer's trade or business) for which the Employer
                           is required to furnish the Employee a written
                           statement under Code ss.ss. 6041(d), 6051(a)(3) and
                           6052 which are paid by the Employer to such Employee
                           for such Plan Year.

                                    (B) Safe Harbor Exclusions. Notwithstanding
                           the provisions of subparagraph (A) above, none of the
                           following items shall be included in the definition
                           of Compensation, whether or not includable in taxable
                           gross income:

                                    (1)      reimbursements or other expense
                                             allowances;

                                    (2)      fringe benefits (cash and noncash);

                                    (3)      moving expenses;

                                    (4)      deferred compensation;

                                    (5)      welfare benefits;

                           and, additionally, solely with respect to Highly
                  Compensated Employees:

                                    (6) amounts received from the exercise of
                           any nonqualified stock options issued by an Employer;

                                    (7) amounts received from the sale or
                           exchange of stock transferred pursuant to the
                           exercise of an incentive stock option; and

                                    (8) amounts required to be reported as
                           income pursuant to Code ss. 7872.

                                    (C) Salary Reduction Arrangements.
                           Notwithstanding the preceding subparagraphs of this
                           paragraph (iv), Compensation shall include any amount
                           which is contributed by the Employer pursuant to a
                           salary



                                       27
<PAGE>   37

                           reduction agreement and which is not includable in
                           the gross income of the Employee under Code ss.ss.
                           125, 402(e)(3), 402(h) or 403(b).

                                    (D) Limitation. Notwithstanding any
                           provision of this paragraph (iv) to the contrary
                           Compensation of an Eligible Employee shall not
                           include the Compensation of such Employee during a
                           period that the Employee is not an Eligible Employee
                           with respect to the Plan and shall be limited in the
                           manner provided in Section 1.15(e).

                  (c) Plan Aggregation Rules. In the case of an Eligible Highly
         Compensated Employee who is eligible to participate in more than one
         cash or deferred arrangement of the Controlled Group, the Actual
         Deferral Percentage for such Employee shall be calculated by treating
         all the cash or deferred arrangements in which the Eligible Highly
         Compensated Employee is eligible to participate (including this Plan)
         as one arrangement; provided, however, that plans that are not
         permitted to be aggregated under Treas. Reg. ss.1.401(k)-1(b)(3)(ii)(B)
         shall not be aggregated for this purpose. Furthermore, if any plan of
         the Controlled Group which is subject to Code ss.401(k) is aggregated
         with this Plan for purposes of Code ss.ss.401(a)(4) and 410(b), then
         all elective contributions (as defined in Treas. Reg.
         ss.1.401(k)-1(g)(3)) under such plan and this Plan shall be aggregated
         in applying the limitations of this Section.

                  (d) Failure to Satisfy Test. If this Plan does not or may not
         satisfy the Deferral Percentage Test of subsection (a) above for a Plan
         Year, the Plan Administrator shall take such action permitted under
         Sections 3.8 and 3.10 of this Plan as the Plan Administrator, in its
         sole discretion, shall determine necessary in order to ensure that the
         Plan satisfies such test for the Plan Year.

                  (e) Recordkeeping. The Plan Administrator shall, on behalf of
         the Employer, maintain such records as are necessary to demonstrate
         compliance with the Deferral Percentage Test of subsection (a) above
         for each Plan Year, including the extent to which any Qualified
         Nonelective Contributions and Qualified Matching Contributions are
         treated as Elective Contributions under paragraph (iii) of subsection
         (b) above.

         3.7      Limitation of Employee and Employer Matching Contributions.

                  (a) Contribution Percentage Test. The Contribution Percentage
         Test shall be satisfied for any Plan Year if the Average Contribution
         Percentage for the Eligible Highly Compensated Employees for such Plan
         Year does not exceed the greater of (i) or (ii) as follows:

                           (i) The Average Contribution Percentage for the prior
                  Plan Year for the Eligible Employees who are not Highly
                  Compensated Employees times 1.25 for the prior Plan Year; or



                                       28
<PAGE>   38

                           (ii)     The lesser of:

                                    (A) The Average Contribution Percentage for
                           the prior Plan Year for the Eligible Employees who
                           are not Eligible Highly Compensated Employees times
                           2; or

                                    (B) The Average Contribution Percentage for
                           the prior Plan Year for the Eligible Employees who
                           are not Eligible Highly Compensated Employees plus
                           two percentage points.

                  (b)      Definitions.

                           (i) Average Contribution Percentage. For purposes of
                  this Section, the term "Average Contribution Percentage" of a
                  group of Employees shall, for a Plan Year, mean the numeric
                  average of the Contribution Percentages calculated separately
                  for each Employee in the group.

                           (ii) Contribution Percentage. The Contribution
                  Percentage of an Eligible Employee shall be obtained by
                  dividing the amount of ACP Contributions credited to the
                  Account of such Employee during such Plan Year by the Eligible
                  Employee's Compensation for the Plan Year, calculated to the
                  nearest one-hundredth of one percent. The Contribution
                  Percentage of an Eligible Employee who has no ACP
                  Contributions credited to his Account during a Plan Year shall
                  be zero for such Plan Year.

                           (iii) ACP Contributions. "ACP Contributions" shall
                  mean the sum of Qualified Matching Contributions to the extent
                  that such contributions are not treated as Elective
                  Contributions under Treas. Reg. ss.1.401(k)-1(b)(5) and
                  Section 3.6(b)(iii) of this Plan, Matching Elective
                  Contributions and, to the extent that the Plan Administrator
                  elects (uniformly with respect to all Eligible Employees) to
                  treat the following contributions as "matching contributions"
                  under Treas. Reg. ss.1.401(m)-1(b)(5) and this paragraph (iii)
                  and such contributions are not treated as Elective
                  Contributions under Treas. Reg. ss.1.401(k)-1(b)(5) and
                  Section 3.6(b)(iii) of this Plan, Qualified Nonelective
                  Contributions, and any forfeitures which are reallocated under
                  Sections 3.5(f) or 3.8(c) as Matching Elective Contributions.
                  Any Qualified Nonelective Contributions which the Plan
                  Administrator elects to treat as "matching contributions" or
                  any Qualified Matching Contributions treated as ACP
                  Contributions under the preceding sentence must not
                  discriminate in favor of Highly Compensated Employees within
                  the meaning of Code ss.401(a)(4) and must satisfy the
                  provisions of Treas. Reg. ss.1.401(m)-1(b).

                           (iv) Compensation. For purposes of this Section,
                  Compensation shall mean Compensation as defined in Section
                  3.6(b)(iv) of this Plan.



                                       29
<PAGE>   39

                  (c) Plan Aggregation. In the case of an Eligible Highly
         Compensated Employee who is eligible to participate in two or more
         plans of the Controlled Group to which employee contributions (within
         the meaning of Treas. Reg. ss.1.401(m)-1(f)(7)) or matching
         contributions (within the meaning of Treas. Reg. ss.1.401(m)-1(f)(12)),
         or both are made, all such contributions on behalf of such Eligible
         Highly Compensated Employee must be aggregated for purposes of
         determining such Employee's Contribution Percentage; provided, however,
         that plans which are not permitted to be aggregated under Treas. Reg.
         ss.1.401(m)-1(b)(3)(ii) shall not be aggregated for this purpose.
         Furthermore, if any plan of the Controlled Group which is subject to
         Code ss.401(m) is aggregated with this Plan for purposes of Code
         ss.ss.410(b) and 401(a)(4), then all employee contributions (as defined
         in the preceding sentence) and all matching contributions (as defined
         in the preceding sentence) under such plan and this Plan shall be
         aggregated in applying the limitations of this Section.


                  (d) Failure to Satisfy Test. If this Plan does not or may not
         satisfy the Contribution Percentage Test of subsection (a) above for a
         Plan Year, the Plan Administrator shall take such action permitted
         under Sections 3.8 and 3.10 of this Plan as the Plan Administrator, in
         its sole discretion, shall determine necessary in order to ensure that
         the Plan satisfies such test for the Plan Year.

                  (e) Recordkeeping. The Plan Administrator shall, on behalf of
         the Employer, maintain such records as are necessary to demonstrate
         compliance with the Contribution Percentage Test of subsection (a)
         above for each Plan Year, including the extent to which any Qualified
         Nonelective Contributions and Qualified Matching Contributions are
         treated as ACP Contributions under paragraph (iii) of subsection (b)
         above.

         3.8     Corrections Required by Discrimination Tests. If the Deferral
Percentage Test of Section 3.6 of this Plan, the Contribution Percentage Test of
Section 3.7 of this Plan and/or the special limitation of Section 3.9 of this
Plan are applicable to this Plan and are not satisfied for a Plan Year, the Plan
Administrator, in its discretion, may use any combination of the methods in
subsections (a) and (b) below to satisfy any one or more of these tests or
limitations, except as otherwise provided below:

                  (a)      Distribution.

                           (i) Correcting Distributions. To the extent necessary
                  to satisfy the Applicable Test for any Plan Year in which such
                  test is not satisfied, the Plan Administrator shall direct the
                  Trustee to distribute to Highly Compensated Participants a
                  portion (determined in the manner set forth in subsections (c)
                  and/or (d) below) of their Applicable Contributions, together
                  with income allocable to such portions, after the close of
                  such Plan Year, but in no event later than the close of the
                  following Plan Year.



                                       30
<PAGE>   40

                           (ii)     Allocable Income or Loss.

                                    (A) General Rules. For purposes of paragraph
                           (i) above, the income or loss allocable to the
                           portion of a Participant's Applicable Contributions
                           made during a Plan Year shall, at any relevant time,
                           be determined by the following formula:

                                    income or loss =     E  x  I
                                                         -------
                                                            D

                           For purposes of applying the formula, E is the
                           portion of such Participant's Applicable
                           Contributions made during the Plan Year; D is the
                           balance in the Participant's Account consisting of
                           Applicable Contributions as of the beginning of the
                           Plan Year increased by the Participant's Applicable
                           Contributions for the Plan Year and I is the income
                           for the Plan Year allocable to the Participant's
                           total Applicable Contributions for the Plan Year. A
                           distribution occurring on or before the fifteenth day
                           of the month will be treated as having been made on
                           the last day of the preceding month, and a
                           distribution occurring after such fifteenth day will
                           be treated as having been made on the first day of
                           the next subsequent month.

                  (b) Contribution. To the extent necessary to satisfy the
         Applicable Test for any Plan Year in which such test is not satisfied,
         the Plan Administrator shall direct the Trustee to contribute to
         nonhighly compensated Participants, to the extent necessary, Qualified
         Nonelective Contributions, Qualified Matching Contributions, or both. A
         contribution under this paragraph must occur on or before 12 months
         after the close of the Plan Year to which the contribution relates.

                  (c) Determination of Excess Contributions. For purposes of
         paragraphs (a) and (b) above, the relevant portion of a Highly
         Compensated Participant's ADP Contributions for a Plan Year shall be
         equal to such Participant's excess contributions for such Plan Year.
         The excess contributions, and the portion of the excess contributions
         to be distributed, shall be calculated in the following manner:

                           (i) The excess contributions with respect to a Highly
                  Compensated Participant for a Plan Year are determined by
                  reducing the Elective Contributions of the Highly Compensated
                  Participant with the highest Actual Deferral Percentage by the
                  amount required to cause the Participant's Actual Deferral
                  Percentage to equal the Actual Deferral Percentage of the
                  Highly Compensated Participant with the next highest such
                  percentage. If a lesser reduction would enable the arrangement
                  to satisfy the Deferral Percentage Test, only this lesser
                  reduction will be made. This process must be repeated until
                  the Deferral Percentage Test would be satisfied.

                           (ii) The total of the reductions in the amounts of
                  Elective Contributions, determined in accordance with (i)
                  above, shall be determined.



                                       31
<PAGE>   41

                           (iii) After the total in (ii) above has been
                  determined, the Elective Contributions of the Highly
                  Compensated Participant with the highest dollar amount of
                  Elective Contributions shall be reduced by the amount required
                  to cause that Highly Compensated Participant's Elective
                  Contributions to equal the dollar amount of the Elective
                  Contributions of the Highly Compensated Participant with the
                  next highest dollar amount of Elective Contributions. This
                  amount is then distributed to the Highly Compensated
                  Participant with the highest dollar amount of Elective
                  Contributions. However, if a lesser reduction, when added to
                  the total dollar amount already distributed under this step
                  would equal the total excess contributions determined under
                  (ii) above, the lesser reduction amount is distributed to the
                  appropriate Participant.

                           (iv) If the total amount distributed under (iii)
                  above is less than the total excess contributions determined
                  under (ii) above, then the procedure described in (iii) is
                  repeated until the full amount of the excess contributions,
                  determined under (ii) above, has been distributed to
                  Participants.

                  (d) Determination of Excess Aggregate Contributions. For
         purposes of paragraph (a) above, the relevant portion of a Highly
         Compensated Participant's ACP Contributions for a Plan Year shall be
         equal to such Participant's excess aggregate contributions for such
         Plan Year. The excess aggregate contributions, and the portion of such
         excess aggregate contributions to be distributed, shall be calculated
         in the following manner:

                           (i) The excess aggregate contributions with respect
                  to a Highly Compensated Participant for a Plan Year are
                  determined by reducing the ACP Contributions of the Highly
                  Compensated Participant with the highest Contribution
                  Percentage by the amount required to cause the Participant's
                  Contribution Percentage to equal the Contribution Percentage
                  of the Highly Compensated Participant with the next highest
                  such percentage. If a lesser reduction would enable the
                  arrangement to satisfy the Contribution Percentage Test, only
                  this lesser reduction will be made. This process must be
                  repeated until the Contribution Percentage Test would be
                  satisfied.

                           (ii) The total of the reductions in the amounts of
                  ACP Contributions, determined in accordance with (i) above,
                  shall be determined.

                           (iii) After the total in (ii) above has been
                  determined, the ACP Contributions of the Highly Compensated
                  Participant with the highest dollar amount of ACP
                  Contributions shall be reduced by the amount required to cause
                  that Highly Compensated Participant's ACP Contributions to
                  equal the dollar amount of the ACP Contributions of the Highly
                  Compensated Participant with the next highest dollar amount of
                  ACP Contributions. This amount is then distributed to the
                  Highly Compensated Participant with the highest dollar amount
                  of ACP Contributions. However, if a lesser reduction, when
                  added to the total dollar amount already distributed under
                  this step, would equal the total excess aggregate
                  contributions



                                       32
<PAGE>   42

                  determined under (ii) above, the lesser reduction amount is
                  distributed to the appropriate Participant.

                           (iv) If the total amount distributed under (iii)
                  above is less than the total excess aggregate contributions
                  determined under (ii) above, then the procedure described in
                  (iii) is repeated until the full amount of the excess
                  aggregate contributions, determined under (ii) above, has been
                  distributed to Participants.

                           (v) With respect to paragraphs (i) through (iii)
                  above, any ACP Contributions which are determined to be excess
                  aggregate contributions and which are to be reduced shall be
                  distributed pursuant to subsection (a).

                  (e) Coordination With Other Provisions. Excess contributions
         to be distributed under subsection (a) with respect to a Participant
         for a Plan Year shall be reduced by any correcting distributions under
         Section 3.5(f) of this Plan previously made to such Participant for the
         calendar year ending with or within such Plan Year. Distributions under
         subsections (a) above may be made without regard to any notice or
         consent otherwise required by the terms of this Plan.

                  (f) Failure to Correct. If, for any reason, any excess
         contributions and/or excess aggregate contributions for a Plan Year are
         not distributed within two and one-half (2 1/2) months after the close
         of such Plan Year or corrected by a contribution under Section 3.8(b)
         of the Plan, then the Employer shall be liable for the Federal excise
         tax imposed under Code ss.4979 in the amount of 10% of such excess
         contributions and/or excess aggregate contributions.

                  (g) Definitions. For purposes of subsections (a) and (b):

                                    (A) Applicable Test shall mean the Deferral
                           Percentage Test of Section 3.6 of this Plan or the
                           Contribution Percentage Test of Section 3.7 of this
                           Plan, whichever is applicable.

                                    (B) Applicable Contributions shall mean:

                                            (1) if the Applicable Test is the
                                    Deferral Percentage Test, "ADP
                                    Contributions" as defined in Section
                                    3.6(b)(iii) of this Plan, or

                                            (2) if the Applicable Test is the
                                    Contribution Percentage Test, "ACP
                                    Contributions" as defined in Section
                                    3.7(b)(iii) of this Plan.

         3.9      Multiple Use of Alternative Limitation. The provisions of this
Section shall only apply if one or more Highly Compensated Employees of the
Employer are Eligible Employees with respect to both a cash or deferred
arrangement (including this Plan) subject to Code ss.401(k) and a plan of the
Employer (including this Plan) subject to Code ss.401(m). Furthermore, for this
Section



                                       33
<PAGE>   43

to apply, the Average Actual Deferral Percentage for the Eligible Highly
Compensated Employees during the Plan Year must be greater than 125% of the
Average Actual Deferral Percentage for the prior Plan Year for the Eligible
Employees who are not Highly Compensated Employees, and the Average Contribution
Percentage for the Eligible Highly Compensated Employees during the Plan Year
must be greater than 125% of the Average Contribution Percentage for the prior
Plan Year for the Eligible Employees who are not Highly Compensated Employees.

                  (a) Special Limitation. In addition to the other conditions
         and limitations herein, for any Plan Year, the sum of the Average
         Actual Deferral Percentage for the Eligible Highly Compensated
         Employees and the Average Contribution Percentage for the Eligible
         Highly Compensated Employees shall not exceed the greater of:

                           (i) the sum of (A) 1.25 multiplied by the greater of
                  the relevant Average Actual Deferral Percentage or the
                  relevant Average Contribution Percentage, and (B) 2% plus the
                  lesser of the relevant Average Actual Deferral Percentage or
                  the relevant Average Contribution Percentage; provided,
                  however, this sum shall not exceed twice the lesser of the
                  relevant Average Actual Deferral Percentage or the relevant
                  Average Contribution Percentage; or

                           (ii) the sum of (A) 1.25 multiplied by the lesser of
                  the relevant Average Actual Deferral Percentage or the
                  relevant Average Contribution Percentage, and (B) 2% plus the
                  greater of the relevant Average Actual Deferral Percentage or
                  the relevant Average Contribution Percentage; provided,
                  however, this sum shall not exceed twice the greater of the
                  relevant Average Actual Deferral Percentage or the relevant
                  Average Contribution Percentage.

         For purposes of this subsection (a), the term "relevant Average Actual
         Deferral Percentage" means the Average Actual Deferral Percentage for
         the Eligible Employees who are not Highly Compensated Employees under
         the cash or deferred arrangement subject to Code ss.401(k) for the
         prior plan year, and the term "relevant Average Contribution
         Percentage" means the Average Contribution Percentage for the Eligible
         Employees who are not Highly Compensated Employees under the Plan
         subject to Code ss.401(m) for the prior plan year.

                  (b) Coordination with Other Provisions. For purposes of this
         Section, the Actual Deferral Percentage and the Contribution Percentage
         of the Eligible Highly Compensated Employees shall be determined after
         use of any Qualified Nonelective Contributions and Qualified Matching
         Contributions to meet the Deferral Percentage Test pursuant to Section
         3.6(b)(iii) of this Plan and after use of Qualified Nonelective
         Contributions to meet the Contribution Percentage Test pursuant to
         Section 3.7(b)(iii) of this Plan. Furthermore, the Actual Deferral
         Percentage and the Contribution Percentage of the Eligible Highly
         Compensated Employees shall be determined after any corrective
         distribution of excess deferrals pursuant to Section 3.5(f) of this
         Plan, or any corrective distribution of excess contributions and excess
         aggregate contributions pursuant to Section 3.8(a) of this Plan.



                                       34
<PAGE>   44

                  (c) Plan Aggregation. If the Controlled Group maintains two or
         more cash or deferred arrangements subject to Code ss.401(k) which are
         not aggregated for purposes of Section 3.6(d) of this Plan or if the
         Controlled Group maintains two or more plans subject to Code ss.401(m)
         which are not aggregated for purposes of Section 3.7(d) of this Plan,
         the provisions of subsection (a) above shall apply separately with
         respect to each such plan and cash or deferred arrangement.
         Furthermore, if any plan of the Controlled Group which is subject to
         Code ss.ss.401(k) and/or (m) is aggregated with this Plan for purposes
         of Code ss.ss.410(b) and 401(a)(4), then all elective contributions (as
         defined in Treas. Reg. ss.1.401(k)-1(g)(3)), employee contributions (as
         defined in Treas. Reg. ss.1.401(m)-1(f)(6)) and all matching
         contributions (as defined in Treas. Reg. ss.1.401(m)-1(f)(12)) under
         such plan and this Plan shall be aggregated in applying the limitations
         of this Section.

                  (d) Correcting Distributions. To the extent necessary to
         satisfy the special limitation of subsection (a) above for any Plan
         Year in which the special limitation is not satisfied, the Plan
         Administrator shall first reduce the Contribution Percentage of the
         Eligible Highly Compensated Employees by correcting distributions in
         accordance with Section 3.8 of this Plan, and then shall reduce the
         Actual Deferral Percentages of the Eligible Highly Compensated
         Employees by correcting distributions in accordance with Section 3.8 of
         this Plan.

         3.10     Discretionary Cutbacks to Satisfy Discrimination Tests. In
addition to those powers granted the Plan Administrator elsewhere herein, the
Plan Administrator shall have the power to reduce the Elective Contribution
election of any Highly Compensated Participant at any time during a Plan Year if
the Plan Administrator, in his sole discretion and based on current contribution
data available, determines that the Deferral Percentage Test of Section 3.6 of
this Plan, the Contribution Percentage Test of Section 3.7 of this Plan, and/or
the special limitation of Section 3.9 of this Plan for such Plan Year may not be
satisfied. Any such reductions shall be made to the extent necessary in the
opinion of the Plan Administrator to satisfy the Deferral Percentage Test, the
Contribution Percentage Test, and/or the special limitation, whichever is
applicable, and shall be made by reducing the Elective Contribution election of
Highly Compensated Participants.

         3.11     401(k)/401(m) Testing Provision. In applying the limitations
set forth in Sections 3.5(f), 3.6 and 3.7, the Plan Administrator may, at his
option, utilize such testing procedures as may be permitted under Code ss.ss.
401(a)(4), 401(k), 401(m) or 410(b), including, without limitation, (a)
aggregation of the Plan with one or more other qualified plans of the Controlled
Group, (b) inclusion of qualified matching contributions, qualified nonelective
contributions or elective deferrals described in, and meeting the requirements
of, Treasury Regulations under Code ss.ss. 401(k) and 401(m) to any other
qualified plan of the Controlled Group in applying the limitations set forth in
Sections 3.5(f), 3.6 and 3.7, (c) effective January 1, 1999, exclusion of all
Eligible Employees (other than Eligible Highly Compensated Employees) who have
not met the minimum age and service requirements of Code ss. 410(a)(1)(A) in
applying the limitations set forth in Sections 3.6 and 3.7, or (d) any
permissible combination thereof.



                                       35
<PAGE>   45

                                   ARTICLE IV

                            LIMITATION ON ALLOCATIONS


         4.1      General Rules.

                  (a) Limitation. The Annual Additions which may be credited to
         a Participant's Accounts under this Plan for any Limitation Year will
         not exceed the Maximum Permissible Amount reduced by the Annual
         Additions credited to a Participant's accounts under any other defined
         contribution plans (as defined in Code ss.414(i)), individual medical
         accounts (as defined in Code ss.415(l)(2)) and welfare benefit funds
         (as defined in Code ss.419(e)) maintained by the Employer for the same
         Limitation Year. If the Annual Additions with respect to the
         Participant under other defined contribution plans, individual medical
         accounts and welfare benefit funds maintained by the Employer, if any,
         are less than the Maximum Permissible Amount and the Employer
         contribution that would otherwise be contributed or allocated under
         this Plan to the Participant's Accounts under this Plan would cause the
         Annual Additions for the Limitation Year to exceed this limitation, the
         amount contributed or allocated to this Plan will be reduced so that
         the Annual Additions under all such plans, accounts and funds for the
         Limitation Year (including this Plan) will equal the Maximum
         Permissible Amount. If the Annual Additions with respect to the
         Participant under such other defined contribution plans, individual
         medical accounts and welfare benefit funds in the aggregate are equal
         to or greater than the Maximum Permissible Amount, no amount will be
         contributed or allocated to the Participant's Accounts under this Plan
         for the Limitation Year.

                  (b) Use of Estimated Compensation. Prior to determining the
         Participant's actual Compensation for the Limitation Year, the Employer
         may determine the Maximum Permissible Amount for a Participant on the
         basis of a reasonable estimation of the Participant's Compensation for
         the Limitation Year, uniformly determined for all Participants
         similarly situated. As soon as is administratively feasible after the
         end of the Limitation Year, the Maximum Permissible Amount for the
         Limitation Year will be determined on the basis of the Participant's
         actual Compensation for the Limitation Year.

                  (c) Allocation of Excess Amounts Among Plans, Funds and
         Accounts. If, pursuant to subsection (b) above or as a result of the
         allocation of forfeitures, a reasonable error in determining the amount
         of Elective Deferrals a Participant may make, or such other facts and
         circumstances as may be allowed by the Internal Revenue Service, a
         Participant's Annual Additions under this Plan and such other plans,
         accounts and funds (if any) would result in an Excess Amount for a
         Limitation Year, the Excess Amount will be deemed to consist of the
         Annual Additions last allocated, except that the Annual Additions
         attributable to a welfare benefit fund or an individual medical account
         will be deemed to have been allocated first regardless of the actual
         allocation date. If an Excess Amount was allocated to a Participant on
         an allocation date of this Plan which coincides with an allocation date
         of



                                       36
<PAGE>   46

         another qualified defined contribution plan, the Excess Amount
         attributed to this Plan will be the product of:

                           (i) the total Excess Amount allocated as of such
                  date, multiplied by

                           (ii) the ratio of (A) the Annual Additions allocated
                  to the Participant for the Limitation Year as of such date
                  under this Plan to (B) the total Annual Additions allocated to
                  the Participant for the Limitation Year as of such date under
                  this and all other qualified defined contribution plans.

                  (d) Disposition of Excess Amounts. Any Excess Amount
         attributed to this Plan will be disposed of as follows:

                           (i) If the Participant is covered by the Plan at the
                  end of the Limitation Year, any Elective Contributions (and
                  earnings thereon), to the extent they would reduce the Excess
                  Amount, will be returned to the Participant;

                           (ii) If, after application of paragraph (i) above, an
                  Excess Amount still exists, and the Participant is covered by
                  the Plan at the end of the Limitation Year, the Matching
                  Elective Contributions, to the extent they would reduce the
                  Excess Amount, will be used to reduce contributions made
                  pursuant to Section 3.1 of this Plan which would be allocated
                  to such Participant (including any allocation of forfeitures)
                  in the next Limitation Year, and each succeeding Limitation
                  Year if necessary;

                           (iii) If, after the application of the preceding
                  paragraphs, an Excess Amount still exists and the Participant
                  is not covered by the Plan at the end of the Limitation Year,
                  the Matching Elective Contributions, to the extent they would
                  reduce the Excess Amount, will be held unallocated in a
                  suspense account. The suspense account will be applied to
                  reduce future contributions made pursuant to Section 3.1 of
                  this Plan which would be allocated to remaining Participants
                  in the next Limitation Year, and each succeeding Limitation
                  Year if necessary;

                           (iv) If a suspense account is in existence at any
                  time during a Limitation Year pursuant to this subsection (d),
                  it will not participate in the allocation of the Trust's
                  investment gains and losses. If a suspense account is in
                  existence at any time during a particular Limitation Year, all
                  amounts in the suspense account must be allocated and
                  reallocated to Participants' Accounts before any contributions
                  made pursuant to Section 3.1 of this Plan may be made to the
                  Plan for that Limitation Year. Except as provided in paragraph
                  (i) above, Excess Amounts may not be distributed from the Plan
                  to Participants or former Participants.

                  (e) Other Defined Benefit Plans. If the Employer maintains, or
         at any time maintained, one or more defined benefit plans covering any
         Participant in this Plan, the sum of the Participant's Defined Benefit
         Fraction and Defined Contribution Fraction will not



                                       37
<PAGE>   47

         exceed 1.0 in any Limitation Year beginning on or before January 1,
         1999. The foregoing limitation will be met by reducing pro rata the
         Projected Annual Benefit under one or more of such qualified defined
         benefit plans.

         4.2 Applicable Definitions. For purposes of this Article, the following
terms shall have the following meanings:

                  (a) Annual Additions shall mean the sum of the following
         amounts allocated to a Participant's accounts for any Limitation Year:

                           (i)      contributions made by the Employer;

                           (ii)     contributions made by the Participant;

                           (iii)    forfeitures;

                           (iv) amounts allocated to an individual medical
                  account, as defined in Code ss.415(l)(2), which is part of a
                  pension or annuity plan maintained by the Employer; and

                           (v) amounts derived from contributions paid or
                  accrued which are attributable to post-retirement medical
                  benefits allocated to a separate account of a "key employee,"
                  as defined in Code ss.419A(d)(3), under a welfare benefit
                  fund, as defined in Code ss.419(e), maintained by the
                  Employer.

         For this purpose, any Excess Amount applied under subsection (d) of
         Section 4.1 above in the Limitation Year to reduce Employer
         contributions will be considered Annual Additions for such Limitation
         Year; however, any nonvested amount restored to a Participant's
         Accounts following his reemployment shall not be deemed an Annual
         Addition, and any corrective allocation pursuant to Section 12.11 will
         be considered an Annual Addition for the Limitation Year to which it
         relates. Contributions do not fail to be Annual Additions merely
         because such contributions are excess deferrals (as defined in Code
         ss.402(g)(2)(A)), excess contributions (as defined in Code
         ss.401(k)(8)(B)) or excess aggregate contributions (as defined in Code
         ss.401(m)(6)(B)), or merely because such excess deferrals and excess
         contributions are corrected through distribution or recharacterization,
         except that excess deferrals which are timely corrected by distribution
         shall not be treated as Annual Additions. Excess aggregate
         contributions attributable to amounts other than employee
         contributions, including forfeited matching contributions, shall be
         counted as Annual Additions even if distributed. For purposes of this
         subsection (a), the provisions of Treas. Reg. ss.1.415-6(b) shall
         govern.

                  (b) Compensation (for purposes of this Article) shall mean a
         Participant's Earned Income, wages, salaries, fees for professional
         service and other amounts received (without regard to whether or not an
         amount is paid in cash) for personal services actually rendered in the
         course of employment with an Employer maintaining the Plan to the
         extent that the



                                       38
<PAGE>   48

         amounts are includible in gross income (including, but not limited to,
         commissions paid salesmen, compensation for services on the basis of a
         percentage of profits, commissions on insurance premiums, tips,
         bonuses, fringe benefits, and reimbursements or other expense
         allowances under a nonaccountable plan (as described in Treas. Reg.
         ss.1.62-2(c))), including foreign earned income (as defined in Code
         ss.911(b)) whether or not excludable from gross income under Code
         ss.911, and determined without regard to the exclusions from gross
         income in Code ss.ss. 931 and 933; amounts described in Code
         ss.ss.104(a)(3), 105(a) and 105(h), but only to the extent that these
         amounts are includible in the gross income of the Participant; amounts
         paid or reimbursed by the Employer for moving expenses incurred by the
         Participant, but only to the extent that at the time of the payment it
         is reasonable to believe that these amounts are not deductible by the
         Participant under Code ss.217; the value of a non-qualified stock
         option granted to the Participant by the Employer, but only to the
         extent that the value of the option is includible in the gross income
         of the Participant for the taxable year in which granted; and the
         amount includible in the gross income of the Participant upon making a
         Code ss.83(b) election; and excluding the following:

                           (i) Employer contributions to a plan of deferred
                  compensation which are not (before the application of the Code
                  ss.415 limitations to the plan) includible in the
                  Participant's gross income for the taxable year in which
                  contributed, or Employer contributions under a simplified
                  employee pension plan described in Code ss.408(k), or any
                  distributions from a plan of deferred compensation (whether or
                  not includible in the Participant's gross income when
                  distributed), except that amounts received by the Participant
                  pursuant to an unfunded non-qualified plan shall be included
                  in the year such amounts are includible in the gross income of
                  the Participant;

                           (ii) amounts realized from the exercise of a
                  non-qualified stock option, or when restricted stock (or
                  property) held by the Participant becomes freely transferable
                  or is no longer subject to a substantial risk of forfeiture
                  under Code ss.83;

                           (iii) amounts realized from the sale, exchange or
                  other disposition of stock acquired under a qualified stock
                  option; and

                           (iv) other amounts which received special tax
                  benefits such as premiums for group-term life insurance (but
                  only to the extent that the premiums are not includible in the
                  gross income of the Participant), or contributions made by the
                  Employer (whether or not under a salary reduction agreement)
                  towards the purchase of an annuity described in Code ss.403(b)
                  (whether or not the amounts are actually excludable from the
                  gross income of the Participant).

         In addition to the amounts described above, effective for Limitation
         Years beginning on and after January 1, 1998, Compensation shall also
         include the amount of the Participant's Elective Contributions or any
         other contributions made by the Employer on behalf of the Employee
         pursuant to a deferral election under an employee benefit plan
         containing a cash or deferred arrangement under Code ss. 401(k) and any
         amounts which would have been



                                       39
<PAGE>   49

         received as cash but for an election to receive benefits under a
         cafeteria plan meeting the requirements of Code ss. 125.

         For purposes of applying the limitations of this Article, Compensation
         for a Limitation Year is the Compensation actually paid, made available
         or includible in gross income during such year. Notwithstanding the
         preceding sentence, Compensation for a Participant in a defined
         contribution plan who is "permanently and totally disabled" (as defined
         in Code ss.22(e)(3)) is the compensation such Participant would have
         received for the Limitation Year if the Participant had been paid at
         the rate of compensation paid immediately before becoming permanently
         and totally disabled; such imputed compensation for the disabled
         Participant may be taken into account only if the Participant is not a
         Highly Compensated Employee and contributions made on behalf of such
         Participant are nonforfeitable when made. In interpreting this
         subsection (b), the provisions of Treas. Reg. ss.1.415-2(d)(1), (2) and
         (3) or the corresponding provisions of any future Treasury Regulations
         shall control.

                  (c) Defined Benefit Fraction shall mean a fraction, the
         numerator of which is the sum of the Participant's Projected Annual
         Benefits under all the defined benefit plans (whether or not
         terminated) maintained by the Employer, and the denominator of which is
         the lesser of (i) 125% of the dollar limitation determined for the
         Limitation Year under Code ss.ss.415(b) and (d) or (ii) 140% of the
         Highest Average Compensation including any adjustments under Code
         ss.415(b).

                  (d) Defined Contribution Dollar Limitation shall mean $30,000,
         as that amount may be adjusted upward for increases in the cost of
         living, in accordance with applicable law.

                  (e) Defined Contribution Fraction shall mean a fraction, the
         numerator of which is the sum of the Annual Additions to the
         Participant's accounts under all the defined contribution plans
         (whether or not terminated) maintained by the Employer for the current
         and all prior Limitation Years, (including the Annual Additions to this
         and all other qualified plans, whether or not terminated, maintained by
         the Employer and the Annual Additions attributable to all welfare
         benefit funds, as defined in Code ss.419(e), and individual medical
         accounts, as defined in Code ss.415(l)(2), maintained by the Employer),
         and the denominator of which is the sum of the maximum aggregate
         amounts for the current and all prior Limitation Years of service with
         the Employer (regardless of whether a defined contribution plan was
         maintained by the Employer). The maximum aggregate amount in any
         Limitation Year is the lesser of (i) 125% of the dollar limitation in
         effect under Code ss.415(c)(1)(A) or (ii) 35% of the Participant's
         Compensation for such year.

                  (f) Employer shall mean, solely for purposes of this Article,
         the Employer and all members of a controlled group of corporations (as
         defined in Code ss.414(b) as modified by Code ss.415(h)), all commonly
         controlled trades or businesses (as defined in Code ss.414(c) as
         modified by Code ss.415(h)) or affiliated service groups (as defined in
         Code ss.414(m)) of which the Employer is a part, and any other entity
         required to be aggregated with the Employer pursuant to regulations
         under Code ss.414(o).



                                       40
<PAGE>   50

                  (g) Excess Amount shall mean the excess of the Participant's
         Annual Additions for the Limitation Year over the Maximum Permissible
         Amount.

                  (h) Highest Average Compensation shall mean the average
         compensation for the three consecutive calendar years with the Employer
         that produces the highest average. In lieu of calendar years, a plan
         may use any 12 month period provided such period is uniformly and
         consistently applied.

                  (i) Limitation Year shall mean the Plan Year. If the
         Limitation Year is amended to a different 12-consecutive-month period,
         the new Limitation Year must begin on a date within the Limitation Year
         in which the amendment is made, and the provisions of Treas. Reg.
         ss.1.415-2(b)(4)(iii) shall apply for the shortened Limitation Year.

                  (j) Maximum Permissible Amount shall mean the maximum Annual
         Addition that may be contributed or allocated to a Participant's
         Account under the Plan for any Limitation Year. The Maximum Permissible
         Amount shall be the lesser of:

                           (i)      the Defined Contribution Dollar Limitation,
                                    or

                           (ii)     25% of the Participant's Compensation for
                                    the Limitation Year.

         The compensation limitation referred to in paragraph (ii) above shall
         not apply to any contribution for medical benefits (within the meaning
         of Code ss.401(h) or Code ss.419A(f)(2)) which is otherwise treated as
         an annual addition under Code ss.ss.415(l)(1) or 419A(d)(2). If a short
         Limitation Year is created because of an amendment changing the
         Limitation Year to a different 12 consecutive-month period, the Maximum
         Permissible Amount will not exceed the Defined Contribution Dollar
         limitation multiplied by the following fraction:


                  number of months in the short Limitation Year
                                       12

                  (k) Projected Annual Benefit shall mean the annual retirement
         benefit (adjusted to an actuarially equivalent straight life annuity if
         such benefit is expressed in a form other than a straight life annuity
         or qualified joint and survivor annuity) to which the Participant would
         be entitled under the terms of the Plan assuming:

                           (i) the Participant will continue employment until
                  normal retirement age under the Plan (or current age, if
                  later), and

                           (ii) the Participant's Compensation for the current
                  Limitation Year and all other relevant factors used to
                  determine benefits under the Plan will remain constant for all
                  future Limitation Years.



                                       41
<PAGE>   51

         4.3      Adjustments for Top Heavy Plan. For purposes of computing the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction, the
125% factor in subsections (c)(i) and (e)(i) of Section 4.2 shall be decreased
to 100% if:

                           (i)      The Plan is Super Top-Heavy; or

                           (ii)     The Plan is Top-Heavy (whether or not Super
                  Top-Heavy) and the Plan and any other plans maintained by the
                  Employer do not provide the additional minimum accrued benefit
                  described in Code ss.416(h)(2)(A).

For purposes of this Section, the Plan is "Super Top-Heavy" if it would continue
to be Top-Heavy if the 60% tests in the definition of Top-Heavy in Section
13.2(g) herein were changed to 90% tests.



                                       42
<PAGE>   52

                                    ARTICLE V

                               VESTING IN ACCOUNTS


         5.1      Vesting of Nonforfeitable Accounts. All amounts allocated to a
Participant's Elective Contributions Account, Qualified Nonelective
Contributions Account, Qualified Matching Contributions Account or Rollover
Contributions Account (a Participant's "Nonforfeitable Accounts") shall at all
times be and remain 100% vested and nonforfeitable, except as provided in
Section 12.9.

         5.2      Vesting of Forfeitable Account. All amounts allocated to a
Participant's Matching Elective Contributions Account, Company Basic
Contributions Account, and Other Contributions Account (a Participant's
"Forfeitable Accounts") shall vest in accordance with the following rules,
except as provided in Section 12.9:

                  (a) Full Vesting Events. A Participant's Forfeitable Account
         shall be 100% vested and nonforfeitable as of the earliest of the
         following dates:

                           (i)      The later of:

                                    (A) the date on which the Participant
                           attains age 65; or

                                    (B) the date on which occurs the 5th
                           anniversary of the date on which the Participant
                           became a Participant hereunder;

                           while still employed by the Employer;

                           (ii) The date the Participant dies while still
                  employed by the Employer; or

                           (iii) The date the Participant becomes Disabled while
                  still employed by the Employer.

                  (b) Vesting Schedule.

                           (i)      Regular Schedule:

                                    An Employee whose Forfeitable Account is not
                  100% vested under the provisions of subsection (a) above shall
                  be vested in such Account in accordance with the following
                  schedule:



                                       43
<PAGE>   53

<TABLE>
<CAPTION>
                 YEARS OF VESTING SERVICE                                    VESTED PERCENTAGE OF
                      EARNED BY THE                                         THE PARTICIPANT IN SUCH
                       PARTICIPANT                                                  ACCOUNT
            --------------------------------------------------------------------------------------------
                 <S>                                                        <C>
                    Less than 5 Years                                                  0%
            --------------------------------------------------------------------------------------------
                     5 or more Years                                                 100%
            --------------------------------------------------------------------------------------------
</TABLE>

                           (ii)     Alternate Schedules:

                                    Any Employer may elect a different vesting
                  Schedule with respect to Forfeiture Accounts of Participants
                  employed by it by designating said alternate Schedule on
                  Exhibit B attached to and made a part of this Plan.

                  (c)      Limitations and Restrictions Regarding Vesting.

                           (i) Nonforfeitability by Participant Conduct. No
                  vested portion of a Participant's Account shall be forfeited
                  as a result of conduct of the Participant (except forfeitures
                  described in Sections 5.3 and 8.5 on account of the
                  Participant's termination of employment).

                           (ii) Amendments to Vesting Schedule. If the vesting
                  schedule of this Plan is amended, the vested percentage of a
                  Participant's Forfeitable Account, determined as of the later
                  of the date on which the amendment to the Plan's vesting
                  schedule is adopted or becomes effective, shall not be reduced
                  by such amendment. Furthermore, any Participant who has at
                  least 3 Years of Vesting Service shall:

                                    (A) automatically have his or her vesting
                           percentage computed without regard to the change in
                           the vesting schedule unless computing his or her
                           vested percentage under the new vesting schedule is
                           more favorable; or

                                    (B) have the right to elect, within 60 days
                           of (1) the day the amendment is adopted, (2) the day
                           the amendment becomes effective, or (3) the day the
                           Participant is issued written notice of the
                           amendment, whichever is latest, to have the vesting
                           schedule in effect prior to the amendment apply in
                           computing his vested percentage;

                  whichever selected by the Plan Administrator applicable to all
                  affected Participants. For purposes of this paragraph (b), an
                  "amendment changing the vesting schedule" is any amendment
                  which directly or indirectly affects the computation of the
                  vested percentage of a Participant's Account balances as
                  described in Treas. Reg. ss.1.411(a)-8(c), and Years of
                  Vesting Service shall be determined without regard to Sections
                  5.4 and 5.5.



                                       44
<PAGE>   54


                           (iii) Automatic Amendments to Vesting Schedule. The
                  rules of paragraph (ii) above shall apply to the automatic
                  change in the vesting schedule. Furthermore, the rules of
                  paragraph (ii) above shall apply to any automatic change in
                  the vesting schedule caused by operation of Article XIII of
                  this Plan.

                  (d) Years of Vesting Service. In determining the Years of
         Vesting Service completed by an Employee for purposes of this Article,
         Years of Vesting Service shall be determined pursuant to Sections 1.82,
         5.4 and 5.5 of this Plan.

                  (e) Special Rule. In the event a Participant, prior to
         incurring five consecutive One-Year Breaks in Service receives a
         distribution of his vested Account balance and the Participant's
         nonvested Account balance is not forfeited, then until the Participant
         does incur such Breaks in Service, a separate Account shall be
         established for the Participant's interest in the Plan, and at any
         relevant time the Participant's vested portion of such Account shall
         not be less than an amount "X" determined by the formula:

                              X = P (AB + (R x D)) - (R x D)

         where P is the vested percentage at the relevant time, AB is the
         Account balances at the relevant time, D is the amount of the
         Distribution, R is the ratio of the Account balances as of the relevant
         time to the Account balances after distribution, and the relevant time
         is the time at which the vested percentage in the Account cannot
         increase.

         5.3      Forfeitures. Amounts in a Participant's Forfeitable
Accounts which are not vested pursuant to the provisions of this Article may be
forfeited by a Participant pursuant to the provisions of Sections 3.5(f), 3.8(c)
and 8.5(a) of this Plan.

         5.4      Reemployed Former Employees.

                  (a) One Year Holdout. Any Employee who has a One-Year Break in
         Service shall not receive credit for service prior to such break in
         service unless and until such Employee has completed a Year of Vesting
         Service after his return.

                  (b) Rule of Parity. Any former Employee (i) who does not have
         any nonforfeitable right under the Plan to his Forfeitable Account, and
         (ii) for whom the number of consecutive One-Year Breaks in Service
         prior to such Employee's reemployment equals or exceeds the greater of
         5 or the aggregate number of Years of Vesting Service before such
         breaks in service shall not receive credit for service prior to such
         breaks in service.

                  (c) Post Break Disregarded Service. Any Employee who has 5
         consecutive One- Year Breaks in Service shall not receive credit for
         service after such Breaks in Service for purposes of determining such
         Employee's vested percentage of his or her Account balances which
         accrued before such 5-year period.



                                       45
<PAGE>   55

                  (d) Separate Accounting. Separate Accounts will be maintained
         for a Participant's pre-break and post-break Forfeitable Accounts to
         the extent that the Participant's vested percentage in such Accounts
         could differ by application of the provisions of this Section, and both
         such Accounts will share in earnings or losses pursuant to Article VII.

                  5.5      Years of Vesting Service Disregarded. Any Employee
on April 1, 1995, who becomes a Participant in the Plan on said date or
thereafter, shall receive credit for purposes of Section 5.2 of this Plan for
Years of Vesting Service rendered to his Employer or any other member of the
Controlled Group for such period of time during which said Employer (or other
employer) was a member of the Controlled Group, including periods of service
rendered prior to April 1, 1995. However, with respect to any person who becomes
an Employee after April 1, 1995, for purposes of Section 5.2 of this Plan and
notwithstanding the preceding sections of this Article, Years of Vesting Service
shall be disregarded during any period for which the Employer did not maintain
this Plan or a predecessor plan. For purposes of this Section 5.5, whether the
Employer maintained a "predecessor plan" shall be determined in accordance with
Treas. Reg. ss. 1.411(a)-5(b)(3).

                  5.6      Vesting Upon Termination. If, pursuant to Article XI
of this Plan, this Plan is wholly or partially terminated, the rights of each
"affected" Participant to his Forfeitable Account as of the date of such
termination or partial termination shall be fully vested to the extent funded
notwithstanding any other provision of this Article to the contrary. See Section
11.3(a) herein.

                  5.7       Family and Medical Leave Act. Any period while an
Employee is on a leave of absence under the Family and Medical Leave Act of 1993
will be treated as continued service for the purpose of computing Years of
Vesting Service.



                                       46
<PAGE>   56

                                   ARTICLE VI

                            ACCOUNTS AND INVESTMENTS


         6.1      Separate Accounts. The Plan Administrator shall maintain
separate Accounts for each Participant to reflect each such Participant's
interest in the Plan attributable to each of the following:

                  (a) Elective Contributions, if any, as defined in Section 1.26
         of this Plan.

                  (b) Matching Elective Contributions, if any, as defined in
         Section 1.47 of this Plan.

                  (c) Qualified Matching Contributions, if any, as defined in
         Section 1.61 of this Plan.

                  (d) Qualified Nonelective Contributions, if any, as defined in
         Section 1.63 of this Plan.

                  (e) Company Basic Contributions, if any, as defined in Section
         1.14 of this Plan.

                  (f) Rollover Contributions, if any, as defined in Section 1.68
         of this Plan.

         6.2      Investment of Trust Fund.

                  (a) General Rule. The Trust Fund, and all contributions
         thereto made under this Plan, shall be invested by the Trustee who
         shall have exclusive authority and discretion to manage and control the
         Trust Fund pursuant to the terms of the Trust Agreement, subject to any
         investment directions allowed by the Trustee under subsections (b) and
         (c) below, and made by the appropriate party as indicated in such
         subsections, as applicable.

                  (b) Investment Manager. The Trustee may appoint one or more
         investment managers (as defined in ERISA ss.3(38)) to manage, acquire
         or dispose of all or a portion of the Trust Fund. Any such appointment
         shall be made in writing and shall be communicated to the Custodian, if
         any. A designated investment manager may certify to the Trustee in
         writing the name of any person, together with a specimen signature of
         any such person, who is authorized to communicate and implement the
         investment manager's respective instructions concerning the Trust Fund.
         The investment manager shall promptly give written notice to the
         Trustee of any change in any such person. The Trustee shall be subject
         to the directions of such investment manager(s) which are made in
         accordance with the terms of this Plan.



                                       47
<PAGE>   57

                  (c)      Investment Funds.

                           (i) Establishment of Funds. The Trustee shall
                  establish three or more funds for the investment of the assets
                  of the Trust Fund, each of which has materially different risk
                  and return characteristics.

                           (ii) Automatic Investment. All amounts in a
                  Participant's Matching Elective Contributions Account shall
                  automatically be invested in Company common stock. To the
                  extent that shares of said stock have been allocated to a
                  Participant's account, the Participant shall be entitled to
                  direct the Trustee as to the exercise of any voting rights
                  with respect to said shares, according to procedures adopted
                  by the Plan Administrator. In the absence of any such valid
                  instructions, the Trustee may vote said shares in its
                  discretion.

                           (iii) Investment Directions by Participants. Each
                  Participant (or, in the case of the Participant's death, his
                  Beneficiary) shall direct the investment of his Accounts
                  (other than his Matching Elective Contributions Account) among
                  the funds provided under paragraph (i) above. The Plan
                  Administrator shall establish, and may alter at any time,
                  rules and procedures which shall govern such Participant
                  direction of investments and the timing thereof, and shall
                  provide all necessary instructions and forms, if any, to
                  Participants (or Beneficiaries). Such rules and procedures may
                  restrict the frequency and timing of such Participant (or
                  Beneficiary) directions and may also limit the amount or
                  percentage of future contributions, and of the existing
                  Account balance, that may be invested in Company common stock
                  or in any other investment fund. Such rules and procedures
                  shall be communicated to Employees (or Beneficiaries). In the
                  absence of any valid investment direction by the Participant
                  (or Beneficiary), the Trustee shall invest the Participant's
                  (or Beneficiary's) Account in the discretion of the Trustee,
                  on a consistent basis applied at the time of investment.

                           (iv) Income or Loss. Any Account or portion thereof
                  of a Participant (or Beneficiary) which is invested pursuant
                  to the Participant's (or Beneficiary's) directions under
                  paragraph (iii) above in a certain fund, or pursuant to
                  paragraph (ii) above in Company common stock shall only share
                  in the gains or losses of such fund or stock, and shall not
                  share in the gains or losses of any other Trust Fund
                  investment.

                           (v) Expenses. Any Account or portion thereof of a
                  Participant (or Beneficiary) which is invested pursuant to the
                  Participant's (or Beneficiary's) directions under paragraph
                  (iii) above shall be charged for the reasonable expenses of
                  such directed investing.

         6.3 Trustee's Reliance. The Trustee may rely and act upon any
certificate, notice or direction of the Employer, Plan Administrator, investment
manager, Participant or Beneficiary, or a person authorized to act on behalf of
such person, that the Trustee reasonably believes to be



                                       48
<PAGE>   58

genuine and to have been signed by the person or persons duly authorized to sign
such certificate, notice or direction. The Trustee may continue to rely upon
such certificate, notice or direction until otherwise notified in writing.



                                       49
<PAGE>   59

                                   ARTICLE VII

          ALLOCATION OF EARNINGS AND LOSSES TO ACCOUNTS OF PARTICIPANTS


         7.1     Allocations of Trust Fund Earnings and Losses. As of each
Valuation Date, the Trustee shall determine the fair market value of the
investments of each of the funds, including the Company common stock fund,
created under the Trust Fund established under Section 6.2(a) of this Plan, and
shall determine the gain or loss experienced by such investments since the
immediately preceding Valuation Date. Each Participant's Account or portion
thereof which has been separately invested in a fund under Section 6.2(c) of
this Plan shall be credited with a percentage of such gain or debited with a
percentage of such loss by multiplying the aggregate gain or loss of the
investments of said separate fund by a fraction, the numerator of which for each
Participant is the value of the Participant's interest in the investments of
said fund as of the immediately preceding Valuation Date, increased by one-half
of any contributions by or on behalf of the Participant since the last Valuation
Date and reduced by (i) any distribution made to the Participant, (ii) any
charges for investment services, or (iii) any amounts transferred to a
Participant loan account, since the last Valuation Date, and the denominator of
which is the sum of the numerator amounts (as so adjusted) for all Participants,
determined separately with respect to each fund.

         7.2     Allocations Regarding Specific Investments. Notwithstanding any
provisions of Section 7.1 of this Article to the contrary, if an Account or any
portion thereof is invested in a specific fund or investment pursuant to Section
6.2, such Account or portion thereof shall not share in gains or losses of other
Trust Fund investments, but shall be credited with gain or debited with loss in
accordance with the proportionate amount of gain or loss of such specified fund
or investment, determined in accordance with the valuation procedures described
in Section 7.1 of this Article as of each Valuation Date.



                                       50
<PAGE>   60

                                  ARTICLE VIII

                               PAYMENT OF BENEFITS


         8.1     Time of Payment of Benefits. If a Participant's employment with
all members of the Controlled Group is terminated for any reason other than
death, including becoming Disabled, retiring, or otherwise, the Participant
shall receive or commence receiving the entire vested amount in his Plan
Accounts (his "Benefit Amount") determined pursuant to the provisions of Section
8.4 in accordance with the following:

                  (a) Termination Prior to Attainment of Normal Retirement Age.
         If the Participant terminates employment with all members of the
         Controlled Group prior to his attainment of his Normal Retirement Age,
         then the following provisions shall apply:

                           (i) General Rule. Except as provided in paragraphs
                  (ii) through (iv) below, the Participant may elect that his
                  Benefit Amount shall be paid as soon as administratively
                  practicable following any Valuation Date following the date on
                  which the Participant has so terminated his employment, (but
                  not later than the Participant's Required Beginning Date) in a
                  lump sum payment valued in accordance with Section 8.4.

                           (ii) Automatic Cash-Outs. Notwithstanding paragraph
                  (i) above, if the value of the Participant's Benefit Amount
                  (A) does not exceed and has never exceeded $3,500, or (B)
                  effective as of January 1, 1998 does not exceed $5,000 on the
                  date of the Participant's termination of employment, the
                  Participant's Benefit Amount shall automatically be paid as
                  soon as administratively practicable following the
                  Participant's termination of employment with all members of
                  the Controlled Group, in the form of a single lump sum
                  distribution valued in accordance with Section 8.4. For
                  purposes of the preceding sentence, if the value of the
                  Participant's Benefit Amount is zero, the Participant shall be
                  deemed to receive a distribution of such benefit under this
                  paragraph (ii).

                  (b) Termination After Attainment of Normal Retirement Age. If
         a Participant terminates employment with all members of the Controlled
         Group on or after his attainment of his Normal Retirement Age or has
         not terminated employment with all members of the Controlled Group as
         of his Required Beginning Date, then the following provisions shall
         apply:

                           (i) General Rule. Except as provided in paragraphs
                  (ii) and (iii) below, the Participant's Benefit Amount shall
                  be paid as soon as administratively practicable following the
                  Participant's termination of employment with all members of
                  the Controlled Group, or, if earlier, his Required Beginning
                  Date, in a lump sum payment valued in accordance with Section
                  8.4.



                                       51
<PAGE>   61

                           (ii) Later Distribution. Notwithstanding paragraph
                  (i) above, the Participant may elect that his Benefit Amount
                  be paid as soon as administratively practicable following any
                  later Valuation Date elected by the Participant (but not later
                  than the Participant's Required Beginning Date), in a lump sum
                  payment valued in accordance with Section 8.4. The
                  Participant's election of a Valuation Date under this
                  paragraph (ii) must be made prior to the Valuation Date
                  selected by the Participant under this paragraph (ii).
                  Furthermore, a Participant's election of a Valuation Date
                  under this paragraph (ii) must be made prior to the Valuation
                  Date specified in paragraph (i) above.

                           (iii) Automatic Cash-Outs. Notwithstanding paragraphs
                  (i) and (ii) above, if the value of the Participant's Benefit
                  Amount (A) does not exceed and has never exceeded $3,500, or
                  (B) effective as of January 1, 1998 does not exceed $5,000 on
                  the date of the Participant's termination of employment, the
                  Participant's Benefit Amount shall automatically be paid as
                  soon as administratively practicable following the
                  Participant's termination of employment with all members of
                  the Controlled Group, in the form of a single lump sum
                  distribution valued in accordance with Section 8.4. For
                  purposes of the preceding sentence, if the value of the
                  Participant's Benefit Amount is zero, the Participant shall be
                  deemed to receive a distribution of such benefit under this
                  paragraph (iii).

                           (iv) Benefits Accrued After Required Beginning Date.
                  If a Participant has received his Benefit Amount under the
                  preceding provisions of this subsection because his Required
                  Beginning Date occurred prior to his termination of employment
                  with all members of the Controlled Group, then the Participant
                  shall receive any subsequent Account balances which he may
                  accrue under this Plan during any Plan Year as soon as
                  administratively practicable following the close of such Plan
                  Year, and such distribution shall be in the same form
                  applicable to the Participant's previous distribution.

                  (c) Required Distributions. Notwithstanding any provision of
         this Plan to the contrary, the entire interest of a Participant must be
         distributed no later than the Participant's Required Beginning Date.
         All distributions required under this Section shall be determined and
         made in accordance with Code ss.401(a)(9) and the regulations
         promulgated thereunder, including the minimum distribution incidental
         benefit requirement of Treas. Reg. ss.1.401(a)(9)-2.

         8.2      Benefits Upon Death.

                  (a) Death Before Benefit Commencement Date. In the event of
         the death of a Participant prior to his Benefit Commencement Date, the
         Beneficiary of the Participant shall receive all or the applicable
         portion of the entire amount in the Participant's Plan Accounts
         designated for such Beneficiary under subsection (c) below (such
         Beneficiary's "Benefit Amount") determined pursuant to the provisions
         of Section 8.4 in accordance with the following:



                                       52
<PAGE>   62

                           (i) General Rule. Except as provided in paragraphs
                  (ii) and (iii) below, the Beneficiary's Benefit Amount shall
                  be paid as soon as administratively practicable following the
                  date of the Participant's death and receipt by the Plan
                  Administrator of proof thereof, in a lump sum payment valued
                  in accordance with Section 8.4 herein.

                           (ii) Later Distribution. Notwithstanding paragraph
                  (i) above, the Beneficiary may elect that his Benefit Amount
                  be paid as soon as administratively practicable following any
                  later Valuation Date elected by the Beneficiary, in a lump sum
                  payment valued in accordance with Section 8.4; provided,
                  however that the Benefit Amount be paid by the date specified
                  in Section 8.2(d). A Beneficiary's election of a Valuation
                  Date under this paragraph (ii) must be made prior to the
                  Valuation Date selected by the Beneficiary under this
                  paragraph (ii). Furthermore, a Beneficiary's election of a
                  Valuation Date under this paragraph (ii) must be made prior to
                  the date specified in paragraph (i) above.

                           (iii) Automatic Cash-Outs. Notwithstanding paragraphs
                  (i) and (ii) above, if the value of such Benefit Amount (A)
                  does not exceed and has never exceeded $3,500, or (B)
                  effective as of January 1, 1998 does not exceed $5,000 on the
                  date of death, the Beneficiary's Benefit Amount shall
                  automatically be paid as soon as administratively practicable
                  following the date the Plan Administrator receives proof of
                  the Participant's death, in the form of a single lump sum
                  distribution valued in accordance with Section 8.4. For
                  purposes of the preceding sentence, if the value of the
                  Participant's Benefit Amount is zero, the Beneficiary shall be
                  deemed to receive a distribution of such benefit under this
                  paragraph (iii).

                  (b) Death On or After Benefit Commencement Date. In the event
         of the death of a Participant on or after his Benefit Commencement
         Date, there shall be no benefit payable to a Participant's Beneficiary.

                  (c) Designation of Beneficiary.

                           (i) General Rules. The Beneficiary of a Participant
                  with respect to the entire vested amount in the Participant's
                  Accounts remaining at the Participant's death shall be
                  determined in accordance with Section 1.9 of this Plan, unless
                  the Participant has designated a Beneficiary or Beneficiaries,
                  which the Participant may designate pursuant to the provisions
                  of Section 1.9 and this Section 8.2(c)(i) on a form provided
                  by or acceptable to the Plan Administrator. However, no
                  Beneficiary other than a Surviving Spouse designated by the
                  Participant shall be valid unless either (1) the Participant
                  has no Surviving Spouse (or such Spouse cannot be located), or
                  (2) the Surviving Spouse of the Participant has consented to
                  such designation pursuant to a Qualified Spousal Waiver.

                           (ii) Designation of Multiple Beneficiaries. A
                  Participant may, consistent with paragraph (i) above,
                  designate more than one Beneficiary and, for each such




                                       53
<PAGE>   63


                  Beneficiary, may designate a percentage of the entire vested
                  amount in his Accounts to which such Beneficiary should become
                  entitled (such Beneficiary's "Benefit Amount") upon the
                  Participant's death. Each such Beneficiary shall be entitled
                  to receive his Benefit Amount determined pursuant to Section
                  8.4 in accordance with the provisions of subsections (a) and
                  (b) above. Unless otherwise specified by the Participant, any
                  designation by the Participant of multiple Beneficiaries shall
                  be interpreted as a designation by the Participant that each
                  such Beneficiary (if alive as of the Participant's date of
                  death, and if not, then the contingent Beneficiary under
                  paragraph (iii) below of such Beneficiary) should be entitled
                  to an equal percentage of the Participant's vested Account
                  balances upon the Participant's death.

                           (iii) Contingent Beneficiaries. A Participant may
                  designate contingent Beneficiaries to receive a Beneficiary's
                  Benefit Amount in the event such Beneficiary should predecease
                  the Participant; otherwise, in the event a Beneficiary
                  predeceases the Participant, the person or those persons
                  specified in Section 1.9 of the Plan shall be deemed to be the
                  Beneficiary with respect to such deceased Beneficiary's
                  Benefit Amount, and shall receive the Benefit Amount to which
                  such Beneficiary would have been entitled hereunder under this
                  Section 8.2.

                  (d) Required Distributions and Forms of Payment.
         Notwithstanding any provision of this Plan to the contrary,
         distribution of a Beneficiary's Benefit Amount shall be made by
         December 31 of the calendar year containing the 5th anniversary of the
         Participant's death.

         8.3      Form of Payment of Benefits. Benefits under this Plan shall
generally be payable in the form of a single lump sum payment in cash.
However, to the extent that a Participant's Accounts are invested in Company
common stock, such Company common stock shall be distributed in-kind to the
Participant (or the Participant's Beneficiary in the case of the Participant's
Death) if requested by the Participant (or the Participant's Beneficiary in the
case of the Participant's Death). See also Appendices I, II, III, IV, V, and VI.

         8.4      Valuation of Accounts for Payments. The amount distributed
to the Participant or Beneficiary shall be determined using the Participant's
or Beneficiary's Benefit Amount valued as of the Valuation Date chosen in
advance by said person in accordance with the foregoing provision of this
Article VIII. In the event of automatic cash-outs paid in accordance with
Section 8.1(a)(ii), 8.1(b)(iii) or 8.2(a)(iii), the relevant Valuation Date
shall be the last day of the month in which the distribution event occurs.

         8.5      Forfeitures.

                  (a) Occurrence of Forfeitures. A forfeiture of the non-vested
         portion of a Participant's Accounts shall occur upon the earlier of the
         following:

                           (i) Payment of Benefits. In the event a Participant
                  terminates employment with the Controlled Group and receives
                  (or is deemed to receive) a distribution of his



                                       54
<PAGE>   64

                  vested Accounts (other than a distribution under Section
                  8.10), the non-vested portion of his Accounts shall be
                  forfeited as of the date of the distribution (or deemed
                  distribution).

                           (ii) Termination, Breaks in Service. In the event
                  that a Participant terminates employment with all members of
                  the Controlled Group and incurs a period of 5 consecutive
                  One-Year Breaks in Service, the non-vested portion of his
                  Accounts shall then be forfeited.

                  (b) Application of Forfeited Amounts. Any forfeitures arising
         under paragraphs (i) and (ii) of subsection (a) above shall be used to
         reduce future contributions of Employers under Section 3.1

                  (c) Recrediting Certain Forfeitures Upon Return to Service. If
         a Participant incurs a forfeiture prior to incurring 5 consecutive
         One-Year Breaks in Service, the Participant shall have the previously
         forfeited amount in his Accounts (unadjusted for any gains or losses)
         restored if and when the Participant, after returning to service with
         an Employer, repays to the Trustee the entire amount of the
         distribution(s) he received from the Plan before the earlier of (A) 5
         years after the first day on which the Participant is subsequently
         reemployed by the Employer, or (B) the end of the first period of 5
         consecutive One-Year Breaks in Service after the distribution(s). A
         Participant who has been deemed to have received a distribution under
         this Plan and who otherwise is described in the preceding sentence
         shall be deemed to have repaid his deemed distribution upon his return
         to service with a member of the Controlled Group. The permissible
         sources for restoration of the Participant's previously forfeited
         amount in his Accounts are earnings of the Trust Fund or forfeitures
         arising under this Section (which shall be used for this purpose prior
         to the application of subsection (b) above).

                  (d) Allocation of Forfeitures. Any forfeitures described above
         shall be used to offset the contribution requirements (other than for
         Elective Contributions) applicable to the Employer whose Participants'
         accounts were the source of the forfeitures in question; provided,
         however, that if a Participant has received contributions from more
         than one Employer under the Plan, his most recent Employer at the time
         of his severance shall be deemed to have made all such contributions
         for purposes of this paragraph.

         8.6      Benefit Payment Commencement. Unless a Participant consents to
later payment, the payment of benefits under the Plan to the Participant shall
begin not later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:

                  (a) The attainment by the Participant of age 65;

                  (b) The 10th anniversary of the date on which the Participant
         commenced participation in the Plan; or

                  (c) The termination of the Participant's service with the
         Controlled Group.



                                       55
<PAGE>   65

The failure of a Participant to consent to a distribution when such consent is
required under Section 8.6 shall be deemed to be an election to defer
commencement of payment for purposes of this Section.

         8.7      Notice and Consent Requirements.

                  (a) In General. Notwithstanding any provision of this Plan to
         the contrary (including Section 8.6), unless one of the exceptions in
         subsection (c) below is satisfied, no distribution may be made or
         commence to a Participant unless the Participant has been provided the
         notification required under subsection (b) below at the time and in the
         manner indicated in such subsection, and has consented in writing to
         the distribution after receiving such notification, with such consent
         being given no less than 30 days and no more than 90 days prior to his
         Benefit Commencement Date.

                  (b) Notification. The Plan Administrator shall notify the
         Participant of the right, if any, to defer any distribution. Such
         notification shall include a general description of the material
         features under the Plan and shall inform the Participant of his right
         to defer receipt of the distribution, and shall be provided (by mail,
         posting or personal delivery) no less than 30 days and no more than 90
         days prior to his Benefit Commencement Date; provided, however, that a
         Participant may waive the right to receive the notice no less than 30
         days prior to the Benefit Commencement Date; provided, further, that a
         Participant shall have the opportunity to consider the decision of
         whether or not to elect a distribution for at least 30 days after the
         notice is provided; provided, further, that the Plan Administrator
         shall provide information to the Participant clearly indicating that
         the Participant has the right to the 30-day period for making the
         decision.

                  (c) Exceptions. This Section 8.7 shall not be applicable to
         the following distributions:

                           (i) Cash-Outs. If the value of a Participant's entire
                  vested Account balances (A) does not and has not ever exceeded
                  $3,500 or (B) effective as of January 1, 1998 does not exceed
                  $5,000 on the date of the Participant's termination of
                  employment, this Section shall not be applicable to a
                  distribution of such entire vested Account balances as a
                  single lump sum.

                           (ii) Immediately Distributable. If a distribution is
                  made on or after the Participant's attainment of the later of
                  age 62 or his Normal Retirement Age, this Section shall not be
                  applicable to such distribution.

                           (iii) Other Payees. If a distribution is made to an
                  alternate payee pursuant to a qualified domestic relations
                  order or to any other Beneficiary, this Section shall not be
                  applicable to such distribution.



                                       56
<PAGE>   66

                           (iv) Code ss.ss.401(a)(9) and 415. If a distribution
                  is required to satisfy the provisions of Article IV, Section
                  8.1(c) or Section 8.2(d), this Section shall not be applicable
                  to such distribution.

                           (v) Plan Termination. If a distribution is made upon
                  termination of this Plan to the Participant and no member of
                  the Controlled Group maintains any other defined contribution
                  plan (other than an employee stock ownership plan as defined
                  in Code ss.4975(e)(7)), this Section shall not be applicable
                  to such distribution.

                  (d) Application to Plan Provisions. To the extent that a
         distribution is required by the terms and provisions of this Plan, but
         this Section is applicable to the distribution and the distribution
         therefore cannot be made, such distribution shall, except as otherwise
         provided, be made as soon as administratively practicable following the
         Valuation Date coincident with the date that this Section is no longer
         applicable to the distribution.

         8.8      Restrictions on Elective Contribution Distributions.
Notwithstanding any provisions of this Plan to the contrary, a Participant's
Elective Contributions Accounts shall not be distributed prior to:

                  (a) the Participant's "separation from service" (as defined in
         Rev. Ruls. 79-336 and 81-141, and any subsequent guidance issued by the
         Internal Revenue Service), retirement, death or disability;

                  (b) the Participant's attainment of age 59 1/2;

                  (c) the Participant's incurrence of a "hardship" (within the
         meaning of Treas. Reg. ss.1.401(k)-1(d)(2)(iv)) and which meets the
         requirements of Section 8.10 of this Plan;

                  (d) the termination of the Plan without establishment or
         maintenance by the Employer of a successor plan (within the meaning of
         Treas. Reg. ss.1.401(k)-1(d)(3));

                  (e) if the Employer is a corporation, the date of the sale or
         other disposition by the Employer of the Participant to an unrelated
         corporation of substantially all the assets used by the Employer in a
         trade or business (within the meaning of Treas. Reg.
         ss.1.401(k)-1(d)(4)); or

                  (f) if the Employer is a subsidiary of a corporation, the date
         of the sale or other disposition by such corporation of its interest in
         the Employer of the Participant to an unrelated entity or individual
         (within the meaning of Treas. Reg. ss.1.401(k)-1(d)(4)).

For purposes of subsections (e) and (f) above, the selling corporation must
maintain this Plan after the sale or other disposition and the Participant must
continue employment with the asset purchaser or subsidiary (as applicable). For
purposes of subsections (d), (e) and (f) above, the distribution must be a lump
sum distribution meeting the requirements of Treas. Reg. ss.1.401(k)-1(d)(5).
This Section 8.8 shall not be interpreted to allow distributions at a time or in
a form which is not otherwise



                                       57
<PAGE>   67

provided for in this Article VIII. The provisions of this Section shall be
interpreted in accordance with the requirements of Code ss.401(k)(2)(B) and any
regulations promulgated thereunder.

         8.9      Payments to Alternate Payees. See Section 12.6(b)(iii) for
special provisions which are applicable to payments to an alternate payee under
a qualified domestic relations order. A qualified domestic relations order may
not provide an alternate payee with a death benefit from this Plan except to the
extent consistent with Section 8.2 and, if applicable, except to the extent such
order requires that the alternate payee be treated as the Participant's
Surviving Spouse.

         8.10     Hardship Distributions of Elective Contributions.

                  (a) General Rules. A Participant shall be entitled to apply to
         the Plan Administrator for a hardship distribution of all or a portion
         of such Participant's Elective Contributions Account balance, valued as
         of the Valuation Date coincident with or next following the date on
         which the Plan Administrator receives the Participant's application. A
         hardship distribution will be made to the Participant (i) only if the
         Plan Administrator or a person or entity designated by the Plan
         Administrator determines that the Participant has an immediate and
         heavy financial need under subsection (b) below, and (ii) only to the
         extent the distribution is necessary to satisfy such need under
         subsection (c) below.

                  (b) Immediate and Heavy Financial Need. A distribution will be
         made on account of an immediate and heavy financial need of a
         Participant if the distribution is on account of:

                                    (i) Medical expenses described in Code
                           ss.213(d) previously incurred by the Participant, the
                           Participant's spouse, or any dependents of the
                           Participant (as defined in Code ss.152) or necessary
                           for such persons;

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

                                    (iii) Payment of tuition, related
                           educational fees, and room and board expenses for the
                           next 12 months of post-secondary education for the
                           Participant, his spouse, children or dependents; or

                                    (iv) The need to prevent the eviction of the
                           Participant from his principal residence or
                           foreclosure on the mortgage of the Participant's
                           principal residence.

                  In determining the existence of an immediate and heavy
                  financial need, the provisions of Treas. Reg.
                  ss.1.401(k)-1(d)(2)(iv)(A) shall govern.

                  (c) Distribution Necessary to Satisfy Need. A distribution
         will be deemed to be necessary to satisfy an immediate and heavy
         financial need of a Participant if all of the following requirements
         are satisfied:



                                       58
<PAGE>   68

                                    (i) The distribution is not in excess of the
                           amount of the immediate and heavy financial need of
                           the Participant, including any estimated taxes which
                           will be incurred because of said distribution;

                                    (ii) The Participant has obtained all
                           distributions (other than hardship distributions) and
                           all nontaxable loans available under all plans
                           maintained by his or her Employer;

                                    (iii) After receiving the hardship
                           distribution, the Participant shall be prohibited
                           from making Elective Contributions under this Plan
                           and elective contributions and employee contributions
                           under any other plan of his Employer or under an
                           otherwise legally enforceable agreement (including
                           all qualified and nonqualified deferred compensation,
                           stock option and stock purchase plans maintained by
                           such Employer, but not including health or welfare
                           benefit plans or the mandatory employee contribution
                           portion of any defined benefit plan) for at least 12
                           months following receipt of the hardship
                           distribution; and

                                    (iv) Notwithstanding Section 3.5(e) of this
                           Plan, the maximum Elective Contributions pursuant to
                           Code ss.402(g) which may be otherwise made by the
                           Participant for the taxable year of the Participant
                           following the taxable year in which the Participant
                           receives the hardship distribution shall be reduced
                           by the amount of the Participant's Elective
                           Contributions for the taxable year in which the
                           Participant received the hardship distribution.

                  In determining the extent of a distribution necessary to
                  satisfy an immediate and heavy financial need, the provisions
                  of Treas. Reg. ss.1.401(k)-1(d)(2)(iv)(B) shall govern.

                  (d) Taxes. The Participant shall be responsible for any excise
         taxes and/or any income taxes due on a hardship distribution under this
         Section.

         8.11     Loan of Account Balances to Participants.

                  (a) Conditions Applicable to Participant Loans. Upon the
         application of any Authorized Borrower filed with the Plan
         Administrator, the Plan Administrator shall in accordance with a
         uniform and nondiscriminatory policy established by it, direct the
         Trustee to make a loan to said Authorized Borrower. Any loans made
         pursuant to this Section 8.11 shall satisfy the following conditions:

                              (i) Such loans shall be available to all
                    Authorized Borrowers. For purposes of this Section
                    "Authorized Borrower" shall mean any Participant or
                    Beneficiary who is a party-in-interest within the meaning of
                    ERISA ss. 3(14) and any Employee as defined in section 1.32
                    of this Plan who is not a Leased Employee or a Self-Employed
                    Individual.



                                       59
<PAGE>   69

                              (ii) Such loans shall not be made available to
                    Authorized Borrowers who are Highly Compensated Employees in
                    an amount which is greater than that available to other
                    Authorized Borrowers in accordance with United States
                    Department of Labor Regulations ss. 2550.408b-1(c);
                    provided, however, that loans may be permitted in an amount
                    that bears a uniform relationship to vested Account
                    balances.

                              (iii) Each such loan shall bear a rate of interest
                    so as to provide the Plan with a return commensurate with
                    the interest rates charged by persons in the business of
                    lending money for loans which would be made under similar
                    circumstances in accordance with United States Department of
                    Labor Regulations ss. 2550.408b-1(e).

                                            (A) The interest rate for a loan
                              from the Plan shall be the rate which shall be
                              selected by the Plan Administrator as of the first
                              day of the month during which the Authorized
                              Borrower applies for the loan.

                                            (B) The Plan Administrator shall
                              have the responsibility on an ongoing basis to
                              assure that the rate of interest for Authorized
                              Borrower loans provides the plan with a rate of
                              return which is commensurate with the interest
                              rate charged under similar circumstances by
                              persons in the business of lending money. If the
                              rate described above fails to accomplish this
                              objective, the Plan Administrator has the duty to
                              specify in writing an alternative rate which shall
                              be deemed to be the rate of interest for loans
                              under this Section 8.11.

                              (iv) The amount of any such loan, when added to
                    the outstanding balance of all other loans, if any, from the
                    Plan (or from any other plan maintained by the Employer) to
                    such Authorized Borrower shall not exceed the lesser of:

                                            (A) $50,000, reduced by the excess
                              (if any) of (1) the highest outstanding balance of
                              loans from the Plan to such Authorized Borrower
                              during the one-year period ending on the day
                              before the date on which the loan was made, over
                              (2) the outstanding balance of loans from the Plan
                              to such Authorized Borrower on the date a new loan
                              was made, or

                                            (B) one-half (1/2) of the value of
                              the vested Accounts of such Authorized Borrower.

                              (v) Each such loan, by its terms, shall be repaid
                    within 5 years, unless such loan is used to acquire a
                    dwelling unit which, within a reasonable time, is to be used
                    as the principal residence of the Authorized Borrower, in
                    which event such loan shall be repaid within 15 years.



                                       60
<PAGE>   70

                           (vi) Each loan, by its terms, shall require
                    repayment on a substantially level amortization basis with
                    loan repayments made not less frequently than quarterly over
                    the term of the loan.

                           (vii) Effective as of January 1, 1998, if a
                  Participant is married and has an Applicable Account under
                  Appendix I of the Plan, then prior to the making of a loan
                  under this Section of the Plan, the spouse of the Participant
                  must consent in writing to the use of the Account as security
                  for the loan. Such consent must be given during the 90-day
                  period ending on the date on which the loan is made. The
                  consent of the spouse must acknowledge the effect of the use
                  of the Participant's Account balance as security for a loan
                  and must be witnessed by a representative of the Plan
                  Administrator or a notary public. However, the consent of the
                  spouse will not be required if it is established to the
                  satisfaction of the Plan Administrator that such consent
                  cannot be obtained because there is no spouse, because the
                  spouse cannot be located, or because of such other
                  circumstances as the Secretary of the Treasury may prescribe
                  by regulations.

                           (viii) The principal amount of any Authorized
                  Borrower loan may not be less than $1,000.

                           (ix) All Authorized Borrower loans will be repaid by
                  Authorized Borrowers who are Employees or who subsequently
                  become Employees on a payroll deduction basis. All other
                  Authorized Borrower loans must be promptly repaid by tender of
                  cash or check for the proper installment payment amount. Loan
                  repayments made by an Authorized Borrower shall be allocated
                  solely to the account of the Authorized Borrower making the
                  repayment.

                           (x) Each such loan shall be evidenced by a promissory
                  note executed by such Authorized Borrower and payable to the
                  Trustee not later than the earliest of a fixed maturity date
                  meeting the requirements of paragraph (v) above, or the
                  following events of default: (A) the Authorized Borrower's
                  death, (B) the Authorized Borrower's failure to pay any amount
                  due within 30 days after the date due, (C) the Authorized
                  Borrower's insolvency, (D) a general assignment for the
                  benefit of the Authorized Borrower's creditors, (E) an
                  appointment of a receiver or trustee with respect to all or a
                  substantial part of the Authorized Borrower's real or personal
                  property, (F) any petition in bankruptcy by or against the
                  Authorized Borrower, (G) any judgment against the Authorized
                  Borrower, (H) the Authorized Borrower's retirement under the
                  Plan, (I) any failure by the Authorized Borrower to perform
                  any covenant, condition or agreement contained in the loan
                  documents, (J) the Authorized Borrower's disability, (K) the
                  termination of the Plan for any reason, or (L) the Authorized
                  Borrower's ceasing to be an Authorized Borrower. Such
                  promissory note shall evidence such terms as are required by
                  this Section.

                           (xi) For each Authorized Borrower for whom a loan is
                  authorized pursuant to this Section, the Plan Administrator
                  shall (1) direct the Trustee to



                                       61
<PAGE>   71
                  liquidate the Authorized Borrower's interest in his or her
                  vested accounts to the extent necessary to provide funds for
                  the loan, (2) direct the Trustee to disburse funds to the
                  Authorized Borrower upon the Authorized Borrower's execution
                  of the promissory note referred to in paragraph (x) above, (3)
                  transmit to the Trustee such executed promissory note, and (4)
                  establish and maintain a separate recordkeeping account (A)
                  which initially shall be in the amount of the loan, (B) to
                  which the funds for the loan shall be deemed to have been
                  allocated and then disbursed to the Authorized Borrower, (C)
                  to which the promissory note shall be allocated and (D) which
                  shall show the unpaid principal of and interest on the note
                  from time to time. All payments of principal and interest by
                  an Authorized Borrower shall be credited initially to his or
                  her separate recordkeeping loan account and applied against
                  the Authorized Borrower's promissory note, and then invested
                  according to the Authorized Borrower's investment directions
                  applicable to his Elective Contributions allocated to the
                  Authorized Borrower's accounts.

                           (xii) Each such loan shall be adequately secured by a
                  pledge of such Authorized Borrower's loan account referred to
                  in paragraph (xi) above so that, in the event the Authorized
                  Borrower defaults on such loan or fails to repay such loan in
                  the time set forth in the promissory note, the Plan
                  Administrator may satisfy any amount of principal or interest
                  due and unpaid on the loan at the time of any default on the
                  loan, and any interest accruing thereafter by deduction from
                  the Authorized Borrower's loan account referred to in
                  paragraph (xi) above. Such amount of principal and interest
                  due and unpaid shall be deemed to have been deducted and
                  distributed to the Authorized Borrower immediately upon
                  default, unless such Authorized Borrower was not, at the time
                  of default, eligible to receive a distribution under the
                  provisions of this Plan, in which event such amount shall be
                  deemed to have been deducted and distributed at such time as
                  the Authorized Borrower first becomes eligible to receive a
                  distribution under the provisions of this Plan. In the event
                  that the amount so deducted and distributed is insufficient to
                  satisfy the remaining balance of such loan, the Authorized
                  Borrower shall be liable for, and must continue to make
                  payments on any such balance still due to the Trust Fund, in
                  accordance with applicable law, and interest at the rate
                  specified in the promissory note shall continue to accrue on
                  any outstanding amount until fully satisfied.

                           (xiii) In the event an Authorized Borrower receives a
                  loan from the Plan, to the extent that an amount is borrowed
                  by an Authorized Borrower from his Account, the Authorized
                  Borrower's Account will not share in the earnings or losses of
                  the Trust Fund, but will only share in earnings or losses
                  based upon the loan made to the Authorized Borrower. An
                  Authorized Borrower who elects to receive a loan from the Plan
                  also automatically elects to direct the investment of his or
                  her Accounts in said loan to the extent so borrowed in
                  accordance with the preceding sentence.



                                       62
<PAGE>   72

                           (xiv) Notwithstanding any provision of this Plan to
                  the contrary, this Plan may distribute the promissory note of
                  an Authorized Borrower identified in paragraph (x) above or
                  may cancel all or a portion of the indebtedness evidenced by
                  such note in lieu of making a cash distribution required by
                  this Plan.

                           (xv) Any Authorized Borrower who takes out or renews
                  a loan from the Plan shall be restricted in the amount which
                  the Authorized Borrower can withdraw under the preceding
                  Sections of this Article VIII so that the Plan at all times
                  shall retain at least 20% of an Authorized Borrower's vested
                  Account balances.

                           (xvi) In the event of default, foreclosure on the
                  note and attachment of security will not occur until a
                  distributable event occurs in the Plan.

                           (xvii) No loans will be made to any
                  Shareholder-Employee or Owner-Employee. For purposes of this
                  requirement, a Shareholder-Employee means an employee or
                  officer of an electing small business (Subchapter S)
                  corporation who owns (or is considered as owning within the
                  meaning of Code ss. 318(a)(1)), on any day during the taxable
                  year of such corporation, more than 5% of the outstanding
                  stock of the corporation.

                           (xviii) The source of any loan shall be the
                  Authorized Borrower's Elective Contribution Account and/or the
                  Authorized Borrower's Rollover Contribution Account, as
                  designated by the Authorized Borrower, and the assets of said
                  account shall be reduced proportionately in each investment
                  account in which they are held.

                           (xix) Notwithstanding any other provision of the
                  Plan, loan repayment will be suspended under the Plan as
                  permitted under Code ss. 414(u)(4) for Participants on a leave
                  of absence for "qualified military service" (as defined in
                  Section 12.19 of the Plan).

                  (b) Additional Conditions that May be Established by the Plan
         Administrator. The Plan Administrator shall have complete discretion to
         establish administrative procedures that shall be applicable to
         Authorized Borrower loans, without the necessity of amending the Plan,
         including but not limited to the following:

                              (i) The Plan Administrator may establish an
                    alternative minimum dollar amount that may be borrowed,
                    provided that such amount may not exceed $1000.

                              (ii) The Plan Administrator may require all loans
                    to be effective only as of a Valuation Date.



                                       63
<PAGE>   73

                              (iii) The Plan Administrator may require that all
                    Authorized Borrowers requesting a loan pay a reasonable loan
                    origination fee.

         Any such administrative procedures shall be set forth in writing and
         communicated to Authorized Borrowers.

                    (c) Special Effective Date. Loans shall not be permitted
         under this Plan until January 1, 1998.

         8.12       Rollover Distribution Election.

                    (a) General Rule. If a Participant or Surviving Spouse of a
         Participant (or an alternate payee pursuant to a qualified domestic
         relations order who is a Spouse or former Spouse of a Participant) who
         is to receive a payment under this Article which equals or exceeds $200
         and which is an eligible rollover distribution (as defined below)
         elects (within the 90 day period ending on the Benefit Commencement
         Date) to have such distribution (or a portion of such distribution if
         the amount of such portion equals or exceeds $500) paid directly to an
         eligible retirement plan (as defined below) and specifies the eligible
         retirement plan to which such distribution is to be paid, such payment
         to be made to the Participant or Surviving Spouse (or alternate payee)
         of a Participant shall be made in the form of a direct lump sum
         transfer of cash from the Trustee to the trustee of the eligible
         retirement plan so specified in lieu of the payment otherwise required
         by this Article. The preceding sentence shall only apply to the extent
         that the eligible rollover distribution would be includible in the
         Participant's or Surviving Spouse's (or alternate payee's) gross income
         if not so transferred (determined without regard to Code ss.ss.402(c)
         and 403(a)(4)). Rollover distributions may be directed to no more than
         one eligible retirement plan for each distribution.

                    (b) Definitions. For purposes of this Section, the following
         terms shall have the meanings indicated:

                              (i)           Eligible retirement plan shall mean:

                                            (A) with respect to a Participant
                              (or alternate payee), an individual retirement
                              account described in Code ss.408(a), an individual
                              retirement annuity described in Code ss.408(b)
                              (other than an endowment contract), a qualified
                              trust which is a defined contribution plan and the
                              terms of which permit the acceptance of rollover
                              distributions, or an annuity plan described in
                              Code ss.403(a); or

                                            (B) with respect to a Surviving
                              Spouse of a Participant, an individual retirement
                              account described in Code ss.408(a) or an
                              individual retirement annuity described in Code
                              ss.408(b) (other than an endowment contract).



                                       64
<PAGE>   74

                              (ii) Eligible rollover distribution shall mean any
                    distribution to a Participant or Surviving Spouse (or
                    alternate payee) of a Participant of all or any portion of
                    the balance to the credit of such individual in this Plan;
                    provided, however, such term shall not include:

                                            (A) any distribution which is one of
                              a series of substantially equal periodic payments
                              (not less frequently than annually) made for the
                              life (or life expectancy) of the Participant or
                              his designated Beneficiary or the joint lives (or
                              joint life expectancies) of the Participant and
                              his designated Beneficiary, or for a specified
                              period of 10 years or more;

                                            (B) any distribution to the extent
                              such distribution is required by Section 8.1(c) or
                              Section 8.2(d);

                                            (C) the portion of any distribution
                              that is not includible in gross income;

                                            (D) effective as of January 1, 1999,
                              any "hardship" distribution under Section 8.10;
                              and

                                            (E) any other distribution or
                              portion of a distribution to the extent such
                              distribution is not considered an eligible
                              rollover distribution under Treasury regulations
                              or other guidance issued by the Internal Revenue
                              Service.

                    (c) Satisfaction of Requirements. For purposes of this
         Section, the Participant or Surviving Spouse (or alternate payee) of
         the Participant electing the transfer must present sufficient evidence
         in a timely manner to the Plan Administrator that the transferee plan
         satisfies the definition of an eligible retirement plan set forth
         above. At a minimum, the Participant or Surviving Spouse (or alternate
         payee) of the Participant must state the name of the transferee plan
         and represent that the transferee plan is an eligible retirement plan
         (as defined in paragraph (i) of subsection (b) above). The Participant
         or Surviving Spouse (or alternate payee) of the Participant must also
         present such additional documentation as the Plan Administrator may
         require which shall be used to verify that the requirements of this
         Section have been met. The Trustee, the Plan Administrator, or any Plan
         fiduciary shall have no duty to verify the authenticity of any such
         evidence or documentation, and shall be entitled to rely on any such
         evidence submitted by a Participant or Surviving Spouse (or alternate
         payee) of the Participant, without questioning the authenticity
         thereof, unless it is unreasonable to so rely. Furthermore, in the
         event that the Trustee, the Plan Administrator or any Plan fiduciary
         shall have actual knowledge of an issue relating to the transferee
         plan's ability to satisfy the definition of an eligible retirement
         plan, such issue must be expressly resolved in favor of the
         satisfaction of such definition by the transferee plan by a ruling from
         the Internal Revenue Service or by an opinion of legal counsel (chosen
         by the Participant or Surviving Spouse (or alternate payee) of the
         Participant, but acceptable to the Plan



                                       65
<PAGE>   75

         Administrator) directed to the Trustee, the Plan, the Plan
         Administrator and any fiduciary of the Plan, before the transfer can
         occur.

                    (d) Determination in the Plan Administrator's Discretion.
         The Plan Administrator shall have complete and absolute discretion to
         determine whether the proposed transferee plan selected by the
         distributee satisfies the requirements of this Section, and to
         determine whether the requirements of this Section have otherwise been
         satisfied by a proposed transfer.

                    (e) Interpretation. The provisions of this Section shall be
         interpreted in accordance with Code ss.401(a)(31), as added by the
         Unemployment Compensation Amendments of 1992, and any regulations or
         other guidance promulgated by the Internal Revenue Service thereunder,
         and shall not be construed or interpreted in a manner other than strict
         compliance with such requirements.

                    (f) Application of Other Rules. For all purposes of this
         Plan, the election by a Participant or Surviving Spouse (or alternate
         payee) of a Participant of a transfer under this Section shall be
         considered a payment or distribution under this Article as if the
         amount transferred were paid directly to the Participant or Surviving
         Spouse (or alternate payee).

         8.13       Provision Pursuant to Code Section 401(a)(9).

                    (a) In General. Notwithstanding any other provision of the
         Plan, to the extent required under Code ss. 401(a)(9) of the Code, the
         entire vested Account balance of a Participant who is a 5% owner (as
         defined in Code ss. 416) or who attains age 70 1/2 prior to July 1,
         1999 (i) shall be distributed to him in a lump sum in cash not later
         than April 1 of the calendar year following the calendar year in which
         he attains age 70 1/2 and, with respect to such Participants who are
         Employees, on December 31 of such year and each succeeding year or (ii)
         shall commence to be distributed to him in one of the optional forms of
         benefit under Appendix II, III, IV or V, not later than the time
         specified in clause (i) of this paragraph. In addition, the vested
         Account balance of any other Participant must be distributed or
         commence to be distributed not later than the April 1 of the calendar
         year following the later of (i) the calendar year in which he attains
         age 70 1/2 or (ii) the calendar year in which he incurs a termination
         of employment.

                    (b) Notwithstanding the foregoing, distributions under this
         Section 8.13 shall be made in accordance with the provisions of Code
         ss. 401(a)(9) and Treasury Regulations issued thereunder, including
         Treas. Reg. ss. 1.401(a)(9)-2, which provisions are hereby incorporated
         herein by reference, provided that such provisions shall override the
         other distribution provisions of the Plan only to the extent that such
         other Plan provisions provide for distribution that is less rapid than
         required under such provisions of the Code and Regulations. Nothing
         contained in this Section shall be construed as providing any optional
         form of payment that is not available under the other distribution
         provisions of the Plan.



                                       66
<PAGE>   76

                    (c) A Participant who attained age 70 1/2 on or before
         December 31, 1996 but did not retire from employment with the Employer
         before January 1, 1997 and who began to receive the minimum required
         distributions under Code ss. 401(a)(9) as in effect prior to January 1,
         1997, may, in accordance with procedures to be established by the Plan
         Administrator, elect to stop receiving such distributions until the
         Participant retires from employment with the Employer.



                                       67
<PAGE>   77

                                   ARTICLE IX

                         THE TRUST FUND AND THE TRUSTEE


         9.1      Existence of Trust. The Company has entered into the Trust
Agreement with the Trustee designated by the Company on the Trust Agreement to
hold the funds necessary to provide the benefits set forth in this Plan.

         9.2      Exclusive Benefit Rule. The Trust Fund shall be received,
held in trust, and disbursed by the Trustee in accordance with the provisions of
the Trust Agreement and this Plan. No part of the Trust Fund shall be used for
or diverted to purposes other than for the exclusive benefit of Participants and
their Beneficiaries and the payment of reasonable expenses attributable to the
administration of the Plan in accordance with ERISA ss.404(a)(1)(A)(ii). For
purposes of the preceding sentence, the use of the Trust Fund to pay fees and
expenses incurred in connection with the provision of services is not a
reasonable expense of administering the Plan if the payments are made for the
Employer's benefit or involve services for which the Employer could reasonably
be expected to bear the cost in the normal course of such Employer's business or
operations. In this regard, services provided in conjunction with the
establishment, termination or design of plans relate to the business activities
of the Employer and generally would not be "reasonable expenses attributable to
the administration of the Plan." No person shall have any interest in, or right
to, the Trust Fund or any part thereof, except as specifically provided for in
this Plan or the Trust Agreement, except as provided in Section 3.4.
Notwithstanding the preceding provisions of this Section, this Section shall be
construed in accordance with the requirements of Code ss.401(a)(2) and ERISA
ss.403(c) and any regulations or other guidance promulgated thereunder, and
shall not be construed in a manner more restrictive than such requirements.

         9.3      Removal or Resignation of Trustee. The Company may remove
the Trustee at any time or the Trustee may resign at any time upon the notice
required by the terms of the Trust Agreement, and upon such removal or upon the
resignation of a Trustee, the Company shall appoint a successor Trustee.

         9.4      Powers of Trustee. The Trustee shall have the power to
hold, invest, reinvest, or to control and disburse the Trust Funds in accordance
with the provisions of the Trust Agreement and Article VI of this Plan. If more
than one person shall be designated as Trustee at any given time, any reference
herein to the Trustee shall refer to all of said persons, except that the
signature of only one of said persons shall be sufficient to represent the
signature of all of said persons and the action of any one of them shall be
deemed to be the action of the Trustee.

         9.5      Integration of Trust Agreement. The Trust Agreement shall
be deemed to be a part of this Plan, and all rights of Participants or others
under this Plan shall be subject to the provisions of the Trust Agreement.

         9.6      Records and Accounts. The Trustee shall maintain accurate
and detailed records and accounts of all transactions of the Plan, which shall
be available at all reasonable times for



                                       68
<PAGE>   78

inspection or audit by any person designated by the Employer or Plan
Administrator and by any other person or entity to the extent required by law.

         9.7 Annual Reports. As soon as practicable following the close of the
Plan Year, the Trustee shall file with the Plan Administrator and the Employer a
written report setting forth all transactions with respect to the Trust Fund
during such Plan Year and listing the assets of the Trust Fund and the market
value thereof at the close of the period covered by such report. The Trustee
shall also provide the Plan Administrator and the Employer with such other
information in its possession as may be necessary for the Plan Administrator or
Employer to conform with the requirements of ERISA ss.103.



                                       69
<PAGE>   79

                                    ARTICLE X

                                 ADMINISTRATION


         10.1     Allocation of Responsibility. The general administration
and day to day operations of the Plan and the responsibility for carrying out
the provisions thereof will be placed in the Plan Administrator who shall be
designated by the President of the Company or by resolution of the Executive
Committee of the Board of Directors of the Company. In the absence of such a
designation, the Company shall carry out the responsibilities of the Plan
Administrator.

         10.2     Administrative Expenses. The Plan Administrator may
employ financial, legal, or other counsel and engage such clerical, financial,
or other services as the Plan Administrator may deem necessary for the effective
administration of the Plan and compliance with Federal and state regulations.
Said operating expenses and any other reasonable administrative expenses will be
paid out of the Trust Fund to the extent possible consistent with the exclusive
benefit rule set forth in Section 9.2, unless the Company elects (in its sole
discretion) to pay such expenses.

         10.3     Plan Administrator Powers and Duties. The Plan
Administrator shall have the power to interpret and construe the Plan, to settle
all questions arising from the operation of the Plan, to determine all questions
of eligibility and the status and rights of Participants, Beneficiaries and
others, and to establish rules for the administration of the Plan and the
transaction of its business. Final determinations or actions of the Plan
Administrator with respect to any questions arising out of or in connection with
the administration of the Plan will be final and conclusive and binding upon all
persons having an interest in the Plan. The Plan Administrator may delegate to
other persons, all or such portion of their duties hereunder, other than those
granted to the Trustee under the Trust Agreement, as the Plan Administrator, in
his sole discretion, may decide.

         10.4     Records and Reports. The Plan Administrator will keep
such accounts and records as he may deem necessary or proper in the performance
of his duties under the Plan.

         10.5     Reporting and Disclosure. The Plan Administrator shall
file all reports and returns required to be filed by the Plan (other than those
which are the responsibility of the Trustee) with any governmental agency, shall
make all disclosures to Employees, Participants and Beneficiaries, and shall
make available for examination by said persons copies of all Plan documents,
descriptions, returns and reports as may be required by applicable law or as
specified herein.

         10.6     Named Fiduciary. The Trustee and the Plan Administrator
shall be named fiduciaries under the Plan within the meaning of ERISA, with the
division of responsibilities between them as set forth in this Plan and the
Trust Agreement.

         10.7     Administrator. The Plan Administrator shall be the
"administrator," as that term is defined in ERISA ss.3(16)(A) and Code
ss.414(g), of this Plan.



                                       70
<PAGE>   80
         10.8     Interpretation of the Plan and Findings of Facts. The Plan
Administrator shall have sole and absolute discretion to interpret the
provisions of the Plan (including, without limitation, by supplying omissions
from, correcting deficiencies in, or resolving inconsistencies or ambiguities
in, the language of the Plan), to make factual findings with respect to any
issue arising under the Plan, to determine the rights and status under the Plan
of Participants and other persons, to decide disputes arising under the Plan
and to make any determinations and findings (including factual findings) with
respect to the benefits payable thereunder and the persons entitled thereto as
may be required for the purposes of the Plan. In furtherance of, but without
limiting, the foregoing, the Plan Administrator is hereby granted the following
specific authorities, which he shall discharge in his sole and absolute
discretion in accordance with the terms of the Plan (as interpreted, to the
extent necessary, by the Plan Administrator):

                  (a) To resolve all questions (including factual questions)
         arising under the provisions of the Plan as to any individual's
         entitlement to become a Participant;

                  (b) To determine the amount of benefits, if any, payable to
         any person under the Plan (including, to the extent necessary, making
         any factual findings with respect thereto); and

                  (c) To conduct the review procedure specified in Section 12.5.

All decisions of the Plan Administrator as to the facts of the case, as to the
interpretation of any provision of the Plan or its application to any case, and
as to any other interpretative matter or other determination or question under
the Plan shall be final and binding on all parties affected thereby, subject to
the claims and review procedures under Section 12.5 of this Plan. The Plan
Administrator shall direct the Trustee relative to benefits to be paid under the
Plan and shall furnish the Trustee with any information reasonably required by
it for the purpose of paying benefits under the Plan.

         10.9     Bonding, Insurance and Indemnity.

                  (a) Bonding. To the extent required under ERISA, the Company
         will obtain, pay for and keep current a bond or bonds with respect to
         the Plan Administrator, and any other Employee who receives, handles,
         disburses, or otherwise exercises custody or control of, any of the
         assets of the Plan.

                  (b) Insurance. The Company, in its discretion, may obtain, pay
         for and keep current a policy or policies of insurance, insuring the
         Plan Administrator, the members of the board of directors of the
         Company and other Employees to whom any fiduciary responsibility with
         respect to the administration of the Plan has been delegated against
         any and all costs, expenses and liabilities (including attorneys' fees)
         incurred by such persons as a result of any act, or omission to act, in
         connection with the performance of their duties, responsibilities and
         obligations under the Plan and any applicable law.

                  (c) Indemnity. If the Company does not obtain, pay for and
         keep current the type of insurance policy or policies referred to in
         subsection (b) above, or if such insurance



                                       71
<PAGE>   81

         is provided but any of the parties referred to in subsection (b) above
         incur any costs or expenses which are not covered under such policies,
         then the Company will indemnify and hold harmless, to the extent
         permitted by law, such parties against any and all costs, expenses and
         liabilities (including attorneys' fees) incurred by such parties in
         performing their duties and responsibilities under this Plan, provided
         that such party or parties were acting in good faith within what was
         reasonably believed to have been the best interests of the Plan and its
         Participants.



                                       72
<PAGE>   82

                                   ARTICLE XI

           AMENDMENT, TERMINATION, MERGER, CONSOLIDATION AND ADOPTION


         11.1     Permanency of Plan. It is contemplated by the Company that the
Plan and Trust shall be maintained permanently and that they shall constitute a
qualified plan under Code ss.401 and a tax-exempt trust under Code ss.501, or
any successor provisions. Nevertheless, the Company and the Employers must
necessarily reserve and do hereby reserve the rights of amendment, termination
and withdrawal as set forth in this Article.

         11.2     Right to Amend Plan.

                  (a) Amendment by the Company. The Company reserves the
         right, at any time, to modify or amend, in whole or in part, any or all
         of the provisions of the Plan, including specifically the right to make
         such amendments effective retroactively, if necessary or desirable, to
         bring the Plan into conformity with Code, ERISA, and any applicable
         regulations promulgated so that the Plan may continue to remain
         qualified and the Trust may continue to remain tax-exempt, or for any
         other purpose, subject to subsection (c) below. Any such amendment
         shall be in writing and shall be executed by an authorized officer of
         the Company.

                  (b) Amendment by Employer other than Company. An Employer
         other than the Company cannot at any time modify or amend, in whole or
         in part, any or all of the provisions of the Plan so long as such
         Employer continues to participate in this Plan. Such an Employer may,
         however, amend the provisions of any Exhibit to the Plan which refers
         specifically to said Employer, with the written approval of the Plan
         Administrator, or may cease to participate in this Plan at any time by
         giving written notice to the Company indicating the effective date of
         such termination of participation prior to such effective date unless
         waived by the Company. See Section 11.4 of this Plan.

                  (c) Restrictions on Amendments.

                           (i) Exclusive Benefit Rule. No modification or
                  amendment shall make it possible for Trust assets to be used
                  for, or diverted to, purposes other than the exclusive benefit
                  of Participants and their Beneficiaries in accordance with the
                  exclusive benefit rule under Section 9.2 of the Plan herein,
                  except as provided in Section 3.4.

                           (ii) Code ss.411(d)(6) Restrictions. No amendment to
                  the Plan shall be permitted that would have the effect of
                  decreasing the Account balances of any Participant.
                  Furthermore, no amendment shall be permitted that would have
                  the effect of eliminating or reducing an early retirement
                  benefit or a retirement-type subsidy (as defined in Treasury
                  regulations under Code ss.411(d)(6)(B)(i)), if any,



                                       73
<PAGE>   83

                  or, except as permitted under Treasury regulations,
                  eliminating an "optional form of benefit" as defined in Treas.
                  Reg. ss.1.411(d)-4(Q&A-1).

                           (iii) Code ss.411(a)(10) Vesting Restrictions. Any
                  amendment changing the vesting schedule of this Plan shall
                  comply with the provisions of Section 5.2(c). For purposes of
                  this paragraph (iii), an "amendment changing the vesting
                  schedule" is any amendment which directly or indirectly
                  affects the computation of the vested percentage of a
                  Participant's Account balances as described in Treas. Reg.
                  ss.1.411(a)-8(c).

         11.3       Right to Terminate Plan.

                    (a) Termination by the Company. The Company reserves the
         right, at any time, to wholly or partially terminate the Plan. If the
         Plan is terminated by the Company, all Accounts of "affected"
         Participants within the meaning of Code ss.411(d)(3) as of the date of
         termination shall immediately become nonforfeitable and fully vested,
         to the extent funded. If the Plan is partially terminated by the
         Company or for whatever reason, all Accounts of those "affected"
         Participants within the meaning of Code ss.411(d)(3) shall, as of the
         date of partial termination, immediately become nonforfeitable and
         fully vested, to the extent funded. Furthermore, a "complete
         discontinuance of contributions" within the meaning of Treas. Reg.
         ss.1.411(d)-2(d) under the Plan shall be treated as a termination of
         the Plan for purposes of this subsection.

                    (b) Termination by Employer Other than Company. An Employer
         other than the Company cannot at any time terminate this Plan. Such an
         Employer may, however, cease to participate in this Plan at any time by
         giving written notice to the Company indicating the effective date of
         such termination of participation prior to such effective date unless
         waived by the Company. See Section 11.4 of this Plan.

                    (c) Distributions Upon Termination. If the Plan is
         terminated, the Account balances of affected Participants shall be
         either held in the Trust pursuant to the provisions of the Plan,
         transferred to another plan maintained by the Controlled Group which is
         qualified under Code ss.401(a), or distributed as soon as
         administratively feasible pursuant to Rev. Rul. 89-87, in the sole
         discretion of the Company. However, notwithstanding the preceding
         sentence, a distribution may not be made upon termination if the
         Controlled Group establishes or maintains any other defined
         contribution plan which is not an employee stock ownership plan. See
         also Sections 8.7(c)(v) for a similar restriction, and 11.5 for
         restrictions on transfers. Any distribution upon Plan termination must
         not eliminate or reduce an early retirement benefit or retirement-type
         subsidy, if any, (as defined in Treasury regulations under Code
         ss.411(d)(6)(B)(i)), or except as permitted under Treasury regulations,
         eliminate an optional form of benefit payment, unless the consent
         requirements of Section 8.7 are satisfied.

                    (d) Consent to Distribution or Transfer. If the Plan is
         terminated by the Company, then the Plan may distribute a Participant's
         Account balances without the



                                       74
<PAGE>   84

         Participant's consent unless a member of the Controlled Group maintains
         another defined contribution plan (other than an employee stock
         ownership plan as defined in Code ss.4975(e)(7)), in which case, the
         Participant's Account balances may be transferred without the
         Participant's consent to such other defined contribution plan if the
         Participant does not consent to an immediate distribution from the
         Plan.

                  (e) Other Special Rules Upon Termination. See Treas. Reg.
         ss.1.411(d)-4(Q&A-2)(b)(2)(iii) and (vi) for special rules regarding
         amendments which may be made to this Plan upon termination.

         11.4     Termination of Participation in Plan by Employer other than
Company. An Employer other than the Company may cease to participate in this
Plan at any time by giving written notice to the Company indicating the
effective date of such termination of participation prior to such effective date
unless waived by the Company, and, in such event, the Account balances of
Participants who are Employees of such Employer or who were Employees of such
Employer and who are no longer Employees of any Employer shall be either held in
the Trust for the benefit of such Participants and their Beneficiaries pursuant
to the provisions of the Plan, or transferred to another plan of such Employer
ceasing participation which is a qualified plan under Code ss.401(a) if the
Company approves of such transfer and if the requirements of Section 11.5 of
this Plan are, in the opinion of the Company in its sole discretion, satisfied.
Such other plan of such Employer ceasing participation may be amended or
terminated at any time and in any manner by such Employer, subject to the
restrictions of subsection (b) of Section 11.2 herein.

         11.5     Merger, Consolidation, or Transfer of Assets.

                  (a) Code ss.401(a)(12) Restriction. The Plan shall not be
         merged or consolidated with any other plan, and its assets and
         liabilities may not be transferred to any other trust, unless each
         Participant, immediately after the merger, consolidation or transfer
         (if the Plan then is terminated), would receive a benefit which is
         equal to or greater than the benefit he would have been entitled to
         receive, and would be entitled to each benefit payment option to which
         he would have been entitled, immediately before the merger,
         consolidation or transfer (if the Plan is then terminated).

                  (b) Code ss.401(a)(11) Restriction. Subject to subsection
         (c) below, this Plan may be the recipient of a transfer of assets from,
         or may transfer assets to, another plan qualified under Code ss.401(a)
         subject to the approval of the Company; provided, however, in no event
         shall this Plan be the recipient of a direct or indirect transfer of
         assets if such receipt would make this Plan a "transferee plan" within
         the meaning of Treas. Reg. ss.1.401(a)-20(Q&A-5)(a), unless such assets
         are separately accounted for (within the meaning of Treas. Reg.
         ss.1.401(a)-20(Q&A-5)(b)) and are subject to the requirements of Code
         ss.401(a)(11).

                  (c) Code ss.411(d)(6) Restriction. This Plan may be the
         recipient of a transfer of assets from, or may transfer assets to,
         another plan qualified under Code ss.401(a) in



                                       75
<PAGE>   85

         accordance with subsection (b) above only if such transfer satisfies
         the provisions of Treas. Reg. ss.1.411(d)-4(Q&A-3).

                    (d) If another plan is merged into this Plan after the
         effective date of a change in the plan qualification requirements of
         the Code, then the provisions of this Plan that are intended to comply
         with those changed plan qualification requirements shall be deemed to
         relate back to, and to apply to, the plan that is merged into this Plan
         during periods of time from the effective date of the change in the
         plan qualification requirements of the Code through the date of the
         plan merger.

         11.6       Adoption of Plan by Controlled Group Members.

                    (a) Procedures for Adoption of Plan. This Plan may be
         adopted by any member of the Controlled Group if the following
         requirements are met:

                              (i) The member of the Controlled Group wishing to
                    become an Employer must adopt the Plan by the execution of a
                    formal resolution by such member's board of directors to
                    adopt this Plan, and such resolution or a merger amendment,
                    as appropriate, shall indicate the effective date of such
                    adoption; and

                              (ii) Such document(s) evidencing the adoption of
                    the Plan by the Controlled Group member must be delivered to
                    and accepted in writing by the Plan Administrator or
                    approved by resolution of the board of directors of the
                    Company.

         The documents referred to in paragraphs (i) and (ii) of this Section
         shall be attached hereto and made a part of the Plan. Such documents
         may, in addition to specifying the effective date of the adoption,
         specify other provisions including, but not limited to, credit for
         service prior to the effective date for eligibility and vesting
         purposes, and contributions for each adopting Employer. In addition,
         Exhibit A hereto shall reflect any such special provisions with respect
         to contributions. In the absence of any such provisions, the terms and
         provisions of this Plan shall control.

                    (b) Procedures for Withdrawal from Plan. Any Employer may
         voluntarily withdraw from participating in the Plan, provided that
         notice of such intent to discontinue participation is furnished to the
         Company prior to the effective date of the withdrawal, unless waived by
         the Company. The Company unilaterally may terminate an adopting
         Employer's participation in the Plan for:

                           (i) failure to timely provide requested information;

                           (ii) failure to timely make contributions;

                           (iii) failure to cooperate with the Company in
                  administering the Plan; or



                                       76
<PAGE>   86

                           (iv) for any other reason that the Company deems
                  appropriate.

                    (c) Transfer of Assets. Upon the voluntary withdrawal or
         involuntary termination of an Employer's participation in the Plan, the
         Company shall determine the amount of assets and liabilities of the
         Plan (if any) which shall be transferred to a qualified plan of the
         withdrawing Employer. This determination shall be made based upon
         principles set forth in Code ss.ss.401(a)(12) and 414(l) and the
         regulations promulgated thereunder. Any transfer of assets and
         liabilities under this subsection (c) shall comply with the provisions
         of Section 11.5.

                    (d) Apportionment of Costs. The Company and all Employers
         shall share in the costs of the Plan (other than those costs paid from
         the Trust Fund in accordance with Section 10.2), including but not
         limited to, the contributions to the Plan, the costs of the Plan
         Administrator, the costs of the consultants (actuaries, accountants,
         attorneys, etc.) and various other direct and indirect costs of
         operating the Plan which may initially be borne by the Company or any
         Employer but which are determined by the Plan Administrator to be costs
         associated with the Plan. The Plan Administrator shall apportion these
         costs to the Company and each Employer as it deems to be equitable.

                    (e) Cooperation. Each Employer shall cooperate fully with
         the Company and the Plan Administrator with regard to all matters
         pertaining to the Plan. Any failure to cooperate will be grounds for
         the involuntary termination of that Employer's participation in the
         Plan.



                                       77
<PAGE>   87

                                   ARTICLE XII

                               GENERAL PROVISIONS


         12.1     Participant's Rights to Employment, Etc. Nothing contained in
the Plan or the establishment of the Trust, or any modification thereof, or the
creation of any fund or account, or the payment of any benefits, shall be
construed to give any Employee, whether or not a Participant, or any
Beneficiary, any rights to continued employment, any legal or equitable right
against an Employer, or any officer or employee thereof, or the Trustee, or its
agents or employees, except as herein provided.

         12.2     No Guarantee of Interests. The Employer, the Plan
Administrator and the Trustee do not guarantee the Trust Fund from any loss or
depreciation, nor do they guarantee any payment to any person. The liability of
the Trustee, the Employer, and the Plan Administrator to make payments
hereunder is limited to the available assets of the Trust Fund.

         12.3     Standard of Conduct. Any person who is a fiduciary with
respect to this Plan shall: (i) discharge his duties solely in the interest of
and for the exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying the reasonable administrative expenses of the Plan,
and shall conduct himself with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims; (ii) act at all times in accordance with the
documents governing the Plan and Trust as they may be amended from time to time;
(iii) not engage in nor allow the Plan or Trust to engage in any transaction
which is prohibited under ERISA ss.406 and which is not allowed by ERISA ss.408
or is prohibited under Code ss.4975; (iv) not knowingly participate in or
conceal an act of another fiduciary under the Plan which he knows to involve a
breach of fiduciary duty within the meaning ERISA; and (v) make reasonable
efforts under the circumstances to remedy a breach of duty described in
subsection (iv) discovered by him.

         12.4     Allocation of Duties. All responsibilities for the operation
and administration of the Plan shall be allocated as follows:

                  (a) The Employer shall furnish to the Trustee information
         with respect to service, eligibility, compensation, termination of
         employment and other matters required or desirable for the purpose of
         enabling the Trustee to carry out its duties and responsibilities under
         this Plan and Trust, and the Trustee may rely upon such information as
         conclusive proof of any fact or matter. The Employer shall also
         transmit to the Trustee, all Employer and Employee contributions under
         the Plan, and the Company shall determine the amount of all such
         contributions.

                  (b) The Plan Administrator shall have those duties and
         responsibilities set forth in Article X.



                                       78
<PAGE>   88

                  (c) The Trustee shall have responsibility for managing and
         administering the Trust Fund subject to the terms and provisions of
         this Plan and the Trust Agreement. The Trustee shall have
         responsibility for making benefit payments only upon the specific
         written direction of the Plan Administrator.

         12.5     Claims Procedure.

                  (a) Filing a Claim. All claims and requests for benefits
         under the Plan shall be directed to the attention of the Plan
         Administrator in writing. The writing must be reasonably calculated to
         bring the claim to the attention of the Plan Administrator.

                  (b) Notification of Denial. If the Plan Administrator
         determines that any individual who has claimed a right to receive
         benefits under the Plan (the "claimant") is not entitled to receive all
         or any part of the benefits claimed, the claimant shall be informed in
         writing of the specific reason or reasons for the denial, with specific
         reference to pertinent Plan provisions on which the denial is based, a
         description of any additional material or information necessary for the
         claimant to perfect the claim and an explanation of why said material
         or information is necessary and a description of the review procedures
         set forth in subsection (d) below.

                  (c) Timing of Notification. The claimant shall be so notified
         of the Plan Administrator's decision within 90 days after the receipt
         of the claim, unless special circumstances require an extension of time
         for processing the claim. If such an extension of time for processing
         is required, the Plan Administrator shall furnish the claimant written
         notice of the extension prior to the termination of the initial 90-day
         period. In no event shall said extension exceed a period of 90 days
         from the end of said initial period. The extension notice shall
         indicate the special circumstances requiring an extension of time and
         the date by which the Plan Administrator expects to render a final
         decision. If for any reason, the claimant is not notified within the
         period described above, the claim shall be deemed denied and the
         claimant may then request review of said denial, subject to the
         provisions of subsection (d) below.

                  (d) Review Procedures. The claimant or his duly authorized
         representative may, within 60 days after notice of the Plan
         Administrator's decision, request a review of said decision, review
         pertinent documents and submit to the Plan Administrator such further
         information as will, in the claimant's opinion, establish his rights to
         such benefits. If upon receipt of this further information, the Plan
         Administrator determines that the claimant is not entitled to the
         benefits claimed, the Plan Administrator shall afford the claimant or
         his representative reasonable opportunity to submit issues and comments
         in writing and to review pertinent documents. If the claimant wishes,
         he may request in writing that the Plan Administrator hold a hearing.
         The Plan Administrator may, in his discretion, schedule an opportunity
         for a full and fair hearing on the issue as soon as is reasonably
         possible under the circumstances. The Plan Administrator shall render
         his final decision with the specific reasons therefor in writing and in
         a manner calculated to be understood by the claimant.



                                       79
<PAGE>   89

                    (e) Timing of Final Decision. The Plan Administrator's final
         decision shall include specific references to the pertinent Plan
         provisions on which the decision is based, and shall be transmitted to
         the claimant by certified mail within 60 days of receipt of claimant's
         request for such review, unless special circumstances require a further
         extension of time for processing, in which case a decision shall be
         rendered as soon as possible, but not later than 120 days after receipt
         of a request for review. If such an extension of time for review is
         required because of special circumstances, written notice of the
         extension shall be furnished to the claimant prior to the commencement
         of the extension.

         12.6       Nonalienation or Assignment; QDRO's.

                    (a) Spendthrift Clause. Except as provided in Section 8.11
         above and in subsection (b) below, (i) none of the benefits under the
         Plan is subject to the claims of creditors of Participants or their
         Beneficiaries, and will not be subject to attachment, garnishment, or
         any other legal process whatsoever, and (ii) neither a Participant nor
         his Beneficiaries may assign, sell, borrow on, or otherwise encumber
         any of his beneficial interest in the Plan and Trust Fund, nor shall
         any such benefits be in any manner liable for or subject to the deeds,
         contracts, liabilities, engagements, or torts of any Participant or
         Beneficiary. Notwithstanding any provision of the Plan to the contrary,
         the Plan shall honor a judgment, order, decree or settlement providing
         for the offset of all or a part of a Participant's benefit under the
         Plan, to the extent permitted under Code ss. 401(a)(13)(C); provided
         that the requirements of Code ss. 401(a)(13)(C)(iii) relating to the
         protection of the Participant's spouse (if any) are satisfied.

                    (b)       Qualified Domestic Relations Orders.

                              (i) General Rule. The provisions of subsection (a)
                    above shall not apply to a "qualified domestic relations
                    order," as defined in Code ss.414(p) and ERISA ss.206(d)(3),
                    or any other domestic relations order permitted to be
                    treated as a "qualified domestic relations order" by the
                    Plan Administrator under the provisions of the Retirement
                    Equity Act of 1984. The Plan Administrator shall establish a
                    written procedure to determine the qualified status of
                    domestic relations orders and to administer distributions
                    under such qualified orders. To the extent provided under a
                    "qualified domestic relations order," a former Spouse of a
                    Participant shall be treated as the Spouse or Surviving
                    Spouse for all purposes under the Plan.

                              (ii)          QDRO Procedures.

                                            (A) Procedure Upon Receipt. Upon
                              receiving a domestic relations order, the Plan
                              Administrator shall notify all affected
                              Participants and any alternate payees (Spouse,
                              former spouse, child or other dependent of the
                              Participant named in the order) that the order has
                              been received. The Plan Administrator shall also
                              notify the affected Participants and



                                       80
<PAGE>   90

                           alternate payees of its procedure for determining
                           whether the domestic relations order is qualified.

                                    (B) Procedure During Determination. During
                           the period the Plan Administrator is determining the
                           qualified status of the order, the Plan Administrator
                           shall separately account for the amount (if any) that
                           would be payable to an alternate payee under this
                           order (if it were a qualified domestic relations
                           order) during this period. If the Plan Administrator
                           determines the order is a qualified domestic
                           relations order during the 18-month period commencing
                           on the date the first payment would be required under
                           the qualified domestic relations order, then the
                           alternate payee shall receive payment from the
                           separate account. If the Plan Administrator cannot
                           make a determination of the order's qualified status
                           during this 18-month period (or determines the order
                           is not a qualified domestic relations order), then
                           the Trustee shall return the amounts in the separate
                           account to the account of the affected Participant as
                           if no court order had been received.

                           (iii)    QDRO Payouts.

                                    (A) Payment Upon Receipt of QDRO.
                           Notwithstanding any provision of this Plan to the
                           contrary, any amounts of a Participant's vested
                           Account balances which, due to the receipt of a
                           domestic relations order determined to be a qualified
                           domestic relations order under paragraph (ii) above,
                           become the vested Account balances of an alternate
                           payee under such order shall be distributed in the
                           form of a single lump-sum payment to the alternate
                           payee as of the earliest date on which such amounts
                           can be accurately determined and paid, subject to any
                           provisions of the qualified domestic relations order
                           to the contrary. No written consent of the alternate
                           payee shall be required for this distribution
                           pursuant to Treas. Reg. ss.1.411(a)-11(c)(6).

                                    (B) Subsequent Additional Amounts. The
                           preceding subparagraph (A) shall apply to any amounts
                           of a Participant's vested Account balances which, due
                           to the receipt of a domestic relations order
                           determined to be a qualified domestic relations under
                           subsection (b) above, become the vested Account
                           balances of an alternate payee under such order after
                           a payment under subparagraph (A) above due to
                           additional vesting, allocation of contributions or
                           earnings, or any other reason.

                           (iv) Status of Alternate Payee. An alternate payee
                    under a qualified domestic relations order shall be
                    entitled to all rights of a Beneficiary hereunder except
                    as otherwise specified herein.



                                       81
<PAGE>   91

         12.7     Plan Continuance Voluntary. Although it is the intention of
the Employer that this Plan shall be continued and that contributions shall be
made regularly, this Plan is entirely voluntary on the part of the Employer, and
the continuance of the Plan and the payments hereunder are not assumed as a
contractual obligation of the Employer.

         12.8     Payments to Minors and Others. In making any distribution to
or for the benefit of any minor or incompetent Participant or Beneficiary, or
any other Participant or Beneficiary who, in the opinion of the Plan
Administrator, is incapable of properly using, expending, investing, or
otherwise disposing of such distribution, the Plan Administrator, in the Plan
Administrator's sole and complete discretion may, but need not, order the
Trustee to make such distribution to a legal or natural guardian or other
relative of such minor or court appointed committee of any incompetent, or to
any adult with whom such person temporarily or permanently resides; and any such
guardian, committee, relative, or other person shall have full authority and
discretion to expend such distribution for the use and benefit of such person;
and the receipt of such guardian, committee, relative, or other person shall be
a complete discharge to the Trustee, the Plan Administrator, and this Plan,
without any responsibility on the part of the Plan Administrator or the Trustee
to see to the application of amounts so distributed.

         12.9     Location of Payee; Unclaimed Benefits. In the event that all,
or any portion, of the distribution payable to a Participant or Beneficiary
hereunder shall, at the expiration of a reasonable time after it has become
payable, remain unpaid solely by reason of the inability of the Plan
Administrator, after sending a registered letter, return receipt requested, to
the last known address of such person, and after further diligent effort
(including requests to the Internal Revenue Service under Policy Statement
P-1-187), to ascertain the whereabouts of such person, the amount so
distributable shall be paid pursuant to the terms and provisions of the Plan as
if the Participant or Beneficiary is deceased. If, for any reason, no
Beneficiary or contingent Beneficiary can be found, the amount so distributable
shall be forfeited and shall be used to reduce the contributions to the Plan. In
the event a proper payee is located subsequent to the benefit being forfeited,
the benefit shall be restored, and the Employer shall make special contributions
to this Plan for such purpose.

         12.10    Governing Law. This Plan shall be administered in the United
States of America, and its validity, construction, and all rights hereunder
shall be governed by the laws of the United States under ERISA. To the extent
that ERISA shall not be held to have preempted local law, the Plan shall be
administered under the laws of the State of Georgia. If any provision of the
Plan shall be held invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.

         12.11    Correction of Participants' Accounts. If an error or omission
is discovered in the Accounts of a Participant, or in the amount distributed to
a Participant, the Plan Administrator will make such equitable adjustments in
the records of the Plan as may be necessary or appropriate to correct such error
or omission as of the Plan Year in which such error or omission is discovered.
Further, the Employer may, in its discretion, make a special contribution to the
Plan which will be allocated by the Plan Administrator only to the Account of
one or more Participants to correct such error or omission.



                                       82
<PAGE>   92

         12.12    Action of Employer and Plan Administrator. Except as may be
specifically provided, any action required or permitted to be taken by the
Employer or the Plan Administrator may be taken on behalf of such person by any
entity or individual who has been delegated the proper authority.

         12.13    Employer Records. Records of the Employer as to an Employee's
or Participant's period of employment, termination of employment and the reason
therefore, leaves of absence, reemployment, compensation, and elections or
designations under this Plan will be conclusive on all persons, unless
determined by the Plan Administrator to be incorrect.

         12.14    Gender and Number. Wherever applicable, the masculine pronoun
shall include the feminine pronoun, and the singular shall include the plural.

         12.15    Headings. The titles in this Plan are inserted for convenience
of reference; they constitute no part of the Plan, and are not to be considered
in the construction hereof.

         12.16    Liability Limited. To the extent permitted by ERISA and other
applicable law, neither the Plan Administrator nor the Employer shall be liable
for any acts of omission or commission in administering the Plan, except for his
or its own individual, willful misconduct. The Employer and the Plan
Administrator shall be entitled to rely conclusively on all tables, valuations,
certificates, opinions and reports which shall be furnished by an actuary,
accountant, trustee, insurance company, counsel or other expert who shall be
employed or engaged by the Plan Administrator or the Employer.

         12.17    Prohibited Discrimination. This Plan shall be operated and
administered in a uniform and consistent manner with respect to all Participants
and in a manner which does not discriminate in favor of Highly Compensated
Employees.

         12.18    Legal References. Any references in this Plan to a provision
of law which is, subsequent to the Effective Date of this Plan, revised,
modified, finalized or redesignated, shall automatically be deemed a reference
to such revised, modified, finalized or redesignated provision of law.

         12.19    Military Service. Notwithstanding any provision of this Plan
to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Code ss. 414(u).
"Qualified military service" means any service in the uniformed services (as
defined in chapter 43 of title 38 of the United States Code) by any individual
if such individual is entitled to reemployment rights under such chapter with
respect to such service.

         12.20    Electronic Means of Communication. Whenever, under this Plan,
a Participant or Beneficiary is required or permitted to make an election,
provide a notice, give a consent, request a distribution, execute a promissory
note or security agreement, or otherwise communicate with the Employer, the Plan
Administrator, the Trustee or a delegate of any of them, to the extent permitted
by law, the election, notice, consent, distribution request, promissory note or
security agreement, or



                                       83
<PAGE>   93

other communication may be transmitted by means of telephonic or other
electronic communication, if the administrative procedures under the Plan
provide for such means of communication.

         12.21    Plan Conversions. Notwithstanding any provision of the Plan to
the contrary, during any conversion period, in accordance with procedures
established by the Plan Administrator, the Plan Administrator may temporarily
suspend, in whole or in part, certain provisions of the Plan, which may include,
but are not limited to, a Participant's right to change his contribution
election, a Participant's right to change his investment election and a
Participant's right to borrow or withdraw from his Account or obtain a
distribution from his Account.



                                       84
<PAGE>   94

                                  ARTICLE XIII

                SPECIAL RULES APPLICABLE TO TOP HEAVY PLAN YEARS


         13.1    Top-Heavy Provisions. If and only if, this Plan is a
Top-Heavy Plan, the following provisions shall apply for such Plan Year
notwithstanding any other provisions of this Plan to the contrary:

                    (a)       Minimum Allocation.

                              (i) For any Plan Year in which this Plan is a
                    Top-Heavy Plan, except as otherwise provided in paragraph
                    (iii) below, the contributions and forfeitures of members of
                    the Controlled Group allocated on behalf of any Participant
                    (A) who is not a Key Employee and (B) who was employed by an
                    Employer on the last day of such Plan Year shall not be less
                    than the lesser of 3% of such Participant's Compensation or,
                    in the case where no member of the Controlled Group has a
                    defined benefit plan which designates this Plan to satisfy
                    Code ss.401, the largest percentage of contributions and
                    forfeitures of members of the Controlled Group, as a
                    percentage of the Key Employee's Compensation, allocated on
                    behalf of any Key Employee for that year. The minimum
                    allocation is determined without regard to any Social
                    Security contribution. This minimum allocation shall be made
                    even though, under other Plan provisions, the Participant
                    would not otherwise be entitled to receive an allocation, or
                    would have received a lesser allocation for the year because
                    of (i) the Participant's failure to complete 1,000 Hours of
                    Service (or any equivalent provided in the Plan), or (ii)
                    the Participant's failure to make Elective Contributions to
                    the Plan, or (iii) the Participant's Compensation is less
                    than a stated amount.

                              (ii) For purposes of computing the minimum
                    allocation, Compensation shall mean Compensation as defined
                    in Section 4.2(b) of the Plan, limited pursuant to Section
                    1.15(e).

                              (iii) The provision in paragraph (i) above shall
                    not apply to any Participant to the extent the Participant
                    is covered under any other plan or plans of a member of the
                    Controlled Group and the Employer has provided that the
                    minimum allocation or benefit requirement applicable to
                    Top-Heavy Plans under Code ss.416(c) will be met in the
                    other plan or plans.

                              (iv) For purposes of this subsection (a), Elective
                    Contributions of Key Employees shall be taken into account,
                    but Elective Contributions of Employees who are not Key
                    Employees shall not be taken into account.



                                       85
<PAGE>   95

                              (v) For purposes of this subsection (a), any
                    Qualified Nonelective Contributions shall be taken into
                    account; however, Qualified Matching Contributions, and
                    Matching Elective Contributions shall not be taken into
                    account.

                              (vi) If an Employer also maintains a defined
                    benefit plan and both this Plan and the defined benefit plan
                    become Top-Heavy Plans, the minimum allocation provisions in
                    this Article will not be required to be made to both plans.
                    Thus, if both plans are Top-Heavy Plans, the requirements of
                    this Article will be satisfied by providing the minimum
                    required benefit under the Employer's defined benefit plan.

                    (b) Minimum Vesting. For any Plan Year in which this Plan is
         a Top-Heavy Plan, the following minimum vesting schedule will
         automatically apply in place of the vesting schedule contained in
         Section 5.2(b) of the Plan:

<TABLE>
<CAPTION>
            Years of Vesting Service Earned by                             Vested Percentage of the
                      the Participant                                 Participant in Forfeitable Account
           <S>                                                        <C>
     -------------------------------------------------------------------------------------------------------
           Less than 3 Years                                               0% vested
     -------------------------------------------------------------------------------------------------------
           3 or more Years                                               100% vested
     -------------------------------------------------------------------------------------------------------
</TABLE>

The minimum vesting schedule applies to all accrued benefits within the meaning
of Code ss.411(a)(7), including benefits accrued before the Plan became
Top-Heavy, except those attributable to Rollover Contributions or Elective
Contributions or those forfeited before the Plan became Top-Heavy. Further, no
decrease in a Participant's nonforfeitable percentage may occur in the event the
Plan's status as Top-Heavy changes for any Plan Year. However, this subsection
(b) does not apply to the Account balances of any Employee who does not have an
Hour of Service after the Plan has initially become Top-Heavy and such
Employee's Account balance attributable to contributions and forfeitures of
members of the Controlled Group will be determined without regard to this
subsection (b).

         13.2     Top-Heavy Special Definitions. For purposes of this Article,
the following terms shall have the following meanings:

                  (a) Top-Heavy Ratio.

                           (i) If a member of the Controlled Group maintains one
                  or more defined contribution plans (including any simplified
                  employee pension plan) and a member of the Controlled Group
                  has never maintained any defined benefit plan which during the
                  5 year period ending on the Determination Date(s) has or had
                  accrued benefits, the Top-Heavy Ratio for this Plan alone, or
                  for the Required or Permissive Aggregation Group as
                  appropriate, is a fraction, the numerator of which is the sum
                  of the account balances of all Key Employees under the
                  aggregated



                                       86
<PAGE>   96

                  defined contribution plan or plans as of the Determination
                  Date(s) (including any part of any Account balance distributed
                  in the 5-year period ending on the Determination Date(s)), and
                  the denominator of which is the sum of all Account balances
                  (including any part of any Account balance distributed in the
                  5-year period ending on the Determination Date(s)) of all
                  Participants as of the Determination Date(s), both computed in
                  accordance with Code ss.416 and the regulations thereunder.
                  Both the numerator and the denominator of the Top-Heavy Ratio
                  are adjusted to reflect any contribution not actually made as
                  of the Determination Date but which is required to be taken
                  into account on that date under Code ss.416 and the
                  regulations thereunder.

                           (ii) If a member of the Controlled Group maintains
                  one or more defined contribution plans (including any
                  simplified employee pension plan) and a member of the
                  Controlled Group maintains or has maintained one or more
                  defined benefit plans which during the 5-year period ending on
                  the Determination Date(s) has or had any accrued benefits, the
                  Top-Heavy Ratio for any Required or Permissive Aggregation
                  Group, as appropriate, is a fraction, the numerator of which
                  is the sum of account balances under the aggregated defined
                  contribution plan or plans for all Key Employees, determined
                  in accordance with paragraph (i) above, and the Present Value
                  of accrued benefits under the aggregated defined benefit plans
                  for all Key Employees, as of the Determination Date(s), and
                  the denominator of which is the sum of the account balances
                  under the aggregated defined contribution plans for all
                  Participants, as determined in accordance with paragraph (i)
                  above, and the Present Value of accrued benefits under the
                  aggregated defined benefit plans for all Participants as of
                  the Determination Date(s), all determined in accordance with
                  Code ss.416 and the regulations thereunder. Both the numerator
                  and the denominator of the Top-Heavy Ratio are adjusted by
                  adding back the amount of any distribution of an account
                  balance or an accrued benefit made in the 5-year period ending
                  on the Determination Date and any contribution not actually
                  made but required to be taken into account under Code ss.416
                  as of the Determination Date.

                           (iii) For purposes of this subsection (a), the value
                  of account balances and the Present Value of accrued benefits
                  will be determined as of the most recent Valuation Date that
                  falls within or ends with the 12-month period ending on the
                  Determination Date, except as provided in Code ss.416 and the
                  regulations thereunder for the first and second plan years of
                  a defined benefit plan. The account balances and accrued
                  benefits of a Participant who is not a Key Employee but who
                  was a Key Employee in a prior year will be disregarded. If an
                  individual has not performed an Hour of Service for any
                  Employer maintaining the Plan at any time during the 5 year
                  period ending on the Determination Date, any accrued benefit
                  for such individual (and the account of such individual) shall
                  not be taken into account in determining the Top-Heavy Ratio.
                  The calculation of the Top-Heavy Ratio, and the extent to
                  which distributions, rollovers, and transfers are taken into
                  account will be made in accordance with Code ss.416 and the
                  regulations



                                       87
<PAGE>   97

                  thereunder. When aggregating plans, the value of Account
                  balances and accrued benefits will be calculated with
                  reference to the Determination Dates that fall within the same
                  calendar year.

                           (iv) The accrued benefit of any Employee (other than
                  a Key Employee) shall be determined (A) under the method which
                  is used for accrual purposes for all plans of the Controlled
                  Group, or (B) if there is no method described in clause (A),
                  as if such benefit accrued not more rapidly than the slowest
                  accrual rate permitted under Code ss.411(b)(1)(C).

                  (b) Permissive Aggregation Group. The Required Aggregation
         Group of plans plus any other plan or plans of the Controlled Group
         which, when considered as a group with the Required Aggregation Group,
         would continue to satisfy the requirements of Code ss.ss.401(a)(4) and
         410.

                  (c) Required Aggregation Group. (i) Each qualified plan of the
         Controlled Group in which at least one Key Employee participates or
         participated at any time during the determination period (as defined in
         subsection (f) below) regardless of whether the plan has terminated,
         and (ii) any other qualified plan of the Controlled Group which enables
         a plan described in (i) to meet the requirements of Code
         ss.ss.401(a)(4) and 410.

                  (d) Determination Date. For any Plan Year subsequent to the
         first Plan Year, the last day of the preceding Plan Year. For the first
         Plan Year of the Plan, the last day of that year.

                  (e) Present Value. For purposes of establishing Present Value
         to compute the Top-Heavy Ratio, any accrued benefit in a defined
         benefit plan shall be discounted only for mortality and interest based
         on the interest rate and mortality table used by the defined benefit
         plan for determining the actuarial present value of actuarially
         equivalent benefits unless the defined benefit plan specifically
         defines alternative interest and mortality assumptions to be used in
         determining the Top-Heavy Ratio. If more than one defined benefit plan
         must be aggregated, the assumptions used will be the assumptions
         applicable to the defined benefit plan that has the greatest value of
         assets as of the Valuation Date coincident with the Determination Date.

                  (f) Key Employee. Any Employee or former Employee (and the
         Beneficiaries of such Employee) who at any time during the
         determination period was an officer of a member of the Controlled Group
         if such individual's annual Compensation from members of the Controlled
         Group exceeds 50% of the dollar limitation under Code ss.415(b)(1)(A),
         an owner (or considered an owner under Code ss.318) of one of the 10
         largest interests in the Employer if such individual's Compensation
         from members of the Controlled Group exceeds 100% of the dollar
         limitation under Code ss.415(c)(1)(A), a 5-percent owner of the
         Employer, or a 1-percent owner of the Employer who has an annual
         Compensation from members of the Controlled Group of more than
         $150,000. Annual Compensation means Compensation as defined in Section
         4.2(b) of this Plan, but including amounts contributed by a member of




                                       88
<PAGE>   98

         the Controlled Group pursuant to a salary reduction agreement which are
         excludable from gross income under Code ss.ss.125, 402(a)(8), 402(h) or
         403(b). The determination period is the Plan Year containing the
         Determination Date and the 4 preceding Plan Years. The determination of
         who is a Key Employee will be made in accordance with Code ss.416(i)(1)
         and the regulations thereunder.

                    (g) Top-Heavy Plan. This Plan is a Top-Heavy Plan if any of
         the following conditions exist:

                              (i) If the Top-Heavy Ratio for this Plan exceeds
                    60% and this Plan is not part of any Required Aggregation
                    Group or Permissive Aggregation Group of plans.

                              (ii) If this Plan is a part of a Required
                    Aggregation Group of plans but not part of a Permissive
                    Aggregation Group and the Top-Heavy Ratio for the group of
                    plans exceeds 60%.

                              (iii) If this Plan is a part of a Required
                    Aggregation Group and part of a Permissive Aggregation Group
                    of plans and the Top-Heavy Ratio for the Permissive
                    Aggregation Group exceeds 60%.


                  IN WITNESS WHEREOF, this Plan has been executed by the Company
         this 11th day of May, 1999.


                                         COMPANY:

                                         FLOWERS INDUSTRIES, INC.


                                         By:/s/ Jimmy M. Woodward
                                            ----------------------------------
                                             Title: TREASURER
                                                   ---------------------------



                                       89
<PAGE>   99

                                   APPENDIX I

                 SPECIAL PROVISIONS RELATING TO ANNUITY PAYMENTS


         1.1     Forms of Benefit for Certain Accounts. As a consequence of
the merger of certain other plans into this Plan, applicable law requires that
particular distribution provisions apply to certain accounts of affected
Participants. Therefore, notwithstanding any provisions of this Plan to the
contrary, except as noted, the following automatic forms of benefits shall
apply with respect to those Accounts (but no other accounts) of Participants
held under this Plan which are expressly stated to be subject to the following
provisions of this Appendix (herein "Applicable Accounts"):

                  (a)      Qualified Joint and Survivor Annuity.

                           (i) Definition. A Participant who is married as of
                  his Annuity Starting Date shall automatically have the vested
                  value of his Applicable Accounts applied to purchase a
                  Qualified Joint and Survivor Annuity, unless he properly
                  waives the Qualified Joint and Survivor Annuity. Such monthly
                  benefit must be of equivalent actuarial value to the amount of
                  monthly retirement benefit the Participant would receive on
                  his Annuity Starting Date in the form of a straight life
                  annuity with no certain period.

                           (ii) Written Explanation. With regard to a Qualified
                  Joint and Survivor Annuity as described above, the Plan
                  Administrator shall, no less than thirty (30) days and no more
                  than ninety (90) days prior to the Annuity Starting Date,
                  provide each Participant who has an Applicable Account, within
                  a reasonable period prior to the commencement of benefits, a
                  written explanation of: (i) the terms and conditions of a
                  Qualified Joint and Survivor Annuity; (ii) the Participant's
                  right to make, and the effect of, an election to waive the
                  Qualified Joint and Survivor Annuity form of benefit; (iii)
                  the rights of a Participant's Spouse; and (iv) the right to
                  make, and the effect of, a revocation of a previous election
                  to waive the Qualified Joint and Survivor Annuity.

                           (iii) Waiver of Automatic Form. A Participant's
                  election to waive the payment of his benefit in the form of a
                  Qualified Joint and Survivor Annuity shall be effective only
                  if all of the following requirements are met: (a) such waiver
                  is made during the 90-day period ending on the Participant's
                  Annuity Starting Date; (b) the election specifies a form of
                  benefit which may not be changed without spousal consent; (c)
                  the Participant's Spouse consents in writing to the form of
                  benefit; (d) such selection by the Participant may not be
                  changed without a consent of the Spouse; and (e) any such
                  spousal consent acknowledges the effect of such election and
                  is witnessed by a representative of the Plan Administrator or
                  a notary public. However, spousal consent will not be required
                  if it is established to the satisfaction of the Plan
                  Administrator that such spousal consent cannot be obtained (i)
                  because there is no Spouse, (ii) because the Spouse cannot be
                  located, or (iii)



                                       90
<PAGE>   100

                  because of such other circumstances as the Secretary of the
                  Treasury may prescribe by regulations. Any election by the
                  Participant to waive the Qualified Joint and Survivor Annuity
                  may be revoked by the Participant during the 90-day period
                  ending on the Participant's Annuity Starting Date. A
                  Participant's election to waive the Qualified Joint and
                  Survivor Annuity and any revocation of such election may be
                  made solely by an instrument (in a form acceptable to the Plan
                  Administrator) signed by the Participant and filed with the
                  Plan Administrator during such election period. The
                  Participant or the Participant's Spouse must furnish evidence
                  satisfactory to the Plan Administrator of their marriage and
                  of their dates of birth. If a Participant's benefit commences
                  under the Qualified Joint and Survivor Annuity and the
                  Participant's Spouse dies on or after the Participant's
                  Annuity Starting Date and while the Participant is living, the
                  Participant's reduced benefit will not be increased thereby.

                  (b) Life Annuity. A Participant who is not married as of his
         Annuity Starting Date shall automatically have the value of his vested
         Applicable Accounts applied to purchase a straight life annuity with no
         period certain, unless he elects an optional form under other
         provisions of this Plan. A Participant electing to receive an optional
         form must give written consent not more than 90 days before the
         Participant's Annuity Starting Date.

                  (c) Qualified Preretirement Survivor Annuity. The Surviving
         Spouse of a Participant (i) who is married at the time of his death,
         (ii) who has a vested Applicable Account balance, and (iii) who dies
         before his Annuity Starting Date, shall automatically receive a
         Qualified Preretirement Survivor Annuity purchased with the value of
         the Participant's vested Applicable Accounts. A Surviving Spouse may,
         however, elect to receive the value of the Participant's vested
         Applicable Accounts in any of the optional forms allowed under other
         provisions of this Plan.

         1.2      Annuities. If an annuity is one of the forms of payment
available to Participants or Beneficiaries under this Plan, the terms of any
annuity contract purchased or distributed by the Plan to a Participant or to
his Beneficiary shall comply with the requirements of this Plan. Any annuity
contract distributed from the Plan must be nontransferable.

         1.3      Death On or After Benefit Commencement Date. In the event of
the death of a Participant on or after his Benefit Commencement Date, if the
Participant was receiving annuity payments, the benefit, if any, for a
Beneficiary shall be determined by the form of annuity which the Participant
was receiving, notwithstanding any provision of this Plan to the contrary.

         1.4      Valuation of Accounts for Payments. If a Participant or
Beneficiary receives his benefit available under this Plan in the form of an
annuity contract under this Appendix, the amount used to purchase such contract
for the Participant or Beneficiary shall be determined using the Participant's
or Beneficiary's Benefit Amount valued as of the date of the distributable
event.



                                       91
<PAGE>   101

         1.5      Definitions.

                  (a) Annuity Starting Date shall mean, with respect to a payee,
         (i) the first day of the first period for which an amount is payable as
         an annuity, or (ii) in the case of a benefit not payable in the form of
         an annuity, the first day on which all events have occurred which
         entitle the payee to such benefit, in accordance with Treas. Reg.
         ss.1.401(a)-20(Q&A-10)(b), Code ss.417(f)(2) and Notice 93-26, and
         determined pursuant to the provisions of this Plan.

                  (b) Qualified Joint and Survivor Annuity shall mean an annuity
         for the life of the Participant with a survivor annuity for the life of
         the Participant's Spouse, under which the Spouse's monthly benefit is
         not more than 100% and not less than 50% of the amount of the
         Participant's monthly benefit, purchased with the Participant's entire
         vested Applicable Accounts. In the case of a "Qualified Joint and 50%
         Survivor Annuity," the Spouse's monthly benefit shall be 50% of the
         amount of the Participant's monthly benefit, and in the case of a
         "Qualified Joint and 100% Survivor Annuity," the Spouse's monthly
         benefit shall be 100% of the amount of the Participant's monthly
         benefit. The exact percentage of the survivor benefit shall be
         specified under the Plan provisions expressly stating that this
         Appendix is applicable.

                  (c) Qualified Preretirement Survivor Annuity shall mean, with
         respect to a Participant, an annuity for the life of the Participant's
         Surviving Spouse purchased with the Participant's entire vested
         Applicable Account balances.



                                       92
<PAGE>   102

                                   APPENDIX II

                   SPECIAL PROVISIONS REGARDING MERGER OF THE
            MRS. BOEHME'S HOLSUM BAKERY, INC. 401(k) RETIREMENT PLAN
                             WITH AND INTO THE PLAN


         2.1     General Provisions. Effective as of April 1, 1995 ("Boehme's
Merger Effective Date"), the Mrs. Boehme's Holsum Bakery, Inc. 401(k)
Retirement Plan ("Boehme's Plan") is merged with and into the Plan. The Plan
shall, as of the Boehme's Merger Effective Date, assume all obligations of the
Boehme's Plan and be responsible for payment of all vested benefits accrued
under the terms and provisions of the Boehme's Plan for (i) participants
participating in the Boehme's Plan immediately prior to the Boehme's Merger
Effective Date, and (ii) former participants and beneficiaries with vested
benefits under the Boehme's Plan immediately prior to the Boehme's Merger
Effective Date. Such participants and beneficiaries shall, as of the Boehme's
Merger Effective Date, automatically become Participants in the Plan with
respect to such account balances. The Plan shall provide for said payment of
benefits with the assets transferred to the Trust accompanying this Plan as
set forth in Section 2.3 of this Appendix.

         2.2     Separate Accounting. The account balances of each participant
in the Boehme's Plan shall be maintained in separate accounts as follows:

                  (a) Amounts transferred attributable to "Elective Deferral
         Contributions" allocated to a participant under the Boehme's Plan shall
         be held in a special segregated Boehme's Elective Deferral
         Contributions Account.

                  (b) Amounts transferred attributable to "Matching
         Contributions" allocated to a participant under the Boehme's Plan shall
         be held in a special segregated Boehme's Matching Contributions
         Account.

                  (c) Amounts transferred attributable to "Rollover
         Contributions" allocated to a participant under the Boehme's Plan shall
         be held in a special segregated Boehme's Rollover Account.

All such accounts shall be collectively referred to as "Boehme's Accounts."

         2.3     Transfer of Plan Assets. Effective as of the Boehme's Merger
Effective Date, the assets of the Boehme's Plan which are held by the trustee
of the trust accompanying the Boehme's Plan shall become assets of the Plan,
and shall be held by the Trustee under the provisions of this Plan and its
accompanying Trust for the exclusive benefit of Participants and Beneficiaries
under the Plan, including the provisions of Appendix I and this Appendix.

         2.4      Conditions for Merger and Transfer. The merger of plans and
transfer of assets as provided for in this Appendix is made on the condition
that subsection (a) of Section 11.5 of the Plan is satisfied.



                                       93
<PAGE>   103
         2.5      Forms of Benefits for Boehme's Accounts.

                  (a) In General. Notwithstanding any provisions of this Plan to
         the contrary except as noted, the Boehme's Accounts of Participants
         held under this Plan shall be "Applicable Accounts" for purposes of
         Appendix I, and shall be subject to the terms and provisions of
         Appendix I. For purposes of Appendix I, the Qualified Joint and
         Survivor Annuity referred to in such Appendix shall be a Qualified
         Joint and 50% Survivor annuity.

                  (b) Additional Optional Methods. Subject to the requirements
         set forth in subsection (a) above, a Participant who has a vested
         Boehme's Account balance may elect by written notice to the Plan
         Administrator at least 31 days prior to his Annuity Starting Date that
         the value of his Boehme's Accounts shall be distributed in the form of
         a lump sum cash payment, or in the form of an annuity contract, or
         partly in the form of a lump sum cash payment and partly in the form of
         an annuity contract. The annuity contract shall provide a fixed or
         variable annuity benefit, or a combination of a fixed and a variable
         annuity benefit, as chosen by the Participant. The Plan Administrator
         shall select the insurance company from which the annuity contract
         shall be purchased. The following forms of annuity benefit are
         available with respect to the Boehme's Accounts:

                           (i) Joint and 100% Survivor Annuity. An annuity
                  benefit under which the Participant will receive fixed monthly
                  payments for life, and upon his death monthly payments in the
                  same amount will continue to the spouse to whom the
                  Participant was married at the time the annuity contract was
                  purchased, for the life of that spouse.

                           (ii) Term Certain and Life Annuity. An annuity
                  benefit under which the Participant will receive monthly
                  payments for life, and upon his death prior to the receipt of
                  either 120 or 180 monthly payments (as elected in advance by
                  the Participant), monthly payments in the same amount will
                  continue to the designated beneficiary for the balance of the
                  120-month or 180-month period (as the case may be).

                           (iii) Contingent Annuitant - Ten Year Certain and
                  Life Annuity. An annuity benefit under which the Participant
                  will receive monthly payments for life. If the Participant
                  dies before receiving 120 monthly payments, payments will
                  continue in the same amount to a contingent annuitant until a
                  total of 120 monthly payments have been made to the
                  Participant and the contingent annuitant. Thereafter monthly
                  payments equal to 50% or 100% of the monthly payments during
                  the Participant's lifetime (as elected in advance by the
                  Participant) will continue to the contingent annuitant for the
                  life of the contingent annuitant. If both the Participant and
                  the contingent annuitant die before a total of 120 monthly
                  payments have been made, payments in the same amount that the
                  contingent annuitant was receiving will continue to a
                  designated beneficiary until a total of 120 monthly payments
                  have been made.



                                       94
<PAGE>   104

                           (iv) Flexible Installment Refund Annuity. An annuity
                  benefit under which the balance in the Boehme's Accounts will
                  be distributed in monthly payments over the Participant's life
                  expectancy as determined in accordance with applicable
                  Internal Revenue Service tables. The life expectancy will be
                  redetermined annually. If the Participant dies, the remaining
                  balance will be distributed to a designated beneficiary in a
                  lump sum.

                           (v) Installment Refund Annuity. An annuity benefit
                  under which the balance in the Boehme's Accounts will be
                  distributed in monthly payments over a period certain of 5,
                  10, or 15 years, at the end of which time all payments will
                  stop. If the Participant dies before the end of the period
                  certain that the Participant has selected, payments will
                  continue to a designated beneficiary for the remainder of the
                  period certain and will then stop.

         2.6     Benefits Upon Death. In the event of the death of a
Participant prior to his Benefit Commencement Date, then the Participant's
Boehme's Accounts will be paid to the Surviving Spouse in the form of a
Qualified Preretirement Survivor Annuity in accordance with Appendix I,
Sections 1.1(c) and 1.5(c).

         2.7     Vesting. The portion of a Participant's Account attributable
to the Boehme's Accounts, determined as of April 1, 1995, shall at all times
be fully vested to such Participant. On and after April 1, 1995, the Account
of a Participant who was previously a participant in the Boehme's Plan
(excluding the portion of the Account attributable to the Boehme's Accounts)
shall be vested in accordance with either the following vesting schedule, or
the vesting provisions set forth in Section 5.2 of the Plan, whichever results
in the greater vested percentage for a Participant:

<TABLE>
<CAPTION>
       Years of Vesting Service                           Vested Percentage
       Earned by the Participant                         of the Participant
       -------------------------                         ------------------
       <S>                                               <C>
           Less than 3 years                                      0%
                3 years                                          20%
                4 years                                          40%
                5 years                                          60%
                6 years                                          80%
            7 years or more                                     100%
</TABLE>

         2.8     In-Service Withdrawals. Amounts in the Boehme's Elective
Deferral Contributions Account (excluding investment earnings attributable to
periods after December 31, 1988) may be withdrawn by the Participant in
accordance with the provisions of Section 8.10 of this Plan. In addition, in
the case of a Participant who has a Boehme's Rollover Account, such a
Participant may elect to withdraw once during each Plan Year any amount up to
100% of the value of that portion of his Account attributable to the Boehme's
Rollover Account. The Participant shall notify the Plan Administrator in
writing of his election to make a withdrawal from the Boehme's Rollover
Account. Any such election shall be effective as of the date specified in such
notice, which date must be at least 15 days after the notice is filed.



                                       95
<PAGE>   105

         2.9     Hours of Service. Effective as of the Boehme's Merger Effective
Date, service with Mrs. Boehme's Holsum Bakery, Inc. shall be treated as service
with an Employer for all purposes under this Plan, even though said service may
have been rendered prior to the time when said company became a member of the
Controlled Group. This provision shall be effective for all employees of said
company who remained or became employed by any member of the Controlled Group as
of the date the company became a member of the Controlled Group. This provision
shall not, however, be construed to permit participation in the Plan prior to
the adoption thereof by the Employer in question.



                                       96
<PAGE>   106

                                  APPENDIX III
                   SPECIAL PROVISIONS REGARDING MERGER OF THE
                      HOLSUM BAKING COMPANY RETIREMENT PLAN
                             WITH AND INTO THE PLAN

         3.1     General Provisions. Effective as of January 1, 1996 ("Holsum
Merger Effective Date"), the Holsum Baking Company Retirement Plan ("Holsum
Plan") is merged with and into the Plan. The Plan shall, as of the Holsum
Merger Effective Date, assume all obligations of the Holsum Plan and be
responsible for payment of all vested benefits accrued under the terms and
provisions of the Holsum Plan for (i) participants participating in the Holsum
Plan immediately prior to the Holsum Merger Effective Date, and (ii) former
participants and beneficiaries with vested benefits under the Holsum Plan
immediately prior to the Holsum Merger Effective Date. Such participants and
beneficiaries shall, as of the Holsum Merger Effective Date, automatically
become Participants in the Plan with respect to such account balances. The
Plan shall provide for said payment of benefits with the assets transferred to
the trust accompanying the Plan as set forth in Section 2.3 of this Appendix.

         3.2     Separate Accounting. The account balances of each participant
in the Holsum Plan shall be maintained in separate accounts as follows:

                  (a) Amounts transferred attributable to "Deferral
         Contributions" allocated to a participant under the Holsum Plan shall
         be held in a special segregated Holsum Deferral Contributions Account.

                  (b) Amounts transferred attributable to "Matching
         Contributions" allocated to a participant under the Holsum Plan shall
         be held in a special segregated Holsum Matching Contributions Account.

                  (c) Amounts transferred attributable to "Qualified Nonelective
         Contributions" allocated to a participant under the Holsum Plan shall
         be held in a special segregated Holsum Qualified Nonelective
         Contributions Account.

                  (d) Amounts transferred attributable to "Discretionary
         Contributions" allocated to a participant under the Holsum Plan shall
         be held in a special segregated Holsum Discretionary Contributions
         Account.

                  (e) Amounts transferred attributable to "Rollover
         Contributions" allocated to a participant under the Holsum Plan shall
         be held in a special segregated Holsum Rollover Contributions Account.

All such accounts shall be collectively referred to in this Appendix III as
"Holsum Accounts."

         3.3     Transfer of Plan Assets. Effective as of the Holsum Merger
Effective Date, the assets of the Holsum Plan which are held by the trustee of
the trust accompanying the Holsum Plan shall become assets of the Plan, and
shall be held by the Trustee under the provisions of the Plan and its



                                       97
<PAGE>   107

accompanying Trust for the exclusive benefit of Participants and Beneficiaries
under the Plan, including the provisions of this Appendix.

        3.4       Conditions for Merger and Transfer. The merger of plans and
transfer of assets as provided for in this Appendix is made on the condition
that subsection (a) of Section 11.5 of the Plan is satisfied.

        3.5       Additional Forms of Benefit for Holsum Accounts. A
Participant who has a vested Holsum Account balance in excess of $3,500 or the
surviving Beneficiary of such a Participant may elect by written notice to the
Plan Administrator that the value of his Holsum Accounts shall be distributed
in the form of a lump sum cash payment, or in monthly, quarterly or annual
installments over a fixed period of time, not exceeding the life expectancy of
the Participant, or the joint life and last survivor expectancy of Participant
and his Beneficiary.

        3.6       Vesting. The portion of a Participant's Account attributable
to the Holsum Accounts, determined as of January 1, 1996, shall at all times be
fully vested to such Participant. On and after January 1, 1996, the Account of
a Participant who was previously a participant in the Holsum Plan (excluding
the portion of the Account attributable to the Holsum Accounts) shall be
vested in accordance with the following vesting schedule:

<TABLE>
<CAPTION>
       Years of Vesting Service                           Vested Percentage
       Earned by the Participant                         of the Participant
       -------------------------                         ------------------
       <S>                                               <C>
           Less than 1 year                                       0%
                1 year                                           20%
                2 years                                          40%
                3 years                                          60%
                4 years                                          80%
            5 years or more                                     100%
</TABLE>

and in all events shall be fully vested upon the Participant's attainment of age
62 while still in the employ of an Employer.

        3.7       In-Service Withdrawals. Amounts in the Holsum Deferral
Contributions Account and the Holsum Qualified Nonelective Contributions Account
may be withdrawn by the Participant on or after attaining age 62. Amounts in the
Holsum Matching Contributions Account and the Holsum Discretionary Contributions
Account may be withdrawn by the Participant on or after attaining age 62 or
completing 30 years of participation in the Holsum Plan and/or the Plan. In
addition, in the case of a Participant who has a Holsum Rollover Contributions
Account, such a Participant may elect to withdraw once during each Plan Year any
amount up to 100% of the value of that portion of his Account attributable to
the Holsum Rollover Contributions Account. The Participant shall notify the Plan
Administrator in writing in a form approved by the Plan Administrator of his
election to make a withdrawal from his Holsum Accounts. Distributions will be
made in accordance with such an election within 90 days (or as soon as
administratively practicable) after the receipt by the Plan Administrator of a
proper distribution request.



                                       98
<PAGE>   108
         3.8      Hours of Service. Effective as of the Holsum Merger
Effective Date, service with Holsum Baking Company shall be treated as service
with an Employer for all purposes under this Plan, even though said service
may have been rendered prior to the time when said company became a member of
the Controlled Group. This provision shall be effective for all employees of
said company who remained or became employed by any member of the Controlled
Group as of the date the company became a member of the Controlled Group. This
provision shall not, however, be construed to permit participation in the Plan
prior to the adoption thereof by the Employer in question.



                                       99
<PAGE>   109

                                   APPENDIX IV
                   SPECIAL PROVISIONS REGARDING MERGER OF THE
                  SHIPLEY BAKING COMPANY 401(k) RETIREMENT PLAN
                        AND TRUST WITH AND INTO THE PLAN


         4.1    General Provisions. Effective as of June 1, 1998 ("Shipley
Merger Effective Date"), the Shipley Baking Company 401(k) Retirement Plan and
Trust ("Shipley Plan") is merged with and into the Plan. The Plan shall, as of
the Shipley Merger Effective Date, assume all obligations of the Shipley Plan
and be responsible for payment of all vested benefits accrued under the terms
and provisions of the Shipley Plan for (i) participants participating in the
Shipley Plan immediately prior to the Shipley Merger Effective Date, and (ii)
former participants and beneficiaries with vested benefits under the Shipley
Plan immediately prior to the Shipley Merger Effective Date. Such participants
and beneficiaries shall, as of the Shipley Merger Effective Date,
automatically become Participants in the Plan with respect to such account
balances. The Plan shall provide for said payment of benefits with the assets
transferred to the trust accompanying the Plan as set forth in Section 4.3 of
this Appendix.

         4.2     Separate Accounting. The account balances of each participant
in the Shipley Plan shall be maintained in separate accounts as follows:

                  (a) Amounts transferred attributable to "Salary Deferral
         Contributions" allocated to a participant under the Shipley Plan shall
         be held in a special segregated Shipley Salary Deferral Contributions
         Account.

                  (b) Amounts transferred attributable to "Employer
         contributions" allocated to a participant under the Shipley Plan shall
         be held in a special segregated Shipley Employer Contributions Account.

                  (c) Amounts transferred attributable to "Voluntary
         Contributions" allocated to a participant under the Shipley Plan shall
         be held in a special segregated Shipley Voluntary Contributions
         Account.

                  (d) Amounts transferred attributable to "Rollover
         Contributions" allocated to a participant under the Shipley Plan shall
         be held in a special segregated Shipley Rollover Contributions Account.

All such accounts shall be collectively referred to in this Appendix IV as
"Shipley Accounts."

         4.3     Transfer of Plan Assets. Effective as of the Shipley Merger
Effective Date, the assets of the Shipley Plan which are held by the trustee
of the trust accompanying the Shipley Plan shall become assets of the Plan,
and shall be held by the Trustee under the provisions of the Plan and its
accompanying Trust for the exclusive benefit of Participants and Beneficiaries
under the Plan, including the provisions of this Appendix.



                                      100
<PAGE>   110

         4.4      Conditions for Merger and Transfer. The merger of plans and
transfer of assets as provided for in this Appendix is made on the condition
that subsection (a) of Section 11.5 of the Plan is satisfied.

         4.5      Additional Forms of Benefit for Shipley Accounts.

                  (a) In General. Notwithstanding any provisions of this Plan to
         the contrary, except as noted, the Shipley Accounts (excluding the
         Shipley Salary Deferral Contributions Accounts) of Participants held
         under this Plan shall be "Applicable Accounts" for purposes of Appendix
         I, and shall be subject to the terms and provisions of Appendix I. For
         purposes of Appendix I, the Qualified Joint and Survivor Annuity
         referred to in such Appendix shall be a Qualified Joint and 50%
         Survivor Annuity.

                  (b) Additional Optional Methods. Subject to the requirements
         set forth in subsection (a) above, a Participant who has a vested
         Shipley Account balance (which includes amounts other than a Shipley
         Salary Deferral Contributions Account) may elect by written notice to
         the Plan Administrator at least 31 days prior to his Annuity Starting
         Date that the value of his Shipley Accounts (excluding the Shipley
         Salary Deferral Contributions Account) shall be distributed in the form
         of a lump sum cash payment, or in the form of an annuity contract, or
         partly in the form of a lump sum cash payment and partly in the form of
         an annuity contract. The annuity contract shall provide a fixed or
         variable annuity benefit, or a combination of a fixed and a variable
         annuity benefit, as chosen by the Participant. The Plan Administrator
         shall select the insurance company from which the annuity contract
         shall be purchased. The following forms of annuity benefit are
         available with respect to the Shipley Accounts (excluding the Shipley
         Salary Deferral Contributions Accounts):

                           (i) Joint and Survivor Annuity. An annuity benefit
                  under which the Participant will receive fixed monthly
                  payments for life, and upon his death monthly payments in an
                  amount equal to a specified percentage of the monthly amount
                  in effect during the joint lives of the Participant and the
                  spouse will be made to the spouse to whom the Participant was
                  married at the time the annuity contract was purchased, for
                  the life of that spouse.

                           (ii) Term Certain and Life Annuity. An annuity
                  benefit under which the Participant will receive monthly
                  payments for life, and upon his death prior to the receipt of
                  a specified number of monthly payments (as elected in advance
                  by the Participant), monthly payments in the same amount will
                  continue to the designated beneficiary for the balance of the
                  specified period.

                           (iii) Contingent Annuitant - Term Certain and Life
                  Annuity. An annuity benefit under which the Participant will
                  receive monthly payments for life. If the Participant dies
                  before receiving a specified number of monthly payments,
                  payments will continue in the same amount to a contingent
                  annuitant until that specified number of monthly payments have
                  been made to the Participant and the contingent annuitant.
                  Thereafter monthly payments equal to a percentage of the
                  monthly



                                      101
<PAGE>   111

                  payments during the Participant's lifetime (as elected in
                  advance by the Participant) will continue to the contingent
                  annuitant for the life of the contingent annuitant. If both
                  the Participant and the contingent annuitant die before the
                  specified number of monthly payments have been made, payments
                  in the same amount that the contingent annuitant was receiving
                  will continue to a designated beneficiary until the specified
                  number of monthly payments have been made.

                           (iv) in the form of periodic installments payable not
                  less often than annually for a period not to exceed the joint
                  life expectancy of the Participant and his designated
                  beneficiary.

                           (v) in any combination of the foregoing.

         4.6     Benefits Upon Death. In the event of the death of a Participant
prior to his Benefit Commencement Date, then the Participant's Shipley Accounts
will be paid to the Surviving Spouse in the form of a Qualified Preretirement
Survivor Annuity in accordance with Appendix I, Sections 1.1(c) and 1.5(c).

         4.7     Vesting. The portion of a Participant's Account attributable
to the Shipley Accounts, determined as of June 1, 1998, shall at all times be
fully vested to such Participant. On and after June 1, 1998, the Account of a
Participant who was previously a participant in the Shipley Plan (excluding the
portion of the Account attributable to the Shipley Accounts) shall be vested in
accordance with either the following vesting schedule, or the vesting provisions
set forth in Section 5.2 of the Plan, whichever results in the greater vested
percentage for a Participant:

<TABLE>
<CAPTION>
Years of Vesting Service               Vested Percentage
Earned by the Participant              of the Participant
-------------------------              ------------------

<S>                                    <C>
Less than 3 years                              0%
3 years                                       20%
4 years                                       40%
5 years                                       60%
6 years                                       80%
7 years or more                              100%
</TABLE>

         4.8      In-Service Withdrawals.

                  (a) Amounts in the Shipley Salary Deferral Contributions
         Account (excluding investment earnings attributable to periods after
         December 31, 1988) may be withdrawn by the Participant in accordance
         with the provisions of Section 8.10 of this Plan.

                  (b) A Participant who has attained the age of 59 1/2 may
         withdraw all or a portion of his Shipley Salary Deferral Contributions
         Account, including earnings, if any.



                                      102
<PAGE>   112

         Distribution shall be made to the Participant as soon as
         administratively practicable after the request is received.

                  (c) In addition, in the case of a Participant who has a
         Shipley Rollover Contributions Account, such a Participant may elect to
         withdraw any amount up to 100% of the value of that portion of his
         Account attributable to the Shipley Rollover Contributions Account. The
         Participant shall notify the Plan Administrator in writing of his
         election to make a withdrawal from the Shipley Rollover Contributions
         Account. Any such election shall be effective as of the date specified
         in such notice, which date must be at least 30 days after the notice is
         filed. Any such withdrawal shall be subject to Appendix I and Section
         4.5 above.

                  (d) In addition, in the case of a Participant who has a
         Shipley Voluntary Contributions Account, such a Participant may elect
         to withdraw all or any part of the balance of his Shipley Voluntary
         Contributions Account. The Participant shall notify the Plan
         Administrator in writing of his election to make a withdrawal from the
         Shipley Voluntary Contributions Account. Any such election shall be
         effective as of the date specified in such notice, which date must be
         at least 30 days after the notice is filed. Any such withdrawal shall
         be subject to Appendix I and Section 4.5 above.

         4.9      Hours of Service. Effective as of the Shipley Merger Effective
Date, service with Shipley Baking Company shall be treated as service with an
Employer for all purposes under this Plan, even though said service may have
been rendered prior to the time when said company became a member of the
Controlled Group. This provision shall be effective for all employees of said
company who remained or became employed by any member of the Controlled Group as
of the date the company became a member of the Controlled Group. This provision
shall not, however, be construed to permit participation in the Plan prior to
the adoption thereof by the Employer in question.



                                      103
<PAGE>   113

                                   APPENDIX V

                   SPECIAL PROVISIONS REGARDING MERGER OF THE
              FRANKLIN BAKING COMPANY, INC. PROFIT SHARING PLAN AND
                        THE FRANKLIN BAKING COMPANY, INC.
              401(k) RETIREMENT SAVINGS PLAN WITH AND INTO THE PLAN


         5.1      General Provisions. Effective as of December 31, 1998
("Franklin Merger Effective Date"), the Franklin Baking Company, Inc. Profit
Sharing Plan ("Franklin Profit Sharing Plan") and the Franklin Baking Company,
Inc. 401(k) Retirement Savings Plan ("Franklin 401(k) Plan"; the Franklin Profit
Sharing Plan and the Franklin 401(k) Plan are sometimes referred to collectively
herein as the "Franklin Plans") are merged with and into the Plan. The Plan
shall, as of the Franklin Merger Effective Date, assume all obligations of the
Franklin Plans and be responsible for payment of all vested benefits accrued
under the terms and provisions of the Franklin Plans for (i) participants
participating in the Franklin Plans immediately prior to the Franklin Merger
Effective Date, and (ii) former participants and beneficiaries with vested
benefits under the Franklin Plans immediately prior to the Franklin Merger
Effective Date. Such participants and beneficiaries shall, as of the Franklin
Merger Effective Date, automatically become Participants in the Plan with
respect to such account balances. The Plan shall provide for said payment of
benefits with the assets transferred to the trust accompanying the Plan as set
forth in Section 5.3 of this Appendix.

         5.2      Separate Accounting. The account balances of each participant
in the Franklin Plans shall be maintained in separate accounts as follows:

                  (a) Amounts transferred attributable to "Deferral
         Contributions" allocated to a participant under the Franklin 401(k)
         Plan shall be held in a special segregated Franklin Deferral
         Contributions Account.

                  (b) Amounts transferred attributable to contributions
         allocated to a participant under the Franklin Profit Sharing Plan shall
         be held in a special segregated Franklin Profit Sharing Contributions
         Account.

                  (c) Amounts transferred attributable to "Rollover
         Contributions" allocated to a participant under the Franklin Plans
         shall be held in a special segregated Franklin Rollover Contributions
         Account.

All such accounts shall be collectively referred to in this Appendix V as
"Franklin Accounts."

         5.3      Transfer of Plan Assets. Effective as of the Franklin Merger
Effective Date, the assets of the Franklin Plans which are held by the trustees
of the trusts accompanying the Franklin Plans shall become assets of the Plan,
and shall be held by the Trustee under the provisions of the Plan and its
accompanying Trust for the exclusive benefit of Participants and Beneficiaries
under the Plan, including the provisions of this Appendix.



                                      104
<PAGE>   114

         5.4      Conditions for Merger and Transfer. The merger of plans and
transfer of assets as provided for in this Appendix is made on the condition
that subsection (a) of Section 11.5 of the Plan is satisfied.

         5.5      Additional Forms of Benefit for Franklin Accounts.
Notwithstanding any provisions of this Plan to the contrary, the Franklin
Accounts shall be distributable in the form of a single lump sum payment or in
installment payments over a period certain in monthly, quarterly, semiannual, or
annual cash payments. The period over which such payment is to be made shall not
extend beyond the Participant's life expectancy or the joint life and last
survivor expectancy of the Participant and his designated Beneficiary.

         5.6      Vesting. On and after December 31, 1998, the Account of a
Participant who was previously a participant in the Franklin Plans (including
the portion of the Account attributable to the Franklin Accounts) shall be
vested in accordance with either the following vesting schedule, or the vesting
provisions set forth in Section 5.2 of the Plan, whichever results in the
greater vested percentage for a Participant:

<TABLE>
<CAPTION>
Years of Vesting Service               Vested Percentage
Earned by the Participant              of the Participant
-------------------------              ------------------

<S>                                    <C>
Less than 2 years                              0%
2 years                                       20%
3 years                                       40%
4 years                                       60%
5 years                                      100%
</TABLE>

         5.7      In-Service Withdrawals. Amounts in the Franklin Deferral
Contributions Account (excluding investment earnings attributable to periods
after December 31, 1988) may be withdrawn by the Participant in accordance with
the provisions of Section 8.10 of this Plan.

         5.8      Hours of Service. Effective as of the Franklin Merger
Effective Date, service with Franklin Baking Company shall be treated as service
with an Employer for all purposes under this Plan, even though said service may
have been rendered prior to the time when said company became a member of the
Controlled Group. This provision shall be effective for all employees of said
company who remained or became employed by any member of the Controlled Group as
of the date the company became a member of the Controlled Group. This provision
shall not, however, be construed to permit participation in the Plan prior to
the adoption thereof by the Employer in question.



                                      105
<PAGE>   115

                                   APPENDIX VI

                   SPECIAL PROVISIONS REGARDING MERGER OF THE
            PIES, INC. RETIREMENT SAVINGS PLAN WITH AND INTO THE PLAN


         6.1      General Provisions. Effective as of January 1, 1997 ("Pies
Merger Effective Date"), the Pies, Inc. Retirement Savings Plan ("Pies Plan") is
merged with and into the Plan. The Plan shall, as of the Pies Merger Effective
Date, assume all obligations of the Pies Plan and be responsible for payment of
all vested benefits accrued under the terms and provisions of the Pies Plan for
(i) participants participating in the Pies Plan immediately prior to the Pies
Merger Effective Date, and (ii) former participants and beneficiaries with
vested benefits under the Pies Plan immediately prior to the Pies Merger
Effective Date. Such participants and beneficiaries shall, as of the Pies Merger
Effective Date, automatically become Participants in the Plan with respect to
such account balances. The Plan shall provide for said payment of benefits with
the assets transferred to the trust accompanying the Plan as set forth in
Section 6.3 of this Appendix.

         6.2      Separate Accounting. The account balances of each participant
in the Pies Plan shall be maintained in separate accounts as follows:

                  (a) Amounts transferred attributable to "Retirement Savings
         Contributions" allocated to a participant under the Pies Plan shall be
         held in a special segregated Pies Retirement Savings Contributions
         Account.

                  (b) Amounts transferred attributable to Employer Discretionary
         Profit Sharing Contributions allocated to a participant under the Pies
         Plan shall be held in a special segregated Pies Employer Discretionary
         Profit Sharing Contributions Account.

                  (c) Amounts transferred attributable to "Rollover
         Contributions" allocated to a participant under the Pies Plan shall be
         held in a special segregated Pies Rollover Contributions Account.

All such accounts shall be collectively referred to in this Appendix VI as "Pies
Accounts."

         6.3      Transfer of Plan Assets. Effective as of the Pies Merger
Effective Date, the assets of the Pies Plan which are held by the trustee of the
trust accompanying the Pies Plan shall become assets of the Plan, and shall be
held by the Trustee under the provisions of the Plan and its accompanying Trust
for the exclusive benefit of Participants and Beneficiaries under the Plan,
including the provisions of this Appendix.

         6.4      Conditions for Merger and Transfer. The merger of plans and
transfer of assets as provided for in this Appendix is made on the condition
that subsection (a) of Section 11.5 of the Plan is satisfied.



                                      106
<PAGE>   116
         6.5      Vesting. Participants who were hired by Pies, Inc. prior to
July 1, 1996 shall be fully vested at all times in their Pies Employer
Discretionary Profit Sharing Contributions Account.

         6.6      In-Service Withdrawals. Amounts in the Pies Retirement Savings
Contributions Account (excluding investment earnings attributable to periods
after December 31, 1988) may be withdrawn by the Participant in accordance with
the provisions of Section 8.10 of this Plan.

         6.7      Hours of Service. Effective as of the Pies Merger Effective
Date, service with Pies, Inc. shall be treated as service with an Employer for
all purposes under this Plan, even though said service may have been rendered
prior to the time when said company became a member of the Controlled Group.
This provision shall be effective for all employees of said company who remained
or became employed by any member of the Controlled Group as of the date the
company became a member of the Controlled Group. This provision shall not,
however, be construed to permit participation in the Plan prior to the adoption
thereof by the Employer in question.



                                      107
<PAGE>   117

                                    EXHIBIT A
                                       TO
             FLOWERS INDUSTRIES, INC. 401(K) RETIREMENT SAVINGS PLAN
                    (AS REVISED, EFFECTIVE AS OF MAY 1, 1999)


         Pursuant to Article III and Section 11.6 of the Plan, the Adopting
Employers listed in the schedule below have elected to have the following
special provisions apply to their Employees, as indicated in the second column
of the schedule below.

A =      Matching Elective Contributions (Section 3.1(b)): The Adopting Employer
         shall make Matching Elective Contributions equal to 25% of the Elective
         Contribution subject to a maximum Matching Elective Contribution of
         $100 per participant. Notwithstanding the foregoing, in the case of an
         Employee who is excluded from active participation in the Flowers
         Industries, Inc. Retirement Plan No. 1 by virtue of the Ninth Amendment
         to that Plan, contributions in accordance with special provision B
         shall be made with respect to such Employees (that is, the Adopting
         Employer shall make Matching Elective Contributions equal to 25% of the
         Elective Contribution subject to a maximum Matching Elective
         Contribution of 1.5% of Compensation (as defined in Section 1.15 of the
         Plan) per participant, with respect to such Employees; and the Adopting
         Employer also shall make Company Basic Contributions equal to 2% of
         each Participant's Compensation (as defined in Section 3.6(b)(iv) of
         the Plan), with respect to such Employees).

B =      Matching Elective Contributions (Section 3.1(b)): The Adopting Employer
         shall make Matching Elective Contributions equal to 25% of the Elective
         Contribution subject to a maximum Matching Elective Contribution of
         1.5% of Compensation (as defined in Section 1.15 of the Plan) per
         participant.

         Company Basic Contributions (Section 3.1(e)): The Adopting Employer
         shall make Company Basic Contributions equal to 2% of each
         Participant's Compensation (as defined in Section 3.6(b)(iv) of the
         Plan).

C =      Matching Elective Contributions (Section 3.1(b)): The Adopting Employer
         will not make any Matching Elective Contributions.

         Company Basic Contributions (Section 3.1(e)): The Adopting Employer
         shall make Company Basic Contributions equal to 2% of each
         Participant's Compensation minus payments for overtime. For purposes of
         this Item C of this Exhibit A, the term "Compensation" shall be defined
         in accordance with Section 1.15 of the Plan; provided, however, that
         there shall be included in Compensation the gain and income (including
         dividend income) associated with restricted stock awards and equity
         incentive awards under the Company's 1989 Executive Stock Incentive
         Plan or any successor to that plan, to the extent that the gain or
         income is required to be reported under Code ss.ss. 6041(d) or
         6051(a)(3).



                                      108
<PAGE>   118

D =      Company Basic Contributions (Section 3.1(e)): The Adopting Employer
         shall make Company Basic Contributions on behalf of each Participant
         equal to 50 cents for each Hour of Service performed after such
         Participant meets the Eligibility Requirements in Section 2.1(b).

<TABLE>
<CAPTION>
                                                                                                            SPECIAL
ADOPTING EMPLOYERS                                                                                       PROVISIONS
------------------                                                                                       ----------

<S>                                                                                                       <C>
Flowers Industries, Inc.                                                                                          A

Flowers Baking Company of Miami, Inc.                                                                             A

Flowers Baking Company of Jacksonville, Inc.                                                                      A

Flowers Baking Company of Bradenton, Inc.                                                                         A

European Bakers, Ltd.                                                                                             A

Dan-Co Bakery, Inc.                                                                                               A

Table Pride, Inc.                                                                                                 A

Mrs. Smith's Sales Support Group, Inc.                                                                            A

Flowers Baking Company of Thomasville, Inc.                                                                       A

Flowers Baking Company of Opelika, Inc.                                                                           A

Hardin's Bakery, Incorporated                                                                                     A

Flowers Specialty of Montgomery, Inc.                                                                             A

Huval Bakery, Incorporated                                                                                        A

Bunny Bread, Inc.                                                                                                 A

Flowers Baking Company of Baton Rouge, Inc.                                                                       A

Flowers Baking Company of Jamestown, Inc.                                                                         A

Daniel's Home Bakery of North Carolina, Inc.                                                                      A

Flowers Baking Company of Lynchburg, Inc.                                                                         A
</TABLE>



                                      109
<PAGE>   119

<TABLE>
<S>                                                                                                               <C>
Flowers Baking Company of South Carolina, Inc.                                                                    A

Flowers Baking Company of Chattanooga, Inc.                                                                       A

Flowers Baking Company of Morristown, Inc.                                                                        A

Schott's Bakery, Inc.                                                                                             A

Flowers Baking Company of West Virginia, Inc.                                                                     A

Flowers Baking Company of Tyler, Inc.                                                                             A

El Paso Baking Company, Inc.                                                                                      A

Flowers Baking Company of Texarkana, Inc.                                                                         A

Mrs. Smith's Bakeries of London, Inc.                                                                             A

Stilwell Foods, Inc.                                                                                              A

Flowers Baking Company of Villa Rica, Inc.                                                                        B

Aunt Fanny's Bakery, Inc.                                                                                         C

Mrs. Smith's Frozen Bakery Distributors, Inc.                                                                     B

Holsum Baking Company                                                                                             B

Mrs. Smith's Bakeries, Inc.                                                                                       A

Mrs. Smith's Foil Company, Inc.                                                                                   A

Pies, Inc.                                                                                                        D

Midtown Bakery, Inc.                                                                                              B

Flowers Bakeries, Inc.                                                                                            A

Franklin Baking Company                                                                                           B
</TABLE>



                                      110
<PAGE>   120

<TABLE>
<S>                                                                                                               <C>
ButterKrust Bakeries, Inc.                                                                                        B

Shipley Baking Company, Inc.                                                                                      B
</TABLE>



                                    APPROVED: /s/ R. Steve Kinsey
                                             ---------------------------------
                                             PLAN ADMINISTRATOR

                                        DATE: 5/18/99
                                             ---------------------------------



                                      111


<PAGE>   121
                                FIRST AMENDMENT
                                     TO THE
                            FLOWERS INDUSTRIES, INC.
                         401(K) RETIREMENT SAVINGS PLAN
            AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1997



                  THIS AMENDMENT to the Flowers Industries, Inc. 401(k)
Retirement Savings Plan as amended and restated effective as of January 1, 1997
(the "Plan") made this 28th day of December, 1999, by Flowers Industries, Inc.
(hereinafter referred to as the "Company"), to be effective upon signing.

                             W I T N E S S E T H :

                  WHEREAS, the Company sponsors and maintains the Plan for the
exclusive benefit of its employees and their beneficiaries and pursuant to
Section 11.2(a) thereof, the Company has the right to amend the Plan at any
time; and
                  WHEREAS, the Company wishes to amend the Plan at this time
for the purpose of merging the Home Baking Company, Inc. Amended and Restated
401(k) Profit Sharing Plan and Trust with and into the Plan, and for other
purposes;
                  NOW, THEREFORE, the Plan is hereby amended as follows:

<PAGE>   122

                                       I.

                  Effective as of December 31, 1999, Section 8.3 of the Plan
shall be amended by deleting the last sentence and inserting in its place the
following:
              See also Appendices I, II, III, IV, V, 9VI, and VII.

                                      II.

                  Effective as of April 1, 1995, Section 8.10(a) is amended by
deleting the first sentence and inserting in its place the following:

                           A Participant shall be entitled to apply to the Plan
                  Administrator for a hardship distribution of all or a portion
                  of such Participant's Elective Contributions Account balance
                  (excluding investment earnings attributable to periods after
                  December 31, 1998), valued as of the Valuation Date
                  coincident with or next following the date on which the Plan
                  Administrator receives the Participant's application.

                                      III.

                  Effective as of December 31, 1999, the Plan shall be amended
by inserting the following Appendix VII at the end thereof:

                                  APPENDIX VII

                   SPECIAL PROVISIONS REGARDING MERGER OF THE
                 HOME BAKING COMPANY, INC. AMENDED AND RESTATED
          401(k) PROFIT SHARING PLAN AND TRUST WITH AND INTO THE PLAN

                           7.1 General Provisions. Effective as of December 31,
                  1999 ("Home Baking Merger Effective Date"), the Home Baking
                  Company, Inc. Amended and Restated 401(k) Profit Sharing Plan
                  and Trust ("Home Baking Plan") is merged with and into the
                  Plan. The Plan shall, as of the Home Baking Merger Effective
                  Date, assume all obligations of the Home Baking Plan and be
                  responsible for payment of all vested benefits accrued under
                  the terms and provisions of the Home Baking Plan for (i)
                  participants participating in the Home Baking Plan
                  immediately prior to the Home Baking Merger Effective Date,
                  and (ii) former participants and beneficiaries with vested
                  benefits under the Home Baking Plan immediately prior to the
                  Home Baking Merger Effective Date whose account balances have
                  not been fully distributed to them. Such participants and

                                       2

<PAGE>   123

                  beneficiaries shall, as of the Home Baking Merger Effective
                  Date, automatically become Participants in the Plan with
                  respect to such account balances. The Plan shall provide for
                  said payment of benefits with the assets transferred to the
                  trust accompanying the Plan as set forth in Section 7.3 of
                  this Appendix.

                           7.2      Separate Accounting. The account balances of
                  each participant in the Home Baking Plan shall be maintained
                  in separate accounts as follows:

                                    (a) Amounts transferred attributable to
                           "Deferral Contributions" allocated to a participant
                           under the Home Baking Plan shall be held in a
                           special segregated Home Baking Deferral
                           Contributions Account.

                                    (b) Amounts transferred attributable to
                           nonelective contributions allocated to a participant
                           under the Home Baking Plan shall be held in a
                           special segregated Home Baking Profit Sharing
                           Contributions Account.

                                    (c) Amounts transferred attributable to
                           employer matching contributions under the Home
                           Baking Plan shall be held in a special segregated
                           Home Baking Matching Contributions Account.

                  All such accounts shall be collectively referred to in this
                  Appendix VII as "Home Baking Accounts."

                           7.3      Transfer of Plan Assets. Effective as of the
                  Home Baking Merger Effective Date, the assets of the Home
                  Baking Plan which are held by the trustee of the trust
                  accompanying the Home Baking Plan shall become assets of the
                  Plan, and shall be held by the Trustee under the provisions
                  of the Plan and its accompanying Trust for the exclusive
                  benefit of Participants and Beneficiaries under the Plan,
                  including the provisions of this Appendix.

                           7.4      Conditions for Merger and Transfer. The
                  merger of plans and transfer of assets as provided for in this
                  Appendix is made on the condition that subsection (a) of
                  Section 11.5 of the Plan is satisfied.

                           7.5      Additional Forms of Benefit for Home Baking
                                    Accounts.

                                    (a) In General. Notwithstanding any
                           provisions of this Plan to the contrary, except as
                           otherwise provided in this Section 7.5, the Home
                           Baking Accounts of Participants held under this Plan
                           shall be "Applicable Accounts" for purposes of
                           Appendix I, and shall be subject to the terms and
                           provisions of Appendix I. For purposes of Appendix
                           I, the Qualified Joint and Survivor Annuity referred
                           to in such Appendix shall be a Qualified Joint and
                           50% Survivor Annuity.

                                    (b) Additional Optional Methods. Subject to
                           the requirements set forth in subsection (a) above,
                           a Participant who has a vested Home Baking Account
                           balance may elect by written notice to the Plan
                           Administrator at least 31 days prior to his Annuity
                           Starting Date that the value of his Home Baking
                           Accounts shall be distributed in the form of a lump
                           sum cash payment, or in the form of an annuity
                           contract, or in the form of periodic installments
                           payable not less often than annually for a period
                           not to exceed the joint life expectancy of the
                           Participant and his designated Beneficiary. The Plan
                           Administrator shall select the insurance company
                           from which the annuity contract shall be purchased.
                           The following forms of annuity benefit are available
                           with respect to the Home Baking Accounts:

                                       3

<PAGE>   124

                                            (i) Joint and Survivor Annuity. An
                                    annuity benefit under which the Participant
                                    will receive fixed monthly payments for
                                    life, and upon his death monthly payments
                                    in an amount equal to 50% of the monthly
                                    amount in effect during the joint lives of
                                    the Participant and the spouse (or, if the
                                    spouse consents to another joint annuitant,
                                    during the joint lives of the Participant
                                    and another joint annuitant) will be made
                                    to the spouse to whom the Participant was
                                    married at the time the annuity contract
                                    was purchased (or, if the spouse consents
                                    to another joint annuitant, to such other
                                    joint annuitant), for the life of the
                                    spouse or other joint annuitant.

                                            (ii) Life Annuity. An annuity
                                    benefit under which the Participant will
                                    receive monthly payments for his life, and
                                    upon his death payments will stop.

                           7.6      Vesting. On and after December 31, 1999, the
                  Matching Elective Contributions Account, Company Basic
                  Contributions Account, Other Contributions Account, Home
                  Baking Profit Sharing Contributions Account, and Home Baking
                  Matching Contributions Account of a Participant who was
                  previously a participant in the Home Baking Plan shall be
                  vested in accordance with either the following vesting
                  schedule, or the vesting provisions set forth in Section 5.2
                  of the Plan, whichever results in the greater vested
                  percentage for a Participant:

<TABLE>
<CAPTION>

                      Years of Vesting Service          Vested Percentage
                      Earned by the Participant         of the Participant
                      -------------------------         ------------------
                      <S>                               <C>
                         Less than 2 years                    0%
                         2 years                             20%
                         3 years                             40%
                         4 years                             60%
                         5 years                             80%
                         6 or more years                    100%
</TABLE>

                           7.7      In-Service Withdrawals. Amounts in the Home
                  Baking Deferral Contributions Account (excluding investment
                  earnings attributable to periods after December 31, 1988) and
                  in the Home Baking Profit Sharing Contributions Account may
                  be withdrawn by the Participant in accordance with the
                  provisions of Section 8.10 of this Plan.

                           7.8      Hours of Service. Effective as of the Home
                  Baking Merger Effective Date, service with Home Baking
                  Company, Inc. shall be treated as service with an Employer
                  for all purposes under this Plan, even though said service
                  may have been rendered prior to the time when said company
                  became a member of the Controlled Group. This provision shall
                  be effective for all employees of said company who remained
                  or became employed by any member of the Controlled Group as
                  of the date the company became a member of the Controlled
                  Group. This provision shall not, however, be construed to
                  permit participation in the Plan prior to the adoption
                  thereof by the Employer in question.


                                       4

<PAGE>   125

                                      IV.
                  All other provisions of the Plan not inconsistent herewith
are hereby confirmed and ratified.

                  IN WITNESS WHEREOF, this First Amendment has been executed on
the day and year first above written.

                               COMPANY:

                               FLOWERS INDUSTRIES, INC.


                               By: /s/ Jimmy M. Woodward
                                  ------------------------------------------
                               Title:  V. P. & Chief Administrative Officer
                                     ---------------------------------------
ATTEST:

By: /s/ R. Steve Kinsey
   ------------------------------------------
Title:  Plan Administrator
      ---------------------------------------



                                       5

<PAGE>   126
                               SECOND AMENDMENT
                                     TO THE
                            FLOWERS INDUSTRIES, INC.
                         401(K) RETIREMENT SAVINGS PLAN

            AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1997


          THIS AMENDMENT to the Flowers Industries, Inc. 401(k) Retirement
Savings Plan, as amended and restated effective as of January 1, 1997 (the
"Plan") made this 23rd day of December, 1999, by Flowers Industries, Inc.
(hereinafter referred to as the "Company"), to be effective upon signing.

                             W I T N E S S E T H :

         WHEREAS, the Company sponsors and maintains the Plan for the exclusive
benefit of its employees and their beneficiaries and pursuant to Section 11.2
(a) thereof, the Company has the right to amend the Plan at any time; and

         WHEREAS, the Company wishes to amend the Plan at this time for
the purpose of providing certain benefits to certain employees assigned to the
Company's Aviation Department who will no longer be eligible to participate in
the Flowers Industries, Inc. Retirement Plan No. 1, and for other purposes;

         NOW, THEREFORE, the Plan is hereby amended as follows:

                                       1

<PAGE>   127

                                       I.

                  Exhibit A to the Plan is hereby amended to provide as
follows, effective as of January 1, 2000:

                                   EXHIBIT A
                                       TO
            FLOWERS INDUSTRIES, INC. 401(K) RETIREMENT SAVINGS PLAN
                 (AS REVISED, EFFECTIVE AS OF JANUARY 1, 2000)


                  Pursuant to Article III and Section 11.6 of the Plan, the
         Adopting Employers listed in the schedule below have elected to have
         the following special provisions apply to their Employees, as
         indicated in the second column of the schedule below.

         A =      Matching Elective Contributions (Section 3.1(b)): The Adopting
                  Employer shall make Matching Elective Contributions equal to
                  25% of the Elective Contribution subject to a maximum
                  Matching Elective Contribution of $100 per participant.
                  Notwithstanding the foregoing, in the case of an Employee who
                  is excluded from active participation in the Flowers
                  Industries, Inc. Retirement Plan No. 1 by virtue of the Ninth
                  Amendment to that Plan, contributions in accordance with
                  special provision B shall be made with respect to such
                  Employees (that is, the Adopting Employer shall make Matching
                  Elective Contributions equal to 25% of the Elective
                  Contribution subject to a maximum Matching Elective
                  Contribution of 1.5% of Compensation (as defined in Section
                  1.15 of the Plan) per participant, with respect to such
                  Employees; and the Adopting Employer also shall make Company
                  Basic Contributions equal to 2% of each Participant's
                  Compensation (as defined in Section 3.6(b)(iv) of the Plan),
                  with respect to such Employees).

         B =      Matching Elective Contributions (Section 3.1(b)): The
                  Adopting Employer shall make Matching Elective Contributions
                  equal to 25% of the Elective Contribution subject to a
                  maximum Matching Elective Contribution of 1.5% of
                  Compensation (as defined in Section 1.15 of the Plan) per
                  participant.

                  Company Basic Contributions (Section 3.1(e)): The Adopting
                  Employer shall make Company Basic Contributions equal to 2%
                  of each Participant's Compensation (as defined in Section
                  3.6(b)(iv) of the Plan).

                                       2

<PAGE>   128

         C =      Matching Elective Contributions (Section 3.1(b)): The
                  Adopting Employer will not make any Matching Elective
                  Contributions.

                  Company Basic Contributions (Section 3.1(e)): The Adopting
                  Employer shall make Company Basic Contributions equal to 2%
                  of each Participant's Compensation minus payments for
                  overtime. For purposes of this Item C of this Exhibit A, the
                  term "Compensation" shall be defined in accordance with
                  Section 1.15 of the Plan; provided, however, that there shall
                  be included in Compensation the gain and income (including
                  dividend income) associated with restricted stock awards and
                  equity incentive awards under the Company's 1989 Executive
                  Stock Incentive Plan or any successor to that plan, to the
                  extent that the gain or income is required to be reported
                  under Code ss.ss. 6041(d) or 6051(a)(3).

         D =      Company Basic Contributions (Section 3.1(e)): The Adopting
                  Employer shall make Company Basic Contributions on behalf of
                  each Participant equal to 50 cents for each Hour of Service
                  performed after such Participant meets the Eligibility
                  Requirements in Section 2.1(b).

         E =      Matching Elective Contributions (Section 3.1(b)): The Adopting
                  Employer shall make Matching Elective Contributions equal to
                  25% of the Elective Contributions subject to a maximum
                  Matching Elective Contribution of 1.5% of Compensation (as
                  defined in Section 1.15 of the Plan) per Participant covered
                  by this special provision.

                  Company Basic Contributions (Section 3.1(e)): With respect to
                  each Participant covered by this special provision, the
                  Adopting Employer shall make Company Basic Contributions
                  equal to the percentage of each Participant's Compensation
                  (as defined in Section 3.6(b)(iv) of the Plan) determined in
                  accordance with the following table, based upon the
                  individual's Years of Vesting Service:

<TABLE>
<CAPTION>
                                                      Percentage of Compensation
                                                  (as defined in Section 3.6(b)(iv)
                  Years of Vesting Service                   of the Plan
                  ------------------------        --------------------------------
                  <S>                             <C>
                  At least 1, but less than 6                3.00%
                  At least 6, but less than 11               4.00%
                  At least 11, but less than 16              5.00%
                  At least 16, but less than 21              6.00%
                  At least 21, but less than 26              7.00%
                  At least 26, but less than 31              8.00%
</TABLE>

                                       3
<PAGE>   129


<TABLE>
<CAPTION>
                                                                              SPECIAL
ADOPTING EMPLOYERS                                                           PROVISIONS
------------------                                                           ----------
<S>                                                                          <C>
Flowers Industries, Inc. (except for those Employees who
are excluded from active participation in the Flowers Industries,
Inc. Retirement Plan No. 1 by Section 2.01(h) of that Plan)                       A

Flowers Industries, Inc. (with respect to those Employees
who are excluded from active participation in the Flowers
Industries, Inc. Retirement Plan No. 1 by Section 2.01(h)
of that Plan)                                                                     E

Flowers Baking Company of Miami, Inc.                                             A

Flowers Baking Company of Jacksonville, Inc.                                      A

Flowers Baking Company of Bradenton, Inc.                                         A

European Bakers, Ltd.                                                             A

Dan-Co Bakery, Inc.                                                               A

Table Pride, Inc.                                                                 A

Mrs. Smith's Sales Support Group, Inc.                                            A

Flowers Baking Company of Thomasville, Inc.                                       A

Flowers Baking Company of Opelika, Inc.                                           A

Hardin's Bakery, Incorporated                                                     A

Flowers Specialty of Montgomery, Inc.                                             A

Huval Bakery, Incorporated                                                        A

Bunny Bread, Inc.                                                                 A

Flowers Baking Company of Baton Rouge, Inc.                                       A

Flowers Baking Company of Jamestown, Inc.                                         A

Daniel's Home Bakery of North Carolina, Inc.                                      A
</TABLE>


                                       4
<PAGE>   130

<TABLE>

<S>                                                                               <C>
Flowers Baking Company of Lynchburg, Inc.                                         A

Flowers Baking Company of South Carolina, Inc.                                    A

Flowers Baking Company of Chattanooga, Inc.                                       A

Flowers Baking Company of Morristown, Inc.                                        A

Schott's Bakery, Inc.                                                             A

Flowers Baking Company of West Virginia, Inc.                                     A

Flowers Baking Company of Tyler, Inc.                                             A

El Paso Baking Company, Inc.                                                      A

Flowers Baking Company of Texarkana, Inc.                                         A

Mrs. Smith's Bakeries of London, Inc.                                             A

Stilwell Foods, Inc.                                                              A

Flowers Baking Company of Villa Rica, Inc.                                        B

Aunt Fanny's Bakery, Inc.                                                         C

Mrs. Smith's Frozen Bakery Distributors, Inc.                                     B

Holsum Baking Company                                                             B

Mrs. Smith's Bakeries, Inc.                                                       A

Mrs. Smith's Foil Company, Inc.                                                   A

Pies, Inc.                                                                        D

Midtown Bakery, Inc.                                                              B

Flowers Bakeries, Inc.                                                            A

Franklin Baking Company                                                           B

</TABLE>

                                       5
<PAGE>   131

<TABLE>

<S>                                                                               <C>
ButterKrust Bakeries, Inc.                                                        B

Shipley Baking Company, Inc.                                                      B

Home Baking Company, Inc.                                                         B

Mrs. Smith's Bakery of Suwanee, Inc.                                              B
</TABLE>

                                    APPROVED: /s/ R. Steve Kinsey
                                             --------------------------------
                                             PLAN ADMINISTRATOR

                                    DATE:
                                         ------------------------------------

                                      II.

           All other provisions of the Plan not inconsistent herewith are
           hereby confirmed and ratified.

           IN WITNESS WHEREOF, this Second Amendment has been executed on the
 day and year first above written.


                                    COMPANY:

                                    FLOWERS INDUSTRIES, INC.

                                    By: /s/ Jimmy M. Woodward
                                       ----------------------------------------
                                    Title:  V.P. & Chief Administrative Officer
                                          -------------------------------------
ATTEST:

By: /s/ R. Steve Kinsey
   ----------------------------
Title:  Director of Tax
      -------------------------

                                       6