Document:

Exhibit 10.27

                           COMMUNITY BANK SYSTEM, INC.

                                  PENSION PLAN

Amended and Restated as of January 1, 2004

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                                    Article I

                           HISTORY AND PURPOSE OF PLAN

      1.1 History. Community Bank System, Inc. established the Community Bank
System, Inc. Pension Plan ("Plan"), effective as of July 1, 1976, for the
benefit of covered employees and their beneficiaries. The Plan has been amended
and restated a number of times since 1976, the most recent amendment and
restatement being effective as of January 1, 2001. This document amends and
restates the Plan in its entirety, effective as of January 1, 2004, except to
the extent a different effective date is specified for certain provisions. This
amended and restated Plan document incorporates a "cash balance" design. The
Plan shall at all times be considered a defined benefit pension plan for
purposes of Code ss.ss.401(a), 411, 412 and 417.

      1.2 Purpose. The purpose of the Plan is to provide retirement and certain
survivor benefits for the Participants and their Beneficiaries. To provide such
benefits, the Employer shall make contributions to the Plan as provided herein.

      1.3 Application of Restated Plan. Unless expressly stated otherwise
herein, the amount of Accrued Benefit and the rate of accrual of benefits for
Participants (or their Beneficiaries) who have terminated employment, or whose
benefits are in pay status, as of the Restatement Effective Date shall be
determined under the terms of the predecessor(s) to this Plan in effect during
his employment or at his termination date and not under the Plan as restated by
this document.

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                                   Article II

                                   DEFINITIONS

      As used in this Plan, the following terms shall have the following
meanings, unless a different meaning is stated and clearly indicated by the
context:

      2.1 "Account" means the account established and maintained for a
Participant who is entitled to benefits pursuant to Paragraph 5.3. The
Administrator may establish one or more sub-Accounts as may be necessary to
administer the Plan. A Participant's Account shall include all such
sub-Accounts.

      2.2 "Accrual Computation Period" shall mean a Plan Year.

      2.3 "Accrued Benefit" means the amount of retirement benefit earned by a
Participant hereunder, and payable during the life of the Participant, expressed
in the form of an annual benefit commencing at the Participant's Normal
Retirement Date. A Participant's Accrued Benefit under the Traditional Formula
(if applicable) as of any Valuation Date shall be determined in accordance with
Paragraph 5.2, based on his credited Years of Creditable Service and his Average
Annual Compensation, both determined as of such Valuation Date. A Participant's
Accrued Benefit under the Cash Balance Formula (if applicable) as of any
Valuation Date shall be the Actuarial Equivalent of the Participant's Account
balance determined in accordance with Paragraph 5.3; provided that, for
Valuation Dates that occur prior to the Participant's Normal Retirement Date,
such Actuarial Equivalent shall be determined by projecting the value of the
Participant's Account balance to the Participant's Normal Retirement Age, using
the Interest Rate described in subparagraph 2.4(c)(1), and then converting such
projected Account balance to a single life annuity payable to the Participant
commencing at the Participant's Normal Retirement Date; provided further that
such Actuarial Equivalent (when expressed as a single lump sum) shall not be
less than the Participant's Account balance as of the applicable Valuation Date.

      2.4 "Actuarial Equivalent".

            (a) An Actuarial Equivalent benefit shall mean a form of benefit
differing in time, period or manner of payment from a specific benefit under the
Plan, but having the same present value as such specific benefit.

            (b) Except as otherwise provided in subparagraphs (c) and (d) below,
an Actuarial Equivalent benefit shall be determined by using the following
assumptions:

                  Interest Rate - 6% pre-retirement
                                  6% post-retirement

                  Mortality -     pre-retirement: 1984 Unisex Table
                                  post-retirement: 1984 Unisex Table

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            (c) Effective for Plan Years beginning on or after January 1, 1995,
the following assumptions shall be used to compute a lump-sum Actuarial
Equivalent benefit:

                  (1) Interest Rate - an interest rate that is the annual
interest rate announced by the Commissioner of Internal Revenue on 30-year U.S.
Treasury securities (A) for the first full calendar month immediately preceding
the Plan Year of distribution, with respect to distributions prior to January 1,
2005, and (B) the second full calendar month immediately preceding the Plan Year
of distribution, with respect to distributions after December 31, 2004 (provided
that distributions during 2005 will be based on the interest rate in (A) or (B)
that produces the greatest benefit), which rate shall be constant during that
entire Plan Year; and

                  (2) Mortality - mortality assumptions under the prevailing
commissioners' standard table as described in Code ss.807(d)(5)(A) used to
determine reserves for group annuity contracts issued on the date as of which
the determination of present value is being made.

Notwithstanding the foregoing provisions of this subparagraph (c), a
Participant's lump sum Actuarial Equivalent benefit shall in no event be less
than the present value of the Participant's Vested Accrued Benefit earned as of
December 31, 1994, computed by taking into account the Participant's age at the
Annuity Starting Date and by using the actuarial assumptions set out in
subparagraph (b) above.

            (d) In the event this paragraph is amended so as to affect benefits
protected under Code ss.411(d)(6), the Actuarial Equivalent benefit on or after
the date of change shall be the greater of:

                  (1) the Actuarial Equivalent benefit as of the date of change
computed under the Plan provisions in effect immediately prior to such change;
or

                  (2) the Actuarial Equivalent benefit computed under the Plan
provisions in effect immediately after such change.

      2.5 "Administrator" or "Plan Administrator" shall mean the person or
entity that administers the Plan, as further described in Article XIII.

      2.6 "Affiliated Company" shall mean any corporation which is a member of a
controlled group of corporations (as defined in Code ss. 1563(a), determined
without regard to ss.ss.1563(a)(4) and (e)(3)(C), except that, with respect to
the limitations on Annual Additions in Article VIII, "50%" shall be substituted
for "80%" wherever such percentage appears in Code ss.1563(a)(1)) which includes
the Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in Code ss.414(c)) with the Employer; any affiliated
service group (as defined in Code ss.414(m)) which includes the Employer; and
any other entity required to be aggregated with the Employer pursuant to
regulations under Code ss.414(o).

      2.7 "Age" shall mean age as of the nearest birthday.

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      2.8 "Anniversary Date" means the first day of the Plan Year.

      2.9 "Annuity Starting Date" shall mean (i) the first day of the first
period for which an amount is paid as an annuity (whether by reason of
retirement or disability) or (ii) in the case of a benefit not payable in the
form of an annuity, the first day on which all events have occurred which
entitle the recipient to such benefit.

      2.10 "Average Annual Compensation" shall mean the average of a
Participant's annual Compensation for the 5 consecutive Years of Participation
which produce the highest average. If he has less than 5 Years of Participation
as of his termination date, the average shall be determined by averaging the
annual Compensation received during the Participant's entire Service with the
Employer.

      2.11 "Beneficiary" shall mean the person(s) or entity(s) designated by a
Participant, or otherwise designated as such under the provisions of this Plan,
to receive benefits hereunder following the Participant's death.

      2.12 "Break in Service" shall mean, for purposes of eligibility, the
failure of an Employee to complete more than 500 Hours of Service during any
Eligibility Computation Period, and for purposes of benefit accrual and vesting,
the failure of a Participant to complete more than 500 Hours of Service during
any Plan Year. The term "One-Year Break in Service" shall mean any such Break in
Service. An Employee shall not incur a Break in Service for the Plan Year in
which he becomes a Participant, dies or retires.

      2.13 "Cash Balance Formula" means the cash balance formula, including
minimum and supplemental amounts, used to determine a Participant's Accrued
Benefit pursuant to Paragraph 5.3.

      2.14 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, any regulations thereunder, and any rulings issued by the Internal
Revenue Service. Reference to any Code Section shall include any successor
provision thereto.

      2.15 "Compensation".

            (a) "Compensation" shall mean the amount reportable by the Employer
on IRS Form W-2 for wages as defined in Code ss.3401(a) and other amounts
pursuant to Code ss.ss.6041(d) and 6051(a)(3), for the calendar year ending in
the Plan Year. Compensation shall include all of the Participant's elective
deferrals as defined in Code ss.402(g), amounts withheld from the Participant's
pay which are not includable in the Participant's gross income under Code
ss.ss.125, 402(e)(3), 402(h)(1)(B), 403(b), or 132(f)(4), amounts deferred under
a Code ss.457 plan, and amounts treated as employer contributions under Code
ss.414(h)(2). Compensation, however, shall not include income attributable to
the grant or exercise of stock options, the vesting of restricted stock, the
sale of stock, or any other income attributable to the acquisition or
disposition of stock or rights related to stock.

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            (b) For purposes of Article VIII, Compensation shall be measured in
relation to the Limitation Year and adjusted in accordance with Treasury Regs.
ss.ss.1.415-2(d)(2) and (3), if required thereunder. In the case of an employee
of two or more Affiliated Companies, his Compensation from all such Affiliated
Companies while so affiliated shall be aggregated.

            (c) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, the
annual Compensation of each Employee shall not exceed $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance with Code
ss.401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year
applies to any period not exceeding 12 months over which compensation is
determined ("Determination Period") beginning in such calendar year. If a
Determination Period consists of fewer than 12 months, the compensation limit
will be multiplied by a fraction, the numerator of which is the number of months
in the Determination Period, and the denominator of which is 12.

            If Compensation for any prior Determination Period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior Determination Period is subject to the OBRA `93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA `93 Annual
Compensation Limit is $150,000.

            Effective for Plan Years beginning after December 31, 1996, and
notwithstanding anything in this Plan to the contrary, an Employee who is a
Family Member of a Highly Compensated Employee shall be considered a separate
Employee and shall not be aggregated with the Highly Compensated Employee for
purposes of determining the Compensation of the Employee or the Compensation of
the Highly Compensated Employee for any purposes under this Plan.

            (d) Increase in Compensation Limit. The annual compensation of each
participant taken into account in determining benefit accruals in any Plan Year
beginning after December 31, 2001 shall not exceed $200,000, as adjusted for
cost-of-living increases in accordance with Code ss.401(a)(17)(B). Annual
compensation means compensation during the Plan Year or such other consecutive
12-month period over which compensation is otherwise determined under the Plan
(the Determination Period). For purposes of determining benefit accruals in a
Plan Year beginning after December 31, 2001, compensation for any prior
Determination Period shall not exceed the limit in effect pursuant to Code
ss.401(a)(17) for such prior Determination Period. The cost-of-living adjustment
in effect for a calendar year applies to annual compensation for the
Determination Period that begins with or within such calendar year.

      2.16 "Cost of Living Factor" shall mean the cost of living adjustment
prescribed by the Secretary of the Treasury under Code ss.415(d).

      2.17 "Defined Benefit Plan" shall mean a Retirement Plan other than a
Defined Contribution Plan.

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      2.18 "Defined Benefit Plan Fraction" shall mean a fraction, the numerator
of which is the sum of the Participant's projected annual benefit (calculated in
accordance with Treasury regulations) under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of (i) 125% of the dollar limitation in effect for the
Limitation Year under Code ss.415(b)(1) and (d) or (ii) 140% of the
Participant's average compensation for the 3 consecutive Years of Service that
produces the highest average, including any adjustments under Code ss.415(b).

            Notwithstanding the preceding, if the Participant participated as of
the first day of the first Limitation Year beginning after December 31, 1986, in
one or more Defined Benefit Plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
125% of the sum of the annual benefits under such plans which the Participant
had accrued as of the close of the Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of the Plan after May
5, 1986. The preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied Code ss.415 limits at the end of the
1986 Limitation Year.

            For purposes of the preceding calculation, a Participant's
"projected annual benefit" shall mean the annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if such benefit is expressed in
a form other than a straight life annuity or qualified joint and survivor
annuity) to which the Participant would be entitled under the terms of the plan
assuming:

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

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

      For limitation years beginning on or after December 31, 1986 the
denominator of the defined benefit fraction shall be determined using the dollar
limitation under Code ss.415 as amended by the Tax Reform Act of 1986, even if
the Plan terminated in a prior limitation year.

      2.19 "Defined Contribution Plan" shall mean a Retirement Plan which
provides for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of other
participants which may be allocated to such participant's account.

      2.20 "Defined Contribution Plan Fraction" shall mean a fraction, the
numerator of which is the Annual Additions to the Participant's Account under
the Employer's Defined Contribution Plans currently or formerly maintained by
the Employer for the current and all prior Limitation Years, including Annual
Additions attributable to the Participant's nondeductible contributions to the
Employer's Defined Benefit Plans and Annual Additions attributable to all
welfare benefit funds (defined in Code ss.419(e)) and individual medical
accounts (defined in Code ss.415(1)(2)), and the denominator of which is the sum
of the lesser of the following

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amounts determined for such year and each prior year of the Participant's
Service with the Employer: (i) 125% times the dollar limitation in effect under
Code ss.415(c)(1)(A) for the pertinent year, or (ii) 140% times the amount that
could be contributed under the percentage limitation of Code ss.415(c)(1)(B) for
the Participant.

            If the Employee was a participant in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction shall be adjusted in accordance with Code
ss.4l5 if the sum of this fraction and the Defined Benefit Plan Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5,1986, but using the Code ss.415
limitation applicable to the first Limitation Year beginning on or after January
1, 1987.

      2.21 "Determination Date" shall mean with respect to the first Plan Year
of the Plan, the last day of that Plan Year, and with respect to any subsequent
Plan Year, the last day of the preceding Plan Year.

      2.22 "Disabled" Participant shall mean one whose physical and/or mental
incapacity, disability or illness qualifies him for benefits under the
Employer's long-term disability insurance program or, in the absence of such
program, which qualifies the Participant for disability benefits under Title II
of the Social Security Act. The Administrator may require a Participant to
submit to a physician examination to make such determination.

      2.23 "Early Retirement Age" of a Participant shall mean (i) the date the
Participant attains age 55 and completes 10 Years of Vesting Service, as defined
in Paragraph 7.2 below, or (ii) the date he attains the earliest age when Social
Security benefits may be paid and completes 5 Years of Vesting Service.

      2.24 "Early Retirement Date" shall mean the first day of the month
following the date the Participant attains his Early Retirement Age.

      2.25 "Effective Date of the Restatement" or "Restatement Effective Date"
shall mean January 1, 2004. The "Effective Date" of the Plan shall mean July 1,
1976.

      2.26 "Eligibility Computation Period" for each Employee shall mean a
12-consecutive month period beginning on the date the Employee first performs an
Hour of Service with the Employer and any succeeding Eligibility Computation
Period shall mean a Plan Year beginning with the Plan Year immediately following
the Plan Year within which the Employee first performed an Hour of Service. In
the case of an Employee who has a Break in Service where Service prior to such
Break in Service is disregarded pursuant to Paragraph 3.4, the Eligibility
Computation Period shall be determined pursuant to this paragraph beginning on
the date the Employee first completes an Hour of Service with the Employer
immediately following such Break in Service.

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      2.27 "Employee" shall mean any person who is employed by the Employer and
treated by the Employer for payroll and employment tax purposes as a common law
employee. For all purposes under this Plan, no independent contractor or any
other individual treated by the Employer for payroll and employment tax purposes
as a non-employee shall be considered an Employee, even if reclassified by a
court or regulatory agency as an employee of the Employer.

      2.28 "Employer" shall mean Community Bank System, Inc. and any
Participating Employer.

      2.29 "Entry Date" shall mean January 1, April 1, July 1, and October 1.

      2.30 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder. References
to any ERISA section shall include any successor provision thereto.

      2.31 "Fiscal Year" means the 12-month period beginning January 1 and
ending December 31.

      2.32 "Forfeiture" shall mean that portion of a Participant's Accrued
Benefit that is not Vested and which is forfeited pursuant to Article VII.

      2.33 "Highly Compensated Employee" includes Highly Compensated Active
Employees and Highly Compensated Former Employees.

            (a) A Highly Compensated Active Employee means any Employee who (i)
was a 5% owner (as defined in Code ss.416(i)(1)) of the Employer at any time
during the current or the preceding Plan Year, or (ii) for the preceding Plan
Year had compensation from the Employer in excess of $80,000 (as adjusted by the
Secretary pursuant to Code ss.415(d)).

            (b) A former Employee shall be treated as a Highly Compensated
Employee if: (i) the Employee was a Highly Compensated Employee when he
separated from Service, or (ii) the Employee was a Highly Compensated Employee
at any time after attaining age 55.

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

            (d) For purposes of this paragraph, the term "compensation" means
compensation within the meaning of Code ss.415(c)(3). For Plan Years beginning
on or after January 1, 2001, amounts excluded from gross income by reason of
Code ss.132(f)(4) shall be added to compensation.

            This definition of a Highly Compensated Employee is effective for
Plan Years beginning after December 31, 1996, except that, in determining
whether an Employee is a Highly Compensated Employee in 1997, this definition is
treated as having been in effect in

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1996, and the family aggregation rules under Code ss.414(q)(6) shall be treated
as inapplicable beginning in 1996.

      2.34 "Hour of Service" shall mean:

            (a) each hour for which an Employee is paid or entitled to payment
for the performance of duties for the Employer;

            (b) each hour (up to 501 hours for any single continuous period,
whether or not occurring in a single computation period) for which an Employee
is paid, or entitled to payment, by the Employer during which no duties are
performed (regardless of whether the employment relationship has terminated) due
to vacation, holiday, illness, incapacity (including disability), layoff, jury
or military duty, or leave of absence. Hours under this paragraph shall be
calculated and credited pursuant to 29 C.F.R. 2530.200b-2(b) and (c) which are
incorporated herein by this reference;

            (c) for purposes other than benefit accrual, each hour (up to the
number required to avoid a Break in Service) for which an Employee would
otherwise be credited but for an unpaid parental leave beginning after December
31, 1984, or family medical leave in effect on or beginning after February 6,
1995. In any case in which such hours cannot be determined, the Employee shall
be credited with 8 Hours of Service per day of such absence. Parental leave
shall mean an authorized absence by reason of (i) the Employee's pregnancy, (ii)
birth of the Employee's child, (iii) placement of a child with the Employee
through adoption, or (iv) caring for the Employee's child immediately following
its birth or adoption. Family medical leave shall mean leave authorized under
the Family Medical Leave Act of 1993 ("FMLA"). No Hours of Service shall be
credited under this subparagraph (c) unless the Employee furnishes to the
Administrator such timely information as the Administrator shall require to
determine whether an Employee's absence constitutes a parental or family medical
leave, and the length of such absence. Hours of Service shall be credited under
this subparagraph (c) in the computation period in which the absence begins only
if such credited hours would prevent a Break in Service in such period,
otherwise in the next succeeding computation period;

            (d) if not credited under the preceding paragraphs, each hour for
which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Employer. These hours shall be credited for the computation
period or periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made;

            (e) for purposes other than benefit accrual, each hour (up to 501
hours in any Plan Year) during which an Employee performs no duties for the
Employer while on an unpaid Leave of Absence. Such hours shall be credited to
the Employee only if the additional hours awarded would prevent the Employee
from incurring a One-Year Break in Service. Hours under this subparagraph shall
be credited on the basis of 40 hours per work week or 8 hours per work day.
"Leave of Absence" shall mean any absence authorized by the Employer under the
Employer's standard personnel practices, provided that the Employee retires or
returns within the

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period of authorized absence. The Employer shall treat all Employees under
similar circumstances in a consistent, non-discriminatory manner;

      (f) each hour for which a leased employee who is considered an Employee
under this Plan would be credited under the foregoing provisions.

            Unless the Employer maintains records of actual Hours of Service, a
salaried Employee who completes at least one Hour of Service during a monthly
period shall be credited with 190 Hours for each such period.

            Notwithstanding the foregoing, no credit shall be given for any
period during which no duties are performed but for which an Employee receives
payment or is entitled to payment under a plan maintained solely for the purpose
of complying with applicable worker's compensation, unemployment compensation or
disability insurance laws or where payment solely reimburses an Employee for
medical or medically related expenses incurred by the Employee. Service rendered
at overtime or other premium rates shall be credited at the rate of one Hour of
Service for each hour worked, regardless of the rate of compensation in effect
with respect to such hour.

            For purposes of eligibility and vesting, Hours of Service will be
credited to an Employee for employment with any Affiliated Company while that
company was an Affiliated Company with the Employer.

      2.35 "Interest Credit" means, with respect to any Plan Year, an addition
to an eligible Participant's Account determined pursuant to subparagraph 5.3(f).

      2.36 "Investment Manager" shall mean any person or entity who:

            (a) is registered as an investment adviser under the Investment
Advisers Act of 1940, a bank (as defined in the Investment Advisers Act of
1940), or an insurance company qualified to manage, acquire and dispose of Plan
assets under the laws of more than one state;

            (b) acknowledges in writing that it is a fiduciary with respect to
the Plan; and

            (c) is granted the power to manage, acquire or dispose of any asset
of the Plan pursuant to its provisions.

      2.37 "Key Employee" shall mean any Employee or former Employee (or such
Employee's Beneficiary) who at any time during the Plan Year including the
Determination Date or during any of the 4 preceding Plan Years is or was:

            (a) an officer of the Employer who has Top Heavy Compensation
greater than 50% of the amount in effect under Code ss.415(b)(1)(A) for the Plan
Year;

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            (b) an owner (or one who is considered an owner under the provisions
of Code ss.318) of one of the 10 largest interests in the Employer if such
individual's Top Heavy Compensation exceeds the amount in effect under Code
ss.415(c)(1)(A);

            (c) a more than 5% owner of the Employer; or

            (d) a 1% owner of the Employer earning more than $150,000 in Top
Heavy Compensation from the Employer.

For purposes of subparagraph (a), not more than 50 (or, if there are less than
500 Employees, not more than the greater of three or 10% of the Employees) shall
be considered a Key Employee by virtue of being an officer. For purposes of
subparagraph (b), if 2 Employees have the same ownership percentage, the
Employee having greater Compensation shall be considered as having a larger
interest.

"Key Employee" shall mean any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the
Determination Date was an officer of the Employer having annual compensation
greater than $130,000 (as adjusted under Code ss.416(i)(1) for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual compensation of more than
$150,000. For purpose, annual compensation means compensation within the meaning
of Code ss.415(c)(3). The determination of who is a Key Employee will be made in
accordance with Code ss.416(i)(1) and the applicable regulations and other
guidance of general applicability issued thereunder.

      2.38 "Late Retirement Date" shall mean the first day of the month
coinciding with or next following a Participant's delayed termination from
Service after having reached his Normal Retirement Age.

      2.39 "Non-Highly Compensated Employee" shall mean an Employee or former
Employee who is not a Highly Compensated Employee.

      2.40 "Non-Key Employee" shall mean any Employee or former Employee who is
not a Key Employee, and any Beneficiary of a Non-Key Employee.

      2.41 "Normal Retirement Age" of a Participant shall mean the later of the
Participant's 65th birthday or the 5th anniversary of the date the Participant
commenced participation in the Plan.

      2.42 "Normal Retirement Benefit" shall mean a Participant's benefit earned
for Service up to his Normal Retirement Age, and expressed in the form of an
annual benefit commencing at his Normal Retirement Date.

      2.43 "Normal Retirement Date" shall mean the first day of the month
coincident with or next following the date a Participant attains his Normal
Retirement Age, presuming he retires from Service upon attaining Normal
Retirement Age.

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      2.44 "Participant" shall mean (i) an Employee who has met the eligibility
requirements for participation in the Plan and who continues to participate
("Active Participant"), and (ii) a former Employee whose Accrued Benefit
hereunder has not yet been fully distributed to him or forfeited under the terms
of the Plan ("Inactive Participant").

      2.45 "Participating Employer" shall mean any entity that adopts the Plan
in accordance with the provisions of Article XXI.

      2.46 "Permissive Aggregation Group" shall mean the Required Aggregation
Group of plans plus any other planes) of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code ss.ss.401(a)(4) and 410.

      2.47 "Plan" shall mean the defined benefit plan and trust as set forth in
this document.

      2.48 "Plan Year" shall mean the 12-month period beginning January 1 and
ending December 31.

      2.49 "Predecessor Plan" means the Employer's tax-qualified pension plan
which has been restated in its entirety by this document.

      2.50 "Pre-Retirement Survivor Annuity" shall mean an annuity payable for
the life of the Participant's Spouse following the Participant's death prior to
the Participant's Annuity Starting Date, in an amount determined as follows:

            (a) For a Participant dying after his Earliest Retirement Age (as
defined in Article VI), the Pre-Retirement Survivor Annuity shall equal the
survivor annuity portion of the Qualified Joint and Survivor Annuity payable if
the Participant had begun to receive the Qualified Joint and Survivor Annuity
the day before his death.

            (b) For a Participant dying on or before his Earliest Retirement Age
(as defined in Article VI), the Pre-Retirement Survivor Annuity shall equal the
survivor annuity portion of the Qualified Joint and Survivor Annuity payable
under the Plan if the Participant had separated from service on the date of his
death (or date of separation from Service, if earlier), had survived to his
Earliest Retirement Age, had begun to receive the Qualified Joint and Survivor
Annuity at such Earliest Retirement Age, and had died the day after attaining
his Earliest Retirement Age.

      2.51 "Qualified Joint and Survivor Annuity" means an annuity for the life
of a Participant with a survivor annuity for the life of his Spouse which is 50%
of the amount of the annuity payable during the joint lives of the Participant
and his Spouse, and which is the Actuarial Equivalent of his Accrued Benefit
payable in the form of a life annuity.

      2.52 "Required Aggregation Group" shall mean each qualified plan of the
Employer or any Affiliated Company, whether or not the plan is terminated, in
which at least one Key

                                       12
<PAGE>

Employee participates (in the Plan Year containing the Determination Date or any
of the four preceding Plan Years) and any other qualified plan of the Employer
which enables any plan in which a Key Employee participates to meet the
requirements of Code ss.ss.401(a)(4) or 410.

      2.53 "Retirement Age" shall mean the date the Participant attains his
Early or Normal Retirement Age as defined herein.

      2.54 "Retirement Date" shall mean the Participant's effective date of
retirement after attaining his Retirement Age.

      2.55 "Retirement Plan" shall mean (i) any profit sharing, pension or stock
bonus plan described in Code ss.ss.401(a) and 501(a), (ii) any annuity plan or
annuity contract described in Code ss.ss.403(a) or 403(b), (iii) any qualified
bond purchase plan described in Code ss.405(a), and (iv) any individual
retirement account, individual retirement annuity or retirement bond described
in Code ss.ss.408(a), 408(b) or 409.

      2.56 "Rollover Contribution" shall mean:

            (a) an amount distributed to a Participant or directly to this Plan
on his behalf in a distribution that qualifies under Code ss.402(c)(4) as an
eligible rollover distribution; or

            (b) an amount which the Participant receives from an individual
retirement account or individual retirement annuity in a distribution described
in Code ss.408(d)(3)(A)(ii).

An amount shall not qualify as a Rollover Contribution if it includes any
after-tax contribution by the Participant or anyone else.

      2.57 "Service" means any period of time the Employee is in the employ of
the Employer, including any period the Employee is on a Leave of Absence (as
defined in the Hour of Service definition herein).

      2.58 "Service Credit" means an addition to a Participant's Account
determined pursuant to subparagraph 5.3(b) or subparagraph 5.3(c), as
applicable.

      2.59 "Social Security Taxable Wage Base" means the contribution and
benefit base in effect under Section 230 of the Social Security Act as of the
first day of each Plan Year for which Service Credits are added to Accounts
pursuant to Paragraph 5.3.

      2.60 "Spouse" shall mean the spouse or surviving spouse of the
Participant, except that a former spouse will be treated as the Spouse to the
extent specifically provided under a Qualified Domestic Relations Order as
defined in Paragraph 15.5 or to the extent required by law.

      2.61 "Super Top Heavy" shall mean that for any Plan Year, the Plan is
determined to be Top Heavy under any of the circumstances described in the
definition of "Top Heavy" herein, except that the applicable Top Heavy Ratio
exceeds 90%.

                                       13
<PAGE>

      2.62 "Termination of Employment" shall mean termination of employment with
the Employer other than by reason of a Participant's death, his becoming
Disabled, or retirement after attaining Retirement Age.

      2.63 "Top Heavy" shall mean that for any Plan Year:

            (a) this Plan is not a part of any Required Aggregation Group or
Permissive Aggregation Group of plans, and the Top Heavy Ratio for this Plan
exceeds 60%;

            (b) this Plan is a part of a Required Aggregation Group of plans but
not a part of a Permissive Aggregation Group, and the Top Heavy Ratio for the
Required Aggregation Group exceeds 60%; or

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

      2.64 "Top Heavy Compensation" means compensation as defined in Code
ss.415(c)(3), including any amount that is excludable from the Employee's gross
income under ss.ss.125, 402(e)(3), 402(b), 403(b), or, for Plan Years beginning
on or after January 1, 2001, ss.132(f)(4).

      2.65 "Top Heavy Ratio" shall mean the ratio determined as follows:

            (a) If the Employer maintains one or more defined benefit plans and
the Employer has never maintained any defined contribution plan which has
covered or could cover a Participant in this Plan, the Top Heavy Ratio is a
fraction, the numerator of which is the sum of the present values of the accrued
benefits of all Key Employees under such planes) as of the Determination Date
(including any part of any accrued benefit distributed in the five year period
ending on the Determination Date), and the denominator of which is the sum of
the present values of the accrued benefits (including any part of any accrued
benefit distributed in the five year period ending on the Determination Date) of
all participants in such planes) as of the Determination Date. Both the
numerator and denominator of the Top Heavy Ratio shall be adjusted to reflect
any benefit which is accrued but unpaid as of the Determination Date.

            (b) If the Employer maintains one or more defined benefit plans and
maintains or has maintained one or more defined contribution plans (including
any Simplified Employee Pension Plan) which have covered or could cover a
Participant in this Plan, the Top Heavy Ratio is a fraction, the numerator of
which is the sum of the present values of the accrued benefits under the defined
benefit planes) for all Key Employees and the sum of the account balances under
the defined contribution planes) for all Key Employees as of the Determination
Date, and the denominator of which is the sum of the present values of the
accrued benefits under the defined benefit planes) for all Participants and the
sum of the account balances under the defined contribution planes) for all
Participants as of the Determination Date(s). Both the numerator and denominator
of the Top Heavy Ratio are adjusted for any distribution of an

                                       14
<PAGE>

account balance or distribution of an accrued benefit made in the five year
period ending on the Determination Date and any contribution due but unpaid as
of the Determination Date.

            (c) For purposes of (a) and (b) above, the present value of a
Participant's Accrued Benefit in this Plan and all other defined benefit plans
included in the Required or Permissive Aggregation Group shall be determined (i)
by taking into account all benefits derived from Employer and Employee
contributions other than deductible employee contributions and (ii) by using the
actuarial assumptions set forth in Paragraph 2.3.

            (d) For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the twelve month period
ending on the Determination Date. The account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior year
will be disregarded. The account balances and accrued benefits of a participant
who has not performed any service for the Employer at any time during the five
year period ending on the Determination Date will be disregarded; however, if
the participant returns to Service, his account balances and accrued benefits
will again be considered. The calculation of the Top Heavy Ratio, and the extent
to which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code ss.416. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. Effective January
1, 1987, the accrued benefit of a Non-Key Employee shall be determined under the
method that uniformly applies for accruing benefits under all defined benefit
plans maintained by the Employer or any Affiliated Employer, and if none, as if
such benefit accrued not more rapidly than the slowest accrual rate allowed
under Code ss.411(b)(1)(C).

            (e) Determination of present values and amounts. This subparagraph
(e) shall apply for purposes of determining the present values of Accrued
Benefits and the amounts of account balances of employees as of the
Determination Date.

                  (1) Distributions during year ending on the Determination
Date. The present values of Accrued Benefits and the amounts of account balances
of an Employee as of the Determination Date shall be increased by the
distributions made with respect to the Employee under the Plan and any plan
aggregated with the Plan under Code ss.416(g)(2) during the 1-year period ending
on the Determination Date. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been terminated, would
have been aggregated with the plan under Code ss.416(g)(2)(A)(i). In the case of
a distribution made for a reason other than separation from Service, death, or
disability, this provision shall be applied by substituting "5-year period" for
1-year period."

                  (2) Employees not performing services during year ending on
the Determination Date. The Accrued Benefits and accounts of any individual who
has not performed services for the Employer during the 1-year period ending on
the Determination Date shall not be taken into account.

                                       15
<PAGE>

      2.66 "Top Heavy Year" shall mean a particular Plan Year for which the Plan
has been determined to be Top Heavy and for which the benefit accrual and
vesting requirements described in Code ss.416 and in this Plan must be met.

      2.67 "Traditional Formula" means the formula, including minimum and
supplemental amounts, used to determine a Participant's Accrued Benefit pursuant
to Paragraph 5.2.

      2.68 "Trust" shall mean the trust created by the Employer by establishing
this Plan and thereby declaring the trust upon which the Trustee will receive,
manage and administer contributions hereunder, which Trust is upon all the terms
and conditions set out in this instrument.

      2.69 "Trust Fund" shall mean all property of every kind held or acquired
by the Trustee under the Plan.

      2.70 "Trustee" or "Trustees" shall mean the person or persons named to act
as trustees, and each duly appointed additional or successor Trustee or Trustees
acting hereunder.

      2.71 "Valuation Date" shall mean the first day of the Plan Year or any
other day agreed upon by the Employer, Plan Administrator and Trustee.

      2.72 "Vested" shall mean that portion of a Participant's Accrued Benefit
which is nonforfeitable.

      2.73 "Vesting Computation Period" shall mean the Plan Year or, for periods
of Service prior to the Effective Date of the Plan, the same 12-month period as
the Plan Year.

      2.74 "Year of Creditable Service" shall mean an Accrual Computation Period
during which the Employee completes 1000 Hours of Service.

      2.75 "Year of Participation" shall mean an Accrual Computation Period
commencing on or after the Effective Date of the Plan during which an Employee
is a Participant and completes 1000 Hours of Service.

                                       16
<PAGE>

                                   Article III

                            ELIGIBILITY REQUIREMENTS

      3.1 Eligibility Requirements and Participation.

            (a) Except as otherwise provided in this paragraph:

                  (1) any Employee employed on the Restatement Effective Date
who participated in the Predecessor Plan on the day before the Restatement
Effective Date shall continue as a Participant in the Plan;

                  (2) any other Employee employed on the Restatement Effective
Date who has completed a Year of Service shall become a Participant as of the
Restatement Effective Date, unless participation is specifically waived by the
Employee; and

                  (3) after the Restatement Effective Date, an Employee shall
become a Participant (unless he specifically waives participation) as of the
Entry Date coincident with or next following the date (prior to January 1, 2005,
the Entry Date closest to the date) on which he satisfies the requirements
described previously in this subparagraph (a), unless he is no longer employed
on such date.

            (b) (1) Notwithstanding anything herein to the contrary, leased
employees shall not be eligible to participate in this Plan.

                  (2) Effective for Plan Years beginning after December 31,
1996, for purposes of this subparagraph (b), the term "leased employee" means
any person (other than an Employee of the Employer) who pursuant to an agreement
between the Employer and any other person ("leasing organization") has performed
services for the Employer (or for the Employer and related persons determined in
accordance with Code ss.414(n)(6)) on a substantially full-time basis for a
period of at least 1 year, and such services are performed under the Employer's
primary direction or control.

            (c) Notwithstanding the foregoing, no person who is included in a
unit of employees covered by a collective bargaining agreement (as so determined
by the Secretary of Labor) between employee representatives and the Employer
shall be eligible to participate in the Plan if retirement benefits were the
subject of good faith bargaining unless such collective bargaining agreement
expressly provides for the inclusion of such persons as Participants. Any
Participant who joins such unit as a member shall immediately cease to accrue
benefits hereunder; however, his Service credited thereafter shall be counted
for vesting purposes.

            (d) Notwithstanding any other provision of this Plan, individuals
who are not contemporaneously classified as Employees of the Employer for
purposes of the Employer's payroll system (including, without limitation,
individuals employed by temporary help firms, technical help firms, staffing
firms, professional employer organizations or other staffing firms whether or
not deemed to be "common law" employees within the meaning of Code ss.414(n))
are

                                       17
<PAGE>

not considered to be eligible Employees of the Employer and shall not be
eligible to participate in the Plan. In the event any such individuals are
reclassified as Employees for any purpose, including, without limitation, common
law or statutory employees, by any action of any third party, including, without
limitation, any government agency, or as a result of any private lawsuit,
action, or administrative proceeding, such individuals shall, notwithstanding
such reclassification, remain ineligible for participation hereunder. In
addition to and not in derogation of the foregoing, the exclusive means for
individuals who are not contemporaneously classified as an Employee of the
Employer on the Employer's payroll system to become eligible to participate in
this Plan is through an amendment to this Plan, duly executed by the Employer,
which specifically renders such individuals eligible for participation
hereunder.

      3.2 Year of Service. For purposes of determining an Employee's eligibility
to participate, a "Year of Service" shall mean the Eligibility Computation
Period during which the Employee completes at least 1000 Hours of Service.
Except as may be provided in ensuing paragraphs of this Article, credit shall be
given for Years of Service completed beginning with the first year the Employee
was employed by the Employer.

      3.3 Waiver. An Employee may, subject to the approval of the Employer, make
an irrevocable election in writing not to participate in the Plan.

      3.4 Participation and Service Upon Reemployment.

            (a) A reemployed Employee who previously separated from Service with
a Vested benefit shall be eligible to resume participation effective as of his
reemployment date.

            (b) A reemployed Employee who previously separated from Service
prior to satisfying the eligibility requirements for participation shall
commence participation on the Entry Date coinciding with or next following the
date on which he meets such eligibility requirements, provided he is so employed
on such Entry Date. For this subparagraph (b), all Years of Service shall be
taken into account except those disregarded under subparagraph (e).

            (c) A reemployed Employee who had completed the eligibility
requirements for participation but who previously separated from Service prior
to becoming a Participant shall commence participation immediately upon his
reemployment, unless his prior Service is disregarded under subparagraph (e).

            (d) A reemployed Employee who had participated in the Plan but
separated from Service with no Vested benefit derived from Employer
contributions shall be eligible to resume participation effective as of his
reemployment date, unless his prior Service is disregarded under subparagraph
(e).

            (e) For purposes of subparagraphs (b)-(d), an Employee's Years of
Service before a period of at least 5 consecutive Breaks in Service shall be
disregarded if the consecutive Breaks in Service exceed the aggregate number of
the Participant's credited Years of Service before such Break period, and the
Employee shall be considered a new Employee as of his

                                       18
<PAGE>

reemployment date. For purposes of this subparagraph (e), Years of Service not
required to be taken into account by reason of any prior Break in Service shall
be disregarded.

      3.5 Forms Upon Eligibility. Each Employee who becomes eligible to
participate in the Plan shall be notified of his eligibility and shall be
provided with such information as is required by ERISA within the time
prescribed for providing such information and forms for designating one or more
Beneficiaries to receive benefits following the Employee's death.

      3.6 Change in Status.

            (a) In the event a person who has been employed in a category of
employment not eligible for participation in this Plan changes to covered
employment, he shall become a Participant immediately upon his change in status,
provided he has completed the eligibility requirements for participation. If he
has not completed the eligibility requirements, he will become a Participant on
the Entry Date coinciding with or next following the date he completes the
eligibility requirements.

            (b) In the event a Participant who has been employed in covered
employment changes to a category of employment not eligible for participation in
the Plan, he shall continue to participate in the Plan and shall receive credit
for benefit accrual purposes based upon such Participant's Compensation from the
Employer and Hours of Service from the first day of the Plan Year up to the date
of change from covered employment, provided such Participant completed the
eligibility requirements under Paragraph 3.1, treating service with an
Affiliated Company as Service with the Employer. In any subsequent Plan Year,
such Participant shall not be eligible for further benefit accruals under the
Plan, unless he returns to covered employment with the Employer.

      3.7 Improper Omission or Inclusion of Participant.

            (a) If, for any Plan Year, an Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such error is
not made until a later year, the Employee's status as a Participant shall be
corrected and his Accrued Benefit and Vesting credited to him as if he had not
been omitted.

            (b) If an Employee who is ineligible to participate in the Plan is
erroneously included as a Participant, his Accrued Benefit for the period he is
ineligible shall be treated as a Forfeiture in the year the error is discovered.

      3.8 Service With Predecessor Employer. If the Employer maintains the plan
of a predecessor employer, whether a corporation, partnership, sole
proprietorship or other business entity, any period of service with such
employer shall be treated as Service with the Employer for eligibility purposes.
If the Plan is not the plan of a predecessor employer, service with such
predecessor employer shall not be considered Service with the Employer, except
to the extent required pursuant to Treasury regulations.

                                       19
<PAGE>

      3.9 Special Credit for Certain Employees.

            (a) With respect to any Employee who was formerly employed on June
13, 1997 by Key Bank, N.A. ("Key") and who on that date became employed by the
Employer, all of the Employee's Service with Key shall be treated as service
with the Employer for purposes of determining his eligibility to participate in
the Plan. Any such Employee who meets the service requirement specified in
Paragraph 3.1 after taking into account such service shall commence
participation on January 1, 1998.

            (b) With respect to any Employee who was formerly employed on July
18, 1997 by Fleet Bank ("Fleet") and who on that date became employed by the
Employer, all of the Employee's Service with Fleet shall be treated as service
with the Employer for purposes of determining his eligibility to participate in
the Plan. Any such Employee who meets the service requirement specified in
Paragraph 3.1 after taking into account such service shall commence
participation on January 1, 1998.

            (c) With respect to Joseph Butler who was formerly employed on June
20, 1997 by Fleet and who on that date became employed by the Employer, all of
the Employee's Service with Fleet shall be treated as service with the Employer
for purposes of determining his eligibility to participate in the Plan. Provided
that he meets the service requirement specified in Paragraph 3.1 after taking
into account such service Joseph Butler shall commence participation on January
1, 1998.

            (d) With respect to Douglas Frank who was formerly employed on
January 27, 1997 by Key and who on that date became employed by the Employer,
all of the Employee's Service with Key shall be treated as service with the
Employer for purposes of determining his eligibility to participate in the Plan.
Provided that he meets the service requirement specified in Paragraph 3.1 after
taking into account such service Douglas Frank shall commence participation on
January 1, 1998.

            (e) With respect to Brian Aldrich who was formerly employed on June
26, 1997 by Key and who on that date became employed by the Employer, all of the
Employee's Service with Key shall be treated as service with the Employer for
purposes of determining his eligibility to participate in the Plan. Provided
that he meets the service requirement specified in Paragraph 3.1 after taking
into account such service Brian Aldrich shall commence participation on January
1, 1998.

            (f) With respect to any Employee who was formerly employed on July
8, 1996 by Benefit Plans Administrators ("BPA") and who on that date became
employed by the Employer, all of the Employee's services with BPA shall be
treated as Service with the Employer for purposes of determining his eligibility
to participate in the Plan.

            (g) With respect to any Employee who was formerly employed on
October 29, 1994 by Chase Bank at the branch located in Cato, New York ("Chase")
and who on that date became employed by the Employer, all of the Employee's
services with Chase shall be

                                       20
<PAGE>

treated as Service with the Employer for purposes of determining his eligibility
to participate in the Plan.

            (h) With respect to any Employee who was formerly employed on July
15, 1995 by Chase Bank ("Chase") and who on that date became employed by the
Employer, all of the Employee's services with Chase shall be treated as Service
with the Employer for purposes of determining his eligibility to participate in
the Plan.

            (i) With respect to any Employee who was formerly employed on
January 26, 2001 by Citizens National Bank of Malone ("Citizens Bank") and who
on that date became employed by the Employer, all of the Employee's services
with Citizens Bank shall be treated as Service with the Employer for purposes of
determining his eligibility to participate in the Plan.

            (j) With respect to any Employee who was formerly employed on
November 16, 2001 by FleetBoston Financial Corporation Fleet National Bank
("FleetBoston") and who on that date became employed by the Employer, all of the
Employee's services with FleetBoston shall be treated as Service with the
Employer for purposes of determining his eligibility to participate in the Plan.

            (k) With respect to any Employee who was formerly employed on August
1, 2003 by PricewaterhouseCoopers, LLP ("PricewaterhouseCoopers") and who on
that date became employed by the Employer, all of the Employee's service with
PricewaterhouseCoopers shall be treated as service with the Employer for
purposes of determining his eligibility to participate in this Plan. Any such
Employee who meets the service requirement specified in Paragraph 3.1 after
taking into account such service shall commence participation on August 1, 2003.

            (l) With respect to any Employee who was formerly employed on
September 5, 2003 by Peoples Bankcorp, Inc. ("Peoples") and who on that date
became employed by the Employer, all of the Employee's service with Peoples
shall be treated as service with the Employer for purposes of determining his
eligibility to participate in this Plan. Any such Employee who meets the service
requirements specified in Paragraph 3.1 after taking into account such service
shall commence participation on September 5, 2003.

            (m) With respect to any Employee who was formerly employed on
November 22, 2003 by Grange National Banc Corp. ("Grange") and who on that date
became employed by the Employer, all of the Employee's service with Grange shall
be treated as service with the Employer for purposes of determining his
eligibility to participate in this Plan. Any such Employee who meets the service
requirement specified in Paragraph 3.1 after taking into account such service
shall commence participation on November 22, 2003.

            (n) With respect to any Employee who was employed by First Heritage
Bank ("First Heritage") on May 14, 2004, and who on that date became employed by
the Employer, all of the Employee's service with First Heritage shall be treated
as service with the Employer for purposes of determining the Employee's
eligibility to participate in this Plan. An Employee who

                                       21
<PAGE>

meets the eligibility requirements specified in Paragraph 3.1 after taking into
account such service shall commence participation in the Plan on May 14, 2004.

            (o) With respect to any Employee who was employed by HSBC Bank at
its branch located in Dansville, New York ("HSBC") on December 3, 2004, and who
on that date became employed by the Employer, all of the Employee's service with
HSBC shall be treated as service with the Employer for purposes of determining
the Employee's eligibility to participate in this Plan. An Employee who meets
the eligibility requirements specified in Paragraph 3.1 after taking into
account such service shall commence participation in the Plan on December 3,
2004.

      3.10 Special Credit for Elias Employees. With respect to any Employee who
was employed on April 3, 2000 by Elias Asset Management Incorporated ("Elias"),
all of the Employee's Service with Elias shall be treated as service with the
Employer for purposes of determining his eligibility to participate in this
Plan. Any such Employee who meets the service requirement specified in Paragraph
3.1 after taking into account such Service shall commence participation on April
3, 2000.

                                       22
<PAGE>

                                   Article IV

                      CREDITED SERVICE FOR BENEFIT ACCRUAL

      4.1 Benefit Accrual.

            (a) A Participant shall be credited with Service for benefit accrual
purposes for each Year of Creditable Service he completes.

            (b) Except as otherwise specifically provided in the Plan, no
employee of an Affiliated Company shall be credited with Service with the
Employer with respect to any time period prior to the date the Affiliated
Company became so affiliated with the Employer by reason of purchase, merger or
otherwise. Without limiting the generality of the prior sentence, with respect
to any Employee described in Paragraph 3.9, none of the Employee's service with
any company prior to his employment by the Employer shall be taken into account
for purposes of this Article. Notwithstanding the foregoing, for purposes of
calculating a Participant's Years of Creditable Service and Accrued Benefit,
both as of December 31, 1988, a Participant employed or formerly employed by
Nichols Bank shall be credited with Service as if he were employed by the
Employer from his hire date with Nichols Bank.

      4.2 Service Limitations.

            (a) No more than one Year of Creditable Service shall be credited to
a Participant with respect to any Accrual Computation Period.

            (b) No more than 35 Years of Creditable Service shall be credited to
any Participant.

      4.3 Loss of Service - Non-Vested Participants. In the case of a
Participant who incurs a period of five or more consecutive One-Year Breaks in
Service who did not have any Vested right to his Accrued Benefit derived from
Employer contributions at his severance date and who subsequently resumes
participation in the Plan, no Years of Creditable Service with the Employer
before the Break in Service shall be taken into account in computing his Accrued
Benefit if the number of consecutive One-Year Breaks in Service equals or
exceeds the aggregate number of Years of Creditable Service before the Break.

      4.4 Reinstatement of Creditable Service - Vested Participant. A
Participant who, at the time he incurred one or more consecutive Breaks in
Service, had a Vested right to his Accrued Benefit derived from Employer
contributions, who is reemployed by the Employer and who resumes participation
in the Plan, shall have his pre-Break Years of Creditable Service restored in
determining his Accrued Benefit unless, after his employment termination, the
Participant received a lump-sum distribution of his Vested Accrued Benefit and
upon reemployment, failed to repay the distribution within the time period
allowed and in accordance with Paragraph 7.7.

                                       23
<PAGE>

      4.5 Retention of Service. The Accrued Benefit of a Participant who
separates from Service after the Effective Date will not be reduced by
termination of employment, absences from employment, or other Breaks in Service,
except as provided under the terms of this Plan.

                                       24
<PAGE>

                                    Article V

                               RETIREMENT BENEFITS

      5.1 Choice of Traditional Formula or Cash Balance Formula.

            (a) Each Participant who is classified by the Employer as an active
Employee on October 1, 2004, may elect prior to November 1, 2004 either (1) to
have the Participant's total Accrued Benefit determined under the Traditional
Formula described in Paragraph 5.2 below, or (2) to have the Participant's
Accrued Benefit determined under the Cash Balance Formula described in Paragraph
5.3 below. An eligible Participant who fails to make an affirmative election of
either (1) or (2) above shall be deemed to have elected (2) above. An election
or deemed election shall apply to all of the Participant's recognized service
with the Employer, including recognized service rendered after a future break in
service.

            (b) A Participant who was not classified by the Employer as an
active Employee on October 1, 2004, but who thereafter returns to active
employment shall have an Accrued Benefit equal to the sum of (1) the
Participant's Accrued Benefit earned prior to October 1, 2004 under the
Traditional Formula, plus (2) the Participant's Accrued Benefit earned after
September 30, 2004 under the Cash Balance Formula.

            (c) An Employee who becomes a Participant after October 1, 2004
shall have an Accrued Benefit determined only under the Cash Balance Formula.

            (d) Except to the extent provided in subparagraph 5.3(e) (regarding
certain supplemental cash balance benefits), in no event shall a Participant be
entitled to benefits under both the Traditional Formula and the Cash Balance
Formula for the same period of service.

      5.2 Traditional Formula.

            (a) Normal Retirement Benefit. Subject to the provisions of Article
XIV and the limitations under this Paragraph and Article VIII, a Participant who
retires upon attaining his Normal Retirement Age and whose benefit is determined
in whole or in part under the Traditional Formula (see Paragraph 5.1) shall be
entitled to receive a Normal Retirement Benefit under the Traditional Formula
equal to the greater of the amount described in (1) below or the amount
described in (2) below:

                  (1) (A) an amount equal to the Participant's Accrued Benefit
earned as of December 31, 1988 under the terms of the Predecessor Plan as
modified by the terms of subparagraph 5.2(b), disregarding all Service after
December 31, 1988, but adjusted for anyone who completed one or more Hours of
Service after December 31, 1988 for changes in Compensation after December 31,
1988 by multiplying such Accrued Benefit by a fraction (not less than 1.0), the
numerator of which is his Average Annual Compensation as of the date the
computation is performed, and the denominator of which is his Average Annual
Compensation as of the Plan Year ending December 31, 1988; however, the Accrued
Benefit, as so adjusted, of any Participant or Former Participant employed by
Exchange National Bank or its predecessor

                                       25
<PAGE>

shall be reduced by his unadjusted accrued benefit earned prior to July 1, 1984
under the defined benefit pension plan sponsored by the Bank of New York; plus

                        (B) an amount equal to .9% of his Average Annual
Compensation, plus .65% of his Average Annual Compensation in excess of his
Covered Compensation, multiplied by the Participant's Years of Creditable
Service earned after December 31, 1988, not to exceed 35 years reduced by his
total Years of Creditable Service earned prior to January 1, 1989.

                  (2) An amount equal to .9% of his Average Annual Compensation,
plus .65% of his Average Annual Compensation in excess of his Covered
Compensation, multiplied by the Participant's total Years of Creditable Service,
not to exceed 35 years.

                  (3) Notwithstanding the foregoing, a Participant employed or
formerly employed by Nichols Bank shall receive under the Traditional Formula
the greater of the sum of the benefits under subparagraphs (a)(1) and (a)(2)
above, or the Actuarial Equivalent of the Participant's Accrued Benefit to which
his account balance in the former profit sharing plan sponsored by Nichols Bank
was converted as of January 1, 1988.

                  (4) Notwithstanding the foregoing, to the extent the Normal
Retirement Benefit of a Participant employed or formerly employed by First
Liberty Bank & Trust is determined under the Traditional Formula (see Paragraph
5.1) such benefit shall equal the sum of (A) the Participant's accrued benefit
determined under the First Liberty Bank & Trust Retirement Plan as of December
31, 2001, plus (B) the benefit earned by the Participant after December 31, 2001
under subparagraph (a)(2) above (taking into account only Compensation and Years
of Creditable Service earned by the Participant after December 31, 2001).

                  (5) In applying the Traditional Formula, neither the Maximum
Excess Allowance (as hereinafter defined) nor the Overall Permitted Disparity
Limits (as hereinafter defined) may be exceeded in any Plan Year with respect to
any Participant. Accordingly, at such time that a Participant's cumulative
permitted disparity reaches the Participant's applicable limit calculated in
accordance with Treas. Regs. ss.1.401(1)-5, then for each Year of Creditable
Service thereafter, the formula under subparagraph (a)(2) shall be modified such
that the Participant shall accrue a benefit at the rate of the Base Benefit
Percentage times his Average Annual Compensation.

                  (6) For all purposes under this Plan:

                        (A) "Base Benefit Percentage" means the rate, expressed
as a percentage, at which Employer-derived benefits are accrued with respect to
that amount of a Participant's Average Annual Compensation that is at or below
the Participant's Covered Compensation for the Plan Year.

                        (B) "Covered Compensation" for each Participant for a
Plan Year shall be the average of the taxable wage bases in effect under the
Social Security Act for each calendar year during the 35-year period ending with
the calendar year in which the

                                       26
<PAGE>

Participant attains or will attain his Social Security retirement age (as
defined in Code ss.415(b)(8)), rounded to the nearest multiple of $600. For this
purpose, the taxable wage base for all years after the year in which the
determination is being made is assumed to be the same as the taxable wage base
in effect for the year of determination. Covered Compensation for a participant
after the 35-year period is the same as his Covered Compensation as of his
Social Security retirement age. A Participant's Covered Compensation shall be
automatically adjusted each Plan Year.

                        (C) "Excess Benefit Percentage" means the rate,
expressed as a percentage, at which Employer-derived benefits are accrued with
respect to that amount of a Participant's Average Annual Compensation that is
above the Participant's Covered Compensation for the Plan Year, which rate
(except as otherwise provided herein) shall be 0.65%.

                        (D) "Maximum Excess Allowance" means the maximum
differential allowed under ss.404(1) and the regulations thereunder between the
Base Benefit Percentage and the Excess Benefit Percentage.

                        (E) "Overall Permitted Disparity Limits" means the
cumulative permitted disparity applicable to a Participant's benefit accrued
hereunder as of any Plan Year, which amount is based on the Participant's total
Years of Creditable Service and calculated in accordance with ss.401(1) and the
regulations thereunder.

                  (7) Except as provided in subparagraph 5.2(b), the Employer
intends that ss.401(l) and the regulations thereunder shall apply only to
benefits that accrue in Plan Years beginning after December 31, 1988 and not to
benefits that accrued under the Predecessor Plan as of December 31,1988, and the
Plan shall be construed accordingly.

                  (8) A Participant's Normal Retirement Benefit under the
Traditional Formula shall not be less than his Accrued Benefit earned under that
formula (as applicable) as of the date he attained Early Retirement Age.

                  (9) For Plan Years that begin on or after January 1, 2004, a
Participant's annual Normal Retirement Benefit under the Traditional Formula
shall equal the greater of the Normal Retirement Benefit determined under
subparagraph 5.2(a) or the following amount:

                        Participant
                        (by Employee ID No.)                       Amount
                        --------------------                       -------

                        98744                                      $ 32,232

                        68051                                      $109,812

                        93083                                      $115,944

                        Any Active Participant                     $      0
                        described in subparagraphs
                        3.9(k), (l), (m), (n), or (o)

                        All other Active Participants              $    660

                                       27
<PAGE>

Notwithstanding the dollar amounts set forth above, no Normal Retirement Benefit
shall exceed the limits set forth in Paragraph 8.1.

                  (10) For Plan Years beginning on or after January 1, 2004, and
subject to the limits set forth in Paragraph 8.1, the following Participants
shall have their annual Normal Retirement Benefit under the Traditional Formula
determined above under this subparagraph 5.2(a) increased by the following
amounts:

                        Participant
                        (by Employee ID No.)                       Amount
                        --------------------                       -------

                        4091                                       $ 6,302

                        3954                                       $15,045

                  (11) With respect to any Employee described in Section 3.9(k),
(l), (m), (n) or (o), none of the Employee's service while employed by
PricewaterhouseCoopers, LLP, Peoples Bankcorp, Inc., Grange National Banc Corp.,
First Heritage Bank or HSBC, as the case may be, shall be taken into account for
any purpose of this Article.

            (b) For purposes of determining a Participant's Accrued Benefit
earned as of December 31, 1988 ("Pre-1989 Accrued Benefit"), the terms of the
Predecessor Plan shall be followed, except as modified by the following:

                  (1) The Pre-1989 Accrued Benefit for each Employee or former
employee of Exchange National Bank shall be determined by (A) combining the
benefits earned by the Employee prior to July 1, 1984 under the defined benefit
pension plan sponsored by the Bank of New York, with the benefits accrued by the
Employee under the Predecessor Plan from July 1, 1984 through December 31, 1988,
and (B) adjusting such benefit (if necessary) such that the Base Benefit
Percentage is not less than 50% of the Excess Benefit Percentage under the Prior
Plan.

                  (2) The Pre-1989 Accrued Benefit for each Employee or former
employee of Nichols Bank shall be determined as if the employee participated in
the Predecessor Plan from his hire date at Nichols Bank.

            (c) Nonforfeitability of Normal Retirement Benefits. The Accrued
Benefit of a Participant who while in Service attains his Normal Retirement Age
prior to completing a period of 5 consecutive One-Year Breaks in Service shall
become 100% nonforfeitable.

                                       28
<PAGE>

            (d) Payment of Benefit. Unless the Participant selects a different
form, the Participant's Normal Retirement Benefit shall be payable in the manner
set forth in Paragraph 9.1. Payment shall commence on the Participant's Normal
Retirement Date or as soon thereafter as administratively feasible.

            (e) Re-Employment. If a former Participant who is entitled to
receive a Normal Retirement Benefit shall be reemployed, his Normal Retirement
Benefit payments shall continue.

      5.3 Cash Balance Formula.

            (a) The Accrued Benefit of a Participant to whom the Cash Balance
Formula applies (see Paragraph 5.1) shall be based upon the Participant's
Account balance, which Account balance shall be determined pursuant to this
Paragraph 5.3.

            (b) A Participant who elected (pursuant to Paragraph 5.1) to have
the Cash Balance Formula apply and who had an Accrued Benefit as of December 31,
2003 shall have an opening Account balance as of January 1, 2004 equal to the
present value of the Participant's Accrued Benefit determined as of December 31,
2003 under the Traditional Formula as in effect on January 1, 2004 (determined
without regard to the minimum benefit provisions of subparagraph 5.2(a)(9)),
where present value for this purpose is determined by using an interest rate of
5.5% and the 1994 Group Annuity Reserve table (projected to 2002 and weighted
equally for males and females). The Account of a Participant who elected
(pursuant to Paragraph 5.1) to have the Cash Balance Formula apply and who
completes at least 1000 Hours of Service during each Plan Year after December
31, 2003 shall be credited with a Service Credit as of the end of each
subsequent Plan Year (beginning December 31, 2004) in accordance with the
following table:

        ----------------------------------------------------------------------
                Attained Age
               On December 31*                         Service Credit**
               ---------------                         ----------------
        ----------------------------------------------------------------------
                  Under 22                                  5.00%
        ----------------------------------------------------------------------
                  22 and 23                                 5.05%
        ----------------------------------------------------------------------
                  24 and 25                                 5.10%
        ----------------------------------------------------------------------
                  26 and 27                                 5.15%
        ----------------------------------------------------------------------
                  28 and 29                                 5.20%
        ----------------------------------------------------------------------
                  30 and 31                                 5.25%
        ----------------------------------------------------------------------
                  32 and 33                                 5.30%
        ----------------------------------------------------------------------
                  34 and 35                                 5.35%
        ----------------------------------------------------------------------
                  36 and 37                                 5.40%
        ----------------------------------------------------------------------
                  38 and 39                                 5.45%
        ----------------------------------------------------------------------
                  40 and 41                                 5.50%
        ----------------------------------------------------------------------
                  42 and 43                                 5.55%
        ----------------------------------------------------------------------
                  44 and 45                                 5.60%
        ----------------------------------------------------------------------
                  46 and 47                                 5.65%
        ----------------------------------------------------------------------
                  48 and 49                                 5.70%
        ----------------------------------------------------------------------
                  50 and 51                                 5.75%
        ----------------------------------------------------------------------

                                       29
<PAGE>

        ----------------------------------------------------------------------
                Attained Age
               On December 31*                         Service Credit**
               ---------------                         ----------------
                  52 and 53                                 5.80%
        ----------------------------------------------------------------------
                  54 and 55                                 5.85%
        ----------------------------------------------------------------------
                  56 and 57                                 5.90%
        ----------------------------------------------------------------------
                  58 and 59                                 5.95%
        ----------------------------------------------------------------------
                  60 and 61                                 6.00%
        ----------------------------------------------------------------------
                  62 and 63                                 6.05%
        ----------------------------------------------------------------------
                  64 and 65                                 6.10%
        ----------------------------------------------------------------------
                   Over 65                                  6.10%
        ----------------------------------------------------------------------
            *or the last day of the Participant's employment, if the
            Participant's termination occurs prior to December 31.
        ----------------------------------------------------------------------
            **Service Credits shall be applied to the sum of the Participant's
            total Compensation for the Plan Year, plus the portion of the
            Participant's total Compensation for the Plan Year that is in excess
            of the Social Security Taxable Wage in effect for the Plan Year.
        ----------------------------------------------------------------------

            (c) The Account of a Participant to whom the Cash Balance Formula
applies (see Paragraph 5.1) but who is not entitled to Service Credits pursuant
to subparagraph (b) above shall be credited with a Service Credit as of the end
of each Plan Year during which the Participant completes at least 1000 Hours of
Service. The Service Credit, which will be added to the Participant's Account as
of December 31 of each applicable Plan Year, shall equal five percent (5%) of
the sum of the Participant's total Compensation for the Plan Year, plus the
portion of the Participant's total Compensation for the Plan Year that is in
excess of the Social Security Taxable Wage Base for the Plan Year.

            (d) (1) Notwithstanding the other provisions of this Paragraph 5.3,
for Plan Years beginning on or after January 1, 2004, the annual Normal
Retirement Benefit payable to the following Participants shall not be less than
the following amounts, except as may be limited under Article VIII:

                         Participant
                     (by Employee ID No.)                      Minimum Benefit
                     --------------------                      ---------------

                        98840                                      $283,041

                        3952                                       $100,000

                  (2) Notwithstanding the other provisions of this Paragraph
5.3, the opening Account balance on January 1, 2004 for the Plan Participant
with Employee ID No. 1026 shall be $153,548.

                  (3) Notwithstanding the other provisions of this Paragraph
5.3, the Account balance on December 31, 2004 for the Plan Participant with
Employee ID No. 3398 shall be $37,781.

                                       30
<PAGE>

                  (e) In addition to the Accrued Benefit determined pursuant to
Paragraph 5.2 or the other provisions of Paragraph 5.3, each Participant
identified below shall have a supplemental Account balance, as of October 1,
2004, determined as follows:

                                                            Supplemental Account
                         Participant                              Balance
                     (by Employee ID No.)                  As of October 1, 2004
                     --------------------                  ---------------------

                        4577                                      $ 23,943
                        98890                                     $ 20,095
                        98744                                     $ 22,315
                        1438                                      $ 23,613
                        908                                       $ 19,988
                        45999                                     $ 47,577
                        49575                                     $ 14,514
                        68051                                     $234,655
                        2996                                      $ 16,241
                        3398                                      $  9,636
                        93083                                     $212,272

The supplemental Account balance provisions in this subparagraph (e) shall apply
to each listed Participant regardless of the election (or deemed election) made
by the Participant pursuant to Paragraph 5.1. The supplemental Account balance
described in this subparagraph (e) shall not be increased by any Service Credits
described in subparagraphs 5.3(b) or (c) or by the Interest Credit described in
subparagraph 5.3(f).

            (f) Beginning December 31, 2004 and continuing on each December 31
thereafter until the Participant's employment ends, the Account of each
Participant to whom the Cash Balance Formula applies shall be credited with an
Interest Credit. The Interest Credit for Plan Years during employment shall
equal six percent (6%) of the total balance credited to the Participant's
Account as of January 1 of the same Plan Year. For the Plan Year during which
the Participant's employment ends, the Interest Credit shall be six percent
(6%), prorated based on months of employment, plus the lesser of six percent
(6%) or the Interest Rate described in subparagraph 2.4(c)(1), prorated based on
months between the date employment ends and December 31 of the Plan Year during
which employment ends. The Interest Credit described in the preceding sentence
shall be added to the Participant's Account as of December 31 of the Plan Year
during which the Participant's employment ends. As of December 31 of each Plan
Year that follows the Plan Year during which the Participant's employment ends,
the Participant's Account will be credited with an Interest Credit equal to the
lesser of six percent (6%) or the Interest Rate described in subparagraph
2.4(c)(1), times the amount credited to the Participant's Account as of January
1 of the same Plan Year. For the Plan Year during which the Participant's
Account balance is withdrawn as a lump sum or converted to annuity payments, the
Interest Credit described in the preceding sentence shall be prorated through
the date of withdrawal or conversion.

                                       31
<PAGE>

            (g) In no event will a Participant's benefit determined under the
Cash Balance Formula (if applicable) be less than the benefit the Participant
would have accrued under the Traditional Formula as of December 31, 2004.

            (h) Notwithstanding the above, the annual rate at which a
Participant accrues future Normal Retirement Benefits under the Cash Balance
Formula shall be limited to the extent necessary to ensure compliance with the
applicable accrual rate rules described in Section 411 of the Code.

      5.4 Accrued Benefits Attributable to Prior Mandatory Employee
Contributions.

            (a) If under the terms of the Predecessor Plan a Participant made
mandatory employee contributions, such Participant's Accrued Benefit as of any
Valuation Date shall equal the greater of:

                  (1) his Accrued Benefit; or

                  (2) the benefit derived from the sum of his mandatory employee
contributions accumulated with interest at the rate of 120% of the federal
mid-term rate in effect in the month preceding payment under Code ss.1274.

Upon distribution of a Participant's mandatory employee contributions plus
interest, the Accrued Benefit of such Participant shall be reduced by that
portion of the Accrued Benefit derived from that distributed amount.

            (b) Notwithstanding anything in this Plan to the contrary, a
Participant shall at all times be 100% Vested in that portion of his Accrued
Benefit derived from his or her mandatory employee contributions.

      5.5 Early Retirement.

            (a) A Participant who retires after attaining his Early Retirement
Age but prior to his Normal Retirement Age shall be entitled to receive an
annual retirement benefit determined as follows:

                  (1) If payment of such benefit commences at his Normal
Retirement Date, the amount of the benefit shall be the Participant's Accrued
Benefit, determined in accordance with the applicable provisions of Paragraph
5.2 and/or Paragraph 5.3 as of his Early Retirement Date.

                  (2) If the Participant elects to receive payment of such
benefit prior to his Normal Retirement Date, the amount of the benefit shall be
his Accrued Benefit, reduced by 3.5% for each of the first 3 years by which his
Annuity Starting Date precedes Age 65 and reduced by 5.5% for each of the next 7
years by which his Annuity Starting Date precedes Age 65.

                                       32
<PAGE>

                  (3) If a Participant who has satisfied the service requirement
for Early Retirement under this paragraph separates from Service before
satisfying the age requirement for Early Retirement, the Participant may elect,
upon satisfying such age requirement, to receive an early retirement benefit
equal to his Accrued Benefit in which he was Vested at the time of his
Termination of Employment, subject to the same reduction as provided in
subparagraph (a)(2).

            (b) Unless the Participant selects an optional form under Paragraph
9.3, a Participant's early retirement benefit shall be payable in the manner set
forth in Paragraph 9.1(a). Payment shall commence as of the date elected by the
Participant, or as soon thereafter as administratively feasible.

            (c) If a Participant who is receiving his early retirement benefit
returns to Service prior to January 1, 2005, his benefit payments shall be
suspended until he terminates Service or attains his Required Beginning Date,
whichever occurs earlier. At such date, and at each subsequent Valuation Date if
the Participant remains in Service after his Required Beginning Date, he shall
be entitled to receive an annual benefit equal to his Accrued Benefit determined
pursuant to the applicable provisions of Paragraph 5.2 and/or Paragraph 5.3 as
of the date for which the calculation is being made, reduced actuarially by the
value of benefit payments already made to the Participant; provided, however
that to the extent the Participant repays the earlier distribution(s) in
accordance with Paragraph Article XXI there shall be no actuarial reduction.
After December 31, 2004, no benefit will be suspended upon reemployment, but any
additional benefits earned during reemployment shall be reduced actuarially by
the value of benefit payments made to the Participant.

            (d) Prohibition Against Reduction in Benefit. Notwithstanding any
contrary provision contained in this Plan, no amendment to this Plan shall
reduce or eliminate a Participant's early retirement benefit accrued prior to
such restatement or amendment, determined as the day before its effective date.

      5.6 Late Retirement. A Participant who remains in Service with the
Employer after attaining his Normal Retirement Age shall have payment of
benefits suspended until the earlier of his Late Retirement Date or his Required
Beginning Date. At such date and each subsequent Valuation Date, the Participant
shall be entitled to receive an annual benefit equal to the greater of (a) the
Actuarial Equivalent of his Normal Retirement Benefit earned as of the date he
attained his Normal Retirement Age, or (b) his Accrued Benefit earned through
his Late Retirement Date using the applicable formula or formulas set out in
Paragraph 5.2 and/or Paragraph 5.3 and any limitations described therein. The
Participant's benefit determined under the foregoing shall be reduced
actuarially to reflect the value of benefit payments previously made to the
Participant hereunder.

      5.7 Disability.

            (a) Disability Retirement Benefits. A Participant who terminates
from Service because of his becoming Disabled prior to attaining his Normal
Retirement Age shall be entitled to receive a retirement benefit ("Disability
Retirement Benefit") determined as follows:

                                       33
<PAGE>

                  (1) If payment commences at his Normal Retirement Date, the
amount of the benefit shall be the Participant's Vested Accrued Benefit
determined under the applicable provisions of Paragraph 5.2 and/or Paragraph 5.3
by applying the relevant factors as of his Disability Retirement Date.

                  (2) If the Participant elects to begin payment prior to his
Normal Retirement Date, the amount of the benefit shall be the Actuarial
Equivalent of the Participant's Vested Accrued Benefit determined under the
applicable provisions of Paragraph 5.2 and/or Paragraph 5.3 based on the
relevant factors as of his Disability Retirement Date.

            (b) Unless the Participant elects an optional form under Paragraph
9.3, or defers payment under Paragraph 9.1, his Disability Retirement Benefit
shall be payable in the normal form in accordance with Paragraph 9.1(a). Payment
shall commence on his Retirement Date or (if he so elects) on his Disability
Retirement Date, or as soon thereafter as practicable.

            (c) If a Participant who is receiving or has received disability
benefits under this Plan resumes Service, he shall resume participation in this
Plan, and payments of his disability benefits shall cease. In addition, his
Years of Creditable Service and Years of Vesting Service for the period prior to
his becoming Disabled shall be reinstated, and he shall be treated in the same
manner as any other rehired Employee, except that the Participant's Accrued
Benefit shall be reduced actuarially by the value of the Participant's
disability retirement benefits previously paid to him hereunder; provided,
however, that no such reduction shall be applied to the extent the Participant
repays the earlier distribution(s) received in accordance with the provisions of
Paragraph 7.7.

      5.8 Relation to Social Security Benefits. Increases in Social Security
benefits or the Social Security Wage Base under Title II of the Social Security
Act subsequent to a Participant's termination of employment or retirement shall
not cause a reduction in benefits under this Plan.

      5.9 Supplemental Retirement Benefit. Notwithstanding any other provision
in this Plan, John A. Lanahan shall be entitled to receive a supplemental
retirement benefit equal to $250.00 per month payable as a life annuity
beginning at his Annuity Starting Date. Such benefit shall be in addition to any
other benefits he may be entitled to under the terms of this Plan. Payment of
such benefit shall be made in accordance with the terms of Article IX.

                                       34
<PAGE>

                                   Article VI

                                 DEATH BENEFITS

      6.1 Benefits Upon Death.

            (a) If a Participant (including any Inactive Participant) dies prior
to his Annuity Starting Date at a time when he is not married on the date of his
death, no death benefit shall be payable under this Plan with respect to such
Participant, except to the extent provided in subparagraph (f) below.

            (b) If a married Participant (including any married Inactive
Participant) who is Vested in any portion of his Accrued Benefit dies prior to
his Earliest Retirement Age (as defined in subparagraph (c) below), a
Pre-Retirement Survivor Annuity shall be payable to the Participant's Spouse.
The Pre-Retirement Survivor Annuity cannot be waived, and no optional form of
benefit shall be provided in lieu of the Pre-Retirement Survivor Annuity, except
as provided in subparagraphs (e) and (f) below.

            (c) For purposes of this Article, "Earliest Retirement Age" means
the earliest date on which the Participant can elect to receive retirement
benefits under the Plan (disregarding disability retirement benefits), and
administered (for purposes of this paragraph) as follows:

                  (1) If a Participant dies or separates from Service before
completing the service requirement for an Early Retirement Benefit hereunder,
the Earliest Retirement Age is the date the Participant would have attained his
Normal Retirement Age had he survived.

                  (2) If a Participant dies or separates from Service after
completing the service requirement for an Early Retirement Benefit hereunder,
the Earliest Retirement Age is the earliest date the Participant could have
retired and begun receiving his Early Retirement Benefit.

            (d) If retirement benefits have begun to be paid to the Participant
and the Participant dies before his entire interest has been distributed to him,
distribution shall continue to the Participant's Beneficiary in accordance with
the terms of this Plan and the Participant's executed beneficiary designation
(if in effect) and consistent with the method of payment selected by the
Participant. Notwithstanding anything to the contrary in the Plan or any payment
election made by a Participant, if distribution of the Participant's benefit has
begun as of the time of the Participant's death as determined under Code
ss.401(a)(9), the remaining benefit shall be distributed to his Beneficiary at
least as rapidly as under the method of distribution in effect as of the date of
the Participant's death.

            (e) Regardless of the normal form of benefit or any optional form
chosen by the Participation or his Beneficiary, the Actuarial Equivalent of the
Pre-Retirement Survivor Annuity shall be paid in a lump sum, without the consent
of the Participant's Spouse, under the following circumstances:

                                       35
<PAGE>

                  (1) for Plan Years beginning before August 6, 1997, the single
sum Actuarial Equivalent of such death benefit does not exceed $3,500 at the
time of distribution;

                  (2) for Plan Years beginning on or after August 6, 1997, the
single sum Actuarial Equivalent of such death benefit does not exceed $5,000 at
the time of distribution.

Notwithstanding the foregoing, no distribution to the surviving Spouse may be
made after the Annuity Starting Date unless the Spouse consents in writing to
such distribution within the 90-day period preceding the date of distribution.

            (f) Notwithstanding the provisions of subparagraphs (a) and (b)
above, to the extent the Cash Balance Formula and/or the provisions of
subparagraph 5.2(a)(9) or (10) apply to a Participant at the time of his death,
the provisions of this subparagraph (f) shall apply.

                  (1) If a Participant dies prior to the Participant's
Retirement Date, such Participant's Beneficiary shall receive a death benefit
equal to the Actuarial Equivalent of the Accrued Benefit determined as of the
date of death.

                  (2) Death benefits payable by reason of the death of a
Participant or a Retired Participant shall be paid to such Participant's
Beneficiary in accordance with the following provisions:

                        (A) Upon the death of a Participant subsequent to the
Participant's Retirement Date, but prior to the Annuity Starting Date, the
Participant's Beneficiary shall be entitled to a death benefit in an amount
equal to the Actuarial Equivalent of the benefit the Participant would have
received at the Participant's Retirement Date.

                        (B) Upon the death of a Participant subsequent to the
Annuity Starting Date, the Participant's Beneficiary shall be entitled to
whatever death benefit may be available under the settlement arrangements
pursuant to which the Participant's benefit is made payable.

                        (C) In the event of a Terminated Participant's death
subsequent to the Participant's termination of employment, the Participant's
Beneficiary shall receive the Present Value of such Participant's Vested Accrued
Benefit as of the date of the Participant's death.

                  (3) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive the death benefit
payable as a result of the death of a Participant as the Administrator may deem
desirable. The Administrator's determination of death and the right of any
person to receive payment shall be conclusive.

                  (4) Unless otherwise elected in the manner prescribed in
Paragraph 6.4, the Beneficiary of that portion of the death benefit necessary to
fund the "minimum spouse's death benefit" shall be the Participant's surviving
spouse, who shall receive such benefit in the

                                       36
<PAGE>

form of a Pre-Retirement Survivor Annuity. Except, however, the Participant may
designate a Beneficiary other than the surviving spouse to receive the Actuarial
Equivalent of the "minimum spouse's death benefit" if:

                        (A) the Participant and the Participant's spouse have
validly waived the Pre-Retirement Survivor Annuity in the manner prescribed in
Paragraph 6.4, and the spouse has waived the right to be the Participant's
Beneficiary, or

                        (B) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the Participant has a court
order to such effect (and there is no qualified domestic relations order which
provides otherwise), or

                        (C) the Participant has no spouse, or

                        (D) the spouse cannot be located.

            In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time revoke a
designation of a Beneficiary or change a Beneficiary by filing written (or in
such other form as permitted by the Internal Revenue Service) notice of such
revocation or change with the Administrator. However, the Participant's spouse
must again consent in writing (or in such other form as permitted by the
Internal Revenue Service) to any change in Beneficiary of that portion of the
death benefit that would otherwise be paid as a Pre-Retirement Survivor Annuity
unless the original consent acknowledged that the spouse had the right to limit
consent only to a specific Beneficiary and that the spouse voluntarily elected
to relinquish such right. That portion of the death benefit remaining after the
"minimum spouse's death benefit" shall be paid to the Participant's designated
Beneficiary. In the event no valid designation of Beneficiary exists, or if the
Beneficiary is not alive, at the time of the Participant's death, the death
benefit shall be payable in accordance with Paragraph 6.6. Additionally, if the
Beneficiary does not predecease the Participant, but dies prior to the
distribution of the death benefit, the death benefit will be paid to the
Beneficiary's estate.

                  (5) The benefit payable under this subparagraph (f) shall be
paid pursuant to the provisions of Article IX.

                  (6) In no event shall the death benefit payable to a surviving
spouse be less than the Actuarial Equivalent of the "minimum spouse's death
benefit."

                  (7) For the purposes of this Section, the "minimum spouse's
death benefit" means a death benefit for a Vested married Participant payable in
the form of a Pre-Retirement Survivor Annuity. Such annuity payments shall be
equal to the amount which would be payable as a survivor annuity under the joint
and survivor annuity provisions of the Plan if:

                        (A) in the case of a Participant who dies after the
Earliest Retirement Age, such Participant had retired with an immediate joint
and survivor annuity on the day before the Participant's date of death, or

                                       37
<PAGE>

                        (B) in the case of a Participant who dies on or before
the Earliest Retirement Age, such Participant had:

                              (i) separated from service on the earlier of the
      actual time of separation or the date of death,

                              (ii) survived to the Earliest Retirement Age,

                              (iii) retired with an immediate joint and survivor
      annuity at the Earliest Retirement Age based on the Participant's Vested
      Accrued Benefit on date of death, and

                              (iv) died on the day after the day on which said
      Participant would have attained the Earliest Retirement Age.

            (g) Inactive Participants who are not credited with an Hour of
      Service after August 22, 1984 shall be provided with rights to a
      pre-retirement survivor annuity in accordance with Section 303(e)(2) of
      the Retirement Equity Act of 1984 and not under the preceding terms of
      this paragraph.

      6.2 Commencement of Payment. To the extent the Traditional Formula
applies, unless a later date is elected by the Participant's Spouse, payment to
the Spouse of the Pre-Retirement Survivor Annuity or the Actuarial Equivalent
lump sum shall be made as soon as administratively feasible following the
Participant's Earliest Retirement Age (as defined in Paragraph 6.1). To the
extent the Cash Balance Formula applies, the Actuarial Equivalent of the
Pre-Retirement Survivor Annuity or the balance credited to the Participant's
Account shall be payable as soon as administratively feasible following the
Administrator's receipt of the Spouse's and/or Beneficiary's election(s).
Notwithstanding anything to the contrary herein, distribution of the
Pre-Retirement Survivor Annuity to a surviving Spouse must commence on or before
the later of: (1) December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December 31st of the
calendar year in which the Participant would have attained age 70 1/2 ("Required
Beginning Date"). Distribution to a designated Beneficiary (who is not the
Spouse) must be made by December 31st of the calendar year immediately following
the calendar year during which the Participant died.

      6.3 Notice of Right to Waive Pre-Retirement Survivor Annuity. The
Administrator shall provide each Participant with a written explanation of the
terms and conditions of the Pre-Retirement Survivor Annuity in a manner
consistent with Treasury regulations within that of the following periods ending
last:

            (a) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year in
which the Participant attains age 34;

            (b) a reasonable period after he became a Participant;

                                       38
<PAGE>

            (c) a reasonable period ending after Code ss.401(a)(11) first
applies to the Participant;

            (d) a reasonable period after the Participant's termination of
employment if the Participant's termination occurs prior to age 35.

      6.4 Effective Waiver of Pre-Retirement Survivor Annuity.

            (a) Election Period. A waiver of a Pre-Retirement Survivor Annuity
may be elected only during the period that begins on the first day of the Plan
Year in which the Participant attains age 35 (or, if he separates from Service
with the Employer prior to then, the date of separation) and ends on the date of
his death.

            (b) Form of Election. The Participant's election shall be made in
writing on a form prescribed by the Administrator.

            (c) Spousal Consent. The Participant's spouse must consent in
writing to a Participant's election under this paragraph. Such consent shall
acknowledge the effect of the election and shall be either notarized or
witnessed by a Plan representative.

            (d) Revocation of Election; Subsequent Election(s). A Participant
may revoke his election at any time during the election period and make one (1)
or more subsequent elections at any time during the election period. A Spouse
who consents to a Participant's election may not revoke his or her consent to
the Participant's election. A subsequent election by the Participant resulting
in a change of form of benefit must be consented to by the Spouse at the time
the subsequent election is made.

            (e) Valid Election Without Consent. Notwithstanding anything herein
to the contrary, a Participant's election under this paragraph shall be valid
without the Spouse's consent if the Participant establishes to the satisfaction
of the Plan Administrator that

                  (1) the Participant is not married at the time of the
election;

                  (2) after all reasonable efforts by the Participant, the
Spouse cannot be located; or

                  (3) there exists other circumstances not requiring spousal
consent, as provided under Treasury regulations.

      6.5 Beneficiary Designation. Except as provided in subparagraph 6.1(f), no
beneficiary other than the Participant's Spouse shall be entitled to receive
death benefits payable by reason of a married Participant's death prior to his
Annuity Starting Date. To the extent the Cash Balance Formula applies to a
Participant who is not married at the time of his death prior to his Annuity
Starting Date, death benefits shall be paid to the Beneficiary designated by the
Participant.

                                       39
<PAGE>

      6.6 No Beneficiary Designation. If a Participant fails to name a
Beneficiary in accordance with Paragraph 6.5, or if all designated Beneficiaries
predecease him or die before complete distribution of benefits, the Trustees
shall pay the Participant's remaining benefits in one of the methods specified
under Article IX in the following order of priority to:

            (a) the surviving Spouse;

            (b) surviving children, including adopted children, in equal shares;
or

            (c) the legal representatives of the estate of the last to die of
the Participant and his Beneficiary.

                                       40
<PAGE>

                                   Article VII

                         EMPLOYMENT TERMINATION BENEFITS

      7.1 Termination of Employment. Any Participant who terminates from Service
prior to attaining Retirement Age shall be entitled to receive the Vested
portion of his Accrued Benefit in accordance with the terms of this Article.
Vesting shall be determined under the following schedule, based on his Years of
Vesting Service as of his termination date:

            (a) For those Participants hired on or after January 1, 1989:

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

                  Less than 5                                 0%

                  5 or more                                 100%

            (b) For those Participants hired before January 1, 1989 credited
with at least 1 Hour of Service on or after January 1, 1989:

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

                  Less than 4                                  0%

                  4                                           40%

                  5 or more                                  100%

If this Plan becomes Top Heavy, this vesting schedule shall be superceded by the
vesting schedule set forth in Article XIV.

      7.2 Vesting Service.

            (a) Except as otherwise provided in this paragraph, for purposes of
Paragraph 7.1, a "Year of Vesting Service" shall mean any Vesting Computation
Period during which the Participant completes at least 1000 Hours of Service
with the Employer. Should an Employee's Eligibility Computation Period overlap
two Vesting Computation Periods, and if such Employee completes 1000 Hours of
Service in the Eligibility Computation Period but fails to complete 1000 Hours
of Service in either of the overlapping Vesting Computation Periods, the Year of
Service completed for eligibility purposes shall also be considered a Year of
Vesting Service at the time the Employee becomes a Participant.

            (b) With respect to any Employee described in Paragraph 3.9, all of
the Employee's service with Key Bank, N.A., Fleet Bank, Benefit Plans
Administrators, Chase Bank, Citizens Bank, FleetBoston, Pricewaterhouse Coopers,
LLP, Peoples Bankcorp, Inc.,

                                       41
<PAGE>

Grange National Banc Corp., First Heritage Bank or HSBC, as the case may be,
prior to such Employee's employment by the Employer shall be treated as Service
with the Employer for purposes of determining his Vested interest in his Accrued
Benefit under this Plan.

            (c) With respect to any Employee described in Paragraph 3.10, all of
the Employee's service with Elias prior to April 3, 2000 shall be treated as
Service with the Employer for purposes of determining his Vested interest in his
Accrued Benefit under this Plan.

      7.3 Break in Service. For purposes of this Article, a Participant shall
incur a Break in Vesting Service if during any Vesting Computation Period he
does not complete more than 500 Hours of Service with the Employer.

      7.4 Determination of Years of Service for Vesting. All of the
Participant's credited Years of Vesting Service with the Employer shall be taken
into account in determining a Participant's Vested interest in the Plan, except
as follows:

            (a) In the case of a Participant who has any One-Year Break in
Service, Years of Vesting Service before such Break shall be disregarded until
such Participant completes a Year of Vesting Service after his return to
employment.

            (b) In the case of any Participant who incurs 5 or more consecutive
One-Year Breaks in Service and who at the time of his Termination of Employment
did not have a Vested right to any portion of his Accrued Benefit derived from
Employer Contributions, Years of Vesting Service before such break shall be
disregarded for purposes of vesting his Accrued Benefit that is earned after
such break if the number of consecutive One-Year Breaks in Service equals or
exceeds the number of Years of Vesting Service before such break. Such aggregate
number of Years of Vesting Service before such break shall not include any Years
of Vesting Service not required to be taken into account under this paragraph by
reason of any prior Break in Service.

            (c) Years of Vesting Service after a period of 5 or more consecutive
One-Year Breaks in Service shall be disregarded for purposes of determining the
Participant's Vested interest in his Accrued Benefit that is earned before such
break.

            (d) Notwithstanding (c) above, for the purpose of determining a
reemployed Participant's Vested interest in his Accrued Benefit earned after
such Participant's date of reemployment, if the Participant had a Vested
interest in his then Accrued Benefit when his prior period of employment
terminated, any Years of Vesting Service attributable to his prior period of
employment shall not be disregarded and shall be reinstated as of the date of
such Participant's reparticipation.

      7.5 Forfeitures.

            (a) Forfeiture of any portion of a Participant's Accrued Benefit
shall occur as of the date the Participant receives a lump sum distribution of
his Vested Accrued Benefit following his Termination of Employment. A
Participant who at his Termination of Employment

                                       42
<PAGE>

had no Vested right to his Accrued Benefit will be considered to have received a
lump sum distribution of his entire Vested Accrued Benefit on the last day on
which he performed an Hour of Service.

            (b) Forfeitures for any Plan Year shall be applied to reduce the
Employer's contribution to the Trust for such Plan Year and succeeding Plan
Years and shall not revert to the Employer except as otherwise permitted herein.

      7.6 Payment of Vested Benefit.

            (a) To the extent the Traditional Formula applies, the Vested
Accrued Benefit of a Participant who terminates employment prior to attaining
Retirement Age shall become payable to the Participant, if living, in an
Actuarial Equivalent amount as soon as administratively feasible following the
date the Participant attains Retirement Age. Payment shall be made to the
Participant in the normal form in accordance with Paragraph 9.1 or an optional
form in accordance with Paragraph 9.3.

            (b) To the extent the Cash Balance Formula applies, the Vested
Account balance of a Participant who terminates employment shall be payable to
the Participant as soon as administratively feasible following the
Administrator's receipt of appropriate election and consent forms. Payment shall
be made in accordance with Article IX.

            (c) Notwithstanding subparagraphs (a) and (b), the single sum
Actuarial Equivalent of the Participant's Vested Accrued Benefit shall be paid
in a single sum as soon as practicable following his Termination of Employment
without his consent or the consent of his Spouse under any of the following
circumstances:

                  (1) for distribution occurring in Plan Years beginning before
August 6, 1997, the amount of such single sum did not exceed $3,500 at the time
of distribution;

                  (2) for distributions occurring in Plan Years beginning on or
after August 6, 1997, the amount of such single sum does not exceed $5,000 at
the time of distribution, regardless of the value of the Participant's Vested
Accrued Benefit at the time of any earlier distribution; however, this
subparagraph (2) shall not apply if a Participant has begun to receive
distribution of his Vested Accrued Benefit and there is still payable at least
one scheduled periodic distribution and the single sum present value of his
Vested Accrued Benefit exceeded $5,000 at the time the earlier distribution
began or was made.

      7.7 Reemployment of Participant. If a former Participant who received a
distribution returns to Service and repays the entire amount previously
received, plus interest from the date of distribution at 120% of the Federal
mid-term rate (in effect under Code ss.1274 for the first month of the Plan Year
of payment) compounded annually, before the earlier of (i) the fifth anniversary
of the Participant's Reemployment Date or (ii) the close of a period of 5
consecutive One-Year Breaks in Service commencing after distribution, his
Accrued Benefit, Years of Creditable Service and Years of Vesting Service shall
be restored to the levels at the time of his termination of employment. If the
former Participant fails to repay the amount(s) plus

                                       43
<PAGE>

interest, his Accrued Benefit, Years of Creditable Service and Years of Vesting
Service attributable to his pre-Break Service shall be fully restored, but his
benefit payable upon his later termination from Service shall be reduced
actuarially by the value of amounts previously paid.

                                       44
<PAGE>

                                  Article VIII

                             LIMITATION OF BENEFITS

      8.1 Maximum Permissible Benefit.

            (a) Except as otherwise provided in this Article, a Participant's
annual retirement benefit payable hereunder and expressed as a straight life
annuity with no ancillary benefits (hereinafter referred to in this Article as
the "Annual Benefit") shall not exceed the lesser of:

                  (1) $160,000 ($90,000 for Limitation Years ending before
January 1, 2002) multiplied by the Cost of Living Factor, and further multiplied
by a fraction (not to exceed 1), the numerator of which is the Participant's
Years of Participation, and the denominator of which is 10; or

                  (2) 100% of the Participant's Compensation for his high three
consecutive Years of Service, multiplied by a fraction (not to exceed 1), the
numerator of which is all of his Years of Service, and the denominator of which
is 10.

For purposes of this paragraph, a Year of Service shall mean any Eligibility
Computation Period, beginning on the Participant's first hire date or
thereafter, during which the Participant completed 1000 Hours of Service. The
limitation described in this subparagraph (a) shall be referred to in this
Article as the Participant's "Maximum Permissible Benefit".

            (b) An Accrued Benefit payable in any form other than a straight
life annuity shall be adjusted to an equivalent straight life annuity. For
purposes of adjusting a benefit to an equivalent "annual benefit", the
equivalent "annual benefit" shall be the greater of the Actuarial Equivalent of
such "annual benefit" computed using the Plan interest rate and mortality table
(as determined under Paragraph 2.3) and the equivalent "annual benefit" computed
using 5% interest and the blended 1983 GAM table specified in Revenue Ruling
95-6, or such successor table as may be prescribed by the Secretary of the
Treasury. If the benefit is paid in a form other than a nondecreasing life
annuity payable for a period of not less than the life of the Participant or, in
the case of a Pre-Retirement Survivor Annuity, the life of the surviving spouse,
the annual interest rate on 30-year Treasury securities as published for the
second full calendar month (the "Lookback Month") preceding the first day of the
Plan Year (the "Stability Period") shall be substituted for 5% in the preceding
sentence. As the Effective Date of the Plan is after the first day of the first
Limitation Year beginning in 1995 (the "Retirement Protection Act of 1994
section 415 effective date"), all changes to Code ss.415(b)(2)(E) enacted in the
Retirement Protection Act of 1994 shall apply to all benefit calculations
hereunder.

      8.2 Aggregation of Defined Benefit Plans. For purposes of this Article,
all defined benefit plans maintained by the Employer shall be considered as a
single plan.

                                       45
<PAGE>

      8.3 Adjustments to Benefit Limitations.

            (a) Retirement Prior to Social Security Retirement Age. If a
Participant's retirement benefit begins before the Participant's Social Security
Retirement Age under the Social Security Act, the dollar limitation under
Paragraph 8.1(a)(l) shall be reduced as follows:

                  (1) If payment commences prior to age 62, reduction of the
dollar limit under Paragraph 8.1(a)(1) shall be to the Actuarial Equivalent of
such dollar limit beginning at age 62, reduced for each month by which benefits
commence before the month the Participant attains age 62. The interest rate
assumption used to determine the Actuarial Equivalent shall be the greater of 5%
or the post-retirement interest rate described in Paragraph 2.3(b).

                  (2) If payment commences on or after age 62 and the
Participant's Social Security Retirement Age is 65, reduction of the dollar
limit under Paragraph 8.1(a)(l) shall be 5/9 of 1 % for each month by which
benefits commence before the month in which the Participant attains age 65.

                  (3) If payment commences on or after age 62 and the
Participant's Social Security Retirement Age is 66 or older, reduction of the
dollar limit under Paragraph 8.1(a)(l) shall be 5/9 of 1% for each of the first
36 months and 5/12 of 1 % for each additional month (up to 24 months) by which
benefits commence before the month of the Participant's Social Security
Retirement Age.

      For Limitation Years ending after December 31, 2001, if a Participant's
retirement benefit begins before the Participant attains age 62, the dollar
limitation under Paragraph 8.1(a)(1) shall be reduced to the Actuarial
Equivalent of such dollar limit beginning at age 62, reduced for each month by
which benefits commence before the month the Participant attains age 62. The
interest rate assumption used to determine the Actuarial Equivalent shall be the
greater of 5% or the post-retirement interest rate described in Paragraph
2.3(b).

            (b) Retirement After Social Security Retirement Age. If the
retirement benefit begins after the Participant's Social Security Retirement
Age, the dollar limitation under Paragraph 8.1(a)(l) shall be increased so that
it is the Actuarial Equivalent of the amount in such Paragraph 8.1 (a)(l)
beginning at the Participant's Social Security Retirement Age, multiplied by the
Cost of Living Factor. The interest rate assumption used to determine the
Actuarial Equivalent shall not exceed 5%.

      For Limitation Years ending after December 31, 2001, if the retirement
benefit begins on or after the Participant 66th birthday, the dollar limitation
under Paragraph 8.1(a)(1) shall be increased so that it is the Actuarial
Equivalent of the amount in such Paragraph 8.1(a)(1) beginning at age 66,
multiplied by the Cost of Living Factor. The interest rate assumption used to
determine the Actuarial Equivalent shall not exceed 5%.

            (c) No Anticipatory Adjustments. For purposes of adjusting the
Annual Benefit under this paragraph, no adjustments shall be taken into account
before the year for which such adjustment first takes effect.

                                       46
<PAGE>

      8.4 Exception for Minimum Benefit. Notwithstanding the preceding
provisions of this Article, the Participant's retirement benefit shall be deemed
not to exceed the Maximum Permissible Benefit if (a) his Annual Benefit payable
under this Plan and under all other Defined Benefit Plans sponsored by the
Employer does not exceed $10,000, multiplied by a fraction (not to exceed 1) the
numerator of which is all of his Years of Service (as defined in Paragraph
8.1(a)) and the denominator of which is 10; and (b) the Participant never
participated in a Defined Contribution Plan maintained by the Employer.

      8.5 Limitations for Defined Contribution Plans. Effective for Plan Years
beginning on or after December 31, 1994, the Annual Additions for any Limitation
Year for a Participant participating only in a Defined Contribution Plan
maintained by the Employer shall not exceed the lesser of: (i) $30,000
multiplied by the applicable Cost of Living Factor, or (ii) 25% of the
Participant's compensation as defined in Code ss.415(c)(3).

      8.6 Limitation if Employer Maintains Defined Contribution Plan(s) in
Addition to this Plan. For Plan Years beginning prior to January 1, 2000, if an
Employee is or has ever been a Participant in one or more Defined Benefit Plans
and one or more Defined Contribution Plans maintained by the Employer or any
Affiliated Company, then for any Limitation Year the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction may not
exceed 1.0. If for any Limitation Year such sum would exceed 1.0, to the extent
necessary to avoid such excess (a) the Participant's voluntary contributions
which constitute Annual Additions to the Defined Contribution Plans of the
Employer and any Affiliated Company and Participant voluntary contributions to
this Plan shall be returned to him, and (b) the annual benefit which the
Participant would accrue for such Limitation Year under this Plan shall be
limited such that the sum of both fractions shall not exceed 1.0.

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

            (a) "Annual Additions" with respect to any Participant shall mean
the sum of the following amounts allocated to the Participant's Account in a
Defined Contribution Plan for a Limitation Year:

                  (1) all Employer contributions;

                  (2) all Employee contributions (excluding any Rollover
Amount);

                  (3) all forfeitures; plus

                  (4) amounts described in Code ss.415(i)(1) and amounts
described in Code ss.419(A)(d)(2), which are paid or accrued to a Key Employee,
but only for determining whether the dollar limit in Paragraph 8.5 is exceeded.

            (b) "Limitation Year" shall mean the Employer's fiscal year or any
other 12 consecutive month period the Employer, by written resolution, adopts
for all plans of which it is the Employer.

                                       47
<PAGE>

            (c) "Accounting Date" shall mean the date with respect to which the
plan administrator allocates all or any portion of Employer contributions,
Employee contributions, and Forfeitures (if any) to the Participants' Accounts.

            (d) "Highest average compensation" shall mean the average
Compensation for the 3 consecutive years of service with the Employer that
produces the highest average.

            (e) "Participant's Account" shall mean the account established and
maintained for each Participant with respect to his total interest in the
Defined Contribution Plan maintained by the Employer.

            (f) (1) "Compensation" for purposes of the limitations contained in
this Article shall be the Participant's Compensation measured in relation to the
Limitation Year, adjusted in accordance with Treas. Regs. ss.1.415-2(d)(2) and
(3).

                  (2) For Limitation Years beginning on and after January 1,
2001, for purposes of applying the limitations described in Paragraphs 8.1 and
8.5, Compensation paid or made available during such limitation years shall
include elective amounts that are not includible in the gross income of the
Employee by reason of Code ss.132(f)(4).

            (g) Social Security Retirement Age means:

                  (1) age 65 for a Participant attaining age 62 before January
1, 2000;

                  (2) age 66 for a Participant attaining age 62 after December
31, 1999 and before January 1, 2017;

                  (3) age 67 for a Participant attaining age 62 after December
31, 2016.

                                       48
<PAGE>

                                   Article IX

                               PAYMENT OF BENEFITS

      9.1 Form and Payment of Benefit. The retirement benefit payable to a
Participant hereunder shall be paid in accordance with the following:

            (a) The normal form of benefit is, for a non-married Participant, a
life annuity, and for a married Participant, a Qualified Joint and Survivor
Annuity which is the Actuarial Equivalent of his Accrued Benefit payable in the
form of a life annuity. Prior to distribution, the Administrator shall obtain
the consent of the Participant and, if he is married, the Participant's Spouse,
if required pursuant to Paragraph 9.9.

            (b) Subject to the terms of Paragraph 9.4, unless the Participant
elects a later beginning date in writing, the Trustee shall commence
distribution of a Participant's benefit not later than 60 days after the close
of the Plan Year in which the latest of the following occurs:

                  (1) The earlier of the Participant's Normal Retirement Date,
or the date he attains age 65;

                  (2) The tenth anniversary of the year in which the Participant
commenced participation in the Plan; or

                  (3) The date on which the Participant terminates Service with
the Employer.

            (c) Notwithstanding the terms of subparagraph (a), a Participant may
elect at any time during the 90-day period ending on his Annuity Starting Date
to receive an optional form of benefit under Paragraph 9.3 or to select a
non-Spouse Beneficiary, however, a married Participant must obtain the consent
of his Spouse to either such election unless otherwise provided in this Article.

      9.2 Notice of Right to Waive Normal Form and Select Optional Form.

            (a) Subject to the provisions of subparagraph (b) below, no less
than 30 days nor more than 90 days before the Participant's Annuity Starting
Date, the Administrator shall provide the Participant a written explanation of
the terms and conditions of the normal form of benefit, including the
Participant's right to make and the effect of an election to waive the normal
form of benefit, the material features and relative values of the available
optional forms of benefit, the rights of the Participant's Spouse regarding the
waiver election, and the Participant's right to make and the effect of a
revocation of a waiver election.

            (b) Effective for Plan Years beginning after December 31, 1996, the
Participant may elect to begin receiving his benefits less than 30 days after
the Participant receives the written explanation described in subparagraph (a)
above, provided that:

                                       49
<PAGE>

                  (1) the Administrator clearly informs the Participant of the
Participant's right to a period of at least 30 days after receipt of the
explanation to consider the decision to receive his benefit and to elect an
optional form;

                  (2) the distribution does not begin before the end of the
7-day period that begins the day after the Participant's receipt of the written
explanation;

                  (3) the Participant affirmatively elects distribution after
receipt of the notice;

                  (4) the Participant is notified of his right to revoke his
election prior to the end of the 7-day period described in subparagraph (b)(2)
above and does not revoke his election within that time period; and

                  (5) in accordance with Paragraph 9.5 his Spouse consents to
the optional form chosen (if any) and to the waiver of the 30-day notice period.

      9.3 Optional Forms of Benefit.

            (a) Participant's Waiver and Election of Optional Form. A
Participant may elect, under the procedure described in Paragraph 9.5, to waive
his normal form of benefit and select an Actuarial Equivalent form under one of
the following options:

                  (1) a life annuity, payable no less frequently than annually,
with payments ending on the Participant's death;

                  (2) a life annuity with 60 monthly payments guaranteed;

                  (3) a joint life and last survivor annuity, with payments
ending on the death of the survivor of the Participant and the contingent
annuitant (Payments to the contingent annuitant shall be equal to 50%, 75% or
100% of the monthly amount paid to the Participants.);

                  (4) a joint life and last survivor annuity, payable no less
frequently than annually, with 60 monthly payments guaranteed;

                  (5) to the extent the Cash Balance Formula applies, or
subparagraph 5.2(a)(9), 5.2(a)(10), 5.3(d) or 5.3(e) applies, a single lump sum
payment; and

                  (6) with respect to any vested Participant who terminated
employment for any reason after December 31, 2003 and before October 1, 2004, a
single lump sum payment; provided that such a Participant must make the lump sum
election by June 30, 2005. Eligible Participants who make the foregoing election
and who previously commenced receipt of Plan benefits shall be considered to
have a new Annuity Starting Date and shall have the elected lump sum payment
reduced by the value of Plan benefits previously paid.

                                       50
<PAGE>

            (b) Cash-Out. Notwithstanding the normal form of benefit or any
optional form selected by the Participant, the Actuarial Equivalent of the
Participant's Vested Accrued Benefit shall be paid in a single sum under any of
the following circumstances:

                  (1) for distribution occurring in Plan Years beginning before
August 6, 1997, the amount of such single sum does not exceed $3,500 at the time
of distribution; or

                  (2) for distributions occurring in Plan Years beginning on or
after August 6, 1997, the amount of such single sum does not exceed $5,000 at
the time of distribution, regardless of the value of the Participant's Vested
Accrued Benefit at the time of any earlier distribution; however, this
subparagraph shall not apply if a Participant has begun to receive distribution
of his Vested Accrued Benefit and there is still payable at least one scheduled
periodic distribution and the single sum present value of his Vested Accrued
Benefit exceeded $5,000 at the time the earlier distribution began or was made.

Such distributions may be made without the consent of either the Participant or
his Spouse; however, if distribution is to be made after the Annuity Starting
Date, the Participant and his Spouse (or if the Participant has died, the
surviving Spouse) must consent in writing to such distribution in accordance
with Paragraph 9.9.

            (c) Selection of Form by Beneficiary. Following a Participant's
death the Beneficiary may elect to receive his or her benefit under any of the
options listed in subparagraph (a), unless the Participant irrevocably elects an
optional form of benefit to be paid to his Beneficiary.

            (d) Alternate Form to Comply With Minimum Distribution Rules. No
alternate form of benefit described in subparagraph (a) shall result in an
annual payment to a Participant or his Beneficiary which fails to comply with
the minimum distribution rules under Code ss.401(a)(9), as generally described
in Paragraph 9.4. The Administrator shall, after consultation with the
Participant (or his Beneficiary, as the case may be), modify such non-complying
form to the extent necessary to conform the selected mode of payment to such
rules.

            (e) Validity of ss.242(b)(2) Elections. Notwithstanding the
foregoing provisions of this Article, the Administrator shall pay the
Participant's retirement benefit in accordance with his timely written election
which meets the requirements of ss.242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982, provided that a married Participant's Spouse
consents in writing to such election, which consent is either notarized or
witnessed by a Plan representative.

            (f) Validity of Waiver. A Participant's waiver of the normal form of
retirement benefit or pre-retirement death benefit and election of an optional
form under this paragraph shall be valid only if executed in accordance with
Paragraph 9.5.

            (g) Participant Consent to Early Distributions. No distribution of
an optional form of benefit to the Participant (except a cash-out under
subparagraph (b)) may be made without the Participant's prior consent, if
required under the provisions of Paragraph 9.9.

                                       51
<PAGE>

      9.4 Minimum Distribution Rules.

            (a) Benefits under this Plan shall be paid in a form that, as of the
Required Beginning Date, satisfies the minimum distribution rules and minimum
distribution incidental benefit rules under this paragraph, Code ss.401(a)(9)
and Treas. Reg. ss. 1.401(a)(9)-2. If any provision of this Plan is inconsistent
with Code ss.401(a)(9), the provisions of Code ss.401(a)(9) shall control.

            (b) The Administrator shall, after consultation with the Participant
(or his Beneficiary, as the case may be), modify any noncomplying form of
payment to the extent necessary to conform the selected mode of payment to such
rules.

            (c) Without limiting the generality of the foregoing provisions of
this paragraph, a Participant's Accrued Benefit payable to the Participant must
be distributed:

                  (1) in its entirety to the Participant on or before his
Required Beginning Date, or

                  (2) in two or more payments, beginning on or before his
Required Beginning Date, over a period of time not extending beyond the
Participant's life, the lives of the Participant and his Designated Beneficiary,
the Participant's life expectancy, or the joint life and last survivor
expectancy of the Participant and his Designated Beneficiary.

            (d) If the Participant dies prior to the date benefit payments have
begun (determined in accordance with Code ss.401(a)(9)), the following rules
apply:

                  (1) With respect to benefits payable other than to a
Designated Beneficiary, the benefits shall be distributed in their entirety by
no later than December 31 of the calendar year in which occurs the fifth
anniversary of the Participant's death;

                  (2) The portion of the Participant's benefit payable to a
Designated Beneficiary shall commence by December 31 of the calendar year
immediately following the calendar year of the Participant's death, and shall be
distributed in minimum amounts in accordance with Code ss.401(a)(9), over the
life of the Designated Beneficiary or over a period not longer than the
Designated Beneficiary's life expectancy as selected by the Designated
Beneficiary. Alternatively, the Designated Beneficiary may irrevocably elect to
receive all benefits by no later than December 31 of the calendar year
containing the fifth anniversary of the Participant's death. Such election must
be made by the earlier of:

                        (A) December 31 of the calendar year in which
distributions would, absent such election, be required to begin to the
Designated Beneficiary; or

                        (B) December 31 of the calendar year containing the
fifth anniversary of the Participant's death.

                                       52
<PAGE>

Absent such election, payments shall be made over the life expectancy of the
Designated Beneficiary, commencing by December 31 of the calendar year following
the Participant's death. With respect to benefits payable to the surviving
Spouse, payment need not commence until the later of (i) December 31 of the
calendar year immediately following the calendar year of the Participant's
death, or (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2.

            (e) Death of Participant After Payments Begin. If the Participant
dies after the date benefit payments have begun (determined in accordance with
Code ss.401(a)(9)), the balance of the Participant's benefit shall be
distributed at least as rapidly as under the method of distribution in effect as
of the date of his death.

            (f) Definitions. For purposes of this Article:

                  (1) "Required Beginning Date" shall mean:

                        (A) for a Participant who is a 5% owner (as determined
under Code ss.401(a)(9)), the April 1 following the calendar year in which he
attains age 70 1/2; and

                        (B) effective for Plan Years beginning after December
31, 1996, for all other Participants, the April 1 following the later of (i) the
calendar year in which he attains age 70 1/2 or (ii) the calendar year in which
he retires. If the Participant becomes a 5% owner after attaining age 70 1/2,
his Required Beginning Date shall be the April 1 immediately following the
calendar year with or within which ends the Plan Year in which the Participant
became a 5% owner.

                  (2) "Designated Beneficiary" shall mean such person or entity
named by the Participant or named pursuant to Paragraph 6.6 to receive benefits
following the Participant's death, who (or which) qualifies as a "designated
beneficiary" under Code ss.401(a)(9).

            (g) Effect of Disclaimer. Any Designated Beneficiary may disclaim
all or any portion of the benefit to which the Designated Beneficiary is
entitled at any time within 9 months following the Participant's death. Such
disclaimed portion shall then be payable to such alternate Beneficiary
designated by the Participant to receive the disclaimed portion, or in the
absence of such contingent designation, to such individual(s), in the order of
priority, designated in Paragraph 6.6.

      9.5 Election Procedure-Qualified Waivers.

            (a) Election Period. A married Participant's waiver of a Qualified
Joint and Survivor Annuity or an unmarried Participant's waiver of a straight
life annuity may be elected only during the 90-day period ending on the Annuity
Starting Date.

            (b) Form of Election. The Participant's election shall be made in
writing on a form prescribed by the Administrator.

                                       53
<PAGE>

            (c) Spousal Consent. No election of an optional form of benefit by a
married Participant shall be effective without the written consent of the
Participant's Spouse. Such consent shall acknowledge the effect of the election
and shall be either notarized or witnessed by a Plan representative.

            (d) Revocation of Election; Subsequent Election(s). A Participant
may revoke his election at any time during the applicable election period, and
he or she may make one or more subsequent elections at any time during the
applicable election period. A Spouse who consents to a Participant's election
may not revoke his or her consent to that election. A subsequent election by the
Participant resulting in a change of Beneficiary or form of benefit must be
consented to by the Participant's Spouse at the time the subsequent election is
made, unless the Spouse executed a general consent. Such consent must, in
addition, acknowledge the specific non-spouse Beneficiary including any class of
beneficiaries or any contingent Beneficiaries.

            (e) Valid Election Without Consent. Notwithstanding anything herein
to the contrary, a Participant's election under this paragraph shall be valid
without the Spouse's consent if the Participant establishes to the satisfaction
of the Administrator that:

                  (1) the Participant is not married at the time of the
election;

                  (2) after all reasonable efforts by the Participant, the
Participant's Spouse cannot be located; or

                  (3) there exists other circumstances not requiring spousal
consent, as provided under Treasury regulations.

      9.6 Qualified Domestic Relations Orders. For purposes of this Article and
Article XV, to the extent provided in a Qualified Domestic Relations Order (as
defined in Article XV), a Participant's Spouse or former Spouse who is entitled
to any portion of the Participant's Accrued Benefit shall be treated as the
Participant's Spouse or surviving Spouse, as the case may be, with respect to
the portion of the Accrued Benefit to which he or she may be entitled under such
Qualified Domestic Relations Order. With respect to the remaining portion (if
any) of the Participant's Accrued Benefit, the Participant's former Spouse shall
be treated as not married to the Participant.

      9.7 Post-Distribution Credits. If after payment has commenced there shall
be additional benefits accrued by a Participant, the Administrator shall direct
adjustment of the remaining payments so as to include all such credited sums, as
nearly evenly as possible, in the remaining payments.

      9.8 Incompetency of Recipient. In the event of the incompetency of a
Participant or Beneficiary at any time while he or she is entitled to receive
benefits under the Plan, the Trustees, in their sole discretion, may pay such
benefits to the legal representative of such incompetent or to such other person
as the Trustees shall deem appropriate.

                                       54
<PAGE>

      9.9 Required Consents.

            (a) (1) If the Participant's Vested Accrued Benefit cannot be
distributed under Paragraphs 7.6(b) or 9.3(b), the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of the Vested Accrued Benefit.
Such consent shall be obtained in writing within the 90-day period ending on the
Annuity Starting Date. The Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any distribution until the
Participant's Accrued Benefit is no longer immediately distributable. Such
notification shall describe the material features and explain the relative
values of the optional forms of benefit available under the Plan in a manner
that would satisfy the notice requirements of Paragraph 9.2. The notice shall be
provided no less than 30 days but no more than 90 days prior to the Annuity
Starting Date, except as provided in subparagraph (a)(2) below.

                  (2) The written explanation described in subparagraph (a)(1)
may be provided after the Annuity Starting Date, in which case the 90-day
election period shall not end before the 30th day after the date on which such
explanation is provided. The Secretary may by regulations limit the period of
time by which the Annuity Starting Date precedes the provision of the written
explanation.

            A Participant may elect (with spousal consent if the Participant is
married) to waive any requirement that the written explanation be provided at
least 30 days before the Annuity Starting Date, and may waive the 30-day
requirement under the foregoing provisions of this subparagraph, if the
distribution commences more than 7 days after the explanation is provided.

            (b) Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint and
Survivor Annuity while the benefit is immediately distributable. Neither the
consent of the Participant or the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy Code ss.ss.401(a)(9) or 415.

            (c) A benefit is immediately distributable if any part of the
benefit could be distributed to the Participant (or surviving Spouse) before the
Participant attains (or would have attained had he not died) the later of his
Normal Retirement Age or age 62.

      9.10 Annuity Contracts. Any annuity form of distribution may be
distributed to the annuitant in the form of an annuity contract, provided that
such contract is by its terms non-transferable (except for surrender to the
obligor under such contract). The terms of any such contract shall comply with
the requirements of this Plan and, in the event of any conflict, the terms of
this Plan shall control.

      9.11 Loans to Participants. Loans to Participants or Beneficiaries shall
not be allowed from this Plan.

                                       55
<PAGE>

      9.12 Direct Rollover.

            (a) Rollover to Eligible Plan. Notwithstanding any contrary
provision in this Plan, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.

            (b) Definitions. For purposes of this paragraph:

                  (1) "Eligible Rollover Distribution" means any distribution of
all or any portion of the balance to the credit of the Distributee, except that
an Eligible Rollover Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of 10 years or more; any
distribution to the extent such distribution is required under Code
ss.401(a)(9); nor the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities). For distributions made after
December 31, 2001, any amount that is distributed on account of hardship shall
not be an eligible rollover distribution and the distribute may not elect to
have any portion of such a distribution paid directly to an eligible retirement
plan.

                  (2) "Eligible Retirement Plan" means an individual retirement
account described in Code ss.408(a), an individual retirement annuity described
in Code ss.408(b), an annuity plan described in Code ss.403(a), or a qualified
trust described in Code ss.401(a), 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 limited to an individual
retirement account or individual retirement annuity.

                  For distributions made after December 31, 2001, an eligible
retirement plan shall also mean an annuity contract described in Code ss.403(b)
and an eligible plan under Code ss.457(b) which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state, and which agrees to separately account for
amounts transferred into such plan from this Plan. The definition of eligible
retirement plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternative payee under a
qualified domestic relation order, as defined in Code ss.414(p).

                  (3) "Distributee" means an Employee or former Employee, his or
her surviving Spouse, or his or her Spouse or former Spouse who is the Alternate
Payee under a Qualified Domestic Relations Order (as defined in Paragraph 15.5)
with regard to the interest of the Spouse or former Spouse.

                  (4) "Direct Rollover" means a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.

                                       56
<PAGE>

            (c) Automatic Rollover. Effective as of March 28, 2005, absent an
affirmative election by the Distributee, an Eligible Rollover Distribution of an
amount in excess of $1,000 but not exceeding $5,000 which is required to be
distributed to the Distributee without the consent of the Distributee (in
accordance with the applicable terms of the Plan) shall be rolled over into an
individual retirement plan, as defined in Code Section 7701(a)(37), established
for the benefit of the Distributee. The establishment of the individual
retirement plan shall comply with the requirements of 29 C.F.R. 2550.404a-2.
Automatic rollovers from the Plan shall be administered in accordance with, and
shall be subject to, the requirements of Code Sections 401(a)(31) and 402.

                                       57
<PAGE>

                                    Article X

                                  CONTRIBUTIONS

      10.1 Fund. The funding of the Plan and payment of the benefits hereunder
will be provided through, and only through, the medium of a Trust Fund to which
contributions shall be made by the Employer as provided herein, and which shall
be held by the Trustee under the provisions of this Plan and Trust. This Plan
confers no right to any Participant, Beneficiary or any other person claiming
through such Participant or Beneficiary to any asset of the Employer to provide
the benefits provided hereunder.

      10.2 Employer Contributions. The Employer intends to make from time to
time such contributions to the Trust Fund as determined necessary or appropriate
by the Plan Administrator to fund the Plan in accordance with the minimum
funding standards of the Code, and to make such contributions in periodic
installments as may be required under ERISA or the Code. Administration expenses
of the Plan, unless paid by the Employer, will be paid out of the assets of the
Trust Fund.

      10.3 Employee Contributions. No Participant shall be required or allowed
to make contributions to the Trust.

      10.4 Rollover Contribution. Rollover Contributions will not be accepted by
the Plan.

                                       58
<PAGE>

                                   Article XI

                       EMPLOYER ADMINISTRATIVE PROVISIONS

      11.1 Information to Administrator. The Employer shall supply current
information to the Administrator as to the name, date of birth, date of
employment, annual compensation, leaves of absences, Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Administrator considers necessary. The Employer's records as to the current
information the Employer furnishes to the Administrator shall be conclusive as
to all persons.

      11.2 No Liability. Except as specifically provided herein, the Employer
assumes no obligation or responsibility to any of its Employees, Participants or
Beneficiaries for any act or failure to act on the part of the Trustees or the
Administrator.

      11.3 Indemnity of Administrator. To the maximum extent not prohibited by
law, the Employer shall indemnify and hold harmless the Administrator from and
against any and all loss, liability or expense incurred by the Administrator by
reason of any act or conduct (except that amounting to the Administrator's
willful misconduct or gross negligence) in the administration of the Trust or
Plan or both, including all expenses reasonably incurred in the Administrator's
defense in case the Employer fails to provide such defense.

                                       59
<PAGE>

                                   Article XII

                      PARTICIPANT ADMINISTRATIVE PROVISIONS

      12.1 Personal Data to Plan Administrator. Each person entitled to benefits
hereunder must furnish to the Administrator such evidence, data or information
as the Administrator considers necessary or desirable for the purpose of
administering the Plan. The provisions of this Plan are effective for the
benefit of each Participant upon the condition precedent that each Participant
furnish promptly full, true and complete evidence, data and information when
requested by the Administrator.

      12.2 Address for Notification. Each Participant and each Beneficiary of a
deceased Participant shall file with the Administrator from time to time, in
writing, his post office address and any change of post office address. Any
communication, statement or notice addressed to a Participant or Beneficiary at
his last post office address filed with the Administrator, or as shown on the
records of the Employer, shall bind the Participant, or Beneficiary, for all
purposes of this Plan.

      12.3 Assignment or Alienation. Except as permitted under the Code and/or
ERISA, neither a Participant nor a Beneficiary shall transfer, assign or
alienate any benefit provided under the Plan, nor shall such benefit be subject
to attachment, execution, garnishment or other legal or equitable process, and
the Trustee shall not recognize any such transfer, assignment, alienation,
attachment, execution or legal or equitable process.

      12.4 Litigation Against the Trust. If any legal action filed against the
Trustee or the Administrator, or against any individual Administrator, by or on
behalf of any Participant or Beneficiary, results adversely to the Participant
or to the Beneficiary, the Trustee shall reimburse itself or the Administrator
all costs and fees expended by it or him by surcharging, to the extent such
surcharging is not prohibited by ERISA, all costs and fees against the sums
payable under the Plan to the Participant or to the Beneficiary.

      12.5 Denial of Claim.

            (a) If the Plan Administrator denies a claim in whole or in part, it
shall send the claimant a written notice of the denial.

            (b) The Plan Administrator shall send the denial notice within 90
days after the date if receives a claim, unless it needs additional time to make
its decision. In that case, the Plan Administrator may authorize an extension of
up to an additional 90 days, if it notifies the claimant of the extension within
the initial 90-day period. The extension notice shall state the reasons for the
extension and the expected decision date.

            (c) The denial notice shall be written in a manner calculated to be
understood by the claimant and shall contain:

                  (1) The specific reason or reasons for the denial of the
claim;

                                       60
<PAGE>

                  (2) Specific reference to pertinent Plan provisions on which
the denial is based;

                  (3) A description of any additional material or information
necessary to perfect the claim, with an explanation of why the material or
information is necessary;

                  (4) An explanation of the review procedures provided by
Section 12.6 and 12.7; and

                  (5) A statement regarding the claimant's right to commence a
civil action.

      12.6 Request for Review of Denial.

            (a) Within 60 days after the claimant receives a denial notice, the
claimant may file a request for review with the Plan Administrator. Any such
request must be made in writing.

            (b) A claimant who timely requests review shall have the right to
review documents affecting the claim, to submit additional information or
written comments, and to be represented.

      12.7 Review Decision.

            (a) The Plan Administrator shall send the claimant a written
decision on any request for review that it receives.

            (b) The Plan Administrator shall send the review decision within 60
days after the date it receives a request for review, unless an extension of
time is needed, due to special circumstances. In that case, the Plan
Administrator may authorize an extension of up to an additional 60 days,
provided it notifies the claimant of the extension within the initial 60-day
period.

            (c) The review decision shall be written in a manner calculated to
be understood by the claimant and shall contain:

                  (1) The specific reason or reasons for the decision;

                  (2) Specific reference to the pertinent Plan provisions on
which the decision is based; and

                  (3) A statement regarding the claimant's right to commence a
civil action.

            (d) If the Plan Administrator does not send the claimant a review
decision within the applicable time period, the claim shall be deemed denied on
review.

                                       61
<PAGE>

            (e) The review decision (including a deemed decision) shall be the
final decision of the Plan.

                                       62
<PAGE>

                                  Article XIII

                                 ADMINISTRATION

      13.1 Appointment; Compensation.

            (a) The Employer shall appoint one or more persons (whether or not
Participants) to act as Administrator. In the absence of such appointment, the
Employer shall act as Administrator.

            (b) The Administrator shall serve without compensation, but the
Employer shall pay all expenses of the Administrator including the expense for
any bond required under ERISA.

      13.2 Term. The Administrator shall serve until its successor is appointed.
Any Administrator may resign upon 10 days' prior written notice. The Employer
may remove any individual acting as Administrator at any time and, in its
discretion, appoint a successor whenever a vacancy occurs.

      13.3 Action During Vacancy. In case of a vacancy in the position of
Administrator, the persons remaining to act as Administrator may exercise any
and all of the powers, authority, duties and discretion conferred upon the
Administrator pending the filling of the vacancy.

      13.4 General Powers and Duties. The Administrator shall have the authority
and responsibility to administer the Plan. The Administrator shall have all
powers necessary or appropriate to administer the Plan, including, but not
limited to the following:

            (a) to select a secretary, who need not be an individual;

            (b) to direct the Trustee as respects the crediting and distribution
of the Trust fund;

            (c) to furnish the Employer with information required by the
Employer for tax or other purposes;

            (d) to engage the service of actuaries, agents, accountants,
attorneys, physicians or such other personnel, whom it may deem advisable to
assist it with the performance of its duties;

            (e) to engage the services of an Investment Manager who shall have
full power and authority to manage, acquire or dispose (or direct the Trustees
with respect to acquisition or disposition) of any Plan asset under its control;

            (f) to be the sole and exclusive arbiter of all questions arising
with respect to issues under the Plan as to coverage and eligibility, both as to
participation and as to benefits and the amount thereof, including, without
limitation, the determination of those individuals who are

                                       63
<PAGE>

deemed employees of the Employer (or any controlled group member). This Plan is
to be construed to exclude all individuals who are not classified by the
Employer as employees for purposes of the Employer's payroll system, and the
Administrator is authorized to do so, despite the fact that its decision may
result in the loss of the Plan's tax qualification;

            (g) to adopt rules of procedure and regulations as the Administrator
deems desirable for the conduct of the administration of the Plan;

            (h) to interpret the terms of the Plan and the Administrator's rules
and regulations, and to determine all questions arising in the administration,
interpretation and application of the Plan;

            (i) to render and review decisions respecting claims for benefits
and rights under the Plan;

            (j) to make factual determinations relating to the value of a
Participant's Accrued Benefit and the right to receive such Accrued Benefit;

            (k) to determine whether a domestic relations order constitutes a
Qualified Domestic Relations Order and whether a putative Alternate Payee
otherwise qualifies for benefits hereunder; and

            (1) to correct any defect, supply any omission or reconcile any
inconsistency, including but not limited to mathematical or arithmetical errors,
in such manner and to such an extent as it shall deem necessary to carry out the
purposes of this Plan.

            Any final decision by the Administrator shall be binding and
conclusive on all parties concerned. The Administrator shall have absolute,
exclusive, total and complete discretion in carrying out the Administrator's
duties and responsibilities, and no decision by the Administrator shall be
modified or overturned upon judicial review unless it was arbitrary and
capricious or made in bad faith.

      13.5 Funding Policy. The Administrator shall establish a funding policy
and method consistent with the objectives of the Plan and the requirements of
Title I of ERISA. The Administrator shall review, not less often than annually,
all pertinent Employee information and Plan data in order to review the funding
policy of the Plan and to determine the appropriate methods of carrying out the
Plan's objectives. The Administrator shall communicate annually to the Trustee
and to any Investment Manager the Plan's short-term and long-term financial
needs so that investment policy can be coordinated with Plan financial
requirements.

      13.6 Manner of Action. The decision of a majority of persons acting as
Administrator shall control.

      13.7 Authorized Representative. The Administrator may authorize anyone of
its members to sign on its behalf any notices, directions, applications,
certificates, consents,

                                       64
<PAGE>

approvals, waivers, letters or other documents. The Administrator must evidence
this authority by an instrument signed by all members and filed with the
Trustees.

      13.8 Interested Member. No Administrator may decide or determine any
matter concerning the distribution, nature or method of settlement of his own
benefits under the Plan, unless he is acting alone in the capacity of the
Administrator.

      13.9 Annual Statement. As soon as practicable after the Valuation Date of
each Plan Year but within the time prescribed by ERISA and the regulations under
the Act, the Plan Administrator shall deliver to each Participant (and to each
Beneficiary) a statement reflecting his Accrued Benefit in the Plan as of such
Valuation Date and such other information the Act required by ERISA to be
furnished to the Participant or Beneficiary.

      13.10 Unclaimed Benefit Procedure.

            (a) Neither the Trustees nor the Administrator shall be obliged to
search for, or ascertain the whereabouts of, any Participant or Beneficiary. The
Administrator, by certified or registered mail addressed to his last known
address of record with the Administrator or the Employer, shall notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan, and the notice shall quote the provisions of this paragraph.

            (b) If the Participant or Beneficiary fails to claim his benefit or
make his whereabouts known in writing to the Administrator within 6 months from
the date of mailing of the notice or before this Plan is terminated or
discontinued, whichever should first occur, the Administrator shall request a
third party of the Administrator's choice to locate such Participant or
Beneficiary. If after a 2-year period commencing from the date the Administrator
notifies the Trustees that a Participant's Accrued Benefit is to be distributed,
a Participant or his Beneficiary fails to claim his benefit, the Administrator
may either treat as a Forfeiture, or permanently segregate such benefit for the
Participant or Beneficiary in any manner acceptable under ERISA.

            (c) The forfeiture of a Participant's unclaimed benefit shall be
subject to the right of the Participant (or, following the Participant's death,
the Participant's Beneficiary) at any time to make a claim for such benefit. In
the event a Participant or the Participant's Beneficiary claims such forfeited
amount, the Employer shall contribute such additional amount to the Plan as is
required to make complete distribution to the claimant, but if the Trust is not
in existence, the Employer shall pay such amount directly to the claimant.

                                       65
<PAGE>

                                   Article XIV

                             TOP HEAVY REQUIREMENTS

      14.1 General. If this Plan becomes Top Heavy with respect to any Plan
Year, the requirements of this Article must be met, notwithstanding any other
Plan provision to the contrary. The requirements of this Article will not apply,
however, to Participants who have ceased employment with the Employer before the
Plan becomes Top Heavy and who have not returned to employment with the Employer
in a Top Heavy Year.

      14.2 Minimum Benefits for Top Heavy Plan.

            (a) If the Employer does not maintain any qualified defined
contribution plan, and if this Plan becomes Top Heavy, then a minimum Normal
Retirement Benefit shall accrue for each Non-Key Employee Participant equal to
2% of his "average annual compensation", multiplied by the number of Years of
Participation (not to exceed 10) earned as a Non-Key Employee Participant in Top
Heavy Years ("Top Heavy Minimum Benefit"). For purposes of this Paragraph,
"average annual compensation" shall be the average of the Participant's "415
Compensation" for such five consecutive Top Heavy Years that produce the highest
average. "415 Compensation" shall mean compensation as defined in Treas. Regs.
ss.1.415-2(d). The Plan meets this requirement if the Non-Key Employee's Accrued
Benefit at the end of the Top Heavy Year is at least equal to the Top Heavy
Minimum Benefit.

                  For purposes of this paragraph, a Non-Key Employee Participant
includes any Employee eligible to participate in the Plan and entitled to
benefit accrual for the Plan Year but who does not participate solely because
his Compensation does not exceed a specified level. For purposes of this
paragraph, the Participant's Accrued Benefit and Top Heavy Minimum Benefit is
expressed as a straight life annuity payable annually beginning at Normal
Retirement Age.

                  If, at the end of any Top Heavy Year, a Non-Key Employee
Participant's Accrued Benefit is not at least equal to the Top Heavy Minimum
Benefit, the Participant shall earn the additional accrual necessary to increase
his Accrued Benefit to such Top Heavy Minimum Benefit. The Participant's Accrued
Benefit shall never be less than the Top Heavy Minimum Benefit, regardless of
whether the Plan is Top Heavy in Plan Years subsequent to a Top Heavy Year.

                  The Employer shall not impute Social Security benefits to
determine whether it has satisfied its obligation to provide the Top Heavy
Minimum Benefit, nor shall the Plan offset a Participant's Social Security
Benefit against his Top Heavy Minimum Benefit.

                  The provisions of this subparagraph (a) shall not apply to any
Participant to the extent the Participant is covered under any other defined
benefit plan of the Employer and the Employer has provided in such other plan
the Top Heavy Minimum Benefit.

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<PAGE>

                  For Plan Years beginning after December 31, 2001, if this Plan
is frozen, for purposes of satisfying the minimum benefit requirements of Code
ss.416(c)(1) and the Plan, in determining Years of Service with the Employer,
any service with the Employer shall be disregarded to the extent that such
service occurs during a Plan Year when the Plan benefits (within the meaning of
Code ss.410(b)) no Key Employee or former Key Employee.

            (b) If the Employer maintains, in addition to this Plan, any
qualified defined contribution plan which is part of a Required or Permissive
Aggregation Group, and a Non-Key Employee participates in both plans, the
Non-Key Employee shall be entitled to the top heavy minimum benefit under this
Plan.

            (c) The minimum benefit provided for a Participant under this
paragraph (to the extent such benefit is Vested) shall not be treated as
forfeitable solely because the Plan provides (i) that the payment of benefits is
suspended for such period as the Employee is employed, subsequent to the
commencement of payment of such benefits, or (ii) that, in the case of a
Participant who does not have a Vested right to at least 50% of his Accrued
Benefit derived from Employer contributions, such Accrued Benefit may be
forfeited on account of the withdrawal by the Participant of any amount
attributable to the benefit derived from mandatory contributions made by such
Participant.

      14.3 Combined Plan Limits in Top Heavy Years.

            (a) If for any Plan Year the Plan is Super Top Heavy, then for
purposes of the limitations on contributions and benefits under Code ss.415 as
described in Article V, the dollar limitations in the denominators of the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction shall
be multiplied by 100% rather than 125% (as otherwise stated in the definitions
of such Fractions in Article II). The foregoing shall not apply in Plan Years
beginning after December 31, 1999.

            (b) If reduction of the multiplier in the Defined Benefit and
Defined Contribution Plan Fractions from 125% to 100% would cause a Participant
to exceed the combined Code ss.415 limitations on contributions and benefits,
then the application of the provisions of Paragraph 14.2 shall be suspended as
to such Participant until such time as he no longer exceeds the combined Code
ss.415 limits. During the period of such suspension, there shall be no Employer
contributions allocated to such Participant under this Plan. The foregoing shall
not apply in Plan Years beginning after December 31, 1999.

      14.4 Top Heavy Vesting. Notwithstanding anything to the contrary in
Article VII, the following vesting schedule shall apply in any Top Heavy Year
for any Participant who is credited with an Hour of Service after the Plan
becomes Top Heavy:

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<PAGE>

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

                  Less than 3                                  0%

                  3 or more                                  100%

If following a Top Heavy Year this Plan ceases to be Top Heavy, a Participant's
Vested percentage of his Accrued Benefit shall be determined under the schedule
in Paragraph 7.1, subject to the Participant's right of election under Paragraph
19.3. No change in the Plan's Top Heavy status which alters the Plan's vesting
schedule shall reduce a Participant's Vested percentage of his Accrued Benefit
as determined immediately prior to the effective date of such change.

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<PAGE>

                                   Article XV

                       QUALIFIED DOMESTIC RELATIONS ORDERS

      15.1 Payment of Benefits to Alternate Payee. Notwithstanding the
prohibitions contained in Paragraph 12.3, all or a portion of a Participant's
Accrued Benefit shall be paid to one or more Alternate Payees in accordance with
the terms of a Qualified Domestic Relations Order entered into on or after
January 1, 1985.

      15.2 Determination of Qualified Status.

            (a) Initial Notice. Within 30 days following receipt of any domestic
relations order, or within such other time period as may be prescribed by
Treasury regulations, the Administrator shall notify the Participant and each
Alternate Payee in writing of its receipt and shall provide a copy of the
Administrator's procedures as outlined below for determining if such order
qualifies as a Qualified Domestic Relations Order.

            (b) Notice of Determination. Within 90 days following the
Administrator's initial notice described in subparagraph (a) above, the
Administrator shall notify the Participant and each Alternate Payee in writing
of its determination whether the proposed order is qualified. If the order is
denied qualified status, the Administrator shall list the specific reasons
therefor. Whether or not the order is determined to be qualified, the
Administrator shall notify the Participant and each Alternate Payee of their
right to appeal such determination within 60 days after receipt of the
determination, and that failure to appeal such determination in writing within
the 60-day period will render such determination final, binding and conclusive.
The Administrator's notice shall identify the name of the Administrator and the
address to which appeal is to be forwarded.

            (c) Appeal. If a Participant or Alternate Payee should appeal the
Administrator's decision, he may submit in writing all pertinent issues and
comments and may review pertinent Plan documents. The Administrator shall
re-examine all facts related to the appeal and make a final determination as to
whether the initial determination is justified under the circumstances. The
Administrator shall notify the appellant of the Administrator's decision within
such time period as provided in rules adopted by the Administrator.

      15.3 Authorized Representative. An Alternate Payee may designate an
authorized representative to receive copies of all notices with respect to the
payment of benefits or claim for such payment under a domestic relations order.
The Alternate Payee shall notify the Administrator of such designation in
writing, which shall be effective upon its receipt by the Administrator.

      15.4 Transition Rule. In the case of a domestic relations order entered
into before January 1, 1985, the Administrator shall treat such order as a
Qualified Domestic Relations Order if benefits pursuant to such order are in pay
status on January 1, 1985. In addition, the Administrator, in its sole
discretion, may treat any other order entered into before January 1,

                                       69
<PAGE>

1985 as a Qualified Domestic Relations Order notwithstanding its failure to meet
all the requirements for qualification under Code ss.4l4(p).

      15.5 Definitions.

            (a) "Qualified Domestic Relations Order" shall mean a domestic
relations order that meets the requirements of Code ss.4l4(p).

            (b) "Domestic relations order" shall mean any judgment, decree or
order, including approval of a property settlement agreement, which relates to
the provision of child support, alimony payments, or marital property rights of
a Spouse, former Spouse, child or other dependent of a Participant, and which is
made pursuant to a state domestic relations law (including community property
law).

            (c) "Alternate Payee" shall mean a Spouse, former Spouse, child or
other dependent of a Participant who is recognized by a domestic relations order
as entitled to receive all or a portion of the benefits payable under a
qualified plan with respect to the Participant.

      15.6 Method and Timing of Distribution.

            (a) Distribution of benefits to an Alternate Payee specified in a
Qualified Domestic Relations Order shall be in any optional form of distribution
allowable under this Plan.

            (b) A domestic relations order which requires payment to an
Alternate Payee prior to the Participant's "earliest retirement age" as defined
in Code ss.4l4(p)(4)(B) shall be allowable under this Plan.

                                       70
<PAGE>

                                   Article XVI

                            TRUSTEE POWERS AND DUTIES

      16.1 Acceptance. The Trustees accept the Trust created under the Plan and
agree to perform the obligations imposed upon them hereunder. The Trustees shall
provide bond for the faithful performance of their duties under the Trust to the
extent required by ERISA.

      16.2 Receipt of Contributions. The Trustees shall be accountable to the
Employer for the funds contributed to the Trust by the Employer, but shall have
no duty to see that the contributions received comply with the provisions of the
Plan. The Trustees shall not be obligated to collect any contributions from the
Employer, nor be obligated to see that funds deposited in the Trust are
deposited according to the provisions of the Plan.

      16.3 Full Investment Powers. The Trustees shall have full discretion and
authority with regard to the investment of the Trust Fund, except with respect
to a Plan asset under the control or direction of a properly appointed
Investment Manager. The Trustees shall coordinate their investment policy with
the financial needs of the Plan as communicated to the Trustees by the
Administrator. The Trustees are authorized and empowered, but not by way of
limitation, with the following powers, rights and duties with respect to the
Trust Fund:

            (a) to invest any or all of the Trust Fund in any common or
preferred stocks, bonds (including United States retirement plan bonds),
insurance contracts, mortgages, notes or other property of any kind, real or
personal, as a prudent man would do under like circumstances with due regard for
the purposes of this Plan;

            (b) to retain in cash so much as the Trustees may deem advisable to
satisfy liquidity needs of the Plan and to deposit any cash in a bank account
without liability for the highest rate of interest available;

            (c) to manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for any term
even though commencing in the future or extending beyond the term of the Trust,
and otherwise deal with all property, real or personal, in such manner, for such
consideration and on such terms and conditions as the Trustees shall decide;

            (d) to credit and distribute the Trust as directed by the
Administrator. The Trustees shall not be obliged to inquire as to whether the
distribution is proper or within the terms of the Plan, or as to the manner of
making any payment or distribution. The Trustees shall be accountable only to
the Administrator for any payment or distribution made by it in good faith on
the order or direction of the Administrator;

            (e) to borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge;

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<PAGE>

            (f) to compromise, contest, arbitrate or abandon claims and demands,
in their discretion;

            (g) to have all of the rights of an individual owner, including the
power to give proxies, to participate in any voting trusts, mergers,
consolidations or liquidations, and to exercise or sell stock subscriptions or
conversion rights;

            (h) to hold any securities or other property in the name of the
Trustees or their nominee, or in another form as they may deem best, with or
without disclosing the trust relationship;

            (i) to perform any and all other acts in their judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust;

            (j) to retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until final adjudication is made by a court of
competent jurisdiction;

            (k) to apply for one or more insurance contracts and to pay to the
insurer in accordance with such insurance contract(s) and otherwise to act as
contractholder under such insurance contract(s).

            (1) to file all required tax returns; and

            (m) to begin, maintain or defend any litigation necessary in
connection with the administration of the Plan.

      16.4 Accounting. Upon request by the Administrator within 60 days after
the later of the Anniversary Date or receipt of the Employer's contribution for
the Fiscal Year, the Trustees shall furnish to the Employer and Administrator a
written statement of account with respect to the Fiscal Year for which such
contribution was made, and any prior period for which the Trustees have not
provided an accounting, setting forth:

            (a) the net income or loss of the Trust Fund;

            (b) the gains or losses realized by the Trust Fund upon sales or
other disposition of the assets;

            (c) the increase or decrease in the value of the Trust Fund;

            (d) all payments and distributions made from the Trust Fund; and

            (e) such further information as the Trustees and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and advise
the Trustees and/or Administrator of its

                                       72
<PAGE>

approval or disapproval thereof. Failure by the Employer to disapprove any such
statement of account within a reasonable period after its receipt thereof shall
be deemed an approval thereof. The approval by the Employer of any statement of
accounting shall be binding as to all matters embraced therein as between the
Employer and the Trustees to the same extent as if the account of the Trustee
has been settled by judgment or decree in an action for a judicial settlement of
its account in a court of competent jurisdiction in which the Trustees, the
Employer and all persons having or claiming an interest in the Plan were
parties; provided, however, that nothing herein contained shall deprive the
Trustees of their right to have the accounts judicially settled if the Trustees
so desire.

      16.5 Records and Statements. The Trustees' records shall be open to the
inspection of the Administrator and the Employer at all reasonable times and may
be audited from time to time by any person(s) as the Administrator may specify
in writing. The Trustees shall furnish the Administrator with whatever
information relating to the Trust Fund the Administrator considers necessary.

      16.6 Fees and Expenses From Fund. The Trustees shall receive annual
compensation as may be agreed upon from time to time between the Employer and
the Trustees; however, no person who is receiving full pay from the Employer
shall receive compensation for services as Trustee. The Trustees shall pay all
expenses reasonably incurred by them in their administration of the Plan from
the Trust Fund unless the Employer pays the expenses.

      16.7 Parties to Litigation. Except as otherwise provided by ERISA, only
the Employer, the Administrator, and the Trustees shall be necessary parties to
any court proceeding involving the Trust or the Trust Fund. No Participant or
Beneficiary shall be entitled to any notice of process unless required by ERISA.
Any final judgment entered in any proceeding shall be conclusive upon the
Employer, the Administrator, the Trustees, Participants and Beneficiaries.

      16.8 Professional Agents. The Trustees may employ and reasonably
compensate from the Trust Fund such agents, attorneys, accountants and other
persons to advise the Trustees as in their opinion may be necessary and may act
or refrain from acting on such advice. The Trustees may delegate to any person
any such power or duty vested in them by the Plan to the extent not prohibited
by ERISA.

      16.9 Third Party. No person dealing with the Trustees shall be obligated
to see to the proper application of any money paid or property delivered to the
Trustees, or to inquire whether the Trustees have acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustees may act upon any
notice, request or representation in writing by the Trustees, or by the
Trustees' duly authorized agent, and shall not be liable to any person
whomsoever in so doing. The certificate of the Trustees that they are acting in
accordance with the Plan shall be conclusive in favor of any third person
relying on the certificate.

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<PAGE>

      16.10 Resignation, Removal and Appointment of Trustee.

            (a) A Trustee may resign at any time by giving 30 days' written
notice in advance to the Employer and to the Administrator.

            (b) The Employer may remove any Trustee upon written notice to such
Trustee.

            (c) The Employer may appoint additional or successor Trustees at any
time by giving written notice to such persons. Each additional or successor
Trustee shall succeed to the title to the Trust by accepting in writing his
appointment as Trustee and filing such acceptance with the former Trustee (if
any) and the Administrator.

            (d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all the estate, rights,
powers, discretions, and duties of his predecessor with the like effect as if he
were originally named as Trustee herein immediately upon the death, resignation,
incapacity, or removal of his predecessor.

            (e) A resigning or removed Trustee, upon receipt of acceptance in
writing of the Trust by a successor Trustee, shall execute all documents and do
all acts necessary to vest title of record in any successor Trustee. Each
successor Trustee shall have and enjoy all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. No successor
Trustee shall be personally liable for any act or failure to act of any
predecessor Trustee. With the approval of the Employer and the Administrator, a
successor Trustee may accept the account rendered and the property delivered to
it by a predecessor Trustee without incurring any liability or responsibility
for so doing.

      16.11 Limitation of Liability Upon Appointment of Investment Manager. The
Trustees shall not be liable for the acts or omissions of any Investment
Manager(s) appointed by the Administrator, nor shall the Trustees be under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the management of a properly appointed Investment Manager.

      16.12 Investment in Pooled Fund. Notwithstanding the provisions of
Paragraph 16.3, the Employer specifically authorizes the Trustees to invest all
or any portion of the assets comprising the Trust Fund in any common trust fund
which at the time of the investment provides for the pooling of the assets of
plans qualified under Code ss.401(a).

      16.13 Protection of Trustee. To the maximum extent not prohibited by law,
the Employer shall indemnify and hold harmless the Trustees from any loss,
liability or expense (including reasonable attorneys fees) suffered or incurred
by the Trustees as a result of any act or omission on the Trustees' part in the
performance of their duties hereunder, unless the same results from the
Trustees' gross negligence or willful misconduct.

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<PAGE>

      16.14 Duties Limited. The duties and responsibilities of the Trustees are
limited to those specifically stated in this instrument and no other or further
duties or responsibilities shall be implied.

      16.15 Notices.

            (a) All notices to the Trustees hereunder shall be mailed or
delivered to the Trustees at their last known address.

            (b) The Trustees shall be fully protected in presenting any notice
hereunder to an Employer or Administrator by mailing such notice to the
Employer, or in care of the Employer, at the last known address provided by such
Employer, and in presenting any notice or distributing any benefit hereunder to
a Participant by mailing it to such Participant at the latest address, if any,
which may have been furnished to the Trustees or by mailing it in care of the
Employer, as above provided.

      16.16 Audit. If an audit of the Plan's records shall be required for any
Plan Year, the Administrator shall direct the Trustees to engage an independent
qualified public accountant for that purpose. Such accountant shall, after an
audit of the books and records of the Plan in accordance with generally accepted
auditing standards, within a reasonable period after the close of the Plan Year,
furnish to the Administrator and the Trustees a report of his audit setting
forth his opinion as to whether each of the following statements, schedules or
lists, or any others that are required by ERISA ss.103 or the Secretary of Labor
to be filed with the Plan's annual report, are presented fairly in conformity
with generally accepted accounting principles applied consistently:

            (a) statement of the assets and liabilities of the Plan;

            (b) statement of changes in net assets available to the Plan;

            (c) statement of receipts and disbursements, a schedule of all
assets held for investment purposes, a schedule of all loans or fixed income
obligations in default at the close of the Plan Year;

            (d) a list of all leases in default or uncollectible during the Plan
Year;

            (e) the most recent annual statement of assets and liabilities of
any bank common or collective trust fund in which Plan assets are invested.

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<PAGE>

                                  Article XVII

                             VALUATION OF TRUST FUND

      17.1 Valuation of Trust Fund. Each Plan Year, the Trustees shall value the
Trust Fund at fair market value as of the close of business on each Valuation
Date for the Plan Year. In making such valuation, the Trustees shall deduct all
charges, expenses and other liabilities (if any), contingent or otherwise, then
chargeable against the Trust Fund, in order to give effect to income realized
and expenses paid or incurred, losses sustained and unrealized gains or losses
constituting appreciation or depreciation in the value of Trust investments
since the last previous valuation. As soon as practicable after such valuation,
the Trustees shall deliver in writing to the Administrator and to the Employer a
certified valuation of the Trust Fund together with a statement of the amount of
net income or loss (including appreciation or depreciation in the value of Trust
investments) since the last previous valuation.

      17.2 Method of Valuation. In determining the fair market value of
securities held in the Trust Fund which are listed on a registered stock
exchange, the Administrator shall direct the Trustee to value them at the prices
they were last traded on such exchange preceding the close of business on the
Valuation Date. If such securities were not traded on the Valuation Date, or if
the exchange on which they are traded was not open for business on the Valuation
Date, then the securities shall be valued at the prices at which they were last
traded prior to the Valuation Date. Any unlisted security held in the Trust Fund
shall be valued at its bid price next preceding the close of business on the
Valuation Date, which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more appraisers
for that purpose and rely on the values established by such appraiser or
appraisers.

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<PAGE>

                                  Article XVIII

                     LIFE INSURANCE CONTRACTS AND COMPANIES

      18.1 Purchase of Life Insurance Contracts for the Benefit of Individual
Participants.

            (a) If life insurance coverage is made available on a uniform,
non-discriminatory basis to all Participants, then upon written request received
from any Participant, the Trustees shall purchase and pay premiums on one or
more life insurance policies on the life of a Participant, provided that the
face amounts of such Contract(s) covering anyone Participant shall be limited to
the greater of:

                  (1) 100 times the Participant's anticipated monthly retirement
benefit; or

                  (2) an amount of Ordinary Life Insurance that may be purchased
by less than 66% of such Participant's Theoretical Contribution (as hereinafter
defined); or

                  (3) an amount of Universal Life Insurance or other Contract(s)
that may be purchased by less than 33% of such Participant's Theoretical
Contribution; or

                  (4) an amount of insurance which is a combination of Ordinary
Life, Universal Life or other life insurance Contracts where the sum of one-half
of the Ordinary Life premiums plus all other premiums does not exceed 33% of
such Participant's Theoretical Contribution.

Notwithstanding the above, the Trustee may purchase Contracts as described in
Code ss.412(i) for each Participant in units of $1,000 face amount for each $10
of anticipated monthly retirement benefit to which the Participant is entitled.

            (b) The Trustees shall, at or before such Participant's retirement,
either

                  (1) convert the entire value of such insurance policies into
cash or into an annuity contract, which will provide periodic income so that no
portion of such value may be used to continue life insurance protection beyond
the date of retirement of such Participant, or

                  (2) distribute such insurance policies to such Participant at
the time such Participant is entitled to receive benefits under the Plan.

            (c) If the Trustees deem it prudent to purchase a Participant's
existing insurance policy either from the Participant directly or from another
qualified employee benefit plan, they may do so provided that such purchase be
made in compliance with all relevant state and federal requirements.

                                       77
<PAGE>

            (d) All dividends paid on such policies, if any, shall be used to
reduce the Employer's contribution for the year in which the dividends are paid.
In no event shall any dividends revert to the Employer.

            (e) If a Participant or his designated Beneficiary wishes to
purchase an insurance policy from the Trust, the Trustees may transfer such
policy in accordance with all relevant state and federal regulations.

      18.2 Purchase of Life Insurance for the Benefit of the Trust. The Trustees
may, in their discretion, purchase and pay premiums on one or more life
insurance policies on the life of a Participant for the benefit of the Trust
rather than the insured Participant, in which event all premiums paid shall be
treated as a general expense of the Trust Fund and all proceeds from such
insurance shall constitute a general asset of the Trust Fund. The Trustees may
purchase a Participant's existing insurance contract subject to compliance with
all relevant state and federal requirements.

      18.3 Annuity Purchase Riders. Any insurance policy purchased hereunder may
be subject to the terms of an annuity purchase rider, applied for by the
Trustees and issued as a part of such policy, pursuant to which the proceeds of
such policy may be applied for the purchase of an annuity to provide benefits
under the Plan. The annuity referred to in this paragraph shall be paid
according to the terms of such policy regardless of the survival of the
Participant.

      18.4 Designation of Trust as Owner and Beneficiary. Each application for
an insurance policy and the policy itself shall nominate and designate the Trust
or the Trustees as sole owner, with the right reserved to said Trustees to
exercise any right or option contained therein. All such policies shall be held
by the Trustees. The Trust or the Trustees shall be designated in the policies
to receive the proceeds maturing by reason of the death of the Participant;
however the Trustees shall be required to pay over the proceeds of any contract
purchased pursuant to Paragraph 18.1 to the Participant's Beneficiary in
accordance with the distribution provisions of this Plan, and under no
circumstances shall the Trust retain any part of the proceeds of such contract.

      18.5 Insurance Company Reliance on Trustee's Signature. For the purpose of
applying to an insurance company and in the exercise of any right or option
contained in any contract, the insurance company may rely upon the signature of
anyone Trustee and shall be held harmless and completely discharged in acting at
the direction and authorization of such Trustees.

      18.6 Duties of Insurance Company. Each insurance company shall keep such
records, make such identification of contracts, funds and accounts within funds,
and supply such information as may be necessary for the proper administration of
the Plan under which it is carrying insurance benefits.

      18.7 Plan Provisions Control. In the event of any conflict between the
terms of the Plan and the provisions of any insurance policy or annuity contract
purchased hereunder, the terms of the Plan shall control.

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<PAGE>

      18.8 Protection of Employer, Plan Administrator and Trustee. Neither the
Employer, Administrator nor the Trustees shall be responsible for the validity
of any insurance policy nor for the failure on the part of an insurance company
to make payments under such insurance policies, nor for the action of any other
person which may render a policy null and void or unenforceable in whole or in
part.

      18.9 Definitions. For purposes of this Article:

            (a) "Contract" shall mean an ordinary or term life insurance
contract, or annuity contract, issued by an insurer.

            (b) "Issuing Company" is any life insurance company which has issued
a policy upon application by the Trustee under the terms of this Plan.

            (c) "Ordinary Life Insurance" contracts shall mean contracts with
nondecreasing death benefits and non-increasing premiums.

            (d) "Theoretical Contribution" shall mean the contribution that
would be made on behalf of the Participant, using the actuarial assumptions
stated in Paragraph 2.3(b) and the individual level premium funding method from
the age at which participation commenced to Normal Retirement Age, to fund the
Participant's entire retirement benefit without regard to preretirement
ancillary benefits.

            (e) "Theoretical Individual Level Premium Reserve" shall mean the
reserve that would be available at time of death if for each year of plan
participation a contribution had been made on behalf of the Participant in an
amount equal to the Theoretical Contribution.

            (f) "Universal Life" contracts are contracts where the premium or
death benefit amounts can be adjusted.

                                       79
<PAGE>

                                   Article XIX

                    EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION

      19.1 Exclusive Benefit.

            (a) Except as specifically set forth in this Plan, the Employer
shall have no beneficial interest in any asset of the Trust and no part of any
asset in the Trust shall ever revert to or be repaid to the Employer, either
directly or indirectly; nor shall 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 for the exclusive benefit of the Participants or their
Beneficiaries.

            (b) Any contribution made by the Employer because of a mistake of
fact may be returned to the Employer within one year after the contribution was
made.

            (c) All Employer contributions are conditioned upon the Plan's
initial qualification under the Code. If the Employer receives a final
determination that the Plan does not initially qualify, the Plan shall terminate
and all Employer contributions shall be returned to the Employer within one year
after the date such initial qualification is denied, but only if the application
for qualification is made by the time prescribed by law for filing the
Employer's tax return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.

            (d) All Employer contributions are conditioned upon their
deductibility under Code ss.404 for the Employer's fiscal year for which a
deduction is claimed, and to the extent the deduction is disallowed, the
contributions may be returned to the Employer within one year after the
disallowance.

            (e) For purposes of this Article, "contribution" has the same
meaning as in ERISA ss.403(c).

      19.2 Amendment. The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this paragraph and such prohibitions as may
be provided by law or by other terms of this Plan. Any such amendment shall be
adopted by formal action of the Employer's Board of Directors and executed by an
officer authorized to act on behalf of the Employer, except as otherwise
provided herein. However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be made with the
Trustee's and Administrator's written consent.

            In addition, subject to the foregoing limitation with respect to the
rights, duties and responsibilities of the Trustee or the Administrator, the
pension committee of the Employer's Board of Directors shall also have the
authority to amend the Plan pursuant to written Plan amendments.

            (a) to comply with changes required by law, or

                                       80
<PAGE>

            (b) to make any other change to the Plan, including any change
required as a result of a corporate purchase or sale of stock or assets which
involves the transfer of employees and their eligibility, participation or
benefits under the Plan;

provided that any such change does not have or create any material financial
impact on the Employer and does not have any adverse impact on the rights of
Participants. Any such amendment shall become effective as provided therein upon
its execution. The Trustee shall not be required to execute any such amendment
unless the Trust provisions contained herein are part of the Plan and the
amendment affects the duties of the Trustee hereunder.

      19.3 Amendment to Vesting Schedule. No amendment shall directly or
indirectly reduce a Participant's Vested interest in his Accrued Benefit to the
date of the amendment, as computed under the terms of the Plan in effect
immediately prior to the date of the amendment. If the vesting schedule of the
Plan is amended, each Participant with at least three Years of Service for
vesting purposes may elect within the time period described below after the
adoption of the amendment to have his Vested percentage computed under the Plan
without regard to such amendment. The period during which the election may be
made shall commence with the date the amendment is adopted and shall end on the
later of:

            (a) 60 days after the amendment is adopted;

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

            (c) 60 days after the Participant is issued written notice of the
amendment by the Employer or Administrator.

      19.4 Termination. The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustees and Administrator written
notice of such termination. Upon full or partial termination of this Plan, the
Accrued Benefit of each affected Participant, to the extent funded as of the
date of such termination, shall become fully Vested. Upon complete termination
of the Plan, the Employer, by written notice to the Trustee, and subject to the
ensuing Paragraphs of this Article, shall distribute the assets in the Trust
Fund in the form of deferred annuities payable at Normal Retirement Date. The
Trustee may also distribute benefits in the form of a lump sum, in cash or in
kind, as soon as practicable following termination.

      19.5 Allocation of Assets. Upon complete termination of the Plan, the
Administrator shall allocate the assets of the Plan among Participants and
Beneficiaries in the following order of priority and subject in any event to the
provisions of ERISA:

            (a) First, to that portion of each Participant's Accrued Benefit
which is derived from his voluntary contributions.

            (b) Equally among individuals in the following two categories:

                  (1) Benefits to retired Participants and their Beneficiaries
to whom payment commenced at least 3 years prior to the termination date, based
on Plan provisions in

                                       81
<PAGE>

effect during the 5-year period ending on such date. The lowest benefit in any
pay status during the most recent 3-year period shall be considered the benefit
in pay status for such period.

                  (2) Benefits as respects a Participant wherein payment would
have commenced at least 3 years prior to the termination date if the Participant
had actually retired, based on the lowest benefit determined under the Plan
provisions in effect during the 5-year period ending on such date.

            (c) All other benefits guaranteed (insured) under ERISA determined
without regard to ss.4022(b)(5) thereof; and additional benefits, if any, under
this subparagraph if ERISA Section 4022(b)(6) did not apply.

            (d) All other (uninsured) Vested benefits.

            (e) All other benefits under the Plan.

Any funds remaining after satisfaction of the foregoing shall be returned to the
Employer.

      19.6 Limitation of Benefits on Early Termination.

            (a) Upon termination of this Plan, the benefits under the Plan for
any Highly Compensated Employee (or any Highly Compensated Employee formerly
employed by the Employer) shall be limited to benefits that are
nondiscriminatory under Code ss.401(a)(4).

            (b) The following distribution restrictions shall apply only to the
25 highest paid Highly Compensated Employees or formerly employed Highly
Compensated Employees taking into account the Employee's highest Compensation in
any Plan Year ("Restricted Participants").

                  (1) The payments made to any Restricted Participant from this
Plan shall be restricted to an amount equal to the payments that would be made
under a single life annuity that is the Actuarial Equivalent of the sum of (A)
the Employee's Accrued Benefit and the other benefits he is entitled to under
the Plan (other than a social security supplement), plus (B) the amount of the
payments that he is actually entitled to receive under a social security
supplement (such sum to be hereinafter referred to as the "Restricted Amount").

                  (2) The restriction set forth in (1) above shall not apply if:

                        (A) After payment to a Restricted Participant of his
total benefit under the Plan, the value of the remaining Plan's assets is at
least 110% of the value of the Plan's current liabilities (as defined in Code
ss.412(l)(7)); or

                        (B) The value of all benefits payable to a Restricted
Participant is less than 1% of the value of the Plan's current liabilities (as
defined in Code ss.412(l)(7)) before distribution; or

                                       82
<PAGE>

                        (C) The lump sum Actuarial Equivalent of all benefits
payable to the Restricted Participant is less than $5,000; or

                        (D) The Participant agrees in writing with the Plan
Administrator to return to the Plan all amounts necessary for the distribution
of assets upon Plan termination to meet the requirements of Code ss.401(a)(4)
and to secure such obligation by agreeing either (A) to promptly deposit in
escrow with an acceptable depository property having a fair market value of at
least 125% of the Restricted Amount, or (B) to post a bond or arrange a bank
letter of credit, in either case acceptable to the Plan Administrator, in an
amount equal to at least 100% of the Restricted Amount. The escrow account shall
at no time have a value less than 125% of the Restricted Amount.

            (c) If an escrow is arranged by the Participant, the following shall
apply:

                  (1) The Participant may withdraw amounts in the escrow account
in excess of 125% of the Restricted Amount at any time;

                  (2) If the value of the escrow account falls below 110% of the
Restricted Amount, the Participant shall deposit additional property into the
escrow account to increase the value to 125% of the Restricted Amount;

                  (3) The depository may release all property from the escrow
account only if the Plan Administrator certifies to the depository that the
Participant (or his estate) is no longer obligated to repay the Restricted
Amount, which certification shall be made only if at any time after distribution
the conditions set forth in either subparagraphs (b)(2)(A) or (b)(2)(B) are met.

      19.7 Merger or Consolidation. This Plan and Trust may be merged or
consolidated with, or its assets and/or liabilities may be transferred to, any
other plan and trust only if the benefits which would be received by a
Participant of this Plan, in the event of a termination of the plan immediately
after such transfer, merger or consolidation, are at least equal to the benefits
the Participant would have received if this Plan had terminated immediately
before the transfer, merger or consolidation.

      19.8 Transfer to Qualified Plan. The Administrator may direct the Trustee
to transfer all or any part of a Participant's Accrued Benefit to the trustee of
any other plan that purportedly meets the qualification requirements of Code
ss.401(a), provided, however, that such transfer would not disqualify this Plan
under Code ss.401(a). The Trustee may require a certification from the trustee
of such other plan as to the qualified status of such plan under Code ss.401(a)
prior to making such transfer.

                                       83
<PAGE>

                                   Article XX

                          VETERANS' REEMPLOYMENT RIGHTS

      20.1 Veterans' Reemployment Rights. Notwithstanding any other provision of
this Plan and in accordance with the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA"), this Article shall apply to
Participants reemployed on or after December 12, 1994, after a Qualified Leave.

      20.2 Service Credit.

            (a) Participant's Qualified Leave shall not be considered as a Break
in Service, but shall be deemed to constitute continuous Service with the
Employer for purposes of determining such Participant's Accrued Benefit under
this Plan and his Vested interest therein.

            (b) All rights to additional Service credit under this Article shall
accrue only upon a Participant's timely reemployment in accordance with this
Article; however, a Participant's Vested interest in his Accrued Benefit earned
prior to entering a Uniformed Service shall not be reduced regardless of the
date such Participant actually returns to Service with the Employer.

      20.3 Compensation. For purposes of determining the benefits to which a
Participant may be entitled under this Article, a Participant shall be deemed to
have received Compensation from the Employer during his Qualified Leave, of an
amount based on the rate of pay such Participant would have received from the
Employer but for the Qualified Leave. If such Participant's pre-Qualified Leave
Compensation was not based on a fixed rate, the calculation will be based on
such Participant's average rate of pay during the 12-month period immediately
preceding the Qualified Leave or, if shorter, the Participant's period of
employment immediately preceding the Qualified Leave.

      20.4 Qualified Leave. A Participant's absence from employment with the
Employer shall be a "Qualified Leave" for the purposes of this Article if all of
the following conditions are met:

            (a) Notice. The Participant (or an appropriate officer of the
Uniformed Service in which services are to be performed) gives written or verbal
notice to the Employer of such Participant's service in one of the Uniformed
Services in advance of the Participant's departure for such service.

            (b) Cumulative Length of Absence. The cumulative length of the
Participant's absence from employment with the Employer by reason of such
Participant's service in one of the Uniformed Services, when combined with all
previous absences from service with the Employer by reason of service in the
Uniformed Services, does not exceed 5 years.

                                       84
<PAGE>

      (c) Uniformed Service. The Participant's absence from employment with the
Employer is due to the Participant's service in one of the following "Uniformed
Services" of the United States: the Army, Navy, Marine Corps, Air Force, Coast
Guard, Army Reserve, Naval Reserve, Marines Corps Reserve, Air Force Reserve,
Coast Guard Reserve, Army National Guard, Air National Guard, commissioned corps
of the Public Health Service, or any other category designated as a uniformed
service by the President of the United States during a time of war or national
emergency.

      (d) Reemployment. The Participant, upon completion of a period of service
in one of the Uniformed Services, notifies the Employer of the Participant's
intention to return to employment with the Employer by reporting to or
submitting an application for reemployment to the Employer within the following
time periods:

            (1) if the period of service in the Uniformed Services is less than
31 days, or a period of any length for the purposes of an examination to
determine the Participant's fitness to perform service in the Uniformed
Services, the Participant reports to the Employer not later than the beginning
of the first full regularly scheduled work period in the first full calendar day
following the completion of the period of service and the expiration of 8 hours
after a period allowing for the safe transportation of the Participant from the
place of that service to the Participant's residence; or if reporting within the
period referred to above is impossible or unreasonable through no fault of the
Participant, as soon as possible after the expiration of the 8-hour period
referred to above;

            (2) if the period of service in the Uniformed Services is more than
30 days but less than 181 days the Participant submits an application for
reemployment not later than 14 days after the completion of the period of such
service, or if submitting such application within such time period is impossible
or unreasonable through no fault of the Participant, the next first full
calendar day when submission of such application becomes possible;

            (3) if the period of service in the Uniformed Services is more than
180 days the Participant submits an application for reemployment not later than
90 days after the completion of the period of such service;

            (4) a Participant who is hospitalized for, or convalescing from, an
illness or injury incurred in, or aggravated during, the performance of service
in the Uniformed Services shall, at the end of the period that is necessary for
the person to recover from such illness or injury, report to (in the case of a
Participant described in subparagraph (1) above) or submit an application for
reemployment (in the case of a Participant described in subparagraph (2) or (3)
above) with the Employer. Such period of recovery may not exceed 2 years,
although such period shall be extended by the minimum time required to
accommodate the circumstances beyond such Participant's control which make
reporting within the period specified in subparagraph (1) impossible or
unreasonable.

      (e) Less Than Honorable Discharge. Notwithstanding the above, a
Participant shall not be entitled to the benefits of this Article if such
Participant's service in the Uniformed Services terminates upon any of the
following events:

                                       85
<PAGE>

                  (1) a separation of the Participant from such Uniformed
Service with a dishonorable or bad conduct discharge;

                  (2) a separation of such Participant from such Uniformed
Service under other than honorable conditions; or

                  (3) a dismissal or dropping from the rolls of any Uniformed
Service of such Participant, in accordance with 10 U.S.C. 1161(a) or (b).

                                       86
<PAGE>

                                   Article XXI

                             PARTICIPATING EMPLOYERS

      21.1 Adoption by Other Entities. Anything contained herein to the contrary
notwithstanding, with the consent of the Employer, any corporation, partnership
or sole proprietorship, whether an Affiliated Company or not, may adopt this
Plan and all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such other entity.

      21.2 Requirements of Participating Employers.

            (a) Each Participating Employer shall be required to use the same
Trustee as provided in this Plan.

            (b) The Trustee shall commingle, hold and invest as one Trust Fund
all contributions made by Participating Employers, as well as all increments
thereof.

            (c) The transfer of any Participant from or to a company
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under the
Plan, and the Participant's interest in his Accrued Benefit as well as his
accumulated service time with the transferor or predecessor and his length of
participation in the Plan, shall continue to his credit.

      21.3 Designation of Agent. Each Participating Employer shall be deemed to
be a part of this Plan; provided, however, that with respect to all of its
relations with the Trustee and Administrator for the purpose of this Plan, each
Participating Employer shall be deemed to have designated irrevocably the
signatory Employer to this Plan document as its agent. Unless the context of the
Plan clearly indicates the contrary, the word "Employer" shall be deemed to
include each Participating Employer as related to its adoption of the Plan.

      21.4 Employee Transfers. It is anticipated that an Employee may be
transferred between Participating Employers, and in the event of any such
transfer, the Employee involved shall carry with him his accumulated service and
eligibility. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is transferred
shall thereupon become obligated hereunder with respect to such Employee in the
same manner as was the Participating Employer from whom the Employee was
transferred.

      21.5 Amendment and Termination. Amendment or termination of this Plan by
the Employer at any time when there shall be a Participating Employer hereunder
shall only be by the written action of each and every Participating Employer and
with the consent of the Trustee where such consent is necessary in accordance
with the terms of this Plan.

      21.6 Discontinuance of Participation. Any Participating Employer shall be
permitted to discontinue or revoke its participation in the Plan. At the time of
any such discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be

                                       87
<PAGE>

delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable to the Participants of
such Participating Employer to such new Trustee as shall have been designated by
such Participating Employer, in the event that it has established a separate
pension plan for its Employees. If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer. In no such
event shall any part of the corpus or income of the Trust as it relates to such
Participating Employer be used for or diverted for purposes other than for the
exclusive benefit of the Employees of such Participating Employer.

      21.7 Administrator's Authority. The Administrator shall have authority to
make any and all necessary rules or regulations, binding upon all Participating
Employers and all Participants, to effectuate the purpose of this Article.

                                       88
<PAGE>

                                  Article XXII

                                  MISCELLANEOUS

      22.1 Evidence. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information which
the person to act in reliance thereof may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The Administrator and the Trustees shall be fully protected in acting
and relying upon any evidence described under this paragraph.

      22.2 Named Fiduciaries and Allocation of Responsibility. The "named
fiduciaries" of this Plan are the Employer, the Administrator, the Trustees and
any Investment Manager appointed hereunder. The named fiduciaries shall have
only those specific powers, duties, responsibilities, and obligations as are
specifically given them under this Plan. Each named fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of this Plan, authorizing or providing for such
direction, information or action. Further, each named fiduciary may rely upon
such direction, information or action of another named fiduciary as being proper
under this Plan, and is not required under this Plan to inquire into the
propriety of any such direction, information or action. It is intended that each
named fiduciary shall be responsible only for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan. Any person or
group may serve in more than one fiduciary capacity.

      22.3 Limited Responsibilities. The Trustees and the Administrator shall
not have any obligation nor responsibility with respect to any action required
by the Plan to be taken by the Employer, any Participant or eligible Employee,
nor for the failure of the Employer to act or make any payment or contribution,
or to otherwise provide any benefit contemplated under this Plan, nor shall the
Trustee or the Plan Administrator be required to collect any contribution
required under the Plan, or determine the correctness of the amount of any
Employer contribution. The Trustees and the Administrator shall not have any
obligation to inquire into or be responsible for any action or failure to act on
the part of the others.

      22.4 Fiduciaries Not Insurers. The Trustees, the Administrator and the
Employer do not guarantee the Trust Fund from loss or depreciation. The Employer
does not guarantee the payment of any money which may become due to any person
from the Trust Fund. The liability of the Administrator and the Trustees to make
any payment from the Trust Fund at any time and all times is limited to the then
available assets of the Trust.

      22.5 Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.

      22.6 Successors. The Plan shall be binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustees, the
Administrator and their successors.

                                       89
<PAGE>

      22.7 Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of the Plan dictates, the plural
shall be read as the singular and the singular as the plural.

      22.8 Status of Employment Relations. The adoption and maintenance of the
Plan and Trust shall not be deemed to constitute a contract between the Employer
and its Employees or to be consideration for, or an inducement or condition of,
the employment of any person. Nothing herein contained shall be deemed (a) to
give to any Employee the right to be retained in the employ of the Employer; (b)
to affect the right of the Employer to discipline or discharge any Employee at
any time; (c) to give the Employer the right to require any Employee to remain
in its employ; or (d) to affect any Employee's right to terminate his employment
at any time.

      22.9 Interpretation of the Plan and Trust. It is the intention of the
Employer that this Plan and Trust shall comply with the provisions of Code
ss.ss.401 and 501, the requirements of ERISA, and the corresponding provisions
of any subsequent laws. The provisions of this Plan and Trust shall be construed
to effectuate such intention.

      22.10 Governing Law. All questions arising with respect to the provisions
of this Agreement shall be determined by application of the laws of the State of
New York, except to the extent superseded by federal law.

      IN WITNESS WHEREOF, the Employer and the Trustees named herein have
executed this Plan and Trust Agreement this 30th day of December, 2004.

                                        The Employer:

                                        COMMUNITY BANK SYSTEM, INC.

                                        By: /s/ Sanford A. Belden
                                           ----------------------------------
                                           President and CEO

                                        The Trustee:

                                        By: /s/ Mark E. Tryniski
                                           ----------------------------------
                                           Executive Vice President and COO

                                       90
<PAGE>

                           COMMUNITY BANK SYSTEM, INC.
                                  PENSION PLAN

                                TABLE OF CONTENTS

Article I      HISTORY AND PURPOSE OF PLAN ...............................    1

Article II     DEFINITIONS ...............................................    2

Article III    ELIGIBILITY REQUIREMENTS ..................................   17

Article IV     CREDITED SERVICE FOR BENEFIT ACCRUAL ......................   23

Article V      RETIREMENT BENEFITS .......................................   25

Article VI     DEATH BENEFITS ............................................   35

Article VII    EMPLOYMENT TERMINATION BENEFITS ...........................   41

Article VIII   LIMITATION OF BENEFITS ....................................   45

Article IX     PAYMENT OF BENEFITS .......................................   49

Article X      CONTRIBUTIONS .............................................   58

Article XI     EMPLOYER ADMINISTRATIVE PROVISIONS ........................   59

Article XII    PARTICIPANT ADMINISTRATIVE PROVISIONS .....................   60

Article XIII   ADMINISTRATION ............................................   63

Article XIV    TOP HEAVY REQUIREMENTS ....................................   66

Article XV     QUALIFIED DOMESTIC RELATIONS ORDERS .......................   69

Article XVI    TRUSTEE POWERS AND DUTIES .................................   71

Article XVII   VALUATION OF TRUST FUND ...................................   76

Article XVIII  LIFE INSURANCE CONTRACTS AND COMPANIES ....................   77

Article XIX    EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION .................   80

Article XX     VETERANS' REEMPLOYMENT RIGHTS .............................   84

                                       i
<PAGE>

Article XXI    PARTICIPATING EMPLOYERS ...................................   87

Article XXII   MISCELLANEOUS .............................................   89

                                       iiEXHIBIT 4.1

                         FAST EDDIE RACING STABLES, INC.

                          SECURITIES PURCHASE AGREEMENT

                                  March 9, 2005

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.    Agreement to Sell and Purchase...........................................1

2.    Fees and Warrant.........................................................1

3.    Closing, Delivery and Payment............................................2
      3.1     Closing..........................................................2
      3.2     Delivery.........................................................2

4.    Representations and Warranties of the Company............................3
      4.1     Organization, Good Standing and Qualification....................3
      4.2     Subsidiaries.....................................................4
      4.3     Capitalization; Voting Rights....................................4
      4.4     Authorization; Binding Obligations...............................5
      4.5     Liabilities......................................................5
      4.6     Agreements; Action...............................................5
      4.7     Obligations to Related Parties...................................6
      4.8     Changes..........................................................7
      4.9     Title to Properties and Assets; Liens, Etc.......................8
      4.10    Intellectual Property............................................8
      4.11    Compliance with Other Instruments................................9
      4.12    Litigation.......................................................9
      4.13    Tax Returns and Payments.........................................9
      4.14    Employees.......................................................10
      4.15    Registration Rights and Voting Rights...........................10
      4.16    Compliance with Laws; Permits...................................11
      4.17    Environmental and Safety Laws...................................11
      4.18    Valid Offering..................................................11
      4.19    Full Disclosure.................................................11
      4.20    Insurance.......................................................12
      4.21    SEC Reports.....................................................12
      4.22    Listing.........................................................12
      4.23    No Integrated Offering..........................................12
      4.24    Stop Transfer...................................................13
      4.25    Dilution........................................................13
      4.26    Patriot Act.................................................... 12

5.    Representations and Warranties of the Purchaser.........................13
      5.1     No Shorting.....................................................13
      5.2     Requisite Power and Authority...................................14
      5.3     Investment Representations......................................14
      5.4     Purchaser Bears Economic Risk...................................14
      5.5     Acquisition for Own Account.....................................14
      5.6     Purchaser Can Protect Its Interest..............................14
      5.7     Accredited Investor.............................................15
      5.8     Legends.........................................................15
      5.9     Limitation on Acquisition of Common Stock of the Company........14

                                       i
<PAGE>

6.    Covenants of the Company................................................16
      6.1     Stop-Orders.....................................................16
      6.2     Listing.........................................................16
      6.3     Market Regulations..............................................16
      6.4     Reporting Requirements..........................................16
      6.5     Use of Funds....................................................16
      6.6     Access to Facilities............................................17
      6.7     Taxes...........................................................17
      6.8     Insurance.......................................................17
      6.9     Intellectual Property...........................................18
      6.10    Properties......................................................18
      6.11    Confidentiality.................................................19
      6.12    Required Approvals..............................................19
      6.13    Reissuance of Securities........................................20
      6.14    Opinion.........................................................20
      6.15    Margin Stock....................................................19
      6.16    Restricted Cash Disclosure......................................19
      6.17    Financing Right of First Refusal................................19

7.    Covenants of the Purchaser..............................................21
      7.1     Confidentiality.................................................21
      7.2     Non-Public Information..........................................21
      7.3     Other...........................................................20
      7.4     No Shorting.....................................................20
      7.5     Limitation on Acquisition of Common Stock of Company............20

8.    Covenants of the Company and Purchaser Regarding Indemnification........22
      8.1     Company Indemnification.........................................22
      8.2     Purchaser's Indemnification.....................................22

9.    Conversion of Convertible Note..........................................22
      9.1     Mechanics of Conversion.........................................22

10.   Registration Rights.....................................................24
      10.1    Registration Rights Granted.....................................24
      10.2    Offering Restrictions...........................................24

11.   Miscellaneous...........................................................24
      11.1    Governing Law...................................................24
      11.2    Survival........................................................25
      11.3    Successors......................................................25
      11.4    Entire Agreement................................................26
      11.5    Severability....................................................26
      11.6    Amendment and Waiver............................................26
      11.7    Delays or Omissions.............................................26
      11.8    Notices.........................................................26
      11.9    Attorneys' Fees.................................................27
      11.10   Titles and Subtitles............................................27
      11.11   Facsimile Signatures; Counterparts..............................27
      11.12   Broker's Fees...................................................28

                                       ii

<PAGE>

      11.13   Construction....................................................28

                                LIST OF EXHIBITS
--------------------------------------------------------------------------------
Form of Convertible Term Note...................................     Exhibit A
Form of Warrant.................................................     Exhibit B-1
Form of Option                                                       Exhibit B-2
Form of Opinion.................................................     Exhibit C
Form of Escrow Agreement........................................     Exhibit D

                                      iii
<PAGE>

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES  PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March 9, 2005,  by and between  FAST EDDIE  RACING  STABLES,  INC., a
Florida  corporation  (the  "Company"),  and Laurus Master Fund,  Ltd., a Cayman
Islands company (the "Purchaser").

                                    RECITALS

      WHEREAS,  the  Company  has  authorized  the  sale to the  Purchaser  of a
Convertible Term Note in the aggregate principal amount of Three Million Dollars
($3,000,000)  (as  amended,  modified  or  supplemented  from time to time,  the
"Note"),  which Note is convertible  into shares of the Company's  common stock,
$0.01 par value per share (the "Common  Stock") at an initial  fixed  conversion
price of $ 0.83 per share of Common Stock ("Fixed Conversion Price");

      WHEREAS,  the Company  wishes to issue (x) a warrant to the  Purchaser  to
purchase  up to  1,084,338  shares of the  Company's  Common  Stock  (subject to
adjustment  as set forth  therein)  and (y) an option to  purchase up to 643,700
shares  of the  Company's  Common  Stock  (subject  to  adjustment  as set forth
therein) in connection with Purchaser's purchase of the Note;

      WHEREAS, Purchaser desires to purchase the Note, the Option (as defined in
Section 2) and the Warrant (as defined in Section 2) on the terms and conditions
set forth herein; and

      WHEREAS,  the Company  desires to issue and sell the Note,  the Option and
Warrant to Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable  consideration,  the receipt and  sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

      1.  Agreement to Sell and Purchase.  Pursuant to the terms and  conditions
set forth in this Agreement,  on the Closing Date (as defined in Section 3), the
Company  agrees to sell to the  Purchaser,  and the  Purchaser  hereby agrees to
purchase  from  the  Company,  a  Note  in the  aggregate  principal  amount  of
$3,000,000  convertible in accordance  with the terms thereof into shares of the
Company's  Common  Stock  in  accordance  with  the  terms  of the Note and this
Agreement.  The  Note  purchased  on the  Closing  Date  shall  be  known as the
"Offering."  A form of the Note is  annexed  hereto as  Exhibit A. The Note will
mature on the Maturity  Date (as defined in the Note).  Collectively,  the Note,
the Option and Warrant and Common  Stock  issuable in payment of the Note,  upon
conversion  of the Note and upon  exercise  of the  Warrant  and the  Option are
referred to as the "Securities."

      2. Fees, Option and Warrant. On the Closing Date:

            (a) The Company will issue and deliver to the Purchaser a Warrant to
      purchase up to  1,084,338  shares of Common Stock in  connection  with the
      Offering (as

                                      D-1
<PAGE>

      amended,  modified  or  supplemented  from  time to time,  the  "Warrant")
      pursuant to Section 1 hereof. The Warrant must be delivered on the Closing
      Date.  A form of  Warrant  is  annexed  hereto  as  Exhibit  B-1.  All the
      representations, covenants, warranties, undertakings, and indemnification,
      and other rights made or granted to or for the benefit of the Purchaser by
      the Company are hereby also made and granted in respect of the Warrant and
      shares of the Company's Common Stock issuable upon exercise of the Warrant
      (the "Warrant Shares").

            (b) The Company will issue and deliver to the Purchaser an Option to
      purchase  up to  643,700  shares of Common  Stock in  connection  with the
      Offering  (as amended,  modified or  supplemented  from time to time,  the
      "Option")  pursuant to Section 1 hereof.  The Option must be  delivered on
      the Closing  Date. A form of the Option is annexed  hereto as Exhibit B-2.
      All  the  representations,   covenants,   warranties,   undertakings,  and
      indemnification, and other rights made or granted to or for the benefit of
      the  Purchaser  by the Company are hereby also made and granted in respect
      of the Option and  shares of the  Company's  Common  Stock  issuable  upon
      exercise of the Option (the "Option Shares").

            (b) Subject to the terms of Section  2(d) below,  the Company  shall
      pay to Laurus Capital  Management,  LLC, the manager of the  Purchaser,  a
      closing  payment in an amount  equal to three and three  quarters  percent
      (3.75%) of the aggregate  principal  amount of the Note. The foregoing fee
      is referred to herein as the "Closing Payment."

            (c) The Company shall  reimburse  the  Purchaser for its  reasonable
      expenses  (including legal fees and expenses)  incurred in connection with
      the  preparation  and  negotiation  of  this  Agreement  and  the  Related
      Agreements (as hereinafter  defined),  and expenses incurred in connection
      with  the  Purchaser's  due  diligence  review  of  the  Company  and  its
      Subsidiaries (as defined in Section 4.2) and all related matters.  Amounts
      required  to be paid under this  Section  2(c) will be paid on the Closing
      Date and shall be $52,500 for such  expenses  referred to in this  Section
      2(c).

            (d)  The  Closing  Payment  and  the  expenses  referred  to in  the
      preceding  clause (c) (net of  deposits  previously  paid by the  Company)
      shall be paid at closing out of funds held pursuant to a Escrow  Agreement
      (as defined below) and a disbursement letter (the "Disbursement Letter").

      3. Closing, Delivery and Payment.

            3.1 Closing. Subject to the terms and conditions herein, the closing
of the transactions contemplated hereby (the "Closing"), shall take place on the
date  hereof,  at such time or place as the Company and  Purchaser  may mutually
agree (such date is hereinafter referred to as the "Closing Date").

            3.2 Delivery.  Pursuant to the Escrow  Agreement,  at the Closing on
the Closing Date, the Company will deliver to the Purchaser, among other things,
a Note in the form attached as Exhibit A  representing  the aggregate  principal
amount of $3,000,000, a Warrant in

                                       2
<PAGE>

the form attached as Exhibit B-1 in the Purchaser's name representing  1,084,338
Warrant Shares, an Option in the form attached as Exhibit B-2 in the Purchaser's
name  representing  643,700  Option Shares and the Purchaser will deliver to the
Company, among other things, the amounts set forth in the Disbursement Letter by
certified  funds or wire transfer (it being  understood  that  $2,500,000 of the
proceeds  of the Note shall be placed in the  Restricted  Account (as defined in
the Restricted  Account Agreement  referred to below) on the Closing Date and up
to $500,000 of the proceeds of the Note will be utilized  for expenses  incurred
in connection  with the  transactions  referred to in this  Agreement,  with the
remainder of such $500,000 of proceeds to be provided to the Company for working
capital purposes).

      4.  Representations  and  Warranties  of the Company.  The Company  hereby
represents and warrants to the Purchaser as follows (which  representations  and
warranties  are  supplemented  by the  Company's  filings  under the  Securities
Exchange Act of 1934 made prior to the date of this Agreement (collectively, the
"Exchange Act Filings"), copies of which have been provided to the Purchaser):

            4.1  Organization,  Good  Standing  and  Qualification.  Each of the
Company and each of its  Subsidiaries  is a corporation,  partnership or limited
liability company,  as the case may be, duly organized,  validly existing and in
good standing under the laws of its  jurisdiction of  organization.  Each of the
Company and each of its  Subsidiaries  has the corporate  power and authority to
own and  operate  its  properties  and  assets,  to execute and deliver (i) this
Agreement,  (ii) the Note, the Option and the Warrant to be issued in connection
with this Agreement,  (iii) the Master  Security  Agreement dated as of the date
hereof  between  the  Company,  certain  Subsidiaries  of the  Company  and  the
Purchaser (as amended,  modified or supplemented  from time to time, the "Master
Security  Agreement"),  (iv) the Registration  Rights Agreement  relating to the
Securities dated as of the date hereof between the Company and the Purchaser (as
amended,  modified or supplemented from time to time, the  "Registration  Rights
Agreement"),  (v) the  Subsidiary  Guaranty  dated as of the date hereof made by
certain  Subsidiaries of the Company (as amended,  modified or supplemented from
time to time, the "Subsidiary Guaranty"),  (vi) the Stock Pledge Agreement dated
as of the date hereof among the Company, certain Subsidiaries of the Company and
the  Purchaser  (as amended,  modified or  supplemented  from time to time,  the
"Stock  Pledge  Agreement"),  (vii) the  Escrow  Agreement  dated as of the date
hereof  among the  Company,  the  Purchaser  and the escrow  agent  referred  to
therein,  substantially in the form of Exhibit D hereto (as amended, modified or
supplemented from time to time, the "Escrow  Agreement"),  (viii) the Restricted
Account  Agreement dated as of the date hereof among the Company,  the Purchaser
and North Fork Bank (as amended, modified or supplemented from time to time, the
"Restricted Account Agreement"), (ix) the Restricted Account Side Letter related
to the  Restricted  Account  Agreement  dated as of the date hereof  between the
Company and the Purchaser  (as amended,  modified or  supplemented  from time to
time, the "Restricted Account Side Letter") and (x) all other agreements related
to this  Agreement  and the Note and referred to herein (the  preceding  clauses
(ii) through (x), collectively, the "Related Agreements"), to issue and sell the
Note and the shares of Common Stock  issuable  upon  conversion of the Note (the
"Note  Shares"),  to issue and sell the  Option  and the  Option  Shares and the
Warrant  and the Warrant  Shares,  to issue and sell the Warrant and the Warrant
Shares,  and to carry  out the  provisions  of this  Agreement  and the  Related
Agreements  and to carry on its  business as  presently  conducted.  Each of the
Company and each of its  Subsidiaries  is duly qualified and is authorized to do
business and is in good standing as a

                                       3
<PAGE>

foreign  corporation,  partnership or limited liability company, as the case may
be, in all  jurisdictions  in which  the  nature  of its  activities  and of its
properties (both owned and leased) makes such  qualification  necessary,  except
for  those  jurisdictions  in  which  failure  to do so has not,  or  could  not
reasonably be expected to have,  individually  or in the  aggregate,  a material
adverse effect on the business,  assets,  liabilities,  condition  (financial or
otherwise),   properties,  operations  or  prospects  of  the  Company  and  its
Subsidiaries, taken individually and as a whole (a "Material Adverse Effect").

            4.2  Subsidiaries.  Each  direct  and  indirect  Subsidiary  of  the
Company,  the  direct  owner of such  Subsidiary  and its  percentage  ownership
thereof,  is set forth on Schedule  4.2.  For the purpose of this  Agreement,  a
"Subsidiary"  of any person or entity  means (i) a  corporation  or other entity
whose shares of stock or other ownership  interests having ordinary voting power
(other than stock or other ownership  interests having such power only by reason
of the happening of a contingency)  to elect a majority of the directors of such
corporation,  or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or
(ii) a corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the equity interests at such time.

            4.3 Capitalization; Voting Rights.

            (a) The  authorized  capital  stock of the  Company,  as of the date
      hereof consists of 100,000,000  shares,  all of which are shares of Common
      Stock,  par value $0.01 per share.  The  authorized  capital stock of each
      Subsidiary of the Company is set forth on Schedule 4.2.

            (b) Except as disclosed on Schedule 4.3,  other than: (i) the shares
      reserved for issuance  under the Company's  stock option  plans;  and (ii)
      shares  which may be granted  pursuant to this  Agreement  and the Related
      Agreements,  there are no outstanding options, warrants, rights (including
      conversion or  preemptive  rights and rights of first  refusal),  proxy or
      stockholder agreements,  or arrangements or agreements of any kind for the
      purchase or acquisition from the Company of any of its securities.  Except
      as disclosed on Schedule 4.3,  neither the offer,  issuance or sale of any
      of the Note, the Option or the Warrant, or the issuance of any of the Note
      Shares,  the Option Shares or Warrant Shares,  nor the consummation of any
      transaction  contemplated  hereby  will result in a change in the price or
      number of any securities of the Company  outstanding,  under anti-dilution
      or other similar provisions contained in or affecting any such securities.

            (c) All issued and outstanding shares of the Company's Common Stock:
      (i) have been duly  authorized  and validly  issued and are fully paid and
      nonassessable;  and (ii) were  issued in  compliance  with all  applicable
      state and federal laws concerning the issuance of securities.

            (d) The rights,  preferences,  privileges  and  restrictions  of the
      shares of the Common Stock are as stated in the Company's  Certificate  of
      Incorporation  (the  "Charter").  The Note Shares,  the Option  Shares and
      Warrant  Shares have been duly and validly  reserved  for  issuance.  When
      issued and paid for in compliance  with the  provisions of this  Agreement
      and the Company's Charter, the Securities will be validly issued, fully

                                       4
<PAGE>

      paid and  nonassessable,  and will be free of any  liens or  encumbrances;
      provided,  however,  that the Securities may be subject to restrictions on
      transfer under state and/or federal securities laws as set forth herein or
      as otherwise required by such laws at the time a transfer is proposed.

            4.4 Authorization;  Binding Obligations. All corporate,  partnership
or  limited  liability  company,  as the case may be,  action on the part of the
Company and each of its  Subsidiaries  (including  the  respective  officers and
directors)  necessary for the  authorization  of this  Agreement and the Related
Agreements,   the  performance  of  all  obligations  of  the  Company  and  its
Subsidiaries  hereunder  and under the other  Related  Agreements at the Closing
and, the authorization,  sale, issuance and delivery of the Note, the Option and
Warrant has been taken or will be taken prior to the Closing. This Agreement and
the Related  Agreements,  when  executed and delivered and to the extent it is a
party thereto,  will be valid and binding obligations of each of the Company and
each of its  Subsidiaries,  enforceable  against each such person in  accordance
with their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) general  principles of equity that restrict the  availability of
      equitable or legal remedies.

The sale of the Note and the subsequent  conversion of the Note into Note Shares
are not and will not be  subject  to any  preemptive  rights  or rights of first
refusal that have not been properly waived or complied with. The issuance of the
Warrant and the  subsequent  exercise of the Warrant for Warrant  Shares and the
issuance of the Option and the subsequent  exercise of the Option for the Option
Shares  are not and will not be subject  to any  preemptive  rights or rights of
first refusal that have not been properly waived or complied with.

            4.5 Liabilities. Neither the Company nor any of its Subsidiaries has
any contingent liabilities,  except current liabilities incurred in the ordinary
course of business and liabilities disclosed in any Exchange Act Filings.

            4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as
disclosed in any Exchange Act Filings:

            (a) there are no agreements, understandings, instruments, contracts,
      proposed  transactions,  judgments,  orders, writs or decrees to which the
      Company  or any of its  Subsidiaries  is a party  or by  which it is bound
      which may  involve:  (i)  obligations  (contingent  or  otherwise)  of, or
      payments to, the Company in excess of $50,000 (other than  obligations of,
      or  payments  to, the Company  arising  from  purchase or sale  agreements
      entered into in the ordinary course of business);  or (ii) the transfer or
      license of any patent, copyright,  trade secret or other proprietary right
      to or from the Company  (other than licenses  arising from the purchase of
      "off  the  shelf"  or  other  standard  products);   or  (iii)  provisions
      restricting the development,  manufacture or distribution of the Company's
      products or services; or (iv) indemnification by

                                       5
<PAGE>

      the Company with respect to infringements of proprietary rights.

            (b) Since  December  31,  2004,  neither  the Company nor any of its
      Subsidiaries  has: (i) declared or paid any  dividends,  or  authorized or
      made any  distribution  upon or with respect to any class or series of its
      capital stock;  (ii) incurred any  indebtedness  for money borrowed or any
      other liabilities (other than ordinary course obligations) individually in
      excess of  $50,000  or,  in the case of  indebtedness  and/or  liabilities
      individually  less than $50,000,  in excess of $100,000 in the  aggregate;
      (iii) made any loans or advances to any person not in excess, individually
      or in the aggregate, of $100,000,  other than ordinary course advances for
      travel expenses;  or (iv) sold,  exchanged or otherwise disposed of any of
      its assets or rights, other than the sale of its inventory in the ordinary
      course of business.

            (c)  For  the  purposes  of  subsections  (a)  and  (b)  above,  all
      indebtedness,   liabilities,  agreements,   understandings,   instruments,
      contracts  and proposed  transactions  involving the same person or entity
      (including  persons or  entities  the  Company  has reason to believe  are
      affiliated  therewith)  shall be aggregated for the purpose of meeting the
      individual minimum dollar amounts of such subsections.

            4.7 Obligations to Related Parties.  Except as set forth on Schedule
      4.7, there are no obligations of the Company or any of its Subsidiaries to
      officers,  directors,  stockholders  or employees of the Company or any of
      its Subsidiaries other than:

            (a) for  payment  of  salary  for  services  rendered  and for bonus
      payments;

            (b) reimbursement for reasonable  expenses incurred on behalf of the
      Company and its Subsidiaries;

            (c) for other standard employee benefits made generally available to
      all employees  (including stock option  agreements  outstanding  under any
      stock option plan approved by the Board of Directors of the Company); and

            (d)  obligations  listed in the  Company's  financial  statements or
      disclosed in any of its Exchange Act Filings.

Except as described  above or set forth on Schedule  4.7,  none of the officers,
directors  or,  to the  best  of  the  Company's  knowledge,  key  employees  or
stockholders  of the Company or any  members of their  immediate  families,  are
indebted to the Company,  individually or in the aggregate, in excess of $50,000
or have any direct or indirect  ownership  interest  in any firm or  corporation
with which the  Company is  affiliated  or with which the Company has a business
relationship,  or any firm or corporation which competes with the Company, other
than passive  investments in publicly traded companies  (representing  less than
one percent (1%) of such company) which may compete with the Company.  Except as
described  above, no officer,  director or  stockholder,  or any member of their
immediate  families,  is,  directly or  indirectly,  interested  in any material
contract  with  the  Company  and  no  agreements,  understandings  or  proposed
transactions are contemplated between the Company and any such person. Except as

                                       6
<PAGE>

set forth on Schedule  4.7, the Company is not a guarantor or  indemnitor of any
indebtedness of any other person, firm or corporation.

            4.8 Changes.  Since  December  31, 2004,  except as disclosed in any
Exchange  Act  Filing  or in any  Schedule  to this  Agreement  or to any of the
Related Agreements, there has not been:

            (a) any  change  in the  business,  assets,  liabilities,  condition
      (financial  or  otherwise),  properties,  operations  or  prospects of the
      Company or any of its Subsidiaries, which individually or in the aggregate
      has had, or could  reasonably be expected to have,  individually or in the
      aggregate, a Material Adverse Effect;

            (b) any  resignation or termination of any officer,  key employee or
      group of employees of the Company or any of its Subsidiaries;

            (c) any material change,  except in the ordinary course of business,
      in the contingent obligations of the Company or any of its Subsidiaries by
      way of guaranty, endorsement, indemnity, warranty or otherwise;

            (d) any  damage,  destruction  or loss,  whether  or not  covered by
      insurance,  which  has  had,  or could  reasonably  be  expected  to have,
      individually or in the aggregate, a Material Adverse Effect;

            (e)  any  waiver  by the  Company  or any of its  Subsidiaries  of a
      valuable right or of a material debt owed to it;

            (f) any direct or  indirect  loans made by the Company or any of its
      Subsidiaries  to any  stockholder,  employee,  officer or  director of the
      Company  or any of its  Subsidiaries,  other  than  advances  made  in the
      ordinary course of business;

            (g) any material change in any compensation arrangement or agreement
      with any employee,  officer, director or stockholder of the Company or any
      of its Subsidiaries;

            (h) any declaration or payment of any dividend or other distribution
      of the assets of the Company or any of its Subsidiaries;

            (i) any labor organization activity related to the Company or any of
      its Subsidiaries;

            (j)  any  debt,   obligation  or  liability  incurred,   assumed  or
      guaranteed  by the Company or any of its  Subsidiaries,  except  those for
      immaterial  amounts and for current  liabilities  incurred in the ordinary
      course of business;

            (k) any sale,  assignment  or transfer of any  patents,  trademarks,
      copyrights,  trade secrets or other intangible assets owned by the Company
      or any of its Subsidiaries;

            (l) any change in any material agreement to which the Company or any
      of its  Subsidiaries  is a party or by which  either the Company or any of
      its Subsidiaries is bound

                                       7
<PAGE>

      which either individually or in the aggregate has had, or could reasonably
      be expected to have,  individually or in the aggregate, a Material Adverse
      Effect;

            (m) any other  event or  condition  of any  character  that,  either
      individually or in the aggregate, has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse Effect; or

            (n) any  arrangement  or  commitment  by the  Company  or any of its
      Subsidiaries to do any of the acts described in subsection (a) through (m)
      above.

            4.9 Title to Properties and Assets;  Liens, Etc. Except as set forth
on Schedule 4.9, each of the Company and each of its  Subsidiaries  has good and
marketable  title to its properties and assets,  and good title to its leasehold
estates, in each case subject to no mortgage,  pledge, lien, lease,  encumbrance
or charge, other than:

            (a) those resulting from taxes which have not yet become delinquent;

            (b) minor liens and  encumbrances  which do not  materially  detract
      from the value of the property  subject  thereto or materially  impair the
      operations of the Company or any of its Subsidiaries; and

            (c) those  that have  otherwise  arisen  in the  ordinary  course of
      business.

All facilities,  machinery,  equipment,  fixtures, vehicles and other properties
owned,  leased or used by the Company and its Subsidiaries are in good operating
condition and repair,  ordinary wear and tear  excepted,  and are reasonably fit
and usable for the purposes  for which they are being used.  Except as set forth
on Schedule 4.9, the Company and its  Subsidiaries  are in  compliance  with all
material terms of each lease to which it is a party or is otherwise bound.

            4.10 Intellectual Property.

            (a)  Each  of the  Company  and  each  of its  Subsidiaries  owns or
      possesses  sufficient  legal  rights to all patents,  trademarks,  service
      marks, trade names, copyrights,  trade secrets, licenses,  information and
      other proprietary  rights and processes  necessary for its business as now
      conducted  and to the  Company's  knowledge,  as presently  proposed to be
      conducted (the "Intellectual Property"), without any known infringement of
      the  rights of  others.  There are no  outstanding  options,  licenses  or
      agreements of any kind relating to the foregoing  proprietary  rights, nor
      is the  Company  or any of its  Subsidiaries  bound  by or a party  to any
      options,  licenses or  agreements of any kind with respect to the patents,
      trademarks,   service  marks,  trade  names,  copyrights,  trade  secrets,
      licenses,  information and other  proprietary  rights and processes of any
      other person or entity other than such licenses or agreements arising from
      the purchase of "off the shelf" or standard products.

            (b) Neither the Company nor any of its Subsidiaries has received any
      communications  alleging that the Company or any of its  Subsidiaries  has
      violated  any of the  patents,  trademarks,  service  marks,  trade names,
      copyrights or trade secrets or other

                                       8
<PAGE>

      proprietary  rights of any other  person or entity,  nor is the Company or
      any of its Subsidiaries aware of any basis therefor.

            (c) The  Company  does not  believe  it is or will be  necessary  to
      utilize any inventions, trade secrets or proprietary information of any of
      its employees made prior to their  employment by the Company or any of its
      Subsidiaries,   except  for  inventions,   trade  secrets  or  proprietary
      information  that have been  rightfully  assigned to the Company or any of
      its Subsidiaries.

            4.11 Compliance with Other Instruments.  Neither the Company nor any
of its Subsidiaries is in violation or default of (x) any term of its Charter or
Bylaws,  or (y) of any  provision  of  any  indebtedness,  mortgage,  indenture,
contract,  agreement or  instrument to which it is party or by which it is bound
or of any judgment,  decree,  order or writ, which violation or default,  in the
case of this  clause  (y),  has had,  or could  reasonably  be expected to have,
either  individually  or in  the  aggregate,  a  Material  Adverse  Effect.  The
execution,  delivery and  performance of and compliance  with this Agreement and
the Related  Agreements to which it is a party, and the issuance and sale of the
Note by the Company and the other Securities by the Company each pursuant hereto
and thereto,  will not, with or without the passage of time or giving of notice,
result in any such  material  violation,  or be in conflict with or constitute a
default  under any such term or  provision,  or  result in the  creation  of any
mortgage,  pledge,  lien,  encumbrance  or charge upon any of the  properties or
assets of the Company or any of its Subsidiaries or the suspension,  revocation,
impairment,  forfeiture or nonrenewal of any permit,  license,  authorization or
approval  applicable  to the Company,  its business or  operations or any of its
assets or properties.

            4.12 Litigation.  Except as set forth on Schedule 4.12 hereto, there
is no action,  suit,  proceeding or  investigation  pending or, to the Company's
knowledge,  currently  threatened against the Company or any of its Subsidiaries
that  prevents the Company or any of its  Subsidiaries  from  entering into this
Agreement or the other Related Agreements, or from consummating the transactions
contemplated  hereby  or  thereby,  or which  has had,  or could  reasonably  be
expected to have,  either  individually or in the aggregate,  a Material Adverse
Effect or any change in the current  equity  ownership  of the Company or any of
its Subsidiaries, nor is the Company aware that there is any basis to assert any
of the foregoing.  Neither the Company nor any of its Subsidiaries is a party or
subject to the provisions of any order, writ, injunction,  judgment or decree of
any court or government  agency or  instrumentality.  There is no action,  suit,
proceeding or investigation by the Company or any of its Subsidiaries  currently
pending or which the Company or any of its Subsidiaries intends to initiate.

            4.13 Tax Returns and  Payments.  Each of the Company and each of its
Subsidiaries  has filed all tax  returns  (federal,  state  and  local)  due and
required  to be filed by it.  All  taxes  shown  to be due and  payable  on such
returns,  any  assessments  imposed,  and all other taxes due and payable by the
Company or any of its  Subsidiaries on or before the Closing,  have been paid or
will be paid prior to the time they  become  delinquent.  Except as set forth on
Schedule 4.13, neither the Company nor any of its Subsidiaries has been advised:

            (a) that any of its returns,  federal,  state or other, have been or
      are being audited as of the date hereof; or

                                       9
<PAGE>

                  (b) of any  deficiency in  assessment or proposed  judgment to
            its federal, state or other taxes.

The Company has no knowledge of any liability for any tax to be imposed upon its
properties  or assets as of the date of this  Agreement  that is not  adequately
provided for.

            4.14  Employees.  Except as set forth on Schedule 4.14,  neither the
Company nor any of its  Subsidiaries  has any collective  bargaining  agreements
with any of its employees.  There is no labor union organizing  activity pending
or, to the Company's knowledge, threatened with respect to the Company or any of
its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule
4.14,  neither the Company nor any of its Subsidiaries is a party to or bound by
any currently effective employment contract,  deferred compensation arrangement,
bonus plan,  incentive plan, profit sharing plan,  retirement agreement or other
employee compensation plan or agreement. To the Company's knowledge, no employee
of the  Company or any of its  Subsidiaries,  nor any  consultant  with whom the
Company or any of its Subsidiaries  has contracted,  is in violation of any term
of any  employment  contract,  proprietary  information  agreement  or any other
agreement  relating to the right of any such individual to be employed by, or to
contract with, the Company or any of its  Subsidiaries  because of the nature of
the business to be conducted by the Company or any of its  Subsidiaries;  and to
the Company's  knowledge  the continued  employment by the Company or any of its
Subsidiaries of its present employees,  and the performance of the Company's and
its Subsidiaries' contracts with its independent contractors, will not result in
any such  violation.  Neither the Company nor any of its  Subsidiaries  is aware
that any of its employees is obligated under any contract  (including  licenses,
covenants or  commitments of any nature) or other  agreement,  or subject to any
judgment,  decree or order of any court or  administrative  agency,  that  would
interfere with their duties to the Company or any of its  Subsidiaries.  Neither
the Company nor any of its  Subsidiaries  has received any notice  alleging that
any such  violation  has  occurred.  Except  for  employees  who have a  current
effective employment  agreement with the Company or any of its Subsidiaries,  no
employee of the Company or any of its Subsidiaries has been granted the right to
continued  employment  by the  Company  or any  of  its  Subsidiaries  or to any
material  compensation  following  termination of employment with the Company or
any of its  Subsidiaries.  Except as set forth on Schedule  4.14, the Company is
not aware  that any  officer,  key  employee  or group of  employees  intends to
terminate  his,  her  or  their  employment  with  the  Company  or  any  of its
Subsidiaries,  nor does the  Company or any of its  Subsidiaries  have a present
intention to terminate the  employment of any officer,  key employee or group of
employees.

            4.15 Registration  Rights and Voting Rights.  Except as set forth on
Schedule  4.15 or on Schedule 7(b) to the  Registration  Rights  Agreement,  and
except as disclosed in Exchange Act Filings,  neither the Company nor any of its
Subsidiaries is presently under any obligation,  and neither the Company nor any
of its Subsidiaries has granted any rights,  to register any of the Company's or
its Subsidiaries' presently outstanding securities or any of its securities that
may  hereafter  be issued.  Except as set forth on  Schedule  4.15 and except as
disclosed in Exchange Act Filings, to the Company's knowledge, no stockholder of
the Company or any of its  Subsidiaries  has  entered  into any  agreement  with
respect  to  the  voting  of  equity  securities  of the  Company  or any of its
Subsidiaries.

                                       10
<PAGE>

            4.16 Compliance with Laws;  Permits.  Neither the Company nor any of
its Subsidiaries is in violation of any applicable  statute,  rule,  regulation,
order  or   restriction   of  any   domestic  or  foreign   government   or  any
instrumentality  or agency  thereof in respect of the conduct of its business or
the ownership of its properties  which has had, or could  reasonably be expected
to have, either individually or in the aggregate,  a Material Adverse Effect. No
governmental  orders,  permissions,  consents,  approvals or authorizations  are
required to be obtained and no  registrations or declarations are required to be
filed in connection  with the  execution  and delivery of this  Agreement or any
other Related  Agreement and the issuance of any of the Securities,  except such
as has been duly and validly  obtained or filed,  or with respect to any filings
that must be made after the Closing,  as will be filed in a timely manner.  Each
of the  Company  and its  Subsidiaries  has all  material  franchises,  permits,
licenses and any similar authority  necessary for the conduct of its business as
now being  conducted by it, the lack of which could,  either  individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

            4.17  Environmental and Safety Laws.  Neither the Company nor any of
its  Subsidiaries is in violation of any applicable  statute,  law or regulation
relating to the environment or occupational  health and safety,  which violation
has had, or could reasonably be expected to have, a Material Adverse Effect, and
to its knowledge,  no material  expenditures are or will be required in order to
comply with any such existing statute, law or regulation. Except as set forth on
Schedule  4.17, no Hazardous  Materials (as defined below) are used or have been
used,  stored,  or disposed of by the Company or any of its  Subsidiaries or, to
the Company's  actual  knowledge,  by any other person or entity on any property
owned,  leased or used by the  Company or any of its  Subsidiaries,  in any such
case in violation of applicable law. For the purposes of the preceding sentence,
"Hazardous Materials" shall mean:

            (a) materials  which are listed or otherwise  defined as "hazardous"
      or "toxic" under any applicable local, state,  federal and/or foreign laws
      and regulations  that govern the existence  and/or remedy of contamination
      on property,  the protection of the environment  from  contamination,  the
      control of  hazardous  wastes,  or other  activities  involving  hazardous
      substances, including building materials; or

            (b) any petroleum products or nuclear materials.

            4.18 Valid  Offering.  Assuming the accuracy of the  representations
and warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration  requirements of
the Securities  Act of 1933, as amended (the  "Securities  Act"),  and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration,  permit or qualification  requirements of all applicable
state securities laws.

            4.19  Full  Disclosure.   Each  of  the  Company  and  each  of  its
Subsidiaries  has provided the Purchaser with all  information  requested by the
Purchaser in connection  with its decision to purchase the Note,  the Option and
Warrant,  including all information the Company and its Subsidiaries  believe is
reasonably necessary to make such investment  decision.  Neither this Agreement,
the Related  Agreements,  the exhibits and schedules  hereto and thereto nor any
other document  delivered by the Company or any of its Subsidiaries to Purchaser
or its attorneys

                                       11
<PAGE>

or  agents  in  connection  herewith  or  therewith  or  with  the  transactions
contemplated hereby or thereby,  contain any untrue statement of a material fact
nor omit to state a  material  fact  necessary  in order to make the  statements
contained  herein or therein,  in light of the  circumstances  in which they are
made, not misleading.  Any financial projections and other estimates provided to
the  Purchaser  by the  Company  or any of its  Subsidiaries  were  based on the
Company's and its Subsidiaries' experience in the industry and on assumptions of
fact  and  opinion  as to  future  events  which  the  Company  or  any  of  its
Subsidiaries,  at the date of the  issuance of such  projections  or  estimates,
believed to be reasonable, it being acknowledged that such projections and other
estimates do not in any way constitute a guarantee of future performance.

            4.20 Insurance. Each of the Company and each of its Subsidiaries has
general commercial, product liability, fire and casualty insurance policies with
coverages  which the Company  believes are  customary  for  companies  similarly
situated to the Company and its Subsidiaries in the same or similar business.

            4.21 SEC Reports.  Except as set forth on Schedule 4.21, the Company
has filed all proxy statements, reports and other documents required to be filed
by it under the Securities  Exchange Act 1934, as amended (the "Exchange  Act").
The Company has furnished the Purchaser with copies of: (i) its Annual Report on
Form 10-KSB for its fiscal year ended  December 31, 2004; and (ii) its Quarterly
Report on Form 10-QSB for its fiscal  quarter ended  September 30, 2004, and the
Form  8-K  filings  which  it has  made  during  the  fiscal  year  2005 to date
(collectively,  the "SEC  Reports").  Except as set forth on Schedule 4.21, each
SEC Report was, at the time of its filing,  in substantial  compliance  with the
requirements  of its  respective  form  and  none  of the SEC  Reports,  nor the
financial  statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact  required to be stated  therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading. The Company also reaffirms the representation made by
it in Section 6(a) of the Registration Rights Agreement.

            4.22 Listing.  The  Company's  Common Stock is listed for trading on
the National  Association of Securities  Dealers Over the Counter Bulletin Board
("NASD  OTCBB") and  satisfies all  requirements  for the  continuation  of such
trading.  The Company has not received any notice that its Common Stock will not
be  eligible  to be traded on the NASD OTCBB or that its  Common  Stock does not
meet all requirements for such trading.

            4.23 No  Integrated  Offering.  Neither the Company,  nor any of its
Subsidiaries  or affiliates,  nor any person acting on its or their behalf,  has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under  circumstances that would cause the offering of
the Securities pursuant to this Agreement or any of the Related Agreements to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act which would prevent the Company from selling the Securities pursuant to Rule
506 under the  Securities  Act, or any applicable  exchange-related  stockholder
approval  provisions,  nor  will  the  Company  or  any  of  its  affiliates  or
Subsidiaries  take any  action or steps  that would  cause the  offering  of the
Securities to be integrated with other offerings.

                                       12
<PAGE>

            4.24 Stop Transfer.  The Securities are restricted  securities as of
the date of this Agreement. Neither the Company nor any of its Subsidiaries will
issue any stop transfer  order or other order  impeding the sale and delivery of
any of the  Securities at such time as the  Securities are registered for public
sale or an exemption from registration is available, except as required by state
and federal securities laws.

            4.25  Dilution.  The  Company  specifically  acknowledges  that  its
obligation  to issue the shares of Common Stock upon  conversion of the Note and
the  exercise  of the  Warrant  and the Option is binding  upon the  Company and
enforceable  regardless  of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

            4.26  Patriot  Act.  The  Company  certifies  that,  to the  best of
Company's  knowledge,  neither the Company nor any of its  Subsidiaries has been
designated,  and is not  owned or  controlled,  by a  "suspected  terrorist"  as
defined in  Executive  Order 13224.  The Company  hereby  acknowledges  that the
Purchaser seeks to comply with all applicable laws concerning  money  laundering
and related  activities.  In furtherance  of those  efforts,  the Company hereby
represents,  warrants and agrees that: (i) none of the cash or property that the
Company or any of its Subsidiaries  will pay or will contribute to the Purchaser
has been or shall be derived  from,  or related to, any activity  that is deemed
criminal  under United  States law; and (ii) no  contribution  or payment by the
Company or any of its Subsidiaries to the Purchaser, to the extent that they are
within the Company's and/or its Subsidiaries'  control shall cause the Purchaser
to be in  violation of the United  States Bank  Secrecy  Act, the United  States
International  Money  Laundering  Control  Act  of  1986  or the  United  States
International  Money Laundering  Abatement and  Anti-Terrorist  Financing Act of
2001.  The  Company  shall  promptly  notify  the  Purchaser  if  any  of  these
representations  ceases to be true and accurate  regarding the Company or any of
its  Subsidiaries.  The Company  agrees to provide the Purchaser any  additional
information  regarding the Company or any of its Subsidiaries that the Purchaser
deems  necessary or convenient to ensure  compliance  with all  applicable  laws
concerning money laundering and similar activities.  The Company understands and
agrees  that  if at  any  time  it is  discovered  that  any  of  the  foregoing
representations  are  incorrect,  or if otherwise  required by applicable law or
regulation related to money laundering or similar activities,  the Purchaser may
undertake  appropriate  actions  to ensure  compliance  with  applicable  law or
regulation,  including but not limited to segregation  and/or  redemption of the
Purchaser's  investment in the Company. The Company further understands that the
Purchaser  may  release  confidential  information  about  the  Company  and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Purchaser,  in its sole discretion,  determines that it is in
the best interests of the Purchaser in light of relevant  rules and  regulations
under the laws set forth in subsection (ii) above.

      5.  Representations and Warranties of the Purchaser.  The Purchaser hereby
represents  and  warrants to the Company as follows  (such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

            5.1  No  Shorting.  The  Purchaser  or any  of  its  affiliates  and
investment partners has not, will not and will not cause any person or entity to
directly  engage in "short sales" of the  Company's  Common Stock as long as the
Note shall be outstanding.

                                       13
<PAGE>

            5.2 Requisite  Power and Authority.  The Purchaser has all necessary
power and  authority  under all  applicable  provisions  of law to  execute  and
deliver  this  Agreement  and the  Related  Agreements  and to carry  out  their
provisions.  All corporate  action on  Purchaser's  part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be  effectively  taken  prior to the  Closing.  Upon  their  execution  and
delivery,  this Agreement and the Related  Agreements  will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) as limited by general  principles  of equity that  restrict  the
      availability of equitable and legal remedies.

            5.3  Investment  Representations.  Purchaser  understands  that  the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon  Purchaser's  representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities  Act"). The Purchaser  confirms that it
has  received  or has had  full  access  to all  the  information  it  considers
necessary or appropriate to make an informed investment decision with respect to
the Note,  the Option and the Warrant to be purchased by it under this Agreement
and the Note Shares,  the Option  Shares and the Warrant  Shares  acquired by it
upon the  conversion of the Note and the exercise of the Option and the Warrant,
respectively.  The Purchaser  further confirms that it has had an opportunity to
ask questions and receive  answers from the Company  regarding the Company's and
its Subsidiaries'  business,  management and financial affairs and the terms and
conditions of the Offering, the Note, the Option, the Warrant and the Securities
and to obtain  additional  information (to the extent the Company possessed such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify any  information  furnished to the Purchaser or to which the
Purchaser had access.

            5.4 Purchaser  Bears Economic  Risk.  The Purchaser has  substantial
experience in  evaluating  and investing in private  placement  transactions  of
securities  in  companies  similar  to the  Company  so  that it is  capable  of
evaluating  the merits and risks of its  investment  in the  Company and has the
capacity to protect its own interests. The Purchaser must bear the economic risk
of this  investment  until the Securities are sold pursuant to: (i) an effective
registration  statement  under the  Securities  Act; or (ii) an  exemption  from
registration is available with respect to such sale.

            5.5  Acquisition  for Own Account.  The  Purchaser is acquiring  the
Note,  the Option and Warrant  and the Note  Shares,  the Option  Shares and the
Warrant Shares for the Purchaser's own account for investment only, and not as a
nominee or agent and not with a view  towards or for resale in  connection  with
their distribution.

            5.6 Purchaser Can Protect Its Interest. The Purchaser represents
that by reason of its, or of its management's, business and financial
experience, the Purchaser has the

                                       14
<PAGE>

capacity to evaluate  the merits and risks of its  investment  in the Note,  the
Warrant,  the Option and the  Securities  and to protect  its own  interests  in
connection with the transactions  contemplated in this Agreement and the Related
Agreements.  Further,  Purchaser is aware of no publication of any advertisement
in connection with the transactions contemplated in the Agreement or the Related
Agreements.

            5.7  Accredited  Investor.   Purchaser  represents  that  it  is  an
accredited investor within the meaning of Regulation D under the Securities Act.

            5.8 Legends.

            (a) The Note shall bear substantially the following legend:

            "THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION  OF THIS
            NOTE HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE AND THE
            COMMON STOCK ISSUABLE UPON  CONVERSION OF THIS NOTE MAY NOT BE SOLD,
            OFFERED  FOR SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE OF AN
            EFFECTIVE  REGISTRATION  STATEMENT  AS TO THIS  NOTE OR SUCH  SHARES
            UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
            COUNSEL REASONABLY  SATISFACTORY TO FAST EDDIE RACING STABLES,  INC.
            THAT SUCH REGISTRATION IS NOT REQUIRED."

            (b) The Note  Shares and the Warrant  Shares,  if not issued by DWAC
      system (as  hereinafter  defined),  shall bear a legend  which shall be in
      substantially  the  following  form  until such  shares are  covered by an
      effective registration statement filed with the SEC:

            "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
            UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY  APPLICABLE
            STATE  SECURITIES  LAWS.  THESE SHARES MAY NOT BE SOLD,  OFFERED FOR
            SALE,  PLEDGED  OR  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE
            REGISTRATION  STATEMENT  UNDER SUCH  SECURITIES  ACT AND  APPLICABLE
            STATE LAWS OR AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO FAST
            EDDIE RACING STABLES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

            (c) The Warrant shall bear substantially the following legend:

            "THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
            WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT
            AND

                                       15
<PAGE>

            THE COMMON SHARES  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
            SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
            EFFECTIVE   REGISTRATION   STATEMENT  AS  TO  THIS  WARRANT  OR  THE
            UNDERLYING  SHARES OF COMMON  STOCK  UNDER  SAID ACT AND  APPLICABLE
            STATE   SECURITIES   LAWS  OR  AN  OPINION  OF  COUNSEL   REASONABLY
            SATISFACTORY   TO  FAST  EDDIE  RACING   STABLES,   INC.  THAT  SUCH
            REGISTRATION IS NOT REQUIRED."

      6.  Covenants of the Company.  The Company  covenants  and agrees with the
Purchaser as follows:

            6.1  Stop-Orders.  The Company will advise the  Purchaser,  promptly
after it receives  notice of issuance by the Securities and Exchange  Commission
(the "SEC"), any state securities  commission or any other regulatory  authority
of any stop order or of any order  preventing or suspending  any offering of any
securities  of the Company,  or of the  suspension of the  qualification  of the
Common  Stock of the Company for  offering or sale in any  jurisdiction,  or the
initiation of any proceeding for any such purpose.

            6.2 Listing.  The Company shall  promptly  secure the listing of the
shares  of  Common  Stock  issuable  upon  conversion  of the  Note and upon the
exercise of the Warrant on the NASD OTCBB (the  "Principal  Market")  upon which
shares of Common Stock are listed  (subject to official  notice of issuance) and
shall maintain such listing so long as any other shares of Common Stock shall be
so listed.  The Company  will  maintain  the listing of its Common  Stock on the
Principal  Market,  and will comply in all material  respects with the Company's
reporting,  filing  and  other  obligations  under  the  bylaws  or rules of the
National  Association  of Securities  Dealers  ("NASD") and such  exchanges,  as
applicable.

            6.3 Market  Regulations.  The Company shall notify the SEC, NASD and
applicable  state  authorities,  in accordance with their  requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Purchaser and promptly provide copies thereof to the Purchaser.

            6.4  Reporting  Requirements.  The Company will timely file with the
SEC all reports  required to be filed  pursuant to the  Exchange Act and refrain
from  terminating  its status as an issuer  required by the Exchange Act to file
reports  thereunder  even  if  the  Exchange  Act or the  rules  or  regulations
thereunder would permit such termination.

            6.5 Use of Funds.  The Company  agrees that it will use the proceeds
of the sale of the Note, the Option and the Warrant for acquisitions approved by
the Purchaser  and/or general working capital purposes only (it being understood
that  $2,500,000 of the proceeds of the Note will be deposited in the Restricted
Account on the Closing Date and shall be subject to the terms and  conditions of
the Restricted Account Agreement and the Restricted Account Side Letter).

                                       16
<PAGE>

            6.6  Access  to  Facilities.  Each of the  Company  and  each of its
Subsidiaries will permit any representatives designated by the Purchaser (or any
successor of the Purchaser),  upon reasonable  notice and during normal business
hours,  at such person's  expense and  accompanied  by a  representative  of the
Company, to:

            (a) visit and inspect any of the properties of the Company or any of
      its Subsidiaries;

            (b) examine the corporate  and  financial  records of the Company or
      any of its  Subsidiaries  (unless  such  examination  is not  permitted by
      federal,  state or local law or by  contract)  and make copies  thereof or
      extracts therefrom; and

            (c) discuss the affairs, finances and accounts of the Company or any
      of  its  Subsidiaries   with  the  directors,   officers  and  independent
      accountants of the Company or any of its  Subsidiaries (so long as, in the
      case of such independent  accountants,  a representative of the Company is
      present at any such discussion).

Notwithstanding  the foregoing,  neither the Company nor any of its Subsidiaries
will provide any material,  non-public  information to the Purchaser  unless the
Purchaser  signs a  confidentiality  agreement in form and substance  reasonably
satisfactory  to the Company  and the  Purchaser  and  otherwise  complies  with
Regulation FD, under the federal securities laws.

            6.7 Taxes.  Each of the  Company and each of its  Subsidiaries  will
promptly pay and  discharge,  or cause to be paid and  discharged,  when due and
payable,  all  lawful  taxes,  assessments  and  governmental  charges or levies
imposed  upon the income,  profits,  property or business of the Company and its
Subsidiaries;  provided, however, that any such tax, assessment,  charge or levy
need not be paid if the validity  thereof  shall  currently be contested in good
faith by appropriate proceedings and if the Company and/or such Subsidiary shall
have set  aside  on its  books  adequate  reserves  with  respect  thereto,  and
provided,  further,  that the  Company  and its  Subsidiaries  will pay all such
taxes,  assessments,  charges  or  levies  forthwith  upon the  commencement  of
proceedings to foreclose any lien which may have attached as security therefor.

            6.8 Insurance.  Each of the Company and its  Subsidiaries  will keep
its assets which are of an insurable  character insured by financially sound and
reputable  insurers  against loss or damage by fire,  explosion  and other risks
customarily  insured against by companies in similar business similarly situated
as the Company and its  Subsidiaries;  and the Company and its Subsidiaries will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner  which the Company  reasonably  believes is  customary  for  companies in
similar business  similarly  situated as the Company and its Subsidiaries and to
the extent available on commercially  reasonable terms. The Company, and each of
its Subsidiaries  will jointly and severally bear the full risk of loss from any
loss  of any  nature  whatsoever  with  respect  to the  assets  pledged  to the
Purchaser  as  security  for its  obligations  hereunder  and under the  Related
Agreements.  At the  Company's and each of its  Subsidiaries'  joint and several
cost  and  expense  in  amounts  and  with  carriers  reasonably  acceptable  to
Purchaser,  the  Company  and each of its  Subsidiaries  shall  (i) keep all its
insurable  properties and properties in which it has an interest insured against
the hazards of fire,

                                       17
<PAGE>

flood,  sprinkler leakage,  those hazards covered by extended coverage insurance
and such other  hazards,  and for such  amounts,  as is customary in the case of
companies  engaged in  businesses  similar to the  Company's  or the  respective
Subsidiary's including business interruption insurance;  (ii) maintain a bond in
such  amounts as is customary  in the case of  companies  engaged in  businesses
similar  to  the  Company's  or the  respective  Subsidiary's  insuring  against
larceny,  embezzlement or other criminal  misappropriation of insured's officers
and  employees  who may either  singly or jointly  with  others at any time have
access to the assets or funds of the Company or any of its  Subsidiaries  either
directly or through governmental  authority to draw upon such funds or to direct
generally the  disposition  of such assets;  (iii)  maintain  public and product
liability insurance against claims for personal injury, death or property damage
suffered by others;  (iv)  maintain all such  worker's  compensation  or similar
insurance  as may be  required  under the laws of any state or  jurisdiction  in
which the Company or the respective  Subsidiary is engaged in business;  and (v)
furnish  Purchaser  with  (x)  copies  of  all  policies  and  evidence  of  the
maintenance  of such  policies at least  thirty (30) days before any  expiration
date, (y) excepting the Company's workers' compensation policy,  endorsements to
such policies  naming  Purchaser as  "co-insured"  or  "additional  insured" and
appropriate  loss payable  endorsements  in form and substance  satisfactory  to
Purchaser, naming Purchaser as loss payee, and (z) evidence that as to Purchaser
the  insurance  coverage  shall not be  impaired  or  invalidated  by any act or
neglect of the Company or any Subsidiary and the insurer will provide  Purchaser
with at least  thirty (30) days notice  prior to  cancellation.  The Company and
each Subsidiary  shall instruct the insurance  carriers that in the event of any
loss  thereunder,  the carriers  shall make payment for such loss to the Company
and/or the Subsidiary and Purchaser jointly. In the event that as of the date of
receipt of each loss  recovery  upon any such  insurance,  the Purchaser has not
declared  an event of  default  with  respect  to this  Agreement  or any of the
Related  Agreements,  then the Company and/or such Subsidiary shall be permitted
to direct the application of such loss recovery  proceeds  toward  investment in
property,  plant and  equipment  that  would  comprise  "Collateral"  secured by
Purchaser's  security  interest  pursuant to its  security  agreement,  with any
surplus funds to be applied toward payment of the  obligations of the Company to
Purchaser. In the event that Purchaser has properly declared an event of default
with respect to this  Agreement or any of the Related  Agreements and such event
of default is continuing,  then all loss  recoveries  received by Purchaser upon
any such insurance  thereafter may be applied to the  obligations of the Company
hereunder and under the Related  Agreements,  in such order as the Purchaser may
determine.  Any surplus  (following  satisfaction of all Company  obligations to
Purchaser)  shall be paid by  Purchaser  to the  Company  or  applied  as may be
otherwise  required by law. Any deficiency  thereon shall be paid by the Company
or the Subsidiary, as applicable, to Purchaser, on demand.

            6.9  Intellectual  Property.  Each of the  Company  and  each of its
Subsidiaries  shall maintain in full force and effect its existence,  rights and
franchises and all licenses and other rights to use Intellectual  Property owned
or possessed by it and  reasonably  deemed to be necessary to the conduct of its
business.

            6.10  Properties.  Each of the Company and each of its  Subsidiaries
will keep its properties in good repair, working order and condition, reasonable
wear and tear  excepted,  and from  time to time  make all  needful  and  proper
repairs, renewals, replacements, additions and improvements thereto; and each of
the  Company  and each of its  Subsidiaries  will at all times  comply with each
provision of all leases to which it is a party or under which it occupies

                                       18
<PAGE>

property if the breach of such provision  could,  either  individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

            6.11 Confidentiality.  The Company agrees that it will not disclose,
and will not  include in any  public  announcement,  the name of the  Purchaser,
unless  expressly agreed to by the Purchaser or unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, the Company may disclose Purchaser's
identity and the terms of this Agreement to its current and prospective debt and
equity financing sources.

            6.12 Required Approvals. For so long as twenty-five percent (25%) of
the principal amount of the Note is outstanding,  the Company, without the prior
written  consent of the  Purchaser,  shall not,  and shall not permit any of its
Subsidiaries to:

            (a) (i) directly or indirectly  declare or pay any dividends,  other
      than   dividends   paid  to  the  Company  or  any  of  its   wholly-owned
      Subsidiaries,   (ii)  issue  any  preferred   stock  that  is  manditorily
      redeemable  prior to the one year anniversary of Maturity Date (as defined
      in the Note) or (iii)  redeem any of its  preferred  stock or other equity
      interests;

            (b)  liquidate,  dissolve  or effect a material  reorganization  (it
      being understood that in no event shall the Company dissolve, liquidate or
      merge with any other person or entity (unless the Company is the surviving
      entity);

            (c) become  subject to  (including,  without  limitation,  by way of
      amendment to or modification  of) any agreement or instrument which by its
      terms would (under any circumstances) restrict the Company's or any of its
      Subsidiaries  right to  perform  the  provisions  of this  Agreement,  any
      Related Agreement or any of the agreements contemplated hereby or thereby;

            (d)  materially  alter or change  the scope of the  business  of the
      Company and its  Subsidiaries  taken as a whole (it being  acknowledged by
      the  Purchaser  that the  Company and its  Subsidiaries  intend to use the
      proceeds of the Note to effect acquisitions approved by the Purchaser,  as
      noted in Section 6.5 hereof);

            (e) (i) create,  incur,  assume or suffer to exist any  indebtedness
      (exclusive  of trade debt and debt  incurred  to finance  the  purchase of
      equipment  (not in excess of five percent (5%) of the fair market value of
      the Company's and its  Subsidiaries'  assets) whether secured or unsecured
      other  than  (x)  the  Company's   indebtedness  to  the  Purchaser,   (y)
      indebtedness set forth on Schedule 6.12(e) attached hereto and made a part
      hereof  and any  refinancings  or  replacements  thereof  on terms no less
      favorable to the  Purchaser  than the  indebtedness  being  refinanced  or
      replaced,  and (z) any debt  incurred in  connection  with the purchase of
      assets  in  the  ordinary  course  of  business,  or any  refinancings  or
      replacements  thereof on terms no less favorable to the Purchaser than the
      indebtedness  being refinanced or replaced;  (ii) cancel any debt owing to
      it in excess of $50,000 in the aggregate during any 12 month period; (iii)
      assume,  guarantee,  endorse or otherwise  become directly or contingently
      liable in connection with any obligations of any other Person,  except the
      endorsement of negotiable instruments by the Company for

                                       19
<PAGE>

      deposit or collection or similar  transactions  in the ordinary  course of
      business  or  guarantees  of  indebtedness   otherwise   permitted  to  be
      outstanding pursuant to this clause (e); and

            (f) create or acquire any  Subsidiary  after the date hereof  unless
      (i) such  Subsidiary is a wholly-owned  Subsidiary of the Company and (ii)
      such Subsidiary becomes party to the Master Security Agreement,  the Stock
      Pledge  Agreement  and the  Subsidiary  Guaranty  (either by  executing  a
      counterpart  thereof  or an  assumption  or joinder  agreement  in respect
      thereof)  and, to the extent  required by the  Purchaser,  satisfies  each
      condition  of  this  Agreement  and  the  Related  Agreements  as if  such
      Subsidiary were a Subsidiary on the Closing Date.

            6.13  Reissuance  of  Securities.  The  Company  agrees  to  reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Section 5.8 above at such time as:

            (a) the holder  thereof is permitted  to dispose of such  Securities
      pursuant to Rule 144(k) under the Securities Act; or

            (b) upon resale subject to an effective registration statement after
      such Securities are registered under the Securities Act.

The Company  agrees to  cooperate  with the  Purchaser  in  connection  with all
resales  pursuant  to Rule 144(d) and Rule  144(k) and  provide  legal  opinions
necessary  to allow such resales  provided  the Company and its counsel  receive
reasonably  requested  representations from the selling Purchaser and broker, if
any.

            6.14 Opinion.  On the Closing Date,  the Company will deliver to the
Purchaser an opinion  acceptable  to the Purchaser  from the Company's  external
legal counsel.  The Company will provide,  at the Company's expense,  such other
legal opinions in the future as are deemed reasonably necessary by the Purchaser
(and  acceptable to the Purchaser) in connection with the conversion of the Note
and exercise of the Option and the Warrant.

            6.15 Margin  Stock.  The Company will not permit any of the proceeds
of the Note,  the Option or the  Warrant to be used  directly or  indirectly  to
"purchase"  or  "carry"  "margin  stock" or to repay  indebtedness  incurred  to
"purchase" or "carry"  "margin stock" within the respective  meanings of each of
the quoted  terms under  Regulation  U of the Board of  Governors of the Federal
Reserve System as now and from time to time hereafter in effect.

            6.16  Restricted  Cash  Disclosure.  The  Company  agrees  that,  in
connection  with  its  filing  of its 8-K  Report  with the SEC  concerning  the
transactions  contemplated  by this Agreement and the Related  Agreements  (such
report, the "Laurus  Transaction 8-K") in a timely manner after the date hereof,
it will  disclose in such Laurus  Transaction  8-K the amount of the proceeds of
the Note  issued to the  Purchaser  that has been  placed in a  restricted  cash
account and is subject to the terms and  conditions  of this  Agreement  and the
Related  Agreements.  Furthermore,  the Company agrees to disclose in all public
filings required by the Commission (where  appropriate)  following the filing of
the Laurus  Transaction 8-K, the existence of the restricted cash referred to in
the immediately preceding sentence, together with the amount thereof.

                                       20
<PAGE>

            6.17  Financing  Limitations.  The  Company  will not,  and will not
permit its  Subsidiaries to, agree,  directly or indirectly,  to any restriction
with any person or entity  which limits the ability of the Company or any of its
Subsidiaries to incur any additional indebtedness from the Purchaser and/or sell
or issue any equity  interests of the Company or any of its  Subsidiaries to the
Purchaser.

            6.18  Additional  Investment.  The Company agrees that the Purchaser
shall have the right (at its sole option),  on or prior to the date which is 270
days  following the Closing Date, to issue an additional  note to the Company in
an  aggregate  principal  amount  of up to  $7,000,000  on the  same  terms  and
conditions  (including,  without  limitation,  the same interest rate, the Fixed
Conversion Price (as defined in the Note) then in effect,  proportionate warrant
coverage (at the same exercise prices), a proportionate  amortization  schedule,
etc.) set forth in, and pursuant to substantially similar documentation as, this
Agreement and the Related Agreements.

      7. Covenants of the Purchaser. The Purchaser covenants and agrees with the
Company as follows:

            7.1 Confidentiality. The Purchaser agrees that it will not disclose,
and will not include in any public announcement, the name of the Company, unless
expressly  agreed to by the  Company  or unless  and until  such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement.

            7.2 Non-Public  Information.  The Purchaser agrees not to effect any
sales in the  shares  of the  Company's  Common  Stock  while in  possession  of
material,  non-public  information  regarding  the  Company if such sales  would
violate applicable securities law.

            7.3  Other.  The  Purchaser  agrees  that it  will  not,  while  any
principal amount of the Note remains outstanding, become a customer with respect
to the products offered by the Company or any of its Subsidiaries.

            7.4 No Shorting. Neither the Purchaser nor any of its affiliates and
investment partners will, or will cause any person or entity to, directly engage
in "short  sales" of the  Company's  Common  Stock as long as the Note  shall be
outstanding.

            7.5  Limitation  on  Acquisition  of  Common  Stock of the  Company.
Notwithstanding  anything  to the  contrary  contained  herein,  in any  Related
Agreement or any document,  instrument  or agreement  entered into in connection
with any other transactions between the Purchaser and the Company, the Purchaser
may not acquire stock in the Company (including, without limitation, pursuant to
a contract to purchase,  by exercising an option or warrant,  by converting  any
other  security or  instrument,  by acquiring or  exercising  any other right to
acquire,  shares of stock or other security  convertible into shares of stock in
the Company, or otherwise, and such contracts,  options, warrants, conversion or
other rights shall not be enforceable or  exercisable)  to the extent such stock
acquisition  would cause any interest  (including any original  issue  discount)
payable by the Company to Laurus not to qualify as "portfolio  interest"  within
the meaning of Section  881(c)(2) of the Code, by reason of Section 881(c)(3) of
the Code, taking into account the constructive ownership rules under

                                       21
<PAGE>

Section 871(h)(3)(C) of the Code (the "Stock Acquisition Limitation"). The Stock
Acquisition  Limitation  shall  automatically  become null and void  without any
notice to the  Company  upon the  earlier to occur of either  (a) the  Company's
delivery to Laurus of a Notice of Redemption (as defined in the Note) or (b) the
existence  of an Event of  Default  (as  defined in the Note) at a time when the
average  closing price of the  Company's  common stock as reported by Bloomberg,
L.P. on the Principal Market for the immediately  preceding five trading days is
greater than or equal to 150% of the Fixed  Conversion  Price (as defined in the
Note).

      8. Covenants of the Company and Purchaser Regarding Indemnification.

            8.1 Company Indemnification.  The Company agrees to indemnify,  hold
harmless,  reimburse and defend the Purchaser, each of the Purchaser's officers,
directors,  agents,  affiliates,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser   which   results,   arises  out  of  or  is  based   upon:   (i)  any
misrepresentation  by the  Company or any of its  Subsidiaries  or breach of any
warranty by the Company or any of its Subsidiaries in this Agreement,  any other
Related Agreement or in any exhibits or schedules attached hereto or thereto; or
(ii) any breach or default in performance by Company or any of its  Subsidiaries
of  any  covenant  or  undertaking  to be  performed  by  Company  or any of its
Subsidiaries hereunder, under any other Related Agreement or any other agreement
entered  into  by the  Company  and/or  any of its  Subsidiaries  and  Purchaser
relating hereto or thereto.

            8.2 Purchaser's Indemnification. Purchaser agrees to indemnify, hold
harmless,  reimburse and defend the Company and each of the Company's  officers,
directors,  agents, affiliates,  control persons and principal shareholders,  at
all times  against any claim,  cost,  expense,  liability,  obligation,  loss or
damage (including  reasonable legal fees) of any nature,  incurred by or imposed
upon  the  Company  which  results,  arises  out of or is  based  upon:  (i) any
misrepresentation  by  Purchaser  or breach of any warranty by Purchaser in this
Agreement  or in any  exhibits  or  schedules  attached  hereto  or any  Related
Agreement;  or (ii) any breach or default in  performance  by  Purchaser  of any
covenant or  undertaking  to be performed by Purchaser  hereunder,  or any other
agreement entered into by the Company and Purchaser relating hereto.

      9. Conversion of Convertible Note.

            9.1 Mechanics of Conversion.

            (a)  Provided  the   Purchaser  has  notified  the  Company  of  the
      Purchaser's  intention  to sell the Note  Shares  and the Note  Shares are
      included in an effective  registration  statement or are otherwise  exempt
      from  registration  when sold: (i) upon the conversion of the Note or part
      thereof,  the  Company  shall,  at its own  cost  and  expense,  take  all
      necessary  action  (including  the  issuance  of  an  opinion  of  counsel
      reasonably  acceptable  to  the  Purchaser  following  a  request  by  the
      Purchaser) to assure that the Company's  transfer agent shall issue shares
      of the  Company's  Common  Stock  in the  name  of the  Purchaser  (or its
      nominee)  or  such  other  persons  as  designated  by  the  Purchaser  in
      accordance  with Section  9.1(b)  hereof and in such  denominations  to be
      specified  representing  the  number  of Note  Shares  issuable  upon such
      conversion; and (ii) the

                                       22
<PAGE>

      Company warrants that no instructions  other than these  instructions have
      been or will be given to the transfer agent of the Company's  Common Stock
      and that after the  Effectiveness  Date (as  defined  in the  Registration
      Rights  Agreement)  the Note  Shares  issued  will be freely  transferable
      subject to the prospectus delivery  requirements of the Securities Act and
      the  provisions  of  this  Agreement,   and  will  not  contain  a  legend
      restricting the resale or transferability of the Note Shares.

            (b) Purchaser will give notice of its decision to exercise its right
      to convert the Note or part thereof by telecopying or otherwise delivering
      an executed and  completed  notice of the number of shares to be converted
      to the Company (the "Notice of  Conversion").  The  Purchaser  will not be
      required to surrender  the Note until the  Purchaser  receives a credit to
      the account of the  Purchaser's  prime broker  through the DWAC system (as
      defined  below),  representing  the Note Shares or until the Note has been
      fully  satisfied.  Each date on which a Notice of Conversion is telecopied
      or delivered to the Company in accordance with the provisions hereof shall
      be deemed a  "Conversion  Date."  Pursuant  to the terms of the  Notice of
      Conversion,  the Company will issue  instructions  to the  transfer  agent
      accompanied  by an opinion of counsel  within two (2) business  days after
      receipt by the  Company of the Notice of  Conversion  and shall  cause the
      transfer agent to transmit the  certificates  representing  the Conversion
      Shares to the Holder by  crediting  the account of the  Purchaser's  prime
      broker  with the  Depository  Trust  Company  ("DTC")  through its Deposit
      Withdrawal Agent Commission ("DWAC") system within three (3) business days
      after  receipt by the Company of the Notice of Conversion  (the  "Delivery
      Date").

            (c) The Company understands that a delay in the delivery of the Note
      Shares  in the form  required  pursuant  to  Section 9 hereof  beyond  the
      Delivery Date could result in economic loss to the Purchaser. In the event
      that the Company  fails to direct its  transfer  agent to deliver the Note
      Shares to the  Purchaser  via the DWAC  system  within  the time frame set
      forth in Section 9.1(b) above and the Note Shares are not delivered to the
      Purchaser by the Delivery Date, as  compensation to the Purchaser for such
      loss,  the Company  agrees to pay late  payments to the Purchaser for late
      issuance  of the Note  Shares in the form  required  pursuant to Section 9
      hereof upon  conversion of the Note in the amount equal to the Purchaser's
      actual damages from such delayed delivery.  Notwithstanding the foregoing,
      the Company will not owe the  Purchaser  any late payments if the delay in
      the delivery of the Note Shares  beyond the Delivery Date is solely out of
      the control of the Company and the Company is actively  trying to cure the
      cause of the delay. The Company shall pay any payments incurred under this
      Section in  immediately  available  funds upon  demand and, in the case of
      actual damages,  accompanied by reasonable  documentation of the amount of
      such damages. Such documentation shall show the number of shares of Common
      Stock the Purchaser is forced to purchase (in an open market  transaction)
      which the Purchaser anticipated receiving upon such conversion,  and shall
      be calculated as the amount by which (A) the  Purchaser's  total  purchase
      price (including customary brokerage  commissions,  if any) for the shares
      of Common Stock so purchased  exceeds (B) the aggregate  principal  and/or
      interest  amount of the Note,  for which  such  Conversion  Notice was not
      timely honored.

                                       23
<PAGE>

Nothing  contained herein or in any document  referred to herein or delivered in
connection  herewith  shall be deemed to  establish  or require the payment of a
rate of  interest  or other  charges  in  excess  of the  maximum  permitted  by
applicable law. In the event that the rate of interest or dividends  required to
be paid or other charges  hereunder  exceed the maximum amount permitted by such
law, any payments in excess of such maximum  shall be credited  against  amounts
owed by the Company to a Purchaser and thus refunded to the Company.

      10. Registration Rights.

            10.1  Registration   Rights  Granted.   The  Company  hereby  grants
registration rights to the Purchaser pursuant to a Registration Rights Agreement
dated as of even date herewith between the Company and the Purchaser.

            10.2 Offering  Restrictions.  Except as previously  disclosed in the
SEC Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors of the Company (these exceptions  hereinafter referred to
as the "Excepted  Issuances"),  neither the Company nor any of its  Subsidiaries
will  issue any  securities  with a  continuously  variable/floating  conversion
feature  which  are or could be (by  conversion  or  registration)  free-trading
securities (i.e. common stock subject to a registration  statement) prior to the
full  repayment or conversion of the Note  (together with all accrued and unpaid
interest and fees related thereto) (the "Exclusion Period").

      11. Miscellaneous.

            11.1 Governing Law, Jurisdiction and Waiver of Jury Trial.

            (a) THIS AGREEMENT AND THE RELATED  AGREEMENTS  SHALL BE GOVERNED BY
      AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
      YORK  APPLICABLE TO CONTRACTS  MADE AND  PERFORMED IN SUCH STATE,  WITHOUT
      REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

            (b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
      COURTS  LOCATED  IN THE  COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
      EXCLUSIVE  JURISDICTION  TO HEAR AND  DETERMINE  ANY  CLAIMS  OR  DISPUTES
      BETWEEN THE  COMPANY,  ON THE ONE HAND,  AND THE  PURCHASER,  ON THE OTHER
      HAND,  PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO
      ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
      RELATED  AGREEMENTS;   PROVIDED,   THAT  THE  PURCHASER  AND  THE  COMPANY
      ACKNOWLEDGE  THAT ANY APPEALS  FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
      COURT LOCATED  OUTSIDE OF THE COUNTY OF NEW YORK,  STATE OF NEW YORK;  AND
      FURTHER  PROVIDED,  THAT  NOTHING  IN THIS  AGREEMENT  SHALL BE  DEEMED OR
      OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
      ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
      THE COLLATERAL (AS DEFINED IN THE

                                       24
<PAGE>

      MASTER  SECURITY  AGREEMENT) OR ANY OTHER SECURITY FOR THE OBLIGATIONS (AS
      DEFINED IN THE MASTER  SECURITY  AGREEMENT),  OR TO ENFORCE A JUDGMENT  OR
      OTHER COURT ORDER IN FAVOR OF THE PURCHASER. THE COMPANY EXPRESSLY SUBMITS
      AND  CONSENTS  IN  ADVANCE  TO SUCH  JURISDICTION  IN ANY  ACTION  OR SUIT
      COMMENCED IN ANY SUCH COURT,  AND THE COMPANY  HEREBY WAIVES ANY OBJECTION
      WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
      OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
      SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
      AGREES THAT SERVICE OF SUCH  SUMMONS,  COMPLAINT  AND OTHER PROCESS MAY BE
      MADE BY  REGISTERED  OR  CERTIFIED  MAIL  ADDRESSED  TO THE COMPANY AT THE
      ADDRESS SET FORTH IN SECTION 11.9 AND THAT SERVICE SO MADE SHALL BE DEEMED
      COMPLETED  UPON THE EARLIER OF THE  COMPANY'S  ACTUAL  RECEIPT  THEREOF OR
      THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

            (c) THE PARTIES  DESIRE  THAT THEIR  DISPUTES BE RESOLVED BY A JUDGE
      APPLYING SUCH APPLICABLE LAWS. THEREFORE,  TO ACHIEVE THE BEST COMBINATION
      OF THE BENEFITS OF THE  JUDICIAL  SYSTEM AND OF  ARBITRATION,  THE PARTIES
      HERETO  WAIVE  ALL  RIGHTS  TO  TRIAL  BY JURY  IN ANY  ACTION,  SUIT,  OR
      PROCEEDING  BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER  ARISING IN CONTRACT,
      TORT, OR OTHERWISE  BETWEEN THE PURCHASER  AND/OR THE COMPANY  ARISING OUT
      OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP  ESTABLISHED
      BETWEEN  THEM  IN  CONNECTION  WITH  THIS  AGREEMENT,  ANY  OTHER  RELATED
      AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

            11.2  Survival.  The  representations,   warranties,  covenants  and
agreements made herein shall survive any investigation made by the Purchaser and
the  closing of the  transactions  contemplated  hereby to the  extent  provided
therein.  All statements as to factual  matters  contained in any certificate or
other  instrument  delivered by or on behalf of the Company  pursuant  hereto in
connection  with the  transactions  contemplated  hereby  shall be  deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

            11.3 Successors.  Except as otherwise expressly provided herein, the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors,  heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be  enforceable by each person who shall be a holder
of the  Securities  from time to time,  other than the  holders of Common  Stock
which  has been  sold by the  Purchaser  pursuant  to Rule  144 or an  effective
registration  statement.  Purchaser  may not assign its  rights  hereunder  to a
competitor  of the Company or any  Subsidiary of the Company or to any person or
entity affiliated with such a competitor.

                                       25
<PAGE>

            11.4 Entire Agreement.  This Agreement, the Related Agreements,  the
exhibits  and  schedules  hereto and thereto and the other  documents  delivered
pursuant  hereto  constitute  the full and entire  understanding  and  agreement
between the parties  with  regard to the  subjects  hereof and no party shall be
liable or bound to any other in any manner by any  representations,  warranties,
covenants and agreements except as specifically set forth herein and therein.

            11.5  Severability.  In case any provision of the Agreement shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            11.6 Amendment and Waiver.

            (a) This  Agreement may be amended or modified only upon the written
      consent of the Company and the Purchaser.

            (b) The  obligations  of the Company and the rights of the Purchaser
      under this  Agreement  may be waived only with the written  consent of the
      Purchaser.

            (c) The  obligations  of the Purchaser and the rights of the Company
      under this  Agreement  may be waived only with the written  consent of the
      Company.

            11.7 Delays or Omissions.  It is agreed that no delay or omission to
exercise  any right,  power or remedy  accruing  to any party,  upon any breach,
default or  noncompliance  by another party under this  Agreement or the Related
Agreements,  shall  impair  any such  right,  power or  remedy,  nor shall it be
construed to be a waiver of any such breach,  default or  noncompliance,  or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring.  All remedies,  either under this Agreement or the Related
Agreements,  by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

            11.8 Notices.  All notices required or permitted  hereunder shall be
in writing and shall be deemed effectively given:

            (a) upon personal delivery to the party to be notified;

            (b) when sent by confirmed  facsimile if sent during normal business
      hours of the recipient, if not, then on the next business day;

            (c) three (3) business  days after having been sent by registered or
      certified mail, return receipt requested, postage prepaid; or

            (d) one (1) day after deposit with a nationally recognized overnight
      courier,  specifying  next day  delivery,  with  written  verification  of
      receipt.

All communications shall be sent as follows:

                                       26
<PAGE>

         If to the Company, to:       Fast Eddie Racing Stables, Inc.

                                      Attention: Chief Financial Officer
                                      Facsimile: 212 922 2081

                                      with a copy to:
                                      Cohen Tauber Spievack & Wagner LLP
                                      420 Lexington Avenue
                                      Suite 2400
                                      New York, New York 10170
                                      Attention: Adam Stein, Esq.
                                      Facsimile: 212-586-5095

         If to the Purchaser, to:     Laurus Master Fund, Ltd.
                                      c/o M&C Corporate Services Limited
                                      P.O. Box 309 GT
                                      Ugland House, George Town
                                      South Church Street
                                      Grand Cayman, Cayman Islands
                                      Facsimile: 345-949-8080

                                      with a copy to:

                                      John E. Tucker, Esq.
                                      825 Third Avenue 14th Floor
                                      New York, NY 10022
                                      Facsimile: 212-541-4434

or at such  other  address as the  Company or the  Purchaser  may  designate  by
written notice to the other parties hereto given in accordance herewith.

            11.9  Attorneys'  Fees.  In the  event  that any suit or  action  is
instituted to enforce any provision in this Agreement,  the prevailing  party in
such dispute shall be entitled to recover from the losing party all fees,  costs
and  expenses  of  enforcing  any right of such  prevailing  party under or with
respect to this Agreement,  including,  without limitation, such reasonable fees
and  expenses  of  attorneys  and  accountants,  which  shall  include,  without
limitation, all fees, costs and expenses of appeals.

            11.10  Titles  and  Subtitles.   The  titles  of  the  sections  and
subsections of this Agreement are for  convenience of reference only and are not
to be considered in construing this Agreement.

            11.11  Facsimile  Signatures;  Counterparts.  This  Agreement may be
executed by  facsimile  signatures  and in any number of  counterparts,  each of
which shall be an  original,  but all of which  together  shall  constitute  one
instrument.

                                       27
<PAGE>

            11.12 Broker's  Fees.  Except as set forth on Schedule 11.12 hereof,
each party hereto  represents  and warrants  that no agent,  broker,  investment
banker,  person or firm acting on behalf of or under the authority of such party
hereto is or will be  entitled  to any  broker's  or  finder's  fee or any other
commission   directly  or  indirectly  in  connection   with  the   transactions
contemplated  herein.  Each party hereto  further agrees to indemnify each other
party for any  claims,  losses or  expenses  incurred  by such other  party as a
result of the representation in this Section 11.12 being untrue.

            11.13  Construction.  Each party acknowledges that its legal counsel
participated  in the  preparation of this  Agreement and the Related  Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be  resolved   against  the   drafting   party  shall  not  be  applied  in  the
interpretation of this Agreement to favor any party against the other.

             [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                       28
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto  have  executed  the  SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                  PURCHASER:

FAST EDDIE RACING STABLES, INC.           LAURUS MASTER FUND, LTD.

By:                                       By:
       -------------------------------          --------------------------------
Name:                                     Name:
       -------------------------------          --------------------------------
Title:                                    Title:
       -------------------------------          --------------------------------

                                       29

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