Document:

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                                 EXHIBIT 4(a)
                                 ------------

        The Progressive Retirement Security Program (1999 Amendment and
Restatement), as further amended on August 1, 1999
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                 THE PROGRESSIVE RETIREMENT SECURITY PROGRAM
                 -------------------------------------------

                       (1999 Amendment and Restatement)

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<TABLE>
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                                                     TABLE OF CONTENTS
                                                     -----------------

      PAGE

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<S>                                                                                                                  <C>
                                                         ARTICLE 1
                                                         ---------
                                                       INTRODUCTION
                                                       ------------

1.1      NAME OF PLAN                                                                                                     1
1.2      EFFECTIVE DATE                                                                                                   1
1.3      TYPE AND PURPOSE OF PLAN                                                                                         1

                                                         ARTICLE 2
                                                        DEFINITIONS
                                                        -----------

2.1      ACCOUNT                                                                                                          1
2.2      ACTIVE LTSP PARTICIPANT                                                                                          1
2.3      ACTIVE SDRP PARTICIPANT                                                                                          1
2.4      ADMINISTRATOR                                                                                                    1
2.5      AFFILIATED COMPANY                                                                                               1
2.6      ANNIVERSARY SHARES                                                                                               1
2.7      ARTICLE                                                                                                          1
2.8      BENEFICIARY                                                                                                      1
2.9      BOARD                                                                                                            2
2.9A     BROKERAGE ACCOUNT                                                                                                2
2.10     CODE OR IRC                                                                                                      2
2.11     COMPANY                                                                                                          2
2.12     COMPANY STOCK FUND                                                                                               2
2.13     COMPENSATION                                                                                                     2
2.14     COMPENSATION DEFERRAL AGREEMENT                                                                                  2
2.15     CONTRIBUTIONS                                                                                                    2
2.16     COVERED EMPLOYEE                                                                                                 2
2.17     COVERED EMPLOYMENT                                                                                               2
2.18     DISABILITY OR DISABLED                                                                                           2
2.19     EFFECTIVE DATE                                                                                                   2
2.20     ELIGIBLE COMPENSATION                                                                                            3
2.21     EMPLOYEE                                                                                                         3
2.22     EMPLOYER                                                                                                         3
2.23     EMPLOYER FORFEITURE ACCOUNT                                                                                      3
2.24     EMPLOYER MATCHED CONTRIBUTIONS                                                                                   3
2.25     EMPLOYER SDRP CONTRIBUTIONS                                                                                      3
2.26     EMPLOYMENT                                                                                                       3
2.27     ENTRY DATE                                                                                                       3
2.28     ERISA                                                                                                            3
2.29     EXCESS ADP CONTRIBUTIONS                                                                                         3
2.30     EXCESS AGGREGATE CONTRIBUTIONS                                                                                   3
2.31     EXCESS DEFERRAL                                                                                                  3
2.32     FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION ACCOUNT                                                                3
2.33     FORMER PARTICIPANT                                                                                               3
2.34     FORMER PAYSOP ACCOUNT                                                                                            3
2.35     FUND                                                                                                             3
2.36     HARDSHIP                                                                                                         3
2.37     HIGHLY COMPENSATED EMPLOYEE                                                                                      4
2.38     INACTIVE LTSP PARTICIPANT                                                                                        4
2.39     INACTIVE SDRP PARTICIPANT                                                                                        4
2.40     INVESTMENT FUNDS                                                                                                 4
</TABLE>

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<TABLE>
<S>                                                                                                                     <C>
2.41     MATERNITY OR PATERNITY ABSENCE                                                                                   5
2.42     MERGER                                                                                                           5
2.43     NON-HIGHLY COMPENSATED EMPLOYEE                                                                                  5
2.44     NORMAL RETIREMENT AGE                                                                                            5
2.45     NORMAL RETIREMENT DATE                                                                                           5
2.46     PARTICIPANT                                                                                                      5
2.47     PARTNERSHIP SHARE                                                                                                5
2.48     PAYROLL DEDUCTION AGREEMENT                                                                                      5
2.49     PLAN                                                                                                             5
2.50     PLAN YEAR                                                                                                        5
2.51     POST-TAX CONTRIBUTIONS                                                                                           5
2.52     PRE-TAX CONTRIBUTIONS                                                                                            5
2.53     QUALIFIED DOMESTIC RELATIONS ORDER (QDRO)                                                                        5
2.54     RETIREMENT                                                                                                       5
2.55     SECTION                                                                                                          5
2.56     SERVICE, HOUR OF SERVICE and YEAR OF SERVICE                                                                     5
2.57     SPOUSE                                                                                                           5
2.58     STOCK                                                                                                            5
2.59     TERMINATION OF EMPLOYMENT                                                                                        5
2.60     TRUST                                                                                                            5
2.61     TRUST AGREEMENT                                                                                                  6
2.62     TRUSTEE                                                                                                          6
2.63     VALUATION DATE                                                                                                   6

                                                         ARTICLE 3
                                                         ---------
                                                       PARTICIPATION
                                                       -------------

3.1      ELIGIBILITY FOR PARTICIPATION                                                                                    6
3.2      COMMENCEMENT OF PARTICIPATION                                                                                    6
3.3      TRANSFERS OF EMPLOYMENT                                                                                          6
3.4      SUSPENSION OF CONTRIBUTIONS                                                                                      7
3.5      FORMER PARTICIPANTS AND RE-PARTICIPATION                                                                         7

                                                         ARTICLE 4
                                                         ---------
                                                DEPOSITS AND CONTRIBUTIONS
                                                --------------------------

4.1      PRE-TAX CONTRIBUTIONS                                                                                            7
4.2      POST-TAX CONTRIBUTIONS                                                                                           7
4.3      EMPLOYER MATCHED CONTRIBUTIONS                                                                                   7
4.3A     SDRP CONTRIBUTIONS                                                                                               8
4.4      CHANGE IN AMOUNT OF CONTRIBUTIONS                                                                                8
4.5      SUSPENSION OF CONTRIBUTIONS                                                                                      8
4.6      REMITTANCE OF CONTRIBUTIONS                                                                                      9
4.7      RETURN OF CONTRIBUTIONS                                                                                          9

                                                       ARTICLE 5
                                                       ---------
                                                 MAXIMUM CONTRIBUTIONS
                                                 ---------------------

5.1      LIMITATIONS ON PRE-TAX CONTRIBUTIONS                                                                             9
5.2      LIMITATIONS ON POST-TAX CONTRIBUTIONS AND EMPLOYER MATCHED CONTRIBUTIONS                                        12
5.3      PROCEDURE IF MULTIPLE USE LIMITATION IS EXCEEDED                                                                15
</TABLE>

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                                                         ARTICLE 6
                                                         ---------
                                                         ACCOUNTS
                                                         --------
<S>                                                                                                                      <C>
6.1      ACCOUNTS                                                                                                        15
6.2      ACCOUNTS REPRESENT UNDIVIDED INTERESTS                                                                          16
6.3      ACCOUNT VALUES                                                                                                  16
6.4      VALUATION OF INVESTMENT FUNDS                                                                                   16
6.5      ALLOCATION OF NET GAIN OR LOSS OF INVESTMENT FUNDS TO ACCOUNTS                                                  16
6.6      BASIS OF VALUATION                                                                                              16
6.7      ADMINISTRATION OF PRE-TAX CONTRIBUTION ACCOUNT                                                                  17
6.8      ADMINISTRATION OF POST-TAX CONTRIBUTION ACCOUNT                                                                 17
6.9      ADMINISTRATION OF EMPLOYER MATCHED CONTRIBUTION ACCOUNT                                                         17
6.9A     ADMINISTRATION OF EMPLOYER SDRP CONTRIBUTION ACCOUNT                                                            17
6.10     ADMINISTRATION OF FORMER PAYSOP ACCOUNT                                                                         17
6.11     ADMINISTRATION OF THE FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION ACCOUNT                                         17
6.12     ADMINISTRATION OF THE SUSPENSE ACCOUNT                                                                          17
6.13     ADMINISTRATION OF THE EMPLOYER FORFEITURE ACCOUNT                                                               18
6.14     CREDITING OF CONTRIBUTIONS                                                                                      18
6.15     EMPLOYEE CONTRIBUTION RECORDS                                                                                   18
6.16     UNIT ACCOUNTING                                                                                                 18

                                                         ARTICLE 7
                                                         ---------
                                              RETIREMENT, DISABILITY OR DEATH
                                              -------------------------------

7.1      BENEFIT AT RETIREMENT                                                                                           18
7.2      DISABILITY BENEFIT                                                                                              19
7.3      DEATH BENEFIT                                                                                                   19

                                                         ARTICLE 8
                                                         ---------
                                                 VESTING AND TERMINATIONS
                                                 ------------------------

8.1      VESTING                                                                                                         19
8.2      TERMINATION OF EMPLOYMENT                                                                                       20
8.3      FORFEITURES                                                                                                     20
8.4      REEMPLOYMENT                                                                                                    20

                                                         ARTICLE 9
                                                         ---------
                                                    PAYMENT OF BENEFITS
                                                    -------------------

9.1      APPLICATION FOR PAYMENT                                                                                         21
9.2      TIME OF PAYMENT                                                                                                 21
9.3      FORM OF PAYMENT                                                                                                 22
9.4      DETERMINATION OF VALUE OF PAYMENT                                                                               22
9.5      CLAIMS PROCEDURE                                                                                                22
9.6      FACILITY OF PAYMENT                                                                                             23

                                                        ARTICLE 10
                                                        ----------
                                          WITHDRAWALS AND LOANS DURING EMPLOYMENT
                                          ---------------------------------------

10.1     IN-SERVICE WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT                                                        23
10.2     IN-SERVICE WITHDRAWALS FROM POST-TAX CONTRIBUTION ACCOUNT                                                       24
10.3     IN-SERVICE WITHDRAWALS FROM EMPLOYER MATCHED CONTRIBUTION ACCOUNT                                               24
10.4     NO WITHDRAWALS AVAILABLE FROM OTHER ACCOUNTS                                                                    24
10.5     PAYMENT OF WITHDRAWALS                                                                                          25
10.6     LOANS TO PARTICIPANTS                                                                                           25

</TABLE>

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                                                        ARTICLE 11
                                                        ----------
                                                          SERVICE
                                                          -------
<S>                                                                                                                      <C>
11.1     SERVICE                                                                                                         27
11.2     PRIOR SERVICE REINSTATED                                                                                        28
11.3     YEAR OF SERVICE                                                                                                 28

                                                        ARTICLE 12
                                                        ----------
                                             PLAN OPERATION AND ADMINISTRATION
                                             ---------------------------------

12.1     POWERS OF ADMINISTRATOR                                                                                         29
12.2     NONDISCRIMINATORY EXERCISE OF AUTHORITY                                                                         29
12.3     RELIANCE ON TABLES, ETC.                                                                                        29
12.4     NAMED FIDUCIARY                                                                                                 29
12.5     INDEMNIFICATION                                                                                                 29
12.6     NOTICES TO ADMINISTRATOR                                                                                        30

                                                        ARTICLE 13
                                                        ----------
                                           AMENDMENT AND TERMINATION OF THE PLAN
                                           -------------------------------------

13.1     AMENDMENT                                                                                                       30
13.2     TERMINATION                                                                                                     31
13.3     LIQUIDATION OF THE FUND                                                                                         31

                                                        ARTICLE 14
                                                        ----------
                                           ADOPTION OF THE PLAN BY OTHER EMPLOYERS
                                           ---------------------------------------

14.1     ADOPTION WITH APPROVAL                                                                                          31
14.2     PROCEDURE FOR ADOPTION                                                                                          31
14.3     EFFECT OF ADOPTION                                                                                              31
14.4     TERMINATION OF ADOPTION                                                                                         32

                                                        ARTICLE 15
                                                        ----------
                                              LIMITATIONS OF ANNUAL ADDITIONS
                                              -------------------------------

15.1     GENERAL LIMITATIONS                                                                                             32
15.2     EXCESS AMOUNT                                                                                                   32
15.3     AGGREGATION OF PLANS OF THE EMPLOYER                                                                            33
15.4     DEFINITIONS                                                                                                     33
15.5     TOP-HEAVY PLAN REQUIREMENTS                                                                                     34

                                                        ARTICLE 16
                                                        ----------
                                                INVESTMENT OF CONTRIBUTIONS
                                                ---------------------------

16.1     INVESTMENT FUNDS                                                                                                38
16.2     ADMINISTRATION OF COMPANY STOCK FUND                                                                            38
16.3     DEPOSIT OF CONTRIBUTIONS                                                                                        39
16.4     INVESTMENT ELECTIONS OF PARTICIPANTS                                                                            39
16.5     ELECTION TO TRANSFER INTEREST BETWEEN INVESTMENT FUNDS                                                          39
16.6     OTHER PROVISIONS CONCERNING INVESTMENT ELECTIONS AND TRANSFERS                                                  39
16.7     FORMER PAYSOP ACCOUNTS                                                                                          40
</TABLE>

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                                                        ARTICLE 17
                                                        ----------
                                                 MISCELLANEOUS PROVISIONS
                                                 ------------------------
<S>                                                                                                                      <C>
17.1     HEADINGS                                                                                                        40
17.2     PLAN NOT CONTRACT OF EMPLOYMENT                                                                                 40
17.3     VESTED RIGHTS                                                                                                   40
17.4     SEVERABILITY                                                                                                    40
17.5     GENERAL UNDERTAKING                                                                                             40
17.6     ACTION BY COMPANY                                                                                               40
17.7     NO RESPONSIBILITY FOR ACTS OF AN INSURER                                                                        40
17.8     SPENDTHRIFT                                                                                                     40
17.9     NUMBER AND GENDER                                                                                               41
17.10    GOVERNING LAW                                                                                                   41
17.11    MERGER, CONSOLIDATION, AND TRANSFER OF ASSETS                                                                   41
17.12    RECEIPT OF ASSETS FROM QUALIFIED PLANS                                                                          41
17.13    INTERPRETATION OF PLAN                                                                                          41
17.14    SATISFACTION OF CLAIMS                                                                                          42
17.15    SERVICE OF PROCESS                                                                                              42
17.16    WARRANTIES                                                                                                      42
17.17    LEASED EMPLOYEES                                                                                                42
17.18    DIRECT ROLLOVER DISTRIBUTIONS                                                                                   42
17.19    PLAN ADDENDA                                                                                                    43
17.20    ADJUSTMENT                                                                                                      43
17.21    USERRA MODEL AMENDMENT                                                                                          43
17.22    ELECTRONIC COMMUNICATIONS                                                                                       43
</TABLE>

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                                    ARTICLE 1
                                    ---------
                                  INTRODUCTION
                                  ------------

1.1       NAME OF PLAN

          This Plan shall be known as The Progressive Retirement Security
          Program. Prior to July 1, 1994, this Plan was known as The Progressive
          Corporation Long-Term Savings Plan.

1.2       EFFECTIVE DATE

          Except as otherwise expressly provided herein, this Plan, as amended
          and restated, shall be effective as of April 1, 1999.

1.3       TYPE AND PURPOSE OF PLAN

          Pursuant to Section 401(a)(27) of the Code, the Plan is hereby
          designated as a profit-sharing plan. The primary purpose of the Plan
          is to encourage Employee savings, to facilitate Employee Stock
          ownership and to provide benefits upon a Participant's or Former
          Participant's Retirement, death, Disability or Termination of
          Employment.

                                    ARTICLE 2
                                    ---------
                                   DEFINITIONS
                                   -----------

The following terms, when used herein with initial capital letters, shall have
the meaning given to them in this Article 2.

2.1       ACCOUNT shall mean one of several records maintained pursuant to
          Section 6 to record a Participant's, Former Participant's, or
          Beneficiary's interest in the Investment Funds.

2.2       ACTIVE LTSP PARTICIPANT shall have the meaning set forth in Article 3.

2.3       ACTIVE SDRP PARTICIPANT shall have the meaning set forth in Article 3.

2.4       ADMINISTRATOR, which is the administrator for purposes of ERISA and
          the plan administrator for purposes of the Code, shall mean
          Progressive Casualty Insurance Company, an Ohio corporation, or its
          successors.

2.5       AFFILIATED COMPANY shall mean any corporation, trade or business if it
          and the Company are members of a controlled group of corporations, or
          are under common control, or are members of an affiliated service
          group, within the meaning of Code Sections 414(b), 414(c), and 414(m),
          respectively; provided, however, that for purposes of Code Section
          415, the definitions prescribed by Code Sections 414(b) and 414(c)
          shall be modified as provided by Code Section 415(h) by substituting
          "more than 50%" common control for "at least 80%" common control. This
          term shall also include any entity required to be treated as an
          Affiliated Company under Code Section 414(o).

2.6       ANNIVERSARY SHARES shall mean such shares of Stock, if any, as may be
          awarded on or before February 28, 1992 to Employees by the Company
          upon completion of five (5) year increments of Years of Service.

2.7       ARTICLE shall mean an Article of this Plan.

2.8       BENEFICIARY as to a Participant or Former Participant who is married
          at the time of his death, shall mean his Spouse or such other
          person(s) as he has designated with the consent of his Spouse, and, as
          to a Participant or Former Participant who is not married at the time
          of his death, shall be such person(s) as he has designated. A
          Participant or Former Participant may change his Beneficiary
          designation at any time, provided that no such change shall be
          effective as to any married Participant or Former Participant who
          predeceases his Spouse, unless the Spouse has consented to the change.
          Each consent of a Spouse shall be irrevocable, but shall be effective
          only with respect to the particular Beneficiary designation to which
          it pertains. All Beneficiary designations (including changes) and
          consents of a

                                       1
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          Spouse shall be made in writing on such forms as the Administrator
          shall prescribe, and shall become effective only when received by the
          Administrator; provided, however, that a Beneficiary designation
          (including a change) or a consent of a Spouse received by the
          Administrator after the designating Participant's death shall be
          disregarded.

          In the absence of a Beneficiary designation, or if the designated
          Beneficiary is no longer living or in existence at the time of the
          Participant's or Former Participant's death, all benefits due from the
          Plan upon the Participant's or Former Participant's death shall be
          paid to the Participant's or Former Participant's (i) Spouse, if the
          Participant or Former Participant was married at the time of his/her
          death or (ii) estate, if the Participant or Former Participant was not
          married at the time of his/her death. Notwithstanding the foregoing,
          consent of a Spouse shall not be required if the Participant or Former
          Participant and his/her Spouse are legally separated or the Spouse
          cannot be located.

2.9       BOARD shall mean the Board of Directors of the Company.

2.9A      BROKERAGE ACCOUNT as to each Participant shall mean a Participant's
          interest in an Investment Fund consisting of Participant-managed
          brokerage accounts.

2.10      CODE OR IRC shall mean the Internal Revenue Code of 1986, as the same
          may be amended from time to time.

2.11      COMPANY shall mean The Progressive Corporation or its successor(s).

2.12      COMPANY STOCK FUND shall mean an Investment Fund consisting
          principally of Stock.

2.13      COMPENSATION of a Participant or Former Participant for a Plan Year
          shall mean all amounts that are received by him/her during such Plan
          Year from the Employer that are reported as wages on IRS Form W-2 for
          such Plan Year, plus (i) the amount contributed by the Employer to the
          Trustee pursuant to a Compensation Deferral Agreement reduced by
          amounts required by Section 5.1(c), and (ii) amounts of pay reduced in
          accordance with an arrangement established by the Employer which
          qualifies under Section 125 of the Code. However, the maximum annual
          dollar amount that will be recognized as Compensation is $150,000 in
          all cases. Such $150,000 limit shall be automatically adjusted in
          accordance with regulations under Section 401(a)(17) of the Code. If,
          as a result of the application of the rules of Section 414(q)(6) of
          the Code, the adjusted $150,000 limit is exceeded, then the limit
          shall be prorated among the affected individuals in proportion to each
          such individual's Compensation, as determined under this Section 2.13
          prior to the application of the limit. In applying the rules of
          Section 414(q)(6) of the Code, the term "family" shall include only
          the spouse of the Participant and any lineal descendants of the
          Participant who have not attained age 19 before the close of the year.

2.14      COMPENSATION DEFERRAL AGREEMENT shall mean an arrangement pursuant to
          which the Employee agrees to reduce his Eligible Compensation,
          pursuant to Section 4.1 hereof, and the Employer agrees to contribute
          to the Plan the amount equal to the amount reduced as a Pre-Tax
          Contribution. The Compensation Deferral Agreement shall also serve to
          provide such other information about the Participant as the
          Administrator shall require.

2.15      CONTRIBUTIONS shall mean a Participant's Pre-Tax Contributions and
          Post-Tax Contributions.

2.16      COVERED EMPLOYEE shall mean an Employee of the Employer, earning
          Eligible Compensation, excluding (i) any such Employee whose terms and
          conditions of Employment are negotiated with the Employer by or
          through a certified or recognized collective bargaining organization
          unless such negotiation provides for his/her inclusion, (ii) those
          Employees classified by the Employer as temporary under its personnel
          policies and procedures, and (iii), effective January 1, 1999,
          Employees who are not residents of the United States. Notwithstanding
          the provisions of clause (ii) above, an Employee who has been
          classified by the Employer as temporary under its personnel policies
          and procedures and who performs at least one thousand (1,000) Hours of
          Service during any twelve (12) consecutive month period beginning on
          his/her date of hire (or any anniversary thereof) shall be considered
          a Covered Employee effective as of the first day following such twelve
          (12) consecutive month period.

                                       2
<PAGE>   10

2.17      COVERED EMPLOYMENT shall mean the period or periods during which an
          Employee is a Covered Employee.

2.18      DISABILITY OR DISABLED shall mean that a Participant shall be totally
          disabled (as defined in the Long-Term Disability Plan coverage
          provided by the Company, whether or not such Participant is eligible
          for such coverage) for a period of twelve (12) consecutive calendar
          months beginning on the first day of disability absence.

2.19      EFFECTIVE DATE shall mean July 1, 1994.

2.20      ELIGIBLE COMPENSATION of a Participant shall mean his base salary,
          straight time hourly wages, overtime pay, vacation pay, holiday pay,
          jury duty pay, taxable sick pay, military pay, funeral pay, lump sum
          salary adjustments and retroactive payments of any of the foregoing
          items pursuant to any back pay award (but only to the extent such
          retroactive payments are actually paid in periods during which a
          Compensation Deferral Agreement is in effect). However, the maximum
          annual dollar amount that will be recognized as Eligible Compensation
          is $150,000 per year in all cases. Such $150,000 limit shall be
          automatically adjusted in accordance with regulations under Section
          401(a)(17) of the Code.

2.21      EMPLOYEE shall mean any person who renders services to an Employer or
          Affiliated Company as a common law employee (including any common law
          employee who is employed as an officer).

2.22      EMPLOYER shall mean the Company. The term Employer shall also include
          any Affiliated Company which adopts the Plan pursuant to Article 14,
          but only for such period as such company continues in its adoption of
          the Plan.

2.23      EMPLOYER FORFEITURE ACCOUNT shall mean the Account maintained and
          administered in accordance with Section 6.13 hereof.

2.24      EMPLOYER MATCHED CONTRIBUTIONS shall mean those amounts contributed by
          the Employer pursuant to Section 4.3 hereof.

2.25      EMPLOYER SDRP CONTRIBUTIONS shall mean those amounts contributed by
          the Employer pursuant to Section 4.3A.

2.26      EMPLOYMENT shall mean the period or periods during which an individual
          is an Employee.

2.27      ENTRY DATE shall mean the first day of the pay period coincident with
          or immediately following the date on which a Participant satisfies the
          requirements for participation contained in Section 3.1(b).

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

2.29      EXCESS ADP CONTRIBUTIONS shall mean the amount of the Pre-Tax
          Contributions of the Highly Compensated Employees for the Plan Year
          above the maximum amount permitted under Section 5.1.

2.30      EXCESS AGGREGATE CONTRIBUTIONS shall mean the amount of the Post-Tax
          Contributions and Employer Matching Contributions of the Highly
          Compensated Employees for the Plan Year above the maximum amount of
          such Post-Tax Contributions and Employer Matching Contributions
          permitted under Section 5.2(d).

2.31      EXCESS DEFERRAL shall mean a Pre-Tax Contribution in excess of the
          permitted maximum deferral amount set forth in Section 5.1(d), or an
          amount designated as such by the Employee where the excess is
          generated by aggregation of pre-tax contributions to plans other than
          this Plan.

2.32      FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION ACCOUNT, as to each
          Participant shall mean the Account derived from the Employer
          Supplemental Contributions (within the meaning of the Plan as
          previously in effect), if any, made in respect of the Participant
          during periods that the Plan provided for such contributions.

                                       3
<PAGE>   11

2.33      FORMER PARTICIPANT shall mean a Participant who has terminated
          Employment but who has one or more Accounts remaining in the Plan.

2.34      FORMER PAYSOP ACCOUNT shall mean the Account described in Section
          6.10.

2.35      FUND shall mean the assets held by the Trustee in accordance with the
          provisions of the Plan and the Trust Agreement.

2.36      HARDSHIP shall mean an immediate and heavy financial need of a
          Participant arising from any of the following items:

          (a)      Expenses for medical care described in Code Section 213(d)
                   previously incurred by the Participant or his/her Spouse or
                   dependents (as defined in Code Section 152).

          (b)      Purchase (excluding mortgage payments) of a principal
                   residence for the Participant.

          (c)      Payment of tuition, related educational fees, and room and
                   board expenses, for the next twelve months of post-secondary
                   education for the Participant or his/her Spouse or
                   dependents.

          (d)      Prevention of the eviction of the Participant from his
                   principal residence or the foreclosure on the mortgage of
                   the Participant's principal residence.

2.37     HIGHLY COMPENSATED EMPLOYEE shall mean any Employee or former Employee
         who, during the Plan Year or the preceding Plan Year:

         (a)       was at any time a five percent owner; or

         (b)       received annual Compensation from the Employer in excess of
                   $80,000, as adjusted for increases in the cost of living;

         In determining which Employees are Highly Compensated Employees, an
         Employee not described in paragraph [b] above for the preceding year
         will not be treated as falling under the category described in
         paragraph [b] for the current year. The Employer may adopt any
         reasonable, nondiscriminatory tie-breaking or rounding rules necessary
         to determine which Employees are Highly Compensated Employees, provided
         that such rules are uniformly and consistently applied. In determining
         an individual's Compensation under this section, Compensation from each
         Employer required to be aggregated under Code Sections 414(b), (c), (m)
         and (o) will be taken into account. For purposes of this section, the
         determination of Compensation will be made without regard to Code
         Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of Employer
         contributions made pursuant to a salary reduction agreement, without
         regard to Code Section 403(b).

         A former Employee will be treated as a Highly Compensated Employee if
         such Employee separated from service (or was deemed to have separated)
         prior to the Plan Year, performs no service for the Employer during the
         Plan Year, and was a Highly Compensated Employee for either the
         separation year or any Plan Year ending on or after the Employee's 55th
         birthday.

         The determination of who is a Highly Compensated Employee will be made
         in accordance with Code Section 414(q).

2.38     INACTIVE LTSP PARTICIPANT shall have the meaning set forth in Article
         3.

2.39     INACTIVE SDRP PARTICIPANT shall have the meaning set forth in Article
         3.

2.40     INVESTMENT FUNDS shall mean the funds established from time to time by
         the Trustee pursuant to Section 16.1.

2.41     MATERNITY OR PATERNITY ABSENCE shall mean an absence from work by an
         Employee for any period

         (a)       By reason of pregnancy of the Employee,

                                       4
<PAGE>   12

         (b)       By reason of the birth of a child of the Employee,

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

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

         An absence will not be considered a "Maternity or Paternity Absence"
         unless the Employee provides the Administrator with information within
         5 working days demonstrating that the absence is for one of the four
         permitted reasons outlined above.

         Nothing in this Plan shall require the Employer to grant a paid or
         unpaid leave of absence to any Employee.

2.42     MERGER shall mean the merger of The Progressive Corporation
         Supplemental Retirement Plan into this Plan, effective July 1, 1994.

2.43     NON-HIGHLY COMPENSATED EMPLOYEE means an Employee not considered a
         Highly Compensated Employee under Section 2.37.

2.44     NORMAL RETIREMENT AGE shall mean attainment by the Participant of age
         65.

2.45     NORMAL RETIREMENT DATE shall mean the first of the month following the
         date on which a Participant attains Normal Retirement Age.

2.46     PARTICIPANT shall mean a Covered Employee who has satisfied and
         continues to satisfy the requirements set forth in Section 3.1(a)
         and/or 3.1(b) for participation and shall include an Active LTSP
         Participant, Active SDRP Participant, Inactive LTSP Participant and
         Inactive SDRP Participant.

2.47     PARTNERSHIP SHARE shall mean the share of Stock awarded on or before
         October 30, 1991 to all Employees upon completion of 30 calendar days
         from his or her date of employment.

2.48     PAYROLL DEDUCTION AGREEMENT shall mean an arrangement pursuant to which
         an Employee agrees, pursuant to Section 4.2 hereof, to have a
         stipulated percentage of his Eligible Compensation deducted from such
         Eligible Compensation and deposited in the Fund as a Post-Tax
         Contribution. The Payroll Deduction Agreement shall also serve to
         provide such other information about the Participant as the
         Administrator shall require.

2.49     PLAN shall mean The Progressive Retirement Security Program, as set
         forth in this document, as the same may be amended or restated from
         time to time hereafter.

2.50     PLAN YEAR shall mean a calendar year.

2.51     POST-TAX CONTRIBUTIONS shall mean those amounts contributed by the
         Participant pursuant to a Payroll Deduction Agreement and to Section
         4.2 hereof. These may have been formerly known as Optional Employee
         Contributions, but hereafter shall be Post-Tax Contributions.

2.52     PRE-TAX CONTRIBUTIONS shall mean those amounts which the Employer is
         obligated to contribute to the Plan pursuant to a Compensation Deferral
         Agreement and to Section 4.1 hereof. These may have been formerly known
         as Deferred Income Contributions, but hereafter shall be Pre-Tax
         Contributions.

2.53     QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) shall mean any judgment,
         decree or order as defined in Section 414(p) of the Code.

2.54     RETIREMENT shall mean a Participant's or Former Participant's
         Termination of Employment on or after his/her Normal Retirement Date.

2.55     SECTION shall mean a Section of this Plan.

                                       5
<PAGE>   13

2.56     SERVICE, HOUR OF SERVICE and YEAR OF SERVICE for purposes of this Plan
         are defined in Article 11 hereof, except that, for purposes of Article
         3 Year of Service shall mean any 12 consecutive month period beginning
         on the date an Employee first performs on Hour of Service (or any
         anniversary thereof) during which the Employee completes at least 1,000
         Hours of Service. However, an Employee who is exempt under the
         provisions of the Fair Labor Standards Act shall be credited with
         forty-five (45) hours of service for each week that such Employee would
         have earned at least one (1) hour of service as defined in
         subparagraphs (a)(i) through (iii) of Section 11.1 during such week.

2.57     SPOUSE shall mean the legal spouse of a Participant or Former
         Participant on the date of his/her death.

2.58     STOCK means the Common Stock, $1.00 par value, of the Company.

2.59     TERMINATION OF EMPLOYMENT shall mean the earlier of (i) the last day
         worked after which an Employee quits, retires, is discharged, or dies,
         or (ii) the first anniversary of the first date of continuous absence
         from employment for any other reason.

2.60     TRUST shall mean the Trust created and maintained by the Trust
         Agreement and known as The Progressive Retirement Security Program
         Trust.

2.61     TRUST AGREEMENT shall mean the agreement of trust between the Company
         and Trustee executed in furtherance of the Plan, as the same may be
         amended from time to time hereafter.

2.62     TRUSTEE shall mean the person (or persons), bank or trust company
         selected from time to time by the Company to serve as Trustee (or
         co-Trustees) under the Plan.

2.63     VALUATION DATE shall mean such date or dates as shall be established
         from time to time by the Administrator for the purpose of valuing the
         Investment Funds and adjusting Accounts hereunder, which dates need not
         be uniform with respect to each Investment Fund or Account; provided,
         however, that each Investment Fund shall be valued, and each Account
         shall be adjusted no less often than quarterly.

                                    ARTICLE 3
                                    ---------
                                  PARTICIPATION
                                  -------------

3.1      ELIGIBILITY FOR PARTICIPATION

         (a)       Each Covered Employee shall be eligible to become an LTSP
                   Participant in the Plan (pursuant to Section 3.2), after the
                   later of (i) thirty (30) calendar days from his/her date of
                   employment or (ii) the date he/she becomes a Covered
                   Employee.

         (b)       Each Covered Employee shall be eligible to become an SDRP
                   Participant in the Plan as of the Entry Date coincident with
                   or immediately following the date such Covered Employee both
                   attains age twenty-one (21) and has completed a Year of
                   Service, provided that such Covered Employee is a Covered
                   Employee on such Entry Date.

3.2      COMMENCEMENT OF PARTICIPATION

         (a)       A Covered Employee who meets the eligibility provisions of
                   Section 3.1(a) hereof may become an Active LTSP Participant
                   by filing a Compensation Deferral Agreement or a Payroll
                   Deduction Agreement with the Administrator and providing such
                   other information as the Administrator shall require. The
                   Compensation Deferral Agreement will stipulate the amount of
                   the Participant's Pre-Tax Contributions. The Payroll
                   Deduction Agreement will stipulate the amount of the
                   Participant's Post-Tax Contributions. Such Participant's
                   Pre-Tax Contributions and Post-Tax Contributions shall be
                   effective as of the first payroll period next following
                   receipt and processing of the Participant's Compensation
                   Deferral Agreement or Payroll Deduction Agreement (as
                   applicable) by the Administrator.

         (b)       A covered Employee who meets the eligibility provisions of
                   Section 3.1(b) shall automatically become an Active SDRP
                   Participant on the Entry Date referred to in Section 3.1(b).

                                       6
<PAGE>   14

3.3      TRANSFERS OF EMPLOYMENT

         (a)       An Active LTSP Participant who transfers from Covered
                   Employment to Employment other than Covered Employment shall
                   become an Inactive LTSP Participant and his/her
                   Contributions, if applicable, shall be suspended in
                   accordance with Section 4.5 hereof.

         (b)       An Active SDRP Participant who transfers from Covered
                   Employment to Employment other than Covered Employment shall
                   become an Inactive SDRP Participant and his/her SDRP
                   Contributions shall cease automatically.

         (c)       An Inactive LTSP Participant who transfers from Employment
                   other than Covered Employment to Covered Employment will
                   become an Active LTSP Participant on the date such Employee
                   resumes Covered Employment. Should such Active LTSP
                   Participant elect to make Pre-Tax Contributions or Post-Tax
                   Contributions hereunder, such Contributions will be effective
                   with the first payroll period next following receipt and
                   processing of the Active Participant's Compensation Deferral
                   Agreement or Payroll Deduction Agreement (as applicable) by
                   the Administrator.

         (d)       An Inactive SDRP Participant who transfers from Employment
                   other than Covered Employment to Covered Employment will
                   become an Active SDRP Participant on the date such Employee
                   resumes Covered Employment.

3.4      SUSPENSION OF CONTRIBUTIONS

         An Active LTSP Participant whose Contributions are suspended pursuant
         to Section 4.5 at his/her option shall continue to be considered an
         Inactive LTSP Participant.

3.5      FORMER PARTICIPANTS AND RE-PARTICIPATION

         (a)       Termination of Employment shall cause an Active Participant
                   or Inactive Participant to become and remain a Former
                   Participant until such time he/she has no remaining Accounts
                   under the Plan.

         (b)       A Former Participant who returns to Employment other than
                   Covered Employment shall become an Inactive Participant.

         (c)       Any individual who ceases to be an Active LTSP Participant or
                   Inactive LTSP Participant (including Former Participants)
                   because of a Termination of Employment and who subsequently
                   returns to Covered Employment will become an Active LTSP
                   Participant on the date such Employee resumes Covered
                   Employment. Should such Active LTSP Participant elect to make
                   Pre-Tax Contributions or Post-Tax Contributions hereunder,
                   such Contributions will be effective with the first payroll
                   period next following receipt and processing of the Active
                   LTSP Participant's Compensation Deferral Agreement or Payroll
                   Deduction Agreement (as applicable) by the Administrator.

         (d)       Any individual who ceases to be an Active SDRP Participant or
                   Inactive SDRP Participant (including Former Participants)
                   because of a Termination of Employment and who subsequently
                   returns to Covered Employment will become an Active SDRP
                   Participant on the date such Employee resumes Covered
                   Employment.

                                    ARTICLE 4
                                    ---------
                           DEPOSITS AND CONTRIBUTIONS
                           --------------------------

4.1      PRE-TAX CONTRIBUTIONS

         Each Active LTSP Participant may, pursuant to a Compensation Deferral
         Agreement, have the Employer contribute on his or her behalf an amount
         to the Plan known as Pre-Tax Contributions (as defined in Section 2.52)
         of not less than one percent (1%) or more than eighteen percent (18%)
         (in any percentage

                                       7
<PAGE>   15

         to one tenth of a percent) of his/her Eligible Compensation subject to
         the limitations of Sections 5.1 and Article 15. The percentage
         contributed under this Section 4.1, when combined with the percentage
         contributed under Section 4.2, cannot exceed eighteen percent (18%) of
         the Active LTSP Participant's Eligible Compensation in the aggregate.

4.2      POST-TAX CONTRIBUTIONS

         Each Active LTSP Participant may elect, pursuant to a Payroll Deduction
         Agreement, to contribute an amount of not less than one percent (1%) or
         more than eighteen percent (18%) (in any percentage to one tenth of a
         percent) of his/her Eligible Compensation, subject to limitations of
         Section 5.2 and Article 15. The percentage contributed under this
         Section 4.2, when combined with the percentage contributed under
         Section 4.1, cannot exceed eighteen percent (18%) of the Active LTSP
         Participant's Eligible Compensation in the aggregate.

4.3      EMPLOYER MATCHED CONTRIBUTIONS

         The Employer shall contribute in respect of each Active LTSP
         Participant Employer Matched Contributions equal to one hundred percent
         (100%) on the first one percent and fifty percent (50%) on up to the
         next four percent of such Active LTSP Participant's Pre-Tax
         Contributions and/or Post-Tax Contributions. For purposes of
         determining the amount of Employer Matched Contributions to be
         allocated to each Active LTSP Participant for a particular payroll
         period, only Pre-Tax Contributions and Post-Tax Contributions
         attributable to such payroll period, both of which in the aggregate do
         not exceed five percent (5%) of Eligible Compensation for such payroll
         period, will be taken into consideration. The Employer Matched
         Contribution will first be attributable to Pre-Tax Contributions, if
         any, and then to Post-Tax Contributions, if any. The Employer, with the
         approval of its Board of Directors, may increase or decrease the amount
         of Employer Matched Contributions at any time and from time to time for
         any reason.

4.3A     SDRP CONTRIBUTIONS

         Each pay period the Employer shall contribute a percentage of the FICA
         Taxable Compensation paid to each Active SDRP Participant during such
         pay period determined in accordance with the following table, based on
         such Active SDRP Participant's Years of Service, as defined in Section
         2.56, as of the first day of such pay period:

                                                             CONTRIBUTION
                      YEARS OF SERVICE                         PERCENTAGE
                      ----------------                         ----------

                   Less than 5 years                               1%

                   At least 5 years but
                   less than 10 years                              2%

                   At least 10 years but
                   less than 15 years                              3%

                   At least 15 years but
                   less than 20 years                              4%

                   20 years or more                                5%

          Each Employer SDRP Contribution shall be promptly allocated to such
          Active SDRP Participant's Account as soon as practicable after it is
          made. For purposes of this Section, an Active SDRP Participant's "FICA
          Taxable Compensation" for a given Plan Year shall consist of that
          portion of his or her Eligible Compensation which is not in excess of
          the dollar amount specified as the maximum contribution and benefit
          base applicable to old-age, survivors, and disability insurance under
          Title II of the Social Security Act, as in effect on the first day of
          such Plan Year (the "Taxable Wage Base").

                                       8
<PAGE>   16

4.4       CHANGE IN AMOUNT OF CONTRIBUTIONS

          (a)      The percentage of Eligible Compensation designated by a
                   Participant as his/her Pre-Tax Contributions and/or Post-Tax
                   Contributions shall continue in effect, notwithstanding any
                   change in his/her Eligible Compensation, until he/she elects
                   to change such percentage.

          (b)      An Active LTSP Participant may elect to change his/her
                   percentage of Pre-Tax Contributions and/or Post-Tax
                   Contributions by filing an election with the Administrator in
                   such manner as the Administrator shall specify. Any such
                   change shall become effective with the first payroll period
                   next following receipt and processing of the Participant's
                   revised Compensation Deferral Agreement or Payroll Deduction
                   Agreement (as applicable) by the Administrator.

4.5       SUSPENSION OF CONTRIBUTIONS

          (a)      An Active LTSP Participant may elect to suspend all of
                   his/her Pre-Tax Contributions and/or Post Tax Contributions
                   by filing a written election with the Administrator on such
                   forms as the Administrator shall specify. Such suspension
                   shall become effective with the first payroll period next
                   following receipt and processing of the suspension request by
                   the Administrator.

          (b)      The Pre-Tax and Post-Tax Contributions of a Participant who
                   becomes an Inactive LTSP Participant pursuant to Section
                   3.3(a) (Transfers of Employment) shall be suspended
                   automatically beginning with the first payroll period
                   thereafter, and may not be resumed until he/she becomes an
                   Active LTSP Participant pursuant to Article 3.

          (c)      All suspensions of Pre-Tax and Post-Tax Contributions shall
                   be indefinite in duration and a Participant shall not be
                   permitted to make up such suspended Contributions.

          (d)      An Active LTSP Participant who has elected to suspend all of
                   his/her Pre-Tax Contributions and/or Post-Tax Contributions
                   shall be eligible to resume making such Contributions as of
                   the first payroll period next following receipt and
                   processing of a new Compensation Deferral Agreement or
                   Payroll Deduction Agreement (as applicable) by the
                   Administrator.

4.6       REMITTANCE OF CONTRIBUTIONS

          It is the Company's intent to remit Contributions to the Trustee as
          soon as practical after the close of the payroll period for which they
          are attributable. In no event, however, will Contributions be remitted
          to the Trustee later than ninety (90) days following the date they are
          deducted from the Participant's Eligible Compensation. In no event
          will Employer Matched Contributions and Employer SDRP Contributions be
          remitted to the Trustee later than ninety (90) days following the
          close of the month in which they are granted.

4.7       RETURN OF CONTRIBUTIONS

          Except as provided in Section 15.2, in Section 6.13 regarding
          forfeitures, and in this Section 4.7, the assets of the Plan shall
          never revert to or be used by the Employer. Contributions made by the
          Employer to the Trust by reason of a mistake of fact may be returned
          to the Employer within one year after the payment of the contribution.
          Furthermore, contributions made by the Employer to the Trust are
          conditioned upon the deductibility of the contribution under Code
          Section 404 and, to the extent the deduction is disallowed, may be
          returned to the Employer within one year after disallowance of the
          deduction. Any amount returned to the Employer by reason of this
          Section 4.7 shall not include earnings attributable thereto and shall
          be reduced by any losses attributable thereto.

                                       9
<PAGE>   17

                                    ARTICLE 5
                                    ---------
                              MAXIMUM CONTRIBUTIONS
                              ---------------------

5.1       LIMITATIONS ON PRE-TAX CONTRIBUTIONS

          (a)      For purposes of determining the maximum Pre-Tax Contribution,
                   contributions by the Employer designated as Pre-Tax
                   Contributions shall be expressed as a percentage of
                   Compensation for each Participant and each Covered Employee
                   who is eligible to be, but who is not, a Participant.

          (b)      The Actual Deferral Percentage for each Participant and
                   Covered Employee for the Plan Year shall be determined in
                   accordance with Code Section 401(k) and the regulations
                   thereunder.

                   The Actual Deferral Percentage for eligible Highly
                   Compensated Employees for the Plan Year shall be the average
                   of the ratios of the eligible Highly Compensated Employees.
                   This will be compared to the Actual Deferral Percentage for
                   the Non-highly Compensated Employees for the Plan Year, which
                   will be the average of the ratios of the eligible Non-highly
                   Compensated Employees.

                   The Actual Deferral Percentage for any Plan Year for eligible
                   Highly Compensated Employees shall not exceed the greater of
                   either (i) or (ii) below:

                   (i)    One hundred and twenty-five percent (125%) of the
                          Actual Deferral Percentage of the eligible Non-highly
                          Compensated Employees, or

                   (ii)   The lesser of the amounts determined under (A) or (B)
                          following (or such other amount as may be prescribed
                          in applicable regulations under the Code to prevent
                          multiple use of the alternative limitation set forth
                          in this clause (ii)):

                            (A)    Two hundred percent (200%) of the Actual
                                   Deferral Percentage of eligible Non-highly
                                   Compensated Employees, or

                            (B)    The Actual Deferral Percentage of the
                                   eligible Non-highly Compensated Employees
                                   plus two percentage points (2%).

                   Notwithstanding any other provision of this Plan, the Pre-Tax
                   Contributions shall be limited to the extent necessary to
                   meet this test.

                   Effective for Plan Years beginning on or after January 1,
                   1999, the following provisions shall apply in lieu of the
                   preceding provisions of this Section 5.1(b): The Actual
                   Deferral Percentage for each Participant and Covered Employee
                   for the Plan Year shall be determined in accordance with Code
                   Section 401(k) and the regulations thereunder.

                   The Actual Deferral Percentage for eligible Highly
                   Compensated Employees for a Plan Year shall be the average of
                   the ratios of the eligible Highly Compensated Employees for
                   that Plan Year. This will be compared to the Actual Deferral
                   Percentage for the Non-highly Compensated Employees for the
                   prior Plan Year, which will be the average of the ratios of
                   the eligible Non-highly Compensated Employees for the prior
                   Plan Year.

                   The Actual Deferral Percentage for any Plan Year for eligible
                   Highly Compensated Employees shall not exceed the greater of
                   either (i) or (ii) below:

                   (i)    One hundred and twenty-five percent (125%) of the
                          Actual Deferral Percentage of the eligible Non-highly
                          Compensated Employees for the prior Plan Year, or

                   (ii)   The lesser of the amounts determined under (A) or (B)
                          following (or such other amount as may be prescribed
                          in applicable regulations under the Code to prevent
                          multiple use of the alternative limitation set forth
                          in this clause (ii)):

                                       10
<PAGE>   18

                            (A)    Two hundred percent (200%) of the Actual
                                   Deferral Percentage of eligible Non-highly
                                   Compensated Employees for the prior Plan
                                   Year, or

                            (B)    The Actual Deferral Percentage of the
                                   eligible Non-highly Compensated Employees for
                                   the prior Plan Year plus two percentage
                                   points (2%).

          Notwithstanding any other provision of this Plan, the Pre-Tax
          Contributions shall be limited to the extent necessary to meet this
          test.

          (c)      PROCEDURE TO LIMIT PRE-TAX CONTRIBUTIONS

                   (i)      PRIOR TO THE END OF THE PLAN YEAR

                            The Administrator may determine prior to the end of
                            the Plan Year whether there is a reasonable
                            expectation that the Actual Deferral Percentage
                            results satisfy the test contained in Section
                            5.1(b).

                            In the event that the test described in Section
                            5.1(b) will not be satisfied, the following
                            procedure will be followed:

                            (A)    The future Pre-Tax Contributions, previously
                                   authorized, for each Highly Compensated
                                   Employee whose Pre-Tax Contributions are at
                                   the highest dollar amount shall be reduced
                                   by a uniform amount, not to exceed one
                                   dollar ($1.00) such that the Actual Deferral
                                   Percentage for the Highly Compensated
                                   Employees will satisfy a test in Section
                                   5.1(b). If the test is still not satisfied
                                   after the adjustments in the immediately
                                   preceding sentence have been made, then
                                   similar adjustments shall be made to the
                                   Pre-Tax Contributions for each Highly
                                   Compensated Active Participant whose Pre-Tax
                                   Contributions are at the next highest dollar
                                   amount until such time as the Actual
                                   Deferral Percentage for the Highly
                                   Compensated Employees will satisfy a test in
                                   Section 5.1(b). The process shall continue
                                   until such time as a test in Section 5.1(b)
                                   is satisfied, or the reduction has
                                   eliminated all future contributions.

                            (B)    Any such reduction of future, previously
                                   authorized Pre-Tax Contributions shall remain
                                   in force until the January 1 immediately
                                   following.

                            (C)    The amount resulting from a reduction in a
                                   Participant's future Pre-Tax Contribution in
                                   Section 5.1(c)(i)(B) shall be treated as
                                   taxable income to the Employee for the month
                                   in which the reduction occurs and subsequent
                                   months through the end of the Plan Year. The
                                   Employer shall withhold those taxes required
                                   by law on such increase in taxable income.

                   (ii)     SUBSEQUENT TO END OF PLAN YEAR

                            (A)    If it is determined subsequent to the end of
                                   the Plan Year that the test in Section 5.1(b)
                                   has not been met, the Excess ADP
                                   Contributions and the income allocable
                                   thereto for the Highly Compensated Employees
                                   must be calculated.

                                   (1)    AMOUNT

                                          The amount of Excess ADP Contributions
                                          for each Highly Compensated Employee
                                          is determined using the leveling
                                          method as set forth in Section
                                          5.1(c)(i)(A).

                                   (2)    DESIGNATION AND DISTRIBUTION

                                          Such Excess ADP Contributions are to
                                          be designated as such by the Company
                                          and must be distributed to the
                                          appropriate Highly Compensated

                                       11
<PAGE>   19
                                          Employee within twelve months of the
                                          close of the Plan Year, reduced by
                                          Excess Deferrals previously
                                          distributed, if any. Any Employer
                                          Matched Contributions relating to such
                                          Excess ADP Contributions shall be
                                          considered to have been made in
                                          respect of the Highly Compensated
                                          Employee's Post-Tax Contributions to
                                          the extent possible, and otherwise
                                          shall be forfeited and applied in
                                          accordance with Section 6.13.

                                   (3)    CALCULATION OF INCOME FOR PLAN YEAR

                                          The income allocable to the Excess ADP
                                          Contribution must also be distributed
                                          within twelve months of the close of
                                          the Plan Year. The determination of
                                          allocable income for the Plan Year is
                                          made by multiplying the net gain (as
                                          set forth in Article 6) for the Plan
                                          Year allocable to Pre-Tax
                                          Contributions by a fraction, the
                                          numerator of which is the Excess ADP
                                          Contribution for the Highly
                                          Compensated Employee for the Plan Year
                                          and the denominator of which is the
                                          sum of (i) such Employee's total
                                          Pre-Tax Contribution Account balance
                                          as of the beginning of the Plan Year,
                                          plus (ii) such Employee's Pre-Tax
                                          Contributions for the Plan Year.

          (d)      MAXIMUM DEFERRAL

                   (i)      The maximum annual amount of any Participant's
                            Pre-Tax Contributions beginning in the calendar year
                            1987 is $7,000. Such $7,000 amount shall be
                            automatically adjusted in subsequent years in the
                            same manner as the $90,000 amount is adjusted under
                            Code Section 415(d).

                   (ii)     (A)   If the maximum deferral set forth in Section
                                  5.1(d)(i) above is exceeded for a Non-highly
                                  Compensated Employee, such amount may not be
                                  considered when performing the test in
                                  Section 5.1(b).

                            (B)   If a Highly Compensated Employee has an
                                  Excess Deferral, regardless of distribution
                                  after the close of the Plan Year as set
                                  forth in (v) below, it must be taken into
                                  account in the performance of the test in
                                  Section 5.1(b).

                   (iii)     CORRECTIVE DISTRIBUTION DURING PLAN YEAR

                             If there has been an Excess Deferral, a corrective
                             distribution may be made to the Employee DURING THE
                             PLAN YEAR IF:

                             (A)   The Employee requests such distribution and
                                   designates in writing the distribution as an
                                   Excess Deferral, and

                             (B)   The correcting distribution is made after
                                   the Plan received the amount of the Excess
                                   Deferral, and

                             (C)   The Plan designates in writing the
                                   distribution as a distribution of an Excess
                                   Deferral.

                             (D)   CALCULATION OF INCOME DURING PLAN YEAR

                                   The income allocable to the Excess Deferral
                                   is to be distributed with the Excess
                                   Deferral. The determination of allocable
                                   income during the Plan Year is made by
                                   multiplying the income allocable to Pre-Tax
                                   Contributions for the period from the
                                   beginning of the Plan Year to the date on
                                   which the distribution is made by a
                                   fraction, the numerator of which is the
                                   amount of Excess Deferral made by the
                                   Employee for the Plan Year, and the
                                   denominator of which is the sum of (i) such
                                   Employee's total Pre-Tax Contribution
                                   Account balance as of the beginning of the
                                   Plan Year plus (ii) such Employee's Pre-Tax
                                   Contributions for such Plan Year through the
                                   date of distribution.

                                       12
<PAGE>   20

                   (iv)      CORRECTIVE DISTRIBUTION AFTER THE END OF THE PLAN
                             YEAR

                             (A)   If the Employee notifies the Plan of the
                                   amount of Excess Deferrals not later than
                                   March 15 following the close of the Plan
                                   Year, then not later than April 15 following
                                   the close of the Plan Year, the Plan may
                                   distribute the Excess Deferrals and any
                                   income allocable to such amount.

                             (B)   CALCULATION OF INCOME FOR THE PLAN YEAR

                                   The income allocable to the Excess Deferral
                                   must also be distributed by the April 15
                                   following the close of the Plan Year. The
                                   determination of allocable income for the
                                   Plan Year is made by multiplying the net gain
                                   (as set forth in Article 6) for the Plan Year
                                   allocable to Pre-Tax Contributions by a
                                   fraction, the numerator of which is the
                                   amount of Excess Deferrals made by the
                                   Employee in the Plan Year, and the
                                   denominator of which is the sum of (i) such
                                   Employee's total Pre-Tax Contribution Account
                                   balance as of the beginning of the Plan Year,
                                   plus (ii) such Employee's Pre-Tax
                                   Contributions for the Plan Year.

                   (v)       No corrective distribution of Excess Deferrals will
                             be permitted after the April 15 following the close
                             of the Plan Year for which there was a Pre-Tax
                             Contribution.

                   (vi)      Any Excess Deferral remaining in the Plan shall be
                             subject to the Pre-Tax Contribution withdrawal
                             restrictions found in Section 9.1 and shall be
                             includable in the Employee's gross income when
                             distributed from the Plan.

          (e)      A Participant's Pre-Tax Contributions may also be limited
                   under Article 15.

5.2       LIMITATIONS ON POST-TAX CONTRIBUTIONS AND EMPLOYER MATCHED
          CONTRIBUTIONS

          (a)      For purposes of determining the maximum Post-Tax Contribution
                   and Employer Matched Contribution, a Contribution Deferral
                   Percentage shall be determined for each Participant and each
                   Employee who is eligible to be, but who is not, a
                   Participant.

          (b)      The Contribution Deferral Percentage for each Participant and
                   Covered Employee shall be determined in accordance with Code
                   Section 401 (m) and the regulations thereunder. The
                   Contribution Deferral Percentage for eligible Highly
                   Compensated Employees for the Plan Year shall be the average
                   of the ratios of the eligible Highly Compensated Employees.
                   This will be compared to the Contribution Deferral Percentage
                   for the Non-highly Compensated Employees for the Plan Year,
                   which will be the average of the ratios of the eligible
                   Non-highly Compensated Employees.

                   Effective for Plan Years beginning on or after January 1,
                   1999, the following provisions shall apply in lieu of the
                   preceding provisions of this Section 5.2(b): The Contribution
                   Deferral Percentage for each Participant and Covered Employee
                   shall be determined in accordance with Code Section 401(m)
                   and the regulations thereunder. The Contribution Deferral
                   Percentage for eligible Highly Compensated Employees for a
                   Plan Year shall be the average of the ratios of the eligible
                   Highly Compensated Employees for that Plan Year. This will be
                   compared to the Contribution Deferral Percentage for the
                   Non-highly Compensated Employees for the prior Plan Year,
                   which will be the average of the ratios of the eligible Non-
                   highly Compensated Employees for the prior Plan Year.

          (c)      The Contribution Deferral Percentage for any Plan Year for
                   eligible Highly Compensated Employees shall not exceed the
                   greater of either (i) or (ii) below:

                   (i)     One hundred and twenty-five percent (125%) of the
                           Contribution Deferral Percentage of the eligible
                           Non-highly Compensated Employees, or

                                       13
<PAGE>   21
                   (ii)    The lesser of the amounts determined under (A) or (B)
                           following (or such other amount as may be prescribed
                           in applicable regulations under the Code to prevent
                           multiple use of the alternative limitation set forth
                           in this clause (ii)):

                             (A)   Two hundred percent (200%) of the
                                   Contribution Deferral Percentage of eligible
                                   Non-highly Compensated Employees, or

                             (B)   The Contribution Deferral Percentage of the
                                   eligible Non-highly Compensated Employees
                                   plus two percentage points (2%).

                   Effective for Plan Years beginning on or after January 1,
                   1999, the following provisions shall apply in lieu of the
                   preceding provisions of this Section 5.2(c):

                   The Contribution Deferral Percentage for any Plan Year for
                   eligible Highly Compensated Employees shall not exceed the
                   greater of either (i) or (ii) below:

                   (i)       One hundred and twenty-five percent (125%) of the
                             Contribution Deferral Percentage of the eligible
                             Non-highly Compensated Employees for the prior Plan
                             Year, or

                   (ii)      The lesser of the amounts determined under (A) or
                             (B) following (or such other amount as may be
                             prescribed in applicable regulations under the
                             Code to prevent multiple use of the alternative
                             limitation set forth in this clause (ii)):

                             (A)   Two hundred percent (200%) of the
                                   Contribution Deferral Percentage of eligible
                                   Non-highly Compensated Employees for the
                                   prior Plan Year, or

                             (B)   The Contribution Deferral Percentage of the
                                   eligible Non-highly Compensated Employees for
                                   the prior Plan Year plus two percentage
                                   points (2%).

          (d)      PROCEDURE TO LIMIT POST-TAX AND EMPLOYER MATCHED CONTRIBUTION

                   (i)       PRIOR TO THE END OF THE PLAN YEAR

                             The Administrator may determine prior to the end of
                             the Plan Year whether there is a reasonable
                             expectation that the Contribution Deferral
                             Percentage results satisfy either of the tests
                             contained in Section 5.2(c). In the event that
                             neither of the tests described in Section 5.2 will
                             be satisfied, the following procedure will be
                             followed:

                             (A)   The future unmatched Post-Tax Contributions,
                                   previously authorized, for each Highly
                                   Compensated Employee whose unmatched
                                   Post-Tax Contributions are at the highest
                                   dollar amount shall be reduced by a uniform
                                   amount, not to exceed one dollar ($1.00)
                                   such that the Contribution Deferral
                                   Percentage for the Highly Compensated
                                   Employees will satisfy a test in Section
                                   5.2(c). If a test in Section 5.2(c) is still
                                   not satisfied after the adjustments in the
                                   immediately preceding sentence have been
                                   made, then similar adjustments shall be made
                                   to the unmatched Post-Tax Contributions for
                                   each Highly Compensated Active Participant
                                   whose unmatched Post-Tax Contributions are
                                   at the next highest dollar amount until such
                                   time as the Contribution Deferral Percentage
                                   for the Highly Compensated Employees will
                                   satisfy a test in Section 5.2(c). This
                                   process shall continue until one of the
                                   tests is satisfied, or there are no further
                                   unmatched Post-Tax Contributions to reduce,
                                   or the Contribution Deferral Percentage
                                   would be reduced below the highest level
                                   attributable to a Highly Compensated
                                   Employee.

                             (B)   In the event that none of the tests
                                   described in Section 5.2(c) will be
                                   satisfied under (A) above, the future
                                   matched Post-Tax Contributions and the
                                   Employer Matched Contributions attributable
                                   to them for each Highly Compensated Employee
                                   whose matched Post-Tax Contributions and
                                   Employer Matched Contributions attributable
                                   to them are at the highest dollar amount
                                   shall be

                                       14
<PAGE>   22

                                   reduced by a uniform amount, not to exceed
                                   one dollar ($1.00), such that the
                                   Contribution Deferral Percentage for the
                                   Highly Compensated Employees will satisfy a
                                   test in Section 5.2(c). If a test in Section
                                   5.2(c) is still not satisfied after the
                                   adjustments in the immediately preceding
                                   sentence have been made, then similar
                                   adjustments shall be made to the matched
                                   Post-Tax Contributions and attributable
                                   Employer Matched Contributions for each
                                   Highly Compensated Active Participant whose
                                   matched Post-Tax Contributions and Employer
                                   Matched Contributions attributable to them
                                   are at the next highest dollar amount until
                                   such time as the Contribution Deferral
                                   Percentage for the Highly Compensated
                                   Employees will satisfy a test in Section
                                   5.2(c). This process shall continue until
                                   such time as a test in Section 5.2(c) is
                                   satisfied.

                             (C)   Any such reduction of future Post-Tax
                                   Contributions or Employer Matched
                                   Contributions shall remain in force until the
                                   January 1 immediately following.

                             (D)   The amount resulting from a reduction in an
                                   Active Participant's future Post-Tax
                                   Contribution in Section 5.2 will not be
                                   considered a Contribution and no future
                                   Employer Matched Contributions will be made
                                   relating to such.

                   (ii)            SUBSEQUENT TO THE END OF THE PLAN YEAR

                             (A)   If it is determined subsequent to the end of
                                   the Plan Year that the tests in Section
                                   5.2(c) have not been met, the Excess
                                   Aggregate Contributions and the income
                                   allocable thereto for the Highly Compensated
                                   Employees must be calculated.

                                  (1)    AMOUNT

                                         The amount of Excess Aggregate
                                         Contributions for each Highly
                                         Compensated Employee is determined
                                         using the leveling method as set forth
                                         in Sections 5.2(d)(i)(A) and
                                         5.2(d)(i)(B).

                                  (2)    DESIGNATION AND DISTRIBUTION

                                         Such Excess Aggregate Contributions are
                                         to be designated as such by the Company
                                         and to the extent consisting of
                                         Post-Tax Contributions, must be
                                         distributed to the appropriate Highly
                                         Compensated Employee within twelve
                                         months of the close of the Plan Year,
                                         and, to the extent consisting of
                                         Employer Matched Contributions, shall
                                         be forfeited and applied in accordance
                                         with Section 6.13.

                                   (3)   CALCULATION OF INCOME FOR PLAN YEAR

                                         The income allocable to the Excess
                                         Aggregate Contribution must also be
                                         distributed within twelve months of the
                                         close of the Plan Year. The
                                         determination of allocable income for
                                         the Plan Year is made by multiplying
                                         the net gain (as set forth in Article
                                         6) for the Plan Year allocable to
                                         Post-Tax Contributions and Employer
                                         Matched Contributions by a fraction,
                                         the numerator of which is the Excess
                                         Aggregate Contribution for the Highly
                                         Compensated Employee for the Plan Year
                                         and the denominator of which is the sum
                                         of (i) such Employee's total Post-Tax
                                         Contribution Account balance plus
                                         Employer Matched Contribution Account
                                         balance as of the beginning of the Plan
                                         Year plus (ii) such Employee's Post-
                                         Tax Contributions and Employer Matched
                                         Contributions for the Plan Year.

                                       15
<PAGE>   23

          (e)      A Participant's Post-Tax and Employer Matched Contributions
                   may also be limited under Article 15.

5.3       PROCEDURE IF MULTIPLE USE LIMITATION IS EXCEEDED

          (a)      If it is determined subsequent to the performance of the
                   tests in Sections 5.1 and 5.2 and subsequent to the end of
                   the Plan Year, that there has been an impermissible multiple
                   use of the alternative limitations set forth in Sections
                   5.1(b)(ii) and 5.2(c)(ii), the Contribution Deferral
                   Percentage for each Highly Compensated Employee must be
                   reduced in the same manner as set forth in Section 5.2(d) so
                   that there is no multiple use of the alternative limitation.
                   The required reduction shall be treated as an Excess
                   Aggregate Contribution, in the same manner as set forth in
                   Section 5.2(d)(ii).

          (b)      If the reduction in (a) above is not sufficient, then the
                   Actual Deferral Percentage for each Highly Compensated
                   Employee must be reduced in the same manner as set forth in
                   Section 5.1(c) so that there is no multiple use of the
                   alternative limitation. The required reduction shall be
                   treated as an Excess ADP Contribution, in the same manner as
                   set forth in Section 5.1(c)(ii).

                                    ARTICLE 6
                                    ---------
                                    ACCOUNTS
                                    --------

6.1       ACCOUNTS

          The Administrator shall maintain in the name of each Participant or
          Former Participant such of the following Accounts as shall be
          applicable:

          (a)      A Pre-Tax Contribution Account;

          (b)      A Post-Tax Contribution Account;

          (c)      An Employer Matched Contribution Account;

          (d)      An Employer SDRP Contribution Account;

          (e)      A Former PAYSOP Account; and

          (f)      A Former Employer Supplemental Contribution Account;

          Such Accounts shall be administered in the manner hereinafter
provided.

6.2       ACCOUNTS REPRESENT UNDIVIDED INTERESTS

          The portion of balances standing to the credit of the Pre-Tax
          Contribution Account, the Post-Tax Contribution Account, the Employer
          Matched Contribution Account, the Employer SDRP Contribution Account,
          the Former PAYSOP Account, the Former Employer Supplemental
          Contribution Account, the Employer Forfeiture Account and the suspense
          account referred to in Section 6.12 that is invested in one of the
          Investment Funds shall represent an undivided interest in such fund.

6.3       ACCOUNT VALUES

          The value of an Account on any date shall be its value determined on
          the coinciding or immediately preceding Valuation Date plus any
          contributions and other amounts subsequently credited thereto, and
          less any distributions and other amounts subsequently charged thereto.

6.4       VALUATION OF INVESTMENT FUNDS

          As of each Valuation Date, the Trustee shall compute the value of each
          Investment Fund from which shall be determined the net gain and loss
          of such Fund since the immediately preceding Valuation Date.

                                       16
<PAGE>   24

          The net gain or loss shall include any unrealized and realized profits
          or losses, and any dividends, interest, or other income and any
          expenses which are due or accrued, but shall not include contributions
          made by the Employer or a Participant and distributions made to a
          Participant, Former Participant or Beneficiary. The cost basis for
          shares of Company Stock purchased since the prior Valuation Date shall
          be the average cost per share; such average based on all purchase and
          sale prices in the Fund since the prior Valuation Date.

6.5       ALLOCATION OF NET GAIN OR LOSS OF INVESTMENT FUNDS TO ACCOUNTS

          (a)      As of each Valuation Date, the net gain or loss of each
                   Investment Fund shall be allocated among the appropriate
                   Accounts in proportion to the ratio of:

                   (i)       The value of the portion of each such Account that
                             is, and has been continuously, invested in such
                             Investment Fund as of the immediately preceding
                             Valuation Date; to

                   (ii)      The aggregate of the amounts computed under clause
                             (i) above for all Accounts that are  invested in
                             such Investment Fund as of such immediately
                             preceding Valuation Date.

          (b)      The Administrator may, however, adopt such procedures as it
                   considers equitable to establish a proportionate crediting of
                   the net gain or loss of the Investment Fund or Investment
                   Funds for contributions made since the last Valuation Date.

          (c)      In determining the value of the appropriate Accounts under
                   Section 6.5 as of the immediately preceding Valuation Date,
                   there shall be excluded any amounts forfeited in accordance
                   with Section 8.3 since such date.

6.6       BASIS OF VALUATION

          In determining the value of any Investment Fund pursuant to the
          provisions of Section 6.4, the Trustee shall use the following values:
          securities listed on any nationally recognized securities exchange
          shall be valued at the closing price reported on any such exchange on
          the Valuation Date, or, if there were no sales on the Valuation Date,
          then at the quoted bid price on the Valuation Date. Securities not
          listed on a recognized stock exchange shall be valued at the quoted
          closing bid price on the Valuation Date. A unit of participation in a
          common trust fund maintained by the Trustee or a share in a mutual
          fund shall be valued at the unit value, or share price respectively,
          in effect on the Valuation Date. Securities with respect to which
          there were no available sale prices or bid prices on the Valuation
          Date, and any other investments, shall be valued at prices deemed by
          the Trustee to represent the fair market value thereof on the
          Valuation Date.

6.7       ADMINISTRATION OF PRE-TAX CONTRIBUTION ACCOUNT

          (a)      There shall be credited to the Pre-Tax Contribution Account
                   of a Participant all Pre-Tax Contributions made pursuant to
                   Section 4.1 and all Qualified Plan Rollover Contributions
                   made pursuant to Section 17.12 on behalf of such Participant.

          (b)      There shall be charged against such Account withdrawals by
                   the Participant pursuant to Section 10.1 hereof.

6.8       ADMINISTRATION OF POST-TAX CONTRIBUTION ACCOUNT

          (a)      There shall be credited to the Post-Tax Contribution Account
                   of a Participant all Post-Tax Contributions made by such
                   Participant under this Plan.

          (b)      There shall be charged against such Account withdrawals by
                   the Participant in accordance with Section 10.2 hereof.

                                       17
<PAGE>   25

6.9       ADMINISTRATION OF EMPLOYER MATCHED CONTRIBUTION ACCOUNT

          (a)      There shall be credited to the Employer Matched Contribution
                   Account of a Participant all Employer Matched Contributions
                   made on behalf of such Participant under this Plan.

          (b)      There shall be charged against such Account withdrawals by
                   the Active Participant in accordance with Section 10.3
                   hereof.

6.9A      ADMINISTRATION OF EMPLOYER SDRP CONTRIBUTION ACCOUNT

          There shall be credited to the Employer SDRP Contribution Account of a
          Participant all Employer SDRP Contributions made on behalf of such
          Participant under this Plan. No withdrawals or loans are permitted
          from such Account.

6.10      ADMINISTRATION OF FORMER PAYSOP ACCOUNT

          No further amounts shall be credited to the Former PAYSOP Account.
          Such Account shall consist of stock and funds of the Participant's or
          Former Participant's former PAYSOP and former Supplemental PAYSOP
          Account (as such contributions ceased, effective December 31,1987). No
          withdrawals or loans are permitted from such Account.

6.11      ADMINISTRATION OF THE FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION
          ACCOUNT

          No amounts attributable to Plan Years after 1988 shall be credited to
          the Former Employer Supplemental Contribution Account of a Participant
          or Former Participant (as such provision ceased to be effective as of
          December 31, 1988). No withdrawals or loans are permitted from such
          Account.

6.12      ADMINISTRATION OF THE SUSPENSE ACCOUNT

          (a)      There shall be credited to a suspense account the amount of
                   any Contributions, Employer Matched Contributions and
                   Employer SDRP Contributions for a Participant which are in
                   excess of the amount permitted under Article 15 hereof.

          (b)      The balance in such suspense account at the close of such
                   Plan Year shall be accounted for as follows:

                   (i)       The Post-Tax Contributions considered as excess
                             under (a) above, including gains or less losses,
                             shall be returned to the Participant before the end
                             of the next Plan Year.

                   (ii)      All such other Contributions, Employer Matched
                             Contributions and Employer SDRP Contributions that
                             are considered as excess under (a) above shall
                             remain credited to this suspense account and
                             reallocated in the following Plan Year as Employer
                             Matched Contributions and Employer SDRP
                             Contributions for such Plan Year (and succeeding
                             Plan Years if necessary).

6.13      ADMINISTRATION OF THE EMPLOYER FORFEITURE ACCOUNT

          (a)      There shall be credited to the Employer Forfeiture Account
                   all funds creditable to such Account as provided in Section
                   8.3 hereof.

          (b)      There shall be charged against such Account all amounts
                   withdrawn from time to time and reallocated as Employer
                   Matched Contributions or Employer SDRP Contributions.

6.14      CREDITING OF CONTRIBUTIONS

          Pre-Tax Contributions and Post-Tax Contributions shall be credited to
          the appropriate Account or Accounts of such Participants no later than
          the end of the quarter for which such contributions are attributable
          or as soon thereafter as administratively possible. Employer Matched
          Contributions and Employer SDRP Contributions made for the benefit of
          Participants with respect to a particular Plan Year

                                       18
<PAGE>   26

          shall be credited to the appropriate Accounts of such Participants no
          later than the end of the quarter for which such Contributions are
          attributable or as soon thereafter as administratively possible.

6.15      EMPLOYEE CONTRIBUTION RECORDS

          The Administrator shall maintain a Pre-Tax Contribution record in the
          name of each Participant or Former Participant, in which shall be
          entered, in dollars and cents, the amount of each Pre-Tax Contribution
          made on behalf of such Participant; and a Post-Tax Contribution record
          in which shall be entered, in dollars and cents, the amount of each
          Post-Tax Contribution made by such Participant. Each such record shall
          at all times carry a current cumulative balance as of the preceding
          Valuation Date plus Contributions, distributions and withdrawals made
          in the interim since such Valuation Date.

6.16      UNIT ACCOUNTING

          The Administrator may, for administrative purposes, establish unit
          values for one or more Investment Funds or any portion thereof and
          maintain the Accounts setting forth each Participant's interest in
          such Investment Fund (or any portion thereof) in terms of such units,
          all in accordance with such rules and procedures as the Administrator
          shall deem to be fair, equitable and administratively practicable. In
          the event that unit accounting is thus established for any Investment
          Fund (or any portion thereof) the value of a Participant's interest in
          that Investment Fund (or any portion thereof) at any time shall be an
          amount equal to the then value of a unit in such Investment Fund (or
          any portion thereof) multiplied by the number of units then credited
          to the Participant.

                                    ARTICLE 7
                                    ---------
                         RETIREMENT, DISABILITY OR DEATH
                         -------------------------------

7.1       BENEFIT AT RETIREMENT

          Upon attaining his/her Normal Retirement Age hereunder, a Participant
          shall be one hundred percent (100%) vested in and eligible to receive
          upon separation from service the value of his/her Pre-Tax Contribution
          Account, Post-Tax Contribution Account, Employer Matched Contribution
          Account, Employer SDRP Contribution Account, Former PAYSOP Account,
          and Former Employer Supplemental Contribution Account in the manner
          provided in Article 9 hereof.

7.2       DISABILITY BENEFIT

          A Participant who is Disabled shall be one hundred percent (100%)
          vested in and eligible to receive the value of his/her Pre-Tax
          Contribution Account, Post-Tax Contribution Account, Employer Matched
          Contribution Account, Employer SDRP Contribution Account, Former
          PAYSOP Account, and Former Employer Supplemental Contribution Account
          in the manner provided in Article 9 hereof.

7.3       DEATH BENEFIT

          Upon the death of a Participant, his/her Beneficiary shall be eligible
          to receive one hundred percent (100%) of the value of his/her Pre-Tax
          Contribution Account, Post-Tax Contribution Account, Employer Matched
          Contribution Account, Employer SDRP Contribution Account, Former
          PAYSOP Account, and Former Employer Supplemental Contribution Account
          in the manner provided in Article 9 hereof. Notwithstanding anything
          in the Plan to the contrary, as to each Participant for whom funds
          were transferred to an Employer SDRP Contribution Account as a result
          of the Merger, such Participant's Beneficiary shall not be entitled to
          receive the value of such Participant's Employer SDRP Contribution
          Account, unless such Beneficiary is named in a single written
          designation that expressly applies to both the Long-Term Savings Plan
          portion and the Self-Directed Retirement Plan portion of The
          Progressive Retirement Security Program. In the absence of such a
          designation, such Participant's Employer SDRP Contribution Account
          shall be paid upon such Participant's death to such Participant's
          "Beneficiary" under and within the meaning of The Progressive
          Corporation Supplemental Retirement Plan, as in effect immediately
          prior to the Merger.

                                       19
<PAGE>   27

                                    ARTICLE 8
                                    ---------
                            VESTING AND TERMINATIONS
                            ------------------------

8.1       VESTING

          A Participant is vested in his/her Accounts as follows:

          (a)      PARTICIPANT ACCOUNTS

                   Each Participant and Former Participant is one hundred
                   percent (100%) vested in his/her Pre-Tax Contribution
                   Account, Post-Tax Contribution Account, and Former PAYSOP
                   Account.

          (b)      EMPLOYER MATCHED CONTRIBUTION ACCOUNT

                   (i)  Each Participant and Former Participant shall be vested
                        in his/her Employer Matched Contribution Account in
                        accordance with the following schedule:

                                                              Vested
                               YEARS OF SERVICE               PERCENTAGE

                              Less than 1                         0%
                              1 but less than 2                  25%
                              2 but less than 3                  50%
                              3 but less than 4                  75%
                              4 or more                          100%

                  (ii)    Notwithstanding (i) above, and due to the fact that
                          class year vesting was eliminated effective December
                          31,1988, this transitional vesting section shall apply
                          to any Participant for whom it produces a greater
                          vested benefit than (i) above. A Participant's vested
                          benefit in his/her Employer Matched Contribution
                          Account as of December 31,1988 will be frozen (for
                          calculation purposes only) and the amount maintained
                          separately. To calculate the vested percentage of a
                          Participant's Employer Matched Contribution Account,
                          the frozen December 31,1988 balance will be added to
                          the subsequent Employer Matched Contributions. This
                          sum will be multiplied by the appropriate vested
                          percentage corresponding to the Participant's Years of
                          Service as determined in (i) above.

          (c)     FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION ACCOUNT AND EMPLOYER
                  SDRP CONTRIBUTION ACCOUNT

                  Each Participant or Former Participant shall be vested in
                  his/her Former Employer Supplemental Contribution Account and
                  Employer SDRP Contribution Account in accordance with the
                  following schedule:

                                                                 Vested
                              YEARS OF SERVICE                 PERCENTAGE
                              ----------------                 ----------

                              Less than 5                           0%
                              5 or more                           100%

          (d)      SPECIAL VESTING PROVISIONS FOR MIDLAND EMPLOYEES

                   Effective June 30, 1998, and notwithstanding anything to the
                   contrary set forth in the Addendum attached hereto entitled
                   "Addendum to The Progressive Retirement Security Program
                   ("Plan") Re: Former Participants Under The Midland Companies'
                   Employee Savings Plan" ("Midland Addendum"), each Participant
                   shall be fully vested in the balance of his/her Midland
                   Matching Contribution Account, as defined in the Midland
                   Addendum.

                                       20
<PAGE>   28

8.2       TERMINATION OF EMPLOYMENT

          The final vesting status of a Participant who terminates his/her
          Employment for any reason other than Retirement, Disability or death
          shall be determined as of his/her Termination of Employment, taking
          into consideration the provisions of Section 11.1. Such Participant
          shall become a Former Participant and shall be eligible to receive the
          value of his/her Pre-Tax Contribution Account, Post-Tax Contribution
          Account, Former PAYSOP Account, and the vested portion of his/her
          Employer Matched Contribution Account, the vested portion of his/her
          Employer SDRP Contribution Account and the vested portion of his/her
          Former Employer Supplemental Contribution Account as provided in
          Article 9 hereof.

8.3       FORFEITURES

          If a Former Participant who terminated Employment for reasons other
          than Retirement, Disability or death does not return to Employment
          during the Plan Year in which his/her Termination of Employment
          occurs, or if he/she dies after his/her Termination of Employment
          during that Plan Year, then the following provisions shall apply to
          the non-vested portion of his/her Employer Matched Contribution
          Account, Employer SDRP Contribution Account and Former Employer
          Supplemental Contribution Account:

          a)       If he/she is 0% vested in his/her Employer SDRP Contribution
                   Account and/or his/her Former Employer Supplemental
                   Contribution Account, he/she shall be deemed to have received
                   a distribution of $0.00 Dollars from such Employer SDRP
                   Contribution Account, and/or Former Employer Supplemental
                   Contribution Account, as the case may be, and the balance of
                   such Account(s) shall be provisionally forfeited and such
                   forfeiture shall be applied in accordance with Section 6.13
                   hereof.

          b)       If he/she is less than 100% vested in his/her Employer
                   Matched Contribution Account, the non-vested portion of such
                   Account shall be provisionally forfeited and such forfeiture
                   shall be applied in accordance with Section 6.13 hereof as of
                   the earlier of (i) the date he/she receives a distribution of
                   the vested portion of such Account, (ii) the fifth
                   anniversary of the date of his/her Termination of Employment
                   or (iii) the date he/she dies.

8.4       REEMPLOYMENT

          If a Participant who ceased to be an Employee returns to active
          Employment, an amount equal to the value of the provisionally
          forfeited non-vested portion of his/her Employer Matched Contribution
          Account, Employer SDRP Contribution Account and Former Employer
          Supplemental Contribution Account, determined as of the Valuation Date
          coincident with or next following the date he/she last ceased to be an
          Employee, will be reinstated by crediting such amounts to the
          Employee's respective Employer Matched Contribution Account, Employer
          SDRP Contribution Account and Former Employer Supplemental
          Contribution Account. The amounts so reinstated will be made from any
          unapplied forfeitures then available under the Plan, provided,
          however, that if unapplied forfeitures are less than the amount to be
          reinstated, the Employer will make a supplemental contribution to
          eliminate such insufficiency.

                                    ARTICLE 9
                                    ---------
                               PAYMENT OF BENEFITS
                               -------------------

9.1       APPLICATION FOR PAYMENT

          Application for distribution of benefits under this Plan shall be made
          by a Participant or Former Participant (or other claimant) in
          accordance with Section 9.5 hereof and approved by the Administrator
          before payment commences.

                                       21
<PAGE>   29

9.2       TIME OF PAYMENT

          (a)      Distribution of benefits to a Participant (or Former
                   Participant) on account of Retirement shall be made as soon
                   as practicable after the Valuation Date coincident with or
                   next following his/her Retirement.

          (b)      Distribution of benefits to a Participant on account of
                   Disability shall be made as soon as practicable after the
                   Valuation Date coincident with or next following the Disabled
                   Participant's application pursuant to Section 9.1.

          (c)      In no event, however, will benefit payments to a Participant
                   (or Former Participant) commence later than April 1 of the
                   calendar year next following the later of (i) the calendar
                   year in which such Participant (or Former Participant)
                   attains age seventy and one-half (70-1/2) or (ii) the
                   calendar year in which the Participant (or former
                   Participant) terminates employment. Notwithstanding the
                   foregoing, benefit payments to a Participant who is a 5%
                   Owner shall commence no later than April 1 of the calendar
                   year next following the calendar year in which the
                   Participant attains age seventy and one-half (70-1/2). For
                   purposes of this provision, the term "5% Owner" shall have
                   the meaning set forth in Section 15.5(h) (iii) of the Plan.
                   Any individual who receives a distribution of benefits prior
                   to age fifty-nine and one-half (59-1/2) shall be advised by
                   the Administrator that an additional federal income tax
                   penalty may be imposed on all or a portion of such
                   distribution unless made on account of death or Disability.

          (d)      In the case of a Participant (or Former Participant) who dies
                   before benefit payments have commenced all benefits in
                   respect of such Participant (or Former Participant) shall be
                   paid to his or her Beneficiary in a lump sum as soon as
                   practicable after the Valuation Date coincident with or next
                   following his or her death.

          (e)      Subject to Section 9.2(h), distribution of benefits to a
                   Participant who terminates Employment for reasons other than
                   Retirement, Disability or death shall be made as soon as
                   practicable after the Valuation Date coincident with or next
                   following the date of his/her Termination of Employment where
                   the Participant (or Former Participant) has made proper
                   application.

          (f)      If proper application has been made, distribution shall be
                   made, in any event, not later than sixty (60) days after the
                   close of the Plan Year in which the Participant or Former
                   Participant attains age sixty-five (65) or terminates his/her
                   Employment, whichever is later.

                   Where the amount to be distributed cannot be determined,
                   distribution may be delayed, but in no event beyond sixty
                   (60) days after such amount is determined.

          (g)      Notwithstanding anything to the contrary in this Section 9.2,
                   while such Participant is in the employ of the Employer, no
                   distribution from the Former PAYSOP Account may be made from
                   a Participant's Account before the end of the eighty-fourth
                   month beginning after the month in which it was allocated. In
                   fact, no withdrawals are permitted from the Former PAYSOP
                   Account pursuant to Section 10.4.

          (h)      Notwithstanding anything provided in this Section 9.2 to the
                   contrary, if the lump sum value of a Participant's Accounts
                   does not exceed Five Thousand Dollars ($5,000), as
                   determined quarterly by the Administrator, the
                   Administrator, shall direct that the lump sum value of such
                   Accounts be paid in total, in cash (unless the Employee
                   elects Company Stock from his/her Former PAYSOP Account or
                   Company Stock Fund pursuant to Section 9.4), as soon as
                   administratively feasible following the Participant's
                   Termination of Employment, whether or not application for
                   payment has been made in accordance with Section 9.1.
                   Distribution will not be made without the Participant's
                   consent if the lump sum value of the Participant's Accounts
                   is $5,000 or more at the time of proposed distribution or at
                   the time of any prior distribution. Such Five Thousand
                   Dollar ($5,000) amount shall be automatically adjusted in
                   subsequent years in accordance with regulations under the
                   Code.

          (i)      No distribution shall be made to any Participant before his
                   Normal Retirement Date unless:

                                       22
<PAGE>   30

                   (i)     his prior written consent has been obtained by the
                           Administrator; or

                   (ii)    the aggregate balance of his Accounts, determined as
                           of the Valuation Date coinciding with or immediately
                           preceding the proposed date of distribution, does not
                           exceed $5,000.

                   If the Participant's consent is required under this Section
                   9.2(i), but is not obtained by the Administrator prior to the
                   time the distribution is to be made under Section 9.2, the
                   distribution shall be made as soon as reasonably practicable
                   following the earlier of (1) the Participant's Normal
                   Retirement Date, (2) the date the Administrator receives
                   satisfactory evidence of the Participant's death, or (3) the
                   date the Administrator obtains the Participant's written
                   consent.

          (j)      All distributions under the Plan will comply with code
                   Section 401(a)(9) and the regulations thereunder.

9.3       FORM OF PAYMENT

          A Participant, Former Participant or Beneficiary shall receive the
          value of his/her Accounts payable in cash or shares of Company Stock
          (if invested in Company Stock Fund at Termination) as elected by the
          Participant in the form of a lump sum payment. However, a Participant
          may elect to receive in-kind distributions of securities held in his
          Brokerage Account.

          However, if a Participant's entire Account consists of only the
          Partnership Share, the distribution shall be in cash (due to the small
          value of such an Account).

9.4       DETERMINATION OF VALUE OF PAYMENT

          The value of the Accounts to be distributed to a Participant, Former
          Participant or Beneficiary shall be determined as of the earliest
          Valuation Date that is at least seven (7) days after receipt of a
          written request for such distribution.

9.5       CLAIMS PROCEDURE

          (a)      The Administrator shall establish reasonable procedures under
                   which a claimant, who may be a Participant, Former
                   Participant or Beneficiary, may present a claim for benefits
                   under this Plan.

          (b)      Unless such claim is allowed in full by the Administrator,
                   written notice of the denial shall be furnished to the
                   claimant within ninety (90) days (which may be extended by a
                   period not to exceed an additional ninety (90) days if
                   special circumstances so require and proper written notice to
                   the claimant is given prior to the expiration of the initial
                   ninety (90) day period) setting forth the following in a
                   manner calculated to be understood by the claimant:

                   (i)     The specific reason(s) for the denial;

                   (ii)    Specific reference(s) to any pertinent
                           provision(s) of the Plan or rules promulgated
                           pursuant thereto on which the denial is based;

                   (iii)   A description of any additional information or
                           material as may be necessary to perfect the claim,
                           together with an explanation of why it is
                           necessary; and

                   (iv)    An explanation of the steps to be taken if the
                           claimant wishes to resubmit his/her claim for review.

          (c)      Within a reasonable period of time after the denial of the
                   claim, but in any event, not to be more than sixty (60) days,
                   the claimant or his/her duly authorized representative may
                   make written application to the Administrator for a review of
                   such denial. The claimant or his/her representative, may
                   review documents held by the Administrator and pertinent to
                   the denial of such claim, and may submit a written statement
                   of issues and comments.

                                       23
<PAGE>   31

          (d)      If an appeal is timely filed, the Administrator shall conduct
                   a full and fair review of the claim and mail or deliver to
                   the claimant its written decision within sixty (60) days
                   after the claimant's request for review (which may be
                   extended by a period not to exceed an additional sixty (60)
                   days if special circumstances or a hearing so require and
                   proper written notice to the claimant is given prior to the
                   expiration of the initial sixty (60) day period). Such
                   decision shall:

                   (i)     Be written in a manner calculated to be
                           understandable by the claimant;

                   (ii)    State the specific reason(s) for the decision; and

                   (iii)   Make specific reference to pertinent provision(s) of
                           the Plan.

9.6       FACILITY OF PAYMENT

          If the Administrator determines that a Participant, Former Participant
          or Beneficiary entitled to receive benefits under this Plan is (at the
          time such benefit is payable) a minor or physically, mentally or
          legally incompetent to receive such benefit and that another person or
          an institution has legal custody of such minor or incompetent
          individual, the Administrator may cause payment to be made to such
          person or institution having custody of such Participant, Former
          Participant or Beneficiary. Such payment, to the extent made, shall
          operate as a complete discharge of obligation by the Administrator,
          the Employer, the Trustee and the Fund.

                                   ARTICLE 10
                                   ----------
                     WITHDRAWALS AND LOANS DURING EMPLOYMENT
                     ---------------------------------------

10.1      IN-SERVICE WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT

          (a)      If a Participant has attained age 59-1/2, such Participant
                   may at any time, by filing written application with the
                   Administrator, make an in-service withdrawal from his/her
                   Pre-Tax Contribution Account.

          (b)      (i)     If a Participant has not attained age 59-1/2, such
                           Participant may make an in-service withdrawal of
                           not less than $250.00 from his/her Pre-Tax
                           Contribution Account only in the event of Hardship
                           and only to the extent that such in-service
                           withdrawal is necessary to satisfy the Hardship.
                           The Participant must request the withdrawal in
                           writing from the Administrator.

                   (ii)    SAFE-HARBOR

                           A request for an in-service withdrawal will be deemed
                           to be necessary to satisfy a Hardship only if all of
                           the following requirements are met:

                           (A)    The amount of the withdrawal does not exceed
                                  the amount of the Hardship plus amounts
                                  necessary to pay any federal, state or local
                                  income taxes or penalties reasonably
                                  anticipated to result from the withdrawal, and

                           (B)    The Participant has obtained all withdrawals
                                  (other than Hardship withdrawals) and all
                                  nontaxable loans available under this Plan and
                                  any other plan maintained by the Employer, and

                           (C)    The Participant certifies in writing that the
                                  amount of the requested Hardship withdrawal is
                                  necessary to satisfy an immediate and heavy
                                  financial need and that such need cannot
                                  reasonably be relieved (i) through
                                  reimbursement or compensation by insurance or
                                  otherwise, (ii) by liquidation of assets,
                                  (iii) by discontinuing Plan contributions,
                                  (iv) by other distributions or non-taxable
                                  loans from any other plans maintained by
                                  Progressive or any other current or former
                                  employer of the Participant or (v) by
                                  borrowing from commercial sources on
                                  reasonable commercial terms.

                                       24
<PAGE>   32

          (c)      The amount of the Pre-Tax Contribution Account available for
                   withdrawal shall include:

                   (i)     The Pre-Tax Contributions and earnings as of December
                           31, 1988, and

                   (ii)    The Pre-Tax Contributions made on or after January
                           1, 1989, but shall not include any income on such
                           Account subsequent to that date.

10.2      IN-SERVICE WITHDRAWALS FROM POST-TAX CONTRIBUTION ACCOUNT

          (a)      A Participant may at any time file a written application with
                   the Administrator to make a voluntary withdrawal of not less
                   than $250.00 from his/her Post-Tax Contribution Account for
                   any reason.

          (b)      The entire Post-Tax Contribution Account balance including
                   income attributable to such Account, is available for
                   withdrawal. Any withdrawal will be processed as follows:

                   (i)     First, from the pre-1987 Post-Tax Contribution
                           Account balance,

                   (ii)    Next, from income on the pre-1987 Post-Tax
                           Contribution Account balance together with
                           Contributions (and income thereon) made to the
                           post-1986 Post-Tax Contribution Account.

                   Such amount shall be on a pro rata basis between
                   Contributions and income thereon, pursuant to Code Section
                   72.

10.3      IN-SERVICE WITHDRAWALS FROM EMPLOYER MATCHED CONTRIBUTION ACCOUNT

          (a)      An Active Participant may file a written application with the
                   Administrator to make a withdrawal from his/her vested
                   Employer Matched Contribution Account balance not to exceed
                   the following:

                   (i)     if the Active Participant has been a Participant in
                           the Plan for less than five (5) years, an amount
                           equal to the sum of all Employer Matched
                           Contributions made in respect to such Participant at
                           least two (2) years prior to the date of the
                           withdrawal; or

                   (ii)    if the Active Participant has been a Participant in
                           the Plan for at least five (5) years, the entire
                           vested balance of such Participant's Employer Matched
                           Contribution Account.

                   An Active Participant may make such a withdrawal no more
                   frequently than once per Plan Year.

          (b)      An in-service withdrawal from an Active Participant's
                   Employer Matched Contribution Account is not available unless
                   the Active Participant has filed an application and is
                   eligible to receive a withdrawal of Contributions pursuant to
                   either 10.1 or 10.2, subject to the further requirement that
                   a withdrawal of all available Post-Tax Contributions pursuant
                   to 10.2 must first occur.

10.4      NO WITHDRAWALS AVAILABLE FROM OTHER ACCOUNTS

          (a)      No withdrawals under any circumstances shall be available
                   from:

                   (i)     The non-vested portion of the Employer Matched
                           Contribution Account,

                   (ii)    The Former PAYSOP Account,

                   (iii)   The Former Employer Supplemental Contribution
                           Account, or

                   (iv)    The Employer SDRP Contribution Account.

          (b)      No withdrawals are available to anyone other than an Active
                   Participant and Inactive Participants as specifically noted
                   in Sections 10.1 and 10.2; that is, no Former Participants or

                                       25
<PAGE>   33

                   Beneficiaries are eligible to make withdrawals from any
                   Accounts, as they may request distribution pursuant to
                   Section 9.1.

10.5      PAYMENT OF WITHDRAWALS

          (a)      Withdrawals shall be processed not less frequently than
                   bi-weekly. Withdrawals shall be distributed as soon as
                   practicable after the date the Participant's application for
                   withdrawal is received, provided full documentation is
                   enclosed.

          (b)      The amount of the withdrawal shall be based upon the value of
                   the Participant's Pre-Tax Contribution Account, Post-Tax
                   Contribution Account, and Employer Matched Contribution
                   Account (as restricted by Section 10.3) as applicable,
                   determined as of the Valuation Date coincident with or
                   immediately preceding the Administrator's receipt of a
                   request for such withdrawal; provided, however, all Stock
                   shall be valued using the closing price on the business day
                   immediately preceding the date the withdrawal is processed.

          (c)      Unless the Participant otherwise directs in writing, each
                   withdrawal shall be charged to each of the Investment Funds
                   (other than the Brokerage Account) in which any portion of
                   his/her Accounts are invested in the proportion that the
                   balance held in such Investment Fund bears to the aggregate
                   balance held in all such Investment Funds. Notwithstanding
                   anything in this Plan to the contrary, no withdrawals shall
                   be made from any Participant's Brokerage Account.

10.6      LOANS TO PARTICIPANTS

          (a)      As approved by the Administrator, a Participant may at any
                   time borrow an amount as set forth in Section 10.6(b) under
                   the terms and conditions of this Section 10.6.

          (b)      The Administrator shall investigate each application for a
                   loan. In addition to such rules and regulations as the
                   Administrator may adopt, all loans shall comply with the
                   following terms and conditions:

                   (i)       An application for a loan by a Participant shall be
                             made to the Administrator in such manner as the
                             Administrator shall prescribe. The loan application
                             will include a promissory note executed by the
                             borrowing Participant obligating the Participant to
                             repay the loan through payroll deduction of
                             substantially level payments made no less
                             frequently than quarterly within the term described
                             in Section 10.6(b)(vi).

                   (ii)      No loans will be available for the purchase of a
                             primary residence.

                   (iii)     Each loan shall be secured by the borrower's entire
                             right, title and interest in and to the trust fund
                             (not to exceed the amount of the loan), evidenced
                             by the Participant's collateral promissory note for
                             the amount of the loan, including interest, payable
                             to the order of the Trustee.

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

                   (v)       The loan amount requested must be a multiple of
                             $100. The outstanding balance of each loan amount
                             (plus the highest outstanding balance of all other
                             loans made from this Plan within the immediately
                             preceding twelve-month period) shall not exceed the
                             lesser of:

                             (A)      $50,000; or

                             (B)      Fifty percent (50%) of the Participant's
                                      vested Account(s) based on the
                                      Participant's Pre-Tax Contribution
                                      Account, Post-Tax Contribution Account,
                                      and Employer Matched Contribution Account.

                   (vi)      Effective January 1, 1999, the period of repayment
                             of any loan shall not exceed four (4) years.

                                       26
<PAGE>   34

                   (vii)     Repayment Options: A loan may be prepaid without
                             penalty by paying the balance of the loan plus
                             accrued interest in a lump sum payment.

                   (viii)    Each loan shall bear interest at a rate to be set
                             and reviewed periodically by the Administrator and,
                             in determining the interest rate, the Administrator
                             shall take into consideration commercial interest
                             rates currently being charged by persons in the
                             business of lending money for loans which would be
                             made under similar circumstances. The Administrator
                             shall not discriminate among Participants in the
                             matter of interest rates. To the extent permitted
                             by law, the interest rate on any loan will not be
                             adjusted.

                   (ix)      Effective January 1, 1999, no application for a
                             loan by the Participant will be approved if it
                             would cause the Participant to have more than two
                             (2) loans outstanding.

                   (x)       Effective January 1, 1999, the Administrator may
                             deduct from the proceeds of each loan any fee, not
                             to exceed $50.00, imposed by any third party
                             administrator for processing loans.

          (c)      (i)       Loans shall be processed not less frequently
                             than bi-weekly. For all purposes relating to loans,
                             the value of the Participant's Account shall be
                             determined as of the Valuation Date coinciding with
                             or immediately following receipt of a loan
                             application by the Administrator; provided,
                             however, all Stock shall be valued using the
                             closing price on the business day immediately
                             preceding the date the withdrawal is processed.

          (d)      A Participant whose Employment terminates shall have 30 days
                   from the date of termination to repay the loan. Repayment
                   must be made by check or money order in a lump sum for the
                   remaining loan balance plus accrued interest. However, a
                   Participant whose active Employment terminates as a result of
                   a leave of absence approved by his or her Employer may
                   continue to repay his or her loan in installments payable in
                   the amounts and at the times that payroll deduction payments
                   would have been made had he continued in active Employment.

          (e)      In the event of a default on any loan the entire outstanding
                   principal balance of the loan plus all accrued interest
                   shall be immediately due and payable and the Administrator
                   is authorized (to the extent permitted by law) to take any
                   and all actions necessary or appropriate to collect such
                   sums. However, foreclosure on and reduction of a
                   Participant's Plan benefits in repayment of a loan shall not
                   occur until an event has occurred which would entitle the
                   Participant or his/her Beneficiary to receive a distribution
                   of his/her Plan benefits, provided that the amount of such
                   distribution shall be reduced by the outstanding principal
                   amount of the loan plus all accrued interest. For purposes
                   of the preceding provisions, "default" means any of the
                   following events:

                   (i)       failure of any Participant whose Employment has
                             terminated to repay the entire outstanding
                             principal balance of the loan plus accrued interest
                             within the time specified in Section 10.6(d); or

                   (ii)      any other failure of a Participant to make any
                             required payment of principal or interest on any
                             loan within thirty (30) days following the date
                             such payment was due.

          (f)      Anything in this Section 10.6 to the contrary
                   notwithstanding, all loans will comply with the terms of Code
                   Section 72(p).

          (g)      The source of funds for each loan shall be those Trust
                   assets comprising first, the Participant's Post-Tax
                   Contribution Account, followed by the Participant's Pre-Tax
                   Contribution Account, and finally, the vested portion of the
                   Participant's Employer Matched Contribution Account. Within
                   each such Account funds for the Participant's loan shall be
                   withdrawn from each Investment Fund (other than the
                   Brokerage Account) in which any portion of such Account is
                   invested in the proportion that the balance held in such
                   Investment Fund bears to the aggregate balance held in all
                   such Investment Funds, unless the Participant elects
                   otherwise in writing. Notwithstanding anything in this Plan
                   to the contrary, funds invested in a Brokerage Account shall
                   not be available for loans to any Participant.

                                       27
<PAGE>   35

          (h)      Funds paid by a Participant in repayment of a loan shall be
                   invested in the same manner as the Participant has elected
                   for Pre-Tax and/or Post-Tax Contributions, as applicable.

          (i)      Notwithstanding the foregoing, no loan shall be made to a
                   Participant during the period in which the Administrator is
                   making a determination of whether a domestic relations order
                   affecting the Participant's Account is a Qualified Domestic
                   Relations Order. Further, if the Administrator is in receipt
                   of a Qualified Domestic Relations Order with respect to any
                   Participant's Account, it may prohibit such Participant from
                   obtaining a loan until the alternate payee's rights under
                   such order are satisfied.

          (j)      In the event that a payment is required to be made to a
                   Beneficiary upon the death of a Participant or an alternate
                   payee pursuant to a Qualified Domestic Relations Order, while
                   the Participant whose Account is the subject of such order
                   has a loan outstanding, the Administrator, in its discretion,
                   may direct that the Participant's promissory note be
                   transferred to such Beneficiary or alternate payee, as
                   applicable.

                                   ARTICLE 11
                                   ----------
                                     SERVICE
                                     -------

11.1      SERVICE

          An Employee's eligibility for benefits under the Plan shall be based
          on his Period of Service. For purposes of this Article 11, the
          following terms shall have the meanings shown.

          (a)      HOUR OF SERVICE shall mean each hour credited to an Employee
                   in accordance with the following provisions:

                   (i)       An Employee shall be credited with one Hour of
                             Service for each hour for which such Employee is
                             paid, or entitled to payment, by an Employer for
                             the performance of duties during the applicable
                             computation period, with such Hours of Service
                             being credited for the Plan Year in which the
                             duties were performed.

                   (ii)      An Employee shall be credited with an Hour of
                             Service for each hour for which back pay,
                             irrespective of mitigation of damages, has been
                             either awarded or agreed to by an Employer for the
                             performance of services during a Plan Year, with
                             such Hours of Service being credited for the Plan
                             Year or Plan Years to which the award or agreement
                             pertains (rather than the Plan Year or Plan Years
                             in which the award, agreement, or payment is made).

                   (iii)     An Employee also shall be credited with one Hour
                             of Service for each hour for which he is paid, or
                             entitled to payment, by an 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, military duty or
                             leave of absence but excluding payments for
                             reimbursement for medical or medically related
                             expenses and payments under a plan maintained
                             solely for the purpose of complying with
                             applicable workmen's compensation or unemployment
                             compensation and disability insurance laws;
                             provided, however, that not more than 501 Hours of
                             Service shall be credited to an Employee under
                             this paragraph (c), on account of any single
                             continuous period during which the Employee
                             performs no duties for an Employer (whether or not
                             such period occurs in a single computation
                             period). A payment shall be deemed to be made by
                             or due from an Employer regardless of whether such
                             payment is made by or due from the Employer
                             directly, or indirectly through, among others, a
                             trust fund, or insurer, to which the Employer
                             contributes or pays premiums. Such Hours of
                             Service shall be

                                       28
<PAGE>   36

                             credited for the Plan Year or, on a ratable basis,
                             for the Plan Years with respect to which the
                             payments are made.

          (b)      PERIOD OF SEVERANCE shall mean the period of time which
                   begins on an Employee's Termination of Employment date and
                   which ends if he/she again completes an Hour of Service.

          (c)      PERIOD OF SERVICE shall include the periods described in (i)
                   and (ii) below.

                   (i)       Period of Service shall include each period of time
                             beginning on an Employee's date of employment or
                             re-employment, as applicable, and ending on his/her
                             next succeeding Termination of Employment.

                   (ii)      Period of Service shall include the Period of
                             Severance following an Employee's Termination of
                             Employment date which resulted from his/her having
                             quit, retired, or been discharged, if he/she again
                             performs an Hour of Service before the first
                             anniversary of the earlier of:

                             (A)      The date on which he/she quit, retired, or
                                      was discharged, or

                             (B)      The date on which he/she began an absence
                                      during which he/she quit, retired, or was
                                      discharged.

                   (iii)     An Employee's Period of Service shall be determined
                             by aggregating all the periods required to be taken
                             into account under this Section 11.1(c) with less
                             than whole years aggregated on the basis that
                             twelve (12) months equals one (1) year and where
                             any beginning or final fraction of a month shall
                             equal one twelfth (1/12th) of a Year of Service. If
                             the final month of employment includes the annual
                             anniversary of their first date of employment, the
                             Employee must work through such anniversary date in
                             order to receive that month of Service.

          (d)      DETERMINATION OF TERMINATION OF EMPLOYMENT

                   (i)       A Termination of Employment shall be deemed not to
                             have occurred when an Employee is or has been
                             absent from his employment either with or without
                             pay due to:

                             (A)      A leave of absence granted by the
                                      Employer, provided the Employee resumes
                                      his employment promptly on the termination
                                      of such leave. The decision of the
                                      Employer on all questions of leaves of
                                      absence shall be final and conclusive.

                             (B)      Service in the Armed Forces of the United
                                      States, including the Merchant Marine, to
                                      the extent the Employee retains
                                      reemployment rights with the Employer by
                                      law. Should an Employee fail to report for
                                      employment within the time required by
                                      law, or should he/she take employment
                                      elsewhere following military service
                                      before resuming employment with the
                                      Company, his/her Termination of Employment
                                      date shall be deemed to be the day he/she
                                      loses his reemployment rights with the
                                      Company under the law.

                   (ii)      The Termination of Employment for a Maternity or
                             Paternity Absence shall be the first anniversary of
                             the first day of absence from employment due to a
                             Maternity or Paternity Absence.

11.2      PRIOR SERVICE REINSTATED

          Upon reemployment of an Employee whose Termination of Employment under
          Section 11.1 occurred on or after the Effective Date as defined in
          Section 2.19, whether or not distribution has been made, any pre-break
          Period of Service shall be restored as of the date of his employment.

                                       29
<PAGE>   37

11.3      YEAR OF SERVICE

          An Employee shall be credited with one Year of Service for each full
year in his/her Period of Service.

                                   ARTICLE 12
                                   ----------
                        PLAN OPERATION AND ADMINISTRATION
                        ---------------------------------

12.1      POWERS OF ADMINISTRATOR

          The Administrator will have full power to administer the Plan in all
          its details. Such power includes, but is not limited to, the following
          authority:

          (a)      to make and enforce such rules and regulations as it deems
                   necessary or proper for the efficient administration of the
                   Plan;

          (b)      to interpret the Plan and to decide all matters arising
                   thereunder, including the right to resolve or remedy any
                   ambiguities, inconsistencies or omissions. All such
                   interpretations shall be final and binding;

          (c)      to compute the amount of benefits which will be payable to
                   any Participant, Former Participant, Beneficiary or other
                   person in accordance with the provisions of the Plan;

          (d)      to authorize disbursements from the Trust;

          (e)      to keep such records and submit such filings, elections,
                   applications, returns or other documents or forms as may be
                   required under ERISA, the Code or other applicable law;

          (f)      to appoint such agents, counsel, accountants and consultants
                   as may be desirable to assist in administering the Plan;

          (g)      To exercise the other powers that are expressly granted to
                   it herein, or that are impliedly necessary for it to carry
                   out any of its responsibilities hereunder; and

          (h)      by written instrument, to delegate any of the foregoing
                   powers and fiduciary responsibilities in accordance with
                   Section 405 of ERISA.

12.2      NONDISCRIMINATORY EXERCISE OF AUTHORITY

          The Administrator shall exercise its authority in a nondiscriminatory
          manner so that all persons similarly situated will receive
          substantially the same treatment.

12.3      RELIANCE ON TABLES, ETC.

          The Administrator will be entitled, to the extent permitted by law, to
          rely conclusively on all tables, valuations, certificates, opinions
          and reports which are furnished by any accountant, Trustee, counsel or
          other expert who is retained by the Administrator to assist it in
          administering the Plan.

12.4      NAMED FIDUCIARY

          The Administrator will be a "named fiduciary" for purposes of ERISA
          with authority to control and manage the operation and administration
          of the Plan, and will be responsible for complying with all of the
          reporting and disclosure requirements of ERISA.

12.5      INDEMNIFICATION

          In addition to whatever rights of indemnification to which employees,
          officers and directors of the Company and of the other Employers may
          be entitled under the articles of incorporation, regulations, or
          bylaws of the Company or such Employers, under any provision of law,
          or under any other agreement, the Company shall satisfy any liability
          actually and reasonably incurred by any such employee, officer or

                                       30
<PAGE>   38

          director, including expenses, attorney's fees, judgments, fines and
          amounts paid in settlement, in connection with any threatened,
          pending, or completed action, suit, or proceeding which is related to
          the exercise or failure to exercise by such person or persons of any
          of the powers, authority, responsibilities, or discretion of the
          Company, the Employers or the Administrator provided under the Plan or
          the Trust Agreement, or reasonably believed by such person or persons
          to be provided thereunder, and any action taken by such person or
          persons in connection therewith.

12.6      NOTICES TO ADMINISTRATOR

          The Administrator shall designate one or more addresses where notices
          and other communications to the Administrator shall be sent. No notice
          or other communication shall be considered to have been given to or
          received by the Administrator until it has been delivered to the
          Administrator's attention at one of such designated addresses.

                                   ARTICLE 13
                                   ----------
                      AMENDMENT AND TERMINATION OF THE PLAN
                      -------------------------------------

13.1      AMENDMENT

          The Company may amend the Plan and Trust Agreement in any respect at
          any time, for any reason and as to all Employers by action of the
          Company's Board of Directors, provided, however, that any amendment
          that is required by law or that will not require any Employer to
          increase the contributions it must make to the Plan may be approved by
          the Company's Chairman, President or Chief Executive Officer, or the
          holder of any similar successor office, which approval shall be
          conclusively evidenced by such officer's execution of such amendment,
          and further provided that the Company may not:

          (a)      amend the Plan or Trust Agreement in such manner as would
                   cause or permit any part of the assets of the Trust to be
                   diverted to purposes other than for the exclusive benefit of
                   Participants, Former Participants and their Beneficiaries
                   (except as permitted herein), unless such amendment is
                   permitted by law, governmental regulation or ruling;

          (b)      amend the Plan or Trust Agreement retroactively in such a
                   manner as would deprive any Participant or Former Participant
                   of any benefit to which he/she was entitled under the Plan by
                   reason of Contributions made prior to the amendment, unless
                   such amendment is necessary to conform the Plan or Trust
                   Agreement to, or satisfy the conditions of, any law,
                   governmental regulation or ruling, or to permit the Trust and
                   the Plan to meet the requirements of Sections 401(a) and
                   501(a) of the Code;

          (c)      to amend the Plan or Trust Agreement in such manner as would
                   increase the duties or liabilities of the Trustee or reduce
                   its fee for services thereunder, unless the Trustee consents
                   thereto in writing;

          (d)      amend the Plan to reduce a Participant's vesting percentage
                   determined as of the later of the date such amendment is
                   effective or adopted; or

          (e)      amend the Plan to revise the vesting schedule unless:

                   (i)       Each Participant's vesting percentage under such
                             amendment is not less at any time than the vesting
                             percentage determined without regard to such
                             amendment; or

                   (ii)      Each Participant who has completed three or more
                             Years of Service (whether or not consecutive) is
                             permitted to make an election to have his/her
                             vesting percentage determined without respect to
                             such amendment; such an election shall be
                             irrevocable and shall be made within the period
                             beginning with the date on which such amendment is
                             adopted and ending no later than the latest of the
                             following:

                             (A)      Sixty (60) days after the day such
                                      amendment is adopted;

                                       31
<PAGE>   39

                             (B)      Sixty (60) days after the date such
                                      amendment becomes effective; or

                             (C)      Sixty (60) days after the day the
                                      Participant is issued written notice of
                                      the amendment.

13.2      TERMINATION

          The Company has established the Plan with the bona fide intention and
          expectation that contributions will be continued indefinitely, but the
          Company will have no obligation or liability whatsoever to maintain
          the Plan for any given length of time and may discontinue
          contributions under the Plan, terminate the Plan or permit any
          Employer to withdraw from the Plan at any time for any reason by
          action of the Company's Board of Directors without any liability
          whatsoever for any such discontinuance, termination or withdrawal. In
          the event of the termination or partial termination of the Plan or the
          complete discontinuance of contributions under the Plan, the balance
          of each affected Participant's Accounts shall be nonforfeitable. Upon
          termination of the Plan, the Trustee will distribute to each
          Participant, Former Participant or Beneficiary, as the case may be,
          the value of the Participant's, Former Participant's or Beneficiary's
          Accounts, determined as of the Valuation Date coinciding with or
          immediately following the date of termination, in a single lump sum
          cash payment. However, if a successor plan is established within the
          meaning of, and within the time limits prescribed by, Section
          401(k)(2)(B)(i)(II) of the Code or applicable regulations thereunder,
          distributions shall be made to Participants and Former Participants
          only in accordance with Articles 7 and 10. Upon the completion of
          distributions to all Participants, Former Participants or
          Beneficiaries, as the case may be, no Participant, Former Participant,
          Beneficiary or person claiming under or through them, will have any
          claims in respect of the Plan.

13.3      LIQUIDATION OF THE FUND

          The Trust and the Fund shall continue in existence after the
          termination of the Plan for such period of time as may be required to
          complete the liquidation thereof in accordance with the terms of this
          Article 13.

                                   ARTICLE 14
                                   ----------
                     ADOPTION OF THE PLAN BY OTHER EMPLOYERS
                     ---------------------------------------

14.1      ADOPTION WITH APPROVAL

          Any Affiliated Company or corporation (hereinafter referred to as
          "Participating Employer") may adopt and become a party to this Plan
          with the consent of the Company and subject to such terms and
          conditions as the Company may require or approve.

14.2      PROCEDURE FOR ADOPTION

          A Participating Employer may adopt the Plan and become an Employer
          hereunder by executing an instrument in writing evidencing such
          adoption on the order of its Board of Directors and filing a copy
          thereof with the Company. Upon approval of the Participating
          Employer's adoption of the Plan by the Company and the delivery of the
          instruments evidencing the Participating Employer's adoption of the
          Plan and the Company's approval thereof to the Trustee, the
          Participating Employer's adoption of the Plan shall be effective as of
          the date specified in said instruments.

14.3      EFFECT OF ADOPTION

          (a)      If there is more than one Employer hereunder, the costs and
                   expenses in connection with the Plan and Fund each year shall
                   be shared by all Employers.

          (b)      Each Participating Employer shall also pay for that portion
                   of the Contribution of the Employers attributable to Pre-Tax
                   Contributions made under the Plan by its Covered Employees
                   but the Contributions of Employers included in an affiliated
                   group under the Code with the Company may be paid by the
                   Company on behalf of itself and the other Participating
                   Employers or may be

                                       32
<PAGE>   40

                   allocated among such Participating Employers by the Company
                   as will permit the deduction for purposes of Federal taxes.

          (c)      Each Participating Employer, as a condition of continued
                   participation in this Plan, delegates to the Company the sole
                   power and authority to administer and operate the Plan,
                   including the power and authority to:

                   (i)       Appoint and remove the Trustee;

                   (ii)      Consent to the adoption of this Plan by other
                             Participating Employers;

                   (iii)     Amend or terminate the Plan or Trust; and

                   (iv)      Determine the amount of Employer contributions.

14.4      TERMINATION OF ADOPTION

          (a)      Each Participating Employer may elect separately to withdraw
                   from the Plan, but amendments may be made only by the
                   Company. Any such withdrawal shall be expressed in an
                   instrument in writing executed by the withdrawing
                   Participating Employer on order of its Board of Directors and
                   filed with the Company and the Trustee.

          (b)      Upon withdrawal from the Plan by a Participating Employer,
                   and subject to the provisions of ERISA, the Code, and other
                   applicable law, the portion of the Fund attributable to the
                   proportionate interests of the Participants affected by said
                   termination of participation may, in the discretion of the
                   Company:

                   (i)       Be retained in the Fund and benefits paid in
                             accordance with the terms of the Plan in effect at
                             the time the Participating Employer terminated its
                             participation in the Plan;

                   (ii)      Be transferred (along with the liability for the
                             payment of benefits) to another qualified
                             retirement plan maintained by the Participating
                             Employer terminating participation in the Plan; or

                   (iii)     Be dealt with in any other manner consistent with
                             the provisions of ERISA, the Code, or other
                             applicable law.

                   In the event the portion of the Fund attributable to the
                   proportionate interests of the Participants and Former
                   Participants affected by the termination of participation of
                   a Participating Employer is retained in the Fund, the
                   Administrator may direct the Trustee to segregate such
                   portion of the Fund.

                                   ARTICLE 15
                                   ----------
                         LIMITATIONS OF ANNUAL ADDITIONS
                         -------------------------------

15.1      GENERAL LIMITATIONS

          Notwithstanding anything provided herein to the contrary, the maximum
          annual addition, as defined in Section 15.4, credited to the Accounts
          of a Participant for any Plan Year shall not exceed the lesser of:

          (a)      Twenty-five percent (25%) of the Participant's compensation
                   as defined in Code Section 415(c)(3) for that Plan Year; or

          (b)      Thirty thousand dollars ($30,000) (or, if greater, one fourth
                   of the dollar limitation in effect under Code Section
                   415(b)(1)(A)), provided that as of January 1 of each Plan
                   Year, the dollar limitation as adjusted by the Commissioner
                   of Internal Revenue for such Plan Year shall be substituted
                   for the dollar amount specified in this Section 15.1(b).

                                       33
<PAGE>   41

15.2      EXCESS AMOUNT

          (a)      Prior to the determination of a Participant's actual
                   compensation for a Plan Year, the maximum annual addition for
                   a Participant may be determined on the basis of a reasonable
                   estimation of his/her compensation for a Plan Year with
                   Contributions then appropriately limited.

          (b)      If such additions exceed the maximum due to a reasonable
                   error in estimating a Participant's annual Compensation or
                   under other limited facts and circumstances which the
                   Commissioner of Internal Revenue finds justifiable, such
                   excess Post-Tax Contributions and Income shall be returned
                   to Employees pursuant to Section 5.2 (except that the
                   Employer Match attributable to any such Post-Tax
                   Contributions shall be deposited in a suspense account as
                   described below). Should an excess remain (Pre-Tax
                   Contributions, Employer Matched Contributions, Employer SDRP
                   Contributions), a suspense account shall be established to
                   hold such excess and such excess shall be allocated in the
                   succeeding Plan Year (and subsequent Plan Years as
                   necessary) as the Employer Matched Contribution and/or
                   Employer SDRP Contribution for all Plan Participants.

15.3      AGGREGATION OF PLANS OF THE EMPLOYER

          (a)      If the Employer is or becomes a member of a group of
                   employers which constitute a controlled group of
                   corporations (within the meaning of Code Section 414(b) as
                   modified by Code Section 415(h)) or which constitute trades
                   or businesses under common control (within the meaning of
                   Code Section 414(c) as modified by Code Section 415(h)) or
                   which constitute an affiliated service group (within the
                   meaning of Code Section 414(m)), such group of employers
                   shall be treated as one employer for purposes of this
                   Article 15.

          (b)      For purposes of applying the limitation of this Article 15,
                   all defined benefit plans (whether or not terminated) of the
                   Employer shall be treated as one defined benefit plan and
                   all defined contribution plans (whether or not terminated)
                   shall be treated as one defined contribution plan. However,
                   multi-employer plans shall not be aggregated with
                   multi-employer plans. If an Employer maintains both a plan
                   which is not a multi-employer plan and a plan which is a
                   multi-employer plan, the plan which is not a multi-employer
                   plan shall be aggregated with the multi-employer plan only
                   to the extent that the benefits provided under the
                   multi-employer plan are provided by such Employer with
                   respect to the Participant.

          (c)      If an excess amount results from the aggregation of annual
                   additions under this Plan and under any other defined
                   contribution plan sponsored by the Employer:

                   (i)       The excess amount shall be attributable to the
                             plan under which annual additions were last
                             allocated; or

                   (ii)      If annual additions were allocated on a date under
                             this Plan which coincides with an allocation date
                             of the other defined contribution plan, the excess
                             amount attributable to this Plan shall be a pro
                             rata portion of the excess amount determined by the
                             ratio of the annual additions that would have been
                             allocated to the Participant under this Plan to the
                             total annual additions that would have been
                             allocated to the Participant under all such defined
                             contribution plans (with the ratio being determined
                             without regard to the limitations imposed by this
                             Article 15).

15.4      DEFINITIONS

          For purposes of this Article 15:

          (a)      (i)       ANNUAL ADDITION means the sum of the following
                             amounts allocated on behalf of a Participant for a
                             Plan Year:

                             (A)      Employer Matched Contributions;

                             (B)      Forfeitures;

                                       34
<PAGE>   42

                             (C)      Pre-Tax Contributions;

                             (D)      Post-Tax Contributions;

                             (E)      Employer SDRP Contributions;

                             (F)      Partnership Share Contribution, if
                                      applicable;

                             (G)      Anniversary Share Contributions, if
                                      applicable; and

                             (H)      Amounts allocated to separate medical
                                      accounts under Code Section 415(I) and
                                      419A(d)(2).

                   (ii)      Annual additions shall not include:

                             (A)      The forfeitures and/or Employer
                                      contributions which are used to restore a
                                      Participant's (or Beneficiary's) benefit
                                      under Section 8.4 hereof,

                             (B)      Loan repayments, or

                             (C)      Transfers of Funds from another qualified
                                      plan.

          (b)      COMPENSATION shall be as defined in Code Section 415(c)(3).

          (c)      DEFINED BENEFIT PLAN means a qualified plan as defined in
                   Code Section 414(j).

          (d)      DEFINED CONTRIBUTION PLAN means a qualified plan as defined
                   in Code Section 414(i).

          (e)      EXCESS AMOUNT means the excess of the Participant's annual
                   addition for the Plan Year over the maximum annual addition
                   permitted under this Article 15 for the Plan Year.

          (f)      MULTI-EMPLOYER PLAN means a multi-employer plan as defined in
                   Code Section 414(f).

15.5      TOP-HEAVY PLAN REQUIREMENTS

          (a)      GENERAL RULE. For any Plan Year for which this Plan is a
                   top-heavy plan as defined in Section 15.5(g) below, any other
                   provisions of this Plan to the contrary notwithstanding, this
                   Plan shall be subject to the following provisions:

                   (i)       The vesting provisions of Section 15.5(b) below:

                   (ii)      The minimum Contribution provisions of Section
                             15.5(c) below;

                   (iii)     The limitation on Compensation set by Section
                             15.5(c) below; and

                   (iv)      The limitation on Contributions set by Section
                             15.5(e) below.

          (b)      VESTING PROVISIONS. Each Participant who has completed at
                   least three Years of Service and has completed an Hour of
                   Service during any Plan Year in which the Plan is a top-heavy
                   plan shall have a nonforfeitable right to the benefit accrued
                   under this Plan.

                   Each Participant's nonforfeitable accrued benefit shall not
                   be less than his/her nonforfeitable accrued benefit
                   determined as of the last day of the last Plan Year in which
                   the Plan was a top-heavy plan. If the Plan ceases to be top
                   heavy, each Participant with three or more years of service,
                   whether or not consecutive, shall have his/her nonforfeitable
                   accrued benefit determined in accordance with this Article 15
                   and separately in accordance with the terms of Article 8, and
                   such will be considered an amendment to the vesting schedule
                   to be governed by Section 13.1(e).

                                       35
<PAGE>   43

          (c)      MINIMUM CONTRIBUTION PROVISIONS

                   (i)       Each Covered Employee who is a Non-key employee (as
                             defined in Section 15.5(i) below) and who has not
                             separated from service as of the last day of the
                             Plan Year shall be entitled to have a contribution
                             made on his/her behalf by the Employer of not less
                             than the lesser of:

                             (A)      Three percent (3%) (the "Minimum
                                      Contribution Percentage") of the Covered
                                      Employee's Compensation for such Plan
                                      Year, or

                             (B)      The largest percentage of Compensation
                                      allocated to the Account of any Key
                                      Employee for such Plan Year. Such
                                      allocations shall include all Pre-Tax
                                      Contributions made pursuant to Section 4.1
                                      of the Plan during such Plan Year.

                             The contribution required by this Section
                             15.5(c)(i) shall be made regardless of the Non-key
                             employee's level of compensation or whether he/she
                             has earned credit for a 1,000 Hours of Service in
                             the Plan Year.

                   (ii)      Where Section 15.5(c)(i) is found to apply after
                             calculation of the amounts to be allocated has been
                             made, Section 15.5(c)(i) shall be implemented by
                             first reducing the Forfeitures to be allocated
                             among the Accounts of Key Employees to the extent
                             necessary; then by the Employer contributing an
                             additional amount of current or accumulated profits
                             to the extent necessary; and finally by reducing
                             the contribution allocated to the Accounts of Key
                             Employees and reallocating it to Non-key Employees
                             to the extent necessary.

                   (iii)     For purposes of this Section 15.5, Compensation
                             shall be as defined in Section 2.13 of the Plan;
                             however, excluding any Pre-Tax Contributions made
                             pursuant to Section 4.1.

          (d)      LIMITATION ON COMPENSATION. Compensation taken into account
                   under this Section 15.5 and Eligible Compensation under
                   Article 4 for purposes of computing contributions under this
                   Plan shall not exceed the first two hundred thousand dollars
                   ($200,000) for any Plan Year in which the Plan is deemed to
                   be top heavy. Such amount shall be adjusted automatically for
                   each Plan Year to the amount prescribed by the Secretary of
                   the Treasury or his/her delegate pursuant to regulations for
                   the calendar year in which such Plan Year commences.

          (e)      LIMITATION ON CONTRIBUTIONS. In the event that the Employer
                   also maintains a defined benefit plan providing benefits on
                   behalf of Participants in this Plan, one of the two following
                   provisions shall apply:

                   (i)       If, for the Plan Year, this Plan would not be a
                             top-heavy plan as defined in Section 15.5(g) below
                             if "ninety percent (90%)" were substituted for
                             "sixty percent (60%)," then Section 15.5(c) shall
                             apply for such Plan Year as if amended so that
                             "four percent (4%)" were substituted for "three
                             percent (3%)."

                   (ii)      If, for the Plan Year, this Plan would continue to
                             be a top-heavy plan as defined in Section 15.5(g)
                             below if "ninety percent (90%)" were substituted
                             for "sixty percent (60%)," then the denominator of
                             both the defined contribution plan fraction and
                             the defined benefit plan fraction shall be
                             calculated as set forth in Section 15.4 hereof for
                             the limitation year ending in such Plan Year by
                             substituting "1.0" for "1.25" in each place such
                             figure appears, except with respect to any
                             individual for whom there are no Employer
                             contributions or accruals for such individual
                             under the defined benefit plan.

          (f)      COORDINATION WITH OTHER PLANS. In the event that the Employer
                   maintains a top-heavy defined benefit plan under which
                   contributions are provided on behalf of participants under
                   this plan, the amount of contributions and forfeitures
                   allocated hereunder to the account of each Non-key Employee
                   also covered under the defined benefit plan shall be at least
                   5% of average annual compensation for years in the testing
                   period.

                                       36
<PAGE>   44
                   If the plan is subject to Section 15.5(e)(ii) but the
                   employer does not substitute "1.0" for "1.25" as required by
                   Section 15.5(e)(ii), the amount of contributions and
                   forfeitures allocated hereunder to such participant shall be
                   7-1/2% of average annual compensation during the testing
                   period.

          (g)      TOP-HEAVY PLAN DEFINITION. This Plan shall be a top-heavy
                   plan for any Plan Year if, as of the determination date (as
                   defined in Section 15.5(g)(i) below), the present value
                   aggregate of the Accounts under the Plan for Participants
                   (including Former Participants) who are Key Employees (as
                   defined in Section 15.5(h) below) exceeds sixty percent (60%)
                   of the present value of the aggregate of the Accounts of all
                   Employees or if this Plan is required to be in an aggregation
                   group (as defined in Section 15.5(g)(iii) below) which for
                   such Plan Year is a top- heavy group (as defined in Section
                   15.5(g)(iv) below).

                   (i)       DETERMINATION DATE means for any Plan Year the last
                             day of the immediately preceding Plan Year (except
                             that for the first Plan Year of this Plan the
                             determination date means the last day of such Plan
                             Year).

                   (ii)      The present value of the aggregate of the Accounts
                             shall be the sum of the Account balances determined
                             as of the most recent Valuation Date that is within
                             the 12- month period ending on the determination
                             date, and the adjustment for contributions due as
                             of the determination date, and as described in the
                             Regulations under the Code, as amended.

                   (iii)     AGGREGATION GROUP means the group of plans, if any,
                             that includes both the group of plans that are
                             required to be aggregated and the group of plans
                             that are permitted to be aggregated.

                             (A)      The group of plans that are required to be
                                      aggregated (the required aggregation
                                      group) includes:

                                      (1)     Each plan of the Employer for a
                                              Plan Year containing the
                                              Determination Date or any of the
                                              four preceding years in which a
                                              Key Employee is a participant,
                                              including collectively bargained
                                              plans and terminated plans
                                              maintained at any time within the
                                              last five years ending on the
                                              applicable termination date; and

                                      (2)     Each other plan of the Employer,
                                              including collectively bargained
                                              plans of the Employer, which
                                              enables a plan in which a Key
                                              Employee is a participant to meet
                                              the requirements of either Code
                                              Section 401(a)(4) or Code Section
                                              410 prohibiting discrimination as
                                              to contributions or benefits in
                                              favor of Employees who are
                                              officers, shareholders, or the
                                              highly compensated, or prescribing
                                              the minimum participation
                                              standards.

                             (B)      The group of plans that are permitted to
                                      be aggregated (the permissive aggregation
                                      group) includes the required aggregation
                                      group plus any plan that is not part of
                                      the required aggregation group that the
                                      Administrator certifies as constituting a
                                      plan within the permissive aggregation
                                      group. Such plans may be added to the
                                      permissive aggregation group only if,
                                      after the addition, the aggregation group
                                      as a whole continues to meet the
                                      requirements of both Code Sections
                                      401(a)(4) and 410.

                   (iv)      TOP-HEAVY GROUP means the aggregation group, if as
                             of the applicable determination date, the sum of
                             the present value of the cumulative accrued
                             benefits for Key Employees under all defined
                             benefit plans included in the aggregation group
                             plus the aggregate of the accounts of Key
                             Employees under all defined contribution plans
                             included in the aggregation group exceeds sixty
                             percent (60%) of the sum of the present value of
                             the cumulative accrued benefits for all Employees,
                             excluding former Key Employees under all such
                             defined benefit plans plus the aggregate accounts
                             for all Employees, excluding former Key Employees
                             under such defined contribution
                                       37
<PAGE>   45

                             plans. If the aggregation group that is a
                             top-heavy group is a required aggregation group,
                             each plan in the group will be top-heavy. If the
                             aggregation group that is a top-heavy group is a
                             permissive aggregation group, only those plans
                             that are part of the required aggregation group
                             will be treated as top heavy. If the aggregation
                             group is not a top-heavy group, no plan within
                             such group will be top heavy.

                   (v)       In determining whether this Plan constitutes a
                             top-heavy plan, the Committee (or its agent) shall
                             make the following adjustments in connection
                             therewith:

                             (A)      When more than one plan is aggregated, the
                                      Administrator shall determine separately
                                      for each plan as of each plan's
                                      determination date the present value of
                                      the accrued benefits or account balance.
                                      The results shall then be aggregated by
                                      adding the results of each plan as of the
                                      determination dates for such plans that
                                      fall within the same calendar year.

                             (B)      In determining the present value of the
                                      cumulative accrued benefit or the amount
                                      of the account of any Employee, such
                                      present value or account shall include the
                                      amount in dollar value of the aggregate
                                      distributions made to such Employee
                                      under the applicable plan during the
                                      five-year period ending on the
                                      determination date unless reflected in
                                      the value of the accrued benefit or
                                      account balance as of the most recent
                                      Valuation Date. Such amounts shall
                                      include distributions to such Employees
                                      which represented the entire amount
                                      credited to their accounts under the
                                      applicable plan.

                             (C)      Further, in making such determination,
                                      such present value or such account shall
                                      include any rollover contribution (or
                                      similar transfer) as follows:

                                      (1)     If the rollover contribution (or
                                              similar transfer) is initiated by
                                              the Employee and made to or from a
                                              plan maintained by another
                                              Employer, the plan providing the
                                              distribution shall include such
                                              distribution in the present value
                                              or such account.

                                      (2)     If the rollover contribution (or
                                              similar transfer) is not initiated
                                              by the Employee or made from a
                                              plan maintained by another
                                              Employer, the plan accepting the
                                              distribution shall include such
                                              distribution in the present value
                                              or such account. The plan making
                                              the distribution shall not include
                                              the distribution in the present
                                              value or such account.

                             (D)      Further, in making such determination,
                                      in any case where an individual is a
                                      Non-key Employee, as defined in Section
                                      15.5(i) below, with respect to an
                                      applicable plan, but was a Key Employee
                                      with respect to such plan for any prior
                                      Plan Year, any accrued benefit and any
                                      account of such Employee shall be
                                      altogether disregarded. For this
                                      purpose, to the extent that a Key
                                      Employee is deemed to be a Key Employee
                                      if he/she met the definition of Key
                                      Employee within any of the four
                                      preceding Plan Years, this provision
                                      shall apply following the end of such
                                      period of time.

                             (E)      If any individual has not performed any
                                      services for any Employer maintaining the
                                      Plan at any time during the five-year
                                      period ending on the determination date,
                                      any accrued benefit and Account of such
                                      individual shall not be taken into
                                      account.

          (h)      KEY EMPLOYEE means any Employee, former Employee or
                   Beneficiary of an Employee or former Employee under this Plan
                   who, at any time during the Plan Year of the determination
                   date or during any of the four preceding Plan Years, is or
                   was one of the following:

                   (i)       An officer of the Employer having an annual
                             Compensation greater than fifty percent (50%) of
                             the amount in effect under Section 415(b)(1)(A) for
                             any such Plan Year. Whether an individual is an
                             officer shall be determined by the Committee on the
                             basis

                                       38
<PAGE>   46

                             of all the facts and circumstances, such as an
                             individual's authority, duties and terms of
                             office, not on the mere fact that the individual
                             has the title of an officer. For any such Plan
                             Year, there shall be treated as officers no more
                             than the lesser of:

                             (A)      Fifty (50) Employees; or

                             (B)      Ten percent (10%) of the Employees or, if
                                      greater than ten percent (10%), three
                                      Employees.

                             For this purpose, the highest paid officers shall
                             be selected and business organizations other than
                             corporations shall be deemed to have no officers.

                   (ii)      One of the ten Employees having annual Compensation
                             from the Employer of more than the limitation in
                             affect under Code Section 415(c)(1)(A) and owning
                             (or considered as owning, in accordance with
                             applicable principles, such as Code Section 318 or
                             a successor provision) the largest interests in the
                             Employer. If two Employees have the same interest
                             in the Employer, the Employee having the greater
                             annual Compensation from the Employer shall be
                             treated as having a larger interest. An Employee
                             who has some ownership interest is considered to
                             be one of the top ten owners unless at least ten
                             other Employees own a greater interest than that
                             Employee.

                             However, an Employee will not be considered a top
                             ten owner for a Plan Year if the Employee earns
                             less than the maximum dollar limitation on
                             contributions and other annual additions to a
                             Participant's Account in a defined contribution
                             Plan under the Code, as amended, as in effect for
                             the calendar year in which the determination date
                             falls.

                   (iii)     Any person who owns (or is considered as owning, in
                             accordance with applicable principles, such as Code
                             Section 318 or a successor provision) more than
                             five percent (5%) of the outstanding stock of the
                             Employer or stock possessing more than five percent
                             (5%) of the combined total voting power of all
                             stock of the Employer.

                   (iv)      Any person who owns (or is considered as owning,
                             in accordance with applicable principles, such as
                             Code Section 318 or a successor provision) more
                             than one percent (1%) of the outstanding stock of
                             the Employer or stock possessing more than five
                             percent (5%) of the combined total voting power of
                             all stock of the Employer and receives annual
                             Compensation from the Employer of more than one
                             hundred and fifty thousand dollars ($150,000). For
                             purposes of this subsection, Compensation means
                             all items includable as compensation for purposes
                             of applying the limitations on contributions and
                             other annual additions to a Participant's account
                             in a defined contribution plan and the maximum
                             benefit payable under a defined benefit plan under
                             the Code.

          (i)      NON-KEY EMPLOYEE means any Employee (and any Beneficiary of
                   an Employee) who is not a Key Employee as defined in this
                   Section 15.5.

          (j)      COLLECTIVE BARGAINING RULES. The provisions of Sections
                   15.5(b), 15.5(c) and 15.5(d) do not apply with respect to any
                   Employee included in a unit of Employees covered by a
                   collective bargaining agreement unless retirement benefits
                   were the subject of good faith bargaining.

                                   ARTICLE 16
                                   ----------
                           INVESTMENT OF CONTRIBUTIONS
                           ---------------------------

16.1      INVESTMENT FUNDS

          The Trustee shall establish and maintain the Company Stock Fund and
          such other Investment Funds as are specified from time to time by the
          Company. In this regard, the Company may choose to offer as

                                       39
<PAGE>   47

          Investment Funds any investment vehicles, including: (i) securities
          issued by investment companies advised by affiliates of the Trustee,
          (ii) guaranteed investment contracts chosen by the Trustee, (iii)
          collective investment trusts maintained by the Trustee for qualified
          plans and (iv) participant-managed brokerage accounts.. Each such
          Investment Fund shall be held and administered by the Trustee as a
          separate, common fund within the Trust Fund. The interest of each
          Participant or Former Participant under the Plan in any such
          Investment Fund shall be an undivided interest. Any dividends,
          interest, or other income received by the Trustee in respect of any
          Investment Fund shall be reinvested by the Trustee in that Investment
          Fund.

16.2      ADMINISTRATION OF COMPANY STOCK FUND

          Stock to be held in the Company Stock Fund shall be purchased at fair
          market value on the open market or from the Company through the sale
          of treasury Stock or the issuance of authorized but previously
          unissued shares at the option of the Company. Such Stock may also be
          obtained through the exercise of stock rights. The Trustee shall vote
          the shares of Stock allocated to the Accounts of each Participant or
          Former Participant in accordance with such Participant's or Former
          Participant's written instructions. If a Participant's or Former
          Participant's voting instructions are not received by
          the Trustee by the tenth day prior to any meeting of shareholders of
          the Company, the Trustee shall vote the shares of stock allocated to
          such Participant's or Former Participant's Accounts in the same
          proportion as those shares for which voting instructions are received
          by the Trustee.

          The Trustee shall vote the shares of Stock held in the Company Stock
          Fund which have not been allocated to Participants' or Former
          Participants' Accounts as of the record date of any meeting of
          shareholders of the Company in the same proportion as those allocated
          shares for which voting instructions are received by the Trustee.

16.2A     ADMINISTRATION OF BROKERAGE ACCOUNTS

          The Administrator shall determine the terms, conditions, procedures
          and limitations applicable to Brokerage Accounts including, without
          limitation, (i) limitations on the types of investments which may be
          purchased and held in such accounts, (ii) procedures for engaging in
          investment transactions in such accounts, (iii) procedures for
          effectuating transfers to and from such accounts and other Investment
          Funds, (iv) the minimum balance required to open such accounts and (v)
          any fees to be charged with respect to such accounts. All such terms,
          conditions, procedures and limitations shall apply uniformly to
          similarly situated Participants.

16.3      DEPOSIT OF CONTRIBUTIONS

          All Employer Matched Contributions, Partnership Shares, Anniversary
          Shares, and contributions to Former PAYSOP Account shall be invested
          by the Trustee in the Company Stock Fund at all times. However,
          effective January 1, 1999, any Participant who is 100% vested in
          his/her Employer Matched Contribution Account may elect to transfer
          any portion of such Account to or from any of the Investment Funds
          available under the Plan in accordance with Section 16.5. All Pre-Tax
          Contributions, Post-Tax Contributions, Employer SDRP Contributions and
          Qualified Plan Rollover Contributions and contributions to the Former
          Employer Supplemental Contribution Account made hereunder in respect
          of a Participant shall be invested by the Trustee in such Investment
          Funds as the Administrator shall direct based on the Participant's
          investment election made in accordance with Section 16.4 (or, in the
          case of a Participant who fails to make such an investment election,
          in such Investment Fund as the Administrator shall specify from time
          to time) and shall be credited to the Participant's Accounts in
          accordance with Article 6.

16.4      INVESTMENT ELECTIONS OF PARTICIPANTS

          Each Participant shall make an investment election in the manner
          prescribed by the Administrator, directing the manner in which his
          Pre-Tax Contributions, Post-Tax Contributions, Employer SDRP
          Contributions, Qualified Plan Rollover Contributions and contributions
          to the Former Employer Supplemental Contribution Account shall be
          invested by the Trustee. Such investment election shall specify that
          such Pre-Tax Contributions, Post Tax Contributions, Employer SDRP
          Contributions,

                                       40
<PAGE>   48

          Qualified Plan Rollover Contributions and contributions to the Former
          Employer Supplemental Contribution Account shall be deposited in one
          or more of the Investment Funds in percentages that are each an
          integral multiple of 1% and that in the aggregate equal 100%. Each
          Participant's investment election shall remain in effect until he
          changes it in accordance with such procedures and limitations as are
          prescribed by the Administrator. Each investment election change made
          by a Participant pursuant to this Section 16.4 shall apply only to
          Pre-Tax Contributions, Post-Tax Contributions, Employer SDRP
          Contributions, Qualified Plan Rollover Contributions and contributions
          to the Former Employer Supplemental Contribution Account received by
          the Trustee after the change is made. Pre-Tax Contributions, Post-Tax
          Contributions, Employer SDRP Contributions, Qualified Plan Rollover
          Contributions and contributions to the Former Employer Supplemental
          Contribution Account deposited in an Investment Fund pursuant to this
          Section 16.4 may be transferred to another Investment Fund only in
          accordance with Section 16.5.

16.5      ELECTION TO TRANSFER INTEREST BETWEEN INVESTMENT FUNDS

          Subject to Section 16.3, a Participant who has an interest in any
          Investment Fund may elect to transfer all or a portion of such
          interest to any of the other Investment Funds in accordance with such
          procedures and limitations as are prescribed by the Administrator.

16.6      OTHER PROVISIONS CONCERNING INVESTMENT ELECTIONS AND TRANSFERS

          The procedures and limitations prescribed by the Administrator
          pursuant to Sections 16.4 and 16.5 may include, without limitation,
          provisions which (i) limit transfers to specified dollar amounts or
          percentages (ii) limit to not less than four the number of transfers
          that each Participant may make each Plan Year (iii) limit to not less
          than four the number of investment election changes that each
          Participant may make each Plan Year (iv) limit the dates as of which
          transfers and investment election changes may become effective and (v)
          impose waiting periods or other restrictions in connection with
          multiple transfers in and out of the same Investment Fund. All such
          procedures and limitations shall apply uniformly to similarly situated
          Participants. Each investment election and investment election change
          made in accordance with this Article 16 and with the procedures and
          limitations established by the Administrator shall be given effect as
          soon as practicable following the date the investment election or
          investment election change is received by the Administrator. Each
          transfer request made in accordance with this Article 16 and with the
          procedures and limitations established by the Administrator shall be
          given effect within one week following the Administrator's receipt of
          the request.

16.7      FORMER PAYSOP ACCOUNTS

          Notwithstanding the first sentence of Section 16.3, a Participant who
          has held a Former PAYSOP Account for at least ten (10) years and who
          has attained age 55, may elect to transfer all or any portion of the
          balance of his Former PAYSOP Account from the Company Stock Fund to
          any of the other Investment Funds at any time.

                                   ARTICLE 17
                                   ----------
                            MISCELLANEOUS PROVISIONS
                            ------------------------

17.1      HEADINGS

          The headings of the Plan have been inserted for convenience of
          reference only and are not to be deemed controlling in any
          constructions of the provisions herein (other than with respect to
          defined terms).

17.2      PLAN NOT CONTRACT OF EMPLOYMENT

          The existence of the Plan shall not create or change any contract of
          Employment between the Employer and its Employees, whether
          Participants or Former Participants hereunder or not. The right of the
          Employer to take corrective, disciplinary or other action with respect
          to its Employees, including terminating their respective Employment at
          any time for any reason, shall not be affected by any

                                       41
<PAGE>   49

          provision of this Plan, and the Employer will not be deemed
          responsible to provide continuing Employment for any reason, at any
          time solely by reason of this Plan.

17.3      VESTED RIGHTS

          No person shall have any vested rights under the Plan except to the
          extent that such rights may accrue to him/her as provided under the
          Plan. Furthermore, any person with vested rights under the Plan shall
          look solely to the Plan and the assets thereunder for satisfaction of
          such vested rights.

17.4      SEVERABILITY

          If any provision of the Plan shall be invalid, such provision shall be
          fully severable, and the remainder of the Plan and the application
          thereof shall not be affected thereby.

17.5      GENERAL UNDERTAKING

          All parties to this Plan and any persons claiming any interest
          whatsoever hereunder shall perform all and any acts that may be
          necessary for carrying out its terms. This Plan and the acts and
          decisions of the parties hereto, shall be binding upon the heirs,
          executors, administrators, successors, and assignees of any party
          hereto or any persons claiming any benefit hereunder.

17.6      ACTION BY COMPANY

          Whenever, under the terms of the Plan or Trust Agreement, the Company
          is required or permitted to take action, such action may be taken,
          unless otherwise provided by the Plan or Trust Agreement or by action
          of the Board, by any officer of the Company.

17.7      NO RESPONSIBILITY FOR ACTS OF AN INSURER

          Neither the Employer, the Company, the Administrator nor the Trustee
          shall be responsible for any action or inaction of an insurer, nor
          shall they be required to institute legal action in connection with
          the same.

17.8      SPENDTHRIFT

          Benefits and interests under this Plan shall not be anticipated,
          assigned (in law or in equity), alienated, subjected to attachment,
          garnishment, levy, execution, or other legal or equitable process, or
          be otherwise subject to the claim of creditors, except under the terms
          of a Qualified Domestic Relations Order.

17.9      NUMBER AND GENDER

          Any use of the singular shall be interpreted to include the plural and
          the plural the singular. Any use of the masculine, feminine or neuter
          shall be interpreted to include the masculine, feminine and neuter, as
          the context shall require.

17.10     GOVERNING LAW

          To the extent not preempted by Federal law, the provisions of the Plan
          shall be construed, regulated and administered under the laws of the
          State of Ohio.

17.11     MERGER, CONSOLIDATION, AND TRANSFER OF ASSETS

          Before this Plan can be merged or consolidated with any other plan, or
          its assets or liabilities transferred to another plan, each
          Participant in the Plan must be entitled to receive a benefit
          immediately after the merger, transfer or consolidation (as if the
          Plan had then terminated) which is equal to or greater than the
          benefit he/she would have been entitled to receive immediately before
          the merger, consolidation or transfer (as if the Plan had then
          terminated).

                                       42
<PAGE>   50

17.12     RECEIPT OF ASSETS FROM QUALIFIED PLANS

          An Employee (whether or not otherwise a Participant) may make a
          rollover contribution to the Plan at any time consisting of a
          "Qualified Plan Rollover Contribution" or an "Individual Retirement
          Account Rollover Contribution" (each defined below).

          Any rollover contribution shall be held in the Participant's Pre-Tax
          Contribution Account, shall be invested in accordance with the
          direction of the Participant pursuant to Article 16 and shall be
          distributed as provided in Articles 7 and 9.

          "Qualified Plan Rollover Contribution" means an "eligible rollover
          distribution" within the meaning of Section 402(c)(4) of the Code. The
          Employee may transfer any portion of the cash he receives in such
          distribution ( or the cash proceeds of the sale of other property
          received in such distribution) to the trust under this Plan provided
          that the Administrator receives such amounts from the Employee on or
          before the 45th day after the day on which he received the property
          distributed. The maximum amount which may be transferred shall not
          exceed the fair market value of all the property received in
          the distribution reduced by (a) the sum of (i) the amount of the
          Employee's own contributions under such Plan and (ii) any other
          amounts considered as contributed by him (determined by applying
          Section 72(f) of the Code) less (b) any amounts previously distributed
          to him from such other plan and not includable in his gross income.
          The amount so transferred must consist of cash distributed from such
          other plan or any portion of the cash proceeds from the sale of
          distributed property other than case, to the extent permitted by
          Section 402(c) of the Code.

          "Individual Retirement Account Rollover Contribution" means the entire
          amount received by an Employee from an individual retirement account
          representing the entire amount in the account (the "qualifying
          amount") if no part of the amount in the account is attributable to
          any source other than a rollover contribution from (i) an employee's
          trust described in Section 401(a) of the Code, which is exempt from
          tax under Section 501(a) of the Code, or (ii) a qualified annuity plan
          meeting the requirements of Section 403(a) and any earnings on such
          sums. An Individual Retirement Account Rollover Contribution will be
          accepted only if the entire qualifying amount was received by the
          Employee in cash and only such cash amount is included in the
          Individual Retirement Account Rollover Contribution.

17.13     INTERPRETATION OF PLAN

          It is the intent of the Company that this Plan shall qualify under
          Code Section 401(a) and Code Section 501 and meet all applicable
          requirements of ERISA. Accordingly, the Plan and Trust Agreement shall
          be construed and interpreted in such manner as to give effect to this
          intent and shall be administered at all times and in all respects in a
          nondiscriminatory manner.

17.14     SATISFACTION OF CLAIMS

          Any payment to any Participant, Former Participant or Beneficiary in
          accordance with the terms of the Plan, shall, to the extent thereof,
          be in full satisfaction of all claims hereunder, whether they be
          against the Employer, the Company, the Administrator, or the Trustee,
          any of whom may require the Participant, Former Participant or
          Beneficiary (or legal representative), as a condition precedent to
          such payment to execute a release and receipt therefor.

17.15     SERVICE OF PROCESS

          The Administrator shall be the designated agent of the Plan for the
          service of process in connection with all matters affecting the Plan.

17.16     WARRANTIES

          Neither the Company, any Employer, the Administrator, nor the Trustee
          warrant against any loss or diminution in the value of Accounts.

                                       43
<PAGE>   51

17.17     LEASED EMPLOYEES

          Notwithstanding anything herein to the contrary, any person who, with
          respect to any Employer or Affiliated Company, is a leased employee
          shall be treated as an Employee for all Plan purposes, except
          eligibility to participate, entitlement to Contributions and Employer
          Matched Contributions and Crediting of Service. For purposes of the
          preceding sentence, "leased employee" means any person who provides
          services to a recipient, but who is not an employee of the recipient,
          if (i) such services are provided pursuant to an agreement between the
          recipient and any other person ("leasing organization") (ii) such
          person has performed such services for the recipient (or for the
          recipient and related persons) on a substantially full-time basis for
          a period of at least one (1) year and (iii) such services are of a
          type historically performed, in the business field of the recipient,
          by employees, excluding, however, any such person who (i) is covered
          by a plan which is maintained by the leasing organization and which 1)
          is a money purchase pension plan with a non-integrated employer
          contribution rate for each participant of at least 10% of compensation
          2) is a plan that provides full and immediate vesting and 3), is a
          plan that permits each employee of the leasing organization (other
          than employees who perform substantially all of their services for the
          leasing organization) to immediately participate in such plan and (ii)
          performs services for a recipient as to which leased employees
          (determined without regard to the preceding provisions) do not
          constitute more than 20% of the recipient's non-highly compensated
          work force. However, if any such leased employee becomes an Employee,
          he shall be credited with Service for all periods that he was, with
          respect to any Employer or Affiliated Company, a leased employee, in
          accordance with and subject to the provisions and limitations of
          Article 11 of the Plan, as if he had been an Employee during such
          periods.

17.18     DIRECT ROLLOVER DISTRIBUTIONS

          (a)      This Section applies to distributions made on or after
                   January 1, 1993. Notwithstanding any provision of the Plan to
                   the contrary that would otherwise limit a distributee's
                   election under this Section, a distributee may elect, at the
                   time and in the manner prescribed by the Plan Administrator,
                   to have any portion of an eligible rollover distribution paid
                   directly to an eligible retirement plan specified by the
                   distributee in a direct rollover.

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

          (c)      Eligible retirement plan: An eligible retirement plan is an
                   individual retirement account described in Section 408(a) of
                   the Code, an individual retirement annuity described in
                   Section 408(b) of the Code, an annuity plan described in
                   Section 403(a) of the Code, or a qualified trust described in
                   Section 401(a) of the Code, that accepts the distributee's
                   eligible rollover distribution. However, in the case of an
                   eligible rollover distribution to the surviving spouse, an
                   eligible retirement plan is an individual retirement account
                   or individual retirement annuity.

          (d)      Distributee: A distributee includes an employee or former
                   employee. In addition, the employee's or former employee's
                   surviving spouse and the employee's or former employee's
                   spouse or former spouse who is the alternate payee under a
                   qualified domestic relations order, as defined in Section
                   414(p) of the Code, are distributees with regard to the
                   interest of the spouse or former spouse.

          (e)      Direct rollover: A direct rollover is a payment by the plan
                   to the eligible retirement plan specified by the
                   distributee.

                                       44
<PAGE>   52

17.19     PLAN ADDENDA

          The Addendum attached hereto entitled "Addendum to The Progressive
          Retirement Security Program (formerly known as The Progressive
          Corporation Long-Term Savings Plan) ("Plan") Re: Former Participants
          Under The Progressive Corporation Supplemental Retirement Plan" is
          hereby incorporated herein by reference and made a part hereof. The
          Addendum attached hereto entitled "Addendum to The Progressive
          Retirement Security Program ("Plan") Re: Former Participants Under The
          Midland Companies' Employee Savings Plan" is hereby incorporated
          herein by reference and made a part hereof.

17.20     ADJUSTMENT

          In the event of any merger, reorganization, consolidation,
          recapitalization, share dividend, share split, combination of shares
          or other change in corporate structure of the Company affecting the
          Stock, such substitution or adjustment shall be made in the aggregate
          number of shares of Stock available for issuance under the Plan, and
          the number of shares of Stock held in the Plan, as may be approved by
          the Company, in its sole discretion.

17.21     USERRA MODEL AMENDMENT

          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 section 414(u) of
          the Internal Revenue Code. Loan repayments will be suspended under
          this plan as permitted under section 414(u) of the Internal Revenue
          Code.

17.22     ELECTRONIC COMMUNICATIONS

          Notwithstanding any provision in this Plan to the contrary,
          Compensation Deferral Agreements and cancellations or amendments
          thereto, investment elections, changes or transfers, loans, withdrawal
          elections, and any other decision or election by a Participant (or
          Beneficiary) under this Plan may be accomplished by electronic or
          telephonic means which are not otherwise prohibited by law and which
          are in accordance with procedures and/or systems approved or arranged
          by the Administrator or its delegates.

          IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers as of this 1st day of December, 1998.

                                              THE PROGRESSIVE CORPORATION

                                              By:    /s/ DAVID M. SCHNEIDER
                                                     ---------------------------
                                                     David M. Schneider
                                              Title: Secretary
                                                     ---------------------------

                                       45
<PAGE>   53

                               FIRST AMENDMENT TO
                   THE PROGRESSIVE RETIREMENT SECURITY PROGRAM

                        (1999 AMENDMENT AND RESTATEMENT)

          WHEREAS, The Progressive Retirement Security Program is currently
maintained pursuant to a 1999 Amendment and Restatement ("Plan") and

          WHEREAS, it is deemed desirable to amend the Plan further;

          NOW, THEREFORE, the Plan is hereby amended in the respects hereinafter
set forth:

1.        Effective August 1, 1999, the following is hereby added to Section
          2.16 of the Plan:

                   "Notwithstanding anything in the Plan to the contrary,
                   Covered Employees shall not include any person classified by
                   an Employer or any Affiliated Company as an independent
                   contractor or as an employee of an entity other than an
                   Employer or Affiliated Company."

          IN WITNESS WHEREOF, The Progressive Corporation has hereunto caused
this Amendment to be executed by its duly authorized representative, effective
as of the date set forth above.

                                          THE PROGRESSIVE CORPORATION

                                          By:     /s/ DAVID M. SCHNEIDER
                                                  ------------------------------
                                          Title:  Secretary
                                                  ------------------------------<PAGE>   1
                                 EXHIBIT 4(b)
                                 ------------

        Trust Agreement dated January 1, 1999 between the Registrant and
American Express Trust Company, as amended on March 11, 1999
<PAGE>   2

                               TRUST AGREEMENT

                                   BETWEEN

                         THE PROGRESSIVE CORPORATION

                                     AND

                        AMERICAN EXPRESS TRUST COMPANY

                                     FOR

              THE PROGRESSIVE RETIREMENT SECURITY PROGRAM TRUST

                         DATED AS OF JANUARY 1, 1999

<PAGE>   3

<TABLE>
<CAPTION>

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

SECTION                                                                                          PAGE
-------                                                                                          ----
<S>                                                                                             <C>
1.       Trust ......................................................................            1

2.       Exclusive Benefit and Reversion of
           Sponsor Contribution .....................................................            2

3.       Contributions to and Distributions from the Trust ..........................            2

4.       Investment of Trust ........................................................            2-7

5.       Recordkeeping and Reports ..................................................            7

6.       Agents, Attorneys, Actuaries, Accountants and
           Brokers; Trustee Compensation and Expenses; Taxes ........................            7-8

7.       Directions .................................................................            8-9

8.       Resignation or Removal of Trustee ..........................................            9

9.       Successor Trustee ..........................................................            9

10.      Termination ................................................................            9

11.      Continuing Assistance ......................................................            10

12.      Notices ....................................................................            10

13.      Duration ...................................................................            10

14.      Amendment or Modification ..................................................            10

15.      Loans to Participants. .....................................................            10

16.      General ....................................................................            11

17.      Governing Law. .............................................................            11

18.      Transferred Assets; Administration of Transferred Assets;
           Powers and Duties of Trustee .............................................            11-12
</TABLE>

<PAGE>   4
         TRUST AGREEMENT, dated as of the 1st day of January, 1999, between The
Progressive Corporation, an Ohio corporation, having an office at 6300 Wilson
Mills Road, Mayfield Village, Ohio 44143 (the "Sponsor"), and American Express
Trust Company, having an office at 1200 Northstar West, P.O. Box 534,
Minneapolis, Minnesota 55440-0534 (the "Trustee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, the Sponsor is the sponsor (within the meaning of Section
3(16)(B) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and a fiduciary of The Progressive Retirement Security Program (the
"Plan"); and

         WHEREAS, Progressive Casualty Insurance Company ("Administrator") has
been designated as administrator (within the meaning of Section 3(16)(A) of
ERISA) of the Plan; and

         WHEREAS, Administrator has retained American Express Trust Company to
provide certain administrative services with respect to the Plan pursuant to an
Administrative Services Agreement dated January 1, 1999 (the "Services
Agreement"); and

         WHEREAS, American Express Trust Company, in its capacity as a provider
of services under the Services Agreement, is referred to hereinafter in this
Agreement as the "Contract Administrator"; and

         WHEREAS, the Sponsor wishes to establish a trust to hold and invest
contributions under the Plan for the exclusive benefit of Participants in the
Plan and their Beneficiaries; and

          WHEREAS, the Trustee is willing to hold and invest the aforesaid
contributions in trust;

         NOW, THEREFORE, Trustee and Sponsor hereby agree as follows:

         SECTION 1. TRUST. The Sponsor hereby establishes a trust (the "Trust")
with the Trustee. The Trust shall consist of an initial transfer of assets from
the prior trustee of the Plan, such additional sums of money as shall from time
to time be delivered to the Trustee under the Plan, all investments made
therewith and proceeds thereof, and all earnings and profits thereon, less the
payments that are made by the Trustee as provided herein. The Trustee hereby
accepts the Trust on the terms and conditions set forth in this Agreement. In
accepting this Trust, the Trustee shall be accountable for the assets received
by it, subject to the terms and conditions of this Agreement. The Sponsor and
the Trustee acknowledge and agree that each is a fiduciary of the Plan to the
extent provided under Section 3(21) of ERISA. Except as otherwise expressly
provided herein, all capitalized terms used in this Agreement shall have the
meanings ascribed to them in the Plan, as in effect from time to time.

                                       1
<PAGE>   5

          SECTION 2. EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS.

         (a) Except as provided in the Plan and as permitted under ERISA, no
part of the Trust may be used for, or diverted to, purposes other than (i) the
exclusive benefit of the Participants in the Plan or their Beneficiaries and
(ii) payment of reasonable expenses of administering the Plan.

          SECTION 3. CONTRIBUTIONS TO AND DISTRIBUTIONS FROM THE TRUST.

         (a) RECEIPT OF CONTRIBUTIONS. The Trustee shall receive and hold as
part of the Trust such assets of the Plan as may be transferred to it from time
to time and any contributions to the Plan made to the Trust from time to time.
The Trustee shall not be required to determine that any contributions are in
compliance with the Plan, ERISA or the Code, and shall be accountable only for
the funds actually received by it. In the case of assets transferred from
another trustee or any other fiduciary, the Trustee shall not be responsible for
any actions or inactions of such trustee or other fiduciary either prior to or
after the transfer of Trust assets. Company represents that any assets, from
time to time so transferred, were part of a qualified trust at the time of the
transfer.

         (b) DISTRIBUTIONS TO PARTICIPANTS. The Trustee shall make distributions
from the Trust to such persons, in such manner, in such amounts (but not
exceeding the then value of the Trust), for such purposes and subject to such
tax withholding and other deductions as may be specified in the Services
Agreement.

                  The Trustee shall not be liable for making any distribution,
failing to make any distribution, or discontinuing any distribution to the
extent required by the Services Agreement. The Trustee shall not be required to
determine or make any investigation to determine the identity or mailing address
of any person entitled to benefits under the Plan, and shall be discharged of
any obligation in that respect when the Trustee shall have sent checks and other
papers by regular mail, postage prepaid, to such persons and at such addresses
as may be furnished to the Trustee, provided that the Trustee shall promptly
advise the Administrator of all returned checks and correspondence. In addition,
the Trustee will promptly notify the Administrator of each uncashed check that
is at least six (6) months old.

         (c) If the Trustee makes a duplicate disbursement in distributing Stock
or cash from the Trust and such error is not the result of a force majeure or
Act of God or duplicate instructions from the Administrator, the Trustee shall
promptly correct the error at its expense and shall promptly reimburse the Trust
for any overpayment.

          SECTION 4. INVESTMENT OF TRUST.

         (a) The Trustee is vested with title to all the assets of the Trust and
shall have full power and authority to do all acts necessary to carry out its
duties hereunder. Participants and Beneficiaries shall not have any right or
interest in the Trust except as provided in the Plan. Prior to the time of
distribution, neither a Participant nor a Beneficiary (nor a legal
representative of a Participant or a Beneficiary) shall have any right, by way
of anticipation or otherwise, to assign, encumber, or in any manner dispose of
any interest in the Trust except as permitted under the Plan or as required by
applicable law or directed by a court of competent jurisdiction.

                                       2
<PAGE>   6

         (b) The Sponsor will direct the Trustee as to the Investment Funds to
be established for investment of Trust assets in accordance with the provisions
of the Plan. The Trustee does not have any duty to question any such direction,
to review any Investment Fund, or to make any suggestions in connection
therewith. The Trustee will promptly comply with any direction given by the
Administrator.

         (c) The Trustee shall invest in the Investment Funds in accordance with
investment directions given by the Participants and Beneficiaries for whose
accounts such assets are held, to the extent so provided for in the Plan. All
such directions by the Participants or Beneficiaries to the Trustee will be made
in writing or by telephone or in such other manner as is mutually agreed by the
Sponsor and the Trustee. Participants and Beneficiaries will be deemed
fiduciaries for purposes of such investment selection.

         (d) Where a Participant, a Beneficiary or an Investment Manager (except
the Trustee as Investment Manager of any assets as provided herein), has the
power and authority to direct the investment of any assets of the Trust, the
Trustee does not have any duty to question any direction, to review any
securities or other property, or to make any suggestions in connection
therewith. The Trustee will promptly comply with any direction given by a
Participant, a Beneficiary or an Investment Manager.

         (e) The Trustee will not be liable in any manner or for any reason for
any loss or other unfavorable investment results arising from its compliance
with direction under this Section, nor be liable for failing to invest any
assets of the Trust under the management and control of a Participant, a
Beneficiary or an Investment Manager in the absence of investment directions
regarding such assets.

         SECTION 4A.  INVESTMENT MANAGERS.

         (a) The Sponsor has the power and authority to appoint one or more
Investment Managers as defined in and subject to the requirements of ERISA. Each
Investment Manager so appointed will have the power and authority to invest,
acquire, manage or dispose of the assets of the Trust under its management and
to direct the Trustee with respect to the investment, reinvestment and sale of
such assets.

         (b) If the Sponsor elects to delegate investment authority for the
assets of all or any portion of the Trust to an Investment Manager pursuant to
subsection (a), the Sponsor will inform the Trustee in writing of such
designation and such written notice shall describe the portion of the Trust
affected. Upon receipt of such notice, the Trustee will be obligated to follow
the investment directions of the Investment Manager with respect to the assets
of the specified portion of the Trust until the Trustee receives written notice
that such Investment Manager has resigned or has been removed or replaced by the
Sponsor. The Trustee will not be a party to any agreement between the Sponsor
and an Investment Manager, and will have no responsibility with respect to the
terms and conditions of such agreement.

         (c) In exercising its authority to delegate investment authority to an
Investment Manager, the Sponsor shall have the duty, responsibility and power to
(i) examine and analyze the performance of prospective Investment Managers; (ii)
select an Investment Manager or

                                       3
<PAGE>   7

Managers; (iii) determine the portion of the Trust that will be under the
management of each Investment Manager; (iv) issue appropriate instructions to
the Trustee and to each Investment Manager regarding the allocation of
investment authority; (v) review the performance of each Investment Manager at
periodic intervals; and (vi) remove any Investment Manager when the Sponsor
deems such removal to be necessary or appropriate.

         (d) All directions by an Investment Manager to the Trustee concerning
the investment, reinvestment, sale or management of assets of the Trust will be
made in writing or in such other manner as is acceptable to the Trustee, by such
person or persons as the Investment Manager designates in writing to the Trustee
from time to time.

         (e) An Investment Manager who engages any investment advisor or
investment counselor that it deems necessary or appropriate, may provide that
directions concerning the investment and reinvestment of the assets of the Trust
under its management and control to be made directly to the Trustee by such
advisor or counselor as the Investment Manager's agent; provided, however, that
prior to any such direction by the investment advisor or investment counselor,
the Trustee receives written notice from the Investment Manager that the
directions of such agent will be considered the directions of the Investment
Manager and that the Investment Manager will be responsible for the directions
of such agent.

         (f) If an Investment Manager resigns or is removed by the Sponsor, the
Sponsor will notify the Trustee in writing of such resignation or removal. Upon
actual receipt of such notice, the power and authority to invest and reinvest
the assets of the Trust formerly under the control and management of the
Investment Manager will return to the Sponsor unless the Sponsor indicates that
a successor Investment Manager has been appointed with respect to such assets.

         (g) The fees and expenses of each Investment Manager, except to the
extent paid by the Sponsor, shall be paid from the Trust, provided that no fees
not expressly provided for in this Agreement shall be paid to the Trustee with
respect to its activities as an Investment Manager under Section 4C.

         SECTION 4B.  INVESTMENT IN COLLECTIVE FUNDS.

         When so directed by the Administrator or pursuant to investment
directions given by Participants or Beneficiaries pursuant to Section 4, the
Trustee shall invest and reinvest all or a portion of the Trust through any
common or collective trust fund or pooled investment fund, including collective
investment funds maintained by American Express Trust Company or its successor,
for the collective investment of funds held by it in a fiduciary capacity. The
1998 Amended and Restated Declaration of Trust creating the American Express
Trust Collective Investment Funds for Employee Benefit Trusts ("Declaration of
Trust") is hereby incorporated by reference and made a part of this Agreement.
Notwithstanding any other provision of this Agreement, the Trustee may commingle
the designated assets from the Trust with the money of trusts created by others,
by causing such assets to be invested as a part of any one or more of the
collective funds created by the Declaration of Trust and assets of this Trust so
added to any of the collective funds at any time shall be subject to all of the
provisions of the Declaration of Trust as it is amended from time to time.
Notwithstanding the foregoing, the provisions of this Section shall apply only
as long as such collective or pooled investment fund remains exempt from

                                       4
<PAGE>   8

taxation under Section 501(a) of the Code and the qualified status of the Plan
and the tax exempt status of the Trust are not thereby affected adversely.

         SECTION 4C.  TRUSTEE AS INVESTMENT MANAGER

         The Sponsor hereby appoints Trustee to serve as Investment Manager with
respect to the Investment Funds set forth in Exhibit A, which Exhibit may be
amended from time to time by mutual agreement of the parties (said Investment
Funds hereinafter referred to as the "Account"):

         Trustee shall have full discretionary authority to formulate and
execute an investment program for the management and investment of the Account,
including the authority to:

         (a) buy, sell, exchange, convert or otherwise trade in any stocks,
bonds and other investments including money market instruments and investment
contracts; and

         (b) place orders for the execution of such investment transactions with
or through such brokers, dealers or issuers as Trustee may select; and

         (c) request the issuance of average price confirmations by
participating brokers.

         Such authority shall be subject to the terms and conditions of this
Agreement, the provisions of the Declaration of Trust with respect to any assets
in the collective funds as provided in Section 4B. of this Trust Agreement and
any written investment objectives and guidelines that are executed by the
Sponsor and accepted by the Trustee. Such guidelines are incorporated herein by
reference.

         To the extent the Trustee is an Investment Manager, it shall invest and
reinvest the principal and income of the Account with the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent person
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.

         SECTION 4D.  OTHER INVESTMENT PROVISIONS.

         (a) Purchases and sales of Company Stock may be made to, from or
through any source, provided that such purchases from, or sales to, a party in
interest (as defined in Section 3(14) of ERISA) shall comply with the
requirements of Section 408(c) of ERISA. Rights, options or warrants offered to
purchase Company Stock shall be exercised by the Trustee to the extent that
there is cash available for the investment; to the extent cash is not available,
the same shall be sold on the open market.

         (b) Neither the Trustee, the Sponsor nor the Administrator shall be
liable for any loss which arises from any Participant's directions, investment
elections, investment election changes, transfers or exercise or non-exercise of
rights under the Plan pertaining to the assets in the Participant's Accounts.

         (c)      The Trustee shall have the following powers and authority:

                                       5
<PAGE>   9

                  (i) Subject to the preceding provisions of this Agreement, to
sell, exchange, convey, transfer, or otherwise dispose of any property held in
the Trust, by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or other
property delivered to the Trustee or to inquire into the validity, expediency,
or propriety of any such sale or other disposition.

                  (ii) To cause any securities or other property held as part of
the Trust to be registered in the Trustee's own name, in the name of one or more
of its nominees, and to hold any investments in bearer form, but the books and
records of the Trustee shall at all times show that all such investments are,
and such investments shall at all times be, part of the Trust.

                  (iii) To make, execute, acknowledge and deliver any and all
documents of transfer or conveyance necessary to carry out the powers herein
granted.

                  (iv) With the Sponsor's prior written consent (which shall not
be unreasonably withheld) (1) to settle, compromise or submit to arbitration any
claims, debts or damages due to or arising from the Trust, (2) to commence or
defend suits or legal or administrative proceedings, (3) to represent the Trust
in all suits and legal and administrative hearings, and (4) to pay all
reasonable expenses arising from any such action from the Trust, if not paid by
the Sponsor; provided that the Trustee has given the Sponsor prompt notice of
all such matters and has permitted the Sponsor to participate in all related
activities. Notwithstanding the foregoing provisions of this Section 4D(e)(v),
where the Trustee must take an action with respect to a claim, suit, or other
legal, administrative or regulatory proceeding in order to fulfill its fiduciary
responsibilities under ERISA, the Trustee need not obtain the Sponsor's prior
written consent as provided above, but the Trustee shall give the Sponsor as
much prior notice of the Trustee's proposed actions as circumstances permit.

                  (v) To borrow money from any lender to cover temporary
overdrafts to the extent such overdrafts are necessary to facilitate transfers
among, or distributions from, any of these Investment Funds.

                  (vi) To hold any part of the Trust assets in cash without
liability for interest, pending the payment of expenses or making of
distributions therewith, notwithstanding the Trustee's receipt of "float" from
such uninvested cash.

                  (vii) To do all other acts although not specifically mentioned
herein, as the Trustee may deem necessary to carry out any of the foregoing
powers and the purposes of the Trust.

         (d) The Administrator has assigned to the Participants the right to
vote proxies or exercise other rights of ownership with respect to all
Investment Funds except Investment Funds for which American Express Trust
Company is the Investment Manager. Unless otherwise agreed in writing: (i) the
Administrator shall be responsible for distributing proxies and proxy related
materials to the Participants and (ii) the Trustee shall deliver or cause to be
delivered to the Administrator or the designated Investment Manager, all
notices, prospectuses and finance statements relating to investments held
hereunder. Except for those Trust assets for which American Express Trust
Company is the Investment Manager, the Trustee shall not vote any proxy or
tender offer election, participate in any voting trust, exercise any option, or
subscription

                                       6
<PAGE>   10

right or join in, dissent from or oppose any merger, reorganization,
consolidation, liquidation or sale with respect to any asset held hereunder
except in accordance with the timely written instructions of the Participants.
Solely for this purpose, each Participant shall act as the Named Fiduciary, as
defined in ERISA, in providing direction to the Trustee. Unless contrary to the
terms of the Plan, and to the extent practicable, all unallocated assets or
investments held hereunder, and all assets or investments for which the Trustee
has not received instructions, shall, solely for the purposes of this Section be
allocated to the account of each Participant who has issued instructions to the
Trustee, in the same proportion as such Participant's allocated proportion of
assets or investments bear to the aggregate of all like assets or investments
for which instructions have been issued by the Participant to the Trustee.

         SECTION 5. RECORDKEEPING AND REPORTS.

         (a) The Trustee shall keep accurate accounts of all investments,
receipts, disbursements and other transactions hereunder. All records generated
by the Trustee shall be open to inspection and audit, during the Trustee's
regular business hours prior to the termination of this Agreement, by the
Sponsor, the Administrator or any person designated by the Sponsor. If the
Sponsor or the Administrator becomes aware of any errors or discrepancies in
such records, it will promptly advise the Trustee.

         (b) Except as otherwise required by law, the Contract Administrator
shall be responsible for the preparation and filing of all returns, reports and
information required of the Trust or Plan by law. The Trustee promptly shall
provide the Contract Administrator with such information in the Trustee's
possession or control as the Contract Administrator may reasonably request to
make these filings.

         SECTION 6. AGENTS, ATTORNEYS, ACTUARIES, ACCOUNTANTS AND BROKERS;
TRUSTEE COMPENSATION AND EXPENSES; TAXES.

         (a) The Trustee, the Sponsor and the Administrator are empowered to
employ such agents, attorneys (including attorneys who may be counsel for the
Sponsor), actuaries, accountants and brokers as they, or any of them, may deem
necessary or proper in connection with the maintenance and administration of the
Trust. The Trustee shall pay out of the Trust the reasonable compensation and
expenses of such agents, attorneys, actuaries, accountants and brokers, except
to the extent such compensation and expenses are paid by the Sponsor or the
Administrator; provided that the Trustee, the Sponsor and the Administrator
shall be responsible for their own attorneys fees and expenses incurred in the
negotiation and preparation of this Agreement and further provided that, in the
case of agents, attorneys, actuaries, accountants and brokers employed by the
Sponsor or Administrator, such payments will only be made by the Trustee as
directed by the Sponsor or Administrator.

         (b) The Trustee shall be entitled to such reasonable compensation for
its services as is provided for in the Services Agreement. The Trustee will, as
part of its compensation for services provided to the Plan, receive the earnings
from any uninvested cash awaiting investment into or distribution from the
Trust. The Company agrees that the Trust may hold such uninvested cash without
incurring any liability for the payment of earnings on such uninvested cash.

                                       7
<PAGE>   11

         (c) As directed by the Sponsor or Administrator, the Trustee is
empowered to pay out of the Trust, as a general charge thereon, any and all
taxes of whatsoever nature assessed on or in respect to the Trust; provided,
however, that, if the Sponsor notifies the Trustee in writing that in the
opinion of the Sponsor's counsel any such tax is not lawfully assessed, the
Trustee, if so requested by the Sponsor, shall contest the validity of such tax
in any manner deemed appropriate by the Sponsor or its counsel. The word
"taxes", as used herein, shall be deemed to include any interest or penalties
assessed in respect to such taxes. Unless the Trustee first shall be indemnified
to its reasonable satisfaction by the Sponsor, the Trustee shall not be required
to contest the validity of any tax, to institute, maintain or defend against any
other action or proceeding or to incur any other expense in connection with the
Trust, except to the extent that the Trust is sufficient therefor.

         SECTION 7. DIRECTIONS.

         (a) Except as otherwise agreed in writing between the Trustee and the
Sponsor or Administrator, any action under this Agreement required to be taken
by the Sponsor or the Administrator shall be by written direction of any
individual authorized by the Sponsor's Chairman, President, Chief Executive
Officer, Chief Human Resources Officer, Chief Financial Officer or Chief Legal
Officer in substantially the form of Exhibit B attached hereto, unless the
Trustee has received actual written notice from any of such officer that such
individual's authority has been withdrawn. The Trustee may rely on any such
written direction which it reasonably believes to bear the genuine signature of
the authorized individual, which writing may include a facsimile transmission.
Notwithstanding anything herein to the contrary, the Sponsor or the
Administrator may delegate any of its responsibilities hereunder to a
representative by giving to the Trustee in writing a letter which identifies the
representative and sets forth the list of the Trustee's responsibilities under
this Agreement that the Trustee has authorized the representative to carry out.

         (b) The Sponsor shall indemnify the Trustee against, and hold the
Trustee harmless from, any and all loss, damage, penalty, liability, cost,
expense and reasonable attorneys' fees and disbursements, that may be incurred
by, imposed upon or asserted against the Trustee by reason of any claim,
regulatory proceeding or litigation arising from any act done or omitted to be
done by any individual or person with respect to the Plan or Trust, excepting
only any and all loss, damage, penalty, liability, cost, expense, and reasonable
attorneys' fees and disbursements, to the extent arising from the Trustee's
negligence in performing or failing to perform any of the duties specifically
allocated to the Trustee under the terms of this Agreement or from the Trustee's
willful misconduct or bad faith.

                  The Trustee agrees to indemnify and hold the Sponsor and
Administrator harmless from and against any loss, damage, penalty, liability,
cost and expense and reasonable attorneys' fees and disbursements incurred by
the Sponsor or Administrator to the extent arising from the Trustee's negligence
in performing or failing to perform any of the duties specifically allocated to
the Trustee under the terms of this Agreement or from the Trustee's willful
misconduct or bad faith.

                                       8
<PAGE>   12

         (c) Notwithstanding the foregoing, nothing in this Agreement shall
limit the liability of American Express Trust Company in its capacity as
Contract Administrator under the Services Agreement.

         (d) The provisions of this Section 7 shall survive the termination of
this Agreement.

         SECTION 8. RESIGNATION OR REMOVAL OF TRUSTEE.

         (a) The Trustee may resign at any time upon three hundred sixty-five
(365) days' notice in writing to the Sponsor, unless a shorter period of notice
is agreed upon by the Sponsor.

         (b) The Sponsor may remove the Trustee at any time upon one hundred
eighty (180) days' notice in writing to the Trustee, unless a shorter period of
notice is agreed upon by the Trustee.

         SECTION 9. SUCCESSOR TRUSTEE.

         (a) If the office of Trustee becomes vacant for any reason, the Sponsor
may in writing appoint a successor trustee under this Agreement. The successor
trustee shall have all of the rights, powers, privileges, obligations, duties,
liabilities and immunities granted to the Trustee under this Agreement. The
successor trustee and predecessor trustee shall not be liable for the acts or
omissions of the other with respect to the Trust.

         (b) When the successor trustee accepts its appointment under this
Agreement, title to and possession of the Trust assets shall immediately vest in
the successor trustee without any further action on the part of the predecessor
trustee. The predecessor trustee shall execute all instruments and do all acts
that reasonably may be necessary or reasonably may be requested in writing by
the Sponsor or the successor trustee to vest title to all Trust assets in the
successor trustee or to deliver all Trust assets to the successor trustee as
promptly as possible.

         (c) Any successor of the Trustee or successor trustee, through sale or
transfer of the business or trust department of the Trustee or successor
trustee, or through reorganization, consolidation, or merger, or any similar
transaction, shall, upon consummation of the transaction, become the successor
trustee under this Agreement.

         SECTION 10. TERMINATION. This Agreement may be terminated at any time
by the Sponsor upon sixty (60) days' notice in writing to the Trustee. On the
date of the termination of this Agreement, the Trustee shall forthwith transfer
and deliver to such individuals or entities as the Sponsor shall designate, all
cash and assets then constituting the Trust. If, by the termination date, the
Sponsor has not notified the Trustee in writing as to whom the assets and cash
are to be transferred and delivered, the Trustee may bring an appropriate action
or proceeding for leave to deposit the assets and cash in a court of competent
jurisdiction. The Trustee shall be reimbursed by the Sponsor for all costs and
expenses of the action or proceeding including, without limitation, reasonable
attorneys' fees and disbursements.

                                       9
<PAGE>   13

         SECTION 11. CONTINUING ASSISTANCE. Following the appointment of a
successor trustee under Section 9 or the termination of this Agreement under
Section 10, the Trustee shall provide such follow-up and transition assistance
as the Sponsor may reasonably request, including, but not limited to, providing
additional copies of Form 1099Rs and cashed distribution checks, related to
activity occurring during the years that the Trustee was trustee, provided
however, the Trustee shall not be required to produce any information, accounts
or copies of Form 1099Rs or checks which are more than seven years old.

         SECTION 12. NOTICES. Except as otherwise expressly provided herein, all
notices required or permitted to be given under this Agreement must be in
writing and mailed to the party to which the notice is being given by certified
or registered mail, return receipt requested, or overnight courier with next day
delivery guaranteed, to the Sponsor at 6300 Wilson Mills Road, Mayfield Village,
Ohio 44143, Attn: Marilyn A. Muzic, with a copy to Michael R. Uth, Progressive
Casualty Insurance Company, 6300 Wilson Mills Road, Mayfield Village, Ohio 44143
and to the Trustee at 1200 Northstar West, P.O. Box 534, Minneapolis, Minnesota
55440-0534, Attn: Team for Progressive Corp., or to such other persons and
addresses as the parties provided notice in the foregoing manner.

         SECTION 13. DURATION. This Trust shall continue in effect without limit
as to time, subject, however, to the provisions of this Agreement relating to
amendment, modification and termination thereof.

         SECTION 14. AMENDMENT OR MODIFICATION. Subject to the provisions of
Section 2, this Agreement may be amended at any time and from time to time only
by an instrument executed by both the Sponsor and the Trustee. Any such
amendment shall be approved on behalf of the Sponsor by its Board of Directors;
provided, however, that any such amendment which is required by law to be made
or which will not require the Sponsor or any Employer to make contributions
other than compensation reduction contributions in respect of the Plan may be
approved by the Sponsor's Chairman, President or Chief Executive Officer and
such officer's execution of such amendment shall be deemed to be conclusive
evidence that any and all requisite approvals in respect of such amendment have
been obtained.

         SECTION 15. LOANS TO PARTICIPANTS. Loans to Participants as provided
for in the Plan shall be granted and administered by the Contract Administrator
in accordance with guidelines provided from time to time by the Administrator.
The Trustee shall distribute cash to such Participants who are granted loans in
such amount and at such times as the Contract Administrator shall from time to
time direct. Loan payments collected by the Sponsor or Contract Administrator
shall be forwarded to the Trustee. The Contract Administrator shall give the
Trustee instructions on how to handle loan disbursements and repayments. The
Trustee shall have no responsibility to ascertain whether a loan complies with
the provisions of the Plan, for the decision to grant a loan or for the
collection and repayment of a loan. The Contract Administrator shall maintain
the market value of the outstanding loans and the Trustee shall have no
responsibility with respect thereto.

                                       10
<PAGE>   14

         SECTION 16.  GENERAL.

         (a) ENTIRE AGREEMENT. This Agreement contains all of the terms agreed
upon between the parties with respect to the subject matter hereof.

         (b) WAIVER. No waiver by either party of any failure or refusal to
comply with any obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.

         (c) SUCCESSORS AND ASSIGNS. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.

         (d) PARTIAL INVALIDITY. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
held invalid or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.

         (e) SECTION HEADINGS. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience of reference and are not part of this Agreement and shall not be
deemed in any manner to modify, explain, expand or restrict any of the
provisions of this Agreement.

         SECTION 17.  GOVERNING LAW.

         (a) The validity, construction, effect and administration of this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Minnesota, except to the extent those laws are superseded by ERISA.

         (b) The Trustee is not a party to the Plan and in no event shall the
terms of the Plan, either expressly or by implication, be deemed to impose upon
the Trustee any power or responsibility other than those set forth in this
Agreement. The Trustee may assume until advised to the contrary that the Plan is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended,
or under corresponding provision of subsequent federal tax laws. The Trustee
shall be accountable for contributions made to the Plan and included among the
assets of the Trust but shall have no duty to determine whether the
contributions comply with the provisions of the Plan or of ERISA.

         SECTION 18. TRANSFERRED ASSETS; ADMINISTRATION OF TRANSFERRED ASSETS;
                     POWERS AND DUTIES OF TRUSTEE.

         (a) There will, from time to time, subsequent to December 31, 1997, be
delivered to the Trustee certain assets ("Midland Assets") previously held
pursuant to the Midland Companies' Employee Savings Plan ("Midland Plan"). All
such Midland Assets shall be held, administered

                                       11
<PAGE>   15

and disbursed by the Trustee as part of the Trust, pursuant to the provisions of
this Agreement, as in effect from time to time once received by the Trustee.

         (b) The Trustee will have no duty to verify whether the amount of any
such Midland Assets delivered to it is correct, and shall have no duty of
inquiry into the prior administration of the Midland Plan or funding for the
Midland Plan.

         (c) Such Midland Assets shall be invested in such investment funds as
the Sponsor shall direct, based on each Participant's investment election then
in effect pursuant to the Plan, if any, and if no investment election is then in
effect as to any Participant, such Midland Assets relating to such Participant
shall be invested in an investment fund consisting of guaranteed investment
contracts or a similar successor investment fund until the Sponsor directs
otherwise based on a subsequent investment election of the Participant.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

                                        THE PROGRESSIVE CORPORATION

                                        By:  /s/ DAVID M. SCHNEIDER
                                             -----------------------------------
                                        Title: Secretary
                                               ---------------------------------

                                        AMERICAN EXPRESS TRUST COMPANY

                                        By:  /s/ TARA L. STONEHOUSE
                                             -----------------------------------
                                        Title: Vice President
                                              ----------------------------------
                                               12/17/98

                                       12
<PAGE>   16

                                                                       EXHIBIT A

Pursuant to Section 4C hereof, American Express Trust is appointed as Investment
Manager of the following Funds:

American Express Trust Stable Capital Fund II
American Express Trust Short - Term Horizon (25:75) Fund
American Express Trust Bond Index Fund II
American Express Trust Medium - Term Horizon (50:50) Fund
American Express Trust Long - Term Horizon (80:20) Fund
American Express Trust Equity Index Fund III
American Express Trust Small Cap Equity Index Fund II

<PAGE>   17

                                   EXHIBIT "B"

_______________________________
_______________________________
_______________________________
_______________________________

Re:      The Progressive Retirement Security Program

Dear Mr. __________________________________ :

This letter is sent to you in accordance with Section ____________ of the Trust
Agreement, dated as of _________ , 1998, between The Progressive Corporation and
American Express Trust Company. I hereby designate _____________, _____________,
and ______________________, as the individuals who may provide directions to you
pursuant to the Agreement. Only one such individual need provide any direction.
The signature of each designated individual is set forth below and certified to
be such.

You may rely upon each designation and certification set forth in this letter
until you receive a written notice of the termination of authority of a
designated individual.

                                           Very truly yours,

                                           __________________________________

                                           By:__________________________________

                                           Title:_______________________________

[signature of designated individual]
 -----------------------------------
[name of designated individual]
 ------------------------------

[signature of designated individual]
 -----------------------------------
[name of designated individual]
 ------------------------------

[signature of designated individual]
 -----------------------------------
[name of designated individual]
 ------------------------------

<PAGE>   18

                                AMENDMENT NO. 1
                                     TO THE
              TRUST AGREEMENT BETWEEN THE PROGRESSIVE CORPORATION
                                      AND
                         AMERICAN EXPRESS TRUST COMPANY
                                    FOR THE
                 PROGRESSIVE RETIREMENT SECURITY PROGRAM TRUST

         This Amendment No.1 to the Trust Agreement between The Progressive
Corporation and American Express Trust Company for the Progressive Retirement
Security Program Trust is made and entered into this 11 day of March 1999, by
and between American Express Trust Company, a Minnesota trust company,
("American Express Trust"), and The Progressive Corporation, a corporation
organized under the laws of the State of Ohio (the "Company").

                                WITNESSETH THAT:
                                 ---------------

         WHEREAS, American Express Trust and the Company are parties to Trust
Agreement made effective, initially, January 1, 1999, with respect to the
Progressive Retirement Security Program (the "Plan"); and

         WHEREAS, the Company has maintained and continues to maintain the Plan
for the benefit of certain of its employees; and

         NOW THEREFORE, in consideration of the mutual covenants set forth in
the Trust Agreement, it is agreed by the parties hereto that the Trust Agreement
is hereby amended as follows, effective April 1, 1999, with all other provisions
which are not herein amended, remaining in full force.

FIRST: A new Section 19 is hereby added to the Trust Agreement, as follows:

"SECTION 19.  DIRECTED BROKERAGE ACCOUNTS

(a)      Notwithstanding anything to the contrary, this Section 19 supercedes
         any conflicting provision as it relates to a Participant's Directed
         Brokerage Account.

(b)      The Company directs the Trustee to deduct the brokerage fee and other
         related fees and expenses charged to each Participant from the
         Participant's Directed Brokerage Account.

(c)      In the case of a class action lawsuit, proceeds from the class action
         for any Participant or former Participant who no longer has an account
         in the Plan shall be held in the default investment fund in a
         segregated or separate account.

                                       1
<PAGE>   19

(d)      The Trustee shall have no responsibility for any proxy or tender offer
         relating to securities held in the Directed Brokerage Account. Each
         Participant in a Directed Brokerage Account shall be responsible for
         completing the appropriate proxy or tender offer materials and
         returning them directly to the proxy solicitor or the entity stated in
         the tender offer materials respectively, for tabulation and vote
         submission. If no proxy or tender offer materials are timely received,
         such election or tender offer shall not be voted or exercised. The
         Trustee shall not bear any responsibility for the tabulation, voting,
         submission, recordation or maintenance of records relative to the proxy
         vote or tender offer.

(e)      The Trustee will not act as trustee of any assets in a Participant's
         Directed Brokerage Account which consist of any of the following:

                  i)   securities that do not have a stated market value, such
                       as closely held stock;
                  ii)  debt instruments (bonds, preferred stock) of American
                       Express Company;
                  iii) limited partnerships;
                  iv)  assets that require an advance or loan, including but not
                       limited to a margin account;
                  v)   securities issued by the Company or its affiliates;
                  vi)  options."

SECOND:  Section 3(c) is hereby deleted and replaced with the following:

(c) If the Trustee makes a duplicate disbursement in distributing cash, Stock,
or other securities from the Trust and such error is not the result of a force
majeure or act of God or duplicate instructions from the Administrator, the
Trustee shall promptly correct the error at its expense and shall promptly
reimburse the Trust for any overpayment.

         IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Trust Agreement between the Progressive Corporation and American Express
Trust Company for the Progressive Retirement Security Program Trust as of the
date first written above.

THE PROGRESSIVE CORPORATION                   AMERICAN EXPRESS TRUST COMPANY

SIGNED: /S/ DAVID M. SCHNEIDER                SIGNED: /S/ TARA L. STONEHOUSE
       --------------------------------               ------------------------

TITLE:   Secretary                            TITLE:  Vice President
       ---------------------------------              ------------------------
                                              PRESIDENT

DATE:   3/11/99                                        DATE:  4/5/99
      ---------------------------------                -----------------------

                                       2

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