<PAGE>

                                                                   EXHIBIT 10.28

                               THE CORPORATEPLAN
                            FOR RETIREMENT 100/SM/

                         (PROFIT SHARING/401(K) PLAN)

                           A FIDELITY PROTOTYPE PLAN

                  Non-Standardized Adoption Agreement No. 001
                                  For use With
                      Fidelity Basic Plan Document No. 10



The CORPORATEplan for Retirement 100/SM/, Basic Plan Document No. 10, and
related Adoption Agreements has not yet received approval from the Internal
Revenue Service for use as a prototype plan. The CORPORATEplan for Retirement
100/SM/ will be submitted in 1999 to the Internal Revenue Service as a minor
modifier to Fidelity Basic Plan Document No. 14 once the Internal Revenue
Service has issued an opinion letter with respect to Fidelity Basic Plan
Document No. 14. The document is considered an individually-designed plan until
it is approved by the Internal Revenue Service, Revisions to the Basic Plan
Document and/or Adoption Agreement may be required by the Internal Revenue
Service as part of the approval process. If revisions are required, the approved
document will be distributed to adopting employers and must be re-executed by
them within a specified time period
<PAGE>

                               ADOPTION AGREEMENT
                                   ARTICLE 1
                   NON-STANDARDIZED PROFIT SHARING/401(K) PLAN


1.01 PLAN INFORMATION
     ----------------

     (a) Name of Plan:

         This is the Craig Corporation Employee Savings Plan (the "Plan")
                 -------------------------------------------

     (b) Type of Plan:

         (1) [_] 401(k) Only

         (2) [X] 401(k) and Profit Sharing

         (3) [_] Profit Sharing Only

     (c)  Administrator Name (if not the Employer):

          -------------------------------------------------------------------
           Address:
                           --------------------------------------------------

                           --------------------------------------------------

                           --------------------------------------------------

          Telephone Number:
                           --------------------------------------------------

          The Administrator is the agent for service of legal process for the
Plan.

     (d) Plan Year End (month/day): 12/31
                                    -----
     (e) Three Digit Plan Number:  001
                                   ---
     (f) Limitation Year (check one):

         (1) [X] Calendar Year

         (2) [_] Plan Year

         (3) [_] Other:
                       ------------------------


                                       1
<PAGE>

     (g)  Plan Status (check appropriate box(es)):

          (1) [X]  New Plan Effective Date: 3/l/2000
                                            --------

          (2) [_]  Amendment Effective Date:
                                            ---------------

               This is (check one):

               (A)  [_] an amendment of The CORPORATE plan for Retirement
                        100(SM) Basic Plan Document No. 10 Adoption Agreement
                        previously executed by the Employer; or

               (B)  [_] a conversion to The CORPORATEplan for Retirement 100(SM)
                        Basic Plan Document No. 10.

                    The original effective date of the Plan:
                                                            ______________

                    The substantive provisions of the Plan shall apply prior to
                    the Amendment Effective Date to the extent required by the
                    Internal Revenue Code, as specifically provided in the Basic
                    Plan Document.

          (3) [_]   Plan Merger Effective Dates. Please complete the Special
                    Effective Dates Addendum to the Adoption Agreement
                    indicating the plan(s) that have merged into the Plan and
                    the effective date(s) of such merger(s).


1.02 EMPLOYER
     --------

     (a)  Employer Name:   Craig Corporation
                         ---------------------------------------------------

          Address:         550 South Hope St., Suite 1825
                         ---------------------------------------------------
                           Los Angeles, CA 90071
                         ---------------------------------------------------

          Contact's Name:  Mr. Andrzej Matyczynski
                         ---------------------------------------------------

          Telephone Number: (213) 239-0555
                           -------------------------------------------------

          (1)    Employer's Tax Identification Number:   95-1620188
                                                      ----------------------


                                       2
<PAGE>

          (2)  Business Form of Employer (check one):

               (A) [X] Corporation or LLC being taxed as a corporation
               (B) [_] Sole proprietor, partnership, or LLC or LLP being taxed
                       as a partnership
               (C) [_] Subchapter S Corporation
               (D) [_] Tax-exempt organization
               (E) [_] Governmental entity

          (3)  Employer's fiscal year end: 12/31
                                          ----------------
          (4)  Date business commenced:  07/60
                                       -------------------

     (b)  The term "Employer" includes the following Related Employer(s) (as
          defined in Subsection 2.01(rr)) (list each participating Related
          Employer and its Employer Tax Identification Number):

          -------------------------------------------------------------------

          -------------------------------------------------------------------

          -------------------------------------------------------------------

          -------------------------------------------------------------------

1.03 TRUSTEE
     -------

     (a)  Trustee Name:  Fidelity Management Trust Company
          Address:       82 Devonshire Street
                         Boston, MA 02109


1.04 COVERAGE
     --------

     All Employees who meet the conditions specified below shall be eligible to
     participate in the Plan:

     (a)  Age Requirement (check one):

          (1) [_]  no age requirement.

          (2) [X]  must have attained age: 21 (not to exceed 21).
                                          ----

                                      3
<PAGE>

     (b)  Eligibility Service Requirement (check one):

          (1)  [_] no Eligibility Service requirement.

          (2)  [_] three months of Eligibility Service requirement (no minimum
                   number Hours of Service can be required).

          (3)  [_] six months of Eligibility Service requirement (no minimum
                   number Hours of Service can be required).

          (4)  [X] one year of Eligibility Service requirement (at least 1,000
                   Hours of Service are required during the Eligibility
                   Computation Period).

     (c)  Eligible Class of Employees (check one):

          Note: The Plan may not cover employees who are citizens of Puerto
          Rico. These employees are automatically excluded from the eligible
          class, regardless of the Employer's selection under this Subsection
          1.04(c).

          (1)  [_] includes all Employees of the Employer.

          (2)  [X] includes all Employees of the Employer except for (check the
                   appropriate box(es)):

               (A) [X] employees covered by a collective bargaining agreement.

               (B) [_] Highly Compensated Employees as defined in Code Section
                       414(q).

               (C) [X] Leased Employees as defined in Subsection 2.01(dd).

               (D) [X] nonresident aliens who do not receive any earned income
                       from the Employer which constitutes United States source
                       income.

               (E) [_] other:

                       -----------------------------------------------------

                       -----------------------------------------------------

                                       4
<PAGE>

                     Note: No exclusion in this Subsection 1.04(c) may create a
                     discriminatory class of employees. An Employer's Plan must
                     still pass the Internal Revenue Code coverage requirements
                     if one or more of the above groups of Employees have been
                     excluded from the Plan.

     (d)  The Entry Dates shall be (check one):

          (1)  [_] the first day of each Plan Year (do not select if Section
                   1.04(b)(4) is selected or if there is an age requirement of
                   more than 20-l/2 in Subsection 1.04(a)).

          (2)  [_] the first day of each Plan Year and the first day of the
                   seventh month of each Plan Year.

          (3)  [X] the first day of each Plan Year and the first day of the
                   fourth, seventh, and tenth months of each Plan Year.

          (4)  [_] the first day of each month.

     (e)  Date of Initial Participation - An Employee shall become a Participant
          unless excluded by Subsection 1.04(c) above on the Entry Date
          immediately following the date the Employee completes the service and
          age requirement(s) in Subsections 1.04(a) and (b), if any, except
          (check one):

          (1)  [_] no exceptions.

          (2)  [X] Employees employed on the Effective Date in Subsection
                   1.01(g) shall become Participants on that date.

          (3)  [_] Employees who meet the age and service requirement(s) of
                   Subsections 1.04(a) and (b) on the Effective Date in
                   Subsection 1.01(g) shall become Participants on that date.

1.05 COMPENSATION
     ------------

     Compensation for purposes of determining contributions shall be as defined
     in Subsection 2.01(j), modified as provided below.

     (a) Compensation Exclusions: Compensation shall exclude the item(s) listed
         below for purposes of determining contributions. (Check the appropriate
         box(es)):

                                       5
<PAGE>

          (1)  [X] No exclusions. (Must be selected if Section 1.10(a)(3)or
                   Section 1.11(a)(3), safe harbor Matching Employer
                   Contribution or safe harbor Nonelective Employer
                   Contribution, is selected.)

          (2)  [_] Overtime Pay.

          (3)  [_] Bonuses.

          (4)  [_] Commissions.

          (5)  [_] The value of a qualified or a non-qualified stock option
                   granted to an Employee by the Employer to the extent such
                   value is includable in the Employee's taxable income.

          (6)  [_] Severance Pay.

               Note: If the Employer selects Option (2), (3), (4), (5), or (6)
               and has selected 1.1l(a) or (b), Compensation must be tested to
               show that it meets the requirements of Code Section 414 (s) or
               401(a)(4). These exclusions shall not apply for purposes of the
               "Top Heavy" requirements in Section 15.03 or for allocating
               Nonelective Employer Contributions if the Integrated Formula is
               elected in Subsection 1.11(b)(2).

     (b)  Compensation for the First Year of Participation-Contributions for
          the Plan Year in which an Employee first becomes a Participant shall
          be determined based on the Employee's Compensation (check one):

          (1)  [_] for the entire Plan Year.

          (2)  [X] for the portion of the Plan Year in which the Employee is
                   eligible to participate in the Plan.

               Note: If the initial Plan Year of a new Plan consists of fewer
               than 12 months from the Effective Date in Subsection
               1.01(g)(l) through the end of the initial Plan Year, Compensation
               for purposes of determining the amount of contributions, other
               than nonsafe harbor Nonelective Employer Contributions, under the
               Plan shall be the period from such Effective Date through the end
               of the initial year. However, for purposes of determining the
               amount of non-safe harbor Nonelective Employer Contributions and
               for other Plan purposes, where appropriate, the full 12-
               consecutive-month period ending on the last day of the initial
               Plan Year shall be used.

                                       6
<PAGE>

 1.06 TESTING RULES
      -------------

      (a) ADP/ACP Present Testing Method - The testing method for purposes of
          applying the "ADP" and "ACP" tests described in Sections 6.03 and 6.06
          of the Plan shall be the (check one):

          (1) [_]  Current Year Testing Method - The ADP or ACP of Highly
                   Compensated Employees for the Plan Year shall be compared to
                   the ADP or ACP of Non-Highly Compensated Employees for the
                   same Plan Year. (Must choose if Option 1.10(a)(3), Safe
                   Harbor Matching Employer Contributions, or Option 1.11(a)(3),
                   Safe Harbor Formula, with respect to Nonelective Employer
                   Contributions is checked)

          (2) [X]  Prior Year Testing Method - The ADP or ACP of Highly
                   Compensated Employees for the Plan Year shall be compared to
                   the ADP or ACP of Non-Highly Compensated Employees for the
                   immediately preceding Plan Year. (Do not choose if Option
                                                        ---
                   1.10(a)(3), Safe Harbor Matching Employer Contributions, or
                   Option 1.11(a)(3), Safe Harbor Formula, with respect to
                   Nonelective Employer Contributions is checked.)

          (3) [_]  Not applicable. (Only if Option 1.01(b)(3), Profit Sharing
                   Only, is checked.)

      (b) [_]  ADP/ACP Testing Methods Used in Prior Years - For Plan Years
               prior to the effective date of this amendment, the "ADP" and
               "ACP" tests were applied using a different testing method as
               shown in the ADP/ACP Testing Methods History Addendum to the
               Adoption Agreement. (Choose if there has been a change in the
               testing method used under the Plan.)

      (c) [X]  Initial Year Testing Method - For the initial Plan Year of a new
               Plan, other than a successor plan, the ADP and ACP tests shall be
               applied (check one):

          (1)  [_] assuming a 3% ADP and ACP for Non-Highly Compensated
                   Employees.

          (2)  [X] using the actual ADP and ACP of Non-Highly Compensated
                   Employees for the initial Plan Year.

     (d)  HCE Determinations: Look Back Year - The look back year for purposes
          of determining which Employees are Highly Compensated Employees shall
          be the 12-consecutive-month period preceding the Plan Year, unless
          otherwise provided below.

                                       7
<PAGE>

          (1)  [_] Calendar Year Determination - The look back year shall be the
                   calendar year beginning within the preceding Plan Year. (Do
                   not choose if the Plan Year is the calendar year.)

          (2)  [_] Prior Plan Years - For Plan Years prior to the effective date
                   of this amendment, the Plan was operated in accordance with a
                   different look back year election as shown in the Special
                   Effective Dates Addendum to the Adoption Agreement. (Choose
                   if there has been a change in the look back year used under
                   the Plan.)

     (e)  HCE Determinations: Top Paid Group - Employees with Compensation
          exceeding $80,000 (as indexed) shall be considered Highly Compensated
          Employees only if they are in the top paid group (the top 20% of
          Employees ranked by Compensation), unless otherwise provided below.

          (1)  [_] No Top Paid Group Election Current Plan Year - All Employees
                   with Compensation exceeding $80,000 (as indexed) shall be
                   considered Highly Compensated Employees.

          (2)  [_] Prior Plan Years - For Plan Years prior to the effective date
                   of this amendment, the Plan was operated in accordance with a
                   different top paid group election as shown in the Special
                   Effective Dates Addendum to the Adoption Agreement. (Choose
                   if the Plan has used the top paid group election in some
                   prior Plan Years, but not in others.)

          Note: Effective for determination years beginning on or after January
          1, 1998, if the Employer elects Option 1.06(d)(l) and/or applies the
          top paid group election described in Option 1.06(e), such election
          must apply consistently to all retirement plans of the Employer for
          determination years that begin with or within the same calendar year
          (except that Option 1.06(d)(l), Calendar Year Determination, shall not
          apply to calendar year plans). Effective for determination years
          beginning on or after January 1, 2000, any such election must apply
          consistently to all plans of the Employer, including non-retirement
          plans.

                                       8
<PAGE>

1.07 DEFERRAL CONTRIBUTIONS
     ----------------------

     (a)  [X] Deferral Contributions - Participants may elect to have a portion
              of their Compensation contributed to the Plan on a before-tax
              basis pursuant to Code Section 401(k).

           (1)  Regular Contributions - The Employer shall make a Deferral
                Contribution in accordance with Section 5.03 on behalf of each
                Participant who has an executed salary reduction agreement in
                effect with the Employer for the payroll period in question, not
                to exceed 15.00% (not to exceed 25%) of Compensation for that
                          -----
                period.


                Note: The percentage elected above must be less than 25% in
                order to satisfy the limitation on annual additions under Code
                Section 415 if other types of contributions are provided under
                th e Plan.

                (A)  [_] Instead of specifying a percentage of Compensation, a
                         Participant's salary reduction agreement may specify a
                         dollar amount to be contributed each payroll period,
                         provided such dollar amount does not exceed the maximum
                         percentage of Compensation specified in Subsection
                         1.07(a)(l) above.

                (B)  A Participant may increase or decrease, on a prospective
                     basis, his salary reduction agreement percentage as of the
                     next Entry Date.

                     Note: Notwithstanding the provisions of Subsection
                     1.07(a)(l)(B), if Option 1.10(a)(3), Safe Harbor Matching
                     Employer Contributions, or 1.11(a)(3), Safe Harbor
                     Formula, with respect to Nonelective Employer Contributions
                     is checked, the Plan provides that an Active Participant
                     may change his salary reduction agreement percentage for
                     the Plan Year within a reasonable period (not fewer than 30
                     days) of receiving the notice described in Section 6.10.

                (C)  A Participant may revoke, on a prospective basis, a salary
                     reduction agreement at any time upon proper notice to the
                     Administrator but in such case may not file a new salary
                     reduction agreement until any subsequent Entry Date.

          (2)  [X]   Catch-Up Contributions - The Employer may allow
                     Participants upon proper notice and approval to enter into
                     a special salary reduction agreement to make additional
                     Deferral Contributions in an amount up to 100% of their
                     Compensation for the payroll period(s) in the final month
                     of the Plan Year.

                                       9
<PAGE>

          (3)  [X] Bonus Contributions - The Employer may allow Participants
                   upon proper notice and approval to enter into a special
                   salary reduction agreement to make Deferral Contributions in
                   an amount up to 100% of any Employer paid cash bonuses
                   designated by the Employer on a uniform and non-
                   discriminatory basis that are made for such Participants
                   during the Plan Year. The Compensation definition elected by
                   the Employer in Subsection 1.05(a) must include bonuses if
                   bonus contributions are permitted.

               Note: A Participant's contributions under Subsection 1.07(a)(2)
               and/or (3) may not cause the Participant to exceed the percentage
               limit specified by the Employer in Subsection 1.07(a)(1) for the
               full Plan Year. The Employer has the right to restrict a
               Participant's right to make Deferral Contributions if they will
               adversely affect the Plan's ability to pass the "ADP" and/or the
               "ACP" test.


1.08 EMPLOYEE CONTRIBUTIONS
     ----------------------

     (a)  [_]  Employee Contributions - Participants are not permitted to
               contribute amounts to the Plan on an after-tax basis but the
               Employer does maintain frozen Employee Contributions Accounts.


1.09 QUALIFIED NONELECTIVE CONTRIBUTIONS
     -----------------------------------

     (a)  Qualified Nonelective Employer Contributions - If Option 1.07(a),
          Deferral Contributions, is checked, the Employer may contribute an
          amount which it designates as a Qualified Nonelective Employer
          Contribution to be included in the "ADP" or "ACP" test. Qualified
          Nonelective Employer Contributions shall be allocated to Participants
          who were eligible to participate in the Plan at any time during the
          Plan Year and are Non-Highly Compensated Employees either (A) in the
          ratio which each Participant's "testing compensation", as defined in
          Subsection 6.01(t), for the Plan Year bears to the total of all
          Participant's "testing compensation" for the Plan Year or (B) as a
          flat dollar amount.

1.10 MATCHING EMPLOYER CONTRIBUTIONS (Only if Option 1.07(a), Deferral
     -------------------------------
     Contributions is checked)

     (a)  [X]  Basic Matching Employer Contributions (check one):

          (1)  [_]  Non-Discretionary Matching Employer Contributions - The
                    Employer shall make a basic Matching Employer Contribution
                    on behalf of each Participant in an amount equal to the
                    following percentage of a Participant's Deferral
                    Contributions during the Contribution Period (check (A) or
                    (B) and, if applicable, (C)):

               Note: Effective for Plan Years beginning on or after January 1,
               1999, if the Employer elected Option 1.11(a)(3), Safe Harbor
               Formula, with respect to Nonelective Employer

                                       10
<PAGE>

               Contributions and meets the requirements for deemed satisfaction
               of the "ADP" test for a Plan Year, the Plan will also be deemed
               to satisfy the "ACP" test with respect to Matching Employer
               Contributions if Matching Employer Contributions hereunder meet
               the requirements in Section 6.11.

               (A)  [X]   Single Percentage Match:


               (B)  [_]   Tiered Match:

                    _____% of the first ____% of the Active Participant's
                    Compensation contributed to the Plan,

                    ____% of the next ____% of the Active Participant's
                    Compensation contributed to the Plan,

                    ____% of the next ____% of the Active Participant's
                    Compensation contributed to the Plan.

                    Note: The percentages specified above for basic Matching
                    Employer Contributions may not increase as the percentage of
                    Compensation contributed increases.

                    [X] Limit on Non-Discretionary Matching Employer
                        Contributions (check the appropriate box(es)):

                     (i)  [X]   Deferral Contributions in excess of 3.00% of the
                                                                    ----
                                Participant's Compensation for the period in
                                question shall not be considered for non-
                                discretionary Matching Employer Contributions.

                         Note: If the Employer elected a percentage limit in
                         (i) above and requested the Trustee to account
                         separately for matched and unmatched Deferral
                         Contributions, the non-discretionary Matching Employer
                         Contributions allocated to each Participant must be
                         computed, and the percentage limit applied, based upon
                         each payroll period.

                      (ii) [_]  Matching Employer Contributions for each
                                Participant for each Plan Year shall be limited
                                to $____.


                                       11
<PAGE>

          (2)  [X]  Discretionary Matching Employer Contributions - The Employer
                    may make a basic Matching Employer Contribution on behalf of
                    each Participant in an amount equal to the percentage
                    declared for the Contribution Period, if any, by a Board of
                    Directors' Resolution (or by a Letter of Intent for a sole
                    proprietor or partnership) of the Deferral Contributions
                    made by each Participant during the Contribution Period. The
                    Board of Directors' Resolution (or Letter of Intent, if
                    applicable) may limit the Deferral Contributions matched to
                    a specified percentage of Compensation or limit the amount
                    of the match to a specified dollar amount.

               (A)  [_] 4% Limitation on Discretionary Matching Employer
                        Contributions for Deemed Satisfaction of "ACP" Test -
                        Effective only for Plan Years beginning on or after
                        January 1, 2000, in no event may the dollar amount of
                        the discretionary Matching Employer Contribution made on
                        a Participant's behalf for the Plan Year exceed 4% of
                        the Participant's Compensation for the Plan Year. (Only
                        if Option 1.11(a)(3), Safe Harbor Formula, with respect
                        to Nonelective Employer Contributions is checked.)

          (3) [_]   Safe Harbor Matching Employer Contributions - Effective only
                    for Plan Years beginning on or after January 1, 1999, if the
                    Employer elects one of the safe harbor formula Options
                    provided in the Safe Harbor Matching Employer Contribution
                    Addendum to the Adoption Agreement and provides written
                    notice each Plan Year to all Active Participants of their
                    rights and obligations under the Plan, the Plan shall be
                    deemed to satisfy the "ADP" test and, in certain
                    circumstances, the "ACP" test.

     (b)  [_]  Additional Matching Employer Contributions - The Employer may at
               Plan Year end make an additional Matching Employer Contribution
               equal to a percentage declared by the Employer, through a Board
               of Directors' Resolution (or by a Letter of Intent for a sole
               proprietor or partnership), of the Deferral Contributions made by
               each Participant during the Plan Year. (Only if Option 1.10(a)(1)
               or (3) is checked.) The Board of Directors' Resolution (or Letter
               of Intent, if applicable) may limit the Deferral Contributions
               matched to a specified percentage of Compensation or limit the
               amount of the match to a specified dollar amount.

          (1)  [_]  4% Limitation on Discretionary Matching Employer
                    Contributions for Deemed Satisfaction of "ACP" Test -
                    Effective only for Plan Years beginning on or after January
                    1, 2000, in no event may the dollar amount of the additional
                    Matching Employer Contribution made on a Participant's
                    behalf for the Plan Year exceed 4% of the Participant's
                    Compensation for the Plan Year. (Only if Option 1.11(a)(3),
                    Safe Harbor Formula, with respect to Nonelective Employer
                    Contributions is checked.)

          Note: If the Employer elected Option 1.10(a)(3), Safe Harbor Matching
          Employer Contributions, above and wants to be deemed to have satisfied
          the "ADP" test for Plan Years

                                       12
<PAGE>

          beginning on or after January 1, 1999, the additional Matching
          Employer Contribution must meet the requirements of Section 6.10. In
          addition to the foregoing requirements, if the Employer elected either
          Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or
          Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective
          Employer Contributions, and wants to be deemed to have satisfied the
          "ACP" test with respect to Matching Employer Contributions for Plan
          Years beginning on or after January 1, 1999, the Deferral
          Contributions matched may not exceed 6% of a Participant's
          Compensation.

     (c)  Contribution Period for Matching Employer Contributions - The
          Contribution Period for purposes of calculating the amount of basic
          Matching Employer Contributions described in Subsection 1.10(a)(1) or
          (2) is:

          (1)  [X] each Plan Year.

          (2)  [_] each payroll period.

          The Contribution Period for safe harbor Matching Employer
          Contributions described in Subsection 1.10(a)(3) and additional
          Matching Employer Contributions described in Subsection 1.10(b) is the
          Plan Year.

     (d)  Continuing Eligibility Requirement(s) - A Participant who makes
          Deferral Contributions during a Contribution Period shall only be
          entitled to receive Matching Employer Contributions under Section 1.10
          for that Contribution Period if the Participant satisfies the
          following requirement(s) (Check the appropriate box(es). Options (3)
          and (4) may not be elected together; Option (5) may not be elected
          with Option (2), (3), or (4); Options (2), (3), (4), (5) and (7) may
          not be elected if Option 1.10(a)(3), Safe Harbor Matching Employer
          Contributions, is checked):

          (1) [X]  No requirements.

          (2) [_]  Is employed by the Employer or a Related Employer on the last
                   day of the Plan Year.

          (3) [_]  Earns at least 501 Hours of Service during the Plan Year.
                   (Only if the Contribution Period is the Plan Year.)

                                       13
<PAGE>

          (4) [X]  Earns at least 1,000 Hours of Service during the Plan Year.
                   (Only if the Contribution Period is the Plan Year.)

          (5) [_]  Either earns at least 501 Hours of Service during the Plan
                   Year or is employed by the Employer or a Related Employer on
                   the last day of the Plan Year. (Only if the Contribution
                   Period is the Plan Year.)

          (6) [_]  Is not a Highly Compensated Employee for the Plan Year.

          (7) [_]  Is not a partner or a member of the Employer, if the Employer
                   is a partnership or an entity taxed as a partnership.

          (8) [_]  Special continuing eligibility requirement(s) for additional
                   Matching Employer Contributions. (Only if Options 1.10(a)(3),
                   Safe Harbor Matching Employer Contributions, and (b),
                   Additional Matching Employer Contributions, are checked.)

              (A)  The continuing eligibility requirement(s) for additional
                   Matching Employer Contributions is/are:_____ (Fill in number
                   of applicable eligibility requirement(s) from above.)

          Note: If Option (2), (3), (4), (5), (6) or (7) above is selected, then
          Matching Employer Contributions can only be funded by the Employer
          after the Plan Year ends. Matching Employer Contributions funded
          during the Plan Year shall not be subject to the eligibility
          requirements of Option (2), (3), (4), (5), (6) or (7). If Option (2),
          (3), (4), (5), (6) or (7) is adopted during a Plan Year, as
          applicable, such Option shall not become effective until the first day
          of the next Plan Year.

     (e)  [X]  Qualified Matching Employer Contributions - The Employer may make
               a Qualified Matching Employer Contribution that may be used to
               satisfy the "ADP" test on Deferral Contributions in an amount
               equal to the percentage declared for the Plan Year, if any, by a
               Board of Directors' Resolution (or by a Letter of Intent for a
               sole proprietor or partnership) of the Deferral Contributions
               made by each eligible Participant during the Plan Year. The Board
               of Directors' Resolution (or Letter of Intent, if applicable) may
               limit the contributions matched to a specified percentage of
               Compensation or limit the amount of the match to a specified
               dollar amount. Qualified Matching Employer Contributions shall be
               allocated to Participants who meet the continuing eligibility
               requirement(s) for basic Matching Employer Contributions
               described in Subsection 1.10(d) above and who are Non-Highly
               Compensated Employees for the Plan Year.

                                       14
<PAGE>

               Note: Qualified Matching Contributions may not be excluded in
               applying the "ACP" test for a Plan Year if the Employer elected
               Option 1.10(a)(3), Safe Harbor Matching Employer Contributions,
               or Option 1.11(a)(3), Safe Harbor Formula, with respect to
               Nonelective Employer Contributions, and the "ADP" test is deemed
               satisfied under Section 6.10 for such Plan Year.


1.11 NONELECTIVE EMPLOYER CONTRIBUTIONS
     ----------------------------------

     Note: An Employer who has elected the safe harbor formula in Subsection
     1.11(a)(3) may also elect a discretionary formula. If both are selected,
     the discretionary formula shall be treated as an additional Nonelective
     Employer Contribution and allocated separately in accordance with the
     allocation formula selected by the Employer.

     (a)  [_]  Fixed Formula (check one):

          (1)  [_]  Fixed Percentage Employer Contribution - For each Plan Year,
                    the Employer shall contribute for each eligible Active
                    Participant an amount equal to _____% (not to exceed 15%) of
                    such Active Participant's Compensation.

          (2)  [_]  Fixed Flat Dollar Employer Contribution - For each Plan
                    Year, the Employer shall contribute for each eligible Active
                    Participant an amount equal to $____.

          (3)  [_]  Safe Harbor Formula - Effective only with respect to Plan
                    Years that begin on or after January 1, 1999, the
                    Nonelective Employer Contribution is intended to satisfy the
                    safe harbor contribution requirements under the Code such
                    that the "ADP" test is deemed satisfied. Please complete the
                    Safe Harbor Nonelective Employer Contribution Addendum to
                    the Adoption Agreement. (Choose only if Option 1.07(a),
                    Deferral Contributions, is checked.)

      (b)  [X] Discretionary Formula - The Employer may decide each Plan Year
               whether to make a discretionary Nonelective Employer Contribution
               on behalf of eligible Active Participants in accordance with
               Section 5.10. Such contributions shall be allocated to eligible
               Active Participants based upon the following (check (1) or (2)):

          (1) [X]  Non-integrated Allocation Formula - In the ratio that each
                   eligible Active Participant's Compensation bears to the
                   total Compensation paid to all eligible Active Participants
                   for the Plan Year.


                                       15
<PAGE>

(2)     [_]     Integrated Allocation Formula - As (A) a percentage of each
                eligible Active Participant's Compensation plus (B) a percentage
                of each eligible Active Participant's Compensation in excess of
                the "integration level" as defined below. The percentage of
                Compensation in excess of the "integration level" shall be equal
                to the lesser of the percentage of the Active Participant's
                Compinsation allocated under (A) above or the "permitted
                disparity limit" as defined below.

        Note: An Employer that has elected the Safe Harbor formula in Subsection
        1.11(a)(3) above may not take Nonelective Employer Contributions made to
        satisfy the safe harbor into account in applying the integrated
        allocation formula described above.

        "Integration level" means the Social Security taxable wage base for the
        Plan Year, unless the Employer elects a lesser amount in (A) or (B)
        below.

        (A) ______% (not to exceed 100%) of the Social Security taxable wage
                  base for the Plan Year, or

        (B) $_____(not to exceed the Social Security taxable wage base).

        "Permitted disparity limit" means the percentage provided by the
        following table:

<TABLE>
<CAPTION>
          =======================================================================
             If the "Integration Level"          But Less Than     The "Permitted
             is at least ____% of the           _____% of the         Disparity
                Taxable Wage Base               Taxable Wage Base    Limit" is
            _____________________________________________________________________
                        <S>                          <C>                 <C>
                        0%                            20%               5.7%
            ____________________________________________________________________
                        20%                           80%               4.3%
            ____________________________________________________________________
                        80%                          100%               5.4%
            ____________________________________________________________________
                       100%                          N/A                5.7%
            =====================================================================
</TABLE>

        Note: An Employer who maintains any other plan that provides for Social
        Security Integration (permitted disparity) may not elect 1.11(b)(2).


                                     16
<PAGE>

       (c)  Continuing Eligibility Requirement(s) - A Participant shall only be
            entitled to receive Nonelective Employer Contributions for a Plan
            Year under this Section 1.11 if the Participant satisfies the
            following requirement(s) (Check the appropriate box(es) - Options
            (3) and (4) may not be elected together; Option (5) may not be
            elected with Option (2), (3), or (4); Options (2), (3), (4) and (5)
            may not be elected with respect to Nonelective Employer
            Contributions under the fixed formula if Option 1.11(a)(3), Safe
            Harbor Formula, is checked):

            (1)  [X]   No requirements.

            (2)  [X]   Is employed by the Employer or a Related Employer on the
                       last day of the Plan Year.

            (3)  [_]   Earns at least 501 Hours of Service during the Plan Year.

            (4)  [X]   Earns at least 1,000 Hours of Service during the Plan
                       Year.

            (5)  [_]   Either earns at least 501 Hours of Service during the
                       Plan Year or is employed by the Employer or a Related
                       Employer on the last day of the Plan Year.

            (6)  [_]   Special continuing eligibility requirement(s) for
                       discretionary Nonelective Employer Contributions. (Only
                       if both Options 1.11(a)(3), Safe Harbor Formula, and 1.11
                       (b), Discretionary Formula, are checked.)

                 (A)   The continuing eligibility requirement(s) for additional
                       discretionary Nonelective Employer Contributions is/are:
                       __________  (Fill in number of applicable eligibility
                       requirement(s) from above.)

          Note: If Option (2), (3), (4), or (5) above is selected then
          Nonelective Employer Contributions can only be funded by the Employer
          after the Plan Year ends. Nonelective Employer Contributions funded
          during the Plan Year shall not be subject to the eligibility
          requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4),
          or (5) is adopted during a Plan Year, such Option shall not become
          effective until the first day of the next Plan Year.


1.12   EXCEPTIONS TO CONTINUING ELIGIBILITY REQUIREMENTS
       -------------------------------------------------

       [X]  Death, Disability, and Retirement Exception to Eligibility
            Requirements - Active Participants who do not meet any last day or
            Hours of Service requirement under Subsection 1.10(d) or 1.11(c)
            because they become disabled, as defined in Section 1.14, retire, as
            provided in Subsection 1.13(a) or (b), or die shall nevertheless
            receive an allocation of Nonelective Employer and/or Matching
            Employer Contributions. No Compensation shall be imputed to Active
            Participants who become disabled for the period following their
            disability.

1.13   RETIREMENT
       ----------

                                       17
<PAGE>

       (a)  The Normal Retirement Age under the Plan is (check one);

            (1)    [X]  age 65.

            (2)    [_]  age _____ (specify between 55 and 64).

            (3)    [X]  later of age 65.0 (not to exceed 65) or the fifth
                                     ----
                        anniversary of the Participant's Employment Commencement
                        Date.

       (b)  [X]    The Early Retirement Age is the first day of the month after
                   the Participant attains age 59.5 (specify 55 or greater) and
                                               ----
                   completes 4.0 years of Vesting Service.
                             ---

            Note:  If this Option is elected, Participants who are employed by
            the Employer or a Related Employer on the date they reach Early
            Retirement Age shall be 100% vested in their Accounts under the
            Plan.

       (c)  [X]    A Participant who becomes disabled, as defined in
                   Section 1.14, is eligible for disability retirement.

            Note:  If this Option is elected, Participants who are employed by
                   the Employer or a Related Employer on the date they become
                   disabled shall be 100% vested in their Accounts under the
                   Plan.

1.14.  DEFINITION OF DISABLED
       ----------------------

       A Participant is disabled if he/she (check the appropriate box(es)):

       (a)  [_]    satisfies the requirements for benefits under the Employer's
                   Long-Term Disability Plan.

       (b)  [_]    satisfies the requirements for Social Security disability
                   benefits.

            Note:  If this Option is elected, Participants who are employed by
            the Employer or a Related Employer on the date they reach Early
            Retirement Age shall be 100% vested in their Accounts under the
            Plan.

       (c)  [X]    is determined to be disabled by a physician approved by the
                   Employer.


1.15   VESTING
       -------

       A Participant's vested interest in Matching Employer Contributions and/or
       Nonelective Employer Contributions, other than Safe Harbor Matching
       Employer and/or Nonelective Employer Contributions elected in Subsection
       1.10(a)(3) or 1.11(a)(3), shall be based upon his years of Vesting
       Service and the schedule selected below.

       (a)  Vesting Schedule (check one):

                                      18
<PAGE>

       (1)  [_]    N/A - No Nonelective Employer Contributions or Matching
                         Employer Contributions

       (2)  [_]    100% Vesting immediately

       (3)  [_]    3 year cliff (see 3 below)

       (4)  [_]    6 year graduated (see 4 below)

       (5)  [X]    Other vesting (complete 5 below)


            Years of
          Vesting Service        Applicable Vesting Schedule(s)
          ============================================================
                                   3            4          5
          ============================================================

              0                   0%            0%       0.00%
                                                         ----
          -------------------------------------------------------------

              1                   0%            0%      25.00%
                                                        -----
          -------------------------------------------------------------

              2                   0%           20%      50.00%
                                                        -----
          -------------------------------------------------------------

              3                 100%           40%      75.00%
                                                        -----
          -------------------------------------------------------------

              4                 100%           60%     100.00%
                                                       ------
          -------------------------------------------------------------

              5                 100%           80%     100.00%
                                                       ------
          -------------------------------------------------------------

           6 or more            100%          100%     100.00%
                                                       ------
           =============================================================

       Note:  A schedule elected under 5 above must be at least as favorable as
       one of the schedules in 3 or 4 above.

1.16   PREDECESSOR EMPLOYER SERVICE
       ----------------------------

       [_]    Service for purposes of eligibility in Subsection 1.04(b) and
              vesting in Subsection 1.15(a) of this Plan shall include service
              with the following predecessor employer(s);

       (a)    Reading Entertainment Inc.
              -------------------------------------------------

       (b)    Citadel Holding Corportaion
              -------------------------------------------------

       (c)    City Cinemas Corporation, a New York Corporation
              -------------------------------------------------
              (Fed. Tax ID 95-4111198)
              -------------------------------------------------

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

1.17   PARTICIPANT LOANS
       -----------------

                                      19
<PAGE>

Participants loans (check one);

       (a)  [X]    are allowed in accordance with Article 9 and loan procedures
                   outlined in the Service Agreement.

       (b)  [_]    are not allowed.
                       ---


1.18   IN-SERVICE WITHDRAWALS
       ----------------------

       Participants may make withdrawals prior to termination of employment
       under the following circumstances (check the appropriate box(es)):

       (a)  [X]  Hardship Withdrawals - Hardship withdrawals from a
                 Participant's Deferral Contributions Account shall be allowed
                 in accordance with Section 10.05, subject to a $500 minimum
                 amount.

       (b)  [X]  Age 59 l/2 - Participants shall be entitled to receive a
                 distribution of all or any portion of the following Accounts
                 upon attainment of age 59 l/2 (check one):

            (1)  [X]  Deferral Contributions Account

            (2)  [_]  All Accounts

       (c)  Withdrawal of Employee Contributions and Rollover Contributions -
            The Plan provides for in-service withdrawals of Employee
            Contributions under Section 1.08 and Rollover Contributions at any
            time.

       (d)  [_]  Protected Inc-Service Withdrawal Provisions - Check if the Plan
                 was converted by plan amendment or received transfer
                 contributions from another defined contribution plan, and
                 benefits under the other defined contribution plan were payable
                 as (check the appropriate box(es)):

                                      20
<PAGE>

       (1)  [_]  an in-service withdrawal of vested employer contributions
                 maintained in a Participant's Account (check (A) and/or (B)):

            (A)  [_]  for at least _________ (24 or more) months.

            (B)  [_]  after the Participant has at least 60 months of
                      participation.

       (2)  [_]  another in-service withdrawal option that is a "protected
                 benefit" under Code Section 411(d)(6). The other in-service
                 withdrawal options available under the plan are:

                 -------------------------------------------------------------

                 -------------------------------------------------------------


1.19   FORM OF DISTRIBUTIONS
       ---------------------

       Subject to Article 14, distributions under the Plan shall be paid as
       (check the appropriate box(es) with respect to optional forms):

       (a)  Lump Sum Payments - Lump sum payments are always available under the
            Plan. If a Participant's account balance is less than or equal to
            the "cashout limit", distribution shall be made to the Participant
            as soon as reasonably practicable following his termination of
            employment in a lump sum payment. Effective the first day of the
            first Plan Year beginning on or after August 5, 1997 (or the date
            the Plan is first operated in compliance with the increase, if
            later, but not later than the effective date specified in Subsection
            1.01(g)(1) or (2)), the "cashout limit" is $5,000 (increased from
            $3,500).

       (b)  [X]  Installments Payments - In lieu of a lump sum, Participants
                 may elect distribution under a systematic withdrawal plan
                 (installments).

       (c)  [_]  Protected Benefit Forms - Check if the Plan was converted by
                 plan amendment or received transfer contributions from another
                 defined contribution plan, and benefits under the other defined
                 contribution plan were payable in any other form. The following
                 protected benefit forms shall apply to the Accounts of all
                 Participants (check the appropriate box(es)):

            (1)  [_]  The prior plan provided a life annuity form of payment.

                 (A)  The normal annuity form for unmarried Participants is a

                      -------------------------------------------------------.

                      The normal annuity form for married Participants is a
                      _____ % (must be at least 50%, but not more than
                      100%)"qualified joint and survivor annuity".

                                      21
<PAGE>

                 (B)  The normal form of distribution under the Plan is:

                      (i)  [_]   A lump sum payment.

                      (ii) [_]   A "qualified joint and survivor annuity".

                 (C)  The qualified preretirement survivor annuity provided to a
                      Participant's spouse is purchased with ___% (must be at
                      least 50%) of the Participant's Account.

       (2)       [_]  The prior plan provided other optional annuity forms. The
                      other optional annuity forms available under the Plan are:

                      ----------------------------------------------------------

                      ----------------------------------------------------------

                      ----------------------------------------------------------

                      ----------------------------------------------------------


       (3)       [_]  The prior plan provided other forms of distribution that
                      are protected benefits. The other forms of distribution
                      available under the Plan are:


                      ----------------------------------------------------------

                      ----------------------------------------------------------

                      ----------------------------------------------------------

                      ----------------------------------------------------------


1.20   TIMING OF DISTRIBUTIONS
       -----------------------

       Distribution shall be made to an eligible Participant from his vested
       interest in his Account as soon as reasonably practicable following the
       date the Participant's application for distribution is received by the
       Administrator, but in no event later than his Required Beginning Date, as
       defined in Subsection 2.01(ss).

       (a)  Required Beginning Date - The Required Beginning Date of a
            Participant who is not a five percent owner shall be determined
            under Code Section 401(a)(9) as amended by the Small Business Job
            Protection Act.

            (1)  [_]  If a Participant attained age 70 1/2 before January 1,
                      1999 (or such later date as may be specified below), he
                      may elect to have his Required Beginning Date


                                      22
<PAGE>

                 determined under Code Section 401(a)(9) as in effect prior to
                 the amendment. (Choose only if the Plan was originally
                 effective before January 1, 1997.)

            (A)  [_]  later effective date applies for grandfathering the prior
                      Code Section 401(a)(9) rules. Please complete Section (c)
                      of the Special Effective Dates Addendum to the Adoption
                      Agreement indicating the late effective date.


1.21   TOP HEAVY STATUS
       ----------------


       (a)  The Plan shall be subject to the Top-Heavy Plan requirements of
            Article 15 (check one):

            (1)  [_]  for each Plan Year, whether or not the Plan is a
                      "top-heavy plan" as defined in Subsection 15.01(f).

            (2)  [X]  for each Plan Year, if any, for which the Plan is a
                      "top-heavy plan" as defined in Subsection 15.01(f).

            (3)  [_]  Not applicable. (Choose only if Plan covers only employees
                      subject to a collective bargaining agreement.)

       (b)  In determining whether the Plan is a "top-heavy plan" for an
            Employer with at least one defined benefit plan, the following
            assumptions shall apply:

            (1)  [_]  Interest rate: ______% per annum.

            (2)  [_]  Mortality table:_______.

            (3)  [X]  Not applicable. (Choose only if either (A) Plan covers
                      only employees subject to a collective bargaining
                      agreement or (B) Employer does not maintain and has never
                      maintained any defined benefit plans.)

                                      23
<PAGE>


(c)     If the Plan is or is treated as a "top-heavy plan" for a Plan Year, each
        non-key Employee shall receive an Employer Contribution of at least 3.0
        (3, 4, 5, or 7 1/2)% of Compensation for the Plan Year in accordance
        with Section 15.03. The minimum Employer Contribution provided in this
        Subsection 1.21(c) shall be made under this Plan only if the Participant
        is not entitled to such contribution under another qualified plan of the
        Employer, unless the Employer elects otherwise in (1) or (2) below:

        (1)     [_]     The minimum Employer Contribution shall be paid under
                        this Plan in any event.

        (2)     [_]     Not applicable. (Choose only if Plan covers only
                        employees subject to a collective bargaining agreement.)


        Note:     The minimum Employer contribution may be less than the
                  percentage indicated in Subsection 1.21(c) above to the extent
                  provided in Section 15.03.

(d)     If the Plan is or is treated as a "top-heavy plan" for a Plan Year and
        Section 1.15(a)(1)(A) was elected,the following vesting schedule shall
        apply to required top-heavy Employer contributions for such Plan Year
        and each Plan Year thereafter (check one):

        (1)  [X]     Not applicable. (Choose only if either (A) Section
                     1.15(a)(1)(A) was not selected or (B) Plan covers only
                                       ---
                     employees subject to a collective bargaining agreement.)

        (2)  [_]     100% vested after______(not in excess of 3) years of
                     Vesting Service.

        (3)  [_]     Graded vesting:


<TABLE>
<CAPTION>
         ====================================================
         Years of Vesting           Vesting        Must be
           Service                 Percentage      at least
         ____________________________________________________
             <S>                 <C>                  <C>
               0                     0.00%            0%
         ____________________________________________________

               1                     25.00%           0%
         ____________________________________________________

               2                     50.00%           20%
         ____________________________________________________

               3                     75.00%           40%
         _____________________________________________________

               4                     100.00%          60%
         ______________________________________________________

               5                     100.00%          80%
         ______________________________________________________

               6 or more             100.00%          100%

        =======================================================

</TABLE>


                                      24



<PAGE>

1.22    CORRECTION TO MEET 415 REQUIREMENTS UNDER MULTIPLE DEFINED CONTRIBUTION
        -----------------------------------------------------------------------
        PLANS
        -----

        If the Employer maintains other defined contribution plans, annual
        additions to a Participant's Account shall be limited as provided in
        Section 6.11 of the Plan to meet the requirements of Code Section 415.


1.23    INVESTMENT DIRECTION
        --------------------

        (a)   Investment Directions - Participant Accounts shall be invested in
              accordance with investment directions provided to the Trustee by
              each Participant for allocating his entire Account among the
                   -----------
              Options listed in the Service Agreement.

        (b)   [X]  404(c) Election - The Administrator intends to treat this
                   Plan as being subject to ERISA Section 404(c).


1.24    RELIANCE ON OPINION LETTER
        --------------------------

        An adopting Employer may not rely on the opinion letter issued by the
        National Office of the Internal Revenue Service as evidence that this
        Plan is qualified under Code Section 401. If the Employer wishes to
        obtain reliance that its Plan is qualified, application for a
        determination letter should be made to the appropriate Key District
        Director of the Internal Revenue Service. Failure to fill out the
        Adoption Agreement properly may result in disqualification of the Plan.

        This Adoption Agreement may be used only in conjunction with Fidelity
        Basic Plan Document No. 10. The Prototype Sponsor shall inform the
        adopting Employer of any amendments made to the Plan or of the
        discontinuance or abandonment of the prototype plan document.

1.25    PROTOTYPE INFORMATION:
        ---------------------

        Name of Prototype Sponsor:      Fidelity Management & Research Company
        Address of Prototype Sponsor:   82 Devonshire Street
                                        Boston, MA 02109

        Questions regarding this prototype document may be directed to the
        following telephone number: 1-800-343-9184.

                                       25
<PAGE>

                                  EXECUTION PAGE
                                 (Employer's Copy)


IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed this 24th day of January, 2000.
              ----        -------  ----

   Employer:                   Craig Corporation
                    -------------------------------------------

   By:                            /s/ [ILLEGIBLE]
                    -------------------------------------------

   Title:                          President
                    -------------------------------------------


   Employer:                  Craig Corporation
                    --------------------------------------------

   By:                           /s/ [ILLEGIBLE]
                    --------------------------------------------

   Title:                     Chief Financial Officer
                    --------------------------------------------


Accepted by:

Fidelity Management Trust Company, as Trustee

By:     /s/ Bryon R. Wall                Date:   1-28-00
      -----------------------------           ---------------

Title:      Bryon R. Wall
          Authorized Signatory
      -----------------------------


                                      27
<PAGE>

                            ADDENDUM

                    Re: SPECIAL EFFECTIVE DATES
                                for

Plan Name: The Craig Corporation Employee Savings Plan
           -------------------------------------------

(a)  [_]   Plan Merger Effective Dates - The following plan(s) were merged into
           the Plan after the Effective Date indicated in Subsection 1.O1
           (g)(1) or (2), as applicable. The provisions of the Plan are
           effective with respect to the merged plan(s) as of the date(s)
           indicated below:

     (1)   Name of merged plan:
                               -------------------------------------------------

           ---------------------------------------------------------------------

           ---------------------------------------------------------------------

           Effective
           date:
                 ---------------------------------------------------------------

     (2)   Name of merged plan:
                               -------------------------------------------------

           ---------------------------------------------------------------------

           ---------------------------------------------------------------------
           Effective
           date:
                ----------------------------------------------------------------

     (3)   Name of merged plan:
                               -------------------------------------------------

           ---------------------------------------------------------------------

           ---------------------------------------------------------------------
           Effective
           date:
                ----------------------------------------------------------------

                                       28
<PAGE>

(b)  HCE Determination - HCE determinations for prior Plan Years shall be made
     applying the following rules:

     (1)   [_]    HCE Determination: Look Back Year Elections - Prior to the
                  effective date of this amendment, the Plan was administered in
                  accordance with the following look back year election(s):

           (A)    [_]  No calendar year election - For the following Plan Years,
                  the look back year was the 12-consecutive-month period
                  immediately preceding the Plan Year:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

           (B)    [_]  Calendar year election - For the following Plan Years,
                  the look back year was the calendar year beginning within the
                  preceding Plan Year:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

     (2)   [_]    HCE Determination: Top Paid Group Elections - For Plan Years
                  prior to the effective date of this amendment, the Plan was
                  administered in accordance with the following top paid group
                  election(s):

           (A)    [_]  For the following Plan Years, Highly Compensated
                       Employees included only the top 20% of Employees ranked
                       by Compensation:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                                       29
<PAGE>

           (B)    [_]  For the following Plan Years, Highly Compensated
                       Employees included all Employees with Compensation
                       exceeding $80,000 (as indexed):

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

     (c)   [_]    Late Effective Date for Grandfathering Prior Required
                  Beginning Date Rules

           Effective date: January 1, (Must be first day of the calendar year
           beginning after the date the Plan was first amended to comply with
           the new Required Beginning Date rules, but not later than the first
           day of the calendar year beginning after the end of the Employer's
           remedial amendment period for making changes to comply with the Small
           Business Job Protection Act.)

                                       30
<PAGE>

                                   ADDENDUM

                      Re: ADP/ACP TESTING METHODS HISTORY
                                      for

Plan Name: The Craig Corporation Employee Savings Plan
           -------------------------------------------


(A)     For Plan Years prior to the date of this amendment, the Plan applied the
        following testing methods:

        (1)  [_]  Current Year Testing Method - The ADP/ACP tests for the
                  following Plan Years were applied using the current year
                  testing method described in Subsection 1.06(a)(l):

             -------------------------------------------------------------------

             -------------------------------------------------------------------

             -------------------------------------------------------------------

        (2)  [_]  Prior Year Testing Method - The ADP/ACP tests for the
                  following Plan Years were applied using the prior year testing
                  method described in Subsection 1.06(a)(2):

             -------------------------------------------------------------------

             -------------------------------------------------------------------

             -------------------------------------------------------------------

                                       31
<PAGE>

                                   ADDENDUM

                Re: SAFE HARBOR MATCHING EMPLOYER CONTRIBUTION
                                      for

Plan Name: The Craig Corporation Employee Savings Plan
           -------------------------------------------

(a)   Safe Harbor Matching Employer Contribution Formula

      Note: Matching Employer Contributions made under this Option must be
      100% vested when made and may only be distributed because of death,
      disability, separation from service, age 59 l/2, or termination of the
      Plan without the establishment of a successor plan. In addition, each Plan
      Year, the Employer must provide written notice to all Active Participants
      of their rights and obligations under the Plan.

      (1)  [_]   100% of the first 3% of the Active Participant's Compensation
                 contributed to the Plan and 50% of the next 2% of the Active
                 Participant's Compensation contributed to the Plan.

           (A)   [_]  Safe harbor Matching Employer Contributions shall not
                                                                        ---
                 be made on behalf of Highly Compensated Employees.

           Note: If the Employer selects this formula and does not elect Option
                                                               ---
           1.10(b), Additional Matching Employer Contributions, Matching
           Employer Contributions will automatically meet the safe harbor
           contribution requirements for deemed satisfaction of the "ACP" test.

      (2)  [_]   Other Tiered Match:

           ___% of the first ___% of the Active Participant's Compensation
           contributed to the plan,

           ___% of the next ___% of the Active Participant's Compensation
           contributed to the plan,

           ___% of the next ___% of the Active Participant's Compensation
           contributed to the plan.


           Note: To satisfy the safe harbor contribution requirement for the
           "ADP" test, the percentages specified above for Matching Employer
           Contributions may not increase as the percentage of Compensation
           contributed increases, and the aggregate amount of Matching Employer
           Contributions at such rates must at least equal the aggregate amount
           of Matching Employer Contributions which would be made under the
           percentages described in (a)(1) of this Addendum.

                                       32
<PAGE>

     (A)   [_]    Safe harbor Matching Employer Contributions shall not be made
                                                                    ---
                  on behalf of Highly Compensated Employees.

     (B)   [_]    The formula specified above is also intended to satisfy the
                  safe harbor contribution requirement for deemed satisfaction
                  of the "ACP".

           Note: To satisfy the safe harbor contribution requirement for the
           "ACP" test, the Deferral Contributions matched cannot exceed 6% of a
           Participant's Compensation.

                                       33
<PAGE>

                                   ADDENDUM

               Re: SAFE HARBOR NONELECTIVE EMPLOYER CONTRIBUTION
                                      for

Plan Name: The Craig Corporation Employee Savings Plan
           -------------------------------------------

(a)  For each Plan Year, the Employer shall contribute for each eligible Active
     Participant an amount equal to ___% (not less than 3% nor more than 15%) of
     such Active Participant's Compensation.

     Note: Contributions that are intended to satisfy the safe harbor
     contribution requirement must be 100% vested when made and may only be
     distributed because of death, disability, separation from service, age
     59 l/2, or termination of the Plan without the establishment of a successor
     plan. In addition, each Plan Year, the Employer must provide written notice
     to all Active Participants of their rights and obligations under the Plan.

     (1)   [_]    Safe harbor Nonelective Employer Contributions shall not be
                                                                       ---
                  made on behalf of Highly Compensated Employees.

     (2)   [_]    In conjunction with its election of the safe harbor described
                  above, the Employer has elected to make Matching Employer
                  Contributions under Subsection 1.10 that are intended to meet
                  the requirements for deemed satisfaction of the "ACP" test
                  with respect to Matching Employer Contributions (i.e. (1) the
                  percentage of Deferral Contributions matched does not increase
                  as the percentage of Compensation contributed increases; (2)
                  Highly Compensated Employees are not provided a greater
                  percentage match than Non-Highly Compensated Employees; (3)
                  Deferral Contributions matched do not exceed 6% of a
                  Participant's Compensation; and (4) for Plan Years beginning
                  on or after January 1,2000, the dollar amount of any
                  discretionary Matching Employer Contributions made on a
                  Participant's behalf for the Plan Year shall not exceed 4% of
                  the Participant's Compensation for the Plan Year).

                                       34