Document:

Southern California Edison Company

                             STOCK SAVINGS PLUS PLAN

                             Also Referred to as the

                           EDISON 401(K) SAVINGS PLAN

                         for Employees of Participating

                              EDISON INTERNATIONAL

                                    Companies

                              As Restated Effective

                                February 1, 2000

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                            Stock Savings Plus Plan
                               Table of Contents

ARTICLE 1 ESTABLISHMENT OF THE PLAN...........................................1

   1.01     ESTABLISHMENT OF PLAN.............................................1
   1.02     EFFECTIVE DATE OF PLAN............................................1
   1.03     DESIGNATION OF PLAN...............................................1

ARTICLE 2 DEFINITIONS.........................................................1

ARTICLE 3 ELIGIBILITY AND PARTICIPATION.......................................9

   3.01     ENTRY OR REENTRY INTO PLAN....................................... 9
   3.02     PARTICIPATION....................................................10
   3.03     LEASED EMPLOYEES.................................................10
   3.04     QUALIFIED MILITARY SERVICE.......................................10

ARTICLE 4 ENROLLMENT IN PLAN.................................................10

   4.01     ENROLLMENT.......................................................10
   4.02     ACCEPTANCE OF PLAN BY PARTICIPANT................................10

ARTICLE 5 PARTICIPANT DEFERRALS AND POST-TAX CONTRIBUTIONS...................11

   5.01     DEFERRAL PERCENTAGE..............................................11
   5.02     EARNINGS REDUCTION AGREEMENT.....................................11
   5.03     INITIAL DEFERRAL ELECTION........................................11
   5.04     POST-TAX CONTRIBUTIONS...........................................11
   5.05     INACTIVE PARTICIPATION...........................................11
   5.06     LIMITATIONS......................................................12

ARTICLE 6 CHANGE OR REVOCATION OF PARTICIPANT ELECTIONS......................12

   6.01     CHANGE OF PARTICIPANT ELECTIONS..................................12
   6.02     REVOCATION OF PARTICIPANT ELECTIONS..............................12

ARTICLE 7 COMPANY CONTRIBUTIONS..............................................12

   7.01     CONTRIBUTION OF PARTICIPANT DEFERRALS............................12
   7.02     MATCHING CONTRIBUTIONS...........................................12
   7.03     PROFIT/GAIN SHARING CONTRIBUTIONS................................13
   7.04     QUALIFIED NONELECTIVE CONTRIBUTIONS..............................15
   7.05     LIMITATIONS......................................................15

ARTICLE 8 TRANSFERS AND ROLLOVERS FROM OTHER PLANS...........................15

   8.01     EMPLOYEE ROLLOVER CONTRIBUTIONS..................................15

ARTICLE 9 PAYMENT TO TRUSTEE and allocations.................................16

   9.01     PAYMENT TO TRUSTEE...............................................16
   9.02     ALLOCATION OF CONTRIBUTIONS......................................16

ARTICLE 10 LIMITATIONS.......................................................17

   10.01    SECTION 415 LIMITATIONS ON ANNUAL ADDITIONS......................17
   10.02    SECTION 401(K)(3) LIMITATIONS....................................20
   10.03    CODE SECTION 401(M) LIMITS.......................................25
   10.04    SECTION 402(G) LIMITATIONS.......................................29

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                            Stock Savings Plus Plan
                                Table of Contents

ARTICLE 11 ACCOUNTING FOR PARTICIPANT INTERESTS..............................30

   11.01    INDIVIDUAL ACCOUNTS..............................................30
   11.02    ACCOUNTING FOR INVESTMENTS.......................................30
   11.03    VALUATION OF ACCOUNTS............................................30
   11.04    PARTICIPANT STATEMENTS...........................................31

ARTICLE 12 INVESTMENT OF TRUST ASSETS........................................31

   12.01    INVESTMENT OF FUTURE CONTRIBUTIONS...............................31
   12.02    INVESTMENT OF ACCUMULATED CONTRIBUTIONS..........................32

ARTICLE 13 VESTING...........................................................32

   13.01    VESTING OF DEFERRALS AND POST-TAX CONTRIBUTIONS..................32
   13.02    VESTING OF COMPANY CONTRIBUTIONS.................................32
   13.03    VESTING OF PLAN TRANSFERS AND ROLLOVER CONTRIBUTIONS.............33
   13.04    FORFEITURE, REPAYMENT AND VESTING FOLLOWING RE-EMPLOYMENT........33

Article 14 PLAN LOANS........................................................34

   14.01    ELIGIBILITY......................................................34
   14.02    LOAN PROCEDURES..................................................34

ARTICLE 15 DIRECT ROLLOVERS AND QUALIFIED DOMESTIC RELATIONS ORDERS..........39

   15.01    DIRECT ROLLOVERS.................................................39
   15.02    DISTRIBUTIONS DUE TO QUALIFIED DOMESTIC RELATIONS ORDERS.........40

ARTICLE 16 WITHDRAWAL DURING EMPLOYMENT......................................40

   16.01    WITHDRAWAL FROM THE POST-TAX ACCOUNT.............................40
   16.02    WITHDRAWAL FROM THE PRE-TAX ACCOUNT..............................40
   16.03    AGE 70-1/2 WITHDRAWALS...........................................41
   16.04    DISBURSEMENT OF WITHDRAWALS......................................41
   16.05    MINIMUM AND MAXIMUM WITHDRAWAL...................................41
   16.06    PROPORTIONAL WITHDRAWAL REQUIREMENT..............................42
   16.07    NO WITHDRAWAL FROM THE COMPANY CONTRIBUTION ACCOUNT..............42

ARTICLE 17 PLAN DISTRIBUTIONS................................................42

   17.01    REQUIRED BEGINNING DATE AND MINIMUM DISTRIBUTIONS................42
   17.02    DISTRIBUTIONS DUE TO RETIREMENT..................................42
   17.03    DISTRIBUTIONS OTHER THAN RETIREMENT..............................43
   17.04    FORM OF DISTRIBUTION.............................................43
   17.05    FRACTIONAL SHARES OF STOCK.......................................44
   17.06    BENEFICIARY IN THE EVENT OF DEATH................................44
   17.07    UNLOCATED PARTICIPANT............................................46

ARTICLE 18 TOP-HEAVY PROVISIONS..............................................46

   18.01    TOP-HEAVY DETERMINATION..........................................46
   18.02    PROVISIONS APPLICABLE IF PLAN IS TOP-HEAVY.......................48

ARTICLE 19 ADMINISTRATION....................................................48

   19.01    ADMINISTRATION DIRECTED BY THE COMMITTEE.........................48
   19.02    COST OF ADMINISTRATION...........................................49

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                            Stock Savings Plus Plan
                                Table of Contents

ARTICLE 20 CLAIMS AND APPEAL PROCEDURES......................................49

   20.01    PRESENTATION OF CLAIMS...........................................49
   20.02    DETERMINATION BY THE SECRETARY...................................49
   20.03    APPEAL PROCEDURE.................................................50
   20.04    EFFECT OF SEPARATE LABOR CONTRACT................................50
   20.05    CONFLICTS BETWEEN CLAIMANTS......................................50

ARTICLE 21 LIABILITY LIMITED.................................................51

ARTICLE 22 EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION OR MERGER OF PLAN.......51

   22.01    EXCLUSIVE BENEFIT................................................51
   22.02    AMENDMENT OF PLAN................................................51
   22.03    TERMINATION OF PLAN OR COMPLETE DISCONTINUANCE OF
            CONTRIBUTIONS....................................................52
   22.04    MERGER OF PLAN...................................................52
   22.05    SALE OF PROPERTY.................................................52
   22.06    PERMISSIBLE REVERSIONS...........................................52

ARTICLE 23 VOTING STOCK......................................................53

ARTICLE 24 INALIENABILITY....................................................53

ARTICLE 25 INVESTMENT FUNDS, VOTING, AND ESOP................................53

   25.01    ESTABLISHMENT OF FUNDS...........................................53
   25.02    INVESTMENT OF THE TRUST..........................................54
   25.03    ADDITIONAL PROVISIONS REGARDING ESOP PLAN........................54

ARTICLE 26 SPECIAL TERMS AND CONDITIONS......................................55

   26.01    EAST COAST CAPITAL ACQUISITION...................................55
   26.02    WESTEC ACQUISITION...............................................55
   26.03    EME HOMER CITY GENERATION, L.P...................................55
   26.04    TEAMSTERS AUTOMOTIVE, INDUSTRIAL & ALLIED
            WORKERS LOCAL NO. 495............................................56
   26.05    JOHN STEWART COMPANY.............................................57
   26.06    MIDWEST GENERATION PROJECT.......................................57
   26.07    OTHER ADOPTING COMPANIES APPROVED TO PARTICIPATE.................58

ARTICLE 27 MISCELLANEOUS PROVISIONS..........................................59

   27.01    APPLICABLE LAW...................................................59
   27.02    SEVERABILITY.....................................................59
   27.03    NONBUSINESS DAY TRANSACTION DATES................................59
   27.04    CAPTIONS.........................................................59

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                       SOUTHERN CALIFORNIA EDISON COMPANY

                             STOCK SAVINGS PLUS PLAN

                     As Restated Effective February 1, 2000

                                    ARTICLE 1
                            ESTABLISHMENT OF THE PLAN

1.01     Establishment of Plan

The Sponsor continues this Plan for the administration and distribution of
contributions made for the purpose of providing retirement benefits for eligible
Employees. This Plan is an amended plan, in restated form, the original plan
being established as the Southern California Edison Company Employee Stock
Purchase Plan on January 1, 1964 and subsequently renamed the Southern
California Edison Company Stock Savings Plus Plan.

1.02     Effective Date of Plan

The effective date of the Plan as restated is February 1, 2000, except as
otherwise provided in the text of the Plan.

1.03     Designation of Plan

This Plan is a stock bonus plan with a cash or deferred arrangement and profit
sharing provision. The Plan and related trust are intended to qualify under
Sections 401 and 501 of the Code, respectively. The Plan is intended to qualify
under Section 404(c) of the Employee Retirement Income Security Act of 1974.
Effective February 26, 1998, the portion of the Plan consisting of the Edison
International Stock Fund (the ESOP Plan) is intended to qualify under Section
4975(e)(7) of the Code as an "employee stock ownership plan".

                                    ARTICLE 2
                                   DEFINITIONS

Capitalized words and phrases used in the Plan, other than headings, will have
the following meanings unless the context indicates otherwise:

Accumulated Balance: The total amount held by the Trustee on behalf of a
Participant.

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Administrator: The administrator of the Plan is the Sponsor's Employee
Benefits/Health Care Committee. Day-to-day supervision of administrative
operations of the Plan has been delegated to the Manager of the Human Resources
Service Center. Where the term "Administrator" appears in the text of the Plan,
it refers to the Human Resources Service Center. The address of the Human
Resources Service Center is 8631 Rush Street, (P.O. Box 800), Rosemead,
California 91770.

Affiliated Company: Any corporation or entity which, along with Southern
California Edison Company, is a component member of a "controlled group" within
the meaning of Section 414(b) or (c) of the Code, or successor statutes; and/or
any corporation which is an includable corporation in an "affiliated group" of
corporations within the meaning of Section 1504 of the Code, or successor
statutes.

Automated Transaction System: An interactive system by which Participants may
obtain account information and initiate most Plan transactions. Participants may
access the Retirement Savings Connection by telephone at 877-432-7283, or
through the Internet at http://resources.hewitt.com/edison. Automated
Transaction System transactions include those initiated through a Plan
representative accessed through the Retirement Savings Connection, or if
automated access is unavailable, through the Plan Administrator.

Beneficiary: The person or persons designated by a Participant on the form
prescribed by the Sponsor for this purpose to receive any distribution due under
the Plan in the event of the death of the Participant. The Beneficiary or
Beneficiaries may be changed by the Participant at any time by filing a new
designation with the Administrator.

Board of Directors: The Board of Directors of the Southern California Edison
Company.

Break in Service: One or more consecutive Computation Periods in which or in
each of which, if there be more than one, the Employee did not complete more
than 500 Hours of Service. The following equivalency will be utilized for
purposes of crediting service under the Plan: An Employee will be credited with
190 Hours of Service for each calendar month in which he/she completes at least
one Hour of Service.

Code:  The Internal Revenue Code of 1986, as amended from time to time.

Committee: The Employee Benefits/Health Care Committee consisting of the persons
appointed from time to time by the Chief Executive Officer of the Sponsor to
serve at his/her pleasure to administer the Plan. The chair of the Committee,
similarly appointed from among the Committee members, is the agent for service
of legal process for suits against the Plan. The address of the Committee and
its chair is 8631 Rush Street, (P.O. Box 800), Rosemead, California 91770.

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Company: An Affiliated Company whose employees have been approved for
participation in the Plan by the Committee.

Company Contributions: Matching Contributions and Profit/Gain Sharing
Contributions made to the Plan by the Company on behalf of the Participant.

Company Contribution Account: The account established under Section 11.01(c).

Compensation:

(a) General Definition of Compensation: Except where specifically modified by
the terms of the Plan, a Participant's wages, salaries, fees for professional
services and other amounts received (without regard to whether or not an amount
is paid in cash) for personal services actually rendered in the course of
employment for the Company to the extent that the amounts are includable in
gross income for a Plan Year (including, but not limited to, commissions paid
salesmen, compensation for services based on a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described in Regulation Section 1.62-2(c)), but excluding:

         (i) Contributions made by the Company to a plan of deferred
         compensation to the extent that, before the application of the Code
         Section 415 limitations to that plan, the contributions are not
         includable in the gross income of the Employee for the taxable year in
         which contributed. In addition, contributions made by the Company on
         behalf of an Employee to a simplified employee pension described in
         Code Section 408(k) are not considered as compensation for the taxable
         year in which contributed. Additionally, any distributions from a plan
         of deferred compensation are not considered as compensation for Code
         Section 415 purposes, regardless of whether such amounts are includable
         in the gross income of the Employee when distributed. However, any
         amounts received by an Employee pursuant to an unfunded non-qualified
         plan is permitted to be considered as compensation for Code Section 415
         purposes in the year the amounts are includable in the gross income of
         the Employee.

         (ii) Amounts realized from the exercise of a non-qualified stock
         option, or when restricted stock (or property) held by an Employee
         either becomes freely transferable or is no longer subject to a
         substantial risk of forfeiture.

         (iii) Amounts realized from the sale, exchange or other disposition of
         stock acquired under a qualified stock option.

         (iv) Other amounts which receive special tax benefits, such as premiums
         for group-term life insurance (but only to the extent that the premiums
         are not includable in the gross income of the Employee), or
         contributions made by an employer (whether or not under a salary
         reduction agreement) towards the

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         purchase of an annuity contract described in Code Section 403(b)
         (whether or not the contributions are excludable from the
         gross income of the Employee).

(b) Compensation Limitations: For Plan Years beginning in 1989 through 1994,
only the first $200,000 (or, such larger amount as may be prescribed by the
Secretary of Treasury) of a Participant's Compensation will be taken into
account under the Plan. For any Plan Year beginning prior to 1989, the $200,000
applies only if the Plan is top heavy for such Plan Year. For Plan Years
beginning after 1994, only the first $150,000 (or such larger amount as may be
prescribed by the Secretary of the Treasury) of a Participant's Compensation
will be taken into account under the Plan.

Computation Period:

(a) for purposes of determining eligibility, initially, the twelve (12)
consecutive month period beginning on the Employment Commencement Date (or if a
Break in Service has occurred, the first date thereafter on which an Hour of
Service is credited) (such period and any subsequent such period ending on
anniversary dates thereof being "Anniversary Year Computation Periods"); and
thereafter the calendar year beginning with the calendar year which commences
within the Employee's first Anniversary Year Computation Period; and

(b) for purposes of determining vesting with respect to Hours of Service
completed on or after January 1, 1996, a calendar year. Prior to January 1,
1996, the Computation Period for determining vesting was the Anniversary Year
Computation Period. Section 13.02 provides certain transition rules applicable
to determining Years of Service for 1996.

Deferral: The actual amount of a Participant's Earnings which he/she defers so
that such amount may be contributed to the Plan by the Company on his/her behalf
pursuant to Section 7.01.

Deferral Percentage: The percentage of Earnings a Participant elects to defer
under Section 5.01.

Earnings:

(a) Earnings for any payroll period of full-time Employees will be the product
of a Participant's hourly base rate of pay times 80 hours (40 hours for weekly
payrolls). Earnings for part-time employees will be the product of a
Participant's hourly base rate of pay times the Participant's regular
straight-time hours not to exceed 80 hours (40 hours for weekly payrolls).
Earnings for employees of Edison Enterprises, or its wholly-owned subsidiaries,
will include commissions. Earnings will not include amounts paid resulting from
long-term disability, overtime premium, upgrade, shift differential, bonuses,
bonus awards, subsistence pay, wage continuation, back pay, management
relocation assistance or deferred compensation other than Deferrals under the
Plan.

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(b) For Plan Years beginning in 1989 through 1994, only the first $200,000 (or,
such larger amount as may be prescribed by the Secretary of Treasury) of a
Participant's Earnings will be taken into account under the Plan. For Plan Years
beginning after 1994, only the first $150,000 (or such larger amount as may be
prescribed by the Secretary of the Treasury) of a Participant's Earnings will be
taken into account under the Plan. This Earnings limitation applies to the
combined earnings of the Employee and of any Family Member required to be
aggregated with the Employee as provided under Article 10.

Employee: A person employed by the Company, as a regular, part-time or new
normal employee unless represented for purposes of collective bargaining by a
union whose collective bargaining agreement with the Company, does not provide
for his/her participation in the Plan.

Employment Commencement Date: The first date with respect to which an Employee
is credited with an Hour of Service.

Entry Date: The first Monday of each pay period.

ESOP Plan: The portion of the Plan consisting of the Edison International Stock
Fund and constituting an employee stock ownership plan.

Family Member: The Employee's spouse and the Employee's lineal ascendants or
descendants and spouses of such lineal ascendants and descendants.

Forfeitures: The Stock and cash, including related income, which, because they
were not vested, have been forfeited due to termination of employment.
Forfeitures also include amounts declared forfeited by the Committee pursuant to
Section 17.07 relating to unlocated Participants or Beneficiaries.

Highly Compensated Employee: The term includes highly compensated active and
highly compensated former Employees.

A highly compensated active Employee includes any Employee who performs service
for the Company during the determination year and who, during the look-back
year: (a) received compensation from the Company in excess of $75,000 (as
adjusted pursuant to Code Section 415(d)); (b) received compensation from the
Company in excess of $50,000 (as adjusted pursuant to Code Section 415(d)) and
was a member of the top-paid group for such year; or (c) was an officer of the
Company and received compensation during such year that is greater than 50
percent of the dollar limitation in effect under Code Section 415(b)(1)(A) of
the Code. The term Highly Compensated Employee also includes (a) Employees who
are both (i) described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and (ii) are one of the 100
Employees who received the most compensation from the Company during the
determination year; and (b) Employees who are five-percent owners at any time
during the look-back year or determination year.

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The number of officers shall be limited to the lesser of (a) 50 employees; or
(b) the greater of three employees or ten percent of all employees. If no
officer has satisfied the compensation requirement of (c) above, during either a
determination year or a look-back year, the highest paid officer for such year
shall be treated as a Highly Compensated Employee.

A highly compensated former Employee includes any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Company during the determination year, and was a
highly compensated active Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.

For purposes of this Section, the "determination year" is the Plan Year. The
"look-back year" is the 12-month period immediately preceding the determination
year. The "top-paid group" for any Plan Year is the top 20 percent of Employees
ranked on the basis of compensation paid. "Compensation" is the amount
determined in accordance with the definition of that term in this Article 2 plus
any amount contributed by the Company on behalf of a Participant pursuant to a
salary reduction agreement and which is not includable in gross income under
Sections 125, 402(a)(8), 402(h) or 403(b) of the Code.

If an Employee is, during a determination year or a look-back year, a Family
Member of either a five-percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the ten most highly compensated
Employees ranked on the basis of Compensation paid by the Company during such
year, then the Family Member and the five-percent owner or top-ten highly
compensated Employee shall be aggregated. In such case, the Family Member and
the five-percent owner or top-ten highly compensated Employee shall be treated
as a single Employee receiving Compensation and Plan contributions or benefits
equal to the sum of the Compensation and contributions or benefits of the Family
Member and the five-percent owner or top-ten highly compensated Employee.

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

Hour of Service:

(a) Each hour for which an Employee is directly or indirectly paid, or entitled
to payment, by the Company for the performance of his/her duties as an Employee
during the applicable Computation Period;

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<PAGE>

(b) to the extent not included in (a), each hour for which back pay,
irrespective of mitigation of damages, is awarded or agreed to be paid to the
Employee by the Company;

(c) each hour for which an Employee receives pay for authorized absences (e.g.,
vacation, paid time off, disabilities caused by industrial accident or
industrial illness) but excluding any hour of absence resulting from
non-industrial accident or illness (i) prior to the completion of six months of
active and continuous service with the Company or (ii) following the exhaustion
of the Employee's sick time allowance credits under the Comprehensive Disability
Plan;

(d) each hour of absence without compensation during authorized absences not in
excess of 30 consecutive calendar days or during periods of absence for military
leave;

(e) each hour of absence resulting from non-industrial accident or illness,
occurring at any time, for which an Employee receives any extended disability
payment under the Comprehensive Disability Plan, or the Long Term Disability
Plan, or any successor plan maintained by the Company for Employees; and

(f) each hour of absence for maternity or paternity reasons which would
otherwise be credited to the individual but for such absence, but no more than
501 Hours of Service will be credited under this Subsection during any
Computation Period for any single continuous period during which the Employee
performs no duties. For purposes of this Subsection, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the pregnancy
of the individual, (2) by reason of the birth of a child of the individual, (3)
by reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (4) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
The Hours of Service credited under this Subsection (f) will be credited in the
Computation Period in which the absence begins if necessary to prevent a Break
in Service in that period, otherwise the Hours of Service will be credited to
the immediately following Computation Period.

(g) In crediting the above Hours of Service, each hour will be determined and
credited in accordance with Department of Labor Regulations 2530.200b-2(b) and
(c) which are incorporated herein by reference.

Investment Fund(s): One or more investment media identified in Section 25.01
which are selected from time to time by the Committee for the investment of the
account balances of Participants pursuant to Article 12.

Leased Employee: means any person who is not an Employee of the recipient, who,
pursuant to an agreement between the Employer, and any other person, has
performed services for the Employer (or any related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least

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one year and such services are of a type historically performed by Employees in
the business field of the Employer.

Market Close: The closing time for the New York Stock Exchange on any business
day, typically 1:00 p.m. Pacific Time.

Matching Contributions: The contributions the Company makes to the Plan in
accordance with Section 7.02.

Month:  Any calendar month.

Non-Highly Compensated Employee: An Employee who is neither a Highly Compensated
Employee nor a Family Member of a Highly-Compensated Employee.

Normal Retirement Age: The first of the month in which a Participant attains age
65.

Participant(s): Any Employee who is participating in the Plan by making
Deferrals or Post-Tax Contributions thereto; any Employee, former Employee,
Beneficiary or former spouse of an Employee who has any Stock or cash held in
the Trust to which he/she is or may become entitled; or any Employee or former
Employee who has received all Stock or cash previously held in the Trust to
which he/she is entitled but who has not incurred a Break in Service.

Permanent and Total Disability: For purposes of the Plan, an Employee
Participant will be considered Permanently and Totally Disabled when the
Participant is so determined by the Committee.

Plan: The Stock Savings Plus Plan of the Company, as amended from time to time,
previously known as the Employee Stock Purchase Plan. The Plan is also
informally known as the Edison 401(k) Savings Plan.

Plan Year: The fiscal year of the Plan beginning January 1 and ending December
31.

Post-Tax Account: The account established under Subsection 11.01(a).

Post-Tax Contribution: Participant contributions to the Plan made on an
after-tax basis pursuant to Section 5.04.

Profit/Gain Sharing Contributions: Company contributions to the Plan made
pursuant to Section 7.03.

Profit/Gain Sharing Account: The account established under Subsection 11.01(e).

Pre-Tax Account: The account established under Subsection 11.01(b).

QDRO: Qualified Domestic Relations Order as defined by Section 414(p) of the
Code.

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Quarter:  Any calendar quarter.

Retirement: Termination of service with the Employer under the terms of the 1958
Retirement Plan or other Company pension plans.

As to Plan benefits awarded in a dissolution of marriage proceeding to a former
Spouse, "Retirement" also includes a date of distribution elected by the former
Spouse which is on or after the earliest date on which the Participant could
have retired under the terms of the 1958 Retirement Plan or other Company
pension plans.

Rollover Account:  The account established under Subsection 11.01(d).

Secretary: The person appointed by the Committee with authority specified in
Article 19 and with such other duties as may be prescribed by the Committee.

Sponsor:  Southern California Edison Company.

Spouse:  A Participant's lawful husband or wife.

Stock:  Edison International common stock.

Trust: The trust established by agreement between the Sponsor and the Trustee
for the purpose of holding the assets of the Plan on behalf of Participants and
from which all Plan distributions are made.

Trustee: State Street Bank and Trust Company has been selected and appointed to
serve as Trustee of the Plan subject to the Sponsor's rights under the trust
agreement to remove a trustee and appoint a successor.

Year of Service: A Computation Period in which an Employee completes not less
than l,000 Hours of Service with an Affiliated Company, a predecessor employer,
or as a leased employee of the Company as defined by Section 414(n) of the Code.
The following equivalency will be utilized for purposes of crediting service
under the Plan: an Employee will be credited with 190 Hours of Service for each
calendar month in which he/she completes at least one Hour of Service.

                                    ARTICLE 3
                          ELIGIBILITY AND PARTICIPATION

3.01     Entry or Reentry Into Plan

(a) An Employee is eligible to become a Participant in the Plan upon employment
or reemployment with the Company. There is no maximum nor minimum age
requirement for eligibility. Participation will commence following enrollment as
provided in Article 4.

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(b) An Employee who retires from his/her employment, but is re-employed by the
Company, may participate in the Plan subject to the conditions in Subsections
(b) and (c), above.

(c) An Employee who terminates his/her employment, but is re-employed by the
Company prior to incurring a Break in Service, may resume participation as soon
as practicable following reemployment.

(d) An Employee who retires from his/her employment, but is re-employed by the
Company, may participate in the Plan.

3.02     Participation

Participation in the 401(k) and ESOP features of the Plan is entirely voluntary
and will continue until the Participant incurs a Break in Service. A Participant
who remains in the employ of the Company after attaining Normal Retirement Age
will continue to participate in the Plan and receive allocations in the same
manner as any other Participant. Participation by eligible Participants in the
Profit Sharing features of the Plan occurs automatically.

3.03     Leased Employees

Leased Employees are not eligible to participate in the Plan. Service of such
persons which would have counted as Hours of Service and Years of Service had
the individual been in an eligible classification shall count towards vesting
should the individual subsequently be employed in an eligible classification.

3.04     Qualified Military Service

Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u)(4) of the Code.

                                    ARTICLE 4
                               ENROLLMENT IN PLAN

4.01     Enrollment

An eligible Employee will be mailed a personal identification number shortly
after beginning employment in an eligible classification. Upon receipt of the
personal identification number, enrollment may be initiated at any time
thereafter by calling the applicable Automated Transaction System. Participation
will begin as soon as practicable, but no later than the second Entry Date
following such enrollment.

4.02     Acceptance of Plan by Participant

The Participant's enrollment in the Plan through the applicable Automated
Transaction System will constitute his/her acceptance of the terms and
provisions of the Plan.

                                       10
<PAGE>

                                    ARTICLE 5
                PARTICIPANT DEFERRALS AND POST-TAX CONTRIBUTIONS

5.01     Deferral Percentage

(a) Except as provided in Subsection (b) and Sections 5.05 and 5.06, each
eligible Participant may defer from 1 to 19 percent of his/her Earnings, in
whole percentage increments only, which would otherwise be payable to him/her
for each payroll period by electing to have the amount deferred to the Plan
instead of receiving it in cash.

(b) Notwithstanding anything in this Plan to the contrary, no more than $10,000
in Deferrals will be allocated to a Participant's account for any calendar year
under this Plan, or any other qualified plan maintained by the Company. A
Participant's deferral of Earnings will be discontinued automatically when the
amount elected to be deferred under this Plan for any payroll period would cause
his/her aggregate Deferrals for the year under this Plan to exceed the annual
limit for the calendar year. The $10,000 limit will be adjusted by the cost of
living adjustment factor prescribed by the Secretary of Treasury under Code
Section 415(d) of the Code.

5.02     Earnings Reduction Agreement

A Participant's election to defer a percentage of his/her Earnings under Section
5.01 will constitute the Participant's agreement to a reduction in his/her
compensation equal to the selected percentage in consideration of the agreement
of the Company to contribute such amount to the Plan on behalf of the
Participant. An election to defer Earnings may not be made with respect to
Earnings which are available to the Participant at the time his/her election is
made.

5.03     Initial Deferral Election

A Participant's initial deferral election will be made at the time of Plan
enrollment through the applicable Automated Transaction System. Use of the
Participant's personal identification number to initiate such deferrals will
constitute the Participant's authorization for the Company to deduct such
amounts from the Participant's compensation.

5.04     Post-Tax Contributions

If a Participant's Deferral Percentage is reduced by operation of the limitation
rules of Section 10.02, the Participant may elect to contribute to the Plan, on
a post-tax basis, a whole percentage of his/her Earnings no greater than such
reduction. This election will be made in the manner and on the form prescribed
by the Sponsor for this purpose. Post-tax contributions may also be permitted
pursuant to Section 13.04(b).

5.05     Inactive Participation

A Participant may not make Deferrals or Post-Tax Contributions under the Plan
after he/she terminates employment or otherwise becomes ineligible to
participate in the Plan.

                                       11
<PAGE>

5.06     Limitations

Notwithstanding the above, Deferrals and Post-Tax Contributions will be limited
as provided in Article 10 to comply with the requirements of Sections 401(k),
402(g) and 415 of the Code.

                                    ARTICLE 6
                  CHANGE OR REVOCATION OF PARTICIPANT ELECTIONS

6.01     Change of Participant Elections

(a) Except as provided in Article 10, the election(s) made under Article 5 will
remain in effect, notwithstanding any change in the Participant's Earnings, as
long as the Participant remains eligible or until he/she changes or revokes
his/her election(s).

(b) A Participant may increase or decrease his/her Deferral Percentage in whole
percentage increments at any time through the applicable Automated Transaction
System. In the case of a decrease, Post-Tax Contributions (if any) will be
reduced prior to Deferrals.

An election to increase or decrease a Deferral Percentage will be effective
within two pay periods.

6.02     Revocation of Participant Elections

A Participant may revoke his/her election(s) at any time and thereby discontinue
making Deferrals and Post-Tax Contributions through the applicable Automated
Transaction System. The revocation will be effective within two payroll periods.
Such a revocation does not terminate participation in the Plan. Participant
Deferrals will resume within two pay periods following the date the Participant
makes a new Deferral election through the applicable Automated Transaction
System.

                                    ARTICLE 7
                              COMPANY CONTRIBUTIONS

7.01     Contribution of Participant Deferrals

In consideration of each Participant's election and agreement under Sections
5.01 and 5.02, respectively, the Company will contribute to the Plan on behalf
of the Participant an amount equal to his/her Deferrals.

7.02     Matching Contributions

(a) Except as provided in Subsection (b), the Company will also contribute to
the Plan out of its net operating revenues as an operating expense an amount
equal to the aggregate Company Matching Contributions as determined under this
Subsection (a). Such contributions will include matching contributions of
Affiliate Companies. The Plan provides Company Matching Contribution rates of 0,
65, 75, or 100 percent of eligible

                                       12
<PAGE>

Participant contributions depending on the Participant's Company or the terms of
any applicable collective bargaining agreement.

         (i) Unless otherwise provided in this Section or Article 26, for each
         dollar of Deferrals and Post-Tax Contributions contributed to the Plan
         up to 6 percent of the Participant's Earnings, 75 cents of Company
         Matching Contributions will be contributed to the Plan on the
         Participant's behalf. The maximum Company Matching Contribution under
         this Paragraph is 4.5% of a Participant's Earnings. This Company
         Matching Contribution rate applies to Participants represented for
         collective bargaining purposes by International Brotherhood of
         Electrical Workers, Local Union No. 47, the Utility Workers Union of
         America, Local Union No. 246 or the Utility Workers Union of America,
         Local Union No. 246A (San Onofre Firefighters Association) effective
         January 1, 2000.

         (ii) For each dollar of Deferrals and Post-Tax Contributions
         contributed to the Plan up to 6 percent of Earnings by a Participant
         employed by Edison Mission Energy, Edison Enterprises or their
         participating subsidiaries, one dollar of Company Matching
         Contributions will be contributed to the Plan on the Participant's
         behalf except as provided in Article 26. The maximum Company Matching
         Contribution under this Paragraph is 6% of a Participant's Earnings.

(b) Company contributions during a Month will be reduced by an amount equal to
any Forfeitures occurring during the prior Month.

(c) Company Matching Contributions on behalf of Participants are determined each
pay period in accordance with Subsection (a). In the case of Participants whose
Deferrals and Post-Tax Contributions to the Plan are discontinued or reduced at
the election of the Participant or as a result of limitations imposed by
Sections 401(a)(17) or 402(g) of the Code, Matching Contributions will continue
to be made in subsequent pay periods during Participant's employment to the
extent necessary to ensure that the Participant's year-to-date Matching
Contributions equal the lesser of (i) the product of the applicable Company
Matching Contribution percentage multiplied by the sum of the Participant's
year-to-date Deferrals and Post-Tax Contributions to the SSPP, or (ii) the
product of the Participant's year-to-date Earnings multiplied by the
Participant's maximum Company Matching Contribution expressed as a percentage of
Earnings, regardless of the amount of Deferrals or Post-Tax Contributions the
Participant makes to the Plan in that particular pay period. This subsection (c)
is not applicable to Participants covered by a collective bargaining agreement
unless this provision is specifically included in such agreement.

7.03     Profit/Gain Sharing Contributions

(a) Except as provided below, employees of Edison Mission Energy, Edison
Enterprises and their participating subsidiaries are eligible for two types of
Profit/Gain Sharing Contributions:

                                       13
<PAGE>

         (i)  Fixed Profit/Gain  Sharing.  This is comprised of a 3%
         Profit/Gain Sharing  Contribution each pay period to the Plan
         on behalf of eligible Employees.

         (ii) Variable Profit/Gain Sharing. This is comprised of an additional
         annual Profit/Gain Sharing Contribution to the Plan on behalf of
         eligible Employees if certain business objectives are reached. The
         annual variable profit/gain sharing rate will likely be different
         between Edison Mission Energy and Edison Enterprises.

(b) Profit/gain sharing contributions are based on employee Earnings as
determined under the Plan. Notwithstanding the foregoing, for an eligible
Employee receiving LTD benefits, fixed Profit/Gain Sharing Contributions are
based on the Employee's Earnings rate immediately prior to the disability. This
does not apply to annual variable Profit/Gain Sharing Contributions which will
only be made to the Plan on behalf of eligible Employees to the extent they have
Earnings during the year. LTD benefits are not included in Earnings.

(c)      Eligibility.

         (i) Fixed Profit/Gain Sharing. Effective the first pay period ending on
         or after April 1, 1999, an Employee is eligible for a fixed Profit/Gain
         Sharing Contribution for a pay period if all of the following apply (i)
         the Employee has Earnings during the pay period, (ii) the Employee is
         employed at Edison Mission Energy or Edison Enterprises at the end of
         the pay period, (iii) the Employee's status code is active, LTD or paid
         leave of absence (PAYLOA) or the Employee dies during the pay period
         and the prior status was active, LTD or PAYLOA; (iv) the Employee is
         not represented for collective bargaining purposes by IBEW Local 459,
         or CWA Local 9586, and (v) if employed by Edison Enterprises, the
         Employee's benefit program code was equal to BEN on March 31, 1999 or
         the Employee was eligible for Profit/Gain Sharing at another Affiliate
         immediately prior to joining Edison Enterprises.

         (ii) Variable Profit/Gain Sharing. An Employee is eligible for a
         variable Profit/Gain Sharing Contribution if all of the following
         apply: (i) the Employee has Earnings during the year; (ii) the Employee
         was employed at Edison Mission Energy or Edison Enterprises during the
         year, (iii) at the end of the year, the Employee's status is active or
         PAYLOA or the Employee died during the year and the prior status was
         active or PAYLOA; (iv) while employed at Edison Mission Energy or
         Edison Enterprises during the year, the Employee is not represented for
         collective bargaining purposes by IBEW Local 459, or CWA Local 9586,
         and (v) if employed by Edison Enterprises, the Employee's benefit
         program code was equal to BEN. Edison Mission Energy or Edison
         Enterprises Employees who transfer to another Affiliated Company during
         the year will be eligible for a pro rata variable Profit/Gain Sharing
         Contribution based on their Earnings for the year at the participating
         company.

                                       14
<PAGE>

(d) All Profit/Gain Sharing Contributions will be invested according to
Participant investment elections for new contributions under the Plan. If the
Employee is not a Plan Participant at the time of the contribution, the
Profit/Gain Sharing Contributions will be invested in the Edison International
Stock Fund. Those Employees, and any other Participant receiving Profit/Gain
Sharing Contributions, may diversify their balances among the Plan Funds on a
daily basis.

(e) Variable Profit/Gain Sharing Contribution percents will be determined and
posted to Employee accounts the following year. Only Earnings while the Employee
was eligible for the fixed Profit/Gain Sharing Contribution will be considered
for determining the variable Profit/Gain Sharing Contribution.

7.04     Qualified Nonelective Contributions

To the extent necessary to satisfy the Code Section 401(k)(3) or 401(m) limits,
the Sponsor may determine in its discretion whether a Qualified Nonelective
Contribution shall be made to the Trust for a Plan year; and if so, the amount
to be contributed by each Company (which amount may vary among Companies).
Qualified Nonelective Contributions shall be fully vested and subject to the
same distribution rules as Deferrals. Qualified Nonelective Contributions are
not eligible for hardship withdrawals.

7.05     Limitations

Notwithstanding the above, Company contributions with respect to any Participant
will be limited in the manner described in Article 10 to comply with the
applicable requirements of Sections 415 and 401(k) of the Code. For Code Section
415 purposes, the annual Profit/Gain Sharing Contribution will be considered a
contribution made in the previous Plan Year.

                                    ARTICLE 8
                    TRANSFERS AND ROLLOVERS FROM OTHER PLANS

8.01     Employee Rollover Contributions

(a) With the consent of the Administrator and subject to the terms and
conditions of this Section 8.01, any Employee may contribute to the Plan an
"eligible rollover distribution," as that term is defined by Section 402(c)(4)
of the Code, from the Southern California Edison Company Retirement Plan.
Participants may rollover eligible rollover distributions from another qualified
plan (includes rollovers via a "conduit" individual retirement account).
Previous Plan participation or eligibility is not required. The Administrator
may require the Employee to provide satisfactory evidence that the proposed
transfer is in fact an eligible rollover distribution.

(b) Rollover contributions to this Plan must be in cash. Any Rollover
Contributions will be invested directly in the Funds designated by the
Participant on his/her rollover contribution request. Rollover contributions
will be accounted for in a separate Rollover Account and will be fully vested at
all times and not subject to forfeiture. In all other respects, the rollover
contribution will be subject to the same Plan administrative

                                       15
<PAGE>

provisions, including withdrawal and distribution restrictions, as would apply
to Participant Deferrals.

(c) Notwithstanding the requirement that rollovers to the Plan be made in cash,
in the event of the acquisition, merger, asset purchase or other similar
transaction involving an Affiliated Company as a result of which new employees
eligible to participate in the Plan are acquired or hired, the Plan may accept
as part of an otherwise valid direct rollover of such an employee's total
account balance from the former employer's qualified plan any outstanding plan
loans and notes. Loan rollovers are subject to the consent of the Secretary and
any conditions the Secretary may impose for the efficient administration of the
Plan including a valid assignment of the note by the former employer's plan, the
employee's written acknowledgment of such assignment and the employee's
authorization of payroll deductions and any loan reamortization necessary to
conform the loan to Company payroll periods and repay the remaining loan balance
over the original term of the loan.

(d) If an Employee makes a rollover contribution, the Employee will be treated
as a Participant for all purposes of the Plan even if the Employee is not a
Participant for purposes of making Deferrals or contributions to the Plan under
Article 5 or sharing in Company Matching Contributions under Article 7.

                                    ARTICLE 9
                       PAYMENT TO TRUSTEE AND ALLOCATIONS

9.01     Payment to Trustee

All Participant Deferrals and Post-Tax Contributions, together with Company
Matching Contributions and fixed Profit/Gain Sharing Contributions, will be paid
to the Trustee each pay period, or as soon thereafter as practicable, to be
invested and held for distribution in accordance with Article 25. If variable
Profit/Gain Sharing Contributions are made, they will be paid to the Trustee
during the Plan Year following the year they are earned.

9.02     Allocation of Contributions

The Deferrals and Post-Tax Contributions of each Participant paid to the Trustee
will be credited to the account of that Participant. Concurrent therewith, or as
soon as practicable thereafter, and subject to the limitations of Article 10,
each Participant will be credited with the Company Matching Contributions as
provided in Section 7.02, and if applicable, the Fixed Profit/Gain Sharing
contribution as provided in Section 7.03. Variable Profit/Gain Sharing
contributions will be credited to the account of each eligible Participant at
the time the contribution is paid to the Trustee, or as soon thereafter as
practicable.

                                       16
<PAGE>

                                   ARTICLE 10
                                   LIMITATIONS

10.01    Section 415 Limitations on Annual Additions

(a) Notwithstanding any other provision herein to the contrary, Annual Additions
to the Plan on behalf of any Participant will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan.

(b)      Definitions

         (i) "Annual additions" for any Plan Year will mean the sum of the
         following amounts allocated to a Participant's accounts for any Plan
         Year for all defined contribution plans maintained by the Company:

                  (A)      All Company contributions;

                  (B)      Forfeitures; and

                  (C)      All Employee contributions.

         Except to the extent provided in Treasury regulations, Annual Additions
         include excess contributions described in Section 401(k) and excess
         aggregate contributions described in Section 401(m), regardless of
         whether the Plan distributes or forfeits such excess amounts.Excess
         deferrals under Code Section 402(g) are not Annual Additions unless
         distributed after the correction period described in Code Section
         402(g). Annual Additions also include any excess amounts reapplied to
         reduce Company Contributions under this Article. Amounts allocated
         after March 31, 1984, to an individual medical account (as defined
         under Code Section 415(l)(2)) included as part of a defined benefit
         plan maintained by the Company are Annual Additions. Furthermore,
         Annual Additions include contributions paid or accrued after December
         31, 1985, for taxable years after December 31, 1985, attributable to
         postretirement medical benefits allocated to a separated account of a
         key employee (as defined in Code Section 419A(d)(3)) under a welfare
         benefit fund (as defined in Code Section 419(e)) maintained by the
         Company, but only for purposes of the dollar limitation applicable to
         the Maximum Permissible Amount.

         (ii) "Maximum Permissible Amount" - the lesser of (a) 25 percent of the
         Participant's Compensation from the Company for the Plan Year, or (b)
         $30,000 (or, if greater, one-fourth of the defined benefit dollar
         limitation under Code Section 415(b)(1)(A) as adjusted for
         cost-of-living increases).

(c) If the Annual Additions with respect to a Participant would cause the
Maximum Permissible Amount to be exceeded for any Plan Year, the aggregate of
the Annual Additions to this Plan and the Annual Additions to any other defined
contribution plan of

                                       17
<PAGE>

the Company will be reduced, until the Annual Additions no longer exceed the
Maximum Permissible Amount, in the following order of priority effective January
1, 1999:

         (i) Refund any Post-Tax Contributions and income attributable thereto
         made by the Participant to this Plan which are not matched by Company
         contributions to the extent that such contributions would be aggregated
         with the Annual Addition to this Plan;

         (ii) Refund any Deferrals and income attributable thereto made by the
         Participant to this Plan which are not matched by Company contributions
         to the extent that such contributions would be aggregated with the
         Annual Addition to this Plan;

         (iii) Refund all other Post-Tax Contributions and income attributable
         thereto made by the Participant to this Plan to the extent that such
         contributions would be aggregated with the Annual Addition to this Plan
         and forfeit Company contributions attributable to such Post-Tax
         Contributions;

         (iv) Refund all other Deferrals and income attributable thereto made by
         the Participant to this Plan to the extent that such contributions
         would be aggregated with the Annual Addition to this Plan and forfeit
         Company contributions attributable to such Deferrals;

         (v) Reduce the Participant's allocation of Profit/Gain Sharing
         Contributions and income attributable thereto to the extent that such
         contributions would be aggregated with the Annual Addition to this
         Plan. Such reduction will be held unallocated and used to reduce
         employer contributions for all Participants in the following limitation
         year;

         (vi) Reduce the Participant's allocation of forfeitures under this Plan
         for the Plan Year in which the excess occurs. Such reduction will be
         held unallocated and used to reduce employer contributions for all
         Participants in the following limitation year;

         (vii) Reduce the Participant's allocation of other Matching
         Contributions under this Plan for the Plan Year in which the excess
         occurs. Such reduction will be held unallocated and used to reduce
         employer contributions for all Participants in the following limitation
         year;

         (viii) Refund any contributions made by the Participant to any other
         defined contribution plan of the Company for the Plan Year in which the
         excess occurs to the extent that such contribution would be aggregated
         with the Annual Addition to this Plan;

                                       18
<PAGE>

         (ix) Reduce the Participant's allocation of Company contributions under
         any other defined contribution plan of the Company for the Plan Year
         following the Plan Year in which the excess occurs. Such reduction will
         be allocated in accordance with the provisions of Section 9.02 to the
         Company Contribution Accounts of Participants who are not affected by
         the limitation of Subsection (a) of this Section; and

         (x) In the event that after the above refunds and reductions are made
         amounts are still available which may not be allocated hereunder, such
         amounts will be held in a suspense account. Amounts held in a suspense
         account will be allocated to the Company Contribution Accounts of
         Participants at the first possible time when such allocation would not
         violate the provisions of Section 415 of the Code or other applicable
         law. Such allocation will take place prior to the allocation of any
         amounts arising from any other source, including forfeitures for the
         subsequent year. Until such suspense account is reallocated in its
         entirety, no Company contributions may be made for a Plan Year in which
         the suspense account has not been exhausted.

         Notwithstanding any other provision of the Plan or Trust Agreement to
         the contrary, if the Company terminates the Plan and the amounts held
         in the suspense account cannot be allocated to the Company Contribution
         Accounts of the Participants upon termination of the Plan, the amount
         then standing in the suspense account will revert to the Company.

(d) For years prior to January 1, 2000, if an Employee is a Participant in both
a defined contribution plan and a defined benefit plan maintained by the Company
the sum of the defined contribution plan fraction and the defined benefit plan
fraction pertaining to such Employee will not exceed 1.0.

         (i) The defined benefit plan fraction for any Plan Year is a fraction,
         the numerator of which is the Participant's projected annual benefit
         under the defined benefit Plan (determined as of the close of the Plan
         Year) and the denominator of which is the lesser of:

               (A)  the product of 1.25 multiplied by the dollar limitation in
                    effect under Section 415(b)(1)(A) of Code for such Plan
                    Year, or

               (B)  the product of 1.4 multiplied by the amount which may be
                    taken into account under Section 415(b)(1)(B) of the Code
                    with respect to such Employee under the Plan for such Plan
                    Year.

         (ii) The defined contribution plan fraction for any Plan Year is a
         fraction, the numerator of which is the sum of the Annual Additions to
         the Participant's accounts in such Plan Year and for each prior Plan
         Year and the denominator of which is the sum of the lesser of the
         following amounts determined for such Plan Year and for each prior Year
         of Service with the Company:

                                       19
<PAGE>

               (A)  the product of 1.25 multiplied by the dollar limitation in
                    effect under Section 415(c)(1)(A) of the Code for such Plan
                    Year (determined without regard to Subsection (c)(6), or

               (B)  the product of 1.4, multiplied by the amount which may be
                    taken into account under Section 415(c)(1)(b) of the Code ,
                    (or Subsection (c)(7) or (8), if applicable) with respect to
                    such individual under such plan for such Plan Year.

         (iii) For any Plan Year in which the limitations of Subsection (d) will
         be exceeded for any Participant for the Plan Year, the Participant's
         benefit under any defined benefit plan maintained by the Company will
         be reduced until such limitations are met. If, after the Participant's
         benefit under any defined benefit plans maintained by the Company are
         reduced, the limitations of Subsection (d) are still exceeded, the
         Annual Additions will be reduced in accordance with the provisions of
         Subsection (c).

         (iv) Where this Plan and a pre-TEFRA defined benefit plan are
         aggregated, a permanent adjustment will be made to the numerator of the
         defined contribution fraction to ensure that the sum of the defined
         contribution fraction and defined benefit fraction will not exceed 1.0
         as of the effective date of TEFRA. This adjustment will be made when
         the sum of the defined contribution fraction and the defined benefit
         fraction exceeds 1.0 for the 1984 limitation year as a result of either
         benefit accruals or Annual Additions in excess of TEFRA Section 415
         limits for the 1983 limitation year.

(e) For purposes of the limitations of this Section, all qualified defined
contribution plans of the Company whether or not terminated, will be treated as
one defined contribution plan, and all qualified defined benefit plans of the
Company whether or not terminated, will be treated as one defined benefit plan.

(f) In the case of a pre-1983 Participant whose current accrued benefit, as of
the close of the 1982 limitation year, exceeds the dollar limitation of Code
Section 415(b) of the Code as amended by TEFRA, then, with respect to such
participant, the applicable dollar limitation is the Participant's current
accrued benefit for purposes of applying the limitations of Code Section 415(b),
and prior to January 1, 2000, Code Section 415(e).

10.02    Section 401(k)(3) Limitations

(a) In General. Deferrals made under the Plan are subject to the limitations on
elective contributions of Code Section 401(k)(3), as more fully described below.
The Plan provisions related to these limits are to be interpreted and applied in
accordance with Code Sections 401(k)(3) and 401(a)(4), and in such manner as to
satisfy such other requirements relating to Code Section 401(k) as may be
prescribed by the Secretary of the Treasury from time to time. The provisions
included in this Section

                                       20
<PAGE>

10.02 pursuant to the Small Business Job Protection Act of 1996 are adopted
effective January 1, 1997.

(b) Actual Deferral Ratios. For each Plan year, the Administrator will determine
the "actual deferral ratio" for each Participant who is eligible to make
Deferrals. The actual deferral ratio shall be the ratio of elective
contributions (plus any Qualified Nonelective Contributions treated as elective
contributions) made on behalf of the Participant for the Plan Year to the
Participant's Compensation for the applicable period. For purposes of
determining a Participant's actual deferral ratio:

         (i)   Elective  contributions  will be taken into  account only if
               both of the  following  requirements are satisfied:

               (A)  The elective contributions are allocated to the
                    Participant's account as of a date within the plan Year, are
                    not contingent upon participation in the Plan or performance
                    of services on any date subsequent to that date, and are
                    actually paid to the Trust no later than the end of the
                    12-month period immediately following the Plan Year to which
                    the elective contributions relate; and

               (B)  The elective contributions relate to Earnings that either
                    would have been received by the Participant in the plan year
                    but for the Participant's election to defer under the Plan,
                    or is attributable to services performed in the Plan year
                    and, but for the election to defer, would have been received
                    by the Participant's Participant within 2-1/2 months after
                    the close of the Plan Year.

         To the extent elective contributions that meet the requirements of (A)
         and (B) above constitute excess deferrals described in Subsection
         10.04, they will be taken into account for each Highly Compensated
         Employee, but will not be taken into account for any Participant who is
         not a highly Compensated Employee.

         (ii) In the case of a Participant who is a Highly Compensated Employee
         for the Plan Year and is eligible to have elective contributions (and
         Qualified Nonelective Contributions, to the extent treated as elective
         contributions) allocated to his or her accounts under two or more cash
         or deferred arrangements described in Code Section 401(k) maintained by
         an Affiliated Company, the Participant's actual deferral ratio will be
         determined as if such elective contributions (and Qualified Nonelective
         Contributions, to the extent treated as elective contributions) are
         made under a single arrangement, and if two or more of the cash or
         deferred arrangements have different Plan Years, all cash or deferred
         arrangements ending with or within the same calendar year will be
         treated as a single arrangement.

         (iii) The applicable period for determining Compensation for each
         Participant for a Plan Year will be the 12-month period ending on the
         last day of the Plan

                                       21
<PAGE>

         Year; provided that effective January 1, 1999 and to the extent
         permitted under Income Tax Regulations, the Administrator
         may choose, on a uniform basis, to treat as the applicable period only
         that portion of the Plan Year during which the individual was a
         Participant.

         (iv) Qualified Nonelective Contributions made on behalf of Participants
         who are eligible to receive elective contributions shall be treated as
         elective contributions to the extent permitted by Income Tax Regulation
         Section 1.401(k)-1(b)(5).

         (v) In the event that the Plan satisfies the requirements of Code
         Section 401(k), 410(a)(4), or 410(b) only if aggregated with one or
         more other plans with the same plan year, or if one or more other plans
         with the same Plan Year satisfy such Code sections only if aggregated
         with this Plan, then this section shall be applied by determining the
         actual deferral ratios as if all such plans were a single plan.

         (vi) An Employee who would be a Participant but for the failure to make
         elective contributions shall be treated as a Participant on whose
         behalf no elective contributions are made.

         (vii) Elective contributions made on behalf of Participants who are not
         Highly Compensated Employees that could be used to satisfy the Code
         Section 401(k)(3) limits but are not necessary to be taken into account
         in order to satisfy such limits, may instead be taken into account for
         purposes of the Code Section 401(m) limits to the extent permitted by
         Income Tax regulation Section 1.401(m)-1(b)(5).

(c) Actual Deferral Percentage Limitation. For any Plan Year, the actual
deferral ratios for all Highly Compensated Employees eligible to receive
elective contributions under the Plan shall be averaged to determine the actual
deferral percentage for the highly compensated group, and the actual deferral
ratios for all Employees who are not Highly Compensated Employees but are
eligible to receive elective contributions under the Plan shall be averaged to
determine the actual deferral percentage for the nonhighly compensated group.
The actual deferral percentages must satisfy one of the following tests:

         (i) The actual deferral percentage for the highly compensated group
         does not exceed 125 percent of the actual deferral percentage for all
         other eligible Employees, or

         (ii) The excess of the actual deferral percentage for the highly
         compensated group over the actual deferral percentage for the nonhighly
         compensated group does not exceed two percentage points, and the actual
         deferral percentage for the highly compensated group does not exceed
         twice the actual deferral percentage of the nonhighly compensated
         group.

                                       22
<PAGE>

The tests in (i) and (ii) above shall be applied using the actual deferral
percentage for the highly compensated group for the current Plan Year and the
actual deferral percentage for the nonhighly compensated group for the
immediately preceding Plan Year (taking into account the nonhighly compensated
group that existed during such preceding Plan Year). Notwithstanding the
foregoing, in satisfying the above tests, the Administrator may elect, to the
extent permitted by Code Section 401(k)(3), applicable regulations and Internal
Revenue Service guidance, to use the actual deferral percentage for the
nonhighly compensated group determined for the current Plan Year. The current
Plan Year method was used in 1997 and 1999, the preceding Plan Year method was
used in 1998. The Plan will subsequently be amended to adopt the methodology to
be used for 2000 and future years.

(d) Adjustments by Administrator. If, prior to the time all elective
contributions for a Plan Year have been contributed to the Trust, the
Administrator determines that Deferrals are being made at a rate which will
cause the ss.401(k)(3) limits to be exceeded for the Plan Year, effective
January 1, 1999, the Administrator may, in its sole discretion, limit the amount
of Deferrals to be made with respect to one or more Highly Compensated Employees
for the balance of the Plan Year by suspending or reducing Deferral elections to
the extent the Administrator deems appropriate. Any Deferrals that would
otherwise be made to the Trust shall instead be paid to the affected Participant
in cash.

(e) Excess Contributions. If the Code Section 401(k)(3) limits have not been met
for a Plan Year after all contributions for the Plan Year have been made, the
Administrator will determine the amount of excess contributions with respect to
Participants who are Highly Compensated Employees. To do so, the Administrator
will perform the following computation (which shall be used solely to determine
the aggregate amount to be distributed under paragraph (f) below and not the
amount to be distributed to any individual): first, the actual deferral ratio of
the Highly Compensated Employee with the highest actual deferral ratio shall be
reduced to the extent necessary to (i) enable the Plan to satisfy the
ss.401(k)(3) limits or (ii) cause such employee's actual referral ratio to equal
the actual deferral ratio of the Highly Compensated Employee with the next
highest actual deferral ratio, and then this process will be repeated until the
Plan satisfies the ss.401(k)(3) limits. This Subsection (e) as restated is
effective January 1, 1997.

(f) Distribution Of Excess Contributions. The aggregate amount of reductions
determined under Subsection (e) above shall be distributed, first, to the Highly
Compensated Employees with the highest dollar amounts of elective contributions,
pro rata, in an amount equal to the lesser of (i) the total amount of excess
contributions for the Plan Year determined under Subsection (e) above or (ii)
the amount necessary to cause the amount of such Employees' elective
contributions to equal the amount of elective contributions of the Highly
Compensated Employees with the next highest dollar amount of elective
contributions. This process is repeated until the aggregate amount distributed
under this Subsection (f) equals the amount of excess contributions

                                       23
<PAGE>

determined under Subsection (e) above. Income on excess contributions shall be
distributed in accordance with applicable Income Tax Regulations. The income or
loss for the period between the end of the year and the date of distribution
allocable to excess elective contributions for the year will be disregarded.
This Subsection (f) as restated is effective January 1, 1997.

(g) Special Rule. For purposes of distributing excess elective contributions,
the amount of excess elective contributions that may be distributed with respect
to a Highly Compensated Employee for a Plan Year shall be reduced by the amount
of excess elective contributions previously distributed to the Highly
Compensated Employee for his or her taxable year ending with or within such Plan
Year.

(h) Recordkeeping Requirement. The Administrator shall maintain such records as
are necessary to demonstrate compliance with the Code Section 401(k)(3) limits
including the extent to which Qualified Nonelective Contributions are taken into
account in determining the actual deferral ratios.

(i) Effect on Matching Contributions. A Participant's elective contributions
which are returned as a result of the Code Section 401(k)(3) limits for a Plan
Year will not be taken into account in determining the amount of Matching
Contributions to be made for the Participant's benefit for the Year. To the
extent Matching Contributions have already been made with respect to the
Deferrals at the time the Deferrals are determined to be excess contributions,
the Matching Contributions will be distributed to the Participant at the same
time as the Deferrals are returned; provided, however, that to the extent the
Participant is not fully vested in the Matching Contributions, the Participant
will forfeit the portion of the Matching Contributions that are not vested.

(j) Excise Tax Where Failure To Correct. If the excess contributions are not
corrected within 2-1/2 months after the close of the Plan Year to which they
relate, the Companies will be liable for a 10% tax on the amount of excess
contributions attributable to them, to the extent provided by Code Section 4979.
Qualified Nonelective Contributions properly taken into account under this
Section for the Plan Year may enable the Plan to avoid having excess
contributions, even if the contributions are made after the close of the 2-1/2
month period.

(k) Effective January 1, 1999, the Actual Deferral Percentage test can be
applied by taking into consideration only those Employees who have attained age
21 and completed one Year of Service by the last day of the Plan Year plus those
Employees who have not met such requirements who are Highly Compensated
Employees.

(l) For purposes of the calculations under this section, "Plan" means the
portion of the Plan other than the portion that is the ESOP Plan.

                                       24
<PAGE>

10.03    Code Section 401(m) Limits

(a) In General. Matching Contributions and Post Tax Contributions made under the
Plan are subject to the limits of Section 401(m) of the Code, as more fully
described below. The Plan provisions relating to the Code Section 401(m) limits
are to be interpreted and applied in accordance with Sections 401(m) and
401(a)(4) of the Code, and in such manner as to satisfy such other requirements
relating to Section 401(m) as may be prescribed by the Secretary of the Treasury
from time to time. The provisions included in this Section 10.03 pursuant to the
Small Business Job Protection Act of 1996 are adopted effective January 1, 1997.

(b) Actual Contribution Ratios. For each Plan Year, the Administrator will
determine the "actual contribution ratio" for each Participant who is eligible
for Matching Contributions. The actual contribution ratio shall be the ratio of
the sum of the Matching Contributions, Post-Tax Contributions and Qualified
Nonelective Contributions which are not treated as Elective Contributions made
on behalf of the Participant for the Plan Year, to the Participant's
Compensation for the applicable period. For purposes of determining a
Participant's actual contribution ratio:

         (i) A Matching Contribution will be taken into account only if the
         contribution is allocated to a Participant's Account as of a date
         within the Plan Year, is actually paid to the Trust no later than 12
         months after the close of the Plan Year, and is made on behalf of a
         Participant on account of theParticipant's Deferrals or Post-Tax
         Contributions for the Plan Year.

         (ii) In the case of a Participant who is a Highly Compensated Employee
         for the Plan Year and is eligible to have Matching Contributions or
         employee contributions (including amounts treated as matching
         contributions) allocated to his or her accounts under two or more plans
         maintained by an Affiliated Company which may be aggregated for
         purposes of Sections 410(b) and 401(a)(4) of the Code, the
         Participant's actual contribution ratio will be determined as if such
         contributions are made under a single plan, and if two or more of the
         plans have different Plan Years, all plans ending with or within the
         same calendar year will be treated as a single plan.

         (iii) Effective January 1, 1999, the applicable period for determining
         Compensation for each Participant for a Plan Year shall be the 12-month
         period ending on the last day of such Plan Year; provided that, to the
         extent permitted under Income Tax Regulations, the Administrator may
         choose, on a uniform basis, to treat as the applicable period only that
         portion of the Plan Year during which the individual was a Participant.

         (iv) Elective Contributions not applied to satisfy the Code Section
         401(k)(3) limits and Qualified Nonelective Contributions not treated as
         Elective Contributions may be treated as Matching Contributions to the
         extent permitted by Income Tax Regulation Section 401(m)-1(b)(5).

                                       25
<PAGE>

         (v) In the event that the Plan satisfies the requirements of Sections
         401(k), 410(a)(4), or 410(b) of the Code only if aggregated with one or
         more other plans with the same Plan Year, or if one or more other plans
         with the same Plan Year satisfy such Code sections only if aggregated
         with this Plan, then this Subsection shall be applied by determining
         the actual contribution ratios as if all such plans were a single plan.

(c) Actual Contribution Percentages. The actual contribution ratios for all
Highly Compensated Employees who are eligible for Matching Contributions or to
make Post-Tax Contributions for a Plan Year shall be averaged to determine the
actual contribution percentage for the highly compensated group for the Plan
Year, and the actual contribution ratios for all Employees who are not Highly
Compensated Employees but are eligible for Matching Contributions or to make
Post-Tax Contributions for the Plan Year shall be averaged to determine the
actual contribution percentage for the nonhighly compensated group for the Plan
Year. The actual contribution percentages must satisfy at least one of the
following tests:

         (i) The actual  contribution  percentage for the highly compensated
         group does not exceed 125% of the actual contribution percentage for
         the nonhighly compensated group; or

         (ii) The excess of the actual contribution percentage for the highly
         compensated group over the actual contribution percentage for the
         nonhighly compensated group does not exceed two percentage points and
         the actual contribution percentage for the highly compensated group
         does not exceed twice the actual contribution percentage of the
         nonhighly compensated group.

The tests in (i) and (ii) above shall be applied using the actual contribution
percentage for the highly compensated group for the current Plan Year and the
contribution percentage for the nonhighly compensated group for the immediately
preceding Plan Year (taking into account the nonhighly compensated group that
existed during such preceding Plan Year). Notwithstanding the foregoing, in
satisfying the above tests, the Administrator may elect, in accordance with
Section 401(m)(2) of the Code, applicable regulations and Internal Revenue
Service guidance, to use the actual contribution percentage for the nonhighly
compensated group calculated for the current Plan Year. The current Plan Year
method was used in 1997 and 1999, the preceding Plan Year method was used in
1998. The Plan will subsequently be amended to adopt the methodology to be used
for 2000 and future years.

(d) Multiple Use Test. In the event that (i) the actual deferral percentage and
actual contribution percentage for the highly compensated group each exceeds
125% of the respective actual deferral percentage or actual contribution
percentage for the nonhighly compensated group, and (ii) the sum of the actual
deferral percentage and the actual contribution percentage for highly
compensated group exceeds the "aggregate limit" within the meaning of Income Tax
Regulation Section 1.401(m)-

                                       26
<PAGE>

2(b)(3), the Administrator will reduce the actual contribution ratios of Highly
Compensated Employees who had both an actual deferral ratio and an actual
contribution ratio for the Plan Year to the extent required by such section and
in the same manner as descried in paragraphs (f) and (g) below.

(e) Adjustments by Administrator. If, prior to the time all Matching
Contributions and Post-Tax Contributions for a Plan Year have been contributed
to the Trust, the Administrator determines that such contributions are being
made at a rate which will cause the Code Section 401(m) limits to be exceeded
for the Plan Year, the Administrator may, in its sole discretion, limit the
amount of such contributions to be made with respect to one or more Highly
Compensated Employees for the balance of the Plan Year by limiting the amount of
such contributions to the extent the Administrator deems appropriate. This
Subsection (e) as restated is effective January 1, 1999.

(f) Excess Aggregate Contributions. If the Code Section 401(m) limits have not
been satisfied for a Plan Year after all contributions for the Plan Year have
been made, the excess of the aggregate amount of the Matching Contributions (and
any Qualified Nonelective Contributions, Post-Tax Contributions or Elective
Contributions taken into account in computing the actual contribution
percentages) actually made on behalf of Highly Compensated Employees for the
Plan Year over the maximum amount of such contributions permitted under Section
401(m)(2)(A) of the Code shall be considered to be "excess aggregate
contributions." The Administrator shall determine the amount of excess aggregate
contributions. To do so, the Administrator will perform the following
computation (which shall be used solely the determine the aggregate amount to be
distributed under paragraph (g) below and not the amount to be distributed to
any individual): first, the actual contribution ratio of the Highly Compensated
Employee with the highest actual contribution ratio shall be reduced to the
extent necessary to (i) enable the Plan to satisfy the Code Section 401(m)
limits or (ii) cause such employee's actual contribution ratio to equal the
actual contribution ratio of the Highly Compensated Employee with the next
highest actual contribution ratio, and then this process will be repeated until
the Plan satisfies the Code Section 401(m) limits. In no event will excess
aggregate contributions remain unallocated or be allocated to a suspense account
for allocation in a future Plan Year. This Subsection (f) as restated is
effective January 1, 1997.

(g) Distribution Of Excess Aggregate Contributions. The aggregate amount of
reductions determined under Subsection (f) above shall be distributed, first, to
the Highly Compensated Employees with the highest dollar amounts of Matching
Contributions (and any Qualified Nonelective Contributions, Post-Tax
Contributions or elective contributions taken into account in computing actual
contribution percentages), pro rata, in an amount equal to the lesser of (i) the
total amount of excess aggregate contributions for the Plan Year determined
under Subsection (f) above, or (ii) the amount necessary to cause the amount of
such Employees' Matching Contributions (and any Qualified Nonelective
Contributions, Post-Tax Contributions or elective contributions taken into
account in computing actual contribution percentages) to equal

                                       27
<PAGE>

the amount of the Matching Contributions (and any Qualified Nonelective
Contributions, Post-Tax Contributions or elective contributions taken into
account in computing actual contribution percentages) of the Highly compensated
Employees with the next highest dollar amount of Matching Contributions (and any
Qualified Nonelective Contributions, Post-Tax Contributions or elective
contributions taken into account in computing actual contribution percentages).
This process is repeated until the aggregate amount distributed under this
Subsection (g) equals the amount of excess aggregate contributions determined
under Subsection (f) above. Income on excess aggregate contributions shall be
distributed in accordance with applicable Regulations. The income or loss for
the period between the end of the year and the date of distribution allocable to
excess aggregate contributions for the year will be disregarded. Distribution of
excess aggregate contributions for each Highly Compensated Employee shall be
made first from any Post-Tax Contributions along with any related Matching
Contributions, next from any Qualified Nonelective Contributions and finally
from other Matching Contributions. Such distribution will be made after the
close of Plan Year to which the contributions relate, but within 12 months after
the close of such Plan Year. Excess aggregate contributions will be treated as
employer contributions for purposes of Sections 401(a)(4), 404 and 415 of the
Code even if distributed from the Plan. Notwithstanding the foregoing, to the
extent a Participant would receive a distribution of excess aggregate
contributions pursuant to this Section which relate to Matching Contributions in
which the Participant does not have a vested interest, such portion of the
excess aggregate contributions will be forfeited.

(h) Recordkeeping Requirement. The Administrator shall maintain such records as
are necessary to demonstrate compliance with the Code Section 401(m) limits,
including the extent to which elective contributions and Qualified Nonelective
Contributions are taken into account in determining the actual contribution
ratios.

(i) Excise Tax Where Failure To Correct. If the excess aggregate contributions
are not corrected within 2-1/2 months after the close of the Plan Year to which
they relate, the Companies will be liable for a 10% excise tax on the amount of
excess aggregate contributions attributable to them, to the extent provided by
Section 4979 of the Code. Qualified-Nonelective Contributions properly taken
into account under this Section for the Plan Year may enable the Plan to avoid
having excess aggregate contributions, even if the contributions are made after
the close of the 2-1/2 month period.

(j) Effective January 1, 1999, the Actual Contribution Percentage test can be
applied by taking into consideration only those Employees who have attained age
21 and completed one Year of Service by the last day of the Plan Year plus those
Employees who have not met such requirements who are Highly Compensated
Employees.

(k) For purposes of the calculations under this section, "Plan" means the
portion of the Plan other than the portion that is the ESOP Plan.

                                       28
<PAGE>

10.04    Section 402(g) Limitations

(a) If a Participant's deferred compensation under this Plan together with any
elective deferrals (as defined in Income Tax Regulation Section 1.402(g)-1(b))
under another qualified cash or deferred arrangement (as defined in Code Section
401(k)), a simplified employee pension (as defined in Code Section 408(k)), a
salary reduction arrangement (within the meaning of Code Section 3121(a)(5)(D)),
a deferred compensation plan under Code Section 457, or a trust described in
Code Section 501(c)(18), cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the method provided in
Code Section 415(d) and related regulations) for such Participant's taxable
year, the Participant may, not later than March 1 following the close of the
Participant's taxable year, certify to the Administrator in writing the amount
of such excess and request that his/her Deferrals under this Plan be reduced by
an amount specified by the Participant. (If the excess is attributable solely to
plans maintained by the Company, such written certification will be deemed to
have been made.) In such event, the Administrator may direct the Trustee
to distribute the excess amount (and any income allocable to such excess amount)
to the Participant not later than the first April 15th following the close of
the Participant's taxable year. The income or loss allocable to the excess
Deferral amount shall be calculated in the same manner as earnings on actual
deferral percentage refunds specified in Section 10.02(f).

(b) Any distribution of less than the entire amount of the Participant's
Deferrals and income for the year shall be treated as a pro rata distribution of
excess Deferrals and income. The amount distributed shall not exceed the
Participant's Deferrals for the taxable year plus allocable income and loss.
Notwithstanding the above, a Participant's excess Deferrals shall be reduced,
but not below zero, by any distribution of excess annual additions pursuant to
Section 10.01.

(c) The Plan may make a correcting distribution of excess deferrals and
allocable income or loss attributable to plans of the Company on or before the
last day of the Participant's taxable year provided each of the following
conditions are met:

         (i) the distribution must be made after the date on which the Plan
         received the excess Deferral;

         (ii)the  Administrator must designate the distribution as an excess
         Deferral  on behalf of the Participant; and

         (iii) the Plan must designate the distribution as a distribution
         of excess Deferrals.

(d) Any distribution made pursuant to this Section 10.05 shall be made first
from unmatched Deferrals and, thereafter, from Deferrals which are matched.
Matching Contributions which relate to such distributed Deferrals shall be
forfeited.

                                       29
<PAGE>

                                   ARTICLE 11
                      ACCOUNTING FOR PARTICIPANT INTERESTS

11.01    Individual Accounts

The following accounts will be kept at the direction of the Committee for each
Participant, along with such subaccounts as are necessary to maintain an
accurate record of the interest of each Participant in the Plan:

(a) Post-Tax Account. This account will include Participant contributions made
to the Plan prior to January 1, 1984, subsequent Post-Tax Contributions, and the
earnings and/or losses attributable thereto.

(b) Pre-Tax Account. This account will include Deferrals contributed to the Plan
in accordance with Section 5.01 together with earnings and/or losses
attributable thereto.

(c) Company Contribution Account. This account will include Company Matching
Contributions in accordance with Section 7.02 together with earnings and/or
losses attributable thereto.

(d) Rollover Account. This account will include rollover contributions made on
behalf of the Employee from other qualified retirement plans pursuant to Section
8.01.

(e) Profit/Gain Sharing Account. This account will include Profit/Gain Sharing
Contributions made on behalf of eligible Employees in accordance with Section
7.03 together with earnings and/or losses attributable thereto.

Participant accounts may be kept in dollars or in units or both, as determined
in accordance with generally accepted principles of trust accounting. The
information maintained will be sufficient to determine the number of shares of
Stock that are allocated to Participant accounts as of any valuation date and
the tax status of distributions with respect to matters such as the
determination of net unrealized appreciation on shares of Stock that may be
distributed.

11.02    Accounting for Investments

Each Participant who has any interest in an Investment Fund will have an
undivided proportionate interest. The Committee will cause the records to be
maintained relative to a Participant's account so that there may be determined
as of any date the current value of the Participant's account in the Trust and
the adjustments from the previous valuation date that have produced the current
value.

11.03    Valuation of Accounts

Within 90 days after the end of each Plan Year, the Trustee will value the
assets of the Trust on the basis of fair market values as of the close of the
Plan Year.

                                       30
<PAGE>

The recordkeeper will value Plan accounts on a daily basis in accordance with
generally accepted trust accounting principles. Accounts of Participants will be
credited with contributions and debited with withdrawals and distributions. The
recordkeeper shall also adjust the net credit balances of the Participant
accounts in the respective Investment Funds of the Trust, upward and downward,
on a pro rata basis (using reasonable assumptions regarding the availability of
current period contributions, withdrawals, and distributions, for purposes of
sharing in current period earnings and investment gains or losses), so that such
net credit balances will equal the net worth of each Investment Fund of the
Trust as of that date. The net worth of an Investment Fund will be determined by
the Trustee and reported to the recordkeeper under procedures approved by the
Committee or its delegate, by subtracting from the fair market value of assets
held in such Investment Fund any expenses, withdrawals, distributions and
transfers chargeable to that Investment Fund which have been incurred but not
yet paid. All determinations made by the Trustee with respect to fair market
values and net worth will be made in accordance with generally accepted
principles of trust accounting, and the accounting based thereon, in accordance
with procedures approved by the Committee or its delegate, will be conclusive
and binding upon all persons having an interest under the Plan.

11.04    Participant Statements

Each Participant will receive a quarterly statement of his/her participation in
the Plan as of the end of the prior Quarter.

                                   ARTICLE 12
                           INVESTMENT OF TRUST ASSETS

12.01    Investment of Future Contributions

(a) Initial Election. The Trustee will invest future Deferrals, Post-Tax
Contributions, Matching Contributions and Profit/Gain Sharing Contributions in
the Investment Funds designated by the Participant on his/her initial
enrollment. If no election is made upon enrollment, these future contributions
will be invested in the Edison International Stock Fund. Such amounts, and the
related earnings, will remain invested in the Edison International Stock Fund
subject to the provisions of Section 12.02. Notwithstanding the foregoing, IRS
Voluntary Compliance Resolution Program remedial Company contributions will be
initially invested in the Money Market Fund on behalf of affected Participants.

(b) Changing Investment Elections. Future contributions will be invested
according to the Participant's last valid election until a new election is made.

The Participant may change his/her election through the applicable Automated
Transaction System. Elections made by Market Close on a business day will be
effective that day. If the election is made after Market Close, the election
will be effective the following business day. Participant elections are made by
indicating the

                                       31
<PAGE>

percentage, stated in whole percentage increments, of his/her future
contributions which he/she elects to invest in any of the Investment Funds.

(c) Timing of Investments. The Trustee will immediately invest Participant and
Company contributions in those Investment Funds which do not have specific
investment entry windows. For those Investment Funds with specific investment
entry windows, the Trustee will hold the contributions in a short-term
investment fund until the earliest date the contributions can be deposited in
the Investment Fund selected by the Participant.

12.02    Investment of Accumulated Contributions

Each Participant may elect the percentage, stated in whole percentage
increments, of his/her Accumulated Balance which he/she wants to invest in any
of the Investment Funds. Elections may be made through the applicable Automated
Transaction System. Elections made by Market Close on a business day will be
effective that day. If the election is made after Market Close, the election
will be effective the following business day. The Participant may transfer
amounts from any Investment Fund to any other Investment Fund. The allocations
between Investment Funds will be made based on the prices of the Investment
Funds as of Market Close on the effective date. If the Participant does not
timely advise the Administrator of any change in his/her investment allocation,
then his/her Accumulated Balance will remain invested as it was without
adjustments for changes in the market value of the Investment Funds.
Furthermore, all contributions and related income added to a Participant's
Accumulated Balance subsequent to the effective date of his/her last valid
election under this Section will remain invested as elected until the
Participant makes a new election through the applicable Automated Transaction
System indicating otherwise.

                                   ARTICLE 13
                                     VESTING

13.01    Vesting of Deferrals and Post-Tax Contributions

The entire amount of a Participant's Deferrals and Post-Tax Contributions,
including any stock, cash and related income, is unconditionally vested in the
Participant.

13.02    Vesting of Company Contributions

Company Contributions and any Stock and cash attributable thereto, including
related income, dividends, stock splits or other rights, are only conditionally
credited to the Participant until they vest or are forfeited. Company
Contributions will fully vest in a Participant when he/she completes the Years
of Service with the Company indicated on the vesting schedule below, or, if
earlier while an active employee, when the Participant attains Normal Retirement
Age, dies, or becomes Permanently and Totally Disabled. All of a Participant's
Years of Service will be counted for vesting purposes. The vesting schedule is
as follows:

                                       32
<PAGE>

                                 Vesting Schedule
       Years of Service with                Percent of Nonforfeitable
            the Company                          Accrued Benefit
       ------------------------            ----------------------------
           Less than One                               0
            One or more                                20
            Two or more                                40
           Three or more                               60
            Four or more                               80
            Five or More                              100

For purposes of vesting under this Plan, in the event that a Participant
performs 1,000 Hours of Service in the anniversary year Computation Period
(defined in Article 2) ending in 1996, and 1,000 Hours of Service in the 1996
calendar year Computation Period, such Participant will be credited with two
Years of Service.

The nonforfeitable percentage of a Participant's right to Company Contributions
in the Plan will not be reduced as a result of any direct or indirect amendment
to the Plan. If the Plan is amended to change or modify any vesting schedule,
each Participant who has completed three Years of Service as of the end of the
election period described below may elect to have his/her nonforfeitable
percentage determined without regard to such amendment. The election period
referred to in the preceding sentence will begin on the date such amendment is
adopted and will end on the latest of the following dates:

(a) the date which is 60 days after the date on which such amendment is adopted;

(b) the date which is 60 days after the date on which such amendment becomes
effective; or

(c) the date which is 60 days after the date on which the Participant is issued
written notice of such amendment.

An election under this Section may be made only by an individual who is a
Participant at the time such election is made, and once made, the election will
be irrevocable.

13.03    Vesting of Plan Transfers and Rollover Contributions

Funds received by this Plan from another qualified retirement plan by rollover
or transfer will remain unconditionally vested in the Participant.

13.04    Forfeiture, Repayment and Vesting Following Re-employment

(a) Forfeiture. If a Participant terminates his/her employment at a time when
the Company Contributions credited to his/her account have not vested, the
portion not

                                       33
<PAGE>

vested will be forfeited upon the earlier of (i) the date of distribution, or
(ii) the date the Participant incurs five consecutive one-year Breaks In
Service.

(b) Repayment. A Participant whose employment has terminated and who has
received a distribution will have the right to repay to the Plan the full amount
of the distribution received by him/her and thereby restore any forfeited
amounts to his/her account. Such repayment must be made before the earlier of
five years after the first date on which the Participant is subsequently
re-employed by the Company or the close of the first period of five consecutive
one-year Breaks In Service commencing after the withdrawal. The provisions of
this Subsection will apply only in the event that the Participant repays the
full amount of the distribution in a single payment within the time period
provided. Upon such a full repayment, the Sponsor will restore to the
Participant's Account an amount equal to the amount of Company Contributions
forfeited at the time of such distribution unadjusted by any subsequent losses
or gains.

(c) Vesting Following Re-employment. Years of Service prior to the date of
employment termination will be recognized for purposes of this Article.

                                   Article 14
                                   PLAN LOANS

14.01    Eligibility

Participants who are Employees, and other Participants who are
parties-in-interest, as defined by the Employee Retirement Income Security Act,
are eligible for Plan loans.

14.02    Loan Procedures

(a)      Types of Loans Available

         (i)  General Purpose Loan. A loan for any purpose with repayment from
         one to four years. Repayment may be extended under certain
         circumstances as provided in this Article.

         (ii) Residential  Loan.  A loan for the purchase of the Participant's
         principal  residence  with repayment  from one to 15 years.
         Repayment  may be extended  under certain  circumstances as provided in
         this Article.

(b)      Loan Procedures

         (i)  Administration.  Plan Loans will be administered by the Secretary.
         The  Administrator  will process loan  requests  under the  direction
         of the  Secretary.  Loans will be approved or denied based on
         the conditions and limitations of this Article.

         (ii) Loan Initiation. A Plan Participant may request a loan by
         submitting a request through the applicable Automated Transaction
         System. Loan requests

                                       34
<PAGE>

         may only be initiated by the Participant by using his or her
         personal identification number to access the applicable
         Automated Transaction System unless the Administrator confirms the
         Participant does not have access to this system and authorizes an
         alternate method to submit the request. The Participant must specify
         the type of loan, the amount of the loan and the number of Months for
         repayment subject to the limitations of this Article. The Participant
         will electronically approve the terms and conditions of the loan,
         payroll deductions and repayment schedule. Endorsement of the loan
         check will reaffirm his or her agreement with the terms and conditions
         of the loan. The applicable Automated Transaction System will provide
         immediate approval of general purpose loan requests meeting the
         eligibility requirements of this Article. Approval of Residential loans
         is contingent upon submission of valid supporting documentation as
         described in Paragraph (iii).

         (iii) Loan Processing. A general purpose loan will be effective the day
         of the request if the request is made prior to Market Close on a
         business day, or the following business day if the request is made
         later than Market Close. The Administrator will send the Participant a
         promissory note/disclosure statement with the loan terms and conditions
         to be retained by the Participant. Participants requesting a
         residential loan must return the completed confirmation notice along
         with valid supporting documentation substantiating the purchase of the
         primary residence and the amount requested within 30 days of the
         initial request, or the loan request will be canceled. The
         Administrator will then review the loan request for compliance with
         this Article. Once the residential loan documentation has been
         approved, the loan will be effective. The Participant may cancel the
         loan request through the applicable Automated Transaction System. The
         cancellation may be made any time prior to Market Close on the
         effective date.

         (iv) Loan Funding and Repayment. Loan proceeds checks are processed
         each week for loans approved that week. When the loan is approved, a
         check for the amount borrowed will be sent to the Participant within
         two weeks. Repayment by payroll deduction of interest and principal
         will begin approximately four to six weeks following the effective date
         of the loan. The repayments will be reinvested in the Participant's
         account in accordance with the last valid election on file for
         investment of future contributions.

(c)      Loan Amount Limitations

         (i) The Participant may borrow up to 50% of the vested account balance
         with a minimum loan amount of $1,000 and a maximum loan amount of
         $50,000. For general purpose loans, the maximum loan amount available
         will be reduced if necessary to ensure that the loan payment will not
         exceed 25% of the Participant's gross pay per pay period (total hours
         times the hourly rate plus any commissions paid). The maximum loan
         amount of $50,000 may be further reduced by IRS rules.

                                       35
<PAGE>

         (ii) The Participant's ability to repay the loan, based on available
         "take-home" funds per paycheck, may also limit the maximum amount of
         loans available.

         (iii) Loan proceeds will be distributed proportionately from each
         Investment Fund, excluding any fund subject to restricted access.

(d) Number of Loans. Only one loan may be taken each calendar year with a limit
of two outstanding loans at anytime. No more than one residential loan may be
outstanding at one time. Defaulted loans of active Employees are considered
outstanding for this purpose unless repaid to the Plan.

(e) Interest Rate. The interest rate charged for a loan will be the lowest prime
rate as published in the Wall Street Journal on the first business day of the
month in which the loan is applied for plus one percent, rounded down to the
nearest quarter percent. The interest rate is a fixed rate for the term of the
loan.

(f) Payment of Loans. Loan repayments are made through equal payroll deductions
throughout the life of the loan. Repayments by participants on an authorized
leave of absence or approved Union leave of absence, by terminated Participants,
or by participants on layoff are discussed in Subsections (i), (j) and (k)
below. A defined grace period applies to loan repayments for loans initiated
after March 11, 1999 (or for SCE IBEW and UWUA participants for loans initiated
after February 1, 2000). For loans on a bi-weekly repayment schedule, the
maximum period a scheduled payment may remain unpaid before a default occurs is
seven bi-weekly pay periods. For loans on a weekly repayment schedule, the
maximum period is thirteen weekly pay periods.

Payoff of the full outstanding balance may be initiated at any time through the
applicable Automated Transaction System. Partial payoff will not be permitted.

(g) Non-Payment of Loan (Default). A loan is immediately due and payable as of
the last day of the month in which a default occurs. A Plan loan will be
considered in default if a scheduled payment is not made prior to the end of the
applicable grace period.

Loans are secured by the Participant's account balance. When a loan is in
default, the outstanding loan balance will be treated as a taxable distribution
from the Plan which will be reported as such to the appropriate taxing
authorities. The Participant will incur ordinary income taxes on the amount and
may incur additional federal and state early distribution penalties.

A loan will also be considered in default under the following circumstances:

         (i)  When the maximum loan term has been reached.

                                       36
<PAGE>

         (ii) When a Participant returns to active payroll after an authorized
         leave of absence or an approved Union leave of absence and fails to
         agree to the reamortization of his/her loan when it is necessary to do
         so.

         (iii) When a Participant whose loan payment has been suspended fails to
         return to work from an authorized leave of absence or an approved Union
         leave of absence before the earlier of:

               (A)  The end of the 12-month suspension period as discussed in
                    Subsection (h), or

               (B)  The date the maximum loan term has been reached.

         (iv) When a Participant terminates employment and does not repay the
         loan balance, except in the case of a Participant who is eligible to
         continue loan amortization payments as provided in Subsection (j) below
         and elects to do so.

         (v)  When a Participant who is eligible to continue loan  amortization
         payments after  termination of employment as provided in Subsection (j)
         below and elects to do so, the earlier of

               (A)  the end of the applicable grace period following the
                    Participant's failure to make a scheduled payment if such
                    amount remains unpaid at that time, or

               (B)  the date the Participant's request for distribution of
                    his/her Plan balance is effective.

The Administrator will take the following actions for loans in default:

When a loan has been determined to be in default, it becomes immediately due and
payable. If repayment of the loan is not made in full, the outstanding balance
will be considered a taxable distribution subject to ordinary income taxes and
any applicable federal and state early distribution penalties. A loan of an
active Employee that has been treated as a taxable distribution will still be
considered an outstanding loan for purposes of this Article. Outstanding taxed
loans may be repaid at any time on a post-tax basis.

(h) Authorized Leave of Absence. The obligation to repay a loan and the accrual
of interest on the loan of a Participant who is on an authorized leave of
absence with insufficient earnings to amortize the loan may be suspended for up
to 12 months subject to the conditions and limitations of Section 72(p)(2)(C) of
the Code and the related regulations. Upon return to active payroll from an
authorized leave of absence, the payroll withholding obligation for loan
repayment will recommence. The term of a loan may be extended by adding the
period for which payroll deductions were suspended as a result of the authorized
leave of absence to the balance of the

                                       37
<PAGE>

remaining loan period, as long as the term does not exceed the maximum specified
in Subsection (a).

Plan Participants who have an outstanding loan balance and who are on an
approved leave of absence for union business will continue to participate in the
SSPP loan provision. This continued participation requires that Participants
make arrangements for their union to make the loan payments in advance on a
monthly basis.

(i) Termination of Employment. Upon termination of employment for any reason
(including death) except as provided in Paragraph (ii) below, any unpaid loan
becomes due and payable.

         (i) If the terminated Participant chooses not to pay the outstanding
         balance of the loan at termination of employment, the unpaid balance
         will reduce the Participant's account balance before the termination
         distribution is made. However, the unpaid loan amount will be included
         as part of the termination distribution for tax reporting and
         withholding purposes.

         If a terminated Participant elects to defer distribution of his/her
         account balance under the terms of the Plan and does not repay the loan
         balance, the outstanding loan balance will be treated as a taxable
         distribution 60 days after termination of employment occurs.

         (ii) Notwithstanding the foregoing, a Participant who has an
         outstanding loan under the Plan and who (A) retires from active service
         under the terms of a qualified retirement plan maintained by the
         Sponsor or an Affiliated Company, or (B) is nonrepresented and is
         terminated under a severance program maintained by the Sponsor or an
         Affiliated Company, may elect to continue loan amortization payments on
         a bi-weekly basis thereafter in the manner prescribed by the Plan
         Administrator provided such Participant has not elected to receive
         distribution from the Plan or has elected to receive distribution in
         the form of installment payments. If such Participant elects to
         continue to make loan amortization payments and subsequently receives
         distribution from the Plan of his/her remaining account balance while a
         loan remains outstanding, and elects not to repay the outstanding loan
         balance at that time, the unpaid loan balance will reduce the
         Participant's account balance before the distribution is made. However,
         the unpaid loan amount will be included as part of the distribution for
         tax reporting and withholding purposes.

(j) Layoff Loans of any Participant who incurs a layoff with recall rights will
not default until the end of the applicable grace period. The grace period will
be reduced by the number of weeks any scheduled payment may already be in
arrears at the time of the layoff.

A Participant who is not recalled before the end of the applicable grace period
will be treated as terminated for purposes of this Article and will have the
same opportunity to

                                       38
<PAGE>

pay off any outstanding loan balances as any other terminating Participant as
discussed in Subsection (i) above.

(k) Effect on Hardship Withdrawals Federal regulations require Participants who
apply for a hardship withdrawal to have exhausted all means available to relieve
the financial need, including applying for loans from plans maintained by the
Company. The Plan loan requirement for a hardship withdrawal is waived if the
loan would not reasonably alleviate the hardship and the Participant signs a
written statement to that effect.

(l) Loan repayments will be suspended under this Plan as provided under Section
414(u)(4) of the Code for Participants performing military service.

                                   ARTICLE 15
            DIRECT ROLLOVERS AND QUALIFIED DOMESTIC RELATIONS ORDERS

15.01 Direct Rollovers

(a) 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 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) An eligible rollover distribution is any distribution or withdrawal 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 to the extent
such distribution is (i) required under Section 401(a)(9) of the Code; (ii) not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities), or (iii) one of a
series of substantially equal periodic payments made for the life expectancy of
the distributee or for a period of 10 years or more.

(c) An eligible retirement plan is an individual retirement account described in
Section 408(a) of the Code, and 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) 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.

                                       39
<PAGE>

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

15.02 Distributions Due to Qualified Domestic Relations Orders

Unless otherwise provided in a Qualified Domestic Relations Order (QDRO),
accounts established for alternate payees pursuant to a QDRO will be subject to
complete and immediate payout on a lump sum basis at the earliest distribution
date. If the account is $5,000 or greater when established, distribution may be
deferred pursuant to the terms of the QDRO.

                                   ARTICLE 16
                          WITHDRAWAL DURING EMPLOYMENT

16.01    Withdrawal From the Post-Tax Account

While employed by the Company a Participant may elect to withdraw amounts from
his/her Post-Tax Contribution Account by making a request through the applicable
Automated Transaction System. The withdrawal will be effective on that day if
the request is made by Market Close on a business day, or the following business
day if the request is made later. One withdrawal per Quarter is permitted.
Withdrawals will be paid within two weeks following the effective date, or as
soon thereafter as practicable. Withdrawals will first be drawn from Post-Tax
Employee Contributions made prior to 1987, after which withdrawals will be drawn
on a pro-rata basis between post-1986 contributions and all Post-Tax Earnings.

16.02    Withdrawal From the Pre-Tax Account

(a) While employed by the Company, a Participant may elect to withdraw amounts
from his/her Pre-Tax Account. One withdrawal per Quarter is permitted. Requests
are initiated through the applicable Automated Transaction System. Withdrawals
will be effective upon submission and approval of the required documentation.
Withdrawals from the Pre-Tax Account may only be made if the Participant meets
the conditions of hardship as described in Subsection (c). Hardship withdrawals
are limited to the amount of the Participant's Deferrals and pre-1989 earnings
on Participant Deferrals plus amounts in the Participant's Rollover Account, if
any. Company Contributions and post-1988 earnings on Participant Deferrals are
not available for withdrawal from this account.

(b) The request for withdrawal on the basis of hardship must be on the form
prescribed by the Sponsor for this purpose, and must include a written statement
setting forth the reasons for the request. The Administrator may require the
Participant to submit additional information as may be necessary to make a
determination in compliance with the standards established under Subsection (c).

(c) A withdrawal will be treated as on account of "hardship" if the withdrawal
is necessary in light of immediate and heavy financial needs of the Participant.
A

                                       40
<PAGE>

withdrawal based upon financial hardship cannot exceed the amount required to
meet the immediate financial need created by the hardship and not reasonably
available from the other resources of the Participant, including his/her
Post-Tax Account. This amount may be increased by 50% of the approved hardship
amount up to the maximum amount available for hardship withdrawal for the
purpose of paying Federal and State income taxes and additional tax penalties
which may apply to the withdrawal. For purposes of this Section, "financial
hardship" is defined as follows:

         (i) Unreimbursed  medical expenses  previously  incurred and for which
         the Participant is responsible for self, spouse, or  dependents as
         defined by Section 152 of the Code.  Medical expense includes expenses
         necessary to secure medical care;

         (ii) Payment of tuition, room, board and related educational fees for
         the next twelve months of post-secondary education of the Participant,
         the Participant's spouse or dependents, as defined by Section 152 of
         the Code;

         (iii) Costs directly related to the purchase of a principal residence
         (excluding mortgage payments) which the Participant will occupy on a
         regular basis the majority of the time; or

         (iv) Payments necessary to prevent the eviction of the Participant from
         the Participant's principal residence or foreclosure on the mortgage on
         that residence.

The determination of hardship will be made by the Committee or its delegate
under uniform and nondiscriminatory standards established by the Committee in
accordance with the definition of such term by the U. S. Treasury Department in
its regulations for plans qualified under Section 401(k) of the Code. The
determination may be appealed pursuant to the provisions of Article 20.

16.03    Age 70-1/2 Withdrawals

While employed by the Company any time after attaining age 70-1/2, a Participant
may request a lump sum distribution of his entire Accumulated Balance in the
Plan.

16.04    Disbursement of Withdrawals

As soon as practicable after the effective date of the withdrawal, the
Administrator will direct the Trustee to disburse the requested withdrawal.

16.05    Minimum and Maximum Withdrawal

Withdrawals under this Article will be no greater than the balance of the
Participant's Pre-Tax and Post-Tax Accounts nor, in the case of withdrawals from
the Post-Tax Account, less than the lesser of $500 or the balance of such
account.

                                       41
<PAGE>

16.06    Proportional Withdrawal Requirement

A Participant who has allocated his/her Deferrals and Post-Tax Contributions to
more than one Investment Fund will be required to withdraw from each Investment
Fund in the same proportion his/her Deferrals and Post-Tax Contributions are
invested in the Investment Funds on the effective date of the withdrawal, except
to the extent such a withdrawal is prohibited under the terms of the investment
contract(s). Withdrawals in the form of EIX Stock will be withdrawn exclusively
from the EIX Stock Fund and are limited to the amount invested in the EIX Stock
Fund.

16.07    No Withdrawal From the Company Contribution Account

No withdrawal from the Company Contribution Account is permitted under this
Article.

                                   ARTICLE 17
                               PLAN DISTRIBUTIONS

17.01    Required Beginning Date and Minimum Distributions

(a) All required distributions shall be determined and made in accordance with
the proposed regulations under Code Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the
proposed regulations.

If any distribution date described under the Plan, either by Plan provision or
Participant election (or nonelection), is later than the Participant's required
beginning date, the distribution will be made no later than the required
beginning date. A Participant's required beginning date is April 1st of the
calendar year following the calendar year in which the Participant attains age
70-1/2. Notwithstanding the foregoing, benefit distributions must begin by April
1st of the first calendar year following the calendar year in which the
Participant has attained age 70-1/2 and is determined to be a five percent
owner.

(b) The minimum distribution under the Plan is a lump sum distribution of the
Participant's entire nonforfeitable account balance unless prior to the
Participant's (i) retirement or (ii) attainment of age 70-1/2, whichever occurs
later, the Participant elects distribution in the form of installment payments.
When installment payments have been elected, the Plan will pay the greater of
the requested installments or the amount determined pursuant to Code Section
401(a)(9).

17.02    Distributions Due to Retirement

When termination of employment results from the Retirement of a Participant, the
Participant may elect to take a lump sum distribution at any time thereafter
until the end of the year in which he/she reaches age 70-1/2. The Participant
who terminates employment due to Retirement is eligible to elect one of the
alternative forms of distribution described in Section 17.04(b). Distributions
will generally occur within two weeks after the effective date. If no
distribution election is made earlier, and no election is made to defer
distribution to a later date, a lump sum distribution of the Participant's

                                       42
<PAGE>

account will be made as soon as practicable following the end of the year in
which he/she reaches age 65.

17.03    Distributions Other Than Retirement

A lump sum distribution to the Beneficiary(ies) of a deceased Participant, or to
Participants who have nonforfeitable account balances with a market value of
$5,000 or less, will occur as soon as practicable after the end of the Month in
which the Participant terminates employment, dies, or is determined to be
Permanently and Totally Disabled and exhausts benefits under the Comprehensive
Disability Plan and State Disability Insurance benefits. A Participant with a
nonforfeitable account balance greater than $5,000 who (i) terminates employment
with the Company, or (ii) is declared Permanently and Totally Disabled and
exhausts Comprehensive Disability Plan and State Disability Insurance benefits
may elect to receive a lump sum distribution. A Participant who terminates
employment with the Company with an account balance greater than $5,000 is
eligible to elect one of the alternative forms of distribution described in
Section 17.04(b). If no election is made earlier, and no election is made to
defer distribution to a later date, a lump sum distribution of the Participant's
account will be made as soon as practicable following the end of the year in
which he/she reaches age 65.

Upon termination of a Participant's employment for any reason other than
retirement or death, the Administrator will direct the Trustee to distribute
payment to the Participant of his/her nonforfeitable accrued benefit. The
Participant must consent in writing to the distribution if the present value of
the Participant's nonforfeitable account balance exceeds $5,000.

17.04    Form of Distribution

(a) Distributions from the Plan shall be made in a lump sum of the entire
nonforfeitable account balance unless an alternative form of distribution has
been elected pursuant to Subsection (b). Lump sum distributions will include all
amounts, including related income, attributable to Deferrals and contributions
(not previously withdrawn), plus all amounts, including related income,
attributable to Company Matching Contributions which have vested as provided in
Section 13.02.

(b) The following alternative forms of distribution are available to eligible
distributees identified in Sections 17.02 and 17.03 in lieu of a lump sum
distribution except as provided in Section 17.01:

         (i) Partial Distributions. An eligible Participant may elect to receive
         a partial distribution of his/her nonforfeitable account balance.
         Partial distributions must be at least $1,000 and may be requested as
         frequently as monthly, but a partial distribution may not reduce the
         account balance below the greater of any outstanding loan balance or $
         5,000.

                                       43
<PAGE>

         (ii) Installment Payments. An eligible Participant may elect to receive
         his/her distribution in the form of installment payments. The three
         installment payment options are based on (1) a fixed term, (2) a fixed
         amount, or (3) life expectancy. The recipient may elect monthly,
         quarterly or annual installments under each option. Installments may
         not be for a duration shorter than the term of any outstanding loan.
         For fixed term installment payments, the frequency and duration of the
         installments are specified by the recipient, and the resulting amount
         of each installment may vary depending on investment results. For fixed
         amount installments, the frequency and the amount of each installment
         are specified by the recipient, and the resulting duration of the
         installments until the account balance is exhausted may vary depending
         on investment results. For life expectancy installments, the frequency
         of the installments is specified by the recipient, the duration of the
         installments is determined with reference to IRS life expectancy
         tables, and the resulting amount of each installment may vary depending
         on investment results.

(c) Unless otherwise elected pursuant to this Subsection (c), lump sum and
partial distributions will be made in cash. The Participant or the Participant's
Beneficiary or the executor or administrator of the Participant's estate may
elect to receive distribution partially or completely in Stock to the extent the
Participant's balance is invested in the Edison International Stock Fund at the
time of distribution by submitting the prescribed form to the Administrator.
Installment payments will be paid in cash only.

(d) If a cash distribution is elected, and all or a portion of a Participant's
balance is invested in Stock, the Administrator will direct the Trustee to
distribute cash equal to the market value of the Stock on the effective date
determined as of Market Close on the effective date.

If all or part of a Participant's Accumulated Balance is invested in one or more
Investment Funds other than the Edison International Stock Fund, such amount
will be distributed in Stock or cash equal in value to the amount invested in
such Investment Funds determined as of Market Close on the effective date.

17.05    Fractional Shares of Stock

No fractional share of Stock will ever be distributed. Its value, determined in
accordance with Section 17.04(d), will be paid in cash.

17.06    Beneficiary in the Event of Death

(a) Automatic Designation of a Surviving Spouse. In the event of death of a
Participant with at least 1 Hour of Service or 1 hour of paid leave as a Plan
Participant after August 23, 1984, the Participant's nonforfeitable accrued
benefit under this Plan (reduced by any security interest held by the Plan by
reason of an outstanding loan to such Participant) will be paid in full to the
Participant's Spouse, if there is one, unless the Spouse has consented to
another designation in the manner specified in Subsection (b).

                                       44
<PAGE>

The automatic designation of a particular person as a surviving spouse will
cease upon:

         (i) Receipt of a court order allocating benefits in a divorce
         proceeding  and  receipt of a new beneficiary designation form
         from the Participant,

         (ii) the death of the Spouse, or

         (iii)the automatic designation of a succeeding Spouse by operation of
         law (under provisions of the Retirement Equity Act of 1984).

(b) Consent of a Spouse to Designation of Another Beneficiary. A Spouse may
waive the automatic designation of Plan benefits to himself or herself by
submitting a signed and notarized consent form. The consent is effective only
for the specific other designee, is effective only as to benefits of the signing
Spouse, and continues until revoked by receipt of a new election of the signing
Spouse.

Consent forms are available from the Administrator. Each consent must:

         (i)  be in writing,

         (ii) be signed by the Spouse,

         (iii)acknowledge  the effect of the consent is to designate a specific
         other person is to receive the Plan benefits, and

         (iv) be witnessed by a notary public.

An election to change the designee must be accompanied by a valid consent in
favor of the new designee. Any such designation or revocation will be effective
only upon receipt by the Administrator.

(c) Other Beneficiary Designations. Benefits not subject to the automatic
designation provision in Subsection (a) may be designated by the Participant, in
the event of his/her or her death, to be distributed to someone else. The
designation must be in writing on the form prescribed by the Administrator and
signed by the Participant. A Participant may change or revoke such a designation
by submission of a new designation form. Forms are available from the
Administrator.

If no designation is made under this provision, and the automatic designation
provision does not apply, Subsection (d) will govern.

Any such designation or revocation will be effective only upon receipt by the
Administrator.

                                       45
<PAGE>

(d) Distribution Priorities. Upon the death of the Participant, his/her benefits
will be distributed according to the provisions of Subsections (a), (b), and
(c), in that order. If there is no designation in effect as to all or part of
the benefits, such amounts will be distributed to the personal representative of
the estate of the Participant for distribution according to the terms of the
will or the laws of intestate succession, as appropriate. Thereupon neither the
Committee nor the Trustee nor any other fiduciary will be under any further
liability to anyone respecting these benefits.

17.07    Unlocated Participant

The Trustee will satisfy its duty to distribute benefits by mailing Stock
registered in the name of the Participant and/or its check payable to the
Participant or Beneficiary to the address provided by the Committee. In the
event the Stock or check is returned undelivered, the Trustee will notify the
Committee and will have no obligation to locate the Participant or Beneficiary.
The Secretary will use his/her best efforts to locate the Participant or
Beneficiary and will direct the Trustee to mail the Stock and/or its check upon
ascertainment of his/her location. If, in spite of his/her best efforts, the
Administrator cannot locate the Participant or Beneficiary within three (3)
years of the Participant's Retirement, Death, Permanent and Total Disability or
termination of employment, the Committee is expressly authorized to declare a
forfeiture of the benefit of such unlocated Participant or Beneficiary. The
forfeiture will be applied to reduce Company contributions in accordance with
the provisions of Section 7.02. If a claim for benefits is subsequently made and
awarded to the unlocated Participant or Beneficiary under the provisions of
Article 20, the Company will contribute to the Plan the amount required to pay
the claim, without interest.

                                   ARTICLE 18
                              TOP-HEAVY PROVISIONS

18.01    Top-Heavy Determination

(a) Each Plan Year, a determination will be made as to whether the Plan is
top-heavy and as to which Employees are Key Employees. The following definitions
apply:

"Aggregation Group" means either a Required Aggregation Group or a Permissive
Aggregation Group:

"Compensation" means the same as the term is defined in Article 2.

"Determination Date" is the last day of the preceding Plan Year, or in the first
Plan Year, the last day of such Plan Year.

"Key Employee" means an Employee or former Employee (or the Beneficiary of such
an Employee or former Employee), who at any time during the determination
period:

                                       46
<PAGE>

         (i) Was an officer of the Company having an annual Compensation from
         the Company greater than 50 percent of the amount in effect under Code
         Section 415(b)(1)(A) for the Plan Year;

         (ii) Had annual Compensation from the Company of more than the
         limitation in effect under Code Section 415(c)(1)(A) and was one of the
         ten Employees owning (or was considered as owning within the meaning of
         Code Section 318) the largest interests in the Company;

         (iii) Owned (or was considered as owning within the meaning of Code
         Section 318) more than five percent of the total combined voting power
         of all stock of the Company; or

         (iv) Had annual Compensation from the Company of more than $150,000 and
         who would be described in (iii) above if one percent were substituted
         for five percent.

For purposes of (i) above, no more than 50 Employees (or, if less, the greater
of three or ten percent of the Employees) will be treated as officers. For
purposes of (ii), if two Employees have the same interest in the Company, the
Employee having greater annual Compensation from the Company will be treated as
having the larger interest.

"Non-Key Employee" means any Employee who is not a key Employee. In addition,
any Beneficiary of a non-key Employee will be treated as a non-key employee.

"Permissive Aggregation Group" means one or more plans that are not required to
be aggregated but may be aggregated if the resulting aggregation group satisfies
the requirements of Code Sections 401(a)(4) and 410.

"Required Aggregation Group" means the group of plans consisting of each plan of
the Company including terminated plans, in which a key employee is a participant
during the Plan Year containing the determination date, or any of the four
preceding Plan Years, and each other plan of the Company which enables any plan
in which a key Employee participates to meet the requirements of Code Sections
401(a)(4) or 410(b).

"Valuation Date" is the last day of each Plan Year as of which account balances
are valued for purposes of calculating the top-heavy ratio.

(b) The top-heavy ratio for a Plan year is the ratio on the determination date
for such Plan Year of (1) the present value of accrued benefits of key employees
and the sum of the aggregate account balances for key employees under this Plan
and all plans of an aggregation group to (2) the present value of accrued
benefits and the aggregate account balances for all Employees under this Plan
and all plans of an aggregation group. The Plan is top-heavy for a Plan Year and
the provisions of Section 18.02 will apply if the top-heavy ratio exceeds 60
percent.

                                       47
<PAGE>

(c) For purposes of this Article the "aggregated group of plans" is comprised of
all qualified defined benefit and defined contribution plans of the Company.

18.02    Provisions Applicable if Plan is Top-Heavy

Notwithstanding anything else in the Plan to the contrary, the following
provisions will apply for the Plan Year if the Plan is determined to be
top-heavy under Section 18.01:

(a) Vesting. All Stock and cash conditionally credited to each Participant in
his/her Company Contribution Account will fully vest and become nonforfeitable
when he/she completes three Years of Service with the Company. Stock and cash
which vests under the provisions of this Subsection while the Plan is top-heavy
will remain so vested if the Plan ceases to be top-heavy. If the Plan ceases to
be top-heavy, the election of Section 13.02 will apply.

(b) Minimum Benefit Limitation. Each non-key Employee Participant will be
entitled to the minimum accrued benefit provided under the defined benefit plans
maintained by the Sponsor, payable monthly upon retirement at or after Normal
Retirement Age, equal to:

         (i)  two percent of his/her average  monthly  earnings  during his/her
         five  highest-paid  consecutive years of service multiplied by

         (ii) the number of his/her years of service, not exceeding ten,
         occurring after December 31, 1983 in which the Plan is top-heavy.

If a non-key Employee cannot receive a minimum benefit under the Sponsor's
defined benefit plans, he/she will be entitled to the minimum contribution
provided under the defined contribution plans maintained by the Sponsor equal to
3% of his/her Compensation. Such contribution will not be contingent upon (i)
attaining a certain Compensation level, (ii) completion of a Year of Service, or
(iii) making a mandatory contribution to the Plan. In addition, the minimum
contribution will not be subject to forfeiture due to withdrawal of a mandatory
Employee contribution.

(c) Section 415 Limitation. Paragraphs (2)(B) and (3)(B) of Section 415(e) of
the Code will be applied as provided under Section 10.01(d) of the Plan by
substituting "1.0" for "1.25".

                                   ARTICLE 19
                                 ADMINISTRATION

19.01    Administration Directed by the Committee

The Plan is administered under the direction of the Committee, which will make
such rules, regulations and decisions as it deems necessary for the uniform,
non-discriminatory and efficient administration of the Plan. The Committee is
authorized to prescribe rules governing its proceedings and has delegated the
day-to-day

                                       48
<PAGE>

administrative operations of the Plan to the vice president responsible for
Human Resources. Direct supervision of ministerial functions, e.g., maintenance
of Participant accounts, processing of status changes, withdrawals,
distributions, loans, payroll deductions and operations of the Plan has been
delegated to the Manager of the Human Resources Service Center who also serves
as Secretary to the Committee. Both the Committee and the Secretary are
authorized to utilize persons, who may or may not be Employees, to assist in the
performance of their respective functions. Except in cases requiring
interpretation or other decisions by the Committee, the Secretary is responsible
for directing withdrawals and distributions in conformity with the status of
each Participant's accounts reflected on the books of the Plan, made by the
Trustee pursuant to Articles 15, 16 and 17, and the Trustee has no
responsibility to verify the correctness of such directions. The Secretary is
authorized to approve contribution and benefit payment adjustments as deemed
appropriate or necessary in his or her discretion pursuant to written guidelines
approved by the Chair of the Committee to correct errors that may occur from
time to time in Plan administration.

19.02    Cost of Administration

The cost of the administration of the Plan will be paid by the Company. The
fees, taxes and other expenses incurred by the Trustee in making investments are
paid out of the Investment Funds for which the investments are made as part of
the cost of the investment.

                                   ARTICLE 20
                          CLAIMS AND APPEAL PROCEDURES

20.01    Presentation of Claims

The procedures established to administer the Plan are such that a formal claim
for benefits or demand for the determination of rights under the Plan is not
usually required. However, any Participant or Beneficiary desiring to do so may
submit such claim or demand in writing, addressed to the Secretary at the
address of the Committee set forth in Article 2; such writing need be in no
prescribed form, but must include the facts and statement of position necessary
to explain the claim or demand. To avoid stale claims, and in view of the
limited period of time the Sponsor retains Employee records, such claim or
demand must be submitted within a reasonable time (not exceeding 120 days) after
the claimant became aware, or reasonably should have become aware, of the
existence of facts on which such claim or demand could be based.

20.02    Determination by the Secretary

Upon receipt thereof, the Secretary will review the claim and conduct such
investigation of the facts as may be necessary to verify the same, and as soon
as practicable but within 90 days, will advise the claimant in writing of the
allowance or denial, in whole or in part, of such claim, or the determination of
rights under the Plan, as the case may be. In the event of a denial, in whole or
part, such advice will be written in a manner calculated to be understood by the
claimant and will include: (i) the specific reason or

                                       49
<PAGE>

reasons for the denial; (ii) specific references to pertinent Plan provisions;
(iii) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why it is necessary; and
(iv) an explanation of the claim and review procedure. The claimant must
cooperate fully in the obtaining of all information reasonably deemed necessary
by the Secretary to investigate the merits of the claim. The claimant will have
the right to review and comment on all evidence submitted by others. Any
good-faith determination by the Secretary will be final and binding on the Plan
and the claimant unless appealed in accordance with Section 20.03 or unless such
claim becomes subject to disposition in accordance with Section 20.05.

20.03    Appeal Procedure

If the claimant is not satisfied with the Secretary's determination, the
claimant may appeal to the Committee by letter requesting review of the
determination. Such letter must be addressed to the chair of the Committee and
must be furnished within 90 days of the date of the determination of the
Secretary. Upon receipt of such letter, the Secretary will submit the claim file
to the chair. The file will be reviewed by the Committee or by a person
designated by the Committee to do so, and a determination will be made by the
Committee within 60 days of the date of the letter requesting review and will be
communicated in writing to the claimant promptly thereafter. Such decision will
be written in a manner calculated to be understood by the Participant and will
include the reasons for the decision including appropriate references to the
provisions of the Plan. The decision of the Committee will be final and binding
on the Plan and the claimant.

20.04    Effect of Separate Labor Contract

The provisions of this claim and appeal procedure are separate from any other
procedures for processing claims which might be available to a Participant by
virtue of a collective bargaining agreement between the Company and a union
representing certain of its Employees; however, nothing herein will be construed
as establishing such a separate procedure.

20.05    Conflicts Between Claimants

Notwithstanding the foregoing provisions of this Article, if at any time prior
to the payment of any benefit to any Participant or Beneficiary, the Secretary
or any member of the Committee is notified of the existence of conflicting
claims of more than one claimant to all or a portion of such benefit under
circumstances when there is no dispute that such benefit is payable to someone
by the Plan, the Secretary or the chair of the Committee may direct the
withholding of such benefit until the conflict in claims has been resolved by
agreement between the claimants, by a final judicial determination of the person
or persons entitled thereto, or by any other procedure reasonably calculated to
protect the Plan from making benefit payments more than once. If, in any case
involving conflicting claims between claimants, there is also a dispute between
one or more claimants and the Plan with respect to the benefit payable
thereunder, the Secretary may process the claim to resolve such dispute in
accordance with Section 20.02, and the same may be appealed in conformity with
Section 20.03 to

                                       50
<PAGE>

the point where any dispute between such claimant or claimants and the Plan will
have been resolved and be subject only to final resolution of conflicting claims
of claimants in accordance with the preceding sentence.

                                   ARTICLE 21
                                LIABILITY LIMITED

In administering the Plan, neither the Committee, any member thereof, the Board
of Directors, any member thereof, the Company, the Sponsor, any officer or
Employee thereof, any administrator appointed by the Committee, the Trustee, any
recordkeeper, nor any director, officer, or employee thereof, will be liable for
any acts of omission or commission, except for his/her or its own individual,
willful and intentional malfeasance or misfeasance, and except as otherwise
provided by the Employee Retirement Income Security Act of 1974. The Sponsor and
its officers and directors, each member of the Committee and the Secretary will
be entitled to rely in good faith on all tables, opinions and reports which will
be furnished by the Trustee, by any actuary, trustee, counsel or other expert
who will be employed or engaged by the Sponsor, the Committee or the Secretary.

                                   ARTICLE 22
           EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION OR MERGER OF PLAN

22.01    Exclusive Benefit

Except as provided in Article 7, 10 and Section 22.06, the Sponsor has no
beneficial interest in any Trust assets, and no part of any asset in the Trust
may ever revert to or be repaid to the Sponsor, either directly or indirectly;
nor, prior to the satisfaction of all liabilities with respect to Participants
and their Beneficiaries under the Plan, may any part of the corpus or income of
the Trust fund, or any asset of the Trust, be (at any time) used for, or
diverted to, purposes other than the exclusive benefit of Participants or their
Beneficiaries. In addition, no Participant may be denied, either directly or
indirectly, a Code Section 411(d)(6) protected benefit through the discretion of
the Sponsor, the Committee or any other party.

22.02    Amendment of Plan

(a) The Sponsor reserves the right to amend the Plan at any time. The Board of
Directors has conferred on the Committee the power to amend the Plan as it deems
appropriate. Amendments shall be in writing and must state the date to which it
is either retroactively or prospectively effective.

(b) Except as provided in Article 10 and Section 22.06, no amendment will reduce
retroactively the rights of Participants or permit the return to the Sponsor of
any part of the Trust assets held by the Trustee or the use of such Trust assets
for any purpose other than for the exclusive benefit of Participants and their
Beneficiaries. In addition, no amendment (including the adoption of this Plan as
a restatement of an existing plan) may decrease or restrict, either directly or
indirectly, a Participant's accrued benefit

                                       51
<PAGE>

under the Plan, except to the extent permitted under Section 412(c)(8) of the
Code, nor reduce or eliminate any Section 411(d)(6) protected benefits
determined immediately prior to the adoption date (or if, later the effective
date) of the amendment. An amendment reduces or eliminates Section 411(d)(6)
protected benefits if the amendment has the effect of either (1) eliminating or
reducing an early retirement benefit or a retirement-type subsidy (as defined in
Treasury regulations), or (2) except as provided by Treasury regulations,
eliminating an optional form of benefit.

22.03    Termination of Plan or Complete Discontinuance of Contributions

Although the Sponsor has established the Plan with the intention and expectation
it will continue indefinitely, the Sponsor reserves the right to terminate the
Plan in whole or in part in accordance with its provisions at any time. In the
event of a complete termination of the Plan or a complete discontinuance of
Company contributions, all Deferrals, Post-Tax Contributions and Company
Matching Contributions will cease, and all Company Matching Contributions,
including related income, attributable thereto, which have not yet vested will
immediately vest notwithstanding any other provision of the Plan. The Trust will
continue after termination until all Trust assets held by the Trustee have been
distributed to Participants, their Beneficiaries, or their estates in accordance
with the provisions of the Plan. In the event of a termination of the Plan,
which constitutes a "partial termination" under Code Section 411(d)(3) with
respect to any class of Employees previously eligible, contributions related to
Participants in such class will cease, and such Participants' rights to Company
Matching Contributions and any income attributable thereto, which have not yet
vested will immediately vest as of the date of such partial termination.

22.04    Merger of Plan

If the Plan merges or consolidates with or transfers its assets or liabilities
to any other qualified employee benefit plan, no Participant will, solely on
account of such merger, consolidation, or transfer, be entitled to a benefit on
the day following such event which is less than the benefit to which such
Participant was entitled on the day preceding such event. For the purpose of
this Section, the benefit to which a Participant is entitled will be calculated
based upon the assumption that a termination of the Plan and distribution of the
Trust assets occurred on the day as of which the amount of the Participant's
entitlement is being determined.

22.05    Sale of Property

If a Participant's participation in the Plan is ended because a substantial
portion of the Company's property is sold or otherwise disposed of (including
disposition through dissolution, merger or consolidation), the Participant's
interest will be determined in accordance with the provisions of Section 22.03
as if the Plan had been terminated.

22.06    Permissible Reversions

Notwithstanding any other provision of the Plan, Company contributions to the
Plan made by reason of a mistake of fact may be returned to the Company within
one year

                                       52
<PAGE>

from the date of the contribution. The amounts that may be returned are the
excess of the amounts contributed over the amounts that would have been
contributed had there not been a mistake of fact. No earnings on the mistaken
contributions may be returned to the Company and losses sustained by the Trust
after the date of contribution will proportionately reduce the amount that may
be returned to the Company.

                                   ARTICLE 23
                                  VOTING STOCK

The Sponsor shall send to each Participant the same proxy material that Edison
International sends to each of its registered holders of Stock before each
stockholders' meeting, together with a form addressed to the Trustee on which
the Participant can give confidential instructions on how the shares of Stock
credited and conditionally credited to each Participant shall be voted by the
Trustee. Upon timely receipt of such instructions, the Trustee shall vote the
Stock as instructed. The instructions received by the Trustee from the
Participants shall be held in strictest confidence and shall not be divulged or
released by the Trustee to the Sponsor or to any officer or Employee of the
Sponsor or any Affiliate Company. The Trustee may vote, in such manner as it
shall determine, the Stock for which it received no instructions and the shares
of issuers other than Edison International which it holds in trust.

                                   ARTICLE 24
                                 INALIENABILITY

The benefits provided hereunder are intended for the personal security of
persons entitled thereto under the Plan. The right of any Participant or his/her
Beneficiary in any Plan distribution or to any separate account shall not be
subject to alienation, assignment or transfer, voluntarily or involuntarily, by
operation of law or otherwise, except as may be expressly permitted herein. No
Participant may assign, transfer, or dispose of such right nor shall any such
right be subjected to attachment, execution, garnishment, sequestration or other
legal, equitable, or other process. The preceding shall also apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless such
order is determined to be a QDRO, or any domestic relations order entered prior
to January 1, 1985.

                                   ARTICLE 25
                       INVESTMENT FUNDS, VOTING, AND ESOP

25.01    Establishment of Funds

The Trustee shall establish and maintain the Investment Funds selected by the
Committee from time-to-time into which the Trust will be invested. Except as
otherwise provided in this Plan and the Trust Agreement, the Trustee shall
invest the Trust into each Investment Fund in whatever proportions and amounts
the Committee may direct. The Committee may direct the Trustee to establish new
Investment Funds or discontinue existing ones as well as change the investment
medium for each Investment Fund.

                                       53
<PAGE>

Income earned by each Investment Fund shall be reinvested in the Investment Fund
unless it is otherwise impracticable. The Trustee shall invest the uninvested
income of each Investment Fund in "cash equivalents" as defined in Section
25.04(d).

25.02    Investment of the Trust

(a) Investment Fund Allocations. The Committee shall direct the investment of
the Trust in accordance with Participant elections pursuant to Article 12 of the
Plan.

As soon as practicable following receipt of Deferrals, Company Contributions,
rollovers and Post-Tax Contributions, the Trustee shall invest the amounts in
the Investment Funds in accordance with the directions of the Committee. Upon
the direction of the Committee, the Trustee shall also reallocate investments
among the Investment Funds. Such reallocations may be made, but are not required
to be made, in conjunction with and "netted against" investments of Deferrals,
Company Contributions, rollovers and Post-Tax Contributions.

(b) Stock Transactions. Stock may be acquired for the Plan (i) by direct
purchase of original issue Stock from Edison International; (ii) from
Participants allocating amounts out of the Edison International Stock Fund of
the Plan to another investment fund; or (iii) in any case the Plan is unable to
acquire Stock by (i) or (ii), through brokers on a national securities exchange
or by purchase from securities dealers or elsewhere as the Trustee or Investment
Manager may elect. The price of Stock purchased directly from Edison
International shall be the price for such Stock on the New York Stock Exchange
at Market Close on that day, or the subscription price pursuant to any offering
of rights, warrants or options made by Edison International to the public. The
price of Stock purchased from Participants allocating amounts out of the Edison
International Stock Fund of the Plan to another investment fund shall be the
price for such Stock on the New York Stock Exchange at Market Close on that day.

25.03    Additional Provisions Regarding ESOP Plan

(a) Qualifying Employer Securities. The ESOP Plan is designed to invest
primarily in Stock, which constitutes "qualifying employer securities" under
Section 4975(3)(8) of the Code.

(b) Exempt Loans. The ESOP Plan will not engage in any "exempt loan"
transactions as described in Regulation 54.4975-7(b) until such time as the Plan
is amended to comply with such Regulation.

(c) Dividends. Dividends received by the Trustee with respect to Stock held in
the ESOP Plan will be distributed to Participants based upon the number of
shares of Stock credited to them and vested as of the applicable ex-dividend
date provided, however, that such distribution will not be made to Participants
(i) who are subject to a collective bargaining agreement that does not permit
ESOP dividend payments under the Plan, (ii) who are alternate payees under a
QDRO, (iii) who are beneficiaries, or (iv) to the

                                       54
<PAGE>

extent that they have elected (in accordance with the Administrator's
procedures) not to receive such distributions with respect to all or a portion
of the Stock credited to them. Effective with dividends declared after January
1, 2000, dividend payments will not commence automatically, the foregoing to the
contrary notwithstanding. Participants who are not receiving dividend payments,
but who wish to receive dividend payments prospectively, must make an election
(in accordance with the Administrator's procedures) to initiate dividend
payments. Effective July 1, 1999, or as soon thereafter as administratively
practicable no dividend distribution will be made for amounts of less than $10 .
Distributions of dividends to Participants will be made as soon as practicable
after receipt by the Trustee, but in no event later than 90 days after the close
of the Plan Year in which paid by Edison International. Dividends not
distributed under this subsection will be reinvested in Stock.

                                   ARTICLE 26
                          SPECIAL TERMS AND CONDITIONS

26.01    East Coast Capital Acquisition

Any Employee formerly employed by East Coast Capital who was hired as a result
of its acquisition by Edison Capital, and who would otherwise have been eligible
to participate in the acquired company's 401(k) plan as of October 1, 1996,
shall be eligible to participate in the Plan on that date and his/her service
with East Coast Capital shall be recognized for vesting purposes under the Plan.

26.02    Westec Acquisition

Notwithstanding any other provision in the Plan to the contrary, and subject to
subsequent collective bargaining of the terms and conditions of participation in
the Plan, Employees represented by the Communications Workers of America, Local
9586 employed in connection with the acquisition of certain businesses from
Westec Security, Inc., or thereafter, will not be entitled to Company Matching
Contributions under Section 7.02. Such Employees will be eligible to rollover
eligible rollover distributions to the Plan from other qualified employer plans
or conduit individual retirement accounts subject to the conditions of Section
8.02. Westec service will be recognized for vesting purposes.

26.03    EME Homer City Generation, L.P.

(a) Employees of EME Homer City Generation, L.P. ("HCGLP") a limited partnership
indirectly owned by Edison Mission Energy are eligible to participate in the
Plan and enrollment shall commence as soon as practicable after they become
eligible. Participation of HCGLP Employees is subject to the provisions of this
Subsection 26.03 notwithstanding any other terms of the Plan to the contrary.

(b) Non-represented Employees. Participation of non-represented HCGLP Employees
shall be subject to the same terms applicable to non-represented employees of
Edison Mission Energy. For each non-represented Employee of HCGLP

                                       55
<PAGE>

first employed on or after the closing date for the acquisition of the Homer
City Electric Generating Station ("Homer City") and on or before March 31, 1999,
his or her service recognized under a tax-qualified defined contribution plan
maintained by the previous owner of Homer City will be recognized for vesting
purposes under the Plan. Other non-represented employees of HCGLP will be
subject to the regular service accrual provisions of the Plan.

(c) Represented Employees. Participation of HCGLP Employees represented by IBEW,
Local 459 shall be subject to the provisions of this Subsection (c).

         (i) For each dollar of Deferrals and Post-Tax Contributions contributed
         to the Plan per pay period up to a maximum of 4 percent of the
         represented Participant's Earnings, the Company will contribute 65
         cents of Company Matching Contributions. The maximum Company Matching
         Contribution per pay period is 2.6% of Earnings. The provisions of
         Subsection 7.02(c) do not apply.

         (ii) The Plan will accept eligible rollover distributions on behalf of
         each represented Employee hired in connection with the acquisition of
         Homer City and who is a "Transferred Union Employee" as described in
         Section 6.10(b) of the Purchase Agreement, including plan loans in the
         repayment phase, from other qualified employer plans or conduit
         individual retirement accounts subject to the conditions of Section
         8.01 applicable to persons eligible to make such rollovers.

         (iii) A Transferred Union Employee as defined in Paragraph (ii) will
         receive recognition of his or her service with the immediately previous
         owner of Homer City, for the purpose of eligibility and vesting under
         the terms of the Plan. Notwithstanding the foregoing, Company Matching
         Contributions will be fully vested for such Employees at the time of
         accrual. Represented Employees subsequently hired for bargaining-unit
         positions at Homer City will be subject to the regular service accrual
         provisions of the Plan.

26.04    Teamsters Automotive, Industrial & Allied Workers Local No. 495

Notwithstanding any other provision in the Plan to the contrary, and subject to
subsequent collective bargaining of the terms and conditions of participation in
the Plan, Employees represented for collective bargaining purposes by the
Teamsters Automotive, Industrial & Allied Workers Local No. 495 are eligible (a)
to rollover eligible rollover distributions to the Plan from other qualified
employer plans or conduit individual retirement accounts subject to the
conditions of Section 8.01, (b) for loan continuation following a reduction in
force termination pursuant to Section 14.02(i)(ii)(B), and (c) to receive
dividend payments pursuant to Section 25.04(c). The applicable collective
bargaining agreement provides for application of the matching contribution
true-up procedure specified in Subsection 7.02(c) as soon as administratively
feasible.

                                       56
<PAGE>

26.05    John Stewart Company

Employees of the John Stewart Company which was acquired by Edison Capital on
May 30, 1997 are not eligible to participate in the Plan, but shall remain
eligible to participate in the acquired company's 401(k) plan in accordance with
the terms and conditions of that plan.

26.06    Midwest Generation Project

(a) Employees of Midwest Generation, LLC, Midwest Generation EME, LLC and the
Illinois Employees of Edison Mission Energy Fuel Services, Inc. may begin
participating in the Plan as soon as practicable after they are eligible.

(b) The following terms apply only to former Commonwealth Edison employees who
are first hired by a company listed in Subsection (a) for the Midwest Generation
Project on the project acquisition closing date:

         (i) Account balances and outstanding loans under the Commonwealth
         Edison Plan will be transferred to this Plan as soon as practicable
         following the Midwest Generation Project closing date,

         (ii)Transferred  balances and subsequent  Company matching and profit
         sharing  contributions  will be 100% vested,

         (iii) Up to five loans transferred from the Commonwealth Edison plan
         may be continued subject to this Plan's loan default rules,

         (iv) Another loan may not be requested while more than one loan remains
         outstanding, and

         (v)  The following withdrawal and/or distribution features apply:

               (A)  One in-service withdrawal may be made per quarter. No
                    minimum withdrawal amount will apply to in-service
                    withdrawals.

               (B)  Withdrawals will be permitted from rollover accounts up to
                    the balance of the rollover account less outstanding loans.

               (C)  Participants attaining age 59-1/2 may withdraw up to the
                    balance of their pre-tax account less outstanding loans.

               (D)  A spousal beneficiary may defer distributions that have not
                    commenced prior to the Participant's death until the date
                    the Participant would have attained age 70-1/2. If the
                    beneficiary is a person other than the Participant's spouse,
                    distributions may be made over a period not longer than the
                    life expectancy of the beneficiary.

                                       57
<PAGE>

               (E)  A spousal beneficiary may elect to receive annual
                    installments for up to fifteen years if distributions have
                    not commenced prior to the Participant's death. Within one
                    year of the Participant's death, a "non-spouse" beneficiary
                    may elect distribution in up to 15 annual installments if
                    distributions have not commenced prior to the Participant's
                    death. A trust may elect a maximum of five annual
                    installments. If installments are not elected, a lump sum
                    will be paid, although payment may be deferred up to five
                    years from the date of death. If distributions commenced
                    prior to death, beneficiary payments must continue at least
                    as rapidly.

(c) Employees of a company listed in Subsection (a) who are hired after the
Midwest Generation Project closing date will be subject to the regular service
accrual provisions of the Plan and will be subject to the regular vesting
requirements of Section 13.02 of the Plan and are not eligible for the special
terms described in Subsection (b).

(d) Subject to future collective bargaining, employees of Midwest Generation,
LLC represented for collective bargaining purposes by IBEW, Local 15, will be
subject to the general terms of the Plan, without regard to any special
provisions applicable to other participating employee groups, except (A) as
provided in Subsections (a) and (b) of this Section, and (B) the Company
Matching Contribution provisions of Paragraph 7.02(a)(i) will apply without
application of Subsection 7.02(c).

(e) Employees of Midwest Generation EME, LLC and non-represented employees of
Midwest Generation, LLC will be eligible for:

         (i) A $1.00 Company Matching Contribution for each dollar contributed
         to the Plan by the Employee (up to six percent of Earnings). The
         provisions of Subsection 7.02(c) of the Plan apply to these Employees.

         (ii)Profit sharing under Section 7.03 of the Plan as applicable to
         Edison  Mission  Energy participants.

(f) Employees of Midwest Generation EME, LLC, Midwest Generation, LLC and
employees of Edison Mission Energy Fuel Services, Inc. working in Illinois will
be:

         (i) Subject to the ESOP dividend pass-through provision of
         Subsection 25.03(c) of the Plan, and

         (ii) Eligible to rollover eligible rollover distributions from another
         qualified plan in accordance with the terms of Section 8.01 of the
         Plan.

26.07    Other Adopting Companies Approved to Participate

Except as otherwise provided in this Article, any company that was an Affiliated
Company prior to June 25, 1998 is deemed an adopting employer for purposes of
the Plan. In addition to those companies identified in this Article that are
subject to special

                                       58
<PAGE>

participation terms, the following adopting employers are approved for
participation under the standard terms of the Plan:

Company                                                        Effective Date
-------                                                        --------------
Edison Mission Energy Fuel Services, Inc., except             February 25, 1999
       as to its Illinois Employees - See Section 26.06
Edison Mission Energy Marketing and Trading, Inc.             February 25, 1999
Edison Mission Finance Company.                               May 1, 1999
Edison Mission Financial Marketing and Trading Co.            May 1, 1999
Edison Material Supply LLC                                    September 27, 1999

                                   ARTICLE 27
                            MISCELLANEOUS PROVISIONS

27.01    Applicable Law

This Plan has been established under the laws of the State of California and, to
the extent such laws have not been preempted by Federal statutes, any questions,
issues, disputes or controversies arising under this Plan will be decided
according to the laws, regulations and decisions of the State of California.

27.02    Severability

In the event that any provision of this Plan will be held illegal or invalid for
any reason, such illegality or invalidity will not affect the remaining
provisions of this Plan, which will be fully severable and this Plan will be
construed and enforced as if such illegal or invalid provisions had not been
inserted.

27.03    Nonbusiness Day Transaction Dates

If the last date a written form or notice will be accepted under the terms of
the Plan to be effective falls on a weekend or other nonbusiness day, the date
will be extended to the next business day, except in the case of loan initiation
requests which must be received on the prior business day. If the last date an
applicable Automated Transaction System transaction may be completed to be
effective the following Month falls on Sunday, the transaction must be completed
by the prior Saturday.

27.04    Captions

The captions used herein are for convenience only and do not in any way limit or
amplify the terms and provisions of the Plan.
//
//
//
//
//
//

                                       59
<PAGE>

IN WITNESS WHEREOF, the Sponsor has executed this Plan as of the date first
written above.

SOUTHERN CALIFORNIA EDISON COMPANY
EMPLOYEE BENEFITS/HEALTH CARE COMMITTEE

THOMAS M. NOONAN                               A. L. WHITLEY
---------------------------------              ---------------------
THOMAS M. NOONAN                               A. L. WHITLEY
Interim Chair                                  SecretaryAGREEMENT OF LEASE

                           signed on January 6th, 2000

                                     between

                              2849-3930 Quebec inc

                          duly represented by mandatory

                                    SITQ inc.

                                 (the "Lessor")

                                       and

                            GSI TECHNOLOGIE USA INC.

                                 (the "Lessee")

Office Lease (net)
2001 Mc Gill College
Suite 1310
Revised (January 1999)

<PAGE>

                                Table of contentS

titles                                                                     PAGES

PARTIES......................................................................1

Article 1   ESSENTIAL DISPOSITIONS, DEFINITIONS AND INTENT...................1
Article 2   LEASE AND DELIVERY OF LEASED PREMISES............................6
Article 3   SERVICES FURNISHED TO THE LESSEE.................................7
Article 4   RENT.............................................................8
Article 5   OPERATING EXPENSES AND REAL ESTATE TAXES.........................9
Article 6   TAXES of lessee and occupation's certificate.....................9
Article 7   USE AND MAINTENANCE OF LEASED PREMISES..........................10
Article 8   LEASEHOLD IMPROVEMENTS..........................................11
Article 9   INSURANCE.......................................................13
Article 10  ACCESS BY LESSOR TO LEASED PREMISES.............................15
Article 11  DAMAGE AND DESTRUCTION..........................................15
Article 12  EXPROPRIATION...................................................15
Article 13  DAMAGES.........................................................16
Article 14  SIGNS AND ADVERTISING...........................................16
Article 15  COMPLIANCE WITH LAWS AND INDEMNIFICATION........................16
Article 16  SUBLET AND ASSIGNMENT...........................................17
Article 17  ASSIGNMENT BY LESSOR............................................19
Article 18  DEFAULT AND RECOURSE............................................19
Article 19  NOTICE 22.......................................................21
Article 20  TERMINATION OF LEASE............................................21
Article 21  UNAVOIDABLE DELAY...............................................21
Article 22  MODIFICATION OF LEASE AND PERFORMANCE BY A THIRD PARTY..........21
Article 23  MISCELLANEOUS...................................................21
Article 24  MOVABLE HYPOTHEC................................................23
Article 25  REGULATIONS.....................................................23
Article 26  SPECIAL PROVISIONS/SCHEDULES....................................23

SCHEDULES

SCHEDULE "A"    GUARANTY(IES) IN FAVOUR OF THE LESSOR
SCHEDULE "B"    DESCRIPTION OF LAND
SCHEDULE "C"    WORK BY THE LESSOR AND BY THE LESSEE
SCHEDULE "D"    PLAN OF LEASED PREMISES
SCHEDULE "E"    REGULATIONS
SCHEDULE "F"    LESSEE'S RESOLUTION
SCHEDULE "G"    STATUS REPORT

<PAGE>

                               AGREEMENT OF LEASE

BETWEEN:  2849-3930  Quebec inc.,  duly  represented by mandatory,  SITQ INC., a
          company  duly  incorporated  under the laws of the Province of Quebec,
          having its head office at Centre de Commerce Mondial de Montreal,  380
          St. Antoine Street West, Suite 6000, in the City of Montreal, Province
          of  Quebec,  H2Y  3X7,  hereinacting  and  represented  by Mr.  Daniel
          Archambault,  Vice-president,  Office Buildings and Business Parks and
          Mr.  Denis  Perreault,  Leasing  Director,  duly  authorised  for  the
          purposes hereof, as they so declare;

          (hereinafter referred to as the "Lessor")

AND:      GSI TECHNOLOGIES USA INC., a company duly incorporated under a company
          incorporated  under  the law of  Delaware  United  States,  the law of
          Delaware, united States, having its head office at 2001 McGill College
          bureau 1310 Place  Mercantile  hereinacting and duly represented by J.
          Michel de Montigny,  its President  duly  authorised  for the purposes
          hereof,  as  declared  and as more  fully set forth in the  resolution
          attached hereto as Schedule "F";

THE PARTIES HEREBY MUTUALLY AGREE AS FOLLOWS:

ARTICLE 1
ESSENTIAL DISPOSITIONS, DEFINITIONS AND INTENT

1.1       Essential  dispositions - Following are certain essential dispositions
          of the Lease which are further acknowledged in the Lease:

          1.1.1     LEASED  PREMISES:  means premises of an approximate  area of
                    seven  thousands eight hundred ninety nine square feet (7899
                    sq.  ft.  )  ("Leasable  Area  of  the  Leased   Premises"),
                    identified as premises  number 1310  ("Leased  Premises") of
                    the  building  located  at 2001  McGill  College,  Montreal,
                    Quebec, H3A 1G1 ("Building").

          1.1.2     TERM: the period  ("Term")  beginning , the first of January
                    or the date on which  the  Lessee  takes  possession  of the
                    Leased Premises, understanding the earliest of the two dates
                    ("Commencement of the Lease"), and terminating December 31st
                    2004  ("Termination of Lease"),  unless the Lessee exercises
                    its option (s) to renew the Lease provided in article 1.1.12
                    (Special  Provisions) of the Lease,  in which case the Lease
                    shall terminate December 31st 2009.

          1.1.3     USE OF THE LEASED  PREMISES : the Leased  Premises  shall be
                    used for no other purpose than office purposes.

                    OU

          1.1.4     MINIMUM RENT :  Throughout  the Term,  an annual  guaranteed
                    minimum rent (the "Minimum Rent") equal to :

                    -    for the period  commencing  on the January 1st 2000 and
                         terminating  on December  31st 2004,  an annual rent of
                         (142 182$ ), payable in advance,  in equal  monthly and
                         consecutive  instalments of ( 11 848.50$ ) each, on the
                         first day of each month during for this  period,  based
                         on a net rate per square  foot ( 18.00$  /sq.  ft. ) of
                         the Leasable Area of the Leased Premises;

                                      -1-
<PAGE>

                    -    The Minimum Rent is payable to the Lessor in accordance
                         to article 4.1 of the Lease

          1.1.5     PROPORTIONATE SHARE: means the ratio of the Leasable Area of
                    the Leased  Premises to the  leasable  area of the  Building
                    2001 McGill College;  this ratio may vary in the event of an
                    increase  or a decrease in the  Leasable  Area of the Leased
                    Premises or in the leasable area of the Building;

          1.1.6     OPERATING EXPENSES OF  THE  BUILDING: An  annual   estimated
                    Proportionate  Share for the 1999 Fiscal Period of ( 5.50$ )
                    per square foot of the Leasable Area of the Leased Premises,
                    which Proportionate Share is payable, adjusted and increased
                    according to the provisions of article 5.1 of the Lease.

          1.1.7     REAL ESTATE TAXES: An annual estimated  Proportionate  Share
                    for the 1999 Fiscal  Period of ( 40.00$ ) per square foot of
                    the  Leasable  Area of the Leased  Premises  (including  the
                    surtax on non residential  buildings  estimated at ( 0.27$ )
                    per  square  foot  of  the  Leasable   Area  of  the  Leased
                    Premises),   which  Proportionate  Share  will  be  payable,
                    adjusted  and  increased  according  to  the  provisions  of
                    article 5.2 of the Lease.

          1.1.8     ELECTRICITY: An annual estimated Proportionate Share for the
                    1999  Fiscal  Period  of (  0.85$ ) per  square  foot of the
                    Leasable Area of the Leased  Premises,  which  Proportionate
                    Share will be payable,  adjusted and increased  according to
                    the provisions of article 3.6 of the Lease.

                    OR

          1.1.9     BUSINESS HOURS:  means the period between 7h00 a.m. to 18h00
                    p.m.,  Monday to Friday on  business  days  excluding  legal
                    holidays  and such  other  times as the  Lessor may set from
                    time to time;

          1.1.10    PAYMENT  OF  RENT:   All  payments  that  must  be  effected
                    according  to the Lease shall be  effected  in money  having
                    legal  tender in  Canada to the order of SITQ - 2001  McGill
                    College.

          1.1.11    NOTICE AND REQUEST:

          i)        in case of a notice to the Lessor :

                    SITQ Inc.
                    2001, McGill College avenue, Suite 1000
                    Montreal (Quebec) H3A 1G1

                    Care of: Vice-President

                    With a copy to the Property Manager to the following
                    address:

                    SITQ inc.
                    2001 McGill College
                    Bureau 510
                    Montreal, Quebec
                    H3A 1G1

                                      -2-
<PAGE>

                    Care of: Property Manager

          ii)       in case of a notice to the Lessee :

                    GSI TECHNOLOGIES USA INC.
                    2001 McGill College
                    bureau 1310
                    Montreal, Quebec
                    H3A 1G1

                    Attention:  J.Michel De Montigny

          1.1.12    SPECIAL PROVISIONS

          i)        FREE INSTALLATION PERIOD

          ii)       RENEWAL  OPTION  FOR  FIVE (5)  YEARS  AT THE SAME  TERM AND
                    CONDITIONS

1.2       DEFINITIONS - When used in this Lease,  and unless  incompatible  with
          the  context  in which  they are  utilised,  the  following  words and
          expressions have the meaning hereinafter set forth:

          1.2.1     "Additional Rent": means all of the financial obligations of
                    the Lessee other than the Minimum Rent;

          1.2.2     "Common   Areas  and   Facilities":   means  all  areas  and
                    facilities of the  Immovable  which are not intended for the
                    exclusive benefit of any lessee in particular, as determined
                    by the Lessor from time to time;

          1.2.3     "Contaminants  and  Hazardous  Materials":  have the meaning
                    attributed  thereto  in the  Environmental  Legislation  and
                    include  any  material  which,  because  of its  properties,
                    presents a real or potential  hazard to the  environment  or
                    the  health  of  users  of the  Immovable  or of the  Leased
                    Premises;

          1.2.4     "Environmental  Legislation":  means all federal, provincial
                    or  municipal   legislative  and  regulatory   environmental
                    provision,  including, in all cases, any judgements, orders,
                    notices,   notices  of  offence,   decrees,   codes,  rules,
                    instructions,     policies,     guidelines    and    guides,
                    authorisations,  certificates of  authorisation,  approvals,
                    permits  and  licenses   issued  by  any  authority   having
                    jurisdiction, the whole as amended from time to time;

          1.2.5     "Fiscal  Period":  means a period  commencing  on the  first
                    (1st) day of  January of the year and ending on the last day
                    of December next following,  with the exception of the first
                    Fiscal  Period,  which  shall begin at the same time as this
                    Lease  and  terminate  on  the  thirty-first  (31st)  day of
                    December next following,  and with the exception of the last
                    Fiscal  Period,  which shall  terminate  at the same time as
                    this Lease; however, the Lessor expressly reserves the right
                    to change the Fiscal  Period  and its  duration.  Should the
                    Fiscal  Period be modified or should a part only of a Fiscal
                    Period  be  comprised  in  the  Term,   the  parties   shall
                    immediately make the necessary adjustments.

          1.2.6     "Immovable":  means the land described in Schedule "B", plus
                    the Building and other structures  erected thereon from time
                    to time;

          1.2.7     "Land":  means  all  lots  or  parts  of lots  described  in
                    Schedule "B" of this Lease;

          1.2.8     "Leasable  Area of the Leased  Premises":  means the area of
                    the Leased Premises as calculated  according to the criteria
                    of BOMA. At any time during the Term, the Lessor's architect
                    or land surveyor may definitely  determine the Leasable Area
                    of the Leased  Premises.  The architect's or land surveyor's
                    certificate  with respect to the Leasable Area of the Leased
                    Premises  shall be  conclusive  and shall  bind all  parties
                    herein retroactively to the Commencement of the Lease;

                                      -3-
<PAGE>

          1.2.9     "Lease":   means  and  refers  to  this  agreement  and  its
                    schedules, as well as any amendments thereto;

          1.2.10    "Leased  Premises":  means the  premises  outlined in red in
                    Schedule   "D",  as  described  in  article  1.1.1  of  this
                    Agreement  and subject to the Lessor's  architect's  or land
                    surveyor's measurement;

          1.2.11    "Lessee": means the Lessee or its successor;

          1.2.12    "Lessor": means the owner of the Immovable or its mandatory;

          1.2.13    "Operating  Expenses":  means,  all  costs  incurred  in the
                    operation, administration,  maintenance, repair, supervision
                    and management of the Immovable, including, namely:

                      1.2.13.1.  salaries,  wages  and costs  related  to fringe
                                 benefits  and  pension  plan  benefits  for all
                                 employees   of  the   Lessor   engaged  in  the
                                 operation,  maintenance,  repair, surveillance,
                                 supervision and management of the Immovable;

                      1.2.13.2.  the cost of all goods and  services  furnished,
                                 employed   or   utilised   in  the   operation,
                                 maintenance, repair, surveillance,  supervision
                                 and management of the Immovable, except for the
                                 cost of special goods and services furnished to
                                 certain lessees of the Immovable, for which the
                                 said lessees are responsible;

                      1.2.13.3.  the  reasonable   rental  value  of  the  space
                                 occupied by employees of the Lessor  engaged in
                                 the  administration,  supervision or management
                                 of the  Immovable,  and  by all  administrative
                                 services of the Lessor, as well as of any space
                                 required  or  utilised  in  the  Immovable  for
                                 security,  welfare, health, protection or other
                                 similar  services,   for  the  benefit  of  the
                                 Immovable and its users in general;

                      1.2.13.4.  the  costs  related  to  the  maintenance  of a
                                 public order and security service;

                      1.2.13.5.  the   costs   of   auditing,   accounting   and
                                 management  incurred  in the  operation  of the
                                 Immovable;

                      1.2.13.6.  the costs related to the planning, maintenance,
                                 repair and  decoration  of the Common Areas and
                                 Facilities  of  the  Immovable,  including  the
                                 cleaning of windows and  exterior  walls,  snow
                                 removal,  cleaning,  repair and  maintenance of
                                 the  Land,  and  contracts   with   independent
                                 contractors;

                      1.2.13.7.  the  cost  of all  repairs  to  the  Immovable,
                                 including  the  replacement  of any  equipment,
                                 apparatus,  machinery or other  property of the
                                 Immovable;

                      1.2.13.8.  the cost of any  modifications and improvements
                                 to the Immovable,  including, without limiting,
                                 modifications  or improvements to the machinery
                                 and equipment contained therein and the cost of
                                 any modifications and additional  equipment and
                                 specialised  services  needed in the  Immovable
                                 for energy conservation measures,  when, in the
                                 opinion of the Lessor,  these  expenditures are
                                 likely to reduce the  Operating  Expenses or be
                                 such as to improve the welfare or the  security
                                 of  the  lessees  or  other  occupants  of  the
                                 Immovable,     or    when    such    equipment,
                                 modifications,  materials or  improvements  are
                                 required by law;

                                      -4-
<PAGE>

                      1.2.13.9.  the total capital depreciation or amortisation,
                                 calculated   according  to  the   straight-line
                                 depreciation  method,  based on the useful life
                                 of the capital assets,  or on any other shorter
                                 period of time as may be reasonably  determined
                                 by the  Lessor,  on the cost of all  equipment,
                                 apparatus  or  machinery  and  other   property
                                 required   for  the   operation,   maintenance,
                                 repair, surveillance,  supervision, management,
                                 modification  or  improvement  of the Immovable
                                 and the  establishing  of  energy  conservation
                                 measures  which,  in the opinion of the Lessor,
                                 have a  useful  life  longer  than  one  Fiscal
                                 Period and the cost of which has not been fully
                                 included  in  the  Operating  Expenses  of  the
                                 Fiscal   Period   of  their   acquisition   (in
                                 accordance with generally  accepted  accounting
                                 principles)  with  interest  at the Prime  Rate
                                 upon the  undepreciated or unamortized  portion
                                 of the cost of said asset(1)

                      1.2.13.10. the cost of energy to ensure:  the humidifying,
                                 the    heating,     the    ventilating,     the
                                 air-conditioning   and  the   lighting  of  the
                                 Immovable  and not  exceeding  the standards of
                                 these  presents,  the  supply of  domestic  hot
                                 water at all times all  other  services  of the
                                 Immovable  requiring  energy excluding the sums
                                 payable  by  the  Lessee  in  conformity   with
                                 Article 3.6 of these presents.

                      1.2.13.11. the real cost of all insurance premiums paid by
                                 the Lessor with  respect to the  Immovable,  in
                                 accordance with prudent insurance  practices or
                                 as may be  required  by  the  creditors  of the
                                 Lessor, as well as payment for the franchises.

                                 No co-insurance - Notwithstanding  the fact the
                                 Lessee  pays  its  Proportionate  Share  of the
                                 Lessor's insurance policy premiums,  the Lessee
                                 acknowledges that it shall not be a co-insured,
                                 that it shall not have any  insurable  interest
                                 in the said  policies  and that it shall remain
                                 liable for any  damage  that might be caused by
                                 its fault,  negligence,  acts or  omissions  or
                                 those of the persons the Lessee  permits to use
                                 or to have access to the Leased  Premises.  The
                                 Lessor or its  insurers  shall not waive  their
                                 right to claim from the Lessee any damage  that
                                 the Lessee is  responsible  for under the Lease
                                 or the Law.

                      1.2.13.12. annual  administration fees of fifteen per cent
                                 (15  %),   calculated   on  the  total  of  the
                                 Operating Expenses.

          1.2.14    "Prime Rate": means the rate designated by the National Bank
                    of  Canada  as  being  its  prime  rate,  plus  five  (  5 )
                    percentage points.

          1.2.15    "Real  Estate  Taxes":   means  all  levies  of  any  nature
                    whatsoever on the  ownership or operation of the  Immovable,
                    including interest on deferred  payments,  but excluding tax
                    on the income or on the capital of the Lessor  (except  that
                    part  of  the  tax  on  the  capital   attributable  to  the
                    Immovable,  which is included) and excluding any tax on real
                    estate transfers;

          1.2.16    "Rent": means the Minimum Rent and the Additional Rent;

          1.2.17    "Surtax":  means any surtax on non-residential  immovable or
                    any  other tax  imposed  under the  Municipal  Taxation  Act
                    L.R.Q.,  c. F- 2.1, as modified by L.Q. 1991. c. 32 and L.Q.
                    1992, c. 532 and any other future modifications.

----------

    (1)   in 1986, the amortisation of these measures and the energy bought with
          the  Loto-Quebec  computer  centre in connection  with this Article is
          twenty-nine cents per square feet ($0.29/sq.ft.) to be included in the
          Operating Expenses.

                                      -5-
<PAGE>

          1.2.18    "Taxes":  means  all  governmental  levies  usually  paid by
                    lessees (e.g.  water and business  taxes,  GST, Quebec Sales
                    Tax), in connection with the Leased  Premises,  the contents
                    thereof or the business conducted therein;

          1.2.19    "Taxing   Authority":   means  any  governmental   authority
                    whatsoever, legally authorised to impose taxes;

          1.2.20    "Term":  means the period  commencing on the date stipulated
                    as the Commencement of the Lease and terminating on the date
                    stipulated as the Termination of the Lease;

          1.2.21    "Unavoidable  Delay":  means a delay caused by circumstances
                    (except  for  the  financial  situation  of  either  of  the
                    parties),  which are  reasonably  beyond the  control of the
                    Lessor or the Lessee, as the case may be;

1.3       Intent - It is the  intent of the  parties  to this  Lease  that it be
          totally net to the Lessor.  The Lessor shall not be liable  during the
          Term for any costs of any  nature  whatsoever  relating  to the Leased
          Premises  and the  Lessee  shall be  solely  responsible  for any such
          costs, except as expressly otherwise provided herein.

ARTICLE 2
LEASE AND DELIVERY OF LEASED PREMISES

2.1       Lease of Leased  Premises - The Lessor hereby leases to the Lessee the
          Leased  Premises for the Term and in  consideration  of the Rent to be
          paid  by  the  Lessee  hereunder  and  of  the  other  provisions  and
          obligations to be observed and executed by the Lessee hereunder.

2.2       Delivery and  Finishing of Leased  Premises - The Lessee  acknowledges
          having  carefully  examined the Leased Premises in their present state
          and declares being fully satisfied therewith.  If such examination has
          not been made, the Lessee  undertakes to do so at the time of delivery
          of the Leased  Premises and to notify the Lessor in writing within ten
          ( 10 ) days of taking  delivery of any defect in the Leased  Premises.
          Should  the Lessee  fail to do so, the Lessee  shall be deemed to have
          taken  delivery  of the  Leased  Premises  in a good  state  and to be
          satisfied  therewith,  and  to  acknowledge  that  i) the  Lessor  has
          discharged all its  obligations in the preparation and delivery of the
          Leased  Premises  and  ii) the  Leased  Premises  may be used  for the
          purposes for which they have been leased.  Schedule "C"  describes the
          work to be undertaken by each parties and allocates the costs thereof.

2.3       Minor Deficiencies - Notwithstanding  that the Leasehold  Improvements
          are not fully completed at the  Commencement of the Lease,  the Leased
          Premises  shall be deemed ready for delivery and the Term shall not be
          affected  so long as  such  incomplete  work  does  not  significantly
          interfere with the use of the Leased Premises.

2.4       Delay in the  improvements  of the Lessee - If the  Lessor  allows the
          Lessee to undertake the leasehold improvements in the Leased Premises,
          article  8 and in  Schedule  "C"  and,  in the  event  such  leasehold
          improvements are not completed prior to the Commencement of the Lease,
          the Term shall in no case be affected.

2.5       Delay in the  improvements  of the Lessor - If the  Lessor  accepts to
          undertake the leasehold improvements in the Leased Premises, article 8
          and in Schedule "C", and these improvements are not completed prior to
          the Commencement of the Lease for a cause  attributable to the Lessee,
          the Term shall in no case be affected. If the delay is attributable to
          the Lessor, the Lessee shall not make any claim for damages.  However,
          the  Commencement of the Lease shall be deferred by the number of days
          equal to the number of days of delay.

2.6       Relocation - The Lessor shall have the right,  at any time, to replace
          the Leased Premises with any other premises located in the Building so
          long  as the  premises  are  substantially  comparable  to the  Leased
          Premises, with respect to the space and the usage for which the Lessee
          had leased the Leased Premises.

                                      -6-
<PAGE>

          In the event the Leased  Premises  are  occupied  by the Lessee at the
          time of the relocation,  the Lessor shall assume all reasonable  costs
          related  to the  Lessee's  moving in the new  premises  and the Lessor
          shall ensure that such move is performed diligently and shall make its
          best possible efforts not to inconvenience the Lessee.

          Prior to such  relocation  and,  in the  event the  Lessee is  already
          occupying the Leased  Premises,  the Lessor shall give a thirty ( 30 )
          days  written  notice,  such  notice to precede  the date to which the
          relocation has been  scheduled.  In any other event,  the Lessor shall
          then give the Lessee a fifteen ( 15 ) days written notice prior to the
          scheduled relocation.

          The new premises  assigned to the Lessee shall then be  designated  as
          the "Leased  Premises"  and the Minimum Rent and the  Additional  Rent
          shall then be adjusted  according to the new leasable  area of the new
          premises.

ARTICLE 3
SERVICES FURNISHED TO THE LESSEE

3.1       Description  of  Services - The Lessor  agrees to supply to the Lessee
          the following services:

          3.1.1     "Air-Conditioning": The Lessor shall supply, during Business
                    Hours,  air-conditioning to the Leased Premises. All special
                    requests  shall be at the expense of the Lessee.  The Lessee
                    shall be liable for the improper  functioning  of the system
                    caused  by  non-conforming  partitions,  by  changes  to the
                    Leased  Premises,  by  the  absence  of  sunshields,  by the
                    excessive  use  of  electrical  power,  or  by  the  use  of
                    apparatus  resulting in the  releasing of excessive  heat by
                    the Lessee.

          3.1.2     "Elevators":  The Lessor  shall supply  passenger  elevators
                    during Business Hours. At all other times,  limited elevator
                    service shall be available.

                    The Lessee  shall have the use of  escalators,  if any,  and
                    elevators,  in  conjunction  with all other  persons  having
                    access thereto.

                    The  freight  elevator,  if  any,  shall  be  used  for  the
                    conveyance  of furniture to the Leased  Premises,  the whole
                    pursuant to the Lessor's guidelines. Any deliveries shall be
                    made at the loading  ramp of the Building  only,  and may be
                    made solely by the representatives of the Lessee.

          3.1.3     "Heating":  The Lessor shall heat the Leased Premises during
                    Business   Hours.   The  Lessee  shall  be  liable  for  any
                    malfunctioning of the system  attributable to non-conforming
                    partitions or to changes to the Leased Premises.

          3.1.4     "Lighting":  The Lessor shall  provide,  at its cost, at the
                    Commencement of the Lease,  standard electrical equipment of
                    the  Immovable as well as the  "Supplies"  necessary for its
                    functioning  such as bulbs  and  starters.  Thereafter,  the
                    Supplies  shall be at the  cost of the  Lessee,  the  Lessor
                    reserving  its right to replace all of the Supplies in whole
                    or in part,  should  this  practice  be in  conformity  with
                    proper real estate management.

          3.1.5     "Business Hours": The Building shall be open during Business
                    Hours. At all other times,  the Lessor shall ensure that the
                    Leased Premises are reasonably accessible.

          3.1.6     "Cleaning":  The  Lessor  shall  have  the  Leased  Premises
                    cleaned,   outside  of  Business  Hours,  according  to  the
                    Lessor's usual standards.  The Lessee shall leave the Leased
                    Premises in a proper  state.  Should,  however,  the wall or
                    floor  coverings  of the  Leased  Premises  differ  from the
                    standard  coverings of the  Building,  or should  additional
                    services be required by the Lessee, the Lessee shall pay the
                    Lessor the  resulting  supplementary  costs,  as  Additional
                    Rent.

3.2       Use of Common  Areas and  Facilities - The Lessee shall be entitled to
          use and to  benefit  from  the  Common  Areas  and  Facilities  of the
          Immovable,  in  conjunction  with all others also entitled to

                                      -7-
<PAGE>

          such and having access thereto.  The Lessor may at any time change the
          form and  destination  of the  Immovable  and of its Common  Areas and
          Facilities  insofar as the  enjoyment  of the Leased  Premises are not
          substantially affected.

3.3       Supplies  and Services - Only the Lessor or its  designated  suppliers
          may provide electrical supplies and services, which shall be billed at
          comparable market rates.

3.4       Suspension  of  Services  - In the  event  of an  accident  or for the
          purpose  of  affecting  work,  or for any reason  beyond the  Lessor's
          control,  the  Lessor  shall be  entitled  to suspend or to modify any
          service  required to be provided  under the Lease for such time deemed
          reasonable by the Lessor.

3.5       Additional  Services - All  additional  services or services  provided
          outside Business Hours, which the Lessor accepts to provide,  shall be
          so provided  upon  sufficient  prior  notice and at the expense of the
          Lessee.  The costs and  expenses  incurred by the Lessor in  rendering
          such  additional  services  shall be subject to an increase of fifteen
          per cent ( 15 % ) for administration fees.

          The  energy  consumed  in the  Leased  Premises  shall be  billed on a
          monthly  basis  to the  Lessee,  based  on  the  Electricity  rate  as
          currently  estimated  and shall be  subject  to all  increases  set by
          Hydro-Quebec in the following years.

          The Lessor shall supply electrical power to the Leased Premises,  of a
          capacity  to meet a maximum  demand  of forty ( 40 ) watts per  square
          metre.

          The Lessor  shall bill the  Lessee  for the above as  Additional  Rent
          which  Additional  Rent  shall be  calculated  so as not to exceed the
          amount which the Lessee would  otherwise pay under the general service
          rates set by  Hydro-Quebec  and either  registered on a separate meter
          and/or according to an estimation of the energy consumed in conformity
          with Hydro-Quebec's  rates. The Lessor's undertaking hereunder is made
          subject  to the rules and  regulations  of  Hydro-Quebec  or any other
          competent authority.

          Notwithstanding  the  foregoing,  the  Lessor  shall have the right to
          install one or several  sub-metres  in which case the Lessee shall pay
          to the Lessor the energy  consumed as indicated  on the  sub-metre(s),
          the whole in conformity with Hydro-Quebec's rates.

          The Lessee  undertakes to never consume an amount of electrical  power
          exceeding  the  capacity  of  the  facilities   supplying  the  Leased
          Premises.   The  Lessor  shall  be  entitled  to  make  the  necessary
          verifications.

3.7       Damages caused during the provision of services - The Lessor shall not
          be  liable  to any  person  for any  damages  in  connection  with the
          services described in this Article,  whether the services are provided
          or not,  unless  caused by the fault or negligence of the Lessor or of
          its employees.  However, in no case shall the Lessee have the right to
          a reduction of the Rent or to resiliate  the Lease.  The Lessor shall,
          however,  to the  extent  possible,  remedy  the  situation  with  due
          diligence and within a reasonable delay.

ARTICLE 4
RENT

4.1       The Rent shall be paid on the first (1st) day of each month,  with the
          exception of the Proportionate  Share of Real Estate Taxes which shall
          be payable as  provided  for in Article  5.2  hereof,  at the  address
          indicated by the Lessor  without  notice and without any  abatement or
          compensation whatsoever. Adjustments for parts of months shall be made
          on a per diem basis.

                                      -8-
<PAGE>

ARTICLE 5
OPERATING EXPENSES AND REAL ESTATE TAXES

5.1       OPERATING EXPENSES:

          5.1.1     Upon the  Commencement of the Lease and thereafter  prior to
                    or at the beginning of each Fiscal Period,  the Lessor shall
                    estimate  the  amount  of the  Operating  Expenses  for  the
                    upcoming  Fiscal  Period  and shall  bill the Lessee for its
                    Proportionate  Share,  which shall be payable as  Additional
                    Rent.

          5.1.2     At the end of each Fiscal  Period,  the Lessor shall provide
                    the Lessee with a statement  audited by an independent  firm
                    of chartered  accountants  indicating  the actual  Operating
                    Expenses for the said Fiscal Period.  This  statement  shall
                    bind the parties. If it is determined that the payments made
                    by the Lessee are greater or lesser than the payments  which
                    the Lessee  should  have made,  the  parties  shall make the
                    necessary adjustments.

          5.1.3     Modification in the estimate of the Operating Expenses - The
                    Lessor  may   during  the  course  of  the  Fiscal   Period,
                    re-evaluate  its estimate of the  Operating  Expenses and in
                    such  a  case,  the   Additional   Rent  shall  be  adjusted
                    accordingly.

          5.1.4     Notwithstanding  anything  herein  contained  in the present
                    Lease,  if at any time during a Fiscal  Period the  leasable
                    area of the  Building  is not one hundred per cent ( 100 % )
                    occupied,  then for the  purpose of the  calculation  of the
                    Operating Expenses,  the Lessee's  Proportionate Share shall
                    have as its  denominator  the  leased  area of the  Building
                    provided  that  the  leased  area of the  Building  shall be
                    deemed never to be less than  eighty-five  per cent ( 85 % )
                    of the leasable area of the Building.

5.2       REAL ESTATE TAXES:

          5.2.1     During the course of each Fiscal  Period,  the Lessee  shall
                    pay its  Proportionate  Share  of  Real  Estate  Taxes  upon
                    receipt of an invoice from the Lessor.  However,  the Lessor
                    reserves  the right to modify the method of  collecting  the
                    Real  Estate  Taxes and to bill them in a manner  similar to
                    that provided for the Operating Expenses or otherwise.

          5.2.2     If the Lessor decides in its absolute  discretion to contest
                    the Real Estate Taxes, all of the expenses  relating thereto
                    shall   be   included   as   Operating   Expenses   and  any
                    reimbursement  of Real Estate Taxes shall be credited to the
                    Operating Expenses.

          5.2.3     If during the Term,  the system of real  estate  taxation is
                    modified  or  replaced  or if in addition to the Real Estate
                    Taxes,  a new tax or levy is  imposed  with  respect  to the
                    Immovable,  the words Real Estate  Taxes shall  include such
                    new tax or levy.

ARTICLE 6
TAXES AND OCCUPATION CERTIFICATE

6.1       The Lessee  shall pay all Taxes as they become due.  Should the method
          of collecting the Taxes be altered so as to make the Lessor liable for
          payment thereof, the Lessee shall reimburse the Lessor on demand.

6.2       The Lessee shall obtain from the  concerned  authority and pay for the
          occupation  certificate  and send a copy to the Lessor.  If the Lessee
          does not fulfil its  obligation to obtain the  occupation  certificate
          within thirty ( 30 ) days of its  occupation  of the Leased  Premises,
          the Lessor shall  consider  the omission as a default  under the Lease
          and the Lessee  shall  reimburse  the Lessor on demand for any penalty
          the Lessor could have paid without prejudice to any other recourse the
          Lessor can benefit from the law or the present Lease.

                                      -9-
<PAGE>

ARTICLE 7
USE AND MAINTENANCE OF LEASED PREMISES

As an essential  condition of the Lease,  it is agreed that the Lessee shall use
the  Leased  Premises  as  determined  in  article  1.1.3  of the  Lease  and in
conformity with the dispositions of the present article.

7.1       Use of the Leased  Premises - The Lessee  undertakes to use the Leased
          Premises with prudence and  diligence.  The Lessee  undertakes  not to
          disturb the peaceful  enjoyment of the other  lessees,  failing which,
          the Lessee will be liable towards the Lessor and the other lessees for
          any  damage  that may  result,  whether  such  damage is caused by the
          Lessee's  own acts or by the acts of  persons  which  the  Lessee  has
          allowed  to use or have  access to the  Leased  Premises.  The  Lessee
          acknowledges  and agrees that it is only one of many other  lessees in
          the Building and that  therefore the Lessee shall conduct its business
          in the Leased  Premises in a manner  consistent with the best interest
          of the Immovable as a whole.

7.2       Prohibited Use - Without  limiting the generality of the foregoing and
          without  derogating  from the  Lessee's  obligations  as  provided  in
          Article  7.1  hereof,  the Lessee will not use or permit or suffer the
          use of the  Leased  Premises,  or any  part  thereof,  for  any of the
          following businesses or activities, in or from the Leased Premises:

          7.2.1     any unethical or fraudulent practice;

          7.2.2     any  business or activity in respect of which the Lessor has
                    granted an  "exclusive"  provision in other leases or offers
                    to lease entered into by the Lessor and concerning which the
                    Lessor  has given the  Lessee  written  notice.  The  Lessee
                    agrees not to conduct its business in the Leased Premises in
                    a manner that would cause the Lessor to be in  contravention
                    of such  exclusive  clauses and agrees to indemnify and save
                    the Lessor  harmless  against and from any actions or claims
                    and for all costs and expenses in connection therewith.  If,
                    in the Lessor's opinion, the use by the Lessee of the Leased
                    Premises is prohibited by a provision of another lease,  the
                    Lessee shall immediately  discontinue such use, upon written
                    notice by the Lessor,  failing which,  the Lessor shall have
                    the right to a payment of a penalty  equal to four times the
                    Minimum  Rent  payable for each day of default or  terminate
                    this Lease by written  notice,  without  prejudice to any of
                    its other rights and recourses.

                    The Lessee  hereby  acknowledges  and agrees  that,  for the
                    purposes of Article 16.4 hereof, the Lessor, in refusing any
                    sublet or assignment for any of the aforesaid  businesses or
                    activities,   shall  not  be  considered   as   unreasonably
                    withholding  its  consent.  Moreover,  the Lessor may insist
                    that the Lessee cease all prohibited activity forthwith upon
                    demand.

7.3       Occupancy of the Leased  Premises - The Lessee shall occupy the Leased
          Premises and shall  continuously  and actively operate its business in
          the entire  area of the Leased  Premises  during the whole  Term;  the
          Lessee shall not leave the Leased Premises vacant or unoccupied at any
          time during the Term,  and shall keep  therein the  moveable  property
          which is normally used in the operation of its business,  the whole at
          all  times  throughout  the Term.  The  Lessee  acknowledges  that its
          obligations  pursuant to this Article 7.3 are of the utmost importance
          to the  Lessor  in  order  to  avoid  the  appearance  and  impression
          generally  created by vacant space, to facilitate the leasing of space
          in the Building,  and to maintain the character,  quality and image of
          the Building.  Furthermore,  the Lessee  acknowledges  that the Lessor
          shall suffer important,  serious and irreparable damages if the Lessee
          does not conform to the  provisions  of the present  Article  7.3, and
          this,  even if the  Lessee  continues  to  promptly  pay all  Rent and
          Additional Rent herein provided.

7.4       Maintenance  and  Repair of the Leased  Premises  - The  Lessee  shall
          assume and pay for all expenses related to the use and the maintenance
          of the Leased  Premises.  In this  regard,  the Lessee  undertakes  to
          effect,  at its  cost,  all  replacements  and  repairs  necessary  to
          maintain the Leased  Premises in a good state,  with the  exception of
          such  replacements and repairs due to ageing and normal wear and tear.
          The present  provision  includes the Lessee's  obligations  to pay for
          replacements   and  repairs   related  to  the  structure  or  to  the
          electro-mechanical  systems of the

                                      -10-
<PAGE>

          Building when such  replacements or repairs are attributable to an act
          or omission of the Lessee or of any person the Lessee allows to use or
          to have access to the Leased Premises. It is expressly agreed that all
          work or replacements to the  electro-mechanical  systems shall only be
          effected by the Lessor.

          In   addition,   the  Lessor   may,  at  all  times,   without   court
          authorisation,  effect all necessary work,  replacements,  repairs and
          maintenance which, in its opinion,  is deemed to be necessary in order
          to ensure the  conservation and the enjoyment of the Immovable and the
          Leased  Premises.  If the Lessor  proceeds  with such  work,  it shall
          ensure that the  enjoyment  of the Leased  Premises is not  materially
          diminished.  If necessitated by the nature of the work,  replacements,
          repairs and  maintenance,  the Lessor may require the Lessee,  without
          court  authorisation,  to vacate or to be temporarily  dispossessed of
          the  Leased  Premises.  The  Lessor  shall  exercise  its  right  in a
          reasonable  manner  and  indemnify  the  Lessee.  Notwithstanding  the
          foregoing,  the  Lessee  shall  in no event  resiliate  or  request  a
          reduction of Rent.

7.5       Inspection and Repairs - The Lessor and its  representatives may enter
          the Leased  Premises at all times to examine  their  condition  and to
          make such  modifications  which they deem  necessary or useful for the
          operation  and  the  proper  maintenance  of the  Immovable  or of its
          electro-mechanical systems.

7.6       Right of Access- If the Lessor  deems it  necessary  to install in the
          Leased Premises those portions of systems  serving the Immovable,  the
          Lessee shall authorise the Lessor to carry out such work without being
          compensated, provided that the enjoyment of the Leased Premises is not
          materially diminished.

7.7       Refuse - The Lessee shall follow the  instructions  of the Lessor with
          respect to refuse.

7.8       Notice of  Defects - The  Lessee  shall  notify  the  Lessor  within a
          reasonable delay, of any defect or deterioration  which is susceptible
          of damaging the Leased  Premises,  the Building or the Common Area and
          Facilities.

ARTICLE 8
LEASEHOLD IMPROVEMENTS

8.1      All Leasehold Improvements carried out in the Leased Premises before or
         during the Term, shall be first approved by the Lessor,  and shall meet
         the following conditions:

          8.1.1     In order to avoid the  suspension of work,  the Lessee shall
                    have the work performed,  at its own expense, by contractors
                    and subcontractors  approved by the Lessor. Such contractors
                    and subcontractors shall:

                    Before the beginning of the work:

                    a)   provide the Lessor  with the plans and  specifications,
                         beforehand  signed by the Lessee,  showing the proposed
                         Leasehold  Improvements,   as  well  as  all  documents
                         necessary to work approval,  like construction permits,
                         architecture   plan   bearing  the   architects   seal,
                         elevation plan and finish  samples,  plan of mechanical
                         and  electrical  distribution,  bearing  the  seal of a
                         specialised  engineer, if need be. Should the plans and
                         specifications  be  approved by the Lessor and bear the
                         Lessors  seal,  the  Leasehold   Improvements  must  be
                         carried   out  in   conformity   with  such  plans  and
                         specifications.  No  Leasehold  Improvements  shall  be
                         performed  by the  Lessee  as long as the plans are not
                         approved  by the Lessor  and  attested  by the  Lessors
                         seal;

                    b)   provide the certificates of compliance,  as well as the
                         following documents:

                         -    Company signing resolution;

                                      -11-
<PAGE>

                         -    Bid bond  (when  required;  the bid  bond  must be
                              presented with the tender);

                         -    Performance bond (when required);

                         -    Licence   from  the  Regie  des   entreprises   de
                              construction;

                         -    Certificate  of compliance  with CCQ;  (competency
                              card, permits, etc.)

                         -    Certificate     of    compliance     with    CSST;
                              (contributions paid, etc.)

                         -    List of subcontractors;

                    c)   obtain the necessary permits and authorisations;

                    d)   carry out the Leasehold Improvements,  according to the
                         Lessors instructions;

                    e)   contract,  and provide  copy of, an  insurance  against
                         civil  liability,  covering  their  activities  in  the
                         Building, until the date of issuance of the certificate
                         of total performance of work, for an amount of at least
                         two million  dollars ( $  2,000,000.00  ), as well as a
                         general property insurance policy covering at least the
                         amount of the price of the  contract  and full value of
                         the specified products to be provided by the contractor
                         in order to be  incorporated to the work. The insurance
                         contract shall include the Lessor as a co-insured party
                         and comprise an undertaking  clause by such insurers to
                         notify   the   Lessor  in  case  of   cancellation   or
                         modification of the insurance policy, at least thirty (
                         30 ) days in advance.  To this effect,  the  contractor
                         shall  be  responsible  for all  damage  caused  by its
                         contractors, subcontractors, as well as its suppliers.

                    Moreover,  it is  expressly  agreed that all work related to
                    the  electromechanical  systems will be  performed  only and
                    solely by the Lessor.

                    It is also agreed that the Lessee shall be  responsible  for
                    all the professionals and contractors hired on this project.
                    The Lessee shall also  designate a  representative  who will
                    communicate with the Lessors supervisor.

          8.1.2     It is  acknowledged  that the  Lessee is in no way acting as
                    the  Lessors   mandatory   with  respect  to  the  Leasehold
                    Improvements  carried out in the Leased  Premises,  and that
                    such Leasehold  Improvements are performed by the Lessee for
                    its own  benefit,  even if the  Lessor  grants the Lessee an
                    allowance  for the  work,  as it is common  practice  on the
                    market.

          8.1.3     On the  date of the end of work at the  latest,  the  Lessee
                    shall pay the Lessor an amount equal to five percent ( 5 % )
                    of the  costs  of the  Leasehold  Improvements,  in order to
                    compensate the Lessor for the management and  supervision of
                    the work and the  approval  of the  plans.  Should  the case
                    arise  when the  Lessor  pays the  Lessee an  Allowance,  as
                    described in Schedule "C" herein, the Lessor shall deduct an
                    amount  equal to five percent ( 5 % ) on the  Allowance,  in
                    compensation for the management, supervision of the work and
                    approval of the plans.  Such Allowance  shall become due and
                    claimable by the Lessee,  according to the terms of Schedule
                    "C" herein, if the case arises.

          8.1.4     Furthermore, at least ten ( 10 ) days before the work in the
                    Leased Premises  begin,  the Lessee shall provide the Lessor
                    with, and this at the Lessors discretion, a security bond on
                    the  construction  or a banks letter of credit for the value
                    of the work to be done,  which  form  and  content  shall be
                    subject to the  Lessors  approval  acting  reasonably,  or a
                    notice of waiver and a  commitment  of release for all legal
                    hypothec or right of legal  hypothec that could arise out of
                    the  materials  supplied.   Should  the  Lessee  default  in
                    providing  the  Lessor  with the  guaranties  required,  the
                    Lessor can order the immediate ending of the work being done
                    or to be carried out by such contractor or  subcontractor in
                    the Leased Premises.

                                      -12-
<PAGE>

          8.1.5     Should an hypothec  or other  security  be  registered,  the
                    Lessee shall have such hypothec or security cancelled within
                    fifteen ( 15 ) days.  Should this  cancellation not be done,
                    the  Lessee  shall  provide  the  Lessor  with a  sufficient
                    deposit to pay the said  hypothec or other  security,  along
                    with  the  pertaining   legal  fees.  Such  amount  will  be
                    reimbursed to the Lessee,  less the expenses incurred by the
                    Lessor,  upon  proof  of  cancellation  of the  hypothec  or
                    security.  If the Lessee defaults in depositing the required
                    amount,  the  Lessor  shall  have the right to  cancel  such
                    hypothec  or  security,  and then  claim from the Lessee the
                    reimbursement of the incurred expenses,  along with the fees
                    and the interests, at the Prime Rate.

          8.1.6     Each  contractor  shall  respect  the  working  rules of the
                    Building,  a list of which shall be given to the contractors
                    at  the  moment  of  the  granting  of  the  contract.   The
                    contractors  shall also respect all construction  codes. All
                    work  shall be  performed  after the  Business  Hours of the
                    Building.  Should some work have to be  executed  during the
                    Business  Hours,  said work shall  first be  authorised  and
                    permitted by the  Buildings  manager.  Moreover,  should the
                    Lessee  have work  executed in an area other than the Leased
                    Premises,  or should the Lessee  use the  freight  elevator,
                    during the performance of work in the Leased  Premises,  the
                    Lessor shall  provide the services of a security  guard,  at
                    the Lessees expense.

                    The contractor shall be responsible for all damage caused by
                    its subcontractors,  as well as its suppliers, and therefore
                    the Lessee  shall  ensure that the  contractor  has suitable
                    insurance to this effect.

          8.1.7     The  Lessee  shall  provide  the  Lessor  with the  plans as
                    constructed,  shop  drawings  mechanical  balancing  report,
                    plans  approved by the City, and operating  manuals,  within
                    two (2) weeks following the completion of work.

                    Furthermore,  should the Leasehold  Improvements be executed
                    by the  Lessor,  by the Lessee  with no  allowance  from the
                    Lessor,  or by the Lessee with an allowance from the Lessor,
                    all other terms and conditions, as well as the list of work,
                    are described in Schedule "C" herein.

8.2       All Leasehold  Improvements shall become the Lessors property, as soon
          as they are installed in the Leased  Premises and shall be surrendered
          with the Leased Premises at the Termination of the Lease,  without any
          compensation whatsoever to the Lessee.  Notwithstanding the foregoing,
          the  Lessee  shall,  at  the  End of  Term  or at  the  moment  of any
          anticipated  resiliation  of the Term,  at its own  costs,  remove all
          Leasehold  Improvements for which the removal has been demanded by the
          Lessor,  should it have been brought in the Leased  Premises before or
          after the  Commencement of the Lease, by the Lessor or the Lessee,  or
          by the Lessor for the previous  Lessee.  Should the Lessor require so,
          the Lessee  shall,  at its own expense,  leave the Leased  Premises in
          base building state.  The Lessee shall, at its own expense,  leave the
          Leased Premises in good state and clean,  under reserve of the repairs
          due to normal ageing, and repair all damage caused to the Building due
          to the removal of the Leasehold Improvements.

          Provided  that the Lessee  executed its  obligations  in virtue of the
          Lease,  at the  moment of the End of the Lease,  the  Lessee  shall be
          entitled to remove from the Leased Premises all its movable properties
          in the Leased Premises.  However,  all movable  properties left in the
          Leased  Premises  after  the End of the  Lease  shall be  deemed to be
          abandoned,  and the Lessor may dispose of such  properties  as it sees
          fit, without compensation of any nature to the Lessee.

ARTICLE 9
INSURANCE

9.1       The Lessee shall,  at its own expense and throughout the Term, keep in
          force:

          a)   insurance  coverage for public liability of businesses,  covering
               all acts the Lessee  could be held  responsible  for and covering
               the Leased  Premises and the  property  located  therein,  for an
               amount equal to a minimum of five million dollars

                                      -13-
<PAGE>

               ($5,000,000.00)  for each  occurrence  or for any greater  amount
               which the Lessor may reasonably  request from time to time, which
               insurance must contain such guarantees as required by the Lessor;

          b)   a broad form insurance  coverage for all of the property  located
               in the Leased  Premises,  and namely the leasehold  improvements,
               for an  amount  equal  to their  replacement  cost,  without  any
               deductions for depreciation,  which insurance shall, in addition,
               have the following endorsements:  replacement value and any other
               endorsements required by the Lessor;

          c)   broad form comprehensive  boiler and machinery  insurance as well
               as insurance  against the  breakdown of equipment  and  machinery
               (under  pressure or otherwise)  "combined form" and protecting in
               the  Leased  Premises  the  destruction  of  such  equipment  and
               machines,   damages  caused  by  all  such  occurrences  and  the
               interruption of business resulting therefrom, for an amount equal
               to  total   forceable   damages,   without  any   deduction   for
               depreciation,  which insurance must include such  endorsements as
               required by the Lessor.

          d)   business  interruption  insurance "broad form" providing standard
               coverage  of a minimum  period  of twelve ( 12 ) months,  in such
               amount to compensate  the Lessee for all loss of earnings and for
               additional  expenses  attributable  namely  to the  perils  to be
               insured  against  pursuant  to  sub-paragraphs  (a),  (b) and (c)
               mentioned   above,   which  insurance  shall  also  include  such
               endorsements as required by the Lessor;

          e)   all other insurance which the Lessor may reasonably  require from
               time to time.

9.2       All insurance policies shall:

          a)   be acceptable to the Lessor in form and in substance;

          b)   be subscribed from insurers acceptable to the Lessor;

          c)   provide  that  they  will not be  permitted  to  expire  or to be
               modified  unless the  insurer  gives the Lessor a ten ( 10 ) days
               written notice to that effect;

          d)   name the  Lessor and the Lessee as  insured,  according  to their
               interests;

          e)   contain a waiver of  subrogation of all rights which the Lessee's
               insurers  may have against the Lessor and for persons for whom it
               is in law responsible.

9.3       Increase of Risk - The Lessee shall:

          a)   not do  anything  which  increases  the  risk  of  fire  and  the
               insurance premium rates for the Immovable;

          b)   comply with the  requirements of the Lessor's  insurers or of any
               associations of insurers having jurisdiction in such matters; and

          c)   not keep dangerous  materials in the Leased  Premises unless such
               materials  are required for its business  and, in such a case, in
               such  quantities  as  are  permitted  by the  Lessor's  insurance
               policies,  failing  which the Lessee  shall pay to the Lessor any
               resulting increase of the insurance premiums.

9.4       Certificates  - The Lessee shall furnish the Lessor with  certificates
          of  insurance at least ten ( 10 ) days prior to taking  possession  of
          the  Leased  Premises  and  thereafter,  within ten ( 10 ) days of the
          renewal thereof.

9.5       If the Lessee fails to maintain the  insurance  for which it is bound,
          the Lessor may do so in the name of the Lessee and in such event,  all
          premiums paid by the Lessor shall be reimbursed by the Lessee.

                                      -14-
<PAGE>

ARTICLE 10
ACCESS BY LESSOR TO LEASED PREMISES

10.1      Visiting the Leased Premises - During the last twelve ( 12 ) months of
          the Term of this Lease, the Lessee shall permit any person  interested
          in leasing  the Leased  Premises to visit the Leased  Premises  during
          Business Hours.

          The  Lessee  shall  permit the  Leased  Premises  to be visited by any
          broker,  purchaser,  lender or evaluator of the Immovable.  The Lessor
          shall exercise its right in a reasonable manner.

ARTICLE 11
DAMAGE AND DESTRUCTION

11.1      Destruction  of  Leased  Premises  - Should  the  Leased  Premises  be
          destroyed  or damaged,  the Lessor  shall state its  intention  to the
          Lessee by way of  written  notice  transmitted  to the  Lessee  within
          thirty ( 30 ) days of the loss, to the effect that the Leased Premises
          are:

          11.1.1    wholly  uninhabitable  or that  their use is  dangerous  and
                    cannot be reasonably  repaired within one hundred and eighty
                    ( 180 ) days  following the loss, in which case either party
                    may resiliate the Lease with retroactive  effect to the date
                    of the loss;  if such notice is not given  within five ( 5 )
                    days following the notice  provided for in Article 11.1, the
                    Rent shall  abate from the date of the loss until the Leased
                    Premises  are  repaired  and are ready to be occupied by the
                    Lessee.

          11.1.2    wholly  uninhabitable or that their use is dangerous but are
                    reasonably  reparable  within one hundred and eighty ( 180 )
                    days  following the loss, as the case may be, the payment of
                    Rent  shall  abate from the date of the loss until such time
                    that the Leased  Premises  are  repaired and are ready to be
                    occupied by the Lessee;

          11.1.3    reasonably  reparable  within one hundred and eighty ( 180 )
                    days  following  the  loss  and  are  partly  usable  in the
                    interim;  as the case may be,  payment of Rent shall  abate,
                    with respect to the unusable area, from the date of the loss
                    until  such time that the  damages  have been  substantially
                    repaired.

11.2      Destruction  of the Building - If the Lessor is of the opinion,  which
          shall be given by notice within  thirty ( 30 ) days of the loss,  that
          twenty per cent ( 20 % ) or more of the leasable  area of the Building
          is damaged,  or if the Lessor is of the opinion  that the  Building is
          hazardous and that the Building  cannot be reasonably  repaired within
          one hundred and eighty ( 180 ) days or, that the proceeds of insurance
          do not cover the cost of repairs,  then the Lessor may  resiliate  the
          Lease  effective  retroactively  as of  the  date  of  the  loss,  all
          adjustments to the Rent to be made as of such date.

11.3      No  Obligation to Rebuild - The Lessor shall be under no obligation to
          repair or rebuild  the  Building,  the  Leased  Premises  or  contents
          thereof, the Lessee's alterations, improvements or other property.

ARTICLE 12
EXPROPRIATION

12.1      Resiliation  of the  Lease - In the case of an  expropriation  or of a
          taking of possession ("Expropriation") by a competent authority which,
          according to the Lessor,  renders the Building or the Leased  Premises
          unusable,  the  Lessor  may  terminate  the Lease from the date of the
          Expropriation by way of a written notice to the Lessee. The Lessee may
          claim  any  damages  from  the  expropriating  party  but not from the
          Lessor.

                                      -15-
<PAGE>

12.2     No Obligation to Contest - The Lessor is under no obligation to contest
         the Expropriation. The parties hereby reserve all their rights to claim
         future damages against the expropriating authority.

ARTICLE 13
DAMAGES

13.1      Liability  of  the  Lessor  -  Notwithstanding  any  provision  to the
          contrary,  the Lessor shall not be liable for damages occurring in the
          Leased  Premises  or  in  the  Immovable   resulting  from  any  cause
          whatsoever, unless such damages are directly attributable to the fault
          of the Lessor.  The Lessor shall not be liable for damages suffered by
          the  Lessee  resulting  from the fault  attributable  to a lessee or a
          third  party even if such third  party is a person  whom the Lessee or
          another lessee of the Building has allowed to use or to have access to
          the Leased Premises.

13.2      Limited  Liability  - Even if the  damages are due to the fault of the
          Lessor, its liability shall extend only to the movable property and to
          the ordinary fixtures of the Lessee located in the Leased Premises and
          shall not extend to special equipment, documents and securities.

13.3      No Reduction of Rent - Unless as  otherwise  stipulated  in the Lease,
          the  Lessee  shall  not in any  case  with  respect  to an  occurrence
          relating to the  Immovable or the Leased  Premises or to an act of the
          Lessor of any nature whatsoever, have the right to a reduction of Rent
          or to the resiliation of the Lease.  Nevertheless,  the Lessee may, if
          granted  by a court  of  law,  obtain  from  the  Lessor  compensation
          resulting  from  damages  directly  attributable  to the  fault of the
          Lessor.

ARTICLE 14
SIGNS AND ADVERTISING

14.1      Consent of Lessor - Any sign or advertising  material visible from the
          exterior  of the Leased  Premises or which may be  distributed  in the
          Immovable  must be  approved  by the Lessor who may  require  that the
          Lessee ceases the use thereof,  without  delay.  Should the Lessee not
          comply with the Lessor's  request,  the Lessor shall be entitled to do
          so at its cost and at the expense of the Lessee.

14.2      Maintenance of Signs - The Lessee shall, at its expense,  maintain all
          signs and shall  indemnify  the  Lessor  for any  damage  which may be
          caused to the Lessor.

14.3      Injurious Advertising - The Lessee shall not publish any advertisement
          injurious  to the  reputation  of the  Lessor,  the  Lessor or another
          lessee  of  the  Immovable,  and  shall  immediately  cease  any  such
          advertising at the request of the Lessor.

ARTICLE 15
COMPLIANCE WITH LAWS AND INDEMNIFICATION

15.1      Compliance  with  Laws - The  Lessee  shall  comply  with all laws and
          regulations  governing the business  conducted in the Leased Premises.
          The Lessee  shall carry out any  changes to the Leased  Premises or to
          the business conducted  therein,  which may be legally required by the
          competent  authorities,  failing which, the Lessor, after having given
          written notice to the Lessee,  may carry out such changes in its place
          and at its expense.

15.2      Indemnity of Lessor - The Lessee shall  indemnify  the Lessor  against
          any penalty  payable by the Lessor  resulting from the Lessee's breach
          to comply with the present  article,  including all related  expenses,
          including legal fees incurred by the Lessor to protect its rights.

15.3      Environmental  Clause - During  the Term and its  renewal,  the Lessee
          agrees to respect the  Environmental  Legislation and comply therewith
          promptly at its expense  and to  immediately  notify

                                      -16-
<PAGE>

          the Lessor of any release and discharge and presence inside or outside
          the Leased Premises of any Contaminants and Hazardous  Materials which
          are in breach of the Environmental Legislation.

          The  Lessee is liable for any  damage  whatsoever  caused in or to the
          Immovable  or the Leased  Premises  as a result of its  non-compliance
          with the Environmental  Legislation,  which damage may also entail the
          termination of the Lease.

          Notwithstanding  anything to the  contrary,  the Lessee  undertakes to
          save and hold  harmless  the Lessor,  its  representatives,  agents or
          employees from any claims, losses, costs, fees, expenses,  damages for
          bodily injury,  moral damages,  property  damages,  actions,  suits or
          proceedings  arising from or  attributable  to Lessee's act,  refusal,
          negligence or omission to comply with the Environmental Legislation.

ARTICLE 16
SUBLET AND ASSIGNMENT

16.1      Mandatory  Consent  of the  Lessor - The  Lessee  shall not assign the
          Lease or sublet the Leased  Premises  in whole or in part,  nor suffer
          the Leased Premises to be utilised by another person (such utilisation
          being, for the purposes hereof,  considered as a sublease) without the
          written  consent of the  Lessor,  which  consent  may not be  withheld
          without a serious reason.

          16.1.1    In the event of an  assignment  or of the  subletting of the
                    whole or any part of the Leased Premises,  unless a specific
                    written  consent to this effect is obtained from the Lessor,
                    no options whatsoever  contained in this Lease shall benefit
                    such sub-lessee or assignee.

          16.1.2    The  occupancy  of a part or of the  totality  of the Leased
                    Premises by a third party or the Lessor's  tolerance of such
                    occupancy or its  acceptance  of any payment shall in no way
                    constitute a waiver of the Lessee's obligation to obtain the
                    Lessor's consent for an assignment or a sublet.

16.2      Deemed  Assignment - If the Lessee is a company,  a  corporation  or a
          partnership,  any change in the effective control thereof is deemed to
          be an  assignment  of the Lease and the Lessee and the assignee  shall
          comply with the present Section 16.

16.3      Information to be provided - The request of the Lessee with respect to
          obtaining the consent of the Lessor to the sublease or the  assignment
          shall include the following:

          16.3.1    the name,  address and telephone number of the true proposed
                    sub-lessee  or  assignee,  or in the case of the  change  of
                    effective control of a corporation or of a company, those of
                    the senior  executives of the  corporation or of the company
                    as well as of those  persons who are  acquiring  the control
                    thereof;

          16.3.2    information  acceptable  to the Lessor  with  respect to the
                    commercial experience of the persons;

          16.3.3    references   from  banks  and  other  credit   institutions,
                    financial   statements   (if   available)   and  any   other
                    information which the Lessor may reasonably  require for the
                    purpose of its evaluation;

          16.3.4    if the  sub-lessee  or the  assignee is a  partnership  or a
                    company, the declarations or constituting documents thereof,
                    as amended;

          16.3.5    the  sub-lessee or the  assignee's  written  undertaking  to
                    respect  all and  every  obligations  of the  present  Lease
                    including,  without  limitation,  the obligation to grant to
                    Lessor the same sureties as previously granted by the Lessee
                    or any other surety that the Lessor may reasonably request.

                                      -17-
<PAGE>

          16.3.6    complete disclosure of all consideration,  rental, terms and
                    conditions of the proposed  assignment or sublease,  as well
                    as all  information  and documents  relating to the proposed
                    sublease or assignment.

16.4      Justified  Refusal - The Lessor may refuse to consent to the  proposed
          sublease  or  assignment  of  the  Lease,   for  any  serious  reason,
          including, without limitation:

          16.4.1    failure to provide the  information  or  documents  required
                    pursuant to Article 16.3;

          16.4.2    the poor reputation,  lack of business experience or lack of
                    commercial success of the proposed sub-lessee or assignee;

          16.4.3    if the use which the proposed  assignee or sublessee intends
                    to make of the Leased  Premises is in conflict,  in whole or
                    in part, with any exclusivity  right then already granted by
                    the  Lessor  to  another  lessee  in  the  Building;  or  is
                    incompatible  with the  image,  character  or quality of the
                    Building;

          16.4.4    if the proposed assignee or sublessee is already a lessee or
                    occupant of the Building  and other space is  available  for
                    such party in the Building or will become  available  within
                    the next following six ( 6 ) months; or

          16.4.5    if the  proposed  assignee or  sublessee  does not intend to
                    physically  occupy the Leased Premises and actively  operate
                    its business therein in good faith; or

          16.4.6    if the proposed  assignment  or sublease  becomes  effective
                    before the date on which the Lessee has physically  occupied
                    the Leased  Premises and  commenced to actively  operate its
                    business therein in good faith.

          16.4.7    if the Lessor  has  reasonable  grounds to believe  that the
                    proposed  assignee or sublessee  does not have the financial
                    capacity  to meet all its  obligations,  including,  without
                    limitation, the obligations of the Lessee towards the Lessor
                    under the Lease.

16.5      Answer of the Lessor - Within  thirty ( 30 ) days from the  receipt of
          the Lessee's complete request for the Lessor's consent,  together with
          all the required  information  and documents,  the Lessor shall inform
          the Lessee:

          a)   of its refusal to consent, stipulating the reasons therefor, or

          b)   of its consent, or

          c)   that the Lessor has  chosen,  as an  alternative  to its  consent
               (without  affecting  its other rights and without  being  obliged
               thereto),  to become itself the sublessee or the assignee, as the
               case  may be,  for the same  consideration,  rentals,  terms  and
               conditions as those of the proposed  sublease or  assignment,  in
               the place of the proposed assignee or sublessee, or

          d)   that the Lessor has  chosen,  as an  alternative  to its  consent
               (without  affecting  its other rights and without  being  obliged
               thereto), to terminate the Lease as of the fifteenth ( 15th ) day
               following the date on which the Lessor so informs the Lessee,  it
               being understood that the Lessee shall,  however,  have the right
               to withdraw its request for consent to the proposed assignment or
               sublease within such fifteen ( 15 ) days delay.

16.6      Delay for  Sublet or  Assignment  - Should  the  Lessee  not sublet or
          assign  the Leased  Premises  within  sixty ( 60 ) days  after  having
          obtained the consent of the Lessor,  said consent  shall be considered
          null and the Lessee shall  recommence  the  procedure for carrying out
          the sublease or the assignment.

16.7      Should the  Lessor  fail to perform  its  obligations  for which it is
          bound to the Lessee,  the  sub-lessee  may not exercise the rights and
          remedies of the Lessee against the Lessor.

                                      -18-
<PAGE>

16.8      Solidarity - Notwithstanding any sublease or assignment,  the Lessee's
          liability  shall remain  solidary with the assignee or the sub-lessee,
          as the case may be for all of the  obligations of the Lessee  pursuant
          to the Lease, so that the Lessor may compel the Lessee, and the Surety
          (if any),  to  observe  all of the  obligations  of the Lease as if no
          assignment or sublease had occurred.

16.9      Expenses of the  Sublease or the  Assignment  - If the sublease or the
          assignment is accepted,  the Lessee shall reimburse the Lessor for the
          related  administrative  expenses,  subject  to  the  approval  of the
          sublease or the assignment, which shall be payable by certified cheque
          and shall be remitted at the time of  signature  of the  agreement  of
          sublease or of assignment.

16.10     Approval of  Publicity - The  sublease  or the  assignment  may not be
          publicised in any manner  whatsoever,  without the express approval of
          the Lessor with respect to the form and  substance of such  publicity,
          all  advertising  in relation to the sublease or the assignment of the
          Lease may be injurious to the Immovable.

ARTICLE 17
ASSIGNMENT BY LESSOR

17.1      Assignment  by  Lessor  - In  the  event  of a  sale,  transfer  or an
          assignment  of the  Immovable  or any  part  of the  Immovable  by the
          Lessor,  or an  assignment by the Lessor of this Lease or any interest
          in the Lease  hereunder,  the Lessor  shall be freed of all  liability
          with respect to any  obligations  in virtue of the Lease or of the law
          if  such  purchaser  or  assignee  assumes  the  Lessor's  obligations
          according to the Lease or law.

17.2      Lessees Certificates - At any time and from time to time upon not less
          than ten ( 10 ) days prior  notice at the request of the  Lessor,  the
          Lessee  shall  execute and  deliver,  as  directed  by the  Lessor,  a
          certificate  of an  officer of the  Lessee  certifying  as at the date
          thereof whether this lease is in full force and effect, whether or not
          it has been modified (and if so in what respect), the status of annual
          rent and other accounts between the Lessor and Lessee,  whether or not
          there are any existing defaults on the part of the Lessor of which the
          Lessee has  notice  (and if so,  specifying  them) and as to any other
          matters  in  connection  with this  lease in  respect  of which such a
          certificate is reasonably requested.

17.3      Lessors Certificates - At any time and from time to time upon not less
          than ten ( 10 ) days prior  notice at the request of the  Lessee,  and
          for the purposes only of a transaction contemplated by Article 17, the
          Lessor  shall  execute and  deliver,  as  directed  by the  Lessee,  a
          certificate  of an  officer of the  Lessor  certifying  as at the date
          thereof whether this lease is in full force and effect, whether or not
          it has been modified (and if so in what respect), the status of annual
          rent and other accounts between the Lessor and Lessee,  whether or not
          there are any  existing  defaults on the part of the Lessee  which the
          Lessor has  notice  (and if so,  specifying  them) and as to any other
          matters  in  connection  with  this  lease in  respect  of which  such
          certificate is reasonably requested.

17.4      Effect of  Certificates  - Any  statement  delivered  pursuant  to the
          provisions of this Article 17 may be conclusively  relied upon only by
          the person to which such statement is addressed but shall not preclude
          any rights of the party giving such statement with respect to defaults
          not set forth in such  statement  but of which the party  giving  such
          statement  had no actual  knowledge at the date thereof as against the
          other immediate party to this lease.

ARTICLE 18
DEFAULT AND RECOURSE

18.1      A default shall occur in the following cases:

          a)   if the Lessee does not fulfil any of its obligations  pursuant to
               the Lease and if this default continues:

                                      -19-
<PAGE>

               i)   in the cases of a pecuniary obligation, for more than five (
                    5 ) days  following  the  receipt by the Lessee of a written
                    notice from the Lessor;

               ii)  in all  other  cases,  for  more  than  fifteen  ( 15 ) days
                    following  the  receipt of a written  notice from the Lessor
                    (unless it constitutes a default  otherwise  provided for in
                    this  paragraph  18.1 or unless the default  cannot be cured
                    within  said  delay,  in which  case the  Lessee  shall have
                    commenced to cure the default  within the  prescribed  delay
                    and to continue to do so with diligence) or within a shorter
                    delay  stipulated  in the Lease  (the  latter  delay  taking
                    precedence);

          b)   if  the   Lessee  is  the  object  of   bankruptcy,   insolvency,
               dissolution  or  liquidation  proceedings or loses control of the
               property located in the Leased Premises;

          c)   if the Lessee  makes a sale of an  enterprise  or if the property
               located  in the  Leased  Premises  is  seized  and that a release
               thereof is not obtained within fifteen ( 15 ) days;

          d)   if the Lessee do not  continuously  operate  its  business in the
               entire area of the Leased  Premises,  leaves the Leased  Premises
               vacant  during  five ( 5 )  consecutive  days  or if  the  Leased
               Premises are used by a person who is not  authorised  pursuant to
               the Lease; or

          e)   if a sublease  or an  assignment  is  attempted  or if the Lessee
               grants a guarantee  that  affects  the  Lessor's  own  guaranties
               provided in the Lease.

          The mere  lapse of the delays  provided  for in  paragraph  18.1 or as
          otherwise  provided  for in the Lease shall have the effect of deeming
          the Lessee in default.

18.2      Default  and  Recourses  - Each time that an event of default  occurs,
          subject to the other  rights and  recourses  which are  granted to the
          Lessor  pursuant  to the  Lease or law and  notwithstanding  any other
          provision of the law, the Lessor shall have the  following  rights and
          remedies, which shall be cumulative and not alternative:

          a)   the right to  terminate  the Lease by  notice to the  Lessee  and
               following such notice, the Lessee shall not be entitled to remedy
               the default;

          b)   the Lessor  may enter the Leased  Premises  as  mandatory  of the
               Lessee,  re-let  them  for the  duration  of the Term and on such
               conditions  which the Lessor  may  determine  at its  discretion,
               collect the Rent, take possession, as mandatory of the Lessee, of
               all moveable property located in the Leased Premises and, in such
               a case store the  moveable  property  at the cost and risk of the
               Lessee or sell or assign it in such  manner as the  Lessor  deems
               appropriate  without notice to the Lessee;  make modifications to
               the Leased  Premises  in order to  facilitate  their  re-letting;
               apply the  proceeds of any sale or  re-letting  to the payment of
               all  expenses  incurred  by the  Lessor in  connection  with such
               re-letting  or of such sale and to any other  debt of the  Lessee
               towards the Lessor and, lastly, to the payment of Rent in arrears
               or of future payments of Rent which are to become due. The Lessee
               shall remain liable to the Lessor for any deficiency;

          c)   the right to remedy or attempt to remedy,  at the  expense of the
               Lessee  and  with no  liability  on the part of the  Lessor,  any
               default  of the  Lessee  pursuant  to the  Lease on behalf of the
               Lessee and to enter the Leased Premises for such purposes.

          d)   the right to recover from the Lessee all damages suffered as well
               as all expenses incurred by the Lessor pursuant to the default of
               the Lessee

18.3      Indemnity - Should the Lessor  retain the services of legal counsel in
          connection  with the non  performance by the Lessee of its obligations
          pursuant  to these  presents,  the  Lessee  shall  pay the  Lessor  as
          damages,  judicial costs, and fees of fifteen per cent ( 15 % ) of the
          amount of the Rent due in connection with such legal services.

                                      -20-
<PAGE>

ARTICLE 19
NOTICE

19.1      Any notice to be given  under this Lease  shall be sent by  registered
          mail or by  telecopier  transmission  or  delivered  in  person at the
          addresses  indicated above at article 1.1.12.  The Lessor reserves the
          right to change its address.

          Notices  sent by mail shall  have been  deemed to be  received  on the
          third  business  day  following  the  mailing  thereof  and  those  by
          telecopier the business day following their transmission.

          The Lessee elects  domicile in the Leased Premises for all purposes in
          connection with these presents.

ARTICLE 20
TERMINATION OF LEASE

20.1      Any  occupation  of the  Leased  Premises  by  the  Lessee  after  the
          Termination  of the Lease shall not have the effect of  extending,  or
          expressly or tacitly renewing the Lease.

20.2      The Lessor may allow the Lessee in the event the Lessee  occupies  the
          Leased  Premises after the  Termination of the Lease,  to continue its
          occupation  pursuant to a monthly Lease in  consideration of a monthly
          Minimum  Rent  which is fifty per cent ( 50 % ) greater  than the last
          monthly  Minimum Rent of the Term,  the other terms and  conditions of
          the Lease remaining the same.

ARTICLE 21
UNAVOIDABLE DELAY

21.1      Except  for the  payment  of an amount  of money,  each time the Lease
          provides for the performance of an obligation, the obligation shall be
          performed  subject  to  Unavoidable  Delay.  The Lessee and the Lessor
          shall  be  deemed  not  to be in  default  in the  performance  of any
          obligation  under  this Lease if they are  prevented  from so doing by
          Unavoidable  Delay, and any period of time for the performance of such
          obligation shall be extended accordingly.

          The Lessee and the Lessor shall notify each other respectively without
          delay at the outset of the cause,  the  duration  and the  effect,  to
          their knowledge, of any Unavoidable Delay.

ARTICLE 22
MODIFICATION OF LEASE AND PERFORMANCE BY A THIRD PARTY

22.1      Modification  of Lease - Any  modification of the Lease shall be valid
          only if expressly  agreed to in writing by the Lessor,  the Lessee and
          the Surety (if any).

22.2      Performance  by Third Party - A third party may not acquire any rights
          pursuant to these presents in performing an obligation of the Lessee.

ARTICLE 23
MISCELLANEOUS

23.1      Declaration of intent - This Lease is intended to be a simple document
          drafted in ordinary  language.  When words or expressions of a general
          meaning are used, the widest  possible  meaning is to be given to them
          unless the context clearly indicates otherwise.

                                      -21-
<PAGE>

23.2      Absence  of  Waiver - The fact  that one or the  other  party  has not
          exercised any of its rights  hereunder  shall not  constitute a waiver
          thereof.

23.3      Cancellation of Previous Agreements - This Lease represents the entire
          agreement  between the parties in connection with the Leased Premises.
          It  replaces  all  previous  documents  and  discussions  between  the
          parties.

23.4      Successors  and  Assigns-  The Lease  shall  bind the  successors  and
          assignees of the parties.

23.5      Brokerage  Commission - The Lessee  warrants to the Lessor that it has
          not  retained  the  services  of  any  broker  in  respect  with  this
          transaction.  Any  brokerage  commission  with  respect to the present
          transaction  shall  be  borne  exclusively  by the  Lessee  who  shall
          indemnify the Lessor against any claim with respect thereto, except in
          the case where the Lessor has given a specific  written  mandate to an
          agent with respect to this transaction.

23.6      Brokerage  Commission - The Lessee  guarantees  to the Lessor that the
          only broker involved in this transaction was Madame Vittoria  Tassone.
          The  Lessor  shall  be  responsible  to  pay  the  leasing  commission
          pertaining  to  the  present  Lease  upon  the  terms  and  conditions
          stipulated in a commission  agreement to intervene  between the Lessor
          and the broker.

23.7      Conversion - The Parties to this Lease agree to the  following  metric
          factors :

                    1 metre            =    3.2808 feet
                    1 square metre     =    10.7643 square feet
                    1 foot             =    0.3048 metres
                    1 square foot      =    0.0929 square metres

23.8      Cumulative  Rights - The rights  conferred  to the Lessor shall not be
          exclusive but shall be cumulative.

23.9      Undertaking to Cooperate - The parties agree to sign all documents and
          do all things  necessary  or  desirable in order to give effect to the
          intention of the parties.

23.10     Publication  of Lease - The Lessee shall have the right to publish the
          Lease,  after having  obtained the prior  approval of the Lessor as to
          the form and as to the other terms of the publication, without however
          mentioning any of the Lease's  financial  terms,  failing  which,  the
          Lessor  may  radiate  such  publication  at the  Lessee's  cost.  Such
          publication  shall be made  solely  at the  Lessee's  cost,  including
          publication  fees and the cost of a published copy for the Lessor.  In
          cases of  publication,  the Lessee shall,  at the  Termination  of the
          Lease,  cause the  publication  to be cancelled  at its cost,  failing
          which the Lessor may do so at the expense of the Lessee.

23.11     Partial Invalidity - All of the parts of this Lease are divisible.  If
          for any reason  whatsoever a provision thereof is judged to be illegal
          or  unenforceable,  the other  provisions of the Lease shall remain in
          effect mutatis mutandis.

23.12     Interpretation - In this Lease, unless the context dictates otherwise:

          i)   the masculine  includes the feminine and the singular the plural,
               and

          ii)  the words  "hereinabove"  and  "these  presents"  or any words or
               expressions having similar import shall refer to the Lease in its
               entirety.

23.13     Laws - This  Lease  shall be  governed  by the Laws in  effect  in the
          province of Quebec.  In addition,  by these presents,  all the parties
          elect domicile in the Court of jurisdiction for the judicial  district
          of  Montreal,  for all  judicial  proceedings  which  may be  taken in
          connection with the application of the present Lease,  notwithstanding
          the fact that one or the other  parties  may have  signed  this  Lease
          outside of the judicial district of Montreal.

23.14     Late Payments - The  acceptance by the Lessor of post-dated  cheque or
          of any late payment shall be considered as a means of collection only,
          subject to the rights of the Lessor  pursuant to these  presents.  Any
          sums unpaid by the Lessee shall bear interest at the Prime Rate.

                                      -22-
<PAGE>

23.15     Solidary  liability - If several persons have signed this lease, their
          liability is solidary,  so that each person shall be liable for all of
          the  obligations  under this Lease,  without  division and  discussion
          benefits.

23.16     Titles - The  titles  and the  numbering  of the  articles  have  been
          inserted as a matter of convenience and shall not be used to interpret
          the text thereof.

23.17     Time is of the  Essence  - All  delays  provided  for in the  Lease in
          connection  with an  undertaking  or an obligation of the Lessee or of
          the Lessor are of the essence.

23.18     Prohibition  to  sell  by  auction  - In the  event  of  the  Lessee's
          bankruptcy,  there  shall  be no sale  by  auction,  performed  by any
          competent authority whatsoever, permitted in the Leased Premises.

ARTICLE 24
MOVABLE HYPOTHEC

ARTICLE 25
REGULATIONS

25.1      The Lessee shall  observe the  regulations  respecting  the use of the
          Immovable,   which  are  annexed  hereto  as  Schedule  "E",  as  such
          regulations may be modified by the Lessor, to the extent that they are
          not in  contradiction  with the  Lease.  The  regulations  may  differ
          depending on the type of business located in the Immovable but may not
          be discriminatory.

ARTICLE 26
SPECIAL PROVISIONS/SCHEDULES

26.1      The schedules form an integral part of this Lease.

                                      -23-
<PAGE>

In witness whereof the Lessee acknowledges that,  notwithstanding that the Lease
was drawn up and submitted by the Lessor,  the Lessee has  negotiated the Lease,
that  it  understands  all of its  provisions  and  that it was  given  adequate
explanations  as to the nature  and  extent of the Lease.  The Lessee has signed
these presents on the this  ____________________th  day of  ____________________
__________.

                                                       GSI TECHNOLOGIES USA INC.
                                                                        "Lessee"

                                      Per:
----------------------------------        -------------------------------------
Witness                                              J.Michel De Montigny

                                      Per:
-----------------------------------        ------------------------------------
Witness

In witness whereof the Lessor has signed these presents in ____________________,
this ____________________th day of ____________________,___________.

                                                           2849-3930 QUEBEC Inc.
                                         duly represented by mandatory SITQ INC.
                                                                        "Lessor"

                                         Per:
-----------------------------------          -----------------------------------
Witness                                       Denis Perreault, Leasing Director

                                         Per:
------------------------------------         -----------------------------------
Witness                                      Daniel Archambault,Vice-president
                                             Office Buildings and Business Parks

                                                       INITIALS
                                        ---------------------------------------
                                             LESSOR                LESSEE
                                                                   SURETY
                                        ---------------------------------------

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

                                      -24-
<PAGE>

                  SCHEDULE "A" GUARANTY IN FAVOUR OF THE LESSOR

SCHEDULE "A" to the Lease between  2849-3930  QUEBEC.Inc.,  duly  represented by
mandatory SITQ inc. ( "Lessor" ) andGSI TECHNOLOGIES USA INC. ( "Lessee" );

                          DEPOSIT OF A LETTER OF CREDIT

1.   This Schedule  relating to the deposit of a letter of credit is an integral
     part of the Lease as Schedule  "A". The words and  expressions  used herein
     will have the same meaning and the same extent as those used in the Lease.

2.   As security for faithful  and punctual  performance  from the Lessee of all
     and every of its  duties in virtue of the Lease,  the Lessee has  remitted,
     upon the signature of the Lease, an unconditional and irrevocable letter of
     credit  (hereinafter  referred to as the  "Letter of Credit")  emitted by a
     Canadian Chartered Bank, in favour of SITQ for an amount of ( 75 000$ ) for
     the  fouth  first  year of the term and of 50 000$ for the last year of the
     term.. In addition of being unconditional and irrevocable,  the said Letter
     of Credit shall be acceptable  in form to the Lessor,  permit the Lessor to
     transfer such Letter of Credit to any assignee,  buyer or secured  creditor
     of the  Building and permit the Lessor to cash the Letter of Credit even if
     the Lease is  repudiated,  cancelled  or  otherwise  resiliated  in case of
     bankruptcy or  insolvency.  The Letter of Credit shall expire thirty ( 30 )
     days after the expiration of the Term of the Lease (including all and every
     periods of renewal of the Lease),  being  specified  that if such Letter of
     Credit  cannot be  emitted  for the whole  Term of the  Lease,  it shall be
     emitted and renewed for  successive  periods of at least twelve (12) months
     each. In such case, the Lessee shall provide the Lessor,  at least thirty (
     30 ) days before each expiration date of the Letter of Credit, with a proof
     of its  renewal.  Should  the Lessee  fail to do so,  the  Lessee  shall be
     automatically  considered  in default and the Lessor shall  immediately  be
     entitled to cash such Letter of Credit.

3.   Without  affecting  its other  rights and  recourses,  the Lessor  shall be
     entitled to use the Letter of Credit, in part or in whole, as reimbursement
     of any  amount  due to the  Lessor by the Lessee in virtue of the Lease and
     that the Lessee failed to pay when due.  Following  such  allocation of the
     Letter of Credit,  the Lessee  shall,  within ten ( 10 ) days after request
     from the Lessor to this  effect,  provide  the Lessor  with a new Letter of
     Credit of the abovementioned amount. Moreover, the Lessor shall be entitled
     to remit the Letter of Credit to any assignee of its rights in the Lease or
     in the Leased  Premises,  provided that every such assignee has assumed the
     duties of the Lessor  regarding  such Letter of Credit.  Should the Lessor,
     according to the  provisions  of Article "" 16 of the Lease,  covenant that
     the  Leased  Premises  be sublet  by a  sub-lessee  or that  this  Lease be
     assigned to an  assignee,  the Lessor shall then be entitled to demand that
     the Letter of Credit be replaced by a new Letter of Credit  supplied by the
     assignee or by the sub-lessee.  Should they fail to do so, the Lessor shall
     be entitled  to realise or cash the Letter of Credit,  as if the Lessee was
     in default of its duties in virtue of the Lease,  under reserve and without
     prejudice to all of the Lessor's other rights, remedies and recourses.

4.   Provided  that the Lessee is not in default in virtue of the Lease and that
     physical possession of the Leased Premises is given back to the Lessor, the
     Lessor  undertakes,  within thirty ( 30 ) days after the  expiration of the
     Term of the Lease (including all and every cancellation  before date of the
     Lease or  renewal of the  Lease),  to give back to the Lessee the Letter of
     Credit.

In  witness  whereof  the  Lessee  has  signed  in  ____________________,   this
____________________th day of ____________________, __________.

                                               gsi technologies usa inc."Lessee"

                                      Par:
----------------------------------       ---------------------------------------
Witness                                  signloc

----------------------------------
Witness

<PAGE>

                                SECURITY DEPOSIT

1.   The Lessee has remitted,  upon the signature of the Lease, an unconditional
     and  irrevocable  letter of credit or shall remit  simultaneously  upon the
     signature of the Lease, a security  deposit for an amount of ( 17 500$ us )
     (hereinafter  referred to as the  "Deposit").  The Lessor shall retain such
     Deposit,  belonging  to the Lessor,  without any  interest in favour of the
     Lessee, as security for the faithful and punctual performance by the Lessee
     of all and every of its duties in virtue of the Lease.

3.   Without  affecting  its other  rights and  recourses,  the Lessor  shall be
     entitled to use the Deposit,  in part or in whole, as  reimbursement of any
     amount  due to the Lessor by the Lessee in virtue of the Lease and that the
     Lessee failed to pay when due.  Following  such  allocation of the Deposit,
     the Lessee  shall,  within ten (10) days after  request  from the Lessor to
     this effect,  provide the Lessor with an amount  sufficient to re-establish
     the Deposit to the  abovementioned  amount.  Moreover,  the Lessor shall be
     entitled to remit the Deposit to any assignee of its rights in the Lease or
     in the Leased Premises,  provided that such assignee has assumed the duties
     of the Lessor  regarding  such  Deposit.  The  assignment  or sublet by the
     Lessee shall in no way affect the rights and  obligations of the Lessee and
     of the Lessor regarding the Deposit.

4.   Provided  that the  Lessee  is not in  default  in  virtue of the Lease the
     Lessor, the Lessor undertakes to give back to the Lessee an amount or money
     equivalent  to the  Deposit or any balance of such  Deposit,  at the latest
     December 15th 1999.

In  witness  whereof  the  Lessee  has  signed  in  ____________________,   this
____________________th day of ____________________, __________.

                                                       GSI TECHNOLOGIES USA INC.
                                                                        "Lessee"

                                      Per:
----------------------------------        --------------------------------------
Witness                                                J.Michel De Montigny

----------------------------------
Witness

<PAGE>

                                  SCHEDULE "B"
                               DESCRIPTION OF LAND

                                Place Mercantile

An  Immovable  known and  designated  as lot number ONE  MILLION  THREE  HUNDRED
THIRTY-NINE  THOUSAND EIGHT HUNDRED  EIGHTY-THREE (1 339 883) of the Cadastre of
Quebec, registration division of Montreal.

With the building thereon erected and, more  particularly,  the building bearing
civic numbers 2095 McGill College Avenue,  in the City of Montreal,  Province of
Quebec,  H3A 3B4 and 752-772  Sherbrooke  Street West,  in the City of Montreal,
Province of Quebec, H3A 1G1.

With and  subject to all rights,  servitudes,  active and  passive,  apparent or
unapparent relating to the said property.

                                  SCHEDULE "C"
                      WORK BY THE LESSOR AND BY THE LESSEE

LESSORS WORK:

The Lessor  covenants to pay the Lessee,  for the Leasehold  Improvements in the
Leased  Premises,  the  sum  of (  23.00$  )  (hereinafter  referred  to as  the
Allowance) less five percent ( 5 % ) for the supervision of the work executed by
the Lessee,  (plus GST and QST), from the total costs of the work. The work must
be based upon the Lessee's  specifications and upon approval from the Lessor. It
is  specifically  agreed that the Lessee shall use one hundred percent ( 100 % )
of  the  Allowance  to  proceed  to the  Leasehold  Improvements  in the  Leased
Premises.

The Allowance  shall be payable by the Lessor and claimable by the Lessee,  upon
the following terms and conditions,  provided that the improvement work be fully
completed,  according  to the rule  book and in  compliance  with the  plans and
specifications  submitted to the Lessor,  before the  Commencement of the Lease.
This  Allowance  shall be solely  spent for the uses agreed upon by the parties,
failing which the Lessor shall not be bound to any payment.

The payments shall be as follows:

1    A first (1st) amount of ( 2.30$ ), representing ten percent ( 10 % ) of the
     Allowance,   will  be  paid  when  the   contractor  has  duly  signed  the
     construction contract, a copy of which will be given to the Lessor.

2    A second (2nd) amount of ( 5.75$ ), representing twenty-five percent ( 25 %
     ) of the  Allowance,  will be paid after at least fifty percent ( 50 % ) of
     the  work are  carried  out,  and  after  written  confirmation  from  SITQ
     Constructions  supervisor to this effect,  as well as upon  presentation of
     the invoices previously approved by the concerned  professionals,  to which
     shall be attached the contractors  and  subcontractors  partial  discharges
     testifying to the payment of these invoices.

3    A third (3rd) maximum amount of ( 5.75$ ), representing twenty-five percent
     ( 25 % ) of the Allowance,  will be paid after at least eighty percent ( 80
     % ) of the work are carried out, and after written confirmation from Lessor
     Construction supervisor to this effect, as well as upon presentation of the
     invoices previously approved by the concerned professionals, to which shall
     be  attached  the  contractors  and   subcontractors   partial   discharges
     testifying to the payment of these invoices.

4.   A fourth (4th) amount of ( 6.90$ ),  representing  thirty percent (30 %) of
     the Allowance, (less all Lessors supervision fees) will be paid thirty ( 30
     ) days after approval of the work by the professionals concerned (architect
     and engineer),  and only after their written confirmation that the work are
     completed and  approved.  The Lessee also shall provide the Lessor with all
     and every invoices (previously approved by the concerned professionals), to
     which shall be attached the contractors and subcontractors final discharges
     testifying to the payment of all their invoices. Moreover, the Lessee shall
     provide the Lessor with a written  notice  stating that the Lessee is fully
     satisfied with all the work carried out in the Leased Premises.

<PAGE>

5.   A last  amount  of ( 2.30$  ),  representing  ten  percent  ( 10 % ) of the
     Allowance, and upon the following conditions:

     a.   that the Lessee and its  contractors  have  respected all the Building
          rules and all building codes;

     b.   that all the work have been  performed  in  accordance  with the plans
          approved by the Lessor and attested by the Lessors seal;

     c.   that the Lessee has provided the Lessor with all the invoices  related
          to the expenses incurred for the work performed in the Leased Premises
          and that the total of such  invoices  reach  the  total  amount of the
          Allowance;

     d.   that no legal hypothec has been registered against the building.

                                       C-3

<PAGE>

                                  SCHEDULE "D"
                             PLAN OF LEASED PREMISES

<PAGE>

                                  SCHEDULE "E"
                                   REGULATIONS

1.   The  Lessee  agrees to observe  all of the  following  regulations  and any
     additional  regulations  as the Lessor may from time to time prescribe with
     respect to the proper management of the Immovable.

     1.1  These  regulations  shall  not be  incompatible  with the terms of the
          Lease.

     1.2  Any amendment shall be communicated in writing to the Lessee.

2.   Traffic

     2.1  Access to the Immovable shall at all times be under the control of the
          Lessor's  security officer on-duty who may require persons to identify
          themselves and may refuse access for any justifiable reason;

     2.2  Prohibition  to Impede  Traffic - The Lessee  shall not leave or allow
          any  objects to be left that might  impede the  movement of traffic in
          the Common Areas and Facilities of the Immovable.

     2.3  Loading and Unloading - The loading and unloading of  merchandise  and
          of  furniture  shall be made at the risk of the Lessee and pursuant to
          instructions from the Lessor.

3.   General  Services  The work of the  Lessee at the  interior  of the  Leased
     Premises with respect to the handling of merchandise and of furniture shall
     be  effected  by the  employees  of the Lessor at the cost of the Lessee at
     rates which the Lessor shall from time to time determine.

4.   Public Areas The use of the Common Areas and Facilities  shall be under the
     exclusive control of the Lessor.

5.   Emergencies and Security

     5.1  Any  emergency  situation  shall be  brought to the  attention  of the
          Lessor's security officer.

     5.2  Only  the  stairways  and  emergency  exits  shall be used in cases of
          emergency.

     5.3  Close  coordination  and cooperation  shall be maintained  between the
          Lessee's and Lessor's  security  services,  for the  protection of the
          Immovable.

     5.4  Interruption  of Services - Elevator,  freight  elevator and escalator
          service in the Building may be interrupted  for reasons of maintenance
          or emergency.

     5.5  No Smoking - Smoking in the elevators and freight elevators and Common
          Areas and Facilities of the Building is prohibited.

6.   Mechanical and Electrical Systems

     6.1  The  maintenance of the private  mechanical and electrical  systems of
          the Lessee shall be maintained by it at its costs,  unless there is an
          agreement to the contrary.

     6.2  The allocation of costs of supplying fluids, electrical consumption or
          any other source of energy shall be made by the Lessor.

<PAGE>

7.   Vehicles and Animals

     7.1  It is prohibited to bring into the Building or the Leased Premises any
          animal, bicycles or vehicle except for:

               a)   animals  or  vehicles  serving  as  guides  for the blind or
                    otherwise handicapped persons; and

               b)   vehicles  which may be authorised in the parking  areas,  by
                    agreement  with the operator of the parking lot and pursuant
                    to instructions from the Lessor.

8.   Machinery,  Equipment and Safe Except for office  equipment,  no machine or
     piece of equipment may be brought into the Building without the approval of
     the  Lessor,  who may refuse  their  installation  or who may  designate  a
     specific area in which to place heavy objects in the Leased Premises.

9.   Illegal  activities by the Lessee and Peddling The Lessee shall not cause a
     nuisance  to its  neighbours  and  shall  respect  the good  order  and the
     security of the Immovable.  Any peddling and soliciting in the Immovable is
     strictly  prohibited  and the Lessee agrees to cooperate with the Lessor in
     order to prevent such activities.

10.  Sales and Types of  Business  The sale of  merchandise  and of  services is
     prohibited without the prior approval of the Lessor.

11.  Signs,  Etc. The Lessee  shall  ensure that all signs or objects  which are
     visible from the exterior of the Leased  Premises  are in  accordance  with
     instructions  of the  Lessor.  All  signs  and  advertising  materials  are
     prohibited.

12.  Advertising, Address

       12.1   The words  2001  McGill  College  shall not be used by the  Lessee
              except to describe the Leased Premises or to designate the address
              thereof. The words "Societe Immobiliere  Trans-Quebec Inc.", "SITQ
              Immobilier " and "SITQ Inc." are reserved for the business name of
              the Lessor.

       12.2   The Lessor  reserves the right to prevent any  advertising  by the
              Lessee  which  might  harm the  security,  the  reputation  or the
              operation of the Immovable,  and,  without limiting the generality
              of  the  foregoing,  the  Lessor  may  prohibit  the  Lessee  from
              advertising  any  illegal  activity  or the sale of any illicit or
              objectionable product.

       12.3   The Lessor  reserves the right,  at any time and without notice to
              the  Lessee,  to change the  address  and the postal  code for the
              Immovable.

13.  Mechanical and Electrical Systems

       13.1   Special  maintenance  and repair  services for the  mechanical and
              electrical  systems inside the Leased  Premises shall be performed
              only by the Lessor and these special  services shall be charged to
              the Lessee  according to rates which the Lessor shall from time to
              time establish.

       13.2   Air-conditioning  and heating  services  shall be provided  during
              Business  Hours.  Extra  services  shall be  charged to the Lessee
              pursuant to rates set by the Lessor from time to time.

       13.3   The density of occupancy of the Leased  Premises  shall not exceed
              one (1) person  per one  hundred ( 100 ) square  feet of  Leasable
              Area.

                                      E-6
<PAGE>

14.  Utilisation of Incremental  or Fan-Coil units of the  Air-Conditioning  and
     Heating System

       14.1   In order to ensure the proper functioning of the  air-conditioning
              system,  the Lessee shall not utilise the  incremental or fan-coil
              units of the  air-conditioning and heating system (perimeter zone)
              for the storage of documents  or other items,  so as not to affect
              the operation of said units and said system.

       14.2   Any curtains  mounted on the windows  shall be placed so as not to
              impede  the  operation  of said  units  and said  air-conditioning
              system.

       14.3   The Lessee shall at all times keep outside  windows  closed (where
              applicable) and, while the  air-conditioning  system is operating,
              keep the blinds of all windows  exposed to direct  sunlight closed
              as well.

15.  Entry Doors to Leased Premises

       15.1   The Lessee shall not change the access systems without the consent
              of the  Lessor.  Should  more than two keys be  required  for each
              lock,  they  shall be  supplied  by the  Lessor,  at the  Lessee's
              expenses.  The Lessee shall return all keys of the Leased Premises
              to the Lessor at the Termination of the Lease.

       15.2   The Lessor shall furnished to the Lessee,  at its costs, one ( 1 )
              "high disk" to access the  Immovable and the  elevators,  for each
              four  hundred ( 400 ) square feet of  Leasable  Area of the Leased
              Premises.  Should  more  "high  disk" be  required,  they shall be
              supplied by the Lessor,  at Lessee's  expenses.  Every "high disk"
              shall remain the Lessor's property.

16.  Cleaning  (Housekeeping) All cleaning services for office spaces and public
     areas shall be performed only by the Lessor's employees,  except by written
     agreement to the contrary.

                                      E-7
<PAGE>

                                  SCHEDULE "F"
                               STANDARD RESOLUTION

Excerpt  from  the  minutes  of a  meeting  of the  Board  of  Directors  of GSI
TECHNOLOGIES  USA  INC.  (hereinafter  referred  to as the  "Company")  held  on
___________th day of _________, ________.-

Be it resolved:

That the Company enters into a Lease  Agreement with 2849-3930  QUEBEC INC. duly
represented  by  mandatory  SITQ inc.,  for the premises  number  located in the
Building bearing civic number , the whole in accordance with a draft Lease which
has been submitted and approved by the Board of Directors.

That J. Michel de Montigny be duly  authorised  to enter into a Lease for and on
behalf of the Company and to sign any and all  documents  necessary  in order to
give effect to the Lease.

I hereby  certify that the foregoing is a true copy of a resolution  passed in a
meeting that has been called and held this th day of , , by all the Directors of
the  Company  as stated in the  minutes  of the said  meeting  and that the said
resolution is hereby still in effect.

This _________ th day of ___________, ________.

--------------------------------------
, secretary

<PAGE>

                                  SCHEDULE "G"
                                  STATUS REPORT

PROPERTY      :  immeuble

LESSOR        :  bailleur

LESSEE        :  locataire

LEASE DATED   :

TO:           :  The   Lessor  or  any   Person  who  is  or   may   become   or
                 contemplates  to become a  Secured  Lender  as  well  as to any
                 prospective purchaser of the property or any part thereof.

THE  UNDERSIGNED,  the  Lessee  under  the above  Lease,  hereby  certifies  and
represents that:

(i)       The Lessee has accepted and is in possession  and in occupation of the
          Leased   Premises   having   a   Leasable   Area   of    approximately
          __________________________ square feet ( _________ sq. ft. ).

(ii)      The Lease has been validly  executed and  delivered by the Lessee (and
          the  Guarantor,  if any) and is in  force  pursuant  to due  corporate
          action properly taken by the Lessee (and the Guarantor, if any).

(iii)     The Lease is presently in full force and effect and unmodified.

(iv)      There is no existing  default by either  Lessee or Lessor  pursuant to
          the Lease for which a notice of default has been given.

(v)       To date,  the Lessee has no  defences,  counter  claims,  or claims of
          offset, deduction or compensation under the Lease or otherwise against
          rents or other  charges  due  under the Lease and no event or fact has
          occurred  which  would  give the  Lessee  the  right or the  option to
          terminate the Lease prior to the expiry of the Term;

(vi)      No rent under the Lease has been paid more than  thirty ( 30 ) days in
          advance of its due date.

(vii)     The Leased Premises are free from any construction deficiencies.

(viii)    All  Lessor's  Work  has been  completed  to the  satisfaction  of the
          Lessee.

The Lessee hereby certifies and represents that the above  statements  including
any  exceptions  which may have been added thereto are true and complete and may
be relied and acted upon.

SIGNED    in    ____________________,    on   this    ____________th    day   of
____________________, __________.

LOCATAIRE

Per:
    --------------------------------------------
          Manager

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}]]